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 ☒
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))
☒ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Rule 14a-12
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REVLON, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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REVLON, INC.
ONE NEW YORK PLAZA
NEW YORK, NY 10004
April 29, 2016
Dear Stockholders:
As Revlon, Inc.’s newly appointed President and Chief Executive Officer (effective as of April 15, 2016), I am pleased to cordially invite you to attend Revlon’s 2016 Annual Stockholders’ Meeting. The 2016 Annual Meeting will be held at 10:00 a.m., Eastern Time, on Thursday, June 9, 2016, at Revlon's Research Center at 2121 Route 27, Edison, NJ 08818.
The matters to be acted upon at the meeting are described in the accompanying Notice of Annual Stockholders’ Meeting and Proxy Statement, which also includes important information that you will need in order to pre-register for admission to the meeting, if you plan to attend in person.
While stockholders may exercise their right to vote their shares in person at the 2016 Annual Meeting, we recognize that many stockholders may not be able to attend the meeting. Accordingly, we are mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) containing instructions on how stockholders can access the proxy materials over the Internet and vote electronically.
The Internet Notice also contains instructions on how stockholders can receive a paper copy of our proxy materials, including the Proxy Statement, the 2015 Annual Report and a form of proxy card. Our proxy materials are being furnished to Revlon, Inc. stockholders on or about April 29, 2016.
Whether or not you plan to attend the 2016 Annual Meeting, we encourage you to vote your shares, regardless of the number of shares you hold, by utilizing the voting options available to you as described in the Internet Notice and our Proxy Statement. This will not restrict your right to attend the 2016 Annual Meeting and vote your shares in person, if you wish to change your prior vote.
Thank you.
Sincerely yours,
Fabian T. Garcia
President and Chief Executive Officer
REVLON, INC.
ONE NEW YORK PLAZA
NEW YORK, NY 10004
NOTICE OF ANNUAL STOCKHOLDERS’ MEETING
To Revlon, Inc. Stockholders:
The 2016 Annual Stockholders’ Meeting of Revlon, Inc. (the “Company”) will be held at 10:00 a.m., Eastern Time, on Thursday, June 9, 2016, at Revlon’s Research Center at 2121 Route 27, Edison, NJ 08818. The following proposals will be voted on at the 2016 Annual Meeting:
| 1. | the election of the following persons as members of the Company’s Board of Directors to serve until the next annual stockholders’ meeting and until such directors’ successors are elected and shall have been qualified: Ronald O. Perelman, Alan S. Bernikow, Viet D. Dinh, Meyer Feldberg, Fabian T. Garcia, Robert K. Kretzman, Ceci Kurzman, Paul M. Meister, Tamara Mellon, Debra Perelman, Paul G. Savas, Barry F. Schwartz and Cristiana Falcone Sorrell; |
| 2. | the ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2016; |
| 3. | the approval of the Revlon Amended and Restated Executive Incentive Compensation Plan; and |
| 4. | the transaction of such other business as may properly come before the 2016 Annual Meeting or at any adjournment of such meeting. |
A Proxy Statement describing the matters to be considered at the 2016 Annual Meeting accompanies this notice. Only stockholders of record of the Company’s Class A Common Stock at 5:00 p.m., Eastern Time, on April 13, 2016 are entitled to notice of, and to vote at, the 2016 Annual Meeting and at any adjournments of such meeting.
For at least 10 days prior to the 2016 Annual Meeting, a list of stockholders entitled to vote at the 2016 Annual Meeting will be available for inspection during normal business hours at the offices of the Company’s Secretary at One New York Plaza, 49th Floor, New York, NY 10004. Such list also will be available at the 2016 Annual Meeting.
Important Notice Regarding the Internet Availability of Proxy Materials:
Our Proxy Statement and 2015 Annual Report are available to stockholders over the Internet. We have furnished the Company’s stockholders with a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) informing them of their ability to access the proxy materials on the Internet.
Stockholders who have a request for paper copies on file with our transfer agent or their broker will receive paper copies of our proxy materials in the mail. A paper copy of our proxy materials may be requested through one of the methods described in the Internet Notice. Our Proxy Statement, including the Notice of Annual Stockholders’ Meeting, and our 2015 Annual Report are available at www.proxyvote.com (where stockholders may also vote their shares over the Internet) and at www.revloninc.com.
Whether or not you plan to attend the 2016 Annual Meeting, your vote is important. Please promptly submit your proxy by Internet, telephone or mail by following the instructions found on your Internet Notice or proxy card. Your proxy can be withdrawn by you at any time before it is voted at the 2016 Annual Meeting.
If you plan to attend the 2016 Annual Meeting in person, you should check the appropriate box on your proxy card or, if you are voting on the Internet, indicate when prompted that you will attend in person. To be admitted to the 2016 Annual Meeting, you will need to present valid picture identification, such as a driver’s license or passport.
If your shares are held other than as a stockholder of record (such as beneficially through a brokerage, bank or other nominee account), to be admitted to the 2016 Annual Meeting you will also need to present original documents (not copies) to evidence your stock ownership as of the April 13, 2016 record date, such as an original of a legal proxy from your bank or broker or your brokerage account statement demonstrating that you held the Company’s Class A Common Stock in your account on the April 13, 2016 record date.
For admission to the 2016 Annual Meeting, you may present an original voting instruction form issued by your bank or broker, demonstrating that you held the Company’s Class A Common Stock in your account on the April 13, 2016 record date, if you did not already return such form to your bank or broker. Copies and “Requests for Admission” will not be accepted. Please see our Proxy Statement for information on how to pre-register for the meeting, should you wish to attend.
To expedite the admission registration process, we encourage stockholders to follow the pre-registration procedures set forth in this Proxy Statement.
Thank you.
By Order of the Board of Directors
Michael T. Sheehan
Senior Vice President, Deputy General Counsel
and Secretary
April 29, 2016
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TO ENABLE YOU TO VOTE YOUR SHARES IN ACCORDANCE WITH YOUR WISHES, PLEASE PROMPTLY SUBMIT YOUR VOTE BY INTERNET, TELEPHONE OR MAIL BY FOLLOWING THE INSTRUCTIONS FOUND ON YOUR INTERNET NOTICE, VOTING INSTRUCTION FORM OR PROXY CARD.
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This summary highlights information contained in this Proxy Statement. For more information, you should carefully read and consider the entire Proxy Statement, as well as the Company’s 2015 Annual Report, before voting on the matters presented in this Proxy Statement.
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2016 Annual Stockholders’ Meeting
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Time & Date
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10:00 a.m., June 9, 2016
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Place
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Revlon Research Center
2121 Route 27 Edison, NJ 08818 |
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Record Date
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April 13, 2016
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Voting
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Each share of the Company’s Class A Common Stock is entitled to one vote. Class A Common Stock is the Company’s only outstanding class of voting capital stock.
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Admission
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Stockholders of record on the Record Date may attend the 2016 Annual Meeting upon presentation of appropriate admission materials; pre-registration is encouraged; see the “Questions and Answers About the Annual Meeting and Voting” section of this Proxy Statement for more information.
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Meeting Agenda
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1.
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Election of Directors.
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Ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2016.
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Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan.
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Transact such other business that may properly be brought before the meeting.
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Voting Matters
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Item
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Board Vote Recommendation
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1.
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Election of Directors
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For each Director nominee.
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2.
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Ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2016
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For.
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3.
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Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan
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For.
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Board Nominees
The following table provides summary information about each Director nominee. Each Director is elected annually by a plurality of the votes cast by the Company’s stockholders.
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Name
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Revlon Director
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Independent
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Ronald O. Perelman (Chairman)
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1992
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Alan S. Bernikow
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2003
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✔
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Viet D. Dinh
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2012
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✔
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Meyer Feldberg
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1997
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✔
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Fabian T. Garcia
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2016
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Robert K. Kretzman
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2013
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Ceci Kurzman
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2013
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✔
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Paul M. Meister
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—
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Tamara Mellon
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2008
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✔
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Debra Perelman
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2015
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Paul G. Savas
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—
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Barry F. Schwartz
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2007
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Cristiana Falcone Sorrell
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2014
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
| Q. | Why am I receiving these proxy materials? |
| A. | Our Board of Directors is providing this Proxy Statement and other materials to you in connection with the Company’s 2016 Annual Stockholders’ Meeting. This Proxy Statement describes the matters proposed to be voted on at the 2016 Annual Meeting, including: |
| (1) | the election of directors; |
| (2) | the ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2016; |
| (3) | the approval of the Revlon Amended and Restated Executive Incentive Compensation Plan; |
and such other business as may properly come before the 2016 Annual Meeting. The approximate date of making these proxy materials available to you is April 29, 2016.
| Q. | Why did I receive a notice regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials? |
In accordance with SEC rules and regulations, instead of mailing a printed copy of our proxy materials to all stockholders entitled to vote at our 2016 Annual Meeting, we are making the proxy materials and our 2015 Annual Report available to our stockholders on the Internet. On or about April 29, 2016, we are sending to our stockholders a Notice of Internet Availability of Proxy Materials (the “Internet Notice”).
The Internet Notice contains instructions on how stockholders may access and review our proxy materials and our 2015 Annual Report on the Internet and vote electronically, as well as instructions on how stockholders can request a paper copy of our proxy materials, including the 2016 Proxy Statement, the 2015 Annual Report and a form of proxy card. Unless you already had a request for paper copies on file with our transfer agent or your broker, you will not receive a printed copy of the proxy materials. Instead, the Internet Notice will instruct you as to how you may access and review the proxy materials and submit your vote on the Internet. If you would like to receive a printed copy of the proxy materials, please follow the instructions in the Internet Notice.
Important Notice Regarding the Availability of Proxy Materials for the June 9, 2016 Annual
Stockholders’ Meeting:
Our 2016 Proxy Statement, the Notice of Annual Stockholders’ Meeting and our 2015 Annual Report are available at www.proxyvote.com and at www.revloninc.com. Stockholders may also vote their shares at www.proxyvote.com.
| Q. | How can I request paper copies of proxy materials? |
| A. | You will not receive a printed copy of the proxy materials unless you request them. There is no charge imposed by the Company for paper copies. To request paper copies, stockholders can (i) go to www.proxyvote.com and follow the instructions, (ii) call 1-800-579-1639 or (iii) send an email to sendmaterial@proxyvote.com. If you request materials by email, send a blank email with your Control Number(s) that are located in the subject line of the Internet Notice. To facilitate timely delivery, please make your paper copy request no later than May 23, 2016. |
| Q. | When and where is the 2016 Annual Meeting? |
| A. | The 2016 Annual Meeting will be held at 10:00 a.m., Eastern Time, on Thursday, June 9, 2016, at Revlon’s Research Center at 2121 Route 27, Edison, NJ 08818. |
| Q. | What is the purpose of the 2016 Annual Meeting? |
| A. | At the 2016 Annual Meeting, the Company’s stockholders will act upon the following matters set forth in the Notice of Annual Stockholders’ Meeting: |
| • | the election of the following persons as members of the Company’s Board of Directors to serve until the next annual stockholders’ meeting and until such directors’ successors are elected and shall have been qualified: Ronald O. Perelman, Alan S. Bernikow, Viet D. Dinh, Meyer Feldberg, Fabian T. Garcia, Robert |
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K. Kretzman, Ceci Kurzman, Paul M. Meister, Tamara Mellon, Debra Perelman, Paul G. Savas, Barry F. Schwartz and Cristiana Falcone Sorrell. If any nominee is unable or declines unexpectedly to stand for election as a director at the 2016 Annual Meeting, the Board of Directors may by resolution provide for a lesser number of directors or designate substitute nominees and proxies will be voted for any such substitute nominee;
| • | the ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2016; |
| • | the approval of the Revlon Amended and Restated Executive Incentive Compensation Plan; and |
| • | the transaction of such other business as may properly come before the 2016 Annual Meeting. |
| Q. | What are the voting recommendations of the Board? |
| A. | The Board recommends the following votes: |
| • | FOR each of the director nominees; |
| • | FOR the ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2016; and |
| • | FOR the approval of the Revlon Amended and Restated Executive Incentive Compensation Plan. |
| Q. | What is the difference between holding shares as a stockholder of record and as a beneficial owner? |
| A. | Many holders of the Company’s Class A Common Stock hold such shares through a broker or other nominee (i.e., as a beneficial owner), rather than directly in their own name (i.e., as a stockholder of record). As summarized below, there are some distinctions between shares held of record and those owned beneficially. |
| • | Stockholder of Record. If your shares are registered in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date, you are considered the stockholder of record with respect to those shares, and the Company is making these proxy materials available, electronically or otherwise, directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to a third party, or to vote in person at the 2016 Annual Meeting. The Company has made available a proxy card or electronic voting that stockholders can use to vote. |
| • | Beneficial Owner. If your shares are held in a brokerage account or by another nominee as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date, you are considered the beneficial owner of shares held in “street name,” and the Company is making these proxy materials available, electronically or otherwise, to your broker, nominee or trustee. These intermediaries should forward these materials to you. |
| Q. | How do I vote? |
| A. | You may vote using one of the following methods: |
Internet. To vote through the Internet, go to www.proxyvote.com and follow the steps on the secure website. You should have your Internet Notice or your proxy card available, as you will need to reference your assigned Control Number(s). You may vote on the Internet up until 11:59 p.m. Eastern Time on June 8, 2016, which is the day before the June 9, 2016 Annual Meeting. If you vote by the Internet, you do not need to return your proxy card, although you can use it later to change your Internet vote.
Telephone. You may vote by telephone by calling the toll-free number on your proxy card up until 11:59 p.m., Eastern Time, on June 9, 2016 and following the pre-recorded instructions. You should have your Internet Notice or your proxy card available when you call, as you will need to reference your assigned Control Number(s). If you vote by telephone, you do not need to return your proxy card, although you can use it later to change your telephone vote.
Mail. If you receive paper copies of the proxy materials by mail, you may vote by mail by marking your proxy card, dating and signing it, and returning it in the postage-prepaid envelope provided, or to Vote Processing (Revlon), c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. You should return your completed proxy card so that Broadridge receives it prior to the closing of the voting polls for the June 9, 2016 Annual Meeting.
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In Person. You may vote your shares in person by attending the 2016 Annual Meeting and submitting a valid proxy at the meeting. If you are a “registered owner” or “record holder” (i.e., you are listed as a stockholder on the books and records of our transfer agent), you may vote in person by submitting your proxy card or casting a ballot furnished by the Company at the 2016 Annual Meeting prior to the closing of the polls. If you are a “beneficial owner” (i.e., your shares are held by a nominee, such as a bank or broker or in “street name”), you may not vote your shares in person at the 2016 Annual Meeting unless you obtain and present to the Company an original legal proxy from your bank or broker authorizing you to vote the shares. Copies and “Requests for Admission” will not be accepted.
Voting, Generally. All shares that have been voted properly by an unrevoked proxy will be voted at the 2016 Annual Meeting in accordance with your instructions. In relation to how your proxy will be voted, see “How will my proxy be voted?” below.
If you are a “beneficial owner” because your brokerage firm, bank, broker-dealer or other similar organization is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive instructions on how to vote from your bank, broker or other record holder. You must follow these instructions in order for your shares to be voted. Your broker is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, the broker may vote your shares only with respect to Proposal No. 2 (the ratification of the Audit Committee’s selection of the Company’s independent registered public accounting firm), which is considered a “routine” matter, and not with respect to Proposal No. 1 (Election of Directors) or Proposal No. 3 (Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan).
| Q. | How are broker non-votes counted? |
| A. | A broker non-vote occurs when shares held by a broker are not voted with respect to a particular proposal because the broker does not have discretionary authority to vote on the matter and has not received voting instructions from its clients. If your broker holds your shares in its name and you do not instruct your broker how to vote, your broker will only have discretion to vote your shares on “routine” matters. Where a proposal is not “routine,” a broker who has not received instructions from its clients does not have discretion to vote its clients’ uninstructed shares on that proposal. At the 2016 Annual Meeting, only Proposal No. 2 (the ratification of the Audit Committee’s selection of the Company’s independent registered public accounting firm) is considered a routine matter. Your broker will therefore not have discretion to vote on the following “non-routine” matters absent direction from you: Proposal No. 1 (Election of Directors) and Proposal No. 3 (Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan). |
Broker non-votes will be counted towards determining whether or not a quorum is present. With respect to Proposal No. 1 (Election of Directors) and Proposal No. 3 (Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan), because broker non-votes are not voted affirmatively or negatively, they will have no effect on the approval of either of these proposals.
| Q. | Who can vote? |
| A. | The only stockholders who are entitled to vote are: (1) stockholders of record of the Company’s Class A Common Stock (which is the only outstanding class of the Company’s voting capital stock) at 5:00 p.m., Eastern Time, on April 13, 2016, the record date for the 2016 Annual Meeting; and (2) those who have been granted and present an original, signed, valid legal proxy in appropriate form from a holder of record of the Company’s Class A Common Stock as of 5:00 p.m., Eastern Time, on April 13, 2016. Each share of Class A Common Stock is entitled to one vote. |
| Q. | How will my proxy be voted? |
| A. | When properly submitted to us, and not revoked, your proxy will be voted in accordance with your instructions. If you sign and return your proxy card without indicating how you would like your shares to be voted, the persons designated by the Company as proxies will vote in accordance with the recommendations of the Board of Directors, as follows: (1) FOR Proposal No. 1 (Election of Directors); (2) FOR Proposal No. 2 (Ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2016); and (3) FOR Proposal No. 3 (Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan). |
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Although we are not aware of any other matter that will be properly presented at the 2016 Annual Meeting, if any other matter is properly presented, the persons designated by the Company as proxies may vote on such matters in their discretion.
| Q. | Can I change or revoke my vote? |
| A. | Yes. If you are a stockholder of record, you can change or revoke your vote at any time before it is voted at the 2016 Annual Meeting by: |
| • | executing and delivering a proxy bearing a later date, which must be received by the Company’s Secretary at One New York Plaza, 49th Floor, New York, NY 10004, Attention: Michael T. Sheehan, before the original proxy is voted at the 2016 Annual Meeting; |
| • | filing a written revocation or written notice of change, as the case may be, which must be received by the Company’s Secretary at One New York Plaza, 49th Floor, New York, NY 10004, Attention: Michael T. Sheehan, before the original proxy is voted at the 2016 Annual Meeting; or |
| • | attending the 2016 Annual Meeting and voting in person. |
If you are a beneficial owner, please follow the voting instructions sent to you by your broker, trustee or nominee to change or revoke your vote.
To revoke a vote previously submitted electronically through the Internet or by telephone, you may simply vote again at a later date, using the same procedures, in which case the later submitted vote will be recorded and the earlier vote revoked.
| Q. | What if I am a participant in the Revlon 401(k) Plan? |
| A. | This Proxy Statement is being furnished to you if the Company’s Class A Common Stock is allocated to your account within the Revlon Employees’ Savings, Investment and Profit Sharing Plan (the “401(k) Plan”). The trustee of the 401(k) Plan, as the record holder of the Company’s shares held in the 401(k) Plan, will vote the shares allocated to your account under the 401(k) Plan in accordance with your instructions. If the trustee of the 401(k) Plan does not otherwise receive voting instructions for shares allocated to your 401(k) Plan Account, the trustee, in accordance with the 401(k) Plan trust agreement, will vote any such shares in the same proportion as it votes those shares allocated to 401(k) Plan participants’ accounts for which voting instructions were received by the trustee. |
401(k) Plan participants must submit their voting instructions to the trustee of our 401(k) Plan in accordance with the instructions included with the proxy card or Internet Notice so that they are received by 11:59 p.m. Eastern Time on May 24, 2016 to allow the trustee time to receive such voting instructions and vote on behalf of participants in the 401(k) Plan. Voting instructions received from 401(k) Plan participants after this deadline, under any method, will not be considered timely and will be voted by the trustee at the 2016 Annual Meeting in the manner described in the previous paragraph.
| Q. | Who can attend the 2016 Annual Meeting? |
| A. | Anyone who was a stockholder of the Company as of 5:00 p.m., Eastern Time, on April 13, 2016, the record date for the 2016 Annual Meeting, and who provides the necessary identification materials referred to earlier in this Proxy Statement may attend the 2016 Annual Meeting. Directions to the location of the 2016 Annual Meeting are available on various Internet travel sites, or you may seek assistance from the Company when pre-registering. |
To attend the 2016 Annual Meeting, please follow these instructions:
| • | If you were a stockholder of record on the April 13, 2016 record date, check the appropriate box on the proxy card indicating that you plan on attending the 2016 Annual Meeting. If you vote on the Internet, please indicate that you will attend the 2016 Annual Meeting when prompted during the voting process. Please present at the 2016 Annual Meeting valid picture identification, such as a driver’s license or passport. |
| • | To be admitted to the 2016 Annual Meeting if you are a beneficial owner whose shares are held in a brokerage account or by another nominee, please present at the 2016 Annual Meeting valid picture |
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identification, such as a driver’s license or passport, as well as original proof of your ownership of shares of the Company’s Class A Common Stock as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date. As noted, you will need to present original evidence of your stock ownership, such as an original of a legal proxy from your bank or broker or your brokerage account statement, demonstrating that you held the Company’s Class A Common Stock in your account as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date. “Requests for Admission” will not be accepted. If you did not already return it to your bank or broker, you must also present an original voting instruction form issued by your bank or broker, demonstrating that you held the Company’s Class A Common Stock in your account as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date.
In order to ensure the safety and security of our meeting attendees, packages and bags may be inspected and may have to be checked and, in some cases, may not be permitted. We thank you in advance for your cooperation with these security measures.
| Q. | Should I pre-register for the 2016 Annual Meeting? |
| A. | In order to expedite the admission registration process required for you to enter the 2016 Annual Meeting, we encourage stockholders to pre-register by phone. Stockholders should pre-register by calling Mara E. Case, Legal Assistant, at (212) 527-5308, Monday through Friday from 9:00 a.m. through 5:00 p.m., Eastern Time, up until 10:00 a.m., Eastern Time, on Wednesday, June 8, 2016 (the day prior to the 2016 Annual Meeting). Stockholders pre-registering by phone will be admitted to the 2016 Annual Meeting by presenting valid picture identification and, if your shares are held in a brokerage account or by another nominee, original evidence of your stock ownership as of the April 13, 2016 record date. |
| Q. | Can I bring a guest to the 2016 Annual Meeting? |
| A. | Yes. If you plan to bring a guest to the 2016 Annual Meeting, please provide us with advance notice of that pursuant to the pre-registration procedures noted above. When you go through the registration area at the 2016 Annual Meeting, please be sure your guest is with you. Guests must also present valid picture identification to gain access to the 2016 Annual Meeting. We reserve the right to limit guest attendance due to space limitations. |
| Q. | Can I still attend the 2016 Annual Meeting if I have previously voted or returned my proxy? |
| A. | Yes. Attending the 2016 Annual Meeting does not revoke a previously submitted valid proxy. See, “Can I Change or Revoke My Vote?” above. |
| Q. | What shares are covered by my proxy card or electronic voting form? |
| A. | The shares covered by your proxy card or electronic voting form represent all of the shares of the Company’s Class A Common Stock that you own in the account referenced on the proxy card. Any shares that may be held for your account by the 401(k) Plan or another account will be represented on a separate proxy card and/or by a separate Control Number. |
| Q. | What does it mean if I get more than one proxy card? |
| A. | It means you have multiple accounts at our transfer agent and/or with banks or stockbrokers. Please vote all of your shares. |
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PROXY STATEMENT
Annual Stockholders’ Meeting
to be held on June 9, 2016
This Proxy Statement is being furnished on or about April 29, 2016 by and on behalf of the Board of Directors (the “Board of Directors” or the “Board”) of Revlon, Inc. (the “Company” or “Revlon”) in connection with the solicitation of proxies to be voted at the 2016 Annual Stockholders’ Meeting (the “2016 Annual Meeting”). The 2016 Annual Meeting is scheduled to be held at 10:00 a.m., Eastern Time, on Thursday, June 9, 2016, at Revlon’s Research Center at 2121 Route 27, Edison, NJ 08818, and at any adjournments of such meeting. The 2015 Annual Report furnished with our Proxy Statement does not form any part of the material for the solicitation of proxies.
We are providing our stockholders with access to our proxy materials over the Internet, rather than only in paper form. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Internet Notice”), rather than a printed copy of the proxy materials, to our stockholders of record as of April 13, 2016. You will not receive a printed copy of the proxy materials unless you already had a request for paper copies on file with our transfer agent or your broker. If you want to receive paper copies of the proxy materials, you must request them through one of the methods identified elsewhere in this Proxy Statement or in the Internet Notice. There is no charge imposed by the Company for paper copies. Our proxy materials, including the Internet Notice, are being made available to stockholders entitled to vote at the 2016 Annual Meeting.
At the 2016 Annual Meeting, the Company’s stockholders will be asked to:
| (1) | elect the following persons as the Company’s directors until the Company’s next annual stockholders’ meeting and until each such director’s successor is duly elected and has been qualified: Ronald O. Perelman, Alan S. Bernikow, Viet D. Dinh, Meyer Feldberg, Fabian T. Garcia, Robert K. Kretzman, Ceci Kurzman, Paul M. Meister, Tamara Mellon, Debra Perelman, Paul G. Savas, Barry F. Schwartz and Cristiana Falcone Sorrell; |
| (2) | ratify the Audit Committee’s selection of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for 2016; |
| (3) | approve the Revlon Amended and Restated Executive Incentive Compensation Plan; and |
| (4) | take such other action as may properly come before the 2016 Annual Meeting or at any adjournments of such meeting. |
The Company’s principal executive offices are located at One New York Plaza, New York, NY 10004, and its main telephone number is (212) 527-4000.
Required Identification and Other Instructions for Attendees at the 2016 Annual Meeting
In order to be admitted to the 2016 Annual Meeting in person, you should check the appropriate box on your proxy card indicating that you intend to attend in person. If you are voting electronically, please indicate that you will attend the 2016 Meeting in person when prompted during the Internet voting process. To attend the 2016 Annual Meeting in person, you will need to present valid picture identification, such as a driver’s license or passport, as well as original proof of ownership of shares of the Company’s Class A Common Stock as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date.
If your shares are held other than as a stockholder of record (such as beneficially through a brokerage, bank or other nominee account), you will need to present original documents to evidence your stock ownership as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date, such as an original of a legal proxy from your bank or broker or your brokerage account statement demonstrating that you held the Company’s Class A Common Stock in your account as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date. If you did not already return it to your bank or broker, you will need to present an original voting instruction form issued by your bank or broker demonstrating that you held the Company’s Class A Common Stock in your account as of 5:00 p.m., Eastern Time, on the April 13, 2016 record date. Copies and “Requests for Admission” will not be accepted.
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To expedite the admission registration process at the 2016 Annual Meeting, we encourage stockholders to pre-register by phone by calling Mara E. Case, Legal Assistant, at (212) 527-5308, Monday through Friday from 9:00 a.m. through 5:00 p.m., Eastern Time, up until 10:00 a.m., Eastern Time, on Wednesday, June 8, 2016 (the day before the 2016 Annual Meeting). Stockholders pre-registering by phone will be admitted to the meeting by presenting valid picture identification and, if your shares are held in a brokerage account or by another nominee, original evidence of your stock ownership as of the April 13, 2016 record date. Directions to the location of the 2016 Annual Meeting are available on various Internet travel sites.
In order to ensure the safety and security of our 2016 Annual Meeting, packages and bags may be inspected and may have to be checked and, in some cases, may not be permitted. We thank you in advance for your cooperation with these security measures.
Solicitation and Voting of Proxies; Revocation
Unless properly revoked, all proxies properly submitted to the Company will be voted on all matters presented at the 2016 Annual Meeting in accordance with the instructions given by the person executing or electronically submitting the proxy. In the absence of instructions, such proxies will be voted:
| (1) | FOR the election to the Board of Directors of each of the 13 nominees identified in this Proxy Statement; |
| (2) | FOR the ratification of the Audit Committee’s selection of KPMG as the Company’s independent registered public accounting firm for 2016; and |
| (3) | FOR the approval of the Revlon Amended and Restated Executive Incentive Compensation Plan. |
The Company has no knowledge of any other matters to be brought before the meeting. The deadline for receipt by the Company of stockholder proposals for inclusion in the proxy materials for presentation at the 2016 Annual Meeting was December 23, 2015. The Company did not receive any stockholder proposals required to be included in these proxy materials.
Pursuant to the Company’s By-laws, in order for stockholders to properly bring any business before the 2016 Annual Meeting that is not otherwise set forth in this proxy statement, notice of such business must have been received by the Company between March 6, 2016 and April 5, 2016 and not subsequently withdrawn. Such notices must include, among other things: (i) information regarding the proposed business to be brought before the meeting; (ii) the identity of the stockholder proposing the business; and (iii) the class of the Company’s shares which are owned beneficially or of record by such stockholder. The Company did not receive notification of any such matters. As a general matter, if any matters are properly presented before the 2016 Annual Meeting for action, in the absence of other instructions, it is intended that the persons named by the Company and acting as proxies will vote in accordance with their discretion on such matters.
The submission of a signed or validly submitted electronic proxy will not affect a stockholder’s right to change such vote, attend and/or vote in person at the 2016 Annual Meeting. Stockholders who execute a proxy or validly submit an electronic vote may revoke it at any time before it is voted at the 2016 Annual Meeting. Such revocations may be made by: (i) filing a written revocation or written notice of change, as the case may be, with the Company’s Secretary at One New York Plaza, 49th Floor, New York, NY 10004, Attention: Michael T. Sheehan, which must be received before the original proxy is voted at the 2016 Annual Meeting; (ii) executing and delivering a proxy bearing a later date to the Company’s Secretary at One New York Plaza, 49th Floor, New York, NY 10004, Attention: Michael T. Sheehan, which must be received before the original proxy is voted at the 2016 Annual Meeting; or (iii) attending the 2016 Annual Meeting and voting in person.
To revoke a proxy previously submitted electronically through the Internet or by telephone, you may simply vote again at a later date, using either of those procedures, or submit a properly completed original proxy reflecting your changed vote. In such case, the later submitted vote will be recorded and the earlier vote revoked.
Only holders of record of shares of the Company’s Class A common stock, par value $0.01 per share (the “Class A Common Stock”), at 5:00 p.m., Eastern Time, on April 13, 2016 (the “Record Date”) will be entitled to notice of and to vote at the 2016 Annual Meeting or at any adjournments of such meeting. On the Record Date, there were issued and outstanding 52,571,141 shares of the Company’s Class A Common Stock, each of which is entitled to one vote. Such shares represent all of the Company’s issued and outstanding shares of voting capital stock as of such date.
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As of the Record Date, Mr. Ronald O. Perelman, Chairman of the Company’s Board of Directors, indirectly through MacAndrews & Forbes Incorporated, of which Mr. Perelman is the sole stockholder (together with certain of its affiliates (other than the Company and its subsidiaries), “MacAndrews & Forbes”), beneficially owned 40,669,640 shares of the Company’s Class A Common Stock, representing approximately 77% of the voting power of such stock.
The presence in person or by duly submitted proxy of the holders of a majority of the total number of votes of the Company’s Class A Common Stock entitled to vote at the 2016 Annual Meeting is necessary to constitute a quorum to transact business at the meeting. Abstentions will be included in the calculation of the number of shares present at the 2016 Annual Meeting for the purposes of determining a quorum.
As there is at least one “routine” matter (under applicable NYSE rules) for consideration at the 2016 Annual Meeting, “broker non-votes,” if any, will also be included in the calculation of the number of shares present at the 2016 Annual Meeting for the purposes of determining a quorum. “Broker non-votes” are shares held by a broker, trustee or nominee that are not voted because the broker, trustee or nominee does not have discretionary voting power on a particular proposal and does not receive voting instructions from the beneficial owner of the shares.
Brokers will not be allowed to vote shares as to which they have not received voting instructions from the beneficial owner with respect to Proposal No. 1 (Election of Directors) or Proposal No. 3 (Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan). Accordingly, broker non-votes will not be counted as a vote for or against either of these proposals.
For shares as to which brokers have not received voting instructions from the beneficial owner, brokers will be able to vote on Proposal No. 2 (ratification of the Audit Committee’s selection of KPMG as the Company’s independent registered public accounting firm for 2016), as this is considered a “routine” matter under applicable NYSE rules for which brokers have discretionary voting power.
MacAndrews & Forbes has informed the Company that it will duly submit proxies:
| (1) | FOR the election to the Board of Directors of each of the 13 nominees identified in this Proxy Statement; |
| (2) | FOR the ratification of the Audit Committee’s selection of KPMG as the Company’s independent registered public accounting firm for 2016; and |
| (3) | FOR the approval of the Revlon Amended and Restated Executive Incentive Compensation Plan. |
Accordingly, with MacAndrews & Forbes’ vote, there will be a quorum for the 2016 Annual Meeting. MacAndrews & Forbes’ vote will also be sufficient, without the concurring vote of any of the Company’s other stockholders, to approve and adopt Proposal Nos. 1, 2 and 3.
If shares of Class A Common Stock are held as of the Record Date for the account of participants under the Revlon Employees’ Savings, Investment and Profit Sharing Plan (the “401(k) Plan”), the 401(k) Plan trustee will vote those shares pursuant to the instructions given by the 401(k) Plan participants on their respective voting instruction forms. If the 401(k) Plan trustee does not otherwise receive voting instructions for shares held on account of a 401(k) Plan participant, the 401(k) Plan trustee, in accordance with the 401(k) Plan trust agreement, will vote any such unvoted shares in the same proportion as it votes those shares allocated to 401(k) Plan participants’ accounts for which voting instructions were received by the trustee.
401(k) Plan participants must cast their votes in accordance with the instructions provided in the proxy materials so that they are received by the 401(k) Plan trustee by 11:59 p.m. Eastern Time on May 24, 2016 to allow the 401(k) Plan trustee time to receive such voting instructions and vote on behalf of 401(k) Plan participants. Voting instructions received from 401(k) Plan participants after this deadline, under any method, will not be considered timely and will be voted by the 401(k) Plan trustee at the 2016 Annual Meeting in the manner described in this paragraph above.
Only holders of record of shares of the Company’s Class A Common Stock on the Record Date will be entitled to notice of and to vote at the 2016 Annual Meeting or at any adjournments of such meeting. Stockholders will be entitled to vote the number of Class A Common Stock held by them on the Record Date.
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Distribution of Proxy Materials; Costs of Distribution and Solicitation; Interest of Certain Persons in Matters to Be Acted Upon
The accompanying form of proxy is being solicited on behalf of the Company’s Board of Directors. The Company will bear all costs in connection with preparing, assembling and furnishing this Proxy Statement and related materials. Such costs include reimbursing banks, brokerage houses and other custodians, nominees, agents and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders. The Company engaged Broadridge to assist it in distributing and hosting on the Internet proxy materials and providing Internet and telephone voting for the 2016 Annual Meeting. The estimated fee for Broadridge’s services is approximately $11,000, plus out-of-pocket expenses, such as postage.
The Company’s employees, including its NEOs, have received, in the past, and may receive, in the future, performance-based incentive compensation grants under an annual bonus program and/or a long-term incentive program, in each case under the Revlon Amended and Restated Executive Incentive Compensation Plan, which is being submitted for stockholder approval as Proposal No. 3 under this Proxy Statement. The annual cash bonuses are contingent upon the Compensation Committee reviewing and certifying the extent to which the Company achieves its annual performance objectives (which objectives are also reviewed and approved by the Compensation Committee), as well as the Compensation Committee’s reviewing and certifying management’s assessment of the extent to which the executive achieved a certain performance rating under the Company’s annual management review process. The awards under the long-term incentive program are also contingent upon the Compensation Committee reviewing and certifying the extent to which the Company achieved its performance objectives during the applicable performance period (which objectives are also reviewed and approved by the Compensation Committee), as well as the Compensation Committee’s reviewing and certifying management’s assessment of each NEO having achieved a satisfactory performance rating under the Company’s annual management review process during each year of the respective LTIP’s performance period. For further information of the benefits under the Revlon Amended and Restated Executive Incentive Compensation Plan, see Proposal No. 3 (Approval of the Revlon Amended and Restated Executive Incentive Compensation Plan): “DESCRIPTION OF THE PLAN’S TERMS” and “NEW PLAN BENEFITS TABLE.”
Householding of Stockholder Materials
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” stockholder materials, such as proxy statements, information statements and annual reports. This means that only one copy of our Internet Notice or proxy materials may have been sent to multiple stockholders in your household, if any. We will promptly deliver a separate copy of our Internet Notice or the 2016 proxy materials to you if you write us at the following address: Revlon, Inc., Investor Relations Department, One New York Plaza, New York, NY 10004; or our proxy distributor at the following address: Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
If you want to receive separate copies of the stockholder materials in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address. In the interest of reducing costs and promoting environmental responsibility, we encourage our stockholders to review electronic versions of our proxy materials, via the Internet.
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
Pursuant to the Company’s By-laws, the Board of Directors has fixed the number of directors at 13 effective as of the date of the 2016 Annual Meeting. The 13 directors nominated for election by the Board of Directors will be elected at the 2016 Annual Meeting to serve until the Company’s next annual stockholders’ meeting and until their successors are duly elected and shall have been qualified. All director nominees, if elected, are expected to serve until the next annual stockholders’ meeting. Messrs. Delpani and Kennedy are not standing for re-election at the 2016 Annual Meeting.
The Board of Directors has been informed that all of the nominees are willing to serve as directors. If, however, any of them should decline or be unable to serve, the Board of Directors may by resolution provide for a lesser number of directors or designate substitute nominees. In such case, the individuals appointed as proxies will vote as directed as to the election of any such substitute nominee. The Board of Directors has no reason to believe that any nominee will be unable or unwilling to serve.
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Vote Required and Board of Directors’ Recommendation (Proposal No. 1)
The election to the Board of Directors of each of the 13 nominees identified in this Proxy Statement requires the affirmative vote of a plurality of the votes cast by the holders of the Company’s Class A Common Stock present in person or represented by proxy at the 2016 Annual Meeting and entitled to vote. Unless such proxies are revoked, with respect to Proposal No. 1, all proxies properly submitted to the Company will be voted in accordance with the instructions given by the person submitting such proxy. In the absence of such instructions, such proxies will be voted FOR the election of each of the 13 nominees identified in this Proxy Statement to the Board of Directors.
