def14a
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. )
Filed by the Registrant
þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o |
|
Preliminary Proxy Statement |
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ |
|
Definitive Proxy Statement |
o |
|
Definitive Additional Materials |
o |
|
Soliciting Material Pursuant to §240.14a-12 |
The Mens Wearhouse, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
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. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
THE
MENS WEARHOUSE, INC.
6380 Rogerdale Road
Houston, Texas
77072-1624
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 15, 2011
The Annual Meeting of the Shareholders of The Mens
Wearhouse, Inc., a Texas corporation (the Company),
will be held at 11:00 a.m., Pacific daylight time, on
Wednesday, June 15, 2011, at the Companys executive
offices, 40650 Encyclopedia Circle, Fremont, California, for the
following purposes:
(1) To elect ten directors of the Company to hold office
until the next Annual Meeting of Shareholders or until their
respective successors are duly elected and qualified;
(2) To consider and act upon a proposal to amend the
Companys 2004 Long-Term Incentive Plan to increase the
number of shares authorized for issuance under the plan;
(3) To consider and act upon a proposal to reapprove the
material terms of the performance goals for performance awards
under the Companys 2004 Long-Term Incentive Plan;
(4) To consider and act upon an advisory vote on executive
compensation;
(5) To consider and act upon an advisory vote on the
frequency of an advisory vote on executive compensation;
(6) To ratify the appointment of the firm of
Deloitte & Touche LLP as independent registered public
accounting firm for the Company for fiscal 2011; and
(7) To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors recommends a vote FOR the
nominees for director listed in the proxy statement and proxy
card, FOR the proposal to amend the Companys
2004 Long-Term Incentive Plan to increase the number of shares
authorized for issuance under the plan, FOR the
proposal to reapprove the material terms of the performance
goals for performance awards under the Companys 2004
Long-Term Incentive Plan, FOR the approval, on an
advisory basis, of our executives compensation, for
3 YEARS as the preferred frequency for the advisory
vote on executive compensation and FOR the proposal
to ratify the appointment of the firm of Deloitte &
Touche LLP as independent registered public accounting firm for
the Company for fiscal 2011. The holders of record of the
Companys common stock, $.01 par value per share, at
the close of business on April 18, 2011, will be entitled
to vote at the meeting and any adjournment(s) thereof.
You are cordially invited to attend the meeting in person.
Even if you plan to be present, you are urged to promptly submit
your proxy by mail, Internet or telephone as described in the
Notice of Availability of Proxy Materials. If you attend the
meeting you can vote either in person or by your proxy. If you
wish to attend the meeting in person and you are a registered
owner of shares of stock on the record date, you must show a
government issued form of identification which includes your
picture. If you are a beneficial owner of shares as of the
record date that are held for your benefit by a bank, broker or
other nominee, in addition to the picture identification, you
will need proof of ownership of our common stock on the record
date to be admitted to the meeting. A recent brokerage statement
or a letter from your bank, broker or other nominee holder that
shows that you were an owner on the record date are examples of
proof of ownership.
By Order of the Board of Directors
Michael W. Conlon
Secretary
May 5, 2011
TABLE OF CONTENTS
THE
MENS WEARHOUSE, INC.
FOR ANNUAL MEETING OF
SHAREHOLDERS
To Be Held June 15, 2011
This proxy statement is furnished to the shareholders of The
Mens Wearhouse, Inc. (the Company, also
referred to in this proxy statement as we,
us or our), whose principal executive
offices are located at 6380 Rogerdale Road, Houston, Texas
77072-1624,
and at 40650 Encyclopedia Circle, Fremont, California
94538-2453,
in connection with the solicitation by our Board of Directors of
proxies to be used at the Annual Meeting of Shareholders to be
held at 11:00 a.m., Pacific daylight time, on Wednesday,
June 15, 2011, at the Companys executive offices,
40650 Encyclopedia Circle, Fremont, California, or any
adjournment(s) thereof (the Annual Meeting).
The Annual Meeting will be held: (1) to elect ten directors
of the Company to hold office until the next Annual Meeting of
Shareholders or until their respective successors are duly
elected and qualified, (2) to consider and act upon a
proposal to amend the Companys 2004 Long-Term Incentive
Plan to increase the number of shares authorized for issuance
under the plan, (3) to consider and act upon a proposal to
reapprove the material terms of the performance goals for
performance awards under the Companys 2004 Long-Term
Incentive Plan, (4) to consider and act upon an advisory
vote on executive compensation, (5) to consider and act
upon an advisory vote on the frequency of an advisory vote on
executive compensation, (6) to ratify the appointment of
the firm of Deloitte & Touche LLP as independent
registered public accounting firm for the Company for fiscal
2011 and (7) to transact such other business as may
properly come before the meeting or any adjournment thereof.
Properly submitted proxies received either by mail, Internet or
telephone in time for the meeting will be voted as specified
therein. The Board of Directors recommends a vote
FOR the nominees for director listed in the proxy
statement and proxy card, FOR the proposal to amend
the Companys 2004 Long-Term Incentive Plan to increase the
number of shares authorized for issuance under the plan,
FOR the proposal to reapprove the material terms of
the performance goals for performance awards under the
Companys 2004 Long-Term Incentive Plan, FOR
the approval, on an advisory basis, of our executives
compensation, for 3 YEARS as the preferred frequency
for the advisory vote on executive compensation and
FOR the ratification of the appointment of the firm
of Deloitte & Touche LLP as independent registered
public accounting firm for the Company for fiscal 2011.
Therefore, if a shareholder does not specify otherwise, the
shares represented by his or her proxy will be voted in
accordance with the recommendations set forth in the preceding
sentence. The giving of a proxy does not preclude the right to
vote in person should the person giving the proxy so desire, and
the proxy may be revoked at any time before it is exercised by
written notice delivered to us at or prior to the Annual Meeting.
This Proxy Statement is being made available on or about
May 6, 2011, to the holders of record of our common stock,
$.01 par value per share (Common Stock), on
April 18, 2011 (the Record Date). At the close
of business on the Record Date, there were outstanding and
entitled to vote 51,481,160 shares of our Common Stock, and
only the holders of record on such date shall be entitled to
vote at the Annual Meeting. Such holders will be entitled to one
vote per share on each matter presented at the Annual Meeting.
Pursuant to the notice and access rules adopted by
the Securities and Exchange Commission, we have elected to
provide shareholders access to our proxy materials over the
Internet. Accordingly, instead of a paper copy of this proxy
statement, form of proxy card and our 2010 Annual Report to
Shareholders, a Notice Regarding Availability of Proxy Materials
(the Notice) will be delivered on or about
May 6, 2011, to all of the holders of record of our Common
Stock as of the Record Date. The Notice includes instructions on
how to access our proxy materials over the Internet and how to
request a printed copy of these materials. Shareholders of
record may vote by Internet or by telephone by following the
instructions on the Notice. Shareholders of record who request
printed copies of the proxy materials by mail may also vote by
signing and submitting the proxy card included with those proxy
materials and returning by mail or by submitting their vote by
telephone.
The holders of a majority of the total shares of our Common
Stock issued and outstanding on the Record Date, whether present
in person or represented by proxy, will constitute a quorum for
the transaction of business at the Annual Meeting. Abstentions
are counted toward the calculation of a quorum, but are not
treated as either a vote for
or against a proposal. Except as discussed below with respect to
advisory votes, an abstention has the same effect as a vote
against a proposal or, in the case of the election of directors,
as shares to which voting power has been withheld. Under Texas
law and applicable rules of the New York Stock Exchange, any
matter on which a broker holding shares for a beneficial owner
does not vote, because the broker does not have discretionary
voting authority and has not received voting instructions from
the beneficial owner, will be considered as not voted and will
not be counted toward fulfillment of quorum requirements as to
that matter. The shares held by each shareholder who properly
submits a proxy will be counted for purposes of determining the
presence of a quorum at the meeting.
The form of proxy provides a means for shareholders to vote for
all of the nominees listed therein, to withhold authority to
vote for one or more of such nominees or to withhold authority
to vote for all of such nominees. The withholding of authority
by a shareholder will reduce the number of votes received by,
but otherwise will have no effect on the results of the election
of, those directors for whom authority to vote is withheld
because our bylaws provide that directors are elected by a
plurality of the votes cast.
The affirmative vote of the holders of a majority of the shares
of our Common Stock represented in person or by proxy at the
Annual Meeting is required to approve the proposals to amend the
Companys 2004 Long-Term Incentive Plan to increase the
number of shares authorized for issuance under the plan,
reapprove the material terms of the performance goals for
performance awards under the Companys 2004 Long-Term
Incentive Plan and ratify the appointment of the firm of
Deloitte & Touche LLP as independent registered public
accounting firm for the Company for fiscal 2011.
With respect to the advisory vote on the compensation of our
Named Executive Officers (as defined herein), you may vote for,
against or abstain. With respect to the advisory vote on the
frequency of an advisory vote on executive compensation, you may
vote for 1 year, 2 years, 3 years, or abstain. A
shareholders choice to abstain will reduce the number of
votes cast for, but otherwise will have no effect on the results
of, these advisory votes. To the extent there is any significant
vote against our Named Executive Officer compensation as
disclosed in this proxy statement, the Compensation Committee of
the Board of Directors will evaluate whether any actions are
necessary to address the concerns of shareholders. Additionally,
the Board of Directors and the Compensation Committee will take
into account the outcome of the vote on the frequency of an
advisory vote on executive compensation when considering the
frequency of future advisory votes on executive compensation.
2
ELECTION
OF DIRECTORS
At the Annual Meeting, ten directors constituting the entire
Board of Directors are to be elected. All directors of the
Company hold office until the next annual meeting of
shareholders or until their respective successors are elected
and qualified or their earlier resignation or removal.
The following persons have been nominated to fill the ten
positions to be elected by the shareholders. It is the intention
of the persons named in the proxy to vote the proxies for the
election of the nominees named below, unless otherwise
specified. Management of the Company does not contemplate that
any of the nominees will become unavailable for any reason, but
if that should occur before the meeting, proxies will be voted
for another nominee, or other nominees, to be selected by the
Nominating and Corporate Governance Committee of the Board of
Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
Name
|
|
Age
|
|
Position with the Company
|
|
Since
|
|
George Zimmer
|
|
|
62
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
1974
|
|
David H. Edwab
|
|
|
56
|
|
|
Vice Chairman of the Board
|
|
|
1991
|
|
Rinaldo S. Brutoco
|
|
|
64
|
|
|
Director
|
|
|
1992
|
|
Michael L. Ray, Ph.D.
|
|
|
72
|
|
|
Director
|
|
|
1992
|
|
Sheldon I. Stein
|
|
|
57
|
|
|
Director
|
|
|
1995
|
|
Deepak Chopra, M.D.
|
|
|
62
|
|
|
Director
|
|
|
2004
|
|
William B. Sechrest
|
|
|
68
|
|
|
Director
|
|
|
2004
|
|
Larry R. Katzen
|
|
|
65
|
|
|
Director
|
|
|
2007
|
|
Grace Nichols
|
|
|
64
|
|
|
Director
|
|
|
2011
|
|
Douglas S. Ewert
|
|
|
47
|
|
|
President and Chief Operating Officer
|
|
|
|
|
Further biographical information about our nominees for director
and the experience, qualifications, attributes and skills
considered by our Nominating and Corporate Governance Committee
and Board of Directors in determining that the nominee should
serve as a director appears below.
George
Zimmer
George Zimmer co-founded The Mens Wearhouse as a
partnership in 1973 and has served as Chairman of the Board of
the Company since its incorporation in 1974. He served as
President from 1974 until 1997 and has served as Chief Executive
Officer of the Company since 1991. Mr. Zimmer is also a
director of Apollo Group, Inc. and serves on their nominating
and governance committee.
Director Qualifications:
|
|
|
|
|
Founder and leader of the Company with extensive experience in
retailing
|
|
|
|
Outstanding human relations skills
|
|
|
|
Developed culture of the Company
|
|
|
|
Continuously innovative and challenging
|
|
|
|
Broad contacts and knowledge
|
|
|
|
Servant leadership perspective and practice
|
David H.
Edwab
Mr. Edwab joined the Company in 1991 and was elected Senior
Vice President, Treasurer and Chief Financial Officer of the
Company. In 1993, he was elected Chief Operating Officer of the
Company. In 1997, Mr. Edwab was elected President of the
Company. In 2000, Mr. Edwab resigned as President of the
Company to join Bear, Stearns & Co. Inc. (Bear
Stearns) as a Senior Managing Director and Head of the
Retail Group in the Investment Banking Department of Bear
Stearns. Concurrently, Mr. Edwab was named Vice Chairman of
the Board for the Company. In 2002, Mr. Edwab re-joined the
Company and continues to serve as Vice Chairman of the Board.
Mr. Edwab is an
3
inactive Certified Public Accountant. Mr. Edwab
is also a director of New York & Company, Inc., where
he serves as chairman of their nomination and governance
committee and is on their audit committee, and Vitamin Shoppe,
Inc., where he serves as lead director, is on their audit
committee and is chairman of their compensation committee. In
addition, Mr. Edwab served as a director of Aeropostale,
Inc. from 2002 to 2007.
Director Qualifications:
|
|
|
|
|
Constantly looking for new opportunities and follows through
|
|
|
|
Great energy, focus and analytical skills
|
|
|
|
Broad experience and skill on the financial and operations sides
of retailing
|
|
|
|
Grounded in realities but always seeing new possibilities
|
|
|
|
Experience in mergers and acquisitions
|
|
|
|
Outstanding network
|
Rinaldo
S. Brutoco
Mr. Brutoco has been since 2000, President and Chief
Executive Officer of ShangriLa Consulting, Inc., which is
affiliated with the ShangriLa Group, a privately held
consulting and merchant banking concern. He also is founder,
President and Chief Executive Officer of the World Business
Academy and has authored multiple books and articles on energy
policy and innovation.
Director Qualifications:
|
|
|
|
|
Brings legal, financial, innovation, retailing, and
organizational transformation experience and proven skills
|
|
|
|
Knows new technologies and new ways of doing business
|
|
|
|
Skilled in helping to maintain the corporate culture and values
important to the Companys success
|
|
|
|
Evaluates strategies at all levels of implementation
|
Michael
L. Ray, Ph.D.
Professor Ray has been on the faculty at Stanford University
since 1967 and is currently the John G. McCoy Banc
One Corporation Professor of Creativity and Innovation and of
Marketing, Emeritus at Stanford Universitys Graduate
School of Business. Professor Ray is a social psychologist with
training and extensive experience in advertising and marketing
management and in developing innovative organizations and has
served as a private consultant to numerous companies since 1967.
He has authored over 100 professional publications, including
ten books, in the areas of business and psychological research
methods, marketing communication, new paradigm business,
creativity and innovation.
Director Qualifications:
|
|
|
|
|
Experience and skill in marketing, particularly advertising and
marketing communication important to the Company
|
|
|
|
As one of the leaders of new forms of transformational
organizations, he helps to maintain the corporate culture and
values that underlie the Companys success, growth and
financial value
|
|
|
|
Mediator and consensus builder
|
|
|
|
Combination of meticulous fact gatherer and creative catalyst
|
|
|
|
Listens well and fosters dialogue
|
4
Sheldon
I. Stein
Mr. Stein is the President and Chief Executive Officer of
Glazers Distributors, one of the countrys largest
distributors of wine, spirits and malt products. From 2008 until
July 2010, Mr. Stein was a Vice Chairman of Global
Investment Banking and Head of Southwest Investment Banking for
Bank of America, Merrill Lynch. Before joining Merrill Lynch in
2008, Mr. Stein had been with Bear Sterns for over twenty
years as a Senior Managing Director running Bear Stearns
Southwest Investment Banking Group and as a member of Bear
Stearns President Advisory Council.
Director Qualifications:
|
|
|
|
|
Keen perspective and skill in building solid Company value
|
|
|
|
Strategic advisor to chief executive officers of major companies
with his sharp intellect coupled with practical wisdom
|
|
|
|
Broad network of business and personal relationships and
perspectives
|
|
|
|
Experience and skills in corporate finance, mergers and
acquisitions
|
|
|
|
CEO of one of the 200 largest privately held companies in the
nation
|
Deepak
Chopra, M.D.
Dr. Chopra is the Chairman and founder of The Chopra Center
for Well Being, which was established by Dr. Chopra in 1995
and offers training programs in mind-body medicine.
Dr. Chopra is the author of more than 60 books in both
the fiction and non-fiction categories. Dr. Chopra is a
fellow of the American College of Physicians and a member of the
American Association of Clinical Endocrinologists, Adjunct
Professor at Kellogg School of Management and Senior Scientist
with The Gallup Organization.
Director Qualifications:
|
|
|
|
|
Advocate for conscious business that is generative in growth and
value
|
|
|
|
Listens well and brings wisdom
|
|
|
|
International and broad perspective
|
|
|
|
Runs his own service organization
|
|
|
|
Wide network in and outside of business
|
William
B. Sechrest
Mr. Sechrest was a founding shareholder in the law firm of
Winstead Sechrest & Minick P.C. from 1973 to 2006,
specializing in finance and banking practice. He then joined the
law firm of Shartis Friese LLP as counsel in 2007,
continuing until 2008. Currently, Mr. Sechrest is actively
involved as a founding shareholder and member of the Board of
Directors of Ojai Community Bank, Ojai Energy Systems, Inc.
(energy storage through patented
Li-Ion
technologies) and BioCee, Inc. (biofuel generation through
patented bio-chemical process). Mr. Sechrest is a member of
the American College of Real Estate Lawyers.
Director Qualifications:
|
|
|
|
|
Combines legal, financial, organizational, and human skills in
an effective way
|
|
|
|
Forty years of experience in helping those that need help in
organizing, developing, financing or protecting a business or an
idea
|
|
|
|
Wise counsel from almost all areas of business
|
|
|
|
Calm leadership and alignment
|
|
|
|
Fosters dialogue on important issues
|
5
Larry R.
Katzen
Mr. Katzen was a partner with Arthur Andersen from
1978-2002,
including Managing Partner, Great Plains Region from
1998-2002,
Managing Partner, St. Louis office from
1993-2002
and Managing Partner of their worldwide retailing industry
practice from
1990-1993.
In addition, Mr. Katzen served as a director of Pathmark
Stores, Inc. from 2004 to 2007 and Kellwood Company from 2002 to
2008.
Director Qualifications:
|
|
|
|
|
Deep experience in accounting and auditing
|
|
|
|
Significant experience in serving a variety of retailers around
the world as auditor, consultant or board member
|
|
|
|
Regularly attends board education seminars and shares the
benefit thereof with other Board members
|
|
|
|
Strategic thinker with international experience
|
|
|
|
Challenges with strong but empathic questions
|
Grace
Nichols
Ms. Nichols spent more than twenty years at Limited Brands,
including 14 years as Chief Executive Officer of
Victorias Secret Stores from 1992 until she retired in
January 2007. From 1986 to 1992, she served as Executive Vice
President of Victorias Secret Stores. Prior to joining
Limited Brands, Ms. Nichols held various senior
merchandising positions in teens and womens apparel
at The Broadway Southern California divisions of Carter, Hawley,
Hale, Inc. Ms. Nichols currently sits on the board of
directors of Pacific Sunwear of California Inc., where she
serves on their nominating and governance committee and as chair
of their compensation committee, and New York &
Company, Inc., where she serves as non-executive chairperson and
is on the nomination and governance committee and the
compensation committee. Ms. Nichols holds a Professional
Director Certification from the American College of Corporate
Directors, a national public director and credentialing
organization.
Director Qualifications:
|
|
|
|
|
Extensive experience as a senior executive and director in the
retail industry
|
|
|
|
Ability to understand and analyze the operational and management
challenges associated with large retailers
|
|
|
|
Particular expertise in branding and merchandising
|
|
|
|
Experience and insights regarding the retail industry from a
womans perspective
|
Douglas
S. Ewert
Mr. Ewert joined the Company in 1995. From 1996 to 1999, he
served as General Merchandise Manager. From 1999 to 2000, he
served as Vice President Merchandising and General
Merchandise Manager. In April 2000, he was named Senior Vice
President Merchandising, and in March 2001 he was
named Executive Vice President and Chief Operating Officer,
K&G Mens Company. In March 2002, he was named
Executive Vice President and General Merchandise Manager. In
January 2005, he was named Executive Vice President and Chief
Operating Officer. On January 26, 2008, he was named
President and Chief Operating Officer. The Company has announced
that Mr. Ewert will become Chief Executive Officer of the
Company immediately after the Annual Meeting.
Director Qualifications:
|
|
|
|
|
Extensive experience with the Company
|
|
|
|
Extensive experience in mens retailing
|
|
|
|
Demonstrated effective leadership within the Company
|
|
|
|
Exceptional interpersonal skills within the Companys
organization
|
6
CORPORATE
GOVERNANCE
Our business and affairs are managed under the direction of the
Board of Directors to enhance the long-term value of the Company
for our shareholders. In exercising its authority to direct, the
Board recognizes that the long-term interests of our
shareholders are best advanced by appropriate consideration of
other stakeholders and interested parties including employees
and their families, customers, suppliers, communities and
society as a whole. To assist the Board in fulfilling its
responsibilities, it has adopted certain Corporate Governance
Guidelines (the Guidelines). As contemplated by the
Guidelines, the Board of Directors has regular executive
sessions where non-management directors meet without management
participation. The director designated by the Board as the Lead
Director is the presiding director for each executive session.
Director
Qualifications
As set forth in the Guidelines, a majority of the members of the
Board of Directors must qualify as independent directors in
accordance with the applicable provisions of the Securities
Exchange Act of 1934, as amended (the Exchange Act),
and the rules promulgated thereunder, and the applicable rules
of the New York Stock Exchange. In addition, at least two-thirds
in number (if two-thirds is not a whole number then at least the
nearest whole number to two-thirds that is less than two-thirds)
of the directors shall meet the following qualifications:
|
|
|
|
|
shall not have been employed by us as an executive officer in
the past ten years;
|
|
|
|
is not an executive officer or director, or a person serving in
a similar capacity with, nor an owner of more than 1% of the
equity of, a significant customer, supplier or service provider
to us. For purposes hereof, significant shall mean circumstances
where during the past fiscal year the business with the
customer, supplier or service provider equaled or exceeded
either 1% of the revenue thereof or 1% of our revenue;
|
|
|
|
is not personally the accountant, lawyer or financial advisor
for compensation to any of our executive officers;
|
|
|
|
is not a trustee, director or officer of any charitable
organization that received contributions during the past fiscal
year aggregating $100,000 or more from us;
|
|
|
|
has not within the last three years engaged in a transaction
with us required to be disclosed in our proxy statement pursuant
to Subpart 229.400 of
Regulation S-K
of the Rules and Regulations of the Securities and Exchange
Commission; and
|
|
|
|
is not a father, mother, wife, husband, daughter, son,
father-in-law,
mother-in-law,
daughter-in-law
or
son-in-law
of a person who would not meet the foregoing qualifications.
|
A director shall not serve on more than four boards of directors
of publicly-held companies (including our Board of Directors)
unless the full Board determines that such service does not
impair the directors performance of his or her duties to
the Company. A person shall not stand for election upon reaching
the age of 75. Directors are expected to report changes in their
business or professional affiliations or responsibilities,
including retirement, to the Chairman of the Board and the
Chairman of the Nominating and Corporate Governance Committee
and will be expected to offer to resign if the Nominating and
Corporate Governance Committee concludes that the director no
longer meets our requirements for service on the Board of
Directors. The Board believes that directors should be
shareholders and have a financial stake in the Company and,
therefore, the Board has recommended that directors develop an
ownership position in the Company equal to at least $200,000 by
fiscal year end 2010 and new directors hold such amount within
three years of becoming a director. Each director has met the
$200,000 requirement, except Ms. Nichols was has until the
end of fiscal year 2013 to do so. The Nominating and Corporate
Governance Committee of the Board may establish from time to
time additional qualifications for directors, taking into
account the composition and expertise of the entire Board.
Identifying
and Evaluating Nominees for Directors
The Nominating and Corporate Governance Committee utilizes a
variety of methods for identifying and evaluating nominees for
director. The Nominating and Corporate Governance Committee
regularly assesses the appropriate size of the Board and whether
any vacancies on the Board are expected due to retirement or
otherwise.
7
In the event that vacancies are anticipated, or otherwise arise,
the Nominating and Corporate Governance Committee will consider
various potential candidates for director. Candidates may come
to the attention of the Nominating and Corporate Governance
Committee through current Board members, professional search
firms, shareholders or other persons. These candidates will be
evaluated at regular or special meetings of the Nominating and
Corporate Governance Committee, and may be considered at any
point during the year. In evaluating such nominations, the
Nominating and Corporate Governance Committee seeks to achieve a
diverse view of thoughts based on each Board members knowledge,
life experiences, capabilities and ethnic background. While the
Nominating and Corporate Governance Committee does not have a
formal policy with respect to diversity, it does attempt to
identify director nominees who can provide a diverse perspective
to the Board of Directors.
Sources
for New Nominees
With respect to the nomination of Ms. Nichols, Board
members submitted the names of potential candidates to the
Nominating and Corporate Governance Committee for their
consideration. Ms. Nichols was originally recommended by
David Edwab, who is one of our executive officers and directors.
After much research and deliberation, the Nominating and
Corporate Governance Committee recommended Ms. Nichols to
the full Board for election effective January 30, 2011 and
inclusion in the list of nominees to be elected at the Annual
Meeting.
The nomination of Mr. Ewert for inclusion in the list of
nominees to be elected at the Annual Meeting was part of the
overall Chief Executive Officer succession plan developed by
Mr. Zimmer and the other Board members.
Board of
Directors Independence
The Board of Directors has affirmatively determined that each
member of the Board, with the exception of George Zimmer and
David Edwab and, if elected, Doug Ewert, are independent in
accordance with New York Stock Exchange Listing Standards and
have no current material relationship with the Company, except
as a director.
Board
Leadership Structure and Role in Risk Oversight
The Board of Directors determined that it was best for the
Company for George Zimmer, as the founder and chief driving
force behind the Company, to serve as Chairman of the Board and
Chief Executive Officer of the Company. At the same time, the
Board of Directors believes that it is beneficial to the Company
and increases the effectiveness of the Board of Directors to
have an outside director integrally involved in establishing and
leading the Board agenda and interacting with management on a
regular basis. As a result, the Board of Directors has appointed
Mr. Sechrest to act as Lead Director. In his capacity as
Lead Director, Mr. Sechrest consults regularly with the
Chairman and Chief Executive Officer and other members of
management; has primary responsibility, in consultation with the
Chairman and Chief Executive Officer, for preparing the agenda
for Board meetings; with the Chairman of the Board, leads the
meetings of the Board of Directors and chairs the executive
sessions of the Board. We have announced that effective
immediately after the Annual Meeting, Doug Ewert will become
Chief Executive Officer of the Company. Mr. Zimmer will
become Executive Chairman of the Board and Mr. Sechrest
will continue as Lead Director.
With respect to the oversight of the Companys risk, the
Companys Chief Compliance Officer supervises the
day-to-day
risk management responsibilities and in turn reports to the
Audit Committee on particular areas of risk. The Audit Committee
continues to focus on the process the Company goes through to
identify financial and operational risks and the procedures for
addressing such risks and periodically requires the Chief
Compliance Officer to report to the Audit Committee with respect
thereto. In addition, the risks related to the Companys
overall strategy, including the risks related to mergers and
acquisitions, divestitures and other significant non-recurring
transactions, are addressed by the full Board.
Attendance
at the Annual Meeting of Shareholders
Our Board of Directors holds a regular meeting in conjunction
with the Annual Meeting of Shareholders. Therefore, the
directors are encouraged to and generally attend our Annual
Meeting of Shareholders. All eight of our then current directors
attended the 2010 Annual Meeting of Shareholders.
8
Communications
with the Company
Any shareholder or other interested party wishing to send
written communications to any one or more members or Committees
of our Board of Directors, including the Lead Director or other
non-management directors, may do so by sending them in care of
Investor Relations at 6380 Rogerdale Road, Houston, Texas
77072-1624.
All such communications will be forwarded to the intended
recipient(s).
Investor
Information
To obtain a printed copy of our Code of Business Conduct, Code
of Ethics for Senior Management, Corporate Governance Guidelines
or charters for the Audit, Compensation, and Nominating and
Corporate Governance Committees of the Board of Directors, send
a request to us in care of Investor Relations at 6380 Rogerdale
Road, Houston, Texas
77072-1624.
This material may also be obtained from our website at
www.menswearhouse.com under Investor
Relations Corporate Governance.
Committees
of the Board of Directors and Meeting Attendance
During the fiscal year ended January 29, 2011, the Board of
Directors held five meetings.
The Board of Directors has an Audit Committee that operates
under a written charter. The Audit Committee is comprised of
Messrs. Sechrest (Chair), Brutoco and Katzen. The Board has
affirmatively determined that all members of the Audit Committee
are independent in accordance with the New York Stock Exchange
Listing Standards and
Rule 10A-3(b)(1)
of the Exchange Act. In addition, the Board has determined that
each of the members of the Audit Committee is financially
literate and that Messrs. Brutoco and Katzen are
audit committee financial experts, as that term is
defined in the rules promulgated by the Securities and Exchange
Commission pursuant to the Sarbanes-Oxley Act of 2002. The Audit
Committee reviews our financial information, accounting policies
and internal controls, reviews with our independent registered
public accounting firm the plan, scope and results of the annual
audit of our financial statements, reviews and discusses our
annual and quarterly financial statements with management and
our independent registered public accounting firm, and selects
our independent registered public accounting firm and approves
in advance all our audit and non-audit engagements of such
independent registered public accounting firm. The Audit
Committees responsibilities to the Board of Directors are
detailed in the Charter of the Audit Committee. During the
fiscal year ended January 29, 2011, the Audit Committee
held five meetings. The Audit Committees report appears
below.
The Board of Directors has a Compensation Committee that
operates under a written charter and each member of which is
independent in accordance with the New York Stock Exchange
Listing Standards. The Compensation Committee is comprised of
Messrs. Stein (Chair), Katzen and Sechrest. The
Compensation Committee reviews and approves our overall
compensation policy and considers and approves, on behalf of the
Board of Directors, the compensation of our Named Executive
Officers and certain other officers, including the Chief
Executive Officer, and the implementation of any compensation
program for the benefit of any of our executive officers. The
Compensation Committees responsibilities to the Board of
Directors are detailed in the Charter of the Compensation
Committee. During the fiscal year ended January 29, 2011,
the Compensation Committee held five meetings. The Compensation
Committees report appears below.
The Board of Directors has a Nominating and Corporate Governance
Committee that operates under a written charter and each member
of which is independent in accordance with the New York Stock
Exchange Listing Standards. The Nominating and Corporate
Governance Committee is comprised of Messrs. Ray (Chair),
Brutoco and Stein and Dr. Chopra. The Nominating and
Corporate Governance Committee develops and recommends to the
Board of Directors a set of corporate governance principles for
the Company, studies and reviews with management the overall
effectiveness of the organization of the Board of Directors and
the conduct of its business and reports and makes
recommendations to the Board of Directors as appropriate, and
considers candidates to be elected directors and recommends to
the Board of Directors the nominees for directors. The
Nominating and Corporate Governance Committees
responsibilities to the Board of Directors are detailed in the
Charter of the Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee normally does
not consider unsolicited director nominees put forth by
shareholders because the need for a new director generally only
occurs on limited occasions when a director position becomes
open as a result of a decision to increase the size of the Board
or
9
if a director retires or resigns. If and when such an event
might occur, the Board of Directors feels that it is in the best
interest of the Company to focus our resources on evaluating
candidates at the appropriate time and who come to us through
reputation or a relationship which initially validates the
reasonableness of the person as a candidate or through
professional search processes that do the same. During the
fiscal year ended January 29, 2011, the Nominating and
Corporate Governance Committee held two meetings.
During the fiscal year ended January 29, 2011, no director
attended fewer than 75% of all of the meetings of the Board of
Directors and of any committee of which such director was a
member.
Procedures
and Processes for Determining Executive and Director
Compensation
The Compensation Committee is responsible for reviewing and
establishing the compensation of the Chief Executive Officer and
the Named Executive Officers. The Compensation Committee also
reviews and discusses with the Chief Executive Officer the
compensation for all other executive officers. The Compensation
Committee has the sole authority to retain compensation
consultants and any other type of legal or accounting adviser
deemed appropriate. In 2010, the Compensation Committee engaged
Towers Watson & Co., a nationally recognized
compensation consulting firm, to advise the Compensation
Committee with respect to matters submitted to Towers Watson
related to fiscal 2011 compensation, but Towers Watson did not
play any role in determining or recommending the amount or form
of executive officer or director compensation for fiscal 2010.
Based on a variety of input received by the Compensation
Committee, including requested input from compensation
consultants, if any, and the experience of its members, the
Committee determines the compensation of our Chief Executive
Officer during an executive session of the Compensation
Committee, at which the Chief Executive Officer is not present.
Our Chief Executive Officer makes recommendations regarding the
compensation of the executive officers to the Compensation
Committee, including but not limited to grants under our equity
plans, which the members of the Compensation Committee discuss
with our Chief Executive Officer and may discuss in executive
session. The final determinations as to the compensation of the
Chief Executive Officer and officers whose annual base salary
plus maximum payout under our annual non-equity cash incentive
program is equal to or in excess of $500,000 are made solely by
the Compensation Committee and the Chief Executive Officer
determines the compensation for the other executive officers
with input from and oversight by the Compensation Committee. The
Compensation Committees charter provides that the
Compensation Committee may delegate any of its powers and
responsibilities to a subcommittee of the Compensation Committee.
As set forth in the Guidelines, the Board of Directors or an
authorized committee thereof may from time to time review and
determine the form and amount of director compensation,
including cash, equity-based awards, and other director
compensation. The Guidelines further provide that, in
determining director compensation, the following should be
considered: (1) fair and competitive compensation for the
time commitment to appropriately discharge the work required for
a company of similar size and scope; (2) alignment of the
directors interest with the long-term interests of the
Company; and (3) a transparent and readily understandable
compensation program.
Compensation
Committee Interlocks and Insider Participation
No member of the Compensation Committee was, during fiscal 2010,
an officer or employee of the Company or any of our
subsidiaries, or was formerly an officer of the Company or any
of our subsidiaries, or had any relationships requiring
disclosure by us under Item 404 of
Regulation S-K
of the General Rules and Regulations of the Securities and
Exchange Commission.
During fiscal 2010, none of our executive officers served as
(i) a member of the compensation committee (or other board
committee performing equivalent functions) of another entity,
one of whose executive officers served on the Compensation
Committee, (ii) a director of another entity, one of whose
executive officers served on the Compensation Committee, or
(iii) a member of the compensation committee (or other
board committee performing equivalent functions) of another
entity, one of whose executive officers served as a director of
the Company.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis included in this Proxy
Statement with the Companys management. Based upon such
review and the related
10
discussions, the Compensation Committee has recommended to the
Board of Directors that the Compensation Discussion and Analysis
be included in this proxy statement.
COMPENSATION COMMITTEE
Sheldon I. Stein, Chairman
Larry R. Katzen
William B. Sechrest
Audit
Committee Report
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board in fulfilling
its responsibility for oversight of the quality and integrity of
the accounting, auditing and financial reporting practices of
the Company.
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained from the independent
registered public accounting firm a formal written statement
describing all relationships between the auditors and the
Company that might bear on the auditors independence
consistent with applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountants communications with the audit committee
concerning independence, discussed with the auditors any
relationships that may impact their objectivity and independence
and satisfied itself as to the auditors independence. The
Audit Committee also discussed with management and the
independent registered public accounting firm the quality and
adequacy of the Companys internal controls. The Audit
Committee reviewed with the independent registered public
accounting firm their audit plan, audit scope, and
identification of audit risks.
The Audit Committee discussed and reviewed with the independent
registered public accounting firm all communications required by
generally accepted auditing standards, including those described
in Statement on Auditing Standards No. 114, The
Auditors Communication with Those Charged With
Governance and, with and without management present,
discussed and reviewed the results of the independent registered
public accounting firms examination of the financial
statements.
