Bed Bath & Beyond Inc. Annual Report 2015

FY2015 Annual Report · Bed Bath & Beyond Inc.

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BED BATH & BEYOND INC.
Notice of 2016 Annual Meeting of Shareholders

Proxy Statement

2015 Annual Report

Consolidated Selected Financial Data (in thousands, except per share and selected operating data)

Statement of Earnings Data:
Net sales
Gross profit
Operating profit
Net earnings
Net earnings per share – Diluted
Selected Operating Data:
Number of stores open (at period end)
Total square feet of store space (at period end)
Percentage increase in comparable sales
Comparable sales (in 000’s)(3)
Balance Sheet Data (at period end):
Working capital
Total assets
Long-term sale/leaseback and capital lease obligations
Long-term debt(4)
Shareholders’ equity(5)(6)

Fiscal Year Ended(1)

February 27,
2016

February 28,
2015

March 1,
2014

March 2,
2013(2)

February 25,
2012

$12,103,887
4,620,310
1,414,903
841,489
5.10

$11,881,176
4,619,779
1,554,293
957,474
5.07

$11,503,963
4,565,582
1,614,587
1,022,290
4.79

$10,914,585
4,388,755
1,638,218
1,037,788
4.56

$ 9,499,890
3,930,933
1,568,369
989,537
4.06

1,530
43,274,000

1,513
43,041,000

1,496
42,619,000

1,471
42,030,000

1,173
36,125,000

1.0%

2.4%

2.7%

5.9%

$11,722,973

$11,517,454

$10,660,573

$ 9,819,904

$ 9,157,183

$ 1,958,737
6,498,940
109,274
1,500,000
$ 2,559,540

$ 2,140,922
6,758,993
106,948
1,500,000
$ 2,743,190

$ 1,953,851
6,356,033
108,046
—
$ 3,941,287

$ 2,216,323
6,279,952
108,364
—
$ 4,079,730

$ 2,760,619
5,724,546
—
—
$ 3,922,528

(1) Each fiscal year represents 52 weeks, except for fiscal 2012 (ended March 2, 2013) which represents 53 weeks.
(2) The Company acquired Linen Holdings, LLC. on June 1, 2012 and Cost Plus, Inc. on June 29, 2012.
(3) Comparable sales include sales consummated through all retail channels which have been operating for twelve full months following the
opening period (typically four to six weeks). Of a Kind (acquired in the second quarter of fiscal 2015) is excluded from the comparable
sales calculation and will continue to be excluded until after the anniversary of the acquisition. Linen Holdings is excluded from the
comparable sales calculations and will continue to be excluded on an ongoing basis as it represents non-retail activity.

(4) On July 17, 2014, the Company issued $300 million aggregate principal amount of 3.749% senior unsecured notes due August 1, 2024,
$300 million aggregate principal amount of 4.915% senior unsecured notes due August 1, 2034 and $900 million aggregate principal
amount of 5.165% senior unsecured notes due August 1, 2044.

(5) The Company has not declared any cash dividends in any of the fiscal years noted above. On April 6, 2016, the Company’s Board of
Directors authorized a quarterly dividend program, and declared an initial quarterly dividend of $.125 per share to be paid on July 19,
2016 to shareholders of record as of June 17, 2016.
In fiscal 2015, 2014, 2013, 2012 and 2011, the Company repurchased approximately $1.101 billion, $2.251 billion, $1.284 billion, $1.001
billion and $1.218 billion of its common stock, respectively.

(6)

Corporate Profile

Founded in 1971, Bed Bath & Beyond Inc. and subsidiaries is a retailer which operates under the names of Bed Bath &
Beyond, Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, Harmon or Harmon Face Values, buybuy BABY
and World Market, Cost Plus World Market or Cost Plus. In the second quarter of fiscal 2015, the Company acquired Of a
Kind, an e-commerce website that features specially commissioned, limited edition items from emerging fashion and home
designers. The Company also operates Linen Holdings, a provider of a variety of textile products, amenities and other goods
to institutional customers in the hospitality, cruise line, healthcare and other industries. Additionally, the Company is a partner
in a joint venture which operates seven retail stores in Mexico under the name Bed Bath & Beyond.
The Company sells a wide assortment of domestics merchandise and home furnishings. Domestics merchandise includes
categories such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories such as
kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings, consumables and certain juvenile
products.
The Company’s strategy is centered on its customer-centric culture and its commitment to customer service, supported by
significant investments to strengthen the Company’s foundation for future growth:

(cid:129) To do more for and with its customers wherever, whenever and however they wish to interact with the Company;
(cid:129) To provide its customers a seamless experience whether they interact with the Company in a store, through one of its

contact centers, on a desktop, tablet, smartphone or through social media;

(cid:129) To be viewed as the expert for the home, including the accompanying life stages that make a house a home, and to
become the destination for customers’ needs and wants as they express their life interests and travel through their life
stages; all through the expanding and differentiated products, services and solutions the Company offers; and

(cid:129) To enhance its ability to achieve these objectives through an ongoing commitment to world class information technology,

comprehensive analytics and targeted marketing and communications.

The Company strives to do more for and with its customers by: offering an extensive breadth and depth of differentiated
merchandise at the right value; presenting merchandise in a distinctive manner designed to maximize customer convenience
and reinforce customer perception of a wide selection; and providing excellent customer service, including new products,
services and solutions. The Company continues to expand, differentiate and leverage its assortment across all channels,
concepts and countries in which it operates, to better engage with its customers wherever, whenever and however they
express their life interests and travel through their life stages.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Time:

9:00 A.M. on Friday, July 1, 2016

Place: The Madison Hotel
One Convent Road
Morristown, New Jersey 07960

Items of Business:

(1) To elect ten directors until the Annual Meeting in 2017 and until their respective successors have been elected

and qualified (Proposal 1).

(2) To ratify the appointment of KPMG LLP as independent auditors for the 2016 fiscal year (Proposal 2).

(3) To consider the approval, by non-binding vote, of the 2015 compensation paid to the Company’s Named

Executive Officers (Proposal 3).

(4) To vote on shareholder proposals (Proposals 4, 5 and 6).

(5) To transact such other business as may properly be brought before the Annual Meeting or any adjournment or

adjournments.

Record Date: You can vote if you were a shareholder of record on May 6, 2016.

Proxy Voting: It is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to
attend the Annual Meeting, we urge you to vote online, via telephone or to fill out the enclosed proxy card and return it to us in
the envelope provided. No postage is required.

Warren Eisenberg
Co-Chairman

Leonard Feinstein
Co-Chairman

May 31, 2016

Important Notice Regarding the Availability of Proxy Material for the Annual Meeting of Shareholders to
be held on July 1, 2016: this Notice of the 2016 Annual Meeting of Shareholders, Proxy Statement and the
Company’s 2015 Annual Report are available at www.bedbathandbeyond.com/annualmeeting2016

Dear Fellow Shareholders and Beyond:

We are pleased to have completed another successful year at Bed Bath & Beyond. During fiscal 2015 we made steady
progress on our strategic initiatives which included significant investments in our business to further strengthen our foundation
for future growth.

At the same time, we remained vigilant in our mission to:

(cid:129) To do more for and with our customers wherever, whenever and however they wish to interact with us;

(cid:129) To provide our customers a seamless experience whether they interact with us in a store, through one of our contact

centers, on a desktop, tablet, smartphone or through social media; and

(cid:129) To be viewed as the expert for the home, including the accompanying life stages that make a house a home—such as
getting married, having a baby, transitioning to college, and moving to a new residence, and to become the destination
for our customer’s needs and wants as they express their life interests and travel through their life stages; all through the
expanding and differentiated products, services and solutions we offer.

As the retail environment continues to change dramatically and advancing technologies transform the way consumers shop for
merchandise both online and in-store, we continue to challenge ourselves to better understand and satisfy our customers and
in turn, build a better company. While these investments currently place pressure on our operating profit, we believe that our
strong balance sheet and cash flows give us the capacity to make significant investments in our future. We are confident that
this is an opportune time for us to drive change throughout our organization to capitalize on these new technologies and to
strengthen our position as a world-class omnichannel retailer.

Our transformation over the past several years has been incredible. The steps we’ve taken to transform our business have
been supported by key initiatives in areas such as information technology, analytics, pricing, merchandising, marketing,
customer service, fulfillment and real estate.

In recalling the old cliché, you can’t know where you are going until you know where you have been, below is an update on our
progress.

Over the past few years, we have:

(cid:129) Upgraded or replaced the majority of our customer-facing and back-end systems and introduced new systems to enable

us to utilize new technology while also enhancing the security and redundancy of our systems.

(cid:129) Enhanced the functionality, general search and navigation features across our customer-facing digital channels so that
customers can find what they are looking for more quickly and efficiently, as well as enabled the sale of personalized
product, Vendor Direct to Consumer items, and product that utilizes Less-Than-Truckload shipping, such as furniture.

(cid:129) Created new services and experiences for our customers such as online appointment scheduling for registry, and a new
virtual coupon wallet called My Offers, which organizes and stores print and digital coupons so customers can access
and redeem them conveniently online or in-store.

(cid:129) Deployed new systems, equipment and increased the bandwidth in our stores to enable our associates to be more

productive and to provide a more personalized customer experience.

(cid:129) Continued development of a new Point-of-Sale system, which will begin piloting in fiscal 2016.

(cid:129) Built a structured analytics department with robust quantitative capabilities to help drive enhanced performance and gain
deep insights into how our customers interact with us across all our concepts, channels and countries in which we
operate.

(cid:129) Created a pricing team and put new systems in place to better track competitor pricing to maintain our competitive

position within the market.

(cid:129) Rolled out additional health & beauty care, baby, food and beverage specialty departments within our stores.

(cid:129)

Introduced new product categories, such as mattresses, jewelry and furniture, and significantly expanded our assortment
in these and other categories.

(cid:129) Begun to implement a new marketing campaign management system to better target our customers and drive
personalization, and began to utilize sophisticated predictive modeling to drive a more customer-centric marketing
strategy.

(cid:129) Established a new customer contact center in Layton, Utah, during fiscal 2015, enhancing our 24/7 customer support.

(cid:129) Developed more flexible fulfillment options for customer delivery and expanded our distribution facility network to support
anticipated growth across all our channels. Opened a new distribution facility in Las Vegas, Nevada during fiscal 2015.

(cid:129) Continued to evaluate our real estate portfolio and opened 29 and closed 12 stores during fiscal 2015. Opened stores in
new markets, tested smaller-store formats, and developed plans to evolve our stores in such a way that is more
experiential and reflects how our customers utilize the products, services and solutions we provide.

(cid:129) Acquired Of a Kind in fiscal 2015, an e-commerce platform geared toward millennials that offers specially commissioned,

limited-edition items from up-and-coming artists and designers.

(cid:129)

Introduced our newest andThat! store in Kennesaw, Georgia in April 2016, designing this store to have local appeal and
to become the destination for customers to find an ever-changing mix of both differentiated and close-out merchandise,
spanning categories such as home décor, seasonal, food, entertaining essentials, and gifts, ALL at a great value.

(cid:129) Continued the development of a unique shopping venue in Brooklyn, New York, which will include four of our concepts
under one roof, to showcase our ever-increasing and evolving merchandise assortment and the integration of our
omnichannel capabilities to provide a more experiential shopping environment.

Our financial performance in fiscal 2015 reflects the benefit of the significant investments in our business and the steady
progress on our strategic initiatives. We reported fiscal 2015 net sales of $12.1 billion, an increase of approximately 1.9%, or
2.3% on a constant currency basis, and net earnings per diluted share of $5.10. In addition, we generated about $1.0 billion in
net cash from operations and returned $1.1 billion to shareholders through share repurchase.

In recognition of our strong cash flow generation, and confidence in our business, as well as to provide a more balanced
approach to returning value to shareholders, our Board of Directors has authorized a quarterly dividend program to commence
in fiscal 2016.

This is an exciting time for our Company, and we are excited about our future. We believe the dynamic and ever changing
retail environment presents a great opportunity for even greater success in the years ahead. The pace of change requires, and
rewards, continuous innovation and the ability to adapt, as technology advances and consumer preferences evolve.

As a highly profitable market leader, we are committed to strengthening our business and making the strategic investments
that will enable us to continue to do more for and with our customers. We’re committed to becoming even more relevant to our
existing customers and attracting new customers as they choose where, when and how to shop.

As our business transforms, we will navigate the competitive landscape to adapt as customer preferences evolve. We will seek
to attract the right people and have the right technologies and products to advance our strategy. All the while, we will remain
disciplined in our efforts to achieve positive returns, and improve long-term profitability.

Our healthy cash flows, and strong balance sheet, enable us to fund these investments and build upon our operational
achievements, while also returning value to our shareholders.

For those of you who have followed our Company for some time, you know that we manage our business for the long term.
Our aim has never been to be the biggest, but always about being the best. Our focus has never been to optimize short-term
profitability, but always about creating long-term prosperity. This has never been more relevant than it is today. We remain
steadfast in making the correct investments for our long-term success.

to thank our more than 60,000 dedicated associates for what

they accomplished during fiscal 2015. Our
We want
foundation has never been stronger. This includes the quality of our people, our merchandise assortments, and our
technologies, each of which drives our Company’s success. Through the commitment of our associates, and the culture they
have created, and the greatly valued contributions of our merchandise and service providers, we are looking forward to
continue to satisfy our customers and in doing so, improving our competitive position in the categories in which we do
business.

Thank you for your interest in Bed Bath & Beyond.

WARREN EISENBERG
Co-Chairman and
Co-Founder

May 31, 2016

LEONARD FEINSTEIN
Co-Chairman and
Co-Founder

STEVEN H. TEMARES
Chief Executive Officer and
Director

iii

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2016 Proxy Statement

TABLE OF CONTENTS

PROXY STATEMENT SUMMARY

FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTING

PROPOSAL 1—ELECTION OF DIRECTORS

Board Structure, Composition and Meetings

Board Nominees and Qualifications

Board Leadership

Director Independence

Committees of the Board of Directors

Compensation Committee Interlocks and Insider Participation

Governance Guidelines and Policies; Additional Information

Compensation of Directors

Risk Oversight

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR FISCAL 2016

Appointment of KPMG LLP

Fees Paid to KPMG LLP for Services and Products

Pre-Approval Policies and Procedures

Audit Committee Report for the Year Ended February 27, 2016

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Compensation Committee Report

Compensation Discussion & Analysis

Introduction

Executive Summary/Executive Compensation Philosophy and Objectives

Say on Pay Results and Shareholder Outreach

Fiscal 2016 Executive Compensation Program Decisions

Methodology for Determining Executive Compensation

Fiscal 2015 Performance Goals and Performance

Executive Officers

Compensation Tables

Summary Compensation Table

Grants of Plan Based Awards for Fiscal 2015

Outstanding Equity Awards at Fiscal Year End

Option Exercises and Stock Vested for Fiscal 2015

Nonqualified Deferred Compensation for Fiscal 2015

Employment Agreements and Potential Payments Upon Termination or Change in Control

TABLE OF CONTENTS

PROPOSAL 4—SHAREHOLDER PROPOSAL REGARDING PROXY ACCESS BYLAWS

PROPOSAL 5—SHAREHOLDER PROPOSAL REGARDING AN EQUITY RETENTION POLICY FOR

SENIOR EXECUTIVES

PROPOSAL 6—SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER APPROVAL OF CERTAIN

FUTURE SEVERANCE AGREEMENTS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Section 16(a) Beneficial Ownership Reporting Compliance

OTHER MATTERS

Certain Relationships and Related Transactions

Householding

Next Year’s Annual Meeting

2015 ANNUAL REPORT

PROXY STATEMENT SUMMARY

You have received these proxy materials because the Board of Directors of Bed Bath & Beyond Inc. (the “Company”, “we”, or
“us”), a New York corporation, is soliciting your proxy to vote your shares at the 2016 Annual Meeting of Shareholders. This
summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the
information that you should consider, and you should read the entire proxy statement carefully before voting. Page references
are supplied to help you find further information in this Proxy Statement.

Summary of Voting Matters

The Board of Directors is not aware of any matter that will be presented for a vote at the 2016 Annual Meeting of Shareholders
other than those shown below.

Proposals

1. Election of 10 Directors

2. Ratification of Appointment of Auditors

3. Advisory Vote on Executive Compensation

4. Shareholder Proposal Regarding Proxy Access Bylaws

5. Shareholder Proposal Regarding an Equity Retention Policy for Senior

Executives

6. Shareholder Proposal Regarding Shareholder Approval of Certain Future

Severance Agreements

Board Vote
Recommendation

Page
Reference

FOR each director nominee

FOR
FOR

AGAINST

15
17

Board of Directors Nominees

You are being asked to vote on the following ten (10) nominees for director. Each director is elected annually by a majority
vote of shares cast. Further information about each director can be found under “Board Nominees and Qualifications.”

Principal Occupation

Independent

Board
Committee*

Name

Warren Eisenberg

Leonard Feinstein

Steven H. Temares

Dean S. Adler

Director
Since

1971

1999

2001

Stanley F. Barshay

2003

Co-Founder/Co-Chairman, Bed Bath & Beyond Inc.

Chief Executive Officer, Bed Bath & Beyond Inc.

Co-Founder and Chief Executive Officer,
Lubert-Adler Partners, L.P.

Retired Executive Vice President, Merck & Co.
(formerly Schering-Plough Corporation) and President of its
Consumer Health Care Division

Geraldine T. Elliott

2014

Retired Executive Vice President, Strategic Advisor,
Juniper Networks, Inc.

Klaus Eppler
(Lead Director)

1992

Pensioned partner in the law firm Proskauer Rose LLP

Patrick R. Gaston

2007

Chief Executive Officer, Gaston Consulting; Past President of
the Verizon Foundation and the Western Union Foundation

Jordan Heller

Victoria A. Morrison

2003

2001

President, Heller Wealth Advisors LLC

Executive Vice President & General Counsel,
Edison Properties LLC

* AC – Audit Committee; NC – Nominating and Corporate Governance Committee; CC – Compensation Committee

Yes

CC, NC

AC, CC

CC, NC

PROXY STATEMENT SUMMARY

Corporate Governance Highlights

– Extensive Shareholder Engagement

– No Hedging with Respect to Company Securities

– Majority Independent Board

– Separate Chair and CEO

– Lead Independent Director

– Independent Committee Members

– >75% Board and Committee Attendance in 2015

– Annual Election of All Directors

– Majority Voting for Uncontested Director Elections

– Executive Sessions for Independent Directors

– Restrictions on Pledging Company Securities

– No Poison Pill

– Ownership Guidelines for CEO and Independent

Directors

– Compensation “Clawback” Policy

– Strong Pay-For-Performance Philosophy

– Comprehensive Policy of Ethical Standards for Business

Conduct

– Annual Board Evaluations

Fiscal 2015 Business Highlights

Our Strategy

The retail environment continues to change dramatically as advancing technologies transform the way consumers shop for
merchandise both online and in-store. The evolution of omnichannel retailing presents a great opportunity to provide a more
seamless and personalized shopping experience for customers.

Over the past few years, Bed Bath & Beyond has driven change throughout our organization to capitalize on advancing
technologies and to strengthen our business as a world-class omnichannel retailer. We have made tremendous progress in
the transformation of our Company to better serve our customers in an ever-evolving digital world. At the same time, our
to customer service, supported by significant
strategy remains rooted in our customer-centric culture and commitment
investments to strengthen our foundation for future growth:

(cid:129) To do more for and with our customers wherever, whenever and however they wish to interact with us;

(cid:129) To provide our customers a seamless experience whether they interact with us in a store, through one of our contact

centers, on a desktop or tablet, smartphone or through social media;

(cid:129) To be viewed as the expert for the home, including the accompanying life stages that make a house a home, and to
become the destination for our customers’ needs and wants as they express their life interests and travel through their
life stages; all through the expanding and differentiated products, services and solutions we offer; and

(cid:129) To enhance our ability to achieve these objectives through an ongoing commitment

to world class information

technology, comprehensive analytics and targeted marketing and communications.

Our Performance

During fiscal 2015, Bed Bath & Beyond made steady progress on our strategic initiatives, including significant investments in
our people, technology, physical and digital channels and supply chain, to further strengthen our foundation for future growth.

Select operational highlights:

(cid:129) Continued to expand, differentiate and improve our merchandise and related services and solutions.

(cid:129) Developed enhanced analytics capabilities, including sophisticated, predictive modeling to drive more personalized

targeted marketing.

(cid:129)

Introduced new services and experiences such as online appointment scheduling for registry and a new virtual coupon
wallet called My Offers, which organizes and stores print and digital coupons so customers can access and redeem
them conveniently online or in-store.

PROXY STATEMENT SUMMARY

(cid:129) Continued development of our new Point-of-Sale system, including both hardware and software elements. The new
system—to be piloted in fiscal 2016—will provide a more efficient customer check out process by automating many
manual processes, as well as greatly enhancing our promotional capabilities.

(cid:129) Progressed development of our Liberty View project in Brooklyn, a unique shopping venue which will house four of our

concepts and provide a more experiential shopping environment.

(cid:129) Opened a new Customer Contact Center in Layton, Utah to enhance our 24/7 customer support.

(cid:129) Expanded our supply chain network, including a new distribution facility in Las Vegas, Nevada, to provide more flexible

fulfillment options and support anticipated growth across all of our channels.

(cid:129) Upgraded our proprietary internal Web-based platform, The Beyond Store, and integrated it with our Bed Bath & Beyond
and buybuy BABY selling websites and mobile channels, to enable our associates to better service our customers in
creating web orders, comparing products, and reading product reviews.

Select financial highlights:

(cid:129) Net sales of $12.1 billion increased approximately 1.9% or approximately 2.3% on a constant currency basis.

(cid:129) Comparable sales increased approximately 1%, or approximately 1.4% on a constant currency basis.

(cid:129) Comparable sales consummated through customer facing online websites and mobile applications increased in excess

of 25%.

(cid:129) Diluted EPS of $5.10, including $0.06 of net benefits from certain non-recurring items, including a favorable state audit

settlement.

(cid:129) Generated $1.0 billion in net cash from operations and returned $1.1 billion to shareholders through share repurchase.

(cid:129) Subsequent to fiscal 2015, announced Board authorization of a quarterly dividend program, which will commence in

fiscal 2016.

For more information regarding our fiscal 2015 financial performance, see our Annual Report on Form 10-K for fiscal 2015 filed
with the SEC on April 26, 2016.

Shareholder Outreach—We Listened, Learned & Responded

We recognize the value of listening and taking into account the views of our shareholders. Building relationships with our
shareholders is an integral part of our corporate governance practices. We conduct shareholder outreach throughout the year
to ensure that management and the Board understand and consider the issues of importance to our shareholders and are able
to consider them appropriately. On a regular basis, we also meet with shareholders and potential investors to review our
operating and financial results.

After last year’s Annual Meeting, at which the advisory vote on executive compensation was below our expectations, we
continued our shareholder outreach program. We contacted our top twenty-five shareholders representing approximately 68%
of our outstanding shares to solicit feedback and explain our strategy on corporate governance and executive compensation.
Members of senior management and the Board met or spoke with shareholders representing approximately 50% of our
shares.

Investor Relations is the primary contact for shareholder interaction with the Company. Investors can reach us at (908) 613-
5820 or via email at janet.barth@bedbath.com.

Shareholder Feedback and Compensation Philosophy Guided Changes to Fiscal 2016
Compensation Program

Subsequent to our shareholder engagement following the 2015 Annual Meeting and after consideration of the feedback
received from our shareholders, the Compensation Committee approved the following changes to the fiscal 2016 executive
compensation program:

(cid:129) No increase in base salary of the Company’s CEO (third consecutive year of no increase in CEO base pay) and Co-

Chairmen.

(cid:129) Reduced CEO target compensation from $19.6 million to $16.9 million, or by approximately 14%.

PROXY STATEMENT SUMMARY

(cid:129) Enhanced the rigor of and amended our Performance Stock Unit (PSU) performance-based equity plan as follows:

O Adjusted weighting of one-year and three-year performance goals from 75/25 to 50/50, respectively, increasing the

weighting of the three-year goal.

O Applied a more strict achievement threshold for PSUs subject to the three-year performance goal by increasing the

achievement percentage from 80-164% to 100-144%, to earn 100% payment.

O Applied a Total Shareholder Return (TSR) “Regulator” to achievement thresholds of each performance goal, capping

PSU awards at 100% of the target if the Company’s TSR over the performance period is negative.

O Adjusted the vesting periods for PSUs to maintain a rate of equal vesting over four years, if performance goals are

met.

FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTING

These proxy materials are delivered in connection with the solicitation by the Board of Directors of Bed Bath & Beyond Inc., a
New York corporation, of proxies to be voted at our 2016 Annual Meeting of Shareholders and at any adjournment or
adjournments.

This Proxy Statement, the proxy card and our 2015 Annual Report are being mailed starting May 31, 2016. The information
regarding stock ownership and other matters in this Proxy Statement is as of the record date, May 6, 2016, unless otherwise
indicated.

What may I vote on?

You may vote on the following proposals:

(cid:129) election of ten directors to hold office until the Annual Meeting in 2017 (Proposal 1);

(cid:129)

ratification of the appointment of KPMG LLP as independent auditors for the fiscal year ending February 25, 2017 (“fiscal
2016”) (Proposal 2);

(cid:129) consider the approval, by non-binding vote, of the 2015 compensation paid to the Company’s Named Executive Officers

(commonly known as a “say-on-pay” proposal) (Proposal 3);

(cid:129) a shareholder proposal regarding proxy access bylaws (Proposal 4);

(cid:129) a shareholder proposal regarding an equity retention policy for the Company’s senior executives (Proposal 5);

(cid:129) a shareholder proposal requiring the Board of Directors to seek shareholder approval of certain future severance

agreements (Proposal 6).

THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE TEN DIRECTORS, FOR THE RATIFICATION OF
THE APPOINTMENT OF AUDITORS, FOR THE SAY-ON-PAY PROPOSAL, AND AGAINST THE THREE SHAREHOLDER
PROPOSALS.

Who may vote?

Shareholders of record of the Company’s common stock at the close of business on May 6, 2016 are entitled to receive this
notice and to vote their shares at the Annual Meeting. As of that date, there were 154,366,662 shares of common stock
outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting.

How do I vote?

The Company encourages you to use the electronic means available to you to vote your shares. How you vote will depend on
how you hold your shares of Bed Bath & Beyond Inc. common stock.

Shareholder of Record

If your shares are registered directly in your name with Bed Bath & Beyond Inc.’s transfer agent, American Stock Transfer &
Trust Company, you are considered the shareholder of record with respect to those shares, and these proxy materials are
being sent directly to you. If you hold restricted stock under the Company’s 2012 Incentive Compensation Plan, you are also
considered the shareholder of record with respect to those shares. As the shareholder of record, you have the right to vote by
proxy.

Vote by Internet
www.proxyvote.com

Vote by Phone
1-800-690-6903

Vote by Mail
Broadridge, 51 Mercedes Way
Edgewood, NY 11717

Voting by any of these methods will not affect your right to attend the Annual Meeting and vote in person. However, for those
who will not be voting at the Annual Meeting in person, your final voting instructions must be received by no later than 11:59
p.m. Eastern Time on June 30, 2016.

FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTING

Beneficial Owner

Most shareholders of Bed Bath & Beyond Inc. hold their shares through a stockbroker, bank or other nominee, rather than
directly in their own name. If you hold your shares in one of these ways, you are considered the beneficial owner of shares
held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered, with
respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker on how to
vote. Your broker or nominee has enclosed a voting instruction form for you to use in directing the broker or nominee on how
to vote your shares. If you hold your shares through a New York Stock Exchange member brokerage firm, such member
brokerage firm has the discretion to vote shares held on your behalf with respect to the appointment of the Company’s
auditors, but not with respect to any other proposal, as more fully described under “What is a broker ‘non-vote’?”.

Can I change my vote?

Yes. If you are the shareholder of record, you may revoke your proxy before it is exercised by doing any of the following:

(cid:129) sending a letter to the Company stating that your proxy is revoked;

(cid:129) signing a new proxy and sending it to the Company; or

(cid:129) attending the Annual Meeting and voting by ballot.

Beneficial owners should contact their broker or nominee for instructions on changing their vote.

How many votes must be present to hold the Annual Meeting?

A “quorum” is necessary to hold the Annual Meeting. A quorum is a majority of the votes entitled to be cast by the
shareholders entitled to vote at the Annual Meeting. They may be present at the Annual Meeting or represented by proxy.
Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum, but are
not counted for purposes of determining any of the proposals to be voted on.

How many votes are needed to approve the proposals?

At the 2016 Annual Meeting of Shareholders, a “FOR” vote by a majority of votes cast is required for the election of directors,
to ratify the selection of KPMG LLP as the Company’s independent auditors for fiscal 2016 and to approve, by non-binding
vote, the say-on-pay proposal as well as Proposals 4, 5 and 6, the shareholder proposals.

A “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of votes
“AGAINST.” Abstentions and broker non-votes shall not constitute votes “FOR” or votes “AGAINST.”

What is an abstention?

An abstention is a properly signed proxy card which is marked “abstain.”

What is a broker “non-vote”?

A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that particular item and has not received instructions from
the beneficial owner. Under current applicable rules, Proposal 2 is a “discretionary” item upon which brokers that hold shares
as nominee may vote on behalf of the beneficial owners if such beneficial owners have not furnished voting instructions by the
tenth day before the Annual Meeting.

However, brokers that hold shares as nominee may not vote on behalf of the beneficial owners on the following proposals
unless you provide voting instructions: Proposal 1, the election of directors, Proposal 3, the say-on-pay proposal, and
Proposals 4, 5 and 6, the shareholder proposals. Therefore, if your shares are held by such nominee, please instruct your
broker regarding how to vote your shares on each of these proposals. This will ensure that your shares are counted with
respect to each of these proposals.

Will any other matters be acted on at the Annual Meeting?

If any other matters are properly presented at the Annual Meeting or any adjournment, the persons named in the proxy will
have discretion to vote on those matters. As of April 3, 2016, which is the date by which any proposal for consideration at the
Annual Meeting submitted by a shareholder must have been received by the Company to be presented at the Annual Meeting,
and as of the date of this Proxy Statement, the Company did not know of any other matters to be presented at the Annual
Meeting.

FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTING

Who pays for this proxy solicitation?

The Company will pay the expenses of soliciting proxies. In addition to solicitation by mail, proxies may be solicited in person
or by telephone or other means by directors or associates of the Company. The Company has engaged D.F. King & Co., Inc.,
for a fee to be determined, to assist in the solicitation of proxies. The Company will reimburse brokerage firms and other
nominees, custodians and fiduciaries for costs incurred by them in mailing proxy materials to the beneficial owners of shares
held of record by such persons.

Whom should I call with other questions?

If you have additional questions about this Proxy Statement or the Annual Meeting or would like additional copies of this
document or our 2015 Annual Report on Form 10-K, please contact: Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, NJ
07083, Attention: Investor Relations Dept., Telephone: (908) 613-5820.

PROPOSAL 1—ELECTION OF DIRECTORS

Board Structure, Composition and Meetings

The Board of Bed Bath & Beyond Inc. consists of ten (10) directors. Directors are elected annually at each annual meeting to
serve until the next annual meeting or until their successors are duly elected and qualified, subject to their earlier death,
resignation or removal. Each of the nominees currently serves as a director and was elected by the shareholders at the 2015
information and qualifications of the nominees for director are included below under “Board
Annual Meeting. Biographical
Nominees and Qualifications.”

The Board has adopted a policy regarding specific, minimum qualifications for potential directors. These factors, and others as
considered useful by the Board and the Nominating and Corporate Governance Committee, are reviewed in the context of an
assessment of the perceived needs of the Board at a particular point in time. The Company’s policies regarding director
qualifications and skills are included on the Company’s website at www.bedbathandbeyond.com under the Investor Relations
section.

Qualified candidates for membership on the Board will be considered without regard to race, color, creed, religion, national
origin, age, gender, sexual orientation or disability. The Nominating and Corporate Governance Committee reviews and
evaluates each candidate’s character,
literacy), background, experience and other
qualifications (without regard to whether a nominee has been recommended by the Company’s shareholders), as well as the
overall composition of the Board, and recommends to the Board for its approval the slate of directors to be nominated for
election at the annual meeting of the Company’s shareholders. While the Nominating and Corporate Governance Committee
does not have a formal policy with respect to diversity, the Committee believes that it is desirable that Board members
represent a diversity of backgrounds, including gender and race, as well as diversity of viewpoints and experience.

judgment, skills (including financial

The Board holds regular meetings each quarter and special meetings when necessary. The Board held five meetings during
the fiscal year ended February 27, 2016 (“fiscal 2015”). Directors are expected to attend the Board meetings and meetings of
committees of the Board on which they serve. The Company encourages, but does not require, the directors to attend the
Company’s Annual Meeting of Shareholders. During fiscal 2015, all nominees for director attended more than 75% of the total
number of meetings of the Board of Directors and committees on which he or she served. All of the Company’s directors
attended the 2015 Annual Meeting of Shareholders.

The Board of Directors believes it is structured to provide oversight, direction and guidance to management. In doing so, the
members of the Board bring to their service valuable expertise in a wide range of subject matter areas relevant to the
Company in the execution of its strategy. These areas include:

(cid:129) operations

(cid:129)

finance and financial reporting

(cid:129) merchandising

(cid:129)

legal and regulatory compliance

(cid:129)

technology

international business

real estate

leadership in large, complex organizations

The Board, as part of its annual self-assessment and on an ongoing basis as appropriate, considers the skills and experience
of its members in relation to the needs of the Company.

