122 Fifth Avenue

New York, New York 10011

August 24, 2018

Dear Stockholder:

You are cordially invited to attend the 2018 annual meeting of stockholders of Barnes & Noble, Inc. The meeting will be held at 9:00 am, Eastern Time, on October 3, 2018 at the Barnes & Noble Booksellers, Union Square Store, 33 East 17^th Street, New York, New York.

Information about the meeting and the various matters on which the stockholders will act is included in the Notice of Annual Meeting of Stockholders and Proxy Statement which follow. Also included are a WHITE proxy card and postage-paid return envelope. WHITE proxy cards are being solicited on behalf of the Board of Directors of the Company.

You are urged to read the Proxy Statement carefully and, whether or not you plan to attend the Annual Meeting, to promptly submit a proxy: (a) by telephone or the Internet following the easy instructions on the enclosed WHITE proxy card or (b) by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided.

The Board of Directors unanimously recommends that you vote FOR the election of each of the Board of Directors’ nominees, FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement and FOR the ratification of the appointment of Ernst & Young LLP as independent registered public accountants for the Company’s fiscal year ending April 27, 2019.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on October 3, 2018: The Proxy Statement and the Company’s 2018 Annual Report to Stockholders are available online at www.bn2018annualmeeting.com.

Your vote is extremely important no matter how many shares you own. If you have any questions or require any assistance with voting your shares, please contact Barnes & Noble’s proxy solicitor:

Innisfree M&A Incorporated

Stockholders May Call Toll-Free: (877) 456-3422.

Banks and Brokers May Call Collect: (212) 750-5833.

122 Fifth Avenue

New York, New York 10011

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 3, 2018

The Annual Meeting of Stockholders of Barnes & Noble, Inc. (the “Company”) will be held at 9:00 am, Eastern Time, on October 3, 2018 at the Barnes & Noble Booksellers, Union Square Store, 33 East 17^th Street, New York, New York for the following purposes:

Only holders of record of Common Stock of the Company as of the close of business on August 6, 2018 are entitled to notice of and to vote at the meeting and any adjournment or postponement thereof.

The Board of Directors unanimously recommends that you vote FOR the election of each of the Board of Directors’ nominees, FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement and FOR the ratification of the appointment of Ernst & Young LLP as independent registered public accountants for the Company’s fiscal year ending April 27, 2019.

Sincerely,

BRADLEY A. FEUER

Vice President, General Counsel and Corporate Secretary

New York, New York

August 24, 2018

The Board of Directors urges you to read the Proxy Statement carefully and, whether or not you plan to attend the Annual Meeting, to promptly submit a proxy: (a) by telephone or the Internet following the easy instructions on the enclosed WHITE proxy card or (b) by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided.

TABLE OF CONTENTS

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BARNES & NOBLE, INC.

122 Fifth Avenue

New York, New York 10011

PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 3, 2018

INTRODUCTION

This Proxy Statement and enclosed WHITE proxy card are being furnished commencing on or about August 24, 2018 in connection with the solicitation by the Board of Directors (the “Board”) of Barnes & Noble, Inc., a Delaware corporation (the “Company”), of proxies for use at its annual meeting of stockholders to be held on October 3, 2018 and any adjournment or postponement thereof (the “Meeting”) for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.

The Board of Directors unanimously recommends that you vote FOR the election of each of the Board of Directors’ nominees, FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement and FOR the ratification of the appointment of Ernst & Young LLP as independent registered public accountants for the Company’s fiscal year ending April 27, 2019.

Stockholders Entitled to Vote

Only holders of record of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), as of the close of business on August 6, 2018 are entitled to notice of and to vote at the Meeting. As of the record date, 73,018,100 shares of Common Stock were outstanding, which number includes 140,840 shares of unvested restricted stock that have voting rights and that are held by members of the Board and the Company’s employees. Each share of Common Stock entitles the record holder thereof to one vote on each matter brought before the Meeting.

How to Vote

Your vote is very important to the Board no matter how many shares of Common Stock you own. Whether or not you plan to attend the Meeting, we urge you to vote your shares today.

If You Are a Registered Holder of Common Stock

If you are a registered holder of Common Stock (including unvested restricted stock), you may vote your shares either by voting by proxy in advance of the Meeting or by voting in person at the Meeting. By submitting a proxy, you are legally authorizing another person to vote your shares on your behalf. We urge you to use the enclosed WHITE proxy card to vote FOR the Board’s nominees, FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers as disclosed in this Proxy Statement and FOR the ratification of the appointment of Ernst & Young LLP as independent registered public accountants for the Company’s fiscal year ending April 27, 2019. If you submit your executed WHITE proxy card, but you do not indicate how your shares are to be voted, then your shares will be voted in accordance with the Board’s recommendations set forth in this Proxy Statement. In addition, if any other matters are brought before the Meeting (other than the proposals contained in this Proxy Statement), then the individuals listed on the WHITE proxy card will have the authority to vote your shares on those other matters in accordance with their discretion and judgment.

Whether or not you plan to attend the Meeting, we urge you to promptly submit a proxy: (a) by telephone or the Internet following the easy instructions on the enclosed WHITE proxy card or (b) by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided. If you later decide to attend the Meeting and vote in person, that vote will automatically revoke any previously submitted proxy.

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If You Hold Your Shares in “Street Name”

If you hold your shares in “street name”, i.e., through a bank, broker or other holder of record (a “custodian”), your custodian is required to vote your shares on your behalf in accordance with your instructions. If you do not give instructions to your custodian, your custodian will not be permitted to vote your shares with respect to “non-routine” items, such as the election of directors and the approval, on an advisory basis, of the compensation of the Company’s named executive officers. Accordingly, we urge you to promptly give instructions to your custodian to vote FOR all items on the agenda by using the voting instruction card provided to you by your custodian. Please note that if you intend to vote your street name shares in person at the Meeting, you must provide a “legal proxy” from your custodian at the Meeting.

Questions on How to Vote

If you have any questions or require any assistance with voting your shares, please contact the Company’s proxy solicitor:

Innisfree M&A Incorporated

Stockholders May Call Toll-Free: (877) 456-3422.

Banks and Brokers May Call Collect: (212) 750-5833.

Quorum and Votes Required

Quorum

The presence in person or by proxy at the Meeting of the holders of shares of capital stock of the Company having a majority of the voting power of the capital stock entitled to vote at the Annual Meeting outstanding as of August  6, 2018 will constitute a quorum.

Votes Required

The three nominees for director receiving the highest vote totals will be elected as directors of the Company.

Approval of the proposal regarding approval, on an advisory basis, of compensation of the Company’s named executive officers requires the affirmative vote of a majority of the votes cast on the proposal.

Because the vote on the approval of the proposal regarding approval of compensation of named executive officers is advisory, it will not be binding upon the Board.

Approval of the proposal to ratify the appointment of the Company’s independent registered public accountants requires the affirmative vote of a majority of the votes cast on the proposal.

Withheld Votes, Abstentions and Broker Non-Votes

With respect to the proposal to elect directors, withheld votes and any “broker non-votes” are not counted in determining the outcome of the election. A “broker non-vote” occurs when a custodian does not vote on a particular proposal because it has not received voting instructions from the applicable beneficial owner and does not have discretionary voting power on the matter in question.

With respect to the proposal regarding approval, on an advisory basis, of compensation of the Company’s named executive officers, abstentions and any “broker non-votes” would not be included in the votes cast and, as such, will have no effect on the outcome of this proposal.

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With respect to the proposal to ratify the appointment of the Company’s independent registered public accountants, abstentions and any “broker non-votes” would not be included in the votes cast and, as such, will have no effect on the outcome of this proposal.

Withheld votes, abstentions and any “broker non-votes” will be included in determining whether a quorum is present.

Attendance at the Annual Meeting

Attendance at the Meeting or any adjournment or postponement thereof will be limited to stockholders of record of the Company as of the close of business on the record date and guests of the Company. If you are a stockholder of record, your name will be verified against the list of stockholders of record prior to your admittance to the Meeting or any adjournment or postponement thereof. Please be prepared to present photo identification for admission. If you hold your shares in street name or through the Company’s 401(k) Plan, you will need to provide proof of beneficial ownership, such as a brokerage account statement, a copy of a voting instruction form provided by your custodian with respect to the Meeting, or other similar evidence of ownership, as well as photo identification, in order to be admitted to the Meeting. Please note that if you hold your shares in street name and intend to vote in person at the Meeting, you must also provide a “legal proxy” obtained from your custodian. Note that 401(k) Plan participants will not be able to vote their 401(k) Plan shares in person at the Meeting.

How to Revoke Your Proxy

Your proxy is revocable. The procedure you must follow to revoke your proxy depends on how you hold your shares.

If you are a registered holder of Common Stock, you may revoke a previously submitted proxy by submitting another valid proxy (whether by telephone, the Internet or mail) or by providing a signed letter of revocation to the Secretary of the Company before the closing of the polls at the Meeting. Only the latest-dated validly executed proxy will count. You also may revoke any previously submitted proxy by attending the Meeting and voting your shares in person. Note that simply attending the Meeting without taking one of the above actions will not revoke your proxy.

If you hold shares in street name, in general, you may revoke a previously submitted voting instruction by submitting to your custodian another valid voting instruction (whether by telephone, the Internet or mail) or a signed letter of revocation. Please contact your custodian for detailed instructions on how to revoke your voting instruction and the applicable deadlines.

