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TABLE OF CONTENTS
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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SCHEDULE 14A
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Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant þ |
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Filed by a Party other than the Registrant o
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material under §240.14a-12
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required |
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Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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HELEN OF TROY LIMITED
Clarendon House
2 Church Street
Hamilton, Bermuda
July 13, 2018
Dear Shareholders:
It is my pleasure to invite you to the 20162018 Annual General Meeting of the Shareholders of Helen of Troy Limited. The meeting will be held at 1:00 p.m., Mountain Daylight Time, on Wednesday, August 17, 2016,22, 2018, at the Hotel Indigo El Paso, 325 N. Kansas Street,Southwest University Park, WestStar Bank Club, 1 Ball Park Plaza, El Paso, Texas, 79901. In addition to the business to be transacted at the meeting, members of management will present information about the Company’sCompany's operations and will be available to respond to your questions.
We encourage you to help us reduce printing and mailing costs and conserve natural resources by signing up for electronic deliverysubmitting your proxy with voting instructions via the Internet. It is convenient and saves us significant postage and processing costs. You may also submit your proxy via telephone or by mail if you received paper copies of our shareholder communications. For more information, see “Electronic Deliverythe proxy materials. Instructions regarding all three methods of Shareholder Communications”voting are included in the enclosedImportant Notice Regarding Internet Availability of Proxy Materials, the proxy card and the proxy statement.
At our meeting, we will vote on proposals (1) to set the number of Director positions at eight (or such lower number as shall equal the number of nominees elected as Directors) and elect the eightnine nominees to our Board of Directors, (2) to provide advisory approval of the Company’sCompany's executive compensation, (3) to approve nine proposals relating to the Company’s Amended and Restated Bye-laws, (4) to approve an amendment to the Helen of Troy Limited Amended and Restated 2011 Annual2018 Stock Incentive Plan, (4) to approve the Helen of Troy Limited 2018 Employee Stock Purchase Plan, (5) to appoint Grant Thornton LLP as the Company’sCompany's auditor and independent registered public accounting firm to serve for the 2019 fiscal year and to authorize the Audit Committee of the Board of Directors to set the auditor’sauditor's remuneration, and (6) to transact such other business as may properly come before the meeting. The accompanying Notice of Annual General Meeting of Shareholders and proxy statement contains information that you should consider when you vote your shares. Also, forFor your convenience, you can appoint your proxy via touch-tone telephone or the internet at:
1-800-690-6903 orWWW.PROXYVOTE.COM
1-800-690-6903 or WWW.PROXYVOTE.COM
It is important that you vote your shares whether or not you plan to attend the meeting. Please complete,Prior to the meeting, I encourage you to sign date and return the enclosedyour proxy card in the accompanying envelope as soon as possible, or appoint your proxy by telephone or on the Internet, as set forth above.so that your shares will be represented and voted at the meeting. If you plan to attend the meeting and wish to vote in person, you may revoke your proxy and vote in person at that time. I look forward to seeing you at the meeting. On behalf of the management and directors of Helen of Troy Limited, I want to thank you for your continued support and confidence.
| Sincerely,
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Julien R. Mininberg
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| Chief Executive Officer |
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HELEN OF TROY LIMITED
Clarendon House
2 Church Street
Hamilton, Bermuda
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 17, 201622, 2018
Notice is hereby given that the 20162018 Annual General Meeting of the Shareholders (the “Annual Meeting”"Annual Meeting") of Helen of Troy Limited, a Bermuda company (the “Company”"Company"), will be held at the Hotel Indigo El Paso, 325 N. Kansas Street,Southwest University Park, WestStar Bank Club, 1 Ball Park Plaza, El Paso, Texas, 79901, on Wednesday, August 17, 2016,22, 2018, at 1:00 p.m., Mountain Daylight Time, for the following purposes:
To set the number of Director positions at eight (or such lower number as shall equal the number of nominees elected as Directors) and elect the eightnine nominees to our Board of Directors;
2.To provide advisory approval of the Company’sCompany's executive compensation;
3. To approve nine proposals relating to the Company’s Amended and Restated Bye-laws;4.
To approve an amendment to the Helen of Troy Limited Amended and Restated 2011 Annual2018 Stock Incentive Plan;
4.To approve the Helen of Troy Limited 2018 Employee Stock Purchase Plan;
5.To appoint Grant Thornton LLP as the Company’sCompany's auditor and independent registered public accounting firm to serve for the 2019 fiscal year and to authorize the Audit Committee of the Board of Directors to set the auditor’sauditor's remuneration; and
6.To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.
The record date for determining shareholders entitled to receive notice of and to vote at the Annual Meeting is June 24, 2016.22, 2018. You are urged to read carefully the attached proxy statement for additional information concerning the matters to be considered at the Annual Meeting.
In accordance with Securities and Exchange Commission ("SEC") rules, we are furnishing proxy materials to our shareholders on the Internet, rather than by mail. We believe this e-proxy process expedites our shareholders' receipt of proxy materials, lowers our costs and reduces the environmental impact of our Annual Meeting. The proxy statement and the Company's 2018 Annual Report to Shareholders and any other proxy materials are available on our hosted website atHTTP://MATERIALS.PROXYVOTE.COM/G4388N. For additional related information, please refer to the Important Notice Regarding Internet Availability of Proxy Materials in the enclosed proxy statement. If you do not expect to be present in person at the Annual Meeting, please complete, sign and datereturn your proxy card, or appoint your proxy by telephone or on the enclosed proxyInternet, so that your shares will be represented and return it promptly invoted at the enclosed postage-paid envelope that has been provided for your convenience. The prompt return of proxies will help ensure the presence of a quorum and save the Company the expense of further solicitation. Also, formeeting. For your convenience, you can appoint your proxy via touch-tone telephone or internet at:
1-800-690-6903 orWWW.PROXYVOTE.COM
The proxy statement and the Company’s 2016 Annual Report to Shareholders are also available on our hosted website at HTTP://MATERIALS.PROXYVOTE.COM/G4388N. For additional related information, please refer to the “Important Notice Regarding Internet Availability of Proxy Materials” in the enclosed proxy statement.
You are cordially invited and encouraged to attend the Annual Meeting in person.
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| | Vincent D. Carson |
| Chief Legal Officer and Secretary |
El Paso, Texas
July 13, 2018
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SUBMIT YOUR PROXY AS SOON AS POSSIBLE. IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON. MOST SHAREHOLDERS HAVE THREE OPTIONS FOR SUBMITTING THEIR PROXIES PRIOR TO THE ANNUAL MEETING: (1) VIA THE INTERNET, (2) BY PHONE OR (3) BY MARKING, DATINGSIGNING AND SIGNINGRETURNING THE ENCLOSED PROXY AND RETURNING IT IN THE ENVELOPE PROVIDED.PROXY. IF YOU HAVE INTERNET ACCESS, WE ENCOURAGE YOU TO APPOINT YOUR PROXY ON THE INTERNET. IT IS CONVENIENT, AND IT SAVES THE COMPANY SIGNIFICANT POSTAGE AND PROCESSING COSTS.
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Proxy Statement Summary
Below are the highlights of important information you will find in this proxy statement. As it is only a summary, please review the complete proxy statement before you vote.
Helen of Troy Fiscal Year 2018 Proxy Statement Highlights
Helen of Troy Fiscal Year 2016 Proxy Statement Highlights
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ANNUAL MEETING INFORMATION:Date and Time: August 22, 2018 at 1:00 PM,
Mountain Daylight Time Record Date: June 22, 2018 Location: Southwest University Park
WestStar Bank Club
1 Ball Park Plaza
El Paso, Texas, 79901 | | | | HOW TO VOTE: You can vote by any of the following methods: • ·Via the internet by going toWWW.PROXYVOTE.COM and following the instructions at that website.
• ·Via touch-tone telephone at 1-800-690-6903.
• ·If you received a proxy card or voting instruction in the mail, by completing, signing, dating and returning the enclosed proxy card in the accompanying envelope as soon as possible.
• ·If you plan to attend the meeting and wish to vote in person, you may revoke your proxy and vote in person at that time.
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Date and Time:
Record Date:
Location:
| August 17, 2016 at 1:00 PM,
Mountain Daylight Time
June 24, 2016
Hotel Indigo El Paso
325 N. Kansas Street
El Paso, Texas 79901
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| VOTING MATTERS:
Proposal
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Recommendation
of the Board
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• · SetElect the number of Director positions at eight (or such lower number as shall equal the number of nominees elected as Directors) and elect the eightnine nominees to our Board of Directors
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Provide advisory approval of the Company’sCompany's executive compensation | |
FOR | | |
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Approvenine proposals relating to the Company’s Amended and Restated Bye-laws | FOR
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· Approve an amendment to the Helen of Troy Limited Amended and Restated 2011 Annual2018 Stock Incentive Plan
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FOR | | |
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Approve the Helen of Troy Limited 2018 Employee Stock Purchase Plan | |
FOR | | |
• Appoint Grant Thornton LLP as the Company’sCompany's auditor and independent registered public accounting firm to serve for the 2019 fiscal year and to authorize the Audit Committee of the Board of Directors to set the auditor’sauditor's remuneration | |
FOR |
BOARD NOMINEES: | | | | | | | |
Name | Age | Director
Since | Independent
Director | Compensation
Committee | Audit
Committee | Nominating
Committee | Corporate
Governance
Committee |
Julien R. Mininberg
Chief Executive Officer | 51 | 2014 | | | | | |
Timothy F. Meeker
Chairman | 69 | 2004 | ü | ü | | Chair | |
Gary B. Abromovitz
Deputy Chairman | 73 | 1990 | ü | ü | ü | ü | ü |
John B. Butterworth | 64 | 2002 | ü | | ü | | |
Alexander M. Davern | 49 | 2014 | ü | | Chair | | ü |
Beryl B. Raff | 65 | 2014 | ü | ü | ü | | |
William F. Susetka | 63 | 2009 | ü | Chair | | ü | |
Darren G. Woody | 56 | 2004 | ü | ü | | ü | Chair |
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| | | BOARD NOMINEES: | | |
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| | | Name | | Age | | Director
Since | | Independent
Director | | Compensation
Committee | | Audit
Committee | | Nominating
Committee | | Corporate
Governance
Committee | | |
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| | | Julien R. Mininberg | | 53 | | 2014 | | | | | | | | | | | | |
| | | Chief Executive Officer | | | | | | | | | | | | | | | | |
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| | | Timothy F. Meeker | | 71 | | 2004 | | ✓ | | ✓ | | | | Chair | | | | |
| | | Chairman | | | | | | | | | | | | | | | | |
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| | | Gary B. Abromovitz | | 75 | | 1990 | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | |
| | | Deputy Chairman | | | | | | | | | | | | | | | | |
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| | | Krista L. Berry | | 53 | | 2017 | | ✓ | | | | | | | | ✓ | | |
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| | | Vincent D. Carson | | 58 | | * | | | | | | | | | | | | |
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| | | Thurman K. Case | | 61 | | 2017 | | ✓ | | | | Chair | | | | ✓ | | |
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| | | Beryl B. Raff | | 67 | | 2014 | | ✓ | | | | ✓ | | | | | | |
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| | | William F. Susetka | | 65 | | 2009 | | ✓ | | Chair | | | | ✓ | | | | |
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| | | Darren G. Woody | | 58 | | 2004 | | ✓ | | ✓ | | ✓ | | ✓ | | Chair | | |
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- Nominee for approval at 2018 Annual General Meeting.
PERFORMANCE HIGHLIGHTS:
The following events summarize our performance highlights from continuing operations for fiscal year 2018:
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- We achieved cumulative total shareholder returns of 18 percent and 143 percent over the past three and five fiscal years, respectively.
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- We achieved net revenue compound annual growth rates of 3.5 percent and 2.9 percent over the past three and five fiscal years, respectively.
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- We achieved cash flow compound annual growth rates of 8.4 percent and 20.1 percent over the past three and five fiscal years, respectively.
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- We achieved diluted earnings per share compound annual growth rates of 2.8 percent and 5.5 percent over the past three and five fiscal years, respectively.
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- We achieved adjusted diluted earnings per share compound annual growth rates of 9.6 percent and 10.1 percent over the past three and five fiscal years, respectively.
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The following events summarize our performance highlights for fiscal year 2016:
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· We had*Three-year cumulative total shareholder returns of 157 percent and 241 percent overreturn for the past three and five fiscal years, respectively, that exceeded our Compensation Peer Group (as described on page 24), the NASDAQ Market Index (the “NASDAQ Market”) and the Dow Jones-U.S. Personal Products, Broad Market Cap, Yearly, and Total Return Index (the “Industry Group”).is less than negative 1 percent.
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Adjusted diluted earnings from continuing operations per share may be considered a non-GAAP financial measure as set forth in SEC Regulation G, Rule 100. See Annex A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP, an explanation of the reasons why the Company believes the non-GAAP financial information is useful and the nature and limitations of the non-GAAP financial measures. On December 20, 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. Following the sale, we no longer consolidate our former Nutritional Supplements segment's operating results. All results presented are from continuing operations.
CORPORATE GOVERNANCE:
We are committed to a corporate governance approach that ensures mutually beneficial results for the Company and its shareholders. In pursuit of this approach, we have implemented the following policies:
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- We maintain separate roles for Chairman and Chief Executive Officer.
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- We require majority voting for all Directors.
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- We require annual election for all Directors.
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- Our Nominating Committee's policy is to review director qualifications and skill sets to maintain a balance between refreshed and seasoned Directors with knowledge of the Company's business.
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- We maintain stock retention guidelines for both our directors and executive officers further aligning them with our shareholders.
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- We require independent directors to meet in executive session without management present at every regular Board meeting and throughout the year as needed.
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- The Board of Directors periodically evaluates the rotation of committee chairs.
EXECUTIVE COMPENSATION FEATURES:
Overall, our executive compensation program emphasizes performance- and equity-based compensation to align it with shareholder interests and includes other practices that we believe serve shareholder interests such as paying for performance and maintaining policies relating to clawbacks of incentive awards and prohibitions on hedging or pledging Company stock. Important features of our executive compensation program include the following:
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· We had net revenue compound annual growth rates of 6.3 percent and 14.8 percent over the past three and five fiscal years, respectively.
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· We had cash flow from operations compound annual growth rates of 16.2 percent and 28.4 percent over the past three and five fiscal years, respectively.
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CORPORATE GOVERNANCE:
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We are committed to a corporate governance approach that ensures mutually beneficial results for the Company and its shareholders. In pursuit of this approach, we have implemented the following policies:
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· We maintain separate roles for Chairman and Chief Executive Officer.
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· We require majority voting for all Directors.
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· We require annual election for all Directors.
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· Our Nominating Committee’s policy is to review director qualifications and skill sets in order to maintain a balance between refreshed and seasoned Directors with knowledge of the Company’s business. Consistent with that objective, our Board nominated two directors for election at the 2014 annual general meeting, Ms. Beryl Raff and Mr. Alexander Davern, who had not previously served on the Board.
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· We maintain stock retention guidelines for both our directors and executive officers further aligning them with our shareholders.
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· We require independent directors to meet in executive session without management present at every regular Board meeting and throughout the year as needed.
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· The Board of Directors periodically evaluates the rotation of committee chairs.
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EXECUTIVE COMPENSATION FEATURES:
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Overall, our executive compensation program emphasizes performance- and equity-based compensation to align it with shareholder interests and includes other practices that we believe serve shareholder interests such as paying for performance, not providing tax “gross-up” payments and maintaining policies relating to clawbacks of incentive awards and prohibitions on hedging or pledging Company stock. Important features of our executive compensation program include the following:
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Benchmarking; Market Compensation Levels
| · Set the compensation of our Chief Executive Officer at what the Compensation Committee believes is a market level using a benchmark peer group of similarly situated companies against which to compare and assess the Company’s compensation program and performance.
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Rigorous Performance Metrics | | · •
Established rigorous performance goals based on multiple metrics that are not duplicative between short-term and long-term incentive awards. |
Long-Term Incentives | |
Long-Term Incentives
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Established multi-year performance periods for long-term incentive awards, with minimum vesting periods for Company equity grants. |
Market Compensation Levels | | • Set the compensation of our named executive officers at what the Compensation Committee believes are market levels using, as a guideline, companies in a comparative peer group and/or other companies it believes are a source of talent, market surveys and other data. |
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HELEN OF TROY LIMITED
Clarendon House
2 Church Street
Hamilton, Bermuda
PROXY STATEMENT
FOR
ANNUAL GENERAL MEETING OF SHAREHOLDERS
August 22, 2018
August 17, 2016
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Helen of Troy Limited (the “Company”"Company") for use at its Annual General Meeting of Shareholders (the “Annual Meeting”"Annual Meeting") to be held in the Hotel Indigo El Paso, 325 N. Kansas Street,WestStar Bank Club at Southwest University Park, 1 Ball Park Plaza, El Paso, Texas, 79901 on Wednesday, August 17, 2016,22, 2018, at 1:00 p.m., Mountain Daylight Time, and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Annual General Meeting of Shareholders. A proxy may be revoked by filing a written notice of revocation or an executed proxy bearing a later date with the Secretary of our Company any time before exercise of the proxy or by attending the Annual Meeting and voting in person. The Notice of Internet Availability and the proxy statements and form of proxy cardsmaterials are to be distributed to shareholders on or about July 15, 2016.
13, 2018.
If you complete and submit your proxy, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you submit a proxy card but do not fill out the voting instructions on the proxy card, the persons named as proxies will vote the shares represented by your proxy as follows:
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·FORFOR setting the number of Director positions at eight (or such lower number as shall equal the number of nominees elected as Directors) and electing the eightnine nominees to the Board of Directors, as set forth in Proposal 1.·
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- FOR the advisory approval of the
Company’sCompany's executive compensation, as set forth in Proposal 2.·
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- FOR
, the approval of nine proposals relating to the Company’s Amended and Restated Bye-laws, as set forth in Proposals 3A through 3I.·FOR, the approval of an amendment to the Helen of Troy Limited Amended and Restated 2011 Annual2018 Stock Incentive Plan, as set forth in Proposal 3.
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- FOR the approval of the Helen of Troy Limited 2018 Employee Stock Purchase Plan, as set forth in Proposal 4.
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- FOR the appointment of Grant Thornton LLP as the auditor and independent registered public accounting firm of the Company for the 2019 fiscal year and to authorize the Audit Committee of the Board of Directors to set the
auditor’sauditor's remuneration, as set forth in Proposal 5.
In addition, if other matters are properly presented for voting at the Annual Meeting or any adjournment thereof, the persons named as proxies will vote on such matters in accordance with their judgment. We have not received notice of other matters that may properly be presented for voting at the Annual Meeting. Your vote is important. If you do not vote your shares, you will not have a say in the important issues to be voted upon at the Annual Meeting. To pass, each proposal included in this year’s
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year's proxy statement requires an affirmative vote of a majority of the votes cast on such proposal at the Annual Meeting. To ensure that your vote is recorded promptly, please submit your proxy as soon as possible, even if you plan to attend the Annual Meeting in person.
The Annual Report to Shareholders for the year ended February 29, 2016 (“28, 2018 ("fiscal year 2016”2018"), including financial statements, is enclosed.included with this proxy statement. It does not form any part of the material provided for the solicitation of proxies.
The cost of solicitation of proxies will be borne by the Company. In addition to solicitation by mail, officers and employees of the Company may solicit the return of proxies by telephone, facsimile, electronic mail, personal interview, and other methods of communication.
We will request brokerage houses and other nominees, fiduciaries and custodians to forward soliciting materials to beneficial owners of the Company’sCompany's common shares, par value $0.10 per share (the “Common Stock”"Common Stock"), for which we will, upon request, reimburse the forwarding expense.
VOTING SECURITIES AND RECORD DATE
The close of business on June 24, 2016,22, 2018, is the record date for determination of shareholders entitled to notice of, and to vote at, the Annual Meeting. As of June 24, 2016,22, 2018, there were []26,341,741 shares of Common Stock issued and outstanding, each entitled to one vote per share.
QUORUM; VOTING
Shareholders may hold their shares either as a “shareholder"shareholder of record”record" or as a “street name”"street name" holder. If your shares are registered directly in your name with our transfer agent, you are considered the shareholder of record with respect to those shares and this proxy statement is being sent directly to you by the Company. If your shares are held in a brokerage account or by another nominee, you are considered to be the beneficial owner of shares held in “street"street name,”" and these proxy materials, together with a voting instruction card, are being forwarded to you by your broker, trustee or other nominee. As the beneficial owner of the shares, you have the right to direct your broker, trustee or other nominee how to vote.
The presence in person of two or more persons, representing throughout the Annual Meeting, in person or by proxy, at least a majority of the issued shares of Common Stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. Proxies marked as “Withhold Authority” on the election of Directors will be treated as present at the Annual Meeting for purposes of determining the quorum.
Abstentions and broker non-votes are also counted for purposes of determining whether a quorum is present. “Broker non-votes”"Broker non-votes" occur when shares held in street name by a broker or nominee are represented at the Annual Meeting, but such broker or nominee is not empowered to vote those shares on a particular proposal because the broker has not received voting instructions from the beneficial owner.
Under the rules that govern brokers who are voting with respect to shares held by them in a street name, if the broker has not been furnished with voting instructions by its client at least ten days before the meeting, those brokers have the discretion to vote such shares on routine matters, but not on non-routine matters. Routine matters include the appointment of the auditor and related matters, submitted to the shareholders in Proposal 5. Non-routine matters include the election of Directors submitted to shareholders in Proposal 1, the advisory approval of the Company’sCompany's executive compensation submitted to shareholders in Proposal 2, the approval of nine proposals relating to the Company’s Amended and Restated Bye-laws submitted to the shareholders in Proposals 3A through 3I, and the approval of an amendment to the Helen of Troy Limited Amended and Restated 2011 Annual2018 Stock Incentive Plan submitted to shareholders in Proposal 3 and the approval of the Helen of Troy
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Limited 2018 Employee Stock Purchase Plan submitted to shareholders in Proposal 4. As a result, with regard to Proposals 1 through 4, brokers have no discretion to vote shares where no voting instructions are received, and no vote will be cast if you do not vote on that proposal. those proposals.We therefore urge you to vote on ALL voting items.
If a quorum is present, each nominee for Director receiving a majority of the votes cast (the number of shares voted “for”"for" a director nominee must exceed the number of votes cast “against”"against" that nominee) at the Annual Meeting in person or by proxy shall be elected. The affirmative vote of the majority of the votes cast at the Annual Meeting in person or by proxy shall also be the act of the shareholders with respect to Proposals 3 throughProposal 5. Abstentions and broker non-votes are not counted in determining the total number of votes cast and will have no effect with respect to any of the proposals because abstentions and broker non-votes are not considered to be votes cast under the applicable laws of Bermuda.
The advisory vote on executive compensation is non-binding. Although the vote is non-binding, the Compensation Committee and the Board of Directors will review and carefully consider the outcome of the advisory vote to approve the Company’sCompany's executive compensation and those opinions when making future decisions regarding executive compensation programs. Notwithstanding the advisory nature of the vote, the resolution in Proposal 2 will be considered passed with the affirmative vote of a majority of the votes cast at the Annual Meeting in person or by proxy.
If within half an hour from the time appointed for the Annual Meeting a quorum is not present in person or by proxy, the Annual Meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place the Board of Directors may determine, provided that at least two persons are present at such adjourned meeting, representing throughout the meeting, in person or by proxy, at least a majority of the issued shares of Common Stock entitled to vote. At any such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the Annual Meeting as originally called.
ATTENDING THE ANNUAL MEETING
A person is entitled to attend the Annual Meeting only if that person was a shareholder or joint shareholder as of the close of business on the record date or that person holds a valid proxy for the Annual Meeting. If you hold your shares in street name and desire to vote your shares at the Annual Meeting, you must provide a signed proxy directly from the holder of record giving you the right to vote the shares or a letter from the broker or nominee appointing you as their proxy. The proxy card enclosed with this proxy statement is not sufficient to satisfy this requirement. If you hold your shares in street name and desire to attend the Annual Meeting, you must also provide proof of beneficial ownership on the record date, such as your most recent account statement prior to the record date or other similar evidence of ownership. If you are the shareholder of record or hold a valid proxy for the Annual Meeting, your name or the name of the person on whose behalf you are proxy must be verified against the Company’sCompany's list of shareholders of record on the record date prior to being admitted to and prior to voting at the Annual Meeting. All shareholders must, if requested by representatives of the Company, present photo identification for admittance. If you do not provide photo identification or comply with the other procedures outlined above upon request, you will not be admitted to the Annual Meeting and/or will not be permitted to vote, as applicable.
PROPOSAL 1: ELECTION OF DIRECTORS
The bye-laws of the Company state that the number of our Directors shall be established by the shareholdersBoard from time to time but shall not be less than two. The Company currently has eight members who serve on the Board of Directors. The Nominating Committee has nominated eightnine candidates for
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election to the Board of Directors. Accordingly, the Board of Directors recommends that the number of Director positions be set at eight. In the event that less than eight Directors are elected, then the number of Director positions set shall not be eight, but instead shall equal the number of Directors actually elected.
The eightnine persons named below are the nominees for election as Directors. Each nominee has consented to serve as a Director if elected. One of the eightThe nine candidates include Julien R. Mininberg, is the Company’sCompany's Chief Executive Officer.Officer and Vincent D. Carson, the Company's current Chief Legal Officer and Secretary. Mr. Carson has announced that he will retire from his positions as Chief Legal Officer and Secretary effective as of the Annual Meeting. The Board of Directors has determined that the remaining seven candidates, Gary B. Abromovitz, John B. Butterworth, Alexander M. Davern,Thurman K. Case, Krista L. Berry, Timothy F. Meeker, Beryl B. Raff, William F. Susetka and Darren G. Woody are independent Directors as defined in the applicable listing standards for companies traded on the NASDAQ Stock Market LLC (“NASDAQ”("NASDAQ"). Therefore, the majority of persons nominated to serve on our Board of Directors are independent as so defined. Each Director elected shall serve as a Director until the next annual general meeting of shareholders or until his or her successor is elected or appointed.
Nominees for the Election of Directors
Set forth below are descriptions of the business experience of the nominees for election to our Board of Directors as well as their qualifications:
GARY B. ABROMOVITZ, age 73,75, has been a Director of the Company since 1990. He is Deputy Chairman of the Board and during his tenure has served as Chair of the Compensation, Nominating, Governance, and Audit Committees. He currently serves as a member of each of those Committees and chairs the executive sessions of the independent Directors. Mr. Abromovitz is a retired attorney and has acted as a consultant to several law firms in business related matters. He also has been active for more than thirty years in various real estate development and acquisition transactions. Until August 10, 2012, Mr. Abromovitz served as a Director of Cardio Vascular Bio Therapeutics, Inc.
Mr. Abromovitz provides the Board with a significant leadership role as Deputy Chairman and an in-depth knowledge of the history and operations of the Company providing the Board with a unique historical perspective and focus on long-term interests of the Company. He has strong regulatory knowledge with a deep understanding of corporate governance and compensation guidelines, as well as experience managing board affairs. Further, Mr. Abromovitz’sAbromovitz's background and skill sets as an attorney and his practical business experience provides a unique perspectivenecessary and valuable complement to the Board.skills of other board members.
JOHN B. BUTTERWORTH, age 64, has been a Director of the Company since 2002. Mr. Butterworth is a Certified Public Accountant and a shareholder in the public accounting firm of Weatherley, Butterworth, Macias & Graves P.C. located in El Paso, Texas. Mr. Butterworth has thirty-seven years of certified public accounting experience and has been a member of the Company’s Audit Committee for the last thirteen years.
Mr. Butterworth has valuable accounting and tax expertise. Additionally, Mr. Butterworth has gained a deep understanding of the Company’s business that enables him to provide significant insights regarding the Company’s financial and accounting related matters. He brings strategic focus to our Board of Directors and has provided leadership and guidance that have helped drive the Company’s growth.
ALEXANDER M. DAVERN, age 49, was elected to our Board of Directors in August 2014 and chairs the Audit Committee. He also serves as a member of the Corporate Governance Committee. Mr. Davern joined National Instruments Corp., a producer of automated test equipment and application software, in February 1994. Since 2010, he has served as Chief Operating Officer, Chief Financial Officer and Executive Vice President. From 2002 to 2010, he served as Chief Financial Officer and Senior Vice President, Information Technology and Manufacturing Operations. From 1997 to 2002, he was the Chief Financial Officer of National Instruments. Prior to joining National Instruments, Mr. Davern worked both in Europe and in the United States for the international accounting firm of Price Waterhouse, LLP. From 2003 to 2008, Mr. Davern also served on the Board of Directors and as Audit Committee Chairman of Sigma Tel, Inc., a semiconductor manufacturer. In March 2015, Mr. Davern joined the Board of Directors of Cirrus Logic, Inc., a publically traded semiconductor manufacturer. Mr. Davern received a Bachelor’s of Commerce degree and a postgraduate diploma in professional accounting from University College in Dublin, Ireland.
Mr. Davern brings broad experience in business strategy, operations, global accounting, information technology, auditing, and SEC reporting matters. In addition, his experience as a public company executive and director contributes to his knowledge of corporate governance and public company matters.
TIMOTHY F. MEEKER, age 69,71, has been a Director of the Company since 2004. In January 2014, Mr. Meeker was appointed as Chairman of the Board. Mr. Meeker is also Chairman of the Nominating Committee and serves as a member of the Compensation Committee. Since 2002, Mr. Meeker has served as President and principal in Meeker and Associates, a privately-held management consulting firm. Mr. Meeker served as Senior Vice President, Sales & Customer Development for Bristol-Myers Squibb, a consumer products and pharmaceutical company, from 1996 through 2002. From 1989 to 1996, Mr. Meeker served as Vice President of Sales for Bristol-Myers’Bristol-Myers' Clairol Division.
Mr. Meeker has over thirty-eightforty years of experience in the consumer products industry resulting in extensive general management experience with responsibilities for sales, distribution, finance, human resources, customer service and facilities. In addition, he has a valued perspective on operational matters that is an asset to the Board of Directors. Mr. Meeker has served as a chairman of the National Association of Chain Drug Stores advisory committee, which allows him to bring an extensive understanding of retail mass market sales and marketing to our Board of Directors.
JULIEN R. MININBERG, age 51,53, has served as our Chief Executive Officer and a member of the Board since March 2014. Prior to his appointment as CEO, Mr. Mininberg had served as the Chief Executive Officer of Kaz Inc. (“Kaz”("Kaz"), a wholly-owned subsidiary of the Company since December
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2010. Kaz comprises the Health & Home segment of the Company, which is the Company’sCompany's largest and most global business segment. Mr. Mininberg joined Kaz in 2006 serving as Chief Marketing Officer and was appointed President in September 2007, where he served until he was appointed Chief Executive Officer of Kaz in September 2010. Before joining Kaz, Mr. Mininberg worked 15 years at The Procter & Gamble Co. (“Company ("P&G”&G"), where he spent an equal amount of time in the United States and Latin America serving in a variety of marketing and general management capacities. In the U.S., he worked in brand management, serving as Brand Manager in P&G’s&G's Health Care division. He was promoted to Marketing Director in 1997 and transferred to Latin America, where he served in the Fabric & Home Care division before being promoted to Country Manager for P&G’s&G's Home Care business in Latin America. In 2003, he became Country Manager for Central America overseeing all P&G business in that region. Mr. Mininberg earned his Bachelor’sBachelor's degree and MBAa Masters of Business Administration from Yale University. He currently serves on the Board of Advisors for Yale School of Management and serves as Past President of its global Alumni Association Board of Directors.
Mr. Mininberg brings a 27-year29-year track record of building market-leading multinational brands and organizations, a strategic mindset, operational expertise, and seasoned leadership skills. As our Chief Executive Officer, Mr. Mininberg provides essential oversight of the business and organization, and a link between management and the Board. Mr. Mininberg has extensive experience in global brand building, general management and leading multi-national organizations. He plays a key role in communication with shareholders and leading the Company’sCompany's acquisition activities. Additionally, he provides crucial insight to the Board on the Company’sCompany's strategic planning and operations.
BERYL B. RAFF,age 65,67, was elected to our Board of Directors in August 2014 and serves as a member of the Audit andCommittee. Ms. Raff also served as a member of the Compensation Committees.Committee from August 2014 through March 2017. Since April 2009, Ms. Raff has served as Chairman and Chief Executive Officer at Helzberg Diamond Shops Inc., a jewelry retailer and a wholly owned subsidiary of Berkshire Hathaway Inc. From 2005 through April 2009, she served as Executive Vice President-General Merchandise Manager for the fine jewelry division of J.C. Penney Company, Inc., a retailer of apparel and home furnishings. From 2001 through 2005, Ms. Raff served as Senior Vice President-General Merchandise Manager for the fine jewelry division of J.C. Penney. Prior to joining J.C. Penney, Beryl served in various leadership roles of Zale Corporation, a national retail jewelry chain, last serving as its Chairman and Chief Executive Officer. Ms. Raff served on the Board of Directors of Group 1 Automotive, Inc., an automotive retail operator, as a member of its Compensation Committee and Chairman of the Governance/Nomination Committee from 2007 to 2015. Since September 2014, Ms. Raff has served on the Board of Directors of The Michaels Stores, Inc., a national retail chain of arts and crafts specialty stores, and is a member of its AuditCompensation Committee. In 2015, Ms. Raff also joined the board of Larry H. Miller Group, an auto dealership, sports and entertainment company, where she serves on the
Compensation and Nomination & Governance committees. Ms. Raff serves on the Advisory Board of Jewelers Circular Keystone, a trade publication and industry authority, and on the Board of the Jewelers Vigilance Committee, a non-profit organization focused on legal and regulatory issues facing the jewelry industry, and the Board of the American Gemological Society, a jewelry industry organization whose mission is consumer protection and integrity in the jewelry industry. Ms. Raff has previously served as a Director of the NACD Heartland Chapter, a non-profit organization dedicated to excellence in board leadership. From 2001 through February 2011, Ms. Raff served on the Board of Directors, the Corporate Governance Committee and the Compensation Committee (which she chaired from 2008 to 2011) of Jo-Ann Stores, Inc., a national specialty retailer of craft, sewing and decorating products. Ms. Raff graduated from Boston University with a Bachelor of Business Administration degree and from Drexel University with a Masters of Business Administration.
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Ms. Raff is well known throughout the retail industry and brings to the Board of Directors her experience and perspective as an outstanding merchant and multi-store retail executive. The Board expects to benefitbenefits from Ms. Raff’sRaff's extensive knowledge of the retail industry and her valuable insight on how we can best serve our retail partners. Ms. Raff’sRaff's current and previous service on other boards also provides important perspectives on key corporate governance matters.
WILLIAM F. SUSETKA, age 63,65, has been a Director of the Company since 2009. In August 2014, Mr. Susetka was appointed as Chairman of the Compensation Committee. He also serves as a member of the Nominating Committee. Mr. Susetka spent thirty years in marketing and senior management for Clairol, Inc. and Avon Products, Inc. From 1999 to 2001, Mr. Susetka was President of the Clairol U.S. Retail Division, with additional responsibility for worldwide research and development and manufacturing. From 2002 through 2005, Mr. Susetka was President of Global Marketing at Avon Products, Inc. where he led worldwide marketing, advertising and research and development and served on Avon’sAvon's Executive Committee. Prior to 1999, he held positions as President of the Clairol International Division and Vice President/General Manager for the Clairol Professional Products Division. He served as a Board Member of the Cosmetics, Toiletry and Fragrance Association from 1999 to 2005 and as a member of the Avon Foundation Board from 2004 to 2005. From October 2005 to January 2006, Mr. Susetka was Chief Operating Officer of Nice Pak Products, Inc., a manufacturer of private labeled pre-moistened wipes and other antiseptic wipes. From 2007 through May 2009, he served as Chief Marketing Officer for the LPGA (Ladies Professional Golf Association). In September 2015, Mr. Susetka completed a six-year term on the LPGA Board of Directors.
Mr. Susetka provides a wealth of global consumer products industry experienceknowledge and valuable insightleadership experience to the Board of Directors. Mr. Susetka is also instrumental in helping to monitor and adjust the strategic direction of the Company’s Grooming, Skin Care, and Hair Care products category, provides general guidance regardingCompany's consumer brand strategy to the Company’s other product categories and consulting on related mattersprovides valuable insight to senior management.
DARREN G. WOODY, age 56,58, has been a Director of the Company since 2004. Mr. Woody chairs the Corporate Governance Committee and also serves as a member of the Compensation, Audit and Nominating Committees. Mr. Woody is President and Chief Executive Officer of Jordan Foster Construction, LLC, a construction firm with offices in Austin, Dallas, El Paso, Houston, and San Antonio, Texas and field operations throughout the United States. The firm specializes in military, commercial, multi-family, and highway construction. He has served in this capacity since August of 2000. Previously, Mr. Woody was a partner in the law firm of Krafsur, Gordon, Mott, Davis and Woody P.C., where he specialized in real estate, business acquisitions and complex financing arrangements.
Mr. Woody brings a multi-disciplined perspective to our Board of Directors given his executive leadership and legal experience. This background enables him to provide oversight with regard to many of the Company’sCompany's legal matters, significant transactional negotiations and the management of challenging complex projects.
THURMAN K. CASE, age 61, was elected to our Board of Directors in January 2017 and serves as a member of the Audit Committee. He was appointed as Chairman of the Audit Committee in March 2017. Mr. Case has been the Chief Financial Officer of Cirrus Logic, Inc., a leader in high performance, low-power integrated circuits for audio and voice signal processing applications since 2007. Prior to being appointed to his current position, Mr. Case served in various positions at Cirrus Logic, including as Vice President, Treasurer, Financial Planning and Analysis from 2004 to 2007, Vice President, Finance from 2002 to 2004, and as Director of Finance from 2000 to 2002. Before his tenure at Cirrus Logic, Mr. Case served in a variety of financial leadership positions, including at Case Associates, Inc. and Public Service Company of New Mexico. Mr. Case received a Bachelor of Economics degree and a Masters of Business Administration from New Mexico State University.
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Mr. Case brings broad experience in business strategy, operations, accounting, information technology, auditing and SEC reporting matters. In addition, his experience as a public company executive contributes to his knowledge of corporate governance and public company matters.
KRISTA L. BERRY, age 53, was elected to our Board of Directors in March 2017. Ms. Berry has been the Chief Revenue Officer at Everlane, Inc., an online clothing retailer, since September 2017. Previously, Ms. Berry served as the Chief Digital Officer for the Kohl's Corporation, an operator of over 1,160 department stores across the U.S. and a direct to consumer ecommerce business selling exclusive and national brand apparel, footwear, beauty, and home products from 2014 to 2016. Ms. Berry also served in the role of Executive Vice President of Multi-Channel Commerce from 2012 to 2014. Prior to her tenure at Kohl's, Ms. Berry served as the General Manager of North American Direct to Consumer at Nike, Inc. from 2009 to 2011, and as the General Manager of North American Digital Commerce from 2007 to 2009. Ms. Berry also held various management and leadership roles at Target Corporation from 1987 to 2007.
Ms. Berry brings valuable experience in developing omni-channel strategy and execution, direct to consumer ecommerce platforms and digital marketing plans. She also brings a wealth of consumer insight from her experience at world-class retailers and direct-to-consumer businesses.
VINCENT D. CARSON, age 58, has been nominated for election to the Board of Directors at the 2018 Annual Meeting. Mr. Carson has announced that he will retire from his positions as Chief Legal Officer and Secretary, which he has held since May 2014, effective as of the Annual Meeting. Prior to his appointment as Chief Legal Officer and Secretary, he had served in the capacity of Vice President, General Counsel and Secretary from November 2001 to September 2010. From September 2010 to April 30, 2014, he served as Senior Vice President, General Counsel, and Secretary of the Company. Prior to joining the Company, Mr. Carson had a 16-year legal career in private practice in El Paso, Texas.
As a result of his service as our Chief Legal Officer and Secretary, Mr. Carson brings his unique knowledge of our Company and our industry to the Board of Directors. This prior experience, knowledge of the Company's structure, and vast experience in the consumer products industry and Federal, state and other jurisdictions' laws applicable to the Company bring great value and benefit to our Board of Directors and the Company.
Vote Required for Approval and Recommendation
The receipt of a majority of the votes cast (the number of shares voted “for”"for" a director nominee exceeding the number of votes cast “against”"against" that nominee) at the Annual Meeting is required to set the number of Director positions at eight (or such lower number as shall equal the number of nominees elected as Directors) and to elect each of the eightnine nominees for Director. In the event that any of the Company’sCompany's nominees are unable to serve, proxies will be voted for the substitute nominee or nominees designated by our Board of Directors, or will be voted to fix the number of Directors at fewer than eight and for fewer than eightnine nominees, as the Board may deem advisable in its discretion.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR”"FOR" EACH OF THE EIGHTNINE NOMINEES NAMED ABOVE.
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CORPORATE GOVERNANCE
Corporate Governance. Corporate governance is typically defined as the system that allocates duties and authority among a company’scompany's shareholders, Board of Directors and management. The shareholders elect the Board and vote on extraordinary matters.
Our Corporate Governance Guidelines, as well as our Code of Ethics, and the charters of the Audit Committee, Compensation Committee, Nominating Committee, and Corporate Governance Committee are available under the “Corporate Governance”"Corporate Governance" heading of the investor relations page of our website at the following address:WWW.HOTUS.COM.
Our Company believes that it is in compliance with the corporate governance requirements of the NASDAQ listing standards. The principal elements of these governance requirements as implemented by our Company are:
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·affirmative determination by the Board of Directors that a majority of the Directors are independent;·
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- regularly scheduled executive sessions of independent Directors;
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- Audit Committee, Nominating Committee and Compensation Committee comprised of independent Directors and having the purposes and charters described below under the separate committee headings; and
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- specific Audit Committee responsibility, authority and procedures outlined in the charter of the Audit Committee.
Independence. The Board of Directors has determined that the following directors and nominees for election at the Annual Meeting are independent Directors as defined in the NASDAQ listing standards: Gary B. Abromovitz, John B. Butterworth, Alexander M. Davern, Timothy F. Meeker, Beryl B. Raff, William F. Susetka, and Darren G. Woody.Woody, Thurman K. Case and Krista L. Berry. Other than Julien R. Mininberg, the Company’sour Chief Executive Officer, and Vincent D. Carson, our current Chief Legal Officer and Secretary, each member of the Board, including all the personseach person nominated to serve on our Company’s Board of Directors, areis independent as so defined and each other person who served on the Board in fiscal year 2018 was independent as so defined. The foregoing independence determination of our Board of Directors included the determination that each of these seven nominated Board members, if elected and appointed to the Audit Committee, Compensation Committee or Nominating Committee, or as discussed above, respectively, is:
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·independent for purposes of membership on the Audit Committee under Rule 5605(c)(2) of the NASDAQ listing standards, that includes the independence requirements of Rule 5605(a)(2) and additional independence requirements under SEC Rule 10A-3(b);·
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- independent under the NASDAQ listing standards for purposes of membership on the Nominating Committee; and
·
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- independent under the NASDAQ listing standards for purposes of membership on the Compensation Committee and as a
“non-employee director”"non-employee director" under SEC Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act"), and an “outside director” as defined in regulations under Section 162(m).
Table of the Internal Revenue Code of 1986, as amended (the “Code”).Contents
BOARD LEADERSHIP AND THE BOARD’SBOARD'S ROLE IN RISK OVERSIGHT
Separation of Chairman and Chief Executive Officer Roles.Roles
In January 2014, theThe Board has separated the roles of the Chairman and the Chief Executive Officer in order to further diversify and strengthen its leadership structure. WeThe Board separated these roles in recognition of the differences between the two roles and the value to our Company of having the distinct and different perspectives and experiences of a separate Chairman and Chief Executive Officer. Our Chief Executive Officer is responsible for the day-to-day management and supervision of the business and affairs of our Company (such as reviewing performance and allocating resources as the Company’sCompany's chief operating decision maker) and for ensuring that the directives of the Board are carried into effect. Our Chairman, on the other hand, is charged with presiding over all meetings of the Board and our shareholders and providing advice and counsel to the Chief Executive Officer and our Company’sCompany's other officers regarding our business and operations, as well as focusing on oversight and governance matters.
By separating the roles of Chief Executive Officer and Chairman, our Chief Executive Officer is able to focus his time and energy on managing the Company’sCompany's complex daily operations, while our Chairman can devote his time and attention to addressing matters relating to the responsibilities of our Board. Our Chief Executive Officer and Chairman have an excellent working relationship, and, with more than thirty-eight years of experience in the consumer products industry, our Chairman is well positioned to provide our Chief Executive Officer with guidance, advice, and counsel regarding our Company’sCompany's business, operations and strategy.
Moreover, we believe that having a separate Chairman focused on oversight and governance matters allows the Board to more effectively perform its risk oversight role as described below. In connection with the Board’sBoard's self-evaluation process, as required by our Corporate Governance Guidelines, the Board evaluates its organization and processes to ensure that the Board is functioning effectively. For the foregoing reasons, we believe that our separate Chief Executive Officer/Chairman structure is the most appropriate and effective leadership structure for our Company and our shareholders.
Deputy Chairman
The Deputy Chairman’sChairman's authority and responsibilities include presiding at all meetings of the Board when the Chairman is not present, presiding over all executive sessions of the independent Directors and interacting with committee Chairs to efficiently address Board issues for presentation at Board meetings. The Deputy Chairman also consults with the Chairman regarding Board agendas and outreach to shareholders.
Executive Sessions
Independent Directors regularly meet without management present. In regard to executive sessions, any independent Director has the authority to call meetings of independent Directors.
The Board’sBoard's Role onin Risk Oversight
The Company’sOur management is responsible for the ongoing assessment and management of the risks the Company faces,we face, including risks relating to capital structure, strategy, liquidity and credit, financial reporting and public disclosure, operations, and governance. The Board oversees management’smanagement's policies and procedures in addressing these and other risks. Additionally, each of the Board’sBoard's four committees (the Audit Committee, Compensation Committee, Nominating Committee, and Corporate Governance Committee) monitor and report to the Board those risks that fall within the scope of such committee’s committee's
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area of oversight responsibility. For example, the full Board directly oversees strategic risks. The Nominating Committee directly oversees risk management relating to Director nomination and independence. The Corporate Governance Committee directly oversees risk management regarding corporate governance. The Compensation Committee directly oversees risk management relating to employee compensation, including any risks of compensation programs encouraging excessive risk-taking. Finally, the Audit Committee directly oversees risk management relating to financial reporting, public disclosure, and legal and regulatory compliance.compliance, information technology and cybersecurity. The Audit Committee is also responsible for assessing the steps management has taken to monitor and control these risks and exposures and discussing guidelines and policies with respect to the Company’sour risk assessment and risk management.
Management has identified risks, designated associated “risk owners”"risk owners" within the organization and receives appropriate reports from the various risk owners as conditions change. Management works with the Board to communicate risk factors to the Board and to enable the Board to understand the Company’sour risk identification, risk management and risk mitigation measures relating to strategic matters. Additional review or reporting of risks is conducted by management as needed or when requested by the Board or a committee. Additionally, the Chairman and Deputy Chairman, working with the Audit Committee and the Corporate Governance Committee, assess corporate governance practices and risks. The Corporate Governance Committee periodically assesses the effectiveness of the Company’sour corporate governance policies in light of the applicable listing standards and laws and reports their findings to the Board.
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BOARD COMMITTEES AND MEETINGS
Our Board of Directors has four committees: the Audit Committee, the Nominating Committee, the Corporate Governance Committee, and the Compensation Committee. The Independent Directors listed in the table below also meet in executive sessions without management present. The following table shows the composition of these committees as of February 29, 201628, 2018 and the number of meetings held during fiscal year 2016:
Director | Executive
Sessions of
Independent
Directors | Compensation
Committee | Audit
Committee | Nominating
Committee | Corporate
Governance
Committee |
Gary B. Abromovitz | Chair | M | M | M | M |
John B. Butterworth | M | | M | | |
Alexander M. Davern | M | | Chair | | M |
Timothy F. Meeker | M | M | | Chair | |
Beryl B. Raff | M | M | M | | |
William F. Susetka | M | Chair | | M | |
Darren G. Woody | M | M | | M | Chair |
Number of Meetings Held in Fiscal Year 2016 | 4 | 7 | 7 | 2 | 1 |
2018:
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Independent
Directors
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Committee
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Committee
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Committee
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Governance
Committee
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Gary B. Abromovitz |
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| | | Krista L. Berry(1) | | | | M | | | | | | | | | | | | | | | | M | | |
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| | | Thurman K. Case | | | | M | | | | | | | | Chair | | | | | | | | M | | |
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| | | Timothy F. Meeker | | | | M | | | | M | | | | | | | | Chair | | | | | | |
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| | | Beryl B. Raff | | | | M | | | | | | | | M | | | | | | | | | | |
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| | | William F. Susetka | | | | M | | | | Chair | | | | | | | | M | | | | | | |
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| | | Darren G. Woody(2) | | | | M | | | | M | | | | M | | | | M | | | | Chair | | |
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| | | Number of Meetings Held in Fiscal Year 2018 | | | | 6 | | | | 3 | | | | 8 | | | | 2 | | | | 2 | | |
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M = Member as of February 29, 201628, 2018
- (1)
- Joined the Board of Directors in May 2017 and was appointed as a member of the Corporate Governance Committee in August 2017.
- (2)
- Appointed as a member of the Audit Committee in May 2017.
Audit Committee. Our Audit Committee is established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee operates under a written charter that has been adopted by the Board of Directors. The primary purposes of this committee are to oversee, on behalf of the Company’sCompany's Board of Directors: (1) the accounting and financial reporting processes and integrity of our Company’sCompany's financial statements, (2) the audits of our Company’sCompany's financial statements and the appointment, compensation, qualifications, independence, and performance of our independent registered public accounting firm, (3) our compliance with legal and regulatory requirements, and (4) the staffing and ongoing operation of our internal audit function. The Audit Committee meets periodically with our Chief Financial Officer and other appropriate officers in the discharge of its duties. The Audit Committee also reviews the content and enforcement of the Company’sCompany's Code of Ethics, consults with legal counsel on various legal compliance matters and on other legal matters if those matters could materially affect our financial statements.
The Board of Directors has determined that each of the members of the Audit Committee is independent as previously described. In addition, the Board of Directors determined that Alexander M. Davern qualifiesDarren G. Woody and Thurman K. Case both qualify as an “audit"audit committee financial expert” asexpert" (as defined by the SEC in Item 407(d)(5) of Regulation S-K promulgated by the SEC.SEC). Additionally, the Board of
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Directors determined that all of the members of the Audit Committee meet the requirement of the NASDAQ listing standards that each member be able to read and understand fundamental financial statements, including a company’scompany's balance sheet, income statement and cash flow statement.
Compensation CommitteeCommittee.. The Compensation Committee operates under a written charter that has been adopted by the Board of Directors. The primary purposes of the committee are to (1) evaluate and approve the corporate goals and objectives set by the Chief Executive Officer (the “CEO”"CEO"), (2) evaluate the CEO’sCEO's performance in light of those goals and objectives, (3) make recommendations to the Board of Directors with respect to non-CEO compensation, incentive compensation plans and equity-based plans, (4) oversee the administration of our incentive compensation plans and equity-based plans, and (5) produce an annual report on executive compensation for inclusion in the Company’sCompany's proxy statement. The Board of Directors has determined that the members of this committee are independent as previously described. In addition to formal meetings, the committee also conducted numerous informal telephonic discussions and consulted its legal advisors throughout the year. The Compensation Committee has the independent authority to hire compensation, accounting, legal, or other advisors. The Compensation Committee retained Pearl Meyer & Partners (“Pearl Meyer”) as its independent compensation consultant to assist in the evaluation of the compensation packages of our Chief Executive Officer and the other named executive officers for fiscal year 2015. Pearl Meyer worked directly with the Compensation Committee (and not on behalf of management) to analyze the compensation received by our named executive officers, and assisted in establishing a peer group on which a benchmarking study was conducted. In April 2015, the Compensation Committee engaged Frederic W. Cook & Company (“("FW Cook”Cook") as its independent compensation consultant to assist the
Compensation Committee with its compensation decisions for our named executive officers for fiscal year 2017. 2018. The Compensation Committee has determined that neither Pearl Meyer nor FW Cook had anyno conflicts of interest relating to its engagement by the Compensation Committee.
Nominating Committee. The Nominating Committee operates under a written charter that has been adopted by the Board of Directors. The primary purposes of the Nominating committee are to (1) recommend to our Board of Directors individuals qualified to serve on our Board of Directors for election by shareholders at each annual general meeting of shareholders and to fill vacancies on the Board of Directors, and (2) implement the Board’sBoard's criteria for selecting new Directors. The Nominating Committee also oversees the evaluation of the Board members and seeks to annually review Director qualifications and skill sets with the goal of maintaining fresh perspectives on the Board.Board and complementing the skill sets of the other Board members. The Nominating Committee receives recommendations from its members, other members of the Board of Directors, outside advisors, and consultants for candidates to be considered for the Board. The Nominating Committee receives recommendations from its members or other members of the Board of Directors for candidates to be appointed to committee positions, reviews and evaluates such candidates and makes recommendations to the Board of Directors for nominations to fill or add committee positions.
The Nominating Committee’sCommittee's current process for identifying and evaluating nominees for Director positions consists of general periodic evaluations of the size and composition of the Board of Directors, applicable listing standards and laws, and other appropriate factors with a goal of maintaining continuity of appropriate industry expertise and knowledge of our Company. The Nominating Committee looks for a number of personal attributes in selecting candidates as specified in the Company’sour Corporate Governance Guidelines including: sound reputation and ethical conduct; business and professional activities that are complementary to those of the Company; the availability of time and a willingness to carry out their duties and responsibilities effectively; an active awareness of changes in the social, political and economic landscape; an absence of any conflicts of interest; a level of health that allows for attendance and active contribution to most Board and committee meetings; limited service on other boards; and a commitment to contribute to the Company’sour overall performance, placing it above personal interests. The Nominating Committee does not have a diversity policy regarding its selection criteria for determining Director nominees. However, as specified in the Company’sour Corporate Governance Guidelines, the Nominating Committee makes efforts to maintain members on the Board who have substantial and direct experience in areas of importance to the Company. Additionally, the Nominating Committee seeks independent Directors who represent a mix of backgrounds and experiences that will
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enhance the quality of the Board’sBoard's deliberations and decisions. The Nominating Committee considers all attributes, business diversity, professional qualifications, and experience of all candidates the committee believes will benefit the Companyus and increase shareholder value, without regard to gender, race or ethnic background. The Nominating Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees.
The Nominating Committee will consider candidates recommended by shareholders. Written suggestions for candidates by shareholders should be delivered for consideration by theA shareholder desiring to recommend a candidate to our Nominating Committee must provide written notice to the Secretary of the Company at Clarendon House, 2 Church Street, Hamilton, Bermuda. Written suggestions for candidates should be accompanied by a written consent of the proposed candidate to serve as a Director if nominated and elected, a description of his or her qualifications and other relevant biographical information. The Nominating Committee may request that the shareholder submitting the proposed nomineerecommendation furnish additionalcertain information to determine the eligibility and qualifications of such candidate. Additionally, any candidate recommended by shareholders must meet the same general requirements outlined in the previous paragraph to be considered for election. Any shareholder recommendation will be considered for nomination as a Directordirector at the sole discretion of the Nominating Committee. Neither the Board of Directors nor the Nominating Committee is required to include any shareholder nominee recommendation as a proposal in the proxy statement and proxy card mailed to shareholders. Our CompanyWe did not receive any such Director nominee recommendations for the Annual Meeting. Under our bye-laws, if a shareholder intends to nominate a person for election to the Board of Directors directly (rather than by recommending such person as a candidate to our Nominating Committee), the shareholder must submit the nomination as described in "Shareholder Proposals."
In addition, Section 79 of the Companies Act 1981 provides that (i) any number of shareholders representing not less than 5 percent of the total voting power of the shares eligible to vote at a general meeting of shareholders, or (ii) not less than 100 shareholders may propose any resolution which may properly be moved at the next annual general meeting of shareholders. Upon timely receipt of a requisition and compliance with Section 79, we will, at the expense of such shareholder(s), give our other shareholders entitled to receive notice of the next annual general meeting of shareholders notice of the proposed resolution. To be timely, the requisition requiring notice of a resolution must be deposited at our registered office at least six weeks before the next annual general meeting of shareholders. Shareholders satisfying the criteria of Section 79 may also require us to circulate a statement in respect of any matter to come before an annual general meeting of shareholders by requisition deposited at our registered office not less than one week prior to the annual general meeting of shareholders.
Corporate Governance Committee. The primary purposes of the Corporate Governance Committee are to (1) develop, assess and recommend to the Board our corporate governance policies, and (2) evaluate, develop and recommend to the Board succession plans for all of the Company’sour senior management. The Corporate Governance Committee works with the Compensation Committee to develop and recommend succession plans to the Board of Directors.
Meetings of Board of Directors and its Committees. The Board of Directors held four regularly scheduled meetings and threetwo other meetings (all of which(which were telephonic) during fiscal year 2016. Except for Ms. Raff, who was unable to participate in three Compensation Committee meetings (each of which were telephonic), each2018. Each Board member attended at least 75 percent of the meetings of our Board of DirectorsDirector meetings and the committee meetings for which they were members. WeOur policy regarding Director attendance at annual general meetings of shareholders is we encourage and expect, but do not require, the members of the Board of Directors to attend annual general meetings. Last year, all of our Directors attended the annual general meeting of shareholders. We expect that all Board members and Director nominees will attend the Annual Meeting.
Committee Rotation. The Board will consider the rotation of committee assignments and of committee chairs at such intervals as the Board determines on the recommendation of the Corporate Governance Committee. Consideration of rotation will seek to balance the benefits derived from continuity and experience, on the one hand, and the benefits derived from gaining fresh perspectives
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and enhancing Directors’Directors' understanding of different aspects of the Company’sour business and enabling functions.functions, on the other hand. The Board did not rotate any committee chairs in fiscal year 2016.2018. Thurman K. Case became Chairman of the Audit Committee in March 2017 upon the departure of Alex M. Davern from the Board.
SHAREHOLDER COMMUNICATIONS TO THE BOARD OF DIRECTORS
Any record or beneficial owner of our shares of Common Stock who has concerns about accounting, internal accounting controls or auditing matters relating to our Company may contact the Audit Committee directly. Any record or beneficial owner of our Common Stock who wishes to communicate with the Board of Directors on any other matter should also contact the Audit Committee. The Audit Committee has undertaken on behalf of the Board of Directors to be the recipient of communications from shareholders relating to our Company. If particular communications are directed to the full Board, independent Directors as a group, or individual Directors, the Audit Committee will route these communications to the appropriate Directors or committees so long as the intended recipients are clearly stated.