PROPOSAL 1—ELECTION OF DIRECTORS

Board Nominees and Qualifications

The Board of Directors, upon recommendation of its Nominating and Corporate Governance Committee, has nominated for
reelection as directors, for a one year term expiring at the 2017 Annual Meeting, each of the current members of the Board.

Information concerning our directors as of the record date, and the key experience, qualifications and skills they bring to our
Board is provided below.

Warren Eisenberg

Co-Founder and Co-Chairman

Mr. Eisenberg, 85, is a Co-Founder of the Company and has served as Co-Chairman since 1999. He has served as a
director since 1971. Mr. Eisenberg served as Chairman from 1992 to 1999, and served as Co-Chief Executive Officer from
1971 to 2003.

Leonard Feinstein

Co-Founder and Co-Chairman

Mr. Feinstein, 79, is a Co-Founder of the Company and has served as Co-Chairman since 1999. He has served as a director
since 1971. Mr. Feinstein served as President from 1992 to 1999, and served as Co-Chief Executive Officer from 1971 to 2003.

Messrs. Eisenberg and Feinstein remain active as part of the senior leadership of the Company and bring to the Board,
among other benefits, their experience in building the Company during its 45-year history and their overall experience in the
retail industry, in each case for over 50 years.

Steven H. Temares

Chief Executive Officer

Steven H. Temares, 57, has served as Chief Executive Officer of the Company since 2003. He was President and Chief
Executive Officer from 2003 to 2006 and was President and Chief Operating Officer from 1999 to 2003. Mr. Temares joined
the Company in 1992 and has served as a director since 1999. Mr. Temares has been part of the leadership of the Company
throughout its entire history as a public company.

Dean S. Adler

Dean S. Adler, 59, is a Co-Founder and Chief Executive Officer of Lubert-Adler Partners, L.P., a private real estate
investment firm. He has served as a Principal of Lubert-Adler Partners, L.P. for over ten years. Mr. Adler has been a director
of the Company since 2001. Mr. Adler also previously has served as a director of Developers Diversified Realty Corp., a
shopping center real estate investment trust, and Electronics Boutique, Inc., a mall retailer. Among other things, Mr. Adler
has wide experience and involvement in commercial real estate including, in particular, retail real estate.

Stanley F. Barshay

Stanley F. Barshay, 76, has served in a variety of senior executive positions at consumer healthcare companies. He served
as Executive Vice President of Merck & Co. (formerly Schering-Plough Corporation) and President of its Consumer Health
Care Division from November 2009 until his retirement on April 1, 2010; prior to November 2009, Mr. Barshay was Chairman,
Consumer Health Care, at Schering-Plough Corporation since June 2003. For many years, Mr. Barshay served in a variety of
senior executive positions at American Home Products (now part of Pfizer). Mr. Barshay has been a director of the Company
since 2003. Among other things, Mr. Barshay brings to the Board specialized knowledge about the marketing of consumer
goods, and in particular health and beauty care products.

Geraldine T. Elliott

Geraldine T. Elliott, 59, is retired Executive Vice President, Strategic Advisor at Juniper Networks, Inc. She served as
Executive Vice President and Chief Customer Officer at Juniper Networks, Inc. from March 2013 to February 2014 after prior
roles as Executive Vice President and Chief Sales Officer, and as Executive Vice President of Strategic Alliances. Ms. Elliott
joined Juniper in 2009 after seven years at Microsoft Corporation, where she held a series of senior executive positions,
including Corporate Vice President of the company’s Industry Solutions Group, Worldwide Public Sector organization, and
their North American Enterprise Sales region. Prior to joining Microsoft, Ms. Elliott spent 22 years at IBM Corporation, where
she held executive and management positions in North America and Asia Pacific in sales, services, consulting, strategy
development, and product management. She has been a director of the Company since February 2014. Additionally,
Ms. Elliott is founder of Broadrooms.com, an informational resource for executive women serving on corporate boards in the
U.S. She serves as an independent director on the boards of Whirlpool Corporation and Imperva, Inc. Among other things,
Ms. Elliott brings to the Board her strategic understanding of transformative digital technologies, as well as her global
marketing, sales, service and channel experience.

PROPOSAL 1—ELECTION OF DIRECTORS

Klaus Eppler

Klaus Eppler, 85, has been a pensioned partner in the law firm of Proskauer Rose LLP, counsel to the Company, since 2001.
Mr. Eppler was an equity partner of Proskauer Rose LLP from 1965 to 2001, when he ceased active partnership with
responsibilities for clients. He has been a director of the Company since 1992 and has served as outside Lead Director since
2002. Mr. Eppler has served as a director of one or more retailers, including publicly traded retailers, continuously for over 35
years. Throughout his career as a practicing attorney, he represented numerous public companies or their boards of
directors, including many retail companies. Among other things, Mr. Eppler brings to the Board his experience with a wide
variety of retailers.

Patrick R. Gaston

Patrick Gaston, 58, is Chief Executive Officer of Gaston Consulting. From January 2013 through February 2016, he was
President of the Western Union Foundation, which supports education and disaster relief efforts throughout the world with the
support of the Western Union Company. From January to December 2012, he was the Chief Executive Officer of Gastal
Networks, LLC, a consulting firm specializing in corporate social responsibility initiatives. From January to December 2011,
he served a one-year term as Executive in Residence and Senior Advisor with the Clinton Bush Haiti Fund to support the
rebuilding efforts in Haiti. Until January 2011, Mr. Gaston was President of the Verizon Foundation since 2003. Prior to
assuming that position, Mr. Gaston held a variety of management positions at Verizon Communications Inc. and its
predecessors since 1984, including positions in operations, marketing, human resources, strategic planning and government
relations. He has been a director of the Company since 2007. Among other things, Mr. Gaston brings to the Board
experience with respect to very large and complex public companies as well as extensive experience with other local,
national and international organizations through his non-profit work.

Jordan Heller

Jordan Heller, 55, has been President of Heller Wealth Advisors LLC, a provider of financial advisory services, since 2008.
Mr. Heller was previously a partner with The Schonbraun McCann Group LLP from 2005 to 2008. Prior to joining The
Schonbraun McCann Group, Mr. Heller was a Managing Director at American Economic Planning Group. He has been a
director of the Company since 2003. Mr. Heller is also a director of Equity One, Inc., a shopping center developer and owner.
Among other things, Mr. Heller brings to the Board experience in and knowledge of various financial matters. He is a certified
public accountant, chartered financial analyst and Certified Financial Planner™, and serves as an ‘‘audit committee financial
expert’’ on the Company’s Audit Committee.

Victoria A. Morrison

Victoria A. Morrison, 63, has been the Executive Vice President & General Counsel of Edison Properties, LLC, a diversified
real estate company, since 2007. Ms. Morrison was previously practicing law as a partner in the law firm of Riker, Danzig,
Scherer, Hyland & Perretti LLP since 1986. She has been a director of the Company since 2001. Among other things,
Ms. Morrison brings to the Board experience in and knowledge of real estate law and transactions.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF THE TEN NOMINEES AS DIRECTORS.

PROPOSAL 1—ELECTION OF DIRECTORS

Board Leadership

Messrs. Eisenberg, Feinstein and Temares function together as the senior leaders of the Company. Since Messrs. Eisenberg,
Feinstein and Temares are not ‘‘independent directors’’ within the meaning of NASDAQ Listing Rule 5605(a)(2), the Board of
Directors appointed an independent director to serve as the outside Lead Director. Mr. Eppler has served as the outside Lead
Director since 2002. The general authority and responsibilities of the outside Lead Director are established by the Board of
Directors. In that capacity, Mr. Eppler presides at all executive sessions of the independent directors, has the authority to call
meetings of the independent directors, acts as a liaison between the members of the Board and management, functions as
Secretary of the Board (including with respect to the proposal and maintenance of Board agendas and schedules for
meetings), arranges for Board committee functions and acts as Secretary of Board committees and receives communications
from the Company’s shareholders.

Director Independence

The Board of Directors, upon the advice of the Nominating and Corporate Governance Committee, has determined that Mses.
Elliott and Morrison and Messrs. Adler, Barshay, Eppler, Gaston and Heller each are ‘‘independent directors’’ under the
independence standards set forth in NASDAQ Listing Rule 5605(a)(2). This determination was based on the fact that each of
these directors is not an executive officer or employee of the Company or has any other relationship which, in the opinion of
the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a
director.

In making its independence determination this year,

The Board of Directors’ independence determination is analyzed annually in both fact and appearance to promote arms-length
the Board of Directors considered relationships and
oversight.
transactions since the beginning of its 2015 fiscal year. The Board of Directors’
independence determinations included
reviewing the following relationships, and a determination that the relationships and the amounts involved, in each case, were
immaterial.

(cid:129) Mr. Eppler is a (non-equity) pensioned partner of Proskauer Rose LLP. In 2001, he ceased active partnership with
responsibilities for clients. The firm receives fees for legal services from the Company which represented a fraction of
1% of the revenues of Proskauer Rose LLP.

(cid:129) Mr. Adler is a principal or executive officer of several private equity funds, each with broad commercial real estate
holdings. Several funds have among their investments interests in entities which hold retail properties, and for a part of
fiscal 2015, portions of two such properties were under lease to the Company or subsidiaries for the operation of four of
the over 1,500 stores operated by the Company. Both properties were sold during 2015 and are no longer held by the
funds. The interests of these funds in the rentals from the four stores represented a fraction of 1% of the rental income of
the funds of which Mr. Adler is a principal or executive officer. In addition, Messrs. Eisenberg and Feinstein, the
Company’s Co-Chairmen, have as part of their overall investment strategy investments in family limited partnerships,
which partnerships hold passive interests in certain of such funds representing between approximately 1% and 3% of the
interests of such funds.

(cid:129) Ms. Elliott previously served as an executive of Juniper Networks, which provides network services to a significant
number of companies around the world, including the Company, which obtains such services on terms and pricing
generally available to Juniper customers. Ms. Elliott retired from Juniper in 2014. Ms. Elliott is a member of the Board of
Directors of Whirlpool Corporation, which manufactures a wide array of kitchen and other products, some of which are
purchased by the Company at market rates for resale in the ordinary course of business. Ms. Elliott is also a member of
the Board of Directors of Imperva, Inc., which provides some of the Company’s firewall technology either through a third
party or directly, at terms and pricing generally available to Imperva customers.

(cid:129) The Company leases 15 stores (or less than 1% of the Company’s total stores) from Equity One, Inc. (or its affiliates), on
whose Board of Directors Mr. Heller serves. The rental income from these stores represents approximately 2.3% of the
total annual minimum rent received by Equity One.

As the Board determined, in each case, that the relationships and the amounts involved were immaterial, the Board does not
believe that the relationships or transactions might reasonably impair the ability of the directors to act in the shareholders’ best
interests.

PROPOSAL 1—ELECTION OF DIRECTORS

Committees of the Board of Directors

The Board has established standing committees to assist with performance of its responsibilities. These include: Audit,
Compensation, and Nominating and Corporate Governance Committees. The Board has adopted written charters for each of
these committees. The charters are available in the Investor Relations section of
the Company’s website at
www.bedbathandbeyond.com. All members of
the Audit, Compensation and Nominating and Corporate Governance
Committees are considered independent pursuant to applicable Securities and Exchange Commission (‘‘SEC’’) and NASDAQ
rules, and all members of the Compensation Committee meet the “outside directors” requirements for purposes of applicable
tax law.

AUDIT

The Audit Committee assists the Board in fulfilling its oversight responsibilities by (i) overseeing the Company’s accounting
and financial reporting processes and the audits of the Company’s financial statements, and (ii) reviewing the financial reports
and other financial
information provided by the Company to the public. In addition, the functions of this Committee have
included, among other things, recommending to the Board the engagement or discharge of independent auditors, discussing
with the auditors their review of the Company’s quarterly results and the results of their annual audit and reviewing the
Company’s internal accounting controls. The Audit Committee held six meetings during fiscal 2015. The current members of
the Committee are Messrs. Barshay, Gaston and Heller. The Board of Directors has determined that Mr. Heller is an “audit
committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.

COMPENSATION

The Compensation Committee assists the Board by (i) considering and determining all matters relating to the compensation of
the Company’s Co-Chairmen, CEO and other executive officers (as defined in Rule 3b-7 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), and such other key executives as the Committee shall determine; (ii) administering
and functioning as the Committee that is authorized to make grants and awards of equity compensation to executive officers
and such other key executives as the Committee shall determine under the Company’s equity compensation plans; and
(iii) reviewing and reporting to the Board on such other matters as may be appropriately delegated by the Board for the
Committee’s consideration. The Committee has the authority to engage consultants and other advisors. The Compensation
Committee held ten meetings during fiscal 2015. The current members of the Committee are Messrs. Adler and Barshay and
Ms. Morrison.

NOMINATING AND CORPORATE GOVERNANCE

The Nominating and Corporate Governance Committee assists the Board by (i) reviewing and recommending changes in
certain policies regarding the nomination of directors to the Board for its approval; (ii) identifying individuals qualified to
become directors; (iii) evaluating and recommending for the Board’s selection nominees to fill positions on the Board; and
(iv) recommending changes in the Company’s corporate governance policies to the Board for its approval. The Committee also
oversees Board and management succession planning. The Committee’s policy is to identify potential nominees based on
properly submitted suggestions from any source and has established procedures to do so. In addition, the Board may
determine that it requires a director with a particular expertise or qualification and will actively recruit such a candidate. The
Nominating and Corporate Governance Committee also has the authority to retain third party search firms to evaluate or assist
in identifying or evaluating potential nominees. Shareholders wishing to propose a director candidate for nomination must
provide timely notice of such nomination in accordance with the Company’s Amended By-Laws. The Nominating and
Corporate Governance Committee held one meeting during fiscal 2015. The current members of the Committee are Messrs.
Adler and Eppler and Ms. Morrison.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee was (i) during fiscal 2015, an officer or employee of the Company or
any of its subsidiaries or (ii) formerly an officer of the Company or any of its subsidiaries.

None of our executive officers currently serves, or in fiscal 2015 has served, as a member of the board of directors or
compensation committee of any entity that has one or more executive officers serving on our Board of Directors or
Compensation Committee.

PROPOSAL 1—ELECTION OF DIRECTORS

Governance Guidelines and Policies; Additional Information

the
The Board has adopted Corporate Governance Guidelines that are available in the Investor Relations section of
Company’s website at www.bedbathandbeyond.com, where you may also find the Company’s policies on director attendance
at the Annual Meeting and how shareholders can communicate with the Board of Directors. In addition, the Board has adopted
a Policy of Ethical Standards for Business Conduct that applies to all directors and employees. This Policy also can be found
in the Investor Relations section of the Company’s website noted above. The Company intends to post on this website any
amendments to, or waivers from, the Code of Ethics that applies to the principal executive officer, financial officer and
accounting officer.

The Company maintains directors and officers indemnification insurance coverage. This insurance covers directors and
officers individually where exposures exist other than those for which the Company is able to provide indemnification. This
coverage is from June 1, 2015 through June 1, 2016, at a total cost of approximately $251,000. The primary carrier is Arch
Insurance Company. Although no assurances can be provided, the Company intends to obtain similar coverage from June 1,
2016 through June 1, 2017.

Compensation of Directors

The Director Compensation Table provides compensation information for each member of our Board of Directors during fiscal
2015, other than Warren Eisenberg, Leonard Feinstein and Steven H. Temares, each of whom is a Named Executive Officer
of the Company and none of whom received any additional compensation for his service as a director of the Company.

Annual director fees for fiscal 2015 were $100,000. In addition, directors serving on standing committees of the Board of
Directors were paid as follows: an additional $10,000 for Audit Committee members, an additional $7,500 for Compensation
Committee members, and (other than for the Lead Director) an additional $5,000 for Nominating and Corporate Governance
Committee members. The Lead Director received an additional $15,000 for acting in that capacity. Director fees are paid on a
quarterly basis. Directors have the right to elect to receive all or 50% of their fees in stock. In addition to the fees above, each
director received a grant of restricted stock under the Company’s 2012 Incentive Compensation Plan with a fair market value
equal to $90,000 on the date of the Company’s 2015 Annual Meeting of Shareholders (calculated based on the average of the
high and low trading prices on such date). Such restricted stock vested on the last day of fiscal 2015.

As described more fully below, the following table summarizes the annual compensation for the non-employee directors as
members of our Board of Directors during fiscal 2015.

Name

Dean S. Adler

Stanley F. Barshay

Geraldine T. Eilliott

Klaus Eppler

Patrick R. Gaston

Jordan Heller

Victoria A. Morrison

Fees Earned or Paid in
Cash ($)

Stock Awards
($)(2)

112,500(1)

117,500

100,000

115,000

110,000(3)

110,000

112,500

90,000

Total ($)

202,500

207,500

190,000

205,000

200,000

202,500

(1) This director fee was paid in shares of common stock of the Company pursuant to the Bed Bath & Beyond Plan to Pay Directors Fees in
Stock and the number of shares was determined (in accordance with the terms of such plan) based on the fair market value per share on
the second business day following the announcement of the Company’s financial results for its fiscal third quarter, which was $46.23 per
share, the average of the high and low trading prices on January 11, 2016.

(2) Represents the value of 1,296 restricted shares of common stock of the Company granted under the Company’s 2012 Incentive
Compensation Plan at fair market value on the date of the Company’s 2015 Annual Meeting of Shareholders ($69.47 per share, the
average of the high and low trading prices on July 2, 2015), such restricted stock to vest on the last day of the fiscal year of grant provided
that the director remains in office until the last day of the fiscal year. No stock awards were outstanding for each director as of
February 27, 2016.

(3) Fifty percent of this director fee was paid in shares of common stock of the Company pursuant to the Bed Bath & Beyond Plan to Pay
Directors Fees in Stock and the number of shares was determined (in accordance with the terms of such plan) as described in
footnote (1).

PROPOSAL 1—ELECTION OF DIRECTORS

Risk Oversight

As part of its oversight responsibility, the Board receives at least annually a report on the material risks facing the Company,
which risks are identified through the Company’s Enterprise Risk Management (“ERM”) process. This report is presented to
the Board by a committee of key executives representing legal, compliance, finance and internal audit, and results from a
formal process where members of the committee meet with executives of each principal business function to identify and
assess the significant risks in each such business function’s areas of responsibility. The committee then analyzes with those
executives what risk mitigation efforts are or should be in place to eliminate or reduce such risks to acceptable levels, where
possible, and then engages on these matters with the full Board of Directors. In the annual ERM report, areas of risk and
mitigation efforts reviewed with the full Board in furtherance of its oversight responsibilities generally include: general business
risks, such as economic forces, competition and weather; employment-related risks, such as recruitment and retention,
succession, labor costs and associate relations; data security risks with respect to Company, associate and customer data;
compliance risks associated with the range of legal, accounting, tax, and financial reporting systems under which the Company
operates; supply chain risks, including disruption arising from political
instability or labor disturbances, supplier financial
stability and legal compliance; and compliance with a variety of product, labor, social, and environmental standards. The Board
is updated on certain risks more frequently than annually, upon request or as developments warrant.

The ERM process and report to the Company’s Board of Directors also informs the more detailed Risk Factor disclosure in the
Company’s annual report on Form 10-K, filed with the Securities & Exchange Commission.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE ELECTION OF THE TEN NOMINEES AS DIRECTORS.

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR
FISCAL 2016

Appointment of KPMG LLP

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s
independent registered public accounting firm. The Audit Committee has appointed KPMG LLP to serve as our independent
auditors for fiscal 2016, subject to ratification by our shareholders. The Company’s auditors have been KPMG LLP for every
year that it has been a public company. The Audit Committee and the Board of Directors believe that the continued retention of
KPMG LLP as our independent registered public accounting firm is in the best interest of the Company and our shareholders.

Representatives of KPMG LLP will be present at the Annual Meeting to answer questions. They will also have the opportunity
to make a statement if they desire to do so. If the proposal to ratify their appointment is not approved, other certified public
accountants will be considered by the Audit Committee. Even if the proposal
is approved, the Audit Committee, in its
discretion, may direct the appointment of new independent auditors at any time during the year if it believes that such a
change would be in the best interest of the Company and its shareholders.

Fees Paid to KPMG LLP for Services and Products

The Audit Committee is responsible for the approval of the audit fee associated with the Company’s retention of KPMG LLP.
The fees incurred by the Company for professional services rendered by and products purchased from KPMG LLP for fiscal
2015 and the fiscal year ended February 28, 2015 (“fiscal 2014”) were as follows:

Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees

2015

2014

$1,214,000 $1,214,000
86,000
81,000
3,000

—
61,000
3,000

$1,278,000 $1,384,000

In fiscal 2015 and fiscal 2014, in accordance with the SEC’s definitions and rules, “Audit Fees” included fees associated with
the annual audit of the Company’s financial statements, the assessment of the Company’s internal control over financial
reporting as integrated with the annual audit of the Company’s financial statements and the quarterly reviews of the financial
statements included in its Form 10-Q filings. In fiscal 2014, “Audit-Related Fees” included fees for procedures required due to
a Form S-3 registration statement and for a review of the accounting for the accelerated share repurchase program. In fiscal
2015 and fiscal 2014, “Tax Fees” included fees associated with tax planning, tax compliance (including review of tax returns)
and tax advice (including tax audit assistance). The Audit Committee has concluded that the provision of the foregoing
services is compatible with maintaining KPMG LLP’s independence. In addition to fees for audit and non-audit services, in
fiscal 2015 and 2014, the Company paid a subscription fee for a KPMG sponsored research product, reflected above in “All
Other Fees.”

Pre-Approval Policies and Procedures

In accordance with the Audit Committee charter, the Audit Committee must pre-approve all audit and non-audit services
provided to the Company by its outside auditor. To the extent permitted by applicable laws, regulations and NASDAQ rules,
the Committee may delegate pre-approval of audit and non-audit services to one or more members of the Committee. Such
member(s) must then report to the full Committee at its next scheduled meeting if such member(s) pre-approved any audit or
non-audit services.

In fiscal 2015 and fiscal 2014, all (100%) audit and non-audit services were pre-approved in accordance with the Audit
Committee charter.

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR FISCAL 2016

Audit Committee Report for the Year Ended February 27, 2016

the Audit Committee meets the SEC and NASDAQ
The Board of Directors has determined that
independence and experience requirements. The Board of Directors has also determined that Mr. Heller qualifies as an “audit
committee financial expert.”

the membership of

The Audit Committee discussed the auditors’ review of quarterly financial information with the auditors prior to the release of
that information and the filing of the Company’s quarterly reports with the SEC; the Audit Committee also met and held
discussions with management and the independent auditors with respect to the audited year-end financial statements.

Further, the Audit Committee discussed with the independent auditors the matters required to be discussed by the Public
Company Accounting Oversight Board Auditing Standard No. 16, ‘‘Communications with Audit Committees,’’ received the
written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning
independence and discussed with the auditors the auditors’ independence. The Committee also discussed with the auditors
and the Company’s financial management matters related to the Company’s internal control over financial reporting. Based on
these discussions and the written disclosures received from the independent auditors, the Committee recommended that the
Board of Directors include the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended
February 27, 2016, filed with the SEC on April 26, 2016.

This audit committee report is not deemed filed under the Securities Act of 1933 or the Securities Exchange Act of 1934 and is
not incorporated by reference into any filings that the Company may make with the SEC.

AUDIT COMMITTEE

Stanley F. Barshay
Patrick R. Gaston
Jordan Heller

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS INDEPENDENT AUDITORS FOR FISCAL 2016.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE
COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, the Company is providing its
shareholders the opportunity to cast an advisory vote on the compensation of its named executive officers for fiscal 2015. This
proposal, commonly known as a “say-on-pay” proposal, gives the Company’s shareholders the opportunity to express their
views on named executive officers’ compensation.

The Board of Directors recommends a vote in favor of the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers for fiscal 2015, as disclosed pursuant to
Item 402 of Regulation S-K,
including the Compensation Discussion and Analysis, compensation tables and narrative
discussion, is hereby APPROVED.”

This proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing
and administering the Company’s executive officer compensation program, values the opinions expressed by shareholders in
the Compensation Committee’s ongoing engagement, discussed below, and considers the views provided by shareholders
when making future compensation decisions for named executive officers. The affirmative vote of the holders of a majority of
the votes cast by our shareholders in person or represented by proxy and entitled to vote is required to approve this proposal.

The following Compensation Discussion & Analysis referenced in the Compensation Committee report is intended to provide
additional information and detail for your consideration of the proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE
COMPANY’S NAMED EXECUTIVE OFFICERS FOR FISCAL 2015 AS DISCLOSED IN
THIS PROXY STATEMENT.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Compensation Committee Report

The Compensation Committee of the Company’s Board of Directors has submitted the following report for inclusion in this
Proxy Statement:

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis
contained in this Proxy Statement. Based on the Compensation Committee’s review of and the discussions with management
with respect to the Compensation Discussion and Analysis, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in
the Company’s Annual Report on Form 10-K for fiscal 2015 for filing with the SEC.

The foregoing report is provided by the following directors, who constitute the fiscal year 2015 Compensation Committee:

COMPENSATION COMMITTEE

Dean S. Adler
Stanley F. Barshay
Victoria A. Morrison

Compensation Discussion & Analysis (CD&A)

Introduction

In this section, we describe our executive compensation philosophy and program that we have implemented to support our
strategic objectives and serve the long-term interests of our shareholders. We also discuss how our principal executive officer,
principal financial officer, and certain other Named Executive Officers (our NEOs) were compensated in fiscal 2015 and
describe how their compensation fits within our executive compensation philosophy. Finally, we discuss changes made to our
executive compensation structure for 2016 after consideration of input from our shareholders, with the purpose of better
aligning performance goals with our long-term strategy.

This CD&A is organized as follows:

(cid:129) Executive Summary (page 18), including our executive compensation philosophy and objectives, an overview of our

strategy, some highlights of our fiscal 2015 operational and financial performance.

(cid:129) Say on Pay Results and Shareholder Outreach (page 21) presents a summary of our 2015 advisory vote on executive
interests, concerns and

compensation and our efforts to engage with shareholders to better understand their
suggestions.

(cid:129) Fiscal 2016 Executive Compensation Program Decisions (page 22) describes modifications to our executive
compensation program, based in part on input from shareholders and adopted to even better align the performance
goals with our long-term strategy.

(cid:129) Methodology for Determining Executive Compensation (page 24) explains our compensation design process,

the
elements of our NEO compensation packages, which are heavily weighted toward performance-based compensation
and provides a review of the senior executive compensation for fiscal 2015, including other benefits and considerations.

(cid:129) Fiscal 2015 Performance Goals and Performance (page 29) describes the fiscal 2015 performance goals under our
long-term incentive program, our performance compared to those goals, and the resulting NEO incentive payouts for
fiscal 2015.

Executive Summary/Executive Compensation Philosophy and Objectives

Our compensation programs are determined by the Compensation Committee of the Board of Directors, with the assistance of
an independent consultant. The primary objectives of the Company’s executive officer compensation program are to:

(cid:129) Align rewards with performance that enhances shareholder value by heavily weighting compensation with equity;

(cid:129) Retain an executive team that drives the long-term success of the Company;

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

(cid:129) Support the Company’s strong team orientation;

(cid:129) Attract additional talented executives as required, and encourage high-potential team players to build a career at the

Company; and

(cid:129) Provide financial rewards and incentives that are competitive with other organizations and fair to employees and

shareholders.

The Company believes that its compensation policies, plans and programs have no material adverse effect on the Company’s
enterprise risk.

The Company believes that a key factor in its success to date has been the stability of its executive team. The average tenure
of our NEOs is approximately 33 years, which has created a very cohesive executive team, led by our CEO Steven Temares,
which has deep knowledge of the Company as well as the depth and breadth of experience to navigate the ever-evolving and
dramatically changing retail landscape. The assembly and retention of this executive team and its team-based approach has
also contributed to the Company’s strong corporate culture to think long-term and do whatever it takes to satisfy a customer.
To that end,
to promote from within and to make
compensation program changes gradually in order to compensate executives in a manner designed to promote the long-term
success of the organization as well as to maintain a level of stability. Compensation heavily weighted toward equity awards
that vest over four or five years also supports such stability.

the Company’s policy is to seek, whenever possible, at all

levels,

The Company’s compensation programs do not include annual cash bonuses and allocate the majority of each executive’s
compensation to long-term equity awards and performance-based compensation. The Compensation Committee firmly
believes that annual cash bonuses promote short-term thinking and are in direct contrast to the Bed Bath & Beyond culture
which is rooted in a commitment to customer service and a desire to achieve long-term success. The Committee believes that
paying a fair base salary and putting all other compensation in the form of long-term equity awards and performance-based
compensation creates alignment with the Company’s and shareholders’ goal of incenting management to continue to enhance
shareholder value over the long term.

The increased pace of change in the retail environment over the past several years has been fueled by advancing
technologies that are impacting the way consumers are able to make shopping decisions and purchase products and services.
At the same time, our Company has been driving change—across our organization—through significant investments in our
people as well as Information Technology, Digital and Mobile capabilities, Analytics, Pricing, Merchandising, Marketing, Store
Operations, Customer Service, Real Estate as well as our Supply Chain network.

The Compensation Committee recognizes the significant transformation occurring within the Company and the level of
fortitude and expertise required to create the right balance between achieving positive results in the near-term, and investing
for long-term success. We have great confidence in our executive team and their ability to further strengthen and position Bed
Bath & Beyond as a world-class omnichannel retailer.

Our Strategy

Over the past few years, Bed Bath & Beyond has driven change throughout our organization to capitalize on advancing
technologies and to strengthen our business as a world-class omnichannel retailer. We have made tremendous progress in
the transformation of our Company to better serve our customers in an ever-evolving digital world. At the same time, our
strategy remains rooted in our customer-centric culture and commitment
to customer service, supported by significant
investments to strengthen our foundation for future growth:

(cid:129) To do more for and with our customers wherever, whenever and however they wish to interact with us;

(cid:129) To provide our customers a seamless experience whether they interact with us in a store, through one of our contact

centers, on a desktop or tablet, smartphone or through social media;

(cid:129) To enhance our ability to achieve these objectives through an ongoing commitment

to world class information

technology, comprehensive analytics and targeted marketing and communications.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

We recognize that the investments we are making impact our operating profit in the short term. However, this multi-year
investment cycle, including fiscal 2015, has produced meaningful change across many key areas of our business including
Information Technology, Digital and Mobile capabilities, Analytics, Pricing, Merchandising, Marketing, Store Operations,
Customer Service, Real Estate as well as our Supply Chain network.

We believe that our foundation has never been stronger than it is today, including the quality of our people, our merchandise
assortments and our technologies. We remain steadfast in making the right investments to position our Company for long-term
success. We are excited about the opportunities that will enable us to continue to do more for and with our customers and to
strengthen our business as a world-class omnichannel retailer.

Our fiscal 2015 financial performance reflects the benefit of the significant investments in our business, steady progress on our
strategic initiatives, and the return of $1.1 billion to our shareholders through share repurchase.

This is an exciting time for Bed Bath & Beyond. We are confident that we are making the right investments to position our
Company for long-term profitable growth, and to further enhance shareholder value. To that end, subsequent to fiscal 2015,
our Board of Directors authorized a quarterly dividend program that will commence in fiscal 2016. Our Board took this action in
recognition of the Company’s strong cash flow generation and confidence in our business, as well as to provide a more
balanced approach to returning value to shareholders. In addition to the dividend, the Company will continue to repurchase
shares under our current $2.5 billion authorization, subject to business and market conditions.

Our Performance
During fiscal 2015, we made steady progress on our strategic initiatives, including significant investments in our people,
technology, physical and digital channels and supply chain, to further strengthen our foundation for future growth.

Select operational highlights:

(cid:129) Continued to expand, differentiate and improve our merchandise and related services and solutions.

(cid:129) Developed enhanced analytics capabilities, including sophisticated, predictive modeling to drive a more personalized

targeted marketing strategy.

(cid:129)

(cid:129) Progressed development of our Liberty View project in Brooklyn, a unique shopping venue which will house four of our

concepts and provide a more experiential shopping environment.

(cid:129) Opened a new Customer Contact Center in Layton, Utah to enhance our 24/7 customer support.

(cid:129) Expanded our supply chain network, including a new distribution facility in Las Vegas, Nevada, to provide more flexible

fulfillment options and support anticipated growth across all of our channels.

Select financial highlights:

(cid:129) Net sales of $12.1 billion increased approximately 1.9% or approximately 2.3% on a constant currency basis.

(cid:129) Comparable sales increased approximately 1%, or approximately 1.4% on a constant currency basis.

(cid:129) Comparable sales consummated through customer facing online websites and mobile applications increased in excess

of 25%.

(cid:129) Diluted EPS of $5.10, including $0.06 of net benefits from certain non-recurring items, including a favorable state audit

settlement.

(cid:129) Generated $1.0 billion in net cash from operations and returned $1.1 billion to shareholders through share repurchase.

(cid:129) Subsequent to fiscal 2015, announced Board authorization of a quarterly dividend program, which will commence in

fiscal 2016.

For more information regarding our fiscal 2015 financial performance, see our Annual Report on Form 10-K for fiscal 2015 filed
with the SEC on April 26, 2016.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Say on Pay Results and Shareholder Outreach
Over the past several years we have expanded our shareholder outreach program. The feedback received through our
engagement efforts led us to make initial changes to our executive compensation program in 2014, which were announced
prior to the Annual Meeting of Shareholders in July 2014 and included in our 2014 Proxy Statement. The program remained
consistent in fiscal 2015. While this engagement and enhanced disclosure was generally well received by our shareholders,
the advisory vote on our executive compensation at our 2015 Annual Meeting of Shareholders was below expectations, with
approximately 35% of votes cast in favor, down from 72% support the prior year.

