UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

Filed by the Registrant  ☒                             Filed by a party other than the Registrant  ☐

Check the appropriate box:

 

URBAN OUTFITTERS, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

 

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Dear Shareholder:

 

You are cordially invited to attend the 2021 Annual Meeting of Shareholders of Urban Outfitters, Inc. to be held at 10:30 a.m., on Tuesday, June 8, 2021 (the “Annual Meeting”).  This year, in light of the unprecedented impact of the Coronavirus (COVID-19), we will again conduct our Annual Meeting in a virtual format, via live audio webcast.  We believe that a virtual meeting will provide meaningful shareholder access and participation and also protect the health and safety of our shareholders, employees and other stakeholders.  During the virtual meeting, you may ask questions and will be able to vote your shares electronically.  Shareholders can access the Annual Meeting by visiting https://web.lumiagm.com/270154195 (password: urban2021).

The matters to be considered and voted upon are described in the 2021 Notice of Annual Meeting of Shareholders and the Proxy Statement that accompany this letter. It is important that your shares be represented and voted at the Annual Meeting. Kindly read the attached Proxy Statement and vote your shares at the meeting, over the Internet, by telephone or, if you received one, by signing and dating the paper copy of the proxy card and returning it promptly.

I look forward to your virtual participation at the Annual Meeting where we will review the business and operations of Urban Outfitters, Inc.

 

DATE: April 1, 2021

 

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URBAN OUTFITTERS, INC.

5000 South Broad Street

Philadelphia, Pennsylvania 19112-1495

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

June 8, 2021

 

TO OUR SHAREHOLDERS:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Urban Outfitters, Inc. (the “Company”) will be conducted as follows:

Date:June 8, 2021

Time:10:30 a.m.

We encourage you to access the meeting prior to the start time to allow time for check in. Please note that there is no in-person annual meeting for you to attend.

     firm for Fiscal Year 2022.

The Board of Directors of the Company unanimously recommends that you vote “FOR” the election of each of the nominees for director listed in Proposal 1 and “FOR” Proposals 2 and 3.

The Board of Directors of the Company has fixed April 1, 2021 as the record date for determining which shareholders are entitled to notice of, and to vote at, the Annual Meeting of Shareholders or any adjournment or postponement thereof.

 

DATE: April 1, 2021

 

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URBAN OUTFITTERS, INC.

5000 South Broad Street

Philadelphia, Pennsylvania 19112-1495

 

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

 

The Board of Directors of Urban Outfitters, Inc. (the “Company”) is furnishing this proxy statement to solicit proxies from the Company’s shareholders for use at the Annual Meeting of Shareholders (the “Annual Meeting”), to be held on Tuesday, June 8, 2021 at 10:30 a.m., and any adjournments or postponements thereof. This year, in light of the unprecedented impact of the Coronavirus (COVID-19), we will conduct our Annual Meeting in a virtual format, via live audio webcast at https://web.lumiagm.com/270154195. The Company believes that a virtual meeting will provide meaningful shareholder access and participation and also protect the health and safety of our shareholders, employees and other stakeholders. During the virtual meeting, shareholders may ask questions and will be able to vote their shares electronically.

The Company is making its proxy statement (this “Proxy Statement”) and its annual report to shareholders available electronically via the Internet. On or before April 29, 2021, we will mail to our shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this Proxy Statement and our annual report and how to vote. Shareholders who receive the Notice will not receive a printed copy of the proxy materials in the mail, although a proxy card will be mailed separately to each shareholder that beneficially owns more than 1,000 of the Company’s common shares, par value $.0001 per share (the “Common Shares”). If you would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice.

Only shareholders of record, as shown on the transfer books of the Company at the close of business on April 1, 2021 (the “Record Date”), are entitled to notice of, and to vote at, the Annual Meeting. On March 10, 2021, there were 98,216,794 Common Shares outstanding. Shareholders of record on the Record Date may vote (i) by Internet by visiting the website specified in the Notice and on the proxy card, (ii) by telephone using the instructions provided in the Notice and on the proxy card, (iii) electronically at the Annual Meeting or (iv) by marking, executing and returning the proxy card, in accordance with the instructions thereon. Shareholders who hold their Common Shares in “street name” through a bank, broker or other holder of record (a “nominee”) must vote their Common Shares in the manner prescribed by their nominee.

Presence at the Annual Meeting, via webcast or by proxy, of the holders of a majority of the Common Shares entitled to vote is necessary to constitute a quorum, which is required for the Company to conduct business at the Annual Meeting. Each Common Share entitles the holder to one vote on each matter presented at the Annual Meeting. When voting is properly authorized over the Internet, by telephone or electronically at the Annual Meeting or proxy cards are properly dated, executed and returned, the Common Shares will be voted in accordance with the instructions of the shareholder.

Any shareholder giving a proxy has the power to revoke it prior to its exercise either by giving written notice to the Secretary of the Company, by voting electronically at the Annual Meeting, by executing a subsequent proxy card or by submitting a subsequent proxy over the Internet or by telephone. Shareholders who hold their Common Shares in “street name” must obtain a legal proxy from their nominee in order to vote at the Annual Meeting and must otherwise follow instructions provided by their nominee with respect to revocation of voting instructions. After obtaining a legal proxy from their nominee, shareholders who hold their Common Shares in “street name” may register to attend the Annual Meeting by submitting proof of their legal proxy reflecting the number of their shares along with their name and email address to American Stock Transfer & Trust Company, LLC (“AST”). Requests for registration should be directed to proxy@astfinancial.com or to facsimile number 718-765-8730.  Written requests can be mailed to:

 

American Stock Transfer & Trust Company LLC

Attn:  Proxy Tabulation Department

6201 15^th Avenue

Brooklyn, NY 11219

Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 21, 2021.  Shareholders who hold their Common Shares in “street name” and register to attend the Annual Meeting will receive confirmation of registration by email after AST receives their registration materials.

The following table summarizes the vote threshold required for approval of each proposal and the effect on the outcome of the vote of abstentions and uninstructed shares held by nominees. When a shareholder who holds his or her Common Shares in “street name” does not provide voting instructions to his or her nominee, the nominee may not vote those shares on matters deemed non-routine (referred to as broker non-votes). Proposals 1 and 3 below are non-routine matters.

Signed but unmarked proxy cards will be voted “FOR” the election of each of the nominees for director listed in Proposal 1 and “FOR” Proposals 2 and 3 and in accordance with the judgment of the persons voting the proxies with respect to such other matters as may come before the Annual Meeting and any adjournments or postponements thereof.

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PROPOSAL 1.    ELECTION OF DIRECTORS

The Company’s Amended and Restated By-laws (the “By-laws”) provide for the Board of Directors to be composed of as many directors as are designated from time to time by the Board of Directors. Currently, there are ten directors, all of whom are standing for re-election. Each director elected shall serve for a term of one year and until a successor is elected and qualified.

Unless otherwise directed, the persons named on the proxy intend to vote all valid proxies received by them “FOR” the election of the listed nominees. In the event any of the nominees shall be unable or unwilling to serve as a director, the persons named on the proxy intend to vote “FOR” the election of any person as may be nominated by the Board of Directors in substitution. The Company has no reason to believe that any of the nominees named below will be unable or unwilling to serve as a director if elected.

A nominee for election as a director must receive a majority of the votes cast to be elected. A majority of the votes cast means that the number of the votes cast “for” a nominee must exceed the number of votes cast “against” that nominee. Each shareholder is entitled to only one vote per share in the election of directors and each director nominee is voted upon separately. If an incumbent director who is a candidate for re-election is not elected, the director will be deemed to have tendered his or her resignation to the Board of Directors. The Nominating and Governance Committee of the Board of Directors (the “Nominating Committee”) will make a recommendation to the Board of Directors on whether to accept or reject the resignation, or whether other action should be taken, and the Board of Directors will be required to act on the Nominating Committee’s recommendation and disclose its decision and the rationale for the decision.

The nominees for re-election to the Board of Directors are Edward N. Antoian, Sukhinder Singh Cassidy, Harry S. Cherken, Jr., Margaret A. Hayne, Richard A. Hayne, Elizabeth Ann Lambert, Amin N. Maredia, Wesley S. McDonald, Todd R. Morgenfeld and John C. Mulliken. The Board of Directors has determined that eight of the nominees, Messrs. Edward N. Antoian, Harry S. Cherken, Jr., Amin N. Maredia, Wesley S. McDonald, Todd R. Morgenfeld and John C. Mulliken, and Mmes. Elizabeth Ann Lambert and Sukhinder Singh Cassidy, are, and Messrs. Galloway and Lawson, who served on the Board of Directors during Fiscal 2021, were, independent under the listing standards of the NASDAQ Global Select Market (“NASDAQ”). The Board of Directors believes that all of its directors possess personal and professional integrity, good judgment, a high level of ability and business acumen, and have performed exceptionally well in their respective time served as directors.

 

 

Mr. Antoian, 65, is a partner of and Founder of Zeke Capital Advisors, a financial advisory firm. From 1997 until March 2019, Mr. Antoian was a partner and Senior Portfolio Manager at Chartwell Investment Partners.  Prior to that, Mr. Antoian worked at Delaware Management Co. as a Senior Portfolio Manager and at E.F. Hutton in Institutional Sales and as a certified public accountant for Price Waterhouse. Mr. Antoian holds an MBA in Finance and has financial and investment experience as a result of his experience as a CFA, CPA, financial advisor and portfolio manager. Mr. Antoian also serves as a director of three not-for-profit entities. As an independent director, Mr. Antoian brings his in-depth understanding of, and expertise in, finance and accounting to the Board of Directors.

 

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Ms. Singh Cassidy, 51, is chairman of theBoardlist, a premium talent marketplace she founded in 2015 that is aimed at connecting highly endorsed women leaders with board opportunities in the technology industry. Ms. Singh Cassidy is also a founding venture partner of the Diversify Capital Fund, a growth stage investment fund from Acrew Capital, since January 2021. From May 2018 to June 2020, she was President of StubHub, a ticket exchange and resale company, where she helped lead the company’s $4.05 billion sale to Viagogo in February 2020. Ms. Singh Cassidy served as chief executive officer of Joyus, a video commerce platform she founded, from January 2011 until February 2017. She has previously held various executive and managerial positions at companies including Google, Amazon, Polyvore, Inc., Accel Partners, Yodlee.com, News Corporation, and Merrill Lynch & Co., Inc. Ms. Singh Cassidy currently serves on the board of Upstart, Inc., a technology company in financial services, which she joined in February 2020, and has served on the boards of Trip Advisor, Inc., LM Ericsson Telephone Company, J. Crew Group, Inc., J. Hilburn, Inc., StitchFix, Inc., and Polyvore, Inc. As a consumer Internet and media executive, Ms. Singh Cassidy’s in-depth knowledge of the online media and advertising sectors, as well as her extensive executive, strategic and operational experience, bring a plethora of talent and expertise to the Board of Directors.

 

Mr. Cherken, 71, is Senior Counsel at the law firm of Faegre Drinker Biddle & Reath LLP in Philadelphia, Pennsylvania.  He was previously a partner of that firm from November 1984 to January 2020, is a former managing partner of that firm and also served as either Chair or Co-Chair of its Real Estate Group for 18 years. As a real estate lawyer for over 40 years representing public and private companies in the acquisition, construction, development, financing, leasing, management, consolidation and disposition of commercial real estate, he has extensive experience with various types of real estate transactions and retail leases, including negotiating real estate transactions and leases on behalf of the Company nearly from its inception. He also holds a Masters in Liberal Arts degree and serves as a trustee of various not-for-profit entities and academic institutions. In 2021, Mr. Cherken was appointed Honorary Consul for Philadelphia of the Republic of Armenia.

