DEF 14A 1 a09-17077_1def14a.htm DEFINITIVE PROXY STATEMENT

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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

 

Filed by the Registrant þ

Filed by a Party other than the Registrant ¨

 

 

Check the appropriate box:

¨

 

Preliminary Proxy Statement

¨

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a - 6(e)(2))

þ

 

Definitive Proxy Statement

¨

 

Definitive Additional Materials

¨

 

Soliciting Material Pursuant to §240.14a-12

 

HELEN OF TROY LIMITED

 

(Name of Registrant as Specified in its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

þ

 

No fee required.

¨

 

Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.

 

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

 

 

 

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

 

 

 

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

 

 

 

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

 

 

 

 

 

 

 

(5)

Total fee paid:

 

 

 

 

 

 

 

 

 

¨

 

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.

 

 

(1)

Amount Previously Paid:

 

 

 

 

 

 

 

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

 

 

 

 

 

 

 

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(4)

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GRAPHIC

 

HELEN OF TROY LIMITED

Clarendon House

Church Street

Hamilton, Bermuda

 

June 29, 2009

 

Dear Shareholders:

 

It is my pleasure to invite you to the 2009 Annual General Meeting of the Shareholders of Helen of Troy Limited. The meeting will be held at 1:00 p.m., Mountain Daylight Time, on Tuesday, August 25, 2009, at the Camino Real Hotel, 101 S. El Paso Street, El Paso, Texas. In addition to the business to be transacted at the meeting, members of management will present information about the Company’s operations and will be available to respond to your questions.

 

We encourage you to help us reduce printing and mailing costs, and conserve natural resources by signing up for electronic delivery of our shareholder communications. For more information, see “Electronic Delivery of Shareholder Communications” in the enclosed proxy statement.

 

At our meeting, we will vote on proposals (1) to set the number of director positions at nine (or such lower number as shall equal the number of nominees elected as directors) and elect the nine nominees to our Board of Directors, (2) to amend the Helen of Troy Limited 2008 Stock Incentive Plan, (3) to appoint Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration, and (4) to transact such other business as may properly come before the meeting.  The accompanying Notice of Annual General Meeting of Shareholders and proxy statement contains information that you should consider when you vote your shares.  Also, for your convenience, you can appoint your proxy via touch-tone telephone at 1-800-690-6903 or via the internet at WWW.PROXYVOTE.COM.

 

It is important that you vote your shares whether or not you plan to attend the meeting. Please complete, sign, date and return the enclosed proxy card in the accompanying envelope as soon as possible, or appoint your proxy by telephone or on the internet as set forth above. If you plan to attend the meeting and wish to vote in person, you may revoke your proxy and vote in person at that time.  I look forward to seeing you at the meeting. On behalf of the management and directors of Helen of Troy Limited, I want to thank you for your continued support and confidence.

 

 

Sincerely,

 

 

 

/s/ Gerald J. Rubin

 

 

 

Gerald J. Rubin

 

Chairman of the Board,

 

Chief Executive Officer and

 

President

 


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GRAPHIC

 

HELEN OF TROY LIMITED

Clarendon House

Church Street

Hamilton, Bermuda

 

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD AUGUST 25, 2009

 

Notice is hereby given that the 2009 Annual General Meeting of the Shareholders (the “Annual Meeting”) of Helen of Troy Limited, a Bermuda company (the “Company”), will be held at the Camino Real Hotel, 101 S. El Paso Street, El Paso, Texas, on Tuesday, August 25, 2009, at 1:00 p.m., Mountain Daylight Time, for the following purposes:

 

1.

To set the number of director positions at nine (or such lower number as shall equal the number of nominees elected as directors) and elect the nine nominees to our Board of Directors;

 

 

2.

To approve amendments to the Helen of Troy Limited 2008 Stock Incentive Plan;

 

 

3.

To appoint Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration; and

 

 

4.

To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

 

The record date for determining shareholders entitled to receive notice of and to vote at the Annual Meeting is June 25, 2009. You are urged to read carefully the attached proxy statement for additional information concerning the matters to be considered at the Annual Meeting.

 

If you do not expect to be present in person at the Annual Meeting, please complete, sign and date the enclosed proxy and return it promptly in the enclosed postage-paid envelope that has been provided for your convenience. The prompt return of proxies will help ensure the presence of a quorum and save the Company the expense of further solicitation. Also, for your convenience, you can appoint your proxy via touch-tone telephone at 1-800-690-6903 or via the Internet at WWW.PROXYVOTE.COM.

 

The proxy statement and the Company’s 2009 Annual Report to Shareholders are also available on our hosted website at HTTP://MATERIALS.PROXYVOTE.COM/G4388N. For additional related information, please refer to the “Important Notice Regarding Internet Availability of Proxy Materials” in the enclosed proxy statement.

 

You are cordially invited and encouraged to attend the Annual Meeting in person.

 

 

 

/s/ Vincent D. Carson

 

 

 

Vincent D. Carson

 

Vice President, General Counsel and Secretary

 

 

El Paso, Texas

 

June 29, 2009

 

 

 

IMPORTANT

 

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SUBMIT YOUR PROXY AS SOON AS POSSIBLE.   IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.  MOST SHAREHOLDERS HAVE THREE OPTIONS FOR SUBMITTING THEIR PROXIES PRIOR TO THE ANNUAL MEETING: (1) VIA THE INTERNET, (2) BY PHONE OR (3) BY MARKING, DATING AND SIGNING THE ENCLOSED PROXY AND RETURNING IT IN THE ENVELOPE PROVIDED.  IF YOU HAVE INTERNET ACCESS, WE ENCOURAGE YOU TO APPOINT YOUR PROXY ON THE INTERNET. IT IS CONVENIENT, AND IT SAVES THE COMPANY SIGNIFICANT POSTAGE AND PROCESSING COSTS.

 


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TABLE OF CONTENTS

 

 

Page

Proxy Statement

1

 

 

Solicitation of Proxies

1

 

 

Voting Securities and Record Date

2

 

 

Quorum; Voting

2

 

 

Attending the Annual Meeting

2

 

 

Proposal 1: Election of Directors

3

 

 

Corporate Governance, The Board, Board Committees and Meetings

4

 

 

Shareholder Communications to the Board of Directors

7

 

 

Compensation Committee Interlocks and Insider Participation

7

 

 

Director Compensation

8

 

 

 

Director Summary Compensation for Fiscal Year 2009

8

 

 

 

Directors Fees Earned or Paid in Cash for Fiscal Year 2009

8

 

 

 

Outstanding Equity Awards for Directors at Fiscal Year-End 2009

9

 

 

 

Director Stock Ownership and Compensation Guidelines

10

 

 

 

Non-Employee Directors Equity Compensation Plan Information

10

 

 

Security Ownership of Certain Beneficial Owners and Management

11

 

 

Executive Officers

12

 

 

Report of the Compensation Committee

13

 

 

Compensation Discussion and Analysis

13

 

 

Executive Compensation

21

 

 

 

Summary Compensation Table for Fiscal Year 2009

21

 

 

 

All Other Compensation for Fiscal Year 2009

22

 

 

 

Grants of Plan-Based Awards in Fiscal Year 2009

22

 

 

 

Outstanding Equity Awards at Fiscal Year-End 2009

23

 

 

 

Employment Contract for Chairman of the Board, Chief Executive Officer and President

24

 

 

 

Equity Compensation Plan Information

27

 

 

 

Potential Payments Upon Termination or Change in Control

31

 

 

Certain Relationships - Related Person Transactions

33

 

 

Report of the Audit Committee

34

 

 

Audit and Other Fees Paid to Our Independent Registered Public Accounting Firms

35

 

 

Proposal 2: Amendments to the Helen of Troy Limited 2008 Stock Incentive Plan

37

 

 

Proposal 3: Appointment of Auditor and Independent Registered Public Accounting Firm and Authorization of the Audit Committee of the Board of Directors to set the Auditor’s Remuneration

44

 

 

Shareholder Proposals

44

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

44

 

 

Other Matters

45

 

 

Householding of Materials

45

 

 

Important Notice Regarding Internet Availability of Proxy Materials

45

 

 

Electronic Delivery of Shareholder Communications

46

 

 

How to Obtain Our Annual Report, Proxy Statement and Other Information about the Company

46

 

Appendix A: Helen of Troy Limited 2008 Stock Incentive Plan, as amended

47

 

 


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HELEN OF TROY LIMITED

 

Clarendon House

Church Street

Hamilton, Bermuda

 

PROXY STATEMENT

 

FOR

ANNUAL GENERAL MEETING OF SHAREHOLDERS

August 25, 2009

 

SOLICITATION OF PROXIES

 

The accompanying proxy is solicited by the Board of Directors of Helen of Troy Limited (the “Company”) for use at its Annual General Meeting of Shareholders (the “Annual Meeting”) to be held at the Camino Real Hotel, 101 S. El Paso Street, El Paso, Texas, on Tuesday, August 25, 2009, at 1:00 p.m., Mountain Daylight Time, and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Annual General Meeting of Shareholders. A proxy may be revoked by filing a written notice of revocation or an executed proxy bearing a later date with the Secretary of our Company any time before exercise of the proxy or by attending the Annual Meeting and voting in person. The proxy statements and form of proxy cards are to be distributed to shareholders on or about July 7, 2009.

 

If you complete and submit your proxy, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you submit a proxy card but do not fill out the voting instructions on the proxy card, the persons named as proxies will vote the shares represented by your proxy as follows:

 

·              FOR setting the number of director positions at nine (or such lower number as shall equal the number of nominees elected as directors) and electing the nine nominees to our Board of Directors, as set forth in Proposal 1.

 

·              FOR the amendments to the Helen of Troy Limited 2008 Stock Incentive Plan, as set forth in Proposal 2.

 

·              FOR the appointment of Grant Thornton LLP as the auditor and independent registered public accounting firm of the Company and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration, as set forth in Proposal 3.

