INFORMATION REQUIRED IN PROXY STATEMENT
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|_| Preliminary Proxy Statement |_| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |x| Definitive Proxy Statement |_| Definitive Additional Materials |_| Soliciting Material under Rule 14a-12 Systemax Inc. ( |
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
Fee paid previously |
|_| | 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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12, 2009
1. | To elect the |
2. | To consider and vote upon a proposal to ratify the appointment of Ernst & Young LLP as the |
3. | To transact such other business as may properly come before the meeting and any and all adjournments or postponements thereof. |
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Each
There are no family relationships among any of our Directors executive officers or nominees for Director or executive officer, except that Richard Leeds, age 47,Bruce Leeds and Robert Leeds are brothers.
Name of Nominee | Principal Occupation | Age | Director Since |
Richard Leeds | Chairman and Chief Executive Officer of the Company | 49 | April 1995 |
Bruce Leeds | Vice Chairman of the Company | 53 | April 1995 |
Robert Leeds | Vice Chairman of the Company | 53 | April 1995 |
Gilbert Fiorentino | Chief Executive of the Company’s Technology Products Group | 49 | May 2004 |
Lawrence P. Reinhold | Executive Vice President and Chief Financial Officer of the Company | 49 | March 2009 |
Robert D. Rosenthal | Chairman and Chief Executive Officer of First Long Island Investors LLC | 60 | July 1995 |
Stacy S. Dick | Managing Director of Rothschild Inc. | 52 | November 1995 |
Marie Adler-Kravecas | Retired President of Myron Corporation | 49 | N/A |
Economics.
Gilbert Fiorentino, age 47,Company and has served as Chief Executive of the Company’s Technology Products Group and as a Director of the Company since May 25, 2004. Mr. Fiorentino is President and Chief Executive Officer of Tiger Direct, Inc., a company he founded in 1988. Tiger Direct became a wholly owned subsidiary of the Company in 1996. Mr. Fiorentino graduated in 1981 from the University of Miami in 1981 with a BSB.S. degree in Economics and graduated in 1984 from the University of Miami Law School.School in 1984.
and received his Certified Public Accountant license in California in 1984.
Ann R. Leven, age 66, has
As all of the The Board’s non-management members of the Board of Directors (all of whom are independent) constitute the Audit Committee, such executive sessions were previously held as part of regularly scheduled meetings of the Audit Committee chaired by the Audit Committee chairman. Pursuant to the terms the Shareholder Suits Settlement, the Company has agreed that the Board's independent directors shall meet separately in executive sessions, chaired by the Lead Independent Director (currently Robert D. Rosenthal), at least quarterly.
Interested parties wishing
The Company expects each Director to attend its Annual Stockholders Meeting, unless he or she has a valid excuse such as illness or a conflict in schedules. The Company usually schedules a separate Board meeting in conjunction with the Stockholders meeting, to elect officers and discuss other Company matters.
Interested parties wishing to communicate directly with
Company’s annual proxy statement.
The Company's policy is not to pay compensation to Directors who are also employees of the Company or its subsidiaries. Through October 11, 2006 each non-employee Director was paid a fee of $25,000 per year and $2,000 for each meeting of the Board of Directors and each committee meeting in which the Director participated. In addition, the Chairman of the Audit Committee of the Board received an additional $5,000 per year. The non-employee Directors of the Company also received annually, following the annual stockholders meeting, an option to purchase 2,000 shares of Common Stock pursuant to the Company's 1995 Stock Plan for Non-Employee Directors.
The Company, increased the compensation paid to non-employee directors, effective as of October 12, 2006 (the date immediately following the 2006 Annual Stockholders' Meeting), such that each non-employee director will receive annual compensation as follows: $50,000 per year as base compensation, $5,000 per year for each committee of which such director is a non-chair member, $10,000 per year for each committee chair, and a grant each year of shares of Company stock (restricted for sale for two years) in an amount equal to $25,000 divided by the fair market value of such stock on the date of grant. The Lead Independent Director, currently Robert D. Rosenthal, also receives an additional $10,000 per year. In addition the Company granted to each non-employee director a one-time stock option for 5,000 shares of Company stock. The restricted stock and stock option grants were made pursuant to the 2006 Stock Incentive Plan for Non-Employee Directors, which was approved by stockholders at the 2006 Annual Stockholders' Meeting.
DIRECTOR COMPENSATION FOR YEAR ENDED DECEMBER 31, 2006
The following table sets forth compensation on information regarding payments in 2006 to our non-employee directors:
- ------------------------------------------------------------------------------------------------------------------------- Change in Pension Value and Nonqualified Fees Earned Non-Equity Deferred or Paid in Stock Option Incentive Plan Compensation All Other Cash Awards Awards Compensation Earnings Compensation Total Name ($) ($)(1) ($)(1) ($) ($) ($) ($) (a) (b) (c) (d) (e) (f) (g) (h) - ------------------------------------------------------------------------------------------------------------------------- Ann Leven $47,000 $25,000 $51,327 __ __ __ $123,327 Robert D. Rosenthal $45,000 $25,000 $51,327 __ __ __ $121,321 Stacy Dick $50,000 $25,000 $51,327 __ __ __ $126,327
Name: Stock Awards Option Awards ---- ------------ ------------- Ann Leven 13,000 2,627 Robert D. Rosenthal 11,000 34,627 Stacy Dick 19,500 2,127
AUDIT COMMITTEE | |
Ann | |
Stacy S. Dick | |
Robert D. Rosenthal |
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* |
22, 2009. this Proxy Statement. for each of our independent directors in connection with their annual grant of restricted stock. The Company wholesale business in 2008. employees. In determining the compensation of a particular executive, consideration is given to the specific corporate responsibilities that such executive is charged with as they relate to the foregoing business areas. Base Salary past; however, he did not receive new equity compensation grants in 2007 or 2008. Compensation Committee. and CEO in Compensation Decisions The Compensation Committee has the authority to retain third party compensation consultants to provide assistance with respect to compensation strategies, market practices, market research data and the Company’s compensation goals. The Compensation Committee retained a third party consultant in 2008 with respect to a long-term incentive plan and is taking their suggestions under advisement. 2008 over year growth of the business. See the Grants of Plan-Based Awards table below for additional information with respect to awards payable to Mr. Fiorentino for 2008. Company-leased car. In 2007, Mr. Reinhold received $380,385 in annual salary, a cash bonus of $325,000, a stock option grant of 100,000 shares of Company stock pursuant to his employment agreement and $20,921 in other compensation. Stockholders* officers that requires disclosure under SEC regulations. 2009. 2008: year. $22,500. fiscal years 2007 and 2008. 2. For Against Abstain26, 2007.
