DEF 14A 1 tmb-20220526xdef14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN THE PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. )


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Loyalty Ventures Inc.
(Name of Registrant as Specified In Its Charter)

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

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2022	Notice of Annual Meeting
2022		of Stockholders


Proxy Statement & Annual Report on Form 10-K

Application

Description automatically generated with medium confidence


Notice of 2022 Annual Meeting of Stockholders


When	Where	Record Date

May 26, 2022, Thursday, at 10:00 a.m. (Central Time)	Via Webcast by registering @ www.proxydocs.com/LYLT	Stockholders as of March 28, 2022 are entitled to vote at the meeting.

Items of Business and Board Voting Recommendation

	PROPOSAL	BOARD VOTING RECOMMENDATION
1	Re-election of the Class I Director named in this proxy statement	FOR

2	Ratification of Appointment of Independent Registered Public Accounting Firm	FOR

	And such other business as may properly come before the Annual Meeting and any postponements or adjournments thereof.

YOUR VOTE IS IMPORTANT. You are cordially invited to attend the virtual meeting, but whether or not you plan to participate in the 2022 Annual Meeting, we urge you to grant your proxy to vote in advance of the meeting by following the instructions included on the Notice of Internet Availability of Proxy Materials you received, or if you received a paper copy of the proxy card, to mark, date, sign and return the proxy card in the envelope provided. You may still vote electronically if you attend the virtual meeting, even if you have given your proxy as your proxy is revocable at your option.

The 2022 Annual Meeting will be held entirely online, where you will be able to vote your shares electronically and submit questions in advance of and during the virtual meeting. We are committed to providing expanded access and improved communication, allowing stockholders to participate from any location around the world the same as if attending in person, at no additional cost to them.

To attend the 2022 Annual Meeting, examine our list of stockholders, vote and/or submit your questions in advance of or during the 2022 Annual Meeting, please register by visiting www.proxydocs.com/LYLT, and entering the unique control number on your proxy card, Notice of Internet Availability of Proxy Materials or instructions accompanying the proxy materials you previously received. Upon completing your registration, you will receive an email with additional instructions and a unique link that will allow you to access the 2022 Annual Meeting. If you have difficulty accessing the meeting, you may call the technical support number included in the instructional email and technicians will be available to assist you.

The Notice of Internet Availability of Proxy Materials, or this proxy statement and the accompanying proxy card, notice of meeting and annual report on Form 10-K for the year ended December 31, 2021 were first mailed on or about April 14, 2022 to stockholders of record as of March 28, 2022.

By order of the Board of Directors,

April 14, 2022

Loyalty Ventures Inc.

8235 Douglas Avenue, Suite 1200

Cynthia L. HagemanDallas, Texas 75225

Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholders Meeting to be held on May 26, 2022. This Notice of Meeting, Proxy Statement, and Annual Report on Form 10-K for the year ended December 31, 2021 are available free of charge at https://www.loyaltyventures.com/investor-relations or on the Securities and Exchange Commission’s, or SEC’s, website at www.sec.gov. Alternatively, you may access our proxy materials at www.proxydocs.com/LYLT, a site that does not have “cookies” that identify visitors to the site.

: Go to www.proxypush.com/LYLT, enter your control number and follow the prompts.

1-866-366-0987; have your control number handy and follow the prompts.

: If you received a paper copy of the proxy materials by mail, mark, sign, date, and promptly mail the enclosed proxy card in the postage-paid envelope.

QR Code: Scan the QR code using your mobile device; have your control number handy and follow the prompts.

Internet with solid fill

By Internet: Go to www.proxypush.com/LYLT, enter your control number and follow the prompts.

Smart Phone with solid fill

By Toll-free Telephone:

From the United States, U.S. territories, and Canada, call 1-866-366-0987; have your control number handy and follow the prompts.

