(Name of Registrant as Specified In Its Charter)

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

 

 

770 Cochituate Road
Framingham, Massachusetts 01701

 

 

April 27, 2009

 

Dear Stockholder:

 

We cordially invite you to attend our 2009 Annual Meeting on Tuesday, June 2, 2009, at 11:00 a.m., to be held at our offices, 770 Cochituate Road, Framingham, Massachusetts. Please enter through the Northeast Entrance.

 

The proxy statement accompanying this letter describes the business we will consider at the meeting. Your vote is important regardless of the number of shares you own. Please read the proxy statement and vote your shares. Instructions for Internet and telephone voting are attached to your proxy card. If you prefer, you can vote by mail by completing and signing your proxy card and returning it in the enclosed envelope.

 

We hope that you will be able to join us on June 2nd.

 

 

 

Printed on Recycled Paper

The TJX Companies, Inc.

 

 

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

June 2, 2009

 

 

 

The Annual Meeting of Stockholders of The TJX Companies, Inc. will be held at our offices, 770 Cochituate Road, Framingham, Massachusetts, on Tuesday, June 2, 2009, at 11:00 a.m. to vote on:

 

 

Stockholders of record at the close of business on April 13, 2009 are entitled to notice of and to vote at the Annual Meeting and any adjournments.

 

To attend the Annual Meeting, you must demonstrate that you were a TJX stockholder as of the close of business on April 13, 2009 or hold a valid proxy for the Annual Meeting from such a stockholder. If you are not a stockholder of record but hold shares through a broker, trustee or nominee, you will need to bring proof of your beneficial ownership as of April 13, 2009, such as a brokerage account statement showing your ownership on that date or similar evidence of such ownership. All stockholders will need to have their photographs taken and receive visitor badges for building security. Please allow additional time for these procedures.

 

By Order of the Board of Directors

 

Ann McCauley

Secretary

 

Framingham, Massachusetts

April 27, 2009

 

PLEASE VOTE ON THE INTERNET, BY TELEPHONE OR BY MAIL

 

The TJX Companies, Inc.

 

 

 

ANNUAL MEETING OF STOCKHOLDERS

 

June 2, 2009

 

PROXY STATEMENT

 

 

 

The Board of Directors of The TJX Companies, Inc., or TJX, is soliciting your proxy for the 2009 Annual Meeting. A majority of the shares outstanding and entitled to vote at the meeting is required for a quorum for the meeting.

 

You may vote on the Internet, using the procedures and instructions described on the proxy card and other enclosures. You may vote by telephone using the toll-free telephone number on the proxy card. Both Internet and telephone voting provide easy-to-follow instructions and have procedures designed to authenticate your identity and permit you to confirm that your voting instructions are accurate. Street name holders may vote by Internet or telephone if their bank or broker makes those methods available, in which case the bank or broker will enclose the instructions with the proxy statement. All stockholders may vote by signing and returning the enclosed proxy card.

 

You may revoke your proxy at any time before it is voted by voting later by telephone or Internet, returning a later-dated proxy card, or delivering a written revocation to the Secretary of TJX.

 

Stockholders of record at the close of business on April 13, 2009 are entitled to vote at the meeting. Each of the 413,278,040 shares of common stock outstanding on the record date is entitled to one vote.

 

This proxy statement, the proxy card and the Annual Report and Form 10-K for our fiscal year ended January 31, 2009 are being first mailed to stockholders on or about the date of the notice of meeting. Our address is 770 Cochituate Road, Framingham, Massachusetts 01701.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting To Be Held on June 2, 2009: This proxy statement and Annual Report and Form 10-K for our fiscal year ended January 31, 2009 are available at http://bnymellon.mobular.net/bnymellon/tjx.

 

ELECTION OF DIRECTORS

 

The individuals listed below have been nominated and are standing for election at this year’s Annual Meeting. If elected, they will hold office until our 2010 Annual Meeting of Stockholders and until their successors are duly elected and qualified. All of our current directors were elected to the Board by stockholders. We do not anticipate that any nominee will become unavailable to serve.

 

Your Board of Directors unanimously recommends that you vote FOR the election of each of the nominees as directors.

 

José B. Alvarez, 45

Director since 2007

 

Mr. Alvarez has been a member of the faculty of the Harvard Business School since February 2009. From 2001 through 2008, Mr. Alvarez was an executive with Ahold, NV, a Dutch supermarket retail company, and Stop & Shop/Giant-Landover, its U.S. subsidiary. From August 2008 through December 2008, Mr. Alvarez was the Global Executive Vice President for Business Development for Ahold. Prior to this appointment, Mr. Alvarez was President and Chief Executive Officer of Stop & Shop/Giant-Landover beginning in April 2006. Mr. Alvarez also served as Executive Vice President, Supply Chain and Logistics from 2004 to 2006, Senior Vice President, Logistics from 2002 to 2004 and Vice President, Strategic Initiatives prior to 2002. Mr. Alvarez began his career in supermarket retail management at the Jewel Food Stores subsidiary of American Stores Company in 1990. Mr. Alvarez is also a director of United Rentals, Inc.

 

Alan M. Bennett, 58

Director since 2007

 

Mr. Bennett served as Interim Chief Executive Officer of H&R Block Inc., a tax services provider, from November 2007 through August 2008. He was Senior Vice President and Chief Financial Officer of Aetna, Inc., a diversified healthcare benefits company, from 2001 to April 2007, and previously held other senior financial management positions at Aetna after joining in 1995. Mr. Bennett held various senior management roles in finance and sales/marketing at Pirelli Armstrong Tire Corporation, formerly Armstrong Rubber Company, from 1981 to 1995 and began his career with Ernst & Ernst (now Ernst & Young LLP). Mr. Bennett is also a director of Halliburton Company and H&R Block Inc.

 

David A. Brandon, 56

Director since 2001

 

Mr. Brandon has been the Chairman, Chief Executive Officer and a director of Domino’s Pizza, Inc., a pizza delivery company, since 1999. Mr. Brandon was President and Chief Executive Officer of Valassis, Inc., a provider of marketing products and services, from 1989 to 1998 and Chairman of its Board from 1997 to 1998. Mr. Brandon is also a director of Burger King Holdings, Inc. and Kaydon Corporation.

 

Bernard Cammarata, 69

Director since 1989

 

Mr. Cammarata has been Chairman of the Board of TJX since 1999. Mr. Cammarata served as Acting Chief Executive Officer of TJX from September 2005 to January 2007. He also led TJX and its former TJX subsidiary and T.J. Maxx Division from the organization of the business in 1976 until 2000, including serving as Chief Executive Officer and President of TJX, Chairman and President of TJX’s T.J. Maxx Division and Chairman of The Marmaxx Group.

 

David T. Ching, 56

Director since 2007

 

Mr. Ching has been Senior Vice President and Chief Information Officer for Safeway Inc., a food and drug retailer, since 1994. Previously, Mr. Ching was the General Manager for British American Consulting

Group, a software and consulting firm focusing on the distribution and retail industry. He also worked for Lucky Stores Inc., a subsidiary of the American Stores Companies from 1979 to 1993, and was the Senior Vice President of Information Systems in the last five years of his tenure.

 

Michael F. Hines, 53

Director since 2007

 

Mr. Hines served as Executive Vice President and Chief Financial Officer of Dick’s Sporting Goods, Inc., a sporting goods retailer, from 1995 to March 2007. From 1990 to 1995, he held management positions with Staples, Inc., an office products retailer, most recently as Vice President, Finance. Mr. Hines spent 12 years in public accounting, the last eight years with the accounting firm Deloitte & Touche LLP.

 

Amy B. Lane, 56

Director since 2005

 

Ms. Lane was a Managing Director and Group Leader of the Global Retailing Investment Banking Group at Merrill Lynch & Co., Inc., from 1997 until her retirement in 2002. Ms. Lane previously served as a Managing Director at Salomon Brothers, Inc., where she founded and led the retail industry investment banking unit. Ms. Lane is also a director of Borders Group, Inc.