Name Age Office
---- --- ------
Richard Leeds 47 Chairman and Chief Executive Officer; Director
Bruce Leeds 51 Vice Chairman; Director
Robert Leeds 51 Vice Chairman; Director
Gilbert Fiorentino 47 President and Chief Executive Officer of
Tiger Direct, Inc.; Director
Lawrence P. Reinhold 47 Executive Vice President and Chief Financial Officer
Thomas Axmacher 47 Vice President and Controller
Curt S. Rush 53 General Counsel and Secretary
Name Age Richard Leeds 49 Bruce Leeds 53 Robert Leeds 53 Gilbert Fiorentino 49 Lawrence P. Reinhold 49 Thomas Axmacher 49 Curt S. Rush 55 General Counsel and Secretary onabout Richard Leeds, Bruce Leeds, Robert Leeds, and Gilbert Fiorentino and Lawrence Reinhold, see page 2. Lawrence P. Reinhold was appointed Executive Vice President and Chief Financial Officer, the principal financial officerpages 3-4 of the Company, effective January 17, 2007*. Mr. Reinhold was a business, finance and accounting consultant in 2006. Previously he was Executive Vice President and Chief Financial Officer of Greatbatch, Inc., a publicly traded developer and manufacturer of components used in implantable medical devices from 2002 through 2005; Executive Vice President and Chief Financial Officer of Critical Path, Inc. a publicly traded communications software company in 2001; and a Managing Partner of PricewaterhouseCooopers LLP with responsibility for its Technology, Information, Communications, Media and Entertainment industry practice in the Midwestern United States from 1998 until 2000 (and held other positions at that firm from 1982 until 2000). He received his BS in Business Administration (in 1982) and his MBA (in 1987) from San Diego State University.2006**.2006. He was previously Chief Financial Officer of Curative Health Services, Inc., a publicly traded health care company. He held that position from 2001 to 2006. From 1991 to 2001 Mr. Axmacher served as Vice President and Controller of that company. From 1986 to 1991 Mr. Axmacher served as Vice President and Controller of Tempo Instrument Group, an electronics manufacturer. Mr. Axmacher received a Bachelor of Sciencehis B.S. degree in Accounting in 1982 from Albany University and a Master of Business Administration degreehis M.B.A. in 1992 from Long Island University.* Steven Goldschein retired effective January 17, 2007 as the Company's Senior Vice President and Chief Financial Officer.** Michael J. Speiller resigned effective September 29, 2006 as the Company's Vice President and Controller.Security Ownership of Certain Beneficial Owners and ManagementOWNERS AND MANAGEMENT(1) of the Company's Common StockShares as of April 26, 2007, the record date for the annual meeting,22, 2009, by (i) each of the Company's Directors, and(ii) each of the officers listed in the summary compensation table, (ii)(iii) all current Directors and executive officers as a group and (iii)(iv) each person known to the Company to be the beneficial owner of more than 5% or more of any class of the Company'sCompany’s voting securities.
AmountNaturehas the sole right to vote and determine whether to dispose of Directors and Executive Officers Beneficial Ownership (a) Percentsuch shares.Class
-------------------------------- ------------------------ ----------------
Richard Leeds (2) 10,469,937 27.3%
Bruce Leeds (3) 8,396,004 21.9%
Robert Leeds (4) 8,396,006 21.9%
Gilbert Fiorentino (5) 861,669 2.2%
Stacy S. Dick (6) 21,627 *
Robert D. Rosenthal (7) 45,627 *
Ann R. Leven (8) 15,627 *
Steven M. Goldschein (9) 116,000 *
All current Directors and executive officers36,628,782 Shares were outstanding as of the Company (10 persons) 25,376,789 66.2%
Other Beneficial Ownersof 5% or More of the Company's Voting Stock
Dimensional Fund Advisors Inc. (10) 2,100,586 5.5%
(a) April 22, 2009.Directors and Executive Officers Percent of Class 12,702,100 34.7 % 9,200,835 25.1 % 9,948,721 27.2 % 1,317,763 3.6 % 24,228 * 50,228 * 18,228 * Lawrence P. Reinhold (8) 67,500 * All current Directors and executive officers of the Company (10 persons) 26,339,473 71.9 % Other Beneficial Owners of 5% or More of the Company’s Voting Stock None (a) Amounts listed below may include shares held in partnerships or trusts that are
counted in more than one individual's total.
* less than 1%
(1)As used in this table "beneficial ownership" means the solecolumn may include shares held in partnerships or shared power to vote or direct the voting or to dispose or direct the disposition of any security. A person is deemed as of any date to have "beneficial ownership" of any securitytrusts that such person has a right to acquire within 60 days after such date. Any security that any person named above has the right to acquire within 60 days is deemed to be outstanding for purposes of calculating the ownership percentage of such person, but is not deemed to be outstanding for purposes of calculating the ownership percentage of any other person. Unless otherwise stated, each person owns the reported shares directly and has the sole right to vote and determine whether to dispose of such shares.are counted in more than one individual’s total.(2)*less than 1% (1) Includes 3,136,666 shares owned by Mr. Leeds directly, and 3,786,9242,449,845 shares owned by the Richard Leeds 20062008 GRAT and 183,306 shares owned by the Richard Leeds 2007 GRAT. Also includes 1,838,583 shares owned by a limited partnership of which Richard Leeds is the general partner, 235,850 shares owned by a limited partnership of which a limited liability company controlled by Mr. Leeds is the general partner, 977,1144,338,050 shares owned by irrevocable trusts for the benefit of his brothers'brothers’ children for which Richard Leeds acts as co-trustee and 494,800519,800 shares owned by a limited partnership in which Richard Leeds has an indirect pecuniary interest. Mr. Leeds'Leeds’ mailing address is Richard Leeds, c/o Systemax Inc., 11 Harbor Park Drive, Port Washington, NY 11050.(3)(2) Includes 3,137,166 shares owned by Mr. Leeds directly, and 3,786,9241,736,229 shares owned by the Bruce Leeds 20062008 GRAT and 183,306 shares owned by the Bruce Leeds 2007 GRAT. Also includes 977,1143,624,334 shares owned by irrevocable trusts for the benefit of his brothers'brothers’ children for which Bruce Leeds acts as co-trustee and 494,800519,800 shares owned by a limited partnership in which Bruce Leeds has an indirect pecuniary interest. Mr. Leeds'Leeds’ mailing address is Bruce Leeds, c/o Systemax Inc., 11 Harbor Park Drive, Port Washington, NY 11050.(4)(3) Includes 2,137,168 shares owned by Mr. Leeds directly, and 4,786,9243,063,651 shares owned by the Robert Leeds 20062008 GRAT and 229,826 shares owned by the Robert Leeds 2007 GRAT. Also includes 977,1143,998,276 shares owned by irrevocable trusts for the benefit of his brothers'brothers’ children for which Robert Leeds acts as co-trustee and 494,800519,800 shares owned by a limited partnership in which Robert Leeds has an indirect pecuniary interest. Mr. Leeds'Leeds’ mailing address is Robert Leeds, c/o Systemax Inc., 11 Harbor Park Drive, Port Washington, NY 11050.(5)(4) Includes options to acquire 561,669500,003 shares that are currently exercisable pursuant to the terms of the Company'sCompany’s 1995 and 1999 Long-Term Stock Incentive Plan.(6)(5) Includes options to acquire a total of 19,500 shares that are exercisable immediately pursuant to the terms of the Company'sCompany’s 1995 Stock Plan for Non-Employee Directors(7)(6) Includes options to acquire a total of 11,000 shares that are exercisable immediately pursuant to the terms of the Company'sCompany’s 1995 Stock Plan for Non-Employee Directors.(8)(7) Includes options to acquire a total of 13,000 shares that are exercisable immediately pursuant to the terms of the Company'sCompany’s 1995 Stock Plan for Non-Employee Directors.(9)(8) Steven Goldschein retired effective January 17, 2007 asIncludes options to acquire 62,500 shares that are currently exercisable pursuant to the Company's Senior Vice President and Chief Financial Officer. Asterms of April 20, 2007 Mr. Goldschein held no outstanding Company stock options.the Company’s 1999 Long-Term Stock Incentive Plan.