  

Ms. Hayne, 62, joined the Company in August 1982. She is an over 35-year veteran of the retail and wholesale industry.  She has served as Co-President of the Company since October 2020 and as Chief Creative Officer of Urban Outfitters, Inc. since November 2013. Ms. Hayne previously served as Chief Executive Officer of Free People from August 2015 until October 2020 and President of Free People from March 2007 until August 2016. Richard A. Hayne, the Company’s current Chairman and Chief Executive Officer, is Ms. Hayne’s spouse. Azeez Hayne, Chief Administrative Officer and General Counsel of the Company, is Ms. Hayne’s nephew. As an employee of the Company for over 35 years and a director since 2013, Ms. Hayne brings a wealth of both Company-specific and industry-wide knowledge and experience to the Board of Directors.

 

Mr. Hayne, 73, co-founded Urban Outfitters in 1970. He has been Chairman of the Board of Directors since the Company’s incorporation in 1976 and, until February 2016, also served as the Company’s President. Mr. Hayne served as the Company’s principal executive officer until 2007 and again beginning in January 2012. Margaret A. Hayne, Chief Executive Officer of Free People and Chief Creative Officer of Urban Outfitters, Inc., is Mr. Hayne’s spouse. Azeez Hayne, Chief Administrative Officer and General Counsel of the Company, is Mr. Hayne’s nephew. Mr. Hayne’s long tenure leading the Company as Chairman of the Board of Directors, his tenure as principal executive officer and his exceptional leadership skills make him uniquely qualified to serve as a director.

 

Ms. Lambert, 57, is a partner of Lambert McGuire Design, an architecture and interior design studio based in Austin, Texas, which she founded in 2019, that works on various restaurant, hotel and retail projects. Ms. Lambert is also the owner of El Cosmico, an 18-acre vintage trailer, tepee, tent hotel and event space in Marfa, Texas that she founded in 2009.  Previously, Ms. Lambert founded and served as partner of Bunkhouse Group, an Austin hospitality management company, from 2006 to 2019.  Prior to her experience as a hotelier, Ms. Lambert worked as a prosecutor in the New York County District Attorney’s office and the Austin, Texas Attorney General’s office. Currently, Ms. Lambert also serves on the Board of Directors of the National Council on Crime & Delinquency. Ms. Lambert’s experience growing a design-centric and customer-focused hospitality company from the ground up gives her a unique perspective and set of skills to contribute to the Board of Directors.

 

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Mr. Maredia, 48, is a Co-founder of, and Managing Partner at Meaningful Partners, a consumer-focused fund that invests in purpose, mission and consumer relevant businesses in the consumer sector. Prior to co-founding Meaningful Partners in 2018, Mr. Maredia served as the Chief Executive Officer of Sprouts Farmers Market, Inc (“Sprouts”), the second largest healthy grocer in the United States, beginning in 2015 and also served on the board of directors of Sprouts. Mr. Maredia also served as Chief Financial Officer of Sprouts from 2011 to 2015. Before Sprouts, Mr. Maredia served in key global strategic roles at Burger King Corporation including leading strategy, global business development and finance.  Mr. Maredia has also been deeply involved in local and global community work for over two decades around health, education and economic development with various domestic and global organizations including the Aga Khan Development Network, the Sprouts Healthy Communities Foundation, Teach for America and Pratham USA. Mr. Maredia attended the Harvard Business School management program and has an undergraduate degree in Accounting from the University of Houston. Mr. Maredia’s in-depth experience in the consumer sector, including high growth omni-channel businesses, as well as his public company experience as Chief Executive Officer, Chief Financial Officer and board member brings valuable expertise to serve as a director. Mr. Maredia was initially identified by Diversified Search, an outside search firm.

 

Mr. McDonald, 58, has been retired since 2017.  Previously, he held the principal officer position of Chief Financial Officer of Kohl’s Corporation from 2015 to 2017, and prior thereto, he served as Senior Executive Vice President and Chief Financial Officer of Kohl’s beginning in 2010. Mr. McDonald began his tenure at Kohl’s in 2003 as its Executive Vice President and Chief Financial Officer. Before joining Kohl’s, Mr. McDonald served as Chief Financial Officer and Vice President of Abercrombie & Fitch Co. Earlier in his career, he held several positions of increasing responsibility at Target Corporation. Mr. McDonald currently serves on the Board of Directors of Wingstop Inc., which operates and franchises over 1,500 restaurants worldwide. Mr. McDonald’s experience as a chief financial officer and in other senior executive leadership roles working with publicly traded consumer products companies provides him with a distinctive set of qualifications and skills to serve as a director.

 

Mr. Morgenfeld, 49, is the Chief Financial Officer of Pinterest, Inc., a position he has held since 2016. Before joining Pinterest, Mr. Morgenfeld served as Vice President of Finance at Twitter from 2015 to 2016 and Treasurer and Senior Vice President of Corporate Development and Corporate Financial Analytics for Hewlett-Packard Company from 2013 to 2015. Prior to his role at Hewlett-Packard, Mr. Morgenfeld was an investment partner at Silver Lake Partners from 2004 to 2013. Mr. Morgenfeld graduated first in his class from the United States Military Academy and also holds an MBA degree from Stanford University. Mr. Morgenfeld has served as a director of a not-for-profit entity and as chairman of the board and member of the audit committee of a public company. His significant finance and consumer internet experience provides valuable expertise to the Board of Directors.

 

Mr. Mulliken, 48, currently serves as a Senior Advisor with The Boston Consulting Group (“BCG”), a global management consulting firm where Mr. Mulliken previously served as a management consultant on topics of retail, consumer goods and technology, and a frequent advisor to high growth technology companies. Prior to re-joining BCG in 2020, Mr. Mulliken served on the executive team at Wayfair Inc. for a decade, serving as Chief Technology Officer and Senior Vice President of Strategic Initiatives. Mr. Mulliken founded and led several lifestyle brands including Joss & Main and Birch Lane.  He also led the acquisition and integration of DwellStudio as well as the ground-up creation of a proprietary ad tech business and tech stack.  Mr. Mulliken previously served as the Chief Integrated Product Officer at IndigoAg, an agricultural technology company.  Mr. Mulliken also serves on the board at Bombas, a direct-to-consumer apparel company. Mr. Mulliken has a 25-year track record of leading innovation and growth as a technology executive and management consultant.  Mr. Mulliken earned his undergraduate degree in Mathematics from Reed College and his MBA in Corporate Finance from London Business School. Mr. Mulliken’s decades of experience in ecommerce and multichannel retail as Chief Technology Officer and member of the executive team of a publicly traded company, as well as a strategy consultant and independent director, provides him valuable perspective as a director. Mr. Mulliken was initially identified by Diversified Search, an outside search firm.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”

THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.

 

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CORPORATE GOVERNANCE AT URBAN OUTFITTERS

Governance Summary & Highlights

We are committed to corporate governance practices that promote long-term value creation, transparency and accountability to our shareholders. The Company and the Board of Directors engage with shareholders in an effort to ensure that management and the Board are focused on, and responsive to, investor priorities and concerns.

After extensive shareholder engagement efforts and evaluation of best practices over the past several years, the Board of Directors has adopted numerous governance changes, including:

In addition, the Company has substantially increased the number of independent Directors on the Board of Directors and significantly diversified the Board of Directors on multiple dimensions. In recent years, the Board of Directors has added multi-channel retail, financial, technology and consumer-sector expertise to the Board of Directors. If all director nominees are elected at the Annual Meeting, female Directors will make up 30% of the Board of Directors. For the fifth consecutive year, female Directors make up more than 25% of the Board of Directors. The Company will continue to seek new skills sets for the Board of Directors and to enhance overall diversity in board recruitment efforts going forward.

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The matrix below provides summary information regarding the candidates for and current Board of Directors in an easy-to-read format.

 

 

 

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 Board of Directors

Our business is managed under the direction of our Board of Directors in accordance with the Pennsylvania Business Corporation Law of 1988 and our By-laws. Members of the Board of Directors are kept informed of our business through discussions with the Chairman of the Board of Directors (the “Chairman”), the Chief Financial Officer and other officers, by reviewing materials provided to them and by participating in regular and special meetings of the Board of Directors and its committees. In addition, to promote open discussion among our non-employee directors, those directors meet in regularly scheduled executive sessions without the participation of management or employee directors.

The foundation for our corporate governance is the Board of Directors’ policy that a majority of the members of the Board of Directors should be independent. We have reviewed internally and with our Board of Directors the provisions of the Sarbanes-Oxley Act of 2002, the related rules of the U.S. Securities and Exchange Commission (the “SEC”) and current NASDAQ Marketplace Rules regarding corporate governance policies and procedures. Our corporate governance documents comply with all applicable requirements.

In accordance with our By-laws, our Board of Directors has specified that the number of directors will be ten, effective as of the date of the Annual Meeting.  Currently, there are ten directors, eight of whom are non-employee directors. The Board of Directors has determined that none of the eight current non-employee directors have any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each meets the objective requirement of “independence” under the NASDAQ Marketplace Rules. Therefore, the Board of Directors has determined that each of these eight directors is an “independent” director under the standards currently set forth in the NASDAQ Marketplace Rules. Neither Richard A. Hayne nor Margaret A. Hayne is independent. See also “—Audit Committee” below.

The Board of Directors currently combines the role of Chairman and the role of Chief Executive Officer. Richard A. Hayne currently serves in both of these positions. The Board of Directors believes this is the most efficient and effective leadership structure for the Company at this time. Mr. Hayne is the co-founder of the Company and has been its Chairman since the Company’s incorporation in 1976, and as such, the Board of Directors believes that he is uniquely qualified through his experience and expertise to set the agenda for, and lead discussions of, strategic issues for the Company at the board level. Mr. Hayne has been instrumental in the Company’s historical success and is in large part responsible for the Company’s substantial growth since its inception.

The Board of Directors believes that the Company’s corporate governance structure provides the appropriate balance between the need for consistent strategic direction and the need for objectivity and independence of the non-management directors and includes several effective oversight mechanisms.  The Company’s corporate governance structure includes, but is not limited to, the following components:  (i) the Board of Directors is comprised of a majority of independent directors; (ii) following most meetings of the Board of Directors, the independent directors meet in executive session without the Chairman present to review, among other things, his performance as Chief Executive Officer; and (iii) various committees of the Board of Directors composed of only independent directors perform oversight functions independent of management, such as overseeing the integrity of the Company’s financial statements, senior executive compensation (including the compensation of the Chief Executive Officer) and the selection and evaluation of directors. Accordingly, the Board of Directors believes that requiring that the Chairman be a non-management director would weaken the Company’s leadership structure without providing any added benefit beyond that already achieved by its existing governance structure. The Board of Directors retains authority to modify this structure as it deems appropriate.  

In order to enhance the Board of Directors’ active and objective oversight of our management, the Board of Directors annually elects one of its independent directors to serve in a lead capacity (the “Lead Director”). Edward N. Antoian has been elected by the Board of Directors to serve as the Lead Director since 2018. The duties of the Lead Director are to (i) preside at all meetings of the Board of Directors at which the Chairman is not present, including any executive sessions of the independent directors, (ii) call meetings of the independent directors, (iii) serve as the principal liaison between the Chairman and the independent directors, (iv) approve the frequency of meetings of the Board of Directors and meeting agendas and schedules, (v) be available, when appropriate and when the Chairman is not available, for consultation and direct communication with shareholders of the Company, and (vi) review the Lead Director Charter on an annual basis and recommend to the Board of Directors for approval any modifications or changes. A copy of the charter for the Lead Director is available on the Company’s corporate website, www.urbn.com.