 

Carol Meyrowitz, 55

Director since 2006

 

Ms. Meyrowitz has been Chief Executive Officer of TJX since January 2007, a director since September 2006 and President since October 2005. She served as Senior Executive Vice President of TJX from 2004 until January 2005, Executive Vice President of TJX from 2001 to 2004 and President of The Marmaxx Group from 2001 to January 2005. From January 2005 until October 2005, she was employed in an advisory role for TJX and consulted for Berkshire Partners LLC, a private equity firm. From 1987 to 2001, she held various senior management positions with The Marmaxx Group and with Chadwick’s of Boston and Hit or Miss, former divisions of TJX. Ms. Meyrowitz is also a director of Amscan Holdings, Inc. and Staples, Inc.

 

John F. O’Brien, 66

Director since 1996

 

Mr. O’Brien is the retired Chief Executive Officer and President of Allmerica Financial Corporation (now known as The Hanover Insurance Group, Inc.), an insurance and diversified financial services company, holding those positions from 1995 to 2002. Mr. O’Brien previously held executive positions at Fidelity Investments, an asset management firm, including Group Managing Director of FMR Corporation, Chairman of Institutional Services Company and Chairman of Brokerage Services, Inc. Mr. O’Brien serves as our Lead Director. Mr. O’Brien is also a director of Cabot Corporation, LKQ Corporation and a family of mutual funds managed by BlackRock, an investment management advisory firm.

 

Robert F. Shapiro, 74

Director since 1974

 

Mr. Shapiro has been the Vice Chairman of Klingenstein, Fields & Co., L.L.C., an investment advisory business, since 1997. Mr. Shapiro was also President of RFS & Associates, Inc., an investment and consulting firm, from 1988 to 2004 and was formerly Co-Chairman of Wertheim Schroder & Co. Incorporated and President of Wertheim & Co., Inc., investment banking firms. Mr. Shapiro is also a trustee of The Burnham Fund, Inc. and a director of Genaera Corporation.

 

Willow B. Shire, 61

Director since 1995

 

Ms. Shire has been an executive consultant with Orchard Consulting Group since 1994, specializing in leadership development and strategic problem solving. Previously, she was Chairperson for the Computer

Systems Public Policy Project within the National Academy of Science. She also held various positions at Digital Equipment Corporation, a computer hardware manufacturer, for 18 years, including Vice President and Officer, Health Industries Business Unit. Ms. Shire is also a director of Vitesse Semiconductor Corporation.

 

Fletcher H. Wiley, 66

Director since 1990

 

Mr. Wiley has been a principal in PRWT Services, Inc., a technology-oriented products and services firm, since 1996 and served as its Executive Vice President and General Counsel until September 2008. Since 2003, Mr. Wiley has been of counsel to the law firm Bingham McCutchen LLP. Previously, Mr. Wiley was of counsel to the law firm Schnader Harrison Goldstein & Manello and a partner of the law firms Goldstein & Manello and Fitch, Wiley, Richlin & Tourse, P.C.

 

CORPORATE GOVERNANCE

 

Board Independence.  Our Corporate Governance Principles provide that at least two-thirds of the members of our Board will be independent directors. The Board evaluates any relationships of each director and nominee with TJX and makes an affirmative determination whether or not each director and nominee is independent. To assist it in making its independence determination, the Board has adopted categorical standards, which are more rigorous than the requirements of the New York Stock Exchange, and are posted on our website at www.tjx.com.

 

As part of the Board’s annual review of director independence, the Board considered the recommendation of our Corporate Governance Committee and reviewed any transactions and relationships between each non-management director or any member of his or her immediate family and TJX. The purpose of this review was to determine whether any relationship or transaction was inconsistent with a determination that the director was independent. As a result of this review, our Board unanimously determined that ten directors of our 12-member Board (83.3%) are independent, with the independent directors being José B. Alvarez, Alan M. Bennett, David A. Brandon, David T. Ching, Michael F. Hines, Amy B. Lane, John F. O’Brien, Robert F. Shapiro, Willow B. Shire and Fletcher H. Wiley. Each of these directors met our categorical standards of independence. In addition, the Board considered a business relationship of Mr. Alvarez, a business relationship of Mr. Ching, a charitable relationship of Mr. O’Brien and a business relationship of Mr. Wiley, each of which fell below our categorical standards. Our other two directors are not independent. Bernard Cammarata is the Chairman of TJX, and Carol Meyrowitz is the Chief Executive Officer and President of TJX.

 

Integrity has been a core tenet of TJX since its inception. We seek to perform with the highest standards of ethical conduct and in compliance with all laws and regulations that relate to our businesses. We have had long-standing Corporate Governance Principles, a Code of Conduct for our associates, a Code of Ethics for TJX Executives, written charters for our Board committees and a Code of Business Conduct and Ethics for Directors. The current versions of these documents and other items relating to our governance can be found at www.tjx.com.

 

Board Expertise and Diversity.  Our directors possess a wide range of talents and experience. Our Board reflects a range of talents, ages, skills, diversity and expertise to provide sound and prudent guidance with respect to our operations and interests. All of our directors are financially literate, and three members of our Audit Committee are audit committee financial experts.

 

Board Annual Performance Reviews.  We have a comprehensive review process for evaluating the performance of our Board and our directors. Our Corporate Governance Committee oversees the annual performance evaluation of the entire Board, our Chairman, our Lead Director, each of our committees and its chair, and each of our individual directors.

 

Board Nominees.  The Corporate Governance Committee recommends to the Board individuals as director nominees who, in the opinion of the Corporate Governance Committee, have high personal and professional integrity, who have demonstrated ability and judgment and who will be effective, in conjunction

with the other nominees to and members of the Board, in collectively serving the long-term best interests of our shareholders. The Corporate Governance Committee’s process for identifying and evaluating candidates, including candidates recommended by shareholders, includes actively seeking to identify qualified individuals by various means which may include reviewing lists of possible candidates, such as chief executive officers of public companies or leaders of finance or other industries, considering proposals from sources, such as the Board of Directors, management, employees, shareholders and industry contacts, and engaging an outside search firm. The Corporate Governance Committee has adopted a policy with respect to submission by shareholders of candidates for director nominees which is available on our website at www.tjx.com. Any shareholder may submit in writing one candidate for consideration for each shareholder meeting at which directors are to be elected by not later than the 120th calendar day before the first anniversary of the date that we released our proxy statement to shareholders in connection with the previous year’s annual meeting. Recommendations should be sent to the Secretary of TJX, c/o Office of the Secretary of The TJX Companies, Inc., 770 Cochituate Road, Framingham, Massachusetts 01701. A recommendation must include specified information about, and consents and agreements of, the candidate. The Corporate Governance Committee evaluates candidates for the position of director recommended by shareholders or others in the same manner. The Corporate Governance Committee will determine whether to interview any candidates and may seek additional information about candidates from third-party sources.

 

Majority Voting.  Our Corporate Governance Principles, available at www.tjx.com, require any nominee for director to provide the Secretary of the Company an irrevocable contingent resignation prior to the distribution of proxy solicitation materials for the meeting at which such director is expected to be nominated to stand for election. Such resignation will be effective only if such director fails to receive the requisite majority vote in an uncontested election, as provided in the by-laws, and the Board accepts such resignation. Our Corporate Governance Principles provide procedures for the consideration of such resignation by the Board. Within 90 days of the date of the annual meeting of shareholders, the Board, with the recommendation of the Corporate Governance Committee, will act upon such resignation. In making its decision, the Board will consider the best interests of TJX and its shareholders, and take what it deems to be appropriate action. Such action may include accepting or rejecting the resignation or taking further measures to address those concerns that were the basis for the underlying shareholder vote.