The Audit Committee reviewed and discussed the audited financial
statements of the Company as of and for the fiscal year ended
January 29, 2011, with management and the independent
registered public accounting firm. Management has the
responsibility for the preparation of the Companys
financial statements and the independent registered public
accounting firm has the responsibility for the examination of
those statements.
Based on the above-mentioned review and discussions with
management and the independent registered public accounting
firm, the Audit Committee recommended to the Board of Directors
that the Companys audited financial statements be included
in its Annual Report on
Form 10-K
for the fiscal year ended January 29, 2011, for filing with
the Securities and Exchange Commission. At present, the Audit
Committee intends to continue the appointment of
Deloitte & Touche LLP as our independent registered
public accounting firm for the fiscal year ending
January 28, 2012.
AUDIT COMMITTEE
William B. Sechrest, Chairman
Rinaldo S. Brutoco
Larry R. Katzen
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To our knowledge, based solely on a review of the copies of the
reports required pursuant to Section 16(a) of the Exchange
Act that have been furnished to us and written representations
that no other reports were required, during the fiscal year
ended January 29, 2011, all Section 16(a) filing
requirements applicable to our directors, executive officers and
greater than 10% beneficial owners have been met.
11
PROPOSAL TO
AMEND THE COMPANYS 2004 LONG-TERM INCENTIVE PLAN
On March 29, 2011, the Board approved an amendment to The
Mens Wearhouse, Inc. 2004 Long-Term Incentive Plan (the
2004 Plan) to increase the total number of shares of
our Common Stock with respect to which awards may be granted
under the 2004 Plan from 2,110,059 shares to
4,610,059 shares and reserved an additional
2,500,000 shares of our Common Stock for issuance
thereunder, subject to shareholder approval. The 2004 Plan
permits the grant of options (both incentive stock options and
nonqualified stock options), stock appreciation rights,
restricted stock, deferred stock units, performance stock
awards, performance units, other stock-based awards and
cash-based awards to non-employee directors, officers and other
employees of the Company. As amended, 2,652,930 shares of
our Common Stock would be available for grant of future awards
under the 2004 Plan.
At the Annual Meeting, shareholders are being asked to approve
the proposed amendment to increase the number of shares
authorized for issuance under the 2004 Plan.
In addition to approximately 500 key employees (including our
executive officers), there are currently seven non-employee
directors of the Company who are eligible to participate in the
2004 Plan. As described under the heading Director
Compensation in this proxy statement, each person who is a
non-employee director on the last day of each of our fiscal
quarters will be granted a number of shares of restricted stock
or deferred stock units equal to $25,000 divided by the closing
price of our Common Stock as reported on the New York Stock
Exchange on the last trading day of such fiscal quarter. In
addition, upon his or her appointment, any new director will
receive a grant of shares of restricted stock or deferred stock
units, at the discretion of the Board of Directors, equal to
$100,000 divided by the closing price of our Common Stock as
reported on the New York Stock Exchange on the date such
director is appointed or elected to the Board of Directors.
During the fiscal year ended January 29, 2011, the
following grants were awarded under the 2004 Plan:
|
|
|
|
|
|
|
Aggregate Number of Shares
|
Name and Position
|
|
Covered by Grants
|
|
George Zimmer,
Chairman of the Board and Chief Executive Officer
|
|
|
|
|
Neill P. Davis,
Executive Vice President, Chief Financial Officer, Treasurer
and Principal Financial Officer
|
|
|
10,000
|
|
Douglas S. Ewert,
President and Chief Operating Officer
|
|
|
12,500
|
|
Carole L. Souvenir,
Chief Legal Officer and Executive Vice President
Employee Relations
|
|
|
4,000
|
|
Charles Bresler, Ph.D.,
Executive Vice President
|
|
|
|
|
Executive Group
|
|
|
31,500
|
|
Non-Executive Director Group
|
|
|
29,825
|
|
Non-Executive Officer Employee Group
|
|
|
333,420
|
|
Summary
of the 2004 Plan
The following is a brief summary intended to highlight certain
of the principal features of the 2004 Plan, as amended. Because
the following is a summary, it may not contain all of the
information that is important to you. A copy of the 2004 Plan,
as amended, is attached as Appendix A to this proxy
statement. The description that follows is qualified in its
entirety by reference to the full text of the 2004 Plan as set
forth in Appendix A.
Purpose. The 2004 Plan is intended to reward
certain non-employee directors of the Company and certain
corporate officers and other employees of the Company and its
affiliates by enabling them to acquire shares of our Common
Stock and to receive other compensation based on the increase in
value of our Common Stock or certain other performance measures.
The 2004 Plan is also intended to advance the best interests of
the Company and our shareholders by providing those persons who
have substantial responsibility for the direction, management
and
12
growth of the Company and its subsidiaries with additional
performance incentives and an opportunity to obtain or increase
their proprietary interest in the Company, thereby encouraging
them to continue in their employment or affiliation with the
Company and its subsidiaries.
Term. The 2004 Plan became effective on
March 29, 2004. No awards may be granted under the 2004
Plan on or after March 29, 2014, unless the 2004 Plan is
subsequently amended, with the approval of shareholders, to
extend the termination date.
Administration. The Compensation Committee (or
a subcommittee comprised of at least two of its members) or, in
the absence thereof or in the case of the non-employee directors
of the Company, the Board, shall administer the 2004 Plan (the
Plan Committee). In administering the 2004 Plan, the
Plan Committee shall have the full power to determine the
persons to whom and the time or times at which awards will be
made; determine the number and exercise price of shares of our
Common Stock covered in each award, subject to the terms and
provisions of the 2004 Plan; determine the terms, provisions and
conditions of each award, which need not be identical and need
not match the default terms set forth in the 2004 Plan;
accelerate the time at which any outstanding award will vest;
prescribe, amend and rescind rules and regulations relating to
administration of the 2004 Plan; and make all other
determinations and take all other actions deemed necessary,
appropriate or advisable for the proper administration of the
2004 Plan.
Eligibility. Key employees who have
substantial responsibility for or involvement with the
management and growth of the Company or its subsidiaries and the
non-employee directors of the Company will be eligible to
receive awards (other than incentive stock options) under the
2004 Plan. An incentive stock option may be awarded only to an
employee who is employed by the Company or one of its subsidiary
corporations and determined by the Plan Committee to be a key
employee on the date of the grant of the option.
Maximum Shares Available. Assuming the
amendment to the 2004 Plan is approved by our shareholders at
the Annual Meeting, the maximum number of shares of our Common
Stock which may be issued under the 2004 Plan may not exceed
4,610,059 shares, in the aggregate, provided that the
aggregate number of shares which may be granted as restricted
stock or performance stock awards are limited to 2,305,030 in
each case. The maximum number of shares of our Common Stock with
respect to which incentive stock options may be granted to an
employee of the Company during a fiscal year is 300,000. The
maximum number of shares of our Common Stock with respect to
each of nonqualified stock options and stock appreciation rights
which may be granted to an employee or non-employee director of
the Company during a fiscal year is 300,000. The maximum number
of shares of our Common Stock with respect to each of restricted
stock awards, performance stock awards, performance unit awards
paid in shares of our Common Stock and other stock-based awards
which may be granted to an employee or non-employee director of
the Company during a fiscal year is 225,000 or, with respect to
deferred stock unit awards, the fair market value of
225,000 shares of our Common Stock, determined as of the
date of the grant. The maximum aggregate amount with respect to
which cash-based awards and performance unit awards paid in cash
may be awarded or credited to an employee or non-employee
director of the Company during a fiscal year may not exceed in
value $3,000,000 determined as of the date of the grant. Such
limitations are subject to adjustment in accordance with the
2004 Plan.
If any outstanding award expires or terminates for any reason,
is settled in cash in lieu of shares of our Common Stock or any
award is surrendered, the shares of our Common Stock allocable
to the unexercised portion of that award may again be subject to
an award granted under the 2004 Plan. For awards granted under
the 2004 Plan before April 1, 2008, if shares of our Common
Stock are withheld from payment of an award to satisfy tax
obligations with respect to the award, such shares of our Common
Stock will not count against the aggregate number of shares of
our Common Stock with respect to which awards may be granted
under the 2004 Plan. For awards granted under the 2004 Plan on
or after April 1, 2008, if shares of our Common Stock are
withheld from payment of an award to satisfy tax obligations
with respect to the award, such shares of our Common Stock will
count against the aggregate number of shares of our Common Stock
with respect to which awards may be granted under the 2004 Plan.
If a stock appreciation right is exercised, only the number of
shares of our Common Stock actually issued shall be charged
against the maximum number of shares of our Common Stock that
may be delivered pursuant to awards under the 2004 Plan.
13
Any shares of our Common Stock delivered pursuant to an award
may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
Options. The Plan Committee may grant options
under the 2004 Plan to eligible persons in such number and upon
such terms as the Plan Committee may determine, subject to the
terms and provisions of the 2004 Plan. The Plan Committee may
award incentive stock options intended to satisfy the
requirements of section 422 of the Internal Revenue Code or
nonqualified stock options which are not intended to satisfy the
requirements of section 422 of the Internal Revenue Code.
The price at which shares of our Common Stock may be purchased
under an option shall be determined by the Plan Committee, but
such price may not be less than 100% of the fair market value of
the shares on the date the option is granted. No incentive stock
option may be granted to any person who, at the time the option
is granted, owns shares of stock possessing more than 10% of the
total combined voting power of all classes of stock of the
Company, unless the exercise price of such option is at least
110% of the fair market value of our Common Stock subject to the
option and such option by its terms is not exercisable after the
expiration of five years from the date such option is granted.
Effective for options granted under the 2004 Plan on or after
January 1, 2005, an option may not be granted with any
dividend equivalent rights.
Unless a shorter term is specified in an option agreement or is
an incentive stock option described in the prior paragraph, an
option shall expire on the tenth anniversary of the date the
option is granted. An option shall not continue to vest after
the termination of the employment relationship between the
optionee and the Company and its subsidiaries, or in the case of
a non-employee director of the Company, the term of such
directors service to the Board, for any reason other than
death or disability of the optionee, unless otherwise specified
in an option agreement.
Subject to certain conditions and exceptions, an option which is
or has become exercisable on the date on which an optionee
ceases to be an employee of the Company, or in the case of a
non-employee director of the Company, the term of such
directors service to the Board:
|
|
|
|
|
for any reason other than death, disability or retirement shall
terminate on the earlier of the tenth anniversary of the date
the option is granted or the date that is one day less than one
month after the termination of employment or, in the case of a
non-employee director of the Company, the term of such
directors service to the Board; and
|
|
|
|
due to death, disability or retirement before the tenth
anniversary of the date the option is granted shall terminate on
the earlier of the tenth anniversary of the date the option is
granted or the first anniversary of the date of the
optionees death, disability or retirement.
|
The Plan Committee shall specify in the option agreement the
time and manner in which each option may be exercised. The Plan
Committee may accelerate the time in which any outstanding
option may be exercised. However, in no event shall any option
be exercisable on or after the tenth anniversary of the date of
the grant of the option.
To the extent that the aggregate fair market value of our Common
Stock with respect to which incentive stock options first become
exercisable by a holder of such award in any calendar year
exceeds $100,000, taking into account both shares of our Common
Stock subject to incentive stock options under the 2004 Plan and
our Common Stock subject to incentive stock options under all
other plans of the Company, such options shall be treated as
nonqualified stock options. In reducing the number of options
treated as incentive stock options to meet the $100,000 limit,
the most recently granted options shall be reduced first. To the
extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Plan Committee may
designate which shares of our Common Stock are to be treated as
shares acquired pursuant to the exercise of an incentive stock
option.
An optionee shall not have any rights as a shareholder with
respect to our Common Stock covered by an option until the date
on which the optionee becomes a shareholder of record with
respect to such Common Stock after exercise of the option.
Stock Appreciation Rights. The 2004 Plan
authorizes the Plan Committee to issue stock appreciation rights
(SAR) to eligible persons in such number and upon
such terms and conditions determined by the Plan Committee. SARs
granted under the 2004 Plan may be freestanding SARs, tandem
SARs or any combination of these forms of SARs.
14
A SAR granted under the 2004 Plan shall confer upon a recipient
a right to receive, upon exercise of such SAR, an amount equal
to the excess of the fair market value of one share of our
Common Stock on the date of exercise over the grant price of the
SAR, which shall not be less than 100 percent of the fair
market value of one share of our Common Stock on the date of
grant of the SAR and in no event less than par value of one
share of our Common Stock. Such amount may be paid to the
optionee in cash, in our Common Stock of equivalent value, in
some combination thereof or in any other manner approved by the
Plan Committee in its sole discretion. A SAR may not be granted
with any dividend equivalent rights.
The Plan Committee may impose such conditions
and/or
restrictions on any shares of our Common Stock received upon
exercise of a SAR granted pursuant to the 2004 Plan as it may
deem advisable or desirable. These restrictions may include, but
shall not be limited to, a requirement that the holder of such
award hold the shares of our Common Stock received upon exercise
of a SAR for a specified period of time.
Subject to the terms and provisions of the 2004 Plan and the
applicable award agreement, by delivery of written notice in the
manner designated by the Plan Committee and upon whatever
additional terms and conditions the Plan Committee, in its sole
discretion, imposes (a) freestanding SARs may be exercised
in whole or in part and (b) tandem SARs may be exercised
for all or part of the shares of our Common Stock subject to the
related option upon the surrender of the right to exercise the
equivalent portion of the related option. A tandem SAR may be
exercised only with respect to the shares of our Common Stock
for which its related option is then exercisable. With respect
to a tandem SAR issued in connection with an incentive stock
option, the tandem SAR will expire no later than the expiration
of the underlying incentive stock option; the value of the
payout with respect to the tandem SAR may be for no more than
100% of the excess of the fair market value of the shares of our
Common Stock subject to the underlying incentive stock option at
the time the tandem SAR is exercised over the option price of
the underlying incentive stock option; and the tandem SAR may be
exercised only when the fair market value of the shares of our
Common Stock subject to the incentive stock option exceeds the
option price of the incentive stock option. The Plan Committee
shall determine the right of each SAR holder to exercise the SAR
following the termination of such holders employment with
the Company or its subsidiaries or service to the Board.
The term of a SAR granted under the 2004 Plan shall be
determined by the Plan Committee; provided that no SAR shall be
exercisable on or after the tenth anniversary date of its grant.
A recipient of a SAR award, as such, shall have no rights as a
stockholder.
Restricted Stock. Under the 2004 Plan, the
Plan Committee may award restricted stock to eligible persons in
such numbers and upon such terms as the Plan Committee shall
determine. The amount of, the vesting and the transferability
restrictions applicable to any award of restricted stock will be
determined by the Plan Committee. The recipient of the
restricted stock will have all the rights of a shareholder with
respect to the shares of restricted stock included in the
restricted stock award during the restriction period established
for the restricted stock award. Dividends paid with respect to
restricted stock in cash or property other than shares of our
Common Stock or rights to acquire shares of our Common Stock
shall be paid to the recipient of the restricted stock award
currently. Dividends paid in shares of our Common Stock or
rights to acquire shares of our Common Stock shall be added to
and become a part of the restricted stock.
Deferred Stock Unit Awards. The 2004 Plan
authorizes the Plan Committee to grant deferred stock units to
eligible persons in such amounts and upon such terms as the Plan
Committee shall determine. Each deferred stock unit shall have a
value equal to the fair market value of a share of our Common
Stock. The amount of, the vesting and the transferability
restrictions applicable to any deferred stock unit award shall
be determined by the Plan Committee. Payment under a deferred
stock unit award shall be made in either cash or shares of our
Common Stock as specified in the applicable award agreement.
Payment under a deferred stock unit award shall be made at such
time as is specified in the applicable award agreement.
An award agreement for a deferred stock unit may specify that
the holder of such award shall be entitled to the payment of
dividend equivalents under the award. Each recipient of deferred
stock units shall have no rights of a shareholder with respect
to such recipients deferred stock units.
Performance Awards. Under the 2004 Plan, the
Plan Committee may grant performance stock and performance unit
awards to eligible persons in such amounts and upon such terms
as the Plan Committee shall determine.
15
The amount of, the vesting and the transferability restrictions
applicable to any performance stock or performance unit award
shall be based upon the attainment of such performance goals as
the Plan Committee may determine. A performance goal for a
particular performance stock or performance unit award must be
established by the Plan Committee prior to the earlier to occur
of (a) 90 days after the commencement of the period of
service to which the performance goal relates or (b) the
lapse of 25 percent of the period of service, and in any
event while the outcome is substantially uncertain. A
performance goal must be objective such that a third party
having knowledge of the relevant facts could determine whether
the goal is met and may be based on one or more of the following
business criteria: earnings per share, earnings per share
growth, total shareholder return, economic value added, cash
return on capitalization, increased revenue, revenue ratios (per
employee or per customer), net income, stock price, market
share, return on equity, return on assets, return on capital,
return on capital compared to cost of capital, return on capital
employed, return on invested capital, shareholder value, net
cash flow, operating income, earnings before interest and taxes,
cash flow, cash flow from operations, cost reductions, cost
ratios (per employee or per customer), proceeds from
dispositions, project completion time and budget goals, net cash
flow before financing activities, customer growth and total
market value. Goals may also be based on performance relative to
a peer group of companies. Unless otherwise stated, such a
performance goal need not be based upon an increase or positive
result under a particular business criterion and could include,
for example, maintaining the status quo or limiting economic
losses (measured, in each case, by reference to specific
business criteria).
Subject to the terms and conditions of the 2004 Plan, each
holder of a performance stock award or a performance unit award
payable in shares of our Common Stock shall have all the rights
of a shareholder with respect to the shares of stock issued to
such holder pursuant to the award during any period in which
such issued shares of our Common Stock are subject to forfeiture
and restrictions on transfer, including the right to vote such
shares of stock. An award agreement for a performance unit award
may specify that the holder of such award shall be entitled to
the payment of dividend equivalents under the award.
Payment under a performance unit award shall be made at such
time as is specified in the applicable award agreement.
No payments of stock or cash will be made pursuant to a
performance stock award or performance unit award unless the
shareholder approval requirements of Department of Treasury
Regulation
section 1.162-27(e)(4)
are satisfied.
Cash-Based Awards and Other Stock-Based
Awards. The Plan Committee may grant cash-based
awards under the 2004 Plan to eligible persons in such amounts
and upon such terms, including the achievement of specific
performance goals, as the Plan Committee shall determine. The
2004 Plan authorizes the Plan Committee to grant other types of
equity-based or equity-related awards not otherwise described by
the terms and provision of the 2004 Plan, including the grant or
offer for sale of unrestricted shares of our Common Stock, in
such amounts and subject to such terms and conditions, as the
Plan Committee shall determine. Such awards may involve the
transfer of actual shares of our Common Stock to holders
thereof, or payment in cash or otherwise of amounts based on the
value of shares of our Common Stock and may include, without
limitation, awards designed to comply with or take advantage of
the applicable local laws of jurisdictions other than the United
States.
The Plan Committee, in its sole discretion, shall determine the
extent to which the holder of an award shall have the right to
continue to hold cash-based awards and other stock-based awards
following termination of such holders employment with the
Company or its subsidiaries, or in the case of a non-employee
director, the termination of service on the Board. Such
provisions need not be uniform among all cash-based awards and
other stock-based awards issued pursuant to the 2004 Plan.
Substitution Awards. Awards may be granted
under the 2004 Plan in substitution for stock options and other
awards held by employees and directors of other corporations who
are about to become employees of or affiliated with the Company
or any of its subsidiaries as a result of a merger or
consolidation of the employing corporation with the Company, or
the acquisition by the Company of substantially all of the
assets of another corporation or the acquisition by the Company
of at least 50% of the issued and outstanding stock of another
corporation as the result of which it becomes an affiliate of
the Company. The terms and conditions of the substitute awards
granted may vary from the terms and conditions set out in the
2004 Plan to the extent the Board, at the time of grant, may
deem appropriate to conform, in whole or in part, to the
provisions of the options and stock awards in substitution for
16
which they are granted, but with respect to options that are
incentive stock options, no such variation shall be such as to
affect the status of any such substitute option as an
incentive stock option under section 422 of the
Internal Revenue Code.
Non-Transferability. Except as specified in
the applicable award agreement or in a domestic relations court
order, an award granted under the 2004 Plan shall not be
transferable by the holder thereof (whether for consideration or
otherwise) other than by will or under the laws of descent and
distribution, and shall be exercisable, during such
holders lifetime, only by him or her. Any attempted
assignment of an award in violation of the 2004 Plan shall be
null and void. In the discretion of the Plan Committee, any
attempt to transfer an award other than under the terms of the
2004 Plan and the applicable award agreement may terminate the
award.
No incentive stock option granted under the 2004 Plan may be
sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all incentive stock options granted to an
employee under the 2004 Plan shall be exercisable during such
employees lifetime only by the employee and, after that
time, by the employees heirs and estate.
Forfeiture. If the Plan Committee finds by a
majority vote that a holder of an award granted under the 2004
Plan, before or after termination of his employment with the
Company or any of its subsidiaries or severance of his
affiliation relationship with the Company and all its affiliates
(a) committed fraud, embezzlement, theft, felony or an act
of dishonesty in the course of his employment by or affiliation
with the Company or an affiliate which conduct damaged the
Company or an affiliate, (b) disclosed trade secrets of the
Company or an affiliate or (c) violated the terms of any
non-competition, non-disclosure or similar agreement with
respect to the Company or any affiliate to which the holder of
such award is a party, then, as of the date the Plan Committee
makes its finding, some or all awards awarded to such holder
(including vested awards that have been exercised, vested awards
that have not been exercised and awards that have not yet
vested), as determined by the Plan Committee in its sole
discretion, and all net proceeds realized with respect to any
such awards, will be forfeited to the Company on such terms as
determined by the Plan Committee. The findings and decision of
the Plan Committee with respect to the matter shall be final for
all purposes.
The Plan Committee may specify in an award agreement that the
rights, payments, and benefits of a holder of an award granted
under the 2004 Plan with respect to such award shall be subject
to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an
award. Such events may include, but shall not be limited to,
termination of employment for cause, termination of such
holders provision of services to the Company or its
subsidiaries, violation of material policies of the Company or
its subsidiaries, breach of non-competition, confidentiality, or
other restrictive covenants that may apply to such holder, or
other conduct by such holder that is detrimental to the business
or reputation of the Company or its subsidiaries.
Antidilution. If the Company shall effect a
capital readjustment or any increase or reduction of the number
of shares of our Common Stock outstanding, without receiving
compensation therefor in money, services or property, then
(1) the number, class or series and per share price of our
Common Stock subject to outstanding awards under the 2004 Plan
shall be appropriately adjusted (subject to the restriction
discussed below under the heading Award Agreements
regarding repricing) as to entitle a holder of an award under
the 2004 Plan to receive upon exercise, for the same aggregate
cash consideration, the equivalent total number and class or
series of our Common Stock the holder would have received had
the holder of such award exercised in full immediately prior to
the event requiring the adjustment, and (2) the number and
class or series of our Common Stock then reserved to be issued
under the 2004 Plan shall be adjusted.
Change in Control. If a Corporate Change (such
as a merger in which the Company is not the surviving entity, a
sale of all or substantially all of the Companys assets,
the dissolution of the Company or another corporate transaction
as defined in the Internal Revenue Code) occurs while
unexercised awards remain outstanding under the 2004 Plan, then,
except as otherwise provided in an award agreement or other
agreement between the holder of the award and the Company, or as
a result of the Plan Committees effectuation of one or
more of the alternatives described below, there shall be no
acceleration of the time at which any award then outstanding may
be exercised, and no later than ten days after the approval by
the shareholders of the Company of such Corporate Change, the
Plan Committee, acting in its sole and absolute discretion,
shall act to effect one or more of the following alternatives,
17
which may vary among individual holders of awards granted under
the 2004 Plan and which may vary among awards held by any
individual holder of an award granted under the 2004 Plan:
(1) accelerate the time at which some or all of the awards
then outstanding may be exercised, after which all such awards
that remain unexercised and all rights of holders of awards
thereunder shall terminate;
(2) require the mandatory surrender to the Company by all
or selected holders of awards granted under the 2004 Plan of
some or all of the then outstanding awards held by such holders
as of a date, before or after such Corporate Change, in which
event the Plan Committee shall thereupon cancel such award and
the Company shall pay to each such holder an amount of cash per
share equal to the excess, if any, of the per share price
offered to shareholders of the Company in connection with such
Corporate Change over the exercise prices under such award for
such shares;
(3) with respect to all or selected holders of awards
granted under the 2004 Plan, have some or all of their then
outstanding awards assumed or have a new award of a similar
nature substituted for some or all of their then outstanding
awards under the 2004 Plan by an entity which is a party to the
transaction resulting in such Corporate Change and which is then
employing such holder or which is affiliated or associated with
such holder in the same or a substantially similar manner as the
Company prior to the Corporate Change, or a parent or subsidiary
of such entity, provided that (A) such assumption or
substitution is on a basis where the excess of the aggregate
fair market value of our Common Stock subject to the award
immediately after the assumption or substitution over the
aggregate exercise price of such Common Stock is equal to the
excess of the aggregate fair market value of all our Common
Stock subject to the award immediately before such assumption or
substitution over the aggregate exercise price of such Common
Stock, and (B) the assumed rights or the substituted rights
will have the same terms and conditions as the rights under the
existing award assumed or substituted for;
(4) provide that the number and class or series of our
Common Stock covered by an award shall be adjusted so that such
award when exercised shall thereafter cover the number and class
or series of our Common Stock or other securities or property
(including, without limitation, cash) to which the holder of
such award would have been entitled pursuant to the terms of the
agreement or plan relating to such Corporate Change if,
immediately prior to such Corporate Change, the holder of such
award had been the holder of record of the number of shares of
our Common Stock then covered by such award; or
(5) make such adjustments to awards then outstanding as the
Plan Committee deems appropriate to reflect such Corporate
Change.
If the Plan Committee chooses to effect one or more of the
alternatives set out in paragraphs (3), (4) or
(5) above, it may, in its sole and absolute discretion and
without the consent or approval of any holder of an award
granted under the 2004 Plan, accelerate the time at which some
or all awards then outstanding may be exercised. With respect to
a reincorporation merger in which holders of the Companys
ordinary shares will receive one ordinary share of the successor
corporation for each ordinary share of the Company, none of the
alternatives set forth above shall apply and, without Plan
Committee action, each award shall automatically convert into a
similar award of the successor corporation exercisable for the
same number of ordinary shares of the successor as the award was
exercisable for ordinary shares of stock of the Company. In the
event of changes in our outstanding Common Stock by reason of
recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any
award and not otherwise provided for above, any outstanding
award and any award agreements evidencing such award shall be
subject to adjustment by the Plan Committee in its sole and
absolute discretion as to the number and price of our Common
Stock or other consideration subject to such award. In the event
of any such change in our outstanding Common Stock, the
aggregate number of shares of our Common Stock available under
the 2004 Plan may be appropriately adjusted by the Plan
Committee.
After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving
corporation, each holder of an award granted under the 2004 Plan
shall be entitled to have his restricted stock appropriately
adjusted based on the manner in which the shares of our Common
Stock were adjusted under the terms of the agreement of merger
or consolidation.
18
Award Agreements. Each award shall be embodied
in a written award agreement that shall be subject to the terms
and conditions of the 2004 Plan. The award agreement may specify
the effect of a change in control of the Company on the award.
The award agreement may contain any other provisions that the
Plan Committee in its discretion shall deem advisable which are
not inconsistent with the terms and provisions of the 2004 Plan.
Except as described above under Change in Control,
the Plan Committee may not directly or indirectly lower the
exercise price of a previously granted option or the grant price
of a previously granted SAR.
Restrictions on Stock Received. The Plan
Committee may impose such conditions
and/or
restrictions on any shares of our Common Stock issued pursuant
to an award as it may deem advisable or desirable. These
restrictions may include, but shall not be limited to, a
requirement that the holder of an award granted under the 2004
Plan hold the shares of our Common Stock for a specified period
of time.
Amendment and Termination. The Plan Committee
may, at any time and from time to time, alter, amend, modify,
suspend, or terminate the 2004 Plan and any award agreement in
whole or in part. However, no termination, amendment,
suspension, or modification of the 2004 Plan or an award
agreement shall adversely affect in any material way any award
previously granted under the 2004 Plan, without the written
consent of the holder holding such award. The Plan Committee
shall not directly or indirectly lower the option price of a
previously granted option or the grant price of a previously
granted SAR, and no amendment of the 2004 Plan shall be made
without shareholder approval if shareholder approval is required
by applicable law or stock exchange rules.
U.S.
Federal Income Tax Consequences of Awards Granted Under the 2004
Plan
The following is a general description of the U.S. federal
income tax consequences generally applicable to the Company and
a recipient of an incentive stock option, a nonqualified stock
option, a SAR, a restricted stock award, a deferred stock unit
award, a performance stock award, a performance unit award, a
cash-based award or an other stock-based award granted under the
2004 Plan.
Incentive Stock Options. When the Plan
Committee grants an employee an incentive stock option to
purchase shares of our Common Stock under the 2004 Plan, the
employee will not be required to recognize any U.S. federal
taxable income as a result of the grant or as a result of the
employees exercise of the incentive stock option; however,
the difference between the exercise price and the fair market
value of the shares of our Common Stock at the time of exercise
is an item of tax preference that may require payment of an
alternative minimum tax. On the sale of the shares acquired
through exercise of an incentive stock option (assuming such
sale does not occur within two years of the date of grant of the
option or within one year from the date of exercise), any gain
(or loss) will be taxed as long term capital gain (or loss) and
the Company will not be entitled to any deduction in connection
with the sale (or the grant or exercise) of the incentive stock
option. With respect to a sale of shares that occurs after the
later of two years from the date of grant and one year from the
date of exercise, the tax basis of the shares for the purpose of
a subsequent sale includes the option price paid for the shares.
However, if the employee sells the shares acquired upon exercise
of an incentive stock option before the later of (i) two
years from the date of grant and (ii) one year from the
date of exercise, the employee will be treated as having
received, at the time of sale, compensation taxable as ordinary
income, and the Company will be entitled to a corresponding
deduction. The amount treated as compensation income is the
excess of the fair market value of the shares at the time of
exercise over the exercise price, and any amount realized in
excess of the fair market value of the shares at the time of
exercise would be treated as long or short term capital gain,
depending on how long such shares were held. With respect to a
sale of shares that occurs before the later of two years from
the date of grant and one year from the date of exercise, the
tax basis of the shares for the purpose of a subsequent sale
includes the option price paid for the shares and the
compensation income reported at the time of sale of the shares.
Nonqualified Stock Options. When the Plan
Committee grants a nonqualified stock option to purchase shares
of our Common Stock under the 2004 Plan, the recipient will not
be required to recognize any U.S. federal taxable income as
a result of the grant. However, the recipient will be required
to recognize ordinary income on the date the recipient exercises
the nonqualified stock option. Generally, the measure of the
income will be equal to the difference between the fair market
value of the shares of our Common Stock acquired on the date the
shares are acquired and the option price. The tax basis of the
shares acquired on exercise of the nonqualified stock option for
the purpose of a subsequent sale includes the option price paid
and the ordinary income reported on exercise of the
19
nonqualified stock option. The income reportable on exercise of
the nonqualified stock option by an employee is subject to
federal tax withholding. Generally, the Company will be entitled
to a deduction in the amount reportable as income by the
recipient on the exercise of a nonqualified stock option.
Stock Appreciation Rights. The grant of a SAR
under the 2004 Plan generally will not result in the recognition
of any U.S. federal taxable income by the recipient or a
deduction for the Company at the time of grant. However, the
recipient will be required to recognize ordinary income on the
date the recipient exercises the SAR. Generally, the measure of
the income will be equal to the amount realized on exercise of
the SAR. The income reportable on exercise of the SAR by an
employee is subject to federal tax withholding. Generally, the
Company will be entitled to a deduction in the amount reportable
as income by the recipient on the exercise of a SAR.
Restricted Stock Awards. The grant of a
restricted stock award under the 2004 Plan generally will not
result in the recognition of any U.S. federal taxable
income by the recipient or a deduction for the Company at the
time of grant unless the recipient timely makes an election
under section 83(b) of the Internal Revenue Code. Upon the
expiration of the forfeiture restrictions applicable to the
restricted stock award (i.e., as the shares become vested), the
recipient will recognize ordinary income in an amount equal to
the excess of the fair market value of those shares at that time
over the amount (if any) the recipient paid for the shares. The
income realized by an employee is subject to federal tax
withholding. The Company will be entitled to a deduction in the
amount and at the time the recipient recognizes income. If an
election under section 83(b) of the Internal Revenue Code
has not been made, any dividends received with respect to any
restricted shares that are not vested (i.e., the forfeiture
restrictions have not yet lapsed) generally will be treated as
compensation that is taxable as ordinary income to the recipient
and the Company will be entitled to a corresponding deduction.
With respect to any restricted shares that are vested (i.e., the
forfeiture restrictions have lapsed), the recipient will be
taxed on any dividends on such shares as the dividends are paid
to the recipient and the Company will not be entitled to
deductions with respect to the dividends.
If the recipient of the restricted stock award makes an election
under section 83(b) of the Internal Revenue Code within
30 days of the date of transfer of the restricted shares
awarded under the restricted stock award, the recipient will
recognize ordinary income on the date the shares are awarded.
The amount of ordinary income required to be recognized is an
amount equal to the excess, if any, of the fair market value of
the shares on the date of award over the amount, if any, paid
for such shares. In such case, the recipient will not be
required to recognize additional ordinary income when the shares
vest. However, if the shares are later forfeited, a loss can
only be recognized up to the amount the individual paid, if any,
for the shares of Common Stock.
Deferred Stock Unit Awards. The grant of a
deferred stock unit award under the 2004 Plan generally will not
result in the recognition of any U.S. federal taxable
income by the recipient or a deduction for the Company at the
time of grant. At the time a deferred stock unit award vests the
recipient will recognize ordinary income and the Company will be
entitled to a corresponding deduction. Generally, the measure of
the income and deduction will be the fair market value of our
Common Stock at the time the deferred stock unit is settled.
Performance Stock and Performance Unit
Awards. Performance stock awards granted under
the 2004 Plan generally have the same tax consequences as
restricted stock awards as discussed above (except that the
compensation deduction limitation described below may not
apply). A recipient of a performance unit award under the 2004
Plan generally will not realize U.S. federal taxable income
at the time of grant of the award, and the Company will not be
entitled to a deduction at that time with respect to the award.
When the performance goals applicable to the performance unit
award are attained and amounts are due under the award, the
holder of the award will be treated as receiving compensation
taxable as ordinary income, and the Company will be entitled to
a corresponding deduction.
Cash-Based Awards and Other Stock-Based
Awards. The grant of a cash-based award under the
2004 Plan generally will not result in the recognition of any
U.S. federal taxable income by the recipient or a deduction
for the Company at the time of grant. At the time a cash-based
award is settled in cash, the recipient will recognize ordinary
income and the Company will be entitled to a corresponding
deduction. Generally the measure of the income and deduction
will be the amount of cash received by the recipient of the
award at the time the cash-based award is settled. Other
stock-based awards granted under the 2004 Plan generally have
the same tax consequences as deferred stock unit awards.
20
Compensation Deduction Limitation. Under
section 162(m) of the Internal Revenue Code, the
Companys federal income tax deductions for certain
compensation paid to designated executives is limited to
$1.0 million per year. These executives include the
Companys Chief Executive Officer and the next three
highest compensated officers. Section 162(m) of the
Internal Revenue Code provides an exception to this limitation
for certain performance based compensation approved
by a committee consisting solely of at least two outside
directors. The Company believes that nonqualified stock
options to purchase shares of our Common Stock, and SARs and, if
the related proposal is approved by our shareholders at the
Annual Meeting, performance based awards granted under the 2004
Plan generally should qualify as performance based compensation
for purposes of section 162(m) of the Internal Revenue Code.
