DEF: PriceSmart Sets 2026 Annual Meeting Agenda

PriceSmart, Inc. announces its 2026 Annual Meeting of Stockholders to be held virtually on February 5, 2026, focusing on director elections, executive compensation, and auditor ratification.

Summary

• The Annual Meeting of Stockholders will be held virtually on Thursday, February 5, 2026, at 8:30 a.m. E.S.T.
• Stockholders will vote on the election of eleven directors, an advisory resolution to approve executive officer compensation for fiscal year 2025, and the ratification of Ernst & Young LLP as the independent registered public accounting firm for fiscal year ending August 31, 2026.
• The record date for stockholders entitled to vote at the Annual Meeting is December 8, 2025, with 30,816,360 shares of common stock outstanding.
• For fiscal year 2025, the company reported $5.3 billion in total revenues, a 6.7% increase in comparable net merchandise sales, and $85.6 million in membership income.
• Operating income increased by 5.2% in fiscal year 2025, and earnings per diluted share were $4.82.
• The executive compensation program shifted in fiscal year 2024 to prioritize long-term value creation, reducing annual cash incentives and increasing equity awards.
• In fiscal year 2025, 50% of equity awards were restricted stock/restricted stock units and 50% were performance stock units (PSUs).
• Fiscal year 2025 PSUs vested at 27.4% due to achieving adjusted operating income of $237.6 million, despite net merchandise sales not meeting the target.
• For fiscal year 2026, annual cash incentives will be 80% corporate performance (split between revenue-based and operating income-based metrics) and 20% individual performance, with potential for overachievement payments on corporate metrics.
• Fiscal year 2026 PSUs will be 50% restricted stock/restricted stock units and 50% performance stock units, with performance criteria based on total revenues/net merchandise sales (constant currency) and Earnings per Share (EPS).

Sentiment

Score: 7

Explanation: The filing presents a generally positive outlook with solid financial performance, strong corporate governance, and a clear commitment to ESG and employee well-being. The executive compensation structure is evolving to align with long-term value creation, and stockholder approval for compensation is high. However, the partial vesting of PSUs due to unmet sales targets and the inherent complexities of operating in diverse international markets introduce some caution.

Positives

• Achieved strong financial performance in fiscal year 2025 with $5.3 billion in total revenues, a 6.7% increase in comparable net merchandise sales, $85.6 million in membership income, and a 5.2% increase in operating income.
• Successfully launched e-commerce and accelerated digital transformation, contributing to growth in clubs, sales, and membership.
• Demonstrated a strong commitment to Environmental, Social, and Governance (ESG) initiatives, structured around four key pillars: Responsibility Toward People and Culture, Social and Community Engagement, Environmental Impact, and Responsibly Sourced Food, Products, and Services.
• Invested significantly in human capital, conducting over 2,100 corporate talent development sessions and providing specialized training to over 2,500 employees in fiscal year 2025, including the launch of the Women@PSMT program.
• Engaged in substantial community support, with employees achieving almost 12,000 hours of volunteering in 2025, surpassing a goal of 8,000 hours.
• Facilitated philanthropic contributions through the PriceSmart Foundation and the Aprender y Crecer program, supporting youth education, career opportunities, economic development, and disaster relief in emerging markets.
• Implemented environmental sustainability measures, including solar arrays in 48 warehouse clubs, LED lighting, waste heat recovery from refrigeration systems, and seven recycling collection stations.
• Maintained a strong focus on local purchasing, with approximately 51% of sales in fiscal year 2025 coming from merchandise sourced within Latin America and the Caribbean.
• Supported smalland medium-sized businesses through 'Roadshow' programs and accelerator funding, with active mentorship from buying teams.
• Received overwhelming stockholder support for the executive compensation program, with 99.3% approval in the 2025 advisory vote.
• Maintained robust corporate governance practices, including independent directors on all key committees, stock ownership guidelines for executives and directors, and an anti-hedging and pledging policy.

Negatives

• Performance Stock Units (PSUs) for fiscal year 2025 vested at only 27.4% because net merchandise sales did not meet the minimum achievement level of $5,200.0 million, despite adjusted operating income exceeding its target.
• Big Lots, a former peer company, was removed from the peer group for fiscal year 2026 due to its bankruptcy filing in September 2024, indicating potential volatility in the retail sector.
• The company acknowledges that its unique operating model (international, warehouse club, low-margin, high-volume, brick-and-mortar and e-commerce) makes direct comparisons with traditional U.S. retail peer groups challenging for executive compensation purposes.

