PROXY STATEMENT SUMMARY

This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of American Eagle Outfitters, Inc., a Delaware corporation, for use at the Annual Meeting of Stockholders to be held on June 2, 2016, at 11:00 a.m., local time, at the Company’s offices located at 417 Fifth Avenue, 8th Floor, New York, New York and at any adjournment thereof. It is being mailed to the stockholders on or about April 21, 2016. (“We,” “our,” “AEO,” “us” and the “Company” refer to American Eagle Outfitters, Inc.)

Fiscal 2015 Business Highlights

In Fiscal 2015 business results strengthened, continuing the progress from the second half of Fiscal 2014. Despite a challenging retail environment, AEO posted 7% revenue growth and earnings per share grew 73%¹ to $1.09. We ended the year with $260 million in cash and no debt, after investing $153 million into capital projects and returning $324 million to stockholders through share repurchases and dividends. Results were driven by merchandise improvement, reduced promotions and markdowns, and expense leverage.

The Board of Directors is divided into three classes. Each class of directors is elected for a three-year term. On the recommendation of the Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board of Directors has fixed the size of the board at seven directors and nominated two candidates, each of whom are currently directors of the Company, to be elected as Class III directors at the Annual Meeting. If re-elected, the Class III directors will serve for three-year terms ending at the 2019

annual meeting, or when their successors are duly elected and qualified. The terms of the remaining Class I and Class II directors expire at the annual meetings to be held in 2017 and 2018, respectively.

Biographical information regarding each nominee and incumbent director is set forth below as of April 1, 2016, together with a brief description of each person’s business experience and qualifications.

The Board of Directors recommends that the stockholders vote “FOR” each

of the following nominees for Class III Director:

The following Class I Directors have been previously elected to terms that expire

as of the 2017 Annual Meeting:

The following Class II Directors have been previously elected to terms that expire

as of the 2018 Annual Meeting:

The following section discusses the Company’s corporate governance, including the role of the Board and its Committees. Additional information regarding corporate governance, including our Corporate Governance Guidelines, the charters of our audit, compensation and nominating committees and our Code of Ethics that applies to all of our directors, officers (including the Principal Executive Officer,

Principal Financial Officer and Principal Accounting Officer) and employees may be found on our website under the “Investors” section at www.ae.com. Any amendments or waivers to our Code of Ethics will also be available on our website. A copy of the corporate governance materials is also available in print to any stockholder upon request.

The Board is responsible for overseeing management, which is, in turn, responsible for the operations of the Company. The Board’s primary areas of focus are strategy, risk management, corporate governance and compliance, as well as evaluating management and making changes as

circumstances warrant. In many of these areas, significant responsibilities are delegated to the Board’s Committees, which are responsible for reporting to the Board on their activities and actions. Please refer to “Board Committees” for additional information on our Committees.

The Board has allocated responsibilities for overseeing risk associated with our business among the Board as a whole and its Committees. In performing its risk oversight function, the Board:

The Board also regularly reviews information regarding our financial, operational and strategic risks. The full Board receives quarterly updates from management’s Risk Management Committee, which is responsible for identifying, quantifying and assisting leaders across the Company in mitigating risks. Each of the Board’s Committees also oversees the management of

Company risks that fall within the Committee’s areas of responsibility. In performing this function, each Committee has full access to management, as well as the ability to engage advisors. As set forth in its charter, the Audit Committee is responsible for discussing with management our major financial risk exposures and the steps management has taken to monitor and control those exposures. The Audit Committee gives updates to the Board at its regular meetings, including updates on financial and information technology risks. The Audit Committee also meets privately with the Company’s independent auditor, the internal auditor and management, including the Chief Financial Officer, frequently. As set forth in its charter, the Compensation Committee oversees our risk management related to employee compensation plans and arrangements. The Nominating Committee manages risks associated with the independence of the Board of Directors and our corporate social responsibility program. While each committee is responsible for overseeing the management of those risk areas, the entire Board of Directors is also regularly informed through committee reports.

The Nominating Committee periodically reviews the appropriate size of the Board, whether any vacancies are expected due to retirement or otherwise, and the need for particular expertise on the Board. In evaluating and determining whether to recommend a candidate to the Board, the Nominating Committee reviews the appropriate skills and characteristics required of Board members in the context of the background of existing members and in light of the perceived needs for the future development of our business.

This includes issues of diversity and experience in different substantive areas such as retail operations, marketing, technology, distribution, real estate and finance. The Board seeks the best director candidates based on the skills and characteristics required without regard to race, color, national origin, religion, disability, marital status, age, sexual orientation, gender, gender identity and expression, or any other basis protected by federal, state or local law.