Compliance with Section 409A. Awards
granted under the 2004 Plan shall be designed, granted and
administered in such a manner that they are either exempt from
the application of, or comply with, the requirements of
section 409A of the Internal Revenue Code and the
Department of Treasury rules and regulations issued thereunder
(collectively, Section 409A). If the Plan
Committee determines that an award granted under the 2004 Plan,
payment, distribution, deferral election, transaction, or any
other action or arrangement contemplated by the provisions of
the 2004 Plan would, if undertaken, cause a holder of an award
to become subject to additional taxes under Section 409A,
then unless the Plan Committee specifically provides otherwise,
such award, payment, distribution, deferral election,
transaction or other action or arrangement shall not be given
effect to the extent it causes such result and the related
provisions of the 2004 Plan
and/or award
agreement for the award will be deemed modified, or, if
necessary, suspended in order to comply with the requirements of
Section 409A to the extent determined appropriate by the
Plan Committee, in each case without the consent of or notice to
holder of the award. The period of exercisability of an option
or a SAR shall not be extended to the extent that such extension
would subject holder of that option or SAR to additional taxes
under Section 409A.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO AMEND THE 2004 PLAN TO INCREASE THE NUMBER OF
SHARES AUTHORIZED FOR ISSUANCE UNDER THE PLAN.
EQUITY
PLAN COMPENSATION INFORMATION
The following table sets forth certain equity compensation plan
information for the Company as of January 29, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Weighted-
|
|
|
|
|
|
|
Securities to be
|
|
|
Average
|
|
|
Number of Securities Remaining
|
|
|
|
Issued Upon
|
|
|
Exercise
|
|
|
Available for Future Issuance
|
|
|
|
Exercise of
|
|
|
Price of
|
|
|
Under Equity Compensation
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Plans (excluding securities in
|
|
|
|
Options
|
|
|
Options
|
|
|
column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity Compensation Plans Approved by Security Holders
|
|
|
1,742,021
|
|
|
$
|
16.01
|
|
|
|
745,727
|
|
Equity Compensation Plans Not Approved by Security Holders(1)
|
|
|
289,722
|
|
|
$
|
15.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,031,743
|
|
|
$
|
15.88
|
|
|
|
745,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
We have adopted the 1998 Key Employee Stock Option Plan (the
1998 Plan) which, as amended, provides for the grant
of options to purchase up to 3,150,000 shares of our Common
Stock to full-time key employees (excluding executive officers),
of which 268,722 shares are to be issued upon the exercise
of outstanding options. No awards have been available for grant
under the 1998 Plan since February 2008. Options granted under
the 1998 Plan must be exercised within ten years from the date
of grant. Unless otherwise provided by the Stock Option
Committee, options granted under the 1998 Plan vest at the rate
of 1/3 of the shares covered by the grant on each of the first
three anniversaries of the date of grant and may not be issued
at a price less than 50% of the fair market value of our stock
on the date of grant. However, a significant portion of options
granted under the 1998 Plan vest annually in varying increments
over a period from one to ten years. |
We entered into consulting arrangements with certain individuals
and issued to them options to purchase an aggregate of
48,000 shares at an exercise price of $10.65, of which
21,000 shares remain unexercised.
21
PROPOSAL TO
REAPPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS FOR
PERFORMANCE AWARDS UNDER THE COMPANYS 2004 LONG-TERM
INCENTIVE PLAN
Section 162(m) of the Internal Revenue Code
(Section 162(m)) generally imposes a limit on
the Companys federal income tax deduction for compensation
paid to our Chief Executive Officer and to each of our other
three most highly compensated executive officers (other than the
CFO) as determined on the last day of a tax year to the extent
that the compensation paid to such officer exceeds $1,000,000 in
any one year. That deduction limit does not apply, however, to
performance-based compensation that satisfies the requirements
of Section 162(m).
The requirements of Section 162(m) for performance-based
compensation include shareholder approval of the material terms
of the performance goals under which the compensation is to be
paid. The material terms include (1) the employees eligible
to receive compensation upon attainment of a goal, (2) the
business criteria on which the goals may be based, and
(3) the maximum amount payable to an employee upon
attainment of a goal. The regulations under Section 162(m)
provide that if a companys compensation committee has the
authority to change the targets under a performance goal, the
material terms of the performance goal must be disclosed to, and
reapproved by, the Companys shareholders on a periodic
basis.
The 2004 Plan was initially adopted by the Board of Directors
and approved by our shareholders in 2004, and the amendment and
restatement of the 2004 Plan was adopted by the Board of
Directors and approved by our shareholders in 2008. The 2004
Plan grants the Compensation Committee the flexibility to change
the targets under a performance goal for performance stock
awards and performance unit awards granted under the 2004 Plan.
As a result, it is necessary for the Company to obtain
shareholder reapproval of the performance goals for performance
stock awards and performance unit awards to ensure that
performance stock awards and performance unit awards granted
under the 2004 Plan will continue to qualify as
performance-based compensation that is exempt from the
$1,000,000 deduction limitation described above.
Please see the summary description of the 2004 Plan included in
the previous proposal on pages 12 through 21. Because this is a
summary, it may not contain all of the information that is
important to you. A copy of the 2004 Plan, as amended, is
attached as Appendix A to this proxy statement.
Employees
Eligible To Receive Performance Awards
Performance awards granted to employees under the 2004 Plan are
administered by the Compensation Committee of our Board of
Directors. The members of the Compensation Committee must
qualify as outside directors under
Section 162(m) in order for awards under the 2004 Plan to
qualify as deductible performance-based compensation under
Section 162(m). Subject to the terms of the 2004 Plan, the
Compensation Committee has the sole discretion to determine the
key employees who shall be granted awards, and the amounts,
terms and conditions of each award.
In selecting participants for the 2004 Plan, the Compensation
Committee chooses our key employees who have substantial
responsibility for the direction, management and growth of the
Company and its subsidiaries. The actual number of employees who
will receive awards under the 2004 Plan cannot be determined
because eligibility for participation is in the discretion of
the Compensation Committee. However, there are currently
approximately 500 key employees (including our executive
officers) of the Company who are eligible to participate in the
2004 Plan. Participation in future years will be at the
discretion of the Compensation Committee, but we currently
expect that a similar number of employees will be eligible to
participate each year.
Business
Criteria On Which Performance Goals May Be Based
Under the 2004 Plan, the amount of and the vesting and
transferability restrictions applicable to any performance stock
award or performance unit award shall be based upon the
attainment of such performance goals as the Compensation
Committee may determine for employees.
A performance goal must be objective such that a third party
having knowledge of the relevant facts could determine whether
the goal is met and may be based on one or more of the following
business criteria which were previously approved by the
Companys shareholders for the grant of performance stock
awards and performance unit awards under the 2004 Plan: earnings
per share, earnings per share growth, total shareholder return,
economic
22
value added, cash return on capitalization, increased revenue,
revenue ratios (per employee or per customer), net income, stock
price, market share, return on equity, return on assets, return
on capital, return on capital compared to cost of capital,
return on capital employed, return on invested capital,
shareholder value, net cash flow, operating income, earnings
before interest and taxes, cash flow, cash flow from operations,
cost reductions, cost ratios (per employee or per customer),
proceeds from dispositions, project completion time and budget
goals, net cash flow before financing activities, customer
growth and total market value. Goals may also be based on
performance relative to a peer group of companies. Unless
otherwise stated, such a performance goal need not be based upon
an increase or positive result under a particular business
criterion and could include, for example, maintaining the status
quo or limiting economic losses (measured, in each case, by
reference to specific business criteria).
A performance goal business criteria may be measured with
respect to the employee, one or more business units of the
Company, the Company as a whole, or any combination of the
foregoing. The Compensation Committee may set performance
periods and performance goals that differ from participant to
participant.
Maximum
Amount Payable To An Employee Upon Attainment Of A Performance
Goal
Neither the Compensation Committee nor the Board may increase
the amount of compensation payable under a performance stock
award or performance unit award granted under the 2004 Plan. If
the time at which any performance stock award or performance
unit award will vest is accelerated, the number of shares of our
Common Stock subject to, or the amount payable under, such award
shall be reduced pursuant to Department of Treasury Regulation
§ 1.162-27(e)(2)(iii) to reasonably reflect the time
value of money. No payments of stock or cash will be made
pursuant to a performance stock award or performance unit award
unless the shareholder approval requirements of Department of
Treasury Regulation § 1.162-27(e)(4) are satisfied.
Under the 2004 Plan, the maximum number of shares of our Common
Stock with respect to which performance stock awards may be
granted to an employee during the Companys fiscal year is
225,000 shares; the maximum number of shares of our Common
Stock with respect to which performance unit awards may be
granted to an employee during the Companys fiscal year is
225,000 shares; and the maximum aggregate amount with
respect to which performance unit awards may be awarded or
credited to an employee during the Companys fiscal year
may not exceed $3,000,000 in value.
Given that payments under the 2004 Plan will be determined by
comparing actual performance to the performance goals
established by the Compensation Committee from time to time, it
is not possible to conclusively state the amount of benefits
that will be paid under the 2004 Plan for any performance period.
The Compensation Committee or the Board may, at any time and
from time to time, alter, amend, modify, suspend, or terminate
the 2004 Plan and any award agreement in whole or in part.
However, no termination, amendment, suspension, or modification
of the 2004 Plan or an award agreement shall adversely affect in
any material way any award previously granted under the 2004
Plan, without the written consent of the holder holding such
award. No amendment of the 2004 Plan shall be made without
shareholder approval if shareholder approval is required by
applicable law or stock exchange rules.
As discussed above, if our shareholders reapprove the
performance goals for performance stock awards and performance
unit awards that are currently authorized to be granted under
the 2004 Plan those awards should continue to qualify as
performance-based compensation that is exempt from the
$1,000,000 deduction limitation described above.
No performance stock awards or performance unit awards will be
granted under the 2004 Plan unless the Companys
shareholders approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO REAPPROVE THE MATERIAL TERMS OF THE PERFORMANCE
GOALS FOR PERFORMANCE AWARDS UNDER THE COMPANYS 2004
LONG-TERM INCENTIVE PLAN.
23
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of the Record
Date (except as noted below), with respect to the beneficial
ownership of our Common Stock by (i) each director,
(ii) each nominee for director, (iii) each Named
Executive Officer listed in the Summary Compensation Table
below, (iv) each shareholder known by us to be the
beneficial owner of more than 5% of our Common Stock and
(v) all of our executive officers and directors as a group.
Unless otherwise indicated, each person has sole voting power
and dispositive power with respect to the shares attributed to
him or her.
|
|
|
|
|
|
|
|
|
|
|
|
|
% of
|
|
|
Number
|
|
Outstanding
|
Name
|
|
of Shares
|
|
Shares
|
|
BlackRock, Inc
|
|
|
4,165,071
|
(1)
|
|
|
7.9
|
|
40 East 52nd Street
|
|
|
|
|
|
|
|
|
New York, New York 10022
|
|
|
|
|
|
|
|
|
Piper Jaffray Companies
|
|
|
3,837,111
|
(2)
|
|
|
7.3
|
|
800 Nicollet Mall, Suite 800
|
|
|
|
|
|
|
|
|
Minneapolis, Minnesota 55402
|
|
|
|
|
|
|
|
|
George Zimmer
|
|
|
2,271,810
|
(3)(4)(5)
|
|
|
4.3
|
|
David H. Edwab
|
|
|
124,117
|
(4)(5)(6)
|
|
|
*
|
|
Rinaldo S. Brutoco
|
|
|
27,876
|
(7)
|
|
|
*
|
|
Michael L. Ray, Ph.D.
|
|
|
18,346
|
(8)
|
|
|
*
|
|
Sheldon I. Stein
|
|
|
43,876
|
(9)
|
|
|
*
|
|
Deepak Chopra, M.D.
|
|
|
32,876
|
(10)
|
|
|
*
|
|
William B. Sechrest
|
|
|
32,876
|
(10)(11)
|
|
|
*
|
|
Larry R. Katzen
|
|
|
28,876
|
(8)
|
|
|
*
|
|
Grace Nichols
|
|
|
3,851
|
(12)
|
|
|
*
|
|
Douglas S. Ewert
|
|
|
110,894
|
(5)(13)
|
|
|
*
|
|
Neill P. Davis
|
|
|
96,996
|
(5)(14)
|
|
|
*
|
|
Carole Souvenir
|
|
|
25,490
|
(5)(15)
|
|
|
*
|
|
Charles Bresler, Ph.D.
|
|
|
5,695
|
(5)(16)
|
|
|
*
|
|
All executive officers and directors as a group (17 Persons)
|
|
|
3,546,240
|
(3)(4)(5)
|
|
|
7.0
|
|
|
|
|
|
(17)(18)(19)
|
|
|
|
|
|
|
|
|
(20)
|
|
|
|
|
|
|
|
* |
|
Less than 0.3% |
|
(1) |
|
Based on a Schedule 13G filed on February 7, 2011. |
|
(2) |
|
Based on a Schedule 13G filed on February 10, 2011,
Advisory Research, Inc. (ARI),
180 N. Stetson, Chicago, IL 60601, a wholly-owned
subsidiary of Piper Jaffray Companies and an investment adviser
registered under Section 203 of the Investment Advisers Act
of 1940, is the beneficial owner of these shares of our Common
Stock as a result of acting as investment adviser to various
clients. Piper Jaffray Companies may be deemed to be the
beneficial owner of these shares through control of ARI.
However, Piper Jaffray Companies disclaims beneficial ownership
of such shares. |
|
(3) |
|
Includes 2,133,745 shares and 68,259 shares,
respectively, held by George Zimmer in his capacity as trustee
for The George Zimmer 1988 Living Trust and the Zimmer
Childrens 2010 Remainder Trust. Subsequent to the Record
Date, The George Zimmer 1988 Living Trust sold
25,000 shares of our Common Stock and now presently owns
2,108,745 shares of our Common Stock. |
|
(4) |
|
Excludes 39,629 shares held by The Zimmer Family Foundation
with respect to which this officer and director has shared
voting and dispositive power but with regard to which such
officer and director disclaims beneficial ownership. |
24
|
|
|
(5) |
|
Includes 69,806 shares, 2,563 shares, 544 shares,
402 shares, 340 shares, 711 shares and
126,940 shares, respectively, allocated to The Mens
Wearhouse, Inc. Employee Stock Ownership Plan (the
ESOP) accounts of George Zimmer, David Edwab,
Douglas Ewert, Neill Davis, Carole Souvenir, Charles Bresler and
to certain executive officers included in all executive officers
and directors of the Company as a group, under the ESOP. The
ESOP provides that participants have voting power with respect
to these shares and in certain circumstances may have
dispositive power with respect to a portion of the shares
allocated to the participants account. |
|
(6) |
|
Includes 96,800 restricted shares and 200 shares owned by
Mr. Edwabs children. |
|
(7) |
|
Includes 4,329 restricted shares and 6,000 shares that may
be acquired within 60 days upon the exercise of stock
options. |
|
(8) |
|
Includes 4,329 restricted shares and 3,000 shares that may
be acquired within 60 days upon the exercise of stock
options. |
|
(9) |
|
Includes 4,329 restricted shares and 16,500 shares that may
be acquired within 60 days upon the exercise of stock
options. |
|
(10) |
|
Includes 4,329 restricted shares and 7,500 shares that may
be acquired within 60 days upon the exercise of stock
options. |
|
(11) |
|
Mr. Sechrests shares (other than the
7,500 shares that may be acquired within 60 days upon
the exercise of stock options) are held in a margin account to
secure advances under a personal line of credit. |
|
(12) |
|
Includes 3,851 restricted shares. |
|
(13) |
|
Includes 89,996 shares that may be acquired within
60 days upon the exercise of stock options and
7,690 shares allocated to the account of Mr. Ewert
under The Mens Wearhouse, Inc. 401(k) Savings Plan. |
|
(14) |
|
Includes 200 shares owned by Mr. Davis children,
62,504 shares that may be acquired within 60 days upon
the exercise of stock options and 2,430 shares allocated to
the account of Mr. Davis under The Mens Wearhouse,
Inc. 401(k) Savings Plan. In addition, Mr. Davis has
pledged 13,112 of such shares which are held in an investment
account to secure advances under a line of credit for personal
purposes. |
|
(15) |
|
Includes 20,250 shares that may be acquired within
60 days upon the exercise of stock options. |
|
(16) |
|
Includes 235 shares allocated to the account of
Mr. Bresler under The Mens Wearhouse, Inc. 401(k)
Saving Plan |
|
(17) |
|
Includes an aggregate of 350,747 shares that may be
acquired within 60 days upon the exercise of stock options. |
|
(18) |
|
Includes 14,868 shares allocated to the 401(k) Savings Plan
accounts of certain of our executive officers. The 401(k)
Savings Plan provides that participants have voting and
investment power over these shares. |
|
(19) |
|
Includes 73,657 shares held by family members of certain of
our executive officers and directors. |
|
(20) |
|
Includes an aggregate of 126,625 restricted shares. |
25
EXECUTIVE
OFFICERS
The following table lists the name, age, current position and
period of service with the Company of each executive officer.
Each officer will hold office until his or her successor shall
have been elected and qualified.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
|
Officer
|
Name
|
|
Age
|
|
Position with the Company
|
|
Since
|
|
George Zimmer
|
|
|
62
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
1974
|
|
David H. Edwab
|
|
|
56
|
|
|
Vice Chairman of the Board
|
|
|
1991
|
|
Douglas S. Ewert
|
|
|
47
|
|
|
President and Chief Operating Officer
|
|
|
2000
|
|
Charles Bresler, Ph.D.
|
|
|
63
|
|
|
Executive Vice President
|
|
|
1993
|
|
Gary G. Ckodre
|
|
|
61
|
|
|
Executive Vice President and Chief Compliance Officer
|
|
|
1992
|
|
Neill P. Davis
|
|
|
54
|
|
|
Executive Vice President, Chief Financial Officer, Treasurer and
Principal Financial Officer
|
|
|
1997
|
|
William C. Silveira
|
|
|
53
|
|
|
Executive Vice President Manufacturing
|
|
|
2006
|
|
Carole L. Souvenir
|
|
|
50
|
|
|
Chief Legal Officer and Executive Vice
President Employee Relations
|
|
|
2006
|
|
Diana M. Wilson
|
|
|
63
|
|
|
Senior Vice President Chief Accounting Officer
and Principal Accounting Officer
|
|
|
2003
|
|
James E. Zimmer
|
|
|
59
|
|
|
Senior Vice President Merchandising
|
|
|
1975
|
|
See the discussion under Election of Directors for
the business experience of Messrs. George Zimmer, David
Edwab and Douglas Ewert.
Charles Bresler, Ph.D. joined the Company in 1993.
From 1993 to 1998, he served as Senior Vice
President Human Development. In February 1998, he
was named Executive Vice President. In March 2003, he was
renamed Executive Vice President Stores, Marketing
and Human Development. In January 2005, he was named President
of the Company. On January 26, 2008, he was named Executive
Vice President Marketing and Human Resources. In
March 2011, his title was changed to Executive Vice President.
Gary G. Ckodre joined the Company in 1992. In
February 1997, he was named Vice President Finance
and Principal Financial and Accounting Officer and, in March
2001, he was named Senior Vice President and Principal
Accounting Officer. In March 2003, he was named Senior Vice
President Finance. In March 2004, he was named
Senior Vice President Chief Compliance Officer. On
April 1, 2008, he was named Executive Vice
President Distribution, Logistics, Tuxedo Operations
and Chief Compliance Officer. In March 2011, his title was
changed to Executive Vice President and Chief Compliance Officer.
Neill P. Davis joined the Company in 1997 as Vice
President and Treasurer. In November 2000, he was named Senior
Vice President, Chief Financial Officer and Treasurer and, in
March 2001, he was named Principal Financial Officer. In March
2002, he was promoted to Executive Vice President and remained
Chief Financial Officer, Treasurer and Principal Financial
Officer. In March 2003, he was named Executive Vice President,
Chief Financial Officer and Principal Financial Officer. In
April 2006, he was again named to the additional office of
Treasurer.
William C. Silveira joined the Company in July 1997 as
Director Manufacturing. In March 2000, he was named
Vice President Manufacturing. In March 2001, he was
named Senior Vice President Manufacturing and, in
March 2005, he was named Executive Vice President
Manufacturing.
Carole L. Souvenir joined the Company in April 1998 as
Vice President Employee Relations. In March 2002,
she was named Senior Vice President Employee
Relations. In August 2006, she was promoted to Chief Legal
Officer and Executive Vice President Employee
Relations.
Diana M. Wilson joined the Company in March 1999 as
Corporate Controller. In March 2001, she was named Vice
President and Corporate Controller and, in March 2002, she was
named Vice President Finance. In March 2003, she was
named Vice President Principal Accounting Officer.
In March 2005, she was named Senior Vice President
Principal Accounting Officer. In April 2006, her title was
changed to Senior Vice President Chief Accounting
Officer and Principal Accounting Officer.
James E. Zimmer has served as Senior Vice
President Merchandising since 1975. James Zimmer
served as a director of the Company until June 2002 when he
chose not to seek re-election.
George Zimmer and James Zimmer are brothers.
26
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Compensation Program
Objectives
of Compensation Program
The primary objective of our compensation program, including our
executive compensation program, is to retain and incentivize
qualified employees who are enthusiastic about and committed to
our culture and mission. In doing so, we design competitive
total compensation and rewards programs to enhance our ability
to attract and retain knowledgeable and experienced executives
who appreciate and are committed to our culture. Promotion from
within is a key principle at the Company and a majority of our
executive officers have reached their current career positions
through an average career development tenure in excess of
10 years with us. The same compensation philosophy is
applied to all levels of exempt employees, including executive
officers. While the amounts may be different, each of the
components of the compensation package is the same and is
applied using similar methodology as further discussed below
under Elements of Compensation. Exceptions to this
principle are generally due to local market requirements.
Executive officers generally receive the same benefits as other
employees. Any differences are generally due to position,
seniority, or local requirements. In line with this philosophy,
executive officers, generally, receive minimal perquisites.
Finally, we endeavor to ensure that our compensation program is
perceived as fundamentally fair to all stakeholders.
What Our
Compensation is Designed to Reward
Our compensation program is designed to reward teamwork and each
individuals contribution to the Company as well as to
produce positive long-term results for our shareholders and
employees. All of our executive officers participate in a
non-equity incentive compensation plan, two-thirds of which is
based on attainment of certain financial metrics. The remaining
one third is based on a qualitative judgment of individual
performance. The maximum average non-equity incentive
compensation program, as a percentage of base salary, for fiscal
2010 for the Named Executive Officers that participate in the
non-equity incentive compensation program was 49% and for all
other executive officers was 42%. Fiscal year 2010 incentive
compensation for the Named Executive Officers that participate
in the non-equity incentive compensation program averaged
approximately 26% of base salary and for all other executive
officers averaged 30% of base salary. For comparison purposes,
for fiscal year 2009, the maximums for the two groups were 46%
and 31%, respectively, and the averages were 15% and 12%,
respectively.
Administration
The Compensation Committee is composed entirely of independent,
non-management members of the Board of Directors. No
Compensation Committee member participates in any of our
employee compensation programs. The Compensation Committee
(i) reviews and approves annual compensation for officers
whose annual base salary plus maximum payout under our annual
non-equity cash incentive program is equal to or in excess of
$500,000 (for fiscal 2010 those officers included the Chief
Executive Officer, President and Chief Operating Officer,
Executive Vice President, Executive Vice President and Chief
Financial Officer, President of K&G and Group
President North America Group of Twin Hill),
(ii) reviews the compensation program for all other senior
officers as recommended to the Committee by the Chief Executive
Officer, and (iii) reviews and approves the annual awards
under equity incentive plans to all employees as recommended to
the Committee by management. Individual recommendations other
than for the Named Executive Officers are made by an executive
group comprised of the President and Chief Operating Officer,
Executive Vice President, Executive Vice President and Chief
Financial Officer, and Vice Chairman and approved by the Chief
Executive Officer. Recommendations for the Named Executive
Officers are made by the Chief Executive Officer.
27
Elements
of Compensation
General
The primary elements of the executive compensation program
consist of (1) base salary, (2) annual cash bonuses
pursuant to a non-equity incentive program, and (3) equity
awards. In prior years, equity awards included non-qualified
stock options, restricted stock awards and deferred stock units.
Each executives current and prior compensation is
considered in setting future compensation and consideration is
given to the vesting and value of previously granted equity
awards. In addition, the Chief Executive Officer focuses on
relative compensation throughout the organization in
recommending his own compensation and that of other executive
officers.
Base
Salaries
Level of responsibility and experience, Company performance,
competitive market conditions, retention concerns and individual
performance are all factored into the determination of base
salary. In addition, the Chief Executive Officer focuses on his
level of base salary and indirectly the level of all other
executive base salary relative to compensation throughout the
organization.
Annual
Cash Bonuses
To align executive pay with our annual performance, our
executives receive annual cash bonuses pursuant to a non-equity
incentive program. Each year, our executives are eligible for a
maximum cash bonus payout. The program establishes a set of
three metrics for each executive. The two financial metrics are
predetermined sales targets and income targets. The
non-financial metric consists of a qualitative assessment of the
executives performance. Each metric carries equal weight
and accounts for one third of the possible payout. Two different
thresholds exist for each of the three metrics good
and excellent. An executive receives one-sixth of the payout if
the good threshold of a particular metric is met and
receives the entire one-third payout if the
excellent threshold is achieved. The maximum annual
bonus payout possible for a Named Executive Officer under our
non-equity performance program varies by individual, with a
highest possible payout of $350,000 for fiscal 2010. The
qualitative assessment of each Named Executive Officers
individual performance is made by the Compensation Committee
primarily based on the views and recommendations of the Chief
Executive Officer in the case of the Named Executive Officers
other than himself.
Threshold levels for good financial metrics are
based on performance objectives that the Chief Executive Officer
sets at the beginning of a year and take into consideration the
Companys operating and growth plans for the coming year,
excluding the effects of asset impairments, restructurings,
discontinued operations, extraordinary items, acquisitions,
divestitures, and other unusual or non-recurring items. The
excellent threshold targets are typically
representative of a substantial increase over the
good threshold. For fiscal 2010, the good and
excellent sales targets were $1.968 billion and
$2.031 billion, respectively, and the net income targets
were $67.7 million and $77.2 million, respectively.
The good target was achieved for sales and net income. In
general, good level bonuses were paid for the non-financial
metric based on individual contributions to the Companys
favorable financial results in a difficult economic environment.
The Compensation Committee reviews and approves the financial
threshold targets and believes that these financial targets
reflect performance that will lead to long-term preservation of
shareholder value in an economic downturn and do not encourage
our executive officers to take unnecessary and excessive risks.
We do not believe that disclosure of our 2011 performance
targets is relevant to an understanding of compensation for our
2010 fiscal year.
Equity
Awards
Our compensation structure also includes an equity incentive
plan that provides for awards of stock options, restricted stock
awards and deferred stock units.
Nonqualified stock options provide executives with the
opportunity to purchase our Common Stock at a price fixed on the
grant date regardless of future market prices. Since a stock
option becomes valuable only if our Common Stock price increases
above exercise price and the holder of the option remains
employed during the period required for the option to
vest, stock options provide the incentive for an
option holder to remain employed
28
by us and links a portion of the employees compensation to
shareholders interests by providing an incentive to make
decisions designed to increase the market price of our stock.
During fiscal 2010, no Named Executive Officer received any
stock option grants.
Restricted stock awards (RSAs) and deferred stock
units (DSUs) are intended to retain executives
through vesting periods. RSAs provide the opportunity for
capital accumulation and more predictable long-term incentive
value. RSAs are shares of our Common Stock that are awarded with
the restriction that the executive remain with us until the date
of vesting. The purpose of granting RSAs is to encourage
ownership of our Common Stock by, and retention of, our
executives. Any unvested RSAs are generally forfeited once the
executive terminates employment. No RSAs were awarded in fiscal
2010.
A DSU is a commitment by us to issue a share of our Common Stock
for each DSU at the time the restrictions in the award agreement
lapse. DSUs are generally forfeited upon termination of
employment with us if the restrictions outlined in the awards
are not met. Any vested shares are fully owned. Historically, we
generally have granted stock options, RSAs and DSUs to executive
officers in larger numbers, in intervals of several years and
vesting over lengthy periods of time. During fiscal 2010, an
award of 12,500, 10,000 and 4,000 DSUs were granted to Doug
Ewert, Neill Davis and Carole Souvenir, respectively. No other
Named Executive Officer received any DSU grants.
Relative
Size of Major Compensation Elements
The combination of base salary, annual non-equity incentive
awards and equity incentive awards comprise total direct
compensation. In setting Named Executive Officer compensation,
the Compensation Committee considers the aggregate compensation
payable to the executive and the form of the compensation. The
Committee seeks to achieve the appropriate balance between
immediate cash rewards and incentives for the achievement of
both annual and long-term financial and non-financial
objectives. The number of shares granted under equity awards to
each executive is made on a discretionary, rather than formula,
basis by taking into consideration the executives
position, responsibilities, accomplishments, achievements and
tenure with the Company.
The Committee may decide, as appropriate, to modify the mix of
base salary, annual and long-term awards to best fit a Named
Executive Officers specific circumstances. For example,
the Chief Executive Officer, who holds significant ownership
interests in the Company, does not participate in any equity
incentive award plan. It is the belief of the Compensation
Committee that, given his significant holdings of our Common
Stock, incentives through equity awards at this time for the
Chief Executive Officer would not significantly affect his
annual or long-term perspective with respect to equity
performance of the Company. However, the Compensation Committee
also believes that participation by George Zimmer in our equity
incentive award plan would be reasonable and appropriate.
Nevertheless, Mr. Zimmer has chosen not to do so.
Similarly, in the past George Zimmer has voluntarily requested
that the Compensation Committee not increase his base salary or
his maximum non-equity incentive bonus although the Compensation
Committee believed it would have been appropriate to do so.
In the event that (i) prior to a Change in Control (as
discussed later in this proxy statement in the section entitled
Potential Payments Upon Termination or Change in
Control Change in Control Agreements), our
Board of Directors determines by a majority vote, or
(ii) following a Change in Control, a court of competent
jurisdiction determines by a final, non-appealable order, that
an executive, before or after the termination of his employment
relationship with us, has committed certain acts which
materially and adversely affect the Company, then some or all of
such executives awards (including vested awards that have
been exercised, vested awards that have not been exercised and
awards that have not yet vested), and all net proceeds realized
with respect to any such awards, will be forfeited to us on such
terms as determined by the Board of Directors. Those acts which
could trigger such a forfeiture include:
|
|
|
|
|
fraud, embezzlement, theft, felony or similar acts of dishonesty
in the course of the executives employment with us which
damaged the Company,
|
|
|
|
knowingly causing or assisting in causing our financial
statements to be misstated or the Company to engage in criminal
misconduct,
|
|
|
|
disclosing our trade secrets, or
|
29
|
|
|
|
|
violating the terms of any non-competition, non-disclosure or
similar agreement with respect to us to which the executive is a
party.
|
Timing of
Compensation Decisions
All elements of executive officer compensation are reviewed and
approved on an established schedule, which may vary from year to
year, but generally occurs over a
90-day
period following our fiscal year end and after a review of
financial, operating and personal objectives with respect to the
prior years results. By way of example, after the end of
fiscal 2010, the Committee reviewed results and management
recommendations and approved base compensation and annual
non-equity incentive bonus and equity awards in March and April
2011. The Compensation Committee may, however, review salaries
or equity awards at other times as the result of new
appointments or promotions or other special circumstances during
the year.
Benefits
We offer a variety of health and welfare and retirement programs
to all eligible employees. Executives generally are eligible for
the same benefit programs on the same basis as the rest of the
broad-based employees. The health and welfare programs are
intended to protect employees against catastrophic loss and
encourage a healthy lifestyle. Our health and welfare programs
include medical, wellness, pharmacy, dental, vision, life
insurance and accidental death and disability.
We maintain a defined contribution plan pursuant to the
provisions of Section 401(k) of the Internal Revenue Code.
The plan covers all full-time employees who meet age and service
requirements. The plan provides for pre-tax, elective employee
contributions with a matching contribution from us.
Perquisites
Split-Dollar
Life Insurance Agreements
As discussed below in this proxy statement, we entered into a
split-dollar insurance agreement with George Zimmer pursuant to
which we own and pay the premiums on a $4,000,000 policy on
Mr. Zimmers life but have granted him the right to
designate the beneficiaries of the proceeds of the policy,
subject to our first being paid the greater of the total amount
of the premiums we paid on this policy or the cash value of the
policy. As a result of his rights with respect to the policy,
George Zimmer had imputed taxable income of $25,238 in 2010 and
we paid him an additional $18,650 to offset the income tax owed
as a result of such imputed income and such additional payment.
On September 1, 2010, the Company assigned its rights to
receive an aggregate of $2.6 million of the proceeds from
the life insurance policies on the life of Mr. Zimmer to
Mr. Zimmer and a trust for the benefit of Mr. Zimmer
in exchange for a cash payment of $2.6 million from
Mr. Zimmer.
Airplane
Use
George Zimmer is provided with the benefit of using our aircraft
for personal air transportation from time to time. The
Compensation Committee considers the benefit to Mr. Zimmer
of his airplane use in approving Mr. Zimmers total
compensation package. The Company does not reimburse
Mr. Zimmer for taxes he owes on imputed income resulting
from use of the aircraft.
Impact
of Accounting and Tax Treatment
In recognizing share-based compensation, we follow the
provisions of the authoritative guidance regarding share-based
awards. This guidance establishes fair value as the measurement
objective in accounting for stock awards and requires the
application of a fair value based measurement method in
accounting for compensation cost, which is recognized over the
requisite service period. We use the Black-Scholes option
pricing model to estimate the fair value of stock options on the
date of grant. The fair value of RSAs and DSUs is determined
based on the number of shares granted and the quoted price of
our Common Stock on the date of grant. The value of the portion
of the award that is ultimately expected to vest is recognized
as expense over the requisite service period. For grants
30
that are subject to pro-rata vesting over a service period, we
recognize expense on a straight-line basis over the requisite
service period for the entire award.
Section 162(m) of the Internal Revenue Code places a limit
of $1,000,000 on the amount of compensation paid to the Chief
Executive Officer and the three other most highly compensated
executive officers that may be deducted by us in any year unless
the compensation is performance-based compensation as described
in Section 162(m) and the related regulations. The
Committee believes the compensation payable in excess of this
amount for the five Named Executive Officers will not result in
any material loss of tax deductions.
Section 409A of the Internal Revenue Code provides that
deferrals of compensation under a nonqualified deferred
compensation plan for all taxable years are currently includible
in gross income to the extent not subject to a substantial risk
of forfeiture and not previously included in gross income,
unless certain requirements are met. We structure any deferred
compensation items to be in compliance with section 409A of
the Internal Revenue Code.
Change
in Control Agreements
The Compensation Committee believes that change in control
arrangements have unique characteristics and value, particularly
in the current economic environment. For example, executives
often look to change in control agreements to provide protection
for lost professional opportunities in the event of a change in
control and consequently assign significant value to them. The
Compensation Committee believes that our current change in
control arrangements protect shareholder interests by retaining
management should periods of uncertainty arise. Because our
change in control arrangements are structured to serve the above
purpose and because change in control agreements represent a
contractual obligation of our Company, decisions relating to
other elements of compensation have minimal effect on decisions
relating to existing change in control agreements.
The Company has entered into change in control agreements with
our Named Executive Officers. The benefits payable under these
arrangements in certain circumstances are disclosed below on
pages 43 through 48. These agreements generally provide
that, if we fail to extend the executives agreement or
terminate the executives employment without cause, or if
the executive terminates his or her employment for good reason,
the executive will receive an amount equal to two (2) times
the sum of the executives base salary plus an amount equal
to the maximum annual performance bonus in the fiscal year in
which a change in control occurs or the immediately preceding
fiscal year, whichever is higher, plus basic benefits as more
fully described in the change in control agreement.
Executive
Officer Equity Ownership
At its meeting in March 2011, the Board of Directors established
a guideline for equity ownership by Named Executive Officers.
Under the guideline, each Named Executive Officer is expected to
hold equity interests in the form of common stock, restricted
stock or deferred stock units having an aggregate equity value
of at least two and one half times his or her base salary by the
later of five years after becoming a Named Executive Officer or
April 30, 2016. Failure to achieve the guideline will be
taken into consideration by the Compensation Committee in
determining compensation for the Named Executive Officer.
