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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 90549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

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104 Coleman Boulevard

Savannah, Georgia  31408

(912) 236-1561

May 4, 2018

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of Citi Trends, Inc. to be held at 9:00 a.m., EDT, on Wednesday, June 6, 2018, at the Embassy Suites Airport, 145 West Mulberry Boulevard, Savannah, Georgia 31322. The formal notice of annual meeting appears on the next page.

In addition to the formal items of business to be brought before the meeting, we will be pleased to report on the affairs of the Company.

We look forward to greeting personally those stockholders who are able to be present at the meeting. However, regardless of whether you plan to be with us at the meeting, it is important that your shares be represented. Accordingly, we request that you promptly complete, sign, date and return the enclosed proxy card in the envelope provided.

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Citi Trends, Inc.

104 Coleman Boulevard
Savannah, Georgia 31408

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

to be held on June 6, 2018

TO THE STOCKHOLDERS:

You are cordially invited to attend the annual meeting of stockholders of Citi Trends, Inc., a Delaware corporation, which will be held at the Embassy Suites Airport, 145 West Mulberry Boulevard, Savannah, Georgia 31322, on Wednesday, June 6, 2018, at 9:00 a.m., EDT, for the following purposes:

1.              To elect the three nominees named in the attached proxy statement to the board of directors to serve as Class I directors whose terms will expire at the 2021 annual meeting of stockholders and until their respective successors are duly elected and qualified;

2.              To vote on a proposal to amend the Company’s second amended and restated certificate of incorporation and second amended and restated bylaws, as amended, to declassify the Company’s board of directors;

3.              To ratify, on a non-binding advisory basis, an amendment to the Company’s second amended and restated bylaws to designate Delaware as the exclusive forum for certain legal actions;

4.              To vote on a non-binding, advisory resolution to approve the compensation of our named executive officers as set forth in this proxy statement;

5.              To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending February 2, 2019; and

6.              To transact any other business properly brought before the meeting or any adjournment or postponement of the meeting.

You can vote your shares of common stock if our records show that you were the owner of the shares as of the close of business on April 9, 2018, the record date for the annual meeting.

For directions to the meeting, please call the Embassy Suites at (912) 330-8222.

YOUR VOTE IS IMPORTANT. Regardless of whether you plan to attend the meeting in person, please take a few minutes now to complete, sign, date and return the enclosed proxy card so that your shares may be represented and voted at the annual meeting. A return envelope is enclosed for your convenience. No postage need be affixed to the enclosed envelope if mailed in the United States. If you are a beneficial owner or you hold your shares in “street name,” please follow the voting instructions provided by your bank, broker or other nominee. Regardless of the number of shares you own, your presence by proxy is helpful to establish a quorum and your vote is important.

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on June 6, 2018:  The Proxy Statement and our 2017 Annual Report are available at http://ir.cititrends.com/annual-proxy.cfm

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CITI TRENDS, INC.
 104 Coleman Boulevard
Savannah, Georgia 31408

PROXY STATEMENT

Annual Meeting of Stockholders

to be held on June 6, 2018

GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

This proxy statement is furnished in connection with the solicitation by the board of directors of Citi Trends, Inc. of proxies to be voted at the annual meeting of stockholders on June 6, 2018. This proxy statement, the accompanying proxy card and the annual report to stockholders are being mailed to stockholders on or about May 11, 2018.

The principal executive offices of Citi Trends, Inc., a Delaware corporation, are located at 104 Coleman Boulevard, Savannah, Georgia 31408, and our telephone number is (912) 236-1561.

The terms “Citi Trends” or the “Company” (as well as the words “we,” “us” and “our”) refer to Citi Trends, Inc.  References to “you” or “your” refer to our stockholders.

In this section of the proxy statement, we answer some common questions regarding the annual meeting of stockholders and the voting of shares of common stock at the meeting.

Where and when will the annual meeting be held?

The date, time and place of the meeting are:  June 6, 2018, at 9:00 a.m., EDT, at the Embassy Suites Airport, 145 West Mulberry Boulevard, Savannah, Georgia 31322.  For directions to the meeting, please call the Embassy Suites at (912) 330-8222.

Why did you send me this proxy statement?

This proxy statement was prepared under the direction of our board of directors to solicit your proxy for voting at the annual meeting. We sent you this proxy statement and the enclosed proxy card because our board of directors is asking for your proxy to vote your shares at the annual meeting. We have summarized information in this proxy statement that you should consider in deciding how to vote at the meeting. But you do not have to attend the meeting in order to vote your shares. Instead, you may simply complete, sign, date and return the enclosed proxy card.

What can I vote on at the meeting?

The matters scheduled to be voted on at the meeting are:

(1)         The election of the three nominees named in this proxy statement to our board of directors to serve as Class I directors and hold office until the annual meeting of stockholders in 2021 and until their successors are duly elected and qualified (“Proposal 1”);

(2)         A proposal to amend the Company’s second amended and restated certificate of incorporation, which we refer to as the Company’s certificate of incorporation, and second amended and restated bylaws, as amended, which we refer to as the Company’s bylaws, to declassify the Company’s board of directors (“Proposal 2”);

(3)         Ratification, on a non-binding, advisory basis, of an amendment to the Company’s bylaws to designate Delaware as the exclusive forum for certain legal actions (“Proposal 3”);

(4)         A non-binding, advisory resolution to approve the compensation of our named executive officers as set forth in this proxy statement (“Proposal 4”); and

(5)         Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending February 2, 2019 (“Proposal 5”).

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How does the board of directors recommend that I vote?

The board of directors unanimously recommends that you vote your shares (i) “FOR” each of the nominees named in this proxy statement to be elected to the board of directors, (ii) “FOR” the approval of a proposal to amend the Company’s certificate of incorporation and bylaws to declassify the Company’s board of directors, (iii) “FOR” the ratification of an amendment to the Company’s bylaws to designate Delaware as the exclusive forum for certain legal actions, (iv) “FOR” the approval of the non-binding, advisory resolution to approve the compensation of our named executive officers as set forth in this proxy statement, and (v) “FOR” the ratification of KPMG LLP as our independent registered public accounting firm for the fiscal year ending February 2, 2019.

Who can vote?

You can vote your shares of common stock if our records show that you were the owner of the shares as of the close of business on April 9, 2018, the record date for determining the stockholders who are entitled to vote at the annual meeting. As of the close of business on April 9, 2018, there were a total of 13,752,215 shares of our common stock outstanding and entitled to vote at the annual meeting. You get one vote for each share of common stock that you own. Holders of shares of common stock do not have cumulative voting rights.

What is the required vote for approval of each proposal?

The election of our nominees for director requires a majority of the votes cast at the annual meeting with respect to that director.  That means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director.  If a nominee who currently serves as a director is not re-elected, Delaware law provides that the director would continue to serve on the board of directors as a “holdover director.” Under the Company’s bylaws and the Company’s Corporate Governance Guidelines, each director submits an advance, contingent, irrevocable resignation that the board of directors may accept if stockholders do not re-elect that director. In that situation, our Nominating and Corporate Governance Committee would make a recommendation to the board of directors about whether to accept or reject the resignation, or whether to take other action instead. Within 90 days from the date that the election results were certified, the board of directors would act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it.

Approval of the proposal to amend the Company’s certificate of incorporation and bylaws to declassify the Company’s board of directors requires the affirmative vote of the holders of two-thirds (2/3) or more of the combined voting power of the outstanding shares of capital stock of the Company entitled to vote generally in the election of directors.

Approval of the non-binding, advisory proposal to ratify the amendment to the Company’s bylaws to designate Delaware as the exclusive forum for certain legal actions, approval of the non-binding, advisory resolution to approve the compensation of our named executive officers as set forth in this proxy statement, and the ratification of the appointment of KPMG LLP as our independent registered public accounting firm each require the affirmative vote of a majority of the votes cast at the annual meeting.

How are votes counted?

We will hold the annual meeting if stockholders representing the required quorum of shares of common stock entitled to vote either sign and return their proxy cards or attend the meeting in person. One-third of the shares of common stock outstanding and entitled to vote at the meeting present in person or by proxy will constitute a quorum. If you sign and return your proxy card, your shares will be counted to determine whether we have a quorum.

Abstentions and broker non-votes, if any, will be counted as shares present for the purpose of determining a quorum but will not be treated as votes cast on any proposal.  Abstentions and broker non-votes, if any, will not affect the outcome of the election of our director nominees, approval of the non-binding, advisory resolution to ratify an amendment to the Company’s bylaws to designate Delaware as the exclusive forum for certain legal actions, approval of the non-binding, advisory resolution to approve the compensation of our named executive officers as set forth in this proxy statement, or the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending February 2, 2019.  Abstentions and broker non-votes, if any, will have the same effect as a vote “against” the proposal to amend the Company’s certificate of incorporation and bylaws to declassify the Company’s board of directors.

A broker non-vote occurs when a bank, broker or other nominee who holds shares for another person returns a proxy but does not vote on a particular item, usually because the nominee does not have discretionary voting authority for that item because that item is not a “routine” matter under applicable rules and the nominee has not received instructions from the owner of the shares.

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How do I vote?

Before the annual meeting, stockholders of record may vote their shares by completing, signing and returning the enclosed proxy card in the enclosed postage-paid envelope.

If you hold shares in the name of a broker, your ability to vote those shares depends on the voting procedures used by your broker, as explained below under the question “How do I vote if my shares are held in ‘street name’?”

How do I vote by proxy?

Follow the instructions on the enclosed proxy card to vote on the matters to be considered at the annual meeting. The individuals named and designated as proxies on the proxy card will vote your shares as you instruct. If you do not mark a selection, your proxy will be voted as recommended by our board of directors.

You have the following choices in completing your proxy:

·                  You may vote on each proposal, in which case your shares will be voted in accordance with your choices.

·                  In voting on the nominees for director, you can either vote “for” or “against” or “abstain” from voting for each of the nominees listed in Proposal 1.

