In 2014, pursuant to the 2010 Long-Term Incentive Plan previously adopted by the Board of Directors and by the stockholders at the 2010 Annual Meeting, our Compensation Committee, with input from our Chief Executive Officer, established our 2014 NEO Cash Bonus Plan (“2014 Bonus Plan”) providing for target cash bonuses for the NEOs based on the achievement of certain financial and non-financial performance-based criteria in 2014. The 2014 Bonus Plan implements for 2014 the 2010 Long-Term Incentive Plan and pertains specifically to the payment of non-equity incentive compensation to NEOs for 2014.
The following discussion applies to 100% of the 2014 total non-equity incentive compensation for each of Mr.Messrs. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr.Lawrence Reinhold; the 25% portion of Mr. Dooley’s 2014 total non-equity incentive compensation that is based on the 2014 Bonus Plan; and the 50% portion of Mr. Lerner’s 2014 total non-equity incentive compensation that is based on the 2014 Bonus Plan.
For 2014, such financial and non-financial goals, the percentage of the executive’s entire cash bonus tied to such goals and the weighting of each component under such goal, are as follows:
Achievement of each of the target financial goals generates a variable target bonus payment (base case); reduced bonuses are payable on a pro rata basis for each financial goal component. The bonus for the sales target financial component is payable starting at achievement of in excess of 80% of the sales target financial goal component amount up to 140% of the sales target financial goal component amount. Each 1% variance in actual achievement from the 100% level generates a 5% variance in the target bonus amount. No bonus is payable in respect of this component if achievement is 80% or less of the sales target while increased bonuses (up to 300% of the target bonus amount for this financial component) are payable on a pro rata basis for over achievement of the sales target financial goal component. The adjusted operating income financial goal component is payable at a level of 100% if the target is achieved. Each $500,000 variance in actual achievement below the 100% level will generate a 5% negative variance in the target bonus amount. Each $500,000 variance in actual achievement above the 100% level will generate a 5% positive variance in the target bonus amount up to 300% of the target bonus amount for this financial component. The non-financial goals are measured based on whether or not the goal is either accomplished or not accomplished during the fiscal year.
Under the 2014 Bonus Plan, the Compensation Committee set the following cash bonus target amounts for each of Mr.Messrs. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr.Lawrence Reinhold, assuming achievement of the 2014 Bonus Plan financial and non-financial goals at 100% base case target levels; and in the case of Mr. Dooley achievement of such 2014 Bonus Plan goals at 100% base case target levels (25% of the bonus) as well as achievement of the financial and non-financial goals of the Industrial Products Group at 100% base case target levels (75% of the bonus); and in the case of Mr. Lerner achievement of such 2014 Bonus Plan goals at 100% base case target levels (50% of the bonus) as well as achievement of performance objectives established for him by the Company (50% of the bonus):
The Compensation Committee believes these bonus levels are appropriate for each of our named executive officers. The 2014 salary increases discussed below reflect the Compensation Committee’s view that such increases are appropriate in light of the current business performance and expected accomplishments in 2014.
The 2014 Bonus Plan imposes a cap on the total bonus that could be payable to any executive whose bonus is 100% earned based upon the NEO plan at 260% of the target base case bonus. The cap on Mr. Dooley’s total bonus is 200% of the target base case bonus, and the cap on Mr. Lerner is 180% of the target base case bonus. The Compensation Committee has the discretion to adjust financial targets based on such events as acquisitions or other one-time charges or gains, or other unforeseen circumstances that can skew normal operating results. Targets and bonuses are also subject to adjustment to prevent unreasonable results in the strict application of these formulas. Executives must generally be employed with the Company at the time the bonuses are paid out to receive the bonus.
In addition, the Board can demand repayment to the Company of any cash bonuses paid in the event that (i) the executive’s misconduct caused the Company to restate its reported financial results; (ii) the reported results created a bonus that would not have been paid based on the restated results, or (ii) the executive engages in serious ethical misconduct.
As described above, 50% of Mr. Lerner’s cash bonus is tied to achievement of certain legal group objectives, 20% of this portion of the bonus (10% of total target bonus) is tied to cost management and 80% of this portion of the bonus (40% of total target bonus) is tied to achievement of individual strategic objectives including enhancing the contract management process, enhancing the litigation management and budget process and strengthening the Company’s overall risk management function. The cost management and the strategic objectives were met or exceeded in 2014, resulting in a 219% payout of this bonus component.
In 2013, pursuant to the 2010 Long-Term Incentive Plan previously adopted by the Board of Directors and by the stockholders at the 2010 Annual Meeting, our Compensation Committee, with input from our Chief Executive Officer, established our 2013 NEO Cash Bonus Plan (“2013 Bonus Plan”) providing for target cash bonuses for the NEOs based on the achievement of certain financial and non-financial performance-based criteria in 2013. The 2013 Bonus Plan implements for 2013 the 2010 Long-Term Incentive Plan and pertains specifically to the payment of non-equity incentive compensation to NEOs for 2013. The following discussion applies to 100% of the 2013 total non-equity incentive compensation for each of Mr.Messrs. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr.Lawrence Reinhold; to the 25% portion of Mr. Dooley’s 2013 total non-equity incentive compensation that is based on the 2013 Bonus Plan; and to the 50% portion of Mr. Lerner’s 2013 total non-equity incentive compensation that is based on the 2013 Bonus Plan.
For 2013, such financial and non-financial goals, the percentage of the executive’s entire cash bonus tied to such goals and the weighting of each component under such goal, are as follows:
Achievement of each of the target financial goals generates a variable target bonus payment (base case); reduced bonuses are payable on a pro rata basis for each financial goal component. The bonus for the sales target financial component is payable starting at achievement of in excess of 80% of the sales target financial goal component amount up to 140% of the sales target financial goal component amount. Each 1% variance in actual achievement from the 100% level generates a 5% variance in the target bonus amount. No bonus is payable in respect of this component if achievement is 80% or less of the sales target while increased bonuses (up to 300% of the target bonus amount for this financial component) are payable on a pro rata basis for over achievement of the sales target financial goal component. The adjusted operating income financial goal component is payable at a level of 100% if the target is achieved. Each $1 million variance in actual achievement below the 100% level will generate a 5% negative variance in the target bonus amount. Each $750,000 variance in actual achievement above the 100% level will generate a 5% positive variance in the target bonus amount up to 300% of the target bonus amount for this financial component. The non-financial goals are measured based on whether or not the goal is either accomplished or not accomplished during the fiscal year.
Under the 2013 Bonus Plan, the Compensation Committee set the following cash bonus target amounts for each of Mr.Messrs. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr.Lawrence Reinhold, assuming achievement of the 2013 Bonus Plan financial and non-financial goals at 100% base case target levels; in the case of Mr. Dooley achievement of such 2013 Bonus Plan goals at 100% base case target levels (25% of the bonus) as well as achievement of the financial and non-financial goals of the Industrial Products Group at 100% base case target levels (75% of the bonus); and in the case of Mr. Lerner achievement of such 2013 Bonus Plan goals at 100% base case target levels (50% of the bonus) as well as achievement of performance objectives established for him by the Company at 100% base case target levels (50% of the bonus), as discussed above:
The Compensation Committee believes these bonus levels are appropriate for each of our Named Executive Officers; these bonus levels are the same as those that were set for the Named Executive Officers in 2012 (other than for Mr. Dooley and Mr. Lerner). The 2013 salary increases reflect the Compensation Committee’s view that such increases are appropriate in light of 2013 NEO bonuses being set at the same level as 2012.
The 2013 Bonus Plan imposed a cap on the total bonus that could be payable to any executive whose bonus is 100% earned based upon the NEO plan at 260% of the target base case bonus. The cap on Mr. Dooley’s total bonus was 185% of the target base case bonus, and the cap on Mr. Lerner was 180% of the target base case bonus. The Compensation Committee had the discretion to adjust financial targets based on such events as acquisitions or other one-time charges or gains, or other unforeseen circumstances that can skew normal operating results. Targets and bonuses are also subject to adjustment to prevent unreasonable results in the strict application of these formulas. Executives must generally be employed with the Company at the time the bonuses are paid out to receive the bonus.
In addition, the Board can demand repayment to the Company of any cash bonuses paid in the event that (i) the executive’s misconduct caused the Company to restate its reported financial results; (ii) the reported results created a bonus that would not have been paid based on the restated results, or (ii) the executive engages in serious ethical misconduct.
