DEF 14A

Preliminary Proxy Statement

Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Under Rule 14a-12

DEF 14A 1 d802068ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

PriceSmart, Inc.

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

☒ No fee required.

☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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☐ Fee paid previously with preliminary materials.

☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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2019 PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders will be held at

PRICESMART, INC.

9740 Scranton Road

San Diego, California 92121

PRICESMART, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT

TO THE STOCKHOLDERS OF PRICESMART, INC.:

Notice is hereby given that the Annual Meeting of the Stockholders of PriceSmart, Inc. (the “Company”), will be held at 10:00 a.m. on Thursday, February 6, 2020 at the Company’s corporate headquarters, 9740 Scranton Road, San Diego, California, 92121 for the following purposes:

1.	To elect directors for the ensuing year, to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified. The Board of Directors of the Company has nominated and recommends for election as directors the following nine persons:


Sherry S. Bahrambeygui	Beatriz V. Infante	Gary Malino
Jeffrey Fisher	Leon C. Janks	Robert E. Price
Gordon H. Hanson	Mitchell G. Lynn	Edgar Zurcher

2.	To approve, on an advisory basis, the compensation of the Company’s executive officers for fiscal year 2019;

3.	To ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending August 31, 2020; and

4.	To transact such other business as may be properly brought before the Annual Meeting or any adjournment thereof.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. The Board of Directors has fixed the close of business on December 9, 2019 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. A list of such stockholders shall be open to the examination of any stockholder at the Annual Meeting and for a period of ten days prior to the date of the Annual Meeting at the Company’s corporate headquarters, 9740 Scranton Road, San Diego, California 92121.

Accompanying this Notice is a Proxy. WHETHER OR NOT YOU EXPECT TO BE AT THE ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY, OR YOU MAY VOTE YOUR SHARES BY TELEPHONE OR OVER THE INTERNET, AS DESCRIBED IN THE ENCLOSED PROXY. If you plan to attend the Annual Meeting and wish to vote your shares personally, you may do so at any time before the Proxy is voted.

All stockholders are cordially invited to attend the meeting.

BY ORDER OF THE BOARD OF DIRECTORS

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Francisco J. Velasco

Secretary

San Diego, California

December 20, 2019

Table of Contents

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	Page

Proposal 1 Election of Directors		2

Information Regarding the Board of Directors		7

Audit Committee Report		9

Securities Ownership of Certain Beneficial Owners and Management		10

Executive Officers of the Company		12

Executive and Director Compensation		15

Equity Compensation Plan Information		39

Certain Transactions		40

Proposal 2 Approval of the Compensation of the Named Executive Officers		41

Proposal 3 Ratification of Selection of Independent Registered Public Accounting Firm		42

General		44

PRICESMART, INC.

9740 Scranton Road

San Diego, California 92121

PROXY STATEMENT

for

ANNUAL MEETING OF STOCKHOLDERS

February 6, 2020

The Board of Directors of PriceSmart, Inc., a Delaware corporation (the “Company”), is soliciting the enclosed Proxy for use at the Annual Meeting of Stockholders of the Company to be held on February 6, 2020 (the “Annual Meeting”), and at any adjournments thereof. This Proxy Statement will be first sent to stockholders on or about December 20, 2019. You can submit your Proxy by mail or you may provide voting instructions for your shares by telephone or via the Internet. Instructions for voting by telephone, by using the Internet or by mail are described on the enclosed Proxy. If you plan to attend the Annual Meeting and wish to vote your shares personally, you may do so. Unless contrary instructions are indicated on the Proxy, all shares represented by valid Proxies received pursuant to this solicitation (and not revoked before they are voted) will be voted for the election of the Board of Directors’ nominees for directors, or for a substitute or substitutes selected by the Board of Directors in the event a nominee or nominees are unable to serve or decline to do so; for the approval, on an advisory basis, of the compensation of the Company’s executive officers for fiscal year 2019; and for the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending August 31, 2020. As to any other business which may properly come before the Annual Meeting and be submitted to a vote of the stockholders, Proxies received by the Board of Directors will be voted in accordance with the best judgment of the holders thereof.

A Proxy may be revoked by written notice to the Secretary of the Company at any time prior to the Annual Meeting by executing a later Proxy or by attending the Annual Meeting and voting in person.

The Company will bear the cost of solicitation of Proxies. In addition to the use of mails, Proxies may be solicited by personal interview, telephone, facsimile or e-mail, by officers, directors and other employees of the Company. The Company also will request persons, firms and corporations holding shares in their names, or in the names of their nominees, which are beneficially owned by others, to send, or cause to be sent, Proxy material to, and obtain Proxies from, such beneficial owners and will reimburse such holders for their reasonable expenses in so doing.

The Company’s mailing address is 9740 Scranton Road, San Diego, California 92121.

Voting

Stockholders of record at the close of business on December 9, 2019 (the “Record Date”) will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof.

As of December 9, 2019, 30,612,511 shares of the Company’s common stock, $0.0001 par value per share (“Common Stock”), were outstanding, representing the only voting securities of the Company. Each share of Common Stock is entitled to one vote.

Votes cast by Proxy or in person at the Annual Meeting will be counted by the person appointed by the Company to act as Inspector of Election for the Annual Meeting. The Inspector of Election will treat shares represented by Proxies that reflect abstentions or include “broker non-votes” as shares that are present and entitled to vote for purposes of determining the presence of a quorum.

Because directors are elected by a plurality of the votes of the shares present in person or represented by Proxy at the Annual Meeting and entitled to vote on the election of directors, the nine director nominees who receive the greatest number of votes cast will be elected directors.

The non-binding advisory vote on executive compensation and the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending August 31, 2020 require the affirmative vote of a majority of the aggregate votes present, in person or by proxy, and entitled to vote at the Annual Meeting.

Abstentions and broker non-votes are not included as votes cast and will not affect the outcome of any of the proposals. Broker non-votes occur when a person holding shares in street name, such as through a brokerage firm, does not provide instructions as to how to vote those shares and the broker does not then vote those shares on the stockholder’s behalf.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		1

Proposal 1 Election of Directors

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Based on the recommendation of the Nominating/Corporate Governance Committee, the Board of Directors of the Company has nominated and recommends for election as directors the nine persons named herein to serve until the next Annual Meeting of Stockholders and until their respective successors shall have been duly elected and qualified. In accordance with the Company’s Second Amended and Restated Bylaws, the size of the Board will be reduced from eleven to nine members immediately prior to the Annual Meeting pursuant to a resolution adopted by the Board. Following the Annual Meeting, there will be no vacancies on the Board. All of the nominees are presently directors of the Company. Each of the nominees has consented to serving as a nominee and being named as a nominee in this Proxy Statement and to serving as a director if elected. Directors are elected by a plurality of the votes of the shares present in person or represented by Proxy at the Annual Meeting and entitled to vote on the election of directors. The enclosed Proxy will be voted in favor of the persons nominated unless otherwise indicated. If any of the nominees should be unable to serve or should decline to do so, the discretionary authority provided in the Proxy will be exercised by the proxy holders to vote the shares represented by the Proxies for one or more substitute nominees selected by the present Board of Directors. The Board of Directors does not believe at this time that any substitute nominee or nominees will be required.

Nominations Process

Identification and Evaluation of Nominees for Directors

The Nominating/Corporate Governance Committee identifies nominees for director by first evaluating the current members of our Board of Directors willing to continue in service. Current members with qualifications and skills that are consistent with the Nominating/Corporate Governance Committee’s criteria for board service, as set forth in the section below entitled “Director Qualifications,” and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of our Board of Directors with that of obtaining a new perspective.

If any member of the Board of Directors does not wish to continue in service or if the Board of Directors decides not to re-nominate a member for re-election, the Nominating/Corporate Governance Committee identifies the desired skills and experience of a new nominee in light of the criteria set forth below in “Director Qualifications.” The Nominating/Corporate Governance Committee generally consults with other members of the Board of Directors and may seek input from management, independent counsel, industry experts or advisors that the Nominating/Corporate Governance Committee believes to be desirable and appropriate. The Nominating/Corporate Governance Committee reviews the qualifications, experience and background of any candidates who are identified. Final candidates are interviewed by the members of the Nominating/Corporate Governance Committee. In making its determinations, the Nominating/Corporate Governance Committee evaluates each individual in the context of the Board of Directors as a whole, with the objective of assembling a group that can best perpetuate the success of the Company and represent stockholder interests through the exercise of sound judgment. After review and deliberation of all feedback and data, the Nominating/Corporate Governance Committee makes its recommendation to the Board of Directors.

Pursuant to the Nominating/Corporate Governance Committee Charter, stockholders of the Company who have held shares of the Company’s Common Stock for at least one year and who hold a minimum of 1% of the Company’s outstanding shares of Common Stock may suggest a candidate for director by writing to the Secretary of the Company. In order to be considered, the recommendation for a candidate must include the following written information: (1) a detailed resume of the recommended candidate; (2) an explanation of the reasons why the stockholder believes the recommended candidate is qualified for service on the Board of Directors; (3) such other information that would be required by the rules of the SEC to be included in a proxy statement; (4) the written consent of the recommended candidate; (5) a description of any arrangements or undertakings between the stockholder and the recommended candidate regarding the nomination; and (6) proof of the recommending stockholder’s stock holdings in the Company. In addition, we may require any candidate to furnish such other information as may reasonably be required by the Company to determine the eligibility of such candidate to serve as an independent director in accordance with the Company’s corporate governance guidelines or that could be material to a reasonable stockholder’s


2		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Proposal 1 Election of Directors (continued)

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understanding of the independence or lack of independence of such candidate. In order to give the Nominating/Corporate Governance Committee sufficient time to evaluate a recommended candidate and/or include the candidate in the Company’s proxy statement for the annual meeting to be held in 2021, the recommendation should be received by the Secretary of the Company at the Company’s principal executive offices no later than August 22, 2020. In the event that the Company receives director candidate recommendations from stockholders, those recommendations are evaluated in the same manner that potential nominees suggested by Board members, management or other parties are evaluated. The Company does not intend to treat stockholder recommendations in any manner different from other recommendations.

Director Qualifications

In evaluating director nominees, the Nominating/Corporate Governance Committee considers, among other things, the following factors:

^•

personal and professional integrity, ethics and values;

^•

experience in corporate management, such as serving as an officer or former officer of a publicly held company, and a general understanding of marketing, finance and other elements relevant to the success of a publicly traded company in today’s business environment;

^•

experience in the Company’s industry and with relevant social policy concerns;

^•

experience as a board member of another publicly held company;

^•

academic or professional expertise in one or more aspects of the Company’s current or planned operations; and

^•

practical and mature business judgment, including ability to make independent analytical inquiries.

While the Company does not have a specific policy regarding board diversity, in connection with its evaluation of director nominees, the Nominating/Corporate Governance Committee also considers diversity of expertise and experience in substantive matters pertaining to our business relative to other members of the Board of Directors. The Nominating/Corporate Governance Committee also considers diversity of background (including diversity of gender, race and ethnicity) and life experience. The Nominating/Corporate Governance Committee’s objective is to assemble a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience.

Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating/Corporate Governance Committee may also consider such other facts as it may deem are in the best interests of the Company and its stockholders. The Nominating/Corporate Governance Committee also believes it is appropriate for at least one, and, preferably, several, members of the Board of Directors to meet the criteria for an “audit committee financial expert” as defined by SEC rules, and that a majority of the members of the Board of Directors be independent as required under the Nasdaq Stock Market listing standards applicable to the Company. The Nominating/Corporate Governance Committee also believes it is appropriate for the Company’s chief executive officer to serve as a member of the Board of Directors. Directors’ performance and qualifications are reviewed annually by the Nominating/Corporate Governance Committee.

A copy of the Nominating/Corporate Governance Committee Charter is available on the Company’s website at www.pricesmart.com.

Independent Directors

The Company’s Board of Directors has determined that the following nominees for director are “independent” under the Nasdaq Stock Market listing standards applicable to the Company: Jeffrey Fisher, Gordon Hanson, Beatriz Infante, Leon Janks, Mitchell Lynn, Gary Malino, Robert Price and Edgar Zurcher.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		3

Proposal 1 Election of Directors (continued)

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Information Regarding Nominees

The table below indicates the name, current position with the Company and age as of November 30, 2019 of each nominee for director.

Name

Position

Age

Robert E. Price

Executive Chairman

Sherry S. Bahrambeygui

Chief Executive Officer and Director

Leon C. Janks

Lead Director

Jeffrey Fisher

Director

Gordon H. Hanson

Director

Beatriz V. Infante

Director

Mitchell G. Lynn

Director

Gary Malino

Director

Edgar Zurcher

Director

Robert E. Price has been Executive Chairman of the Board of Directors of the Company since October 2018. At the 2020 Annual Meeting, he will cease to serve as Executive Chairman but, if re-elected to the Board, will continue to serve as Chairman, the position he has held since the Company’s spin-off from Price Enterprises, Inc. in 1997. Mr. Price served as Chief Executive Officer and President of the Company at various times during the Company’s history, most recently as Chief Executive Officer from April 2006 until July 2010. Mr. Price was a founder of The Price Company, which operated the Price Club, and served as its Chief Executive Officer and a member of its board of directors from the time of The Price Company’s founding in 1976 until The Price Company’s merger with Costco Wholesale Corp. in 1993. Mr. Price was Chairman of the Board of Price/Costco, Inc. from October 1993 until December 1994 and Chairman of Price Enterprises from July 1994 until September 1997. Mr. Price currently serves as a Manager of The Price Group, LLC and as President of Price Philanthropies Foundation and Price Charities. Price Philanthropies is a private family foundation that supports charitable activities in the Company’s markets and San Diego, California. Mr. Price’s 40 year experience in the warehouse club merchandising business as well as his extensive knowledge of the Company’s business, history and culture, support the Board of Directors’ conclusion that he should serve as a director of the Company.

Sherry S. Bahrambeygui has served as Chief Executive Officer since January 2019, after serving as interim Chief Executive Officer from November 2018 to January 2019. She also has been a director of the Company since November 2011. She served as Vice Chair of the Board from October 2016 to October 2017. Ms. Bahrambeygui previously served as Senior Executive and Managing Member of The Price Group, LLC from September 2006 to January 2019. Additionally, Ms. Bahrambeygui served as Executive Vice President, Secretary and Vice Chairman of the Boards of Price Charities, Price Philanthropies Foundation and the Aaron Price Fellows Foundation, and as the Chief Executive Officer of PS Ivanhoe, LLC, a commercial real estate investment company. Ms. Bahrambeygui was a licensed stockbroker and a partner in multiple law firms, including a founding partner of the law firm of Hosey & Bahrambeygui, LLP. She practiced law with an emphasis on complex international business and corporate matters and also in the areas of employment and compensation. Ms. Bahrambeygui’s service as Chief Executive Officer, her thorough understanding of the business and operations of the Company, as well as having effectively assisted the Company on complex business matters, contribute to the Board of Directors’ conclusion that she should serve as a director of the Company.

Leon C. Janks has served as a director of the Company since July 1997. He served as Vice Chair of the Board from October 2017 to October 2018 and as Lead Director since October 2018. At the 2020 Annual Meeting, he will cease to serve as Lead Director but, if re-elected to the Board, will continue to serve as a director. Mr. Janks served as a director of Price Enterprises from March 1995 until July 1997. He has been a partner in the accounting firm of Green, Hasson & Janks LLP in Los Angeles,


4		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Proposal 1 Election of Directors (continued)

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California since 1980 and serves as its Managing Partner Emeritus. Mr. Janks has extensive experience in domestic and international business, serving a wide variety of clients in diverse businesses. Mr. Janks is a certified public accountant. Mr. Janks’ experience, his significant accounting, financial and tax expertise which qualify him as an audit committee financial expert and his many years of service to the Company as a member of the Board of Directors contribute to the Board of Directors’ conclusion that he should serve as a director of the Company.

Jeffrey Fisher has been a director of the Company since November 2019. Since 2011, Mr. Fisher has served as the Chief Financial Officer of The Price Group, LLC, a private investment and management company, and Price Philanthropies Foundation, a private non-profit organization. He also has been a director of Price Philanthropies Foundation since May 2019. Since 2004, Mr. Fisher has also served as the Chief Financial Officer of PS Ivanhoe, LLC, a real estate holding company. He is also Chief Financial Officer of Aaron Price Fellows Foundation, La Jolla Fay, LLC, IvanFay, LLC, and RARSD, LLC. From January 2004 through December 2004, Mr. Fisher served as Chief Financial Officer of Price Legacy Corporation, a publicly traded Real Estate Investment Trust with approximately $1.2 billion in real estate assets. From October 2000 until joining Price Legacy, Mr. Fisher served as Chief Financial Officer of National Retail Partners, LLC, a private real estate company which owned and operated approximately $2.0 billion in real estate assets. From August 1993 to September 2000, Mr. Fisher served in various financial capacities of Burnham Pacific Properties, Inc., a publicly traded Real Estate Investment Trust. Prior to joining Burnham Pacific Properties, Mr. Fisher was a senior manager at Deloitte & Touche LLP, having started with them in 1983. Mr. Fisher is a certified public accountant. Mr. Fisher brings over 36 years of finance, accounting and investment experience, with an emphasis on real estate finance, and specific experience with public companies. Mr. Fisher’s extensive experience with finance and real estate matters, his experience as an executive of publicly traded companies and his accounting background contributed to the Board of Directors’ conclusion that he should serve as a director of the Company.

Gordon H. Hanson has been a director of the Company since April 2014. Mr. Hanson will become a tenured member of the faculty at the Harvard Kennedy School of Harvard University in January 2020. From 2001 through 2019, he was a tenured member of the economics faculty at the University of California, San Diego. From 1998 to 2001, he was a tenured member of management faculty at the University of Michigan, and from 1992 to 1998, he was on the economics faculty of the University of Texas. From 2009 until 2014, he served as a director of the Washington Office on Latin America, a non-profit organization working to promote civic advancement in the region, chairing their development committee. Mr. Hanson’s extensive background in the analysis of the economies of Latin America, including over 25 years of experience in consulting for international financial organizations, contribute to the Board of Directors’ conclusion that he should serve as director of the Company.

Beatriz V. Infante has been a director of the Company since January 2018. Since 2009, Ms. Infante has served as Chief Executive Officer of BusinessExcelleration LLC, a business consultancy specializing in corporate transformation and renewal, and since 2008 has been a limited partner in Tandem Capital, a Silicon Valley venture capital firm. From 2010 until its acquisition by Infor in 2011, Ms. Infante was the Chief Executive Officer and a director of ENXSUITE Corporation, from 2006 until its acquisition by Voxeo Corporation in 2008 she was the Chief Executive Officer and a director of VoiceObjects Inc., and from April 2000 until October 2003 was Chief Executive Officer and President of Aspect Communications Corporation and was additionally named Chairman in February 2001. Since May 2014, she has served on the board of directors and as a member of the audit committee of Liquidity Services Inc., an online marketplace for retail goods and capital assets, and has additionally served as chair of the compensation committee since November 2015. Since October 2017, she has served as director and member of the compensation and audit committees of Ribbon Communications, a cloud communications company formed from the merger of Sonus Networks and Genband. From January 2010 until October 2017, she served as director and member of the compensation committee of Sonus Networks, and additionally became chair of the compensation committee in June 2017. Ms. Infante also served on the board of directors and member of the Nominating and Corporate Governance committee of Ultratech, Inc. from July 2016 until its acquisition by Veeco in May 2017. From May 2012 until its acquisition by Broadcom in May 2015, she served on the board of directors and member compensation committee of Emulex Corporation, and additionally became chair of the Nominating and Corporate Governance Committee in February 2014. From 1994 to 2019, she served on


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		5

Proposal 1 Election of Directors (continued)

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the Advisory Committee to the Princeton University School of Engineering and Applied Science. Ms. Infante has also served as a director of a number of privately held companies, and currently serves on the board of directors or advisory boards of private companies in the areas of cloud infrastructure, cybersecurity, intelligent automation and bank fraud detection. Additionally, Ms. Infante is a National Association of Corporate Directors Board Leadership Fellow, and in 2016 was named to the 2016 “NACD Directorship 100,” which honors the most influential boardroom leaders each year. Ms. Infante holds a bachelor of science and engineering degree in electrical engineering and computer science from Princeton University and holds a master of science degree in engineering science from California Institute of Technology. Ms. Infante’s executive leadership experience, including from her service as a chief executive officer of various companies, along with extensive operational expertise and experience in digital transformation, engineering, sales and marketing, contribute to the Board of Directors’ conclusion that she should serve as a director of the Company.

Mitchell G. Lynn has been a director of the Company since November 2011 and will become Vice Chair of the Board at the 2020 Annual Meeting if he is re-elected to the Board. Mr. Lynn served in several senior executive positions and as the President and a director of The Price Company prior to its merger in 1993 with Costco, Inc., and from 1993 until 1994, he served as an executive officer, director and member of the Executive Committee of Price/Costco. Mr. Lynn also was a member of The Price Group, LLC from 2005 to 2008. Mr. Lynn is a founding and continuing director of Bodega Latina Corporation, dba El Super and Fiesta Mart, a 120+ store warehouse-style grocery retailer that targets the Hispanic market in the southwestern United States. Mr. Lynn is a founding and continuing director of Origin International Inc., which is focused on recycling, redistributing and servicing waste oils. Mr. Lynn is also the founder and a partner of CRI 2000, LP, dba Combined Resources International, and Lightspeed Outdoors, LP, dba Lightspeed, which designs, develops and manufactures consumer products under various brand names for domestic and international wholesale distribution, primarily through warehouse clubs and online platforms. Mr. Lynn also is a founder and a partner of ECR4Kids LP dba ECR4Kids, which designs, manufactures, imports and sells educational/classroom products to wholesale dealers and online platforms. Mr. Lynn is a certified public accountant (inactive) and a licensed real estate broker in California. Mr. Lynn’s extensive prior experience in both the warehouse club business and general retailing and his significant knowledge relating to financial matters contribute to the Board of Directors’ conclusion that he should serve as a director of the Company.

Gary Malino has been a director of the Company since April 2016. Mr. Malino is a former senior executive of Realty Income Corporation, a real estate investment trust (REIT) listed on the New York Stock Exchange. Mr. Malino joined Realty Income Corporation in 1985 and was the Chief Financial Officer from 1994 until 2001 when he was promoted to President and Chief Operating Officer, the position he held until his retirement in 2014. Prior to joining Realty Income, Mr. Malino was a manager for a Los Angeles-based public accounting firm (1981-1985) and assistant controller with McMillin Development Company, a real estate development company (1979-1981). Mr. Malino is a certified public accountant (inactive) and a licensed real estate broker in California. Mr. Malino’s extensive experience as a prior executive of a publicly traded company, his accounting background and his extensive experience with finance and real estate matters contributed to the Board of Directors’ conclusion that he should serve as a director of the Company.

Edgar Zurcher has been a director of the Company since October 2009 and also served as a director of the Company from November 2000 to February 2008. Mr. Zurcher has been a partner in the law firm Zurcher, Odio & Raven in Costa Rica since 1980, which the Company uses as counsel for certain legal matters. Mr. Zurcher is also President of PLP, S.A., as well as a director of Payless ShoeSource Holdings, Ltd. (“Payless Shoes”). PLP, S.A. owns 40% of Payless Shoes. Additionally, Mr. Zurcher is a director of Molinos de Costa Rica Pasta and Roma S.A. dba Roma Prince S.A. and is a director of Promerica Financial Corporation, S.A. Mr. Zurcher’s background in legal matters and his significant experience in Central America business and legal affairs contribute to the Board of Directors’ conclusion that he should serve as a director of the Company.

Recommendation of the Board of Directors

The Board of Directors recommends that stockholders vote FOR the slate of nominees set forth above. Proxies solicited by the Board of Directors will be so voted unless stockholders specify otherwise on the accompanying Proxy.


6		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Information Regarding the Board of Directors

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Board Meetings

The Company’s Board of Directors held four meetings during fiscal year 2019. No nominee for director who served as a director during the past year attended fewer than 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings of committees of the Board of Directors on which he or she served.

Board Leadership Structure

The positions of Chairman and Chief Executive Officer are separate. Mr. Price serves as Executive Chairman, and Ms. Bahrambeygui serves as Chief Executive Officer. At the 2020 Annual Meeting, Mr. Price will cease to serve as Executive Chairman but, if re-elected to the Board, will continue to serve as Chairman. The Board of Directors believes that the current leadership of the Board of Directors by the Company’s Chairman enhances the effectiveness of its oversight of management and provides a perspective that is separate and distinct from that of management.

Role of the Board of Directors in Risk Oversight

The Board of Directors oversees the Company’s risk management processes, either as a whole or through its committees. Committees of the Board of Directors review with management and the Company’s internal audit department the Company’s major risk exposures, their potential impact on the Company’s business and the steps the Company takes to manage such risk exposures. The Board of Directors’ risk oversight process includes receiving reports from committees of the Board of Directors and members of senior management.

Committees of the Board

Audit Committee. The Audit Committee, which currently consists of Mr. Janks, Ms. Infante and Mr. Malino held seven meetings during fiscal year 2019. The Audit Committee oversees the Company’s accounting and financial reporting processes and the audits of its consolidated financial statements. The Committee reviews the annual audits conducted by the Company’s independent public accountants, reviews and evaluates internal accounting controls, is responsible for the selection of the Company’s independent public accountants, and conducts such reviews and examinations as it deems necessary with respect to the practices and policies of, and the relationship between, the Company and its independent public accountants. All committee members satisfy the Nasdaq Stock Market’s standards for “independence,” including applicable audit committee independence requirements, and the Board of Directors has determined that Mr. Janks qualifies as an “audit committee financial expert” within the meaning of the applicable SEC rules and regulations. The Audit Committee is governed by a written charter adopted by the Board of Directors, which is available on the Company’s public website at www.pricesmart.com.

Compensation Committee. The Compensation Committee, which currently consists of Ms. Infante, Mr. Janks and Mr. Malino, held nine meetings during fiscal year 2019. Each of the current members of the Compensation Committee satisfies the Nasdaq Stock Market’s standards for “independence,” including applicable compensation committee independence requirements. The Compensation Committee oversees the compensation philosophy for the Company and reviews and approves the compensation program for the Company’s executive officers. The Committee is authorized to evaluate and determine the compensation of the Company’s Chief Executive Officer and reviews and approves compensation for all other executive officers. The Committee also administers, interprets and makes grants under the Company’s equity incentive award plans. The Compensation Committee is governed by a written charter adopted by the Board of Directors, which is available on the Company’s public website at www.pricesmart.com.

Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committee, which currently consists of Mr. Janks, Mr. Hanson and Mr. Lynn, held two meetings during fiscal year 2019. The Nominating/Corporate Governance Committee considers the slate of nominees to be presented for reelection at annual meetings of stockholders. The Nominating/Corporate Governance Committee also may evaluate and recommend candidates to add expertise and fill vacancies on the


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Information Regarding the Board of Directors (continued)

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Board of Directors, which vacancies may be created by the departure of any directors or the expansion of the number of members of the Board of Directors. The Nominating/Corporate Governance Committee approved the nomination of the candidates reflected in Proposal 1. The Nominating/Corporate Governance Committee also assists the Board of Directors as needed in establishing corporate governance guidelines and other policies and procedures pertaining to corporate governance matters. The Nominating/Corporate Governance Committee is governed by a written charter adopted by the Board of Directors, which is available on the Company’s public website at www.pricesmart.com.

Executive Committee. The Executive Committee, which currently consists of Mr. Price, Mr. Janks and Ms. Bahrambeygui, held one meeting during fiscal year 2019. The Executive Committee has all powers and rights necessary to exercise the full authority of the Board of Directors in the management of the business and affairs of the Company, except as provided in the Delaware General Corporation Law or the Bylaws of the Company.

Finance Committee. The Finance Committee, which currently consists of Mr. Janks, Ms. Bahrambeygui, Mr. Fisher, Mr. Hanson, Mr. Malino and Mr. Price, held four meetings during fiscal year 2019. The Finance Committee reviews and makes recommendations with respect to (1) annual budgets, (2) investments, (3) financing arrangements and (4) the creation, incurrence, assumption or guaranty by the Company of any indebtedness, obligation or liability, except, in each case, for any such transactions entered into in the ordinary course of business of the Company.

Real Estate Committee. The Real Estate Committee, which currently consists of Mr. Price, Ms. Bahrambeygui, Mr. Fisher, Mr. Lynn and Mr. Zurcher, held six meetings during fiscal year 2019. The Real Estate Committee reviews and approves the material terms of real estate-related transactions entered into by the Company, consistent with the applicable annual budget of the Company previously approved by the Board of Directors.

Digital Transformation Committee. The Digital Transformation Committee, which currently consists of Ms. Infante, Mr. Price, Ms. Bahrambeygui, Mr. Hanson, Mr. Janks and Gonzalo Barrutieta, a current director not up for re-election at the 2020 Annual Meeting, held five meetings during fiscal year 2019. The Digital Transformation Committee is charged with oversight of the Company’s omni-channel development and digital transformation to enhance membership and stockholder value.

Policy Governing Stockholder Communications with the Board of Directors

The Board of Directors welcomes communications from stockholders of the Company. Any stockholder who wishes to communicate with the Board of Directors or one or more members of the Board of Directors should do so in writing in care of the General Counsel of the Company, at the principal office of the Company, 9740 Scranton Road, San Diego, California 92121. The General Counsel is directed to forward each communication to the director or directors of the Company for whom it is intended.

Policy Governing Director Attendance at Annual Meetings of Stockholders

The Company encourages, but does not require, the members of its Board of Directors to attend the annual meeting of stockholders. All ten members then-serving on the Board of Directors attended the Annual Meeting of Stockholders held on January 30, 2019.


8		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Audit Committee Report

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The Audit Committee oversees the Company’s financial accounting and reporting process and the audits of the financial statements of the Company. All committee members satisfy the definition of independent director set forth in Rule 5605(a)(2) and Rule 5605(c)(2) of the Nasdaq Stock Market’s listing standards. The Audit Committee is governed by a written charter adopted by the Board of Directors, which is available on the Company’s public website at www.pricesmart.com.

In fulfilling its oversight responsibilities, the committee reviewed and discussed with management the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended August 31, 2019, including a discussion of the quality, and not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

The Company’s independent registered public accounting firm, Ernst & Young LLP (“EY”), is responsible for expressing an opinion on the conformity of its audited financial statements with generally accepted accounting principles. EY met with the committee and expressed its judgment as to the quality, not just the acceptability, of the Company’s accounting principles and discussed with the committee other matters as required under generally accepted auditing standards, including those matters required to be discussed by Public Company Accounting Oversight Board Statement on Auditing Standards No. 16 Communications with Audit Committees. In addition, EY discussed the accountants’ independence from the Company and from the Company’s management and delivered to the committee those matters to be set forth in written disclosures as required by applicable requirements of the Public Company Accounting Oversight Board regarding independent registered public accounting firm’s communications with the Audit Committee concerning independence.

The committee discussed with the Company’s independent registered public accounting firm the overall scope and plan of their audit. The committee meets with the independent registered public accounting firm, with and without our management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

In reliance on the reviews and discussions referred to above, the committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2019 for filing with the SEC.

This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.

Leon C. Janks

Beatriz Infante

Gary Malino


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		9

Securities Ownership of Certain Beneficial Owners and Management

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The following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of November 30, 2019 by (1) each of its directors and nominees for director, (2) each of its Named Executive Officers, (3) each person or group known by it to own beneficially more than 5% of the Common Stock and (4) all directors and executive officers as a group.

Name and Address⁽¹⁾

Number of Shares of
Common Stock
Beneficially Owned⁽²⁾

Percentage of Shares
of Common Stock
Beneficially Owned

Robert E. Price⁽³⁾⁽⁴⁾

7,386,740

24.1%

Sherry S. Bahrambeygui⁽⁵⁾

256,897

Gonzalo Barrutieta

11,016

Jeffrey Fisher⁽⁶⁾

47,000

Gordon H. Hanson

Beatriz V. Infante

2,243

Leon C. Janks

27,306

Mitchell G. Lynn⁽⁷⁾

6,638

Gary Malino

2,951

Pierre Mignault

4,096

Edgar A. Zurcher

6,016

José Luis Laparte

1,000

Maarten O. Jager⁽⁸⁾

31,113

William J. Naylon⁽⁹⁾

34,484

Francisco Velasco⁽¹⁰⁾

15,740

All executive officers and directors as a group (22 persons)

8,075,258

26.4

BlackRock, Inc.

55 East 52^nd Street

New York, NY 10055

3,351,586

10.9

EdgePoint Investment Group Inc.⁽¹¹⁾

150 Bloor Street West, Suite 500

Toronto, Ontario M5S 2X9 Canada

3,274,465

10.7

Kayne Anderson Rudnick Investment Management LLP⁽¹²⁾

1800 Avenue of the Stars, Second Floor

Los Angeles, CA 90067

3,584,527

11.7

The Vanguard Group⁽¹³⁾

100 Vanguard Blvd.

Malvern, PA 19355

2,297,277

7.5

*	Less than 1%.

⁽¹⁾

Except as indicated, the address of each person named in the table is c/o PriceSmart, Inc., 9740 Scranton Road, San Diego, California 92121.

⁽²⁾

Beneficial ownership of directors, executive officers and 5% or more stockholders includes shares of restricted stock subject to vesting, regardless of vesting date, and shares issuable upon vesting of restricted stock units and performance stock units that vest within 60 days after the date of this table. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and dispositive power with respect to all shares of stock beneficially owned by them.


10		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Securities Ownership of Certain Beneficial Owners and Management (continued)

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⁽³⁾

Mr. Price is manager of The Price Group, LLC (“The Price Group”). As such, for purposes of this table, he is deemed to beneficially own 150,511 shares of Common Stock held by The Price Group. Mr. Price is manager of RARSD, LLC (“RARSD”). As such, for purposes of this table, he is deemed to beneficially own 8,314 shares of Common Stock held by RARSD. Mr. Price has shared voting and dispositive power with respect to, and disclaims beneficial ownership of, the shares held by The Price Group and RARSD. In addition, Mr. Price is Chairman of the Board and President of Price Charities and a director of Price Philanthropies Foundation. As such, for purposes of this table, he is deemed to beneficially own 2,594,421 shares of Common Stock held by Price Charities and 1,784,034 shares of Common Stock held by Price Philanthropies Foundation. Mr. Price has shared voting and dispositive power with respect to, and disclaims beneficial ownership of, the shares held by Price Charities and Price Philanthropies Foundation. If the percentages of shares of Common Stock beneficially owned by Mr. Price were calculated without regard to the shares held by The Price Group, Price Charities and the Price Family Charitable Fund, he would own 9.3% of the Common Stock.

⁽⁴⁾

Includes 1,326,557 shares of Common Stock held by the Robert & Allison Price Charitable Remainder Trust, of which Mr. Price is a trustee, 1,447,332 shares of Common Stock held by the Robert and Allison Price Trust, of which Mr. Price is a trustee, 38,805 shares of Common Stock held by trusts for the benefit of Mr. Price’s son, of which Mr. Price is a trustee, and 45,000 shares of Common Stock held by family trusts, of which Allison Price, Mr. Price’s wife, is the sole trustee.

⁽⁵⁾

Includes 40,248 shares owned by trusts for the benefit of Mr. Price’s children and nephew, of which Ms. Bahrambeygui is a trustee, 69,728 shares owned by the Hosey Family Trust, of which Ms. Bahrambeygui is a trustee and 2,000 shares owned by Ms. Bahrambeygui’s children. Includes 72,278 shares of restricted Common Stock that are subject to vesting restrictions.

⁽⁶⁾

Includes 47,000 shares held by the Fisher Family Trust.

⁽⁷⁾

Includes 4,650 shares held by the Lynn Family Trust.

⁽⁸⁾

Includes 25,507 shares of restricted Common Stock that are subject to vesting restrictions.

⁽⁹⁾

Includes 20,575 shares of restricted Common Stock that are subject to vesting restrictions.

⁽¹⁰⁾

Includes 10,148 shares of restricted Common Stock that are subject to vesting restrictions.

⁽¹¹⁾

Includes 1,750,482 shares held by EdgePoint Global Portfolio, for which EdgePoint Investment Group Inc. acts as investment manager.

⁽¹²⁾

Includes 2,119,980 shares beneficially owned by Virtus Investment Advisors, Inc., which includes 1,595,000 shares beneficially owned by Virtus Equity Trust, on behalf of Virtus KAR Small Cap Growth Fund: Delaware.

⁽¹³⁾

Includes 43,871 shares held by Vanguard Fiduciary Trust Company and 4,562 shares held by Vanguard Investments Australia, Ltd., both of which are wholly owned subsidiaries of The Vanguard Group, Inc.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		11

Executive Officers of the Company

LOGO

The executive officers of the Company and their ages as of December 20, 2019 are as follows:

Name

Position

Age

Sherry S. Bahrambeygui

Chief Executive Officer and Director

Michael McCleary

Senior Vice President & Interim Chief Financial Officer

William J. Naylon

Executive Vice President and Chief Operating Officer

Francisco Velasco

Executive Vice President, General Counsel, Chief Ethics & Compliance Officer and Secretary

Ana Luisa Bianchi

Executive Vice President—Chief Merchandising Officer

Rodrigo Calvo

Executive Vice President—Real Estate

Frank Diaz

Executive Vice President—Logistics and Distribution

Brud E. Drachman

Executive Vice President—Construction and Facilities

John D. Hildebrandt

Executive Vice President—Operations

Laura Santana

Executive Vice President—Information Technology

Jesus Von Chong

Executive Vice President—Local/Regional Buying—Central America/Caribbean/Columbia

Michael McCleary has served as Senior Vice President and Interim Chief Financial Officer since December 2019. He joined the Company as Vice President and Corporate Controller in 2003 and was subsequently promoted to Senior Vice President and Corporate Controller. Mr. McCleary has over 30 years of international finance, tax and accounting experience. Mr. McCleary has a bachelor of arts degree in business economics from the University of California, Santa Barbara. Prior to joining PriceSmart, Mr. McCleary worked for 14 years in various international companies based in Madrid, Spain.

William J. Naylon has been Executive Vice President and Chief Operating Officer of the Company since January 2002. Mr. Naylon served as Executive Vice President—Merchandising of the Company from July 2001 until January 2002 and as Senior Vice President of the Company from March 1998 until July 2001. From September 1995 through February 1998, Mr. Naylon was Managing Director for the Company’s licensee warehouse club operation in Indonesia. Prior to joining the Company, Mr. Naylon was a General Manager for Price/Costco and served in various management roles for The Price Company.

Francisco Velasco has been Executive Vice President, General Counsel and Secretary of the Company since July 2016 and Chief Ethics & Compliance Officer since October 2016. From March 2009 to June 2016, Mr. Velasco served as Division Counsel Latin America for AbbVie Inc., a publicly traded global biopharmaceutical company. Previously, he held in-house legal roles at Abbott Laboratories, Hanes Brands Inc. and Sara Lee Corporation, and he began his career in private practice specializing in the Latin America region. Mr. Velasco attended law school in Mexico, has a Masters of Law degree from Georgetown University and has an MBA degree from Duke University.


12		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive Officers of the Company (continued)

LOGO

Ana Luisa Bianchi has been Executive Vice President—Chief Merchandising Officer since August 2018 and was Senior Vice President—Merchandising—Latin America Local from October 2016 through July 2018. From 2010 to October 2016, Ms. Bianchi was Vice President—Merchandising, overseeing the local side of the Colombia business. Ms. Bianchi previously served as regional buyer for the Central America operations from 2007 to 2010. From 2005 to 2007, Ms. Bianchi was local buyer for the Guatemala operations. In 2004, Ms. Bianchi was a consultant to PriceSmart’s St. Thomas operations. In 2003, Ms. Bianchi served as Merchandising Director for U.S. food purchases. From 1999 to 2003, Ms. Bianchi served as the food and candy buyer in the Miami corporate office. Ms. Bianchi joined PriceSmart in 1998 as a local buyer for the Guatemala operations. Ms. Bianchi has a law degree in Guatemala from Universidad Rafael Landívar.

Rodrigo Calvo has been Executive Vice President—Real Estate since June 2015 and served as Senior Vice President of Real Estate from February 2009 after joining PriceSmart in October 2004 as Director of Real Estate. Before coming to the Company, he led Grupo Promerica’s real estate development division. Before that, he worked for McDonald’s Corporation’s real estate area and for CSU (now Walmart Central America) in special projects. This combined background allowed him to develop a deep understanding of the commercial real estate field in Central America and the Dominican Republic. He holds a bachelors of science degree in civil engineering from the University of Costa Rica and an MBA from INCAE Business School.

Frank Diaz has been Executive Vice President—Logistics and Distribution since November 2015. Mr. Diaz previously served as Senior Vice President of Distribution and Logistics from February 2010 until November 2015. He joined PriceSmart in September 2008 as Vice President of Logistics. Prior to joining the Company, Mr. Diaz worked more than 20 years in progressively responsible positions in the areas of operations, strategic planning and commercial development with top-tier logistics companies including UPS, FedEx and CS Integrated LLC. With DHL, Mr. Diaz was head of transformational programs involving international tradelane development and improved customer experience. Mr. Diaz has a bachelors of science degree in industrial engineering from the New Jersey Institute of Technology and a logistics management certification from the Georgia Institute of Technology.

Brud E. Drachman has been Executive Vice President—Construction and Facilities since August 2013, was Executive Vice President—Construction Management of the Company from November 2005 until July 2013, served as Executive Vice President—Real Estate and Construction of the Company from February 2005 through October 2005 and as Executive Vice President—Construction and Private Label Merchandising from November 2004 until January 2005. Mr. Drachman served as Executive Vice President—Real Estate and Construction of the Company from November 2002 until October 2004 and served as Senior Vice President—Real Estate and Construction of the Company from August 1998 to October 2002. Mr. Drachman previously served as Vice President—Real Estate and Construction at Price Enterprises from August 1994 to August 1997. Prior to joining Price Enterprises in 1994, Mr. Drachman served as Project Manager at The Price Company beginning in 1987.

John D. Hildebrandt has been Executive Vice President—Operations of the Company since February 2010. Mr. Hildebrandt served as Executive Vice President—Central America and Trinidad Operations from March 2009 through January 2010, as Executive Vice President—Central America Operations from August 2003 until February 2009, as Executive Vice President—Caribbean and Asia Operations from July 2001 until July 2003 and as Senior Vice President of the Company from September 2000 until July 2001. Mr. Hildebrandt previously served as Vice President of the Company from September 1998 until August 2000, overseeing operations in Central America. Mr. Hildebrandt served as the Company’s Country Manager in the Philippines and Panama from August 1997 until August 1998, and as Price Enterprises’ Country Manager in the Philippines and Panama from 1996 until the Company was spun off from Price Enterprises in August 1997. Prior to joining Price Enterprises as Country Manager in 1996, Mr. Hildebrandt was a Senior Operations Manager of Price/Costco from 1994 through 1996, and served in various management roles for The Price Company beginning in 1979.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		13

Executive Officers of the Company (continued)

LOGO

Laura Santana has been Executive Vice President—Information Technology since March 2017. Ms. Santana has served in progressively responsible positions relating to the Company’s IT systems since joining the Company in 1995. Ms. Santana previously worked at The Price Company from 1987 to 1995 in operations and information technology. Ms. Santana is a graduate of the University of San Diego.

Jesus Von Chong has been Executive Vice President—Local/Regional Buying—Central America/Caribbean/Columbia since August 2018. He previously served as Executive Vice President—Chief Merchandising Officer from September 2016 through July 2018 and was Executive Vice President—Foods Merchandising from November 2015 through August 2016. Mr. Von Chong served as Senior Vice President of Merchandising for Central America beginning in 2003, added Colombia to his responsibilities in March 2011 and the Caribbean Region in April 2015. He served as a Regional Merchandising Director for Panama, Costa Rica and Dominican Republic from 2000 to 2003. He was first employed by the Company as a buyer in the Company’s operations in Panama in 1996. Mr. Von Chong progressed to head Buyer in 1998, Warehouse Manager for Via Brasil Operations in 1999 and to Panama’s Country Manager in 2000.


14		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive and Director Compensation

LOGO

Compensation Discussion and Analysis

The Compensation Committee of our Board of Directors, comprised entirely of independent directors, administers the Company’s executive compensation program. The role of the Compensation Committee is to oversee compensation and benefit plans and policies, administer stock plans, and review and approve annually all compensation decisions relating to all executive officers. The Compensation Committee is authorized to retain the services of one or more executive compensation advisors, in its discretion, in order to assist with the establishment and review of our compensation programs and related policies. The Committee has engaged an independent national compensation consulting firm to provide executive compensation advisory services, help evaluate our compensation philosophy and objectives and provide guidance in administering our compensation program.

Fiscal Year 2019 Company Initiatives

Our Chief Executive Officer, Sherry Bahrambeygui, took over leadership of the Company in November 2018, first on a transitional basis and then on a permanent basis in January 2019. She is driving strategic investments to strengthen our core business and to build and incorporate into the core business an omni-channel platform, diversify our club base with smaller format clubs, and enhance and streamline our sourcing and inventory models. Underpinning these investments, Ms. Bahrambeygui and the PriceSmart leadership team have re-committed to the “Six Rights of Merchandising,” with the objective of enhancing technological tools and capabilities available today to increase efficiencies and fully support the guiding principles in our current business and our business going forward.

^•

The Right Merchandise: basic, seasonal, and exciting new items

^•

The Right Time: merchandise must be “fresh” and in tune with current seasons and trends

^•

The Right Place: flow and position merchandise to maximize sales

^•

The Right Condition: sell only first quality merchandise

^•

The Right Quantity: purchase merchandise in quantities that allow for efficient handling and lowest acquisition cost

^•

The Right Price: price merchandise as low as possible to provide consistently low prices every day

The Company is endeavoring to create a more nimble, competitive and customizable platform from which it can respond to the fast-changing retail environments where we operate. Our members expect a low-cost, seamless and tailored buying experience through both our physical and digital channels. We are testing new initiatives to address our members’ expectations for merchandise and services and through smaller store formats in Veraguas, Panama and Santo Domingo, Dominican Republic, which we anticipate will resonate with our members and facilitate growth in previously underserved geographies. We are also analyzing our member data to better inform decisions related to buying, services and inventory flow.

Compensation Philosophy

Beginning in fiscal year 2017, the Compensation Committee, which, at the time, was led by our current Chief Executive Officer, Sherry Bahrambeygui, began a review of the Company’s compensation practices. This review focused, in particular, on the extent to which executive compensation should include performance incentives. Following this analysis, the Compensation Committee, with the input of the compensation consultant, determined that the Company’s compensation philosophy should encompass the following core values:

1.	Fair—a compensation package that is applied consistently across the organization, regardless of gender, age, background, national origin, sexual orientation, sexual identity and race;

2.	Flexible—a comprehensive approach designed to meet our business objectives and market demands;


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		15

Executive and Director Compensation (continued)

LOGO

3.	Competitive—compensation should be equitable and take into account competitive conditions;

4.	Performance based—sharing success through pay programs tied to personal & team metrics, where applicable, and Company performance; and

5.	Understood—clearly communicated to explain the value and to motivate.

As a result of the review of compensation practices continued under the current Chair of the Compensation Committee, Beatriz Infante, and the establishment of the core values set forth above, the Compensation Committee is modifying the Company’s pay philosophy and compensation practices to incorporate performance-driven incentives for the Chief Executive Officer and throughout the Company. To ensure retention of top talent as the compensation practices evolve, the Committee determined that it was in the best interests of stockholders to begin the transition with the Chief Executive Officer’s compensation to lead by example for the executive team and to stage the changes to the compensation programs over a multi-year period.

From fiscal year 2016 to fiscal year 2018, our executive compensation was comprised primarily of base salary and restricted stock awards with time-based vesting. Beginning in late fiscal year 2018 and early fiscal year 2019, the Company introduced performance stock units with vesting tied to achievement of revenue or operating income targets. In fiscal year 2019, the Compensation Committee reintroduced performance-based cash bonuses in connection with the hiring of Sherry Bahrambeygui, first as interim Chief Executive Officer, and later as permanent Chief Executive Officer. The Compensation Committee intends to incorporate annual cash bonuses as well as long-term performance-based equity into its executive compensation program for executives going forward, in addition to the practice updated in fiscal year 2018 of smaller annual grants of time-based equity with multi-year vesting. The Company’s Chief Executive Officer and Compensation Committee believe that creation of stockholder value requires accountability for the achievement of specific company objectives, both short-term and long term, and that performance-based cultures are correlated with increased stockholder value. Accordingly, the Chief Executive Officer and the Compensation Committee are seeking to gradually increase the portion of compensation that is performance-based to provide incentives for achievement of annual objectives. The Company’s Chief Executive Officer and Compensation Committee also believe that direct linkages of executive pay with the Company’s stock price performance encourages and rewards an owner-operator mindset among the Company’s executives and incentivizes executives to take actions that generate long-term sustainable benefits to the Company, which are aligned with stockholders’ interests.

The below chart compares the components of target compensation for our Chief Executive Officer for fiscal year 2018 to the components of target compensation for our Chief Executive Officer for fiscal year 2020. Fiscal year 2019 is not shown because it was a transition year in which our former Chief Executive Officer served for a portion of the year and our current Chief Executive Officer served for a portion of the year in an interim role and a portion of the year in a permanent role.

LOGO


16		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive and Director Compensation (continued)

LOGO

The below chart compares the components of target compensation for our Named Executive Officers other than our Chief Executive Officer for fiscal year 2019 to the components of target compensation for our Named Executive Officers other than our Chief Executive Officer for fiscal year 2020.

LOGO

Purposes and Structure of the Executive Compensation Program

The objectives of the Company’s executive compensation program are to:

^•

Attract, motivate and retain superior talent;

^•

Encourage and reward high performance, collaboration and accountability; and

^•

Align executive pay opportunities with Company performance and stockholder returns.

To achieve these objectives, the Compensation Committee evaluates the appropriate mix of cash and stock-based compensation and the appropriate weighting of performance-based and fixed compensation. In determining specific amounts and components of compensation, the Compensation Committee considers each officer’s role, position, performance, level of responsibility, skills and experience, and prior compensation awards, as well as market data, as more fully described below under “Elements of Compensation.”

The following table sets forth executive compensation and governance policies and practices we have implemented to advance the objectives of our executive compensation program and to align our practices and policies with industry best practices.



Practice		PriceSmart Policy
Alignment of Compensation and Stockholder Returns	✓	A material proportion of the total target compensation opportunity of our Named Executive Officers is long-term equity incentive awards.
Stock Ownership Requirements	✓	All of our executive officers and outside directors are subject to stock ownership requirements.
Clawback Policy	✓	All of our executive officers are subject to a compensation clawback policy.
Independent Compensation Consultant	✓	The Compensation Committee engages an independent compensation consultant that reviews and advises the Compensation Committee on executive compensation. The consultant performs services solely for the Compensation Committee.
Anti-Hedging and Pledging Policy	✓	We do not allow executive officers or directors to enter into any hedging or pledging transactions relating to our common shares.
Excise Tax Gross-Ups	✓	We do not pay excise tax gross ups under our employment agreements in the event of a change in control.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		17

Executive and Director Compensation (continued)

LOGO

Compensation Determination Process

The Compensation Committee reviews the compensation for our Chief Executive Officer and makes a recommendation to the full Board, which has ultimate authority for approval of such compensation. The Compensation Committee reviews and approves all compensation for our executive officers. Each year the Compensation Committee relies on multiple data points to assess the competitiveness of our executive compensation program and the individual compensation of our executives. Information the Compensation Committee uses to perform this analysis includes:

^•

The Company’s performance against its financial and operational goals;

^•

The mix of short-term and long-term compensation in the form of cash and equity-based compensation achieved in the prior year;

^•

A review of information on the competitive market, with input from the Compensation Committee’s independent consultant;

^•

The anticipated level of complexity and responsibility assigned to the executives given the Company’s strategic objectives; and

^•

The expense to the Company of the proposed compensation for the following fiscal year relative to the Company’s budget.

Use of Independent Compensation Consultant

In fiscal year 2019, the Compensation Committee retained Semler Brossy as its independent executive compensation consultant. The consultant has no other business relationship with the Company and receives no payments from us other than the fees for services to the Compensation Committee. The consultant reports directly to the Compensation Committee, and the Compensation Committee may replace the consultant or hire additional consultants at any time.

During fiscal year 2019, the scope of the compensation consultant’s engagement included:

^•

Conducting a review of competitive market information for our executive officers, including our Chief Executive Officer, for use in determining fiscal year 2019 compensation levels;

^•

Reviewing and commenting, as requested by the Compensation Committee, on our executive compensation programs and opportunities;

^•

Advising the Compensation Committee regarding the selection of the executive pay peer group discussed below under the heading “—Peer Group”;

^•

Providing recommendations on instituting a long-term performance-based compensation structure in response to stockholder input and participating in the design and implementation of new performance-based components of our compensation program; and

^•

Reviewing and commenting on the Compensation Committee’s report for the proxy statement.

Semler Brossy made recommendations regarding compensation for our Chief Executive Officer and also made recommendations with respect to our other Named Executive Officers. After gathering this input and receiving these recommendations, the Compensation Committee determined the compensation of our Named Executive Officers in executive session.


18		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive and Director Compensation (continued)

LOGO

The Compensation Committee believes that long-term compensation plays an important role in encouraging positive results through collaboration, aligning the compensation of the senior management team to stockholder returns and in retaining key executives. In particular, the Compensation Committee believes that the Chief Executive Officer’s compensation should be more heavily weighted towards long-term incentives as compared to other members of senior management given her greater ability to affect the results of the Company and the importance of retaining her services.

Comparison of Short-Term Compensation and Long-Term, Equity-Based Compensation

The charts below show the percentage breakdown of short-term compensation (comprised of salary, bonus, dividends paid on restricted stock, 401(k) contribution by the Company and miscellaneous perquisites) and long-term, equity-based compensation (comprised of the dollar value of restricted stock awards and performance stock units that vested during the fiscal year based on the market value on the vesting date) for fiscal year 2019 for our Chief Executive Officer and for the other Named Executive Officers.

LOGO

Elements of Compensation

In fiscal year 2019, the compensation of our Named Executive Officers was comprised of base salaries and long-term, equity-based incentives in the form of restricted stock awards and performance stock units. In addition, our Chief Executive Officer’s compensation included cash bonuses based upon achievement of individual performance targets.

Base Salary. Base salaries for the Named Executive Officers were initially established either when they were hired into the position from outside the Company or as they were promoted to increasing levels of responsibility within the Company. Base salaries for the Named Executive Officers are generally established based on the scope of their responsibilities, level of experience and individual performance, taking into account both external competitiveness and internal equity considerations. While the goal for the base salary component is to compensate executives at a level that is competitive with the salaries of executives in comparable positions among our peer group, the Compensation Committee does not attempt to set base salaries at a certain target percentile within the peer group. Instead, the Compensation Committee considers external market information only to confirm that its base salary determinations based on the other factors described above are competitive.

The Compensation Committee annually evaluates the base salary levels of the Named Executive Officers to ensure that there is consistency within the Company based upon scope of responsibility and also to ensure that the base salaries are appropriate relative to the peer companies listed below. In establishing changes to base salaries, the Compensation Committee may consider the overall financial condition of the Company but does not make changes to executive salaries based on the achievement of any particular financial criteria.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		19

Executive and Director Compensation (continued)

LOGO

The Named Executive Officers did not receive salary increases in fiscal year 2019. The Company’s Chief Executive Officer advised the Compensation Committee that, in consideration of the challenges facing the Company, she and the Executive Vice Presidents were willing to forgo a cost of living increase to ensure that lower-level employees were able to receive a cost of living increase.

Bonus. In connection with engaging Ms. Bahrambeygui to serve as the Company’s interim and later permanent Chief Executive Officer, the Compensation Committee included a cash bonus component for her compensation to lead the way to a more performance-based culture. The Compensation Committee has approved a bonus plan for all executives for fiscal year 2020.

Long-Term Incentive Compensation and Performance-based Equity Compensation. We believe that long-term incentives for higher-level executives are consistent with the values and culture of the Company and therefore should be an integral and heavily weighted part of the overall executive compensation program. Direct linkages of executive pay with the Company’s stock price performance encourages and rewards an owner-operator mindset among the Company’s executives and incentivizes executives to take actions that generate long-term sustainable benefits to the Company.

PriceSmart uses restricted stock and performance stock units as long-term incentive vehicles because:

^•

restricted stock and the related vesting period help attract and retain executives;

^•

the value received by the recipient of an award of restricted stock or performance stock units is enhanced as our stock price increases; therefore, restricted stock and performance stock units promote teamwork and collaboration and enhance the executives’ incentives to increase the stock price consistent with stockholders’ interests; and

^•

restricted stock and performance stock units help to provide a balance to the overall executive compensation program as restricted stock rewards executives for increases in stockholder value over the longer term.

PriceSmart historically has awarded restricted stock with time-based vesting to its Named Executive Officers, but the Compensation Committee determined that performance-based equity is an important tool alongside grants of restricted stock with time-based vesting. The Compensation Committee believes that these two equity instruments—performance stock units and restricted stock—will work together to provide the Company’s executives a competitive pay opportunity that focuses executives on maximizing stockholder value over the long term.

In fiscal year 2017, the Compensation Committee decided that the Company should make smaller annual grants of restricted stock vesting over a period of three years instead of the larger, periodic grants vesting over five or more years the Compensation Committee had previously made. In moving to annual awards, the Compensation Committee noted that moving to smaller, but more frequent, awards would give the Compensation Committee greater flexibility to adjust awards to take into account:

^•

an individual’s value to the Company, including any extraordinary skills or characteristics which might warrant special consideration;

^•

changes in external benchmarks;

^•

changes in internal benchmarks, addressing morale and fairness issues;

^•

an individual’s trend in compensation relative to changes in the financial performance of the Company; and

^•

fiscal responsibility and appropriateness given the short- and long-term performance of the Company.

The Compensation Committee also noted that annual awards would allow the Company to have better fiscal control of the compensation program; would more easily allow for the implementation of pay-for-performance metrics; and would help prevent hardship or windfall scenarios in future.


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In determining the number of shares of restricted stock to be granted to our Named Executive Officers, the Compensation Committee takes into account the individual’s position, scope of responsibility, ability to affect profits and stockholder value, and the value of restricted stock in relation to other elements of the individual executive’s total compensation and market competitive data. All awards of restricted stock to our executive officers are made by the Compensation Committee.

Our Named Executive Officers recognize taxable income from restricted stock when and as shares vest. On each vesting date, the Company repurchases a portion of the shares vesting on such vesting date from the participant to cover the tax obligations triggered by the vesting. The Company repurchases the shares at their fair market value on the date of vesting and pays this amount directly to the taxing authorities. The Company generally receives a corresponding tax deduction for compensation expense in the year of vesting, subject to limits on the deductibility of compensation in excess of $1.0 million paid to certain executives under Internal Revenue Code Section 162(m). The amount included in the participant’s wages upon such vesting, and, subject to Section 162(m), the amount we may deduct, is equal to the fair market value of a share of Common Stock on the date the shares vest, multiplied by the number of shares vesting.

Other Benefits. PriceSmart’s Named Executive Officers are eligible to participate in all of our employee benefit plans, such as our 401(k) plan and our medical, dental, vision, long and short-term disability and life insurance plans, in each case on the same basis as other employees. We provided our former Chief Executive Officer and President a housing allowance and travel benefits in accordance with his employment agreement, and we reimbursed moving expenses and provided a two-year housing allowance of $60,000 per year for our Chief Financial Offer. The Compensation Committee believes that these perquisites are no greater than competitors’ practices.

Fiscal Year 2019 Compensation of Chief Executive Officer

Salary. The Compensation Committee set Ms. Bahrambeygui’s base salary as interim Chief Executive Officer at the outset of that engagement in November 2018 and set her base salary as permanent Chief Executive Officer when she assumed that role on January 30, 2019.

Bonus. Ms. Bahrambeygui’s target bonus for her service as interim Chief Executive Officer was $437,500. The performance criteria set by the Compensation Committee for her interim CEO service consisted of individual objectives with associated target key results relating to strategic plan and process, operating process, organizational process, compensation practices and management development. At the conclusion of her interim service, the Compensation Committee determined that Ms. Bahrambeygui achieved the stated objectives and key results required for achievement of the bonus, and additionally recognized Ms. Bahrambeygui’s extraordinary efforts and devotion of time during her service as interim Chief Executive Officer. The Committee thus approved the payment of the $437,500 bonus.

Ms. Bahrambeygui’s target bonus for her service as Chief Executive Officer for the remaining portion of fiscal year 2019 was $291,800 (which amount represents a pro rata portion of a $500,000 target bonus for the year), consisting of a 50% company financial results component and 50% individual performance objectives. The measurement criteria for the individual objectives and key results were set by the Compensation Committee and were determinable, measurable, and quantifiable operational targets in the following key areas:

^•

Strengthen the Buying organization, a key component of our business

^•

Improve the Member experience and enhance the Membership organization

^•

Improve inventory to better deliver on the Six Rights

^•

Create digital leverage

For fiscal year 2019, upon setting the criteria for the bonus in February, the Compensation Committee concluded that a half year did not provide sufficient time for a new Chief Executive Officer to have a significant impact on the Company’s financial metrics.


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Executive and Director Compensation (continued)

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Therefore, the Compensation Committee guaranteed the financial portion of this bonus for fiscal year 2019. In October 2019, the Compensation Committee reviewed Ms. Bahrambeygui’s performance relative to her individual objectives and key results and determined that she achieved all of her targets. Accordingly, Ms. Bahrambeygui earned her full target bonus of $291,800.

The Compensation Committee has approved a bonus plan for all executives for fiscal year 2020.

Equity Incentive Awards. The Compensation Committee made grants of performance stock units and restricted stock to Ms. Bahrambeygui in November 2018 (fiscal year 2019) and February 2019 (fiscal year 2019). The grants to Ms. Bahrambeygui in November 2018 were comprised of 2/3 restricted stock and 1/3 performance stock units with the same performance criteria as the other executive officer grants and a one-year vesting schedule. Ms. Bahrambeygui’s February 2019 awards are comprised entirely of restricted stock with time-based vesting because the Compensation Committee determined that it was too late in the fiscal year for Ms. Bahrambeygui to be reasonably expected to materially impact financial metrics such as revenues and operating income for the fiscal year.

Fiscal Year 2019 Compensation of Other Named Executive Officers

Salary. The Named Executive Officers did not receive salary increases in fiscal year 2019. The Company’s Chief Executive Officer advised the Compensation Committee that, in consideration of the challenges facing the Company, she and the Executive Vice Presidents were willing to forgo a cost of living increase to ensure that lower-level employees were able to receive a cost of living increase.

Bonus. Our Named Executive Officers other than our Chief Executive Officer were not eligible for cash bonuses in fiscal year 2019.

Equity Incentive Awards. The Compensation Committee made grants of performance stock units and restricted stock to our Named Executive Officers other than our Chief Executive Officer in October 2018 (fiscal year 2019). The performance criteria for the PSUs would be satisfied for all shares underlying the award upon a 3% increase in revenues or operating income in fiscal year 2019 compared to fiscal year 2018 determined on a GAAP basis and would be satisfied for 50% of the shares upon a 3% increase in revenues in fiscal year 2019 compared to fiscal year 2018 determined on a constant currency basis. As used here, the term “constant currency basis” refers to the calculation of revenues excluding the impact of foreign currency exchange rate fluctuations. We believe this measure provides a valuable means of evaluating period-to-period revenue growth before the impact of foreign currency exchange issues that are outside our executive officers’ control. After the end of fiscal year 2019, the Compensation Committee determined that the Company had not achieved the GAAP-based targets but had exceeded 3% growth in revenues measured on a constant-currency basis. Accordingly, the executive officers earned 50% of the PSUs granted, subject to multi-year vesting.

Following satisfaction of performance targets, in whole or in part, the portion of the PSU for which the performance target has been achieved vests in three annual installments in October 2019, October 2020 and October 2021, subject to the recipient’s continued employment through those vesting dates. To the extent performance-vesting and time-vesting requirements are met, PSUs are settled and paid in shares of common stock (net of shares withheld for taxes). PSUs have dividend equivalents, but payment of such amounts will be subject to satisfaction of the performance criteria.

Peer Group

The Compensation Committee establishes individual executive compensation at levels the Compensation Committee believes are comparable with those of executives in other companies of similar size and stage of development operating in retail industries, taking into account our own strategic goals and our relative performance. Management utilized Equilar Inc.’s Executive Insight research database, a resource for referencing executive compensation and analyzing executive pay trends


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Executive and Director Compensation (continued)

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based on information Equilar gathers from proxy statements and reports filed with the Securities and Exchange Commission, and additional competitive information provided by our compensation consultant.

PriceSmart is the largest operator of membership warehouse clubs in Latin America and the Caribbean. We are incorporated and headquartered in the U.S., but the large majority of our retail and operational footprint is international. The Company operates in 13 different countries and territories, each with unique characteristics and a variety of currencies, and tax and legal regimes, and sometimes in challenging geopolitical markets. We seek to maximize the value of PriceSmart membership to members by operating a low-margin model focused on providing the best possible value on high-volume products, which are tailored to a large and exclusively international member base. This requires our management team to focus on purchasing, supply chain and other operational efficiencies.

There are few publicly traded companies in the U.S. that have a similar profile to PriceSmart’s in terms of operating model, customer focus and geographic footprint. The complexities of our business show up in our daily operations in navigating different local and international laws, local customs and preferences, political changes and foreign currency conversions. We are not like many traditional retailers, which is evidenced to a degree by the fact that only one public company in the U.S.—BJ’s Wholesale Club—names PriceSmart as a peer company in its proxy. The other most directly comparable company to PriceSmart is Costco Wholesale Corporation, whose size relative to PriceSmart’s makes comparisons impractical for executive compensation purposes.

In developing a peer group for executive pay purposes, we started with a premise that a diverse set of US-based retailers and grocers would be most reflective—though not fully reflective—of our Company’s business focus and managerial complexity, as well as the market within which we compete for executive-level talent. In April 2019, the Compensation Committee, with advice from its independent executive compensation consultant, approved an executive pay peer group made up of the 21 US-based retailers and grocers listed below. The Company will use this group to monitor competitive pay levels for executives and as a reference when evaluating our effectiveness and appropriateness of our executive compensation programs and practices. However, the Compensation Committee noted that no single company identified as a peer has all of the key characteristics of PriceSmart, but each has some of the attributes. As a result, the Compensation Committee will monitor and adjust this peer group from time to time to ensure continuing relevance with our company size, the complexities associated with our international footprint, our business strategy and our executive talent needs.

The executive pay peer group consists of the following companies:

Abercrombie and Fitch

Fossil

Sprouts Farmers Market

Big Lots

Fresh Del Monte Produce

StitchFix

BJ’s Wholesale Club

Guess?

The Andersons

Burlington Stores

Ingles Market

The Chefs’ Warehouse

Dillard’s

Mercado Libre

ULTA

DSW

Neiman Marcus Group

Village Super Market

Five Below

Smart and Final Stores

Weis Markets

These companies were identified based on the following criteria:

^•

Comparable scale by revenue to PriceSmart. At the time the Compensation Committee established the peer group, the 21 companies reported annual revenue ranging roughly from 0.4x to 2.5x PriceSmart’s fiscal year 2018 revenue of $3.2 billion.

^•

Significant international presence. The peer group shows a preference for retailers and grocers with a strong international presence to reflect the complexities that PriceSmart faces in its international operations. PriceSmart’s international orientation is among the highest of its peer group at 100% of sales from outside the U.S.


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Executive and Director Compensation (continued)

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^•

Comparability to PriceSmart’s membership-based, club model. The Compensation Committee assigned priority to potential peers that have membership-based or loyalty-type programs. Consideration is also given to operating margins and the intensiveness of supply chain and logistics, more broadly.

^•

Comparability in store format. Companies with larger store formats were prioritized over those retailers with more, but smaller store formats.

For fiscal year 2018, the Compensation Committee compared our Named Executive Officers’ compensation to compensation of executives at public companies Institutional Shareholder Services included in its most recent benchmarking analysis for PriceSmart. For fiscal year 2018, ISS used a peer group comprised of the 16 public companies in the same SIC code as PriceSmart, with revenues between $1.6 billion and $8 billion and employees between 1,500 and 40,000. The Compensation Committee adopted the same group, except that it excluded Sears Hometown & Outlet Stores, Inc. because of its then-recent bankruptcy filing. Upon further consideration in April 2019, the Compensation Committee determined that the peer group identified above provided a more appropriate and relevant comparison than the ISS peer group because most of the companies in the ISS peer group did not have an international component and none featured a membership format.

For fiscal year 2019, as a part of its compensation program review process, the Compensation Committee assessed the total target pay opportunities and mix of compensation elements—overall and by pay element—for those serving as Named Executive Officers at the beginning of the year against general industry compensation data provided by Semler Brossy. The Compensation Committee noted substantial variation between the compensation levels and pay mix of similarly situated executives, particularly when evaluating the competitiveness of the Company’s long-term incentive awards. After evaluating PriceSmart’s target pay opportunities against these external benchmarks, the Compensation Committee determined that target pay opportunities for our Named Executive Officers were, in aggregate and generally on an individual basis, below competitive midpoints.

Additionally, the Compensation Committee evaluated Ms. Bahrambeygui’s target pay opportunity against the set of companies identified as the Company’s peer group in its Proxy Statement for 2019 Annual Meeting of Stockholders upon her appointment as interim Chief Executive Officer and against the go-forward peer group described above upon her appointment as Chief Executive Officer. The evaluation process that the Compensation Committee took upon the appointment of Ms. Bahrambeygui as interim Chief Executive Officer and as Chief Executive Officer is similar to that used for other Named Executive Officers. Ms. Bahrambeygui’s target pay opportunity for fiscal year 2019 was less than the median for the 21 peer companies listed above.

Based on the objectives outlined above, the Compensation Committee strives to set target total compensation opportunity levels and the individual components of compensation to be competitive with the market in which we compete for executive talent. The Compensation Committee does not, however, target any specific percentile of market compensation levels.

Compensation data for the peer group of companies is only one of the many factors the Compensation Committee considers in setting compensation for PriceSmart’s Named Executive Officers, and actual compensation may vary based on the Compensation Committee’s review of other considerations, including the Company’s and the individual Named Executive Officer’s performance and the value of the executive’s leadership and other skills to the Company.

Severance and Change in Control Payments

We have entered into agreements and maintain plans that require us to make payments and/or provide benefits to our Named Executive Officers under specified circumstances in the event of a termination of their employment without cause or a change in control. We provide for certain severance benefits in the event that a Named Executive Officer’s employment is involuntarily terminated. Such severance benefits are designed to alleviate the financial impact of an involuntary termination through salary continuation and are intended to provide for a stable work environment. We believe that reasonable severance benefits for our


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Executive and Director Compensation (continued)

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Named Executive Officers are important because it may be difficult for our executive officers to find comparable employment within a short period of time following certain qualifying terminations. In addition to normal severance, we provide for accelerated vesting of the time-based component of all equity awards for all employees in the event of a change in control as a means of reinforcing and encouraging the continued attention and dedication of our employees to their duties of employment without personal distraction or conflict of interest in circumstances which could arise from the occurrence of a change in control. We believe that the interests of stockholders will be best served if the interests of our senior management are aligned with them, and providing these change-in-control benefits should eliminate, or at least reduce, the reluctance of senior management to pursue potential change in control transactions that may be in the best interests of stockholders.

The Company provides severance, continuity and change-in-control benefits because they are essential to help us fulfill our objectives of attracting and retaining key managerial talent. These agreements are intended to be competitive with those of similarly sized companies in our industry and company size and to attract and retain highly qualified individuals. While these arrangements form an integral part of the total compensation provided to these individuals and are considered by the Compensation Committee when determining executive officer compensation, the decision to offer these benefits did not influence the Compensation Committee’s determinations concerning other direct compensation or benefit levels.

Say-on-Pay Feedback from Stockholders

At our 2019 Annual Meeting of Stockholders, we sought an advisory vote from our stockholders regarding our executive compensation program and received a 98.4% favorable vote supporting the program, excluding abstentions and broker non-votes. For fiscal year 2019, the Compensation Committee considered the results of the advisory vote as part of its annual review of the compensation provided to our Named Executive Officers and other executives. The Compensation Committee will continue to consider the outcome of our say-on-pay votes when making future compensation decisions for the Company’s executive officers.

Stock Ownership Guidelines and Hedging and Pledging Prohibition

To further align executive and stockholder interests, we have adopted stock ownership guidelines for our executives and non-employee directors. The guidelines require our Chief Executive Officer to hold Common Stock with a value of at least five times his or her base salary and other executive officers to hold Common Stock with a value of at least one times their respective base salaries. The guideline for non-employee directors is one times their annual cash compensation. Until such time as an executive or non-employee director satisfies the minimum ownership requirement set forth herein, such executive or non-employee directors is required to hold 50% of the equity awards (net of amounts required to satisfy any applicable tax obligations arising in connection with the exercise or vesting of any equity award) granted by the Company on or after the date such executive or non-employee director becomes subject to these guidelines. After an executive or non-employee director satisfies the minimum ownership requirement as of a measurement date, he or she will be deemed to be in compliance with the stock ownership guidelines notwithstanding subsequent changes in the value of his or her stock ownership, so long as the number of shares deemed held does not decrease (as counted in connection with the foregoing valuation methodology). In addition to the minimum stock ownership requirements, we do not allow our executive officers or non-employee directors to enter into any hedging, pledging or monetization transactions involving our Common Stock.

Recoupment Policy

We adopted a Compensation Recoupment Policy effective as of September 19, 2017. The recoupment (or “clawback”) policy provides the Compensation Committee with broad discretion to recoup certain incentive awards made to the Company’s executive officers when it determines that (1) an executive engaged in serious misconduct or failed to supervise a subordinate employee who engaged in serious misconduct which the executive knew, or was reckless in not knowing, was occurring, and (2) such misconduct resulted in a material violation of law or a written Company policy that caused significant financial or


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Executive and Director Compensation (continued)

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reputational harm to the Company. This clawback policy is broader than current and expected regulatory requirements. The policy can be found on the Corporate Governance section of our website.

Compensation Committee Report

We have reviewed and discussed with management the Compensation Discussion and Analysis required to be included in this Proxy Statement. Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the Compensation Discussion and Analysis referred to above be included in our Proxy Statement.

The foregoing has been furnished by the Compensation Committee.

Beatriz Infante

Leon C. Janks

Gary Malino


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Executive Compensation

Summary of Compensation

The following table sets forth the compensation for fiscal year 2019 by any person who served as our Chief Executive Officer or Chief Financial Officer during the fiscal year and the three other most highly compensated executive officers who were serving as executive officers at August 31, 2019. These persons are referred to as the Company’s “Named Executive Officers” elsewhere in this Proxy Statement.



Name and Principal Position	Fiscal Year	Salary ($)	Bonus ($)	Stock Awards ($)⁽¹⁾	Non-Equity Incentive Plan Compensation ($)	All Other Compensation ($)	Total ($)
Sherry Bahrambeygui
—Chief Executive Officer and President⁽²⁾
	2019	$755,208	$729,300	$4,428,493⁽³⁾	—	$ 68,195⁽⁴⁾	$5,981,196
José Luis Laparte
—Former Chief Executive Officer and President⁽⁵⁾
	2019	256,101	—	—	—	646,608⁽⁶⁾	902,709
	2018	762,654	—	—	—	117,614⁽⁶⁾	880,268
	2017	745,925	—	—	—	130,390⁽⁶⁾	876,315
Maarten O. Jager
—Executive Vice President and Chief Financial Officer
	2019	600,000	—	395,442	—	174,641⁽⁷⁾	1,170,083
	2018	186,538	—	2,462,887	—	124,189⁽⁷⁾	2,773,614
William J. Naylon
—Executive Vice President and Chief Operating Officer
	2019	591,259	—	611,312	—	28,813⁽⁸⁾	1,231,384
	2018	543,526	—	—	—	35,277⁽⁸⁾	578,803
	2017	531,603	—	—	—	38,243⁽⁸⁾	569,846
Francisco Velasco
—Executive Vice President, Secretary and General Counsel
	2019	550,000	—	101,445	—	16,395⁽⁹⁾	667,840
	2018	427,579	—	422,369	—	16,422⁽⁹⁾	866,370
	2017	418,201	—	—	—	237,091⁽⁹⁾	655,292
John Hildebrandt
—Executive Vice President
	2019	465,698	—	101,765	—	18,883⁽¹⁰⁾	586,346
	2018	421,418	—	—	—	20,947⁽¹⁰⁾	442,365
	2017	411,835	—	—	—	23,623⁽¹⁰⁾	435,458

⁽¹⁾

Represents the aggregate grant date fair value of the restricted stock awards and performance stock units granted to the Named Executive Officers in the relevant fiscal year in accordance with FASB Accounting Standards Codification ASC 718, “Share-Based Payment” (“ASC 718”). For information regarding assumptions made in connection with this valuation, please see Note 7 Stock Based Compensation to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2019, filed with the SEC on October 29, 2019. Restricted stock awards and restricted stock units have not been granted on an annual basis.

⁽²⁾

Ms. Bahrambeygui was appointed interim Chief Executive Officer effective November 16, 2018 and became Chief Executive Officer on January 30, 2019.

⁽³⁾

Excludes $1,549,676 in grant value of stock awards forfeited by Ms. Bahrambeygui in connection with her moving from interim to permanent Chief Executive Officer. In February 2019, Ms. Bahrambeygui and the Compensation Committee agreed to terminate continued vesting of the stock awards made to her in connection with her becoming interim Chief Executive Officer and replace such


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Executive and Director Compensation (continued)

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awards with new awards appropriate for her becoming permanent CEO. As a result, Ms. Bahrambeygui vested in only the pro rata portion of the awards made to her as interim Chief Executive Officer associated with the period during which she served in that role.

⁽⁴⁾

Represents dividend payments of $29,035 on unvested restricted stock awards, 401(k) contributions made by the Company totaling $11,200 and a transition payment of $27,960.

⁽⁵⁾

Mr. Laparte resigned as Chief Executive Officer and President and as a director effective November 16, 2018.

⁽⁶⁾

For fiscal year 2019, represents housing allowance payments totaling $50,004, 401(k) contributions made by the Company totaling $4,558, vacation payout of $79,843 and severance of $512,203. For fiscal year 2018, represents dividend payments of $52,123 on unvested restricted stock awards, 401(k) contributions made by the Company totaling $11,000, housing allowance payments totaling $50,004 and $4,487 for the cost of airline tickets for Mr. Laparte and his family and the related tax gross-up. For fiscal year 2017, represents dividend payments of $60,942 on unvested restricted stock awards, 401(k) contributions made by the Company totaling $10,800, housing allowance payments totaling $50,004 and $8,644 for the cost of airline tickets for Mr. Laparte and his family and the related tax gross-up.

⁽⁷⁾

For fiscal year 2019, represents dividend payments of $13,084 on unvested restricted stock awards, 401(k) contributions made by the Company totaling $16,700, a housing allowance of $60,000 on a grossed up basis and a tax gross up payment of $84,857 related to reimbursement of relocation expenses. For fiscal year 2018, represents 401(k) contributions made by the Company totaling $4,400. Also includes, a housing allowance of $20,000 on a grossed up basis and reimbursement of relocation expenses of $99,789.

⁽⁸⁾

For fiscal year 2019, represents dividend payments of $17,613 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $11,200. For fiscal year 2018, represents dividend payments of $24,277 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $11,000. For fiscal year 2017, represents dividend payments of $27,443 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $10,800.

⁽⁹⁾

For fiscal year 2019, represents dividend payments of $5,195 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $11,200. For fiscal year 2018, represents dividend payments of $5,422 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $11,000. For fiscal year 2017, represents dividend payments of $6,196 on unvested restricted stock awards, 401(k) contributions made by the Company totaling $10,800. For fiscal year 2017, also includes reimbursed costs, on a grossed up basis, of $43,964 for moving expenses and temporary housing during the moving process, and an additional payment of $176,131 to Mr. Velasco to offset the cost of financing his San Diego residence.

⁽¹⁰⁾

For fiscal year 2019, represents dividend payments of $7,683 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $11,200. For fiscal year 2018, represents dividend payments of $9,947 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $11,000. For fiscal year 2017, represents dividend payments of $12,823 on unvested restricted stock awards and 401(k) contributions made by the Company totaling $10,800.

Grants of Plan-Based Awards

The following table sets forth certain information with respect to grants of plan-based awards for the fiscal year ended August 31, 2019 to the Named Executive Officers.

Estimated Payouts under

Equity Incentive Plan Awards

All Other
Stock Awards:

Number of
Shares

Name

Grant Date

Threshold (#)

Target (#)

Maximum (#)

Grant Date Fair Value
Stock and Option ($)⁽¹⁾

Sherry Bahrambeygui

11/16/2018⁽²⁾

1,004

2,007

⁽⁴⁾

2,007

⁽⁴⁾

—

$132,281

⁽⁴⁾

11/16/2018⁽³⁾

—

4,074

⁽⁵⁾

266,738

⁽⁵⁾

03/06/2019⁽³⁾

—

63,130

4,027,694

José Luis Laparte

—

Maarten O. Jager

10/23/2018⁽²⁾

1,371

2,741

—

219,636

10/23/2018⁽³⁾

—

2,194

175,805

William J. Naylon

10/23/2018⁽²⁾

1,789

3,578

—

286,705

10/23/2018⁽³⁾

—

4,051

324,607

Francisco Velasco

10/23/2018⁽²⁾

445

889

—

71,236

10/23/2018⁽³⁾

—

377

30,209

John Hildebrandt

10/23/2018⁽²⁾

198

396

—

31,731

10/23/2018⁽³⁾

—

874

70,034


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⁽¹⁾

Represents the aggregate grant date fair value of the restricted stock awards and performance stock units granted to the Named Executive Officers in the relevant fiscal year in accordance with FASB Accounting Standards Codification ASC 718, “Share-Based Payment” (“ASC 718”). For information regarding assumptions made in connection with this valuation, please see Note 7 Stock-Based Compensation to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2019, filed with the SEC on October 29, 2019.

⁽²⁾

Award of performance stock units subject to vesting upon the Company’s achievement of revenue or operating income targets specified by the Compensation Committee for fiscal year 2019. If the performance targets are not achieved but would have been achieved on a constant-currency basis, the performance criteria will be deemed met with respect to half of the shares covered by an award. In fiscal year 2019, the Company achieved the performance criteria on a constant-currency basis only; thus, only 50% of the awards granted were earned and will vest in accordance with the NEO’s vesting schedule.

⁽³⁾

Award of restricted stock with time-based vesting.

⁽⁴⁾

Excludes 7,759 performance stock units having a grant date fair value of $511,396 that were awarded to Ms. Bahrambeygui as interim Chief Executive Officer that were canceled at the end of her service in that role. In February 2019, Ms. Bahrambeygui and the Compensation Committee agreed to terminate continued vesting of the stock awards made to her in connection with her becoming interim Chief Executive Officer and replace such awards with new awards appropriate for her becoming permanent CEO.

⁽⁵⁾

Excludes 15,753 restricted stock units having a grant date fair value of $1,038,280 that were awarded to Ms. Bahrambeygui as interim Chief Executive Officer that were canceled at the end of her service in that role. In February 2019, Ms. Bahrambeygui and the Compensation Committee agreed to terminate continued vesting of the stock awards made to her in connection with her becoming interim Chief Executive Officer and replace such awards with new awards appropriate for her becoming permanent CEO.

Employment Contracts

On January 30, 2019, the Board of Directors of the Company appointed Sherry S. Bahrambeygui as the Company’s Chief Executive Officer. Ms. Bahrambeygui had held that position in an interim role since November 16, 2018. On March 4, 2019, the Company and Ms. Bahrambeygui entered into a new Employment Agreement, which superseded the Employment Agreement between the Company and Ms. Bahrambeygui dated November 20, 2018 relating to Ms. Bahrambeygui’s service as interim Chief Executive Officer. In October 2019, the Compensation Committee corrected the vesting schedule for the bridge grant of restricted stock described below and increased her target annual bonus for fiscal year 2020 to 100% of her base salary.

The new Employment Agreement provides for a term expiring August 31, 2020, which will be automatically renewed annually for additional one-year terms, unless either the Company or Ms. Bahrambeygui provides at least 60 days’ notice that the Company or Ms. Bahrambeygui, as the case may be, wishes to terminate the agreement. The Company may terminate Ms. Bahrambeygui’s employment with cause upon immediate notice or without cause upon 30 days’ prior written notice, or immediately upon Ms. Bahrambeygui’s death or disability. Ms. Bahrambeygui may terminate her employment without “good reason” on 60 days’ prior written notice or with “good reason” upon 30 days’ notice and opportunity for the Company to cure the conditions providing “good reason.”

The Employment Agreement specifies a base salary of $1,000,000 per year, which may be increased, but not decreased, at the Company’s discretion. Ms. Bahrambeygui also received a $27,960 one-time payment relating to transition of her compensation from interim to permanent status. The Employment Agreement states that Ms. Bahrambeygui is eligible to participate in the Company’s bonus plan and to receive all other benefits offered to senior executives of the Company under the Company’s benefit practices and plans. As amended, the Employment Agreement specifies that for the 2019 fiscal year, Ms. Bahrambeygui is eligible to receive a target bonus of $291,800 (which is pro-rated based on service for the period commencing January 30, 2019 and ending August 31, 2019), and for the 2020 fiscal year, Ms. Bahrambeygui is eligible to receive a target bonus of $1,000,000.

In addition, the Employment Agreement provides that, except as specified below for the 2019 and 2020 fiscal years, Ms. Bahrambeygui will be eligible to receive for each fiscal year ending during the term an annual long-term incentive equity award. The anticipated value of each award will be $2,500,000, with the number of shares subject to the award calculated based on the average closing price per share for the 30-day trading period prior to the date of grant. Each award is anticipated to vest approximately: (i) 1/3 based on achievement of performance metrics, such performance metrics to be substantially similar to those applicable to other executive officers; and (ii) 2/3 based on service, such service-based vesting to be substantially similar to the vesting terms applicable to other executive officers. The actual value of the award for any fiscal year and the actual vesting


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Executive and Director Compensation (continued)

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terms for each such award, however, will be determined by the Compensation Committee of the Company’s Board of Directors in its sole discretion, acting in good faith, with consideration of all applicable facts and circumstances existing at that time.

Pursuant to the Employment Agreement, as amended, Ms. Bahrambeygui received a “bridge grant” of restricted stock of the Company with an aggregate value of $2,500,000 based on the average closing price per share for the 30-day trading period prior to the grant date. This award will vest, subject to Ms. Bahrambeygui’s continued employment through each applicable vesting date, in accordance with the following schedule: (A) 30% on August 29, 2019; (B) 45% on August 29, 2020; and (C) 25% on August 29, 2021.

Ms. Bahrambeygui also received an “annual grant” of restricted stock of the Company with an aggregate value of $1,458,900 based on the average closing price per share for the 30-day trading period prior to the date of grant. This award vests, subject to Ms. Bahrambeygui’s continued employment through each applicable vesting date, in accordance with the following schedule: (A) 50% on August 29, 2019; (B) 25% on August 29, 2020; and (C) 25% on August 29, 2021.

Ms. Bahrambeygui will be entitled to receive in fiscal year 2020 a grant of restricted stock and performance stock units of the Company with an aggregate value of $2,500,000 based on the average closing price per share for the 30-day trading period prior to the grant date. This award will be made, subject to the Compensation Committee’s approval, concurrently with fiscal year 2020 grants to the Company’s executives, but in no event later than April 3, 2020. In considering this award, the Compensation Committee is required to take into account the facts that such award has been agreed in principle following good faith negotiations between Ms. Bahrambeygui and the Company and that Ms. Bahrambeygui entered into the Employment Agreement in reliance of the Compensation Committee’s stated intention to make this award at the time and on the terms contemplated thereby. The 2020 award will vest: (i) 1/3 based on achievement of performance metrics, such performance metrics to be substantially similar to those applicable to other executive officers; and (ii) 2/3 based on service, such service-based vesting to be substantially similar to the vesting terms applicable to the other executive officers.

In connection with Ms. Bahrambeygui’s service as interim Chief Executive Officer, Ms. Bahrambeygui was previously granted awards of restricted stock and performance stock units in the Company. In the case of the Prior Grant of performance stock units, a pro rata portion of the service component of vesting applicable to such performance stock units will be deemed satisfied such that, subject to the Compensation Committee’s determination that the performance criteria for such performance stock units have been satisfied, 2,007 shares subject to such performance stock units will vest upon the Compensation Committee’s making such determination. In the case of the Prior Grant of restricted stock, 4,074 shares will vest as of date of the new Employment Agreement. All other vesting under the Prior Grants ceased effective as of January 29, 2019.

Upon termination of Ms. Bahrambeygui’s employment with the Company for any reason, she will be entitled to receive any earned but unpaid base salary, unpaid expense reimbursements and any vested benefits she may have under any employee benefit plan of the Company.

In the event that the Company terminates Ms. Bahrambeygui’s employment without “cause” or upon her death or “disability,” Ms. Bahrambeygui terminates her employment for “good reason” or the Company elects to cause the non-renewal of the Employment Agreement such that it expires at the end of its then-current term, Ms. Bahrambeygui also will be entitled to:

^•

payment of an amount equal to one times base salary, payable over 24 months in conformity with the Company’s normal payroll period (less any earned income or disability payments received during such period, in the case of a termination upon her disability),

^•

continued contribution of the premium cost for Ms. Bahrambeygui’s and her eligible dependents’ participation in the Company’s group health plan for 12 months,

^•

payment of any earned but unpaid bonus for the year prior to termination and a pro rata bonus for the year of termination (payable when all other bonuses are paid).


30		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive and Director Compensation (continued)

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In the event Ms. Bahrambeygui resigns her employment with the Company without “good reason” but provides at least 60 days’ notice of her resignation, she also will be entitled to receive payment of any accrued but any unpaid bonus for the year prior to termination (payable when all other bonuses are paid).

The foregoing severance benefits are the exclusive benefits that would be payable to Ms. Bahrambeygui under her Employment Agreement by reason of her termination. Payment of the severance benefits is conditioned on Ms. Bahrambeygui’s continued compliance with her obligations with respect to confidentiality, non-solicitation of employees and non-interference with the Company’s customers and contracts and Ms. Bahrambeygui (or her estate) executing and delivering to the Company a full release of all claims in a form reasonably acceptable to the Company.

The Company also has entered into employment agreements with each of its other executive officers that automatically renew each year unless either the Company or the executive provides at least 60 days’ notice that the Company or executive, as the case may be, wishes to terminate the agreement. Each employment agreement specifies the base salary in effect at the time the agreement was entered into and provides that the amount may be increased, but not decreased, at the Company’s discretion.

The employment agreements state that the executive is eligible to participate in the Company’s bonus plan in effect at the time and to receive all other benefits offered to senior executives of the Company under the Company’s benefit practices and plans. The Company discontinued its annual bonus plan in fiscal year 2016, so there was no payment required to be made thereunder during fiscal year 2017, fiscal year 2018 or fiscal year 2019.

In addition to termination at the end of the term if one party elects to terminate the agreement, the executive may terminate his or her employment on 60 days’ prior written notice. The Company may terminate the executive’s employment with cause upon immediate notice or without cause upon 30 days’ prior written notice. In the event that (i) the Company terminates an executive’s employment without “cause”; (ii) upon termination due to an executive’s “disability”; (iii) the executive terminates his or her employment for “good reason”; or (iv) the Company elects to cause the non-renewal of the employment agreement such that it expires at the end of its then-current term, subject to the executive providing a release to the Company, the executive will be entitled to:

^•

payment of an amount equal to one times base salary then in effect, payable in 24 equal installments over a period of 12 months,

^•

continued contribution of the premium cost for the executive’s and his eligible dependents’ participation in the Company’s group health plan for 12 months,

^•

payment of any accrued but any unpaid bonus for year prior to termination and a pro rata bonus earned for the year of termination (payable when all other bonuses are paid).

Upon an executive’s death, the executive’s estate will be entitled to receive continued contribution of the premium cost for executive’s eligible dependents’ participation in the Company’s group health plan for 12 months and payment of any accrued but any unpaid bonus for year prior to termination and a pro rata bonus for the year of termination (payable when all other bonuses are paid).

The employment agreements also contain confidentiality provisions, restrictions on solicitation of employees and interference with the Company’s customers and contracts, and other terms and conditions customary to executive employment agreements.

Equity Incentive Plans

Prior to January 22, 2013, the Company had three active Equity Incentive Plans. On January 22, 2013, the Company adopted the 2013 Equity Incentive Award Plan and agreed not to issue any additional awards under prior plans.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		31

Executive and Director Compensation (continued)

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2001 Equity Participation Plan

The 2001 Equity Participation Plan of PriceSmart, Inc. (the “2001 Plan”) had a total of 6,789 shares outstanding as of November 30, 2019, all of which are subject to outstanding and unvested restricted stock units.

The 2001 Plan provides that in the event of a “Change in Control” or a “Corporate Transaction,” each as defined in the 2001 Plan, each outstanding award shall, immediately prior to the effective date of the Change in Control or Corporate Transaction, automatically become fully vested, exercisable or payable, as applicable, for all of the shares of Common Stock at the time subject to such award and, as applicable, may be exercised for any or all of those shares as fully vested shares of Common Stock.

2002 Equity Participation Plan

The 2002 Equity Participation Plan of PriceSmart, Inc. (the “2002 Plan”) has a total of 53,701 shares outstanding as of November 30, 2019, all of which are subject to outstanding and unvested restricted stock awards.

The 2002 Plan provides that in the event of a “Change in Control” or a “Corporate Transaction,” each as defined in the 2002 Plan, each outstanding award shall, immediately prior to the effective date of the Change in Control or Corporate Transaction, automatically become fully vested, exercisable or payable, as applicable, for all of the shares of Common Stock at the time subject to such award and, as applicable, may be exercised for any or all of those shares as fully vested shares of Common Stock.

2013 Equity Incentive Award Plan

The 2013 Equity Incentive Award Plan of PriceSmart, Inc. (the “2013 Plan”) provides that the Compensation Committee of the Board of Directors or a subcommittee thereof may grant or issue incentive stock options, non-qualified stock options, stock purchase rights, stock appreciation rights, restricted stock, deferred stock, dividend equivalents, performance awards, stock payments and other stock related benefits, or any combination thereof.

The 2013 Plan provides for awards covering up to (1) 600,000 shares of Common Stock plus (2) the number of shares that remained available for issuance under the 1998 Equity Participation Plan of PriceSmart, Inc., the 2001 Plan and the 2002 Plan (collectively, the “Prior Plans”) as of January 22, 2013. The number of shares reserved for issuance under the 2013 Plan increases during the term of the 2013 Plan by the number of shares relating to awards outstanding under the 2013 Plan or any of the Prior Plans that expire, or are forfeited, terminated, cancelled or repurchased, or are settled in cash in lieu of shares; however, in no event will more than an aggregate of 816,265 shares of our Common Stock be issued under the 2013 Plan. As of November 30, 2019, the 2013 Plan provided for the issuance of up to 755,775 shares (including shares originally authorized for issuance under the Prior Plans), with 386,985 shares subject to outstanding and unvested restricted stock awards, restricted stock units and performance stock units and 368,790 shares remaining available for future grants.

The 2013 Plan provides that in the event of a “Change in Control” or a “Corporate Transaction,” each as defined in the 2013 Plan, each outstanding award shall, immediately prior to the effective date of the Change in Control or Corporate Transaction, automatically become fully vested, exercisable or payable, as applicable, for all of the shares of Common Stock at the time subject to such award and, as applicable, may be exercised for any or all of those shares as fully vested shares of Common Stock, subject to prior achievement of vesting criteria in the case of performance stock units. In addition to the foregoing, pursuant to a September 2019 amendment to the 2013 Plan, in the event of termination of a plan participant’s service as a result of death or “disability,” any equity awards granted to such participant will, to the extent then unvested, automatically become fully vested, exercisable or payable, as applicable, for all of the shares of Common Stock at the time subject to such award and, as applicable, may be exercised for any or all of those shares as fully vested shares of Common Stock, subject to prior achievement of vesting criteria in the case of performance stock units.


32		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive and Director Compensation (continued)

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The Retirement Plan of PriceSmart, Inc.

In 1998, the Company established a retirement plan. The retirement plan is designed to be a “qualified” plan under applicable provisions of the Internal Revenue Code of 1986, as amended, covering all employees, as defined in the retirement plan. Each year, participants may contribute up to 100% per pay period of their pre-tax annual compensation (as defined in the retirement plan) up to the maximum allowable by the Internal Revenue Code of 1986, as amended. Participants also may contribute amounts representing distributions from other qualified plans. Effective January 1, 2011, the Plan was amended to replace the Company match with a discretionary contribution of 4% of the employee’s eligible compensation up to the IRS maximum allowed to all employees regardless of their own salary deferrals. Effective January 1, 2016, the Company began providing up to a 2% matching contribution to non-officer employees who contribute at least 1% of their eligible pay, and during fiscal year 2019 expanded the 2% matching contribution to officers who contribute at least 1% of their eligible pay. Although the Company has not expressed any intent to do so, the Company has the right under the retirement plan to discontinue its contributions at any time and to terminate the retirement plan, subject to the provisions of Employee Retirement Income Security Act of 1974, as amended. All participants in the retirement plan are immediately vested in their accounts and earnings thereon.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth certain information with respect to outstanding equity awards at August 31, 2019 with respect to the Named Executive Officers.


Name	Grant Date		Number of Shares of Stock That Have Not Vested (#)⁽¹⁾		Market Value of Shares of Stock That Have Not Vested ($)⁽²⁾		Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not Vested (#)⁽³⁾			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights That Have Not Vested ($)⁽²⁾
Sherry Bahrambeygui
		11/16/2018		—	$	—		2,007	⁽⁴⁾	$	121,283
		03/06/2019		43,525		2,630,216		—			—
José Luis Laparte
				—		—		—			—
Maarten Jager
		04/24/2018		9,427		569,674		—			—
		07/17/2018		—		—		4,714	⁽⁵⁾		284,867
		10/23/2018		2,194		132,583		2,741	⁽⁶⁾		165,639
William J. Naylon
		01/25/2012		9,051		546,952		—			—
		11/03/2015		6,030		364,393		—			—
		10/23/2018		1,482		89,557		3,578	⁽⁷⁾		216,219
Francisco Velasco
		07/14/2016		2,213		133,732		—			—
		04/04/2018		1,746		105,511		—			—
		07/17/2018		—		—		1,746	⁽⁸⁾		105,511
		10/23/2018		—		—		889	⁽⁹⁾		53,722
John Hildebrandt
		01/25/2012		5,658		341,913		—			—
		11/03/2015		2,222		134,275		—			—
		10/23/2018		507		30,638		396	⁽⁸⁾		23,930


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Executive and Director Compensation (continued)

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⁽¹⁾

Each restricted stock award is subject to certain accelerated vesting upon a change in control, as described under “—Equity Incentive Plans” above. The vesting schedule of shares of restricted stock with service-based vesting requirements, are presented in the table below.

Vesting Date

Sherry
Bahrambeygui

Maarten O.
Jager

William J.
Naylon

Francisco
Velasco

John
Hildebrandt

October 16, 2019

3,986

—

January 24, 2020

—

3,017

—

1,886

April 4, 2020

—

873

—

April 24, 2020

—

6,285

—

August 29, 2020

23,756

1,097

6,277

2,213

2,407

January 24, 2021

—

3,017

—

1,886

April 4, 2021

—

873

—

April 24, 2021

—

3,142

—

August 29, 2021

15,783

1,097

1,235

—

322

January 24, 2022

—

3,017

—

1,886

⁽²⁾

The market value is computed by multiplying the closing market price of the Company’s Common Stock ($60.43) on August 30, 2019 by the number of shares subject to stock award.

⁽³⁾

Awards of performance stock units.

⁽⁴⁾

Based on actual performance relative to target, 50% of the shares vested on October 26, 2019 and the remainder will be forfeited.

⁽⁵⁾

Based on actual performance relative to target, 50% of the shares will vest in accordance with the vesting schedule and the remainder will be forfeited. The achieved shares vested or will vest 67% on October 26, 2019 and 33% on October 26, 2020.

⁽⁶⁾

Based on actual performance relative to target, 50% of the shares will vest in accordance with the vesting schedule and the remainder will be forfeited. The achieved shares vested or will vest 20% on October 26, 2019, 20% on October 26, 2020 and 60% on October 26, 2021.

⁽⁷⁾

Based on actual performance relative to target, 50% of the shares will vest in accordance with the vesting schedule and the remainder will be forfeited. The achieved shares vested or will vest 30% on October 26, 2019, 35% on October 26, 2020 and 35% on October 26, 2021.

⁽⁸⁾

Based on actual performance relative to target, 50% of the shares will vest in accordance with the vesting schedule and the remainder will be forfeited. The achieved shares vested or will vest in equal portions on October 26, 2019 and October 26, 2020.

⁽⁹⁾

Based on actual performance relative to target, 50% of the shares will vest in accordance with the vesting schedule and the remainder will be forfeited. The achieved shares vested or will vest 11% on October 26, 2019, 32% on October 26, 2020 and 57% on October 26, 2021.

Restricted Stock Vested

The following table sets forth certain information with respect to the vesting of shares of restricted stock during the fiscal year ended August 31, 2019 with respect to the Named Executive Officers.


	Stock Awards

Name	Number of Shares Acquired on Vesting		Value Realized on Vesting⁽¹⁾
Sherry Bahrambeygui		23,679		$1,435,060
José Luis Laparte		50,000		2,955,000
Maarten O. Jager		14,141		826,117
William J. Naylon		11,616		715,249
Francsico Velasco		4,334		260,844
John Hildebrandt		4,475		280,156

⁽¹⁾

The value realized upon vesting of a stock award is calculated based on the number of shares vesting multiplied by the fair market value per share of the Common Stock on the vesting date.

Pension Benefits

Other than the Company’s retirement plan, which is described above, the Company does not have any plan that provides for payments or other benefits at, following, or in connection with, retirement for our Named Executive Officers.


34		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive and Director Compensation (continued)

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Nonqualified Deferred Compensation

The Company does not have any plan that provides for deferred compensation.

Severance and Change in Control Payments

The following table summarizes the potential payments to each Named Executive Officer in two different potential scenarios: (1) a termination of the Named Executive Officer without cause and (2) a change in control without a termination of employment. The table assumes that the termination of employment or change in control occurred on August 31, 2019, the last business day of our last completed fiscal year. For purposes of estimating the value of accelerated vesting of equity awards to be received in the event of a change in control, the Company has assumed a price per share of our Common Stock of $60.43, which represents the closing market price of our Common Stock as reported on the Nasdaq Global Select Market on August 31, 2019 (the last trading day of fiscal year 2019).


Name	Severance upon Termination without Cause ($)⁽¹⁾		Acceleration of Options and Restricted Stock upon Change in Control($)⁽²⁾
Sherry Bahrambeygui	$	1,291,800	$	2,751,499	⁽³⁾
José Luis Laparte		N/A		N/A
Maarten O. Jager		600,000		1,152,763	⁽⁴⁾
William J. Naylon		600,000		1,217,121	⁽⁵⁾
Francisco Velasco		550,000		398,475	⁽⁶⁾
John Hildebrandt		474,000		530,757	⁽⁷⁾

⁽¹⁾

Under the Named Executive Officer’s employment agreement, in the event of his or her termination other than for cause, death or disability, he or she will be entitled to payment of an amount equal to one times base salary then in effect, payable in 24 equal installments over a period of 12 months, plus, in the case of Ms. Bahrambeygui, a bonus for the fiscal year of the Company in which the termination occurs, prorated for the portion of such fiscal year that she is employed by the Company. The amount of the bonus, prior to proration, shall be contingent on attainment of the relevant annual bonus plan performance goals for the year.

⁽²⁾

Under the terms of our equity incentive award plans, vesting of all restricted stock awards, restricted stock units and performance stock units for which at least one of the performance criteria have been met will accelerate upon a change in control.

⁽³⁾

Includes 2,007 performance stock units, valued for purposes of this table at $121,283, the vesting of which will accelerate upon a change in control only if one of the performance criteria has been met prior to the change in control.

⁽⁴⁾

Includes 7,445 performance stock units, valued for purposes of this table at $450,506, the vesting of which will accelerate upon a change in control only if one of the performance criteria has been met prior to the change in control.

⁽⁵⁾

Includes 3,578 performance stock units, valued for purposes of this table at $216,219, the vesting of which will accelerate upon a change in control only if one of the performance criteria has been met prior to the change in control.

⁽⁶⁾

Includes 2,635 performance stock units, valued for purposes of this table at $159,233, the vesting of which will accelerate upon a change in control only if one of the performance criteria has been met prior to the change in control.

⁽⁷⁾

Includes 396 performance stock units, valued for purposes of this table at $530,757, the vesting of which will accelerate upon a change in control only if one of the performance criteria has been met prior to the change in control.

Director Compensation

Each non-employee director receives an annual retainer for serving on the Board of Directors.


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Executive and Director Compensation (continued)

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Each non-employee director receives an annual retainer of $36,000 per year for serving on the Board of Directors. Additionally, non-employee directors who serve on, but do not chair, committees other than the Audit Committee receive an additional $5,000 per year per committee, and non-employee directors, who serve on, but do not chair, the Audit Committee receive an additional $15,000 per year. Committee chairpersons receive additional annual retainers as follows: the chairperson of the Compensation Committee receives an additional annual retainer of $15,000, the chairperson of the Digital Transformation Committee receives an additional annual retainer of $25,000, the chairperson of the Finance Committee receives an additional annual retainer of $20,000, the chairperson of the Nominating/Corporate Governance Committee receives an additional annual retainer of $15,000, and the chairperson of the Audit Committee receives an additional annual retainer of $45,000. These annual retainers are paid on a quarterly basis. Ms. Infante receives an additional retainer of $25,000 in recognition of her devotion of significant additional time to supporting the Board of Directors and management on technology matters.

Effective January 30, 2019, the Board of Directors granted to each non-employee director an award of restricted stock units under the 2013 Plan, with dividend equivalents thereon, covering a number of shares having a value equal to $80,000 minus the value of RSUs vesting during the one-year vesting period of the new grants (based on the value at the time such awards were granted). To determine the number of shares covered by the new grants, the Board of Directors divided the dollar value of the award to be granted by the 30-trading-day average of the Company’s stock price prior to the grants. These awards will vest in full on January 31, 2020 or the date of the Company’s next annual meeting of stockholders, whichever is sooner, subject to the non-employee director’s continued service on the Board of Directors on such vesting date. The vesting of all restricted stock units accelerates automatically upon a change in control.

Directors also receive reimbursement for travel expenses incurred in connection with their duties as directors.

The following table sets forth a summary of the compensation we paid or was earned by our non-employee directors in the fiscal year ended August 31, 2019.


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)⁽¹⁾⁽²⁾		All Other Compensation ($)⁽³⁾		Total ($)
Gonzalo Barrutieta	$	41,000	$	81,663	$	907		$123,570
Sherry Bahrambeygui⁽⁴⁾		33,363		—		—		33,363
Gordon Hanson		44,111		81,663		907		126,681
Beatriz V. Infante		97,438		81,663		907		180,008
Leon C. Janks		124,355		81,663		907		206,925
Mitchell G. Lynn		46,000		81,663		907		128,570
Gary Malino		59,417		81,663		1,048		142,128
Pierre Mignault		36,000		81,663		907		118,570
Robert Price⁽⁵⁾		—		—		—		—
Edgar Zurcher		38,083		81,663		907		120,653

⁽¹⁾

Represents the aggregate grant date fair value of the restricted stock unit award granted to the director on January 30, 2019 calculated in accordance with ASC 718.

⁽²⁾

The aggregate number of restricted stock unit awards outstanding at the end of fiscal year 2019 for each of the directors was as follows:

Gonzalo Barrutieta, 1,295; Gordon Hanson, 1,295; Beatriz Infante, 1,295; Leon C. Janks, 1,295; Mitchell G. Lynn, 1,295; Gary Malino, 1,295; Pierre Mignault, 1,295 and Edgar Zurcher, 1,295.

⁽³⁾

Represents the amount paid to the director pursuant to dividend equivalents on such director’s unvested restricted stock units plus, in the case of Mr. Mignault, the amount of consulting fees paid to Mr. Mignault as a sourcing agent.

⁽⁴⁾

The Company discontinued payment of director fees to Ms. Bahrambeygui upon her becoming permanent Chief Executive Officer in January 2019.

⁽⁵⁾

Effective May 1, 2012, Mr. Price declined further compensation for his services as a director.


36		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Executive and Director Compensation (continued)

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Risk Assessment

Management assessed the Company’s compensation program for the purpose of reviewing and considering any risks presented by the Company’s compensation policies and practices that are likely to have a material adverse effect on the Company.

As part of that assessment, management reviewed the primary elements of our compensation program, including base salary and long-term equity compensation. Management’s risk assessment included a review of the overall design of each primary element of our compensation program and an analysis of the various design features, controls and approval rights in place with respect to compensation paid to management and other employees that mitigate potential risks to the Company.

Management also noted that we have adopted stock ownership guidelines for our executives and non-employee directors. Management believes the adoption of such guidelines further aligns the interests of our Chief Executive Officer, our other executive officers and our Board of Directors with those of our stockholders. Management also noted that the adoption of the Company’s Compensation Recoupment Policy provides the Compensation Committee with broad discretion to recoup certain incentive awards made to the Company’s executive officers in instances of material violations of law or a written Company policy by an executive officer or by a subordinate employee if the executive failed to supervise the subordinate, if the misconduct caused significant financial or reputational harm to the Company.

Following the assessment, management determined that the Company’s compensation policies and practices did not create risks that were reasonably likely to have a material adverse effect on the Company and reported the results of the assessment to the Compensation Committee.

Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of all our employees and the annual total compensation of Jose Luis Laparte, our former Chief Executive Officer and President, and Sherry Bahrambeygui, in her roles as interim and permanent Chief Executive Officer. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

For fiscal year 2019, our last completed fiscal year:

^•

the median of the annual total compensation of all employees of our Company (other than our former Chief Executive Officer and President and our current Chief Executive Officer) was $9,924; and

^•

the sum of the annual total compensation of our former Chief Executive Officer and President and our current Chief Executive Officer, as reported in the Summary Compensation Table set forth above, was $6,883,905.

Based on this information, for fiscal year 2019, the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees is estimated to be 694 to 1.

To identify the median of the annual total compensation of all our employees and determine the annual total compensation of our median employee and the annual total compensation of our Chief Executive Officer, we took the following steps:

1.	We identified the median employee using our employee population on August 31, 2018, the last day of fiscal year 2018. This population consisted of full-time employees and part-time employees.

To identify the “median employee” from our employee population, we first determined the amount of each employee’s gross earnings (i.e., sum of base pay, cash bonus and equity compensation) as reflected in our payroll records for fiscal year 2018. We then identified our median employee from our employee population using this compensation measure, which was consistently applied to all our employees included in the calculation.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		37

Executive and Director Compensation (continued)

LOGO

Our median employee is a full-time merchandise stocker in one of our Trinidad warehouse clubs. We are required to identify the median employee only once every three years and calculate total compensation for that employee each year. For purposes of this year’s calculation, we used the fiscal 2019 compensation earned by the median employee we identified for fiscal year 2018 because there has been no change in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure.

4.	We combined all of the elements of our median employee’s compensation for fiscal year 2019, calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $9,924.

5.	With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of our Summary Compensation Table for fiscal year 2019 for our former Chief Executive Officer and President and our current Chief Executive Officer combined.


38		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Equity Compensation Plan Information

LOGO

The following table sets forth the number and weighted-average exercise price of securities to be issued upon exercise or vesting of outstanding options, restricted stock units, warrants and rights, and the number of securities remaining available for future issuance under all of our equity compensation plans, at August 31, 2019. For more information regarding the Company’s equity compensation plans, please see “Compensation Discussion and Analysis—Equity Incentive Plans” above.



Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)	Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders
Options	—	N/A	—	⁽¹⁾
Restricted stock, RSUs and PSUs	140,956	N/A	368,790
Equity compensation plans not approved by security holders	—	—	—

Total	140,956		368,790

⁽¹⁾

Although the Company does not currently award options, the shares available for future issuance under the Company’s 2013 Equity Incentive Award Plan could be awarded as options, restricted stock, restricted stock units or other forms of equity incentive awards specified in the plan.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		39

Certain Transactions

LOGO

Review and Approval of Related-Party Transactions

As set forth in the Audit Committee charter, the members of the Audit Committee, all of whom are independent directors, review and approve related-party transactions for which such approval is required under applicable law, including Securities and Exchange Commission and Nasdaq rules. In the course of its review and approval or ratification of a disclosable related-party transaction, the Audit Committee may consider:

^•

the nature of the related person’s interest in the transaction;

^•

the material terms of the transaction, including, without limitation, the amount and type of transaction;

^•

the importance of the transaction to the related person;

^•

the importance of the transaction to the Company;

^•

whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the Company; and

^•

any other matters the Audit Committee deems appropriate.

Related Party Transactions

Relationships with Edgar Zurcher: Edgar Zurcher is a director of the Company. Mr. Zurcher is a director of a company that owns 40% of Payless ShoeSource Holdings, Ltd., which rents retail space from the Company. The Company recorded approximately $1.6 million in rental income for this space during the year ended August 31, 2019. Additionally, Mr. Zurcher is a director of Molinos de Costa Rica S.A. The Company paid approximately $741,000 for products purchased from this entity during the year ended August 31, 2019. Also, Mr. Zurcher is a director of Roma Prince S.A. PriceSmart purchased products from this entity for approximately $1.0 million for the year ended August 31, 2019.

Relationships with Price Family Charitable Organizations: During the year ended August 31, 2019, the Company sold approximately $527,000 of supplies to Price Philanthropies Foundation. Robert Price, Chairman of the Company’s Board of Directors, is the Chairman of the Board and President of Price Philanthropies Foundation, and Jeffrey Fisher, a director of the Company since November 2019, is the Chief Financial Officer and a director of Price Philanthropies Foundation. Sherry S. Bahrambeygui, our Chief Executive Officer and director, served as Executive Vice President, Secretary and Vice Chairman of the Board of Price Philanthropies Foundation until January 2019.


40		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Proposal 2 Approval of the Compensation of the Named Executive Officers

LOGO

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the Company’s stockholders are entitled to vote at the Annual Meeting to provide advisory approval of the compensation of the Company’s named executive officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission. Pursuant to the Dodd-Frank Act, the stockholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or our Board of Directors.

Although the vote is non-binding, our Compensation Committee and Board of Directors appreciate the opinions of the stockholders and will consider the outcome of the vote when making future compensation decisions. As described more fully in the Compensation Discussion and Analysis section of this Proxy Statement, the Company’s executive compensation program is designed to attract, retain and motivate individuals with superior ability, experience and leadership capability to deliver on our annual and long-term business objectives necessary to achieve growth in stockholder value. We urge stockholders to read the Compensation Discussion and Analysis section of this Proxy Statement, which describes in detail how our executive compensation policies and procedures operate and are intended to operate in the future. The Compensation Committee and the Board of Directors believe that our executive compensation program fulfills these goals and is reasonable, competitive and aligned with our performance and the performance of our executives.

We are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask that our stockholders vote “FOR” the following resolution:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”

Recommendation of the Board of Directors

The Board of Directors recommends that stockholders vote FOR the approval of the compensation of the named executive officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission. Proxies solicited by the Board of Directors will be so voted unless stockholders specify otherwise on the accompanying Proxy.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		41

Proposal 3 Ratification of Selection of Independent Registered Public Accounting Firm

LOGO

Subject to ratification by the shareholders at the Annual Meeting, the Board, upon recommendation of the Audit Committee, has selected Ernst & Young LLP (“EY”) to audit the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending August 31, 2020. EY has issued its reports, included in the Company’s Form 10-K, on the audited consolidated financial statements of the Company and internal control over financial reporting for the fiscal year ended August 31, 2019. EY has served the Company as independent auditors since the Company’s spin-off from Price Enterprises, Inc. in 1997. Representatives of EY are expected to be present at the Annual Meeting, will have the opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions.

Stockholders are not required to ratify the appointment of EY as our independent registered public accounting firm. However, we are submitting the appointment of EY to the stockholders for ratification as a matter of good corporate practice. If you fail to ratify the appointment, the Board of Directors and the Audit Committee will reconsider whether or not to retain EY. Even if the appointment is ratified, the Board of Directors and the Audit Committee in their discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and our stockholders.

Independent Registered Public Accounting Firm

The Audit Committee of the Company’s Board of Directors has selected EY to serve as the Company’s independent registered public accounting firm for the 2020 fiscal year, subject to the Company and EY agreeing on a mutually acceptable engagement letter. Representatives of EY are expected to be present at the Annual Meeting. Such representatives will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

Audit and non-audit fees. The aggregate fees billed to the Company by EY, the Company’s independent registered public accounting firm, for the indicated services for each of the last two fiscal years were as follows (in thousands):



		2019		2018
Audit Fees⁽¹⁾	$	2,203	$	2,400
Audit-Related Fees⁽²⁾		—		15
Tax Fees⁽³⁾		32		38
All Other Fees		11		8


Total	$	2,246	$	2,461

⁽¹⁾

Audit Fees consist of fees for professional services performed by EY for the audit of the Company’s annual financial statements and review of quarterly financial statements.

⁽²⁾

Audit-Related Fees consist of fees for assurance and related services performed by EY that are reasonably related to the performance of the audit or review of the Company’s financial statements.

⁽³⁾

Tax Fees consist of fees for professional services performed by EY with respect to tax compliance, tax advice and tax planning.


42		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

Proposal 3 Ratification of Selection of Independent Registered Public Accounting Firm (continued)

LOGO

Audit Committee Policy Regarding Pre-Approval of Audit and Permissible Non-Audit Services of Our Independent Registered Public Accounting Firm

Our Audit Committee has established a policy that generally requires that all audit and permissible non-audit services provided by the Company’s independent registered public accounting firm be pre-approved by the Audit Committee. These services may include audit services, audit-related services, tax services and other services. From the time that the pre-approval requirements became effective, all permissible non-audit services provided by the Company’s independent registered public accounting firm have been pre-approved by the Company’s Audit Committee. Our Audit Committee has considered whether the provision of services under the heading “All Other Fees” is compatible with maintaining the accountants’ independence and determined that it is consistent with such independence.

The Board of Directors recommends a vote FOR the ratification of the selection of EY as our independent registered public accounting firm. Proxies solicited by the Board of Directors will be so voted unless stockholders specify otherwise on the accompanying Proxy.


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		43

General

LOGO

Delinquent Section 16 Filings

Under Section 16(a) of the Exchange Act, directors, officers and beneficial owners of 10% or more of the Company’s Common Stock, or reporting persons, are required to report to the SEC on a timely basis the initiation of their status as a reporting person and any changes with respect to their beneficial ownership of the Common Stock. Based solely on our review of such forms received by the Company and the written representations of the reporting persons, the Company has determined that no reporting persons known to the Company were delinquent with respect to their reporting obligations as set forth in Section 16(a) of the Exchange Act, except that each of our directors during fiscal year 2019 other than Mr. Price did not timely report on Form 4 one award of restricted stock units; each of our executive officers other than Mr. Laparte, Mr. Von Chong and Ms. Santana did not timely report on Form 4 one award of restricted stock; Ms. Bahrambeygui did not timely report on Form 4 one distribution to her of shares by an entity; Mr. Price did not timely report on Form 4 two transfers of shares between entities affiliated with him; and the Price Philanthropies Foundation did not timely report on Form 3 its becoming the beneficial owner of 10% or more of our common stock. All of these forms were subsequently filed.

Stockholder Proposals

In order to be included in our proxy statement and form of proxy relating to our Annual Meeting of Stockholders to be held in 2021, proposals of stockholders intended to be presented at that meeting must be received by us no later than August 24, 2020, which is 120 days prior to the first anniversary of the mailing date of this Proxy Statement. These proposals must comply with the requirements as to form and substance established by the Securities and Exchange Commission for such proposals in order to be included in the proxy statement. Under our Second Amended and Restated Bylaws, a stockholder who wishes to make a proposal at the 2021 Annual Meeting without including the proposal in our proxy statement and form of proxy relating to that meeting must notify us no earlier than October 9, 2020 and no later than November 8, 2020 unless the date of the 2021 annual meeting of stockholders is more than 30 days before or more than 60 days after the one-year anniversary of the 2020 annual meeting. If the stockholder fails to give notice by this date, then the persons named as proxies in the proxies solicited by the board of directors for the 2021 Annual Meeting may exercise discretionary voting power regarding any such proposal.

Annual Report

The Annual Report of the Company for the fiscal year ended August 31, 2019 will be mailed to stockholders of record on or about December 20, 2019. The Annual Report does not constitute, and should not be considered, a part of this Proxy solicitation material.

If any person who was a beneficial owner of Common Stock of the Company on the record date for the Annual Meeting of Stockholders desires additional information, a copy of the Company’s Annual Report on Form 10-K will be furnished without charge upon receipt of a written request identifying the person so requesting a report as a stockholder of the Company at such date. Requests should be directed to PriceSmart, Inc., 9740 Scranton Road, San Diego, California 92121, Attention: Secretary.

Householding of Proxy Materials

If you share an address with another stockholder, you may receive only one set of proxy materials unless you have provided contrary instructions. The rules promulgated by the SEC permit companies, brokers, banks or other intermediaries to deliver a single copy of a proxy statement and annual report to households at which two or more stockholders reside. This practice, known as “house holding,” is designed to reduce duplicate mailings, save significant printing and postage costs, and conserve natural resources. Stockholders will receive only one copy of our proxy statement and annual report if they share an address with another stockholder, have been previously notified of house holding by their broker, bank or other intermediary, and have consented to house holding, either affirmatively or implicitly by not objecting to house holding. If you would like to opt out of this practice for future mailings, and receive separate annual reports and proxy statements for each stockholder sharing the same


44		PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement

General (continued)

LOGO

address, please contact your broker, bank or other intermediary. You may also obtain a separate annual report or proxy statement without charge by sending a written request to PriceSmart, Inc., 9740 Scranton Road, San Diego, California 92121, Attention: Secretary or call Investor Relations at (858) 404-8800. We will promptly send additional copies of the annual report or proxy statement upon receipt of such request. Stockholders sharing an address that are receiving multiple copies of the annual report or proxy statement can request delivery of a single copy of the annual report or proxy statement by contacting their broker, bank or other intermediary, sending a written request to the Company at the address above or calling Investor Relations at the telephone number above.

Other Matters

The Board of Directors does not know of any matter to be presented at the Annual Meeting which is not listed on the Notice of Annual Meeting and discussed above. If other matters should properly come before the meeting, however, the persons named in the accompanying Proxy will vote all Proxies in accordance with their best judgment.

ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN

THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.

By Order of the Board of Directors

Francisco J. Velasco

Secretary

Dated: December 20, 2019


PriceSmart, Inc. Notice of Annual Meeting of Shareowners and 2019 Proxy Statement		45

LOGO

PRICESMART, INC

9740 SCRANTON ROAD

SAN DIEGO, CA 92121-1745

VOTE BY INTERNET - www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.


TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:		KEEP THIS PORTION FOR YOUR RECORDS
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
		DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

For

All

Withhold
All

For All
Except

To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.

The Board of Directors recommends you vote FOR the following:

☐

Election of Directors

Nominees


01	Sherry S. Bahrambeygui	02	Jeffrey Fisher	03	Gordon H. Hanson	04	Beatriz V. Infante	05	Leon C. Janks
06	Mitchell G. Lynn	07	Gary Malino	08	Robert E. Price	09	Edgar Zurcher

The Board of Directors recommends you vote FOR the following proposals:

For

Against

Abstain

To approve, by non-binding vote, executive compensation.

☐

Ratification of Ernst & Young LLP as Independent Accountants.

☐

NOTE: The proxies of the undersigned may vote according to their discretion on any other matter that may properly come before the meeting.

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement & Annual Report are available at www.proxyvote.com.

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — ——

PRICESMART, INC

Annual Meeting of Stockholders

February 6, 2020 10:00 AM

This proxy is solicited by the Board of Directors

The undersigned stockholder of PriceSmart, Inc., a Delaware corporation (the “Company”), hereby appoints Sherry S. Bahrambeygui and Francisco Velasco, and each of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the Annual Meeting of the Stockholders of the Company to be held on Thursday, February 6, 2020 at 10 a.m. Pacific Time, and any adjournment or postponement thereof, to cast, on behalf of the undersigned, all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and revokes any proxy heretofore given with respect to such meeting.

This Proxy is solicited on behalf of the Board of Directors of the Company. The votes entitled to be cast by the undersigned will be cast as instructed on the reverse side. If this Proxy is executed, but no instruction is given, the votes entitled to be cast by the undersigned will be cast “FOR” the nominees for directors listed in Proposal 1, “FOR” Proposal 2 and “FOR” Proposal 3.

Continued and to be signed on reverse side