During Fiscal 2021, the Board of Directors held six meetings. Each member of the Board of Directors attended at least 75% of the total number of meetings of the Board of Directors and all committees on which he or she sits, except Messrs. Maredia and Mulliken, who were not elected to the Board of Directors until November 2020, and Mr. Lawson, who did not stand for re-election at the Company’s 2020 Annual Meeting of Shareholders.  All references in this Proxy Statement to our fiscal years refer to the fiscal years ended on January 31 in those years. For example, “Fiscal 2021” refers to the Company’s fiscal year ended January 31, 2021.

Committees of the Board of Directors

Our Board of Directors has an Audit Committee, a Compensation and Leadership Development Committee (“Compensation Committee”) and a Nominating and Governance Committee. The charters of these committees have been approved by our Board of Directors and are available on the Company’s corporate website at www.urbn.com.

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For a portion of Fiscal 2021, our Board of Directors also had an Innovation Committee, the charter of which was approved by our Board of Directors and was available on the Company’s corporate website at www.urbn.com while the Innovation Committee remained a standing committee. The Innovation Committee did not meet during Fiscal 2021 and was dissolved on the date of the 2020 Annual Meeting of Shareholders. The functions that were previously performed by the Innovation Committee are now performed by the full Board of Directors.

 

Audit Committee

The Audit Committee operates under a written charter that has been approved by the Board of Directors. The charter is reviewed annually by the Audit Committee with any recommended changes approved by the Board of Directors. The Audit Committee’s primary responsibility is to assist the Board of Directors in fulfilling its oversight responsibilities to our shareholders and other constituencies. In furtherance of those oversight responsibilities, the Audit Committee’s primary duties are to: (1) appoint (and terminate), compensate and oversee the work of the independent accountants, including the audit plan, scope and procedures; (2) pre-approve, in accordance with its pre-approval policies, all audit services and permissible non-audit services provided by the independent accountants to the Company; (3) confirm and assure the independence of the independent accountants by reviewing and discussing the formal written statement and other periodic written reports received from the independent accountants regarding their objectivity and independence, including statements concerning other relationships and services that may affect their independence; (4) set clear hiring policies for employees and former employees of the independent accountants; (5) consider and review with management, the independent accountants and management of the Company’s internal audit department the adequacy and effectiveness of the Company’s internal controls, including processes for identifying significant risks or exposures (as further discussed in “—Risk Management” below) and elicit recommendations for the improvement of such internal control procedures where desirable; (6) review with the independent accountants and management (i) the Company’s financial reporting (including financial statements and related footnotes), (ii) any significant changes required in the independent accountants’ audit plan, (iii) any material difficulties or disputes with management encountered during the course of the audit, (iv) other matters related to the conduct of the audit, (v) any material written communications provided by the independent accountants to management and the Company’s response to those communications and (vi) any legal and regulatory matters that may have a material impact on the financial statements; (7) review the appointment, replacement, reassignment or dismissal of management of the Company’s internal audit function; (8) review and approve all related-party transactions; (9) establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding these issues; (10) report committee actions to the Board of Directors with such recommendations as the Audit Committee may deem appropriate; (11) prepare the audit committee report required to be filed with the SEC; (12) investigate any matter brought to its attention within the scope of the Audit Committee’s duties, with the power to retain and determine the appropriate compensation for independent legal, accounting, financial and other advisors as the Audit Committee may deem necessary or appropriate to carry out its duties, at the expense of the Company; and (13) enforce the Company’s Code of Conduct and Ethics (the “Code of Conduct”). The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Board of Directors has determined that each member of the Audit Committee is independent under the independence standards discussed above, and that each member meets the additional independence standards applicable under the Sarbanes-Oxley Act of 2002 and related rules of the SEC and NASDAQ Marketplace Rules. In addition, the Board of Directors has determined that each of the current directors serving on the Audit Committee, Wesley S. McDonald, Edward N. Antoian and Todd R. Morgenfeld, qualifies as an “audit committee financial expert” in accordance with the definition set forth in Item 407(d)(5)(ii) of Regulation S-K, as adopted by the SEC. In Fiscal 2021, the Audit Committee met eight times.  

Compensation Committee

The Compensation Committee operates under a written charter that has been approved by the Board of Directors. The charter is reviewed annually by the Compensation Committee with any recommended changes approved by the Board of Directors. The Compensation Committee is responsible for overseeing our compensation strategy and for the oversight and administration of our compensation programs including our stock incentive plans. The Compensation Committee: (1) annually reviews and determines the compensation of the Chief Executive Officer and all other executive officers, including the use of cash incentives and deferred compensation plans; (2) determines the Company’s policy with respect to the application of Section 162(m) of the Internal Revenue of 1986, as amended (the “Code”); (3) approves compensation programs and grants involving the use of the Common Shares and other equity securities; (4) appoints (based on the consideration of certain factors set forth in the Compensation Committee charter), compensates and oversees the work of the compensation consultant retained by the committee; (5) prepares an annual report on executive compensation for inclusion in the Company’s proxy statement in accordance with applicable rules and regulations; and (6) reviews and discusses with management plans and programs to support the selection, development and retention of future leadership for the Company. The Board of Directors has determined that each member of the Compensation Committee is independent under the independence standards currently set forth in the NASDAQ Marketplace Rules. For a discussion of the role of executive officers and compensation consultants in determining executive and director compensation, see “Compensation of Executive Officers—

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Compensation Discussion and Analysis—Design of Compensation Program” and “—Operation and Process—Role of Executive Officers in Establishing Compensation.” In Fiscal 2021, the Compensation Committee met four times.

Nominating Committee

The Nominating Committee operates under a written charter that has been approved by the Board of Directors. The charter is reviewed annually by the Nominating Committee with any recommended changes approved by the Board of Directors. The Nominating Committee, in consultation with our Chairman: (1) recommends to the Board of Directors for its selection (i) potential nominees for director to stand for election at the Company’s annual meeting of shareholders, including without limitation, those proposed by shareholders and (ii) individuals to be considered by the Board of Directors to fill vacancies; (2) establishes criteria for selecting new directors; (3) conducts, or causes to be conducted, background and qualifications checks of new director candidates; and (4) evaluates directors before nomination for re-election. The Nominating Committee also periodically reviews the Company’s corporate governance policies and practices and recommends to the Board of Directors any appropriate modifications. The Board of Directors has determined that each member of the Nominating Committee is independent under the independence standards currently set forth in the NASDAQ Marketplace Rules. In Fiscal 2021, the Nominating Committee met five times.

Director Nominations

The Nominating Committee recommends director nominees to the Board of Directors. The Nominating Committee seeks individuals with diverse experience from traditional corporate environments as well as from other sources who are qualified to be directors based on the Nominating Committee’s judgment of the potential candidate’s experience, skills and knowledge of business and management practices. If needed, the Nominating Committee will use a third-party search firm to assist in finding director candidates.

The Nominating Committee considers the diversity of directors as part of the overall mix of factors when identifying and evaluating candidates for the Board of Directors, although it does not have a formal policy. The Company considers diversity broadly to include differences of viewpoint, professional experience, individual characteristics, qualities and skills, resulting in naturally varying perspectives among the directors and individual skills that complement the full Board of Directors. The Nominating Committee strives to broaden the knowledge and viewpoints of the members of the Board of Directors. Therefore, the Board of Directors, as a unit, possesses the appropriate skills and experience to oversee the Company’s business.

The nominees for election to the Board of Directors consist of individuals with several different areas of expertise, including physical and digital retail, creative and design, brand strategy, social media, finance and accounting, hospitality, law, technology and consumer-sector experience.

The Nominating Committee will give appropriate consideration to qualified persons recommended by shareholders for nomination as directors and will evaluate such qualified persons in the same manner as other identified candidates, when submitted prior to the applicable shareholder proposal date referred to in the “Proposals for 2022 Annual Meeting” section of this Proxy Statement, provided such recommendations comply with the applicable procedures in the Company’s By-laws, which are summarized in that section. Shareholders may submit director recommendations in writing to the Nominating Committee at Urban Outfitters, Inc., 5000 South Broad Street, Philadelphia, PA 19112-1495. Such recommendations must also include: (i) sufficient biographical information about the proposed nominee to permit the Nominating Committee to evaluate his or her qualifications and experience and (ii) the nominee’s consent to being named in the proxy statement and to serving as a director if elected.

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Risk Management

The Board of Directors is actively involved in the oversight of risks that could affect the Company. This oversight is conducted primarily through the Audit Committee, but the full Board of Directors has retained responsibility for general oversight of risks. The Audit Committee, pursuant to its charter, considers and reviews with management, the Company’s internal audit department and the independent registered public accounting firm the adequacy of the Company’s internal controls, including the processes for identifying significant risks or exposures, and elicits recommendations for the improvements of such procedures where desirable. In addition to the Audit Committee’s role, the full Board of Directors is involved in oversight and administration of risk and risk management practices by overseeing members of senior management in their risk management capacities, regularly reviewing and analyzing the Company’s investment portfolio and accompanying risk levels and reviewing and analyzing inventory risk each quarter as part of the review of quarterly financial statements. Members of the Company’s senior management have day-to-day responsibility for risk management and establishing risk management practices, and members of management are expected to report matters relating specifically to the Audit Committee directly thereto and to report all other matters directly to the Board of Directors as a whole. Members of the Company’s senior management have an open line of communication to the Board of Directors and have the discretion to raise issues from time-to-time in any manner they deem appropriate, and management’s reporting on issues relating to risk management typically occurs through direct communication with directors or committee members as matters requiring attention typically arise.

In addition to the Audit Committee, the Compensation Committee considers the risks that may be implicated with executive compensation, as discussed in “Compensation of Executive Officers—Compensation Discussion and Analysis—Determination of Amount of Element; Relation of Elements to Primary Compensation Objectives—Setting Performance Criteria and Targets.”

 

Communications with Directors  

Shareholders may communicate with members of the Company’s Board of Directors by writing, as applicable, to the full Board of Directors, a particular committee or a specific director at Urban Outfitters, Inc., 5000 South Broad Street, Philadelphia, PA 19112-1495. The Company’s telephone number is (215) 454-5500 and its fax number is (215) 454-4660.

Annual Meeting

Pursuant to Company policy, the directors are expected to attend the Company’s annual meetings of shareholders. All of the Company’s current directors attended last year’s annual meeting of shareholders, except Messrs. Maredia and Mulliken, who were not elected to the Board of Directors until November 2020.

Code of Conduct and Ethics

The Company has had a written code of conduct for a number of years. The Code of Conduct applies to the Company’s directors and employees, including its Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. The Code of Conduct includes guidelines relating to compliance with laws, including anti-bribery and illegal payment laws, the ethical handling of actual or potential conflicts of interest, the use of corporate opportunities, the protection and use of the Company’s confidential information, the acceptance of gifts and business courtesies, accurate financial reporting, and procedures for promoting compliance with, and reporting violations of, the Code of Conduct. The Code of Conduct is available on the Company’s corporate website at www.urbn.com. The Company intends to post any amendments to the Code of Conduct and also to disclose any waivers (to the extent applicable to the Company’s executive officers and directors) on its website.

 

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PROPOSAL 2.    RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
FISCAL YEAR 2022

The Audit Committee has appointed Deloitte & Touche LLP as the Company’s independent registered public accounting firm to audit the consolidated financial statements of the Company and the effectiveness of internal control over financial reporting for Fiscal 2022 and to perform such other appropriate accounting services as may be approved by the Audit Committee. The Board of Directors proposes and recommends that shareholders ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for Fiscal 2022.

More information concerning the relationship of the Company with its independent registered public accounting firm appears above under the heading “Corporate Governance at Urban Outfitters—Audit Committee” and below under the headings “Relationships with Auditors” and “Audit Committee Report.”

If the shareholders do not ratify the appointment, the Audit Committee will take such vote into account in considering the retention of Deloitte & Touche LLP.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2022.