As described above, 50% of Mr. Lerner’s cash bonus is tied to achievement of certain legal group objectives, 20% of this portion of the bonus (10% of total target bonus) is tied to cost management and 80% of this portion of the bonus (40% of total target bonus) is tied to achievement of individual strategic objectives including enhancing regulatory compliance, implementing technology solutions, and new litigation management tools, and enhancing the interaction of the Legal Department with the other business units. The cost management objective was achieved, and the strategic objectives were met or partially met, resulting in an 85% payout of this bonus component.
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| – | Corporate Governance Goals (4%): These goals relate to continuing improvements in our internal control processes, ethics compliance procedures and safety protocols that the Compensation Committee believes will generally benefit stockholders. |
Achievement of each of the target financial goals generates a variable target bonus payment (base case); reduced bonuses are payable on a pro rata basis for each financial goal component, starting at achievement of in excess of 80% of the target financial goal component amount up to 140% of the target financial goal component amount. Each 1% variance in actual achievement from the 100% level generates a 5% variance in the target bonus amount for that component, and no bonus is payable in respect of these components if achievement is 80% or less of the target financial component goal amount. Increased bonuses (up to 300% of the target bonus amount for each component) are payable on a pro rata basis for each financial goal component amount achieved. The non-financial goals are measured based on whether or not the goal is either accomplished or not accomplished during the fiscal year.
Under the 2012 Bonus Plan, the Compensation Committee set the following cash bonus target amounts for each of Mr. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr. Reinhold, assuming achievement of the 2012 Bonus Plan financial and non-financial goals at 100% base case target levels:
Richard Leeds | | $ | 1,100,000 | |
Bruce Leeds | | $ | 750,000 | |
Robert Leeds | | $ | 750,000 | |
Lawrence Reinhold | | $ | 825,000 | |
The Compensation Committee believes these bonus levels are appropriate for each of the named executive officers; these bonus levels are the same as those that were set for the named executive officers in 2011. The 2012 salary increases reflect the Compensation Committee’s view that such increases are appropriate in light of 2012 NEO bonuses being set at the same level as 2011.
The 2012 Bonus Plan imposed a cap on the total bonus that could be payable to any executive whose bonus was 100% earned based upon the NEO plan at 260% of the target base case bonus. The Compensation Committee had the discretion to adjust financial targets based on such events as acquisitions or other one-time charges or gains, or other unforeseen circumstances that can skew normal operating results. Targets and bonuses are also subject to adjustment to prevent unreasonable results in the strict application of these formulas. Executives must generally be employed with the Company at the time the bonuses are paid out to receive the bonus.
In addition, the Board can demand repayment to the Company of any cash bonuses paid in the event that (i) the executive’s misconduct caused the Company to restate its reported financial results; (ii) the reported results created a bonus that would not have been paid based on the restated results, or (ii) the executive engages in serious ethical misconduct.
Compensation of NEOs in 20142015
In determining the compensation of the Company’s Chief Executive Officer for fiscal year 20142015 and approving the compensation of the Company’s other NEOs, the Committee considered, among the other factors discussed above, the achievement of the performance based criteria established under the 20142015 Bonus Plan.
The Compensation Committee determined that the Company and management had performed adequately, particularly given trends in the general economic environment and in the technology products industry in which the Company competesCompany’s North American Technology Group formerly competed that had affected the Company’s business throughout fiscal year 2014.2015. It was the view of the Compensation Committee that management had executed acceptably on strategic business initiatives to position the Company for growth while managing risk. Based on Company and individual performance, the Compensation Committee believes that compensation levels for fiscal year 20142015 were consistent with the philosophy and objectives of the Company’s compensation programs. The Compensation Committee determined that the Company met or substantially met its 20142015 corporate governance non-financial goals, including for the Industrial Products Group, described above, but did not achieve its NA Tech B2B restructuring goals, and met or substantially metonly achieved 50% of its strategic goals. In this regard theEuropean Technology Products Group objectives. The Compensation Committee also exercised its discretion to provide partial achievement credit for one strategic goal that was only partially achieved, resultingreset the sales growth target and adjusted operating income growth target to eliminate the contribution of the NA Tech business exited in a 93.75% payout of this bonus component.2015. The CompanyCompany’s revised sales growth target of $3.35$1.905 billion was 100%99%% achieved after adjusting for the exit from the NA Tech business and constant currency, and removing the revenue generated from an acquisition completed in the Netherlands in June 2014, resulting in a 100%95% payout of this bonus component. Furthermore, the Company partially achieved its 2014minimum 2015 adjusted operating income financial goal,growth target, resulting in a 35%80% payment of this bonus component. In this regard the Compensation Committee exercised its discretion to effect adjustments (i.e., eliminating the effect on earnings of certain expenses that were outside the ordinary course of business) relating to restructuring charges in Europe, the Netherlands acquisition, recruitment costs related to the Hungary shared business center and special bonuses in the Industrial Products Group. Accordingly, pursuant to the 20142015 Bonus Plan formulas, 20142015 non-equity incentive plan/bonus compensation for each Named Executive Officer was paid at 60%80% of the target level. However,level (50% of which was waived by each of Messrs. Richard, Leeds requested that his bonus be reduced to $150,000,Robert and Bruce and Robert Leeds each requested that their bonus be reduced to $100,000 each (a reduction of $651,000, $397,000 and $397,000 respectively)Leeds).
The 20142015 threshold, target and maximum bonus amounts for each of our Named Executive Officers are found in the Grants of Plan-Based Awards table on page 39.37.
Employment Arrangements of the Named Executive Officers
Richard Leeds
Richard Leeds has no employment agreement and is an “at will” employee. Base salary accounted for 80%55% and bonus accounted for 17%42% of Mr. Leeds total cash compensation for 2014. Mr. Leeds salary for 2015 is set at $731,000.2015. Mr. Leeds’ bonus for 20142015 was determined as described above under the heading 20142015 NEO Cash Bonus Plan.Plan; however, Mr. Leeds waived 50% ($560,000 of his 2015 bonus, and actual 2015 bonus paid was $560,000). Mr. Leeds salary for 2016 is set at $734,450.
Bruce Leeds
Bruce Leeds has no employment agreement and is an “at will” employee. Base salary accounted for 82%61% and bonus accounted for 14%36% of Mr. Leeds total cash compensation for 2014. Mr. Leeds salary for 2015 is set at $599,000.2015. Mr. Leeds’ bonus for 20142015 was determined as described above under the heading 20142015 NEO Cash Bonus Plan.Plan; however, Mr. Leeds waived 50% ($351,000 of his 2015 bonus, and actual 2015 bonus paid was $351,000). Mr. Leeds salary for 2016 is set at $600,000.
Robert Leeds
Robert Leeds has no employment agreement and is an “at will” employee. Base salary accounted for 82%61% and bonus accounted for 14%36% of Mr. Leeds total cash compensation for 2014. Mr. Leeds salary for 2015 is set at $607,000.2015. Mr. Leeds’ bonus for 20142015 was determined as described above under the heading 20142015 NEO Cash Bonus Plan.Plan; however, Mr. Leeds waived 50% ($351,000 of his 2015 bonus, and actual 2015 bonus paid was $351,000). Mr. Leeds salary for 2016 is set at $604,000.
Lawrence Reinhold
The Company entered into an employment agreement with Mr. Reinhold on January 17, 2007. The agreement provides for a minimum base salary of $400,000 (which may be increased 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’s financial performance objectives) established for him by the Company. He is entitled to receive a car allowance or a Company-leased car.
Base salary accounted for 52%53% and bonus accounted for 46%45% of Mr. Reinhold’s total cash compensation for 2014. His salary for 2015 is set at $695,000.2015. Mr. Reinhold’s bonus for 20142015 was determined as described above under the heading 20142015 NEO Cash Bonus Plan.
Mr. Reinhold’s salary for 2016 is set at $717,000. In February 2016, Mr. Reinhold received a grant of 50,000 restricted stock units under the 2010 Long-Term Incentive Plan, which vest in three installments: 16,667 Shares on February 1, 2017; 16,667 Shares on February 1, 2018 and 16,666 Shares February 1, 2019. In addition in February 2016, Mr. Reinhold was granted an option to purchase 50,000 Shares of common stock pursuant to the 2010 Long-Term Incentive Plan (vesting over a period of four years with 25% of the options vesting on the first, second, third and fourth anniversary dates of the grant date).
Compensation that may become payable following the termination of his employment or a change in control of the company, and other terms of the employment agreement related to such events, are discussed below under “—Potential Payments Upon Termination or Change in Control.”
Robert Dooley
Mr. Dooley has no employment agreement and is an “at will” employee. Base salary accounted for 56% and bonus accounted for 41% of Mr. Dooley’s total cash compensation for 2014. Mr. Dooley’s salary for 2015 is set at $475,000. Mr. Dooley’s bonus for 2014 was determined as described above under the heading 2014 NEO Cash Bonus Plan.
