For 2015, 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$1,000,000 variance in actual achievement below the 100% level will generate a 5% negative variance in the target bonus amount. Each $500,000$1,000,000 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. Accomplishment can be measured at 0%, 25%, 50%, 75%, or 100% levels with target bonus paid out accordingly.
Under the 2015 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 2015 Bonus Plan financial and non-financial goals at 100% base case target levels; and in the case of Mr. Dooley achievement of such 2015 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 2015 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 2015 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 indicated above, 75% of Mr. Dooley’s cash bonus is tied to achievement of certain Industrial Products Group objectives, 80% of this portion of the bonus (60% of total target bonus) is tied to achievement of financial objectives and 20% of this portion of the bonus (15% of total target bonus) is tied to achievement of strategic objectives for the Industrial Products Group. The financial objective is based on an operating income target and each $1.0 million variance above or below the target generates a 10% positive or negative variance of the bonus payable. The bonus payout for over achievement of the financial objective is capped at 200% of the target amount. The strategic objectives are tied to achievement of various sales, customer service, integration and marketing initiatives and are measured on whether or not the goal is achieved.
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 efficiency, automation and cost of the contract and litigation management process. The cost management and the strategic objectives were met or exceeded in 2015, resulting in a 100% payout of this bonus component.
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. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr. 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. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr. 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 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 indicated above, 75% of Mr. Dooley’s cash bonus is tied to achievement of certain Industrial Products Group objectives, 80% of this portion of the bonus (60% of total target bonus) is tied to achievement of financial objections and 20% of this portion of the bonus (15% of total target bonus) is tied to achievement of strategic objectives for the Industrial Products Group. The financial objective is based on an operating income target and each $1.5 million variance above or below the target generates a 10% positive or negative variance of the bonus payable. The bonus payout is capped at 200% of the target amount. The strategic objectives are tied to achievement of various sales, customer service, and marketing initiatives and are measured on whether or not the goal is achieved. In 2014, the Industrial Products Group’s adjusted operating income performance resulted in an earned bonus of 80% of the bonus tied to this Industrial Products Group financial objective. The strategic objectives were met or partially met, and Mr. Dooley achieved 70% of the bonus for this component.
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.
2013 NEO Cash Bonus Plan33
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:
| ● | Financial Goals (80% of total cash bonus target) |
| – | Adjusted Operating Income Performance (60%): The Compensation Committee believes this is the most important individual component and aligns the interests of our executives with those of our stockholders, in addition to building long-term value. Adjusted Operating Income is defined as operating income adjusted for unusual or nonrecurring items as determined by our Compensation Committee. |
| – | Sales Performance (20%): The Compensation Committee believes top line sales growth is key to our Company achieving the scale necessary to remain competitive with larger companies. Sales are defined as sales revenue net of returns on a constant currency basis. |
| ● | Non-Financial Goals for 2013 (20% of total cash bonus target) |
| – | Strategic Accomplishments (16%): These goals relate to various strategic initiatives including enhancing both the North American and EMEA Technology Product Group’s information technology systems, reducing our costs in Europe, including implementing our shared services center in Hungary, expanding the Industrial business through foreign sales initiatives and the commercial launch of a new online revenue channel for the Industrial business and the implementation of website enhancements and retail strategy initiatives to enhance North American Technology performance. The Compensation Committee believes these initiatives will enhance the Company’s operational infrastructure and efficiency. |
| – | 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. 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. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr. 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:
| Richard Leeds | | $ | 1,100,000 | |
| Bruce Leeds | | $ | 750,000 | |
| Robert Leeds | | $ | 750,000 | |
| Lawrence Reinhold | | $ | 825,000 | |
| Robert Dooley | | $ | 414,000 | |
| Eric Lerner | | $ | 248,000 | |
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 indicated above, 75% of Mr. Dooley’s cash bonus is tied to achievement certain financial and strategic objectives of the Industrial Products Group, 60% of this portion of the target bonus (45% of the total target bonus) is tied to achievement of financial objectives and 40% of this portion of the target bonus (30% of the total target bonus) is tied to the achievement of strategic objectives for the Industrial Products Group. The financial objective is based on an operating income target and each $2.5 million variance below target results in a 10% negative bonus variance. Each $1 million variance above the target results in a 10% positive bonus variance. The bonus payout is capped at 200% of the target amount. The strategic objectives are tied to achievement of various sales, customer service, and marketing initiatives including expanding the product line, efficiently managing supply chains and logistics capabilities, implementing new sales programs, expanding web market sales, and foreign expansion. In 2013, the Industrial Products Group achieved adjusted operating income of $39.5 million which resulted in an earned bonus of 90% of the bonus tied to this Industrial Products Group financial objective. The strategic objectives were met or substantially met, and Mr. Dooley achieved 90% of the bonus for this component.
As described above, 50% of Mr. Lerner’s cash bonus is tied to achievement of certain legal group objectives, 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.
2012 NEO Cash Bonus Plan
In 2012, 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 2012 NEO Cash Bonus Plan (“2012 Bonus Plan”) providing for target cash bonuses for the NEOs based on the achievement of certain financial and non-financial performance-based criteria in 2012. The 2012 Bonus Plan implemented for 2012 the 2010 Long-Term Incentive Plan and pertains specifically to the payment of non-equity incentive compensation to NEOs for 2012. The following discussion applies to 100% of the 2012 total non-equity incentive compensation for each of Mr. Richard Leeds, Mr. Bruce Leeds, Mr. Robert Leeds and Mr. Reinhold.