The current members of the Board have served for an average of 10 years. The Nominating Committee and the Board believe it is important for the Board to be “refreshed” by adding new directors from time to time and two of the current directors, or approximately 30% of the Board, have served for less than five years. However, the Committee and the Board also believe that long-serving directors bring critical skills to the Board. Among other things, such directors bring a historical

perspective to the Board, which is highly relevant in a cyclical business such as retailing. In addition, the Committee and the Board believe that long-serving directors have knowledge of the business that tends to make them less dependent upon management for information and perspectives than may be the case with newer directors. Accordingly, while the Committee considers tenure as a factor in determining the nominee slate, it is not a critical or determinative factor.

Candidates may come to the attention of the Nominating Committee from a variety of sources, including current Board members, stockholders and management. All candidates are reviewed in the same manner regardless of the source of the recommendation. In the past, the Nominating Committee has retained the services of a search firm to assist in identifying and evaluating qualified director candidates.

The Nominating Committee will consider the recommendations of stockholders regarding potential director candidates. See “Submission of Nominations and Proposals for the 2017 Annual Meeting” for information regarding the submission of recommendations.

The Board has determined that the following directors are independent as defined in the applicable rules of the New York Stock Exchange:

In particular, the Board determined that none of these directors had relationships that would cause them not to be independent under the specific criteria of Section 303A.02 of the NYSE Listed Company Manual.

In making these determinations, the Board took into account all factors and circumstances that it considered relevant, including the following:

See “Related Party Transactions Policy” for information regarding our policy on related party transactions and transactions with affiliates of Mr. Schottenstein.

Mr. Schottenstein serves as both Executive Chairman of our Board of Directors and Chief Executive Officer. Prior to his appointment as Chief Executive Officer in December 2015, Mr. Schottenstein acted as the Company’s Interim Chief Executive Officer from January 2014 to December 2015. While the Board’s historical policy is that the positions of Chairperson and Chief Executive Officer should be held by separate persons, the Board believes that Mr. Schottenstein’s combined role provides for strong leadership. In addition, Mr. Schottenstein has significant experience in our industry and with the Company, which provides our Board with significant leadership advantages and continuity. Our Board believes that the current board composition, along with an emphasis on board independence, provides effective independent oversight of management. We also have a Lead Independent Director position. The Lead Independent Director is appointed by the independent directors annually. Mr. Jesselson was appointed as our Lead Independent Director for Fiscal 2015. The Lead Independent Director is responsible for:

The Lead Independent Director also has the authority to call meetings of the independent directors, and if requested by major stockholders, is available, if appropriate, for consultation and direct communication. We believe that this leadership structure provides our Board with the greatest depth of leadership and experience, while also providing balance for the direction of the Company.

Meetings of Independent Directors

The Board’s policy is to have the independent directors meet separately in executive session in connection with each regularly scheduled board meeting (at least four times annually). During each meeting of the independent directors, the Lead Independent Director will lead the discussion.

Self-assessments

We conduct self-assessments of the Board and its Committees annually. From time to time, these evaluations are conducted by a third party to refresh the process.

Director Orientation/Education

Each year, we hold a two-day educational program covering business developments and strategy, developments in corporate governance, fiduciary duties and other relevant topics. Additionally, all new directors attend an intensive orientation program. The orientation program is designed to familiarize new directors with the Company’s businesses, strategies and challenges.

Throughout Fiscal 2015, we continued to regularly meet and speak with stockholders. On a quarterly basis, we invited top holders to visit with senior management. These discussions

were consistently reported to the Board, and management and the Board discussed comments and business insights provided by stockholders.

The Board provides a process for all interested parties to send communications to the independent members of the

Board. That process is described under the “Investors” section of our website at www.ae.com.

During Fiscal 2015, the Board met nine times and all members of the Board attended no fewer than 75% of the total number of meetings of the Board and of the committees of the Board on which they served. It is our expectation that

all incumbent directors attend the Annual Meeting of Stockholders. All current members of the Board were present at our 2015 Annual Meeting.

We have a Related Party Transaction Policy (the “Policy”) to allow us to identify, document and properly disclose related party transactions. The Policy applies to our directors and executive officers as well as all associates who have authority to enter into commitments on behalf of the Company. Under the Policy, a related party transaction is any transaction to which we or any of our subsidiaries is a participant and in which a related party has a direct or indirect material interest. Examples of transactions include, without limitation, those for the purchase or sale of goods, the provision of services, the rental of property, or the licensing of intellectual property rights. Additionally, if a related party or a member of such related party’s immediate family is a supplier of goods or services or owns or is employed by a business that supplies us; or if a member of such related party’s immediate family is employed by us; or if an applicable related party serves on the board of directors of a business that supplies goods or services to us, that transaction is a related party transaction. All related party transactions must be approved in advance by the Audit Committee if they involve a significant stockholder, director or executive officer. All other related party transactions must be disclosed in writing to, and approved in advance by, our General Counsel and our Chief Financial and Administrative Officer. Each quarter, our directors, executive officers and associates who have authority to enter into commitments on our behalf are required to provide a certification regarding the existence of any related party transactions of which they have knowledge and which have not been fully and accurately disclosed in our filings with the U.S. Securities and Exchange Commission (the “SEC”).

