UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Under§240.14a-12 |
LIFETIME BRANDS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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☐ | Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. | |||
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Notice of
and Proxy Statement | ||||
June | Garden City, New York | |||
MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS
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Dear Fellow Stockholder:
I invite you to attendparticipate in our Annual Meeting of Stockholders on Thursday, June 27, 201925, 2020 at 10:30 a.m. Eastern Time, online at our office, located at 1000 Stewart Avenue, Garden City, New York 11530.www.meetingcenter.io/247518216. Due to the information and guidance currently available surrounding the emerging public health impact of the coronavirus outbreak(COVID-19), we have made the decision that this year’s Annual Meeting will be virtual only. Information on how to participate in the Annual Meeting can be found on page 9 of the Proxy Statement.
At the Annual Meeting, you will be asked: to elect a board of ten directors; to ratify the appointment of our independent registered public accounting firm; and to approve the compensation of the Company’s named executive officers. We will also be sharing with you recent news about the Company,officers; and you will be given the opportunity to ask questionsapprove an amendment and express your opinions about Lifetime Brands. You also will be able to see manyrestatement of the outstanding, innovative productsCompany’s Amended and brandsRestated 2000 Long-Term Incentive Plan.
We are taking advantage of the Securities and Exchange Commission rule that allows companies to provide their stockholders with access to proxy materials over the Internet. On or about May 5, 2020, we proudly featurewill begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders informing them that our Proxy Statement, Annual Report for the fiscal year ended December 31, 2019 and voting instructions are available online. As more fully described in that Notice, all stockholders may choose to access our portfolioproxy materials on the Internet or may request to receive paper copies of kitchenware, tablewarethe proxy materials. This allows us to conserve natural resources and other products.
Pleasereduces the costs of printing and distributing the proxy materials, while providing our stockholders with access to the proxy materials in a fast and efficient manner. You can also visit our website, www.lifetimebrands.com, where you will find this Proxy Statement and our Annual Report for the fiscal year ended December 31, 2018.2019.
On behalf of our directors and our management team, I thank you for your continued support of Lifetime Brands.
Best regards,
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/s/ Jeffrey Siegel
Jeffrey Siegel
Chairman of the Board of Directors
April 29, 2020
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on June 27, 201925, 2020: TheOn or about May 5, 2020, we will begin mailing a notice, called the Notice of Internet Availability of Proxy Materials, to our stockholders advising them that this Proxy Statement, form of proxy, andthe 2019 Annual Report on Form10-K forand voting instructions can be accessed over the fiscal year ended December 31, 2018 are available freeInternet at www.envisionreports.com/LCUT. You may then access these proxy materials over the Internet, or you may request that a printed copy of charge atwww.envisionreports.com/LCUT.the materials be sent to you. If you require directionswant to receive a paper ore-mail copy of these proxy materials, you must request one over the Annual Meeting, please contact usInternet at (516)www.envisionreports.com/LCUT, by calling toll free683-6000.1-866-641-4276, or by sending ane-mail to investorvote@computershare.com. There is no charge to you for requesting a copy.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 27, 2019,25, 2020, 10:30 a.m. Eastern Time
1000 Stewart Avenue, Garden City, New York 11530
Notice is hereby given that the Annual Meeting of Stockholders of Lifetime Brands, Inc., a Delaware corporation (the “Company”), will be held online at the office of the Company, 1000 Stewart Avenue, Garden City, New York 11530www.meetingcenter.io/247518216 on Thursday, June 27, 201925, 2020 at 10:30 a.m., Eastern Time (the “Annual Meeting”), for the following purposes:
(1) | To elect to the board of directors the ten persons named in the accompanying Proxy Statement, each to serve until the 2020 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified; |
(2) | To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for |
(3) | To approve, on anon-binding advisory basis, the compensation of the Company’s named executive |
(4) | To approve an amendment and restatement of the Company’s Amended and Restated 2000 Long-Term Incentive Plan. |
In addition to the foregoing, the Annual Meeting will include the transaction of such other business as may properly come before the meeting, or any adjournment(s), continuation(s), rescheduling(s) or postponement(s) thereof.
Stockholders of record at the close of business on April 29, 201927, 2020 are entitled to notice of and to vote at the Annual Meeting and any adjournment(s), continuation(s), rescheduling(s) or postponement(s) thereof. A complete list of the stockholders entitled to vote at the Annual Meeting may be accessed electronically, upon request, starting ten (10) days prior to the meeting by contacting our Corporate Secretary via email at sara.shindel@lifetimebrands.com. In addition, such stockholder list will be availableposted on the virtual meeting website during the meeting.
The Annual Meeting will be held online only via live webcast and there will be no physical location for examination by any stockholder atstockholders to attend the Company’s office, 1000 Stewart Avenue, Garden City, New York 11530, for any purpose germaneAnnual Meeting. Stockholders will be able to vote electronically and submit questions prior to the Annual Meeting by logging in at www.meetingcenter.io/247518216, entering their15-digit control number and the password LCUT2020, or may vote and ask questions during ordinary business hours, for a period ofthe Annual Meeting by logging in and entering the required information at least 10 days priorthe meeting date and time. Guests may log in to the website and attend the Annual Meeting.Meeting, but only stockholders who have15-digit control numbers will be able to vote and ask questions.
By Order of the Board of Directors, |
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/s/ Sara Shindel
Sara Shindel
Secretary
Garden City, New York
April 29, 2020
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | ||||
PROPOSAL NO. 4: APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE COMPANY’S AMENDED AND RESTATED 2000 LONG-TERM INCENTIVE PLAN | 68 | |||
VOTING MATTERS & BOARD RECOMMENDATIONS
Proposal No. | Proposal | Board Recommends | ||
1 | To elect a board of directors consisting of ten directors named in this proxy statement to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified | FOR each nominee | ||
2 | To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for | FOR | ||
3 | To approve, on anon-binding advisory basis, the compensation of the Company’s named executive officers | FOR | ||
4 | To approve an amendment and restatement of the Company’s Amended and Restated 2000 Long-Term Incentive Plan | FOR |
BOARD NOMINEES AND COMMITTEE ASSIGNMENTS
There are ten director nominees for election at our 20192020 Annual Meeting, to hold office until the next Annual Meeting and until their successors have been duly elected and qualified. All of the nominees, other than Ms. Veronique Gabai-Pinsky, are currently serving as directors of the Company, and all nominees, other than Ms. Gabai-Pinsky and Ms. Rachael A. Jarosh, were elected to the board of directors (the “Board”) at the last Annual Meeting. Ms. Jarosh was appointed to the Board on January 27, 2020. Ms. Gabai-Pinsky is not currently serving on the Board, but has been nominated for election to the Board at the 2020 Annual Meeting. She will fill the vacancy on the Board that will result from current Board member Dennis E. Reaves not beingre-nominated for election at the 2020 Annual Meeting.
With respect to Messrs. Kay, Pollack and Schnabel, as previously disclosed, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Taylor Parent, LLC, a Delaware limited liability company (“Taylor Parent”), and Taylor Holdco, LLC, a Delaware limited liability company (dba Filament Brands, and which the Company refers to as “Filament”) and related entities, providing for the acquisition of Filament by the Company (the “Filament Acquisition”). In connection with the Merger Agreement, the Company entered into a stockholders agreement (the “Stockholders Agreement”) by and among the Company, Taylor Parent and other related stockholders. Pursuant to the Merger Agreement and the Stockholders Agreement, the Company was required to appoint three Taylor designees to the Board. On March 1, 2018, effective upon the closing of the Filament Acquisition, the Board unanimously voted to expand the Board and to appoint Messrs. Kay, Pollack and Schnabel to fill the newly created vacancies on the Board. Messrs. Kay, Pollack and Schnabel were subsequently elected to the Board by the Company’s stockholders at the 2018 and 2019 Annual MeetingMeetings and are standing forre-election to the Board at the 20192020 Annual Meeting.
Name | Age | Main Occupation | Joined Board | Committee Assignment | ||||
Jeffrey Siegel | 76 | Chairman/Executive Chairman, Lifetime Brands, Inc. | 1967 | SP, Exec (Chair) | ||||
Robert B. Kay | 57 | CEO, Lifetime Brands, Inc. | 2018 | |||||
Michael J. Jeary | 72 | Retired advertising executive | 2005 | Nom/Gov, SP (Chair), Comp | ||||
John Koegel* | 67 | Principal,Jo-Tan, LLC | 2008 | Nom/Gov (Chair), SP, Audit, Comp, Exec | ||||
Cherrie Nanninga | 70 | Partner, Real Estate Solutions Group | 2003 | Nom/Gov, Audit, Comp (Chair) | ||||
Craig Phillips | 68 | Retired, Senior VP – Distribution1, Lifetime Brands, Inc. | 1974 | Nom/Gov | ||||
Bruce G. Pollack | 60 | Managing Partner, Centre Partners Management, LLC | 2018 | Nom/Gov, Comp | ||||
Dennis E. Reaves | 76 | Consultant | 2013 | Nom/Gov, SP | ||||
Michael J. Regan | 77 | Retired Certified Public Accountant | 2012 | Nom/Gov, Audit (Chair) | ||||
Michael Schnabel | 41 | Partner, Centre Partners Management, LLC | 2018 | Nom/Gov, SP |
Name | Age | Main Occupation | Joined Board | Committee Assignment | ||||
Jeffrey Siegel | 77 | Chairman/Executive Chairman, Lifetime Brands, Inc. | 1967 | Exec (Chair) | ||||
Robert B. Kay | 58 | CEO, Lifetime Brands, Inc. | 2018 | Exec | ||||
Rachael A. Jarosh | 51 | CEO, Enactus | 2020 | Nom/Gov | ||||
John Koegel* | 68 | Principal,Jo-Tan, LLC | 2008 | Nom/Gov (Chair), SP, Audit, Comp, Exec | ||||
Cherrie Nanninga | 71 | Partner, Real Estate Solutions Group | 2003 | Nom/Gov, Comp (Chair) | ||||
Craig Phillips | 69 | Retired, Senior VP – Distribution1, Lifetime Brands, Inc. | 1974 | Nom/Gov, SP | ||||
Veronique Gabai-Pinsky | 54 | Former Global President, The Vera Wang Group | - | - | ||||
Bruce G. Pollack | 61 | Managing Partner, Centre Partners Management, LLC | 2018 | Nom/Gov, Comp | ||||
Michael J. Regan | 78 | Retired Certified Public Accountant | 2012 | Nom/Gov, Audit (Chair) | ||||
Michael Schnabel | 42 | Partner, Centre Partners Management, LLC | 2018 | Nom/Gov, SP |
Abbreviations:Nom/Gov = Nominating/Governance Committee; Audit = Audit Committee; SP = Strategic Planning Committee; Comp = Compensation Committee; Exec = Executive Committee
* Independent Lead Director
1 Mr. Phillips retired and resigned as Senior Vice-President – Distribution, effective January 2, 2015.
CORPORATE GOVERNANCE PRACTICES
Our corporate governance practices include the following best practices:
● | a majority vote director resignation policy, |
● | a lead independent director on our Board, |
● | the annual election of directors, |
● | a compensation philosophy for named executive officers aligning compensation with short-term and long-term performance, including drivers of stockholder value, |
● | stock ownership guidelines for directors, |
● | stock ownership guidelines for our executive officers, |
● | stockholders can take action by written consent, |
● | anti-hedging provisions, |
● | stockholders have the right to remove directors with or without cause, |
● | our strong corporate citizenship, including our donation practices, our partnership with organizations and our avoidance of the use of conflict minerals. |
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL STOCKHOLDERS TO ATTENDPARTICIPATE IN THE ANNUAL MEETING.MEETING ONLINE AT WWW.MEETINGCENTER.IO/247518216. WHETHER OR NOT YOU PLAN TO ATTENDPARTICIPATE IN THE ANNUAL MEETING, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. PLEASE COMPLETE, DATE, SIGNVOTE YOUR SHARES USING THE INTERNET OR THE DESIGNATED TOLL-FREE TELEPHONE NUMBER, OR BY REQUESTING A PRINTED COPY OF THE PROXY MATERIALS AND RETURN AS PROMPTLY AS POSSIBLECOMPLETING AND RETURNING BY MAIL THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD YOU WILL RECEIVE IN THE ACCOMPANYING REPLY ENVELOPE. STOCKHOLDERS WHO WISH MAY ATTEND THE ANNUAL MEETING.RESPONSE TO YOUR REQUEST. STOCKHOLDERS WHO HAVE SUBMITTED COMPLETED PROXY OR VOTING INSTRUCTION CARDS MAY REVOKE THEIR PROXIES AND VOTE IN PERSON.DURING THE MEETING.
LIFETIME BRANDS, INC.
1000 Stewart Avenue
Garden City, New York 11530
ANNUAL MEETING OF STOCKHOLDERS
To be held on June 27, 201925, 2020
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Lifetime Brands, Inc., a Delaware corporation (the “Company”, “us” or “we”), for use at our Annual Meeting of Stockholders (the “Annual Meeting”) to be held on the date, at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. Stockholders of record at the close of business on April 29, 201927, 2020 are entitled to notice of and to vote at the Annual Meeting. This Proxy Statement and the accompanying form of proxy shall be mailed to stockholders on
On or about May 6, 2019.5, 2020, we will begin mailing a notice, called the Notice of Internet Availability of Proxy Materials (the “Notice”), to our stockholders advising them that this Proxy Statement, the 2019 Annual Report and voting instructions can be accessed over the Internet at www.envisionreports.com/LCUT. You may then access these proxy materials over the Internet, or you may request that a printed copy of the materials be sent to you. If you want to receive a paper ore-mail copy of these proxy materials, you must request one over the Internet at www.envisionreports.com/LCUT, by calling1-866-641-4276toll free, or by sending ane-mail to investorvote@computershare.com. There is no charge to you for requesting a copy.
THE ANNUAL MEETING
On April 29, 2019,27, 2020, there were 20,921,967 shares21,485,682shares of the Company’s common stock, $0.01 par value, issued and outstanding. Each share of the Company’s common stock entitles the holder thereof to one vote on each matter submitted to a vote of stockholders at the Annual Meeting.
All shares of common stock represented by properly executed proxies or voting instruction forms will be voted at the Annual Meeting in accordance with the directions marked on the proxies or voting instruction forms, unless such proxies or voting instruction forms have previously been revoked. If no directions are indicated on such proxies or voting instruction forms, they will be voted FOR Proposal 1 – the election of each nominee named under Election of Directors, FOR Proposal 2 – the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for 2019 and2020, FOR Proposal 3 – the approval, on anon-binding advisory basis, of the
compensation of the Company’s named executive officers.officers and FOR Proposal 4 – to approve an amendment and restatement of the Amended and Restated 2000 Long-Term Incentive Plan. If any other matters are properly presented at the Annual Meeting for action, the proxy holders will vote the proxies (which confer discretionary authority upon such holders to vote on such matters) in accordance with their best judgment, subject to compliance with Rule14a-4(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each proxy executed and returned by a stockholder by any of the methods indicated below may be revoked at any time before it is voted by timely submission of a written notice of revocation or by submission of a duly executed proxy bearing a later date (in either case directed to the Secretary of the Company), or, if a stockholder is present atparticipates online in the Annual Meeting, he or she may elect to revoke his or her proxy and vote his or her shares personally.
VOTE REQUIRED FOR APPROVAL
A majority of our outstanding shares of common stock present at the Annual Meeting, in person or by proxy, and entitled to vote shall constitute a quorum. Abstentions and brokernon-votes will be counted for purposes of determining the presence or absence of a quorum. Assuming a quorum is present, (1) directors shall be elected by a plurality of the votes cast in the election of directors, (2) the affirmative vote of a majority of the shares present at the Annual Meeting, in person or by proxy, and entitled to vote is necessary to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, and (3) the affirmative vote of a majority of the shares present at the Annual Meeting, in person or by proxy, and entitled to vote is necessary to approve, on anon-binding advisory basis, the compensation of the Company’s named executive officers.officers, and (4) the affirmative vote of a majority of the shares present at the Annual Meeting, in person or by proxy, and entitled to vote is necessary to approve an amendment and restatement of our Amended and Restated 2000 Long-Term Incentive Plan.
With respect to Proposal 1, you may vote for all nominees, withhold your vote as to all nominees, or vote for all nominees except those specific nominees from whom you withhold your vote. The ten nominees receiving the most “FOR” votes will be elected. Properly executed proxies marked “WITHHOLD” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. Proxies may not be voted for more than ten directors and stockholders may not cumulate votes for the election of any directors.
With respect to Proposals 2, 3 and 3,4, you may vote for, against or abstain from voting on any of these proposals.
If a stockholder, present in person or by proxy, abstains on a matter, such stockholder’s shares of common stock, although included in the quorum, will not be voted on such matter. Thus, an abstention from voting on either Proposal 2, 3 or 34 has the same effect as a vote “against” the matter.
Brokers or other nominees who hold shares of our common stock for a beneficial owner have the discretion to vote on routine proposals when they have not received voting instructions from the beneficial owner at least ten days prior to the Annual Meeting. New York Stock Exchange rules prohibit brokers from voting on Proposals 1, 3 and 34 without receiving instructions from the beneficial owner of the shares. Brokers may vote on Proposal 2 absent instructions from the beneficial owner.
A brokernon-vote occurs when a broker or other nominee does not receive voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares. Brokernon-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting, but, in the absence of instructions, shares subject to such brokernon-votes will not be counted for purposes of determining the number of votes present in person or represented by proxy and entitled to vote with respect to a particular proposal. Thus, a brokernon-vote will not impact our ability to obtain a quorum.
In determining whether a proposal has received the requisite number of votes, brokernon-votes will have no effect on the outcome of the vote on a proposal that requires a plurality of votes cast (Proposal 1) and will have no effect on the outcome of the vote on a proposal that requires the
affirmative vote of a majority of the shares present at the Annual Meeting, in person or by proxy, and entitled to vote (Proposal 3)(Proposals 3 and 4).
HOW TO VOTE
You may vote your shares by one of the following methods:
INTERNET:To vote your shares by Internet, please visit the website listed on your proxy card or voting instruction form and follow theon-screen instructions. If you vote by Internet, you do not need to mail your proxy card or voting instruction form.
TELEPHONE: To vote your shares by telephone, please follow the instructions on your proxy card or voting instruction form. If you vote by telephone, you do not need to mail your proxy card or voting instruction form.
MAIL: To vote your shares by mail, please follow the instructions on your proxy card or voting instruction form. Please be sure to sign and date your completed proxy card or voting instruction form before mailing. If you do not sign your proxy card or voting instruction form, your votes cannot be counted. Please mail your proxy card or voting instruction form in thepre-addressed, postage-paid envelope.
IN PERSON:VOTE ONLINE DURING THE MEETING: You may also attendvote online during the Annual Meeting and vote in person. Please bring photo identification.by visiting the link www.meetingcenter.io/247518216. If you ownare the registered holder of your stockshares, meaning that you hold your shares through Computershare Investor Services (“Computershare”), our transfer agent, you do not need to register in advance for the Annual Meeting. The15-digit control number provided on your Notice, proxy card or voting instruction form is necessary to access this site, as well as the password LCUT2020. If you hold your shares in “street name”name,” meaning that you hold your shares through a broker, bank or other financial institution, please follow the directions below to register in advance for the Annual Meeting. Guests will not be able to vote during the Annual Meeting.
PARTICIPATING IN THE ANNUAL MEETING
You are entitled to participate in the Annual Meeting only if you were a stockholder of record or a beneficial owner of shares of our common stock as of the close of business on the Record Date, April 27, 2020, or you hold a valid proxy for the Annual Meeting. Our Annual Meeting will be a completely virtual meeting. There will be no physical meeting location. The meeting will be conducted only via live webcast. Guests may attend the meeting but will not be able to participate, vote, or ask questions.
To participate in the Annual Meeting, visit www.meetingcenter.io/247518216 and enter the15-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied your proxy materials, and the password LCUT2020. If you hold your shares in “street name,” please contact the broker, bank, or other financial institution that holds your shares to receive proof of your beneficial ownership and submit such proof, along with your name and email information, to Computershare in advance of the Annual Meeting no later than 5:00 pm Eastern Time on June 15, 2020. Requests for registration must be labeled as “Legal Proxy,” and may be submitted (i) via email to legalproxy@computershare.com by forwarding the email from your broker regarding your beneficial ownership or sending an image of your legal proxy, or (ii) sending proof of your beneficial ownership via mail to: Computershare, Lifetime Brands, Inc. Legal Proxy, P.O. Box 43001, Providence, Rhode Island 02940-3001. Upon receipt of such proof of beneficial ownership, Computershare will then register you for attendance at the virtual meeting and provide you with an email confirming your registration. The meeting will begin promptly at 10:30 a.m. (Eastern Time) on June 25, 2020. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.
If you are a stockholder and wish to vote your shares in person at the Annual Meeting, you must obtain and bringsubmit questions prior to or during the meeting, a legal proxy fromlog into the bank orvirtual meeting platform at www.meetingcenter.io/247518216. Questions pertinent to meeting matters will be answered during the brokerage firm holding your shares.meeting, subject to time constraints.
MAJORITY VOTING GOVERNANCE PRINCIPLE
Although our Bylaws provide for a plurality voting standard for the election of directors, our Board has adopted, as a governance principle, a majority voting standard for uncontested director elections and a plurality voting standard for contested director elections. For this purpose, a “majority of votes cast” means that the number of votes cast “for” a nominee’s election exceeds the number of votes cast “against” that nominee’s election. Accordingly, subsequent to the election of directors at the Annual Meeting, any elected director who is not elected by an affirmative vote of a majority of the votes cast at the Annual Meeting shall submit his or her resignation to our Board, to be effective upon the Board’s determination of whether to accept or reject the resignation. Upon receipt by our Board of such resignation, our Board shall, in its sole judgment and discretion, within 90 days from the submission of such director’s resignation as a director of the Company, determine whether to accept or reject such director’s resignation. If our Board rejects such director’s resignation as a director of the Company, then we shall prepare and file a Form8-K to explain our Board’s rationale for its rejection of such director’s resignation.
PROXY SOLICITATION
We will bear the cost of preparing, printing, assembling and mailing the Notice, form of proxy, this Proxy Statement, the 20182020 Annual Report and other materials that may be sent to stockholders in connection with this solicitation. We have retained Georgeson, a proxy solicitation firm, at an estimated cost of $8,500 plus reimbursement of expenses, to assist in soliciting proxies from brokers, banks, nominees, and institutional holders. Georgeson may solicit votes personally or by telephone, mail or electronic means. In addition, Georgeson and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement.
It is contemplated that brokerage houses will forward the proxy materials to beneficial holders at our request. In addition to the solicitation of proxies by the use of mail, our officers and other employees may solicit proxies personally, by telephone or by electronic means without being paid any additional compensation. We will reimburse such persons for their reasonableout-of-pocket expenses in accordance with the regulations of the Securities and Exchange Commission (“SEC”).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of our common stock as of April 15, 201920, 2020 (except where otherwise noted) based on a review of information filed with the SEC and our records with respect to (i) each person known to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all our directors and executive officers as a group.