(10)As disclosed by Dimensional Fund Advisors Inc. in an SEC Schedule 13G filing dated December 31, 2006. Its address is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401.Securities Exchange Act of 1934 requires the Company'sCompany’s executive officers and Directors and persons who own more than ten percent of a registered class of the Company'sCompany’s equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers,Executive officers, Directors and ten-percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of Section 16(a) forms received by it, or written representations from certain reporting persons, the Company believes thatits executive officers, Directors and ten-percent stockholders complied with all such filing requirements for fiscal year 2008, except for the year ended December 31, 2006 were complied with exceptinadvertent failure to timely file a Form 4 that was filed after the required filing date by Richard Leeds.Transactions With Related PersonsCompany'sCompany’s Corporate Ethics Policy, Company Representatives (includingall officers, directorsDirectors and all employees)employees (collectively the “Company Representatives”) are required to avoid conflicts of interest, appearances of conflicts of interest and potential conflicts of interest. A "conflict“conflict of interest"interest” occurs when an individual'sa Company Representative’s private interest interferes in any way with the interests of the Company. A conflict situation can arise when a Company Representative takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest also arise when a Company Representative, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company. Company Representatives cannot allow any consideration such as the receipt of gifts or financial interests in other businesses or personal or family relationships to interfere with the independent exercise of his or her business judgment and work activities to the benefit of the Company. Loans to, or guarantees of obligations of, Company Representatives are prohibited unless permitted by law and authorized by the Board of Directors or a Committee designated by the Board. If a Company Representative becomes aware of a potential conflict of interest he or she must communicate such potential conflict of interest to the Company.Company'sCompany’s corporate approval policy requires related party transactions (specifically Company agreements, including leases, with "related parties"“related parties” and sales or purchases of inventory or other Company assets by "related parties"“related parties”) to be approved by the Company'sCompany’s Audit Committee as well as the Company'sCompany’s CEO, CFO and General Counsel.Leasescurrently leaseshas leased its facility in Port Washington, NY since 1988 from Addwin Realty Associates, an entity owned by Richard Leeds, Bruce Leeds and Robert Leeds, Directors of the Company and the Company'sCompany’s three senior executive officers and principal stockholders. Rent expense under this lease totaled $612,000$860,000 for thefiscal year ended December 31, 2006.2008. The Company believes that these payments were no higher than would be paid to an unrelated lessor for comparable space.Leeds' family trusts of Messrs. Leeds entered into a stockholders agreement pursuant to which the parties agreed to vote in favor of the nominees for the nominees of the Board of Directors designated by the holders of a majority of shares of common stockthe Shares held by such stockholders at the time of the Company'sCompany’s initial public offering of common stock (the "Shares").the Shares. In addition, the agreement prohibits the sale of the Shares without the consent of the holders of a majority of the Shares held by all parties to the agreement, subject to certain exceptions, including sales pursuant to an effective registration statement and sales made inDecember 31, 2006,the end of fiscal year 2008, the parties to the stockholders agreement beneficially owned 24,783,300 shares of Common Stock25,296,800 Shares subject to such agreement (constituting approximately 65%69 % of the common stockShares outstanding)."piggy-back,"“piggy-back,” registration rights with respect to the Shares. The demand registration rights generally provide that the holders of a majority of the Shares may require, subject to certain restrictions regarding timing and number of Shares, that the Company register under the Securities Act all or part of the Shares held by such stockholders. Pursuant to the incidental registration rights, the Company is required to notify such stockholders of any proposed registration of theany Shares under the Securities Act and if requested by any such stockholder to include in such registration any number of shares of Shares held by it subject to certain restrictions. The Company has agreed to pay all expenses and indemnify any selling stockholders against certain liabilities, including under the Securities Act, in connection with registrationsthe registration of Shares pursuant to such agreement.The Company believes that the sales volume of competitive products sold by this wholesale business was not significant. In 20062008 the Company subleased office space to this business at an annual rent of approximately $32,000 and sold merchandise to this business totaling less than $10,000.$24,000. The Company believes these transactions were madethis sublease was entered into on an arms-length basis and were not in competition with the Company's business.Related Insurance Broker The son of Bruce Leeds, the Company's Vice Chairman, is an employee- in - -training at an insurance brokerage firm that has represented the Company since January 2006. This brokerage firm earned approximately $386,000 in commissions from the Company in 2006.basis. The Company believes that its transactionsdid not transact any other business with this insurance brokerage firm were made on an arms-length basis.EQUITY COMPENSATION PLAN INFORMATION (a) (b) (c) Plan category Equity compensation plans approved by security holders 2,202,584 $9.23 4,941,514 Equity compensation plans not approved by security holders — — — Total 2,202,584 $9.23 4,941,514 Richard Leeds Chairman; Chief Executive Officer Bruce Leeds Vice Chairman Robert Leeds Vice Chairman Gilbert Fiorentino Chief Executive - Technology Products Group Lawrence Reinhold Executive Vice President; Chief Financial Officer Company'sCompany’s executive compensation programs are designed to achieve a number of important objectives, including attracting and retaining individuals of superior ability and managerial talent, rewarding individual contributions to the achievement of the Company'sCompany’s short and long-term financial and business objectives, promoting integrity and good corporate governance, and motivating executive officers to manage the Company in a manner that will enhance the Company'sCompany’s growth and financial performance for the benefit of our stockholders, customers and other constituencies.Company'sCompany’s named executive officers is determined based primarily upon an evaluation of Company performance as it relates to three general business areas:Operational and Financial Performance (utilizing standard metrics such as net sales, operating income, gross margin, earnings per share, working capital, shareholder equity and peer group comparisons)· Operational and Financial Performance (utilizing standard metrics such as net sales, operating income, consolidated net income, earnings before interest and taxes (“EBIT”), gross margin, operating margin, earnings per share, working capital, return on invested capital, stockholder equity and peer group comparisons); · Strategic Accomplishments (including growth in the business, implementation of systems, process and technology improvements, and growth in the value of the Company’s assets, including through strategic acquisition transactions); and · Corporate Governance and Oversight (encompassing legal and regulatory compliance and adherence to Company policies including the timely filing of periodic reports with the SEC, the Sarbanes-Oxley Act, environmental, employment and safety laws and regulations and the Company’s corporate ethics policy). business and in the value of the Company's stock and assets).foregoing areas.Corporate Governance and Oversight (encompassing legal and regulatory compliance and adherence to company policies including the timely filing of periodic reports with the SEC, the Sarbanes-Oxley Act, employment and safety laws and regulations and the Company's corporate ethics policy)areas but no specific financial performance benchmarks are generally used.typically consist of the following principal elements:Base salaryCash bonusesStock-based· Base salary; · Cash bonuses; · Stock–based incentives (other than for the Chairman/CEO and the two Vice Chairmen of the Company who are considered majority stockholders of the Company); and · Benefits, perquisites and other compensation. Chairman/CEOCommittee maintains flexibility and the two Vice Chairmanadjusts different elements of compensation based upon its evaluation of the Company’s key compensation goals set forth above. The Company who are considered majority stockholders of the Company); anddoes not have a formal policy regarding internal pay equity.Benefits, perquisites and other compensation—-Salary levels generally are determined based on individual and Company performance as well as a subjective assessment of prevailing levels among the Company's competitors.Company’s competitors and an objective assessment (derived by management from widely available published reports) of the average of prevailing salary levels for comparable companies (based on industry, revenues, number of employees, location and similar factors).