By Mail: If you received a paper copy of the proxy materials by mail, mark, sign, date, and promptly mail the enclosed proxy card in the postage-paid envelope.

By QR Code: Scan the QR code using your mobile device; have your control number handy and follow the prompts.

CONTENTS


01	Corporate Governance
	1Board Oversight Role 1Board Structure, Leadership and Committees 2Board Diversity 4Sustainability Strategy 5Board Committees 5Audit Committee 6Compensation Committee 6Compensation Committee Interlocks and Insider Participation 7Corporate Governance and Nominating Committee 7Board Risk Oversight Function 8Board Oversight of Information Security, Including Cybersecurity and Data Privacy 9Other Corporate Governance Policies and Procedures 11Identification, Qualification and Selection of Directors and Director Nominees 12Director and Director Nominee Independence 13Certain Relationships and Related Party Transactions

16	Proposal 1: Re-election of Class I Director

17	Director Skills Matrix and Biographies

20	Executive Officer Biographies

22	Executive Officer Compensation
	22Summary Compensation Table 23Outstanding Equity Awards at Fiscal Year-End 2021 24Other Plans or Agreements Governing Executive and Director Compensation 26Compensation Practices 26Equity Compensation Plan Information – Outstanding Grants and Securities Available for Future Issuance 27Establishing the Proxy Peer Group

28	Director Compensation

29	Security Ownership of Certain Beneficial Owners

31	Audit Committee Report

32	Proposal 2: Ratification of the Selection of the Independent Registered Public Accounting Firm

34	Additional Information
	34Questions and Answers about the Proxy Process 39Delinquent Section 16(a) Reports 39Incorporation by Reference 39Householding of Annual Meeting Materials 39Other Matters

Corporate Governance

Loyalty Ventures Inc. began trading on the Nasdaq Global Select Market, or Nasdaq, as a new, independent publicly-traded company on November 8, 2021 following our spinoff from former parent company, Bread Financial Holdings, Inc. (formerly Alliance Data Systems Corporation), or ADS, with inclusion in the S&P SmallCap 600 index shortly thereafter. Loyalty Ventures’ advent coincides with a time of increased focus on corporate responsibility in environmental, social and governance, or ESG, matters. As our nascent corporation and board of directors assesses and builds on the strong foundation formed by our established operational businesses—the AIR MILES^® Reward Program and BrandLoyalty—our journey begins with their nearly thirty years experience and the fundamentals of effective corporate governance established while we were part of publicly-traded ADS prior to our spinoff. As a new company, our amended and restated certificate of incorporation provides certain protective features intended to shield our stockholders from coercive or otherwise unfair takeover tactics with the intent to provide our board of directors the opportunity to assess any acquisition proposal and negotiate directly with interested parties. A number of these provisions, including the classification of our board of directors, prohibition on stockholders calling special meetings and supermajority voting requirements for amendment of our current certificate of incorporation and bylaws, expire automatically following the completion of our annual meeting of stockholders in 2028. In addition, due to our “emerging growth company” status as defined in the Jumpstart Our Business Startups Act, or JOBS Act, our required disclosures in this proxy statement are reduced. As Loyalty Ventures progresses in its inaugural year, we intend to evaluate and address the diverse priorities and interests of all stakeholders in our business, from stockholders to sponsors, retailers, collectors, consumers, suppliers, employees and the communities where we live and work.

Board Oversight Role

Our board of directors oversees the financial strength and overall health of Loyalty Ventures, with the primary objective of optimizing stockholder value over the long term. In fulfillment of this core responsibility, the directors exercise their business judgment to fulfill their duty of care to make informed, deliberative decisions based on all material information reasonably available and their duty of loyalty to act (or not act) in a disinterested and independent basis, in good faith and with an honest belief that each action is in the best interests of Loyalty Ventures and our stockholders. Our directors must fulfill their responsibilities consistent with their fiduciary duties to the stockholders and in compliance with applicable laws, rules and regulations.

