DEF: Bed Bath & Beyond Seeks Share Increase, Approves New Equity Plan

Bed Bath & Beyond, Inc. is seeking stockholder approval for a significant increase in authorized common stock and a new equity incentive plan, alongside the election of directors and ratification of auditors at its upcoming 2026 Annual Meeting.

Summary

• Stockholders will vote on the election of seven directors, ratification of KPMG LLP as the independent auditor for fiscal year 2026, and an advisory vote on executive compensation.
• A key proposal is to amend the Certificate of Incorporation to increase authorized common stock from 100,000,000 to 200,000,000 shares.
• Approval is also sought for an amendment and restatement of the 2005 Equity Incentive Plan, which would increase the share reserve by 4,291,000 newly authorized shares, bringing the total available for future awards to 4,679,179 shares (subject to adjustments).
• The Restated Plan significantly increases individual award limits for options, SARs, restricted stock, RSUs, and performance shares to 2,000,000 shares each per fiscal year, and performance units to an initial value of $15,000,000.
• Contingent Awards, including 1,500,000 RSUs and 600,000 performance shares for CEO Marcus Lemonis, granted on March 11, 2026, are subject to stockholder approval of the Restated Plan and will be forfeited if not approved.
• The company's three-year average equity burn rate as of fiscal year-end 2025 was 2.2%, and the fully diluted overhang was approximately 5.4% as of March 10, 2026, projected to increase to 10.6% if the Restated Plan is approved.
• The 2025 performance-based bonus program for executive officers (excluding Mr. Lemonis and Mr. Lockton) was earned at 84.9% of target, based on Adjusted EBITDA, Adjusted Gross Margin, and Contribution Margin.
• Former President David J. Nielsen's employment terminated on March 10, 2025, and he received $900,000 in severance and a $170,137 prorated target bonus.
• Former COO Alexander W. Thomas's employment terminated on January 1, 2026, and he received $233,333 in severance and COBRA benefits.
• Marcus A. Lemonis, as CEO, will receive a base salary of $300,000 and a target annual bonus of $2,200,000 for 2026, with his compensation heavily weighted towards incentive-based pay.
• The PEO pay ratio for 2025 was 47.92 to 1, with CEO Marcus A. Lemonis's total compensation at $5,928,963 and the median employee's at $123,734.
• The company's Net Income (loss) for 2025 was ($84,621k) and Adjusted EBITDA was ($30,688k).
• Total Shareholder Return (TSR) for an initial $100 investment was $11.38 by December 31, 2025, significantly underperforming the Peer Group TSR of $143.95.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with caution due to significant financial underperformance, including negative net income and EBITDA, and substantial underperformance in TSR compared to peers. While the company is taking steps to align executive incentives and ensure future equity flexibility, past performance indicates considerable challenges.

Positives

• The company's executive compensation program is designed to align pay with company performance, with a significant portion of compensation being at-risk.
• The Board maintains an independent Compensation Committee and engages an independent compensation consultant (FW Cook).
• The company has a policy against hedging company stock by officers, directors, and employees, and prohibits stock option repricing without stockholder approval.
• The Board has adopted stock ownership guidelines for senior executive officers and non-employee directors to align their interests with stockholders.
• The company has a clawback policy for incentive-based compensation in the event of an accounting restatement.
• The Board's three-year average equity burn rate of 2.2% is considered reasonable.
• The Board has a diverse range of skills and experience, including senior leadership, marketing/brand management, finance/accounting, legal/risk management, technology/cybersecurity, and business transformation.

Negatives

• The company's Net Income (loss) for 2025 was negative ($84,621k), and Adjusted EBITDA was also negative ($30,688k), indicating ongoing financial losses.
• The company's Total Shareholder Return (TSR) significantly underperformed its peer group, with an initial $100 investment yielding $11.38 compared to the peer group's $143.95 by December 31, 2025.
• The 2024 performance shares tied to 2024 and 2025 net revenue targets were forfeited due to the company not meeting the revenue hurdles ($1.4 billion actual vs. $2 billion target for 2024, and $1 billion actual vs. $2.7 billion target for 2025).
• The $45.00 stock price hurdle tranche (500,000 shares) of the Lemonis Performance-Based Options was forfeited on February 20, 2026, due to failure to meet the stock price condition.
• The 2025 performance-based bonus program achieved only 84.9% of target, with the Adjusted Gross Margin metric earning 0% of its target payout.
• Two executive officers, David J. Nielsen and Alexander W. Thomas, had their employment terminated in early 2025 and early 2026, respectively, indicating management turnover.
• Rick S. Lockton's employment terminated in January 2026, and he was not entitled to severance under his employment letter agreement.
• Two Section 16(a) reports (Leah R. Putnam and Alexander W. Thomas) were delinquent in the last fiscal year.

