Kontoor Brands (KTB) DEF 14ADefinitive proxy

Table of Contents

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.   )

Filed by the Registrant  x                    Filed by a Party other than the Registrant  o

Check the appropriate box:  

KONTOOR BRANDS, 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 the appropriate box): 

On behalf of the Board of Directors and the leadership team, I am pleased to invite you to attend the Kontoor Brands, Inc. 2023 Annual Meeting of Shareholders (the “Annual Meeting”) on Thursday, April 20, 2023, at 11:00 a.m., Eastern Time, to be held live via the Internet at www.virtualshareholdermeeting.com/KTB2023. The format of the Annual Meeting will be a virtual-only meeting.

Attached to this letter are a Notice of Annual Meeting of Shareholders and a Proxy Statement, which describe the business to be conducted at the Annual Meeting.

In accordance with the Securities and Exchange Commission rules allowing companies to furnish proxy materials to their shareholders over the Internet, we have sent shareholders of record at the close of business on February 16, 2023 a Notice of Internet Availability of Proxy Materials (“Notice”) beginning on or about March 9, 2023. The Notice contains instructions on how to access our Proxy Statement and Annual Report and vote online. If you would like to receive a printed copy of these proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions for requesting such materials included in the Notice, as well as in the attached Proxy Statement.

We have designed the format of the Annual Meeting to ensure that shareholders are afforded similar rights and opportunities to participate as they would at an in-person meeting, using online tools to ensure shareholder access and participation. To attend the Annual Meeting, shareholders must register in advance, using their control number and other information, at www.proxyvote.com prior to the deadline of Monday, April 17, 2023, at 5:00 p.m., Eastern Time. Upon completing registration, shareholders will receive further instructions by e-mail, including links that will allow them to access the Annual Meeting, submit questions, and vote online during the Annual Meeting.

Beginning thirty minutes prior to, and during, the Annual Meeting, support will be available to assist shareholders with any technical difficulties they may have accessing, hearing or participating in the virtual meeting. If participants encounter any difficulty accessing, or during, the virtual meeting, they should call the support team at the numbers listed on the virtual meeting registration page.

Your vote is important to us. To ensure that you will be represented, we ask you to vote your shares on the Internet, by telephone or by mail as soon as possible, or you may vote during the live webcast of the Annual Meeting. Voting on the Internet, by telephone or by mail does not deprive you of your right to attend the Annual Meeting. If you do attend the Annual Meeting and wish to vote your shares at the meeting, you may revoke your proxy at or prior to the Annual Meeting.

I thank you for your continued support of our company.

Sincerely,

Scott H. Baxter

President, Chief Executive Officer and Chair of the Board of Directors

		To Our Shareholders of Kontoor Brands, Inc.
Notice of Annual Meeting of Shareholders Date: Thursday, April 20, 2023 Time: 11:00 a.m., ET Place: Virtually via the Internet at www.virtualshareholdermeeting. com/KTB2023		The 2023 Annual Meeting of Shareholders of Kontoor Brands, Inc. will be held live virtually via the Internet at www.virtualshareholdermeeting.com/KTB2023, on Thursday, April 20, 2023, at 11:00 a.m., Eastern Time, for the following purposes:
			to elect seven directors to serve until the annual meeting of shareholders to be held in 2024;
			to ratify the appointment of PricewaterhouseCoopers LLP as Kontoor’s independent registered public accounting firm for the fiscal year ending December 30, 2023;
			to approve the compensation of Kontoor’s named executive officers as disclosed in this Proxy Statement; and
YOUR VOTE IS IMPORTANT You are urged to vote your shares in advance via the Internet, through our toll-free telephone number, or by signing, dating and promptly returning your completed proxy card.			to transact such other business as may properly come before the meeting and any adjournments or postponements thereof.
		A copy of Kontoor’s Annual Report for the fiscal year ended December 31, 2022 is included for your information. Only shareholders of record as of the close of business on February 16, 2023 are entitled to notice of, and to vote at, the Annual Meeting. To attend the Annual Meeting, shareholders must register in advance, using their control number and other information, at www.proxyvote.com prior to the deadline of Monday, April 17, 2023, at 5:00 p.m., Eastern Time. Upon completing registration, shareholders will receive further instructions by e-mail, including links that will allow them to access the Annual Meeting, submit questions, and vote online during the Annual Meeting. Shareholders will not be able to attend the Annual Meeting in person. A list of shareholders entitled to vote at the Annual Meeting will be available for inspection during the Annual Meeting at www.virtualshareholdermeeting.com/KTB2023, upon registration and log-in. Sincerely, Thomas L. Doerr, Jr. Executive Vice President, General Counsel and Corporate Secretary

Voting Roadmap

Proposal No. 1
Election of Directors

The eight individuals named below currently serve on our Board. While the Board is currently divided into three classes, beginning with the Annual Meeting, each of our directors will be elected for a one-year term expiring at the next annual meeting of shareholders and the classification of the Board will cease.

Kathleen S. Barclay is not standing for re-election to the Board and her term as a director will end at the Annual Meeting. Kontoor acknowledges and thanks Ms. Barclay for her outstanding service on the Board. Effective as of the Annual Meeting, the size of the Board will decrease from eight directors to seven directors.

Composition of the Continuing Board

Gender Diversity: 1 of 7 are female	Director Independence: 6 of 7 are independent
Ethnic Diversity: 2 of 7 are ethnically diverse	CEO Experience: 3 of 7 have CEO experience

TENURE

Continuing Director Skills and Qualifications Matrix

Executive Management Experience – Senior leadership experience in operations, strategic planning, risk management and oversight, finance/accounting, and supply chain management	l	l	l	l	l	l	l	7
Financial Expertise – Deep understanding of financial and accounting concepts, including experience with financial reporting processes, and financial controls	l		l	l	l	l	l	6
International Experience – Exposure to and experience in global markets, diverse business environments, and/or cultural perspectives	l	l	l	l	l	l	l	7
Industry – Extensive knowledge and experience in the retail apparel industry, and/or consumer products	l		l	l	l	l		5

Marketing and Branding – Experience with consumer marketing, branding, media, and reputational management	l		l	l	l			4
Digital and eCommerce – Experience with digital business strategies and eCommerce operations, including experience with technology resources, and infrastructure	l	l	l	l	l	l	l	7
Corporate Governance – Understanding of public company governance best practices, shareholder relations and institutional investor considerations, including related to executive compensation and risk management along with public company board experience.	l	l	l	l	l	l	l	7
ESG/Sustainability – Understanding of legal and regulatory implications related to environmental, social and governance ("ESG") matters, experience with sustainable sourcing and operations, and/or experience with social impact matters	l	l	l	l	l	l	l	7
Cybersecurity Experience – Understanding of legal and regulatory implications related to cybersecurity matters, experience with cybersecurity strategy and policies, and understanding of risk-based threat management strategies.	l	l	l	l	l	l	l	7

As reflected in the chart above, we believe our continuing directors offer a diverse range of key skills and experience to provide effective oversight of Kontoor and create long-term sustainable growth through successful execution of the Company’s strategic initiatives.

Our Corporate Governance Principles require each director to tender, promptly following the meeting at which he or she is elected as a director, an irrevocable resignation that will be effective upon (a) the failure of such director to receive the number of votes required for re-election, and (b) the acceptance of such director’s resignation by the Nominating and Governance Committee. The Nominating and Governance Committee will consider such tendered resignation and, within 30 days following the date of the shareholders’ meeting at which the election occurred at which a director failed to receive the number of votes required for re-election, will make a recommendation to the Board concerning the acceptance or rejection of such resignation. The Board will act on the tendered resignation, taking into account such recommendation, and publicly disclose its decision regarding the tendered resignation within 60 days from the date of the certification of the election results.

The following section provides information with respect to each director nominee. It includes the specific experience, qualifications and skills considered by the Nominating and Governance Committee and/or the Board in assessing the appropriateness of the person to serve as a director. Ages are presented as of March 9, 2023.

Director Nominees

The Board unanimously recommends a vote “FOR” each of the director nominees.

Executive Officers

Kontoor’s executive officers are as follows:

Certain information with respect to our executive officers is provided below. Officers are appointed to serve at the discretion of the Board. Information regarding Mr. Baxter is included in the director profiles set forth above. Ages are represented as of March 9, 2023.