 

In addition, if other matters are properly presented for voting at the Annual Meeting, the persons named as proxies will vote on such matters in accordance with their judgment. We have not received notice of other matters that may properly be presented for voting at the Annual Meeting. Your vote is important. If you do not vote your shares, you will not have a say in the important issues to be voted upon at the Annual Meeting.  To pass, each proposal included in this year’s proxy statement requires an affirmative vote of a majority of the votes cast on such proposal at the Annual Meeting. To ensure that your vote is recorded promptly, please submit your proxy as soon as possible, even if you plan to attend the Annual Meeting in person.

 

The Annual Report to Shareholders for the year ended February 28, 2009 (“fiscal 2009”), including financial statements, is enclosed. It does not form any part of the material provided for the solicitation of proxies.

 

The cost of solicitation of proxies will be borne by the Company. In addition to solicitation by mail, officers and employees of the Company may solicit the return of proxies by telephone and personal interview, or hire an outside proxy solicitor. Forms of proxy and proxy materials may also be distributed through brokers, custodians and like parties to beneficial owners of our common shares, par value $.10 per share (the “Common Stock”), for which we will, upon request, reimburse the forwarding expense.   MacKenzie Partners Inc. will also assist the Company in the solicitation of proxies for a fee of $12,500, plus expenses.

 

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VOTING SECURITIES AND RECORD DATE

 

The close of business on June 25, 2009, is the record date for determination of shareholders entitled to notice of, and to vote at, the Annual Meeting. As of June 25, 2009, there were 30,069,821 shares of Common Stock issued and outstanding, each entitled to one vote per share.

 

QUORUM; VOTING

 

The presence in person of two or more persons, representing throughout the Annual Meeting, in person or by proxy, at least a majority of the issued shares of Common Stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. Proxies marked as “Withholding Authority” on the election of directors will be treated as present at the Annual Meeting for purposes of determining the quorum.  Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present. Broker non-votes are shares held by a broker or nominee that are represented at the Annual Meeting, but with respect to which such broker or nominee is not empowered to vote on a particular proposal because the broker has not received voting instructions from the beneficial owner. Under the rules that govern brokers who are voting with respect to shares held by them in a “street name,” brokers have the discretion to vote such shares on routine matters, but not on non-routine matters, if the broker has not been furnished with voting instructions by its client at least ten days before the meeting. Routine matters include the election of directors and appointment of auditors, submitted to the shareholders in Proposals 1 and 3. Non-routine matters include the matters being submitted to the shareholders in Proposal 2.  If a quorum is present, the nominees for Directors receiving a majority of the votes cast at the Annual Meeting in person or by proxy shall be elected.  Proxies marked as “Withholding Authority” on the election of directors will be counted as votes cast against the nominees with respect to whom authority to vote was withheld. The affirmative vote of the majority of the votes cast at the Annual Meeting in person or by proxy shall also be the act of the shareholders with respect to proposals 2 and 3. Abstentions and broker non-votes are not counted in determining the total number of votes cast and will have no effect with respect to any of the proposals.  If within half an hour from the time appointed for the Annual Meeting a quorum is not present in person or by proxy, the Annual Meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place the Board of Directors may determine, provided that at least two persons are present at such adjourned meeting, representing throughout the meeting, in person or by proxy, at least a majority of the issued shares of Common Stock entitled to vote. At any such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the Annual Meeting as originally called.

 

Shareholders may hold their shares either as a “shareholder of record” or as a “street name” holder.   If your shares are registered directly in your name with our transfer agent, you are considered the shareholder of record with respect to those shares and this proxy statement is being sent directly to you by the Company.  If your shares are held in a brokerage account or by another nominee, you are considered to be the beneficial owner of shares held in street name, and these proxy materials, together with a voting instruction card, are being forwarded to you by your broker, trustee or other nominee. As the beneficial owner of the shares, you have the right to direct your broker, trustee or other nominee how to vote.

 

ATTENDING THE ANNUAL MEETING

 

A person is entitled to attend the Annual Meeting only if that person was a shareholder or joint shareholder as of the close of business on the record date or that person holds a valid proxy for the Annual Meeting.  If you hold your shares in street name and desire to vote your shares at the Annual Meeting, you must provide a signed proxy directly from the holder of record giving you the right to vote the shares or a letter from the broker or nominee appointing you as their proxy.  The proxy card enclosed with this proxy statement is not sufficient to satisfy this requirement.   You must also provide proof of beneficial ownership on the record date, such as your most recent account statement prior to the record date or other similar evidence of ownership.  If you hold your shares in street name and desire to attend the Annual Meeting without voting your shares, you must provide proof of beneficial ownership on the record date and present photo identification.  If you are the shareholder of record or hold a valid proxy for the Annual Meeting, your name or the name of the person on whose behalf you are proxy must be verified against the list of shareholders of record on the record date as shown on the list of shareholders of the Company prior to being admitted to and prior to voting at the Annual Meeting.  All shareholders must present photo identification for admittance.  If you do not provide photo identification or comply with the other procedures outlined above upon request, you will not be admitted to the Annual Meeting and/or will not be permitted to vote, as applicable.

 

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PROPOSAL 1: ELECTION OF DIRECTORS

 

The bye-laws of the Company state that the number of our Directors shall be established by the shareholders from time to time but shall not be less than two. The Company currently has eight members who serve on the Board of Directors.  The Nominating Committee has nominated nine candidates for election to the Board of Directors.  Accordingly, the Board of Directors recommends that the number of director positions be set at nine.  In the event that less than nine directors are elected, then the number of director positions set shall not be nine, but instead shall equal the number of directors actually elected.

 

The nine persons named below are the nominees for election as Directors. Each nominee has consented to serve as a Director if elected. One of the nine candidates, Mr. Gerald J. Rubin, is a member of the Company’s senior management. Under Mr. Rubin’s employment agreement, the Company agreed to use its best efforts to cause Mr. Rubin to be nominated for election to the Board of Directors and elected by the Board of Directors as Chairman of the Board. Gerald J. Rubin and Stanlee N. Rubin are married. Gerald J. Rubin and Byron H. Rubin are brothers.   The Board of Directors has determined that the remaining six candidates, Gary B. Abromovitz, John B. Butterworth, Timothy F. Meeker, William F. Susetka, Adolpho R. Telles and Darren G. Woody are independent directors as defined in the applicable listing standards for companies traded on the NASDAQ Stock Market LLC (“NASDAQ”).  Therefore, the majority of persons nominated to serve on our Board of Directors are independent as so defined.  Each Director elected shall serve as a Director until the next annual general meeting of shareholders, or until his or her successor is elected or appointed.

 

Set forth below are descriptions of the business experience during at least the past five years of the nominees for election to our Board of Directors:

 

GARY B. ABROMOVITZ, age 66, is Deputy Chairman of the Board, lead Director, and chairs the Compensation Committee and the Nominating Committee.  He is also a member of the Audit Committee and the Corporate Governance Committee, and chairs the executive sessions of the independent Directors.  He has been a Director of the Company since 1990. He is an attorney and has acted as a consultant to several law firms in business related matters, including trade secrets, unfair competition and commercial litigation. He also has been active in various real estate development and acquisition transactions for over 30 years in Arizona and California, with experience in the areas of industrial buildings, medical offices and commercial, residential and historic properties.  In March 2005, he joined the Board of Directors of CardioVascular BioTherapeutics, Inc., a biopharmaceutical company, where he currently serves as Lead Director, Chair of the Compensation, Audit, Corporate Governance, and Conflict Resolution Committees, and chairs the executive sessions of independent directors.

 

JOHN B. BUTTERWORTH, age 58, has been a Director of the Company since August 2002. Mr. Butterworth is a Certified Public Accountant and, since 1982, has been a shareholder in a public accounting firm located in El Paso, Texas.

 

TIMOTHY F. MEEKER, age 62, has been a Director of the Company since August 2004, and chairs the Corporate Governance Committee.  Since 2002, Mr. Meeker has served as President and principal in Meeker and Associates, a privately-held management consulting firm.  Mr. Meeker served as Senior Vice President, Sales & Customer Development for Bristol-Myers Squibb, a consumer products and pharmaceutical company, from 1996 through 2002.  From 1989 to 1996, Mr. Meeker served as Vice President of Sales for Bristol-Myers’ Clairol Division.

 

BYRON H. RUBIN, age 59, has been a Director of the Company since 1981. Mr. Rubin has been a partner in the firm of Daniels & Rubin, an insurance and tax planning firm in Dallas, Texas, since 1979.

 

GERALD J. RUBIN, age 65, founder of the Company, has been the Chairman of the Board, Chief Executive Officer and President of the Company since June 2000.  From 1984 to June 2000, Mr. Rubin was Chairman of the Board and Chief Executive Officer of the Company. Mr. Rubin has been a Director of the Company since 1969. Mr. Rubin also serves on the Board of Directors of the El Paso Branch, Federal Reserve Bank of Dallas, Texas.

 

STANLEE N. RUBIN, age 65, has been a Director of the Company since 1990. Mrs. Rubin is active in civic and charitable organizations.  She is a Partner for the Susan G. Komen Breast Cancer Foundation and Founder of the Center for the Visual Arts at the University of Texas at El Paso.

 

WILLIAM F. SUSETKA, age 56, is a new nominee to the Board of Directors.  Mr. Susetka spent 30 years in marketing and senior management for Clairol, Inc. and Avon Products, Inc.  From 1999 to 2001, Mr. Susetka was President, Clairol U.S.

 

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Retail Division, with additional responsibility for worldwide research and development and manufacturing.  From 2002 through 2005, Mr. Susetka was President of Global Marketing at Avon Products, Inc. where he led worldwide marketing, advertising and research and development and served on Avon’s Executive Committee.  Prior to 2001, he held positions as President of the Clairol International Division and Vice President/General Manager for the Clairol Professional Products Division.  He served as a Board Member of the CTFA (Cosmetics, Toiletry and Fragrance Association) from 1999 to 2005 and a member of the Avon Foundation Board from 2004 to 2005.  From October 2005 to January 2006, Mr. Susetka was Chief Operating Officer of Nice Pak Products, Inc., a manufacturer of consumer products that private labeled pre-moistened wipes and other antiseptic wipes.  From 2007 through May 2009 he served as Chief Marketing Officer for the LPGA (Ladies Professional Golf Association) and currently serves on the LPGA Commissioner’s Advisory Council.