In March 2012, Mr. Dooley received a grant of 50,000 restricted stock units under the 2010 Long-Term Incentive Plan. The restricted stock units vest in ten equal annual installments of 5,000 units each, beginning March 1, 2013. In addition in March 2012 Mr. Dooley was granted an option to purchase 50,000 shares of common stock pursuant to the 2010 Long-Term Incentive Plan (vesting over a period of four years with 25% of the options vesting on the first, second, third and fourth anniversary dates of the grant date).
In March 2014, the Company entered into a performance award based special bonus agreement with Mr. Dooley. Pursuant to such bonus agreement, Mr. Dooley will have the ability to earn a $10,000,000 bonus, payable over three years from December 31, 2016 to December 31, 2018 (half in cash and half in Company stock that is issued pursuant to the 2010 Long-Term Incentive Plan, or at the Company’s option, all in cash). The bonus payment is based on the achievement of a cumulative threshold operating income target of the Industrial Products Group for the three fiscal years ended December 31, 2014, 2015 and 2016 (and the maintenance of a minimum gross margin level in achieving such income level in each such year as well as for the years ended December 31, 2017 and 2018). This special bonus plan aligns Mr. Dooley’s incentives with long term employment and also aligns cumulative earnings of the Industrial Products Group with long-term stockholder value.
Eric Lerner
The Company entered into an employment agreement with Mr. Lerner on April 12, 2012. The agreement provides for a minimum base salary of $480,000 (which may be increased 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. Lerner meets certain performance objectives (50% of such bonus is based on the performance objective for the Company under its NEO cash bonus plan for the applicable year and 50% of such bonus is based on the achievement of performance objectives established for him by the Company). He is entitled to receive a car allowance.
Base salary accounted for 48% and bonus accounted for 32% of Mr. Lerner total cash compensation for 2014. Mr. Lerner’s salary for 2015 is set at $552,000. Mr. Lerner’s non-equity incentive compensation for 2014 was determined as described above under the heading 2014 NEO Cash Bonus Plan. In addition, he received $170,000 as a discretionary bonus in consideration of his overall performance in 2014, including significant cost savings achieved.
Pursuant to his employment agreement, in May 2012 Mr. Lerner was granted an option to purchase 25,000 shares of common stock pursuant to the 2010 Long-Term Incentive Plan (vesting over a period of four years with 25% of the options vesting on the first, second, third and fourth anniversary dates of the grant date). In addition, his employment agreement provides on each of the first, second and third anniversary date of his commencement date he will receive an additional option to acquire at least an additional 25,000 shares of Company’s common stock (each grant will vest over a period of four years with 25% of the options for each grant vesting on the first, second, third and fourth anniversary dates of such grant dates). The decision by the Compensation Committee to award Mr. Lerner stock options was based on a desire to align his interests with those of the Company’s stockholders.
Compensation that may become payable following the termination of his employment, and other terms of the employment agreement related to such event, are discussed below under “—Potential Payments Upon Termination or Change in Control.”
Compensation Committee Report to Stockholders*The Compensation Committee of the Board 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 our management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement on Schedule 14A.
COMPENSATION COMMITTEE
Robert Rosenthal (Chairman)
Stacy Dick
Marie Adler-Kravecas
| * | The 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 filings under the Securities Act of 1933, as amended, which we refer to as the Securities Act, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference into any such filing. |
Compensation Committee Interlocks and Insider ParticipationThe members of the Company’s Compensation Committee for fiscal year 2014 were Robert Rosenthal, Stacy Dick and Marie Adler-Kravecas. The Company does not employ any member of the Compensation Committee and no member of the Compensation Committee has ever served as an officer of the Company. In addition, none of our directors serving on the Compensation Committee has any relationship that requires disclosure under SEC regulations.
SUMMARY COMPENSATION TABLEThe following table sets forth the compensation earned by the Named Executive Officers for fiscal years 2012, 2013 and 2014:
Name and Principal Position | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) (1) | | | Non-Equity Incentive Plan Compensation ($) (2) | | | All Other Compensation ($) | | | Total ($) | |
Richard Leeds | 2014 | | | 701,000 | | | | | | | | | | | | | | | | 150,000 | | | | 25,200 | (3) | | | 876,200 | |
Chairman and Chief | 2013 | | | 670,000 | | | | | | | | | | | | | | | | 100,000 | | | | 16,800 | | | | 786,800 | |
Executive Officer | 2012 | | | 648,000 | | | | | | | | | | | | | | | | 396,000 | | | | 21,477 | | | | 1,065,477 | |
Bruce Leeds | 2014 | | | 568,000 | | | | | | | | | | | | | | | | 100,000 | | | | 25,200 | (3) | | | 693,200 | |
Vice Chairman | 2013 | | | 547,000 | | | | | | | | | | | | | | | | 100,000 | | | | 24,000 | | | | 671,000 | |
| 2012 | | | 526,000 | | | | | | | | | | | | | | | | 270,000 | | | | 21,600 | | | | 817,600 | |
Robert Leeds | 2014 | | | 577,000 | | | | | | | | | | | | | | | | 100,000 | | | | 25,200 | (3) | | | 702,200 | |
Vice Chairman and | 2013 | | | 554,000 | | | | | | | | | | | | | | | | 100,000 | | | | 24,000 | | | | 678,000 | |
Chief Executive-North American Technology Products Group | 2012 | | | 538,000 | | | | | | | | | | | | | | | | 270,000 | | | | 21,600 | | | | 829,600 | |
Lawrence Reinhold | 2014 | | | 660,000 | | | | | | | | | | | | | | | | 580,500 | | | | 29,100 | (4) | | | 1,269,600 | |
Executive Vice President | 2013 | | | 632,000 | | | | | | | | | | | | | | | | 268,125 | | | | 28,000 | | | | 928,125 | |
and Chief Financial Officer | 2012 | | | 608,000 | | | | | | | | | | | | | | | | 297,000 | | | | 82,850 | | | | 987,850 | |
Robert Dooley | 2014 | | | 450,000 | | | | | | | | | | | | | | | | 331,000 | | | | 21,900 | (5) | | | 802,900 | |
President of the Company’s Industrial Products Group | 2013 | | | 415,000 | | | | | | | | | | | | | | | | 313,000 | | | | 22,750 | | | | 750,750 | |
Eric Lerner | 2014 | | | 532,000 | | | | 170,000 | | | | | | | | 196,750 | | | | 185,000 | | | | 21,900 | (5) | | | 1,105,650 | |
Senior Vice President and General Counsel | 2013 | | | 516,000 | | | | | | | | | | | | 154,203 | | | | 149,000 | | | | 21,750 | | | | 840,953 | |
(1) | This column represents the fair value of the stock option on the grant date determined in accordance with the provisions of ASC 718. 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 9 to our audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2014. |
(2) | The 2012 figures in this column represent the amount earned in fiscal year 2012 (although paid in fiscal year 2013) pursuant to the 2012 Bonus Plan; the 2013 figures in this column represent the amount earned in fiscal year 2013 (although paid in fiscal year 2014) pursuant to the 2013 Bonus Plan and the 2014 figures in this column represent the amount earned in fiscal year 2014 (although paid in fiscal year 2015) pursuant to the 2014 Bonus Plan. For more information, see the Grants of Plan-Based Awards table below. Because these payments were based on predetermined performance metrics, these amounts are reported in the Non-Equity Incentive Plan column. |
(3) | Auto-related expenses. |
(4) | Includes auto-related expenses ($25,200) and Company 401(k) contributions ($3,900). |
(5) | Includes auto-related expenses ($18,000) and Company 401(k) contributions ($3,900). |
GRANTS OF PLAN-BASED AWARDSThe following table sets forth the estimated possible payouts under the cash incentive awards granted to our Named Executive Officers in respect of 2014 performance under the 2014 NEO Plan.
Name | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards | |
| | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | | | | | | | | | | | |
Richard Leeds | | | | 268,000 | | | | 1,340,000 | | | | 3,484,000 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Bruce Leeds | | | | 166,500 | | | | 832,500 | | | | 2,164,500 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert Leeds | | | | 166,500 | | | | 832,500 | | | | 2,164,500 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lawrence Reinhold | | | | 193,500 | | | | 967,000 | | | | 2,515,500 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert Dooley | | | | 90,000 | | | | 450,000 | | | | 900,000 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Eric Lerner | 5/2/14 | | | 127,500 | | | | 255,000 | | | | 459,000 | | | | - | | | | 25,000 | (2) | | | $16.61 | | | | $7.87 | |
(1) | Amount presented assume payment of threshold, target and maximum awards at the applicable level. |
(2) | The options awarded to Mr. Lerner in May 2014 vest in equal portions on the first, second, third and fourth anniversaries of the grant date, subject to certain restrictions and acceleration events. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2014The following table sets forth information regarding stock option and restricted stock awards previously granted which were outstanding at the end of fiscal year 2014.