For 2012, 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, were as follows:
| ● | Financial Goals (80% of total cash bonus target) |
| – | Adjusted Operating Income Growth (60%): The Compensation Committee believes this is the most important individual component and aligns the interests of our executives with those of our stockholders, in addition to building long-term value. Adjusted Operating Income is defined as operating income adjusted for unusual or nonrecurring items as determined by our Compensation Committee. |
| – | Sales Growth (20%): The Compensation Committee believes top line sales growth is key to our Company achieving the scale necessary to remain competitive with larger companies. Sales are defined as sales revenue net of returns on a constant currency basis. |
| ● | Non-Financial Goals for 2012 (20% of total cash bonus target) |
| – | Strategic Accomplishments (16%): These goals relate to various strategic initiatives including enhancing both the North American and EMEA Technology Product Group’s information technology systems, reducing our costs in Europe, expanding the Industrial business’ distribution capacity through the operation of our new distribution center, the development of a new online revenue channel for the Industrial business and the creation and implementation of a long-term incentive compensation program for the Company’s senior management. The Compensation Committee believes these initiatives will enhance the Company’s operational infrastructure and efficiency. |
| – | 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 20142016
In determining the compensation of the Company’s Chief Executive Officer for fiscal year 20142016 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 20142016 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 competes that had affected the Company’s businessformer European Technology Group (sold in March 2017) competed throughout fiscal year 2014.2016. 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 20142016 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 20142016 corporate governance non-financial goals, described abovebut only achieved 50% of its Industrial Products Group strategic objectives, 75% of the European Technology Products Group strategic non-financial objectives and met or substantially met75% of the strategic objectives within its strategic goals. In this regard theCorporate Segment. The Compensation Committee also exercised its discretion to provide partial achievement credit for one strategic goal thatreset the sales growth target and adjusted operating income growth target to eliminate, as applicable, any revenue and earnings contributable to its NA Tech business exited in 2015, or contributable to its former German business exited in 2016. The Company’s revised sales target was 95.6%% achieved, which resulted in participants’ earning 75% of available target bonus related to this financial metric. Furthermore, the Company’s revised operating income target only partially achieved, resultingwhich resulted in a 93.75% payoutparticipants’ earning 30% of the available target for this bonus component. The Company sales growth target of $3.35 billion was 100% achieved after adjusting for constant currency and removing the revenue generated from an acquisition completed in the Netherlands in June 2014, resulting in a 100% payout of this bonus component. Furthermore, the Company partially achieved its 2014 adjusted operating income financial goal, resulting in a 35% 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 20142016 Bonus Plan formulas, 20142016 non-equity incentive plan/bonus compensation for each Named Executive Officer was paid at 60%41% of the target level. However, Richard Leeds requested that his bonus be reduced to $150,000, 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).
The 20142016 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.
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%61% and bonus accounted for 17%36% of Mr. Leeds total cash compensation for 2014. Mr. Leeds salary for 2015 is set at $731,000.2016. Mr. Leeds’ bonus for 20142016 was determined as described above under the heading 20142016 NEO Cash Bonus Plan. Mr. Leeds salary for 2017 is set at $726,000.
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%37% of Mr. Leeds total cash compensation for 2014. Mr. Leeds salary for 2015 is set at $599,000.2016. Mr. Leeds’ bonus for 20142016 was determined as described above under the heading 20142016 NEO Cash Bonus Plan. Mr. Leeds salary for 2017 is set at $601,000.
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 $607,000.2016. Mr. Leeds’ bonus for 20142016 was determined as described above under the heading 20142016 NEO Cash Bonus Plan. Mr. Leeds salary for 2017 is set at $610,000.
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%43% of Mr. Reinhold’s total cash compensation for 2014. His salary for 2015 is set at $695,000.2016. Mr. Reinhold’s bonus for 20142016 was determined as described above under the heading 20142016 NEO Cash Bonus Plan.
Mr. Reinhold’s salary for 2017 is set at $715,000. Compensation that may become payable following the termination of his employment or a change in control of the company,Company, and other terms of the employment agreement related to such events, are discussed below under “—Potential Payments Upon Termination or Change in Control.”
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 on 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). In December 2016, Mr. Reinhold was granted an option to purchase 100,000 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).
Thomas Clark
Mr. Clark has no employment agreement and is an “at will” employee. Base salary accounted for 73% and bonus accounted for 24% of Mr. Clark’s total cash compensation for 2016. Mr. Clark’s bonus for 2016 was determined as described above under the heading 2016 NEO Cash Bonus Plan. Mr. Clark’s salary for 2017 is set at $362,000. Compensation that may become payable following the termination of his employment or a change in control of the Company, are discussed below under “—Potential Payments Upon Termination or Change in Control.”
In February 2016, Mr. Clark 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 on February 1, 2019. In addition, in February 2016, Mr. Clark was granted an option to purchase 10,000 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 November 2016, Mr. Clark 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).
Robert Dooley
Mr. Dooley has no employment agreement and is an “at will” employee. Base salary accounted for 56%75% and bonus accounted for 41%22% of Mr. Dooley’s total cash compensation for 2014. Mr. Dooley’s salary for 2015 is set at $475,000.2016. Mr. Dooley’s bonus for 20142016 was determined as described above under the heading 20142016 NEO Cash Bonus Plan. Mr. Dooley’s salary for 2017 is set at $520,000. Compensation that may become payable following the termination of his employment or a change in control of the Company, are discussed below under “—Potential Payments Upon Termination or Change in Control.”
In March 2012,February 2016, Mr. Dooley received a grantwas granted an option to purchase 50,000 Shares of 50,000 restrictedcommon stock units underpursuant to the 2010 Long-Term Incentive Plan. The restricted stock units vest in ten equal annual installmentsPlan (vesting over a period of 5,000 units each, beginning March 1, 2013.four years with 25% of the options vesting on the first, second, third and fourth anniversary dates of the grant date). In addition, in March 2012December 2016 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%79% and bonus accounted for 32%17% of Mr. Lerner total cash compensation for 2014.2016. Mr. Lerner’s salarybonus for 2015 is set at $552,000. Mr. Lerner’s non-equity incentive compensation for 20142016 was determined as described above under the heading 20142016 NEO Cash Bonus Plan. Mr. Lerner’s salary for 2017 is set at $576,000. 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.”