Rustin E. Welton is Executive Vice President and Chief Financial Officer (and has served in that role since the Spin-Off). Prior to his current role at Kontoor, Mr. Welton was VF’s Vice President and Chief Financial Officer—Americas East from January 2017 to the Spin-Off. He previously served as VF’s Vice President and Chief Financial Officer for the Jeanswear Coalition, Imagewear Coalition, and Central America/South America from December 2014 until January 2017 and Chief Financial Officer–Jeanswear North and South America from 2012 to 2015. He earned a Master of Business Administration degree from Indiana University’s Kelley School of Business and a B.A. in Finance from the University of Illinois at Urbana-Champaign.

Thomas E. Waldron is Executive Vice President, Co-Chief Operating Officer and Global Brand President–Wrangler (and has served in that role since March 2022). Prior to his current role, Mr. Waldron was Kontoor’s Executive Vice President (or Vice President) and Global Brand President–Wrangler since the Spin-Off. He previously served as VF’s Global Brand President–Wrangler from October 2018 to the Spin-Off, President—Wrangler from March 2016 until October 2018, Vice President–Mass Brands from July 2010 until March 2016, Vice President General Manager—Wrangler Male Bottoms from July 2005 until July 2010, Merchandise Manager– Wrangler Men’s from January 2003 until July 2005, National Account Executive—Walmart (Boys) from January 2000 until January 2003, National Account Executive—Walmart (Men’s) from November 1996 until January 2000 and Replenishment Manager from September 1995 until November 1996. He earned a B.S. in Economics from the University of North Carolina at Greensboro.

Christopher Waldeck is Executive Vice President, Co-Chief Operating Officer and Global Brand President—Lee (and has served in that role since March 2022). Prior to his current role, Mr. Waldeck was Kontoor’s Executive Vice President (or Vice President) and Global Brand President—Lee since the Spin-Off. He previously served as VF’s Global Brand President, Lee and Rock & Republic from October 2018 to the Spin-Off and President—Lee and Rock & Republic from May 2017 to October 2018. Before joining VF, Mr. Waldeck was with the Adidas Group as Vice President, General Manager, Reebok USA from October 2013 until April 2017, Brand Director, Reebok Korea from May 2010 until October 2013 and Senior Director of Marketing for Equipment, Cleated Footwear from May 2004 until May 2010. He earned a B.S. in Business from Emporia State University.

Thomas L. Doerr, Jr. is Executive Vice President, General Counsel and Corporate Secretary (and has served in that role since May 2022). Prior to his role at Kontoor, Mr. Doerr served as Executive Vice President (or Senior Vice President), General Counsel & Secretary from November 2017 to May 2022 at The Manitowoc Company, Inc. He previously served as Vice President, General Counsel & Secretary at Jason Industries, Inc. and Associate General Counsel at The Manitowoc Company, Inc. He earned his bachelor’s degree in Business Administration from the University of St. Thomas and his law degree from the Marquette University Law School.

Corporate Governance

Kontoor’s business is managed under the direction of the Board. The Board regularly assesses its criteria for Board membership to identify the qualifications and skills that directors and candidates should possess. Members of the Board are kept informed of Kontoor’s business through discussions with the Chief Executive Officer and other officers, by reviewing Kontoor’s annual business plan and other materials provided to them and by participating in meetings of the Board and its committees. We believe that, over time, the Board will benefit from a mix of new directors, who will bring fresh ideas and viewpoints, and longer-serving directors who will have developed deep insight into Kontoor’s business and operations. The Board seeks to maintain a balance of directors who have longer terms of service and directors who have joined more recently.

Corporate Governance Highlights

The Company believes that strong corporate governance is a critical element to achieving long-term shareholder value. We are committed to governance practices and policies that serve the interests of the Company and its shareholders. The following table summarizes certain highlights of corporate practices and policies:

Corporate Governance Principles

The Board is committed to sound and effective corporate governance practices. A foundation of Kontoor’s corporate governance is the Board’s policy that a substantial majority of the members of the Board must meet the independence requirements of the NYSE. In addition, members of the Board who are also executive officers of a public company can serve on the board of directors of no more than two public companies total, and members of the Board who are not executive officers of a public company can serve on the board of directors of no more than four public companies total. These policies are included in the Board’s written corporate governance principles (the “Corporate Governance Principles”), which address a number of other important governance issues such as:

In addition, the Board has in place formal charters stating the powers and responsibilities of each of its committees.

Director Orientation and Continuing Education

The Board views orientation and continuing education as vital tools for building an effective Board. We provide all new directors, upon joining the Board, with appropriate orientation programs, sessions or materials regarding the Board and the Company’s operations. The orientation consists of presentations by members of senior management on the Company’s financial profile, strategic plans, management organization, compliance programs and corporate policies. Directors are required to continue educating themselves with respect to topics related to the Company’s business. The Board encourages, but does not require, directors to periodically pursue or obtain appropriate programs, sessions or materials as to the responsibilities of directors of publicly-traded companies, and the Company reimburses directors for their reasonable expenses in pursuing such opportunities.

Related Person Transactions Policy

Our Related Person Transactions Policy sets forth the policies and procedures governing the review and approval or ratification by the Nominating and Governance Committee of transactions between Kontoor, on the one hand, and (i) an executive officer; (ii) a director or nominee to become director; (iii) any security holder who is known by Kontoor to own of record or beneficially more than five-percent of any class of Kontoor’s voting securities (as defined in the policy) at the time of the transaction; or (iv) an immediate family member of such executive officer, director or nominee to become director, or five-percent holder, on the other hand. Persons in the categories described above are collectively referred to as “related persons.” The policy applies to all related person transactions, and under the policy a “related person transaction” is any transaction in which:

No related person transaction shall be approved or ratified if such transaction is contrary to the best interests of the Company and its stakeholders. Unless different terms are specifically approved or ratified by the Nominating and Governance Committee, any approved or ratified transaction must be on terms that are no less favorable to Kontoor than would be obtained in a similar transaction with an unaffiliated third party under the same or similar circumstances. All related person transactions or series of similar transactions must be presented to the Nominating and Governance Committee for review and pre-approval or ratification.

Since the beginning of Kontoor’s last fiscal year, no financial transactions, arrangements or relationships, or any series of them, were disclosed or proposed through Kontoor’s processes for review, approval or ratification of transactions with related persons in which (i) Kontoor was or is to be a participant, (ii) the aggregate amount involved exceeded $120,000, and (iii) any related person had or will have a direct or indirect material interest. PNC Bank, N.A., which is one of three co-trustees under the Barbey Family Trust accounts (see footnote 4 to the “Security Ownership of Certain Beneficial Owners and Management—Common Stock Beneficial Ownership of Certain Beneficial Owners” table on page 66), is one of several lenders party to Kontoor’s revolving credit facility. The credit facility was entered in the ordinary course of business, was made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and did not involve more than the normal risk of collectability or present other unfavorable features.

Corporate Governance Documents

The Board’s Corporate Governance Principles and the Audit Committee, the Nominating and Governance Committee and the Talent and Compensation Committee charters are available on Kontoor’s website (www.kontoorbrands.com) and will be provided free of charge to any person upon written request directed to the Corporate Secretary of Kontoor at 400 N. Elm Street, Greensboro, North Carolina 27401. Other than the text of the Corporate Governance Principles, the charters of the Audit Committee, the Nominating and Governance Committee and the Talent and Compensation Committee, and the Code of Conduct, we are not including the information contained on or available through our corporate website as part of, or incorporating such information by reference into, this Proxy Statement.

Code of Conduct

The Board has adopted a written code of business conduct and ethics (the “Code of Conduct”), which applies to all of our employees, officers and directors. Our Code of Conduct is available on Kontoor’s website (www.kontoorbrands.com) and will be provided free of charge to any person upon written request directed to the Corporate Secretary of Kontoor at 400 N. Elm Street, Greensboro, North Carolina 27401. In addition, we intend to post on our website all disclosures that are required by law or the NYSE listing rules concerning any amendments to, or waivers from, any provision of our Code of Conduct.

Board Leadership Structure

The Board has concluded that Kontoor and its shareholders are best served by not having a formal policy on whether the same individual should serve as both Chief Executive Officer and Chair of the Board. The Board retains the flexibility to determine the appropriate leadership structure based on the circumstances at the time of the determination. From the Spin-off through August 25, 2021, Mr. Shearer served as Chair of the Board and Mr. Baxter served as Chief Executive Officer of Kontoor. Effective August 26, 2021, upon the recommendation of the Nominating and Governance Committee, the Board elected Mr. Baxter to the additional position of Chair of the Board, and elected Mr. Shearer as the Lead Independent Director (“Lead Director”). The Board believes combining the positions of Chair and Chief Executive Officer enhances overall Board effectiveness and interaction with management, and provides the Company with strong, clear leadership and strategic vision. Mr. Baxter has over 30 years of experience in retail, operations, marketing, merchandising, sales and manufacturing and has served with the Company or VF for over 15 years. In addition, Mr. Baxter has extensive knowledge of, and experience with, all other aspects of the Company’s business, including with its employees, customers, vendors, and shareholders. Having Mr. Baxter serve as both Chair and Chief Executive Officer helps promote unified leadership and direction for both the Board and management.