The market value of the unvested stock award is based on the closing price of one share of our common stock as of December 26, 2014, the last trading day of the 2014 fiscal year, which was $13.58.
| | Option Awards | | | | Stock Awards | |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | |
Lawrence Reinhold | | | 100,000 | | | | - | | | | $20.15 | | 1/17/17 | | | - | | | | - | |
| | | 50,000 | | | | - | | | | $11.51 | | 3/13/18 | | | - | | | | - | |
| | | 100,000 | | | | - | | | | $13.19 | | 5/18/19 | | | 105,000 | (3) | | | $1,425,900 | |
| | | 37,500 | | | | 12,500 | (1) | | | $14.30 | | 11/14/21 | | | 70,000 | (4) | | | $950,600 | |
| | | | | | | | | | | | | | | | | | | | | |
Robert Dooley | | | 10,000 | | | | - | | | | $19.39 | | 6/7/17 | | | - | | | | - | |
| | | 25,000 | | | | 25,000 | (1) | | | $18.73 | | 3/1/22 | | | 40,000 | (5) | | | $543,200 | |
| | | | | | | | | | | | | | | | | | | | | |
Eric Lerner | | | 12,500 | | | | 12,500 | (1) | | | $14.55 | | 5/3/22 | | | - | | | | - | |
| | | 6,250 | | | | 18,750 | (1) | | | $9.53 | | 5/3/23 | | | - | | | | - | |
| | | - | | | | 25,000 | (1)(2) | | | $16.61 | | 5/2/24 | | | - | | | | - | |
(1) | Options vest 25% per year over four years from date of grant. |
(2) | Not treated as outstanding on December 27, 2014. |
(3) | Restricted stock units vest in ten equal annual installments of 17,500 beginning May 15, 2011. |
(4) | Restricted stock units vest in ten equal annual installments of 10,000 beginning November 14, 2012. |
(5) | Restricted stock units vest in ten equal annual installments of 5,000 beginning March 1, 2013. |
OPTION EXERCISES AND STOCK VESTEDThe following table sets forth information regarding exercise of options to purchase shares of the Company’s common stock and vesting of restricted stock units by the Named Executive Officers that exercised options or whose restricted stock units vested during fiscal year 2014:
| | Option Awards | | | Stock Awards | |
Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) (1) | |
Lawrence Reinhold | | | - | | | | - | | | | 17,500 | (2) | | | $270,375 | |
| | | | | | | | | | | 10,000 | (3) | | | $152,900 | |
| | | | | | | | | | | | | | | | |
Robert Dooley | | | - | | | | - | | | | 5,000 | (4) | | | $58,850 | |
| | | | | | | | | | | | | | | | |
Eric Lerner | | | - | | | | - | | | | - | | | | - | |
(1) | The amount in this column reflects the aggregate dollar amount realized upon the vesting of the restricted stock unit, determined by the market value of the underlying shares of common stock on the vesting date. |
(2) | Pursuant to a grant of restricted stock units on August 25, 2010, the restricted stock units vest in ten equal annual installments of 17,500 units each, beginning on May 15, 2011. |
(3) | Pursuant to a grant of restricted stock units on November 14, 2011, the restricted stock units vest in ten equal annual installments of 10,000 units each, beginning on November 14, 2012. |
(4) | Pursuant to a grant of restricted stock units on March 1, 2012, the restricted stock units vest in ten equal annual installments of 5,000 units each, beginning on March 1, 2013. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLLawrence Reinhold
Mr. Reinhold’s employment agreement is terminable upon death or total disability, by the Company for “cause” (as defined) or without cause, or by Mr. Reinhold voluntarily for any reason or for “good reason” (as defined). In the event of termination for death, disability, cause or voluntary termination by Mr. Reinhold, the Company will owe no further payments other than as applicable under disability or medical plans and any accrued but unused vacation time (up to four weeks). In the event of termination for disability or death, Mr. Reinhold would also receive the pro rata portion of any bonus which would otherwise be paid based on the average annual bonus received for the prior two years. 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 in addition to the payments described above for other terminations, 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 bonus based on his average annual bonus for the prior two years and a reimbursement of costs for COBRA insurance coverage. A “Change in Control” means: (i) approval by the stockholders of the Company of (I) a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which the Majority Stockholders (as defined) cease to own, directly or indirectly, in the aggregate at least forty percent (40%) of the then outstanding shares of the Parent’s common stock or the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities, in substantially the same proportions as their ownership immediately prior to such reorganization, merger, consolidation or other transaction, or (II) the sale of all or substantially all of the assets of the Company; (ii) the acquisition by any person, entity or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of beneficial ownership within the meaning of Rule 13-d promulgated under the Securities Exchange Act which would result in the Majority Stockholders ceasing to own, directly or indirectly, in the aggregate, at least forty percent (40%) of the then outstanding shares of the Company’s common stock; or (iii) the approval by the stockholders of the Company of the complete liquidation or dissolution of the Company.
If Mr. Reinhold is terminated for cause, any unvested portion of his restricted stock units will terminate and be forfeited. In the event of a change in control, Mr. Reinhold will become immediately vested in all of the restricted stock units held by him as of the date of the change in control. If Mr. Reinhold’s employment is terminated without cause or for good reason, he will become immediately vested in all non-vested units and will become immediately entitled to a distribution of that number of shares of common stock of the Company that are represented by those vested restricted stock units. If Mr. Reinhold’s employment is terminated due to disability or death, his estate or designated beneficiary(ies), whichever is applicable, will become immediately vested in 50% of the non-vested restricted stock units.
Pursuant to the Company’s standard option agreements, in the event Mr. Reinhold’s employment is terminated for any reason other than death, disability or cause, the vested portions of his options will be exercisable for up to three months, and the unvested portion will be forfeited. In the event of death or disability, the vested portion of his option will be exercisable for up to one year, and the unvested portion will be forfeited. In the event of termination for cause, all unexercised options (vested and unvested) will be forfeited.
Robert Dooley
Pursuant to Mr. Dooley’s restricted stock unit agreement, if Mr. Dooley is terminated for cause, any unvested portion of his restricted stock units will terminate and be forfeited. In the event of a change in control, Mr. Dooley will become immediately vested in all of the restricted stock units held by him as of the date of the change in control. If Mr. Dooley’s employment is terminated without cause or for good reason, he will become immediately vested in all non-vested units and will become immediately entitled to a distribution of that number of shares of common stock of the Company that are represented by those vested restricted stock units. If Mr. Dooley’s employment is terminated due to disability or death, his estate or designated beneficiary(ies), whichever is applicable, will become immediately vested in 50% of the non-vested restricted stock units.
Eric Lerner
The Company entered into an employment agreement with Mr. Lerner on April 12, 2012. The agreement provides for a minimum base salary of $480,000 (which may be increased 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. Lerner meets certain performance objectives (50% of such bonus is based on the performance objective for the Company under its NEO cash bonus plan for the applicable year and 50% of such bonus is based on the achievement of performance objectives established for him by the Company). He is entitled to receive a car allowance.
Base salary accounted for 65% and bonus accounted for 32% of Mr. Lerner total cash compensation for 2015. Mr. Lerner’s non-equity incentive compensation for 2015 was determined as described above under the heading 2015 NEO Cash Bonus Plan, except that Mr. Lerner also received a discretionary bonus of $169,000 in respect of his work on the disposition of the NA Tech business.
Mr. Lerner’s salary for 2016 is set at $576,000. In February 2016, Mr. Lerner received a grant of 25,000 restricted stock units under the 2010 Long-Term Incentive Plan, which vest in three installments: 8,334 Shares on February 1, 2017; 8,333 Shares on February 1, 2018 and 8,333 Shares February 1, 2019. In addition in February 2016, Mr. Reinhold was granted an option to purchase 25,000 Shares of common stock pursuant to the 2010 Long-Term Incentive Plan (vesting over a period of four years with 25% of the options vesting on the first, second, third and fourth anniversary dates of the grant date).
