NIKE (NKE) DEF 14ADefinitive proxy

By Order of the Board of Directors,

We are furnishing proxy materials to our shareholders primarily via the Internet, by mailing a Notice Regarding the Availability of Proxy Materials, or "Notice", instead of mailing printed copies of those materials to each shareholder. The Notice directs shareholders to a website where they can access our proxy materials, including our proxy statement and our annual report, and view instructions on how to vote online or by telephone. If you would prefer to receive a paper copy of our proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive access to these materials electronically unless you elect otherwise.

The enclosed proxy is solicited by the Board of Directors (the "Board") of NIKE, Inc. ("NIKE" or the "Company") for use at the annual meeting of shareholders to be held on October 6, 2021, and at any adjournment thereof (the "Annual Meeting"). Our principal executive offices are located at One Bowerman Drive, Beaverton, Oregon 97005-6453. This proxy statement is first being made available to shareholders on or about August 17, 2021. Shareholders may submit a proxy to vote at the Annual Meeting by following the instructions on the Notice, online or by telephone, or (if they have received paper copies of the proxy materials) by returning a proxy card.

The Company will bear the cost of soliciting proxies. In addition to soliciting proxies by mail, certain officers and employees of the Company, without extra compensation, may also solicit proxies personally or by telephone. Copies of proxy solicitation materials will be furnished to fiduciaries, custodians, and brokerage houses for forwarding to the beneficial owners of shares held in their names. We may retain Georgeson, Inc. to solicit proxies at a cost we anticipate will not exceed $17,500.

Shares that are properly voted online or by telephone or for which proxy cards are properly executed and received by the Company prior to the Annual Meeting will be voted in accordance with the instructions specified in such proxies. Where no instructions are given, shares will be voted "FOR" the election of each of the named nominees for director (Proposal 1), "FOR" the proposal regarding an advisory vote to approve executive compensation (Proposal 2), "FOR" the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm (Proposal 3), "AGAINST" the shareholder proposal regarding political contributions disclosure (Proposal 4), "AGAINST" the shareholder proposal regarding a human rights impact assessment (Proposal 5), "AGAINST" the shareholder proposal regarding supplemental pay equity disclosure (Proposal 6), and "AGAINST" the shareholder proposal regarding diversity and inclusion efforts reporting (Proposal 7).

A shareholder giving the enclosed proxy has the power to revoke it at any time before it is exercised by affirmatively electing to vote at the meeting or by delivering to Ms. Ann M. Miller, Vice President, Corporate Secretary, and Chief Ethics & Compliance Officer of NIKE, Inc., either an instrument of revocation or an executed proxy bearing a later date.

Due to the public health impact of the COVID pandemic and to support the well-being of our employees and shareholders, we have decided to hold this year’s Annual Meeting in a virtual meeting format only. Shareholders of record at the close of business on August 6, 2021 may attend the Annual Meeting, vote, and submit questions in advance of and during the meeting. To attend, vote at, and submit questions during the Annual Meeting, visit www.virtualshareholdermeeting.com/NKE2021 and enter the 16-digit control number included in your Notice, voting instructions form, or proxy card. Online access to the webcast will open approximately 15 minutes prior to the start of the Annual Meeting to allow time for you to log in and test the computer audio system. To submit questions in advance of the Annual Meeting, visit www.proxyvote.com before 11:59 P.M. Eastern Time on October 5, 2021 and enter the 16-digit control number included in your Notice, voting instructions form, or proxy card.

Holders of record of NIKE’s Class A Common Stock ("Class A Stock") and holders of record of NIKE’s Class B Common Stock ("Class B Stock" and together with the Class A Stock, the "Common Stock") at the close of business on August 6, 2021 will be entitled to vote at the Annual Meeting. On that date, 305,011,252 shares of Class A Stock and 1,278,086,797 shares of Class B Stock were issued and outstanding. Neither class of Common Stock has cumulative voting rights.

Each share of Class A Stock and each share of Class B Stock is entitled to one vote on every matter submitted to the applicable shareholders at the Annual Meeting.

A majority of the votes entitled to be cast on Proposal 1, the election of directors, by each of the Class A Stock and Class B Stock separately constitutes a quorum of Class A Stock and Class B Stock, respectively, for action on Proposal 1. The holders of Class A Stock and the holders of Class B Stock will vote separately on Proposal 1. Holders of Class B Stock are currently entitled to elect 25 percent of the Board, rounded up to the next whole number. Holders of Class A Stock are currently entitled to elect the remaining directors. Under this formula, holders of Class B Stock, voting separately, will elect three directors, and holders of Class A Stock, voting separately, will elect nine directors. Under Oregon law and our Bylaws, if a quorum of each class of Common Stock is present at the meeting, the three director nominees who receive the greatest number of votes cast by holders

of Class B Stock and the nine director nominees who receive the greatest number of votes cast by holders of Class A Stock will be elected directors.

A majority of the votes entitled to be cast on Proposals 2, 3, 4, 5, 6, and 7 by both Class A Stock and Class B Stock together constitutes a quorum for action on those proposals. Holders of Class A Stock and holders of Class B Stock will vote together as one class on Proposals 2, 3, 4, 5, 6, and 7. If a quorum is present at the meeting, Proposals 2, 3, 4, 5, 6, and 7 will be approved if the votes cast in favor of the proposal exceed the votes cast against the proposal.

Abstentions and broker non-votes are counted for purposes of determining whether a quorum exists. Abstentions and broker non-votes are not included as votes cast and will not affect the outcome of any of the proposals. Broker non-votes occur when a person holding shares in street name, such as through a brokerage firm, does not provide instructions as to how to vote those shares and the broker does not then vote those shares on the shareholder’s behalf.

Our Board is currently comprised of 12 individuals selected on the basis of numerous criteria, including experience and achievements, fields of significant knowledge, good character, sound judgment, and diversity. We view the effectiveness of our Board both through an individual and collective lens and believe that our Board is optimized to support and guide the Company.

Ms. Benko is a member of the Board of Directors of Prime Impact Capital. In addition to this public company board service, she also holds board positions at nonprofits Stanford Institute for Research in the Social Sciences, the International Women's Forum, American Corporate Partners, and the National Association of Corporate Directors. She is also on the board of WorkBoard, a privately-held company. Ms. Benko is chair of Harvard Business School/NC’s Advisory Council.

Ms. Comstock is a member of the Board of Directors of EVgo Inc. In addition to this public company board service, she is also a trustee of The National Geographic Society and Visiting Scholar at the Columbia University Center for Science and Society.

Mr. Connors is a member of the Board of Directors of privately held companies ICERTIS, Inc., Tempered Networks Inc., Symend Inc., KenSci Inc., Carbon Robotics, and Traceable, Inc., and is on the Board of the Washington Policy Center. He served on the Board of Directors of Splunk Inc. from April 2012 until May 2021.

Mr. Cook is a member of the Board of Directors of Apple. In addition to this public company board service, he is also a member of the Board of Directors of the National Football Foundation and Duke University Board of Trustees.

Mr. Donahoe is Chairman and a member of the Board of Directors of PayPal Holdings, Inc. In addition to this public company board service, he also serves on the Board of Trustees for The Bridgespan Group. Mr. Donahoe served on the Board of Directors of Intel Corporation from March 2009 to May 2017, and ServiceNow from March 2017 to June 2020.

Ms. Duckett is President and Chief Executive Officer of the Teachers Insurance and Annuity Association of America ("TIAA"), a leading provider of financial services in the academic, research, medical, cultural and governmental fields.

Ms. Duckett is chair of the Otis and Rosie Brown Foundation and a member of the Board of Directors of the Children’s Learning Center of Fairfax County and the Robert F. Kennedy Human Rights.