Risks

• Future issuances of common stock or securities convertible into or exchangeable for common stock could have a dilutive effect on earnings per share, book value per share, and the voting power and interest of current stockholders if the Share Increase Amendment is approved.
• The availability of additional authorized shares for issuance could, under certain circumstances, discourage or make more difficult efforts to obtain control of the company, potentially acting as an anti-takeover measure.
• If the Restated Plan is not approved by stockholders, the Contingent Awards (including significant awards to CEO Marcus Lemonis) will be forfeited, and the company may not have sufficient authorized shares to make necessary equity awards, potentially impacting its ability to attract, motivate, and retain highly qualified talent.
• The company's business model is constantly changing and evolving, which inherently carries risks related to strategic planning and execution.
• Reliance on technology for marketing, sales, tracking, and delivery, along with the exchange and security of information, poses significant technology and cybersecurity risks.
• Global or international business operations, if pursued, create various risks and complexities, including increased legal, regulatory, and market-specific challenges.
• The company's compensation policies and practices are periodically analyzed for risks, but there is always an inherent risk that they could have a material adverse effect.
• Compensation attributable to awards under the Restated Plan may not be fully tax deductible under Section 162(m) of the Code, potentially increasing the company's tax burden.
• Certain benefits under the Restated Plan may constitute deferred compensation under Section 409A of the Code, and failure to comply could result in accelerated taxation and substantial penalties for participants.

Future Outlook

The company expects the proposed aggregate share reserve under the Restated Plan to provide enough shares for equity awards for the remainder of 2026 and at least a portion of 2027, assuming consistent granting practices, share price, and hiring activity. The Board periodically reviews its leadership structure and may make changes as circumstances warrant. The company intends to continue proactive engagement with stockholders on significant issues, including board leadership.

Management Comments

• "We cordially invite you to attend the 2026 Annual Meeting of Stockholders of Bed Bath & Beyond, Inc."
• "We appreciate your ownership interest in and support of Bed Bath & Beyond."
• "Bed Bath & Beyond's Board unanimously recommends votes: FOR each of Marcus A. Lemonis, Joanna C. Burkey, Barclay F. Corbus, William B. Nettles, Jr., Debra G. Perelman, Dr. Robert J. Shapiro, and Joseph J. Tabacco, Jr. as directors."
• "Bed Bath & Beyond's Board unanimously recommends votes: FOR the ratification of KPMG LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2026."
• "Bed Bath & Beyond's Board unanimously recommends votes: FOR the Say on Pay Vote."
• "Bed Bath & Beyond's Board unanimously recommends votes: FOR the Share Increase Amendment."
• "Bed Bath & Beyond's Board unanimously recommends votes: FOR the Adjournment Proposal."
• "Bed Bath & Beyond's Board unanimously recommends votes: FOR the approval of an amendment and restatement of the Company's Amended and Restated 2005 Equity Incentive Plan."
• "We believe that hosting a virtual meeting will enable more of our stockholders to attend and participate in the meeting since our stockholders can participate from any location around the world with internet access."
• "Our Board believes it is in the best interests of the Company and our stockholders to increase our authorized shares of common stock in order to have additional shares available for use as our Board deems appropriate or necessary."
• "We believe that the adoption of the Restated Plan is essential to our success. A talented, motivated and effective management team and workforce are essential to our continued progress."
• "Our Board and management believe that equity awards are necessary to remain competitive in our industry and are essential to recruiting and retaining the highly qualified employees in an extremely competitive labor market and industry who help our Company meet its goals."
• "If we do not increase the shares available for issuance under the Existing Plan, we will have a very limited number of shares available for future grant under the Existing Plan and will not have a sufficient number of shares authorized under the Existing Plan to make necessary equity awards during the remainder of 2026, including the Contingent Awards."
• "We believe that our current leadership structure is in the best interest of the Company and our stockholders, with Mr. Lemonis serving as Executive Chairman and Chief Executive Officer, Joseph J. Tabacco, Jr. serving as our lead independent director, and having strong and independent Board committee chairs, as we work to drive revenue growth."