In connection with Mr. Baxter’s appointment, the non-management directors also created the position of Lead Director. This position was created to, among other things, ensure that the non-management directors maintain proper oversight of management and Board process. The responsibilities of Mr. Shearer, as Lead Director, include:

Director Independence

Seven of Kontoor’s current directors are non-employee directors. Under the NYSE listing standards, no director qualifies as “independent” unless the Board affirmatively determines that the director has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). The Board has adopted categorical standards for director independence, which are part of the Corporate Governance Principles, to assist it in making determinations of independence. In evaluating the independence of directors, the Board considered transactions and relationships between each director and members of his or her immediate family members with the Company. When considering commercial transactions that are made from time to time in the ordinary course of business between Kontoor and certain entities affiliated with non-management directors, transactions are not considered to be a material transaction that would impair the independence of the relevant non-management director if the director is an executive officer or employee of another company that does business with Kontoor in an amount which, in any single fiscal year for the past three fiscal years, is less than the greater of $1 million or 2% of such other company’s consolidated gross revenues.

The Board has determined that all of our non-employee directors are free of any material relationship with Kontoor, other than their service as directors, and are “independent” directors both under the NYSE listing standards and the categorical standards adopted by the Board. The Board determined that Ms. Barclay, Ms. Goldsmith, Mr. Lynch, Mr. Page, Mr. Schiller, Mr. Shearer and Mr. Stewart are independent directors, and that Mr. Baxter is not an independent director. In determining that Ms. Goldsmith was independent, the Board considered her role at Workday, Inc., which is a supplier to Kontoor. Ms. Goldsmith has served as Chief People Officer

of Workday since 2013. During fiscal 2022, Kontoor continued its commercial relationship with Workday, paying Workday approximately $1.74 million for goods and services (which represented about 0.03% of Workday’s gross revenues). The transactions with Workday were conducted in arms’ length transactions in the normal and ordinary course of Kontoor’s business.

Annual Board Evaluation Process

The Board and each of its committees conduct an annual evaluation to determine whether the Board is functioning effectively both at the Board and at the committee levels. The Board recognizes that a robust evaluation process is essential to Board effectiveness, which is in turn critical for ensuring that the Company has a comprehensive long-term business strategy, prudent risk management and sound governance. The Nominating and Governance Committee oversees an annual evaluation process led by the Lead Director.

Each director completes a detailed written annual evaluation of the Board and the committees on which he or she serves and the Lead Director conducts one-on-one interviews with each of the directors. These Board evaluations are designed to elicit feedback on the composition, dynamics, operations and structure of the Board and its committees, and to determine whether the Board and its committees are functioning effectively. The process also evaluates the relationship between management and the Board, including the level of access to management, responsiveness of management, and the effectiveness of the Board’s evaluation of management performance. The results of this Board evaluation are discussed by the full Board and changes to the Board’s and its committees’ practices are implemented as appropriate.

Board Meetings and Attendance

During 2022, the Board held six meetings. Under Kontoor’s Corporate Governance Principles, directors are expected to attend all meetings of the Board, all meetings of committees of which they are members and the annual meeting of shareholders. Six of the seven members of the Board then in office attended the 2022 annual meeting of shareholders. Each current member of the Board then in office attended 100% of the total number of meetings of the Board and all committees on which he or she served during 2022.

Executive Sessions

To promote open discussion among the non-management directors, those directors meet in executive session without management present on a regular basis. At least once per year, such an executive session is held to review the report of the outside auditors, the criteria upon which the performance of the Chief Executive Officer and other senior managers is based, the performance of the Chief Executive Officer against such criteria, and the compensation of the Chief Executive Officer and other senior managers. Additional executive sessions or meetings of non-management directors may be held from time to time as needed. Executive sessions or meetings are held at each Board meeting with the Lead Director for a general discussion of relevant subjects. At least one meeting or executive session of non-management directors per year shall include only independent directors. During 2022, the non-management directors met in executive session without management present four times. Mr. Shearer, the Lead Director, currently presides over executive sessions.

Board Committees

Each of the Audit Committee, the Nominating and Governance Committee and the Talent and Compensation Committee of the Board is governed by a written charter approved by the Board. Each of these committees is required to perform an annual self-evaluation, and each committee may engage outside independent advisors as the committee deems appropriate. The Board has determined that each of the members of the Audit Committee, the Nominating and Governance Committee and the Talent and Compensation Committee is independent. The Board has also created a Strategy and Finance Committee governed by a Board approved written charter. A brief description of the responsibilities of the Audit Committee, the Nominating and Governance Committee, the Talent and Compensation Committee and the Strategy and Finance Committee follows.

Audit Committee

The Audit Committee is a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Audit Committee monitors and makes recommendations to the Board concerning the financial policies and procedures to be observed in the conduct of Kontoor’s affairs. Its duties include:

As of the date of this Proxy Statement, the members of the Audit Committee are Messrs. Shearer (Chair), Page, Schiller and Stewart. The Audit Committee held nine meetings during 2022. The Board has determined that all of the members of the Audit Committee are independent as independence for audit committee members is defined in the NYSE listing standards and the SEC regulations and that all are financially literate. The Board has further determined that Messrs. Shearer, Page and Schiller each qualify as an “audit committee financial expert” in accordance with the definition of such term in the SEC regulations and have accounting and related financial management expertise within the meaning of the NYSE listing standards. Messrs. Shearer, Page and Schiller acquired those attributes through acting as or actively overseeing a principal financial officer or principal accounting officer of a public company. Messrs. Shearer, Page and Schiller also have experience overseeing or assessing the performance of companies with respect to the evaluation of financial statements. No Audit Committee member currently serves on the audit committees of more than three public companies.

Nominating and Governance Committee

The responsibilities of the Nominating and Governance Committee include:

The Nominating and Governance Committee annually evaluates each director to determine his or her fitness and appropriateness for continued service on the Board. While diversity of experience and background are factors taken into consideration in selecting nominees (including diversity of age, gender, nationality, race and ethnicity). Board members are elected to represent all shareholders and not to represent any particular constituency. The Nominating and Governance Committee considers this policy to have been effective to date in identifying diverse candidates. The Nominating and Governance Committee will also consider potential candidates for director recommended by shareholders using the same process it follows for other candidates. Shareholders can submit recommendations to the Corporate Secretary of Kontoor at 400 N. Elm Street, Greensboro, North Carolina 27401.

Shareholders can nominate potential candidates for director by following the established procedures for shareholder nominations set forth in our Bylaws. In addition, the Nominating and Governance Committee may consider any candidates submitted by directors, as well as self-nominations by directors, and it also may consider candidates submitted by a third-party search firm hired for the purpose of identifying director candidates and candidates identified through outside networks or other sources. As of the date of this Proxy Statement, the members of the Nominating and Governance Committee are Mr. Stewart (Chair), Ms. Barclay and Ms. Goldsmith. The Nominating and Governance Committee held four meetings during 2022.

Talent and Compensation Committee

The Talent and Compensation Committee has the authority to discharge the Board’s responsibilities relating to compensation of Kontoor’s senior executive officers and to review and make recommendations to the Board concerning compensation and benefits for key employees. The responsibilities of the Talent and Compensation Committee include:

The Talent and Compensation Committee has the authority to retain or obtain the advice of any compensation consultant, legal counsel or other adviser. The Committee may only select a compensation consultant, legal counsel or other adviser after taking into consideration the factors that affect the independence of such advisers as identified by the SEC and the NYSE. During 2022, the Committee retained Compensation Advisory Partners LLC (“CAP”) as independent compensation consultant to assist the Talent and Compensation Committee in accomplishing its objectives. CAP has no relationship with Kontoor other than providing services to the Talent and Compensation Committee.

The Talent and Compensation Committee has the authority to form and delegate authority to subcommittees as it deems appropriate. The role of the Talent and Compensation Committee, the compensation consultant, and management in senior executive compensation is discussed in further detail in the CD&A beginning on page 31. As of the date of this Proxy Statement, the members of the Committee are Ms. Barclay (Chair), Ms. Goldsmith and Mr. Lynch. The Committee held five meetings during 2022.