Our board of directors oversees the senior management team, who are responsible for the day-to-day conduct of our business. The board of directors’ span of oversight includes advising on a range of matters including, but not limited to, business strategy, risk assessment and mitigation, compliance, leadership development and succession, operational performance, corporate governance, human capital and sustainability. Where appropriate, our board of directors will also take into consideration the interests of other stakeholders, including employees and the communities where we operate.

Board Structure, Leadership and Committees

Our amended and restated bylaws provide the size of our board of directors may be between three and twelve directors. We currently have five directors, including four non-employee directors. Assuming stockholders re-elect our director nominee, our board of directors will remain five directors.

Our amended and restated certificate of incorporation classifies our board of directors into three classes of roughly equal size. The term for our initial directors designated as Class I, Class II and Class III directors expire at the annual meeting of stockholders in 2022, 2023 and 2024, respectively. After expiration of these initial terms, our directors will be elected by class for three-year terms. Our board of directors will transition to a fully declassified board through a phase-out, beginning with the annual meeting in 2029. Our five initial directors are distributed to Class I, Class II and Class III in groups of one, two and two, respectively, as follows:

Class I:Barbara L. Rayner

Class II:Charles L. Horn; Richard A. Genovese

Class III:Graham Atkinson; Roger H. Ballou

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Pursuant to the terms of the Internal Revenue Service, or IRS, private letter ruling with respect to our spinoff from ADS, Roger H. Ballou currently serves as chair of our board of directors for a single three-year term ending in 2024, after which he will not seek re-election. Our corporate governance guidelines provide that while our board of directors currently believes best practice entails having a non-executive chair, the choice of whether the roles of chair of the board of directors and chief executive officer may be combined remain in the business judgment of the board of directors for consideration with respect to the relevant circumstances at the time of such decision. As discussed above, Mr. Ballou will remain the chair of our board of directors for the duration of his tenure. Following the annual meeting of stockholders in 2024, per our corporate governance guidelines, the board of directors will select the next chair of our board of directors from among its members at the time.

As indicated previously, the classification of our board of directors protects our interests and that of our stockholders from takeover attempts by increasing the length of time necessary to change the composition of a majority of our board of directors. In general, at least two annual meetings of stockholders will be necessary to effect a change in a majority of the members of our board of directors. Based on the equal distribution criteria, the addition of any new director would be to Class I.

Each director shall be elected by the vote of a plurality of the shares represented in person or by proxy at any meeting and entitled to vote in the election of directors. Until the declassification of our board of directors, no director will be removable by the stockholders except for cause, and directors may be removed for cause by the stockholders only by an affirmative vote of the majority of the total voting power of outstanding securities generally entitled to vote in the election of directors. Any vacancy occurring on the board of directors and any newly created directorship may be filled only by a majority of the remaining directors in office (although less than a quorum) or by the sole remaining director.

Board Diversity

New Nasdaq Rule 5605(f)(2)(A) requires listed companies to have (or publicly disclose why they do not have) at least two diverse directors, with at least one director that self identifies as female and at least one director that self identifies as an underrepresented minority or as LGBTQ+ all as defined by Nasdaq with certain phase-in, cure and grace periods. Further, new Nasdaq Rule 5606(a) requires that listed companies annually disclose and post to their website a board diversity matrix and subsequent to the first year provide information for both the current and prior year. Under new Nasdaq Rule 5605(f)(2)(D), listed companies with smaller boards of five directors or less may satisfy the diversity requirements with one diverse director.