Communications intended to be anonymous may be made by calling our national hotline service at 844-317-9054 or online at WWW.HOTUS.ETHICSPOINT.COM. If calling, please identify yourself as a shareholder of our Company intending to communicate with the Audit Committee. This third partythird-party service undertakes to forward the communications to the Audit Committee if so requested and clearly stated. You may also send communications intended to be anonymous by mail, without indicating your name or address, to Helen of Troy, 1 Helen of Troy Plaza, El Paso, Texas, 79912, USA, Attention: Chairman of the Audit Committee. Communications not intended to be made anonymously may be made by calling the hotline number or by mail to that address, including whatever identifying or other information you wish to communicate.
Communications from employees or agents of our Company will not be treated as communications from our shareholders unless the employee or agent clearly indicates that the communication is made solely in the person’sperson's capacity as a shareholder.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2016,2018, none of the members of the Compensation Committee was an officer (or former officer) or employee of the Company, and no executive officer of the Company served on the Compensation Committee (or equivalent), or the Board of Directors of another entity whose executive officer(s) served on the Company’sCompany's Compensation Committee or Board.
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DIRECTOR COMPENSATION
The following table summarizes the total compensation earned by all non-employee Directors during fiscal year 2016:2018:
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| | Fees Earned
or Paid
in Cash
($)
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| | Stock
Awards
($)(5)
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| | Total
($)
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| | | Gary B. Abromovitz | | | | | 120,000 | | | | | 100,000 | | | | | 220,000 | | |
| | | John B. Butterworth(1) | | | | | 50,000 | | | | | 50,000 | | | | | 100,000 | | |
| | | Krista L. Berry(2) | | | | | 100,000 | | | | | 75,000 | | | | | 175,000 | | |
| | | Thurman K. Case(3) | | | | | 115,000 | | | | | 100,000 | | | | | 215,000 | | |
| | | Alexander M. Davern(4) | | | | | - | | | | | 25,000 | | | | | 25,000 | | |
| | | Timothy F. Meeker | | | | | 210,000 | | | | | 100,000 | | | | | 310,000 | | |
| | | Beryl B. Raff | | | | | 100,000 | | | | | 100,000 | | | | | 200,000 | | |
| | | William F. Susetka | | | | | 115,000 | | | | | 100,000 | | | | | 215,000 | | |
| | | Darren G. Woody | | | | | 105,000 | | | | | 100,000 | | | | | 205,000 | | |
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- (1)
Completed his term on the Board of Directors on August 23, 2017 and did not stand for re-election.
(2)Joined the Board of Directors in May 2017 and was appointed as a member of the Corporate Governance Committee in August 2017.
(3)Joined the Board of Directors in January 2017 and was appointed Chairman of the Audit Committee in March 2017 and as a member of Corporate Governance Committee in August 2017.
(4)Resigned from the Board of Directors in March 2017.
(5)The amounts in this column are based on the grant date fair values of $78.11, $88.45, $82.04$98.45, $93.40, $90.80 and $103.51$88.90 per share on March 3,1, June 2,1, September 1, and December 1, 2015,2017, respectively, computed in accordance with FASB ASC Topic 718. Each of the restricted stock awards vested on the grant date. With respect to stock awards, approximately 30 percent of the value of the grant is settled with cash in order for the Directors to satisfy any tax liabilities associated with the grant. Further information regarding the awards is included in “Non-Employee"Non-Employee Director Equity Compensation Plan.”Plan" below.
During the fiscal year ended February 28, 2015,2018, Julien R. Mininberg, our Chief Executive Officer,CEO, was our only Director who was also an employee of the Company. He did not receive any remuneration for his service as a member of the Board of Directors. Under our compensation guidelines, adopted in August 2014, Board members who are non-employee directors received annual compensation for their services in the form of a cash retainer equal to $100,000 and Common Stock valued at $100,000. The grants of Common Stock are made in quarterly equal value installments on the first business day of each fiscal quarter based on fair market value of the Common Stock as of the close of business of the grant date. Under the compensation guidelines as previously adopted, the Chairman of the Board of Directors was to receive anThe additional $70,000 annually in cash compensation. Compensation was paid at this rate for the first quarter of fiscal year 2016. In August 2015, the Board of Directors voted to increase the annual cash compensation of the Chairman of the Board of Directors to $90,000.is $105,000 annually. The Chairman of the Board of Directors also received an additional $5,000 annually as the Chairperson of the nominating committee,Nominating Committee, as further described below. The Deputy Chairman received an additional $20,000
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$20,000 annually in cash compensation, and the Chairperson of each committee of the Board of Directors received the following additional annual cash compensation:
Audit Committee
| $15,000
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Compensation
| | Audit Committee | | | | $15,000 | | |
Nominating Committee
| $5,000
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| | Compensation Committee | | | | $15,000 | | |
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| | Nominating Committee | | | | $5,000 | | |
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| | Governance Committee | | | | $5,000 | | |
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No other meeting attendance or committee fees are paid.
In fiscal year 2016,2018, the following cash compensation was paid to our non-employee Directors.
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Retainers
($) (1)
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| | Chairman
And Deputy
Chairman
Fees
($)
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| | Committee
Chair
Fees
($)
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($)
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| | | Gary B. Abromovitz | | | | | 100,000 | | | | | 20,000 | (2) | | | | - | | | | | 120,000 | | |
| | | John B. Butterworth (3) | | | | | 50,000 | | | | | - | | | | | - | | | | | 50,000 | | |
| | | Krista L. Berry | | | | | 100,000 | | | | | - | | | | | - | | | | | 100,000 | | |
| | | Thurman K. Case | | | | | 100,000 | | | | | - | | | | | 15,000 | (4) | | | | 115,000 | | |
| | | Timothy F. Meeker | | | | | 100,000 | | | | | 105,000 | (5) | | | | 5,000 | (5) | | | | 210,000 | | |
| | | Beryl B. Raff | | | | | 100,000 | | | | | - | | | | | - | | | | | 100,000 | | |
| | | William F. Susetka | | | | | 100,000 | | | | | - | | | | | 15,000 | (6) | | | | 115,000 | | |
| | | Darren G. Woody | | | | | 100,000 | | | | | - | | | | | 5,000 | (7) | | | | 105,000 | | |
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- (1)
All non-employee Directors received a quarterly cash retainer of $25,000.
(2)For his services as Deputy Chairman, Mr. Abromovitz received quarterly cash fees of $5,000.
(3)Mr. Butterworth completed his term on the Board of Directors and did not stand for re-election, Accordingly, his compensation is for the portion of the year for which he served on the Board of Directors.
(4)For his services as Chairman of the Audit Committee, Mr. Case received quarterly cash fees of $3,750.
(5)For his services as Chairman of the Board, Mr. Meeker received a quarterly cash fee of $17,500 for the first quarter of fiscal year 2016 and quarterly cash fees of $22,500 for all remaining fiscal quarters.(4) For his services as Chairman of the Audit Committee, Mr. Davern received quarterly cash fees of $3,750.
(5)$26,250. For his services as Chairman of the Nominating Committee, Mr. Meekerhe received quarterly cash fees of $1,250.
(6)For his services as Chairman of the Compensation Committee, Mr. Susetka received quarterly cash fees of $3,750.
(7)For his services as Chairman of the Corporate Governance Committee, Mr. Woody received quarterly cash fees of $1,250.Director Stock Ownership and Compensation Guidelines
The Compensation Committee and the Board of Directors believe that Directors should own and hold Common Stock to further align their interests and actions with the interests of the Company’sour shareholders. In June 2014, the Board ofOur guidelines require our Directors adopted revised stock ownership and compensation guidelines for the Directors, which replaced previous guidelines. These revised guidelines took effect after the 2014 annual general meeting and require that Directorsto hold shares of the Common Stock equal in value to at least twice thetheir annual cash retainer for Directors. These revised guidelines require a higher ownership threshold than under the previously effective guidelines. The revisedretainer. Our guidelines provide that equity awards to non-employee Directors vest when granted. Because the effectiveness of the revised guidelines took effect concurrent with the increases in theEach Director annual cash retainers, the Directors wereis given five years from his or her appointment to the date
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Board of Directors to acquire any additionalthe shares needed to comply with the revised guidelines. The Compensation Committee will review stock ownership levels on the first trading day of the calendar year based on the fair market value of the shares on such date.
The Board of Directors also believes that compensation arrangements should be flexible enough to allow the Directors to receive a balanced mix of equity and cash keeping in mind the Board’sBoard's guidelines for achieving and maintaining stock ownership. In this respect, the Board of Directors will seek to target Director average compensation at a mix of approximately 50 percent cash and 50 percent equity, not including any annual cash chair fees paid to the chairpersons of the Board committees. Each Director receives approximately 30 percent of the value of the stock grant award in cash in order to pay any tax liabilities associated with the grant.
Non-Employee Director Equity Compensation Plan
At the 2008 annual general meeting of shareholders, the Company’sCompany's shareholders approved the Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan (the “2008"2008 Director Plan”Plan"). The purpose of the 2008 Director Plan is to (1) aid the Company in attracting, securing, and retaining Directors of outstanding ability and (2) motivate such persons to exert their best efforts on behalf of the Company and its subsidiaries and its affiliates by providing incentives through the granting of awards under the plan. Only non-employee Directors of the Company are eligible to participate in the 2008 Director Plan. Because Julien Mininberg is an employee of the Company, he is not eligible to participate in the 2008 Director Plan.
The 2008 Director Plan is administered by the Compensation Committee of the Board of Directors. The 2008 Director Plan permits grants of restricted stock, restricted stock units and other stock-based awards to the Company’sCompany's non-employee Directors. The vesting criteria and other terms and conditions of restricted stock, restricted stock units and other stock-based awards will be determined by the Compensation Committee. Shares which are subject to awards that terminate, expire, are cancelled, exchanged, forfeited, lapse, or settled for cash may be utilized again with respect to awards granted under the 2008 Director Plan. As of May 10, 2016, 74,82115, 2018, 85,862 shares of restricted stock have been granted under the plan and 100,17989,138 shares of Common Stock remain available for future issue (subject to adjustment in certain circumstances). The plan will expire by its terms on August 19, 2018.2018, and no awards will be granted under that plan after that date. The 2018 Stock Plan is intended to replace the 2008 Director Plan. For additional information regarding these awards and the 2018 Stock Plan, see "Proposal 3 – Approval of the Helen of Troy Limited 2018 Stock Incentive Plan."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 10, 2016,15, 2018, the beneficial ownership of the Common Stock of the Directors, nominees for Directors and the executive officers of the Company; the
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Directors, nominees for Director and executive officers of the Company as a group; and each person known to the Company to be the beneficial owner of more than five percent of the Common Stock:
| | Number of | |
| | Common Shares | |
Name of Beneficial Owner | | Beneficially Owned | Percent * |
Julien R. Mininberg | | 20,263 | | ** |
Thomas J. Benson | | 28,517 | (1) | ** |
Vincent D. Carson | | 26,289 | (1) | ** |
Brian L. Grass | | 17,245 | (1) | ** |
John B. Butterworth | | 6,693 | | ** |
Gary B. Abromovitz | | 10,693 | | ** |
Timothy F. Meeker | | 9,043 | | ** |
William F. Susetka | | 6,043 | | ** |
Darren G. Woody | | 2,843 | | ** |
Alexander M. Davern | | 1,563 | | ** |
Beryl B. Raff | | 1,563 | | ** |
All Directors, nominees for Directors and executive officers as a group (11 persons) | | 130,755 | (1) | 0.47% |
FMR LLC | | 4,211,957 | (2) | 15.14% |
245 Summer Street | | | | |
Boston, Massachusetts 02210 | | | | |
Blackrock Inc. | | 2,618,683 | (3) | 9.42% |
55 East 52nd Street | | | | |
New York, NY 10022 | | | | |
Dimensional Fund Advisors LP | | 2,295,966 | (4) | 8.26% |
Palisades West, Building One | | | | |
6300 Bee Cave Road | | | | |
Austin, Texas 78746 | | | | |
Vanguard Group, Inc. | | 2,202,641 | (5) | 7.92% |
100 Vanguard Boulevard | | | | |
Malvern, Pennsylvania 19355 | | | | |
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| | Name of Beneficial Owner
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| | Number of
Common Shares
Beneficially
Owned
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| | Percent *
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| | | Julien R. Mininberg | | | | | 73,462 | | | | | | ** | |
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| | | Brian L. Grass | | | | | 33,547 | (1) | | | | | ** | |
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| | | Vincent D. Carson | | | | | 26,811 | (1) | | | | | ** | |
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| | | Gary B. Abromovitz | | | | | 8,218 | | | | | | ** | |
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| | | Timothy F. Meeker | | | | | 8,068 | | | | | | ** | |
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| | | William F. Susetka | | | | | 6,635 | | | | | | ** | |
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| | | Darren G. Woody | | | | | 4,368 | | | | | | ** | |
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| | | Beryl B. Raff | | | | | 3,088 | | | | | | ** | |
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| | | Thurman K. Case | | | | | 953 | | | | | | ** | |
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| | | Krista L. Berry | | | | | 775 | | | | | | ** | |
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| | | All Directors, nominees for Directors and executive officers as a group (10 persons) | | | | | 165,925 | (1) | | | | 0.62 | % | |
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| | | FMR LLC
245 Summer Street
Boston, Massachusetts 02210 | | | | | 3,941,850 | (2) | | | | 14.75 | % | |
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| | | Blackrock, Inc.
55 East 52nd Street
New York, New York 10055 | | | | | 2,853,747 | (3) | | | | 10.68 | % | |
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| | | The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, Pennsylvania 19355 | | | | | 2,328,339 | (4) | | | | 8.71 | % | |
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| | | Dimensional Fund Advisors LP
Building One
6300 Bee Cave Road
Austin, Texas 78746 | | | | | 1,440,829 | (5) | | | | 5.39 | % | |
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- *
Percent ownership is calculated using a base denominator of 27,812,34426,719,371 shares of the Common Stock outstanding on May 10, 2016,15, 2018, adjusted in the case of Directors and executive officers, individually and as a group, for stock options exercisable, or restricted stock units that may be settled, within sixty days of May 10, 2016.15, 2018.
**Ownership of less than one percent of the outstanding Common Stock.
(1)There are no outstanding restricted stock units that would settle within sixty days of May 15, 2018. Includes shares subject to stock options that are exercisable within sixty days of May 10, 201615, 2018 as follows:
| Options
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(#) | |
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Thomas J. Benson
| 24,125
| | | | | | Options
(#) | | |
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| | Vincent D. Carson | 24,125
| | | | 21,486 | | |
| | | | | | | | | |
| | Brian L. Grass | 16,025
| | | | 22,250 | | |
Total
| 64,275
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| | Total | | | | | 43,736 | | |
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- (2)
- Based on the Schedule 13G/A filed on February
12, 2016.13, 2018. According to the filing, FMR LLC currently has sole dispositive power for 4,211,9573,941,850 shares, shared dispositive power for zero shares, sole voting power for 715,277913,869 shares, and shared voting power for zero shares.
- (3)
- Based on the Schedule 13G/A filed on January
26, 2016.23, 2018. According to the filing, Blackrock, Inc. has sole dispositive power for 2,618,6832,853,747 shares, shared dispositive power for zero shares, sole voting power for 2,555,0832,795,602 shares, and shared voting power for zero shares.
- (4)
- Based on the Schedule 13G/A filed on February
09, 2016.8, 2018. According to the filing, The Vanguard Group, Inc. currently has sole dispositive power for 2,286,503 shares, shared dispositive power for 41,836 shares, sole voting power for 40,495 shares, and shared voting power for 3,415 shares.
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- (5)
- Based on the Schedule 13G/A filed on February 9, 2018. According to the filing, Dimensional Fund Advisors LP has sole dispositive power for
2,295,9661,440,829 shares, shared dispositive power for zero shares, sole voting power for 2,269,2621,399,046 shares, and shared voting power for zero shares.
EXECUTIVE OFFICERS
(5) Based on the Schedule 13G/A filed on February 11, 2016. According to the filing, Vanguard Group, Inc. currently has sole dispositive power for 2,155,760 shares, shared dispositive power for 46,881 shares, sole voting power for 46,781 shares, and shared voting power for 1,700 shares.
EXECUTIVE OFFICERS
TheOur executive officers of the Company are currently Julien R. Mininberg, Brian L. Grass Thomas J. Benson and Vincent D. Carson. Mr. Mininberg also serves as a Director of the Company and standshe and Mr. Carson stand for nomination at the Annual Meeting. His biography isTheir biographies are included above under “Proposal"Proposal 1: Election of Directors.”" Mr. Carson has announced that he will retire from his positions as Chief Legal Officer and Secretary effective as of the Annual Meeting and has been nominated for election to the Board of Directors at the Annual Meeting.
BRIAN L. GRASS, age 46,48, joined the Company in 2006. In May 2014, Mr. Grass was appointed Chief Financial Officer of the Company. Prior to the appointment, he had served in the capacity of the Company’sCompany's Assistant Chief Financial Officer. Prior to joining the Company, Mr. Grass spent seven years in public accounting at KPMG LLP and six years in various financial leadership roles at Tenet Healthcare Corporation, a healthcare services company.
COMPENSATION COMMITTEE REPORT
THOMAS J. BENSON, age 59, joined the Company in August 2003. In May 2014, Mr. Benson was appointed Chief Operations Officer of the Company. From January 14, 2014 through February 28, 2014, Mr. Benson served as Interim Chief Executive Officer in addition to his duties as Chief Financial Officer. Prior to the appointments, Mr. Benson served as Senior Vice President and Chief Financial Officer of the Company. Mr. Benson served as Chief Financial Officer of Elamex, S.A. de C.V., a provider of manufacturing and shelter services, from June 2002 to August 2003, and as Chief Financial Officer of Franklin Connections/Azar Nut Company, a manufacturer, packager and distributor of candy and nut products, from May 1994 to June 2002. He has served as an investments director in two private investment firms and spent seven years in public accounting. He received his B.S. from St. Mary’s College and his Masters Degree of Taxation from DePaul University.
VINCENT D. CARSON, age 56, joined the Company in November 2001. In May 2014, Mr. Carson was appointed Chief Legal Officer and Secretary of the Company. Prior to the appointment, he had served in the capacity of Vice President, General Counsel and Secretary from November 2001 to September 2010. From September 2010 to April 30, 2014, he served as Senior Vice President, General Counsel, and Secretary of the Company. Prior to joining the Company, Mr. Carson had a 16 year legal career in private practice in El Paso, Texas.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”"Compensation Committee") has reviewed and discussed with management the Compensation Discussion and Analysis for the fiscal year ended February 29, 201628, 2018 to be included in the proxy statement for the Annual Meeting filed pursuant to Section 14(a) of the Exchange Act. Based on its review and discussion referred to above, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the proxy statement on Schedule 14A for the Company’sCompany's Annual Meeting and incorporated by reference in the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended February 29, 2016.
28, 2018.
Members of the Compensation Committee:
William F. Susetka, Chairman
Gary B. Abromovitz
Timothy F. Meeker
Beryl B. Raff
Darren G. Woody
This Report of the Compensation Committee Report is not “soliciting"soliciting material,”" and is not deemed “filed”"filed" with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference.
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COMPENSATION DISCUSSION AND ANALYSIS
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EXECUTIVE OFFICERS
Julien R. Mininberg
CEOChief Executive Officer
Brian L. Grass
Chief Financial Officer
Thomas J. Benson
Chief Operations Officer
Vincent D. Carson
Chief Legal Officer and Secretary
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This section of the proxy statement explains how the Compensation Committee oversees our executive compensation programs and discusses the compensation earned by our named executive officers below, as presented in the tables under “Executive"Executive Compensation.”" We sometimes refer to Messrs. Grass Benson and Carson as “other"other named executive officers.”" Mr. Carson has announced that he will retire from his positions as Chief Legal Officer and Secretary effective as of the Annual Meeting. |
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Executive Summary
Executive Summary
This Compensation Discussion and Analysis describes our executive compensation program for fiscal year 2016.2018. During fiscal year 2016,2018, the Compensation Committee was responsible for approving executive compensation and overseeing the administration of our incentive plans and employee benefit plans.
Overall, our executive compensation program emphasizes performance- and equity-based compensation to align it with shareholder interests and includes other practices that we believe serve shareholder interests such as paying for performance not providing tax “gross-up” payments and maintaining policies relating to clawbacks of incentive awards and prohibitions on hedging or pledging Company stock. Important features of our fiscal year 20162018 executive compensation program include the following:
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Benchmarking; Market Compensation Levels
| · Set the compensation of our Chief Executive Officer at what the Compensation Committee believes is a market level using a benchmark peer group of similarly situated companies against which to compare and assess the Company’s compensation program and performance.
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| | Rigorous Performance Metrics | | | | · •
Established rigorous performance goals based on multiple metrics that are not duplicative between short-term and long-term incentive awards. | | |
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| | Long-Term Incentives | | | | · •
Established multi-year performance periods for long-term incentive awards, with minimum vesting periods for Company equity grants. | | |
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| | Market Compensation Levels | | | | • Set the compensation of our named executive officers at what the Compensation Committee believes are market levels using, as a guideline, companies in a comparative peer group and/or other companies it believes are a source of talent, market surveys and other data. | | |
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At the 20152017 annual general meeting, approximately 9899 percent of votes present (excluding abstentions and broker non-votes) voted for the “Say-on-Pay”"Say-on-Pay" proposal related to our compensation policies. Following the end of each fiscal year, the Compensation Committee conducts a review of all components of the Company’sCompany's compensation program. In consideration of the results on the “Say-on-Pay”"Say-on-Pay" vote, the Compensation Committee acknowledged the support received from our shareholders and viewed the results as a confirmation of the Company’sCompany's executive compensation policies and decisions. Accordingly, we did not significantly change our compensation principles and objectives for our named executive officers in fiscal year 2016 in response to the advisory vote2018.
Table of our shareholders. However, on January 7, 2016, we entered into an amended and restated employment agreement with our Chief Executive Officer, that, among other matters, extended the term of his employment and modified certain of his compensation terms. This agreement became effective as of March 1, 2016, the first day of our fiscal year 2017. Pursuant to its terms, Mr. Mininberg’s original employment agreement was scheduled to expire on February 29, 2016. For further information, see “– Contents
Fiscal Year 2017 Compensation Changes.”
Fiscal Year 20162018 Performance Overview
We were able to meet a number of objectives aimed to further our core initiatives to grow our business and increase shareholder value, including:
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- cumulative total shareholder returns of
15718 percent and 241143 percent over the past three and five fiscal years, respectively, that exceed our Compensation Peer Group (as described below), the NASDAQ Market Index, and the Dow Jones-U.S. Personal Products, Broad Market Cap, Yearly, and Total Return Index (which we sometimes refer to as the “Industry Group”);
·respectively.
•net revenue compound annual growth rates of 6.33.5 percent and 14.82.9 percent over the past three and five fiscal years, respectively;•cash flow compound annual growth rates of 8.4 percent and 20.1 percent over the past three and five fiscal years, respectively;•diluted earnings per share compound annual growth rates of 2.8 percent and 5.5 percent over the past three and five fiscal years, respectively; and· cash flow from operations
•adjusted diluted earnings per share compound annual growth rates of 16.29.6 percent and 28.410.1 percent over the past three and five fiscal years, respectively.
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- *
- Three-year cumulative return for the Compensation Peer Group is less than negative 1 percent.
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Adjusted diluted earnings per share from continuing operations may be considered a non-GAAP financial measure as set forth in SEC Regulation G, Rule 100. See Annex A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP and an explanation of the reasons why the Company believes the non-GAAP financial information is useful and the nature and limitations of the non-GAAP financial measures. On December 20, 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. Following the sale, we no longer consolidate our former Nutritional Supplements segment's operating results. All results presented above are from continuing operations.
Elements of Executive Compensation
The Compensation Committee structured the fiscal year 20162018 compensation of our named executive officers as follows:
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| | Base Salary | | | | Cash | | | | · •
Fixed amount of compensation for performing day-to-day responsibilities. • ·Named executive officers are generally eligible for annual increases.
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| | Annual Incentives and Bonuses | | | | Cash | | | | · •
Competitively-based annual incentive awards for achieving short-term financial goals (such as annual adjusted income and net sales targets) and other strategic objectives, as well asobjectives. While no discretionary bonuses were awarded in fiscal year 2018, the Compensation Committee may award discretionary cash bonuses for exceptional performance and efforts relating to extraordinary Company events.efforts. | | |
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| | Performance Long-Term Incentives | | | | Restricted Stock Units (RSUs) | | | | · •
Performance RSUs vest at the end of a three-year performance period. • ·Number of Performance RSUs earned by executive officers is based upon cumulative adjusted earnings per share, growth, adjusted cash flow productivity and relative total shareholder return performance metrics.
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| | Time-Vested Long-Term Incentives | RSUs; Stock Options
| | | RSUs | | | | · •
Time-Vested RSUs vest equally over a three-year period: 50 percent atperiod for our CEO and over a three-year period for our other named executive officers with 50% vesting on the endfirst day of the 2nd year and 50 percent at the end of the 3rd year. · Foreach fiscal year 2016, these were not available to our Chief Executive Officer.during the second and third years after the date of grant.
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| | Other | | | | Perquisites | | | | · •
Very limited perquisites. | | |
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Overview of Compensation Practices
Oversight of Our Executive Compensation Program
The Compensation Committee oversees the compensation of our named executive officers and is composed entirely of independent Directors, as defined under the listing standards of NASDAQ. The Compensation Committee is responsible for evaluating the Chief Executive Officer’sCEO's performance in light of the goals and objectives of the Company. It also makes compensation recommendations with respect to our other named executive officers, including approval of awards for incentive compensation and equity-based plans. The Compensation Committee and the Corporate Governance Committee also assist the Board of Directors in developing succession planning for our named executive officers.
The Role of Chief Executive Officerthe CEO in Determining Executive Compensation
The Compensation Committee, working with the Chief Executive Officer,CEO, evaluates and approves all compensation regarding our other named executive officers. Our other named executive officers report directly to our Chief Executive OfficerCEO who supervises the day to day performance of those officers. Accordingly, the Chief Executive OfficerCEO establishes the criteria and any targets used to determine bonuses, including each other named executive officer’sofficer's individual performance and Company-based performance factors, and makes recommendations to the Compensation Committee regarding salaries, bonuses and equity awards for the other named executive officers. The Compensation Committee strongly considers the compensation recommendations and the performance evaluations of the Chief Executive OfficerCEO in making its decisions and any recommendations to the Board of Directors with respect to other named executive officers’officers' compensation, incentive compensation plans and equity-based plans that are required to be submitted to the Board. In deliberations or approvals regarding the compensation of the other named executive officers, the Compensation Committee may elect to invite the Chief Executive OfficerCEO to be present but not vote. In any deliberations or approvals of the Compensation Committee regarding the Chief Executive Officer’sCEO's compensation, the Chief Executive OfficerCEO is not invited to be present.
Objectives of Our Compensation Program
Our compensation program is designed to attract, motivate and retain key employees and to align the long-term interests of the named executive officers with those of our shareholders. The philosophy that the Compensation Committee uses to set executive compensation levels and structures is based on the following principles:
·
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- compensation for our named executive officers should be linked to performance;
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- a higher percentage of compensation should be performance-based as an executive
officer’sofficer's range of responsibility and ability to influence the Company’sCompany's results increase;·
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- compensation should be competitive in relation to the
marketplace;marketplace and· in consideration of sources of talent; and
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- outstanding achievement should be recognized.
In addition, we believe that our compensation programs for executive officers should be appropriately tailored to encourage employees to grow our business, but not encourage them to do so in a way that poses unnecessary or excessive material risk to the Company.
Compensation Consultant and Other Advisers
The Compensation Committee has the independent authority to hire compensation, accounting, legal, or other advisors. In connection with any such hiring, the Compensation Committee can
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determine the scope of the consultant’sconsultant's assignments and their fees. The scope of a consultant’sconsultant's services may include providing the Compensation Committee with data regarding compensation trends, assisting the Compensation Committee in the preparation of market surveys or tally sheets or otherwise helping it evaluate compensation decisions.
The Compensation Committee retained Pearl MeyerFrederic W. Cook & Partners (“Pearl Meyer”Company ("FW Cook") as its independent compensation consultant to assist in the evaluation of the compensation packages of our Chief Executive OfficerCEO and the other named executive officers for fiscal year 2015. Pearl Meyer worked2018. FW Cook works directly with the Compensation Committee (and not on behalf of management) to analyze the compensation received by our named executive officers, and assisted in establishing a peer group on which a benchmarking study was conducted. In April 2015, the Compensation Committee engaged Frederic W. Cook & Company (“FW Cook”) as its independent compensation consultant to assist the Compensation Committee within meeting its compensation decisionsresponsibilities. FW Cook has not performed any other services for our named executive officers for fiscal year 2017. the Company nor undertaken any projects on behalf of management. The Compensation Committee has determined that neither Pearl Meyer nor FW Cook had anyno conflicts of interest relating to its engagement by the Compensation Committee.
BenchmarkingCompetitive Pay Position for our CEO
To assist the Compensation Committee in setting appropriate compensation for our CEO, it analyzed competitive market conditions drawing from third-party compensation surveys and publicly available executive compensation data. The Compensation Committee benchmarkedalso evaluated compensation trends and market practice in setting the compensation of our Chief Executive OfficerCEO. Furthermore, the Compensation Committee used compensation data for similar positions in a peer group analysis as a guide to setting fiscal year 2016, which was not changed from fiscal year 2015. The Compensation Committee believes2018 compensation for our CEO. We believe that targeting executive compensation within thea peer group analysis permits the Compensation Committee to assess an appropriate total value and mix of pay for our executivesCEO and to set the compensation of our named executive officersCEO in a manner that is competitive in relation to the marketplace.marketplace and in consideration of sources of talent. Accordingly, in fiscal year 2017, the Compensation Committee engaged Pearl MeyerFW Cook to prepare a peer group list for the Compensation Committee to consider as a benchmark in determining the fiscal year 2015 total compensation of our Chief Executive OfficerCEO (the “Compensation"Compensation Peer Group”Group"). TheIn fiscal year 2018, the Compensation Committee also usedreconsidered the composition of the Compensation Peer Group as well as survey data, to assistin consultation with FW Cook, and determined that the committeeorganizations in setting the fiscal year 2016 total compensation of our other executive officers. The fiscal year 2016 Compensation Peer Group consistswere still appropriate at the time of that determination, other than the removal of Elizabeth Arden Inc., which was acquired by Revlon Inc. In fiscal year 2018, the Compensation Peer Group consisted of the following 1415 companies:
Jarden Corp.
| Lifetime Brands Inc.
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Newell Rubbermaid Inc.
| Tempur Sealy International Inc.
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Clorox Co. (The)
| Revlon Inc.
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Coty Inc.
| Elizabeth Arden Inc.
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Spectrum Brands Holdings Inc.
| NACCO Industries Inc.
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Church & Dwight Co. Inc. | Libbey Inc.
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Tupperware Brands Corp.
| Nu Skin Enterprises, Inc. |
| Coty Inc. | | Prestige Brands Holdings, Inc. |
| Edgewell Personal Care Company | | Revlon Inc. |
| Energizer Holdings, Inc. | | Spectrum Brands Holdings Inc. |
| La-Z-Boy Incorporated | | Tempur Sealy International Inc. |
| Libbey Inc. | | Tupperware Brands Corp |
| Lifetime Brands Inc. | | Vitamin Shoppe, Inc. |
| NACCO Industries Inc. | | |
In compiling the Compensation Peer Group, the Compensation Committee considered management input peer groups lists prepared by proxy advisers and the input of its independent compensation consultant. The Compensation Peer Group includes a mix of companies identified as being within our peer group by proxy advisors or recommended by our compensation consultant or management. The organizations ultimately included in the Compensation Peer Group were chosen because they are a source of talent, are within the general industry of the Company and have comparable revenues, are competitors of the Company or have similar distribution channels as the Company. The Compensation Committee also screened companies included in the Compensation Peer Group with a focus on including those with revenues of one-third to three times the revenue of the Company. Although their revenues are more than three times larger than those of the Company, theThe Compensation Committee decidedsupplements this analysis with additional market information with respect to include The Clorox Co., Jarden Corp., Newell Rubbermaid Inc.our CEO's role with data on external opportunities potentially available to our CEO and Coty Inc. in the Compensation Peer Group because they are direct competitors of the Company andcompanies it believes are a source of talent. The Compensation Committee plans to review the Compensation Peer Group on an annual basis. Other thanduring fiscal year 2019. As a result of the removaldivestiture of one company from the peer group due to corporate transactions,Nutritional Supplements segment, the Compensation Committee determined notexpects to change the peer group for fiscal year 2016.
The Compensation Committee used median compensation data for similar positions inremove Vitamin Shoppe, Inc. from the Compensation Peer Group for fiscal year 2019.
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While the Compensation Committee used the peer group analysis, market data and compensation survey data as a guide to understand the range of compensation opportunities in setting fiscal year 20152018 compensation targets for our named executive officers. ForCEO, it did not tie our named executive officers other thanCEO's compensation to specific market percentiles. In addition, the Chief Executive Officer, the Compensation Committee also considered survey data. The actual total compensation and/or amount of each compensation element for an individual may be more or less than this median. For fiscal year 2015 compensation, the Compensation Committee benchmarked the total target compensationtargets because of factors like expertise, performance, and responsibilities. In setting Mr. Mininberg at approximately the 50th percentile level. Because of the overwhelming approval by our shareholders of our compensation policies in fiscal year 2015, the Compensation Committee determined not to make significant changes to Mr. Mininberg’s elements ofMininberg's compensation for fiscal year 20162018, the Compensation Committee considered his extraordinary efforts and electedleadership as our CEO that have led to maintainstrong growth in the samerevenue, cash flow and market capital of the Company during his tenure. The Compensation Committee views Mr. Mininberg's role as involving greater scope and complexity than similar positions at companies in the Compensation Peer Group and believes his performance would be above the median level of similar positions at companies in the Compensation Peer Group. As such, the Compensation Committee considers his total compensation for fiscal year 2018 to be an appropriate total level and mix of pay in light of the competitive market for executive level talent that can provide innovative leadership and perform demanding roles leading large global organizations. The Compensation Committee believes the compensation program of the Company's CEO is closely aligned with the interests of the shareholders and reflective of the marketplace.
Competitive Pay Positions for our Other Named Executive Officers
To assist the Compensation Committee in setting appropriate compensation levels for our other named executive officers, it analyzed competitive market conditions drawing from third-party compensation surveys and publicly available executive compensation data. The Compensation Committee supplemented this analysis with additional market information related to each named executive officer's role with data on external opportunities potentially available to our other named executive officers and companies it believes are a source of talent. The Compensation Committee also evaluated compensation trends and market practice for the other named executive officers. While the Compensation Committee used the market data and compensation survey data as a guide in setting fiscal year 2018 compensation targets for these executive officers, it did not tie executive officer compensation to specific market percentiles. In determining target compensation for Mr. Mininbergour other named executive officers in fiscal year 2016.2018, the Compensation Committee applied its independent judgment and considered the recommendations of the CEO and input from the market data, compensation survey data and compensation trends, as well as factors like expertise, performance and responsibilities.
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Our Pay Practices and Corporate Governance
A summary of our current pay practices includes the following:
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| | Pay for Performance –– We heavily link our executive compensation program to the Company’sCompany's operating performance and the Compensation Committee's evaluation of individual performance. We ensure that a significant portion of our named executive officers’officers' compensation opportunities are performance-based. The amount of the payout to our Chief Executive Officernamed executive officers is contingent on the degree to which the Company achieves pre-established performance goals that the Compensation Committee has determined are aligned with the Company’sCompany's short- and long-term operating and financial objectives. | | | | No Pledging of Common Stock –– Our Insider Trading Policy prohibits Board members and our named executive officers from pledging Common Stock. None of our Directors or executive officers has any existing pledging arrangements. |
WHAT WE DO
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| | RefocusedFocused Incentive Goals –– Our annual and long-term incentive program includes multiple and more rigorous performance goals that are not duplicative between short- term and long-term incentive awards. Long-term awards are measured over a three-year period. By using different performance measures in our annual cash incentive program and our long-term stock incentive program, we mitigate the risk that our Chief Executive Officernamed executive officers would be motivated to pursue results with respect to one performance measure to the detriment of the Company as a whole. |
| | | No Use of Common Stock as Collateral for Margin Loans –Board members and our named executive officers are prohibited from using Common Stock as collateral for any margin loan. | | |
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| | Limitation of Employment Term for our Chief Executive OfficerCEO –Mr. Mininberg’sMininberg's employment agreement has a termination date of February 28, 2019.
| | | | No Pension Plans or Special Retirement Programs for Executive Officers –– We do not have a pension plan, and our named executive officers do not participate in any retirement programs not generally available to our employees.
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| | Compensation Recoupment Policies –– In order to discourage excessive risk-taking and misconduct on the part of the executive officers, each of our annual cash incentive plan and our principal equity compensation plan includes a clawback provision.provision and is subject to our clawback policy. | | | | No Excessive Perquisites –– We provide only a limited number of perquisites and supplemental benefits to attract talented executives to the Company and to retain our current executives. | | |
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| | Annual Shareholder “Say"Say on Pay” Pay" –– Because we value our shareholders’shareholders' input on our executive compensation programs, our Board has chosen to provide shareholders with the opportunity each year to vote to approve, on a non-binding, advisory basis, the compensation of the named executive officers in our proxy statement.
| | | | No Hedging –– Board members and our named executive officers are prohibited from engaging in transactions (such as trading in options) designed to hedge against the value of the Company’sCompany's Common Stock, which would eliminate or limit the risks and rewards of the Common Stock ownership.
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| | Limitation on Employment Contracts –– All of our named executive officers, other than our Chief Executive Officer,CEO, are employed on an at-will basis. Each executive officer has post-termination and non-competition obligations with the Company pursuant to which the executive officer has agreed that he will not participate in a business that competes with us. | | | | No Speculative Trading –– Board members and our named executive officers are prohibited from short-selling the Common Stock, buying or selling puts and calls of the Common Stock, or engaging in any other transaction that reflects speculation about the Common Stock price or that might place their financial interests against the financial interests of the Company.
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| | Stock Ownership Guidelines –– Our named executive officers are subject to certain stock ownership and holding requirements. The Chief Executive OfficerCEO is required to own Common Stock equal in value to at least three times annual salary, and each other executive officer is required to own Common Stock equal in value to at least one times annual salary.
| | | | No Unapproved Trading Plans –– Board members and our named executive officers are prohibited from entering into securities trading plans pursuant to SEC Rule 10b5-1 without pre-approval; further, no Board member or any executive officer may trade in our Common Stock without pre-approval.
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Our Compensation Program for Our Chief Executive OfficerCEO
Mr. Mininberg has served as Chief Executive Officer of the Company since March 1, 2014 and was party to an employment agreement that became effective on that date (the “Employment Agreement”). On January 7, 2016, we entered into an amended and restated employment agreement with Mr. Mininberg, effective March 1, 2016 (the “New Employment Agreement”"Employment Agreement"). For further information regarding the compensatory terms of the New Employment Agreement, see “– Fiscal Year 2017 Compensation Changes.” Mr. Mininberg sets the overall strategic vision for our Company, and oversees the senior management team and the Company’sCompany's growth and acquisition strategy. TheWhile the Compensation Committee has structured hisused the peer group analysis, market data and compensation so that it falls withinsurvey data as a range paidguide in setting fiscal year 2018 compensation for our CEO, we do not tie our CEO's compensation to chief executives of peer companies that followed the compensation guidelines of proxy advisory firms.specific market percentiles. To assist the Compensation Committee in these efforts, it evaluated the compensation relative to organizations in the Compensation Peer Group. For more information, see "Overview of Compensation Practices – Competitive Pay Position for our CEO."
Pay for Performance
Total compensation for the CEO varies with both individual performance and the Company's performance in achieving financial and non-financial objectives. The CEO's compensation is designed to reward his contribution to the Company's results and objectives. Accordingly, in addition to considering a comparative peer group, market surveys and other external data, each year, the Compensation Committee reviews individual and Company performance of the CEO and makes corresponding adjustments to compensation.
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The Compensation Committee targeted Mr. Mininberg’s total compensation in fiscal year 2015 at approximately the 50th percentile level of the Compensation Peer Group. The Compensation Committee elected to maintain the same level of total target compensation for Mr. Mininberg and determined not to make significant changes to Mr. Mininberg’s elements of compensation for fiscal year 2016. The Compensation Committee believes the compensation program of the Company’s Chief Executive Officer is closely aligned with the interests of the shareholders and reflective of the marketplace.
Pay for Performance
The Compensation Committeealso believes that performance-based compensation aligns our Chief Executive Officer’sCEO's interests with our annual corporate goals and that a substantial majority of his compensation should be performance-based considering the scope and level of his business responsibilities. For fiscal year 20162018 and the remaining term of the New Employment Agreement, Mr. Mininberg’sMininberg's performance compensation was and will be based on a balanced mix of equity and cash awards. Under the Employment Agreement and related compensation programs, the Compensation Committee uses targeted, performance-based compensation goals for our Chief Executive Officer.CEO. These targets are designed to incorporate performance criteria that promote our short-term and long-term business strategies, build long-term shareholder value and avoid encouragingdiscourage excessive risk-taking.
For fiscal year 2016,2018, approximately 7984 percent of Mr. Mininberg’sMininberg's total target total compensation was tied to Company performance.
Elements of the Compensation Program for Our Chief Executive OfficerCEO
For fiscal year 2016,2018, the principal components of compensation for our Chief Executive OfficerCEO were:
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·base salary;·
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- performance-based incentive awards (annual and long-term);
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- very limited perquisites; and
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limited - •
- post-termination benefits.
Additionally, the Compensation Committee approved the payment of a discretionary bonus to our Chief Executive Officer in fiscal year 2016. The Compensation Committee reviews total compensation for the Chief Executive OfficerCEO annually and evaluates his performance. Each year, the Compensation Committee also certifies that the amounts of any bonus payments under the 2011 Annual Incentive Plan (“("2011 Bonus Plan”Plan") have been accurately determined and that the performance targets approved by the shareholders, and any other material terms previously established by the Compensation Committee, were in fact satisfied. The Compensation Committee believes that performance-based compensation should constitute a substantial portion of our Chief Executive Officer’sCEO's total compensation. As a result, the Compensation Committee anticipates that the Chief Executive Officer’sCEO's base salary will represent a small percentage of the Chief Executive Officer’sCEO's total compensation in any given fiscal year.
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Mr. Mininberg’sMininberg's total compensation is primarily performance-based and tied directly to the success of the Company. In addition, Mr. Mininberg’sMininberg's performance-based compensation consists of a mix of cash and equity to provide an appropriate balance of incentives to achieve both the short-term and long-term goals of the Company.
Base Salary of Our Chief Executive OfficerCEO
We provide our named executive officers and other employees with a base salary to provide a fixed amount of compensation for regular services rendered during the fiscal year. The Employment Agreement initially sets Mr. Mininberg’sMininberg's salary at $900,000$950,000 per year. As a result of his demonstrated strong performance as our CEO, the Company's strong financial performance during his time as CEO, and the leadership and direction he provides to our employees, the Compensation Committee increased Mr. Mininberg's base salary from $950,000 to $975,000 per year for fiscal year 2018.
Performance-Based Incentive Awards for Our Chief Executive OfficerCEO
The Compensation Committee also designed Mr. Mininberg’sMininberg's compensation package to include a balance of short-term incentive compensation awarded on an annual basis and long-term incentive compensation measured over a three-year performance period. Both short-term and long-term incentive compensation for Mr. Mininberg is based on multiple performance measures.
The Compensation Committee believes that performance-based awards align our executives’executives' interests with our annual corporate goals and are important to the success of the Company. Accordingly, Mr. Mininberg is entitled to receive an annual incentive bonus, subject to the achievement of specific performance conditions that are not duplicative of the performance conditions of his long-term incentive awards. The Compensation Committee also based the annual incentive award on two performance measures, which are intended to measure identified short term goals of the Company. Mr. Mininberg’sMininberg's annual incentive compensation wasis not based on a set performance measure over the term of the Employment Agreement. Accordingly, the Compensation Committee wasis able to reevaluate and establish the performance measures on an annual basis to reflect shareholder input and changes in market trends.
The fiscal year 20162018 bonus opportunity was based on the achievement of adjusted income and net sales targets, with no annual incentive award to be paid if the threshold adjusted income target was not met. Adjusted income is calculated based on net income, without certain asset impairment charges related to assets acquired prior to March 1, 2014 (the date Mr. Mininberg assumed his current position with the Company), gains and losses from dispositions, acquisition and divestiture related expenses, results of operations and performance target components related to divested companies, restructuring charges (including CEO transition costs), litigation charges (including settlements of litigation, but excluding product liability litigation charges and settlements), non-market based currency revaluations,devaluations, and chief executive officer succession costs (collectively, the “Signinficant Items”).impact of unanticipated changes in accounting principles. The Compensation Committee values both goals as important to the Company’sCompany's success. For fiscal year 2016,2018, the Compensation Committee
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set the threshold, target and maximum adjusted income and net sales values from continuing operations at the following levels:
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Adjusted Income
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| $138.0 million
| $148.0 million
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| | Adjusted Income | | | | $140.1 million | | | | $155.6 million | | | | $171.2 million | | |
| | | | | | | | | | | | | | | | | |
| | Net Sales | $1,350.0 million
| $1,510.0 million
| | $1,570.01,323.0 million | | | | $1,470.0 million | | | | $1,544.0 million | | |
| | | | | | | | | | | | | | | | | |
At the time the performance metrics were set by the Compensation Committee, the Company was evaluating the divestiture of the Nutritional Supplements segment. Accordingly, the Compensation Committee set the net sales target for fiscal year 2018 based on sales from continuing operations, which excluded the results of the Nutritional Supplements segment. As a consequence, the net sales target for fiscal year 2018 was lower than the net sales target for fiscal year 2017. On December 20, 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. Following the sale, we no longer consolidate our former Nutritional Supplements segment's operating results.
Depending upon the achievement of the above performance goals, for fiscal 2016,year 2018, Mr. Mininberg was eligible for a cash payout under the 2011 Bonus Plan targeted at $1,800,000,$1,950,000, with a maximum payout of 165 percent of the target amount$3,050,000 and a threshold payout of 50 percent of the target amount. For adjusted income and net sales results that fall in between the threshold and the target and the target and maximum values, the payout percentage of the award is calculated as a percent of the target amount using a non-linear curve.
Eighty percent (80%) of the bonus opportunity was based on the achievement of the adjusted income performance measure and twenty percent (20%) of the bonus opportunity was based on the achievement of the net sales performance measure. The committee placed a higher weight on the adjusted income goal over the net sales goal because it believes that adjusted income is the most accuraterelevant and significant factor in measuring our performance. Additionally, the emphasis on the adjusted income metric reflects the importance the Board places on achieving profitability through disciplined business expansion and expense management. If the adjusted income threshold had not been achieved, because of the importance the Compensation Committee places on adjusted income, no bonus would have been earned or payable with respect to fiscal year 2016.2018. Additionally, Mr. Mininberg is not entitled to that
portion of the bonus attributed to any performance measure if the threshold amount associated with such performance measure is not achieved.
The adjusted income and net sales targets are subject to adjustment in the event that the Company or any of its subsidiaries consummatesdivests any of its stock or assets. Additionally, the Company's actual results measured to determine the achievement of these targets are subject to adjustment in the event the Company completes an acquisition of the stock or assets of another entity or business or divests any stock or assetsassets. Accordingly, the results of the Company or its subsidiaries.operations attributed to divestitures and acquisitions are effectively excluded from determining whether performance goals have been achieved. The Compensation Committee believes these adjustments properly modify performance results under the 2011 Bonus Plan to account for the impact of acquisitionsdivestitures and divestitures.acquisitions.
For fiscal year 2016,2018, the Compensation Committee’s exercised its discretion to negatively adjust theCompany's adjusted income and net sales amounts for fiscal year 2016 used in the determination of the bonus payout percentage, decreasing the amounts by approximately $2,680,000 and $4,057,000, respectively, due to the beneficial impact that hyperinflation had on the Company’s Venezuelan operating results. Following these adjustments, for purposes of determining the bonus payout percentage, the Company’s adjusted incomefrom continuing operations was $145,719,000,$162,942,000, representing 105.6104.7 percent of the target measure and resulting in a payout percentage relating to that target of 149.8141.3 percent, and the Company’sCompany's net sales from continuing operations were $1,541,644,000,$1,489,747,000, representing 102.1101.3 percent of the target measure and resulting in a payout percentage relating to that target of 111.6106.5 percent. As a result, the Compensation Committee determined
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Mr. Mininberg had earned a cash bonus of $2,558,942$2,618,850 under the 2011 Bonus Plan (a blended percentage of 142.2134.3 percent of the target award).
The Compensation Committee believes that executive compensation should be linked, in part, to building long-term shareholder value. This objective is met by providing long-term incentives in the form of equity-based awards, such as performance-based restricted stock units (“Performance RSUs”).RSUs. These grants make the performance of the Company’sCompany's Common Stock a targeted incentive. The Compensation Committee established what it believes are rigorous performance goals that are not duplicative between short term and long-term incentive awards. Additionally, the Compensation Committee established a three-year performance period for long-term incentive awards of our Chief Executive Officer.CEO.
As part of this objective, with respect to fiscal year 2016,2018, Mr. Mininberg is eligible to receive a long-term incentive award for a three yearthree-year performance period ending February 28, 2018,2020, pursuant to the Helen of Troy Amended and Restated 2008 Stock Plan (the “2008"2008 Stock Plan”Plan"). Pursuant to the Employment Agreement, this(1) 25% of the target amount of the long-term incentive award is in the form of a grant of time-vested RSUs and (2) 75% of the target amount of the long-term incentive award is in the form of a grant of Performance RSUs. Time-vested RSUs granted in fiscal 2018 will vest over a three-year period from date of grant in three equal installments on March 1, 2018, March 1, 2019 and March 1, 2020. This grant is targeted at 8,125 shares of Common Stock subject to time-vested RSUs (with a grant date fair value of $800,000). The fiscal year 20162018 Performance RSU grant is targeted at 19,57724,378 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $1,500,000)$2,400,000), with the opportunity to earn up to 39,15448,756 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $3,000,000)$4,800,000) and a threshold achievement payout of 9,78912,189 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $750,000)$1,200,000). The fiscal year 2016 Performance RSU2018 long-term incentive grant is based on the achievement of cumulative adjusted earnings per share growth (based on earnings per share, without Significant Items,(as described below), adjusted cash flow productivity (as described below) and relative total shareholder return.return targets. Fifty percent (50%) of the fiscal year 2016 Performance RSU2018 long term incentive grant is based on the achievement of thecumulative adjusted earnings per share growth performance measure, twenty-five percent (25%) of the fiscal year 2016 Performance RSU2018 long term incentive grant is based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2016 Performance RSU2018 long term incentive grant is based on the achievement of the relative total shareholder return performance measure. The comparison group for purposes of the relative total shareholder return measure is the benchmarked Compensation Peer Group. However,
Adjusted diluted earnings per share is calculated by dividing adjusted income by the number of diluted shares outstanding for each fiscal year. The cumulative adjusted earnings per share metric is calculated as the sum of adjusted diluted earnings per share for each year in the performance period. The adjusted income metric is determined in the same manner as the adjusted income target in Mr. Mininberg's annual incentive award, as described above, other than the results relating to acquisitions during the performance period, which are included in the results for purposes of this calculation,achieving the Compensation Committee excluded American Greetings Corp. due to it becoming a privately-held corporation.
long-term incentive targets. The Compensation Committee used cumulative adjusted earnings per share growth because it believes it is viewed by our shareholders as an important reflection of the Company’sCompany's financial health and it measures how the Company is performing with respect to profitability and value creation. Due to the importance of cumulative adjusted earnings per share growth to the Company’sCompany's shareholders over the long-term, the Compensation Committee elected to use the measure as the highest weighted metric in the determination of Mr. Mininberg’sMininberg's long-term incentive award.
The adjusted cash flow productivity metric is calculated by dividing (1) net cash provided by operating activities of the Company, less capital and intangible asset expenditures, plus pre-tax cash
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adjustments included in adjusted income, by (2) adjusted income (calculated based on net income, without Significant Items).income. The Compensation Committee chose this metric because it calculatesmeasures how the Company’sCompany's operations are effectively using its investments to generate cash flow. The measuremetric also reflects the importance of cash flow as a means of assessing the fiscal soundness of the Company. The Compensation Committee chose the relative total shareholder return metric because it provides a direct link between Mr. Mininberg’sMininberg's compensation and shareholder results allowing his performance to be judged in comparison to peer group performance, while also allowing positive and negative adjustments for unexpected market conditions. Mr. Mininberg is not entitled to that portion of the award attributed to any performance measure if the threshold amount associated with such performance measure is not achieved.
Discretionary Bonuses
The Compensation Committee madeIn fiscal year 2016, Mr. Mininberg received a discretionary grantlong-term incentive award under the 2008 Stock Plan, with a three-year performance period that ended on February 28, 2018, targeted at 19,577 shares of 2,000 restricted shares in March 2015, withCommon Stock subject to Performance RSUs (with a grant date fair value of $178,240. The$1,500,000), with the opportunity to earn up to 39,154 shares of Common Stock subject to Performance RSUs (with a grant rewardeddate fair value of $3,000,000) and a threshold achievement payout of 9,789 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $750,000). Pursuant to the terms of the fiscal year 2016 award, the amount of the long-term incentive award paid is determined based on the achievement of cumulative adjusted earnings per share (based on earnings per share without asset impairment charges, restructuring charges, total gains or losses from dispositions, costs and expenses incurred in connection with acquisitions and dispositions, litigation charges (including in connection with settlements of litigation but excluding product liability litigation charges and settlements), non-market based currency devaluations and CEO succession costs), adjusted cash flow productivity (as described above) and relative total shareholder return targets. Fifty percent (50%) of the fiscal year 2016 Performance RSU grant was based on the achievement of the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the fiscal year 2016 Performance RSU grant was based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2016 Performance RSU grant is based on the achievement of the relative total shareholder return performance measure.
In May 2018, the Compensation Committee certified the level of attainment of established performance goals for the fiscal year 2016 Performance RSU award. For the three fiscal years ending February 28, 2018, our adjusted cumulative earnings per share was $16.55, representing 103.1 percent of the target measure and resulting in a payout percentage relating to that target of 200 percent. Additionally, our adjusted cash flow productivity over the three-year period was 134 percent, representing 168 percent of the target measure and resulting in a payout percentage relating to that target of 200 percent. Finally, our relative total shareholder return over the three-year period was at the 62.5th percentile of the comparative peer group, representing 125 percent of the target measure and resulting in payout percentage relating to that target of 150 percent. As a result, the Compensation Committee determined Mr. Mininberg for his contributionshad earned 36,707 shares of Common Stock subject to Performance RSUs with respect to the Company’s success and his extensive efforts toward those ends and in lieu of increasing Mr. Mininberg’s base salary for fiscal year 2016. Additionally, Mr. Mininberg received a holiday bonus2016 Performance RSU grant under the 2008 Stock Plan (a blended percentage of $2,500 in fiscal year 2016.187.5 percent of the target award).
Limited Perquisites and Other Personal Benefits Provided to Our Chief Executive OfficerCEO
Mr. Mininberg is entitled to participate in various benefit plans available to all employees of the Company, such as a 401(k) plan (including matching contributions), group medical, group life and group dental insurance, as well as vacation and paid holidays. In addition, the Company pays or reimburses Mr. Mininberg for reasonable travel and other expenses incurred by him in performing his obligations. Additionally, in fiscal year 2016, the Company paid $25,000 in legal fees on Mr. Mininberg’s behalf in connection with the negotiation
Table of the New Employment Agreement.Contents
Potential Post-Termination Benefits for our Chief Executive OfficerCEO
The Employment Agreement providedprovides for certain payments and benefits upon Mr. Mininberg’sMininberg's termination of employment, as described below:
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- Death or Disability. If Mr. Mininberg's employment is terminated by reason of death or disability, then he (or his estate) would be entitled receive (1) any portion of unpaid base salary earned but not yet paid to him as of the date of termination, (2) any unpaid incentive payment earned by Mr. Mininberg with respect to any award under the 2011 Bonus Plan or the 2008 Stock Plan prior to the effective date of termination, (3) pro rata incentive compensation for the year in which his death or disability occurred, as the Compensation Committee, in its reasonable discretion, determines he likely would have received for the performance period during which his employment was terminated, and (4) any death or disability benefits under the life insurance and disability programs of the Company and its subsidiaries to which he is entitled.
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- Termination by Company for Cause or by Mr. Mininberg Other Than for Good Reason. If Mr. Mininberg's employment is terminated for cause by the Company or other than for good reason by Mr. Mininberg, then he would be entitled to receive (1) any portion of unpaid base salary earned but not yet paid to him as of the date of termination and (2) any unpaid incentive payment earned by Mr. Mininberg and vested with respect to any award under the 2011 Bonus Plan or the 2008 Stock Plan prior to the effective date of termination.
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- Termination by Mr. Mininberg for Good Reason or by Company Other Than for Cause (and Not in Connection with a Change of Control). If Mr. Mininberg's employment is terminated by Mr. Mininberg for good reason or by the Company other than for cause and not in connection with a change of control of the Company, then he would be entitled to receive: (1) any portion of unpaid base salary or other benefit earned and vested but not yet paid to him as of the date of termination, (2) a cash payment of two times Mr. Mininberg's base salary at the time of termination, in 24 equal installments, (3) a pro rata bonus under the 2011 Bonus Plan for the year in which the termination occurred based upon the actual performance of the Company, (4) a pro rata portion of any outstanding Performance RSUs granted under the 2008 Stock Plan based upon the actual performance of the Company during the applicable performance periods; (5) a pro rata portion of any installment of time-vested RSUs that would have vested as of the anniversary of the grant date that immediately follows the date of termination, (6) an additional cash payment, if applicable, to achieve an aggregate payment amount or value equal to $4,000,000, to the extent the aggregate amount or value of the payments upon such termination is less than $4,000,000, and (7) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for Mr. Mininberg and his family for a maximum of 18 months after the date of termination or until Mr. Mininberg is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months. All payments and benefits due to Mr. Mininberg, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Mininberg's execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents pursuant to the Employment Agreement.