Compensation
Consultant
As noted above, the Compensation Committee engaged Towers Watson
to advise the Committee with respect to specific matters related
to the compensation program for executive officers for fiscal
2011. The compensation consultant did not play any role in
determining or recommending the amount or form of executive
officer or director compensation for fiscal 2010.
31
Summary
Compensation Table
The following table sets forth certain information regarding
compensation paid for services rendered during the fiscal year
ended January 29, 2011 to each of our five most highly
compensated executive officers, including the Chief Executive
Officer and Chief Financial Officer (collectively, the
Named Executive Officers):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
|
Name and Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(3)
|
|
($)(4)
|
|
Earnings ($)
|
|
($)(5)
|
|
Total ($)
|
|
George Zimmer
|
|
|
2010
|
|
|
|
932,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
939,804
|
(6)(7)
|
|
|
1,971,804
|
|
Chairman of the Board and
|
|
|
2009
|
|
|
|
956,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,000
|
|
|
|
|
|
|
|
476,680
|
(6)(8)
|
|
|
1,498,911
|
|
Chief Executive Officer
|
|
|
2008
|
|
|
|
1,016,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
|
|
|
|
|
|
|
658,996
|
(6)
|
|
|
1,709,012
|
|
Neill P. Davis
|
|
|
2010
|
|
|
|
396,923
|
|
|
|
|
|
|
|
241,800
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
8,708
|
(10)
|
|
|
797,431
|
|
Executive Vice President,
|
|
|
2009
|
|
|
|
398,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,000
|
|
|
|
|
|
|
|
6,167
|
(8)(10)
|
|
|
504,013
|
|
Chief Financial Officer,
|
|
|
2008
|
|
|
|
393,770
|
|
|
|
201,683
|
|
|
|
568,000
|
|
|
|
|
|
|
|
51,000
|
|
|
|
|
|
|
|
6,033
|
(9)(10)
|
|
|
1,220,486
|
|
Treasurer and Principal Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas S. Ewert
|
|
|
2010
|
|
|
|
505,770
|
|
|
|
|
|
|
|
302,250
|
|
|
|
|
|
|
|
175,000
|
|
|
|
|
|
|
|
12,789
|
(7)(10)
|
|
|
995,809
|
|
President and Chief
|
|
|
2009
|
|
|
|
498,558
|
|
|
|
|
|
|
|
232,300
|
|
|
|
|
|
|
|
115,500
|
|
|
|
|
|
|
|
8,658
|
(8)(10)
|
|
|
855,016
|
|
Operating Officer
|
|
|
2008
|
|
|
|
486,154
|
|
|
|
500,000
|
|
|
|
|
|
|
|
785,753
|
|
|
|
59,500
|
|
|
|
|
|
|
|
11,303
|
(9)(10)
|
|
|
1,842,710
|
|
Carole Souvenir
|
|
|
2010
|
|
|
|
258,000
|
|
|
|
|
|
|
|
96,720
|
|
|
|
|
|
|
|
124,950
|
|
|
|
|
|
|
|
1,738
|
(7)(10)
|
|
|
481,408
|
|
Chief Legal Officer and Executive Vice President
Employee Relations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Bresler, Ph.D.
|
|
|
2010
|
|
|
|
372,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
6,555
|
(7)(10)
|
|
|
478,670
|
|
Executive Vice President
|
|
|
2009
|
|
|
|
367,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,000
|
|
|
|
|
|
|
|
7,188
|
(8)(10)
|
|
|
440,255
|
|
|
|
|
2008
|
|
|
|
364,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
|
|
|
|
|
|
|
9,787
|
(9)(10)
|
|
|
407,825
|
|
|
|
|
(1) |
|
Represents salary for 52 weeks in 2010, 2009 and 2008
fiscal years, respectively. |
|
(2) |
|
Represents special bonus paid to the Named Executive Officer in
the indicated fiscal year. |
|
(3) |
|
Represents aggregate grant date Fair Value of award computed in
accordance with FASB ASC topic 718. |
|
(4) |
|
Represents bonus paid relating to services performed in the
indicated fiscal years. |
|
(5) |
|
Includes forfeitures and dividend allocation to the ESOP account
of the Named Executive Officer in the indicated fiscal year. |
|
(6) |
|
Includes $25,238, $23,076, and $21,722 paid in 2010, 2009 and
2008, respectively, in connection with insurance premiums (see
Split-Dollar Life Insurance Agreements), $18,650,
$17,053, and $16,484 paid in 2010, 2009 and 2008, respectively,
in related tax gross up payments, $224,293, $127,917, and
$169,755 paid in 2010, 2009 and 2008, respectively, in
incremental cost for George Zimmers personal use of the
corporate aircraft, and $643,966, $288,245, and $439,194 paid in
2010, 2009 and 2008, respectively, for lost Company tax benefits
from disallowed deductions associated with George Zimmers
personal use of the corporate aircraft. |
|
(7) |
|
Includes $200 Company matching contribution to the 401(k) Saving
Plan account of the Named Executive Officer. |
|
(8) |
|
Includes $100 Company matching contribution to the 401(k) Saving
Plan account of the Named Executive Officer. |
|
(9) |
|
Includes $400 Company matching contribution to the 401(k) Saving
Plan account of the Named Executive Officer. |
|
(10) |
|
Includes amount of dividend equivalent payment on unvested
deferred stock units paid to the Named Executive Officer in the
indicated fiscal year. |
32
Employment
Agreements
Douglas
S. Ewert
On April 13, 2011, we entered into an employment agreement
with Douglas S. Ewert, current President and Chief Operating
Officer of the Company. Pursuant to the terms of his employment
agreement, Mr. Ewert shall serve as Chief Executive Officer
and President of the Company beginning immediately after the
Annual Meeting. At such time, George Zimmer shall cease to be
Chief Executive Officer of the Company but shall remain
Executive Chairman of the Board.
The initial term of Mr. Ewerts employment agreement
shall be for a period of three years and thereafter shall
automatically be extended for successive twelve-month periods
unless either we or Mr. Ewert gives written notice of an
election not to extend the employment agreement not less than
180 days prior to the end of the initial employment period
and 90 days prior to the end of any extended employment
period. Under Mr. Ewerts employment agreement, we
agreed, among other things, to:
|
|
|
|
|
pay Mr. Ewert an annual base salary of $605,000;
|
|
|
|
provide Mr. Ewert an opportunity to earn an annual cash
bonus each fiscal year in accordance with the terms of our
annual cash bonus program for executive officers for such fiscal
year based on the achievement of performance objectives as may
be established from time to time by our Board of Directors or a
committee thereof; provided, that Mr. Ewerts target
bonus shall not be less than $600,000 for any given year (though
the actual bonus paid may be greater or lesser than the target
bonus and shall be determined consistent with the criteria set
for our other senior management executives by the Board or a
committee thereof, based on such factors as it may determine)
and the actual bonus paid to Mr. Ewert in each fiscal year
shall not be less than an amount equal to $1,005,000 minus all
other cash compensation paid to Mr. Ewert for such fiscal
year;
|
|
|
|
provide life, accident, disability and health insurance coverage
and certain other benefits provided to our senior management
executives; and
|
|
|
|
on the first day of Mr. Ewerts employment as Chief
Executive Officer and President, issue to him 100,000 deferred
stock units, which shall vest in two equal installments of
33,333 units on the first and second anniversary dates of
the date of grant and in an installment of 33,334 on the third
anniversary date of the date of grant, provided that
Mr. Ewerts employment with us has not terminated
prior to the applicable vesting date; additionally,
Mr. Ewert shall receive annual awards of restricted stock,
deferred stock units or stock options, or some combination
thereof, having a value equal to $1,000,000.
|
We may terminate Mr. Ewerts employment under his
employment agreement for cause. Under
Mr. Ewerts employment agreement, cause is
limited to Mr. Ewerts:
|
|
|
|
|
conviction of or a plea of nolo contendere to the charge of a
felony (which, through the lapse of time or otherwise, is not
subject to appeal);
|
|
|
|
willful refusal without proper legal cause to perform, or gross
negligence in performing, his duties and responsibilities;
|
|
|
|
material breach of fiduciary duty to us through the
misappropriation of Company funds or property or through fraud;
|
|
|
|
material breach or default of his obligations or agreements
under his employment agreement or any other agreement with us
containing restrictive covenants or willful failure to follow in
any material respect the lawful directions or policies of the
Board; or
|
|
|
|
unauthorized absence from work (other than for sick leave or
personal disability) for a period of 60 working days or more
during a period of 90 working days.
|
If we terminate Mr. Ewert for cause, or if Mr. Ewert
terminates his employment with us without good
reason (as defined below) or he chooses not to renew his
employment agreement at the end of the current term or any
extended term, we will pay all amounts owed to Mr. Ewert
under his employment agreement through the date of
33
termination and any other benefits which may be owing in
accordance with our policies or applicable law, which will
satisfy all of our obligations under his employment agreement.
If we terminate Mr. Ewerts employment without
cause or Mr. Ewert terminates his employment
for good reason or if we notify Mr. Ewert that
we do not intend to extend his employment under his employment
agreement at the end of the current term or any extended term,
then, in addition to any other benefits which may be owing in
accordance with our plans and policies:
|
|
|
|
|
we will be required to pay Mr. Ewert:
|
|
|
|
|
|
a lump sum payment of all amounts owed through the date of
termination,
|
|
|
|
a lump sum payment in cash equal to Mr. Ewerts full
target bonus for our fiscal year ending contemporaneously with
or immediately following the date of termination, to be paid on
the April 15th immediately following the end of our
fiscal year bonus period to which such target bonus
relates, and
|
|
|
|
a lump sum payment in cash equal to two times the target bonus,
also to be paid on the April 15th immediately
following the end of our fiscal year bonus period to which the
target bonus relates;
|
|
|
|
|
|
Mr. Ewert will continue to receive his annual base salary
through the two year anniversary of the termination
date; and
|
|
|
|
all options to acquire securities of the Company held by
Mr. Ewert immediately prior to his termination date that
would have vested if his employment continued for two years
after the termination date shall become fully exercisable, and
all restrictions on any restricted stock or deferred stock units
of the Company held by Mr. Ewert immediately prior to his
termination date that would have lapsed if his employment
continued for two years after the termination date shall be
removed.
|
Under Mr. Ewerts employment agreement, good
reason means:
|
|
|
|
|
a material reduction in Mr. Ewerts status, title,
position or responsibilities;
|
|
|
|
a reduction in Mr. Ewerts annual base salary below
$605,000 or annual cash compensation below $1,005,000;
|
|
|
|
a reduction in the value of Mr. Ewerts annual equity
grants below $1,000,000;
|
|
|
|
any material breach by us of the employment agreement;
|
|
|
|
any purported termination of Mr. Ewerts employment
for cause which does not comply with the terms of the employment
agreement; or
|
|
|
|
a mandatory relocation of Mr. Ewerts employment with
us more than twenty-five (25) miles from the office of the
Company where he is principally employed and stationed as of the
date of the employment agreement, except for travel reasonably
required in the performance of his duties and responsibilities;
|
provided, however, that no termination shall be for good reason
until Mr. Ewert has provided us with written notice of the
conduct alleged to have caused good reason and at least thirty
(30) days have elapsed after our receipt of such written
notice from Mr. Ewert, during which we have failed to cure
any such alleged conduct.
If Mr. Ewerts employment is terminated as a result of
his death, then, in addition to any other benefits which may be
owing in accordance with our plans and policies, we will be
required to:
|
|
|
|
|
pay to Mr. Ewerts estate:
|
|
|
|
|
|
a lump sum payment in cash equal to (A) annual base salary
earned through the date of Mr. Ewerts death and
(B) any accrued vacation pay earned by
Mr. Ewert, and
|
|
|
|
a lump sum payment in cash equal to the number of days in our
fiscal year up to and including the date of
Mr. Ewerts death divided by the total number of days
in our fiscal year multiplied by Mr. Ewerts bonus
earned for our fiscal year ending contemporaneously with or
immediately following the date of
|
34
|
|
|
|
|
his death as reasonably determined by the Board or a committee
thereof after the end of our fiscal year in which such death
occurs in accordance with the Boards determination
policies then in effect; provided that the bonus shall not be
less than an amount equal to the pro rata fraction times the
positive difference between $1,005,000 and his annual base
salary; and
|
|
|
|
|
|
all options to acquire securities of the Company held by
Mr. Ewert immediately prior to his termination date that
would have vested if his employment continued for two years
after the termination date shall become fully exercisable, and
all restrictions on any restricted stock or deferred stock units
of the Company held by Mr. Ewert immediately prior to his
termination date that would have lapsed if his employment
continued for two years after the termination date shall be
removed.
|
If Mr. Ewerts employment is terminated because of his
permanent disability, then, in addition to any other benefits
which may be owing in accordance with our plans and policies:
|
|
|
|
|
we will be required to pay Mr. Ewert:
|
|
|
|
|
|
a lump sum payment in cash equal to (A) annual base salary
earned through the date of Mr. Ewerts termination of
employment and (B) any accrued vacation pay earned by
Mr. Ewert, and
|
|
|
|
a lump sum payment in cash equal to the number of days in our
fiscal year up to and including his termination date divided by
the total number of days in our fiscal year multiplied by
Mr. Ewerts bonus earned for our fiscal year ending
contemporaneously with or immediately following the termination
date as reasonably determined by the Board or a committee
thereof after the end of our fiscal year in which such
termination occurs in accordance with the Boards
determination policies then in effect; provided that the bonus
shall not be less than an amount equal to the pro rata fraction
times the positive difference between $1,000,000 and his annual
base salary, and
|
|
|
|
|
|
all options to acquire securities of the Company held by
Mr. Ewert immediately prior to his termination date that
would have vested if his employment continued for two years
after the termination date shall become fully exercisable, and
all restrictions on any restricted stock or deferred stock units
of the Company held by Mr. Ewert immediately prior to his
termination date that would have lapsed if his employment
continued for two years after the termination date shall be
removed.
|
If Mr. Ewerts employment agreement is terminated as a
result of his death or permanent disability, or by us without
cause, by our non-renewal of his employment agreement or by
Mr. Ewert for good reason, we shall arrange to provide
Mr. Ewert and his spouse and eligible dependents who were
covered under our group health plan on the date of his
termination and who in the case of eligible dependents continue
to be eligible dependents, group health plan coverage until
Mr. Ewert reaches age 65, or in the case of a
termination as a result of Mr. Ewerts death or
permanent disability, until Mr. Ewerts spouse reaches
age 65. Such coverage will be substantially similar to that
provided to our executive officers during such period and at the
same cost as if Mr. Ewert remained an executive officer of
the Company during such period. Subject to Mr. Ewerts
group health plan coverage continuation rights under
section 4980B of the Internal Revenue Code, the
continuation of medical benefits shall be reduced to the extent
benefits of the same type are received by Mr. Ewert, his
spouse or any eligible dependent from any other person during
such period.
Certain of the payments to be made to Mr. Ewert under his
employment agreement may be deferred in order to comply with the
requirements of section 409A of Code.
Under his employment agreement, Mr. Ewert has agreed not to
compete with us during the term thereof and for any period in
which he is receiving payments or benefits from us under his
employment agreement (other than the continuation of medical
benefits).
Finally, Mr. Ewerts employment agreement provides
that in the event that (i) prior to a change in control of
the Company, the Board determines by a majority vote, or
(ii) following a change in control of the Company, a court
of competent jurisdiction determines by a final, non-appealable
order, that Mr. Ewert, before or after the termination of
his employment relationship with us, has committed certain acts
which materially and adversely affect us, then some or all
(A) benefits payable or to be provided, or previously paid
or provided, to Mr. Ewert under his employment agreement or
(B) cash bonuses paid to Mr. Ewert by us on or after
the date of his employment
35
agreement, or equity awards granted to Mr. Ewert by us that
vest, on or after the date of his employment agreement will be
forfeited to us on such terms as determined by the Board or the
final, non-appealable order of a court of competent
jurisdiction. Those acts which could trigger such a forfeiture
include:
|
|
|
|
|
fraud, embezzlement, theft, felony or an act of dishonesty in
the course of Mr. Ewerts employment with us or any of
our affiliates;
|
|
|
|
knowingly causing or assisting in causing us or one of our
subsidiaries to engage in criminal misconduct;
|
|
|
|
if Mr. Ewert knew or should have known in the reasonable
exercise of his duties that we were publicly releasing financial
statements of the Company that were materially misstated and
misleading;
|
|
|
|
disclosing trade secrets of the Company or an affiliate and such
action materially and adversely affected us; or
|
|
|
|
violating the terms of any non-competition, non-disclosure or
similar agreement with respect to us or any of our affiliates to
which Mr. Ewert is a party and such action materially and
adversely affected us.
|
Neill
P. Davis
On April 18, 2011, we entered into an employment agreement
with Neill P. Davis, Executive Vice President and Chief
Financial Officer of the Company. The initial term of
Mr. Daviss employment agreement shall be for a period
of three years and thereafter shall automatically be extended
for successive twelve-month periods unless either we or
Mr. Davis gives written notice of an election not to extend
the employment agreement not less than 180 days prior to
the end of the initial employment period and 90 days prior
to the end of any extended employment period. Under
Mr. Daviss employment agreement, we agreed, among
other things, to:
|
|
|
|
|
pay Mr. Davis an annual base salary of $450,000;
|
|
|
|
provide Mr. Davis an opportunity to earn an annual cash
bonus each fiscal year in accordance with the terms of our
annual cash bonus program for executive officers for such fiscal
year based on the achievement of performance objectives as may
be established from time to time by the Board or a committee
thereof; provided, that Mr. Daviss target bonus shall
not be less than $350,000 for any given year (though the actual
bonus paid may be greater or lesser than the target bonus and
shall be determined consistent with the criteria set for our
other senior management executives by the Board or a committee
thereof, based on such factors as it may determine);
|
|
|
|
provide life, accident, disability and health insurance coverage
and certain other benefits provided to our senior management
executives; and
|
|
|
|
Mr. Davis shall receive annual awards of restricted stock,
deferred stock units or stock options, or some combination
thereof, having a value equal to $800,000.
|
We may terminate Mr. Daviss employment under his
employment agreement for cause. Under
Mr. Daviss employment agreement, cause is
limited to Mr. Daviss:
|
|
|
|
|
conviction of or a plea of nolo contendere to the charge of a
felony (which, through the lapse of time or otherwise, is not
subject to appeal);
|
|
|
|
willful refusal without proper legal cause to perform, or gross
negligence in performing, his duties and responsibilities;
|
|
|
|
material breach of fiduciary duty to us through the
misappropriation of Company funds or property or through fraud;
|
|
|
|
material breach or default of his obligations or agreements
under the employment agreement or any other agreement with us
containing restrictive covenants or willful failure to follow in
any material respect the lawful directions or policies of the
Board; or
|
|
|
|
unauthorized absence from work (other than for sick leave or
personal disability) for a period of 60 working days or more
during a period of 90 working days.
|
36
If we terminate Mr. Davis for cause, or if Mr. Davis
terminates his employment with us without good
reason (as defined below) or he chooses not to renew his
employment agreement at the end of the current term or any
extended term, we will pay all amounts owed to Mr. Davis
under his employment agreement through the date of termination
and any other benefits which may be owing in accordance with our
policies or applicable law, which will satisfy all of our
obligations under the employment agreement.
If we terminate Mr. Daviss employment without
cause or Mr. Davis terminates his employment
for good reason or if we notify Mr. Davis that
we do not intend to extend his employment under his employment
agreement at the end of the current term or any extended term,
then, in addition to any other benefits which may be owing in
accordance with our plans and policies:
|
|
|
|
|
we will be required to pay Mr. Davis:
|
|
|
|
|
|
a lump sum payment of all amounts owed through the date of
termination,
|
|
|
|
a lump sum payment in cash equal to Mr. Daviss full
target bonus for our fiscal year ending contemporaneously with
or immediately following the date of termination, to be paid on
the April 15th immediately following the end of our
fiscal year bonus period to which such target bonus
relates, and
|
|
|
|
an additional lump sum payment in cash equal to the target
bonus, to be paid on the April 15th immediately
following the end of our fiscal year bonus period to which the
target bonus relates;
|
|
|
|
|
|
Mr. Davis will continue to receive his annual base salary
through the first year anniversary of the termination
date; and
|
|
|
|
all options to acquire securities of the Company held by
Mr. Davis immediately prior to his termination date that
would have vested if his employment continued for one year after
the termination date shall become fully exercisable, and all
restrictions on any restricted stock or deferred stock units of
the Company held by Mr. Davis immediately prior to his
termination date that would have lapsed if his employment
continued for one year after the termination date shall be
removed.
|
Under Mr. Daviss employment agreement, good
reason means:
|
|
|
|
|
a material reduction in Mr. Daviss status, title,
position or responsibilities;
|
|
|
|
a reduction in Mr. Daviss annual base salary below
$450,000;
|
|
|
|
a reduction in the value of Mr. Daviss annual equity
grants below $800,000;
|
|
|
|
any material breach by us of the employment agreement;
|
|
|
|
any purported termination of Mr. Daviss employment
for cause which does not comply with the terms of the employment
agreement; or
|
|
|
|
a mandatory relocation of Mr. Daviss employment with
us more than twenty-five (25) miles from the office of the
Company where he is principally employed and stationed as of the
date of the employment agreement, except for travel reasonably
required in the performance of his duties and responsibilities;
|
provided, however, that no termination shall be for good reason
until Mr. Davis has provided us with written notice of the
conduct alleged to have caused good reason and at least thirty
(30) days have elapsed after our receipt of such written
notice from Mr. Davis, during which we have failed to cure
any such alleged conduct.
If Mr. Daviss employment is terminated as a result of
his death, then, in addition to any other benefits which may be
owing in accordance with our plans and policies, we will be
required to:
|
|
|
|
|
pay to Mr. Daviss estate:
|
|
|
|
|
|
a lump sum payment in cash equal to (A) annual base salary
earned through the date of Mr. Daviss death and
(B) any accrued vacation pay earned by
Mr. Davis, and
|
37
|
|
|
|
|
a lump sum payment in cash equal to the number of days in our
fiscal year up to and including the date of
Mr. Daviss death divided by the total number of days
in our fiscal year multiplied by Mr. Daviss bonus
earned for our fiscal year ending contemporaneously with or
immediately following the date of his death as reasonably
determined by the Board or a committee thereof after the end of
our fiscal year in which such death occurs in accordance with
the Boards determination policies then in effect; and
|
|
|
|
|
|
all options to acquire securities of the Company held by
Mr. Davis immediately prior to his termination date that
would have vested if his employment continued for one year after
the termination date shall become fully exercisable, and all
restrictions on any restricted stock or deferred stock units of
the Company held by Mr. Davis immediately prior to his
termination date that would have lapsed if his employment
continued for one year after the termination date shall be
removed.
|
If Mr. Daviss employment is terminated because of his
permanent disability, then, in addition to any other benefits
which may be owing in accordance with our plans and policies:
|
|
|
|
|
we will be required to pay Mr. Davis:
|
|
|
|
|
|
a lump sum payment in cash equal to (A) annual base salary
earned through the date of Mr. Daviss termination of
employment and (B) any accrued vacation pay earned by
Mr. Davis, and
|
|
|
|
a lump sum payment in cash equal to the number of days in our
fiscal year up to and including his termination date divided by
the total number of days in our fiscal year multiplied by
Mr. Daviss bonus earned for our fiscal year ending
contemporaneously with or immediately following the termination
date as reasonably determined by the Board or a committee
thereof after the end of our fiscal year in which such
termination occurs in accordance with the Boards
determination policies then in effect; and
|
|
|
|
|
|
all options to acquire securities of the Company held by
Mr. Davis immediately prior to his termination date that
would have vested if his employment continued for one year after
the termination date shall become fully exercisable, and all
restrictions on any restricted stock or deferred stock units of
the Company held by Mr. Davis immediately prior to his
termination date that would have lapsed if his employment
continued for one year after the termination date shall be
removed.
|
If Mr. Daviss employment agreement is terminated as a
result of Mr. Daviss death or permanent disability,
or by us without cause, by our non-renewal of the employment
agreement or by Mr. Davis for good reason, we shall arrange
to provide Mr. Davis and his spouse and eligible dependents
who were covered under our group health plan on the date of his
termination and who in the case of eligible dependents continue
to be eligible dependents, group health plan coverage until
Mr. Davis reaches age 65, or in the case of a
termination as a result of Mr. Daviss death or
permanent disability, until Mr. Daviss spouse reaches
age 65. Such coverage will be substantially similar to that
provided to our executive officers during such period and at the
same cost as if Mr. Davis remained an executive officer of
the Company during such period. Subject to Mr. Daviss
group health plan coverage continuation rights under
section 4980B of the Internal Revenue Code, the
continuation of medical benefits shall be reduced to the extent
benefits of the same type are received by Mr. Davis, his
spouse or any eligible dependent from any other person during
such period.
Certain of the payments to be made to Mr. Davis under his
employment agreement may be deferred in order to comply with the
requirements of section 409A of Code.
Under his employment agreement, Mr. Davis has agreed not to
compete with us during the term thereof and for any period in
which he is receiving payments or benefits from us under his
employment agreement (other than the continuation of medical
benefits).
Finally, Mr. Daviss employment agreement provides
that in the event that (i) prior to a change in control of
the Company, the Board determines by a majority vote, or
(ii) following a change in control of the Company, a court
of competent jurisdiction determines by a final, non-appealable
order, that Mr. Davis, before or after the termination of
his employment relationship with us, has committed certain acts
which materially and adversely affect us, then some or all
(A) benefits payable or to be provided, or previously paid
or provided, to Mr. Davis under his employment agreement or
(B) cash bonuses paid to Mr. Davis by us on or after
the date of his employment agreement, or equity awards granted
to Mr. Davis by us that vest, on or after the date of his
employment agreement
38
will be forfeited to us on such terms as determined by the Board
or the final, non-appealable order of a court of competent
jurisdiction. Those acts which could trigger such a forfeiture
include:
|
|
|
|
|
fraud, embezzlement, theft, felony or an act of dishonesty in
the course of Mr. Daviss employment with us or any of
our affiliates;
|
|
|
|
knowingly causing or assisting in causing us or one of our
subsidiaries to engage in criminal misconduct;
|
|
|
|
if Mr. Davis knew or should have known in the reasonable
exercise of his duties that we were publicly releasing financial
statements of the Company that were materially misstated and
misleading;
|
|
|
|
disclosing trade secrets of the Company or an affiliate and such
action materially and adversely affected us; or
|
|
|
|
violating the terms of any non-competition, non-disclosure or
similar agreement with respect to us or any of our affiliates to
which Mr. Davis is a party and such action materially and
adversely affected us.
|
Split-Dollar
Life Insurance Agreements
The George Zimmer 1988 Living Trust and the Zimmer
Childrens 2010 Remainder Trust are presently the owners,
respectively, of 2,133,745 shares and 68,259 shares of
our Common Stock. We have been advised that in the event of the
death of George Zimmer, absent other sources of cash, his estate
may be required to publicly sell all or a substantial portion of
such shares to satisfy estate tax obligations. The public sale
of such number of shares may destabilize the market for our
publicly traded stock. In November 1994, shortly after the
Company went public and when George Zimmer owned approximately
31% of our outstanding Common Stock, we entered into an
agreement (commonly known as a split-dollar life insurance
agreement) with him under the terms of which we made advances of
the premiums for certain life insurance policies on the life of
George Zimmer with an aggregate face value, as amended, of
$25,500,000 purchased by a trust established by Mr. Zimmer.
To secure the repayment of the advances, the trust assigned the
policies to us as collateral. Further, a second split-dollar
life insurance agreement with essentially the same terms as the
existing agreement was entered into relating to a life insurance
policy on the life of George Zimmer with a face value of
$1,000,000 purchased by a second trust established by
Mr. Zimmer. The trusts assigned the additional policies to
us as collateral. The proceeds of these policies are intended to
provide George Zimmers estate with enough liquidity to
avoid destabilizing sales of our Common Stock.
In light of the provisions of the Sarbanes-Oxley Act of 2002
which prohibit us from making loans to our officers and
directors (which may encompass the advancement of premiums for
life insurance policies even though secured by the cash payable
pursuant to such policies), we have ceased making premium
payments as loans to George Zimmer. When, as a result of the
limitations imposed by the Sarbanes Oxley Act of 2002, the
Company could no longer provide to Mr. Zimmer the benefit
of the traditional split dollar insurance arrangement, the
Compensation Committee reviewed his overall compensation program
and decided to pay him an amount in cash to pay the premiums on
the insurance policies and also to pay him an additional amount
to cover the taxes due on such payment and the additional
payment. Because the Compensation Committee considers these
payments as part of George Zimmers base compensation and
the payments are made directly to him without any requirement
that they be used to pay premiums on the insurance, we have
included the payments as part of his base salary in the Summary
Compensation Table. Starting in fiscal 2009, the Compensation
Committee set Mr. Zimmers base compensation without
identifying a specific amount determined by the premiums on the
insurance policies or taxes due in respect of additional
payments with respect to the premiums.
In June 2006, we entered into an additional split-dollar life
insurance agreement with George Zimmer pursuant to which we
granted to Mr. Zimmer the right to select the settlement
option for payment of the death benefits and the beneficiaries
to receive certain of the proceeds to be paid upon his death
under a $4,000,000 policy which we maintain on his life. We will
continue to pay the premiums due on this policy, a portion of
which is additional compensation to Mr. Zimmer. We are the
sole owner of the policy and at the time of George Zimmers
death we have the right to receive a portion of the death
benefit equal to the greater of the total amount of the premiums
paid under the policy or the cash value of the policy (excluding
certain charges and reductions, including but not limited to
indebtedness outstanding against such policy and interest
related thereto). The balance of the death benefit, if any, will
be provided to the beneficiaries named by George Zimmer.
39
On September 1, 2010, the Company assigned its rights to
receive an aggregate of $2.6 million of the proceeds from
the life insurance policies on the life of Mr. Zimmer to
Mr. Zimmer and a trust for the benefit of Mr. Zimmer
in exchange for a cash payment of $2.6 million from
Mr. Zimmer.
Employee
Equity Incentive Plans
We maintain The Mens Wearhouse, Inc. 1996 Long-Term
Incentive Plan (the 1996 Plan) and the 2004 Plan
(collectively, the Plans) for the benefit of our
full-time key employees. Under the 1996 Plan, awards covering up
to 2,775,000 shares of our Common Stock may be granted;
however, no shares of our Common Stock remain available for
grants of future awards under the 1996 Plan. Under the 2004
Plan, awards covering up to 2,110,059, or 4,610,059 if the
amendment to the 2004 Plan is approved by shareholders at the
Annual Meeting, shares of our Common Stock may be granted.
The Plans are administered by the Compensation Committee. The
individuals eligible to participate in the Plans are such of our
full-time key employees, including officers and employee
directors, as the committee may determine from time to time.
However, George Zimmer and James Zimmer are not eligible to
participate in the 1996 Plan.
Under the Plans, the Compensation Committee may grant options
(both incentive stock options and nonqualified stock options),
stock appreciation rights, restricted stock, deferred stock
units, performance stock awards, performance units, cash-based
awards, and other stock-based awards. The purchase price of
shares subject to an option granted under the Plans is
determined by the Compensation Committee and may not be less
than 100% of the fair market value of the shares of our Common
Stock on the date of grant. Options granted under the Plans must
be exercised within ten years from the date of grant. Unless
otherwise provided by the Compensation Committee, the options
vest with respect to one-third of the shares covered thereby on
each of the first three anniversaries of the date of grant. In
the case of any eligible employee who owns or is deemed to own
stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or its parent or
subsidiaries, (i) the option price of any incentive stock
option granted may not be less than 110% of the fair market
value of our Common Stock on the date of grant and (ii) the
exercisable period may not exceed five years from the date of
grant. Stock appreciation rights (freestanding or tandem),
restricted stock, deferred stock units, performance stock
awards, performance units, other stock-based awards and
cash-based awards may be granted under the Plans in such number
and upon such terms and conditions as determined by the
Compensation Committee.
Generally, awards granted under the Plans are not transferable
by the holder other than by will or under the laws of descent
and distribution. Options granted under the Plans terminate on
the earlier of (i) the expiration date of the option or
(ii) one day less than one month after the date the holder
of the option terminates his or her employment with us for any
reason other than the death, disability or the retirement of
such holder. During such one-month period, the holder may
exercise the option in respect of the number of shares that were
vested on the date of such severance of employment. In the event
of severance because of the death, disability or retirement of a
holder before the expiration date of the option, the option
terminates on the earlier of such (i) expiration date or
(ii) one year following the date of severance. During this
period the holder, or his or her heirs, as the case may be,
generally may exercise the option in respect of the number of
shares that were vested on the date of severance because of
death, disability or retirement. The Compensation Committee
shall determine the extent to which a holder shall have the
right to receive or exercise such award following termination of
the holders employment with us.