ELECTION OF DIRECTORS—PROPOSAL 1

Introduction

The Board currently consists of nine directors. At the 2017 annual meeting of stockholders, stockholders approved a proposal to declassify the Board. Accordingly, the declassification is being phased in, and the directors standing for election at the Meeting will stand for election for one-year terms, as will each class of directors standing for election at each subsequent annual meeting of stockholders. At the 2020 annual meeting of stockholders, and at each annual meeting of stockholders thereafter, all directors will stand for election for one-year terms. The directors are currently divided into three classes, consisting of three members whose terms expire upon the election and qualification of their successors at the Meeting, three members whose terms expire at the 2019 annual meeting of stockholders and three members whose terms expire at the 2020 annual meeting of stockholders. The Board unanimously recommends using the enclosed WHITE proxy card to vote FOR each of the Board’s three nominees for director.

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Information Concerning the Directors and the Board’s Nominees

Background information with respect to the Board and the Board’s nominees for election as directors appears below. See “Security Ownership of Certain Beneficial Owners and Management” for information regarding such persons’ holdings of equity securities of the Company.

At the Meeting, three directors will be elected. Scott S. Cowen, William Dillard, II and Patricia L. Higgins are the Board’s nominees for election as directors at the Meeting, each to hold office for a term of one year until the annual meeting of stockholders to be held in 2019 and until his or her successor is elected and qualified. Each of the nominees has consented to be named in this Proxy Statement and to serve on the Board, if elected. However, if any nominee is unable to serve or for good cause will not serve, proxies may be voted for a substitute designated by the Board.

The terms of Scott S. Cowen, William Dillard, II and Patricia L. Higgins expire upon the election and qualification of their successors at the Meeting. The terms of Al Ferrara, Paul B. Guenther and Leonard Riggio expire in 2019. The terms of Kimberley A. Van Der Zon, George Campbell, Jr. and Mark D. Carleton expire in 2020.

On July 3, 2018, the Board announced the termination of the Company’s Chief Executive Officer, Demos Parneros, for violations of the Company’s policies. In connection with the termination, Mr. Parneros was removed from the Board.

Nominees for Election as Director

The following individuals are nominees for director at the Meeting. The Board unanimously recommends a vote FOR each of the below nominees for director using the enclosed WHITE proxy card.

Scott S. Cowen has been a director of the Company since April 2014. Dr. Cowen serves as the Chair of the Corporate Governance and Nominating Committee and as a member of the Compensation Committee. Dr. Cowen has been the president emeritus and distinguished University chair of Tulane University since July 2014. From July 1998 to July 2014, Dr. Cowen served as the president of Tulane University. While serving as president of Tulane University he led the school, as well as the City of New Orleans, through the aftermath of Hurricane Katrina and developed unique and exceptional skills in crisis leadership and management. In recognition of his leadership skills, he received the Carnegie Award for Academic Leadership, the TIAA-CREF Hesburgh Award for Leadership Excellence in Higher Education, and was named one of the “Ten Best College Presidents” in America by Time magazine. Prior to 1998, Dr. Cowen was dean at the Weatherhead School of Management at Case Western Reserve University, where he was also a professor for 23 years. Dr. Cowen has served as a board member of Newell Brands, Inc. (formerly Newell Rubbermaid, Inc.), a consumer products corporation, from 1999 to 2018, Forest City Realty Trust, Inc. (formerly Forest City Enterprises, Inc.), a real estate developer, from 1989 to 2018 and NACCO Industries, Inc., a publicly traded mining, small appliances and

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specialty retail holding company, from May 2014 to August 2016. Since 2016, Dr. Cowen has served as a board member of American Greetings Corporation, formerly a publicly traded greeting card company, and previously served as a board member of American Greetings Corporation from 1989 to 2013. Since January 2015, Dr. Cowen has been serving as a senior advisor for the Boston Consulting Group. In 2010, President Barack Obama appointed him to the White House Council for Community Solutions, which advised the President on the best ways to mobilize citizens, non-profits, businesses and government to address community needs. Dr. Cowen recently became a member of the Board of Trustees of Case Western Reserve University and served as a trustee of the University of Notre Dame from 2015 to 2018.

Qualifications, Experience, Attributes and Skills. Dr. Cowen has extensive academic and professional expertise in the areas of strategic financial management systems, corporate governance and leadership, including as a consultant with public companies in such areas and significant experience in retail and consumer business and crisis management, including in connection with the recovery from Hurricane Katrina.

William Dillard, II has been a director of the Company since November 1993. Mr. Dillard serves on the Corporate Governance and Nominating Committee. Mr. Dillard has been the Chief Executive Officer of Dillard’s, Inc. (“Dillard’s”), a national department store and retailer of luxury goods, since May 1998 and he has been a director of Dillard’s since 1968. He was appointed Chairman of Dillard’s in May 2002. Mr. Dillard is also a director of Acxiom Corporation (“Acxiom”), a company that provides marketing services focused on the use of technology.

Qualifications, Experience, Attributes and Skills. Mr. Dillard has a total of more than 40 years of executive and board-level experience, focused in the retail industry. He is also a director of Acxiom as well as Chief Executive Officer of Dillard’s. This experience in the retail industry allows Mr. Dillard to bring to the Board substantial knowledge of the retail sector.

Patricia L. Higgins has been a director of the Company since June 2006. Ms. Higgins is the Lead Independent Director and serves on the Audit Committee and the Corporate Governance and Nominating Committee. Ms. Higgins was President, Chief Executive Officer and a director of Switch and Data Facilities Company, Inc., a leading provider of network interconnection and collocation services, from September 2000 to February 2004. Prior to that, she served as Chairman and Chief Executive Officer of The Research Board from May 1999 to August 2000 and Vice President and Chief Information Officer of Alcoa Inc. from January 1997 to April 1999. Ms. Higgins is also a director of Travelers and Dycom Industries. During the previous five years, Ms. Higgins also served as a director of Delta Air Lines, Visteon and SpectraSite Communications. Ms. Higgins was a director of Barnes & Noble.com from 1999 to 2004.

Qualifications, Experience, Attributes and Skills. Ms. Higgins has over 30 years of technology experience, holding senior executive positions in telecommunications, computing and information technology. Ms. Higgins has had extensive board experience as a director of nine public companies, including as a member of six audit committees, chairing two; a member of six compensation committees, chairing one; a member of four governance/nominating committees, chairing one; and chairing one finance committee. This wide-ranging experience allows Ms. Higgins to bring to the Board a significant depth of understanding into the operation and management of public companies, including those in the technology sector.

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE USING THE ENCLOSED WHITE PROXY CARD.

Other Directors

Leonard Riggio is the founder of the Company and has been Chairman of the Board and a principal stockholder since its inception in 1986. He served as Chief Executive Officer from 1986 through February 2002

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and from December 2016 through April 2017. He was Chairman of the Board, Chief Executive Officer and the principal stockholder of Barnes & Noble College Booksellers, Inc. (B&N College, a subsidiary of the Company until August 2, 2015), one of the nation’s largest operators of college bookstores, from 1965 and until its acquisition by the Company in September 2009. From 1985 to February 2017, Mr. Riggio was a principal beneficial owner of MBS Textbook Exchange, Inc. (“MBS”), one of the nation’s largest wholesalers of college textbooks. He also served as a director of GameStop Corp. (“GameStop”), a national video game retailer from 2001 to 2011.

Qualifications, Experience, Attributes and Skills. Mr. Riggio has approximately 45 years of entrepreneurial and executive and board-level experience, resulting from his activities as (at various times) the founder, Chief Executive Officer, chairman of the board and significant stockholder of the Company, B&N College, MBS and GameStop. This extensive experience allows Mr. Riggio to bring to the Board a deep insight into the operations, challenges and complex issues facing the Company and retail-oriented businesses in general.

Kimberley A. Van Der Zon has been a director of the Company since April 2017. Ms. Van Der Zon serves on the Compensation Committee and the Corporate Governance and Nominating Committee. In 1999, Ms. Van Der Zon joined Egon Zehnder, the global board advisory, executive search and leadership consulting firm, where she was a Partner from 2005-2018. Ms. Van Der Zon served as a trusted advisor to boards and chief executive officers on all facets of strategically maximizing human capital, including talent management, chief executive officer and board succession planning, and governance. Previously, Ms. Van Der Zon served as Vice President Corporate Marketing from 1996-1999 at BMO Financial Group. From 1992-1996, Ms. Van Der Zon served as Senior Brand Marketing Manager and Director New Business Development at Labatt Breweries. Ms. Van Der Zon commenced her career at Procter & Gamble in Marketing, where she was ultimately promoted to Senior Brand Manager, responsible for the P&L leadership of a portfolio of iconic brands. Ms. Van Der Zon holds a Master of Business Administration degree from the University of Toronto, and an Honors Bachelor of Business Administration degree from Wilfrid Laurier University.

Qualifications, Experience, Attributes and Skills. Ms. Van Der Zon has over 30 years of strategic consulting, brand management and marketing experience. She has wide-ranging executive experience, having served in functional and operational roles across the professional services, consumer, and financial services sectors, and her consulting experience has given her extensive exposure to most other sectors. She has regional expertise in the U.S., U.K., and Canada, with strong knowledge of Europe and Asia as well. She brings to the Board her extensive knowledge of talent management, succession planning, corporate governance and board leadership, in addition to marketing and brand management. Further, across both her corporate experience and her consulting experience with boards and CEOs across most industries, she has a comprehensive understanding of the operations and management of public companies.