Brokers do not have the ability to vote on “non-routine” matters, including the election of directors, as to shares for which they have not received voting instructions from the beneficial owner. In light of the application of plurality voting to the election of Directors, when tabulating the vote and determining whether a Director nominee has received the requisite number of affirmative votes, abstentions and broker non-votes will not count as a vote for or against a Director nominee.
MacAndrews & Forbes has informed the Company that it will vote FOR the election of each of the 13 nominees identified in this Proxy Statement to the Board of Directors. MacAndrews & Forbes’ affirmative vote is sufficient, without the concurring vote of the Company’s other stockholders, to elect each of the Director nominees at the 2016 Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE 13 NOMINEES IDENTIFIED BELOW TO THE BOARD OF DIRECTORS.
Nominees for Election as Directors
The name, age (as of December 31, 2015), principal occupation for the last 5 years, public company board service for the last 5 years, selected biographical information and period of service as a Company Director for each of the Director nominees for election follow:
Mr. Perelman (72) has been Chairman of the Board of Directors of the Company and of Revlon Consumer Products Corporation, the Company’s wholly-owned operating subsidiary (“Products Corporation”), since June 1998 and a Director of the Company and of Products Corporation since their respective formations in 1992. Mr. Perelman has been Chairman of the Board and Chief Executive Officer of MacAndrews & Forbes, a company that acquires and manages a diversified portfolio of private and public companies, and certain of its affiliates since 1980. Mr. Perelman has also served as Chairman of the Board of Directors of Scientific Games Corporation (“Scientific Games”) since November 2013. Mr. Perelman has served on the Boards of Directors of the following companies which were required to file reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or were registered investment companies under the Investment Company Act of 1940 (in either case, referred to herein as “public reporting companies”) within the last 5 years: the Company (1992 – present); Products Corporation (1992 – present); Scientific Games (2003 – present) and M & F Worldwide Corp. (“M & F Worldwide”) (1995 – 2011), a holding company which ceased to be a publicly-traded company in December 2011.
Mr. Bernikow (75) has been a Director of the Company and of Products Corporation since September 2003, and serves as Chairman of the Company’s Audit Committee and Chairman of the Company’s Compensation Committee. From 1998 until his retirement in May 2003, Mr. Bernikow served as the Deputy Chief Executive Officer of Deloitte & Touche LLP (“D&T”). Prior to that, Mr. Bernikow held various senior executive positions at D&T and various of its predecessor companies, which he joined in 1977. Previously, Mr. Bernikow was the National Administrative Partner in Charge for the accounting firm, J.K. Lasser & Company, which he joined in 1966. Mr. Bernikow has served on the Boards of Directors or Trustees of the following public reporting companies within the last 5 years: the Company (2003 – present); Products Corporation (2003 – present); Destination XL Group, Inc. (“Destination XL”) (formerly known as Casual Male Retail Group, Inc.) (2003 – present); Mack-Cali Realty Corporation (“Mack-Cali”) (2004 – present), for which he also currently serves as Chairman of its audit committee; FCB Financial Holdings, Inc. (“FCB Financial”) (2010 – present), for which he also currently serves as Chairman of its audit committee; and certain funds (the “UBS Funds”) for which UBS Global Asset Management (US) Inc., a wholly-owned subsidiary of UBS AG, or one of its affiliates, serves as investment advisor, sub-advisor or manager (2005 – present), and for which he serves as Chairman of its audit committee.
Mr. Dinh (47) has been a Director of the Company and of Products Corporation since June 2012, including serving as a member of the Company’s Audit Committee since June 2015. Mr. Dinh is the founding partner of Bancroft
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PLLC, a law and strategic consulting firm which he founded in 2003. Mr. Dinh also serves as the General Counsel and Corporate Secretary of Strayer Education, Inc., an education services holding company that owns Strayer University, a holding company that he joined in 2010. In addition, Mr. Dinh has served as a Professional Lecturer in Law and a Distinguished Lecturer in Government at Georgetown University since 2014. Previously, Mr. Dinh served as a tenured law professor at Georgetown University from 1996 to 2014. From 2001 to 2003, Mr. Dinh served as Assistant Attorney General for Legal Policy at the U.S. Department of Justice. Mr. Dinh has served on the Boards of Directors of the following public reporting companies within the last 5 years: the Company (2012 – present); Products Corporation (2012 – present); Twenty-First Century Fox, Inc. (2013 – present), for which he also serves as a member of its audit committee; News Corporation (2004 – 2013); M & F Worldwide (2007 – 2011) (which ceased to be a publicly-traded company in December 2011) and The Orchard, Inc. (2007 – 2010).
Professor Feldberg (73) has been a Director of the Company since February 1997 and serves as a member of the Company’s Audit Committee. Professor Feldberg has been a Senior Advisor with Morgan Stanley since March 2005 and has been the Dean Emeritus and the Professor of Leadership and Ethics at Columbia Business School, since July 2004. Professor Feldberg also serves as an Advisory Director of Welsh, Carson, Anderson & Stowe, a private equity investment firm. He was the Dean of Columbia Business School from July 1989 through June 2004. Professor Feldberg served as the President of NYC Global Partners, an office in the New York City Mayor’s office that manages the relationships between New York City and other cities around the world, from 2007 to 2013. Professor Feldberg has served on the Boards of Directors of the following public reporting companies within the last 5 years: the Company (1997 – present); Macy’s, Inc. (1992 – present); UBS Funds (2001 – present); PRIMEDIA Inc. (1997 – 2011); and Sappi Limited (2002 – 2012).
Mr. Garcia (56) has served as the Company’s and Products Corporation’s President and Chief Executive Officer since April 15, 2016. Prior to joining the Company, Mr. Garcia served in senior executive positions at the Colgate-Palmolive Company, including most recently as its Chief Operating Officer, Global Innovation and Growth, Europe/South Pacific & Hill’s Pet Nutrition, a position he held since 2010, with expanded responsibility for Hill’s Pet Nutrition beginning in 2012. From 2007 to 2010, Mr. Garcia was EVP, President, Colgate-Latin America & Global Sustainability. Mr. Garcia joined Colgate in 2003 as President, Colgate-Asia Pacific. Prior to joining Colgate, Mr. Garcia was Senior Vice President of International Operations at the Timberland Company. Mr. Garcia has served on the Boards of Directors of the following public reporting companies within the last 5 years: the Company (April 2016 – present); Products Corporation (April 2016 – present) and Kimberly-Clark Corporation (2011 – present).
Mr. Kretzman (64) has been a Company Director since October 2013, and serves as a member of the Company’s Compensation Committee. Mr. Kretzman retired as the Company’s Executive Vice President on December 31, 2013 following a 25-year career with the Company. Most recently, Mr. Kretzman served as the Company’s and Products Corporation’s Executive Vice President from October 2013 to December 2013 and as the Company’s and Products Corporation’s Executive Vice President and Chief Administrative Officer from November 2010 to September 2013. Formerly, he served as the Company’s and Products Corporation’s General Counsel from January 2000 to March 2011; Chief Legal Officer from December 2003 to November 2010; and Executive Vice President, Human Resources from October 2006 to November 2010. Mr. Kretzman formerly served as the Company’s and Products Corporation’s Secretary from September 1992 to June 2009. Mr. Kretzman served as the Company’s and Products Corporation’s Senior Vice President and General Counsel from January 2000 until December 2003. Prior to becoming General Counsel, Mr. Kretzman served as Senior Vice President and Deputy General Counsel from March 1998 to January 2000; as Vice President and Deputy General Counsel from January 1997 to March 1998; and as Vice President, Law from September 1992 to January 1997. Mr. Kretzman joined the Company in 1988 as Senior Counsel responsible for mergers and acquisitions. Mr. Kretzman also served as the Company’s Corporate Compliance Officer from January 2000 through March 2012. Mr. Kretzman is currently a member of the board of directors for several non-profit organizations that provide charitable services to his local community. Mr. Kretzman has served on the Board of Directors of the following public reporting company within the last 5 years: the Company (2013 – present).
Ms. Kurzman (45) has been a Company Director since February 2013, and serves as a member of the Company’s Compensation Committee. Ms. Kurzman serves as President of Nexus Management Group, Inc., a talent representation and consulting group which she founded in 2004. Prior to founding Nexus Management, Ms. Kurzman joined Epic/Sony Music in 1997 as Vice President of Worldwide Marketing and held positions of increasing responsibility there until 2004. From 1992 to 1997, Ms. Kurzman held positions of increasing responsibility at Arista Records, including serving as Director of Artist Development. Ms. Kurzman has served on the Board of Directors of the following public reporting company within the last 5 years: the Company (2013 – present).
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Mr. Meister (63) has served as President of MacAndrews & Forbes since 2014. He is also Co-Founder, and since 2008, Chief Executive Officer, of Liberty Lane Partners, a private investment company with investments in healthcare, technology and distribution-related industries, and Co-Founder and, since 2007, Vice Chair, at Perspecta Trust, a trust company that provides trust and investment services. From 2010 to 2014, Mr. Meister served as Chairman, and from 2011 to 2014 also as Chief Executive Officer, of inVentiv Health, a leading provider of commercial, consulting and clinical research services to the pharmaceutical and biotech industries. Until 2007, he was Chairman of the Board of Thermo Fisher Scientific Inc., a provider of products and services to businesses and institutions in the field of science, which was formed by the merger of Fisher Scientific International Inc. and Thermo Electron Corporation in November 2006. Mr. Meister was Vice Chairman of Fisher Scientific International, Inc. from 2001 to 2006 and served as its Chief Financial Officer from 1991 to 2001. Mr. Meister is a member of the Board of Directors of LKQ Corporation, Inc., a leading distributor of vehicle products; Scientific Games Corporation, which provides customized, end-to-end solutions to the gaming industry; Quanterix Corporation, a developer of ground-breaking tools in high definition diagnostics; vTv Therapeutics Inc., a clinical stage biopharmaceutical company focusing on treatments for alzheimers and diabetes; and inVentiv Health. During the last 5 years, he has also served as a member of the Board of Directors of M & F Worldwide, a holding company that holds various businesses that is controlled by affiliates of MacAndrews & Forbes (which ceased to be a publicly-traded company in December 2011). Mr. Meister is Co-Chair of the University of Michigan’s Life Sciences Institute External Advisory Board and serves on the Executive Advisory Board of the Chemistry of Life Processes Institute at Northwestern University.
Ms. Mellon (48) has been a Company Director since August 2008. Ms. Mellon has served as the President of TMellon Enterprises LLC since 2011. In 1996, Ms. Mellon founded and until November 2011 served in a senior executive capacity with J. Choo Limited, a manufacturer and international retailer of women’s shoes and accessories based in London, England, including serving most recently as its Chief Creative Officer. Prior to that, Ms. Mellon served as accessories editor for British Vogue magazine, since 1990, and previously held positions at Mirabella magazine and Phyllis Walters Public Relations. Ms. Mellon also serves on the Board of Directors and on the Creative Advisory Board of The H Company Holdings, LLC, a privately held holding company which owns and manages the Halston fashion design company. Ms. Mellon has served on the Board of Directors of the following public reporting company within the last 5 years: the Company (2008 – present).
Ms. Perelman (42) has been a Company Director since June 2015. Ms. Perelman has been Executive Vice President, Strategy and New Business Development, of MacAndrews & Forbes since 2014. Ms. Perelman joined MacAndrews & Forbes in 2004 as Vice President and served as a Senior Vice President from 2008 to 2014. Prior to joining MacAndrews & Forbes, Ms. Perelman held various positions at the Company in corporate finance and brand marketing. Ms. Perelman also serves as a founding member and Vice Chairman of the Child Mind Institute, an Advisory Board member for the Social Enterprise Program at Columbia Business School, as a trustee of the NYU Langone Medical Center and as a trustee of the Children’s Museum of the Arts. Ms. Perelman is the daughter of the Company’s Chairman of the Board. Ms. Perelman has served on the Boards of Directors of the following public reporting companies within the last 5 years: the Company (2015 – present) and Scientific Games (2014 – 2015).
Mr. Savas (53) has been Executive Vice President and Chief Financial Officer of MacAndrews & Forbes since 2007. Mr. Savas has also served as Executive Vice President and Chief Financial Officer of M&F Worldwide Corp. since 2006. Mr. Savas previously served as Director of Corporate Finance, and in various positions of increasing responsibility, at MacAndrews & Forbes since 1994. Mr. Savas has served on the Boards of the following public reporting companies within the last 5 years: vTv Therapeutics Inc. (2015 – present); Harland Clarke Holdings Corp. (2006 – present) and SIGA Technologies, Inc. (2004 – present).
Mr. Schwartz (66) has been a Director of the Company since November 2007 and a Director of Products Corporation since March 2004. Mr. Schwartz has served as Executive Vice Chairman of MacAndrews & Forbes since October 2007. Mr. Schwartz served as Senior Vice President of MacAndrews & Forbes from 1989 to 1993 and as Executive Vice President and General Counsel of MacAndrews & Forbes and various of its affiliates from 1993 to 2007. Mr. Schwartz serves as a Trustee of the City University of New York, served as Chairman of the Board of Trustees of Kenyon College and continues as a member of the Board, served as a member of the Board of Visitors of the Georgetown University Law Center until October 2015; a member of the Board of Trustees of the NYU Langone Medical Center; and a member of the Board of Directors of each of the following civic organizations: Jazz at Lincoln Center, New York City Center and Human Rights First. Mr. Schwartz has served on the Boards of Directors of the
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following public reporting companies within the last 5 years: the Company (2007 – present); Products Corporation (2004 – present); Scientific Games (2003 – present); Harland Clarke Holdings Corp. (2005 – 2014); and M & F Worldwide (2008 – 2011) (which ceased to be a publicly-traded company in December 2011).
Ms. Falcone Sorrell (42) has been a Company Director since March 2014. She serves as Senior Advisor to the Chairman at the World Economic Forum, a position she has held since 2009. From 2010 to 2014, Ms. Falcone Sorrell served as Principal Consultant, Office of Outreach and Partnership for the Inter-American Development Bank. Prior to joining the World Economic Forum in 2004, Ms. Falcone Sorrell held positions at the International Labor Organization from 2002 to 2004 and Shell London Ltd. from 2001 to 2002. Ms. Falcone Sorrell has served on the Boards of Directors of the following public reporting companies within the last 5 years: the Company (2014 – present) and Viacom, Inc. (2013 – present).
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Board of Directors and its Committees
The Board currently consists of 13 directors. Following the 2016 Annual Meeting, and assuming all director nominees named in Proposal No. 1 (Election of Directors) are elected, we expect the Board will continue to consist of 13 directors. Messrs. Delpani and Kennedy are not standing for re-election at the 2016 Annual Meeting. The Board of Directors currently has the following standing committees: the Audit Committee and the Compensation Committee. Each of these committees and their functions are described in further detail below. Following the 2015 Annual Meeting, the Board took advantage of the “controlled company” exemption from the requirement to have a nominating and corporate governance committee, and the Board, the Audit Committee and the Compensation Committee each assumed certain functions that were formerly carried out by the Company’s now-disbanded Nominating and Corporate Governance Committee.
“Controlled Company” Exemption
The Company is a “controlled company” (i.e., one in which more than 50% of the voting power for the election of directors is held by an individual, a group or another company) within the meaning of New York Stock Exchange (the “NYSE”) rules. Accordingly, the Company is not required to have a majority of independent directors, a nominating and corporate governance committee or a compensation committee (each of which committees, under the NYSE’s rules, would otherwise be required to be comprised entirely of independent directors). The Company currently avails itself of the NYSE’s “controlled-company” exemption from the requirement to have a majority of independent directors and the requirement to have a nominating and corporate governance committee.
The Board has determined that of the director nominees listed in this Proxy Statement, Messrs. Bernikow, Dinh and Feldberg and Mses. Kurzman, Mellon and Falcone Sorrell qualify as independent directors under Section 303A.02 of the NYSE Listed Company Manual (the “NYSE Manual”) and under the Revlon, Inc. Board Guidelines for Assessing Director Independence (the “Independence Guidelines”). The Independence Guidelines are available at www.revloninc.com under the heading Investor Relations - Corporate Governance.
Even though as a “controlled company,” the Company is not required to have a Compensation Committee (which, under NYSE rules, would otherwise be required to be comprised entirely of independent directors), the Board does maintain a Compensation Committee. The Compensation Committee is currently comprised of Messrs. Bernikow (Chairman) and Kretzman and Mses. Kurzman and Perelman. The Board has determined that Mr. Bernikow and Ms. Kurzman qualify as independent directors under Section 303A.02 of the NYSE Manual and under the Independence Guidelines. The Board has also determined that Messrs. Bernikow and Kretzman and Ms. Kurzman qualify as “non-employee directors” within the meaning of Section 16 of the Exchange Act, and that Mr. Bernikow and Mses. Kurzman and Perelman qualify as “outside directors” under Section 162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986, as amended (the “Code”).
Number of Board and Committee Meetings
During 2015, the Board of Directors held 6 meetings and acted 3 times by unanimous written consent; the Audit Committee held 6 meetings; the Compensation Committee held 5 meetings and acted once by unanimous written consent; the Nominating and Corporate Governance Committee held 2 meetings and acted once by unanimous written consent (which committee was discontinued following the 2015 Annual Meeting); and the Compensation Committee and the Nominating and Corporate Governance Committee held 1 joint meeting. Ms. Mellon attended fewer than 75% of the Board meetings during 2015.
Director Attendance at Annual Stockholders’ Meeting
While the Board has not adopted a formal policy regarding directors’ attendance at the Company’s annual stockholders’ meeting, directors are invited to attend such meeting. One Director attended the Company’s 2015 Annual Stockholders’ Meeting.
The Company believes that its board leadership structure is appropriate given the Company’s specific status as a “controlled company.” Following the 2016 Annual Meeting, the Board will continue to maintain its Audit Committee
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and Compensation Committee, each operating under their respective written charters, to assist the Board in its oversight functions. The Audit Committee will continue to be comprised entirely of independent directors as required under SEC rules and NYSE standards.
The qualifications and experience of nominees for election to the Board were reviewed by the Board and such nominees were approved by the Board, subject to stockholder approval at the 2016 Annual Meeting. Following the 2016 Annual Meeting, the Board, after having reviewed and considered the directors’ qualifications and experience, will re-appoint the members of its Audit Committee and Compensation Committee.
The Company has not established a “lead director” role. At Board and committee meetings, the Chairman of the Board and the Chairman of each such committee, or their respective designees, as applicable, presides for the purpose of conducting an orderly and efficient meeting. Independent directors or any other director may lead or initiate discussion, in the interest of promoting thorough consideration of any issue before the Board or any of its committees.
The Company has historically maintained separate positions of Chairman and Chief Executive Officer. Mr. Perelman, Chairman and Chief Executive Officer of MacAndrews & Forbes, has held the position of Chairman of the Company’s Board since June 1998; and Mr. Delpani held the positions of President and Chief Executive Officer of the Company from November 2013 until March 1, 2016. On February 25, 2016 Gianni Pieraccioni, the Company’s former Executive Vice President and Global President – Revlon Consumer Division, was elected as the Company’s Executive Vice President and Chief Operating Officer. Following Mr. Delpani’s cessation as the Company’s President and Chief Executive Officer on March 1, 2016, Mr. Pieraccioni was the Company’s acting principal executive officer until Mr. Garcia was elected as the Company’s President and Chief Executive Officer, effective April 15, 2016. The Chairman provides overall leadership to the Board in its oversight function, while the Chief Executive Officer provides leadership in respect of the day-to-day management and operation of the Company’s business.
The Board and each of its committees conduct annual self-assessments to review and monitor their respective continued effectiveness. The Board has determined that in light of its status as a “controlled company,” the size, composition and structure (including committee structure) are appropriate for the Board to continue to function effectively and efficiently. The Company believes that its separation of the Chairman and Chief Executive Officer positions and its overall board leadership structure are appropriate.
Below is a summary of the respective nominees’ experience, qualifications and background (including public company board experience). Such experience supports their respective qualifications to serve on the Company’s Board of Directors. Without limiting the foregoing—
| • | Mr. Perelman: Mr. Perelman’s extensive business and financial experience (including managing diverse businesses within the MacAndrews & Forbes group of companies), his public company board experience (including at Scientific Games and at M & F Worldwide (which ceased to be a publicly-traded company in December 2011)) and his knowledge of the Company and his long-standing service as a Company Director, together with his being the Company’s controlling stockholder, qualify him to continue to serve on the Company’s Board, including continuing to serve as the Chairman of the Board. |
| • | Mr. Bernikow: Mr. Bernikow’s accounting experience and financial expertise (including having served for 26 years at D&T and its predecessors), his public-company board and audit committee experience (including at UBS Funds, Mack-Cali, FCB Financial and formerly at Destination XL) and his familiarity with the Company, as well as his prior service as a Company Director, qualify him to continue to serve on the Company’s Board. |
| • | Mr. Dinh: Mr. Dinh’s academic experience (including serving as a Professional Lecturer in Law and a Distinguished Lecturer in Government at Georgetown University, where he previously served as a Professor of Law), his government experience (including having served as Assistant Attorney General for Legal Policy for the U.S. Department of Justice), his business experience (including serving as a partner of Bancroft PLLC, which he founded, and as General Counsel and Corporate Secretary for Strayer Education, Inc.), his public company board experience (including at Twenty-First Century Fox, Inc. and formerly at each of News Corporation, M & F Worldwide (which ceased to be a publicly-traded company in December 2011) and The Orchard, Inc.), and his familiarity with the Company, as well as his prior service as a Company Director, qualify him to continue to serve on the Company’s Board. |
| • | Professor Feldberg: Professor Feldberg’s academic experience (including having served for 15 years as Dean of the Columbia Business School), his civic experience (including having served as President of NYC Global Partners), his business experience (including serving as Senior Advisor at Morgan Stanley and as Advisory |
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Director of Welsh, Carson, Anderson & Stowe), his public company board experience (including at Macy’s and UBS Funds and formerly at each of PRIMEDIA Inc. and Sappi Limited) and his familiarity with the Company, as well as his prior service as a Company Director, qualify him to continue to serve on the Company’s Board.
| • | Mr. Garcia: Mr. Garcia senior executive experience (including having served in senior executive positions at the Colgate-Palmolive Company, including most recently as its Chief Operating Officer, Global Innovation and Growth, Europe/South Pacific & Hill’s Pet Nutrition, a position he held from 2010 until 2016, with expanded responsibility for Hill’s Pet Nutrition beginning in 2012), his prior public company board experience (including at Kimberly-Clark Corporation) and his familiarity with the Company, qualify him to continue to serve on the Company’s Board. |
| • | Mr. Kretzman: Mr. Kretzman’s senior executive experience (including having served the Company in various capacities over his 25-year career with the Company prior to his retirement on December 31, 2013, including having most recently served as Executive Vice President and as special advisor to Mr. Delpani upon his assuming the position as the Company’s President and Chief Executive Officer in October 2013, as well as having previously served as the Company’s Chief Administrative Officer), his legal experience (including having served as the Company’s Chief Legal Officer, Chief Compliance Officer and General Counsel), his business experience (including leadership of the Company’s global human resources, licensing, security and facilities functions), and his familiarity with the Company, as well as his prior service as a Company Director, qualify him to continue to serve on the Company’s Board. |
| • | Ms. Kurzman: Ms. Kurzman’s senior executive experience in the areas of talent representation and talent-related brand-to-brand business development strategies (including serving as President of Nexus Management, a talent representation and consulting group which she founded in 2004) and marketing (including serving in senior marketing positions at Epic/Sony Music and Arista Records, respectively), and her familiarity with the Company, as well as her prior service as a Company Director, qualify her to continue to serve on the Company’s Board. |
| • | Mr. Meister: Mr. Meister’s senior executive experience (including serving as President of MacAndrews & Forbes), his business experience (including serving as co-founder and Chief Executive Officer of Liberty Lane Partners, co-founder and Vice Chair at Perspecta Trust, and formerly as Chairman and Chief Executive Officer of inVentiv Health and prior to that as Chairman of the Board of Thermo Fisher Scientific Inc.), his public company board experience (including at LKQ Corporation, Inc., Scientific Games, Quanterix Corporation, vTv Therapeutics Inc. and M&F Worldwide (which ceased to be a publicly-traded company in December 2011)) and his familiarity with the Company, qualify him to serve on the Company’s Board. |
| • | Ms. Mellon: Ms. Mellon’s experience in the fashion industry and marketing of women’s retail products (including serving as President of TMellon Enterprises LLC and having formerly served as founder and Chief Creative Officer of Jimmy Choo) and her familiarity with the Company, as well as her prior service as a Company Director, qualify her to continue to serve on the Company’s Board. |
| • | Ms. Perelman: Ms. Perelman’s business and senior executive experience (including serving as Executive Vice President, Strategy and New Business Development of MacAndrews & Forbes), her public company board experience (including having served at Scientific Games) and her knowledge of the Company, including as gained during her prior service at the Company in corporate finance and brand marketing, as well as her prior service as a Company Director, qualify her to serve on the Company’s Board. |
| • | Mr. Savas: Mr. Savas’ business, financial and senior executive experience (including serving as Executive Vice President and Chief Financial Officer of MacAndrews & Forbes), his public company board experience (including at Harland Clarke Holdings Corp., SIGA Technologies, Inc. and vTv Therapeutics Inc.) and his familiarity with the Company, qualify him to serve on the Company’s Board. |
| • | Mr. Schwartz: Mr. Schwartz’s senior executive experience (including serving as Executive Vice Chairman and as Chief Administrative Officer of MacAndrews & Forbes), his legal experience (including having served as General Counsel at MacAndrews & Forbes), his public company board experience (including at Scientific Games, Harland Clarke Holdings Corp. and M & F Worldwide (which ceased to be a publicly-traded company in December 2011)) and his familiarity with the Company, as well as his prior service as a Company Director, qualify him to continue to serve on the Company’s Board. |
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| • | Ms. Falcone Sorrell: Ms. Falcone Sorrell’s senior executive experience in the areas of business development (including serving as Senior Advisor to the Chairman of the World Economic Forum and formerly as Principal Consultant at the Office of Outreach and Partnership for the Inter-American Development Bank) and marketing (including serving in positions at Shell London Ltd.), her public company board experience (including at Viacom, Inc.), and her familiarity with the Company, as well as her prior service as a Company Director, qualify her to continue to serve on the Company’s Board. |
Director Nominating Processes; Diversity
The Board selects director nominees for each annual stockholders’ meeting and director nominees to fill vacancies on the Board that may occur between annual stockholders’ meetings by reason of disqualification, resignation, retirement, death or any increase in the size of the Board.
In evaluating director nominees, the Board is guided by, among other things, the principles for Board membership expressed in the Company’s Corporate Governance Guidelines, which are available at www.revloninc.com under the heading, Investor Relations (Corporate Governance). The Board, in identifying and considering candidates for nomination to the Board, considers, in addition to the requirements set out in the Company’s Corporate Governance Guidelines, the quality of the candidate’s experience, the Company’s needs and the range of talent and experience represented on the Board.
In its assessment of each potential candidate, the Board considers the nominee’s reputation, judgment, accomplishments in present and prior positions, independence, knowledge and experience that may be relevant to the Company, and such other factors as the Board determines to be pertinent in light of the Board’s needs over time, including, without limitation, education, diversity, race, gender and other individual qualities and attributes that are expected to contribute to the Board having an appropriate mix of viewpoints. The Board identifies potential nominees from various sources, such as officers, directors and stockholders, and from time to time may retain the services of third party consultants to assist it in identifying and evaluating director nominees.
Stockholder Process for Submitting Director Nominees
The Board will consider director candidates recommended by stockholders. The process followed to evaluate candidates submitted by stockholders does not differ from the process followed for evaluating other director nominees. The Board may also take into consideration the number of shares held by the recommending stockholder, the length of time that such shares have been held and the number of candidates submitted by each stockholder or group of stockholders over the course of time. Stockholders desiring to submit director candidates must submit their recommendation in writing (certified mail — return receipt requested) to the Company’s Secretary, at Revlon, Inc., One New York Plaza, 49th Floor, New York, NY 10004, attention: Michael T. Sheehan.
Recommendations for director candidates are accepted throughout the year by the Board. In order for a recommended director candidate to be considered for nomination to stand for election at an upcoming annual stockholders’ meeting, the recommendation must be received by the Company, as set forth above, not less than 120 days prior to the anniversary date of the date of the Company’s most recent annual proxy statement. For director recommendations to be considered in connection with the Company’s 2016 Annual Meeting, this submission date was December 23, 2015. No such recommendations were received from stockholders in connection with the 2016 Annual Meeting. To have a candidate considered for nomination (subject to requests for further information as may be determined by the Board), a stockholder must initially provide the following information:
| • | the stockholder’s name and address, evidence of such stockholder’s ownership of the Company’s Class A Common Stock, including the number of shares owned and the length of time of continuous ownership, and a statement as to the number and names of director candidates such stockholder has previously submitted to the Company during the period that such stockholder has owned such shares; |
| • | the name of the candidate; |
| • | the candidate’s resume or a listing of his or her qualifications to be a director of the Company; |
| • | any other information regarding the candidate that would be required to be disclosed in a proxy statement filed with the SEC if the candidate were nominated for election to the Board; and |
| • | the candidate’s consent to be named as a director, if selected and nominated by the Board. |
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Stockholder-Director Communications
The Board has established a process to receive communications from stockholders and other interested parties. Any stockholder or other interested party desiring to communicate with the Board or individual directors (including, without limitation, the non-management directors) regarding the Company may contact either the Board or such director by sending such communication to the attention of the Board or such director, in each case in care of the Company’s Secretary, who is responsible to ensure that all such communications are promptly provided to the Board or such director. Any such communication may be sent by: (i) emailing it to Michael T. Sheehan, Senior Vice President, Deputy General Counsel and Secretary, at michael.sheehan@revlon.com; or (ii) mailing it to Revlon, Inc., One New York Plaza, 49th Floor, New York, NY 10004, attention: Michael T. Sheehan. Communications that consist of stockholder proposals must instead follow the procedures set forth under “General Rules Applicable to Stockholder Proposals” in this Proxy Statement, below, and, in the case of recommendations of director candidates, “Stockholder Process for Submitting Director Nominees,” in this Proxy Statement, above.
Non-Management Executive Sessions
The Company’s Corporate Governance Guidelines provide that the Board will regularly meet in executive session without any member of the Company’s management being present and that the Company’s independent directors will also meet in at least one non-management executive session per year attended only by independent directors. A non-management director will preside over each non-management executive session of the Board, and an independent director will preside over each independent director executive session of the Board, although the same director is not required to preside at all such non-management or independent director executive sessions. The presiding director at such non-management and independent director executive sessions of the Board is determined in accordance with the applicable provisions of the Company’s By-laws, such that the Chairman of the Board of Directors or, in his absence (as is the case with independent executive sessions), a director chosen by a majority of the directors present will preside at such meetings. During 2015, the Board of Directors met in at least one executive session attended by only independent directors (all of whom constituted non-management directors).
Composition of the Audit Committee
The Audit Committee is comprised of Messrs. Bernikow (Chairman), Dinh and Feldberg, each of whom the Board of Directors has determined satisfies the NYSE’s and the SEC’s audit committee independence and financial experience requirements. Each of these directors served as a member of the Audit Committee during all of 2015 (other than Mr. Dinh, who was appointed to the Audit Committee in June 2015) and each of these directors remained a member of the Audit Committee as of the date of this Proxy Statement.
The Company has determined that Mr. Bernikow qualifies as an “audit committee financial expert” under applicable SEC rules. In accordance with applicable NYSE listing standards, the Company’s Board of Directors has considered Mr. Bernikow’s simultaneous service on the audit committees of more than three public companies, namely the audit committees of the Company, Mack-Cali, FCB Financial and the UBS Funds, and has determined that such service does not impair his ability to effectively serve on the Company’s Audit Committee as, among other things, Mr. Bernikow is retired and, accordingly, has a flexible schedule and time to commit to service as an Audit Committee and Board member, including on a full-time basis, if necessary; he has significant professional accounting experience and expertise, which renders him highly qualified to effectively and efficiently serve on multiple audit committees; the audit committees of the UBS Funds effectively function as a single, consolidated audit committee; and Mr. Bernikow has served as a member of the Company’s Audit Committee since 2003 and his service on the other audit committees noted has not impaired his ability to effectively serve on the Company’s Audit Committee during this period.
The Audit Committee operates under a comprehensive written charter, a printable and current copy of which is available at www.revloninc.com under the heading, Investor Relations (Corporate Governance).
Audit Committee Responsibilities
Pursuant to its charter, the Audit Committee is responsible for assisting the Board of Directors in fulfilling its oversight responsibilities with respect to, among other things, the integrity of the Company’s financial statements and disclosures; the Company’s compliance with legal and regulatory requirements; the appointment, compensation,
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retention and oversight of the Company’s independent auditors, as well as their qualifications, independence and performance; enterprise risk assessment and the Company’s risk management guidelines, processes and policies; the performance of the Company’s internal audit functions; and the Revlon, Inc. Related Party Transaction Policy. The Audit Committee is also responsible for preparing the annual Audit Committee Report, which is required under SEC rules to be included in this Proxy Statement (see “Audit Committee Report,” below). The Audit Committee has an Audit Committee Pre-Approval Policy for pre-approving all permissible audit and non-audit services performed by the Company’s independent auditor. See “Annex C – Revlon, Inc. 2016 Audit committee pre-approval policy.”
Audit Committee Complaint Procedures
The Audit Committee has established procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and (b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. These complaint procedures are described in the Audit Committee’s charter.
Management represented to the Audit Committee that the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015 were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed such audited consolidated financial statements with management and KPMG LLP (“KPMG”), the Company’s independent registered public accounting firm.
The Audit Committee discussed with the Company’s independent registered public accounting firm those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”), including information concerning the scope and results of the audit and information relating to KPMG’s judgments about the quality, and not just the acceptability, of the Company’s accounting principles. These communications and discussions are intended to assist the Audit Committee in overseeing the Company’s financial reporting.
The Audit Committee has received the written disclosures and the letter from the Company’s independent registered public accounting firm, as required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with the Company’s independent registered public accounting firm that firm’s independence.
The Audit Committee also reviewed, among other things, the amount of fees paid to the independent registered public accounting firm for audit and permissible non-audit services (see “Audit Fees” in this Proxy Statement, below). The Audit Committee has satisfied itself that KPMG’s provision of audit and non-audit services to the Company is compatible with KPMG’s independence.
Based on the Audit Committee’s review of and discussions regarding the Company’s audited consolidated financial statements and the Company’s internal control over financial reporting with management, the Company’s internal auditors and the independent registered public accounting firm and the other reviews and discussions with the independent registered public accounting firm referred to in the preceding paragraph, subject to the limitations on the Audit Committee’s roles and responsibilities described above and in the Audit Committee charter, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the SEC.
Respectfully submitted,
Audit Committee
Alan S. Bernikow, Chairman
Viet D. Dinh
Meyer Feldberg
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Composition of the Compensation Committee
The Compensation Committee is comprised of Messrs. Bernikow (Chairman) and Kretzman and Mses. Kurzman and Perelman. Each of these directors served as a member of the Compensation Committee during all of 2015 (other than Ms. Perelman, who was appointed to the Compensation Committee in June 2015) and each of these directors remained a member of the Compensation Committee as of the date of this Proxy Statement.
Compensation Committee Charter
The Compensation Committee operates under a comprehensive written charter, a printable and current copy of which is available at www.revloninc.com under the heading, Investor Relations (Corporate Governance).
Compensation Committee’s Responsibilities
Pursuant to its charter, the Compensation Committee currently reviews and approves corporate goals and objectives relevant to the compensation of the Company’s Chief Executive Officer (the “CEO”) and other Named Executive Officers (“NEOs”), evaluates the CEO’s and the other NEOs’ performance in light of those goals and objectives, and determines, either as a committee or together with the Board of Directors, the CEO’s and other NEOs’ compensation level based on such evaluations. The Compensation Committee also reviews and approves compensation and incentive arrangements for certain of the Company’s executive officers and such other Company employees as the Compensation Committee may determine to be necessary or desirable from time to time. The Compensation Committee also reviews and approves awards pursuant to the Fourth Amended and Restated Revlon, Inc. Stock Plan (the “Stock Plan”) and the Revlon Amended and Restated Executive Incentive Compensation Plan (the “Incentive Compensation Plan”) and oversees the administration of such plans. During 2015, the Compensation Committee approved certain grants of restricted stock under the Stock Plan to designated members of its senior management team, including to Mr. Pieraccioni, which grants were designed to provide their recipients with a strong retention incentive and a significant stake in Revlon’s long-term success, while aligning the interests of management with shareholder interests. For more information on these grants of restricted stock, see “Grants of Plan-Based Awards - Equity Awards,” below.
The Compensation Committee is also responsible for reviewing and discussing with the Company’s appropriate officers the Compensation Discussion and Analysis included in this Proxy Statement. Based on such review and discussion, the Compensation Committee is also responsible for (i) determining whether to recommend to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K or in the annual proxy statement (and incorporated by reference into the Annual Report on Form 10-K) and (ii) producing the annual Compensation Committee Report and approving its inclusion in the Company’s annual report on Form 10-K or in the annual proxy statement. The Compensation Committee also considers whether there exist any potential conflicts of interest with its independent outside compensation consultant, and has determined that there were none.
Compensation Committee’s Delegation of Authority
Pursuant to the terms of the Incentive Compensation Plan, the Compensation Committee may delegate to an administrator (who must be an employee or officer of the Company) the power and authority to administer the Incentive Compensation Plan for the Company’s employees, other than its Chief Executive Officer and certain other officers who constitute “covered employees” as defined in Treasury Regulation §1.162-27(c)(2) (“Section 162(m) Officers”). Section 157(c) of the Delaware General Corporation Law (the “DGCL”) provides that the Company’s Board of Directors (or the Compensation Committee acting on behalf of the Board) may delegate authority to any officer of the Company to designate grantees of equity awards under the Stock Plan other than himself or herself and to determine the number of such equity awards to be issued. The Compensation Committee did not delegate any such authority for 2015.