—-In establishing annual bonuses, the CompanyCompensation Committee considers suchgenerally the same factors relating to the Company's overall performanceit considers in determining base salaries and assigns such weight to each such factor as it,the Compensation Committee, in its discretion, deems appropriate. The CompanyCompensation Committee may also consider its assessment of each individual'sindividual’s contribution to the Company'sCompany’s performance. In certain cases, threshold, target and maximum bonus awards based on achieving specific financial goals are established.Stock–BasedStock-Based Incentives — - Stock-based incentives, at the present time consisting of (a) stock options granted at 100% of the stock'sstock’s fair market value on the grant date and/or (b) restricted stock units granted subject to certain performance conditions, constitute the long-term portion of the Company'sCompany’s executive compensation package. Stock options provide an incentive for executives to manage the Company with a view to achieving results which would increase the Company'sCompany’s stock price and, therefore, the return to the Company'sCompany’s stockholders. The number and timingsize of stock option and restricted stock unit grants are decided in part based on the Company'sCompany’s subjective assessment of prevailing levels of similar compensation among the Company'sCompany’s competitors. Stock option and restricted stock unit grants must be approved by the Compensation Committee, of the Board of Directors, or, with respect to grantees who are not officers or directors, by the committee'sCompensation Committee’s designee. We do not use any specific allocation percentage or formula in determining the size of the cash and equity based components of compensation in relation to each other.dohave not receivehistorically received stock options or other stock–basedstock-based incentives as part of their compensation. The Messrs. Leeds are members of a family group that together owns more than 60% ofcompensation since the stock ofCompany's initial public offering. As described below, Gilbert Fiorentino (Chief Executive - Technology Products Group) has received stock-based compensation in the Company. In 2007BoardCompany is $5 million. In the event that an award contains more than one performance goal, participants in the plan will be entitled to receive the portion of Directors established a policy requiring the forfeiting of bonusestarget percentage allocated to the managers of the Company's TigerDirect subsidiary, including Gilbert Fiorentino, TigerDirect's CEO and a Company director, inperformance goal achieved. In the event that the Company's consolidated financial statements require restatementCompany does not achieve at least the minimum performance goals established, no award payment will be made.result of a material error inparticular executive and the financial statements of TigerDirect or any other subsidiary withintarget percentages established by the Company's Technology Products business segment. We have not established any policies regarding required share ownership by executives or directors or hedging and pledging of our common stock by our executives or directors.Committee'sCommittee’s responsibility is to review and approve corporate goals relevant to the compensation of the Chief Executive Officer and, after an evaluation of the Chief Executive Officer'sOfficer’s performance in light of such goals, to set the compensation of the Chief Executive Officer. The Compensation Committee also approves, upon the recommendation of the Chief Executive Officer (following consultation with the Chief Financial Officer and Chief Executive of the Technology Products Group), (a) the annual compensation of the other executive officers of the Company, (b) the annual compensation of certain subsidiary managers, and (c) all individual stock incentive grants to other executive officers. The Committee is also responsible for reviewing and making periodic recommendations to the Board with respect to the general compensation, benefits and perquisite policies and practices of the Company including the Company'sCompany’s stock-incentive based compensation plans.1. The Compensation Committee will not, except in unusual circumstances, delegate to the Company officers the authority to grant options to employees. Instead, Company management will present to the Compensation Committee in advance a list of prospective grantees with the specific number of option shares proposed to be granted to each grantee. The Compensation Committee shall then consider and if agreed, in its discretion, approve the list (with or without modification). The grant date of such options shall be the date ofthat the Committee approves the list and the exercise price of such options shall be the NYSE closing price of the Company stock on the grant date.2. The Compensation Committee will be cognizant of timing the grant of options in relation to the publication of Company earnings releases and other public announcements so as to avoid any perception of "spring-loading"“spring-loading” or "bullet- dodging,"“bullet-dodging,” i.e. granting options just after the release of unfavorable news or before the release of favorable news. Stock option grants will not be made, generally, until after the Company has disclosed, and the market has had an opportunity to react to, material, potentially market-moving, information concerning the Company.3. 3.In general, employee stock option grants will be made at fixed times each year. or the Code.of 1986, as amended (the “Code”). Section 162(m) generally prohibits deducting the compensation of executive officers that exceeds $1,000,000 unless that compensation is based on the satisfaction of objective performance goals. Our stock incentive plans (the 1995 Long-term Stock Incentive Plan, the 1999 Long-term Stock Incentive Plan, as amended, the 1995 Stock Option Plan for Non-Employee Directors, and the 2006 Stock Incentive Plan for Non-Employee Directors)Directors and the Systemax Executive Incentive Plan) are structured to permit awards under such plans to qualify as performance-based compensation and to maximize the tax deductibility of such awards. However, we reserve the discretion to pay compensation to our executive officers, including under the Systemax Executive Incentive Plan, that may not be deductible.2006Company'sthe Company’s Chief Executive Officer for thefiscal year 20062008 and approving the annual compensation of the Company'sCompany’s other named executive officers, the Committee considered, among other factors, the increaseCompany’s 8% growth in Company revenues from the prior year; its maintaining a 15.3% consolidated gross margin; its maintaining overall profitability; and its ending the year (10.9%),with $116 million in cash and equivalents despite spending $37 million for a special dividend; $31 million for the increaseacquisition of CompUSA and in income from operations fromexcess of $20 million to stock inventory in new stores, all in the prior year (78%), the increasemost challenging economic environment in net income from the prior year (295%) and the increase in diluted earnings per share (294%).generations. The Compensation Committee also considered the previouslyCompany's improved controls over internal accounting and financial reporting during 2008, as disclosed significant deficiencies in the Company's internal controls over financial reporting as of December 31, 2006 (see Part II, Item 9A "Controls and Procedures" in the Company's Annual Report on Form 10-K for 2008 and as attested to by Ernst & Young LLP.ended December 31, 2006).Certainthe Named Executive Officers$420,000$550,000 in 20062008 and an annual salary of $401,092$442,600 in 2005.2007. He received a cash bonus of $550,000 in 2008 and $600,000 in 2006 and a cash bonus of $500,000 in 2005.2007. Mr. Leeds received substantially the same amount of$26,522 in other compensation in both 20062008 and 2005.$19,843 in 2007. He received no stock options or other stock-based incentive grants in either 20062008 or 2005.Robert2007.RobertIn both 2006 and 2005 Mr. Leeds received an annual salary of $389,881$450,000 in 2008 and $405,365 in 2007. He received a cash bonus of $250,000. He$375,000 in 2008 and $400,000 in 2007. Mr. Leeds received substantially the same amount$21,329 in other compensation in 20062008 and 2005.$21,912 in 2007. Mr. Leeds received no stock options or other stock-based incentive grants in either 20062008 or 2005.Bruce2007.Bruce the Vice Chairman of the Company, has no employment agreement. In both 2006 and 2005 Mr. Leeds received an annual salary of $389,881$450,000 in 2008 and $405,365 in 2007. He received a cash bonus of $250,000. He$375,000 in 2008 and $400,000 in 2007. Mr. Leeds received substantially the same amount$20,003 in other compensation in 20062008 and 2005.$18,923 in 2007. Mr. Leeds received no stock options or other stock-based incentive grants in either 20062008 or 2005.2007.