In the ordinary course of business, we have entered into agreements with affiliates of Jay L. Schottenstein, our

Executive Chairman of the Board of Directors and Chief Executive Officer. We believe that each of the agreements entered into with these entities is on terms at least as favorable to us as could be obtained in an arm’s length transaction with an unaffiliated third party. The material terms of these transactions are described below. In each case, the transaction was approved in advance by the Audit Committee in accordance with our Policy.

In June 2015, we entered into a one-year design services agreement with Artisan de Luxe, a company which is owned in part by Mr. Schottenstein’s sons, for an annual fee of $300,000. The agreement expires in June 2016.

In September 2013, we entered into a store lease with an affiliate of Jay L. Schottenstein pursuant to which we expect to pay rent, together with other expenses, of approximately $270,000 annually (subject to annual adjustments), in addition to an annual payment equal to a percentage of the applicable store’s gross sales in excess of specified thresholds. We incurred rent and other expenses under the lease of approximately $280,000 during Fiscal 2015. The lease expires in January 2024.

During Fiscal 2012, we entered into a three-year agreement with Retail Entertainment Design, LLC (“R.E.D.”) for in-store music program services. This agreement expired in August 2015 and continued on a month-to-month basis until we entered into a new two-year contract with R.E.D. in January 2016. A majority of R.E.D. is owned by Jubilee-RED LLC, which is indirectly owned by trusts benefitting Jay L. Schottenstein’s descendants. Mr. Schottenstein also serves as trustee of the aforementioned family trusts. Fiscal 2015 expense under the agreements was approximately $690,000.

Directors who are employees of the Company do not receive additional compensation for serving as directors. The table below sets forth the compensation for directors who were not employees of the Company during Fiscal 2015. In addition, we pay attorneys fees related to the preparation and filing of director stock ownership forms with the SEC. We also reimburse travel expenses to attend Board and committee meetings and director continuing education expenses. The

Compensation Committee is charged with reviewing and making recommendations to the Board of Directors regarding director compensation. In making its recommendations, the Compensation Committee considers the significant time committed by our directors to the performance of their duties as directors, as well as peer data and input from the Committee’s independent compensation consultant.

The Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 28, 2017. In the event the stockholders do not ratify the appointment of Ernst & Young LLP, the Audit Committee will reconsider its appointment. In addition, even if the stockholders ratify the appointment of Ernst & Young LLP, the Audit Committee may in its discretion appoint a different independent registered public accounting

firm at any time during the year if the Audit Committee determines that a change is in our best interest.

Representatives of Ernst & Young LLP are expected to be present at the annual meeting to respond to appropriate questions and to make a statement if such representatives so desire.

The Board of Directors recommends that the stockholders vote “FOR” the ratification of

the appointment of Ernst & Young LLP as our independent registered public accounting firm

for the fiscal year ending January 28, 2017.

The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report for the year ended January 30, 2016 with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

The Audit Committee reviewed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgments as to the quality, not just acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee by Statement on Auditing Standards No. 61, as amended by Statement on Auditing Standards No. 90 (Communications with Audit Committees). In addition, the Audit Committee has discussed with the independent registered public accounting firm its independence from

management and the Company, including the matters in the written disclosures required by Rule 3526 of the Public Company Accounting Oversight Board, Communication with Audit Committees Concerning Independence, and considered the compatibility of nonaudit services with the firm’s independence.

The Audit Committee discussed with our internal auditors and our independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting. The Audit Committee also carried out the additional responsibilities and duties as outlined in its charter.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the year ended January 30, 2016 for filing with the Securities and Exchange Commission.

Noel J. Spiegel (Chair)

Michael G. Jesselson

Thomas R. Ketteler

Cary D. McMillan

Janice E. Page

David M. Sable

“Audit Fees” include fees billed for professional services rendered in connection with (1) the audit of our consolidated financial statements, including the audit of our internal control over financial reporting, and the review of our interim consolidated financial statements included in quarterly reports; (2) statutory audits of foreign subsidiaries; and (3) fees for services that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters, consents, assistance with the review of registration statements filed with the SEC and consultation regarding financial accounting and/or reporting standards. “Audit-Related Fees” include fees billed for internal control reviews and audits of the Company’s employee benefit plan. “Tax Fees” primarily include fees billed related to federal, state and local tax compliance and consulting. “All Other Fees” include fees billed for accounting research software.