Industry Context

StockSavvy.ai notes that Bed Bath & Beyond's pursuit of increased authorized shares and a revised equity incentive plan is a common strategy for companies in evolving retail and e-commerce sectors. The significant underperformance in Total Shareholder Return compared to the S&P Retail Select Index highlights the intense competitive pressures and challenges faced by traditional retail brands transitioning to online models. The emphasis on performance-based compensation, particularly with new metrics like revenue for 2026, suggests a strategic pivot towards top-line growth, a critical factor in the highly competitive e-commerce landscape where market share gains are paramount. The high executive turnover and forfeiture of performance-based awards underscore the difficulty of achieving ambitious targets in a challenging market.

Comparison to Industry Standards

• The company's Total Shareholder Return (TSR) of $11.38 for an initial $100 investment by December 31, 2025, significantly lags the S&P Retail Select Index's TSR of $143.95 for the same period. This indicates substantial underperformance relative to the broader retail industry benchmark.
• The 2025 performance-based bonus payout of 84.9% of target, while not a complete failure, suggests that the company did not fully meet its internal performance objectives, particularly with the Adjusted Gross Margin metric achieving 0% of its target. This contrasts with high-performing e-commerce companies that often exceed such targets.
• The forfeiture of 2024 performance shares tied to net revenue targets (e.g., $1.4 billion actual vs. $2 billion target for 2024) and the forfeiture of a tranche of CEO Marcus Lemonis's performance-based options due to unmet stock price hurdles ($45.00) indicate that the company's operational and market performance has not met the ambitious goals set for its executives, a situation less common among industry leaders like Amazon or Chewy, which typically demonstrate consistent growth and stock performance.
• The proposed increase in authorized shares and individual equity award limits, while aimed at attracting and retaining talent, could be viewed as a necessary measure to remain competitive in executive compensation against larger, more stable industry players, rather than a sign of exceptional growth.

Management Changes

Corporate Governance

Related Party Transactions

• The company compensates its directors and officers as described in the filing.
• From time to time, the company employs relatives of directors and executive officers; none were paid more than $120,000 in 2025, and none are proposed to be paid more than $120,000 in 2026.

Stakeholder Impact

• Shareholders: Potential dilution from increased authorized shares and equity incentive plan. Significant underperformance in TSR compared to peers. Opportunity to vote on key governance matters and executive compensation.
• Employees: Equity incentive plan aims to attract and retain talent, providing ownership stake. Compensation structure includes performance-based incentives.
• Management: Compensation tied to performance metrics, with significant equity components. High turnover among some executive roles.
• Customers: No direct impact mentioned, but strategic updates and business transformation efforts are ultimately aimed at improving customer experience and sales.
• Creditors: No direct impact mentioned, but financial performance (negative net income and EBITDA) could be a concern.

Next Steps

• Hold the 2026 Annual Meeting of Stockholders on May 14, 2026, to vote on the proposals.
• If approved, file a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of Delaware to increase authorized common stock.
• If the Restated Plan is approved, no further awards will be granted under the 2025 Employee Inducement Equity Incentive Plan after March 10, 2026.
• If the Restated Plan is not approved, Contingent Awards granted on March 11, 2026, will be forfeited.
• Announce preliminary voting results at the Annual Meeting and file a Form 8-K with the SEC within four business days reporting the final results.
• The Board expects to hold the next advisory say on pay vote at the annual meeting of stockholders in 2027.
• The Nominating and Corporate Governance Committee will consider any tendered director resignations (if a nominee fails to receive more "for" than "withheld" votes) and make a recommendation to the Board within 60 days of vote certification.
• The Board will determine whether to accept or reject such resignations within 30 days of the Committee's recommendation and publicly disclose its decision.

Key Dates

Recommendation

The company is undergoing significant strategic and leadership changes, including a new CEO and a revised equity incentive plan aimed at aligning management with long-term value creation. However, the substantial underperformance in Total Shareholder Return compared to industry peers and ongoing negative financial metrics (Net Income and Adjusted EBITDA) indicate considerable challenges. While the proposed share increase and equity plan are necessary for future flexibility and talent retention, they also carry dilution risks. An investor should hold to observe if the new leadership and strategic adjustments can reverse the negative financial trends and close the performance gap with the industry.

Keywords

Proxy Statement, Stockholder Meeting, Corporate Governance, Executive Compensation, Equity Incentive Plan, Authorized Shares, Share Dilution, Board of Directors, Financial Performance, SEC Filing, Bed Bath & Beyond, KPMG LLP, Marcus Lemonis, Say on Pay, Risk Management, Shareholder Value, Retail, E-commerce