Strategy and Finance Committee

The responsibilities of the Strategy and Finance Committee include:

As of the date of this Proxy Statement, the members of the Strategy and Finance Committee are Messrs. Shearer (Chair), Baxter and Stewart.

Talent and Compensation Committee Interlocks and Insider Participation

There are no Talent and Compensation Committee interlocks or insider participation.

Board Oversight of Risk

Risk management is primarily the responsibility of management; however, the Board oversees management’s identification and management of risks to Kontoor. The Board uses various means to fulfill this oversight responsibility. The Board, and its committees, as appropriate, regularly receive and discuss periodic updates from the Chief Executive Officer, the Chief Financial Officer, the General Counsel and other members of senior management regarding significant risks to Kontoor, including in connection with the annual review of Kontoor’s business plan and its review of budgets and strategy. These discussions include operational, strategic, legal, regulatory, financial, reputational and cybersecurity risks and the plans to address these risks.

During 2022, the Board received reports and updates on macroeconomic conditions, including inflation, rising interest rates and recessionary concerns, as well as ongoing global supply chain disruptions and the COVID-19 pandemic, from, and discussed these reports and updates with, our management, including with regard to evaluating the impact of these items on strategy, operations, liquidity and financial matters.

Each of the Board’s standing committees assists the Board in overseeing the management of the Company’s risks within the areas delegated to that committee, and reports to the full Board as appropriate. In particular:

Communications with Directors

Shareholders or other interested parties wishing to communicate directly with one or more members of the Board or with the non-management members of the Board as a group (including the Lead Director) may contact the Chair of the Nominating and Governance Committee, c/o Corporate Secretary of Kontoor at 400 N. Elm Street, Greensboro, North Carolina 27401, or contact the Corporate Secretary via telephone at 336-332-3400, or send an email message to corp.gov@kontoorbrands.com. The Corporate

Secretary forwards all such communications, other than solicitations and frivolous communications, to the Chair of the Nominating and Governance Committee. In addition, any communication that the Corporate Secretary determines, in his or her discretion, to be or to contain any language that is offensive or to be dangerous, harmful, illegal, illegible, not understandable, or nonsensical, may, at the option of such person, not be forwarded to the Board or any particular director. Any communication from an interested party shall not be entitled to confidential treatment and may be disclosed by the Company or by any Board member as the Company or the Board member sees fit. Neither the Company nor the Board, nor any Board member, shall be obligated to send any reply or response to the interested party, except to indicate to the interested party (but only if the interested party specifically requested such an indication) whether or not the interested party’s communication was forwarded to the Board or the applicable Board member.

Commitment to Environmental, Social and Governance

At Kontoor, we believe that our success as a company is closely tied to advancing basic rights, water conservation, and protection of the environment. We recognize the importance of addressing these integral components of Environmental, Social, and Governance (“ESG”) issues, not only to meet the expectations of our stakeholders but to secure a sustainable future for generations to come. Our commitment to ESG goes beyond compliance and reporting; it encompasses a proactive approach to addressing challenges and opportunities in these areas. We believe that our commitment to ESG is key to building long-term value for our employees, communities, customers, shareholders, and all members of our value chain.

Some of the ways we are advancing our ESG priorities, include our focus on sustainability. In December 2021, we published our second Sustainability Report, the second report in our two years as a publicly traded company. Our second Sustainability Report was prepared in accordance with the standards of the Global Reporting Initiative (“GRI”) and the Sustainable Accounting Standard Board (“SASB”) and details our progress in advancing our sustainability agenda focusing on People, Product and Planet. Additionally, to advance our Inclusion & Diversity goals, we have made progress in implementing our two-year old Inclusion & Diversity strategy and have identified key areas of focus. 

ESG and Corporate Governance

The Board is responsible for promoting the exercise of responsible corporate citizenship and monitoring adherence to our standards. The Nominating and Governance Committee reviews and evaluates our strategies, programs, policies and practices relating to ESG issues and impacts to support the sustainable and responsible growth of our business. We articulate our commitments to corporate sustainability and responsibility in our Code of Conduct.

The Kontoor Brands ESG Council champions our company-wide commitment to ESG initiatives and transparency. The Council, consisting of members from our Executive Leadership Team, our Global Sustainability Business Team and select working group leaders, promotes and guides progress toward Kontoor Brands’ ESG goals.

Our Enterprise Risk Management Council is organized to identify, evaluate and manage risk topics and issues aligned with our business priorities. The Council meets regularly and provides leadership on strategy, financial, operational, compliance and reputational risk. Information with respect to the six ESG goals is provided below.

Diversity, Equity and Inclusion

Diversity, Equity and Inclusion (“DEI”) have been at the heart of the Company and ingrained in our values since Kontoor was created. We have made solid progress in advancing our DEI goals in 2022 including, introducing an Inclusion Tech Pack to provide structure for team conversations about inclusivity, structuring our DEI team to support our internal business partners and developing ways of working to support and promote our Employee Resource Groups (ERGs). With these actions, we have redoubled our efforts in three key areas: increasing representation, ensuring equity, and fostering inclusion. Consistent with our desire to mirror our consumers, customers, and communities, our continued work will be anchored in these three areas and align with the strategic objectives of both the function and business.

The Nominating and Governance Committee considers diversity as one of many factors in identifying nominees for director, including personal characteristics such as race and gender, as well as diversity in the experience and skills that contribute to the Board’s performance of its responsibilities in the oversight of a complex and highly-competitive global business. The Nominating and Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees.

Shareholder Engagement

Our management team routinely meets with shareholders for conversations on a variety of topics, including but not limited to Company strategic growth initiatives, business performance, compensation, and macroeconomic and industry conditions. In addition, the Company solicits input from our investment community to better understand their perception of the Company’s performance and strategy. In 2022, our management team held discussions with several top shareholders, and prospective new shareholders, to garner their input on governance matters and practices. The Company collects the feedback from these sessions and presents it to the Board for its consideration. The Board values an active and transparent investor relations program as it believes that shareholder input strengthens its role as an informed and engaged fiduciary.  

2022 Engagement Summary

The Company maintains its active shareholder engagement efforts with its shareholders both during and outside of the proxy season where management from various departments meet with shareholders regularly to discuss a variety of topics. Highlights of our 2022 shareholder engagement are as follows:

The Board considers feedback from these conversations during its deliberations, and the Company regularly reviews and adjusts applicable corporate governance structure and executive compensation policies and practices in response to comments from our shareholders.

Director Compensation

The primary components of compensation for our non-employee directors are a cash retainer, equity-based grant of restricted stock units (“RSUs”) under Kontoor’s 2019 Stock Compensation Plan and Committee Chair fees. The Board sets director compensation annually based on an analysis of non-employee director compensation practices at Kontoor peers and peer company information provided by the independent compensation consultant to the Talent and Compensation Committee. The following describes our fiscal 2022 non-employee director compensation:

Mr. Baxter is the only employee who serves as a director. He is not separately compensated for his service on the Board or as Chair of the Board.

The Talent and Compensation Committee has retained CAP as its independent compensation consultant, which assists the Committee with its periodic review of Kontoor’s non-employee director compensation, among other matters.

Each non-employee director may elect to defer all or part of his or her cash retainer and fees into equivalent units of Kontoor common stock under the Kontoor Deferred Savings Plan for Non-Employee Directors. All Kontoor common stock equivalent units receive dividend equivalents. Deferred sums are generally payable in cash to the participant upon termination of service in a lump sum or substantially equal annual installments over up to ten (10) years, as specified in advance by the participant. Messrs. Shearer, Lynch and Schiller and Mses. Barclay and Goldsmith elected to defer all cash compensation in 2022.

Kontoor reimburses non-employee directors for travel and lodging expenses incurred in the performance of their duties. Directors traveling on Kontoor business are covered by Kontoor’s business travel accident insurance policy, which generally covers all Kontoor’s employees and directors. Directors are encouraged to attend formal training programs in areas relevant to the discharge of their duties as directors. Kontoor reimburses expenses incurred by directors attending such programs. Directors are also eligible for discounts on Kontoor products equal to discounts available to all employees of Kontoor. Kontoor does not provide medical or life insurance benefits to its non-employee directors.