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 on February 1, 2019. In addition, he received $170,000 asin February 2016, 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 discretionary bonus in considerationperiod of his overall performance in 2014, including significant cost savings achieved.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 sharesShares 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 datedates of his commencement date he will receive an additional option to acquire at least an additional 25,000 sharesShares 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.”35
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 20142016 were RobertMr. Rosenthal, StacyMr. Dick and MarieMs. 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 2012, 20132014, 2015 and 2014:2016:
Name and Principal Position | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(2) | | | Non-Equity Incentive Plan Compensation ($)(3) | | | All Other Compensation ($) | | | Total ($) | |
Richard Leeds Executive Chairman | 2016 | | | 734,450 | | | | | | | | | | | | | 435,000 | | | | 30,000(4 | ) | | | 1,199,450 | |
| 2015 | | | 731,000 | | | | | | | | | | | | | 560,000 | | | | 29,200 | | | | 1,320,200 | |
| 2014 | | | 701,000 | | | | | | | | | | | | | 150,000 | | | | 25,200 | | | | 876,200 | |
Bruce Leeds Vice Chairman | 2016 | | | 600,000 | | | | | | | | | | | | | 362,000 | | | | 30,000 | (4) | | | 992,000 | |
| 2015 | | | 599,000 | | | | | | | | | | | | | 351,000 | | | | 29,200 | | | | 979,200 | |
| 2014 | | | 568,000 | | | | | | | | | | | | | 100,000 | | | | 25,200 | | | | 693,200 | |
Robert Leeds Vice Chairman | 2016 | | | 604,000 | | | | | | | | | | | | | 362,000 | | | | 30,000 | (4) | | | 996,000 | |
| 2015 | | | 607,000 | | | | | | | | | | | | | 351,000 | | | | 29,200 | | | | 987,200 | |
| 2014 | | | 577,000 | | | | | | | | | | | | | 100,000 | | | | 25,200 | | | | 702,200 | |
Lawrence Reinhold President & Chief Executive Officer | 2016 | | | 717,000 | | | | | | | 415,500 | | | | 666,500 | | | | 582,000 | | | | 51,683(5 | ) | | | 2,432,969 | |
| 2015 | | | 694,000 | | | | | | | | | | | | | | | 816,000 | | | | 33,100 | | | | 1,543,100 | |
| 2014 | | | 660,000 | | | | | | | | | | | | | | | 580,500 | | | | 29,100 | | | | 1,269,600 | |
Thomas Clark(6) Vice President & Chief Financial Officer | 2016 | | | 231,548 | | | | | | | 207,750 | | | | 218,200 | | | | 75,000 | | | | 16,548 | (7) | | | 749,046 | |
| 2015 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| 2014 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Robert Dooley President of the Company’s Industrial Products Group | 2016 | | | 514,000 | | | | | | | | | | | | 463,000 | | | | 150,000 | | | | 24,975(8 | ) | | | 1,152,128 | |
| 2015 | | | 484,000 | | | | 82,000 | | | | | | | | | | | | 318,000 | | | | 21,900 | | | | 905,900 | |
| 2014 | | | 450,000 | | | | | | | | | | | | | | | | 331,000 | | | | 21,900 | | | | 802,900 | |
Eric Lerner Senior Vice President and General Counsel | 2016 | | | 572,000 | | | | | | | | 207,750 | | | | 129,750 | | | | 125,000 | | | | 24,475(9 | ) | | | 1,059,199 | |
| 2015 | | | 552,000 | | | | 169,000 | | | | | | | | 111,000 | | | | 106,000 | | | | 21,900 | | | | 959,900 | |
| 2014 | | | 532,000 | | | | 170,000 | | | | | | | | 196,750 | | | | 185,000 | | | | 21,900 | | | | 1,105,650 | |
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 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 9 to our audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2016. |
(1)(2) | 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 2014.2016. |
(2)(3) | 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; 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; and the 2016 figures in this column represent the amount earned in fiscal year 2016 (although paid in fiscal year 2017) pursuant to the 2016 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)(4) | Auto-related expenses. |
(4) | Includes auto-related expenses ($25,200) and Company 401(k) contributions ($3,900). |
| (5) | Includes auto-related expenses ($18,000) and30,000), Company 401(k) contributions ($3,900), and dividend equivalent payments on unvested restricted stock ($17,783). |
| (6) | Mr. Clark was not a Named Executive Officer prior to October 2016, and therefore no amounts are reported for fiscal years 2014 or 2015 in the Summary Compensation Table. |
| (7) | Includes auto-related expenses ($11,100), Company 401(k) contributions ($2,948), and dividend equivalent payments on unvested restricted stock ($2,500). |
| (8) | Includes auto-related expenses ($18,000), Company 401(k) contributions ($3,975), and dividend equivalent payments on unvested restricted stock ($3,000). |
| (9) | Includes auto-related expenses ($18,000), Company 401(k) contributions ($3,975), and dividend equivalent payments on unvested restricted stock ($2,500). |
GRANTS OF PLAN-BASED AWARDS
The following table sets forth the estimated possible payouts under the cash incentive awards granted to our Named Executive Officers in respect of 20142016 performance under the 20142016 NEO Plan.
| Name | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#)(2) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards ($/Sh) | |
| | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | | | | | | | | | | | |
| Richard Leeds | | | | 94,500 | | | | 1,050,000 | | | | 2,730,000 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bruce Leeds | | | | 78,975 | | | | 877,500 | | | | 2,281,500 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Robert Leeds | | | | 78,975 | | | | 877,500 | | | | 2,281,500 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Lawrence Reinhold | | | | 126,900 | | | | 1,410,000 | | | | 3,666,000 | | | | | | | | | | | | | | | | | |
| 2/1/16 | | | | | | | | | | | | | | | 50,000(3 | ) | | | 50,000 | | | | 8.31 | | | | 5.19 | |
| | 12/14/16 | | | | | | | | | | | | | | | - | | | | 100,000 | | | | 8.95 | | | | 4.07 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thomas Clark | | | | 12,320 | | | | 100,000 | | | | 177,000 | | | | | | | | | | | | | | | | | |
| 2/1/16 | | | | | | | | | | | | | | | 25,000(4 | ) | | | 10,000 | | | | 8.31 | | | | 3.17 | |
| 11/10/16 | | | | | | | | | | | | | | | - | | | | 50,000 | | | | 8.32 | | | | 3.73 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Robert Dooley | | | | 60,000 | | | | 500,000 | | | | 925,000 | | | | - | | | | | | | | | | | | | |
| 2/1/16 | | | | | | | | | | | | | | | - | | | | 50,000 | | | | 8.31 | | | | 5.19 | |
| 12/14/16 | | | | | | | | | | | | | | | | | | | 50,000 | | | | 8.95 | | | | 4.07 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eric Lerner | | | | 93,500 | | | | 550,000 | | | | 990,000 | | | | | | | | | | | | | | | | | |
| 2/1/16 | | | | | | | | | | | | | | | 25,000(4 | ) | | | 25,000 | | | | 8.31 | | | | 5.19 | |
| 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) | AmountAmounts presented assume payment of threshold, target and maximum awards at the applicable level. |
| (2) | The options awarded to Mr.Messrs. Reinhold, Clark, Dooley and Lerner in May 20142016 vest in equal portions on the first, second, third and fourth anniversaries of the grant date, subject to certain restrictionsrestrictions. |
| (3) | The restricted stock vests in three installments: 16,667 Shares on February 1, 2017; 16,667 Shares on February 1, 2018; and acceleration events.16,666 Shares on February 1, 2019. |
| (4) | The restricted stock vests in three installments: 8,334 Shares on February 1, 2017; 8,333 Shares on February 1, 2018; and 8,333 Shares on February 1, 2019. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
20142016
The following table sets forth information regarding stock option and restricted stock awards previously granted which were outstanding at the end of fiscal year 2014.2016.