Pursuant to his employment agreement, in May 2012 Mr. Lerner was granted an option to purchase 25,000 Shares of common stock pursuant to the 2010 Long-Term Incentive Plan (vesting over a period of four years with 25% of the options vesting on the first, second, third and fourth anniversary dates of the grant date). In addition, his employment agreement provides on each of the first, second and third anniversary dates of his commencement date he will receive an additional option to acquire at least an additional 25,000 Shares of Company’s common stock (each grant will vest over a period of four years with 25% of the options for each grant vesting on the first, second, third and fourth anniversary dates of such grant dates). The decision by the Compensation Committee to award Mr. Lerner stock options was based on a desire to align his interests with those of the Company’s stockholders.
Compensation that may become payable following the termination of his employment, and other terms of the employment agreement related to such event, are discussed below under “—Potential Payments Upon Termination or Change in Control.”
Compensation Committee Report to Stockholders*
The Compensation Committee of the Board 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 our management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement on Schedule 14A.
COMPENSATION COMMITTEE
Robert D. Rosenthal (Chairman)
Stacy Dick
Marie Adler-Kravecas
| * | The 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 filings under the Securities Act of 1933, as amended, which we refer to as the Securities Act, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference into any such filing. |
Compensation Committee Interlocks and Insider Participation
The members of the Company’s Compensation Committee for fiscal year 2015 were Mr. Rosenthal, Mr. Dick and Ms. Adler-Kravecas. The Company does not employ any member of the Compensation Committee and no member of the Compensation Committee has ever served as an officer of the Company. In addition, none of our directors serving on the Compensation Committee has any relationship that requires disclosure under SEC regulations.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by the Named Executive Officers for fiscal years 2013, 2014 and 2015:
Name and Principal Position | Year | | Salary ($) | | Bonus ($) | Stock Awards ($) | Option Awards ($) (1) | | Non-Equity Incentive Plan Compensation ($) (2) | | | All Other Compensation ($) | | | Total ($) | |
Richard Leeds | 2015 | | 731,000 | | | | | | | 560,000 | | | | 29,200 | (3) | | | 1,320,200 | |
Executive Chairman | 2014 | | 701,000 | | | | | | | 150,000 | | | | 25,200 | | | | 876,200 | |
| 2013 | | 670,000 | | | | | | | 100,000 | | | | 16,800 | | | | 786,800 | |
Bruce Leeds | 2015 | | 599,000 | | | | | | | 351,000 | | | | 29,200 | (3) | | | 979,200 | |
Vice Chairman | 2014 | | 568,000 | | | | | | | 100,000 | | | | 25,200 | | | | 693,200 | |
| 2013 | | 547,000 | | | | | | | 100,000 | | | | 24,000 | | | | 671,000 | |
Robert Leeds | 2015 | | 607,000 | | | | | | | 351,000 | | | | 29,200 | (3) | | | 987,200 | |
Vice Chairman | 2014 | | 577,000 | | | | | | | 100,000 | | | | 25,200 | | | | 702,200 | |
| 2013 | | 554,000 | | | | | | | 100,000 | | | | 24,000 | | | | 678,000 | |
Lawrence Reinhold | 2015 | | 694,000 | | | | | | | 816,000 | | | | 33,100 | (4) | | | 1,543,100 | |
President, Chief Executive | 2014 | | 660,000 | | | | | | | 580,500 | | | | 29,100 | | | | 1,269,600 | |
Officer and Interim Chief Financial Officer | 2013 | | 632,000 | | | | | | | 268,125 | | | | 28,000 | | | | 928,125 | |
Eric Lerner | 2015 | | 552,000 | | 169,000 | | 111,000 | | | 106,000 | | | | 21,900 | (5) | | | 959,900 | |
Senior Vice President and | 2014 | | 532,000 | | 170,000 | | 196,750 | | | 185,000 | | | | 21,900 | | | | 1,105,650 | |
General Counsel | 2013 | | 516,000 | | | | 154,203 | | | 149,000 | | | | 21,750 | | | | 840,953 | |
(1) | This column represents the fair value of the stock option on the grant date determined in accordance with the provisions of ASC 718. 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 10 to our audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2015. |
(2) | The 2013 figures in this column represent the amount earned in fiscal year 2013 (although paid in fiscal year 2014) pursuant to the 2013 Bonus Plan, the 2014 figures in this column represent the amount earned in fiscal year 2014 (although paid in fiscal year 2015) pursuant to the 2014 Bonus Plan and the 2015 figures in this column represent the amount earned in fiscal year 2015 (although paid in fiscal year 2016) pursuant to the 2015 Bonus Plan. For more information, see the Grants of Plan-Based Awards table below. Because these payments were based on predetermined performance metrics, these amounts are reported in the Non-Equity Incentive Plan column. |
(3) | Auto-related expenses. |
(4) | Includes auto-related expenses ($29,200) and Company 401(k) contributions ($3,900). |
(5) | Includes auto-related expenses ($18,000) and Company 401(k) contributions ($3,900). |
GRANTS OF PLAN-BASED AWARDS
The following table sets forth the estimated possible payouts under the cash incentive awards granted to our Named Executive Officers in respect of 2015 performance under the 2015 NEO Plan.
Name | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards | |
| | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | | | | | | | | | | | |
Richard Leeds | | | | 280,000 | | | | 1,400,000 | | | | 3,640,000 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Bruce Leeds | | | | 175,000 | | | | 877,500 | | | | 2,281,500 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert Leeds | | | | 175,000 | | | | 877,500 | | | | 2,281,500 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lawrence Reinhold | | | | 204,000 | | | | 1,020,000 | | | | 2,652,000 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Eric Lerner | 5/2/15 | | | 53,000 | | | | 265,000 | | | | 477,000 | | | | - | | | | 25,000 | (2) | | $ | 10.62 | | | $ | 4.44 | |
(1) | Amounts presented assume payment of threshold, target and maximum awards at the applicable level. |
(2) | The options awarded to Mr. Lerner in May 2015 vest in equal portions on the first, second, third and fourth anniversaries of the grant date, subject to certain restrictions and acceleration events. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2015
The following table sets forth information regarding stock option and restricted stock awards previously granted which were outstanding at the end of fiscal year 2015.
The market value of the unvested stock award is based on the closing price of one share of our common stock as of December 31, 2015, the last trading day of the 2015 fiscal year, which was $8.60.
| | Option Awards | | Stock Awards | |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | |
Lawrence Reinhold | | | 100,000 | | | | - | | | $ | 20.15 | | 1/17/17 | | | - | | | | - | |
| | | 50,000 | | | | - | | | $ | 11.51 | | 3/13/18 | | | - | | | | - | |
| | | 100,000 | | | | - | | | $ | 13.19 | | 5/18/19 | | | 87,500 | (2) | | $ | 752,500 | |
| | | 50,000 | | | | - | | | $ | 14.30 | | 11/14/21 | | | 60,000 | (3) | | $ | 516,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Eric Lerner | | | 18,750 | | | | 6,250 | (1) | | $ | 14.55 | | 5/3/22 | | | - | | | | - | |
| | | 12,500 | | | | 12,500 | (1) | | $ | 9.53 | | 5/3/23 | | | - | | | | - | |
| | | 6,250 | | | | 18,750 | (1) | | $ | 16.61 | | 5/2/24 | | | - | | | | - | |
| | | - | | | | 25,000 | (1) | | $ | 10.62 | | 5/2/25 | | | - | | | | - | |
(1) | Options vest 25% per year over four years from date of grant. |
(2) | Restricted stock units vest in ten equal annual installments of 17,500 beginning May 15, 2011. |
(3) | Restricted stock units vest in ten equal annual installments of 10,000 beginning November 14, 2012. |
OPTION EXERCISES AND STOCK VESTED
The following table sets forth information regarding exercise of options to purchase Shares of the Company’s common stock and vesting of restricted stock units by the Named Executive Officers that exercised options or whose restricted stock units vested during fiscal year 2015:
| | Option Awards | | | Stock Awards | |
Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) (1) | |
Lawrence Reinhold | | | - | | | | - | | | | 17,500(2) | | | $ | 169,575 | |
| | | | | | | | | | | 10,000(3) | | | $ | 89,000 | |
Eric Lerner | | | - | | | | - | | | | - | | | | - | |
(1) | The amount in this column reflects the aggregate dollar amount realized upon the vesting of the restricted stock unit, determined by the market value of the underlying Shares of common stock on the vesting date. |
(2) | Pursuant to a grant of restricted stock units on August 25, 2010, the restricted stock units vest in ten equal annual installments of 17,500 units each, beginning on May 15, 2011. |
(3) | Pursuant to a grant of restricted stock units on November 14, 2011, the restricted stock units vest in ten equal annual installments of 10,000 units each, beginning on November 14, 2012. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Lawrence Reinhold
Mr. Reinhold’s employment agreement is terminable upon death or total disability, by the Company for “cause” (as defined) or without cause, or by Mr. Reinhold voluntarily for any reason or for “good reason” (as defined). In the event of termination for death, disability, cause or voluntary termination by Mr. Reinhold, the Company will owe no further payments other than as applicable under disability or medical plans and any accrued but unused vacation time (up to four weeks). In the event of termination for disability or death, Mr. Reinhold would also receive the pro rata portion of any bonus which would otherwise be paid based on the average annual bonus received for the prior two years. 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 in addition to the payments described above for other terminations, 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 bonus based on his average annual bonus for the prior two years and a reimbursement of costs for COBRA insurance coverage. A “Change in Control” means: (i) approval by the stockholders of the Company of (I) a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which the Majority Stockholders (as defined) cease to own, directly or indirectly, in the aggregate at least forty percent (40%) of the then outstanding shares of the Company’s common stock or the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities, in substantially the same proportions as their ownership immediately prior to such reorganization, merger, consolidation or other transaction, or (II) the sale of all or substantially all of the assets of the Company; (ii) the acquisition by any person, entity or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of beneficial ownership within the meaning of Rule 13-d promulgated under the Securities Exchange Act which would result in the Majority Stockholders ceasing to own, directly or indirectly, in the aggregate, at least forty percent (40%) of the then outstanding shares of the Company’s common stock; or (iii) the approval by the stockholders of the Company of the complete liquidation or dissolution of the Company.