George Campbell, Jr. has been a director of the Company since 2008. Dr. Campbell serves as Chair of the Compensation Committee and is a member of the Audit Committee. Dr. Campbell, a physicist, is currently a member of the Board of Trustees of the Webb Institute, an engineering college specializing in naval architecture and marine engineering. Prior to that, Dr. Campbell served as the Chairman of the Webb Institute. Dr. Campbell was the President from July 2000 through June 2011, and is now President Emeritus of The Cooper Union for the Advancement of Science and Art, New York, NY (“Cooper Union”), a college focusing primarily on engineering, architecture and art. Dr. Campbell is also a director of Consolidated Edison, Inc. and the Josiah Macy Jr. Foundation. He is also a Trustee of the MITRE Corporation, Rensselaer Polytechnic Institute, Montefiore Medical Center (Emeritus), and the Institute of International Education. Dr. Campbell is also a Fellow of the American Association for the Advancement of Science and the New York Academy of Sciences.

Qualifications, Experience, Attributes and Skills. Dr. Campbell has a total of more than 25 years of executive and board-level experience serving on the boards of major companies, as well as serving as President and Chief Executive Officer of Cooper Union. Dr. Campbell’s experience has generally been focused in higher education, and he has more than 12 years of experience in research and development in telecommunications technology at Bell Laboratories. Dr. Campbell also has extensive experience serving on the board of trustees of

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academic and research institutions and non-profit organizations. This experience allows Dr. Campbell to bring to the Board a unique insight into the Company’s operations.

Mark D. Carleton has served as a director of the Company since September 2011. Mr. Carleton serves on the Audit Committee. Mr. Carleton has been Chief Financial Officer of Liberty Media Corporation, Qurate Retail, Inc., Liberty Broadband Corporation and GCI Liberty since October 2016. Prior to his current role, Mr. Carleton served as Chief Development Officer and Senior Vice President of Liberty Media, and served as a Senior Vice President of predecessors of Liberty Media, since 2003. His primary responsibilities include corporate development and oversight of Liberty Media’s technology, music, telecom, satellite and sports interests. Prior to Liberty Media, Mr. Carleton served as a Partner with KPMG LLP from 1993 to 2003, where he had overall responsibility for the communications sector and also served as a member of KPMG LLP’s Board of Directors. Mr. Carleton currently serves as a director of Live Nation Entertainment, Inc., Sirius XM Radio Inc. and a number of private companies and formerly served as a director of DIRECTV.

Qualifications, Experience, Attributes and Skills. Mr. Carleton received a Bachelor of Science degree in Accounting from Colorado State University, where he currently is a member of the College of Business Global Leadership Council. He also is a member of the University of Colorado Sports and Entertainment Advisory Council and a member of the Board of Directors of United States Speedskating. In addition, Mr. Carleton was the Executive in Resident at the Colorado State University Business School for the 2011-2012 school year. Mr. Carleton brings to the Board, among his other skills and qualifications, financial and accounting expertise acquired while serving as a partner at KPMG LLP. In addition, Mr. Carleton’s service on other public company boards has provided him with a number of skills, including leadership development and succession planning, risk assessment, and shareholder and government relations.

Al Ferrara, Certified Public Accountant, has served as a director of the Company since September 2016. Mr. Ferrara serves on the Audit Committee and the Compensation Committee. Mr. Ferrara was previously the National Director of Retail & Consumer Products at BDO USA, LLP. Prior to that position, Mr. Ferrara worked at BDO USA, LLP in a variety of positions since 1994 and was a member of its Board of Directors from 2003 to 2010. Mr. Ferrara has provided services as a partner of public and private retail clients, including: Barnes & Noble, Inc., Aeropostale, Inc., Children’s Place, Inc., GameStop Corp., Kmart Corporation, Modells Sporting Goods, Inc., Deb Shops, Inc., A.C. Moore Incorporated, Sleepy’s, LLC, Syms Corporation, Camuto Group, Inc., J. McLaughlin (Seas Island Clothiers, LLC) and 1-800-Flowers.com, Inc. Previously, Mr. Ferrara served as the Northeast Regional Managing Partner at BDO USA, LLP from 2000 to 2003. Mr. Ferrara was also a director and BDO USA, LLP representative at Trenwith Capital, Inc. (now BDO Capital Advisors, LLC) from 2000 to 2015 and a member of the retail advisory board at Hilco Retail Consulting from 2013 to 2015.

Qualifications, Experience, Attributes and Skills. Mr. Ferrara has over 45 years of experience in public accounting and extensive knowledge of the retail industry along with SEC experience.

Paul B. Guenther has been a director of the Company since June 2015. Mr. Guenther serves as Chair of the Audit Committee. Mr. Guenther is the former President of Paine Webber Group, Inc. and also served on its board of directors. He also retired as a director of Guardian Life Insurance in December 2015, a Fortune 250 financial services company. He was chairman of Community & Southern Holdings, a $4 billion Atlanta based bank sold in 2016. Mr. Guenther serves as the chairman of the executive committee at Lenox Hill Hospital and is a Director of Northwell, the parent of Lenox Hill and serves as a director of Fordham University, where he previously served as the Chairman of Board. Mr. Guenther has also served as chairman of the New York Philharmonic and is the former director of the Securities Industry Association, a former director of ZAIS Group Holdings, and a former President and Director of Columbia’s Graduate School of Business Alumni Association.

Qualifications, Experience, Attributes and Skills. Mr. Guenther has expertise in managing large complex organizations. In addition, Mr. Guenther brings a sophisticated knowledge of finance to the Board, as well as a deep understanding of operations. Mr. Guenther is a Chartered Financial Analyst.

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CORPORATE GOVERNANCE

Meetings and Committees of the Board

The Board met 6 times during the Company’s 2018 fiscal year beginning on April 30, 2017 and ending on April 28, 2018 (“Fiscal 2018”). All incumbent directors attended at least 5 of the 6 meetings of the Board, during the period in which he or she served as a director, occurring during Fiscal 2018, with the exception of Mark D. Carleton. All incumbent directors, with the exception of Mark D. Carleton, attended 100% of the committee meetings occurring during Fiscal 2018 on which he or she served, during the period in which he or she served as a committee member. As a result, all incumbent directors, with the exception of Mark D. Carleton, attended at least 92% of the aggregate of the meetings of the Board and committees on which he or she served, during the period in which he or she served as a director or committee member, respectively, occurring during Fiscal 2018. Mr. Carleton attended 4 of 6 board meetings and 5 of 8 committee meetings occurring during Fiscal 2018, and, since September 18, 2017, he has attended 3 of 4 board meetings and 4 of 5 committee meetings.

Based on information supplied to it by the directors and the director nominees, the Board has affirmatively determined that each of Kimberley A. Van Der Zon, George Campbell, Jr., Mark D. Carleton, Scott S. Cowen, William Dillard, II, Al Ferrara, Paul B. Guenther and Patricia L. Higgins is “independent” under the listing standards of the New York Stock Exchange (the “NYSE”), and has made such determinations based on the fact that none of such persons have had, or currently have, any relationship with the Company or its affiliates or any executive officer of the Company or his or her affiliates, that would currently impair their independence, including, without limitation, any such commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship. In determining the independence of Dr. Campbell, the Board considered a charitable contribution made by Mr. Riggio during the Company’s 2017 fiscal year beginning on May 1, 2016 and ending on April 29, 2017 (“Fiscal 2017”) to an educational institution with which Dr. Campbell’s wife is affiliated.

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee.

Audit Committee. The Audit Committee has the principal function of, among other things, reviewing the adequacy of the Company’s internal system of accounting controls, the appointment, compensation, retention and oversight of the independent registered public accountants, conferring with the independent registered public accountants concerning the scope of their examination of the books and records of the Company, reviewing and approving related party transactions (see “Certain Relationships and Related Transactions” below) and considering other appropriate matters regarding the financial affairs of the Company. In addition, the Audit Committee has established procedures for the receipt, retention and treatment of confidential and anonymous complaints regarding the Company’s accounting, internal accounting controls and auditing matters. The Board has adopted a written charter setting out these functions of the Audit Committee, a copy of which is available on the Company’s website at www.barnesandnobleinc.com and is available in print to any stockholder who requests it in writing to the Company’s Corporate Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011. The members of the Audit Committee currently are Paul B. Guenther (Chair), Mark D. Carleton, George Campbell, Jr., Patricia L. Higgins and Al Ferrara. In addition to meeting the independence standards of the NYSE, each member of the Audit Committee is financially literate and meets the independence standards established by the Securities and Exchange Commission (the “SEC”). The Board has also determined that Mr. Guenther, Mr. Carleton, Dr. Campbell, Ms. Higgins and Mr. Ferrara each has the requisite attributes of an “audit committee financial expert” as defined by regulations promulgated by the SEC and that such attributes were acquired through relevant education and/or experience. The Audit Committee met 8 times during Fiscal 2018.