Role of Officers and Consultants in the Compensation Committee’s Deliberations
For a discussion of the role of the Company’s executive officers and compensation consultants in recommending the amount or form of executive and director compensation, and the consideration of any possible conflicts of interest with the Compensation Committee’s independent outside compensation consultant, see “Compensation Discussion and Analysis - Role of the Compensation Committee.”
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Compensation Committee Interlocks and Insider Participation
The Compensation Committee does not have any interlocks or insider participation requiring disclosure under the SEC’s executive compensation rules.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth below in this Proxy Statement with the Company’s appropriate officers. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement, as well as in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, including by incorporation by reference to this 2016 Proxy Statement.
Respectfully submitted,
Compensation Committee
Alan S. Bernikow, Chairman
Robert K. Kretzman
Ceci Kurzman
Debra Perelman
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The following executive officers of the Company constituted the Company’s “Named Executive Officers” for 2015 for purposes of this Proxy Statement:
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Name
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Position during 2015
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Lorenzo Delpani
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Former President and Chief Executive Officer (Mr. Delpani resigned from his position as the Company’s President and Chief Executive Officer on March 1, 2016 and ceased employment with the Company on March 31, 2016)
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Roberto Simon
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Former Executive Vice President and Chief Financial Officer (Mr. Simon ceased employment with the Company as its Executive Vice President and Chief Financial Officer on February 29, 2016)
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Giovanni “Gianni” Pieraccioni
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Executive Vice President and Chief Operating Officer (Mr. Pieraccioni was elected to such position on February 25, 2016 prior to which he served as Executive Vice President and Global President – Revlon Consumer Division)
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The following sets forth the age (as of December 31, 2015), positions held with the Company during 2015 and selected biographical information for the Company's current executive officers whose biographical information is not otherwise included in this Proxy Statement, above, with the Company's Directors:
Mr. Delpani (47) served as the Company’s and Products Corporation’s President and Chief Executive Officer from November 2013 until March 1, 2016. His employment with the Company ceased on March 31, 2016. Mr. Delpani has also served as a Director of the Company and Products Corporation since November 2013, and he will continue to serve in such directorship roles following the cessation of his employment until the 2016 Annual Meeting. Pursuant to Mr. Delpani’s Transition and Separation Agreement and Release with the Company and Products Corporation, dated March 1, 2016 (as amended on April 21, 2016, the “Delpani TSA”), Mr. Delpani also agreed to provide advisory services to the Company through March 31, 2018 to assist with the transition of his duties. Prior to joining the Company in October 2013 as part of the Company’s acquisition of The Colomer Group Participations, S.L. (“TCG”), Mr. Delpani served as TCG’s Chief Executive Officer since May 2007. Before joining TCG, from 2005 to 2007, Mr. Delpani provided innovation and new venture development guidance to various clients as a consultant. Previously, Mr. Delpani served in various senior executive positions at Reckitt Benckiser plc, and/or certain of its affiliates and predecessors, from 1998 to 2005, including responsibility for southwestern Europe and for new product initiatives, as well as e-business. Prior to working at Reckitt Benckiser plc, Mr. Delpani held various senior marketing and executive positions with Johnson & Johnson and The Procter & Gamble Company.
Mr. Pieraccioni (56) has served as the Company’s Executive Vice President and Chief Operating Officer since February 2016. Mr. Pieraccioni previously served as the Company’s Executive Vice President, Global President – Revlon Consumer Division since February 2014. Prior to joining the Company, Mr. Pieraccioni most recently served as Executive Vice President and Chief Commercial Officer for Alitalia, from August 2012 until September 2013. From January 2011 to July 2012, Mr. Pieraccioni served as General Manager - Spirits at Averna Group. From February 2009 to December 2010, Mr. Pieraccioni provided business consulting services to companies in various industries. Prior to that, Mr. Pieraccioni held several general management, marketing and commercial positions of increasing scope and seniority within the consumer and luxury goods industry, including at The Procter & Gamble Company, PepsiCo, Inc., Johnson & Johnson S.p.A., Sector Group Inc. and Binda Group S.p.A.
Mr. Simon (41) served as the Company’s Executive Vice President and Chief Financial Officer from September 2014 until February 2016. Mr. Simon previously served as the Company's Senior Vice President, Global Finance since joining the Company in October 2013, as part of the Company's acquisition of TCG. Prior to joining the Company and since 2002, Mr. Simon served in various senior finance positions of increasing responsibility at TCG, including as TCG's Chief Financial Officer since October 2011. From January 2008 until September 2011, Mr. Simon served as Vice President, Finance Americas & Africa of Colomer USA.
Effective in April 2016, the Company appointed (i) Fabian T. Garcia as President and Chief Executive Officer, whose biography appears under “Nominees for Election as Directors” above; and (ii) Juan R. Figuereo as Executive Vice President and Chief Financial Officer, whose biography appears below:
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Juan R. Figuereo (60) has served as the Company’s Executive Vice President and Chief Financial Officer since April 12, 2016. From October 2012 to October 2015, Mr. Figuereo served as Executive Vice President and Chief Financial Officer of NII Holdings, Inc. NII Holdings, Inc. filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the U.S. Bankruptcy Code in September 2014 and emerged from such proceedings in June 2015. From 2009 to 2012, Mr. Figuereo served as Executive Vice President and Chief Financial Officer of Newell Rubbermaid Inc., a global marketer of consumer and commercial products. Prior to that, Mr. Figuereo served as Chief Financial Officer of Cott Corporation from 2007 to 2009, Vice President, Mergers and Acquisitions for Wal-Mart International from 2003 to 2007 and various international, finance and general management positions at PepsiCo from 1988 to 2003. Mr. Figuereo is a certified public accountant. Mr. Figuereo has served since June 2011 as a director and as member of the Audit & Risk Management Committee of PVH Corp., a NYSE-listed company. In 2015, Mr. Figuereo became Chairman of PVH’s Audit & Risk Management Committee.
Relationship of Compensation Practices to Risk Management
The Company has reviewed and considered all of its compensation plans and practices and does not believe that its compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company.
The Company's senior management is responsible for identifying and managing risks to the Company's business and the Board's Audit Committee is responsible for reviewing and discussing that process with management. In accordance with applicable NYSE rules for listed issuers, the Audit Committee maintains an Audit Committee charter that addresses the duties and responsibilities of the Audit Committee, including the requirement that such committee discuss the Company's guidelines, policies and processes with respect to enterprise risk assessment and risk management. As part of the Company's enterprise risk management function, management identifies internal and external risk factors, monitors identified risks and takes appropriate action to mitigate such identified risks. Specifically, the Company's internal audit group, with input from the Company's senior management, leads a comprehensive enterprise risk assessment annually using a comprehensive risk management framework. This process identifies and characterizes risks based on the possible impact to the Company's business and likelihood of occurrence. The Company's management puts in place appropriate plans to mitigate the risks identified. The enterprise risk assessment is also taken into account in the formulation of the internal audit plan for the ensuing year. The Audit Committee reviews and discusses the Company's enterprise risk assessment and risk management guidelines, policies and processes at least annually. Further, the Board reviews the Company’s business plan and receives regular business and financial updates, including progress against the Company's business plan, at Board meetings, enabling the Board to understand and remain updated regarding the business risks faced by the Company and the Company's management of those risks.
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COMPENSATION DISCUSSION AND ANALYSIS
The following is a discussion and analysis of all material elements of the Company's compensation of its Named Executive Officers for 2015 (the “2015 NEOs”):
Overview of 2015 Compensation Programs
For 2015, in addition to base salaries, the Company's primary cash and stock incentive compensation programs for its 2015 NEOs included:
| (1) | an annual cash bonus program covering the 2015 performance year (the “2015 Annual Bonus Program”); |
| (2) | cash-based, long-term incentive program awards (“LTIPs”) consisting of: (a) the 2015 LTIP, with a 3-year performance period covering the 2015, 2016 and 2017 performance years, payable in March 2018; (b) the previously-granted 2014 LTIP, with a 3-year performance period covering the 2014, 2015 and 2016 performance years, payable in March 2017; and (c) the final tranche of the previously-granted 2014 Transitional LTIP, with a 2-year performance period covering the 2014 and 2015 performance years, which were paid in March 2016 (each such LTIP program is further described below and they are referred to collectively as the “2015 LTIP Programs”); and |
| (3) | the March 2016 vesting of a portion of the 2015 NEO’s Restricted Stock Grants and the 2016 Restricted Stock Grant to Mr. Pieraccioni (as further described below). |
The 2015 Annual Bonus Program, the 2015 LTIP Programs and the March 2016 vesting of the 2015 NEO’s Restricted Stock Grants are collectively referred to as the “2015 Incentive Compensation Programs.”
As previously disclosed on a Current Report on Form 8-K that each of the Company and Products Corporation filed with the SEC on March 28, 2016, the Company and Products Corporation elected Fabian T. Garcia as President and Chief Executive Officer, effective April 15, 2016. Mr. Garcia replaced Lorenzo Delpani, who served as the Company’s President and Chief Executive Officer from November 2013 through March 1, 2016. Mr. Garcia was also appointed to serve as a member of the Company’s Board of Directors, as well as the Board of Directors of Products Corporation. On March 27, 2016, the Company and Products Corporation entered into an employment agreement with Mr. Garcia, a summary of which is included in this proxy statement under “EXECUTIVE COMPENSATION — Employment Agreements.”
Also, as previously disclosed on a Current Report on Form 8-K that each of the Company and Products Corporation filed with the SEC on April 12, 2016, the Company and Products Corporation elected Juan R. Figuereo as Executive Vice President and Chief Financial Officer, effective April 12, 2016. Mr. Figuereo succeeded Mr. Roberto Simon in such position, whose resignation from the Company was effective on February 29, 2016, as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 26, 2016 (the “2015 Form 10-K”). On April 12, 2016, the Company and Products Corporation entered into an employment agreement with Mr. Figuereo, a summary of which is included in this proxy statement under “EXECUTIVE COMPENSATION — Employment Agreements.”
The Company’s compensation philosophy has remained unchanged from last year, other than that the Company has re-assessed the market reference points that it uses in its compensation philosophy. In the past, the Company had targeted the total target compensation for its NEOs to be positioned at or about the 50th to 75th percentile of competitive benchmark data for similarly situated executives at companies operating in general industry that participate in the Towers Watson U.S. Executive compensation database (the “Towers Watson Comparison Group”). The Towers Watson Comparison Group consisted of companies with revenues that are generally comparable in size with the Company (as listed on Annex A).
Beginning in 2015, based on the advice of Compensation Advisory Partners LLC (“CAP”), the Compensation Committee’s outside independent compensation consultant, the Company substituted the general industry survey data obtained from the Towers Watson Comparison Group for its NEOs with survey data from a proxy peer group of U.S. public companies. The Company’s proxy peer group for 2015 (the “2015 Proxy Peer Group”) consists of certain U.S. public companies (as listed on Annex B) that manufacture and market personal care and household products with revenues and market capitalization that are generally comparable in size with the Company. With input from CAP, the Compensation Committee’s outside independent compensation consultant, the Company's Human
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Resources Department and the Compensation Committee discussed and considered that compensation data from other public companies would provide enhanced insight into competitive compensation trends applicable to the Company’s NEOs. When making peer group comparisons, the Company's Human Resources Department and the Compensation Committee focus annually on developing a total compensation opportunity that is intended to be competitive to the 2015 Proxy Peer Group, using the 50th and 75th percentiles of the 2015 Proxy Peer Group as reference points. For purposes of peer group comparison, “total compensation” refers to the sum of base salary, annual cash bonus (assuming a 100% target payout) and long-term incentive opportunities (consisting of LTIP awards (assuming a 100% target payout) and, if applicable, the annualized value of restricted stock measured on the grant date of the restricted stock awards).
Using the 50th and 75th percentiles of the 2015 Proxy Peer Group as reference points, the Company's compensation philosophy continues to focus on providing its NEOs with compensation programs that are reasonably designed to satisfy the following principal objectives:
| (a) | to pay for performance by basing salary increases upon the NEO’s individual performance and basing incentive compensation payouts upon the degree to which the Company and the NEO achieve their respective corporate and individual performance objectives, as well as assessing: (i) internal pay equity considerations; (ii) internal annual bonus and long-term incentive opportunities; and (iii) the NEO’s roles and responsibilities and his or her experience in those roles. The Company designs its compensation programs to align the level of position with the degree of risk in compensation. Accordingly, the Company's NEOs, with the highest levels of responsibility and accountability within the organization, have a higher percentage of their total potential remuneration at risk (in the form of performance-based annual cash bonuses and long-term incentive opportunities (consisting of restricted stock grants and performance-based LTIP awards)), than do employees with lower levels of responsibility and accountability. This means that a higher proportion of the Company's NEOs’ total potential compensation is based upon variable elements, compared to employees with lower levels of responsibility and accountability; |
| (b) | to pay competitively to retain, attract and motivate exceptional performers and key contributors with the skills and experience necessary for the Company to achieve its business strategy. Satisfying this objective requires the Company's compensation programs for its NEOs to be competitive with the compensation practices of other companies. As described above, the Company reviews the market data of the 2015 Proxy Peer Group as part of the process in measuring whether it is paying the Company’s NEOs competitively; and |
| (c) | to align the interests of management and employees with corporate performance and shareholder interests by rewarding performance that is directly linked to the degree to which the Company achieves its business strategy. The Company seeks to structure its compensation program to align the 2015 NEOs’ actual total compensation with the degree to which the Company achieves its business objectives and with the creation of shareholder value. |
2014 “Say-on-Pay” Vote Results:
At the Company’s last “say-on-pay” vote at its 2014 annual stockholders' meeting, approximately 99% of the Company’s stockholders approved the Company’s “say-on-pay” proposal regarding the structure and payment of the Company's compensation for its NEOs. At the Company’s June 2011 annual stockholders' meeting, approximately 99% of the Company’s stockholders approved the Company’s proposal that the “say-on-pay” vote be held once every 3 years (which is the Company’s current intention). While these “say-on-pay” stockholder votes are held on an advisory, non-binding basis (in accordance with SEC regulations), the Company believes that the near unanimity of the last stockholder vote represents an endorsement that the Company’s compensation processes and practices are appropriate for the Company.
Role of the Compensation Committee
The Compensation Committee reviews key components of each NEO's total compensation, which enables the Compensation Committee to make informed compensation decisions. Among other things, the Compensation Committee reviews and approves: (i) compensation for the Company's NEOs; (ii) the structure of the Company's annual bonus program under the Revlon Executive Incentive Compensation Plan, including approving annual performance-based objectives for the NEOs and the organization as a whole and certifying management’s assessment of the extent to which the applicable performance targets have been achieved; (iii) the structure of the Company’s LTIPs under the Incentive Compensation Plan, including approving performance-based objectives, target grants of
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LTIP awards for the NEOs and certifying management’s assessment of the extent to which the applicable performance targets have been achieved; and (iv) the structure of the Company’s grants of restricted shares of its Class A Common Stock (the “Restricted Stock Grants”) to the NEOs under the Stock Plan.
The Compensation Committee, based upon management’s recommendation and with input from CAP: (i) reviews and approves corporate and individual performance objectives relevant to the compensation of the Company's CEO and the other NEOs; (ii) evaluates the CEO’s and the other NEO’s performance in respect of those corporate and individual performance objectives, which evaluations may be done in conjunction with the Board; and (iii) reviews and approves the CEO’s and the other NEOs’ total compensation level based on that evaluation process.
Working with CAP, the Company's Human Resources Department recommends to the Compensation Committee: (i) the structure of the Company's annual bonus program under the Incentive Compensation Plan; (ii) the structure of the Company’s LTIP awards under the Incentive Compensation Plan; and (iii) for 2014 and 2015, the structure of the Company’s Restricted Stock Grants to the NEOs under the Stock Plan, including the 2014 Restricted Stock Grants to each of the 2015 NEOs and the 2015 and 2016 Restricted Stock Grants to Mr. Pieraccioni.
As part of the Company's processes and procedures for determining the amount and form of executive officer and director compensation, the Compensation Committee relies in part upon informed proposals and information provided by management, as well as market data, analysis and guidance provided by CAP. During 2015, the Compensation Committee consulted with and/or considered advice provided by CAP with respect to: (1) the structure and components of the Company's 2015 Incentive Compensation Programs; and (2) the total target compensation for the Company’s 2015 NEOs. During 2015, CAP provided only compensation advice to the Compensation Committee (or to the Company's Human Resources Department in respect to compensation survey data analysis and other executive compensation matters) and did not perform any other services for the Company or the Compensation Committee, such as benefits administration, human resources consulting or actuarial services. The Compensation Committee last approved CAP's engagement in October 2009, based upon CAP's experience and qualifications and CAP reports directly to the Compensation Committee. Since then, the Compensation Committee has annually reviewed CAP’s engagement, including discussion of whether there are any conflicts of interest with CAP or CAP’s compensation advisor to the Compensation Committee and in each case the Compensation Committee determined that there were none. The Compensation Committee’s Chairman also reviews and approves all invoices from CAP prior to payment.
As part of its regular process, the Compensation Committee confers with management and with CAP, and confers separately with CAP, without management present. The Compensation Committee also confers in executive session without management or CAP present.
As there has never been a restatement of the Company's financial results, the Company has not considered any policy in respect of adjustment or recovery of amounts paid under its compensation plans.
2015 Incentive Compensation Programs: Design
To achieve the objectives of the Company’s compensation philosophy, the Company maintains the following principal elements of compensation for the 2015 NEOs (the structure, targets, payout slopes and amounts of incentive compensation awards may change from year to year):
| I. | Annual Base Salary: Base salary adjustments are considered annually and may be based on individual performance, promotions and/or the assumption of new responsibilities, competitive data from the 2015 Proxy Peer Group, employee recruitment and retention efforts and the Company's overall compensation guidelines and annual salary budget guidelines. Higher annual increases may be made to higher performers and key contributors; |
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| II. | Annual Bonuses: Approximately 900 employees, including the 2015 NEOs, were eligible to participate in the 2015 Annual Bonus Program under the Incentive Compensation Plan. For more information on the target amount of the annual bonus awards that were granted to the 2015 NEOs in respect of 2015, see the table under “GRANTS OF PLAN-BASED AWARDS - Non-Equity Awards.” The key components of the 2015 Annual Bonus Program included: |
| • | Corporate Performance Targets: The annual bonus payments for 2015 under the 2015 Annual Bonus Program that were made in March 2016 were based on the degree of the Company’s achievement of the following corporate performance targets: (1) a 2015 Adjusted EBITDA1 target of $338.4 million, weighted at 50% (the “2015 Adjusted EBITDA Performance Target”); (2) a 2015 net sales target of $1,897.8 million, weighted at 25% (the “2015 Net Sales Performance Target”); and (3) a 2015 Net Working Capital Ratio2 (“NWCR”) target of 6.75%, weighted at 25% (the “2015 NWCR Performance Target” and, together with the 2015 Adjusted EBITDA Performance Target and the 2015 Net Sales Performance Target, the “2015 Annual Bonus Corporate Performance Targets”). In each case, the Company’s achievement of the 2015 Annual Bonus Corporate Performance Targets took into account the 2015 Excluded Items (as defined in the footnote below) and, in the case of the 2015 Adjusted EBITDA Performance Target and the 2015 NWCR Performance Target, were measured after taking into account all incentive compensation accruals. Receipt of a bonus award under the 2015 Annual Bonus Program was further conditioned upon the participant’s achievement of a performance rating of “target” or higher under the Company’s 2015 performance management review process. The exact payout amount was further adjusted to account for the extent to which a 2015 NEO achieved his 2015 Individual Strategic Objectives under the 2015 Individual Annual Bonus Performance Factors (as defined below), as part of the Company’s annual management review process. |
| • | Payout Opportunities: The payout opportunity under the 2015 Annual Bonus Program could range from 0% to 150% of target bonus awards based on the extent to which the Company achieved the 2015 Annual Bonus Corporate Performance Targets (in accordance with the payout slopes described below). Also, to enable comparatively higher-performing employees to be appropriately rewarded, the actual bonus payments to each 2015 NEO under the 2015 Annual Bonus Program could range between 80% to 120% of the adjusted target bonus awards, based on the Compensation Committee’s review of management’s assessment of the extent to which each of the 2015 NEOs achieved his 2015 Individual Strategic Objectives. |
| • | Target Annual Bonuses for 2015 NEOs: Per the terms of their respective employment agreements: (i) Mr. Delpani was eligible for a target bonus of 100% of his base salary; and (ii) each of Messrs. Pieraccioni and Simon was eligible for a target bonus of 75% of his respective base salary (referred to as the “Target Bonus Awards”). |
| • | Payout Slopes: The 2015 Annual Bonus Program included the following payout slopes for adjusting the Target Bonus Awards based upon the extent to which the Company achieved the respective 2015 Annual Bonus Corporate Performance Targets: |
| 1 | Adjusted EBITDA as used to determine the achievement and payouts under the 2015 Incentive Compensation Programs is a non-GAAP financial measure which, for 2015, the Company defined as income from continuing operations before interest, taxes, depreciation, amortization, gains/losses on foreign currency fluctuations and miscellaneous expenses (the foregoing being the “EBITDA Exclusions”) and also excluding non-cash stock compensation expense and certain other non-operating items that are not directly attributable to the Company's underlying operating performance (the “2015 Non-Operating Items”), including charges for restructuring and related actions, expenses related to business acquisitions and the integration of TCG, asset impairment charges, pension settlement charges and inventory purchase accounting adjustments and deferred compensation related to the acquisition of CBB. In addition, the Company excluded the effects of certain 2015 non-recurring items in calculating 2015 Adjusted EBITDA, such as net periodic benefit income and gains on sales of assets, among other items, to determine the achievement of the 2015 Adjusted EBITDA Performance Target because the Company's management believed that either these items will not recur in future periods or were not contemplated when determining the Company’s 2015 Adjusted EBITDA Performance Target (the “2015 Non-Recurring Items” and together with the EBITDA Exclusions and the 2015 Non-Operating Items, the “2015 Excluded Items”). Adjusted EBITDA is translated using the 2015 budget exchange rate to ensure comparability to the targets set. |
| 2 | NWCR is determined by dividing (1) the Company’s 2015 net working capital (defined as, current assets minus current liabilities, excluding cash, income taxes, debt and restructuring) by (2) the Company’s trailing 12-month net sales. This target is measured monthly and is the average of the NWCR for each of the 12 months during 2015. |
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| • | Adjusted EBITDA Payout Slope: Funding would be at 100% of 50% of the Target Bonus Award for 100% achievement of the 2015 Adjusted EBITDA Performance Target. For every 1 point of achievement under 100% of the 2015 Adjusted EBITDA Performance Target, the funding level of 50% of the Target Bonus Award would decrease by 10 points, to a minimum funding level of 0% at 90% achievement of this target for 50% of the Target Bonus Award. For every 1 point of achievement over 100% of the 2015 Adjusted EBITDA Performance Target, the funding level of 50% of the Target Bonus Award would increase by 5 points, to a maximum payout of 150% for 50% of the Target Bonus Award if the Company achieved 110% or more of this target. |
| • | Net Sales Payout Slope: Funding would be at 100% of 25% of the Target Bonus Award for 100% achievement of the 2015 Net Sales Performance Target. For every 1 point of achievement under 100% of the 2015 Net Sales Performance Target, the funding level of 25% of the Target Bonus Award would decrease by 25 points, to a minimum funding level of 0% at 96% achievement of the 2015 Net Sales Performance Target for 25% of the Target Bonus Award. For every 1 point of achievement over 100% of the 2015 Net Sales Performance Target, the funding level of 25% of the Target Bonus Award would increase by 25 points, to a maximum payout of 150% for 25% of the Target Bonus Award if the Company achieved 102% or more of this target. |
| • | NWCR Payout Slope: Funding would be at 100% of 25% of the Target Bonus Award for 100% achievement of the 2015 NWCR Performance Target. For every 1 point of achievement over (i.e., worse than) 100% of the 2015 NWCR Target, the funding level of 25% of the Target Bonus Award would decrease by 12.5 points, to a minimum funding level of 0% at 108% achievement of this target for 25% of the Target Bonus Award. For every 1 point of achievement under (i.e., better than) 100% of the 2015 NWCR Performance Target, the funding level of 25% of the Target Bonus Award would increase by 12.5 points, to a maximum payout of 150% for 25% of the Target Bonus Award if the Company achieved 96% or less of this target. |
| • | Individual Performance Assessment: The Company's President and CEO; Executive Vice President and CFO; Executive Vice President and General Counsel; Senior Vice President, Human Resources, Employment and Administration; and other senior executives within the Company’s Human Resources group, develop the objectives against which each 2015 NEO’s performance, including the CEO’s, is assessed. The Compensation Committee also reviews and approves these objectives, having discussed them with CAP. These objectives are established by the Compensation Committee at the start of the performance period based on the Company’s future business plans. After the end of each annual performance period, referring to factual support provided by management, the Compensation Committee assesses and certifies the extent to which the 2015 Annual Bonus Corporate Performance Targets have been achieved based on the Company’s financial and operational results for the performance period, as well as reviewing the 2015 NEOs’ respective performance against their 2015 Individual Strategic Objectives. |
In March 2015, the Compensation Committee approved the 2015 Annual Bonus Corporate Performance Targets, which were quantitative financial objectives adopted under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Section 162(m) Performance Factors”). For each 2015 NEO, the Compensation Committee also approved individual strategic and operational objectives linked directly to the extent to which the NEO was expected to contribute towards the Company’s achievement of its business strategy (the “2015 Individual Strategic Objectives” and together with the 2015 Annual Bonus Corporate Performance Targets, the “2015 Individual Annual Bonus Performance Factors”). In February 2016, the Compensation Committee used the 2015 Individual Annual Bonus Performance Factors to assess and certify management’s assessment of the extent to which each 2015 NEO achieved a certain performance rating under the Company’s annual management review process. These individual ratings were used to determine the extent to which each 2015 NEO was eligible to receive a payout of up to 120% of the adjusted Target Bonus Award in accordance with the terms of the 2015 Annual Bonus Program.
| III. | LTIPs: The grant of target LTIP awards to the 2015 NEOs under the 2015 LTIP Programs, each of which covered, in part, the 2015 performance year, were structured as flat dollar amounts based on the 2015 NEOs’ respective levels of responsibility within the organization. Approximately 85 senior employees, including the Company’s 2015 NEOs, were eligible to participate in the 2015 LTIP Programs. Each of the 2015 LTIP Programs is further described below. By conditioning payments on the average degree of the Company’s achievement of its corporate performance targets over several 1-year performance periods, the 2015 LTIP |
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Programs are designed to: (i) motivate key employees to focus on the Company’s long-term business goals, including execution of the Company’s business strategy; (ii) provide more effective retention incentives; and (iii) better distinguish the Company’s long-term compensation from its annual bonus programs.
| • | Corporate Performance Targets: |
| • | 2015 LTIP: For 2015, the Compensation Committee approved a LTIP structure and design (the “2015 LTIP”) that is eligible for payment in March 2018 based upon the average degree of the Company’s achievement of its performance targets over 3 separately-measured, 1-year performance periods (namely, 2015, 2016 and 2017). The 2015 LTIP’s corporate performance targets for the 2015 performance year were: (1) the 2015 Adjusted EBITDA Performance Target, weighted at 50%; (2) the 2015 Net Sales Performance Target, weighted at 25%; and (3) a 2015 Free Cash Flow3 (“FCF”) Target of $104.3 million, weighted at 25% (the “2015 FCF Performance Target” and, together with the 2015 Adjusted EBITDA Performance Target and the 2015 Net Sales Performance Target, the “2015 LTIP Corporate Performance Targets”). In each case these targets are subject to adjustment to account for the 2015 Excluded Items and, in the case of the 2015 Adjusted EBITDA Performance Target, measured after taking into account all incentive compensation accruals. In March 2016, the Compensation Committee approved the Adjusted EBITDA, net sales and FCF performance targets for the 2015 LTIP’s 2016 performance year and in early 2017 the Company expects to recommend to the Compensation Committee for its approval the 2015 LTIP’s Adjusted EBITDA, net sales and FCF performance targets for the 2015 LTIP’s 2017 performance year (such targets for the 2015 LTIP’s 2016 and 2017 performance years, together with the 2015 LTIP Corporate Performance Targets, being the “2015 LTIP 3-Year Corporate Performance Targets”). After each of the 3 1-year performance periods, the Compensation Committee certifies the extent to which each of the 2015 LTIP’s Adjusted EBITDA, net sales and FCF performance targets are achieved, which, based on their weighting, are used to determine an annual funding level for that performance year. The 2015 LTIP award would then be eligible to be paid out in March 2018 (i.e., following the third and final year of the 2015 LTIP) based on the average of the 3 separately-measured annual funding levels. |
| • | 2014 LTIP: The Company’s corporate performance targets under the previously-granted 2014 LTIP (the “2014 LTIP”) that is eligible for payment in March 2017, are based upon the average degree of the Company’s achievement of its corporate performance targets over 3 separately-measured, 1-year performance periods (namely, 2014, 2015 and 2016) (such targets for the 2014 LTIP’s 2014, 2015 and 2016 performance years, being the “2014 LTIP 3-Year Corporate Performance Targets”). For purposes of the 2014 LTIP, the performance targets for 2015 were the same as the 2015 LTIP Corporate Performance Targets and had the same weighting as the 2015 LTIP Corporate Performance Targets. After each of the 3 1-year performance periods, the Compensation Committee certifies the extent to which each of the 2014 LTIP’s Adjusted EBITDA, net sales and FCF performance targets are achieved, which, based on their weighting, are used to determine an annual funding level for that performance year. The 2014 LTIP award would then be eligible to be paid out in March 2017 (i.e., following the third and final year of the 2014 LTIP) based on the average of the 3 separately-measured annual funding levels. |
| • | 2014 Transitional LTIP: The Company’s corporate performance targets under the final tranche of the 2014 Transitional LTIP (the “2014 Transitional LTIP”) were based upon the average degree of the Company’s achievement of its performance targets over 2, separately-measured, 1-year performance periods (namely, 2014 and 2015) (such targets for the 2014 Transitional LTIP’s 2014 and 2015 performance years, being the “2014 Transitional LTIP 2-Year Corporate Performance Targets”). The corporate performance targets for 2015 for purposes of the final tranche of the 2014 Transitional LTIP were the same as the 2015 LTIP Corporate Performance Targets and had the same weighting as the 2015 LTIP Corporate Performance Targets. After each of the 2 1-year performance periods, the Compensation Committee certified the extent to which each of the 2014 Transitional LTIP’s Adjusted |
| 3 | Free Cash Flow or FCF is a non-GAAP financial measure which, for 2015, the Company defined as net cash provided by operating activities plus proceeds from the sale of certain assets less capital expenditures for property, plant and equipment. FCF excludes proceeds on sale of discontinued operations. FCF does not represent the residual cash flow available for discretionary expenditures, as it excludes certain expenditures such as mandatory debt service requirements, which for the Company are significant. |
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EBITDA, net sales and FCF performance targets were achieved, which, based on their weighting, were used to determine an annual funding level for that performance year. The final tranche of the 2014 Transitional LTIP award was paid in March 2016 (i.e., following the second and final performance year of the 2014 Transitional LTIP) based on the average of the 2 separately-measured annual funding levels.
| • | Payout Opportunities: The 2015 LTIP and 2014 LTIP have, and the final tranche of the 2014 Transitional LTIP had, a payout opportunity range of 0% to 150% of a 2015 NEO’s target award based on: (1) the extent to which the Company achieved the 2015 LTIP 3-Year Corporate Performance Targets, the 2014 LTIP 3-Year Corporate Performance Targets and 2014 Transitional LTIP 2-Year Corporate Performance Targets, respectively; and (2) the Compensation Committee’s review of management’s assessment that each respective 2015 NEO achieved at least a target performance rating under the Company’s annual management review process, including performance factors approved by the Compensation Committee for each of the NEOs, for each of the applicable performance years, including the 2015 Individual LTIP Performance Factors (as defined below). |
| • | Payout Slopes: The terms of the 2015 LTIP, the 2014 LTIP and the final tranche of the 2014 Transitional LTIP include the following payout slopes for adjusting the target LTIP awards (the “Target LTIP Awards”) based upon the extent to which the Company achieved the respective 2015 LTIP 3-Year Corporate Performance Targets, the 2014 LTIP 3-Year Corporate Performance Targets and 2014 Transitional LTIP 2-Year Corporate Performance Targets: |
| • | Adjusted EBITDA Payout Slope: Funding would be at 100% of 50% of the Target LTIP Award for 100% achievement of the Adjusted EBITDA target. For every 1 point of achievement under 100% of the Adjusted EBITDA target, the funding level of 50% of the Target LTIP Award would decrease by 10 points, to a minimum funding level of 0% at 90% achievement of this target for 50% of the Target LTIP Award. For every 1 point of achievement over 100% of the Adjusted EBITDA target, the funding level of 50% of the Target LTIP Award would increase by 5 points, to a maximum payout of 150% for 50% of the Target LTIP Award if the Company achieved 110% or more of this target. |
| • | Net Sales Payout Slope: Funding would be at 100% of 25% of the Target LTIP Award for 100% achievement of the net sales target. For every 1 point of achievement under 100% of the net sales target, the funding level of 25% of the Target LTIP Award would decrease by 25 points, to a minimum funding level of 0% at 96% achievement of this target for 25% of the Target LTIP Award. For every 1 point of achievement over 100% of the net sales target, the funding level of 25% of the Target LTIP Award would increase by 25 points, to a maximum payout of 150% for 25% of the Target LTIP Award if the Company achieved 102% or more of this target. |
| • | FCF Payout Slope: Funding would be at 100% of 25% of the Target LTIP Award for 100% achievement of the FCF target. For every 1 point of achievement under 100% of the FCF target, the funding level of 25% of the Target LTIP Award would decrease by 10 points, to a minimum funding level of 0% at 90% achievement of this target for 25% of the Target LTIP Award. For every 1 point of achievement over 100% of the FCF target, the funding level of 25% of the Target LTIP Award would increase by 5 points, to a maximum payout of 150% for 25% of the Target LTIP Award if the Company achieved 110% or more of this target. |
| • | As noted previously, after each of the 3 (or 2 in the case of the 2014 Transitional LTIP) 1-year LTIP performance periods, the Compensation Committee certifies the extent to which each of the respective LTIP’s Adjusted EBITDA, net sales and FCF performance targets are achieved, which, based on their 50%, 25% and 25% weightings, are used to determine an annual funding level for that performance year. The respective LTIP award would then be eligible to be paid out following the final year of the 2- or 3-year performance periods based on the average of the 3 (or 2 in the case of the 2014 Transitional LTIP) separately-measured annual funding levels. |
| • | Individual Performance Assessment: In March 2015, the Compensation Committee approved the 2015 LTIP Corporate Performance Targets (which would also serve as the corporate performance targets for the second performance year of the 2014 LTIP and the second and final performance year of the 2014 Transitional LTIP). These quantitative measures qualified as Section 162(m) Performance Factors. For each NEO, the Compensation Committee also approved individual strategic and operational objectives linked |
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directly to the extent to which the NEO was expected to contribute towards the Company’s achievement of its business strategy (collectively, the “2015 Individual LTIP Performance Factors” and together with the 2015 Individual Annual Bonus Performance Factors, the “2015 Individual Performance Factors”). In February 2016, the Compensation Committee reviewed the ratings that each 2015 NEO achieved against the 2015 Individual LTIP Performance Factors under the Company’s annual management review process during the 2015 performance period under the 2015 LTIP, the 2014 LTIP and the final tranche of the 2014 Transitional LTIP.
| IV. | March 2016 Vesting of (1) one-fifth of the 2014 Restricted Stock Grants; (2) one-fourth of the 2015 Restricted Stock Grant; (3) one-fourth of the 2016 Restricted Stock Grant: The Company’s 2015 Incentive Compensation Programs also included: (1) for each of the 2015 NEOs, the vesting in March 2016 of one-fifth of their respective Restricted Stock Grants made during 2014 under the Stock Plan (the “2014 Restricted Stock Grants”); and (2) for Mr. Pieraccioni, the vesting in March 2016 of one-fourth of his Restricted Stock Grant made during 2015 (the “2015 Restricted Stock Grant”) and one-fourth of his restricted stock grant made in February 2016 (the “2016 Restricted Stock Grant”). The 2014 Restricted Stock Grants (including the amount of such grants) were intended to provide their recipients with (i) total compensation that was designed to be competitive compared to their most relevant Towers Watson Comparison Group and to position their total compensation at or about the 50th to 75th percentile of such benchmark; and/or (ii) a strong retention incentive and a significant stake in Revlon’s long-term success, while aligning the interests of management with shareholder interests. The 2015 Restricted Stock Grant and the 2016 Restricted Stock Grant to Mr. Pieraccioni were designed to provide him with a strong retention incentive and a significant stake in Revlon’s long-term success, while aligning the interests of management with shareholder interests. The 2014 Restricted Stock Grants vest in 5 equal installments over 5 years (with the first vesting event for Messrs. Delpani and Pieraccioni occurring on March 15, 2015; and the second vesting event for Messrs. Delpani and Pieraccioni and the first vesting event for Mr. Simon occurring on March 15, 2016, consistent with the Delpani TSA and the Simon Separation Agreement (as defined below)). Mr. Pieraccioni’s 2015 Restricted Stock Grant and the 2016 Restricted Stock Grant vests in 4 equal installments over 4 years (with the first vesting event for each such grant occurring on March 15, 2016). |
Pursuant to the Delpani TSA, in April 2016 the Company repurchased from Mr. Delpani his 72,895 vested shares of Revlon, Inc. Class A common stock for an aggregate purchase price of $2,684,722, based on the $36.83 NYSE closing price on April 20, 2016. The Company also paid Mr. Delpani $1,600,000 as consideration for cancelling his 65,703 restricted shares of Revlon, Inc. Class A common stock that were otherwise scheduled to vest on March 15, 2017. The remaining balance of Mr. Delpani’s 2014 Restricted Stock Grant (i.e., the tranches that were otherwise scheduled to vest in March 2018 and 2019 (i.e., 131,406 shares in the aggregate)) were cancelled and forfeited upon the cessation of his employment with the Company on March 31, 2016.