 

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PROPOSAL 3.    Shareholder advisory vote on executive
compensation  

Pursuant to Section 14A of the Exchange Act, we are seeking a non-binding advisory vote from our shareholders to approve the compensation of our named executive officers, as set forth in this Proxy Statement. This vote is intended to provide an overall assessment of our executive compensation program rather than focus on any specific item of compensation. Based on an advisory vote at our 2017 Annual Meeting of Shareholders, it is our current policy to hold an advisory vote on the compensation of our named executive officers every year.

At the Company’s 2020 Annual Meeting of Shareholders, our shareholders overwhelmingly approved, with approximately 99% of the votes cast, the compensation of our named executive officers. The Company welcomes our shareholders’ views on this subject, and our Board of Directors and Compensation Committee will carefully consider the outcome of this vote consistent with the best interests of all shareholders. As an advisory vote, however, the outcome is not binding on the Company, the Board of Directors or the Compensation Committee.

As described in detail under the heading “Compensation of Executive Officers—Compensation Discussion and Analysis,” the Company’s executive compensation program is designed to attract, retain, and motivate executive and key employee talent in support of its primary objective of building compelling brands that connect with the customer on an emotional level. Please read the Compensation Discussion and Analysis for additional details about our executive compensation programs, including information about the Fiscal 2021 compensation of our named executive officers. Specifically, we are seeking a vote on the following resolution:

RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RESOLUTION ABOVE TO APPROVE EXECUTIVE COMPENSATION.

 

 

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OTHER MATTERS

The Board of Directors knows of no matters to be presented for action at the Annual Meeting, other than those set forth herein and in the attached notice and customary procedural matters. If any other matters should properly come before the Annual Meeting or any adjournments or postponements thereof, the proxies solicited hereby will be voted on such matters, to the extent permitted by the rules and regulations of the SEC, in accordance with the judgment of the persons voting such proxies.

COMPENSATION OF DIRECTORS

FISCAL 2021

 

 

 

 

 

 

 

 

For a discussion of the assumptions utilized in the fair value models in Fiscal 2021 and Fiscal 2020, please see the “Share-Based Compensation” note to the Company’s Consolidated Financial Statements for the fiscal year ended January 31, 2021, which is included in the Company’s Annual Report on Form 10-K, as filed with the SEC on April 1, 2021.

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Typically, each non-employee director is paid two cash installments consisting of (i) a $50,000 payment in August, following the Company’s annual meeting of shareholders, and (ii) a $50,000 payment upon completion of the fiscal year. In response to the Coronavirus (“COVID-19”) pandemic, however, the Board of Directors approved a furlough of a substantial number of store, wholesale and home office employees, which lasted from April 1, 2020 to July 31, 2020, with some furloughs resulting in layoffs as of July 31, 2020. In connection with the furlough, the Board of Directors also approved a 50% reduction in the cash component of director compensation for Fiscal 2021, as one of its many measures to protect the Company’s financial position and increase financial flexibility during the COVID-19 pandemic. As a result, each member of the Board of Directors other than Messrs. Galloway and Lawson, who did not receive any cash compensation for their service on the Board of Directors in Fiscal 2021, received only one cash installment of $50,000 in Fiscal 2021.

During Fiscal 2021, the Company granted, on a discretionary basis, each non-employee director serving on June 2, 2020, 8,300 Restricted Stock Units (“RSUs”) under the 2017 Plan (as defined below). The grant date fair value of the RSUs granted under the 2017 Plan was $17.99.

 

All directors and their immediate family members are eligible to receive discounts on our merchandise through use of discount cards issued to them and in accordance with our employee merchandise discount policy.  

The Board of Directors believes it is good corporate practice to periodically review and re-evaluate the total compensation paid to the Company’s non-employee directors for their service on the Board of Directors, including the cash and equity components of that compensation. The Board of Directors intends to review the compensation paid to the non-employee directors following the Annual Meeting and will make any adjustments it deems appropriate.

 

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COMPENSATION OF EXECUTIVE OFFICERS

Compensation Discussion and Analysis

Company Objectives

The Company’s compensation program is designed to attract, retain and motivate executive and key employee talent in support of its primary objective of building compelling brands that connect with the customer on an emotional level. The Company believes that delivering value to the customer by excelling at “experiential retailing” is the foundation for the long-term maximization of shareholder value.

Design of Compensation Program

General

In furtherance of our primary objective, our compensation program is designed to motivate executives to maximize shareholder value and grow our brands, both in the short-term and the long-term, by rewarding executives for doing so. Our compensation program seeks to establish balanced performance metrics that promote disciplined progress towards longer-term goals and that correlate to the revenue and profit objectives of, and appropriate risk to, the Company. The majority of our executive officers’ total compensation is comprised of a combination of performance-based compensation and equity-based awards, which derive their benefit from increases in shareholder value. This furthers our core compensation principle of providing pay for both individual and Company-wide performance. These long-standing compensation policies were designed and approved by management, the Compensation Committee and/or the Board of Directors, as appropriate. In addition, at the 2020 Annual Meeting of Shareholders, our shareholders overwhelmingly approved our executive compensation program. We have identified the first step in attaining these objectives as having superior executives in place, and as such, our compensation program’s initial purpose is to attract and retain exceptional executive leadership. This requires our compensation to be competitive in the marketplace. The other step in attaining our objectives is to reward these executives through annual performance-based compensation based on the achievement of specific operating goals that have been determined by the Compensation Committee based on recommendations by our Chairman and Chief Executive Officer. Moreover, through equity-based compensation, we attempt to align the compensation of our executives with the interests of the shareholders and motivate our executives to achieve the Company’s longer-term goals.

Long-Term Versus Currently Paid Out Compensation

Current compensation paid to executive officers includes base salaries, which are paid periodically throughout the fiscal year, and performance bonuses, which are awarded at the end of the fiscal year. The Company’s long-term compensation has been comprised of stock options, stock appreciation rights, performance stock units and restricted stock units. The Company has long believed that the characteristics of equity-based compensation, particularly the extended vesting periods, leverage and the deferral of taxation until exercise or vesting, are closely aligned with maximizing shareholder value, supporting its long-term growth strategies and aligning compensation with risk outcomes. The Company believes that equity-based compensation awards made in Fiscal 2019, Fiscal 2020 and Fiscal 2021 share these characteristics and offer the potential for meaningful compensation for superior performance measured over an extended period of time.

Beginning February 1, 2013, the Company allowed certain employees, including the Company’s named executive officers, an opportunity to participate in the Urban Outfitters Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is discussed more fully below in “Equity-Based Incentives—Nonqualified Deferred Compensation Plan.” As a matter of practice and philosophy, the Company has significantly limited the scope and value of perquisites provided to executive officers.

The Company’s compensation structure attempts to balance the ongoing cash requirements of the named executive officers for current income with the Company’s desire to create long-term incentives that are directly tied to growth in shareholder value. There is no pre-determined allocation between current and long-term compensation; the Compensation Committee maintains flexibility in this regard. Historically, however, equity compensation has provided the majority of income that named executive officers have derived from their employment with the Company. In recognition of this, the Compensation Committee takes the performance of the Common Shares (and therefore the perceived value of them to the executive) into consideration when making compensation decisions for each executive. Different positions may yield a different balance between cash and equity compensation in light of what the Compensation Committee decides will best further the Company’s objectives. For example, in Fiscal 2021, prior to the suspension of performance bonuses discussed below in “Determination of Amount of Element; Relation of Elements to Primary Compensation Objectives”, the bonus potential for brand leaders could have equaled or exceeded their base salary. This reflects the Company’s emphasis on the specific brand-related performance goals tied to the bonus for these particular executives. The maximum bonus potential in Fiscal 2021 for Francis J. Conforti, former Chief Financial Officer and current Co-President and Chief Operating Officer, would have been 100% of his base salary. His bonus plan, which was set in early Fiscal 2021 when he was Chief Financial Officer, consisted of financial metrics related to the revenue and profitability of the Anthropologie, Free People, and Urban Outfitters brands, representing 50% of his

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maximum potential bonus. The different elements of compensation are discussed more fully below in “Determination of Amount of Element; Relation of Elements to Primary Compensation Objectives.”

In the beginning of Fiscal 2009, citing his ownership of a substantial number of Common Shares and his confidence in the Company’s future performance, our Chairman and Chief Executive Officer, Richard A. Hayne, requested that his base salary be set at $1.00 per year, and the Compensation Committee continues to honor his request. Prior to the suspension of performance bonuses discussed below in “Determination of Amount of Element; Relation of Elements to Primary Compensation Objectives”, Mr. Hayne remained eligible to receive a performance bonus in Fiscal 2021, which was tied to revenue and profitability metrics. The performance criteria were based on two incremental levels (i.e. “Plan” level and “Goal” level). The Compensation Committee chose to focus on brand financial performance instead of Company-wide performance in order to create appropriate incentives for Fiscal 2021. The Compensation Committee provided “Plan” and “Goal” levels as the most appropriate measurements in Fiscal 2021.  

Operation and Process

Compensation Committee

The Company’s Compensation Committee, acting pursuant to its charter, sets the amount of each element of compensation for each named executive officer, as described herein and under “Corporate Governance at Urban Outfitters—Compensation Committee.” The Compensation Committee generally holds meetings at least four times a year, and compensation amounts for executive officers for the new fiscal year are generally set in the Company’s first fiscal quarter. In Fiscal 2021, there were four meetings of the Compensation Committee.

The Compensation Committee is currently comprised of four members, Todd R. Morgenfeld (who is the Compensation Committee’s chairman), Elizabeth Ann Lambert, Amin N. Maredia and Wesley S. McDonald, all of whom are “independent” directors, as defined by the NASDAQ Marketplace Rules. The Compensation Committee charter is available on the Company’s corporate website at www.urbn.com. The charter is reviewed by the Compensation Committee on an annual basis and revised as warranted.

Compensation Committee Consultant

Korn Ferry Hay Group (“Korn Ferry”) has served as a compensation consultant to the Compensation Committee since February 2018, providing advice on executive compensation matters. The Compensation Committee and the Board of Directors have discretion to appoint and terminate the consultant, as described in the Compensation Committee’s charter. The Compensation Committee determines the scope of the consultant’s review. While the compensation consultant does not typically make specific recommendations on the amount or form of compensation for any individual executive, the guidance and recommendations of the consultant regarding compensation generally have informed the Compensation Committee’s decisions regarding overall compensation structures. Korn Ferry sends its invoices for the compensation consultant’s services directly to the Compensation Committee, which reviews the invoices and then forwards them to the Company for payment.  During Fiscal 2021, the Company paid $88,000 to Korn Ferry for services rendered.

Role of Executive Officers in Establishing Compensation

The Compensation Committee is solely responsible for compensation determinations and compensation policies applicable to executive officers, as well as other matters provided in the Compensation Committee charter. Neither the Company’s Chief Executive Officer nor any other executive officer makes any such determinations or sets any such policies. The Compensation Committee does consult with the Chief Executive Officer in determining compensation levels for each other named executive officer, and the Compensation Committee takes his assessment of the performance of such named executive officers into consideration when weighing the factors and setting compensation. The Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Administrative Officer and other executive officers may attend portions of certain meetings of the Compensation Committee as needed.  

Neither the Chief Executive Officer nor any other officer has the authority to call Compensation Committee meetings or set meeting agendas themselves, nor do they meet with the compensation consultant on an individual basis without the consent of the Compensation Committee or its chairman.

The Chief Executive Officer has the primary role in making recommendations to the Compensation Committee regarding the assessment and design of programs, plans and awards. He is assisted by the Chief Operating Officer and Chief Financial Officer, who provide him with information and input on these items.

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Elements of Compensation

The Company’s compensation program is comprised of three main elements: (1) base salary, (2) performance bonus and (3) equity-based incentives, including stock appreciation rights, performance stock units, restricted stock units and stock options.