Since that time, we have continued to engage with our shareholders to discuss various compensation and governance
matters:

(cid:129) Contacted top twenty-five shareholders representing approximately 68% of the total shares outstanding (as of March 26,

2016).

(cid:129) Representatives of the Compensation Committee, along with the Co-Chairmen and management, met in person with
the total outstanding shares, as well as held

nine institutional shareholders representing approximately 31% of
conversations with a leading proxy advisory firm.

(cid:129) Representatives of

the Compensation Committee and management spoke with an additional six institutional

shareholders by phone, representing approximately 18% of the total outstanding shares.

(cid:129)

In these meetings, our shareholders expressed a wide range of viewpoints relating to compensation and governance
practices. This engagement process was very informative and productive.

Key feedback included the following:

Shareholder Feedback

Our Responses

Concerns regarding magnitude of CEO pay

Concerns regarding rigor of performance
goals

Following our shareholder engagement after the 2015 Annual Meeting and
after consideration of
the
Compensation Committee approved the following actions with respect to our
CEO compensation in 2016:

the issues discussed with our shareholders,

(cid:129) No salary increase for our CEO, marking third consecutive year.

(cid:129) Reduced CEO target compensation from $19.6 million to $16.9 million,

or by approximately 14%.

(cid:129)

In addition, the Compensation Committee enhanced the rigor of and
amended our PSU compensation performance goals applicable to our
CEO and other senior executives as described in this chart below.

Payouts tied to PSU performance goals are contingent upon achievement of
various levels of Earnings Before Interest and Taxes (EBIT) margin and
Return on Invested Capital (ROIC) as well as the continued performance of
service by the executives. After consideration of shareholder feedback, the
Compensation Committee has enhanced the rigor of and amended these
performance goals for fiscal 2016 by:

(cid:129) Adjusting the weighting of one-year and three-year performance goals
from 75/25 to 50/50, respectively, increasing the weighting of the three-
year goal.

(cid:129) Applying a more strict achievement threshold for PSUs subject to the
three-year performance goal by increasing the achievement percentage
from 80-164% to 100-144%, to earn 100% payment.

(cid:129) Applying a Total Shareholder Return (TSR) “Regulator” to achievement
thresholds of each performance goal, capping PSU awards at 100% of
the Company’s TSR over the performance period is
the target
negative.

(cid:129) Adjusting the vesting periods for PSUs to maintain a rate of equal

vesting over four years, if performance goals are met.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Shareholder Feedback

Our Responses

Suggestion to better articulate our business
executive
linkage
strategy
compensation program

and

In 2016, we significantly expanded our disclosure regarding our investment
strategy to become a world-class omnichannel retailer and the progress we
have made in transforming our business over the past several years. We
believe that a combination of a one-year performance goal based on EBIT
margin and a three-year goal based on ROIC, in each case relative to a retail
industry peer group, are appropriate to support this long-term strategy. A
performance goal based on EBIT margin incentivizes short-term fiscal
discipline as these investments are being made, while a performance goal
based on ROIC measures how these investments are returning value to the
enterprise over the long term.

Suggestion
philosophy regarding cash bonuses

better

articulate

our

The Compensation Committee firmly believes that annual cash bonuses
promote short-term thinking and are in direct contrast to the Bed Bath &
Beyond culture which is rooted in a commitment to customer service and a
desire to achieve long-term success. The Committee believes that paying a
fair base salary and putting all other compensation in the form of long-term
equity awards and performance-based compensation creates alignment with
the Company’s and shareholders’ goal of incenting management to continue
to enhance shareholder value over the long term.

The Compensation Committee will continue to actively engage with shareholders to discuss various compensation and
governance matters and will consider their feedback in any future changes to the Company’s executive compensation
program.

Fiscal 2016 Executive Compensation Program Decisions

The Compensation Committee continues to believe that a combination of Performance Stock Units (including an EBIT
performance metric requiring fiscal discipline in a short-term one-year period with vesting that extends over two years, and an
ROIC performance metric that measures the return on the investments being made to address a rapidly changing industry
over a three-year period with vesting after years three and four), together with stock options vesting over three or five years,
appropriately aligns the compensation program with both the short- and long-term interests of the Company’s shareholders.

Subsequent to the recent shareholder engagement efforts and in discussion with the full Board of Directors, the Compensation
Committee made further changes to the Company’s executive compensation program for fiscal 2016, building on changes
made during the prior two years. The Compensation Committee believes these changes further strengthen the direct link
between pay and performance.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Summary of Executive Compensation and Relevant Governance Changes

In furtherance of the objectives of aligning compensation awards with performance, while retaining an executive team that
drives the long-term success of the Company, the Compensation Committee has made significant changes to the Company’s
executive officer compensation program over the last three years.

FY 2016

(cid:129) No increase in base salary of the Company’s CEO (third consecutive year of no increase in CEO base pay) and Co-Chairmen.

(cid:129) Reduced CEO target compensation from $19.6 million to $16.9 million, or by approximately 14%.

(cid:129) Enhanced the rigor of and amended our Performance Stock Unit (PSU) performance-based equity plan as follows:

O Adjusted weighting of one-year and three-year performance goals from 75/25 to 50/50, respectively, increasing the weighting of the

three-year goal.

O Applied a more strict achievement threshold for PSUs subject to the three-year performance goal by increasing the achievement

percentage from 80-164% to 100-144%, to earn 100% payment.

O Applied a Total Shareholder Return (TSR) “Regulator” to achievement thresholds of each performance goal, capping PSU awards

at 100% of the target if the Company’s TSR over the performance period is negative.

O Adjusted the vesting periods for PSUs to maintain a rate of equal vesting over four years, if performance goals are met.

(cid:129) Maintained practice of not awarding cash bonuses.

FY 2015

(cid:129) CEO annual base salary amount remained unchanged since 2014 (second consecutive year of no increase).

FY 2014

(cid:129) The Company significantly redesigned its 2014 equity incentive program for the Named Executive Officers, with a view toward further
strengthening the direct link between pay and performance and providing performance metrics that are fundamental to the business
and aligned with shareholder value creation.

(cid:129) The features of the program for fiscal 2014 included the following:

O No increase in base salary for the Company’s CEO or Co-Chairmen. The Company also maintained its practice of not awarding

cash bonuses.

O A revised performance-based equity plan with the following components:

▪ One-year performance goal based upon EBIT margin relative to a retail industry peer group, under which awards vest in three
equal annual installments from date of grant. The Compensation Committee believed it appropriate to set a target based upon
EBIT margin when compared to a retail industry peer group, to incentivize continued operational and fiscal discipline as
management executes against the Company’s strategic goals.

▪ Three-year performance goal based upon ROIC relative to a retail industry peer group, under which awards vest four years

after grant. The Compensation Committee believed that, as a relative measure compared to a retail industry peer group, ROIC
over a three-year period provides a suitable metric to measure how the Company’s investments are returning value to the
enterprise.

O Awards of stock options, which were intended to be valued at no more than one-third of total performance-based equity, vesting
over a five-year period (three years for the Co-Chairmen). The Compensation Committee believed stock options provide further
incentives aligned with the long-term interests of shareholders.

(cid:129)

In addition, the Board of Directors adopted the following:

O Stock ownership guidelines that require the Company’s CEO and each outside director to hold the Company’s common stock with

a value of at least $6,000,000 and $300,000, respectively.

O Restrictions on engaging in hedging transactions involving the Company’s common stock and on pledging such common stock, in

each case, by the Company’s directors and executive officers.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Below is a summary of our executive compensation practices that we have implemented to drive performance, as well as
practices we avoid because we do not believe they serve investors’ long-term interests.

What We Do

Provide a majority of pay in equity and performance-based
compensation.

Use an independent compensation consulting firm,
which provides no other services to Bed Bath & Beyond,
and independent counsel.

Pay for performance based on measurable goals tied to
Company strategy.

Engage in shareholder outreach.

Apply multi-year vesting to equity awards.

Include caps on individual payouts in incentive plans.

Require significant stock ownership for CEO and each
outside director with a value of at least $6,000,000 and
$300,000, respectively.

Subject incentive pay to compensation recovery “claw-
back” policy.

Conduct an annual advisory vote on executive
compensation.

Limit outside board memberships.

Have a lead director and a high proportion of independent
directors.

What We Don’t Do

Design compensation programs using cash bonuses, to
avoid short-termism.

Have excessive perquisites, or allow tax gross-ups for
perquisites or upon a change in control.

Allow hedging and unrestricted pledging of the Company’s
securities.

Allow re-pricing of stock options.

Methodology for Determining Executive Compensation

The Compensation Committee has engaged the services of an independent compensation consultant, retaining Arthur J.
Gallagher & Co. Human Resources & Compensation Consulting Practice (Gallagher) or its predecessor to conduct a
compensation review for the Named Executive Officers and certain other executives. Gallagher has not served the Company
in any other capacity except as consultants to the Compensation Committee. The Compensation and the Nominating and
Corporate Governance Committees also receive advice and assistance from the law firm of Chadbourne & Parke LLP, which
has acted as counsel only to the Company’s independent directors and its Board committees. The Compensation Committee
has concluded that no conflict of interest exists that prevents Gallagher or Chadbourne from being independent advisors to the
Compensation Committee.

The Compensation Committee charter, which describes the Compensation Committee’s function, responsibilities and duties, is
available on the Company’s website at www.bedbathandbeyond.com under the Investor Relations section. The Compensation
Committee consists of three independent members of our Board of Directors. The Compensation Committee meets on a
regular basis and met 10 times in fiscal 2015.

Under the direction of the Compensation Committee, the compensation review included a peer group competitive market
review of executive compensation and total compensation recommendations by Gallagher. The peer group developed by
Gallagher, agreed upon by the Compensation Committee and upon which Gallagher based its recommendations for fiscal
2015 compensation, consisted of 19 retail companies of a size range in revenue and net income relatively closely aligned with
the Company’s revenue and net income. The peer group remained the same from fiscal 2014 to fiscal 2015.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

The 19 company peer group consisted of the following companies at the time of the analysis:

Advance Auto Parts, Inc.

AutoZone, Inc.

Dick’s Sporting Goods, Inc.

Dillard’s, Inc.

Dollar General Corporation

Family Dollar Stores, Inc.

Foot Locker, Inc.

GameStop Corp.

The Gap, Inc.

Kohl’s Corporation

L Brands, Inc.

Macy’s, Inc.

Nordstrom, Inc.

O’Reilly Automotive, Inc.

PetSmart, Inc.

Ross Stores, Inc.

Staples, Inc.

Starbucks Corporation

The TJX Companies, Inc.

Gallagher conducted a compensation review for all executive officers, including the Named Executive Officers, and for certain
other key executives. Gallagher benchmarked the Named Executive Officers total compensation and separately their cash
compensation against data from the 19 company peer group. Gallagher also assisted the Compensation Committee in
determining the targets and other provisions, for the one-year and three-year performance goals. With respect to grants of
PSUs, the Compensation Committee, with assistance from Gallagher, adopted a wider peer group of 47 retail companies
against which the performance goals will be measured. This larger peer group includes 18 of the 19 company benchmarking
peer group described above and was created to establish a larger, more stable statistical base over the duration of the
performance periods.

The compensation approved by the Compensation Committee for each of Messrs. Eisenberg, Feinstein and Temares for fiscal
2015 was determined by the Compensation Committee taking into account recommendations of and certain data received
from Gallagher. The compensation approved by the Compensation Committee for the Named Executive Officers for fiscal
2015, other than the Co-Chairmen and Mr. Temares, was determined by the Compensation Committee, taking into account
the recommendations of
the Co-Chairmen, Chief Executive Officer and Gallagher and certain data the Compensation
Committee received from Gallagher. No executive was present during voting or deliberations with respect to matters relating to
such executive’s compensation.

Based on the recommendations and data from Gallagher, and in light of the Company’s financial results for fiscal 2014, the
growth in the size and scope of the Company, the strategic investments being made to position the Company for long-term
growth, its relative performance in its industry and other factors, the Compensation Committee determined that the Named
Executive Officers of the Company should receive the total compensation packages for fiscal 2015, as described below.

Elements of Compensation

The Company seeks to provide total compensation packages to its associates, including its Named Executive Officers, which
implement its compensation philosophy. As described above, the Company places greater emphasis in the compensation
packages for Named Executive Officers on equity incentive compensation than on cash compensation in order to align
compensation more closely with long-term performance results and the creation of shareholder value. The Compensation
Committee firmly believes that annual cash bonuses promote short-term thinking and are in direct contrast to the Bed Bath &
Beyond culture which is rooted in a commitment to customer service and a desire to achieve long-term success.

The components of the Company’s compensation programs for its executive officers and certain other key executives are base
salary, equity compensation (consisting of awards of PSUs and stock options), retirement and other benefits (consisting of
health plans, a limited 401(k) plan match and a nonqualified deferred compensation plan) and very limited perquisites.
Consistent with prior practice and the Company’s culture,
the Company does not provide perquisites such as club
memberships, company planes or retreats. For those perquisites provided, see the footnotes to the Summary Compensation
Table on page 31.

Base Salary

is
The Company pays base salaries to provide its Named Executive Officers with current, regular compensation that
appropriate for their position, experience and responsibilities. Changes in base salary, if any, are generally effective in May of
each fiscal year. The Company believes that total cash compensation levels for its Named Executive Officers are appropriate
taking into consideration factors including that the Company does not pay annual cash bonuses.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Equity Compensation

PSUs

In early fiscal 2014, the Company significantly redesigned its equity incentive program for its Named Executive Officers and
certain other key executives with a view toward creating an enhanced link between pay and performance, providing
performance metrics fundamental to the business, and aligning with shareholder value creation. The redesigned program
eliminated the prior performance test and created a new framework consisting of a one-year performance test based on EBIT
margin relative to a peer group and a three-year performance test based on ROIC relative to such peer group. Payouts under
the performance goals were contingent upon achievement of various levels of EBIT margin and ROIC as well as the continued
performance of services by the executives. The 2014 and 2015 awards were in the form of PSUs, of which 75% were subject
to the one-year EBIT margin goal and 25% were subject to the three-year ROIC goal (subsequently changed for fiscal 2016 to
50% for each of the one-year goal and three-year goal, increasing the weighting of the three-year goal). The Compensation
Committee believed it appropriate to set a target based upon EBIT margin when compared to a retail industry peer group, to
incentivize continued operational and fiscal discipline as management executes against the Company’s strategic goals. The
Compensation Committee also believed that, as a relative measure compared to a retail industry peer group, ROIC over a
three-year period provides a suitable metric to measure how the Company’s investments are returning value to the enterprise.
The Compensation Committee believes that these goals are an appropriate measure of performance for companies in the
retail industry and, specifically, for companies in the Company’s sector.

The following table sets forth the achievement ranges for the one-year relative EBIT margin goal and the three-year relative
ROIC goal in place for fiscal 2015, together with the associated payout percentages and vesting schedule. As shown in the
table, the awards range from a floor of zero to a cap of 150% of target achievement.

PSUs Subject to One-Year EBIT Goal for 2015
(75% Weighting)

Vesting : 1/3 year 1, 1/3 year 2, 1/3 year 3

PSUs Subject to Three-Year ROIC Goal for 2015
(25% Weighting)

Vesting : 100% year 4

Achievement
Percentage (% of Peer
Group Average)

200% or Greater

185-199%

125-184%

100-124%

80-99%

70-79%

60-69%

<60%

Payment Percentage of
Common Stock
Underlying PSUs

150%

110%

100%

90%

75%

50%

25%

Achievement
Percentage (% of Peer
Group Average)

180% or Greater

165-179%

80-164%

70-79%

60-69%

50-59%

40-49%

<40%

Payment Percentage of
Common Stock
Underlying PSUs

150%

110%

100%

90%

75%

50%

25%

The metrics with respect to each peer group member necessary to measure the performance criteria are based on data
reported in the S&P Capital IQ Database to the extent publicly available, and to the extent such data is not publicly available,
are based on information otherwise publicly available.

The PSUs are not transferable, cannot be pledged, assigned or otherwise disposed of and are subject to the terms of the
Company’s 2012 Incentive Compensation Plan.

The overall approach to equity compensation in fiscal 2015 for all executive officers, including the Named Executive Officers,
and for certain other executives was to combine the performance-based PSU awards with stock options. In determining the
allocation between these two forms of equity awards, the Company considered the retention component and the role of the
executive in the enhancement of shareholder value. For fiscal 2015, the Company allocated at least two-thirds of the value of
equity compensation granted to all executive officers, including the Named Executive Officers, to PSU awards and no greater
than one-third of such value to stock option awards. The vesting provisions relating to equity compensation have been and
continue to be determined with a principal purpose of retaining the Company’s executives and key associates. The Company
believes its equity compensation program promotes the long-term retention of its executives and key associates, including its
Named Executive Officers and in large measure directly aligns compensation of its Named Executive Officers with Company
performance.

The Company believes that
the standard for performance-based
compensation under Section 162(m) of the Code, so that the PSU awards are intended to be deductible compensation by the
Company for certain executives if their annual compensation exceeds $1 million.

the performance-based tests described above meet

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Stock Options

Stock option awards are made in dollars (with the number of shares covered by the options determined by dividing the dollar
amount of the grant by the Stock Option Fair Value, as defined below). The Compensation Committee believes that making
stock option awards in dollar amounts rather than share amounts is advisable because making stock option awards in dollar
amounts allows the Compensation Committee to align stock option awards with the value of the option grants. Awarding stock
options in a fixed dollar amount also enables the Compensation Committee to more readily evaluate appropriate aggregate
compensation amounts and percentage increases or decreases for executives, in comparison to making stock option awards
in share amounts (the value of which varies depending on the trading price of the Company’s stock and other factors). In
making the awards, the Compensation Committee considered the fair value of these options on the date of grant determined in
accordance with Accounting Standards Codification Topic No. 718, “Compensation—Stock Compensation” (the Stock Option
Fair Value).

Consistent with the Company’s historic practice, the stock options vest over time, subject, in general, to the Named Executive
Officers remaining in the Company’s service on specified vesting dates.

Time Vested Restricted Stock

All executives (other than Named Executive Officers and other key executives whose compensation is determined by the
Compensation Committee) and associates awarded incentive compensation receive grants consisting solely of restricted
stock. Vesting of restricted stock awarded to these associates is based solely on time with no performance-based test.

All 2015 awards of equity compensation were made under the Company’s 2012 Incentive Compensation Plan approved by the
Company’s shareholders, which is the only equity incentive plan under which the Company can currently make awards of
equity compensation.

Senior Executive Compensation

The Compensation Committee reviews the compensation packages for the Chief Executive Officer,
Executive Officers and the other senior executives believed to be the most important and influential
continued success of the Company.

the other Named
in determining the

In the spring of 2015, when the Compensation Committee made its determinations relating to executive compensation for the
Company’s Named Executive Officers for fiscal 2015, the Compensation Committee took into account, among other things, the
following:

(cid:129)

the Company’s net earnings per diluted share had increased to $5.07 for fiscal 2014 from $4.79 in the prior year;

the Company had returned approximately $2.251 billion to shareholders through share repurchases in fiscal year 2014;
and

the Company had made capital expenditures exceeding $300 million in fiscal 2014, principally for strategic investments
related to enhancing its omnichannel capabilities to further position the Company for continued growth and success in
the ever-evolving retail environment, and operated approximately 1,500 stores.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

The following charts illustrate the average mix of target total direct compensation for Mr. Temares and for chief executive
officers in the Company’s peer group for 2015:

Company CEO
Target Compensation Mix-2015

Average Peer CEO
Target Compensation Mix-2015

Salary 20%

Perf Awards
53%

Options
27%

Pay at Risk (80%)

Time Vested
Stk
13%

Salary
14%
Options
17%

Bonus
22%

Perf Awards
34%

Pay at Risk (73%)

Mr. Temares’ base salary did not increase in fiscal 2015, and remained at $3,967,500, which represented his entire cash
compensation since the Company does not pay cash bonuses. Cash compensation for fiscal 2015 represented 20% of
Mr. Temares’ total compensation.

Equity awards to Mr. Temares for fiscal 2015 consisted of $10,446,137 of PSUs (representing 147,222 PSUs) and $5,224,624
of stock options (representing 226,003 options). Approximately 80% of Mr. Temares’ cash and equity compensation for fiscal
2015 was dependent on Company performance and/or an increase in shareholder value.

As calculated in accordance with the Company’s stock ownership guidelines for the Company’s Chief Executive Officer,
Mr. Temares held substantially more than the minimum $6,000,000 holding requirement. In setting the minimum holding
requirement, the Compensation Committee considered the relative value of stock required to be held by CEOs within the peer
group. It is important to note that Mr. Temares has not sold any post-tax restricted shares during his tenure with the Company.

For fiscal 2015, the base salaries for the Co-Chairmen did not increase and remained at $1,100,000 each, the same as they
were for the previous nine years. Equity awards in 2015 for the Co-Chairmen did not increase and have remained in the same
amount as they were for the previous four years (rounded to the next full share). The base salaries and equity awards of the
other Named Executive Officers increased based upon several factors including increased responsibilities and in certain cases
individual performance.

The stock options granted to the Chief Executive Officer and the other Named Executive Officers vest in five equal annual
installments, while the stock options awarded to the Co-Chairmen vest in three equal annual
installments. In each case,
vesting commences on the first anniversary of the grant date and is also based on continued service to the Company.

In the view of the Compensation Committee, the fiscal 2015 compensation packages for the Chief Executive Officer, the Co-
Chairmen, and the other Named Executive Officers, based on the Company’s growth and strong financial results in 2014, the
strategic investments being made to position the Company for
long-term growth, and based on the results and
recommendations of Gallagher’s compensation review, were appropriate for a company with the revenues and earnings of the
Company.

For further discussion related to equity grants to the Named Executive Officers in fiscal 2015, see the Potential Payments
Upon Termination or Change in Control Table.

Other Benefits

The Company provides the Named Executive Officers with the same benefits offered to all other associates. The cost of these
benefits constitutes a small percentage of each Named Executive Officer’s total compensation. Key benefits include paid
vacation, premiums paid for long-term disability insurance, a matching contribution to the Named Executive Officer’s 401(k)
plan account, and the payment of a portion of the Named Executive Officer’s premiums for healthcare and basic life insurance.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

The Company has a nonqualified deferred compensation plan for the benefit of certain highly compensated associates,
including the Named Executive Officers. The plan provides that a certain percentage of an associate’s contributions may be
matched by the Company, subject to certain limitations. This matching contribution will vest over a specified period of time.
See the Nonqualified Deferred Compensation Table.

The Company provides the Named Executive Officers with certain perquisites including tax preparation services and car
service, in the case of Messrs. Eisenberg and Feinstein, and a car allowance, in the case of all Named Executive Officers,
other than Ms. Lattmann. The Compensation Committee believes all such perquisites are reasonable and consistent with its
overall objective of attracting and retaining our Named Executive Officers.

See the “All Other Compensation” column in the Summary Compensation Table for further information regarding these
benefits and perquisites, and Potential Payments Upon Termination or Change in Control Table for information regarding
termination and change in control payments and benefits.

Impact of Accounting and Tax Considerations

The Compensation Committee considers the accounting cost associated with equity compensation and the impact of
Section 162(m) of the Code, which generally prohibits any publicly held corporation from taking a federal income tax deduction
for compensation paid in excess of $1 million in any taxable year to certain executives, subject to certain exceptions for
performance-based compensation. Stock options and performance-based compensation granted to our Named Executive
Officers are intended to satisfy the performance-based exception and be deductible. Base salary amounts in excess of $1
million are not deductible by the Company.

Policy on the Recovery of Incentive Compensation

In fiscal 2009, the Board adopted a policy as part of the Company’s corporate governance guidelines on the recovery of
incentive compensation, commonly referred to as a “clawback policy,” applicable to the Company’s Named Executive Officers
(as defined under Item 402(a)(3) of Regulation S-K). The policy appears in the Company’s Corporate Governance Guidelines,
available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com. The Compensation
Committee is monitoring the issuance of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act
relating to incentive compensation recoupment and will amend its policy to the extent necessary to comply with such Act.

Fiscal 2015 Performance Goals and Performance

The table below shows how we performed against the fiscal 2015 performance goals under our equity incentive program,
which were set by the Compensation Committee in early fiscal 2015.

(cid:129) The one-year performance goal based on EBIT margin relative to a retail

industry peer group earned 100% of the

incentive target for each NEO.

Mean (average) EBIT for Peer Group Companies

Bed Bath & Beyond

Achievement Percentage

Payment Percentage

7.28%

11.69%

160.60%

100.00%

(cid:129) The three-year performance goal based on ROIC relative to such peer group will be measured at the end of fiscal 2017.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Executive Officers

Set forth below is information concerning our executive officers as of May 6, 2016.

Name

Warren Eisenberg

Leonard Feinstein

Steven H. Temares

Arthur Stark

Eugene A. Castagna

Susan E. Lattmann

Matthew Fiorilli

Age

Position

Co-Chairman and Director

Chief Executive Officer and Director

President and Chief Merchandising Officer

Chief Operating Officer

Chief Financial Officer and Treasurer

Senior Vice President—Stores

The biographies for Messrs. Eisenberg, Feinstein and Temares are set forth above under Election of Directors (Proposal 1).
Biographies for our other executive officers are as follows:

Arthur Stark has been President and Chief Merchandising Officer since 2006. Mr. Stark has served as Chief Merchandising
Officer since 1999 and was a Senior Vice President from 1999 to 2006. Mr. Stark joined the Company in 1977.

Eugene A. Castagna has been Chief Operating Officer since 2014. Mr. Castagna served as Chief Financial Officer and
Treasurer from 2006 to 2014, as Assistant Treasurer from 2002 to 2006 and as Vice President—Finance from 2000 to 2006.
Mr. Castagna joined the Company in 1994.

Susan E. Lattmann has been Chief Financial Officer and Treasurer since 2014. Ms. Lattmann served as Vice President—
Finance from 2006 to 2014, as Vice President—Controller from 2001 to 2006 and as Controller from 2000 to 2001.
Ms. Lattmann is a certified public accountant and joined the Company in 1996.

Matthew Fiorilli has been Senior Vice President—Stores since 1999. Mr. Fiorilli joined the Company in 1973.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Compensation Tables

SUMMARY COMPENSATION TABLE FOR FISCAL 2015,
FISCAL 2014 AND FISCAL 2013

The following table sets forth information concerning the compensation of the Company’s Named Executive Officers.

Stock
Awards(2)(3)
($)

1,500,060

1,500,025

1,500,023

1,500,060

1,500,025

1,500,023

Option
Awards(2)
($)

500,008

500,010

500,019

500,008

500,010

500,019

3,967,500

10,446,137

5,224,624

9,712,323

4,856,147

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)

—

(242,787)

556,242

6,750,034

6,750,011

1,753,736

1,675,035

1,550,022

1,450,064

1,750,034

1,550,022

1,450,126

900,064

750,013

300,058

1,425,060

1,300,038

1,200,060

600,015

600,012

600,014

750,001

600,012

600,014

400,002

300,006

—

600,015

600,012

600,014

—

Fiscal
Year

Salary(1)
($)

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

1,100,000

3,967,500

3,867,981

1,770,769

1,670,769

1,568,846

1,811,154

1,670,769

1,421,154

871,154

730,769

534,908

1,655,769

1,555,769

1,453,846

All Other
Compensation
($)

147,887

145,635

153,138

165,878

160,213

163,564

14,194

23,828

22,993

15,112

14,699

14,352

12,000

13,878

16,416

8,262

7,955

7,820

18,572

22,154

21,825

Total
($)

3,247,955

3,245,670

3,253,180

3,265,946

3,260,248

3,263,606

19,409,668

19,116,040

19,144,755

4,060,931

3,835,502

3,633,276

4,323,189

3,834,681

3,487,710

2,179,482

1,788,743

842,786

3,699,416

3,477,973

3,275,745

Name and Principal Position

Warren Eisenberg(4)(5)
Co-Chairman

Leonard Feinstein(6)(7)
Co-Chairman

Steven H. Temares(8)(9)(10)
Chief Executive Officer

Arthur Stark(11)(12)
President and Chief
Merchandising Officer

Eugene A. Castagna(13)(14)
Chief Operating Officer

Susan E. Lattmann(15)(16)
Chief Financial Officer
and Treasurer

Matthew Fiorilli(17)(18)
Senior Vice
President—Stores

(1) Except as otherwise described in this Summary Compensation Table, salaries to Named Executive Officers were paid in cash in fiscal

2015, fiscal 2014 and fiscal 2013, and increases in salary, if any, were effective in May of the fiscal year.

(2) The value of stock awards and option awards represents their respective total fair value on the date of grant calculated in accordance with
Accounting Standards Codification Topic No. 718, “Compensation—Stock Compensation” (“ASC 718”), without regard to the estimated
forfeiture related to service-based vesting conditions. All assumptions made in the valuations are contained and described in footnote 12
to the Company’s financial statements in the Company’s Form 10-K for fiscal 2015. Stock awards and option awards are rounded up to
the nearest whole share when converted from dollars to shares. The amounts shown in the table reflect the total fair value on the date of
grant and do not necessarily reflect the actual value, if any, that may be realized by the Named Executive Officers.

(3) The value of stock awards granted in fiscal 2015 and 2014 consists of performance stock unit (“PSU”) awards. Please see Compensation
Discussion and Analysis for a description of the PSU awards. The one-year performance-based test for both fiscal 2015 and 2014 was
met at the 100% target. The fair value of the PSU awards are reported at 100% of target, which is the estimated outcome of performance
conditions associated with the PSU awards on the grant date. If the Company achieves the highest level of performance for the PSU
awards, then the fair value of the PSU awards would be $2,250,125, $2,250,125, $15,669,206, $2,512,588, $2,625,051, $1,350,132 and
$2,137,661 for Mr. Eisenberg, Mr. Feinstein, Mr. Temares, Mr. Stark, Mr. Castagna, Ms. Lattmann and Mr. Fiorilli, respectively. The value
of stock awards granted in fiscal year 2013 consists of restricted stock. Except as described below, the vesting of restricted stock awards
granted in fiscal 2013 depends on (i) the Company’s achievement of a performance-based test for the fiscal year of the grant, and
(ii) assuming the performance-based test is met, time vesting, subject in general to the executive remaining in the Company’s service on
specific vesting dates. The performance-based test for fiscal 2013 was met, and the fair value of such performance-based stock awards
are reported at 100% of target, their maximum value assuming the highest level of performance. The vesting of restricted stock awards
granted to Ms. Lattmann in fiscal 2013 and a portion of restricted stock awards granted to Mr. Castagna in fiscal 2013 are based solely on
time vesting.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

(4) Salary for Mr. Eisenberg includes a deferral of $569,756, $550,000 and $546,504 for fiscal 2015, 2014 and 2013, respectively, pursuant to
the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified
Deferred Compensation Table below.

(5) All Other Compensation for Mr. Eisenberg includes incremental costs to the Company for tax preparation services of $34,780, $31,625
and $42,950, car service of $81,598, $79,598 and $77,214 and car allowance of $23,559, $26,612 and $25,325, and an employer
nonqualified deferred compensation plan matching contribution of $7,950, $7,800 and $7,650 for fiscal 2015, 2014 and 2013, respectively.

(6) Salary for Mr. Feinstein includes a deferral of $591,009, $550,000 and $550,000 for fiscal 2015, 2014 and 2013, respectively, pursuant to
the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified
Deferred Compensation Table below.

(7) All Other Compensation for Mr. Feinstein includes incremental costs to the Company for tax preparation services of $34,780, $31,625 and
$42,950, car service of $87,982, $86,077 and $82,905 and car allowance of $35,166, $34,711 and $30,059 and an employer nonqualified
deferred compensation plan matching contribution of $7,950, $7,800 and $7,650 for fiscal 2015, 2014 and 2013, respectively.

(8) Salary for Mr. Temares includes a deferral of $42,000, $40,624 and $36,684 for fiscal 2015, 2014 and 2013, respectively, pursuant to the
terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified
Deferred Compensation Table below.

(9) The change in pension value for fiscal 2015, 2014 and 2013 is a result of the change in the actuarial present value of the benefits payable
under the supplemental executive retirement benefit agreement with Mr. Temares, reflecting an increase in salary in fiscal 2013, and
which is discussed more fully below. There was no cash payment as a result of this increase. See also “Potential Payments Upon
Termination or Change in Control—Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann” below.

(10) All Other Compensation for Mr. Temares includes incremental costs to the Company for car allowance of $6,244, $16,103 and $15,344
and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $7,950, $7,725 and $7,649 for fiscal
2015, 2014 and 2013, respectively.

(11) Salary for Mr. Stark includes a deferral of $10,192, $10,639 and $10,937 for fiscal 2015, 2014 and 2013, respectively, pursuant to the
terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified
Deferred Compensation Table below.

(12) All Other Compensation for Mr. Stark includes incremental costs to the Company for car allowance of $6,547, $6,995 and $6,702 and
employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $8,565, $7,704 and $7,650 for fiscal 2015,
2014 and 2013, respectively.

(13) Salary for Mr. Castagna includes a deferral of $180,538, $166,154 and $141,538 for fiscal 2015, 2014 and 2013, respectively, pursuant to
the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified
Deferred Compensation Table below.

(14) All Other Compensation for Mr. Castagna includes incremental costs to the Company for car allowance of $3,500, $6,203 and $8,766 and
employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $8,500, $7,675 and $7,650 for fiscal 2015,
2014 and 2013, respectively.