 

Chairman; Lead Director.  Our Board annually elects the Chairman of the Board of Directors. Because our Chairman, Mr. Cammarata, is not an independent director, consistent with our Corporate Governance Principles, our independent directors have elected John F. O’Brien as Lead Director. In this role, among other duties, Mr. O’Brien meets at least quarterly with our Chief Executive Officer and with senior officers as necessary, attends quarterly management business review meetings, schedules meetings of the independent directors, presides at meetings of the Board at which the Chairman is not present, including meetings of the independent directors and of the non-management directors, serves as a liaison between the independent directors and the Chairman and Company management, approves meeting schedules and agendas, attends the meetings of each Board committee and undertakes other responsibilities designated by the independent directors.

 

Attendance.  During fiscal 2009, our Board met 15 times. Each director attended at least 75% of all meetings of the Board and committees of which he or she was a member. At each regularly scheduled Board meeting, the independent directors met separately. It is our policy that all nominees and directors standing for re-election are expected to attend the annual meeting of stockholders. All nominees and directors attended the 2008 Annual Meeting of Stockholders.

 

Board Committees.  The Board of Directors has five standing committees: Audit, Corporate Governance, Executive, Executive Compensation and Finance. Each committee’s charter is available on our website at www.tjx.com.

 

All members of the Audit, Corporate Governance, Finance and Executive Compensation Committees are independent directors. While each committee has designated responsibilities, the committees act on behalf of the entire Board. The committees regularly report on their activities to the entire Board.

The table below provides information about these committees during fiscal 2009:

 

 

 

 

Audit Committee.  The Audit Committee is responsible for the annual appointment of the independent registered public accounting firm and oversight of the financial reporting process. Each member of the Audit Committee is a non-employee director and meets the independence standards adopted by the Board in compliance with New York Stock Exchange listing standards. The Audit Committee operates under the terms of a written charter which is reviewed by members of the committee annually. Specifically, the Audit Committee’s responsibilities include:

 

 

Executive Compensation Committee.  The Executive Compensation Committee, or the ECC, is responsible for overseeing executive compensation and benefits. Each member of the ECC is a non-employee director and meets the independence standards adopted by the Board in compliance with New York Stock Exchange

listing standards. The ECC operates under the terms of a written charter which is reviewed by the members of the committee annually.

 

Specifically, the ECC’s responsibilities include:

 

 

Corporate Governance Committee.  The Corporate Governance Committee is responsible for recommending nominees for directors to the Board and for our corporate governance practices. Each member of the Corporate Governance Committee is a non-employee director and meets the independence standards adopted by the Board in compliance with New York Stock Exchange listing standards. The Corporate Governance Committee operates under the terms of a written charter which is reviewed by the members of the committee annually. Specifically, the Corporate Governance Committee’s responsibilities include:

 

 

Executive Committee.  The Executive Committee meets at such times as it determines to be appropriate and has the authority to act for the Board on specified matters during the intervals between meetings of the Board.

 

Finance Committee.  The Finance Committee is responsible for reviewing and making recommendations to the Board relating to our financial activities and condition. The Finance Committee operates under the terms of a written charter which is reviewed by the members of the committee annually. Specifically, the Finance Committee’s responsibilities include:

 

 

Policies Relating to Directors.  It is our policy that no director shall be nominated who has attained the age of 75 prior to or on the date of his or her election or re-election. Under our Corporate Governance Principles, directors with full-time jobs should not serve on more than three boards of public companies in

addition to our Board; no director should serve on more than four boards of public companies in addition to our Board; and members of the Audit Committee should not serve on more than two audit committees of other companies. When a director’s principal occupation or business association changes during his or her tenure as a director, our Corporate Governance Principles provide that the director is required to tender his or her resignation from the Board, and the Corporate Governance Committee will recommend to the Board any action to be taken with respect to the resignation.

 

Code of Conduct.  We have a Code of Conduct for our associates designed to ensure that our business is conducted with integrity. Our Code of Conduct covers professional conduct, including employment policies, conflicts of interest, intellectual property and the protection of confidential information, as well as adherence to laws and regulations applicable to the conduct of our business. Information concerning our Code of Conduct is available on our website at www.tjx.com.

 

Code of Ethics for TJX Executives and Code of Business Conduct and Ethics for Directors.  We have a Code of Ethics for TJX Executives governing our Chairman, Chief Executive Officer, President, Vice Chairman, Chief Administrative Officer, Chief Financial Officer, Principal Accounting Officer and other senior operating, financial and legal executives. The Code of Ethics for TJX Executives is designed to ensure integrity in our financial reports and public disclosures. We also have a Code of Business Conduct and Ethics for Directors which promotes honest and ethical conduct, compliance with applicable laws, rules and regulations and the avoidance of conflicts of interest. Both of these codes of conduct are published on our website at www.tjx.com. We intend to disclose any future amendments to, or waivers from, the Code of Ethics for TJX Executives or the Code of Business Conduct and Ethics for Directors within four business days of the waiver or amendment through a website posting or by filing a Current Report on Form 8-K with the Securities and Exchange Commission, or SEC.

 

Stock Ownership Guidelines.  Our Corporate Governance Principles provide that at the time of his or her election, a director must own at least $10,000 of our common stock. Over time, a director must increase his or her stock ownership to hold shares of our common stock (or their equivalent) equal to at least $200,000 (including awards under the Deferred Stock Program for Non-Employee Directors under our Stock Incentive Plan). Our Stock Ownership Guidelines included in our Corporate Governance Principles provide that our Chief Executive Officer and President will attain stock ownership with a fair market value of at least five times his or her annual base compensation, and our Vice Chairman and each Senior Executive Vice President will attain stock ownership with a fair market value of at least three times his or her annual base compensation. For our executive officers, such ownership guidelines are reduced by 50% at age 62. It is expected that individuals who have not yet achieved the stock ownership levels provided by these guidelines will make steady progress towards meeting such levels and will retain 50% of their shares (on an after-tax basis) resulting from the exercise of stock options, vesting of deferred stock or vesting of performance-based restricted stock. Once an executive satisfies and sustains the target stock ownership level, the executive is permitted to sell all future shares obtained through option exercises, the vesting of deferred stock or the vesting of performance-based restricted stock.

 

Communications with Directors.  Security holders and other interested parties may communicate directly with the Board, the non-management directors or the independent directors as a group, specified individual directors or the Lead Director by writing to such individual or group c/o Office of the Secretary, The TJX Companies, Inc., 770 Cochituate Road, Framingham, Massachusetts 01701. The Secretary will forward such communications to the relevant group or individual at or prior to the next meeting of the Board.

 

Requests for Information.  Shareholders may request print copies of our Corporate Governance Principles, Code of Conduct for Associates, Code of Ethics for TJX Executives, Code of Business Conduct and Ethics for Directors, and charters for our Audit, Corporate Governance, Executive, Executive Compensation and Finance Committees by writing to the Office of the Secretary at the above address. The current versions of these documents are also available on our website at www.tjx.com.

Transactions with Related Persons

 

Under the Corporate Governance Committee’s charter, the Committee is responsible for reviewing and approving or ratifying any transaction in which TJX and any of our directors, director nominees, executive officers, 5% shareholders and their immediate family members are participants and in which such persons have a direct or indirect material interest as provided under SEC rules. In the course of reviewing potential related person transactions, the Committee considers the nature of the related person’s interest in the transaction; the presence of standard prices, rates or charges or terms otherwise consistent with arms-length dealings with unrelated third parties; the materiality of the transaction to each party; the reasons for TJX entering into the transaction with the related person; the potential effect of the transaction on the status of a director as an independent, outside or disinterested director or committee member; and any other factors the Committee may deem relevant. Our General Counsel’s office is primarily responsible for the implementation of processes and procedures for screening potential transactions and providing information to the Corporate Governance Committee.

 

Audit Committee Report

 

We operate in accordance with a written charter adopted by the Board and reviewed annually by the Committee. We are responsible for overseeing the quality and integrity of TJX’s accounting, auditing and financial reporting practices. The Audit Committee is composed solely of members who are independent, as defined by the New York Stock Exchange and TJX’s Corporate Governance Principles. Further, the Board has determined that three of our members (Mr. Hines, Ms. Lane and Mr. Shapiro) are audit committee financial experts as defined by the rules of the SEC.

