Employee Support and Development

LS&Co. has approximately 16,600 employees, united in a shared commitment to grow and shape our company through creativity, innovation and teamwork. Wherever they are in life or in their career, we want our employees to feel that we provide the support they and their families need to stay healthy, meet their financial goals, protect their income, and balance their work and personal lives.

Employee Well-being

Because people are critical to our success as a business, we aim to support our employees and communities in ways that promote their well-being and allow them to flourish. Over the years, we’ve been a leader in several key areas. Decades ago, for example, we were the first American company to provide benefits to same-sex partners. We have extended paid sick leave to all part-time employees — and we continue to build on those foundations for a more diverse and equitable workplace and to provide strong benefits and learning and development opportunities.

In keeping with our values, particularly empathy, courage and integrity, we are committed to providing employees with a supportive work environment that is free of discrimination and harassment based on any protected characteristics. Our Respectful Workplace Policy, updated in 2021, prohibits sexual harassment and other forms of discrimination so that each person can perform their workplace responsibilities and fully contribute to the company.

Leading Benefits

We are fueled by passion, drive and a commitment to doing great work, but the work can’t happen without putting employee well-being first. We support employees in their physical, financial, emotional and social well-being through a variety of benefits and programs. While benefits vary by position, location, and eligibility, LS&Co. employees have access to competitive compensation, innovative well-being programs, and best-practice benefits. Depending on location, comprehensive benefits are generally available to full-time employees working in our offices, our retail stores and our distribution centers. In addition, all LS&Co. employees around the world, whether part-time or full-time, can take advantage of several important base benefits:

• Travel and accident insurance
• Global life insurance
• Employee Assistance Program, known as WorkLife
• Global mental well-being program, THRIVE
• Counseling, work/life referral services, critical incident support through Optum, a new resource in 2021

In 2021, we made several changes to provide even better resources, including more generous health benefits coverage for employees and family members, easier access to mental health and well-being support, an expanded network of providers, and enhanced concierge support personalized to an employee’s unique health care needs. We also extended benefit coverage to employee family members, enhanced gym rewards, and added more emotional well-being benefits like access to online therapy and stress management resources. As part of our ongoing commitment to making LS&Co. a place where women can thrive, in 2021 we made sure that all LS&Co.-provided insurance plans in the U.S. include access to comprehensive reproductive healthcare. We also provide travel expense reimbursement for healthcare services not available in a U.S. employee’s home state, including those related to reproductive healthcare and abortion.

Work/Life Flexibility and Support for the Whole Self

Throughout 2021, the ongoing COVID-19 pandemic continued to ask a lot of employees, and we responded with resources and programs to make things easier. In mid-2021, we announced our new workplace framework for corporate employees. SEAM(less): Work Tailored for Us is a hybrid model that will enable us to drive our business forward, stay connected and provide flexibility to seamlessly integrate work and life. Rooted in both flexibility and connection, SEAM(less): Work Tailored for Us has been guiding how we work, whenever offices can safely remain open, which varies around the world.

Mental Health

We expanded our wellness and mental health programs to support resiliency and well-being, offering a spectrum of support. We made it easier to access the suite of integrated WorkLife well-being benefits, adding 24/7/365 access to a personal coach, offering enhanced mental health benefits, and connecting employees with the Thrive Global app to support mental, physical, financial, family and social well-being. Our partnership with Thrive will continue beyond the pandemic.

We also added access to Talkspace, a digital platform offering an alternative to face-to-face therapy with a licensed behavioral health clinician, providing greater flexibility to improve health. And we offered the Grief Warrior program to help employees and teams process grief through guidance, workshops and training. We expanded the program in 2021 to provide more support to global regions being deeply affected by the pandemic.

Physical Wellness

In addition to our existing live wellth program, which offers opportunities to complete well-being-related activities to earn incentives throughout the year, we began offering new workshops on yoga, Pilates, and dealing with isolation — provided around the world in local languages. Some locations, like our factory in Plock, Poland, also offer on-site wellness options, such as daily gymnastics sessions.

We also have a no-meeting-Friday policy and provide corporate employees with the last Friday off each month to encourage self-care and time with loved ones.

To help parents juggling remote work and parenting during the pandemic, we upgraded our childcare and parent support benefits and made them available to full-time retail employees. The new benefit includes support with childcare and eldercare, access to a network of 6 million caregivers, full-time nanny placement services, an online curriculum of classes and parent support webinars and tutoring services.

Paid Family Leave

Our Paid Parental Leave program offers eight weeks of paid leave for hourly and salaried LS&Co. employees, regardless of gender, at the time of a child’s birth, adoption, or entry into a family from foster care. In 2020, we took another step, offering up to eight weeks of paid family leave to help ease the strain on U.S.-based employees caring for an immediate family member with a serious medical condition. Since then, we have advocated for national paid leave policies so employees of other companies have access to support when illness or caregiving needs affect their family.

This policy is an important part of our commitment to building a best-in-class workplace that supports well-being and enables our employees to take care of themselves and their family members in the moments they need it most. In 2021, we expanded employee leave for bereavement, which also includes pregnancy loss leave up to two weeks. In Europe, where a country-by-country approach is required, we set minimum standards to best support employees consistently and inclusively across Europe.

Total Rewards Compensation

As detailed in our annual proxy statements, we structure our compensation so that approximately 90% of our CEO’s total compensation and approximately 70% of our other named executive officers’ total compensation is linked to company performance, which in fiscal year 2021 included net revenues, earnings, share price, total shareholder return and DE&I goals, among other results. Additional compensation details for fiscal year 2021 are available in our 2022 Notice of Annual Meeting of Shareholders and Proxy Statement.

In 2022, we held a shareholder advisory vote on executive compensation, commonly referred to as a “say-on-pay vote,” which received shareholder approval. We take the views of our shareholders seriously and believe that the principles of our executive compensation program are strongly supported by our shareholders and aligned with their interests. Each year, the Compensation and Human Capital Committee conducts a review of our compensation and benefits programs to assess whether the programs are aligned with our business strategies, the competitive practices of our peer companies and our shareholders’ interests. Full-time corporate employees have an incentive component to their overall pay, as do our employees at our company-operated distribution centers.

Pay Equity

To help fulfill our commitment to fair and equitable compensation, LS&Co. conducts an independent pay equity audit every other year, with the most recent audit completed in 2020. We use the data to identify potential adjustments to be incorporated into our annual performance review process for different groups in the U.S. population, including corporate and retail employees as well as distribution center management. The study considered job level, performance, experience, and other factors such as promotions and location of jobs. Our audit confirmed that we do not have any systemic pay differences across gender and ethnicity. We are expanding our pay equity audits to include new markets. We’re also focused on eliminating bias and increasing transparency in pay practices and salary ranges and ensuring objectivity around compensation rewards.

Engagement

At LS&Co., the voice of our employees matters, and we strive to empower them to make a difference. They are instrumental in how we hold ourselves accountable to our commitments, inform our talent priorities and drive a culture in alignment with our core purpose, brand identity and values. To this end, we conduct regular employee engagement surveys to understand and enhance the employee experience across many dimensions.

In July 2021, we launched our engagement survey on a new platform. A total of 63% of employees from around the world participated in the survey, resulting in an engagement score of 79%. This is about 6 percentage points higher than the global average, an external benchmark of other best-in-class companies compiled by Qualtrics. Our people leaders used the aggregate results to create specific action plans to address the top opportunities identified for their teams.

We also shifted from a single annual survey to a continuous and integrated approach to comprehensively understand and act on feedback and insights across the full employee life cycle. This new approach includes pulse surveys in addition to the annual employee engagement survey to measure and track progress and take real-time action on employee sentiment.

Listening and Learning

True Blue, our new annual global listening and learning tour launched in 2021, allows us to delve into the nuances of our employees’ experiences. True Blue provides opportunities for employees to have honest conversations about what’s important to them and for the company to learn more about how they experience culture, inclusion and belonging at LS&Co.

Representative groups of employees from 16 functions and 33 global offices took part in True Blue. They universally expressed their deep appreciation for our culture, an overall sense of belonging at LS&Co. and connections to their colleagues. We heard that employees want us to focus on becoming a more globally focused and connected workplace, provide greater clarity on career growth and development, increase access to tools to support mental health, and support workload balance, especially in retail stores and distribution centers.

Our Plock, Poland, factory began using the ping app to stay in touch with employees in 2021, providing a monthly newsletter and two-way communication. And our Epping, South Africa, factory launched various communication platforms to engage with employees who do not have technology access, such as monthly newsletters, town hall meetings, and televisions placed throughout the plant to share information with employees.

Learning and Development

We are working to sustain a culture of high performance and continuous learning, underpinned by clear role expectations and opportunities for growth. We start by listening to employees — who made it clear through engagement surveys they wanted a better way to discover and grow their careers. Our learning and development approach zeroes in on these desires by offering development opportunities based on current and future skill gaps that support healthy careers and a strong business. We are also committed to ensuring equitable access and opportunity to learning, and to delivering tailored learning pathways, anchored in individual needs and learning preferences. In addition, our learning and professional development approach sustains a strong leadership bench through tailored programs for high-potential talent. Above all, we strive to build a continuous learning culture.

Convenient and Personalized Learning

In October 2021, we launched a new learning management system, Workday Learning, to make it even more convenient for employees to access the training they seek. The new learning management system also enables better reporting, access to development content and systems consolidation. The platform covers more than 5,000 employees as well as some contractors. By the end of fiscal year 2021, more than 1,100 enrollments and 86 courses had been created. Overall, between our previous platform and the new learning management system, approximately 24,000 completions were tracked across approximately 20 internally developed courses.

Internal career development content is accessible to employees who can build their own learning paths using personalized learning recommendations. The platform will also integrate compliance training in 2022, creating a single hub for learning content. In addition to the internally created content on Workday Learning, employees still have access to the LinkedIn Learning content library, which is being migrated into the learning management system. In 2021, more than 95,000 LinkedIn Learning videos were viewed by more than 1,800 unique learners. Also during 2021, we offered live workshops attended by nearly 3,000 employees in the Americas, Asia-Pacific and Europe.

Employees Helping Employees

As the COVID-19 pandemic affects people around the globe, the role of hardship funds has never been more critical. Widely considered to be the first corporate employee-funded hardship fund, the Red Tab Foundation is a public, nonprofit foundation that assists LS&Co. employees, retirees and their families during times of unexpected financial hardship. The Red Tab Foundation serves as a valuable connecting point between employee giving and employee grants, and since March 2020, has disbursed more than $1.15 million in COVID-specific hardship relief.

Assistance to Departing Employees

The impact of the pandemic, coupled with a restructuring initiative, resulted in workforce reductions occurring in 2020 and 2021. These difficult steps were necessary to provide us with a path forward to be the strongest possible business and employer over the long term. In all instances, we sought to treat our employees with empathy and respect, providing additional support where possible. Most departing employees received severance packages and were allowed to retain company-issued computers and phones. Most remained eligible for Red Tab Foundation support and our Employee Assistance Program for an additional year.

Ongoing Support During COVID-19

Although 2021 presented moments when it seemed the world was returning to normal, the pandemic continued to present challenges to LS&Co. employees worldwide. We continued to prioritize the safety and well-being of our people, launching a suite of initiatives in offices and stores to support physical, psychological and financial well-being.

Thousands of our retail, distribution center and manufacturing employees were on the front lines during the worst of the COVID-19 pandemic. We updated and adapted our policies to ensure that their working environment was as safe as it could be and that we were following all applicable health guidelines — or exceeding them in circumstances where we believed they did not go far enough.

At our two company-operated factories, we launched a suite of initiatives to help keep employees safe. At our Epping, South Africa, facility, a dedicated nurse oversees our COVID-19 measures and tracks employee recovery; we have a COVID-19 isolation room; we issued masks, hand sanitizer and multi-vitamins; we introduced gate screening; we provided support and training to employees on coping mechanisms; and we held a wellness week.

At our Plock, Poland, factory, our 2021 COVID-19 safety measures included on-site vaccination, remote or hybrid work arrangements, masks, work station distancing, temperature checks, hand disinfection resources, limits on meetings and other measures.

And in our retail stores, we developed a detailed guide and handbook explaining the protocols for COVID-19 safety, created COVID-19 prevention plans that included a hazard assessment and online training, put in place a process for reporting, and established contract tracing and case management processes for COVID-19.

Due to continued business disruptions and store closures, we did have to furlough some retail employees in 2021. In those instances, we provided regular pay for several months, continued offering benefits and invited employees back as stores reopened. Around the world, we worked through a network of state and LS&Co. supplemental pay programs to take care of employees while stores were closed. Once stores were able to reopen, we adapted store policies to prioritize the safety of our staff and consumers alike, and we continue to adapt our retail and distribution center practices to support employee well-being.

What’s Next – Employee Support and Development

There’s no doubt that 2021 was a year of listening and learning at LS&Co. Our employees spoke up, sharing their hopes, concerns and ideas for a brighter future. Many of the programs initiated during the pandemic to give employees extra support — paid sick leave for part-time retail employees, for example — will continue going forward, even when the pandemic threat diminishes. We will also continue to make sure employees know they have a voice, whether through our regular surveys, through town halls during which anyone can ask questions of our CEO, or through employee resource groups.

Building out our training and competencies, expanding our new learning management system to include more courses, leaning into integrated talent management, and making even stronger connections to culture in ways that help everyone feel valued, appreciated and included are all part of our outlook for 2022 and beyond. Our focus on making LS&Co. a dynamic and inclusive career destination goal will continue through multiple channels, including social media, campus tours, talent events, DE&I action plans for our retail stores and other initiatives.

We also anticipate continuing our progress on global corporate compensation structures and benefits toward development of a global paid leave policy. We are concurrently working toward a model retail compensation program that could include new incentives for store managers and associates in certain countries to make our retail network an even more attractive place to build a career.