DEF: Tillys, Inc. Seeks Stockholder Approval for Amended Equity and Incentive Award Plan at 2025 Annual Meeting

Tillys, Inc. is soliciting proxies for its 2025 annual meeting, featuring proposals including director re-election, approval of an amended equity plan, and ratification of the company's independent auditor.

Summary

• Tillys, Inc. is holding its 2025 annual meeting of stockholders on June 11, 2025, at its headquarters in Irvine, California.
• Stockholders of record as of April 21, 2025, are entitled to vote.
• The meeting will address the re-election of six directors, approval of the Third Amended and Restated Tilly's 2012 Equity and Incentive Award Plan, ratification of BDO USA, P.C. as the independent registered public accounting firm, and an advisory vote on executive compensation.
• The board recommends voting FOR all director nominees, FOR the Amended Equity Plan, FOR the ratification of BDO, and FOR the advisory approval of executive compensation.
• The Amended Equity Plan proposes to increase the number of shares reserved for issuance by 2,000,000, bringing the total to 8,613,900 shares.
• If approved, the additional shares would dilute existing stockholders' holdings by an estimated 7 percentage points on a fully diluted basis.
• The company expects to have sufficient shares for approximately three to four years if the Amended Equity Plan is approved, based on its historic adjusted three-year average burn rate.
• The company's overhang as of the date of the annual meeting is expected to be approximately 17.9% if the Amended Equity Plan is approved.
• The board has fixed the number of directors at seven.
• The company is taking advantage of SEC rules allowing companies to furnish their proxy materials over the internet.
• The company did not achieve any of the minimum thresholds required to earn any portion of the performance-based bonuses and, accordingly, no performance-based bonuses were awarded to our NEOs.

Sentiment

Score: 6

Explanation: The document is primarily factual and procedural, outlining the proposals for the annual meeting. The sentiment is neutral, with some positive aspects related to corporate governance and some negative aspects related to executive compensation.

Positives

• The board is actively engaged in risk oversight, both as a whole and at the committee level.
• The company has a compensation recovery (clawback) policy in place.
• The company prohibits directors, officers, employees, and their family members from engaging in hedging or pledging company securities.
• The company is committed to good corporate governance practices, including a code of ethics and business conduct.
• The company is providing stockholders with access to proxy materials over the internet, reducing printing and mailing costs.

Negatives

• The company did not achieve any of the minimum thresholds required to earn any portion of the performance-based bonuses and, accordingly, no performance-based bonuses were awarded to our NEOs.
• If approved, the additional shares would dilute existing stockholders' holdings by an estimated 7 percentage points on a fully diluted basis.
• The company's overhang as of the date of the annual meeting is expected to be approximately 17.9% if the Amended Equity Plan is approved.

Risks

• The company's future performance is subject to various uncertainties, as detailed in the risk factors in its Annual Report on Form 10-K.
• The company's ability to attract and retain talented executives depends on its compensation and reward programs.
• The company's compensation programs must be carefully designed to avoid incentives that promote excessive risk-taking.
• The company's compensation recovery (clawback) policy may be triggered if certain conditions are met.
• The company's stock price may be affected by various factors, including market conditions and company performance.

Future Outlook

The company expects to have sufficient shares for approximately three to four years if the Amended Equity Plan is approved, based on its historic adjusted three-year average burn rate.

Industry Context

The document references peer companies in the retail apparel industry, including Boot Barn Holdings, Inc., The Buckle, Inc., Build-a-Bear Workshop, Inc., The Cato Corporation, Chico's FAS, Inc., Citi Trends, Inc., Destination XL Group, Inc., Duluth Holdings, Inc., Express, Inc., J.Jill, Inc., Lulu's Fashion Holdings, Inc., Torrid Holdings, Inc., and Zumiez, Inc., for compensation benchmarking purposes.

Comparison to Industry Standards

• The peer group chosen was comprised of companies in the retail apparel industry of as nearly similar revenue size and business context as possible, including Boot Barn Holdings, Inc., The Buckle, Inc., Build-a-Bear Workshop, Inc.,The Cato Corporation, Chico's FAS, Inc., Citi Trends, Inc., Destination XL Group, Inc., Duluth Holdings, Inc., Express, Inc., J.Jill, Inc., Lulu's Fashion Holdings, Inc., Torrid Holdings, Inc., and Zumiez, Inc.
• Management used the information previously provided by Mercer, and other resources and tools, to develop compensation recommendations presented to our Compensation Committee.
• The peer group information prepared by Mercer was used by the Compensation Committee for informational purposes only, and was not used for direct benchmarking given that all of the peer group comparison companies are larger than us in terms of revenue.

Management Changes

Corporate Governance

Related Party Transactions

• The company leases its corporate headquarters and distribution center from Shaked Holdings, LLC, incurring rent expense of $2.1 million in fiscal 2024.
• The company leases a building used as its e-commerce fulfillment center from Amnet Holdings, LLC, incurring rent expense of $1.5 million in fiscal 2024.
• The company leases office and warehouse space from Amnet Holdings, LLC, incurring rent expense of $0.6 million in fiscal 2024.
• The company provides annual support for Tillys Life Center (TLC), a charitable organization founded and run by Ms. Levine, donating $200,000 during fiscal 2024.
• The company provides a Round Up for Charity option in its stores, with customer donations passed through to TLC, totaling $0.9 million in fiscal 2024.
• The company subleases a portion of its office space to TLC.

Stakeholder Impact

• Stockholders are being asked to vote on key proposals that will impact the company's governance and executive compensation.
• Employees are affected by the equity incentive plan and executive compensation decisions.
• Customers are given the opportunity to donate to Tillys Life Center through the Round Up for Charity program.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its annual meeting on June 11, 2025.
• The company will consider the results of the advisory vote on executive compensation in future compensation decisions.

Key Dates

Keywords

proxy statement, annual meeting, equity plan, executive compensation, directors, BDO USA, stockholders, Tillys