The Audit Committee has adopted a policy that requires pre-approval of all auditing services and permitted non-audit services to be performed by the independent registered public accounting firm, subject to the de minimis exceptions for non-audit services as described in SEC Exchange Act Section 10A(i)(1)(B) which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may form and delegate the authority to grant pre-approvals of audit and permitted non-audit services to subcommittees consisting of one or more members when it deems appropriate, provided that decisions of such subcommittee shall be presented to the full Audit Committee at its next scheduled meeting.

We are providing stockholders with an advisory vote on the overall compensation of our named executive officers.

As discussed in the “Compensation Discussion and Analysis” section below, our executive compensation program is based on four core principles: performance, competitiveness, affordability and simplicity. We believe that our program design implements these principles and provides the framework for alignment between executive compensation opportunities and long-term strategic growth. The overall program is intended to ensure that management is held accountable for long-term results and does not pursue inappropriately risky business strategies in order to maximize short-term compensation payouts. Based on the 2015 advisory vote on our executive compensation program, which was approved by 99.5% of the votes cast, we are confident that our stockholders agreed.

At the same time, we have an ongoing commitment to ensuring that our executive compensation plans are aligned with our principles and evolve as the industry and business

changes. We continue to engage with our stockholders to gain an understanding of their critical perspectives on all aspects of the business, including compensation programs. We continue to evaluate and enhance plan design to align with leading practices in executive compensation.

We urge our stockholders to read the following Compensation Discussion and Analysis for information on our executive compensation program.

In summary, we believe that our executive compensation program has provided and continues to provide appropriate incentives and remains responsive to our stockholders’ views. Accordingly, the following resolution will be submitted for a stockholder vote at the 2016 Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, as set forth in the Proxy Statement for the Annual Meeting.”

The Board of Directors recommends that the stockholders vote “FOR” the

approval of the compensation of our named executive officers as set forth in the

Proxy Statement for the Annual Meeting.

The Compensation Committee has adopted and implemented core principles that form the basis for our executive compensation program. We believe that this program appropriately aligns executive compensation opportunities and our long-term strategic plan and supports management accountability for long-term results while discouraging inappropriately risky business strategies in order to maximize short-term compensation payouts.

The Committee has reviewed and discussed the following Compensation Discussion and Analysis with management, which describes the Committee’s decisions regarding our

executives’ compensation for Fiscal 2015 and how those decisions support and implement our principles. The Compensation Committee has recommended to the Board that it be included in this Proxy Statement, and we encourage you to read it.

Cary D. McMillan (Chair)

Michael G. Jesselson

Thomas R. Ketteler

Janice E. Page

Noel J. Spiegel

Throughout Fiscal 2015, the retail macro environment remained challenging and highly competitive. Within this context, the Company delivered strong financial results, and management continued to make progress on the long-term growth plan. Initiatives implemented to enhance merchandise assortments, improve the customer experience, create inventory efficiencies, reduce promotions and lower expense led to sales and earnings growth in Fiscal 2015. Both brands,

American Eagle Outfitters and Aerie, achieved sales growth and margin improvement. Revenue increased 7% and earnings per share from continuing operations grew 73%⁽¹⁾ to $1.09. We ended the year with $260 million in cash and no debt, after investing $153 million into capital projects and returning $324 million to stockholders through share repurchases and dividends.

Our compensation program design provides the framework for alignment between executive compensation opportunities and our long-term strategic growth. We continually review leading practices in corporate governance and executive compensation and consider changes to the program to align with those practices, ensure competitiveness and reinforce pay and performance alignment. We have instituted a number of changes over the past few years to our programs

with a goal of creating increased alignment between executive compensation and stockholder interests, placing a greater emphasis on performance-based long-term incentives and further aligning target pay with market. In Fiscal 2015 and Fiscal 2016, executive annual equity grant values have been reduced as part of a two year approach aimed at further aligning target compensation to market values.

The combination of these elements enables us to offer a competitive total annual compensation opportunity in which realized pay and costs reflect the degree to which key operational performance objectives are attained. The compensation for our NEOs is balanced to provide a mix of

cash and long term incentive awards and focused on both annual and long-term performance to ensure that executives are held accountable for, and rewarded for, achievement of both annual and long-term financial and strategic objectives.

Goal Setting:

We remain committed to setting incentive goals that are aligned with delivering solid financial performance and returns to our stockholders, while also enabling the successful execution of our strategy. This includes building a strong foundation for long-term growth while also delivering near term results. Management has been focused on improving our merchandise assortment while at the same time reducing our reliance on promotions as well as managing expenses and inventory. Capital investments have centered on growth in under-penetrated new markets, building strong omni-tools and digital capabilities.