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, 2014,30, 2016, the last trading day of the 20142016 fiscal year, which was $13.58.$8.77.
| | | Option Awards | | | | Stock Awards | | | Option Awards | | Stock Awards | |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | 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 ($) | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | 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 | | | - | | | | - | |
| | | | 50,000 | | | | - | | | | $11.51 | | 3/13/18 | | | - | | | | - | | | | 100,000 | | | | - | | | | 13.19 | | 5/18/19 | | | 70,000(2 | ) | | $ | 613,900 | |
| | | | 100,000 | | | | - | | | | $13.19 | | 5/18/19 | | | 105,000 | (3) | | | $1,425,900 | | | | 50,000 | | | | - | | | | 14.30 | | 11/14/21 | | | 50,000(3 | ) | | $ | 438,500 | |
| | | | 37,500 | | | | 12,500 | (1) | | | $14.30 | | 11/14/21 | | | 70,000 | (4) | | | $950,600 | | | | - | | | | 50,000(1 | ) | | | 8.31 | | 2/1/26 | | | 50,000(4 | ) | | $ | 438,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | - | | | | 100,000(1 | ) | | | 8.95 | | 12/14/26 | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Thomas Clark | | | | 5,000 | | | | - | | | | 16.63 | | 8/9/20 | | | - | | | | - | |
| | | | | 5,000 | | | | - | | | | 18.73 | | 3/1/22 | | | - | | | | - | |
| | | | | - | | | | 10,000(1 | ) | | | 8.31 | | 2/1/26 | | | 25,000(5 | ) | | $ | 219,250 | |
| | | | | | | | | 50,000(1 | ) | | | 8.32 | | 11/10/26 | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Robert Dooley | | | 10,000 | | | | - | | | | $19.39 | | 6/7/17 | | | - | | | | - | | | | 10,000 | | | | - | | | | 19.39 | | 6/7/17 | | | - | | | | - | |
| | | | | 50,000 | | | | - | | | | 18.73 | | 3/1/22 | | | 30,000(6 | ) | | $ | 263,100 | |
| | | | | - | | | | 50,000(1 | ) | | | 8.31 | | 2/1/26 | | | - | | | | - | |
| | | | 25,000 | | | | 25,000 | (1) | | | $18.73 | | 3/1/22 | | | 40,000 | (5) | | | $543,200 | | | | - | | | | 50,000(1 | ) | | | 8.95 | | 12/14/26 | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Eric Lerner | | | 12,500 | | | | 12,500 | (1) | | | $14.55 | | 5/3/22 | | | - | | | | - | | | | 25,000 | | | | - | | | | 14.55 | | 5/3/22 | | | - | | | | - | |
| | | | 6,250 | | | | 18,750 | (1) | | | $9.53 | | 5/3/23 | | | - | | | | - | | | | 18,750 | | | | 6,250(1 | ) | | | 9.53 | | 5/3/23 | | | - | | | | - | |
| | | | - | | | | 25,000 | (1)(2) | | | $16.61 | | 5/2/24 | | | - | | | | - | | | | 12,500 | | | | 12,500 | (1) | | | 16.61 | | 5/2/24 | | | - | | | | - | |
| | | | | 6,250 | | | | 18,750 | (1) | | | 10.62 | | 5/2/25 | | | - | | | | - | |
| | | | | - | | | | 25,000 | (1) | | | 8.31 | | 2/1/26 | | | 25,000(5 | ) | | $ | 219,250 | |
| (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)(3) | Restricted stock units vest in ten equal annual installments of 10,000 beginning November 14, 2012. |
| (4) | Restricted stock units vest in three installments: 16,667 Shares on February 1, 2017; 16,667 Shares on February 1, 2018; and 16,666 Shares on February 1, 2019. |
| (5) | Restricted stock units vest in three installments: 8,334 Shares on February 1, 2017; 8,333 Shares on February 1, 2018; and 8,333 Shares on February 1, 2019. |
| (6) | Restricted stock units vest in ten equal annual installments of 5,000 beginning March 1, 2013. |
OPTION EXERCISES AND STOCK VESTED
The following table sets forth information regarding exercise of options to purchase sharesShares 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 2014:2016:
| | | Option Awards | | | Stock Awards | | | 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) | | | 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 | | | | - | | | | - | | | | 17,500(2) | | | | 156,100 | |
| | | | | | | | | | | | 10,000 | (3) | | | $152,900 | | | | | | | | | | | | 10,000(3) | | | | 88,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Robert Dooley | | | - | | | | - | | | | 5,000 | (4) | | | $58,850 | | | | - | | | | - | | | | 5,000(4) | | | | 43,200 | |
| | | | | | | | | | | | | | | | | | |
| 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 sharesShares 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 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 Parent’sCompany’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.
IfPursuant to Mr. Reinhold’s restricted stock unit agreements (dated August 25, 2010 and November 14, 2011), 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 sharesShares 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 Mr. Reinhold’s restricted stock unit agreement (dated February 1, 2016), 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 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.
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.