·                  You may vote “for,” “against” or “abstain” on one or more of the Company’s proposals: to approve a proposal to amend the Company’s certificate of incorporation and bylaws to declassify the Company’s board of directors; to ratify on a non-binding, advisory basis, an amendment to the Company’s bylaws to designate Delaware as the exclusive forum for certain legal actions; to approve on a non-binding, advisory basis, the compensation of our named executive officers as set forth in this proxy statement; and to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending February 2, 2019.

·                  You may return a signed proxy card without indicating your vote on any matter, in which case the designated proxies will vote (i) to elect all of the nominees as directors, (ii) to approve the proposal to amend the Company’s certificate of incorporation and bylaws to declassify the Company’s board of directors, (iii) to ratify an amendment to the Company’s bylaws to designate Delaware as the exclusive forum for certain legal actions, (iv) to approve the compensation of our named executive officers as set forth in this proxy statement, and (v) to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending February 2, 2019.

How do I vote if my shares are held in “street name”?

If your shares are held in a brokerage account in the name of your broker, a bank or other nominee, that party will give you instructions for voting your shares.  Under the rules of the New York Stock Exchange, if you do not give instructions to your bank or brokerage firm, it will still be able to vote your shares with respect to certain “discretionary” items such as Proposal 5 (ratification of the appointment of KPMG LLP), but will not be allowed to vote your shares with respect to certain “non-discretionary” items such as Proposal 1 (election of directors), Proposal 2 (approval of the declassification amendments),  Proposal 3 (ratification of the exclusive forum amendment) and Proposal 4 (“say on pay”).  In the case of non-discretionary items, in the absence of voting instructions, shares subject to such so-called broker non-votes, if any, will not be counted as voted on those proposals, but will be counted as present for the purpose of determining the existence of a quorum.   Such broker non-votes will have no effect on Proposals 1, 3 or 4, but will have the same effect as a vote “against” Proposal 2.  Accordingly, we encourage you to vote promptly, even if you plan to attend the annual meeting.

What if other matters come up at the annual meeting?

The only matters we now know of that will be voted on at the annual meeting are the proposals we have described in this proxy statement: Proposal 1 (election of directors), Proposal 2 (approval of the declassification amendments), Proposal 3 (ratification of the exclusive forum amendment), Proposal 4 (“say on pay”), and Proposal 5 (ratification of the appointment of KPMG LLP). If other matters are properly presented at the meeting, the designated proxies will vote your shares in their discretion.

Can I change my mind and revoke my proxy?

Yes, so long as you are the record holder. To revoke a proxy given pursuant to this solicitation, you must:

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·                  sign another proxy with a later date (we will honor the proxy card with the latest date);

·                  provide us with a written notice of revocation dated later than the date of the proxy, which should be delivered to Citi Trends, Inc. c/o American Stock Transfer and Trust Company, 6201 15th Avenue, Brooklyn, New York 11219, at or before the annual meeting; or

·                  attend the annual meeting and vote in person—note that attendance at the annual meeting will not revoke a proxy if you do not actually vote at the annual meeting.

If you hold shares in “street name,” you should contact your broker, bank or other nominee regarding any change in voting instructions.

Can I vote in person at the annual meeting rather than by completing the proxy card?

Although we encourage you to vote by completing and returning the proxy card to ensure that your vote is counted, you can attend the annual meeting and vote your shares in person if you are a stockholder of record on the record date even if you have previously submitted a proxy card.  If your shares are held in street name, then you may vote your shares in person only if you have a legal proxy from the entity that holds your shares giving you the right to vote the shares. A legal proxy is a written document from your brokerage firm or bank authorizing you to vote the shares it holds in its name. If you attend the meeting and vote your shares by ballot, your vote at the meeting will revoke any vote you previously submitted by mail.

What do I do if I receive more than one proxy statement and proxy card?

If you receive multiple copies of the same proxy statement or multiple proxy cards, that may mean that you have shares registered in different names or your shares are held in more than one type of account maintained by brokers or by American Stock Transfer and Trust Company (“AST”), our transfer agent. To have all your shares voted, please sign, date and return all proxy cards. We also recommend that you contact your broker and AST to consolidate as many accounts as possible under the same name and address. AST may be contacted at (800) 485-1883.

Who will count the votes?

American Stock Transfer and Trust Company will tabulate the votes.  Corporate Communications, Inc. will serve as the inspector of election.

Who will conduct this proxy solicitation and who pays for this proxy solicitation?

We will pay for the entire cost of soliciting proxies on behalf of the Company.  We will also reimburse brokerage houses, banks and other custodians or nominees holding shares in their names for others for the cost of forwarding the Company’s proxy materials to beneficial owners.  In addition, proxies may be solicited on our behalf by our directors, officers and employees in person, by telephone, by Internet or by other means of communication.  None of these persons will receive any additional compensation for soliciting proxies.

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PROPOSAL 1:

ELECTION OF DIRECTORS

Our board of directors currently consists of eight directors, R. Edward Anderson, Brian P. Carney, Jonathan Duskin, Laurens M. Goff, Margaret L. Jenkins, Barbara Levy, John S. Lupo and Bruce D. Smith.  In accordance with the Company’s bylaws and certificate of incorporation, our board determines the number of directors on our board, but such number cannot be less than five or more than nine.  Our directors are divided into three classes with staggered three-year terms so that the term of one class expires at each annual meeting of stockholders. See Proposal 2 below for a proposal to declassify the board of directors and which, if passed, would provide for annual election of all directors by 2021. This year, three nominees will be proposed for election as Class I directors at the annual meeting.

It is intended that the persons named as proxies in the enclosed proxy card will vote to elect the nominees listed below unless otherwise directed or authority to vote is withheld. The elected directors will serve until the annual meeting of stockholders in 2021 and until their successors are elected and qualify to serve, or until an earlier resignation or retirement.

Each nominee currently serves as a director. The nominees have consented to be named in this proxy statement, stand for election and serve as directors if elected. However, if any nominee named herein is unable to serve or for good cause will not serve as a director at the annual meeting, it is intended that shares represented by the enclosed proxy card will be voted for the election of the other nominees named below and may be voted for any substitute nominee designated by our board of directors or, in lieu thereof, our board of directors may reduce the number of directors in accordance with the Company’s amended and restated bylaws.

Nominees for Election as Class I Directors

Laurens M. Goff.  Mr. Goff, age 45, has served as a director since November 2013, and is Chairman of the Compensation Committee and a member of the Audit Committee and the Nominating and Corporate Governance Committee.  Mr. Goff is a co-founder and Managing Partner of Stone-Goff Partners, a private equity firm founded in 2010 that is focused on investing in private companies in the lower middle market.  Prior to that, he was Managing Partner of Goff Management, a predecessor firm, which he founded in 2007.  Mr. Goff began his career in the investment banking division of Furman Selz LLC.  He subsequently joined Hampshire Equity Partners, a middle market buyout firm, where he spent over eight years sourcing, executing and managing private equity investments, including Citi Trends prior to its initial public offering in 2005.

In determining that Mr. Goff should serve as one of our directors, our board considered in particular his business and financial experience described above, as well as his knowledge of Citi Trends attained from serving as a director over the past four years and through his role at Hampshire where Citi Trends was a portfolio holding prior to the Company’s initial public offering..

Margaret L. Jenkins.  Ms. Jenkins, age 66, has served as a director since October 2017, and is a member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.  Ms. Jenkins is a retired marketing and advertising executive with extensive experience in consumer marketing and retail advertising. Ms. Jenkins served as a director of PVH Corp., an international apparel manufacturer and retailer, from June 2006 through May 2014. She has also served as Senior Vice President, Chief Marketing Officer of Denny’s Corporation, a restaurant company, from 2002 to 2007 and as Chief Marketing Officer of El Pollo Loco restaurants from 1999 through mid-2002. Ms. Jenkins held several management positions with Taco Bell Corp. and PepsiCo International Foodservice. Her career in advertising included account management of brands such as McDonald’s, Sunny Delight Beverages and the Atlantic Richfield Company (ARCO). Ms. Jenkins was recently made Chair of the Board of Directors of the Greenville Health System, one of the largest healthcare providers in the Southeast.

In determining that Ms. Jenkins should serve as one of our directors, our board considered in particular her extensive marketing and management experience described above, as well as her performance as a director on boards of both public and not-for-profit companies.

Bruce D. Smith. Mr. Smith has served as our President, Chief Executive Officer, Secretary and Director since March 2018, our Acting Chief Executive Officer from March 2017 through March 2018, and as our Chief Operating Officer, Chief Financial Officer and Secretary from March 2015 through March 2018.  Mr. Smith served as our Executive Vice President and Chief Financial Officer from March 2010 to March 2015 and as our Senior Vice President and Chief Financial Officer from April 2007 to March 2010.  From 2005 to March 2007, Mr. Smith served as Executive Vice President, Chief Financial Officer and Treasurer of Hancock Fabrics, Inc. (“Hancock”), a specialty retailer of fabrics and related accessories, and served as the Senior Vice President, Chief Financial Officer and Treasurer of Hancock from 1996 until 2005.  From 1991 to 1996, Mr. Smith served as Executive Vice President and Chief Financial Officer of Fred’s, Inc.  From 1980 to 1991, Mr. Smith was a Senior Manager with Price Waterhouse (now PricewaterhouseCoopers LLP). Mr. Smith is a certified public accountant.

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In determining that Mr. Smith should serve as one of our directors, our board considered in particular his knowledge of Citi Trends attained from serving as Acting Chief Executive Officer over the last year, Chief Operating Officer over the last three years, and Chief Financial Officer over the last eleven years.

Our board of directors unanimously recommends that stockholders vote “FOR” each of the nominees listed above.