 

ADOLPHO R. TELLES, age 59, has been a Director of the Company since June 2005 and chairs the Audit Committee. Mr. Telles is a Certified Public Accountant. Since November 2003, Mr. Telles has been a business consultant providing advisory services in the area of corporate governance, internal auditing, and compliance with the Sarbanes Oxley Act of 2002.  Mr. Telles manages personal investments, including an operating company.   Mr. Telles is on the Texas Comptroller’s Advisory Board for the Texas Treasury Safekeeping Trust Company.  Previously, Mr. Telles was with the accounting firm of KPMG LLP, and its predecessors, for 27 years, including over 16 years as a partner.

 

DARREN G. WOODY, age 49, has been a Director of the Company since August 2004.  Mr. Woody is President and Chief Executive Officer of C.F. Jordan L.P., a construction firm.  He has served in this capacity since August of 2000.  Previously, Mr. Woody was a partner in the law firm of Krafsur, Gordon, Mott and Woody P.C.

 

The receipt of a majority of the votes cast at the Annual Meeting is required to set the number of Director positions at nine (or such lower number as shall equal the number of nominees elected as directors) and to elect each of the nine nominees for Director.  In the event that any of the Company’s nominees are unable to serve, proxies will be voted for the substitute nominee or nominees designated by our Board of Directors, or will be voted to fix the number of directors at fewer than nine and for fewer than nine nominees, as the Board may deem advisable in its discretion.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “ FOR ” EACH OF THE NINE NOMINEES NAMED ABOVE.

 

CORPORATE GOVERNANCE, THE BOARD, BOARD COMMITTEES AND MEETINGS

 

Corporate Governance. Corporate governance is typically defined as the system that allocates duties and authority among a company’s shareholders, Board of Directors and management. The shareholders elect the Board and vote on extraordinary matters.

 

Our Corporate Governance Guidelines, as well as our Code of Ethics, and the charters of the Audit Committee, Compensation Committee, Nominating Committee and Corporate Governance Committee are available under the “Corporate Governance” heading of the investor relations page of our website at the following address: http://www.hotus.com.

 

Our Company believes that it is in compliance with the corporate governance requirements of the NASDAQ listing standards.  The principal elements of these governance requirements as implemented by our Company are:

 

·              affirmative determination by the Board of Directors that a majority of the Directors are independent;

 

·              regularly scheduled executive sessions of independent Directors;

 

·              Audit Committee, Nominating Committee and Compensation Committee comprised of independent Directors and having the purposes and charters described below under the separate committee headings; and

 

·              specific Audit Committee responsibility, authority and procedures outlined in the charter of the Audit Committee.

 

Independence. The Board of Directors has determined that the following six nominees for election at the Annual Meeting are independent Directors as defined in the NASDAQ listing standards: Gary B. Abromovitz, John B. Butterworth, Timothy F. Meeker, William F. Susetka, Adolpho R. Telles, and Darren G. Woody.  Therefore, a majority of the persons

 

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nominated to serve on our Company’s Board of Directors are independent as so defined. The foregoing independence determination of our Board of Directors included the determination that each of these six nominated Board members, if elected and appointed to the Audit Committee, Compensation Committee or Nominating Committee, or as discussed above, respectively, is:

 

·              independent for purposes of membership on the Audit Committee under Rule 5605(c)(2) of the NASDAQ listing standards, that includes the independence requirements of Rule 5605(a)(2) and additional independence requirements under SEC Rule 10A-3(b);

 

·              independent under the NASDAQ listing standards for purposes of membership on the Nominating Committee; and

 

·              independent under the NASDAQ listing standards for purposes of membership on the Compensation Committee, as a “non-employee director” under SEC Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an “outside director” as defined in regulations under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

The Board has designated Gary B. Abromovitz, an independent director, as the Deputy Chairman and lead Director.  The Deputy Chairman’s authority and responsibilities include:

 

·              presiding at all meetings of the Board when the Chairman is not present and over executive sessions;

 

·              serving as a liaison between the Chairman and the independent Directors; and

 

·              calling meetings of the independent Directors.

 

Our Board and its committees meet throughout the year on a set schedule, and hold special meetings and act by written consent from time to time, as appropriate.  Independent Directors regularly meet without management present, and the Board’s lead Director conducts those sessions.  Board members have access to all of our employees outside of Board meetings.  Our Board of Directors has four committees: the Audit Committee, the Nominating Committee, the Corporate Governance Committee and the Compensation Committee.

 

The following table shows the composition of these committees and the number of meetings held during fiscal 2009:

 

Director

Executive
Sessions of
Independent
Directors

Audit

Nominating

Corporate
Governance

Compensation

Gary B. Abromovitz

Chair

M

Chair

M

Chair

 

 

 

 

 

 

John B. Butterworth

M

M

 

 

 

 

 

 

 

 

 

Timothy F. Meeker

M

 

M

Chair

M

 

 

 

 

 

 

Stanlee N. Rubin

 

 

 

M

 

 

 

 

 

 

 

Adolpho R. Telles

M

Chair

 

 

 

 

 

 

 

 

 

Darren G. Woody

M

 

M

M

M

 

 

 

 

 

 

Number of Meetings Held in Fiscal 2009

8

8

2

2

10

 

 

 

 

 

 

 


 

M = Current Member during fiscal 2009

 

Audit Committee. Our Audit Committee is established in accordance with Section 3(a)(58)(A) of the Exchange Act.  The primary purposes of this committee are to oversee, on behalf of the Company’s Board of Directors: (1) the accounting and financial reporting processes and integrity of our Company’s financial statements, (2) the audits of our Company’s financial statements and the appointment, compensation, qualifications, independence and performance of our independent

 

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registered public accounting firm, (3) our compliance with legal and regulatory requirements, and (4) the staffing and ongoing operation of our internal audit function.  The Audit Committee meets periodically with our chief financial officer and other appropriate officers in the discharge of its duties.  The Audit Committee also reviews the content and enforcement of the Company’s Code of Ethics, consults with our legal counsel on various legal compliance matters and on other legal matters if those matters could materially affect our financial statements.

 

The Board of Directors has determined that each of the members of the Audit Committee are independent as previously described.  In addition, the Board of Directors determined that Mr. Telles qualifies as an “audit committee financial expert” as defined by the SEC in Item 407(d)(5) of Regulation S-K promulgated by the SEC. The Board of Directors also determined that all of the members of the Audit Committee meet the requirement of the NASDAQ listing standards that each member be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement.

 

Compensation Committee. The primary purposes of the committee are to (1) evaluate and approve the corporate goals and objectives set by the chief executive officer (the “CEO”), (2) evaluate the CEO’s performance in light of those goals and objectives, (3) make recommendations to the Board of Directors with respect to non-CEO compensation, incentive compensation plans and equity-based plans, (4) oversee the administration of our incentive compensation plans and equity-based plans, and (5) produce an annual report on executive compensation for inclusion in the Company’s proxy statement.  The Board of Directors has determined that the members of this committee are independent as previously described.   In addition to formal meetings, the committee also conducted numerous informal telephonic discussions and consulted its legal advisors throughout the year, and also acted by unanimous consent once during fiscal 2009.  For additional information regarding the operation and authority of the Compensation Committee, see “Compensation Discussion and Analysis.”

 

In fiscal 2009, the Compensation Committee retained an outside compensation consultant to provide the committee with certain statistical data and analysis with respect to the compensation of the chief executive officer and the directors.  The Compensation Committee is currently reviewing the information provided by the consultant with respect to director compensation.  The Compensation Committee does not believe that the compensation consultant had a material role in determining or recommending the amount or form of executive or director compensation or in compensation-setting practices or decisions for fiscal 2009.

 

Nominating Committee.  The primary purposes of the committee are to (1) recommend to our Board of Directors individuals qualified to serve on our Board of Directors for election by shareholders at each annual general meeting of shareholders and to fill vacancies on the Board of Directors, (2) implement the Board’s criteria for selecting new directors, and (3) oversee the evaluation of our Board.  The Nominating Committee receives recommendations from its members or other members of the Board of Directors for candidates to be appointed to the Board or committee positions, reviews and evaluates such candidates and makes recommendations to the Board of Directors for nominations to fill Board and committee positions.

 

The committee’s current process for identifying and evaluating nominees for Director consists of general periodic evaluations of the size and composition of the Board of Directors, applicable listing standards and laws, and other appropriate factors with a goal of maintaining continuity of appropriate industry expertise and knowledge of our Company. The committee looks for a number of personal attributes in selecting candidates including: sound reputation and ethical conduct; business and professional activities that are complementary to those of the Company; the availability of time and a willingness to carry out their duties and responsibilities effectively; an active awareness of changes in the social, political and economic landscape; an absence of any conflicts of interest; limited service on other boards; and a commitment to contribute to the Company’s overall performance, placing it above personal interests.

 

The Nominating Committee will consider candidates recommended by shareholders. Any candidate recommended by shareholders must meet the same general requirements outlined in the previous paragraph to be considered for election.  Any shareholder who intends to present a director nomination proposal for consideration at the 2010 annual general meeting of shareholders and intends to have that proposal included in the proxy statement and related materials for the 2010 annual general meeting, must deliver a written copy of the proposal to our Company’s principal executive offices no later than the deadline, and in accordance with the notice procedures, specified under “Shareholder Proposals” in this proxy statement and in accordance with the applicable requirements of SEC Rule 14a-8.