Thomas Clark
Pursuant to Mr. Clark’s restricted stock unit agreement (dated February 1, 2016), if Mr. Clark 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. Clark 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. Clark’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. Clark’s employment is terminated due to disability or death, his estate or designated beneficiary(ies), whichever is applicable, 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.
Pursuant to the Company’s standard option agreements, in the event Mr. Clark’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 (dated March 1, 2012), 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.
Pursuant to the Company’s standard option agreements, in the event Mr. Dooley’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 Mr. Lerner’s restricted stock unit agreement (dated February 1, 2016), if Mr. Lerner 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. Lerner 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. Lerner’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. Lerner’s employment is terminated due to disability or death, his estate or designated beneficiary(ies), whichever is applicable, 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.
Pursuant to the Company’s standardMr. Lerner’s 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
Inin Control
The following table sets forth the severance payments that would have been made had the employment of Mr. Reinhold, Mr. Clark, 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, 2013,31, 2016, the last day of the Company’s fiscal year 2014,2016, and using the closing price of our common stock on December 26, 2013,30, 2016, the last trading day of the 20142016 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 ($) | |
| Lawrence Reinhold | | | 1,416,000(1) | | | | 1,490,900(2) | | | | 14,578(3) | | | | 2,921,478 | |
| | | | | | | | | | | | | | | | | |
| Thomas Clark | | | - | | | | 219,250(4) | | | | - | | | | 219,250 | |
| | | | | | | | | | | | | | | | | |
| Robert Dooley | | | - | | | | 263,100(5) | | | | - | | | | 263,100 | |
| | | | | | | | | | | | | | | | | |
| Eric Lerner | | | 784,500(6) | | | | 219,250(7) | | | | 24,701(3) | | | | 1,028,451 | |
| Name | | Cash Compensation (Salary and Bonus) ($) | | | 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 | |
| | | | | | | | | | | | | | | | | |
| Robert Dooley | | | - | | | | 543,200 | (4) | | | - | | | | 543,200 | |
| | | | | | | | | | | | | | | | | |
| Eric Lerner | | | 784,000 | (5) | | | - | | | | 29,338 | (3) | | | 813,338 | |
| (1) | Represents one year’s salary of $660,000$717,000 and an average yearly cash bonus of $424,300$699,000 paid to Mr. Reinhold for fiscal years 20132015 and 2014.2016. Mr. Reinhold would also receive the bonus amount in the event of his death or disability. |
| (2) | Represents accelerated vesting of 170,000 unvested restricted stock units granted to Mr. Reinhold if terminated without cause or for good reason. Pursuant to Mr. Reinhold’s restricted stock unit agreements (dated August 25, 2010 and November 14, 2011), on the event of Mr. Reinhold’s death or disability, 60,000 restricted stock units (50% of the unvested restricted stock units granted under such agreements at December 31, 2016) would vest, having a value of $526,200, based on a termination date of December 31, 2016 and using a closing price of our stock on December 30, 2016, the last trading day of the 2016 fiscal year. Pursuant to Mr. Reinhold’s restricted stock unit agreement (dated February 1, 2016), on the event of Mr. Reinhold’s death or disability, 50,000 restricted stock units (100% of the unvested restricted stock units granted under such agreement at December 31, 2016) would vest, having a value of $438,500, based on a termination date of December 31, 2016 and using a closing price of our stock on December 30, 2016, the last trading day of the 2016 fiscal year. |
| (3) | Represents reimbursement of medical and dental insurance payments under COBRA for twelve months. |
| (4) | Represents accelerated vesting of 25,000 unvested restricted stock units granted to Mr. Clark if terminated without cause or for good reason. Pursuant to Mr. Clark’s restricted stock unit agreement (dated February 1, 2016), on the event of Mr. Clark’s death or disability, 25,000 restricted stock units (100% of the unvested restricted stock units granted under such agreement at December 31, 2016) would vest, having a value of $219,250, based on a termination date of December 31, 2016 and using a closing price of our stock on December 30, 2016, the last trading day of the 2016 fiscal year. |
| (5) | Represents accelerated vesting of 30,000 unvested restricted stock units granted to Mr. Dooley if terminated without cause or for good reason. Pursuant to Mr. Dooley’s restricted stock unit agreement (dated March 1, 2012), on the event of Mr. Dooley’s death or disability, 15,000 restricted stock units (50% of the unvested restricted stock units granted under such agreements at December 31, 2016) would vest, having a value of $131,550, based on a termination date of December 31, 2016 and using a closing price of our stock on December 30, 2016, the last trading day of the 2016 fiscal year. |
| (6) | Represents one year’s salary of $572,000 and an average yearly cash bonus of $212,500 paid to Mr. Lerner for fiscal years 2015 and 2016. Mr. Lerner would also receive the bonus amount in the event of his death or disability. |
(2)(7) | Represents accelerated vesting of 175,00025,000 unvested restricted stock units granted to Mr. ReinholdLerner if terminated without cause or for good reason. InPursuant to Mr. Lerner’s restricted stock unit agreement (dated February 1, 2016), on the event of Mr. Reinhold’sLerner’s death or disability, 87,50025,000 restricted stock units (50%(100% of the unvested restricted stock units granted under such agreement at December 27, 2014)31, 2016) would vest, having a value of $1,188,250,$219,250, based on a termination date of December 27, 201431, 2016 and using a closing price of our stock on December 26, 2014,30, 2016, the last trading day of the 20142016 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 and an average yearly cash bonus of $252,000 paid to Mr. Lerner for fiscal years 2013 and 2014. Mr. Lerner would also receive the bonus amount in the event of his death or disability. |
Change
Inin Control Payments
The following table sets forth the change in control payments that would have been made based on a hypothetical change of control date of December 27, 2014,31, 2016, the last day of the Company’s fiscal year 2014,2016, and using the closing price of our common stock on December 26, 2014,30, 2016, the last trading day of the 20142016 fiscal year. These amounts are estimates and the actual amounts to be paid can only be determined at the time of the change of control.