 

The Audit Committee met 14 times during fiscal 2009, including four meetings held with TJX’s Chief Financial Officer, Corporate Controller and PricewaterhouseCoopers LLP (PwC), TJX’s independent registered public accounting firm, prior to the public release of TJX’s quarterly and annual earnings announcements in order to discuss the financial information contained in the announcements.

 

We took numerous actions to discharge our oversight responsibility with respect to the audit process. We received the written disclosures and the letter from PwC pursuant to Rule 3526, Communication with Audit Committees Concerning Independence, of the Public Company Accounting Oversight Board (“PCAOB”) concerning any relationships between PwC and the Company and the potential effects of any disclosed relationships on PwC’s independence and discussed with PwC its independence. We discussed with management, the internal auditors and PwC TJX’s internal control over financial reporting and management’s assessment of the effectiveness of internal control over financial reporting and the internal audit function’s organization, responsibilities, budget and staffing. We reviewed with both PwC and our internal auditors their audit plans, audit scope and identification of audit risks.

 

We discussed and reviewed with PwC communications required by the Standards of the PCAOB (United States), as described in PCAOB AU Section 380, “Communication with Audit Committees,” and, with and without management present, discussed and reviewed the results of PwC’s examination of TJX’s financial statements. We also discussed the results of the internal audit examinations.

 

The aggregate fees that TJX paid for professional services rendered by PwC for the fiscal years ended January 31, 2009 and January 26, 2008 were:

 

 

 

 

We pre-approve all audit services and all permitted non-audit services by PwC, including engagement fees and terms. We have delegated the authority to take such action between meetings to the Audit Committee chair, who reports the decisions made to the full Audit Committee at its next scheduled meeting.

 

Our policies prohibit TJX from engaging PwC to provide any services relating to bookkeeping or other services related to accounting records or financial statements, financial information system design and implementation, appraisal or valuation services, fairness opinions or contribution-in-kind reports, actuarial services, internal audit outsourcing, any management function, legal services or expert services not related to the audit, broker-dealer, investment adviser, or investment banking services or human resource consulting. In addition, we evaluate whether TJX’s use of PwC for permitted non-audit services is compatible with maintaining PwC’s independence. We concluded that PwC’s provision of non-audit services, which we approved in advance, was compatible with their independence.

 

We reviewed the audited financial statements of TJX as of and for the fiscal year ended January 31, 2009 with management and PwC. Management has the responsibility for the preparation of TJX’s financial statements, and PwC has the responsibility for the audit of those statements.

 

Based on these reviews and discussions with management and PwC, we recommended to the Board that TJX’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended January 31, 2009 for filing with the SEC. We also have selected PwC as the independent registered public accounting firm for fiscal 2010, subject to ratification by TJX’s shareholders.

 

Audit Committee

 

Michael F. Hines, Chair
José B. Alvarez
David T. Ching
Amy B. Lane
Robert F. Shapiro
Fletcher H. Wiley

 

Beneficial Ownership

 

The following table shows as of April 13, 2009 the number of shares of our common stock beneficially owned by each director, each director nominee, each executive officer named in the Summary Compensation Table and all directors and executive officers as a group:

 

 

 

 

As of April 13, 2009 based on information filed with the SEC, persons known to us to beneficially own 5% or more of our outstanding common stock are as follows:

 

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers to file reports of holdings and transactions in our common stock with the SEC and the New York Stock Exchange. To facilitate compliance, we have undertaken the responsibility to prepare and file these reports on behalf of our officers and directors. Based on our records and other information, all reports were timely filed, except that in April 2008, Mr. Tripathy filed a Form 4 relating to the withholding of shares in connection with the vesting of restricted stock one day late. The failure to report this transaction was inadvertent and was corrected promptly upon discovery.

 

EXECUTIVE COMPENSATION

 

Compensation Committee Report

 

We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on these reviews and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and in the Annual Report on Form 10-K for the fiscal year ended January 31, 2009.

 

Executive Compensation Committee

 

David A. Brandon, Chair
José B. Alvarez
John F. O’Brien
Willow B. Shire

 

Compensation Discussion and Analysis

 

Our compensation program is based on our philosophy that all of our associates are important to our success, with our executive officers and senior executives setting the direction of our business and having overall responsibility for driving our results. We have achieved significant success in our business over many years. But, like other retailers, we operate in a highly-competitive and challenging economic environment. Accordingly, we have adopted a total compensation approach weighted toward performance-based incentive compensation to accomplish several goals:

 

 

The Executive Compensation Committee of our Board of Directors implements this compensation philosophy by providing a total compensation package for our executives that is competitive with our peers but is weighted toward performance-based incentive compensation. The elements of our executive compensation include:

 

 

Compensation Philosophy

 

For many years, our compensation philosophy for our key associates, including our named executive officers, has reflected pay for performance. Total compensation for our executives is a combination of base salary, short-term and long-term cash incentives, and long-term equity-based incentives. We design our compensation so that a substantial portion of each executive’s compensation opportunity is equity-based and cash incentive compensation. The amount of each named executive officer’s incentive compensation is directly tied to objective performance achieved by TJX and is therefore directly linked with the interests of shareholders.

 

 

 

In determining total compensation, the ECC takes into account individual performance, contractual obligations, historical compensation practices that in the ECC’s estimation have proven successful for TJX, compensation practices at peer group companies, compensation programs for TJX as a whole and any special considerations such as recruitment, new hires, promotions, organizational changes, relocations and transitional roles. In addition to base salary and incentive compensation, our executive officers receive retirement benefits, deferred compensation opportunities and limited perquisites. The availability of these benefits helps us maintain our competitive position in the market for executive talent but does not form part of the basis for the ECC’s determination of an executive officer’s total compensation for any year.

 

Compensation Consultant and Benchmarking

 

The ECC is advised by Frederic W. Cook & Co., Inc., or Cook, an independent compensation consultant, engaged by and reporting to the ECC. Cook does not perform any services for TJX other than its work for the ECC. In general, Cook advises the ECC with respect to the competitive positioning of base salary, annual bonus and long-term incentives for senior management, including our named executive officers.

 

The ECC generally benchmarks total compensation of our named executive officers and each of the elements of that compensation against a group of 12 peer companies that are large, publicly traded retailers selected by the ECC. The peer group included Circuit City Stores, Inc., Dillard’s, Inc., Macy’s, Inc., The Gap, Inc., Kohl’s Corporation, Limited Brands, Inc., Nike, Inc., OfficeMax Incorporated, J.C. Penney Company, Inc., Ross Stores, Inc., Staples, Inc. and Target Corporation. Substantially the same peer group has been used over a number of years, and the ECC considers revisions each year to reflect changes in the peer group and TJX with the advice of the ECC’s compensation consultant and our management. Although the ECC uses peer group data to provide context for its own determinations, it does not calibrate compensation or any element of compensation for our named executive officers with any specified level at the peer group.

 

Total Compensation

 

In determining the overall level and components of executive compensation, the ECC focuses on total compensation weighted toward performance-based incentive compensation. Generally, the ECC conducts a strategic review of the compensation policies for all management employees of TJX and its divisions, including the named executive officers. Using the comparative benchmarking data provided by the Hay Group, TJX’s compensation consultant, and in the case of our named executive officers, the ECC’s compensation consultant, the ECC assesses the overall competitiveness of our compensation programs. For each management level, the ECC then assesses the appropriate mix of short-term versus long-term incentives and cash versus equity-based compensation to provide a competitive mix and at the same time encourage long-range goals and employee retention. The ECC then separately reviews and determines individual compensation components, including base salary, short-term and long-term cash incentive awards and equity grants, at its various meetings throughout the year described below.