Loyalty Ventures Inc. (LYLT) Board Diversity Matrix as of April 14, 2022
Total Number of Directors:		Five (5)
	Female	Male	Non-binary	Did not disclose gender
Part I. Gender Identity
Directors	1	4	0	0
Part II. Demographic Background
African American or Black	0	0	0	0
Alaskan Native or Native American	0	0	0	0
Asian	0	0	0	0
Hispanic or Latinx	0	0	0	0
Native Hawaiian or Pacific Islander	0	0	0	0
White	1	4	0	0
Two or More Races or Ethnicities	0	0	0	0
LGBTQ+	0
Did Not Disclose Demographic Background	0

As provided in the Nasdaq continued listing standards, our board of directors maintains an audit committee and a compensation committee and our corporate governance guidelines also provide for a standing corporate governance and nominating committee. Our board of directors may from time to time establish or eliminate such other standing or special committees as it deems necessary or appropriate. Pursuant to our corporate governance guidelines, the board of directors appoints committee members. Consideration will be given to rotating committee members periodically, but rotation will not be mandated as a policy. Each committee member must satisfy the membership requirements set

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forth in the relevant committee charter consistent with Nasdaq and Securities and Exchange Commission, or SEC, requirements, including with respect to independence. The chair of each committee will determine the frequency and length of committee meetings and will develop the committee’s agenda for each meeting in accordance with the responsibilities or other parameters set out in their respective committee charters as discussed more fully below.

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Sustainability Strategy

Sustainability – whether it refers to the ability to maintain growth, avoid depletion of natural resources or otherwise minimize our impact on our planet – benefits us all, from our investors to our employees, clients, consumers, reward suppliers and the communities where we live and work. These stakeholders look to Loyalty Ventures to design and implement long-term, sustainable policies that support growth while simultaneously addressing the environmental and social impacts of our company. With ESG already embedded in our performance goals for 2022 by the compensation committee of our board of directors, the corporate governance and nominating committee of our board of directors will oversee and work with management to assess and build on the strengths of our AIR MILES Reward Program and BrandLoyalty sustainability platforms, leveraging those strengths to develop a broader and more cohesive corporate strategy for Loyalty Ventures during 2022.

2021 ESG Highlights for Loyalty Ventures, the AIR MILES Reward Program and BrandLoyalty

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of plastic waste recycled in new products ●

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₂-neutral reward products ●

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Product Stewardship

Continuous Improvement with solid fill

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400,000 kg of plastic waste recycled in new products ●

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Developed new Green Ray brand to produce CO₂-neutral reward products ●

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Launched an eco-friendly rewards category for AIR MILES Reward Program collectors online ●

Going Green

Renewable Energy with solid fill

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Club Leaf app allows individual consumers to offset CO₂ emissions ●

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40% reduction in commuting with intro of Smart Working Policy ●

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All offices powered by 100% renewable energy ●

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Toronto HQ maintains LEED Platinum certification ●

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2021 Canada’s Greenest Employer (12 time recipient) ●

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Employee group, the Sustainables, dedicated to educating and engaging employees on environmental topics ●

Accountability to Our Employees

Group of people with solid fill

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>21,000 hours of training provided to employees

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Trained senior leaders on inclusive leadership ●

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Launched new Career Level Framework ● ●

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Established a balanced pay structure ●

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Launch new DEI fundamentals and Truth and Reconciliation training for employees ●

Community Outreach

Neighborhood with solid fill

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Launched capability for collectors to donate miles to charity; over 14 million miles donated in support of charities since launch ●

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Provided $100k in annual grants through our Youth Empowerment Grant program ●

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BrandCharity, in its 18th year, continued its support for communities through volunteerism and donations ●

Excellence in Business Practices

Handshake with solid fill

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Adopted a supplier code of conduct ● ●

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Joined the UN Global Compact ●

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Issued first sustainability report and appointed Data Protection Officer ●

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Member of Canadian Business for Social Responsibility ●

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Received 4 individual and 6 team awards at the Greater Toronto Area Contact Centre Virtual Customer Service Excellence Awards ●

Ethical Decision Making

Scales of justice with solid fill

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Established an ethics helpline

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Developed initial corporate governance documents

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Review of pay by employee identity (gender, sexual orientation), in a voluntary survey, revealed zero pay gap ●

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Board Committees

The current membership and function of each standing committee is described below. Each committee operates under a written charter. Copies of these charters as well as our corporate governance guidelines and our Codes of Ethics for our senior financial officers, board of directors and employees are available on our website at https://www.loyaltyventures.com/corporate-governance/governance-overview. The committees may, when appropriate and in their discretion, delegate authority with respect to specific matters to one or more members. The committees report to the board of directors regularly, and will review and reassess the adequacy of their charters at least annually as well as conduct an annual evaluation of their performance.