 

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If a shareholder does not comply with the Rule 14a-8 procedures, the Company would not be required to include the nomination proposal as a proposal in the proxy statement and proxy card mailed to shareholders. For a shareholder’s nominee to be considered for nomination as a Director, the shareholder should give timely notice of their nomination in writing to the Secretary of our Company.  To be timely, written suggestions for candidates should be delivered for consideration by the Nominating Committee prior to the next annual general meeting to the Secretary of the Company, Clarendon House, Church Street, Hamilton, Bermuda no later than 45 calendar days before the first anniversary of the date on which the Company sent its proxy statement to shareholders in connection with the previous year’s annual general meeting.  Written suggestions for candidates should be accompanied by a written consent of the proposed candidate to serve as a director if nominated and elected, a description of his or her qualifications and other relevant biographical information. The Nominating Committee may request that the shareholder submitting the proposed nominee furnish additional information to determine the eligibility and qualifications of such candidate.

 

Under SEC Rule 14a-8 (and assuming consent to disclosure is given by the proponents and nominee), our Company must disclose any nominations for Director made by any person or group beneficially owning more than 5% of our outstanding Common Stock by the date that was 120 calendar days before the anniversary of the date on which its proxy statement was sent to its shareholders in connection with the previous year’s annual general meeting.  Our Company did not receive any such nominations for the Annual Meeting.

 

Corporate Governance Committee.  The primary purposes of the committee are to (1) develop, recommend to the Board, and assess our corporate governance policies, and (2) evaluate, develop and recommend to the Board succession plans for all of the company’s senior management. The Corporate Governance Committee works together with the Compensation Committee to develop and recommend succession plans to the Board of Directors.

 

Meetings of Board of Directors and its Committees.  The Board of Directors held four regularly scheduled meetings, six telephonic meetings and acted by unanimous consent once during fiscal 2009.  Each director attended at least 75 % of the aggregate of the regularly scheduled meetings of our Board of Directors and the committees of which he or she was a member. We encourage, but do not require, the members of the Board of Directors to attend annual general meetings. Last year, all, but one of our directors attended the annual general meeting of shareholders. We expect that all Board members will attend the Annual Meeting.

 

SHAREHOLDER COMMUNICATIONS TO THE BOARD OF DIRECTORS

 

Any record or beneficial owner of our shares of Common Stock who has concerns about accounting, internal accounting controls, or auditing matters relating to our Company may contact the Audit Committee directly.  Any record or beneficial owner of our Common Stock who wishes to communicate with the Board of Directors on any other matter should also contact the Audit Committee.  The Audit Committee has undertaken on behalf of the Board of Directors to be the recipient of communications from shareholders relating to our Company.  If particular communications are directed to the full Board, independent Directors as a group, or individual directors, the Audit Committee will route these communications to the appropriate directors or committees so long as the intended recipients are clearly stated.

 

Communications intended to be anonymous may be made by calling our national hotline service at 866-210-7649 or 866-210-7650.  When calling, please identify yourself as a shareholder of our Company intending to communicate with the Audit Committee.  This third party service undertakes to forward the communications to the Audit Committee if so requested and clearly stated.  You may also send communications intended to be anonymous by mail, without indicating your name or address, to Helen of Troy Limited, 1 Helen of Troy Plaza, El Paso, Texas, 79912, USA, Attention: Chairman of the Audit Committee.  Communications not intended to be made anonymously may be made by calling the hotline number or by mail to that address, including whatever identifying or other information you wish to communicate.

 

Communications from employees or agents of our Company will not be treated as communications from our shareholders unless the employee or agent clearly indicates that the communication is made solely in the person’s capacity as a shareholder.

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

During fiscal 2009, no executive officer of the Company served on the compensation committee (or equivalent), or the board of directors, of another entity whose executive officer(s) served on the Company’s Compensation Committee or Board.

 

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DIRECTOR COMPENSATION

 

The following table summarizes the total compensation earned by all non-employee Directors during fiscal 2009:

 

Director Summary Compensation for Fiscal Year 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees Earned

 

 

 

 

 

 

 

 

 

or Paid

 

 

All Other

 

 

 

 

 

 

in Cash

 

 

Compensation

 

 

Total

 

Name

 

($)

 

 

($)

 

 

($)

 

 

 

 

 

 

 

 

 

 

 

Gary B. Abromovitz

 

145,500

 

 

-

 

 

145,500

 

 

 

 

 

 

 

 

 

 

 

John B. Butterworth

 

84,000

 

 

-

 

 

84,000

 

 

 

 

 

 

 

 

 

 

 

Timothy F. Meeker

 

77,000

 

 

-

 

 

77,000

 

 

 

 

 

 

 

 

 

 

 

Byron H. Rubin

 

36,000

 

 

7,500

(1)

 

 

43,500

 

 

 

 

 

 

 

 

 

 

 

 

Stanlee N. Rubin

 

34,500

 

 

-

 

 

34,500

 

 

 

 

 

 

 

 

 

 

 

Adolpho R. Telles

 

100,000

 

 

-

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

Darren G. Woody

 

73,500

 

 

-

 

 

73,500

 

 

 

 

 

 

 

 

 

 

 

 


 

(1)          Represents insurance agent’s commissions earned by Byron Rubin and paid directly to him by certain of our insurers in  connection with certain life insurance policies.  For further information, see “Certain Relationships - Related Person Transactions.”

 

Gerald J. Rubin is our only Director that is also an executive officer.  He has not received any remuneration for his service as a member of the Board of Directors.

 

In fiscal 2009, the following cash compensation was paid to our non-employee Directors:

 

Directors Fees Earned or Paid in Cash for Fiscal Year 2009

 

 

 

 

 

 

 

 

 

 

Annual

Board

Independent

Deputy

Committee

Committee

 

 

Board

Meeting

Directors

Chairman

Chair

Member

 

 

Retainers

Fees

Fees

Fees

Fees

Fees

Total

Name

($) (1)

($) (2)

($) (3)

($) (4)

($)

($) (5)

($)

 

 

 

 

 

 

 

 

 

Gary B. Abromovitz

24,000

12,000

24,000

40,000

20,000

(6) 

25,500

145,500

 

 

 

 

 

 

 

 

 

John B. Butterworth

24,000

12,000

24,000

-

24,000

84,000

 

 

 

 

 

 

 

 

Timothy F. Meeker

24,000

12,000

24,000

-

5,000

(7) 

12,000

77,000

 

 

 

 

 

 

 

 

 

Byron H. Rubin

24,000

12,000

-

-

-

36,000

 

 

 

 

 

 

 

 

Stanlee N. Rubin

24,000

9,000

-

-

1,500

34,500

 

 

 

 

 

 

 

 

Adolpho R. Telles

24,000

12,000

24,000

-

40,000

(8) 

-

100,000

 

 

 

 

 

 

 

 

 

Darren G. Woody

24,000

12,000

24,000

-

13,500

73,500

 

 

 

 

 

 

 

 

 


 

(1)          All non-employee Directors receive a quarterly cash retainer of $6,000.

 

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(2)          All non-employee Directors receive a cash fee of $3,000 for each quarterly meeting of the Board of Directors attended.

 

(3)          All independent Directors receive a quarterly cash fee of $6,000 for participation in executive sessions.

 

(4)          The Deputy Chairman and lead director receives a quarterly cash fee of $10,000.

 

(5)          Each non-chair member of the Audit Committee receives a quarterly cash fee of $6,000, each non-chair member of the Compensation Committee receives a quarterly cash fee of $3,000, each non-chair member of the Corporate Governance Committee receives a quarterly cash fee of $1,500, commencing in the fourth quarter of fiscal 2009.

 

(6)          The Compensation Committee Chairman receives a quarterly cash fee of $5,000.

 

(7)   The Corporate Governance Committee Chairman receives a quarterly cash fee of $2,500, which commenced in the third quarter of fiscal 2009.

 

(8)          The Audit Committee Chairman receives a quarterly cash fee of $10,000.

 

In addition to the amounts shown above, non-employee Board members received reimbursement for travel and lodging expenses incurred while attending Board and committee meetings and Board-related activities, such as visits to Company locations.

 

The following table provides information on the outstanding equity awards at fiscal year-end 2009 for non-employee Directors:

 

Outstanding Equity Awards for Non-Employee Directors at Fiscal Year-End 2009

 

 

Option Awards

 

Number of

 

 

 

Securities

 

 

 

Underlying

Option

 

 

Unexercised

Exercise

Option

 

Options

Price

Expiration

Name

(#) Exercisable

($)/Sh

Date

 

 

 

 

Gary B. Abromovitz

32,000

21.47 to 33.35

9/1/13 to 6/1/15

 

 

 

 

 

 

 

 

John B. Butterworth

40,000

13.13 to 33.35

3/1/13 to 6/1/15

 

 

 

 

 

 

 

 

Timothy F. Meeker

16,000

23.13 to 28.33

9/1/14 to 6/1/15

 

 

 

 

 

 

 

 

Byron H. Rubin

32,000

21.47 to 33.35

9/1/13 to 6/1/15

 

 

 

 

 

 

 

 

Stanlee N. Rubin

96,000

4.41 to 33.35

9/1/09 to 6/1/15

 

 

 

 

 

 

 

 

Adolpho R. Telles

-

-

-

 

 

 

 

 

 

 

 

Darren G. Woody

16,000

23.13 to 28.33

9/1/14 to 6/1/15

 

 

 

 

 

All options were issued under the Company’s 1995 Non-Employee Stock Option Plan.  Under the plan, all options were issued at a price not less than the fair market value of the Common Stock at the date of grant, vested one year from the date granted, and expire ten years after the options were granted.  Currently, all outstanding options under the plan are vested.  This stock option plan expired by its terms on June 6, 2005.  Therefore, no additional options have been granted since that date.