Compensation Committee. The principal function of the Compensation Committee is to review and approve the compensation and employment arrangements for the Company’s executive officers. The Compensation Committee is also responsible for administering various compensation plans of the Company. The

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members of the Compensation Committee currently are George Campbell, Jr. (Chair), Al Ferrara, Scott S. Cowen and Kimberley A. Van Der Zon. All members of the Compensation Committee meet the independence standards of the NYSE. The Board has adopted a written charter setting out the functions of the Compensation Committee, which is available on the Company’s website at www.barnesandnobleinc.com and is available in print to any stockholder who requests it in writing to the Company’s Corporate Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011. The Compensation Committee met 5 times during Fiscal 2018. In Fiscal 2018, as in prior years, the Compensation Committee directly engaged Frederic W. Cook & Co., Inc. (“FW Cook”), an independent consulting firm, to provide information, analyses and advice regarding executive compensation and other matters. For further discussion of the nature and scope of the independent compensation consultant’s assignment, see the “Compensation Discussion and Analysis—Process for Determining Named Executive Officer Compensation—Retention of Consultants” section of this Proxy Statement.

Corporate Governance and Nominating Committee. The principal function of the Corporate Governance and Nominating Committee is to oversee the corporate governance of the Company. The Corporate Governance and Nominating Committee is also responsible for, among other things, identifying and evaluating individuals to serve as directors of the Company and recommending to the Board such individuals, evaluating the Board and management and recommending Board committee assignments. The members of the Corporate Governance and Nominating Committee currently are Scott S. Cowen (Chair), Patricia L. Higgins, Kimberley A. Van Der Zon and William Dillard, II. All members of the Corporate Governance and Nominating Committee meet the independence standards of the NYSE. The Board has adopted a written charter setting out the functions of the Corporate Governance and Nominating Committee, which is available on the Company’s website at www.barnesandnobleinc.com and is available in print to any stockholder who requests it in writing to the Company’s Corporate Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011. The Corporate Governance and Nominating Committee met 3 times during Fiscal 2018.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee has ever been an employee of the Company, and none of them had a relationship requiring disclosure in this Proxy Statement under Item 404 of SEC Regulation S-K, other than Ms. Van Der Zon (as described under “Certain Relationships and Related Transactions” below). None of the Company’s executive officers serves, or in Fiscal 2018 served, as a member of the Board or Compensation Committee of any entity that has one or more of its executive officers serving as a member of the Company’s Board or the Company’s Compensation Committee.

Director Qualifications and Nominations

Minimum Qualifications

The Company does not set specific criteria for directors except to the extent required to meet applicable legal, regulatory and stock exchange requirements, including, but not limited to, the independence requirements of the NYSE and the SEC, as applicable. Nominees for director will be selected on the basis of outstanding achievement in their personal careers; board experience; wisdom; integrity; ability to make independent, analytical inquiries; understanding of the business environment; and willingness to devote adequate time to Board duties. While the selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, the Corporate Governance and Nominating Committee believes that each director should have a basic understanding of (a) the principal operational and financial objectives and plans and strategies of the Company, (b) the results of operations and financial condition of the Company and of any significant subsidiaries or businesses, and (c) the relative standing of the Company and its businesses in relation to its competitors.

The Company does not have a specific policy regarding the diversity of the Board. Instead, the Corporate Governance and Nominating Committee considers the Board’s overall composition when considering director

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candidates, including whether the Board has an appropriate combination of professional experience, skills, knowledge and variety of viewpoints and backgrounds in light of the Company’s current and expected future needs. In addition, the Corporate Governance and Nominating Committee also believes that it is desirable for new candidates to contribute to a variety of viewpoints on the Board, which may be enhanced by a mix of different professional and personal backgrounds and experiences.

Nominating Process

Although the process for identifying and evaluating candidates to fill vacancies and/or expand the Board will inevitably require a practical approach in light of the particular circumstances at such time, the Board has adopted the following process to guide the Corporate Governance and Nominating Committee in this respect. The Corporate Governance and Nominating Committee is willing to consider candidates submitted by a variety of sources (including incumbent directors, stockholders (as described below), Company management and third-party search firms) when reviewing candidates to fill vacancies and/or expand the Board. If a vacancy arises or the Board decides to expand its membership, the Corporate Governance and Nominating Committee may ask each director to submit a list of potential candidates for consideration. The Corporate Governance and Nominating Committee then evaluates each potential candidate’s educational background, employment history, outside commitments and other relevant factors to determine whether he or she is potentially qualified to serve on the Board. At that time, the Corporate Governance and Nominating Committee also will consider potential nominees submitted by stockholders, if any, in accordance with the procedures described below, or by the Company’s management and, if the Corporate Governance and Nominating Committee deems it necessary, retain an independent third-party search firm to provide potential candidates. The Corporate Governance and Nominating Committee seeks to identify and recruit the best available candidates, and it intends to evaluate qualified stockholder nominees on the same basis as those submitted by Board members, Company management, third-party search firms or other sources.

After completing this process, the Corporate Governance and Nominating Committee will determine whether one or more candidates are sufficiently qualified to warrant further investigation. If the process yields one or more desirable candidates, the Corporate Governance and Nominating Committee will rank them by order of preference, depending on their respective qualifications and the Company’s needs. The Corporate Governance and Nominating Committee Chair will then contact the preferred candidate(s) to evaluate their potential interest and to set up interviews with the full Corporate Governance and Nominating Committee. All such interviews include only the candidate and one or more Corporate Governance and Nominating Committee members. Based upon interview results and appropriate background checks, the Corporate Governance and Nominating Committee then decides whether it will recommend the candidate’s nomination to the full Board.

When nominating a sitting director for re-election at an annual meeting, the Corporate Governance and Nominating Committee will consider the director’s performance on the Board and its committees and the director’s qualifications in respect of the criteria referred to above.

Consideration of Stockholder-Nominated Directors

In accordance with its charter, the Corporate Governance and Nominating Committee will consider candidates for election to the Board at an annual stockholder meeting if submitted by a stockholder in a timely manner and in accordance with the advance notice provision of our by-laws. Any stockholder wishing to submit a candidate for consideration for election at a stockholder meeting should send the following information to the Company’s Corporate Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011:

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In accordance with the charter of the Corporate Governance and Nominating Committee, in order for the Corporate Governance and Nominating Committee to consider a candidate submitted by a stockholder for election at a stockholder meeting, the Company must receive the foregoing information not less than 30 days, nor more than 60 days, prior to such meeting; provided, that if less than 40 days’ notice of such meeting is given to stockholders, the Company must receive the foregoing information no later than the 10^th day following the day on which notice of the date of such meeting was mailed or publicly disclosed. The Company’s Corporate Secretary will promptly forward such materials to the Corporate Governance and Nominating Committee. The Company’s Corporate Secretary also will maintain copies of such materials for future reference by the Corporate Governance and Nominating Committee when filling Board positions.

Additionally, the Corporate Governance and Nominating Committee will consider stockholder-nominated candidates if a vacancy arises or if the Board decides to expand its membership, and at such other times as the Corporate Governance and Nominating Committee deems necessary or appropriate. In any such event, any stockholder wishing to submit a candidate for consideration should send the above-listed information to the Company’s Corporate Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011.

Certain Board Policies and Practices

Corporate Governance Guidelines and Code of Business Conduct and Ethics

The Board has adopted Corporate Governance Guidelines. The Board has also adopted a Code of Business Conduct and Ethics applicable to the Company’s employees, directors, agents and representatives, including consultants. The Corporate Governance Guidelines and the Code of Business Conduct and Ethics are available on the Company’s website at www.barnesandnobleinc.com. Copies of the Corporate Governance Guidelines and the Code of Business Conduct and Ethics are available in print to any stockholder who requests them in writing to the Company’s Corporate Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011.

Board Leadership Structure

The Chairman of the Board is selected by the members of the Board. The positions of Chairman and Chief Executive Officer were separate from 2002 until August 2016, when Mr. Riggio became Chief Executive Officer of the Company. Mr. Riggio served as both Chairman and Chief Executive Officer during his tenure as Chief Executive Officer from August 2016 to April 2017. The positions of Chairman and Chief Executive Officer again became separate in April 2017, when the Company appointed a new Chief Executive Officer. Since July 2018, the duties of the office of the Chief Executive Officer have been shared by a leadership group, as described in further detail below. The office of the Chief Executive Officer reports directly to the Board. Mr. Riggio currently serves as the Executive Chairman of the Board. The Board has determined that the current structure separating the positions of Chairman and Chief Executive Officer continues to be appropriate in that it enables the Chairman of the Board to provide leadership on policy at the Board level while enabling the Chief Executive Officer, or those serving in the office of the Chief Executive Officer, as applicable, to focus on the duties of the Chief Executive Officer. Although the roles of Chief Executive Officer and Chairman are currently

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separated, the Board has not adopted a formal policy requiring such separation. The Board believes that the right Board leadership structure should, among other things, be informed by the needs and circumstances of the Company and the then current membership of the Board, and that the Board should remain adaptable to shaping the leadership structure as those needs and circumstances change.

In accordance with the Corporate Governance Guidelines, non-management directors meet in executive sessions at every Board meeting. In addition, the independent directors meet at least once a year in an executive session of only independent directors. Ms. Higgins is currently the Lead Independent Director.

Risk Oversight

The Board’s primary function is one of oversight. In connection with its oversight function, the Board oversees the Company’s policies and procedures for managing risk. The Board administers its risk oversight function primarily through its Committees. Board Committees have assumed oversight of various risks that have been identified through the Company’s enterprise risk assessment. The Audit Committee reviews the Company’s risk assessment and risk management policies and the Audit Committee reports to the Board on the Company’s enterprise risk assessment.