Mr. Knight serves on the Board of Directors of LAIKA. He is the son of NIKE’s co-founder, Mr. Philip Knight, who currently serves as Chairman Emeritus. In addition to his skills and qualifications described above, Mr. Travis Knight was selected to serve on the Board because he has a significant role in the management of the Class A Stock owned by Swoosh, LLC, strengthening the alignment of the Board with the interests of NIKE shareholders.

Mr. Parker is a member of the Board of Directors of The Walt Disney Company. In addition to his skills and qualifications described above, Mr. Parker was selected to serve on the Board because the experience gained while serving as the Company's Chief Executive Officer makes his position as Executive Chairman of the Board instrumental.

Mr. Rogers is a member of the Board of Directors of McDonald’s Corporation and The New York Times Company. In addition to this public company board service, he also serves as trustee of the University of Chicago, a member of the Board of Directors of the Robert F. Kennedy Human Rights, and the National Association of Basketball Coaches (NABC) Foundation, Inc., and a life trustee of the Chicago Symphony Orchestra. Mr. Rogers served on the Board of Directors of Exelon Corporation from October 2000 until April 2019.

Dr. Henry is a member of the Board of Directors of Citigroup Inc. In addition to this public company board service, he also serves on the Board of Directors of the National Bureau of Economic Research and the Economic Club of New York and serves on the Advisory Board for Protiviti. Dr. Henry is a member of the Council of Foreign Relations and the Economic Advisory Panel of the Federal Reserve Bank of New York. Dr. Henry served on the Board of Directors of General Electric from July 2016 until April 2018 and Kraft Foods Group, Inc. and its predecessor, Kraft Foods Inc., from May 2011 until July 2015.

Ms. Peluso is a member of the Board of Directors at the Ad Council and is on the Executive Council of the Board of Directors of the Association of National Advertisers. She is also a director of the nonprofit TechnoServe.

The Board of Directors takes an "evergreen" approach to Board refreshment, cultivating relationships with top talent on an ongoing basis. The Corporate Responsibility, Sustainability & Governance Committee identifies potential director candidates through a variety of means, including recommendations from members of the Corporate Responsibility, Sustainability & Governance Committee or the Board, suggestions from Company management, and shareholder recommendations. The committee may, in its discretion, engage director search firms to identify candidates. Shareholders may recommend director candidates for consideration by the Corporate Responsibility, Sustainability & Governance Committee by submitting a written recommendation to the committee, c/o Ann M. Miller, Vice President, Corporate Secretary, and Chief Ethics & Compliance Officer, NIKE, Inc., One Bowerman Drive, Beaverton, Oregon 97005-6453. The recommendation should include the candidate’s name, age, qualifications (including principal occupation and employment history), and written consent to be named as a nominee in the Company’s proxy statement and to serve as a director, if elected.

The Board of Directors has adopted qualification standards for the selection of non-management nominees for director, which can be found at our corporate website: http://investors.nike.com. As provided in these standards and the Company’s corporate governance guidelines, nominees for director are selected on the basis of, among other things, distinguished business experience or other non-business achievements; education; significant knowledge of international business, finance, marketing, technology, human resources, diversity & inclusion, law, or other fields which are complementary to, and balance the knowledge of, other Board members; a desire to represent the diverse interests of all stakeholders; independence; good character; ethics; sound judgment; diversity; and ability to devote substantial time to discharge Board responsibilities.

The Corporate Responsibility, Sustainability & Governance Committee identifies qualified potential candidates without regard to their age, gender, race, national origin, sexual orientation, or religion. While the Board has no policy regarding Board member diversity, the Corporate Responsibility, Sustainability & Governance Committee considers and discusses diversity in selecting nominees for director and in the re-nomination of an incumbent director. The committee views diversity broadly to include, among other things, differences in backgrounds, qualifications, experiences, viewpoint, geographic location, education, skills and expertise (including financial, accounting, compliance, corporate social responsibility, public policy, cybersecurity, or other expertise relevant to service on the Board), professional and industry experience, and personal characteristics (including gender, ethnicity/race, and sexual orientation). The Board believes that a variety and balance of perspectives on the Board results in more thoughtful and robust deliberations, and ultimately, better decisions.

In considering the re-nomination of an incumbent director, the Corporate Responsibility, Sustainability & Governance Committee reviews the director’s overall service to the Company during his or her term, including the number of meetings attended, level of participation, and quality of performance, as well as any special skills, experience, or diversity that such director brings to the Board. All potential new director candidates, whether recommended by shareholders or identified by other means, are initially screened by the Chair of the Corporate Responsibility, Sustainability & Governance Committee, who may seek additional information about the background and qualifications of the candidate, and who may determine that a candidate does not have qualifications that merit further consideration by the full committee. With respect to new director candidates who pass the initial screening, the Corporate Responsibility, Sustainability & Governance Committee meets to discuss and consider each candidate’s qualifications and potential contributions to the Board, and determines by majority vote whether to recommend such candidates to the Board. The final decision to either appoint a candidate to fill a vacancy between annual meetings or include a candidate on the slate of nominees proposed at an annual meeting is made by the Board.

It is the general policy of the Board that directors will not stand for re‑election after reaching the age of 72.

Pursuant to New York Stock Exchange ("NYSE") listing rules, in order for a director to qualify as "independent", the Board of Directors must affirmatively determine that the director has no material relationship with the Company that would impair the director’s independence. The Board affirmatively determined that commercial or charitable relationships below the following thresholds will not be considered material relationships that impair a director’s independence: (1) if a NIKE director or immediate family member is an executive officer of another company that does business with NIKE and the annual sales to, or purchases from, NIKE are less than one percent of the annual revenues of the other company; and (2) if a NIKE director or immediate family member serves as an officer, director, or trustee of a charitable organization, and NIKE’s contributions to the organization are less than one percent of that organization’s total annual charitable receipts. After applying this categorical standard and the applicable NYSE independence standards, the Board has determined that the following directors who served during fiscal 2021—Cathleen A. Benko, Elizabeth J. Comstock, John G. Connors, Timothy D. Cook, Thasunda B. Duckett, Alan B. Graf, Jr., Peter B. Henry, Michelle A. Peluso, and John W. Rogers, Jr.—have no material relationship with the Company and, therefore, are independent. Messrs. John J. Donahoe II, Travis A. Knight, and Mark G. Parker were not independent pursuant to NYSE rules. Messrs. Donahoe and Parker were not independent pursuant to NYSE rules because they were employed by the Company during fiscal 2021. Mr. Knight was not independent pursuant to NYSE rules because he is the son of NIKE’s co-founder and former Chairman

of the Board, Mr. Philip H. Knight, who received compensation in excess of the threshold set forth in applicable NYSE rules (the "NYSE threshold") for his position as Chairman Emeritus. The compensation paid to Mr. Philip H. Knight is described in the section below titled "Stock Ownership Information—Transactions with Related Persons".

The Board is currently composed of nine independent directors and three directors who are not independent under the NYSE listing rules. During fiscal 2021, there were five meetings of the Board and all of our directors attended at least 75 percent of the total number of meetings of the Board and committees on which he or she served. The Company encourages all directors to attend each annual meeting of shareholders, and all directors attended the 2020 annual meeting.

NIKE’s governing documents provide the Board with flexibility to select the appropriate leadership structure of the Company. In determining the leadership structure, the Board considers many factors, including the specific needs of the business, fulfilling the duties of the Board, and the best interests of the Company’s shareholders. Effective January 2020, the Company separated the position of Chairman of the Board from the position of President and CEO, although this is not a permanent policy of the Board. The Executive Chairman, Mr. Mark G. Parker, presides over meetings of the Board of Directors and shareholders. The President and CEO, Mr. John J. Donahoe II, is in charge of the general supervision, direction, and control of the business and affairs of the Company, subject to the overall direction and supervision of the Board and its committees.