Name of beneficial owner | Number of shares beneficially owned | Percent of shares | Number of shares beneficially owned
| Percent of shares beneficially owned*
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DIRECTORS AND EXECUTIVE OFFICERS (1)
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Jeffrey Siegel | 1,508,170 (2) | 7.1% | 1,700,891 (2) | 7.7% | ||||||||||||
Craig Phillips
| 642,039(3) | 3.1% | 649,639 | 3.0% | ||||||||||||
Daniel Siegel | 434,552(4) | 2.1% | 478,434 (3) | 2.2% | ||||||||||||
Ronald Shiftan
| 395,121(5) | 1.9% | 224,356(4) | 1.0% | ||||||||||||
Laurence Winoker | 116,308(6) | † | 136,164 (5) | † | ||||||||||||
Robert B. Kay
| 128,500(7) | † | 290,389 (6) | 1.3% | ||||||||||||
Michael J. Jeary | 80,600(8) | † | ||||||||||||||
Rachael A. Jarosh
| 4,197 | † | ||||||||||||||
Cherrie Nanninga
| 57,100(9) | † | 48,960 | † | ||||||||||||
John Koegel | 39,085 | † | 46,685 | † | ||||||||||||
Michael J. Regan
| 26,134 | † | 33,734 | † | ||||||||||||
Dennis E. Reaves | 20,558 | † | 28,158 | † | ||||||||||||
Bruce G. Pollack
| 5,891,794 (10) | 28.2% | 6,007,802 (7) | 28.0% | ||||||||||||
Michael Schnabel | 7,086 | † | 14,686 | † | ||||||||||||
All directors and executive officers as a group (13 persons)
| 9.347,047 | 44.7% | ||||||||||||||
Veronique Gabai-Pinsky | 0 | 0% | ||||||||||||||
All directors, nominees and executive officers as a group (14 persons) | 9,664,095 | 43.5% | ||||||||||||||
Name of beneficial owner | Number of shares beneficially owned | Percent of shares beneficially owned | Number of shares beneficially owned
| Percent of shares beneficially owned
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Centre Partners V, L.P. 601 Lexington Avenue, 55th Floor New York, New York 10022
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5,884,708 |
(11) |
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28.1% |
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5,993,116 |
(8) |
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27.9 |
% | ||||
Kennedy Capital Management, Inc. 10829 Olive Blvd. St. Louis, Missouri 63141
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1,686,821 |
(9) |
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7.9 |
% | ||||||||||
Mill Road Capital II, L.P. 382 Greenwich Avenue, Suite One Greenwich, Connecticut 06830
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1,628,203 |
(12) |
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7.8% |
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|
1,628,203 |
(10) |
|
7.6 |
% | ||||
Dimensional Fund Advisors LP 6300 Bee Cave Road Austin, Texas 78746 |
|
1,250,094 |
(13) |
|
6.0% |
|
|
1,304,463 |
(11) |
|
6.1 |
% |
Notes:
* Calculated on the basis of 20,926,717 shares of common stock outstanding on April 15, 2019.
* | Calculated on the basis of 21,485,682 shares of common stock outstanding on April 20, 2020. Pursuant to the regulations of the SEC, shares are deemed to be “beneficially owned” by a |
directly or indirectly has or shares the power to vote or dispose of such shares. Each person is deemed to be the beneficial owner of securities which may be acquired within sixty days through the exercise of options, warrants, and other rights, if any, and such securities are deemed to be outstanding for the purpose of computing the percentage of the class beneficially owned by such person. |
† | Less than 1%. |
(1) | The address of such individuals is c/o the Company, 1000 Stewart Avenue, Garden City, New York 11530. |
(2) | Consists of: (i) |
(3) | Consists of: (i) |
|
(4) | Based on a Form 4 filed with the SEC on April 5, 2019, the subsequent cancellation of restricted shares originally awarded as part of Mr. Shiftan’s compensation as an independent director, and the issuance of shares relating to performance units on March 10, 2020. |
(5) | Consists of: (i) |
(6) | Consists of: (i) |
|
Consists of: (i) |
|
|
Based solely on |
Based solely on the Schedule 13G filed on February 14, 2020. Kennedy Capital Management, Inc. owns 1,686,821 shares, over which it has sole voting and dispositive power. |
(10) | Based solely on Amendment No. 7 to the Schedule 13D filed with the SEC on March 12, 2018. Represents shares owned by Mill Road Capital II, L.P. (“MR Capital Fund”). MR Capital Fund directly |
holds, and thus has sole voting and dispositive power over, 1,628,203 shares. Mill Road Capital II GP LLC (“MR Capital GP”), as sole general partner of MR Capital Fund, also has sole authority to vote (or direct the vote of), and to dispose (or direct the disposal) of, the shares held on behalf of MR Capital Fund, and each of Thomas E. Lynch and Scott P. Scharfman has shared authority to vote (or direct the vote of), and to dispose (or direct the disposal) of, these shares on behalf of MR Capital GP. Accordingly, each of MR Capital GP, MR Capital Fund, Mr. Lynch and Mr. Scharfman (collectively, the “MR Reporting Persons”) beneficially owns 1,628,203 shares of common stock, and the MR Reporting Persons beneficially own, in the aggregate, 1,628,203 shares of common stock. |
Based solely on Amendment No. |
ELECTION OF DIRECTORS
A board of ten directors is to be elected at the Annual Meeting to hold office until the next Annual Meeting of Stockholders, and shall hold office until their successors are duly elected and qualified or until their earlier resignation or removal. The following nominees have been recommended by the Board. Each of the nominees is one of our current directors. It is the intention of the persons named as proxies in the enclosed proxy card to vote the shares covered thereby FOR the election of the ten persons named below, unless a proxy card received by them contains contrary instructions:
Director Nominees
Jeffrey Siegel is Executive Chairman of | ||||
Robert B. Kayis our ChiefExecutive Officer and has served in such role since the consummation of the Filament Acquisition in March 2018. Mr. Kay previously served as the Chairman and Chief Executive Officer of Filament from 2012 to 2018. Mr. Kay began his career at Deloitte & Touche where he spent six years as a management consultant. From 1993 until 1998, he served as the Senior Vice President and Chief Financial Officer of Oxford Resources Corp., a |
|
John Koegel has been our independent lead director since 2013 and a principal ofJo-Tan, LLC, a retail consulting company since 2006. From February 2010 to October 2011, Mr. Koegel was a member of the Board of Directors and Lead Director of Game Trading Technologies, Inc., a |
Cherrie Nanninga has been a partner of Real Estate Solutions Group, LLC, a privately-held real estate consulting firm, since May 2014 and prior to that was the Chief Operating Officer of the New YorkTri-State Region of CBRE, a commercial real estate firm, since 2002. For 23 years prior thereto, Ms. Nanninga was employed by The Port Authority of New York and New Jersey where she most recently served as Deputy Chief Financial Officer and Director of Real Estate. |
Craig Phillips held the position of |
Veronique Gabai-Pinskyheld the position of Global President of the Vera Wang Group, a fashion designer, manufacturer, and distributor, from 2015 to 2018. Previously, Ms. Pinsky held the position of Global President of ADF (all fragrance portfolio), Lab Series (skin care for men) Beauty Bank and Idea Bank (New Brands Development), all divisions of the Estee Lauder Companies from 2006 to 2015 and served as the General Manager for Donna Karan and Michael Kors in the same ADF division from 2003 to 2006. Prior to her service at the Estee Lauder Companies, Ms. Gabai Pinsky held various executive level marketing and management positions at large international beauty companies such as Dragoco (now Symrise), LVMH and L’OREAL from 1988 to 2003. Ms. Gabai Pinsky currently serves on the Board of Interparfums, a publicly traded company, since 2017. | ||||
Bruce G. Pollack is a Managing Partner of Centre Partners Management, LLC |
|
Michael J. Regan is a retired certified public accountant. From 1996 to 2002, Mr. Regan was the Vice Chairman and Chief Administrative Officer of KPMG LLP, a leading independent public accounting firm, and was the lead audit partner for many Fortune 500 companies during his40-year tenure with KPMG (1962 to 2002). Mr. Regan currently is a director of Scientific Games Corporation, an entertainment and media company (since 2006). Mr. Regan previously served on the board of directors of DynaVox, Inc. The Board has determined that Mr. Regan is an “Audit Committee Financial Expert,” as defined by the SEC rules. |
Michael Schnabel is a Partner of Centre Partners Management LLC. Mr. Schnabel joined Centre Partners Management, LLC in 2002. Prior to joining Centre, he served as Director of Finance at OmniSky Corporation after having worked in Donaldson, Lufkin & Jenrette Securities Corp.’s investment banking department. Mr. Schnabel is currently a |
Key Qualifications of Director Nominees
Nominee | Key Qualifications | |
Jeffrey Siegel | Service as our Chairman and Executive Chairman; extensive knowledge of our strategy, operations and financial position and of the housewares and retail industries. | |
Robert B. Kay | Service as our Chief Executive Officer; distinguished career as the Chief Executive Officer in the housewares industry; experience gained in leadership positions in various industries. | |
Rachael A. Jarosh |
| |
John Koegel | Notable career in retailing; strong background in merchandising and general management; consultant for private investment funds and their retail and consumer related portfolio companies; recognized expertise in business improvement, management oversight and due diligence; experience in providing strategic advice on merger and acquisition transactions; knowledge of the Company and the housewares industry through board service. | |
Cherrie Nanninga | Extensive experience as a financial and operations executive; experience as Deputy Chief Financial Officer of a large public sector organization and Chief Operating Officer of a large division of a multinational company; knowledge of the Company and the housewares industry through board service. | |
Craig Phillips | Longstanding service as our Senior Vice-President – Distribution and Vice-President – Manufacturing until his retirement in 2015; knowledge of our strategy, operations and financial position and of the housewares industry. | |
Veronique Gabai-Pinsky | Expert in brand building, product development, creative and innovation, global business management, organizational design, talent management, brand portfolio management through senior leadership positions in the beauty and fragrance industry and the ready to wear apparel industry. | |
Bruce G. Pollack | Extensive investment banking and private equity experience; | |
| ||
Michael J. Regan | Notable career with extensive public company board experience; experience as an audit partner in a large international accounting firm; financial, business and strategic acumen and knowledge of the retail and consumer products industries. | |
Michael Schnabel | Extensive investment banking and private equity experience; |
Each of the nominees have consented to being named in this proxy statement and to serve on the Board if elected. We have no reason to believe that any of the nominees will not be a candidate or will be unable to serve. However, should any of the foregoing nominees become unavailable for any reason, the persons named as proxies in the enclosed proxy card intend to vote for such other person or persons as the Board may nominate.
Our Board unanimously recommends that stockholders vote FOR
the election of each of the nominated directors.
Signed proxies that are returned will be so voted unless otherwise instructed on the proxy card.
The following table sets forth the names and ages of each of our executive officers as of April 30, 2019.29, 2020.
Name | Age | Positions/Offices with Company | ||
Robert B. Kay | Chief Executive Officer | |||
Jeffrey Siegel | Chairman of the Board; Executive Chairman | |||
Daniel Siegel | President | |||
Laurence Winoker | Senior Vice-President – Finance; Treasurer; Chief Financial Officer |
Ronald Shiftan served as Chief Operating Officer of the Company until his retirement in March 2019.
EXECUTIVE OFFICER BACKGROUNDS
SeeElection of Directors for biographies, names and ages of those executive officers who are directors.
All of our officers are elected annually by our Board, hold office at the pleasure of the Board and serve until their successors are duly elected and qualified. Certain directors are executives of the Company for a contractual term pursuant to employment agreements. See theCompensation Discussion and Analysis section for summarized terms of these agreements.
Daniel Siegel has served in various positions since joining us in 1992, including as President since 2013. Prior thereto, Mr. Siegel was Executive Vice President of Sales from 2006 to 2008, Executive Vice President of Corporate Invention Strategies from 2008 to 2010 and was an Executive Vice President from 2010 to 2013. Mr. Siegel has been a director of Vasconia, since 2008 and was a director of GS Internacional S/A from 2011 to 2016.. Mr. Siegel is the son of Jeffrey Siegel, Chairman of our Board and Executive Chairman.
Laurence Winoker has been our Senior Vice-President – Finance, Treasurer and Chief Financial Officer since July 2007. Prior thereto, Mr. Winoker was Senior Vice-President, Controller and Treasurer of MacAndrews & Forbes Holdings Inc., a holding company with controlling interests in a diversified portfolio of public and private companies including Revlon, Inc. Mr. Winoker was Senior Vice-President, Treasurer and Controller of Revlon, Inc. from 1999 to 2003.
BOARD INDEPENDENCE
Our Board has determined that our director nominees, Michael J. Jeary,Rachael A. Jarosh, John Koegel, Cherrie Nanninga, Craig Phillips, Veronique Gabai-Pinsky, Bruce G. Pollack, Dennis E. Reaves, Michael J. Regan and Michael Schnabel are independent directors under the listing standards of The NASDAQNasdaq Stock Market LLC. Michael J. Jeary, who served as a member of our Board until his resignation from our Board on January 27, 2020, was also an independent director under the listing standards of The Nasdaq Stock Market LLC. Jeffrey Siegel and Robert B. Kay are our employees and are not considered to be independent directors. Ronald Shiftan was one of our employees until his retirement in March 2019 and is not considered to be an independent director. Sara Genster Robling and William U. Westerfield were independent directors until their resignations as of December 31, 2018 and September 30, 2018, respectively.
BOARD LEADERSHIP STRUCTURE
Jeffrey Siegel serves as Chairman of our Board and our Executive Chairman. Mr. Siegel has served the Company in various capacities, has been one of our directors since 1967 and is our largest individual stockholder. Mr. Siegel provides effective leadership and guidance as our Chairman of the Board in the development and pursuit of our strategic goals, recognition of business opportunities that present themselves and oversight of our risk profile.
John Koegel serves as our independent lead director. The duties of the independent lead director include:
● | Chairing meetings of our Board at which |
● | Reviewing the agenda approved by the Chairman of our Board for Board meetings and, with input from the other independent directors, suggesting to the Chairman of our Board additional agenda items for Board meetings, as well as the substance and timeliness of information to be sent to the members of our Board in connection with Board meetings and in between Board meetings; |
● | Reviewing with the Chairman of our Board the schedule for meetings of our Board to help assure that there is sufficient time allocated for discussion of all agenda items; |
● | Maintaining constant communication with the Chairman of our Board between meetings of our Board; |
● | Collaborating with and acting as a resource for, and counsel to, the Chairman of our Board; |
● | Chairing meetings of the independent directors; |
● | Reviewing with the Chairman of our Board the schedule for meetings of the independent directors and, with input from the other independent directors, setting the agenda for such meetings; |
● | Reviewing with the Chairman of our Board after meetings of the independent directors matters discussed by the independent directors at such meetings; |
● | Facilitating communication and serving as the principal liaison on Board-related issues between the Chairman of our Board and the independent directors. Notwithstanding the foregoing, each director is free to communicate directly with the Chairman of our Board and our other directors and senior management; |
● | Authorizing the retention of independent legal advisors, and other independent consultants and advisors, as necessary, to advise the independent directors on issues related to the independent directors. Such advisors and consultants shall work with and under the direction of the independent lead director and report directly to the independent directors with respect to such issues; and |
● | At least annually, reviewing with the other independent directors and with the Chairman of our Board the duties and responsibilities of the independent lead director. |
Our Board believes that the Chairman position fosters clear accountability, effective decision making and alignment of corporate strategies and, taken together with the independent lead director role, is the appropriate leadership structure for us at this time.
Our Board is currently composed of eleventen directors, eight of whom are independent of the Company. Our independent directors, and our governance practices, provide effective and independent oversight of management. The independent directors meet in periodic executive sessions, the results of which are discussed by the independent lead director with the Chief Executive Officer.
STOCK OWNERSHIP GUIDELINES
Our Board has adopted stock ownership guidelines applicable to our directors. Under these guidelines, a director must, on or prior to the deadline, own shares of our stock with a value in an amount equal to or in excess of three times thenon-employee director annual cash retainer, with such value determined at the time of the receipt of the stock based on the amount paid or contributed by the director for the stock. The deadline is five years after the director’s election or appointment to our Board. For the purpose of stock ownership guidelines, unexercised stock options are not considered in calculating stock ownership but restricted shares are included at the time the restriction lapses.
Our Board has also adopted stock ownership guidelines for our named executive officers, which are intended to align their long-term interests with those of our stockholders and to encourage a long-term focus in managing our Company. The requirements for named executive officers are expressed as a multiple of base salary. The Chief Executive ChairmanOfficer is required to maintain a minimum ownership of
three times his base salary. All other named executive officers are required to maintain one times their base salary. The named executive officers are requiredneed to achieve the requirements within five years. Compliance with the guidelines will be determined based on the then-current base salary.
ANTI-HEDGING POLICY
We have a policy with respect to hedging in the company’s securities that is contained in our Insider Trading Policy. In this regard, we prohibit our directors and executive officers from engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of our securities. With respect to employees of the Company that are not executive officers, the policy strongly discourages those employees from engaging in hedging transactions involving the Company’s securities.
BOARD OVERSIGHT OF RISK
Our Board bears the responsibility for maintaining oversight over our exposure to risk. Our Board, itself and through its committees, meets with various members of management regularly and discusses our material risk exposures, the potential impact on us and the efforts of management it deems appropriate to deal with the risks that are identified. The Audit Committee considers our risk assessment and risk management practices including those relating to regulatory risks, financial liquidity and accounting risk exposure, reserves and our internal controls. The Nominating and Governance Committee considers the risks associated with our corporate governance principles and procedures with the guidance of corporate and outside counsel. Our Compensation Committee, in connection with the performance of its duties, considers risks associated with our compensation programs.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a Code of Business Conduct and Ethics, as supplemented by a Code of Conduct, which applies to all of our directors, officersemployees (including officers) and our Executive Chairman, Chief Executive Officer, President, Chief Financial Officer and Controller) and employees.directors.
A copy of our Code of Business Conduct and Ethics can be found on our website, www.lifetimebrands.com, in the Corporate Governance subsection under Investor Relations. We intend to post any amendments to or waivers from our Code of Business Conduct and Ethics that apply to our executive officers on our website.
BOARD AND COMMITTEE MEETINGS; ATTENDANCE
All directors who served as directors at the time, attended our 20182019 Annual Meeting of Stockholders. Directors are expected, but not required, to attend the Annual Meeting of Stockholders. Our Board holds meetings on at least a quarterly basis and more often, if necessary, to fulfill its responsibilities. Our Board held sixseven regularly scheduled meetings during the fiscal year ended December 31, 2018.2019. During the 20182019 fiscal year, each director attended a minimum of 75% of the meetings of the Board and committees on which the director served.
STOCKHOLDER COMMUNICATION WITH DIRECTORS
Stockholders who wish to communicate with members of our Board, including the independent directors, individually or as a group, may send correspondence to them care of the Secretary at our principal office, 1000 Stewart Avenue, Garden City, New York 11530. Alternatively, the directors may be contacted viae-mail at BoardofDirectors@lifetimebrands.com. All such communications will be relayed to the members of our Board generally or individually, as specified.
BOARD NOMINATION PROCESS
Our Board nominates candidates to serve as directors based on recommendations of the Board’s Nominating and Governance Committee.
Our Nominating and Governance Committee’s procedures for identifying and evaluating candidates include requests for candidate recommendations from within the housewares industry and from outside independent professional advisors, as the case may be. In selecting a director nominee, our Nominating and Governance Committee focuses on skills, expertise and backgrounds that would complement those of the existing members of our Board, recognizing the nature of our business.
Directors are elected annually by our stockholders and serve until the next annual meeting of the stockholders and shall hold office until their successors have been duly elected and qualified or until their earlier resignation or removal.
Our Board has adopted, as a governance principle, a majority voting standard for uncontested director elections and a plurality voting standard for contested director elections. Any director elected by a plurality vote, as provided for in our Bylaws, at an annual meeting of our stockholders in an uncontested election who does not receive a majority of the votes cast at such annual meeting shall submit his or her resignation to our Board, to be effective upon the Board’s determination of whether to accept or reject the resignation. Our Board shall then, in its sole judgment and discretion, within 90 days from submission of such director’s resignation, determine whether to accept or reject such director’s resignation. If our Board rejects the director’s resignation, then we shall prepare and file a Form8-K to explain our Board’s rationale for rejecting such director’s resignation.
NOMINATING AND GOVERNANCE COMMITTEE
Our Nominating and Governance Committee is currently composed of eight of our independent directors: John Koegel (Chair), Michael J. Jeary,Rachael A. Jarosh, Cherrie Nanninga, Craig Phillips, Bruce G. Pollack, Dennis E. Reaves, Michael J. Regan and Michael Schnabel. Sara Genster Robling and William U. Westerfield were members of the Nominating and Governance Committee until their resignations as of December 31, 2018 and September 30, 2018, respectively. The Nominating and Governance Committee held eightseven meetings in 2018.2019.
Our Nominating and Governance Committee has the following responsibilities:
● | To evaluate the qualifications of candidates for Board membership and, following consultation with the Chief Executive Officer and Executive Chairman, recommend to our Board nominees for open or newly created director positions; |
● | To consider nominees recommended by stockholders as long as such recommendations are received at least 120 calendar days |
● | To periodically review the composition of our Board to determine whether it may be appropriate to add or subtract individuals with different backgrounds or skill sets from those already on our Board, and submit to our Board on an annual basis a report summarizing its conclusions regarding these matters; |
● | To |
● | To develop and make recommendations to our Board regarding governance principles applicable to us; |
● | To periodically assess the structure and operations of the committees of our Board, develop and recommend corporate governance guidelines and review such guidelines at least annually; |
● | To develop and recommend procedures for the evaluation and self-evaluation of our Board and its committees and to oversee the evaluation process; |
● | To perform an evaluation of the committee’s performance at least annually; |
● | To review the compensation of our Board and recommend changes to our Board; and |
● | To perform such other duties as our Board may assign to the committee. |
Our Nominating and Governance Committee charter is available on our website, www.lifetimebrands.com, in the Corporate Governance subsection under Investor Relations.
PROCESS FOR STOCKHOLDERS TO RECOMMEND DIRECTOR NOMINEES
Our Board, through our Nominating and Governance Committee, will consider nominees recommended by stockholders as long as, consistent with our Nominating and Governance Committee charter, such recommendations are received at least 120 calendar days beforeprior to theone-year anniversary date of the immediately preceding year’s annual meeting to elect directors.of stockholders. A stockholder wishing to recommend a candidate must submit the following documents to the Secretary, Lifetime Brands, Inc., 1000 Stewart Avenue, Garden City, New York 11530, not less than 120 calendar days beforeprior to the stockholders meet to elect directors:one-year anniversary date of the immediately preceding year’s annual meeting of stockholders:
● | A recommendation that identifies the candidate and provides contact information for that candidate; |
● | The written consent of the candidate to serve as a director of the Company, if elected; and |
● | If the candidate is to be evaluated by the Nominating and Governance Committee, the Secretary will request from the candidate a detailed resume, an autobiographical statement explaining the candidate’s interest in serving as a director of the Company, a completed statement regarding conflicts of interest, and a waiver of liability for a background check. |
The Nominating and Governance Committee evaluates all candidates, regardless of who recommended the candidate, based on the same criteria.
BOARD DIVERSITY
Our diversity policy provides that, while diversity and the variety of experiences and viewpoints represented on our Board should always be considered, a director nominee should not be chosen nor excluded because of race, color, gender, national origin or sexual orientation or identity. Our Nominating and Governance Committee assesses the effectiveness of the diversity policy by periodically reviewing the skills, expertise and background of each of the existing members of our Board to determine whether it may be appropriate to add individuals with different backgrounds or skill sets from those existing members of our Board.
AUDIT COMMITTEE
Our Audit Committee is currently composed of three directors, each of whom is independent, as required by the Audit Committee charter, the Exchange Act, the listing requirements for The NASDAQNasdaq Stock Market LLC and the SEC rules. The current members are Michael J. Regan (Chair), Cherrie NanningaDennis E. Reaves and John Koegel. William U. Westerfield was a member of the Audit Committee until his resignation as of September 30, 2018. Our Board has determined that Michael J. Regan is an “Audit Committee Financial Expert,” as defined by the SEC rules.rules The Audit Committee held four meetings during 2018.2019.