Communications Between Stockholders and the Board

Stockholders and other interested persons seeking to communicate with the Board should submit any communications in writing to the Company’s Corporate Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011. Any such communication must state the number of shares beneficially owned by the stockholder making the communication. The Company’s Corporate Secretary will forward such communication to the full Board or to any individual director or directors (including the non-management directors as a group) to whom the communication is directed.

Attendance at Annual Meetings

All Board members are expected to attend in person the Company’s annual meetings of stockholders and be available to address questions or concerns raised by stockholders. All of the then-incumbent directors attended the 2017 annual meeting of stockholders.

Executive Officers

On July 3, 2018, the Board announced the termination of the Company’s Chief Executive Officer, Mr. Parneros, for violations of the Company’s policies. In order to ensure continuity going forward, the Company appointed a leadership group, consisting of Allen W. Lindstrom, Tim Mantel and Carl Hauch, to share the duties of the office of the Chief Executive Officer until a new Chief Executive Officer is named. Mr. Riggio remains Executive Chairman of the Company and is involved in its management. As of August 3, 2018, Frederic Argir retired from his position as the Company’s Chief Digital Officer and William E. Wood was appointed to the position of Chief Digital Officer.

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The Company’s executive officers as of August 6, 2018, as well as additional information with respect to such persons, are set forth in the table below.

Information with respect to executive officers of the Company who also are a director or director nominee is set forth in “Information Concerning the Directors and the Board’s Nominees” above.

Carl Hauch joined the Company as Vice President of Stores in July 2017. Mr. Hauch has also served as a member of the office of the Chief Executive Officer since July 3, 2018. Mr. Hauch joined the Company from CityMD, where he served as Chief Operating Officer from January 2015 to March 2016, and as Senior Vice President of Operations from June 2014 to January 2015. Prior to CityMD, Mr. Hauch served as a consultant and board member to several early-stage service companies from 2013 to June 2014. From 2008 to 2013, Mr. Hauch held various positions at Advance Auto Parts, Inc., including serving as Senior Vice President, National Operations and Customer Experience, and Senior Vice President, Human Resources. Prior to joining Advance Auto Parts, Mr. Hauch held various positions at Starbucks Coffee Company from 1994 to 2008, including serving as Vice President, Operations from 2005 to 2008, and as CEO of Starbucks Switzerland and Austria from 2003 to 2005.

Allen W. Lindstrom has been Chief Financial Officer of the Company since July 2013. Mr. Lindstrom has also served as a member of the office of the Chief Executive Officer since July 3, 2018. Prior to Mr. Lindstrom’s appointment as Chief Financial Officer of the Company, he served as Vice President, Corporate Controller of the Company from November 2007 to July 2013. From October 2011 to March 2012, Mr. Lindstrom also served as the interim Chief Financial Officer for the Company. Prior to joining the Company, Mr. Lindstrom was Chief Financial Officer at Liberty Travel, Inc. from April 2002 to November 2007. Prior to that, he held various positions at The Museum Company, Inc., Toys “R” Us, Inc. and Goldstein Golub Kessler & Company. Mr. Lindstrom is a Certified Public Accountant.

Tim Mantel was appointed Chief Merchandising Officer in February 2018. Mr. Mantel has also served as a member of the office of the Chief Executive Officer since July 3, 2018. Prior to his appointment as Chief Merchandising Officer of the Company, Mr. Mantel held the role of Chief Merchandising Officer for GNC Corporation from February 2016 to February 2018. Prior to that, Mr. Mantel was Senior Vice President, Food, Household Essentials and Food Service at Target Corporation from June 1994 to January 2015. Mr. Mantel previously served as President, Target Sourcing Services, and held various positions from business analyst to buyer to merchandise planning director early in his career. He has served on the boards of the Nibakure Children’s Village, a nonprofit that helps communities in Rwanda, as well as the Retail Industry Leaders Association Apparel Coalition.

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Bradley A. Feuer was appointed as the Company’s Vice President, General Counsel and Corporate Secretary in December 2013 after serving in an interim role since July 2013. From 2008 to 2013, Mr. Feuer served as the Vice President, Assistant General Counsel for the Company. Mr. Feuer joined the Company in 1999 and has worked across all departments within the organization. Prior to joining the Company, Mr. Feuer was an associate at the law firms of Weil, Gotshal and Manges LLP, and Brobeck Phleger & Harrison LLP.

Peter M. Herpich was appointed Vice President, Corporate Controller of the Company in October 2013 and Principal Accounting Officer of the Company in November 2013. From March 2010 to October 2013, Mr. Herpich was Vice President, Assistant Controller of the Company. From June 2004 to March 2010, he served as Director of Financial Reporting for the Company. Prior to that, he held various positions at the Company from January 1995 to June 2004. Mr. Herpich is a Certified Public Accountant.

Mary Ellen Keating joined the Company as Senior Vice President, Corporate Communications and Public Affairs in February 1998. Prior to that, she was an executive with Hill & Knowlton, Inc., a worldwide public relations firm, from 1991 to 1998, where she served as Executive Vice President and General Manager of Hill & Knowlton’s flagship New York office.

Michelle Smith became Vice President of Human Resources of the Company in November 1996. Ms. Smith joined the Company in September 1993 as Director of Human Resources. Ms. Smith is a member of the Society for Human Resource Management and serves on the National Retail Federation’s Committee on Employment Law.

William E. Wood was appointed Chief Digital Officer in August 2018. Mr. Wood joined the Company in December 2015 as Chief Information Officer. He is also responsible for the business operations and technology of BN.com, NOOK and Customer Service. He is also responsible for the information technology, telecommunication networks and computer systems that support the Company, as well as for allocating and evaluating the effectiveness of overall technology resources and strategies, and developing new systems. Mr. Wood was previously Chief Information Officer at EZCORP, Inc., where in 2014 he led an organizational transformation in information technology and was named “2015 Austin IT Executive of the Year” by the Austin, Texas Society for Information Management. He has extensive experience in retail, with previous high-level IT roles at Bass Pro Shops, Brookstone, Inc. and Dollar General Corporation. He has served as an advisory board member for several companies, and is a 10-year veteran of the United States Army. Mr. Wood has a Bachelor of Arts from Kent State University and an MBA from Vanderbilt University. He is also actively involved in several non-profit organizations.

The Company’s officers are elected annually by the Board and hold office at the discretion of the Board.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of shares of Common Stock, as of August 6, 2018, unless otherwise indicated, by each person known by the Company to own beneficially more than five percent of the Company’s outstanding Common Stock, by each director, by each director nominee, by each executive officer named in the Summary Compensation Table who was an executive officer as of August 6, 2018, unless otherwise indicated, and by all directors and executive officers of the Company as a group. Except as otherwise noted, to the Company’s knowledge, each person named in the table has sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by him, her or it. Unless otherwise indicated, the address of each person listed is c/o Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011.

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COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis summarizes the material elements of the Company’s compensation programs for its named executive officers. As of the end of our Fiscal 2018, which ended on April 28, 2018, the Company’s named executive officers (“NEOs”) were:

Executive Summary

Fiscal 2018 Business Performance Highlights

Fiscal 2018 was a challenging but important year for the Company. We made significant progress in many areas of the business and laid the groundwork for our multi-year strategic plan, which will center on better serving our customers, re-imagining our bookstores through a smaller footprint and returning to our bookselling roots.

In Fiscal 2018, our comparable store sales declined 5.4% and we generated Adjusted Consolidated EBITDA of $145 million, excluding non-recurring or unusual charges. (Adjusted Consolidated EBITDA is a non-GAAP financial measure. See Appendix A for a reconciliation of Adjusted Consolidated EBITDA to Operating Income, which is the most comparable GAAP measure.) We reduced annual expenses by $52 million, excluding non-recurring or unusual charges. In addition, we strengthened our leadership team with several key hires including Mr. Mantel, our new Chief Merchandising Officer, and Mr. Hauch, our Vice President of Stores.

In February 2018, we implemented a new labor model to increase customer engagement and reduce non-productive tasks, leading to an immediate improvement in our conversion rates. We have also tested various enhancements to our Membership program that grew our Membership base by over 500,000 members. Our Café team has successfully implemented several initiatives to grow our Café business, which resulted in positive comparable store sales in the second half of Fiscal 2018. We have also improved our omni-channel offerings and launched a ship-from-store program for BN.com orders, which has resulted in faster deliveries for our customers at a lower cost to the Company.

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Fiscal 2018 Compensation Highlights

Compensation for our NEOs in Fiscal 2018 was closely aligned with performance and the Company’s business and talent strategies.

Compensation and Governance Best Practices

The Compensation Committee regularly reviews best practices in governance and executive compensation. The Company’s current best practices and policies include the following, which are described in more detail in this Compensation Discussion and Analysis.

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Compensation Philosophy and Objectives

We Strive to Attract, Incentivize and Retain Talented Individuals. It is imperative that we attract, incentivize and retain individuals whose skills are critical to the current and long-term success of the Company.

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We Pay for Performance. We firmly believe that pay should be tied to performance. Superior performance enhances stockholder value and is a fundamental objective of the Company’s compensation program.

We Align Pay to Business Objectives and Long-Term Strategy. The compensation program is designed to reward and motivate the NEOs’ Company-wide performance and, as described below, individual performance in attaining business objectives and maximizing stockholder value. Compensation decisions are based on the principle that the long-term interests of the NEOs should be aligned with those of the Company’s stockholders.