Given the particular experience and tenure of Messrs. Parker and Donahoe, the Board believes this leadership structure is appropriate for the Company because it separates the leadership of the Board from the duties of day-to-day leadership of the Company. This structure permits Mr. Donahoe to primarily focus his time and attention on the business, while Mr. Parker directs his attention to the broad strategic issues considered by the Board of Directors. This structure works particularly well given the talent, experience and professional relationship of Messrs. Donahoe and Parker established during Mr. Donahoe's service on the Board beginning in 2014.

In June 2019, the Board re-appointed Mr. Tim Cook to serve as Lead Independent Director for a term of three years. Mr. Cook continues to serve as Lead Independent Director of the Company working in collaboration with Messrs. Parker and Donahoe.

The chairs of Board committees also play an active role in the leadership structure of the Board. The Corporate Responsibility, Sustainability & Governance Committee and the Board endeavor to select independent committee chairs who will provide strong leadership to guide the important work of the Board committees. Committee chairs work with the Company’s senior executives to ensure the committees are discussing the key strategic risks and opportunities of the Company. In the absence of the Lead Independent Director, a presiding director is appointed to chair executive sessions of non-management directors (consisting of all directors other than Messrs. Parker and Donahoe). The position of presiding director is rotated among the chairs of the various Board committees, other than the Executive Committee. Executive sessions are regularly scheduled and held at least once each year.

Mr. Philip H. Knight, co-founder and former Chairman of the Company, serves as Chairman Emeritus, with a standing invitation to attend meetings of the Board and its committees as a non-voting observer. The Board believes that it benefits from the valuable experience and insights of the Company’s co-founder and former Chairman of the Board.

For all of these reasons, the Board believes this leadership structure is optimal.

The Board’s current standing committees are an Audit & Finance Committee; a Compensation Committee; a Corporate Responsibility, Sustainability & Governance Committee; and an Executive Committee. The Board may appoint other committees from time to time. Each standing committee has a written charter and all such charters, as well as the Company’s corporate governance guidelines, are available at the Company’s corporate website, http://investors.nike.com, and will be provided in print to any shareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453.

The NIKE Code of Conduct is available at the Company’s corporate website, http://investors.nike.com, and will be provided in print without charge to any shareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453. The Code of Conduct applies to all of the Company’s employees and directors, including our CEO and all other executive officers. The Code of Conduct provides that any waiver of the Code of Conduct for executive officers or directors may be made only by the Board or a committee of the Board. Any such waiver will be publicly disclosed, when required by law. The Company plans to disclose amendments to, and waivers from, the Code of Conduct on the Company’s corporate website: http://investors.nike.com.

Under our director compensation program in effect for fiscal 2021, non-employee directors receive:

Neither Mr. Donahoe nor Mr. Parker received any additional compensation for services provided as a director in fiscal 2021.

NIKE maintains stock ownership guidelines for all non-employee directors. Under these guidelines, directors are required to hold NIKE stock valued at five times their annual cash retainer. New directors are required to attain these ownership levels within five years of their election to the Board. Each of our directors has met or is on track to meet the specified ownership level.

Under our Deferred Compensation Plan, non-employee directors may elect in advance to defer up to 100 percent of the director fees paid by the Company. For a description of the plan, see the section below titled "Compensation Discussion and Analysis—Executive Compensation Tables—Non-Qualified Deferred Compensation in Fiscal 2021—Non-Qualified Deferred Compensation Plans".

This Compensation Discussion and Analysis ("CD&A") describes our compensation program, philosophy, decisions, and process for the compensation of our "Named Executive Officers" (also referred to as our "NEOs") for fiscal 2021:

Through this engagement, we learned that shareholders were largely supportive of the design of the underlying executive compensation program for fiscal 2020. However, shareholders expressed support for additional disclosure regarding the COVID-related adjustments made to payouts in order to more meaningfully assess fiscal 2020 compensation. During these conversations, we shared additional detail regarding the Compensation Committee's approach to determining fiscal 2020 executive compensation, including the magnitude that the onset of the pandemic had on the Company's fourth quarter, which began in March 2020, and the committee's desire to appropriately compensate the management team for strong performance in the first three quarters and the resilience with which they operated during this unprecedented time while maintaining our pay-for-performance philosophy. Shareholders appreciated this additional information regarding COVID-related adjustments for fiscal 2020 and expressed no ongoing concerns regarding these decisions.

These engagements also provided an opportunity to discuss considerations the Compensation Committee took into account in designing the executive compensation program for fiscal 2021, which began on June 1, 2020 in the midst of an unprecedented economic and social environment. Shareholders were broadly supportive of the fiscal 2021 program design and provided useful feedback regarding proxy disclosure they would find helpful to inform their analysis of our program, which we have integrated in the following discussion of our fiscal 2021 executive compensation program. Shareholders also shared feedback regarding our executive compensation program structure more broadly, including a preference for stock-based long-term incentive compensation and general considerations for using retention and sign-on awards. We are incorporating this feedback, and are replacing cash long-term incentive awards with performance-based restricted stock units ("PSUs") beginning in fiscal 2022, as described in the section below titled "Compensation of our Named Executive Officers—Fiscal 2022 Long-Term Incentive Compensation Changes".

During these engagements we also had an opportunity to discuss our strategic transformation, driven by our Consumer Direct Acceleration strategy which is focused on creating more premium, consistent, and seamless consumer experiences while operating under a simple consumer construct. As part of this conversation, shareholders provided feedback related to Mr. Donahoe's fiscal 2020 sign-on awards, with some expressing concern over the quantum of the awards. We explained that Mr. Donahoe forfeited approximately $79 million in incentive awards upon resigning as the President and CEO at ServiceNow in 2019 to become NIKE's CEO, which our shareholders noted mitigated their concerns around these awards. Shareholders also expressed a desire for disclosure explaining how a successful CEO transition would be measured with respect to Messrs. Donahoe's and Parker's transition-period cash incentive awards. We have included this disclosure, including key quantitative and qualitative achievements, in the section below titled "Compensation of our Named Executive Officers—Fiscal 2020 Leadership Transition Awards—Transition-Period Cash Incentive Awards". Finally, as a part of this discussion, we discussed with shareholders the restricted stock unit ("RSU") awards which were approved during fiscal 2020 and granted to the management team on June 1, 2020 in order to support continuity of leadership during a key transitional period for the Company that includes our CEO succession and the launch of our Consumer Direct Acceleration strategy. Shareholders broadly understood the rationale behind the RSU awards and were supportive of granting them (as initially disclosed in the 2020 proxy statement, and discussed in the section below titled "Compensation of our Named Executive Officers—Fiscal 2020 Leadership Transition Awards—Stock-Based Transition Awards") given the extensive transformation NIKE is undergoing and the importance of leadership continuity.

The Board and Compensation Committee greatly values these engagements with shareholders and is committed to maintaining ongoing dialogue and incorporating shareholder feedback into the design of the executive compensation program going forward.

The following table summarizes feedback themes we heard from shareholders and actions taken to be responsive:

NIKE has been, and continues to be, committed to supporting our employees all over the world during the COVID pandemic. For example, throughout the pandemic we provided pay continuity for our retail, Air MI manufacturing, and distribution center employees—employees who were particularly affected by closures and reduced hours in fiscal 2020 and fiscal 2021. To support employee well-being, we expanded our mental health offerings and our leave policies, including providing additional paid leave for employees with COVID-related physical or mental health impacts or who need time off to care for a household family member. We have also taken precautions to provide a safe working environment, encouraging and supporting work-from-home whenever possible and instituting protective policies and procedures for when remote work is not possible.

NIKE's annual direct compensation for the Named Executive Officers generally consists of the following elements:

Beginning in fiscal 2022, the cash component of our long-term incentive awards will be replaced with PSUs, as discussed in the section below titled "Compensation of our Named Executive Officers—Fiscal 2022 Long-Term Incentive Compensation Changes".