Our Audit Committee, among other things:
● | Considers the qualifications of and appoints and oversees the activities of our independent registered public accounting firm, i.e., our independent auditor; |
● | Reviews with the independent auditor any audit problems or difficulties encountered in the course of audit work; |
● | Preapproves all audit andnon-audit services provided by the independent auditor; |
● | Discusses with the internal auditors and the independent auditor the overall scope and plans for their respective audits, including the adequacy of staffing and budget or compensation; |
● | Reviews our financial statements and reports and meets with management and the independent auditor to review, discuss and approve our financial statements, ensuring the completeness and clarity of the disclosures in the financial statements; |
● | Monitors compliance with our internal controls, policies, procedures and practices; |
● | Reviews management’s report on its assessment of the effectiveness of internal control over financial reporting as of the end of each fiscal year and the independent auditor’s report on the effectiveness of internal control over financial reporting; |
● | Reviews the performance of our internal audit function and approves our Internal Audit Department’s annual audit plan and all major changes to the plan; |
● | Discusses our policies on risk assessment and risk management, our major financial risk exposures and the steps management has taken to monitor and control such exposures; |
● | Reviews our compliance and ethics programs, including legal and regulatory requirements, and reviews with management our periodic evaluation of the effectiveness of such programs; |
● | Reviews and approves related-party transactions; and |
● | Undertakes such other activities as our Board from time to time may delegate to it. |
Our Audit Committee charter is available on our website, www.lifetimebrands.com, in the Corporate Governance subsection under Investor Relations.
STRATEGIC PLANNING COMMITTEE
Our Strategic Planning Committee is currently composed of fivefour directors. The current members are Michael J. Jeary (Chair), John Koegel, Craig Phillips, Dennis E. Reaves, and Michael Schnabel and Jeffrey Siegel. Sara Genster Robling was a member of the Strategic Planning Committee until her resignation as of December 31, 2018.Schnabel. Our Strategic Planning Committee held one meetingtwo meetings in 2018.2019.
Our Strategic Planning Committee, among other things, provides assistance to our Board in fulfilling its responsibilities to our stockholders with respect to the following:
● | Monitoring and informing our Board of developments, trends and new discoveries that may facilitate us in achieving our goals by improving operations, profitability and stockholder value; |
● | Reviewing and recommending to our Board, for its approval, long-term business objectives and plans developed by management; and |
● | Overseeing the development and monitoring the implementation of a strategic plan. |
Our Strategic Planning Committee regularly receives updates from the Chairman of our Board/Executive Chairman and Chief Executive Officer and, from time to time, meets with our Division Presidents.
Our Strategic Planning Committee charter is available on our website, www.lifetimebrands.com, in the Corporate Governance subsection under Investor Relations.
COMPENSATION COMMITTEE
Our Compensation Committee is composed of fourthree directors, each of whom is independent. The current members are Cherrie Nanninga (Chair), John Koegel, Michael J. Jeary and Bruce G. Pollack. Our Compensation Committee held twelvethirteen meetings during 2018.2019.
Our Compensation Committee advises our Board with respect to our compensation practices and administers our Amended and Restated 2000 Incentive Bonus Compensation Plan and our Amended and Restated 2000 Long-Term Incentive Plan.
The principal duties and responsibilities of our Compensation Committee include:
● | Reviewing and approving compensation principles that apply generally to our |
● | Establishing and reviewing corporate goals and objectives relevant to the compensation of the Executive Chairman |
● | Reviewing, based primarily on the evaluations and recommendations of the Executive Chairman |
● | Overseeing our compliance with the requirements under the Nasdaq Stock Market Rules, with respect to our long-term incentive compensation plans; and |
● | Reviewing and discussing compensation programs that may create incentives that can affect our risk and management of that risk. |
Our Compensation Committee charter is available on our website, www.lifetimebrands.com, in the Corporate Governance subsection under Investor Relations.
EXECUTIVE COMMITTEE
Our Executive Committee is composed of three directors. The current members are Jeffrey Siegel (Chair), John Koegel and Ronald Shiftan.Robert B. Kay. Our Executive Committee held no meetings in 2018.2019.
Our Executive Committee was formed in 2016, at the recommendation of the Nominating and Governance Committee, for authorizing the opening and closing of bank accounts for the Company and other matters delegated by the Board of Directors to the Executive Committee.
EXECUTIVE SESSIONS
The independent directors meet at regularly scheduled executive sessions without members of management present.
Fees paid to ournon-employee directors are based on the following schedule:schedule. However, in connection with certain cost reduction efforts in light of the effect of theCOVID-19 pandemic on our business, on April 2, 2020, the Board agreed to reduce the unpaid cash portion of their annual compensation set forth in the following schedule by 20% effective during the period beginning on April 13, 2020 and ending on the earlier of October 1, 2020 or such time as the Board determines is appropriate. Additional information regarding these efforts is described in a Form8-K filed on April 8, 2020.
Board of Directors Annual Retainer | ||||
Cash | $45,000 | |||
Restricted Common Stock | $70,000 | |||
Total | $ | |||
|
| |||
Committee Chair Annual Cash Retainer | ||||
Chair of Audit or Compensation Committee | $20,000 | |||
Chair of Nominating/Governance or Strategic Planning Committee | $10,000 | |||
Committee Member Annual Cash Retainer | $2,000 | |||
Independent Lead Director Annual Cash Retainer | $30,000 | |||
Cash Fee for Each Meeting Attended | ||||
Board Meeting | $2,000 | |||
| $ | |||
|
|
The following table sets forth compensation paid to ournon-employee directors for 2018:2019:
Name
| Fees earned or paid in cash
| Stock awards(1)(2)
| All Other
| Total
| Fees earned or paid in cash | Stock awards (1)(2) | All Other Compensation | Total | ||||||||||||||||||||
Michael J. Jeary | $ 83,000 | $ 70,000 | $— | $ 153,000 | $ | 84,000 | $ | 70,000 | $ | - | $ | 154,000 | ||||||||||||||||
John Koegel | 115,500 | 70,000 | — | 185,500 | 118,000 | 70,000 | - | 188,000 | ||||||||||||||||||||
Cherrie Nanninga | 94,500 | 70,000 | — | 164,500 | 93,500 | 70,000 | - | 163,500 | ||||||||||||||||||||
Craig Phillips | 61,500 | 70,000 | — | 131,500 | 67,500 | 70,000 | - | 137,500 | ||||||||||||||||||||
Bruce G. Pollack | 64,750 | 93,333 | — | 158,083 | 69,500 | 70,000 | - | 139,500 | ||||||||||||||||||||
Dennis E. Reaves | 67,500 | 70,000 | 29,500(6) | 167,000 | 69,000 | 70,000 | - | 139,000 | ||||||||||||||||||||
Michael J. Regan | 78,000 | 70,000 | — | 148,000 | 86,500 | 70,000 | - | 156,500 | ||||||||||||||||||||
Sara Genster Robling (4) | 55,250 | — | — | 55,250 | ||||||||||||||||||||||||
Michael Schnabel(3) | 62,750 | 93,333 | — | 156,083 | ||||||||||||||||||||||||
William U. Westerfield(5) | 50,500 | — | — | 50,500 | ||||||||||||||||||||||||
Michael Schnabel | 67,500 | 70,000 | - | 137,500 | ||||||||||||||||||||||||
Ronald Shiftan(4) | 15,125 | 20,264 | - | 35,389 |
Note:
(1) | Represents the aggregate grant date fair value of the awards as determined under Financial Accounting Standards Board Accounting Standards Codification TopicNo. 718-20, Awards Classified as Equity, recognized by the Company for awards granted during |
(2) | Consists of restricted stock awards valued at the closing market price of our common stock on the date of grant. |
(3) |
|
(4) |
|
June 28, 2019. The compensation reported in this table reflects amounts received by Mr. |
|
The following table sets forth the aggregate number of restricted shares of our common stock and shares of our common stock issuable upon the exercise of stock options held by eachnon-employee director at December 31, 2018:2019:
Name | Restricted shares | Vested stock options | Unvested stock options | |||
Michael J. Jeary(1) | 5,364 | 25,000 | -- | |||
John Koegel(1) | 5,364 | -- | -- | |||
Cherrie Nanninga(1) | 5,364 | 25,000 | -- | |||
Craig Phillips(1) | 5,364 | -- | -- | |||
Bruce G. Pollack(2) | 7,086 | -- | -- | |||
Dennis E. Reaves(1) | 5,364 | -- | -- | |||
Michael J. Regan(1) | 5,364 | -- | -- | |||
Sara Genster Robling | -- | -- | -- | |||
Michael Schnabel(2) | 7,086 | -- | -- | |||
William U. Westerfield | -- | -- | -- |
Name | Restricted shares | Vested stock options | Unvested stock options | ||||||||||||
Michael J. Jeary (1) | 7,600 | – | – | ||||||||||||
John Koegel (1) | 7,600 | – | – | ||||||||||||
Cherrie Nanninga (1) | 7,600 | – | – | ||||||||||||
Craig Phillips (1) | 7,600 | – | – | ||||||||||||
Bruce G. Pollack (1) | 7,600 | – | – | ||||||||||||
Dennis E. Reaves (1) | 7,600 | – | – | ||||||||||||
Michael J. Regan (1) | 7,600 | – | – | ||||||||||||
Michael Schnabel (1) | 7,600 | – | – | ||||||||||||
Ronald Shiftan (2) | – | – | – |
Note:
(1) | Restricted shares were issued on June |
(2) |
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The table of Security Ownership of Certain Beneficial Owners and Management sets forth the beneficial ownership of each director of our common stock at April 15, 2019.20, 2020.
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
About Our Business
Lifetime Brands is a leading global provider of kitchenware, tableware and other products used in the home. We offer brands you trust, value without compromise and an unwavering commitment to innovation. Our products make it easier for you to prepare food, serve meals, entertain guests, and decorate your home.
We market products under well-known kitchenware brands, including Farberware, KitchenAid, Sabatier, Amco Houseworks, Chef’n, Chicago Metallic, Copco, Fred & Friends, Houdini, KitchenCraft, Kamenstein, Kizmos, MasterClass, Misto, Mossy Oak,Swing-A-Way, and Taylor Kitchen and Vasconia;Kitchen; respected tableware and giftware brands, including Mikasa, Pfaltzgraff, Fitz and Floyd, Creative Tops, Empire Silver, Gorham, International Silver, Kirk Stieff, Rabbit, Towle Silversmiths, Tuttle, Wallace, Wilton Armetale, V&A and Royal Botanic Gardens Kew; and valued home solutions brands, including BUILT NY, and Taylor. We also provide exclusive private label products to leading retailers worldwide.
Our products can be found in specialty stores, department stores, national chains, mass merchants, warehouse clubs, home centers, supermarkets andoff-price retailers, as well as our branded websites.
2018 Performance Highlights
In 2018, due in part to significant macroeconomic events, including European softness primarily due to Brexit and the inconsistent implementation of a new U.S. tariff program that prevented us from passing along timely price increases, as well as disappointing sales in our North American distribution channels due to stocking levels and inventory management decisions by retail customers, the Company did not achieve its financial goals for 2018. There were, however, a number of tangible benefits of the Company’s 2018 strategic goals achieved that were within the control of the Company and that served our stockholders well for fiscal 2018 and that we believe will continue to benefit stockholders in future years. These included:
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The Compensation Committee acknowledges the efforts of the named executive officers (“NEOs”) in helping the Company achieve the strategic objectives outlined above in 2018.
Our Executives
As previously announced and disclosed, as a result of the Filament Acquisition, the Company is led by Robert Kay, as Chief Executive Officer and Jeffrey Siegel, as Executive Chairman. Together our NEOsnamed executive officers (“NEOs”) are:
● | Robert B. Kay, Chief Executive Officer |
● | Jeffrey Siegel, Executive Chairman of our Board and Director |
● | Ronald Shiftan, Former Vice Chairman of our Board, |
● | Daniel Siegel, President |
● | Laurence Winoker, Senior Vice-President – Finance, Treasurer and Chief Financial Officer |
2019 Performance Highlights
In 2019, the Company’s core U.S. business performed solidly with growth over prior year in revenues and contribution margin. This was partially offset by challenges such as the impact of U.S. tariffs, Brexit uncertainty and a combination of reorganization costs and operational challenges in the Company’s U.K. based European business. While these operational challenges had been addressed by January 2020, the negative impacts of these challenges offset the growth in the U.S. business and resulted in basically flat EBITDA for the year over year period. Despite relatively flat EBITDA performance, the Company did exceed its objective of cash flow generation andde-leveraging for the year, and there were a number of tangible benefits of the Company’s 2019 strategic goals which included:
● | Launched commercial food service business in the U.S. on a large scale. |
● | Implemented strategic program to drive business decisions for divisional wholesale U.S. business using common framework and metrics. |
● | Strengthened Investor Relations function and increased outreach to shareholder community. |
● | Restructured U.K. business with consolidation of eight warehouses into one. |
The Compensation Committee acknowledges the efforts of the NEOs in helping the Company achieve the strategic objectives outlined above in 2019.
Say On Pay
In 2011, 2014, 2017 and 2018,2019, our Board provided stockholders with the opportunity to cast an advisory vote on executive compensation. Beginning in 2017, stockholders were provided an annual advisory vote on executive compensation. We received overwhelming support from our stockholders on the advisory vote in 2011, 2014, 2017 and 2018. At our most recent Annual Meeting of Stockholders held on June 28, 2018,27, 2019, approximately 90%96% of the votes cast, approved, on an advisory basis, the compensation of our NEOs. Although these votes werenon-binding and advisory, our Compensation Committee believes that the outcome strongly affirms stockholder support of our approach to executive compensation. In view of the overwhelming support demonstrated by the stockholders, our Board and Compensation Committee are continuing their existing approach to determining executive compensation when considering executive compensation decisions. The next advisory vote on executive compensation will occur at this year’s Annual Meeting. Both our Board and Compensation Committee expect to take into account the outcome of these votes when considering future executive compensation decisions.
COMPENSATION PHILOSOPHY AND OBJECTIVES
Our compensation program has historically been designed to attract, reward and retain capable executives and to provide incentives for the attainment of short-term performance objectives and strategic long-term performance goals. A number of key principles guide management and our Compensation Committee in determining compensation for hiring, motivating, rewarding and retaining executive officers who create both short-term and long-term stockholder value, including:
● | A significant amount of compensation should be linked to measurable success in business performance; |
● | Management’s interests should be aligned with those of the stockholders; |
● | Both short-term and long-term financial and business objectives should be incentivizing; and |
● | Compensation should be set at levels that will be competitive with the compensation offered by those companies against whom we compete for executive talent so that we are able to attract and retain experienced executives. |
In an effort to balance the need to retain talent yet motivate executives to achieve superior performance, we have adopted a compensation philosophy that contains both fixed and variable elements of compensation. Our compensation philosophy is to reward executives with compensation aligned with our short-term and long-term financial goals and the establishment of performance targets that do not promote excessive risk-taking. The elements of our total executive compensation are base salary, cash bonus and stock incentives. The compensation program was designed to create a substantial percentage of variable compensation for executives, subject to increases or decreases based on the attainment of specified achievements and targets. Consistent with our goal of linking pay and performance, the target performance-based compensation components of our Chief Executive Officer and other NEOs amounted to 48% and 51%, respectively, of their total compensation for 2018.
Our Compensation Committee uses its judgment in allocating compensation between long- and short-term incentives and cash andnon-cash components. Although long-term incentives are considered of great significance in aligning performance with stockholder interests, they have traditionally been a smaller component of aggregate compensation. The Compensation Committee has also historically awarded larger long-term incentive compensation awards, as consideration for NEOs entering into a new employment agreement.
The following charts indicate the elements Based on 2019 target compensation, long-term incentives for our Chief Executive Officer comprised 54% of his total compensation for 2019 (with 19% attributable to stock options, 20% attributable to restricted stock, and mix15% attributable to performance share awards), while short-term incentives comprised 46% of his total compensation for 2019 (with 21% attributable to base salary, 24% attributable to annual bonus, and 1% attributable to other compensation). Based on 2019 target compensation, long-term incentives for all other NEOs (excluding Mr. Shiftan) comprised 26% of their total compensation for 2019 (with 24% attributable to restricted stock and 2% attributable to performance share awards), while short-term incentives comprised 74% of their total compensation for 2019 (with 34% attributable to base salary, 37% attributable to annual bonus, and 3% attributable to other compensation). In addition, based on 2019 target compensation, 39% of our Chief Executive OfficerOfficer’s 2019 compensation consisted of performance-based compensation and 38% of all other NEOs for 2018:
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NEOs’ 2019 compensation (excluding Mr. Shiftan) consisted of performance-based compensation (which, in each case, includes target annual bonus and the target award value of performance shares granted).
Note:ROLE OF COMPENSATION COMMITTEE
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Our Compensation Committee has the authority to review and approve compensation principles and practices that apply generally to our executives and senior employees. Our Compensation Committee reviews corporate goals and objectives relevant to the compensation of our Executive Chairman and Chief Executive Officer and our Chief Operating Officer, evaluates their performance in light of the established goals and objectives and approves their annual compensation. It also reviews the corporate goals and objectives established by our Executive Chairman and Chief Executive Officer and our Chief Operating Officer relevant to the compensation of all other executive officers and all direct reports of the Executive Chairman Chief Executive Officer and Chief OperatingExecutive Officer. Based primarily on the evaluations and recommendations of our Executive Chairman and Chief Executive Officer and our Chief Operating Officer of the performance of such executive officers and direct reports in light of the established goals and objectives, our Compensation Committee approves their annual compensation. It also reviews the evaluation process and compensation structure for the other members of our senior management and provides oversight regarding management’s decisions concerning the performance and compensation of such members of senior management. Our Compensation Committee takes into account and considers reports of its independent compensation consultant, Pearl Meyer & Partners, LLC (“Pearl Meyer”), as to the elements of compensation among our peer group of companies (discussed under Role of Compensation Consultant) and the proportion of each component relative to the total compensation.
ROLE OF COMPENSATION CONSULTANT
Our Compensation Committee has engaged Pearl Meyer as its independent outside compensation consultant to provide services related to executive andnon-employee director compensation. Pearl Meyer does not provide other services unless approved by our Compensation Committee.
Pearl Meyer assists our Compensation Committee in its evaluation of our compensation philosophy and with the development of relevant metrics used by our Compensation Committee to assure internal pay equity and market parity. It also provides compensation data and information relative to our peer group.
As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, our Compensation Committee analyzed whether the services of Pearl Meyer could result in any conflicts of interest, giving consideration to the following factors:
● | Pearl Meyer does not provide any services to us other than as approved by our Compensation Committee; |
● | The fees we paid amount to less than 1% of Pearl Meyer’s total revenue for the applicable period; |
● | The policies and procedures of our Compensation Committee were designed to ensure independence; |
● | Pearl Meyer does not have any business or personal relationship with any of our executive officers or any member of our Compensation Committee; and |
● | Neither Pearl Meyer nor any of its consultants who provide services to our Compensation Committee own any of our stock. |
Our Compensation Committee has determined that the services of Pearl Meyer, including the individual compensation advisors employed by it, have not created any conflicts of interest. On an annual basis, our Compensation Committee will continue to monitor the independence of its compensation consultant.
PEER GROUP DEVELOPMENT
Pearl Meyer developed a peer group of companies with characteristics generally comparable to our revenue and market capitalization for review and approval by our Compensation Committee. The peer group is comprised of the following companies:
● | Acushnet Holdings Corp. |
● | Callaway Golf Company |
● | Crocs, Inc. |
● | Delta Apparel, Inc. |
● | Hamilton Beach Brands Holding Co. |
● | Helen of Troy Limited |
● | JAKKS Pacific, Inc. |
● | Johnson Outdoors Inc. |
● | Lands’ End, Inc. |
● | Libbey Inc. |
● | Movado Group, Inc. |
● | Oxford Industries, Inc. |
● | The Buckle, Inc. |
● | Tupperware Brands Corp. |
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Our Compensation Committee believes that the companies included in the peer group are the most comparable public companies; however, most of our direct competitors are either smaller, international or privately-held. Our Compensation Committee considers the competitive data compiled by Pearl Meyer as reference points, but does not “benchmark” to specific pay levels when establishing goals and objectives relevant to our compensation policy.
ELEMENTS OF COMPENSATION
Salary
Salary is intended to compensate our executives for performance of core job responsibilities and duties.
The base salaries of Jeffrey Siegel, Robert B. Kay and Ronald Shiftan are fixed by employment agreements that were negotiated between Messrs. Siegel, Kay and Shiftan and our Compensation Committee. The amount and components of aggregate compensation for comparable positions in our peer group of companies as well as the preferences of Messrs. Siegel, Kay and Shiftan were taken into account by our Compensation Committee in determining their compensation.
In determining Mr. Siegel’s base salary, our Compensation Committee took into account Mr. Siegel’s long-standing executive role with us, his extensive knowledge of and experience in the housewares industry and his role in directing our growth. Our Compensation Committee views Mr. Siegel as one of the most experienced and successful executives in the housewares industry.
In determining Mr. Kay’s base salary, our Compensation Committee took into account Mr. Kay’s role with Filament, as described above, and his role with us, his extensive knowledge of and experience in the housewares industry and his role in directing our growth.
In determining Mr. Shiftan’s base salary, our Compensation Committee took into account his significant role in developing, structuring and implementing our growth and acquisition strategies. Our Compensation Committee also considered Mr. Shiftan’s role in assisting Mr. Siegel in various aspects of our business.
The base salaries of Daniel Siegel and Laurence Winoker are also set forth in their employment agreements. The employment agreements were negotiated between Messrs. Siegel and Winoker with the Chief Executive Officer and the Chief Operating Officer, in consultation with our Compensation Committee. The salaries set forth in their employment agreements were determined by the Chief Executive Officer and Chief Operating Officer, in consultation with our Compensation Committee, taking into consideration their roles and responsibilities within the Company, as well as the amount and components of aggregate compensation for comparable positions in our peer group of companies. Pursuant to the terms of Daniel Siegel’s employment agreement, Mr. Siegel’s annual rate of base salary was increased from $512,500 to $550,000 effective July 1, 2019.
Changes to Salary for 2020
In connection with certain cost reduction efforts in light of the effects of theCOVID-19 pandemic on our business, our NEOs have voluntarily taken temporary base salary reductions. The base salaries of Messrs. Kay and Jeffrey Siegel were reduced by 20%, and the base salaries of Messrs. Daniel Siegel and Laurence Winoker were reduced by 12.5%. This reduction is effective during the period beginning on April 13, 2020 and ending on the earlier of October 1, 2020 or such time as the Board, in the case of Messrs. Kay and Jeffrey Siegel, and Mr. Kay, in the case of Messrs. Daniel Siegel and Laurence Winoker determines is appropriate. These temporary reductions will not apply to the calculation of any annual bonus or severance or termination payments under each NEO’s employment agreement, which will be calculated based on the base salary in effect prior to the reductions. Additional information regarding these reductions is described in a Form8-K filed on April 8, 2020.
Annual Bonuses
Annual bonuses are intended to compensate an executive for achievement of specific performance goals for a specified performance period.period and are based on achievement of a Company performance metric and individual performance goals. Bonuses are awarded underpursuant to the Company’s Amended and Restated 2000 Incentive Bonus Compensation Plan (the “2000 Bonus Plan”) and each executive’s employment agreement and areagreement. For 2019, our Compensation Committee determined that the Company performance metric applicable to annual bonuses would be based on achievementAdjusted EBITDA (as defined below), rather than our income before income taxes and equity in earnings (“Adjusted IBIT”), which served as the Company performance metric for prior years. All of Adjusted IBITour NEOs other than Mr. Shiftan were eligible to receive annual bonuses for 2019. Pursuant to the terms of the Retirement Agreement (as defined below), Mr. Shiftan was not eligible to receive an annual bonus for 2019.
