CARTERS INC (CRI)
Sector: Consumer Discretionary
2026 Annual Meeting Analysis
CARTERS INC · Meeting: May 13, 2026
Directors FOR
2
Directors AGAINST
7
Say on Pay
AGAINST
Auditor
FOR
Director Elections
Election of Nine Nominated Directors
Against Analysis
Director since 2022 (more than 24 months), so the TSR trigger applies: Carter's 3-year price return is -40.5% against the XLY ETF's +49.6%, a gap of -90.1 percentage points, far exceeding the 30-percentage-point threshold for negative absolute TSR; the 5-year return of -53.2% versus XLY's longer-term gain does not provide a mitigant since underperformance is sustained across both periods.
Director since 2021 (well over 24 months), so the full TSR trigger applies: Carter's 3-year return of -40.5% trails the XLY ETF by -90.1 percentage points, far exceeding the 30-percentage-point threshold for negative absolute TSR; the 5-year record (-53.2%) shows sustained underperformance that does not provide a mitigant.
Director since 2010 (long tenure), so the full TSR trigger applies: Carter's 3-year return of -40.5% trails the XLY ETF by -90.1 percentage points, far exceeding the 30-percentage-point threshold for negative absolute TSR; the 5-year return of -53.2% reflects sustained, not transient, underperformance with no mitigating 5-year track record.
Director since 2018 (well over 24 months), so the full TSR trigger applies: Carter's 3-year return of -40.5% trails the XLY ETF by -90.1 percentage points, far exceeding the 30-percentage-point threshold for negative absolute TSR; the 5-year return of -53.2% confirms sustained underperformance with no mitigating long-term track record.
Director since 2022 (more than 24 months), so the TSR trigger applies: Carter's 3-year return of -40.5% trails the XLY ETF by -90.1 percentage points, far exceeding the 30-percentage-point threshold for negative absolute TSR; the 5-year return of -53.2% shows sustained underperformance with no mitigating longer-term track record.
Director since 2019 (well over 24 months), so the full TSR trigger applies: Carter's 3-year return of -40.5% trails the XLY ETF by -90.1 percentage points, far exceeding the 30-percentage-point threshold for negative absolute TSR; the 5-year return of -53.2% reflects sustained, not transient, underperformance.
Director since 2022 (more than 24 months), so the TSR trigger applies: Carter's 3-year return of -40.5% trails the XLY ETF by -90.1 percentage points, far exceeding the 30-percentage-point threshold for negative absolute TSR; the 5-year return of -53.2% shows sustained underperformance with no mitigating track record.
For Analysis
Director since 2022 — within 24-month exemption window from the TSR trigger — and brings strong human capital management experience relevant to Carter's business transformation.
Director since April 2025 — well within the 24-month exemption from the TSR trigger — and joined as the new CEO tasked with leading a turnaround; it would be inappropriate to hold him accountable for prior-period performance he had no part in.
Seven of nine director nominees receive an AGAINST vote due to sustained and severe stock price underperformance: Carter's shares have lost approximately 40% over three years while the consumer discretionary sector ETF (XLY) gained nearly 50%, a gap of -90 percentage points that far exceeds the policy's 30-percentage-point trigger for companies with negative absolute returns. The 5-year record (-53%) provides no mitigant. The two exceptions are Douglas Palladini, who joined as CEO in April 2025 and is exempt as a director within his first 24 months, and Rochester Anderson, Jr., who joined in 2022 and also falls within the 24-month exemption window.
Say on Pay
✗ AGAINSTCEO
Douglas C. Palladini
Total Comp
$7,496,679
Prior Support
94%%
The board chose to grant 100% time-based (no performance conditions) stock awards to executives in fiscal 2025, explicitly pausing the normal practice of including performance-based restricted stock — this means a large portion of long-term incentive pay vests based purely on continued employment, not company results, which effectively converts variable pay into fixed pay and fails the policy's requirement for meaningful performance conditions on incentive awards. Compounding this concern, Carter's stock has declined roughly 40% over the past three years while the consumer discretionary sector ETF (XLY) has gained about 50%, a gap of approximately 90 percentage points, meaning above-benchmark incentive pay is not aligned with shareholder experience. While prior-year say-on-pay support was a strong 94% and the CEO (Palladini) is new with his pay package structured partly around ambitious stock price hurdles, the overall 2025 program for the executive team as a whole does not meet the pay-for-performance standard required by policy.
Auditor Ratification
✓ FORAuditor
PricewaterhouseCoopers LLP
Tenure
N/A
Audit Fees
$2,761,815
Non-Audit Fees
$482,000
Non-audit fees (combining audit-related fees of $340,000, tax fees of $140,000, and other fees of $2,000, totaling $482,000) represent approximately 17% of audit fees of $2,761,815 — well below the 50% threshold that would raise independence concerns — and PwC is a Big 4 firm appropriate for a $1.3 billion market cap company; auditor tenure is not disclosed so the tenure trigger cannot fire under policy rules.
Overall Assessment
This ballot presents significant governance concerns at Carter's: seven of nine director nominees receive an AGAINST vote due to the company's severe and sustained stock price underperformance relative to the XLY consumer discretionary ETF (-90 percentage points over three years), and the Say on Pay vote also receives an AGAINST because the board paused performance-based equity grants in 2025, effectively paying executives in time-vesting stock while shareholders experienced a roughly 40% loss. The auditor ratification is straightforward and warrants a FOR vote, as non-audit fees are well within acceptable limits.