Krista McDonough
Capri HoldingsAbout Krista McDonough
Krista A. McDonough is Chief Legal and Sustainability Officer of Capri Holdings, leading global legal, compliance, risk management, and corporate social responsibility/sustainability initiatives; she is 45 years old and has been with Capri since August 2011, after practicing corporate and securities law at Paul, Weiss from 2005–2011 . She previously served as Capri’s General Counsel (since October 2016) and Chief Sustainability Officer (since 2020) before assuming her current combined role . Fiscal 2025 was a difficult year for Capri, with revenue down 14.1% to $4.4B amid industry softness and strategic execution issues (context for incentive outcomes and retention actions) . Capri’s pay-versus-performance disclosure shows FY2025 net loss of $1.182B and adjusted free cash flow of $153M, with cumulative TSR since fiscal 2020 equating to $173.95 on a $100 investment (underscoring a challenged performance backdrop) .
Past Roles
| Organization | Role | Years (as disclosed) | Strategic Impact |
|---|---|---|---|
| Capri Holdings | General Counsel | Since Oct 2016 | Led worldwide legal, compliance, and risk management in a period including M&A and strategic pivots . |
| Capri Holdings | Chief Sustainability Officer | Since 2020 | Built and executed the company’s CSR/sustainability agenda across governance, climate, sourcing, and philanthropy pillars . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Paul, Weiss, Rifkind, Wharton & Garrison LLP | Attorney, Corporate Department (Capital Markets/Securities) | 2005–2011 | Advised on capital markets and securities law, foundational to current public-company governance and disclosure responsibilities . |
Fixed Compensation
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Base Salary ($) | 550,000 | 550,000 | 550,000 |
| 401(k) Company Match ($) | 8,700 | 9,150 | 9,900 |
| Total Fixed Cash/Perqs Disclosed ($) | 8,700 (All Other) | 9,150 (All Other) | 9,900 (All Other) |
Notes:
- FY2025 base salary rate confirmed at $550,000; no merit increases company-wide for NEOs in FY2025 .
- Ms. McDonough’s employment agreement sets base salary at $550,000 and eligibility for the annual cash incentive (see next section) .
Performance Compensation
Capri’s annual cash incentive design uses hard financials (free cash flow and adjusted operating income) plus an ESG component; however, for FY2025 Ms. McDonough did not participate in the Cash Incentive Plan because the Compensation & Talent Committee substituted a special retention construct following the termination of the Tapestry merger .
FY2025 Annual Cash Incentive (Company Plan Framework; McDonough not a participant)
| Metric | Weight | Threshold | Target | Maximum | FY2025 Actual | Payout vs Target |
|---|---|---|---|---|---|---|
| Free Cash Flow ($mm) | 50% | 400 | 500 | 600 | 153 | 0% |
| Adjusted Operating Income ($mm) | 40% | 468 | 520 | 572 | 91 | 0% |
| Individualized ESG Goals | 10% | — | — | — | — | Assessed discretely (CEO maxed; McDonough not in plan) |
| Total Weighted Payout (Financials) | — | — | — | — | — | 0% (financials) |
Note: McDonough did not participate in FY2025 Cash Incentive Plan due to retention awards in lieu of bonus .
FY2025 Special Retention Awards (in lieu of annual bonus)
| Component | Amount ($) | Timing | Conditions |
|---|---|---|---|
| Target Retention Award | 275,000 | 50% paid 12/13/2024; 50% paid 6/13/2025 | In lieu of FY2025 cash incentive; paid for retention post-termination of Tapestry deal . |
| Special Performance Bonus | 250,000 | Paid 12/13/2024 | Must repay if terminate before 12/13/2025, except limited circumstances . |
Long-Term Incentives (LTI)
- June 17, 2024 grant (reflects FY2024 performance; appears in FY2025 SCT): time-based RSUs only, 4-year ratable vesting; grant-date fair value $1,250,016; 39,063 RSUs .
- June 2025 grants (for FY2025 performance; will appear in FY2026 SCT): time-based RSUs only, 3-year vesting; indicated grant value $1,312,500 for McDonough (25% below target reference) .
PRSUs – Performance Outcomes
| PRSU Cohort | Metric(s) | Period | Target(s) | Actual | Earnout | McDonough Result |
|---|---|---|---|---|---|---|
| 2022 Grant | Cumulative Adjusted Free Cash Flow | FY2023–FY2025 | $1,950mm target | $1,085mm | 0% | 15,819 PRSUs forfeited; $0 value . |
| 2023 Grant | Avg of FCF (50%) and ROIC (50%); measured annually (3 tranches) | FY2024–FY2026 | FY2025 targets: FCF $126mm; ROIC 8.8% | FY2025 actual: FCF $153mm; ROIC 2.1% | 21.0% for FY2025 tranche | Of 23,764 target PRSUs: 1,647 vest in June 2026 for FY2025 tranche; 8,080 remain eligible for FY2026; 14,037 forfeited to date; illustrative market values provided at $20.30 close . |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 104,722 shares; <1% of 117,923,400 outstanding as of 6/9/2025 . Includes 4,900 vested options at $67.52 expiring June 2025 and 20,980 RSUs vesting within 60 days of 6/9/2025 . |
| Outstanding Unvested RSUs (3/29/2025) | 62,159 RSUs; market value $1,261,828 at $20.30 close . |
| Outstanding PRSUs (unearned) (3/29/2025) | 5,687 PRSUs (based on performance measurement status/assumptions); market value $115,446 at $20.30 . |
| Options | 4,900 options exercisable at $67.52; expiration June 2025 (out-of-the-money vs $20.30) . |
| Stock Ownership Guidelines | Requirement: 2x salary for Chief Legal & Sustainability Officer; Status: in compliance (“ü”) as of FY2025 measurement date . |
| Hedging/Pledging | Prohibited: no buying on margin, no pledging as collateral, no short sales, no derivatives/hedging . |
Vesting and near‑term supply indicator:
- 20,980 RSUs scheduled to vest within 60 days of 6/9/2025 (i.e., mid‑summer 2025), a potential source of sell‑to‑cover/tax withholding activity depending on plan mechanics .