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BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS

Board Leadership Structure

Separate Chairman and CEO

The board has separated the role of Chairman of the Board of Directors and Chief Executive Officer (“CEO”) since March 2015. Our board of directors does not have a set policy with respect to the separation of the offices of the Chairman and CEO, as the board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the board.  Mr. Anderson is currently the Chairman and served as the Executive Chairman from March 2017 through March 2018 and non-executive Chairman from April 2016 through March 2017.  Prior to that, Mr. Anderson was the Chairman and CEO from January 2012 through his retirement as CEO in March 2015, at which time he became Executive Chairman of our board of directors in order to provide for an orderly transition of the CEO role to his successor, Jason Mazzola.  In April 2016, Mr. Anderson transitioned from Executive Chairman to non-executive Chairman of our board of directors.  Upon Mr. Mazzola’s resignation in March 2017, Mr. Anderson resumed his role as Executive Chairman in order to assist Mr. Smith in his role as Acting CEO.  In March 2018, when Mr. Smith was named President and CEO, Mr. Anderson transitioned back to non-executive Chairman of the Board.

Lead Independent Director

The Company’s Corporate Governance Guidelines provide for the appointment of a lead independent director at any time when the Chairman is not independent.  Our board believes that the appointment of a lead independent director and the use of regular executive sessions of the independent directors, along with the board’s independent committee system and majority of independent directors, allow it to maintain effective oversight of management. Our board recognizes that depending on the circumstances, other leadership models might be appropriate. Accordingly, our board regularly reviews and reassesses its leadership structure.

The Company’s independent directors have appointed Mr. Lupo as the board’s lead independent director, and he presides at all meetings of our board at which the Chairman of the board of directors is not present, including executive sessions of the independent directors. Our board has adopted guidelines that provide for the lead independent director to fulfill the following functions:

·                  Serve as a liaison, as needed, between the directors and the Chairman of the board of directors;

·                  Call meetings of the independent directors, when appropriate;

·                  If requested by Company management or stockholders, ensure that he or she is available, as appropriate, for consultation with management and/or direct communication with stockholders;

·                  Be the focal point for stockholder communications addressed to independent directors;

·                  Recommend the retention of outside advisors who report directly to the board of directors as he or she may determine is necessary or appropriate; and

·                  Assist in the annual evaluation of the Chief Executive Officer, and, if an officer other than the Chief Executive Officer is serving as Chairman of the board of directors, such other officer. For the officer serving as Chairman of the board of directors, such evaluation shall include an evaluation of such officer’s effectiveness as Chairman of the board of directors and as an officer of the Company and an annual evaluation of his or her interactions with directors and ability to provide leadership and direction to the full board of directors.

Directors

Our board of directors consists of eight directors (Messrs. Anderson, Carney, Duskin, Goff, Lupo and Smith and Mses. Jenkins and Levy), all of whom, except Messrs. Anderson and Smith, have been determined by our board to be independent under NASDAQ listing standards.  Mr. Lawrence E. Hyatt, who served as a director until the 2017 annual meeting, was also determined by our board of directors to be independent under NASDAQ listing standards.  Our certificate of incorporation divides our board into three classes having staggered terms, with one of such classes being elected each year for a new three-year term.  Our Class I directors, Mr. Goff, Ms. Jenkins and Mr. Smith, have terms expiring at the 2018 annual meeting, our Class II directors, Messrs. Carney and Lupo and Ms. Levy, have terms expiring at the 2019 annual meeting, and our Class III directors, Messrs. Anderson and Duskin, have terms expiring at the 2020 annual meeting.

The biographical information for our Class I directors is set forth above in Proposal 1 (election of directors).  The following sets forth selected biographical information for our other directors.

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Continuing Class II Directors with terms expiring in 2019.

Brian P. Carney.  Mr. Carney, age 57, has served as a director since 2007, and is Chairman of the Audit Committee and a member of the Compensation Committee and the Nominating and Corporate Governance Committee.  Mr. Carney currently serves as Executive Vice President and Chief Financial Officer of Southeastern Grocers, LLC, a grocery retailer, a position he has held since 2005.  Prior to that time, Mr. Carney served as Executive Vice President and Chief Financial Officer of Jo-Ann Stores, Inc., a specialty retailer, from 1997 to 2005, as Senior Vice President of Finance of Revco, D.S., Inc., a drug store retailer, from 1989 to 1997, and as an Audit Manager with Arthur Andersen & Co., a public accounting firm, from 1982 to 1989.

On March 23, 2009, BI-LO Holding, LLC, a wholly owned subsidiary of Southeastern Grocers, LLC, filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code.  BI-LO Holding, LLC emerged from Chapter 11 through a plan of reorganization on May 12, 2010. On March 15, 2018, Southeastern Grocers, LLC, entered into a Restructuring Support Agreement with a group of creditors collectively holding 80% of its unsecured notes and its private equity sponsor regarding the terms of a comprehensive financial structuring. Under the terms of the agreement, Southeastern Grocers, LLC, will file pre-packaged plans of reorganization and commence voluntary cases under Chapter 11 of the U.S. Bankruptcy Code.

Mr. Carney’s financial, accounting and audit experience with publicly reporting retail companies and a public accounting firm, as well as his performance as a member of the board of directors of Citi Trends, qualifies him to serve on our board of directors.  Mr. Carney’s financial background is such that he is considered to be an “audit committee financial expert” as defined by the rules of the SEC and as a result our board of directors named him Chairman of the Audit Committee.

Barbara Levy.  Ms. Levy, age 63, has served as a director since August 2016, and is Chairman of the Nominating and Corporate Governance Committee and a member of the Audit Committee and the Compensation Committee.  Ms. Levy has extensive retail experience in traditional, off price, and e-commerce businesses. She served as a Senior Strategy Advisor for ideeli Inc., an online apparel retailer, from July 2010 through October 2012.  Ms. Levy focused specifically on building ideeli, Inc.’s merchandising team, devising new strategies for its vendors and brands, and ensuring that the overall merchandising function aligns with the strategic direction of ideeli, Inc.  From 1993 through 2007, Ms. Levy served in various merchandising positions, including Executive Vice President, with Ross Stores, Inc., an off-price retailer, overseeing 700 stores and $1.5 billion in sales volume.  Ms. Levy was responsible for significantly growing the missy and junior apparel, plus sizes, outerwear, active and accessories businesses at Ross Stores, Inc., while also working extensively with the marketing group, planning and allocation teams, and distribution centers to develop long-term strategies.  From 1977 through 1993, she served in various merchandising positions, including Senior Vice President and General Merchandise Manager, with Macy’s, Inc., where she oversaw a buying team with responsibility for nearly 70 stores including the Herald Square flagship location.  Ms. Levy has been a member of the Board of Trustees of Lafayette College since 1998.  She is presently a member of the Executive Committee, the Committee on Compensation, and the combined Committees on Development & Alumni Relations and External Affairs, and she serves as Co-Chairman of the Lafayette College $400 Million Capital Campaign.

Ms. Levy’s retail merchandising experience described above, her extensive knowledge of and experience in the off-price retail industry, her strong product development knowledge and her performance as a member of the board of directors of Citi Trends, qualifies her to serve on our board of directors.  Through her senior executive role with Ross Stores, Inc., Ms. Levy brings the relevant expertise of devising strategies with vendors and brands, and ensuring alignment between the overall merchandising function and the strategic direction of a company.   Ms. Levy’s fourteen year tenure at Ross Stores, Inc. provides her with a unique understanding of how to enhance the Company’s competiveness in the off-price retail industry.

John S. Lupo.  Mr. Lupo, age 71, has served as a director since 2003, and is the lead independent director, as well as a member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.  Mr. Lupo was a principal in the consulting firm, Renaissance Partners, LLC, from 2000 through 2008.  From 1998 through 1999, Mr. Lupo served as Executive Vice President of Basset Furniture. From 1996 until 1998, Mr. Lupo served as the Chief Operating Officer of the International Division of Wal-Mart Stores Inc., and from 1990 until 1996, Mr. Lupo served as Senior Vice President and General Merchandise Manager of Wal-Mart Stores, Inc.  Mr. Lupo also served as a director of Cobra Electronics Corporation from 2007 to 2014, as a director of AB Electrolux from 2007 to 2012 and as a director of Spectrum Brands Inc. (formerly Rayovac Corporation) from 1998 to 2009.

Mr. Lupo’s extensive retail merchandising and operational experience with Wal-Mart Stores, Inc. and as a consultant with Renaissance Partners, LLC, as well as his performance as a member of the board of directors of Citi Trends, qualifies him to serve on our board of directors.

Continuing Class III Directors with terms expiring in 2020.

R. Edward Anderson.  Mr. Anderson, age 68, has served as a director since 2001 and as Chairman of the board of directors since May 2006, including service as Executive Chairman from April 2009 to April 2010, from October 2011 to January 2012, from March 2015 to April 2016 and from March 2017 to March 2018.  He served as CEO of the Company from 2001 to April 2009 and returned to that position from January 2012 to March 2015.  From 1997 to 2001, Mr. Anderson was Chief Financial Officer of Variety Wholesalers, Inc.,

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an operator of discount stores.  Prior to 1997, Mr. Anderson served as Chairman, President and Chief Executive Officer of Rose’s Stores, Inc., a discount retailer.

Mr. Anderson’s in-depth knowledge of Citi Trends and its target customers attained from his tenure of more than eleven years as CEO and sixteen years as a director qualifies him to serve on our board of directors.  Such familiarity with the Company makes Mr. Anderson a valuable institutional resource.  In addition, Mr. Anderson’s distinguished career leading other companies in our industry, including his roles in executive management as CFO, CEO and chairman of other discount retailers prior to joining Citi Trends, provides him with a unique understanding of our industry.  Having more than three decades of relevant executive management experience enables Mr. Anderson to provide critical insights on strategic issues facing the Company.