(15) Salary for Ms. Lattmann includes a deferral of $36,731, $29,594 and $25,598 for fiscal 2015, 2014 and 2013, respectively, pursuant to the
terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified
Deferred Compensation Table below.

(16) All Other Compensation for Ms. Lattmann includes incremental costs to the Company for employer 401(k) plan and nonqualified deferred

compensation plan matching contributions of $8,262, $7,955 and $7,820 for fiscal 2015, 2014 and 2013, respectively.

(17) Salary for Mr. Fiorilli includes a deferral of $33,038, $140,654 and $83,827 for fiscal 2015, 2014 and 2013, respectively, pursuant to the
terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified
Deferred Compensation Table below.

(18) All Other Compensation for Mr. Fiorilli includes incremental costs to the Company for car allowance of $10,622, $14,579 and $14,175 and
employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $7,950, $7,575 and $7,650 for fiscal 2015,
2014 and 2013, respectively.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

GRANTS OF PLAN BASED AWARDS

Grants of Stock Options and Performance Stock Units for Fiscal 2015

The following table sets forth information with respect to stock options granted and performance stock units awarded during
fiscal 2015 to each of the Named Executive Officers under the Company’s 2012 Incentive Compensation Plan (the “2012
Plan”). The Company did not grant any non-equity incentive plan awards in fiscal 2015.

Estimated Future Payouts Under
Equity Incentive Plan Awards

Grant
Date

Threshold(1)
(#)

Target(1)
(#)

Maximum(1)
(#)

21,141

31,712

All Other
Option
Awards:
Number of
Securities
Underlying
Options(1)
(#)

Exercise
or
Base
Price of
Option
Awards(2)
($/Sh)

Closing
Market
Price on
Date of
Grant
($/Sh)

Grant Date
Fair
Value of
Stock and
Option
Awards(3) ($)

$ 1,500,060

Name

Warren Eisenberg

Leonard Feinstein

Steven H. Temares

Arthur Stark

Eugene A. Castagna

Susan E. Lattmann

Matthew Fiorilli

5/11/15

21,629

$70.96

$70.30

500,008

21,141

31,712

$ 1,500,060

21,629

$70.96

$70.30

500,008

147,222

220,833

$10,446,137

23,607

35,411

$ 1,675,035

226,003

$70.96

$70.30

$ 5,224,624

25,955

$70.96

$70.30

600,015

24,664

36,996

12,685

19,028

20,084

30,127

32,443

$70.96

$70.30

17,303

$70.96

$70.30

$ 1,750,034

750,001

900,064

400,002

$ 1,425,060

25,955

$70.96

$70.30

600,015

(1) Number of shares when converted from dollars to shares, which number is rounded up to the nearest whole share.

(2) The exercise price of option awards is the average of the high and low trading prices of the Company’s common stock on the date of

grant.

(3) Pursuant

to the SEC rules, stock and option awards are valued in accordance with ASC 718. See footnote 2 to the Summary

Compensation Table in this Proxy Statement.

Vesting of stock option awards depends on time vesting, subject in general to the executive remaining in the Company’s
service on specific vesting dates. The options granted in fiscal 2015 to Messrs. Eisenberg and Feinstein vest in three equal
installments starting on the first anniversary of the grant date. The options granted in fiscal 2015 to Messrs. Temares, Stark,
Castagna and Fiorilli and Ms. Lattmann vest in five equal installments starting on the first anniversary of the grant date. At the
time of grant or thereafter, option awards and underlying shares of common stock are not transferable other than by will or the
laws of descent and distribution, except as the Compensation Committee may permit.

Vesting of performance stock unit awards (“PSUs”) depends on (i) the Company’s achievement of a performance-based test
during a one-year period from the date of grant and during a three-year period from the date of grant, and (ii) assuming
achievement of the performance-based test, time vesting, subject, in general, to the executive remaining in the Company’s
service on specified vesting dates. Performance during the one-year period is based on Earnings Before Interest and Taxes
(“EBIT”) margin relative to a peer group of the Company comprising 47 companies. Upon achievement of the one-year
performance-based test, the corresponding PSUs will vest annually in substantially equal installments over a three year period
starting one year from the date of grant. Performance during the three-year period is based on Return on Invested Capital
(“ROIC”) relative to such peer group. Upon achievement of the three-year performance-based test, the corresponding PSUs
will vest on the fourth anniversary date of grant. The awards based on EBIT margin and ROIC are capped at 150% of target
achievement, with a floor of zero. PSUs are converted into shares of common stock upon payment following vesting.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth information for each of the Named Executive Officers with respect to the value of all unexercised
options, unvested restricted stock awards and unvested performance stock units as of February 27, 2016, the end of fiscal
2015.

Option Awards

Stock Awards

Name

Warren Eisenberg

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Option
Exercise
Price ($)

Option
Expiration
Date

Number of
Shares or
Units of
Stock
That Have
Not
Vested (#)

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(1) ($)

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested (#)

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested(1) ($)

81,367

84,603

29,326

25,440

21,682

14,961

7,952

— $32.8700

5/12/16

38,977(7) $1,909,483

27,157(13) $1,330,421

— $28.3300

5/11/17

— $45.2000

5/10/18

— $56.1850

5/10/19

— $68.9100

5/10/20

7,481(2)

$69.7750

5/10/21

15,903(2)

$62.3400

5/12/22

—

21,629(2)

$70.9550

5/11/23

Leonard Feinstein

29,326

25,440

21,682

14,961

7,952

— $45.2000

5/10/18

38,977(7) $1,909,483

27,157(13) $1,330,421

— $56.1850

5/10/19

— $68.9100

5/10/20

7,481(2)

$69.7750

5/10/21

15,903(2)

$62.3400

5/12/22

Steven H. Temares

374,288(19)

— $32.8700

5/12/16

189,370(8) $9,277,236

186,171(14) $9,120,517

—

21,629(2)

$70.9550

5/11/23

296,109

263,930

203,520

149,608

121,182

46,336

— $28.3300

5/11/17

— $45.2000

5/10/18

50,880(3)

$56.1850

5/10/19

99,739(3)

$68.9100

5/10/20

181,774(3)

$69.7750

5/10/21

185,346(3)

$62.3400

5/12/22

—

226,003(3)

$70.9550

5/11/23

Arthur Stark

8,206

8,933

32,101

24,422

15,611

10,772

5,725

— $32.8700

5/12/16

72,046(9) $3,529,534

29,823(15) $1,461,029

8,933(4)

$28.3300

5/11/17

— $45.2000

5/10/18

6,106(4)

$56.1850

5/10/19

10,408(4)

$68.9100

5/10/20

16,158(4)

$69.7750

5/10/21

22,901(4)

$62.3400

5/12/22

—

25,955(4)

$70.9550

5/11/23

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Option Awards

Stock Awards

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Option
Exercise
Price ($)

Option
Expiration
Date

Number of
Shares or
Units of
Stock
That Have
Not
Vested (#)

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(1) ($)

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested (#)

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested(1) ($)

8,933

32,101

24,422

15,611

10,772

5,725

—

2,862

—

41,029

35,731

32,101

24,422

15,611

10,772

5,725

8,933(5)

$28.3300

5/11/17

62,558(10) $3,064,716

30,880(16) $1,512,811

— $45.2000

5/10/18

6,106(5)

$56.1850

5/10/19

10,408(5)

$68.9100

5/10/20

16,158(5)

$69.7750

5/10/21

22,901(5)

$62.3400

5/12/22

32,443(5)

$70.9550

5/11/23

11,451(6)

$62.3400

5/12/22

17,407(11) $ 852,769

15,693(17) $ 768,800

17,303(6)

$70.9550

5/11/23

— $32.8700

5/12/16

58,342(12) $2,858,175

25,298(18) $1,239,349

8,933(4)

$28.3300

5/11/17

— $45.2000

5/10/18

6,106(4)

$56.1850

5/10/19

10,408(4)

$68.9100

5/10/20

16,158(4)

$69.7750

5/10/21

22,901(4)

$62.3400

5/12/22

Name

Eugene A. Castagna

Susan E. Lattmann

Matthew Fiorilli

—

25,955(4)

$70.9550

5/11/23

(1) Market value is based on the closing price of the Company’s common stock of $48.99 per share on February 26, 2016, the last trading

day in fiscal 2015.

(2) Messrs. Eisenberg and Feinstein’s unvested option awards are scheduled to vest as follows: (a) 7,481 on May 10, 2016, (b) 7,951 on

May 12, 2016 and 7,952 on May 12, 2017 and (c) 7,210 on each of May 11, 2016 and 2018 and 7,209 on May 11, 2017.

(3) Mr. Temares’ unvested option awards are scheduled to vest as follows: (a) 50,880 on May 10, 2016, (b) 49,869 on May 10, 2016 and
49,870 on May 10, 2017, (c) 60,591 on each of May 10, 2016 and 2017 and 60,592 on May 10, 2018, (d) 46,336 on each of May 12, 2016
and 2018 and 46,337 on each of May 12, 2017 and 2019 and (e) 45,200 on each of May 11, 2016 and 2018 and 45,201 on May 11, 2017,
2019 and 2020.

(4) Messrs. Stark and Fiorilli’s unvested option awards are scheduled to vest as follows: (a) 8,933 on May 11, 2016, (b) 6,106 on May 10,
2016, (c) 5,204 on each of May 10, 2016 and 2017, (d) 5,386 on each of May 10, 2016, 2017 and 2018, (e) 5,725 on each of May 12,
2016, 2017 and 2018 and 5,726 on May 12, 2019 and (f) 5,191 on each of May 11, 2016, 2017, 2018, 2019 and 2020.

(5) Mr. Castagna’s unvested option awards are scheduled to vest as follows: (a) 8,933 on May 11, 2016, (b) 6,106 on May 10, 2016, (c) 5,204
on each of May 10, 2016 and 2017, (d) 5,386 on each of May 10, 2016, 2017 and 2018, (e) 5,725 on each of May 12, 2016, 2017 and
2018 and 5,726 on May 12, 2019 and (f) 6,488 on each of May 11, 2016 and 2018 and 6,489 on each of May 11, 2017, 2019 and 2020.

(6) Ms. Lattmann’s unvested option awards are scheduled to vest as follows: (a) 2,863 on each of May 12, 2016, 2018 and 2019 and 2,862

on May 12, 2017 and (b) 3,460 on each of May 11, 2016 and 2018 and 3,461 on each of May 11, 2017, 2019 and 2020.

(7) Messrs. Eisenberg and Feinstein have an aggregate of 26,947 shares of unvested restricted stock and an aggregate of 12,030 shares
underlying unvested performance stock units (“PSUs”). Messrs. Eisenberg and Feinstein’s unvested restricted stock awards are
scheduled to vest as follows: (a) 5,340 on May 10, 2016, (b) 4,354 on each of May 10, 2016 and 2017 and (c) 4,299 on May 10, 2016 and
4,300 on each of May 10, 2017 and 2018. Messrs. Eisenberg and Feinstein’s unvested PSU awards that have satisfied the applicable
performance-based test are scheduled to vest as follows: 6,015 on each of May 12, 2016 and 2017.

(8) Mr. Temares has an aggregate of 111,472 shares of unvested restricted stock and an aggregate of 77,898 shares underlying unvested
PSUs. Mr. Temares’ unvested restricted stock awards are scheduled to vest as follows: (a) 18,600 on May 10, 2016, (b) 17,414 on each
of May 10, 2016 and 2017 and (c) 19,348 on each of May 10, 2016, 2017 and 2018. Mr. Temares’ unvested PSU awards that have
satisfied the applicable performance-based test are scheduled to vest as follows: 38,949 on each of May 12, 2016 and 2017.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

(9) Mr. Stark has an aggregate of 59,614 shares of unvested restricted stock and an aggregate of 12,432 shares underlying unvested PSUs.
Mr. Stark’s unvested restricted stock awards are scheduled to vest as follows: (a) 7,060 on May 11, 2016, (b) 5,531 on each of May 10,
2016 and 2017, (c) 4,449 on May 10, 2016 and 4,450 on each of May 10, 2017 and 2018, (d) 3,918 on each of May 10, 2016, 2017 and
2018 and 3,919 on May 10, 2019 and (e) 4,157 on each of May 10, 2016 and 2018 and 4,156 on May 10, 2017. Mr. Stark’s unvested PSU
awards that have satisfied the applicable performance-based test are scheduled to vest as follows: 6,216 on each of May 12, 2016 and
2017.

(10) Mr. Castagna has an aggregate of 50,126 shares of unvested restricted stock and an aggregate of 12,432 shares underlying unvested
PSUs. Mr. Castagna’s unvested restricted stock awards are scheduled to vest as follows: (a) 5,295 on May 11, 2016, (b) 4,425 on each of
May 10, 2016 and 2017, (c) 3,560 on each of May 10, 2016, 2017 and 2018, (d) 3,193 on each of May 10, 2016, 2018 and 2019 and
3,192 on May 10, 2017, (e) 3,440 on each of May 10, 2016, 2017 and 2018 and (f) 736 on February 26, 2017 and 737 on each of
February 26, 2018 and 2019. Mr. Castagna’s unvested PSU awards that have satisfied the applicable performance-based test are
scheduled to vest as follows: 6,216 on each of May 12, 2016 and 2017.

(11) Ms. Lattmann has an aggregate of 11,392 shares of unvested restricted stock and an aggregate of 6,015 shares underlying unvested
PSUs. Ms. Lattmann’s unvested restricted stock awards are scheduled to vest as follows: (a) 1,412 on May 11, 2016, (b) 885 on each of
May 10, 2016 and 2017, (c) 712 on each of May 10, 2016, 2017 and 2018, (d) 581 on each of May 10, 2016, 2018 and 2019 and 580 on
May 10, 2017, (e) 573 on each of May 10, 2016, 2017 and 2019 and 574 on each of May 10, 2018 and 2020 and (f) 294 on February 26,
2017 and 295 on each of February 26, 2018 and 2019. Ms. Lattmann’s unvested PSU awards that have satisfied the applicable
performance-based test are scheduled to vest as follows: 3,007 on May 12, 2016 and 3,008 on May 12, 2017.

(12) Mr. Fiorilli has an aggregate of 47,916 shares of unvested restricted stock and an aggregate of 10,426 shares underlying unvested PSUs.
Mr. Fiorilli’s unvested restricted stock awards are scheduled to vest as follows: (a) 5,295 on May 11, 2016, (b) 4,425 on each of May 10,
2016 and 2017, (c) 3,560 on each of May 10, 2016, 2017 and 2018, (d) 3,193 on each of May 10, 2016, 2018 and 2019 and 3,192 on
May 10, 2017 and (e) 3,440 on each of May 10, 2016, 2017 and 2018. Mr. Fiorilli’s unvested PSU awards that have satisfied the
applicable performance-based test are scheduled to vest as follows: 5,213 on each of May 12, 2016 and 2017.

(13) Messrs. Eisenberg and Feinstein’s unvested PSU awards are valued at target achievement and include 15,855 PSU awards, subject to a
one-year performance goal, and 11,302 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year
performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled
to vest as follows: 5,285 on each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the
Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 6,016 on
May 12, 2018 and 5,286 on May 11, 2019.

(14) Mr. Temares’ unvested PSU awards are valued at target achievement and include 110,416 PSU awards, subject to a one-year performance
goal, and 75,755 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the
Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 36,806 on
May 11, 2016 and 36,805 on each of May 11, 2017 and 2018. Upon attainment of the three-year performance goal and after the
Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 38,949 on
May 12, 2018 and 36,806 on May 11, 2019.

(15) Mr. Stark’s unvested PSU awards are valued at target achievement and include 17,705 PSU awards, subject to a one-year performance
goal, and 12,118 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the
Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 5,902 on
each of May 11, 2016 and 2018 and 5,901 on May 11, 2017. Upon attainment of the three-year performance goal and after the
Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 6,216 on
May 12, 2018 and 5,902 on May 11, 2019.

(16) Mr. Castagna’s unvested PSU awards are valued at target achievement and include 18,498 PSU awards, subject to a one-year
performance goal, and 12,382 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal
and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows:
6,166 on each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation
Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 6,216 on May 12, 2018 and
6,166 on May 11, 2019.

(17) Ms. Lattmann’s unvested PSU awards are valued at

to a one-year
performance goal, and 6,180 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal
and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows:
3,171 on each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation
Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 3,008 on May 12, 2018 and
3,172 on May 11, 2019.

target achievement and include 9,513 PSU awards, subject

(18) Mr. Fiorilli’s unvested PSU awards are valued at target achievement and include 15,063 PSU awards, subject to a one-year performance
goal, and 10,235 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the
Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 5,021 on
each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation Committee
certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 5,214 on May 12, 2018 and 5,021 on
May 11, 2019.

(19) Mr. Temares’ 374,288 exercisable option awards that expire on May 12, 2016 include 187,144 option awards held by him individually and

187,144 option awards held by a family limited partnership.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

OPTION EXERCISES AND STOCK VESTED

Option Exercises and Stock Awards Vested for Fiscal 2015

The following table includes certain information with respect to the exercise of options and vesting of stock awards by Named
Executive Officers during fiscal 2015.

Name

Warren Eisenberg(1)
Leonard Feinstein(1)(2)
Steven H. Temares(3)
Arthur Stark(4)
Eugene A. Castagna(5)(6)
Susan E. Lattmann(7)
Matthew Fiorilli(8)

Option Awards

Stock Awards

Number of Shares
Acquired on
Exercise
(#)

Value Realized
on Exercise
($)

Number of Shares
Acquired on
Vesting
(#)

Value Realized on
Vesting
($)

—
165,970
—
—
8,206
—
—

—
7,064,241
—
—
117,691
—
—

26,647
26,647
114,222
37,416
31,429
8,109
29,690

1,896,434
1,896,434
8,107,981
2,652,625
2,210,972
565,720
2,105,036

(1) Messrs. Eisenberg and Feinstein each acquired (i) 20,631 shares on May 10, 2015, upon the lapse of restrictions on previously granted

shares of restricted stock and (ii) 6,016 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met.

(2) Mr. Feinstein exercised stock options on April 13, 2015.

(3) Mr. Temares acquired (i) 75,273 shares on May 10, 2015, upon the lapse of restrictions on previously granted shares of restricted stock

and (ii) 38,949 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met.

(4) Mr. Stark acquired (i) 31,200 shares in total on May 10, 2015, May 11, 2015 and May 12, 2015 upon the lapse of restrictions on previously
granted shares of restricted stock and (ii) 6,216 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had
been met.

(5) Mr. Castagna exercised stock options on February 18, 2016.

(6) Mr. Castagna acquired (i) 25,213 shares in total on May 10, 2015, May 11, 2015, May 12, 2015 and February 26, 2016, upon the lapse of
restrictions on previously granted shares of restricted stock and (ii) 6,216 shares on May 12, 2015 upon the vesting of PSUs for which the
performance test had been met.

(7) Ms. Lattmann acquired (i) 5,101 shares in total on May 10, 2015, May 11, 2015, May 12, 2015 and February 26, 2016, upon the lapse of
restrictions on previously granted shares of restricted stock and (ii) 3,008 shares on May 12, 2015 upon the vesting of PSUs for which the
performance test had been met.

(8) Mr. Fiorilli acquired (i) 24,476 shares in total on May 10, 2015, May 11, 2015 and May 12, 2015 upon the lapse of restrictions on
previously granted shares of restricted stock and (ii) 5,214 shares on May 12, 2015 upon the vesting of PSUs for which the performance
test had been met.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

NONQUALIFIED DEFERRED COMPENSATION

Effective January 1, 2006, the Company adopted a nonqualified deferred compensation plan for the benefit of employees
defined by the Internal Revenue Service as highly compensated. A certain percentage of an employee’s contributions may be
matched by the Company, subject to certain plan limitations, as more fully described below. The following table provides
compensation information for the Company’s nonqualified deferred compensation plan for each of the Named Executive
Officers for fiscal 2015.

Nonqualified Deferred Compensation for Fiscal 2015

Name

Warren Eisenberg

Leonard Feinstein

Steven H. Temares

Arthur Stark

Eugene A. Castagna

Susan E. Lattmann

Matthew Fiorilli

Executive
Contributions
for Fiscal
2015(1)
($)

Company
Contributions
for Fiscal
2015(2)
($)

Aggregate
Earnings
(Losses) in
Fiscal 2015(3)
($)

Aggregate
Withdrawals/
Distributions
($)

569,756

591,009

42,000

10,192

180,538

36,731

33,038

7,950

1,126

5,450

1,813

3,465

2,100

(268,753)

(268,583)

(22,606)

—

432

(16,773)

(97,160)

(24,059)

(74,849)

—

Aggregate
Balance at
Fiscal
Year End
2015(4) ($)

4,042,012

4,068,995

387,874

33,973

1,482,627

281,773

838,681

(1) All amounts reported in this column were also reported in this Proxy Statement in the “Salary” column of the Summary Compensation

Table for the applicable named executive officer.

(2) All amounts reported in this column were also reported in this Proxy Statement in the “All Other Compensation” column of the Summary

Compensation Table for the applicable named executive officer.

(3) Amounts reported in this column represent returns on participant-selected investments.

(4) Amounts reported in this column that were also reported in previously filed Proxy Statements in the “Salary” or “All Other Compensation”
columns of the Summary Compensation Tables for Messrs. Eisenberg, Feinstein, Temares, Stark, Castagna and Fiorilli and Ms. Lattmann
were $2,586,278, $2,589,774, $251,682, $17,473, $961,838, $233,391 and $62,397, respectively.

Under the Company’s nonqualified deferred compensation plan, a participant’s regular earnings may be deferred at the
election of the participant, excluding incentive compensation, welfare benefits, fringe benefits, noncash remuneration, amounts
realized from the sale of stock acquired under a stock option or grant, and moving expenses.

When a participant elects to make a deferral under the plan, the Company credits the account of the participant with a
matching contribution equal to fifty percent of the deferral, offset dollar for dollar by any matching contribution that the
Company makes to the participant under the Company’s 401(k) plan. The payment of this matching contribution is made upon
the conclusion of the fiscal year. The maximum matching contribution to be made by the Company to a participant between the
Company’s nonqualified deferred compensation plan and the Company’s 401(k) plan cannot exceed the lesser of $7,950 or
three percent of a participant’s eligible compensation.

A participant is fully vested in amounts deferred under the nonqualified deferred compensation plan. A participant has a vested
right in matching contributions made by the Company under the nonqualified deferred compensation plan, depending on the
participant’s years of service with the Company: 20% at one to two years of service, 40% at two to three years of service, 60%
at three to four years of service, 80% at four to five years of service and 100% at five or more years of service. As each of the
Named Executive Officers has more than five years of service to the Company, they are each fully vested in the matching
contributions made by the Company under the plan.

Amounts in a participant’s account in the nonqualified deferred compensation plan are payable either in a lump sum or
substantially equal annual installments over a period of five or ten years, as elected by the participant. Such distributions may
be delayed to a period of six months following a participant’s termination of employment to comply with applicable law.

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Employment Agreements and Potential Payments Upon Termination or Change in Control

Employment Agreements

There were no amendments to any Named Executive Officer’s employment agreement since the Company’s 2015 Annual
Meeting of Shareholders.

Messrs. Eisenberg and Feinstein

Messrs. Eisenberg and Feinstein have employment agreements with the Company with terms currently expiring February 25,
2017, or as further extended by mutual agreement. These agreements provide for salaries at the rate of $800,000 per year
which may be increased from time to time by the Company. The current annual salary for each of Messrs. Eisenberg and
Feinstein is $1,100,000. Under these agreements, each of Messrs. Eisenberg and Feinstein may at any time elect senior
status (i.e., to be continued to be employed to provide non-line executive consultative services) at an annual salary of the
greater of $400,000 (increased for cost of living adjustments) or 50% of his average salary over the three-year period prior to
such election for a period (the “Senior Status Period”) of up to ten years from the date of such election. During the Senior
Status Period, the executive must provide services at a level of at least 25% of the average level of services the executive
performed for the prior 36 month period. During the Senior Status Period, the Company is required to provide to the executive
an office at a location specified by the executive, a secretary, car service and car allowance, all on a basis comparable to that
which is currently provided to the executive. The agreements contain non-competition, non-solicitation and confidentiality
provisions. These provisions generally apply through the term of employment, including the Senior Status Period and any
other time when salary payments are required to be made under the agreements. The agreements provide, in addition, for
some of Messrs. Eisenberg’s and Feinstein’s employee benefits to continue during their active employment, their Senior
Status Period and during the period of supplemental pension payments. For a complete description of payments due to
Messrs. Eisenberg and Feinstein upon termination of their employment with the Company, see “Potential Payments Upon
Termination or Change in Control” below.

Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann

Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann have employment agreements with the Company which
provide for severance pay and other benefits upon a termination of their employment. For a complete description of payments
due to Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann upon termination of their employment with the
Company, see “Potential Payments Upon Termination or Change in Control” below. These agreements also provide for non-
competition and non-solicitation of the Company’s employees during the term of employment and for one year thereafter (two
years in the case of Mr. Castagna and Ms. Lattmann), and confidentiality during the term of employment and surviving the end
of the term of employment.

Potential Payments Upon Termination or Change in Control

The foregoing employment agreements and certain of the plans in which the executives participate require the Company to
pay compensation to the executives if their employment terminates.

The estimated amount of compensation payable to such Named Executive Officers in each termination situation is listed in the
table below. The table is presented using an assumed termination date and an assumed change in control date of
February 27, 2016, the last day of fiscal 2015 and a price per share of common stock of $48.99 (the “Per Share Closing
Price”), the closing per share price as of February 26, 2016, the last business day of fiscal 2015. Descriptions of the
agreements under which such payments would be made follow.

Messrs. Eisenberg and Feinstein

Pursuant to their employment agreements, following the Senior Status Period, Messrs. Eisenberg and Feinstein are each
entitled to supplemental pension payments of $200,000 per year (as adjusted for a cost of living increase) until the death of the
survivor of him and his current spouse. The agreements provide, in addition, for some of Messrs. Eisenberg’s and Feinstein’s
employee benefits to continue during their Senior Status Period and during the period of supplemental pension payments or
following a termination other than due to “cause” (as defined below). Under the agreements, if Messrs. Eisenberg and
the executive elects to terminate his employment due to a “constructive
Feinstein are terminated without cause or if
termination” (as defined below), the executive shall be paid through the end of the term of employment and the Senior Status
Period.

The agreements were amended, effective March 1, 2014, to eliminate the executives’ ability to terminate employment for any
reason following a change in control and receive change in control severance payments and benefits. The agreements now

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

provide that, following a termination without cause or a constructive termination, in each case, occurring on a change in control
of the Company (as defined in the agreements) or within two years following a change in control, each of the executives shall
be paid an amount equal to three times salary then in effect, if the written notice is given before the Senior Status Period, or, if
during the Senior Status Period, one half of Senior Status Salary for the number of years (including fractions), if any, remaining
in the Senior Status Period, payable over such applicable period in accordance with normal payroll practices. The agreements
provide that in the event any amounts paid or provided to the executive in connection with a change in control are determined
to constitute “excess parachute payments” under Section 280G of the Code which would be subject to the excise tax imposed
by Section 4999 of the Code, the payments and benefits due to the executive will be reduced if the reduction would result in a
greater amount payable to the executive after taking into account the excise tax imposed by Section 4999 of the Code. The
agreements also provide that upon a change in control of the Company, the Company will fund a “rabbi trust” for each of the
executives to hold an amount equal to the value of the payments and certain benefits payable to each of the executives upon
his termination of employment with the Company. In the event of termination of employment, the executives are under no
obligation to seek other employment and there is no reduction in the amount payable to the executive on account of any
compensation earned from any subsequent employment. In the event of termination due to death of either of the executives,
the executive’s estate or beneficiary shall be entitled to his salary for a period of one year following his death and payment of
expenses incurred by the executive and not yet reimbursed at the time of death. In the event of termination due to the inability
to substantially perform his duties and responsibilities for a period of 180 consecutive days, the executive shall be entitled to
his salary for a period of one year following the date of termination (less any amounts received under the Company’s benefit
plans as a result of such disability). To the extent that any payments under the employment agreements due following the
termination of Messrs. Eisenberg and Feinstein are considered to be deferred compensation under Section 409A, such
amounts will commence to be paid on the earlier of the six-month anniversary of termination of employment or the executive’s
death.

Either of the executives may be terminated for cause upon written notice of the Company’s intention to terminate his
employment for cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the
grounds on which the proposed termination for cause is based. The executives shall have ten days after such notice is given
to cure such conduct, to the extent a cure is possible. “Cause” generally means (i) the executive is convicted of a felony
involving moral turpitude or (ii) the executive is guilty of willful gross neglect or willful gross misconduct in carrying out his
duties under the agreement, resulting, in either case, in material economic harm to the Company, unless the executive
believed in good faith that such act or non act was in the best interests of the Company. “Constructive termination” generally
means the executive’s election to terminate employment due to (i) a reduction in the executive’s salary or a material reduction
in the executive’s benefits or perquisites (other than as part of any across-the-board action applicable to all executive officers
of the Company), (ii) removal from, or failure to reelect the executive to, the position of co-chairman or chairman or as a
director, (iii) a material diminution in the executive’s duties or the assignment of duties materially inconsistent with the
executive’s duties or that materially impairs the executive’s ability to function as the co-chairman or chairman or (iv) the
Company’s principal office or the executive’s own office location provided by the Company is relocated and, in any case, not
timely cured by the Company. In addition, pursuant to their respective restricted stock and performance stock unit agreements,
shares of restricted stock and performance stock units granted to Messrs. Eisenberg and Feinstein will vest upon death or
disability, or upon a termination of employment without cause or constructive termination, subject to attainment of any
applicable performance goals.

In substitution for a split dollar insurance benefit previously provided to such executives, in fiscal 2003, the Company entered
into deferred compensation agreements with Messrs. Eisenberg and Feinstein under which the Company is obligated to pay
Messrs. Eisenberg and Feinstein $2,125,000 and $2,080,000, respectively, in each case payable only on the last day of the
first full fiscal year of the Company in which the total compensation of Mr. Eisenberg or Feinstein, as applicable, will not result
in the loss of a deduction for such payment pursuant to applicable federal income tax law.

Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann

The agreements with Messrs. Temares, Stark and Fiorilli provide for severance pay equal to three years’ salary, and the
agreements with Mr. Castagna and Ms. Lattmann provide for severance pay equal to one year’s salary, if the Company
terminates their employment other than for “cause” (including by reason of death or disability). Additionally, the agreements
with Messrs. Temares, Stark, Castagna and Fiorilli provide for one year’s severance pay if the executive voluntarily leaves the
employ of the Company. Severance pay will be paid in accordance with normal payroll; however, other than for Ms. Lattmann,
any amount due prior to the six months after termination of employment will be paid in a lump sum on the date following the six
month anniversary of termination of employment. Any severance payable to these executives will be reduced by any monetary
compensation earned by them as a result of their employment by another employer or otherwise. “Cause” is defined in the
agreements as when the executive has: (i) acted in bad faith or with dishonesty; (ii) willfully failed to follow reasonable and
lawful directions of the Company’s Chief Executive Officer or the Board of Directors, as applicable; (iii) performed his or her

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

duties with gross negligence; or (iv) been convicted of a felony. Upon a termination of employment by the Company for any
reason other than for cause, all unvested options will vest and become exercisable. In addition, pursuant to their respective
restricted stock and performance stock unit agreements, or, in the case of Ms. Lattmann, her employment agreement, shares
of restricted stock and performance stock units granted will vest upon death or disability, or upon a termination of employment
without cause subject to attainment of any applicable performance goals. These agreements also provide for non-competition
and non-solicitation during the term of employment and for one year thereafter (two years in the case of Mr. Castagna and
Ms. Lattmann), and confidentiality during the term of employment and surviving the end of the term of employment.

Mr. Temares has a supplemental executive retirement benefit agreement and a related escrow agreement, under which he is
entitled to receive a supplemental retirement benefit on his retirement or other separation from service from the Company. The
retirement benefit will be payable in the form of a lump sum equal to the present value of an annual amount equal to 50% of
Mr. Temares’ annual base salary on the date of termination of employment if such annual amount were paid for a period of 10
years in accordance with the Company’s normal payroll practices. Except in the case of Mr. Temares’ death (in which case the
supplemental retirement benefit will be immediately payable) and the agreement as to escrow, the supplemental retirement
benefit will be paid on the first business day following the six month anniversary of Mr. Temares’ termination and will be
includible in his income for tax purposes at such time.