Compensation Considerations:

When reviewing the results for the year and making year end pay decisions, the Compensation Committee considered a variety of factors, including our performance relative to the pre-established goals as well as our financial and operational performance relative to peers within the context of a highly competitive retail environment.

Fiscal 2015 financial and operational measures represent aggregate global results from the American Eagle Outfitters and Aerie brands, including our online business, AEO Direct.

As described herein, for Fiscal 2015, our Earnings before Interest and Taxes (“EBIT”)¹ was between target and stretch levels. Our Revenue Growth was above stretch levels. When calculated with the relative weightings, this performance resulted in a 190% of target payout of the Annual Incentive Bonus. The cumulative performance goals associated with the Fiscal 2013 PS award were not achieved and resulted in a forfeiture of the award. Our strong financial performance in Fiscal 2015 did result in a 20% single year lock-in under both the Fiscal 2014 and Fiscal 2015 PS award cycles. This represented the second 20% single year lock-in for the Fiscal 2014 PS award. The achievement of a single year lock-in secures the vesting of at least 20% of the award at the end of the three-year period.

In addition to financial and operational performance, the Compensation Committee and management also consider alignment to our compensation program principles (see the section below entitled “Compensation Program Objectives and Philosophy”) as well as corporate governance best practices when making compensation decisions. Our overall program aligns with recognized corporate governance best practices as described below in the section “Compensation Governance Highlights.”

Below are selected Company executive pay and governance actions and practices. These highlights serve to illustrate our commitment to provide a compensation program that supports our financial and strategic goals, aligns executive pay with stockholder value creation, complies with regulatory requirements and discourages unnecessary and excessive risk taking.

Our executive compensation program is designed to place a considerable amount of compensation at risk for all executives. This philosophy is intended to cultivate a pay-for-performance environment.

The portion of total compensation which is performance-based increases at successively higher levels of management. This approach seeks to ensure that executive compensation closely aligns with changes in stockholder value and achievement of performance objectives while also ensuring that executives are held accountable for results relative to position level.

Refer to the “Fiscal 2015 Performance Metrics, Targets and Results” section for additional information.

Base Salary

Base salaries are reviewed in the last quarter of the fiscal year and increases, where applicable, are typically effective for the beginning of the new fiscal year.

Annual Incentive Bonus

The Annual Incentive Bonus focuses the executive team on key annual objectives and business drivers that support growth in revenue and profits, improvement in overall operations and increases in stockholder value. We establish an executive’s annual incentive bonus as a percentage of base salary, with increases in target percentages directly related to position level. This approach places a proportionately larger percentage of total annual pay at risk for our executives relative to position level and ensures that accountability is directly related to each executive’s role and responsibility.

During Fiscal 2015, the target bonus award opportunity for Mr. Schottenstein was equal to 150% of his base salary for the first 10 months of the year and increased to 175% of his base salary for the last two months of the fiscal year in conjunction with his appointment as permanent CEO. The target bonus award opportunities for our other NEOs ranged from 75% to 150% of their respective base salaries. Annual Incentive Bonus payouts vary based upon EBIT (80% of payout) and Revenue Growth (20% of payout) results. Based upon pre-established goals and payout levels, actual payments range from 0% of the targeted percentage amount for below threshold performance, to 25% of the targeted percentage amount at threshold performance, to 100% of the targeted percentage amount at target performance, to 200% of the targeted percentage amount if we achieve goals that are substantially above our business plan for the fiscal year.

Annual Long-Term Incentive Awards

We utilize a combination of time- and performance-based annual long-term incentives to focus management on long-term corporate performance and sustainable earnings growth. The overall plan design has a heavy emphasis on PS to both directly link compensation to achievement of performance objectives, and place a proportionately larger percentage of total direct compensation at risk relative to position level. The plan also uses time-based RSUs to support our retention objectives and provide balance to the risk/reward ratio for our executives while maintaining our commitment to increasing long-term stockholder value.

Performance Shares: PS represent approximately 70% of the value of a NEO’s annual long-term incentive (77% of Mr. Markfield’s Fiscal 2015 equity was performance-based). We determine the number of target PS based on the overall dollar grant value of the award divided by the closing price of our common stock on the grant date. Dividend equivalents on the PS are reinvested in additional units and paid out to the extent the associated PS vest.

Annual PS grants cliff vest at the end of a three-year performance period. Fiscal 2015 PS vest upon achievement of pre-established three-year cumulative EBIT and ROIC¹ goals, each contributing to 50% of vesting. However, achievement of single year EBIT and ROIC targets “lock-in” 20% vesting of the award. The single year “lock-in” feature serves as a retention tool, and focuses participants on the importance of meeting annual goals in pursuit of achieving long-term objectives. In all cases, whether overall vesting will occur is conclusively determined at the end of the applicable three-year performance period.