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- Termination by Mr. Mininberg for Good Reason or by Company Other Than for Cause (and in Connection with a Change of Control). If Mr. Mininberg's employment is terminated by Mr. Mininberg for good reason or by the Company other than for cause and in connection with a change of control, then he would be entitled to receive: (1) any portion of unpaid base salary or other benefit earned and vested but not yet paid to him as of the date of termination, (2) a lump sum cash payment equal to two times both: (i) Mr. Mininberg's then-applicable base salary at the time of the change of control or the date of termination of employment, whichever is higher, plus (ii) an amount equal to the target annual incentive under the 2011 Bonus Plan for the performance period in which his employment terminated, (3) the pro rata portion of the target annual incentive bonus under the 2011 Bonus Plan for the year in which the termination occurred, (4) accelerated vesting of all unvested, time-vested RSUs issued pursuant to the 2008 Stock Plan as of the date of termination, (5) accelerated vesting at target of all outstanding, unearned, Performance RSUs issued pursuant to the 2008 Stock Plan as of the date of termination, (6) an additional cash payment, if applicable, to achieve an aggregate payment amount or value equal to $4,000,000, to the extent the aggregate amount or value of the payments upon such termination is less than $4,000,000, and (7) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for Mr. Mininberg and his family for a maximum of 18 months after the date of termination or until Mr. Mininberg is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months. In the event of any severance payment to Mr. Mininberg that constitutes "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and would be subject to excise taxes imposed by Section 4999 of the Code, a "best-of" calculation will be made comparing (a) the total benefit to Mr. Mininberg from the payments after consideration of the excise tax, to (b) the total benefit to Mr. Mininberg if the payments are reduced to the extent necessary to avoid being subject to the excise tax. Mr. Mininberg would be entitled to the payments equal to the more favorable outcome, as calculated in the Company's reasonable judgment. All payments and benefits due to Mr. Mininberg, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Mininberg's execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents pursuant to the Employment Agreement.
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| Death or Disability. If Mr. Mininberg’s employment was terminated by reason of death or disability, then he (or his estate) would have been entitled receive (1) any portion of unpaid base salary earned but not yet paid to him as of the date of termination, (2) any unpaid incentive payment earned by Mr. Mininberg with respect to any award under the 2011 Bonus Plan or the 2008 Stock Plan prior to the effective date of termination, (3) pro rata incentive compensation for the year in which his death or disability occurred, as the Compensation Committee, in its reasonable discretion, determines he likely would have received for the performance period during which his employment was terminated, and (4) any death or disability benefits under the life insurance and disability programs of the Company and its subsidiaries to which he is entitled.
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| Termination by Company For Cause or by Mr. Mininberg Other Than For Good Reason. If Mr. Mininberg’s employment was terminated for cause by the Company or other than for good reason by Mr. Mininberg, then he would have been entitled to receive (1) any portion of unpaid base salary earned but not yet paid to him as of the date of termination and (2) any unpaid incentive payment earned by Mr. Mininberg with respect to any award under the 2011 Bonus Plan or the 2008 Stock Plan prior to the effective date of termination.
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| Termination by Mr. Mininberg For Good Reason or by Company Other Than For Cause. If Mr. Mininberg’s employment was terminated by Mr. Mininberg for good reason or by the Company other than for cause, then he would have been entitled to receive: (1) any portion of unpaid base salary or other benefit earned but not yet paid to him as of the date of termination (except that no benefit or other compensation with respect to any awards under 2011 Bonus Plan or the 2008 Stock Plan shall be payable), (2) a single payment in the amount of $4,000,000 payable in 18 equal installments commencing on the first payroll date that is at least 60 but not more than 75 days after the date of termination and on a monthly basis thereafter, and (3) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for Mr. Mininberg and his family for a maximum of 18 months after the date of termination or until Mr. Mininberg is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months. All payments and benefits due to Mr. Mininberg, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Mininberg’s execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents pursuant to the Employment Agreement.
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Additionally, in the event any outstanding equity awards issued to Mr. Mininberg pursuant to the 2008 Stock Plan are not assumed in connection with a change of control, such awards will vest immediately in accordance with the terms of the 2008 Stock Plan. The Compensation Committee believes the severance provisions of the Employment Agreement wereare a competitive compensation element in the executive labor market at the time the Employment Agreement was negotiated and were necessary becauseare more beneficial to the Employment Agreement did notCompany and its shareholders than conducting an individual negotiation with our CEO in the event of a termination of his employment. The Compensation Committee believes the change of control severance benefits provide incentive for any retirement benefits for Mr. Mininberg following his termination withour CEO to fully consider potential changes that are in the Company.best interest of the Company and our shareholders, even if such changes would result in the executive's termination. As noted above, the Employment Agreement limitedlimits the potential severance payable to our Chief Executive OfficerCEO over the term of the Employment Agreement for the termination events described in the preceding paragraph.
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The Employment Agreement did not contain the provision of any payment that is linked to a change of control of the Company. However, the Compensation Committee can provide for the acceleration of equity awards to our Chief Executive Officer based on a “double trigger,” which means that the acceleration of those awards would generally occur if, during the employment period, the named executive officer’s employment was involuntarily terminated by the Company other than for cause or by the named executive officer for good reason, in each case, within a specified period following a change of control or if the equity award is not assumed or substituted in connection
with the change of control. On March 1, 2016, the New Employment Agreement became effective, which amends certain post-termination benefits our Chief Executive Officer is eligible to receive. For further information, see “– Fiscal Year 2017 Compensation Changes.”
The Company’sCompany's Compensation Program for our Other Named Executive Officers
Our other named executive officers for fiscal year 20162018 are Mr. Grass, Chief Financial Officer, Mr. Benson, Chief Operations Officer, and Mr. Carson, Chief Legal Officer and Secretary. NoneNeither of these named executive officers is party to an employment agreement. As a result, their compensation is reviewed and determined by the Compensation Committee on an annual basis. The Compensation Committee may also review an executive officer’sofficer's compensation if that executive officer is promoted or experiences a change in responsibilities.
Our other named executive officers report directly to our Chief Executive OfficerCEO who supervises the day to day performance of those officers. Our Chief Executive OfficerCEO annually reviews our executive compensation program (other than for himself) and makes compensation recommendations to the Compensation Committee with respect to the other named executive officers, among others. The Compensation Committee strongly considers the recommendations of the Chief Executive OfficerCEO in making its decisions and any recommendations to the Board of Directors with respect to non-CEO compensation, incentive compensation plans and equity-based plans that are approved by the Board. Additionally, for fiscal year 2016,2018, the Compensation Committee evaluated compensation trends and market practice for the other named executive officers. The Compensation Committee also used compensation survey data as a guide to help set fiscal year 2018 compensation targets for the other named executive officers. For further information, see "Overview of Compensation Practices – Competitive Pay Positions for our other Named Executive Officers."
Pay for Performance
Total compensation for each other named executive officer varies with both individual performance and the Company's performance in achieving financial and non-financial objectives. Each other named executive officer's compensation is designed to reward his contribution to the Company's results and objectives. Accordingly, in addition to considering CEO recommendations, market surveys and other external data, each year, the Compensation Committee reviews individual and Company performance and makes corresponding adjustments to compensation.
The Compensation Committee believes that a significant portion of compensation to our named executive officers should be “at risk”"at risk" based on the financial performance of the Company and the individual performance of the executive. The Compensation Committee also believes that the performance compensation should promote both a near- and long-term outlook. As a result, each of the other named executive officers is eligible to earn a performance-based cash annual incentive award and a mix of long-term performance-based and time-vested RSU incentive awards, similar to the compensation structure of our Chief Executive Officer. Additionally, each of the other named executive officers is eligible to earn time vested long-term incentive awards in the form of equity.CEO. Multiple performance criteria have been established for both annual performance awards (based on adjusted income and net sales targets) and long-term performance awards (based on cumulative adjusted earnings per share, growth, adjusted cash flow productivity and relative total shareholder return targets). For fiscal year 2016,2018, approximately 61, 61,70 percent and 6465 percent of the total compensation offor both Messrs. Grass Benson and Carson, respectively, werewas tied to performance. For additional information regarding these awards, see “–"– Annual Incentive Awards for
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our Other Named Executive Officers”Officers" and “–"– Long-Term Incentive Awards for our Other Named Executive Officers.”
"
Elements of Our Compensation Program for Our Other Named Executive Officers
The principal components of compensation for our other named executive officers in fiscal year 20162018 were:
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·Base salary;·
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- Annual performance-based incentive bonuses;
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- Long-term equity compensation; and
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- Other personal benefits.
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For fiscal year 2018, Messrs. Grass Benson, and Carson arewere each eligible to earn a performance-based cash annual incentive award and a mix of performance-based and time-vested long-term incentive awards in the form of equity, similar to the compensation structure of our ChiefCEO. Additionally, the Company's policy is to provide severance arrangements for the other named executive officers. We expect to enter into written severance agreements with our other named executive officers. For additional information regarding the severance policy and these severance payments, see "– Potential Post-Termination and Change of Control Benefits for our Other Named Executive Officer.Officers. The Compensation Committee used compensation data for similar positions in the benchmarked Compensation Peer Group, as well as survey data as a guide to setting fiscal year 20162018 compensation targets for these executive officers. In fiscal 2016, we had no severance plans or arrangements in place for our other named executive officers. Additionally, the Compensation Committee approved the payment of discretionary cash bonuses to our other named executive officers in fiscal year 2016.
Base Salary of Our Other Named Executive Officers
The Company provides our other named executive officers with a base salary to provide a fixed amount of compensation for regular services rendered during the fiscal year. In setting or increasing base salaries, the Compensation Committee strongly considers the recommendations made by our Chief Executive Officer.CEO. In addition, the committee considers each executive’sexecutive's job responsibilities, qualifications, experience, performance history and length of service with the Company and comparable salaries paid by our competitors. The Compensation Committee may, in its discretion, change the base salary of other named executive officers based on that named executive officer’sofficer's performance. In recognition of their respective increased responsibilities assigned to them during
During fiscal year 2015, and2018, the Compensation Committee, upon the recommendation of our Chief Executive Officer,CEO, approved the following increases in annual base salary effective June 1, 2017:
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| | Named Executive Officer
| |
| | Annual Base
Salary Increase
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| | | | | | | | | |
| | Brian L. Grass | | | | $30,000 | | |
| | | | | | | | | |
| | Vincent D. Carson | | | | $1,500 | | |
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The Compensation Committee approved anthe increase in Messrs. Grass’s and Carson’s annualMr. Grass' base salary from $350,000 to $375,000because it believes his compensation was below market levels and from $375,000 to $450,000, respectively. Forin recognition of his performance in fiscal year 2016,2017 and his increased experience as our Chief Financial Officer. The Compensation Committee strongly considered the annualrecommendation of the CEO in determining to increase Mr. Grass' base salarysalary. The Compensation Committee also reviewed market data and trends in evaluating the increase in his base salaries. The Compensation Committee believes the compensation program of Mr. Benson remained at $600,000.our other named executive officers is closely aligned with the interests of the shareholders and reflective of the marketplace.
Annual Incentive Awards for Our Other Named Executive Officers
Our other named executive officers are eligible to earn a cash annual incentive award. These awards are intended to align our executives’executives' interests with our annual corporate goals. After considering the recommendations of the Chief Executive Officer,CEO, for fiscal year 2016,2018, the Compensation Committee established multiple performance criteria for the cash annual incentive award of each other named executive officer.
The fiscal year 20162018 bonus opportunity was based on the achievement of adjusted income and net sales targets, with no annual incentive award to be paid if the threshold adjusted income was not met. Adjusted income is calculated based on net income without Significant Items. The Compensation Committee values both goals as important to the Company’sCompany's success. For fiscal
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year 2016,2018, the Compensation Committee set the threshold, target and maximum adjusted income and net sales values from continuing operations at the following levels:
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| | Performance Metric |
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| | Threshold |
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| | Target |
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| | Maximum
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| | Adjusted Income | $124.0 million
| $138.0 million
| | $148.0140.1 million | | | | $155.6 million | | | | $171.2 million | | |
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| | Net Sales | $1,350.0 million
| $1,510.0 million
| | $1,570.01,323.0 million | | | | $1,470.0 million | | | | $1,544.0 million | | |
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The annual incentive threshold, target and maximum award for each of Messrs. Grass Benson, and Carson are based upon a percentage of such respective executive officer’sofficer's base salary for fiscal 2018, as follows:
Name | Threshold | Target | Maximum |
B. Grass | 32.5% | 65% | 130% |
T. Benson | 32.5% | 75% | 150% |
V. Carson | 32.5% | 65% | 130% |
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| | Name
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| | Threshold
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| | Target
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| | Maximum
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| | B. Grass | | | | 37.5% | | | | 75% | | | | 150% | | |
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| | V. Carson | | | | 37.5% | | | | 75% | | | | 150% | | |
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For adjusted income and net sales results that fall between the threshold and the target and the target and maximum values, the payout percentage of the award of each other named executive officer is calculated as a percent of the target amount using a non-linear curve.
Eighty percent (80%) of the annual incentive award is based on the achievement of the adjusted income performance measure and twenty percent (20%) is based on the achievement of the net sales performance measure. If the adjusted income threshold had not been achieved, because of the importance the Compensation Committee places on adjusted income, no bonus would have been earned or payable with respect to fiscal year 2016.2018. Additionally, none of our other named executive officers is entitled to that portion of the bonus attributed to any performance measure if the threshold amount associated with such performance measure is not achieved. For a discussion concerning the Compensation Committee’sCommittee's decisions relating to the establishment of these performance measures, see “–"– Our Fiscal Year 20162018 Compensation Program for our Chief Executive OfficerCEO – Performance-Based Incentive Awards for our Chief Executive OfficerCEO – Annual Incentive Awards.”The adjusted income and net sales targets are subject to adjustment in the event that the Company or any of its subsidiaries consummates an acquisition of the stock or assets of another entity or business or divests any stock or assets of the Company or its subsidiaries. The Compensation Committee believes these adjustments properly modify performance results under the 2011 Bonus Plan to account for the impact of acquisitions and divestitures."
The adjusted income and net sales targets are subject to adjustment in the event that the Company or any of its subsidiaries consummates an acquisition of the stock or assets of another entity or business or divests any stock or assets of the Company or its subsidiaries. The Compensation Committee believes these adjustments properly modify performance results under the 2011 Bonus Plan to account for the impact of acquisitions and divestitures.
For fiscal year 2016,2018, the Compensation Committee exercised its discretion to negatively adjust theCompany's adjusted income and net sales amounts for fiscal year 2016 used in the determination of the bonus payout percentage, decreasing the amounts by approximately $2,680,000 and $4,057,000, respectively, due to the beneficial impact that hyperinflation had on the Company’s Venezuelan operating results. Following these adjustments, for purposes of determining the bonus payout percentage, the Company’s adjusted incomefrom continuing operations was $145,719,000,$162,942,000, representing 105.6104.7 percent of the target measure and resulting in a payout percentage relating to that target of 149.8141.3 percent, and the Company’sCompany's net sales from continuing operations were $1,541,644,000,$1,489,747,000, representing 102.1101.3 percent of the target measure and resulting in a payout percentage relating to that target of 111.6106.5 percent. As a result, the Compensation Committee approved an annual incentive award payout for each of Messrs. Grass Benson and Carson of $340,662, $639,736$460,817 and $398,502,$467,994, respectively. These awards represent a blended payout percentage of 142.2134.3 percent of the target award of each such other named executive officer.
Long-Term Incentive Awards for Our Other Named Executive Officers
At the 2008 annual general meeting ofThe Company's shareholders the Company’s shareholdershave approved the 2008 Stock Plan, which the Company uses to grant equity awards to its named executive officers and to key employees. Equity-based compensation and ownership give these individuals a continuing stake in the long-term success of the Company, and the delayed vesting of stock options and RSUs helps to encourage retention. The Compensation Committee and the Board of Directors believe that the executive officers and key employees of the Company should be rewarded for earnings performance that may result from their efforts and that this should be accomplished, in part, by awarding equity compensation to these individuals, which increases
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their stake in the Company’sCompany's long-term success and further aligns their interests with those of shareholders. For more information regarding the Company’sCompany's long-term equity compensation, see “Executive"Executive Compensation – Equity Compensation Plan Information.”"
After considering the recommendations of the Chief Executive Officer,CEO, the Compensation Committee also established multiple performance criteria for the long-term incentive awards in the form of equityPerformance RSUs for each other named executive officer. Fifty percent (50%) of the fiscal year 20162018 Performance RSU awards wereare based on the achievement of the cumulative adjusted earnings per share growth performance measure, twenty-five percent (25%) of the fiscal year 20162018 Performance RSU awards wereare based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 20162018 Performance RSU awards wereare based on the achievement of the relative total shareholder return performance measure. None of our other named executive officers is entitled to that portion of the award attributed to any performance measure if the threshold amount associated with such performance measure is not achieved. The values of the threshold, target and maximum award for each of Messrs. Grass Benson, and Carson’sCarson's Performance RSUs are as follows:
Name | Threshold | Target | Maximum |
B. Grass | $131,250 | $262,500 | $525,000 |
T. Benson | $187,500 | $375,000 | $750,000 |
V. Carson | $187,500 | $375,000 | $750,000 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | Name
| |
| | Threshold
| |
| | Target
| |
| | Maximum
| |
|
|---|
| | | | | | | | | | | | | | | | | |
| | B. Grass | | | | $262,500 | | | | $525,000 | | | | $1,050,000 | | |
| | | | | | | | | | | | | | | | | |
| | V. Carson | | | | $187,500 | | | | $375,000 | | | | $750,000 | | |
| | | | | | | | | | | | | | | | | |
The Compensation Committee also granted time-vested RSUs that will vest fifty percent (50%)over a three-year period with vesting on February 28, 2017each of March 1, 2019 and fifty percent (50%) on February 28, 2018.March 1, 2020. The time-vested RSUs are targeted at $87,500, $125,000,$175,000 and $125,000 in grant date fair value respectively, for fiscal year 20162018 for Messrs. Grass Benson, and Carson.Carson, respectively.
Discretionary Cash Bonuses
In fiscal year 2016, each of our other named executive officers received a long-term incentive award under the 2008 Stock Plan with a three-year performance period that ended on February 28, 2018 in the form of a grant of Performance RSUs. Pursuant to the terms of the fiscal year 2016 award, the amount of the long-term incentive award paid is determined based on the achievement of cumulative adjusted earnings per share, adjusted cash flow productivity and relative total shareholder return targets. Fifty percent (50%) of the fiscal year 2016 Performance RSU grant was based on the achievement of the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the fiscal year 2016 Performance RSU grant was based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2016 Performance RSU grant is based on the achievement of the relative total shareholder return performance measure. The Compensation Committee grantedgrant date fair values of the threshold, target and maximum award for each of Messrs. Grass and Carson a discretionary cash bonusCarson's 2016 Performance RSUs are as follows:
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | Name
| |
| | Threshold
| |
| | Target
| |
| | Maximum
| |
|
|---|
| | | | | | | | | | | | | | | | | |
| | B. Grass | | | | $131,250 | | | | $262,500 | | | | $525,000 | | |
| | | | | | | | | | | | | | | | | |
| | V. Carson | | | | $187,500 | | | | $375,000 | | | | $750,000 | | |
| | | | | | | | | | | | | | | | | |
In May 2018, the Compensation Committee certified the level of $70,000 and $95,000, respectively, in fiscal year 2016. They were awarded these bonuses in recognitionattainment of their substantial efforts provided toestablished performance goals for the Company during fiscal year 2016 Performance RSU award. For the three fiscal years ending February 28, 2018, our cumulative adjusted earnings per share was $16.55, representing 103.1 percent of the target measure and resulting in a payout percentage relating to that were beyond their normal responsibilities. For Mr. Grass,target of 200 percent. Additionally, our adjusted cash flow productivity over the three-year period was 134 percent, representing 168 percent of the target measure and resulting in a payout percentage relating to that
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target of 200 percent. Finally, our relative total shareholder return over the three-year period was at the 62.5th percentile of the comparative peer group, representing 125 percent of the target measure and resulting in payout percentage relating to that target of 150 percent. As a result, the Compensation Committee also considered his significant work in connectiondetermined that each of the other named executive officers listed below had earned the award payable with implementing the Company’s strategic plan and the Company’s successful acquisitions and related integration. For Mr. Carson, the Compensation Committee also considered his significant work on the Company’s acquisitions and dispute resolution matters relatingrespect to our former chief executive officer during the fiscal year. A holiday bonusyear 2016 Performance RSU grant (a blended percentage of $2,500 was also awarded to each187.5 percent of Mr. Grass, Mr. Benson, and Mr. Carson in fiscal year 2016.the target award), as follows:
| | | | | | | | |
| | | | | | | | | |
| | Name
| |
| | Performance RSUs
| |
|
|---|
| | | | | | | | | |
| | B. Grass | | | | 6,424 | | |
| | | | | | | | | |
| | V. Carson | | | | 9,176 | | |
| | | | | | | | | |
Other Benefits Provided for Our Other Named Executive Officers
We provide other benefits to the other named executive officers, such as participation in a 401(k) plan, including matching contributions, group medical, group life and group dental insurance, as well as vacation and paid holidays. These benefits are available to all our full-time employees, including each named executive officer, and we believe they are comparable to those provided at other companies.
Potential Post-Termination and Change of Control Benefits for our Other Named Executive Officers
The Company did not previously have any formal employment or severance agreements with any other named executive officer in fiscal year 2016. In the event any other named executive officer is terminated, the payment of any cash severance would be at the discretion of the Company, based upon the facts and circumstances at that time.
For stock options granted to our other named executive officers prior to August 19, 2015, the date on which the 2008 Stock Plan (as amended and restated) was approved by our shareholders, any unvested options immediately vest upon a change of control of the Company (as defined under the plan) pursuant to the provisions of the Helen of Troy 2008 Stock Incentive Plan in effect prior to August 19, 2015 (the “Prior 2008 Stock Plan”). In addition, if an option holder’s employment with the Company is terminated due to his death or disability, to the extent the participant was entitled to exercise the option on the date of death or disability, the option may be exercised within one year after such termination. If an option holder’s employment is terminated voluntarily or with cause, all of his options that are exercisable as of the date of termination will remain exercisable for ninety days under the Prior 2008 Stock Plan. Additionally, if an option holder’s employment is terminated without cause, all of his options that are exercisable as of the date of termination will remain exercisable for ninety days, regardless of whether they are incentive stock options or non-qualified stock options. Beginning in fiscal year 2016, the Compensation Committee does not plan to grant stock options to our other named executive officers.
Any unvested time-vested RSUs granted to our other named executive officers prior to August 19, 2015, would accelerate upon a change in control of the Company. Additionally, any unearned Performance RSUs granted to our other named executive officers prior to August 19, 2015 would vest pro rata based upon target performance and the number of days elapsed during the performance period at the time of the change in control. In the event of the death or disability or in the event of the termination of the employment for any reason following a change in control, each of the other named executive officers would receive the pro rata portion of his annual incentive award he would have received had he remained employed for the entire year in which his employment was terminated.
Any equity awards granted on or after August 19, 2015 to our other named executive officers would accelerate based on a “double trigger,” which means that the acceleration of those awards would generally occur if, during the employment period, the other named executive officer’s employment is involuntarily terminated by the Company other than for cause or by the other named executive officer for good reason, in each case, within a specified period following a change of control or if the equity award is not assumed or substituted in connection with the change of control. For further information, see “Equity Compensation Plan Information.”
Fiscal Year 2017 Compensation Changes
Compensation Consultant for Fiscal Year 2017 Compensation
The Compensation Committee retained FW Cook as its independent compensation consultant to assist in the evaluation of the compensation packages of our Chief Executive Officer and the other named executive officers for fiscal year 2017. FW Cook worked directly with the Compensation Committee (and not on behalf of management) to analyze the compensation received by our named executive officers, and assisted in establishing a peer group for which a benchmarking study was conducted. FW Cook has not performed any other services for the Company nor undertaken any projects on behalf of management. The Compensation Committee has determined that FW Cook had no conflicts of interest relating to its engagement by the Compensation Committee.
Amended and Restated Employment Agreement of our Chief Executive Officer
Pursuant to its terms, Mr. Mininberg’s Employment Agreement was scheduled to expire on March 1, 2016. During his tenure as Chief Executive Officer, the Company has experienced tremendous growth in revenue and in market capital. Mr. Mininberg’s leadership and performance during this time has been integral to the Company’s success. As a result, the Board determined that it was in the best interests of the Company and its shareholders to extend the term of his employment agreement. The Compensation Committee engaged the services of independent counsel and FW Cook, its independent compensation consultant, to negotiate a revised employment agreement with Mr. Mininberg. The Company entered into the New Employment Agreement with Mr. Mininberg on January 7, 2016, which took effect on March 1, 2016, and extended the term of his employment through February 28, 2019. The Compensation Committee believes the revised compensation program of Mr. Mininberg remains closely aligned with the interests of the shareholders and reflective of the marketplace.
While many of the provisions of the New Employment Agreement match that of Mr. Mininberg’s former Employment Agreement, certain compensation provisions were amended. These changes include the following:
Element
| Compensation Changes
| Reasoning for Changes
|
Base Salary
| Increased from $900,000 to $950,000.
| The Compensation Committee elected to increase Mr. Mininberg’s base salary as a result of his demonstrated strong performance as our Chief Executive Officer, the Company’s strong financial performance during his time as Chief Executive Officer, and the leadership and direction he provides to our employees.
|
Annual Incentives and Bonuses
| Target annual performance bonus at 200 percent of base salary, with the opportunity to earn up to $3,050,000 and a threshold achievement payout of 100 percent of his base salary. However, the Compensation Committee determines the performance goals and other terms for the annual performance bonus.
| The Compensation Committee increased the maximum annual incentive bonus Mr. Mininberg is eligible to receive to correspond to the increase in his base salary.
|
Long-Term Incentives
| Long-term performance bonus consists of both time-vesting RSUs (25 percent of the total bonus, vesting in equal installments over a three year period) and Performance RSUs (75 percent of the total bonus), as opposed to solely consisting of Performance RSUs. However, the Compensation Committee determines the performance goals and other terms for the long-term performance bonus. Additionally, the Compensation Committee may increase or decrease targets, thresholds or maximums for these awards.
Target long-term performance bonus at the lesser of $3,200,000 or the value of the common shares that may be granted to a participant under the 2008 Stock Plan (the “Maximum Grant Amount”).
Target Performance RSU portion of the long-term performance bonus at the difference of the Maximum Grant Amount less the fair market value of the time-vested RSU portion of the long-term performance bonus (with a threshold award of 50 percent and a maximum award of 200 percent of the target Performance RSUs granted under the 2008 Stock Plan).
| The changes made to the Mr. Mininberg’s long-term incentives were made to reflect what the Compensation Committee believes is a competitive market level for this element of compensation consistant with our goal to align Mr. Mininberg’s interests to building long-term shareholder value.
|
Element
| Compensation Changes
| Reasoning for Changes
|
Severance Benefits in the Event of Termination by Mr. Mininberg for Good Reason or by the Company other than for Cause (and not in Connection with a Change of Control)
| Severance benefits of earned and vested incentive compensation plus the following (not to be less than $4,000,000 in the aggregate):
(1) a cash payment of two times base salary at the time of termination;
(2) a pro rata annual incentive bonus for the year in which the termination occurred, as determined by the Compensation Committee in its reasonable discretion;
(3) a pro rata portion of any outstanding Performance RSU’s based upon the actual performance of the Company during the applicable performance periods; and
(4) a pro rata portion of any installment of time-vesting RSUs that would have vested as of the anniversary of the grant date that immediately follows the date of termination.
Generally, the new severance payments were in lieu of a $4,000,000 cash payment under the former Employment Agreement.
| The Compensation Committee believes the severance provisions of the New Employment Agreement are a competitive compensation element in the current executive labor market and are more beneficial to the Company and its shareholders than conducting an individual negotiation with our Chief Executive Officer in the event of a termination of his employment.
|
Severance Benefits in the Event of Termination by Mr. Mininberg for Good Reason or by the Company other than for Cause (and in Connection with a Change of Control)
| Severance benefits of earned and vested incentive compensation plus the following (not to be less than $4,000,000 in the aggregate):
(1) a lump-sum cash payment of two times: (i) base salary at the time of the change of control or the date of termination, whichever is higher, plus (ii) an amount equal to the target annual incentive under the 2011 Bonus Plan for the performance period in which his employment terminated;
(2) a pro rata annual incentive bonus for the year in which the termination occurred, as determined by the Compensation Committee in its reasonable discretion;
(3) accelerated vesting of all unvested, time-vesting RSUs as of the date of termination;
(4) accelerated vesting at target of all outstanding, unearned, Performance RSUs as of the date of termination; and
(5) certain heath insurance benefits.
| The Compensation Committee added the change of control severance benefits to provide incentive for our Chief Executive Officer to fully consider potential changes that are in the best interest of the Company and our shareholders, even if such changes would result in the executive’s termination. The Company competes for executives in a highly competitive market in which companies routinely offer similar benefits to senior executives. The Compensation Committee views these amounts as reasonable and appropriate for the Chief Executive Officer, who may not be in a position to obtain comparable employment following a change of control.
|
Accelerated Vesting in the Event of a Change of Control
| In the event any outstanding equity awards issued pursuant to the 2008 Stock Plan are not assumed in connection with a change of control, such awards will vest immediately in accordance with the terms of the 2008 Stock Plan.
| The Compensation Committee added this benefit to provide incentive for our Chief Executive Officer to fully consider potential changes that are in the best interest of the Company and our shareholders.
|
Element
| Compensation Changes
| Reasoning for Changes
|
Modified Tax Gross-Up
| In the event of any severance payment to Mr. Mininberg that constitutes “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, and would be subject to excise taxes imposed by Section 4999 of the Internal Revenue Code, a “best-of” calculation will be made comparing (a) the total benefit to Mr. Mininberg from the payments after consideration of the excise tax, to (b) the total benefit to Mr. Mininberg if the payments are reduced to the extent necessary to avoid being subject to the excise tax. Mr. Mininberg will be entitled to the payments under the more favorable outcome, as calculated in the Company’s reasonable judgment.
| The Compensation Committee believes this provision is a competitive compensation element in the current executive labor market.
|
Severance Arrangements
In March 2016, theThe Compensation Committee authorized the Company to provide severance arrangements for the other named executive officers, and the Company expects to enter into written severance arrangementsagreements with the other named executive officers. Until formal severance agreements are entered into with our other named executive officers, which the Company expectsCompany's policy is to complete during fiscal year 2017.provide severance in accordance with the terms authorized by the Compensation Committee. The severance agreements would include the following terms:
- •
·For a termination by the Company without cause (not in connection with a change in control), the other named executive officer will receive (1) cash severance equal to 100 percent of his base salary plusand 100 percent of his target annual incentive award for the year in which the termination occurred, (2) the pro rata portion of his annual incentive award for the year in which the termination occurred based upon the actual performance of the Company during the performance period, (3) the pro rata portion of his outstanding performance-based long-term incentive awards based upon the actual performance of the Company during the applicable performance periods, (4) pro rata acceleration of all time-vested equity awards held by the other named executive officer that are not vested at the time of termination, and (5) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for him and his family for a maximum of 12 months after the date of termination or until he is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 12 months.·
- •
- For a termination in connection with a change in control (whether by the Company without cause or by the other named executive officer for good reason within
two years of6 months prior to or 18 months after the change in control), the other named executive officer will receive (1) cash severance equal to 150 percent of both his base salary and 100 percent of his target annual incentive award for the year in which the termination occurred, (2) the pro rata portion of his target annual incentive award for the year in which the termination occurred, (3) acceleration of all time-vested equity
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awards held by the other named executive officer that are not vested at the time of termination, (4) acceleration of all unvested performance-based equity awards at target held by the named executive officderofficer at the time of termination (5) a modified tax gross-up similar to that received by our Chief Executive Officer,CEO, and (6) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for him and his family for a maximum of 18 months after the date of termination or until he is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.
In addition to the above, as of February 28, 2018, each of our named executive officers held 5,250 unvested shares subject to options granted before August 31, 2015. These options will accelerate if there is a termination of employment by the Company without cause, a termination of employment due to death or disability or the occurrence of a change in control. Beginning in fiscal year 2016, the Compensation Committee no longer plans to grant stock options to our other named executive officers.
The Compensation Committee believes these severance provisions are a competitive compensation element in the current executive labor market and are more beneficial to the Company and its shareholders than conducting an individual negotiation with each executive officer in the event of a termination of his employment. Furthermore, the Compensation Committee believes the change of control severance benefits provide incentive for our other named executive officers to fully consider potential changes that are in the best interest of the Company and our shareholders, even if such changes would result in the executive’sexecutive's termination. The Company competes for executives in a highly competitive market in which companies routinely offer similar benefits to senior executives. As a result, the Compensation Committee views these amounts as reasonable and appropriate for the other named executive officers.
Base Salary Increase In the event any other named executive officer is terminated, the payment of our Chief Financial Officerany cash severance would be at the discretion of the Company, based upon the facts and circumstances at that time.
ForUnder the 2008 Stock Plan, if an option holder's employment with the Company is terminated due to his death or disability, to the extent the participant was entitled to exercise the option on the date of death or disability, the option may be exercised within one year after such termination. If an option holder's employment is terminated without cause, all of his options that are exercisable as of the date of termination will remain exercisable for ninety days. Beginning in fiscal year 2017,2016, the Compensation Committee also approvedno longer plans to grant stock options to our other named executive officers. Any equity awards granted under the 2008 Stock Plan to our other named executive officers would accelerate based on a base salary increase"double trigger," which means that the acceleration of $60,000those awards would generally occur if, during the employment period, the other named executive officer's employment is involuntarily terminated by the Company other than for Mr. Grass becausecause or by the other named executive officer for good reason, in each case, within a specified period following a change of control or if the equity award is not assumed or substituted in connection with the change of control. For further information, see "Executive Compensation Committee believes his compensation was below market levels and in recognition of his performance.– Equity Compensation Plan Information."
In the event of death or disability, each of the other named executive officers would receive his annual incentive award on a pro rata basis based on the number of days he was employed with the Company during the entire year in which his employment was terminated.
Stock Ownership Guidelines
Beginning in May 2014, our named executive officers became subject to stock ownership and holding requirements. Our Chief Executive OfficerCEO is required to own Common Stock equal in value to at least three times his annual salary, and each other named executive officer is required to own Common Stock equal in value to at least one times his annual salary. For purposes of these requirements, ownership
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includes not only shares owned directly by the executive, but also shares covered by in-the-money, stock options that are vested or exerciseableexercisable within 60 days of the date of determination and certain restricted stock units held through various plans and programs of the Company. We have also established milestone guidelines that we use to monitor progress toward meeting these targets over a five-year period, at the end of which the executive is expected to have reached the applicable ownership level.
Until an executive reaches the applicable milestone, he or she must hold and may not sell any shares (except to meet tax withholding obligations); once the ownership level is met, he or she must hold and may not sell shares if doing so would cause his or her ownership to fall below that level. Although the Company does not require its executive officers to hold Common Stock for specified periods of time, we believe that the above holding requirements result in the ownership by our executives of significant amounts of Common Stock for substantial periods of time and align the interests of our executives with those of our shareholders. For fiscal year 2016,2018, all our named executive officers met their stock ownership requirements.
Prohibition on Pledging and Hedging and Restrictions on Other Transactions involvingInvolving Common Stock
Our Insider Trading Policy prohibits Board members and our named executive officers from pledging Common Stock or using Common Stock as collateral for any margin loan. In addition, the Insider Trading Policy contains the following restrictions:
- •
·Board members and our named executive officers are prohibited from engaging in transactions (such as trading in options) designed to hedge against the value of the Company’sCompany's Common Stock, which would eliminate or limit the risks and rewards of the Common Stock ownership;·
- •
- Board members and our named executive officers are prohibited from short-selling the Common Stock, buying or selling puts and calls of the Common Stock, or engaging in any other transaction that reflects speculation about the Common Stock price or that might place their financial interests against the financial interests of the Company;
·
- •
- Board members and our named executive officers are prohibited from entering into securities trading plans pursuant to SEC Rule 10b5-1 without pre-approval; further, no Board member or any named executive officer may trade in our Common Stock without pre-approval; and
·
- •
- Board members and our named executive officers may trade in Common Stock only during open window periods, and only after they have pre-cleared transactions.
Currently, none of our Directors or executive officers has any pledging arrangements in place involving Common Stock.
Tax Implications of Executive Compensation
Section 162(m) of the Code places a limit of $1,000,000 on the amount of compensation that a publicly traded company may deduct for federal tax purposes in any one year with respect to its principal executive officer and eachcertain of its other three most highly paid executive officers other than the Chief Financial Officer. There is an exceptionofficers.
For taxable years beginning prior to the $1,000,000 limitation for performance-basedDecember 31, 2017 (prior to changes in U.S. tax law), compensation that meets certain requirements. Annual cash incentive compensation and equity awards are generally forms of performance-based compensation that meet those requirements and, as such, are fully deductible. Grants of stock options to our other named executive officersconstituted "qualified performance-based" under our 2008 Stock Plan and the grant of the Performance RSUs are intended to comply with Section 162(m) for treatment as performance-based compensation. Therefore,was excluded from the deductibility limit if, among other requirements, the compensation was payable only upon the attainment of pre-established, objective performance goals under a plan approved by a company's shareholders. Historically, we expecthave had the ability to be ablegrant compensation to deduct compensationSection 162(m) "covered
Table of our named executive officers related to compensation with respect to these grants.Contents
The incentive cash bonus payments to our Chief Executive Officeremployees" under both the 2011 Bonus Plan areand the 2008 Stock Incentive Plan that was designed to qualify under this exception to maintain the deductibility of that compensation when we have determined that performance-based compensation was appropriate for those executive officers. Effective for tax years beginning after December 31, 2017, U.S. tax law changes expanded the definition of covered employees under Section 162(m) to include, among others, our Chief Financial Officer, and eliminated the performance-based compensation exception. Therefore, for our 2019 tax year and thereafter, compensation payable to our covered employees in excess of $1 million will not be deductible even if it was intended to be designed to comply withconstitute qualified performance-based compensation unless it is eligible for transition relief under the newly modified Section 162(m) for treatment as performance-based compensation. Section 162(m) allows companies to deduct, for federal income tax purposes, certain performance-basedand any rules promulgated thereunder. However, there is no guarantee that any such compensation over $1,000,000. The material terms of the performance goals for the awards under the 2011 Bonus Plan mustwill be approved by the shareholders every five years in order fordeductible, and the Company may determine that certain compensation cannot qualify for such transition relief or that it does not wish to be
eligibletake or refrain from taking steps necessary to deductqualify for tax purposes the incentive awards paid under those plans. The Company’s shareholders originally approved the terms of the 2011 Bonus Plan at the 2011 annual general meeting and approved an amendment and restatement of the 2011 Bonus Plan at the 2014 annual general meeting.such relief.
The Compensation Committee has considered and will continue to consider tax deductibility in structuring compensation arrangements. However, the Compensation Committee retains discretion to establish executive compensation arrangements that it believes are consistent with the principles described earlier and in the best interests of our Company and its shareholders, even if those arrangements may not be fully deductible under Section 162(m).
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EXECUTIVE COMPENSATION
The following table sets forth the summary of compensation during fiscal years 20142016 through 20162018 for the Company’sCompany's Chief Executive Officer, Chief Financial Officer, and other executive officersofficer whose total compensation exceeded $100,000 and who werewas serving as an executive officer at the end of theduring fiscal year 20162018 (such persons referred to, collectively, as the “named"named executive officers”officers").
Summary Compensation Table
Summary Compensation Table
|
| | | | | | | Non-Equity | | |
| | | | | | | Incentive | | |
| | | | Stock | | Option | Plan | All Other | |
Name and Principal | | Salary | Bonus | Awards | | Awards | Compensation | Compensation | Total |
Position (1) | Year | ($) | ($) | ($)(2) | | ($)(3) | ($)(4) | ($)(5) | ($) |
| | | | | | | | | |
| | | | | | | | | |
Julien R. Mininberg | 2016 | 900,000 | 2,500 | 1,678,240 | (6) | - | 2,558,942 | 36,842 | 5,176,524 |
Chief Executive Officer | 2015 | 910,096 | 492,500 | 1,500,000 | | - | 2,387,400 | 393,264 | 5,683,260 |
| | | | | | | | | |
| | | | | | | | | |
Brian L. Grass | 2016 | 368,637 | 72,500 | 350,000 | (7) | - | 340,665 | 11,410 | 1,143,212 |
Chief Financial Officer | 2015 | 339,167 | 112,500 | 280,000 | | 187,725 | 273,293 | 11,418 | 1,204,103 |
| | | | | | | | | |
| | | | | | | | | |
Thomas J. Benson | 2016 | 600,000 | 2,500 | 500,000 | (8) | - | 639,736 | 12,922 | 1,755,158 |
Chief Operations Officer | 2015 | 591,667 | 62,500 | 500,000 | | 187,725 | 595,944 | 13,055 | 1,950,891 |
| 2014 | 606,731 | 771,250 | - | | 89,978 | - | 12,855 | 1,480,814 |
| | | | | | | | | |
| | | | | | | | | |
Vincent D. Carson | 2016 | 431,250 | 97,500 | 500,000 | (8) | - | 398,502 | 12,922 | 1,440,174 |
Chief Legal Officer and Secretary | 2015 | 362,500 | 137,500 | 438,000 | | 187,725 | 243,414 | 12,297 | 1,381,436 |
| 2014 | 297,500 | 451,250 | - | | 89,978 | - | 11,509 | 850,237 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Name and Principal Position
| |
| | Fiscal
Year
| |
| | Salary
($)
| |
| | Bonus
($)
| |
| | Stock
Awards
($) (1)
| |
| | Non-Equity
Incentive Plan
Compensation
($) (2)
| |
| | All Other
Compensation
($) (3)
| |
| | Total
($)
| |
|
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Julien R. Mininberg | | | | | 2018 | | | | | 975,000 | | | | | - | | | | | 3,200,000 | (4) | | | | 2,618,850 | | | | | 13,245 | | | | | 6,807,095 | | |
| | Chief Executive Officer | | | | | 2017 | | | | | 950,000 | | | | | - | | | | | 3,200,000 | | | | | 2,637,200 | | | | | 37,331 | | | | | 6,824,531 | | |
| | | | | | | 2016 | | | | | 900,000 | | | | | 2,500 | | | | | 1,678,240 | | | | | 2,558,942 | | | | | 36,842 | | | | | 5,176,524 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Brian L. Grass | | | | | 2018 | | | | | 457,500 | | | | | - | | | | | 700,000 | (5) | | | | 460,817 | | | | | 12,260 | | | | | 1,630,577 | | |
| | Chief Financial Officer | | | | | 2017 | | | | | 419,963 | | | | | - | | | | | 500,000 | | | | | 378,890 | | | | | 11,729 | | | | | 1,310,582 | | |
| | | | | | | 2016 | | | | | 368,637 | | | | | 72,500 | | | | | 350,000 | | | | | 340,665 | | | | | 11,410 | | | | | 1,143,212 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Vincent D. Carson (6) | | | | | 2018 | | | | | 464,625 | | | | | - | | | | | 500,000 | (7) | | | | 467,994 | | | | | 14,422 | | | | | 1,447,041 | | |
| | Chief Legal Officer and | | | | | 2017 | | | | | 460,125 | | | | | - | | | | | 500,000 | | | | | 415,125 | | | | | 14,524 | | | | | 1,389,774 | | |
| | Secretary | | | | | 2016 | | | | | 431,250 | | | | | 97,500 | | | | | 500,000 | | | | | 398,502 | | | | | 12,922 | | | | | 1,440,174 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
Effective March 1, 2014, the Board of Directors appointed Julien Mininberg to serve as the Chief Executive Officer. Effective May 1, 2014, the Board of Directors appointed (1) Brian L. Grass, formerly serving as the Company’s Vice President and Assistant Chief Financial Officer, to serve as the Chief Financial Officer; (2) Thomas J. Benson, formerly serving as the Company’s Chief Financial Officer, to serve as the Chief Operations Officer; and (3) Vincent D. Carson, formerly serving as the Company’s General Counsel and Senior Vice President, to serve as Chief Legal Officer and Secretary.
(2)
These amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Long-term incentive awards were granted in fiscal year 20162018 under the 2008 Stock Plan in the form of Performance RSUs and time vested RSUs to Messrs. Mininberg, Grass Benson and Carson and in the form of time-vested RSUs to Messrs. Grass, Benson and Carson. The reported value of the Performance RSUs is computed based on the probable outcome of the performance conditions, which is “target”"target". For each of the named executive officers, the ultimate payout for the Performance RSUs can range from zero shares to a maximum of 200 percent of target. Further information regarding the awards is included in the tables entitled “Grants"Grants of Plan-Based Awards in Fiscal Year 2016,” “Outstanding2018," "Outstanding Equity Awards at Fiscal Year-End 2016”2018" and “Equity"Equity Compensation Plan Information.”(3) These amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Further information regarding the awards is included in the tables entitled “Outstanding Equity Awards at Fiscal Year-End 2016” and “Equity Compensation Plan Information.” Assumptions used in the calculation of the grant date fair value of these options are
discussed in Note (15) to the Company’s audited consolidated financial statements for the fiscal year ended February 29, 2016, included in the Company’s Annual Report on Form 10-K for the year then ended, filed with the SEC on April 29, 2016.
(4)"
(2)The amounts in this column represent annual cash incentive bonuses under the 2011 Bonus Plan that were earned in fiscal year 2016.2018. These amounts were accrued in the Company’sCompany's financial statements in fiscal year 2016,2018, but were actually paid to Messrs. Mininberg, Grass Benson, and Carson after fiscal year end 2016,2018, when the Compensation Committee certified that the related performance goals had been achieved. For further information regarding these awards, see “Grants"Grants of Plan Based Awards in Fiscal Year 2016.”(5)2018."
(3)For fiscal year 2016,2018, the following compensation was paid to our named executive officers, which comprises “All"All Other Compensation”Compensation":All Other Compensation For Fiscal Year 2018
All Other Compensation for Fiscal Year 2016 |
| | | | |
Name | 401(k) Plan
($) | Group Life
Insurance
($) | Legal
Fees
($)(A) | Total
($) |
Julien R. Mininberg | 10,600 | 1,242 | 25,000 | 36,842 |
Brian L. Grass | 10,600 | 810 | - | 11,410 |
Thomas J. Benson | 10,600 | 2,322 | - | 12,922 |
Vincent D. Carson | 10,600 | 2,322 | - | 12,922 |
(A) Represents legal fees paid on Mr. Mininberg’s behalf in connection with the negotiation of the New Employment Agreement.
(6)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | Name
| |
| | 401(k) Plan
($)
| |
| | Group Life
Insurance
($)
| |
| | Other
Payments
($)
| |
| | Total
($)
| |
|
|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Julien R. Mininberg | | | | | 10,967 | | | | | 1,932 | | | | | 346 | | | | | 13,245 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Brian L. Grass | | | | | 11,000 | | | | | 1,260 | | | | | - | | | | | 12,260 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Vincent D. Carson | | | | | 10,810 | | | | | 3,612 | | | | | - | | | | | 14,422 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
- (4)
- Includes
19,5778,125 shares or $1,500,000 ofsubject to RSUs (or $800,000), which vest equally over a three-year period, and 24,378 shares subject to Performance RSUs (or $2,400,000), which represents the target award, calculated using a price per share of $76.62,$98.45, the closing market price of the Common Stock on February 27, 2015, the last trading day prior toMarch 1, 2017, the date of the
Table of Contents
grant. At the date of the grant, the maximum potential value of the Performance RSUs, assuming the achievement of the highest level of performance conditions, is 39,15448,756 shares or $3,000,000. Also includes 2,000 shares, or $178,240, of a discretionary restricted share award granted and vested on May 8, 2015.subject to Performance RSUs (or $4,800,000). This represents the aggregate grant date fair value of the award, calculated in accordance with FASB ASC Topic 718.
(7) Calculated
- (5)
- Includes 1,794 shares subject to RSUs (or $175,000), which vest over a three-year period with 50% vesting on the first day of each fiscal year during the second and third years after the date of grant, and 5,384 shares subject to Performance RSUs (or $525,000), which represents the target award, calculated using a price per share of
$76.62,$98.45 and $95.92, the closing market prices of the Common Stock on March 1, 2017 and May 10, 2017, respectively, the dates of the grants. At the dates of the grants, the maximum potential value of the Performance RSUs, assuming the achievement of the highest level of performance conditions, is 10,768 shares subject to Performance RSUs (or $1,050,000). This represents the aggregate grant date fair value of the award, calculated in accordance with FASB ASC Topic 718.
- (6)
- Mr. Carson has announced that he will retire from his positions as Chief Legal Officer and Secretary effective as of the Annual Meeting.
- (7)
- Includes 1,269 shares subject to RSUs (or $125,000), which vest over a three-year period with 50% vesting on the first day of each fiscal year during the second and third years after the date of grant, and 3,809 shares subject to Performance RSUs (or $375,000), which represents the target award, calculated using a price per share of $98.45, the closing market price of the Common Stock on
February 27, 2015, the last trading day prior toMarch 1, 2017, the date of grant. Includes 1,142 shares, or $87,500 of RSUs, which vest over a three-year period, and 3,426 shares, or $262,500 of Performance RSUs, which represents the target award.grant. At the date of the grant, the maximum potential value of the Performance RSUs, assuming the achievement of the highest level of performance conditions, is 6,8527,618 shares or $525,000.(8) Calculated using a price per share of $76.62, the closing market price of the Common Stock on February 27, 2015, the last trading day priorsubject to the date of grant. Includes 1,631 shares, or $125,000 of RSUs, which vest over a three-year period, and 4,894 shares, or $375,000 of Performance RSUs which(or $750,000). This represents the target award. At theaggregate grant date of the grant, the maximum potentialfair value of the Performance RSUs, assuming the achievementaward, calculated in accordance with FASB ASC Topic 718.
Table of the highest level of performance conditions, is 9,788 shares, or $750,000.Contents
For fiscal year 2016,2018, the following plan-based compensation was awarded to the named executive officers:
Grants of Plan-Based Awards in Fiscal Year 20162018
| | | | | | | | All Other | All Other | | |
| | Estimated | Estimated | Stock | Option | | |
| | Future Payouts Under | Future Payouts Under | Awards; | Awards; | Exercise | Grant Date |
| | Non-Equity Incentive | Equity Incentive | Number of | Number of | or Base | Fair Value |
| | Plan Awards | Plan Awards (1) | Shares of | Securities | Price of | of Stock |
| | | | Stock | Underlying | Option | and Option |
| | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Options | Awards | Awards |
Name | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($/Sh) | ($) |
Julien R. Mininberg | | | | | | | | | | | |
Annual Incentive Award | 3/01/15 (2) | 900,000 | 1,800,000 | 2,970,000 | | | | | | | |
Performance RSUs | 3/01/15 | | | | 9,789 | 19,577 | 39,154 | | | | 1,500,000 (5) |
Restricted Share Award | 5/08/15 | | | | | | | 2,000 (3) | | | 178,240 (3) |
Brian L. Grass | | | | | | | | | | | |
Annual Incentive Award | 3/01/15 (2) | 119,807 | 239,614 | 479,228 | | | | | | | |
Performance RSUs | 3/01/15 | | | | 1,713 | 3,426 | 6,852 | | | | 262,500 (5) |
Time-Vested RSUs | 3/01/15 | | | | | | | 1,142 (4) | | | 87,500 (5) |
Thomas J. Benson | | | | | | | | | | | |
Annual Incentive Award | 3/01/15 (2) | 225,000 | 450,000 | 900,000 | | | | | | | |
Performance RSUs | 3/01/15 | | | | 2,447 | 4,894 | 9,788 | | | | 375,000 (5) |
Time-Vested RSUs | 3/01/15 | | | | | | | 1,631 (4) | | | 125,000 (5) |
Vincent D. Carson | | | | | | | | | | | |
Annual Incentive Award | 3/01/15 (2) | 140,157 | 280,313 | 560,626 | | | | | | | |
Performance RSUs | 3/01/15 | | | | 2,447 | 4,894 | 9,788 | | | | 375,000 (5) |
Time-Vested RSUs | 3/01/15 | | | | | | | 1,631 (4) | | | 125,000 (5) |
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| | | | | | | | | | | | Estimated
Future
Payouts Under
Non-Equity Incentive
Plan Awards | | | | | Estimated
Future
Payouts Under
Equity Incentive
Plan Awards(1) | | | | | All Other
Stock
Awards;
Number of
Shares of
Stock or | | | | | Grant Date
Fair Value of
Stock and
Option | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Name | | | | | Grant
Date | | | | | Threshold
($) | | | | | Target
($) | | | | | Maximum
($) | | | | | Threshold
(#) | | | | | Target
(#) | | | | | Maximum
(#) | | | | | Units
(#) | | | | | Awards
($) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Julien R. Mininberg | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Annual Incentive Award | | | | | 03/01/17 | (2) | | | | 975,000 | | | | | 1,950,000 | | | | | 3,050,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Performance RSUs | | | | | 03/01/17 | | | | | | | | | | | | | | | | | | | | 12,189 | | | | | 24,378 | | | | | 48,756 | | | | | | | | | | 2,400,000 | (5) | |
| | Time-Vested RSUs | | | | | 03/01/17 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,125 | (3) | | | | 800,000 | (5) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Brian L. Grass | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Annual Incentive Award | | | | | 03/01/17 | (2) | | | | 171,563 | | | | | 343,125 | | | | | 686,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Performance RSUs | | | | | 03/01/17 | | | | | | | | | | | | | | | | | | | | 1,905 | | | | | 3,809 | | | | | 7,618 | | | | | | | | | | 375,000 | (5) | |
| | | | | | | 05/10/17 | | | | | | | | | | | | | | | | | | | | 788 | | | | | 1,575 | | | | | 3,150 | | | | | | | | | | 150,000 | (5) | |
| | Time-Vested RSUs | | | | | 03/01/17 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,269 | (4) | | | | 125,000 | (5) | |
| | | | | | | 05/10/17 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 525 | (4) | | | | 50,000 | (5) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Vincent D. Carson | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Annual Incentive Award | | | | | 03/01/17 | (2) | | | | 174,234 | | | | | 348,469 | | | | | 696,938 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Performance RSUs | | | | | 03/01/17 | | | | | | | | | | | | | | | | | | | | 1,905 | | | | | 3,809 | | | | | 7,618 | | | | | | | | | | 375,000 | (5) | |
| | Time-Vested RSUs | | | | | 03/01/17 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,269 | (4) | | | | 125,000 | (5) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
- The number of shares listed represents long-term equity incentive awards in the form of Performance RSUs. The performance criteria for these awards is based on the achievement of cumulative adjusted earnings per share,
growth, adjusted cash flow productivity and relative total shareholder return targets over a three-year performance period, as described in further detail in “Compensation"Compensation Discussion and Analysis.”"
- (2)
- Under the 2011 Bonus Plan, the performance metrics are based on the achievement of adjusted income and net sales targets. For further information regarding these
amounts,performance goals, see “Compensation"Compensation Discussion and Analysis.” Actual payout" The actual payouts for fiscal year 2016 was 142.22018 were 134.3 percent of the target amount for each of the named executive officers.
- (3)
- The amounts shown reflect the number of time-vested RSUs granted to our CEO in fiscal year 2018, which vest equally over a
discretionary restricted share award to Mr. Mininberg on May 8, 2015. The grantthree-year period from the date fair value was computed in accordance with FASB ASC Topic 718.of grant.
- (4)
- The amounts shown reflect the number of time-vested RSUs granted to each applicable named executive officer in fiscal year
2016,2018, which vest 50 percentover a three-year period with 50% vesting on the first day of each offiscal year during the second and third anniversariesyears after the date of the grant date.grant.
- (5)
- Represents the aggregate grant date fair value of the subject awards, based on the expected achievement of performance targets, where applicable. These were computed in accordance with FASB ASC Topic 718.
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The following table sets forth certain information with respect to outstanding equity awards at February 29, 201628, 2018 with respect to our named executive officers.