Jonathan Duskin.  Mr. Duskin, age 49, has served as a director since May 2017, and is a member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.  Since July 2009, Mr. Duskin has served as the Chief Executive Officer of Macellum Capital Management, LLC, which operates a New York-based pooled investment fund. From 2005 to 2008, Mr. Duskin served as a Managing Director and Partner at Prentice Capital Management, LP, an investment management firm, and from 2002 to 2005, Mr. Duskin served as a Managing Director at S.A.C. Capital Associates LLC, a New York-based hedge fund.  From 1998 to 2002, Mr. Duskin served as a Managing Director at Lehman Brothers Inc., an investment bank, and served as Head of Product Management and Chairman of the Investment Policy Committee within the Research Department. Mr. Duskin currently serves on the board of directors of Christopher & Banks Corporation and previously served on the boards of directors of The Wet Seal, Inc., Whitehall Jewelers, Inc. and Furniture.com Inc.

Mr. Duskin’s considerable business, financial services and retail investment expertise, having provided financial services to a variety of public and private companies, as well as his prior service on the boards and committees of public companies and his familiarity with the retail industry, qualifies Mr. Duskin to serve on our board of directors.

Board Risk Oversight

Our management team is responsible for identifying, assessing and managing our exposure to risk, while our board of directors is responsible for providing oversight of risk management.  The oversight role performed by our board and its committees includes, among other things, the following:

·                  Review of risks associated with our long-term strategic plan and annual budgets;

·                  Meetings with various members of management regarding initiatives being undertaken in their respective areas, including, among others, merchandising, real estate, finance, human resources and information services;

·                  Private meetings with our independent registered public accounting firm, our Chief Financial Officer, and our Director of Internal Audit and Loss Prevention;

·                  Performance of a comprehensive risk assessment, including those significant risk factors discussed in Item 1A of our Annual Report on Form 10-K;

·                  Review and approval of our Investment Policy; and

·                  Review of legal matters.

Our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee each have responsibility for addressing risks inherent within their areas of oversight.  In accordance with its charter, the Audit Committee is responsible for assisting the board with its oversight of our overall risk management profile and our financial reporting risks.  The Compensation Committee’s responsibilities related to risk include ensuring that compensation policies have a fair balance of risk and reward.  The Nominating and Corporate Governance Committee’s primary risk-related responsibilities deal with the development and recommendation of appropriate corporate governance guidelines and oversight to ensure compliance with such guidelines.  Each of the committee chairs regularly reports to the board regarding significant issues addressed.

Risk and Employee Compensation

We believe that Citi Trends’ compensation policies do not create risks that are reasonably likely to have a material adverse effect on the Company.  Instead, we believe that our compensation structure encourages a fair balance of risk and reward.  The process undertaken by the board of directors to determine that the compensation policies do not create unnecessary risk includes detailed reviews of the assumptions used in the budget on which annual cash incentives are based.  In addition, the board of directors participates in the strategic planning process to ensure that the goals and planned strategies to achieve such goals are aligned between management and the board.  As a retail company operating only a one-store concept, we are not subject to many of the issues that cause employees in other industries to take excessive and unnecessary risks in order to maximize their compensation.  We believe that the components of our employee-wide compensation program are consistent in form with similar companies.  Also, the performance targets for our named executive officers are at the consolidated company level, not at individual division or subsidiary levels, and there is a balance between annual cash incentive

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compensation and long-term equity incentives to enhance the likelihood that management will not make decisions in the short-term to earn cash incentives at the risk of achieving long-term success.

Board of Directors Committees

The board of directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each comprised solely of the independent members of our board of directors, Messrs. Carney, Duskin, Goff and Lupo and Mses. Jenkins and Levy.

Audit Committee

The Audit Committee, currently consisting of all six of the Company’s independent directors, reviews our internal accounting procedures and consults with and reviews the services provided by our independent registered public accounting firm. All members of the Audit Committee satisfy NASDAQ’s audit committee member independence requirements. Mr. Carney is the Chairman of the Audit Committee.  The board of directors has determined that Mr. Carney is an “audit committee financial expert” as defined by the rules of the SEC.  During fiscal 2017, the Audit Committee met 10 times.

The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The Audit Committee oversees the Company’s accounting and financial reporting processes, both internal and external, and audits of the Company’s financial statements, on behalf of the board of directors.  The principal duties and responsibilities of the Audit Committee, among other things, are to:

·                  have direct responsibility for the appointment, selection, compensation, retention, replacement and oversight of the work of our independent registered public accounting firm, including prescribing what services are allowable and approving in advance all services provided by them;

·                  discuss with the internal auditors and the independent registered public accounting firm the overall scope and plans for their respective audits and the results of their respective audits;

·                  review our annual audited financial statements and quarterly unaudited financial statements, and discuss the statements with management and the independent registered public accounting firm and review our earnings press releases, as well as financial information and earnings guidance, if any, provided to analysts and rating agencies;

·                  review and discuss with management, the internal auditors and the independent registered public accounting firm the adequacy and effectiveness of our internal controls, including our ability to monitor and manage business risk, legal and ethical compliance programs and financial reporting;

·                  review and approve all related party transactions consistent with the rules applied to companies listed on The NASDAQ Stock Market; and

·                  establish procedures regarding complaints received by us or our employees regarding accounting, accounting controls or auditing matters.

The Audit Committee is required to report regularly to our board of directors to discuss any issues that arise with respect to the quality or integrity of our financial statements, our compliance with legal or regulatory requirements, the performance and independence of our independent registered public accounting firm, or the performance of the internal audit function. The Audit Committee’s work is guided by a written charter which has been approved and adopted by the board of directors. A copy of the current Audit Committee charter is available in the “Investor Relations” section of the Company’s website located at http://www.cititrends.com. The information set forth on this website should not be deemed filed with, and is not incorporated by reference into, this proxy statement or any of the Company’s other filings under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically so provides.

Compensation Committee

The Compensation Committee, currently consisting of all six of the Company’s independent directors, reviews and determines the compensation and benefits of the Company’s executive officers and administers our incentive and equity-based compensation plans. All members of the Compensation Committee satisfy NASDAQ’s compensation committee member independence requirements.  Mr. Goff is the Chairman of the Compensation Committee. The Compensation Committee has adopted a written charter, a copy of which is available in the “Investor Relations” section of the Company’s website at http://www.cititrends.com.  During fiscal 2017, the Compensation Committee met 10 times.  The principal duties and responsibilities of the Compensation Committee, among other things, are to:

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·                  review and approve corporate goals and objectives relevant to our CEO’s compensation, evaluate the CEO’s performance in light of these goals and objectives, and determine and approve the CEO’s compensation based on such evaluation;

·                  make recommendations to our board of directors regarding compensation for our other executive officers, including the salaries and awards under our incentive compensation plans and equity-based plans;

·                  review and administer the Company’s incentive and equity-based compensation plans;

·                  review and make recommendations to our board of directors concerning compensation arrangements for non-employee members of our board of directors;

·                  oversee, in consultation with management, regulatory compliance with respect to compensation matters;

·                  review the Company’s overall compensation systems and determine whether any incentive compensation arrangements encourage excessive risk-taking;

·                  review and approve any severance or similar termination payments proposed or made to any of our current or former executive officers; and

·                  review and approve any employment contracts or other contractual arrangements resulting in any payment to any employee of the Company proposed to be made as a result of a change in control of the Company.

The Compensation Committee has the discretion to delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee.  In addition, the Compensation Committee has delegated limited authority to a committee consisting of our CEO to grant awards under the 2012 Incentive Plan to non-executive employees of the Company. The Compensation Committee has the authority and resources to engage compensation consultants and legal, accounting or other advisors to provide the committee with advice and information in connection with carrying out its responsibilities.  The Compensation Committee engaged Korn Ferry Hay Group (“Hay Group” or the “Compensation Consultant”) to provide advice on the Company’s executive and director compensation practices.

See “Compensation Discussion and Analysis” elsewhere in this proxy statement for a discussion of the role of the Compensation Consultant and executive officers in the compensation process and further discussion of the processes and procedures of the Compensation Committee.  See also “Compensation Committee Report” elsewhere in this proxy statement.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee currently consists of all six of the Company’s independent directors.  Ms. Levy is the Chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has adopted a written charter, a copy of which is available in the “Investor Relations” section of the Company’s website at http://www.cititrends.com.  During fiscal 2017, the Nominating and Corporate Governance Committee met 6 times.  The principal duties and responsibilities of the Nominating and Corporate Governance Committee, among other things, are to:

·                  review the composition of our board of directors and committee structure and evaluate the performance of the board, its directors and its committees;

·                  identify individuals qualified to become board members, consistent with criteria approved by our board of directors;

·                  select and recommend individuals as nominees to serve as directors at annual meetings of our stockholders and nominate individuals to fill any vacancies;

·                  develop and recommend to our board of directors a set of corporate governance principles applicable to us and periodically review and assess such corporate governance principles and the Company’s governing documents; and

·                  review the institutional and other affiliations of our board members and nominees for directors for any potential conflicts of interest and make recommendations to our board of directors with respect to the determination of director independence.

Code of Business Conduct and Ethics

We have adopted a written Code of Business Conduct and Ethics applicable to our directors, executive officers (including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions)

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and employees in accordance with the rules of The NASDAQ Stock Market and the SEC. Our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote:

·                  honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;

·                  full, fair, accurate, timely and understandable disclosure in reports and documents that we file with the SEC and in all other public communications;

·                  compliance with applicable laws, rules and regulations, including insider trading compliance; and

·                  accountability for adherence to the code and prompt internal reporting of violations of the code, including illegal or unethical behavior regarding accounting or auditing practices.

The Code of Business Conduct and Ethics is available on the Company’s website at http://www.cititrends.com. In the event of any amendment or waiver of the Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, such amendment or waiver will be posted on our website.  Our directors, executive officers and employees are required to affirm annually their compliance with the Code of Business Conduct and Ethics.