If Mr. Reinhold is terminated for cause, any unvested portion of his restricted stock units will terminate and be forfeited. In the event of a change in control, Mr. Reinhold will become immediately vested in all of the restricted stock units held by him as of the date of the change in control. If Mr. Reinhold’s employment is terminated without cause or for good reason, he will become immediately vested in all non-vested units and will become immediately entitled to a distribution of that number of Shares of common stock of the Company that are represented by those vested restricted stock units. If Mr. Reinhold’s employment is terminated due to disability or death, his estate or designated beneficiary(ies), whichever is applicable, will become immediately vested in 50% of the non-vested restricted stock units.
Pursuant to the Company’s standard option agreements, in the event Mr. Reinhold’s employment is terminated for any reason other than death, disability or cause, the vested portions of his options will be exercisable for up to three months, and the unvested portion will be forfeited. In the event of death or disability, the vested portion of his option will be exercisable for up to one year, and the unvested portion will be forfeited. In the event of termination for cause, all unexercised options (vested and unvested) will be forfeited.
Eric Lerner
Mr. Lerner’s employment agreement is terminable upon death or total disability, by the Company for “cause” (as defined) or without cause, or by Mr. Lerner voluntarily for any reason or for “good reason” (as defined). In the event of termination for death, disability, cause or voluntary termination by Mr. Lerner, the Company will owe no further payments other than as applicable under disability or medical plans and any accrued but unused vacation time (up to four weeks). In the event of termination for disability or death, Mr. Lerner would also receive the pro rata portion of any bonus which would otherwise be paid based on the average annual bonus received for the prior two years. If Mr. Lerner resigns for good reason or if the Company terminates him for any reason other than disability, death or cause, he shall also receive in addition to the payments described above for other terminations, severance payments equal to 12 months’ base salary, one year’s bonus based on his average annual bonus for the prior two years and a reimbursement of costs for COBRA insurance coverage for twelve months.
Pursuant to the Company’s standard option agreements, in the event Mr. Lerner’s employment is terminated for any reason other than death, disability or cause, the vested portions of his options will be exercisable for up to three months, and the unvested portion will be forfeited. In the event of death or disability, the vested portion of his option will be exercisable for up to one year, and the unvested portion will be forfeited. In the event of termination for cause, all unexercised options (vested and unvested) will be forfeited. If Mr. Lerner’s employment is terminated without cause or for good reason within six months following a “change in control”, he will become immediately vested in all outstanding unvested stock options, and all of Mr. Lerner’s outstanding options shall remain exercisable in accordance with their terms, but in no event for less than 90 days after such termination.
Termination of Employment Without Change In Control
The following table sets forth the severance payments that would have been made had the employment of Mr. Reinhold Mr. Dooley or Mr. Lerner been terminated by the Company without cause or by them for “good reason” in a situation not involving a change in control, based on a hypothetical termination date of December 27, 2013,January 2, 2016, the last day of the Company’s fiscal year 2014,2015, and using the closing price of our common stock on December 26, 2013,31, 2015, the last trading day of the 20142015 fiscal year. These amounts are estimates and the actual amounts to be paid can only be determined at the time of the termination of the officer’s employment.
Name | | Cash Compensation (Salary and Bonus) ($) | | | Value of Accelerated Vesting of Stock & Option Awards ($) | | | Medical and Other Benefits ($) | | | Total ($) | | | Cash Compensation (Salary and Bonus) ($) | | | Value of Accelerated Vesting of Stock & Option Awards ($) | | | Medical and Other Benefits ($) | | | Total ($) | |
Lawrence Reinhold | | | 1,084,300 | (1) | | | 2,376,500 | (2) | | | 19,787 | (3) | | | 3,480,587 | | | | 1,392,250(1) | | | | 1,268,500(2) | | | | 12,614(3) | | | | 2,673,364 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert Dooley | | | - | | | | 543,200 | (4) | | | - | | | | 543,200 | | |
| | | | | | | | | | | | | | | | | |
Eric Lerner | | | 784,000 | (5) | | | - | | | | 29,338 | (3) | | | 813,338 | | | | 867,000(4) | | | | - | | | | 26,696(3) | | | | 893,696 | |
(1) | Represents one year’s salary of $660,000$694,000 and an average yearly cash bonus of $424,300$698,250 paid to Mr. Reinhold for fiscal years 20132014 and 2014.2015. Mr. Reinhold would also receive the bonus amount in the event of his death or disability. |
(2) | Represents accelerated vesting of 175,000147,500 unvested restricted stock units granted to Mr. Reinhold if terminated without cause or for good reason. In the event of Mr. Reinhold’s death or disability, 87,50073,750 restricted stock units (50% of the unvested restricted stock units at December 27, 2014)January 2, 2016) would vest, having a value of $1,188,250,$634,250, based on a termination date of December 27, 2014January 2, 2016 and using a closing price of our stock on December 26, 2014,31, 2015, the last trading day of the 20142015 fiscal year. |
(3) | Represents reimbursement of medical and dental insurance payments under COBRA for twelve months. |
(4) | Represents accelerated vesting of 40,000 unvested restricted stock units granted to Mr. Dooley if terminated without cause or for good reason. In the event of Mr. Dooley’s death or disability, 20,000 restricted stock units (50% of the unvested restricted stock units at December 27, 2014) would vest, having a value of $271,600, based on a termination date of December 27, 2014 and using a closing price of our stock on December 26, 2014, the last trading day of the 2014 fiscal year. |
(5) | Represents one year’s salary of $532,000$552,000 and an average yearly cash bonus of $252,000$315,000 paid to Mr. Lerner for fiscal years 20132014 and 2014.2015. Mr. Lerner would also receive the bonus amount in the event of his death or disability. |
Change In Control Payments
The following table sets forth the change in control payments that would have been made based on a hypothetical change of control date of December 27, 2014,January 2, 2016, the last day of the Company’s fiscal year 2014,2015, and using the closing price of our common stock on December 26, 2014,31, 2015, the last trading day of the 20142015 fiscal year. These amounts are estimates and the actual amounts to be paid can only be determined at the time of the change of control.