Outstanding Equity Awards at Fiscal Year-End 20162018
| Option Awards (1) | Share Awards |
| | | | | | | | Equity Incentive |
| | | | | | | | Plan Awards: |
| Number of | Number of | | | Number of | Market Value | Equity Incentive | Market or Payout |
| Securities | Securities | | | Shares or | of Shares or | Plan Awards: | Value of |
| Underlying | Underlying | | | Units of | Units of | Number of | Unearned Shares, |
| Unexercised | Unexercised | Option | | Stock That | Stock That | Units or Other | Units or Other |
| Options | Options | Exercise | Option | Have Not | Have Not | Rights That Have | Rights That Have |
| (#) | (#) | Price | Expiration | Vested | Vested | Not Vested | Not Vested |
Name | Exercisable | Unexerciseable | ($) | Date (2) | (#) | ($) | (#) | ($) |
Julien R. Mininberg | - | - | - | - | - | - | 26,068 (4) | 2,485,844 (7) |
| - | - | - | - | - | - | 19,577 (6) | 1,866,863 (7) |
Brian L. Grass | 1,200 | - | 22.46 | 8/19/18 | - | - | - | - |
| 1,200 | - | 18.80 | 5/15/19 | - | - | - | - |
| 2,250 | 1,500 | 32.90 | 5/17/21 | - | - | - | - |
| 2,250 | 2,750 | 34.72 | 5/1/22 | - | - | - | - |
| 1,875 | 5,625 | 36.03 | 5/6/23 | - | - | - | - |
| 1,500 | 6,000 | 64.19 | 5/2/24 | - | - | - | - |
| - | - | - | - | - | - | 1,217 (3) | 116,053 (7) |
| - | - | - | - | - | - | 3,649 (4) | 347,969 (7) |
| - | - | - | - | - | - | 1,142 (5) | 108,901 (7) |
| - | - | - | - | - | - | 3,426 (6) | 326,703 (7) |
Thomas J. Benson | 5,000 | - | 18.80 | 5/15/19 | - | - | - | - |
| 5,250 | 2,250 | 32.90 | 5/17/21 | - | - | - | - |
| 3,375 | 4,125 | 34.72 | 5/1/22 | - | - | - | - |
| 1,875 | 5,625 | 36.03 | 5/6/23 | - | - | - | - |
| 1,500 | 6,000 | 64.19 | 5/2/24 | - | - | - | - |
| - | - | - | - | - | - | 2,172 (3) | 207,122 (7) |
| - | - | - | - | - | - | 6,518 (4) | 621,556 (7) |
| - | - | - | - | - | - | 1,631 (5) | 155,532 (7) |
| - | - | - | - | - | - | 4,894 (6) | 466,692 (7) |
Vincent D. Carson | 5,000 | - | 18.80 | 5/15/19 | - | - | - | - |
| 5,250 | 2,250 | 32.90 | 5/17/21 | - | - | - | - |
| 3,375 | 4,125 | 34.72 | 5/1/22 | - | - | - | - |
| 1,875 | 5,625 | 36.03 | 5/6/23 | - | - | - | - |
| 1,500 | 6,000 | 64.19 | 5/2/24 | - | - | - | - |
| - | - | - | - | - | - | 1,903 (3) | 181,470 (7) |
| - | - | - | - | - | - | 5,709 (4) | 544,410 (7) |
| - | - | - | - | - | - | 1,631 (5) | 155,532 (7) |
| - | - | - | - | - | - | 4,894 (6) | 466,692 (7) |
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| | | | | | | Option Awards(1) | | | | | Share Awards | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Name | | | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexerciseable | | | | | Option
Exercise
Price
($) | | | | | Option
Expiration
Date(2) | | | | | Equity Incentive
Plan Awards:
Number of 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
($)(9) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Julien R. Mininberg | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 36,707 | (3) | | | | 3,305,465 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 25,020 | (4) | | | | 2,253,051 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 5,560 | (10) | | | | 500,678 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 24,378 | (6) | | | | 2,195,239 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 8,125 | (11) | | | | 731,656 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Brian L. Grass | | | | | 1,200 | | | | | - | | | | | 22.46 | | | | | 8/19/18 | | | | | - | | | | | - | | |
| | | | | | | 1,200 | | | | | - | | | | | 18.80 | | | | | 5/15/19 | | | | | - | | | | | - | | |
| | | | | | | 3,750 | | | | | - | | | | | 32.90 | | | | | 5/17/21 | | | | | - | | | | | - | | |
| | | | | | | 5,000 | | | | | - | | | | | 34.72 | | | | | 5/1/22 | | | | | - | | | | | - | | |
| | | | | | | 5,250 | | | | | 2,250 | | | | | 36.03 | | | | | 5/6/23 | | | | | - | | | | | - | | |
| | | | | | | 4,500 | | | | | 3,000 | | | | | 64.19 | | | | | 5/2/24 | | | | | - | | | | | - | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 6,424 | (3) | | | | 578,481 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 571 | (5) | | | | 51,419 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 3,909 | (4) | | | | 352,005 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 1,303 | (7) | | | | 117,335 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 5,384 | (6) | | | | 484,829 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 1,794 | (8) | | | | 161,550 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Vincent D. Carson | | | | | 5,000 | | | | | - | | | | | 18.80 | | | | | 5/15/19 | | | | | - | | | | | - | | |
| | | | | | | 7,500 | | | | | - | | | | | 32.90 | | | | | 5/17/21 | | | | | - | | | | | - | | |
| | | | | | | 7,500 | | | | | - | | | | | 34.72 | | | | | 5/1/22 | | | | | - | | | | | - | | |
| | | | | | | 5,250 | | | | | 2,250 | | | | | 36.03 | | | | | 5/6/23 | | | | | - | | | | | - | | |
| | | | | | | 4,500 | | | | | 3,000 | | | | | 64.19 | | | | | 5/2/24 | | | | | - | | | | | - | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 9,176 | (3) | | | | 826,299 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 815 | (5) | | | | 73,391 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 3,909 | (4) | | | | 352,005 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 1,303 | (7) | | | | 117,335 | | |
| | | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 3,809 | (6) | | | | 343,000 | | |
| | | | | | | - | | | | | - | | | | | | | | | | | | | | | 1,269 | (8) | | | | 114,273 | | |
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- (1)
- All options granted had five annual vesting periods commencing on the first anniversary of each grant date. Options granted through May 6, 2013 vested at graduated rates per year of 10, 15, 20, 25, and 30 percent. Options granted on or after May 2, 2014 vested equally at a rate of 20 percent per year.
- (2)
- All options listed in this table have an expiration date of ten years from the date of grant.
- (3)
Represents time-vested RSUs granted to Messrs. Grass, Benson and Carson, of which fifty percent (50%) vested on March 1, 2016 and fifty percent (50%) will vest on March 1, 2017.(4)
- These shares represent Performance RSUs granted under the 2008 Stock Plan, based on
“target.”187.5 percent performance achievement. The Performance RSUs willvest if the performance conditions under the awards are achieved based on a three-year performance period ended February 28, 2018. Payouts can range from zero shares to a maximum of 200 percent of target. In May 2018, the Compensation Committee certified the level of attainment of established performance goals and the Performance RSUs vested at 187.5 percent of target.
- (4)
- These shares represent Performance RSUs granted under the 2008 Stock Plan, based on "target." The Performance RSUs vest if the performance conditions under the awards are achieved based on a three-year performance period ending February 28,
2017.2019. Payouts can range from zero shares to a maximum of 200 percent of target. The number of shares reflected assumes the target level of performance achievement, which would result in the Performance RSUs vesting at 100 percent of target.
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- (5)
- Represents time-vested RSUs granted to Messrs. Grass
Benson and Carson, which will vest fifty percent (50%)vested over a three-year period from date of grant with 50% vesting on February 28,each of March 1, 2017 and fifty percent (50%) on February 28,March 1, 2018.
- (6)
- These shares represent Performance RSUs granted under the 2008 Stock Plan, based on
“target.”"target." The Performance RSUs will vest if the performance conditions under the awards are achieved based on a three-year performance period ending February 28, 2018.2020. Payouts can range from zero shares to a maximum of 200 percent of target. The number of shares reflected assumes the target level of performance achievement, which would result in the Performance RSUs vesting at 100 percent of target.
- (7)
- Represents time-vested RSUs granted to Messrs. Grass and Carson, which vest over a three-year period from date of grant with 50% vesting on each of March 1, 2018 and March 1, 2019.
- (8)
- Represents time-vested RSUs granted to Messrs. Grass and Carson, which vest over a three-year period from date of grant with 50% vesting on each of March 1, 2019 and March 1, 2020.
- (9)
- Calculated using a price per share of
$95.36,$90.05, the closing market price of the Company’s common stockCommon Stock as reported by NASDAQ Stock Market on February 29, 2016,28, 2018, the end of the Company’sCompany's last completed fiscal year.
- (10)
- Represents time-vested RSUs granted to Mr. Mininberg, which vest over a three-year period from date of grant in three equal installments on March 1, 2017, 2018 and 2019.
- (11)
- Represents time-vested RSUs granted to Mr. Mininberg, which vest over a three-year period from date of grant in three equal installments on March 1, 2018, 2019 and 2020.
The following table provides information on all exercises of stock options and vesting of stock awards for our named executive officers during fiscal year 2016:2018:
Option Exercises and Stock Vested forDuring Fiscal Year 20162018
| Option Awards | Stock Awards |
Name | Number of Shares
Acquired on Exercise
(#) | Value Realized
on Exercise
($) | Number of Shares
Acquired on Vesting
(#) | Value Realized
on Vesting
($) |
Julien R. Mininberg (1) | - | - | 2,000 | 178,240 |
Thomas J. Benson | 12,500 | 792,650 | - | - |
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| | | | | Option Awards | | | | | Stock Awards | | |
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| | | Name | | | | | Number of Shares
Acquired on Exercise
(#) | | | | | Value Realized
on Exercise
($) | | | | | Number of Shares
Acquired on Vesting
(#) | | | | | Value Realized
on Vesting
($) | | |
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| | | Julien R. Mininberg (1) | | | | | | | | | | | | | | | 54,916 | | | | | 5,255,286 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Brian L. Grass (1) | | | | | - | | | | | - | | | | | 8,477 | | | | | 813,396 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Vincent D. Carson (1) | | | | | - | | | | | - | | | | | 13,185 | | | | | 1,264,951 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
Fiscal year 2016 restricted share award granted - Represents the vesting of time-vested RSUs on March 1, 2017 and
vestedPerformance RSUs on May 8, 2015 under the 2008 Stock Plan.15, 2017.
EMPLOYMENT CONTRACT FOR OUR CHIEF EXECUTIVE OFFICER
Mr. Mininberg and the Company entered into the Employment Agreement as of January 14, 2014,7, 2016, which became effective March 1, 2014.2016. Pursuant to the Employment Agreement, Mr. Mininberg wasis to serve as the Company’s Chief Executive OfficerCompany's CEO for a fixed term through March 1, 2016,February 28, 2019, subject to earlier termination by either party. The Employment Agreement did not automatically renew at the end of the term. The Company entered into the New Employment Agreement with Mr. Mininberg on January 7, 2016, which took effect on March 1, 2016, and extended the term of his employment through February 28, 2019. For additional information regarding Mr. Mininberg’s NewMininberg's Employment Agreement, and the changes to his compensation for fiscal year 2017, see “Compensation"Compensation Discussion and Analysis – Fiscal Year 2017 Compensation Changes.”Amended and Restated Employment Agreement of our CEO."
Annual Incentive BonusBonus.. With respect to fiscal year 2016,2018, Mr. Mininberg was eligible for an annual performance bonus (the “Fiscal 2016 APB”"Fiscal 2018 APB") payable in cash under 2011 Bonus Plan targeted at $1,800,000,$1,950,000, with the opportunity to earn up to one hundred sixty-five percent (165%) of the target amount$3,050,000 and a threshold achievement payout of fifty percent (50%) of the target amount. The Fiscal 20162018 APB was based on the achievement of adjusted income (based on net income without Significant Items)certain items defined in the Plan) and net sales targets.targets from continuing operations. Eighty percent (80%) of the Fiscal 20162018 APB was based on the achievement of
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the adjusted income performance measure and twenty percent (20%) of the Fiscal 20162018 APB was based on the achievement of the net sales performance measure. If the adjusted income threshold had not been achieved, no Fiscal 20162018 APB would have been earned or payable. Mr. Mininberg would not have been entitled to a bonus with respect to any performance measure if the threshold amount associated with such performance measure had not been achieved.
Long-Term Incentive CompensationCompensation.. With respect to fiscal year 2016,2018, Mr. Mininberg is eligible to receive a long-term incentive award for a three-year performance period ending February 28, 2020 (the "Fiscal 2018 (the “Fiscal 2016 LTPB”LTPB"), pursuant to the 2008 Stock Plan. Pursuant to the Employment Agreement, this award is in the form of a grant of time-vested RSUs and Performance RSUs. The Fiscal 20162018 LTPB is targeted at $1,500,000,$3,200,000, with the opportunity to earn up to $3,000,000$5,600,000 and a threshold achievement payout of $750,000.$2,000,000. The Fiscal 20162018 LTPB is based on the achievement of cumulative adjusted earnings per share, growth (based on earnings per share without Significant Items), adjusted cash flow productivity and relative total shareholder return.return targets. Fifty percent (50%) of the Fiscal 20162018 LTPB is based on the achievement of the cumulative adjusted earnings per share growth performance measure, twenty-five percent (25%) of the Fiscal 20162018 LTPB is based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the Fiscal 20162018 LTPB is based on the achievement of the relative total shareholder return performance measure. Mr. Mininberg is not entitled to a bonus with respect to any performance measure if the threshold amount associated with such performance measure is not achieved. In fiscal year 2016, Mr. Mininberg also was entitled to receive a remaining long-term incentive plan payment of $756,178 earned prior to Mr. Mininberg’s promotion to Chief Executive Officer, which was subject to a service obligation.
Other Benefits. For information regarding other limited perquisites and other benefits provided to Mr. Mininberg pursuant to the Employment Agreement, see “Compensation"Compensation Discussion and Analysis —– Our Fiscal Year 20162018 Compensation Program for Our Chief Executive Officer —CEO – Limited Perquisites and Other Personal Benefits Provided to Our Chief Executive Officer.”CEO."
Employment TerminationTermination.. The Employment Agreement provided for certain payments and benefits upon Mr. Mininberg’sMininberg's termination of employment. See “Compensation"Compensation Discussion and Analysis —– Our Fiscal Year 20162018 Compensation Program for Our Chief Executive Officer —CEO – Potential Post-Termination Benefits for our Chief Executive Officer.”CEO."
The following table summarizes certain equity compensation plan information as of February 29, 2016:28, 2018:
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| | | Plan Category | | | | Number of securities to
be issued upon exercise of
outstanding options,
warrants, and rights | | | | Weighted-average
exercise price of
outstanding options,
warrants, and rights | | | | Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in the first
column) (1) | | |
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| | | Equity compensation plans approved by security holders | | | | 610,508 | | | | $58.35(2) | | | | 1,607,461 | | |
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- (1)
Includes 98,65250,444 shares authorized and available for issuance in connection with the 2008 Employee Stock Purchase Plan (as defined below), 1,748,6381,466,500 shares authorized and available for issuance under the 2008 Stock Plan and 101,46090,517 shares authorized and available for issuance under the 2008 Director Plan.
(2)The weighted average exercise price does not take into account the shares issuable upon vesting of time-based RSUs and Performance RSUs.
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As of May 10, 2016,15, 2018, (1) there were options to purchase 579,365254,285 shares of Common Stock outstanding under the equity compensation plans of the Company; (2) the weighted average exercise price for such outstanding options was $55.27;$60.16; (3) the weighted average remaining term for such outstanding options was 5.714.1 years; and (4) there were 323,00149,725 granted but unvested full-value awards under the equity compensation plans of the Company; and (5) there were 1,248,080 shares available for issuance under the equity compensation plans of the Company.
The Company's existing equity compensation plans include the 2008 Director Plan, the 2008 Stock Plan and the 2008 ESPP (as defined below). Those plans will expire pursuant to their terms on August 19, 2018 and no awards will be granted under those plans after that date.
The Company’sCompany's shareholders approved the 2008 Stock Plan (as amended and restated) at the 2015 annual general meeting of shareholders. The 2008 Stock Plan is administered by the Compensation Committee of the Board of Directors. The 2008 Stock Plan permits the granting of stock options, including ISO’sISO's and NSO’s,NSO's, unrestricted shares of Common Stock, stock appreciation rights (“SAR’s”("SAR's"), restricted stock, restricted stock units, and other stock-based awards. Currently, the maximum number of shares reserved for issuance under the 2008 Stock Plan is 3,750,000 shares and the maximum number of shares with respect to which awards of any and all types may be granted during a calendar year to any participant is limited, in the aggregate, to 1,000,000 shares, subject to adjustment for certain events as described in the plan. The plan will expire by its terms on August 19, 2018. The 2008 Stock Plan provides that if the Chief Executive Officer of the Company is a member of the Board of Directors, the Board of Directors may, upon recommendation of the Compensation Committee, authorize him or her to grant awards of up to an aggregate of 350,000 shares of Common Stock to employees other than the Chief Executive Officer (subject to adjustment in certain circumstances), provided that any such grants will be subject to the terms and conditions of the Board authorization and that the Chief Executive Officer must notify the Compensation Committee of any such grants. Currently, employeesEmployees of the Company, its subsidiaries and affiliates and consultants to the Company and its subsidiaries, are eligible to participate in the 2008 Stock Plan. The plan will expire by its terms on August 19, 2018 and no awards will be granted under that plan after that date. The 2018 Stock Plan is intended to replace the 2008 Director Plan. For additional information regarding these awards and the 2018 Stock Plan, see "Proposal 3 – Approval of the Helen of Troy Limited 2018 Stock Incentive Plan."
The 2008 Stock Plan provides that the option price pursuant to which Common Stock may be purchased will be determined by the Compensation Committee, but will not be less than the fair market value of the Common Stock on the date the option is granted. No option granted under the 2008 Stock Plan will be exercisable more than ten years after the date of grant. If a participant’sparticipant's service terminates by reason of death or disability (as defined in the 2008 Stock Plan), to the extent the participant was entitled to exercise the option on the date of death or disability, the option may be exercised within one year after the date of death or disability. If a participant’sparticipant's service with the Company terminates for any reason (other than death or disability), each option then held by the participant may be exercised within ninety days after the date of such termination, but only to the extent such option was exercisable at the time of termination of service. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested options held by a participant if the participant is terminated without “cause”"cause" (as determined by the Compensation Committee) by the Company.
The 2008 Stock Plan also provides for certain terms and conditions pursuant to which restricted stock and restricted stock units may be granted under the 2008
Stock Plan. The vesting of a restricted stock award or restricted stock unit granted under the 2008 Stock Plan may be conditioned upon the completion of a specified period of employment with the Company or a subsidiary, upon attainment of specified performance goals, and/or upon such other criteria as the Compensation Committee may determine in its sole discretion. If a participant’sparticipant's service is terminated for any reason, the participant will only be entitled to the restricted stock or restricted stock units vested at the time of such termination of service. The participant’sparticipant's unvested restricted stock and restricted stock units will be forfeited. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested restricted stock or restricted stock units held by a participant if the participant is terminated
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without “cause”"cause" (as determined by the Compensation Committee) by the Company, provided that with respect to Awards granted to Covered Employees that are intended to qualify as “performance-based compensation”"performance-based compensation" under Section 162(m) of the Code and that are eligible for transition relief from changes to the tax laws in November 2017, such acceleration must be done in a manner that complies with Section 162(m) of the Code.
The terms and conditions of other stock-based awards will be determined by the Compensation Committee. Other stock-based awards granted prior to the changes to the tax laws in November 2017 or future awards that are eligible for transition relief from the changes to the tax laws in November 2017 may be granted in a manner that will enable the Company to deduct any amount paid by the Company underin compliance with the "performance-based compensation" exemption from Section 162(m) of the Code. Performance-based awards are rights to receive amounts denominated in cash or shares of Common Stock, based on the Company’sCompany's or a participant’sparticipant's performance between the date of grant and a pre-established future date.
Under the 2008 Stock Plan, the acceleration of equity awards to participants is based on a “double trigger”"double trigger", which means that the acceleration of those awards would generally occur if, during the employment period, the participant’sparticipant's employment is involuntarily terminated by the Company other than for cause or by the participant for good reason, in each case, within a specified period following a Change of Control (as defined under the plan) or if the equity award is not assumed or substituted in connection with the Change of Control. In the event of a Change of Control, with respect to awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, if within one year after the effective date of the Change of Control, a participant’sparticipant's employment is involuntarily terminated other than for cause or by the participant for good reason, then (1) the participant will have the right to exercise or settle from and after the date of termination any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant’sparticipant's other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant’sparticipant's outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the date of termination based upon achievement of relevant performance goals or based on performance at the “target”"target" level, either in full or pro rata based upon the length of time within the performance period that has elapsed.
With respect to awards not assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, upon the occurrence of the Change of Control, (1) the participant will have the right to exercise or settle from and after the date of the Change of Control any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant’sparticipant's other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant’sparticipant's outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the effective date of the Change of Control based upon achievement of relevant performance goals or based on performance at the “target”"target" level, either in full or pro rata based upon the length of time within the performance period that has elapsed.
Any awards granted prior to August 19, 2015 will remain subject to the provisions of the Prior 2008 Stock Plan. Therefore, for those previously granted awards, if a Change of Control occurs, (1) the participant will have the right to exercise or settle from and after the date of the Change of Control any option, SAR or restricted stock unit held by such participant in whole or in part, notwithstanding that such option, SAR or restricted stock unit may not be fully exercisable or vested, and (2) any and all restrictions on any participant’s other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested.
Employee Stock Purchase Plan
At the 2008 annual general meeting, the shareholders approved the Helen of Troy Limited 2008 Employee Stock Purchase Plan (the “2008 ESPP”"2008 ESPP") and reserved 350,000 shares of Common Stock
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for issuance under the plan. It is the intention of the Company that the 2008 ESPP qualify as an “employee"employee stock purchase plan”plan" under Section 423 of the Code.
The purpose of the 2008 ESPP is to provide employees of the Company or its subsidiaries designated by the Board of Directors or the Committee (defined below) (“("Designated Subsidiaries”Subsidiaries") as eligible to participate in the 2008 ESPP an opportunity to purchase shares of Common Stock and thereby have an additional incentive to contribute to the prosperity of the Company. The aggregate number of shares of Common Stock that may be sold pursuant to all offerings of the Company’sCompany's Common Stock under the 2008 ESPP will not exceed 350,000 shares, as adjusted for any recapitalization or reorganization of the Company as set forth in the 2008 ESPP. The 2008 ESPP provides that eligible full-time employees of the Company or its Designated Subsidiaries may purchase shares of Common Stock with payroll deductions accumulated on behalf of such employees. Employees may authorize payroll deductions of up to 15 percent of their compensation, subject to certain limitations under section 423(b) of the Code, which is accumulated over an option period and then used to purchase Common Stock. Option periods end in February and August of each fiscal year. The purchase price is 85 percent of the closing price of the Common Stock on NASDAQ on either the first day or last day of each option period, whichever is less. Employees may suspend or discontinue their participation in the plan at any time.
Potential Payments Upon Termination Or Change In Control
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Chief Executive Officer
The information below describes certain compensation that would be paid to Mr. Mininberg under the terms of the Employment Agreement, in the event of a termination of his employment with the Company and/or change in control of the Company. The amounts shown in the table below assume that such a termination of employment and/or change in control occurred on February 29, 2016 and thus28, 2018. The below information includes amounts earned through such date and are estimates of the amounts that would be paid out to Mr. Mininberg upon his termination and/or a change in control (based upon his compensation and service levels as of such date). The actual amounts to be paid out can only be determined at the time of a change in control and/or termination of employment with the Company. In addition to the amounts in the table below, Mr. Mininberg would have been entitled to receive earned and unpaid annual incentive compensation of $3,315,120$2,618,850 as of February 29, 2016. This amount represents the annual incentive compensation of $2,558,942 earned for fiscal year 2016 and the remaining long-term incentive plan payment of $756,178 earned prior to Mr. Mininberg’s promotion to Chief Executive Officer,28, 2018, which was subject to a service obligation, each of which were paid to Mr. Mininberg in the first quarter ofafter fiscal year 2017. No additional amounts of annual incentive compensation would have been payableend 2018. Any outstanding equity awards issued pursuant to Mr. Mininberg if the Company experienced2008 Stock Plan that are not assumed in connection with a change of control on February 29, 2016.will vest immediately in accordance with the terms of the 2008 Stock Plan. Mr. Mininberg's equity awards are otherwise subject to a double trigger and would not vest unless within one year after a change of control, his employment was involuntarily terminated by the Company other than for cause or by Mr. Mininberg for good reason. For further information regarding the terms of the Employment Agreement and a description of Mr. Mininberg’sMininberg's potential payments upon termination and/or a change of control, see “Executive"Executive Compensation — Employment Contract for our Chief Executive Officer”CEO" and “Compensation"Compensation Discussion and Analysis — Our Fiscal Year 20162018 Compensation Program for Our Chief Executive OfficerCEO — Potential Post-Termination Benefits for our Chief Executive Officer.”CEO."
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In addition to any portion of unpaid base salary and annual incentive earned but not yet paid to him as of the date of termination, if Mr.Mininberg’sMr. Mininberg's employment had been terminated as of February 29, 2016,28, 2018, Mr. Mininberg would be entitled to receive the following:
Chief Executive Officer – Julien R. Mininberg
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| | Triggering Event | | |
| Compensation Component | | |
| How Paid | | |
| Payout | | |
| | | | | | | | | | | | | | | | | |
| | Death or Disability (1) | | | | · •
Death or disability benefits(2) | | | Various
| Third party
payment | | | | $750,000 | | |
| | | | | | | | | | | | | | | | | |
| | Disability (1) | | | | • Disability benefits(2) | | | | Third party
payment | | | | $4,057,200 | | |
| | | | | | | | | | | | | | | | | |
| | Termination for Good Reason or | | | | · • Severance
Cash payment (3)of 2 times base salary | | | | Over 24 months | | | | $1,950,000 | | |
| | without Cause (1)(3)(6) | | | | • Pro rata portion of any outstanding Performance
RSUs based on actual performance(4) | | | | Over time | | | | $5,539,253 | | |
| | | | | | • Pro rata portion of any time-vesting RSUs | Over time
| | | $4,000,000
Within 60 days | | | | $494,224 | | |
| | | | | | • Health benefits(5) | | | | Over time | | | |
$23,442 | | |
| | | | | | | | | | | | | | | | | |
| | | | | | Total | | | | | | | | $8,006,919 | | |
without Cause (1) (5) (6)
| | | | | | | | | | | | | | | | |
| | Change of Control (1)(6)(7) | | | | · • Health benefits (4)
Cash payment of 2 times base salary and target
annual incentive | | | | Within 75 days | | | | $3,900,000 | | |
| | | | | | • Accelerated vesting of outstanding Performance
RSUs(4) | | | | Over time | | | | $7,753,755 | | |
| | | | | | • Accelerated vesting of time-vesting RSUs | Over time
| | | $38,600
Within 60 days | | | | $1,232,334 | | |
| | | | | | • Health benefits(5) | | | | Over time | | | |
$35,163 | | |
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| | | | | | Total | | | | | | | | $12,921,252 | | |
| | | | Total
| | | | | | $4,038,600
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Change of Control (6)
| | | · None (6)
| | | Not Applicable
| | | $0
| |
- (1)
The terms “disability,” “good reason”"disability," "good reason" and “cause”"cause" have the same meanings as defined in the Employment Agreement.
(2)These represent third party payments from insurers. In the event of death, this would include the payment under a life insurance policy in the amount of $750,000. In the event of disability, the amount of the payment(s) would depend upon the circumstances and nature of the disability, with a maximum payment of $25,000 per month until age 67.
(3)Under the terms of the Employment Agreement, Mr. Mininberg would receive a severance paymentminimum of $4,000,000 in severance payments. If Mr. Mininberg's employment had been terminated as of February 28, 2018, the aggregate amount or value of severance payments payable to him would be greater than $4,000,000, as shown in 18 equal installments commencingthe table above. The value of the pro rata portion of outstanding Performance RSUs based upon the actual performance of the Company and the pro rata portion of the time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the first payroll date that is at least 60 but not more than 75 days after the date of terminationthe event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2018 ($90.05).
(4)A pro rata portion of any outstanding Performance RSUs based on the actual performance of the Company at the end of the applicable performance periods would be payable at the time that such payment would be made during the course of Mr. Mininberg's regular employment with the Company. The amount disclosed in the table for Performance RSUs is based on 187.5 percent actual performance achievement for the performance period ended February 28, 2018 and on a monthly basis thereafter.(4)target performance achievement of 100 percent for the performance periods ended February 28, 2019 and 2020.
(5)Reflects the estimated value of 18 monthly COBRA payments. Under the terms of the Employment Agreement, to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, Mr. Mininberg is entitled to the continuation of health insurance benefits under COBRA for Mr. Mininberg and his family for a maximum of 18 months after the date of termination or until Mr. Mininberg is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.(5)
(6)In the event of Mr. Mininberg’sMininberg's termination without cause or for good reason, all payments and benefits due to him, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Mininberg’sMininberg's execution of a general release of all claims against the Company, its affiliates and their respective and former directors, employees and agents to the maximum extent permitted by law, pursuant to the Employment Agreement.
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- (7)
- Reflects the payment obligation to Mr. Mininberg under the Employment Agreement in the event of a change of control in connection with a termination of employment. Under the terms of the Employment Agreement, Mr. Mininberg would receive a minimum of $4,000,000 in severance payments. If Mr. Mininberg's employment had been terminated in connection with a change of control as of February 28, 2017, the aggregate amount or value of severance payments payable to him would be greater than $4,000,000, as shown in the table above. The value of the acceleration of all outstanding Performance RSUs and the acceleration of all time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2018 ($90.05). The amount disclosed in the table assumes actual performance of 187.5 percent to target for performance RSUs with a performance period ending on February 28, 2018, and target performance achievement of 100 percent for the performance periods ending February 28, 2019 and 2020. Any outstanding equity awards issued to Mr. Mininberg that are not assumed in connection with a change of control will vest immediately in accordance with the terms of the 2008 Stock Plan. Mr. Mininberg's other equity awards are subject to a double trigger and would not vest unless his employment was involuntarily terminated by the Company other than for cause or by Mr. Mininberg for good reason, in each case, within a specified period following a change of control.
The Compensation Committee has authorized the Company to provide severance arrangements for the other named executive officers, and the Company expects to enter into written severance agreements with the other named executive officers. Until formal severance agreements are entered into with our other named executive officers, the Company's policy is to provide severance in accordance with the terms authorized by the Compensation Committee. Awards granted to the other named executive officers on or after August 19, 2015 are subject to the terms of the 2008 Stock Plan (as amended and restated). In addition to the amounts in the table below, for each triggering event, each of Messrs. Grass and Carson would have been entitled to receive earned and unpaid annual incentive compensation of $460,817 and $467,994, respectively, as of February 28, 2018, which were paid to Messrs. Grass and Carson after fiscal year end 2018. This amount represents the annual incentive compensation earned for fiscal year 2018, which was paid to Messrs. Grass and Carson in the first quarter of fiscal year 2019. In addition to the above, each of our named executive officers held 5,250 shares subject to unvested options granted before August 31, 2015 that remain outstanding as of February 28, 2018. These unvested options, in amount equal to $199,125 (valued at the market price of the Common Stock at February 28, 2018 in excess of the exercise price of such options), will accelerate if there is a termination of employment by the Company without cause, a termination of employment due to death or disability or the occurrence of a change in control. Beginning in fiscal year 2016, the Compensation Committee no longer plans to grant stock options to our other named executive officers. For additional information regarding post-termination and or change of control payments and benefits, see "Compensation Discussion and Analysis — The Company's Compensation Program for our Other Named Executive Officers — Potential Post-Termination and Change of Control Benefits for our Other Named Executive Officers" and "Equity Compensation Plan Information."
The Compensation Committee authorized the Company to provide severance arrangements for the other named executive officers, and the Company expects to enter into written severance agreements with the other named executive officers.
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In addition to any portion of unpaid base salary and annual incentive earned but not yet paid to him as of the date of termination, if Mr. Grass's employment had been terminated as of February 28, 2018, Mr. Grass would be entitled to receive the following:
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| |
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| | | | | | | | | | | | | | | | | |
| | Triggering Event | | | | Compensation Component | | | | How Paid | | | | Payout | | |
| | | | | | | | | | | | | | | | | |
| | Death | | | | • Death benefits(2) | | | | Third party
payment | | | | $750,000 | | |
| | | | | | | | | | | | | | | | | |
| | Disability | | | | • Disability benefits(2) | | | | Third party
payment | | | | $5,216,200 | | |
| | | | | | | | | | | | | | | | | |
| | Termination for Good Reason or
without Cause (1)(5) | | | | • Cash payment equal to base salary and target
annual incentive | | | | Over 12 months | | | | $813,750 | | |
| | | | | | • Pro rata portion of any outstanding Performance
RSUs based on actual performance (3) | | | | Over time | | | | $974,770 | | |
| | | | | | • Pro rata portion of any time-vesting RSUs | | | | Within 60 days | | | | $216,367 | | |
| | | | | | • Health benefits(4) | | | | Over time | | | |
$23,442 | | |
| | | | | | | | | | | | | | | | | |
| | | | | | Total | | | | | | | | $2,028,329 | | |
| | | | | | | | | | | | | | | | | |
| | Change of Control (6) | | | | • Cash payment of target annual incentive and 1.5
times base salary | | | | Within 75 days | | | | $1,046,250 | | |
| | | | | | • Accelerated vesting at target of any outstanding
Performance RSUs | | | | Within 60 days | | | | $1,415,315 | | |
| | | | | | • Accelerated vesting of any time-vesting RSUs | | | | Within 60 days | | | | $330,304 | | |
| | | | | | • Health benefits(7) | | | | Over time | | | |
$35,163 | | |
| | | | | | | | | | | | | | | | | |
| | | | | | Total | | | | | | | | $2,827,032 | | |
| | | | | | | | | | | | | | | | | |
- (1)
- Under the Company's severance policy, Mr. Grass would receive severance benefits upon a termination of his employment by the Company without cause or by Mr. Grass for good reason. The value of the pro rata portion of outstanding Performance RSUs based on actual performance and time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2018 ($90.05).
- (2)
- These represent third party payments from insurers. In the event of death, this would include the payment under a life insurance policy in the amount of $750,000. In the event of disability, the amount of the payment(s) would depend upon the circumstances and nature of the disability, with a maximum payment of $25,000 per month until age 67.
- (3)
- A pro rata portion of any outstanding Performance RSUs based on the actual performance of the Company at the end of the applicable performance periods would be payable at the time that such payment would be made during the course of Mr. Grass's regular employment with the Company. The amount disclosed in the table for Performance RSUs is based on 187.5 percent actual performance achievement for the performance period ended February 28, 2018 and target performance achievement of 100 percent for the performance periods ended February 28, 2019 and 2020.
- (4)
- Reflects the estimated value of 12 monthly COBRA payments. To the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, under the Company's severance policy, Mr. Grass is entitled to the continuation of health insurance benefits under COBRA for Mr. Grass and his family for a maximum of 12 months after the date of termination or until Mr. Grass is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 12 months.
- (5)
- In the event of Mr. Grass's termination without cause or for good reason, all payments and benefits due to him, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Grass's execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents.
- (6)
- Reflects the payment obligation under the Company's severance policy to Mr. Grass in the event of a change of control in connection with a termination of employment. In addition, in the event any other outstanding equity awards issued to Mr. Grass are not assumed in connection with a change of control, such awards will vest immediately in accordance with
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the terms of the 2008 Stock Plan. Mr. Grass's other equity awards are subject to a double trigger and would not vest unless his employment was involuntarily terminated by the Company other than for cause or by Mr. Grass for good reason, in each case, within a specified period following a change of control. The value of the acceleration of outstanding Performance RSUs and the acceleration of all time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2018 ($90.05). The amount disclosed in the table for Performance RSUs is based on 187.5 percent actual performance achievement for the performance period ended February 28, 2018 and target performance achievement of 100 percent for the performance periods ended February 28, 2019 and 2020.
- (7)
- Reflects the estimated value of 18 monthly COBRA payments. To the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, Mr. Grass is entitled to the continuation of health insurance benefits under COBRA for Mr. Grass and his family for a maximum of 18 months after the date of termination or until Mr. Grass is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.
In addition to any portion of unpaid base salary and annual incentive earned but not yet paid to him as of the date of termination, if Mr. Carson's employment had been terminated as of February 28, 2018, under the Company's severance policy, Mr. Carson would be entitled to receive the following:
| | | | | | | | | | | | | | | | | |
| | ��� | | | | | | | | | | | | | | | | |
| | Triggering Event | | | | Compensation Component | | | | How Paid | | | | | Payout | | |
| | | | | | | | | | | | | | | | | | |
| | Death | | | | • Death benefits(2) | | | | Third party payment | | | | $ | 750,000 | | |
| | | | | | | | | | | | | | | | | | |
| | Disability | | | | • Disability benefits(2) | | | | Third party payment | | | | $ | 2,416,600 | | |
| | | | | | | | | | | | | | | | | | |
| | Termination for Good Reason or without Cause(1)(5) | | | | • Cash payment equal to base salary and target annual incentive | | | | Over 12 months | | | | $ | 813,750 | | |
| | | | | | • Pro rata portion of any outstanding Performance RSUs based on actual performance(3) | | | | Over time | | | |
$ |
1,175,092 | | |
| | | | | | • Pro rata portion of any time-vesting RSUs | | | | Within 60 days | | | |
$ |
218,641 | | |
| | | | | | • Health benefits(4) | | | | Over time | | | |
$ |
7,618 | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | Total | | | | | | | | $ | 2,215,101 | | |
| | | | | | | | | | | | | | | | | | |
| | Change of Control(6) | | | | • Cash payment of target annual incentive and 1.5 times base salary | | | | Within 75 days | | | | $ | 1,046,250 | | |
| | | | | | • Accelerated vesting at target of any outstanding Performance RSUs | | | | Within 60 days | | | |
$ |
1,521,304 | | |
| | | | | | • Accelerated vesting of any time-vesting RSUs | | | | Within 60 days | | | |
$ |
304,999 | | |
| | | | | | • Health benefits(7) | | | | Over time | | | |
$ |
11,426 | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | Total | | | | | | | | $ | 2,883,979 | | |
| | | | | | | | | | | | | | | | | | |
- (1)
- Under the Company's severance policy, Mr. Carson would receive severance benefits upon a termination of his employment by the Company without cause or by Mr. Carson for good reason. The value of the pro rata portion of outstanding Performance RSUs based on actual performance and time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2018 ($90.05).
- (2)
- These represent third party payments from insurers. In the event of death, this would include the payment under a life insurance policy in the amount of $750,000. In the event of disability, the amount of the payment(s) would depend upon the circumstances and nature of the disability, with a maximum payment of $25,000 per month until age 67.
- (3)
- A pro rata portion of any outstanding Performance RSUs based on the actual performance of the Company at the end of the applicable performance periods would be payable at the time that such payment would be made during the course of Mr. Carson's regular employment with the Company. The amount disclosed in the table for Performance RSUs is based on
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187.5 percent actual performance achievement for the performance period ended February 28, 2018 and target performance achievement of 100 percent for the performance periods ended February 28, 2019 and 2020.
- (4)
- Reflects the estimated value of 12 monthly COBRA payments. To the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, under the Company's severance policy, Mr. Carson is entitled to the continuation of health insurance benefits under COBRA for Mr. Carson and his family for a maximum of 12 months after the date of termination or until Mr. Carson is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 12 months.
- (5)
- In the event of Mr. Carson's termination without cause or for good reason, all payments and benefits due to him, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Carson's execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents pursuant to the
Employment Agreement.severance policy.
- (6)
- Reflects
paymentsthe payment obligation under the Employment Agreement. Under the New Employment Agreement, which became effective on March 1, 2016, the paymentsCompany's severance policy to Mr. MininbergCarson in the event of hisa change of control in connection with a termination for good reason, without cause, orof employment. In addition, in the event any other outstanding equity awards issued to Mr. Carson are not assumed in connection with a change of control, were each amended. For additional information, see “Compensation Discussion and Analysis — Fiscal Year 2017 Compensation Changes – Amended and Restated Employment Agreement of our Chief Executive Officer.”Other Named Executive Officers
Except for the Employment Agreement and the New Employment Agreement discussedsuch awards will vest immediately in “Executive Compensation — Employment Contract for our Chief Executive Officer” and “Compensation Discussion and Analysis — Fiscal Year 2017 Compensation Changes – Amended and Restated Employment Agreement of our Chief Executive Officer,” the Company did not previously have any formal employment or severance agreementsaccordance with any named executive officer. In March 2016, the Compensation Committee authorized the Company to enter into severance agreements with the other named executive officers, which the Company expects to complete in fiscal year 2017.
Any awards granted to the other named executive officers prior to August 19, 2015 will remain subject to the provisions of the Prior 2008 Stock Plan. Awards granted to the other named executive officers in fiscal year 2016 on or after August 19, 2015 are subject to the terms of the 2008 Stock Plan (as amendedPlan. Mr. Carson's other equity awards are subject to a double trigger and restated). For information regardingwould not vest unless his employment was involuntarily terminated by the terms of these plans, see “Compensation Discussion and Analysis – The Company’s Compensation ProgramCompany other than for our Other Named Executive Officers – Potential Post-Termination and Change of Control Benefitscause or by Mr. Carson for our Other Named Executive Officers” and “Equity Compensation Plan Information.” In the event of the death or Disability orgood reason, in the event of the termination of employment for any reasoneach case, within a specified period following a Changechange of Control, the other named executive officers would receivecontrol. The value of the pro rata portion of their annual incentive award they would have received had they remained employedoutstanding Performance RSUs at target and the acceleration of all time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2018 ($90.05). The amount disclosed in the table for Performance RSUs is based on 187.5 percent actual performance achievement for the entireperformance period ended February 28, 2018 and target performance achievement of 100 percent for the performance periods ended February 28, 2019 and 2020.
- (7)
- Reflects the estimated value of 18 monthly COBRA payments. To the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, Mr. Carson is entitled to the continuation of health insurance benefits under COBRA for Mr. Carson and his family for a maximum of 18 months after the date of termination or until Mr. Carson is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.
CEO PAY RATIO FOR FISCAL YEAR 2018
Pay Ratio
Our CEO to median employee pay ratio has been calculated in accordance with the recently adopted rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act and is calculated in a manner consistent with Item 402(u) of Regulation S-K. Mr. Mininberg's annual total compensation for fiscal year 2018, as shown in which their employmentthe Summary Compensation Table above, was terminated. Each$6,807,095. The median Helen of Messrs. Grass, BensonTroy Limited employee's annual total compensation in fiscal year 2018 (other than Mr. Mininberg) was $51,585, calculated using the same methodology as used in the calculation of the Summary Compensation Table, consisting of base salary, bonus, stock awards, non-equity incentive plan compensation, and Carson would have been entitledall other compensation. As a result, the ratio of Mr. Mininberg's annual total compensation in fiscal year 2018 to receive earned and unpaidthe median annual incentivetotal compensation of $340,665, $639,736 and $398,502, respectively,all Helen of Troy Limited employees (other than Mr. Mininberg) in fiscal year 2018 was 131.96, when calculated in a manner consistent with Item 402(u) of Regulation S-K.
Identification of Median Employee
For purposes of determining the median Helen of Troy Limited employee, we evaluated all employees, other than Mr. Mininberg, employed by the Company as of February 29, 2016. This amount represents28, 2018 and calculated each such employee's annual total compensation received from March 1, 2017 through February 28, 2018. Annual total compensation consists of total cash compensation, including actual wages earned (including overtime), annual performance based incentive cash actually received, holiday cash bonuses and one time bonuses (excluding 401(k) plan matching contributions). We did not make any material assumptions, adjustments, or estimates with respect to annual total compensation and we annualized the annual incentive compensation earned for fiscal year 2016, which was paid to Messrs. Grass, Benson and Carson in the first quarterany full-time employees that were not employed by us for all of fiscal year 2017. No additional amounts2018. The annual total compensation of annual incentive compensation would have been payableeach employee other than Mr. Mininberg was then ranked lowest to Messrs. Grass, Benson and Carson ifhighest to determine the Company experienced a changemedian employee.
Table of control on February 29, 2016.Contents
If the Company experienced a change in control on February 29, 2016, Messrs. Grass, Benson and Carson would have been entitled to receive the following:Annual Total Compensation
Name | Immediate
Vesting of
Options | Immediate
Vesting of
Time Vested
RSUs | Pro Rata
Vesting of
Performance
RSUs |
Brian L. Grass | $781,201 | $224,954 | $333,792 |
Thomas J. Benson | $911,426 | $362,654 | $569,935 |
Vincent D. Carson | $911,426 | $337,002 | $518,504 |
After identifying the median employee based on annual total compensation, as described above, we calculated annual total compensation for such employee using the same methodology we use for our Named Executive Officers as set forth in the Summary Compensation Table above.
COMPENSATION RISKS
The Company has reviewed and assessed its compensation policies and practices to determine whether they are reasonably likely to have a material adverse effect on the Company. The Company’sCompany's management reviews compensation policies for the presence of certain elements that could encourage employees to take unnecessary or excessive risks; the ratios and level of incentive to fixed compensation, annual to long-term compensation and cash to equity compensation; and the comparison of compensation expense to earnings of the Company. Management’sManagement's assessment of the Company’sCompany's compensation policies is reviewed by the Compensation Committee as part of its risk oversight function.
The Company believes that its compensation programs for employees and executive officers are appropriately tailored to encourage employees to grow our business, but not to encourage them to do so in a way that poses unnecessary or excessive material risk. In particular, the Company’sCompany's compensation programs are designed to provide the following: elements that reward short-term and long-term performance; for our executive officers, incentive compensation that rewards individual and Company performance; incentive or equity compensation awards that vest based on performance and/or over time; and compensation with fixed and variable components, so that executive officers and key employees have both competitive remuneration to encourage retention and opportunities to earn more by successfully executing the Company’sCompany's business strategy.
Overall, the Compensation Committee does not believe that the compensation policies and practices give rise to risks that are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee noted that:
·
- •
- Our compensation program is designed to provide a balanced mix of base salary, annual cash incentive compensation and long-term equity incentives, which provides the incentive to perform at high levels and maximize Company performance without focusing exclusively on compensation performance metrics to the detriment of other important business metrics;
·
•Our 2011 Bonus Plan provides for authority to adjust the performance targets for annual incentive bonuses and stock incentive awards to take into account acquisitions and divestitures of the Company to reduce the incentive to engage in activities that would have a short-term focus and would be inconsistent with the Company’sCompany's long-term business objectives;·
•Our principal equity compensation plan and our 2011 Bonus Plan include clawback provisions in the event of a financial restatement or misconduct;·
•The annual cash incentive opportunity for our Chief Executive OfficerCEO contains maximum payout levels, which helps avoid excessive total compensation and reduces the incentive to engage in unnecessarily risky behavior; and·
•Our insider trading policy prohibits executives from pledging Common Stock or using Common Stock as collateral for any margin loan and from engaging in transactions (such as trading in options) designed to hedge against the value of the Common Stock.
Based on the recent actions taken by the Company and considering the supportthat we received from a very high percentage99 percent of our shareholders who votedvotes present (excluding abstentions and broker non-votes) in favor of the compensation of our named executive officers described in our 20152017 proxy statement (“("say on pay”pay"), the Compensation Committee concluded that the executive compensation program is consistent with our executive compensation objectives and principles. As a result, since the 20152017 annual general meeting, the Compensation Committee has not significantly changed our compensation principles and objectives in response to that vote.
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CERTAIN RELATIONSHIPS - RELATED PERSON TRANSACTIONS
Procedures for the Approval of Related Person Transactions
The Audit Committee Charter provides that the Audit Committee has the authority to establish, and communicate to the full board and management, policies that restrict the Company and its affiliates from entering into related person transactions without the Audit Committee’sCommittee's prior review and approval. In accordance with these policies, the Audit Committee on a timely basis reviews and, if appropriate, approves all material related person transactions.
At any time in which an executive officer, Director or nominee for Director becomes aware of any contemplated or existing transaction that, in that person’sperson's judgment may be a material related person transaction, the executive officer, Director or nominee for Director is expected to notify the Chairman of the Audit Committee of the transaction. Generally, the Chairman of the Audit Committee reviews any reported transaction and may consult with outside legal counsel regarding whether the transaction is, in fact, a material related person transaction requiring approval by the Audit Committee. If the transaction is considered to be a material related person transaction, then the Audit Committee will review the transaction at its next scheduled meeting or at a special meeting of the committee.
Related Person Transactions
The Audit Committee was not requested to, and did not approve, any transactions required to be reported under SEC rules in fiscal year 2016.2018.
AUDIT COMMITTEE MATTERS
Composition
Composition
The Audit Committee of the Board of Directors of the Company (the “Audit Committee”"Audit Committee") is composed of four Directors: Alexander M. Davern,Thurman K. Case, Darren G. Woody, Gary B. Abromovitz, John B. Butterworth, and Beryl B. Raff. Alexander M. Davern served as Chairman of the Audit Committee until his resignation as a director of the Company effective March 31, 2017. Each member of the Audit Committee meets the independence and financial experience requirements under both SEC and NASDAQ rules. In addition, the Board has determined that Alexander M. Davern iseach of Darren G. Woody and Thurman K. Case qualify as an “audit"audit committee financial expert”expert" as defined by SEC rules.
Responsibilities
The Audit Committee operates under a written charter that has been adopted by the Board. The charter is reviewed annually for changes, as appropriate.
The Audit Committee is responsible for oversight, on behalf of the Board of Directors, of:
·
- •
- The
Company’sCompany's auditing, accounting and financial reporting processes, and the integrity of its financial statements;·
- •
- The audits of the
Company’sCompany's financial statements and the appointment, compensation, qualifications, independence and performance of the Company’sCompany's auditor and independent registered public accounting firm;·
- •
- The
Company’sCompany's compliance with legal and regulatory requirements; and·
- •
- The staffing and ongoing operation of the
Company’sCompany's internal audit function.
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The Company’sCompany's management is responsible for: (a) maintaining the Company’sCompany's books of account and preparing periodic financial statements based thereon; and (b) maintaining the system of internal controls. The independent registered public accounting firm is responsible for auditing the Company’sCompany's consolidated annual financial statements.
The Audit Committee’sCommittee's function is one of oversight only and does not relieve management of its responsibilities for preparing financial statements that accurately and fairly present the Company’sCompany's financial results and condition, nor the independent registered public accounting firm of their responsibilities relating to the audit or review of the financial statements.
In accordance with Audit Committee policy and the requirements of law, the Audit Committee pre-approves all services to be provided by the Company’sCompany's auditor and independent registered public accounting firm. Pre-approved services include audit services, audit-related services, tax services, and other services. In some cases, the full Audit Committee provides pre-approval for up to a year related to a particular defined task or scope of work and subject to a specific budget. In other cases, the Chairman of the Audit
Committee has the delegated authority from the Audit Committee to pre-approve additional services, and the Chairman then communicates such pre-approvals to the full Audit Committee for ratification. To avoid potential conflicts of interest, the law prohibits a publicly traded company from obtaining certain non-audit services from its independent registered public accounting firm. The Company obtains these services from other service providers as needed.
Report of Audit Committee
The Audit Committee hereby reports as follows:
- 1.
The Audit Committee has reviewed and discussed with management and the independent registered public accounting firm, together and separately, the Company’sCompany's audited consolidated financial statements contained in the Company’sCompany's Annual Report on Form 10-K for fiscal year 2016.2018.
2.The Audit Committee has discussed with the auditor and independent registered public accounting firm matters required to be discussed in applicable Public Company Accounting Oversight Board (“("the PCAOB”PCAOB") rules. This review included a discussion with management of the quality, not merely the acceptability, of the Company’sCompany's accounting principles, the reasonableness of significant estimates and judgments, and the clarity of disclosure in the Company’sCompany's financial statements, including the disclosures related to critical accounting estimates.
3.The Audit Committee has received from the auditor and independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’sfirm's communications with the Audit Committee concerning independence, and the Audit Committee has held discussions regarding independence with its auditor and independent registered public accounting firm.
Based on the review and discussions referred to in paragraphs 1-3 above, the Audit Committee recommended to the Board, and the Board has approved, that the Company’sCompany's audited consolidated financial statements be included in the Company’sCompany's Annual Report on Form 10-K for fiscal year 20162018 for filing with the SEC.
Members of the Audit Committee:
Alexander M. DavernThurman K. Case (Chairman)
Gary B. Abromovitz
John B. Butterworth
Beryl B. Raff
Darren G. Woody
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The foregoing report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
AUDIT AND OTHER FEES FOR SERVICES PROVIDED BY OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The following table presents fees for professional audit services provided by Grant Thornton LLP for the auditaudits of the Company’sCompany's annual consolidated and stand-alone financial statements for fiscal years ended 20162018 and 2015,2017, and fees for other services provided by Grant Thornton LLP associated with those periods.those.
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | Type of Fee | | | | | 2018 | | | | | 2017 | | |
| | | | | | | | | | | | | | | |
| | | Audit Fees | | | | $ | 1,386,000 | | | | $ | 1,289,000 | | |
| | | Audit-Related Fees | | | | | - | | | | | - | | |
| | | Tax Fees | | | | | 9,100 | | | | | 22,200 | | |
| | | | | | | | | | | | | | | |
| | | Total | | | | $ | 1,395,100 | | | | $ | 1,311,200 | | |
| | | | | | | | | | | | | | | |
Type of Fee | | | 2016 | | | 2015 | |
Audit Fees | | | 1,190,100 | | | $ | 1,198,700 | |
Audit-Related Fees | | | - | | | 1,100 | |
Tax Fees | | | 22,100 | | | 12,500 | |
Total | | | $ | 1,212,200 | | | $ | 1,212,300 | |
| | | | | | | | | |
Audit Fees: Consist of fees for professional services rendered for the audit of the Company’sCompany's consolidated and stand-alone financial statements and review of the interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements, including services in connection with assisting the Company in its compliance with its obligations under Section 404 of the Sarbanes-Oxley Act and related regulations and attest services, except those not required by statute or regulation.
Audit-Related Fees: Consist of fees for professional services rendered by our independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of the Company’sCompany's consolidated financial statements, due diligence, accounting consultations concerning financial accounting and reporting standards, and other similar services which have not been reported as audit fees.
Tax Fees: Consist of tax compliance/preparation fees for professional services rendered by our independent registered public accounting firm to certain subsidiaries of the Company.
The Audit Committee pre-approved all of the services described above that were provided in fiscal years 20162018 and 20152017 in accordance with the pre-approval requirements of the Sarbanes-Oxley Act. There were no services for which the de minimis exception, as defined in Section 202 of the Sarbanes-Oxley Act, was applicable.
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PROPOSAL 2: ADVISORY APPROVAL OF THE COMPANY’SCOMPANY'S EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, we are asking shareholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED, that the shareholders of Helen of Troy Limited approve, on an advisory basis, the compensation of the Company’sCompany's named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narratives in the Proxy Statement for the Company’s 2016Company's 2018 Annual General Meeting of Shareholders.
This advisory resolution, commonly referred to as a “say"say on pay”pay" resolution, is non-binding on the Board of Directors. Although non-binding, the Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
Our executive compensation program emphasizes performance- and equity-based compensation to align it with shareholder interests. In addition, our executive compensation program includes other practices that we believe serve shareholder interests such as benchmarking the Chief Executive Officer compensation program against a peer group, paying for performance, establishing rigorous performance goals setting target executive compensation at market levels, not providing for tax “gross-up” payments, and maintaining policies relating to clawbacks ofclawback terms for incentive awards and prohibitions on hedging or pledging Company stock.
The Compensation Committee believes that the Company’sCompany's executive compensation programs use appropriate structures and sound pay practices. Accordingly, the Compensation Committee recommends a vote “For”"For" this Proposal 2.
We urge shareholders to read the “Compensation"Compensation Discussion and Analysis”Analysis" beginning on page 2023 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”"FOR" THIS PROPOSAL.
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PROPOSAL 3: APPROVAL OF NINE PROPOSALS RELATING TO THE COMPANY’S AMENDED AND RESTATED BYE-LAWS
Shareholders are being asked to consider and approve the adoption of each of the nine proposals described below (Proposals 3A through 3I) to implement the Amended and Restated Bye-laws of the Company (the “Amended Bye-laws”).
Under Section 13 of the Bermuda Companies Act 1981 (the “Companies Act”) and Bye-laws 43 and 84 of our current Bye-laws (the “Bye-laws”), any amendment of the Bye-laws requires approval by the affirmative vote of a majority of the votes cast by shareholders present in person or by proxy at the Annual Meeting.
Background and Reasons for the Amended and Restated Bye-laws
The Company’s Bye-laws were originally adopted in 1993. The Bye-laws have been amended two times: in 2005, to permit meetings and communications by electronic transmission and in 2007, to permit direct registration of shares as required by the Nasdaq listing rules. Since that time, there have been numerous developments in the laws of Bermuda and the United States and in public company practice that involve matters covered by the Bye-laws. The Companies Act, which is the primary corporate statute that applies to Bermuda companies, has been substantively amended since the adoption of the Bye-laws, including by legislative amendments to the Companies Act in 2006 and 2011. These legislative amendments made significant changes to the Companies Act for the benefit of Bermuda companies and their shareholders, but in many cases, these benefits are not available until a company’s bye-laws explicitly provide for them. Since the adoption of the Bye-laws, there have also been various changes and updates in corporate governance practices and SEC rules and regulations. For example, in 2007, the SEC, in an effort to take advantage of advances in communications technology, adopted a voluntary “notice and access” system under which issuers can satisfy their proxy delivery requirements by posting proxy materials on an Internet website.
In light of the foregoing, the Board recently reviewed the existing Bye-laws of the Company to determine what changes were necessary or advisable. A number of clarifications and stylistic revisions were also considered to improve the organization and clarity of the Bye-laws. The intended effect of the proposed Amended Bye-laws, if approved, will be to enable the Company to take advantage of the changes to the Companies Act under Bermuda law and to update its corporate governance practices. Based on its review, the Board unanimously determined that it was in the best interests of our shareholders to amend and restate the Bye-laws, and the Board approved, and recommended that shareholders approve, such amendment and restatement.
Shareholders will vote separately on each of the nine proposals described below (Proposals 3A through 3I) to amend and restate the Bye-laws. The Amended Bye-laws are set forth in Appendix A to this proxy statement. Shareholders are urged to carefully review Appendix A.
PROPOSAL 3A — ADVANCE NOTICE PROVISIONS FOR DIRECTOR NOMINATIONS AND DIRECTOR ELIGIBILITY
The Company proposes to add new provisions in the Amended Bye-laws requiring advance notice to the Company of shareholder nominations for election of directors to be brought by shareholders before any general meeting of the shareholders and specifying the qualifications that director nominees must meet to be eligible to serve as a director of the Company. The Company’s current Bye-laws do not contain any procedures or requirements for shareholders to nominate directors before a general meeting of the shareholders. Therefore, a shareholder could nominate directors for a shareholder vote at an annual general meeting or special general meeting of the shareholders, without providing the Company, or its shareholders, any advance notice. In addition, any such nomination does not have to be accompanied with important information regarding the background and experience of director nominees. Accordingly, shareholders may not have critical information regarding director nominees available for their review and consideration prior to a general meeting of the shareholders.
We believe that implementing advance notice procedures and eligibility qualifications for directors will provide an orderly procedure for the notification of the Company of business that is to be presented at shareholders’ general meetings. This will enable the Board to plan shareholder general meetings and result in better information being made available to our shareholders in advance of any general meetings of the shareholders with respect to any director nominees. It will also permit the Board to make a recommendation or statement of its position so as to enable shareholders to better determine whether they desire to attend the general meeting or grant a proxy to the Company as to the election of each director nominee. In addition, the Company believes that requiring director nominees to meet reasonable eligibility requirements to serve on the board will enable the Company to gain the expertise that suitable director nominees may bring to the Board.
If approved by the shareholders, the Amended Bye-laws would set deadlines and procedures with respect to when and how a shareholder must give advance written notice of a proposed director nomination to be considered at an annual general meeting or a
special general meeting of the shareholders and the director qualifications that nominees must meet in order to be eligible to serve as a director of the Company. Only persons who are nominated to the Board in accordance with the Amended Bye-laws and who meet the director qualifications described in the Amended Bye-laws will be eligible to serve as directors of the Company. The advance notice provisions and procedures and eligibility requirements include the following key terms.