 

Base Salary

 

Each of our named executive officers receives a base salary in cash during the fiscal year. Base salary levels are determined by the ECC taking into account Company performance, contractual obligations, individual performance and responsibilities, past base salary, the limitation on income tax deductions imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), peer group data, the advice of Cook and recommendations by the supervising executive officers. The performance review of the Chief Executive Officer is performed each year by the Corporate Governance Committee as provided in its

charter. The review includes both quantitative and qualitative factors, including the Chief Executive Officer’s achievement of performance objectives for the year set by the Corporate Governance Committee in addition to those provided in the Management Incentive Plan and the Long Range Performance Incentive Plan. The Corporate Governance Committee does not make compensation recommendations. The executive to whom a named executive officer reports undertakes the performance review and makes salary recommendations to the ECC for such officer. In June 2008, Ms. Meyrowitz did so for Mr. Campbell, Mr. Barron and Mr. Herrman, Mr. Campbell did so for Mr. Naylor, and Mr. Naylor did so for Mr. Tripathy. Base salary increases for our named executive officers, other than increases as a result of mid-fiscal year promotions or contractual obligations, are generally implemented effective in June each year.

 

In April 2008, effective as of the beginning of fiscal 2009, the ECC increased Ms. Meyrowitz’s base salary and in June 2008, the ECC increased the base salaries of Mr. Campbell, Mr. Barron, Mr. Naylor, Mr. Herrman and Mr. Tripathy as part of its annual performance appraisal. In September 2008, pursuant to the terms of his employment agreement, Mr. Campbell’s base salary was reduced when the ECC approved a reduction in the level of his services.

 

Incentive Compensation

 

General.  A significant portion of each named executive officer’s compensation is equity-based and cash incentive compensation granted under goals approved by our stockholders.

 

 

Our equity-based and cash incentive compensation for our named executive officers in fiscal 2009 was intended to qualify for an exemption from the deduction limitation rules of Section 162(m) of the Code.

 

The ECC does not apply a formula in determining the portion of total compensation payable in the form of cash incentive compensation or equity-based compensation. However, starting in fiscal 2006, based on input from our shareholders and a review of our equity grant practices, the ECC reallocated compensation, reducing the number of stock options granted and increasing long-term cash incentive opportunities.

 

Short-Term Cash Incentives.  Our annual cash incentive awards are made under our Management Incentive Plan, or MIP. The strategic purpose of our MIP is to motivate our named executive officers and other key associates to achieve the annual targets for each of our divisions. Each MIP award has performance targets and MIP awards are paid in cash in an amount determined by measurement of actual performance against performance targets. If performance meets the performance targets, participants receive their target MIP awards. If performance exceeds the performance targets, participants are paid more than their target MIP awards based on the extent to which performance exceeds the performance targets (but, under the terms of the MIP, not more than two times the target award and not more than a maximum of $5 million per award for officers whose compensation is subject to the limits on deductibility under Code Section 162(m)). If performance does not meet the performance targets, the participants are paid no MIP awards or are paid awards below their target awards, based on the extent to which performance falls below the performance targets.

 

The annual MIP performance target for executive officers and other corporate associates for fiscal 2009 was an aggregation of weighted pre-tax income, excluding capitalized inventory costs, certain corporate allocations and results of T.K. Maxx in Germany and HomeSense in the U.K. and including intercompany

interest income/expense, for our divisions (“adjusted pre-tax income”). Marmaxx was underweighted relative to its expected contribution to adjusted corporate pre-tax income in order to make performance at the smaller divisions more meaningful to the incentive award and thereby promote focus on their performance. For the portion of fiscal 2009 during which Mr. Herrman was President of Marmaxx, like other Marmaxx divisional associates, his MIP performance target was based solely on Marmaxx’s performance.

 

The MIP performance target for each division for fiscal 2009 was derived from our plans for the division for the fiscal year approved by our Board and reflected performance by our divisions necessary for TJX to achieve corporate performance within the range publicly projected in the beginning of fiscal 2009 as well as the adjusted pre-tax income needed from each division to generate the return on invested capital and earnings per share for TJX publicly projected at that time. Because these MIP performance targets reflected our plans for our divisions for fiscal 2009, we believed when we set them that they were challenging but reasonably achievable.

 

Divisional performance at the actual divisional MIP performance target results in payment of the divisional portion of a corporate MIP award at the target level. If a division performs above or below its target performance, that divisional portion of the corporate award is adjusted in accordance with a predetermined percentage, or slope, adjustment. (Due to its lower profitability, the ECC established predetermined step, rather than slope, adjustments for above or below-target performance by A.J. Wright for fiscal 2009.) The adjustments included a minimum level of divisional performance required for payment of the corresponding portion of the corporate MIP award and a maximum level of divisional performance beyond which such portion would not be increased. These limits reflected our belief that divisional performance below the minimum level should not merit any award and that the maximum level of performance represented the appropriate “reach” level for the division. For fiscal 2009, the minimum performance level for each division (except A.J. Wright) ranged from 70% to 80% of the performance targets, and the maximum performance level ranged from 114% to 130% of the performance targets. The divisional portions of the corporate award are then aggregated for the corporate MIP award. Our MIP requires that performance be certified by the ECC before any payments can be made to named executive officers.

 

The MIP award opportunities (as a percentage of base salary) for our named executive officers for fiscal 2009 were: Ms. Meyrowitz, 100% target, 200% maximum; Mr. Barron, Mr. Campbell, Mr. Herrman and Mr. Naylor, 55% target, 110% maximum; and Mr. Tripathy, 45% target, 90% maximum. As with other aspects of compensation, the ECC generally reviews short-term cash compensation as part of its overall review of compensation of our named executive officers and establishes MIP target award levels based on responsibilities, peer group data and input from the ECC’s compensation consultant.

 

Our named executive officers other than Mr. Herrman earned fiscal 2009 MIP awards of 72.89% of their respective target awards. These awards were calculated as follows:

 

 

Because his responsibilities changed during the fiscal year, Mr. Herrman’s fiscal 2009 award was prorated between the Marmaxx divisional award and the corporate award based on the time he served in the divisional and corporate roles during the year.

 

Long-Term Cash Incentives.  Our long-term cash incentive awards are made under our Long Range Performance Incentive Plan, or LRPIP. The strategic purpose of our LRPIP is to motivate our named executive

officers and other key associates to achieve cumulative multi-year targeted adjusted pre-tax income levels for each of our divisions. Like the MIP, LRPIP awards are paid in cash in an amount determined by measurement of actual performance against performance targets. If cumulative performance meets the performance targets set by the ECC, participants receive their target LRPIP awards. If cumulative performance exceeds the performance targets, participants are paid more than their target LRPIP awards based on the extent to which performance exceeds the performance targets (but, under the terms of the LRPIP, not more than 150% of the target award, subject to a maximum of $5 million per award for those officers whose compensation is subject to the limits on deductibility under Code Section 162(m)). If performance does not meet the performance targets, the participants are paid no LRPIP awards or awards below their target LRPIP awards, based on the extent to which performance falls below the performance targets. For the LRPIP award opportunities for fiscal 2009-2011 granted in fiscal 2009, the minimum three-year performance level for an award was set at 33.33% of the performance targets and the level for maximum awards was set at 133.33% of the performance targets.

 

The LRPIP performance targets are a cumulative aggregation of adjusted pre-tax income for our divisions for a multi-fiscal year period (generally three fiscal years). Like the MIP targets, the LRPIP performance targets for awards made for fiscal 2009-2011 were derived from our plans for each of our divisions for the fiscal years approved by our Board and reflected performance by our divisions necessary for TJX to achieve corporate performance within the range publicly projected in the beginning of the fiscal year as well as the adjusted pre-tax income needed from each division to generate the return on invested capital and earnings per share for TJX publicly projected at that time. Because these performance targets reflected our plans for our divisions, we believed when we set them that they were challenging but reasonably achievable.

 

Payouts under the LRPIP for all awards are calculated in a similar manner to payouts under the corporate MIP except that performance is measured on a cumulative basis over the multi-year period of the award. The award earned with respect to cumulative performance of each division for the multi-year period above or below target performance is determined by applying pre-determined slope adjustments. Amounts earned with respect to each division are aggregated for the corporate LRPIP award. Under our LRPIP, the ECC must certify performance for a performance period before any payments can be made to named executive officers.

 

In April 2008, the ECC granted LRPIP awards for fiscal 2009-2011 to each participant in the LRPIP. The LRPIP award opportunities for our named executive officers for fiscal 2009-2011 were: Ms. Meyrowitz, $1,400,000 target, $2,100,000 maximum; Mr. Barron, Mr. Campbell, Mr. Herrman and Mr. Naylor, $700,000 target, $1,050,000 maximum; and Mr. Tripathy, $300,000 target, $450,000 maximum. The ECC generally reviews long-term and short-term cash compensation together as part of its overall review of compensation of our named executive officers and establishes LRPIP award levels by position, based on responsibilities, peer group data and input from the ECC’s compensation consultant.

 

Our named executive officers other than Mr. Tripathy earned fiscal 2007-2009 LRPIP awards of 105.69% of their respective target awards. These awards were calculated as follows:

 

 

Mr. Tripathy, who joined TJX during the fiscal 2007-2009 LRPIP cycle, had a two-year fiscal 2008-2009 LRPIP award.

 

Long-Term Equity-Based Compensation.  Long-term equity-based awards under our Stock Incentive Plan, or SIP, are an important part of our named executive officers’ total compensation. The ECC generally

determines by management level the amount of equity grants and the allocations between stock options and performance-based restricted stock based on responsibilities, peer group data and input from the ECC’s compensation consultant. Stock options do not deliver value unless and only to the extent that the value of our stock appreciates, thus linking the interests of our executive officers with those of our shareholders. The performance conditions applicable to the restricted stock awards relate vesting to achievement of the performance levels provided for those awards. The service-based vesting conditions of both our stock options and our other equity-based awards provide important retention incentives. For both options and restricted stock awards, the ECC values each stock award based on the closing price of our common stock on the date of the award, and in the case of option awards, uses the Black-Scholes option pricing formula.

 

For the September 2008 option awards to named executive officers and other associates, the ECC determined the number of stock options granted by setting a fixed dollar value by position and dividing this value by the stock price on the grant date. All options are granted with an exercise price equal to the closing stock price on the New York Stock Exchange on the grant date, and in general, have a maximum term of ten years, vest over three years and, to the extent vested, are exercisable for a limited period following termination of employment.

 

The performance-based restricted stock granted to our named executive officers in fiscal 2009 had both service-based and performance-based vesting conditions. Ms. Meyrowitz’s award had a one-year service condition as well as a condition for full vesting of achievement of a level of performance resulting in an MIP award for fiscal 2009 of 67% of the targeted MIP award for the year. The awards for Mr. Naylor, Mr. Herrman and Mr. Tripathy had a three-year service condition as well as a condition for full vesting of achievement of a level of performance resulting in an LRPIP award for fiscal 2009-2011 of 67% of the targeted LRPIP award for the period. At the time the ECC made these awards, we believed this performance was reasonably achievable. Performance below these target levels results in a pro rata reduction in the number of shares vested. We believe these awards perform an important retention function.

 

Other Elements of Compensation

 

Retirement Benefits.  Although we have a broad-based defined benefit pension plan under which benefits accrue based on compensation and service, the plan was closed to new participants as of February 1, 2006. In fiscal 2009, all of our named executive officers other than Mr. Tripathy participated in this plan. We also maintain a Supplemental Executive Retirement Plan, or SERP. Ms. Meyrowitz, Mr. Campbell and Mr. Barron participate in our primary SERP benefit program, and Mr. Naylor and Mr. Herrman participate in our alternative SERP benefit program.

 

Deferred Compensation.  Our named executive officers can defer up to 20% of base salary and up to 100% of any MIP and LRPIP bonuses under our Executive Savings Plan, or ESP, an elective deferred compensation plan. Amounts deferred are notionally invested in mutual funds or other market investments, as specified by the plan administrator. Participants in the ESP (other than those eligible for our primary SERP benefit) receive an employer match, subject to a vesting schedule, that is similarly notionally invested. It has been our practice to purchase investments specified by participants, thus realizing the actual return of the notional investments. Of our named executive officers, Mr. Naylor, Mr. Herrman and Mr. Tripathy were eligible for an ESP match in fiscal 2009, although of these named executive officers only Mr. Naylor elected to participate in ESP.

 

Amounts previously deferred under our General Deferred Compensation Plan, or GDCP, now closed to new investment, are credited to an account that earns notional interest at an annually adjusted rate based on U.S. Treasury securities until distributed.

 

Perquisites.  In fiscal 2009, we provided a limited amount of perquisites and other personal benefits to our named executive officers, all of which are detailed in footnote 9 to the Summary Compensation Table below: (i) an automobile benefit, (ii) financial and tax planning services, (iii) employer contributions or credits under the Company’s qualified and non-qualified savings plans and (iv) payment of life insurance premiums.

Employment Agreement with President and Chief Executive Officer.  In March 2009 we entered into a new employment agreement with Carol Meyrowitz, our President and CEO, effective as of February 1, 2009, that continues until January 29, 2011, unless terminated earlier in accordance with its provisions. The ECC, with the assistance of Mr. Cammarata, negotiated this agreement with Ms. Meyrowitz and was advised by Cook with respect to its terms. Under the agreement, Ms. Meyrowitz is entitled to an annual base salary of not less than $1,475,000, the current level of her base salary, consistent with our freeze of merit increases for most employees. She continues to be eligible to participate in specified benefit programs including MIP and LRPIP at levels commensurate with her position and responsibilities, with a target award for each of 100% of her base salary, and subject to such terms as are established by the ECC. Ms. Meyrowitz agreed to eliminate her right to a tax gross-up payment for certain taxes that might be incurred in connection with a change of control and to severance benefits upon certain voluntary terminations without good reason following a change of control. Her severance benefits following an involuntary termination without cause or a voluntary termination for good reason and her non-competition and non-solicitation provisions following any termination of employment were increased to twenty-four months. In connection with her agreement, Ms. Meyrowitz was awarded 300,000 shares of performance-based restricted stock.

 

Employment Agreement with Vice Chairman.  In June 2008, we entered into a new employment agreement with our Vice Chairman, Donald Campbell that continues until January 29, 2011, unless terminated earlier in accordance with its provisions. Under his agreement, Mr. Campbell was entitled to a minimum base salary of $785,000 and continued participation in specified benefit programs at levels commensurate with his position and responsibilities, taking into account any modified schedule. Pursuant to the agreement and as approved by the ECC, the level of services Mr. Campbell provided to the Company was reduced to 37% of his prior full-time level, effective September 15, 2008, with a prorata reduction in his base salary and his outstanding MIP and LRPIP award opportunities. Mr. Campbell agreed to non-competition agreement and non-solicitation provisions during the term of his employment and for 18 months thereafter, in the case of the non-competition provisions, and 24 months thereafter, in the case of the non-solicitation provisions. On April 7, 2009, Mr. Campbell retired as Vice Chairman of TJX but agreed to continue his employment under his employment agreement on a per diem basis as requested by TJX.

 

Employment Agreement with Senior Executive Vice President, Group President.  On April 3, 2008, we entered into a letter agreement with Arnold Barron, Senior Executive Vice President, Group President, extending the term of his employment agreement until January 31, 2009. Under the letter agreement, Mr. Barron agreed that he would not be entitled to any LRPIP award for which the applicable performance period would extend beyond January 31, 2009 but would remain eligible to receive stock option awards with service-based vesting conditions during the term of his employment. On November 1, 2008, Mr. Barron resigned as an executive officer and continued his employment in an executive advisory role through his retirement on January 31, 2009.

 

Separation Agreement with Former Executive Vice President, Chief Financial Officer.  Nirmal Tripathy, Executive Vice President and CFO, resigned, effective January 31, 2009, and we entered into a separation agreement with Mr. Tripathy in which we agreed to treat his termination of employment as though it had been without cause, with specified modifications, and Mr. Tripathy agreed to provide TJX a release of claims. Mr. Tripathy remains subject to the non-competition and non-solicitation agreements in his employment agreement, as well as a non-disparagement agreement contained in his separation agreement.