40
Grants of
Plan-Based Awards Table
The following table sets forth certain information regarding
grants made during the fiscal year ended January 29, 2011
to each of the Named Executive Officers under any of the Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Number
|
|
Number
|
|
or Base
|
|
Value of
|
|
|
|
|
Under Non-Equity
|
|
Under Equity
|
|
of Shares
|
|
of Securities
|
|
Price of
|
|
Stock and
|
|
|
Grant
|
|
Incentive Plan Awards
|
|
Incentive Plan Awards
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
(1)
|
|
($)
|
|
($)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(3)
|
|
(#)
|
|
($/Sh)
|
|
($)(4)
|
|
George Zimmer
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neill P. Davis
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
241,800
|
|
Douglas S. Ewert
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
302,250
|
|
Carole Souvenir
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
96,720
|
|
Charles Bresler, Ph.D.
|
|
|
4/7/2010
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the date when the Compensation Committee approved the
targets for the executive officers annual cash incentive
bonus program or equity grant. |
|
(2) |
|
Relates to our ongoing bonus program in which executive officers
participate annually. The criteria for determining the amount of
each Named Executive Officers bonus is based on:
(i) the Company attaining sales goals, (ii) the
Company attaining net income goals, and (iii) the officer
attaining personal goals. Each of the first two criteria is
quantitative, while the third criterion is subjective. Each
criterion carries equal weight and accounts for one third of the
possible payout. Two different thresholds exist for each of the
three criteria good and excellent. An executive
receives one-sixth of the payout if the good
threshold of a particular criterion is met and receives the
entire one-third payout if the excellent threshold
is achieved. As an example, Mr. Zimmers maximum
target bonus is $200,000, and if he achieved the good level of
only one of the criteria he would receive $33,333 which would be
the lowest bonus level and if he achieved the good level of all
the criteria he would receive $100,000 which would be one half
of the maximum bonus level. The qualitative assessment of each
Named Executive Officers individual performance is made by
the Compensation Committee primarily based on the views and
recommendations of the Chief Executive Officer in the case of
the Named Executive Officers other than himself. Threshold
levels for good financial criteria are based on
minimum performance objectives that the Chief Executive Officer
sets at the beginning of a year and take into consideration the
Companys operating and growth plans for the coming year
and are generally considered to be obtainable that year. The
excellent threshold targets are typically
representative of a substantial increase over the
good threshold and, in recent years, these
thresholds usually have not been achieved. For actual amounts
paid to the Named Executive Officers pursuant to these grants
under the bonus program, see the column entitled
Non-Equity Incentive Plan Compensation in the
Summary Compensation Table. |
|
(3) |
|
Represents deferred stock units granted to these individuals on
April 7, 2010. Each grant vests on April 13, 2011. |
|
(4) |
|
Represents grant date fair value of each of the respective
deferred stock unit grants. |
41
Outstanding
Equity Awards at Fiscal Year-End Table
The following table summarizes certain information regarding
unexercised vested options and option, stock and equity
incentive plan awards outstanding and not yet vested as of the
end of the fiscal year ended January 29, 2011 for each of
the Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Plan Awards:
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number
|
|
|
Market Value
|
|
|
Plan Awards:
|
|
|
Market or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
of Shares
|
|
|
Number of
|
|
|
Payout Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
or Units
|
|
|
or Units
|
|
|
Unearned Shares,
|
|
|
Unearned Shares,
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
of Stock
|
|
|
of Stock
|
|
|
Units or Other
|
|
|
Units or Other
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
That Have
|
|
|
Rights That Have
|
|
|
Rights That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
George Zimmer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neill P. Davis
|
|
|
17,504
|
(2)
|
|
|
|
|
|
|
|
|
|
|
14.24
|
|
|
|
2/11/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(3)
|
|
|
|
|
|
|
|
|
|
|
7.97
|
|
|
|
2/26/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
|
(4)
|
|
|
37,500
|
(5)
|
|
|
|
|
|
|
15.88
|
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(6)
|
|
|
389,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(7)
|
|
|
259,700
|
|
|
|
|
|
|
|
|
|
Douglas S. Ewert
|
|
|
18,000
|
(8)
|
|
|
18,000
|
(9)
|
|
|
|
|
|
|
15.88
|
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(10)
|
|
|
70,000
|
(11)
|
|
|
|
|
|
|
41.33
|
|
|
|
11/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,997
|
(12)
|
|
|
77,003
|
(13)
|
|
|
|
|
|
|
22.72
|
|
|
|
3/28/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(14)
|
|
|
389,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(15)
|
|
|
324,625
|
|
|
|
|
|
|
|
|
|
Carole Souvenir
|
|
|
5,250
|
(16)
|
|
|
|
|
|
|
|
|
|
|
14.83
|
|
|
|
1/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(17)
|
|
|
15,000
|
(18)
|
|
|
|
|
|
|
22.72
|
|
|
|
3/28/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
(19)
|
|
|
103,880
|
|
|
|
|
|
|
|
|
|
Charles Bresler, Ph.D.
|
|
|
30,000
|
(20)
|
|
|
30,000
|
(21)
|
|
|
|
|
|
|
14.24
|
|
|
|
2/11/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(14)
|
|
|
389,550
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the closing price of $25.97 per share for our Common
Stock on the New York Stock Exchange on January 28, 2011,
which was the last trading day of our fiscal year. |
|
(2) |
|
The award vested on January 27, 2009, 2010 and 2011. |
|
(3) |
|
The award vested on February 26, 2010. |
|
(4) |
|
The award vested on February 13, 2008, 2009 and 2010. |
|
(5) |
|
The award vests as follows: 15,000 options on February 13,
2011 and 22,500 options on February 13, 2012. |
|
(6) |
|
The award vests as follows: 5,000 units annually on each of
April 13, 2011, 2012 and 2013. |
|
(7) |
|
The award vests on April 13, 2011. |
|
(8) |
|
The award vested on February 13, 2009 and 2010. |
|
(9) |
|
The award vests as follows: 9,000 options annually on each of
February 13, 2011 and 2012. |
|
(10) |
|
The award vested on November 16, 2008, 2009 and 2010. |
|
(11) |
|
The award vests as follows: 10,000 options annually on each of
November 16, 2011, 2012, 2013, 2014, 2015, 2016, and 10,000
options on October 16, 2017. |
|
(12) |
|
The award vested on March 28, 2009 and 2010. |
|
(13) |
|
The award vests as follows: 10,999 options annually on
March 28, 2011, 2012, 2013, 2014, 2015 and 2016 and 11,009
options on March 28, 2017. |
|
(14) |
|
The award vests as follows: 7,500 units annually on each of
April 13, 2011 and 2012. |
|
(15) |
|
The award vests on April 13, 2011. |
|
(16) |
|
The award vested on January 12, 2006 and 2007. |
|
(17) |
|
The award vested on March 28, 2009 and 2010. |
|
(18) |
|
The award vests as follows: 5,000 units annually on each of
March 28, 2011, 2012 and 2013. |
|
(19) |
|
The award vests on April 13, 2011. |
|
(20) |
|
The award vested on January 27, 2011. |
|
(21) |
|
The award vests on July 27, 2011. |
42
Option
Exercises and Stock Vested Table
The following table summarizes certain information regarding the
exercise of options and the vesting of stock during the fiscal
year ended January 29, 2011 for each of the Named Executive
Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Acquired
|
|
Realized
|
|
Acquired
|
|
Realized
|
|
|
on Exercise
|
|
on Exercise
|
|
on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
George Zimmer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neill P. Davis
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
126,650
|
|
Douglas S. Ewert
|
|
|
1,500
|
|
|
|
9,567
|
|
|
|
20,000
|
|
|
|
494,800
|
|
Carole Souvenir
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
|
91,188
|
|
Charles Bresler, Ph.D.
|
|
|
30,000
|
|
|
|
321,426
|
|
|
|
7,500
|
|
|
|
189,975
|
|
Pension
Benefits
We currently have no defined benefit pension plans.
Nonqualified
Deferred Compensation
We currently have no defined contribution plans which provide
for the deferral of compensation on a basis that is not tax
qualified.
Potential
Payments upon Termination or Change in Control
Change
in Control Agreements
Effective as of May 15, 2009 (the Effective
Date), we entered into Change in Control agreements with
our executive officers, including the Named Executive Officers,
which entitle the executives to receive certain benefits in the
event that a Change in Control occurs and the executives
employment with the Company is terminated after the occurrence
of that Change in Control. The agreements terminate on the first
to occur of (a) the executives death or disability,
(b) the termination of the executives employment with
the Company or (c) the end of the last day of (i) the
two-year period beginning on the Effective Date (or any period
for which the term shall have been automatically extended) if no
Change in Control shall have occurred during that two-year
period or (ii) the two-year period beginning on the date on
which a Change in Control occurred if a Change in Control of the
Company shall have occurred during the applicable two-year
period; provided, however, that, if the agreement has not
terminated due to the executives death or disability and
we have not given the executive notice at least 90 days
before any applicable expiration date that the term will expire
on such expiration date, then the term of the agreement shall be
automatically extended for successive two-year periods.
The Change in Control agreements do not limit or otherwise
affect any rights an executive may have under any other contract
or agreement with the Company or any of our affiliates. Amounts
which are vested benefits or which the executive is otherwise
entitled to receive under any plan, program, policy or practice
of or provided by, or any contract or agreement with, the
Company or any of our affiliates at or subsequent to the date of
termination of the executives employment with the Company
shall be payable or otherwise provided in accordance with such
plan, program, policy or practice or contract or agreement
except as explicitly modified by the executives Change in
Control agreement.
Pursuant to the agreements, a Change in Control
occurs when:
|
|
|
|
|
the individuals who (i) are members of the Board of
Directors on the Effective Date or (ii) who become members
of the Board of Directors after the Effective Date, whose
appointment or election by the Board of Directors or nomination
for election by our shareholders is approved or recommended by a
vote of at least two-thirds of the then serving incumbent
directors and whose initial assumption of service on the Board
of
|
43
|
|
|
|
|
Directors is not in connection with an actual or threatened
election contest (the Incumbent Directors) cease for
any reason to constitute a majority of the members of the Board
of Directors;
|
|
|
|
|
|
a merger, consolidation or similar transaction (a
merger) of the Company with another entity is
consummated, unless:
|
|
|
|
|
|
the individuals and entities who were the beneficial owners of
our voting securities outstanding immediately prior to such
merger own, directly or indirectly, more than 50 percent of
the combined voting power of the voting securities of either the
surviving entity or the parent of the surviving entity
outstanding immediately after such merger; and
|
|
|
|
the individuals who comprise the Board of Directors immediately
prior to such merger constitute a majority of the board of
directors or other governing body of either the surviving entity
or the parent of the surviving entity;
|
|
|
|
|
|
a merger of a wholly-owned subsidiary with another entity (other
than an entity in which we own, directly or indirectly, a
majority of the voting and equity interest) is consummated if
the gross revenues of such wholly-owned subsidiary (including
the entities wholly-owned directly or indirectly by such
wholly-owned subsidiary) for the twelve-month period immediately
preceding the month in which the merger occurs equal or exceed
30 percent of our consolidated gross revenues reported by
us on our consolidated financial statements for such period;
|
|
|
|
any person, other than a Specified Owner (as defined in the
agreement), becomes a beneficial owner, directly or indirectly,
of our securities representing 30 percent or more of the
combined voting power of our then outstanding voting securities;
|
|
|
|
a sale, transfer, lease or other disposition of all or
substantially all of the assets of the Company is consummated
(an Asset Sale), unless:
|
|
|
|
|
|
the individuals and entities who were the beneficial owners of
our voting securities immediately prior to such Asset Sale own,
directly or indirectly, more than 50 percent of the
combined voting power of the voting securities of the entity
that acquires such assets in such Asset Sale or its parent
immediately after such Asset Sale in substantially the same
proportions as their ownership of our voting securities
immediately prior to such Asset Sale; and
|
|
|
|
the individuals who comprise the Board of Directors immediately
prior to such Asset Sale constitute a majority of the board of
directors or other governing body of either the entity that
acquired such assets in such Asset Sale or its parent; or
|
|
|
|
|
|
our shareholders approve a plan of complete liquidation or
dissolution of the Company.
|
In addition, if following the commencement of any discussion
with a third person (other than discussions with an investment
banker, attorney, accountant or other advisor engaged by us)
that ultimately results in a Change in Control, the
executives (i) employment with the Company is
terminated, (ii) duties are materially changed or the
executives status and position with the Company is
materially diminished, (iii) annual base salary is reduced,
or (iv) annual bonus potential is reduced to an amount less
than such executives maximum annual bonus potential for
the preceding year (the Benchmark Bonus), then for
all purposes of the agreement, such Change in Control shall be
deemed to have occurred on the date immediately prior to the
date of such termination, change, diminution, or reduction.
If a Change in Control occurs and an executives employment
by the Company is terminated, the executive shall be entitled to
the following benefits:
|
|
|
|
|
If the executives employment by the Company is:
|
|
|
|
|
|
terminated by the Company as a result of the occurrence of an
Event of Termination for Cause (as defined below) or by the
executive before the occurrence of an Event of Termination for
Good Reason (as defined below),
|
|
|
|
automatically terminated as a result of the executives
death, or
|
44
|
|
|
|
|
automatically terminated as a result of the executives
disability (as defined in the Change in Control agreements),
|
then we shall pay to the executive, or the executives
estate or beneficiaries, as applicable, those amounts earned or
benefits accumulated due to the executives continued
service through his termination date.
|
|
|
|
|
If the executives employment by the Company is terminated
by us otherwise than as a result of the occurrence of an Event
of Termination for Cause or by the executive after the
occurrence of an Event of Termination for Good Reason, then we
shall pay to the executive those amounts earned or benefits
accumulated due to the executives continued service
through his termination date as well as:
|
|
|
|
|
|
a lump sum equal to two times the sum of (1) the amount
(including any deferred portion thereof) of the base salary for
the fiscal year in which the executives termination date
occurs or for the immediately preceding fiscal year, whichever
is higher and (2) an amount equal to the executives
maximum potential annual performance bonus for the fiscal year
in which the executives termination date occurs or the
immediately preceding fiscal year, whichever is higher, and
|
|
|
|
a lump sum equal to the product of (1) the total monthly
basic life insurance premium (both the portion paid by us and
the portion paid by the executive) applicable to the
executives basic life insurance coverage on his
termination date and (2) 24 (provided that if a conversion
option is applicable under our group life insurance program, the
executive may, at his option, convert his basic life insurance
coverage to an individual policy after his termination date by
completing the forms required by us).
|
In addition, we at our sole expense shall take the following
actions: (1) throughout the period beginning on the
termination date and ending on the first to occur of the second
anniversary of the termination date, or the date on which the
executive becomes employed on a full-time basis by another
person (the Coverage Period), we shall maintain in
effect, and not materially reduce the benefits provided by our
group health plan in which the executive was a participant
immediately before the termination date; and (2) we shall
arrange for the executives uninterrupted participation
throughout the coverage period in our group health plan in which
the executive was a participant immediately before the
termination date; provided that if the executives
participation after the termination date in such group health
plan is not permitted by the terms of that plan, then throughout
the Coverage Period, we (at our sole expense) shall provide the
executive with substantially the same benefits that were
provided to the executive by that plan immediately before the
termination date.
Assuming that a Change in Control occurred during fiscal 2010
and each of the executives were terminated under the
above-described circumstances effective as of January 29,
2011, the Named Executive Officers would be entitled to receive
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2x Base &
|
|
Insurance
|
|
Health
|
|
|
|
|
Bonus
|
|
Premiums
|
|
Coverage
|
|
Total
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)(1)
|
|
George Zimmer
|
|
|
2,264,000
|
|
|
|
4,493
|
|
|
|
20,486
|
|
|
|
2,288,979
|
|
Neill P. Davis
|
|
|
1,400,000
|
|
|
|
4,493
|
|
|
|
20,486
|
|
|
|
1,424,979
|
|
Douglas S. Ewert
|
|
|
1,700,000
|
|
|
|
4,493
|
|
|
|
18,464
|
|
|
|
1,722,957
|
|
Carole Souvenir
|
|
|
820,000
|
|
|
|
4,333
|
|
|
|
6,943
|
|
|
|
831,276
|
|
Charles Bresler, Ph.D.
|
|
|
1,150,000
|
|
|
|
4,493
|
|
|
|
16,242
|
|
|
|
1,170,735
|
|
|
|
|
(1) |
|
Does not include amounts earned or benefits accumulated due to
continued service through January 29, 2011. |
Each payment required to be made to an executive pursuant to the
foregoing shall be made by check drawn on an account of the
Company or the successor and shall be paid generally within
30 days after the date of termination; provided, however,
that certain of the payments to be made to the executives under
the Change in Control agreements may be deferred in order to
comply with the requirements of section 409A of the
Internal Revenue Code. In the event that it is determined that
any payment, benefit or distribution by us or our affiliates to
or for the benefit of the executive (whether paid or payable,
distributed or distributable, or provided or to be provided,
45
pursuant to the terms of his Change in Control agreement or
otherwise) would be nondeductible by us or any of our affiliates
for federal income tax purposes because of section 280G of
the Internal Revenue Code then the aggregate present value of
amounts payable or distributable to or for the benefit of the
executive pursuant to his Change in Control agreement shall be
reduced to an amount expressed in present value which maximizes
the aggregate present value of agreement payments without
causing any payment to be nondeductible by us or any of our
affiliates because of section 280G of the Internal Revenue
Code.
Pursuant to the terms of the Change in Control agreements, an
Event of Termination for Cause shall be deemed to
have occurred if, after a Change in Control, the executive shall
have committed:
|
|
|
|
|
gross negligence or willful misconduct in connection with his
duties or in the course of his employment with the Company or
any wholly-owned subsidiary;
|
|
|
|
an act of fraud, embezzlement or theft in connection with his
duties or in the course of his employment with the Company or
any wholly-owned subsidiary;
|
|
|
|
intentional wrongful damage to property (other than of a de
minimis nature) of the Company or any wholly-owned subsidiary;
|
|
|
|
intentional wrongful disclosure of secret processes or
confidential information of the Company or any wholly-owned
subsidiary which the executive believes or reasonably should
believe will have a material adverse affect on the
Company; or
|
|
|
|
an act leading to a conviction of a felony, or a misdemeanor
involving moral turpitude.
|
No act, or failure to act, on the part of the executive shall be
deemed intentional if it was due primarily to an
error in judgment or negligence, but shall be deemed
intentional only if done, or omitted to be done, by
the executive not in good faith and without reasonable belief
that his action or omission was in the best interest of the
Company. The Executive shall not be deemed to have been
terminated as a result of an Event of Termination for
Cause under the agreement unless and until there shall
have been delivered to the executive a certified copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters of the members of the Board of Directors then in
office (but excluding the executive from any such vote or
determination if he is then a member of the Board of Directors)
at a meeting of the Board of Directors called and held for such
purpose, finding that, in the good faith opinion of the Board of
Directors, the executive had committed an act set forth above
and specifying the particulars thereof in detail.
Further, as defined in the Change in Control agreements, an
Event of Termination for Good Reason shall occur if,
on or after a Change in Control, the Company or the successor:
|
|
|
|
|
assigns to the executive any duties inconsistent with the
executives position (including offices, titles and
reporting requirements), authority, duties or responsibilities
with the Company in effect immediately before the occurrence of
the Change in Control or otherwise makes any change in any such
position, authority, duties or responsibilities;
|
|
|
|
removes the executive from, or fails to re-elect or appoint the
executive to, any duties or position with the Company that were
assigned or held by the executive immediately before the
occurrence of the Change in Control, except that a nominal
change in the executives title that is merely descriptive
and does not affect rank or status shall not constitute such an
event;
|
|
|
|
takes any other action that results in a material diminution in
the executives position, authority, duties or
responsibilities or otherwise takes any action that materially
interferes therewith;
|
|
|
|
reduces the executives annual base salary as in effect
immediately before the occurrence of the Change in Control or as
the executives annual base salary may be increased from
time to time after that occurrence;
|
|
|
|
reduces the executives maximum annual bonus potential to
an amount less than the executives maximum annual bonus
potential for the preceding year (the Benchmark
Bonus) or revises the bonus plan in any manner that
materially adversely affects the executives ability to
achieve the maximum annual bonus potential;
|
46
|
|
|
|
|
requires the executive:
|
|
|
|
|
|
to be based at any office or location more than thirty-five
(35) miles from the office of the Company where the
executive was principally employed and stationed immediately
prior to the Change in Control, or
|
|
|
|
to travel on Company business to a materially greater extent
than required immediately prior to the Change in Control;
|
|
|
|
|
|
requires the executive to perform a majority of his duties
outside the office of the Company where the executive was
principally employed and stationed immediately prior to the
Change in Control for a period of more than 21 consecutive days
or for more than 90 days in any calendar year;
|
|
|
|
fails to:
|
|
|
|
|
|
continue in effect any bonus, incentive, profit sharing,
performance, savings, retirement or pension policy, plan,
program or arrangement (such policies, plans, programs and
arrangements collectively being referred to as the Basic
Benefit Plans), including, but not limited to, any
deferred compensation, supplemental executive retirement or
other retirement income, stock option, stock purchase, stock
appreciation, restricted stock, deferred stock unit, employee
stock ownership or similar policy, plan, program or arrangement
of the Company, in which the executive was a participant
immediately before the occurrence of the Change in Control
unless an equitable and reasonably comparable arrangement
(embodied in a substitute or alternative benefit or plan) shall
have been made with respect to such Basic Benefit Plan promptly
following the occurrence of the Change in Control, or
|
|
|
|
continue the executives participation in any Basic Benefit
Plan (or any substitute or alternative plan) on substantially
the same basis, both in terms of the amount of benefits provided
to the executive (which are in any event always subject to the
terms of any applicable Basic Benefit Plan) and the level of the
executives participation relative to other executives of
the Company, as existed immediately before the occurrence of the
Change in Control;
|
|
|
|
|
|
fails to continue to provide the executive with benefits
substantially similar to those enjoyed by the executive under
any of our other executive benefit plans, policies, programs and
arrangements, including, but not limited to, life insurance,
medical, dental, health, hospital, accident or disability plans,
in which the executive was a participant immediately before the
occurrence of the Change in Control;
|
|
|
|
takes any action that would directly or indirectly materially
reduce any other non-contractual benefits that were provided to
the executive by the Company immediately before the occurrence
of the Change in Control or deprive the executive of any
material fringe benefit enjoyed by the executive immediately
before the occurrence of the Change in Control;
|
|
|
|
fails to provide the executive with the number of paid vacation
days to which the executive was entitled in accordance with our
vacation policy in effect immediately before the occurrence of
the Change in Control;
|
|
|
|
fails to continue to provide the executive with office space,
related facilities and support personnel (including, but not
limited to, administrative and secretarial assistance) that are
(i) both commensurate with the executives
responsibilities to and position with the Company immediately
before the occurrence of the Change in Control and not
materially dissimilar to the office space, related facilities
and support personnel provided to our other executives having
comparable responsibility to the executive, or
(ii) physically located at the office of the Company where
the executive was principally employed and stationed immediately
prior to the Change in Control;
|
|
|
|
fails to honor any provision of any employment agreement the
executive has or may in the future have with the Company or fail
to honor any provision of the Change in Control agreement;
|
|
|
|
gives effective notice of an election to terminate at the end of
the term or the extended term of any employment agreement the
executive has or may in the future have with the Company or the
successor in accordance with the terms of any such
agreement; or
|
47
|
|
|
|
|
purports to terminate the executives employment by the
Company unless proper notice of that termination shall have been
given to the executive.
|
In addition, pursuant to the terms of the Change in Control
agreements, immediately upon the occurrence of a Change in
Control, all options to acquire our voting securities held by an
executive shall become fully exercisable and all restrictions on
our restricted voting securities granted to an executive prior
to a Change in Control shall be removed and the securities shall
be freely transferable. In addition, the award agreements
between the Named Executive Officers and the Company related to
the awards of deferred stock units provide that such units shall
immediately vest upon a Change in Control. If a Change in
Control occurred on January 29, 2011, the following awards
would have vested for each of the Named Executive Officers
which, based on the closing sales price of our Common Stock on
January 28, 2011 (the last trading day of the fiscal year
ended January 29, 2011), would have resulted in the
indicated realized value to the Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock and Deferred
|
|
|
|
Option Awards
|
|
|
Stock Unit Awards
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value
|
|
|
Shares or
|
|
|
Value
|
|
|
Total Value
|
|
|
|
Shares
|
|
|
Realized
|
|
|
Units
|
|
|
Realized
|
|
|
Realized
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
George Zimmer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neill P. Davis
|
|
|
37,500
|
|
|
|
378,375
|
|
|
|
25,000
|
|
|
|
649,250
|
|
|
|
1,027,625
|
|
Douglas S. Ewert
|
|
|
165,003
|
|
|
|
431,880
|
|
|
|
27,500
|
|
|
|
714,175
|
|
|
|
1,146,055
|
|
Carole Souvenir
|
|
|
15,000
|
|
|
|
48,750
|
|
|
|
4,000
|
|
|
|
103,880
|
|
|
|
152,630
|
|
Charles Bresler, Ph.D.
|
|
|
30,000
|
|
|
|
351,900
|
|
|
|
15,000
|
|
|
|
389,550
|
|
|
|
741,450
|
|
Finally, the Change in Control agreements provide that in the
event that (i) prior to a Change in Control, our Board of
Directors determines by a majority vote, or (ii) following
a Change in Control, a court of competent jurisdiction
determines by a final, non-appealable order, that an executive,
before or after the termination of his employment relationship
with us, has committed certain acts which materially and
adversely affect the Company, then some or all (A) benefits
payable or to be provided, or previously paid or provided, to
the executive under his Change in Control agreement or
(B) cash bonuses paid to the executive by the Company, or
equity awards granted to the executive by the Company that vest,
on or after the executive executed the Change in Control
agreement will be forfeited to us on such terms as determined by
the Board of Directors. Those acts which could trigger such a
forfeiture include:
|
|
|
|
|
fraud, embezzlement, theft, felony or similar acts of dishonesty
in the course of the executives employment with us which
damaged the Company,
|
|
|
|
knowingly causing or assisting in causing our financial
statements to be misstated or the Company to engage in criminal
misconduct,
|
|
|
|
disclosing our trade secrets, or
|
|
|
|
violating the terms of any non-competition, non-disclosure or
similar agreement with respect to us to which the executive is a
party.
|
DIRECTOR
COMPENSATION
Our employee directors do not receive fees for attending
meetings of the Board of Directors. Generally, each of our
non-employee directors receives an annual retainer of $100,000.
In addition, the Lead Director receives an annual retainer of
$50,000, members of the Audit Committee receive an annual
retainer of $10,000, or $20,000 for the Chairman of the Audit
Committee, and the Chairman of each of the Compensation
Committee and the Nominating and Corporate Governance Committee
receive an annual retainer of $10,000. Further, each person who
is a non-employee director on the last day of each fiscal
quarter receives a grant of a number of deferred stock units
equal to $25,000 divided by the closing price of our Common
Stock on the last trading day of such fiscal quarter. In
addition, upon his or her appointment, any new director will
receive a grant of restricted stock or deferred stock units, at
the discretion of the Board of Directors, equal to $100,000
divided by the closing price of our Common
48
Stock as reported on the New York Stock Exchange on the date
such director is appointed or elected to the Board of Directors.
All such awards shall be subject to the terms of the 2004 Plan.
All restrictions on the restricted stock lapse, and all deferred
stock unit awards shall vest, one year after the date of grant
or, if earlier, upon the occurrence of a change in control of
the Company (as defined in the award agreements to be entered
into between us and the directors under the 2004 Plan, the form
of which was filed as Exhibit 10.1 to our Current Report on
Form 8-K
filed with the Commission on January 28, 2009).
The following table summarizes compensation paid to each
non-employee director during the fiscal year ended
January 29, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified
|
|
|
|
|
|
|
Fees Earned
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
Name
|
|
or Paid
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
|
(1)
|
|
in Cash ($)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
Earnings
|
|
($)(3)
|
|
Total ($)
|
|
Rinaldo S. Brutoco
|
|
|
110,000
|
|
|
|
100,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,396
|
|
|
|
212,414
|
|
Deepak Chopra, M.D.
|
|
|
100,000
|
|
|
|
100,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,396
|
|
|
|
202,414
|
|
Larry R. Katzen
|
|
|
110,000
|
|
|
|
100,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,396
|
|
|
|
212,414
|
|
Michael L. Ray, Ph.D.
|
|
|
110,000
|
|
|
|
100,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,396
|
|
|
|
212,414
|
|
William B. Sechrest
|
|
|
170,000
|
|
|
|
100,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,396
|
|
|
|
272,414
|
|
Sheldon I. Stein
|
|
|
110,000
|
|
|
|
100,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,396
|
|
|
|
212,414
|
|
Grace Nichols(4)
|
|
|
|
|
|
|
100,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,010
|
|
|
|
|
(1) |
|
David Edwab, who is an executive officer of the Company, but not
a Named Executive Officer, has been omitted from the table as he
does not receive any additional compensation for services
provided as a director. Please see below for a discussion of
certain agreements he has with the Company. |
|
(2) |
|
Represents aggregate grant date fair value of awards computed in
accordance with FASB ASC topic 718. |
|
(3) |
|
Represents amount of dividend paid to the director on unvested
restricted stock shares. |
|
(4) |
|
Ms. Nichols was appointed to the Board of Directors
effective as of January 30, 2011. |
Agreements
with Mr. Edwab
Split-Dollar
Life Insurance Agreements
We have entered into split-dollar life insurance agreements with
Mr. Edwab under the terms of which we made advances of the
premiums on $3,000,000 in life insurance policies owned by a
trust established by Mr. Edwab and payable to beneficiaries
designated by him (subject to certain split-dollar provisions in
favor of us). To secure the repayment of the premiums, the Trust
has assigned the policies to us as collateral.
In light of the provisions of the Sarbanes-Oxley Act of 2002
which prohibit us from making loans to our officers and
directors (which may encompass the advancement of premiums for
life insurance policies even though secured by the cash payable
pursuant to such policies), we have ceased making premium
payments as loans to Mr. Edwab.
Employment
Agreement
On November 5, 2010, we entered into a Fourth Amended and
Restated Employment Agreement with David H. Edwab, Vice Chairman
of the Company, for a term extending through February 5,
2013, which will be automatically extended for successive one
year terms unless the requisite prior written notice is provided
by Mr. Edwab or the Company; provided, however, that in any
event his employment agreement will terminate on
February 5, 2016. Under Mr. Edwabs employment
agreement we agreed, among other things, to:
|
|
|
|
|
pay Mr. Edwab an annual salary of $300,000 through our 2010
fiscal year end and $395,000 per year thereafter; and
|
49
|
|
|
|
|
provide disability and medical insurance coverage and certain
other benefits provided to other employees, excluding, however,
(i) our annual cash bonus program for executive officers
and (ii) grants and awards under our key employee equity
incentive plans, awards under which, if any, shall be wholly at
our discretion.
|
We may terminate Mr. Edwabs employment under his
employment agreement for cause, in which event we
will pay all amounts owed to Mr. Edwab under his employment
agreement through the date of termination, which will satisfy
all of our obligations under his employment agreement. Under
Mr. Edwabs employment agreement, cause is
limited to Mr. Edwabs
|
|
|
|
|
conviction of or a plea of nolo contendere to the charge of a
felony (which, through the lapse of time or otherwise, is not
subject to appeal);
|
|
|
|
willful refusal without proper legal cause to perform, or gross
negligence in performing, his duties and responsibilities after
30 days written notice and an opportunity to cure;
|
|
|
|
material breach of fiduciary duty to us through the
misappropriation of Company funds or property; or
|
|
|
|
unauthorized absence from work (other than for sick leave or
personal disability) for a period of 60 working days or more
during a period of 90 working days.
|
If we terminate Mr. Edwabs employment without
cause or Mr. Edwab terminates his employment
for good reason (defined below) or if we notify
Mr. Edwab that we do not intend to extend his employment
under his employment agreement at the end of the current term or
any extended term, then:
|
|
|
|
|
we will be required to pay Mr. Edwab:
|
|
|
|
|
|
all amounts owed through the date of termination,
|
|
|
|
an amount equal to the monthly life insurance premiums
applicable to Mr. Edwabs coverage though the
Companys life insurance plan through the earlier of
February 6, 2016 or two years following the date of
termination and
|
|
|
|
an amount equal to the employer contributions that would have
been credited to Mr. Edwabs retirement accounts under
certain of the Companys plans until the earlier of
February 6, 2016 or two years following the date of
termination (provided we are still making employer contributions
to any such plan on the date of termination),
|
|
|
|
|
|
Mr. Edwab will continue to receive:
|
|
|
|
|
|
his annual salary to which he is entitled under his employment
agreement until the earlier of February 6, 2016 or two
years following the date of termination and
|
|
|
|
weekly installment payments equal of $1,250 beginning on the
earlier of February 6, 2016 or two years following the date
of termination and ending when Mr. Edwab reaches
age 65, at which time our interest in the insurance
policies referred to and covered by the split-dollar life
insurance agreements between the Company and Mr. Edwab
described above (the Split Dollar Policies) will be
assigned to Mr. Edwab, and
|
|
|
|
|
|
until Mr. Edwab reaches age 65, we will be required to
arrange to provide Mr. Edwab and his dependents medical
insurance benefits.
|
Under Mr. Edwabs employment agreement, good
reason means
|
|
|
|
|
removal, without Mr. Edwabs written consent, from the
office of Vice Chairman of the Board or a material reduction in
his authority or responsibilities (other than a removal for
cause) or
|
|
|
|
we otherwise commit a material breach of the employment
agreement.
|
If Mr. Edwabs employment is terminated as a result of
his death, then we will be required to:
|
|
|
|
|
pay to Mr. Edwabs estate all amounts owed to
Mr. Edwab through the date of termination and an amount
equal to the employer contributions that would have been
credited to Mr. Edwabs retirement accounts under
|
50
|
|
|
|
|
certain of the Companys plans until the earlier of
February 6, 2016 or two years following the date of
Mr. Edwabs death (provided we are still making
employer contributions to any such plan on the date of his
death), and
|
|
|
|
|
|
arrange to provide Mr. Edwabs dependents medical
insurance benefits until the date on which Mr. Edwab would
have turned 65.
|
If Mr. Edwabs employment is terminated because of his
permanent disability, then:
|
|
|
|
|
we will be required to pay Mr. Edwab:
|
|
|
|
|
|
all amounts owed through the date of termination,
|
|
|
|
an amount equal to the monthly life insurance premiums
applicable to Mr. Edwabs coverage though the
Companys life insurance plan through the earlier of
February 6, 2016 or two years following the date of
termination and
|
|
|
|
an amount equal to the employer contributions that would have
been credited to Mr. Edwabs retirement accounts under
certain of the Companys plans until the earlier of
February 6, 2016 or two years following the date of
termination (provided we are still making employer contributions
to any such plan on the date of termination),
|
|
|
|
|
|
Mr. Edwab will continue to receive his annual salary to
which he is entitled under his employment agreement until the
earlier of February 6, 2016 or two years following the date
of termination,
|
|
|
|
until Mr. Edwab reaches age 65, we will be required to
arrange to provide Mr. Edwab and his dependents medical
insurance benefits, and
|
|
|
|
we will assign our interest in the Split Dollar Policies to
Mr. Edwab.
|
If Mr. Edwabs employment agreement is not terminated
before February 6, 2016, then thereafter and until
Mr. Edwab reaches age 65, we will arrange to provide
Mr. Edwab and his dependents medical insurance benefits,
make weekly cash installment payments of $1,250 to
Mr. Edwab, and when Mr. Edwab reaches age 65, we
will assign our interest in the Split Dollar Policies to
Mr. Edwab.
If Mr. Edwab voluntarily terminates his employment at any
time after February 6, 2013 and before February 6,
2016, we will assign our interest in the Split Dollar Policies
to Mr. Edwab.
Certain of the payments to be made to Mr. Edwab under his
employment agreement may be deferred in order to comply with the
requirements of section 409A of the Internal Revenue Code.
Under his employment agreement, Mr. Edwab has agreed not to
compete with us during the term thereof and for a period of one
year thereafter. However, Mr. Edwab may render services for
compensation and engage in other business activities; provided,
that (i) rendering such services or engaging in such
activities does not violate the non-competition provisions of
his employment agreement and (ii) Mr. Edwab must
continue to devote more of his working time to us than to any
other single business or group of related businesses.
Pursuant to the terms of his employment agreement, we agreed to
grant to Mr. Edwab, on February 5, 2011, 96,800
restricted shares of our Common Stock under the 1996 Plan, which
will vest with respect to 19,360 shares initially covered
thereby on February 5th of each year from 2012 through
2016. In the event of termination of Mr. Edwabs
employment, other than for cause or by reason of voluntary
termination, a portion of the unvested shares of restricted
stock will immediately vest. In addition, in the event of
termination of Mr. Edwabs employment for cause or by
reason of voluntary termination, all unvested shares of such
restricted stock will immediately terminate.
Change
in Control Agreement
As discussed above, we have entered into Change in Control
agreements with our executive officers, including
Mr. Edwab, which entitle our executives to receive certain
benefits in the event that a Change in Control occurs and the
executives employment with the Company is terminated after
the occurrence of that Change in Control. Please
51
see Executive Compensation Potential Payments
upon Termination or Change in Control Change in
Control Agreements for information with respect to the
terms of these agreements.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions
with Related Persons
On November 8, 2010, we entered into a License Agreement
with George Zimmer, Chairman and Chief Executive Officer of, and
spokesperson for, the Company. Pursuant to the terms of the
License Agreement, we have the right to use George Zimmers
likeness, which is a registered trademark, in connection with
our advertising and marketing for so long as Mr. Zimmer is
an employee of the Company for an annual license fee of $10,000.
If Mr. Zimmer ceases to be an employee of the Company for
any reason, then we would be required to pay Mr. Zimmer or
his estate $250,000 per year for four years for the continued
license. Thereafter, we will have the option to continue the
license on an annual basis for $250,000 a year. There were no
payments made by the Company to Mr. Zimmer pursuant to the
license agreement during the fiscal year ended January 29,
2011.
James E. Zimmer, George Zimmers brother, is and has been
the Senior Vice President Merchandising of the
Company since 1975 and is compensated in line with other
similarly situated employees of the Company, except that
generally he has not received awards under our equity plans.
James Zimmers base salary and bonus equaled $404,733 for
the fiscal year ended January 29, 2011.
Policies
and Procedures for Approval of Related Person
Transactions
The Board of Directors formally adopted a written policy with
respect to related person transactions to document procedures
pursuant to which such transactions are reviewed, approved or
ratified. The policy applies to any transaction, arrangement or
relationship (or any series of similar transactions,
arrangements or relationships) in which (i) we or any of
our subsidiaries are a participant, (ii) any related person
has a direct or indirect interest and (iii) the amount
involved exceeds $50,000. The Compensation Committee is
responsible for reviewing, approving and ratifying any related
person transaction. The Compensation Committee intends to
approve only those related person transactions that are in, or
are not inconsistent with, the best interests of the Company and
its shareholders.
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act,
enacted in July 2010, requires that we provide our shareholders
with the opportunity to vote to approve, on a nonbinding,
advisory basis, the compensation of our Named Executive Officers
as disclosed in this proxy statement in accordance with the
compensation disclosure rules of the Securities and Exchange
Commission.
We seek to closely align the interests of our Named Executive
Officers with the interests of our shareholders. Our
compensation programs are designed to reward teamwork and each
individuals contribution to the Company as well as to
produce positive long-term results for our shareholders and
employees, while at the same time avoiding the encouragement of
unnecessary or excessive risk-taking. We endeavor to ensure that
our compensation program is perceived as fundamentally fair to
all stakeholders. While the amounts may be different, each of
the components of the compensation package for our executive
officers is generally the same, and is applied using similar
methodology, as that applied to all levels of exempt employees.