The Board of Directors has evaluated the Company’s overall compensation policies and practices for its employees to determine whether such policies and practices create incentives that can affect the Company’s risk and management of that risk and has further assessed whether any risks arising from these policies and practices are reasonably likely to have a material adverse effect on the Company. In connection with the evaluation, the Board of Directors considered, among other factors, the distribution of risk among the Company’s brands and segments, the overall mixture of compensation elements used to incentivize employees and the Company’s use of balanced performance metrics that promote disciplined progress towards longer-term goals. Based on its evaluation, the Board of Directors has concluded that the risks arising from the Company’s overall compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Selection of Elements

The Compensation Committee has chosen to utilize base salary, performance bonus and equity-based incentives because it believes such a compensation package, taken as a whole, is both competitive in the marketplace and directly reflects the Company’s primary objective of maximizing shareholder value and growing its brands. The rationale for the selection of each particular element is discussed in detail below.

 

Determination of Amount of Element; Relation of Elements to Primary Compensation Objectives  

The Compensation Committee reviews the amounts payable to each executive under each individual element of compensation, as well as the aggregate amount of compensation to such executive, in making compensation decisions. In response to the COVID-19 pandemic, the Company took several measures to protect its financial position and increase financial flexibility in Fiscal 2021; those measures include adjustments to executive compensation, as described below. The Compensation Committee believes the actions taken with respect to executive compensation in light of the COVID-19 pandemic are measured and appropriate given the economic impact on the Company and the Company’s financial performance during Fiscal 2021 and are aligned with the long-term interests of the Company’s shareholders. For further information on the impact of the COVID-19 pandemic on the Company, please see the Company’s Annual Report on Form 10-K, as filed with the SEC on April 1, 2021.

Base Salaries

Base salary is determined by position, experience and competitive market factors for comparable talent. Inasmuch as the main objective of the compensation plan is maximizing shareholder value, the Company generally seeks to set base salaries at or near prevailing market rates for comparable levels of responsibility in specialty retail so as to reduce the levels of committed compensation expense on the Company’s financial statements as well as the cash cost to the Company. The Company believes that it needs to offer competitive base salaries in order to retain and attract superior personnel, which is a key step in achieving its primary objectives.

As discussed above, under “Compensation of Directors,” in response to the COVID-19 pandemic, the Board of Directors approved a furlough of a substantial number of store, wholesale and home office employees, which lasted from April 1, 2020 to July 31, 2020, with some furloughs resulting in layoffs as of July 31, 2020. In connection with the furlough, the Board of Directors also approved a 20% reduction in executive compensation for the duration of the furlough, which reduction was subsequently extended to September 6, 2020. As a result, our named executive officers’ base salaries were reduced by 20% from April 1, 2020 to September 6, 2020.

Performance Bonuses

The Company’s executive officers are typically eligible to receive cash incentive bonuses based on the achievement of specific performance targets established in advance under the Urban Outfitters Executive Incentive Plan (as amended, the “Incentive Plan”). In determining performance objectives, the Compensation Committee sets forth specific targets that are consistent with its primary objectives. We believe that this presents the executive with clear objectives that, if achieved, will maximize shareholder value and further the growth of our brands while providing commensurate rewards to the executive.

 

For Fiscal 2021, the Compensation Committee set the performance criteria for each participant, including our named executive officers, in the first fiscal quarter prior to the onset of the COVID-19 pandemic. Eligibility for performance bonuses, the methodology for setting the performance criteria and targets, the role of executive officers in determining performance factors and the methodology for measuring achievement at the end of the fiscal year are all described below. Effective April 1, 2020, however, the Board of Directors suspended performance bonuses for Fiscal 2021 in its further efforts to protect the Company’s financial stability during the COVID-19 pandemic. Because of the suspension, the Company did not accrue bonuses and did not track metrics for achieving performance targets.

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Eligibility

The Compensation Committee determines executive officer eligibility for performance bonuses during the Company’s first fiscal quarter based on the Company’s financial budgets and operating plans and the roles that the executives have in achieving those objectives.

Setting Performance Criteria and Targets

Each year, the Compensation Committee sets the performance criteria for each participant during the Company’s first fiscal quarter in light of the Company’s growth strategy, major initiatives and current and projected operations and objectives. The criteria may be based on the performance of the participant, a division, the Company as a whole or a subsidiary of the Company, at the Compensation Committee’s discretion. Performance criteria may include, depending on the particular participant: sales, profit, return on sales, net operating profit after taxes, investment turnover, customer service indices, funds from operations, income from operations, return on assets, return on net assets, asset turnover, return on equity, return on capital, market price of Common Shares, economic value added, total shareholder return, net income, pre-tax income, earnings per share, operating profit margin, net income margin, sales margin, cash flow, market share, inventory turnover, sales growth, net revenue growth, capacity utilization, new stores opened, customer penetration, increase in customer base, net income growth, expense control and hiring of personnel. The Compensation Committee determines performance criteria that are appropriate for each participant. The Compensation Committee may also take into account the opinion of the named executive officer as to which criteria he or she feels is the best indicator of his or her performance. After a reasonable evaluation, the Compensation Committee concluded that while the criteria or targets for Fiscal 2021 reward prudent risk-taking in support of the Company’s objectives, they do not encourage or promote inappropriate risk-taking by the participants.  

Typically, the primary criteria for the performance bonus plans for executives with merchant responsibilities, such as the Global Chief Executive Officer, Free People Group and Urban Outfitters Group, would be revenue and operating profits for their specific brands. For executive officers who do not have merchant responsibilities, such as the Chief Financial Officer, the criteria generally include one or more brand or Company revenue and operating profits goals and may include specific targets related to their functional areas or other goals determined by the Compensation Committee. The Compensation Committee chose to focus on brand financial performance instead of Company-wide performance in order to create appropriate incentives for Fiscal 2021. The Compensation Committee provided “Plan” and “Goal” levels as the most appropriate measurements in Fiscal 2021.

Each performance criterion is then assigned a performance target. For example, for a criterion of “number of new stores opened,” the target would be the Company’s goal for a specified number of stores opened, consistent with the operating budget and with the brand growth strategies. The Compensation Committee takes historical revenue and operating profit performance and the current business environment into account in the development of the performance targets upon which performance bonuses are based. For a criterion of “revenue” and “operating profit,” the performance target for Fiscal 2021 was based on the Company’s achieving or exceeding two levels of revenue and operating profit, defined as “Plan” and “Goal” for the fiscal year. The thresholds for the functional area objectives take into consideration the operating budget and the goal of leveraging selling, general and administrative expenses as top line revenue grows, and those for functional area performance ratings are driven by the brand leaders’ or the Chief Executive Officer’s assessments of the functional areas.

Finally, the Compensation Committee establishes a schedule or matrix for each participant showing the maximum performance bonus (expressed as a percentage of base salary) payable for the achievement of the specified performance target. The specific amounts for each performance target are determined by assessing the profit contribution attained by meeting various targets and measuring the compensation outcomes achieved by meeting those targets while taking into account total compensation from base salary, bonus and equity compensation. The performance targets and the percentage of performance bonus subject to each performance objective for the Company’s named executive officers in Fiscal 2021 are described below in “—Measuring Achievement: Payment of Bonuses.”

 

Role of Executive Officers in Determining Performance Factors  

With respect to the performance bonus factors of all named executive officers, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer and the Chief Administrative Officer make recommendations to the Compensation Committee, which it considers when setting the performance bonus plans.

Measuring Achievement: Payment of Bonuses

At the end of the fiscal year, the Compensation Committee determines the extent of achievement of the pre-established performance targets for each criterion. The level of achievement attained is applied to the schedule to determine the individual’s adjusted performance bonus percentage, which is then multiplied by the individual’s award. The Compensation Committee has the discretion to award that amount or adjust the award payable if it believes such action would be in the best interest of the Company. While these awards were designed to be deductible under the performance-based compensation exception under Section 162(m) of the Code, the 2017 Tax Cuts and Jobs Act (the “TCJA”) eliminated the performance-based compensation exception such that all compensation over one million dollars paid to “covered employees” would be nondeductible. The TCJA also modified the definition of “covered

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employees.” Previously, “covered employees” included the chief executive officer of a corporation as of the close of the taxable year, or the three highest compensated officers for the taxable year (other than the chief executive officer and the chief financial officer). This term was modified under the TCJA to include any employee who was the chief executive officer or the chief financial officer or one of the three highest compensated officers (“Covered Employee”). In addition, an individual will generally be considered a Covered Employee if he or she was a “covered employee” under Section 162(m) (as in effect before the enactment of the TCJA) during any taxable year beginning after 2016.

Set forth in the tables below are the performance targets and the percentage of performance bonus subject to each performance objective for Fiscal 2021 for (i) the Chairman and Chief Executive Officer, (ii) the Co-President and Chief Operating Officer and former Chief Financial Officer, (iii) the Chief Financial Officer, (iv) the Global Chief Executive Officer of Urban Outfitters Group and Free People Group, (v) Former Global Chief Executive Officer of Urban Outfitters Group, (vi) Co-President and Global Chief Creative Officer, and (vii) Former Chief Operating Officer. Because of the suspension of performance bonuses described above, however, the Company did not accrue bonuses and did not track metrics for achieving performance targets.

Richard A. Hayne – Chairman and Chief Executive Officer

 

Francis J. Conforti – Co-President and Chief Operating Officer (Bonus plan below is what was set in early Fiscal 2021 when Mr. Conforti was the Chief Financial Officer)

 

 

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Melanie Marein-Efron – Chief Financial Officer (Bonus plan below is what was set in early Fiscal 2021 when Ms. Marein-Efron was Executive Director of Financial Planning and Analysis)

 

 

 

Sheila B. Harrington – Global Chief Executive Officer Urban Outfitters Group and Free People Group (Bonus plan below is what was set in early Fiscal 2021 when Ms. Harrington was the Chief Executive Officer of Free People)  

 

 

 

Trish Donnelly – Former Global Chief Executive Officer Urban Outfitters Group

 

 

 

 

 

 

 

 

 

 

 

 

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Margaret A. Hayne – Co-President and Global Chief Creative Officer (Bonus plan below is what was set in early Fiscal 2021 when Ms. Hayne was the Global Chief Creative Officer)

 

 

Calvin B. Hollinger – Former Chief Operating Officer

 

 

In the future, if the Company were to change the financial budgets or goals upon which the performance targets and awards were based for a particular fiscal year, the Compensation Committee would have discretion to adjust bonus awards accordingly where it believes it is warranted in light of the objectives of the compensation program. With respect to Covered Employees, however, such adjustments may only be made to lower the compensation that would otherwise be receivable.

Equity-Based Incentives

The Compensation Committee believes that stock ownership by management and equity-based performance compensation arrangements are useful tools to align the interests of management with those of the Company’s shareholders. Where executives are shareholders themselves, the executives will realize a direct benefit by maximizing shareholder value. In addition, as shareholders, executives will benefit from successful growth of the Company’s brands to the extent that this will increase the value of their shareholdings. Accordingly, the Company’s executives are eligible to receive stock appreciation rights, performance stock units, restricted stock units, restricted stock and stock options under the Company’s stock incentive plans, which have been approved by the Company’s shareholders. The Company may grant awards under the Urban Outfitters 2008 Stock Incentive Plan (the “2008 Plan”), other than incentive stock options, and under the Urban Outfitters 2017 Stock Incentive Plan (the “2017 Plan”). In addition, there are awards outstanding under the Urban Outfitters 2004 Stock Incentive Plan (the “2004 Plan,” and, together with the 2008 Plan and the 2017 Plan, the “Plans”), although awards may no longer be made under the 2004 Plan.