Director Nominations and Eligibility
· Generally, for director nominations to be made at an annual general meeting or special general meeting by a shareholder, the shareholder must (1) provide timely notice in writing and in proper form to the Secretary of the Company at the Company’s principal executive offices, (2) provide any updates or supplements to the notice at the time and in the form required by the Amended Bye-laws, and (3) the shareholder of record and the beneficial owner or owners, if any, on whose behalf any nomination is made, must have acted in accordance with the representations set forth in the notice of director nomination.
· To be in proper form, the notice of a director nomination would be required to include, among other things, information about the proposed nominee for director that is required to be disclosed under Regulation 14A of the Exchange Act, information about the shareholder submitting the nomination (including with respect to such shareholder’s ownership of shares of the Company and any interest such shareholder has in any derivative positions or hedging transactions pertaining to shares of the Company’s common stock), and information about any other shareholders or beneficial owners known to support the proposed nomination.
· To be eligible to be a nominee for election or reelection as a director of the Company, a proposed nominee must timely deliver to the Secretary at the principal executive offices of the Company a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which form of questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that, among other things, the proposed nominee and the person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Company, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Company.
Timely Notice
· With respect to an annual general meeting, a shareholder’s notice of a director nomination would be timely if the notice is received by the Secretary at the principal executive offices of the Company not less than 60 and not more than 90 days prior to the date of the annual general meeting.
· With respect to a special general meeting, a shareholder notice of a director nomination is timely if it is given not later than 10 days following the earlier of the date on which notice of the special general meeting was posted to shareholders or the date on which public disclosure of the date of the special general meeting was made. In no event shall an adjournment, or postponement of a general meeting for which notice has been given, commence a new time period for the giving of a shareholder of record’s notice. For purposes of the Bye-laws, “public announcement” or “public disclosure” means disclosure in a press release reported by a national news service or in a document publically filed by the Company with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act.
The above summary of the new provisions of the Amended Bye-laws is qualified in its entirety by reference to the full text of Bye-law 36 and Bye-law 38 of the Amended Bye-laws, a copy of which is attached hereto as Appendix A. Shareholders are urged to read carefully the full text of Bye-law 36 and Bye-law 38 of the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3A: ADVANCE NOTICE PROVISIONS FOR DIRECTOR NOMINATIONS
PROPOSAL 3B — ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER PROPOSALS OF BUSINESS (OTHER THAN DIRECTOR NOMINATIONS)
The Company proposes to add a new provision in the Amended Bye-laws requiring advance notice to the Company of shareholder proposals of business (other than director nominations) to be brought by shareholders before a general meeting of the shareholders. The Company’s current Bye-laws do not contain any procedures or requirements for shareholders to propose other business before a general meeting of the shareholders. Therefore, a shareholder could make proposals of business for a shareholder vote at an annual general meeting or special general meeting of the shareholders, without providing the Company, or its shareholders, any advance notice. In addition, any such proposal does not need to be accompanied with important information regarding any such
proposal. Accordingly, shareholders may not have critical information regarding a proposal for their review and consideration prior to the general meeting of the shareholders.
We believe that implementing advance notice procedures for shareholder proposals will provide an orderly procedure for the notification of the Company of business that is to be presented at shareholders’ general meetings. This will enable the Board to plan general meetings and result in better information being made available to our shareholders in advance of any general meetings of the shareholders with respect to any shareholder proposals. It will also permit the Board to make a recommendation or statement of its position so as to enable shareholders to better determine whether they desire to attend the general meeting or grant a proxy to the Company as to the disposition of any such business. In addition, by requiring advance notice, the Company will be able to carefully review and determine, in advance of a general meeting of the shareholders, whether such proposals are the proper subject matter for a shareholder vote under applicable law.
If approved by the shareholders, the Amended Bye-laws would set deadlines and procedures with respect to when and how a shareholder must give advance written notice of a proposal of business to be considered at an annual general meeting of the shareholders or a special general meeting of the shareholders. The advance notice provisions and procedures include the following key terms.
Shareholder Proposals of Business
· Generally, for business to be properly brought before an annual general meeting or special general meeting by a shareholder, (1) the business must otherwise be a proper matter for shareholder action under applicable law and (2) the shareholder must (i) provide timely notice in writing and in proper form to the secretary of the Company at the Company’s principal executive office, (ii) provide any updates or supplements to such notice at the times and in the form required by the Bye-laws and (iii) the shareholder of record and the beneficial owner or owners, if any, on whose behalf any such business proposal is made, must have acted in accordance with the representations set forth in the notice of shareholder proposal of business.
· To be in proper form, the notice would be required to include, among other things, information about the proposed business to be brought before the general meeting of shareholders, information about the shareholder submitting the nomination (including with respect to such shareholder’s ownership of shares of the Company and any interest such shareholder has in any derivative positions or hedging transactions pertaining to shares of the Company’s common stock), and information about any other shareholders or beneficial owners known to support the proposal.
· Except for proposals made in accordance with the procedures and conditions set forth in Rule 14a-8 of the Exchange Act, the shareholder must be a shareholder of record at the time of giving of notice, must be entitled to vote at the meeting, and must comply with the notice procedures set forth in the Amended Bye-laws.
Timely Notice
· With respect to an annual general meeting, a shareholder’s notice would be timely if the notice is received by the Secretary at the principal executive offices of the Company not less than 60 and not more than 90 days prior to the date of the annual general meeting.
· With respect to a special general meeting, a shareholder notice is timely if it is given not later than 10 days following the earlier of the date on which notice of the special general meeting was posted to shareholders or the date on which public disclosure of the date of the special general meeting was made. In no event shall an adjournment, or postponement of a general meeting for which notice has been given, commence a new time period for the giving of a shareholder of record’s notice. For purposes of the Bye-laws, “public announcement” or “public disclosure” means disclosure in a press release reported by a national news service or in a document publically filed by the Company with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act.
The foregoing summary of the new provision is qualified in its entirety by reference to the full text of Bye-law 21 of the Amended Bye-laws, a copy of which is attached hereto as Appendix A. Shareholders are urged to read carefully the full text of Bye-law 21 of the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3B: ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER PROPOSALS OF BUSINESS (OTHER THAN DIRECTOR NOMINATIONS)
PROPOSAL 3C — MAJORITY VOTING IN DIRECTOR ELECTIONS EXCEPT PLURALITY VOTING IN CONTESTED DIRECTOR ELECTIONS
The Bye-laws currently require majority voting for all directors. If a quorum is present, each director nominee receiving a majority of the votes cast at the Annual Meeting in person or by proxy shall be elected. The Amended Bye-laws retain the majority voting requirement for all director elections except contested director elections. A contested election is defined as the situation in which the number of director nominees exceeds the number of positions on the Board by election at that general meeting. The Amended Bye-laws provide that in a contested election, directors will be elected by a plurality of the votes cast. Employing a majority voting standard in a contested election could make it more difficult for any candidate, whether proposed by the Board or by a shareholder, to obtain the number of votes necessary to secure a seat on the Board. If there were a close vote in such a contested election, it is possible that no candidate would achieve the requisite majority. Accordingly, the Amended Bye-laws add a provision for plurality voting in contested director elections to avoid such a result but maintains the majority voting requirement for uncontested director elections.
The foregoing summary of the new provision is qualified in its entirety by reference to the full text of Bye-law 28 of the Amended Bye-laws, a copy of which is attached hereto as Appendix A. Shareholders are urged to read carefully the full text of Bye-law 28 of the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3C: MAJORITY VOTING IN DIRECTOR ELECTIONS EXCEPT PLURALITY VOTING IN CONTESTED DIRECTOR ELECTIONS
PROPOSAL 3D — AUTHORIZATION TO FIX NUMBER OF DIRECTORS AND FILLING A VACANCY ON THE BOARD
The Bye-laws currently provide that the Board shall consist of not less than two directors or such number in excess thereof as the shareholders may determine from time to time. The Companies Act permits the Board flexibility to adjust the number of directors on the Board from time to time. To take advantage of that flexibility, the Amended Bye-laws amend this provision to establish that the Board will fix the number of directors from time to time. The Bye-laws will continue to provide that the Board shall consist of not less than two directors.
The Amended Bye-laws also add a provision to allow the Board to fill a vacancy on the Board occurring as a result of an increase in the size of the Board. The Bye-laws currently provide that the Board may fill a vacancy on the Board occurring as a result of the death, disability, disqualification or resignation of any director and to appoint an alternate director to any director so appointed. Under the Amended Bye-laws, the Board may fill a vacancy on the Board occurring as a result of an increase in the size of the Board. Any director so appointed would be subject to the nomination of the director by the Board and would serve only until the next general meeting of the shareholders in which directors are elected. These changes in the Amended Bye-laws allow for greater efficiency and flexibility for the Board to focus the Company’s resources on evaluating candidates at the appropriate time and to take advantage of the expertise that suitable director nominees may bring to the Board on limited occasions when a director position becomes open as a result of a decision to increase the size of the Board.
The foregoing summary of the new provision is qualified in its entirety by reference to the full text of Bye-law 37 and Bye-law 40 of the Amended Bye-laws, a copy of which is attached hereto as Appendix A. Shareholders are urged to read carefully the full text of Bye-law 37 and Bye-law 40 of the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3D: FILLING A VACANCY ON THE BOARD
PROPOSAL 3E — CASTING OF VOTES
The Amended Bye-laws add a provision that allows a person entitled to more than one vote at a general meeting of shareholders to cast such votes in different ways. For example, some votes held by a person may be cast in favor of a particular proposal while the remaining votes held by such person may be cast against such proposal. This provision was added to provide flexibility to shareholders in casting votes when, for example, they hold shares in different capacities.
The foregoing summary of the new provision is qualified in its entirety by reference to the full text of Bye-law 29 of the Amended Bye-laws, a copy of which is attached hereto as Appendix A. Shareholders are urged to read carefully the full text of Bye-law 29 of the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3E: CASTING OF VOTES.
PROPOSAL 3F — APPOINTMENT OF PROXY
The Amended Bye-laws add a provision that the appointment of proxy must be received by the Company at the registered office of the Company or at such other place or in such manner as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting at which the person named in the appointment proposes to vote, and appointment of a proxy which is not received in the manner so permitted shall be invalid. The Amended Bye-laws further clarify that a shareholder of two or more shares may appoint more than one proxy to represent him and vote on his behalf in respect of different shares. These provisions were added for orderly administration of shareholders’ general meetings and to provide flexibility to shareholders to cast votes in different ways by appointing different proxies in respect of different shares.
The foregoing summary of the new provision is qualified in its entirety by reference to the full text of Bye-law 31 of the Amended Bye-laws, a copy of which is attached hereto as Appendix A. Shareholders are urged to read carefully the full text of Bye-law 31 of the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3F: APPOINTMENT OF PROXY.
PROPOSAL 3G — DIRECTOR REMUNERATION
The Amended Bye-laws add a provision to allow the remuneration of the directors to be determined by the Company in general meeting or the Board, providing the Board with greater flexibility and administrative efficiency. Currently, the Bye-laws provide that the remuneration of the directors shall be determined by the Company in general meeting.
The foregoing summary of the proposed provision is qualified in its entirety by reference to the full text of Bye-law 41 of the Amended Bye-laws, a copy of which is attached hereto as Appendix A. Shareholders are urged to read carefully the full text of Bye-law 41 of the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3G: DIRECTOR REMUNERATION
PROPOSAL 3H — OTHER CHANGES TO THE BYE-LAWS
Other changes were made to the Bye-laws to include certain provisions permitted by the legislative amendments to the Companies Act, to update provisions in the existing Bye-laws to reflect changes in corporate governance practices and SEC rules and regulations, to combine separate provisions that relate to the same subject, to consolidate related provisions under separate headings, and to clarify the Bye-laws and make them easier to read. Some of these changes are described below:
·Treasury Shares. Currently, we are required to cancel any shares that we repurchase and, as a result, those shares are not available for later reissuances. As permitted by the legislative amendments to the Companies Act, the Amended Bye-laws would enhance our flexibility by providing that we may hold shares that we repurchase as treasury shares. (Bye-law 3 of the Amended Bye-laws)
·Transfer of Shares. The Bye-laws currently provide that the Board may refuse to register a transfer of shares unless applicable consents, authorisations and permissions of any governmental body or agency in Bermuda have been obtained and that the Board shall notify the proposed transferor and transferee within three months of such refusal. In order to clarify the authority of the Board, the Amended Bye-laws provide the Board with the right to refuse to register share transfers of shares which are not fully paid up in its discretion and without assigning any reason therefor. The existing Bye-laws contain several provisions requiring a written instrument for the transfer of shares. However, the Companies Act allows shares to be transferred without a written instrument if transferred by an appointed agent (within the meaning of the Companies Act) or otherwise in accordance with the Companies Act. This provision was added to the Amended Bye-laws to make clear that the Companies Act’s provision is available to us and our shareholders notwithstanding the Bye-law requirement for a written instrument. The Amended Bye-laws further provide that shares of the Company that are listed or admitted to trading on an appointed stock exchange may be transferred in accordance with the rules and regulations of such exchange. (Bye-law 11 of the Amended Bye-laws)
·Financial Assistance. The Bye-laws currently provide that the Company can not give financial assistance for the purpose of a purchase or subscription made or to be made by any person of or for any shares in the Company. This provision was included in our current Bye-laws because Bermuda law prohibited such financial assistance when the Bye-laws were originally adopted. The legislative amendments to the Companies Act eliminated these financial assistance measures. Accordingly, the Amended Bye-laws removes these financial assistance restrictions in accordance with the change in Bermuda law which the Board believes will enhance our flexibility. (Current Bye-law 51(3); deleted in Amended Bye-laws)
·Method of Payment of Dividends. The Bye-laws currently provide that the Board may declare a dividend to be paid to the shareholders but do not describe procedures regarding the method of payment, such as how payment shall be made to joint holders of shares, rights with respect to unclaimed dividends and whether an unpaid dividend shall bear interest as against the Company. As a matter of clarification and what the Board believes will be good corporate practice, the Amended Bye-laws provide that dividends may be paid by cheque or draft sent through the post directed to a shareholder at such shareholder’s address in the Register of Members or to such person and to such address as the holder may direct in writing. With respect to joint holders of shares, such cheque or draft may be sent to the holder first named in the Register of Members or to such person and to such address as the holder may direct in writing, and any one of the holders can give an effectual receipt of payment of such dividend. The Company will be entitled to cease sending dividend cheques and drafts by post or otherwise to a shareholder if the instruments have been returned undelivered or left uncashed by such shareholder on at least two consecutive occasions or one occasion, if reasonable inquiries have failed to establish the shareholder’s new address, until the shareholder claims a dividend or cashes a dividend cheque or draft. If a dividend or other moneys payable in respect of a share has remained unclaimed for 7 years from the date when it became due for payment, the Board may resolve that such payment shall be forfeited and cease to remain owing by the Company. Finally, the Amended Bye-laws provide that no unpaid dividend will bear interest as against the Company. The Board believes these changes provide greater administrative clarity and efficiency and reflect good corporate practice. (Bye-law 15 and Bye-law 17 of the Amended Bye-laws)
·Electronic Delivery of Proxy and Other Materials. As permitted by the legislative amendments to the Companies Act, the Amended Bye-laws allow us to deliver information and documents to the shareholder by posting them on a website and sending a notice to the shareholder of the availability of such information and documents on the website. This conforms with the voluntary proxy notice and access rules enacted by the SEC and will allow us, in our discretion, to offer that delivery method to our shareholders in the future. (Bye-law 23 of the Amended Bye-laws)
·Adjournment of General Meetings. Currently, the Bye-laws provide that a general meeting may be adjourned by the chairman of the meeting with the consent of shareholders holding a majority of the voting rights of shareholders present in person or by proxy. The Amended Bye-laws add a provision to allow the chairman of a general meeting to adjourn the meeting to another time without the consent or direction of the shareholders if it is likely to be impractical to hold or continue the meeting because of the number of shareholders who are not present, the unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting, or an adjournment is otherwise necessary so that the business of the meeting may be properly conducted. The changes permit the Board greater flexibility in establishing the procedures and restrictions in connection with the orderly administration of general meetings. (Bye-law 33 of the Amended Bye-laws)
·Alternate Directors. Bermuda law and the current Bye-laws provide that the shareholders in general meeting may either elect alternate directors who have the right to attend Board meetings and vote in the absence of the appointing director or authorize the Board to appoint such alternate directors. The Amended Bye-laws omit this provision because it is not consistent with current public company practice in the US. In the Board’s view, only an individual elected by the shareholders to serve as a director or appointed by the Board to fill a vacancy on the Board should be entitled to act as a director. (Current Bye-law 14; deleted in Amended Bye-laws)
·Officer Positions. The Bye-laws currently require the appointment of a President and a Vice President, Chairman, Deputy Chairman and Secretary as officers of the Company. As a result of the legislative amendments to the Companies Act, there are no longer any specific titles required for officers except “Secretary.” Thus, the Amended Bye-laws provide that the only required Company officer is the Secretary and the Board is otherwise permitted to appoint officers in its discretion. (Bye-law 46 of the Amended Bye-laws)
·Conflicts of Interest. The Bye-laws currently provide that an Interested Director (as defined in the Amended Bye-laws) who has complied with the requirements in the Bye-laws in declaring the nature of his interest in a contract or proposed contract may vote on such contract or proposed contract and be counted in the quorum for the meeting. The Amended Bye-laws add a provision to clarify further, consistent with the current industry standard, that no such contract or proposed contract shall be void or voidable by reason only that the Interested Director voted on it or was counted in the quorum of the relevant meeting and that the Interested Director shall not be liable to account to the Company for any profit realized thereby. (Bye-law 50 of the Amended Bye-laws)
·Director and Officer Indemnification and Exculpation. The Amended Bye-laws updated the provisions regarding indemnification and exculpation of directors and officers of the Company to provide that we may in our discretion maintain insurance against liability incurred by directors and officers acting in those capacities, and may advance defense costs subject to repayment if any allegation of fraud or dishonesty is proved. The Amended Bye-laws also clarify that the indemnification and exculpation provisions apply whether the director or officer was acting in relation to the affairs of the Company or any of
its subsidiaries. In addition, the Amended Bye-laws clarify that the parties indemnified under the indemnification and exculpation provisions expressly include the current and former directors, secretary, or other officers, resident representative, any person appointed to any committee by the Board, and the liquidator or trustees of the Company acting in relation to any of the affairs of the Company or any of its subsidiaries. Finally, the Bye-laws currently provide that indemnity shall not extend to any matter in respect of any willful negligence, willful default, fraud or dishonesty of the indemnified parties. Consistent with legislative changes to the Companies Act, the Amended Bye-laws remove the exclusion to indemnity for willful negligence and willful default. (Bye-law 51 of the Amended Bye-laws)
·Corporate Seal. The legislative amendments to the Companies Act conforms Bermuda law to modern practice by eliminating the requirement that share certificates, deeds and other documents be executed under seal. The Amended Bye-laws reflect that change. (Bye-law 62 of the Amended Bye-laws)
·Retention of Records of Account. The Amended Bye-laws add a provision requiring the records of account of the Company to be retained for a minimum period of five years from the date on which they were prepared. This change is in accordance with good corporate governance practices and reflect the current Bermuda law requirement under the Companies Act. (Bye-law 63 of the Amended Bye-laws)
·Appointment and Remuneration of Auditor. Currently, the Bye-laws provide that if the office of the auditor become vacant by the resignation, disability or death of the Auditor, the Board shall convene a special general meeting to fill the vacancy. The Amended Bye-laws enhance the Board’s flexibility and efficiency by adding provisions to allow the Board to fill any casual vacancy in the office of the auditor and to fix the remuneration of an auditor appointed by the Board to fill a casual vacancy. Except as described above, the appointment and remuneration of the auditor must be approved by the shareholders of the Company. (Bye-laws 66, 67, 70 and 72 of the Amended Bye-laws)
The foregoing is a summary of some of the changes provided for by Proposal 3H and is qualified in its entirety by reference to the Amended Bye-laws set forth in Appendix A. Shareholders are urged to carefully review Appendix A.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3H: OTHER CHANGES TO THE BYE-LAWS.
PROPOSAL 3I — BOARD AUTHORISATION
Both the existing Bye-laws and the Amended Bye-laws provide that the Board has the power to carry out certain actions. Shareholders are being asked in this Proposal 3I to specifically authorise the Board to carry out the powers given to the Board in the Amended Bye-laws.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL 3I: BOARD AUTHORISATION
Vote Required for Approval and Recommendation
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve the Amended Bye-laws as described in each of the nine proposals above (Proposals 3A through 3I).
THE BOARD RECOMMENDS THE APPROVAL OF THE AMENDED BYE-LAWS BY A VOTE “FOR” THE APPROVAL OF EACH OF PROPOSALS 3A THROUGH 3I.
PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE HELEN OF TROY LIMITED AMENDED AND RESTATED 2011 ANNUAL2018 STOCK INCENTIVE PLAN
We are submittingOn June 27, 2018, the Company's Board of Directors adopted, subject to ourapproval by the Company's shareholders, this proposal to approve an amendment to the Helen of Troy Limited Amended and Restated 2011 Annual2018 Stock Incentive Plan (the “Amendment”"2018 Stock Plan"). The Amendment amends the Helen and reserved 2,000,000 shares of Troy Limited Amended and Restated 2011 Annual Incentive Plan (the “2011 Bonus Plan”) to increase the limit on the aggregate Incentive Bonus received by any ParticipantCommon Stock for awards under the 2011 Bonusplan. The text of the 2018 Stock Plan in any performance period to $4,500,000 from $3,000,000. No other amendments are being made to the 2011 Bonus Plan.
is attached hereto as Annex B. The material features of the 2011 Bonus2018 Stock Plan are discussed below, but the description is subject to, and is qualified in its entirety by, the full text of the 2011 Bonus2018 Stock Plan. If
The Board of Directors, the AmendmentCompensation Committee and management believe that the effective use of performance-based long-term incentive compensation and other equity awards, has been and will continue to be integral to the Company's success. We believe that performance-based awards and other equity awards incentivize directors, officers and other employees and consultants to maximize our growth, profitability and overall success, as well as align their interests with the interests of our shareholders to create long-term, sustainable shareholder value.
We currently maintain the 2008 Plan and the 2008 Director Plan that provide for the issuance of equity awards to directors, officers and other employees. Those plans will expire pursuant to their terms on August 19, 2018 and no awards will be granted under those plans after that date. Because these plans expire, the Board of Directors and the Company will lose access to an important compensation tool that is key to our ability to attract, motivate, reward and retain our key employees, directors and officers if the 2018 Stock Plan is not approved by our shareholders atshareholders. The 2018 Stock Plan is intended to replace those expiring plans. If the Annual Meeting, then the Amendment will not become effective and the 2011 Bonus2018 Stock Plan will continue in full force and effect. In addition, if the Amendment is not approved by our shareholders, the Incentive Bonus award2018 Stock Plan will be the Company's sole equity compensation plan (other than the Company's employee stock purchase plan) for future awards. As a result, after giving effect to this proposal, as of May 15, 2018, approximately 299,802 shares of our Common Stock would have been subject to outstanding equity awards or available for future awards (2,000,000 shares) under our equity compensation plans (other than the Company's employee stock purchase plan). Our three-year average annual equity grant rate, or "burn rate," was approximately 1.8% from fiscal year 2016 to fiscal year 2018. For additional information concerning the outstanding awards and number of shares available under the 2008 Stock Plan and 2008 Stock Plan, see "Executive Compensation - Equity Compensation Plan Information."
Key Features of the 2018 Stock Plan
We believe that the 2018 Stock Plan reflects a broad range of compensation and governance best practices, with some of the key features as follows:
- •
- No "Reload" Stock Options. The 2018 Stock Plan does not permit grants of stock options with a "reload" feature that would provide for additional stock options to be granted automatically to
our Chief Executive Officer, Julien R. Mininberg, fora participant upon the annual performance period commencing March 1, 2016 willparticipant's exercise of previously-granted stock options.
- •
- Minimum Vesting Requirements. 95% of the awards granted under the 2018 Stock Plan would be subject to a minimum vesting period of one year.
- •
- Director Grant Limit. No director in any fiscal year may be granted awards which have an aggregate fair value, together with cash compensation earned by a director, in excess of $650,000.
- •
- No Repricing or Replacement of Options or Stock Appreciation Rights ("SARs"). Options and SARs granted under the
maximum payment limits set forth2018 Stock Plan may not be repriced, replaced or re-granted through cancellation or modification without shareholder approval if the effect would be to reduce the
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- •
- No Dividend Payments on Unvested Awards. No dividends or dividend equivalents are payable with respect to unvested stock grants.
- •
- No Liberal Share Recycling. The 2018 Stock Plan is not subject to liberal share "recycling" provisions, meaning (among other things) that shares used to pay the exercise price of stock options, and shares tendered or withheld to satisfy tax withholding obligations with respect to an option, do not again become available for grant.
- •
- No "Evergreen" Provision. The total number of shares that may be issued under the 2018 Stock Plan is limited to the share reserve that is subject to shareholder approval. That is, the 2018 Stock Plan does not include an automatic share replenishment provision (also known as an "evergreen" provision).
- •
- No Automatic Single-Trigger Accelerated Vesting. Under the 2018 Stock Plan, there is no automatic single-trigger accelerated vesting in connection with a change in control where the awards are continued or the acquirer assumes the awards or grants substitute awards.
- •
- No Liberal Change of Control Definition. The definition of change in control in the
2011 Bonus Plan. Such award is more fully described under “New2018 Stock Plan Benefits” below.would require consummation, not only shareholder approval, of a merger or similar corporate transaction.
General Plan Information
General
The purpose of the 2011 Bonus2018 Stock Plan is to promote(1) aid the successCompany in attracting, securing and retaining directors of outstanding ability, (2) aid the Company and its subsidiaries and affiliates in attracting, securing and retaining employees of outstanding ability, (3) attract consultants to provide services to the Company and its subsidiaries and affiliates, as needed, and (4) motivate such persons to exert their best efforts on behalf of the Company and its subsidiaries and its affiliates by providing incentives through the granting of awards under the plan. The 2018 Stock Plan permits the granting of any or all of the following types of awards:
- •
- stock options, including incentive stock options ("ISOs") and non-qualified stock options ("NSOs");
- •
- SARs;
- •
- restricted stock;
- •
- restricted stock units; and
- •
- other stock-based awards.
The 2018 Stock Plan provides that the maximum number of shares of Common Stock with respect to certain keywhich awards may be granted is 2,000,000 shares (subject to adjustment in accordance with the provisions under the caption "Adjustments Upon Certain Events" below), whether pursuant to ISOs or otherwise. To the extent permitted by applicable law or rules, shares of Common Stock issued pursuant to a pre-existing plan of a company acquired by (or combined with) the Company or an affiliate or issued in assumption of, or in substitution for, any outstanding awards of any entity acquired
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by (or combined with) the Company or an affiliate will not be counted against shares of Common Stock available for grant pursuant to the 2018 Stock Plan.
The 2018 Stock Plan also provides that the total number of shares of Common Stock that will be available for grants of ISOs is 2,000,000 shares. The 2018 Stock Plan also sets the maximum number of shares of Common Stock that will be available for grants in a calendar year to any participant (other than non-employee directors) shall be limited, in the aggregate, to 1,000,000 shares of Common Stock (subject to adjustment in accordance with the provisions under the caption "Adjustments Upon Certain Events" below). An annual limit has been imposed on the fair value of awards that may be granted to any non-employee director during a fiscal year. The fair value of awards, when aggregated with cash compensation, granted to a non-employee director in any fiscal year may not exceed $650,000. Shares which are subject to awards that expire, are cancelled, exchanged, forfeited, settled by delivery of fewer shares than the number underlying the award, or are settled for cash (other than shares (1) withheld from an option or SAR for payment of the exercise price or tax payments, (2) not delivered due to a net settlement of outstanding options or SARs, and (3) repurchased on the open market using proceeds from the exercise of an option) may be utilized again with respect to awards granted under the 2018 Stock Plan. As of June 22, 2018, the closing price of Common Stock was $97.20 per share.
Grants and Future Benefits
Under our current compensation guidelines, Board members who are non-employee directors receive annual compensation for their services in the form of a cash retainer equal to $100,000 and Common Stock valued at $100,000. The grants of Common Stock are made in quarterly equal value installments on the first business day of each fiscal quarter based on fair market value of the Common Stock as of the close of business of the grant date. Any additional grants of awards or future benefits that will be received by participants under the 2018 Stock Plan are not yet determinable, as awards are at the discretion of the Compensation Committee.
Eligibility
Currently, employees, directors and consultants (including officers)agents, independent contractors leased employees and advisors) of the Company, and its subsidiaries bonus incentives that qualify as performance-based compensation within the meaning of Section 162(m) of the Code. The 2011 Bonus Plan is designed to recognize the significant contributions of the Company’s and its subsidiaries’ executive officers to the growth, profitability and success of the Company and its subsidiaries by rewarding participating executive officers for the achievement of pre-established annual performance goals.
Eligibility and Incentive Bonuses
The 2011 Bonus Plan authorizes the Compensation Committee to establish and administer performance criteria pursuant to which eligible key employees and consultants may receive designated bonus compensation (the “Incentive Bonus”). Key employees (including any officer) and consultants of the Company or its subsidiaries that are selected by the Compensation Committeeaffiliates are eligible to participate in the 2011 Bonus2018 Stock Plan. As of June 22, 2018, the Company, its subsidiaries and affiliates, had approximately 1,532 employees and directors who would be eligible to receive awards under the 2018 Stock Plan. The Compensation Committee in its sole discretion determines key employees and consultants eligible for Incentive Bonus awards (the “Participants”) and, subject to the terms of the 2011 Bonus Plan, the amount of such Incentive Bonuses payable to such Participants. The number of key employees and consultants, if any, that are eligible to receive awards under the 2011 Bonus2018 Stock Plan as of February 29, 2016June 22, 2018 is not determinable.
New Plan BenefitsAdministration
Except as described inThe 2018 Stock Plan is administered by the table below, we have not approved any Incentive Bonus awards where anyCompensation Committee of the Board of Directors. The Compensation Committee has the authority to, among other things, select employees, directors or consultants to whom awards are to be granted, to determine the number of options or other types of awards to be granted to such employees, directors or consultants and to establish the terms are conditioned upon shareholder approvaland conditions of such awards. The Compensation Committee has the authority to interpret the 2018 Stock Plan, to establish, amend and rescind any rules and regulations relating to the 2018 Stock Plan, and to otherwise make any determination that it deems necessary or desirable for the administration of the Amendment2018 Stock Plan. In order to satisfy the requirements of Rule 16b-3 of the Exchange Act, members of the Compensation Committee are required to be "non-employee directors" within the meaning of Rule 16b-3 of the Exchange Act. The 2018 Stock Plan provides that the Compensation Committee may authorize one or more officers to grant awards of up to an aggregate of 350,000 shares of Common Stock (subject to adjustment in accordance with the provisions under the
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caption "Adjustments Upon Certain Events" below) in each calendar year to participants who are not subject to the 2011 Bonus Plan. Ifrules promulgated under Section 16 of the Amendment is not approved, then the maximum amount of Mr. Mininberg’s annual incentive bonusExchange Act, provided that any such grants will be subject to the $3,000,000terms and conditions of the Compensation Committee authorization and that such officer must notify the Compensation Committee of any such grants.
Notwithstanding the foregoing, a Repricing (as defined below) is prohibited without prior shareholder approval, provided, however, that the Compensation Committee may: (1) authorize the Company, with the consent of the respective participant, limitto issue new awards in exchange for the surrender and cancellation of any or all outstanding awards or (2) buy from a participant an award previously granted with payment in cash, shares of Common Stock (including restricted stock) or other consideration, based on such terms and conditions as the Compensation Committee and the participant may agree. For purposes of the 2018 Stock Plan, "Repricing" means any of the following or any other action that has the same purpose and effect: (1) lowering the exercise price of an outstanding option or SAR granted under the 2011 Bonus Plan. However, there are some Incentive Bonus awards2018 Stock Plan after it is granted or (2) canceling an outstanding award granted under the 2011 Bonus2018 Stock Plan that are notat a time when its exercise or purchase price exceeds the then fair market value (as defined in the 2018 Stock Plan) of the shares underlying such outstanding award, in exchange for another award or a cash payment, unless the cancellation and exchange occurs in connection with a merger, amalgamation, consolidation, sale of substantially all the Company's assets, acquisition, spin-off, or other similar corporate transaction.
Adjustments Upon Certain Events
Subject to any required action by the shareholders of the Company, the number and type of shares covered by each outstanding award, and the number and type of shares which have been authorized for issuance under the 2018 Stock Plan but as to which no awards have yet been granted or which have been returned to the 2018 Stock Plan upon cancellation, expiration or forfeiture of an award, as well as the exercise or purchase price, will be proportionately adjusted for any increase or decrease in the number of issued shares, any change to the price of the shares or any other change affecting the shares resulting from, among other events, a stock split, subdivision, consolidation, reverse stock split or combination or the payment of a bonus issue or stock dividend (but only on the Common Stock) or reclassification of the Common Stock, any other similar corporate event, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company (other than increases pursuant to the issuance of certain other stock-based awards under this plan). Except as expressly provided in the 2018 Stock Plan, no issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, will affect, and no adjustment by reason thereof will be made with respect to, the number or price of shares subject to shareholder approvalthe 2018 Stock Plan or an award.
In the event of a Reorganization (as defined in the 2018 Stock Plan), the Compensation Committee may, in its sole discretion, provide for adjustments to the settlement and vesting of existing awards, including termination of such awards or modification of performance targets or performance periods for performance-based awards. The Compensation Committee's determination need not be uniform and may be different for different participants whether or not such participants are similarly situated.
The Compensation Committee may grant awards under the 2018 Stock Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Amendment. Future grantsCompany or an affiliate as a result of a merger or consolidation of the former employing entity with the Company or an affiliate or the acquisition by the Company or an affiliate of property or stock of the former employing corporation. Shares of Common Stock issued pursuant to a pre-existing plan of a company acquired by (or combined with) the Company or an affiliate or in assumption or substitution
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for any outstanding awards of any entity acquired (or combined with) the Company or an affiliate shall not reduce the shares of Common Stock authorized for grant under the Amendment2018 Stock Plan.
Change of Control
The acceleration of equity awards due to a Change of Control is based on a "double trigger," which means that the 2011 Bonusacceleration of those awards would generally occur if, during the employment period, the participant's employment is involuntarily terminated by the Company other than for cause or by the participant for good reason, in each case, within a specified period following a Change of Control or if the equity award is not assumed or substituted in connection with the Change of Control. Accordingly, in the event of a Change of Control, with respect to awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, if within one year after the effective date of the Change of Control, a participant's service is involuntarily terminated other than for cause or by the participant for good reason, then (1) the participant will have the right to exercise or settle from and after the date of termination any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant's other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant's outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the date of termination based upon achievement of relevant performance goals or based on performance at the "target" level, either in full or pro rata based upon the length of time within the performance period that has elapsed. With respect to awards not assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, upon the occurrence of the Change of Control, (1) the participant will have the right to exercise or settle from and after the date of the Change of Control any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant's other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant's outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the effective date of the Change of Control based upon achievement of relevant performance goals or based on performance at the "target" level, either in full or pro rata based upon the length of time within the performance period that has elapsed.
Regardless of whether a Change of Control has occurred, the Compensation Committee may in its sole discretion at any time determine that, upon the termination of service of a participant for any reason or the occurrence of a Change of Control, all or a portion of such participant's options or SARs shall become fully or partially exercisable, that such Participant's awards shall lapse, and/or that any performance-based criteria shall be deemed to be wholly or partially satisfied.
Stock Options
The 2018 Stock Plan provides that the option price pursuant to which Common Stock may be purchased will be determined by the Compensation Committee, but will not be less than the fair market value of the Common Stock on the date the option is granted. The Compensation Committee will determine the term of each option, but no option will be exercisable more than 10 years after the date of grant. Payment of the purchase price will be (1) in its discretion,cash, (2) in shares of Common Stock held for at least six months, (3) partly in cash and partly in such shares, (4) through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the aggregate option price for the shares being purchased, (5) through having shares withheld by the
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Company from any shares that would have otherwise been received by the participant, or (6) through such other means as described above. Thus, except as set forthwill be prescribed in the table below,award agreement. If a participant's service terminates by reason of death or Disability (as defined in the 2018 Stock Plan), to the extent the participant was entitled to exercise the option on the date of death or Disability, the option may be exercised within one year after the date of death or Disability (or such other period specified in the applicable award agreement). If a participant's service with the Company cannot, at this time, determineterminates for any reason (other than death or Disability), each option then held by the amount of any Incentive Bonuses thatparticipant may be paidexercised within ninety days (or such other period specified in the future underapplicable award agreement) after the 2011 Bonus Plan.
Helen of Troy Limited
Amended and Restated 2011 Annual Incentive Plan
|
Name and Position
| Maximum Dollar Value ($)
|
Julien R. Mininberg, Chief Executive Officer
| $3,050,000
|
Brian L. Grass, Chief Financial Officer
| -
|
Thomas J. Benson, Chief Operations Officer
| -
|
Vincent D. Carson, Chief Legal Officer and Secretary
| -
|
Executive Group
| $3,050,000
|
Non-Executive Director Group
| -
|
Non-Executive Officer Employee Group
| -
|
Administration
The 2011 Bonus Plan will be administereddate of such termination, but only to the extent such option was exercisable at the time of termination of service. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested options held by a participant if the participant is terminated by the Company without "cause" (as determined by the Compensation Committee, which consists of two or more “outside directors” within the meaning of Section 162(m) of the Code.Committee).
Stock Appreciation Rights
The Compensation Committee has the authority under the 2018 Stock Plan to construegrant SARs independent of stock options. Each SAR granted independently of an option entitles a participant to exercise the SAR in whole or in part and, interpretupon such exercise, to receive from the 2011 Bonus Plan and may adopt rules and regulations governingCompany an amount equal to (1) the administration thereof.
Underexcess of (i) the current provisionsfair market value on the exercise date of one share of Common Stock over (ii) the exercise price per share, times (2) the number of shares covered by the portion of the 2011 Bonus Plan, no Participant shall receive an Incentive BonusSAR so exercised.
Other Stock-Based Awards
The Compensation Committee also has the authority under the 2011 Bonus2018 Stock Plan for any performance periodto grant awards of unrestricted shares of Common Stock, restricted stock, restricted stock units, and other awards that are valued in excesswhole or in part by reference to, or are otherwise based upon, the fair market value of $3,000,000. If the Amendment is approved by shareholders, the limitCommon Stock. The terms and conditions of these other stock-based awards will be increaseddetermined by the Compensation Committee.
Other stock-based awards may also be granted to $4,500,000. In addition, no Participant shall receive any payment under the 2011 Bonus Plan unlessparticipants from time to time as the Compensation Committee has certified, by resolution or other appropriate action in writing, that the amount thereof has been accurately determined in accordance with the terms, conditions and limits of the 2011 Bonus Plan and that the performance criteria and any other material terms previously established by the Compensation Committee or set forth in the 2011 Bonus Plan were in fact satisfied.
Any Incentive Bonus granted by the Compensation Committee under the 2011 Bonus Plan shall be paidsees fit. Such performance-based awards are rights to receive amounts denominated in cash or shares of Common Stock, and shall be paid as soon as practicable followingbased on the endCompany's or a participant's performance during a designated period in which attainment of the applicable performance period and no later thangoals is measured. Performance goals, the fifteenth day of the third calendar month following the endlength of the performance period (which generally shalland time of payment of the Performance-Based Award are established in writing by the Compensation Committee: (1) at a time when the outcome for that performance period is substantially uncertain and (2) not later than ninety days after the commencement of the performance period to which the performance goal relates, but in no event after 25 percent of the relevant performance period has elapsed. The performance criteria will be the Company’s fiscal year), unless the Participant with the consent ofbased on one or more (or any combination) criteria as the Compensation Committee elects, priorshall determine from time to time, including, but not limited to the beginning of the applicable performance period, to defer all or a portion such payment. Incentive Bonuses paid in shares of Common Stock will be paid under the 2008 Stock Plan (or any successor plan) and shall reduce the number of shares available for issuance under the plan.
Except as otherwise provided in a written agreement between the Company and the Participant, no Incentive Bonus will be paid for any fiscal year unless the Participant is an employee of the Company at the end of that fiscal year, except if the Participant’s employment terminates during a fiscal year by reason of death, disability or a Change in Control (as defined in the 2011 Bonus Plan), then the Participant (or the Participant’s beneficiary) will receive the Incentive Bonus for that fiscal year, prorated to the date of termination of employment.
Performance Goals
Performance goals established under the 2011 Bonus Plan for each of the Participants may be, but need not be, different for each fiscal year, and different performance goals may be applicable to different Participants. The specific performance goals must be established by the Compensation Committee in advance of the deadlines applicable under Section 162(m) of the Code and while the attainment relating to the performance goals remains substantially uncertain within the meaning of Section 162(m) of the Code. Each Participant may receive an Incentive Bonus if and only if the performance goals established by the Compensation Committee is attained. The performance goals to be used for purposes of awards to employees whose compensation is subject to Section 162(m) of the Code must be chosen by the Compensation Committee from among the following:
- •
·earnings before or after taxes· (including earnings before interest, taxes, depreciation and amortization
amortization);·
- •
- net
incomeincome;
·
- •
- operating
incomeincome;
·
- •
- earnings from continuing
operationsoperations;
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- •
- earnings per share (whether basic or fully diluted)
;
·
- •
- book value per
shareshare;
·
- •
- expense management;
- •
- return on investment before or after the cost of capital;
- •
- improvements in capital structure;
- •
- growth measures (including, but not limited to, sales, net income, cash flow, and earnings per share)
- •
- maintenance or improvement of profit margins;
- •
- stock price;
- •
- market share;
- •
- revenues or sales;
- •
- costs;
- •
- cash flow;
- •
- cash flow productivity;
- •
- free cash flow;
- •
- working capital;
- •
- changes in net assets (whether or not multiplied by a cost of capital percentage);
- •
- return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales or revenue)
;
·
expense management - •
· return on investment before or after the cost of capital· improvements in capital structure
· maintenance or improvement of profit margins
· stock price
· market share
· revenues or sales
· costs
· cash flow
· cash flow productivity
· working capital
· changes in net assets (whether or not multiplied by a constant percentage intended to represent the cost of capital)
·debt reduction
reduction;·
- •
- reductions in the
Company’sCompany's overhead ratioratio;
·
growth measures (including, but not limited - •
- expenses to sales
net income, cash flow or earnings per share)ratio; and
·
- •
- total shareholder
returnreturn.
· free cash flow
· expense to sales ratio
Any of the aboveThe foregoing criteria may relate to or be based upon the Company, one or more of its Subsidiaries,affiliates, subsidiaries or one or more of its divisions, geography, business units, segments, products, product lines, partnerships, joint ventures, minority investments (except with respect to total shareholder return and earnings per share criteria), or any combination thereof, or may be determined or applied on an absolute or relative basis, a consolidated basis, an adjusted basis, or as compared to the performance of a published or special index, including, but not limited to, the Standard & Poor's 500 Stock Index, the Nasdaq Market Index, the Russell 2000 Index or a group of comparable companies, or any combination thereof. Such criteria are
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Performance goals need not, required tohowever, be based anupon any increase or positive result under the foregoing criteria and could include, for example, maintaining the status quo or limiting economic losses. As of June 22, 2018, the closing price of Common Stock was $97.20 per share.
The Compensation Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given participant and, if they have, to so ascertain the amount payable under the applicable Performance-Based Award. No performance-based awards will be paid for such performance period until such determination is made by the Compensation Committee. The amount of the Performance-Based Award actually paid to a given participant may be less than the amount determined by the applicable performance goal formula, at the discretion of the Committee. The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the participant at such time as determined by the Compensation Committee, in its sole discretion after the end of such performance period; provided, however, that a participant may, if and to, the extent permitted by the Compensation Committee and consistent with the provisions of Section 409A of the Code, elect to defer payment of a Performance-Based Award. In addition, the performance goals may be calculated without regard to extraordinary items or accounting changes. For example (without limiting the adjustments to any of the following), the Compensation Committee may specify, in its sole discretion, at the time the performance goals are set, the manner of adjustment of any performance goal to the extent necessary to prevent dilution or enlargement of any award as a result of extraordinary events or other circumstances, as determined by the Compensation Committee, or to exclude the effects of (a) extraordinary, unusual, or non-recurring items, (b) changes in applicable laws, regulations, or accounting principles, (c) currency fluctuations, (d) discontinued operations, (e) non-cash items, such as amortization, depreciation, reserves, or asset impairments, (f) any recapitalization, restructuring, reorganization, amalgamation, merger, acquisition, divestiture, consolidation, spin-off, split-up, subdivision, combination, liquidation, dissolution, sale of assets, or other similar corporate transaction, including expenses incurred in connection therewith, or (g) litigation charges. In addition, post-grant changes may be made to stock-based performance-based awards on a discretionary basis if they are made to reflect a change in corporate capitalization of the Company.
Restricted Stock and Restricted Stock Units
The 2018 Stock Plan provides for certain terms and conditions pursuant to which restricted stock and restricted stock units may be granted under the 2018 Stock Plan. Each grant of restricted stock and restricted stock units must be evidenced by an award agreement in a form approved by the Compensation Committee. The vesting of a restricted stock award or restricted stock unit granted under the 2018 Stock Plan may, but shall not be required to, be conditioned upon the completion of a specified period of service, upon attainment of specified performance goals, and/or upon such other criteria as the Compensation Committee may determine in its sole discretion. If a participant's service is terminated for any reason, the participant will only be entitled to the restricted stock or restricted stock units vested at the time of such termination of service unless the participant is party to an employment agreement that provides otherwise. The participant's unvested restricted stock and restricted stock units will be repurchased or forfeited at the time of the participant's termination. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested restricted stock or restricted stock units held by a participant if the participant is terminated by the Company without "cause" (as determined by the Compensation Committee). Except as provided in the applicable award agreement, no shares of restricted stock may be assigned, transferred or otherwise encumbered or disposed of by the participant until such shares have vested in accordance with the terms of such award agreement. If and to the extent that the applicable award agreement so provides, a participant will have the right to vote and, to the extent vested, receive dividends on the shares of restricted stock granted to him or her under the 2018 Stock Plan. Unless otherwise provided in the
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applicable award agreement, any shares received as a dividend on such restricted stock or in connection with a stock split or subdivision of the shares of restricted stock will be subject to the same restrictions as the restricted stock.
Amendments to the 2011 Bonus2018 Stock Plan
The 2011 Bonus2018 Stock Plan canmay be amended by the Board of Directors or the Compensation Committee, alone, unless suchexcept that no amendment is required tomay be approved bymade which, (1) without the Boardapproval of Directors or the Company’s shareholders to complyof the Company, would (except as in accordance with the provisions under the caption "Adjustments Upon Certain Events" above) increase the total number of shares reserved or change the maximum number of shares for which awards may be granted to any participant, or that otherwise would require shareholder approval under rules of any stock exchange or market or quotation system on which the shares are traded, or other applicable rules under Section 162(m)law or (2) without the consent of a participant, would impair any of the Code.rights or obligations under any award previously granted to the participant or affect adversely, in any material way, any award previously granted (a) that may cause an ISO to become a non-qualified stock option or (b) that may be required or desirable to facilitate compliance with applicable laws, as determined in the sole discretion of the Compensation Committee. Subject to the foregoing, with respect to participants who reside or work outside of the United States, the Compensation Committee may amend the terms of the 2018 Stock Plan or awards granted thereunder in order to conform such terms with the requirements of local law.
Transferability
Transferability
Except as expressly provided by the Committee, benefits payableAwards under the 2011 Bonus2018 Stock Plan are not assignable or transferable otherwise than by an assignmentwill or by the laws of a contingencydescent or payment due after deathdistribution, except that the Compensation Committee may authorize stock options (other than ISOs) to be granted on terms which permit irrevocable transfer for no consideration by the participant to (1) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, parent-in-law, child-in-law or sibling-in-law, including adoptive relationships, of the Participantparticipant, (2) any trust in which these persons have more than 50 percent of the beneficial interest, (3) any foundation in which these persons or the participant control the management of assets and (4) any other entity in which these persons or the participant own more than 50 percent of the voting interests. In addition, the Compensation Committee may waive the non-transferability provisions of the 2018 Stock Plan (except with respect to ISOs) to the deceased Participant’s legal representativeextent that such provisions are not required under any law, rule or beneficiary.regulation applicable to the Company.
Federal Income Tax Consequences
The following is a discussion of certain U.S. corporate and personal federal income tax consequences relevant to the Company and its participants in the 2011 Bonus2018 Stock Plan. It is not intended to be a complete description of all possible tax consequences with respect to awards granted under the 2011 Bonus2018 Stock Plan and does not address state, local or foreign tax consequences.
A participant who is granted a NSO will not recognize income at the time the option is granted. Upon the exercise of the option, however, the excess, if any, of the fair market value of the shares on the date of exercise over the option exercise price will be treated as ordinary income to the participant, and the Company will generally be entitled to an income tax deduction in the same year in an amount measured by the amount of ordinary income taxable to the participant, subject to the limitations described below. The participant will be entitled to a cost basis for the shares for income tax purposes equal to the amount paid for the shares plus the amount of ordinary income taxable at the time of exercise. Upon a subsequent sale of such shares, the participant will recognize short-term or long-term capital gain or loss, depending upon his or her holding period for such shares.
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To A participant who is granted an ISO satisfying the extentrequirements of the Code will not recognize income at the time the option is granted or exercised. The excess of the fair market value of the shares on the date of exercise over the option exercise price is, however, included as an adjustment in determining the participant's alternative minimum tax for the year in which the exercise occurs. If the participant does not dispose of shares received upon exercise of the option for more than one year after exercise and two years after grant of the option (the "Holding Period"), upon the disposition of such shares the participant will recognize long-term capital gain or loss based on the difference between the option exercise price and the amount realized upon the disposition of such shares. In such event, the Company is not entitled to a deduction for income tax purposes in connection with the exercise of the option. If the participant disposes of the shares received upon exercise of the ISO without satisfying the Holding Period requirement, the participant must generally recognize ordinary income equal to the lesser of (1) the fair market value of the shares at the date of exercise of the option over the exercise price or (2) the amount realized upon the disposition of such shares over the exercise price. Any further appreciation is taxed as short-term or long-term capital gain, depending on the participant's holding period. In such event, the Company would be entitled to an income tax deduction in the same year in an amount measured by the amount of ordinary income taxable to the participant, subject to the limitations described below.
Upon exercise of a SAR, a participant will recognize taxable income in the amount of the aggregate cash or shares received. A participant who is granted unrestricted shares will recognize ordinary income in the year of grant equal to the fair market value of the shares received. In either such case, the Company will be entitled to an income tax deduction in the amount of such ordinary income taxable to the participant, subject to the limitations described below.
Generally, a participant will not recognize any income at the time an award of restricted stock or restricted stock units is granted, nor will the Company be entitled to a deduction at that an Incentive Bonus is paidtime. In the year in which restrictions on shares of commonrestricted stock generally, alapse, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of paymentvesting over the amount, if any, the participant paid for the shares. A participant may, however, elect within thirty days after receiving an award of restricted stock to recognize ordinary income in the year of receipt, instead of the year of vesting, equal to the excess of the fair market value of the shares on the date of receipt over the amount, if any, the participant paid for the shares. Similarly, upon the vesting of restricted stock units, the participant will recognize ordinary income in an amount equal to the fair market value of the shares upon vesting, provided the shares are issued on that date. With respect to the issuancegrants of sharesawards of commonboth restricted stock and restricted stock units, the Company will be entitled to a tax deduction at the same time and in the same amount asthat the ordinary income is taxable to the participant, recognizes income. If such shares are subject to a substantial risk of forfeiture when issued, the participant’s recognition of income and the Company’s deduction shall be delayed until the substantial risk of forfeiture lapses.limitations described below.
In order for the amounts described above to be tax deductible, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses. And the Company's ability (or the ability of one of the Company's subsidiaries, as applicable) to obtain a deduction for amounts paid under the 2018 Stock Plan could be limited by Section 162(m), which limits the deductibility, for federal income tax purposes, of compensation paid to certain executive officers of a publicly traded corporation to $1,000,000 with respect to any such officer during any taxable year of the corporation. For taxable years beginning prior to 2019, an exception to the non-deductibility limitations of Section 162(m) has applied to "qualified performance-based compensation" that complies with certain conditions. However, the Tax Cuts and Jobs Act has repealed the performance-based compensation exception from Section 162(m)'s deduction limit, effective for taxable years beginning after December 31, 2017. Therefore, the Company's ability to obtain a deduction for an award paid under the 2018 Stock Plan will be subject to the deductibility limitations of Section 162(m).
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Under current Company policies or agreements, certain executives may be required to hold a certain number of shares for a certain period of time (e.g. six months past termination of employment) including, but not limited to, shares the executive receives under the 2018 Stock Plan. Although such policies may restrict the executive's ability to sell his or her shares, it will not change the income inclusion event with respect to any shares issued under the 2018 Stock Plan.
The Compensation Committee will require payment of any amount it may determine to be necessary to withhold for federal, state, local, or other taxes as a result of the issuancegrant, vesting or the exercise of shares of common stock.an award.
Section 162(m) of the Code. Section 162(m) of the Code generally disallows a federal income tax deduction to any publicly held corporation for compensation paid by the Company in excess of $1,000,000 in any taxable year to any “covered employee” as of the last day of the taxable year, but exempts from this limitation “performance-based” compensation the material terms of which are disclosed and approved by shareholders. For purposes of Section 162(m) of the Code, “covered employees” include the chief executive officer and each of the three other most highly compensated executive officers other than the chief financial officer. The Company has structured and intends to implement the 2011 Bonus Plan so that compensation paid to these executive officers under the 2011 Bonus Plan would be qualified performance-based compensation under Section 162(m) of the Code and would not, therefore, be subject to any deduction limitation under Section 162(m) of the Code. Notwithstanding the foregoing, the Company may, from time to time, award compensation to executive officers that is not deductible under Section 162(m) of the Code.
Section 280G of the Code.Code
Under certain circumstances, payments, including Incentive Bonus payments, madethe accelerated vesting or exercise of awards in connection with a Change inof Control (as defined in the 2011 Bonus Plan) of the Company might be deemed an “excess"excess parachute payment”payment" for purposes of the golden parachute tax provisions of Section 280G of the Code. To the extent it is so considered, the recipientgrantee may be subject to a 20 percent excise tax, and the Company may be denied a tax deduction.
Sections 409A and 457A of the Code. Code
The Company generally intends that, to the extent applicable, awards granted under the 2011 Bonus2018 Stock Plan will comply with, or be exempt from, the provisions of Sections 409A and 457A of the Code. Incentive stock options and restricted stock generally are not subject to Section 409A of the CodeCode. NSOs and willSARs are granted so as to be exempt from Section 457A of the Code. Restricted stock is not subject to Section 409A of the Code. Other awards have been designed to be exempt from Sections 409A and 457A because the awards are settled immediately following the vesting date, or to automatically comply with SectionSections 409A of the Code. However, recipientsgrantees of performance-based awards may be permitted to elect to defer the payment of certain performance-based awards to the extent that the recipient would not be subject to Section 457A of the Code.awards. This deferral election and the subsequent payment of the awards are also intended to comply with SectionSections 409A of the Code. However, under certain circumstances the accelerated payment of Incentive Bonuses subject to Section 409A of the Code that violates Section 409A may subject the recipient to adverse tax consequences, including penalty taxes and interest.
Tax Summary. Summary
The foregoing discussion is intended only as a summary of certain U.S. federal income tax consequences and does not purport to be a complete discussion of all the tax consequences of participation in the 2011 Bonus2018 Stock Plan. Accordingly, participants inholders of awards granted under the 2011 Bonus2018 Stock Plan should consult their own tax advisers for specific advice with respect to all U.S. federal, state or local tax effects before exercising any options or SARs, and before disposing of participating in the 2011 Bonus Plan.any shares acquired pursuant to an award. Moreover, the Company does not represent that the foregoing tax consequences apply to any particular participant’saward holder's specific circumstances or will continue to apply in the future and makes no undertaking to maintain the tax status (e.g. as an ISO) of the 2011 Bonus Plan with respect to any participant.award.
The 2011 Bonus2018 Stock Plan is not subject to any provision of ERISA, nor is it a qualified employee benefit plan under Section 401(a) of the Code.
Clawback Policyand Insider Trading Policies
Any participant receiving any Incentive BonusAward granted pursuant to the 2011 Bonus2018 Stock Plan shall be subject to (1) Section 304 of the Sarbanes Oxley Act of 2002, and (2) to the extent required under theany rules and/or regulations issued pursuant to the Dodd-Frank Act of 2010, any(3) the Company's clawback policy adopted byand (4) the Company pursuant to such rules and/or regulations.Insider Trading Policy of the Company.
Vote Required for Approval and Recommendation
The affirmative vote of the majority of the votes cast at the Annual Meeting is required to approve the Amendment to the Helen of Troy Limited Amended and Restated 2011 Annual2018 Stock Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”"FOR" THIS PROPOSAL.
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PROPOSAL 4: APPROVAL OF THE HELEN OF TROY LIMITED 2018 EMPLOYEE STOCK PURCHASE PLAN
On June 27, 2018, the Company's Board of Directors adopted, subject to approval by the Company's shareholders, the Helen of Troy Limited 2018 Employee Stock Purchase Plan (the "2018 ESPP") and reserved for issuance thereunder 750,000 shares of Common Stock. The 2008 ESPP will expire pursuant to its terms on September 1, 2018 and no additional shares will be offered under that plan after that date. The text of the 2018 ESPP is attached hereto as Annex C. The material features of the 2018 ESPP are discussed below, but the description is subject to, and is qualified in its entirety by, the full text of the 2018 ESPP.
The purpose of the 2018 ESPP is to provide employees of the Company or its subsidiaries or affiliates designated by the Board of Directors or the Committee (defined below) ("Designated Companies") as eligible to participate in the 2018 ESPP an opportunity to purchase shares of Common Stock and thereby have an additional incentive to contribute to the prosperity of the Company. If a subsidiary or affiliate of the Company has been designated by the Board of Directors or the Committee as eligible to participate in the 2018 ESPP Plan, the Committee shall determine whether such Designated Company shall participate in the Section 423 offering or the non-Section 423 offering. For purposes of a Section 423 offering, only the Company and its subsidiaries may be a Designated Company; provided, however, that at any given time, a subsidiary of the Company that is a Designated Company under a Section 423 offering will not be a Designated Company under a non- Section 423 offering. The 2018 ESPP provides that eligible full-time employees of the Company or the Designated Companies may purchase shares of Common Stock with payroll deductions accumulated on behalf of such employee.