Officer of its subsidiary Tiger Direct, Inc.the Company’s Technology Products Group, and a director of the Company. The agreement was effective as of June 1, 2004 and expires on December 31, 2013 unless terminated sooner under the terms of the agreement. The Company may terminate the agreement without cause on 30 days' notice provided certain severance payments are made (see below).Fiorentino'sFiorentino’s compensation consists of a base salary at the initial annual rate of $400,000 (which is increased by five percent per year subject to certain Company earnings requirements) and a performance bonus of $250,000 per year (similarly increasing annually) provided that he meets certain performance criteria previously established from time to time by the Executive Committee of the Board of Systemax. He is also eligible for an additional bonus, in the discretion of the Board. 20062008, Mr. Fiorentino, received $453,923$476,875 in annual salary and a non-equity incentive plan payment of $1,400,000. In 2007, Mr. Fiorentino received $456,484 in annual salary and a cash bonus of $950,000 and stock option awards valued at $917,438. In 2005 Mr. Fiorentino received $446,808 in annual salary, a cash bonus of $500,000 and no stock option awards.$1,938,000. He received substantially the same$622,945 in other compensation in 20062008 (including a $600,000 dividend equivalent payment) and 2005.$624,916 (including a $600,000 dividend equivalent payment) in other compensation in 2007. His cash bonus in 20062008 was determined based on the increase in 20062008 in the operating income (EBITDA) of the Technology Products segment of the Company as compared with 2005.Under2007. See the termsGrants of his employment agreement,Plan-Based Awards table below foris entitled to a special bonus of 0.85% of the total proceeds of a "qualified" change of control transaction upon the first occurrence of a change of control meeting certain conditions. for 2008. Mr. Fiorentino received no stock options or other stock based incentive grants in either 2008 or 2007.benefits,and life insurance, benefits available to all employees generally, and an automobile and vacation.allowance. The Company has also agreed to make certain "gross up"“gross up” payments if other payments to Mr. Fiorentino are deemed by the IRS to be subject to excise tax.Fiorentino'sFiorentino’s option to purchase 350,000 shares of Company stock, granted on February 28, 2003, at an exercise price of $1.76 per shareShare and his option to purchase 50,000 shares of Company stock, granted on April 1, 2003, at an exercise price of $1.95 per shareShare both now vest at 20% per year with the first 20% vesting on October 12, 2004 (the date of execution of the employment agreement). Mr. Fiorentino also was granted new options under the Company'sCompany’s 1999 Long Term Stock Incentive Plan for 166,667 shares, and the agreement obligated the Company to issue additional options on 166,667 shares in each of August 2005 and 2006, at the then-fair market value. Options vest in five annual cumulative installments of 20% each. was granted, pursuant to a restricted stock unit agreement (the form of which is part of his employment agreement), 1,000,000 restricted stock units under the 1999 Long Term Stock Incentive Plan conditioned on stock holderstockholder approval and the satisfaction of certain performance conditions based on the earnings before interest, taxes, depreciation and amortization in fiscal 2004 or fiscal 2005. Such restricted stock units vested atvest in accordance with the rate of 20%following schedule: 200,000 on May 31, 2005 and 10%100,000 on April 1, 2006 and each April thereafter.thereafter, until April 1, 2015. The restricted stock units do not reflect actual issued shares of common stock; sharesShares; Shares are distributed within 30 days after a "Distribution Event"“Distribution Event”. A Distribution Event is defined as the earliest of the date that Mr. Fiorentino is no longer employed by the Company, or Tiger Direct, the date of a change of control (as defined) or January 1, 2006 for the units that vest in 2005 or the date on which any subsequent units vest for units that vest after 2005. If the Company pays dividends or makes other distributions during the term of the restricted stock agreement, however, Mr. Fiorentino has the right to receive equivalent payments under certain circumstances, but shares of Company stock shall only be distributed when there is a Distribution Event.If Mr. Fiorentino is terminated byCompany without cause (as definedtermination of his employment or a change in Mr. Fiorentino's employment agreement), under most circumstances he would become vested in at least halfcontrol of the restricted stock units that were awarded to him (or all of such units under certain circumstances if a "Qualified Change of Control" as, defined in the agreement, had occurred), subject to the Company's right to redeem such units.Mr. Fiorentino is subject to a two-year non-competition covenant following termination of employment, although such period can be shortened to one year or lengthened to three years by the Company in the event of a Termination Without Cause (as defined). The Company is obligated to continue the employee's salarycompany, and certain other benefits for such non-competition period after an early termination by (a) the Company other than for cause or (b) the employee for "Good Reason" (as defined) or after the expirationterms of the employment agreement at its scheduled termination date. In the event of arelated to such events, are discussed below under “—Potential Payments Upon Termination Without Cause by the Company or a termination by the employee for Good Reason, certain unvested restricted stock units generally vest and certain options may vest. In certain instances the Company has the right to redeem vested restricted stock units at fair market value.Change in Control.”
Under thatThe agreement hisprovides for a minimum base salary isof $400,000 and he shall(which may be eligible forincreased at the discretion of the Company) and a bonus (which the agreement states is expected to be at least equal to 50% of the base salary) assuming Mr. Reinhold meets certain performance objectives (including the Company'sCompany’s financial performance objectives) established for him by the Company. He is entitled to receive four weeks vacation, a relocation allowance (not to exceed $75,000 plus the cost of temporary housing and weekly travel to his prior residence for six weeks), a car allowance of up to $1,200 per month or a company-leased car, and an option to purchase 100,000 shares of common stock pursuant to the Company's 1999 Long Term Stock Incentive Plan (vesting in four equal annual installments commencing on the first anniversary of the grant).The agreement is terminable upon death or total disability, by the Company for "cause" (as defined) or without cause, or by the employee voluntarily for any reason or for "good reason" (as defined). the event of termination for death, disability, cause or voluntary termination by2008, Mr. Reinhold the Company will owe no further payments other than as applicable under disability or medical plans, any accrued but unused vacation time (up to four weeks) and, in the event of termination for disability or death, thepro rataportion of any bonus which would otherwise be paid. If Mr. Reinhold resigns for good reason or if the Company terminates him for any reason other than disability, death or cause, he shall also receive severance payments equal to 12 months' base salary (or 24 months' base salary if termination is within 60 days prior to or one year following a "change of control," as defined), one year's base salary bonus based on his average annual bonus for the prior two years (unless he was employed for less than two years in which case he will receive a prorated bonus) and a reimbursement of costs for COBRA insurance coverage in addition to the payments paid for other terminations. The employment agreement includes customary nondisclosure and intellectual property rights provisions and non-compete/non-solicit provisions effective for one year following termination.Steven GoldscheinSteven Goldschein retired as the Company's Senior Vice President and Chief Financial Officer effective January 17, 2007. He has agreed to remain with the Company on a part-time basis for a one-year period. The employment agreement with Mr. Goldschein was amended effective January 17, 2007 to reflect Mr. Goldschein's role as a part time employee for 12 months (not to exceed 30 hours per week) pursuant to which he shall receive during such part time employment period 105% of his prior base salary in effect on January 17, 2007. He is eligible to receive his annual bonus for the 2006 fiscal year. The amendment also provides that the non-compete period shall commence upon termination of Mr. Goldscheins's part-time employment. In 2006 Mr. Goldschein received $422,257 in annual Salary, a cash bonus of $220,000, no stock options or other stock-based incentive grants and less than $10,000 in other compensation. In 2005 he received $403,248$455,250 in annual salary, a cash bonus of $75,000, no$325,000, a stock options or other stock-based incentive grantsoption grant of 50,000 shares of Company stock and less than $10,000$22,923 in other compensation.Stockholders* of Directors of Systemax, Inc. has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which appears in this proxy statement, with the management of Systemax. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Systemax'sSystemax’s proxy statement on Schedule 14A.Stacy S. Dick Robert D. Rosenthal Ann Leven __________________________* This reportThe information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any filingfilings under the Securities Act of 1933, oras amended, which we refer to as the Securities Act, or under the Exchange Act, of 1934, except to the extent that we specifically incorporate this information by reference.reference into any such filing.Company'sCompany’s Compensation Committee for fiscal year 20062008 were Robert Leeds,Ann R. Leven, Robert D. Rosenthal and Stacy S. Dick. (Pursuant to the terms of the Shareholder Suits Settlement, Robert Leeds resigned from the committee and Ann Leven was appointed to the committee at the end of 2006.) Other than Robert Leeds, theThe Company employs no member of the Compensation Committee. No DirectorIn addition, none of the Company served during the last completed fiscal year as anour directors has any interlocking relationship with our Board, Compensation Committee or executive officer of any entity whose compensation committee (or other comparable committee, or the Board, as appropriate) included an executive officer of the Company. There are no "interlocks" as defined by the Securities and Exchange Commission.("CEO"(“CEO”, our principal executive officer), Chief Financial Officer ("CFO"(“CFO”, our principal financial officer), and the three most highly compensated executive officers other than the CEO and CFO (collectively the "Named“Named Executive Officers"Officers”) for the year ended December 31, 2006:
2008:
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Change in
Pension
Valuefiscal years 2006, 2007 and Non-Equity Nonqualified
Incentive Deferred
Stock Option Plan Compensation All Other
Name and Principal Salary Bonus Awards Awards Compensation Earnings Compensation Total
Position Year ($) ($) ($) ($) (1) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
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Richard Leeds 2006 $420,000 $600,000 - - - - $27,795 (2) $1,047,795
Chairman and Chief
Executive Officer (Principal
Executive Officer)
Steven M. Goldschein 2006 $422,257 $220,000 - - - - $23,662 (3) $665,919
Senior Vice President and
Chief Financial Officer
(Principal Financial
Officer)
Bruce Leeds 2006 $389,881 $250,000 - - - - $26,061 (4) $665,942
Vice Chairman
Robert Leeds 2006 $389,881 $250,000 - - - - $21,890 (5) $661,771
Vice Chairmans
Gilbert Fiorentino 2006 $453,923 $950,000 - $917,438 - - $37,709 (6) $2,359,070
President and CEO of Tiger
Direct, Inc.
