Barnes Noble Education Inc

Elements of Pay

Our compensation structure is primarily composed of base salary, performance-based annual incentive compensation and performance-based and time-vested long-term equity incentives.

Base Salary

We pay our NEOs a base salary to provide them with a guaranteed minimum compensation level for their services. An NEO’s base salary is determined by evaluating the external competitive marketplace, internal equity and individual contributions.

Performance-Based Annual Incentive Compensation

The target award under the Annual Incentive Plan for the NEOs for Fiscal 2024 is expressed as a percentage of base salary as set forth in the table below.

In Fiscal 2024, given the Company’s financial condition, management recommended to the Compensation Committee that no incentive plan awards be funded unless the Company achieved its annual Company EBITDA target contained in the Company’s business plan for Fiscal 2024. Accordingly, any individual Annual Incentive Plan payouts would be discretionary and subject to the approval of the Compensation Committee based upon Fiscal 2024 results and other considerations. In light of the separate retention and performance bonus opportunities as described below under “Fiscal 2024 Retention Bonuses and Performance Incentive Bonuses,” the Compensation Committee determined that no additional discretionary annual bonuses would be paid to our NEOs.

Separately, Mr. Watson received a guaranteed annual bonus for Fiscal 2024 (prorated based on his start date) equal to $306,000 pursuant to the terms of his employment agreement with the Company, and therefore was not eligible for any additional annual bonus.

Long-Term Equity Incentives

Although long-term equity incentives were a component of the Company’s compensation program in prior years, the Company did not grant any equity awards to our NEOs during Fiscal 2024 due to our financial condition and the depreciated equity value of our Common Stock.

Fiscal 2024 Retention Bonuses and Performance Incentive Bonuses

As discussed above under “Key Compensation Decisions for Fiscal 2024 and Fiscal 2025,” the Company entered into special one-time retention and performance incentive agreements with our NEOs (other than Mr. Watson and Mr. Henderson) to retain key talent in the face of challenging conditions and support the Company’s critical path goal of strengthening its long-term financial position.

Under the terms of retention agreements with each of Messrs. Miller and Shar and Ms. Paul, they were entitled to receive an aggregate cash retention bonus of $450,000 ($350,000 in the case of Ms. Paul), payable in two equal installments on or about September 1, 2023 and February 1, 2024, if they remained employed through such date. Each such NEO earned these retention bonuses in full.

Separately under the terms of a performance incentive agreement with Mr. Huseby, he was eligible to earn a retention bonus of $220,000 if he remained employed with the Company through September 15, 2023, and up to $880,000 in performance cash bonuses tied to the achievement of certain business milestones or at the discretion of the ATC. Mr. Huseby ultimately earned the $220,000 retention bonus and an additional $440,000 in performance bonuses in connection with the approval of the equity financing and debt restructuring transactions by the ATC and achievement of second quarter Fiscal 2024 EBITDA goals.

Other Components of Compensation

401(k) Plan. Each of our NEOs is entitled to participate in our tax-qualified defined contribution 401(k) plan on the same basis as all other eligible employees. The 401(k) plan provides our employees, including our NEOs, with a way to accumulate tax-deferred savings for retirement. Prior to August 2023, the Company matched the contributions of participants, subject to certain criteria. In August 2023, upon management’s recommendation, the Compensation Committee approved the conversion of the Company’s 401(k) plan match to a discretionary year end contribution. The amount of the Company’s matching contributions for each of our NEOs is set forth in footnotes to the “Summary Compensation Table” on page 32. We do not provide supplemental executive retirement benefits.

Limited Perquisites and Other Compensation. The Company’s NEOs are entitled to only the limited perquisites set forth in their employment agreements or letters and disclosed in the footnotes to the “Summary Compensation Table” on page 32.

Severance and Change of Control Payments and Benefits. The Company has an employment agreement with Mr. Huseby (Mr. Huseby resigned effective June 11, 2024) and each of Messrs. Watson, Miller, Shar and Henderson (Mr. Henderson retired effective June 2, 2023), and Ms. Paul have employment letter agreements that contain severance and change in control benefits. The agreements provide for certain severance payments and benefits upon termination of employment by the Company without cause or by the NEO for good reason (including upon termination within two years following a change of control). The triggering events that would result in the severance payments and benefits and the amount of those payments and benefits are intended to provide our NEOs with financial protection upon loss of employment and to support our executive retention goals and enable our NEOs to focus on the interests of the Company in the event of a potential change of control. Equity awards are subject to a “double-trigger” and vesting will only be accelerated if there is a termination of employment without “cause” or for “good reason” following a change of control. The Company does not pay any tax gross-ups in connection with the severance payments. The Compensation Committee believes that the terms of the employment agreements, including triggering events and amounts payable, are competitive with severance protection being offered by other companies with whom we compete for highly qualified executives. The material terms of these agreements, as in effect for Fiscal 2024, are described in the section entitled “Narrative to the Summary Compensation Table – Employment Arrangements with the Named Executive Officers.”