| Name | | Cash Compensation (Salary and Bonus) ($) | | | Value of Accelerated Vesting of Stock & Option Awards ($) | | | Medical and Other Benefits ($) | | | Total ($) | |
| Lawrence Reinhold | | | 2,133,000(1) (2) | | | | 1,490,900(3) | | | | 29,156(4) | | | | 3,653,056 | |
| | | | | | | | | | | | | | | | | |
| Thomas Clark | | | - | | | | 219,250(5) | | | | - | | | | 219,250 | |
| | | | | | | | | | | | | | | | | |
| Robert Dooley | | | - | | | | 263,100(6) | | | | - | | | | 263,100 | |
| | | | | | | | | | | | | | | | | |
| Eric Lerner | | | 784,500(7) | | | | 230,750(5) (8) | | | | 24,701(9) | | | | 1,039,951 | |
| Name | | Cash Compensation (Salary and Bonus) ($) | | | 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 | |
| | | | | | | | | | | | | | | | | |
Robert Dooley | | | - | | | | 543,200 | (5) | | | - | | | | 543,200 | |
| | | | | | | | | | | | | | | | | |
| Eric Lerner | | | 784,000 | (6) | | | 75,938 | (7) | | | 29,338 | (8) | | | 889,276 | |
| (1) | Represents two year’s salary of $660,000$717,000 and an average yearly cash bonus of $424,300$699,000 paid to Mr. Reinhold for fiscal years 20132015 and 2014.2016. |
| (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 175,000170,000 unvested restricted stock units. |
| (4) | Represents reimbursement of medical and dental insurance payments under COBRA for twenty-four months. |
| (5) | Represents accelerated vesting of 40,00025,000 unvested restricted stock units. |
| (6) | Represents one year’s salaryaccelerated vesting of $532,000 and an average yearly cash bonus of $252,000 paid to Mr. Lerner for fiscal years 2013 and 2014.30,000 unvested restricted stock units. |
| (7) | Represents one year’s salary of $572,000 and an average yearly cash bonus of $212,500 paid to Mr. Lerner for fiscal years 2015 and 2016. |
| (8) | 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). 37,500 of suchthese options on the hypothetical change of control date of December 27, 2014 had31, 2016 have no intrinsic value. |
(8)(9) | Represents reimbursement of medical and dental insurance payments under COBRA for twelve months. |
The Company’s policy is not to pay compensation to Directorsdirectors who are also employees of the Company or its subsidiaries. Each non-employee Directordirector 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 each year immediately following the annual stockholders meeting 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 onclosing price per share during the 20 trading days preceding the date of grant. The Lead Independent Director, currently Robert Rosenthal, also receives an additional $20,000 per year. Thethe annual meeting (rounded up to the nearest whole number of shares). Through 2016 the annual restricted stock grants areto non-employee directors were 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. After the 2016 grant the annual restricted stock grants to non-employee directors will be made pursuant to the Company’s 2010 Long-Term Incentive Plan, which was approved by the Company’s stockholders at the 2010 Annual Stockholders’ Meeting. The Lead Independent Director, currently Mr. Rosenthal, also receives an additional $20,000 per year. In addition, each non-employee director received a one-time grant of 10,000 options on October 31, 2016 made pursuant to the Company’s 2010 Long-Term Incentive Plan. Directors are reimbursed for reasonable travel and out-of-pocket expenses incurred for attending Board and Committee meetings and are covered by our travel accident insurance policy for such travel.
Director Compensation
Forfor Fiscal Year
20142016
The following table sets forth compensation information regarding payments in 20142016 to our non-employee Directors:directors:
Name: | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Option Awards $(2) | | | Total ($) | |
| Robert D. Rosenthal | | | 105,000 | | | | 40,000 | | | | 34,904 | | | | 179,904 | |
| | | | | | | | | | | | | | | | | |
| Stacy Dick | | | 85,000 | | | | 40,000 | | | | 34,904 | | | | 159,904 | |
| | | | | | | | | | | | | | | | | |
| Marie Adler-Kravecas | | | 65,000 | | | | 40,000 | | | | 34,904 | | | | 139,904 | |
Name: | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total ($) | |
| Robert Rosenthal | | | 105,000 | | | | 40,000 | | | | 145,000 | |
| Stacy Dick | | | 85,000 | | | | 40,000 | | | | 125,000 | |
| Marie Adler-Kravecas | | | 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 9 to our audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2014.2016. |
| (2) | 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 2016. |
The following table presents the aggregate number of unvested restricted stock awards and stock option awards held by each of our non-employee Directorsdirectors at the end of fiscal year 2014:2016:
| Name: | | Stock Awards | | | Option Awards | |
| Robert Rosenthal | | | 6,709 | | | | 7,000 | |
| Stacy Dick | | | 6,709 | | | | 7,000 | |
| Marie Adler-Kravecas | | | 6,709 | | | | 5,000 | |
| Name: | | Stock Awards | | Option Awards |
| Robert D. Rosenthal | | | 8,835 | | 10,000 (unvested) | |
| | | | | | |
| Stacy Dick | | | 8,835 | | 10,000 (unvested) | |
| | | | | | |
| Marie Adler-Kravecas | | | 8,835 | | 10,000 (unvested) 5,000 (vested) | |
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
The guiding principles of the Company’s compensation policies and decisions include aligning each executive’s compensation with the Company’s business strategy and the interests of our stockholders and providing incentives needed to attract, motivate and retain key executives who are important to our long-term success. Consistent with this philosophy, a significant portion of the total incentive compensation for each of our executives is directly related to the Company’s financial results and to other performance factors that measure our progress against the goals of our strategic and operating plans.
Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which discusses how our compensation design and practices reflect our compensation philosophy. The Compensation Committee and the Board believe that our compensation design and practices are effective in implementing our guiding principles.
We are required to submit a proposal to stockholders for a (non-binding) advisory vote to approve the compensation of our Named Executive Officers pursuant to Section 14A of the 1934 Act. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on the compensation of our Named Executive Officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the principles, policies and practices described in this proxy statement.
Accordingly, the following resolution is submitted for stockholder vote at the 2017 Annual Meeting:
“RESOLVED, that the stockholders of Systemax Inc. approve, on an advisory basis, the compensation of its Named Executive Officers as disclosed in the Proxy Statement for the 2017 Annual Meeting, including the Summary Compensation Table and the Compensation Discussion and Analysis set forth in such Proxy Statement and other related tables and disclosures.”