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Name and Principal Position Year Richard Leeds 2008 550,000 550,000 - - - 26,522 (3) 1,126,522 Chairman and Chief Executive Officer 2007 442,600 600,000 - - - 19,843 1,062,443 2006 420,000 600,000 - - - 27,795 1,047,795 Lawrence P. Reinhold 2008 455,250 325,000 - 567,161 - 22,923 (4) 1,370,334 Bruce Leeds 2008 450,000 375,000 - - - 21,329 (5) 846,329 Vice Chairman 2007 405,365 400,000 - - - 21,912 827,277 2006 389,881 250,000 - - - 26,061 665,942 Robert Leeds 2008 450,000 375,000 - - - 20,003 (6) 845,003 Vice Chairman 2007 405,365 400,000 - - - 18,923 824,288 2006 389,881 250,000 - - - 21,890 661,771 Gilbert Fiorentino 2008 476,875 - - 329,045 1,400,000 622,945 (7) 2,828,865 This column represents the dollar amount recognized for financial statement purposes with respect to the 2006, 2007 and 2008 fiscal yearyears for the fair value of stock options granted in 2006, 2007 and 2008 as well as in prior years, in accordance with SFAS 123R. As per SEC rules relating to executive compensation disclosure, the amounts shown exclude the impact of forfeitures related to service based vesting conditions. These amounts were calculated using the Black-Scholes option-pricing model.For additional information regarding assumptions made in calculating the amounts reflected in this column for grants made in fiscal years 2006, 2007 and 2008, please refer to Note 7 to our audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2008. For additional information regarding assumptions made in calculating the amounts reflected in this column for grants made prior to fiscal year 2006, see the “Shareholders’ Equity” note to our audited consolidated financial statements, included in our Annual Report on Form 10-K for the respective fiscal years.(2) This column represents the amount earned in fiscal year 2008 (although paid in fiscal year 2009) pursuant to the Systemax Executive Incentive Plan. For more information, see the Grants of Plan-Based Awards table below and the section entitled “—Compensation Arrangements of the Named Executive Officers—Gilbert Fiorentino” beginning on page 17 of this proxy statement. (3) Includes $22,599$26,522 in auto-related expenses. Also includes certain medical insurance and other employee benefits not generally available to employees.(3)(4) Includes $17,308(i) $19,473 in auto-related expenses. Also includesexpenses and (ii) Company 401K contributions and certain medical insurance and other employee benefits not generally available to employees.401(k) contributions. (4)(5) Includes $20,865$21,329 in auto-related expenses. Also includes certain medical insurance and other employee benefits not generally available to employees.(5)(6) Includes $16,694$20,003 in auto-related expenses. Also includes certain medical insurance and other employee benefits not generally available to employees.(6)(7) Includes $22,635(i) $600,000 in a dividend equivalent payment, (ii) $22,248 in auto-related expenses. Also includesexpense and (iii) Company 401K contributions and certain medical insurance and other employee benefits not generally available to employees.401(k) contributions.shows information regarding grantssets forth the stock options granted to our named executive officers in 2008 and the estimated possible payouts under the cash incentive awards granted to our named executive officers in respect of non-equity incentive plan awards and grants of equity awards that the Company made during the fiscal year ended December 31, 2006 to each of the Named Executive Officers receiving such awards:
2008 performance.
All Other
Estimated Future Payouts Under Estimated Future Payouts Stock
Non-Equity Incentive Under Equity Incentive Awards:
Plan Awards Plan Awards
------------------------------ ------------------------ All Other
Option
Awards: Grant
Number of Number of Exercise or Date
Shares of Securities Base Price Fair
Stock or Underlying of Option Value of
Grant Threshold Target Maximum Threshold Target Maximum Units Options(1) Awards Option Stock and
Name Date ($) ($) ($) (#) (#) (#) (#) (#) ($/Sh) Awards(2) Option Awards
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l)
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Gilbert 3/22/2006 166,667 $6.80 $802,597
Fiorentino
8/25/2006 166,667 $8.06 $973,564
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Name Lawrence P. Reinhold 3/13/2008 - - 50,000 11.51 353,250 Gilbert Fiorentino - 1,300,000 2,000,000 10,000,000 - - - (1) See Mr. Fiorentino's employment agreement discussion on page 14.(2)This column represents the fair value of the stock option on the granted dated determined in accordance with the provisions of SFAS 123R. As per SEC rules relating to executive compensation disclosure, the amounts shown exclude the impact of forfeitures related to service based vesting conditions. These amounts were calculated using the Black-Scholes option-pricing model. For additional information regarding assumptions made in calculating the amount reflected in this column please refer to Note 7 to our audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2008. showssets forth information regarding grants of stock optionsoption and grants of unvestedrestricted stock awards previously granted which were outstanding at the end of fiscal year 2008.last dayclosing price of the fiscal year ended December 31, 2006, including both awards subject to performance conditions and non-performance based awards, to eachone share of the Named Executive Officers holding such awards:
- -----------------------------------------------------------------------------------------------------------------------------------
Option Awards Stock Awards
- -----------------------------------------------------------------------------------------------------------------------------------
Equity
Incentive
Plan
Equity Awards:
Incentive Market or
Incentive Plan Payout
Plan Awards: Valueour common stock as of Equity Awards: Market Number of Unearned
Number of Number of Number of Value Unearned Shares,
Number of Securities Securities Shares or of Shares Shares, Units or
Securities Underlying Underlying Units of or Units Units or Other
Underlying Unexercised Exercised Option Stock of Stock Other Rights Rights
Unexercised Options Unearned Exercise Option That Have That Have That Have That Have
Options (#) (#) Options Price Expiration Not Vested Not Vested Not Vested Not Vested
Name Exercisable Unexercisable (#) ($) Date (#) ($) (#) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- -----------------------------------------------------------------------------------------------------------------------------------
Steven Goldschein 40,000 (1) $7.31 10/25/09
Gilbert Fiorentino 20,000 (1) $7.31 10/25/09
50,833 (1) $1.95 2/15/11
50,833 (1) $3.05 5/31/12
210,000 (2) 140,000 (2) $1.76 2/28/13
30,000 (2) 20,000 (2) $1.95 4/1/13
100,001 (3) 66,666 (3) $5.65 10/11/14
66,668 (3) 99,999 (3) $6.80 3/22/16
33,334 (3) 133,333 (3) $8.06 8/25/16
700,000 $12,215,000
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(1)Options vested 25% per year over four years from date of grant.(2)Options vested 20% over five years from date of grant.