Our executive compensation program is designed to attract and retain top-tier talent in a competitive marketplace and to maximize shareholder value by rewarding NEOs for strong Company performance. The program generally consists of annual direct compensation, with a focus on incentive compensation, and competitive benefits that are generally consistent with the benefits offered to our other U.S.-based employees. In connection with the senior leadership changes that occurred in late fiscal 2020, and to support continuity of our highly recruitable leadership team during a key period, in fiscal 2020 the Compensation Committee also approved special transition-related awards to be paid or granted during fiscal 2021, as previously described in our 2020 proxy statement and further described in the section below titled "Fiscal 2020 Leadership Transitions".

Our philosophy is to "pay for performance" in order to drive business results and maximize shareholder value. As a result, executive compensation is highly incentive-based and weighted towards long-term awards to emphasize long-term performance and support retention. For fiscal 2021, to balance continued adherence to our "pay for performance" philosophy with the need for flexibility to respond to the ongoing COVID pandemic, the Compensation Committee determined to grant annual cash incentive awards in the form of annual bonuses based on objective financial metrics targeted at driving our recovery and emergence from the impacts of COVID. These bonuses are described in the section below titled "Annual Cash Incentive".

Our executive compensation program balances performance incentives, including by using different performance metrics and performance periods, and through a mixture of cash- and stock-based compensation elements. Stock-based compensation is also structured to pay for performance and is generally delivered 60% in the form of stock options and 40% in the form of RSUs. The following charts illustrate the mix of components that make up fiscal 2021 target annual direct compensation for our CEO.

Base salary is a fixed element of compensation that serves to attract and retain top-tier talent. The Compensation Committee generally reviews and determines base salaries for our Named Executive Officers in June, with any adjustments becoming effective in August of the same year.

In response to the COVID pandemic, the Company committed to ensuring pay continuity for our retail, NIKE Air MI manufacturing, and distribution center employees—employees who were particularly affected by closures and reduced hours in fiscal 2020 and fiscal 2021. To support our pay continuity commitment, the Company generally kept fiscal 2021 base salaries flat across all employee levels, including our NEOs.

Historically, we have paid annual cash incentive awards to the Named Executive Officers under our Executive Performance Sharing Plan ("PSP"), with payouts determined based on Company earnings before interest and taxes (as adjusted to exclude the impact of certain non-operational events, "Adjusted EBIT") measured over the entire fiscal year. To align employees and reinforce our one-team culture, the same compensation philosophy, structure, and metrics underlying our PSP awards were also applied to all other global employees eligible to participate in the Company's success through incentive bonuses. The Compensation Committee generally set the PSP metric, performance goal, and target awards for our Named Executive Officers at the start of the fiscal year in June, and would determine the payout following completion of the fiscal year.

In June 2020, the disruption and uncertainty caused by the ongoing COVID pandemic, including uncertainty regarding the pace of marketplace recovery and quarantine measures throughout the different geographic regions in which we operate, made it very difficult to set an appropriate year-long Adjusted EBIT goal. Furthermore, recognizing the dynamic nature of the pandemic, the Compensation Committee determined that an annual incentive award structure that provided more flexibility than the PSP would better enable the committee to challenge and motivate executives as the Company moved from the volatility created by the COVID pandemic through a period of recovery and into a period of continued growth. Therefore, the Compensation Committee decided to grant fiscal 2021 annual cash incentive awards in the form of annual bonuses rather than PSP awards. Staying true to our "pay for performance" philosophy, the Compensation Committee structured these annual bonuses to be earned between 0% and 150% of target based on achievement of objective financial metrics set for each of two equally-weighted, six-month performance periods, with the final payout to be determined by the committee taking into consideration the Company's fiscal 2021 revenue performance. As described in further detail below, the financial metrics for each performance period were selected to support our COVID response and strategic priorities during that period.

In setting fiscal 2021 annual bonus target awards, the Compensation Committee decreased Mr. Parker's award from 200% of base salary to 100% to reflect the change in his responsibilities following his appointment as Executive Chairman. The Compensation Committee decided not to increase target awards for any of the other Named Executive Officers due to the continuing uncertainty and financial impact of COVID. Therefore, the fiscal 2021 annual bonus target awards were:

For the first six-month performance period ("1H"), which covered June 2020 through November 2020, three metrics and corresponding performance goals were established in June 2020 with a focus on driving our strategic priorities and managing the impact of the pandemic. The 1H metrics consisted of: (1) revenue generated through sales on digital platforms ("Digital Revenue") of Nike Brand and Jordan Brand products, to support digital growth in connection with our Consumer Direct Acceleration strategy; (2) selling, general, and administrative expenses ("SG&A"), to encourage tight management of discretionary expenses; and (3) units of Nike Brand and Jordan Brand product ("Inventory Units") at Company distribution centers or Company-owned stores, or in transit to Company distribution centers, to incentivize strategic management of excess inventory accumulated as a result of the COVID pandemic.

The performance goal for each 1H metric was set as a range, rather than as a discrete value, in light of forecasting uncertainties caused by COVID. Each performance goal range was designed to be challenging in order to drive performance without encouraging excessive risk-taking. Performance goals were set taking into consideration many factors, including prior-year results and the complex and volatile market conditions resulting from the COVID pandemic. The Digital Revenue performance goal range represented an increase of 28% to 42% compared to actual results during the same period of fiscal 2020 ("Prior Year 1H"); the SG&A performance goal represented a decrease in spending of 6% to 12% compared to Prior Year 1H; and the Inventory Units

performance goal range represented a decrease in inventory levels of 1% to 15% compared to Prior Year 1H, reflecting our drive to quickly clear excess inventory accumulated due to COVID and return to healthy inventory levels. Earnout levels were established based on the number of 1H performance goals achieved or exceeded. Certain achievements corresponded to an earnout range rather than a fixed earnout percentage, with the final 1H earnout to be determined within the designated range, if applicable, based on the quality of the Company's 1H performance. The 1H performance goals and earnout levels were as follows:

The Compensation Committee maintained the same nimble and targeted approach to goal-setting for the second six-month performance period ("2H"), which covered December 2020 through May 2021. 2H metrics, and corresponding performance goals, were established in November 2020 with a focus on driving strategic priorities and sustainable profitability and continuing to manage the pandemic's impact. We eliminated Inventory Units as a 2H metric due to 1H improvements in inventory levels. We also re-introduced our historical Adjusted EBIT metric, because EBIT is a key measure used internally to manage financial performance and drive operational performance, and adjusting EBIT to exclude the impact of certain non-operational events helps to drive and reward organic growth. As a result, the 2H metrics consisted of: (1) Digital Revenue of Nike Brand, Jordan Brand, and Converse products, to support continued digital growth in connection with our ongoing Consumer Direct Acceleration strategy; (2) SG&A, to encourage continued tight management of discretionary expenses; and (3) Adjusted EBIT, to drive sustainable, profitable growth.

For 1H, our actual Digital Revenue was $4.3 billion, SG&A (adjusted to exclude the impact of one-time charges related to acquisitions, divestitures, and restructurings, and the impact of unanticipated foreign exchange volatility) was $6.0 billion, and Inventory Units were 399 million units. This resulted in the Company achieving target performance for two of the 1H metrics and above-target performance for the third 1H metric, which corresponded to a 1H earnout range of 100% – 150%. The Compensation Committee then considered the quality of the Company's 1H performance, specifically: Digital Revenue results exceeded 125% of the upper limit of the performance goal range, reflecting strong increases in digital sales across all geographies; SG&A results equaled the upper limit of the performance goal range even as we continued investing in digital capabilities to support our Consumer Direct Acceleration strategy; and Company 1H revenues exceeded internal budget. Based on these factors, the committee set the 1H earnout at 120%.

