Karen Smith

About Karen Smith

Karen G. Smith is Executive Vice President, Supply Chain at Carter’s, Inc. (CRI). She joined Carter’s in 2022 and is age 58. Prior to Carter’s, she served as EVP, Supply Chain at Kontoor Brands (2019–2022), after holding roles including VP, Global Supply Chain Operations post-Kontoor’s 2019 spin-off from V.F. Corporation; at VF (2014–2019) she was VP, Supply Chain Operations, Americas East; earlier she held supply chain leadership roles at Jockey International. Carter’s ties a substantial portion of executive compensation to company performance through annual incentives (Net Sales, Adjusted Operating Income, strategic objectives) and long-term PSAs (Net Sales, Adjusted EPS, Relative TSR), aligning pay with growth, profitability, and shareholder returns .

Past Roles

Performance Compensation

2024 Annual Incentive Plan (company program design and outcome)

• Committee-selected AIP metrics reflect growth, profitability, and strategic consumer initiatives; executives could earn 0%–200% of target. Company performance yielded an overall payout of 5% of target for 2024 .

Long-term equity: PSAs (design and completed cycle)

• PSA metrics and weights for 2024–2026 cycle: Net Sales (33%), Adjusted EPS (33%), Relative TSR vs. S&P 1500 Apparel indices (34%); 25%–200% payout range; three-year measurement, shares vest in 2027 as earned .
• Time-based restricted stock generally vests 25% annually over 4 years .

Completed PSA cycle (2022–2024):

Equity Ownership & Alignment

• Stock ownership guidelines for executive officers: multiples of base salary. CEO 7x; Senior Executive Vice Presidents & Executive Vice Presidents 3x .
• Equity retention policy (for NEOs): time-based restricted stock must be held for 4 years from grant; options (when applicable) held at least 1 year from vesting .
• Hedging and pledging prohibited for all directors and employees, including executive officers; consistent with alignment goals .
• Clawback: mandatory clawback provisions in the Equity Incentive Plan consistent with SEC Rule 10D-1 and NYSE standards .

Ownership guideline multiples:

Additional alignment features:

• Carter’s has not awarded stock options since fiscal 2018 (shifts equity mix toward restricted stock/PSAs) .
• During fiscal 2024, NEOs were reported in compliance with their ownership requirements (note: applies to NEOs) .

Employment Terms

• Equity change-of-control (amended Feb 15, 2024): double-trigger protection for equity awards granted in 2024 and beyond. Vesting accelerates if no qualifying replacement awards are provided, or if a qualifying replacement award is provided and there is a termination for Cause or resignation for Good Reason within 2 years post-CoC .
• Severance framework (for NEOs): if terminated without Cause or resign for Good Reason, base salary continuation for 12 months, pro-rated annual incentive based only on Company performance, Company contributions to medical/dental (up to 12 months), and life insurance (12 months), subject to release and ongoing covenants (confidentiality, non-compete, non-solicit) . In a change-of-control termination within two years, NEOs receive an additional 12 months of base salary and extended benefits; equity vesting per plan terms above .
• Company-wide compensation governance: independent consultant (Meridian) engaged; peer benchmarking; pay-for-performance design; no hedging/pledging; double-trigger CoC and clawback embedded in plan .

Note: Karen Smith’s individual base salary, target bonus, equity grants, and severance agreement are not specifically disclosed in the proxy; disclosures above reflect company policies and NEO frameworks .

Compensation Structure Highlights (applies broadly to executives)

• Annual bonus metrics and weights: Net Sales 50%; Adjusted Operating Income 30%; Strategic Objectives 20% (2024 company payout at 5% of target) .
• Long-term PSAs: Net Sales 33%; Adjusted EPS 33%; Relative TSR 34%; three-year performance with 25%–200% payout range and vest in 2027 for the 2024–2026 cycle .
• Time-based RS: 4-year ratable vesting (25% per year) .

Governance, Say-on-Pay, and Peer Benchmarking

• Say-on-pay: Approximately 98% approval at the 2024 Annual Meeting; Committee maintained compensation philosophy given strong support .
• Peer group used for benchmarking includes 15 apparel/retail comparators (e.g., Abercrombie & Fitch, Kontoor, Levi Strauss, Under Armour, Tapestry) .

Investment Implications

• Alignment: Strong linkage of long-term pay to Net Sales, Adjusted EPS, and Relative TSR, plus strict ownership guidelines and anti-hedging/pledging policies, supports shareholder alignment and reduces misaligned risk-taking .
• Near-term selling pressure: Four-year holding requirements on time-based restricted stock for NEOs and policy prohibitions on hedging/pledging reduce potential selling pressure from equity vesting; company has not issued options since 2018, further curbing option-driven sales .
• Retention and CoC: Double-trigger equity vesting and NEO severance frameworks enhance retention through uncertain periods (e.g., strategic changes or CoC), though Karen Smith’s individual severance terms are not disclosed, limiting visibility into her specific protections .
• Pay-for-performance signal: Minimal 2024 AIP payout (5% of target) and 0% payout on the 2022–2024 PSA cycle underscore a program that restricts rewards when performance misses targets, which is generally shareholder-friendly but can pressure retention if underperformance persists .