January 2, 2009, which was $10.87.(3)Granted pursuant to Mr. Fiorentino's employment contract (see page 14). Options vest 20% per year over five years from date of grant. Name (a) (b) (c) (e) (f) (g) (h) Lawrence P. Reinhold 25,000 75,000 (1) $20.15 1/17/17 - - Gilbert Fiorentino 20,000 - $7.31 10/25/09 - - 70,000 - $1.76 2/28/13 - - 10,000 - $1.95 4/1/13 - - 166,667 - $5.65 10/11/14 - - 133,334 33,333 (2) $6.80 3/22/16 - - 100,000 66,667 (2) $8.06 8/25/16 - - - - - - $6,522,000 (2) Granted pursuant to Mr. Fiorentino’s employment agreement (see pages 17-18). Options vest 20% per year over five years from date of grant. (3) The restrictions shall lapse annually in 100,000 share increments through April 2013. IN 2006showssets forth information regarding exercise of options to purchase Systemaxshares of the Company’s common stock and vesting of restricted stock awards by each of the Named Executive Officers whose options were exercised or awards vested during the fiscal year ended December 31, 2006:
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Option Awards Stock Awards
Number of Shares Value Realized Number of Shares Value Realized
Acquired on Exercised on Exercised Acquired on Vesting on Vesting
(#) (#) (#) ($) (1)
Name
(a) (b) (c) (d) (e)
- -----------------------------------------------------------------------------------------------------------------------------------
Steven Goldschein 115,000 $432,100
Gilbert Fiorentino 100,000 $730,000
- -----------------------------------------------------------------------------------------------------------------------------------
(1)Value realized is based upon the closing price of the company's stock on the exercise or vesting date. If employment of any of our named executive officers that exercised options or whose restricted stock vested during fiscal year 2008: Option Awards Stock Awards Name (a) (b) (c) (d) (e) Gilbert Fiorentino 421,666 $3,159,779 100,000 $1,301,000 executive's employment agreement), under most circumstances he would become vested in at least half of the restricted stock units that were awarded to him (or all of such units under certain circumstances if a situation not involving“Qualified Change of Control” as, defined in the agreement, had occurred), subject to the Company’s right to redeem such units. In addition, Mr. Fiorentino is entitled to a special bonus of 0.85% of the total proceeds of a “qualified” change of control transaction upon the first occurrence of a change of control meeting certain conditions. control, the chartevent of a termination without “cause” (as defined). The Company is obligated to continue the employee’s salary and certain other benefits for such non-competition period after an early termination by (a) the Company other than for cause or (b) the employee for “good reason” (as defined) or after the expiration of the agreement at its scheduled termination date. In the event of a termination without “cause” by the Company or a termination by the employee for “good reason,” certain unvested restricted stock units generally vest and certain options may vest. In certain instances the Company has the right to redeem vested restricted stock units at fair market value.December 31, 2006January 3, 2009, the last day of the Company’s fiscal year 2008, and using the closing price of our common stock on the last trading date before that date. These amounts are estimates and the actual amounts to be paid can only be determined at the time of the termination of the executive'sofficer’s employment.TerminationName Gilbert Fiorentino 2,353,750 (1) 1,087,000 (2) 34,800 (3) 3,475,550 Lawrence P. Reinhold 780,250 (4) - - 780,250 Employment Without $476,875 per year and cash bonus of $1.4 million for fiscal year 2008.
Value of Medical and
Cash Compensation Accelerated Vesting Other
(Salary and Bonus) of Stock Awards Benefits Total
Name ($) ($) ($) ($)
- ---- ------------------ ------------------- -------------- ------
Richard Leeds -- -- -- --
Bruce Leeds -- -- -- --
Robert Leeds -- -- -- --
Gilbert Fiorentino $2,807,847 (1) $9,371,993(2) $92,840 (3) $12,272,680
Steven Goldschein $ 321,128 (4) -- -- $ 321,128
Upon a change in control, the chart PaymentsDecember 31, 2006January 3, 2009, the last day of the Company’s fiscal year 2008, and using the closing price of our common stock on the last trading date before that date. These amounts are estimates and the actual amounts to be paid can only be determined at the time of the change of control.Change In Control Payments
Value of Medical and
Accelerated Vesting Other
Cash Compensation of Stock Awards Benefits Total
Name ($) ($) ($) ($)
- ---- ------------------ ------------------- ------------ -----
Richard Leeds -- -- -- --
Bruce Leeds -- -- -- --
Robert Leeds -- -- -- --
Gilbert Fiorentino (5) $12,215,000(6) (7) (8)
Steven Goldschein -- -- -- --
(1)Represents 2 years' salary bonusGilbert Fiorentino 2,353,750 (1)(2) 5,435,000 (3) 34,800 (4) 7,823,550 (5) Lawrence P. Reinhold 1,235,500 (6) 34,800 1,270,300 (7) (2)Name (a) (b) (c) (h) Ann R. Leven $75,000 $25,000 $100,000 Robert D. Rosenthal $85,000 $25,000 $110,000 Stacy S. Dick $75,000 $25,000 $100,000 (1) This column represents the grant date fair value recognized for financial reporting purposes with respect to restricted stock units and options to purchase 66,666grants made in 2008, as determined under SFAS 123R. Grant date fair value was calculated by multiplying the closing price of the Shares on the date of grant by the number of shares of Company stock.(3)Represents 2 years' medical and other benefits.(4)Represents 6 months salary and 6 months pro-rated bonus.(5)Upon a "Qualifying Change of Control" as defined in his employment agreement, Mr. Fiorentino would receive 0.85% of "Qualifying Value" of "Qualifying Change of Control" transaction as defined in his employment agreement.(6)Represents accelerated vesting of 700,000 restricted stock units.(7)Upon a change in control, Mr. Fiorentino may be subject to certain excise taxes under Section 280Gthe grants. In accordance with SEC rules, this amount disregards the estimate of the Internal Revenue Code of 1986, as amended. The Company has agreed to reimburse Mr. Fiorentino for those excise taxes as well as for any income and excise taxes payable by the executives as a result of any such reimbursement capped at $6 million in the aggregate.forfeitures on service-based awards.(8)Total of (a) change of control payment as described in footnote (5), (b) $12,215,000 value of accelerated vesting of stock awards and (c) reimbursement of excise taxes as described in footnote (7).The following table presents the aggregate number of outstanding stock awards and stock option awards held by each of our non-employee Directors at the end of fiscal year 2008: Stock Awards Option Awards Ann R. Leven 4,228 13,000 Robert D. Rosenthal 4,228 11,000 Stacy S. Dick 4,228 19,500 Ratification of Independent Registered Public AccountantsRATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTSItem&Young& Young LLP as independent registered public accountants for the Company for the fiscal year ending December 31, 2007.&Young& Young LLP are expected to be present at the Annual Meeting and to be available to respond to appropriate questions. They will have an opportunity to make a statement if they so desire.Services. Ernst & Young LLP replaced Deloitte & Touche LLP as our independent registered public accountants in December 2005. Servicesand Deloitte & Touche LLP for services rendered during the fiscal years ended December 31, 20052007 and 2006:$2,160,982$2,583,000 for professional services rendered for the audit of the Company'sCompany’s annual consolidated financial statements for the fiscal year ended December 31, 20062008 and its reviews of the interim financial statements included in the Company'sCompany’s Forms 10-Q for that fiscal year and $2,585,000$3,450,745 for professional services rendered for the audit of the Company'sCompany’s annual consolidated financial statements and its internal control over financial reporting for the fiscal year ended December 31, 20052007 and its interim reviews of the financial statements included in the Company'sCompany’s Forms 10-Q for that fiscal year .provided no tax related services to the Company in 2006. Deloitte & Touche LLP billed the Company for professional services rendered for tax compliance, planning and advice for the fiscal year ended December 31, 2005in 2007 an aggregate of $116,000.or by Deloitte & Touche LLP for the year ended December 31, 2006. Other fees of $5,000 were billed by Ernst & Young LLP for the year ended December 31, 2005.Company'sCompany’s independent registered public accountants to perform audit or non-audit services on behalf of the Company or any of its subsidiaries before such accountants can be engaged to provide those services. The Audit Committee of the Board of Directorsdoes not delegate its pre-approval authority. The Audit Committee has reviewed the services provided to the Company by Ernst & Young LLP and believes that the non-audit/review services it has provided are compatible with maintaining the auditor'sauditor’s independence.Company'sCompany’s independent registered public accountants is not required by the Company's by-lawsCompany’s By-Laws or other applicable legal requirement. However, the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to continue to retain that firm. Even if the selection is ratified, the Audit Committee at its discretion may direct the appointment of different independent registered public accountants at any time during the year or thereafter if it determines that such a change would be in the best interests of the Company and its stockholders.Change of Accountants On November 7, 2005, the