It is the intention of the Company that the 2018 ESPP qualify as an "employee stock purchase plan" under Section 423 of the Code. The 2018 ESPP also authorizes the grant of rights to purchase shares of Common Stock that do not qualify under Section 423 of the Code pursuant to the rules, procedures, or sub-plans adopted by the Compensation Committee designed to accommodate the specific requirements of laws and procedures in non-United States jurisdictions. Except as otherwise indicated, Section 423 offerings and non-Section 423 offerings will operate and be administered in the same manner.
Administration
The 2018 ESPP will be administered by a committee appointed by the Board of Directors (the "Committee"). The Committee will consist of at least two members. The Committee will have the full power and authority, in its sole discretion, to promulgate any rules and regulations which it deems necessary for the proper administration of the 2018 ESPP and to interpret the provisions and supervise the administration of the plan.
Effective Time and Term; Amendment and Termination
The 2018 ESPP is subject to shareholder approval and will become effective on the date of the Annual Meeting and continue until September 1, 2028, unless sooner terminated. The Board of Directors may amend or terminate the 2018 ESPP in its sole discretion; provided that, if shareholder approval is required pursuant to the Code, United States federal securities laws or regulations, or the rules or regulations of the Nasdaq Global Select Market (or any other securities exchange on which the shares are listed or traded), then no such amendment shall be effective unless approved by the Company's shareholders within such time period as may be required. Upon termination of the 2018 ESPP, all contributions shall cease and all amounts then credited to a participant's account shall be
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equitably applied to the purchase of whole shares then available for sale, and any remaining amounts shall be promptly refunded, without interest, to the participants.
Eligibility
Employees regularly employed on a full-time basis by the Company or a Designated Company on the first day of any offering period are eligible to purchase Common Stock under the terms and conditions of such offering of Common Stock under the 2018 ESPP. An employee is considered to be employed on a full-time basis unless his or her customary employment is less than 20 hours per week or less than 5 months during any year. An employee who immediately after a right to purchase Common Stock under the 2018 ESPP is granted owns or is considered to own shares possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company or any of its subsidiaries may not participate in the 2018 ESPP. For purposes of determining share ownership pursuant to the immediately preceding sentence, any shares which an employee may purchase by conversion of convertible securities or under outstanding options will be treated as owned by the employee and the attribution rules of Section 424 of the Code, will be applicable. The Committee, in its discretion, from time to time, may, prior to the commencement of an option period for all options granted in an offering (and on a uniform and nondiscriminatory basis), (a) extend eligibility to part-time employees pursuant to criteria and procedures established by the Committee; (b) impose an eligibility period on participation of up to two (2) years with respect to participation on any prospective entry date; or (c) exclude from eligibility an individual who (i) is a highly compensated employee within the meaning of Section 414(q) of the Code, (ii) is a highly compensated employee within the meaning of Section 414(q) of the Code with compensation above a certain level or (iii) is an officer subject to Section 16(b) of the Exchange Act, provided the exclusion is applied, to the extent required by applicable law, with respect to each offering in an identical manner to all highly compensated individuals or officers of the Company, subsidiary or affiliate, as applicable, whose employees are participating in that offering.
At June 22, 2018, the Company had approximately 1,522 employees (including 12 part-time employees, if the Committee authorizes their participation) who would be eligible to participate in the 2018 ESPP. At this time, the number of employees that will participate in the 2018 ESPP is not determinable nor can the benefits or amounts that will be received by or allocated to participating employees, including the Company's executive officers or any other group of employees.
An employee who works for the Company or a subsidiary or affiliate of the Company and is a citizen or resident of a jurisdiction other than the United States (without regard to whether such individual also is a citizen or resident of the United States or is a resident alien may be excluded from participation in the 2018 ESPP or an offering if the participation of such employee is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the 2018 ESPP or a Section 423 offering to violate Section 423 of the Code. In the case of a non-Section 423 offering, an employee (or group of employees) may be excluded from participation in the 2018 ESPP or an offering if the Committee has determined, in its sole discretion, that participation of such employee(s) is not advisable or practicable for any reason.
Securities and Amount of Common Stock Subject to the 2018 ESPP
The aggregate number of shares of Common Stock that may be sold pursuant to all offerings of the Company's Common Stock under the 2018 ESPP will not exceed 750,000 shares, as adjusted for any recapitalization or reorganization of the Company as set forth in the 2018 ESPP. The shares that may be issued under the 2018 ESPP may be authorized but unissued Common Stock, treasury shares or shares purchased in the open market. If the total number of shares of Common Stock for which
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options are granted exceeds the maximum number of shares offered, the number of shares which may be purchased under the options granted will be reduced on a pro rata basis.
Method of Employee Participation in the 2018 ESPP
The Committee will designate the amount of shares available for each offering and will establish the duration for each offering, the first day of each offering and the exercise periods for the offerings.
An eligible employee electing to participate in any offering of Common Stock under the 2018 ESPP may authorize payroll deductions not to exceed 15% of that employee's compensation, or such lesser percentage of the employee's compensation. The Company will maintain or cause to be maintained a stock purchase account for each participating employee and no interest will be paid or credited with respect to amounts accrued in such accounts except where required by local law. Upon the expiration date of each offering, the funds accumulated in the stock purchase account of each participating employee will be applied to the purchase of shares of Common Stock at a price per share equal to the lesser of (a) a percentage (not less than 85%) established by the Committee (the "Designated Percentage") of the fair market value per share of Common Stock on the date on which an option is granted, or (b) the Designated Percentage of the fair market value (as determined under the 2018 ESPP) per share of Common Stock on the date on which the option is exercised and the Common Stock is purchased. Upon the exercise of an option, the Company will deliver to the participating employee the Common Stock purchased. The Committee may permit or require that shares be deposited directly with a broker designated by the participating employee (or a broker selected by the Committee) or to a designated agent of the Company, and the Committee may utilize electronic or automated methods of share transfer. The Committee may also require that shares be retained with such broker or agent for a designated period of time (and may restrict dispositions during that period) and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares or to restrict transfer of such shares.
An employee will not be entitled to accrue rights to purchase shares under the 2018 ESPP (and other employee stock purchase plans, as defined in Section 423 of the Code, of the Company and its subsidiaries) at a rate which exceeds $25,000 of the fair market value (as determined under the 2018 ESPP) of such shares (determined at the time the option is granted) for any calendar year in which such option is outstanding at any time. The maximum shares of Common Stock that may be purchased by an employee under any offering period cannot exceed 2,000, subject to adjustment for any recapitalization or reorganization. On June 22, 2018, the fair market value of a share of Common Stock was $97.20.
In the event the fair market value (as determined under the 2018 ESPP) of the Common Stock is lower on the first day of an exercise period within an option period (subsequent "Reassessment Date") than it was on the first day for the applicable option period, all employees participating in the 2018 ESPP on the Reassessment Date will be deemed to have relinquished the portion of the option granted on the first day of the option period that has not previously been exercised and to have enrolled in and received a new option commencing on such Reassessment Date, unless the Committee has determined not to permit overlapping option periods or to restrict such transfers to lower price option periods.
A participating employee may suspend or discontinue participation in the 2018 ESPP. If an employee suspends participation during an exercise period, his or her accumulated payroll deductions will remain in the 2018 ESPP for purchase of shares on the following exercise date. If an employee
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discontinues participation in the 2018 ESPP, the amount credited to the participating employee's individual account will be paid to such employee without interest (except where required by local law).
Recapitalization
If there is any change in the number or value of the shares because of a stock split, subdivision, bonus issue, stock dividend, combination, consolidation, recapitalization, reorganization, spin-off, split-up, rights offerings or reductions of the outstanding shares, the number of shares to be purchased pursuant to an option, the share limits and the maximum number of shares will be proportionately increased or decreased and the terms relating to the purchase price with respect to the option will be appropriately adjusted by the Committee, and the Committee will take any further actions which, in the exercise of its discretion, may be necessary or appropriate under the circumstances.
Merger, Liquidation, Other Company Transactions
In the event of the proposed liquidation or dissolution of the Company, the option period will terminate immediately prior to the consummation of such proposed transaction, unless otherwise provided by the Committee in its sole discretion, and all outstanding options will automatically terminate and the amounts of all payroll deductions will be refunded without interest to the participating employees.
In the event of a proposed sale of all or substantially all of the assets of the Company, or the amalgamation, merger or consolidation of the Company with or into another corporation, then in the sole discretion of the Committee, (a) each option will be assumed or an equivalent option will be substituted by the successor corporation or parent or subsidiary of such successor corporation, (b) a date established by the Committee on or before the date of consummation of such amalgamation, merger, consolidation or sale will be treated as an exercise date for the options granted pursuant to the 2018 ESPP, and all outstanding options will be deemed exercisable on such date or (c) all outstanding options will terminate and the accumulated payroll deductions will be returned to the participating employees.
Termination of Employment, Death and Transferability
In the event a participating employee terminates employment with the Company or a subsidiary for any reason (including death) prior to the expiration of the offering, the employee's participation in the 2018 ESPP will terminate and all amounts credited to the employee's account will be paid to the employee or the employee's estate without interest (except where required by local law). The Committee may establish rules regarding when leaves of absence or change of employment status will be considered termination of employment and may establish termination of employment procedures with respect to the 2018 ESPP which are independent of similar rules established under other benefits plans of the Company and its subsidiaries and affiliates. Options granted under the 2018 ESPP may not be voluntarily or involuntarily assigned, transferred, pledged or otherwise disposed of in any way.
Unless otherwise determined by the Committee, an employee whose employment transfers or whose employment terminates with an immediate rehire (with no break in service) by or between the Company and a subsidiary or affiliate will not be treated as having terminated employment for purposes of participating in the 2018 ESPP; however, if an employee transfers from a Section 423 offering to a non-Section 423 offering, the exercise of an employee's right to purchase shares under the 2018 ESPP will be qualified under the Section 423 offering only to the extent such exercise complies
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with Section 423 of the Code. If an employee transfers from a non-Section 423 offering to a Section 423 offering, the exercise of an employee's right to purchase shares under the 2018 ESPP will remain non-qualified under the non-Section 423 offering. The Committee may establish different and additional rules governing transfers between separate offerings within the Section 423 offering and between offerings under the Section 423 offering and non-Section 423 offering.
The Company will not be under any obligation to issue Common Stock upon the exercise of any option unless and until the Company has determined that: (a) it and the participating employee have taken all actions required to register the Common Stock under the Securities Act of 1933, as amended, and to qualify the Common Stock under applicable state "blue sky" laws and any applicable foreign securities laws, or the Company has determined that an exemption from registration and from qualification under such state "blue sky" laws and applicable foreign securities laws is available, (b) any applicable listing requirement of any NASDAQ market system or stock exchange on which the Common Stock is listed has been satisfied and (c) all other applicable provisions of state, federal and applicable foreign law have been satisfied. The Committee may require each participating employee purchasing Common Stock under the 2018 ESPP to represent to and agree with the Company in writing that such the employee is acquiring the shares for investment purposes and not with a view to the distribution thereof. All certificates for shares of Common Stock delivered under the 2018 ESPP will be subject to such stock-transfer orders and other restrictions as the Board or the Committee may deem advisable under the rules, regulations, and other requirements of the SEC, any NASDAQ market system or stock exchange upon which the shares are then listed, and any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
Federal Income Tax Consequences
The following is a discussion of certain U.S. federal income tax consequences relevant to participating employees in the 2018 ESPP who are subject to federal income tax and the Company and it does not address state, local or foreign tax consequences.
The 2018 ESPP is intended to provide for offering that meet the requirements of a tax-qualified "employee stock purchase plan" under Section 423 of the Code, which qualifies for favorable tax treatment. For employees participating in a Section 423 offering, the employee does not have to pay taxes until he or she sells or otherwise disposes of the shares purchased under the 2018 ESPP. The tax treatment applicable to employees participating in a Section 423 offering when he or she sells the shares acquired under the 2018 ESPP depends on whether the shares are sold after the holding period established under Section 423 of the Code.
If a participating employee under the 2018 ESPP does not sell or otherwise dispose of the shares until the later of two years after the granting of the option to purchase shares or twelve months after the purchase date (or he or she dies while owning the shares) then upon the sale or disposition of such shares (or at the participating employee's death) the participating employee will recognize ordinary income in the year of sale or disposition in an amount equal to the lesser of (1) the excess of the sale price of the shares over the purchase price, or (2) the excess of the fair market value of the shares at the time the option was granted over the purchase price (determined as of the date the option was granted). In addition, the participating employee will realize a capital gain or loss in an amount equal to the difference between the sales price and the adjusted tax basis in the shares (i.e., the purchase price plus the amount taxed as ordinary income). If the participating employee dies before the shares are sold, the basis of the shares in the hands of the participating employee's heirs or estate will be equal to the fair market value of the shares on the date of the participating employee's death.
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The Company will not be entitled to a deduction if the holding periods described in this paragraph are met.
However, if the participating employee sells or disposes of such shares before the expiration of the required holding period above, he or she will recognize ordinary income in the year of sale or disposition in an amount equal to the excess of the fair market value of the shares on the purchase date over the purchase price. In addition, the participating employee will realize a capital gain or loss on the difference between the sale price and the adjusted tax basis in the shares (i.e., the purchase price plus the amount taxed as ordinary income). If the participating employee sells or disposes of the shares before the expiration of the required holding period, the Company will be allowed a compensation expense deduction for the amount of ordinary income recognized by the employee.
If the purchase right is granted under the non-Section 423 offering, then the amount equal to the difference between the fair market value of the shares on the purchase date and the purchase price will be treated as ordinary income at the time of such purchase. In such instances, the amount of such ordinary income will be added to the participant's basis in the shares, and any additional gain or resulting loss recognized on the disposition of the shares after such basis adjustment will be a capital gain or loss. A capital gain or loss will be long-term if the participant holds the shares for more than one year after the purchase date. The Company generally will be entitled to a deduction in the year of purchase equal to the amount of ordinary income realized by the participant as a result of such disposition.
Tax Summary
The foregoing discussion is intended only as a summary of certain federal income tax consequences and does not purport to be a complete discussion of all the tax consequences of participation in the 2018 ESPP. Accordingly, holders of shares purchased under the 2018 ESPP should consult their own tax advisers for specific advice with respect to all federal, state or local tax effects before disposing of any shares of stock acquired. Moreover, the Company does not represent that the foregoing tax consequences apply to any particular holder's specific circumstances or will continue to apply in the future and makes no undertaking to maintain any tax status.
Vote Required for Approval and Recommendation
The affirmative vote of the majority of the votes cast at the Annual Meeting is required to approve the Helen of Troy Limited 2018 Employee Stock Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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PROPOSAL 5: APPOINTMENT OF AUDITOR AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2019 FISCAL YEAR AND AUTHORIZATION OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TO SET THE AUDITOR’SAUDITOR'S REMUNERATION
Under Bermuda law, our shareholders have the responsibility to appoint the auditor and independent registered public accounting firm of the Company to hold office until the close of the next annual general meeting and are able to authorize the Audit Committee of the Board of Directors to set the auditors’auditors' remuneration.
The Audit Committee has nominated Grant Thornton LLP as the Company’sCompany's auditor and independent registered public accounting firm for fiscal year 2017.2019. A representative of Grant Thornton LLP, the Company’sCompany's auditor and independent registered public accounting firm for fiscal year 2016,2018, is expected to be present at the Annual Meeting with the opportunity to make a statement if the representative desires to do so. The Grant Thornton LLP representative is also expected to be available to respond to appropriate questions.
Vote Required for Approval and Recommendation
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to appoint Grant Thornton LLP as our auditor and independent registered public accounting firm to serve for the 2019 fiscal year and authorize the Audit Committee to set the auditor’sauditor's remuneration as described in this Proposal 5.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”"FOR" THIS PROPOSAL.
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SHAREHOLDER PROPOSALS
We currently expect that our 2019 annual general meeting of shareholders will be held on or about Wednesday, August 21, 2019. Shareholders intending to present proposals at the 20172019 annual general meeting of shareholders and desiring to have those proposals included in the Company’sCompany's proxy statement and form of proxy relating to that meeting must submit such proposals, in compliance with Rule 14a-8 of the Exchange Act, to be received at the executive offices of the Company no later than March 17, 2017. For proposals that shareholders intend15, 2019. Under the Company's bye-laws, if a shareholder does not want to presentsubmit a proposal for inclusion in our proxy statement but wants to introduce it at our 2019 annual meeting, or intends to nominate a person for election to the 2017 annual general meetingBoard directly (rather than by recommending such person as a candidate to our Nominating Committee as described under "Board Committees and Meetings – Nominating Committee"), the shareholder must submit the proposal or nomination in writing between May 23, 2019 and June 22, 2019. The nomination or proposal and supporting materials must comply with the requirements set forth in our bye-laws. To be in proper form, the notice of shareholders outside the processes of Rule 14a-8a director nomination should be accompanied by supporting materials required by our bye-laws, including, among other things, written consent of the Exchange Act, unlessproposed candidate to serve as a director if nominated and elected, information about the proposed nominee for director, information about the shareholder submitting the nomination, and information about any other shareholders or beneficial owners known to support the nomination. Additionally, any candidate nominated by shareholders must meet the general requirements outlined in the Company's bye-laws. Neither the Board of Directors nor the Nominating Committee is required to include any shareholder nominee or proposal as a proposal in the proxy statement and proxy card mailed to shareholders. Unless the shareholder notifies the Company of suchan intent byto nominate a director nominee for election or submit a proposal at the annual general meeting between May 31, 2017,23, 2019 and June 22, 2019, any proxy solicited by the Company for that annual general meeting will confer on the holder of the proxy discretionary authority to vote on the proposal so long as suchthe proposal is properly presented at the meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’sCompany's Directors and executive officers, and persons who own more than 10 percent of a registered class of the Company’sCompany's equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors, executive officers and greater than 10 percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’sCompany's knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during fiscal year 2016,2018, all Section 16(a) filing requirements applicable to the Directors, executive officers and greater than 10 percent shareholders were satisfied, except for that (i) Mr. Grass filed two late Form 4s with respect to an open market sale and an exempt transaction; (ii) Mr. Butterworth filed two late Form 4s with respect to exempt transactions; (iii) Mr. Carson filed one late Form 4 with respect to an exempt transaction; (iv) Mr. Benson filed one late Form 4 with respect to an exempt transaction; (v) Mr. Oppenheim filed one late Form 4 with respect to an exempt transaction; (vi) Ms. Raff filed two late Form 4s with respect to exempt transactions; and (vii) Mr. Meeker filed one late Form 4 with respect to an exempt transaction.satisfied.
OTHER MATTERS
OTHER MATTERS
Except as described in this proxy statement, the Board of Directors knows of no other matters to be presented at the Annual Meeting. If other matters that require the vote of the shareholders, including a question of adjourning the Annual Meeting, properly come before the Annual Meeting or any adjournment thereof, the holders of the proxies are authorized to vote on these matters in accordance with management’smanagement's discretion. The accompanying proxy card confers discretionary authority to take action with respect to any additional matters that may come before the Annual Meeting or any adjournment thereof.
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HOUSEHOLDING OF MATERIALS
Some banks, brokers, and other nominee record holders may be participatingTo reduce the expenses of delivering duplicate proxy materials, we participate in the practice of “householding”"householding" proxy statements and annual reports. This means that onlywe deliver one copyNotice of the Company’s proxy statement orInternet Availability and, if applicable, annual report may have been sentand proxy statement, to multiple shareholders insharing the same household.mailing address unless otherwise requested. The Company will promptly deliver a separate copy of either document to any shareholder upon request by contacting Helen of Troy Investor Relations, ICR, Inc.: Eunice Han (646) 277-1220,Attention: Anne Rakunas (915) 225-4841, or via e-mail at HOTUS@ICRINC.COM,Arakunas@hotus.com, or send written correspondence to Helen of Troy Limited, Attention: Investor Relations, 1 Helen of Troy Plaza, El Paso, Texas 79912. Some banks, brokers, and other nominee record holders may also be participating in the practice of "householding" proxy statements and annual reports. Any shareholder who wants to receive separate copies of the annual report and proxy statement in the future, or who is currently receiving multiple copies and would like to receive only one copy for his or her household, should contact his or her bank, broker, or other nominee record holder, or contact the Company at the above address and phone number.
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
Pursuant to SEC rules, we may furnish proxy materials, including this proxy statement and the Company's 2018 Annual Report to Shareholders, to our shareholders by providing access to such documents on the Internet instead of mailing printed copies. Most shareholders will not receive printed copies of the proxy materials unless they request them. Instead, a Notice of Internet Availability of Proxy Materials ("Notice of Internet Availability"), which was mailed to most of our shareholders, will explain how you may access and review the proxy materials and how you may submit your proxy on the Internet. If you would like to receive a paper or electronic copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability. Shareholders who requested paper copies of proxy materials or previously elected to receive proxy materials electronically did not receive the Notice of Internet Availability and are receiving the proxy materials in the format requested. You may submit your proxy via the Internet, by telephone, or, if you have received a printed version of these proxy materials, by mail.
This proxy statement and the Company’s 2016Company's 2018 Annual Report to Shareholders are also available electronically on our hosted website. You may view these directly at:website at
HTTP://MATERIALS.PROXYVOTE.COM/G4388N.
To access and review the materials made available electronically:
1. Go toHTTP://MATERIALS.PROXYVOTE.COM/G4388N.
G4388N and input the 12-digit control number from the Notice of Internet Availability or proxy card.
2. Click the “2016"2018 Proxy Statement" or "2018 Annual Report” or “2016 Notice of Proxy”Report".
3. Have your proxy card or voting instructions available.
We encourage you to review all of the important information contained in the proxy materials before voting.
ELECTRONIC DELIVERY OF SHAREHOLDER COMMUNICATIONS
If you received your Annual Meeting materials by mail, we encourage you to conserve natural resources, as well as significantly reduce the Company’s printing and mailing costs, by signing up to receive shareholder communications via e-mail. With electronic delivery, you will be notified via e-mail after the annual report The Notice of Internet Availability and the proxy statementmaterials are first being made available to our shareholders on the Internet, and you can submit your proxy appointment and instructions online. Electronic delivery can also help reduce the numberor about July 13, 2018.
Table of bulky documents in your personal files and eliminate duplicate mailings. To sign up for electronic delivery:
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1.
If you are a registered holder (you hold your shares of Common Stock in your own name through our transfer agent, Computershare Investor Services, LLC, or you have stock certificates), you can elect to have next year’s communications sent to you electronically as part of this year’s on-line proxy appointment and instruction process at WWW.PROXYVOTE.COM by following the instructions that will be provided to you on screen when you submit your proxy.
2. If you are a beneficial holder (your shares are held by a brokerage firm, a bank or a trustee), you may contact your broker or visit their website. Most brokers have made provisions for you to sign up on-line for electronic delivery of shareholder reports and mailings.
Your electronic delivery enrollment will be effective until you cancel it.
HOW TO OBTAIN OUR ANNUAL REPORT, PROXY STATEMENT
AND OTHER INFORMATION ABOUT THE COMPANY
From time to time, we receive calls from shareholders asking how they can obtain more information regarding the Company. The following options are available:
- 1.
Our Investor Relations site, which can be accessed from our main Internet website located at WWW.HOTUS.COM, contains Company press releases, earnings releases, financial information and stock quotes, as well as corporate governance information and links to our SEC filings. This proxy statement and our 20162018 Annual Report to Shareholders are both available at this site.
2.You may also request a free copy of our Annual Report or proxy statement by contacting Helen of Troy Investor Relations, ICR, Inc.: Eunice Han (646) 277-1220,Attention: Anne Rakunas (915) 225-4841, or via e-mail at HOTUS@ICRINC.COM,Arakunas@hotus.com, or send written correspondence to Helen of Troy Limited, Attention: Investor Relations, 1 Helen of Troy Plaza, El Paso, Texas 79912.YOUR VOTE IS IMPORTANT
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Annex A
Reconciliation of GAAP Diluted Earnings Per Share from Continuing Operations to Adjusted Diluted Earnings Per Share (non-GAAP) from Continuing Operations
| | | | | | | | | | |
| | Fiscal Years Ended the Last Day of February |
| | 2014 | | 2015 | | 2016 | | 2017 | | 2018 |
Diluted earnings per share ("EPS") from continuing operations as reported (GAAP) | | $2.66 | | $4.36 | | $3.23 | | $5.17 | | $4.73 |
Tax Reform | | | | | | | | | | $0.66 |
Asset impairment charges, net of tax | | $0.37 | | $0.28 | | $0.18 | | $0.09 | | $0.51 |
Restructuring charges, net of tax | | | | | | | | | | $0.07 |
TRU bankruptcy charge, net of tax | | | | | | | | | | $0.12 |
CEO succession costs, net of tax | | $0.51 | | | | $0.14 | | | | |
Acquisition-related expenses, net of tax | | | | | | $0.02 | | | | |
Venezuela re-measurement related charges, net of tax | | | | | | $0.65 | | | | |
Patent litigation charge, net of tax | | | | | | $0.62 | | $0.05 | | |
| | | | | | | | | | | |
Subtotal | | $3.54 | | $4.64 | | $4.85 | | $5.32 | | $6.08 |
Amortization of intangible assets, net of tax | | $0.64 | | $0.70 | | $0.71 | | $0.73 | | $0.66 |
Non-cash share-based compensation, net of tax | | $0.32 | | $0.16 | | $0.22 | | $0.44 | | $0.49 |
| | | | | | | | | | | |
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| | | | | | | | | | | |
Adjusted diluted EPS from continuing operations (non-GAAP) | | 4.50 | | 5.50 | | 5.78 | | 6.49 | | 7.24 |
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| | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | |
Weighted average shares of common stock used in computing diluted EPS | | 32,344 | | 29,035 | | 28,749 | | 27,891 | | 27,254 |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted Diluted EPS from continuing operations may be considered a non-GAAP financial measure as set forth in SEC Regulation G, Rule 100. The table above reports diluted EPS from continuing operations without the impact of non-cash asset impairment charges, CEO succession costs, acquisition-related expenses, tax reform, Venezuelan currency re-measurement related charges, patent litigation charges, the TRU bankruptcy charge, amortization of intangible assets, and non-cash share-based compensation for the periods presented, as applicable. During fiscal 2018, we divested our Nutritional Supplements segment, therefore fiscal 2018 and prior fiscal years 2015 to 2017 have been restated to reflect the divestiture. The table reconciles adjusted diluted EPS from continuing operations to its corresponding GAAP-based measure, EPS from continuing operations, presented in our consolidated statements of income in our Annual Report on Form 10-K for the fiscal year ended February 28, 2018. This measure may be considered non-GAAP financial information as set forth in SEC Regulation G, Rule 100. The preceding table reconciles this measure to its corresponding GAAP-based measure presented in our consolidated statements of income. We believe that adjusted diluted EPS from continuing operations provides useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations. We believe that this non-GAAP financial measure, in combination with the our financial results calculated in accordance with GAAP, provides investors with additional perspective regarding the impact of such charges on net income and earnings per share. We also believe that this non-GAAP measure facilitates a more direct comparison of our performance to our competitors. We further believe that including the excluded charges would not accurately reflect the underlying performance of our continuing operations for the period in which the charges are incurred, even though such charges may be incurred and reflected in our GAAP financial results in the near future. The material limitation associated with the
APPENDIX ATable of Contents
use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of our activities. Our adjusted diluted EPS from continuing operations is not prepared in accordance with GAAP, is not an alternative to GAAP financial information and may be calculated differently than non-GAAP financial information disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP information.
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AMENDED AND RESTATED BYE-LAWS
Annex B
OF
HELEN OF TROY LIMITED
2018 STOCK INCENTIVE PLAN
1. Purpose of the Plan
The purpose of the Plan is to (i) aid the Company in attracting, securing and retaining directors of outstanding ability, (ii) aid the Company and its Subsidiaries and Affiliates in attracting, securing and retaining employees of outstanding ability, (iii) attract consultants to provide services to the Company and its Subsidiaries and Affiliates, as needed, and (iv) motivate such persons to exert their best efforts on behalf of the Company and its Subsidiaries and its Affiliates by providing incentives through the granting of Awards. The Company expects that it will benefit from the added interest, which such persons will have in the welfare of the Company as a result of their proprietary interest in the Company's success.
2. Definitions
The following capitalized terms used in the Plan have the respective meanings set forth in this Section:
( (a) Affiliate: Any entity (i) that is an affiliate within the meaning given to such term in Rule 12b-2 promulgated under the Exchange Act, or (ii) that had been a business, division or subsidiary of the Company, the equity of which has been distributed to the Company's shareholders. The Board shall have the authority to determine the time or times at which "Affiliate" status is determined within the foregoing definition.
(b) Applicable Law: The requirements relating to the administration of equity-based and cash-based awards, as adoptedapplicable, and the related issuance of Shares under U.S. state corporate laws, U.S. federal and state and non-U.S. securities laws, the Code, any stock exchange or quotation system on which the Shares are listed or quoted and the applicable laws of any non-U.S. country or jurisdiction where Awards are, or will be, granted under the Plan.
(c) Award: An Option, Stock Appreciation Right or Other Stock-Based Award granted pursuant to the Plan.
(d) Award Agreement: Any written or electronic agreement, contract, or other instrument or document evidencing an Award granted by the Committee hereunder, which does not require the signature of the Company or the Participant.
(e) Beneficial Owner orBeneficially Owned: As such term is defined in Rule 13d-3 under the Exchange Act (or any successor rule thereto).
(f) Board: The Board of Directors of the Company.
(g) Change of Control: The occurrence of any of the following events:
(i) any Person becomes the Beneficial Owner, directly or indirectly, of more than forty percent (40%) of the combined voting power of the then issued and outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities");provided,however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition by any employee benefit plan (or related
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trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (B) any acquisition by an entity pursuant to a reorganization, merger, amalgamation or consolidation, unless such reorganization, merger, amalgamation or consolidation constitutes a Change of Control under clause (ii) of this Section 2(g);
(ii) the consummation of a reorganization, merger, amalgamation or consolidation, unless following such reorganization, merger, amalgamation or consolidation sixty percent (60%) or more of the combined voting power of the then issued and outstanding voting securities of the entity resulting from such reorganization, merger, amalgamation or consolidation entitled to vote generally in the election of directors is then Beneficially Owned, directly or indirectly, by all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Voting Securities immediately prior to such reorganization, merger, amalgamation or consolidation;
(iii) the (A) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company or (B) sale or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its Subsidiaries, unless the successor entity existing immediately after such sale or disposition is then Beneficially Owned, directly or indirectly, by all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Voting Securities immediately prior to such sale or disposition;
(iv) during any period of twenty-four months (not including any period prior to the Effective Date), individuals who at the Annual General Meetingbeginning of such period constitute the Board, and any new director (other than (A) a director nominated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 2(g)(i), (ii) or (iii) of the Plan, (B) a director whose initial assumption of office occurs as a result of either an actual or threatened election contest subject to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or (C) a director designated by any Person who is the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of the Outstanding Company Voting Securities) whose election by the Board or nomination for election by the Company's shareholders was approved in advance by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or
Notwithstanding the foregoing, to the extent that any amount constituting "non-qualified deferred compensation" under Section 409A of the Code would become payable under this Plan by reason of a Change of Control, such amount shall become payable only if the event constituting a Change of Control would also constitute a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A of the Code.
(h) Code: The Internal Revenue Code of 1986, as amended, or any successor thereto.
(i) Committee: The Compensation Committee of the Board, or any successor thereto or other committee designated by the Board to assume the obligations of the Committee hereunder, or if no such committee shall be designated or in office, the Board.
(j) Company: Helen of Troy Limited, a Bermuda company.
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(k) Confidential Information: All knowledge and information pertaining to the business of the Company and its Affiliates and Subsidiaries obtained by a Participant from any source whatever as a result of his or her Services to the Company and/or its Affiliates or Subsidiaries and which is not a matter of public knowledge, including, without limitation, any confidential records, documents, contracts, customer lists, writings, data or other information, whether or not the same is in written or other recorded form. Without limiting the generality of the foregoing, Confidential Information shall be deemed to include any information or knowledge which may now or hereafter be deemed a trade secret of the Company and/or its Affiliates or Subsidiaries or information which relates to the Company's and/or its Affiliates' or Subsidiaries' personnel; present operations or future planning with respect to suppliers or customers, the contents of any Company, Affiliate or Subsidiary manual, practice or procedure, operating, revenue, expense or other statistics; private or public debt or equity financing or concerning any banking, accounting or financial matters; current or future advertising or promotion plans or programs; applications to or matters pending or under the jurisdiction of any regulatory agency or court, including those that are only threatened; any system, program, procedure or administrative operations, including those pertaining to any matter relative to computer operations of any type; information of the type mentioned above or of any other type regarding affiliates of the Company; present or future plans for the extension of the present business or the commencement of new business by the Company and/or its Affiliates or Subsidiaries.
(l) Consultant: Any consultant, agent, independent contractor, leased employee or advisor if: (a) the consultant, agent, independent contractor, leased employee or advisor renders bona-fide services to the Company or any Affiliate or Subsidiary; (b) the services rendered by the consultant, agent, independent contractor, leased employee or advisor are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and (c) the consultant, agent, independent contractor, leased employee or advisor is a natural person.
(m) Disability: Unless otherwise provided in an Award Agreement, that the Participant would qualify to receive benefit payments under the long-term disability plan or policy, as it may be amended from time to time, of the Company or the Affiliate to which the Participant provides Service regardless of whether the Participant is covered by such policy. If the Company or the Affiliate to which the Participant provides Service does not have a long-term disability policy, "Disability" means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determined physical or mental impairment for a period of not less than ninety (90) consecutive days or one-hundred eighty (180) non-consecutive days in any twelve month period. A Participant shall not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee in its sole discretion. Notwithstanding the foregoing, (a) for purposes of ISOs granted under the Plan, "Disability" means that the Participant is disabled within the meaning of Section 22(e)(3) of the Code, and (b) with respect to an Award that is subject to Section 409A of the Code where the payment or settlement of the Award is made upon or by reference to the date of the Participant's Disability, solely for purposes of determining the timing of payment, no such event will constitute a Disability for purposes of the Plan or any Award Agreement unless such event also constitutes a "disability" as defined under Section 409A of the Code.
(n) Effective Date: The date on which the Plan takes effect, as defined pursuant to Section 29 of the Plan.
(o) Exchange Act: The Securities Exchange Act of 1934, as amended, or any successor thereto.
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(p) Fair Market Value: As of any date that requires the determination of the Fair Market Value of Shares under this Plan, the value of a Share on such date of determination, calculated as follows:
(i) If the Shares are then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on such date on such Nasdaq market system or principal stock exchange on which the Share is then listed or admitted to trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the Share on such Nasdaq market system or such exchange on the immediately preceding day on which a closing sale price is reported;
(ii) If the Shares are not then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid and asked prices of the Share in the over-the-counter market on such date; or
(iii) If neither clause (i) nor (ii) is applicable as of such date, then the Fair Market Value shall be determined by the Board in good faith and in using any reasonable method of evaluation, which determination shall be conclusive and binding on all interested parties.
(q) ISO: An Option that is also an incentive stock option granted pursuant to Section 7(d) of the Plan.
(r) LSAR: A limited stock appreciation right granted pursuant to Section 8(d) of the Plan.
(s) Non-Employee Director: A member of the Board who is not an employee of the Company or any of its Subsidiaries.
(t) Other Stock-Based Awards: Awards granted pursuant to Section 9 of the Plan.
(u) Option: A stock option granted pursuant to Section 7 of the Plan.
(v) Option Price: The purchase price per Share of an Option, as determined pursuant to Section 7(a) of the Plan.
(w) Participant: An individual who is selected by the Committee to participate in the Plan pursuant to Section 5 of the Plan.
(x) Performance-Based Awards: Other Stock-Based Awards granted pursuant to Section 9(b) of the Plan.
(y) Person: As such term is used for purposes of Section 13(d)(3) or 14(d)(2) of the Exchange Act (or any successor section thereto).
(z) Plan: The Helen of Troy Limited 2018 Stock Incentive Plan, as amended from time to time.
(aa) Restricted Stock: Restricted stock granted pursuant to Section 9 of the Plan.
(bb) Restricted Stock Unit: A restricted stock unit representing a right to acquire a fixed number of Shares at a future date, granted pursuant to Section 9 of the Plan.
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(cc) Securities Act: The Securities Act of 1933, as amended, or any successor thereto.
(dd) Service: Services rendered to the Company or any of its Affiliates or Subsidiaries as an employee, Consultant or director.
(ee) Shares: Common shares, par value $0.10 per Share, of the Company, as adjusted pursuant to Section 10 of the Plan.
(ff) Stock Appreciation Right: A stock appreciation right granted pursuant to Section 8 of the Plan.
(gg) Subsidiary: A subsidiary corporation, as defined in Section 424(f) of the Code (or any successor section thereto).
(hh) Tax-Related Items: Any U.S. federal, state, and/or local taxes and any taxes imposed by a jurisdiction outside the U.S. (including, without limitation, income tax, social insurance and similar contributions, payroll tax, fringe benefits tax, payment on account, employment taxes, stamp tax and any other taxes related to participation in this Plan and legally applicable to a Participant, including any employer liability for which the Participant is liable pursuant to applicable laws or the applicable Award Agreement).
(ii) Termination of Service: A Participant's termination of all Service, subject to the sole discretion of Committee. A Termination of Service of an employee of the Company or any Subsidiary or Affiliate shall not be deemed to have occurred in the case of sick leave, military leave or any other leave of absence, in each case approved by the Committee or in the case of transfers between locations of the Company or its Affiliates or Subsidiaries. For purposes of determining whether an Option is entitled to ISO status, an employee's Termination of Service shall be treated as occurring ninety (90) days after such Employee goes on leave, unless such employee's right to return to active work is guaranteed by law or by a contract. In the case of Participant who is a U.S. taxpayer and a "specified employee" (as defined under Section 409A of the Code), an Award which is considered non-qualified deferred compensation (as defined under Section 409A of the Code) which is otherwise distributable upon a Termination of Service (which is also a Separation from Service as such term is defined under Section 409A of the Code) may not be made before the first day of the seventh month after the date of the Separation from Service (or, if earlier, the date of death of the Participant).
3. Shares Subject to the Plan
(a) Number of Shares Reserved. The maximum number of Shares with respect to which Awards may be granted under the Plan shall be 2,000,000 (subject to adjustment in accordance with the provisions of Section 10 hereof), whether pursuant to ISOs or otherwise. Of that number, not more than 2,000,000 Shares (subject to adjustment in accordance with the provisions of Section 10 hereof) will be available for grants under the Plan of ISOs pursuant to Section 7(d) hereof. The Shares may consist, in whole or in part, of authorized and unissued Shares or treasury Shares, including Shares acquired by purchase in the open market or in private transactions.
(b) Share Replenishment. To the extent that an Award granted under this Plan is cancelled, expired, forfeited, surrendered, exchanged, settled by delivery of fewer Shares than the number underlying the Award, settled in cash or otherwise terminated without delivery of the Shares to the Participant, the Shares retained by or returned to the Company will (i) not be deemed to have been delivered under this Plan, (ii) be available for future Awards under the Plan and (iii) not be counted against the number of Shares reserved and available under this Plan; provided, that notwithstanding the foregoing, Shares that
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are (x) withheld from an Option or Stock Appreciation Right or separately surrendered by the Participant in payment of the Option Price or exercise or purchase price or Tax-Related Items with respect to such Award, (y) not issued or delivered as a result of the net settlement of an outstanding Option or Stock Appreciation Right or (z) repurchased on the open market using proceeds from the exercise of a Option shall be deemed to constitute delivered shares and shall not be available for future Awards under this Plan and shall continue to be counted as outstanding for purposes of determining whether any of the Award limits specified in Sections 3(d) or 3(e) have been attained.
(c) Shares Not Counted Against Share Pool Reserve. To the extent permitted by applicable law or any stock exchange rules, Shares issued in assumption of, or in substitution for, any outstanding awards pursuant to Section 10(e) hereof of any entity acquired in any form of combination by the Company or an Affiliate shall not be counted against the number of Shares reserved and available under this Plan. Additionally, to the extent permitted by applicable law or any stock exchange rules, in the event that a company acquired by (or combined with) the Company or an Affiliate has shares available under a pre-existing plan approved by its shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the shareholders of the entities party to such acquisition or combination) may, at the discretion of the Committee, be used for Awards under this Plan in lieu of awards under the applicable pre-existing plan of the other company and shall not reduce the number of Shares reserved and available under this Plan;provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or combination, and shall only be made to individuals who were not employees or directors of the Company or any Affiliate in existence prior to such acquisition or combination.
(d) Limitation on Number of Shares Subject to Awards. The maximum number of Shares with respect to which Awards of any and all types may be granted during a calendar year to any Participant (other than a Non-Employee Director) shall be limited, in the aggregate, to 1,000,000 Shares (subject to adjustment in accordance with the provisions of Section 10 hereof).
(e) Non-Employee Director Award Limit. Notwithstanding any provision to the contrary in the Plan or in any policy of the Company regarding compensation payable to a Non-Employee Director, the sum of the grant date fair value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all Awards payable in Shares to an individual as compensation for services as a Non-Employee Director, together with cash compensation earned by the Non-Employee Director during any fiscal year, shall not exceed $650,000 in any fiscal year.
4. Administration
(a) General. The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof. If necessary to satisfy the requirements of Rule 16b-3 promulgated under the Exchange Act, the Committee shall consist solely of at least two individuals who are each "non-employee directors" within the meaning of Rule 16b-3 under the Exchange Act (or any successor rule thereto), and satisfy all applicable independence requirements set forth in any applicable stock exchange or market or quotation system in which the Shares are then traded, listed or quoted. Except as required by Rule 16b under the Exchange Act, any action permitted to be taken by the Committee may be taken by the Board, in its discretion;providedhowever that, to the extent required by any stock exchange or market or quotation system on which the Shares are traded, listed or quoted, any
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Award approved by the Board shall also have been approved by a majority of the Company's independent directors (within the meaning of such exchange or market or quotation system).
(b) Scope of Authority. The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to make any other determinations that it deems necessary or desirable for the administration of the Plan, and to take the following actions, in each case subject to and consistent with the provisions of the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each Participant;
(iii) to determine the type and number of Awards to be granted, the number of Shares to which an Award may relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, and any bases for adjusting such exercise, grant or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to transferability or forfeiture, exercisability, or settlement of an Award, and waiver or accelerations thereof, extension of the period of time during which Participant may exercise Options previously granted or to permit the continued vesting of Awards (subject to Section 11(b)) following a Participant's Termination of Service, and waivers of performance conditions relating to an Award, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;
(iv) to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be cancelled, forfeited, exchanged, or surrendered;
(v) to take any action consistent with the terms of the Plan, either before or after an Award has been granted, as the Committee deems necessary or advisable to comply with or facilitate compliance with any applicable laws, including without limitation any other government laws or regulatory requirements of a non-U.S. jurisdiction, or taking advantage of tax-favorable treatment for Awards granted to Participants outside the U.S., including but not limited to, modifying or amending the terms and conditions governing any Awards, establishing any local country plans as sub-plans to the Plan, adopting any addenda to Award Agreements, conforming with or taking advantage of governmental requirements, statutes or regulations or adopting the rules and procedures regarding the conversion of local currency, withholding procedures and handling of stock certificates which vary with local requirements;
(vi) to prescribe the form of each Award Agreement, which need not be identical for each Participant;
(vii) to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder, in each case, in the manner and to the extent the Committee deems necessary or desirable;
(viii) to approve any repurchase of Shares pursuant to Section 42A or 42B of the Companies Act 1981 of Bermuda where a Participant wishes to effect payment of (A) an exercise of an Award or (B) payment of any Tax Related Items pursuant to Section 4(e) below by delivery of Shares;
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(ix) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan;
(x) amend or modify the terms of an Award consistent with the terms and conditions of this Plan, including Section 15(a); and
(xi) to prescribe the form of each Award Agreement, which need not be identical for each Participant and may vary for Participants within and outside of the U.S.
(c) Delegation. To the extent permitted by applicable law and any stock exchange rules and without limiting any delegation of authority under Section 16 or otherwise under this Plan, the Committee, from time to time, may delegate to a committee or one or more members of the Board or to one or more officers of the Company the authority to grant Awards to Participants other than (i) Employees who are subject to Section 16 of the Exchange Act, or (ii) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder;provided,however, that officers delegated such authority may make grants of Awards of up to an aggregate of 350,000 Shares (subject to adjustment in accordance with the provisions of Section 10 hereof) in each calendar year to Participants who are not subject to the rules promulgated under Section 16 of the Exchange Act (or any successor section thereto);provided, further, that such officers shall notify the Committee of any such grants made pursuant to this Section 4. Provided it meets the limitations of this Section 4(c), any delegation hereunder shall include the right to modify Awards as necessary to accommodate changes in applicable law or regulations, including in jurisdictions outside the U.S., or any stock exchange rules. Furthermore, any delegation hereunder shall be subject to the restrictions and limitations that the Board (or, as applicable, the Committee) specifies at the time of such delegation, and the Board (or, as applicable, the Committee) may rescind at any time the authority so delegated and/or appoint a new delegatee. At all times, the delegatee appointed under this Section 4(c) shall serve in such capacity at the pleasure of the Board (or, as applicable, the Committee). The Committee may also delegate to a committee consisting of employees of the Company the authority to authorize transfers, establish terms and conditions upon which transfers may be made and establish classes of options eligible to transfer options, as well as to make other determinations with respect to option transfers.
(d) Binding Determination. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors). Determinations made by the Committee under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated.
(e) Tax Withholding. The Participant shall be responsible for payment of any Tax-Related Items or similar charges required by Applicable Law to be paid or withheld from an Award or an amount paid in satisfaction of an Award, or otherwise applicable to the Participant. Without limiting the foregoing, the Committee shall require payment and the Company shall have the power and the right to deduct or withhold automatically from any amount deliverable under the Award or otherwise, or require a Participant to remit to the Company or the applicable Subsidiary or Affiliate (including by withholding from the proceeds of the sale of Shares acquired pursuant to an Award, either through a voluntary sale or a mandatory sale arranged by the Company on the Participant's behalf, without need of further authorization), to satisfy Tax-Related Items withholding requirements with respect to any taxable event arising as a result of the Plan or as a result of the grant, vesting or the exercise of an Award or other event that results in taxable income in respect of an Award. With the approval of the Committee, the Participant may elect or may be required by the Company to pay a portion or all of the withholding of such Tax Related Items by (i) delivery of Shares or (ii) having Shares withheld by the Company from any Shares that
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would have otherwise been received by the Participant (or allowing the return of Shares), to satisfy such Tax-Related Items. Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withhold rates, including maximum applicable rates, in which case, Participants may receive or seek a refund of any over-withheld amount from local tax authorities. The Award Agreement may also specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award.
(f) Repricing. Notwithstanding the foregoing, a Repricing (as defined below) is prohibited without prior shareholder approval. Subject to compliance with the provisions of the immediately preceding sentence regarding a Repricing, the Committee may, at any time or from time to time: (i) authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards or (ii) buy from a Participant an Award previously granted with payment in cash, Shares (including Restricted Stock) or other consideration, based on such terms and conditions as the Committee and the Participant may agree. For purposes of the Plan, "Repricing" means any of the following or any other action that has the same purpose and effect: (A) lowering the exercise price of an outstanding Option or SAR granted under the Plan after it is granted or (B) canceling an outstanding Award granted under the Plan at a time when its exercise or purchase price exceeds the then Fair Market Value of the stock underlying such outstanding Award, in exchange for another Award or a cash payment, unless the cancellation and exchange occurs in connection with a merger, amalgamation, consolidation, sale of substantially all the Company's assets, acquisition, spin-off or other similar corporate transaction.
(g) Other Term and Conditions. Shares issued pursuant to an Award shall, subject to the terms hereof, be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, share repurchase, option cancellation, Participant services or other consideration, as the Committee shall determine,provided that in no event shall the consideration per share be less than the par value thereof.
5. Eligibility
Employees of the Company, its Subsidiaries and Affiliates, who are from time to time responsible for, or contribute to, the management, growth and protection of the business of the Company and its Affiliates or Subsidiaries, Consultants to the Company, its Subsidiaries and Affiliates and directors of the Company, its Subsidiaries and Affiliates are eligible to be granted Awards under the Plan. Participants shall be selected from time to time by the Committee, in its sole discretion, from among those eligible, and the Committee shall determine, in its sole discretion, the number of Shares to be covered by the Awards granted to each Participant. Notwithstanding any provisions of the Plan to the contrary, an Award may be granted to an employee, Consultant or director in connection with his or her hiring or retention prior to the date the employee, Consultant or director first performs Services for the Company, Affiliate or a Subsidiary;provided,however, that any such Award shall not become vested prior to the date the employee, Consultant or director first performs such Services.
6. Limitations
No Award may be granted under the Plan after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date.
7. Terms and Conditions of Options
Options granted under the Plan shall be, as determined by the Committee, non-qualified, incentive or other stock options for federal income tax purposes, as evidenced by the related Award
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Agreements, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine:
(a) Option Price. The Option Price per Share shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of the Shares on the date an Option is granted.
(b) Exercisability. Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event shall an Option be exercisable more than ten years after the date it is granted.
(c) Exercise of Options. Except as otherwise provided in this Plan or in an Award Agreement, an Option may be exercised for all, or from time to time any part, of the Shares for which it is then exercisable. For purposes of Section 7 of the Plan, the exercise date shall be the date the Company receives a written notice of exercise in accordance with the terms of the Award Agreement and full payment for the Shares with respect to which the Option is exercised, together with (i) any other agreements required by the terms of the Plan and/or Award Agreement or as required by the Committee, and (ii) payment by the Participant of all Tax Related Items incurred in connection with such Option exercise (or arrangements for the collection or payment of such tax satisfactory to the Committee are made). The Option Price for the Shares as to which an Option is exercised shall be paid to the Company in full at the time of exercise at the election of the Participant (A) in cash, (B) in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee;provided, that, such Shares have been held by the Participant for no less than six months, (C) partly in cash and partly in such Shares, (D) through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the aggregate Option Price for the Shares being purchased, (E) through having Shares withheld by the Company from any Shares that would have otherwise been received by the Participant or (F) through such other means as shall be prescribed in the Award Agreement.
(d) ISOs. The Committee may grant Options under the Plan that are intended to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the Code (or any successor section thereto). If the aggregate Fair Market Value of the Shares (determined as of the respective date or dates of grant) for which ISOs are granted under the Plan (or any other stock incentive plan of the Company or Subsidiaries) are exercisable for the first time by a Participant during any calendar year exceeds $100,000, the portion of the Option not exceeding $100,000, to the extent of whole Shares, will be treated as an ISO and the remaining portion of the Option will be treated as a non-statutory stock option. Unless otherwise permitted under Section 422 of the Code (or any successor section thereto), no ISO may be granted to any Participant who at the time of such grant, owns more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, unless (i) the Option Price for such ISO is at least 110% of the Fair Market Value of a Share on the date the ISO is granted and (ii) the date on which such ISO terminates is a date not later than the day preceding the fifth anniversary of the date on which the ISO is granted. Any Participant who disposes of Shares acquired upon the exercise of an ISO either (A) within two years after the date of grant of such ISO or (B) within one year after the transfer of such Shares to the Participant, shall notify the Company of such disposition and of the amount realized upon such disposition. Notwithstanding Section 5 of the Plan, ISOs may be granted solely to employees of the Company and its Subsidiaries.
(e) Exercisability Upon Termination of Service by Death or Disability. Upon a Termination of Service by reason of death or Disability, the Option may be exercised within one year (or such other period specified in the Award Agreement) following the date of death or Termination of Service due to Disability (subject to any earlier termination of the Option as provided by its terms), by the Participant in the case of Disability, or in the case of death, by the Participant's estate or by a person who acquired the right to
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exercise the Option by bequest or inheritance, but in any case only to the extent the Participant was entitled to exercise the Option on the date of his or her Termination of Service by death or Disability. To the extent that he or she was not entitled to exercise such Option at the date of his or her Termination of Service by death or Disability, or if he or she does not exercise such Option (which he or she was entitled to exercise) within the time specified herein, the Option shall terminate. Notwithstanding anything to the contrary herein, the Committee may, at any time and from time to time, (a) in its sole discretion, impose such conditions upon the exercisability of such Options as it may deem fit, and (b) prior to the termination of an Option, with the consent of the Participant, extend the period of time during which the Participant may exercise his or her Option following the date of Termination of Service due to death or Disability;provided,however, that the maximum period of time during which an Option shall be exercisable following the date of Termination of Service due to death or Disability shall not exceed the original term of such Option as set forth in the Award Agreement and that notwithstanding any extension of time during which an Option may be exercised, such Option, unless otherwise amended by the Committee, shall only be exercisable to the extent the Participant was entitled to exercise the Option on the date of Termination of Service due to death or Disability.
(f) Effect of Other Termination of Service. Upon a Termination of Service for any reason (other than death or Disability), an unexercised Option may thereafter be exercised during the period ending 90 days (or such other period specified in the Award Agreement) after the date of such Termination of Service, but only to the extent to which such Option was vested and exercisable at the time of such Termination of Service. Notwithstanding the foregoing, the Committee may, in its sole discretion, either by prior written agreement with the Participant or upon the occurrence of a Termination of Service, accelerate the vesting of unvested Options held by a Participant if such Participant's Termination of Service is without "cause" (as such term is defined by the Committee in its sole discretion) by the Company or extend the period of time during which the Participant may exercise his or her Option following the date of Termination of Service;provided,however, that the maximum period of time during which an Option shall be exercisable following the date of Termination of Service shall not exceed the original term of such Option as set forth in the Award Agreement and that notwithstanding any extension of time during which an Option may be exercised, such Option, unless otherwise determined by the Committee, shall only be exercisable to the extent the Participant was entitled to exercise the Option on the date of Termination of Service.
8. Terms and Conditions of Stock Appreciation Rights
(a) Grants. The Committee also may grant a Stock Appreciation Right, independent of an Option, with respect to Shares that are traded or listed on an established stock exchange or market or quotation system.
(b) Terms. The exercise price per Share of a Stock Appreciation Right shall be an amount determined by the Committee but in no event shall such amount be less than the greater of (i) the Fair Market Value of a Share on the date the Stock Appreciation Right is granted and (ii) an amount permitted by applicable laws, rules, by-laws or policies of regulatory authorities or stock exchanges or market or quotation systems (including under Applicable Law). Each Stock Appreciation Right granted independent of an Option shall entitle a Participant to exercise the Stock Appreciation Right in whole or in part and, upon such exercise, to receive from the Company an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the exercise price per Share, times (ii) the number of Shares covered by the portion of the Stock Appreciation Right so exercised. The date a notice of exercise is received by the Company shall be the exercise date. Payment shall be made in cash, Shares or a combination of cash and Shares, as determined by the Committee. Stock Appreciation Rights may be exercised from time to time upon actual receipt by the Company of written notice of exercise stating the number of Shares with respect to which the Stock Appreciation Right is being exercised.
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(c) Limitations. The Committee may impose, in its discretion, such conditions upon the exercisability or transferability of Stock Appreciation Rights as it may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may grant LSARs that are exercisable upon the occurrence of specified contingent events. Such LSARs may provide for a different method of determining appreciation, may specify that payment will be made only in cash as soon as practicable after the occurrence of the specified contingent event and may provide that any related Awards are not exercisable while such LSARs are exercisable. Unless the context otherwise requires, whenever the term "Stock Appreciation Right" is used in the Plan, such term shall include LSARs.
9. Other Stock-Based Awards
(a) Generally. The Committee, in its sole discretion, may grant Awards of unrestricted Shares, Restricted Stock, Restricted Stock Units and other Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares (collectively, "Other Stock-Based Awards"). Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine (i) to whom and when Other Stock-Based Awards will be made, (ii) the number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards, (iii) whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares, and (iv) all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof, subject to Section 11(b)).
(b) Performance-Based Awards. Notwithstanding anything to the contrary herein, certain Other Stock-Based Awards granted under this Section 9 may be granted to Participants as the Committee shall determine from time to time ("Performance-Based Awards"). A Participant's Performance-Based Award shall be determined based on the attainment of one or more pre-established, objective performance goals established in writing by the Committee, for a performance period established by the Committee, (x) at a time when the outcome for that performance period is substantially uncertain and (y) not later than ninety (90) days after the commencement of the performance period to which the performance goal relates, but in no event after 25% of the relevant performance period has elapsed.
(i) Performance Goals. The performance goals shall be based upon one or more (or any combination) criteria as the Committee shall determine from time to time, which may be Company-wide, on an individual basis, a consolidated basis or otherwise, including, but not limited to, the following: (A) earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (B) net income; (C) operating income; (D) earnings from continuing operations; (E) earnings per Share (whether basic or fully diluted); (F) book value per Share; (G) expense management; (H) return on investment before or after the cost of capital; (I) improvements in capital structure; (J) growth measures (including, but not limited to, sales, net income, cash flow or earnings per share); (K) maintenance or improvement of profit margins; (L) stock price; (M) market share; (N) revenues or sales; (O) costs; (P) cash flow; (Q) cash flow productivity; (R) free cash flow; (S) working capital; (T) changes in net assets (whether or not multiplied by a constant percentage intended to represent the cost of capital); (U) return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales or revenue); (V) debt reduction; (W) reductions in the Company's overhead ratio; (X) expenses to sales ratio; and (Y) total shareholder return. The foregoing criteria may relate to the Company, one or more of its Affiliates, Subsidiaries or one or more of its divisions, geography, business units,
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segments, products, product lines, partnerships, joint ventures, minority investments (except with respect to total shareholder return and earnings per share criteria), or any combination thereof, or may be determined or applied on an absolute or relative basis, a consolidated basis, an adjusted basis, or as compared to the performance of a published or special index, including, but not limited to, the Standard & Poor's 500 Stock Index, the Nasdaq Market index, the Russell 2000 index or a group of comparable companies, or any combination thereof. Performance goals need not, however, be based upon any increase or positive result under the foregoing criteria and could include, for example, maintaining the status quo or limiting economic losses.