The term “Adjusted EBITDA” means the Company’s adjusted earnings before interest, taxes, depreciation, and individual performance goals.amortization, as determined by the Company and derived from the Company’s audited financial statements, adjusted to exclude equity in earnings of investments,non-cash goodwill impairment expense,non-cash share based compensation expense,non-cash inventory SKU rationalization charge, restructuring expenses, integration expenses, warehouse relocation expenses, and acquisition and divestment related expense.
Our Compensation Committee has determined that Adjusted IBIT bestEBITDA is an appropriate measure because the Company uses this financial measure in evaluating the Company’son-going financial results and trends. In addition, management uses thisnon-GAAP information as an indicator of business performance. It is also one of the measures the efforts and productivity of Messrs. Kay, Jeffrey Siegel, Shiftan, Daniel Siegel and Winoker. The term “Adjusted IBIT,” as it appliesused to any particular year, means that amount for such year equalcalculate financial covenants required to be provided to the Company’s income before income taxes and equity in earnings, as reported in our Form10-K, subjectlenders pursuant to such adjustments as are set forth in the Adjusted IBIT Performance Bonus Table for such year.
its credit facilities. In determining to use Adjusted IBITEBITDA as the Company performance measure,metric, our Compensation Committee was also guided by the extent to which this measuremetric is within the control of the respective named executive officer.
For the purpose of establishing the targetamount of the annual bonus payable based on Adjusted IBITEBITDA for the NEOs entitled to cash bonus incentive awards in a given year,annual bonuses, our Compensation Committee considered data provided by
Pearl Meyer as to practices among our peer group of companies.Meyer. Our Compensation Committee also relied on our annual budget, which was approved by our Board, in establishing the thresholds, targets and maximum bonuses tied to achievement of these targets for our executives.
Each NEO’s employment agreement provides for a target annual bonus based on Adjusted EBITDA (“Adjusted EBITDA Target Bonus”) and a target annual bonus based on individual goal achievement (“Individual Goal Target Bonus”).
The portion of the NEOs.
In additionAdjusted EBITDA Target Bonus payable to each executive for each year (the “Annual Adjusted IBIT, individual goals are established for Messrs. Jeffrey Siegel, Kay and ShiftanEBITDA Performance Bonus”), if any, is based on an Annual Adjusted EBITDA Performance Table prepared by our Compensation Committee. With respectCommittee and the annual budget reviewed and approved by the Board. If the target Adjusted EBITDA goal is achieved, the executive receives 100% of the Adjusted EBITDA Target Bonus; if threshold Adjusted EBITDA is achieved, the executive receives 50% of the executive’s Adjusted EBITDA Target Bonus; and if maximum performance is achieved, in the case of Messrs. Kay, Jeffrey Siegel, and Winoker, the executive receives 200% of the Adjusted EBITDA Target Bonus, and in the case of Mr. Daniel Siegel, the executive receives 150% of the Adjusted EBITDA Target Bonus. Each executive is entitled to receive sliding scale percentages of the Adjusted EBITDA Target Bonus set forth in the Annual Adjusted EBITDA Performance Bonus Table based upon Adjusted EBITDA being more than the threshold Adjusted EBITDA but less than the target Adjusted EBITDA, or more than the target Adjusted EBITDA but less than the maximum Adjusted EBITDA. The Adjusted EBITDA Performance Bonus for any year will be zero if the Adjusted EBITDA achieved by the Company for such year is less than the threshold Adjusted EBITDA goal for such year, and in no event will an Annual Adjusted EBITDA Performance Bonus be more than 200% of the Adjusted EBITDA Target Bonus, in the case of Messrs. Kay, Jeffrey Siegel, and Winoker, and 150% of the Adjusted EBITDA Target Bonus in the case of Mr. Daniel Siegel, individual goalsSiegel.
The portion of the Individual Goal Target Bonus payable to each executive for each year (the “Annual Individual Goal Bonus”), if any, is determined based on financial andthe executive’s satisfaction of individual performance objectives are establishedset by our Compensation Committee, in the Chief Executive Officercase of Messrs. Kay and Jeffrey Siegel, and Mr. Kay in consultation with our Compensation Committee. The weighting for the Adjusted IBIT and individual goal components of annual bonuses is shownCommittee, in the table below.case of Messrs. Daniel Siegel and Winoker. If each executive satisfies at least 50% of such objectives, he is entitled to an Annual Individual Goal Bonus equal to at least 50% of the Individual Goal Target Bonus, and if he meets less than 50% of such objectives, he is not entitled to receive any Annual Individual Goal Bonus. The individual goals established for each of the NEOs for 20182019 are discussed below. At the end of the 20182019 fiscal year, Messrs. Kay and Jeffrey Siegel prepared written materials for our Compensation Committee with their assessments of whether their respective individual goals were achieved during the year. Our Compensation Committee reviewed these materials and assessed independently the extent to which their individual goals were achieved.
For each NEO eligible to receive an annual bonus for 2019, the weighting for both of the Adjusted EBITDA and Individual Goal components are shown in the table below.
Executive | Adjusted IBIT Weighting | Individual Bonus Weighting | ||
Robert Kay | 78% | 22% | ||
Jeffrey Siegel | 80% | 20% | ||
Ronald Shiftan | 86% | 14% | ||
Daniel Siegel | 67% | 33% | ||
Laurence Winoker | 60% | 40% |
Executive | Adjusted EBITDA Weighting as a % of Target | Individual Goals Weighting as a % of Target | ||
Robert Kay | 78% | 22% | ||
Jeffrey Siegel | 80% | 20% | ||
Daniel Siegel | 67% | 33% | ||
Laurence Winoker | 60% | 40% |
As set forth in detail in the table below, we achieved an Adjusted IBITEBITDA of $11.464$64.064 million for the 20182019 fiscal year, which was belowabove the threshold performance level of the plan of $14.239 million.$62.950 million but
below the target level. Adjusted IBITEBITDA for 20182019 is equal to the Company’s incomeearnings before incomeinterest, taxes, depreciation, and equity in earnings,amortization, as reported in our Form10-K,determined by the Company and derived from the Company’s audited financial statements and adjusted to includeexclude equity in earnings of investments, before local and U.S. taxes and adjusted to exclude acquisition costs,non-cash goodwill impairment expense,non-cash share based compensation expense,non-cash inventory SKU rationalization charge, restructuring expenses, loss on retirement of debtintegration expenses, warehouse relocation expenses, and acquisition and divestment related bonuses.expense. Adjusted IBITEBITDA is anon-GAAP financial measure. A reconciliation of the Company’s net income before income taxes and equity in earnings (the most directly comparable GAAP measure) to Adjusted IBITEBITDA for 20182019 is included in Appendix A.
2018 Annual Bonus Metric and Achievement | ||||||||||||
Financial Metric | Threshold Performance Level | Target Performance Level | 150% Performance Level | 200% Performance Level | Actual Performance Achieved | % of Target | ||||||
Adjusted IBIT
| $14,238,500
| $28,477,000
| $42,715,500
| $56,954,000
| $11,464,000
| 0
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As further described below, although no portion of annual bonuses based on Adjusted IBIT was payable to the NEOs for 2018, Messrs. Kay, Jeffrey Siegel, Daniel Siegel, and Winoker received annual bonuses on account of their achievement of at least 50% of their individual performance goals. Our Compensation Committee determined that in order to further incentivize retention, such bonuses would be paid in the form of restricted stock subject to a one year vesting period, rather than in the form of cash.
Robert Kay
Mr. Kay’s employment agreement entitles him to receive (a) an Annual Adjusted IBIT Performance Bonus at a target of 87.5% of base salary based on an Adjusted IBIT Performance Table prepared by our Compensation Committee and the annual budget reviewed and approved by our Board and (b) an Annual Individual Goal Bonus based on certain measureable objectives (discussed below for 2018). Pursuant to the employment agreement, the threshold Adjusted IBIT for any year would be 50% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Kay to receive 50% of the target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. Similarly, the maximum Adjusted IBIT for such year would be 200% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Kay to receive 200% of the Adjusted IBIT target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. Mr. Kay will be entitled to receive the sliding scale percentages of the Adjusted IBIT Target Bonus set forth in the Adjusted IBIT Performance Bonus Table based upon Adjusted IBIT being more than the threshold Adjusted IBIT but less than the target Adjusted IBIT, or more than the target Adjusted IBIT but less than the maximum Adjusted IBIT; provided that, the Annual Adjusted IBIT Performance Bonus for any year will be zero if the Adjusted IBIT achieved by the Company for such year is less than the threshold Adjusted IBIT for such year, and in no event will an Annual Adjusted IBIT Performance Bonus for any year be more than 200% of the Adjusted IBIT target bonus for such year even if the Adjusted IBIT achieved by the Company for such year exceeds the maximum Adjusted IBIT for such year.
Mr. Kay’s employment agreement entitles him to receive an Annual Individual Goal Bonus up to a maximum of 25% of his base salary for each year based on meeting individual measurable objectives set by our Compensation Committee. If Mr. Kay satisfies at least 50% of such objectives, he is entitled to an Annual Individual Goal Bonus equal to at least 50% of the maximum Individual Goal Bonus. If Mr. Kay meets less than 50% of such objectives, he is not entitled to receive any Annual Individual Goal Bonus.
2019 Annual Bonus Metric and Achievement | ||||||||||||||||||||||||
Financial Metric | Threshold Performance Level | Target Performance Level | Maximum Performance Level (D. Siegel and Winoker) | Maximum Performance Level (Kay and J. Siegel) | Actual Performance Achieved | Payout % of Adjusted EBITDA | ||||||||||||||||||
Adjusted EBITDA | $ | 62,950,000 | $ | 75,000,000 | $ | 87,050,000 | $ | 99,100,000 | $ | 64,064,000 | 55 | % |
Mr. Kay’s individual goals for 20182019 included: integrating Filament’s operations with those ofachieving efficiencies in UK operations; developing a strategic planning process; implementing the Company, achievement of certain synergies relatedStrategic Thinking and Results Program (a program for line managers intended to focus business decisions based on a common framework and metrics) in every division in the sales of Filament and the Company, improving the performance of certain aspects of our European operations, and reducingU.S. wholesale business; strengthening the Company’s leverage.investor relations program; developing a food service initiative in the U.S. market; developing a strategy for expansion in specificnon-U.S. regions; and implementing a process for identifying and pursuing strategic acquisitions. Our Compensation Committee evaluated Mr. Kay’s achievement of his individual performance objectivesgoals and determined that at least 50% of the objectivesgoals were met.
For 2018, Mr. Kay was awarded 20,000 shares of restricted stock, subject to an additional one year vesting period, based upon his attainment of at least 50% of his individual performance objectives. In determining the number of shares to award Mr. Kay, our Compensation Committee considered the extent to which he achieved each of his individual goals, his extraordinary efforts in integrating Filament with the Company, and the additional vesting conditions imposed on the restricted stock. For the year ended December 31, 2018, Adjusted IBIT amounted to $11.464 million, which is less than the threshold Adjusted IBIT, resulting in no Adjusted IBIT bonus. The details of the results of Mr. Kay’s full bonus payment opportunity (including his individual target bonus opportunity) are provided in the table below.
Bonus Opportunity
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Threshold | Target | Maximum | Actual Bonus Paid(1) | % of Target | ||||||
TOTAL | $450,000 | $900,000 | $1,600,000 | $181,200 | 20% | |||||
Individual | 100,000 | 200,000 | 200,000 | 181,200 | 91% | |||||
Adjusted IBIT | 350,000 | 700,000 | 1,400,000 | - | 0% |
(1) Based on the closing price per share on the date of grant of the restricted stock award for 20,000 shares.
Jeffrey Siegel
Jeffrey Siegel’s employment agreement, as amended, entitles him to receive (a) an Annual Adjusted IBIT Performance Bonus at a target of 100% of base salary based on an Adjusted IBIT Performance Bonus Table prepared by our Compensation Committee and the annual budget reviewed and approved by our Board and (b) an Annual Individual Goal Bonus based on certain measurable objectives (discussed below for 2018). Pursuant to Mr. Siegel’s employment agreement, as amended, the threshold Adjusted IBIT for any such year would be 50% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Siegel to receive 50% of the target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. Similarly, the maximum Adjusted IBIT for such year would be 200% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Siegel to receive 200% of the target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. The employment agreement, as amended, also provides that the Adjusted IBIT Performance Bonus for any such year would be zero if the Adjusted IBIT we achieved for such year was less than the threshold Adjusted IBIT for such year, and in no event will an Adjusted IBIT Performance Bonus for any such year be more than the maximum target bonus for such year even if the Adjusted IBIT we achieved for such year exceeds the maximum Adjusted IBIT for such year.
Mr. Siegel’s employment agreement, as amended, further entitles him to receive an Annual Individual Goal Bonus up to a maximum of 25% of his base salary for such year based on meeting individual measurable performance objectives set by our Compensation Committee in consultation with Mr. Siegel. If Mr. Siegel satisfies at least 50% of such objectives, he is entitled to an Annual Individual Goal Bonus equal to 12.5% of his base salary for such year. If Mr. Siegel meets less than 50% of such objectives, he is not entitled to receive any Annual Individual Goal Bonus for such year.
Mr. Siegel’s individual goals for 20182019 included: integrating Filament’s operationsimplementing methods to increase profitability and the Company’s earnings before interest, taxes, depreciation, and amortization; enhancing the Company’s relationships with those of the Company, achievementcertain retailers; exploring new business opportunities; and developing methodologies to improve sales of certain synergies related to the sales of Filament and the Company, improving the performance of certain aspects of our European operations, and reducing the Company’s leverage.products. Our Compensation Committee evaluated Mr. Siegel’s achievement of his individual performance objectivesgoals and determined that at least 50% of the objectivesgoals were met.
For 2018, Mr. Siegel was awarded 20,000 shares of restricted stock, subject to an additional one year vesting period, based upon his attainment of at least 50% of his individual performance objectives. In determining the number of shares to award Mr. Siegel, our Compensation Committee considered the extent to which he achieved each of his individual goals, his extraordinary efforts in integrating Filament with the Company, and the additional vesting conditions imposed on the restricted stock. For the year ended December 31, 2018, Adjusted IBIT amounted to $11.464 million, which is less than the threshold Adjusted IBIT, resulting in no Adjusted IBIT bonus. The details of the results of Mr. Siegel’s full bonus payment opportunity (including individual target bonus opportunity) are provided in the table below.
Bonus Opportunity | ||||||||||
Threshold |
Target |
Maximum |
Actual |
% of | ||||||
TOTAL | $618,750 | $1,237,500 | $2,227,500 | $181,200 | 15% | |||||
Individual | 123,750 | 247,500 | 247,500 | 181,200 | 73% | |||||
Adjusted IBIT | 495,000 | 990,000 | 1,980,000 | - | 0% |
(1) Based on the closing price per share on the date of grant of the restricted stock award for 20,000 shares.
Ronald Shiftan
Mr. Shiftan’s third amended and restated employment agreement entitles Mr. Shiftan to receive (a) an Annual Adjusted IBIT Performance Bonus at a target of 90% of base salary based on an Adjusted IBIT Performance Bonus Table prepared by our Compensation Committee and the annual budget reviewed and approved by our Board and (b) an Annual Individual Goal Bonus based on certain measurable objectives (discussed below for 2018). Pursuant to Mr. Shiftan’s third amended and restated employment agreement, the threshold Adjusted IBIT for any such year would be 50% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Shiftan to receive 50% of the target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. Similarly, the maximum Adjusted IBIT for such year would be 200% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Shiftan to receive 200% of the base salary payable for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. Mr. Shiftan’s third amended and restated employment agreement also provides that the Adjusted IBIT Performance Bonus for any such year would be zero if the Adjusted IBIT we achieved for such year was less than the threshold Adjusted IBIT for such year, and in no event will an Adjusted IBIT Performance Bonus for any such year be more than the maximum target bonus for such year even if the Adjusted IBIT we achieved for such year exceeds the maximum Adjusted IBIT for such year.
Mr. Shiftan’s third amended and restated employment agreement further entitles him to receive an Annual Individual Goal Bonus up to a maximum of 15% of his base salary for such year based on meeting individual measurable objectives set by the Chief Executive Officer and monitored by our Compensation Committee. If Mr. Shiftan satisfies at least 50% of such objectives, he is entitled to an Annual Individual Goal Bonus equal to at least 7.5% of his base salary for such year. If Mr. Shiftan meets less than 50% of such objectives, he is not entitled to receive any Annual Individual Goal Bonus for such year.
Our Compensation Committee evaluated Mr. Shiftan’s achievement of his individual performance objectives and determined that because Mr. Shiftan’s focus in 2018 was on transitioning his duties and responsibilities in light of his pending retirement, less than 50% of the objectives were met, resulting in no 2018 bonus. For the year ended December 31, 2018, Adjusted IBIT amounted to $11.464 million, which is less than the threshold Adjusted IBIT, resulting in no Adjusted IBIT bonus. The details of the results of Mr. Shiftan’s full bonus payment opportunity (including individual target bonus opportunity) are provided in the table below.
Bonus Opportunity Threshold Target Maximum Actual Bonus Paid % of TOTAL Individual Adjusted IBIT
Target $341,250 $682,500 $1,397,500 $- 0% 48,750 97,500 97,500 - 0% 292,500 585,000 1,300,000 - 0%
Daniel Siegel
Mr. Siegel’s employment agreement entitles Mr. Siegel to receive (a) an Annual Adjusted IBIT Performance Bonus at a target of 75% of his base salary based on an Adjusted IBIT Performance Bonus Table prepared by the Chief Executive Officer and the annual budget reviewed and approved by our Board and (b) an Annual Individual Goal Bonus based on certain measurable objectives (discussed below for 2018). Pursuant to the employment agreement, the threshold Adjusted IBIT would be 50% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Siegel to receive 50% of the target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. Similarly, the maximum Adjusted IBIT for such year would be 150% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Siegel to receive 150% of the target bonus for such year, consistent with the Adjusted IBIT Performance Table for such year. The employment agreement, as amended, also provides that Mr. Siegel is entitled to receive sliding scale percentages of the target bonus set forth in the Adjusted IBIT Performance Table based upon Adjusted IBIT being more than the threshold Adjusted IBIT but less than the target Adjusted IBIT, or more than the target Adjusted IBIT but less than the maximum Adjusted IBIT. The Adjusted IBIT Performance Bonus for any such year will be zero if the Adjusted IBIT achieved by the Company for such year is less than the threshold Adjusted IBIT for such year, and in no event will an Adjusted IBIT Performance Bonus for any such year be more than the maximum target bonus for such year even if the Adjusted IBIT achieved by the Company for such year exceeds the maximum Adjusted IBIT for such year.
Mr. Siegel is also entitled to receive an Annual Individual Goal Bonus up to a maximum of 37.5% of his base salary for such year based on meeting individual measurable objectives set by the Chief Executive Officer in consultation with Mr. Siegel, as determined by the Chief Executive Officer in his sole discretion; provided, however, if, in the sole discretion of the Chief Executive Officer, (y) Mr. Siegel meets at least 50% of such objectives, he shall be entitled to an Annual Individual Goal Bonus equal to not less than 18.75% of his base salary for such year and (z) Mr. Siegel meets less than 50% of such objectives, he shall not be entitled to receive any Annual Individual Goal Bonus for such year.
Mr. Siegel’s individual goals for 20182019 included: improving our core U.S. sales; refining the U.S. sales organization, improving the alignment at retailers between divisionsorganization;re-focusing category management to strategic and sales, developing innovation in all areasmarketing orientation; reducing costs related to meetings and trade shows; establishing methods of the Company, fulfilling his responsibility for our trade shows and showrooms, including integration of Filament in certain trade shows while achieving cost savings, keeping the Board updated with respect toenhanced market research using research data analytics and reducing the costs of such market research to the Company; and enhancing brand development and coordination, and coordinating, developing, and delivering strategic plan presentations to our Board. The amount payable in connection with individual goals was subject to adjustment if our net incomesales strategies for the year was less than $10 million.certain lines of business. Our Chief Executive Officer, in consultation with our Compensation Committee, evaluated Mr. Siegel’s achievement of his individual performance objectivesgoals and determined that at least 50% of the objectivesgoals were met.
For 2018, Mr. Siegel was awarded 14,000 shares of restricted stock, subject to an additional one year vesting period, based upon his attainment of at least 50% of his individual performance objectives. In determining the number of shares to award Mr. Siegel, our Compensation Committee considered the extent to which he achieved each of his individual goals, his extraordinary efforts in integrating Filament with the Company, and the additional vesting conditions imposed on the restricted stock. For the year ended December 31, 2018, Adjusted IBIT amounted to $11.464 million, which is less than the threshold Adjusted IBIT, resulting in no Adjusted IBIT bonus. The details of the results of Mr. Siegel’s full bonus payment opportunity (including individual target bonus opportunity) are provided in the table below.
Bonus Opportunity | ||||||||||
Threshold |
Target |
Maximum |
Actual |
% of | ||||||
TOTAL | $288,281 | $576,563 | $768,750 | $126,840 | 22% | |||||
Individual | 96,094 | 192,188 | 192,188 | 126,840 | 66% | |||||
Adjusted IBIT | 192,188 | 384,375 | 576,563 | - | 0% |
(1) Based on the closing price per share on the date of grant of the restricted stock award for 14,000 shares.
Laurence Winoker
Mr. Winoker’s amended and restated employment agreement entitles Mr. Winoker to receive (a) an Annual Adjusted IBIT Performance Bonus at a target of 37.5% of his base salary based on an Adjusted IBIT Performance Bonus Table prepared by the Chief Executive Officer and the Chief Operating Officer and the annual budget reviewed and approved by our Board and (b) an Annual Individual Goal Bonus based on certain measurable objectives (discussed below for 2018). Pursuant to the amended and restated employment agreement, the threshold Adjusted IBIT for any such year would be 50% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Winoker to receive 50% of the target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. Similarly, the maximum Adjusted IBIT for such year would be 150% of the target Adjusted IBIT for such year which, if achieved, would entitle Mr. Winoker to receive 200% of the target bonus for such year consistent with the Adjusted IBIT Performance Bonus Table for such year. The amended and restated employment agreement also provides that Mr. Winoker is entitled to receive sliding scale percentages of the target bonus set forth in the Adjusted IBIT Performance Table based upon Adjusted IBIT being more than the threshold Adjusted IBIT but less than the target Adjusted IBIT, or more than the target Adjusted IBIT but less than the maximum Adjusted IBIT. The amended and restated employment agreement also provides that the Adjusted IBIT Performance Bonus for any such year would be zero if the Adjusted IBIT we achieved for such year was less than the threshold Adjusted IBIT for such year, and in no event will an Adjusted IBIT Performance Bonus for any such year be more than the maximum target bonus for such year even if the Adjusted IBIT achieved by the Company for such year exceeds the maximum Adjusted IBIT for such year.
Mr. Winoker’s amended and restated employment agreement further entitles him to receive an Annual Individual Goal Bonus up to a maximum of 25% of his base salary for such year based on meeting individual measurable objectives set by the Chief Executive Officer and Chief Operating Officer. If Mr. Winoker satisfies at least 50% of such objectives, he is entitled to an Annual Individual Goal Bonus equal to at least 12.5% of his base salary for such year. If Mr. Winoker meets less than 50% of such objectives, he is not entitled to receive any Annual Individual Goal Bonus for such year.