2022 Director Compensation

Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) provides an overview of our named executive officers’ compensation for the period January 2, 2022, through December 31, 2022 (referred to herein as “fiscal 2022” or “2022”). The CD&A explains Kontoor’s executive compensation program, the compensation decisions we have made under the program for fiscal 2022, and the compensation philosophy and objectives supporting these decisions. The focus of the analysis is on the Company’s named executive officers listed in the Summary Compensation Table (the “NEOs”):

1.    Mr. Doerr joined the Company effective May 31, 2022.

Executive Summary

Kontoor is a global lifestyle apparel company, with a portfolio led by two of the world’s most iconic consumer brands: Wrangler^® and Lee^®. The Company designs, produces, procures, markets and distributes apparel primarily under the brand names Wrangler^® and Lee^®.   Our business is founded upon a strategic sourcing model and best-in-class supply chain. We focus on leveraging our global platform to drive brand growth and deliver long-term value to our stakeholders, including our shareholders, consumers, customers, suppliers and communities.

Navigating ongoing operating challenges and macroeconomic pressures, Kontoor, supported by the resilience and dedication of its 14,400 employees across the globe, finished 2022 with strong operational, business and financial performance, including the following:

Fiscal 2022 Key Financial Highlights:

Fiscal 2022 Performance Achievement–Based on our performance relative to our pre-established performance goals, we achieved a payout at 87% of target under the Annual Incentive Plan (AIP) and payout at 107% for the Performance Based Restricted Stock Units (PRSUs) covering the performance period of fiscal 2020 through fiscal 2022.

Overview of 2022 Compensation Elements–Our 2022 NEO compensation is comprised of base salary, annual cash incentive compensation and long-term equity incentive compensation, with long-term equity compensation in the form of Kontoor performance-based and time-based restricted stock units.

Key Fiscal 2022 Compensation Decisions–Our Talent and Compensation Committee (also referred to as the “Committee”) designed our executive compensation program to support strategic growth plans and long-term commitments to our shareholders. After reviewing the function and results of the executive compensation program for fiscal 2021, the Committee implemented the following changes for fiscal 2022:

Summary of Compensation Philosophy

Kontoor’s Executive Compensation Program (or the “Program”) is designed to attract, motivate, and retain talented executives with a target total direct compensation package that is positioned within a competitive range of market median for comparable executives within our peer group and the broader industry. We focus on aligning our executives’ interests with those of our shareholders by paying for performance and requiring our executives to retain a certain amount of share ownership. We provide a significant portion of our executives’ total direct compensation in pay that is at-risk and in the form of long-term equity-based compensation to reward performance over the short and long-term.

The Committee is committed to ensuring that the Program is oriented toward pay-for-performance, and designed to achieve the objectives of our compensation philosophy for our NEOs through the grant of short-and long-term incentive awards that align with Kontoor’s strategic vision and growth catalysts:

Our 2022 NEO total direct compensation is comprised of base salary, annual cash incentive compensation and long-term equity incentive compensation in the form of performance-based and time-based restricted stock units. Total direct compensation for NEOs is targeted at approximately median levels of compensation of comparable positions in publicly traded companies of our size and in our industry. Consistent with our pay-for-performance philosophy, actual earned compensation varies above or below the median level based on the degree to which specific performance goals are achieved, changes in our stock value over time and the individual performance of each NEO.

Kontoor’s philosophy is that a significant portion of each executive’s total direct compensation should be at-risk, meaning subject to fluctuation based on Kontoor’s financial and stock price performance. At-risk compensation is delivered through annual cash incentives and long-term equity compensation. The at-risk portion of target total direct compensation is greater for higher level positions, reflecting greater accountability for performance results. For our NEOs, 60% of the grant date fair value of our long-term incentive equity awards is at-risk and subject to financial performance objectives linked to our strategic priorities and shareholder returns.

The charts below depict approximate percentages for each element of target total direct compensation and demonstrate how compensation is significantly weighted towards variable compensation (annual cash incentives, performance-based restricted stock (PRSUs), and restricted stock units (RSUs)). The details of all executive officer compensation are provided in the "Components of Total Direct Compensation" section of this Proxy Statement.

CEO	OTHER NEOS

As indicated above, base salary represents a significantly smaller portion of overall compensation than variable compensation while a more meaningful position is allocated to annual cash incentive awards that focus executives on annual objectives supporting our long-term strategy. The largest portion of overall compensation for our executive officers is allocated to long-term incentives, supporting long-term value creation, and aligning the interests of our executive officers with those of our stockholders.

Compensation Program Elements

The following chart summarizes the primary components, objectives, and time frames of our compensation Program for fiscal 2022. We use a combination of cash and equity incentive awards to foster and reward performance in key areas over near-term and long-term timeframes. We discuss each component beginning on page 39.

In establishing the elements of executive compensation, the Committee, in consultation with its independent consultant, assesses whether the Program’s terms promote unnecessary risk-taking. In performing this assessment, the Committee reviews such compensation design elements as pay mix, performance metrics, performance goals and payout curves, payment timing and adjustments, equity incentives, stock ownership requirements, clawbacks and Kontoor’s trading policies. The Committee’s independent consultant considered risk and the potential for unintended consequences associated with incentive design as part of its ongoing service to the Committee. After performing this analysis, the Committee has concluded that the Program does not promote excessive or unnecessary risk-taking.

Governance of Our Compensation Programs

Our executive compensation practices promote good governance and mitigate excessive risk-taking. Below we highlight key compensation practices that we have implemented in our Program, to promote the interests of shareholders, and responsible compensation and governance practices:

Results of 2022 Shareholder Advisory Vote

We have adopted a policy of conducting an annual advisory vote on executive compensation. While this vote is not binding, our Board and the Committee value the opinions of our shareholders. The Committee strives to ensure our executive compensation aligns with the interests of our shareholders and adheres to our pay-for-performance philosophy.

At our 2022 annual meeting of shareholders, more than 97% of votes cast supported our executive compensation program. The Committee and management reviewed our shareholders’ affirmative 2022 Say-on-Pay vote and believe it to be a strong indication of support for our executive compensation program and practices and the related decision-making by the Committee. The Committee expects to continue to consider future annual Say-on-Pay votes and investor feedback when making decisions relating to our executive compensation program, policies, and practices. We take this vote seriously and regularly engage with our top shareholders. For additional detailed discussion regarding shareholder engagement, see the 2022 Engagement Summary on page 28.

Compensation Decision Making Process—Roles and Responsibilities

Committee Process for Determining Compensation

At the beginning of each fiscal year, the Committee reviews and approves the following elements of direct compensation to be provided to each of our NEOs:

In determining the amounts of compensation to be awarded to our NEOs, the Committee considers the company’s overall performance and competitive market data for our compensation peer group.

Determining Variable Compensation: Company performance is the key factor in determining variable compensation. The amount of any cash or performance-based equity incentive awards to be paid upon completion of the applicable performance period is determined based upon our achievement of short- and long-term financial goals set at the beginning of the fiscal year or performance period. However, the final cash incentive award payout also reflects a modifier for performance against our non-financial ESG objectives.

Determining CEO Compensation: The Committee assesses our Chief Executive Officer's performance and gathers input from the independent directors. In determining compensation for our Chief Executive Officer, the Committee meets in executive session and evaluates his performance based on his achievement of performance objectives that are established at the beginning of the fiscal year. The Committee also considers the Chief Executive Officer’s leadership contributions towards the company’s performance, including financial results, development and achievement of strategic objectives, progress in building capability among the executive leadership team, development of a succession plan for executive leadership and corporate governance leadership, as well as market data and analysis and recommendations provided by the Committee’s independent compensation consultant. The Committee determines the Chief Executive Officer’s compensation and then reviews his evaluation and compensation with the Board’s independent directors. The Chief Executive Officer does not propose his own compensation and is not present for discussions of his performance and compensation. The Lead Independent Director of the Board and the Chair of the Committee then present the Committee’s evaluation and compensation determination to the Chief Executive Officer.

Competitive Compensation Targets and the Role of the Industry Group- The Committee annually reviews the composition of Kontoor’s peer Industry Group, comprised of companies that are of comparable size, and meet a majority of several criteria, such as:

In July 2021, the Committee approved the following Industry Group constituent companies that were used to support senior executive pay decisions:

At the time the Industry Group was approved, Kontoor's revenues and market cap ranked between the 25^th percentile and 50^th percentile of the Industry Group companies.

In addition, we currently participate in and use several executive compensation surveys for NEO positions, including the Willis Towers Watson General Industry Executive Compensation Survey, the Equilar TrueView Survey, the Willis Towers Watson Retail Executive Survey, and the Aon Hewitt Total Compensation Measurement (TCM) Survey for Executives. The surveys provide general market data for relevant positions at companies with revenues and market capitalization similar to Kontoor in both the apparel/retail and general industry.