 

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Director Stock Ownership and Compensation Guidelines

 

The Compensation Committee and the Board of Directors believe that Directors should own and hold Common Stock to further align their interests and actions with the interests of the Company’s shareholders.  Accordingly, upon recommendation of the Compensation Committee, in June 2008, the Board of Directors has adopted stock ownership and compensation guidelines for the Company’s Directors.  Under these guidelines, the Directors should hold shares of the Company’s Common Stock equal in value to at least three times the annual cash retainer for Directors.  The guidelines provide that the stock ownership levels should be achieved by each Director within five years from the adoption of the guidelines or, in the case of a new director, within five years of his or her first appointment to the Board of Directors.  The Compensation Committee will review stock ownership levels on the first trading day of the calendar year based on the greater of the fair market value and the Director’s cost basis in the shares on such date.  In the event of an increase in the annual cash retainer, the Directors will have five years from the time of the increase to acquire any additional shares needed to comply with the guidelines.  To further encourage equity participation, the guidelines provide that equity awards to non-employee Directors either vest over a period of at least three years or are required to be held by the Director until his or her service with the Company ends.  The Board of Directors also believe that compensation arrangements should be flexible enough to allow the Directors to receive a balanced mix of equity and cash keeping in mind the Board’s guidelines for achieving and maintaining stock ownership.  In this respect, the Board of Directors will seek to target Director compensation at a mix of approximately 60% cash and 40% equity.  The Compensation Committee did not make any equity awards to non-employee directors during fiscal 2009 due to the economic uncertainty and in accordance with the Company’s efforts to conserve costs.  The Compensation Committee has determined to postpone making any decisions regarding awards until fiscal 2010.

 

Non-Employee Director Equity Compensation Plan

 

At the 2008 annual general meeting of shareholders, the Company’s shareholders approved the Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan (the “2008 Director Plan). The purpose of the 2008 Director Plan is to (1) aid the Company in attracting, securing and retaining Directors of outstanding ability and (2) motivate such persons to exert their best efforts on behalf of the Company and its subsidiaries and its affiliates by providing incentives through the granting of awards under the plan.  Only non-employee Directors of the Company are eligible to participate in the 2008 Director Plan.  Because Gerald J. Rubin is an employee of the Company, he is not eligible to participate in the 2008 Director Plan.

 

The 2008 Director Plan is administered by the Compensation Committee of the Board of Directors. The 2008 Director Plan permits grants of restricted stock, restricted stock units, and other stock-based awards to the Company’s non-employee Directors.  The vesting criteria and other terms and conditions of restricted stock, restricted stock units and other stock-based awards will be determined by the Compensation Committee.  Currently, the 2008 Director Plan provides that the maximum number of shares of Common Stock with respect to which awards may be granted is 175,000 shares (subject to adjustment in certain circumstances). Shares subject to awards which terminate, expire, are cancelled, exchanged, forfeited, lapse or are settled for cash may be utilized again with respect to awards granted under the 2008 Director Plan.  As of June 25, 2009, no awards have been granted under the 2008 Director Plan. The plan will expire by its terms on August 19, 2018.

 

If a participant’s service is terminated for any reason, the participant will only be entitled to the restricted stock or restricted stock units vested at the time of such termination of service. The participant’s unvested restricted stock and restricted stock units will be forfeited. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested restricted stock or restricted stock units held by a participant if the participant is terminated without “cause” (as determined by the Compensation Committee) by the Company.  In the event of a Change of Control (as defined in the 2008 Director Plan), (1) the participants will have the right to settle from and after the date of the Change of Control any restricted stock unit held by such participant in whole or in part, notwithstanding that such restricted stock unit may not be fully vested, and (2) any and all restrictions on any participant’s other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth, as of May 28, 2009, the beneficial ownership of the Common Stock of the Directors, the nominees for Director, the executive officers of the Company, the Directors, Director nominees and executive officers of the Company as a group, and each person known to the Company to be the beneficial owner of more than five percent of the Common Stock:

 

 

Number of

 

 

Common Shares

 

Name of Beneficial Owner

Beneficially Owned

Percent *

 

 

 

 

 

Gerald J. Rubin

4,569,922

 

(1) (2)

13.94% 

 

 

 

 

 

Stanlee N. Rubin

 

 

 

 

 

 

 

 

 

 One Helen of Troy Plaza

 

 

 

 

 

 

 

 

 

 El Paso, Texas 79912

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thomas J. Benson

68,723

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

John B. Butterworth

55,100

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

Byron H. Rubin

47,100

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

Gary B. Abromovitz

34,000

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

Vincent D. Carson

23,268

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

Darren G. Woody

18,000

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

Timothy F. Meeker

16,000

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

Adolpho R. Telles

2,000

 

(2)

**    

 

 

 

 

 

 

 

 

 

 

William F. Susetka

-

 

(3)

**    

 

 

 

 

 

 

 

 

 

 

All Directors, Director nominees and executive officers as a group (11 Persons)

4,834,113

 

 

14.64% 

 

 

 

 

 

 

 

 

 

 

FMR Corp.

3,114,700

 

(4)

10.36% 

 

 

 

 

 

 82 Devonshire Street

 

 

 

 

 

 

 

 

 

 Boston, Massachusetts 02109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Columbia Wanger Asset Management, LP

2,020,000

 

(5)

6.72% 

 

 

 

 

 

 227 W Monroe Street Suite 3000

 

 

 

 

 

 

 

 

 

 Chicago, Illinois  60606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dimensional Fund Advisers, LP

1,811,051

 

(6)

6.02% 

 

 

 

 

 

 6300 Bee Cave Road Building One

 

 

 

 

 

 

 

 

 

 Austin, Texas 78746

 

 

 

 

 

 

 

 

 

 


 

*   Percent ownership is calculated based on 30,069,821 shares of the Common Stock outstanding on May 28, 2009.

 

** Ownership of less than one percent of the outstanding Common Stock.

 

(1)   Does not include 144,000 shares in a trust for the children of Gerald J. Rubin and Stanlee N. Rubin in which they disclaim any beneficial ownership and includes 276,980 shares held beneficially through a partnership in which Gerald J. Rubin and Stanlee N. Rubin are partners.  1,812,922 shares of Common Stock held beneficially by Mr. and Mrs. Rubin are pledged to secure certain loans.

 

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(2)   Includes shares subject to stock options that are exercisable within 60 days of May 28, 2009 as follows:

 

Name of Beneficial Owner

Options
(#)

 

 

Gerald J. Rubin

2,625,000

 

 

 

 

Stanlee N. Rubin

96,000

 

 

 

 

Thomas J. Benson

62,133

 

 

 

 

John B. Butterworth

40,000

 

 

 

 

Byron H. Rubin

32,000

 

 

 

 

Gary B. Abromovitz

32,000

 

 

 

 

Vincent D. Carson

21,800

 

 

 

 

Darren G. Woody

16,000

 

 

 

 

Timothy F. Meeker

16,000

 

 

 

 

 Total

2,940,933

 

 

 

(3) William F. Susetka  is a new nominee to the Board of Directors.

 

(4) Based on the Schedule 13G/A filed on February 17, 2009.  According to the filing, FMR Corp. currently has sole dispositive power for 3,114,700 shares and shared voting power for -0- shares.

 

(5) Based on the Schedule 13G filed on January 28, 2008.   According to the filing, Columbia Wanger Asset Management, LP has sole dispositive power for 2,020,000 shares, sole voting power for 1,900,000 shares and shared voting power for 120,000 shares.

 

(6) Based on the Schedule 13G filed on February 9, 2009.   According to the filing, Dimensional Fund Advisors, LP currently has sole dispositive power for 1,811,051 shares, sole voting power for 1,761,481 shares and shared voting power for -0- shares

 

EXECUTIVE OFFICERS

 

The executive officers of the Company are Gerald J. Rubin, Thomas J. Benson and Vincent D. Carson. Mr. Rubin is also a Director of the Company and his biography is included above under “Proposal 1: Election of Directors.”

 

THOMAS J. BENSON, age 51, has been Senior Vice President and Chief Financial Officer of the Company since August 2003. Mr. Benson served as Chief Financial Officer of Elamex, S.A. de C.V., a provider of manufacturing and shelter services, from June 2002 to August 2003, and as Chief Financial Officer of Franklin Connections / Azar Nut Company, a manufacturer, packager and distributor of candy and nut products, from May 1994 to June 2002. He has served as an investments director in two private investment firms and spent seven years in public accounting. He received his B.S. from St. Mary’s College and his Masters Degree of Taxation from DePaul University.

 

VINCENT D. CARSON, age 49, joined the Company on November 1, 2001, in the capacity of Vice President, General Counsel and Secretary, after a 16-year legal career in private practice. Prior to joining the Company, Mr. Carson was a shareholder in Brandys Carson & Pritchard, P.C. from 1993 to 2001, and was a shareholder at Mounce, Green, Myers, Safi & Galatzan, P.C. during 2001. Both firms are located in El Paso, Texas.

 

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REPORT OF THE COMPENSATION COMMITTEE

 

The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) has reviewed and discussed with management the Compensation Discussion and Analysis for the fiscal year ended February 28, 2009 to be included in the proxy statement for the Annual Meeting filed pursuant to Section 14(a) of the Exchange Act.  Based on its review and discussion referred to above, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the proxy statement on Schedule 14A for the Company’s Annual Meeting and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2009.

 

 

Members of the Compensation Committee:

 

 

 

Gary B. Abromovitz, Chairman

 

Darren G. Woody

 

Timothy F. Meeker

 

This Report of the Compensation Committee is not “soliciting material,” and is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference.

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Throughout this proxy statement, the following individuals are collectively referred to as the “named executive officers”:

 

·              Gerald J. Rubin, Chairman of the Board of Directors, Chief Executive Officer and President;

 

·              Thomas J. Benson, Senior Vice President and Chief Financial Officer; and

 

·              Vincent D. Carson, Vice President and General Counsel.

 

We sometimes refer to Messrs. Benson and Carson as “other named executive officers”.

 

Oversight of Our Executive Compensation Program

 

The Compensation Committee oversees the compensation of our named executive officers and is composed entirely of independent Directors as defined under the listing standards of NASDAQ. The Compensation Committee is responsible for reviewing, approving and evaluating the chief executive officer’s performance in light of the goals and objectives of the Company. It also makes compensation recommendations with respect to our other executive officers, including approval of awards for incentive compensation and equity-based plans. The committee administers the Helen of Troy 1997 Cash Bonus Performance Plan (the “Bonus Plan”), in which the chief executive officer is currently the only participant. The Compensation Committee also administers all of our stock-based and other incentive compensation plans. The Compensation Committee and the Corporate Governance Committee also assist the Board of Directors in developing succession planning for our executive officers.