Name | | Cash Compensation (Salary and Bonus) ($) | | | Value of Accelerated Vesting of Stock & Option Awards ($) | | | Medical and Other Benefits ($) | | | Total ($) | | | Cash Compensation (Salary and Bonus) ($) | | | Value of Accelerated Vesting of Stock & Option Awards ($) | | | Medical and Other Benefits ($) | | | Total ($) | |
Lawrence Reinhold | | | 1,744,300 | (1)(2) | | | 2,376,500 | (3) | | | 19,786 | (4) | | | 4,140,586 | | | | 2,086,250(1)(2) | | | | 1,268,500(3) | | | | 25,228(4) | | | | 3,379,978 | |
| | | | | | | | | | | | | | | | | |
Robert Dooley | | | - | | | | 543,200 | (5) | | | - | | | | 543,200 | | |
| | | | | | | | | | | | | | | | | |
Eric Lerner | | | 784,000 | (6) | | | 75,938 | (7) | | | 29,338 | (8) | | | 889,276 | | | | 867,000(5) | | | | -(6) | | | | 26,696(7) | | | | 893,696 | |
(1) | Represents two year’s salary of $660,000$694,000 and an average yearly cash bonus of $424,300$698,250 paid to Mr. Reinhold for fiscal years 20132014 and 2014.2015. |
(2) | Payments are made to Mr. Reinhold only if he is terminated without “cause” or resigns for “good reason” within 60 days prior to, or one year following, a Change of Control. |
(3) | Represents accelerated vesting of 175,000147,500 unvested restricted stock units. |
(4) | Represents reimbursement of medical and dental insurance payments under COBRA for twenty-four months. |
(5) | Represents accelerated vestingone year’s salary of 40,000 unvested restricted stock units.$552,000 and an average yearly cash bonus of $315,000 paid to Mr. Lerner for fiscal years 2014 and 2015. |
(6) | Represents one year’s salary of $532,000 and an average yearly cash bonus of $252,000 paid to Mr. Lerner for fiscal years 2013 and 2014. |
(7) | Represents accelerated vesting of 56,25062,500 unvested stock options (only if terminated without “cause” or resigns for “good reason” within six months following a Change of Control). 37,500All of suchthese options on the hypothetical change of control date of December 27, 2014 hadJanuary 2, 2016 have no intrinsic value. |
(8)(7) | Represents reimbursement of medical and dental insurance payments under COBRA for twelve months. |
The Company’s policy is not to pay compensation to Directors who are also employees of the Company or its subsidiaries. Each non-employee Director receives annual compensation as follows: $65,000 per year as base compensation, $10,000 per year for each committee chair, except for the Audit Committee Chair who receives $20,000, and a grant each year of sharesShares of Company stock (restricted for sale for two years) in an amount equal to $40,000 divided by the fair market value of such stock on the date of grant. The Lead Independent Director, currently RobertMr. Rosenthal, also receives an additional $20,000 per year. The restricted stock grants are made pursuant to the Company’s 2006 Stock Incentive Plan for Non-Employee Directors, which was approved by the Company’s stockholders at the 2006 Annual Stockholders’ Meeting. Directors are reimbursed for reasonable travel and out-of-pocket expenses incurred for attending Board and Committee meetings and are covered by our travel accident insurance policy for such travel.
Director Compensation For Fiscal Year
20142015
The following table sets forth compensation information regarding payments in 20142015 to our non-employee Directors:
Name: | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total ($) | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total ($) | |
Robert Rosenthal | | | 105,000 | | | | 40,000 | | | | 145,000 | | |
Robert D. Rosenthal | | | | 105,000 | | | | 40,000 | | | | 145,000 | |
Stacy Dick | | | 85,000 | | | | 40,000 | | | | 125,000 | | | | 85,000 | | | | 40,000 | | | | 125,000 | |
Marie Adler-Kravecas | | | 65,000 | | | | 40,000 | | | | 105,000 | | | | 65,000 | | | | 40,000 | | | | 105,000 | |
| (1) | This column represents the fair value of the stock award on the grant date determined in accordance with the provisions of ASC 718. As per SEC rules relating to executive compensation disclosure, the amounts shown exclude the impact of forfeitures related to service based vesting conditions. For additional information regarding assumptions made in calculating the amount reflected in this column, please refer to Note 910 to our audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2014.2015. |
The following table presents the aggregate number of unvested restricted stock awards and stock option awards held by each of our non-employee Directors at the end of fiscal year 2014:2015:
Name: | | Stock Awards | | | Option Awards | | | Stock Awards | | | Option Awards | |
Robert Rosenthal | | | 6,709 | | | | 7,000 | | |
Robert D. Rosenthal | | | | 6,973 | | | | 5,000 | |
Stacy Dick | | | 6,709 | | | | 7,000 | | | | 6,973 | | | | 5,000 | |
Marie Adler-Kravecas | | | 6,709 | | | | 5,000 | | | | 6,973 | | | | 5,000 | |
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Action is to be taken at the Annual Meeting to ratify the selection of Ernst & Young LLP as independent registered public accountants for the Company for fiscal year 2015.2016.
Representatives of Ernst & 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.
Principal Accounting Fees and Services
The following are the fees billed by Ernst & Young LLP for services rendered during fiscal years 20132014 and 2014:2015:
Audit and Audit-related Fees
Ernst & Young billed the Company $2,649,900$3,081,000 for professional services rendered for the audit of the Company’s annual consolidated financial statements for fiscal year 20142015 and its reviews of the interim financial statements included in the Company’s Forms 10-Q for that fiscal year and $1,998,000$2,649,900 for such services rendered for fiscal year 2013.2014. Ernst & Young also billed the Company $20,000 for audit related fees in 2015.
In accordance with the SEC’s definitions and rules, “audit fees” are fees that were billed to the Company by Ernst & Young for the audit of the Company’s annual financial statements, to be included in the Form 10-K, and review of financial statements included in the Form 10-Qs; for the audit of the Company’s internal control over financial reporting with the objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects; for the attestation of management’s report on the effectiveness of internal control over financial reporting; and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements. “Audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of the company’s financial statements and internal control over financial reporting, including services in connection with assisting the company in its compliance with its obligations under Section 404 of the Sarbanes-Oxley Act and related regulations.
Tax Fees
Tax fees included services for international tax compliance, planning and advice. Ernst & Young LLP billed the Company for professional services rendered for tax compliance, planning and advice in 20132015 and 2014 an aggregate of $42,600$0 and $40,000, respectively.
All Other Fees
Other fees (i.e., those that are not audit fees, audit related fees, or tax fees) of $1,995 and $2,167 were billed by Ernst & Young LLP for each of the fiscal years 20132014 and 2014.2015.
The Audit Committee is responsible for approving every engagement of the Company’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 does 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’s independence.
Stockholder ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accountants is not required by the Company’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.
Vote Required for Approval
Ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accountants will require the affirmative vote of the holders of a majority of the Shares present in person or by proxy and entitled to vote on the issue. There are no rights of appraisal or dissenter’s rights as a result of a vote on this issue.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR FISCAL YEAR 2015,2016, WHICH IS DESIGNATED AS PROPOSAL NO. 2.
NON-BINDING ADVISORY VOTE
TO TERMINATE CERTAIN CORPORATE GOVERNANCE RESTRICTIONS
The Company strives to maintain the highest standards of corporate governance and internal controls, and as described above under “Corporate Governance” follows many of the best practices currently in use among similar public companies, even though the Company is a “controlled company” for which certain corporate governance activities are not required.
In 2006 the Company and several directors settled certain stockholder derivative actions brought in the United States District Court for the Eastern District of New York (the “Court”) by agreeing, without admitting any liability, to a settlement agreement (the “Settlement Agreement”), which among other things, requires us to adhere to certain corporate governance requirements, as discussed below (the “Governance Restrictions”).
Because the Settlement Agreement was entered into ten years ago, at a time when best practices and corporate governance standards were rapidly changing following adoption of the Sarbanes-Oxley Act, the Company believes the Governance Restrictions no longer serve a valid “good governance” goal, and in fact over time have proven to be impediments to good governance and unworkable in the current business environment. The Company believes that since 2006 the Governance Restrictions have proven to be outdated and no longer serve their intended purpose, and have been effectively superseded by newer regulations and advances in best practices and corporate governance.
Accordingly, with the cooperation of the plaintiffs’ counsel that negotiated the Settlement Agreement on behalf of the derivative action plaintiffs, the Company intends to request the Court to relieve the Company from the obligation to continue to observe the Governance Restrictions.
In this regard, the Company is requesting the holders of Shares not beneficially owned by officers or directors of the Company to approve, on a non-binding advisory basis, the termination of the Governance Restrictions.
Governance Restrictions
The Settlement Agreement mandated certain restrictions (among others) on how we operate our business, as follows:
| · | The Chief Executive Officer of the Company is prohibited from serving on the board of other public for-profit companies (the “CEO Restriction”); |
| · | The Company must conduct a re-proposal process every five years for the engagement of the independent public accountants hired to audit the Company’s financial results (The “Auditor Engagement Restriction”); |
| · | The independent auditing firm cannot provide consulting services to the Company other than tax consulting (the “Auditor Consulting Restriction”); and |
| · | The Audit Committee must review the appropriateness and accounting treatment of all related party transactions, including sales/disposition of assets greater than $300,000 (the “Related Party Restriction”). |
CEO Restriction
The Company believes the CEO Restriction is no longer in the best interests of the Company or its stockholders. It prevents the CEO gaining expertise for our benefit by being exposed to best business practices of other market participants, gaining additional perspective and experience in managing a public company and by being able to assess other companies’ governance policies.