The Compensation Committee determines whether to grant equity awards, the type of award and the size of the grant to each executive officer based upon its overall assessment. The Compensation Committee evaluates the executive officer’s performance after

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taking into consideration prior years’ grants, the organizational impact of the executive officer and the need to respond to competitive conditions in order retain executive officers and attract new candidates.  

Stock Appreciation Rights

In Fiscal 2021, the Company did not grant stock appreciation rights to any executive officers because the Compensation Committee chose to utilize other forms of equity awards, such as performance stock units. Nevertheless, the Compensation Committee believes that including stock appreciation rights in the compensation program serves the Company’s longer-term goals in the same manner as other equity-based compensation. Whereas base salary and performance bonuses compensate for achievement of shorter-term goals, equity awards motivate the executive to focus on the Company’s long-term success because the value of the award generally cannot be realized for an extended period of time. The Compensation Committee believes that stock appreciation rights, which provide value to our executives only if the Company’s share price increases relative to the share price on the date the awards are granted, generally share these beneficial characteristics and fit into the Company’s overall compensation philosophy.

Performance Stock Units and Restricted Stock Units

Performance stock unit awards and restricted stock unit awards are additional forms of equity-based incentives available to the Compensation Committee under the 2008 Plan and the 2017 Plan. Restricted stock unit awards are purely time-vesting awards.

As discussed above, under “—Design of Compensation Program—Long-Term Versus Currently Paid Out Compensation,” the Company believes that the performance stock unit awards made in Fiscal 2021 offer the potential for meaningful compensation for superior performance measured over an extended period of time. Vesting is both time-based and performance-based; the awards will not vest until the date specified in the award agreement and, consistent with our core principle of providing pay for performance, are forfeited if the established performance criteria are not achieved. The Compensation Committee considers the performance stock unit awards granted in Fiscal 2021 to be an integral component of the named executive officers’ overall compensation.

 

In Fiscal 2021, the Company made four grants of performance-based restricted stock units to named executive officers. On February 25, 2020, the Company granted 40,000 performance-based restricted stock units to Francis J. Conforti, Co-President and Chief Operating Officer and former Chief Financial Officer, 34,000 performance-based restricted stock units to Trish Donnelly, Former Global Chief Executive Officer, Urban Outfitters Group, 30,000 performance-based restricted stock units to Margaret A. Hayne, Co-President and Global Chief Creative Officer and former Chief Executive Officer of Free People and Chief Creative Officer, and 30,000 performance-based restricted stock units to Calvin B. Hollinger, Former Chief Operating Officer. One-third of the grant is subject to a performance period ending on February 25, 2022 where the average operating profit margin for Urban Outfitters, Inc. for fiscal years 2021 and 2022 is equal to or greater than 3.50%, one-third of the grant is subject to a performance period ending on February 25, 2023 where the average operating profit margin for Urban Outfitters, Inc. for fiscal years 2021, 2022, and 2023 is equal to or greater than 3.50%, and the remaining one third of the grant is subject to a performance period ending on February 25, 2024 where the average operating profit margin for Urban Outfitters, Inc. for fiscal years 2021, 2022, 2023 and 2024 is equal to or greater than 3.50%.  Ms. Donnelly and Mr. Hollinger forfeited their respective performance-based restricted stock units granted on February 25, 2020, upon their respective resignations from the Company.

Restricted Stock

The Compensation Committee believes that restricted stock awards generally share the same beneficial characteristics of stock options, but add a more significant retention element, and fit into the Company’s overall compensation philosophy in the same manner. In Fiscal 2021, the Company made two restricted stock awards to named executive officers.  On February 25, 2020, the Company granted 50,000 restricted stock units to Sheila B. Harrington, Global Chief Executive Officer of Urban Outfitters Group and Free People Group, and 10,500 restricted stock units to Melanie Marein-Efron, Chief Financial Officer.  One-third of this grant is subject to a time-based restriction ending on February 25, 2022, one-third of this grant is subject to a time-based restriction ending on February 25, 2023 and the remaining one-third of this grant is subject to a time-based restriction ending February 25, 2024.

Stock Options

In Fiscal 2021, the Company did not grant stock options to any executive officers because the Compensation Committee chose to utilize other forms of equity awards, such as performance-based restricted stock units. Nevertheless, the Compensation Committee believes that including stock options in the compensation program serves the Company’s longer-term goals in the same manner as other equity-based compensation.

 

The exercise price of stock options is equal to or greater than fair market value of the Common Shares on the date of the grant, as defined in the Plans. Awards granted pursuant to the Plans may be subject to performance-based vesting conditions, but to date, the Compensation Committee has granted only time-based stock options.  

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Timing

The Company generally considers once-a-year grants to a broad group of executives and managers, including named executive officers, typically at regularly scheduled board meetings and at such other times as necessary for business purposes related to employee promotion, or retention, or new hires. The Company makes grants that are effective on or after the date when the “Administrator” (defined in the Plans as the Compensation Committee, or, for grants under a specified threshold made to certain employees, a committee of which the Chairman is the sole member) approves the grant. The Company does not time grants with respect to the release of positive or negative material non-public information.

Nonqualified Deferred Compensation Plan

The Company maintains an “unfunded” Deferred Compensation Plan primarily for the purpose of providing deferred compensation to a select group of employees who are limited in their participation under the Company’s 401(k) plan. Accordingly, the Deferred Compensation Plan is exempt from Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, and complies with the requirements of Section 409A of the Code. The terms of the Deferred Compensation Plan were adopted by the Board of Directors on November 27, 2012, and the Deferred Compensation Plan became effective on February 1, 2013.

Deferred compensation under the Deferred Compensation Plan consists of elective deferral credits, if any, made by the participant and discretionary contribution credits made by the Company. Elective deferral credits will be fully vested. Discretionary contribution credits may be subject to a vesting schedule determined by the Company. Payment obligations, if any, under the Deferred Compensation Plan are payable in cash on a date or dates selected by the participant or upon certain specified events such as termination of employment, death or disability, subject to change in certain specified circumstances.

Additional Types of Compensation

In addition to the three main elements, the Company provides compensation to its executive officers in the form of: (i) a 401(k) matching contribution available to all employees who have completed three months of service, which was $0.25, and is now $0.50 as of January 1, 2019, on every $1.00 of employee deferral up to 6% of salary match, with a vesting schedule of 20% a year for five years, with the deferral limited by applicable law; (ii) a holiday bonus, capped at $5,000; and (iii) employee awards made to all staff with fixed dollar amounts, plus the tax cost of such awards, for terms of service, in five-year service increments, ranging from $1,000 for 10 years of service to $15,000 for 30 years of service.

At its discretion, the Compensation Committee may also award bonuses to employees, including named executive officers, for individual achievement or outstanding performance, to motivate for achievement of specific Company or individual goals and/or to promote retention and loyalty to the Company.

In light of our Fiscal 2021 performance exceeding initial COVID-19 pandemic forecasts and because performance bonuses were suspended, the Board of Directors approved one-time discretionary bonuses for all bonus-eligible employees, including our named executive officers, to award outstanding performance in managing through the COVID-19 pandemic especially in the areas of inventory management, cash generation and retention and managing expenses.  The Compensation Committee recommended such bonuses with respect to our named executive officers.  Such bonuses were approved after financial results were confirmed for Fiscal 2021 and resulted in our named executive officers receiving 20% of their target bonus amounts for Fiscal 2021 in accordance with the bonuses awarded to all other bonus-eligible employees.  

Potential Payments Upon Changes in Control; Certain Corporate Transactions

The 2008 Plan and 2017 Plan provide that upon a change in control, all remaining unvested options and restricted stock awards will immediately vest and become exercisable, as applicable. The 2008 Plan and the 2017 Plan, however, provide the Compensation Committee with the flexibility to specify the change in control provisions in the award agreement.  In Fiscal 2021, all award agreements granted to key executives were under the 2017 Plan and included a provision that vesting would accelerate upon a change in control of the Company.  “Change in control” is defined to include an event in which any person or group acquires majority beneficial ownership of the Company, other than Richard A. Hayne or benefit plans sponsored by either the Company or its subsidiaries. In deciding whether to exclude the change in control provisions in the grants, the Compensation Committee considers various factors, such as consistency with previous Company plans, industry practice, competition in the marketplace and effects on retention.

In the event of certain corporate transactions (such as a merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation), the Compensation Committee has discretion to terminate all or a portion of outstanding options and stock appreciation rights, effective as of the closing of the corporate transaction, if it determines that such termination is in the best interests of the Company. If the Compensation Committee decides to terminate, the holder will have the right to exercise outstanding options and stock appreciation rights on at least seven days’ notice. The Compensation Committee selected these corporate transactions as a triggering event for potential termination because they believe they are customary in industry practice.

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Benchmarking

In January 2021, Korn Ferry, the Company’s compensation consultant, reviewed publicly available information regarding the compensation paid to named executive officers of specialty retailers similar in operations and revenue to the Company and made a presentation to the Compensation Committee regarding this analysis. The retailers reviewed were PVH Corp, Ralph Lauren Corp, Williams-Sonoma, Under Armour, Capri Holdings (Michael Kors), Tapestry, American Eagle Outfitters, Tailored Brands, Abercrombie & Fitch, Carter’s, Fossil Group, Genesco, Chicos FAS, Columbia Sportswear, G-III Apparel Group, Lululemon Athletica, Express and Guess.  The Compensation Committee reviewed the figures provided by the consultant, which provided the group’s median and the 25^th and 75^th percentiles for informational and overall comparison purposes. Although the Compensation Committee considered the comparative data provided, there is no target percentile or precise position in which the Compensation Committee aims to set compensation other than to generally be competitive in the marketplace.  

With respect to executives other than the named executive officers, neither Korn Ferry nor the Compensation Committee has undertaken any formal benchmarking over the last three fiscal years; however, in prior years of reviewing base salaries to determine whether the Company is meeting its goal of providing competitive compensation that will attract and retain outstanding personnel, the Compensation Committee from time to time has reviewed publicly available compensation information described in the periodic filings of an informal group of other publicly traded companies in the specialty retail industry, typically including the retailers reviewed by the Company’s compensation consultant, for purposes of a market reference.

If the Compensation Committee elects to analyze comparative data, there may be a variation in the companies reviewed for comparative purposes from year-to-year depending on what information becomes most relevant to the Compensation Committee, although the Compensation Committee anticipates referring to information available for publicly traded specialty retailers, including those reviewed in 2021, for the foreseeable future.

The Compensation Committee takes the Company’s own historical data into consideration to ensure that compensation increases are consistent with the growth in operating profit and in responsibility of its executives. Each year, the Compensation Committee reviews a summary of all of the Company’s named executive officer and key management personnel compensation for the previous fiscal year as well as prior fiscal years. All historical data is viewed with the operating results and responsibilities of management personnel and their specific performance.

Compensation Committee Discretion

The factors related to increasing the compensation and potential compensation from bonuses of named executive officers from year-to-year take into account increased revenue and profitability, performance and measurably increased responsibilities, with a focus on both performance and the leveraging of selling, general and administrative expenses. The Company has not generally decreased base salaries or the bonus potential of named executive officers. This is because its history of growth has led to larger responsibilities for its named executive officers and because as a matter of philosophy, it does not generally reduce these compensation elements for existing employees. As more fully described above, however, at Richard A. Hayne’s request, the Compensation Committee set his base salary at $1.00 in Fiscal 2009, which has remained in effect since that time and continued in effect for Fiscal 2021.