For fiscal 2022, Kontoor used the Industry Group data as a reference point, in combination with broader executive compensation surveys, to assess each NEO’s target total direct compensation (i.e., salary, annual cash incentive, and the grant date fair value of long-term incentives). Other factors were also considered, such as the scope of the executive’s duties, the executive’s experience in their role and the executive’s individual performance in their role and relative to their peers.

In July 2022, the Committee reviewed the composition of the Industry Group and, considering the recommendation from CAP, removed Tapestry, Inc. and Capri Holdings Limited from the Industry Group due to their relatively large market capitalization and focus on luxury goods and apparel, and added Canada Goose Holdings Inc. and The Buckle, Inc. due the comparable business models and to bring additional balance to the size of the organizations in the peer group.

Components of Total Direct Compensation

The components of the target total direct compensation opportunity set by the Committee annually for each executive are short-term cash compensation (annual base salary and target annual cash incentive award) and long-term equity incentive compensation (performance-based and time-based RSUs under the Stock Plan). The Committee sets each portion of compensation based on Kontoor’s overall philosophy that a significant portion of each executive’s total direct compensation should be at-risk, meaning subject to fluctuation based on Kontoor’s financial and stock price performance. The at-risk components of total compensation targets are annual cash incentives and long-term equity compensation.

The at-risk portion of target total compensation is greater for higher level positions, reflecting greater accountability for performance results. For our NEOs, 60% of our long-term incentive equity awards are at-risk and subject to financial performance objectives linked to our strategic priorities and shareholder returns.

The portions of fiscal 2022 target total direct compensation for each of the compensation elements for each of the NEOs were as follows:

1.    “Performance-Based Portion” includes Annual Cash Incentive Award and PRSUs.

2.    “At-Risk Portion” includes Annual Cash Incentive Award and Long-Term Equity Incentive Awards.

Base Salary

Base salary is designed to compensate senior executives for their level of responsibility, skills, experience and sustained individual contribution. Base salary is generally intended to be competitive as compared to salary levels for equivalent senior executive positions at companies in the Industry Group. The Committee believes that a competitive base salary provides the foundation for the total compensation package required to attract, retain, and motivate executives in alignment with Kontoor’s business strategies.

The Committee annually reviews individual salaries for the NEOs and intends to conduct a review at the time of a promotion or other change in responsibilities. Each NEO is evaluated annually based on several components: key job responsibilities, key accomplishments, performance trends and annual goals and objectives. The resulting performance evaluations are presented to the Committee and used in assessing salary and the other components of total compensation for each NEO.

In the fall of 2021, the Committee requested a competitive market assessment of Kontoor’s senior executive officer compensation levels from the Committee’s independent compensation consultant to assist with compensation planning for fiscal 2022. Accordingly, the Committee set fiscal 2022 base salaries for the NEOs based on (i) review of the competitive market salary range for the individual’s position, as described above, (ii) assessment of the individual’s experience, skill set and performance and (iii) Kontoor’s overall merit increase budget for salaries. Considering peer median salary levels for comparable roles, as well as changes to the roles and responsibilities to Co-Chief Operating Officer for Mr. Waldron and Mr. Waldeck, the following adjustments were approved to more closely position our executives to the median of the market when compared to similar executives at our peer Industry Group companies.

1.    The fiscal 2022 base salary adjustments were effective April 3, 2022.

2.    Mr. Doerr joined the Company effective May 31, 2022.

Annual Cash Incentives

Kontoor has an annual cash incentive program (the “AIP”). Certain Kontoor employees are eligible to participate in the AIP if selected by the Committee. The AIP focuses employee attention on Kontoor’s annual performance as measured by pre-established goals. The incentives are designed to motivate Kontoor’s employees by providing payments for achieving and exceeding goals related to Kontoor’s annual business plan and strategic priorities. AIP bonuses for the NEOs are paid according to the terms of Kontoor Brands 2019 Management Incentive Compensation Plan (“MIC Plan”).

Under the AIP, annual performance goals are set by the Committee. While it is the policy of the Committee to provide opportunities for annual incentive compensation for achievement of pre-established performance goals based primarily on financial measures, the Committee also retains discretion to pay bonuses apart from the AIP and the MIC Plan, reflecting its subjective assessment of the value of accomplishments of Kontoor’s senior executive officers which, in the Committee’s view, cannot always be anticipated in advance or reflected in such pre-established goals.

The Committee sets the targeted annual incentive opportunities under the AIP for executives after considering the Industry Group compensation data, the recommendations of the Chief Executive Officer (other than with respect to his compensation) and analysis by the Committee’s independent compensation consultant. The Committee also makes a general assessment as to the relative amounts of annual incentives for the NEOs to make sure they are, in the Committee’s judgment, fair and reasonable.

The following table summarizes the fiscal 2022 AIP targets for the NEOs.

1.     Mr. Doerr joined the Company effective May 31, 2022. As part of his offer to join Kontoor Brands, and to compensate for a forfeited annual incentive award opportunity from a previous employer, Mr. Doerr’s FY22 AIP award was not prorated for the number of months of service during the fiscal year.

Our Performance Goals—The structure of the AIP seeks to align Kontoor’s strategic growth plans and focus on the most impactful drivers of annual shareholder return. The Committee identified the following key metrics as the foundation for annual bonus payouts for the NEOs:

1.     Profit before taxes is our reported income before taxes for the year ended adjusted for restructuring and separation costs and other non-recurring expenses.

The Committee believes these three metrics are the most important performance outcomes to create shareholder value, while securing our future as a global leader in lifestyle apparel. In addition, these metrics align with those used by companies in our peer group to motivate management. Additionally, the 2022 AIP continued to include an ESG modifier designed to ensure Kontoor’s ongoing commitment to improve our sustainability practices and advance diversity, equity and inclusion in our workforce.

The AIP performance goals for 2022 were set in line with Kontoor’s strategy to deliver consistent, profitable growth that provides sustainable, long-term returns for Kontoor’s shareholders while considering the impact of external factors on short-term performance. The goals reflected a number of factors, including Kontoor’s strategic growth plan and value creation model and long-term commitments to our shareholders.

The Kontoor performance goals are measured at threshold, target and maximum amounts. Details of the performance goals and 2022 results are shown below:

Fiscal Year 2022 Kontoor AIP Performance Goals

1.     Performance achievement is interpolated between levels.

2.     Non-GAAP Financial Information: The financial information above has been presented on a GAAP basis and on an adjusted basis. These adjusted presentations are non-GAAP measures. See “Appendix A-Reconciliation of Adjusted Financial Measures” at the end of this document for a reconciliation of these adjusted measures.

3.     When assessing AIP performance, the Committee may adjust for certain preestablished items including the effects of impairment charges, restructuring charges, unplanned impact of trade tariffs, other extraordinary items, regulatory changes, non-recurring items and required changes in accounting policies, and differences between actual foreign exchange rates and the foreign exchange rates used in Kontoor’s 2022 financial plan. For 2022 the Committee began with GAAP revenue, adjusted gross margin, and adjusted profit before taxes as reported in our earnings release, and further adjusted the results for differences between actual foreign exchange rates and the foreign exchange rates used in Kontoor’s 2022 financial plan.

4.     Threshold performance for the Profit Before Taxes metric must be attained or exceeded in order for the ESG modifier to apply to award payouts.

Based on the performance achieved against the goals listed in the above, the payout percentage for the fiscal 2022 AIP was determined to be 67% prior to the application of the ESG modifier.

ESG Modifier—The 2022 AIP continues to leverage an ESG modifier designed to promote and reward Kontoor’s ongoing commitment to improve our sustainability practices and advance diversity, equity and inclusion in our workforce. The 2022 ESG modifier is comprised of four metrics that can each modify the AIP score by plus or minus 5%. A positive modifier applies if we achieve these goals, and a negative modifier applies if we fail to meet these measured goals. The total potential modifier impact is between -20 and +20%.

Regardless of performance on the ESG modifier the total payout under the AIP continues to be capped at 200% of the target AIP award opportunity. Additionally, the ESG modifier will not apply unless the Profit Before Taxes metric meets or exceeds a threshold level of performance (50%).

The 2022 ESG metrics were selected based on their alignment with Kontoor’s business plan and culture. The selected metrics do not constitute a comprehensive list of our ESG priorities, but rather represent a starting point for linking compensation to ESG in fiscal 2022. Performance relative to the selected metrics is determined by the Committee based on pre-established targets and the Committee’s assessment of performance relative to the selected metrics. The table below summarizes the goals and results of the 2022 ESG modifier.