If cumulative threshold performance is not met, PS do not vest and all shares are forfeited, except in the event that any 20% lock-in single year targets were previously achieved, which would result in partial vesting at the end of the performance period. Vesting based on the cumulative three-year goal ranges from 0% of the target amount for below threshold performance, to 50% of the target amount at threshold performance, to 100% of the target amount at target performance, to 150% of the target amount if we achieve goals that are substantially above our long range business plan for the performance period. In the event of termination of employment, executives who signed a RSU Confidentiality, Non-Solicitation, Non-Competition and Intellectual Property Agreement may be eligible to receive a pro-rata portion of their PS if the performance goals are achieved. The pro-rata amount is based on the number of days of service in the performance period as of their separation date and cannot exceed target levels.

RSUs: We determine the number of RSUs in each grant based on the overall dollar grant value of the award divided by the closing price of our common stock on the grant date. Dividend equivalents on RSUs are reinvested in additional RSUs and paid to the extent the associated RSUs vest.

RSU awards represent approximately 30% of the value of an NEO’s annual long-term incentive award (23% of Mr. Markfield’s annual equity was delivered via RSUs). Annual RSU grants vest proportionately over three years from the grant date assuming continued employment.

Retention Awards

Ensuring the continuity of leadership has been a critical effort. Although not a standard element of the executive compensation program, retention cash or stock awards have been granted from time to time in an effort to further ensure the stability of the leadership team. Such awards generally have company performance goals associated with the vesting to ensure that company financial results support the expense associated with the award.

In Fiscal 2015, business results strengthened, continuing the progress from the second half of Fiscal 2014. Despite a challenging retail environment, AEO posted 7% revenue growth and earnings per share grew from continuing operations 73%⁽¹⁾ to $1.09. Results were driven by merchandise improvement, reduced promotions and markdowns, and expense leverage.

The Compensation Committee established specific performance metrics for each performance-based compensation element at the beginning of the respective fiscal year based on a variety of factors. Considerations included internal budget; investor expectations; expected peer results; our prior year performance; upcoming fiscal year business plan; and strategic initiatives as well as executive retention concerns.

The Compensation Committee selected EBIT, Revenue Growth and ROIC as the key performance metrics because they are reflective of our success in managing our core operations, growing the business and driving sustained increases in profit. We believe that these metrics reflect a balanced approach to all aspects of performance, including top-line revenue, expense control and efficient use of capital while maintaining simplicity in the design and execution of our executive compensation program. The Fiscal 2015 performance metrics for our annual incentive bonus and performance shares (together with the weighting ascribed to each metric) are illustrated below.

Annual Incentive Bonus

Performance Shares

We establish a performance-based Annual Award Pool (the “Award Pool”) for NEOs who are subject to Internal Revenue Code Section 162(m) (which does not include the Chief Financial Officer). At the beginning of each fiscal year, the Compensation Committee establishes annual performance goals for the Award Pool based on our earnings before interest, taxes, depreciation and amortization (“EBITDA”).

Achievement of the performance goal determines the maximum amount payable as cash awards and/or grants of time-based RSUs to the NEOs. The following maximum award levels were established during Fiscal 2015 as a percent of Adjusted EBITDA, in each case subject to the 2014 Plan maximum of $5 million per person:

Role of Our Compensation Committee

The Compensation Committee reviews and approves annual base salaries and other compensation elements of our NEOs. Additionally, the Compensation Committee makes annual incentive bonus and long term incentive awards relating to our stockholder approved 2014 Plan. Furthermore, the Compensation Committee reviews and approves changes to our compensation peer group, as deemed appropriate, taking into consideration a variety of factors, including suggestions made by the CEO, compensation consultants and external advisory firms. The Compensation Committee acts in accordance with its charter which can be found under the “Investors” section of our website at www.ae.com.

Role of Executive Officers in Compensation Decisions

Our CEO annually reviews the performance of each NEO and makes recommendations to the Compensation Committee with respect to each element of executive compensation for the NEOs, excluding himself. The CEO considers Company, brand and individual performance as well as market positioning in his recommendations to the Compensation Committee with regard to base salary, grants of annual long term incentives and Annual Incentive Bonus for all executives including the NEOs. The Compensation Committee makes the final determination of individual compensation levels and opportunities, taking into consideration the CEO’s recommendations.