The affirmative vote of a majority of the votes cast for this proposal is required to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement.
As this is an advisory vote, the result will not be binding on the Company, the Board or the Compensation Committee, although our Compensation Committee will consider the outcome of the vote when evaluating our compensation principles, design and practices. Proxies submitted without direction pursuant to this solicitation will be voted “FOR” the approval of the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF ITS NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT, WHICH IS DESIGNATED AS PROPOSAL NO. 2.
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 2015.2017.
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 20132015 and 2014:2016:
Audit and Audit-related Fees
Ernst & Young billed the Company $2,649,900$1,577,655 for professional services rendered for the audit of the Company’s annual consolidated financial statements for fiscal year 20142016 and its reviews of the interim financial statements included in the Company’s Forms 10-Q for that fiscal year and $1,998,000$3,081,000 for such services rendered for fiscal year 2013.2015. Ernst & Young also billed the Company $181,544 related to subsidiary statutory audits in 2016.
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. Fees
Ernst & Young LLP billed the Company fordid not provide any professional services rendered for tax compliance, planning andor advice in 20132016 and 2014 an aggregate of $42,600 and $40,000, respectively.2015.
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 20132015 and 2014.2016.
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 2015,2017, WHICH IS DESIGNATED AS PROPOSAL NO. 2.3.
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, 2015,24, 2017, 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 20142016 are available at 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,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,2018 annual meeting, including proposals for the nomination of Directors,directors, must be received by December 31, 2015,26, 2017 to be considered for the 20162018 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 20142016 IS INCLUDED AS PART OF THE COMPANY’S ANNUAL REPORT ALONG WITH THIS PROXY STATEMENT, WHICH ARE AVAILABLE AT 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, Directorsdirectors 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). A copy of the Audit Committee Charter is also attached hereto as Appendix A
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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. |
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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. |
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| 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 | |
1.Election of Directors
Nominees
| | | | |
| | | | |
01 Richard Leeds 05 Stacy Dick06 Robert D. Rosenthal
| 02 Bruce Leeds
06 Robert Rosenthal | 03 Robert Leeds
07 Marie Adler-Kravecas
| 03 Robert Leeds | 04 Lawrence Reinhold | 05 Stacy Dick |
The Board of Directors recommends you vote FOR Proposal 2 and 3:
| |
The Board of Directors recommends you vote FOR proposal 2:
| |
| For | Against | Abstain | | |
| 2. | The adoption, on an advisory basis, of a resolution approving the compensation of the Named Executive Officers of the Company as described in the “Executive Compensation” section of the 2017 Proxy Statement. | | ☐ | ☐ | ☐ |
2.| 3. | A Proposal to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accountants for fiscal year 20152017. | o | o | o | | |
| | ☐ | ☐ | | | ☐ |
| | | | | |
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 items 1 and 2.
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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)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 | Date |
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting: The Proxy Statement & Annual Report is/are available at www.proxyvote.com
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement 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, 20155, 2017
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, EDTEastern Time on June 8, 2015,5, 2017, 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 | |
(Continued, and to be marked, dated and signed, on the other side)
Appendix A
AUDIT COMMITTEE CHARTER
FOR
SYSTEMAX INC.
(revised March 15, 2017)
Purpose of Committee
The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Systemax Inc. (the “Company”) is to (a) assist the Board with oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the Company’s independent auditor’s qualifications and independence, and (iv) the performance of the Company’s internal audit function and independent auditors; and (b) prepare the report that U.S. Securities and Exchange Commission rules require be included in the Company’s annual proxy statement.
The function of the Committee is oversight. It is not the Committee’s responsibility to certify the Company’s financial statements or to guarantee the report of the independent auditor. The Company’s management is responsible for the (i) preparation, presentation and integrity of the Company’s financial statements, (ii) maintenance of appropriate accounting and financial reporting principles and policies, and (iii) maintenance of internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditor is responsible for planning and carrying out a proper audit and reviews. In fulfilling their responsibilities hereunder, it is recognized that members of the Committee are not full-time employees of the Company. As such, it is not the duty or responsibility of the Committee or its members to conduct auditing or accounting reviews or procedures, except to the extent described below under “Performance Evaluation”.
Each member of the Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Company from which it receives information and (ii) the accuracy of the financial and other information provided to the Committee by such persons and organizations absent actual knowledge to the contrary (which shall be promptly reported to the Company’s Board). In addition, the evaluation of the Company’s financial statements by the Committee is not of the same scope as, and does not involve the extent of detail as, audits performed by the independent auditor, nor does the Committee’s evaluation substitute for the responsibilities of the Company’s management for preparing, or the independent auditor for auditing, the financial statements.
