DEF: 1-800-FLOWERS.COM Seeks Share Plan Boost Amidst Executive Pay Shifts

1-800-FLOWERS.COM, Inc. will hold its Annual Meeting on December 10, 2025, to elect directors, ratify auditors, and vote on increasing authorized shares for its long-term incentive plan, following a fiscal year with 0% executive annual incentive payouts due to missed financial targets.

Summary

• The Annual Meeting of Stockholders will be held virtually on December 10, 2025, at 9:00 a.m. EST.
• Stockholders will vote on the election of nine directors, the ratification of BDO USA, P.C. as the independent auditor for fiscal year ending June 28, 2026, and an amendment to the 2003 Long Term Incentive and Share Award Plan to increase authorized shares by 5,000,000.
• Executive annual incentive awards under the Sharing Success Program resulted in a 0% payout for all Named Executive Officers (NEOs) in Fiscal 2025 due to actual Plan EBITDA ($29.166 million) and Plan Revenue ($1,685.658 million) falling below threshold targets of $103.950 million and $1,813.740 million, respectively.
• Performance shares granted in Fiscal 2025 were partially earned (16.7%) based on strategic initiatives, but no payout was made due to Plan EBITDA being below 80% of target.
• The company reported a Net Income (Loss) of -$199.993 million and Adjusted EBITDA of $29.166 million for Fiscal 2025.
• The Total Shareholder Return for the company was $25, significantly underperforming the S&P 500 Consumer Discretionary Index at $174 for the period from June 26, 2020, through June 29, 2025.
• Adolfo Villagomez was appointed Chief Executive Officer effective May 12, 2025, with an annual base salary of $1,000,000 and a target annual bonus of 100% of base salary starting Fiscal 2026, along with a $3,000,000 signing equity grant.
• James F. McCann, Executive Chairman, received a $1,000,000 annual marketing fee in Fiscal 2025 and will no longer be eligible for the annual bonus program starting Fiscal 2026, instead receiving an annual credit to his Nonqualified Supplemental Deferred Compensation Plan.
• The proposed increase of 5,000,000 shares for the incentive plan is estimated to fund the equity compensation program for approximately three years and could result in approximately 16% dilution of total issued and outstanding shares.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to significant underperformance in key financial metrics (EBITDA, Revenue, Net Income, TSR) leading to 0% executive annual incentive payouts. While there are positive governance and ESG initiatives, and a new CEO, the current financial results are concerning.

Positives

• The company maintains a robust corporate governance framework with specialized committees (Audit, Compensation, Nominating and Corporate Governance, Technology and Cybersecurity) overseeing various risks and strategic areas.
• Ongoing commitment to environmental and social responsibility, including responsible floral sourcing, sustainable agriculture practices, increased use of denim insulation packaging, investment in renewable energy credits for key facilities, and support for community non-profit organizations.
• The appointment of Adolfo Villagomez as the new Chief Executive Officer brings over two decades of leadership experience in digital transformations and consumer-facing businesses.
• The adoption of an Executive Severance Plan, effective October 17, 2025, provides structured benefits for senior leadership upon certain termination events, enhancing executive retention policies.
• The company has a clear clawback policy for executive compensation in the event of accounting restatements due to material noncompliance, aligning executive incentives with financial integrity.

Negatives

• Executive annual incentive awards for Fiscal 2025 resulted in a 0% payout for all Named Executive Officers due to significant underperformance against Plan EBITDA and Plan Revenue targets.
• The company reported a substantial Net Income (Loss) of -$199.993 million for Fiscal 2025, indicating significant unprofitability.
• Adjusted EBITDA for Fiscal 2025 was $29.166 million, falling considerably short of the target of $115.5 million.
• Total Shareholder Return for the company was $25 for the period ending June 29, 2025, which is significantly lower than the S&P 500 Consumer Discretionary Index return of $174 over the same period.
• The partial achievement of strategic initiatives for performance shares in Fiscal 2025 did not lead to a payout because the Plan EBITDA threshold was not met.

Risks

• Operational, financial, legal, strategic, marketing, and brand reputation risks are continuously overseen by the Board and its committees.
• Cybersecurity and data privacy risks are a focus of the Technology and Cybersecurity Committee, ensuring compliance with applicable laws and preparedness for material incidents.
• Risks related to environmental and social matters, such as environmental resilience, human capital management, and community relations, are monitored by the Nominating and Corporate Governance Committee.
• The proposed increase of 5,000,000 shares for the Long Term Incentive and Share Award Plan could lead to approximately 16% dilution of total issued and outstanding shares, potentially impacting existing shareholder value.
• The company's ability to attract and retain qualified executive talent is crucial in a competitive industry, and compensation programs must remain effective despite recent low incentive payouts.