(ii) Committee Discretion to Determine Performance Goals. The Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given Participant and, if they have, to so ascertain the amount of the applicable Performance-Based Award. No Performance-Based Awards will be paid for such performance period until such determination is made by the Committee. The amount of the Performance-Based Award actually paid to a given Participant may be less than the amount determined by the applicable performance goal formula, at the discretion of the Committee. The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee, in its sole discretion after the end of such performance period;provided,however, that a Participant may, if and to the extent permitted by the Committee and consistent with the provisions of 409A of the Code, elect to defer payment of a Performance-Based Award. In addition, the performance goals may be calculated without regard to extraordinary items or accounting changes. For example (without limiting the adjustments to any of the following), the Committee may specify, in its sole discretion, at the time the performance goals are set, the manner of adjustment of any performance goal to the extent necessary to prevent dilution or enlargement of any award as a result of extraordinary events or other circumstances, as determined by the Committee, or to exclude the effects of (A) extraordinary, unusual, or non-recurring items, (B) changes in applicable laws, regulations or accounting principles, (C) currency fluctuations, (D) discontinued operations, (E) non-cash items, such as amortization, depreciation, reserves, or asset impairments, (F) any recapitalization, restructuring, reorganization, amalgamation, merger, acquisition, divestiture, consolidation, spin-off, split-up, subdivision, combination, liquidation, dissolution, sale of assets, or other similar corporate transaction, including expenses incurred in connection therewith, or (G) litigation charges.
(c) Terms and Conditions of Restricted Stock and Restricted Stock Units.
(i) Grant. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement in form approved by the Committee. Subject to Section 11(b), the vesting of a Restricted Stock Award or Restricted Stock Unit granted under the Plan may, but shall not be required to, be conditioned upon the completion of a specified period Service, upon attainment of specified performance goals, and/or upon such other criteria as the Committee may determine in its sole discretion.
(ii) Receipt of Restricted Stock. As soon as practicable after an Award of Restricted Stock has been made to a Participant, there shall be registered in the name of such Participant or of a nominee the number of Shares of Restricted Stock so awarded. Except as provided in the applicable Award Agreement, no Shares of Restricted Stock may be assigned, transferred or otherwise encumbered or disposed of by the Participant until such Shares have vested in accordance with the terms of such Award Agreement. If and to the extent that the applicable Award Agreement so provides, a Participant shall have the right to vote and, to the extent vested, receive dividends on the Shares of Restricted Stock granted to him or her under the Plan. Unless
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otherwise provided in the applicable Award Agreement, any Shares received as a dividend or bonus issue on such Restricted Stock or in connection with a stock split or subdivision of the Shares of Restricted Stock shall be subject to the same restrictions as the Restricted Stock.
(iii) Purchase Price. At the time of the grant of Restricted Stock, the Committee shall determine the price, if any, to be paid by the Participant for each Share subject to the Award. The purchase price of Shares acquired pursuant to the Award shall be paid either: (A) in cash at the time of purchase; (B) at the sole discretion of the Committee, by Service rendered or to be rendered to the Company or an Affiliate; or (C) in any other form of legal consideration that may be acceptable to the Committee in its sole discretion and in compliance with Applicable Laws.
(iv) Form and Time of Payments Pursuant to Restricted Stock Units. The Committee shall specify the settlement date applicable to each grant of Restricted Stock Units, which date shall not be earlier than the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, or such settlement date may be deferred to any later date, subject to compliance with Section 409A of the Code, as applicable. On the settlement date, the Company shall, subject to Section 11(c) hereof and satisfaction of applicable Tax-Related Items, transfer to the Participant one Share for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited. Alternatively, settlement of a Restricted Stock Unit may be made in cash (in an amount reflecting the Fair Market Value of the Shares that otherwise would have been issued) or any combination of cash and Shares, as determined by the Committee, in its sole discretion, in either case, less applicable Tax-Related Items. Until a Restricted Stock Unit is settled, the number of Restricted Stock Units shall be subject to adjustment pursuant to Section 10 hereof.
(v) Effect of Termination of Service. Upon a Termination of Service for any reason, the Participant shall only be entitled to the Restricted Stock or Restricted Stock Units vested at the time of such Termination of Service, and the Participant's unvested Restricted Stock Restricted Stock Units shall be forfeited or, to the extent provided in the Award Agreement, repurchased by the Company. Notwithstanding the foregoing, the Committee may, in its sole discretion, either by prior written agreement with the Participant or upon the occurrence of a Termination of Service, accelerate the vesting of unvested Restricted Stock or Restricted Stock Units held by the Participant if such Participant's Termination of Service is without "cause" (as such term is defined by the Committee in its sole discretion) by the Company or, if a Restricted Stock Award or Restricted Stock Unit granted under the Plan is conditioned upon a specified period of Service, permit the continued vesting of the Restricted Stock or Restricted Stock Units during a period of time following the date of Termination of Service to satisfy such condition;provided,however, that the maximum period of time during which the Restricted Stock or Restricted Stock Units continue to vest following the date of Termination of Service shall not exceed the original term of such Restricted Stock or Restricted Stock Units as set forth in the Award Agreement;provided further, that any continuation of vesting of Awards as contemplated herein shall be implemented in compliance with Section 409A of the Code and in a manner that is exempt from Section 457 of the Code.
10. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to all Awards granted under the Plan:
(a) Adjustments upon Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number and type of Shares covered by each outstanding Award, and the
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number and type of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation, expiration or forfeiture of an Award, as well as the exercise or purchase price, shall be proportionately adjusted for any increase or decrease in the number of issued Shares, any change to the price of the Shares or any other change affecting the Shares resulting from a stock split, subdivision, consolidation, spin-off, rights offering, large nonrecurring cash dividend, reverse stock split or combination or the payment of a bonus issue or stock dividend (but only on the Company's common shares) or reclassification of the Company's common shares, any other similar corporate event or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company (other than increases pursuant to the issuance of Other Stock-Based Awards under Section 9 of the Plan). Such adjustments and any other adjustments the Committee determines to be equitable shall be made by the Committee in its sole discretion, which adjustment shall be final, binding and conclusive. Notwithstanding the foregoing, the Committee shall not make any adjustments to outstanding Options or SARs that would constitute a modification or substitution of the stock right under Treas. Reg. Sections 1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or change in the form of payment for purposes of Section 409A of the Code or that would cause an ISO to become disqualified. Except as expressly provided herein, no issuance by the Company of shares of any class or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to the Plan or an Award.
(b) Adjustments upon Reorganization.
(i) In the event of a Reorganization, then the Committee may, in its sole discretion, provide (A) that Awards will be settled in cash rather than Shares, (B) that Awards will become immediately vested and non-forfeitable and exercisable (in whole or in part) and will expire after a designated period of time to the extent not then exercised, (C) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (D) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Shares, as of a specified date associated with the transaction, over the exercise or base price of the Award, (E) that performance targets and performance periods for Performance-Based Awards will be modified, (F) that, upon written notice to a Participant, all of the Participant's unexercised and/or unvested Awards will terminate immediately prior to the consummation of such Reorganization unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, or (G) any combination of the foregoing. The Committee's determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated.
(ii) The term "Reorganization" as used in this Section 10(b) shall mean any corporate event or transaction involving the Company (including, without limitation, any reorganization, recapitalization, combination or exchange of shares, statutory merger, statutory amalgamation, statutory consolidation, sale of all or substantially all of the assets of the Company, or sale, pursuant to an agreement with the Company, of securities of the Company pursuant to which the Company is or becomes a wholly-owned subsidiary of another company after the effective date of the Reorganization or any transaction described in Section 10(a).
(iii) Any adjustments made pursuant to this Section 10(b) shall be subject to the provisions of Section 15(b) and, to the extent constituting a Change of Control, Section 10(c).
(c) Change of Control. The provisions of this Section 10(c) shall apply in the event there occurs a Change of Control.
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(i) Awards Assumed or Substituted by Surviving Entity. Subject to Section 27 and unless otherwise provided in an Award Agreement, with respect to Awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, if within one year after the effective date of the Change of Control (or such other period set forth in the Award Agreement or other agreement, including prior thereto if applicable), a Participant's Service is involuntarily terminated other than for cause or by that Participant for good reason under the circumstances specified in the Award Agreement or other agreement, then (A) all of that Participant's outstanding Options or SARs shall immediately vest and become fully exercisable and may thereafter be exercised for one year (or the period of time set forth in the Award Agreement or other agreement), but in no event later than the expiration date of the Option or SAR, as applicable, (B) all time-based vesting restrictions on that Participant's outstanding Awards shall lapse and become fully vested, and (C) the payout level under all of that Participant's Awards that vest in whole or in part based on performance conditions that were outstanding immediately before the effective time of the Change of Control shall be determined and deemed to have been earned as of the date of termination based upon achievement of relevant performance goals or based on performance at the "target" level (either in full or pro rata based upon the length of time (in days) within the performance period that has elapsed prior to the date of Termination of Service), and any limitations or other restrictions shall lapse and there shall be a payout to such Participant within 60 days following the date of Termination of Service (unless a later date is required under Section 409A of the Code).
(ii) Awards not Assumed or Substituted by Surviving Entity. Subject to Section 27 and unless otherwise provided in an Award Agreement, upon the occurrence of a Change of Control, and except with respect to any Awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change of Control in a manner approved by the Committee as provided in Section 10(c)(c)(i): (A) outstanding Options or SARs shall immediately vest and become fully exercisable and may thereafter be exercised for the period of time set forth in the Award Agreement or other agreement, but in no event later than the expiration date of the Option or SAR, as applicable, (B) time-based vesting restrictions on outstanding Awards shall lapse and become fully vested, and (C) the payout level attainable under outstanding Awards that vest in whole or in part based on performance conditions shall be determined and deemed to have been fully earned as of the effective date of the Change of Control based upon achievement of relevant performance goals or based on performance at the "target" level (either in full or pro rata based upon the length of time (in days) within the performance period that has elapsed prior to the Change of Control), and any limitations or other restrictions shall lapse and there shall be a payout to Participants within sixty (60) days following the Change of Control (unless a later date is required by Section 409A of the Code). Any Options or SARs shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Agreement.
(iii) For the purposes of this Section 10(c), an Option, SAR, Restricted Stock, Restricted Stock Unit Award or Other Stock-Based Award shall be considered assumed or substituted for if following the Change of Control the Award confers the right to purchase or receive, for each Share subject to the Option, SAR, Restricted Stock, Restricted Stock Unit Award or Other Stock-Based Award immediately prior to the Change of Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting the Change of Control by holders of Shares for each Share held on 17the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the issued and outstanding Shares);provided,however, that if such consideration received in the transaction constituting a Change of Control is not solely common stock of the successor company or the parent of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received
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upon the exercise or vesting of an Option, SAR, Restricted Stock, Restricted Stock Unit Award or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company or the parent of the successor company with a fair market value substantially equal to the per Share consideration received by holders of Shares in the transaction constituting a Change of Control. The determination of whether fair market value is substantially equal shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.
(d) Acceleration for Other Reasons. Regardless of whether an event has occurred as described in Section 10(c) above, and subject to Section 9(b) as to Performance-Based Awards, the Committee may in its sole discretion at any time determine that, upon the termination of Service of a Participant for any reason, or the occurrence of a Change of Control, all or a portion of such Participant's Options or SARs shall become fully or partially exercisable, that all or a part of the restrictions on all or a portion of the Participant's outstanding Awards shall lapse, and/or that any performance-based criteria with respect to any Awards held by that Participant shall be deemed to be wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole discretion, declare. The Committee may discriminate among Participants and among Awards made to a Participant in exercising its discretion pursuant to this Section 10(d).
(e) Substitute Awards. The Committee may grant Awards under the Plan in substitution for stock and stock-based awards held by employees or members of the board or equivalent governing body of another entity who become employees or directors of the Company or an Affiliate as a result of a merger, amalgamation or consolidation of the other entity with the Company or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of such entity. The Committee may direct that the substitute awards be made on such terms and conditions as the Committee considers appropriate in the circumstances.
11. Provisions Applicable to Awards
(a) Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.
(b) Minimum Vesting Requirements. Notwithstanding any other provision of the Plan, except in connection with Awards granted in connection with assumption or substitution of awards as part of a transaction as contemplated under Section 3(c) or Section 10(e) or Awards that may be settled only in cash, no portion of an Award granted on or after the Effective Date may vest before the first anniversary of the date of grant, subject to accelerated vesting as contemplated under Section 4(b)(iii) and Section 10;provided,however, that the Company may grant Awards with respect to up to five percent (5%) of the number of Shares reserved under Section 3 as of the Effective Date without regard to the minimum vesting period set forth in this Section 11(b);providedfurther that, for purposes of Awards granted to Non-Employee Directors, such Awards shall be deemed to have vested after the first anniversary of the date of grant if the Awards are granted to Non-Employee Directors in connection with their election or reelection to the Board at an annual general meeting of shareholders and the Awards vest on the next annual general meeting of shareholders, so long as the period between such annual general meetings is not less than 50 weeks.
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(c) Share Certificates; Book Entry Procedures.
(i) Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing Shares pursuant to the exercise or vesting, as applicable, of any Award, unless and until the Board has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all Applicable Law. All certificates evidencing Shares delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with Applicable Law. The Committee may place legends on any certificate evidencing Shares to reference restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the Board may require that a Participant make such reasonable covenants, agreements, and representations as the Board, in its discretion, deems advisable in order to comply with any such Applicable Law. The Committee shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including, without limitation, a window-period limitation, as may be imposed in the discretion of the Committee.
(ii) Notwithstanding any other provision of the Plan, unless otherwise determined by the Committee or required by any Applicable Law, the Company shall not deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).
(d) Paperless Administration. Participants hereby agree to the Company's use (for itself or through the services of a third-party) of an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website, intranet or interactive voice response, and that the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system.
(e) Nontransferability of Awards. An Award shall not be assigned, transferred or otherwise encumbered or disposed of by the Participant (including, without limitation, to a third-party financial institution or for consideration), other than as provided in this Section 11(e) or by will or by the laws of descent and distribution, and except as provided in this Section 11(e), during the lifetime of a Participant an Award shall be exercisable only by the Participant. An Award exercisable after the death of a Participant or a transferee pursuant to the following sentence may be exercised by the legatees, personal representatives or distributees of the Participant or such transferee. The Committee may, in its discretion, authorize all or a portion of Awards previously granted or to be granted to a Participant, other than ISOs, to be on terms which permit irrevocable transfer for no consideration by such Participant to any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, of the Participant, any trust in which these persons have more than 50% of the beneficial interest, any foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests (collectively, "Eligible Transferees"),provided that (i) the Award Agreement pursuant to which such options are granted must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Section 11(e) and (ii) subsequent transfers of transferred Awards shall be prohibited except those in accordance with the first sentence of this Section 11(e). The Committee may, in its discretion, amend the definition of Eligible Transferees to conform to the coverage rules of Form S-8 under the Securities Act (or any comparable or successor registration statement) from time to time in effect. Following transfer, any such Awards shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. The events of Termination of Service of
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Sections 7(e) and 7(f) hereof shall continue to be applied with respect to the original Participant, following which the Options shall be exercisable by the transferee only to the extent, and for the periods specified, in Sections 7(e) and 7(f). Notwithstanding anything to the contrary herein, the Committee, in its sole discretion, shall have the authority to waive this Section 11(e) or any part hereof (except with respect to ISOs) to the extent that this Section 11(e) or any part hereof is not required under the rules promulgated under any law, rule or regulation applicable to the Company.
12. Confidentiality and Non-Competition
By accepting an Award under the Plan and as a condition to the exercise or settlement of Options, Stock Appreciation Rights or Restricted Stock Units and the enjoyment of any of the benefits of the Plan and the applicable Award Agreement, each Participant agrees as follows:
(a) Confidentiality. During the period that each Participant provides Services (or the Participant's engaging in any other activity with or for the Company) and for a two year period thereafter, such Participant shall treat and safeguard as confidential and secret all Confidential Information received by such Participant at any time. Without the prior written consent of the Company, except as required by law, such Participant will not disclose or reveal any Confidential Information to any third party whatsoever or use the same in any manner except in connection with the businesses of the Company and its Affiliates or Subsidiaries. In the event that a Participant is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other process) to disclose (i) any Confidential Information or (ii) any information relating to his opinion, judgment or recommendations concerning the Company or its Affiliates or Subsidiaries as developed from the Confidential Information, each Participant will provide the Company with prompt written notice of any such request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions contained herein. If, failing the entry of a protective order or the receipt of a waiver hereunder, such Participant is, in the reasonable opinion of his counsel, compelled to disclose Confidential Information, such Participant shall disclose only that portion and will exercise best efforts to obtain assurances that confidential treatment will be accorded such Confidential Information. For the avoidance of doubt, nothing herein is intended to impede, prohibit or restrict the Participant (or an attorney acting on the Participant's behalf) from initiating communications directly with, or responding to any inquiry from, or providing testimony before, the U.S. Securities and Exchange Commission, Commodity Futures Trading Commission, FINRA, or any other state or federal regulatory authority or self-regulatory organization regarding this agreement or its underlying facts or circumstances, or about a possible violation of securities laws (or recovering any remuneration for doing so), the Commodities Exchange Act, or employment laws, or exercising rights under the federal Defend Trade Secrets Act which provides that an individual shall not be held criminally or civilly liable for the disclosure of a trade secret that is made (i) in confidence to a government official or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. This Section 12(a) does not, however, authorize the Participant to disclose information the Participant obtains through a communication that is subject to the attorney-client privilege or the work product doctrine.
(b) Non-Competition.
(i) During the period that each Participant provides Services to the Company or its Affiliates or Subsidiaries, and for a two-year period thereafter, such Participant shall not, without prior written consent of the Committee, do, directly or indirectly, any of the following: (A) own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated with, any other corporation, partnership, proprietorship, firm, association or other business entity, or otherwise engage in any business
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which competes with the business of the Company or any of its Affiliates or Subsidiaries (as such business is conducted during the term such Participant provides Services to the Company or its Affiliates or Subsidiaries) in the geographical regions in which such business is conducted;provided,however, that the ownership of a maximum of one percent of the outstanding stock of any publicly traded corporation shall not violate this covenant; or (B) employ, solicit for employment or assist in employing or soliciting for employment any present, former or future employee, officer or agent of the Company or any of its Affiliates or Subsidiaries.
(ii) In the event any court of competent jurisdictions should determine that the foregoing covenant of non-competition is not enforceable because of the extent of the geographical area or the duration thereof, then the Company and the affected Participant hereby petition such court to modify the foregoing covenant to the extent, but only to the extent, necessary to create a covenant which is enforceable in the opinion of such court, with the intention of the parties that the Company shall be afforded the maximum enforceable covenant of non-competition which may be available under the circumstances and applicable law.
(c) Failure to Comply. Each Participant acknowledges that remedies at law for any breach by him of this Section 12 may be inadequate and that the damages resulting from any such breach are not readily susceptible to being measured in monetary terms. Accordingly, each Participant acknowledges that upon his or her violation of any provision of this Section 12, the Company will be entitled to immediate injunctive relief and may obtain an order restraining any threatened or future breach. Each Participant further agrees, subject to the proviso at the end of this sentence, that if he or she violates any provisions of this Section 12, such Participant shall immediately forfeit any rights and benefits under the Plan and shall return to the Company any unexercised Options and forfeit the rights under any other Awards and shall return any Shares held by such Participant upon exercise of any Option or the vesting of Shares underlying an Award granted hereunder (or, to the extent provided in the Award Agreement, the Company shall repurchase such Shares), together with any proceeds from sales of any Shares received upon exercise of such Options or the vesting of Shares underlying an Award;provided,however, that upon violation of subsection (b) of this Section 12, the forfeiture, repurchase and return provisions contained in this sentence shall apply only to (i) Awards under which underlying Shares have become exercisable or vested during the two year period immediately prior to the Participant's Termination of Service, and in any such case the gross proceeds from sales of any such Awards or underlying Shares, and (ii) without duplication of the amounts described in clause (i) above, any gross proceeds from the sale of any Awards or underlying Shares during the two year period immediately prior to the Participant's Termination of Service. Nothing in this Section 12 will be deemed to limit, in any way, the remedies at law or in equity of the Company, for a breach by a Participant of any of the provisions of this Section 12.
(d) Notice. Each Participant agrees to provide written notice of the provisions of this Section 12 to any future employer of such Participant, and the Company expressly reserves the right to provide such notice to such Participant's future employer(s).
13. "Lockup" Agreement
The Committee may in its discretion specify upon granting an Award that upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, the Participant shall agree in writing that for a period of time (not to exceed 180 days) from the effective date of any registration of securities of the Company, the Participant will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Shares issued pursuant to the exercise and settlement of such Award, without the prior written consent of the Company or such underwriters, as the case may be.
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14. Limitation of Liability
Each member of the Board, including the members of the Committee, shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or any Subsidiary or Affiliate, the Company's independent certified public accountants, or other professional retained by the Company to assist in the administration of the Plan. No member of the Board, including the members of the Committee, nor any officer or employee of the Company acting on behalf of the Board, shall be personally liable for any action, determination, or interpretation taken or made in good faith and in absence of fraud and dishonesty with respect to the Plan, and all members of the Board, including the members of the Committee, and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation.
15. Amendments or Termination
(a) The Board or the Committee may terminate or discontinue the Plan at any time. The Board or the Committee may amend, modify or alter the Plan at any time, but no amendment, modification or alteration shall be made which, (i) without the approval of the shareholders of the Company, would (except as is provided in Section 10 of the Plan), increase the total number of Shares reserved for the purposes of the Plan, change the maximum number of Shares for which Awards may be granted to any Participant or modify the Plan in any other way to the extent shareholder approval is required by the rules of any stock exchange or market or quotation system on which the Shares are traded, listed or quoted, or (ii) without the consent of a Participant, would impair any of the rights or obligations under any Award theretofore granted to such Participant under the Plan or affect adversely, in any material way, any Award previously granted pursuant to the Plan (A) that may cause an ISO to become a non-qualified stock option or (B) that may be required or desirable to facilitate compliance with Applicable Laws, as determined in the sole discretion of the Committee. Notwithstanding anything to the contrary herein, neither the Committee nor the Board may amend, alter or discontinue the provisions relating to Section 10(b) of the Plan after the occurrence of a Change of Control.
(b) Except as provided in Section 10 of the Plan or expressly provided under the Plan, any amendment, modification, termination or discontinuance of the Plan shall not affect Awards previously granted, and such Awards shall remain in full force and effect as if the Plan had not been amended, modified, terminated or discontinued, unless such amendment, modification, termination or discontinuance (i) may be required or desirable to facilitate compliance with Applicable Laws, as determined in the sole discretion of the Committee or (ii) would not impair, in any material respect, any of the rights or obligations under any Award or unless mutually agreed otherwise between the Participant and the Company, which agreement shall be in writing and signed by the Participant and the Company.
16. International Participants
The Committee may delegate to another committee, as it may appoint, the authority to take any action consistent with the terms of the Plan, either before or after an Award has been granted, which such other committee deems necessary or advisable to comply with any Applicable Law or with any other government laws or regulatory requirements of a non-U.S. jurisdiction, including but not limited to, modifying or amending the terms and conditions governing any Awards, or establishing any local country plans as sub-plans to the Plan. In addition, under all circumstances, the Committee may make non-substantive administrative changes to the Plan as to conform with or take advantage of governmental requirements, statutes or regulations.
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17. No Right to Continued Employment or Service
Neither the Plan nor the granting of an Award under the Plan shall impose any obligation on the Company, a Subsidiary or any Affiliate to continue the employment or Service of a Participant or lessen or affect the Company's, Subsidiary's or Affiliate's right to terminate the employment or service of such Participant.
18. Not Compensation for Benefit Plans
No Award payable under the Plan shall be deemed salary or compensation for the purpose of computing benefits under any benefit plan or other arrangement of the Company for the benefit of its employees or directors unless the Company shall determine otherwise.
19. Unfunded Status of Awards
The Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company;provided,however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.
20. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options and other awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
21. Successors and Assigns
The Plan shall be binding on all successors and assigns of the Company and a Participant, including, without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant's creditors.
22. No Rights to Awards, No Shareholder Rights
No Participant or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants and employees. Unless otherwise expressly provided herein, no Award shall confer on any Participant any rights to dividends or other rights of a shareholder with respect to Shares subject to an Award unless and until Shares are duly issued or transferred to the Participant in accordance with the terms of the Award and, if applicable, the satisfaction of any other conditions imposed by the Committee pursuant to the Plan.
23. No Fractional Shares
No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, including on account of any action under Section 10 of the Plan. In the case of Awards to Participants, the Committee
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shall determine, in its discretion, whether cash, other Awards, scrip certificates (which shall be in a form and have such terms and conditions as the Committee in its discretion shall prescribe) or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.
24. Compliance with Legal and Trading Requirements
The Plan, the granting, exercising and settlement of Awards thereunder, and the other obligations of the Company under the Plan and any Award Agreement, shall be subject to all applicable federal, state and local laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Committee shall have the right to require any Participant to comply with timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, in the discretion of the Committee. All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or market or quotation system upon which the Shares are then listed, traded or quoted, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. No Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would comply with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject. The Company, in its discretion, may postpone the issuance or delivery of Shares under any Award until completion of such stock exchange or market or quotation system listing or registration or qualification of such Shares or other required action under any state, federal or local law, rule or regulation as the Company may consider appropriate, including the Securities Act and the Exchange Act, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules and regulations. No provisions of the Plan shall be interpreted or construed to obligate the Company to register any Shares under federal, state or local law.
25. Severability
If any provision of the Plan (including Section 12 of the Plan) is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan (including the remainder of Section 12 of the Plan, as applicable) shall remain in full force and effect. In addition to the foregoing, any restriction set forth in Section 12 of the Plan is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area or otherwise conflicts with applicable law, it will be interpreted to extend only over the maximum period of time, range of activities or geographic area, or otherwise, as to which it may be enforceable.
26. Choice of Law
The Plan and all Award Agreements shall be governed by and construed in accordance with the laws of the State of Texas applicable to contracts made and to be performed in the State of Texas without regard to conflict of laws principles.
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27. Conflict
To the extent the provisions of the Plan conflicts with the terms and conditions of any written agreement between the Company and a Participant (including the vesting or settlement of any Awards upon Termination of Service, whether by Change of Control or any analogous term or otherwise), the terms and conditions of such agreement shall control.
28. Effectiveness of the Plan; Term
The Plan shall be effective on August 2016)22, 2018. The Plan shall continue in effect until August 22, 2028 unless sooner terminated under Section 15 of the Plan.
29. Section 409A and 457A of the Code; Tax Favorable Treatment
(a) Notwithstanding any other provision of the Plan or an Award Agreement to the contrary, to the extent that the Committee determines that any Award granted to a U.S. taxpayer under the Plan is subject to Section 409A or 457A of the Code, it is the intent of the parties to the applicable Award Agreement that such Award Agreement incorporate the terms and conditions necessary to avoid adverse tax consequences under Section 409A or Section 457A, as applicable, of the Code and that such Award Agreement and the terms of the Plan as applicable to such Award be interpreted and construed in compliance with Section 409A and 457A of the Code and the Treasury regulations and other interpretive guidance issued thereunder.
(b) Notwithstanding any provision of the Plan to the contrary, in the event that following the date an Award is granted the Committee determines that the Award may be subject to Section 409A or 457A of the Code and related U.S. Department of Treasury guidance (including such guidance as may be issued after the Effective Date), the Committee may, but shall not be required to, adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, including amendments or actions that would result in a reduction to the benefits payable under an Award, in each case, without the consent of the Participant, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A or 457A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related U.S. Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section or mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Section 409A or 457A of the Code if compliance is not practical. Notwithstanding the foregoing, the Company shall not be required to assume any increased economic burden in connection therewith.
(c) Although the Company may endeavor to (a) qualify an Award for favorable or specific tax treatment under the laws of the U.S. (e.g., Incentive Stock Options under Section 422 of the Code) or jurisdictions outside of the U.S. or (b) avoid adverse tax treatment (e.g., under Section 409A or 457A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment, notwithstanding anything to the contrary in this Plan, including this Section 29 hereof. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on Participants under the Plan. Nothing in this Plan or in an Award Agreement shall provide a basis for any person to take any action against the Company or any Affiliate or Subsidiary based on matters covered by Section 409A or 457A of the Code, including the tax treatment of any Awards, and neither the Company nor any Affiliate or Subsidiary will have any liability under any circumstances to the Participant or any other party if the Award that is intended to be exempt
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from, or compliant with, Section 409A of the Code or exempt from Section 457A of the Code, is not so exempt or compliant or for any action taken by the Committee with respect thereto.
30. Notices
All notices or other communications by a Participant to the Committee, the Board or the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Committee at the location, or by the person, designated by the Committee for the receipt thereof. Notwithstanding anything to the contrary contained in the Plan, notices and other elections under the Plan may be delivered or made electronically, in the discretion of the Committee. In addition, in the discretion of the Committee, Shares otherwise deliverable under the Plan may be delivered or otherwise evidenced through book entry or other electronic format without the need to deliver an actual Share certificate;provided,however, an actual Share certificate shall be delivered if requested by the Participant.
31. Applicable Policies
Notwithstanding any other provision of the Plan or an Award Agreement to the contrary, acceptance by any Participant of any Award granted pursuant to the Plan constitutes such Participant's acknowledgement and agreement that all Awards made pursuant to the Plan shall be subject to (a) Section 304 of the Sarbanes Oxley Act of 2002, (b) any rules and/or regulations issued pursuant to the Dodd-Frank Act of 2010 or any clawback policy adopted by the Company pursuant to such rules and/or regulations and (c) the Insider Trading Policy of the Company.
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Annex C
HELEN OF TROY LIMITED
2018 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
The purpose of this Plan is to provide an opportunity for Eligible Employees of the Company and its Designated Companies to purchase Common Stock of the Company and thereby to have an additional incentive to contribute to the prosperity of the Company. It is the intention of the Company that this Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code although the Company makes no undertaking nor representation to maintain such qualification. This Plan also authorizes the grant of options that do not qualify under Section 423 of the Code pursuant to the rules, procedures, or sub-plans adopted by the Committee designed to accommodate the specific requirements of laws and procedures in non-United States jurisdictions. Except as otherwise indicated, Section 423 Offerings (as defined below) and Non-423 Offerings (as defined below) will operate and be administered in the same manner.
2. Definitions.
2.1 "Affiliate" means any Subsidiary and any person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company or any other entity designated by the Board in which the Company or a Subsidiary or Affiliate has an interest.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Code" shall mean the United States Internal Revenue Code of 1986, as amended.
2.4 "Committee" shall mean the committee appointed by the Board in accordance with Section 12 of this Plan.
2.5 "Common Stock" shall mean the common shares of the Company, par value $.10 per share, or any stock into which such common shares may be converted or for which it may be exchanged.
2.6 "Company" shall mean Helen of Troy Limited, a Bermuda company.
2.7 "Compensation" shall mean an Eligible Employee's wages or salary paid directly by (or through the payroll provider of) the Company or a Designated Company, and which are reportable as wages or other compensation on the Eligible Employee's Form W-2 issued by the Company or a Designated Company, plus pre-tax contributions of the Eligible Employee under a cash or deferred arrangement (401(k) plan) or cafeteria plan maintained by the Company or a Designated Company, but excluding, however, (a) non-cash fringe benefits, (b) special payments as determined by the Committee (e.g., moving expenses, unused vacation, severance pay), (c) income from the exercise of stock options or other stock-based awards, stock purchases, or from the vesting, settlement or other event related to stock-based awards, (d) income from bonuses and (e) any other items of Compensation as determined by the Committee. Consistent with Section 13 of the Plan, the Committee shall have sole and absolute discretion to determine the application of this definition to Participants in non-United States jurisdictions, in a uniform and nondiscriminatory basis in accordance with Section 423 of the Code to the extent the option is intended to qualify under Section 423 of the Code.
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2.8 "Designated Company" shall mean a Subsidiary or Affiliate, whether now existing or existing in the future, which has been designated by the Board or the Committee from time to time in its sole discretion as eligible to participate in this Plan. If a Subsidiary or Affiliate has been designated by the Board or Committee as eligible to participate in this Plan, the Committee shall determine whether such Designated Company shall participate in a Section 423 Offering or a Non-423 Offering. For purposes of a Section 423 Offering, only the Company and its Subsidiaries may be a Designated Company; provided, however, that at any given time, a Subsidiary that is a Designated Company under a Section 423 Offering will not be a Designated Company under a Non- 423 Offering.
2.9 "Eligible Employee" shall mean an individual in an employee-employer relationship with the Company or a Designated Company for income tax and employment tax withholding and reporting purposes. For purposes of clarity, the term "Eligible Employee" shall not include the following, regardless of any subsequent reclassification as an employee by the Company or a Designated Company, any governmental agency, or any court: (i) any independent contractor; (ii) any consultant; (iii) any individual performing services for the Company or a Designated Company who has entered into an independent contractor or consultant agreement with the Company or a Designated Company; (iv) any individual performing services for the Company or a Designated Company under an independent contractor or consultant agreement, a purchase order, a supplier agreement or any other agreement that the Company or a Designated Company enters into for services; (v) any individual classified by the Company or a Designated Company as contract labor (such as contractors, contract employees, job shoppers), regardless of length of service; and (vi) any leased employee. The Committee shall have exclusive discretion to determine whether an individual is an Eligible Employee for purposes of the Plan.
2.10 "Entry Date" shall mean the first Trading Day of each Option Period.
2.11 "Exercise Date" shall mean the last Trading Day of each Exercise Period.
2.12 "Exercise Period" shall mean a three (3) month, six (6) month or other period within the Option Period as determined by the Committee. The first Exercise Period during an Option Period shall commence on the Entry Date of such Option Period. Subsequent Exercise Periods, if any, shall run consecutively after the termination of the preceding Exercise Period. The last Exercise Period in an Option Period shall terminate on the last Trading Day of such Option Period. The Committee may determine that the length of Exercise Periods during an Option Period are different.
2.13 "Fair Market Value" shall mean, as of any date that requires the determination of the Fair Market Value of Common Stock under this Plan, the value of a Share on such date of determination, calculated as follows:
(a) If the Common Stock is then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on such date on such Nasdaq market system or principal stock exchange on which the share is then listed or admitted to trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the share on such Nasdaq market system or such exchange on the next preceding day on which a closing sale price is reported;
(b) If the Common Stock is not then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid and asked prices of the Share in the over-the-counter market on such date; or
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(c) If neither clause (a) nor (b) is applicable as of such date, then the Fair Market Value shall be determined by the Board in good faith using any reasonable method of evaluation, which determination shall be conclusive and binding on all interested parties.
2.14 "Maximum Offering" shall mean, with respect to some or all Participants in Non-423 Offerings, a maximum number or value of Shares made available in a certain period(e.g., 12-month period) in specified countries, locations or Designated Companies.
2.15 "Non-423 Offering" shall mean an offering authorizing the grants of rights under the Plan that is not intended to comply with the requirements of Section��423 of the Code, pursuant to any rules, procedures, or sub-plan adopted by the Committee for such purpose.
2.16 "Offering" means a Section 423 Offering or a Non-423 Offering of a right to purchase Shares under the Plan during an Option Period as further described in Section 5. For purposes of the Plan, the Committee may establish separate Offerings under the Plan (the terms of which need not be identical) in which Eligible Employees of one or more Designated Companies may participate, even if the dates of the applicable Option Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. With respect to Section 423 Offerings, the terms of each Offering need not be identical provided that the terms of the Plan and an Offering together satisfy Code Section 423; a Non-423 Offering need not satisfy such regulations.
2.17 "Option Period" shall mean a period of up to twelve (12) months as determined by the Committee during which rights to purchase Shares may be granted pursuant to the Plan and may be purchased in one or more Exercise Dates as determined in accordance with Section 5. The Committee may determine that the Option Period and the Exercise Period will run simultaneously.
2.18 "Participant" shall mean a participant in this Plan as described in Section 4 of this Plan.
2.19 "Plan" shall mean this Helen of Troy Limited 2018 Employee Stock Purchase Plan, as amended from time to time.
2.20 "Section 423 Offering" shall mean an offering under the Plan intended qualify as an "employee stock purchase plan" which is designed to meet the requirements set forth in Section 423 of the Code. The provisions of the Section Offering shall be construed, administered and enforced in accordance with Section 423 of the Code.
2.21 "Shareholder" shall mean a record holder of Shares entitled to vote under the Company's Bye-Laws, as amended from time to time.
2.22 "Shares" shall mean shares of Common Stock.
2.23 "Subsidiary" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, as described in Section 424(f) of the Code.
2.24 "Tax-Related Items" means any U.S. federal, state, and/or local taxes and any taxes imposed by a jurisdiction outside of the U.S. (including, without limitation, income tax, social insurance and similar contributions, payroll tax, fringe benefits tax, payment on account, employment tax, stamp tax and any other taxes related to participation in the Plan and legally applicable to a Participant, including any employer liability for which the Participant is liable pursuant to applicable laws).
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2.25 "Trading Day" shall means a day on which the Nasdaq Global Select Market is open for trading.
3. Eligibility.
3.1 Any Eligible Employee regularly employed on a full-time basis by the Company or by any Designated Company on an Entry Date shall be eligible to participate in this Plan with respect to the Option Period commencing on such Entry Date, provided that the Committee may establish administrative rules requiring that employment commence some minimum period (e.g., one pay period) prior to an Entry Date to be eligible to participate with respect to that Entry Date and provided further that the Committee, in its discretion, from time to time, may, prior to the commencement of an Option Period for all options granted in an Offering (and on a uniform and nondiscriminatory basis), (a) extend eligibility to part-time Eligible Employees pursuant to criteria and procedures established by the Committee; (b) impose an eligibility period on participation of up to two (2) years with respect to participation on any prospective Entry Date; (c) exclude from eligibility an individual who (i) is a highly compensated employee within the meaning of Section 414(q) of the Code, (ii) is a highly compensated employee within the meaning of Section 414(q) of the Code with compensation above a certain level or (iii) is an officer subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), provided the exclusion is applied, to the extent required by applicable law, with respect to each Offering in an identical manner to all highly compensated individuals or officers of the Designated Company whose employees are participating in that Offering. An Eligible Employee shall be considered employed on a full-time basis unless his or her customary employment is less than twenty (20) hours per week or five (5) months per year. No employee may participate in this Plan if immediately after an option is granted the employee owns or is considered to own (within the meaning of Section 424(d) of the Code), shares of stock, including stock which the Eligible Employee may purchase by conversion of convertible securities or under outstanding options granted by the Company, possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any of its Subsidiaries. All Eligible Employees who participate in this Plan shall have the same rights and privileges under this Plan except for differences which may be mandated by local law and which are consistent with Section 423(b)(5) of the Code. Subject to continued compliance with Section 423 of the Code, the Committee may impose other restrictions on eligibility and participation of Eligible Employees.
3.2 An Eligible Employee who works for a Designated Company and is a citizen or resident of a jurisdiction other than the United States (without regard to whether such individual also is a citizen or resident of the United States or is a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from participation in the Plan or an Offering if the participation of such Eligible Employee is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or a Section 423 Offering to violate Section 423 of the Code. In the case of a Non-423 Offering, an Eligible Employee (or group of Eligible Employees) may be excluded from participation in the Plan or an Offering if the Committee has determined, in its sole discretion, that participation of such Eligible Employee(s) is not advisable or practicable for any reason.
4. Participation.
4.1 An Eligible Employee who is eligible to participate in this Plan in accordance with Section 3 may become a Participant by filing and completing the appropriate form or following the procedures prescribed by the Committee, in each case, on a date prescribed by the Committee prior to an applicable Entry Date. An Eligible Employee may authorize payroll deductions at the rate of any whole percentage of the Eligible Employee's Compensation, not to exceed fifteen percent (15%) of the Eligible Employee's Compensation, or such lesser percentage as specified by the Committee as applied to an Entry Date or Option Period. An Eligible Employee may authorize other contributions rather than payroll
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deductions to the extent permitted by the Committee for Participants in the Non-423 Offering (or the Section 423 Offering if permitted under the regulations for Section 423 of the Code). All payroll deductions may be held by the Company and commingled with its other corporate funds. Payroll deductions under the Non-423 Offering (or the Section 423 Offering if permitted under the regulations for Section 423 of the Code) may be segregated from the Company's other corporate funds, where, as determined by the Committee, local law requires segregation of such accounts. No interest shall be paid or credited to the Participant with respect to such payroll deductions except where required by local law as determined by the Committee. Interest may be paid or credited to the Participant with respect to payroll deductions where required by local law, as determined by the Committee, for Participants in the Non-423 Offering (or the Section 423 Offering if permitted under the regulations for Section 423 of the Code). A separate bookkeeping account for each Participant shall be maintained by the Company under this Plan and the amount of each Participant's payroll deductions shall be credited to such account. A Participant may not make any additional payments into such account. An actual account for each Participant may be maintained by the Company under this Plan where required by local law, as determined by the Committee, for Participants in the Non-423 Offering (or the Section 423 Offering if permitted under the regulations for Section 423 of the Code).
4.2 (a) Under procedures established by the Committee, a Participant may suspend or discontinue participation in this Plan at any time during an Exercise Period by completing and filing the form or following the procedures prescribed by the Committee. Subject to Section 4.1, a Participant may increase (up to the maximum rate set forth in Section 4.1) or decrease his or her rate of payroll deductions only effective on the next subsequent Entry Date by electing such an increase or decrease by completing and filing the form or following the procedures prescribed by the Committee. If an appropriate form is not completed and filed or if the procedures established by the Committee are not followed, the rate of payroll deductions shall continue at the originally elected rate with respect to the next subsequent Option Period unless the Committee determines to change the permissible rate. In such a case, the Participant will be deemed to have accepted the terms and conditions of the Plan and any enrollment or other participation form in effect at the time each subsequent Option Period begins, subject to the Participant's right to elect to discontinue participation in the Plan in accordance with the applicable procedures in effect at the time.
(b) If a Participant suspends participation during an Exercise Period, his or her accumulated payroll deductions will remain in this Plan for purchase of Shares as specified in Section 6 on the following Exercise Date, but the Participant will not again participate until he or she again enrolls in the Plan in accordance with Section 4.1. If a Participant discontinues participation in this Plan, the amount credited to the Participant's individual account shall be paid to the Participant without interest (except where required by local law). In the event any Participant terminates employment with the Company or any Affiliate for any reason (including death) prior to the expiration of an Option Period, the Participant's participation in this Plan shall terminate and all amounts credited to the Participant's account shall be paid to the Participant or the Participant's estate without interest (except where required by local law). Whether a termination of employment has occurred shall be determined by the Committee. The Committee may also establish rules regarding when leaves of absence or change of employment status (e.g., from full-time to part-time) will be considered to be a termination of employment, and the Committee may establish termination of employment procedures for this Plan which are independent of similar rules established under other benefit plans of the Company and its Affiliates.
(c) In the event of a Participant's death, any accumulated payroll deductions will be paid, without interest, to the estate of the Participant.
4.3 Unless otherwise determined by the Committee, a Participant whose employment transfers or whose employment terminates with an immediate rehire (with no break in service) by or between the Company and a Designated Company will not be treated as having terminated employment
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for purposes of participating in the Plan; however, if a Participant transfers from a Section 423 Offering to a Non-423 Offering, the exercise of a Participant's right to purchase Shares under the Plan will be qualified under the Section 423 Offering only to the extent such exercise complies with Section 423 of the Code. If a Participant transfers from a Non-423 Offering to a Section 423 Offering, the exercise of a Participant's right to purchase Shares under the Plan will remain non-qualified under the Non-423 Offering. The Committee may establish different and additional rules governing transfers between separate Offerings within the Section 423 Offering and between Offerings under the Section 423 Offering and Non-423 Offering.
4.4 Any references to payroll deductions in the Plan shall be read as references to payroll deductions or other contributions. Any references in the Plan to the payment of interest (or lack thereof) shall be read in accordance with Section 4.1 of the Plan.
4.5 Unless otherwise provided by the Committee in its sole discretion, if a Participant goes on a leave of absence during which the Participant receives Compensation, payroll deductions from Compensation on behalf of the Participant shall continue and any amounts credited to the Participant's individual account may be used to purchase Shares as provided under this Plan. If a Participant goes on a leave of absence during which the Participant does not receive Compensation, payroll deductions taken on behalf of the Participant shall be discontinued and no other contributions shall be permitted (unless required by applicable law or otherwise determined by the Committee, in a uniform and nondiscriminatory basis in accordance with Section 423 of the Code to the extent the option is intended to qualify under Section 423 of the Code), but any amounts then credited to the Participant's individual account may be used to purchase Shares on the next applicable Exercise Date. Where the period of leave exceeds three months and the Participant's right to employment is not guaranteed either by statute or by contract, employment will be considered to have terminated three months and one day following the commencement of such leave.
5. Offering.
5.1 The maximum number of Shares which may be issued pursuant to this Plan shall be 750,000 Shares, subject to adjustment pursuant to Section 8 below. The Committee may designate the maximum number of Shares for offering for any Option Period determined pursuant to Section 5.2. The Committee may also specify a Maximum Offering. The Shares that may be issued under this Plan may be authorized but unissued Shares, treasury shares or Shares purchased in the open market. For the avoidance of doubt, the number of Shares set forth in this Section 5.1 may be used to satisfy purchases of Shares under either a Section 423 Offering or a Non-423 Offering.
5.2 Each Option Period and Exercise Period shall be determined by the Committee. The Committee shall have the power to change the duration of future Option Periods or future Exercise Periods, and to determine whether or not to have overlapping Option Periods or multiple Exercise Periods within an Option Period, with respect to any prospective Offering, without shareholder approval, and without regard to the expectations of any Participants.
5.3 With respect to each Option Period, each Eligible Employee who has elected to participate as provided in Section 4.1 shall be granted an option to purchase that number of Shares which may be purchased with the payroll deductions accumulated on behalf of such Eligible Employee during each Exercise Period within such Option Period at the purchase price specified in Section 5.4 below; provided, however, (a) in no event shall the Eligible Employee be entitled to accrue rights to purchase Shares under this Plan (and all other employee stock purchase plans, as defined in Section 423 of the Code, of the Company and its Subsidiaries) at a rate which exceeds $25,000 of the Fair Market Value of such stock (determined at the time the option is granted) for any calendar year in which such option is
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outstanding at any time, and (b) the maximum number of Shares subject to any option with respect to an Option Period shall in no event exceed 2,000, subject to adjustment pursuant to Section 8 below.
5.4 The option exercise price under each option shall be the lower of: (a) a percentage (not less than eighty-five percent (85%)) established by the Committee ("Designated Percentage") of the Fair Market Value of the Common Stock on the Entry Date on which an option is granted, or (b) the Designated Percentage of the Fair Market Value of the Common Stock on the Exercise Date, provided that in no event shall the option exercise price per Share be less than the par value thereof. The Committee may change the Designated Percentage with respect to any future Option Period, but not below eighty-five percent (85%).
5.5 If the total number of Shares for which options granted under this Plan are exercisable exceeds the maximum number of Shares offered on any Entry Date, the number of Shares which may be purchased under options granted on the Entry Date shall be reduced on a pro rata basis in as nearly a uniform manner as shall be practicable and equitable. In this event, payroll deductions shall also be reduced or refunded accordingly. If an Eligible Employee's payroll deductions during any Option Period exceeds the purchase price for the maximum number of Shares permitted to be purchased under Section 5.3, the excess shall be refunded to the Participant without interest (except where otherwise required by local law). For the avoidance of doubt, the Committee is authorized, to the extent permitted by applicable law and the Company's Bye-laws, to permit Eligible Employees to use any amounts remaining in a Participant's account as of the relevant Exercise Date that are insufficient to purchase a whole Share to (a) purchase a fraction of a Share or (b) carry such amount over to the next Option Period. If the total number of Shares for which options granted under this Plan are exercisable exceeds the Maximum Offering (if any), the number of Shares which may be purchased under options granted on the Entry Date shall be reduced on a pro rata basis in as uniform manner as shall be practicable and equitable. In this event, payroll deductions shall also be reduced or refunded accordingly.
5.6 In the event that the Fair Market Value of the Company's Common Stock is lower on the first day of an Exercise Period within an Option Period (the "Reassessment Date") than it was on the Entry Date for such Option Period, all Eligible Employees participating in this Plan on the Reassessment Date shall be deemed to have relinquished the portion of the option granted on the Entry Date that has not previously been exercised and to have enrolled in and received a new option commencing on such Reassessment Date, unless the Committee has determined not to permit overlapping Option Periods or to restrict such transfers to lower price Option Periods. For purposes of the preceding sentence, the first Trading Day of the new Option Period shall be the Entry Date for that Option Period.
6. Purchase of Stock.
On each Exercise Date, a Participant's option shall be exercised automatically for the purchase of that number of whole Shares which the accumulated payroll deductions credited to the Participant's account at that time shall purchase at the applicable exercise price specified in Section 5.4.
7. Payment and Delivery.
Upon the exercise of an option, the Company shall deliver to the Participant the Common Stock purchased. The Committee may permit or require that Shares be deposited directly with a broker designated by the Participant (or a broker selected by the Committee) or to a designated agent of the Company, and the Committee may utilize electronic or automated methods of share transfer. The Committee may require that Shares be retained with such broker or agent for a designated period of time (and may restrict dispositions during that period) and/or may establish other procedures to permit tracking of disqualifying dispositions of such Shares or to restrict transfer of such Shares. The Company shall retain
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the amount of payroll deductions used to purchase Common Stock as full payment for the Common Stock and the Common Stock shall then be fully paid and non-assessable. No Participant shall have any voting, dividend or other shareholder rights with respect to Shares subject to any option granted under this Plan until the option has been exercised and Shares issued.
8. Recapitalization.
If there is any change affecting the number or value of the Shares because of a stock split, subdivision, bonus issue, stock dividend, combination, consolidation or recapitalization, reorganizations, spin-off, split-up, rights offerings or reductions of Shares of its issued and outstanding Common Stock, the number of Shares (and type of securities) to be purchased pursuant to an option and the Plan, including the share limit of Section 5.3 and the maximum number of Shares specified in Section 5.1, shall be proportionately adjusted, the terms relating to the purchase price with respect to the option shall be appropriately adjusted by the Committee, and the Committee shall take any further actions which, in the exercise of its discretion, may be necessary or appropriate under the circumstances.
The Committee's determinations under this Section 8 shall be conclusive and binding on all parties.
9. Merger, Liquidation, Other Company Transactions.
In the event of the proposed liquidation or dissolution of the Company and subject to all applicable laws, the Option Period will terminate immediately prior to the consummation of such proposed transaction, unless otherwise provided by the Committee in its sole discretion, and all outstanding options shall automatically terminate and the amounts of all payroll deductions will be refunded without interest to the Participants.
In the event of a proposed sale of all or substantially all of the assets of the Company, or the amalgamation, merger or consolidation of the Company with or into another corporation, then in the sole discretion of the Committee, (a) each option shall be assumed or an equivalent option shall be substituted by the successor corporation or parent or subsidiary of such successor corporation, (b) a date established by the Committee on or before the date of consummation of such amalgamation, merger, consolidation or sale shall be treated as an Exercise Date, and all outstanding options shall be deemed exercisable on such date or (c) all outstanding options shall terminate and the accumulated payroll deductions shall be returned to the Participants.
10. Transferability.
Options granted to Participants may not be voluntarily or involuntarily assigned, transferred, pledged, or otherwise disposed of in any way, and any attempted assignment, transfer, pledge, or other disposition shall be null and void and without effect. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under this Plan, other than as permitted by the Code, such act shall be treated as an election by the Participant to discontinue participation in this Plan pursuant to Section 4.2.
11. Amendment or Termination of this Plan.
11.1 This Plan shall continue until September 1, 2028, unless previously terminated in accordance with Section 11.2.
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11.2 The Board may, in its sole discretion, insofar as permitted by law, terminate or suspend this Plan at any time. The Board may, in its sole discretion, insofar as permitted by law, revise or amend this Plan in any respect whatsoever, provided that, if shareholder approval is required pursuant to the Code, United States federal securities laws or regulations, or the rules or regulations of the Nasdaq Global Select Market (or any other securities exchange on which the Common Stock is listed or traded), then no such amendment shall be effective unless approved by the Company's shareholders within such time period as may be required. Upon termination of the Plan, all contributions shall cease and all amounts then credited to a Participant's account shall be equitably applied to the purchase of whole Shares then available for sale, and any remaining amounts shall be promptly refunded, without interest, to the Participants.
12. Administration.
12.1 The Board shall appoint a Committee consisting of at least two members. The members of the Committee will serve for such period of time as the Board may specify and may be removed by the Board at any time. The Committee will have the authority and responsibility for the day-to-day administration of this Plan, the authority and responsibility specifically provided in this Plan and any additional duty, responsibility and authority delegated to the Committee by the Board, which may include any of the functions assigned to the Board in this Plan.
12.2 To the extent not prohibited by applicable law, the Committee may, from time to time, delegate some or all of its authority under the Plan to a subcommittee or subcommittees of the Committee or other persons or groups of persons as it deems necessary, appropriate or advisable under conditions or limitations that it may set at or after the time of the delegation. For purposes of the Plan, reference to the Committee shall be deemed to refer to any subcommittee, subcommittees, or other persons or groups of persons to whom the Committee delegates authority pursuant to this Section 12.2.
12.3 The Committee shall have full power and authority, in its sole discretion, to promulgate any rules and regulations which it deems necessary for the proper administration of this Plan, to interpret the provisions and supervise the administration of this Plan, determine eligibility and adjudicate all disputed claims filed under the Plan, including whether Eligible Employees shall participate in a Section 423 Offering or a Non-Section 423 Offering and which Subsidiaries and Affiliates of the Company shall be Designated Companies participating in either a Section 423 Offering or a Non- 423 Offering, determine the terms and conditions of any right to purchase Shares under the Plan, establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan, amend an outstanding right to purchase Shares, and to take all action in connection with administration of this Plan as it deems necessary or advisable, consistent with the delegation from the Board. Decisions of the Board and the Committee shall be final and binding upon the Company and all Participants. Any decision reduced to writing and signed by a majority of the members of the Committee shall be fully effective as if it had been made at a meeting of the Committee duly held. The Company shall pay all expenses incurred in the administration of this Plan. No Board or Committee member shall be liable for any action or determination made in good faith with respect to this Plan or any option granted thereunder. Shares issued pursuant to an Option shall, subject to the terms hereof, be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, share repurchase, option cancellation, Participant services or other consideration, as the Committee shall determine.
13. Committee Rules for Non-United States Jurisdictions.
The Committee may adopt rules, procedures or sub-plans relating to the operation and administration of this Plan in non-United States jurisdictions to accommodate the specific requirements of
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INTERPRETATION
1.Definitions
1.1In these Bye-laws, the following wordslocal laws and expressions shall, where not inconsistent with the context, have the following meanings, respectively:
Act
| the Companies Act 1981;
|
| |
Auditor
| includes an individual, company or partnership;
|
| |
Board
| the board of directors (including, for the avoidance of doubt, a sole director) appointed or elected pursuant to these Bye-laws and acting by resolution in accordance with the Act and these Bye-laws or the directors present at a meeting of directors at which there is a quorum;
|
| |
Company
| the company for which these Bye-laws are approved and confirmed;
|
| |
Director
| a director of the Company;
|
| |
Exchange Act Member
| Securities Exchange Act of 1934, as amended; the person registered in the Register of Members as the holder of shares in the Company and, when two or more persons are so registered as joint holders of shares, means the person whose name stands first in the Register of Members as one of such joint holders or all of such persons, as the context so requires;
|
| |
notice
| written notice as further provided in these Bye-laws unless otherwise specifically stated;
|
| |
Officer
| any person appointed by the Board to hold an office in the Company;
|
| |
principal executive offices
| the registered office of the Company in Bermuda and the U.S. office where the Secretary of the Company is situate from time to time;
|
| |
Register of Directors and Officers
| the register of directors and officers referred to in these Bye-laws;
|
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Register of Members
| the register of members referred to in these Bye-laws;
|
| |
Resident Representative
| any person appointed to act as resident representative and includes any deputy or assistant resident representative;
|
| |
Secretary
| the person appointed to perform any or all of the duties of secretary of the Company and includes any deputy or assistant secretary and any person appointed by the Board to perform any of the duties of the Secretary; and
|
| |
Treasury Share
| a share of the Company that was or is treated as having been acquired and held by the Company and has been held continuously by the Company since it was so acquired and has not been cancelled.
|
1.2In these Bye-laws, where not inconsistent with the context:
(a)words denoting the plural number include the singular number and vice versa;
(b)words denoting the masculine gender include the feminine and neuter genders;
(c)words importing persons include companies, associations or bodies of persons whether corporate or not;
(d)the words:
(i)“may” shall be construed as permissive; and
(ii)“shall” shall be construed as imperative;
(e)a reference to statutory provision shall be deemed to include any amendment or re-enactment thereof;
(f)the phrase “issued and outstanding” in relation to shares, means shares in issue other than treasury shares;
(g)the word “corporation” means a corporation whether or not a company within the meaning of the Act; and
(h)unless otherwise provided herein, words or expressions defined in the Act shall bear the same meaning in these Bye-laws.
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1.3In these Bye-laws expressions referring to writing or its cognates shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words in visible form.
1.4Headings used in these Bye-laws are for convenience only and are not to be used or relied upon in the construction hereof.
SHARES
2.Power to Issue Shares
2.1Subject to these Bye-laws and to any resolution of the Members to the contrary, and without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, the Board shall have the power to issue any unissued shares on such terms and conditions as it may determine and any shares or class of shares may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital, or otherwise as the Company may by resolution of the Members prescribe.
3.Power of the Company to Purchase its Shares
3.1The Company may purchase its own shares for cancellation or acquire them as Treasury Shares in accordance with the Act on such terms as the Board shall think fit.
3.2The Board may exercise all the powers of the Company to purchase or acquire all or any part of its own shares in accordance with the Act.
4.Rights Attaching to Shares
4.1The authorised share capital of the Company may be divided into common shares (“Common Shares”) and preference shares (“Preference Shares”).
4.2The holders of Common Shares shall, subject to these Bye-laws (including, without limitation, the rights attaching to Preference Shares):
(a)be entitled to one vote per share;
(b)be entitled to such dividends as the Board may from time to time declare;
(c)in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or
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upon any distribution of capital, be entitled to the surplus assets of the Company; and
(d)generally be entitled to enjoy all of the rights attaching to shares.