Mr. Winoker’s individual goals for 20182019 included: successfully integrating Filament’srestructuring the Company’s accounting function to ensure accurate and finance functions into thosetimely financial reporting and control, redesign of the Company; improvingCompany’s internal management reports; redesign of the Company’s financial planning and analysis function to reflect the Company’s restructuring following the Filament acquisition; and performing certain responsibilities related toassisting Mr. Kay in strengthening the Company’s investor relations. The amount payable in connection with individual goals was subject to adjustment if our net income for the year is less than $10 million.relations program. Our Chief Executive Officer, in consultation with our Compensation Committee, evaluated Mr. Winoker’s achievement of his individual performance objectivesgoals and determined that at least 50% of the objectivesgoals were met.
For 2018, Mr. Winoker
The Compensation Committee determined that in order to further incentivize retention, a portion of each NEO’s annual bonus was awarded 8,000 sharespaid in the form of restricted stock subject to an additionala one year vesting period, based upon his attainment of at least 50% of his individual performance objectives. In determining the number of shares to award Mr. Winoker, our Compensation Committee considered the extent to which he achieved each of his individual goals, his extraordinary efforts in integrating Filament with the Company, and the additional vesting conditions imposed on the restricted stock. For the year ended December 31, 2018, Adjusted IBIT amounted to $11.464 million, whichrather than cash. Each NEO’s 2019 annual bonus is less than the threshold Adjusted IBIT, resulting in no Adjusted IBIT bonus. The details of the results of Mr. Winoker’s full bonus payment opportunity (including individual target bonus opportunity) are providedset forth in the table below.
Bonus Opportunity | ||||||||||
Threshold | Target | Maximum | Actual Bonus Paid(1) | % of Target | ||||||
TOTAL | $132,813 | $265,625 | $425,000 | $72,840 | 27% | |||||
Individual | 53,125 | 106,250 | 106,250 | 72,840 | 69% | |||||
Adjusted IBIT | 79,688 | 159,375 | 318,750 | - | 0% |
Executive | Annual Adjusted EBITDA Performance Bonus Achieved | Annual Individual Goal Bonus Achieved | Total Annual Bonus Achieved | Value of Cash Payment | Value of Restricted Shares Granted(1) | Number of Restricted Shares Granted | % of Target Award Achieved | |||||||
Robert Kay | $385,000 | $150,925 | $535,925 | $145,500 | $390,425 | 61,195 | 60% | |||||||
Jeffrey Siegel | $544,500 | $193,916 | $738,416 | $200,475 | $537,941 | 84,317 | 60% | |||||||
Daniel Siegel | $219,141 | $133,078 | $352,219 | $95,625 | $256,594 | 40,218 | 59% | |||||||
Laurence Winoker | $87,656 | $67,907 | $155,563 | $42,234 | $113,329 | 17,763 | 59% |
(1) | Based on the closing price per share on the date of grant of the restricted shares granted in lieu of cash and reflects approximately 73% of the total annual bonus achieved. |
(1) Based on the closing price per share on the date of grant of the restricted stock award for 8,000 shares.
Equity Compensation
Equity compensation is intended to incentivize and to promote alignment between our employees and our stockholders. Additionally, performance shares reward executives if the Company achieves specified performance goals, and stock options and restricted stock are also aimed atincentivize retention asbased on the vesting period or the period during which the restrictions lapse, which generally ranges from one to four years.
Our Compensation Committee granted stock options, performance shares and/or restricted stockequity awards to Robert Kay, Jeffrey Siegel, Robert Kay, Ronald Shiftan, Daniel Siegel and Laurence Winoker in connection with their entering into their respective employment agreements. In addition, each NEO generally receives an annual equity compensation grant once a year in connection with annual performance reviews based on an assessment of such person’s individual performance and, where appropriate, the performance of such person’s business unit (division), as well as our overall performance and the dilutive effect of the equity awards.
Our annual equity compensation program generally consists of a mix of 50% time-based restricted stock awards and 50% performance-based stock awards.awards called performance shares. The performance shares provide an opportunity for shares to be earned at the end of a three-year performance period ifpre-established financial goals are met. These goals have been tailored to be difficultchallenging to achieve, so as to incentivize our NEOs to maximize their performance. Net sales and adjusted EBITDA (each with a 50% weighting) were established as performance metrics for our performance share awards granted in 2016, 2017, 2018 and 2018,2019, each with a three-year performance period. Following the Filament Acquisition, our Compensation Committee increased the net sales and adjusted EBITDA performance targets applicable to our performance share awards granted in 20162017 and 20172018 to account for the addition of Filament. The final number of shares earned pursuant to a performance share award is dependent on the cumulative net sales and cumulative adjusted EBITDA results over the three-year performance period with threshold, target and maximum awards equal to 75%, 100% and 150%, respectively, of the target number of performance shares awarded on the grant date. Consolidated Adjusted EBITDA is anon-GAAP financial measure. A reconciliation of Consolidated Adjusted EBITDA to the most directly comparable GAAP measure for 20182019 is included in Appendix A.
Our performance for the performance-based stock awardsshares granted in 20162017 for the three-year performance period that ended on December 31, 2018,2019, resulted in the following percentage payouts:
Performance Metrics | Weight | Target (in thousands) | Actual (in thousands) | % Target | Weight | Target (in thousands) | Actual (in thousands) | % Target Achieved | ||||||||
Net Sales | 50% | $1,997,200 | $1,876,637 | 94.0% | 50% | $2,227,600 | $2,018,920 | 90.7% | ||||||||
Adjusted EBITDA | 50% | $171,000 | $140,341 | 82.1% | 50% | $210,000 | 157,925 | 75.2% |
Actual performance share awards earned for the 2017 performance cycle are shown in the table below for each executive.
Executive | Performance Shares Target | Performance Shares Earned as a % of Target | Actual Performance Shares Earned | |||
Robert Kay(1) | - | - | - | |||
Jeffrey Siegel | 6,000 | 83% | 4,978 | |||
Ronald Shiftan(2) | 6,000 | 57% | 3,407 | |||
Daniel Siegel | 6,000 | 83% | 4,978 | |||
Laurence Winoker | 4,000 | 83% | 3,319 |
(1) Mr. Kay was not employed by the Company at the time of grant for the 2017 performance cycle.
(2) Pursuant to the terms of the Retirement Agreement and Mr. Shiftan’s deferred performance share agreement, payment of Mr. Shiftan’s performance shares waspro-rated, based on the portion of the performance period that he was employed by the Company.
In addition to the typical annual equity awards described above, our Compensation Committee decided to grant to Mr. Kay an award of stock options, which vests over three years. In determining this grant, the Compensation Committee considered the following additional factors: Mr. Kay’s assumption of direct responsibility for legal, finance, supply chain, and human resources functions in connection with Mr. Shiftan’s retirement; Mr. Kay’s continued leadership in connection with the integration of the Filament business, including his achievement of synergies in excess of budgeted amounts; and Mr. Kay’s assumption of certain of Jeffrey Siegel’s responsibilities over the three year vesting period of the award.
In lieu of the typical annual equity awards described above, Mr. Jeffrey Siegel received a restricted stock award in connection with entering into a new employment agreement with us and did not receive any performance shares. The restricted stock award vests in equal installments over the term of the new employment agreement withone-third of the award vesting on each of December 31, 2020, December 31, 2021, and December 31, 2022.
Other Compensation
We maintain a defined contribution 401(k) plan for all employees, including the NEOs. We also offer perquisites that we believe are customary and reasonable, such as Company-paid automobile expenses, and with respect to Messrs. Jeffrey Siegel, Kay and Shiftan, reimbursement or payment of certain insurance and professional expenses.
ACCOUNTING AND TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code (the “Code”) generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to any of the company’s chief executive officer and certain other executive officers. Prior to the effectiveness of the 2017 Tax CutsCut and Jobs Act, performance-based compensation satisfying certain requirements was not subject to this deduction limitation. Effective January 1, 2018, the performance-based compensation exception is not available to public companies, except for certain limited grandfathered arrangements. We periodically review potential consequences of Section 162(m).
POLICY REGARDING RESTATEMENTS
We do not have a formal policy regarding adjustment or recovery of awards or payments if the relevant performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of the award or payment. Under those circumstances, our Board or our Compensation Committee would evaluate whether adjustments or recoveries of awards would be appropriate based upon the facts and circumstances surrounding the restatement. We will comply with any future regulatory requirements as mandated under the Dodd-Frank Act as they become effective.
COMPENSATION COMMITTEE REPORT
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Our Compensation Committee also annually evaluates the levels of risks arising from our compensation policies and practices, and reviews suggested practices to mitigate such risks. The risks considered by our Compensation Committee included the following:
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We concluded that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on us. Based on this review discussion and evaluation of risks,discussion, our Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement.
The Compensation Committee | ||||
Cherrie Nanninga – Chair | ||||
John Koegel | ||||
Bruce G. Pollack |
COMPENSATION RISK MANAGEMENT
The Company has reviewed its compensation policies and practices and concluded that any risks arising from the Company’s policies, plans and programs are not reasonably likely to have a material adverse effect on the Company. The Company reviewed the elements of compensation to determine whether any portion of the compensation programs encouraged excessiverisk-taking and concluded:
• the allocation of compensation between cash compensation and equity compensation, combined with the vesting schedule under the equity plan, discouragesshort-termrisk-taking; and
• the approach to goal setting, setting of targets with payouts at multiple levels of performance, capping the amount of the Company’s incentive payouts, and the evaluation of performance results assist in mitigating excessiverisk-taking.
To complement the existingrisk-reducing features of the Company’s compensation policies and practices, the Company has stock ownership guidelines and an anti-hedging policy.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the 20182019 fiscal year were Michael J. Jeary, John Koegel, Bruce G. Pollack and Cherrie Nanninga. During the 20182019 fiscal year, no member of our Compensation Committee was an officer, former officer or employee of the Company or had any direct or indirect material interest in a transaction with us or in a business relationship with the Company that would require disclosure under the applicable rules of the SEC. In addition, no interlocking relationship existed between any member of our Compensation Committee, any member of our Board, or one of our executive officers, on the one hand, and any member of our Compensation Committee (or committee performing equivalent functions, or the full board of directors)directors or an executive officercompensation committee of any other entity, on the other hand.company.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of our NEOs.
Name, Principal Position | Year | Salary | Non-Equity Incentive Plan Compensation | Stock Awards (1)(2) | Option Awards (1) | All Other Compensation (5) | Total | |||||||||||||||
Robert Kay (3)
Chief Executive Officer | 2018 | $ | 649,231 | $ — | $ | 1,948,800 | $ | 679,650 | $ 15,280 | $ 3,292,961 | ||||||||||||
Jeffrey Siegel (4)
Chairman of our Board, Executive Chairman
| 2018 | 990,000 | — | 156,600 | — | 124,005 | 1,270,413 | |||||||||||||||
|
2017 |
| 990,000 | 899,406 | 387,400 | 454,500 | 123,675 | 2,854,981 | ||||||||||||||
|
2016 |
| 1,000,000 | 1,412,316 | 188,280 | — | 108,136 | 2,708,732 | ||||||||||||||
Ronald Shiftan
Vice Chairman of our Board, Chief Operating Officer |
|
2018 |
| 650,000 | — | — | — | 91,500 | 741,500 | |||||||||||||
|
2017 |
| 650,000 | 482,717 | 221,400 | — | 91,220 | 1,445,337 | ||||||||||||||
|
2016 |
| 650,000 | 798,556 | 188,280 | — | 101,961 | 1,738,797 | ||||||||||||||
Daniel Siegel
President |
|
2018 |
| 511,779 | — | 117,450 | — | 18,000 | 647,229 | |||||||||||||
|
2017 |
| 475,000 | 412,712 | 221,400 | — | 18,025 | 1,127,137 | ||||||||||||||
|
2016 |
| 475,000 | 592,200 | 188,280 | — | 18,000 | 1,273,480 | ||||||||||||||
Laurence Winoker
Senior Vice | 2018 | 425,000 | — | 117,450 | — | 12,000 | 554,450 | |||||||||||||||
|
2017 |
| 425,000 | 211,197 | 147,600 | — | 12,083 | 795,880 | ||||||||||||||
|
2016 |
| 425,000 | 291,494 | 125,520 | — | 11,636 | 853,650 |
Name, Principal | Year | Salary | Non-Equity Compensation (1)
| Stock Awards | Option Awards (2) | All Other (8) | Total | |||||||||||||||
Robert Kay (5)
Chief Executive Officer | 2019 | $ | 800,000 | $ 145,500 | $ | 1,339,250 | $ | 691,075 | $ 28,836 | $ 3,004,661 | ||||||||||||
2018 | 649,231 | - | 1,948,800 | 679,650 | 15,280 | 3,292,961 | ||||||||||||||||
Jeffrey Siegel (6)
Chairman of our Board, Executive Chairman | 2019 | 990,000 | 200,475 | 1,109,000 | - | 123,640 | 2,423,115 | |||||||||||||||
2018 | 990,000 | - | 156,600 | - | 124,005 | 1,270,605 | ||||||||||||||||
2017 | 990,000 | 899,406 | 387,400 | 454,500 | 123,675 | 2,854,981 | ||||||||||||||||
Ronald Shiftan (7)
Former Vice Chairman of our Board, Chief Operating Officer | 2019 | 101,042 | - | - | - | 1,208,170 | 1,309,212 | |||||||||||||||
2018 | 650,000 | - | - | - | 91,500 | 741,500 | ||||||||||||||||
2017 | 650,000 | 482,717 | 221,400 | - | 91,220 | 1,445,337 | ||||||||||||||||
Daniel Siegel
President | 2019 | 530,529 | 95,625 | 246,725 | - | 18,000 | 890,879 | |||||||||||||||
2018 | 511,779 | - | 117,450 | - | 18,000 | 647,229 | ||||||||||||||||
2017 | 475,000 | 412,712 | 221,400 | - | 18,025 | 1,127,137 | ||||||||||||||||
Laurence Winoker
Senior Vice President-Finance, Treasurer, Chief Financial Officer | 2019 | 425,000 | 42,234 | 148,880 | - | 12,000 | 628,114 | |||||||||||||||
2018 | 425,000 | - | 117,450 | - | 12,000 | 554,450 | ||||||||||||||||
2017 | 425,000 | 211,197 | 147,600 | - | 12,083 | 795,880 |
Notes: |
(1) | Represents the portion of each NEO’s annual bonus that the Board determined to pay in cash, rather than in the form of restricted stock subject to aone-year vesting period. |
(2) | Represents the aggregate grant date fair value of the awards as determined under Financial Accounting Standards Board Accounting Standards Codification TopicNo. 718-20, Awards Classified as Equity, which was recognized by the Company for awards granted during 2019, 2018 |
For 2019, includes restricted stock awards granted in 2019 in respect of 2018 annual bonuses. Such awards are subject to a one year vesting period. |
(4) | The grant date fair value of the performance share awards included in this column is the target payout based on the probable outcome of the performance-based conditions determined as of the grant date. The maximum potential payout of the stock awards would be 150% of the target shares awarded on the |
grant date. The maximum value of the performance share awards for |
In March 2018, upon the consummation of the Filament Acquisition, Mr. Kay became the Company’s Chief Executive Officer. Options awarded and restricted shares and performance share awards granted to Mr. Kay in 2018 include options, restricted shares and performance share awards granted pursuant to Mr. Kay’s employment agreement. |
Until March 2018, Mr. Siegel held the position of the Company’s Chief Executive Officer. Upon the consummation of the Filament Acquisition, Mr. Siegel became the Executive Chairman of the Company. Options awarded and restricted shares granted in 2017 include options and restricted shares granted pursuant to Mr. Siegel’s amended and restated employment agreement. |
Mr. Shiftan resigned from his position as Chief Operating Officer of the Company effective March 15, 2019. |
(8) | All Other Compensation includes the following: |
Name | Year | Insurance Reimbursement | Automobile Related | Professional fees | Misc | Total All Other Compensation | Year
| Insurance
| Automobile
| Professional
| Misc.
| Total All Other
| ||||||||||||
Robert Kay | 2019 | $ - | $ 18,000 | $ 10,836 | $ - | $ 28,836 | ||||||||||||||||||
2018 | $ - | td5,280 | $ - | $ - | $ 15,280 | 2018 | - | 15,280 | - | - | 15,280 | |||||||||||||
Jeffrey Siegel | 2018 | 100,000 | 24,005 | - | - | 124,005 | 2019 | 100,000 | 23,640 | - | - | 123,640 | ||||||||||||
2017 | 100,000 | 23,650 | - | 25 | 123,675 | 2018 | 100,000 | 24,005 | - | - | 124,005 | |||||||||||||
2016 | 75,000 | 25,555 | 7,581 | - | 108,136 | 2017 | 100,000 | 23,650 | - | 25 | 123,675 | |||||||||||||
Ronald Shiftan | 2018 | 68,359 | 16,500 | 6,641 | - | 91,500 | 2019 | - | - | - | 1,238,870(1) | 1,208,170 | ||||||||||||
2017 | 66,270 | 18,000 | 6,925 | 25 | 91,220 | 2018 | 68,359 | 16,500 | 6,641 | - | 91,500 | |||||||||||||
2016 | 75,000 | 25,156 | 1,805 | - | 101,961 | 2017 | 60,000 | 20,400 | 15,000 | 95,400 | ||||||||||||||
Daniel Siegel | 2018 | - | 18,000 | - | - | 18,000 | 2019 | - | 18,000 | - | - | 18,000 | ||||||||||||
2017 | - | 18,000 | - | 25 | 18,025 | 2018 | - | 18,000 | - | - | 18,000 | |||||||||||||
2016 | - | 18,000 | - | - | 18,000 | 2017 | - | 18,000 | - | 25 | 18,025 | |||||||||||||
Laurence Winoker | 2018 | - | 12,000 | - | - | 12,000 | 2019 | - | 12,000 | - | - | 12,000 | ||||||||||||
2017 | - | 12,033 | - | 50 | 12,083 | 2018 | - | 12,000 | - | - | 12,000 | |||||||||||||
2016 | - | 11,636 | - | - | 11,636 | 2017 | - | 12,033 | - | 50 | 12,083 |
(1) | Includes cash severance equal to $1,077,091, the value of accelerated vesting of outstanding shares of restricted stock equal to $81,637, reimbursement of six months of rental payments on an apartment that Mr. Shiftan maintains near the Company’s principal offices equal to $30,900, and payment for accrued but unused vacation equal to $18,542. These amounts were payable to Mr. Shiftan in connection with his retirement and are described below underPotential Payments Upon Termination or Change of Control. |
EMPLOYMENT AGREEMENTS OF THE NEOs
Robert B. Kay
During 2018,2019, Robert B. Kay was employed by us as the Chief Executive Officer of the Company pursuant to an employment agreement with the Company, dated as of December 22, 2017, which became effective upon the closing of the Filament Acquisition on March 2, 2018 and was amended as of January 1, 2019 (the “Kay Employment Agreement”).
The Kay Employment Agreement provides for a term through the third anniversary of the consummation of the Filament Acquisition, March 2, 2021, with automatic renewals for additionalone-year periods unless his employmentnotice ofnon-renewal is terminatedprovided by either us or Mr. Kay, an annual base salary of $800,000 and an automobile allowance of up to $1,500 per month. The Kay Employment Agreement further provides for the reimbursement on aone-time basis of up to $10,000 for reasonable legal fees
incurred by Mr. Kay in connection with the preparation, negotiation and execution of the Kay Employment Agreement and ancillary documents and reimbursement to Mr. Kay of up to a total of $35,000 during any calendar year for legal, financial and other professional services.
Pursuant to the Kay Employment Agreement, we granted Mr. Kay, 50,000 restricted shares and an option to purchase 150,000 shares of the Company’s common stock. The restrictions onone-third of these 50,000 restricted shares terminateterminated on March 2, 2019, and the restrictions on the remaining portion of the restricted shares vest in equal installments on each of the first, second,March 2, 2020 and third anniversaries of the consummation of the Filament Acquisition.March 2, 2021. The option shall vestvested as to 50,000 shares on March 2, 2019 and an additional 50,000 shares subject to the option vest on each of the first, second,March 2, 2020, and third anniversaries of the consummation of the Filament Acquisition.March 2, 2021. Pursuant to the Kay Employment Agreement, we also granted Mr. Kay performance-based deferred stock unitsperformance shares in a target amount of 50,000 shares, subject to the terms and conditions established by theour Compensation Committee of our Board.Committee. The performance goals and other vesting terms applicable to these performance-based deferred stock unitsperformance shares are consistent with those granted to other NEOs in respect of the performance period commencing in 2018.
The Kay Employment Agreement also entitles Mr. Kay to receive an Annual Adjusted IBITEBITDA Performance Bonus and an Annual Individual Goal Bonus based on certain measurable objectives as described underAnnual Bonuses.
The Kay Employment Agreement further provides for payments to Mr. Kay upon the termination of his employment under certain circumstances, as described underPotential Payments Upon Termination or Change of Control.
The complete text of the Kay Employment Agreement was filed with the SEC as an exhibit to aForm8-K filed on December 29, 2017. The complete text of the amendment to the Kay Employment Agreement iswas filed with the SEC on October 15, 2019 as an exhibit to a Form8-K. The Kay Employment Agreement and the amendment thereto are incorporated herein by reference and the foregoing description of such agreementagreements is qualified in its entirety by the text of such agreement.agreements.
Jeffrey Siegel
Employment Agreement effective as of January 1, 2017
During 2018,2019, Jeffrey Siegel was employed by us as Executive Chairman and a director pursuant to an employment agreement, dated as of March 12, 2014, as amended and restated as of January 12, 2017 and as amended as of November 8, 2017 and January 1, 2019 (the “J. Siegel Amended and Restated Employment Agreement”). Prior to the consummation of the Filament Acquisition on March 2, 2018, Mr. Siegel was the Chief Executive Officer of the Company.
The J. Siegel Amended and Restated Employment Agreement, which was effective as of January 1, 2017, extended the term of Mr. Siegel’s employment agreement through December 31, 2019, with automatic renewals for two additionalone-year periods unless his employmentnotice ofnon-renewal is terminatedprovided either by either us or Mr. Siegel. In connection with the expiration of the J. Siegel Amended and Restated Employment Agreement on December 31, 2019, we entered into a new employment agreement with Mr. Siegel which is effective as of January 1, 2020, as further described below. However, during 2019, Mr. Siegel continued to be employed pursuant to the J. Siegel Amended and Restated Employment Agreement.
The J. Siegel Amended and Restated Employment Agreement provides for an annual base salary of $990,000; Company-paid automobile expenses; reimbursement of insurance premiums and certain legal, financial and other professional services up to $100,000 during any calendar year.
Pursuant to the J. Siegel Amended and Restated Employment Agreement, we granted Mr. Siegel an option to purchase 75,000 shares of our common stock at a price per share equal to the closing stock price on January 12, 2017. The option shall vestvested as to 25,000 shares on each of December 31, 2017, December 31, 2018 and December 31, 2019. Pursuant to the J. Siegel Amended and Restated
Employment Agreement, we also granted Mr. Siegel 10,000 restricted shares of our common stock. The restrictions on 3,333 restricted shares shall terminateterminated on each of December 31, 2017, and December 31, 2018 and the restrictions on 3,334 restricted shares shall terminate on December 31, 2019.
The J. Siegel Amended and Restated Employment Agreement also entitles Mr. Siegel to receive an Annual Adjusted IBITEBITDA Performance Bonus and an Annual Individual Goal Bonus based on certain measurable objectives as described underAnnual Bonuses.