Pursuant to Mr. Simon’s Separation Agreement with the Company and Products Corporation, dated November 3, 2015 (the “Simon Separation Agreement”), the remaining balance of his 2014 Restricted Stock Grant (i.e., the tranches that were otherwise scheduled to vest in March 2017, 2018, 2019 and 2020) were cancelled and forfeited after his departure from the Company in February 2016.
Outstanding Restricted Stock Grants will vest in full upon any “change of control.” Unless the Compensation Committee determines otherwise, the NEOs are required to retain such shares, even after vesting, so long as they remain employed by the Company. For more information on the 2014 Restricted Stock Grants, the 2015 Restricted Stock Grants, the 2016 Restricted Stock Grants and the March 2016 vesting of these Restricted Stock Grants, see “Summary Compensation Table” and “Outstanding Equity Awards at Fiscal Year-End.”
The Stock Plan and Incentive Compensation Plan condition their eligibility for benefits (including under the 2015 Annual Bonus Program and the 2015 LTIP Programs) upon compliance with certain confidentiality, non-competition and non-solicitation obligations required by the Company's confidentiality and non-competition agreement (which all of the 2015 NEOs have effectively executed).
The structure, payout opportunities and payout slopes under the annual bonus and LTIP programs may change from year to year.
2015 Incentive Compensation Programs: Achievement of Performance Targets and Payouts
In March 2016, the Company made cash payments to its 2015 NEOs under (1) the 2015 Annual Bonus Program and (2) under the final tranche of the 2014 Transitional LTIP, as well as to other employees eligible for awards under such
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programs. Such payments were made following the Compensation Committee’s having, after consulting with CAP: (i) certified management’s assessment of the extent to which the Company achieved its 2015 Annual Bonus Corporate Performance Targets and the 2015 LTIP Corporate Performance Targets; (ii) reviewed management’s assessment of the extent to which each NEO achieved their performance rating under the Company’s annual management review process, including for the 2015 NEOs the 2015 Individual Performance Factors approved by the Compensation Committee in March 2015; and (iii) approved (1) the 150% funding level for the 2015 Annual Bonus Program (with each of the NEOs receiving payments of 120% of that adjusted target under the 2015 Annual Bonus Program based on their outstanding performance ratings under their 2015 Individual Annual Bonus Performance Factors), and (2) the payout under the final tranche of the 2014 Transitional LTIP, all in accordance with the terms and conditions of each such program.
| I. | Achievement of Performance Targets and Payouts under the 2015 Annual Executive Bonus Program: |
| • | Achievement of 2015 Annual Bonus Corporate Performance Targets: In February 2016, based upon management’s recommendation and the Company’s 2015 financial results compared to the 2015 Annual Bonus Corporate Performance Targets, the Compensation Committee certified for the purpose of the 2015 Annual Bonus Program the Company’s achievement of: (1) $375.5 million of Adjusted EBITDA for 2015, or 110.9% of its 2015 Adjusted EBITDA Performance Target; (2) $1,940.2 million of net sales for 2015, or 102.2% of its 2015 Net Sales Performance Target; and (3) a 6.44% NWCR for 2015, or 95.4% of its 2015 NWCR Performance Target, in each case after adjusting the Company’s results to account for the 2015 Excluded Items. |
| • | Calculation of Funding Level: In February 2016, in accordance with the plan design and terms of the 2015 Annual Bonus Program, after applying the respective weightings and payout slopes to each of these 2015 corporate performance achievements, while taking into account the 2015 Excluded Items, the Compensation Committee, based upon management’s recommendation and with input from CAP, approved the funding level of the 2015 Annual Bonus Program at 150% of target (the “2015 Annual Bonus Funding Level”), calculated as follows: |
| • | Based on the payout slopes described above: (i) the Company’s achievement of 110.9% of its 2015 Adjusted EBITDA Performance Target yielded a payout at 150% of target; (ii) the Company’s achievement of 102.2% of its 2015 Net Sales Performance Target yielded a payout at 150% of target; and (iii) the Company’s achievement of 95.4% of its 2015 NWCR Performance Target yielded a payout at 150% of target. |
| • | Applying the respective weightings to each of these corporate performance achievements, the Company achieved: (i) Adjusted EBITDA of 75% (or the 50% weighting multiplied by the 150% level of achievement against target); plus (ii) net sales of 37.5% (or the 25% weighting multiplied by the 150% level of achievement against target); plus (iii) a NWCR of 37.5% (or the 25% weighting multiplied by the 150% level of achievement against target), resulting in a total funding level of 150% for the 2015 Annual Bonus Program, calculated by adding each of these variables. |
| • | 2015 Annual Bonus Program Awards: Based on the extent of the Company’s over-achievement of its 2015 Annual Bonus Corporate Performance Targets, as discussed above, in February 2016 the Compensation Committee approved a 150% funding level for the 2015 Annual Bonus Program, which effectively increased such 2015 NEOs’ target bonus to 150%, before taking into account any impact of the NEO’s individual performance against the 2015 Individual Strategic Objectives under his 2015 Individual Annual Bonus Performance Factors, which could then increase or decrease his actual bonus payout within the program’s range of 80% to 120% of the adjusted target. |
| • | Individual Performance Measurement: Consistent with the structure and design of the 2015 Annual Bonus Program, after assessing the degree to which the Company achieved the 2015 Annual Bonus Corporate Performance Targets, the Compensation Committee considered the 2015 individual performance for Messrs. Delpani, Pieraccioni and Simon, including their achievements against their 2015 Individual Annual Bonus Performance Factors. |
Below is a summary of Messrs. Delpani’s, Pieraccioni’s and Simon's 2015 key achievements. In connection with the Compensation Committee’s review process, the Company’s management provided these key achievements to the Compensation Committee in support of management’s assessment that each
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NEO achieved their 2015 Individual Strategic Objectives under the 2015 Individual Annual Bonus Performance Factors at a performance rating that entitled them to a payout of 120% of the adjusted annual bonus awards, in each case pursuant to the plan design and the terms of the 2015 Annual Bonus Program:
| • | Mr. Delpani – Former President and Chief Executive Officer: |
| ○ | Continued the implementation of the “REVLON LOVE IS ON” campaign, including: (i) completing the “Revlon LOVE IS ON Million Dollar Challenge” that generated more than $4 million of donations for women’s health charities, with the Company making an additional $1 million donation to the Revlon/UCLA Women's Cancer Research Program; (ii) launching the “Revlon Love Is On Fragrance;” (iii) launching the “Revlon Love Test: Choose Love” video that generated over 37 million views; and (iv) launching in January 2016 the “Revlon Choose Love” campaign. In recognition of the success of these campaigns, WWD named Mr. Delpani “Marketer of the Year” for 2015; |
| ○ | Continued to implement the Company’s Strategy of Value Creation (“SVC”), including the development and implementation of a company-wide SVC performance management process; |
| ○ | As part of the Company’s “Fewer, Bigger, Better” component of the SVC that is focused on rationalizing its brand portfolio, completed: (i) the acquisition of several new businesses, including Cutex in the U.S., American Crew distribution rights in Australia and the U.K., and the CBBeauty Group; and (ii) the disposition of several non-core brands, such as Ultima II, ABBA and MOP; |
| ○ | Significantly improved the Company’s distributor and travel retail businesses by focusing on, among other things, developing established geographies, re-franchising key territories and launching into key new geographies; |
| ○ | Completed the Company’s integration of TCG, which generated annualized cost reductions of approximately $35 million, and implemented the 2015 Efficiency Program consisting of restructuring actions to drive organizational efficiencies across the Company’s Consumer and Professional segments, by which the Company expects to achieve annualized cost reductions of approximately $10 million to $15 million by end of 2018; |
| ○ | Continued to implement a company-wide SAP enterprise resource planning system, including going-live in 8 countries without major disruption, as well as implementing a new financial consolidation and reporting system that facilitated the integration of the Company’s and TCG’s Finance Departments and provided the Company with enhanced reporting capabilities; and |
| ○ | To optimize support for the Company’s “Fewer, Bigger, Better” strategy, drove several new R&D initiatives, such as integrating R&D with SAP, re-aligning R&D teams to support the Company’s business lines and creating new governance structures. |
| • | Mr. Pieraccioni –Executive Vice President and Chief Operating Officer: |
| ○ | Continued the implementation of the “REVLON LOVE IS ON” campaign, including: (i) completing the “Revlon LOVE IS ON Million Dollar Challenge” that generated more than $4 million of donations for women’s health charities, with the Company making an additional $1 million donation to the Revlon/UCLA Women's Cancer Research Program; (ii) launching the “Revlon Love Is On Fragrance;” (iii) launching the “Revlon Love Test: Choose Love” video that generated over 37 million views; and (iv) launching in January 2016 the “Revlon Choose Love” campaign; |
| ○ | As part of the Company’s “Fewer, Bigger, Better” component of the SVC that is focused on rationalizing its brand portfolio, completed: (i) the acquisition of Cutex in the U.S.; and (ii) the disposition of Ultima II; and |
| ○ | Significantly improved the Company’s distributor and travel retail businesses by focusing on, among other things, developing established geographies, re-franchising key territories and launching into key new geographies. |
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| • | Mr. Simon – Former Executive Vice President and Chief Financial Officer: |
| ○ | As part of the Company’s “Fewer, Bigger, Better” component of the SVC that is focused on rationalizing its brand portfolio, completed: (i) the acquisition of several new businesses, including Cutex in the U.S., American Crew distribution rights in Australia and the U.K., and the CBBeauty Group; and (ii) the disposition of several non-core brands, such as Ultima II, ABBA and MOP; |
| ○ | Completed the Company’s integration of TCG, which generated annualized cost reductions of approximately $35 million, and implemented the 2015 Efficiency Program consisting of restructuring actions to drive organizational efficiencies across the Company’s Consumer and Professional segments, by which the Company expects to achieve annualized cost reductions of approximately $10 million to $15 million by end of 2018; and |
| ○ | Continued to implement a company-wide SAP enterprise resource planning system, including going-live in 8 countries without major disruption, as well as implementing a new financial consolidation and reporting system that facilitated the integration of the Company’s and TCG’s Finance Departments and provided the Company with enhanced reporting capabilities. |
These 2015 key achievements resulted in each of Messrs. Delpani, Pieraccioni and Simon achieving a performance rating of “4” (on a scale of “1” to “4”), which entitled them to a payout of 120% of the adjusted annual bonus awards, in each case pursuant to the plan design and the terms of the 2015 Annual Bonus Program (and, in the case of Mr. Delpani and Mr. Simon, consistent with the Delpani TSA and the Simon Separation Agreement, respectively). Accordingly, based upon its review of management’s assessment of the extent to which each of the NEOs achieved their 2015 Individual Annual Bonus Performance Factors, and taking into account the 150% 2015 Annual Bonus Funding Level, the Compensation Committee approved paying the following bonus awards under the 2015 Annual Bonus Program:
| • | Mr. Delpani was awarded an annual bonus for 2015 of $2,160,000, representing 120% of his 2015 adjusted target bonus of $1,800,000; |
| • | Mr. Pieraccioni was awarded an annual bonus for 2015 of $810,000, representing 120% of his 2015 adjusted target bonus of $675,000; and |
| • | Mr. Simon was awarded an annual bonus for 2015 of $810,000, representing 120% of his 2015 adjusted target bonus of $675,000. |
All of the annual bonus awards were paid to the NEOs pursuant to the terms of the 2015 Annual Bonus Program (and, in the case of Mr. Delpani and Mr. Simon, consistent with the Delpani TSA and the Simon Separation Agreement, respectively) and the Compensation Committee did not exercise any discretion in approving such awards.
The “Summary Compensation Table” below reflects the annual bonus award amounts that were earned by the NEOs for 2015 under the 2015 Annual Bonus Program, which were paid in March 2016.
| II. | Achievement of Performance Targets and Payouts under 2015 LTIP Programs: |
| • | Achievement of 2015 LTIP Corporate Performance Targets: In February 2016, for the purpose of: (i) the first performance year of the 2015 LTIP; (ii) the second performance year of the 2014 LTIP; and (iii) the second and final performance year of the final tranche of the 2014 Transitional LTIP, based upon management’s recommendation and the Company’s 2015 financial results compared to the 2015 LTIP Corporate Performance Targets, the Compensation Committee certified the Company’s achievement of: (1) $375.5 million of Adjusted EBITDA for 2015, or 110.9% of its 2015 Adjusted EBITDA Performance Target; (2) $1,940.2 million of net sales for 2015, or 102.2% of its 2015 Net Sales Performance Target; and (3) $117.0 million of FCF for 2015, or 112.2% of its 2015 FCF Performance Target, in each case after adjusting the Company’s results to account for the 2015 Excluded Items. |
| • | Calculation of Funding Level for the Final Tranche of the 2014 Transitional LTIP: In February 2016, in accordance with the plan design and terms of the final tranche of the 2014 Transitional LTIP, after applying the respective payout slopes and weightings to each of these corporate performance achievements, while |
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taking into account the 2015 Excluded Items, the Compensation Committee, based upon management’s recommendation and with input from CAP, approved the funding level of 147.2% for the final tranche of the 2014 Transitional LTIP (the “Final Tranche 2014 Transitional LTIP Funding Level”), which was based upon the level of the Company’s attainment of its 2014 Transitional LTIP 2-Year Corporate Performance Targets. The Final Tranche 2014 Transitional LTIP Funding Level of 147.2% was calculated as follows:
|
Calculation of 2014 Funding Level:
|
Adjusted
EBITDA |
Net Sales
|
FCF
|
|
2014 Achievements Against Targets:
|
108.7%
|
101.6%
|
244.8%
|
|
2014 Calculated Payouts:
|
143.5%
|
140.0%
|
150.0%
|
|
Weightings:
|
50%
|
25%
|
25%
|
|
Applying Weightings:
|
71.8%
|
35.0%
|
37.5%
|
|
2014 Funding Level:
|
144.3%
|
||
|
Calculation of 2015 Funding Level:
|
Adjusted EBITDA
|
Net Sales
|
FCF
|
|
2015 Achievements Against Targets:
|
110.9%
|
102.2%
|
112.2%
|
|
2015 Calculated Payouts:
|
150.0%
|
150.0%
|
150.0%
|
|
Weightings:
|
50%
|
25%
|
25%
|
|
Applying Weightings:
|
75.0%
|
37.5%
|
37.5%
|
|
2015 Funding Level:
|
150.0%
|
||
|
Average overall payout:
|
Funding Level
|
|
2014 Funding Level:
|
144.3%
|
|
2015 Funding Level:
|
150.0%
|
|
2014-2015 Funding Level:
|
147.2%
|
| • | Individual Performance Measurement: The Compensation Committee considered the 2015 individual performance for Messrs. Delpani, Pieraccioni and Simon, including their achievements against their 2015 Individual Performance Factors, and certified that each of the 2015 NEOs satisfied the performance rating required to receive their respective 2014 Transitional LTIP awards. |
In February 2016, based on the extent of the Company's over-achievement of its 2014 Transitional LTIP 2-Year Corporate Performance Targets (including the 2015 LTIP Corporate Performance Targets) and after reviewing management’s assessment of Messrs. Delpani’s, Pieraccioni’s and Simon's 2015 Individual LTIP Performance Factors and applying the formula of the final tranche of the 2014 Transitional LTIP, the Compensation Committee approved the Final Tranche 2014 Transitional LTIP Funding Level of 147.2%.
| • | 2014 Transitional LTIP Awards: Accordingly, based upon the Compensation Committee’s review of management’s assessment that the eligible 2015 NEOs achieved at least a target performance rating under the Company’s annual management review process (including the 2015 Individual LTIP Performance Factors), and applying the Final Tranche 2014 Transitional LTIP Funding Level of 147.2% for the final tranche of the 2014 Transitional LTIP, as calculated above, in February 2016 the Compensation Committee approved paying the following awards: |
| • | Mr. Delpani was paid $2,944,000 for the 2014 Transitional LTIP award, representing his full $2,000,000 target award attributable to the 2014 and 2015 performance years, as adjusted by the Final Tranche 2014 Transitional LTIP Funding Level of 147.2%; |
| • | Mr. Pieraccioni was paid $490,667 for the second tranche of the 2014 Transitional LTIP award, representing the remaining two-third portion of his $500,000 target award attributable to the 2014 and 2015 performance years, as adjusted by the Final Tranche 2014 Transitional LTIP Funding Level of 147.2%; and |
| • | Mr. Simon was paid $490,667 for the second tranche of the 2014 Transitional LTIP award, representing the remaining two-third portion of his $500,000 target award attributable to the 2014 and 2015 performance years, as adjusted by the Final Tranche 2014 Transitional LTIP Funding Level of 147.2%. |
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The “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” reflects the awards under the final tranche of the 2014 Transitional LTIP that were paid to the NEOs in March 2016 pursuant to the terms of the 2014 Transitional LTIP program (and, in the case of Mr. Delpani and Mr. Simon, consistent with the Delpani TSA and the Simon Separation Agreement, respectively) and the Compensation Committee did not exercise any discretion in approving such awards.
Under each of the Delpani TSA and the Simon Separation Agreement, all of Mr. Delpani’s and Mr. Simon’s other outstanding LTIP awards (i.e., the 2015 LTIP and the 2014 LTIP) were cancelled and forfeited. For more information on the target amounts of the 2015 LTIPs that were granted to the 2015 NEOs in the last completed fiscal year, see the table under “GRANTS OF PLAN-BASED AWARDS - Non-Equity Awards.”
Total Compensation against Towers Watson Comparison Group and 2015 Proxy Peer Group as Reference Points
Applying the Company’s previous compensation philosophy by comparing the NEOs’ 2015 total compensation at target against the 50th and the 75th percentiles of total compensation at target for the comparable Towers Watson Comparison Group, reflected that the total compensation at target for each of Messrs. Delpani, Pieraccioni and Simon was above the 75th percentile.
Applying the Company’s new compensation philosophy by comparing the NEOs’ 2015 total compensation at target against the 2015 Proxy Peer Group at target reflected that the total compensation at target for each of Messrs. Delpani, Pieraccioni and Simon was between the 50th and the 75th percentiles.
Other Compensation and Benefit Programs
The Company also maintains standard benefits that are consistent with those offered by other major corporations and which are generally available to all of the Company's full-time employees (subject to meeting basic eligibility requirements). These plans, which include 401(k), profit sharing, medical, dental, vision and life insurance coverage, are available to all full-time U.S.-based, non-union employees.
The Company also maintains a limited number of benefit programs that are available to the 2015 NEOs and other senior employees qualifying for eligibility based on salary grade level. These benefits and perquisites include an automobile allowance or use of a Company automobile, supplemented medical coverage and an allowance for financial counseling and tax preparation. These types of benefits are similar to those commonly made available to senior executives at other major corporations and assist the Company in retaining and attracting key talent.
Tax Deductibility of Executive Compensation
Section 162(m) places a limit of $1,000,000 on the amount of compensation that the Company may deduct, for tax purposes, in any one year for certain officers who constitute “covered employees” under the rule, unless such amounts are determined to be “qualified performance-based compensation” meeting certain requirements. Generally, the Company's provision of cash incentive compensation under the Incentive Compensation Plan is intended to meet the requirements for qualified performance-based compensation under Section 162(m) and thus, generally, those items are intended to be fully deductible. Salary, perquisites, discretionary bonuses and restricted stock that have time-based vesting generally are not considered performance-based compensation under Section 162(m) and are generally subject to Section 162(m) limitations on deductibility. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy requiring all compensation to be deductible and retains discretion to award compensation that may not constitute qualified performance-based compensation under Section 162(m). Certain amounts of compensation for the Company's officers do not meet Section 162(m)'s performance-based requirements and therefore are not deductible by the Company.
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The following table sets forth information for the years indicated concerning the compensation awarded to, earned by or paid to the 2015 NEOs for services rendered in all capacities to the Company and its subsidiaries during such periods. The “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table, below, presents annual bonus and LTIP payments earned under the Incentive Compensation Plan. As discussed above under “Compensation Discussion and Analysis – Overview of Key 2015 Compensation Events,” the 2015 Annual Bonus Program and the final tranche of the 2014 Transitional LTIP were funded at 150% (with a further adjustment of 120% based on the 2015 NEOs’ outstanding performance ratings, in accordance with the terms of the 2015 Annual Bonus Program) and 147.2%, respectively, of target amounts in accordance with the formulae set forth in such programs, which funding levels were also recommended by management and approved by the Compensation Committee.
Name and Principal Position |
Year |
Salary ($) |
Bonus ($)(a) |
Stock Awards $(b) |
Non-Equity Incentive Plan Compensation ($)(c) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($)(d) |
Total ($) |
||||||||||||||||
Lorenzo Delpani |
2015 | 1,204,615 | — | — | 5,104,000 | — | 119,538 | 6,428,153 | ||||||||||||||||
Former President and Chief |
2014 | 1,206,346 | 250,000 | 9,999,997 | 3,200,253 | — | 98,425 | 14,755,021 | ||||||||||||||||
Executive Officer |
2013 | 161,250 | 887,000 | — | 83,333 | — | — | 1,131,583 | ||||||||||||||||
Gianni Pieraccioni |
2015 | 602,308 | 100,000 | 999,991 | 1,300,667 | — | 273,910 | 3,276,876 | ||||||||||||||||
Executive Vice President and |
2014 | 501,710 | — | 2,499,976 | 1,019,720 | — | 284,767 | 4,306,173 | ||||||||||||||||
Chief Operating Officer |
||||||||||||||||||||||||
Roberto Simon |
2015 | 602,308 | 350,000 | — | 1,300,667 | — | 235,133 | 2,488,108 | ||||||||||||||||
Former Executive Vice President |
2014 | 431,599 | — | 2,499,972 | 745,550 | — | 165,323 | 3,842,444 | ||||||||||||||||
and Chief Financial Officer |
||||||||||||||||||||||||
| (a) | The amounts set forth under the “Bonus” column reflect the portion of any bonus amount paid to the NEO, pursuant to the Compensation Committee’s authority under the Incentive Compensation Plan, in excess of such executive’s target bonus for the year, as adjusted for program funding levels (see “Non-Equity Incentive Plan Compensation” column in this table for bonuses and/or LTIPs earned by the NEO and paid at or below target amounts pursuant to applicable incentive compensation program formulas under the Incentive Compensation Plan). |
For Mr. Pieraccioni, the amount set forth under the “Bonus” column represents a $100,000 one-time retention payment that was paid in April 2015 at the completion of one year of active service, as per Mr. Pieraccioni’s employment agreement.
For Mr. Simon, the amount set forth under the “Bonus” column represents a supplemental payment of $350,000 that was paid in March 2016 in recognition of his effective management of the Company’s financial, accounting and treasury functions through his departure date, including overseeing the close of the Company’s 2015 fiscal year-end reporting process (as previously disclosed by the Company in its 2015 Form 10-K).
| (b) | For Mr. Pieraccioni, the amount set forth under the “Stock Awards” column for 2015 reflects the grant date value of his award of 36,271 restricted shares of the Company’s Class A Common Stock, based on the NYSE closing price of $27.57 per share on the December 10, 2015 grant date. One-fourth of these restricted shares vested on March 15, 2016 and the remaining restricted shares vest in equal installments on March 15, 2017, March 15, 2018 and March 15, 2019. Accordingly, none of such shares were vested during 2015. |
| (c) | The amounts set forth under the “Non-Equity Incentive Plan Compensation” column reflect the portion of the annual bonus and the given year’s LTIP awards actually earned by the NEO, and in the case of 2015, pursuant to the terms of the 2015 Annual Bonus Program and the final tranche of the 2014 Transitional LTIP (excluding any discretionary amounts, as there were none), based on the Compensation Committee’s certification of management’s assessment of the extent to which the Company and the respective NEO achieved the applicable performance objectives. |
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For Mr. Delpani, who ceased employment with the Company in March 2016, for 2015, the amount that was paid in March 2016 reflects: (i) $2,160,000 in cash bonus, representing his 2015 target annual bonus of 100% of his annual base salary, as adjusted by the 2015 Annual Bonus Funding Level of 150% based on the Company’s 2015 financial performance against the 2015 Annual Bonus Performance Targets, with a further adjustment of 120% based on his outstanding performance rating, in accordance with the terms of the 2015 Annual Bonus Program; plus (ii) $2,944,000, representing his 2014 Transitional LTIP award, consisting of his $2,000,000 target award attributable to the 2014 and 2015 performance periods, as adjusted by the 2nd Tranche 2014 Transitional LTIP Funding Level of 147.2% based on the Company’s financial performance in 2014 and 2015 against the 2014 Transitional LTIP 2-Year Corporate Performance Targets. See “Compensation Discussion and Analysis” for further details on the payout calculations of the 2015 Annual Bonus Program and the final tranche of the 2014 Transitional LTIP.
For Mr. Pieraccioni, the amount for 2015 that was paid in March 2016 reflects: (i) $810,000 in cash bonus, representing his target annual bonus of 75% of his annual base salary, as adjusted by the 2015 Annual Bonus Funding Level of 150% based on the Company’s 2015 financial performance against the 2015 Annual Bonus Performance Targets, with a further adjustment of 120% based on his outstanding performance rating, in accordance with the terms of the 2015 Annual Bonus Program; plus (ii) $490,667, representing his 2014 Transitional LTIP award, consisting of the remaining two-third portion of his $500,000 target award attributable to the 2014 and 2015 performance periods, as adjusted by the 2nd Tranche 2014 Transitional LTIP Funding Level of 147.2% based on the Company’s financial performance in 2014 and 2015 against the 2014 Transitional LTIP 2-Year Corporate Performance Targets.
For Mr. Simon, who ceased employment with the Company in February 2016, the amount for 2015 that was paid in March 2016 reflects: (i) $810,000 in cash bonus, representing his target annual bonus of 75% of his annual base salary, as adjusted by the 2015 Annual Bonus Funding Level of 150% based on the Company’s 2015 financial performance against the 2015 Annual Bonus Performance Targets, with a further adjustment of 120% based on his outstanding performance rating, in accordance with the terms of the 2015 Annual Bonus Program; plus (ii) $490,667, representing his 2014 Transitional LTIP award, consisting of the remaining two-third portion of his $500,000 target award attributable to the 2014 and 2015 performance periods, as adjusted by the 2nd Tranche 2014 Transitional LTIP Funding Level of 147.2% based on the Company’s financial performance in 2014 and 2015 against the 2014 Transitional LTIP 2-Year Corporate Performance Targets.
| (d) | For Mr. Delpani, for 2015, the amount shown under “All Other Compensation” consists of a car allowance in the amount of $30,000; tax preparation and financial counseling services; profit sharing contributions under the Amended and Restated Revlon Excess Savings Plan (the “Excess Savings Plan”) in the amount of $46,050 and under the 401(k) Plan; matching contributions under the 401(k) Plan; supplemental medical coverages; and all other compensation (which includes promotional items provided by the Company in connection with certain corporate meetings and a related income tax gross-up of $680). |
For Mr. Pieraccioni, for 2015, the amount shown under “All Other Compensation” consists of an annual car allowance in the amount of $30,000; tax preparation and financial counseling services; a relocation allowance and assistance; a $180,000 annual housing allowance; supplemental medical coverage; profit sharing contributions under the Excess Savings Plan in the amount of $19,050 and under the 401(k) Plan; matching contributions under the 401(k) Plan; and all other compensation (which includes promotional items provided by the Company in connection with certain corporate meetings and a related income tax gross-up of $1,163).
For Mr. Simon, for 2015, the amount shown under “All Other Compensation” consists of an annual car allowance in the amount of $30,000; tax preparation and financial counseling services; a $150,000 annual housing allowance; profit sharing contributions under the Excess Savings Plan in the amount of $19,050 and under the 401(k) Plan; matching contributions under the 401(k) Plan; and all other compensation, including: (i) promotional items provided by the Company in connection with certain corporate meetings and a related income tax gross-up of $1,646; and (ii) unreimbursed automobile expenses with a related income tax gross up of $1,316.
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Employment Agreements and Payments Upon Termination and Change of Control
Set forth below is a summary of the 2015 NEOs’ employment agreements (copies of which have been filed with the SEC).
Mr. Delpani
Mr. Delpani resigned as the Company’s President and Chief Executive Officer on March 1, 2016 and his employment with the Company ceased on March 31, 2016. Prior to such separation, Mr. Delpani’s amended and restated employment agreement provided that Mr. Delpani was to serve as the Company’s President and Chief Executive Officer, at an annual base salary of not less than $1,200,000 (which was his base salary as of December 31, 2015).
Under his employment agreement, Mr. Delpani was eligible to participate in the Company’s annual bonus programs as in effect from time to time, with a target bonus of 100% of his base salary. Mr. Delpani was eligible to participate in the Company’s LTIPs as in effect from time to time. Mr. Delpani was also eligible to participate in the fringe benefit programs and perquisites generally made available to the Company’s other senior executives, including a $10,000 financial planning and tax preparation allowance and a $30,000 annual car allowance.
Mr. Delpani’s employment agreement required that he comply with the Company’s standard confidentiality and non-compete obligations and with the Company’s Code of Conduct and Business Ethics.
Products Corporation had the right to terminate Mr. Delpani’s employment upon written notice following his “disability” (as defined in Mr. Delpani’s employment agreement), with no further amounts or benefits under the employment agreement being due after any such termination. Products Corporation or Mr. Delpani had the right to terminate the employment agreement for any reason upon 30 days’ prior written notice to the other party.
Upon termination of employment, the Company had the right to elect to enforce Mr. Delpani’s non-competition covenant under the employment agreement, for up to 24 months, and in such event, as sole consideration for such non-competition agreement, Mr. Delpani would have been entitled to: (i) payments during such non-compete period in lieu of base salary at 50% of his base salary then in effect; (ii) payment of a pro-rated target bonus, if and to the extent bonuses are payable to executives under the Incentive Compensation Plan for the performance year when the termination occurs, based upon actual achievement of objectives and payable on the date that bonuses are paid to other executives under the bonus program for such performance year; (iii) the executive’s bonus (if not already paid) with respect to the performance year immediately preceding the year of termination (if bonuses with respect to such year are payable to other executives based upon achievement of bonus objectives), payable as and when such bonuses are paid to other executives under the bonus program for such performance year; and (iv) continued participation in Products Corporation’s medical, dental and group life insurance plans in which Mr. Delpani was participating on the termination date, subject to the terms of such plans, throughout the non-compete period or until Mr. Delpani would have been covered by like medical or dental plans of another company.
As noted above, Mr. Delpani resigned as the Company’s President and Chief Executive Officer on March 1, 2016 and his employment with the Company ceased on March 31, 2016. Pursuant to the Delpani TSA, Mr. Delpani has agreed to provide advisory services to the Company through March 31, 2018 to assist with the transition of his duties. Mr. Delpani is not standing for re-election as a director at the Company’s 2016 Annual Meeting.
In consideration for Mr. Delpani’s compliance with certain restrictive covenants of the Delpani TSA, including its confidentiality, non-competition, non-solicitation and non-disparagement provisions (the “Restrictive Covenants”) for 24 months following its March 31, 2016 effective date (the “Non-Competition Period”), the Company will: (i) pay Mr. Delpani $600,000 per year during the Non-Competition Period, to be paid in equal installments on a bi-weekly basis; (ii) pay Mr. Delpani a pro-rated portion of his 2016 annual bonus at the target level of 100% of his current base salary, subject to adjustment based on the Company’s level of attainment of its corporate performance objectives for 2016, payable at such time as 2016 annual bonuses are paid to the Company’s other employees; and (iii) continue to provide Mr. Delpani with the same or substantially similar medical, dental and vision and life insurance benefits that he was receiving prior to his transition until the earlier of the end of (a) the Non-Competition Period or (b) the date on which Mr. Delpani becomes covered by the medical, dental and/or vision plans of another employer.
Pursuant to the Delpani TSA, Mr. Delpani has agreed to provide advisory services to the Company through March 31, 2018 (the “Advisory Period”) in order to assist with the transition of his duties (the “Advisory Services”). During
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the Advisory Period, the Company will pay Mr. Delpani a fee of $600,000 per year (the “Advisory Fees”), to be paid in equal installments on a bi-weekly basis. The Company may elect to terminate the Advisory Services prior to the end of the Advisory Period upon the occurrence of any of the following events: (i) Mr. Delpani’s willful failure to provide or perform the Advisory Services; (ii) Mr. Delpani’s conviction of any felony or any crime of moral turpitude; or (iii) any breach by Mr. Delpani of the Restrictive Covenants (any event under (i), (ii) or (iii), being “Cause”). The Company may also terminate the Advisory Services at any time, provided that, if the Company terminates the Advisory Services other than for Cause, the Company will continue to pay Mr. Delpani the Advisory Fees through the end of the Advisory Period, subject to his continued compliance with the Restrictive Covenants.
Pursuant to the Delpani TSA, in April 2016 the Company repurchased from Mr. Delpani his 72,895 vested shares of Revlon, Inc. Class A common stock for an aggregate purchase price of $2,684,722, based on the $36.83 NYSE closing price on April 20, 2016. The Company also paid Mr. Delpani $1,600,000 as consideration for cancelling his 65,703 restricted shares of Revlon, Inc. Class A common stock that were otherwise scheduled to vest on March 15, 2017. The remaining balance of Mr. Delpani’s 2014 Restricted Stock Grant (i.e., the tranches that were otherwise scheduled to vest in March 2018 and 2019 (i.e., 131,406 shares in the aggregate)) were cancelled and forfeited upon the cessation of his employment with the Company on March 31, 2016.
The Company’s obligation to begin providing such payments and benefits pursuant to the Delpani TSA were conditioned on Mr. Delpani executing a valid release of claims, which he provided to the Company on March 31, 2016.
Mr. Pieraccioni
Mr. Pieraccioni’s employment agreement dated October 9, 2014, as amended on February 25, 2016 (the “Pieraccioni Amended Employment Agreement”), provides that Mr. Pieraccioni will serve as the Company’s Executive Vice President and Chief Operating Officer, at an annual base salary of not less than $1,000,000. During 2015 and until February 2016, Mr. Pieraccioni served as the Company’s Executive Vice President, Global President – Revlon Consumer Division, at an annual base salary of not less than $600,000.
Under the Pieraccioni Amended Employment Agreement, Mr. Pieraccioni is eligible to participate in the Company’s annual bonus programs as in effect from time to time, with a target bonus of 100% of his base salary (which target for 2015 was 75% of his base salary). In addition, Mr. Pieraccioni was entitled to a $180,000 annual housing allowance during 2015 (which allowance was increased, under the Pieraccioni Amended Employment Agreement, on a going-forward basis to $250,000 per annum through February 2019). Pursuant to the Pieraccioni Amended Employment Agreement, in April 2015 Mr. Pieraccioni received a one-time bonus of $100,000 in recognition of his completing one year of service to the Company. Mr. Pieraccioni is also eligible to participate in the Company’s LTIPs as in effect from time to time.
Mr. Pieraccioni is also eligible to participate in the fringe benefit programs and perquisites as may be generally made available to the Company’s other senior executives, including an annual $30,000 car allowance and a $10,000 financial planning and tax preparation allowance.
Mr. Pieraccioni’s employment agreement requires that he comply with the Company’s standard confidentiality and non-compete obligations and with the Company’s Code of Conduct and Business Ethics.
Products Corporation may terminate Mr. Pieraccioni’s employment upon written notice following his “disability” (as defined in Mr. Pieraccioni’s employment agreement), with no further amounts or benefits under the employment agreement being due after any such termination, except to the extent required pursuant to the terms of the Company’s compensation and benefit plans and policies in effect on any such termination date. Products Corporation may terminate Mr. Pieraccioni’s employment agreement upon 12 months’ written notice of non-renewal, or sooner upon written notice for “cause,” as defined in Mr. Pieraccioni’s employment agreement. Mr. Pieraccioni may terminate his employment agreement upon 30 days’ prior written notice following a material breach by Products Corporation of its obligations to Mr. Pieraccioni under such agreement, which breach remains uncured following 90 days’ written notice of such breach by the executive to Products Corporation.
Mr. Pieraccioni ’s employment agreement provides that if Mr. Pieraccioni’s employment is terminated by him for any material uncured breach by Products Corporation of any of its obligations to Mr. Pieraccioni under his employment agreement, or is terminated by Products Corporation (other than for “cause” as defined in Mr. Pieraccioni’s employment agreement or disability), Mr. Pieraccioni would be entitled to: (i) continued payments of base salary throughout a minimum severance period of 12 months; (ii) payment of a pro-rated target bonus, if and to the extent
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bonuses are payable to executives under the Incentive Compensation Plan for the performance year when the termination occurs, based upon actual achievement of objectives and payable on the date bonuses are paid to other executives under the bonus program for such performance year; (iii) the executive’s bonus (if not already paid) with respect to the performance year immediately preceding the year of termination (if bonuses with respect to such performance year are payable to other executives based upon actual achievement of bonus objectives), payable as and when such bonuses are paid to other executives under the bonus program for such performance year; and (iv) continued participation in Products Corporation’s life insurance plan and medical, vision and dental plans, subject to the terms of such plans, throughout the severance period or until Mr. Pieraccioni is covered by like plans of another company.
Mr. Simon
Mr. Simon’s employment with the Company ceased on February 29, 2016. Prior to such separation, Mr. Simon’s employment agreement provided that Mr. Simon was to serve as the Company’s Executive Vice President and Chief Financial Officer at an annual base salary of not less than $600,000 (which was his base salary as of his February 29, 2016 separation date).
Under his employment agreement, Mr. Simon was eligible to participate in the Company’s annual bonus programs as in effect from time to time, with a target bonus of 75% of his base salary. Mr. Simon was also eligible to participate in the Company’s LTIPs as in effect from time to time.
Mr. Simon was also eligible to participate in the fringe benefit programs and perquisites as may be generally made available to the Company’s other senior executives, including an annual $30,000 car allowance and a $10,000 financial planning and tax preparation allowance.
Mr. Simon’s employment agreement required that he comply with the Company’s standard confidentiality and non-compete obligations and with the Company’s Code of Conduct and Business Ethics.