 

Objectives of Our Compensation Program

 

Our compensation program is designed to attract, motivate and retain key leaders and to align the long-term interests of the named executive officers with those of our shareholders. The philosophy that the Compensation Committee uses to set executive compensation levels and structures is based on the following principles:

 

·              compensation for our executive officers should be strongly linked to performance;

 

·              a higher percentage of compensation should be at risk and subject to performance-based awards as an executive officer’s range of responsibility and ability to influence the Company’s results increase;

 

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·              compensation should be competitive in relation to the marketplace; and

 

·              outstanding achievement should be recognized.

 

The Role of Chief Executive Officer in Determining Executive Compensation

 

The Compensation Committee, working with the chief executive officer, evaluates and approves all compensation regarding our named executive officers.  Our other named executive officers report directly to our chief executive officer who supervises the day to day performance of those officers.  Accordingly, the chief executive officer makes recommendations to the Compensation Committee regarding salaries, bonuses and equity awards for the other named executive officers and is required to annually review our executive compensation program for those officers. The Compensation Committee strongly considers the compensation recommendations and the performance evaluations of the Chief Executive Officer in making its decisions and any recommendations to the Board of Directors with respect to non-CEO compensation, incentive compensation plans and equity-based plans that are required to be submitted to the Board.  In deliberations or approvals regarding the compensation of the other named executive officers, the committee may elect to invite the chief executive officer to be present but not vote. In any deliberations or approvals of the committee regarding the chief executive officer’s compensation, the chief executive officer is not invited to be present.

 

Compensation Consultant

 

The Compensation Committee has the authority to hire compensation, accounting, legal or other advisors. In connection with any such hiring, the committee can determine the scope of the consultant’s assignments and their fees. The scope of a consultant’s services may include providing the committee with data regarding compensation trends, assisting the committee in the preparation of market surveys or tally sheets or otherwise helping it evaluate compensation decisions.  In fiscal 2009, the Compensation Committee retained an outside compensation consultant.  However, the compensation consultant did not have a material role in any compensation setting practices or decisions.  For more information about the compensation consultant that was retained in fiscal 2009, see “Corporate Governance, the Board, the Board Committees and Meetings – Compensation Committee.”

 

Our Compensation Program for Our Chief Executive Officer

 

Mr. Rubin is the founder of the Company, and he served as President of the Company prior to our initial public offering in 1971. Mr. Rubin served as President, Chief Executive Officer, and Chairman of the Board of Directors from 1971 to 1984, and from 1984 to June 2000, he served as Chief Executive Officer and Chairman of the Board of Directors.  Since June 2000, Mr. Rubin has served as Chief Executive Officer, Chairman of the Board of Directors and President of the Company. Mr. Rubin sets the overall strategic vision for our Company, and oversees the senior management team and the Company’s growth and acquisition strategy.  In making discretionary compensation decisions regarding Mr. Rubin, the Compensation Committee considers Mr. Rubin’s leadership of the Company and his contributions to increasing shareholder value.

 

Mr. Rubin’s compensation is governed by an employment agreement and his participation in the Bonus Plan.  The employment agreement and the Bonus Plan dictate the terms of Mr. Rubin’s compensation, and, therefore, decisions regarding his compensation, other than discretionary compensation, are limited by the terms of the agreement and the plan. The term of Mr. Rubin’s employment agreement is three years and automatically renews daily for a three-year term. In 2005, the Company and Mr. Rubin entered into an amendment to Mr. Rubin’s employment agreement reducing his employment term from five years to three years. The Compensation Committee determined that the term reduction was in the best interests of our shareholders in order to effectively eliminate the tax “gross up” provision that otherwise would have been triggered in the event of a change in control of the Company. By reducing the term of the employment agreement, the amendment also effectively reduced Mr. Rubin’s total change of control compensation. Mr. Rubin receives an annual base salary of $600,000 and is eligible to receive an annual cash bonus payable in accordance with the Company’s Bonus Plan. For a more detailed discussion of the terms of Mr. Rubin’s employment agreement, see “Executive Compensation - Employment Contract for Chairman of the Board, Chief Executive Officer and President.”

 

Historically, Mr. Rubin’s total compensation has been primarily performance-based and tied to the profitability of the Company. Mr. Rubin is presently the sole participant in the Bonus Plan, which provides for cash bonuses based on the Company’s achievement of pre-tax earnings. The earnings formula under the Bonus Plan constitutes a performance goal under Section 162(m) of the Code. The Bonus Plan and the performance targets for the chief executive officer under the

 

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Bonus Plan were originally approved by the shareholders of the Company at our 1997 annual general meeting.  The Company’s shareholders last approved the terms of the performance goals under the Bonus Plan at the 2008 annual general meeting.  At the 2003 annual general meeting, the shareholders approved an amendment to the Bonus Plan to change the performance targets from a pre-tax fixed percentage of earnings to a pre-tax graduated percentage of earnings based on a graduating scale.  The performance targets provide that Mr. Rubin’s cash bonus increases or decreases as pre-tax earnings increase or decrease, respectively. This provides Mr. Rubin with an incentive to work toward positive earnings performance and directly aligns his interests with those of our shareholders.  In connection with the amendment in 2003, Mr. Rubin agreed to a reduction in the number of stock options he would otherwise have been entitled to receive under his employment agreement. Since 2003, Mr. Rubin has received no stock options or other equity awards.

 

Our Bonus Plan is designed to permit the Company to deduct, for federal income tax purposes, certain performance-based compensation over $1,000,000 paid to the chief executive officer and certain other named executive officers under the Bonus Plan. The material terms of the pre-established performance goals for the awards under the Bonus Plan must be approved by the shareholders every five years in order for the Company to be eligible to deduct for tax purposes the incentive awards paid under the Bonus Plan.  The Company’s shareholders last approved the terms of the performance goals under the Bonus Plan at the 2008 annual general meeting.

 

Elements of Our Compensation Program for Our Chief Executive Officer

 

The principal current components of compensation for our chief executive officer are:

 

·              Base salary;

 

·              Bonuses, including performance-based incentive bonuses;

 

·              Perquisites and other personal benefits; and

 

·              Post-termination benefits, including change of control triggers and benefits.

 

Currently, Mr. Rubin is not eligible to receive grants of stock options under any of the Company’s equity compensation plans, including the Helen of Troy Limited 2008 Stock Incentive Plan (the “2008 Stock Plan”). However, in the past, the Company has included grants of stock options in the total compensation package of our chief executive officer. Under the terms of Mr. Rubin’s employment agreement, Mr. Rubin is entitled to receive immediately vested options to purchase 125,000 shares of Common Stock on the last business day of each of the Company’s fiscal quarters (or options to purchase a total of 500,000 shares of Common Stock each year), subject to sufficient availability for such grants under the Company’s equity compensation plans.  In the event there are not a sufficient number of shares under the equity plans to cause the grant of stock options to Mr. Rubin, under Mr. Rubin’s employment agreement, the Company agreed to use its reasonable efforts to cause the Company’s shareholders to approve additional shares of Common Stock to be subject to such equity plans to enable such grants. In the event the Company’s shareholders do not approve additional shares to be issued under such equity plans, the Company is not obligated to Mr. Rubin to grant such options.  In the fourth quarter of fiscal 2004, Mr. Rubin declined the receipt of the balance of available options remaining in the 1998 Stock Option and Restricted Stock Plan totaling 67,011 shares so that these options could be used during the remainder of fiscal 2005 to reward selected members of the Company’s management and certain new management hires with an equity ownership interest in the Company.  At February 28, 2009, Mr. Rubin held fully vested options that he received under these prior grants exercisable for an aggregate of 3,625,000 shares. On May 14, 2009, Mr Rubin exercised certain of these options for 1,000,000 common shares which would have expired in calendar years 2009 and 2010.  Accordingly, on June 28, 2009, Mr. Rubin held options exerciseable for 2,625,000 shares.   See “Executive Compensation - Outstanding Equity Awards At Fiscal Year-End 2009.”

 

At the Annual Meeting, a proposal to amend the 2008 Stock Plan is being submitted to our shareholders to comply with the Company’s obligations under Mr. Rubin’s employment agreement, which requires the Company to use its reasonable efforts to cause the Company’s shareholders to approve additional shares of Common Stock in the event there are not a sufficient number of shares under the Company’s equity plans to grant stock options to Mr. Rubin pursuant to his employment agreement.  Mr. Rubin has received no stock options or other equity awards from the Company since 2003.  If approved, the amendment will, among other things, allow Mr. Rubin to participate in the 2008 Stock Plan and increase the number of shares of Common Stock available for grant.  If the amendment is approved, under the terms of Mr. Rubin’s employment agreement, Mr. Rubin is entitled to receive immediately vested options to purchase 125,000 shares of Common

 

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Stock on the last business day of each of the Company’s fiscal quarters (or options to purchase a total of 500,000 shares of Common Stock each year), subject to sufficient continued availability for such grants under the Company’s equity compensation plans.  For further details regarding the proposed amendment to the 2008 Stock Plan, see “- Long Term Equity Compensation for Our Other Named Executive Officers” and “Proposal 2:  Approval of the Amendment to the Helen of Troy 2008 Stock Incentive Plan.”  For more information regarding the 2008 Stock Plan, see “Executive Compensation – Equity Compensation Plan Information.”

 

The Compensation Committee reviews total compensation for the chief executive officer annually and evaluates his performance. Each year, the Compensation Committee also certifies that the amounts of any bonus payments under the Bonus Plan have been accurately determined and that the performance targets and any other material terms previously established by the Compensation Committee were in fact satisfied. The Compensation Committee believes that performance-based cash compensation that is directly related to the profitability of the Company should constitute a substantial portion of our chief executive officer’s total compensation. As a result, the chief executive officer’s base salary has historically represented a comparatively small percentage of the chief executive officer’s total compensation. In addition, the chief executive officer’s base salary is deducted from his performance-based incentive bonus when computing his total annual cash compensation.