Risks

• Foreign currency exchange rate fluctuations can significantly impact net merchandise sales, requiring constant currency adjustments for accurate performance evaluation.
• Operating primarily in emerging markets exposes the company to greater community needs, political changes, and diverse local and international laws, which can hinder business development and operations.
• Technical difficulties during the virtual Annual Meeting could potentially limit stockholder access, participation, and voting.
• Broker non-votes on non-routine matters, such as director elections and the advisory vote on executive compensation, may occur if beneficial owners do not provide specific voting instructions to their brokers, potentially affecting quorum and voting outcomes.
• The Compensation Recoupment (Clawback) Policy requires the clawback of incentive-based compensation based on financial results that later require an accounting restatement, regardless of executive misconduct, covering both material ('big R') and immaterial ('little r') errors.
• The company faces 'extreme and unpredictable challenges' in the retail global market, particularly in developed markets, which are not fully captured by its identified peer group, making strategic planning and competitive analysis complex.

Future Outlook

The company intends to evolve its equity award structure by making smaller grants that vest solely at the end of five years, ensuring executives consistently hold awards with five years of future vesting. For fiscal year 2026, annual cash incentive awards will continue to be 80% corporate performance and 20% individual performance, with corporate metrics split between revenue-based and operating income-based measures, and overachievement payments possible for corporate performance. Performance Stock Units (PSUs) for fiscal year 2026 will be 50% restricted stock/RSUs and 50% PSUs, with performance criteria based on total revenues/net merchandise sales (constant currency) and Earnings per Share (EPS).

Management Comments

• "PriceSmart's purpose is to improve the lives and businesses of our Members, our employees and our communities through the responsible delivery of the best quality goods and services at the lowest possible prices."
• "We believe that a virtual Annual Meeting provides expanded stockholder access and participation and improved communications."
• "We believe that employees should be paid fairly and competitively. As Sol Price said: Pay good wages and provide good benefits, including health insurance to employees."
• "We believe that all employees should be rewarded based on personal achievements in their positions, considering function and level, in addition to both department-level success and overall company success."
• "We are especially mindful that there are entry level and lower-compensated employees who must be prioritized to ensure that their compensation allows for a reasonable standard of living."
• "We believe we offer a comprehensive and competitive total compensation and benefits package designed to reward employees for their contributions to PriceSmart's success."
• "We believe that equity awards for higher-level executives are consistent with the values and culture of the Company and therefore should be an integral and heavily weighted part of the overall executive compensation program."
• "In our view direct linkages of executive pay with the Company's stock price performance encourages and rewards an owner-operator mindset among the Company's executives and incentivizes executives to take actions that generate long-term sustainable benefits to the Company."

Industry Context

PriceSmart operates in a unique segment of the retail industry, primarily in emerging markets across Latin America and the Caribbean, which presents distinct challenges and opportunities compared to developed markets. The company's business model, combining brick-and-mortar warehouse clubs with growing e-commerce capabilities and a low-margin, high-volume strategy, makes it difficult to find direct peer comparisons among U.S. publicly traded companies. The removal of Big Lots from its peer group due to bankruptcy highlights the competitive pressures and potential volatility within the broader retail sector. PriceSmart's strong emphasis on ESG initiatives, local sourcing (51% of sales), and community engagement aligns with increasing global trends for responsible business practices, which are particularly impactful and necessary in the emerging markets where it operates.

Comparison to Industry Standards

• The company acknowledges that direct comparisons to industry standards are challenging due to its unique operating model, which includes international operations, both brick-and-mortar and e-commerce sales, and a low-margin, high-volume approach, unlike most U.S. publicly traded retailers.
• Costco is identified as the 'most directly comparable company' but its significantly larger size renders direct comparisons impractical for executive compensation benchmarking.
• The peer group used for executive compensation, including companies like Academy Sports and Outdoors, Grocery Outlet, BJs Wholesale Club, Mercado Libre, and Sprouts Farmers Market, provides some reference points but does not fully capture PriceSmart's specific business complexities.
• The company's 6.7% increase in comparable net merchandise sales for fiscal year 2025 can be assessed against the performance of the S&P 500 Consumer Discretionary Distribution & Retail Index, which is used as a benchmark for Total Stockholder Return (TSR) in the Pay versus Performance analysis.