Products Corporation had the right to terminate Mr. Simon’s employment upon written notice following his “disability” (as defined in Mr. Simon’s employment agreement), with no further amounts or benefits under the employment agreement being due after any such termination, except to the extent required pursuant to the terms of the Company’s compensation and benefit plans and policies in effect on any such termination date. Products Corporation had the right to terminate Mr. Simon’s employment agreement upon 12 months’ written notice of non-renewal, or sooner upon written notice for “cause,” as defined in Mr. Simon’s employment agreement. Mr. Simon had the right to terminate his employment agreement upon 30 days’ prior written notice following a material breach by Products Corporation of its obligations to Mr. Simon under such agreement, which breach remains uncured following 90 days’ written notice of such breach by the executive to Products Corporation.
Mr. Simon’s employment agreement provided that, if Mr. Simon’s employment was terminated for any material uncured breach by Products Corporation of any of its obligations to Mr. Simon under his employment agreement, or was terminated by Products Corporation (other than for “cause” as defined in Mr. Simon’s employment agreement or disability), Mr. Simon was entitled to: (i) continued payments of base salary throughout a maximum severance period of 18 months; (ii) payment of a pro-rated target bonus, if and to the extent bonuses were payable to executives under the Incentive Compensation Plan for the performance year when the termination occurred, based upon achievement of objectives and payable on the date bonuses were paid to other executives under the bonus program for such performance year; (iii) the executive’s bonus (if not already paid) with respect to the performance year immediately preceding the year of termination (if bonuses with respect to such performance year were payable to other executives based upon achievement of bonus objectives), payable as and when such bonuses were paid to other executives under the bonus program for such performance year; and (iv) continued participation in Products Corporation’s life insurance plan, subject to a limit of 18 months, and medical, vision and dental plans, subject to the terms of such plans, throughout the severance period or until Mr. Simon is covered by like plans of another company.
As noted above, Mr. Simon’s employment with the Company ceased on February 29, 2016. Pursuant to the Simon Separation Agreement, he remained eligible to receive the following incentive compensation awards: (i) payment in March 2016 of his 2015 annual bonus award, subject to the terms and conditions of the 2015 Annual Bonus Program; (ii) payment in March 2016 of $75,000, representing a pro rata portion of his 2016 annual bonus at target; (iii) payment in March 2016 of the final tranche of his 2014 Transitional LTIP, subject to the terms and conditions of the 2014 Transitional LTIP, with all of Mr. Simon’s other outstanding LTIP awards (i.e., the 2015 LTIP and the 2014 LTIP) being cancelled and forfeited upon his separation from employment; and (iv) vesting on March 15, 2016
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of his 15,133 restricted shares of Revlon, Inc. Class A Common Stock, with the remaining balance of his 60,532 restricted shares (which would otherwise have vested in equal installments in March 2017, 2018, 2019 and 2020) being cancelled and forfeited upon his separation from employment, in accordance with the terms and conditions of the Stock Plan. The Company also agreed to waive its right to clawback a one-time $150,000 housing allowance that was paid to Mr. Simon in August 2015. As previously disclosed by the Company in its 2015 Form 10-K, in recognition of Mr. Simon’s effective management of the Company’s financial, accounting and treasury functions through his departure date, including overseeing the close of the Company’s 2015 year-end financial reporting process, the Company’s Compensation Committee approved a supplemental payment of $350,000 to Mr. Simon (which was paid in March 2016).
Employment Agreement with Fabian T. Garcia Entered into Following the End of Fiscal 2015
On March 27, 2016, the Company and Products Corporation entered into an employment agreement with Mr. Garcia (the “Garcia Employment Agreement”). The initial term of the Garcia Employment Agreement is 5 years, subject to automatic annual extensions thereafter unless either the Company or Mr. Garcia provides the other with at least 60 days’ prior notice of non-renewal. The initial 5-year term, and any subsequent annual renewals, may end earlier in accordance with the terms of the Garcia Employment Agreement.
The Garcia Employment Agreement provides that Mr. Garcia will serve as the Company’s President and Chief Executive Officer at an annual base salary of not less than $1,500,000, with a target annual bonus of 150% of his base salary, with the possibility of exceeding such amount based upon the over-achievement of the Company’s performance objectives, up to a maximum of 200% of his base salary. Pursuant to the terms and conditions of the Garcia Employment Agreement, Mr. Garcia’s annual bonus for 2016 will not be less than $1,500,000. Mr. Garcia will also receive a sign-on bonus of $2 million, payable in a lump sum within 30 days of the date on which his employment becomes effective (such date, the “Garcia Effective Date”). If Mr. Garcia resigns without “good reason” or is terminated by the Company for “cause” (as such terms are defined in the Garcia Employment Agreement) prior to the second anniversary of the Garcia Effective Date, he will be required to repay the sign-on bonus as follows: 100% of the after-tax amount if terminated within the first year, and 50% of the after-tax amount if terminated in the second year.
Pursuant to the terms and conditions of the Garcia Employment Agreement, Mr. Garcia will have the opportunity to earn a long-term compensation award based on specified Adjusted EBITDA targets covering the performance period commencing on the Garcia Effective Date and ending on December 31, 2019.
On the first anniversary of the Garcia Effective Date (the “Garcia Grant Date”), the Company will grant to Mr. Garcia restricted shares of Revlon Class A Common Stock, with the number of shares being in an amount equal to $10 million divided by the NYSE closing price of Revlon Class A Common Stock on the Garcia Effective Date (the “Garcia Restricted Stock Grant”). One-fifth of the Garcia Restricted Stock Grant will be vested on the Garcia Grant Date, with the remaining four-fifths vesting ratably on each of the first 4 anniversaries of the Garcia Grant Date, so long as Mr. Garcia remains employed with the Company on each applicable vesting date, subject to earlier vesting as described below. In lieu of making the Garcia Restricted Stock Grant, the Company’s Board of Directors may, at its election based on the occurrence of certain events impacting the price of Revlon’s Class A Common Stock, choose to pay Mr. Garcia $3 million on each of the first 5 anniversaries of the Garcia Effective Date (the “Garcia Deferred Cash Award”), so long as Mr. Garcia remains employed with the Company on each applicable payment date, subject to earlier payment as described below.
Mr. Garcia is also eligible to participate in other benefit and perquisites plans generally made available to the Company’s other senior executives at his level.
Upon termination of Mr. Garcia’s employment due to his death or disability, Mr. Garcia will be eligible to receive: (i) his annual bonus with respect to the year prior to the year of termination (if not already paid as of the termination date) (the “Garcia Prior-Year Bonus”); (ii) his annual bonus with respect to the year of termination, based on actual performance and pro-rated for the number of days actually worked during such year (the “Garcia Pro-Rated Bonus”); and (iii) payment in respect of any outstanding LTIP awards, based on actual performance and pro-rated for the number of days actually worked during the applicable performance period (the “Garcia Pro-Rated LTIP”). Under such circumstances, any unvested portion of the Garcia Restricted Stock Grant will vest or, if being paid in lieu of the Garcia Restricted Stock Grant, the remaining unpaid portion of the Garcia Deferred Cash Award will be paid in full no later than March 15 of the year following the year in which any such termination occurs (as applicable, the “Garcia Restricted Stock Vesting” or the “Garcia Deferred Cash Payment”).
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In the event Mr. Garcia resigns for “good reason” or in the event the Company terminates Mr. Garcia’s employment without “cause” (but for reasons other than death, disability or non-renewal of the Garcia Employment Agreement), Mr. Garcia will receive the payments and benefits described above. In addition, the Company will pay Mr. Garcia an amount equal to 2 times the sum of (i) his annual base salary and (ii) an amount equal to the annual bonus paid to him for the year prior to the year of termination (such amount, the “Garcia Cash Severance”). The Garcia Cash Severance will be paid in equal installments over the 24-month period following Mr. Garcia’s termination of employment; provided that payments in the second 12-month period are subject to reduction for any compensation that Mr. Garcia earns as an employee or consultant during that period (with certain exceptions). The Company will also contribute to costs of premiums owed in respect of Mr. Garcia’s continuation of health coverage pursuant to COBRA for the 24-month period following Mr. Garcia’s termination or, if earlier, the date on which Mr. Garcia becomes eligible for coverage under the plans of a subsequent employer or is no longer eligible to receive benefits pursuant to COBRA (the “Garcia COBRA Benefits”).
Upon a “change of control,” the term of the Garcia Employment Agreement would be extended for 24 months from the effective date of such change of control (if such extended date would be longer than the expiration of the existing employment term) (such period, the “Garcia Extended Period”). If during the Garcia Extended Period Mr. Garcia terminates his employment for “COC good reason” (as defined in the Garcia Employment Agreement) or if the Company terminates his employment other than for “cause,” he would receive in a lump sum: (a) 2 times the sum of (i) his base salary and (ii) his average gross annual bonus earned over the previous 5 years (or a lesser period based on the period for which Mr. Garcia was employed by the Company); and (b) the Garcia COBRA Benefits. Mr. Garcia would also receive the Garcia Prior-Year Bonus, the Garcia Pro-Rated Bonus, the Garcia Pro-Rated LTIP and the Garcia Restricted Stock Vesting or the Garcia Deferred Cash Payment, as applicable. Any such payment would not be subject to reduction for any compensation that Mr. Garcia earns as an employee or consultant following termination.
Upon any termination of employment, Mr. Garcia will be subject to non-compete restrictions for 1 year following the date of termination (or, if terminated without “cause” or for “good reason” or “COC good reason”, for 2 years following the date of termination) (either such period, the “Garcia Restricted Period”); provided that the non-compete shall only apply following the expiration of the employment term if the Company so elects and continues to pay Mr. Garcia his base salary for the 1-year period. Mr. Garcia will also be subject to non-solicitation restrictions with respect to employees, customers and vendors during the Garcia Restricted Period. The Company’s obligation to provide the payments and benefits described above are subject to Mr. Garcia’s continued compliance with such non-competition and non-solicitation restrictions during the Garcia Restricted Period.
Employment Agreement with Juan R. Figuereo Entered into Following the End of Fiscal 2015
On April 12, 2016 (“Figuereo Effective Date”), the Company and Products Corporation entered into an employment agreement with Mr. Figuereo (the “Figuereo Employment Agreement”), which, among other things, provides that Mr. Figuereo will serve as the Company’s Executive Vice President and Chief Financial Officer at an annual base salary of not less than $600,000, with a target annual bonus under the Incentive Compensation Plan of 75% of his base salary, with the possibility of exceeding such amount based upon the Company’s and/or Mr. Figuereo’s over-achievement of their respective objectives. During his employment with the Company, Mr. Figuereo is eligible to participate in the Company’s LTIP programs under the Incentive Compensation Plan, subject to Compensation Committee approval. In addition, the Company approved the following LTIP award opportunities for Mr. Figuereo: (i) a $500,000 target award under the Company’s 2016 LTIP (payable in March 2019 based on the extent to which the Company achieves certain performance metrics over 2016, 2017 and 2018); (ii) a $333,333 target award under the Company’s 2016-2017 Transitional LTIP (payable in March 2018 based on the extent to which the Company achieves certain performance metrics over 2016 and 2017); and (iii) a target award of $166,667 under the Company’s 2016 Transitional LTIP (payable in March 2017 based on the extent to which the Company achieves certain performance metrics during 2016).
On the first anniversary of the Figuereo Effective Date (the “Figuereo Grant Date”), Revlon will grant to Mr. Figuereo restricted shares of Revlon Class A Common Stock, with the number of shares being in an amount equal to $3,750,000 divided by the NYSE closing price of Revlon Class A Common Stock on the Figuereo Effective Date (the “Figuereo Restricted Stock Grant”). One-fifth of the Figuereo Restricted Stock Grant will be vested on the Figuereo Grant Date, with the remaining four-fifths vesting ratably on each of the first 4 anniversaries of the Figuereo
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Grant Date. In lieu of making the Figuereo Restricted Stock Grant, the Board of Directors of Revlon may, at its election based on the occurrence of certain events impacting the price of Revlon’s Class A Common Stock, choose to pay Mr. Figuereo $1,125,000 on each of the first 5 anniversaries of the Figuereo Effective Date (the “Figuereo Deferred Cash Award”).
Vesting of the Figuereo Restricted Stock Grant and the Figuereo Deferred Cash Award, as applicable, is generally subject to Mr. Figuereo’s continuous employment with the Company on each applicable vesting or payment date. However, his award is subject to earlier vesting or payment, as applicable, upon the occurrence of a “change of control” or upon a termination by the Company “without cause” (as such terms are defined in the Figuereo Employment Agreement) following certain corporate transactions.
Mr. Figuereo is entitled to participate in other benefit plans generally made available to the Company’s other senior executives at his level, including a $30,000 per annum car allowance and a $10,000 per annum financial counseling and tax preparation allowance. The Company will also pay or reimburse Mr. Figuereo for the reasonable costs that he incurs in connection with his relocation to the greater New York City area.
While the term of the Figuereo Employment Agreement is indefinite, it may be terminated by the Company on 12 months’ notice, or sooner pursuant to certain termination provisions in the Figuereo Employment Agreement. If Mr. Figuereo (i) terminates his employment as a result of RCPC’s “material breach” of the Figuereo Employment Agreement or (ii) is terminated by the Company for any reason other than for “cause,” death or disability, he would be eligible to receive the greater of (a) 12 months’ separation pay and benefits and (b) the benefits provided under the Company’s Executive Severance Pay Plan. The Executive Severance Pay Plan currently provides for base salary continuation for 12 months, plus an additional 2 weeks of base salary for each full year of service with the Company, up to a total of 18 months.
Upon a change of control, the term of the Figuereo Employment Agreement would be extended for 24 months from the effective date of such change of control and if, within such period, Mr. Figuereo terminated his employment for “COC good reason” or if the Company terminated his employment other than for “cause,” he would receive: (i) two times the sum of (a) his base salary and (b) his average gross bonus earned over the previous five years; (ii) 24 months’ continuation of fringe benefits; and (iii) all of his unvested restricted shares, if any, would immediately vest.
Mr. Delpani
Under his employment agreement, if Mr. Delpani had been terminated without “cause” on December 31, 2015 and (i) the Company did not elect to enforce the 24-month non-compete provision, the estimated aggregate total of termination benefits during the maximum severance period of 30 days would have been approximately $1,304,851, consisting of the following: (a) $100,000, representing 30 days’ of Mr. Delpani’s annual base salary on December 31, 2015; (b) $1,200,000, representing Mr. Delpani’s 2015 target bonus, subject to adjustment based on the Company’s 2015 achievement under the terms of the 2015 Annual Bonus Program (as noted above, Mr. Delpani’s actual bonus for 2015 was $2,160,000); (c) approximately $413, representing the cost of 30 days of life insurance coverage; and (d) approximately $4,438, representing the cost of 30 days of medical and dental insurance coverage; and (ii) the Company had elected to enforce the non-compete provision for the maximum 24-month period, the estimated aggregate total of termination benefits during the maximum severance period of 24 months would have been approximately $2,516,413, consisting of the following: (a) $1,200,000, representing two times 50% of Mr. Delpani’s annual base salary on December 31, 2015; (b) $1,200,000, representing Mr. Delpani’s 2015 target bonus, subject to adjustment based on the Company’s 2015 achievement under the terms of the 2015 Annual Bonus Program (as noted above, Mr. Delpani’s actual bonus for 2015 was $2,160,000); (c) approximately $9,907, representing the cost of 24 months of life insurance coverage; and (d) approximately $106,506, representing the cost of 24 months of medical and dental insurance coverage. Mr. Delpani’s severance payments would have been conditional on his compliance with the Company’s standard confidentiality and non-competition provisions during any such severance period. See the description of the Delpani TSA under “Employment Agreements – Mr. Delpani,” above.
Mr. Pieraccioni
Under his employment agreement, if Mr. Pieraccioni had been terminated without “cause” on December 31, 2015, the estimated aggregate total of termination benefits during a severance period of 12 months would have been approximately $1,121,977, consisting of the following: (a) $623,077, representing Mr. Pieraccioni’s annual base
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salary on December 31, 2015 for the 12-month severance period; (b) $450,000, representing Mr. Pieraccioni’s 2015 target bonus, subject to adjustment based on the Company’s and Mr. Pieraccioni’s level of achievement under the terms of the 2015 Annual Bonus Program (as noted above, Mr. Pieraccioni’s actual bonus for 2015 was $810,000); (c) approximately $2,572, representing the cost of 12 months and 2 weeks of life insurance coverage; and (d) approximately $46,328, representing the cost of 12 months and 2 weeks of group medical, dental and vision insurance coverage. The Company’s obligation to make such payments and benefits would be conditioned on Mr. Pieraccioni’s execution of a valid release of claims and his continued compliance with the Company’s Employee Agreement as to Confidentiality and Non-Competition.
Mr. Simon
Under his employment agreement, if Mr. Simon had been terminated without “cause” on December 31, 2015, the estimated aggregate total of termination benefits during a severance period of 18 months would have been approximately $1,353,715, consisting of the following: (a) $900,000, representing Mr. Simon’s annual base salary on December 31, 2015 for the 18-month severance period; (b) $450,000, representing Mr. Simon’s 2015 target bonus, subject to adjustment based on the Company’s 2015 achievement under the terms of the 2015 Annual Bonus Program (as noted above, Mr. Simon’s actual bonus for 2015 was $810,000); and (c) approximately $3,715, representing the cost of 18 months of life insurance coverage.
Mr. Delpani
Mr. Delpani ceased employment with the Company effective March 31, 2016, and not following a “change of control”. For a summary of Mr. Delpani’s remaining “change of control” benefits, see the description of the Delpani TSA under “Employment Agreements” above.
As per Mr. Delpani’s employment agreement, the estimated aggregate total of benefits that would have been payable upon a “change of control” and if thereafter Mr. Delpani had been terminated on December 31, 2015 would have been approximately $16,646,946, consisting of the following: (a) $2,400,000, representing 2 times his $1,200,000 annual base salary on December 31, 2015; (b) $2,609,947, representing 2 times his average 5-year bonus; (c) approximately $15,900, representing 2 years of contributions under the Company’s 401(k) Plan; (d) approximately $108,000, representing 2 years of profit sharing contributions under the 401(k) Plan; (e) approximately $9,907, representing the cost of 24 months of life insurance coverage; (f) approximately $106,506, representing the cost of 24 months of group medical and dental insurance coverage; (g) $60,000, representing 24 months of annual car allowance; (h) $20,000, representing 24 months of tax preparation and financial counseling allowance; and (i) approximately $7,316,686, representing the fair market value attributable to the accelerated vesting of his 262,812 shares of unvested restricted stock, based on the NYSE closing market price per share of $27.84 on December 31, 2015. Upon a “change of control” without the successor entity assuming or otherwise continuing the terms of the LTIP, Mr. Delpani also would have been entitled to the payout of the remaining unpaid portion of his previously earned LTIP awards, to be paid at target on a pro-rated basis, in the aggregate amount as of December 31, 2015 of $4,000,000, consisting of: (i) $2,000,000, representing 100% of his $2,000,000 2014 Transitional LTIP (based on 2 years completed of the 2 1-year (2014-2015) performance periods); (ii) $1,333,333, representing 67% of his $2,0000,000 2014 LTIP (based on 2 years completed of the 3 1-year (2014-2016) performance periods); (ii) and (iii) $666,667, representing 33% of his $2,000,000 2015 LTIP (based on 1 year completed of the 3 1-year (2015-2017) performance periods).
Mr. Pieraccioni
Under the Pieraccioni Amended Employment Agreement, in the event of any “change of control,” the terms of his employment agreement would be extended for an additional 24 months from the effective date of any such “change of control.” The Pieraccioni Amended Employment Agreement also provides that if, within this 24-month period, he were to terminate his employment with the Company for “COC good reason” (as defined under the Pieraccioni Amended Employment Agreement) or if the Company were to terminate his employment other than for “cause,” he would receive: (i) a lump-sum payment equal to two times the sum of (a) his base salary and (b) his average gross bonus earned over the five calendar years prior to termination; and (ii) 24 months of continuation of all fringe benefits in which he participated on the “change of control” effective date or, in lieu of such benefits, a lump-sum cash payment equal to the value of such benefits. The Pieraccioni Amended Employment Agreement also provides that,
40
in the event of a “change of control,” all then-unvested stock options and restricted shares held by him shall immediately vest and become fully exercisable. Mr. Pieraccioni does not hold any unvested options. For information on unvested shares of restricted stock held by the Name Executive Officers, see the “Summary Compensation Table” and “Outstanding Equity Awards at Fiscal Year-End,” above.
Under the Incentive Compensation Plan, if, in connection with a “change of control,” a successor entity assumes the LTIP, does not terminate the LTIP or provides participants with comparable LTIP benefits, then outstanding LTIP awards remain payable in accordance with their terms. Otherwise, upon a “change of control,” LTIP awards related to the performance period when any “change of control” event occurs are to be paid at target on a pro-rated basis (based on the number of days elapsed with respect to the applicable LTIP performance period) within 60 days following such “change of control,” and (ii) LTIP awards related to prior performance periods as to which the respective performance objectives were achieved, but for which payments remain outstanding, are to be paid within 60 days following any such “change of control.”
The estimated aggregate total of benefits upon a “change of control” and subsequent termination if Mr. Pieraccioni had been terminated on December 31, 2015 would have been approximately $5,512,256, consisting of the following: (a) $1,200,000, representing 2 times his $600,000 annual base salary on December 31, 2015; (b) $1,229,220, representing 2 times his average 5-year bonus; (c) approximately $15,900, representing the cost of 2 years of contributions under the Company’s 401(k) Plan; (d) approximately $54,000 in respect of 2 years of profit sharing contributions under the 401(k) Plan; (e) approximately $4,954, representing the cost of 24 months of life insurance coverage; (f) $60,000, representing 24 months of car allowance; (h) $20,000, representing 24 months of tax preparation and financial counseling allowance; (i) approximately $89,226, representing the cost of 24 months of group medical and dental insurance coverage; and (j) $2,838,956, representing the fair market value attributable to the accelerated vesting of his 101,974 shares of unvested restricted stock that were outstanding as of December 31, 2015 (excluding the 32,082 restricted shares that he was granted on February 25, 2016), based on the NYSE closing market price per share of $27.84 on December 31, 2015. Upon a “change of control” without the successor entity assuming or otherwise continuing the terms of the LTIP, Mr. Pieraccioni also would be entitled to the payout of the remaining unpaid portion of his previously earned LTIP awards, to be paid at target on a pro-rated basis, in the amount of $833,333, consisting of: (i) $333,333, representing the remaining two-thirds portion of his $500,000 2014 Transitional LTIP (based on its 2-year performance period (i.e., 2014 and 2015)) (which award was in fact paid in March 2016); (ii) $333,333, representing two-thirds of his $500,000 2014 LTIP (based on 2 years completed of the 3-year performance period (i.e., 2014, 2015 and 2016)); and (iii) $166,667, representing one-third of his $500,000 2015 LTIP (based on 1 year completed of the 3-year performance period (i.e., 2015, 2016 and 2017)).
Mr. Simon
Mr. Simon ceased employment with the Company on February 29, 2016, and not following a “change of control.”
As per Mr. Simon’s employment agreement, the estimated aggregate total of benefits that would have been payable upon a “change of control” and if thereafter Mr. Simon had been terminated on December 31, 2015 would have been approximately $5,209,749, consisting of the following: (a) $1,200,000, representing 2 times his $600,000 annual base salary on December 31, 2015; (b) $915,048, representing 2 times his average 5-year bonus; (c) approximately $15,900, representing 2 years of contributions under the Company’s 401(k) Plan; (d) approximately $54,000 in respect of 2 years of profit sharing contributions under the 401(k) Plan; (e) approximately $4,954, representing the cost of 24 months of life insurance coverage; (f) $60,000, representing 24 months of car allowance; (g) $20,000, representing 24 months of tax preparation and financial counseling allowance; and (h) approximately $2,106,514, representing the fair market value attributable to the accelerated vesting of his 75,665 shares of unvested restricted stock, based on the NYSE closing market price per share of $27.84 on December 31, 2015. Upon a “change of control” without the successor entity assuming or otherwise continuing the terms of the LTIP, Mr. Simon also would be entitled to the payout of the remaining unpaid portion of his previously earned LTIP awards, to be paid at target on a pro-rated basis, in the amount as of December 31, 2015 of $833,333, consisting of: (i) $333,333, representing 100% of the second tranche of his $500,000 2014 Transitional LTIP (based on 2 years completed of the 2 1-year performance periods (2014 and 2015)); (ii) $333,333, representing 2-thirds of his $500,000 2014 LTIP (based on 2 years completed of the 3 1-year (2014-2016) performance periods); and (iii) $166,667, representing one-third of his $500,000 2015 LTIP (based on one year completed of the 3 1-year (2015-2017) performance periods).
41
The following tables present information about the target amounts of the non-equity, plan-based awards that were granted to the 2015 NEOs in the last completed fiscal year. The actual payout of such awards requires the satisfaction of certain performance objectives by the Company and the 2015 NEOs and other conditions. For amounts actually paid in respect of 2015, see the “Summary Compensation Table,” above. For additional factors relevant to an understanding of the below tables and the 2015 Incentive Compensation Programs, including funding levels for payouts in respect of 2015 performance, see the “Compensation Discussion and Analysis,” above.
The Compensation Committee, at management’s recommendation, approved the award of performance-based LTIPs under the 2015 Incentive Compensation Programs to eligible NEOs covering the 2015 performance period. Prior to approving such awards, the Compensation Committee approved the structure of the 2015 Incentive Compensation Programs, as well as performance targets applicable to both the Company and each of the NEOs. Amounts earned are based upon the Company’s degree of achievement of its respective performance targets for the applicable performance periods and the NEO’s achieving at least a target performance rating under the Company’s management assessment process for each year covered by the LTIP’s performance period. The Compensation Committee reviews and certifies management’s assessment of the extent to which both the Company and each of the NEOs achieved their respective performance targets, prior to the Compensation approving the payment of the award amounts.
Name |
Estimated Possible Future Payouts Under Non-Equity Incentive Plans (2015 LTIP)(1) |
|||||||||
Threshold |
Target |
Maximum |
2015 LTIP Payout Dates |
|||||||
Lorenzo Delpani(2) |
$ | 0 | $ | 2,000,000 | $ | 3,000,000 | March 2018 |
|||
Former President & Chief Executive Officer |
||||||||||
Gianni Pieraccioni |
$ | 0 | $ | 500,000 | $ | 750,000 | March 2018 |
|||
Executive Vice President and Chief Operating Officer |
||||||||||
Roberto Simon(3) |
$ | 0 | $ | 500,000 | $ | 750,000 | March 2018 |
|||
Former EVP & Chief Financial Officer |
||||||||||
| (1) | Awards under the 2015 LTIP pursuant to the Incentive Compensation Plan are structured as flat dollar amounts that could be earned based upon the average degree of the Company’s achievement of its applicable performance targets over 3 1-year performance periods (i.e., 2015, 2016 and 2017), conditioned on the NEO achieving at least a target performance rating under the Company’s management review process, subject to management’s assessment of such performance being reviewed and certified by the Compensation Committee. Under the 2015 LTIP, the eligible NEOs are eligible to receive payment of their 2015 LTIP award in one installment in March 2018, conditioned on their remaining employed with the Company on the payout date, unless provided otherwise in his employment agreement (see “Employment Agreements and Payments Upon Termination and Change of Control”) and achieving during each year of the 2015 LTIP’s performance period at least a target performance rating under the Company’s management review process, subject to management’s assessment of such performance being reviewed and certified by the Compensation Committee. Pursuant to its terms, the 2015 LTIP is not funded, and no award is payable, if the Company achieves less than 90% of its applicable Adjusted EBITDA performance targets and FCF performance targets and less than 96% of its net sales performance targets, on average over the 3-year performance period. The 2015 LTIP is funded at the “Target” level if the Company achieves 100% of its applicable Adjusted EBITDA, FCF and net sales performance targets, on average over the 3-year performance period (represented by the “Threshold” column, above). The 2015 LTIP is funded at 150% of the “Target” level if the Company achieves 110% of its applicable Adjusted EBITDA and FCF performance targets and 102% of its applicable net sales performance targets, on average over the 3-year performance period (represented by the “Maximum” column, above). The Company’s corporate performance targets under the 2015 LTIP are based upon average degree of the Company’s achievement of its performance targets over 3 1-year periods (i.e., 2015, 2016 and 2017), as to: (1) Adjusted EBITDA (which for 2015 includes the 2015 EBITDA Performance Target), weighted at 50%; (2) net sales (which for 2015 includes the 2015 Net Sales Performance Target), weighted at 25%; and (3) FCF (which for 2015 includes the 2015 FCF Performance Target), weighted at 25%. For additional information about the 2015 LTIP, see “Compensation Discussion and Analysis – Incentive Compensation: Long-Term Cash Compensation,” above. |
42
| (2) | Under the Delpani TSA, Mr. Delpani’s outstanding 2015 LTIP awards were cancelled and forfeited upon his separation. |
| (3) | Under Mr. Simon’s Separation Agreement, his outstanding 2015 LTIP awards were cancelled and forfeited upon his separation. |
As noted above, the below amounts do not represent actual amounts paid to the 2015 NEOs under the 2015 Annual Bonus Program. See “Summary Compensation Table,” above, for actual amounts earned by the 2015 NEOs in respect of 2015.
Name |
2015 Annual Bonus Program(4) |
||||||||
Threshold |
Target |
Maximum |
|||||||
Lorenzo Delpani(5) |
$ | 0 | $ | 1,200,000 | $ | 1,800,000 | |||
Former President & Chief Executive Officer |
|||||||||
Gianni Pieraccioni(6) |
$ | 0 | $ | 450,000 | $ | 675,000 | |||
Executive Vice President and Chief Operating Officer |
|||||||||
Roberto Simon(7) |
$ | 0 | $ | 450,000 | $ | 675,000 | |||
Former EVP & Chief Financial Officer |
|||||||||
| (4) | The amounts under this column represent the threshold, target and maximum payouts for annual cash bonuses under the 2015 Annual Bonus Program, based on 2015 performance against pre-established performance measures. The amount under the “Target” column represents the target award opportunity, which is set as a percentage of base salary under the 2015 NEOs’ respective employment agreements. Pursuant to its terms, the 2015 Annual Bonus Program would not be funded, and no award would be payable, if the Company achieved less than 90% of its 2015 Adjusted EBITDA Performance Target, less than 96% of its 2015 Net Sales Performance Target and 108% or more of its 2014 NWCR Performance Target (represented by the “Threshold” column, above). The 2015 Annual Bonus Program was eligible to be funded at the “Target” level if the Company had achieved 100% of its 2015 Adjusted EBITDA Performance Target, 2015 Net Sales Performance Target and 2015 NWCR Performance Target. The 2015 Annual Bonus Program was eligible to be funded at 150% of the “Target” level if the Company achieved 110% of its 2015 Adjusted EBITDA Performance Target, 102% of its 2015 Net Sales Performance Target and 96% of its 2015 NWCR Performance Target (represented by the “Maximum” column, above). Also, the actual bonus payments under the 2015 Annual Bonus Program could flex between 80% to 120% of the adjusted target amounts, based on, in the case of the 2015 NEOs, the Compensation Committee’s review and certification of management’s assessment of the 2015 NEO’s individual performance rating under the Company’s annual management review process, including performance factors approved by the Compensation Committee in March 2015 for the 2015 NEOs. For additional information about the 2015 Annual Bonus Program, see “Compensation Discussion and Analysis – Incentive Compensation: Annual Cash Bonus,” above. Also, see the “Summary Compensation Table” above for quantification of the 2015 Annual Bonus awards paid to each of the 2015 NEOs in respect of the 2015 performance year. |
| (5) | Consistent with the Delpani TSA, Mr. Delpani’s annual bonus target award opportunity was paid in March 2016 subject to the terms and conditions of the 2015 Annual Bonus Program. See the “Summary Compensation Table” above for quantification of the 2015 Annual Bonus Program award paid to Mr. Delpani for the 2015 performance year. |
| (6) | Pursuant to the Pieraccioni Amended Employment Agreement, in April 2015 Mr. Pieraccioni received a one-time bonus of $100,000 in recognition of his completing one year of service to the Company. Under the Pieraccioni Amended Employment Agreement, Mr. Pieraccioni is eligible to participate in the Company’s annual bonus programs as in effect from time to time, with a target bonus of 100% of his base salary (which target for 2015 was 75% of his base salary). |
| (7) | Consistent with his Separation Agreement, Mr. Simon’s annual bonus target award opportunity was paid in March 2016 subject to the terms and conditions of the 2015 Annual Bonus Program. As noted above, in March 2016 Mr. Simon received a $350,000 supplemental payment, in recognition of his effective management of the Company’s financial, accounting and treasury functions through his departure date, including overseeing the close of the Company’s 2015 fiscal year-end reporting process. |
43
During 2015, the Compensation Committee approved a grant of restricted shares of the Company’s Class A Common Stock under the Stock Plan to Mr. Pieraccioni (as described in the table below), as well as to certain other key members of the Company’s senior management leadership team. The 2015 Restricted Stock Grants were designed to provide their participants with a strong retention incentive and a significant stake in Revlon’s long-term success, while aligning the interests of management with shareholder interests. Provided Mr. Pieraccioni remains employed by the Company on each such vesting date, his 2015 Restricted Stock Grant vests in 4 equal installments over 4 years, and in full upon any “change of control.” Mr. Pieraccioni had his first one-fourth vesting event on March 15, 2016. Mr. Pieraccioni is required to retain such shares, even after they vested, so long as he remains employed by the Company.
The grant date fair values stated in the table below reflect the number of shares of restricted stock granted during 2015 to the 2015 NEOs multiplied by the NYSE closing market price of the Company’s Class A Common Stock on the grant date.
Name |
Grant Date |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
NYSE closing market price of grant date |
All Other Option Awards: Number of Securities Underlying Options (#)(a) |
Grant Date Fair Value of Stock and Option Awards ($)(b) |
||||||||||
Gianni Pieraccioni |
December 10, 2015 |
36,271 | $ | 27.57 | — | 999,991(c | ) |
||||||||
Executive Vice President and Chief Operating Officer |
|||||||||||||||
| (a) | None of the 2015 NEOs received stock option awards during 2015 or at any other time. |
| (b) | Amounts shown in this column reflect the aggregate grant date fair value of restricted stock awards determined in accordance with FASB ASC Topic 718. |
| (c) | Mr. Pieraccioni’s restricted stock grant during 2015 was previously publicly reported on a Form 4 filed with the SEC on December 11, 2015. One-fourth of the restricted shares granted to Mr. Pieraccioni vested on March 15, 2016 and the remaining restricted shares vest in equal installments on March 15, 2017, March 15, 2018 and March 15, 2019, and in full upon any “change of control.” |
In connection with his election as the Company’s Executive Vice President and Chief Operating Officer on February 25, 2016, Mr. Pieraccioni received a restricted stock grant of 32,082 shares of Revlon, Inc. Class A Common Stock during 2016 which is not included in the table above. This 2016 grant was previously publicly reported in the Company’s 2015 Form 10-K and on a Form 4 filed with the SEC on February 29, 2016. One-fourth of the restricted shares granted to Mr. Pieraccioni in 2016 vested on March 15, 2016 and the remaining 2016 restricted shares vest in equal installments on March 15, 2017, March 15, 2018 and March 15, 2019, and in full upon any “change of control.”
No dividends are payable on unvested shares of restricted stock. As of December 31, 2015, all of the restricted shares listed in the table above were unvested and therefore had no realizable monetary value as of that date. As noted above, one-fourth of Mr. Pieraccioni’s 2015 Restricted Stock Grant vested after December 31, 2015, on March 15, 2016.
44
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth certain information regarding equity awards in the form of restricted stock of the Company’s Class A Common Stock held by the 2015 NEOs under the Company’s Stock Plan which had not vested and remained outstanding as of December 31, 2015.
Option Awards |
Stock Awards |
||||||||||||||||||||||||||
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#)(a) |
Market Value of Shares or Units of Stock That Have Not Vested ($)(b) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
||||||||||||||||||
Lorenzo Delpani |
— | — | — | — | — | 262,812 | $ | 7,316,686 | — | — | |||||||||||||||||
Former President and Chief Executive Officer |
|||||||||||||||||||||||||||
Gianni Pieraccioni |
— | — | — | — | — | 101,974 | $ | 2,838,956 | — | — | |||||||||||||||||
Executive Vice President and Chief Operating Officer |
|||||||||||||||||||||||||||
Roberto Simon |
— | — | — | — | — | 75,665 | $ | 2,106,513 | — | — | |||||||||||||||||
Former Executive Vice President and Chief Financial Officer |
|||||||||||||||||||||||||||
| (a) | For Mr. Delpani, the 328,515 restricted shares of Revlon, Inc. Class A common stock were scheduled to vest ratably over 5 consecutive years on March 15th of each such year, beginning on March 15, 2015. One-fifth of his 328,515 restricted shares (i.e., 65,703 shares) vested on March 15, 2015. Pursuant to the Delpani TSA, in April 2016 the Company repurchased from Mr. Delpani his 72,895 vested shares of Revlon, Inc. Class A common stock for an aggregate purchase price of $2,684,722, based on the $36.83 NYSE closing price on April 20, 2016. The Company also paid Mr. Delpani $1,600,000 as consideration for cancelling his 65,703 restricted shares of Revlon, Inc. Class A common stock that were otherwise scheduled to vest on March 15, 2017. The remaining balance of Mr. Delpani’s 2014 Restricted Stock Grant (i.e., the tranches that were otherwise scheduled to vest in March 2018 and 2019 (i.e., 131,406 shares in the aggregate)) were cancelled and forfeited upon the cessation of his employment with the Company on March 31, 2016. |
For Mr. Pieraccioni, his restricted shares are scheduled to vest in 4 equal installments on March 15, 2016 (which shares have vested), March 15, 2017, March 15, 2018 and March 15, 2019. On February 25, 2016, in connection with his election as the Company’s Executive Vice President and Chief Operating Officer, Mr. Pieraccioni was granted an additional 32,082 shares of restricted stock, which shares vest in 4 equal installments on March 15, 2016 (which shares have vested), March 15, 2017, March 15, 2018 and March 15, 2019.