For 2H, our actual Digital Revenue was $4.8 billion, SG&A (adjusted to exclude the impact of one-time charges related to acquisitions, divestitures, and restructurings, and the impact of unanticipated foreign exchange volatility) was $6.6 billion, and Adjusted EBIT (adjusted to exclude the impact of one-time charges related to acquisitions, divestitures, and restructurings, and the impact of unanticipated foreign exchange volatility) was $3.6 billion. This resulted in the Company achieving target performance for two of the 2H metrics and above-target performance for the third 2H metric, which corresponded to a 2H earnout range of 100% – 150%. The Compensation Committee then considered the quality of the Company's 2H performance, specifically: Digital Revenue results were at the upper limit of the performance goal range, with continued momentum across all geographies; SG&A results were at the middle of the performance goal range, reflecting both tight management of discretionary costs and prioritization of strategic investments; and Adjusted EBIT results were 120% of the upper limit of the performance goal range due to strong revenue growth and margin expansion. Based on these factors, the committee set the 2H earnout at 120%.

The two equally-weighted performance period earnouts were averaged together to calculate a fiscal 2021 earnout of 120%. The Compensation Committee then considered the Company's strong fiscal 2021 revenue performance of $44.5 billion, which exceeded budget by approximately 4%. In support of our one-team culture and historical practice of aligning annual incentive payouts for all eligible employees, the committee also considered that the payout for the fiscal 2021 annual bonus for employees below the executive officer level—which used a similar structure, metrics, and performance goals—was 120%. Based on these factors, and as illustrated in the graphic below, the Compensation Committee determined a fiscal 2021 annual cash incentive payout of 120% for each of the NEOs.

In June 2021, the Compensation Committee decided to begin transitioning annual cash incentive awards back to our historical structure. Accordingly, fiscal 2022 awards to the Named Executive Officers will be paid under the PSP. They will be earned between 0% and 150% of target based on achievement of multiple, equally-weighted metrics selected to support our strategic priorities and drive sustainable, profitable growth. The Compensation Committee set one-year target, threshold, and maximum performance goals for each metric, and the earnout for achievement between these goals will be calculated by linear interpolation. This structure, including the metrics and goals, is consistent with the structure underlying fiscal 2022 annual incentive bonuses for eligible employees below the executive officer level, reinforcing our one-team culture.

Long-term cash incentive awards are paid to the Named Executive Officers under our Long-Term Incentive Plan ("LTIP"). Like our annual cash incentive awards, LTIP awards reflect our "pay for performance" philosophy: they are earned between 0% and 200% of target based on Company performance during a three-year performance period. The Compensation Committee retains discretion to adjust LTIP award payouts based on individual or Company performance.

At the beginning of each fiscal year, the Compensation Committee sets target award amounts for our executive officers, selects the LTIP award metric, and determines the performance goal. The Compensation Committee then determines the applicable payout percentage at the end of the three-year performance period.

In June 2020, the Compensation Committee selected as the metric for the fiscal 2021 – 2023 LTIP awards the Company's total shareholder return ("Absolute TSR") for fiscal 2021 – 2023 relative to total shareholder return over the same period for the other companies in the S&P 500 ("Relative TSR"), as shown in the table below:

LTIP awards will pay out at 100% of target if the Company's Relative TSR for the performance period is at the 55th percentile, and will pay out at 0% if the Company's Relative TSR for the performance period is below the 25th percentile. LTIP award payout based on Relative TSR performance is subject to a cap of 100% of target if Absolute TSR for the performance period is negative. The Compensation Committee selected three-year Relative TSR as the performance metric because it is an objective and transparent measure of long-term shareholder value, especially in the context of a volatile market. Furthermore, the cap on payout if Absolute TSR is negative incentivizes NEOs to pursue long-term growth.

For fiscal 2021, the Named Executive Officers were eligible to receive payout of their fiscal 2019 – 2021 LTIP awards. In June 2018, the Compensation Committee set three-year cumulative performance targets for two equally-weighted metrics: revenues and diluted earnings per share ("EPS"), in each case excluding generally the effect of acquisitions, divestitures, accounting changes, changes in tax law, and other extraordinary, unusual, or infrequently occurring items (respectively, "Adjusted Revenue" and "Adjusted EPS"). In June 2021, the Compensation Committee determined that a payout of 90% under these awards was earned by each NEO based on the average of the cumulative Adjusted Revenue and cumulative Adjusted EPS achievements as shown in the table below.

(Dollars in millions, except per share data)

Stock-based incentive awards reward long-term Company performance and align executives' interests with those of our shareholders. Such awards form the largest component of our Named Executive Officers' annual direct compensation, constituting 49% of fiscal 2021 total target compensation for Mr. Donahoe (51% on average for our other NEOs) and 64% of fiscal 2021 total long-term incentive compensation for Mr. Donahoe (81% on average for our other NEOs). We grant stock-based incentive awards under our Stock Incentive Plan in the form of stock options and RSUs. The Compensation Committee determines awards as dollar values, and generally grants the stock portion of incentive compensation 60% in the form of stock options and 40% in the form of RSUs.

In response to the continuing uncertainty and financial impact of COVID, the Compensation Committee determined not to increase the value of fiscal 2021 stock-based incentive awards from fiscal 2020 values for any executive officer cohort. As a result, the award values for each of Messrs. Donahoe and Campion remained unchanged from fiscal 2020. Consistent with our cohort approach to compensation, Mr. Friend and Ms. O'Neill each received stock-based incentive awards equal in value to Mr. Campion's awards. While the cohort award value remained flat year-over-year, this represented an increase for each of Mr. Friend and Ms. O'Neill, whose fiscal 2020 award values were set by the Company before they became executive officers in April 2020. Finally, in light of the change in Mr. Parker's responsibilities following his appointment as Executive Chairman and the retention strength of his outstanding stock awards, the Compensation Committee determined to eliminate the RSU component of Mr. Parker's fiscal 2021 stock-based incentive award and maintain the stock option component at the same value as his fiscal 2020 award. Therefore, the fiscal 2021 stock-based incentive awards for our NEOs were:

Stock options align our Named Executive Officers' interests with those of our shareholders by rewarding the achievement of upside potential, and they reflect our "pay for performance" philosophy because they provide value to the NEOs only if the price of our Class B Stock appreciates.

The number of stock options granted to each NEO for fiscal 2021 was determined by dividing the NEO's award value by the Black-Scholes value (calculated based on a twenty-day average stock price and the available five-year and seven-year interest rates) of a stock option on the date of grant. Options granted to the Named Executive Officers vest in equal annual installments over four years and have an exercise price equal to the closing market price of our stock on the date of grant. To promote retention, stock options generally provide that if a Named Executive Officer leaves the Company, they forfeit any unvested stock options. Forfeiture is subject to a limited retirement provision designed to encourage executives to delay retirement and partial accelerated vesting upon termination of employment in connection with a divestiture or reduction in force (each as described in the section below titled "Executive Compensation Tables—Potential Payments Upon Termination or Change-in-Control").

RSUs align our Named Executive Officers' interests with those of our shareholders by rewarding the achievement of long-term value creation, and they reflect our "pay for performance" philosophy because their value is directly tied to our Class B Stock price.

The number of RSUs granted to each NEO for fiscal 2021 was determined by dividing the NEO's award value by the average closing price of our Class B Stock for the 20-trading day period ending on the date of grant. RSUs granted to the Named Executive Officers as part of our stock-based incentive award vest in equal annual installments over three years and accumulate dividend equivalents that are paid only upon vesting. To promote retention, RSU awards generally provide that any unvested RSUs are forfeited if the Named Executive Officer leaves the Company. Forfeiture is subject to partial accelerated vesting upon termination of employment in connection with a divestiture or reduction in force (as described in the section below titled "Executive Compensation Tables—Potential Payments Upon Termination or Change-in-Control").