Pay Mix

Compensation for our NEOs is weighted towards variable at-risk compensation, where actual amounts earned may differ from target amounts. Each of our NEOs has a target performance-based annual incentive compensation opportunity that is assessed annually by the Compensation Committee to ensure alignment with the Company’s compensation objectives and market practice. Since Fiscal 2015, each of our named executive officers in each applicable fiscal year, other than Mr. Riggio who does not receive long-term equity compensation awards and generally except in the case of new hires, has received annual awards under our long-term equity program that ultimately deliver value based on the returns realized by our stockholders, aligning the executive’s interests with those of our stockholders. In Fiscal 2018, each of our NEOs, other than Mr. Riggio who does not receive long-term equity compensation awards, received a grant of equity incentive awards that vested over a three-year period following the date of grant. Fifty percent of the grant date value of each such award also was subject to performance vesting conditions.

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The Fiscal 2018 target total direct compensation of our NEOs as a group, excluding Mr. Riggio, was, on average, approximately 61% variable at-risk compensation.

“Say-On-Pay” Results

At the Fiscal 2017 annual meeting of stockholders of the Company that was held on September 19, 2017, the stockholders approved, on an advisory basis, the Fiscal 2017 compensation of the Company’s NEOs, which is commonly referred to as a “say-on-pay” proposal, by an affirmative vote of approximately 58% of the votes cast on the proposal. To further strengthen long-term alignment with our stockholders and their interests during Fiscal 2018, we communicated regularly with our largest stockholders to obtain valuable input and feedback, a practice we plan to continue.

Specifically, we offered our top 14 institutional stockholders as of the record date (including Mr. Riggio), who in the aggregate held approximately 48.1% of the outstanding shares of Common Stock, or approximately 72% of the Shares not held by insiders and individual “retail” shareholders, the opportunity to meet with Company management and Mr. Campbell, Chairman of the Compensation Committee, regarding the Company’s executive compensation programs and practices and the negative recommendation from Institutional Shareholder Services on the advisory “say-on-pay” proposal in Fiscal 2017. Four such stockholders, who together hold approximately 14% of the outstanding shares of Common Stock, or approximately 21% of the Shares not held by insiders and individual “retail” shareholders, accepted our invitation. In addition to raising general questions regarding the Company’s compensation structure, such as performance metrics and specific elements of compensation, these stockholders expressed concerns over the severance payments to two of our former CEOs and the recent CEO turnover. We discussed the Company’s general goal of aligning CEO target total direct compensation and severance with median market levels, and an analysis of Mr. Parneros’ target total direct compensation in Fiscal 2018 indicated that he was, in fact, positioned below the median of both our peer group and applicable survey data. In addition, the Company believes the severance payments paid to each of our former CEOs were the result of unusual circumstances, including a significant corporate transaction which benefited our stockholders, and no severance payments were made to Mr. Parneros following his termination. Furthermore, partly in response to turnover concerns, the Company developed and is implementing a robust succession planning process for corporate functions.

The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the NEOs and will continue to seek and welcome feedback from individual and institutional stockholders and consider and implement changes in response to such feedback, where appropriate. In furtherance of these goals and in response to such feedback, the Company has recently adopted certain compensation practices including, among others, a “clawback” policy, an anti-hedging and pledging policy, share ownership guidelines (including holding requirements) and a performance-based long-term incentive program. Going forward, the Company will continue to focus on aligning executive pay with building stockholder value and the achievement of short-term and long-term financial and strategic objectives.

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Process for Determining Named Executive Officer Compensation

Roles of the Compensation Committee and Management in Compensation Decisions for the Named Executive Officers

The Compensation Committee has responsibility for establishing, implementing and overseeing the Company’s compensation program for the NEOs, and reviews and approves the Company’s compensation philosophy and objectives and the compensation of the NEOs. The Compensation Committee reviews and approves corporate goals and objectives relevant to the CEO’s compensation, evaluates his performance considering those goals and objectives and determines and approves his compensation level based on this evaluation. The Compensation Committee also annually reviews and approves the annual base salary levels, the annual incentive opportunity levels, the long-term equity incentive opportunity levels, the employment and severance agreements and any special or supplemental benefits, in each case, when and if appropriate, for each of the executive officers of the Company and any other executives of the Company with a title of Vice President (or above) reporting into the CEO. In addition, the Compensation Committee reviews and makes recommendations to the Board with respect to the compensation programs and policies applicable to the Company’s non-employee directors and officers, including incentive compensation plans and equity-based plans, and approves all new incentive plans and major benefit programs. The Compensation Committee also administers the Company’s long-term equity incentive plan.

The Compensation Committee annually reviews the performance of the CEO. The Chairman and/or the CEO annually review the performance of each of the other NEOs. Their compensation recommendations following these reviews are presented to the Compensation Committee. If applicable, the Chairman’s compensation recommendations with respect to the CEO are presented to the Compensation Committee. The Chairman and the CEO do not make recommendations regarding their own compensation. The Compensation Committee considers all key elements of compensation separately and reviews the full compensation package provided by the Company to the NEOs. In accordance with the Company’s compensation philosophy and objectives, the Compensation Committee considers the compensation package provided to each of the NEOs considering: (a) the Company’s business performance; (b) each NEO’s experience, prior performance and anticipated future performance; (c) relative compensation among the NEOs; (d) industry-wide business conditions; (e) compensation provided by the Company’s peers; and (f) each NEO’s terms of employment. When approving equity awards, the Compensation Committee considers the size and vesting schedule of outstanding awards. Based on its judgment and expertise, the Compensation Committee may exercise its judgment to modify any or all recommended elements of compensation or awards to the NEOs.

Retention of Consultants

The Compensation Committee has retained an independent compensation consultant. In order to ensure that the consultant’s advice to the Compensation Committee remains objective and is not unduly influenced by the Company’s management, the consultant reports to and takes direction from the Compensation Committee itself and not from the Company’s management. With the consent of the Compensation Committee, the consultant may contact the Company’s management for information necessary to fulfill its assignments, such as information regarding personnel responsibilities and compensation arrangements. All decisions with respect to the amount and form of director and executive compensation are made by the Compensation Committee alone, subject to the approval of the full Board with respect to the compensation of the directors, and may reflect factors and considerations other than the information and advice provided by the compensation consultant.

In Fiscal 2018, the Compensation Committee continued the engagement of FW Cook, an independent nationally recognized compensation consulting firm, to provide information, analyses and advice regarding executive compensation and other matters. During Fiscal 2018, FW Cook advised on the design of the Company’s non-employee director and executive compensation programs, changes to the compensation peer group for purposes of Fiscal 2019 pay determinations, evaluations of the competitiveness of executive and

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director compensation, and the development of our clawback policy. FW Cook does not provide other services to the Company in addition to providing compensation consulting services to the Compensation Committee. The Compensation Committee has assessed the independence of FW Cook, as required by both the SEC rules and the NYSE Listing Standards, and concluded that no conflict of interest exists with respect to its services to the Compensation Committee.

Review of Competitiveness

Compensation Peer Group. During Fiscal 2018, the Compensation Committee reviewed the pay practices for our NEOs using the same peer group (“Compensation Peer Group”) established with respect to Fiscal 2017, except that Outerwall Inc. was no longer included in the Compensation Peer Group for Fiscal 2018 because it was acquired in September 2016.¹

As shown in the table below, the peer group for Fiscal 2018 consists of a mix of specialty retail companies with an e-commerce presence, with median annualized revenues of $3.94 billion, slightly above the Company’s annualized revenues.

Barnes & Noble’s Fiscal 2018 Peer Group

In addition, the Compensation Committee considers market information based on retail industry survey data from Hay Group and general industry survey data from Willis Towers Watson (together, “Competitive Survey Data”). Depending on the position being analyzed, the general industry survey data included between seven and 184 company participants. All survey data are sized to be appropriate for the Company’s annual revenue when the analysis was conducted.

Competitiveness. The Compensation Committee does not set percentile goals for its executive compensation relative to any peer group. However, the Compensation Committee generally considers market median compensation for the Compensation Peer Group and the Competitive Survey Data when negotiating the employment arrangements of certain NEOs and assessing the competitiveness of executive target total direct compensation levels.

Competitive market data is just one factor that the Compensation Committee considers in determining compensation levels for the NEOs. In addition, the Compensation Committee considers: (a) the Company’s business performance; (b) each NEO’s job responsibilities, experience, prior performance and anticipated future performance; (c) relative compensation among the NEOs; (d) industry-wide business conditions; (e) the recommendations of the Chairman and the CEO and (f) each NEO’s terms of employment; however, the Chairman and the CEO do not make recommendations with respect to their own compensation.

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Key Elements of Compensation in Fiscal 2018

Consistent with the Compensation Committee’s compensation philosophy and objectives, the following elements made up the compensation of the NEOs:

Base Salaries

The Company pays its NEOs a base salary to provide them with a guaranteed minimum compensation level for their annual services. An NEO’s base salary is determined by evaluating the responsibilities of the position held, the individual’s experience and the competitive marketplace for executive talent. The base salary is a component of total direct compensation that is reviewed periodically for competitiveness relative to the total direct compensation paid to executive officers at companies in the Compensation Peer Group with comparable qualifications, experience and responsibilities as well as based on Competitive Survey Data, as discussed above.