2022 ESG Modifier Performance Goals

The Committee reviewed the Company’s achievement against the ESG modifier performance goals for fiscal 2022 and determined that an increase of 20% of target performance incentive payments should be applied based on the achievement of each component of the ESG goals. As a result, the Committee determined payout for fiscal 2022 performance at 87%. The payments made to the NEOs under the AIP for 2022 are set forth in the table below:

1.     As part of his offer to join Kontoor Brands, and to compensate for a forfeited annual incentive award opportunity from a previous employer, Mr. Doerr’s FY22 AIP award was not prorated for the number of months of service during the fiscal year.

In the future, the Committee may set targets related to not only Company financial performance, but also Company non-financial performance goals, as well as individual, regional, business unit and similar performance goals. The Committee continues to emphasize the importance of including an ESG modifier to the AIP and intends to continue to do so in 2023.

Long-Term Incentive Awards

We provide equity incentive awards to our NEOs to support retention and focus on building long-term stockholder value through their future performance. In fiscal 2022, we provided the following forms of long-term incentive compensation to our NEOs:

Performance-Based RSUs—PRSUs are designed to align the interests of Kontoor executives with those of shareholders by encouraging the executives to enhance the value of Kontoor common stock and improve the performance of selected metrics. Earned shares vest and are issued at the end of the three-year performance cycle and range from 0% for below threshold performance to 225% for maximum performance. PRSUs are granted annually in overlapping performance cycles and serve as a tool to align pay and company performance and to retain our NEOs. Dividend equivalents are paid only on the shares actually earned and paid out. At the payout date, the cash value of dividend equivalents is converted into additional shares.  Time-Based RSUs—Align pay and company performance as reflected in our stock price, encourage retention of our NEOs’ and promote continued holding of company stock by our senior executives. RSUs awarded in fiscal 2022 vest over a three-year period in 33% installments at each anniversary of the grant date. Dividend equivalents are paid only on the shares actually vested and paid out. At the payout date, the cash value of dividend equivalents is converted into additional shares.

Fiscal 2022-2024 Performance-Based RSU Plan Awards

1.     Adjusted earnings per share is our reported earnings per share for the year ended adjusted for restructuring and separation costs and other non-recurring expenses.

2.     rTSR Peer Group consists of the Apparel, Accessories, and Luxury Goods companies in our Industry Peer Group, as well as Apparel, Accessories, and Luxury Goods companies in the Russell 3000 Index: Capri Holdings Limited, Carter’s Inc., Columbia Sportswear Co., Fossil Group, Inc., G-III Apparel Group, Ltd., Gildan Activewear Inc., Hanesbrands Inc., Levi Strauss & Co., Lululemon Athletica Inc., Movado Group, Inc., Oxford Industries, Inc., PLBY Group, Inc., PVH Corp., Ralph Lauren Corporation, Superior Group of Companies, Inc., Tapestry, Inc., Under Armor, Inc., Vera Bradley, Inc., V.F. Corporation.

Performance-Based Restricted Stock Units (60% of Annual LTI Awards)—Under the Kontoor Brands Mid-Term Incentive Plan (as amended and restated, the “MTIP”), and the Stock Plan, executives are awarded performance-based RSUs (“PRSUs”) that are settled under the Stock Plan. At the beginning of each three-year performance period, the Committee establishes the performance measures to be used for that performance period, their weightings, and for the 2022 PRSUs, the levels of performance on those measures for the entire three-year performance period that will generate threshold, target, and maximum payouts. We decided to use cumulative three-year performance to determine the number of 2022 PRSUs earned, rather than, as in previous years, using three one-year performance periods, because we believed a cumulative three-year performance goal would better focus our NEOs on long-term performance goals. The number of performance shares delivered at the end of the three-year performance cycle may range from 0% for below threshold performance to 50% for threshold performance and up to 200% for maximum performance. When the performance threshold is met, payouts are determined on a linear interpolation basis for performance levels between threshold and target and between target and maximum.

The number of shares earned may be increased (not to exceed 225% of target) or decreased based on the achievement of rTSR performance against the companies in the rTSR Peer Group. At the end of the three-year performance period, the payout for each participant will be unaffected if Kontoor’s TSR is between the 25th and 75th percentile of TSR of the Peer Group companies over the period; increase in the amount of 25% of the participant’s target award if Kontoor’s TSR is greater than or equal to the 75th percentile of TSR of Peer Group companies over the period, or decrease in the amount of 25% of the participant’s target award if Kontoor’s TSR is equal to or below the 25th percentile of TSR of the Peer Group companies over the period.

Time-Based Restricted Stock Units (40% of Annual LTI Awards)—Executives are also awarded time-based restricted stock units (“RSUs”) under the Stock Plan. The RSUs consist of awards of the right to receive stock as determined by the Committee at the end of a specified restricted period, subject generally to continued employment. Dividend equivalents shall be paid or credited on RSUs, but any such dividend equivalents shall be subject to the same risk of forfeiture, other restrictions and deferral of settlement, if applicable, as apply to the underlying RSUs. The RSUs vest ratably in annual installments over three years.

The LTI target award amounts established by Kontoor for the NEOs for the 2022-2024 performance period are set forth below:

1.    Represents the PRSUs to be awarded at target performance

2.    The 2022 PRSU and RSU awards are set forth in the Grants of Plan-Based Awards table on page 53. The values attributable to RSUs, as set forth in this CD&A, were determined using an estimate of the 30-day average value of Kontoor’s common stock prior to the relevant grant date, which reflects the manner in which these awards were considered by the Committee when calculating the number of RSUs granted to each of our NEOs. This method differs from the grant date fair value, as determined for accounting purposes, which is the method used for purposes of reflecting the value of RSUs in the Stock Awards column of the Summary Compensation Table on page 51 and the Grant Date Fair Value of Stock and Option Awards column of the Grants of Plan-Based Awards Table on page 53.

3.    The amount listed reflects Mr. Doerr’s annual award prorated by 75% based on his hire date of May 31, 2022.

As part of his offer to join Kontoor Brands, and to compensate for forfeited equity awards from a previous employer, Mr. Doerr was provided a sign-on equity award in the amount of $1.3M at target performance.  This award was granted in 60% performance-based RSUs and 40% time-based RSUs.  50% of these awards will vest on the first anniversary date of the grant and 50% will vest on the second anniversary date. For the performance-based RSUs, 50% are associated with the fiscal year 2021-2023 LTI performance conditions and 50% are associated with the fiscal year 2022-2024 LTI performance conditions. 

Fiscal 2020-2022 Performance-Based RSU Performance Goals and Results

Due to the lack of historical performance data as a stand-alone company and the higher risk of goal obsolescence associated with the establishment of multi-year performance goals following the Spin-Off, as well as the ongoing business disruption and uncertainty caused by the COVID-19 pandemic, the three-year performance cycle for the PRSUs granted in 2020 consisted of three consecutive one-year performance periods, with payout based on the average of performance over the three periods.

For 2022, the Committee established the following goals for the third year of the fiscal 2020-2022 performance cycle:

1.    Performance achievement is interpolated between levels.

2.    Non-GAAP Financial Information: The financial information above includes non-GAAP measures. See “Appendix A-Reconciliation of Adjusted Financial Measures” at the end of this document for a reconciliation of these adjusted measures.

3.    When assessing MTIP performance, the Committee adjusts for certain preestablished items including the effects of impairment charges, restructuring charges, unplanned impact of trade tariffs, other extraordinary items, regulatory changes, non-recurring items and required changes in accounting policies, and differences between actual foreign exchange rates and the foreign exchange rates used in Kontoor’s 2022 financial plan. For 2022, the Committee began with adjusted EPS, as reported in our earnings release, and further adjusted the results for differences between actual foreign exchange rates and the foreign exchange rates used in Kontoor’s 2022 financial plan.

The final PRSU payout for the fiscal 2020-2022 grant is based on the average performance achievement for fiscal 2020, fiscal 2021, and fiscal 2022 and adjusted for the relative TSR modifier. Kontoor’s TSR for the December 29, 2019-December 31, 2022 period, as compared to the TSR generated by the Russell 3000 Index companies during such 36-month period, was between the median and the 75th percentile, resulting in no change to the final performance payout. Therefore, the Committee determined that the level of achievement for the PRSUs granted in fiscal 2020 was 107%, determined by averaging the achievement of the PRSU goals for fiscal 2020 (75%), 2021 (200%) and 2022 (46%) as outlined in the table below.