The J. Siegel Amended and Restated Employment Agreement further provides for payments to Mr. Siegel upon the termination of his employment under certain circumstances as described underPotential Payments Upon Termination or Change of Control. The J. Siegel Amended and Restated Employment Agreement provides that under certain circumstances, including a change in Mr. Siegel’s position or material reduction in Mr. Siegel’s responsibilities, Mr. Siegel may terminate his employment for “Good Reason” and be entitled to receive such payments. Mr. Siegel waived such termination right and any entitlement to such payments resulting from the change in Mr. Siegel’s position from Chief Executive Officer to Executive Chairman in connection with the Filament Acquisition.
The complete text of the J. Siegel Amended and Restated Employment Agreement was filed with the SEC as an exhibit to a Form8-K dated January 19, 2017. The complete text of the first amendment to his employment agreementJ. Siegel Amended and Restated Employment Agreement was filed with the SEC on November 9, 2017 as an exhibit to the Form10-Q for the nine months ended September 30, 2017.2017 and the complete text of the second amendment to the J. Siegel Amended and Restated Employment Agreement was filed with the SEC on October 15, 2019 as an exhibit to a Form8-K. Mr. Siegel’s employment agreement and the amendments thereto are incorporated herein by reference and the foregoing description of such agreements is qualified in its entirety by the text of such agreements.
Employment Agreement Effective as of January 1, 2020
In 2020, Jeffrey Siegel continues to be employed by us as Executive Chairman of the Board pursuant to an employment agreement, dated as of June 27, 2019, and subsequently amended on October 11, 2019 (as amended, the “J. Siegel 2020 Employment Agreement”), which is effective as of January 1, 2020.
Pursuant to the J. Siegel 2020 Employment Agreement, the term of Mr. Siegel’s employment has been extended until December 31, 2022, unless Mr. Siegel’s employment with the Company is earlier terminated in accordance with the terms of the J. Siegel 2020 Employment Agreement. During the term of the J. Siegel 2020 Employment Agreement, the Company will recommend that Mr. Siegel be nominated by the Board forre-election to the Board and bere-elected by the Board as Executive Chairman.
Under the J. Siegel 2020 Employment Agreement, Mr. Siegel’s base salary will be $700,000 for each of 2020 and 2021, and $675,000 for 2022. Mr. Siegel will be eligible receive performance bonuses based on the Company’s Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization for each year (the “Annual Adjusted EBITDA Performance Bonus”) in a target amount equal to 75% of Mr. Siegel’s base salary, and based on Mr. Siegel having met certain individual performance goals for such year (the “Annual Individual Goal Bonus”) in a target amount equal to 25% of his base salary. Annual bonus payments may range from 50% to 200% of the target Annual Adjusted EBITDA Performance Bonus, and from 50% to 100% of the target Annual Individual Goal Bonus based on the extent to which the performance goals are achieved.
During the term of the J. Siegel 2020 Employment Agreement, the Company will provide Mr. Siegel with the automobile provided to him as an officer of the Company during the year ending December 31,
2019. Upon the expiration of the lease of such automobile, the Company will provide Mr. Siegel with a monthly cash payment equal to the monthly lease payment paid by the Company in respect of such automobile and reimbursement for automobile insurance premiums. The J. Siegel 2020 Employment Agreement also provides for the reimbursement of insurance premiums and certain legal, financial and other professional services up to $100,000 during any calendar year.
The J. Siegel 2020 Employment Agreement provides for certain payments and benefits in the event that Mr. Siegel’s employment is terminated under certain circumstances.
If Mr. Siegel’s employment is terminated by us for Cause or if Mr. Siegel resigns other than for Good Reason (as such terms are defined in the J. Siegel 2020 Employment Agreement), Mr. Siegel will be entitled to be paid the following amounts (collectively, the “J. Siegel Accrued Obligations”): base salary accrued up to and including the date of termination; payment for any accrued but unused vacation time; and any unreimbursed expenses. Mr. Siegel will also be entitled to exercise any then-outstanding stock options granted to Mr. Siegel that vested on or prior to such termination or resignation of employment.
If Mr. Siegel’s employment is terminated (i) by us for any reason other than Cause, (ii) by Mr. Siegel for Good Reason, (iii) by us or Mr. Siegel due to Mr. Siegel’s Disability (as defined in the J. Siegel 2020 Employment Agreement) or (iv) by reason of Mr. Siegel’s death (collectively, a “Siegel Involuntary Termination”), Mr. Siegel will be entitled to payment of the J. Siegel Accrued Obligations, as well as the following severance payments (the “J. Siegel Severance Payments”), conditioned (except in the case of death) upon his execution andnon-revocation of a release of all claims against the Company: payment equal to 3.0 times Mr. Siegel’s base salary in effect at the time of termination; payment equal to 3.0 times Mr. Siegel’s target bonus (which is equal to 100% of his base salary in effect in effect for the year in which the termination occurs); and the Annual Adjusted EBITDA Performance Bonus accrued to the date of termination. In addition, all of Mr. Siegel’s then outstanding stock options and restricted stock will be immediately vested, to the extent consistent with the LTIP.
If Mr. Siegel receives the J. Siegel Severance Payments in connection with change of control of the Company and all or any portion of the payments and benefits would constitute a “parachute payment” within the meaning of Section 280G of the Code (or a similar or successor provision), we will reduce such payments to the extent necessary so that (i) no portion thereof will be subject to the excise tax imposed by Section 4999 of the Code (or a similar or successor provision); and (ii) by reason of such reduction, the netafter-tax benefit to Mr. Siegel will exceed the netafter-tax benefit to him if such reduction were not made.
If Mr. Siegel’s employment is terminated as a result of the expiration of the term of the J. Siegel 2020 Employment Agreement, Mr. Siegel is entitled to payment of the J. Siegel Accrued Obligations and, conditioned upon his execution andnon-revocation of a release of all claims against the Company, he is entitled to a lump sum cash payment equal to one times the amount of his average base salary for each of 2020, 2021 and 2022, and one times the average of the sum of his annual bonuses for each of 2020, 2021 and 2022. In addition, all of Mr. Siegel’s then outstanding stock options and restricted stock will be immediately vested, to the extent consistent with the LTIP.
The complete text of the J. Siegel 2020 Employment Agreement was filed with the SEC as an exhibit to a Form8-K dated June 27, 2019. The complete text of the first amendment to the J. Siegel 2020 Employment Agreement was filed with the SEC as an exhibit to a Form8-K dated October 11, 2019. The J. Siegel 2020 Employment Agreement and the amendment thereto are incorporated herein by reference and the foregoing description of such agreements is qualified in its entirety by the text of such agreements.
Ronald Shiftan
During 2018, Ronald Shiftan was employed by us until March 15, 2019 (the “Retirement Date”) as our Vice Chairman and Chief Operating Officer pursuant to the Third Amended and Restated Employment Agreement by and between the Company and Mr. Shiftan, dated as of November 24, 2015, as amended by an amendment dated November 8, 2017 (as amended, the “Shiftan Employment Agreement”) and further amended by the Retirement Agreement between the Company and Mr. Shiftan, dated June 11, 2018 (the “Retirement Agreement”). The Retirement Agreement sets forth (collectively, the terms of Mr. Shiftan’s continued employment through his retirement as an officer of the Company effective March 15, 2019 (the “Retirement Date”“Shiftan Employment Agreement”). Prior to the Retirement Date, the Company and Mr. Shiftan agreed that neither party will terminate Mr. Shiftan’s employment pursuant to the Shiftan Employment Agreement, except that prior to the Retirement Date the Company may terminate Mr. Shiftan’s employment for cause, Mr. Shiftan could terminate his employment for good reason (as such definition is amended by the Retirement Agreement), or Mr. Shiftan’s employment could be terminated on account of his death or disability.
The Retirement Agreement extended the term of Mr. Shiftan’s employment agreement through the Retirement Date. During the period from June 11, 2018 through the Retirement Date (the “Transition Period”“Transition Period”), Mr. Shiftan continued to perform such duties as were assigned to him by theour Chief Executive Officer, provided, however, thatOfficer. However, during the period from January 1, 2019 through the Retirement Date, his time commitment was reduced to 50% of what it had been over the prior 36 months.
Pursuant to the Retirement Agreement, the Company continued to pay Mr. Shiftan his base salary of $650,000 under the Shiftan Employment Agreement through December 31, 2018. For the remainder of the Transition Period,months, and the Company paid him at thean annual rate of base salary equal to $325,000 (which was 50% of suchhis base salary.salary in effect for 2018). The Retirement Agreement further providesprovided Mr. Shiftan with Company-paid automobile expenses;expenses and reimbursement offor insurance premiums, and certain legal, financial and other professional services up to $75,000 during any calendar year.
The Retirement Agreement also entitlesyear during his employment. Mr. Shiftan was not eligible to receive an Annual Adjusted IBIT Performance Bonus and an Annual Individual Goal Bonus based on certain measurable objectives as described underAnnual Bonuses and in accordance withannual bonus for 2019 pursuant to the Shiftan Employment Agreement. Mr. Shiftan’s 2018 bonus eligibility was determined and paid in accordance withRetirement Agreement.
Upon the Shiftan Employment Agreement; he is not entitled to any other bonus compensation, including in respect of the portion of the year that he works in 2019.
The Retirement Agreement further provides for payments toDate, Mr. Shiftan uponbecame eligible for certain payments and benefits pursuant to the termination of his employmentRetirement Agreement, as described underPotential Payments Upon Termination or Change of Control.
The complete text of the Retirement Agreement was filed with the SEC as an exhibit to a Form8-K dated June 12, 2018. The complete text of the Third Amended and Restated Employment Agreement was filed with the SEC as an exhibit to a Form8-K dated November 30, 2015. The complete text of the Amendment to the Third Amended and Restated Employment Agreement was filed with the SEC on November 9, 2017 as an exhibit to the Form10-Q for the nine months ended September 30, 2017. The Third Amended and Restated Employment Agreement, the amendment thereto dated November 8, 2017, and the Retirement Agreement are incorporated herein by reference and the foregoing descriptionsdescription of such agreements areis qualified in theirits entirety by the text of such agreements.
Daniel Siegel
During 2018,2019, Daniel Siegel was employed by us as our President pursuant to an employment agreement dated as of November 8, 2017, effective as of January 1, 2018 and amended as of January 1, 2019 (the “D. Siegel Employment Agreement”).
The D. Siegel Employment Agreement provides that the term of Mr. Siegel’s employment shallwill be through December 31, 2020, with automatic renewals for additionalone-year periods unless his employmentnotice ofnon-renewal is terminatedprovided by either us or Mr. Siegel, and provides for an annual base salary of $512,500, for the period from January 1, 2018 through June 30, 2019 and a base salary of $550,000 for the period from July 1, 2019 through December 31, 2020. The D. Siegel Employment Agreement provides certain perquisites including Company-paidan automobile expenses.allowance of $1,500 per month. The D. Siegel Employment Agreement also entitles Mr. Siegel to receive an Annual Adjusted IBITEBITDA Performance Bonus and an Annual Individual Goal Bonus based on certain measurable objectives as described underAnnual Bonuses.
Mr. Siegel’s employment agreementThe D. Siegel Employment Agreement further provides for payments to Mr. Siegel upon the termination of his employment under certain circumstances as described underPotential Payments Upon Termination or Change of Control.
The complete text of the D. Siegel Employment Agreement, dated as of November 8, 2017, was filed with the SEC on November 9, 2017 as an exhibit to the Form10-Q for the nine months ended
September 30, 2017. The complete text of the amendment to his employment agreement was filed with the SEC on October 15, 2019 as an exhibit to a Form8-K. The D. Siegel Employment Agreement isand the amendment thereto are incorporated herein by reference and the foregoing description of such agreementagreements is qualified in its entirety by the text of such agreement.agreements.
Laurence Winoker
During 2018,2019, Laurence Winoker was employed by us as our Senior Vice-President — Finance, Treasurer and Chief Financial Officer pursuant to an employment agreement, dated as of June 28, 2007, as amended as of March 8, 2010 and April 12, 2012, as amended and restated as of September 10, 2015 and further amended as amendedof November 8, 2017 and January 1, 2019 (the “Winoker Amended and Restated Employment Agreement”).
The Winoker Amended and Restated Employment Agreement provides for an annual base salary of $425,000 for 2018 and an Annual Adjusted IBITEBITDA Performance Bonus and an Annual Individual Goal Bonus based on certain measurable objectives as described underAnnual Bonuses. The Winoker Amended and Restated Employment Agreement also provides for certain perquisites including Company-paidan automobile related expenses.allowance of $1,000 per month.
The Winoker Amended and Restated Employment Agreement further provides for payments to Mr. Winoker upon the termination of his employment under certain circumstances as described underPotential Payments Upon Termination or Change of Control.
The complete text of Mr. Winoker’s employment agreement, dated as of June 28, 2007, was filed with the SEC as an exhibit to a Form8-K dated July 3, 2007. The complete text of the first amendment to Mr. Winoker’s employment agreement was filed with the SEC as an exhibit to a Form8-K dated March 10, 2010. The complete text of the second amendment to Mr. Winoker’s employment agreement was filed with the SEC as an exhibit to a Form8-K dated April 16, 2012. The complete text of theWinoker Amended and Restated Employment Agreement was filed with the SEC as an exhibit to a Form8-K dated September 16, 2015. The complete text of the first amendment to the Winoker Amended and Restated Employment Agreement was filed with the SEC on November 9, 2017 as an exhibit to the Form10-Q for the nine months ended September 30, 2017. Mr. Winoker’s employment agreement,2017 and the first amendment to his employment agreement,complete text of the second amendment to his employment agreement, the Winoker Amended and Restated Employment Agreement was filed with the SEC on October 15, 2019 as an exhibit to a Form8-K. The Winoker Amended and Restated Employment Agreement and the amendmentamendments to the Winoker Amended and Restated Employment Agreement are incorporated herein by reference and the foregoing descriptionsdescription of such agreements areis qualified in theirits entirety by the text of such agreements.
GRANTS OF PLAN-BASED AWARDS DURING FISCAL YEAR ENDED DECEMBER 31, 20182019
The following table sets forth information regarding grants of plan-based compensation to the NEOs during 2018.2019.
Name | Grant date | Estimated possible payouts plan awards(1) | Estimated future payouts under equity incentive plan awards(2) | All other stock awards: Number of shares of stock (#) | All other option awards: Number of securities underlying options (#) | Exercise or base price of option awards ($) | Grant date fair ($) | Grant date | Estimated possible payouts under non-equity incentive plan awards (1) | Estimated future payouts under equity incentive plan awards (2) | All other stock awards: Number of shares of stock (#) | All other option awards: Number of securities underlying options (#) | Exercise or base price of option awards ($) | Grant and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert Kay | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan | $450,000 | $900,000 | $1,600,000 | $ | 450,000 | $ | 900,000 | $ | 1,600,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | March 2, 2018 | 150,000(3) | $13.75 | 679,650 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | March 2, 2018 | 50,000(4) | 687,500 | | March 15, 2019 | | 20,000 (3) | $ | 188,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | June 28, 2018 | 6,000(5) | 78,300 | | June 27, 2019 | | 62,500 (4) | 575,625 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock options | | June 27, 2019 | | 250,000 (5) | $9.21 | 691,075 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance shares | June 28, 2018 | (6) | 42,000 | 56,000 | 84,000 | 730,800 | | June 27, 2019 | | 46,875 | 62,500 | 93,750 | 575,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey Siegel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan | 618,750 | 1,237,500 | 2,227,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | | March 15, 2019 | | 20,000 (3) | 188,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | | June 27, 2019 | | 100,000 (6) | 921,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ronald Shiftan(7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel Siegel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan | 298,828 | 597,656 | 796,875 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | | March 15, 2019 | | 14,000 (3) | 131,600 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | | June 27, 2019 | | 6,250 (4) | 57,563 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance shares | August 8, 2018 | (6) | 28,500 | 38,000 | 57,000 | 452,200 | | June 27, 2019 | | 4,688 | 6,250 | 9,375 | 57,563 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey Siegel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Laurence Winoker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan | 618,750 | 1,237,500 | 2,227,500 | 132,813 | 265,625 | 425,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | June 28, 2018 | 6,000(5) | 78,300 | | March 15, 2019 | | 8,000 (3) | 75,200 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | | June 27, 2019 | | 4,000 (4) | 36,840 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance shares | June 28, 2018 | 4,500 | 6,000 | 9,000 | 78,300 | | June 27, 2019 | | 3,000 | 4,000 | 6,000 | 36,840 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ronald Shiftan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan | 341,250 | 682,500 | 1,397,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel Siegel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan | 288,281 | 576,563 | 768,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | June 28, 2018 | 4,500(5) | 58,725 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance shares | June 28, 2018 | 3,375 | 4,500 | 6,750 | 58,725 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Laurence Winoker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Plan | 132,813 | 265,625 | 425,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted shares | June 28, 2018 | 4,500(5) | 58,725 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance shares | June 28, 2018 | 3,375 | 4,500 | 6,750 | 58,725 |
Notes:
(1) | The threshold, target and maximum payouts disclosed in the table above include the Annual Adjusted |
(2) | The threshold, target and maximum performance share awards represent possible future payouts of the Company’s common stock underlying performance share awards granted in |
(3) |
|
Represents restricted stock granted under the Amended and Restated 2000 Long Term Incentive Plan |
Represents restricted stock granted under the Amended and Restated 2000 Long Term Incentive Plan. The restricted stock vests in equal installments on the first, second, third and fourth anniversaries of the grant date. |
These |
(6) | Represents restricted stock granted under the Amended and Restated 2000 Long Term Incentive Plan. The restricted stock vests in equal annual installments over three years on December 31, 2020, 2021 and 2022. |
(7) | Mr. Shiftan did not receive any grants of plan-based awards as an executive officer during the fiscal year ended December 31, 2019. |
OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR ENDED DECEMBER 31, 20182019
Option Awards | Restricted Stock Awards | Option Awards | Restricted Stock Awards and Performance Share Awards | |||||||||||||||||||||
Name |
Number of shares | Value realized on exercise ($) |
Number of shares | Value realized on Vesting ($) |
Number of shares exercise | Value realized on exercise ($) |
Number of shares | Value realized on Vesting ($) | ||||||||||||||||
Robert Kay | - | $ - | - | $ - | - | $ | - | 18,166 | $ | 188,516 | ||||||||||||||
Jeffrey Siegel | 15,000 | 107,250 | 12,229 | 146,119 | - | - | 14,366 | 122,796 | ||||||||||||||||
Ronald Shiftan | 15,000 | 83,250 | 10,562 | 129,399 | - | - | 14,032 | 129,492 | ||||||||||||||||
Daniel Siegel | - | - | 8,896 | 112,689 | - | - | 10,657 | 96,077 | ||||||||||||||||
Laurence Winoker | 5,000 | 33,250 | 4,948 | 62,357 | 25,000 | 180,500 | 7,272 | 65,784 |
OUTSTANDING EQUITY AWARDS HELD BY NEOs AT DECEMBER 31, 20182019
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of securities underlying unexercised options (#) exercisable | Number of securities | Option exercise price ($) | Option expiration date | Number of Shares or Units of Stock that have not vested (#) | Market Value of of Stock That have not vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not vested (#) | Equity Incentive Shares, Units or Other Rights that have not vested ($) | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of Shares or Units of Stock that have not vested (#) | Market Value of Shares or Units of Stock That have not vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not vested (#) |
Equity Incentive
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert Kay | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | - | 150,000 | (1) | 13.75 | March 2, 2028 | 50,000 | (1) | 100,000 (1) | 13.75 | March 2, 2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
250,000 (2) | 9.21 | June 27, 2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares | 50,000 | (2) | 501,500 | (3) | 33,334 | (3) | 231,671 | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,000 | (4) | 60,180 | (3) | 4,500 | (5) | 31,275 | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20,000 | (6) | 139,000 | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
62,500 | (7) | 434,375 | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 56,000 | (5) | 561,680 | (3) | �� | 56,000 | (8) | 389,200 | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38,000 | (9) | 264,100 | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
62,500 | (10) | 434,375 | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38,000 | (6) | 381,140 | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey Siegel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 100,000 | (7) | 13.27 | May 6, 2020 | 100,000 | (11) | 13.27 | May 6, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
150,000 | (8) | 11.73 | March 3, 2021 | 150,000 | (12) | 11.73 | March 3, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
30,000 | (9) | 11.64 | April 30, 2022 | 30,000 | (13) | 11.64 | April 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24,000 | (10) | 12.79 | May 6, 2023 | 24,000 | (14) | 12.79 | May 6, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
100,000 | (11) | 18.04 | March 11, 2024 | 100,000 | (15) | 18.04 | March 12, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,000 | (12) | 19.10 | April 29, 2024 | 16,000 | (16) | 19.10 | April 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
50,000 | (13) | 25,000 | (13) | 16.60 | January 1, 2027 | 75,000 | (17) | 16.60 | January 1, 2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares | 1,250 | (14) | 12,538 | (3) | 1,500 | (18) | 10,425 (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,000 | (15) | 30,090 | (3) | 3,000 | (19) | 20,850 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,334 | (16) | 33,440 | (3) | 4,500 | (5) | 31,275 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,500 | (17) | 45,135 | (3) | 20,000 | (6) | 139,000 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,000 | (4) | 60,180 | (3) | 100,000 | (20) | 695,000 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 6,000 | (18) | 60,180 | (3) | 6,000 (21) | 41,700 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,000 | (19) | 60,180 | (3) | 6,000 (8) | 41,700 (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,000 | (5) | 60,180 | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel Siegel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 25,000 | (11) | 13.27 | May 6, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,000 | (13) | 11.64 | April 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,000 | (14) | 12.79 | May 6, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,000 | (16) | 19.10 | April 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares | 1,500 | (18) | 10,425 (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,000 | (19) | 20,850 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,375 | (5) | 23,456 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14,000 | (6) | 97,300 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,250 | (7) | 43,438 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 6,000 (21) | 41,700 (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,500 (8) | 31,275 (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,250 (10) | 43,438 (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option expiration date Ronald Shiftan Stock Options Restricted Shares Performance Shares Daniel Siegel Stock Options Restricted Shares Performance Shares Laurence Winoker Restricted Shares Performance Shares Option Awards Stock Awards Name Number of
securities
underlying
unexercised
options (#)
exercisable Number of
securities
underlying
unexercised
options (#)
unexercisable Option
exercise
price ($) Number of
Shares or
Units of
Stock that
have not
vested (#) Market Value of
Shares or Units
of Stock That
have not vested
($) Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights that
have not
vested (#) Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights that
have not vested ($) 50,000 (7) 13.27 May 6, 2020 20,000 (20) 10.79 June 15, 2021 20,000 (9) 11.64 April 30, 2022 16,000 (10) 12.79 May 6, 2023 16,000 (12) 19.10 April 29, 2024 50,000 (21) 13.26 January 1, 2021 1,250 (14) 12,538 (3) 3,000 (15) 30,090 (3) 4,500 (17) 45,135 (3) 6,000 (18) 60,180 (3) 6,000 (19) 60,180 (3) 25,000 (7) 13.27 May 6, 2020 10,000 (9) 11.64 April 30, 2022 16,000 (10) 12.79 May 6, 2023 16,000 (12) 19.10 April 29, 2024 1,250 (14) 12,538 (3) 3,000 (15) 30,090 (3) 4,500 (17) 45,135 (3) 4,500 (4) 45,135 (3) 6,000 (18) 60,180 (3) 6,000 (19) 60,180 (3) 4,500 (5) 45,135 (3) 25,000 (22) 2.19 April 2, 2019 20,000 (7) 13.27 May 6, 2020 10,000 (20) 10.79 June 15, 2021 10,000 (9) 11.64 April 30, 2022 8,000 (10) 12.79 May 6, 2023 8,000 (12) 19.10 April 29, 2024 625 (14) 6,269 (3) 2,000 (15) 20,060 (3) 3,000 (17) 30,090 (3) 4,500 (4) 45,135 (3) 4,000 (18) 40,120 (3) 4,000 (19) 40,120 (3) 4,500 (5) 45,135 (3)
Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not vested (#) |
Equity Incentive
| ||||||||||||||||||||||
Laurence Winoker | ||||||||||||||||||||||||||||||
20,000 | (11) | 13.27 | May 6, 2020 | |||||||||||||||||||||||||||
10,000 | (22) | 10.79 | June 15, 2021 | |||||||||||||||||||||||||||
10,000 | (13) | 11.64 | April 30, 2022 | |||||||||||||||||||||||||||
8,000 | (14) | 12.79 | May 6, 2023 | |||||||||||||||||||||||||||
8,000 | (16) | 19.10 | April 29, 2024 | |||||||||||||||||||||||||||
Restricted Shares | 1,000 | (18) | 6,950 (4) | |||||||||||||||||||||||||||
2,000 | (19) | 13,900 (4) | ||||||||||||||||||||||||||||
3,375 | (5) | 23,456 (4) | ||||||||||||||||||||||||||||
8,000 | (6) | 55,600 (4) | ||||||||||||||||||||||||||||
4,000 | (7) | 27,800 (4) | ||||||||||||||||||||||||||||
Performance Shares | 4,000 (21) | 27,800 (4) | ||||||||||||||||||||||||||||
4,500 (8) | 31,275 (4) | |||||||||||||||||||||||||||||
4,000 (10) | 27,800 (4) | |||||||||||||||||||||||||||||
Ronald Shiftan | ||||||||||||||||||||||||||||||
Performance Shares | 4,106 (23) | 28,537 (4) | ||||||||||||||||||||||||||||
Notes:
(1) | This option was granted on March 2, 2018 and vests 33% a year in three equal annual installments commencing on the first anniversary of the date of grant. |
(2) | This option was granted on June 27, 2019 and vests 33% a year in three equal annual installments commencing on the first anniversary of the date of grant. |
(3) | These restricted shares were granted on March 2, 2018 and vest 33% a year in three equal annual installments commencing on the first anniversary of the date of grant. |
Calculated using a price per share of |
These restricted shares were granted on June 28, 2018 and vest 25% per year in four equal annual installments commencing on the first anniversary of the date of grant. |
These restricted shares were granted on March 15, 2019 in respect of the 2018 annual bonus and vest on the first anniversary of the date of grant. |
(7) | These restricted shares were granted on June 27, 2019 and vest 25% per year in four equal installments commencing on the first anniversary of the date of grant. |
(8) | These performance share awards were granted on June 28, 2018. These awards will vest upon the achievement of performance measures based on cumulative performance metrics over a three-year performance period (January 1, 2018 through December 31, 2020), with threshold, target and maximum awards equal to 75%, 100% and 150%, respectively, of the number of performance share awards granted.The number of shares reflected assumes the target level of performance achievement which would result in the performance share awards vesting at 100% of the target. |
These performance share awards were granted on August 8, 2018. These awards will vest upon the achievement of performance measures based on cumulative performance metrics over a three-year performance period (January 1, 2018 through December 31, 2020), with threshold, target and maximum awards equal to 75%, 100% and 150%, respectively, of the number of performance share awards granted.The number of shares reflected assumes the target level of performance achievement which would result in the performance share awards vesting at 100% of the target. |
|
|
|
(10) |
|
|
|
|
|
|
|
|
These performance share awards were granted on June |
awards equal to 75%, 100% and 150%, respectively, of the number of performance share awards granted.The number of shares reflected assumes the target level of performance achievement which would result in the performance share awards vesting at 100% of the target. |
(11) | This option was granted on May 7, 2010 and vested 25% a year in four equal annual installments commencing on the first anniversary of the date of grant. |
(12) | This option was granted on March 4, 2011 and vested 33% a year in three equal annual installments on each of December 31, 2011, 2012 and 2013. |
(13) | This option was granted on May 1, 2012 and vested 25% a year in four equal annual installments commencing on the first anniversary of the date of grant. |
(14) | This option was granted on May 7, 2013 and vested 25% a year in four equal annual installments commencing on the first anniversary of the date of grant. |
(15) | This option was granted on March 13, 2014 and vested 33% a year in three equal annual installments commencing on December 31, 2014. |
(16) | This option was granted on April 30, 2014 and vested 25% a year in four equal annual installments commencing on the first anniversary of the date of grant. |
(17) | This option was granted on January 12, 2017 and vested 33% a year in three equal annual installments on each of December 31, 2017, 2018 and 2019. |
(18) | These restricted shares were granted on June 9, 2016 and vest 25% per year in four equal annual installments commencing on the first anniversary of the date of grant. |
(19) | These restricted shares were granted on June 22, 2017 and vest 25% per year in four equal annual installments commencing on the first anniversary of the date of grant. |
(20) | These restricted shares were granted on June 27, 2019 and vest 33% per year in three equal annual installments commencing on December 31, 2020. |
(21) | These performance share awards were granted on June 22, 2017. These awards |
This option was granted on June 16, 2011 and vested 25% a year in four equal annual installments commencing on the first anniversary of the date of grant. |
|
|
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the Company’s equity compensation plans as of December 31, 2018.