Committee Duties and Responsibilities
The duties and responsibilities of the Committee are to:
| 1. | Retain and terminate the Company’s independent auditors (subject, if applicable, to shareholder ratification). The Committee shall oversee the rotation of the audit partners of the independent auditors as required by the Sarbanes-Oxley Act of 2002. The Committee shall have the sole authority to approve and/or pre-approve all audit engagement fees and terms, as well as all non-audit engagement fees and terms with the independent auditor. The Committee shall not engage the independent auditor to perform non-audit services proscribed by law or regulation. The Committee need not pre-approve non-audit services that fall within the “De Minimis Exception” set forth in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended; |
| 2. | At least annually, obtain and review a report by the independent auditor consistent with Independence Standards Board of Directors Standard No. 1, describing: (a) the independent auditor’s internal quality-control procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditor, and any steps taken to deal with any such issues; and (c) (to assess the auditor’s independence) all relationships between the independent auditor and the Company. After reviewing the foregoing report and the independent auditor’s work throughout the year, the Committee shall evaluate the auditor’s qualifications, performance and independence. This evaluation shall include the review and evaluation of the lead partner of the independent auditor. In making its evaluation, the Committee shall take into account the opinions of management and the Company’s internal auditors (or other personnel responsible for the internal audit function). The Committee shall present its conclusions with respect to the independent auditor to the full Board; |
| 3. | Review and discuss the annual audited financial statements and quarterly financial statements with management and the independent auditor, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and provide the annual Audit Committee report required by the SEC for inclusion in the Company’s annual report on Form 10-K, and otherwise report to the stockholders of the Company in accordance with the rules and regulations of the SEC. |
| 4. | Review and discuss with management earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. This discussion may be done generally (i.e., discussion of the types of information to be disclosed and the type of presentation to be made). The Committee is not required to discuss in advance each earnings press release or each instance in which the Company provides earnings guidance; |
| 5. | As appropriate, obtain advice and assistance from outside legal, accounting or other advisors; |
| 6. | Review and discuss with management policies with respect to risk assessment and risk management. While it is the job of the chief executive officer and senior management to assess and manage the Company’s exposure to risk under the oversight of the Board of Directors, the Committee shall discuss guidelines and policies to govern the process by which this is handled, including working together with the Compensation Committee regarding the Company’s compensation policies for all its employees as they relate to the Company’s risk management goals and objectives. The Committee shall discuss the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures; |
| 7. | Periodically meet separately with management, with internal auditors (or other personnel responsible for the internal audit function), and with independent auditors; |
| 8. | Annually discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management. The discussion shall address, to the extent applicable, any accounting adjustments that were noted or proposed by the independent auditor but were "passed" (as immaterial or otherwise), any communications between the audit team and the auditor's national office with respect to auditing or accounting issues presented by the engagement and any “management” or “internal control” letter issued, or proposed to be issued, by the independent auditor. The Committee shall discuss with the independent auditor: |
| (a) | the responsibilities, budget and staffing of the Company’s internal audit function; |
| (b) | the Company's critical accounting policies and practices; |
| (c) | alternative treatments of financial information within generally accepted accounting principles related to material items the independent auditors have discussed with management, ramifications of use of the alternative disclosures and treatments, and the treatment preferred by the independent auditors; and |
| (d) | other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences. |
The Company’s directors of internal audit shall report directly to the chief financial officer and the Committee at least four times per fiscal year, or more often as necessary;
| 9. | The Committee shall periodically review and discuss with management and the independent auditor: (a) any major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles, and major issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of material control deficiencies; (b) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements; and (c) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company. |
| 10. | The Committee shall review disclosures made to the Committee by the Company's Chief Executive Officer and Chief Financial Officer during their certification process for the Form 10-K and Forms 10-Q about significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting and any fraud involving management or other employees who have a significant role in the Company's internal control over financial reporting. The Committee shall review with management, the senior internal auditing executive, and the independent auditor, as appropriate, attestations and reports by the independent auditor on internal control over financial reporting. |
| 11. | Set clear hiring policies for the hiring by the Company of employees or former employees of the independent auditors; |
| 12. | Establish procedures for (i) the receipt, retention and treatment of complaints received by the Company, regarding accounting, internal accounting controls, or auditing matters and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; |
| 13. | Report regularly to the Board. The Committee shall review with the full Board any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditors, or the performance of the internal audit function; |
| 14. | Review the content of CEO and CFO disclosures and certifications under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; and |
| 15. | The Committee shall obtain from the independent auditor assurance that Section 10A(b) of the Exchange Act (relating to reports by the independent auditor made to the Company of illegal acts discovered by the independent auditor) has not been implicated. |
Committee Membership
The Committee shall consist of at least three members of the Board, each of whom is, in the business judgment of the Board, “independent” under Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, the rules of the New York Stock Exchange and any other securities exchange on which the Company’s securities are listed. Each member of the Committee shall be financially literate (or shall become so within a reasonable period of time after appointment to the Committee), and at least one member of the Committee shall have “accounting or related financial management expertise” as such qualifications are interpreted by the Board in its business judgment, and qualify as a “financial expert” as defined by the U.S. Securities and Exchange Commission. No Committee member may serve on the audit committees of more than two other public companies, unless the Board has determined that such service will not impair the effectiveness of the member’s service on the Committee. The Board shall periodically determine (a) whether each Committee member meets such independence and experience requirements and (b) whether or not any member of the Committee is an "audit committee financial expert" as that term is defined by the rules and regulations of the Commission.
The members of the Committee shall be appointed by the Board, and shall serve at the pleasure of the Board for such term or terms as the Board may determine.
The compensation to be paid by the Company to any Committee member must consist solely of director’s fees; provided, however, that pension or other deferred compensation that is not contingent on future service to the Company will not be deemed to violate this requirement.
Committee Structure and Operations
A majority of the Committee shall constitute a quorum. The Board shall designate a member of the Committee as its chairperson. The Committee may act by a majority of the members present at a meeting of the Committee. In the event of a tie vote on any issue, the chairperson’s vote shall decide the issue. The Committee shall meet in person or telephonically at least four times a year at a time and place determined by the Committee chairperson, with further meetings to occur when deemed necessary or desirable by the Committee or its chairperson. The Committee may delegate some or all of its duties to a subcommittee comprising one or more members of the Committee. The Committee may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee to attend any meetings and to provide such pertinent information as the Committee may request.
Performance Evaluation
The Committee shall review the adequacy of this charter and evaluate its performance hereunder at least annually and present such report to the full Board. Such report shall include any recommended changes to this charter. The Board shall also review and approve this charter at least annually.
While the fundamental responsibility for the Company’s financial statements and disclosures rests with management and the independent auditor, the Committee shall review: (i) major issues regarding accounting principles, and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies; (ii) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of using alternative methods under generally accepted accounting principles (“GAAP”) on the financial statements; (iii) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company; and (iv) earnings press releases (paying particular attention to any use of “pro forma,” or “adjusted” non-GAAP, information), as well as financial information and earnings guidance provided to analysts and rating agencies.
Resources and Authority of the Committee
In discharging its oversight responsibilities, the Committee shall have unrestricted access to the Company’s management, books and records and the authority to retain outside counsel, accountants or other consultants in the Committee’s sole discretion. The Committee may direct any officer of the Company, the independent auditor and/or the Company’s internal audit staff to inquire into and report to the Committee on any matter.
Nothing contained in this charter is intended to, or should be construed as, creating any responsibility or liability of the members of the Committee except to the extent otherwise provided under applicable Delaware law which shall continue to set the legal standard for the conduct of the members of the Committee.