In Fiscal 2018, as in Fiscal 2017, the Compensation Committee did not approve salary increases for any of the NEOs for compensation that was payable in Fiscal 2018 other than Mr. Parneros, whose base salary was increased in Fiscal 2018, as adopted in Fiscal 2017, in connection with his promotion to the position of CEO. Mr. Riggio’s base salary has not increased since he entered into his current employment agreement with the Company in Fiscal 2011.

The table below sets forth the base salaries of each NEO as of the end of Fiscal 2018 and Fiscal 2017.

Annual Incentive Compensation

Overview. In Fiscal 2018, each of the NEOs was granted an annual incentive award with a target opportunity expressed as a percentage of annual salary under the Incentive Compensation Plan, Home Office. In general, these incentive awards were structured so that achievement of an Adjusted EBIT* target was required, except in the case of Mr. Riggio, for eligibility for any payout of the awards. The Compensation Committee considers Adjusted EBIT to be an appropriate performance metric for the performance units because it reflects the financial performance of the Company and aligns performance-based annual incentive compensation with the interests of stockholders. Mr. Riggio’s incentive award was not subject to the achievement of the Adjusted EBIT target because his compensation is not subject to certain tax deduction limitations and his actual payout was based solely on the achievement of Adjusted Consolidated EBITDA (as described below).

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Actual payout levels were then determined based on the achievement of Adjusted Consolidated EBITDA** and, other than in the case of Messrs. Riggio and Parneros, individual performance goals established by the Compensation Committee at the beginning of Fiscal 2018. The Compensation Committee chose Adjusted Consolidated EBITDA as the performance metric for the NEOs given their overall responsibility for the Company and because of the Company’s emphasis on viewing its operations on a consolidated “one Company” basis. Moreover, EBITDA growth is at the core of the Company’s multi-year strategic plan, which will center on better serving our customers, re-imagining our bookstores through a smaller footprint and returning to our bookselling roots.

The annual incentive award granted to each of the NEOs, other than Mr. Riggio, was granted in the form of cash-settled performance units, payable in accordance with the Amended and Restated 2009 Incentive Plan.

Threshold Performance Requirement. The cash-settled performance units granted to our NEOs (other than Mr. Riggio) had an Adjusted EBIT threshold of $4,206,000, which was established by the Compensation Committee in consultation with the CEO and FW Cook during the first quarter of Fiscal 2018, and was set to ensure a minimum level of performance for payment of annual incentives. Following the close of Fiscal 2018, the Compensation Committee certified that the Company had achieved the Adjusted EBIT goal, which enabled the Compensation Committee to award annual incentive compensation to each of the NEOs.

Fiscal 2018 Performance-Based Incentive Compensation Metrics. In establishing the target opportunity levels for Fiscal 2018 annual incentive compensation, the Compensation Committee took into consideration each of the NEOs’ prior performance, anticipated future performance, and responsibilities, both within the Company

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and as compared to the responsibilities of similarly situated executives in the Compensation Peer Group. The Compensation Committee also considered the target opportunity necessary to achieve the competitive level of target total direct compensation that the Compensation Committee determined was necessary to incentivize and retain each of these NEOs.

For each of the NEOs (other than Messrs. Riggio and Parneros, whose annual incentive awards were subject only to the achievement of Adjusted Consolidated EBITDA goals), achievement of Adjusted Consolidated EBITDA was weighted 70% and achievement of individual performance goals was weighted 30% for purposes of determining the actual payouts of the annual incentive awards.

Set forth below is a chart showing the target annual incentive opportunities for our NEOs for Fiscal 2018. These target annual incentive opportunities remained unchanged from Fiscal 2017, except for Mr. Parneros whose opportunity increased from 100% to 150% when he was promoted to CEO.

Fiscal 2018 Consolidated Performance Targets and Results. Set forth below is a chart showing the payout scales and the target and actual Adjusted Consolidated EBITDA results for the Company for Fiscal 2018. The Compensation Committee established the Adjusted Consolidated EBITDA targets based on the Company’s prior year’s performance, the Board’s expectations for future performance (including the key strategic objectives established at the start of performance period) and the Compensation Committee’s desire to appropriately motivate the executives. Specifically, the targets were established in connection with the Company’s focus on mitigating sales declines through an aggressive cost reduction program intended to maintain consistent profit levels.

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Fiscal 2018 Individual Performance Results. The Compensation Committee determined that the accomplishment of the Company’s strategic objectives during Fiscal 2018 and the operational challenges it faced represented extraordinary work for the NEOs and specifically with respect to the individual performance goals established under the performance units for each of Messrs. Lindstrom, Argir and Wood and Ms. Keating. Additionally, the Compensation Committee noted that these NEOs took important actions during the year and accomplished significant positive results relating to, among other things, implementation of a new labor model for our stores and aggressive cost reduction to help mitigate sales declines. The Compensation Committee specifically determined that each of the NEOs had achieved the individual performance goals discussed below.

Mr. Lindstrom. The Compensation Committee noted Mr. Lindstrom’s leadership in realizing over $50 million in savings for Fiscal 2018 and identifying additional savings for Fiscal 2019 and beyond. Mr. Lindstrom also rationalized the Finance and Accounting function and was responsible for building a new analytics organization to support all facets of the business.

Mr. Argir. The Compensation Committee recognized that under Mr. Argir’s leadership the NOOK business was profitable for the first time; however, e-commerce sales declined. Mr. Argir also successfully completed the B&N Press platform rebranding of the site and improvement of the customer experience overall.

Mr. Wood. The Compensation Committee considered Mr. Wood’s implementation of new technologies that supported sales in the stores, including inventory management to improve localized assortments and point of sale (POS) enhancements to support price testing and initiatives. Mr. Wood also reduced technology-related expenses throughout the organization.

Ms. Keating. The Compensation Committee noted Ms. Keating assuming responsibility for Author Promotions and her implementation of new initiatives, including hosting publishing houses to discuss creative ways to partner and the creation of the Barnes & Noble Podcast. Ms. Keating developed the Company’s Holiday campaign in the absence of a Chief Merchandising Officer and a Chief Marketing Officer. She also created a multi-faceted campaign for the launch of the Barnes & Noble Book Club.

Pursuant to the terms of the annual incentive awards, payouts with respect to individual performance goals cannot exceed 100% of target. Considering the factors described above, the Compensation Committee determined that it was appropriate to pay out the individual performance goal-related portion of the annual incentive award for each of Messrs. Lindstrom and Wood and Ms. Keating at 100% of target. With respect to Mr. Argir, the Compensation Committee determined a payout of 50% of target was appropriate for the individual performance goal-related portion of the annual incentive award.

Fiscal 2018 Annual Incentive Compensation Payment Amounts. Set forth below is a chart showing target, maximum, and actual annual incentive compensation for each of the NEOs. In Fiscal 2018, payouts under the annual incentive compensation awards for the NEOs were lower (as a percentage of target) than such payouts in each of the preceding four fiscal years.

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Long-Term Equity Incentive Compensation

Overview. In Fiscal 2016, the Compensation Committee implemented a long-term equity incentive program to align the interests of our NEOs with stockholders’ interests and to aid in recruitment and retention by providing a regular annual long-term equity grant practice. Award values are determined based on market data for specialty retail companies with an e-commerce presence and the grant amounts are at the levels necessary, in combination with target cash compensation, to be competitive with what executives in similar positions who work at specialty retail companies with an e-commerce presence receive. Under this program, 50% of an NEO’s target award is granted in the form of time-based restricted stock units (“RSUs”) and 50% is granted in the form of performance-based restricted stock units (“PSUs”).

At the time the long-term equity incentive program was established, the long-term incentive targets were set at the 25^th percentile of the market data. The Compensation Committee intended to increase these target values to median over time and maintain cash compensation at its then-current rate. However, given the decline in the Company’s stock price since the long-term equity incentive program was implemented, the long-term incentive targets have not been increased, and in general remain at the 25^th percentile. Furthermore, the base salaries and bonus targets of our executive officers have remained unchanged (other than with respect to Mr. Parneros in connection with his promotion to CEO).

Overview of Time-Based Restricted Stock Units. In Fiscal 2018, each of the NEOs, other than Mr. Riggio, was granted time-based RSUs under the Amended and Restated 2009 Incentive Plan. These awards vest in equal annual installments over three years on the dates specified in the RSU agreement subject to the NEO’s continued employment, except if the NEO’s employment is terminated due to his or her death or disability or by the Company without “cause” following a change of control (as defined in the Amended and Restated 2009 Incentive Plan), in which case all restrictions with respect to any unvested RSUs will lapse. The NEO will be entitled to receive an amount in cash or stock equal to any cash or stock dividends, as applicable, paid with respect to the number of shares of Common Stock underlying the RSUs. Any such cash or stock dividends or other distributions will be distributed to the NEO when the underlying RSU vests.

Fiscal 2018 Grants of Time-Based Restricted Stock Units. Set forth below is a chart showing the number of RSUs granted to each applicable NEO.

Overview of Performance-Based Restricted Stock Units

In Fiscal 2018, each of the NEOs, other than Mr. Riggio, was granted PSUs under the Amended and Restated 2009 Incentive Plan. The maximum number of PSUs that may be paid out with respect to each grant is 150% of the target number of PSUs. The PSUs may qualify as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code. Accordingly, vesting of a PSU is contingent upon the achievement of certain performance metrics during the performance period beginning on April 30, 2017 and ending on May 2, 2020, however settlement of such PSUs will be contingent on continued employment on the applicable settlement date, which will be no later than August 15, 2020.