Role of Compensation Consultants

The Compensation Committee has the authority under its charter to retain outside consultants or advisors for assistance. In accordance with this authority, during Fiscal 2015, the Compensation Committee continued to retain the services of Frederic W. Cook & Co., Inc. as its outside independent compensation consultant to advise on matters related to CEO and other executive compensation. The services provided by Frederic W. Cook & Co., Inc. are subject to a written agreement with the Compensation Committee. The Compensation Committee has sole authority to terminate the relationship. The Compensation Committee reviewed the relationship with Frederic W. Cook & Co., Inc.

and determined that there are no conflicts of interest. Frederic W. Cook & Co., Inc. does not provide any other services to the Company. The Compensation Committee may engage other consultants as needed in order to provide analysis, recommendations or other market data.

Under the direction of the Compensation Committee, Frederic W. Cook & Co., Inc. interacts with members of the senior management team to provide insights into market practices and to ensure that management is aware of emerging best practices and market trends. Representatives from Frederic W. Cook & Co. Inc. contributed to this Compensation Discussion and Analysis.

In addition to many other factors that affect compensation determinations, we take into account the compensation practices of comparable companies in formulating our compensation program. We consider three key factors in choosing the companies that comprise our peer group:

Our peer group consists of 19 companies. In terms of size, our revenue and market capitalization are near the median of the peer group. We evaluate our peer group on an annual basis for relevance and propose changes when appropriate. The Compensation Committee annually reviews and approves the recommended peer group; there were no changes for Fiscal 2015.

Clawback Policy: Recovery and Adjustments to Award

The Compensation Committee believes that it is appropriate that our cash and long-term incentive awards be subject to financial penalties or clawbacks in the event of misconduct. Pursuant to the 2005 Amended Plan and the 2014 Plan, equity and cash awards are subject to additional forfeiture conditions. Forfeiture and recovery will be determined by the Compensation Committee and triggered in the event of misconduct related to: (a) acts in competition with the Company; (b) disclosure of confidential or proprietary information; (c) failure to cooperate with the Company in regards to a legal suit; or (d) restatement of financial statements. The forfeiture will be triggered upon the occurrence of any of the aforementioned events at any time during active employment and resulting in termination of employment, or during the one-year period following termination. If any of the above events occur, the unexercised portion (vested or unvested) of an option, and any other

award not settled, will immediately cancel and forfeit. Additionally, the NEO will be required to repay the Company the total amount of the award gain realized upon each exercise of an option or award settlement that occurred on or after the date which is one-year prior to either (a) the forfeiture event or (b) the termination date.

Prohibition Against Hedging Transactions and Pledging

Employees and the Board are prohibited from engaging in transactions in financial instruments designed to hedge or offset any decrease in the market value of our stock. Our policy prohibits transactions in such instruments as prepaid variable forward contracts, equity swaps, collars or exchange funds, as well as any other hedging instrument. Employees and the Board are also prohibited from holding our stock in a margin account as collateral for a margin loan or otherwise pledging our stock as collateral.

Mr. Schottenstein:

In December 2015, Mr. Schottenstein was named the permanent Chief Executive Officer of the Company. As part of that appointment, Mr. Schottenstein’s compensation changed, with an increase to annual bonus and annual equity. His target compensation for Fiscal 2016 for the CEO role will be $7,625,000, comprised of: base salary of $1,500,000; an annual incentive bonus opportunity at target of $2,625,000; time-based RSUs with a grant date value of $1,050,000; and PS with a three-year performance period and a grant date value of $2,450,000. For Fiscal 2016, Mr. Schottenstein’s total compensation at risk will increase from Fiscal 2015 levels. In order to determine Fiscal 2016 CEO compensation for Mr. Schottenstein, the Compensation Committee considered peer benchmark information. His pay is below the 25^th percentile.

Mr. Markfield:

In 2014, the Company entered into an amended employment agreement with Mr. Markfield. The key elements of Mr. Markfield’s compensation are similar to that of other NEOs, however his individual agreement provides an overall compensation package that is above the target market positioning of other NEOs. The amended agreement reflected Mr. Markfield’s continued leadership and the key role he has played in ensuring strong succession through the development of the Global Brand Presidents in Fiscal 2015. In light of the CEO transition and the product assortment

challenges we faced in 2014, Mr. Markfield’s leadership and vast industry experience were vitally important to retain. As evidenced by the customer’s response to our assortment, Mr. Markfield’s contributions to the business in both Fiscal 2014 and Fiscal 2015 were significant. The active term of the contract was for Fiscal 2014 and Fiscal 2015. The contract outlined the key elements of compensation for Mr. Markfield, to include base salary of $1,188,000, annual incentive bonus opportunity targeted at 150% of his base salary with the potential to receive up to 300% of his base salary at maximum company performance, and annual equity in the form of a time-based restricted stock unit award, performance share unit award, and an individual performance-based RSU award. For each fiscal year of the contract, Mr. Markfield was entitled to grants of RSUs consisting of time-based RSUs with a grant date value of $1,680,000, PS with a three-year performance period and grant value of $3,920,000 as well as a performance-based RSUs with a one-year performance period and a target grant date value of $1,700,000. The Fiscal 2015 performance based RSU afforded an opportunity for a vesting up to 200% of target if certain stretch performance levels were attained. Details regarding the vesting of the 2015 award can be found in the section entitled “Annual Incentive Bonus, RSUs, and PS.” The number of shares of the Company’s common stock underlying each RSU and PS is determined by dividing the grant date value by the closing price of the Company’s common stock on the grant date. Mr Markfield’s RSU and PS awards for the Fiscal 2015 were granted on March 3, 2015.