Executive officers generally receive the same benefits as other
employees and, in line with this philosophy, executive officers,
generally, receive minimal perquisites. The Compensation
Committee seeks to achieve the appropriate balance between
immediate cash rewards and incentives for the achievement of
both annual and long-term financial and non-financial
objectives. Our Named Executive Officers total
compensation is comprised of a mix of base salary, annual cash
incentive awards and long-term equity incentive awards.
|
|
|
|
|
Base Salary: Level of responsibility and
experience, Company performance, competitive market conditions,
retention concerns and individual performance are all factored
into the determination of base salary.
|
52
|
|
|
|
|
Annual Cash Incentive Awards: Sales targets
and income targets are key metrics for our annual cash incentive
awards as well as a qualitative assessment of the
executives performance. These metrics provide for a
balanced approach to measuring annual Company performance as
well as individual performance of the executive. Each metric
accounts for one third of the maximum possible payout and two
different thresholds exist for each of the three
metrics good and excellent. Threshold levels for
good financial metrics are based on performance
objectives that the Chief Executive Officer sets at the
beginning of a year and take into consideration the
Companys operating and growth plans for the coming year.
The excellent threshold targets are typically
representative of a substantial increase over the
good threshold. The maximum annual bonus payout
possible for the Named Executive Officers under our non-equity
performance program varies by individual, with a highest
possible payout of $350,000 for fiscal 2010. The good target was
achieved for sales and net income. In general, good level
bonuses were paid for the non-financial metric based on
individual contributions to the Companys favorable
financial results in a difficult economic environment.
|
|
|
|
Equity Awards: The number of shares granted
under equity awards to each executive is made on a
discretionary, rather than formula, basis by taking into
consideration the executives position, responsibilities,
accomplishments, achievements and tenure with the Company as
well as the vesting and value of previously granted equity
awards. George Zimmer, who holds significant ownership interests
in the Company, does not participate in any equity incentive
award plan.
|
|
|
|
Perquisites: As discussed in more detail in
Compensation Discussion and Analysis in this proxy statement, as
a result of certain split dollar life insurance agreements
between the Company and George Zimmer, he had imputed taxable
income of $25,238 in 2010 and we paid him an additional $18,650
to offset the income tax owed as a result of such imputed income
and such additional payment. In addition, George Zimmer is
provided with the benefit of using our aircraft for personal air
transportation from time to time. The Compensation Committee
considers the benefit to Mr. Zimmer of his airplane use in
approving Mr. Zimmers total compensation package. The
Company does not reimburse Mr. Zimmer for taxes he owes on
imputed income resulting from use of the aircraft.
|
We encourage you to read our Compensation Discussion and
Analysis for a more detailed discussion and analysis of our
executive compensation program, including information about the
fiscal 2010 compensation of the Named Executive Officers.
The vote on this resolution is not intended to address any
specific element of compensation; rather, the vote relates to
the compensation of our Named Executive Officers, taken as a
whole, as described in this proxy statement in accordance with
the compensation disclosure rules of the Securities and Exchange
Commission. The vote is advisory, which means that the vote is
not binding on the Company, our Board of Directors or the
Compensation Committee of the Board of Directors.
Accordingly, we ask our shareholders to vote on the following
resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the Companys
Named Executive Officers, as disclosed in this proxy statement,
including Compensation Discussion and Analysis, compensation
tables and narrative discussion, is hereby APPROVED.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.
ADVISORY
VOTE ON THE FREQUENCY OF
AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act also provides that shareholders must be given
the opportunity to vote, on a non-binding, advisory basis, for
their preference as to how frequently we should seek future
advisory votes on the compensation of our Named Executive
Officers as disclosed in accordance with the compensation
disclosure rules of the Securities and Exchange Commission,
which we refer to as an advisory vote on executive compensation.
By voting with respect to this proposal, shareholders may
indicate whether they would prefer that we conduct future
advisory
53
votes on executive compensation once every one, two, or three
years. Shareholders also may, if they wish, abstain from casting
a vote on this proposal.
Our Board of Directors has determined that an advisory vote on
executive compensation that occurs once every three years is the
most appropriate alternative for the Company and therefore our
Board recommends that you vote for a three-year interval for the
advisory vote on executive compensation. In determining to
recommend that shareholders vote for a frequency of once every
three years, the Board considered how an advisory vote at this
frequency will provide our shareholders with sufficient time to
evaluate the effectiveness of our overall compensation
philosophy, policies and practices in the context of our
long-term business results for the corresponding period, while
avoiding over-emphasis on short term variations in compensation
and business results.
The Company recognizes that the shareholders may have different
views as to the best approach for the Company. We look forward
to hearing from our shareholders as to their preferences on the
frequency of an advisory vote on executive compensation;
however, we note that this vote is advisory and not binding on
the Company or our Board of Directors in any way. The Board of
Directors and the Compensation Committee will take into account
the outcome of the vote when considering the frequency of future
advisory votes on executive compensation, but the Board may
decide that it is in the best interests of the Company to hold
an advisory vote on executive compensation more or less
frequently than the frequency receiving the most votes cast by
our shareholders.
The proxy card provides shareholders with the opportunity to
choose among four options as to the preferred frequency of the
advisory vote on the executive compensation of the
Companys Named Executive Officers as set forth in the
Companys proxy statement (i.e., holding the vote every
one, two or three years, or abstaining).
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE OPTION
OF 3 YEARS AS THE PREFERRED FREQUENCY FOR ADVISORY
VOTES ON EXECUTIVE COMPENSATION.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Fees for professional services provided by Deloitte &
Touche LLP (D&T), the Companys
independent registered public accounting firm, in each of the
last two fiscal years in each of the following categories were:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit Fees(1)
|
|
$
|
1,099,200
|
|
|
$
|
877,000
|
|
Audit Related Fees(2)
|
|
|
465,800
|
|
|
|
122,000
|
|
Tax Fees(3)
|
|
|
861,900
|
|
|
|
158,400
|
|
All Other Fees(4)
|
|
|
2,300
|
|
|
|
22,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,429,200
|
|
|
$
|
1,179,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consist of audit work performed in connection with
the annual financial statements, assessment of our internal
control over financial reporting, the reviews of unaudited
quarterly financial statements as well as work generally only
the independent registered public accounting firm can reasonably
provide, such as consents, comfort letters and review of
documents filed with the Securities and Exchange Commission. |
|
(2) |
|
Audit related services represent fees for audits of our employee
benefit plans, our marketing agreement with Davids Bridal,
Inc. and in 2010 due diligence services for our acquisitions
completed in August 2010. |
|
(3) |
|
Tax services include fees for a variety of federal, state and
international tax consulting projects, tax compliance services
and in 2010 tax planning strategies related to our acquisitions
completed in August 2010. |
|
(4) |
|
Fees for other services consist of fees for accounting research
tools and fees associated with potential acquisitions by the
Company. |
The Audit Committee has considered whether non-audit services
provided by D&T to us are compatible with maintaining
D&Ts independence.
54
The Audit Committee has implemented pre-approval policies and
procedures for all audit and non-audit services. Generally, the
Audit Committee requires pre-approval of any services to be
provided by our independent registered public accounting firm to
us or any of our subsidiaries. The pre-approval procedures
include the designation of such pre-approval responsibility to
one individual on the Audit Committee, currently
Mr. Sechrest. There were no services approved by the Audit
Committee pursuant to the de minimis exception in paragraph
(c)(7)(i)(C) of
Rule 2-01
of
Regulation S-X
during fiscal 2010.
RATIFICATION
OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
D&T has served as our independent registered public
accounting firm providing auditing, financial and tax services
since their engagement in fiscal 1992. At present, the Audit
Committee intends to continue the appointment of D&T as our
independent registered public accounting firm for the fiscal
year ending January 28, 2012. In determining to appoint
D&T, the Audit Committee carefully considers
D&Ts past performance for the Company, its
independence with respect to the services to be performed and
its general reputation for adherence to professional auditing
standards.
Representatives of D&T are expected to attend the Annual
Meeting, will be afforded an opportunity to make a statement if
they desire to do so, and will be available to respond to
appropriate questions by shareholders.
We are asking our shareholders to ratify the selection of
D&T as our independent registered public accounting firm.
Although ratification is not required by our bylaws or
otherwise, the Board is submitting the selection of D&T to
our shareholders for ratification as a matter of good corporate
practice. If the selection is not ratified, the Audit Committee
will consider whether it is appropriate to select another
independent registered public accounting firm. Even if the
selection is ratified, the Audit Committee in its discretion may
select a different independent registered public accounting firm
at any time during the year if it determines that such a change
would be in the best interests of the Company and our
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR FISCAL 2011.
PROPOSALS FOR
NEXT ANNUAL MEETING
Any proposals of shareholders intended to be presented at our
annual meeting of shareholders to be held in 2012 must be
received by us at our principal executive offices, 6380
Rogerdale Road, Houston, Texas
77072-1624,
attention: Investor Relations, or via facsimile at
(281) 776-7060,
no later than January 5, 2012, in order to be considered
for inclusion in the proxy statement and form of proxy relating
to that meeting.
The Companys Fourth Amended and Restated Bylaws provide
that, for business to be properly brought before an Annual
Meeting by a shareholder, the shareholder must have given timely
notice thereof in writing to the Secretary of the Company. To be
timely, a shareholders notice must be delivered to the
Secretary of the Company at our principal executive offices
(6380 Rogerdale Road, Houston, Texas
77072-1624),
no later than the close of business on the 90th day (which
for the 2012 meeting would be March 17, 2012) nor
earlier than the 120th day (which for the 2012 meeting
would be February 15, 2012) prior to the anniversary
date of the immediately preceding annual meeting; provided,
however, that in the event that the date of the annual meeting
is more than 60 days (which for the 2012 meeting would be
August 14, 2012) after the anniversary date of the
immediately preceding annual meeting, notice by the shareholder
to be timely must be received not later than the close of
business on the 120th day prior to such annual meeting and
not later than the close of business on the later of the
90th day prior to such annual meeting or the 10th day
following the day on which the date of such meeting is first
disclosed to the public by us. In the event that the number of
directors to be elected to our Board of Directors at an annual
meeting is increased and there is no public announcement by us
naming all of the nominees for director or specifying the size
of the increased Board of Directors at least 100 days prior
to the first anniversary of the immediately preceding annual
meeting, a shareholders required notice shall also be
considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to
the Secretary of
55
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 us.
To be in proper form, a shareholders notice must set forth
the following items:
|
|
|
|
|
If the shareholder proposes to nominate a person for election as
a director, the notice must set forth:
|
|
|
|
|
|
all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
in an election contest, or is otherwise required, in each case
pursuant to and in accordance with Section 14 of the
Exchange Act and the rules and regulations promulgated
thereunder,
|
|
|
|
such persons written consent to being named in the proxy
statement as a nominee and to serving as a director if
elected, and
|
|
|
|
a completed and signed questionnaire, representation and
agreement as required by our Fourth Amended and Restated Bylaws.
|
|
|
|
|
|
If the shareholder proposes to bring any other matter before the
Annual Meeting, the notice must set forth:
|
|
|
|
|
|
a brief description of the business desired to be brought before
the Annual Meeting,
|
|
|
|
the reasons for conducting such business at the Annual Meeting,
|
|
|
|
the text of the proposal or business (including the text of any
resolutions proposed for consideration and in the event that
such business includes a proposal to amend our bylaws, the
language of the proposed amendment),
|
|
|
|
any material interest in such business of such shareholder and
the beneficial owner, if any, on whose behalf the proposal is
made, and
|
|
|
|
a description of all agreements, arrangements and understandings
between such shareholder and beneficial owner, if any, and any
other person or persons (including their names) in connection
with the proposal of such business by such shareholder.
|
|
|
|
|
|
In either case, the notice must also set forth, as to the
shareholder giving the notice and the beneficial owner, if any,
on whose behalf the proposal is made:
|
|
|
|
|
|
the name and address, as they appear on the Companys
books, of such shareholder proposing such proposal, and of such
beneficial owner, if any,
|
|
|
|
(1) the class or series and number of shares of the Company
which are directly or indirectly owned beneficially or of record
by such shareholder and by such beneficial owner, (2) the
existence and material terms of any proxy, contract,
arrangement, understanding, or relationship pursuant to which
such shareholder or beneficial owner, if any, has a right to
vote any shares of any security of the Company (including, if
applicable, any contract, arrangement, understanding or
relationship pursuant to which any economic interest in the
capital stock to be voted is beneficially owned by a person or
persons other than the shareholder of record as of the record
date), (3) any short interest in any security of the
Company (as such term is defined in Section 2.05 of our
Fourth Amended and Restated Bylaws), in each case with respect
to the information required to be included in the notice
pursuant to (1) through (3), as of the date of such notice
and including, without limitation, any such interests held by
members of such shareholders or such beneficial
owners immediate family sharing the same household,
|
|
|
|
any other information relating to such shareholder and
beneficial owner, if any, that would be required to be disclosed
in a proxy statement or other filings required to be made in
connection with solicitation of proxies for election of
directors in a contested election pursuant to Section 14 of
the Exchange Act and the rules and regulations thereunder,
|
|
|
|
a representation that the shareholder is a holder of record of
our Common Stock entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to propose such
business or nomination, and
|
56
|
|
|
|
|
a representation whether the shareholder or the beneficial
owner, if any, intends or is part of a group that intends
(1) to deliver a proxy statement or form of proxy to
holders of at least the percentage of our outstanding capital
stock required to approve or adopt the proposal or elect the
nominees or (2) otherwise to solicit proxies from
shareholders in support of such proposal or nomination.
|
We may also require any proposed nominee for director to furnish
such other information as it may reasonably require (i) to
determine the eligibility of such proposed nominee to serve as a
director of the Company, (ii) to determine whether such
nominee qualifies as an independent director or
audit committee financial expert under applicable
law, securities exchange rule or regulation, or any
publicly-disclosed corporate governance guideline or committee
charter of the Company; and (iii) that could be material to
a reasonable shareholders understanding of the
independence and qualifications, or lack thereof, of such
nominee.
OTHER
MATTERS
Our management knows of no other matters which may come before
the meeting. However, if any matters other than those referred
to above should properly come before the meeting, it is the
intention of the persons named in the proxy to vote such proxy
in accordance with their best judgment.
The cost of solicitation of proxies will be paid by us. In
addition to solicitation by use of the mails, certain of our
directors, officers or employees may solicit the return of
proxies by telephone, telegram or personal interview.
57
Appendix A
THE
MENS WEARHOUSE, INC.
2004 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective April 1, 2008),
AS AMENDED BY AMENDMENT NO. 1 THERETO
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Section
|
|
ARTICLE I ESTABLISHMENT, PURPOSE AND
DURATION
|
|
|
|
|
Establishment
|
|
|
1.1
|
|
Purpose of the Plan
|
|
|
1.2
|
|
Duration of Authority to Make Grants Under the Plan
|
|
|
1.3
|
|
ARTICLE II DEFINITIONS
|
|
|
|
|
Affiliate
|
|
|
2.1
|
|
Award
|
|
|
2.2
|
|
Award Agreement
|
|
|
2.3
|
|
Board
|
|
|
2.4
|
|
Cash-Based Award
|
|
|
2.5
|
|
Code
|
|
|
2.6
|
|
Committee
|
|
|
2.7
|
|
Company
|
|
|
2.8
|
|
Corporate Change
|
|
|
2.9
|
|
Covered Employee
|
|
|
2.10
|
|
Deferred Stock Unit
|
|
|
2.11
|
|
Deferred Stock Unit Award
|
|
|
2.12
|
|
Director
|
|
|
2.13
|
|
Disability
|
|
|
2.14
|
|
Dividend Equivalent
|
|
|
2.15
|
|
Effective Date
|
|
|
2.16
|
|
Employee
|
|
|
2.17
|
|
Exchange Act
|
|
|
2.18
|
|
Fair Market Value
|
|
|
2.19
|
|
Fiscal Year
|
|
|
2.20
|
|
Freestanding SAR
|
|
|
2.21
|
|
Holder
|
|
|
2.22
|
|
Incentive Stock Option or ISO
|
|
|
2.23
|
|
Mature Shares
|
|
|
2.24
|
|
Minimum Statutory Tax Withholding Obligation
|
|
|
2.25
|
|
Nonqualified Stock Option or NQSO
|
|
|
2.26
|
|
Option
|
|
|
2.27
|
|
Optionee
|
|
|
2.28
|
|
Option Price
|
|
|
2.29
|
|
Option Agreement
|
|
|
2.30
|
|
Other Stock-Based Award
|
|
|
2.31
|
|
Parent Corporation
|
|
|
2.32
|
|
Performance-Based Award
|
|
|
2.33
|
|
Performance-Based Compensation
|
|
|
2.34
|
|
Performance Goals
|
|
|
2.35
|
|
Performance Period
|
|
|
2.36
|
|
Performance Stock Award
|
|
|
2.37
|
|
Performance Unit Award
|
|
|
2.38
|
|
Period of Restriction
|
|
|
2.39
|
|
Plan
|
|
|
2.40
|
|
Restricted Stock
|
|
|
2.41
|
|
Restricted Stock Award
|
|
|
2.42
|
|
i
|
|
|
|
|
|
|
Section
|
|
Retirement
|
|
|
2.43
|
|
Section 409A
|
|
|
2.44
|
|
Stock Appreciation Right or SAR
|
|
|
2.45
|
|
Stock
|
|
|
2.46
|
|
Subsidiary Corporation
|
|
|
2.47
|
|
Substantial Risk of Forfeiture
|
|
|
2.48
|
|
Tandem SAR
|
|
|
2.49
|
|
Ten Percent Stockholder
|
|
|
2.50
|
|
Termination of Employment
|
|
|
2.51
|
|
Termination of Service
|
|
|
2.52
|
|
TMW Group
|
|
|
2.53
|
|
ARTICLE III ELIGIBILITY AND PARTICIPATION
|
|
|
|
|
Eligibility
|
|
|
3.1
|
|
Participation
|
|
|
3.2
|
|
ARTICLE IV GENERAL PROVISIONS RELATING TO
AWARDS
|
|
|
|
|
Authority to Grant Awards
|
|
|
4.1
|
|
Dedicated Shares; Maximum Awards
|
|
|
4.2
|
|
Shares That Count Against Limit
|
|
|
4.3
|
|
Non-Transferability
|
|
|
4.4
|
|
Requirements of Law
|
|
|
4.5
|
|
Changes in the Companys Capital Structure
|
|
|
4.6
|
|
Election Under Section 83(b) of the Code
|
|
|
4.7
|
|
Forfeiture for Cause
|
|
|
4.8
|
|
Forfeiture Events
|
|
|
4.9
|
|
Award Agreements
|
|
|
4.10
|
|
Amendment of Award Agreements
|
|
|
4.11
|
|
Rights as Stockholder
|
|
|
4.12
|
|
Issuance of Shares of Stock
|
|
|
4.13
|
|
Restrictions on Stock Received
|
|
|
4.14
|
|
Compliance With Section 409A
|
|
|
4.15
|
|
Source of Shares Deliverable Under Awards
|
|
|
4.16
|
|
ARTICLE V OPTIONS
|
|
|
|
|
Authority to Grant Options
|
|
|
5.1
|
|
Type of Options Available
|
|
|
5.2
|
|
Option Agreement
|
|
|
5.3
|
|
Option Price
|
|
|
5.4
|
|
Duration of Options
|
|
|
5.5
|
|
Amount Exercisable
|
|
|
5.6
|
|
Exercise of Options
|
|
|
5.7
|
|
Transferability of Options
|
|
|
5.8
|
|
Notification of Disqualifying Disposition
|
|
|
5.9
|
|
No Rights as Stockholder
|
|
|
5.10
|
|
$100,000 Limitation on Incentive Stock Options
|
|
|
5.11
|
|
ARTICLE VI STOCK APPRECIATION RIGHTS
|
|
|
|
|
Authority to Grant Stock Appreciation Rights Awards
|
|
|
6.1
|
|
Type of Stock Appreciation Rights Available
|
|
|
6.2
|
|
General Terms
|
|
|
6.3
|
|
ii
|
|
|
|
|
|
|
Section
|
|
Stock Appreciation Right Agreement
|
|
|
6.4
|
|
Term of Stock Appreciation Rights
|
|
|
6.5
|
|
Exercise of Freestanding SARs
|
|
|
6.6
|
|
Exercise of Tandem SARs
|
|
|
6.7
|
|
Payment of SAR Amount
|
|
|
6.8
|
|
Termination of Employment or Termination of Service
|
|
|
6.9
|
|
Nontransferability of SARs
|
|
|
6.10
|
|
No Rights as Stockholder
|
|
|
6.11
|
|
Restrictions on Stock Received
|
|
|
6.12
|
|
ARTICLE VII RESTRICTED STOCK AWARDS
|
|
|
|
|
Restricted Stock Awards
|
|
|
7.1
|
|
Restricted Stock Award Agreement
|
|
|
7.2
|
|
Holders Rights as Stockholder
|
|
|
7.3
|
|
ARTICLE VIII DEFERRED STOCK UNIT AWARDS
|
|
|
|
|
Authority to Grant Deferred Stock Unit Awards
|
|
|
8.1
|
|
Deferred Stock Unit Awards
|
|
|
8.2
|
|
Deferred Stock Unit Award Agreement
|
|
|
8.3
|
|
Dividend Equivalents
|
|
|
8.4
|
|
Form of Payment Under Deferred Stock Unit Award
|
|
|
8.5
|
|
Time of Payment Under Deferred Stock Unit Award
|
|
|
8.6
|
|
Holders Rights as Stockholder
|
|
|
8.7
|
|
ARTICLE IX PERFORMANCE STOCK AND PERFORMANCE
UNIT AWARDS
|
|
|
|
|
Authority to Grant Performance Stock and Performance Unit
Awards
|
|
|
9.1
|
|
Time of Payment Under Performance Unit Award
|
|
|
9.2
|
|
Holders Rights as Stockholder With Respect to a
Performance Stock Award
|
|
|
9.3
|
|
Increases Prohibited
|
|
|
9.4
|
|
Stockholder Approval
|
|
|
9.5
|
|
Dividend Equivalents
|
|
|
9.6
|
|
ARTICLE X CASH-BASED AWARDS AND OTHER
STOCK-BASED AWARDS
|
|
|
|
|
Authority to Grant Cash-Based Awards
|
|
|
10.1
|
|
Authority to Grant Other Stock-Based Awards
|
|
|
10.2
|
|
Value of Cash-Based Awards and Other Stock-Based Awards
|
|
|
10.3
|
|
Payment of Cash-Based Awards and Other Stock-Based Awards
|
|
|
10.4
|
|
Termination of Employment or Service
|
|
|
10.5
|
|
Nontransferability
|
|
|
10.6
|
|
ARTICLE XI SUBSTITUTION AWARDS
|
|
|
|
|
ARTICLE XII ADMINISTRATION
|
|
|
|
|
Awards
|
|
|
12.1
|
|
Authority of the Committee
|
|
|
12.2
|
|
Decisions Binding
|
|
|
12.3
|
|
No Liability
|
|
|
12.4
|
|
ARTICLE XIII AMENDMENT OR TERMINATION OF
PLAN
|
|
|
|
|
Amendment, Modification, Suspension, and Termination
|
|
|
13.1
|
|
Awards Previously Granted
|
|
|
13.2
|
|
ARTICLE XIV MISCELLANEOUS
|
|
|
|
|
Unfunded Plan/No Establishment of a Trust Fund
|
|
|
14.1
|
|
No Employment Obligation
|
|
|
14.2
|
|
iii
|
|
|
|
|
|
|
Section
|
|
Tax Withholding
|
|
|
14.3
|
|
Written Agreement
|
|
|
14.4
|
|
Indemnification of the Committee
|
|
|
14.5
|
|
Gender and Number
|
|
|
14.6
|
|
Severability
|
|
|
14.7
|
|
Headings
|
|
|
14.8
|
|
Other Compensation Plans
|
|
|
14.9
|
|
Other Awards
|
|
|
14.10
|
|
Successors
|
|
|
14.11
|
|
Law Limitations/Governmental Approvals
|
|
|
14.12
|
|
Delivery of Title
|
|
|
14.13
|
|
Inability to Obtain Authority
|
|
|
14.14
|
|
Investment Representations
|
|
|
14.15
|
|
Persons Residing Outside of the United States
|
|
|
14.16
|
|
No Fractional Shares
|
|
|
14.17
|
|
Arbitration of Disputes
|
|
|
14.18
|
|
Governing Law
|
|
|
14.19
|
|
iv
THE
MENS WEARHOUSE, INC.
2004 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective April 1, 2008)
WITNESSETH:
WHEREAS, effective March 29, 2004, The Mens
Wearhouse, Inc. (the Company) adopted The
Mens Wearhouse, Inc. 2004 Long-Term Incentive Plan (the
Plan) for the benefit of key employees of the
Company and affiliates of the Company;
WHEREAS, the Company desires to allow non-employee
directors of the Company to receive awards under the Plan;
WHEREAS, the Company desires to restate the limitations
set forth in the Plan on the number of shares of stock available
for awards granted or paid in shares of stock to reflect the
three-for-two stock split effected by the Company through the
payment of a 50 percent stock dividend to shareholders of
record as of May 31, 2005, and the Company desires to
increase the aggregate number of shares of stock with respect to
which awards may be granted under the Plan by
1,210,059 shares; and
WHEREAS, the Company desires to amend and restate the
Plan on behalf of itself and on behalf of the other adopting
entities;
NOW THEREFORE, the Plan is hereby amended and restated in
its entirety as follows, effective as of April 1, 2008,
except insofar as an earlier effective date is expressly
specified.
ARTICLE I
ESTABLISHMENT,
PURPOSE AND DURATION
1.1 Establishment. The Company has
previously established the incentive compensation plan known as
The Mens Wearhouse, Inc. 2004 Long-Term Incentive
Plan. The Plan permits the grant of Options (both
Incentive Stock Options and Nonqualified Stock Options), Stock
Appreciation Rights, Restricted Stock, Deferred Stock Units,
Performance Stock Awards, Performance Units, Cash-Based Awards,
and Other Stock-Based Awards. The Plan became effective on
March 29, 2004, the date the Plan was approved by the
Board, which date was within one year of the date the Plan was
approved by the holders of at least a majority of the
outstanding shares of voting stock of the Company at a meeting
of the stockholders of the Company (the Effective
Date), and shall remain in effect as provided in
Section 1.3.
1.2 Purpose of the Plan. The purpose of
the Plan is to reward certain non-employee directors of the
Company and certain corporate officers and other employees of
the Company and its Affiliates (collectively, the TMW
Group) by enabling them to acquire shares of common
stock of the Company and to receive other compensation based on
the increase in value of the common stock of the Company or
certain other performance measures. The Plan is intended to
advance the best interests of the Company, its Affiliates and
its stockholders by providing those persons who have substantial
responsibility for the direction, management and growth of the
TMW Group with additional performance incentives and an
opportunity to obtain or increase their proprietary interest in
the Company, thereby encouraging them to continue in their
employment or affiliation with the TMW Group.
1.3 Duration of Authority to Make Grants Under the
Plan. The Plan shall continue indefinitely until
it is terminated pursuant to Section 13.1. No Awards may be
granted under the Plan on or after the tenth anniversary of the
Effective Date. The applicable provisions of the Plan will
continue in effect with respect to an Award granted under the
Plan for as long as such Award remains outstanding.
I-1
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the
meaning set out below throughout the Plan, unless the context in
which any such word or phrase appears reasonably requires a
broader, narrower or different meaning.
2.1 Affiliate means any corporation,
partnership, limited liability company or association, trust or
other entity or organization which, directly or indirectly,
controls, is controlled by, or is under common control with, the
Company. For purposes of the preceding sentence,
control (including, with correlative meanings, the
terms controlled by and under common control
with), as used with respect to any entity or organization,
shall mean the possession, directly or indirectly, of the power
(a) to vote more than 50 percent (50%) of the
securities having ordinary voting power for the election of
directors of the controlled entity or organization, or
(b) to direct or cause the direction of the management and
policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or
otherwise.
2.2 Award means, individually or
collectively, a grant under the Plan of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock Units, Performance Stock
Awards, Performance Units, Cash-Based Awards, and Other
Stock-Based Awards, in each case subject to the terms and
provisions of the Plan.
2.3 Award Agreement means an agreement
that sets forth the terms and conditions applicable to an Award
granted under the Plan.
2.4 Board means the board of directors
of the Company.
2.5 Cash-Based Award means an Award
granted to a Holder pursuant to Article X.
2.6 Code means the United States
Internal Revenue Code of 1986, as amended from time to time.
2.7 Committee means (a) in the case
of an Award granted to a Director, the Board, and (b) in
the case of any other Award granted under the Plan, a committee
of at least two persons, who are members of the Compensation
Committee of the Board and are appointed by the Compensation
Committee of the Board, or, to the extent it chooses to operate
as the Committee, the Compensation Committee of the Board. Each
member of the Committee in respect of his or her participation
in any decision with respect to an Award that is intended to
satisfy the requirements of section 162(m) of the Code must
satisfy the requirements of outside director status
within the meaning of section 162(m) of the Code; provided,
however, that the failure to satisfy such requirement shall not
affect the validity of the action of any committee otherwise
duly authorized and acting in the matter. As to Awards, grants
or other transactions that are authorized by the Committee and
that are intended to be exempt under
Rule 16b-3,
the requirements of
Rule 16b-3(d)(1)
with respect to committee action must also be satisfied.
2.8 Company means The Mens
Wearhouse, Inc., a Texas corporation, or any successor (by
reincorporation, merger or otherwise).
2.9 Corporate Change shall have the
meaning ascribed to that term in Section 4.6(c).
2.10 Covered Employee means a Holder who
is a covered employee, as defined in
section 162(m) of the Code and the regulations promulgated
thereunder, or any successor statute.
2.11 Deferred Stock Unit means a unit
credited to a Holders ledger account maintained by the
Company pursuant to Article VIII.
2.12 Deferred Stock Unit Award means an
Award granted pursuant to Article VIII.
2.13 Director means a member of the
Board who is not an Employee.
2.14 Disability means, effective for
awards issued under the Plan that are earned and vested on or
after January 1, 2005, as determined by the Committee in
its discretion exercised in good faith, (a) in the case of
an Award that is exempt from the application of the requirements
of Section 409A, a physical or mental condition of the
Holder that would entitle him to payment of disability income
payments under the Companys long-term disability insurance
policy or plan for employees as then in effect; or in the event
that the Holder is a Director or is not covered,
II-1
for whatever reason, under the Companys long-term
disability insurance policy or plan for employees or in the
event the Company does not maintain such a long-term disability
insurance policy, Disability means a permanent and
total disability as defined in section 22(e)(3) of the Code
and (b) in the case of an Award that is not exempt from the
application of the requirements of Section 409A,
(i) the Holder is unable to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not
less than 12 months, or (ii) the Holder is, by reason
of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering
employees of the Company. A determination of Disability may be
made by a physician selected or approved by the Committee and,
in this respect, the Holder shall submit to an examination by
such physician upon request by the Committee.
2.15 Dividend Equivalent means a payment
equivalent in amount to dividends paid to the Companys
stockholders.
2.16 Effective Date shall have the
meaning ascribed to that term in Section 1.1.
2.17 Employee means (a) a person
employed by the Company or any Affiliate as a common law
employee or (b) a person who has agreed to become a common
law employee of the Company or any Affiliate and is expected to
become such within six (6) months from the date of a
determination made for purposes of the Plan.
2.18 Exchange Act means the United
States Securities Exchange Act of 1934, as amended from time to
time.
2.19 Fair Market Value of the Stock as of any
particular date means,
(a) if the Stock is traded on a stock exchange,
(i) and if the Stock is traded on that date, the closing
sale price of the Stock on that date; or
(ii) and if the Stock is not traded on that date, the
closing sale price of the Stock on the last trading date
immediately preceding that date;
as reported on the principal securities exchange on which the
Stock is traded; or
|
|
|
|
(b)
|
if the Stock is traded in the over-the-counter market,
|
(i) and if the Stock is traded on that date, the average
between the high bid and low asked price on that date; or
(ii) and if the Stock is not traded on that date, the
average between the high bid and low asked price on the last
trading date immediately preceding that date;
as reported in such over-the-counter market; provided, however,
that (x) if the Stock is not so traded, or (y) if, in
the discretion of the Committee, another means of determining
the fair market value of a share of Stock at such date shall be
necessary or advisable, the Committee may provide for another
means for determining such fair market value that complies with
the requirements of Section 409A.
2.20 Fiscal Year means the
Companys fiscal year.
2.21 Freestanding SAR means a SAR that
is granted pursuant to Article VI independently of any
Option.
2.22 Holder means a person who has been
granted an Award or any person who is entitled to receive shares
of Stock (and/or cash in the case of a Stock Appreciation Right)
under an Award.
2.23 Incentive Stock Option or
ISO means an option which is intended, as
evidenced by its designation, as an incentive stock option
within the meaning of section 422 of the Code, the award of
which contains such provisions (including but not limited to the
receipt of stockholder approval of the Plan, if the Award is
made prior to such approval) and is made under such
circumstances and to such persons as may be necessary to comply
with that section.
2.24 Mature Shares means shares of Stock
that the Holder has held for at least six months.
II-2
2.25 Minimum Statutory Tax Withholding
Obligation means, with respect to an Award, the amount
the Company or an Affiliate is required to withhold for federal,
state and local taxes based upon the applicable minimum
statutory withholding rates required by the relevant tax
authorities.
2.26 Nonqualified Stock Option or
NQSO means an Option that is designated as a
nonqualified stock option. Any Option granted hereunder that is
not designated as an incentive stock option shall be deemed to
be designated a nonqualified stock option under the Plan and not
an incentive stock option under the Code.
2.27 Option means an Incentive Stock
Option or a Nonqualified Stock Option granted pursuant to
Article V.
2.28 Optionee means a person who is
granted an Option under the Plan.
2.29 Option Price shall have the meaning
ascribed to that term in Section 5.4.
2.30 Option Agreement means a written
contract setting forth the terms and conditions of an Option.
2.31 Other Stock-Based Award means an
equity-based or equity-related Award not otherwise described by
the terms and provisions of the Plan that is granted pursuant to
Article X.
2.32 Parent Corporation means any
corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if, at the time of the
action or transaction, each of the corporations other than the
Company owns stock possessing 50 percent or more of the
total combined voting power of all classes of stock in one of
the other corporations in the chain.
2.33 Performance-Based Award means a
Performance Stock Award, a Performance Unit, or a Cash-Based
Award granted to a Holder under which the fulfillment of
performance goals determines the degree of payout or vesting.
2.34 Performance-Based Compensation
means compensation under an Award that satisfies the
requirements of section 162(m) of the Code for
deductibility of remuneration paid to Covered Employees.
2.35 Performance Goals means one or more
of the criteria described in Article IX on which the
performance goals applicable to an Award are based.
2.36 Performance Period means the period
of time during which the performance goals applicable to a
Performance-Based Award must be met.
2.37 Performance Stock Award means an
Award designated as a performance stock award granted to a
Holder pursuant to Article IX.
2.38 Performance Unit Award means an
Award designated as a performance unit award granted to a Holder
pursuant to Article IX.
2.39 Period of Restriction means the
period during which Restricted Stock is subject to a substantial
risk of forfeiture (based on the passage of time, the
achievement of Performance Goals, or upon the occurrence of
other events as determined by the Committee, in its discretion),
as provided in Article VII.
2.40 Plan means The Mens
Wearhouse, Inc. 2004 Long-Term Incentive Plan, as set forth in
this document and as it may be amended from time to time.
2.41 Restricted Stock means shares of
restricted Stock issued or granted under the Plan pursuant to
Article VII.
2.42 Restricted Stock Award means an
authorization by the Committee to issue or transfer Restricted
Stock to a Holder.
2.43 Retirement means (a) in the
case of an Employee, retirement in accordance with the terms of
a retirement plan that is qualified under section 401(a) of
the Code and maintained by the Company or an Affiliate in which
the Holder is a participant and (b) in the case of a
Director, retirement from the Board in accordance with the
Boards then applicable retirement policy.