Governance Highlights

·                  Majority voting in uncontested elections of directors

·                  Majority independent directors

·                  Independent Lead Director of our board of directors

·                  Separate Chairman of our board of directors and Chief Executive Officer since March 2015

·                  Each director serving in 2017 attended over 85% of the aggregate number of the meetings of our board of directors and applicable Committees held in 2017 when he or she was a director

·                  Diverse board of directors in terms of background, professional experience and skills

·                  Independent directors meet regularly in executive session without management present

·                  Audit, Compensation and Nominating and Corporate Governance Committees are composed entirely of independent directors

·                  Stock ownership guidelines for directors and certain executive officers

·                  Risk oversight by full board of directors and committees

·                  Company policy against hedging, short-selling and pledging by directors, officers and employees

·                  Compensation recoupment (“clawback”) policy

·                  Directors, executive officers and employees are required to affirm their compliance with the Code of Business Conduct and Ethics annually

·                  Annual board of directors and committee self-evaluations

Stock Ownership Guidelines for Directors and Executives

In order to align the financial interests of our directors and certain executive officers with the long-term interests of our stockholders, we have Stock Ownership Guidelines (the “Guidelines”).  Under the current Guidelines, as amended in March 2017, each of our non-employee directors is expected to retain all of his or her shares of common stock until they attain stock ownership with a fair market value equal to at least three times the annual base cash retainer paid to directors (excluding committee and attendance fees).

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Bruce D. Smith, our President and Chief Executive Officer, is similarly expected to retain shares of common stock equal to three times his annual base salary.  Shares of common stock owned directly or indirectly count toward meeting the Guidelines; however, shares of unvested time-based restricted stock and unearned performance-based restricted shares do not count.

As of February 3, 2018, each of our non-employee directors, with the exception of Mr. Goff, who joined the board of directors in November 2013, Ms. Levy, who joined the board of directors in August 2016, and Ms. Jenkins, who joined the board of directors in October 2017, owned shares with a fair market value in excess of the Guidelines’ requirements and are, therefore, in compliance with the Guidelines.  Neither Mr. Goff, Ms. Levy nor Ms. Jenkins has disposed of any shares of common stock since joining the board of directors, therefore, they are also in compliance with the Guidelines.  Mr. Smith owned shares with a fair market value in excess of the Guidelines’ requirements as of February 3, 2018.

Compensation Committee Interlocks and Insider Participation

No current member of the Compensation Committee serves or has ever served as one of our executive officers or employees. None of our executive officers serves or has ever served as a member of the board of directors or the compensation committee of any entity that has one or more executive officers serving on our board of directors or our Compensation Committee.

Attendance of Directors

During fiscal 2017, the board of directors held 33 meetings. Each director attended over 85% of the aggregate of the total number of meetings held by the board of directors and the total number of meetings held by all committees of the board of directors on which he or she served, which meetings were held when he or she was a director.

Policies Relating to our Board of Directors

Nomination and Selection of Directors

The Nominating and Corporate Governance Committee identifies and evaluates potential director candidates in a variety of ways. Recommendations may come from current members of our board of directors, professional search firms, members of management, stockholders or other persons. In assessing the qualifications of potential nominees, the Nominating and Corporate Governance Committee may rely on personal interviews or discussions with the candidate and others familiar with the candidate’s professional background, on third-party background and reference checks and on such other due diligence information as reasonably available. The Nominating and Corporate Governance Committee must be satisfied that the candidate possesses the highest professional and personal ethics and values and has broad experience at the policy-making level in business before it would recommend a candidate as a nominee to our board of directors, and the nominee must meet the following minimum qualifications:

·                  demonstrates personal integrity and moral character;

·                  shows a willingness to apply sound and independent business judgment for the long-term interests of stockholders of the Company;

·                  possesses relevant business or professional experience, technical expertise or specialized skills;

·                  exhibits personality traits and background that appear to fit with those of the other directors to produce a collegial and cooperative board responsive to the Company’s needs; and

·                  maintains the ability to commit sufficient time to effectively carry out the substantial duties of a director.

Neither the board nor the Nominating and Corporate Governance Committee has a formal diversity policy with regard to the consideration of diversity in identifying director candidates; however, our Corporate Governance Guidelines state that the committee will review candidates’ experience, integrity, competence, diversity, skills, and dedication in the context of the needs of the board.  Accordingly, in connection with its evaluation of each candidate, the committee takes into account how all of these factors pertaining to a candidate may complement or supplement those skills of other board members.  This helps to explain how our board, consisting of eight members, represents such a wide range of experiences, including executive, financial, merchandising, retail operations and distribution.

The Nominating and Corporate Governance Committee evaluates nominees submitted by stockholders in the same manner as nominees from other sources.  Stockholders may recommend nominees for consideration at the annual meeting by submitting the names and supporting information to the Secretary of the Company at: Stockholder Nominations, Citi Trends, Inc., 104 Coleman Boulevard, Savannah, Georgia 31408. Such submissions must be delivered or mailed to the Secretary and received not less than ninety (90) calendar

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days and not more than one hundred twenty (120) calendar days prior to the first anniversary of the previous year’s annual meeting. The submission should include a current resume and curriculum vitae of the candidate, a statement describing the candidate’s qualifications and contact information for personal and professional references. The submission must also include certain information about the stockholder who is submitting the nominee and must comply with all of the requirements set forth in the Company’s bylaws.

Communications with our Board of Directors

Stockholders and other interested parties may communicate directly with our board of directors, the non-management directors as a group or individual directors. All communications should be in writing and should be directed to the Secretary of the Company at: Stockholder Communications, Citi Trends, Inc., 104 Coleman Boulevard, Savannah, Georgia 31408. The sender should indicate in the address whether it is intended for the entire board of directors, the non-management directors as a group or an individual director. Each communication received by the Secretary will be forwarded to the intended recipients.

Stockholder Engagement

The Company recognizes the value of the views and input of its stockholders. The Company reaches out to and engages with its stockholders on various topics, including corporate governance, compensation, performance, strategy and other matters. We believe that having regular engagement with our stockholders strengthens our relationships with stockholders and helps us to better understand stockholders’ views on our policies and practices and other matters of importance to our business.

Director Attendance at Annual Meeting of Stockholders

We do not have a formal policy regarding attendance by directors at our annual meeting of stockholders but invite, expect and encourage all directors to attend. All of the individuals who were directors at the time of the 2017 annual meeting of stockholders attended such meeting.

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AUDIT COMMITTEE REPORT

The Audit Committee reviews the Company’s financial reporting process on behalf of the board of directors.  Management has primary responsibility for the financial statements, the reporting process, and maintaining an effective system of internal controls over financial reporting.  The Audit Committee has adopted a written charter, a copy of which is available in the “Investor Relations” section of the Company’s website at http://www.cititrends.com.

In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Annual Report on Form 10-K for the 2017 fiscal year. The Audit Committee has also discussed with KPMG LLP, the Company’s independent registered public accounting firm during the 2017 fiscal year, the matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees.

The Audit Committee has received and reviewed the written disclosures and the letter from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLP’s communications with the Audit Committee concerning independence and has discussed with KPMG LLP its independence from the Company.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the board of directors that the audited financial statements of the Company be included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2018 for filing with the SEC.

Submitted by the Audit Committee of the board of directors:

Brian P. Carney, Chairman

Jonathan Duskin

Laurens M. Goff

Margaret L. Jenkins

Barbara Levy

John S. Lupo

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed the Compensation Discussion and Analysis section of this proxy statement and discussed that disclosure with management.  Based on its review and discussions with management, the committee recommended to our board of directors that the Compensation Discussion and Analysis be included in the Company’s proxy statement for the 2018 annual meeting of stockholders and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2018.

The undersigned members of the Compensation Committee have submitted this Report to the Board of Directors.

Submitted by the Compensation Committee of the board of directors:

Laurens M. Goff, Chairman

Brian P. Carney

Jonathan Duskin

Margaret L. Jenkins

Barbara Levy

John S. Lupo

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EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions of our current executive officers.

The following sets forth selected biographical information for our executive officers who are not directors.

Ivy D. Council. Ms. Council has served as our Executive Vice President of Human Resources and Chief Compliance Officer since March 2012 and as our Senior Vice President of Human Resources since January 2007.  In 2006, Ms. Council served as Vice President of Human Resources for Baja Fresh Restaurants, a division of Wendy’s, Inc.  From 2003 to 2006, Ms. Council served as Executive Vice President of Human Resources for Pasta Pomodoro Restaurants and as a director of such entity from 2001 through 2002.  Prior to that, Ms. Council served as Senior Vice President of Human Resources for Ross Stores, Inc.

Stuart C. Clifford.  Mr. Clifford has served as our Senior Vice President and Chief Financial Officer since March 2018, as our Vice President, Finance since October 2014 and as our Director of Accounting since July 2007.  Prior to joining the Company, Mr. Clifford served in various financial and operational positions with Friedman’s Jewelers, from Finance Director in 1992 through Senior Vice President of Store Operations in 2004.

James A. Dunn. Mr. Dunn has served as our Senior Vice President of Store Operations since 2006 and as our Vice President of Store Operations since 2001. From January to April 2001, Mr. Dunn was our Director of Training and Development and from 2000 to 2001, was one of our Regional Managers. Prior to joining the Company, Mr. Dunn was a Store Manager at Staples from 1999 to 2000. Prior to that, Mr. Dunn was a Regional Manager at Dress Barn, where he supervised 77 stores and 10 district managers.

Charles D. Crowell. Mr. Crowell has served as our Senior Vice President of Supply Chain since April 2011. From 2004 to March 2011, Mr. Crowell served as Vice President, Distribution for Hecht’s, a division of May Department Stores Company, and Macy’s, Inc. upon the merger of the two companies.  Mr. Crowell served as Vice President, Distribution Services for The Home Depot from 1997 to 2002 where he was responsible for the operations of a worldwide network of 62 distribution facilities. Prior to that, Mr. Crowell served as Vice President of Transportation and Distribution for Best Products.