Under the Incentive Plan, the Compensation Committee has discretion in the granting of performance bonus awards and can grant such awards to executive officers who are not Covered Employees at its discretion, even if specified performance goals are not achieved. In future fiscal years, the requirements for performance bonus awards could be waived to reward specific performance achievements in an instance where the actual criteria for a performance bonus were not met or for purposes of retention. The Compensation Committee may reduce any executive officer’s award if it believes such action would be in the best interest of the Company. At the end of a fiscal year, the Compensation Committee also has the ability to grant cash bonuses to any executive officer on a discretionary basis, as described above in “—Additional Types of Compensation.” In light of our Fiscal 2021 performance exceeding initial COVID-19 pandemic forecasts and because performance bonuses were suspended, the Board of Directors approved one-time discretionary bonuses for all bonus-eligible employees, including our named executive officers, to award outstanding performance in managing through the COVID-19 pandemic especially in the areas of inventory management, cash generation and retention and managing expenses. The Compensation Committee subsequently ratified such bonuses with respect to our named executive officers.  Such bonuses were approved after financial results were confirmed for Fiscal 2021 and resulted in our named executive officers receiving 20% of their target bonus amounts for Fiscal 2021 in accordance with the bonuses awarded to all other bonus-eligible employees.

Pursuant to the Plans, the Compensation Committee has discretion to accelerate the date on which options or stock appreciation rights may be exercised and may accelerate the date of termination of the restrictions applicable to restricted stock and restricted stock units if it determines that to do either would be in the best interests of the Company and the plan participants.

The Company at present has no employment agreements or contracts with its currently serving named executive officers and has no policies for post-termination compensation arrangements. As described below in the Summary Compensation Table, however, the Company, in its sole discretion, entered into a separation agreement with Calvin Hollinger on October 12, 2020, pursuant to which the Company makes severance payments to Mr. Hollinger and subsidizes continued health benefits for Mr. Hollinger through October 30,

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2021 and pursuant to which Mr. Hollinger remains eligible to vest in certain performance-based restricted stock units previously granted to him.  In the future, the Company may, in its sole discretion, decide to provide some form of severance to other named executive officers in the event that any named executive officer’s employment ceases.

Tax and Accounting Considerations

The applicability of Section 162(m) of the Code may affect the tax deductibility of certain portions of named executive officers’ compensation. As discussed above, the TCJA eliminated the exception under Section 162(m) of the Code for performance-based compensation and commissions, such that all compensation over one million dollars would be nondeductible. Where possible, the Company will structure compensation for its executive officers in a way that preserves tax deductibility under Section 162(m).

The Company does not usually consider the tax consequences to named executive officers of cash compensation or of equity-based compensation, though it considers the tax treatment to the Company for non-qualified options and the non-qualifying disposition of qualified options to be favorable.

Security Ownership Guidelines

The Company has no policy that requires or sets guidelines for the ownership of Common Shares. The Code of Conduct does, however, prohibit the directors and executive officers of the Company, other Company employees who have been granted options to purchase Company securities or who have received awards of equity-based securities, all Company employees who report directly to the Chief Executive Officer, and all employees in the Company’s Finance Department at the director level or above from trading any options on Company securities, maintaining a short position in Company securities, or engaging in certain hedging or monetization transactions, including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, or zero cost collars related to the Company’s Common Shares.

 

Consideration of Advisory Shareholder Vote on Executive Compensation

At the 2020 Annual Meeting of Shareholders, our shareholders overwhelmingly approved, on a non-binding advisory basis, the compensation of the Company’s named executive officers, including the Company’s compensation practices and principles and their implementation, as discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables, and the narrative executive compensation disclosure contained in our 2020 Proxy Statement. The Compensation Committee appreciates and values the views of our shareholders.

As the Compensation Committee evaluated the Company’s compensation practices throughout Fiscal 2021, the Compensation Committee was mindful of the strong support our shareholders expressed by the 2020 shareholder advisory vote. In light of this strong level of support of the overall pay practices, and of the general effectiveness of our long-standing compensation policies, the Board of Directors and the Compensation Committee do not currently intend to make any material changes to our executive compensation program for Fiscal 2022. Future advisory votes on executive compensation, including the advisory vote that will be held at the Annual Meeting, will serve as an additional tool to assist the Board of Directors and the Compensation Committee in evaluating the alignment of the Company’s executive compensation program with the interests of the Company and its shareholders.

At the 2017 Annual Meeting of Shareholders, our shareholders expressed a preference that advisory votes on executive compensation occur every three years. The Company received proxies representing approximately 500,000 shares after the deadline for voting by proxy, however, which were not included in the results of the 2017 vote. Had those proxies been timely submitted, the recommendation of the Company’s shareholders would have been that the Company hold future advisory votes to approve executive compensation every year. After taking this into consideration, the Board of Directors determined that it is in the best interest of the Company and its shareholders to hold an advisory vote to approve executive compensation annually until the next required shareholder vote on the frequency of future advisory votes to approve executive compensation, which is scheduled to occur at the 2023 Annual Meeting of Shareholders.  

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COMPENSATION COMMITTEE REPORT

The following report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act.

The Compensation and Leadership Development Committee of the Company’s Board of Directors (the “Committee”) has submitted the following report for inclusion in this Proxy Statement:

Our Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on our Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2021 for filing with the SEC.

The foregoing report is provided by the following directors, who constitute the Committee:

Todd R. Morgenfeld, Chairman of the Compensation and Leadership Development Committee

Elizabeth Ann Lambert

Amin N. Maredia

Wesley S. McDonald

 

 

 

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SUMMARY COMPENSATION TABLE

 

 

 

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FISCAL 2021 GRANTS OF PLAN-BASED AWARDS

 

 

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OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR-END

 

 

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OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2021

 

Equity Compensation Plan Information

The following table shows the status of equity awards under the Plans as of January 31, 2021:

 

 

 

 

 

 

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CEO PAY RATIO

SEC rules require us to disclose the ratio of the annual total compensation of our CEO, Richard A. Hayne, to the annual total compensation of our median employee (the “CEO Pay Ratio”). For Fiscal 2021, our median employee’s annual total compensation was $14,967. As set forth in the Summary Compensation Table, Mr. Hayne’s annual total compensation for Fiscal 2021 was $36,287. Accordingly, the ratio of the annual total compensation of Mr. Hayne to our median employee was 2.42:1.

In calculating the CEO Pay Ratio, we first identified all employees as of November 1, 2020. Including all full-time, part-time, seasonal and temporary employees, as required by SEC rules, we had 15,405 U.S. and 3,318 non-U.S. employees on that date. In accordance with SEC rules, we excluded all employees in the 13 countries with our smallest employee populations, totaling in the aggregate 610 employees (approximately 3.30% of our total employee population on November 1, 2020). The table below sets forth the number of excluded employees by country.

To identify our median employee, we used total taxable compensation for calendar year 2020 and annualized the compensation of all permanent employees who worked for us for less than the full calendar year. We then calculated Fiscal 2021 compensation for the median employee using the same methodology we use for our named executive officers as set forth in the Summary Compensation Table.

Pay ratios that are reported by our peers may not be directly comparable to ours because of differences in the composition of each company’s workforce, as well as the assumptions and methodologies used in calculating the pay ratio, as permitted by SEC rules.

 

 

 

 

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PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP

The following table sets forth certain information regarding the beneficial ownership of the Common Shares for each person known to the Company, other than Richard A. Hayne, Margaret A. Hayne and Harry S. Cherken, Jr., who beneficially owns more than five percent of the Company’s outstanding Common Shares, the name and address of such beneficial owner and the percentage such shares comprise of the outstanding Common Shares. All percentages are calculated based on 98,216,794 shares outstanding as of March 10, 2021.

 

 

 

 

 

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The following table sets forth certain information regarding the beneficial ownership of the Common Shares for each current director, director nominee and named executive officer for Fiscal 2021 and all directors and executive officers of the Company as a group. The number of shares beneficially owned is as of March 10, 2021, and all percentages are calculated based on 98,216,794 shares outstanding as of March 10, 2021. The address of each of the beneficial owners identified is 5000 South Broad Street, Philadelphia, PA 19112-1495.

 

 

 

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee currently consists of Mr. Morgenfeld, Ms. Lambert, Mr. Maredia and Mr. McDonald.  No member of the Compensation Committee who served on the Compensation Committee at any time during Fiscal 2021 is or was during Fiscal 2021 an employee, or is or ever has been an officer, of the Company or its subsidiaries. No executive officer of the Company served as a director or a member of the compensation committee of another company, one of whose executive officers serves as a member of the Company’s Board of Directors or Compensation Committee.

CERTAIN BUSINESS RELATIONSHIPS

Richard A. Hayne, Chief Executive Officer and Chairman, and Margaret A. Hayne, Co-President and Chief Creative Officer of Urban Outfitters, Inc., are married. Mr. Hayne’s son, David A. Hayne, is employed by the Company, and his total compensation in Fiscal 2021 was $909,587 including salary, bonus, equity awards and 401(k) Company contributions.

Harry S. Cherken, Jr., a director of the Company, is Senior Counsel at the law firm of Faegre Drinker Biddle & Reath LLP, which provided legal services to the Company in Fiscal 2021 and is expected to continue to do so in the future. Faegre Drinker Biddle & Reath LLP has received customary compensation for these services in a net amount of $1,018,387 during Fiscal 2021.

Todd R. Morgenfeld, a director of the Company, is Chief Financial Officer of Pinterest, Inc., which provided digital marketing services to the Company in Fiscal 2021 and is expected to continue to do so in the future. The amount paid to Pinterest, Inc. for such digital marketing services was financially immaterial to Pinterest, Inc. and is unrelated to Mr. Morgenfeld’s compensation from Pinterest, Inc. Mr. Morgenfeld did not provide and was not involved in the provision of digital marketing services by Pinterest, Inc. to the Company, and he does not intend to provide or be involved in the provision of such services by Pinterest, Inc. in the future. The Board of Directors considered these matters in determining Mr. Morgenfeld’s independence.

Pursuant to the terms of the Code of Conduct, which applies to all of the Company’s directors, officers and employees, conflicts of interest are prohibited unless approved by the Board of Directors or allowed under guidelines approved by the Board of Directors. Under the Code of Conduct, a conflict of interest can arise whenever a person’s private interests interfere in any way with the interests of the Company, including when a director, officer or employee takes actions or has interests that make it difficult for such person to perform his or her work objectively and effectively, or when a director, officer or employee or a member of such person’s family receives potentially improper personal benefits. Each of the relationships described above has been reviewed and approved by the Board of Directors.

RELATIONSHIPS WITH AUDITORS

In May 2005, the Audit Committee approved the engagement of Deloitte & Touche LLP as the Company’s independent registered public accounting firm and has re-approved the engagement in each subsequent year. Deloitte & Touche LLP has performed audit services, including the issuance of their audit opinion for the fiscal years ended January 31, 2021, 2020 and 2019.

One or more representatives of Deloitte & Touche LLP will be present at the Annual Meeting, will have an opportunity to make a statement as he or she may desire and will be available to respond to appropriate questions.

 

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AUDIT COMMITTEE REPORT

The following report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act.

During Fiscal 2021, the Audit Committee was composed of three independent directors of the Company (as independence is defined under NASDAQ’s Marketplace Rules and the rules and regulations of the SEC). In addition, the Board of Directors has determined that during Fiscal 2021, all three current members of the Audit Committee, Wesley S. McDonald, Edward N. Antoian and Todd R. Morgenfeld, qualified as “audit committee financial experts” as defined by the SEC in Item 407(d)(5)(ii) of Regulation S-K.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Its purpose is to monitor the integrity of the financial statements, review the Company’s internal accounting procedures and controls, oversee the independence, qualification and performance of the Company’s independent accountants and appoint the independent accountants. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report on Form 10-K for Fiscal 2021 with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.