Future Outlook

The company is committed to operating in an environmentally and socially responsible way, continually exploring methods to promote resilience in its supply chain and operations, and working towards an assessment of business-relevant climate-related risks and opportunities to inform its future environmental strategy. The Board of Directors receives periodic reports on progress in these areas. Starting Fiscal 2026, the new CEO, Adolfo Villagomez, will have a target bonus of 100% of his base salary, and beginning Fiscal 2027, an annual equity grant with a target fair market value of $3,000,000. The proposed increase in authorized shares for the incentive plan is expected to fund equity compensation for approximately three years.

Management Comments

• The Compensation Committee believes that the compensation programs for the company's NEOs, as well as all of its Executive Officers, should reflect the company's performance and the value created for the company's stockholders.
• The Compensation Committee's philosophy is that a significant portion of each NEO and Executive Officer's compensation should be contingent upon the company's financial performance.
• The company's success depends upon its ability to attract and retain qualified Executive Officers through the competitive compensation packages it offers to such individuals.

Industry Context

The company operates in a very competitive industry and competes for senior executive talent with many leading companies. Its Total Shareholder Return is benchmarked against the S&P 500 Consumer Discretionary Index, indicating its positioning within the broader consumer discretionary sector. The focus on digital transformation, marketing innovation, and consumer engagement, as highlighted by new director Shelton Palmer's expertise, reflects ongoing industry trends.

Comparison to Industry Standards

• The company's Total Shareholder Return of $25 for the period from June 26, 2020, through June 29, 2025, significantly underperformed the S&P 500 Consumer Discretionary Index, which returned $174 over the same period.

Management Changes

Corporate Governance

Related Party Transactions

• James F. McCann III, son of Executive Chairman James F. McCann and nephew of Director Christopher G. McCann, is employed as Director, Enterprise Strategy and Business Development, and earned $160,000 in Fiscal 2025.
• Jenna Messer, daughter of Director Christopher G. McCann and niece of Executive Chairman James F. McCann, is employed as Senior Vice President, Direct Marketing, and earned $290,000 in Fiscal 2025, plus 6,285 restricted shares with a grant date fair value of $52,417.
• The company subleased space to Clarim Holdings, LLC, an entity in which Executive Chairman James F. McCann owns a controlling interest. The company received $371,194 in rent and utility payments from Clarim in Fiscal 2025. A new sublease for different space in the same building commenced in September 2025, providing for $144,000 per year in rent and certain expenses.

Stakeholder Impact

• Shareholders: Will vote on key governance matters, including director elections and a significant increase in authorized shares for the incentive plan, which could lead to dilution. Their investment value is directly impacted by the company's poor financial performance and Total Shareholder Return.
• Employees: Executive compensation outcomes directly affect senior management. The proposed increase in the Long Term Incentive and Share Award Plan aims to attract, retain, and motivate employees through equity awards. The company's social responsibility initiatives also focus on employee engagement and inclusion.
• Customers: Benefit from the company's environmental resilience efforts, such as responsible sourcing and sustainable practices, and social responsibility initiatives that promote community and inclusion.
• Suppliers: Impacted by the company's focus on responsible sourcing in its supply chain, particularly for floral products.
• Creditors: Financial performance, including the reported net loss and lower EBITDA, could influence the company's creditworthiness and ability to meet obligations.

Next Steps

• Stockholders will vote on the election of directors, ratification of auditors, and the amendment to the 2003 Long Term Incentive and Share Award Plan at the Annual Meeting on December 10, 2025.
• The Executive Severance Plan will become effective on October 17, 2025.
• The company will continue to assess and implement its environmental, social, and governance strategy, with periodic reports to the Board of Directors.
• The company will continue to research and assess other locations for energy-saving opportunities and work towards an assessment of business-relevant climate-related risks and opportunities.

Key Dates

Recommendation

The company reported a 0% payout for executive annual incentives in Fiscal 2025 due to significantly missed EBITDA and Revenue targets, alongside a substantial net loss and negative total shareholder return. While the proposed increase in authorized shares for the long-term incentive plan aims to attract and retain talent, it also introduces potential dilution. The appointment of a new CEO and ongoing ESG initiatives are positive, but current financial performance warrants a cautious 'hold' stance, awaiting evidence of improved operational and financial results.

Keywords

1-800-FLOWERS.COM, FLWS, SEC filing, proxy statement, corporate governance, executive compensation, stock options, restricted stock, annual meeting, director election, auditor ratification, long-term incentive plan, share award plan, environmental initiatives, social responsibility, related party transactions, EBITDA, revenue, shareholder return