4.3The Preference Shares may be issued from time to time in one or more classes. The Board hereby is authorized to fix or alter by resolution or resolutions, the designations, preferences and relative participating, optional or other special rights of the shares of each such class and the qualifications, limitations, or restrictions thereon, including but not limited to, determination of the dividend rights, dividend rates, conversion rights, voting rights, rights in terms of redemption (including sinking fund provisions), redemption price or prices and liquidation preferences of any wholly unissued class of Preference Shares and the number of shares constituting any such class and the designation thereof or any of them; and to increase or decrease the number of shares of any class subsequent to the issue of shares of such class then outstanding. In case the number of shares of any class shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares in such class.
4.4At the discretion of the Board, whether or not in connection with the issuance and sale of any shares or other securities of the Company, the Company may issue securities, contracts, warrants or other instruments evidencing any shares, option rights, securities having conversion or option rights, or obligations on such terms, conditions and other provisions as are fixed by the Board.
4.5All the rights attaching to a Treasury Share shall be suspended and shall not be exercised by the Company while it holds such Treasury Share and, except where required by the Act, all Treasury Shares shall be excluded from the calculation of any percentage or fraction of the share capital, or shares, of the Company.
5.Calls on Shares
5.1The Board may make such calls as it thinks fit upon the Members in respect of any moneys (whether in respect of nominal value or premium) unpaid on the shares allotted to or held by such Members (and not made payable at fixed times by the terms and conditions of issue) and, if a call is not paid on or before the day appointed for payment thereof, the Member may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment. The Board may differentiate between the holders as to the amount of calls to be paid and the times of payment of such calls.
5.2Any amount which, by the terms of allotment of a share becomes payable upon issue or at any fixed date, whether on account of the nominal value of the share or by way of
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premium, shall for the purposes of these Bye-laws be deemed to be an amount on which a call has been duly made and payable on the date on which, by the terms of issue, the same becomes payable, and in case of non-payment all the relevant provisions of these Bye-laws as to payment of interest, costs and expenses, forfeiture or otherwise shall apply as if such amount had become payable by virtue of a duly made and notified call.
5.3The joint holders of a share shall be jointly and severally liable to pay all calls and any interest, costs and expenses in respect thereof.
5.4The Company may accept from any Member the whole or a part of the amount remaining unpaid on any shares held by such Member, although no part of that amount has been called up or become payable.
6.Forfeiture of Shares
6.1If any Member fails to pay, on the day appointed for payment thereof, any call in respect of any share allotted to or held by such Member, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward such Member a notice in writing in the form, or as near thereto as circumstances admit, of the following:
Notice of Liability to Forfeiture for Non-Payment of Call
[Name of Company] (the “Company”)
You have failed to pay the call of [amount of call] made on [date], in respect of the [number] share(s) [number in figures] standing in your name in the Register of Members of the Company, on [date], the day appointed for payment of such call. You are hereby notified that unless you pay such call together with interest thereon at the rate of [ ] per annum computed from the said [date] at the registered office of the Company the share(s) will be liable to be forfeited.
Dated this [date]
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6.2If the requirements of such notice are not complied with, any such share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to that effect, and such share shall thereupon become the property of the Company and may be disposed of as the Board shall determine.procedures. Without limiting the generality of the foregoing, the disposal may take place by sale, repurchase, redemption orCommittee is specifically authorized to adopt rules, procedures and sub-plans regarding handling of payroll deductions, payment of interest, conversion of local currency, withholding procedures and stock certificates which vary with local requirements.
14. Compliance with Law.
The Company shall not be under any other methodobligation to issue Common Stock upon the exercise of disposal permitted byany option unless and consistent with these Bye-lawsuntil the Company has determined that: (a) it and the Act.
6.3A Member whose shareParticipant have taken all actions required to register the Common Stock under the United States Securities Act of 1933, as amended, and to qualify the Common Stock under applicable state "blue sky" laws and any applicable foreign securities laws, or sharesthe Company has determined that an exemption from registration and from qualification under such state "blue sky" laws and applicable foreign securities laws is available, (b) any applicable listing requirement of any Nasdaq market system or stock exchange on which the Common Stock is listed has been satisfied and (c) all other applicable provisions of state, federal and applicable foreign law have been so forfeited shall, notwithstanding such forfeiture, be liablesatisfied. The Committee may require each Participant purchasing Common Stock under this Plan to payrepresent to the Company all calls owing on such share or shares at the time of the forfeiture, togetherand agree with all interest due thereon and any costs and expenses incurred by the Company in connection therewith.writing that such Eligible Employee is acquiring the Shares for investment purposes and not with a view to the distribution thereof. All certificates for Shares delivered under this Plan shall be subject to such stock-transfer orders and other restrictions as the Board or the Committee may deem advisable under the rules, regulations, and other requirements of the United States Securities and Exchange Commission, any Nasdaq market system or stock exchange upon which the Shares are then listed, and any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
15. Governmental Regulations.
6.4The Board may acceptThis Plan and the surrenderCompany's obligation to sell, issue and deliver Shares under this Plan shall be subject to the approval of any shares which it isgovernmental authority required in a position to forfeit on such terms and conditions as may be agreed. Subject to those terms and conditions, a surrendered shareconnection with this Plan or the authorization, issuance, sale, or delivery of stock hereunder.
16. No Enlargement of Eligible Employee Rights.
Nothing contained in this Plan shall be treated as if it had been forfeited.
7.Share Certificates
7.1Every Member shalldeemed to give any Eligible Employee the right to be entitled to a certificate underretained in the common sealemploy of the Company (or a facsimile thereof) or bearingany Designated Company or to interfere with the signature (or a facsimile thereof)right of a Directorthe Company or Officer or a person expressly authorizedDesignated Company to sign specifying the number and, where appropriate, the class of shares held by such Member and whether the same are fully paid up and, if not, specifying the amount paid on such shares. The Board may by resolution determine, either generally or in a particular case, thatdischarge any or all signatures on certificates may be printed thereon or affixed by mechanical means.Eligible Employee at any time.
17. Governing Law.
THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
18. 7.2Effective Date.
The Companyeffective date of this Plan shall be under no obligationAugust 22, 2018. This Plan shall be submitted to completethe Shareholders for approval and deliver a share certificate unless specifically called uponratification at the annual general meeting thereof to do sobe held on or about August 22, 2018. Unless at such meeting this Plan is approved and ratified by the person to whomShareholders in the sharesmanner provided by the Company's Bye-Laws, then, and in such event, this Plan and any then outstanding options that may have been allotted.
7.3If any share certificateconditionally granted under this Plan prior to such shareholder meeting shall be provedbecome null and void and of no further force or effect. Subject to the satisfaction ofimmediately preceding sentence, this Plan shall become effective upon its adoption by the Board to have been worn out, lost, mislaid, or destroyed the Board may cause a new certificate to be issued and request an indemnity for the lost certificate if it sees fit.Board.
7.4Notwithstanding any provisions of these Bye-laws, the Directors shall, subject always to the Act and any other applicable laws and regulations and the facilities and requirements of any relevant system concerned, have power to implement any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of uncertificated shares and to the extent such arrangements are so implemented, no provision of these Bye-laws shall apply or have
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19. Notices.
effect All notices or other communications by a Participant to the extent that it is in any respect inconsistent withCommittee, the holding or transfer of shares in uncertificated form.
8.Fractional Shares
The Company may issue its shares in fractional denominations and deal with such fractions to the same extent as its whole shares and shares in fractional denominations shall have in proportion to the respective fractions represented thereby all of the rights of whole shares including (but without limiting the generality of the foregoing) the right to vote, to receive dividends and distributions and to participate in a winding-up.
REGISTRATION OF SHARES
9.Register of Members
9.1The Board, shall cause to be kept in one or more books a Register of Members and shall enter therein the particulars required by the Act.
9.2The Register of Members shall be open to inspection without charge at the registered office of the Company, on every business day, subject to such reasonable restrictions as the Board may impose, so that not less than two hours in each business day be allowed for inspection. The Register of Members may, after notice has been given in accordance with the Act, be closed foror any timeAffiliate under or times not exceeding in the whole thirty days in each year.
10.Registered Holder Absolute Owner
The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable claim or other claim to, or interest in, such share on the part of any other person.
11.Transfer of Registered Shares
11.1An instrument of transfer shall be in writing in the form of the following, or as near thereto as circumstances admit, or in such other form as the Board may accept:
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Transfer of a Share or Shares
[ ] (the “Company”)
FOR VALUE RECEIVED……………….. [amount], I, [name of transferor] hereby sell, assign and transfer unto [transferee] of [address], [number] shares of the Company.
DATED this [date]
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Transferor
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Signed by:
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11.2Such instrument of transfer shall be signed by (or in the case of a party that is a corporation, on behalf of) the transferor and transferee, provided that, in the case of a fully paid up share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such share until the same has been registered as having been transferred to the transferee in the Register of Members.
11.3The Board may refuse to recognise any instrument of transfer unless it is accompanied by the certificate in respect of the shares to which it relates and by such other evidence as the Board may reasonably require showing the right of the transferor to make the transfer.
11.4The joint holders of any share may transfer such share to one or more of such joint holders, and the surviving holder or holders of any share previously held by them jointly with a deceased Member may transfer any such share to the executors or administrators of such deceased Member.
11.5The Board may in its absolute discretion and without assigning any reason therefor refuse to register the transfer of a share which is not fully paid up. The Board shall refuse to register a transfer unless all applicable consents, authorisations and permissions of any governmental body or agency in Bermuda have been obtained. If
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the Board refuses to register a transfer of any share the Secretary shall, within three months after the date on which the transfer was lodged with the Company, send to the transferor and transferee notice of the refusal.
11.6Shares may be transferred without a written instrument if transferred by an appointed agent or otherwise in accordance with the Act.
11.7Notwithstanding anything to the contrary in these Bye-laws, shares that are listed or admitted to trading on an appointed stock exchange may be transferred in accordance with the rules and regulations of such exchange.
12.Transmission of Registered Shares
12.1In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member’s interest in the shares. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by such deceased Member with other persons. Subject to the Act, for the purpose of this Bye-law, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may, in its absolute discretion, decide as being properly authorised to deal with the shares of a deceased Member.
12.2Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member may be registered as a Member upon such evidence as the Board may deem sufficient or may elect to nominate some person to be registered as a transferee of such share, and in such case the person becoming entitled shall execute in favour of such nominee an instrument of transfer in writing in the form, or as near thereto as circumstances admit, of the following:
Transfer by a Person Becoming Entitled on Death/Bankruptcy of a Member
[Name of Company] (the “Company”)
I/We, having become entitled in consequence of the [death/bankruptcy] of [name and address of deceased/bankrupt Member] to [number] share(s) standing in the Register of Members of the Company in the name of the said [name of deceased/bankrupt Member] instead of being registered myself/ourselves, elect to have [name of transferee] (the “Transferee”) registered as a transferee of such share(s) and I/we do hereby accordingly transfer the said share(s) to the Transferee to hold the same unto the Transferee, his or her executors, administrators and assigns, subject to the conditions on which the same were held at the time of the execution hereof;
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and the Transferee does hereby agree to take the said share(s) subject to the same conditions.
DATED this [date]
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Signed by:
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12.3On the presentation of the foregoing materials to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Member. Notwithstanding the foregoing, the Board shall, in any case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the share by that Member before such Member’s death or bankruptcy, as the case may be.
12.4Where two or more persons are registered as joint holders of a share or shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to such share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.
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ALTERATION OF SHARE CAPITAL
13.Power to Alter Capital
13.1The Company may if authorised by resolution of the Members increase, divide, consolidate, subdivide, change the currency denomination of, diminish or otherwise alter or reduce its share capital in any manner permitted by the Act.
13.2Where, on any alteration or reduction of share capital, fractions of shares or some other difficulty would arise, the Board may deal with or resolve the same in such manner as it thinks fit.
14.Variation of Rights Attaching to Shares
If, at any time, the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of a resolution passed by a majority of the votes cast at a separate general meeting of the holders of the shares of the class in accordance with Section 47 (7) of the Act. The rights conferred upon the holders of the shares of any class or series issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class or series, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
DIVIDENDS AND CAPITALISATION
15.Dividends
15.1The Board may, subject to these Bye-laws and in accordance with the Act, declare a dividend to be paid to the Members, in proportion to the number of shares held by them, and such dividend may be paid in cash or wholly or partly in specie in which case the Board may fix the value for distribution in specie of any assets. No unpaid dividend shall bear interest as against the Company.
15.2The Board may fix any date as the record date for determining the Members entitled to receive any dividend.
15.3The Company may pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.
15.4The Board may declare and make such other distributions (in cash or in specie) to the Members as may be lawfully made out of the assets of the Company. No unpaid distribution shall bear interest as against the Company.
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16.Power to Set Aside Profits
The Board may, before declaring a dividend, set aside out of the surplus or profits of the Company, such amount as it thinks proper as a reserve to be used to meet contingencies or for equalising dividends or for any other purpose.
17.Method of Payment
17.1Any dividend, interest, or other moneys payable in cash in respect of the shares may be paid by cheque or draft sent through the post directed to the Member at such Member’s address in the Register of Members, or to such person and to such address as the holder may in writing direct.
17.2In the case of joint holders of shares, any dividend, interest or other moneys payable in cash in respect of shares may be paid by cheque or draft sent through the post directed to the address of the holder first named in the Register of Members, or to such person and to such address as the joint holders may in writing direct. If two or more persons are registered as joint holders of any shares any one can give an effectual receipt for any dividend paid in respect of such shares.
17.3The Board may deduct from the dividends or distributions payable to any Member all moneys due from such Member to the Company on account of calls or otherwise.
17.4Any dividend and/or other moneys payable in respect of a share which has remained unclaimed for 7 years from the date when it became due for payment shall, if the Board so resolves, be forfeited and cease to remain owing by the Company. The payment of any unclaimed dividend or other moneys payable in respect of a share may (but need not) be paid by the Company into an account separate from the Company’s own account. Such payment shall not constitute the Company a trustee in respect thereof.
17.5The Company shall be entitled to cease sending dividend cheques and drafts by post or otherwise to a Member if those instruments have been returned undelivered to, or left uncashed by, that Member on at least two consecutive occasions, or, following one such occasion, reasonable enquiries have failed to establish the Member’s new address. The entitlement conferred on the Company by this Bye-law 17.5 in respect of any Member shall cease if the Member claims a dividend or cashes a dividend cheque or draft.
18.Capitalisation
18.1The Board may capitalise any amount for the time being standing to the credit of any of the Company’s share premium or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such amount in paying up unissued shares to be allotted as fully paid bonus shares pro-rata (except in connection with the conversion of shares of one class to shares of another class) to the Members.
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18.2The Board may capitalise any amount for the time being standing to the credit of a reserve account or amounts otherwise available for dividend or distribution by applying such amounts in paying up in full, partly or nil paid shares of those Members who would have been entitled to such amounts if they were distributed by way of dividend or distribution.
MEETINGS OF MEMBERS
19.Annual General Meetings
Notwithstanding the provisions of the Act entitling the Members of the Company to elect to dispense with the holding of an annual general meeting, an annual general meeting shall be held in each year (other than the year of incorporation) at such time and place as the president or the chairman of the Company (if any) or any two Directors or any Director and the Secretary or the Board shall appoint.
20.Special General Meetings
The president or the chairman of the Company (if any) or any two Directors or any Director and the Secretary or the Board may convene a special general meeting whenever in their judgment such a meeting is necessary.
21.Requisitioned General Meetings and Member Proposals
21.1Proposal of business to be transacted by the Members may only be made at a meeting of Members (i) pursuant to the Company’s notice and proxy materials for such meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any Member of record of the Company at the time of the giving of the notice required in this Bye-law who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Bye-law. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a Member to propose business at a meeting of Members.
21.2For business proposals to be properly brought before a meeting by a Member of record pursuant to clause (iii) of Bye-law 21.1, (i) the Member of record must have given timely notice thereof in writing to the Secretary of the Company, (ii) the Member of record must provide to the Secretary of the Company any updates or supplements to such notice at the times and in the forms specified in this Bye-law, (iii) any such business must be a proper matter for Member action under Bermuda law, and (iv) the Member of record and the beneficial owner or owners, if any, on whose behalf any such business proposal is made, must have acted in accordance with the representations set forth in the Business Proposal Solicitation Statement (as defined in Bye-law 21.4(j)).
21.3Where a business proposal is to be brought before an annual general meeting, to be timely, a notice by a Member of record must be received by the Secretary at the principal executive offices of the Company not less than 60 or more than 90 days prior to the date of the annual general meeting. Where a business proposal is to be brought
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before a special general meeting, such notice must be given not later than 10 days following the earlier of the date on which notice of the special general meeting was posted to Members or the date on which public disclosure of the date of the special general meeting was made. In no event shall an adjournment, or postponement of a meeting for which notice has been given, commence a new time period for the giving of a Member of record’s notice. For purposes of these Bye-laws, “public announcement” or “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publically filed by the Company with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
21.4As to (1) the Member of record giving the notice and (2) the beneficial owner or owners, if any, or other persons on whose behalf the business proposal is made or acting in concert therewith (each, a “party”), the notice shall set forth:
(a)the name and address of such party;
(b)the class, series, and number of shares of the Company that are owned, directly or indirectly, beneficially and of record by each such party;
(c)any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or providing for a settlement payment or mechanism based on the price of any class or series of shares of the Company or with a value derived in whole or in part from the value of any class or series of shares of the Company, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Company or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by each such party or such beneficial owner, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Company, including a description of all agreements, arrangements, understandings or relationships (including any short interest or other borrowing arrangements) engaged in directly or indirectly, by such party or such beneficial owner, the purpose or effect of which is to mitigate loss to, reduce the economic risk (or ownership or otherwise) of any class or series of shares of the Company, manage the risk of share price changes for, or increase or decrease the voting power of, such party or beneficial owner, or which provides, directly or indirectly, such party or beneficial owner with the opportunity to profit or share in any profit from any decrease in the price or value of the shares of any class or series of shares of the Company;
(d)a description of all agreements, arrangements, understandings or relationships between such party and any material interest of such party in the proposed business;
(e)any proportionate interest in shares of the Company or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which any
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party is a general partner or, directly or indirectly, beneficially owns an interest in a general partner;
(f)any performance-related fees (other than an asset-based fee) that each Member is directly or indirectly entitled to based on any increase or decrease in the value of shares of the Company or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of each such party’s immediate family sharing the same household (which information set forth in this paragraph shall be supplemented by such party or such beneficial owner or other person, as the case may be, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date);
(g)any proxy, contract, arrangement, understanding or relationship pursuant to which any party, either directly or acting in concert with another person or persons, has a right to vote, directly or indirectly, any shares of any security of the Company;
(h)any rights to dividends on the shares of the Company owned beneficially directly or indirectly by each such party that are separated or separable from the underlying shares of the Company;
(i)a representation that such party intends to appear in person or by proxy at the general meeting to propose such business;
(j)a statement as to whether or not each such party will deliver a proxy statement and form of proxy to holders of at least the percentage of voting power of all of the shares of capital stock of the Company required under applicable law to approve the proposal (such statement, a “Business Proposal Solicitation Statement”); and
(k)any other information relating to each such party that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the business proposal pursuant to Section 14 of the Exchange Act (whether or not such Member intends to deliver a proxy statement or conduct its own proxy solicitation).
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21.5A Member of record providing notice of business proposed to be brought before a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Bye-law shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Company not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than five (5) business days prior to the date for the meeting, if practicable (or, if not practicable, on the first practicable date prior to) any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).
21.6Only such business shall be conducted at an annual meeting of Members as shall have been brought before the meeting in accordance with the procedures set forth in this Bye-law. The chair of the meeting shall have the power and the duty to determine whether any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bye-laws and, if any proposed business is not in compliance with these Bye-laws, to declare that such proposed business shall not be presented for Member action at the meeting and shall be disregarded.
21.7Notwithstanding the foregoing provisions of this Bye-law, a Member shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Bye-law. Nothing in this Bye-law shall be deemed to affect any rights of Members to request inclusion of non-binding proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
22.Notice
22.1At least ten (10) and not more than sixty (60) days’ notice of an annual general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, place and time at which the meeting is to be held, that the election of Directors will take place thereat, and as far as practicable, the other business to be conducted at the meeting.
22.2At least ten (10) and not more than sixty (60) days’ notice of a special general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, time, place and the general nature of the business to be considered at the meeting.
22.3The Board may fix any date as the record date for determining the Members entitled to receive notice of and to vote at any general meeting.
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22.4A general meeting shall, notwithstanding that it is called on shorter notice than that specified in these Bye-laws, be deemed to have been properly called if it is so agreed by (i) all the Members entitled to attend and vote thereat in the case of an annual general meeting; and (ii) by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the shares giving a right to attend and vote thereat in the case of a special general meeting.
22.5The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.
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23.Giving Notice and Access
23.1A notice may be given by the Company to a Member:
a)by delivering it to such Member in person, in which case the noticePlan shall be deemed to have been served upon such delivery;duly given when received in the form specified by the Committee at the location, or by the person, designated by the Committee for the receipt thereof. Notwithstanding anything to the contrary contained in this Plan, notices and other elections under this Plan may be delivered or made electronically, in the discretion of the Committee. In addition, in the discretion of the Committee, Shares otherwise deliverable under this Plan may be delivered or otherwise evidenced through book entry or other electronic format without the need to deliver an actual share certificate; provided, however, an actual share certificate shall be delivered if requested by the Participant.
20. Affiliates; Sale Proceeds.
b)The Board of Directors or the Committee may extend or terminate the benefits of this Plan to any Affiliate at any time without the approval of the shareholders of the Company. The proceeds received by sending it by postthe Company from the sale of Common Stock pursuant to such Member’s address in the Register of Members, in which case the noticethis Plan shall be deemed to have been served seven days after the date on which it is deposited, with postage prepaid, in the mail; orused for general corporate purposes.
21. Taxes.
c)by sending it by courier to such Member’s address21.1 At the time a Participant's option is exercised, in the Register of Members,whole or in which case the notice shall be deemed to have been served two days after the date on which it is deposited, with courier fees paid, with the courier service;part, or
d)by transmitting it by electronic means (including facsimile and electronic mail, but not telephone) in accordance with such directions as may be given by such Member to the Company for such purpose, in which case the notice shall be deemed to have been served at the time that it would in the ordinary course be transmitted;a Participant disposes of some or
e)by delivering it in accordance with the provisions all of the Act pertaining to delivery of electronic records by publication on a website, in which caseShares acquired under the notice shall be deemed to have been servedPlan or at the time whenof any other taxable event, the requirements of the Act in that regard have been met.
23.2Any notice required to be given to a MemberParticipant shall with respect tomake adequate provision for any shares held jointly by two or more persons, be given to whichever of such persons is named first in the Register of Members and notice so given shall be sufficient notice to all the holders of such shares.
23.3Tax-Related Items. In proving service under paragraphs(b), (c) and (d), it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted or sent by courier, and the time when it was posted, deposited with the courier, or transmitted by electronic means.
24.Postponement or Cancellation of General Meeting
The Secretary may, and on the instruction of the chairman or president oftheir sole discretion, the Company or the Board,Designated Company that employs the Secretary shall, postpone or cancel any general meeting calledParticipant may satisfy their obligations to withhold Tax-Related Items by (a) withholding from the Participant's compensation, (b) withholding a sufficient whole number of Shares otherwise issuable following purchase having an aggregate Fair Market Value sufficient, as determined by the Committee in accordanceits sole discretion, to satisfy such obligations to withhold Tax-Related Items with these Bye-laws (other than a meeting requisitioned under these Bye-laws) provided that notice of postponement or cancellation is givenrespect to the Members beforeShares, or (c) withholding from proceeds from the timesale of Shares issued upon purchase, either through a voluntary sale or a mandatory sale arranged by the Company.
21.2 Although the Company may endeavor to (a) qualify a right to purchase for such meeting. Fresh noticespecial tax treatment under the laws of the date, timeUnited States or jurisdictions outside of the United States or (b) avoid adverse tax treatment, the Company makes no representation to that effect and place for a postponed meeting shallexpressly disavows any covenant to maintain special or to avoid unfavorable tax treatment, notwithstanding anything to the contrary in the Plan. The Company will be givenunconstrained in its corporate activities without regard to each Member in accordance with these Bye-laws.potential negative tax impact on Participants.
25.Electronic Participation21.3 This Plan and Security in Meetings
25.1Members may participate in any general meeting by such telephonic, electronic or other communications facilities or means as permit all persons participating in the
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meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.
25.2The Board may, and at any general meeting, the chairman of such meeting may, make any arrangement and impose any requirement or restriction it or he considers appropriate to ensure the security of a general meeting including, without limitation, requirements for evidence of identityoptions hereunder are intended to be produced by those attendingexempt from the meeting,provisions of Section 409A of the searching of their personal propertyCode and the restriction of items that may be taken into the meeting place. The Board and, at any general meeting, the chairman of such meeting are entitled to refuse entry to a person who refusesTreasury regulations issued thereunder or otherwise to comply with any such arrangements, requirements or restrictions.
26.Quorum at General Meetings
26.1At any general meeting two or more persons present in person throughout the meeting and representing in person or by proxy in excess of 50%Section 409A of the total voting rightsCode and the Treasury regulations and guidance issued thereunder. Notwithstanding any provision of all issued and outstanding shares inthis Plan to the Company shall form a quorum for the transaction of business.
26.2If within half an hour from the time appointed for the meeting a quorum is not present, then, in the case of a meeting convened on a requisition, the meetingcontrary, this Plan shall be deemed cancelledinterpreted and in any other case, the meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Secretary may determine. Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the resumption of the meeting shall be given to each Member entitled to attend and vote thereat in accordanceconstrued consistent with these Bye-laws.
27.Chairman to Preside at General Meetings
Unless otherwise agreed by a majority of those attending and entitled to vote at a general meeting, the chairman of the Company, if there be one who is present, and if not the president of the Company, if there be one who is present, shall act as chairman of such meeting. In their absence a chairman of the meeting shall be appointed or elected by those present at the meeting and entitled to vote.
28.Voting on Resolutions
28.1[Subject to the Act and these Bye-laws, at elections of directors at any general meeting at which a quorum is present, a director shall, except in a contested election, be elected by the affirmative votes of a majority of the votes cast in accordance with these Bye-laws in favour of such nominee by the Members entitled to vote in the election. In a contested election, a director shall be elected by a plurality of the votes cast in accordance with these Bye-laws in favour of such nominee by the Members entitled to vote in the election. An election shall be considered to be contested if, as of the record date for such general meeting, there are more nominees for election than positions on the Board to be filled by election at that general meeting.] Except as otherwise provided by the Act and these Bye-laws, any question proposed for the consideration
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of the Members at any general meeting shall be decided by the affirmative votes of a majority of the votes cast in accordance with these Bye-laws and in the case of an equality of votes the resolution shall fail.
28.2No Member shall be entitled to vote at a general meeting unless such Member has paid all the calls on all shares held by such Member.
28.3At any general meeting a resolution put to the vote of the meeting shall, in the first instance, be voted upon by a show of hands and, subject to any rights or restrictions for the time being lawfully attached to any class of shares and subject to these Bye-laws, every Member present in person and every person holding a valid proxy at such meeting shall be entitled to one vote and shall cast such vote by raising his hand.
28.4In the event that a Member participates in a general meeting by telephone, electronic or other communications facilities or means, the chairman of the meeting shall direct the manner in which such Member may cast his vote on a show of hands.
28.5At any general meeting if an amendment is proposed to any resolution under consideration and the chairman of the meeting rules on whether or not the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.
28.6At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to these Bye-laws, be conclusive evidence of that fact.
29.Power to Demand a Vote on a Poll
29.1Notwithstanding the foregoing, a poll may be demanded by any of the following persons:
(a)the chairman of such meeting; or
(b)at least three Members present in person or represented by proxy; or
(c)any Member or Members present in person or represented by proxy and holding between them not less than one-tenth of the total voting rights of all the Members having the right to vote at such meeting; or
(d)any Member or Members present in person or represented by proxy holding shares in the Company conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total amount paid up on all such shares conferring such right.
29.2Where a poll is demanded, subject to any rights or restrictions for the time being lawfully attached to any class of shares, every person present at such meeting shall have one vote for each share of which such person is the holder or for which such person holds a proxy and such vote shall be counted by ballot as described herein, or
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in the case of a general meeting at which one or more Members are present by telephone, electronic or other communication facilities or means, in such manner as the chairman of the meeting may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands. A person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.
29.3A poll demanded for the purpose of electing a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time and in such manner during such meeting as the chairman (or acting chairman) of the meeting may direct. Any business other than that upon which a poll has been demanded may be conducted pending the taking of the poll.
29.4Where a vote is taken by poll, each person physically present and entitled to vote shall be furnished with a ballot paper on which such person shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken, and each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. Each person present by telephone, electronic or other communications facilities or means shall cast his vote in such manner as the chairman shall direct. At the conclusion of the poll, the ballot papers and votes cast in accordance with such directions shall be examined and counted by a committee of not less than two Members or proxy holders appointed by the chairman of the meeting for the purpose and the result of the poll shall be declared by the chairman of the meeting.
30.Voting by Joint Holders of Shares
In the case of joint holders, the vote of the senior who tenders a vote (whether in person or by proxy) shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.
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31.Instrument of Proxy
31.1A Member may appoint a proxy by
(a)an instrument in writing in substantially the following form or such other form as the Board or the chairman of the meeting shall accept:
Proxy
[Name of Company] (the “Company”)
I/We, [insert names here] , being a Member of the Company with [number] shares, HEREBY APPOINT [name] of [address] or failing him, [name] of [address] to be my/our proxy to vote for me/us at the meeting of the Members to be held on [date] and at any adjournment thereof. [Any restrictions on voting to be inserted here.]
Signed this [date]
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Member(s)
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or
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(b)such telephonic, electronic or other means as may be approved by the Board from time to time.
31.2The appointment of a proxy must be received by the Company at the registered office or at such other place or in such manner as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting at which the person named in the appointment proposes to vote, and appointment of a proxy which is not received in the manner so permitted shall be invalid.
31.3A Member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf in respect of different shares.
31.4The decision of the chairman of any general meeting as to the validity of any appointment of a proxy shall be final.
32.Representation of Corporate Member
32.1A corporation which is a Member may, by written instrument, authorise such person or persons as it thinks fit to act as its representative at any meeting and any person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as that corporation could exercise if it were an
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individual Member, and that Member shall be deemed to be present in person at any such meeting attended by its authorised representative or representatives.
32.2intent. Notwithstanding the foregoing, the chairmanCompany shall not be required to assume any increased economic burden in connection therewith.
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting may accept such assurances as he thinks fit asdate. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. HELEN OF TROY LIMITED ATTN: ROSS CITTA ONE HELEN OF TROY PLAZA EL PASO, TX 79912 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the right ofcosts incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any persontouch-tone telephone to attendtransmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and vote at general meetings on behalf of a corporation which is a Member.
33.Adjournment of General Meeting
33.1The chairman of a general meeting at which a quorum is present may withthen follow the consent of the Members holding a majority of the voting rights of those Members present in person or byinstructions. VOTE BY MAIL Mark, sign and date your proxy (and shall if so directed by Members holding a majority of the voting rights of those Members present in person or by proxy), adjourn the meeting.
33.2The chairman of a general meeting may adjourn the meeting to another timecard and place without the consent or direction of the Members ifreturn it appears to him that:
(a)it is likely to be impractical to hold or continue that meeting because of the number of Members wishing to attend who are not present; or
(b)the unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting; or
(c)an adjournment is otherwise necessary so that the business of the meeting may be properly conducted.
33.3Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Member entitled to attend and vote thereat in accordance with these Bye-laws.
34.Written Resolutions
34.1Subject to subparagraph (6), anything which may be done by resolution of the Company in general meeting or by resolution of a meeting of any class of the Members of the Company, may, without a meeting and without any previous notice being required, be done by resolution in writing signed by, or, in the case of a Member that is a corporation whetherpostage-paid envelope we have provided or not a company within the meaning of the Act, on behalf of, all the Members who at the date of the resolution would be entitledreturn it to attend the meeting and vote on the resolution.
34.2A resolution in writing may be signed by, or, in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of, all the Members, or any class thereof, in as many counterparts as may be necessary.
34.3For the purposes of this Bye-law, the date of the resolution is the date when the resolution is signed by, or, in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of, the last Member to sign and
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any reference in any Bye-law to the date of passing of a resolution is, in relation to a resolution made in accordance with this Bye-law, a reference to such date.
34.4A resolution in writing made in accordance with this Bye-law is as valid as if it had been passed by the Company in general meeting or by a meeting of the relevant class of Members, as the case may be and any reference in any Bye-law to a meeting at which a resolution is passed or to Members voting in favour of a resolution shall be construed accordingly.
34.5A resolution in writing made in accordance with this Bye-law shall constitute minutes for the purposes of sections 81 and 82 of the Act.
34.6This Bye-law shall not apply to:
(a)a resolution passed pursuant to section 89(5) of the Act; or
(b)a resolution passed for the purpose of removing a Director before the expiration of his term of office under these Bye-laws.
35.Directors Attendance at General Meetings
The Directors shall be entitled to receive notice of, attend and be heard at any general meeting.
DIRECTORSVote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E49421-P11627 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND OFFICERS
36.Election of Directors
36.1Nominations of persons for election to theRETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. HELEN OF TROY LIMITED The Board of Directors may only be made at a meetingrecommends you vote FOR the following: 1. Election of Members (i) pursuantDirectors Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Gary B. Abromovitz 1b. Krista L. Berry The Board of Directors recommends you vote FOR proposals 2, 3, 4 and 5. For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! 1c. Vincent D. Carson 2. To provide advisory approval of the Company's executive compensation. To approve the Helen of Troy Limited 2018 Stock Incentive Plan. To approve the Helen of Troy Limited 2018 Employee Stock Purchase Plan. To appoint Grant Thornton LLP as the Company's auditor and independent registered public accounting firm to serve for the Company’s notice2019 fiscal year and proxy materials for such meeting, (ii) by or atto authorize the directionAudit Committee of the Board of Directors to set the auditor's remuneration. 1d. Thurman K. Case 3. 1e. Timothy F. Meeker 4. 1f. Julien R. Mininberg 5. 1g. Beryl B. Raff 1h. William F. Susetka 1i. Darren G. Woody For address changes and/or (iii) by any Member of record ofcomments, please check this box and write them on the Company at the time of the giving of the notice required inback where indicated. Please indicate if you plan to attend this Bye-law 36 who is entitled to vote at the meetingmeeting. ! Yes ! No Please date this proxy and who has complied with the notice procedures set forth in this Bye-law 36. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a Member to make nominations at a meeting of Members.
36.2For nominations to be properly brought before a meeting by a Member of record pursuant to clause (iii) of Bye-law 36.1, (i) the Member of record must have given timely notice thereof in writing to the Secretary of the Company, (ii) the Member of record must provide to the Secretary of the Company any updatessign exactly as your name or supplements to such notice at the timesnames appear hereon. If shares are held jointly, signature should include both names. Executors, administrators, trustees, guardians, and others signing in the forms specified in this Bye-law 36,representative capacity, please so indicate when signing. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting: The Annual Report and (iii) the MemberNotice and Proxy Statement are available at www.proxyvote.com. E49422-P11627 HELEN OF TROY LIMITED Annual General Meeting of record and the beneficial owner or owners, if any, on whose behalf any nominationShareholders August 22, 2018 1:00 PM MDT This proxy is made, must have acted in accordance with the representations set forth in the Nomination Solicitation Statement (as defined in Bye-law 36.5(i)).
36.3Where a nomination of person(s) for election tosolicited by the Board of Directors is to be made by a Member at an annual general meeting, to be timely, a notice by a Member of record must be received by the Secretary at the principal executive offices of the Company
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not less than sixty (60) days or more than ninety (90) days prior to the date of the annual general meeting. Notwithstanding anything in the preceding sentence to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there has been no public announcement naming all of the nominees for director or indicating the increase in the size of the Board of Directors made by the Company at least 10 days before the last day a Member of record may deliver a notice of nomination in accordance with the preceding sentence, a notice by a Member of record required by this Bye-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase in the number of directors, if it shall be received by the Secretary at the principal executive offices of the Company not later than the close of business on the 10th day following the day on which such public announcement is first made by the Company. Where a nomination of person(s) for election to the Board of Directors is to be made by a Member at a special general meeting, such notice must be given not later than ten (10) days following the earlier of the date on which notice of the special general meeting was posted to Members or the date on which public disclosure of the date of the special general meeting was made. In no event shall an adjournment, or postponement of a meeting for which notice has been given, commence a new time period for the giving of a Member of record’s notice.
36.4As to each person whom the Member of record proposes to nominate for election or reelection as a director, the notice by a Member of record shall set forth:
(a)information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Exchange Act;
(b)a description of all direct and indirect compensation or other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such Member of record and beneficial owner or owners, if any, or other person on whose behalf the nomination is made, and their respective affiliates and associates, or other persons acting in concert therewith, on the one hand, and each proposed nominee and his or her respective affiliates and associates or other persons acting in concert therewith, on the other hand, including without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Member of record making the nomination and any beneficial owner or owners, if any, or other person on whose behalf the nomination is made, or any affiliate or associate thereof or other person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant. For purposes of these Bye-laws, a person shall be deemed to be acting in concert with another person if such person knowingly acts toward a common goal relating to the management, governance or control of the
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Company in parallel with such other person where (i) each person is conscious of the other person’s conduct or intent and this awareness is an element in their decision-making process and (ii) at least one additional factor suggests that persons intend to act in parallel, which additional factors may include attending meetings, conducting discussions or making or soliciting invitations to act in parallel;
(c)such person’s written consent to serve as a director if elected; and
(d)a completed and signed questionnaire, representation or agreement as may be required by the Company pursuant to these Bye-laws.
36.5As to (1) the Member of record giving the notice and (2) the beneficial owner or owners, if any, or other persons on whose behalf the nomination is made or acting in concert therewith (each, a “party”), the notice shall set forth:
(a)the name and address of such party;
(b)the class, series, and number of shares of the Company that are owned, directly or indirectly, beneficially and of record by each such party;
(c)any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or providing for a settlement payment or mechanism based on the price of any class or series of shares of the Company or with a value derived in whole or in part from the value of any class or series of shares of the Company, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Company or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by each such party or such beneficial owner, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Company, including a description of all agreements, arrangements, understandings or relationships (including any short interest or other borrowing arrangements) engaged in directly or indirectly, by such party or such beneficial owner, the purpose or effect of which is to mitigate loss to, reduce the economic risk (or ownership or otherwise) of any class or series of shares of the Company, manage the risk of share price changes for, or increase or decrease the voting power of, such party or beneficial owner, or which provides, directly or indirectly, such party or beneficial owner with the opportunity to profit or share in any profit from any decrease in the price or value of the shares of any class or series of shares of the Company;
(d)any proportionate interest in shares of the Company or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which any
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party is a general partner or, directly or indirectly, beneficially owns an interest in a general partner;
(e)any performance-related fees (other than an asset-based fee) that each Member is directly or indirectly entitled to based on any increase or decrease in the value of shares of the Company or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of each such party immediate family sharing the same household (which information set forth in this paragraph shall be supplemented by such party or such beneficial owner or other person, as the case may be, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date);
(f)any proxy, contract, arrangement, understanding or relationship pursuant to which any party, either directly or acting in concert with another person or persons, has a right to vote, directly or indirectly, any shares of any security of the Company;
(g)any rights to dividends on the shares of the Company owned beneficially directly or indirectly by each such party that are separated or separable from the underlying shares of the Company;
(h)a representation that such party intends to appear in person or by proxy at the general meeting to propose such nomination;
(i)a statement as to whether or not each such party will deliver a proxy statement and form of proxy to holders of at least the percentage of voting power of all of the shares of capital stock of the Company reasonably believed by the Member of record or beneficial owner or owners, as the case may be, to be sufficient to elect the persons proposed to be nominated by the Member of record (such statement, a “Nomination Solicitation Statement”); and
(j)any other information relating to each such party that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act (whether or not such party intends to deliver a proxy statement or conduct its own proxy solicitation).
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36.6A Member of record providing notice of a nomination of director before a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Bye-law 36 shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Company not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than five (5) business days prior to the date for the meeting, if practicable (or, if not practicable, on the first practicable date prior to) any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).
36.7A person shall not be eligible for election or re-election as a director at a meeting unless (i) the person is nominated by a Member of record in accordance with this Bye-law; or (ii) the person is nominated by or at the direction of the Board of Directors or a duly authorized committee thereof. The chair of the meeting shall have the power and the duty to determine whether a nomination to be brought before the meeting has been made in accordance with the procedures set forth in these Bye-laws and, if any proposed nomination is not in compliance with these Bye-laws, to declare that such nomination shall not be presented for Member action at the meeting and shall be disregarded.
36.8Notwithstanding the foregoing provisions of this Bye-law, a Member shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Bye-law. Nothing in this Bye-law 36 shall be deemed to affect any rights of Members to request inclusion of non-binding proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
37.Number of Directors
The Board shall consist of such number of Directors being not less than two Directors and not more than such maximum number of Directors as the Board may from time to time determine.
38.Eligibility as a Director
To be eligible to be a nominee for election or reelection as a director of the Company pursuant to clause (iii) of Bye-law 36.1, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Bye-law 36 of these Bye-laws or such period as the Board of Directors may specify) to the Secretary at the principal executive offices of the Company a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is
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being made (which form of questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed in writing to the Company or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Company, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Company, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Company.
39.Removal of Directors
39.1Subject to Bye-law 21 and any provision to the contrary in these Bye-laws, the Members entitled to vote for the election of Directors may, at any special general meeting convened and held in accordance with these Bye-laws, remove a Director, provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 60 days before the meeting and at such meeting the Director shall be entitled to be heard on the motion for such Director’s removal.
39.2If a Director is removed from the Board under this Bye-law the Members may fill the vacancy at the meeting at which such Director is removed. In the absence of such election or appointment, the Board may fill the vacancy.
40.Vacancy in the Office of Director
40.1The office of Director shall be vacated if the Director:
(a)is removed from office pursuant to these Bye-laws or is prohibited from being a Director by law;
(b)is or becomes bankrupt, or makes any arrangement or composition with his creditors generally;
(c)is or becomes of unsound mind or dies; or
(d)resigns his office by notice to the Company.
40.2The Board or, subject to Bye-laws 36 and 38, the Members in general meeting, shall have the power to appoint any person as a Director to fill a vacancy on the Board
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occurring as a result of the death, disability, disqualification or resignation of any Director or as a result of an increase in the size of the Board.
41.Remuneration of Directors
The remuneration (if any) of the Directors shall be determined by the Company in general meeting or the Board and shall be deemed to accrue from day to day. The Directors may also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from Board meetings, meetings of any committee appointed by the Board or general meetings, or in connection with the business of the Company or their duties as Directors generally.
42.Defect in Appointment
All acts done in good faith by the Board, any Director, a member of a committee appointed by the Board, any person to whom the Board may have delegated any of its powers, or any person acting as a Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that he was, or any of them were, disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director or act in the relevant capacity.
43.Directors to Manage Business
43.1The business of the Company shall be managed and conducted by the Board. In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by the Act or by these Bye-laws, required to be exercised by the Company in general meeting.
43.2When and as authorised by the affirmative vote or the written consent of the holders of shares holding at the date of the resolution or consent as the case may be not less than sixty six and two thirds percent of the paid up share capital of the Company as at the date of the resolution or consent carries the right to vote at general meetings of the Company, and not otherwise, the Board shall have the power to sell, lease or exchange all the property and assets of the Company, including its goodwill and its corporate franchises upon such temps and conditions and for such consideration, which may be in whole or in part shares of stock, in, and/or other securities of, any other company or companies, as the Board shall deem expedient and for the best interest of the Company.
43.3Subject to these Bye-laws, the Board may delegate to any company, firm, person, or body of persons any power of the Board (including the power to sub-delegate).
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44.Powers of the Board of Directors
The Board may:
(a)appoint, suspend, or remove any manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties;
(b)exercise all the powers of the Company to borrow money and to mortgage or charge or otherwise grant a security interest in its undertaking, property and uncalled capital, or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party;
(c)appoint one or more Directors to the office of managing director or chief executive officer of the Company, who shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company;
(d)appoint a person to act as manager of the Company’s day-to-day business and may entrust to and confer upon such manager such powers and duties as it deems appropriate for the transaction or conduct of such business;
(e)by power of attorney, appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney;
(f)procure that the Company pays all expenses incurred in promoting and incorporating the Company and listing the shares of the Company;
(g)delegate any of its powers (including the power to sub-delegate) to a committee of one or more persons appointed by the Board which may consist partly or entirely of non-Directors, provided that every such committee shall conform to such directions as the Board shall impose on them and provided further that the meetings and proceedings of any such committee shall be governed by the provisions of these Bye-laws regulating the meetings and proceedings of the Board, so far as the same are applicable and are not superseded by directions imposed by the Board;
(h)delegate any of its powers (including the power to sub-delegate) to any person on such terms and in such manner as the Board may see fit;
(i)present any petition and make any application in connection with the liquidation or reorganisation of the Company;
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(j)in connection with the issue of any share, pay such commission and brokerage as may be permitted by law; and
(k)authorise any company, firm, person or body of persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any deed, agreement, document or instrument on behalf of the Company.
45.Register of Directors and Officers
The Board shall cause to be kept in one or more books at the registered office of the Company a Register of Directors and Officers and shall enter therein the particulars required by the Act.
46.Appointment of Officers
The Board may appoint such Officers (who may or may not be Directors) as the Board may determine for such terms as the Board deems fit.
47.Appointment of Secretary
The Secretary shall be appointed by the Board from time to time for such term as the Board deems fit.
48.Duties of Officers
The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time.
49.Remuneration of Officers
The Officers shall receive such remuneration as the Board may determine.
50.Conflicts of Interest
50.1Any Director, or any Director’s firm, partner or any company with whom any Director is associated, may act in any capacity for, be employed by or render services to the Company on such terms, including with respect to remuneration, as may be agreed between the parties. Nothing herein contained shall authorise a Director or a Director’s firm, partner or company to act as Auditor to the Company.
50.2A Director who is directly or indirectly interested in a contract or proposed contract with the Company (an “Interested Director”) shall declare the nature of such interest as required by the Act.
50.3An Interested Director who has complied with the requirements of the foregoing Bye-law may:
(a)vote in respect of such contract or proposed contract; and/or
(b)be counted in the quorum for the meeting at which the contract or proposed contract is to be voted on,
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and no such contract or proposed contract shall be void or voidable by reason only that the Interested Director voted on it or was counted in the quorum of the relevant meeting and the Interested Director shall not be liable to account to the Company for any profit realised thereby.
51.Indemnification and Exculpation of Directors and Officers
51.1The Directors, Resident Representative, Secretary and other Officers (such term to include any person appointed to any committee by the Board) acting in relation to any of the affairs of the Company or any subsidiary thereof and the liquidator or trustees (if any) acting in relation to any of the affairs of the Company or any subsidiary thereof and every one of them (whether for the time being or formerly), and their heirs, executors and administrators (each of which an “indemnified party”), shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and no indemnified party shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, PROVIDED THAT this indemnity shall not extend to any matter in respect of any fraud or dishonesty in relation to the Company which may attach to any of the indemnified parties.
51.2The Company may purchase and maintain insurance for the benefit of any Director or Officer against any liability incurred by him under the Act in his capacity as a Director or Officer or indemnifying such Director or Officer in respect of any loss arising or liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the Director or Officer may be guilty in relation to the Company or any subsidiary thereof.
51.3The Company may advance moneys to a Director or Officer for the costs, charges and expenses incurred by the Director or Officer in defending any civil or criminal proceedings against him, on condition that the Director or Officer shall repay the advance if any allegation of fraud or dishonesty in relation to the Company is proved against him.
51.4Each Member agrees to waive any claim or right of action such Member might have, whether individually or by or in the right of the Company, against any Director or Officer on account of any action taken by such Director or Officer, or the failure of such Director or Officer to take any action in the performance of his duties with or for
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the Company or any subsidiary thereof, PROVIDED THAT such waiver shall not extend to any matter in respect of any fraud or dishonesty in relation to the Company which may attach to such Director or Officer.
MEETINGS OF THE BOARD OF DIRECTORS
52.Board Meetings
The Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit. Subject to these Bye-laws, a resolution put to the vote at a Board meeting shall be carried by the affirmative votes of a majority of the votes cast and in the case of an equality of votes the resolution shall fail.
53.Notice of Board Meetings
A Director may, and the Secretary on the requisition of a Director shall, at any time summon a Board meeting. Notice of a meeting of the Board shall be deemed to be duly given to a Director if it is given to such Director verbally (including in person or by telephone) or otherwise communicated or sent to such Director by post, electronic means or other mode of representing words in a visible form at such Director’s last known address or in accordance with any other instructions given by such Director to the Company for this purpose.
54.Electronic Participation in Meetings
Directors may participate in any meeting by such telephonic, electronic or other communications facilities or means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.
55.Quorum at Board Meetings
The quorum necessary for the transaction of business at a Board meeting shall be two Directors, provided that at any time the Company is listed on an appointed stock exchange, as that term is defined in the Act, the quorum necessary for the transaction of business at a meeting of the Board shall be a majority of the Directors then in office.
56.Board to Continue in the Event of Vacancy
The Board may act notwithstanding any vacancy in its number but, if and so long as its number is reduced below the number fixed by these Bye-laws as the quorum necessary for the transaction of business at Board meetings, the continuing Directors or Director may act for the purpose of (i) summoning a general meeting; or (ii) preserving the assets of the Company.
57.Chairman to Preside
Unless otherwise agreed by a majority of the Directors attending a Board meeting, the chairman of the Company, if there be one who is present, and if not, the president of the Company, if there be one who is present, shall act as chairman at such Board meeting. In their absence a chairman of the meeting shall be appointed or elected by the Directors present at the meeting.
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58.Written Resolutions
A resolution signed by all the Directors, which may be in counterparts, shall be as valid as if it had been passed at a Board meeting duly called and constituted, such resolution to be effective on the date on which the resolution is signed by the last Director.
59.Validity of Prior Acts of the Board
No regulation or alteration to these Bye-laws made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation or alteration had not been made.
CORPORATE RECORDS
60.Minutes
The Board shall cause minutes to be duly entered in books provided for the purpose:
(a)of all elections and appointments of Officers;
(b)of the names of the Directors present at each Board meeting and of any committee appointed by the Board; and
(c)of all resolutions and proceedings of general meetings of the Members, Board meetings, and meetings of committees appointed by the Board.
61.Place Where Corporate Records Kept
Minutes prepared in accordance with the Act and these Bye-laws shall be kept by the Secretary at the registered office of the Company.
62.Form and Use of Seal
62.1The Company may adopt a seal in such form as the Board may determine. The Board may adopt one or more duplicate seals for use in or outside Bermuda.
62.2A seal may, but need not be affixed to any deed, instrument or document, and if the seal is to be affixed thereto, it shall be attested by the signature of (i) any Director; or (ii) any Officer; or (iii) the Secretary; or (iv) any person authorized by the Board for that purpose
62.3A Resident Representative may, but need not, affix the seal of the Company to certify the authenticity of any copies of documents.
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ACCOUNTS
63.Records of Account
63.1The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:
(a)all amounts of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;
(b)all sales and purchases of goods by the Company; and
(c)all assets and liabilities of the Company.
63.2Such records of account shall be kept at the registered office of the Company, or subject to the Act, at such other place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours.
63.3Such records of account shall be retained for a minimum period of five years from the date on which they are prepared.
64.Financial Year End
The financial year end of the Company may be determined by resolution of the Board and failing such resolution shall be the last day in February in each year.
AUDITS
65.Annual Audit
Subject to any rights to waive laying of accounts or appointment of an Auditor pursuant to the Act, the accounts of the Company shall be audited at least once in every year.
66.Appointment of Auditor
66.1Subject to the Act, Members shall appoint an auditor to the Company to hold office for such term as the Members deem fit or until a successor is appointed.
66.2The Auditor may be a Member but no Director, Officer or employee of the Company shall, during his continuance in office, be eligible to act as an Auditor of the Company.
67.Remuneration of Auditor
67.1The remuneration of an Auditor appointed by the Members shall be fixed by the Company in general meeting or in such manner as the Members may determine.
67.2The remuneration of an Auditor appointed by the Board to fill a casual vacancy in accordance with these Bye-laws shall be fixed by the Board.
68.Duties of Auditor
68.1The financial statements provided for by these Bye-laws shall be audited by the Auditor in accordance with generally accepted auditing standards. The Auditor shall make a written report thereon in accordance with generally accepted auditing standards.
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68.2The generally accepted auditing standards referred to in this Bye-law may be those of a country or jurisdiction other than Bermuda or such other generally accepted auditing standards as may be provided for in the Act. If so, the financial statements and the report of the Auditor shall identify the generally accepted auditing standards used.
69.Access to Records
The Auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto, and the Auditor may call on the Directors or Officers for any information in their possession relating to the books or affairs of the Company.
70.Financial Statements and the Auditor’s Report
70.1Subject to the following bye-law, the financial statements and/or the auditor’s report as required by the Act shall
(a)be laid before the Members at the annual general meeting; or
(b)be received, accepted, adopted or approved by the Members by written resolution passed in accordance with these Bye-laws.
70.2If all Members and Directors shall agree, either in writing or at a meeting, that in respect of a particular interval no financial statements and/or auditor’s report thereon need be made available to the Members, and/or that no auditor shall be appointed then there shall be no obligation on the Company to do so.
71.Vacancy in the Office of Auditor
The Board may fill any casual vacancy in the office of the auditor.
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VOLUNTARY WINDING-UP AND DISSOLUTION
72.Winding-Up
If the Company shall be wound up the liquidator may, with the sanction of a resolution of the Members, divide amongst the Members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in the trustees upon such trusts for the benefit of the Members as the liquidator shall think fit, but so that no Member shall be compelled to accept any shares or other securities or assets whereon there is any liability.
CHANGES TO CONSTITUTION
73.Changes to Bye-laws
No Bye-law shall be rescinded, altered or amended and no new Bye-law shall be made until the same has been approved by a resolution of the Board and by a resolution of the Members.
74.Discontinuance
The Board may exercise all the powers of the Company to discontinue the Company to a jurisdiction outside Bermuda pursuant to the Act.
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HELEN OF TROY LIMITED
ANNUAL GENERAL MEETING OF SHAREHOLDERS
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes each of Julien R. Mininberg and Vincent D. CarsonTessa Judge as ProxyProxies with power of substitution, to represent the undersigned at the Annual General Meeting of Shareholders of Helen of Troy Limited (the “Company”"Company") to be held on Wednesday, August 17, 2016,22, 2018, at 1:00 p.m., Mountain Daylight Time, in the Hotel Indigo El Paso Downtown, 325 N. Kansas Street,at Southwest University Park, WestStar Bank Club, 1 Ball Park Plaza, El Paso, Texas 79901, and any adjournment thereof, and to vote all the common shares of the Company that the undersigned is entitled to vote on the following matters:
1. To set the number of Director positions at eight (or such lower number as shall equal the number of nominees elected as Directors) and to elect each of the following nominees to the Board of Directors:
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01 – Gary B. Abromovitz
| | For []
| Against []
| Abstain []
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02 – John B. Butterworth
| | For []
| Against []
| Abstain []
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03 – Alexander M. Davern
| | For []
| Against []
| Abstain []
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04 – Timothy F. Meeker
| | For []
| Against []
| Abstain []
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05 – Julien R. Mininberg
| | For []
| Against []
| Abstain []
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06 – Beryl B. Raff
| | For []
| Against []
| Abstain []
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07 – William F. Susetka
| | For []
| Against []
| Abstain []
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08 – Darren G. Woody
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| Against []
| Abstain []
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2. Advisory vote to approve the Company’s executive compensation.
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| Against []
| Abstain []
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3A. To approve amendments to the Company’s Bye-laws regarding advance notice provisions for director nominations and director eligibility
| | For []
| Against []
| Abstain []
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3B. To approve amendments to the Company’s Bye-laws regarding advance notice provisions for shareholder proposals of business (other than director nominations)
| | For []
| Against []
| Abstain []
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3C. To approve amendments to the Company’s Bye-laws regarding majority voting in director elections except plurality voting in contested director elections
| | For []
| Against []
| Abstain []
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3D. To approve amendments to the Company’s Bye-laws regarding authorization to fix number of directors and filling a vacancy on the board
| | For []
| Against []
| Abstain []
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3E. To approve amendments to the Company’s Bye-laws regarding casting of votes
| | For []
| Against []
| Abstain []
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3F. To approve amendments to the Company’s Bye-laws regarding appointment of proxy
| | For []
| Against []
| Abstain []
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3G. To approve amendments to the Company’s Bye-laws regarding director remuneration
| | For []
| Against []
| Abstain []
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3H. To approve other changes to the Company’s Bye-laws
| | For []
| Against []
| Abstain []
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3I. To approve amendments to the Company’s Bye-laws regarding authorisation to carry out the powers given the Board of Directors in the Company’s Bye-laws
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| Abstain []
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4. To approve an amendment to the Helen of Troy Limited Amended and Restated 2011 Annual Incentive Plan.
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| Abstain []
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5. To appoint Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm to serve for the 2016 fiscal year and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration.
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| Abstain []
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matters. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”"FOR" THE LISTED NOMINEES IN PROPOSAL 1 AND A VOTE “FOR”"FOR" PROPOSALS 2, 3A, 3B, 3C, 3D, 3E, 3F, 3G, 3H, 3I,3, 4 AND 5. This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE LISTED NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2, 3A, 3B, 3C, 3D, 3E, 3F, 3G, 3H, 3I,3, 4 AND 5.
THIS PROXY ALSO GRANTS AUTHORITY TO VOTE SUCH SHARES AS TO ANY OTHER MATTER WHICH MAY BE BROUGHT BEFORE THE MEETING IN THE SOLE DISCRETION OF THE HOLDERS OF THIS PROXY.
IMPORTANT: Please date this proxy and sign exactly as your name or names appear hereon. If shares are held jointly, signature should include both names. Executors, administrators, trustees, guardians, and others signing in the representative capacity, please so indicate when signing.
DATE:
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SIGNATURE 1:
| | | SIGNATURE 2, IF HELD JOINTLY:
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PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPEENVELOPE. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side Address Changes/Comments:
