Levi Strauss & Co

This non-binding advisory proposal asks shareholders to approve the overall compensation of the Company’s named executive officers as disclosed in the proxy statement. Management is seeking shareholder approval to validate its executive pay framework, which the Compensation and Human Capital Committee designed to attract, retain and incentivize leadership while aligning pay with long-term shareholder value through a mix of base salary, annual incentive (AIP) tied to Adjusted EBIT, Net Revenues and Cash Conversion Cycle, and long-term incentive awards heavily weighted to performance-based RSUs (PRSUs), SARs, and RSUs. The board recommends FOR, noting that a substantial portion of CEO and NEO pay is ‘‘at risk’’ and tied to multi-year performance metrics, that the company engages shareholders and uses independent benchmarking and consultants, and that say-on-pay feedback is considered in future compensation decisions. The proposal is advisory and thus non-binding, but an affirmative vote signals shareholder endorsement of the program and gives the board and Compensation Committee support to continue current practices. Key contextual points include strong FY25 financial performance (record gross margin, adjusted EBIT margin expansion, and increased shareholder returns), the company’s emphasis on pay-for-performance and clawback and ownership guidelines, and prior strong shareholder support (over 99% approval in 2025). Risks for shareholders include outsized realized pay in years of high equity appreciation and complexities in valuing performance-based equity; however, management has structured multi-metric PRSUs (TSR relative to peers, EBIT margin, ROIC, and revenue growth) and increased maximum payouts to better align outcomes to long-term strategy. The committee’s rationale emphasizes alignment with competitors, retention in a competitive talent market, and governance features (clawback, stock ownership guidelines, independent consultant) intended to mitigate pay-for-performance disconnects. Given the board’s recommendation and the program design, the proposal tests investor confidence in both pay structure and governance oversight rather than directing specific compensation components.

The shareholder proposal from the National Center for Public Policy Research requests a bylaw amendment to require the Audit Committee to annually assess sustainability initiatives on an expected value/ROI basis and to report findings to shareholders. The proponent’s core argument is that Levi’s public sustainability commitments (climate, water, supplier standards) lack project-level economic rigor—no published EV/NPV decision framework, limited disclosure of per-project payback or IRR, and no quantification of supplier-cost impacts—making it difficult for investors to judge whether sustainability spending is value-accretive or dilutive to shareholder value. The proposal would hardwire a specific oversight process into the bylaws, transferring to the Audit Committee (rather than management or NGCC committee) a prescriptive financial-assessment duty. Management counters that the proposal would micromanage the Board, constrain the Board’s judgment, duplicate and conflict with existing committee responsibilities (NGCC and Audit already share oversight), and impose a costly and potentially misleading requirement to quantify ROI for initiatives whose benefits are often long-term, intangible, and difficult to isolate. The company emphasizes existing disclosures (annual Sustainability Goals & Metrics, Climate Transition Plan), governance practices, committee collaboration, and that sustainability initiatives mitigate risks to operations and brand value and can produce long-term cost and reputational benefits that support shareholder value. From a governance perspective, requiring a bylaw amendment to mandate a particular analytical framework risks legal and operational rigidity and could force the company to produce simplistic or spurious financial metrics that obscure long-term strategic value. The proposal’s potential benefits for investors are greater transparency and the ability to compare sustainability spending to alternative capital uses; however, practical challenges include agreeing on discount rates, scenario weights, attribution of benefits, and increased reporting costs. The Board’s recommendation AGAINST reflects concern about prescriptive oversight chilling flexible strategy-setting, the existence of current oversight and reporting, and the difficulty of producing meaningful ROI measures for sustainability; shareholders must weigh the value of prescriptive demand for ROI disclosure against the risk of imposing an ill-fitting reporting mandate and the company’s existing sustainability governance and disclosures.