Historically, we have structured our long-term incentive compensation to include a mix of cash-based awards (consisting of awards under our LTIP) and stock-based awards (consisting of stock options and RSUs under our Stock Incentive Plan). After considering shareholder feedback, including feedback received during our extensive shareholder engagement, and evolving market practice, the Compensation Committee determined to replace cash-based long-term incentive awards with performance-based restricted stock units (“PSUs”) beginning in fiscal 2022. Like the historical cash LTIP awards, PSUs will be earned between 0% and 200% of target based on Company performance during a three-year performance period. The fiscal 2022 – 2024 PSU awards also contain a "People & Planet" modifier, which is the same as the 2021 – 2023 LTIP award modifier except that it permits the PSU award earnout to be either increased or decreased by up to 20 percentage points. The Compensation Committee believes that this shift to PSUs reflects our "pay for performance" philosophy, because the number of PSUs earned will be determined by long-term Company performance and the value of the awards upon vesting will be directly tied to our Class B Stock price.

During fiscal 2020, we made changes to our executive team which impacted each of our fiscal 2021 Named Executive Officers. These changes included our CEO transition, through which Mr. Donahoe was appointed President and CEO and Mr. Parker became Executive Chairman. In addition, Mr. Campion transitioned from being CFO to COO, Mr. Friend succeeded Mr. Campion as CFO, and Ms. O'Neill became President of Consumer and Marketplace. In connection with these leadership transitions, and as previously disclosed in last year's proxy statement, in fiscal 2020 the Compensation Committee approved special transition-related awards to be granted or earned during fiscal 2021. These awards are described below.

In fiscal 2020, the Compensation Committee granted each of Messrs. Donahoe and Parker a transition-period cash incentive award with a value of $10,000,000 designed to support a smooth and effective CEO transition. The awards were subject to the achievement of the following transition-related performance goals over the performance period of January 13, 2020 to May 31, 2021:

To assess the performance of each of Messrs. Donahoe and Parker with respect to these goals, the Compensation Committee considered input from a variety of sources, including feedback from the Board, the executive team, and Messrs. Donahoe and Parker. Board feedback was obtained through a detailed survey provided to each member of the Board other than Messrs. Donahoe and Parker. Feedback from the executive team was obtained through confidential interviews with a third-party consultant. Feedback from Messrs. Donahoe and Parker themselves was obtained through their annual self-assessments.

In determining achievement of the transition-related performance goals, the Compensation Committee specifically considered the following:

We maintain a U.S. tax qualified retirement savings plan—the 401(k) Savings and Profit Sharing Plan for Employees of NIKE, Inc. (the "401(k) Plan")—under which all eligible U.S. employees, including the Named Executive Officers, are able to make pre-tax and after-tax contributions from their cash compensation. We make annual matching contributions for all participants equal to 100% of their pre-tax contributions up to 5% of their total eligible compensation.

We also generally make annual profit sharing contributions to the accounts of eligible U.S. employees, including the Named Executive Officers, under the 401(k) Plan. The aggregate profit sharing contribution amount, if any, is determined each year by the Board of Directors. This aggregate contribution is allocated among eligible employees based on an equal percentage of their total salary and annual cash incentive award for the year. For fiscal 2021, the profit sharing contribution percentage for each eligible employee was 0%.

The Internal Revenue Code limits the amount of compensation that can be deferred under the 401(k) Plan, and also limits the amount of salary and annual cash incentive award ($285,000 for fiscal 2021) that may be taken into account when determining contributions under that plan. Accordingly, we provide our Named Executive Officers and other highly compensated employees with the opportunity to defer their compensation, including amounts in excess of the tax law limit, under our nonqualified Deferred Compensation Plan. We also make profit sharing contributions under the Deferred Compensation Plan with respect to salary and annual cash incentive award of any eligible employee that exceeds the tax law limit, and for fiscal 2021 these contributions were equal to 0% of the total salary and annual cash incentive award of each Named Executive Officer in excess of $285,000. These contributions under the Deferred Compensation Plan allow our Named Executive Officers and other highly compensated employees to receive profit sharing contributions in the same percentage as our other employees. We do not match deferrals to the Deferred Compensation Plan. Balances in the Deferred Compensation Plan, including the balances of the Named Executive Officers, are unsecured and at-risk, meaning that the balances may be forfeited in the event of the Company’s financial distress, such as bankruptcy. Fiscal 2021 matching and profit sharing contributions to the Named Executive Officers under the qualified and nonqualified plans are included in the All Other Compensation column in the Summary Compensation Table on page 47.

Our Employee Stock Purchase Plan allows eligible employees in the United States and in many countries outside of the United States, including the Named Executive Officers, to purchase Class B Stock through payroll deductions at a 15% discount to the market price on the first or last trading day of the six-month purchase period, depending on which day the stock price was lower. In fiscal 2021, all of our Named Executive Officers participated in our Employee Stock Purchase Plan, with the exception of Messrs. Donahoe and Parker.

Our executive compensation program includes limited perquisites and other personal benefits for our Named Executive Officers, which generally consist of home security and financial planning services. In addition, our CEO and Executive Chairman are entitled to limited personal use of Company aircraft, primarily pursuant to time sharing agreements, which is intended to increase the security, availability, and productivity of these individuals, and enhanced charitable gift matching under our Employee Matching Gift Program, with an annual executive contribution limit of $1,000,000 and Company matching on a 4:1 basis. Finally, given the nature of our business, from time to time certain Company employees, including certain executive officers, may receive Company product, event tickets, or travel benefits that are not generally offered to all employees. We do not provide any tax gross-ups on perquisites to our executive officers. Greater detail about the perquisites and personal benefits provided to our Named Executive Officers in fiscal 2021 is provided in the footnotes to the Summary Compensation Table on page 47.

In exchange for non-competition agreements from each of our Named Executive Officers, we have agreed to provide monthly payments during the non-compete period following termination of employment, as described in the section below titled "Executive Compensation Tables—Potential Payments upon Termination or Change-in-Control". We believe that it is appropriate to compensate individuals to refrain from working with competitors following termination, and that compensation enhances the enforceability of such agreements.

In connection with the CEO transition in fiscal 2020, we entered into letter agreements with each of Messrs. Donahoe and Parker. Other than these two letter agreements, we do not have employment contracts with any of our executive officers.

Mr. Donahoe's letter agreement sets forth the terms of his target annual direct compensation—consisting of a base salary of $1,500,000, a PSP target award of $3,000,000, and a long-term incentive target award of $14,000,000 in the forms and on the terms determined by the Compensation Committee from time to time—and his enhanced charitable gift matching under our Employee Matching Gift Program as described in the section above titled "Perquisites and Other Benefits". Mr. Donahoe's letter agreement also provides for the transition-period cash incentive award described in the section above titled "Fiscal 2020 Leadership Transition Awards—Transition-Period Cash Incentive Awards".

Mr. Parker's letter agreement provides for the transition-period cash incentive award described in the section above titled "Fiscal 2020 Leadership Transition Awards—Transition-Period Cash Incentive Awards" and the enhanced charitable gift matching under our Employee Matching Gift Program as described in the section above titled "Perquisites and Other Benefits".