Plan Category | Number of Shares of Common Stock to be Issued upon Exercise of Outstanding Options, Warrants or Rights(1) | Weighted-Average Exercise Price of Outstanding Options (2) | Number of Shares of Common Stock Remaining Available for Future Issuance | |||
Equity Compensation Plan Approved by Security Holders | 2,057,756 | $13.87 | 946,109 | |||
Equity Compensation Plan Not Approved by Security Holders | - | - | - | |||
Total | 2,057,756 | $13.87 | 946,109 |
|
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The employment agreements that we have entered into with each of the NEOs require us to make certain payments to these individuals in the event of a termination of their employment or a change of control of the Company. We believe that the arrangements with respect to a change of control are appropriate to allow the NEOs to focus on our interests in a change of control situation without distractions relating to their employment. Notwithstanding provisions contained in the respective NEO’s employment agreements, all equity awards are subject to the provisions of the Amended and Restated 2000 Long-Term Incentive Plan, as it may be amended from time to time.
The following table shows estimated payments that would have been made to each of our NEOs pursuant to their employment agreements and outstanding equity award agreements as of December 31, 20182019 under various scenarios involving a termination of employment or a change of control of the Company, assuming that each individual’s employment was terminated or a change of control of the Company had occurred on December 31, 20182019 and using the closing market price of our common stock as of December 31, 2018:2019:
Upon Termination as a Result of a Disability
|
Upon Termination as a Result of a Disability
|
Upon Termination as a Result of a Disability
|
| |||||||||||||||||||||||
Payment | Robert Kay | Jeffrey Siegel | Ronald Shiftan | Daniel Siegel | Laurence Winoker | Robert Kay | Jeffrey Siegel (1) | Daniel Siegel | Laurence Winoker | |||||||||||||||||
Cash severance | $400,000 | $6,682,500 | $3,997,500 | $256,250 | $212,500 | $400,000 | $6,682,500 | $275,000 | $212,500 | |||||||||||||||||
Awarded but unpaid bonus | - | - | - | - | - | $385,000 | $544,500 | $219,141 | $155,563 | |||||||||||||||||
Options (intrinsic value) | - | - | - | - | - | - | - | - | - | |||||||||||||||||
Restricted shares (intrinsic value) | - | 181,383 | 87,763 | - | - | - | $896,550 | - | - | |||||||||||||||||
Accrued salary | 18,462 | 22,846 | 15,000 | 11,827 | 9,808 | $21,538 | $26,654 | $14,808 | $11,442 | |||||||||||||||||
Accrued vacation | 122,530 | 139,133 | 25,000 | 19,712 | 16,346 | $123,076 | $152,307 | $21,154 | $16,346 | |||||||||||||||||
Insurance or professional fee reimbursement | - | 100,000 | - | - | - | - | $100,000 | - | - | |||||||||||||||||
TOTAL | $540,992 | $7,125,862 | $4,125,263 | $287,789 | $238,654 | $929,614 | $8,402,511 | $530,103 | $395,851 | |||||||||||||||||
Upon Termination as a Result of a Death
| ||||||||||||||||||||||||||
Payment | Robert Kay | Jeffrey Siegel | Ronald Shiftan | Daniel Siegel | Laurence Winoker | |||||||||||||||||||||
Cash severance | $ - | $6,682,500 | $3,997,500 | $ - | $ - | |||||||||||||||||||||
Awarded but unpaid bonus | - | - | - | - | - | |||||||||||||||||||||
Options (intrinsic value) | - | - | - | - | - | |||||||||||||||||||||
Restricted shares (intrinsic value) | - | 181,383 | 87,763 | - | - | |||||||||||||||||||||
Accrued salary | 18,462 | 22,846 | 15,000 | 11,827 | 9,808 | |||||||||||||||||||||
Accrued vacation | 122,530 | 139,133 | 25,000 | 19,712 | 16,346 | |||||||||||||||||||||
TOTAL | $140,992 | $7,025,862 | $4,125,263 | $31,539 | $26,154 |
Upon Termination as a Result of a Death
|
| |||||||||||||||
Payment | Robert Kay | Jeffrey Siegel (1) | Daniel Siegel | Laurence Winoker | ||||||||||||
Cash severance | - | $6,682,500 | - | - | ||||||||||||
Awarded but unpaid bonus | $385,000 | $544,500 | $219,141 | $155,563 | ||||||||||||
Options (intrinsic value) | - | - | - | - | ||||||||||||
Restricted shares (intrinsic value) | - | $896,550 | - | - | ||||||||||||
Accrued salary | $21,538 | $26,654 | $14,808 | $11,442 | ||||||||||||
Accrued vacation | $123,076 | $152,307 | $21,154 | $16,346 | ||||||||||||
TOTAL | $529,614 | $8,302,511 | $255,103 | $183,351 |
Upon Termination by the Company for Cause or by the Executive Without Good Reason Awarded but unpaid bonus Accrued salary Accrued vacation TOTAL Upon Termination as a Result of a Change of Control of the Company by the Company without Cause or by the Executive for Good Reason Cash severance Awarded but unpaid bonus Options (intrinsic value) Restricted shares (intrinsic value) Health benefits Insurance or professional fee reimbursement Accrued salary Accrued vacation TOTAL Upon All Other Termination by the Company or by the Executive for Good Reason Cash severance Awarded but unpaid bonus Options (intrinsic value) Restricted shares (intrinsic value) Health benefits Insurance or professional fee reimbursement Accrued salary Accrued vacation TOTAL Payment Robert Kay Jeffrey Siegel Ronald Shiftan Daniel Siegel Laurence Winoker $ - $ - $ - $ - $ - 18,462 22,846 15,000 11,827 9,808 122,530 139,133 25,000 19,712 16,346 $140,992 $161,979 $40,000 $31,539 $26,154 Payment Robert Kay Jeffrey Siegel Ronald Shiftan (3) Daniel Siegel Laurence Winoker $3,400,000 $6,682,500 $3,997,500 $2,178,125 $1,381,250 - - - - - - - - - - 561,680 181,383 87,763 132,898 101,554 4,639 6,332 - 8,580 6,037 - 100,000 - - - 18,462 22,846 15,000 11,827 9,808 122,530 139,133 25,000 19,712 16,346 $4,107,311 $7,132,194 $4,125,263 $2,351,142 $1,514,995 Payment Robert Kay (1) Jeffrey Siegel (2) Ronald Shiftan (3) Daniel Siegel (4) Laurence Winoker(5) $3,400,000 $6,682,500 $3,997,500 $2,178,125 $1,381,250 - - - - - - - - - - 561,680 181,383 87,763 132,898 101,554 4,639 6,332 - 8,580 6,037 - 100,000 - - - 18,462 22,846 15,000 11,827 9,808 122,530 139,133 25,000 19,712 16,346 $4,107,311 $7,132,194 $4,125,263 $2,351,142 $1,514,995
Upon Termination by the Company for Cause or by the Executive Without Good Reason
| ||||||||||||||||
Payment | Robert Kay | Jeffrey Siegel (1) | Daniel Siegel | Laurence Winoker | ||||||||||||
Awarded but unpaid bonus | - | - | - | $155,563 | ||||||||||||
Accrued salary | $21,538 | $26,654 | $14,808 | $11,442 | ||||||||||||
Accrued vacation | $123,076 | $152,307 | $21,154 | $16,346 | ||||||||||||
TOTAL | $144,614 | $178,961 | $35,962 | $183,351 | ||||||||||||
Upon Termination as a Result of a Change of Control of the Company by the Company without Cause or
| ||||||||||||||||
Payment | Robert Kay | Jeffrey Siegel (1) | Daniel Siegel | Laurence Winoker | ||||||||||||
Cash severance | $3,400,000 | $6,682,500 | $2,337,500 | $1,381,250 | ||||||||||||
Awarded but unpaid bonus | $385,000 | $544,500 | $219,141 | $155,563 | ||||||||||||
Options (intrinsic value) | - | - | - | - | ||||||||||||
Restricted shares and performance shares (intrinsic value)(2) | $1,923,996 | $938,250 | $270,182 | $186,781 | ||||||||||||
Health benefits | $5,266 | $7,531 | $9,168 | $6,447 | ||||||||||||
Insurance or professional fee reimbursement | - | $100,000 | - | - | ||||||||||||
Accrued salary | $21,538 | $26,654 | $14,808 | $11,442 | ||||||||||||
Accrued vacation | $123,076 | $152,307 | $21,154 | $16,346 | ||||||||||||
TOTAL | $5,858,876 | $8,451,742 | $2,871,953 | $1,757,829 |
Upon All Other Termination by the Company or by the Executive for Good Reason or Retirement
| ||||||||||||||||||||
Payment | Robert Kay (3) | Jeffrey Siegel (1)(4) | Ronald Shiftan (5) | Daniel Siegel (6) | Laurence Winoker (7) | |||||||||||||||
Cash severance | $3,400,000 | $6,682,500 | $1,077,091 | $2,337,500 | $1,381,250 | |||||||||||||||
Awarded but unpaid bonus | $385,000 | $544,500 | - | $219,141 | $155,563 | |||||||||||||||
Options (intrinsic value) | - | - | - | - | - | |||||||||||||||
Restricted shares (intrinsic value) | $836,321 | $896,550 | $81,637 | $195,469 | $127,706 | |||||||||||||||
Health benefits | - | $7,351 | - | $9,168 | $6,447 | |||||||||||||||
Insurance or professional fee reimbursement | - | $100,000 | - | - | - | |||||||||||||||
Rental payment reimbursement | - | - | $30,900 | |||||||||||||||||
Accrued salary | $18,462 | $22,846 | - | $14,808 | $11,442 | |||||||||||||||
Accrued vacation | $123,076 | $139,133 | $18,542 | $21,154 | $16,346 | |||||||||||||||
TOTAL | $4,762,859 | $7,132,194 | $1,208,170 | $2,797,240 | $1,698,754 |
Notes:
(1) | The term of Mr. Siegel’s employment agreement would have expired on December 31, 2019 if we had provided 180 days notice ofnon-renewal. Because no such notice was provided, these termination tables assume that the term of Mr. Siegel’s employment agreement was extended for an additional one year. Mr. Siegel’s new employment agreement became effective on January 1, 2020. For more information, see the discussion of the J. Siegel 2020 Employment Agreement underEmployment Agreements of NEOs. |
(2) | Includes the vesting at target value of performance shares with open performance periods as of December 31, 2019, which would vest in the event of such termination within 24 months following a Change of Control. |
(3) | $800,000 of such cash severance amount would be payable to Mr. Kay pursuant to his current employment agreement if |
(4) | $ |
(5) |
|
(6) | $ |
(7) | $425,000 of such cash severance amount would be payable to Mr. Winoker pursuant to his employment agreement if |
Robert B. Kay
Robert B. Kay’s employment agreement, dated as of December 23, 2017,
The Kay Employment Agreement contains the following provisions regarding the termination of hisMr. Kay’s employment and a change of control of the Company.
Termination for Cause; Resignation Without Good Reason
If Mr. Kay’s employment is terminated by us for causeCause or if Mr. Kay resigns other than for good reason,Good Reason (in each case, as defined by the Kay Employment Agreement), Mr. Kay shallwill be entitled to be paid the following amounts (collectively, the “Kay Accrued Obligations”):
● | His base salary accrued up to and including the date of termination or resignation of his employment; |
● | An amount in lieu of any accrued but unused vacation time; |
● | The amount of any unreimbursed expenses; and |
● | All benefits that are accrued and vested through the date of termination under all employee benefit plans of the Company. |
All payments, salary and other benefits thereunder shall cease as of the date of termination with the exception of the Kay Accrued Obligations.
Death
In the eventIf Mr. Kay’s employment terminates on account of Mr. Kay’shis death, then Mr. Kay’s estate shallwill receive payment of the Kay Accrued Obligations plus anyPro-Rated Performance Bonus (defined as follows) accrued through the effective date of his termination of employment to which Mr. Kay may be entitled.employment. The“Pro-Rated Performance Bonus” for a particular fiscal year is the amount equal to the Annual Adjusted IBITEBITDA Performance Bonus for the fiscal year that would have been payable to Mr. Kay, by the Company, as determined by the Board, if Mr. Kay’shis employment had not been terminated during the year,pro-rated for the months during the year preceding the termination.
Termination Due to Disability
In the event of Mr. Kay’s total disability, we shall be entitled to terminate Mr. Kay’s employment. In the event thatIf Mr. Kay’s employment is terminated due to total disability,terminates on account of Total Disability (as defined by the Kay Employment Agreement), then in addition to the Kay Accrued Obligations, Mr. Kay shallwill receive, an amount equal toconditioned on his execution andnon-revocation of a release of claims against the Company, continued payments of base salary for a period of six months from the datefollowing his termination of termination (providedemployment (except that such payment will be made in a lump sum if Mr. Kay’s termination due to total disabilityTotal Disability occurs within two years following a “Change of Control”, as defined inby the Kay Employment Agreement) plusand anyPro-Rated Performance Bonus (as defined above) accrued through the effective date of his termination of employment to which Mr. Kay may be entitled.termination.
Termination by the Company without Cause; Resignation by the Executive for Good Reason
In the event that (i)If Mr. Kay’s employment is terminated (i) by us without causeCause or (ii) his employment is terminated by Mr. Kay for good reason,Good Reason, in each case outside of the context of a Change of Control, then Mr. Kay shall be entitled to receive, conditioned (except with respectin addition to the Kay Accrued Obligations) uponObligations, Mr. Kay will receive, conditioned on his execution andnon-revocation of a release of all claims against the Company:
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● | Reimbursement for certain medical and dental |
● | 2.0 times Mr. Kay’s base salary as in effect at the date of termination payable over a period of 24 months |
● | ThePro-Rated Performance Bonus |
● | 2.0 times an amount equal to 112.5% of Mr. Kay’s annual base salary in effect at the time of termination (such amount, the “Kay Target Bonus”) |
Mr. Kay’s then-outstanding stock options shall immediately vest and become exercisable in their entirety and all restrictions on his shares of restricted stock shall
● | Mr. Kay’s then-outstanding stock options will immediately vest and become exercisable in their entirety and all restrictions on his shares of restricted stock will immediately terminate, subject to the terms of the LTIP. |
Termination upon Expiration of Term
If Mr. Kay’s employment is terminated by reason of our failure to renew the term of his employment under his employment agreement, outside the context of a Change of Control, as defined below, then Mr. Kay shall be entitled to receive, conditioned (except with respectin addition to the Kay Accrued Obligations)Obligations, Mr. Kay will receive, conditioned upon his execution andnon-revocation of a release of all claims against the Company, as severance, an amount equal to:Company:
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● | Reimbursement for certain medical and dental benefits set forth in the Kay Employment Agreement for a period of 12 months; |
● | 1.0 times Mr. Kay’s base salary as in effect at the date of termination payable over a period of 12 months |
● | The Annual Adjusted |
Mr. Kay’s then-outstanding stock options shall immediately vest and become exercisable in their entirety and all restrictions on his shares of restricted stock shall
● | Mr. Kay’s then-outstanding stock options will immediately vest and become exercisable in their entirety and all restrictions on his shares of restricted stock will immediately terminate, subject to the terms of the LTIP. |
Termination by the Company without Cause;Cause or on account ofNon-Renewal, Resignation by the Executive for Good Reason in Connection with Certain Changes of Control
In the event thatIf Mr. Kay’s employment is terminated by Mr. Kay for good reasonGood Reason or by us without causeCause or by us upon expiration of the term following delivery of a notice ofnon-renewal, in each case upon or within two years following a Change of Control, Mr. Kay shall be entitled to receive, conditioned (except with respectthen in addition to the Kay Accrued Obligations)Obligations, Mr. Kay will receive, conditioned upon his execution andnon-revocation of a release of all claims against the Company:
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● | ThePro-Rated Performance Bonus |
● | 2.0 times the Kay Target Bonus, |
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All of Mr. Kay’s then-outstanding stock options shall vest and become immediately exercisable and all restrictions on his shares of restricted stock shall immediately terminate, subject to the terms of the LTIP.
In the event thatIf Mr. Kay’s employment is terminated by Mr. Kay for good reasonGood Reason or by us without causeCause or upon expiration of the term following delivery of a notice ofnon-renewal, and in each case, within 90 days following such termination, a Change of Control occurs, then Mr. Kay shallwill be entitled to receive a payment equal to the excess of the base salary severance payments that would have been due to him had he been terminated within two years following a Change of Control, less the amount of base salary severance payments already paid to him. Additionally, in the event that termination is on account of our delivery of a notice ofnon-renewal, Mr. Kay shallwill be entitled to receive two times the Kay Target Bonus, (as defined above),and both amounts are payable within 60 days following the Change of Control.
If all or any portion of the payments and benefits would constitute a “parachute payment” within the meaning of Section 280G of the Code (or a similar or successor provision), we shallwill reduce such payments to the extent necessary so that (i) no portion thereof shallwill be subject to the excise tax imposed by Section 4999 of the Code (or a similar or successor provision) and (ii) by reason of such reduction, the netafter-tax benefit to Mr. Kay shallwill exceed the netafter-tax benefit to him if such reduction were not made.
Jeffrey Siegel
Jeffrey Siegel’s employment agreement dated as of March 12, 2014The J. Siegel Amended and as amended and restated as of January 12, 2017 and as further amended on November 8, 2017Restated Employment Agreement contains the following provisions regarding the termination of hisMr. Siegel’s employment and a change of control of the Company.
Termination for Cause; Resignation without Good Reason
If Mr. Siegel’s employment is terminated by us for causeCause or if Mr. Siegel resigns other than for good reason,Good Reason (in each case as defined by the J. Siegel Amended and Restated Employment Agreement), Mr. Siegel shallwill be entitled to be paid the following amounts (collectively, the “J. Siegel Accrued Obligations”):
● | His base salary accrued up to and including the date of termination or resignation of his employment; |
● | An amount in lieu of any accrued but unused vacation time; and |
● | The amount of any unreimbursed expenses. |
Notwithstanding anything to the contrary in his employment agreement, Mr. Siegel shallwill also be entitled to exercise any then-outstanding stock options granted to Mr. Siegel that shall have vested on or prior to suchhis termination or resignation of employment.