For Mr. Simon, pursuant to his Separation Agreement, one-fifth of his restricted shares set forth under the “Number of Shares or Units of Stock That Have Not Vested” column (i.e., 15,133 shares) vested after December 31, 2015 on March 15, 2016, and remaining balance of his restricted shares that were otherwise scheduled to vest on March 15 of 2017, 2018, 2019 and 2020 (i.e., 60,532 shares in the aggregate) were cancelled and forfeited after his separation from employment.
| (b) | The market value of the restricted shares identified in the table above is based on the $27.84 per share NYSE closing market price of the Company’s Class A Common Stock on December 31, 2015. No dividends are payable on unvested shares of restricted stock. |
45
OPTION EXERCISES AND STOCK VESTED
The following table sets forth the value of restricted stock held by the 2015 NEOs which vested during 2015, with the value determined by multiplying the number of shares that vested during 2015 by the NYSE closing market price of the Company’s Class A Common Stock on the applicable vesting date. None of the NEOs hold any stock options, nor has the Company ever granted any stock options to them.
Option Awards |
Stock Awards |
|||||||||||
Name |
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#)(a) |
Value Realized on Vesting ($)(b) |
||||||||
Lorenzo Delpani |
— | — | 65,703 | 2,341,655 | ||||||||
Former President and Chief Executive Officer |
||||||||||||
Gianni Pieraccioni |
— | — | 16,425 | 585,387 | ||||||||
Executive Vice President and Chief Operating Officer |
||||||||||||
Roberto Simon |
— | — | — | — | ||||||||
Former Executive Vice President and Chief Financial Officer |
||||||||||||
| (a) | 65,703 shares of Mr. Delpani’s restricted stock vested on March 15, 2015. Of this amount, 27,563 shares were withheld by the Company to cover tax withholding obligations; such withheld shares were not sold on the open market and became Company treasury shares. Pursuant to the Delpani TSA, in April 2016 the Company repurchased from Mr. Delpani his 72,895 vested shares of Revlon, Inc. Class A common stock for an aggregate purchase price of $2,684,722, based on the $36.83 NYSE closing price on April 20, 2016. The Company also paid Mr. Delpani $1,600,000 as consideration for cancelling his 65,703 restricted shares of Revlon, Inc. Class A common stock that were otherwise scheduled to vest on March 15, 2017. The remaining balance of Mr. Delpani’s 2014 Restricted Stock Grant (i.e., the tranches that were otherwise scheduled to vest in March 2018 and 2019 (i.e., 131,406 shares in the aggregate)) were cancelled and forfeited upon the cessation of his employment with the Company on March 31, 2016. |
16,425 shares of Mr. Pieraccioni’s restricted stock vested on March 15, 2015. Of this amount, 9,169 shares were withheld by the Company to cover tax withholding obligations; such withheld shares were not sold on the open market and became Company treasury shares.
| (b) | The NYSE closing market price of the Company’s Class A Common Stock on March 13, 2015 (as the March 15, 2015 vesting date was a Sunday) was $35.64 per share. |
46
The following table shows, as of December 31, 2015, the number of years of credited service under the Company’s pension plans, and the present value of accumulated benefit and payments during the last fiscal year, with respect to each NEO who has any pension benefits. As described below, Messrs. Delpani, Pieraccioni and Simon do not have any pension benefits, as they joined the Company after the Company’s pension plans (namely, the Revlon Employees’ Retirement Plan (as amended, the “Retirement Plan”) and the Amended and Restated Revlon Pension Equalization Plan (the “PEP”)) were frozen effective December 31, 2009.
Name |
Plan Name |
Number of Years of Credited Service (#) |
Present Value of Accumulated Benefit ($) |
Payments During 2015 ($) |
||||||
Lorenzo Delpani |
Retirement Plan |
— | — | — | ||||||
Former President and Chief Executive Officer |
PEP |
— | — | — | ||||||
Gianni Pieraccioni |
Retirement Plan |
— | — | — | ||||||
Executive Vice President and Chief Operating Officer |
PEP |
— | — | — | ||||||
Roberto Simon |
Retirement Plan |
— | — | — | ||||||
Former Executive Vice President & Chief Financial Officer |
PEP |
— | — | — | ||||||
47
NON-QUALIFIED DEFERRED COMPENSATION
As previously noted, the Company “froze” its U.S. qualified and non-qualified defined benefit retirement plans (i.e., the Retirement Plan and the PEP) to cease future benefit accruals under such plans after December 31, 2009. The Company also amended its qualified and non-qualified savings plans effective January 1, 2010 to enable the Company, on a discretionary basis, to make profit-sharing contributions (equal to 3% of eligible compensation for 2015) to the qualified plan and, to the extent eligible compensation exceeds IRS limits, to the Excess Savings Plan, a non-qualified, defined contribution plan.
The Excess Savings Plan provides for substantially the same investment choices as are available in the Company’s qualified 401(k) Plan. The Excess Savings Plan does not provide for above-market returns. Payments of participant balances under the Excess Savings Plan commence in accordance with the applicable provisions of the Excess Savings Plan after termination of a participant’s employment and may be paid in either annual installments over a period of no more than 10 years or as a single lump-sum payment, as elected by the participant.
Amounts shown in the table below reflect discretionary Company contributions made under the discretionary employer profit-sharing provisions of the Excess Savings Plan during 2015, as well as total account balances, inclusive of investment returns, as of December 31, 2015.
Name |
Executive Contributions in 2015 ($) |
Registrant Contributions for 2015 ($)(a) |
Aggregate Earnings in 2015 ($)(b) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at 12/31/15 ($)(c) |
||||||||||
Lorenzo Delpani |
0 | 46,050 | (1,172 | ) |
0 | 79,026 | |||||||||
Former President and Chief Executive Officer |
|||||||||||||||
Gianni Pieraccioni |
0 | 19,050 | (299 | ) |
0 | 13,905 | |||||||||
Executive Vice President and Chief Operating Officer |
|||||||||||||||
Roberto Simon |
0 | 19,050 | (432 | ) |
0 | 18,133 | |||||||||
Former Executive Vice President & Chief Financial Officer |
|||||||||||||||
| (a) | These amounts represent discretionary employer contributions credited under the profit-sharing provisions of the Excess Savings Plan in respect of 2015 (including those credited during January 2016 in respect of 2015). |
Amounts reported under “Registrant Contributions for 2015” are also included in the amounts shown under the “All Other Compensation” column in the Summary Compensation Table.
| (b) | Amounts reported under “Aggregate Earnings in 2015” are not reported in the Summary Compensation Table. |
| (c) | These amounts represent actual account balances at year end, and do not reflect the portion of the 2015 discretionary employer contributions credited during 2016, nor the earnings on such contributions credited during 2016. The Company has contributed funds to a rabbi trust equal to the Excess Savings Plan’s liabilities. |
48
The following Director Compensation table shows all compensation paid by the Company in respect of 2015 to its Directors who served on the Board during 2015:
Name (a) |
Fiscal Year |
Fees Earned or Paid in Cash ($)(b) |
All Other Compensation ($)(c) |
Total ($) |
||||||||
Alan S. Bernikow |
2015 | 174,891 | 25,000 | 199,891 | ||||||||
Diana Cantor |
2015 | 69,551 | — | 69,551 | ||||||||
Lorenzo Delpani |
2015 | — | — | — | ||||||||
Viet D. Dinh |
2015 | 148,736 | 25,000 | 173,736 | ||||||||
Meyer Feldberg |
2015 | 153,286 | — | 153,286 | ||||||||
David Kennedy |
2015 | — | — | — | ||||||||
Robert K. Kretzman |
2015 | 134,500 | — | 134,500 | ||||||||
Ceci Kurzman |
2015 | 136,000 | — | 136,000 | ||||||||
Debra L. Lee |
2015 | 59,786 | — | 59,786 | ||||||||
Tamara Mellon |
2015 | 122,500 | — | 122,500 | ||||||||
Debra Perelman |
2015 | — | — | — | ||||||||
Ronald O. Perelman |
2015 | — | — | — | ||||||||
Barry F. Schwartz |
2015 | — | — | — | ||||||||
Kathi P. Seifert |
2015 | 76,642 | — | 76,642 | ||||||||
Cristiana Falcone Sorrell |
2015 | 87,850 | — | 87,850 | ||||||||
| (a) | See “Summary Compensation Table” regarding compensation earned in respect of 2015 by Mr. Delpani in his role as the Company’s President and Chief Executive Officer during 2015. Messrs. Delpani, Kennedy, Perelman and Schwartz and Debra Perelman did not receive any compensation for their service as Directors during 2015. As of April 1, 2016, Mr. Schwartz will be entitled to receive compensation for his services as a Director of the Company. Mses. Cantor, Lee and Seifert did not stand for re-election at the Company’s 2015 Annual Meeting and thus ceased to serve on the Company’s Board of Directors on June 4, 2015. As previously publicly reported by the Company on its Definitive Proxy Statement on April 24, 2014, Mr. Kennedy, the Company’s former President and Chief Executive Officer, was paid in March 2016 an amount of $62,500, representing the final tranche of his 2013 LTIP, attributable to the 2013 performance year. Messrs. Delpani and Kennedy are not standing for re-election as directors at the 2016 Annual Meeting. |
| (b) | During 2015, the Company's Board compensation structure was comprised of the following components: (i) an annual Board retainer of $115,000; (ii) Board and Committee meeting fees of $1,500 per meeting; (iii) an additional annual retainer of $10,000 for each Committee chairman; and (iv) an additional annual Audit Committee membership retainer of $10,000. |
| (c) | The amounts shown under the “All Other Compensation” column reflect fees received by Messrs. Bernikow and Dinh during 2015 as members of Products Corporation’s Board of Directors (the Company's wholly-owned operating subsidiary). Products Corporation's non-employee directors (i.e., those Directors who were not receiving compensation as officers or employees of the Company or any of its affiliates) are paid a retainer fee of $25,000 per annum and are entitled to a $1,500 per meeting fee. Messrs. Delpani, Kennedy, Perelman and Schwartz also served as Directors of Products Corporation during 2015, but received no fees for such service. As of April 1, 2016, Mr. Schwartz will be entitled to receive compensation for his services as a Director of Products Corporation. Messrs. Delpani and Kennedy are not standing for re-election as directors of Products Corporation following the 2016 Annual Meeting. |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 13, 2016, the number of shares of each class of the Company's voting capital stock beneficially owned, and the percent so owned, by (i) each person known to the Company to be the beneficial owner of more than 5% of any class of the Company's voting securities; (ii) each Director of the Company who served on the Board during 2015; (iii) the Chief Executive Officer during 2015 and each of the other 2015 NEOs; and (iv) all Directors who served on the Board during 2015, director nominees and the 2015 NEOs as a group. The number of shares owned are those beneficially owned, as determined under the SEC’s applicable rules, and such information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares of voting capital stock as to which a person has sole or shared voting power or investment power and any shares of voting capital stock which the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership (Class A Common Stock) |
Percentage of Class (Class A Common Stock) |
||||
Ronald O. Perelman |
40,669,640 | (1) |
77.4 | % |
||
c/o MacAndrews & Forbes Incorporated, 35 E. 62nd St., New York, NY 10065 |
||||||
Alan S. Bernikow |
13,250 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Diana Cantor |
0 | (2) |
* |
|||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Lorenzo Delpani |
72,895 | (3) |
* |
|||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Viet D. Dinh |
2,925 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Meyer Feldberg |
13,250 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
David L. Kennedy |
111,550 | * |
||||
c/o MacAndrews & Forbes Incorporated, 35 E. 62nd St., New York, NY 10065 |
||||||
Robert K. Kretzman |
39,592 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Ceci Kurzman |
0 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Debra L. Lee |
13,250 | (4) |
* |
|||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Paul M. Meister |
0 | * |
||||
c/o MacAndrews & Forbes Incorporated, 35 E. 62nd St., New York, NY 10065 |
||||||
Tamara Mellon |
10,750 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Debra Perelman |
0 | * |
||||
c/o MacAndrews & Forbes Incorporated, 35 E. 62nd St., New York, NY 10065 |
||||||
Gianni Pieraccioni |
22,061 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Paul G. Savas |
19,800 | * |
||||
c/o MacAndrews & Forbes Incorporated, 35 E. 62nd St., New York, NY 10065 |
||||||
50
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership (Class A Common Stock) |
Percentage of Class (Class A Common Stock) |
||||
Barry F. Schwartz |
0 | * |
||||
c/o MacAndrews & Forbes Incorporated, 35 E. 62nd St., New York, NY 10065 |
||||||
Kathi P. Seifert |
13,250 | (5) |
* |
|||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Roberto Simon |
7,328 | (6) |
* |
|||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
Cristiana Falcone Sorrell |
0 | * |
||||
c/o Revlon, One New York Plaza, 49th Floor, New York, NY 10004 |
||||||
All Directors, Director Nominees and Executive Officers, as a Group (19 Persons) |
41,009,541 | 78 | % |
|||
| * | Less than one percent. |
| (1) | Mr. Perelman beneficially owned, indirectly through MacAndrews & Forbes, as of April 13, 2016, 40,669,640 shares of Class A Common Stock (of which, (a) 36,108,030 shares were beneficially owned by MacAndrews & Forbes; and (b) 4,561,610 shares were beneficially owned by a family member of Mr. Perelman with respect to which shares MacAndrews & Forbes holds a voting proxy). Such Common Stock share ownership represented approximately 77% of the Company’s issued and outstanding voting capital stock as of April 13, 2016. MacAndrews & Forbes has advised the Company that it has pledged shares of Class A Common Stock to secure certain obligations of MacAndrews & Forbes. Additional shares of Revlon, Inc., and shares of common stock of intermediate holding companies between Revlon, Inc. and MacAndrews & Forbes, may from time to time be pledged to secure obligations of MacAndrews & Forbes. A default under any of these obligations that are secured by the pledged shares could cause a foreclosure with respect to such shares of Class A Common Stock, Products Corporation’s common stock or stock of intermediate holding companies between Revlon, Inc. and MacAndrews & Forbes. A foreclosure upon any such shares of common stock or dispositions of shares of Revlon, Inc.’s Class A Common Stock, Products Corporation's common stock or stock of intermediate holding companies between Revlon, Inc. and MacAndrews & Forbes which are beneficially owned by MacAndrews & Forbes could, in a sufficient amount, constitute a “change of control” under Products Corporation’s amended and restated bank term loan agreement and multi-currency revolving credit agreement and the indenture governing Products Corporation’s 5¾% Senior Notes. A change of control constitutes an event of default under Products Corporation’s credit agreements, which would permit Products Corporation’s lenders to accelerate amounts outstanding under such facilities. In addition, holders of the 5¾% Senior Notes may require Products Corporation to repurchase their respective notes under those circumstances. |
| (2) | As Ms. Cantor ceased to serve on the Company’s Board of Directors on June 4, 2015, her reported shares are as of such date. |
| (3) | Pursuant to the Delpani TSA, in April 2016 the Company repurchased from Mr. Delpani his 72,895 vested shares of Revlon, Inc. Class A common stock for an aggregate purchase price of $2,684,722, based on the $36.83 NYSE closing price on April 20, 2016. The Company also paid Mr. Delpani $1,600,000 as consideration for cancelling his 65,703 restricted shares of Revlon, Inc. Class A common stock that were otherwise scheduled to vest on March 15, 2017. The remaining balance of Mr. Delpani’s 2014 Restricted Stock Grant (i.e., the tranches that were otherwise scheduled to vest in March 2018 and 2019 (i.e., 131,406 shares in the aggregate)) were cancelled and forfeited upon the cessation of his employment with the Company on March 31, 2016. |
| (4) | As Ms. Lee ceased to serve on the Company’s Board of Directors on June 4, 2015, her reported shares are as of such date. |
| (5) | As Ms. Seifert ceased to serve on the Company’s Board of Directors on June 4, 2015, her reported shares are as of such date. |
| (6) | As Mr. Simon ceased employment with the Company prior to the date of this Proxy Statement, his reported shares are as of March 15, 2016, the vesting date of his outstanding shares of restricted stock. |
51
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth as of December 31, 2015, with respect to all equity compensation plans of the Company previously approved and not previously approved by its stockholders: (i) the number of securities to be issued upon the exercise of outstanding options, warrants and rights; (ii) the weighted-average exercise price of such outstanding options, warrants and rights; and (iii) the number of securities remaining available for future issuance under such equity compensation plans, excluding securities reflected in column (a).
Plan Category |
(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights |
(b) Weighted-average exercise price of outstanding options, warrants and rights |
(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
||||||
Previously Approved by Stockholders: |
|||||||||
Stock Plan |
— | (1) |
— | 3,768,954 | (2) |
||||
Not Previously Approved by Stockholders: |
— | — | — | ||||||
| (1) | Represents stock options issued and outstanding under the Stock Plan; does not include the 764,769 shares of restricted stock that were outstanding as of December 31, 2015, which were not yet vested as of such date and are subject to risk of forfeiture as of such date. |
| (2) | As of December 31, 2015, all of these shares remained available for issuance as awards of any kind under the Stock Plan, including awards of restricted stock and restricted stock units. |
52
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 2015, MacAndrews & Forbes beneficially owned approximately 78% of Revlon, Inc.'s Class A Common Stock, representing approximately 78% of Revlon, Inc.’s outstanding shares of voting capital stock. As a result, MacAndrews & Forbes is able to elect Revlon, Inc.'s entire Board of Directors and control the vote on all matters submitted to a vote of Revlon, Inc.'s stockholders. MacAndrews & Forbes is wholly owned by Ronald O. Perelman, Chairman of Revlon, Inc.'s Board of Directors.
In June 1992, Revlon, Inc. and Products Corporation entered into an asset transfer agreement (the “Asset Transfer Agreement”) with Revlon Holdings LLC, a Delaware limited liability company and formerly a Delaware corporation known as Revlon Holdings Inc. (“Revlon Holdings”), and which is an affiliate and an indirect wholly-owned subsidiary of MacAndrews & Forbes, and certain of Revlon Holdings’ wholly-owned subsidiaries. Revlon, Inc. and Products Corporation also entered into a real property asset transfer agreement with Revlon Holdings. Pursuant to such agreements, in June 1992, Revlon Holdings transferred certain assets to Products Corporation and Products Corporation assumed all of the liabilities of Revlon Holdings, other than certain specifically excluded assets and liabilities (the liabilities excluded are referred to as the “Excluded Liabilities”). Certain consumer products lines sold in demonstrator-assisted retailers considered not integral to the Company's business and that historically had not been profitable and certain other assets and liabilities were retained by Revlon Holdings. Revlon Holdings agreed to indemnify Revlon, Inc. and Products Corporation against losses arising from the Excluded Liabilities, and Revlon, Inc. and Products Corporation agreed to indemnify Revlon Holdings against losses arising from the liabilities assumed by Products Corporation. The amounts reimbursed by Revlon Holdings to Products Corporation for the Excluded Liabilities was $0.3 million for 2015. A $0.2 million receivable balance from MacAndrews & Forbes was included within prepaid expenses and other in the Company’s Consolidated Balance Sheets for transactions subject to the Transfer Agreements, at December 31, 2015.
Revlon, Inc., Products Corporation and MacAndrews & Forbes Incorporated (a wholly-owned subsidiary of MacAndrews & Forbes) have entered into reimbursement agreements (the “Reimbursement Agreements”) pursuant to which: (i) MacAndrews & Forbes Incorporated is obligated to provide (directly or through its affiliates) certain professional and administrative services, including, without limitation, employees, to the Company, and to purchase services from third party providers, such as insurance, legal, accounting and air transportation services, on behalf of the Company, to the extent requested by Products Corporation; and (ii) Products Corporation is obligated to provide certain professional and administrative services, including, without limitation, employees, to MacAndrews & Forbes and to purchase services from third party providers, such as insurance, legal and accounting services, on behalf of MacAndrews & Forbes, to the extent requested by MacAndrews & Forbes, provided that in each case the performance of such services does not cause an unreasonable burden to MacAndrews & Forbes or Products Corporation, as the case may be.
The Company reimburses MacAndrews & Forbes for the allocable costs of the services that MacAndrews & Forbes purchases for or provides to the Company and for the reasonable out-of-pocket expenses that MacAndrews & Forbes incurs in connection with the provision of such services. MacAndrews & Forbes reimburses Products Corporation for the allocable costs of the services that Products Corporation purchases for or provides to MacAndrews & Forbes and for the reasonable out-of-pocket expenses incurred by Products Corporation in connection with the purchase or provision of such services. Each of the Company, on the one hand, and MacAndrews & Forbes Incorporated, on the other, has agreed to indemnify the other party for losses arising out of the services provided by it under the Reimbursement Agreements, other than losses resulting from its willful misconduct or gross negligence.
The Reimbursement Agreements may be terminated by either party on 90 days' notice. The Company does not intend to request services under the Reimbursement Agreements unless their costs would be at least as favorable to the Company as could be obtained from unaffiliated third parties.
The Company participates in MacAndrews & Forbes' directors and officers liability insurance program (the “D&O Insurance Program”), as well as its other insurance coverages, such as property damage, business interruption, liability and other coverages, which cover the Company, as well as MacAndrews & Forbes and its subsidiaries. The limits of coverage for certain of the policies are available on an aggregate basis for losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews & Forbes
53
from time to time for their allocable portion of the premiums for such coverage or the Company pays the insurers directly, which premiums the Company believes are more favorable than the premiums that the Company would pay were it to secure stand-alone coverage. Any amounts paid by the Company directly to MacAndrews & Forbes in respect of premiums are included in the amounts paid under the Reimbursement Agreements.
The net activity related to services provided and/or (purchased) under the Reimbursement Agreements during 2015 was $(2.1) million, which primarily included partial payments made by the Company to MacAndrews & Forbes during 2015 for premiums related to the Company's allocable portion of the 5-year renewal of the D&O Insurance Program for the period from January 31, 2012 through January 31, 2017. The receivable balances from MacAndrews & Forbes were $0.1 million at December 31, 2015 for transactions subject to the Reimbursement Agreements.
As a result of closing the debt-for-equity exchange transaction in March 2004 (the “2004 Revlon Exchange Transactions”), as of March 25, 2004, Revlon, Inc., Products Corporation and their U.S. subsidiaries were no longer included in the affiliated group of which MacAndrews & Forbes was the common parent (the “MacAndrews & Forbes Group”) for federal income tax purposes.
Revlon Holdings, Revlon, Inc., Products Corporation and certain of its subsidiaries and MacAndrews & Forbes Incorporated entered into a tax sharing agreement (as subsequently amended and restated, the “MacAndrews & Forbes Tax Sharing Agreement”) for taxable periods beginning on or after January 1, 1992 through and including March 25, 2004, during which Revlon, Inc. and Products Corporation or a subsidiary of Products Corporation was a member of the MacAndrews & Forbes Group. In these taxable periods, Revlon, Inc.'s and Products Corporation's federal taxable income and loss were included in such group's consolidated tax return filed by MacAndrews & Forbes Incorporated. Revlon, Inc. and Products Corporation were also included in certain state and local tax returns of MacAndrews & Forbes Incorporated or its subsidiaries. Revlon, Inc. and Products Corporation remain liable under the MacAndrews & Forbes Tax Sharing Agreement for all such taxable periods through and including March 25, 2004 for amounts determined to be due as a result of a redetermination arising from an audit or otherwise, equal to the taxes that Revlon, Inc. or Products Corporation would otherwise have had to pay if it were to have filed separate federal, state or local income tax returns for such periods.
Following the closing of the 2004 Revlon Exchange Transactions, Revlon, Inc. became the parent of a new consolidated group for federal income tax purposes and Products Corporation's federal taxable income and loss are included in such group's consolidated tax returns. Accordingly, Revlon, Inc. and Products Corporation entered into a tax sharing agreement (the “Revlon Tax Sharing Agreement”) pursuant to which Products Corporation is required to pay to Revlon, Inc. amounts equal to the taxes that Products Corporation would otherwise have had to pay if Products Corporation were to file separate federal, state or local income tax returns, limited to the amount, and payable only at such times, as Revlon, Inc. will be required to make payments to the applicable taxing authorities.
There were no federal tax payments or payments in lieu of taxes from Revlon, Inc. to Revlon Holdings pursuant to the MacAndrews & Forbes Tax Sharing Agreement in 2015 with respect to periods covered by the MacAndrews & Forbes Tax Sharing Agreement, and the Company expects that there will not be any such payments in 2016. During 2015, there were no federal tax payments from Products Corporation to Revlon, Inc. pursuant to the Revlon Tax Sharing Agreement with respect to 2015 or 2014. The Company expects that there will be no federal tax payments from Products Corporation to Revlon, Inc. pursuant to the Revlon Tax Sharing Agreement during 2016 with respect to 2015.
Pursuant to the Asset Transfer Agreement referred to above, Products Corporation assumed all tax liabilities of Revlon Holdings other than (i) certain income tax liabilities arising prior to January 1, 1992 to the extent such liabilities exceeded the reserves on Revlon Holdings' books as of January 1, 1992 or were not of the nature reserved for and (ii) other tax liabilities to the extent such liabilities are related to the business and assets retained by Revlon Holdings.
Prior to the consummation of Revlon, Inc.'s initial public equity offering in February 1996, Revlon, Inc. and Revlon Worldwide Corporation (which subsequently merged into REV Holdings LLC, a Delaware limited liability company (formerly a Delaware corporation) and a wholly-owned subsidiary of MacAndrews & Forbes (“REV Holdings”), the then direct parent of Revlon, Inc.) entered into a registration rights agreement (the “Registration Rights
54
Agreement”), and in February 2003, MacAndrews & Forbes executed a joinder agreement to the Registration Rights Agreement, pursuant to which REV Holdings, MacAndrews & Forbes and certain transferees of Revlon, Inc.'s Class A Common Stock held by REV Holdings (the “Holders”) have the right to require Revlon, Inc. to register under the Securities Act of 1933, as amended, all or part of the Company’s Class A Common Stock owned by such Holders, including, without limitation, the shares of Class A Common Stock purchased by MacAndrews & Forbes in connection with the $50 million equity rights offering consummated by Revlon, Inc. in 2003 and the shares of Class A Common Stock which were issued to REV Holdings upon its October 2013 conversion of all of its 3,125,000 shares of Revlon, Inc. Class B Common Stock (a “Demand Registration”). In connection with the closing of the 2004 Revlon Exchange Transactions and pursuant to an Investment Agreement entered into in connection with such transactions (the “2004 Investment Agreement”), MacAndrews & Forbes executed a joinder agreement that provided that MacAndrews & Forbes would also be a Holder under the Registration Rights Agreement and that all shares acquired by MacAndrews & Forbes pursuant to the 2004 Investment Agreement are deemed to be registrable securities under the Registration Rights Agreement. This included all of the shares of Class A Common Stock acquired by MacAndrews & Forbes in connection with Revlon, Inc.’s 2006 $110 million rights offering of shares of its Class A Common Stock and related private placement to MacAndrews & Forbes and the Company's 2007 $100 million rights offering of shares of its Class A Common Stock and related private placement to MacAndrews & Forbes. Pursuant to the Registration Rights Agreement, in 2009 Revlon, Inc. registered under the Securities Act all 9,336,905 shares of Class A Common Stock issued to MacAndrews & Forbes in the 2009 Exchange Offer, in which, among other things, Revlon, Inc. issued to MacAndrews & Forbes shares of Class A Common Stock at a ratio of one share of Class A Common Stock for each $5.21 of outstanding principal amount of the Senior Subordinated Term Loan that MacAndrews & Forbes contributed to Revlon, Inc.
Revlon, Inc. may postpone giving effect to a Demand Registration for a period of up to 30 days if Revlon, Inc. believes such registration might have a material adverse effect on any plan or proposal by Revlon, Inc. with respect to any financing, acquisition, recapitalization, reorganization or other material transaction, or if Revlon, Inc. is in possession of material non-public information that, if publicly disclosed, could result in a material disruption of a major corporate development or transaction then pending or in progress or could result in other material adverse consequences to Revlon, Inc. In addition, the Holders have the right to participate in registrations by Revlon, Inc. of its Class A Common Stock (a “Piggyback Registration”). The Holders will pay all out-of-pocket expenses incurred in connection with any Demand Registration. Revlon, Inc. will pay any expenses incurred in connection with a Piggyback Registration, except for underwriting discounts, commissions and expenses attributable to the shares of Class A Common Stock sold by such Holders.
Certain of Products Corporation’s debt obligations (including under its Third Amended and Restated Term Loan Agreement, dated as of May 19, 2011 (as amended by Amendment No. 1 to Credit Agreement, dated as of February 21, 2013, Amendment No. 2 to Term Loan Agreement, dated as of August 19, 2013, the Incremental Amendment, dated as of August 19, 2013, and Amendment No. 3 to the 2011 Term Loan Agreement, dated as of February 26, 2014); the Third Amended and Restated Revolving Credit Agreement, dated as of June 16, 2011 (as amended by Amendment No. 1 to Revolving Credit Agreement, dated as of August 14, 2013, and the Incremental Amendment, dated as of December 24, 2013); and the 5¾% Senior Notes Indenture, dated as of February 8, 2013), have been, and may in the future be, supported by, among other things, guarantees from all of Products Corporation's domestic subsidiaries (subject to certain limited exceptions) and, for the Amended Credit Agreements, guarantees from Revlon, Inc. The obligations under such guarantees are secured by, among other things, all of the capital stock of Products Corporation and, its domestic subsidiaries (subject to certain limited exceptions) and 66% of the capital stock of Products Corporation's and its domestic subsidiaries' first-tier foreign subsidiaries.
During 2015, the Company engaged several companies in which MacAndrews & Forbes had a controlling interest to provide the Company with various ordinary course business services. These services included: (i) advertising inserts, for which the Company paid fees of approximately $0.2 million during 2015; (ii) processing approximately $32.9 million of coupon redemptions for the Company's retail customers for 2015, for which the Company paid fees of approximately $0.4 million during 2015; and (iii) other similar advertising, coupon redemption and raw material supply services, for which the Company paid fees aggregating to less than $0.1 million during 2015. The Company believes that its engagement of each of these affiliates was on arm's length terms, taking into account each firm's expertise in its respective field, and that the fees paid were at least as favorable as those available from unaffiliated parties.
55
Please see “Employment Agreements and Payments Upon Termination and Change of Control” under “Compensation Discussion and Analysis” above for a discussion on the Company’s repurchase of Mr. Delpani’s vested shares of Revlon, Inc. Class A common stock.
Review and Approval of Transactions with Related Persons
The Revlon, Inc. Related Party Transaction Policy (the “Policy”) serves as a set of guidelines for the approval of interested transactions with related parties. As of the date of this Proxy Statement, related party transactions are subject to the Audit Committee’s review, approval and/or ratification. The Audit Committee is comprised entirely of independent directors. The Policy also pre-approves a series of related party transactions including, among others: (i) certain employment relationships and related compensatory arrangements with executive officers, which are either approved by the Compensation Committee or disclosed in the Company's annual proxy statement, if so required; (ii) any compensation paid to a director if the compensation is required to be reported in the Company's proxy statement; (iii) transactions related to the ownership of the Company's common stock where all stockholders are receiving the same or substantially the same pro rata benefit; (iv) competitively-bid transactions; (v) any transaction involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services; (vi) transactions permitted under Products Corporation's indentures, credit agreements and other debt instruments (copies of each of which are on file with the SEC); and (vii) transactions described in the Company's proxy statements or other SEC reports filed with or furnished to the SEC on or before the original adoption of the Policy in March 2007. The Chairman of the Audit Committee also has the authority to pre-approve certain related party transactions, which in the aggregate are expected to involve less than $5,000,000; provided that any such transactions are later reviewed and discussed by the Audit Committee.
CODE OF CONDUCT AND BUSINESS ETHICS AND SENIOR FINANCIAL OFFICER CODE OF ETHICS
The Company has a written Code of Conduct and Business Ethics (the “Code of Conduct”) that includes a code of ethics (the “Senior Financial Officer Code of Ethics”) that applies to the Company's Chief Executive Officer and senior financial officers, including the Company's Chief Financial Officer, Controller and persons performing similar functions (collectively, the “Senior Financial Officers”). Printable copies of the Code of Conduct and the Senior Financial Officer Code of Ethics are available at www.revloninc.com under the heading Investor Relations (Corporate Governance). If the Company changes the Senior Financial Officer Code of Ethics in any material respect or waives any provision of the Code of Conduct for its executive officers or Directors, including waivers of the Senior Financial Officer Code of Ethics for any of its Senior Financial Officers, the Company expects to provide the public with notice of any such change or waiver by publishing an appropriate description of such event on its corporate website, www.revloninc.com, or by other appropriate means as required or permitted under applicable rules of the SEC. The Company does not currently expect to make any such waivers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors and 10% stockholders may be required under the Exchange Act to file reports of ownership and changes in ownership with the SEC. The Company makes such SEC filings available on its corporate website, www.revloninc.com, under the heading Investor Relations (SEC Filings). Copies of these reports also must be furnished to the Company by such filers.
Based solely upon a review of copies of such reports furnished to the Company through the date hereof and written representations as to transactions consummated by the Company's executive officers, directors and 10% stockholders during the year, if any, the Company believes that all Section 16 filing requirements applicable to its executive officers, directors and 10% stockholders were complied with during 2015.
56
PROPOSAL NO. 2 — RATIFICATION OF AUDIT COMMITTEE’S SELECTION OF KPMG LLP
The Audit Committee of the Board of Directors has selected KPMG LLP to audit the Company’s consolidated financial statements for the fiscal year ending December 31, 2016, subject to ratification by the Company's stockholders.
The Sarbanes-Oxley Act of 2002 and Section 10A of the Exchange Act require the Audit Committee be directly responsible for the appointment, compensation, retention and oversight of the audit work of the Company's independent registered public accounting firm. Stockholder ratification of the Audit Committee’s selection of KPMG is not required by law, the Company's By-laws or otherwise. However, the Board of Directors is submitting the Audit Committee’s selection of KPMG for stockholder ratification to ascertain stockholders' view on the matter.
KPMG has audited the Company’s consolidated financial statements for more than the past 6 consecutive years. Representatives of KPMG are expected to be present at the 2016 Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from stockholders.
The Audit Committee reviews audit and non-audit services performed by KPMG, as well as the fees charged by KPMG for such services. In its review of non-audit service fees, the Audit Committee received and discussed with KPMG their annual written report on KPMG's independence from the Company and its management, as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG that firm's independence. The Audit Committee has satisfied itself that KPMG's provision of audit and non-audit services to the Company is compatible with KPMG's independence. Additional information concerning the Audit Committee and its activities with KPMG can be found in the following sections of this Proxy Statement: “Board of Directors and its Committees” and “Audit Committee Report.” Information regarding the aggregate fees billed by KPMG for services rendered to the Company for the fiscal years ended December 31, 2015 and December 31, 2014 can be found below under “Audit Fees.”
Vote Required and Board of Directors' Recommendation (Proposal No. 2)
The ratification of the Audit Committee’s selection of KPMG as the Company's independent registered public accounting firm for 2016 requires the affirmative vote of the holders of a majority of the total number of votes of the Company’s Class A Common Stock present in person or represented by proxy and entitled to vote at the 2016 Annual Meeting. With respect to Proposal No. 2, all proxies properly submitted to the Company will be voted in accordance with the instructions given by the person submitting such proxy or, in the absence of such instructions, will be voted FOR the ratification of the Audit Committee’s selection of KPMG as the Company's independent registered public accounting firm for 2016, unless such proxies are revoked prior to their being voted on. In determining whether Proposal No. 2 has received the requisite number of affirmative votes, abstentions will be counted and will have the same effect as a vote against Proposal No. 2. Brokers will have discretionary authority to vote on Proposal No. 2 absent instructions from the beneficial owner of the shares, as this is a “routine” proposal. MacAndrews & Forbes has informed the Company that it will vote FOR the ratification of the Audit Committee’s selection of KPMG as the Company's independent registered public accounting firm for 2016. Accordingly, the affirmative vote of MacAndrews & Forbes is sufficient, without the concurring vote of any other stockholder of the Company, to approve and adopt Proposal No. 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE AUDIT COMMITTEE’S SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016.
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The Company’s Board of Directors maintains its Audit Committee in accordance with applicable SEC rules and the NYSE's listing standards. In accordance with the Audit Committee’s charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the audit work of Revlon, Inc.'s independent auditors for the purpose of preparing and issuing its audit report or performing other audit, review or attest services for Revlon, Inc. A printable and current copy of the Audit Committee’s charter is currently available at www.revloninc.com under the heading Investor Relations (Corporate Governance). The independent auditors, KPMG, report directly to the Audit Committee and the Audit Committee is directly responsible for, among other things, reviewing in advance, and granting any appropriate pre-approvals of, (a) all auditing services to be provided by the independent auditor and (b) all non-audit services to be provided by the independent auditor (as permitted by the Exchange Act), and in connection therewith to approve all fees and other terms of engagement, as required by the applicable rules of the Exchange Act.
Since 2005, the Audit Committee has approved an Audit Committee Pre-Approval Policy for pre-approving all permissible audit and non-audit services performed by KPMG. During 2015, an electronic printable copy of the 2015 Audit Committee Pre-Approval Policy was available at www.revloninc.com under the heading Investor Relations (Corporate Governance). A copy of the 2016 Audit Committee Pre-Approval Policy is attached to this Proxy Statement as Annex C and an electronic printable copy of such policy is currently available at www.revloninc.com under the heading Investor Relations (Corporate Governance). The Audit Committee also has the authority to approve services to be provided by KPMG at its meetings and by unanimous written consents.
The aggregate fees billed for professional services by KPMG in 2015 and 2014 for these various services for Revlon, Inc. and Products Corporation in the aggregate are set forth in the table, below (in millions).