Auditor Engagement Requirement
The Company believes the Auditor Engagement Restriction, requiring the Company to go through the effort and expense of seeking to change auditors every five years, even when the Board and the Audit Committee have no desire to do so and are satisfied with the performance of its current independent auditors, is no longer in the best interests of the Company or its stockholders. The Sarbanes-Oxley Act contains a number of protections relating to public companies’ relationships with their auditors, with which we comply. Moreover, the number of leading accounting firms has dwindled over the years, and as the Company may from time to time use certain other leading accounting firms on projects, those projects would prevent them proposing on the audit as they would not be considered “independent” under applicable SEC regulations. The Company does not believe it is in the best interests of its stockholders to go through the engagement solicitation process just in order to either remain with the existing audit firm, or to engage a new firm that may not have the experience, scope, reputation and resources of the leading audit firms the Company has used historically.
Auditor Consulting Restriction
Further, the Company does not believe the Auditor Consulting Restriction is necessary, in that today’s auditor professional standards and SEC regulations set forth classes of consulting work that may be performed by independent auditors without impairing or losing such independence. Accordingly, the Auditor Consulting Restriction is stricter than current auditor independence regulations and standards, and places an unnecessary burden and cost on the Company by forcing it to use various firms for discrete projects that could otherwise be performed by the existing independent auditors, but for the Auditor Consulting Restriction under the Settlement Agreement.
Related Party Restriction
Finally, as described above under Transactions with Related Persons on page 21, the Company has an existing policy regarding approvals of transactions with related persons and related processes to address the matters covered by the Related Party Restriction, and in fact the Company’s policies and processes are stricter than those under the Related Party Restriction.
Request to Approve Termination of Governance Restrictions
The Company has determined to seek a non-binding advisory vote approving the termination of the Governance Restrictions by a majority of the voting Shares not beneficially owned directly or indirectly by any officer or director of the Company.
Because the Settlement Agreement did not place a termination date on the Governance Restrictions agreed to by the Company, they remain in place today despite no longer serving their intended purpose. Accordingly, the Company has consulted with the plaintiffs’ counsel who negotiated the Settlement Agreement, and counsel has advised the Company that it does not object to the Company’s effort to terminate the Governance Restrictions as described above.
In this regard, following the vote on Proposal No. 3 at the Annual Meeting, the Company intends to submit to the Court an amendment that would terminate the Governance Restrictions effective December 31, 2015 (the “Amendment”).
In the event the Governance Restrictions are terminated, the Company will make corresponding changes to the Audit Committee Charter and to the Corporate Governance guidelines.
The affirmative vote of a majority of the Shares not beneficially owned by any of our directors or officers cast for this proposal is required to approve, on a non-binding advisory basis, the termination of the Governance Restrictions.
As this is an advisory vote, the result will not be binding on the Company or the Board although we will consider the outcome of the vote when evaluating whether to maintain or modify the Governance Restrictions, including in the event the Amendment is approved by the Court and the Governance Restrictions are terminated. If the Court rejects the Amendment, the Governance Restrictions will remain in place. Proxies submitted without direction pursuant to this solicitation will be voted “FOR” the approval of the termination of the Governance Restrictions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE TERMINATION OF THE GOVERNANCE RESTRICTIONS, AS DISCLOSED IN THIS PROXY STATEMENT, WHICH IS DESIGNATED AS PROPOSAL NO. 3.
Solicitation of Proxies
We are using the Securities and Exchange Commission, or SEC, Notice and Access“Notice Only” rule that allows us to furnish our proxy materials over the internet to our stockholders instead of mailing paper copies of those materials to each stockholder. As a result, beginning on or about April 29, 2015,25, 2016, we sent to most of our stockholders by mail a notice containing instructions on how to access our proxy materials over the internet and vote online. This notice is not a proxy card and cannot be used to vote your shares.Shares. If you received only a notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice or on the website referred to in the notice.
The proxy statementProxy Statement and annual reportAnnual Report on Form 10-K for fiscal year 20142015 are available at www.proxyvote.com.www.proxyvote.com.
The cost of soliciting proxies for the 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’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.
Stockholder Proposals
Stockholder proposals intended to be presented at the Annual Meeting,2017 annual meeting, including proposals for the nomination of Directors, must be received by December 31, 2015,26, 2016 to be considered for the 20162017 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.
Other Matters
The Board 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 Shares they represent in accordance with their judgment.
A COPY OF THE COMPANY’S FORM 10-K FOR FISCAL YEAR 20142015 IS INCLUDED AS PART OF THE COMPANY’S ANNUAL REPORT ALONG WITH THIS PROXY STATEMENT, WHICH ARE AVAILABLE AT www.proxyvote.com.www.proxyvote.com.
Available Information
The Company maintains an internet web site at www.systemax.com. The Company files reports with the Securities and Exchange Commission and makes available free of charge on or through this web site its annual reportsAnnual Reports on Form 10-K, quarterly reportsQuarterly Reports on Form 10-Q and current reportsCurrent Reports on Form 8-K, including all amendments to those reports. These are available as soon as is reasonably practicable after they are filed with the SEC. All reports mentioned above are also available from the SEC’s web site (www.sec.gov). The information on the Company’s web site or any report the Company files with, or furnishes to, the SEC is not part of this proxy statement.
The Board has adopted the following corporate governance documents (the “Corporate Governance Documents”):
| ●· | Corporate Ethics Policy for officers, Directors and employees; |
| ●· | Charter for the Audit Committee of the Board; |
| ●· | Charter for the Compensation Committee of the Board; |
| ●· | Charter for the Nominating/Corporate Governance Committee of the Board; and |
| ●· | Corporate Governance Guidelines and Principles. |
In accordance with the corporate governance rules of the New York Stock Exchange, each of the Corporate Governance Documents is available on the Company’s Company web site (www.systemax.com).
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| VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
| |
SYSTEMAX INC. 11 HARBOR PARK DRIVE PORT WASHINGTON, NY 11050 | VOTE BY PHONE –1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. |
| |
| VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY |
| KEEP THIS PORTION FOR YOUR RECORDS |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| For
All | Withhold
All | For All
Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) in the line below | |
The Board of Directors recommends that you vote FOR the following: | ☐ | ☐ | ☐ | | | |
1. Election of Directors
Nominees | | | | |
| | | | |
01 Richard Leeds 05 Stacy Dick | 02 Bruce Leeds
06 Robert D. Rosenthal | 03 Robert Leeds
07 Marie Adler-Kravecas | 04 Lawrence Reinhold | |
| The Board of Directors recommends you vote FOR proposalProposal 2: | | | | |
| For | Against | Abstain | | |
2. A Proposal to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accountants for fiscal year 20152016. | o☐ | o☐ | o☐ | |
The Board of Directors recommends you vote FOR Proposal 3: | | | | |
| For | Against | Abstain | | |
| | | | | |
NOTE: 3.The shares represented by this proxy when properly executed will be voted inApprove, on a non-binding, advisory basis, the manner directed herein by the undersigned Stockholder(s). If no direction is made, this proxy will be voted FOR items 1 and 2. If any other matters properly come before the meeting, or if cumulative voting is required, the person named in this proxy will vote in their discretion. This proxy is solicited on behalftermination of the Board of Directors and may be revoked.certain corporate governance restrictions imposed under a 2006 class action settlement agreement.
| ☐ | ☐ | ☐ | |
|
NOTE: The shares represented by this proxy when properly executed will be voted in the manner directed herein by the undersigned Stockholder(s). If no direction is made, this proxy will be voted FOR Proposals 1, 2 and 3. If any other matters properly come before the meeting, or if cumulative voting is required, the person named in this proxy will vote in their discretion. This proxy is solicited on behalf of the Board of Directors and may be revoked.
For address change/comments, mark here. (see reverse for instructions) ☐
For address change/comments, mark here. (see reverse for instructions) o
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | |
| | | | | | |
Signature [PLEASE SIGN WITHIN BOX] | | Date | | Signature (Joint Owners) | | Date |
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting: The Proxy Statement &and Annual Report is/are available at www.proxyvote.com
SYSTEMAX INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS – JUNE 8, 20156, 2016
The stockholder(s) hereby appoint(s) Eric Lerner and Thomas Axmacher, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of SYSTEMAX INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholder(s) to be held at 12:00 PM, EDT on June 8, 2015,6, 2016, at the Company’s Corporate Offices 11 Harbor Park Drive, Port Washington, NY 11050, and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDERS, IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR ITEMSPROPOSALS 1, 2 AND 2.3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
Address change/comments:
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side