In the event Mr. Temares elects to retire or voluntarily terminates his employment with the Company, a portion of the
supplemental retirement benefit, net of withholdings, will be deposited into an escrow account governed by a separate
agreement. No portion of the supplemental retirement benefit will be deposited into the escrow account, however, in the event
Mr. Temares dies, is terminated by the Company without cause (as such term is defined in his employment agreement),
terminates due to disability, or terminates employment within 12 months following a change of control.
In the event
Mr. Temares elects to retire or voluntarily terminates his employment with the Company, 1/10 of the lump sum supplemental
retirement benefit distribution (net of applicable withholding taxes) will be distributed to Mr. Temares; and 9/10 of the lump sum
supplemental retirement benefit distribution (net of applicable withholding taxes) will be deposited into an escrow account to be
distributed in nine equal annual
installments on each of the following nine anniversaries of the deposit date, subject to
acceleration in the case of Mr. Temares’ death or a change of control of the Company. The entire escrow account will be
distributed to Mr. Temares’ beneficiary no later than 30 days following his death or to Mr. Temares no later than 30 days
following a change of control of the Company. If Mr. Temares does not comply with the restrictive covenant not to compete
with the Company (as described in his employment agreement, for the term of the escrow agreement) prior to the payment of
the entire escrow amount, the Company will have the right to direct the escrow agent to pay the remaining escrow amount to
the Company no later than 15 days after notice to the escrow agent and Mr. Temares will forfeit any and all rights to such
remaining escrow amount. Mr. Temares has agreed that
in escrow is forfeited, he will use
commercially reasonable efforts to obtain a refund of applicable taxes and remit such refund to the Company and the
Company has agreed to reimburse Mr. Temares, or to pay on his behalf, reasonable legal fees and expenses incurred in
connection with such a refund request. Although the amended Supplemental Executive Retirement Plan (“SERP”) provides
that Mr. Temares will be protected from any impact resulting from the possible application of Section 409A to the terms of the
SERP due to the complexities surrounding Section 409A, the Company believes that no such payment will be required.

in the event any amount

Table and related footnotes follow:

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

Cash
Severance

Senior
Status
Salary
Continuation(3)

Option
Acceleration(4)

Restricted
Stock
Acceleration(4)

PSU
Acceleration(5)

Benefit
Continuation(6)

Nonqualified
Deferred
Compensation
Balance(7)

Supplemental
Pension(8)

Split-Dollar
Life
Insurance
Substitute
Payment(9)

Total

$ 1,093,989 $5,740,637

— $1,320,134

$1,366,086

$1,293,823

$4,042,012 $

439,267 $2,125,000 $17,420,948

— $

—

$ 3,300,000 $

— $

— $1,320,134

$1,366,086

$1,293,823

$4,042,012 $ 2,065,419 $2,125,000 $15,512,474

$ 1,093,989 $5,740,637

— $1,320,134

$1,366,086

$1,777,948

$4,068,995 $

972,740 $2,080,000 $18,420,529

— $

—

$ 3,300,000 $

— $

— $1,320,134

$1,366,086

$1,777,948

$4,068,995 $ 2,822,658 $2,080,000 $16,735,821

$11,902,500 $

— $

— $5,461,013

$9,225,503

— $ 387,874 $19,055,452 $

— $46,032,342

Warren Eisenberg(10)
Termination Without

Cause/Constructive
Termination(1)(2)

Change in Control
(No Termination)

Change in Control +
Termination(11)

Leonard Feinstein(10)
Termination Without

Cause/Constructive
Termination(1)(2)

Change in Control
(No Termination)

Change in Control +
Termination(11)

Steven H. Temares(12)
Termination Without

Cause(11)

Voluntary

Termination(13)

$ 3,967,500 $

— $

— $ 387,874 $19,055,452 $

— $23,410,826

— $

—

$11,902,500 $

— $

— $5,461,013

$9,225,503

— $ 387,874 $19,055,452 $

— $46,032,342

Change in Control
(No Termination)

Change in Control +
Termination(11)

Arthur Stark(14)
Termination Without

Cause(11)

Voluntary

$ 5,370,000 $

— $184,556

$2,920,490

$1,476,412

— $

33,973 $

Termination(13)

$ 1,790,000 $

— $

33,973 $

Change in Control
(No Termination)

Change in Control +
Termination(11)

Eugene A.
Castagna(14)
Termination Without

Cause(13)

Voluntary

— $

$ 5,370,000 $

— $184,556

$2,920,490

$1,476,412

— $

33,973 $

$ 1,840,000 $

— $184,556

$2,455,673

$1,515,261

— $1,482,627 $

Termination(13)

$ 1,840,000 $

— $

— $1,482,627 $

Change in Control
(No Termination)

Change in Control +
Termination(13)

Susan E. Lattmann(14)
Termination Without

Cause(13)

Change in Control
(No Termination)

Change in Control +
Termination(13)

Matthew Fiorilli(14)
Termination Without

Cause(11)

Voluntary

— $

$ 1,840,000 $

— $184,556

$2,455,673

$1,515,261

— $1,482,627 $

900,000 $

— $

— $ 558,094

$ 760,717

— $ 281,773 $

— $

900,000 $

— $

— $ 558,094

$ 760,717

— $ 281,773 $

$ 5,025,000 $

— $184,556

$2,347,405

$1,248,706

— $ 838,681 $

Termination(13)

$ 1,675,000 $

— $

— $ 838,681 $

Change in Control
(No Termination)

Change in Control +
Termination(11)

— $

$ 5,025,000 $

— $184,556

$2,347,405

$1,248,706

— $ 838,681 $

— $

— $ 9,985,431

— $ 1,823,973

— $

—

— $ 9,985,431

— $ 7,478,117

— $ 3,322,627

— $

—

— $ 7,478,117

— $ 2,500,584

— $

—

— $ 2,500,584

— $ 9,644,348

— $ 2,513,681

— $

—

— $ 9,644,348

PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION

(1) Cash severance represents current salary continuation through February 25, 2017.

(2)

In the event of a termination of employment due to death or disability, each of Messrs. Eisenberg and Feinstein (or their respective estates) will receive the
same payments as if there was a “Termination Without Cause/Constructive Termination,” except that neither Mr. Eisenberg nor Mr. Feinstein (nor their
respective estates) will receive either “Senior Status Salary Continuation” or “Benefit Continuation” payments.

(3) Represents $400,000, adjusted for the cost of living increase between June 30, 2000 and June 30, 2015 for the CPI-U for NY, Northern NJ and LI, for 10

years during the Senior Status Period.

(4) Represents the value of unvested outstanding stock options and restricted stock that would accelerate and vest on a termination occurring on February 27,
2016. In the case of stock options, the value is calculated by multiplying the number of shares underlying each accelerated unvested stock option by the
difference between the Per Share Closing Price and the per share exercise price. In the case of restricted stock, the value is calculated by multiplying the
number of shares of restricted stock that accelerate and vest by the Per Share Closing Price.

(5) Represents the value of unvested outstanding performance stock unit (PSU) awards that would accelerate and vest on a termination without cause (and, in
the cases of Messrs. Eisenberg and Feinstein, upon a termination without cause or constructive termination), subject to attainment of any applicable
performance goals and after the Compensation Committee certifies achievement of the applicable performance test. These values represent acceleration of
the portion of (i) the 2014 PSU awards for which the one-year performance test has been met and (ii) the 2015 PSU awards subject to the one-year
performance test at target, which result was reasonably estimable on February 27, 2016 based on assumptions regarding the performance of the peer
companies. The portion of 2014 and 2015 PSU awards subject to a three-year performance test, based on relative performance against the peer companies,
was substantially uncertain on February 27, 2016 and is not included. For a more complete discussion of the metrics and method of calculating the applicable
performance metrics for PSU awards, please see the discussion of Performance Stock Units in the Equity Compensation section of the Compensation
Discussion & Analysis above.

(6) Represents the estimated present value of continued health and welfare benefits and other perquisites for the life of the executive and his spouse.

(7) Reflects executives’ vested account balances as of February 27, 2016.

(8) For Messrs. Eisenberg and Feinstein, represents the estimated present value of lifetime supplemental pension payments, commencing six months following
the conclusion of the Senior Status Period. For Mr. Temares, present value will be paid out six months following (1) termination without cause or (2) any
termination (including voluntary termination) following a change in control.

(9) This amount will be paid on the last day of the following fiscal year.

(10) The employment agreements of Messrs. Eisenberg and Feinstein provide that in the event any amounts paid or provided to the executive in connection with a
change in control are determined to constitute “excess parachute payments” under Section 280G of the Code which would be subject to the excise tax
imposed by Section 4999 of the Code, the payments and benefits due to the executive will be reduced if the reduction would result in a greater amount
payable to the executive after taking into account the excise tax imposed by Section 4999 of the Code. However, no reduction of payments and benefits are
disclosed above since neither of these executives would have been subject to excise taxes as a result of payments subject to Section 280G of the Code that
would have been made in connection with a change in control occurring on February 27, 2016.

(11) Cash severance represents three times current salary payable over a period of three years following a termination without cause; or, in the cases of Messrs.
Eisenberg and Feinstein, following a termination without cause or constructive termination occurring on a change in control or within two years following a
change in control.

(12) In the event of a termination of employment due to death or disability, Mr. Temares (or his estate) will receive the same payments as if there was a

“Termination Without Cause.”

(13) Cash severance represents one times current salary payable over a period of one year.

(14) In the event of a termination of employment due to death or disability, the Named Executive Officer (or the executive’s estate) will receive the same payments

as if there were a “Termination Without Cause.”

PROPOSAL 4—SHAREHOLDER PROPOSAL REGARDING PROXY ACCESS BYLAWS

We have been notified that the following shareholder proposal will be presented for consideration at the Annual Meeting.
Promptly upon receipt of an oral or written request we will provide you with the name and address of, and number of shares
held by, each proponent.

RESOLVED: Shareholders of Bed Bath & Beyond Inc. (the “Company”) ask the board of directors (“the Board”) to take the
steps necessary to adopt a “proxy access” bylaw. Such a bylaw shall require the Company to include in proxy materials
prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined
herein) of any person nominated for election to the board by a shareholder or group (the “Nominator”) that meets the criteria
established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card.

The number of shareholder-nominated candidates appearing in proxy materials shall not exceed one quarter of the directors
then serving. This bylaw, which shall supplement existing rights under Company bylaws, should provide that a Nominator
must:

(a) have beneficially owned 3% or more of the Company’s outstanding common stock continuously for at least three

years before submitting the nomination;

(b) give the Company, within the time period identified in its bylaws, written notice of the information required by the
bylaws and any Securities and Exchange Commission rules about (i) the nominee, including consent to being named
in the proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required
shares (the “Disclosure”); and

(c) certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s
communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all
applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (iii) to the
best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or
influence control at the Company.

The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of each nominee (the
“Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was
timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given
to multiple nominations exceeding the one-quarter limit.

SUPPORTING STATEMENT

that will make directors more accountable and enhance
We believe proxy access is a fundamental shareholder right
shareholder value. A 2014 CFA Institute study concluded that proxy access would “benefit both the markets and corporate
boardrooms, with little cost or disruption” and could raise overall US market capitalization by up to $140.3 billion if adopted
market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1)

The proposed terms are similar to those in vacated SEC Rule 14a-11 (https://www.sec.gov/rules/final/2010/33-9136.pdf). The
SEC, following extensive analysis and input from companies and investors, determined that those terms struck the proper
balance of providing shareholders with a viable proxy access right while containing appropriate safeguards.

The proposed terms enjoy strong support. Through October 2015, votes on more than 100 similar proposals averaged 55%
and at least 60 companies enacted bylaws with similar terms.

We urge shareholders to vote FOR this proposal.

The Board of Directors Recommends a Vote Against Proposal 4

The Board of Directors recognizes that proxy access is an important development in corporate governance. Our directors, and
particularly our Nominating and Corporate Governance Committee, have discussed and will continue to discuss proxy access
developments with shareholders as part of the Company’s shareholder engagement program.

Based on discussions with our shareholders, we know that not all shareholders support proxy access. Among those who do
support proxy access, there are differing views of the features that are appropriate for a proxy access bylaw. Additionally,
based on our review of proxy access bylaws that have been adopted by other companies, there is an array of approaches on
structure and fundamental terms. For example, there is not a market consensus on the percentage of shareholder-nominated
candidates that can appear in the Company’s proxy materials, which we believe is a fundamental term. The proposal requires

PROPOSAL 4—SHAREHOLDER PROPOSAL REGARDING PROXY ACCESS BYLAWS

this percentage to be 25%, which is inconsistent with market trends of 20%. Accordingly, we recognize that proxy access
standards are still evolving and that there is not yet a set of terms that is widely accepted by all stakeholders.

While proxy access is a trending issue in corporate governance, only a minority of companies have adopted it to date. The
Board believes that any decision to implement proxy access should be made in a careful and deliberative manner. For
example, the Board wishes to further review continuing marketplace developments and carefully consider the intended and
potentially unintended consequences of proxy access bylaws.

The Board is committed to further engagement with shareholders on proxy access and further evaluation of the issue in the
coming year. Moreover, the Board intends to substantively address proxy access in advance of the Company’s 2017 annual
meeting. We believe that, by that time, there is more likely to be market consensus on the fundamental terms for a proxy
access bylaw.

Prior to any adoption of proxy access bylaws, our shareholders continue to have different methods for participating in the
director nomination process, including:

(cid:129) Submitting for consideration the names of potential directors directly to the Nominating and Corporate Governance

Committee; and

(cid:129)

In accordance with SEC rules, state law and our bylaws, nominating and soliciting proxies for their own director
candidates at shareholder meetings.

Additionally, we have procedures to ensure that our directors are accountable for continually representing the interests of our
shareholders. These procedures include (i) a non-classified Board where each director must be re-elected annually by
receiving a majority of votes cast; (ii) an annual evaluation of the Board and each committee by our directors; (iii) active
shareholder outreach by the Board; and (iv) an established process for any shareholder to communicate with the Board,
including with respect to potential board members.

We believe that the foregoing procedures provide our shareholders with a sufficient voice in the director nomination and
election process, even without proxy access bylaws. Given these existing procedures and pending our shareholder
engagement and monitoring of proxy access developments (including a more fulsome evaluation of the appropriate terms that
proxy access bylaws should contain) over the next year, the Board believes that this proposal is not currently in the best
interest of our shareholders and not the proper mechanism for considering proxy access.

FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THIS PROPOSAL.

PROPOSAL 5—SHAREHOLDER PROPOSAL REGARDING AN EQUITY RETENTION
POLICY FOR SENIOR EXECUTIVES

RESOLVED: Shareholders of Bed Bath & Beyond Inc. (the “Company”) urge the Compensation Committee of the Board of
Directors (the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired
through equity compensation programs until reaching normal retirement age or terminating employment with the Company.
For the purpose of this policy, normal retirement age shall be defined by the Company’s qualified retirement plan that has the
largest number of plan participants. The shareholders recommend that the Committee adopt a share retention percentage
requirement of at least 50 percent of net after-tax shares. The policy should prohibit hedging transactions for shares subject to
this policy which are not sales but reduce the risk of loss to the executive. This policy shall supplement any other share
ownership requirements that have been established for senior executives, and should be implemented so as not to violate the
Company’s existing contractual obligations or the terms of any compensation or benefit plan currently in effect.

SUPPORTING STATEMENT

Equity-based compensation is an important component of senior executive compensation at our Company. While we
encourage the use of equity-based compensation for senior executives, we are concerned that our Company’s senior
executives are generally free to sell shares received from our Company’s equity compensation plans. In our opinion, the
Company’s current share ownership guidelines for its senior executives do not go far enough to ensure that the Company’s
equity compensation plans continue to build stock ownership by senior executives over the long-term.

As detailed in last year’s proxy statement, our Company’s share ownership guidelines required the CEO Steven Temares to
hold stock with a value of at least $6,000,000 or approximately 111,982 shares according to the current trading price. For
comparison, in 2014 Mr. Temares’ targeted amount of equity awards was 155,796 shares and 231,682 option awards. In other
words the supposed “long-term” share ownership requirement could be met with less than half of one year’s worth of stock and
option awards. In addition Mr. Temares already owns 2,018,624 shares or roughly 18 times the requirement.

We believe that requiring senior executives to only hold shares equal to a set target loses effectiveness over time. After
satisfying these target holding requirements, senior executives are free to sell all the additional shares they receive in equity
compensation.

Our proposal seeks to better link executive compensation with long-term performance by requiring a meaningful share
retention ratio for shares received by senior executives from the Company’s equity compensation plans. A 2009 report by the
Conference Board Task Force on Executive Compensation observed that such hold-through-retirement requirements give
executives “an ever growing incentive to focus on long-term stock price performance as the equity subject to the policy
increases” (available at http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf).

We urge shareholders to vote FOR this proposal.

The Board of Directors Recommends a Vote Against Proposal 5

The Board of Directors believes that equity interest by our senior executives is an important part of our executive
compensation program and, along with other aspects of our compensation program, aligns the interests of our shareholders
and our executives. The Company’s active engagement with shareholders is, and will continue to be, a more productive
means of ensuring an appropriate level of equity interest rather than the proposal’s requirements of an inflexible mandatory
policy.

The Board recommends a vote against proposal 5 because:

(cid:129) The proposal’s policy is unnecessary because our Named Executive Officers currently hold a substantial amount of, and

have a substantial economic interest in, our common stock.

(cid:129) Our current executive compensation program and policies already align our senior executives’ interests with the long-

term interests of shareholders.

(cid:129) The proposed policy could be harmful in several respects and limit our ability to attract and retain qualified candidates for

senior executive positions.

PROPOSAL 5—SHAREHOLDER PROPOSAL REGARDING AN EQUITY RETENTION POLICY FOR SENIOR EXECUTIVES

Our Named Executive Officers currently hold a substantial amount of, and have a substantial economic
interest in, our common stock.

Our Named Executive Officers have a strong interest in our long-term performance due to their substantial holdings and
economic interest in our common stock, which is reflected in the table below. Other than our Chief Executive Officer, who is
already subject to, and complies with, a robust stock ownership policy, our Named Executive Officers have achieved this high
level of ownership despite not being bound to a formal policy for stock ownership. Additionally, our Chief Executive Officer has
greatly exceeded his required ownership amount of $6,000,000. This substantial ownership, and related economic interest, by
our Named Executive Officers motivates them to deliver long-term results, while at the same time discourages them from
unreasonable risk-taking.

Named Executive Officer

Warren Eisenberg

Leonard Feinstein

Steven H. Temares

Arthur Stark

Eugene A. Castagna

Susan E. Lattmann(3)

Matthew Fiorilli

Shares/Shares
Equivalent(1)

Share/Share
Equivalent Value(2)

1,108,420

968,521

1,550,598

189,165

177,869

32,593

193,474

$48,841,554

$42,509,725

$37,558,815

$ 7,110,643

$ 6,346,314

$ 1,475,159

$ 6,293,409

(1)

Includes (i) shares of common stock held directly or through an estate planning vehicle for the benefit of the executive (but not solely for
the benefit of his or her family members); (ii) restricted stock where any applicable performance goals have been achieved;
(iii) performance stock units whose performance goals have been achieved and (iv) shares of common stock underlying in-the-money,
vested stock options (the value of such option shares are calculated as described in footnote 2 below). Share ownership is as of May 6,
2016, the record date.

(2) Calculated based on the closing price of $45.26 per share on May 6, 2016. For shares of common stock underlying in-the-money, vested

stock options, value reflects the difference between the aforementioned closing price and the exercise price.

(3) Ms. Lattmann became an executive officer on February 26, 2014. These numbers reflect her shorter tenure as a Named Executive Officer.

Our current executive compensation program and policies already align our senior executives’ interests
with the long-term interests of shareholders.

The following aspects of our executive compensation program align the interests of our senior executives with that of our
shareholders and render the proposed policy unnecessary for the achievement of that goal.

(cid:129) Focus on long-term equity incentive awards. We do not employ short-term cash incentives or pay cash bonuses, and
consequently, a large proportion of each executive’s annual compensation has been in the form of long-term equity
incentive awards, in the form of stock options or performance stock units. As a result, executives have a rolling, long-
term incentive linked to the value of our common stock.

(cid:129) Anti-hedging policy. We have a policy against hedging transactions with respect to our Company’s securities, and this
policy further aligns the interests of our senior executives with that of our shareholders by prohibiting our executives from
engaging in transactions designed to hedge or offset decreases in the market value of our common stock that they hold.

The proposed policy could be harmful in several respects and limit our ability to attract and retain
qualified candidates for senior executive positions.

While the Board believes it is important that our executives have a meaningful equity stake in our Company, the Board also
believes that executives should not be restricted from responsibly managing their personal financial affairs and diversifying
their investment portfolios over the course of their careers. This is already made more challenging for executives by an internal
policy that restricts their trading in our common stock to certain limited window periods during the year and, even then, only
when they are not in possession of material, nonpublic information.

The policy could also put us at a competitive disadvantage in retaining our current, and attracting new, senior executives,
given that the majority of large public companies, including major retailers, do not require senior executives to retain such a
significant share interest for such an extended period of time. This policy could have a particular negative effect on younger
executives, who could be potentially faced with decades of a retention obligation not imposed by our competitors.

FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST THIS PROPOSAL.

PROPOSAL 6—SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER APPROVAL
OF CERTAIN FUTURE SEVERANCE AGREEMENTS

that

the shareholders of Bed Bath & Beyond Inc. (“the Company”) urge the Board of Directors to seek
RESOLVED:
shareholder approval of future severance agreements with senior executives that provide benefits in an amount exceeding
2.99 times the sum of the executives’ base salary plus bonus.

“Future severance agreements”
provisions and agreements renewing, modifying or extending existing agreements.

include employment agreements containing severance provisions, special

retirement

“Benefits” include lump-sum cash payments (including payments in lieu of medical and other benefits); the payment of any
“gross-up” tax liability; the estimated present value of special retirement provisions; any stock or option awards that are
awarded under any severance agreement; any prior stock or option awards as to which the executive’s access is accelerated
under the severance agreement; fringe benefits; and consulting fees (including reimbursable expenses) to be paid to the
executive.

SUPPORTING STATEMENT

We believe that requiring shareholder ratification of “golden parachute” severance packages with a total cost exceeding 2.99
times an executive’s base salary plus bonus will provide valuable feedback, encourage restraint, and strengthen the hand of
the Board’s compensation committee.

According to the Summary of Potential Payments Upon Termination or Change in Control on page 36 of the Company’s 2015
Proxy Statement, if there is a change of control and the chief executive officer is terminated, he will receive three times the
sum of his base salary. According to the Company’s 2015 Proxy Statement, if there had been a change of control and
termination on February 28, 2015, the CEO would have received a cash severance of $11.9 million upon termination, in
addition to payments for equity awards and other benefits. In the CEO’s case, he would receive a total of $62.6 million in a
change in control and termination scenario.

If you agree with us that the Company should seek shareholder ratification of severance packages with a total cost exceeding
2.99 times an executive’s base salary plus bonus, then please VOTE FOR this proposal.

The Board of Directors Recommends a Vote Against Proposal 6

The Compensation Committee works to structure the Company’s compensation program to attract, incentivize and retain
executives to carry out our business strategy. The Compensation Committee requires flexibility in a dynamic environment
where competitive compensation structures and applicable laws are subject to change. The Company’s active engagement
with shareholders is, and will continue to be, a more productive means of ensuring accountability in designing executive
compensation arrangements than the proposal’s requirements of
for each severance
agreement.

requiring shareholder approval

The Board recommends a vote against proposal 6 because:

(cid:129) The proposed policy could adversely impact the Company’s ability to secure high-performing executives.

(cid:129) The Compensation Committee has evolved in its approach to severance arrangements for executives, without the need

for a rigid policy.

(cid:129) Accelerated vesting of equity awards is appropriate given our compensation practices, which do not include cash

bonuses for executives.

(cid:129) We seek and obtain shareholder feedback on compensation issues.

The proposed policy would be unduly restrictive and could adversely impact the Company’s ability to secure high-
performing executive talent in the future.

The structure of compensation and retention programs in the marketplace for talent is constantly changing. Tax policy and
legal requirements evolve over time as well. The severance aspects of an executive compensation package will often be

PROPOSAL 6—SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER APPROVAL OF CERTAIN FUTURE SEVERANCE AGREEMENTS

structured and negotiated on an individual by individual basis taking into account these market trends, tax policies and legal
requirements. Subjecting the severance element to shareholder approval would interfere with these individual negotiations and
could jeopardize the Company’s ability to design and extend an attractive and competitive employment offer to future
executives.

(cid:129) Prior shareholder approval through special meeting. Calling and holding a special meeting is an expensive and time-
consuming process, and top candidates are unlikely to be willing to wait for such approval and may instead seek
employment elsewhere, including at one of the Company’s competitors that does not have similar restrictions on
executive severance.

(cid:129) Post-signing shareholder ratification. Even if shareholder ratification, after the fact, is an acceptable method of obtaining
shareholder approval under the proposal, the potential for shareholders to reject the severance provisions—potentially
many months after the compensation package is finalized—would likely cause top candidates to view the agreed-upon
severance provisions as too uncertain to merit serious consideration.

Given these risks,
the Company believes that shareholder interests are best protected by providing flexibility to the
Compensation Committee, which consists solely of independent directors and oversees all matters regarding senior executive
compensation, on how to design severance packages for potential executive candidates.

The Compensation Committee has evolved in its approach to severance arrangements for executives, without the
need for a rigid policy.

Our severance agreements with our Chief Operating Officer and, more recently, our Chief Financial Officer provide for a cash
severance payment upon a termination without cause of only one times each officer’s salary (compared to three times salary in
older agreements with other Named Executive Officers). Additionally, in connection with a change in control transaction, the
agreements with our Named Executive Officers contain a “double trigger” arrangement whereby the executives receive equity
acceleration only upon a qualifying termination following the change in control transaction (which in the case of our Co-
Chairmen includes “constructive termination” as described under Employment Agreements and Potential Payments Upon
Termination or Change in Control, above).

Accelerated vesting of equity awards is appropriate given our compensation practices, which do not include cash
bonuses for executives.

While our senior executives continue to be eligible to receive accelerated vesting of equity awards in certain termination
scenarios, we believe that this benefit is appropriate given our compensation practice. Because our compensation packages
for executives do not include cash bonuses, the proposed policy relying on that element as a basis of severance pay would be
severely limiting.

(cid:129) We do not award cash bonuses and instead provide the largest portion of compensation to our senior executives in the
form of equity awards (including performance-based awards). We believe that this structure properly incentivizes our
executives to achieve long-term value for, and aligns their interests with, our shareholders.

(cid:129)

In light of the fundamental role equity plays in our compensation structure, the Compensation Committee believes that it
is appropriate that certain termination scenarios result in acceleration of equity awards at an amount greater than the
proposal’s specified cap. For example, our existing arrangements providing for accelerated vesting of equity awards
allow our senior executives to remain focused on protecting shareholders’ interests in the event of a potential change in
control transaction and not be distracted by concerns about losing a substantial portion of their unvested equity
compensation.

The Compensation Committee seeks and obtains extensive and detailed shareholder feedback through its outreach
program.

As described elsewhere in this proxy statement, the Company reached out to shareholders representing approximately 68% of
the Company’s outstanding shares over the course of the last year, and members of the Compensation Committee have met
or spoken with shareholders representing approximately 50% of the Company’s shares. Similar engagement has occurred in
prior years. Such shareholder outreach is the most effective method of providing shareholders with a voice in the Company’s
executive compensation program. Requiring additional shareholder approval of a specific element of a compensation package
is unlikely to provide shareholders with more effective input and carries the risk of jeopardizing the Company’s ability to attract
and retain qualified candidates.

FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST THIS PROPOSAL.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of
May 6, 2016 by (i) each person or group of affiliated persons known by us to beneficially own more than 5% of our common
stock; (ii) our Named Executive Officers; (iii) each of our directors and nominees for director; and (iv) all of our directors and
executive officers as a group.

The following table gives effect to the shares of common stock issuable within 60 days of May 6, 2016 upon the exercise of all
options and other rights beneficially owned by the indicated stockholders on that date. Beneficial ownership is determined in
accordance with Rule 13d-3 promulgated under Section 13 of the Exchange Act, and includes voting and investment power
with respect to shares. Percentage of beneficial ownership is based on 154,366,662 shares of our common stock outstanding
at May 6, 2016. Except as otherwise noted below, each person or entity named in the following table has sole voting and
investment power with respect to all shares of our common stock that he, she or it beneficially owns.

Unless otherwise indicated, the address of each beneficial owner listed below is c/o Bed Bath & Beyond Inc., 650 Liberty
Avenue, Union, New Jersey 07083.

Name

Position

The Vanguard Group

BlackRock, Inc.

FMR LLC

Brown Brothers Harriman & Co.

State Street Corporation

Warren Eisenberg

Leonard Feinstein

Steven H. Temares

Arthur Stark

Eugene A. Castagna

Susan E. Lattmann

Matthew Fiorilli

Dean S. Adler

Stanley F. Barshay

Geraldine T. Elliott

Klaus Eppler

Patrick R. Gaston

Jordan Heller

Victoria A. Morrison

Co-Chairman and Director

Chief Executive Officer and Director

President and Chief Merchandising Officer

Chief Operating Officer

Chief Financial Officer and Treasurer

Senior Vice President—Stores

Director

Number of Shares of Common Stock
Beneficially Owned and Percent of Class as
of May 6, 2016

13,701,292(1)

10,584,463(2)

10,224,916(3)

8,823,373(4)

8,620,466(5)

2,043,024(6)

1,902,906(7)

2,290,171(8)

276,024(9)

266,025(10)

38,770(11)

281,336(12)

28,617

23,915

2,815

14,460

17,539

16,372

14,155

8.9%

6.9%

6.6%

5.7%

5.6%

1.3%

1.2%

1.5%

All Directors and Executive Officers

as a Group (14 persons)

Less than 1% of the outstanding common stock of the Company.

7,216,129

4.7%

(1)

(2)

Information regarding The Vanguard Group was obtained from a Schedule 13G filed with the SEC on February 10, 2016 by The Vanguard
Group. The Schedule 13G states that The Vanguard Group has sole voting power of 311,802 shares of common stock, shared voting
power of 16,700 shares of common stock, sole dispositive power of 13,371,420 shares of common stock and shared dispositive power of
329,872 shares of common stock. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.

Information regarding BlackRock, Inc. was obtained from a Schedule 13G filed with the SEC on February 10, 2016 by BlackRock, Inc.
The Schedule 13G states that BlackRock, Inc. has sole voting power of 9,064,922 shares of common stock and sole dispositive power of
10,584,463 shares of common stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(3)

(4)

(5)

Information regarding FMR LLC was obtained from a Schedule 13G filed with the SEC on February 12, 2016 by FMR LLC. The Schedule
13G states that FMR LLC has sole voting power of 1,627,216 shares of common stock and sole dispositive power of 10,224,916 shares of
common stock. The address of FMR LLC is 245 Summer Street, Boston, MA 02210.

Information regarding Brown Brothers Harriman & Co. was obtained from a Schedule 13G filed with the SEC on February 16, 2016 by
Brown Brothers Harriman & Co. The Schedule 13G states that Brown Brothers Harriman & Co. has sole voting power and sole dispositive
power of 2,657,816 shares of common stock, shared voting power of 6,165,557 shares of common stock, and shared dispositive power of
7,271,692 shares of common stock. The address of Brown Brothers Harriman & Co. is 140 Broadway, New York, NY 10005.

Information regarding State Street Corporation was obtained from a Schedule 13G filed with the SEC on February 12, 2016 by State
Street Corporation. The Schedule 13G states that State Street Corporation has shared voting power and shared dispositive power of
8,620,466 shares of common stock. The address of State Street Corporation is One Lincoln Street, Boston, MA 02111.

(6) The shares shown as being owned by Mr. Eisenberg include: (a) 518,204 owned by Mr. Eisenberg individually; (b) 122,003 shares
issuable pursuant to stock options granted to Mr. Eisenberg that are exercisable or become exercisable within 60 days; (c) 500,000
shares owned by a foundation of which Mr. Eisenberg and his family members are trustees and officers; (d) 869,855 shares owned by
trusts for the benefit of Mr. Eisenberg and his family members; (e) 26,947 shares of restricted stock; and (f) 6,015 shares underlying PSUs
that are expected to vest within 60 days. Mr. Eisenberg has sole voting power with respect to the shares held by him individually and in
trust for which he is the trustee but disclaims beneficial ownership of any of the shares not owned by him individually and in trust for which
he is not the trustee.

(7) The shares shown as being owned by Mr. Feinstein include: (a) 900,218 shares owned by Mr. Feinstein individually; (b) 122,003 shares
issuable pursuant to stock options granted to Mr. Feinstein that are exercisable or become exercisable within 60 days; (c) 350,000 shares
owned by a foundation of which Mr. Feinstein and his family members are directors and officers; (d) 156,483 shares held by trusts for the
benefit of Mr. Feinstein’s family members; (e) 341,240 shares owned by his spouse; (f) 26,947 shares of restricted stock; and (g) 6,015
shares underlying PSUs that are expected to vest within 60 days. Mr. Feinstein has sole voting power with respect to the shares held by
him individually and in trust for which he is the trustee but disclaims beneficial ownership of any of the shares not owned by him
individually and in trust for which he is not the trustee.

(8) The shares shown as being owned by Mr. Temares include: (a) 412,615 shares owned by Mr. Temares individually; (b) 1,520,705 shares
issuable pursuant to stock options granted to Mr. Temares that are exercisable or become exercisable within 60 days; (c) 187,144 shares
issuable pursuant to stock options that are exercisable held by a family limited partnership, of which Mr. Temares and his spouse are the
sole general partners, and of which Mr. Temares and his spouse serve as limited partners together with trusts for the benefit of
Mr. Temares, his spouse and his children; (d) 14,286 shares owned by the above described family limited partnership; (e) 5,000 shares
owned by a family limited partnership established by Mr. Temares’ mother; (f) 111,472 shares of restricted stock; and (g) 38,949 shares
underlying PSUs that are expected to vest within 60 days. Mr. Temares has sole voting power with respect to the shares held by him
individually and the above described family limited partnership but disclaims beneficial ownership of the shares owned by the family
limited partnership established by Mr. Temares’ mother.

(9) The shares shown as being owned by Mr. Stark include: (a) 85,018 shares owned by Mr. Stark individually; (b) 125,176 shares issuable
pursuant to stock options granted to Mr. Stark that are exercisable or become exercisable within 60 days; (c) 59,614 shares of restricted
stock; and (d) 6,216 shares underlying PSUs that are expected to vest within 60 days.