Types of Fees (Dollars in millions) |
2015 |
2014 |
||||
Audit Fees |
$ | 5.0 | $ | 4.7 | ||
Audit-Related Fees |
$ | 0.1 | $ | 0.2 | ||
Tax Fees |
$ | 0.3 | $ | 0.4 | ||
All Other Fees |
$ | — | $ | — | ||
Total Fees |
$ | 5.4 | $ | 5.3 | ||
In the above table, in accordance with the SEC definitions and rules: (a) “audit fees” are fees the Company paid KPMG for professional services rendered for: (i) the audits of Revlon, Inc.'s and Products Corporation's annual financial statements; (ii) the audit of Revlon, Inc.'s internal control over financial reporting; and (iii) the review of financial statements included in Revlon, Inc.'s and Products Corporation's Quarterly Reports on Form 10-Q, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements; (b) “audit-related fees” are fees billed by KPMG for assurance and related services that are traditionally performed by the auditor, including services performed by KPMG related to employee benefit plan audits and certain transactions, as well as attestation services not required by statute or regulation; (c) “tax fees” are fees for permissible tax compliance, tax advice and tax planning; and (d) “all other fees” are fees billed by KPMG to the Company for any permissible services not included in the first three categories.
All of the services performed by KPMG for the Company during 2015 and 2014 were either expressly pre-approved by the Audit Committee or were pre-approved in accordance with the Audit Committee Pre-Approval Policy, and the Audit Committee was provided with regular updates as to the nature of such services and fees paid for such services.
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PROPOSAL NO. 3 — APPROVAL OF REVLON AMENDED AND RESTATED EXECUTIVE
INCENTIVE COMPENSATION PLAN
At the 2016 Annual Meeting, the Company’s stockholders will be asked to approve the Revlon Amended and Restated Executive Incentive Compensation Plan (the “Plan”), attached to this 2016 Proxy Statement as Annex D. The Plan sets forth certain terms and conditions of the Company’s annual bonus and LTIP programs. To qualify certain compensation payable pursuant to the Plan to be eligible for deduction under Section 162(m) of the Code, the Plan must be approved by stockholders at least once every five years. The prior Revlon Executive Incentive Compensation Plan (originally effective as of January 1, 2010, and as amended and restated as of March 11, 2015) (the “Original Plan”) was last approved by the Company’s stockholders at the 2015 Annual Meeting.
At management’s recommendation and after consideration and consultation with CAP, on March 24, 2016 the Compensation Committee, subject to stockholder approval at the 2016 Annual Meeting, approved the Plan with the following material modifications from the Original Plan: (i) increasing the maximum amount of compensation payable in respect of Annual Awards to any Participant in respect of any single calendar year from $3.5 million to $5 million; (ii) increasing the maximum amount of compensation payable in respect of Long-Term Awards to any Participant in respect of any single calendar year from $3.5 million to $10 million; and (iii) revising each of Sections 5(b) and 6(b) of the Plan to clarify that the $10 million and $5 million limitations apply, respectively, to any single calendar year.
The Plan also includes other non-material, technical changes necessary to effectuate the changes described above.
The purposes of the Plan are to recruit, retain and incentivize eligible executives and other employees necessary to operate the Company; to incentivize Plan participants to achieve objectives which are tied to the achievement of the Company’s business plan and strategy, to enhance shareholder value; and to reflect the Company’s commitment to pay for performance. In addition, the Plan is intended to serve as a qualified performance-based compensation program under Section 162(m). Section 162(m) limits the deductibility of certain compensation in excess of $1 million per year paid by a publicly traded corporation to certain officers who constitute “covered employees” under Section 162(m) (“Covered Employees”). Compensation that qualifies as “performance-based” compensation under Section 162(m) is, however, exempt from the $1 million deductibility limitation.
The Company believes that the Plan continues to serve the Company’s objectives of recruiting, retaining and compensating key employees and providing an appropriate incentive for them to execute the Company’s business strategy.
In this Proposal No. 3, the Company is asking stockholders to approve the Plan.
Vote Required and Board of Directors' Recommendation (Proposal No. 3)
The approval of the Plan requires the affirmative vote of the holders of a majority of the total number of votes of the Company’s Class A Common Stock present in person or represented by proxy and entitled to vote at the 2016 Annual Meeting. With respect to Proposal No. 3, all proxies properly submitted to the Company, unless such proxies have been previously revoked, will be voted in accordance with the instructions given by the person submitting such proxy or, in the absence of such instructions, will be voted FOR the approval of the Plan. In determining whether Proposal No. 3 has received the requisite number of affirmative votes, abstentions will be counted and will have the same effect as a vote against such proposal and broker non-votes will be counted neither as a vote for or against Proposal No. 3. MacAndrews & Forbes has informed the Company that it will vote FOR the approval of the Plan. Accordingly, the affirmative vote of MacAndrews & Forbes is sufficient, without the concurring vote of any other stockholder of the Company, to approve Proposal No. 3.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE REVLON AMENDED AND RESTATED EXECUTIVE INCENTIVE COMPENSATION PLAN.
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Set out below is a summary of the key provisions of the Plan, which is qualified in its entirety by reference to the text of the Plan, attached as Annex D. Capitalized terms used in the below description of the Plan which are not defined below, shall have the meanings ascribed to such terms in the Plan.
DESCRIPTION OF THE PLAN’S TERMS
Summary of the Revlon Amended and Restated Executive Incentive Compensation Plan
As noted above, the purposes of the Plan are to recruit, retain and incentivize eligible executives and other employees necessary to operate the Company; to incentivize Plan participants to achieve objectives which are tied to the achievement of the Company’s business plan and strategy, to enhance shareholder value; and to reflect the Company’s commitment to pay for performance. Generally, while the Company's provision of incentive compensation under the Plan is intended to meet the requirements for deductibility of qualified performance-based compensation under Section 162(m), to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy requiring all compensation paid under the Plan to be deductible under the Code. The Compensation Committee retains discretion to award compensation under the Plan that may not constitute qualified performance-based compensation under Section 162(m). Please see “Compensation Discussion and Analysis” and “Grants of Plan-Based Awards” above for further details on the Plan.
Plan Administration; Delegation
The Plan is administered by the Compensation Committee, or such other sub-committee as may be appointed by either the Board or the Compensation Committee to administer the Plan. For any Award that is intended to satisfy Section 162(m), administration is performed by a sub-committee of at least 2 directors, each of whom qualifies as an “outside director” within the meaning of Section 162(m). Except with respect to awards to Covered Employees during any Performance Period for which the Plan is intended to satisfy the requirements of Section 162(m), or as otherwise required for compliance with other applicable law or applicable exchange listing requirements, the Compensation Committee has the authority to delegate any or all of its authority under the Plan to any employee or committee of employees of the Company, including but not limited to, the Company’s Chief Executive Officer. The Compensation Committee has discretion in designing the annual bonus programs and LTIPs under the Plan, including, without limitation, performance targets, performance periods, Participant eligibility and other terms on which Plan awards may be made, in each case subject to the limitations set forth in the Plan. Please see “Role of the Compensation Committee” in the “Compensation Discussion and Analysis.”
The Plan sets forth certain types of employees who are eligible for Awards under the Plan. Eligibility for Annual Awards includes: (i) approximately 900 employees of the Company whose position is classified under the Company’s exempt salary program in salary grades 9 and above (or the equivalent of such grades) and who do not participate in the Company’s sales incentive plans; (ii) regional or country general managers and any other key executive of the Company’s operations outside of the U.S. who do not participate in a local incentive plan; and/or (iii) such other key employees of the Company as the Compensation Committee may designate from time to time. Eligibility for Long-Term Awards includes approximately 85 key employees of the Company, which group of employees the Compensation Committee may designate from time to time. Each year, the Company recommends to the Compensation Committee employees that are eligible for participation in the annual bonus and LTIP programs under the Plan. In determining annual bonus and LTIP Participants, and the Performance Factors relating to each Award, the Compensation Committee takes into account such factors as it deems necessary to facilitate the objectives of the Plan.
Unless the Compensation Committee otherwise determines and except as provided in the Plan, no person may participate in the Plan or receive any Award under the Plan unless he or she is actively employed as of the date of payment of an Award and shall have signed and shall be in full compliance with (A) the Company’s Employee Agreement as to Confidentiality and Non-Competition and the Company’s Code of Conduct and Business Ethics (as each may be amended from time to time by the Company), and (B) to the extent applicable, any applicable employment agreement.
Awards and Performance Periods
The Plan provides for both Annual Awards and Long-Term Awards.
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An Annual Award is an incentive compensation award payable to a Participant which is contingent upon the attainment of certain Performance Factors with respect to a designated Annual Award Performance Period. An Annual Award Performance Period means the calendar year or any other period that the Compensation Committee may determine to apply to an Annual Award. An Annual Award Performance Period for a Participant who becomes employed by the Company during an on-going Annual Award Performance Period may be a shorter period beginning when such employee commences employment. A Long-Term Award means an incentive compensation award payable to a Participant which is contingent upon the attainment of certain Performance Factors with respect to a designated Long-Term Award Performance Period. A Long-Term Award Performance Period means one or more calendar years or any other period that the Compensation Committee may determine to apply to a Long-Term Award. A Long-Term Award Performance Period for a Participant who becomes employed by the Company during an on-going Long-Term Award Performance Period may be a shorter period beginning when such employee commences employment.
Under the revised Plan, the maximum amount payable to any individual Participant with respect to each Annual Award for any single calendar year (including, without limitation, as a portion of the applicable Annual Award Performance Period) may not exceed $5 million per Award.
Under the revised Plan, the maximum amount payable to any individual Participant with respect to each Long-Term Award for any single calendar year (including, without limitation, as a portion of the applicable Long-Term Award Performance Period), may not exceed $10 million per Award.
Performance Objective Attainment Required for Award Payment
The Plan provides for the payment of Awards to participants to the extent that goals established by the Compensation Committee are met with respect to the applicable Performance Period. Please see the “Compensation Discussion and Analysis” above for further details on the Company’s process for measuring and certifying the attainment of the Company’s corporate performance targets and individual executive’s performance objectives with respect to Awards that have been granted under the Original Plan.
Performance Factors are the criteria and objectives determined by the Compensation Committee which must be met during a Performance Period as a condition to receiving payment of an Annual Award or a Long-Term Award. Generally, not later than 90 days after the beginning of an Annual Award Performance Period or Long-Term Award Performance Period, at the Company’s recommendation and following discussions with CAP, the Compensation Committee reviews and approves the design of the annual bonus program and LTIP under the Plan, including, without limitation, the Performance Factors, performance periods, Participant eligibility and other terms on which Plan Awards may be made with respect to such Award Performance Period. Awards, including the terms and conditions of such Awards, are communicated to Participants by the Company. Unless otherwise provided by the Compensation Committee in connection with specified terminations of employment, or as otherwise provided in the Plan, payments in respect of Awards are made only to the extent that the Compensation Committee has determined that the Performance Factors with respect to the Performance Period have been attained.
Performance Factors may include any or all of the following, or any combination thereof: (a) stock price; (b) fair market value; (c) book value; (d) third party appraised value; (e) market share; (f) total shareholder return; (g) earnings per share; (h) cash flow, including, without limitation, cash flow from operations and/or free cash flow; (i) return on equity, assets, capital or investment; (j) net income; (k) operating profit or income; (l) operating income before restructuring charges, plus depreciation and amortization other than relating to early extinguishment of debt and debt issuance costs; (m) gross or net sales; (n) expense targets; (o) working capital targets, including, without limitation, those relating to inventory, accounts receivable and/or capital and display spending; (p) operating margin; (q) productivity improvement; (r) cost, expense or debt reduction; (s) gross margin; (t) earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT,” “EBITA,” “EBITDA” or as may otherwise be adjusted by the Company); (u) revenue; (v) unit sales; (w) earnings from continuing operations; (x) asset management (e.g., inventory and receivable levels); (y) planning accuracy (as measured by comparing planned results to actual results); (z) customer satisfaction based on market share or other relevant factors; (aa) implementation or completion of critical projects or processes, including, without limitation, growing consumption of the Company’s products, enhancing new product development, enhancing demand, supply and financial business planning processes, completing asset dispositions, engaging in capital markets transactions to refinance all or a portion of the Company’s indebtedness, reducing interest expense or otherwise strengthening the Company’s balance sheet, reducing selling,
61
general and administrative (SG&A) expenses, ensuring Company products are in stock at retail, consolidating plants, and improving employee satisfaction surveys with quantifiable results; and (bb) management of employees, including training, development and succession planning processes based on achievement of determinable results from such activities and processes.
The Compensation Committee retains the discretion to include or exclude extraordinary, one-time or unusual items (such as, but without limitation, major litigation settlements, acquisitions or divestitures) in assessing the Company’s performance versus programs targets. For these purposes, “extraordinary items” under the Plan may include: (i) any profit or loss attributable to acquisitions or dispositions of stock or assets; (ii) any changes in accounting standards or treatments that may be required or permitted by the Financial Accounting Standards Board, the SEC or the Public Company Accounting Oversight Board, or adopted by the Company or its subsidiaries after the goal is established; (iii) all items of gain, loss or expense related to the Company’s restructuring charges; (iv) all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of assets; (v) all items of gain, loss or expense related to discontinued operations; (vi) the impact of capital expenditures; (vii) the impact of share repurchases and other changes in the number of outstanding shares; (viii) the impact of foreign exchange rates; (ix) all items of gain, loss or expense related to changes in customer business models, to the extent permissible under Section 162(m); (x) such other items as may be prescribed by Section 162(m); and (xi) such other items required by applicable law, regulation or rule.
Performance Factors for participants other than Covered Employees may be developed by each department head, subject to the approval of the Company’s Chief Executive Officer and its Company's senior-most Human Resources officer.
Performance Factors may relate to the performance of the Company, a Subsidiary or any portion of a Business Unit, and may be expressed on an aggregate, per share (outstanding or fully diluted), per unit or other basis. The Compensation Committee, in its sole discretion, may determine to express Performance Factors, among other methods, in terms of attaining a specified level of a particular criteria, attainment of a percentage increase or decrease in a particular criteria, or as applied to the performance of the Company, a Subsidiary or a Business Unit, relative to a market index, a group of other companies (or their subsidiaries, business units or product lines) or a combination thereof, or otherwise. While Performance Factors may relate to the performance of the Company, a Subsidiary or any portion of a Business Unit, the Company has historically set Performance Factors based on Company-wide performance, such as consolidated worldwide Adjusted EBITDA, FCF, net sales and NWCR. Please see the “Compensation Discussion and Analysis” above for further details.
Individual performance objectives are established for participants other than Covered Employees by each Participant’s department head and approved by the Company's senior-most Human Resources officer (or its designee or by the Company’s Chief Executive Officer).
Performance Factors may include a threshold level of performance below which no Award payments will be made, target levels of performance at which target Award payments will be made and maximum levels of performance at which maximum Award payments will be made, as well as payout slopes providing for varying Award payments based upon the extent to which the Company achieves its corporate objectives. Award payments can also be impacted by each Participant’s rating under the Company’s annual management review process. Please see the “Compensation Discussion and Analysis” above for further details.
Compensation Committee Certification of Performance Factor Attainment
Before the Company pays any Awards for a particular Performance Period, based upon the Company’s recommendation and following discussions with CAP, the Compensation Committee certifies the extent to which the Company and the NEOs have achieved the Performance Factors for that Performance Period.
Effect of Termination of Employment
Generally, to receive payment of an Award, the Participant must remain employed by the Company on the payment date. However, Awards may be paid and, if appropriate, pro-rated, in the sole discretion of the Compensation Committee, in the event a participant’s employment terminates prior to the date that Awards are paid for a particular Performance Period. Such might be the case in the event of (for example) a Participant’s death, disability, retirement or for a reason other than that which would disqualify such Participant from eligibility to receive separation pay under the Revlon Executive Severance Pay Plan.
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Limitation of Compensation Committee’s Discretion
To be qualified for deductibility under Section 162(m) of the Code, the amount of an award payable to a Covered Employee upon attainment of a specified Performance Factor cannot be increased by the Compensation Committee at its discretion, but may be decreased by the Compensation Committee (other than with respect to Mr. Garcia’s 2016 CEO LTIP (as described below)). However, the Compensation Committee may at its discretion make appropriate adjustments to Performance Factors to reflect the impact of extraordinary items (as defined in the Plan) which are not reflected in such objectives to the extent permitted pursuant to Section 162(m).
Amendments to or Termination of Revlon Amended and Restated Executive Incentive Compensation Plan
The Board or the Compensation Committee reserves the right to alter, amend, suspend or terminate the Plan at any time during or after a Performance Period. However, if stockholder approval for any such amendment would be required in order for the Plan to remain qualified under Section 162(m), and such stockholder approval is not obtained, then the failure to obtain such stockholder approval shall not render the Plan or the subject amendment ineffective. Under such circumstances, the Plan would continue in full force and effect, as amended, without regard to Section 162(m) as to such amended terms. No amendment may adversely affect the rights of any Participant under any Award following the end of the Performance Period to which the Award relates.
The amounts payable under the Plan in respect of performance achieved during 2016 are not yet determinable. However, below is a description of the terms of the 2016 Annual Bonus Program and the 2016 LTIP as administered pursuant to the Original Plan.
2016 Annual Bonus Program
For 2016, the Compensation Committee, based upon input from management and CAP, the Compensation Committee’s independent outside compensation consultant, approved the structure and design of the Annual Awards for the 2016 Performance Period (the “2016 Annual Bonus Program”). The 2016 Annual Bonus Program is structured substantially the same as the 2015 Annual Bonus Program, as discussed above under “Compensation Discussion and Analysis.” As with the 2015 Annual Bonus Program, the Performance Factors for the 2016 Annual Bonus Program include the following targets: (i) Adjusted EBITDA (weighted at 50%); (ii) net sales (weighted at 25%); and (iii) NWCR (weighted at 25%).
Participants in the 2016 Annual Bonus Program will be eligible to receive Annual Awards conditioned upon the Compensation Committee (1) certifying the extent to which the Performance Factors have been achieved, which is scheduled to occur in first quarter of 2017, after the Company finalizes its 2016 financial results, and (2) such Participants remaining employed with the Company on the payment date. Therefore, until the Company’s 2016 financial results are determined, the exact amounts of the 2016 Annual Bonus Program Awards to Participants, if any, are not determinable.
Mr. Garcia is eligible to receive an annual bonus payable in respect of performance achieved during 2016 pursuant to the Plan in accordance with the terms of his employment agreement, with a target annual bonus of 150% of his base salary of $1,500,000, with the possibility of exceeding such amount based upon the over-achievement of the Company's performance objectives, up to a maximum of 200% of his base salary. Pursuant to the terms and conditions of the Garcia Employment Agreement, Mr. Garcia’s annual bonus for 2016 will not be less than $1.5 million.
2016 LTIP
For 2016, the Compensation Committee, based upon input from management and CAP, approved the structure and design of the 2016 LTIP. Mr. Garcia will not participate in the 2016 LTIP under the Original Plan, but will instead participate in a separate 2016 CEO LTIP under the Plan as described below.
The 2016 LTIP is structured substantially the same as the 2015 LTIP, as discussed above under “Compensation Discussion and Analysis.” The Performance Factors under the 2016 LTIP include the following targets: (i) Adjusted EBITDA; (ii) net sales; and (iii) FCF targets for each of 2016, 2017 and 2018. The Company’s achievement of these Performance Factors will be measured independently after the close of each year and will have respective weightings of: (i) 50% for Adjusted EBITDA; (ii) 25% for net sales; and (iii) 25% for FCF.
63
As with the 2015 LTIP, achievement against the targeted Performance Factors under the 2016 LTIP will be measured as the average degree of the Company’s achievement of its performance objectives over 3, 1-year periods (2016, 2017 and 2018), with annual goals set based upon the Company’s recommendation and approved by the Compensation Committee, based on the budgeted Performance Factors in the Company’s business plan for each respective performance year. Therefore, until the end of the 3-year performance period, the exact amounts of the 2016 LTIP awards payable to Participants, if any, are not determinable.
Under each of the Company’s 2016 Annual Bonus Program and 2016 LTIP established under the Original Plan, these target Awards, if and when paid, may range from 0% to 150% of the respective target amounts, based upon and subject to the extent of the Company’s achievement of its relevant Performance Factors under the particular program and, in the case of the 2016 Annual Bonus Program, the extent to which the executive satisfies his/her individual performance objectives and, for the 2016 LTIP, the executive having achieved a satisfactory performance rating under the Company’s annual management review process for each year of 2016 LTIP’s 3-year performance period. Also, as with the 2015 Annual Bonus Program, the 2016 Annual Bonus Awards can range between 80% and 120% of adjusted target Award amounts, based on management’s assessment of the extent to which each executive has achieved his/her individual performance objectives under the Company’s annual management review process.
2016 CEO LTIP
As discussed above, the Company currently maintains a 2016 LTIP for the purpose of recruiting, retaining, incentivizing and rewarding key individuals whom the Company needs continue to execute its business strategy, and to provide key employees with a competitive total compensation opportunity. As part of recruiting, retaining, incentivizing and rewarding Mr. Garcia, on March 24, 2016, based upon input from management and CAP, the Compensation Committee approved an individualized, cash-based LTIP (such program, the “2016 CEO LTIP” and any Award paid with respect thereto, the “2016 CEO LTIP Award”) as a component of Mr. Garcia’s total compensation opportunity.
The Performance Period for the 2016 CEO LTIP begins on April 1, 2016 and ends on December 31, 2019. Payment in respect of Mr. Garcia’s 2016 CEO LTIP Award, if any, will be based solely on Adjusted EBITDA for each of 2016 (the achievement of which for 2017 is pro-rated to reflect the fact that the 2016 performance period begins on April 1, 2016), 2017, 2018 and 2019.
Under the 2016 CEO LTIP, the Company’s achievement of Adjusted EBITDA will be measured independently after the close of each performance year. Likewise, the payout amount for each respective performance year will be calculated independently after the close of each performance year, based on the level of achievement of the Adjusted EBITDA performance targets for such year. Therefore, until the end of the 3¾-year performance period, the exact amount of the 2016 CEO LTIP Award payable to Mr. Garcia, if any, is not yet determinable. However, the maximum amount that may be paid in any single calendar year under the 2016 CEO LTIP will be subject to the $10 million per-year limitation under the Plan.
The ultimate amount that gets paid in respect of Mr. Garcia’s 2016 CEO LTIP Award will be the sum each performance year’s calculated payout, and such payment, if any, will be made in March of 2020. The Compensation Committee may not exercise negative discretion with respect to Mr. Garcia’s 2016 CEO LTIP Award.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended for inclusion in next year's proxy statement pursuant to Rule 14a-8 under the Exchange Act must be received by the Company's Secretary, at Revlon, Inc., One New York Plaza, 49th Floor, New York, NY 10004, attention: Michael T. Sheehan, no later than December 30, 2016 (provided, however, if the date of the 2017 annual stockholders' meeting is changed by more than 30 days from the date of the 2016 meeting, then the deadline is a reasonable time before the Company begins to print and send its proxy materials). The Company's By-laws require that proposals of stockholders made outside of Rule 14a-8 under the Exchange Act (i.e., proposals that are not to be included in the proxy statement, but to be otherwise considered at the annual stockholders’ meeting) must comply with the requirements of Article II, Section 3 of the Company's By-laws and must be received by the Company's Secretary by no earlier than March 11, 2017 and by no later than April 10, 2017 (provided, however, that if the 2017 annual stockholders' meeting is called for a date that is not within 30 days before or after the 1-year anniversary of the 2016 Annual Meeting date, the stockholder's notice in order to be timely must be received by the Company's Secretary not later than the close of business on the 10th day following the earlier of the day on which such notice of the date of the 2017 annual stockholders' meeting is mailed or such public disclosure of the date of the 2017 annual stockholders' meeting is made).
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VOTING THROUGH THE INTERNET OR BY TELEPHONE
Our stockholders voting through the Internet or telephone should understand that there may be costs associated with such voting methods, such as usage charges from Internet access providers or telephone companies, which must be borne by the stockholder. To vote by telephone if you are a stockholder of record of our voting capital stock as of the Record Date, call toll free 1-800-690-6903 and follow the instructions provided by the recorded message. To vote by telephone if you are a beneficial owner of our voting capital stock as of the Record Date (i.e., your shares are held in a brokerage account or by another nominee), call the toll free number listed on your voting instruction form or follow the instructions provided by your broker. To vote through the Internet, log on to the Internet and go to www.proxyvote.com and follow the steps on the secure website. In either case, have your Control Number(s) listed on your Internet Notice or proxy available for voting.
The Company will provide shareholders with a copy of its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on February 26, 2016, including financial statements and financial statement schedules, without charge, upon written request to the Company's Secretary, at Revlon, Inc., One New York Plaza, 49th Floor, New York, NY 10004, attention: Michael T. Sheehan (or via email to michael.sheehan@revlon.com). In order to ensure timely delivery of such documents prior to the 2016 Annual Meeting, any request should be sent to the Company promptly.
For your convenience, please note that current electronic printable copies of the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as well as a copy of our Internet Notice and this Proxy Statement, are available on the Company's website at www.revloninc.com under the heading SEC Filings, as well as the SEC's website at www.sec.gov through the Filings and Forms (EDGAR) pages. In addition, electronic printable copies of the Corporate Governance Guidelines, Board Guidelines for Assessing Director Independence, Code of Conduct and Business Ethics, Audit Committee Pre-Approval Policy and the current charters of the Audit Committee and Compensation Committee are available at www.revloninc.com under the heading Corporate Governance. Any person wishing to receive an electronic copy of Revlon, Inc.'s 2015 Form 10-K, without charge, may send an email making such a request and including a return email address to michael.sheehan@revlon.com (note that the Company's ability to respond may be subject to file size limitations imposed by Internet service providers and e-mail services).
Management does not intend to present any other items of business and is not aware of any matters other than those set forth in this Proxy Statement that will be presented for action at the 2016 Annual Meeting. However, if any other matters properly come before the 2016 Annual Meeting, the persons designated by the Company as proxies may vote the shares of voting capital stock that they represent in their discretion.
By Order of the Board of Directors
Michael T. Sheehan
Senior Vice President, Deputy General Counsel and Secretary
New York, New York
April 29, 2016
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Pitney Bowes(2)
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Air Products and Chemicals(2)
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G&K Services(1)
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Plexus(1)
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Alexion Pharmaceuticals(1)
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GAF Materials(1)
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Praxair(2)
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Allegion(1)
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General Atomics(1)
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Rackspace(1)
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American Crystal Sugar(1)
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General Dynamics(2)
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Rayonier Advanced Materials(1)(2)
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Americas Styrenics(1)
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General Mills(2)
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Recreational Equipment(1)
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AMETEK(2)
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GlaxoSmithKline(2)
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Regal-Beloit(1)
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AMSTED Industries(2)
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Graco(1)
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Revlon(1)
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Amway(2)
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Granite Construction(1)
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Rockwell Automation(2)
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Ansell(1)
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H.B. Fuller(1)(2)
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Rockwell Collins(2)
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Arby’s Restaurant Group(1)
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Halyard Health(1)
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Rowan Companies(1)
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Arcadis(1)(2)
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Hanesbrands(2)
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SAS Institute(1)
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Ashland(2)
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Harsco(1)(2)
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Scholastic(1)
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Armstrong World Industries(1)(2)
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Harris(2)
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Schreiber Foods(2)
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Automatic Data Processing(2)
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Henry Schein(2)
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Schwan Food Company(1)
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Avery Dennison(2)
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Herman Miller(1)
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Scotts Miracle-Gro(1)
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Arup USA(1)
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Hertz(2)
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Scripps Networks Interactive(1)(2)
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Avintiv(1)
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Hexcel(1)(2)
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Sealed Air(2)
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Ball(2)
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HNI(1)
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Select Comfort(1)
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Bayer Business & Technology Services(2)
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HNTB(1)
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ServiceMaster Company(1)
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Blount International(1)
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Houghton Mifflin Harcourt Publishing(1)
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Sherwin-Williams(2)
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Beam Suntory(2)
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Hormel Foods(2)
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Sigma-Aldrich(1)
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BMC Software(1)
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Hunt Consolidated(2)
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Smiths Group(2)
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Bechtel Nuclear, Security & Environmental(2)
|
Husky Injection Molding Systems(1)
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Snap-on(1)(2)
|
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Bob Evans Farms(1)
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IBM(2)
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Solenis(1)(2)
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BorgWarner(2)
|
ICF International(1)
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Sonoco Products(2)
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Brady Brembo(1)
|
IDEX Corporation(1)(2)
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Spirit AeroSystems(2)
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Brickman Group(1)(2)
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IDEXX Laboratories(1)
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Spirit Airlines(1)
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Bristol-Myers Squibb(2)
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IMS Health(1)
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Stanley Black & Decker(2)
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Broadridge Financial Solutions(1)
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Ingersoll Rand(2)
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Starbucks Coffee(2)
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C.R. Bard(1)
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Intelsat(1)
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Steelcase(1)(2)
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Cargill(2)
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Intercontinental Hotels Group(1)
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SunCoke Energy(1)
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Capsugel(1)
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International Flavors & Fragrances(1)(2)
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SunGuard Data Systems(1)
|
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Carmeuse North America Group(1)(2)
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International Game Technology(1)
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Sysco Corporation(2)
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Carpenter Technology(1)(2)
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Irvine Company(1)
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TE Connectivity Ltd.(2)
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Catalent Pharma Solutions(1)(2)
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ITT Corporation(1)(2)
|
TeleTech Holdings(1)
|
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CDK Global(1)(2)
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J.C. Penney Company(2)
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Tempur Sealy(1)
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CDW(2)
|
Jabil Circuit (²)
|
Teradata(1)
|
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Celestica(2)
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Jack in the Box(1)(2)
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Terex(2)
|
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CH2M Hill(2)
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K. Hovnanian Companies(1)(2)
|
Thermo Fisher Scientific(2)
|
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Chemtura(1)(2)
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Kate Spade & Company(1)
|
Thomson Reuters(2)
|
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Children’s Place(1)
|
KB Home(1)
|
Timken(1)
|
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Clearwater Paper Corporation(1)
|
Kellogg(2)
|
TimkenSteel(1)
|
|
Cloud Peak Energy(1)
|
Kennametal(1)
|
Toro(1)
|
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Columbia Sportswear(1)
|
Keysight Technologies(1)
|
Toshiba Medical Research Institute(2)
|
|
Commercial Metals(2)
|
Kohler(2)
|
Total System Service (TSYS)(1)(2)
|
A-1
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Compass(2)
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L-3 Communications(2)
|
Tribune Media(1)
|
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Convergys(1)
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Land O’Lakes(2)
|
Tribune Publishing(1)
|
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Cooper Standard Automotive(1)(2)
|
Leggett and Platt(2)
|
Tronox(1)(2)
|
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Corning(2)
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Lehigh Hanson(2)
|
Tupperware Brands(1)(2)
|
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Covance(1)
|
Leidos(2)
|
UBM(1)
|
|
Cubic(1)
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LexisNexis(2)
|
Underwriters Laboratories(1)
|
|
Curtiss-Wright(1)
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Lincoln Electric(1)(2)
|
Unisys(1)
|
|
Cox Enterprises(2)
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LinkedIn(1)
|
United Launch Alliance(1)
|
|
Cytec Industries(1)(2)
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L'Oréal(2)
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United Technologies(2)
|
|
Darden Restaurants(2)
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Magellan Midstream Partners(1)(2)
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Vectrus(1)
|
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Day & Zimmermann(1)(2)
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Martin Marietta Materials(1)(2)
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Ventura Foods(1)
|
|
Deluxe(1)(2)
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Mary Kay(2)
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Verint Systems(1)
|
|
Demantic Group(1)(2)
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Mattel(2)
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Vesuvius(1)
|
|
Dentsply(1)
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Matthews International(1)(2)
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VF Corporation(2)
|
|
Donaldson(1)(2)
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Medtronic(2)
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Vulcan Materials(1)
|
|
DST Systems(1)(2)
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Merck & Co (²)
|
VWR International(2)
|
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E.W. Scripps(1)
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Navigant Consulting(1)(2)
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Walt Disney(2)
|
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Ecolab(2)
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Navistar International(2)
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Walter Energy(1)(2)
|
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Eastman Kodak(1)(2)
|
NBTY(1)(2)
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Wendy's Group(1)
|
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Edwards Lifesciences(1)
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NCR(2)
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West Pharmaceutical Services(1)
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Eli Lilly(2)
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Nike(2)
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Weyerhaeuser(2)
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Emerson Electric(2)
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Nortek(1)
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Whirlpool(2)
|
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Endo(1)(2)
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Northrop Grumman(2)
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WhiteWave Foods(1)
|
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Equifax(1)(2)
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Novartis(2)
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Wilsonart(1)
|
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Equity Office Properties(1)
|
Nu Skin Enterprises(1)
|
Xylem(2)
|
|
ESCO(1)
|
Nuance Communications(1)
|
YP(1)
|
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Esterline Technologies(1)
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Oakley(2)
|
Yum! Brands(2)
|
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Estée Lauder(2)
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Occidental Petroleum(2)
|
|
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Exel(2)
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Osram Sylvania(2)
|
|
| * | The Towers Watson executive database sector of $1-$3 billion revenue companies (which are identified in Annex A above with footnote (1)) was used to benchmark Messrs. Delpani’s and Simon’s total compensation at target. During 2015, Mr. Pieraccioni served as the Executive Vice President and Global President - Revlon Consumer Division, which for 2015 had net sales of $1,418.8 million compared to the Company’s 2015 total net sales of $1,914.3 million. Applying the previous compensation philosophy, as a division head, Mr. Pieraccioni’s total compensation was compared against the Towers Watson executive database sector of $800 million - $2 billion revenue companies (e.g., multiple profit centers or business units), which are identified in Annex A above with footnote (2). |
A-2
2015 PROXY PEER GROUP
Coty Inc.
Church & Dwight Co. Inc.
International Flavors & Fragrances Inc.
The Hain Celestial Group, Inc.
Edgewell Personal Care Company
Tupperware Brands Corporation
Nu Skin Enterprises Inc.
Helen of Troy Limited
Sensient Technologies Corporation
Elizabeth Arden, Inc.
Prestige Brands Holdings, Inc.
B-1
REVLON, INC.
2016 AUDIT COMMITTEE PRE-APPROVAL POLICY
| I. | Statement of Principles |
The Audit Committee is required to pre-approve the audit and non-audit services performed by the Company’s independent auditor, KPMG LLP (“KPMG LLP” or the “independent auditor”), in order to assure that KPMG LLP’s provision of such services does not impair its independence. Unless a type of service to be provided by the independent auditor is within the pre-approved services and dollar limits set forth in the appendices attached to this Policy, the provision of such service by the independent auditor will require specific pre-approval by the Audit Committee.
The appendices to this Policy describe the Audit Services, Audit-Related Services, Tax Services and All Other Services that have the general pre-approval of the Audit Committee for 2016, as well as the applicable dollar limits for the particular services. The Audit Committee will annually review and pre-approve the services that may be provided by the independent auditor without obtaining specific pre-approval from the Audit Committee. The Audit Committee may revise the list of general pre-approved services from time to time. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent auditor to management.
| II. | Delegation |
The Audit Committee may delegate pre-approval authority to one or more of its members for Audit-Related, Tax Services or All Other Services (each as defined below) to be provided by the independent auditor (but excluding Annual Audit Services referred to in Section III below and prohibited services referred to in Section VII below). Specifically, the Chairman of the Audit Committee may approve services which are not Annual Audit Services referred to in Section III below or prohibited services referred to in Section VII below if the fees as to any applicable project will not exceed $35,000, provided that the independent auditor complies with any applicable rules or requirements of this Policy to document the services to the Audit Committee and to discuss such services with the Audit Committee. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at least quarterly on the services provided by KPMG LLP and the approximate fees paid or payable to KPMG LLP for such services during the preceding quarter, including a report on any services pre-approved during such quarter by the Chairman of the Audit Committee pursuant to this Section II .
| III. | Audit Services |
The terms and fees of the annual Audit Services engagement, including, without limitation, the independent auditor’s services in connection with the audit of the Company’s annual financial statements and internal control over financial reporting and the independent auditor’s review of the Company’s financial statements included in the Company’s quarterly reports on Form 10-Q, will be subject to the specific pre-approval of the Audit Committee. The Audit Committee will also approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope or other matters.
In addition to the foregoing annual Audit Services engagement, the Audit Committee may grant pre-approval for other Audit Services, which are those services that are normally provided by the independent auditor in connection with statutory and regulatory filings or engagements for those fiscal years and other services that generally only the independent auditor reasonably can provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC. The Audit Committee has pre-approved the other Audit Services listed in Appendix A, provided that such services do not exceed the pre-approved fees set forth on Appendix A. All other Audit Services not listed in Appendix A must be specifically pre-approved by the Audit Committee.
| IV. | Audit-related Services |
Audit-Related Services are assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements or that are traditionally performed by the independent auditor, and in each case which are not covered by the Audit Services described in Section III. Such services could include, among other things, employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, attest services and internal control reviews that are not required by statute
C-1
and regulation and consultations concerning financial accounting and reporting standards. The Audit Committee believes that the provision of Audit-Related Services does not impair the independence of the auditor, and has pre-approved the Audit-Related Services listed in Appendix B, provided that such services do not exceed the pre-approved fees set forth on Appendix B. All other Audit-Related Services not listed in Appendix B must be specifically pre-approved by the Audit Committee, except to the extent covered by the delegation of authority under Section II above. As to all non-audit internal control services for the Company, the independent auditor must: (1) describe in writing to the Audit Committee the scope of the proposed non-audit internal control service; (2) discuss with the Audit Committee any potential effects on the independent auditor’s independence that could be caused by the independent auditor’s performance of the proposed non-audit internal control service; and (3) document the substance of such discussions with the Audit Committee.
| V. | Tax Services |
The Audit Committee believes that the independent auditor can provide certain Tax Services to the Company, such as: (i) tax compliance (e.g., preparing original and amended state and federal corporate tax returns, planning for estimated tax payments and preparation of tax return extensions); (ii) tax advice; and (iii) tax planning, without impairing the auditor’s independence. Tax advice and tax planning could include, without limitation, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and employee benefit plans and request for rulings or technical advice from taxing authorities. However, the Audit Committee will not permit the retention of the independent auditor (or any affiliate of the independent auditor) in connection with the provision of any prohibited tax service listed in Exhibit 1 to the Company or its affiliates, as the PCAOB has determined that such prohibited tax services would impair the independent auditor’s independence.