In connection with the spinoff, our board of directors was first appointed on November 4, 2021. During 2021, our board of directors met informally twice in advance of their appointment for informational and educational sessions about us and their upcoming duties and responsibilities and met formally one additional time following their appointment. The audit committee and compensation committees each met two times in 2021 and the corporate governance and nominating committee met once in 2021. Each of our directors attended at least 75% of the meetings of the board of directors and their respective standing committees. Our directors are expected to attend our annual stockholder meetings, including any virtual annual stockholder meeting. Our first annual meeting of stockholders will be held in a virtual format on May 26, 2022.


Audit Committee

Members: Graham W. Atkinson Richard A. Genovese Barbara L. Rayner	Chair: Barbara L. Rayner 2021 Meetings: 2 2021 Attendance: 100%

Our board of directors has determined that each member of our audit committee meets the requirements for independence under Nasdaq’s current listing standards and SEC rules and regulations. In addition, the board of directors has determined that each member of our audit committee is financially literate, and further that Barbara L. Rayner is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K under the Securities Act of 1934. This designation does not impose on such director any duties, obligations or liabilities that are greater than are generally imposed on members of our audit committee and our board of directors. Assuming stockholders re-elect our director nominee, our 2022 audit committee will continue with the current members and chair.

The responsibilities of the audit committee are more fully described in our audit committee charter and include, among other duties:

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reviewing the qualifications and independence of, selecting and overseeing the work of the independent registered public accounting firm;

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reviewing the scope of the audit to be conducted by the independent registered public accounting firm and assessing their performance;

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discussing with the independent registered public accounting firm the results of their audit and the significant accounting policies and critical accounting estimates to be used;

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reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements;

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overseeing the effectiveness of our system of internal controls over financial reporting;

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discussing with management, the independent registered public accounting firm and internal audit, our risk assessment and risk management policies, and the steps management has taken to monitor and control major risk exposures;

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establishing procedures for the receipt, retention and treatment of complaints received by Loyalty Ventures regarding accounting, internal controls or auditing matters;

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reviewing and approving related party transactions, if any; and

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preparing a report to stockholders annually for inclusion in the proxy statement.

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As discussed under the caption “Board Risk Oversight Function,” the audit committee oversees and evaluates the risk information provided by management, including with respect to any material financial and financial reporting risks as well as financial risks related to litigation or other legal, regulatory or compliance matters and technology, cybersecurity, physical security and data privacy matters.


Compensation Committee

Members: Graham W. Atkinson Roger H. Ballou Richard A. Genovese	Chair: Richard A. Genovese 2021 Meetings: 2 2021 Attendance: 100%

Our board of directors has determined that each member of our compensation committee is a non-employee director, as defined by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, and meets the requirements for independence under Nasdaq’s current listing standards and SEC rules and regulations. Our 2022 compensation committee will continue with the current members and chair. The compensation committee may delegate any of its responsibilities to one or more sub-committees comprised of one or more members of the compensation committee, provided such delegation is permitted under applicable laws, rules and regulations and any subcommittee consists of at least two members of the compensation committee who are non-employee directors.