(10) The shares shown as being owned by Mr. Castagna include: (a) 74,277 shares owned by Mr. Castagna individually; (b) 135,406 shares
issuable pursuant to stock options granted to Mr. Castagna that are exercisable or become exercisable within 60 days; (c) 50,126 shares
of restricted stock; and (d) 6,216 shares underlying PSUs that are expected to vest within 60 days.

(11) The shares shown as being owned by Ms. Lattmann include: (a) 15,186 shares owned by Ms. Lattmann individually; (b) 9,185 shares
issuable pursuant to stock options granted to Ms. Lattmann that are exercisable or become exercisable within 60 days; (c) 11,392 shares
of restricted stock; and (d) 3,007 shares underlying PSUs that are expected to vest within 60 days.

(12) The shares shown as being owned by Mr. Fiorilli include: (a) 67,300 shares owned by Mr. Fiorilli individually; (b) 160,907 shares issuable
pursuant to stock options granted to Mr. Fiorilli that are exercisable or become exercisable within 60 days; (c) 47,916 shares of restricted
stock; and (d) 5,213 shares underlying PSUs that are expected to vest within 60 days.

Section 16(a) Beneficial Ownership Reporting Compliance

The members of our Board of Directors, our executive officers and persons who hold more than 10% of our outstanding
common stock are subject to the reporting requirements of Section 16(a) of the Exchange Act, which requires them to file
reports with respect to their ownership of our common stock and their transactions in such common stock. Based solely upon a
review of the copies of Section 16(a) reports that we have received from such persons or entities for transactions in our
common stock and their common stock holdings for fiscal 2015, we believe that all reporting requirements under Section 16(a)
for such fiscal year were met in a timely manner by our directors and executive officers.

OTHER MATTERS

Certain Relationships and Related Transactions

The Company’s Audit Committee reviews and, if appropriate, approves transactions brought to the Committee’s attention in
which the Company is a participant and the amount involved exceeds $120,000, and in which, in general, beneficial owners of
more than 5% of the Company’s common stock, the Company’s directors, nominees for director, executive officers, and
members of their respective immediate families, have a direct or indirect material interest. The Committee’s responsibility with
respect to the review and approval of these transactions is set forth in the Audit Committee’s charter.

Martin Eisenberg is the Company’s Regional Vice President for the Northeast Region, with responsibilities in areas that include
store operations, merchandising, store design and product sourcing. For fiscal 2015, his salary was $525,872 and he received
other benefits consistent with his position and tenure,
including a restricted stock award valued at $150,000, and an
automotive allowance and employer 401(k) match aggregating approximately $12,000. He has been employed by the
Company since 1977 and is the son of Warren Eisenberg, the Company’s Co-Chairman.

A brother-in-law of Arthur Stark, the Company’s President, earned in his capacity as a sales representative employed by Blue
Ridge Home Fashions commissions (aggregating approximately $284,000) on sales of merchandise in fiscal 2015 by Blue
Ridge Home Fashions to the Company in the amount of approximately $28.4 million. Additionally, a son-in-law of Mr. Stark is a
managing member and has a minority equity interest in Colordrift LLC which had aggregate sales of merchandise to the
Company of approximately $3.2 million in fiscal 2015. Colordrift LLC had a pre-existing sales relationship with the Company at
the time such managing member became Mr. Stark’s son-in-law, which was during the Company’s fiscal 2012 year.

Householding

Unless we have received contrary instructions, we are mailing one copy of the proxy materials (other than the proxy card) to
record holders who have the same address and last name. Such record holders will continue to receive separate proxy cards.
We refer to this practice as householding.

If you are a record holder who participates in householding and wish to receive separate copies of the proxy materials for the
2016 Annual Meeting or future Annual Meetings, then please contact the Secretary of the Company by writing to 650 Liberty
Avenue, Union, New Jersey 07083 or calling 908-688-0888. We will promptly deliver separate copies of the proxy materials for
the 2016 Annual Meeting upon receiving your request.

If you are a record holder who is eligible for householding and do not currently participate in the program but would like to, then
please contact the Secretary of the Company at the address or phone number indicated above.

If you are a beneficial owner, then please contact your stockbroker, bank or other holder of record to receive one or separate
copies of the proxy materials.

Next Year’s Annual Meeting

Proposals which shareholders intend to be eligible for inclusion in next year’s proxy statement under the SEC’s proxy rules
must be received by the Company no later than January 31, 2017. Such proposals can be sent to the Company at 650 Liberty
Avenue, Union, New Jersey 07083, Attn: Warren Eisenberg, Co-Chairman and Secretary.

for consideration at

In addition, under the Company’s Amended By-laws, any proposal
the 2017 Annual Meeting of
Shareholders submitted by a shareholder other than pursuant to Rule 14a-8 will be considered timely if it is received by the
Secretary of the Company at its principal executive offices at 650 Liberty Avenue, Union, New Jersey 07083 between the close
of business on March 3, 2017 and the close of business on April 3, 2017, and is otherwise in compliance with the requirements
set forth in the Company’s Amended By-laws. If the date of the 2017 Annual Meeting of Shareholders is more than 30 days
before or more than 60 days after the anniversary date of the 2016 Annual Meeting of Shareholders, notice must be received
not earlier than the close of business on the 120th day prior to the 2017 Annual Meeting of Shareholders and not later than the
close of business on the 90th day prior to the 2017 Annual Meeting of Shareholders, or if the first public announcement of the
date of the 2017 Annual Meeting of Shareholders is less than 100 days prior to the date of the 2017 Annual Meeting of
Shareholders, the 10th day following the date on which notice of the date of the meeting is given to shareholders or made
public, whichever occurs first.

2015 Annual Report

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

Bed Bath & Beyond Inc. and subsidiaries (the “Company”) is a retailer which operates under the names Bed
Bath & Beyond (“BBB”), Christmas Tree Shops, Christmas Tree Shops andThat! or andThat! (collectively,
“CTS”), Harmon or Harmon Face Values (collectively, “Harmon”), buybuy BABY (“Baby”) and World Market,
Cost Plus World Market and Cost Plus (collectively, “Cost Plus World Market”). Customers can purchase
products from the Company either in-store, online, with a mobile device or through a contact center. The
Company generally has the ability to have customer purchases picked up in-store or shipped direct to the
customer from the Company’s distribution facilities, stores or vendors. In the second quarter of fiscal 2015, the
Company acquired Of a Kind, an e-commerce website that features specially commissioned, limited edition
items from emerging fashion and home designers. The Company also operates Linen Holdings, a provider of a
variety of textile products, amenities and other goods to institutional customers in the hospitality, cruise line,
healthcare and other industries. Additionally, the Company is a partner in a joint venture which operates seven
retail stores in Mexico under the name Bed Bath & Beyond.

The Company accounts for its operations as two operating segments: North American Retail and Institutional
Sales. The Institutional Sales operating segment, which is comprised of Linen Holdings, does not meet the
quantitative thresholds under U.S. generally accepted accounting principles and therefore is not a reportable
segment.

The Company’s strategy is centered on its customer-centric culture and its commitment to customer service:

• To do more for and with its customers wherever, whenever and however they wish to interact with the

Company.

• To provide its customers a seamless experience whether they interact with the Company in a store,

through one of its contact centers, on a desktop, tablet, smartphone or through social media.

• To be viewed as the expert for the home, including the accompanying life stages that make a house a

home, and to become the destination for customers’ needs and wants as they express their life interests
and travel through their life stages, all through the expanding and differentiated products, services and
solutions the Company offers.

The Company’s objective is to be its customers’ first choice for products and services in the categories offered,
in the markets, channels and countries in which the Company operates, as those customers express their life
interests and travel through their various life stages. The Company strives to accomplish this objective through
excellent customer service, including new products, services and solutions, and by offering an extensive breadth
and depth of differentiated merchandise at the right value. The Company is also enhancing its ability to achieve
this objective through its ongoing commitment to world class information and interactive technology,
comprehensive analytics and targeted marketing and communications.

Operating in the highly competitive retail industry, the Company, along with other retail companies, is influenced
by a number of factors including, but not limited to, general economic conditions including the housing market,
unemployment levels and commodity prices; the overall macroeconomic environment and related changes in the
retailing environment; consumer preferences, spending habits and adoption of new technologies; unusual weather
patterns and natural disasters; competition from existing and potential competitors across all channels of

distribution; potential supply chain disruption; and the ability to find suitable locations at acceptable occupancy
costs and other terms to support the Company’s plans for new stores. The Company cannot predict whether,
when or the manner in which these factors could affect the Company’s operating results.

The results of operations for the fiscal year ended February 27, 2016 include Of a Kind since the date of
acquisition in the second quarter of fiscal 2015.

The following represents an overview of the Company’s financial performance for the periods indicated:

• Net sales in fiscal 2015 increased approximately 1.9% to $12.104 billion; net sales in fiscal 2014

increased approximately 3.3% to $11.881 billion over net sales of $11.504 billion in fiscal 2013. On a
constant currency basis, which is a non-GAAP measure, net sales increased approximately 2.3%, as
compared with fiscal 2014. Net sales and comparable sales of the Company’s foreign operations are
calculated on a constant currency basis by translating the current year’s respective sales of its foreign
operations at the same exchange rates used in the prior year. The non-GAAP measure of net sales on a
constant currency basis is intended to provide visibility into the Company’s operations by excluding
the effects of foreign currency exchange rate fluctuations.

• Comparable sales in fiscal 2015 increased by approximately 1.0%, as compared with an increase of
approximately 2.4% for both fiscal 2014 and fiscal 2013. On a constant currency basis, comparable
sales for fiscal 2015 increased by 1.4%. For fiscal 2015, comparable sales consummated through
customer facing online websites and mobile applications increased in excess of 25% over the
corresponding period in the prior year, while comparable sales consummated in-store declined
approximately 1% over the corresponding period in the prior year. For fiscal 2014, comparable sales
consummated through customer facing online websites and mobile applications increased in excess of
50%, over the corresponding period in the prior year, while comparable sales consummated in-store
were relatively flat to the corresponding period in the prior year.

Comparable sales include sales consummated through all retail channels which have been operating for
twelve full months following the opening period (typically four to six weeks). The Company is an
omnichannel retailer with capabilities that allow a customer to use more than one channel when making
a purchase, including in-store, online, with a mobile device or through a contact center, and have it
fulfilled, in most cases, either through in-store customer pickup or by direct shipment to the customer
from one of the Company’s distribution facilities, stores or vendors.

Sales consummated on a mobile device while physically in a store location are recorded as customer
facing online websites and mobile applications sales. Customer orders reserved online and picked up in
a store are recorded as in-store sales. In-store sales are reduced by sales originally consummated from
customer facing online websites and mobile applications and subsequently returned in-store.

Stores relocated or expanded are excluded from comparable sales if the change in square footage would
cause meaningful disparity in sales over the prior period. In the case of a store to be closed, such
store’s sales are not considered comparable once the store closing process has commenced. Of a Kind
is excluded from the comparable sales calculation for fiscal 2015, and will continue to be excluded
until after the anniversary of the acquisition. Cost Plus World Market was excluded from the
comparable sales calculation through the end of the fiscal first half of 2013, and is included beginning
with the fiscal third quarter of 2013. Linen Holdings is excluded from the comparable sales
calculations and will continue to be excluded on an ongoing basis as it represents non-retail activity.

• Gross profit for fiscal 2015 and fiscal 2014 was $4.620 billion; fiscal 2015 gross profit was 38.2% of
net sales compared with 38.9% of net sales for fiscal 2014. Gross profit for fiscal 2013 was $4.566
billion or 39.7% of net sales.

•

Selling, general and administrative expenses (“SG&A”) for fiscal 2015 were $3.205 billion or 26.5% of
net sales compared with $3.065 billion or 25.8% of net sales for fiscal 2014 and $2.951 billion or
25.7% of net sales for fiscal 2013.

•

Interest expense was $87.5 million, $50.5 million and $1.1 million in fiscal 2015, 2014 and 2013,
respectively.

• The effective tax rate was 36.6%, 36.3% and 36.6% for fiscal years 2015, 2014 and 2013, respectively.
The tax rate included discrete tax items resulting in net benefits of approximately $14.8 million, $20.0
million and $20.0 million, respectively, for fiscal 2015, 2014 and 2013.

•

For the fiscal year ended February 27, 2016, net earnings per diluted share were $5.10 ($841.5 million),
an increase of approximately 1%, as compared with net earnings per diluted share of $5.07 ($957.5
million) for fiscal 2014, which was an increase of approximately 6% from net earnings per diluted
share of $4.79 ($1.022 billion) for fiscal 2013. For the fiscal years ended February 27, 2016 and
February 28, 2015, the increases in net earnings per diluted share are the result of the impact of the
Company’s repurchases of its common stock, partially offset by the decrease in net earnings as a result
of the items described above. Included in net earnings for the fiscal years ended February 27, 2016 and
February 28, 2015, respectively, are net benefits of approximately $0.06 per diluted share for certain
non-recurring items, including a favorable state audit settlement and approximately $0.04 per diluted
share for certain non-recurring items, including a credit card fee litigation settlement.

Capital expenditures for fiscal 2015, 2014 and 2013 were $328.4 million, $330.6 million and $320.8 million,
respectively. A significant portion of the current year capital expenditures were for technology related projects
with the remaining portion for new stores, existing store improvements, the new customer contact center in
Layton, Utah, the new distribution facility in Las Vegas, Nevada and other projects. The Company continues to
review and prioritize its capital needs and remains committed to making the required investments in its
infrastructure to help position the Company for continued growth and success.

Several additional key initiatives include: continuing to add new functionality and assortment to its selling
websites, mobile sites and applications; improving customer data integration and customer relations management
capabilities; continuing to enhance service offerings to its customers; continuing to strengthen and deepen its
information technology, analytics, marketing and e-commerce groups; and creating more flexible fulfillment
options that will improve the Company’s delivery capabilities and lower the Company’s shipping costs. These
and other investments are expected to, among other things, provide a seamless and compelling customer
experience across the Company’s physical and digital shopping environments.

During fiscal 2015, the Company opened a total of 29 new stores, closed 12 stores and opened a new customer
contact center in Layton, Utah and a new distribution facility in Las Vegas, Nevada. The Company plans to
continue to actively manage its real estate portfolio in order to permit store sizes, layouts, locations and offerings
to evolve over time to optimize market profitability and will renovate or reposition stores within markets when
appropriate. In fiscal 2016, the Company expects to open approximately 30 new stores company-wide, most of
which are planned for new markets, close approximately 15 stores and open a new distribution facility.
Additionally, during fiscal 2016, the Company expects to continue to invest in technology related projects,
including the deployment of new systems and equipment in its stores, enhancements to the Company’s digital,
web and mobile capabilities, ongoing investment in data analytics and the continued development and
deployment of a new point of sale system.

During fiscal 2015, 2014 and 2013, including the shares repurchased under an accelerated share repurchase
agreement in fiscal 2014, the Company repurchased 18.4 million, 33.0 million and 18.3 million shares,
respectively, of its common stock at a total cost of approximately $1.101 billion, $2.251 billion and $1.284
billion, respectively.

stock, in the future, subject to the determination by the Board of Directors based on an evaluation of the
Company’s earnings, financial condition and requirements, business conditions and other factors.

In addition to the quarterly dividend program, the Company’s share repurchase program may be influenced by
several factors, including business and market conditions. In addition, the Company reviews its alternatives with
respect to its capital structure on an ongoing basis.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated (i) selected statement of earnings data of the Company
expressed as a percentage of net sales and (ii) the percentage change in dollar amounts from the prior year in
selected statement of earnings data:

Fiscal Year Ended

Percentage
of Net Sales

Percentage Change
from Prior Year

February 27,
2016

February 28,
2015

March 1,
2014

February 27,
2016

February 28,
2015

100.0%
61.8
38.2
26.5
11.7
0.7
11.0
4.0
7.0

100.0% 100.0%

61.1
38.9
25.8
13.1
0.4
12.7
4.6
8.1

60.3
39.7
25.7
14.0
0.0
14.0
5.1
8.9

1.9%
3.1
0.0
4.6
(9.0)
73.3
(11.7)
(11.1)
(12.1)

3.3%
4.7
1.2
3.9
(3.7)
4,326.1
(6.8)
(7.6)
(6.3)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Interest expense, net
Earnings before provision for income taxes
Provision for income taxes
Net earnings

Net Sales

Net sales in fiscal 2015 increased $222.7 million to $12.104 billion, representing an increase of 1.9% over
$11.881 billion of net sales in fiscal 2014, which increased $377.2 million or 3.3% over the $11.504 billion of net
sales in fiscal 2013. On a constant currency basis, which is a non-GAAP measure, net sales for fiscal 2015
increased approximately 2.3%. Net sales and comparable sales of the Company’s foreign operations are
calculated on a constant currency basis by translating the current year’s respective sales of its foreign operations
at the same exchange rates used in the prior year. The non-GAAP measure of net sales on a constant currency
basis is intended to provide visibility into the Company’s operations by excluding the effects of foreign currency
exchange rate fluctuations. For fiscal 2015, approximately 55% of the increase was attributable to an increase in
comparable sales and the remainder was primarily attributable to an increase in the Company’s new store sales
and Linen Holdings. For fiscal 2014, approximately 71% of the increase was attributable to an increase in
comparable sales and the remainder was primarily attributable to an increase in the Company’s new store sales.

The increase in comparable sales for fiscal 2015 and fiscal 2014 was approximately 1.0% and 2.4%, respectively.
The increase in comparable sales for fiscal 2015 was due to an increase in the average transaction amount, offset
by a slight decrease in the number of transactions. The increase in comparable sales for fiscal 2014 was due to
increases in both the average transaction amount and the number of transactions. On a constant currency basis,
comparable sales for fiscal 2015 increased approximately 1.4%.

The Company’s comparable sales metric considers sales consummated through all retail channels – in-store,
online, with a mobile device or through a contact center. Customers today may take advantage of the Company’s
omnichannel environment by using more than one channel when making a purchase. The Company believes an
integrated experience must exist among these channels to provide a seamless customer experience. A few

examples are: a customer may be assisted by an in-store associate to create a wedding or baby registry, while the
guests may ultimately purchase a gift from the Company’s websites; or, a customer may research a particular
item, and read other customer reviews on the Company’s websites before visiting a store to consummate the
actual purchase; or a customer may reserve an item online for in-store pick up; or while in a store, a customer
may make the purchase on a mobile device for in home delivery from either a distribution facility, a store or
directly from a vendor. In addition, the Company accepts returns in-store without regard to the channel in which
the purchase was consummated, therefore resulting in reducing store sales by sales originally consummated
through customer facing online websites and mobile applications. As the Company’s retail operations are
integrated and it cannot reasonably track the channel in which the ultimate sale is initiated, the Company can
however provide directional information on where the sale was consummated.

For fiscal 2015, comparable sales consummated through customer facing online websites and mobile applications
increased in excess of 25% over the corresponding period in the prior year, while comparable sales consummated
in-store declined approximately 1% over the corresponding period in the prior year. For fiscal 2014, comparable
sales consummated through customer facing online websites and mobile applications increased in excess of 50%,
over the corresponding period in the prior year, while comparable sales consummated in-store were relatively flat
to the corresponding period in the prior year.

Comparable sales represented $11.723 billion, $11.517 billion and $10.661 billion of net sales for fiscal 2015,
2014 and 2013, respectively.

Sales of domestics merchandise accounted for approximately 35.9%, 35.9% and 36.1% of net sales in fiscal
2015, 2014 and 2013, respectively, of which the Company estimates that bed linens accounted for approximately
12% of net sales in fiscal 2015, fiscal 2014 and fiscal 2013, respectively. The remaining net sales in fiscal 2015,
2014 and 2013 of 64.1%, 64.1% and 63.9%, respectively, represented sales of home furnishings. No other
individual product category accounted for 10% or more of net sales during fiscal 2015, 2014 or 2013.

Gross Profit

Gross profit in fiscal 2015, 2014 and 2013 was $4.620 billion or 38.2% of net sales, $4.620 billion or 38.9% of
net sales and $4.566 billion or 39.7% of net sales, respectively. The decrease in the gross profit margin as a
percentage of net sales between fiscal 2015 and 2014 was primarily attributed to a decrease in merchandise
margin. Also contributing were increases in coupon expense, resulting from an increase in redemptions and a
slight increase in the average coupon amount, and net direct to customer shipping expense. The decrease in the
gross profit margin as a percentage of net sales between fiscal 2014 and 2013 was primarily attributed to an
increase in coupon expense resulting from an increase in redemptions, partially offset by a slight decrease in the
average coupon amount, and an increase in net direct to customer shipping expense, which was impacted by a
reduction in the bedbathandbeyond.com free shipping threshold. The one year anniversary of the
bedbathandbeyond.com free shipping threshold occurred in February 2015.

Selling, General and Administrative Expenses

SG&A was $3.205 billion or 26.5% of net sales in fiscal 2015, $3.065 billion or 25.8% of net sales in fiscal 2014
and $2.951 billion or 25.7% of net sales in fiscal 2013. The percentage of net sales increase in SG&A between
fiscal 2015 and 2014 was primarily due to, in order of magnitude, increased technology expenses and related
depreciation and increased advertising expenses, due in part to the growth in digital advertising. The percentage
of net sales increase in SG&A between fiscal 2014 and 2013 was primarily due to increased technology expenses
and related depreciation and increased advertising expenses, partially offset by relative decreases in payroll and
payroll related items (including salaries), occupancy expenses (including rent) and the year over year net benefits
of certain non-recurring items, primarily relating to credit card fee litigation in the fiscal third quarter of 2014.
The increase in technology expenses and related depreciation, as a percentage of net sales, represented
approximately 30 basis points for fiscal 2014 as compared to the same period in the prior year.

Operating Profit

Operating profit for fiscal 2015 was $1.415 billion or 11.7% of net sales, $1.554 billion or 13.1% of net sales in
fiscal 2014 and $1.615 billion or 14.0% of net sales in fiscal 2013. The changes in operating profit as a
percentage of net sales between fiscal 2015 and 2014 and between fiscal 2014 and 2013 were the result of the
changes in gross profit margin and SG&A as a percentage of net sales as described above.

The Company believes operating margin compression is likely to continue in fiscal 2016 as a result of several
items, including increases in, as a percentage of net sales, coupon expense, net direct to customer shipping
expense, additional payroll start-up costs associated with the opening of the Company’s Lewisville, Texas
distribution facility, investments in compensation and benefits, and technology-related expenses, including
depreciation related to the Company’s ongoing investments. In addition, the year-over-year comparison of
operating margin will be impacted by the non-recurring benefit relating to the state audit settlement which
occurred in fiscal 2015.

Interest Expense, net

Interest expense, net was $87.5 million, $50.5 million and $1.1 million in fiscal 2015, 2014 and 2013,
respectively. For fiscal 2015 and fiscal 2014, interest expense, net primarily related to interest on the senior
unsecured notes issued in July 2014.

Income Taxes

The effective tax rate was 36.6% for fiscal 2015, 36.3% for fiscal 2014 and 36.6% for fiscal 2013. For fiscal
2015 and fiscal 2013, the tax rate included net benefits of approximately $14.8 million and $20.0 million,
respectively, primarily due to the recognition of favorable discrete state tax items. For fiscal 2014, the tax rate
included net benefits of approximately $20.0 million, primarily due to the recognition of favorable discrete
federal and state tax items.

Potential volatility in the effective tax rate from year to year may occur as the Company is required each year to
determine whether new information changes the assessment of both the probability that a tax position will
effectively be sustained and the appropriateness of the amount of recognized benefit.

GROWTH

The Company strives to do more for and with its customers by: offering an extensive breadth and depth of
differentiated assortment of merchandise at the right value; presenting merchandise in a distinctive manner
designed to maximize customer convenience and reinforce customer perception of a wide selection; and
providing excellent customer service, including new products, services and solutions. The Company is pursuing
its growth objectives by investing in its omnichannel capabilities, optimizing its store operations and market
coverage, including international expansion; leveraging its combined expertise and product knowledge to provide
products and services to hospitality, travel and other institutional customers; and continuously reviewing
opportunities for strategic acquisitions.

The Company continues to expand, differentiate and leverage its merchandise assortment across all channels,
concepts and countries in which it operates, to better engage with its customers wherever, whenever and however
they express their life interests and travel through their life stages. Through its growing analytic capabilities and
omnichannel marketing approaches, the Company strives to more efficiently and effectively understand and
satisfy its customers’ needs.

As of February 27, 2016, the Company operated 1,530 stores plus its various websites, other interactive
platforms and distribution facilities. The Company’s 1,530 stores operate in all 50 states, the District of

Columbia, Puerto Rico and Canada, including: 1,020 BBB stores, 276 Cost Plus World Market stores, 105 Baby
stores, 78 CTS stores and 51 Harmon stores. During fiscal 2015, the Company opened a total of 29 new stores,
closed 12 stores and opened a new customer contact center in Layton, Utah and a new distribution facility in Las
Vegas, Nevada. At the end of fiscal 2015, Company-wide total store square footage, net of openings and
closings, for all of its concepts, was approximately 43.3 million square feet. The Company has distribution
facilities totaling 6.1 million square feet. In addition, the Company has entered into a lease for a new distribution
facility in Lewisville, Texas, which is planned to open in the fall of 2016, which will be approximately 800,000
square feet. The Company will continue to assess sites throughout the country in order to gain greater distribution
efficiencies. The Company also operates websites at bedbathandbeyond.com, bedbathandbeyond.ca,
christmastreeshops.com, harmondiscount.com, buybuybaby.com, buybuybaby.ca, worldmarket.com and
ofakind.com. Additionally, the Company is a partner in a joint venture which operated a total of seven stores as
of February 27, 2016 in Mexico under the name Bed Bath & Beyond.

The Company plans to continue to expand its operations and invest in its infrastructure to reach its long-term
objectives. In fiscal 2016, the Company expects company-wide to open approximately 30 new stores, most of
which are planned for new markets, close approximately 15 stores and open a new distribution facility.
Additionally, in connection with leveraging its merchandise offerings and optimizing its operations, the
Company continues to expand, across selected stores, the number of specialty departments such as health and
beauty care, baby, specialty food, and beverage. Also, the Company is committed to the continued growth of its
merchandise categories and channels and is growing the number of items it is able to have shipped directly to
customers from a vendor. The continued growth of the Company is dependent, in part, upon the Company’s
ability to execute these and other key initiatives successfully.

LIQUIDITY AND CAPITAL RESOURCES

The Company has been able to finance its operations, including its growth, through internally generated funds.
For fiscal 2016, the Company believes that it can continue to finance its operations, including its growth, share
repurchases, cash dividends, planned capital expenditures and debt service obligations, through existing and
internally generated funds. In addition, if necessary, the Company could borrow under its revolving credit
facility. Capital expenditures for fiscal 2016 are planned to be approximately $400 million to $425 million, with
a significant portion for information technology enhancements, which includes enhancements to the Company’s
digital, web and mobile capabilities, the continued deployment of new systems and equipment to the stores and
other projects, and the remainder of the spend would be for the new distribution facility, new stores, existing
store improvements, and other projects. These planned capital expenditures are subject to the timing and
composition of the projects. In addition, the Company reviews its alternatives with respect to its capital structure
on an ongoing basis.

Fiscal 2015 compared to Fiscal 2014

Net cash provided by operating activities in fiscal 2015 was $1.012 billion, compared with $1.178 billion in
fiscal 2014. Year over year, the Company experienced an increase in cash used by the net components of
working capital (primarily accounts payable and other current assets, partially offset by merchandise inventories)
offset by a slight increase in net earnings, as adjusted for non-cash expenses (primarily deferred income taxes and
depreciation).

Retail inventory, which includes inventory in the Company’s distribution facilities for direct to customer
shipments, was approximately $2.8 billion, an increase of approximately 3.6% compared to retail inventory at
February 28, 2015. The Company’s distribution facilities include the Company’s newest Las Vegas, Nevada
distribution facility which opened during fiscal 2015.

Net cash used in investing activities in fiscal 2015 was $275.6 million, compared to net cash provided by
investing activities of $48.8 million in fiscal 2014. In fiscal 2015, net cash used in investing activities was

primarily due to $328.4 million of capital expenditures, partially offset by $52.8 million of redemptions of
investment securities, net of purchases. In fiscal 2014, net cash provided by investing activities was primarily due
to $379.4 million of redemptions of investment securities, net of purchases, partially offset by $330.6 million of
capital expenditures.

Net cash used in financing activities for fiscal 2015 was $1.089 billion, compared with $704.9 million in fiscal
2014. In fiscal 2015, the net cash used in financing activities was primarily due to $1.101 billion of common
stock repurchases. For fiscal 2014, net cash used in financing activities was primarily due to $2.251 billion of
common stock repurchases, partially offset by $1.5 billion of proceeds from the issuance of senior unsecured
notes.

Fiscal 2014 compared to Fiscal 2013

Net cash provided by operating activities in fiscal 2014 was $1.178 billion, compared with $1.382 billion in
fiscal 2013. Year over year, the Company experienced an increase in cash used by the net components of
working capital (primarily accounts payable and merchandise inventories, partially offset by other current assets
and accrued expenses and other current liabilities) and a decrease in net earnings, as adjusted for non-cash
expenses (primarily deferred income taxes and depreciation).

Retail inventory at cost per square foot was $62.58 as of February 28, 2015, as compared to $59.68 as of
March 1, 2014.

Net cash provided by investing activities in fiscal 2014 was $48.8 million, compared with net cash used in
investing activities of $363.4 million in fiscal 2013. In fiscal 2014, net cash provided by investing activities was
primarily due to $379.4 million of redemptions of investment securities, net of purchases, partially offset by
$330.6 million of capital expenditures. In fiscal 2013, net cash used in investing activities was primarily due to
$320.8 million of capital expenditures and $39.1 million of purchases of investment securities, net of
redemptions.

Net cash used in financing activities for fiscal 2014 was $704.9 million, compared with $1.210 billion in fiscal
2013. The decrease in net cash used was primarily due to proceeds from the issuance of the senior unsecured
notes of $1.5 billion, partially offset by an increase in common stock repurchases of $966.6 million, which
includes the shares repurchased under an accelerated share repurchase agreement.

Other Fiscal 2015 Information

At February 27, 2016, the Company maintained two uncommitted lines of credit of $100 million each, with
expiration dates of August 31, 2016 and February 26, 2017, respectively. These uncommitted lines of credit are
currently and are expected to be used for letters of credit in the ordinary course of business. During fiscal 2015,
the Company did not have any direct borrowings under the uncommitted lines of credit. As of February 27, 2016,
there was approximately $9.5 million of outstanding letters of credit. Although no assurances can be provided,
the Company intends to renew both uncommitted lines of credit before the respective expiration dates. In
addition, as of February 27, 2016, the Company maintained unsecured standby letters of credit of $51.2 million,
primarily for certain insurance programs.

The Company has authorization to make repurchases from time to time in the open market or through other
parameters approved by the Board of Directors pursuant to existing rules and regulations.

Between December 2004 and September 2015, the Company’s Board of Directors authorized, through several
share repurchase programs, the repurchase of $11.950 billion of the Company’s common stock. Since 2004
through the end of fiscal 2015, the Company has repurchased approximately $9.7 billion of its common stock
through share repurchase programs. The Company has approximately $2.3 billion remaining of authorized share

repurchases as of February 27, 2016. The Company’s share repurchase program could change, and would be
influenced by several factors, including business and market conditions.

Subsequent to the end of fiscal 2015, on April 6, 2016, the Company’s Board of Directors authorized a quarterly
dividend program, and declared an initial quarterly dividend of $.125 per share to be paid on July 19, 2016 to
shareholders of record as of June 17, 2016. The Company expects to pay quarterly cash dividends on its common
stock, in the future, subject to the determination by the Board of Directors based on an evaluation of the
Company’s earnings, financial condition and requirements, business conditions and other factors.

The Company has contractual obligations consisting mainly of principal and interest related to the Notes,
operating leases for stores, offices, distribution facilities and equipment, purchase obligations, long-term sale/
leaseback and capital lease obligations and other long-term liabilities which the Company is obligated to pay as
of February 27, 2016 as follows:

(in thousands)

Senior unsecured notes (1)
Interest on senior unsecured notes (1)
Operating lease obligations (2)
Purchase obligations (3)
Long-term sale/leaseback and capital lease

obligations (4)

Other long-term liabilities (5)
Total Contractual Obligations

Total

$1,500,000
1,693,205
3,284,725
1,137,597

326,674
462,901
$8,405,102

Less than 1
year

— $

72,477
585,118
1,137,597

1-3 years

4-5 years

After 5
years

— $ — $1,500,000
1,330,820
955,643
—

144,954
732,659
—

144,954
1,011,305
—

10,366
—

20,896
—

21,176
—

274,236
—

$1,805,558

$1,177,155

$898,789

$4,060,699

(1) On July 17, 2014, the Company issued $300 million aggregate principal amount of 3.749% senior unsecured

notes due August 1, 2024, $300 million aggregate principal amount of 4.915% senior unsecured notes due
August 1, 2034 and $900 million aggregate principal amount of 5.165% senior unsecured notes due
August 1, 2044.

(2) The amounts presented represent the future minimum lease payments under non-cancelable operating

leases. In addition to minimum rent, certain of the Company’s leases require the payment of additional costs
for insurance, maintenance and other costs. These additional amounts are not included in the table of
contractual commitments as the timing and/or amounts of such payments are not known. As of February 27,
2016, the Company has leased sites for 41 new or relocated locations planned for opening in fiscal 2016,
2017 or 2018, for which aggregate minimum rental payments over the term of the leases are approximately
$312.2 million and are included in the table above.