The Audit Committee has pre-approved the Tax Services listed in Appendix C, provided that such services do not exceed the pre-approved fees set forth on Appendix C. All other Tax Services for the Company not listed in Appendix C must be specifically pre-approved by the Audit Committee, except to the extent covered by the delegation of authority under Section II above, provided that the independent auditor complies with any applicable rules and the following requirements to document the applicable Tax Services to the Audit Committee and to discuss such services with the Audit Committee.
As to all Tax Services for the Company, the independent auditor must: (1) describe in writing to the Audit Committee the scope of the proposed Tax Service, the proposed fee structure for the engagement and any agreement between the independent auditor and the Company and its affiliates relating to the proposed Tax Service; (2) describe in writing to the Audit Committee any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the independent auditor or any of its affiliates and any person (other than the Company and its affiliates) with respect to the promoting, marketing or recommending of any transaction covered by the Tax Service; (3) discuss with the Audit Committee any potential effects of the proposed Tax Services on the independence of the independent auditor; and (4) document the substance of such discussions with the Audit Committee.
| VI. | All Other Services |
The Audit Committee may grant general pre-approval to those permissible non-audit services classified as All Other Services that it believes are routine and recurring services, and would not impair the independence of the auditor, provided such All Other Services may not include Audit Services referred to in Section III above or prohibited services referred to in Section VII below. The Audit Committee has pre-approved the All Other Services listed in Appendix D, provided that such services do not exceed the pre-approved fees set forth on Appendix D. Permissible All Other Services other than those listed in Appendix D must be specifically pre-approved by the Audit Committee, except to the extent covered by the delegation of authority under Section II above.
| VII. | Prohibited Services |
The Company will not retain its independent auditors for any services that are “prohibited services” as defined by applicable statutes or regulations, as may be in effect from time to time, including, without limitation, those services prohibited by Section 201(a) of the Sarbanes-Oxley Act of 2002 and the SEC’s or the PCAOB’s rules and regulations and such other rules and regulations as may be promulgated thereunder from time to time. Attached to this policy as Exhibit 1 is a current list of the SEC’s and PCAOB’s prohibited non-audit services, including prohibited tax services.
C-2
VIII. Pre-Approval Fee Levels
Pre-approval fee levels for all services to be provided by the independent auditor will be established annually by the Audit Committee. Any services proposed to be provided by the independent auditors during a fiscal year exceeding these levels will require specific pre-approval by the Audit Committee.
| IX. | Procedures |
Requests or applications to provide services that require specific approval by the Audit Committee may be submitted to the Audit Committee by the independent auditor and any of the Company’s Chief Financial Officer, Chief Accounting Officer and Corporate Controller or General Counsel.
C-3
Appendix A to Annex C
Pre-Approved Audit Services for Fiscal Year 2016
Dated: November 3, 2015
|
Service
|
Total Pre-Approved Annual Fees for Pre-Approved Audit Services: $50,000 |
|
|
1.
|
Statutory audits or financial audits for subsidiaries of the Company
|
|
|
2.
|
Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters, consents), and assistance in responding to SEC comment letters
|
|
|
3.
|
Consultations by the Company’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard setting bodies
|
|
C-4
Appendix B to Annex C
Pre-Approved Audit-Related Services for Fiscal Year 2016*
Dated: November 3, 2015
|
Service
|
Total Pre-Approved Annual Fees for Pre-Approved Audit-Related Services: $200,000 |
|
|
1.
|
Due diligence services pertaining to potential business acquisitions/dispositions
|
|
|
2.
|
Financial statement audits of employee benefit plans
|
|
|
3.
|
Agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters
|
|
|
4.
|
Attest services and internal control reviews not required by statute or regulation
|
|
|
5.
|
Audit work in connection with liquidations and contract terminations; legal entity dissolution/restructuring assistance; and inventory audits
|
|
| * | The foregoing pre-approval of non-audit internal control services identified on this Appendix B is subject in all cases to compliance with Section IV of this Pre-Approval Policy, including without limitation, compliance with applicable rules to document the services to the Audit Committee and to discuss such services with the Audit Committee. |
C-5
Appendix C to Annex C
Pre-Approved Tax Services for Fiscal Year 2016*
Dated: November 3, 2015
|
Service
|
Total Pre-Approved Annual Fees for Pre-Approved Tax Services: $500,000 |
|
|
1.
|
U.S. federal, state and local tax compliance, including, without limitation, review of income, franchise and other tax returns
|
|
|
2.
|
International tax compliance, including, without limitation, review of income, franchise and other tax returns
|
|
|
3.
|
U.S. federal, state and local tax advice, including, without limitation, general tax advisory services
|
|
|
4.
|
International tax advice, including, without limitation, intercompany pricing and advanced pricing agreement services, general tax advisory services and tax audits and appeals services
|
|
| * | The foregoing pre-approval of Tax Services identified on this Appendix C is subject in all cases to compliance with Section V of this Pre-Approval Policy, including without limitation, compliance with applicable rules to document the services to the Audit Committee and to discuss such services with the Audit Committee. |
C-6
Appendix D to Annex C
Pre-Approved All Other Services for Fiscal Year 2016
Dated: November 3, 2015
|
Service
|
Total Pre-Approved Annual Fees for Pre-Approved All Other Services: $35,000 per project |
|
|
All Other Services approved by the Chairman of the Audit Committee pursuant to Section II of this policy, provided that the independent auditor complies with any applicable rules and requirements of this Policy to document the services to the Audit Committee and to discuss such services with the Audit Committee (and in each case excluding Audit Services described in Section III and prohibited services described in Section VII).
|
||
C-7
Exhibit 1 to Annex C
| I. | PROHIBITED NON-AUDIT SERVICES |
| • | Bookkeeping or other services related to the accounting records or financial statements of the audit client |
| • | Financial information systems design and implementation* |
| • | Appraisal or valuation services, fairness opinions or contribution-in-kind reports* |
| • | Actuarial services* |
| • | Internal audit outsourcing services* |
| • | Management functions |
| • | Human resources |
| • | Broker-dealer, investment adviser or investment banking services |
| • | Legal services |
| • | Expert services unrelated to the audit |
Each of these prohibited services is subject to applicable exceptions under the SEC’s rules.
*Unless it is reasonable to conclude that the results of these services will not be subject to audit procedures during an audit of the audit client’s financial statements.
| II. | PROHIBITED TAX SERVICES |
The PCAOB has determined the following services to be “Prohibited Tax Services” for the independent auditor (including any affiliate of the independent auditor, as defined in PCAOB Rule 3501(a)(i)):
| • | any service or product by the independent auditor or any of its affiliates for the Company and its affiliates for a contingent fee or a commission, including any fee established for the sale of a product or the performance of any service pursuant to an arrangement in which no fee would be payable unless a specified finding or result is attained or the amount of the fee is otherwise dependent on the finding or result of such product or service, taking into account any rights to reimbursements, refunds or other repayments that could modify the amount received in a manner that make it contingent on a finding or result (excluding fees where the amount is fixed by courts or other public authorities and is not dependent on a finding or result), or the independent auditor or any of its affiliates receives, directly or indirectly, a contingent fee or commission; |
| • | non-audit services by the independent auditor or any of its affiliates for the Company and its affiliates related to marketing, planning or opining in favor of the tax treatment of a “confidential transaction” as defined under PCAOB Rule 3501(c)(i) or an “aggressive tax position transaction” (including, without limitation, any transaction that is a “listed transaction” under applicable U.S. Treasury regulations) that was (i) initially recommended, directly or indirectly, by the independent auditor or another tax advisor with which the independent auditor has a formal agreement or other arrangement related to the promotion of such transactions, and (ii) a significant purpose of which is tax avoidance, unless the proposed tax treatment is at least more likely than not to be allowable under applicable tax laws; and |
| • | tax services by the independent auditor or any of its affiliates for persons that serve in a financial reporting oversight role at the Company or its affiliates, including any employee who is in a position to, or does, exercise influence over the contents of the Company’s financial statements or any employee who prepares the financial statements, including, without limitation, the Company’s chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer or any equivalent position, including for any immediate family member of such employees (being such employee’s spouse, spousal equivalent and dependents), but excluding tax services for (i) any person who serves in a financial reporting oversight role for the Company or its affiliates solely because such person serves as a member of the Board of Directors, the Audit Committee, any other Board committee or similar management or governing body of the Company or its affiliates (in each case who do not otherwise occupy an employment position in a financial oversight role), (ii) any person serving in a financial reporting oversight role at the Company or its affiliates only because of such person’s relationship to an affiliate of the Company if such affiliate’s financial statements (1) are not material to the Company’s consolidated |
C-8
financial statements or (2) are audited by an auditor other than the Company’s independent auditor or its associated persons and (iii) employees who were not in a financial reporting oversight role for the Company or its affiliates before a hiring, promotion or other change in employment event and the tax services were provided by the independent auditor or any of its affiliates to such person pursuant to an engagement in process before the hiring, promotion or other change in employment event, provided that such tax services are completed on or before 180 days after the hiring or promotion event.
Last reviewed and updated as of November 3, 2015
C-9
REVLON AMENDED AND RESTATED EXECUTIVE INCENTIVE COMPENSATION PLAN
(as amended and restated as of March 24, 2016)
| Section 1. | Purpose. The purpose of this Revlon Amended and Restated Executive Incentive Compensation Plan is to provide an annual cash incentive program and a long-term cash incentive program intended to: |
| • | attract, retain and incentivize eligible executives and other employees necessary to operate the Company; |
| • | incentivize Plan participants to achieve objectives which are tied to the achievement of the Company’s business plan and strategy, to enhance shareholder value; |
| • | reflect the Company’s commitment to pay for performance; and |
| • | in the case of Covered Employees, be directly related to the Company’s performance results and be contingent upon the achievement of certain corporate goals during any Annual Award Performance Period or Long-Term Award Performance Period, as the case may be, for which the Plan is intended to satisfy the requirements of Section 162(m). |
| Section 2. | Definitions. The following terms, as used in this Plan, have the following meanings: |
“Annual Award” means an incentive compensation award payable to a Participant pursuant to Section 5 of this Plan, which is contingent upon the attainment of certain Performance Factors with respect to a designated Annual Award Performance Period.
“Annual Award Performance Period” means the calendar year or any other period the Committee may determine covering an Annual Award, provided, however, that an Annual Award Performance Period for a Participant who becomes employed by the Company during an on-going Annual Award Performance Period may be a shorter period that commences with such employee’s date of commencement of employment.
“Award” means an Annual Award and/or a Long-Term Award payable to a Participant under this Plan, as the case may be.
“Board” means Revlon, Inc.’s Board of Directors.
“Business Unit” means a Group or Division, product line or any combination thereof.
“Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.
“Committee” means the Compensation Committee of the Board, or such other committee or sub-committee as may be appointed by either the Board or the Compensation Committee of the Board to administer this Plan in accordance with Section 3 of this Plan, provided however, that, in respect of the administration of any Award that is intended to satisfy Section 162(m), such administration may be done by a sub-committee or sub-group of at least two directors, each of whom shall be an “outside director” within the meaning of Section 162(m).
“Company” means Revlon Consumer Products Corporation, a Delaware corporation, and its participating affiliates.
“Covered Employee” has the meaning set forth in Section 162(m)(3) of the Code.
“Disability” means permanent disability, as determined pursuant to the Company’s long-term disability plans or policies in effect at the time of such disability and applicable to a Participant.
“Division” means any of the Company’s business units that may be designated as a division for purposes of this Plan from time to time.
“Eligible Employee” means (A) for Annual Award eligibility, (i) an employee of the Company whose position is classified under the Company’s exempt salary program in salary grades 9 and above (or the equivalent of such grades) and who does not participate in the Company’s sales incentive plan, (ii) a regional or country general manager and any other key executive of the Company’s operations outside the United States who does not participate in a local incentive plan, and/or (iii) such other key employees of the Company as the Committee may designate from time to time, and (B) for Long-Term Award eligibility, such key employees of the Company as the Committee may designate from time to time.
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“Group” means a major business unit of the Company reporting directly to the Company level.
“Long-Term Award” means an incentive compensation award payable to a Participant pursuant to Section 6 of this Plan, which is contingent upon the attainment of certain Performance Factors with respect to a designated Long-Term Award Performance Period.
“Long-Term Award Performance Period” means the calendar year or any other period the Committee may determine covering a Long-Term Award, provided, however, that a Long-Term Award Performance Period for a Participant who becomes employed by the Company during an on-going Long-Term Award Performance Period may be a shorter period that commences with such employee’s date of commencement of employment.
“Participant” means, with respect to any respective Performance Period, each Eligible Employee who receives (or is eligible to receive) an Annual Award or a Long-Term Award in accordance with Section 4 of this Plan.
“Performance Factors” means the criteria and objectives determined by the Committee, which must be met during a Performance Period as a condition of payment to a Participant of an Annual Award or a Long-Term Award, as the case may be. Performance Factors may include any or all of the following, or any combination thereof:
| (a) | stock price; |
| (b) | fair market value; |
| (c) | book value; |
| (d) | third party appraised value; |
| (e) | market share; |
| (f) | total shareholder return; |
| (g) | earnings per share; |
| (h) | cash flow, including, without limitation, cash flow from operations and/or free cash flow; |
| (i) | return on equity, assets, capital or investment; |
| (j) | net income; |
| (k) | operating profit or income; |
| (l) | operating income before restructuring charges, plus depreciation and amortization other than relating to early extinguishment of debt and debt issuance costs; |
| (m) | gross or net sales; |
| (n) | expense targets; |
| (o) | working capital targets, including, without limitation, those relating to inventory, accounts receivable and/or capital and display spending; |
| (p) | operating margin; |
| (q) | productivity improvement; |
| (r) | cost, expense or debt reduction; |
| (s) | gross margin; |
| (t) | earnings before all or any of interest, taxes, depreciation and/or amortization (“EBIT”, “EBITA,” “EBITDA” or as may otherwise be adjusted by the Company); |
| (u) | revenue; |
| (v) | unit sales; |
| (w) | earnings from continuing operations; |
| (x) | asset management (e.g., inventory and receivable levels); |
| (y) | planning accuracy (as measured by comparing planned results to actual results); |
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| (z) | customer satisfaction based on market share or other relevant factors; |
| (aa) | implementation or completion of critical projects or processes, including, without limitation, growing consumption of the Company’s products, enhancing new product development, enhancing demand, supply and financial business planning processes, completing asset dispositions, engaging in capital markets transactions to refinance all or a portion of the Company’s indebtedness, reducing interest expense or otherwise strengthening the Company’s balance sheet, reducing Selling, General and Administrative expenses, ensuring Company products are in stock at retail, consolidating plants, and improving employee satisfaction surveys with quantifiable results; and |
| (bb) | management of employees, including training, development and succession planning processes based on achievement of determinable results from such activities and processes. |
Performance Factors may relate to the performance of the Company, a Subsidiary or any portion of a Business Unit, and may be expressed on an aggregate, per share (outstanding or fully diluted), per unit or other basis. The Committee, in its sole discretion, may determine to express Performance Factors, among other methods, in terms of attaining a specified level of a particular criteria, attainment of a percentage increase or decrease in a particular criteria, or as applied to the performance of the Company, a Subsidiary or a Business Unit, relative to a market index, a group of other companies (or their subsidiaries, business units or product lines) or a combination thereof, or otherwise.
Subject to final review and approval by the Committee, Performance Factors (other than with respect to Covered Employees during any Performance Period for which the Plan is intended to satisfy the requirements of Section 162(m)) may also be developed by each Company Department Head and approved by the Company’s President and Chief Executive Officer and the Company’s senior-most Human Resources officer. In addition, Performance Factors (other than with respect to Covered Employees during any Performance Period for which the Plan is intended to satisfy the requirements of Section 162(m)) may be based on personal performance objectives that are specific to each individual and that are based upon, among other things, contribution to specific projects and/or overall performance, as measured under the Company’s performance evaluation process as in effect from time to time. Personal performance objectives may be developed by each Participant’s Department Head, approved by the Company’s senior-most Human Resources officer (or his designee) and reviewed with the Participant.
Performance Factors may include:
| (i) | a threshold level of performance below which no payment shall be made; |
| (ii) | levels of performance below the target level but above the threshold level at which specified percentages of the Award shall be paid; |
| (iii) | a target level of performance at which the full Award shall be paid; |
| (iv) | levels of performance above the target level but below the maximum level at which specified multiples of the Award shall be paid; or |
| (v) | a maximum level of performance above which no additional payment shall be made. |
Performance Factors may also specify that payments for levels of performance between specified levels will be interpolated.
The Committee (subject to its power to delegate pursuant to Section 3(c) of the Plan) shall have the sole discretion to determine whether, or to what extent, Performance Factors are achieved, provided, however, that the Committee shall have the authority to make appropriate adjustments in Performance Factors under an Award to reflect the impact of “extraordinary items” not reflected when such goals were established. For purposes of this Plan, “extraordinary items” means:
| (1) | any profit or loss attributable to acquisitions or dispositions of stock or assets; |
| (2) | any changes in accounting standards or treatments that may be required or permitted by the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board, or adopted by the Company or its Subsidiaries after the goal is established; |
| (3) | all items of gain, loss or expense related to the Company’s restructuring charges; |
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| (4) | all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of assets; |
| (5) | all items of gain, loss or expense related to discontinued operations; |
| (6) | the impact of capital expenditures; |
| (7) | the impact of share repurchases and other changes in the number of outstanding shares; |
| (8) | the impact of foreign exchange rates; |
| (9) | all items of gain, loss or expense related to changes in customer business models, to the extent permissible under Section 162(m); |
| (10) | such other items as may be prescribed by Section 162(m); and |
| (11) | such other items required by applicable law, regulation or rule. |
“Performance Period” means an Annual Award Performance Period and/or a Long-Term Award Performance Period under this Plan, as the case may be.
“Plan” means this Revlon Amended and Restated Executive Incentive Compensation Plan (as in effect from time to time).
“Retirement” means the voluntary termination of a Participant’s employment on or after the later of the date the Participant attains age 62 or the fifth anniversary of the date such Participant commenced employment with the Company.
“Section 162(m)” means Code section 162(m) and the Treasury regulations, notices and rulings thereunder.
“Section 409A” means Code section 409A and the Treasury regulations, notices and rulings thereunder.
“Subsidiary” means any company, partnership, limited liability company, business or entity (other than the Company) of which at least 50% of the combined voting power of its voting securities is, or the operations and management are, directly or indirectly controlled by the Company.
| Section 3. | Administration. |
| (a) | In General. The Plan shall be administered by the Committee. The Committee shall have the authority, in its sole discretion (but subject to and not inconsistent with the terms of this Plan), to administer this Plan and to exercise all powers and authorities either specifically granted to it under this Plan or necessary or advisable in the administration of this Plan. The Committee’s authority includes, without limitation, the authority to: |
| (i) | grant Awards; |
| (ii) | determine the Participants to whom and the time or times at which Awards shall be granted from the group of Eligible Employees; |
| (iii) | determine the amount of Awards, which may be stated in dollars or, provided a maximum Award amount is specified, as a percentage of base salary or otherwise; |
| (iv) | determine the terms, conditions, restrictions and performance criteria, including Performance Factors, relating to any Award; |
| (v) | determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, or surrendered; |
| (vi) | make adjustments in the Performance Factors in recognition of “extraordinary items” (as defined above); |
| (vii) | construe and interpret this Plan and any Award; |
| (viii) | prescribe, amend and rescind rules and regulations relating to this Plan; and |
| (ix) | make all other determinations deemed necessary or advisable for the administration of this Plan. |
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| (b) | Committee Members. The Committee shall consist of two or more persons. All decisions, determinations and interpretations of the Committee shall be final and binding on all persons, including the Company and the Participant (or any person claiming any rights under the Plan from or through any Participant). |
| (c) | Delegation. Except with respect to Covered Employees during any Performance Period for which the Plan is intended to satisfy the requirements of Section 162(m), or as otherwise required for compliance with other applicable law or applicable exchange listing requirements, the Committee may delegate any or all of its authority under this Plan to any employee or committee of employees of the Company, including but not limited to, the Chief Executive Officer. Any such delegate shall have all of the rights, obligations, discretion and protection otherwise applicable to the Committee under this Plan. |
| Section 4. | Eligibility. The Committee shall designate the Participants. In determining Participants and the Performance Factors relating to each Award, the Committee shall take into account such factors as the Committee shall deem relevant while accomplishing the purposes of this Plan. Unless the Committee otherwise determines and except as provided in Sections 5(e), (f) or (g) and Sections 6(e), (f) or (g) of this Plan, no person may participate in the Plan or receive any Award under this Plan unless he or she is actively employed as of the date of payment of an Award and shall have signed and shall be in full compliance with (A) the Company’s Employee Agreement as to Confidentiality and Non-Competition and the Company’s Code of Conduct and Business Ethics (as each may be amended from time to time by the Company) and (B) to the extent applicable, any applicable employment agreement. |
| Section 5. | Annual Award Program. |
| (a) | In General. Not later than 90 days after the beginning of an Annual Award Performance Period (or, if earlier, on or prior to the date on which 25% of such Annual Award Performance Period has elapsed) or such shorter period, if any, as may be required by applicable law, including Section 162(m), the Committee shall specify in writing, by resolution of the Committee or other appropriate action, the Participants for such Annual Award Performance Period and the Performance Factors applicable to each Annual Award for each Participant with respect to such Annual Award Performance Period; provided, however, that with respect to any Participants who are not Covered Employees or for any Annual Award Performance Period for which the Plan is not intended to satisfy the requirements of Section 162(m), the Committee shall make such written specification either within 90 days after the beginning of such Annual Award Performance Period or as soon as practicable thereafter. Annual Awards, including the terms and conditions of such Annual Awards, shall be communicated to Participants in such form as the Committee from time to time approves. Unless otherwise provided by the Committee in connection with specified terminations of employment, or except as set forth below in this Section 5, payment in respect of Annual Awards shall be made only to the extent that the Committee determines that the Performance Factors with respect to the Annual Award Performance Period have been attained. |
| (b) | Special Provisions Regarding Annual Awards. Notwithstanding anything to the contrary contained in this Plan, in no event shall payment in respect of Annual Awards granted to any Participant attributable to any single calendar year (including, without limitation, as a portion of the applicable Annual Award Performance Period) exceed $5 million. The Committee may, in its sole discretion, decrease the amount of an Annual Award payable upon attainment of specified Performance Factors, but in no event may the Committee increase the amount of an Annual Award payable upon attainment of specified Performance Factors to a Covered Employee in respect of any Annual Award Performance Period for which the Plan is intended to satisfy the requirements of Section 162(m). |
| (c) | Time and Form of Payment of Annual Awards - In General. Except as may otherwise be provided or permissible to satisfy the requirements of the Code or other applicable laws, all payments in respect of Annual Awards for an Annual Award Performance Period shall be made, in cash, by the 15th day of the third month following the end of the Annual Award Performance Period. |
| (d) | Payment of Annual Awards to Covered Employees. In addition to the provisions set forth in subsection 5(c) above, in the case of Participants who are Covered Employees, unless otherwise determined by the Committee, such payments shall be made only after achievement of the Performance Factors have been certified by the Committee. |
| (e) | Payment of Annual Awards to Actively Employed Employees. Unless otherwise provided by the Committee, and except as provided in the following sentence, a Participant must be actively employed by the Company as of the |
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date of payment of an Annual Award in order to be eligible to receive payment in respect of such Annual Award. With respect to any Participant whose employment is terminated at any time prior to the expiration of an Annual Award Performance Period or thereafter but prior to the date of payment (if any) for such Annual Award Performance Period as a result of death, Disability, Retirement, or by the Company for a reason other than that which would disqualify such Participant from eligibility to receive separation pay under the Revlon Executive Severance Pay Plan as in effect on the date of this Plan, the Committee may (but has no obligation to), in its sole discretion, determine to provide such Participant payment under his or her Annual Award for such Annual Award Performance Period at the time payment is made to other Participants in respect of such Annual Award Performance Period (which payment may be prorated, if the Committee so provides, based on the number of days such Participant was employed during such Annual Award Performance Period, or as the Committee otherwise determines is appropriate).
| (f) | Payment of Annual Awards to Transferred Employees; Change of Assignment. If a Participant has a change of assignment or transfer during an Annual Award Performance Period, the Committee may, in its sole discretion, determine that such Participant’s Annual Award be calculated for each position on a pro-rated basis. Similarly, the Committee may, in its sole discretion, determine that an Eligible Employee who is newly hired or who becomes eligible to join this Plan after the start of the Annual Award Performance Period, shall be eligible for a pro-rated Annual Award based on the percentage of the Annual Award Performance Period actually worked while a Participant. |
| (g) | Payment of Annual Awards - Leaves of Absence. If a Participant takes an approved leave of absence of more than three months during all or part of an Annual Award Performance Period, the Committee may, in its sole discretion, determine that such Participant shall be eligible for a pro-rated Annual Award based on the percentage of the Annual Award Performance Period that such Participant was actively employed. |
| Section 6. | Long-Term Award Program. |
| (a) | In General. Not later than 90 days after the beginning of a Long-Term Award Performance Period or such period, if any, as may be required by Section 162(m), the Committee shall specify in writing, by resolution of the Committee or other appropriate action, the Participants for such Long-Term Award Performance Period and the Performance Factors applicable to each Long-Term Award for each Participant with respect to such Long-Term Award Performance Period; provided, however, that with respect to any Participants who are not Covered Employees or for any Long-Term Award Performance Period for which the Plan is not intended to satisfy the requirements of Section 162(m), the Committee shall make such written specification either within 90 days after the beginning of such Long-Term Award Performance Period or as soon as practicable thereafter. Long-Term Awards, including the terms and conditions of such Long-Term Awards, shall be communicated to Participants in such form as the Committee from time to time approves. Unless otherwise provided by the Committee in connection with specified terminations of employment, or except as set forth below in this Section 6, payment in respect of Long-Term Awards shall be made only to the extent that the Committee determines that the Performance Factors with respect to the Long-Term Award Performance Period (and any portion thereof, as applicable) have been attained. |
| (b) | Special Provisions Regarding Long-Term Awards. Notwithstanding anything to the contrary contained in this Plan, in no event shall payment in respect of Long-Term Awards granted to any Participant attributable to any single calendar year (including, without limitation, as a portion of the applicable Long-Term Award Performance Period) exceed $10 million. The Committee may, in its sole discretion, decrease the amount of a Long-Term Award payable upon attainment of specified Performance Factors, but in no event may the Committee increase the amount of a Long-Term Award payable upon attainment of specified Performance Factors to a Covered Employee in respect of any Long-Term Award Performance Period for which the Plan is intended to satisfy the requirements of Section 162(m). |
| (c) | Time and Form of Payment of Long-Term Awards - In General. Except as may otherwise be provided or permissible to satisfy the requirements of the Code or other applicable laws, all payments in respect of Long-Term Awards for a Long-Term Award Performance Period shall be made, in cash, by the 15th day of the third month following the end of the Long-Term Award Performance Period or in partial payments at such other times or intervals as the Committee may determine. |
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| (d) | Payment of Long-Term Awards to Covered Employees. In addition to the provisions set forth in subsection 6(c) above, in the case of Participants who are Covered Employees, unless otherwise determined by the Committee, such payments shall be made only after achievement of the Performance Factors has been certified by the Committee. |
| (e) | Payment of Long-Term Awards to Actively Employed Employees. Unless otherwise provided by the Committee, and except as provided in the following sentence or under Section 6(i), a Participant must be actively employed by the Company as of the date(s) of payment of a Long-Term Award in order to be eligible to receive payment(s) in respect of such Long-Term Award. In the event of a Long Term Award made in partial payments as provided in paragraph 6(c) above, a Participant who ceases to be actively employed after receipt of a partial payment shall forfeit any partial payments which would otherwise be made after he or she ceases to be actively employed. With respect to any Participant whose employment is terminated at any time prior to the expiration of a Long-Term Award Performance Period or thereafter but prior to the date of payment (if any) for such Long-Term Award Performance Period as a result of death, Disability, Retirement, or by the Company for a reason other than that which would disqualify such Participant from eligibility to receive separation pay under the Revlon Executive Severance Pay Plan as in effect on the date of this Plan, the Committee may (but has no obligation to), in its sole discretion, determine to provide such Participant payment under his or her Long-Term Award for such Long-Term Award Performance Period at the time payments are made to other Participants in respect of such Long-Term Award Performance Period (which payment(s) may be prorated, if the Committee so provides, based on the number of days such Participant was employed during such Long-Term Award Performance Period, or as the Committee otherwise determines is appropriate). |
| (f) | Payment of Long-Term Awards to Transferred Employees; Change of Assignment. If a Participant has a change of assignment or transfer during a Long-Term Award Performance Period, the Committee may, in its sole discretion, determine that such Participant’s Long-Term Award be calculated for each position on a pro-rated basis. Similarly, the Committee may, in its sole discretion, determine that an Eligible Employee who is newly hired or who becomes eligible to join this Plan after the start of the Long-Term Award Performance Period, shall be eligible for a pro-rated Long-Term Award based on the percentage of the Long-Term Award Performance Period actually worked while a Participant. |
| (g) | Payment of Long-Term Awards - Leaves of Absence. If a Participant takes an approved leave of absence of more than three months during all or part of a Long-Term Award Performance Period, the Committee may, in its sole discretion, determine that such Participant shall be eligible for a pro-rated Long-Term Award based on the percentage of the Long-Term Award Performance Period that such Participant was actively employed. |
| (h) | Code Section 409A. Notwithstanding any provision of this Section 6 to the contrary, it is intended that any agreement under which any Participant has been afforded a discretionary benefit under Section 6(e), above, shall satisfy or be exempt from the requirements of Code Section 409A, including, but not limited to, the granting of each such award in writing and the inclusion of the specifics of the requirements for vesting and the timing and the form of payment, as well as restrictions on payment, if any, to “specified employees,” as such term is defined under Code Section 409A, and requirements, if any, for “separation from service,” as such term is defined under Code Section 409A. For purposes of Code Section 409A, each such agreement shall be treated as a separate plan and each of a series of payments under each such agreement shall be treated as a separate payment. |
| (i) | Change in Control. |
| (1) | Change in Control, Generally. |
| (A) | Pro Rated Payments if Change in Control Occurring During a Performance Period. Upon a Change in Control during a Performance Period, Long-Term Awards related to such Performance Period shall be paid at target on a prorated basis (based on the number of days elapsed during the Long-Term Award Performance Period) within 60 days following such Change in Control. |
| (B) | Payments if Change in Control After a Performance Period. Upon a Change in Control after a Performance Period as to which the respective Performance Factors had been achieved, but before the payment of the Long-Term Awards for such period, such Long-Term Awards shall be paid within 60 days following such Change in Control. |
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| (2) | Successor Benefits upon Change in Control. If, in connection with a Change in Control, a Successor Entity assumes the Plan, does not terminate the Plan or provides Participants with comparable benefits as those provided by this Plan, then the provisions of Section 6(i)(1) above shall not apply. |
| (3) | Discretionary Benefits Not Affected. Notwithstanding the foregoing, any Participant whose employment with the Company has terminated and who has been afforded a discretionary benefit under Section 6(e) above shall not receive any further benefit upon a Change in Control under this Section 6(i). |
| (4) | Certain Defined Terms. For purposes of this Section 6(i), the following defined terms shall have the meanings ascribed thereto, below: |
“Change in Control” means the occurrence of any of the following events:
| (i) | any Person, other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this definition a Person will be deemed to have “beneficial ownership” of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of Revlon, Inc.; provided, that under such circumstances the Permitted Holders do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of Revlon, Inc. (for the purposes of this clause (i) and clause (iii), such other Person will be deemed to beneficially own any Voting Stock of a specified corporation held by a parent corporation, if such other Person beneficially owns, directly or indirectly, more than 50% of the voting power of the Voting Stock of such parent corporation and the Permitted Holders do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of such parent corporation); |
| (ii) | during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Revlon, Inc. (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of Revlon, Inc. was approved by a vote of 66-2/3% of the directors of Revlon, Inc. then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Revlon, Inc. then in office; or |
| (iii) | the shareholders of Revlon, Inc. approve a plan of complete liquidation or dissolution of Revlon, Inc. or there is consummated an agreement for the sale or disposition by Revlon, Inc. of all or substantially all of Revlon, Inc.’s assets to an entity in which any Person, other than one or more Permitted Holders, is or becomes the Beneficial Owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this definition a Person will be deemed to have “beneficial ownership” of all shares that any Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of securities of such entity representing 50% or more of the combined voting power of such entity’s Voting Stock, and the Permitted Holders “beneficially own” (as so defined) directly or indirectly, in the aggregate, a lesser percentage of the total voting power of the Voting Stock of such entity than such other Person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of such entity. |
Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of Revlon, Inc. immediately prior to such transaction or series of transactions continue to have substantially the same combined voting power of the Voting Stock in an entity which owns all or substantially all of the assets of Revlon, Inc. immediately following such transaction or series of transactions.
For purposes of this definition of “Change in Control,” the following terms shall have the meanings ascribed thereto below:
“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into or exchangeable for such equity.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
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“Permitted Holders” means Ronald O. Perelman (or in the event of his incompetence or death, his estate, heirs, executor, administrator, committee or other personal representative (collectively, “heirs”)) or any Person controlled, directly or indirectly, by Ronald O. Perelman or his heirs.
“Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) Revlon, Inc. or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of Revlon, Inc. or any of its affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of Revlon, Inc. in substantially the same proportions as their ownership of stock of Revlon, Inc.
“Preferred Stock,” as applied to the Capital Stock of Revlon, Inc., means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of Revlon, Inc., over shares of Capital Stock of any other class of Revlon, Inc.
“Revlon, Inc.” means Revlon, Inc. together with its subsidiaries, including, without limitation, the Company.
“Voting Stock” means all classes of Capital Stock of Revlon, Inc. then outstanding and normally entitled to vote in the election of Directors.
“Successor Entity” means the entity which succeeds to the Company’s business, operations or material assets in connection with a Change in Control, whether by operation of law, merger or consolidation, asset sale, re-organization or otherwise.
| Section 7. | General Provisions. |
| (a) | Compliance with Legal Requirements. This Plan and the granting and payment of Awards and the other obligations of the Company under this Plan shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. No payment under any Award granted hereunder shall be made in the event it would trigger a breach or default under, or otherwise be restricted by, any of the Company’s governing debt instruments, and Participants shall have no claim in respect to any such Award or portion thereof in such circumstances. |
| (b) | Nontransferability. Awards shall not be transferable by a Participant, except upon a Participant’s death following the end of a Performance Period but prior to the date payment(s) is (are) made, in which case the Award shall be transferable in accordance with any beneficiary designation made by the Participant in accordance with Section 7(i) or, in the absence thereof, by will or the laws of descent and distribution. No Participant’s rights under the Plan may be assigned, attached, pledged or alienated by operation of law or otherwise. |
| (c) | No Right To Continued Employment. Nothing in this Plan or in any Award granted pursuant to this Plan shall confer upon any Participant the right to continue in the Company’s employ or to be entitled to any remuneration or benefits not set forth in this Plan, or to interfere with or limit in any way whatever rights the Company may otherwise have to terminate such Participant’s employment or change such Participant’s remuneration or otherwise establish the terms and conditions of such Participant’s employment. |
| (d) | Withholding Taxes. Where a Participant or other person is entitled to receive a payment pursuant to an Award, the Company shall have the right either to deduct from the payment, or to require the Participant or such other person to pay to the Company prior to delivery of such payment, an amount sufficient to satisfy any federal, state, local or other withholding tax requirements related thereto. |
| (e) | Amendment, Termination and Duration of the Plan. The Board or the Committee may at any time and from time to time alter, amend, suspend, or terminate this Plan, in whole or in part, for any or no reason, without advance notice to any Participant, provided, however, that if stockholder approval for any such amendment would be required in order for the Plan to remain compliant with Section 162(m), and such stockholder approval is not obtained, then the failure to obtain such stockholder approval shall not render the Plan or the subject amendment ineffective; rather, the Plan shall continue in full force and effect, as amended, without regard to Section 162(m) as to such amended terms. Notwithstanding the foregoing, no amendment shall adversely affect any of the rights of any Participant under any Award following the end of the Performance Period to which such Award relates, provided, however, that the exercise of the Committee’s discretion pursuant to Section 5(b) and Section 6(b) of this Plan to increase or decrease the amount of an Award shall not be deemed an amendment of this Plan. |
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| (f) | Participant Rights. No Participant shall have any claim to be granted any Award under this Plan, and there is no obligation for uniformity of treatment for Participants. |
| (g) | Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in this Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company. |
| (h) | Governing Law. This Plan and all determinations made and actions taken pursuant to this Plan shall be governed by the laws of the State of New York without giving effect to the conflict of laws principles thereof. This Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended. |
| (i) | Beneficiary. A Participant may file a written designation of a beneficiary with the Committee (on a form as may be prescribed by the Committee), solely to specify that an Award to such Participant may be transferable upon such Participant’s death following the end of a Performance Period but prior to the date payment is made pursuant to this Plan. A Participant may, from time to time, amend or revoke any such designation. If no designated beneficiary survives the Participant and an Award is payable to the Participant’s beneficiary pursuant to Section 7(b) of this Plan, the executor or administrator of the Participant’s estate shall be deemed to be the grantee’s beneficiary. |
| (j) | Interpretation. This Plan is designed and intended to be exempt from, or, to the extent applicable, comply with Section162(m) and Section 409A, and all provisions of this Plan shall be construed in a manner to so comply. |
| (k) | Effective Date. This Plan was originally effective as of January 1, 2010 and, for purposes of the Company’s compliance with Section 162(m), approved by the Company’s stockholders at the Company’s annual stockholders meeting held in 2010. This Plan was restated as of March 11, 2015 and, for purposes of the Company’s compliance with Section 162(m), approved by the Company’s stockholders at the Company’s annual stockholders meeting held in 2015. This Plan was amended and restated as of March 24, 2016, provided, however, that, for purposes of the Company’s continuing compliance with Section 162(m), this Plan is subject to approval by the Company’s stockholders at the Company’s annual stockholders meeting to be held in 2016 (or any adjournment thereof), or as otherwise permitted under the Delaware General Corporation Law. |
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