Brian D. Lattman.  Mr. Lattman has served as our Senior Vice President, General Merchandise Manager since March 2018, and as our Vice President, General Merchandise Manager from March 2017 to March 2018.  Mr. Lattman served as Divisional Merchandise Manager from the time he joined the Company in August 2016 to March 2017.  From June 2013 to August 2016, Mr. Lattman served as President and Chief Merchandising Officer of dELiA*s and Alloy Apparel, online apparel retailers.  Mr. Lattman was the President of Merchandising and Sales for Lany Group, a private label apparel manufacturer from 2005 to 2013.  Prior to that, Mr. Lattman was the Vice President, Chief Merchandising Officer of Norstan Apparel Shops, a ladies apparel retailer.

Christina K. Short.  Ms. Short has served as our Senior Vice President, General Merchandise Manager since March 2018, and as our Vice President, General Merchandise Manager from March 2017 to March 2018.  Ms. Short served as Vice President of Planning and Allocation, Divisional Merchandise Manager, from October 2016 to March 2017, and as Vice President of Planning and Allocation from February 2015 to October 2016.  From the time Ms. Short joined the Company in March 2013 to February 2015, she was a merchandise buyer.  From 2011 to 2013, Ms. Short was a buyer at ideeli Inc., an online apparel retailer, after spending 11 years at TJX Companies, Inc. in various capacities in the merchandise planning, allocation and buying areas.

Each of the executive officers serves at the discretion of the board of directors and holds office until his or her successor is elected and qualified or until his or her earlier resignation or removal.  There are no family relationships among any of the directors or executive officers.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

In the paragraphs that follow, we will give an overview and analysis of the material elements of our compensation program and policies, the material compensation decisions we have made under those programs and policies with respect to our named executive officers, and the material factors that we considered in making those decisions.  This information should be read in conjunction with the compensation tables, related narratives and notes contained later in this proxy statement, containing specific information about the compensation earned or paid in fiscal 2017 to the following individuals, whom we refer to as our named executive officers (positions shown are those held by the respective officers during fiscal 2017):

·                  R. Edward Anderson, the Executive Chairman of our board of directors,

·                  Jason T. Mazzola, our former President and Chief Executive Officer,

·                  Bruce D. Smith, our Acting Chief Executive Officer, Chief Operating Officer and Chief Financial Officer,

·                  Ivy D. Council, our Executive Vice President of Human Resources and Chief Compliance Officer,

·                  James A. Dunn, our Senior Vice President of Store Operations, and

·                  Charles D. Crowell, our Senior Vice President of Supply Chain.

The discussion below is intended to help you understand the detailed information provided in the compensation tables and put that information into context within our overall compensation program.

Summary of Fiscal 2017

The sales momentum the Company built in late 2016 continued throughout 2017, and together with accomplishments in several other areas of our business, strengthened Citi Trends’ profits significantly for the year.  Total sales for the year ended February 3, 2018 increased 8.6% to $755 million, including a 4.5% increase in comparable store sales for the 53 weeks of 2017 when compared with the similar 53 weeks for the period ended February 4, 2017.  Underscoring our sales growth, all three ticket and transaction metrics were favorable, and all five of our major merchandise categories contributed to the sales improvement.  This top-line expansion, combined with significant leveraging of selling, general and administrative expenses during 2017, was the key driver behind our increase in profits for the year.  Net income in 2017 improved to $14.6 million, or $1.03 per diluted share, compared with $13.3 million, or $0.91 per diluted share in 2016.  However, when 2017 net income is adjusted for proxy contest expenses and the impact of tax reform, adjusted net income per diluted share increased 38.5% to $1.26.  Our compensation program is designed to align the interests of management and stockholders and to link Company performance with executive pay, such that the Company’s achievement of challenging financial goals results in payment of annual incentives to our executive officers.  As discussed in the “Annual Cash Incentives” section below, we attained 103.6% of our Adjusted EBITDA target, resulting in cash incentives being paid to our named executive officers at a rate equal to 119.6% of the target award.

Adjusted net income per diluted share is a non-GAAP measure.  See the reconciliations under “Key Operating Statistics” on page 21 of our Form 10-K for the fiscal year ended on February 3, 2018 for a reconciliation to GAAP net income.

Our Pay Governance Reflects Best Practices

We believe the following compensation and pay governance practices reflect a “best practices” approach to pay governance and are integral parts of the Company’s compensation philosophy:

Our Executive Compensation Practices (What We Do):

·                  Stock ownership guidelines have been adopted for the Company’s Chief Executive Officer and directors.

·                  A compensation clawback policy is applicable to the Company’s executive officers.

·                  A significant portion of named executive officer compensation is performance-based.

·                  The Compensation Committee reviews “tally sheets” to understand total compensation calculations in connection with making compensation decisions.

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·                  Change in control benefits, including the acceleration of equity awards, are “double-trigger” benefits, which require both a change in control and a qualifying termination within a specified period following the change in control.

Executive Compensation Practices Not Implemented (What We Don’t Do):

·                  No excise tax gross-ups are provided.

·                  Executive officers and directors, through the Company’s anti-hedging policy, are not permitted to engage in certain transactions such as puts, calls or other derivatives relating to the Company’s securities.

·                  We have never repriced underwater stock options.

·                  We do not pay dividends on unvested stock awards.

Consideration of Last Year’s Advisory Stockholder Vote on Executive Compensation

At the annual meeting of stockholders held on May 24, 2017, 95% of the shares cast were voted to approve the compensation of the Company’s named executive officers, as discussed and disclosed in the 2017 proxy statement.  This is consistent with a pattern of high stockholder approval of our executive compensation program, as 95% or more of the shares cast at each of our three most recent annual meetings were voted to approve the compensation of our named executive officers.

Our board of directors and the Compensation Committee appreciate and value the views of our stockholders, and regularly solicit their input on matters such as executive compensation, board composition, and other more general governance topics.  In considering the results of the consistently high advisory votes on executive compensation, the Compensation Committee concluded that the compensation paid to our named executive officers and the Company’s overall pay practices enjoy strong stockholder support.

In light of the very strong stockholder support of the compensation paid to our named executive officers evidenced by the results of this advisory vote, the Compensation Committee decided to retain our general approach to executive compensation and did not make significant changes to our executive compensation programs for 2017.  Going forward, future advisory votes on executive compensation, and direct communication with our stockholders on the subject, will serve as an additional tool to guide the Committee in evaluating the alignment of the Company’s executive compensation programs with the interests of the Company and its stockholders.

Objective of Our Compensation Program

In order to maintain a critical advantage in our competitive marketplace, we believe our compensation program should be designed to provide market-competitive compensation and benefits that will enable us to attract and retain a talented, diverse workforce dedicated to the long-term success of the Company.   In furtherance of those goals, our compensation program is designed to:

·                  enable the Company to attract, retain and motivate a team of high quality executives who will create long-term stockholder value;

·                  create opportunities to participate in the ownership of the Company and to share in the value the executives help create, both directly and through managing those that report to them; and

·                  provide rewards that are proportional to each executive’s contribution to our success by including an individual component as well as an overall corporate performance component.

Our compensation philosophy emphasizes each individual’s responsibility for high achievement and provides a strong link between pay and performance on both an individual and Company level.  Our management team and the Compensation Committee will continue to develop and refine our compensation philosophy, program and practices over time, with the goal of maximizing stockholder value.

How We Determine and Assess Executive Compensation

Role of the Compensation Committee and Executive Officers

The Compensation Committee plays an integral role in the strategic direction and administration of the compensation structure of the Company.  The Compensation Committee and our CEO work together to ensure that the compensation paid to our named executive officers is in line with our compensation philosophy and furthers our long-term goals.

Our CEO recommends to the Compensation Committee base salary, target annual cash incentive amounts and formulas, and long-term equity incentive grants for our executive officers (other than himself), after forming qualitative judgments regarding individual

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performance within each executive’s areas of direct responsibility, as well as how such performance serves the entire Company, and after having discussions with the Compensation Committee and other members of management regarding appropriate levels of compensation. The Compensation Committee reviews such recommendations and determines whether, in light of our compensation philosophy, the recommended compensation levels are appropriate. This determination includes consideration of recommendations by the Compensation Consultant as described below. Upon such determination, the Compensation Committee formally approves the compensation levels for recommendation to the board of directors.  Our CEO is not involved with any aspect of determining his own compensation.  The Compensation Committee independently sets the CEO’s total compensation package, taking into account the same factors as for the other executive officers.

Compensation Consultant

The Compensation Committee has the authority to directly engage outside compensation consultants and other experts to assist in fulfilling its duties.  As discussed in further detail in the following section, the Compensation Committee engaged Hay Group in 2017 to provide an analysis of the Company’s compensation practices and to provide the Compensation Committee with survey data and an update on current compensation trends.  The Compensation Committee assessed the independence of the Compensation Consultant against specific criteria under applicable SEC and NASDAQ rules and concluded that no conflict of interest exists that would prevent Hay Group from independently advising the Compensation Committee.  The Compensation Consultant does not have any relationship or arrangement with the Company other than their engagement as a consultant to the Compensation Committee.

Market Data

Periodically, the Compensation Committee reviews the compensation practices of a group of public companies selected from an industry peer group comprised primarily of specialty apparel retailers that are similar in size to the Company.  The peer group used by the Compensation Consultant in the 2017 analysis consisted of the apparel retailers indicated below.  The Compensation Committee believes that the companies comprising this peer group represent appropriate comparisons due to the similarity in business and financial characteristics.  They are all either direct or tangential business competitors or geographically situated and similarly sized such that we consider them to be competitors for recruitment and retention purposes.

The Compensation Committee also reviewed compensation information provided by the Compensation Consultant from its proprietary 2017 survey of more than 140 retail companies. The Compensation Consultant’s analysis focused on the following areas of compensation:

·                  base salary,

·                  annual cash incentives,

·                  total cash compensation (the sum of base salary and annual cash incentives),

·                  long-term equity incentives (a variable incentive vesting over a multi-year period), and

·                  total direct compensation (the sum of total cash compensation and long-term equity incentives).