The Compensation Committee oversees our executive compensation program, including determining the value and composition of the compensation package for each of our executive officers and setting annual performance goals for the CEO. In addition to any special actions the Compensation Committee may take throughout the year, the committee generally acts with respect to compensation for our Named Executive Officers during the fiscal year as follows:

Given the competitive market for top-tier talent, the Compensation Committee uses a peer group (consisting of companies with similar revenue size, market capitalization, brand value, products, or markets, or with which we compete for executive talent) to provide a reference for assessing executive compensation levels and practices. Based on the criteria, we determined that for purposes of setting fiscal 2021 executive compensation, our peer group should be refined to include American Express, Best Buy, and Oracle, and to remove FedEx and Macy's. Our revised peer group consists of the following companies:

The CEO makes compensation recommendations to, and participates in discussions with, the Compensation Committee regarding the compensation of each executive officer other than himself. In addition, our human resources staff regularly provides data, analysis, and recommendations to the committee regarding executive compensation.

The Compensation Committee meets regularly in executive session without the CEO or other management present to discuss our executive compensation program. Such executive sessions include discussions about, among other topics, the CEO's performance and compensation and the design and operation of our executive compensation plans.

The Compensation Committee has the authority, in its sole discretion, to retain compensation consultants to assist the committee in overseeing our executive compensation program. The Compensation Committee chose not to retain any such consultants in fiscal 2021. However, in connection with the committee's analysis and decision-making regarding the fiscal 2021 executive compensation program, the Compensation Committee supplemented peer group data with information from surveys and reports containing competitive market data from Aon, Willis Towers Watson, and Mercer, which are obtained by our human resources staff.

New officers are required to attain these ownership levels within five years of their appointment. As of May 31, 2021, the CEO, each other Named Executive Officer, and each of our other executive officers has met or is on track to meet the applicable ownership guideline within the requisite period.

In response to shareholder feedback received as part of our extensive shareholder engagement efforts, the Board revised the stock ownership guidelines for fiscal 2022 to require that the CEO hold NIKE stock valued at eight times base salary, and that each other executive officer hold NIKE stock valued at three times base salary. New officers are still required to attain these revised ownership levels within five years of their appointment. As of May 31, 2021, each of our executive officers, including each Named Executive Officer, has met or is on track to meet the applicable revised ownership guideline within the requisite period.

The Company’s Blackout and Pre-clearance Policy (which supplements our Insider Trading Policy) prohibits directors, executive officers, and other designated insiders (based on seniority and department) from engaging in transactions involving hedging, monetization or short sales of NIKE stock, including zero-cost collars and forward sale contracts. The policy also requires directors, executive officers, and designated insiders to obtain pre-approval from the Company’s Clearance Director before pledging NIKE stock. Before granting approval of any pledge, the Clearance Director considers the size of the pledge relative to the individual’s other holdings, both direct and indirect, and NIKE’s shares outstanding; the risk of foreclosure given the nature of the associated transaction; protections against the appearance of insider trading, including prohibitions on sales during trading black-outs; and the ability to timely report sales on Form 4.

Neither PSP nor LTIP awards are subject to acceleration upon a change in control. Stock option, RSU, and restricted stock awards are subject only to "double-trigger" accelerated change-in-control vesting, meaning that vesting is accelerated only if there is a change in control of the Company, and within the following two years, either the acquiring entity fails to assume the awards or the employee’s employment is terminated by the acquirer without cause or by the employee for good reason. This double-trigger acceleration is intended to encourage executive retention through a period of uncertainty. The Compensation Committee believes that this approach will enhance shareholder value in the context of an acquisition and align executives' interests with those of investors. The effect of change-in-control transactions on stock-based awards is described further in the section below titled "Executive Compensation Tables—Potential Payments Upon Termination or Change-in-Control".

We maintain a clawback policy for the recoupment of incentive compensation. Under the clawback policy, an executive officer who is involved in wrongful conduct that results in a restatement of the Company’s financial statements must repay to the Company up to the full amount of any incentive compensation that was paid based on the financial statements that were subsequently restated. The clawback policy covers PSP awards, LTIP awards, stock-based awards (based on excess proceeds from pre-restatement sales of stock acquired pursuant to the stock-based awards), and profit sharing contributions to the Deferred Compensation Plan. In addition to the clawback policy, the PSP, LTIP and Stock Incentive Plan also specify that the Committee may apply further clawback requirements to awards through additional clawback policies or award agreement provisions, and that all awards are subject to clawback requirements under applicable law and regulation.

At the Compensation Committee’s request, in fiscal 2021, management prepared and discussed with the committee an assessment of potential risk associated with the Company’s compensation programs, including any risk that would be reasonably likely to have a material adverse effect on the Company. This included an assessment of risks associated with each element of employee compensation. The assessment considered certain design features of the compensation program that reduce the likelihood of excessive risk taking, such as reasonable performance targets, capped incentive compensation payouts, a balance of short- and long-term incentives, a balance of cash- and stock-based incentives, vesting of awards over time, and the potential for clawback of incentive compensation. In addition, for stock-based compensation, we have adopted stock ownership guidelines, provided for limited accelerated vesting of stock options and RSUs upon termination of employment, and provided for only double-trigger accelerated vesting of stock-based awards upon a change in control.

Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a company can deduct in any one year for "covered employees". While the Compensation Committee seeks to preserve tax deductibility in developing and implementing our compensation program, the committee also believes that it is important to maintain flexibility in administering compensation programs in a manner designed to promote varying corporate goals and the interests of our shareholders. Accordingly, we have not adopted a policy that all compensation must qualify as deductible for tax purposes and retain the ability to provide compensation that may not qualify as deductible under Section 162(m).

The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

The Named Executive Officers are eligible to participate in our Deferred Compensation Plan (the "DCP"). Participants in the DCP may elect in advance to defer up to 75 percent of their annual base salary, and up to 100 percent of their bonus and long-term cash incentive payments.

Generally, we make annual profit sharing contributions to defined contribution retirement plans. The contributions are allocated among eligible employees based on a percentage of their total salary and bonus for the year. To the fullest extent permitted under Internal Revenue Code limitations, these contributions are made to employees’ accounts under our qualified 401(k) Savings and Profit Sharing Plan. Contributions based on salary and bonus in excess of the tax law limit ($285,000 for fiscal 2021) are made as NIKE contributions under the DCP.

Amounts deferred under the DCP are credited to a participant’s account under the DCP. Each participant may allocate his or her account among any combination of the investment options available under the DCP. Participants’ accounts are adjusted to reflect the investment performance of the investment options selected by the participants. Participants can change the allocation of their account balances daily. The investment options available under the DCP consist of 18 mutual funds with a variety of investment objectives and five risk-based portfolios. The investment options had annual returns in fiscal 2021 ranging from -.50% to 72.06%. Amounts credited to participants’ accounts are invested by us in actual investments matching the investment options selected by the participants to ensure that we do not bear any investment risk related to participants’ investment choices.

The portion of a participant’s account attributable to elective deferrals, including investment returns, is fully vested at all times. The portion of a participant’s account attributable to NIKE contributions, including investment returns, is fully vested after the participant has been employed by us for five years. All of the Named Executive Officers, other than Mr. Donahoe, are fully vested in their NIKE contributions.

Each time they elect to defer compensation, participants make an election regarding distribution of the compensation deferred under the election (as adjusted to reflect investment performance). A participant may elect for distribution to be made in a lump sum at the beginning of a predetermined year while the participant is still employed or in service (but no sooner than the fourth year after the year in which the distribution election is submitted). Alternatively, a participant may elect for distribution to be made in a lump sum or in quarterly installments over five, ten or fifteen years after termination of employment or service. Participants have limited rights to change their distribution elections. Participants may make a hardship withdrawal under certain circumstances. Subject to certain limitations, a participant may also at any time request to withdraw amounts from his or her account balance that were vested as of December 31, 2004 (and any subsequent investment returns on such amount). If such request is approved, the participant may withdraw 90% of the amount requested, and the remaining 10% will be permanently forfeited.

For purposes of our stock awards, "cause" generally includes willful and continued failure to substantially perform assigned duties and willful engagement in illegal conduct materially injurious to us, and "good reason" generally includes a material diminution in position or duties, a salary reduction or material reduction in other benefits, and a home office relocation of over 50 miles.