Management Changes

Corporate Governance

Legal Proceedings

• A $9.2 million charge was incurred in fiscal year 2023 to settle minimum tax litigation in one of the company's markets, which was an adjustment for adjusted operating income calculations.

Related Party Transactions

• The company recorded approximately $708,000 in rental income during fiscal year 2025 from a company that owns 40% of Payless ShoeSource Holdings, Ltd., where director Edgar Zurcher is also a director.
• The company paid approximately $1.7 million for products purchased during fiscal year 2025 from Molinos de Costa Rica S.A., where director Edgar Zurcher is also a director.
• The company sold approximately $337,000 of supplies to Price Philanthropies Foundation during fiscal year 2025. Robert Price (Executive Chairman), Sherry S. Bahrambeygui (Director), Jeffrey R. Fisher (Director), and David Price (CEO) are involved with this foundation.
• The company incurred approximately $210,000 in travel expenses during fiscal year 2025 for travel provided by La Jolla Aviation, Inc., a company owned by Robert E. Price (Executive Chairman).

Stakeholder Impact

• **Shareholders**: Will participate in key governance decisions at the Annual Meeting, including director elections, executive compensation, and auditor ratification. Stock ownership guidelines for management and directors aim to align their interests with shareholder value creation. Strong financial performance and ESG initiatives are intended to enhance long-term shareholder value.
• **Employees**: Benefit from a commitment to fair and competitive pay, comprehensive benefits (including health plans in all markets), talent development programs (over 2,100 corporate sessions and 2,500 specialized training sessions in FY2025), career advancement opportunities, and well-being initiatives. The Women@PSMT program supports career advancement for women.
• **Customers (Members)**: Benefit from the company's purpose to deliver high-quality goods and services at the lowest possible prices, enhanced by digital transformation and e-commerce initiatives. Food safety programs ensure product quality and trust.
• **Suppliers**: The company strives to treat suppliers fairly and empower them, particularly regional and global partners. Support for smalland medium-sized businesses through 'Roadshow' programs and accelerator funding fosters local economic growth.
• **Communities**: Receive significant philanthropic contributions and support through the PriceSmart Foundation and the Aprender y Crecer program, focusing on youth education, career opportunities, economic development, and disaster relief. Environmental initiatives and food bank donations also contribute positively to local communities.

Next Steps

• Stockholders will elect eleven directors at the Annual Meeting on February 5, 2026.
• Stockholders will cast an advisory vote on the compensation of executive officers for fiscal year 2025.
• Stockholders will vote to ratify Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending August 31, 2026.
• The Compensation Committee plans to continue making smaller equity awards that vest solely at the end of five years, aiming for executives to consistently hold awards with five years of future vesting.
• The Compensation Committee will implement new corporate performance metrics for fiscal year 2026 annual cash incentives, split between revenue-based and operating income-based measures, with potential for overachievement payments.
• The Compensation Committee will implement new performance criteria for fiscal year 2026 Performance Stock Units (PSUs) based on total revenues/net merchandise sales (constant currency) and Earnings per Share (EPS).

Key Dates

Recommendation

The filing is a routine proxy statement for an annual meeting, providing details on corporate governance, executive compensation, and past fiscal year performance. While the company shows solid financial growth in FY2025 and a strong commitment to ESG, there are no new material financial disclosures or strategic shifts that would warrant a change in investment stance. The executive compensation structure is evolving to better align with long-term value, and stockholder approval is high. The inherent complexities of its international retail model and the partial vesting of PSUs due to unmet sales targets suggest a balanced view. Therefore, a 'hold' recommendation is appropriate as the information reinforces the existing understanding of the company without presenting new catalysts for significant price movement.

Keywords

PriceSmart, PSMT, Proxy Statement, Annual Meeting, Corporate Governance, Executive Compensation, Director Election, Financial Performance, ESG, Sustainability, Retail, Warehouse Club, E-commerce, International Business, Latin America, Caribbean, Risk Management, Audit, Ernst & Young, Stock Ownership, Related Party Transactions