II-3
2.44 Section 409A means
section 409A of the Code and Department of Treasury rules
and regulations issued thereunder.
2.45 Stock Appreciation Right or
SAR means any stock appreciation right
granted pursuant to Article VI of the Plan.
2.46 Stock means the common stock of the
Company, $.01 par value per share (or such other par value
as may be designated by act of the Companys stockholders).
2.47 Subsidiary Corporation means any
corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the
last corporation in an unbroken chain owns stock possessing
50 percent or more of the total combined voting power of
all classes of stock in one of the other corporations in the
chain.
2.48 Substantial Risk of Forfeiture
shall have the meaning ascribed to that term in
Section 409A.
2.49 Tandem SAR means a SAR that is
granted in connection with a related Option pursuant to
Article VI, the exercise of which shall require forfeiture
of the right to purchase a share of the Stock under the related
Option (and when a share of the Stock is purchased under the
Option, the Tandem SAR shall similarly be canceled).
2.50 Ten Percent Stockholder means
an individual who, at the time the Option is granted, owns stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock or series of the Company or
of any Parent Corporation or Subsidiary Corporation. An
individual shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers and sisters
(whether by the whole or half blood), spouse, ancestors and
lineal descendants; and stock owned, directly or indirectly, by
or for a corporation, partnership, estate or trust, shall be
considered as being owned proportionately by or for its
stockholders, partners or beneficiaries.
2.51 Termination of Employment means, in
the case of an Award issued to an Employee other than an
Incentive Stock Option, the termination of the Employees
employment relationship with the Company and all Affiliates.
Termination of Employment means, in the case
of an Incentive Stock Option, the termination of the
Employees employment relationship with all of the Company,
any Parent Corporation, any Subsidiary Corporation and any
parent or subsidiary corporation (within the meaning of
section 422(a)(2) of the Code) of any such corporation that
issues or assumes an Incentive Stock Option in a transaction to
which section 424(a) of the Code applies.
2.52 Termination of Service means, in
the case of an Award issued to a Director, the termination of
the Directors service on the Board.
2.53 TMW Group shall have the meaning
ascribed to that term in Section 1.2.
II-4
ARTICLE III
ELIGIBILITY
AND PARTICIPATION
3.1 Eligibility. The persons who are
eligible to receive Awards under the Plan, other than Incentive
Stock Options, are key Employees who have substantial
responsibility for or involvement with the management and growth
of one or more members of the TMW Group and Directors. However,
only those persons who are, on the dates of grant, key employees
of the Company or any Parent Corporation or Subsidiary
Corporation are eligible for grants of Incentive Stock Options
under the Plan.
3.2 Participation. Subject to the terms
and provisions of the Plan, the Committee may, from time to
time, select the eligible persons to whom Awards shall be
granted and shall determine the nature and amount of each Award.
III-1
ARTICLE IV
GENERAL PROVISIONS RELATING TO AWARDS
4.1 Authority to Grant Awards. The
Committee may grant Awards to those key Employees and Directors
as the Committee shall from time to time determine, under the
terms and conditions of the Plan. Subject only to any applicable
limitations set out in the Plan, the number of shares of Stock
or other value to be covered by any Award to be granted under
the Plan shall be as determined by the Committee in its sole
discretion.
4.2 Dedicated Shares; Maximum Awards. The
aggregate number of shares of Stock with respect to which Awards
may be granted under the Plan is 4,610,059. The aggregate number
of shares of Stock with respect to which Incentive Stock Options
may be granted under the Plan is 4,610,059. The aggregate number
of shares of Stock with respect to which Nonqualified Stock
Options may be granted under the Plan is 4,610,059. The
aggregate number of shares of Stock with respect to which Stock
Appreciation Rights may be granted under the Plan is 4,610,059.
The aggregate number of shares of Stock with respect to which
Restricted Stock Awards may be granted under the Plan is
2,305,030. The aggregate number of shares of Stock with respect
to which Performance Stock Awards may be granted under the Plan
is 2,305,030. The maximum number of shares of Stock with respect
to which Incentive Stock Options may be granted to an Employee
during a Fiscal Year is 300,000. The maximum number of shares of
Stock with respect to which Nonqualified Stock Options may be
granted to an Employee or Director during a Fiscal Year is
300,000. The maximum number of shares of Stock with respect to
which Stock Appreciation Rights may be granted to an Employee or
Director during a Fiscal Year is 300,000. The maximum number of
shares of Stock with respect to which Restricted Stock Awards
may be granted to an Employee or Director during a Fiscal Year
is 225,000. The maximum amount with respect to which Deferred
Stock Unit Awards may be granted to an Employee or Director
during a Fiscal Year may not exceed in value the Fair Market
Value of 225,000 shares of Stock determined as of the date
of grant. The maximum number of shares of Stock with respect to
which Performance Stock Awards may be granted to an Employee or
Director during a Fiscal Year is 225,000. The maximum number of
shares of Stock with respect to which Performance Unit Awards
may be granted to an Employee or Director during a Fiscal Year
is 225,000. The maximum number of shares of Stock with respect
to which Other Stock-Based Awards may be granted to an Employee
during a Fiscal Year is 225,000. The maximum aggregate amount
with respect to which Cash-Based Awards may be awarded or
credited to an Employee or Director during a Fiscal Year may not
exceed in value $3,000,000 determined as of the date of grant.
The maximum aggregate amount with respect to which Performance
Unit Awards may be awarded or credited to an Employee or
Director during a Fiscal Year may not exceed in value $3,000,000
determined as of the date of grant. Each of the foregoing
numerical limits stated in this Section 4.2 shall be
subject to adjustment in accordance with the provisions of
Section 4.6. The number of shares of Stock stated in this
Section 4.2 shall also be increased by such number of
shares of Stock as become subject to substitute Awards granted
pursuant to Article XI; provided, however, that such
increase shall be conditioned upon the approval of the
stockholders of the Company to the extent stockholder approval
is required by law or applicable stock exchange rules.
4.3 Shares That Count Against Limit.
(a) If any outstanding Award expires or terminates for any
reason, is settled in cash in lieu of shares of Stock or any
Award is surrendered, the shares of Stock allocable to the
unexercised portion of that Award may again be subject to an
Award granted under the Plan.
(b) For Awards granted under the Plan before April 1,
2008, if shares of Stock are withheld from payment of the Award
to satisfy tax obligations with respect to such Award, such
shares of Stock will not count against the aggregate number of
shares of Stock with respect to which Awards may be granted
under the Plan. For Awards granted under the Plan on or after
April 1, 2008, if shares of Stock are withheld from payment
of the Award to satisfy tax obligations with respect to such
Award, such shares of Stock will count against the aggregate
number of shares of Stock with respect to which Awards may be
granted under the Plan.
(c) If a Stock Appreciation Right is exercised, only the
number of shares of Stock actually issued shall be charged
against the maximum number of shares of Stock that may be
delivered pursuant to Awards under the Plan.
IV-1
4.4 Non-Transferability. Except as
specified in the applicable Award Agreement or in a domestic
relations court order, an Award shall not be transferable by the
Holder (whether for consideration or otherwise) other than by
will or under the laws of descent and distribution, and shall be
exercisable, during the Holders lifetime, only by him or
her. Any attempted assignment of an Award in violation of this
Section 4.4 shall be null and void. In the discretion of
the Committee, any attempt to transfer an Award other than under
the terms of the Plan and the applicable Award Agreement may
terminate the Award. No ISO granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to an Employee under the
Plan shall be exercisable during his or her lifetime only by the
Employee, and after that time, by the Employees heirs or
estate.
4.5 Requirements of Law. The Company
shall not be required to sell or issue any shares of Stock under
any Award if issuing those shares of Stock would constitute or
result in a violation by the Holder or the Company of any
provision of any law, statute or regulation of any governmental
authority. Specifically, in connection with any applicable
statute or regulation relating to the registration of
securities, upon exercise of any Option or pursuant to any other
Award, the Company shall not be required to issue any shares of
Stock unless the Committee has received evidence satisfactory to
it to the effect that the Holder will not transfer the shares of
Stock except in accordance with applicable law, including
receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable
law. The determination by the Committee on this matter shall be
final, binding and conclusive. The Company may, but shall in no
event be obligated to, register any shares of Stock covered by
the Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the shares of Stock
issuable on exercise of an Option or pursuant to any other Award
are not registered, the Company may imprint on the certificate
evidencing the shares of Stock any legend that counsel for the
Company considers necessary or advisable to comply with
applicable law, or, should the shares of Stock be represented by
book or electronic entry rather than a certificate, the Company
may take such steps to restrict transfer of the shares of Stock
as counsel for the Company considers necessary or advisable to
comply with applicable law. The Company shall not be obligated
to take any other affirmative action in order to cause or enable
the exercise of an Option or any other Award, or the issuance of
shares of Stock pursuant thereto, to comply with any law or
regulation of any governmental authority.
4.6 Changes in the Companys Capital Structure.
(a) The existence of outstanding Awards shall not affect in
any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Companys capital
structure or its business, any merger or consolidation of the
Company, any issue of bonds, debentures, preferred or prior
preference shares ahead of or affecting the Stock or Stock
rights, the dissolution or liquidation of the Company, any sale
or transfer of all or any part of its assets or business or any
other corporate act or proceeding, whether of a similar
character or otherwise.
(b) If the Company shall effect a subdivision or
consolidation of Stock or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of
the number of shares of Stock outstanding, without receiving
compensation therefor in money, services or property, then
(1) the number, class or series and per share price of
Stock subject to outstanding Options or other Awards under the
Plan shall be appropriately adjusted (subject to the restriction
in Section 4.11 prohibiting repricing) in such a manner as
to entitle a Holder to receive upon exercise of an Option or
other Award, for the same aggregate cash consideration, the
equivalent total number and class or series of Stock the Holder
would have received had the Holder exercised his or her Option
or other Award in full immediately prior to the event requiring
the adjustment, and (2) the number and class or series of
Stock then reserved to be issued under the Plan shall be
adjusted by substituting for the total number and class or
series of Stock then reserved that number and class or series of
Stock that would have been received by the owner of an equal
number of outstanding shares of Stock of each class or series of
Stock as the result of the event requiring the adjustment.
(c) If while unexercised Options or other Awards remain
outstanding under the Plan (1) the Company shall not be the
surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity
other than an entity that was wholly-owned by the Company
immediately prior to such merger, consolidation or other
reorganization), (2) the Company sells, leases or exchanges
or agrees to sell,
IV-2
lease or exchange all or substantially all of its assets to any
other person or entity (other than an entity wholly-owned by the
Company), (3) the Company is to be dissolved or
(4) the Company is a party to any other corporate
transaction (as defined under section 424(a) of the Code
and applicable Department of Treasury regulations) that is not
described in clauses (1), (2) or (3) of this sentence
(each such event is referred to herein as a Corporate
Change), then, except as otherwise provided in an
Award Agreement or another agreement between the Holder and the
Company (provided that such exceptions shall not apply in the
case of a reincorporation merger), or as a result of the
Committees effectuation of one or more of the alternatives
described below, there shall be no acceleration of the time at
which any Award then outstanding may be exercised, and no later
than ten days after the approval by the stockholders of the
Company of such Corporate Change, the Committee, acting in its
sole and absolute discretion without the consent or approval of
any Holder, shall act to effect one or more of the following
alternatives, which may vary among individual Holders and which
may vary among Awards held by any individual Holder (provided
that, with respect to a reincorporation merger in which Holders
of the Companys ordinary shares will receive one ordinary
share of the successor corporation for each ordinary share of
the Company, none of such alternatives shall apply and, without
Committee action, each Award shall automatically convert into a
similar award of the successor corporation exercisable for the
same number of ordinary shares of the successor as the Award was
exercisable for ordinary shares of Stock of the Company):
(1) accelerate the time at which some or all of the Awards
then outstanding may be exercised so that such Awards may be
exercised in full for a limited period of time on or before a
specified date (before or after such Corporate Change) fixed by
the Committee, after which specified date all such Awards that
remain unexercised and all rights of Holders thereunder shall
terminate;
(2) require the mandatory surrender to the Company by all
or selected Holders of some or all of the then outstanding
Awards held by such Holders (irrespective of whether such Awards
are then exercisable under the provisions of the Plan or the
applicable Award Agreement evidencing such Award) as of a date,
before or after such Corporate Change, specified by the
Committee, in which event the Committee shall thereupon cancel
such Award and the Company shall pay to each such Holder an
amount of cash per share equal to the excess, if any, of the per
share price offered to stockholders of the Company in connection
with such Corporate Change over the exercise prices under such
Award for such shares;
(3) with respect to all or selected Holders, have some or
all of their then outstanding Awards (whether vested or
unvested) assumed or have a new award of a similar nature
substituted for some or all of their then outstanding Awards
under the Plan (whether vested or unvested) by an entity which
is a party to the transaction resulting in such Corporate Change
and which is then employing such Holder or which is affiliated
or associated with such Holder in the same or a substantially
similar manner as the Company prior to the Corporate Change, or
a parent or subsidiary of such entity, provided that
(A) such assumption or substitution is on a basis where the
excess of the aggregate fair market value of the Stock subject
to the Award immediately after the assumption or substitution
over the aggregate exercise price of such Stock is equal to the
excess of the aggregate fair market value of all Stock subject
to the Award immediately before such assumption or substitution
over the aggregate exercise price of such Stock, and
(B) the assumed rights under such existing Award or the
substituted rights under such new Award, as the case may be,
will have the same terms and conditions as the rights under the
existing Award assumed or substituted for, as the case may be;
(4) provide that the number and class or series of Stock
covered by an Award (whether vested or unvested) theretofore
granted shall be adjusted so that such Award when exercised
shall thereafter cover the number and class or series of Stock
or other securities or property (including, without limitation,
cash) to which the Holder would have been entitled pursuant to
the terms of the agreement or plan relating to such Corporate
Change if, immediately prior to such Corporate Change, the
Holder had been the holder of record of the number of shares of
Stock then covered by such Award; or
(5) make such adjustments to Awards then outstanding as the
Committee deems appropriate to reflect such Corporate Change
(provided, however, that the Committee may determine in its sole
and absolute discretion that no such adjustment is necessary).
IV-3
In effecting one or more of the alternatives set out in
paragraphs (3), (4) or (5) immediately above, and
except as otherwise may be provided in an Award Agreement, the
Committee, in its sole and absolute discretion and without the
consent or approval of any Holder, may accelerate the time at
which some or all Awards then outstanding may be exercised.
(d) In the event of changes in the outstanding Stock by
reason of recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant
changes in capitalization occurring after the date of the grant
of any Award and not otherwise provided for by this
Section 4.6, any outstanding Award and any Award Agreement
evidencing such Award shall be subject to adjustment by the
Committee in its sole and absolute discretion as to the number
and price of Stock or other consideration subject to such Award.
In the event of any such change in the outstanding Stock, the
aggregate number of shares of Stock available under the Plan may
be appropriately adjusted by the Committee, whose determination
shall be conclusive.
(e) After a merger of one or more corporations into the
Company or after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving
corporation, each Holder shall be entitled to have his
Restricted Stock appropriately adjusted based on the manner in
which the shares of Stock were adjusted under the terms of the
agreement of merger or consolidation.
(f) The issuance by the Company of stock of any class or
series, or securities convertible into, or exchangeable for,
stock of any class or series, for cash or property, or for labor
or services either upon direct sale or upon the exercise of
rights or warrants to subscribe for them, or upon conversion or
exchange of stock or obligations of the Company convertible
into, or exchangeable for, stock or other securities, shall not
affect, and no adjustment by reason of such issuance shall be
made with respect to, the number, class or series, or price of
shares of Stock then subject to outstanding Options or other
Awards.
4.7 Election Under Section 83(b) of the
Code. No Holder shall exercise the election
permitted under section 83(b) of the Code with respect to
any Award without the prior written approval of the Chief
Financial Officer of the Company. Any Holder who makes an
election under section 83(b) of the Code with respect to
any Award without the prior written approval of the Chief
Financial Officer of the Company may, in the discretion of the
Committee, forfeit any or all Awards granted to him or her under
the Plan.
4.8 Forfeiture for Cause. Notwithstanding
any other provision of the Plan or an Award Agreement, if the
Committee finds by a majority vote that a Holder, before or
after his Termination of Employment or severance of affiliation
relationship with the Company and all Affiliates,
(a) committed fraud, embezzlement, theft, felony or an act
of dishonesty in the course of his employment by or affiliation
with the Company or an Affiliate which conduct damaged the
Company or an Affiliate, (b) disclosed trade secrets of the
Company or an Affiliate or (c) violated the terms of any
non-competition, non-disclosure or similar agreement with
respect to the Company or any Affiliate to which the Holder is a
party, then as of the date the Committee makes its finding some
or all Awards awarded to the Holder (including vested Awards
that have been exercised, vested Awards that have not been
exercised and Awards that have not yet vested), as determined by
the Committee in its sole discretion, and all net proceeds
realized with respect to any such Awards, will be forfeited to
the Company on such terms as determined by the Committee. The
findings and decision of the Committee with respect to such
matter, including those regarding the acts of the Holder and the
damage done to the Company, will be final for all purposes. No
decision of the Committee, however, will affect the finality of
the discharge of the individual by the Company or an Affiliate
or severance of the individuals affiliation with the
Company and all Affiliates.
4.9 Forfeiture Events. The Committee may
specify in an Award Agreement that the Holders rights,
payments, and benefits with respect to an Award shall be subject
to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an
Award. Such events may include, but shall not be limited to,
Termination of Employment for cause, termination of the
Holders provision of services to the Company or its
Affiliates, violation of material policies of the TMW Group,
breach of noncompetition, confidentiality, or other restrictive
covenants that may apply to the Holder, or other conduct by the
Holder that is detrimental to the business or reputation of the
TMW Group.
IV-4
4.10 Award Agreements. Each Award shall
be embodied in a written Award Agreement that shall be subject
to the terms and conditions of the Plan. The Award Agreement
shall be signed by an executive officer of the Company, other
than the Holder, on behalf of the Company, and may be signed by
the Holder to the extent required by the Committee. The Award
Agreement may specify the effect of a change in control of the
Company on the Award. The Award Agreement may contain any other
provisions that the Committee in its discretion shall deem
advisable which are not inconsistent with the terms and
provisions of the Plan.
4.11 Amendments of Award Agreements. The
terms of any outstanding Award under the Plan may be amended
from time to time by the Committee in its discretion in any
manner that it deems appropriate and that is consistent with the
terms of the Plan. However, no such amendment shall adversely
affect in a material manner any right of a Holder without his or
her written consent. Except as specified in Section 4.6(c),
the Committee may not directly or indirectly lower the exercise
price of a previously granted Option or the grant price of a
previously granted SAR.
4.12 Rights as Stockholder. A Holder
shall not have any rights as a stockholder with respect to Stock
covered by an Option, a SAR, a DSU or a Performance Unit Award
payable in Stock until the date, if any, such Stock is issued by
the Company; and, except as otherwise provided in
Section 4.6, no adjustment for dividends, or otherwise,
shall be made if the record date therefor is prior to the date
of issuance of such Stock.
4.13 Issuance of Shares of Stock. Shares
of Stock, when issued, may be represented by a certificate or by
book or electronic entry.
4.14 Restrictions on Stock Received. The
Committee may impose such conditions
and/or
restrictions on any shares of Stock issued pursuant to an Award
as it may deem advisable or desirable. These restrictions may
include, but shall not be limited to, a requirement that the
Holder hold the shares of Stock for a specified period of time.
4.15 Compliance With
Section 409A. Awards shall be designed,
granted and administered in such a manner that they are either
exempt from the application of, or comply with, the requirements
of Section 409A. If the Committee determines that an Award,
Award Agreement, payment, distribution, deferral election,
transaction, or any other action or arrangement contemplated by
the provisions of the Plan would, if undertaken, cause a Holder
to become subject to additional taxes under Section 409A,
then unless the Committee specifically provides otherwise, such
Award, Award Agreement, payment, distribution, deferral
election, transaction or other action or arrangement shall not
be given effect to the extent it causes such result and the
related provisions of the Plan
and/or Award
Agreement will be deemed modified, or, if necessary, suspended
in order to comply with the requirements of Section 409A to
the extent determined appropriate by the Committee, in each case
without the consent of or notice to the Holder. The
exercisability of an Option or a SAR shall not be extended to
the extent that such extension would subject the Holder to
additional taxes under Section 409A. This Section 4.15
is effective for awards issued under the Plan that are earned
and vested on or after January 1, 2005.
4.16 Source of Shares Deliverable Under
Awards. Any shares of Stock delivered pursuant to
an Award may consist, in whole or in part, of authorized and
unissued shares of Stock or of treasury shares of Stock.
IV-5
ARTICLE V
OPTIONS
5.1 Authority to Grant Options. Subject
to the terms and provisions of the Plan, the Committee, at any
time, and from time to time, may grant Options under the Plan to
eligible persons in such number and upon such terms as the
Committee shall determine.
5.2 Type of Options Available. Options
granted under the Plan may be Incentive Stock Options intended
to satisfy the requirements of section 422 of the Code or
Nonqualified Stock Options that are not intended to satisfy the
requirements of section 422 of the Code.
5.3 Option Agreement. Each Option grant
under the Plan shall be evidenced by an Option Agreement that
shall specify (a) whether the Option is intended to be an
ISO or a NQSO, (b) the Option Price, (c) the duration
of the Option, (d) the number of shares of Stock to which
the Option pertains, (e) the exercise restrictions
applicable to the Option, and (f) such other provisions as
the Committee shall determine that are not inconsistent with the
terms and provisions of the Plan. Notwithstanding the
designation of an Option as an ISO in the applicable Option
Agreement, to the extent the limitations of section 422 of
the Code are exceeded with respect to the Option, the portion of
the Option in excess of the limitation shall be treated as a
NQSO. Effective for Options granted under the Plan on or after
January 1, 2005, an Option granted under the Plan may not
be granted with any Dividend Equivalents rights.
5.4 Option Price. The price at which
shares of Stock may be purchased under an Option (the
Option Price) shall not be less than
100 percent (100%) of the Fair Market Value of the shares
of Stock on the date the Option is granted. However, in the case
of a Ten Percent Stockholder, the Option Price for an
Incentive Stock Option shall not be less than 110 percent
(110%) of the Fair Market Value of the shares of Stock on the
date the Incentive Stock Option is granted. Subject to the
limitations set forth in the preceding sentences of this
Section 5.4, the Committee shall determine the Option Price
for each grant of an Option under the Plan.
5.5 Duration of Options. An Option shall
not be exercisable after the earlier of (i) the general
term of the Option specified in Section 5.5(a), or
(ii) the period of time specified herein that follows the
Optionees death, Disability, Retirement or other
Termination of Employment or Termination of Service. Unless the
Optionees applicable Option Agreement specifies otherwise,
an Option shall not continue to vest after the Optionees
Termination of Employment or Termination of Service for any
reason other than the death or Disability of the Optionee.
(a) General Term of Option. Unless the
Option Agreement specifies a shorter general term, an Option
shall expire on the tenth anniversary of the date the Option is
granted. Notwithstanding the foregoing, unless the Option
Agreement specifies a shorter term, in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder, the
Option shall expire on the fifth anniversary of the date the
Option is granted.
(b) Early Termination of Option Due to Termination of
Employment or Termination of Service Other Than for Death,
Disability or Retirement. Except as may be
otherwise expressly provided by the Committee in an Option
Agreement, an Option shall terminate on the earlier of
(1) the date of the expiration of the general term of the
Option or (2) the date that is one day less than one month
after the date of the Optionees Termination of Employment
or Termination of Service, whether with or without cause, for
any reason other than the death, Disability or Retirement of the
Optionee, during which period the Optionee shall be entitled to
exercise the Option in respect of the number of shares of Stock
that the Optionee would have been entitled to purchase had the
Optionee exercised the Option on the date of such Termination of
Employment or Termination of Service. The Committee shall
determine whether an authorized leave of absence, absence on
military or government service, or any other absence from
service shall constitute a termination of the employment
relationship between the Optionee and the Company and all
Affiliates. Notwithstanding the foregoing, in the case of an
Incentive Stock Option, if an Optionee has an authorized leave
of absence from employment with the Company, a Parent
Corporation or a Subsidiary Corporation that exceeds
90 days and the Optionees right to reemployment is
not guaranteed by either statute or contract, the Optionee will
be deemed to incur a Termination of Employment on the
91st day
of such leave.
V-1
(c) Early Termination of Option Due to
Death. Unless the Committee specifies otherwise
in the applicable Option Agreement, in the event of the
Optionees Termination of Employment or Termination of
Service due to death before the date of expiration of the
general term of the Option, the Optionees Option shall
terminate on the earlier of the date of expiration of the
general term of the Option or the first anniversary of the date
of the Optionees death, during which period the
Optionees executors or administrators or such persons to
whom such Options were transferred by will or by the laws of
descent and distribution, shall be entitled to exercise the
Option in respect of the number of shares of Stock that the
Optionee would have been entitled to purchase had the Optionee
exercised the Option on the date of his death.
(d) Early Termination of Option Due to
Disability. Unless the Committee specifies
otherwise in the applicable Option Agreement, in the event of
the Termination of Employment or Termination of Service due to
Disability before the date of the expiration of the general term
of the Option, the Optionees Option shall terminate on the
earlier of the expiration of the general term of the Option or
the first anniversary of the date of the Termination of
Employment or Termination of Service due to Disability, during
which period the Optionee shall be entitled to exercise the
Option in respect of the number of shares of Stock that the
Optionee would have been entitled to purchase had the Optionee
exercised the Option on the date of such Termination of
Employment or Termination of Service.
(e) Early Termination of Option Due to
Retirement. Unless the Committee specifies
otherwise in the applicable Option Agreement, in the event of
the Optionees Termination of Employment or Termination of
Service due to Retirement before the date of the expiration of
the general term of the Option, the Optionees Option shall
terminate on the earlier of the expiration of the general term
of the Option or the first anniversary of the date of the
Termination of Employment or Termination of Service due to
Retirement, during which period the Optionee shall be entitled
to exercise the Option in respect of the number of shares of
Stock that the Optionee would have been entitled to purchase had
the Optionee exercised the Option on the date of such
Termination of Employment or Termination of Service.
After the death of the Optionee, the Optionees executors,
administrators or any person or persons to whom the
Optionees Option may be transferred by will or by the laws
of descent and distribution, shall have the right, at any time
prior to the termination of the Option to exercise the Option,
in respect to the number of all of the remaining unexercised and
unexpired shares of Stock subject to the Option.
5.6 Amount Exercisable. Each Option may
be exercised at the time, in the manner and subject to the
conditions the Committee specifies in the Option Agreement in
its sole discretion. Unless the Committee specifies otherwise in
an applicable Option Agreement, an Option Agreement shall set
forth the following terms regarding the exercise of the Option
covered by the Option Agreement:
(a) No Option granted under the Plan may be exercised until
an Optionee has completed one year of continuous employment with
the Company or any subsidiary of the Company or one year of
service on the Board following the date of grant;
(b) Beginning on the day after the first anniversary of the
date of grant, an Option may be exercised up to
1/3
of the shares subject to the Option;
(c) After the expiration of each succeeding anniversary
date of the date of grant, the Option may be exercised up to an
additional
1/3
of the shares initially subject to the Option, so that after the
expiration of the third anniversary of the date of grant, the
Option shall be exercisable in full;
(d) To the extent not exercised, installments shall be
cumulative and may be exercised in whole or in part until the
Option expires on the tenth anniversary of the date of grant.
However, the Committee, in its discretion, may change the terms
of exercise so that any Option may be exercised so long as it is
valid and outstanding from time to time in part or as a whole in
such manner and subject to such conditions as the Committee may
set. In addition, the Committee, in its discretion, may
accelerate the time in which any outstanding Option may be
exercised. However, in no event shall any Option be exercisable
on or after the tenth anniversary of the date of the grant of
the Option.
V-2
5.7 Exercise of Options.
(a) General Method of Exercise. Subject
to the terms and provisions of the Plan and an Optionees
Option Agreement, Options may be exercised in whole or in part
from time to time by the delivery of written notice in the
manner designated by the Committee stating (1) that the
Optionee wishes to exercise such option on the date such notice
is so delivered, (2) the number of shares of Stock with
respect to which the Option is to be exercised and (3) the
address to which the certificate representing such shares of
Stock should be mailed. Except in the case of exercise by a
third party broker as provided below, in order for the notice to
be effective the notice must be accompanied by payment of the
Option Price and any applicable tax withholding amounts which
must be made at the time of exercise by any combination of the
following: (a) cash, certified check, bank draft or postal
or express money order for an amount equal to the Option Price
under the Option, (b) Mature Shares with a Fair Market
Value on the date of exercise equal to the Option Price under
the Option (if approved in advance by the Committee or an
executive officer of the Company), (c) an election to make
a cashless exercise through a registered broker-dealer (if
approved in advance by the Committee or an executive officer of
the Company) or (d) except as specified below, any other
form of payment which is acceptable to the Committee. If Mature
Shares are used for payment by the Optionee, the aggregate Fair
Market Value of the shares of Stock tendered must be equal to or
less than the aggregate Option Price of the shares of Stock
being purchased upon exercise of the Option, and any difference
must be paid by cash, certified check, bank draft or postal or
express money order payable to the order of the Company.
If, at the time of receipt by the Company or its delegate of
such written notice, (i) the Company has unrestricted
surplus in an amount not less than the Option Price of such
shares of Stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all
outstanding shares of preferred stock of the Company have been
fully paid, (iii) the acquisition by the Company of its own
shares of Stock for the purpose of enabling such Optionee to
exercise such Option is otherwise permitted by applicable law,
does not require any vote or consent of any stockholder of the
Company and does not violate the terms of any agreement to which
the Company is a party or by which it is bound, and
(iv) there shall have been adopted, and there shall be in
full force and effect, a resolution of the Board authorizing the
acquisition by the Company of its own shares of stock for such
purpose, then such Optionee may deliver to the Company, in
payment of the Option Price of the shares of Stock with respect
to which such Option is exercised, (x) certificates
registered in the name of such Optionee that represent a number
of shares of stock legally and beneficially owned by such
Optionee (free of all liens, claims and encumbrances of every
kind) and having a Fair Market Value on the date of receipt by
the Company or its delegate of such written notice that is not
greater than the Option Price of the shares of Stock with
respect to which such Option is to be exercised, such
certificates to be accompanied by stock powers duly endorsed in
blank by the record holder of the shares of Stock represented by
such certificates, with the signature of such record holder
guaranteed by a national banking association, and (y) if
the Option Price of the shares of Stock with respect to which
such Option is to be exercised exceeds such Fair Market Value, a
cashiers check drawn on a national banking association and
payable to the order of the Company, in an amount, in United
States dollars, equal to the amount of such excess.
Notwithstanding the provisions of the immediately preceding
sentence, the Committee, in its sole discretion, may refuse to
accept shares of Stock in payment of the Option Price of the
shares of Stock with respect to which such Option is to be
exercised and, in that event, any certificates representing
shares of Stock that were received by the Company or its
delegate with such written notice shall be returned to such
Optionee, together with notice by the Company or its delegate to
such Optionee of the refusal of the Committee to accept such
shares of Stock. If, at the expiration of seven business days
after the delivery to such Optionee of such written notice from
the Company or its delegate, such Optionee shall not have
delivered to the Company or its delegate a cashiers check
drawn on a national banking association and payable to the order
of the Company in an amount, in United States dollars, equal to
the Option Price of the shares of Stock with respect to which
such Option is to be exercised, such written notice from the
Optionee to the Company or its delegate shall be ineffective to
exercise such Option.
Whenever an Option is exercised by exchanging shares of Stock
owned by the Optionee, the Optionee shall deliver to the Company
or its delegate certificates registered in the name of the
Optionee representing a number of shares of Stock legally and
beneficially owned by the Optionee, free of all liens, claims,
and encumbrances of every kind, accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented
by the certificates, (with signature guaranteed by a commercial
bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of
certificates upon the exercise of Option is
V-3
subject to the condition that the person exercising the Option
provide the Company with the information the Company might
reasonably request pertaining to exercise, sale or other
disposition of an Option.
(b) Issuance of Shares. Subject to
Section 4.4 and Section 5.7(c), as promptly as
practicable after receipt of written notification and payment,
in the form required by Section 5.7(a), of an amount of
money necessary to satisfy any withholding tax liability that
may result from the exercise of such Option, the Company shall
deliver to the Optionee certificates for the number of shares
with respect to which the Option has been exercised, issued in
the Optionees name. Delivery of the shares shall be deemed
effected for all purposes when a stock transfer agent of the
Company shall have deposited the certificates in the United
States mail, addressed to the Optionee, at the address specified
by the Optionee.
(c) Exercise Through Third-Party
Broker. The Committee may permit an Optionee to
elect to pay the Option Price and any applicable tax withholding
resulting from such exercise by authorizing a third-party broker
to sell all or a portion of the shares of Stock acquired upon
exercise of the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the Option Price and any
applicable tax withholding resulting from such exercise.
(d) Limitations on Exercise
Alternatives. The Committee shall not permit an
Optionee to pay such Optionees Option Price upon the
exercise of an Option by having the Company reduce the number of
shares of Stock that will be delivered pursuant to the exercise
of the Option. In addition, the Committee shall not permit an
Optionee to pay such Optionees Option Price upon the
exercise of an Option by using shares of Stock other than Mature
Shares. An Option may not be exercised for a fraction of a share
of Stock.
5.8 Transferability of Options.
(a) Incentive Stock Options. No ISO
granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Further, all
ISOs granted to an Optionee under the Plan shall be exercisable
during his or her lifetime only by the Optionee, and after that
time, by the Optionees heirs or estate.
(b) Nonqualified Stock
Options. Except as otherwise provided
in an Optionees Option Agreement, no NQSO granted under
the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution. Further, except as
otherwise provided in an Optionees Option Agreement, all
NQSOs granted to an Optionee under the Plan shall be exercisable
during his or her lifetime only by such Optionee.
Any attempted assignment of an Option in violation of this
Section 5.8 shall be null and void.
5.9 Notification of Disqualifying
Disposition. If any Optionee shall make any
disposition of shares of Stock issued pursuant to the exercise
of an ISO under the circumstances described in
section 421(b) of the Code (relating to certain
disqualifying dispositions), such Optionee shall notify the
Company of such disposition within ten (10) days thereof.
5.10 No Rights as Stockholder. An
Optionee shall not have any rights as a stockholder with respect
to Stock covered by an Option until the date a stock certificate
for such Stock is issued by the Company; and, except as
otherwise provided in Section 4.6, no adjustment for
dividends, or otherwise, shall be made if the record date
therefor is prior to the date of issuance of such certificate.
5.11 $100,000 Limitation on Incentive Stock
Options. To the extent that the aggregate Fair
Market Value of Stock with respect to which Incentive Stock
Options first become exercisable by a Holder in any calendar
year exceeds $100,000, taking into account both shares of Stock
subject to Incentive Stock Options under the Plan and Stock
subject to incentive stock options under all other plans of the
Company, such Options shall be treated as Nonqualified Stock
Options. For this purpose, the Fair Market Value of
the Stock subject to Options shall be determined as of the date
the Options were awarded. In reducing the number of Options
treated as Incentive Stock Options to meet the $100,000 limit,
the most recently granted Options shall be reduced first. To the
extent a reduction of simultaneously granted Options is
necessary to meet the $100,000 limit, the Committee may, in the
manner and to the extent permitted by law, designate which
shares of Stock are to be treated as shares acquired pursuant to
the exercise of an Incentive Stock Option.
V-4
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1 Authority to Grant Stock Appreciation Rights
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant Stock Appreciation Rights under the Plan to eligible
persons in such number and upon such terms as the Committee
shall determine. Subject to the terms and conditions of the
Plan, the Committee shall have complete discretion in
determining the number of SARs granted to each Holder and,
consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.
6.2 Type of Stock Appreciation Rights
Available. SARs granted under the Plan may be
Freestanding SARs, Tandem SARs or any combination of these forms
of SARs.