Prior installment payment commitments totaling $6 million and payable in equal installments of $1.5 million commencing February 2014 and each anniversary through February 2017 were maintained in the amended agreement. Mr. Markfield retired on February 1, 2016 and under his employment agreement, Mr. Markfield is generally obligated to provide consulting services to the Company until he terminates the consulting arrangement or the Company terminates the consulting arrangement for cause. Mr. Markfield will receive an annual consulting fee of up to $500,000.

Mr. Markfield is subject to non-solicitation, noncompetition and perpetual confidentiality covenants. During the term of the contract (including the consulting period) and for two years thereafter, Mr. Markfield is restricted from (i) soliciting any of the Company’s employees or inducing them to terminate employment with the Company, (ii) soliciting or otherwise inducing any customers, suppliers, sales representatives or other business relations of the Company to discontinue doing business with the Company, and (iii) performing services for any business that directly competes with the Company’s business.

Severance and CIC Payments

Our NEOs are entitled to receive severance payments and other consideration upon the termination of the executive’s employment with us under specified circumstances including a change in control (“CIC”) related termination. These arrangements provide essential protections to both the NEO and us. Agreements providing for severance and CIC payments assist us in attracting and retaining qualified executives who could have other job alternatives. At the same

time, the applicable agreements preserve our valuable assets by imposing upon the executives non-competition and non-solicitation restrictions, confidentiality obligations, and cooperation covenants. For a description and quantification of these severance and CIC benefits, please refer to “Post-Employment Compensation.”

During Fiscal 2009, the Compensation Committee approved a CIC plan which provides for CIC agreements (each, a “CIC Agreement”) with certain executives. The objectives of the plan are to motivate executives to continue to work for our best interests and our stockholders in a potential CIC situation. The standard CIC Agreement contains double-trigger provisions for severance, equity vesting, and other benefits; i.e. payments and benefits are provided only if the executive’s employment terminates under limited circumstances within 18 months following a CIC. Specifically, in the event of a CIC and a subsequent termination by us, other than for Cause, Disability, or death, or if the executive terminates his or her employment for Good Reason (each capitalized term as defined in the applicable CIC Agreement), any and all equity compensation awards (i.e., NSO, RSUs, PS or other forms of securities issued by us and beneficially owned by the executive) that are unvested, restricted or subject to any similar restriction shall vest and become exercisable, or such restrictions shall lapse.

Mr. Markfield was eligible to receive post-employment payments (in addition to other benefits) under the terms of his employment agreement in certain termination scenarios, as negotiated. For a description and quantification of these severance and change in control benefits refer to the “Post-Employment Compensation” section below.

Section 162(m) of the Internal Revenue Code generally permits a tax deduction to public corporations for compensation over $1,000,000 paid in any fiscal year to a corporation’s CEO and the three other most highly compensated NEOs (other than the Chief Financial Officer) employed at the end of the year only if the compensation qualifies as being performance-based under Section 162(m). We endeavor to structure our compensation policies to allow for tax deductibility whenever it is reasonably possible to do so while meeting our compensation objectives.

Nonetheless, from time to time certain non-deductible compensation may be paid and the Board of Directors and the Compensation Committee reserve the authority to award non-deductible compensation in their discretion. Further, compensation which is intended to be performance-based pursuant to Section 162(m) may fail to be so if the requirements of 162(m) are not met. In addition, under applicable I.R.S. rules, the personal use of corporate aircraft results in a disallowance of a deduction of certain airplane and related costs.

This proxy statement contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including in our CEO’s letter to our stockholders and our Compensation Discussion and Analysis, which represent our expectations or

beliefs concerning future events, including with respect to merchandise innovation and product focused marketing, customer engagement, brand growth, new technologies, and improved customer experience. These forward-looking statements rely on assumptions and involve risks and uncertainties, many of which are beyond our

control, including, but not limited to factors detailed herein and under Part I, “Item 1A. Risk Factors” and in other sections of our most recent annual report on Form 10-K and in other filings with the SEC.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. All subsequent written and oral forward-looking statements

attributable to us or persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on our forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and, except as required by law, we undertake no duty to update or revise any forward-looking statement.