 

Base Salary of Our Chief Executive Officer

 

We provide our named executive officers and other employees with a base salary to provide a fixed amount of compensation for regular services rendered during the fiscal year. Mr. Rubin’s employment agreement sets his base salary at $600,000 per year. His salary has remained at this level since 1999, with no increases for inflation or cost of living adjustments. The Compensation Committee has not sought to increase Mr. Rubin’s salary because it believes that the majority of our chief executive officer’s compensation should be attributed to the profitability of the Company. The Compensation Committee believes that Mr. Rubin’s base salary is below the median range for chief executive officers of similarly-situated companies.

 

Performance-Based Incentive Bonuses for Our Chief Executive Officer

 

The Compensation Committee believes that performance-based awards align our executives’ interests with our annual corporate goals. The Compensation Committee recognizes that Mr. Rubin’s base salary may be below the median range for chief executive officers of similarly-situated companies. The Compensation Committee believes, however, that a significant portion of “at risk” compensation at the chief executive officer level is important to the success of the Company and to provide a form of incentive based compensation to Mr. Rubin. For the fiscal year ended February 28, 2009, Mr. Rubin did not receive equity awards under the Company’s existing equity incentive plan.

 

Under the Bonus Plan, Mr. Rubin’s incentive compensation will fluctuate depending on the Company’s financial performance.  Mr. Rubin’s incentive bonus under the Bonus Plan is capped at $15,000,000 in any one fiscal year. During fiscal 2009, Mr. Rubin was entitled to receive an annual cash incentive bonus based upon a graduated percentage ranging from 5% to 10% of the pre-tax annual earnings of the Company under the Bonus Plan.   For fiscal 2009, earnings was based on earnings (loss) before income taxes in the Company’s statement of operations for the fiscal year ended February 28, 2009, which was a loss of  $51,465,000.  Because the Company experienced a loss for fiscal 2009, Mr. Rubin was not entitled to and did not receive an annual cash bonus under the terms of the Bonus Plan.  For more information regarding the Bonus Plan, see “Executive Compensation – Employment Contract for Chairman of the Board, Chief Executive Officer and President.”

 

In addition to any bonus paid under the Bonus Plan, the Compensation Committee has the authority to recommend to the Board of Directors that a discretionary bonus be awarded to Mr. Rubin. The committee evaluates Mr. Rubin’s performance on an annual basis and reserves such discretionary bonus awards for extraordinary performance or achievement. The committee has not approved a discretionary bonus for the fiscal year ended February 28, 2009.

 

Perquisites and Other Personal Benefits Provided to Our Chief Executive Officer

 

The Company provides our chief executive officer with perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with our overall compensation program. The Company is required to provide most of these benefits pursuant to the terms of Mr. Rubin’s employment agreement. In 2004, the Compensation Committee, with Mr. Rubin’s consent, eliminated the Company’s prior practice of making our corporate aircraft available for personal use by executive officers. The perquisites currently available to Mr. Rubin according to his

 

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employment agreement include an automobile and a driver, all expenses of operating, maintaining and insuring the automobile, legal assistance, financial planning and tax return preparation up to $10,000 per year, reimbursement for certain medical care for himself and his wife, disability insurance coverage and certain life insurance coverage.  In fiscal 2009, Mr. Rubin did not request a driver for his automobile or medical care reimbursement.  Additionally, in May 2009, Mr. Rubin’s individual disability insurance policy expired and it will not be renewed.  The policy will not be renewed because Mr. Rubin is age 65 and the policy only provided for payments on disabilities incurred before reaching age 65.  For more information regarding the perquisites provided under Mr. Rubin’s employment agreement, see “Executive Compensation – Employment Contract for Chairman of the Board, Chief Executive Officer and President.”

 

Mr. Rubin’s employment agreement also provides that the Company must pay or reimburse Mr. Rubin for reasonable travel and other expenses incurred by him in performing his obligations under his employment agreement, including certain travel expenses incurred by his spouse, and any taxes incurred by him with respect to these payments. During fiscal 2009, there were no payments that resulted in reimbursable tax expense.

 

The Company also provides other benefits to Mr. Rubin, such as a 401(k) plan, group medical, group life and group dental insurance, as well as vacation and paid holidays. These benefits are available to all our employees, including each named executive officer, and we believe they are comparable to those provided at other companies.

 

Potential Post-Termination Benefits for our Chief Executive Officer

 

Change in Control

 

Mr. Rubin’s employment agreement provides that the Company must make certain payments to him if his employment is terminated as a result of a change in control (as defined in the employment agreement). Under Mr. Rubin’s employment agreement, he will receive the benefits provided under the agreement if his employment is terminated other than for cause (as defined in the agreement) after a change in control or if he elects to terminate his employment within six months after a change in control including the immediate vesting of all options and the removal of all restrictions on restricted stock granted to him. These benefits are more fully described under “Executive Compensation - Employment Contract for Chairman of the Board, Chief Executive Officer and President” and “Executive Compensation – Potential Payments Upon Termination or Change of Control.”

 

The change in control provisions of Mr. Rubin’s employment agreement are intended to ensure that we will retain the benefit of Mr. Rubin’s services without distraction in the face of a potential change in control and that Mr. Rubin will evaluate potential transactions on an objective basis. The Compensation Committee believes the change in control provisions in Mr. Rubin’s employment agreement are reasonable and necessary considering the competitive conditions of the Company and its industry.

 

Severance

 

The employment agreement of the chief executive officer provides that, if his employment is terminated by the Company without “cause” or if he terminates his employment for “good reason” (as those terms are defined in his employment agreement) or as a result of a “change in control”, then for the three years following any such event, he will be entitled to, among other things,  monthly payments of his base salary and annual bonus payments equal to highest annual bonus paid to him in the preceding three years.   Our chief executive officer will also be entitled to receive certain benefits following a termination of his employment by reason of death or disability.  These benefits are more fully described under “Executive Compensation - Executive Compensation Employment Contract for Chairman of the Board, Chief Executive Officer and President” and “Executive Compensation – Potential Payments upon Termination or Change in Control.” The employment agreement also provides for the immediate vesting of all options granted to Mr. Rubin if his employment is terminated by the Company without “cause,” if he terminates his employment for “good reason,” including in the event of a change of control, or if his employment is terminated for death or disability. As of the end of fiscal 2009, all of Mr. Rubin’s options were fully vested. See “Executive Compensation - Outstanding Equity Awards At Fiscal Year-End 2009.”

 

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The Company’s Compensation Program for Other Named Executive Officers

 

The Company’s other named executive officers are not party to employment agreements. As a result, their compensation is reviewed and determined by the Compensation Committee on an annual basis. The Compensation Committee may also review a named executive officer’s compensation if that executive officer is promoted or experiences a change in responsibilities.

 

Our other named executive officers report directly to our chief executive officer who supervises the day to day performance of those officers.   Our chief executive officer annually reviews our executive compensation program (other than for himself) and makes compensation recommendations to the Compensation Committee.  The Compensation Committee strongly considers the recommendations of the chief executive officer in making its decisions and any recommendations to the Board of Directors with respect to non-CEO compensation, incentive compensation plans and equity-based plans that are required to be submitted to the Board.

 

Elements of Our Compensation Program for Our Other Named Executive Officers

 

The principal components of compensation for our other named executive officers are:

 

·              Base salary;

 

·              Bonuses, including performance-based incentive bonuses;

 

·              Long-term equity compensation; and

 

·              Other personal benefits.

 

The Company has no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, the Compensation Committee reviews the performance of the Company and the individuals and determines the appropriate level and mix of compensation elements.

 

Base Salary of Our Other Named Executive Officers

 

The Company provides our other named executive officers with a base salary to provide a fixed amount of compensation for regular services rendered during the fiscal year. In setting or increasing base salaries, the Compensation Committee strongly considers the recommendations made by our chief executive officer. In addition, the committee considers each executive’s job responsibilities, qualifications, experience, performance history and length of service with the Company and comparable salaries paid by our competitors.  The Compensation Committee may, in its discretion, increase the base salary of an other named executive officer based on that named executive officer’s performance.  During fiscal 2008, the Compensation Committee increased the annual salaries of Thomas J. Benson and Vincent D. Carson from $315,000 and $191,000, respectively, to $410,000 and $250,000, respectively, based on the Compensation Committee’s review of their performance and for merit reasons.  The Compensation Committee determined that our other named executive officers would not receive base salary increases in fiscal 2009 due to the global economic conditions and the Company’s financial performance.

 

Annual Incentive Bonuses for Our Other Named Executive Officers

 

Performance-based awards are intended to align executives’ interests with our annual corporate goals. Annual incentive bonuses take into account both individual and Company performance, including the Company’s earnings. While the amount of funds available for distribution as bonuses varies with Company earnings, the actual amount that may be distributed is subjectively determined each year considering recommendations made by our chief executive officer and reviewed by the Compensation Committee.

 

The annual incentive bonuses awarded to Messrs. Benson and Carson are entirely discretionary. In determining the discretionary bonus relating to any fiscal year, the executive officer’s individual performance and the financial results and condition of the Company for that fiscal year are considered. The bonuses are not based on the Compensation Committee’s consideration of any specific, pre-established performance criteria or metrics.  Messrs. Benson and Carson serve as the

 

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Company’s chief financial officer and general counsel, respectively.  Accordingly, in determining whether to award a bonus and the amount of the bonus awarded, the Compensation Committee does not establish any operational performance targets of the Company or any operating segment of the Company.  The Compensation Committee determined not to award any annual incentive bonuses to the named executive officers for performance in fiscal 2009, other than a $1,500 holiday bonus, due to the current global economic conditions and the Company’s financial performance.