6.3 General Terms. Subject to the terms
and conditions of the Plan, a SAR granted under the Plan shall
confer on the recipient a right to receive, upon exercise
thereof, a cash amount equal to the excess of (a) the Fair
Market Value of one share of the Stock on the date of exercise
over (b) the grant price of the SAR, which shall not be
less than 100 percent of the Fair Market Value of one share
of the Stock on the date of grant of the SAR and in no event
less than par value of one share of the Stock. The grant price
of a Freestanding SAR shall not be less than the Fair Market
Value of a share of the Stock on the date of grant of the SAR.
The grant price of a Tandem SAR shall equal the Option Price of
the Option which is related to the Tandem SAR. Effective for
SARs granted under the Plan on or after January 1, 2005, a
SAR granted under the Plan may not be granted with any Dividend
Equivalents rights.
6.4 Stock Appreciation Right
Agreement. Each Award of SARs granted under the
Plan shall be evidenced by an Award Agreement that shall specify
(a) whether the SAR is intended to be a Freestanding SAR or
a Tandem SAR, (b) the grant price of the SAR, (c) the
term of the SAR, (d) the vesting and termination provisions
and (e) such other provisions as the Committee shall
determine that are not inconsistent with the terms and
provisions of the Plan. The Committee may impose such additional
conditions or restrictions on the exercise of any SAR as it may
deem appropriate.
6.5 Term of Stock Appreciation
Rights. The term of a SAR granted under the Plan
shall be determined by the Committee, in its sole discretion;
provided that no SAR shall be exercisable on or after the tenth
anniversary date of its grant.
6.6 Exercise of Freestanding
SARs. Subject to the terms and provisions of the
Plan and the applicable Award Agreement, Freestanding SARs may
be exercised in whole or in part from time to time by the
delivery of written notice in the manner designated by the
Committee stating (a) that the Holder wishes to exercise
such SAR on the date such notice is so delivered, (b) the
number of shares of Stock with respect to which the SAR is to be
exercised and (c) the address to which the payment due
under such SAR should be mailed. In accordance with applicable
law, a Freestanding SAR may be exercised upon whatever
additional terms and conditions the Committee, in its sole
discretion, imposes.
6.7 Exercise of Tandem SARs.
(a) Subject to the terms and provisions of the Plan and the
applicable Award Agreement, Tandem SARs may be exercised for all
or part of the shares of Stock subject to the related Option
upon the surrender of the right to exercise the equivalent
portion of the related Option and by the delivery of written
notice in the manner designated by the Committee stating
(a) that the Holder wishes to exercise such SAR on the date
such notice is so delivered, (b) the number of shares of
Stock with respect to which the SAR is to be exercised and
(c) the address to which the payment due under such SAR
should be mailed. A Tandem SAR may be exercised only with
respect to the shares of Stock for which its related Option is
then exercisable. In accordance with applicable law, a Tandem
SAR may be exercised upon whatever additional terms and
conditions the Committee, in its sole discretion, imposes.
(b) Notwithstanding any other provision of the Plan to the
contrary, with respect to a Tandem SAR granted in connection
with an ISO: (1) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (2) the value of the
payout with respect to the Tandem SAR may be for no more than
100 percent (100%) of the excess of the Fair Market Value
of the shares of Stock subject to the underlying ISO at the time
the Tandem SAR is exercised
VI-1
over the Option Price of the underlying ISO; and (3) the
Tandem SAR may be exercised only when the Fair Market Value of
the shares of Stock subject to the ISO exceeds the Option Price
of the ISO.
6.8 Payment of SAR Amount. Upon the
exercise of a SAR, an Employee shall be entitled to receive
payment from the Company in an amount determined by multiplying:
(a) The excess of the Fair Market Value of a share of the
Stock on the date of exercise over the grant price of the SAR by
(b) The number of shares of Stock with respect to which the
SAR is exercised.
At the discretion of the Committee, the payment upon SAR
exercise may be in cash, in Stock of equivalent value, in some
combination thereof or in any other manner approved by the
Committee in its sole discretion. The Committees
determination regarding the form of SAR payout shall be set
forth in the Award Agreement pertaining to the grant of the SAR.
6.9 Termination of Employment or Termination of
Service. Each Award Agreement shall set forth the
extent to which the grantee of a SAR shall have the right to
exercise the SAR following the grantees Termination of
Employment or Termination of Service. Such provisions shall be
determined in the sole discretion of the Committee, may be
included in the Award Agreement entered into with the grantee,
and need not be uniform among all SARs issued pursuant to the
Plan and may reflect distinctions based on the reasons for
termination.
6.10 Nontransferability of SARs. Except
as otherwise provided in a Holders Award Agreement, no SAR
granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Further, except
as otherwise provided in a Holders Award Agreement, all
SARs granted to a Holder under the Plan shall be exercisable
during his or her lifetime only by the Holder, and after that
time, by the Holders heirs or estate. Any attempted
assignment of a SAR in violation of this Section 6.10 shall
be null and void.
6.11 No Rights as Stockholder. A grantee
of a SAR award, as such, shall have no rights as a stockholder.
6.12 Restrictions on Stock Received. The
Committee may impose such conditions
and/or
restrictions on any shares of Stock received upon exercise of a
SAR granted pursuant to the Plan as it may deem advisable or
desirable. These restrictions may include, but shall not be
limited to, a requirement that the Holder hold the shares of
Stock received upon exercise of a SAR for a specified period of
time.
VI-2
ARTICLE VII
RESTRICTED STOCK AWARDS
7.1 Restricted Stock Awards. Subject to
the terms and conditions of the Plan, the Committee, at any
time, and from time to time, may make Awards of Restricted Stock
to eligible persons in such numbers and upon such terms as the
Committee shall determine. The amount of, the vesting and the
transferability restrictions applicable to any Restricted Stock
Award shall be determined by the Committee in its sole
discretion. If the Committee imposes vesting or transferability
restrictions on a Holders rights with respect to
Restricted Stock, the Committee may issue such instructions to
the Companys share transfer agent in connection therewith
as it deems appropriate. The Committee may also cause the
certificate for shares of Stock issued pursuant to a Restricted
Stock Award to be imprinted with any legend which counsel for
the Company considers advisable with respect to the restrictions
or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take
such steps to restrict transfer of the shares of Stock as
counsel for the Company considers necessary or advisable to
comply with applicable law.
7.2 Restricted Stock Award
Agreement. Each Restricted Stock Award shall be
evidenced by an Award Agreement that contains any vesting,
transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.
7.3 Holders Rights as
Stockholder. Subject to the terms and conditions
of the Plan, each recipient of a Restricted Stock Award shall
have all the rights of a stockholder with respect to the shares
of Restricted Stock included in the Restricted Stock Award
during the Period of Restriction established for the Restricted
Stock Award. Dividends paid with respect to Restricted Stock in
cash or property other than shares of Stock or rights to acquire
shares of Stock shall be paid to the recipient of the Restricted
Stock Award currently. Dividends paid in shares of Stock or
rights to acquire shares of Stock shall be added to and become a
part of the Restricted Stock. During the Period of Restriction,
certificates representing the Restricted Stock shall be
registered in the recipients name and bear a restrictive
legend to the effect that ownership of such Restricted Stock,
and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms, and conditions provided in the Plan
and the applicable Restricted Stock Award Agreement. Such
certificates shall be deposited by the recipient with the
Secretary of the Company or such other officer of the Company as
may be designated by the Committee, together with all stock
powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any
portion of the Restricted Stock which shall be forfeited in
accordance with the Plan and the applicable Restricted Stock
Award Agreement.
VII-1
ARTICLE VIII
DEFERRED
STOCK UNIT AWARDS
8.1 Authority to Grant Deferred Stock Unit
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant Deferred Stock Units under the Plan to eligible persons in
such amounts and upon such terms as the Committee shall
determine. The amount of, the vesting and the transferability
restrictions applicable to any Deferred Stock Unit Award shall
be determined by the Committee in its sole discretion. The
Committee shall maintain a bookkeeping ledger account which
reflects the number of Deferred Stock Units credited under the
Plan for the benefit of a Holder.
8.2 Deferred Stock Unit Awards. A
Deferred Stock Unit shall be similar in nature to Restricted
Stock except that no shares of Stock are actually transferred to
the Holder until a later date specified in the applicable Award
Agreement. Each Deferred Stock Unit shall have a value equal to
the Fair Market Value of a share of Stock.
8.3 Deferred Stock Unit Award
Agreement. Each Deferred Stock Unit Award shall
be evidenced by an Award Agreement that contains any Substantial
Risk of Forfeiture, vesting, transferability restrictions, form
and time of payment provisions and other provisions not
inconsistent with the Plan as the Committee may specify.
8.4 Dividend Equivalents. Effective for
Deferred Stock Awards granted under the Plan on or after
January 1, 2005, an Award Agreement for a Deferred Stock
Unit Award may specify that the Holder shall be entitled to the
payment of Dividend Equivalents under the Award.
8.5 Form of Payment Under Deferred Stock Unit
Award. Payment under a Deferred Stock Unit Award
shall be made in either cash or shares of Stock as specified in
the applicable Award Agreement.
8.6 Time of Payment Under Deferred Stock Unit
Award. A Holders payment under a Deferred
Stock Unit Award shall be made at such time as is specified in
the applicable Award Agreement. The Award Agreement shall
specify that the payment will be made (a) by a date that is
no later than the date that is two and one-half
(21/2)
months after the end of the Fiscal Year in which the Deferred
Stock Unit Award payment is no longer subject to a Substantial
Risk of Forfeiture or (b) at a time that is permissible
under Section 409A. This Section 8.6 is effective for
awards issued under the Plan that are earned and vested on or
after January 1, 2005.
8.7 Holders Rights as
Stockholder. Each recipient of Deferred Stock
Units shall have no rights of a stockholder with respect to the
Holders Deferred Stock Units. A Holder shall have no
voting rights with respect to any Deferred Stock Unit Awards.
VIII-1
ARTICLE IX
PERFORMANCE
STOCK AND PERFORMANCE UNIT AWARDS
9.1 Authority to Grant Performance Stock and Performance
Unit Awards. Subject to the terms and provisions
of the Plan, the Committee, at any time, and from time to time,
may grant Performance Stock and Performance Unit Awards under
the Plan to eligible persons in such amounts and upon such terms
as the Committee shall determine. The amount of, the vesting and
the transferability restrictions applicable to any Performance
Stock or Performance Unit Award shall be based upon the
attainment of such Performance Goals as the Committee may
determine. A Performance Goal for a particular Performance Stock
or Performance Unit Award must be established by the Committee
prior to the earlier to occur of (a) 90 days after the
commencement of the period of service to which the Performance
Goal relates or (b) the lapse of 25 percent of the
period of service, and in any event while the outcome is
substantially uncertain. A Performance Goal must be objective
such that a third party having knowledge of the relevant facts
could determine whether the goal is met. Such a Performance Goal
may be based on one or more business criteria that apply to the
Employee, one or more business units of the Company, or the
Company as a whole, with reference to one or more of the
following: earnings per share, earnings per share growth, total
shareholder return, economic value added, cash return on
capitalization, increased revenue, revenue ratios (per employee
or per customer), net income, stock price, market share, return
on equity, return on assets, return on capital, return on
capital compared to cost of capital, return on capital employed,
return on invested capital, shareholder value, net cash flow,
operating income, earnings before interest and taxes, cash flow,
cash flow from operations, cost reductions, cost ratios (per
employee or per customer), proceeds from dispositions, project
completion time and budget goals, net cash flow before financing
activities, customer growth and total market value. Goals may
also be based on performance relative to a peer group of
companies. Unless otherwise stated, such a Performance Goal need
not be based upon an increase or positive result under a
particular business criterion and could include, for example,
maintaining the status quo or limiting economic losses
(measured, in each case, by reference to specific business
criteria). In interpreting Plan provisions applicable to
Performance Goals and Performance Stock or Performance Unit
Awards, it is intended that the Plan will conform with the
standards of section 162(m) of the Code and Treasury
Regulations § 1.162-27(e)(2)(i), and the Committee in
establishing such goals and interpreting the Plan shall be
guided by such provisions. Prior to the payment of any
compensation based on the achievement of Performance Goals, the
Committee must certify in writing that applicable Performance
Goals and any of the material terms thereof were, in fact,
satisfied. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Performance Stock
or Performance Unit Awards made pursuant to the Plan shall be
determined by the Committee. If the Committee imposes vesting or
transferability restrictions on a recipients rights with
respect to Performance Stock or Performance Unit Awards, the
Committee may issue such instructions to the Companys
share transfer agent in connection therewith as it deems
appropriate. The Committee may also cause the certificate for
shares of Stock issued pursuant to a Performance Stock or
Performance Unit Award to be imprinted with any legend which
counsel for the Company considers advisable with respect to the
restrictions or, should the shares of Stock be represented by
book or electronic entry rather than a certificate, the Company
may take such steps to restrict transfer of the shares of Stock
as counsel for the Company considers necessary or advisable to
comply with applicable law.
Each Performance Stock or Performance Unit Award shall be
evidenced by an Award Agreement that contains any vesting,
transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.
9.2 Time of Payment Under Performance Unit
Award. A Holders payment under a
Performance Unit Award shall be made at such time as is
specified in the applicable Award Agreement. The Award Agreement
shall specify that the payment will be made (a) by a date
that is no later than the date that is two and one-half
(21/2)
months after the end of the calendar year in which the
Performance Unit Award payment is no longer subject to a
Substantial Risk of Forfeiture or (b) at a time that is
permissible under Section 409A. This Section 9.2 is
effective for awards issued under the Plan that are earned and
vested on or after January 1, 2005.
9.3 Holders Rights as Stockholder With Respect to
a Performance Stock Award. Subject to the terms
and conditions of the Plan, each Holder of a Performance Stock
Award shall have all the rights of a stockholder with respect to
the shares of Stock issued to the Holder pursuant to the Award
during any period in which such issued
IX-1
shares of Stock are subject to forfeiture and restrictions on
transfer, including without limitation, the right to vote such
shares of Stock.
9.4 Increases Prohibited. Neither the
Committee nor the Board may increase the amount of compensation
payable under a Performance Stock Award or Performance Unit
Award. If the time at which a Performance Stock Award or
Performance Unit Award will vest or be paid is accelerated for
any reason, the number of shares of Stock subject to, or the
amount payable under, the Performance Stock Award or Performance
Unit Award shall be reduced pursuant to Department of Treasury
Regulation § 1.162-27(e)(2)(iii) to reasonably reflect
the time value of money.
9.5 Stockholder Approval. No payments of
Stock or cash will be made pursuant to this Article IX
unless the stockholder approval requirements of Department of
Treasury Regulation § 1.162-27(e)(4) are satisfied.
9.6 Dividend Equivalents. Effective for
Performance Unit Awards granted under the Plan on or after
January 1, 2005, an Award Agreement for a Performance Unit
Award may specify that the Holder shall be entitled to the
payment of Dividend Equivalents under the Award.
IX-2
ARTICLE X
CASH-BASED
AWARDS AND OTHER STOCK-BASED AWARDS
10.1 Authority to Grant Cash-Based
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant Cash-Based Awards under the Plan to Employees in such
amounts and upon such terms, including the achievement of
specific performance goals, as the Committee shall determine.
10.2 Authority to Grant Other Stock-Based
Awards. Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may
grant other types of equity-based or equity-related Awards not
otherwise described by the terms and provisions of the Plan
(including the grant or offer for sale of unrestricted shares of
Stock) under the Plan to eligible persons in such amounts and
subject to such terms and conditions, as the Committee shall
determine. Such Awards may involve the transfer of actual shares
of Stock to Holders, or payment in cash or otherwise of amounts
based on the value of shares of Stock and may include, without
limitation, Awards designed to comply with or take advantage of
the applicable local laws of jurisdictions other than the United
States.
10.3 Value of Cash-Based and Other Stock-Based
Awards. Each Cash-Based Award shall specify a
payment amount or payment range as determined by the Committee.
Each Other Stock-Based Award shall be expressed in terms of
shares of Stock or units based on shares of Stock, as determined
by the Committee. The Committee may establish performance goals
in its discretion for Cash-Based Awards and Other Stock-Based
Awards. If the Committee exercises its discretion to establish
performance goals, the number
and/or value
of Cash-Based Awards or Other Stock-Based Awards that will be
paid out to the Holder will depend on the extent to which the
performance goals are met.
10.4 Payment of Cash-Based Awards and Other Stock-Based
Awards. Payment, if any, with respect to a
Cash-Based Award or an Other Stock-Based Award shall be made in
accordance with the terms of the Award, in cash or shares of
Stock as the Committee determines.
10.5 Termination of Employment or Service
. The Committee shall determine the extent to
which a grantees rights with respect to Cash-Based Awards
and Other Stock-Based Awards shall be affected by the
grantees Termination of Employment or Termination of
Service. Such provisions shall be determined in the sole
discretion of the Committee and need not be uniform among all
Awards of Cash-Based Awards and Other Stock-Based Awards issued
pursuant to the Plan.
10.6 Nontransferability. Except as
otherwise determined by the Committee, neither Cash-Based Awards
nor Other Stock-Based Awards may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Further, except
as otherwise provided by the Committee, a Holders rights
under the Plan, if exercisable, shall be exercisable during his
or her lifetime only by such Holder.
X-1
ARTICLE XI
SUBSTITUTION
AWARDS
Awards may be granted under the Plan from time to time in
substitution for stock options and other awards held by
employees and directors of other corporations who are about to
become Employees, or whose employer is about to become a parent
or subsidiary corporation as contemplated in Section 3.1,
conditioned in the case of an Incentive Stock Option upon the
employee becoming an employee of the Company or a parent or
subsidiary corporation of the Company, as the result of a merger
of consolidation of the Company with another corporation, or the
acquisition by the Company of substantially all the assets of
another corporation, or the acquisition by the Company of at
least 50 percent (50%) of the issued and outstanding stock
of another corporation as the result of which it becomes a
subsidiary of the Company. The terms and conditions of the
substitute Awards so granted may vary from the terms and
conditions set forth in the Plan to such extent as the Board at
the time of grant may deem appropriate to conform, in whole or
in part, to the provisions of the Award in substitution for
which they are granted, but with respect to Options that are
Incentive Stock Options, no such variation shall be such as to
affect the status of any such substitute Option as an incentive
stock option under section 422 of the Code.
XI-1
ARTICLE XII
ADMINISTRATION
12.1 Awards. The Plan shall be
administered by the Committee or, in the absence of the
Committee or in the case of awards issued to Directors, the Plan
shall be administered by the Board. The members of the Committee
(that is not itself the Board) shall serve at the discretion of
the Board. The Committee shall have full and exclusive power and
authority to administer the Plan and to take all actions that
the Plan expressly contemplates or are necessary or appropriate
in connection with the administration of the Plan with respect
to Awards granted under the Plan.
12.2 Authority of the Committee. The
Committee shall have full and exclusive power to interpret and
apply the terms and provisions of the Plan and Awards made under
the Plan, and to adopt such rules, regulations and guidelines
for implementing the Plan as the Committee may deem necessary or
proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the objectives of
the Plan. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting shall
decide any question brought before that meeting. Any decision or
determination reduced to writing and signed by a majority of the
members shall be as effective as if it had been made by a
majority vote at a meeting properly called and held. All
questions of interpretation and application of the Plan, or as
to Awards granted under the Plan, shall be subject to the
determination, which shall be final and binding, of a majority
of the whole Committee. When appropriate, the Plan shall be
administered in order to qualify certain of the Options granted
hereunder as Incentive Stock Options. No member of the Committee
shall be liable for any act or omission of any other member of
the Committee or for any act or omission on his own part,
including but not limited to the exercise of any power or
discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct. In carrying
out its authority under the Plan, the Committee shall have full
and final authority and discretion, including but not limited to
the following rights, powers and authorities, to:
(a) determine the persons to whom and the time or times at
which Awards will be made;
(b) determine the number and exercise price of shares of
Stock covered in each Award, subject to the terms and provisions
of the Plan;
(c) determine the terms, provisions and conditions of each
Award, which need not be identical and need not match the
default terms set forth in the Plan;
(d) accelerate the time at which any outstanding Award will
vest;
(e) prescribe, amend and rescind rules and regulations
relating to administration of the Plan; and
(f) make all other determinations and take all other
actions deemed necessary, appropriate or advisable for the
proper administration of the Plan.
The Committee may make an Award to an individual who the Company
expects to become an Employee of the Company or any of its
Affiliates within six (6) months after the date of grant of
the Award, with the Award being subject to and conditioned on
the individual actually becoming an Employee within that time
period and subject to other terms and conditions as the
Committee may establish. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan
or in any Award to a Holder in the manner and to the extent the
Committee deems necessary or desirable to further the
Plans objectives. Further, the Committee shall make all
other determinations that may be necessary or advisable for the
administration of the Plan. As permitted by law and the terms
and provisions of the Plan, the Committee may delegate its
authority as identified in this Section 12.2.
XII-1
The actions of the Committee in exercising all of the rights,
powers, and authorities set out in this Article XII and all
other Articles of the Plan, when performed in good faith and in
its sole judgment, shall be final, conclusive and binding on all
persons. The Committee may employ attorneys, consultants,
accountants, agents, and other persons, any of whom may be an
Employee, and the Committee, the Company, and its officers and
Board shall be entitled to rely upon the advice, opinions, or
valuations of any such persons.
12.3 Decisions Binding. All
determinations and decisions made by the Committee and the Board
pursuant to the provisions of the Plan and all related orders
and resolutions of the Committee and the Board shall be final,
conclusive and binding on all persons, including the Company,
its stockholders, Employees, Holders and the estates and
beneficiaries of Employees and Holders.
12.4 No Liability. Under no circumstances
shall the Company, the Board or the Committee incur liability
for any indirect, incidental, consequential or special damages
(including lost profits) of any form incurred by any person,
whether or not foreseeable and regardless of the form of the act
in which such a claim may be brought, with respect to the Plan
or the Companys or the Committees or the
Boards roles in connection with the Plan.
XII-2
ARTICLE XIII
AMENDMENT OR
TERMINATION OF PLAN
13.1 Amendment, Modification, Suspension, and
Termination. Subject to Section 13.2 the
Committee may, at any time and from time to time, alter, amend,
modify, suspend, or terminate the Plan and any Award Agreement
in whole or in part; provided, however, that, without the prior
approval of the Companys stockholders and except as
provided in Section 4.6, the Committee shall not directly
or indirectly lower the Option Price of a previously granted
Option or the grant price of a previously granted SAR issued
under the Plan, and no amendment of the Plan shall be made
without stockholder approval if stockholder approval is required
by applicable law or stock exchange rules.
13.2 Awards Previously
Granted. Notwithstanding any other provision of
the Plan to the contrary, no termination, amendment, suspension,
or modification of the Plan or an Award Agreement shall
adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the
Holder holding such Award.
XIII-1
ARTICLE XIV
MISCELLANEOUS
14.1 Unfunded Plan/No Establishment of a
Trust Fund. Holders shall have no right,
title, or interest whatsoever in or to any investments that the
Company or any of its Affiliates may make to aid in meeting
obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Holder, beneficiary,
legal representative, or any other person. To the extent that
any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of
an unsecured general creditor of the Company. All payments to be
made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and
no segregation of assets shall be made to assure payment of such
amounts, except as expressly set forth in the Plan. No property
shall be set aside nor shall a trust fund of any kind be
established to secure the rights of any Holder under the Plan.
All Holders shall at all times rely solely upon the general
credit of the Company for the payment of any benefit which
becomes payable under the Plan. The Plan is not intended to be
subject to the Employee Retirement Income Security Act of 1974,
as amended.
14.2 No Employment Obligation. The
granting of any Award shall not constitute an employment
contract, express or implied, nor impose upon the Company or any
Affiliate any obligation to employ or continue to employ, or
utilize the services of, any Holder. The right of the Company or
any Affiliate to terminate the employment of, or provision of
services by, any person shall not be diminished or affected by
reason of the fact that an Award has been granted to him, and
nothing in the Plan or an Award Agreement shall interfere with
or limit in any way the right of the Company or its Affiliates
to terminate any Holders employment or provision of
service to the Company at any time or for any reason not
prohibited by law.
14.3 Tax Withholding. The Company or any
Affiliate shall be entitled to deduct from other compensation
payable to each Holder any sums required by federal, state or
local tax law to be withheld with respect to the vesting or
exercise of an Award or lapse of restrictions on an Award. In
the alternative, the Company may require the Holder (or other
person validly exercising the Award) to pay such sums for taxes
directly to the Company or any Affiliate in cash or by check
within ten days after the date of vesting, exercise or lapse of
restrictions. In the discretion of the Committee, and with the
consent of the Holder, the Company may reduce the number of
shares of Stock issued to the Holder upon such Holders
exercise of an Option to satisfy the tax withholding obligations
of the Company or an Affiliate; provided that the Fair Market
Value of the shares of Stock held back shall not exceed the
Companys or the Affiliates Minimum Statutory
Withholding Tax Obligations. The Committee may, in its
discretion, permit a Holder to satisfy any Minimum Statutory
Withholding Tax Obligations arising upon the vesting of Award by
delivering to the Holder of the Award a reduced number of shares
of Stock in the manner specified herein. If permitted by the
Committee and acceptable to the Holder, at the time of vesting
of shares of under the Award, the Company shall
(a) calculate the amount of the Companys or an
Affiliates Minimum Statutory Withholding Tax Obligations
on the assumption that all such shares of Stock vested under the
Award are made available for delivery, (b) reduce the
number of such shares of Stock made available for delivery so
that the Fair Market Value of the shares of Stock withheld on
the vesting date approximates the Companys or an Affiliate
Minimum Statutory Withholding Tax Obligation and (c) in
lieu of the withheld shares of Stock, remit cash to the United
States Treasury
and/or other
applicable governmental authorities, on behalf of the Holder, in
the amount of the Minimum Statutory Withholding Tax Obligations
due. The Company shall withhold only whole shares of Stock to
satisfy its Minimum Statutory Withholding Tax Obligations. Where
the Fair Market Value of the withheld shares of Stock does not
equal the amount of the Minimum Statutory Withholding Tax
Obligations, the Company shall withhold shares of Stock with a
Fair Market Value slightly less than the amount of its Minimum
Statutory Withholding Tax Obligation and the Holder must satisfy
the remaining Minimum Statutory Withholding Tax Obligation in
some other manner permitted under this Section 14.3. The
withheld shares of Stock not made available for delivery by the
Company shall be retained as treasury shares or will be
cancelled and, in either case, the Holders right, title
and interest in such shares of Stock shall terminate. The
Company shall have no obligation upon vesting or exercise of any
Award or lapse of restrictions on an Award until the Company or
an Affiliate has received payment sufficient to cover the
Minimum Statutory Withholding Tax Obligation with respect to
that vesting, exercise or lapse of restrictions. Neither the
Company nor any Affiliate shall be obligated to advise a Holder
of the existence of the tax or the amount which it will be
required to withhold.
XIV-1
14.4 Written Agreement. Each Award shall
be embodied in a written agreement or statement which shall be
subject to the terms and conditions of the Plan. The Award
Agreement shall be signed by a member of the Committee on behalf
of the Committee and the Company or by an executive officer of
the Company, other than the Holder, on behalf of the Company,
and may be signed by the Holder to the extent required by the
Committee. The Award Agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which
are not inconsistent with the terms and provisions of the Plan.
14.5 Indemnification of the
Committee. The Company shall indemnify each
present and future member of the Committee against, and each
member of the Committee shall be entitled without further action
on his or her part to indemnity from the Company for, all
expenses (including attorneys fees, the amount of
judgments and the amount of approved settlements made with a
view to the curtailment of costs of litigation, other than
amounts paid to the Company itself) reasonably incurred by such
member in connection with or arising out of any action, suit or
proceeding in which such member may be involved by reason of
such member being or having been a member of the Committee,
whether or not he or she continues to be a member of the
Committee at the time of incurring the expenses, including,
without limitation, matters as to which such member shall be
finally adjudged in any action, suit or proceeding to have been
negligent in the performance of such members duty as a
member of the Committee. However, this indemnity shall not
include any expenses incurred by any member of the Committee in
respect of matters as to which such member shall be finally
adjudged in any action, suit or proceeding to have been guilty
of gross negligence or willful misconduct in the performance of
his duty as a member of the Committee. In addition, no right of
indemnification under the Plan shall be available to or
enforceable by any member of the Committee unless, within
60 days after institution of any action, suit or
proceeding, such member shall have offered the Company, in
writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the
benefit of the heirs, executors or administrators of each member
of the Committee and shall be in addition to all other rights to
which a member of the Committee may be entitled as a matter of
law, contract or otherwise.
14.6 Gender and Number. If the context
requires, words of one gender when used in the Plan shall
include the other and words used in the singular or plural shall
include the other.
14.7 Severability. In the event any
provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been
included.
14.8 Headings. Headings of Articles and
Sections are included for convenience of reference only and do
not constitute part of the Plan and shall not be used in
construing the terms and provisions of the Plan.
14.9 Other Compensation Plans. The
adoption of the Plan shall not affect any other option,
incentive or other compensation or benefit plans in effect for
the Company or any Affiliate, nor shall the Plan preclude the
Company from establishing any other forms of incentive
compensation arrangements for Employees.
14.10 Other Awards. The grant of an Award
shall not confer upon the Holder the right to receive any future
or other Awards under the Plan, whether or not Awards may be
granted to similarly situated Holders, or the right to receive
future Awards upon the same terms or conditions as previously
granted.
14.11 Successors. All obligations of the
Company under the Plan with respect to Awards granted hereunder
shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business
and/or
assets of the Company.
14.12 Law Limitations/Governmental
Approvals. The granting of Awards and the
issuance of shares of Stock under the Plan shall be subject to
all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities
exchanges as may be required.
14.13 Delivery of Title. The Company
shall have no obligation to issue or deliver evidence of title
for shares of Stock issued under the Plan prior to:
(a) obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable; and
XIV-2
(b) completion of any registration or other qualification
of the Stock under any applicable national or foreign law or
ruling of any governmental body that the Company determines to
be necessary or advisable.
14.14 Inability to Obtain Authority. The
inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the
Companys counsel to be necessary to the lawful issuance
and sale of any shares of Stock hereunder, shall relieve the
Company of any liability in respect of the failure to issue or
sell such shares of Stock as to which such requisite authority
shall not have been obtained.
14.15 Investment Representations. The
Committee may require any person receiving Stock pursuant to an
Award under the Plan to represent and warrant in writing that
the person is acquiring the shares of Stock for investment and
without any present intention to sell or distribute such Stock.
14.16 Persons Residing Outside of the United
States. Notwithstanding any provision of the Plan
to the contrary, in order to comply with the laws in other
countries in which the TMW Group operates or has Employees, the
Committee, in its sole discretion, shall have the power and
authority to:
(a) determine which Affiliates shall be covered by the Plan;
(b) determine which persons employed outside the United
States are eligible to participate in the Plan;
(c) amend or vary the terms and provisions of the Plan and
the terms and conditions of any Award granted to persons who
reside outside the United States;
(d) establish subplans and modify exercise procedures and
other terms and procedures to the extent such actions may be
necessary or advisable any subplans and
modifications to Plan terms and procedures established under
this Section 14.16 by the Committee shall be attached to
the Plan document as Appendices; and
(e) take any action, before or after an Award is made, that
it deems advisable to obtain or comply with any necessary local
government regulatory exemptions or approvals.
Notwithstanding the above, the Committee may not take any
actions hereunder, and no Awards shall be granted, that would
violate the Exchange Act, the Code, any securities law or
governing statute or any other applicable law.
14.17 No Fractional Shares. No fractional
shares of Stock shall be issued or delivered pursuant to the
Plan or any Award. The Committee shall determine whether cash,
additional Awards, or other property shall be issued or paid in
lieu of fractional shares of Stock or whether such fractional
shares or any rights thereto shall be forfeited or otherwise
eliminated.
14.18 Arbitration of Disputes. Any
controversy arising out of or relating to the Plan or an Option
Agreement shall be resolved by arbitration conducted pursuant to
the arbitration rules of the American Arbitration Association.
The arbitration shall be final and binding on the parties.
14.19 Governing Law. The provisions of
the Plan and the rights of all persons claiming thereunder shall
be construed, administered and governed under the laws of the
State of Texas.
XIV-3
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice, Proxy Statement and our 2010 Annual Report to Shareholders are available at www.proxyvote.com.
THE MENS WEARHOUSE, INC.
Annual Meeting of Shareholders
June 15, 2011 11:00 AM
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of The Mens Wearhouse, Inc. (the Company) hereby appoints
George Zimmer and David Edwab, or either of them, attorneys and proxies of the undersigned,
with full power of substitution to vote, as designated below, the number of votes which the
undersigned would be entitled to cast if personally present at the Annual Meeting of Shareholders
of the Company to be held at 11:00 a.m., Pacific daylight time, on Wednesday, June 15, 2011,
at the Companys executive offices, 40650 Encyclopedia Circle, Fremont, California, and at any adjournment or
adjournments thereof.
This Proxy will be voted as directed. IF NOT OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED FOR
EACH OF THE NOMINEES LISTED HEREIN, FOR PROPOSALS 2, 3, 4 AND 6 AND FOR 3 YEARS WITH RESPECT TO
PROPOSAL 5. As noted in the accompanying proxy statement, receipt of which is hereby
acknowledged, if any of the listed nominees becomes unavailable for any reason and
authority to vote for election of directors is not withheld, the shares will be voted for
another nominee or other nominees to be selected by the Nominating and Corporate
Governance Committee.
(If you noted any Address Changes above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
THE MENS WEARHOUSE, INC.
6380 ROGERDALE RD
HOUSTON, TX 77072
VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs 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 touch-tone telephone to transmit your voting instructions up until
11:59 p.m. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: þ
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE MENS WEARHOUSE, INC. |
|
|
|
For
All |
|
Withhold
All |
|
For All
Except |
|
|
The Board of Directors recommends you vote
FOR the ten nominees named below: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
|
Election of Directors |
|
|
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01 |
) |
|
George Zimmer |
|
|
06 |
) |
|
Deepak Chopra, M.D. |
|
|
|
|
|
|
|
|
|
|
|
02 |
) |
|
David H. Edwab |
|
|
07 |
) |
|
William B. Sechrest |
|
|
|
|
|
|
|
|
|
|
|
03 |
) |
|
Rinaldo S. Brutoco |
|
|
08 |
) |
|
Larry R. Katzen |
|
|
|
|
|
|
|
|
|
|
|
04 |
) |
|
Michael L. Ray, Ph.D. |
|
|
09 |
) |
|
Grace Nichols |
|
|
|
|
|
|
|
|
|
|
|
05 |
) |
|
Sheldon I. Stein |
|
|
10 |
) |
|
Douglas S. Ewert |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you vote
FOR proposals 2, 3 and 4: |
|
For |
|
Against |
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. |
|
|
To amend the Companys 2004 Long-Term Incentive
Plan to increase the number of shares authorized for
issuance under the plan. |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. |
|
|
To reapprove the material terms of the performance
goals for performance awards under the Companys
2004 Long-Term Incentive Plan. |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. |
|
|
To approve, on
an advisory basis, our
executive compensation. |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For address change, mark here. (see reverse for instructions) |
|
o |
Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, or other fiduciary, please give full title as
such. Joint owners should each sign personally. All holders must sign. If
corporation or partnership, please sign in full corporate or partnership
name, by authorized officer.
|
|
|
To
withhold authority to vote for any individual nominee(s),
mark For All Except and write the number(s) of the nominee(s)
on the line below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you
vote 3 YEARS on the following proposal: |
|
1 Year |
|
2 Years |
|
3 Years |
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
5.
|
|
To recommend, on an advisory basis, the preferred frequency for the
advisory vote on executive compensation.
|
|
o
|
|
o
|
|
o
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you vote
FOR the following proposal: |
|
For |
|
Against |
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
6. |
|
To ratify the appointment of the firm of
Deloitte & Touche LLP as independent registered
public accounting firm for the Company for
fiscal 2011. |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
7. |
|
In their discretion, the above-named proxies are authorized to
vote
upon such other matters as may properly come before the
meeting or
any adjournment thereof and upon matters incident to the
conduct of
the meeting. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
|
Date
|
|
Signature (Joint Owners)
|
|
Date |