Employment Terms
| Term | Details |
|---|---|
| Employment Agreement | At-will; base salary $550,000; eligible for annual cash incentive (0%–100% of salary; target 50%) subject to plan . |
| Severance (Non‑CIC) | If terminated without Cause or resign for Good Reason: 12 months base salary continuation, one year benefits continuation, and prorated annual cash incentive for the fiscal year of termination (subject to release) . |
| Change‑in‑Control (CIC) | Separate CIC Agreement: double trigger; 2x (base salary + target annual cash incentive), prorated target bonus for year of termination, 24 months COBRA-equivalent benefits, up to $25,000 outplacement; no excise tax gross‑up (cutback applies) . |
| Equity on CIC | If awards assumed: performance conditions for PRSUs deemed at target, but continue time‑based; full vesting if terminated without Cause/for Good Reason within 24 months post‑CIC; if not assumed, vesting accelerates at CIC . |
| Restrictive Covenants | Confidentiality; post-employment restrictions include non-solicitation/no-hire elements as referenced across agreements and plan enforcement; breach can trigger equity forfeiture/clawback . |
| Clawback | Company policy (NYSE‑compliant) covers annual cash incentives and performance-based LTI upon restatements; additional forfeiture for breach of post‑employment covenants . |
| Hedging/Pledging Policy | Prohibitions on hedging, pledging, margining (alignment safeguard) . |
Multi‑Year Compensation (as reported)
| Component ($) | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Salary | 550,000 | 550,000 | 550,000 |
| Bonus (Special/Other) | — | — | 525,000 (retention program) |
| Share Awards (Grant‑date FV) | 1,499,958 | 1,749,981 | 1,250,016 |
| Non‑Equity Incentive Plan | 440,000 | 55,000 | — (replaced by retention awards) |
| All Other Compensation | 8,700 | 9,150 | 9,900 |
| Total | 2,498,658 | 2,364,131 | 2,334,916 |
Performance Plan Architecture (what drives pay outcomes)
- Annual cash incentive metrics: Free Cash Flow (50%) and Adjusted Operating Income (40%) with individualized ESG goals (10%); 0% payout on financials in FY2025; McDonough did not participate due to retention awards .
- PRSUs: 2022 cycle (3-year cumulative adjusted FCF) paid 0% at FY2025 end; 2023 cycle (annual FCF and ROIC tranches) paid 21% for FY2025 tranche (FCF above target; ROIC below threshold), with final year FY2026 still open .
Compensation Structure Analysis
- Mix shift and retention: For FY2025, the Committee used retention cash (275k) plus a one-time 250k performance bonus in lieu of the standard cash incentive, signaling retention priority after the merger termination and amid operational headwinds .
- Equity risk profile: LTI in FY2024 and FY2025 cycles was delivered solely as time-based RSUs (no PRSUs) due to pending transaction/goal‑setting constraints, with an intent to return to PRSU/RSU mix as conditions normalize .
- Pay-for-performance alignment: 2022 PRSUs paid 0% and FY2025 financial metrics missed thresholds (0% on financials), consistent with disclosed underperformance .
Risk Indicators & Alignment
- Ownership alignment: Meets 2x salary holding requirement; robust anti‑hedging/pledging policy .
- Clawback and forfeiture: NYSE‑compliant clawback in place; equity forfeiture for covenant breaches .
- Options out-of-the-money: 4,900 options at $67.52 expiring June 2025—non‑economic vs $20.30 share price at FY2025-end—reduces near‑term exercise/sale incentives .
Investment Implications
- Retention risk mitigated near term: The two‑tranche FY2025 retention cash (in lieu of bonus) and strong CIC protections reduce near‑term flight risk for a control‑function executive critical to executing brand separations and legal/ESG initiatives .
- Limited selling pressure signal: Options are far out‑of‑the‑money; incremental supply relates to time‑based RSU releases (20,980 within 60 days of 6/9/2025 and ongoing annual tranches) but hedging/pledging is prohibited and ownership guidelines support alignment .
- Pay outcomes reflect performance reality: Zero payout on FY2025 financial metrics and 0% earnout on 2022 PRSUs, with partial earnout on one 2023 tranche (21%) underscore a disciplined link to results .
- Change‑of‑control economics: Double‑trigger CIC at 2x cash plus broad equity vesting protections could elevate transaction‑related payouts, but are within contemporary market practice and lack tax gross‑ups (shareholder friendly) .
Overall: Compensation decisions emphasize retention and alignment amid restructuring and performance pressure; equity remains the dominant lever of upside with stringent no‑hedge/no‑pledge rules and ownership compliance, while downside realization (0% PRSU, missed financials) demonstrates pay-for-performance integrity .