company then serving as our certifying accountant, Deloitte & Touche LLP, notified our chief financial officer that it would not stand for re-appointment as the Company's independent registered public accountant for the year ending December 31, 2005, stating that the client-auditor relationship would cease upon our filing our Form 10-K/A for the fiscal year ended December 31, 2004. During the two most recent fiscal years and the subsequent interim period preceding the notification from Deloitte & Touche on November 7, 2005: (i) there were no disagreements between us and Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Deloitte & Touche, would have caused it to make reference to the subject matter of the disagreement in connection with its reports; and (ii) there were "reportable events" (as defined in Item 304(a)(1)(v) of Regulation S-K) as described in the paragraph below. In addition, Deloitte & Touche's reports on our consolidated financial statements for the past two years did not contain an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles; however, the 2003 report of Deloitte & Touche issued in connection with the 2003 Form 10-K/A contained an explanatory paragraph which addressed the restatement of such year's consolidated financial statements for the correction of an error. During the two most recent fiscal years and the subsequent interim period preceding the notification from Deloitte & Touche on November 7, 2005, the following reportable events occurred which caused our auditors to significantly increase the scope of their audit work: (i) An investigation was conducted in 2004 of certain possible irregularities committed by former employees of a subsidiary of the Company in connection with a promotional program; (ii) Deloitte & Touche issued a material weakness letter to us, as previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2004, which addressed (together with material weaknesses identified by management related to errors at the Company's United Kingdom subsidiary which gave rise to the restatement referred to in the prior paragraph) the dependency on back end detective controls to overcome system shortcomings and inadequate financial controls, communication and authority on the part of our management over the Company's operating subsidiaries; and (iii) the restatement of our consolidated financial statements for our years ended December 31, 2004, 2003 and 2002 which resulted principally from the discovery of errors in accounting for inventory at our Tiger Direct subsidiary as to 2004 and the timing of revenue recognition as it relates to all years. These matters were discussed in detail among management, the audit committee and our independent registered public accountants. The Company authorized Deloitte & Touche to respond fully to inquiries of the successor accountant concerning the subject matter of the material weakness. We provided Deloitte & Touche with a copy of the above disclosures and requested that Deloitte & Touche furnish us with a letter addressed to the Securities and Exchange Commission stating whether it agrees with such statements made by the Company. We received such letter on November 16, 2005. On December 9, 2005, the Company, by action of the audit committee of the Board of Directors, engaged Ernst & Young LLP as its independent registered public accounting firm to audit the Company's consolidated financial statements. The Company did not, during the two most recent fiscal years and any subsequent interim period prior to engaging Ernst & Young LLP, consult with Ernst & Young LLP regarding any matters referred to in either paragraph 304(2)(i) or (ii) of Item 304 of Regulation S-K.Company'sCompany’s independent registered public accountants will require the affirmative vote of the holders of a majority of the sharesShares present in person or by proxy and entitled to vote on the issue. There are no rights of appraisal or dissenter'sdissenter’s rights as a result of a vote on this issue.COMPANY'SCOMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR FISCAL 2007,2009, WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON THE ENCLOSED PROXY CARD. 2007 Annual Meeting will be borne by the Company. In addition to solicitation by mail and over the internet, solicitations may also be made by personal interview, fax and telephone. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy material to their principals, and the Company will reimburse them for expenses in so doing. Consistent with the Company'sCompany’s confidential voting procedure, Directors, officers and other regular employees of the Company, as yet undesignated, may also request the return of proxies by telephone or fax, or in person.Annual Report The Annual Report of the Company for the year ended December 31, 2006 will be first mailed to all stockholders with this proxy statement.Stockholder Proposals
an annual meeting,the Annual Meeting, including proposals for the nomination of Directors, must be received by March 31, 2008,February 12, 2010, to be considered for the 2008 Annual Meeting.2010 annual meeting pursuant to Rule 14a-8 under the Exchange Act. Stockholders proposals should be mailed to Systemax Inc., Attention: Investor Relations, 11 Harbor Park Drive, Port Washington, NY 11050. of Directors does not know of any matter other than those described in this proxy statement that will be presented for action at the meeting. If other matters properly come before the meeting, the persons named as proxies intend to vote the sharesShares they represent in accordance with their judgment.COMPANY'SCOMPANY’S FORM 10-K FOR THEFISCAL YEAR ENDED DECEMBER 31, 20062008 IS INCLUDED AS PART OF THE COMPANY'SCOMPANY’S ANNUAL REPORT PROVIDEDALONG WITH THIS PROXY STATEMENT.STATEMENT, WHICH ARE AVAILABLE AT www.proxyvote.com. AN ADDITIONAL COPY MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST. Such request should be sent to: SYSTEMAX INC.Systemax Inc., 11 Harbor Park Drive, Port Washington, New York 11050, Attention: Investor Relations or via email to investinfo@systemax.com.SEC'sSEC’s web site (www.sec.gov)(www.sec.gov). The information on the Company'sCompany’s web site or any report the Company files with, or furnishes to, the SEC is not part of this proxy statement.Company's Board of Board of Directors has adopted the following corporate governance documents (the "Corporate“Corporate Governance Documents"Documents”):•••••·Corporate Ethics Policy for officers, directorsDirectors and employees
employees;· Charter for the Audit Committee of the Board of Directors
Board;· Charter for the Compensation Committee of the Board of Directors
Board;· Charter for the Nominating/Corporate Governance Committee of the Board of Directors
Board; andCorporate Governance Guidelines and PrinciplesPrinciples.Company'sCompany’s Company web site (www.systemax.com) or can be obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY 11050.This Proxy is Solicited on Behalf All All All Except2. Proposal to ratify the appointment of Ernst & Young LLP as independent registered public accountants for the company for the fiscal year ending December 31, 2009.
NOTE: The undersigned hereby appoints Curt Rush and Thomas Axmacher, and each of them, with power of substitution, attorneys and proxies to represent and vote all shares of Common Stock of Systemax Inc. (the "Company") which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Systemax Inc. to be held on June 7, 2007, at 2:00 p.m., local time, and at any adjournment or postponements thereof. Under the Company's By-Laws, business transacted at the Annual Meeting of Stockholders is confined to the purposes stated in the Notice of the Meeting. This Proxy will, however, convey discretionary authority to the persons named herein as proxies to vote on matters incident to the conduct of the Meeting. This Proxyrepresented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder.Stockholder(s). If no direction is made, this Proxyproxy will be voted FOR items 1 and 2. If any other matters properly come before the electionmeeting, the person named in this proxy will vote in their discretion. This proxy is solicicted on behalf of the nomineesBoard of directors and FOR proposal 2.(Continued and tomay be signed on the reverse side)revoked.ANNUAL MEETING OF STOCKHOLDERS OFSYSTEMAX INC.June 7, 2007Please date, sign and mailyour proxy card in theenvelope provided as soonas possible.Please detach along perforated line and mail in the envelope provided.PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.PLEASE MARK YOUR VOTE IN THE BLUE OR BLACK INK AS SHOWN HERE [X]1. Election of Directors:[ ][ ][ ]FOR ALL NOMINEESAGAINSTALL NOMINEESFOR ALL EXCEPT(See instructions below)( )( )( )( )( )( )( )NOMINEES:Richard LeedsBruce LeedsRobert LeedsGilbert FiorentinoRobert RosenthalStacy S. DickAnn R. LevenINSTRUCTION:To vote against any individual nominee(s), mark"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to vote against, as shown here: at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. [ ]2. To consider and vote upon a proposal to ratify the appointment of Ernst & Young LLP as the Company's independent registered public accountants for fiscal 2007.For [ ] Against [ ] Abstain [ ]3. To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.Signature of StockholderDateSignature of StockholderDateNote:name or names appear on this Proxy. When shares are held jointly, each holder should sign.name(s) appear(s) hereon. When signing asattorney, trustee or guardian,other fiduciary, please give full title the signer is a corporation please sign full corporate name by duly authorized officer, giving full title as such. If signer is aor partnership, please sign in full corporate or partnershipperson.officer.