 

Amendments to Employment Agreements with Senior Executive Vice President, Group President and Senior Executive Vice President, Chief Financial and Administrative Officer.  In April 2009, Mr. Herrman, Senior Executive Vice President, Group President, and Mr. Naylor, Senior Executive Vice President, Chief Financial and Administrative Officer, entered into amendments to their agreements, effective February 1, 2009, to provide that MIP and LRPIP-based payouts upon a termination without cause or certain voluntary terminations without good reason will be measured by actual, rather than target, performance, to eliminate their right to a tax gross-up payment for certain taxes that might be incurred in connection with a change of control and to severance benefits upon certain voluntary terminations without good reason following a change of control and to increase their severance benefits following an involuntary termination without cause or a

voluntary termination for good reason and, in the case of Mr. Naylor, his non-competition provision following any termination of employment, to twenty-four months.

 

Severance and Change of Control Provisions.   During fiscal 2009, each of our named executive officers had an agreement that provided employment and severance terms, including in connection with a change of control, and non-competition and non-solicitation undertakings. Provisions of these agreements relating to termination and change of control are summarized below under “Potential Payments upon Termination or Change of Control.” We provided these agreements because we believe that it is important to define the relative obligations of TJX and our named executive officers, including obtaining protection against competition and solicitation, and that severance and change of control protections assist in attracting and retaining high quality executives and in keeping them focused on their responsibilities during any period in which a change of control may be contemplated or pending.

 

Stock Ownership Guidelines.  We have stock ownership guidelines that apply to all of our executive officers, which are summarized in more detail above under “Stock Ownership Guidelines” in the “Corporate Governance” section. These guidelines are designed to align our executives’ interests with those of our shareholders and to encourage a long-term focus. Also, our policies prohibit our executives from engaging in hedging transactions with respect to TJX stock.

 

Tax and Accounting Considerations.  We structure incentive compensation arrangements to qualify as performance-based compensation exempt from the deduction limitations under Section 162(m) of the Code, but we view the availability of a tax deduction as only one relevant consideration. We continue to emphasize performance-based compensation for executives and thus minimize the effect of Section 162(m) of the Code. However, the ECC believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive talent necessary for our success. Consequently, the ECC authorizes compensation that is not performance-based in excess of $1 million.

 

Equity Grant Practices.  All of our equity awards are made under our stockholder approved SIP. Virtually all of our stock options and other equity-based awards are granted at the same regularly scheduled ECC meetings held on approximately the same dates each year. The specific dates of the meetings are set by the Board, along with its determination of all regularly scheduled Board and committee meetings, generally about two years in advance. In limited circumstances, typically in connection with new hires or promotions, the ECC approves or grants stock options and stock awards at other times during the year at pre-scheduled ECC meetings. The ECC does not have any programs, plans or practices of timing these equity grants in coordination with the release of material non-public information. The exercise price of each stock option grant is the closing stock price on the New York Stock Exchange on the grant date. The SIP prohibits, without stockholder approval, any repricing requiring stockholder approval under applicable NYSE rules.

 

Executive Compensation Committee Processes and Procedures

 

The ECC is responsible for overseeing executive compensation and benefits. The ECC has the authority, without Board or management approval, to retain and terminate its compensation consultants and to determine their fees and terms of engagement. In addition, the ECC may delegate its authority to a subcommittee and may establish formal procedures to govern its operation, as it deems appropriate.

 

In determining the compensation program for TJX and setting the compensation of our named executive officers, the ECC generally provides for total compensation and each of its elements by position level and individual performance, weighted toward performance-based incentive compensation. Cook advises the ECC with respect to compensation for our named executive officers. The level of Cook’s engagement and its fees are determined by the ECC. In fiscal 2009, Cook advised the ECC with respect to the level and mix of compensation for our Chief Executive Officer, including comparative data for the peer group. In fiscal 2009, the ECC also considered a report by Hay, TJX’s compensation consultant, on company-wide, long-term incentive compensation.

The ECC reviews and approves compensation matters at various meetings during the year. The ECC generally acts as follows including with respect to our named executive officers:

 

 

Our named executive officers play a limited role in the executive compensation process. Each named executive officer provides annual performance reviews of any named executive officers directly reporting to him or her. In addition, our Chief Executive Officer makes recommendations to the ECC regarding base salaries and other elements of compensation for the other named executive officers. The ECC then considers those performance reviews and recommendations in establishing base salaries, cash incentive awards and equity grants. The Corporate Governance Committee performs the annual performance review of our Chief Executive Officer, which the ECC considers in determining the compensation of our Chief Executive Officer.

 

Our named executive officers participate in our strategic planning process and recommend to the Board the annual plans for TJX and its divisions. These plans are the basis for the MIP and LRPIP performance targets and the restricted stock performance criteria, all of which are approved by the ECC. In addition, Mr. Campbell, Vice Chairman (through September 2008), and Mr. Herrman, Senior Executive Vice President, Group President (starting in September 2008) assisted the ECC in its administration of the MIP, LRPIP, SIP, SERP, GDCP and ESP and advised the ECC regarding the general design and structure of these incentive plans. Mr. Cammarata, Ms. Meyrowitz, Mr. Campbell (through September 2008) and Mr. Herrman regularly attended ECC meetings at the request of the ECC, although the ECC met in executive session at all regularly scheduled meetings.

Summary Compensation Table

 

The following table provides information concerning compensation for our principal executive officer, our principal financial officer and four other most highly paid executive officers during fiscal 2009 (collectively, our named executive officers):

 

 

 

 

 

 

 

Total compensation for our named executive officers is composed of base salary, short-term and long-term cash incentives, long-term equity-based incentives, retirement benefits and limited perquisites. During fiscal 2009, each of our named executive officers had an employment agreement that provided for a base salary of not less than the amount of such officer’s base salary as of the effective date of the employment agreement. Our named executive officers were entitled under their employment agreements to participation in our SIP, MIP and LRPIP, and received cash incentives only pursuant to our MIP or LRPIP during fiscal 2009 and, in the case of Mr. Tripathy, the payment made in connection with his separation. Our named executive officers other than Mr. Tripathy also participated in our tax-qualified defined benefit plan; Ms. Meyrowitz, Mr. Campbell and Mr. Barron participated in our primary SERP benefit and Mr. Herrman and Mr. Naylor participated in our alternative SERP benefit. All of our named executive officers were eligible to make deferrals to our 401(k) plan and our ESP, although only Mr. Naylor, Mr. Herrman and Mr. Tripathy were eligible for matching contributions under the ESP and, of these named executive officers, only Mr. Naylor elected to make deferrals to the ESP during fiscal 2009. The employment agreements of our named executive officers entitled them to an automobile benefit and participation in employee benefit and fringe benefit plans and programs made available to executives generally. For our executives, all other compensation items including perquisites comprise a small portion of overall total compensation.

Grants of Plan-Based Awards in Fiscal 2009

 

The following table reports potential payouts under our incentive plans and all other stock and option awards that were granted during fiscal 2009 to our named executive officers.

 

 

 

 

A significant portion of each named executive officer’s total compensation is composed of equity-based and cash incentive compensation. Short-term cash incentives are granted under our MIP, and long-term cash incentives are granted under our LRPIP. As discussed in “Compensation Discussion and Analysis,” MIP awards are based on actual performance against targets for aggregate adjusted pre-tax income for our divisions for the fiscal year set by the ECC. The target award for each named executive officer is set as a percentage of base salary; if our performance meets the targeted performance, the named executive officer receives his or her target award. If our performance exceeds the targeted performance, the named executive officer can earn

up to a specified maximum (as shown above), but, under the terms of the MIP, not more than two times the target award or $5 million per award for officers whose compensation is subject to the limits on deductibility under Code Section 162(m). If our performance does not meet the targeted performance, the named executives will receive no awards or awards below target, based on the extent to which performance falls below target awards. Similarly, LRPIP awards are based on performance against targets for multi-year cumulative aggregate adjusted pre-tax income for our divisions set by the ECC. Like our MIP, our named executive officers are paid performance awards under the LRPIP only to the extent that multi-year performance targets are achieved. LRPIP participants can earn up to the specified maximum, shown above, but, under the terms of the LRPIP, not more than 150% of the target award or $5 million per award for officers whose compensation is subject to the limits on deductibility under Code Section 162(m).