The Audit Committee reviewed with the Company’s independent registered public accounting firm, Deloitte & Touche LLP, who is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with U.S. generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and discussed with the independent accountants such other matters as are required under Auditing Standard No. 1301 and other generally accepted auditing standards. In addition, the Audit Committee has discussed with the independent accountants the accountants’ independence from management and the Company, including the matters in the written disclosures and the letter received by the Audit Committee, as required by applicable requirements of the Public Company Accounting Oversight Board and considered the compatibility of nonaudit services with the accountants’ independence.

The Audit Committee discussed with the Company’s independent accountants the overall scope and plans for the audit. The Audit Committee met with the independent accountants, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting.

 

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for Fiscal 2021 for filing with the SEC.  

 

Wesley S. McDonald, Chairman of the Audit Committee

Edward N. Antoian

Todd R. Morgenfeld

 

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AUDIT AND OTHER FEES

Audit and Other Fees for Past Two Fiscal Years

The following table sets forth the aggregate fees billed to the Company for services rendered by our independent registered public accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, “Deloitte & Touche”) for the fiscal years ended January 31, 2021 and 2020.

 

Audit and Permissible Non-Audit Services Pre-Approval Policies and Procedures

The Audit Committee has a pre-approval policy pursuant to which it has granted its approval for Deloitte & Touche, as the Company’s independent registered public accounting firm, to perform certain audit, audit-related, tax and other services up to specified aggregate fee levels for each service. The Audit Committee periodically reviews and revises, if necessary, the list of pre-approved services that Deloitte & Touche may provide. The Audit Committee’s policy also provides that any proposed services that are not specifically pre-approved pursuant to the policy, as well as any proposed services that exceed pre-approved cost levels established in the policy, will require the Audit Committee’s separate pre-approval. In addition, the Audit Committee may delegate pre-approval authority to one or more of its members, who must report, for information purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee pre-approved all audit, audit-related and tax services provided by Deloitte & Touche during Fiscal 2021 in accordance with this policy.

PROPOSALS FOR 2022 ANNUAL MEETING

Shareholder Proposals for Inclusion in 2022 Proxy Statement. To be eligible for inclusion in the proxy statement for the 2022 Annual Meeting of Shareholders, shareholder proposals must comply with applicable SEC rules and regulations and must be received by the Secretary of the Company prior to December 2, 2021. If notification of a shareholder proposal is not received by December 2, 2021, the Company may vote, in its discretion, any and all of the proxies received in its solicitation against such proposal.

Shareholder Director Nominations for Inclusion in 2022 Proxy Statement. In December 2016, the Board of Directors amended the Company’s By-laws to implement “proxy access,” a means for the Company’s eligible shareholders to include shareholder-nominated director candidates in the Company’s proxy materials for annual meetings of shareholders. Section 1.10 was added to the By-laws to allow a shareholder, or a group of up to 20 shareholders, owning at least 3% of the number of outstanding Common Shares continuously for at least three years, to include in the Company’s proxy materials for an annual meeting of shareholders a number of director nominees up to the greater of two or 25% of the Board of Directors, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified therein. Pursuant to Section 1.10 of the By-laws, written notice of shareholder nominations to the Board of Directors that are to be included in the Proxy Statement must be delivered to the Secretary of the Company not later than 120 nor earlier than 150 days prior to the first anniversary of the preceding year’s annual meeting. Accordingly, any eligible shareholder who wishes to have a nomination considered at the 2022 Annual Meeting of Shareholders and included in the Company’s proxy statement must deliver a written notice (containing the information specified in the By-laws regarding the shareholder and the proposed nominee) to the Secretary of the Company between January 9, 2022 and February 8, 2022.

Shareholder Director Nomination and Other Shareholder Proposals for Presentation at the 2022 Annual Meeting Not Included in 2022 Proxy Statement. Under our By-laws, written notice of shareholder nominations to the Board of Directors or any other business

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proposed by a shareholder that is not to be included in the proxy statement must be delivered to the Company’s Secretary not less than 70 nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting. Accordingly, any shareholder who wishes to have a nomination or other business considered at the 2022 Annual Meeting of Shareholders but not included in the Company’s proxy statement must deliver a written notice (containing the information specified in the By-laws) to the Secretary of the Company between March 10, 2022 and March 30, 2022.

 

COST OF SOLICITATION  

The cost of soliciting proxies will be borne directly by the Company. Solicitation may be made by mail, personal interview or telephone or other electronic means by certain officers and other employees of the Company who will receive no additional compensation for such solicitation. The Company has made arrangements with Morrow Sodali, LLC, 470 West Ave., Stamford, CT 06902, to assist us in soliciting proxies and has agreed to pay them a fee for such services that is not expected to exceed $10,000. The Company will reimburse banks, brokers and other nominees for their reasonable expenses in forwarding proxy materials to the beneficial owners for whom they hold shares.

HOUSEHOLDING

Some nominees may participate in the practice of “householding” proxy statements and annual reports. This means that only one copy of the Company’s Proxy Statement, annual report or Notice may have been sent to multiple shareholders in your household. The Company will promptly deliver a separate copy of any of these documents to you if you request one by writing, calling or faxing as follows: Investor Relations, Urban Outfitters, Inc., 5000 South Broad Street, Philadelphia, PA 19112-1495, telephone number (215) 454-5500 and facsimile number (215) 454-4660. If you want to receive separate copies of the annual report, Proxy Statement or Notice in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your nominee, or you may contact the Company at the above address and phone number.

 

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ADDITIONAL INFORMATION  

This Proxy Statement is accompanied by the Company’s Annual Report on Form 10-K for Fiscal 2021, as filed with the SEC (except for exhibits). Requests for additional copies of such Form 10-K should be directed to the Company at the address set forth on the cover of this Proxy Statement, Attention: Investor Relations.

The Reports of the Compensation Committee of the Board of Directors on Executive Compensation and of the Audit Committee included in this Proxy Statement shall not be deemed “soliciting material” or otherwise deemed “filed” and shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates those portions of this Proxy Statement by reference therein.

It is important that your shares be represented at the Annual Meeting. If you are unable to participate in the Annual Meeting via live audio webcast, we respectfully request that you vote promptly. You may vote your shares over the Internet, by telephone or, if you received a paper copy of the proxy card, by signing and dating it and returning it to us in the stamped and addressed envelope that is enclosed with the proxy card as promptly as possible.

By Order of the Board of Directors,

 

Richard A. Hayne

Chairman of the Board

April 1, 2021

 

 

 

 

 

 

 

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     URBAN  OUTFITTERS,  INC.    THIS  PROXY  IS  SOLICITED  ON  BEHALF  OF  THE  BOARD  OF  DIRECTORS    The  undersigned,  revoking  all  prior  proxies,  hereby  appoints  Richard  A.  Hayne  and  Francis  J.  Conforti,  or  either  of  them,  with  full  power  of  substitution,  as  the  undersigned's  proxies  to  vote  at  the  Annual  Meeting  of  Shareholders  of  Urban  Outfitters,  Inc.  (the  "Company")  called  for  June  8,  2021,  at    10:30  a.m.  Eastern  Time  via  live  audio  webcast  at  https://web.lumiagm.com/270154195  (password:  urban2021)  and  at  any  adjournment  thereof.  (Continued  and  to  be  signed  on  the  reverse  side)    1.1  14475    
  

 

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  ANNUAL  MEETING  OF  SHAREHOLDERS  OF    URBAN  OUTFITTERS,  INC.    June8,2021PROXYVOTINGINSTRUCTIONS INTERNET  -Access  “www.voteproxy.com”  and  follow  the  on-screen  instructions  or  scan  the  QR  code  with  your  smartphone.  Have  your  proxy  card  available  when  you  access  the  web  page.    TELEPHONE  -Call  toll-free  1-800-PROXIES  (1-800-776-9437)  in  the  United  States  or  1-718-921-8500  from  foreign  countries  from  anytouch-tone  telephone  and  follow  the  instructions.  Have  your  proxy  card  available  when  you  call.    MAIL  -Sign,  date  and  mail  your  proxy  card  in  the  envelope  provided  as  soon  as  possible.  Proxies  submitted  by  mail,  telephone,  Internet  or  other  electronic means  must  be  received  by  11:59  P.M.  EDT,  Monday,  June  7,  2021.    VIRTUALLY  AT  THE  MEETING  -The  Company  will  conduct  our  AnnualMeeting  in  a  virtual  format,  via  a  live  audio  webcast.  To  attend  theAnnual  Meeting  visit  https://web.lumiagm.com/270154195(password:  urban2021)  and  be  sure  to  have  available  the  control  number.    GO  GREEN  -e-Consent  makes  it  easy  to  go  paperless.  With  e- Consent,  you  can  quickly  access  your  proxy  material,  statementsand  other  eligible  documents  online,  while  reducing  costs,  clutterand  paper  waste.  Enroll  today  via  www.astfinancial.com  to  enjoyonline  access.     COMPANY  NUMBER  ACCOUNT  NUMBER    NOTICE  REGARDING  THE  INTERNET  AVAILABILITY  OF  PROXY  MATERIAL:  The  Notice  of  Meeting,  proxy  statement,  proxy  card  and  Annual  Report  on  Form  10-K  are  available  at  http://proxy.urbn.com     Please  detach  along  perforated  line  and  mail  in  the  envelope  provided  IF  you  are  not  voting  via  the  Internet  or  telephone.    00033333333333300000  6  060821     PLEASE  SIGN,  DATE  AND  RETURN  PROMPTLY  IN  THE  ENCLOSED  ENVELOPE.  PLEASE  MARK  YOUR  VOTE  IN  BLUE  OR  BLACK  INK  AS  SHOWN  HERE    x THE  BOARD  OF  DIRECTORS  UNANIMOUSLY  RECOMMENDS  A  VOTE  “FOR”  EACH  OF  THE  NOMINEES  FOR  DIRECTOR  AND  “FOR”  PROPOSALS  2  AND  3.    THIS  PROXY,  WHEN  PROPERLY  EXECUTED,  WILL  BE  VOTED  IN  THE  MANNER  DIRECTED  HEREIN  BY  THE  UNDERSIGNED  SHAREHOLDER.  IF  NO  DIRECTION  IS  MADE,  THIS  PROXY  WILL  BE  VOTED  “FOR”  EACH  OF  THE  NOMINEES  LISTED  IN  PROPOSAL  1  AND  “FOR”  PROPOSALS  2  AND  3.    FOR  AGAINST  ABSTAIN    1.  Election  of  Directors:  Edward  N.  Antoian  Sukhinder  Singh  Cassidy    Harry  S.  Cherken,  Jr.  Margaret  A.  Hayne    Richard  A.  Hayne  Elizabeth  Ann  Lambert  Amin  N.  Maredia  Wesley  S.  McDonald    Todd  R.  Morgenfeld  John  C.  Mulliken    2.  To  ratify  the  appointment  of  Deloitte  &  Touche  LLP  as  the  Company's  independent  registered  public  accounting  firm  for  Fiscal  Year  2022.  3.  Advisory  vote  to  approve  executive  compensation.  You  are  urged  to  sign  and  return  this  proxy  so  that  you  may  be  sure  that  your  shares  willbe  voted.    To  change  the  address  on  your  account,  please  check  the  box  at  right  andindicate  your  new  address  in  the  address  space  above.  Please  note  that  changes  to  the  registered  name(s)  on  the  account  may  not  be  submitted  viathis  method.     Signature  of  Shareholder    Date:    SignatureofShareholderDate: Note:  Please  sign  exactly  as  your  name  or  names  appear  on  this  Proxy.  When  shares  are  held  jointly,  each  holder  should  sign.  When  signing  as  executor,  administrator,  attorney,  trustee  or  guardian,  please  give  fulltitle  as  such.  If  the  signer  is  a  corporation,  please  sign  full  corporate  name  by  duly  authorized  officer,  giving  full  title  as  such.  If  signer  is  a  partnership,  please  sign  in  partnership  name  by  authorized  person.