We do not strive to set our executive officers’ targeted total direct compensation at a specific level relative to the median reflected in the Compensation Consultant’s peer group study or retail company survey.  Instead, the data is used as a guide and is combined with the experience and judgment of the Compensation Committee’s members to determine the reasonableness of total direct compensation appropriate for each individual within the context of the Company’s performance.  The 2017 analysis by the Compensation Consultant indicated that total direct compensation at target levels for the majority of our executive officers was at or below median in relation to the peer group or retail survey, as applicable.

The allocation of our executive officers’ total direct compensation among base salary, annual cash incentives and long-term equity incentives is based on the Compensation Committee’s judgment, taking into consideration market practices reflected in previous and

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current peer group and retail surveys, together with a goal of providing a fair balance of risk and reward through an allocation that includes a reasonable mix of both fixed and variable components.

Elements of our Compensation Program

Our executive officer compensation program consists of the following elements: base salary, annual cash incentives, long-term equity incentives, and certain other benefits.

Base Salary

Base salaries fulfill the fixed portion of our compensation program.  Base salaries are set annually by the Compensation Committee based on a variety of factors, including peer group information, a qualitative review of the executive’s performance and contributions to the Company during the year and over a number of years, the oversight and direct managerial skills of our executives, and changes in responsibilities, if any.  After considering these factors, the Compensation Committee approved adjustments to certain of our named executive officers’ base salaries in March 2017 as shown below:

(1) Mr. Smith was promoted to Acting Chief Executive Officer on March 23, 2017.

Annual Cash Incentives

We measure our overall financial performance based on a number of financial metrics, of which the most important are (1) earnings before interest, taxes, depreciation and amortization (“EBITDA”) and (2) Adjusted EBITDA, which is comprised of EBITDA, as adjusted for asset impairment expense, a non-cash charge similar in certain respects to depreciation, and certain other unusual or one-time items, such as our proxy contest expenses in 2017.  The Company’s performance in these areas allows us to evaluate the Company’s success and operational performance in any given year.  The Company’s success and performance impacts our compensation decisions with respect to our executive officers.  We believe that linking our annual cash incentives to these financial metrics, while providing long-term equity incentives that are earned based on stock price appreciation (as described below), provide an effective and balanced approach to executive compensation that is aligned with the interests of our stockholders.

Our annual cash incentive program provides our executive officers with an opportunity to earn cash awards based on the achievement of our budgeted goal for Adjusted EBITDA. Due to the importance of this financial metric to the annual and long-term success of the Company, we strive to make the achievement of this goal each year to be a meaningful challenge to our executive officers. The budgeted Adjusted EBITDA that represents our goal considers many key operating and financial factors, including the following:

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·                  Store selling square footage;

·                  Comparable store sales;

·                  Average sales per store;

·                  Gross margin;

·                  Store and distribution operating expenses as a percentage of sales; and

·                  Corporate expenses.

Our CEO recommends a target award (as a percentage of base salary) for each executive officer (other than himself) based on the executive’s position within the Company and consideration of data provided by the Compensation Consultant and, together with the Compensation Committee, determines the appropriate target award for each executive.  For fiscal 2017, each executive officer’s target award (as a percentage of base salary) was as follows:

The annual cash incentive program is directly linked to our budgeted goals.  Items such as unplanned and significant costs related to litigation, claim judgments or settlements and proxy contests are excluded from both the budgeted and actual amounts used in the calculation of Adjusted EBITDA.  Since the calculation of cash incentives is based on performance versus budget, the exclusion of items such as these ensures that the inability to accurately budget such items does not positively or negatively influence cash incentives.

There is a scale in place that dictates payment of annual cash incentives in the event that actual Adjusted EBITDA as a percentage of Target Adjusted EBITDA is between the threshold and maximum levels of the scale.  For 2017, if actual EBITDA was equal to 94% of Target (threshold), then 50% of the Target award was to be paid, while if it was equal to or greater than 117% of Target (maximum), then 200% of the Target award was to be paid.

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The graph below reflects the various potential payout levels at different levels of performance:

In 2017, the Target Adjusted EBITDA was $42,986,000, representing an 18.3% increase over 2016’s actual Adjusted EBITDA.  Actual Adjusted EBITDA for fiscal 2017 was $44,673,000, including the add-back of actual 2017 proxy contest expenses of $2,516,000.  For purposes of the incentive compensation calculation, actual Adjusted EBITDA was reduced by $149,000 to $44,524,000 in order to exclude the 2017 benefit from a legal settlement.  The actual performance for incentive purposes, $44,524,000, was 103.6% of the performance target.  As prescribed by the scale, achieving 103.6% of the performance target resulted in cash incentives equal to 119.6% of the Target award being payable to the executive officers.

Actual awards earned in each of the past three years by our named executive officers are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table elsewhere in this proxy statement.

Long-Term Equity Incentives

Long-term equity incentive compensation awards are designed to encourage the creation of long-term value for our stockholders by increasing the retention of qualified key employees and aligning the interests of executive officers with our stockholders through the officers’ ownership of equity in the Company.

The dollar value of each equity grant is within the discretion of the Compensation Committee and is based on recommendations made by our CEO (with respect to executives other than himself), which take into account the executive’s past performance, the executive’s position within the Company, and an evaluation of other elements of compensation provided to the executive officer.  The Compensation Committee also considers studies performed by the Compensation Consultant to determine the appropriate size of the equity-based awards.

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We believe that grants of restricted stock and restricted stock units provide strong incentives for the creation of long-term stockholder value and provide significant retention value for the executives.  In 2017, Mr. Mazzola and Mr. Smith received long-term equity incentives with a total grant date value equal to 100% and 80% of base pay, respectively, split equally between restricted shares that vest over three years based on continued future employment with the Company and restricted stock units that vest in increments of 25% each if the Company’s stock price reaches $19.10; $21.70; $24.30; and $26.90 for twenty consecutive trading days at any time during the three years after the grant date.  In addition, upon being named Acting CEO, Mr. Smith received 7,500 restricted shares that vest over three years based on continued future employment with the Company.  Mr. Mazzola forfeited his awards prior to vesting when he resigned on March 20, 2017.  The Compensation Committee felt it important to focus these two corporate leaders on driving market performance of the Company as they oversee all areas of the Company and thus are held accountable for the overall performance of the Company, and they communicate directly with market participants and therefore are held accountable for how well the success of the Company translates into market value.

The long-term incentive grants to Ms. Council and Messrs. Dunn and Crowell consisted of time-based restricted shares that vest over three years based on continued future employment with the Company with grant date values determined as a percentage of base pay, equal to 65% for Ms. Council (executive vice president) and 50% for Messrs. Dunn and Crowell (senior vice presidents).  As previously discussed, the grant levels were determined as one of several components designed to achieve the desired total direct compensation; however, they were not set to be at any specific level within our peer group.  The vesting periods were determined based on consideration of peer group practices and discussions with the Compensation Consultant.

For more information regarding these long-term incentives granted to our named executive officers in fiscal 2017, please see “Grants of Plan-Based Awards Table for Fiscal Year 2017” and “Outstanding Equity Awards at 2017 Fiscal Year-End Table” and the related footnotes elsewhere in this proxy statement.

Other Benefits

Retirement.  We maintain the Citi Trends, Inc. 401(k) Profit Sharing Plan, a tax-qualified, defined contribution employee benefit plan in which a substantial majority of our employees, including the named executive officers, are eligible to participate.  We match 50% of employee contributions to the plan, up to a maximum of 4% of an employee’s total calendar year compensation (subject to IRS limits).

Perquisites.  During fiscal 2017, the Company provided Mr. Dunn with the use of a Company car.  Each executive officer also received life/long-term disability insurance coverage.  We did not provide any other special benefits or perquisites to our executive officers.  We believe these perquisites are reasonable in light of peer group practices.  We provide health and welfare benefits to our executive officers on the same basis as we provide to all of our salaried employees.  Prior to Mr. Mazzola’s resignation in March 2017, the Company provided him with reimbursements of commuting expenses to the Company’s buying offices in New York, New York from his home near Boston, Massachusetts and the cost of his apartment rental in New York.

Employment Agreements and Severance Agreements.  We have entered into severance agreements with all of our named executive officers, which provide severance benefits in the event their employment is terminated by the Company without Cause (as defined in the severance agreement) or in connection with a Change in Control (as defined in the severance agreement) of the Company.  Each severance agreement provides that if the Company terminates an executive’s employment without Cause or if the executive terminates his or her employment within twelve months of a Change in Control, provided that within such period the executive’s job duties have been materially diminished or compensation has been materially decreased, the Company will provide the executive with separation payments of twelve months base salary. The Company provides these involuntary termination severance benefits to protect individuals from events outside their control and to offer compensation packages similar to those commonly found in our market for competing executive talent. Furthermore, the Company provides these benefits to protect the Company against disruption in the event of a Change in Control. We believe that these severance agreements serve as an important retention element of the compensation package provided to these officers and acts to mitigate self-serving behavior during a potential Change in Control by providing a safety net to our executives in the event the employment relationship is severed.  The potential severance benefits payable to our named executive officers are described in “Potential Payments upon Termination or Change in Control” elsewhere in this proxy statement.

Equity Grant Practices

The Company has a practice of generally making equity awards on pre-established dates.  Annual equity awards are presented to the Compensation Committee for approval at a regularly scheduled Compensation Committee meeting, usually held in March of each year.  Equity awards are also given to employees throughout the year as they are hired or promoted into positions eligible for those awards. We make decisions on equity grants based solely on our compensation and retention objectives and our established measurements of the value of these awards.  The Company makes an effort to issue the annual grants each March after the Company’s fourth quarter earnings release, in order to allow time for the release to be disseminated to the investment community.

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Stock Ownership Guidelines

As described above under “Stock Ownership Guidelines for Directors and Executives” in “Board of Directors and Committees of the Board of Directors,” certain of our executives are expected to retain all shares of common stock (except for shares withheld to pay withholding taxes) until such point that the owned stock has a fair market value equal to at least three times annual base salary.

Compensation Recoupment (“Clawback”) Policy

In November 2014, our board of directors adopted the Citi Trends, Inc. Compensation Recoupment Policy (the “Clawback Policy”).  Pursuant to the Clawback Policy, in the event of a restatement of the Company’s financial results as a result of material non-compliance with financial reporting requirements, the Compensation Committee will review the incentive compensation, including equity awards and non-equity incentive compensation, that the Company’s executive officers received or realized based on the erroneous financial results reported by the Company (“covered compensation”). If any covered compensation would have been lower had the covered compensation been calculated based on the Company’s restated financial results, the Compensation Committee will, as and to the extent it deems appropriate and as permitted by applicable law, recoup any portion of covered compensation paid to certain executives in excess of what would have been paid based on the restated financial results. The Compensation Committee shall seek recovery from any executive officer whose misconduct is determined by the Compensation Committee to have caused or contributed to the requirement for the restatement, unless the Compensation Committee determines that the cost of recovery would exceed the amount sought to be recovered. The Clawback Policy applies to all current and former executive officers of the Company.

The Clawback Policy applies in addition to any right of recoupment against the Company’s Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002.  The policy does not apply in any situation where a restatement is not the result of material non-compliance with financial reporting requirements, such as any restatement due to a change in applicable accounting rules, standards or interpretations, a change in segment designations or the discontinuance of an operation.

Anti-Hedging Policy; Policy on Pledging

We have an insider trading policy that sets forth guidelines and restrictions applicable to transactions involving our stock by our directors, officers and employees.  Among other things, this policy prohibits our directors, officers and employees from engaging in purchases or sales of puts, calls, options or other derivative securities based on the Company’s securities.  These hedging transactions are prohibited because they would allow directors, officers and employees to continue to own the covered securities, but without the full risks and rewards of ownership.  When that occurs, their interests and the interests of the Company and its stockholders may be misaligned and may signal a message to the trading market that may not be in the best interests of the Company and its stockholders at the time it is conveyed.  The insider trading policy also prohibits directors and officers from engaging in short sales of the Company’s securities.

Our insider trading policy, which is available on our corporate website at http://www.cititrends.com, prohibits any pledging of the Company’s securities as collateral for a loan by a director or executive officer.

Tax and Accounting Considerations

It is the Compensation Committee’s intent to maximize tax deductibility of executive compensation while retaining some discretion needed to compensate executives in a manner commensurate with performance and the competitive landscape for executive talent.  Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), places a limit of $1 million on the amount of compensation that we may deduct in any year with respect to any one of our named executive officers.  For fiscal 2017, this limitation does not apply to compensation that meets the requirements under Code Section 162(m) for “qualifying performance-based” compensation and no deductions for compensation paid during 2017 were limited under Code Section 162(m).  However, beginning in fiscal 2018, such deduction limitation will apply to substantially all compensation with respect to named officers, including “performance-based” compensation.  This change is the result of the enactment of the Tax Cuts and Jobs Act tax reform legislation in December 2017.

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2017 Fiscal Year Compensation Tables

Summary Compensation Table

The following table sets forth the cash and other compensation that we paid to our named executive officers, or that was otherwise earned by our named executive officers, for their services in all capacities during fiscal years 2015, 2016 and 2017.  Fiscal 2017 was comprised of 53 weeks, while fiscal years 2015 and 2016 were each comprised of 52 weeks.

(1)         Reflects the grant-date fair value of restricted stock awards and restricted stock units computed in accordance with FASB ASC Topic 718.  The fair value of time-based grants of restricted stock is based on the closing price of the Company’s common stock on the date of grant, and the fair value of performance-based grants of restricted stock units is estimated using a lattice model with the following assumptions for 2017: (1) risk-free rate of return: 1.7%; (2) volatility: 39%; and (3) term: three years.  The aggregate grant date fair value of the awards to Mr. Mazzola, assuming the highest level of performance conditions will be achieved under their performance-based restricted stock units, was $510,000.  Mr. Mazzola forfeited these awards prior to

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vesting when he resigned on March 20, 2017.  The aggregate grant date fair value of the awards to Mr. Smith, assuming the highest level of performance conditions will be achieved under his performance-based restricted stock units, is $505,700.

(2)         Reflects the value of cash incentive compensation earned under our annual cash incentive program.

(3)         All Other Compensation in 2017 for Mr. Mazzola includes reimbursements for commuting expenses and rental expenses totaling $8,538.  Mr. Dunn’s All Other Compensation in 2017 includes $7,539 related to the use of a Company car.  Additionally, 2017 All Other Compensation includes amounts for each officer related to life and long-term disability insurance coverage and amounts representing the Company’s 401(k) matching contributions.

(4)         Mr. Anderson served as Executive Chairman from March 2015 to April 2016 and from March 2017 to March 2018.  From April 2016 to March 2017, he served as non-executive Chairman.  His cash incentive compensation for 2017 was determined on a pro rata basis beginning March 23, 2017 and ending on February 3, 2018.

(5)         Mr. Mazzola resigned on March 20, 2017.

(6)         Mr. Smith was promoted to Chief Operating Officer and Chief Financial Officer on March 22, 2015 and began serving as Acting Chief Executive Officer on March 23, 2017.  His cash incentive compensation for 2017 was determined on a pro rata basis based on his salary and Target award as Chief Operating Officer and Chief Financial Officer from the beginning of the year up to March 23, 2017, and his salary and Target award as Acting Chief Executive Officer for the remainder of the year.

CEO Pay Ratio

As required by Item 402(u) of Regulation S-K under the Exchange Act, we are providing the following information regarding the ratio of the annual total compensation of our median employee to the annual total compensation of Bruce D. Smith, our President and Chief Executive Officer. The pay ratio figures below are considered to be a reasonable estimate, calculated in a manner that is consistent with the requirements of Item 402(u) of Regulation S-K.

For 2017, our last completed fiscal year:

· annual total compensation of the employee who represents our median compensated employee (other than our CEO) was $15,300;

· annual total compensation of our CEO was $1,562,600.

Accordingly, for 2017, the ratio of CEO pay to median employee pay (other than the CEO) was 102:1.

Determining the Median Employee

Employee Population:

The Company used our employee population data as of February 3, 2018 as the reference date for identifying our median employee. As of such date, our employee population consisted of 5,596 individuals, over 90% of which were hourly employees, and all of whom were located in the United States. For purposes of the pay ratio calculation our employee population consists of all full- and part-time employees at all locations.

Methodology for Determining Our Median Employee, Compensation Measure and Annual Total Compensation of Median Employee:

With respect to the annual total compensation of the median employee, we calculated such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.  In identifying the median employee from our employee population, we chose gross pay for the final payroll in fiscal 2017 as our consistently applied compensation measure.  We then annualized the compensation of all full-time and part-time permanent employees who were employed in said pay period (ended February 3, 2018).  We did not make any cost-of-living adjustments.  The median employee’s compensation includes items shown in the Summary Compensation Table above, primarily base pay, bonus, 401(k) and other compensation.

Annual Total Compensation of CEO

As noted above, Mr. Smith began serving as Acting Chief Executive Officer on March 23, 2017.  We calculated the annual total compensation of Mr. Smith for purposes of this CEO pay ratio disclosure by annualizing the compensation Mr. Smith earned for the portion of the year in which he served as Acting Chief Executive Officer.

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Grants of Plan-Based Awards Table for Fiscal Year 2017

The following table sets forth the individual grants of awards made to each of our named executive officers during fiscal year 2017.

(1)         Represents threshold, target and maximum payout values pursuant to our annual cash incentive program for fiscal year 2017 performance.  For more information on our annual cash incentive program, see the description contained in the “Compensation Discussion and Analysis” elsewhere in this proxy statement.  In each case, the actual amount earned pursuant to our annual cash incentive program by each named executive officer is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.

(2)         Reflects the target payout level of performance-based restricted stock units that vest in 25% increments if the Company’s stock price reaches $19.10, $21.70, $24.30 and $26.90 for twenty consecutive trading days during the three years following the grant date.  The restricted stock units were granted pursuant to a form of award agreement which is filed as Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended February 2, 2013.

(3)         Represents awards of time-based restricted stock under the 2012 Incentive Plan, which vest in three equal installments on the first three anniversaries of the grant date.  The restricted stock was granted pursuant to a form of award agreement which is filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 28, 2012.

(4)         Reflects the grant-date fair value of restricted stock awards and restricted stock units computed in accordance with FASB ASC Topic 718.  The fair value of time-based grants of restricted stock is based on the closing price of the Company’s common stock on the date of grant, and the fair value of performance-based grants of restricted stock units is estimated using a lattice model with the following assumptions: (1) risk-free rate of return: 1.7%; (2) volatility: 39%; and (3) term: three years.

(5)         Mr. Mazzola forfeited all of his awards upon his resignation on March 20, 2017.

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Employment Agreements

Letter agreements with Mr. Smith (March 2007), Ms. Council (December 2006) and Mr. Crowell (February 2011) provided for an annual gross starting salary of $250,000, $200,000 and $245,000, respectively, and participation in our annual bonus plan.  A letter agreement with Mr. Mazzola (January 2012) provided for an annual gross starting salary of $375,000 and participation in our annual bonus plan.  Mr. Mazzola’s letter agreement was terminated in connection with his resignation in March 2017.  Mr. Smith’s letter agreement was superseded by his new letter agreement (March 2018) that he received upon being named President and Chief Executive Officer.  The letter agreements may be terminated by the executive or us at any time for any reason or no reason.  See “Potential Payments Upon Termination or Change in Control” for further information concerning severance agreements and employment non-compete, non-solicit and confidentiality agreements between the Company and each of the named executive officers.

Outstanding Equity Awards at 2017 Fiscal Year-End Table

The following table provides information concerning unexercised options and unvested restricted stock and restricted stock units outstanding as of February 3, 2018 for each of our named executive officers.