(3) Purchase obligations primarily consist of purchase orders for merchandise.
(4) Long-term sale/leaseback and capital lease obligations represent future minimum lease payments under the

sale/leaseback agreements and capital lease agreements.

(5) Other long-term liabilities are primarily comprised of income taxes payable, deferred rent, workers’

compensation and general liability reserves and various other accruals and are recorded as Deferred Rent
and Other Liabilities and Income Taxes Payable in the Consolidated Balance Sheet as of February 27, 2016.
The amounts associated with these other long-term liabilities have been reflected only in the Total Column
in the table above as the timing and / or amount of any cash payment is uncertain.

SEASONALITY

The Company’s sales exhibit seasonality with sales levels generally higher in the calendar months of August,
November and December, and generally lower in February.

INFLATION

The Company does not believe that its operating results have been materially affected by inflation during the past
year. There can be no assurance; however, that the Company’s operating results will not be affected by inflation
in the future.

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles requires the Company to establish accounting policies and to make estimates and judgments that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of
the consolidated financial statements and the reported amounts of revenues and expenses during the reporting
period. The Company bases its estimates on historical experience and on other assumptions that it believes to be
relevant under the circumstances, the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. In particular, judgment is used in
areas such as inventory valuation, impairment of long-lived assets, goodwill and other indefinite lived intangible
assets, accruals for self insurance, litigation, store opening, expansion, relocation and closing costs, stock-based
compensation and income and certain other taxes. Actual results could differ from these estimates.

Inventory Valuation: Merchandise inventories are stated at the lower of cost or market. Inventory costs are
primarily calculated using the weighted average retail inventory method.

Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are
calculated by applying a cost-to-retail ratio to the retail values of inventories. The cost associated with
determining the cost-to-retail ratio includes: merchandise purchases, net of returns to vendors, discounts and
volume and incentive rebates; inbound freight expenses; duty, insurance and commissions.

At any one time, inventories include items that have been written down to the Company’s best estimate of their
realizable value. Judgment is required in estimating realizable value and factors considered are the age of
merchandise and anticipated demand. Actual realizable value could differ materially from this estimate based
upon future customer demand or economic conditions.

The Company estimates its reserve for shrinkage throughout the year based on historical shrinkage and any
current trends, if applicable. Actual shrinkage is recorded at year end based upon the results of the Company’s
physical inventory counts for locations at which counts were conducted. For locations where physical inventory
counts were not conducted in the fiscal year, an estimated shrink reserve is recorded based on historical
shrinkage and any current trends, if applicable. Historically, the Company’s shrinkage has not been volatile.

The Company accrues for merchandise in transit once it takes legal ownership and title to the merchandise; as
such, an estimate for merchandise in transit is included in the Company’s merchandise inventories.

Impairment of Long-Lived Assets: The Company reviews long-lived assets for impairment when events or
changes in circumstances indicate the carrying value of these assets may exceed their current fair values.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the
carrying amount of the asset exceeds the fair value of the assets. Assets to be disposed of would be separately
presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and
are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be
presented separately in the appropriate asset and liability sections of the balance sheet. The Company has not
historically recorded any material impairment to its long-lived assets. In the future, if events or market conditions

affect the estimated fair value to the extent that a long-lived asset is impaired, the Company will adjust the
carrying value of these long-lived assets in the period in which the impairment occurs.

Goodwill and Other Indefinite Lived Intangible Assets: The Company reviews goodwill and other intangibles that
have indefinite lives for impairment annually or when events or changes in circumstances indicate the carrying
value of these assets might exceed their current fair values. Impairment testing is based upon the best information
available including estimates of fair value which incorporate assumptions marketplace participants would use in
making their estimates of fair value. The Company has not historically recorded an impairment to its goodwill
and other indefinite lived intangible assets. As of February 27, 2016, for goodwill related to the North American
Retail operating segment and the Institutional Sales operating segment and certain other indefinite lived
intangible assets, the Company assessed qualitative factors in order to determine whether any events and
circumstances existed which indicated that it was more likely than not that the fair value of these indefinite lived
intangible assets did not exceed its carrying value and concluded no such events or circumstances existed which
would require an impairment test being performed. In the future, if events or market conditions affect the
estimated fair value to the extent that an asset is impaired, the Company will adjust the carrying value of these
assets in the period in which the impairment occurs.

Self Insurance: The Company utilizes a combination of insurance and self insurance for a number of risks
including workers’ compensation, general liability, automobile liability and employee related health care benefits
(a portion of which is paid by its employees). Liabilities associated with the risks that the Company retains are
estimated by considering historical claims experience, demographic factors, severity factors and other actuarial
assumptions. Although the Company’s claims experience has not displayed substantial volatility in the past,
actual experience could materially vary from its historical experience in the future. Factors that affect these
estimates include but are not limited to: inflation, the number and severity of claims and regulatory changes. In
the future, if the Company concludes an adjustment to self insurance accruals is required, the liability will be
adjusted accordingly.

Litigation: The Company records an estimated liability related to its various claims and legal actions arising in
the ordinary course of business when and to the extent that it concludes a liability is probable and the amount of
the loss can be reasonably estimated. Such estimated loss is based on available information and advice from
outside counsel, where appropriate. As additional information becomes available, the Company reassesses the
potential liability related to claims and legal actions and revises its estimated liabilities, as appropriate. The
Company expects the ultimate disposition of these matters will not have a material adverse effect on the
Company’s consolidated financial position, results of operations or liquidity. The Company also cannot predict
the nature and validity of claims which could be asserted in the future, and future claims could have a material
impact on its earnings.

Store Opening, Expansion, Relocation and Closing Costs: Store opening, expansion, relocation and closing costs,
including markdowns, asset residual values and projected occupancy costs, are charged to earnings as incurred.

Stock-Based Compensation: The Company uses a Black-Scholes option-pricing model to determine the fair value
of its stock options. The Black-Scholes model includes various assumptions, including the expected life of stock
options, the expected risk free interest rate and the expected volatility. These assumptions reflect the Company’s
best estimates, but they involve inherent uncertainties based on market conditions generally outside the control of
the Company. As a result, if other assumptions had been used, total stock-based compensation cost could have
been materially impacted. Furthermore, if the Company uses different assumptions for future grants, stock-based
compensation cost could be materially impacted in future periods.

The Company determines its assumptions for the Black-Scholes option-pricing model in accordance with the
accounting guidance related to stock compensation.

• The expected life of stock options is estimated based on historical experience.

• The expected risk free interest rate is based on the U.S. Treasury constant maturity interest rate

whose term is consistent with the expected life of the stock options.

• Expected volatility is based on the average of historical and implied volatility. The historical
volatility is determined by observing actual prices of the Company’s stock over a period
commensurate with the expected life of the awards. The implied volatility represents the implied
volatility of the Company’s call options, which are actively traded on multiple exchanges, had
remaining maturities in excess of twelve months, had market prices close to the exercise prices of
the employee stock options and were measured on the stock option grant date.

The Company is required to record stock-based compensation expense net of estimated forfeitures. The
Company’s forfeiture rate assumption used in determining its stock-based compensation expense is estimated
based on historical data. The actual forfeiture rate could differ from these estimates.

Taxes: The Company accounts for its income taxes using the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to the differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that
includes the enactment date.

The Company intends to reinvest the unremitted earnings of its Canadian subsidiary. Accordingly, no provision
has been made for U.S. or additional non-U.S. taxes with respect to these earnings. In the event of repatriation to
the U.S., in most cases such earnings would be subject to U.S. income taxes.

The Company recognizes the tax benefit from an uncertain tax position only if it is at least more likely than not
that the tax position will be sustained on examination by the taxing authorities based on the technical merits of
the position. The tax benefits recognized in the financial statements from such a position are measured based on
the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing
authorities.

The Company also accrues for certain other taxes as required by their operations.

Judgment is required in determining the provision for income and other taxes and related accruals, deferred tax assets
and liabilities. In the ordinary course of business, there are transactions and calculations where the ultimate tax
outcome is uncertain. Additionally, the Company’s various tax returns are subject to audit by various tax authorities.
Although the Company believes that its estimates are reasonable, actual results could differ from these estimates.

FORWARD-LOOKING STATEMENTS

This Annual Report, and in particular Management’s Discussion and Analysis of Financial Condition and Results
of Operations and the Shareholder Letter, contain forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. The Company’s actual results and future financial condition
may differ materially from those expressed in any such forward-looking statements as a result of many factors.
Such factors include, without limitation: general economic conditions including the housing market, a
challenging overall macroeconomic environment and related changes in the retailing environment; consumer
preferences, spending habits and adoption of new technologies; demographics and other macroeconomic factors

that may impact the level of spending for the types of merchandise sold by the Company; civil disturbances and
terrorist acts; unusual weather patterns and natural disasters; competition from existing and potential competitors
across all channels of distribution; pricing pressures; liquidity; the ability to attract and retain qualified
employees in all areas of the organization; the cost of labor, merchandise and other costs and expenses; potential
supply chain disruption due to political instability, labor disturbances, product recalls, financial or operational
instability of supplier or carriers, and other items; the ability to find suitable locations at acceptable occupancy
costs and other terms to support the Company’s plan for new stores; the ability to assess and implement
technologies in support of the Company’s development of its omnichannel capabilities; uncertainty in financial
markets; disruptions to the Company’s information technology systems including but not limited to security
breaches of systems protecting consumer and employee information; reputational risk arising from challenges to
the Company’s or a third party supplier’s compliance with various laws, regulations or standards, including those
related to labor, health, safety, privacy or the environment; reputational risk arising from third-party merchandise
or service vendor performance in direct home delivery or assembly of product for customers; changes to
statutory, regulatory and legal requirements; new, or developments in existing, litigation, claims or assessments;
changes to, or new, tax laws or interpretation of existing tax laws; changes to, or new, accounting standards;
foreign currency exchange rate fluctuations; and the integration of acquired businesses. The Company does not
undertake any obligation to update its forward-looking statements.

BED BATH & BEYOND INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)

Assets
Current assets:

Cash and cash equivalents
Short term investment securities
Merchandise inventories
Other current assets

Total current assets

Long term investment securities
Property and equipment, net
Goodwill
Other assets

Total assets

Liabilities and Shareholders’ Equity
Current liabilities:

Accounts payable
Accrued expenses and other current liabilities
Merchandise credit and gift card liabilities
Current income taxes payable

Total current liabilities

Deferred rent and other liabilities
Income taxes payable
Long term debt

Total liabilities

Commitments and contingencies

Shareholders’ equity:

February 27,
2016

February 28,
2015

515,573
86,197
2,848,119
376,073

875,574
109,992
2,731,881
366,156

3,825,962

4,083,603

71,289
1,725,043
487,169
389,477

97,160
1,676,700
486,279
415,251

$ 6,498,940

$ 6,758,993

$ 1,100,958
409,445
297,930
58,892

$ 1,156,368
403,547
306,160
76,606

1,867,225

1,942,681

499,368
72,807
1,500,000

493,137
79,985
1,500,000

3,939,400

4,015,803

Preferred stock – $0.01 par value; authorized – 1,000 shares; no shares issued

or outstanding

—

Common stock – $0.01 par value; authorized - 900,000 shares; issued 337,613
and 336,667 shares, respectively; outstanding 156,690 and 174,178 shares,
respectively

Additional paid-in capital
Retained earnings
Treasury stock, at cost
Accumulated other comprehensive loss

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying Notes to Consolidated Financial Statements.

3,377
1,884,813
10,394,865
(9,668,517)
(54,998)

3,367
1,796,692
9,553,376
(8,567,932)
(42,313)

2,559,540

2,743,190

$ 6,498,940

$ 6,758,993

Consolidated Statements of Earnings

Bed Bath & Beyond Inc. and Subsidiaries

(in thousands, except per share data)

Net sales
Cost of sales

Gross profit

Selling, general and administrative expenses

Operating profit
Interest expense, net

Earnings before provision for income taxes

Provision for income taxes

Net earnings

Net earnings per share – Basic
Net earnings per share – Diluted

Weighted average shares outstanding – Basic
Weighted average shares outstanding – Diluted

See accompanying Notes to Consolidated Financial Statements.

FISCAL YEAR ENDED

February 27,
2016

February 28,
2015

March 1,
2014

$12,103,887
7,483,577

$11,881,176
7,261,397

$11,503,963
6,938,381

4,620,310
3,205,407

1,414,903
87,458

1,327,445
485,956

841,489

5.15
5.10

163,257
165,016

$
$

4,619,779
3,065,486

1,554,293
50,458

1,503,835
546,361

4,565,582
2,950,995

1,614,587
1,140

1,613,447
591,157

$
$

957,474

$ 1,022,290

5.13
5.07

$
$

186,659
188,880

4.85
4.79

210,710
213,363

Consolidated Statements of Comprehensive Income

Bed Bath & Beyond Inc. and Subsidiaries

(in thousands)

Net earnings
Other comprehensive (loss) income:

Change in temporary valuation adjustment of auction rate

securities, net of taxes

Pension adjustment, net of taxes
Currency translation adjustment

Other comprehensive loss

Comprehensive income

See accompanying Notes to Consolidated Financial Statements.

FISCAL YEAR ENDED

February 27,
2016

February 28,
2015

March 1,
2014

$841,489

$957,474

$1,022,290

1,584
(351)
(13,918)

(12,685)

143
(5,552)
(23,057)

(28,466)

(792)
3,249
(11,984)

(9,527)

$828,804

$929,008

$1,012,763

Total

$ 4,079,730
1,022,290
(9,527)

74,780

—

57,842
167

(1,283,995)

3,941,287
957,474
(28,466)

54,917

—

68,408
167

Consolidated Statements of Shareholders’ Equity
Bed Bath & Beyond Inc. and Subsidiaries

(in thousands)

Common Stock

Shares Amount

Additional Paid-
in Capital

Retained
Earnings

Treasury Stock

Amount

Accumulated Other
Comprehensive
Loss

Balance at March 2, 2013 332,696 $3,327
Net earnings
Other comprehensive loss
Shares sold under

$1,540,451

$ 7,573,612 (111,207) $(5,033,340)

$ (4,320)

1,022,290

(9,527)

1,375

868

74,766

(9)

57,842
167

employee stock option
plans, net of taxes
Issuance of restricted

shares, net

Stock-based compensation

expense, net

Director fees paid in stock
Repurchase of common
stock, including fees

Balance at March 1, 2014 334,941
Net earnings
Other comprehensive loss
Shares sold under

(18,329)

(1,283,995)

3,350

1,673,217

8,595,902 (129,536)

(6,317,335)

(13,847)

957,474

(28,466)

employee stock option
plans, net of taxes
Issuance of restricted

shares, net

Stock-based compensation

expense, net

Director fees paid in stock
Repurchase of common
stock, including fees

Balance at February 28,

2015

Net earnings
Other comprehensive loss
Shares sold under

employee stock option
plans, net of taxes
Issuance of restricted

shares, net

Payment and vesting of

performance stock units
Stock-based compensation

expense, net

Director fees paid in stock
Repurchase of common
stock, including fees

Balance at February 27,

2016

1,033

691

54,907

(7)

68,408
167

(32,953)

(2,250,597)

336,667

3,367

1,796,692

9,553,376 (162,489)

(8,567,932)

(42,313)

841,489

(12,685)

255

590

18,944

(6)

(1)

69,017
167

2,743,190
841,489
(12,685)

18,947

—

69,017
167

337,613 $3,377

$1,884,813

$10,394,865 (180,923) $(9,668,517)

$(54,998)

$ 2,559,540

(18,434)

(1,100,585)

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Cash Flows
Bed Bath & Beyond Inc. and Subsidiaries

(in thousands)

Cash Flows from Operating Activities:

Net earnings
Adjustments to reconcile net earnings to net cash provided by

operating activities:

Depreciation and amortization
Stock-based compensation
Excess tax benefit from stock-based compensation
Deferred income taxes
Other
(Increase) decrease in assets:
Merchandise inventories
Trading investment securities
Other current assets
Other assets

(Decrease) increase in liabilities:

Accounts payable
Accrued expenses and other current liabilities
Merchandise credit and gift card liabilities
Income taxes payable
Deferred rent and other liabilities

FISCAL YEAR ENDED

February 27,
2016

February 28,
2015

March 1,
2014

841,489

957,474

$ 1,022,290

273,947
66,965
(10,370)
56,997
398

(121,748)
(2,270)
(16,171)
(27,904)

(48,148)
6,694
(7,872)
(15,036)
15,213

239,193
66,539
(14,561)
(22,295)
(2,244)

(161,506)
(9,530)
19,012
(254)

44,563
18,494
22,520
17,656
3,428

220,116
56,244
(19,126)
11,729
(1,784)

(117,926)
(11,382)
(5,287)
(3,812)

179,522
(1,336)
33,014
15,729
3,735

Net cash provided by operating activities

1,012,184

1,178,489

1,381,726

Cash Flows from Investing Activities:

Purchase of held-to-maturity investment securities
Redemption of held-to-maturity investment securities
Redemption of available-for-sale investment securities
Capital expenditures
Investment in unconsolidated joint venture

(103,017)
126,875
28,905
(328,395)

—

(298,094)
677,500
—

(330,637)

—

(1,156,634)
1,117,500
—

(320,812)
(3,436)

Net cash (used in) provided by investing activities

(275,632)

48,769

(363,382)

Cash Flows from Financing Activities:

Proceeds from exercise of stock options
Proceeds from issuance of senior unsecured notes
Payment of deferred financing costs
Payment of other liabilities
Excess tax benefit from stock-based compensation
Repurchase of common stock, including fees

Net cash used in financing activities

9,109
—
—
(7,646)
10,370
(1,100,585)

41,197
1,500,000
(10,092)
—
14,561
(2,250,597)

54,815
—
—
—
19,126
(1,283,995)

(1,088,752)

(704,931)

(1,210,054)

Effect of exchange rate changes on cash and cash equivalents

(7,801)

(13,269)

(6,745)

Net (decrease) increase in cash and cash equivalents

(360,001)

509,058

(198,455)

Cash and cash equivalents:

Beginning of period

End of period

875,574

366,516

564,971

515,573

875,574

366,516

See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements
Bed Bath & Beyond Inc. and Subsidiaries

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS

A. Nature of Operations

Bed Bath & Beyond Inc. and subsidiaries (the “Company”) is a retailer which operates under the names Bed
Bath & Beyond (“BBB”), Christmas Tree Shops, Christmas Tree Shops andThat! or andThat! (collectively,
“CTS”), Harmon or Harmon Face Values (collectively, “Harmon”), buybuy BABY and World Market, Cost Plus
World Market or Cost Plus (collectively, “Cost Plus World Market”). Customers can purchase products from the
Company either in-store, online, with a mobile device or through a contact center. The Company generally has
the ability to have customer purchases picked up in-store or shipped direct to the customer from the Company’s
distribution facilities, stores or vendors. In the second quarter of fiscal 2015, the Company acquired Of a Kind,
an e-commerce website that features specially commissioned, limited edition items from emerging fashion and
home designers. The Company also operates Linen Holdings, a provider of a variety of textile products,
amenities and other goods to institutional customers in the hospitality, cruise line, healthcare and other industries.
Additionally, the Company is a partner in a joint venture which operates seven retail stores in Mexico under the
name Bed Bath & Beyond.

The Company sells a wide assortment of domestics merchandise and home furnishings. Domestics merchandise
includes categories such as bed linens and related items, bath items and kitchen textiles. Home furnishings
include categories such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings,
consumables and certain juvenile products. Sales of domestics merchandise and home furnishings accounted for
approximately 35.9% and 64.1% of net sales, respectively, for fiscal 2015 and fiscal 2014, and approximately
36.1% and 63.9% of net sales, respectively, for fiscal 2013. As the Company operates in the retail industry, its
results of operations are affected by general economic conditions and consumer spending habits.

Since the date of acquisition, Of a Kind’s results of operations, which are not material, have been included in the
Company’s results of operations for the fiscal year ended February 27, 2016.

B. Fiscal Year

The Company’s fiscal year is comprised of the 52 or 53 week period ending on the Saturday nearest February 28.
Accordingly, fiscal 2015, fiscal 2014 and fiscal 2013 represented 52 weeks and ended on February 27,
2016, February 28, 2015 and March 1, 2014, respectively.

C. Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries. The Company accounts for its investment in the joint venture under the equity method.

Certain reclassifications have been made to the fiscal 2014 and 2013 consolidated statements of cash flows to
conform to the fiscal 2015 consolidated statement of cash flows presentation.

All significant intercompany balances and transactions have been eliminated in consolidation.

D. Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles requires the Company to establish accounting policies and to make estimates and judgments that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of
the consolidated financial statements and the reported amounts of revenues and expenses during the reporting
period. The Company bases its estimates on historical experience and on other assumptions that it believes to be
relevant under the circumstances, the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. In particular, judgment is used in
areas such as inventory valuation, impairment of long-lived assets, impairment of auction rate securities,
goodwill and other indefinite lived intangible assets, accruals for self insurance, litigation, store opening,
expansion, relocation and closing costs, the provision for sales returns, vendor allowances, stock-based
compensation and income and certain other taxes. Actual results could differ from these estimates.

E. Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with original maturities of three months or less
to be cash equivalents. Included in cash and cash equivalents are credit and debit card receivables from banks,
which typically settle within 5 business days, of $89.4 million and $90.3 million as of February 27, 2016 and
February 28, 2015, respectively.

Investment Securities

Investment securities consist primarily of U.S. Treasury Bills with remaining maturities of less than one year and
auction rate securities, which are securities with interest rates that reset periodically through an auction process.
The U.S. Treasury Bills are classified as short term held-to-maturity securities and are stated at their amortized
cost which approximates fair value. Auction rate securities are classified as available-for-sale and are stated at
fair value, which had historically been consistent with cost or par value due to interest rates which reset
periodically, typically every 7, 28 or 35 days. As a result, there generally were no cumulative gross unrealized
holding gains or losses relating to these auction rate securities. However, beginning in mid-February 2008 due to
market conditions, the auction process for the Company’s auction rate securities failed and continues to fail.
These failed auctions result in a lack of liquidity in the securities, and affect their estimated fair values at
February 27, 2016 and February 28, 2015, but do not affect the underlying collateral of the securities. (See “Fair
Value Measurements,” Note 2 and “Investment Securities,” Note 3). All income from these investments is
recorded as interest income.

Those investment securities which the Company has the ability and intent to hold until maturity are classified as
held-to-maturity investments and are stated at amortized cost. Those investment securities which are bought and
held principally for the purpose of selling them in the near term are classified as trading securities and are stated
at fair market value.

Premiums are amortized and discounts are accreted over the life of the security as adjustments to interest income
using the effective interest method. Dividend and interest income are recognized when earned.

Inventory Valuation

Merchandise inventories are stated at the lower of cost or market. Inventory costs are primarily calculated using
the weighted average retail inventory method.

H. Property and Equipment

Property and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over
the estimated useful lives of the assets (forty years for buildings; five to twenty years for furniture, fixtures and
equipment; and three to ten years for computer equipment and software). Leasehold improvements are amortized
using the straight-line method over the lesser of their estimated useful life or the life of the lease. Depreciation
expense is primarily included within selling, general and administrative expenses.

The cost of maintenance and repairs is charged to earnings as incurred; significant renewals and betterments are
capitalized. Maintenance and repairs amounted to $130.9 million, $120.3 million and $111.9 million for fiscal
2015, 2014 and 2013, respectively.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment when events or changes in circumstances indicate the
carrying value of these assets may exceed their current fair values. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows,
an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair
value of the assets. Assets to be disposed of would be separately presented in the balance sheet and reported at
the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and
liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and
liability sections of the balance sheet. The Company has not historically recorded any material impairment to its
long-lived assets. In the future, if events or market conditions affect the estimated fair value to the extent that a
long-lived asset is impaired, the Company will adjust the carrying value of these long-lived assets in the period in
which the impairment occurs.

J. Goodwill and Other Indefinite Lived Intangible Assets

The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually or when
events or changes in circumstances indicate the carrying value of these assets might exceed their current fair
values. Impairment testing is based upon the best information available, including estimates of fair value which
incorporate assumptions marketplace participants would use in making their estimates of fair value. The
Company has not historically recorded an impairment to its goodwill and other indefinite lived intangible assets.
As of February 27, 2016, for goodwill related to the North American Retail operating segment and the
Institutional Sales operating segment and certain other indefinite lived intangible assets, the Company assessed
qualitative factors in order to determine whether any events and circumstances existed which indicated that it was
more likely than not that the fair value of these indefinite lived intangible assets did not exceed its carrying value

and concluded no such events or circumstances existed which would require an impairment test being performed.
In the future, if events or market conditions affect the estimated fair value to the extent that an asset is impaired,
the Company will adjust the carrying value of these assets in the period in which the impairment occurs.

Included within other assets in the accompanying consolidated balance sheets as of February 27, 2016 and
February 28, 2015, respectively, are $291.4 million for indefinite lived tradenames and trademarks.

K. Self Insurance

The Company utilizes a combination of insurance and self insurance for a number of risks including workers’
compensation, general liability, automobile liability and employee related health care benefits (a portion of which
is paid by its employees). Liabilities associated with the risks that the Company retains are estimated by
considering historical claims experience, demographic factors, severity factors and other actuarial assumptions.
Although the Company’s claims experience has not displayed substantial volatility in the past, actual experience
could materially vary from its historical experience in the future. Factors that affect these estimates include but
are not limited to: inflation, the number and severity of claims and regulatory changes. In the future, if the
Company concludes an adjustment to self insurance accruals is required, the liability will be adjusted
accordingly.

L. Deferred Rent

The Company accounts for scheduled rent increases contained in its leases on a straight-line basis over the term
of the lease beginning as of the date the Company obtained possession of the leased premises. Deferred rent
amounted to $77.3 million and $77.8 million as of February 27, 2016 and February 28, 2015, respectively.

Cash or lease incentives (“tenant allowances”) received pursuant to certain store leases are recognized on a
straight-line basis as a reduction to rent over the lease term. The unamortized portion of tenant allowances is
included in deferred rent and other liabilities. The unamortized portion of tenant allowances amounted to $119.8
million and $121.0 million as of February 27, 2016 and February 28, 2015, respectively.

M. Shareholders’ Equity

The Company has authorization to make repurchases from time to time in the open market or through other
parameters approved by the Board of Directors pursuant to existing rules and regulations.

Between December 2004 and September 2015, the Company’s Board of Directors authorized, through several
share repurchase programs, the repurchase of $11.950 billion of the Company’s shares of common stock. On
July 17, 2014, the Company entered into an accelerated share repurchase agreement (“ASR”) with an investment
bank to repurchase an aggregate $1.1 billion of the Company’s common stock. The ASR was completed in
December 2014. The total number of shares repurchased under the ASR was 16.8 million shares at a weighted
average share price of $65.41. Since 2004 through the end of fiscal 2015, the Company has repurchased
approximately $9.7 billion of its common stock through share repurchase programs, which include the shares
repurchased under the ASR.

During fiscal 2015, the Company repurchased approximately 18.4 million shares of its common stock at a total
cost of approximately $1.101 billion. During fiscal 2014, including the shares repurchased under the ASR, the
Company repurchased approximately 33.0 million shares of its common stock at a total cost of approximately
$2.251 billion. During fiscal 2013, the Company repurchased approximately 18.3 million shares of its common
stock at a total cost of approximately $1.284 billion. The Company has approximately $2.3 billion remaining of
authorized share repurchases as of February 27, 2016.

Subsequent to the end of fiscal 2015, on April 6, 2016, the Company’s Board of Directors authorized a quarterly
dividend program, and declared an initial quarterly dividend of $.125 per share to be paid on July 19, 2016 to
shareholders of record as of June 17, 2016. Future cash dividends on the Company’s common stock are subject to
the determination by the Board of Directors based on an evaluation of the Company’s earnings, financial
condition and requirements, business conditions and other factors.

N. Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, investment securities, accounts payable,
long term debt and certain other liabilities. The Company’s investment securities consist primarily of U.S.
Treasury securities, which are stated at amortized cost, and auction rate securities, which are stated at their
approximate fair value. The book value of the financial instruments, excluding the Company’s long term debt, is
representative of their fair values (See “Fair Value Measurements,” Note 2). The fair value of the Company’s
long term debt is approximately $1.299 billion, which is based on quoted prices in active markets for identical
instruments (i.e., Level 1 valuation), compared to the carrying value of approximately $1.500 billion.

O. Revenue Recognition

Sales are recognized upon purchase by customers at the Company’s retail stores or upon delivery for products
purchased from its websites. The value of point-of-sale coupons and point-of-sale rebates that result in a
reduction of the price paid by the customer are recorded as a reduction of sales. Shipping and handling fees that
are billed to a customer in a sale transaction are recorded in sales. Taxes, such as sales tax, use tax and value
added tax, are not included in sales.

Revenues from gift cards, gift certificates and merchandise credits are recognized when redeemed. Gift cards
have no provisions for reduction in the value of unused card balances over defined time periods and have no
expiration dates.

Sales returns are provided for in the period that the related sales are recorded based on historical experience.
Although the estimate for sales returns has not varied materially from historical provisions, actual experience
could vary from historical experience in the future if the level of sales return activity changes materially. In the
future, if the Company concludes that an adjustment to the sales return accrual is required due to material
changes in the returns activity, the reserve will be adjusted accordingly.

P. Cost of Sales

Cost of sales includes the cost of merchandise, buying costs and costs of the Company’s distribution network
including inbound freight charges, distribution facility costs, receiving costs, internal transfer costs and shipping
and handling costs.

Q. Vendor Allowances

The Company receives allowances from vendors in the normal course of business for various reasons including
direct cooperative advertising, purchase volume and reimbursement for other expenses. Annual terms for each
allowance include the basis for earning the allowance and payment terms, which vary by agreement. All vendor
allowances are recorded as a reduction of inventory cost, except for direct cooperative advertising allowances
which are specific, incremental and identifiable. The Company recognizes purchase volume allowances as a
reduction of the cost of inventory in the quarter in which milestones are achieved. Advertising costs were
reduced by direct cooperative allowances of $31.7 million, $25.6 million and $24.0 million for fiscal 2015, 2014
and 2013, respectively.

R. Store Opening, Expansion, Relocation and Closing Costs

Store opening, expansion, relocation and closing costs, including markdowns, asset residual values and projected
occupancy costs, are charged to earnings as incurred.

S. Advertising Costs

Expenses associated with direct response advertising are expensed over the period during which the sales are
expected to occur, generally four to seven weeks, and all other expenses associated with store advertising are
charged to earnings as incurred. Net advertising costs amounted to $338.1 million, $308.4 million and $280.5
million for fiscal 2015, 2014 and 2013, respectively.

Stock-Based Compensation

The Company measures all employee stock-based compensation awards using a fair value method and records
such expense in its consolidated financial statements. Currently, the Company’s stock-based compensation
relates to restricted stock awards, stock options and performance stock units. The Company’s restricted stock
awards are considered nonvested share awards.

Income Taxes

The Company files a consolidated Federal income tax return. Income tax returns are also filed with each taxable
jurisdiction in which the Company conducts business.

The Company accounts for its income taxes using the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to the differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that
includes the enactment date.

The Company recognizes the tax benefit from an uncertain tax position only if it is at least more likely than not
that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of
the position. The tax benefits recognized in the financial statements from such a position are measured based on
the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing
authorities.

Judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and
liabilities. In the ordinary course of business, there are transactions and calculations where the ultimate tax
outcome is uncertain. Additionally, the Company’s tax returns are subject to audit by various tax authorities.
Although the Company believes that its estimates are reasonable, actual results could differ from these estimates.

V. Earnings per Share

The Company presents earnings per share on a basic and diluted basis. Basic earnings per share has been
computed by dividing net earnings by the weighted average number of shares outstanding. Diluted earnings per
share has been computed by dividing net earnings by the weighted average number of shares outstanding,
including the dilutive effect of stock-based awards as calculated under the treasury stock method.

Stock-based awards of approximately 2.6 million, 1.7 million and 1.2 million shares were excluded from the
computation of diluted earnings per share as the effect would be anti-dilutive for fiscal 2015, 2014 and 2013,
respectively.

W. Recent Accounting Pronouncements

In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-09, Revenue from Contracts with Customers. This guidance requires an entity to recognize revenue in a
manner that depicts the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard
also will result in enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash
flows arising from contracts with customers. In July 2015, the FASB issued ASU 2015-14, Revenue from
Contracts with Customers (Topic 606): Deferral of the Effective Date. This guidance deferred the effective date
of ASU 2014-09 for one year from the original effective date. In accordance with the deferral, ASU 2014-09 is
effective for annual reporting periods beginning after December 15, 2017, including interim periods within that
reporting period. ASU 2014-09 can be adopted either retrospectively to each prior reporting period presented or
as a cumulative-effect adjustment as of the date of adoption. The adoption of this guidance is not expected to
have a significant effect on the Company’s consolidated financial position, results of operations, or cash flows.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs. This guidance requires an entity to present debt issuance costs related to a
recognized debt liability on the balance sheet as a direct deduction from the carrying amount of that debt liability,
consistent with debt discounts. Costs associated with line-of-credit arrangements may continue to be recorded as
deferred assets. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015,
including interim periods within that reporting period, with earlier adoption permitted. ASU 2015-03 must be
adopted retrospectively to each prior reporting period presented. The adoption of this guidance is not expected to
have a significant effect on the Company’s consolidated financial position, results of operations, or cash flows.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of
Deferred Taxes. This guidance requires an entity to classify deferred tax assets and liabilities as noncurrent on
the balance sheet. ASU 2015-17 is effective for annual reporting periods beginning after December 15, 2016,
including interim periods within that reporting period, with earlier adoption permitted. ASU 2015-17 can be
adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of
the date of adoption. The adoption of this guidance is not expected to have a significant effect on the Company’s
consolidated financial position, results of operations, or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases. This guidance requires an entity to recognize lease
liabilities and a right-of-use asset for all leases on the balance sheet and to disclose key information about the
entity’s leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning after
December 15, 2018, including interim periods within that reporting period, with earlier adoption permitted. ASU
2016-02 must be adopted using a modified retrospective approach for all leases existing at, or entered into after
the date of initial adoption, with an option to elect to use certain transition relief. The Company is evaluating the
impact of this new standard on its financial position, results of operations, cash flows and related disclosures.

FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the
exit price”) in an orderly transaction between market participants at the measurement date. In determining fair
value, the Company uses various valuation approaches, including quoted market prices and discounted cash
flows. The hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and
minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.
Observable inputs are inputs that market participants would use in pricing the asset or liability developed based

on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s
judgment concerning the assumptions that market participants would use in pricing the asset or liability
developed based on the best information available under the circumstances. In certain cases, the inputs used to
measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability
must be classified in its entirety based on the lowest level of input that is significant to the measurement of fair
value. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

• Level 1 – Valuations based on quoted prices in active markets for identical instruments that the

Company is able to access. Since valuations are based on quoted prices that are readily and regularly
available in an active market, valuation of these products does not entail a significant degree of
judgment.

• Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or

quoted prices in markets that are not active for identical or similar instruments, and model-derived
valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value

measurement.

As of February 27, 2016, the Company’s financial assets utilizing Level 1 inputs include long term trading
investment securities traded on active securities exchanges. The Company did not have any financial assets
utilizing Level 2 inputs. Financial assets utilizing Level 3 inputs included long term investments in auction rate
securities consisting of preferred shares of closed end municipal bond funds (See “Investment Securities,”
Note 3).

INVESTMENT SECURITIES

The Company’s investment securities as of February 27, 2016 and February 28, 2015 are as follows:

(in millions)

Available-for-sale securities:

Long term

Trading securities:
Long term

Held-to-maturity securities:

Short term

Total investment securities

February 27,
2016

February 28,
2015

$ 19.8

$ 47.9

51.5

49.2

86.2

$157.5

110.0

$207.1

Auction Rate Securities

As of February 27, 2016 and February 28, 2015, the Company’s long term available-for-sale investment
securities represented approximately $20.3 million and $51.0 million par value of auction rate securities,
respectively, consisting of preferred shares of closed end municipal bond funds, less temporary valuation
adjustments of approximately $0.5 million and $3.1 million, respectively. Since these valuation adjustments are
deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit,
and did not affect the Company’s net earnings.

In fiscal 2015, approximately $30.7 million of these securities were tendered at a price of approximately 94% of
par value for which the Company incurred a realized loss of approximately $1.8 million, which is included within
interest expense, net in the consolidated statement of earnings for fiscal 2015.

U.S. Treasury Securities

As of February 27, 2016, and February 28, 2015, the Company’s short term held-to-maturity securities included
approximately $86.2 million and approximately $110.0 million, respectively, of U.S. Treasury Bills with
remaining maturities of less than one year. These securities are stated at their amortized cost which approximates
fair value, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation).

Long Term Trading Investment Securities

The Company’s long term trading investment securities, which are provided as investment options to the
participants of the nonqualified deferred compensation plan, are stated at fair market value. The values of these
trading investment securities included in the table above are approximately $51.5 million and $49.2 million as of
February 27, 2016 and February 28, 2015, respectively.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

(in thousands)

Land and buildings
Furniture, fixtures and equipment
Leasehold improvements
Computer equipment and software

Less: Accumulated depreciation

Property and equipment, net

5. LONG TERM DEBT

Senior Unsecured Notes

February 27,
2016

February 28,
2015

567,602
1,240,181
1,341,596
1,106,812

4,256,191

557,538
1,179,073
1,258,916
940,754

3,936,281

(2,531,148)

(2,259,581)

$ 1,725,043

$ 1,676,700

On July 17, 2014, the Company issued $300 million aggregate principal amount of 3.749% senior unsecured
notes due August 1, 2024 (the “2024 Notes”), $300 million aggregate principal amount of 4.915% senior
unsecured notes due August 1, 2034 (the “2034 Notes”) and $900 million aggregate principal amount of 5.165%
senior unsecured notes due August 1, 2044 (the “2044 Notes” and, together with the 2024 Notes and the 2034
Notes, the “Notes”). The aggregate net proceeds from the Notes were approximately $1.5 billion, which was used
for share repurchases of the Company’s common stock and for general corporate purposes. Interest on the Notes
is payable semi-annually on February 1 and August 1 of each year.

The Notes were issued under an indenture (the “Base Indenture”), as supplemented by a first supplemental
indenture (together, with the Base Indenture, the “Indenture”), which contains various restrictive covenants,
which are subject to important limitations and exceptions that are described in the Indenture. The Company was
in compliance with all covenants related to the Notes as of February 27, 2016.

The Notes are unsecured, senior obligations and rank equal in right of payment to any of the Company’s existing
and future senior unsecured indebtedness. The Company may redeem the Notes at any time, in whole or in part,
at the redemption prices described in the Indenture plus accrued and unpaid interest to the redemption date. If a
change in control triggering event, as defined by the Indenture governing the Notes, occurs unless the Company
has exercised its right to redeem the Notes, the Company will be required to make an offer to the holders of the
Notes to purchase the Notes at 101% of their principal amount, plus accrued and unpaid interest.

Revolving Credit Agreement

On August 6, 2014, the Company entered into a $250 million five year senior unsecured revolving credit facility
agreement (“Revolver”) with various lenders. For fiscal 2015 and during the period from August 6, 2014 through
February 28, 2015, the Company did not have any borrowings under the Revolver.

Borrowings under the Revolver accrue interest at either (1) a fluctuating rate equal to the greater of the prime
rate, as defined in the Revolver, the Federal Funds Rate plus 0.50%, or one-month LIBOR plus 1.0% and, in each
case, plus an applicable margin based upon the Company’s leverage ratio which is calculated quarterly, (2) a
periodic fixed rate equal to LIBOR plus an applicable margin based upon the Company’s leverage ratio which is
calculated quarterly or (3) an agreed upon fixed rate. In addition, a commitment fee is assessed, which is
included in interest expense, net in the Consolidated Statement of Earnings. The Revolver contains customary
affirmative and negative covenants and also requires the Company to maintain a minimum leverage ratio. The
Company was in compliance with all covenants related to the Revolver as of February 27, 2016.

Deferred financing costs associated with the Notes and the Revolver of approximately $10.1 million were
capitalized and are included in other assets, net of amortization, in the accompanying Consolidated Balance
Sheets. These deferred financing costs are being amortized over the term of each of the Notes and the term of the
Revolver and such amortization is included in interest expense, net in the Consolidated Statement of Earnings.
Interest expense related to the Notes and the Revolver, including the commitment fee and the amortization of the
deferred financing costs, was approximately $73.0 million for fiscal 2015 and $44.9 million for the period from
July 17, 2014 through February 28, 2015.

Lines of Credit

At February 27, 2016, the Company maintained two uncommitted lines of credit of $100 million each, with
expiration dates of August 31, 2016 and February 26, 2017, respectively. These uncommitted lines of credit are
currently and are expected to be used for letters of credit in the ordinary course of business. During fiscal 2015
and 2014, the Company did not have any direct borrowings under the uncommitted lines of credit. As of
February 27, 2016, there was approximately $9.5 million of outstanding letters of credit. Although no assurances
can be provided, the Company intends to renew both uncommitted lines of credit before the respective expiration
dates. In addition, as of February 27, 2016, the Company maintained unsecured standby letters of credit of $51.2
million, primarily for certain insurance programs. As of February 28, 2015, there was approximately $11.1
million of outstanding letters of credit and approximately $71.7 million of outstanding unsecured standby letters
of credit, primarily for certain insurance programs.

PROVISION FOR INCOME TAXES

The components of the provision for income taxes are as follows:

(in thousands)

Current:

Federal
State and local

Deferred:

Federal
State and local

FISCAL YEAR ENDED

February 27,
2016

February 28,
2015

March 1,
2014

$389,039
39,991

429,030

$504,154
64,486

$514,818
64,581

568,640

579,399

42,592
14,334

56,926

(18,245)
(4,034)

(22,279)

11,221
537

11,758

$485,956

$546,361

$591,157

At February 27, 2016, included in other current assets is a net current deferred income tax asset of $201.5 million
and included in deferred rent and other liabilities is a net noncurrent deferred income tax liability of $2.4 million.
At February 28, 2015, included in other current assets is a net current deferred income tax asset of $207.3 million
and included in other assets is a net noncurrent deferred income tax asset of $49.7 million. These amounts
represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The significant components of the
Company’s deferred tax assets and liabilities consist of the following:

(in thousands)

Deferred tax assets:
Inventories
Deferred rent and other rent credits
Insurance
Stock-based compensation
Merchandise credits and gift card liabilities
Accrued expenses
Obligations on distribution centers
Net operating loss carryforwards and other tax credits
Other

Deferred tax liabilities:
Depreciation
Goodwill
Intangibles
Other

February 27,
2016

February 28,
2015

$ 30,470
74,182
51,238
39,417
66,496
46,226
40,704
22,253
90,776

$ 35,169
77,878
62,668
35,591
65,055
42,328
41,175
30,453
89,933

(104,781)
(62,252)
(81,150)
(14,525)

(74,051)
(55,888)
(80,515)
(12,780)

$ 199,054

$257,016

At February 27, 2016, the Company has federal net operating loss carryforwards of $11.4 million (tax effected),
which will begin expiring in 2025, state net operating loss carryforwards of $5.0 million (tax effected), which
will expire between 2015 and 2031, California state enterprise zone credit carryforwards of $4.8 million (tax
effected), which will expire in 2023, but require taxable income in the enterprise zone to be realizable and other
tax credits of $1.0 million (tax effected).

The Company has not established a valuation allowance for the net deferred tax asset as it is considered more
likely than not that it is realizable through a combination of future taxable income and the deductibility of future
net deferred tax liabilities.

The following table summarizes the activity related to the gross unrecognized tax benefits from uncertain tax
positions:

(in thousands)

Balance at beginning of year

Increase related to current year positions
Increase related to prior year positions
Decrease related to prior year positions
Settlements
Lapse of statute of limitations

Balance at end of year

February 27,
2016

February 28,
2015

$ 79,985

$ 92,614

16,662
2,104
(14,698)
(5,865)
(5,381)

17,333
6,549
(20,082)
(11,762)
(4,667)

$ 72,807

$ 79,985

At February 27, 2016, the Company has recorded approximately $72.8 million of gross unrecognized tax benefits
in noncurrent income taxes payable on the consolidated balance sheet of which approximately $72.7 million
would impact the Company’s effective tax rate. At February 28, 2015, the Company has recorded approximately
$80.0 million of gross unrecognized tax benefits in noncurrent income taxes payable on the consolidated balance
sheet of which approximately $79.9 million would impact the Company’s effective tax rate. As of February 27,
2016 and February 28, 2015, the liability for gross unrecognized tax benefits included approximately $10.5
million and $13.0 million, respectively, of accrued interest. The Company recorded a decrease of interest of
approximately $2.5 million and $3.9 million, respectively, for the years ended February 27, 2016 and
February 28, 2015 for gross unrecognized tax benefits in the consolidated statement of earnings.

The Company anticipates that any adjustments to gross unrecognized tax benefits which will impact income tax
expense, due to the expiration of statutes of limitations, could be approximately $4 to $5 million in the next
twelve months. However, actual results could differ from those currently anticipated.

As of February 27, 2016, the Company operated in all 50 states, the District of Columbia, Puerto Rico, Canada
and several other international countries and files income tax returns in the United States and various state, local
and international jurisdictions. The Company is open to examination for state and local jurisdictions with varying
statutes of limitations, generally ranging from three to five years.

For fiscal 2015, the effective tax rate is comprised of the Federal statutory income tax rate of 35.00%, the State
income tax rate, net of Federal benefit, of 3.07%, provision for uncertain tax positions of .07% and other income
tax benefits of 1.53%. For fiscal 2014, the effective tax rate is comprised of the Federal statutory income tax rate
of 35.00%, the State income tax rate, net of Federal benefit, of 3.01%, provision for uncertain tax positions of
0.04% and other income tax benefits of 1.72%. For fiscal 2013, the effective tax rate is comprised of the Federal
statutory income tax rate of 35.00%, the State income tax rate, net of Federal benefit, of 3.07%, benefit for
uncertain tax positions of 0.05% and other income tax benefits of 1.42%.

7. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

In fiscal 2002, the Company had an interest in certain life insurance policies on the lives of its Co-Chairmen and
their spouses. The Company’s interest in these policies was equivalent to the net premiums paid by the Company.
The agreements relating to the Company’s interest in the life insurance policies on the lives of its Co-Chairmen
and their spouses were terminated in fiscal 2003. Upon termination in fiscal 2003, the Co-Chairmen paid to the
Company $5.4 million, representing the total amount of premiums paid by the Company under the agreements
and the Company was released from its contractual obligation to make substantial future premium payments. In
order to confer a benefit to its Co-Chairmen in substitution for the aforementioned terminated agreements, the
Company has agreed to pay to the Co-Chairmen, at a future date, an aggregate amount of $4.2 million, which is
included in accrued expenses and other current liabilities as of February 27, 2016 and February 28, 2015.

8. LEASES

The Company leases retail stores, as well as distribution facilities, offices and equipment, under agreements
expiring at various dates through 2042. Certain leases provide for contingent rents (which are based upon store
sales exceeding stipulated amounts and are immaterial in fiscal 2015, 2014 and 2013), scheduled rent increases
and renewal options. The Company is obligated under a majority of the leases to pay for taxes, insurance and
common area maintenance charges.

As of February 27, 2016, future minimum lease payments under non-cancelable operating leases were as follows:

(in thousands)

Fiscal Year:
2016
2017
2018
2019
2020
Thereafter

Total future minimum lease payments

Operating
Leases

$ 585,118
538,142
473,163
407,510
325,149
955,643

$3,284,725

Expenses for all operating leases were $568.1 million, $566.0 million and $559.8 million for fiscal 2015, 2014
and 2013, respectively.

As of February 27, 2016 and February 28, 2015, the capital lease obligations were approximately $6.5 million
and $3.5 million, respectively, for which the current and long-term portions are included within accrued expenses
and other current liabilities and deferred rent and other liabilities, respectively, in the consolidated balance sheet.
Monthly minimum lease payments are accounted for as principal and interest payments. Interest expense for all
capital leases was $0.4 million, $0.5 million and $0.5 million for fiscal 2015, 2014 and 2013, respectively. The
minimum capital lease payments, including interest, by fiscal year are: $1.2 million in fiscal 2016, $1.2 million in
fiscal 2017, $1.0 million in fiscal 2018, $1.0 million in fiscal 2019, $0.9 million in fiscal 2020 and $3.3 million
thereafter.

The Company has financing obligations, related to two sale/leaseback agreements, which approximated the
discounted fair value of the minimum lease payments, had a residual fair value at the end of the lease term and
are being amortized over the term of the respective agreements, including option periods, of 32 and 35 years. As
of February 27, 2016 and February 28, 2015, the sale/leaseback financing obligations were approximately $104.0
million and $104.6 million, respectively, for which the current and long-term portions are included within
accrued expenses and other current liabilities and deferred rent and other liabilities, respectively, in the
consolidated balance sheet. Monthly lease payments are accounted for as principal and interest payments (at
approximate annual interest rates of 7.2% and 10.6%). These sale/leaseback financing obligations, excluding the
residual fair value at the end of the lease term, mature as follows: $0.7 million in fiscal 2016, $0.8 million in
fiscal 2017, $0.8 million in fiscal 2018, $0.8 million in fiscal 2019, $0.9 million in fiscal 2020 and $76.4 million
thereafter.

9. EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company has five defined contribution savings plans covering all eligible employees of the Company (“the
Plans”). Participants of the Plans may defer annual pre-tax compensation subject to statutory and Plan
limitations. In addition, a certain percentage of an employee’s contributions are matched by the Company and
vest over a specified period of time, subject to certain statutory and Plan limitations. The Company’s match was
approximately $13.9 million, $13.2 million and $12.5 million for fiscal 2015, 2014 and 2013, respectively, which
was expensed as incurred.

Nonqualified Deferred Compensation Plan

The Company has a nonqualified deferred compensation plan (“NQDC”) for the benefit of employees who are
defined by the Internal Revenue Service as highly compensated. Participants of the NQDC may defer annual

pre-tax compensation subject to statutory and plan limitations. In addition, a certain percentage of an employee’s
contributions may be matched by the Company and vest over a specified period of time, subject to certain plan
limitations. The Company’s match was approximately $0.6 million, $0.7 million and $0.5 million in fiscal 2015,
2014 and 2013, respectively, which was expensed as incurred.

Changes in the fair value of the trading securities related to the NQDC and the corresponding change in the
associated liability are included within interest income and selling, general and administrative expenses
respectively, in the consolidated statements of earnings. Historically, these changes have resulted in no net
impact to the consolidated statements of earnings.

Defined Benefit Plan

The Company has a non-contributory defined benefit pension plan for the CTS employees, hired on or before
July 31, 2003, who meet specified age and length-of-service requirements. The benefits are based on years of
service and the employee’s compensation up until retirement. The Company recognizes the overfunded or
underfunded status of the pension plan as an asset or liability in its statement of financial position and recognizes
changes in the funded status in the year in which the changes occur. For the years ended February 27,
2016, February 28, 2015 and March 1, 2014, the net periodic pension cost was not material to the Company’s
results of operations. The Company has a $20.4 million and $18.4 million liability, which is included in deferred
rent and other liabilities as of February 27, 2016 and February 28, 2015, respectively. In addition, as of
February 27, 2016 and February 28, 2015, the Company recognized a loss of $6.5 million, net of taxes of $4.2
million, and a loss of $6.1 million, net of taxes of $4.0 million, respectively, within accumulated other
comprehensive loss.

10. COMMITMENTS AND CONTINGENCIES

The Company maintains employment agreements with its Co-Chairmen, which extend through February 25,
2017. The agreements provide for a base salary (which may be increased by the Board of Directors), termination
payments, postretirement benefits and other terms and conditions of employment. In addition, the Company
maintains employment agreements with other executives which provide for severance pay and, in some
instances, certain other supplemental retirement benefits.

The Company records an estimated liability related to its various claims and legal actions arising in the ordinary
course of business when and to the extent that it concludes a liability is probable and the amount of the loss can
be reasonably estimated. Such estimated loss is based on available information and advice from outside counsel,
where appropriate. As additional information becomes available, the Company reassesses the potential liability
related to claims and legal actions and revises its estimated liabilities, as appropriate. The Company expects the
ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated
financial position, results of operations or liquidity. The Company also cannot predict the nature and validity of
claims which could be asserted in the future, and future claims could have a material impact on its earnings.

11. SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid income taxes of $442.4 million, $554.4 million and $562.4 million in fiscal 2015, 2014 and
2013, respectively. In addition, the Company had interest payments of approximately $81.5 million, $48.2
million and $9.2 million in fiscal 2015, 2014 and 2013, respectively.

The Company recorded an accrual for capital expenditures of $51.7 million, $57.8 million and $50.2 million as
of February 27, 2016, February 28, 2015 and March 1, 2014, respectively.

12. STOCK-BASED COMPENSATION

The Company measures all employee stock-based compensation awards using a fair value method and records
such expense, net of estimated forfeitures, in its consolidated financial statements. Currently, the Company’s
stock-based compensation relates to restricted stock awards, stock options and performance stock units. The
Company’s restricted stock awards are considered nonvested share awards.

Stock-based compensation expense for the fiscal year ended February 27, 2016, February 28, 2015 and March 1,
2014 was approximately $67.0 million ($42.4 million after tax or $0.26 per diluted share), $66.5 million ($42.4
million after tax or $0.22 per diluted share) and approximately $56.2 million ($35.6 million after tax or $0.17 per
diluted share), respectively. In addition, the amount of stock-based compensation cost capitalized for the years
ended February 27, 2016 and February 28, 2015 was approximately $2.1 million and $1.9 million, respectively.

Incentive Compensation Plans

The Company currently grants awards under the Bed Bath & Beyond 2012 Incentive Compensation Plan (the
“2012 Plan”), which amended and restated the Bed Bath & Beyond 2004 Incentive Compensation Plan (the
“2004 Plan”). The 2012 Plan includes an aggregate of 43.2 million common shares authorized for issuance and
the ability to grant incentive stock options. Outstanding awards that were covered by the 2004 Plan continue to
be in effect under the 2012 Plan.

The 2012 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through
stock options (whether nonqualified stock options or incentive stock options), restricted stock awards, stock
appreciation rights, performance awards and other stock based awards, including cash awards. Under the 2012
Plan, grants are determined by the Compensation Committee for those awards granted to executive officers and
by an appropriate committee for all other awards granted. Awards of stock options and restricted stock generally
vest in five equal annual installments beginning one to three years from the date of grant. Awards of performance
stock units generally vest over a period of four years from the date of grant dependent on the Company’s
achievement of performance-based tests and subject, in general, to the executive remaining in the Company’s
service on specified vesting dates.

The Company generally issues new shares for stock option exercises, restricted stock awards and vesting of
performance stock units.

Stock Options

Stock option grants are issued at fair market value on the date of grant and generally become exercisable in either
three or five equal annual installments beginning one year from the date of grant for options issued since May 10,
2010, and beginning one to three years from the date of grant for options issued prior to May 10, 2010, in each
case, subject, in general to the recipient remaining in the Company’s service on specified vesting dates. Option
grants expire eight years after the date of grant. All option grants are nonqualified. As of February 27, 2016,
unrecognized compensation expense related to the unvested portion of the Company’s stock options was $23.2
million, which is expected to be recognized over a weighted average period of 2.7 years.

The fair value of the stock options granted was estimated on the date of the grant using a Black-Scholes option-
pricing model that uses the assumptions noted in the following table.

Black-Scholes Valuation Assumptions (1)

Weighted Average Expected Life (in years) (2)
Weighted Average Expected Volatility (3)
Weighted Average Risk Free Interest Rates (4)
Expected Dividend Yield

FISCAL YEAR ENDED

February 27,
2016

February 28,
2015

March 1,
2014

6.7
27.59%
1.93%
—

6.6
28.31%
2.11%
—

6.6
29.27%
1.11%
—

(1) Forfeitures are estimated based on historical experience.
(2) The expected life of stock options is estimated based on historical experience.
(3) Expected volatility is based on the average of historical and implied volatility. The historical volatility is
determined by observing actual prices of the Company’s stock over a period commensurate with the
expected life of the awards. The implied volatility represents the implied volatility of the Company’s call
options, which are actively traded on multiple exchanges, had remaining maturities in excess of twelve
months, had market prices close to the exercise prices of the employee stock options and were measured on
the stock option grant date.

(4) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of

the stock options.

Changes in the Company’s stock options for the fiscal year ended February 27, 2016 were as follows:

(Shares in thousands)

Options outstanding, beginning of period
Granted
Exercised
Forfeited or expired

Options outstanding, end of period

Options exercisable, end of period

Number of Stock Options

Weighted Average
Exercise Price

3,682
501
(255)
(90)

3,838

2,358

$51.05
70.96
35.10
63.12

$54.43

$47.06

The weighted average fair value for the stock options granted in fiscal 2015, 2014 and 2013 was $23.12, $20.96
and $22.28, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for
options outstanding as of February 27, 2016 was 3.7 years and $19.9 million, respectively. The weighted average
remaining contractual term and the aggregate intrinsic value for options exercisable as of February 27, 2016 was
2.4 years and $18.9 million, respectively. The total intrinsic value for stock options exercised during fiscal 2015,
2014 and 2013 was $8.7 million, $33.5 million and $44.6 million, respectively.

Net cash proceeds from the exercise of stock options for fiscal 2015 were $9.1 million and the net associated
income tax benefit was $10.0 million.

Restricted Stock

Restricted stock awards are issued and measured at fair market value on the date of grant and generally become
vested in five equal annual installments beginning one to three years from the date of grant, subject, in general, to
the recipient remaining in the Company’s service on specified vesting dates. Vesting of restricted stock awarded
to certain of the Company’s executives is dependent on the Company’s achievement of a performance-based test
for the fiscal year of grant and, assuming achievement of the performance-based test, time vesting, subject, in
general, to the executive remaining in the Company’s service on specified vesting dates. The Company
recognizes compensation expense related to these awards based on the assumption that the performance-based
test will be achieved. Vesting of restricted stock awarded to the Company’s other employees is based solely on
time vesting. As of February 27, 2016, unrecognized compensation expense related to the unvested portion of the
Company’s restricted stock awards was $127.6 million, which is expected to be recognized over a weighted
average period of 3.6 years.

Changes in the Company’s restricted stock for the fiscal year ended February 27, 2016 were as follows:

(Shares in thousands)

Unvested restricted stock, beginning of period
Granted
Vested
Forfeited

Unvested restricted stock, end of period

Number of Restricted
Shares

Weighted Average
Grant-Date Fair
Value

3,592
792
(952)
(202)

3,230

$57.90
68.67
49.50
62.81

$62.71

Performance Stock Units

Performance stock units (“PSUs”) are issued and measured at fair market value on the date of grant. Vesting of PSUs
awarded to certain of the Company’s executives is dependent on the Company’s achievement of a performance-based test
during a one-year period from the date of grant and during a three-year period from the date of grant and, assuming
achievement of the performance-based test, time vesting, subject, in general, to the executive remaining in the Company’s
service on specified vesting dates. Performance during the one-year period will be based on Earnings Before Interest and
Taxes (“EBIT”) margin relative to a peer group of the Company. Upon achievement of the one-year performance-based
test, the corresponding PSUs will vest annually in substantially equal installments over a three year period starting one
year from the date of grant. Performance during the three-year period will be based on Return on Invested Capital
(“ROIC”) relative to such peer group. Upon achievement of the three-year performance-based test, the corresponding
PSUs will vest on the fourth anniversary date of grant. The awards based on EBIT margin and ROIC range from a floor of
zero to a cap of 150% of target achievement, with a floor of zero. PSUs are converted into shares of common stock upon
payment following vesting. Upon grant of the PSUs, the Company recognizes compensation expense related to these
awards based on the assumption that 100% of the target award will be achieved. The Company evaluates the target
assumption on a quarterly basis and adjusts compensation expense related to these awards, as appropriate. As of
February 27, 2016, unrecognized compensation expense related to the unvested portion of the Company’s performance
stock units was $20.6 million, which is expected to be recognized over a weighted average period of 2.0 years.

Changes in the Company’s PSUs for the fiscal year ended February 27, 2016 were as follows:

(Shares in thousands)

Unvested performance stock units, beginning of period
Granted
Vested
Forfeited

Unvested performance stock units, end of period

Number of Performance
Stock Units

Weighted Average
Grant-Date Fair
Value

391
370
(98)
(36)

627

$62.34
70.96
62.34
67.15

$67.15

13. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

(in thousands, except per share data)

Net sales
Gross profit
Operating profit
Earnings before provision for income

taxes

Provision for income taxes
Net earnings
EPS-Basic (1)
EPS-Diluted (1)

FISCAL 2015 QUARTER ENDED

FISCAL 2014 QUARTER ENDED

May 30,
2015

August 29,
2015

November 28,
2015

February 27,
2016

May 31,
2014

August 30,
2014

November 29,
2014

February 28,
2015

$2,738,495 $2,995,469
1,044,133 1,140,950
350,194

273,269

$2,952,031
1,115,311
292,858

$3,417,892 $2,656,698 $2,944,905
1,030,885 1,134,045
1,319,916
368,741
498,582

300,701

$2,942,980
1,128,974
352,683

253,368
94,917

325,141
123,463
$ 158,451 $ 201,678
1.22
$
1.21
$

0.94 $
0.93 $

274,806
96,990
$ 177,816
1.10
$
1.09
$

474,130
170,586

298,607
111,555

359,213
135,260
$ 303,544 $ 187,052 $ 223,953
1.18
$
1.17
$

1.93 $
1.91 $

0.94 $
0.93 $

333,114
107,706
$ 225,408
1.24
$
1.23
$

$3,336,593
1,325,875
532,168

512,901
191,840
$ 321,061
1.83
$
1.80
$

(1) Net earnings per share (“EPS”) amounts for each quarter are required to be computed independently and may not equal the amount computed

for the total year.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Bed Bath & Beyond Inc.:

We have audited the accompanying consolidated balance sheets of Bed Bath & Beyond Inc. and subsidiaries as
of February 27, 2016 and February 28, 2015, and the related consolidated statements of earnings, comprehensive
income, shareholders’ equity, and cash flows for each of the fiscal years in the three-year period ended
February 27, 2016. In connection with our audits of the consolidated financial statements, we also have audited
the consolidated financial statement schedule. These consolidated financial statements and financial statement
schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Bed Bath & Beyond Inc. and subsidiaries as of February 27, 2016 and February 28, 2015,
and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended
February 27, 2016, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the
related financial statement schedule, when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of February 27, 2016, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated April 26, 2016 expressed an unqualified
opinion on the effectiveness of the Company’s internal control over financial reporting.

Short Hills, New Jersey
April 26, 2016

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
CONTROL OVER FINANCIAL REPORTING

The Board of Directors and Shareholders
Bed Bath & Beyond Inc.:

We have audited Bed Bath & Beyond Inc. and subsidiaries’ (the “Company”) internal control over financial
reporting as of February 27, 2016, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s
management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in “Management’s Report on
Internal Control Over Financial Reporting,” appearing in Item 9A, Controls and Procedures. Our responsibility is
to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of February 27, 2016, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Bed Bath & Beyond Inc. and subsidiaries as of February 27,
2016 and February 28, 2015, and the related consolidated statements of earnings, comprehensive income,
shareholders’ equity and cash flows for each of the fiscal years in the three-year period ended February 27, 2016,
and our report dated April 26, 2016 expressed an unqualified opinion on those consolidated financial statements.

Short Hills, New Jersey
April 26, 2016

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our
management assessed the effectiveness of our internal control over financial reporting as of February 27, 2016.
In making this assessment, our management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”), released in 2013, Internal Control-Integrated
Framework.

Our management has concluded that, as of February 27, 2016, our internal control over financial reporting is
effective based on these criteria.

April 26, 2016

STOCK PRICE PERFORMANCE GRAPH

The graph shown below compares the performance of the Company’s common stock with that of the S&P 500
Index, the S&P Specialty Retail Index and the S&P Retail Composite Index over the same period (assuming the
investment of $100 in the Company’s common stock and each of the three Indexes on February 26, 2011, and the
reinvestment of dividends, if any).

S
R
A
L
L
O
D

300
275
250
225
200
175
150
125
100
75
50
25
-

Bed Bath & Beyond Inc.

S&P 500 Index

S&P Specialty Retail Index

S&P Retail Composite Index

2/26/11 2/25/12

3/2/13

3/1/14

2/28/15 2/27/16

BED BATH & BEYOND INC.

CORPORATE AND SHAREHOLDER INFORMATION

Corporate Office
650 Liberty Avenue
Union, NJ 07083
Telephone: 908/688-0888

Shareholder Information
A copy of the Company’s 2015
Form 10-K as filed with the Securities
and Exchange Commission (“SEC”)
may be obtained from the Investor
Relations Department at the
Corporate Office.
Telephone: 908/613-5820

The Company provides access to the
documents filed with the SEC through
the Investor Relations section of its
website,
www.bedbathandbeyond.com.

A copy of the Company’s Policy of
Ethical Standards for Business
Conduct is also provided at this
location.

Stock Listing
Shares of Bed Bath & Beyond Inc. are
traded on The NASDAQ Stock Market
LLC under the symbol BBBY.

Annual Meeting
The Annual Meeting of Shareholders
will be held at 9 a.m. July 1, 2016, at
The Madison Hotel, One Convent
Road, Morristown, New Jersey
07960.

Independent Auditors
KPMG LLP
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078

Transfer Agent
The Transfer Agent should be
contacted on questions of change of
address, name or ownership, lost
certificates and consolidation of
accounts.

American Stock Transfer & Trust
Company
6201 15th Avenue
Brooklyn, New York 11219
Telephone: 800/937-5449

Websites
www.andthat.com
www.bedbathandbeyond.com
www.buybuybaby.com
www.christmastreeshops.com
www.facevalues.com
www.harborlinen.com
www.harmondiscount.com
www.ofakind.com
www.t-ygroup.com
www.worldmarket.com
www.bedbathandbeyond.ca
www.buybuybaby.ca

Stock Activity
The following table sets forth the high
and low reported closing prices of the
Company’s common stock on The
NASDAQ Stock Market LLC during
fiscal 2015 and fiscal 2014:
QUARTER
HIGH
Fiscal 2015

LOW

First
Second
Third
Fourth
Fiscal 2014
First
Second
Third
Fourth

$77.68 $69.65
59.93
52.89
41.94

71.53
63.33
54.52

$69.80 $60.51
56.70
62.40
71.12

64.53
73.69
79.45

At May 6, 2016, there were
approximately 5,800 shareholders of
record. This number excludes
individual shareholders holding stock
under nominee security position
listings.

BED BATH & BEYOND INC.

650 Liberty Avenue
Union, NJ 07083
908-688-0888