 

In fiscal 2009, we granted all equity incentives, including stock options and performance-based restricted stock, under our SIP. Stock options generally have a maximum term of ten years, vest in equal annual installments over three years, upon a change of control and in the event of certain early terminations of employment. In the event a named executive officer’s employment is terminated by reason of death, disability, or retirement at or after age 65 with five or more years of service, vested options generally remain exercisable for five years following termination, unless the option terminates on an earlier date pursuant to its terms. Following a retirement at or after age 65 with ten or more years of service, or a retirement at or after age 60 with twenty or more years of service, vested options generally remain exercisable for five years following termination and unvested options continue to vest for the three year period following retirement on the same basis as if the named executive officer had not retired and will remain exercisable for an extended period, unless the option terminates on an earlier date pursuant to its terms. In the event of any other termination, other than a termination for cause, vested options for our named executive officers generally remain exercisable for six months following termination (or such other period of up to three years as the ECC determines at or after the grant date), unless the option terminates on an earlier date pursuant to its terms. All options, whether or not then vested, are forfeited on a termination for cause.

 

The restricted stock grants have both service-based and performance-based vesting conditions, except that awards fully vest upon a change of control and for Ms. Meyrowitz in the event of certain early terminations of employment. For performance-based restricted stock granted to our named executive officers in fiscal 2009, the service-based conditions are satisfied by three years of continuous employment (one year for Ms. Meyrowitz), and the performance-based conditions are tied to the corporate performance target under our MIP, in the case of Ms. Meyrowitz, and our LRPIP, in the case of Mr. Naylor, Mr. Herrman and Mr. Tripathy. Our fiscal 2009 grants of equity and non-equity incentive plan compensation reflect our general approach to long-term compensation, with long-term cash incentive awards making up a larger share of our named executive officers’ total compensation relative to stock option incentives.

Outstanding Equity Awards at 2009 Fiscal Year-End

 

The following table provides information on outstanding option and stock awards for named executive officers as of January 31, 2009:

 

 

 

 

 

 

 

 

Option Exercises and Stock Awards Vested during Fiscal 2009

 

The following table provides information relating to option exercises and stock award vesting of performance-based restricted stock for our named executive officers during fiscal 2009:

 

 

 

 

Pension Benefits

 

We have a tax-qualified defined benefit plan, or Retirement Plan, and a non-qualified Supplemental Executive Retirement Plan, or SERP. We do not have a policy of granting extra years of credited service for purposes of these plans. Our Retirement Plan was closed to new participants as of February 1, 2006, although participants employed prior to that date continue to accrue benefits. Consistent with industry practices, we have not offered primary SERP benefits to any new participants in a number of years and do not currently intend to do so in the future, although we continue to offer an alternative SERP benefit.

 

Under our Retirement Plan, participants accrue a benefit payable as an annuity at retirement or, if vested, on an earlier termination of employment. The amount accrued each year once participation commences after an initial one-year eligibility period, expressed as a life annuity payable commencing at age 65, is 1% of eligible compensation (base salary and MIP awards) up to a periodically adjusted limit ($86,000 in calendar

2008 and $90,000 in calendar 2009) and 1.4% of eligible compensation in excess of that limit. For years of service in excess of 35, the accrual rate is 1% per year of eligible compensation. Compensation in excess of another periodically adjusted limit, currently $245,000, however, is disregarded for these purposes. Benefits under the Retirement Plan vest, in general, after five years of service. A vested participant who retires or whose employment terminates prior to age 65 with at least ten years of service may elect to receive a reduced annuity benefit at retirement or at age 55, if later.

 

Under our SERP, the primary benefit provides participants a benefit equal to the value of an annuity providing annual payments up to a maximum of 50% of the participant’s final average earnings, less other employer-provided retirement benefits and social security benefits. This benefit, before offsets, accrues at the rate of 2.5% of final average earnings for each year of service not in excess of 20. In determining final average earnings, the SERP includes base salary and MIP, but not LRPIP, and uses the highest average of five years over the preceding ten years. The primary SERP benefit is payable in installments, or in certain other forms of actuarially equivalent value. The alternative benefit provides participants whose regular pension benefits are affected by Internal Revenue Service benefit restrictions with the amount of the benefits lost by reason of those restrictions.

 

The following table provides information on pension benefits for our named executive officers eligible for these benefits as of January 31, 2009:

 

 

 

 

Nonqualified Deferred Compensation Plans

 

We have an Executive Savings Plan, or ESP, which is a nonqualified deferred compensation plan available to key employees. Under the ESP, our named executive officers and other eligible employees can elect to defer up to 20% of base salary and up to 100% of any MIP and LRPIP awards, our directors can elect to defer retainers and meeting fees, and employees not eligible for primary SERP benefits are eligible to receive matching credits. For participants at the Vice President level or higher, we match 25% of the first 10% of their deferred base salary if we meet our annual MIP performance target (and up to a 50% match if those performance targets are exceeded). If we do not meet the target, participants receive only a 10% matching credit (or, after the attainment of age 50, up to a 25% matching credit). Because the required performance

target was not met, ESP participants received only this non-performance based matching credit for the 2008 plan year. Matching employer credits are 50% vested after five years of plan participation and are 100% vested after ten years of plan participation or at age 55. Of our named executive officers, only Mr. Naylor, Mr. Herrman and Mr. Tripathy were eligible to receive matching credits if they participated in the ESP. All amounts deferred or credited to a participant’s account under the ESP are notionally invested in mutual funds or other investments, available on the market, specified by the plan administrator. Although not required by the ESP, it is our practice to purchase the investments specified by participants, thus realizing the actual return of the notional investments.

 

Under the ESP, amounts deferred are generally distributed upon termination of employment, unless the participant has irrevocably elected an earlier distribution date, which may be no earlier than January 1st of the second year following the year of the deferral. Vested employer matching credits are distributed upon death, disability or separation from service after attaining age 55. Distributions are generally made in a lump sum payment; however a participant may irrevocably elect to be paid in annual installments over a period of not more than ten years in the event that their employment terminates after age 55. Amounts vested under the ESP prior to January 1, 2005 (and earnings on those amounts) can be distributed at the participant’s request prior to termination of employment in a lump sum distribution of 85% of the vested account, with the remaining 15% forfeited.

 

Through December 31, 2007, we offered eligible employees including our named executive officers and directors, the opportunity to participate in the General Deferred Compensation Plan, or GDCP, another nonqualified deferred compensation plan. Under the GDCP, participants could defer all or a portion of base salary and MIP and LRPIP awards and, in the case of directors, retainers and meeting fees and be credited amounts on deferrals based on a rate for Treasury securities that is adjusted annually. For calendar 2008, this rate was 4.58%. No further deferrals were permitted beginning with fiscal 2009 compensation, but previously deferred amounts continue to be credited with interest amounts. GDCP participants who receive a benefit under our Retirement Plan may be eligible to receive a retirement equalization benefit to compensate for the deferral of income. A participant who is already eligible to receive an equalization benefit of the same value under the SERP is not eligible for this benefit.

 

Amounts deferred under the GDCP on or after January 1, 2005 (and earnings on those amounts) that had not been distributed prior to January 1, 2009 are distributed under the terms of the ESP, as described above. Amounts deferred under the GDCP prior to January 1, 2005 (and earnings on those amounts credited prior to that date) are distributed in a lump sum at termination of service or upon an event or at a date (no later than the tenth anniversary of termination of service) and in a lump sum or in monthly installments as elected by the participant. Upon a change of control, each participant receives the entire amount credited to his deferred account, along with the present value of any retirement equalization benefit in a lump sum payment.