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For each of the awards, 50% will vest based on the Adjusted Consolidated EBITDA* performance level achieved during the performance period and 50% will vest based on the Adjusted Consolidated Revenue** performance level achieved during the performance period. The Compensation Committee determined these two metrics are best aligned with the Company’s multi-year strategic plan, which will center on better serving our customers, re-imagining our bookstores through a smaller footprint and returning to our bookselling roots.

The Compensation Committee established the threshold, target and maximum performance levels based on the Board’s expectations for future performance and the Compensation Committee’s desire to appropriately motivate the executives. The Compensation Committee believes that threshold performance will be difficult to achieve and that target and maximum will be progressively more difficult to achieve.

Depending on the achievement of the performance metrics, payout levels with respect to the PSUs will be determined as follows:

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Fiscal 2018 Grants of Performance-Based Restricted Stock Units. Set forth below is a chart showing the number of PSUs granted at target to each applicable NEO.

Vesting and Settlement of Fiscal 2016 Grants of Performance-Based Restricted Stock Units.

In Fiscal 2016, Messrs. Lindstrom and Argir and Ms. Keating were granted PSUs under the Amended and Restated 2009 Incentive Plan, which vest based on the achievement of certain performance metrics during the performance period that began on May 3, 2015 and ended on April 28, 2018 and which were subject to continued employment as of July 15, 2018, the applicable settlement date. The maximum number of such PSUs that may be paid out with respect to each grant is 150% of the target number of PSUs.

The performance metrics applicable to such Fiscal 2016 PSU awards were Adjusted Retail EBITDA* and Retail Revenue**. For each of the awards, 50% of the applicable award vests based on the Adjusted Retail EBITDA performance level achieved during the performance period and 50% of the applicable award vests based on the Adjusted Retail Revenue performance level achieved during the performance period.

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The chart below also shows how the Adjusted Retail Revenue and the Adjusted Retail EBITDA results correlate to a percentage of target and translate into a percentage of target payout.

Set forth below is a chart showing the number of PSUs that each applicable NEO was entitled to receive on the settlement date based on achievement of the Adjusted Retail Revenue and Adjusted Retail EBITDA metrics.

The chart below sets forth the grant date fair value of the Fiscal 2016 PSUs as well as the value of the PSUs that each applicable NEO was entitled to receive on the settlement date, assuming a stock price of $5.40, which was the closing price of Common Stock on the last trading day preceding the settlement date.

Other Components of Compensation

Retirement Benefits. In Fiscal 2018, each of the NEOs was entitled to participate in the Company’s tax-qualified defined contribution 401(k) plan on the same basis as all other eligible employees. The 401(k) plan provides the Company’s NEOs and other employees with a means for accumulating tax-deferred savings for retirement purposes. The Company matches the contributions of participants, subject to certain criteria. Under the terms of the 401(k) plan, as prescribed by the Code, the contribution of any participating employee is limited to the lesser of 75% of annual salary before taxes or a maximum dollar amount ($18,500 for 2018), subject to a $6,000 increase for participants who are age 50 or older. The amount of the Company’s matching payments for each of the NEOs is set forth in Note 6 to the Summary Compensation Table.

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Limited Perquisites and Other Compensation. The Company does not have a formal program providing perquisites to its NEOs. Instead, Mr. Lindstrom is (and Mr. Parneros was) entitled to limited perquisites as set forth in his employment agreement, including supplemental life and disability insurance and a car allowance. The Company provides perquisites to provide for the financial security of NEOs and their families and to enhance their business efficiency.

The perquisites and other compensation received by the NEOs are set forth in Note 6 of the Summary Compensation Table.

Severance and Change of Control Payments and Benefits. The employment agreement, offer letter or severance agreement, as applicable, of each of the NEOs, other than Mr. Riggio, provides (and, in the case of Messrs. Parneros and Argir, provided) for certain severance payments and benefits upon termination of employment by the Company without “cause” or, in the case of Messrs. Parneros and Lindstrom, by the NEO for “good reason” (including upon termination within two years following a change of control). The triggering events that would result in the severance payments and benefits and the amount of those payments and benefits were selected to provide these NEOs with financial protection upon loss of employment in order to support our executive retention goals and to enable them to focus on the interests of the Company and its stockholders in the event of a potential change of control. When the agreements were entered into, the triggering events and amounts were considered to be competitive with severance protection being offered by other companies with which we compete for highly-qualified executives.

The compensation that could be received by each of the NEOs upon termination or a change of control is set forth in the Potential Payments Upon Termination or Change of Control Table. Mr. Parneros did not receive any severance payments or benefits in connection with the termination of his employment, because his employment was terminated for “cause.”

Clawback Policy. In December 2017, the Company adopted a recoupment policy that allows the Compensation Committee to cancel, or clawback gains realized from, any short-term or long-term incentive award granted to an executive officer following the adoption of the policy under certain circumstances. Pursuant to the recoupment policy, any incentive compensation paid during the three (3) years immediately preceding the date on which any such officer violates any non-competition, non-solicitation or non-disclosure agreement or engages in any fraudulent or other conduct that contributes to any financial restatement by the Company that reduces the amount of incentive compensation such officer would have earned, or as otherwise necessary to comply with applicable law, is subject to forfeiture or clawback. In addition, cash and equity awards granted under the Company’s Amended and Restated 2009 Incentive Plan may provide that such awards will be canceled, or that an NEO or other employee will forfeit any gains realized on the vesting or exercise of such awards or repay gains previously realized under such awards, under certain circumstances, including in the event the Compensation Committee determines that the NEO or other employee engaged in fraud or other conduct contributing to a financial restatement or violated any Company clawback policy as in effect on the date the award was granted, or to the extent necessary to address the requirements of applicable law.

Hedging and Pledging Policy. Our hedging and pledging transaction policy disallows directors, officers, employees at the director level or above or their designees from entering into any financial instruments that are designed to hedge or offset any decrease in the market value of equity securities of the Company held by such persons and from pledging shares of Common Stock as collateral for any indebtedness.

Stock Ownership Guidelines. The Compensation Committee adopted stock ownership requirements for NEOs and certain other executive officers to encourage such executives to hold a meaningful stake in the Company and thereby demonstrate the alignment of their interests with those of the stockholders. The stock ownership requirements, as revised in Fiscal 2016, apply to the CEO, Chief Financial Officer, Chief Operating

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Officer and any other executive officer whose base salary is $500,000 or greater. They are expressed as a multiple of base salary as follows:

Each executive subject to such guidelines is required to provide a statement of Common Stock owned annually, and is required to retain at least 50% of net shares of Common Stock received upon exercise of stock options or vesting of restricted stock, RSUs or PSUs until the applicable stock ownership level has been achieved. Shares of Common Stock owned by the executive, beneficially owned shares held indirectly and shares held in the Company’s 401(k) plan count toward compliance with these requirements. Mr. Lindstrom has satisfied his ownership requirement and our other NEOs are making progress toward achieving their ownership requirements.

Employment Agreements with the Named Executive Officers

For a summary of the material terms of the employment agreements, offer letters and severance agreement with the NEOs that affect the amounts set forth in the tables following this Compensation Discussion and Analysis, see the discussion in the “Narrative to the Summary Compensation Table and the Grants of Plan-Based Awards Table” section of this Proxy Statement.

Tax Implications

In making its compensation determinations, the Compensation Committee considers the potential impact of Section 162(m) of the Code. Section 162(m), as in effect for Fiscal 2018, disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1,000,000 in any taxable year paid to its chief executive officer or any of its three other highest-paid officers employed at the end of the fiscal year (other than its chief financial officer) unless generally (a) the compensation is payable solely on account of the attainment of performance goals, (b) the performance goals are determined by a committee of two or more outside directors, (c) the material terms under which compensation is to be paid are disclosed to and approved by stockholders and (d) the determining committee certifies that the performance goals were met. To be eligible to pay certain types of compensation on a deductible basis to its executives, the Company obtained stockholder approval for the Amended and Restated 2009 Incentive Plan, which provides for the payment of compensation in compliance with Section 162(m) of the Code, and the Compensation Committee administers this plan in a manner intended to comply with Section 162(m) of the Code. However, it is possible that one or more grants under this plan may not qualify as performance-based awards as may be determined by the Internal Revenue Service. Additionally, in certain circumstances, the Company may determine that it is in the best interests of the stockholders to pay awards or other compensation (including salaries) that do not qualify as performance-based compensation under Section 162(m) of the Code.

The Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, eliminated the exception for “performance-based” compensation under Section 162(m) with respect to compensation paid in Fiscal 2019 and in future years and expanded the number of executives to which the Section 162(m) limit may apply. As a result, except to the extent provided in limited transition relief, compensation over $1,000,000 per year paid by the Company to any NEO (and to any person who was an NEO for any year beginning with Fiscal 2018) will be nondeductible under Section 162(m). The Board and the Compensation Committee reserve the right to provide compensation to our executives that is not deductible, including but not limited to when necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention or recognize and reward desired performance.

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Compensation Committee Report

The Compensation Committee on July 18, 2018 reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee as of that date recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee as of July 18, 2018

George Campbell, Jr. (Chair)

Scott S. Cowen

Al Ferrara

Kimberley A. Van Der Zon

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OTHER COMPENSATION RELATED INFORMATION

Summary Compensation Table

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