The responsibilities of our compensation committee are more fully described in our compensation committee charter and include, among other duties:

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annually reviewing and approving the compensation, target levels of incentive compensation and corresponding performance objectives for our executive officers;

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annually recommending to the board of directors the compensation, target levels of incentive compensation and corresponding performance objectives for our chief executive officer;

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reviewing and approving equity and non-equity-based incentive compensation-based plans and equity-based plans;

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reviewing our compensation philosophy, programs and benefit plans for employees;

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reviewing key aspects of our human capital management strategies and diversity, equity and inclusion, or DE&I, initiatives, policies and practices

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reviewing our succession plan for key employees;

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administering our stockholder approved equity plans;

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preparing a report to stockholders annually for inclusion in the proxy statement and discussing with management our Compensation Discussion and Analysis in the proxy statement, if required;

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periodically reviewing the compensation program for non-employee directors in relation to comparable companies and recommending, as appropriate, changes to director compensation to the board of directors; and

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reviewing and recommending to the board of directors our submissions to stockholders on executive compensation matters.

Compensation Committee Interlocks and Insider Participation

Mr. Atkinson, Mr. Ballou and Mr. Genovese served as members of the Compensation Committee during 2021. No member of the compensation committee is or has been an officer or employee of Loyalty Ventures Inc. or had any relationship requiring disclosure by Loyalty Ventures under Item 404 of Regulation S-K, and no executive officer of Loyalty Ventures has served on the compensation committee (or its equivalent) or board of any company that employed any member of our compensation committee or board of directors during fiscal year 2021.

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Corporate Governance and Nominating Committee

Members: Graham W. Atkinson Roger H. Ballou Barbara L. Rayner	Chair: Graham W. Atkinson 2021 Meetings: 1 2021 Attendance: 100%

Our board of directors has determined that each member of our corporate governance and nominating committee meets the requirements for independence under Nasdaq’s current listing standards. Assuming the stockholders re-elect our director nominee, our 2022 corporate governance and nominating committee will continue with the current members and chair.

The responsibilities of the corporate governance and nominating committee are more fully described in our corporate governance and nominating committee charter and include, among other duties:

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developing criteria and procedures for selecting director nominees, screening potential nominees and recommending nominees to the board of directors for the next annual meeting (or to fill interim vacancies), as well as committee composition, board chair and the chair for each committee;

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administering and leading the board of directors in its annual review of the performance of the board of directors and its committees;

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reviewing developments in corporate governance and making recommendations to the board of directors on governance policies and principles; and

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overseeing our ESG/sustainability strategies and advising management on related policies, guidelines and programs.

The corporate governance and nominating committee develops criteria for the selection of directors, including procedures for reviewing potential nominees proposed by stockholders. The corporate governance and nominating committee reviews with the board of directors the desired experience, mix of skills and other qualities, including diversity of race/ethnicity and gender, to assure appropriate composition of the board of directors, taking into account the current directors and the specific needs of our company and board of directors. The corporate governance and nominating committee also reviews and monitors the size and composition of the board of directors and its committees to ensure that the requisite number of directors are “independent directors” and “non-employee directors” within the meaning of rules, laws and listing standards applicable to us. For additional information on the role of the corporate governance and nominating committee with respect to the selection of directors, see “Director Selection Process.”

Board Executive Sessions

Our corporate governance guidelines provide that the non-management directors shall meet in executive session as a part of regularly scheduled board of director meetings, and the board of directors did so during 2021. In addition, each committee meeting may also conclude with an executive session at the election of the committee members. Further the board of directors or any committee may meet in executive session with select members of management, including our lead audit executive or representatives of our independent registered public accounting firm.

Board Risk Oversight Function

Management is responsible for the day-to-day handling of risks our company faces, implementing and supervising risk management processes and policies and reporting regularly to our board of directors and its committees, as appropriate. Our board of directors, as a whole and through its committees, maintains responsibility for the oversight of risk management. The audit committee has primary responsibility for overseeing our enterprise risk framework, evaluating the risk information provided by our management.

While the audit committee has primary

SEC Form DEF 14A filed by Loyalty Ventures Inc.