1.    As reported in Kontoor Brands 2022 Proxy Statement.

2.    For total shareholder return (TSR) calculation purposes, Kontoor' Beginning Stock Price for the 2020 PRSU Award is $35.22. As of December 31, 2022, its Ending Stock Price is $41.00. Stock prices are adjusted for dividends paid. This results in a TSR of 16.39% for Kontoor, which places Kontoor's absolute ranking among the peers at 1040 out of 2209, and its percentile ranking at the 52.94th percentile.

Retirement and Other Benefits

The Committee believes that retirement and other benefits and perquisites are important components of competitive compensation packages necessary to attract and retain qualified, high caliber senior executives. The Committee reviews the amounts of such benefits and perquisites periodically along with other compensation components. However, such benefits do not affect the decisions the Committee makes regarding other compensation components, which are generally structured to achieve Kontoor’s short-term and long-term financial, strategic and operational objectives.

Executive Perquisites

All senior executives reporting to the CEO, including our NEOs, are eligible for executive physical exams and financial counseling. The cost of such physical exams and/or financial counseling is imputed income to the executive, for which a tax gross-up is provided. The costs of financial counseling for each year are capped at $10,900 per executive, except for the first year that an executive participates in this perquisite, which is capped at $13,450. The decision to offer this potential reimbursement was authorized by the Committee to support the physical and financial well-being of our NEOs. In addition, in 2022 the CEO was eligible for personal use of corporate aircraft up to a limit on the total aggregate cost of all trips of $150,000. In reviewing the limit on the amount personal aircraft use provided to Mr. Baxter, the Committee considered industry specific data and general industry data, as well as the location of our corporate headquarters in Greensboro, North Carolina relative to larger airport hubs. Additionally, this perquisite was reviewed by the Committee in conjunction with the position Mr. Baxter’s total target compensation relative to the industry peer group median. For additional details, including associated amounts for each NEO calculated in accordance with the SEC’s requirements, refer to footnotes relating to “All Other Compensation” included with the Summary Compensation Table starting on page 51.

401k Plan

During 2022, Kontoor’s U.S.-based senior executives, including the NEOs were permitted to participate in the Kontoor Brands 401(k) Savings Plan (the “401k Plan”). The 401k Plan is a broad-based tax-qualified defined contribution plan available to most U.S.-based employees of Kontoor.

Nonqualified Deferred Compensation

Kontoor’s U.S.-based senior executives, including the NEOs, are permitted to defer compensation and receive a limited amount of matching credits under the Kontoor Brands Executive Deferred Savings Plans. Each Kontoor NEO participates in the Kontoor Brands Executive Deferred Savings Plan II, while only Mr. Waldron participates in the Kontoor Brands Executive Deferred Savings Plan. These plans enable executives to save for retirement on a tax-deferred basis. Nonqualified deferred compensation is discussed in further detail within the supporting tables under the caption “2022 Nonqualified Deferred Compensation.”

Pension Benefits

Kontoor does not maintain a defined benefit pension plan.

Employee Benefits

Kontoor provides a number of benefit plans to all eligible employees, including the NEOs. These benefits include programs such as medical, dental, vision, life insurance and short- and long-term disability coverage and a merchandise discount on most Kontoor products.

Change-in-Control Agreements

Kontoor has entered into Change-in-Control Agreements (the “Agreements”) with certain Kontoor senior executives, including the NEOs, that provide the executives with certain severance benefits in the event their employment with Kontoor is terminated under certain circumstances, as defined in the Agreements, subsequent to a change in control of Kontoor (i.e., “double-trigger” terminations). The Agreements are designed to reinforce and encourage the continued attention and dedication of such executives to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of Kontoor. Kontoor believes that change-in-control arrangements are an important component of a competitive compensation package necessary to attract and retain qualified senior executives. The Agreements are described and quantified below in the “Potential Payments Upon Change in Control, Retirement or Termination of Employment” section.

Under the terms of the Agreements, the executives would also be entitled to supplemental benefits, such as accelerated rights to exercise stock options, accelerated lapse of restrictions on restricted stock, restricted stock units and performance-based restricted stock units and continued life, medical and dental insurance, for specified periods after termination. Upon a change in control of Kontoor, Kontoor also will pay all reasonable legal fees and related expenses incurred by the executive as a result of the termination of his or her employment or in obtaining or enforcing any right or benefit provided by the Agreements.

Other Policies and Considerations

Retention and Special Awards

Retention equity awards may be made by the Committee from time to time to attract or retain key executives and are designed to promote long-term employment with Kontoor. Awards of restricted stock units for retention purposes under the Stock Plan are not part of regular annual compensation and are not treated as part of total direct compensation as discussed above. Other than the special sign-on compensation granted to Mr. Doerr in connection with his commencement of employment discussed above under “Long-Term Incentive Compensation Awards,” no special equity awards were granted to the NEOs in 2022.

Clawback Policy

The Committee has adopted a policy for the recovery of cash and equity incentive compensation from officers and certain other employees (these are generally referred to as “recoupment” or “clawback” policies). The policy provides that the Committee may require a covered employee to forfeit an equity-based incentive award or repay cash-based incentive compensation if Kontoor is required to prepare an accounting restatement as a result of the covered employee’s misconduct, if the covered employee engages in misconduct materially detrimental to Kontoor or if otherwise required by applicable laws, rules or regulations. The award agreements for performance-based restricted stock units, time-based restricted stock units, restricted stock awards and options under the Stock Plan include provisions respecting such recovery, as does the MIC Plan. We intend to adopt a clawback policy responsive to the recently published SEC and stock exchange listing requirements on compensation recovery within the timeframe mandated by those requirements.

Anti-Hedging and Anti-Pledging Policies

The Committee has adopted a policy prohibiting Kontoor directors, executive officers named in this Proxy Statement and certain other executives from engaging in transactions in derivative securities (including puts, calls, collars, forward contracts, equity swaps, exchange funds and the like) relating to Kontoor securities, transactions “hedging” the risk of ownership of Kontoor securities and short sales of Kontoor securities. In addition, these individuals are prohibited from holding Kontoor securities in margin accounts or pledging Kontoor securities as collateral for loans.

Tax and Accounting Implications

In designing our compensation and benefit programs, the Committee reviews and considers the accounting implications of its decisions, including the accounting treatment of awards paid to our executives.

Section 162(m) of the Code generally limits the deductibility by Kontoor for Federal income tax purposes of annual compensation in excess of $1 million paid to Kontoor’s covered employees, generally including the NEOs. The Committee has and will continue to review on a periodic basis the effect of Section 162(m) and may use its judgement to authorize payments that are in excess of the deduction limit when it believes such payments are appropriate.

Executive Stock Ownership Guidelines

It is Kontoor’s policy to strongly encourage stock ownership by Kontoor senior management and directors. This policy closely aligns the interests of management with those of shareholders. Under the policy, senior executives are subject to share ownership guidelines that require them to accumulate and then retain shares of Kontoor common stock having a market value ranging from one to six times annual base salary, depending upon the position. The Chief Executive Officer and the other currently serving named executive officers are required to accumulate Kontoor common stock having market values as follows:

Once achieved, the ownership of the guideline amount should be maintained for as long as the executive is subject to the guideline. Future declines in stock price will not affect compliance with the policy so long as the number of shares held at the time the required ownership level was achieved does not change.

Credit will be given for direct holdings by the executive or his or her spouse or dependent child, joint holdings by the executive and his or her spouse and/or dependent child and the 401(k) plan. Additionally, credit will be given to shares held in individual brokerage accounts or other custodial accounts or in trust for the benefit of the executive or his or her spouse and/or dependent children. No credit will be given for shares subject to unexercised options or SARs (whether vested or unvested) or shares subject to restricted stock, restricted stock units or similar awards that have not vested or been earned. Until a senior executive has met the targeted ownership level, he or she must retain shares equal to 50% of the after-exercise, after-tax value of all vested, earned or exercised equity awards settled in Kontoor common stock. As of December 31, 2022, all of the currently serving NEOs are in compliance with the retention requirements of the ownership guidelines and have either met or are making progress toward meeting the guidelines.

Talent and Compensation Committee Report

The Talent and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and the Committee’s independent compensation consultant. Based on the foregoing review and discussions, the Talent and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and Kontoor’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Kathleen S. Barclay, Chair

Robert M. Lynch

Ashley D. Goldsmith

Summary Compensation Table for Fiscal 2022

The following table summarizes the compensation of our named executive officers in fiscal 2022, 2021 and 2020.