Termination by the Company without Cause; Resignation by the Executive for Good Reason; Termination due to Disability; Death
If Mr. Siegel’s employment is terminated (i) by us for any reason other than cause,Cause, (ii) by Mr. Siegel for good reason (inGood Reason, in the case of (i) or (ii), outside the context of a “Change of Control,” as defined inby the J. Siegel Amended and Restated Employment Agreement),Agreement, (iii) by us or Mr. Siegel due to Mr. Siegel’s disabilityDisability (as defined by the J. Siegel Amended and Restated Employment Agreement) or (iv) by reason of Mr. Siegel’s death (collectively, a “Siegel Involuntary Termination”), Mr. Siegel shallwill be entitled to payment of the J. Siegel Accrued Obligations, as well asand subject to Mr. Siegel’s execution andnon-revocation of a release of claims against the Company (except in the case of death), he will receive the following severance payments (the “J. Siegel Severance Payments”), conditioned (except in the case of death) upon his execution andnon-revocation of a release of all claims against the Company:
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● | 3.0 times |
● | 3.0 times the “J. Siegel Target Bonus,” which includes both |
● | If termination occurs on or prior to June 30 of any year, apro-rated amount of Mr. Siegel’s Annual Adjusted |
These payments will be made in a lump sum within 60 days of termination, except for thepro-rated amount payment in respect of Mr. Siegel’s Annual Adjusted IBITEBITDA Performance Bonus, which will be paid in the following calendar year pursuant to the terms of the J. Siegel Amended and Restated Employment Agreement.following termination. In addition, Mr. Siegel shallwill continue to participate, at our expense, in our health and medical plans and in any other benefits provided by us to Mr. Siegel at the time of such Involuntary Termination until the end of the term of his employment under his employment agreementthe J. Siegel Amended and Restated Employment Agreement or until Mr. Siegel obtains other employment, whichever occurs first. In addition, in the event of a Siegel Involuntary Termination, allAll of Mr. Siegel’s then outstanding stock options shallwill be immediately vested and exercisable and the restrictions on his restricted stock shallwill immediately terminate, to the extent permitted under the LTIP.
No J. Siegel Severance Payments shall be payable ifSolely in the event Mr. Siegel’s employment with us ends at the expiration ornon-renewal of the termis terminated on account of his employmentdeath or Disability, then in addition to the payments and benefits described above, he will also be eligible to receive any death or disability benefits (as applicable) that are provided under his employment agreement.the terms of any pension, medical, disability and life insurance plan applicable to Mr. Siegel.
Siegel Involuntary Termination or Termination on Account ofNon-Renewal in Connection with Certain Changes of Control
If, during the term of his employment, we undergo a Change of Control and either (i) Mr. Siegel’s employment is, within two years thereafter, terminated under circumstances that would constitute a Siegel Involuntary Termination or Mr. Siegel’s employment is terminated upon expiration of the term following a notice ofnon-renewal provided by us, or (ii) Mr. Siegel undergoes a Siegel Involuntary Termination or Mr. Siegel’s employment is terminated upon expiration of the term following a notice ofnon-renewal provided by us and within 90 days of the Siegel Involuntary Termination or such expiration of the term we execute a definitive agreement to enter into a transaction the consummation of which would result in a Change of Control and such transaction is actually consummated, then Mr. Siegel shallwill be entitled to all payments and benefits as described above with respect to a Siegel Involuntary Termination, calculated using the J. Siegel Target Bonus for the year in which the Change of Control occurs, and using the greater of Mr. Siegel’s base salary in effect at the time of termination and base salary in effect at the time of the Change of Control. These payments and benefits, other than the J. Siegel Accrued Obligations, are conditioned upon hisMr. Siegel’s execution andnon-revocation of a release of all claims against the Company. All of Mr. J. Siegel’s then-outstanding stock options shall be immediately vested and exercisable and all restrictions on his restricted stock shall immediately terminate, to the extent permitted under the LTIP. If all or any portion of the payments and benefits made in connection with such termination would constitute a “parachute payment” within the meaning of Section 280G of the Code (or a similar or successor provision), we shallwill reduce such payments to the extent necessary so that (i) no portion thereof shallwill be subject to the excise tax imposed by
Section 4999 of the Code (or a similar or successor provision); and (ii) by reason of such reduction, the netafter-tax benefit to Mr. Siegel shallwill exceed the netafter-tax benefit to him if such reduction were not made.
Termination Due to Disability
In the event of Mr. Siegel’s disability, either we or Mr. Siegel shall be entitled to terminate Mr. Siegel’s employment. In the event that Mr. Siegel elects to terminate his employment due to disability, such termination shall be deemed to be an Involuntary Termination and Mr. Siegel shall be entitled to payment of the J. Siegel Accrued Obligations, the J. Siegel Severance Payments and any disability benefits that are provided under the terms of any pension, medical, disability and life insurance plan applicable to our senior executives, applicable to Mr. Siegel at the time of his disability. All of Mr. Siegel’s then outstanding stock options shall be immediately vested and exercisable and the restrictions on his restricted stock shall immediately terminate, to the extent permitted under the LTIP.
Death
In the event of Mr. Siegel’s death, the J. Siegel Accrued Obligations and the J. Siegel Severance Payments shall be paid to Mr. Siegel’s beneficiary. Mr. Siegel’s beneficiary shall also be entitled to any death benefits that are provided under the terms of any pension, medical, disability and life insurance plan applicable to our senior executives, applicable to Mr. Siegel at the time of death. All of Mr. Siegel’s then outstanding stock options shall be immediately vested and exercisable and the restrictions on his restricted stock shall immediately terminate, to the extent permitted under the LTIP.
Termination upon Expiration of Term
If Mr. Siegel’s employment is terminated by reason of the expiration of the term of his employment under his employment agreement other than in connection with a Change of Control as described above, Mr. Siegel shallwill be entitled to payment of the J. Siegel Accrued Obligations. In addition, in such event, we shall payand subject to Mr. Siegel as severance, conditioned upon hisSiegel’s execution andnon-revocation of a release of all claims against the Company, an amount equal to:Mr. Siegel will be entitled to the following severance payments and benefits:
● | 2.0 times |
● | 2.0 times the average of the sum of the Annual Adjusted |
Both payments will be paid in a lump sum. The formerfirst payment will be made in a lump sum within 60 days of termination, and the lattersecond payment will be paid in the following calendar year pursuant to the terms of the J. Siegel Amended and Restated Employment Agreement.following termination. In addition, all of Mr. Siegel’s then-outstanding stock options shallwill be immediately vested and exercisable and the restrictions on his restricted stock shallwill immediately terminate.
Continuation of Life Insurance
NotwithstandingPursuant to the J. Siegel Amended and Restated Employment Agreement, following any termination of Mr. Siegel’s employment (other than for causeCause or by reason of his death), we shallwill continue to provide reimbursement for the premiums on the life insurance policies on the life of Mr. Siegel that we are required to provide reimbursement for pursuant to his employment agreementthe J. Siegel Amended and Restated Employment Agreement immediately prior to such termination. If Mr. Siegel’s employment is terminated for any reason other than by reason of his death, Mr. Siegel will have the right to assume the life insurance policypolicies in his name owned by the Company.
Ronald Shiftan
The Shiftan Employment Agreement, as amended byUpon the Retirement Agreement, containsDate, Mr. Shiftan was entitled to receive his base salary accrued up to and including the following provisions regarding thedate of termination of Mr. Shiftan’s employment.
Terminationemployment, payment for Cause; Resignation without Good Reason
If Mr. Shiftan’s employment is terminated by us for cause or if Mr. Shiftan resigns other than for good reason, Mr. Shiftan shall be entitled to be paid the following amountsany accrued but unused vacation time, and any unreimbursed expenses (collectively, the “Shiftan Accrued Obligations”):
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Notwithstanding anything. In addition, subject to Mr. Shiftan’s execution andnon-revocation of a release of claims against the contrary in his employment agreement,Company, Mr. Shiftan shall bebecame entitled to exercise any then-outstanding stock options grantedreceive the following payments and benefits pursuant to him that shall have vested on or prior to such termination or resignation of employment.
Involuntary Termination
Pursuant to the Retirement Agreement, the Company may not terminate Mr. Shiftan’s employment without cause and severance is only payable under the Shiftan Employment Agreement if Mr. Shiftan’s employment is terminated (i) by Mr. Shiftan for good reason as defined in the Shiftan Employment Agreement, as amended by the Retirement Agreement, (ii) by us or Mr. Shiftan due to Mr. Shiftan’s disability or (iii) by reason of Mr. Shiftan’s death (such a resignation or termination being hereinafter referred to as a “Shiftan Involuntary Termination”), Mr. Shiftan shall be entitled to payment of the Shiftan Accrued Obligations as well as the following amounts (the “Shiftan Severance Payments”), conditioned (except in the case of death) upon his execution andnon-revocation of a release of all claims against the Company:
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● | Performance shares remain outstanding and will vest to the extent that the applicable performance goals are achieved, but will bepro-rated for the |
● | Reimbursement of six months of rental payments on an apartment that Mr. Shiftan maintains near the Company’s principal offices; and |
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In addition, Mr. Shiftan shall continue to participate, at our expense, in our health and medical plans and in any other benefits provided by us to Mr. Shiftan at the time of such Shiftan Involuntary Termination until the Retirement Date or until Mr. Shiftan obtains other employment, whichever occurs first. Furthermore, in the event of a Shiftan Involuntary Termination, all of Mr. Shiftan’s then-outstanding stock options shall be immediately vested and exercisable and all restrictions on Mr. Shiftan’s restricted shares shall immediately terminate, to the extent permitted under the LTIP.
Termination Due to Disability
In the event of Mr. Shiftan’s disability, either we or Mr. Shiftan shall be entitled to terminate Mr. Shiftan’s employment. In the event that Mr. Shiftan elects to terminate his employment due to disability, such termination shall be deemed to be a Shiftan Involuntary Termination and Mr. Shiftan shall be entitled to payment of the Shiftan Accrued Obligations, the Shiftan Severance Payments and any disability benefits that are provided under the terms of any pension, medical, disability and life insurance plan applicable to Mr. Shiftan at the time of his disability. In addition, all of Mr. Shiftan’s then-outstanding stock options shall be immediately vested and exercisable and all restrictions on Mr. Shiftan’s restricted shares shall immediately terminate, to the extent permitted under the LTIP.
Death
In the event of Mr. Shiftan’s death, the Shiftan Accrued Obligations and the Shiftan Severance Payments shall be paid to Mr. Shiftan’s beneficiary. Mr. Shiftan’s beneficiary shall also be entitled to any death benefits that are provided under the terms of any pension, medical, disability and life insurance plan applicable to Mr. Shiftan at the time of death. In addition, all of Mr. Shiftan’s then-outstanding stock options shall be immediately vested and exercisable and all restrictions on Mr. Shiftan’s restricted shares shall immediately terminate, to the extent permitted under the LTIP.
Upon the Retirement Date
In the event that Mr. Shiftan’s employment terminates on the Retirement Date, as long as Mr. Shiftan remains employed by the Company until the Retirement Date, (i) his unvested time-based equity awards will vest, (ii) his performance-based equity awards will vest to the extent that the applicable performance goals are obtained and will bepro-rated for the portion of the performance period ending on the Retirement Date, (iii) he will receive a lump sum payment equal to the sum of (a) $650,000 and (b) the average of the bonuses paid to him pursuant to the Shiftan Employment Agreement for each of 2016, 2017 and 2018, (iv) he will be eligible to receive reimbursement of up to six months of rental payments on an apartment that he maintains near the Company’s principal offices, and (v) he will be permitted to serve out the remainder of his term as a member of the Board (subject to the Board’s right to remove him for cause), in each case upon the effectiveness of a customary release executed by him on or after the Retirement Date but no later than April 22, 2019. On March 26, 2019, Mr. Shiftan executed the release and on April 3, 2019, Mr. Shiftan’s unvested stock options and unvested shares of restricted stock became fully vested. He also received 2,172 shares of restricted stock on April 3, 2019 as director compensation due to his change in director status as of March 16, 2019 to anon-employee director. In addition, on April 3, 2019, he received a lump sum severance payment equal to $1,107,991. Mr. Shiftan is eligible to receive reimbursement of rental payments through September 2019. Apro-rated portion ofHowever, these shares were forfeited upon Mr. Shiftan’s outstanding deferred stock units will vest at the end of each performance period, based on the achievement of the applicable performance goals. Mr. Shiftan has continued to serve as a member oftermination from the Board since his termination of employment.on June 28, 2019.
Daniel Siegel
Daniel Siegel’s employment agreement dated as of November 8, 2017The D. Siegel Employment Agreement contains the following terms regarding the termination of hisMr. Siegel’s employment and a change of control of the Company.
GeneralTermination for Cause; Resignation without Good Reason
If Mr. Siegel’s employment is terminated duringby us for Cause or by Mr. Siegel without Good Reason (in each case, as defined by the term of his employment agreement for any reason, we shall payD. Siegel Employment Agreement), Mr. Siegel will be entitled to be paid the following amounts (collectively, “D. Siegel Accrued Obligations”):
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His base salary for the period accrued up to and including the date of termination of his employment;
An amount in lieu of any accrued but unused vacation time;
The amount of any unreimbursed expenses; and
All benefits that are accrued and vested through the date of termination under all employee benefit plans of the Company.
Death
If Mr. Siegel’s employment is terminated by reasonterminates on account of Mr. Siegel’shis death, then Mr. Siegel’s estate shallwill receive payment of the amounts provided asD. Siegel Accrued Obligations plus any“Pro-Rated Performance Bonus”Bonus accrued through the effective date of his termination of employment to which Mr. Siegel may be entitled.employment. The“Pro-Rated Performance BonusBonus” for a particular fiscal year is the amount equal to the Annual Adjusted IBITEBITDA Performance Bonus for the fiscal year that would have been payable to Mr. Siegel, by the Company, as determined by the Board, if the agreementhis employment had not been terminated during the year,pro-rated for the months during the year preceding the termination.
Termination Due to Disability
In the event of Mr. Siegel’s total disability, we shall be entitled to terminate Mr. Siegel’s employment. In the event thatIf Mr. Siegel’s employment is terminated due to total disability, contingent upon his execution andnon-revocationterminates on account of a release of all claims againstTotal Disability (as defined by the Company,D. Siegel Employment Agreement), then in addition to the D. Siegel Accrued Obligations, Mr. Siegel shallwill receive, conditioned upon his execution andnon-revocation of an amount equal to hiseffective release of all claims against the Company, continued payments of base salary for a period of six months from the datefollowing his termination of termination (providedemployment (except that such payment will be made in a lump sum if Mr. Siegel’s termination due to total disabilityTotal Disability occurs within two years following a “ChangeChange of Control,” as defined inby the D. Siegel Employment Agreement) plusand anyPro-Rated Performance Bonus accrued through the effective date of his termination of employment to which Mr. Siegel may be entitled.termination.
Termination for Cause; Resignation without Good Reason
Upon any termination of Mr. Siegel’s employment either (i) voluntarily by Mr. Siegel (other than for good reason, as defined in the employment agreement) or (ii) by us for cause (as defined in the employment agreement), all payments, salary and other benefits thereunder shall cease at the date of termination, with the exception of the D. Siegel Accrued Obligations.
Termination by the Company without Cause; Resignation by the Executive for Good Reason
In the event thatIf (i) Mr. Siegel’s employment is terminated by us without cause,Cause, or (ii) hisMr. Siegel’s employment agreement is terminated by Mr. Siegel for good reason,Good Reason, in each case outside of the context of a Change of Control, then Mr. Siegel shall be entitled to receive, conditioned (except with respectin addition to the D. Siegel Accrued Obligations)Obligations, Mr. Siegel will receive, conditioned upon his execution andnon-revocation of a release of all claims against the Company:
Certain medical and dental benefits set forth in the D. Siegel Employment Agreement for a period of 12 months;
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2.0 times Mr. Siegel’s base salary as in effect at the date of termination payable over a period of 24 months following the date of termination;
ThePro-Rated Performance Bonus for the fiscal year in which the termination occurs, payable at the same time as the Performance Bonus for such fiscal year would otherwise have been paid;
2.0 times an amount equal to 112.5% of Mr. Siegel’s annual base salary in effect at the time of termination (such amount, the “D. Siegel Target Bonus”) payable within 60 days following termination; and
Mr. Siegel’s then-outstanding stock options shallwill immediately vest and become exercisable in their entirety and all restrictions on his shares of restricted stock shallwill immediately terminate, subject to the terms of the LTIP.
Termination upon Expiration of Term
If Mr. Siegel’s employment is terminated by reason of our failure to renew the term of his employment under his employment agreement, then in addition to the D. Siegel Accrued Obligations, Mr. Siegel shallwill be entitled to receive, conditioned (except with respect to the D. Siegel Accrued Obligations) uponon his execution andnon-revocation of a release of all claims against the Company, as severance, an amount equal to:Company:
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Certain medical and dental benefits set forth in the D. Siegel Employment Agreement for a period of 12 months;
1.0 times Mr. Siegel’s base salary as in effect at the date of termination payable over a period of 12 months following the date of termination;
The Annual Adjusted EBITDA Performance Bonus for the fiscal year in which termination occurs; and
Mr. Siegel’s then-outstanding stock options shallwill immediately vest and become exercisable in their entirety and all restrictions on his shares of restricted stock shallwill immediately terminate, subject to the terms of the LTIP.
Termination by the Company without Cause or on Account ofNon-Renewalin Connection with Certain Changes of Control;Control, Resignation by the Executive for Good Reason in Connection with Certain Changes of Control
In the event thatIf Mr. Siegel’s employment is terminated by Mr. Siegel for good reasonGood Reason or by us without causeCause or upon expiration of the term following our delivery of a notice ofnon-renewal, in each case upon or within two years following a Change of Control, then in addition to the D. Siegel Accrued Obligations, Mr. Siegel shallwill be entitled to receive, conditioned (except with respect to the D. Siegel Accrued Obligations) uponon his execution andnon-revocation of a release of all claims against the Company:
Certain medical and dental benefits set forth in his employment agreement for a period of 12 months;
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2.0 times his annual base salary in effect at the effective date of the Change of Control, or if greater, 2.0 times his annual base salary in effect as of his termination of employment, payable in a lump sum within 60 days following termination;
ThePro-Rated Performance Bonus for the fiscal year in which termination occurs, payable at the same time as the Annual Adjusted EBITDA Performance Bonus for such fiscal year would otherwise have been paid;
2.0 times the D. Siegel Target Bonus, using the greater of Mr. Siegel’s base salary in effect at the time of termination and base salary in effect at the time of the Change of Control, payable in a lump sum within 60 days following termination; and
All of Mr. Siegel’s then-outstanding stock options shallwill vest and become immediately exercisable and all restrictions on his shares of restricted stock granted shallwill immediately terminate, subject to the terms of the LTIP.
In the event thatIf Mr. Siegel’s employment is terminated by Mr. Siegel for good reasonGood Reason or by us without causeCause or upon expiration of the term following our delivery of a notice ofnon-renewal, and in each case, within 90 days following such termination, a Change of Control occurs, then Mr. Siegel shallwill be entitled to receive a payment equal to the excess of the base salary severance payments that would have been due to him had he been terminated within two years following a Change of Control, less the amount of base salary severance payments already paid to him. Additionally, in the event that termination is on account of our delivery of a notice ofnon-renewal, Mr. Siegel shallwill be entitled to receive two times the D. Siegel Target Bonus, payable within 60 days following the changeChange of control.Control.
If all or any portion of the payments and benefits would constitute a “parachute payment” within the meaning of Section 280G of the Code (or a similar or successor provision), we shallwill reduce such payments to the extent necessary so that (i) no portion thereof shallwill be subject to the excise tax imposed by Section 4999 of the Code (or a similar or successor provision) and (ii) by reason of such reduction,
the netafter-tax benefit to Mr. Siegel shallwill exceed the netafter-tax benefit to him if such reduction were not made.
Laurence Winoker
Laurence Winoker’s employment agreement dated as of June 28, 2007, as amended as of March 8, 2010, as amended as of April 12, 2012, as amended and restated as of September 10, 2015 and as amended as of November 8, 2017The Winoker Employment Agreement contains the following terms regarding the termination of his employment and a change of control of the Company.
GeneralTermination for Cause; Resignation Without Good Reason
Without limiting the generality of the termination provisions contained in Mr. Winoker’s employment agreement, as amended and restated, ifIf Mr. Winoker’s employment is terminated during the term of his employment agreementby us for any reason, we shall payCause or by Mr. Winoker without Good Reason (in each case, as defined by the Winoker Employment Agreement), Mr. Winoker will be entitled to the following amounts (collectively, the “Winoker Accrued Obligations”):
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His base salary accrued up to and including the date of termination of his employment;
An amount in lieu of any accrued but unused vacation time;
The amount of any unreimbursed expenses; and
Any vested rights that Mr. Winoker may have pursuant to any insurance or other death benefit, bonus, retirement, or stock award plans or arrangements of the Company or any other employee benefit program.
Death
If Mr. Winoker’s employment is terminated by reason of Mr. Winoker’s death, then Mr. Winoker’s estate shallwill receive payment for amounts provided asthe Winoker Accrued Obligations. In addition, if Mr. Winoker’s employment is terminated prior to December 1 of any year, Mr. Winoker’s estate will receive anyPro-Rated Adjusted EBITDA Performance Bonus accrued through the date of termination of employment. The“Pro-Rated Adjusted EBITDA Performance Bonus” for a particular fiscal year is the amount equal to the Adjusted EBITDA Performance Bonus for the fiscal year that would have been payable to Mr. Winoker by the Company, as determined by the Board, if Mr. Winoker’s employment had not terminated during the year,pro-rated for the months during the year preceding the termination.
Termination Due to Disability
Mr. Winoker’s employment shall automatically terminate as a result of his total disability. In the event thatIf Mr. Winoker’s employment is terminated due to total disability,on account of Total Disability (as defined by the Winoker Employment Agreement), then in addition to the Winoker Accrued Obligations, Mr. Winoker shallwill receive, an amount equal toconditioned on his execution andnon-revocation of a release of all claims against the Company, continued payments of his base salary for a period of six months from the date of termination.
Termination for Cause; Resignation Without Good Reason
Upon any termination of Mr. Winoker’s employment agreement either (i) voluntarily by Mr. Winoker (except if he is voluntarily terminating his employment for good reason) or (ii) by us for cause, all payments, salary and other benefits thereunder shall cease atfollowing the date of termination, withand if such termination occurs prior to December 1, the exceptionPro-Rated Bonus for the year of the Winoker Accrued Obligations, and any vested rights that Mr. Winoker may have at the time of discharge and termination pursuant to any insurance or other death benefit, bonus, retirement, severance pay or stock award plans or arrangements of the Company or any subsidiary, or any stock option plan or any options granted thereunder, or any other employee benefit program which rights shall continue to be governed by the provisions of such plans and arrangements.termination.
Termination by the Company without Cause;Cause, Resignation by the Executive for Good Reason
In the event thatIf (i) Mr. Winoker’s employment is terminated by us without cause,Cause, or (ii) Mr. Winoker’s employment is terminated by Mr. Winoker for good reason,Good Reason, in each case outside of the context of a “ChangeChange of Control”, asControl (as defined inby the Winoker Amended and Restated Employment Agreement,Agreement), then in addition to the Accrued Obligations, Mr. Winoker shallwill be entitled to receive, conditioned (except with respect to the Winoker Accrued Obligations) uponon his execution andnon-revocation of a release of all claims against the Company:
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Certain medical and dental benefits set forth in Winoker Amended and Restated Employment Agreement for a period of 12 months; |
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