The following table shows the estimated benefits that would have been received by the Named Executive Officers if double-trigger accelerated vesting had occurred on May 31, 2021, when the closing price of our Class B Stock was $136.46 per share.

Under the terms of the stock options held by each Named Executive Officer that were granted after fiscal 2020, upon a termination of employment due to a "divestiture" or "reduction in force" that occurs at least six months following the grant date, and subject to the holder signing a general waiver and release of claims, options that are scheduled to vest within one year following the termination will vest and all vested options will be exercisable for one year following termination of employment, but not beyond each option’s original 10-year term. The value of the unvested stock options held by each Named Executive Officer as of May 31, 2021 that would have become vested if a termination due to a "divestiture" or "reduction in force" had occurred on that date is $2,326,882 for Mr. Donahoe, $749,805 for each of Messrs. Friend and Campion and Ms. O'Neill, and $2,585,429 for Mr. Parker.

Under the terms of Mr. Donahoe's performance-based stock options, if he retires with at least 5 years of service (disregarding his years of service as a non-employee director prior to his employment), unvested options will be forfeited and vested options will be exercisable for four years following termination of employment, but not beyond the option’s original 10-year term. Under the terms applicable to all other stock options held by the Named Executive Officers, options that have been outstanding for at least one year will be subject to continued vesting if the holder retires after reaching age 55 with at least 5 years of service (or accelerated vesting if the holder retires after reaching age 60 with at least 5 years of service), and vested options will be exercisable for four years following termination of employment, but not beyond each option’s original 10-year term. If the Named Executive Officers had retired on May 31, 2021, the aggregate value of stock options subject to retirement vesting would have been $6,092,778 for Mr. Donahoe, $4,507,907 for Ms. O'Neill, and $20,438,831 for Mr. Parker. Messrs. Friend and Campion are not eligible for retirement vesting because these Named Executive Officers have not reached age 55.

As of May 31, 2021, each Named Executive Officer held unvested RSUs as set forth in the Outstanding Equity Awards table above. Under the terms of their award agreements, all unvested RSUs will immediately vest fully upon the death or disability of the holder. The value of the unvested RSUs held by each Named Executive Officer as of May 31, 2021 that would have become vested if death or disability had occurred on that date is as set forth in the "Stock Award Acceleration" column of the Change-in-Control Compensation — Acceleration of Equity Awards table above.

Under the terms of the RSUs held by each Named Executive Officer that were granted after fiscal 2020 (excluding the stock-based transition awards granted to Messrs. Friend and Campion and Ms. O'Neill), upon a termination of employment due to a "divestiture" or "reduction in force" that occurs at least six months following the grant date, and subject to the holder signing a general waiver and release of claims, RSUs that are scheduled to vest within one year following the termination will vest. The value of the unvested RSUs held by each Named Executive Officer as of May 31, 2021 that would have become vested if a termination due to a "divestiture" or "reduction in force" had occurred on that date is $1,679,140 for Mr. Donahoe and $541,064 for each of Messrs. Friend and Campion and Ms. O'Neill.

We have a noncompetition agreement with Mr. Donahoe that extends for eighteen months following the termination of his employment with us and a noncompetition agreement with Mr. Parker that extends for two years following the termination of his employment with us. Under these agreements, if Mr. Donahoe's employment is terminated by us without "cause" (as defined in his agreement), or if Mr. Parker’s employment is terminated by us, we will make monthly payments to the executive during the noncompetition period in an amount equal to one-twelfth of his then current annual salary and target PSP award ("Annual NIKE Income"). The agreements provide further that if the executive voluntarily resigns, we will make monthly payments to him during the noncompetition period in an amount equal to one-twenty-fourth of his then current Annual NIKE Income. However, commencement of the above-described monthly payments will be delayed until after the six-month period following the executive's separation from service, and all payments that he would otherwise have received during that period will be paid in a lump sum promptly following the end of the period, together with interest at the prime rate. If employment is terminated without "cause" (as defined in the applicable agreement), the parties may mutually agree to waive the covenant not to compete, and if employment is terminated for "cause", we may unilaterally waive the covenant. If the covenant is waived, we will not be required to make the payments described above for the months as to which the waiver applies. Assuming that Mr. Donahoe's employment had been terminated on May 31, 2021 and the covenant was not waived, during the 18-month period ending November 30, 2022 we would have been required to pay Mr. Donahoe $375,000 per month if the termination was by us without "cause", or $187,500 per month if he had voluntarily resigned. Assuming that Mr. Parker's employment had been terminated on May 31, 2021 and the covenant was not waived, during the 24-month period ending May 31, 2023 we would have been required to pay Mr. Parker $283,333 per month if the termination was by us, or $141,667 per month if he had voluntarily resigned.

We have noncompetition agreements with each of the other Named Executive Officers on generally the same terms as Mr. Donahoe, except that the noncompetition period is one year, we may unilaterally waive the covenant in all cases (including a termination without "cause"), the monthly payments are one-twelfth or one-twenty-fourth of the executive's then current annual salary (instead of their Annual NIKE Income), and payments may commence on termination. Assuming that the employment of each of these Named Executive Officers had been terminated by us without "cause" on May 31, 2021 and the covenants were not waived, we would have been required to pay Mr. Friend $72,917, Mr. Campion $91,667, and Ms. O'Neill $91,667, each on a monthly basis for the 12-month period ending May 31, 2022. Assuming that each of these Named Executive Officers had voluntarily resigned on May 31, 2021 and the covenants were not waived, we would have been required to pay Mr. Friend $36,458, Mr. Campion $45,833, and Ms. O'Neill $45,833, each on a monthly basis for the 12-month period ending May 31, 2022.

NIKE's pay and benefits are designed to be competitive and equitable, meet the diverse needs of our global teammates, and reinforce our values. We pay for performance and impact by linking incentive pay to Company performance and seek to invest in positive experiences that have the greatest impact on the engagement and well-being of our employees. The executive compensation program is highly incentive-based and weighted towards long-term awards to emphasize long-term performance and support retention. Our executive compensation program is designed to attract and retain top-tier talent in a competitive market and to "pay for performance" in order to drive business results and maximize shareholder value.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described below. The SEC rules for identifying the median compensated employee and calculating the pay ratio allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

Consistent with our past practice, we used the first business day in May as the date to determine the median employee. In prior years the first business day was May 1, although this year it was May 3, 2021. At that time, we had approximately 72,645 employees globally. After applying the "de minimis exemption" under the SEC rules, which permits us to exclude non-U.S. employees accounting for 5% or less of our total employee population, we excluded the 3,533 employees in the jurisdictions identified below, and our employee population consisted of approximately 69,112 employees.

Of the 69,112 employees included in the CEO Pay Ratio calculation, approximately 75% were full-time, 51% were in retail jobs, and 50% were located in the United States.

To identify our median employee we calculated annual compensation for fiscal 2021 based on base salary or hourly wages, as applicable. For the majority of our employees, base salary or hourly wages comprise the majority of their compensation. To determine wages for hourly employees, we used each individual’s pay rate and estimated scheduled hours in the applicable Human Resources system of record.

After determining the annual compensation for our employee population as described above, we identified a subset of approximately 100 individuals representing the potential median employee population. For this subset, we calculated each employee’s annual total compensation in U.S. dollars for fiscal 2021 based on the Summary Compensation Table rules used for our Named Executive Officers (in accordance with Item 402(c)(2)(x) of Regulation S-K). Compensation for permanent employees hired during the fiscal year was annualized, compensation for non-U.S. employees was converted into U.S. dollars using the applicable currency conversion rate as of the median employee determination date, and the median employee was then selected from this subset.

The Audit & Finance Committee has:

Members of the Audit & Finance Committee: