Exhibit 10.2

 

SALLY BEAUTY HOLDINGS, INC.

AMENDED AND RESTATED

INDEPENDENT DIRECTOR COMPENSATION POLICY

 

The Board of Directors (the “Board”) of Sally Beauty Holdings, Inc. (the
“Company”) has adopted the following compensation policy, effective as of
October 1, 2012 (or upon election for new directors elected after July 25, 2012
and, in either case, the “Effective Date”), for independent directors of the
Company.  The compensation policy has been developed to compensate certain
independent directors of the Company for their time, commitment and
contributions to the Board.  This policy shall apply to directors of the Company
who are not Company employees and who are not affiliated with Clayton Dubilier &
Rice, Inc. (each an “Independent Director”).

 

CASH COMPENSATION

 

Retainers for Serving on the Board

 

Independent Directors shall be paid an annual cash retainer of $35,000, payable
in advance in quarterly installments, for each calendar year of service on the
Board.  Cash retainers for partial years of service shall be pro-rated to
reflect the number of days served by an Independent Director during any such
quarter.

 

Retainers for Serving as Chairpersons

 

An additional annual cash retainer shall be paid to an Independent Director who
serves as the Lead Independent Director or chairperson of the Audit Committee,
Compensation Committee, or Nominating and Corporate Governance Committee. Such
additional retainer shall be payable in advance in quarterly installments, in
the following annualized amounts:

 

Lead Independent Director

 

$

25,000

 

Audit Committee

 

$

20,000

 

Compensation Committee

 

$

14,000

 

Nominating & Corporate Governance Committee

 

$

14,000

 

 

Additional retainers paid to the Lead Independent Director or chairpersons for
partial years of service shall be pro-rated to reflect the number of days served
by an Independent Director during any such quarter.

 

Meeting Fees

 

For in-person Board or committee meetings, each Independent Director in
attendance shall receive $2,000.  For telephonic Board or committee meetings for
which minutes are kept, each independent director in attendance shall receive
$1,000.

 

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EQUITY-BASED COMPENSATION

 

Annual Grants

 

Each Independent Director shall be granted an annual equity-based retainer award
with a value at the time of issuance of approximately $100,000. Such award shall
normally be made at the first Board meeting each Company fiscal year in the form
of grants of restricted stock units (“RSUs”), in accordance with the Company’s
Omnibus Incentive Plan then in effect (“Omnibus Plan”), and shall vest on the
last day of such fiscal year.  Independent Directors whose Board service begins
after the start of a Company fiscal year shall receive a grant pro-rated to
reflect the number of days remaining in such fiscal year.

 

RSUs Granted Prior to the Effective Date

 

Upon vesting of RSUs granted prior to the Effective Date, Independent Director
RSUs shall be deferred into deferred stock units that shall be distributed six
months after such Independent Director’s Board service terminates.

 

In the event an Independent Director’s Board service terminates because of
death, disability or involuntary termination without Cause (as defined in the
Omnibus Plan), a pro rata portion of such Independent Director’s unvested RSUs
shall vest upon such termination. If an Independent Director’s Board service is
terminated for any other reason than the foregoing RSUs shall be canceled upon
such termination.

 

RSUs Granted Following the Effective Date

 

With respect to RSUs granted following the Effective Date, Independent Directors
may elect, by the deadline imposed by the Compensation Committee of the Board in
compliance with Section 409A of the Code, to defer delivery of the shares of
common stock of the Company (“Common Stock”) that would otherwise be due on the
vesting date until a later date as specfied in such Independent Director’s
deferral election form.  The Company shall establish the rules and procedures
for such payment deferrals in compliance with Section 409A of the Code and
Treasury regulations and guidance with respect to such law.  If an Independent
Director does not make such election, he or she will receive shares of Common
Stock in settlement of the RSU on the vesting date.

 

In the event an Independent Director’s Board service terminates because of death
or disability, a pro rata portion of such Independent Director’s unvested RSUs
shall vest upon such termination. If an Independent Director’s Board service is
terminated for any other reason than the foregoing RSUs shall be canceled upon
such termination.

 

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TRAVEL EXPENSE REIMBURSEMENT

 

Each of the Independent Directors shall be entitled to receive reimbursement for
reasonable travel expenses which they properly incur in connection with their
functions and duties as a director.  With respect to air travel, reimbursements
shall be limited to the cost of first-class commercial airline tickets for the
trip and date in question.

 

MINIMUM STOCK OWNERSHIP GUIDELINES

 

Each Independent Director must own shares of Common Stock in an amount equal to
5x his or her base annual cash retainer (excluding additional annual cash
retainers for the Lead Independent Director and committee chairpersons and
meeting fees). Independent Directors are required to achieve the applicable
level of ownership within five years of becoming subject to the requirements.
Until such time as the Independent Director reaches his or her equity ownership
guideline, the Independent Director will be required to retain 100% of the
shares of Common Stock received upon settlement of his or her restricted stock
units.

 

Equity that Counts Toward Meeting the Guidelines:

 

·                  Shares owned directly (e.g., shares purchased in the open
market, etc.)

·                  Shares owned indirectly (e.g., by a spouse, trust or limited
partnership or any other entity)

·                  Shares underlying vested restricted stock units

·                  Shares the receipt of which have been deferred

 

Equity that Does Not Count Toward Meeting the Guidelines:

 

·                  Unexercised options (whether vested or unvested)

·                  Unvested restricted stock units

 

Compliance with the Guidelines:

 

Equity ownership guidelines for Independent Directors are determined as a
multiple of his or her base annual cash retainer and then converted to a fixed
number of shares based on an average of the prior fiscal year’s quarter-end
closing stock prices.  Currently serving Independent Directors will first become
subject to the guidelines as of October 1, 2012, which will be the initial date
of determination for such Independent Directors. Independent Directors becoming
subject to the guidelines thereafter will have their individual guidelines
established based upon the base annual cash retainer at the time they become
subject to the guidelines, which shall be the date of determination for such
Independent Director.  The guideline establishing the required ownership level

 

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based on a multiple of the base annual cash retainer will be re-determined each
December 1st thereafter based on the then-current annual cash retainer and an
average of the prior fiscal year’s quarter-end closing stock prices. Once
established each year, an Independent Director’s guideline does not change as a
result of fluctuations in the market price of the Common Stock.  Once achieved,
ownership of the guideline amount must be maintained for as long as the
Independent Director is subject to the guidelines.

 

The Nominating and Corporate Governance Committee of the Board will be
responsible for monitoring compliance with these stock ownership guidelines.

 

EFFECTIVE DATE, AMENDMENT, REVISION AND TERMINATION

 

This policy may be amended, revised or terminated by the Compensation Committee
of the Board at any time and from time-to-time.

 

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