 

For fiscal 2009, the individual performance factors considered by the Compensation Committee for Mr. Benson, following the recommendation of the Company’s chief executive officer, included the quality of his work with respect to potential acquisitions, his analysis of tax issues related to Sections 409A and 457A of the Code, his cooperation and input in various matters relating to the internal auditing of the divisions of the Company, his attitude and his ability to integrate a teamwork concept among the finance department and the operating divisions of the Company.  Performance factors considered by the Compensation Committee for Mr. Carson, following the recommendation of the Company’s chief executive officer, included his ability and experience in negotiating the terms and operating issues relating to acquisitions, his analysis of issues related to Sections 409A, 457A and 162(m) of the Code regarding compensation of employees, the achieved cost savings to the Company as a result of his work on special projects and tax matters and his work ethic and interaction with executives of the Company and the Board of Directors.  The overall financial results and condition of the Company are also considered in determining any bonus, however, no financial targets or criteria are established for any bonus.

 

Bonuses are calculated as percentages of base salary, with the maximum bonus historically ranging from 20% to 25% for named executive officers. Although incentive bonuses are primarily based on individual and corporate performance, in some circumstances the Compensation Committee may provide additional discretionary bonus awards. The committee believes that discretionary bonuses, where warranted, can be effective in motivating, rewarding and retaining our executive officers.

 

Long Term Equity Compensation for Our Other Named Executive Officers

 

The 1998 Stock Option and Restricted Stock Plan expired by its own terms on August 25, 2008.  At the 2008 annual general meeting of shareholders, the Company’s shareholders approved the 2008 Stock Plan, which the Company intends to use to grant equity awards to its named executive officers, other than our chief executive officer, and to key employees. Equity-based compensation and ownership give these individuals a continuing stake in the long-term success of the Company, and the delayed vesting of stock options helps to encourage retention.  The Compensation Committee and the Board of Directors believe that the executive officers and key employees of the Company should be rewarded for earnings performance that may result from their efforts and believe this should be accomplished, in part, by awarding equity compensation to these individuals, which increases their stake in the Company’s long-term success and further aligns their interests with those of shareholders.  For more information regarding the Company’s long term equity compensation, see “Executive Compensation – Equity Compensation Plan Information.”

 

At the 2008 annual general meeting of shareholders, the Company’s shareholders also approved the 2008 Stock Purchase Plan (the “2008 ESPP”).  Prior to the approval of the 2008 ESPP, the Company maintained the 1998 Employee Stock Purchase Plan, which terminated by its own terms on July 17, 2008. All employees that own less than five percent of the total combined voting power or value of all classes of stock of the Company or any of its subsidiaries are eligible to participate in the 2008 ESPP, including the named executive officers. During fiscal year 2009, Thomas J. Benson, one of our named executive officers, participated in the 2008 ESPP.  Under the plan, employees are entitled to purchase shares of the Company’s Common Stock at a discount to market value. The purchase price is 85% of the average of the highest and lowest sale prices of the Common Stock on NASDAQ on either the first day or last day of each option period, whichever is less. As of February 28, 2009, 334,518 shares remain available for issuance under the 2008 ESPP.  For an additional discussion of the material terms of the 2008 ESPP, see “Executive Compensation – Equity Compensation Plan Information - Employee Stock Purchase Plan.”

 

Other Personal Benefits Provided for Our Other Named Executive Officers

 

We provide other benefits to the named executive officers, such as a 401(k) plan, group medical, group disability, group life and group dental insurance, as well as vacation and paid holidays. These benefits are available to all our employees and we believe they are comparable to those provided at other companies.

 

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Option Grant Practices

 

Grants of stock options are made without regard to anticipated earnings or other material announcements by the Company. Under the 2008 Stock Plan, the exercise price of stock options granted under the plan may not be less than the closing price of our common shares on NASDAQ on the date of the grant. The vesting period of options for officers has historically been over a five year period at the graduated rate per year of 10%, 15%, 20%, 25%, and 30%. The Compensation Committee believes that these vesting terms encourage retention of our executive officers. The Compensation Committee may, however, adjust the vesting of options as it deems necessary under the circumstances. Our Board of Directors normally determines any annual grants of stock options to current officers and employees on the first business day following the public announcement of the fiscal year-end financial results.

 

Tax Implications of Executive Compensation

 

Section 162(m) of the Code places a limit of $1,000,000 on the amount of compensation that a company may deduct in any one year with respect to its principal executive officer and each of its other three most highly paid executive officers other than the chief financial officer.  There is an exception to the $1,000,000 limitation for performance-based compensation that meets certain requirements. Annual cash incentive compensation and stock option awards are generally forms of performance-based compensation that meet those requirements and, as such, are fully deductible.

 

Grants of stock options to our named executive officers under our 2008 Plan are intended to comply with Section 162(m) for treatment as performance-based compensation. Therefore, we expect to deduct compensation of our named executive officers related to compensation under each of these plans.

 

The incentive cash bonus payments to our chief executive officer under the Bonus Plan are designed to comply with Section 162(m) for treatment as performance-based compensation.  Section 162(m) allows companies to deduct, for federal income tax purposes, certain performance-based compensation over $1,000,000.  The material terms of the pre-established performance goals for the awards under the Bonus Plan must be approved by the shareholders every five years in order for the Company to be eligible to deduct for tax purposes the incentive awards paid under the Bonus Plan.  The Company’s shareholders last approved the terms of the performance goals under the Bonus Plan at the 2008 annual general meeting.

 

The Compensation Committee has considered and will continue to consider tax deductibility in structuring compensation arrangements. However, the Compensation Committee retains discretion to establish executive compensation arrangements that it believes are consistent with the principles described earlier and in the best interests of our Company and its shareholders, even if those arrangements may not be fully deductible under Section 162(m).

 

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EXECUTIVE COMPENSATION

 

The following table sets forth the summary of compensation earned during fiscal 2007 through fiscal 2009 by the Company’s chief executive officer, chief financial officer and one other most highly compensated executive officer whose total compensation exceeded $100,000 and who was serving as the executive officer at the end of the fiscal 2009 (such persons referred to collectively, as the “named executive officers”).

 

Summary Compensation Table for Fiscal Year 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Option

All Other

 

 

Fiscal

Salary

Bonus

Awards

Compensation

Total

Name and principal position

Year

($)

($)(1)

($)(2)

($)(3)

($)

 Gerald J. Rubin

2009

600,000

-

-

87,160

687,160

 Chairman, Chief Executive

2008

600,000

5,054,234

-

68,409

5,722,643

 Officer, and President

2007

600,000

4,110,639

-

60,916

4,771,555

 Thomas J. Benson

2009

410,000

1,500

42,141

8,142

461,783

 Senior Vice President

2008

386,250

54,300

34,848

8,038

483,436

 and Chief Financial Officer

2007

315,000

84,808

20,916

7,192

427,916

 Vincent D. Carson

2009

250,000

1,500

14,448

7,710

273,658

 Vice President and

2008

236,917

30,500

9,431

7,444

284,292

 General Counsel

2007

191,000

3,673

17,306

6,239

218,218

 


 

(1)        Mr. Rubin’s bonuses were calculated and awarded pursuant to the Company’s 1997 Cash Bonus Performance Plan, as amended.

 

(2)          These amounts reflect the expense recognized for the covered fiscal year in the Company’s financial statement reporting for equity awards granted under the Company’s share-based compensation plans.  Further information regarding the awards is included in “Outstanding Equity Awards at Fiscal Year-End 2009” and “Equity Compensation Plan Information.”  The expense recognized for financial statement reporting was determined in accordance with Statement of Financial Accounting Standards No. 123(R), and includes amounts from awards granted prior to fiscal 2009.  The calculation disregards the estimate of forfeitures related to service based vesting conditions.  Assumptions used in the calculation of these amounts are discussed in Note (9) to the Company’s audited financial statements for the fiscal year ended February 28, 2009, included in the Company’s Annual Report on Form 10-K for the year then ended, filed with the SEC on May 14, 2009.  During Fiscal 2009, options held by Mr. Rubin to purchase 1,000,000 shares of Common Stock expired unexercised.

 

(3)          This column reports all other compensation for the covered fiscal year that the Company could not properly report in any other column of the Summary Compensation Table.  Details regarding the amounts in this column for fiscal 2009 are provided in the table entitled “All Other Compensation for Fiscal Year 2009” set forth below.

 

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In fiscal 2009, the following compensation was paid to our named executive officers, which comprises “All Other Compensation”:

 

All Other Compensation for Fiscal Year 2009

 

 

 

 

 

 

 

Life

 

 

 

Group Life

Disability

Auto

Legal

Insurance

 

 

401(k) Plan

Insurance

Insurance

Lease

Fees Paid

Benefit

Total

Name

($)

($)

($)

($)

($)

($)(1)

($)

 Gerald J. Rubin

6,900

6,858

5,798

18,702

10,000

38,902

87,160

 Thomas J. Benson

6,900

1,242

-

-

-

-

8,142

 Vincent D. Carson

6,900

810

-

-

-

-

7,710

 


 

(1)          Includes amounts attributable to the economic benefit received for executive and survivorship life insurance policies.  The economic benefit of such policies totaled $38,902 in fiscal 2009.  For fiscal year 2009, the Board of Directors directed that premium payments in the total amount of $360,417 be made towards the next year’s premiums.

 

(2)          In fiscal year 2009, the following share-based compensation was awarded to the named executive officers:

 

 

Grants of Plan-Based Awards in Fiscal Year 2009

 

 

 

 

 

All Other

 

 

 

 

 

 

Option Awards;

 

Grant Date

 

 

 

 

Number of

Exercise or

Fair Value

 

 

 

 

Securities

Base Price

of Stock

 

 

 

 

Underlying

of Option

and Option

 

 

 

 

Options

Awards

Awards

 

 

Name

Grant Date

(#)

($/Sh)

($) (1)

 

 

 Thomas J. Benson

8/19/2008

5,000

22.46

47,070

 

 

 Vincent D. Carson

8/19/2008

7,500

22.46

70,605

 

 


 

(1)          Mr. Benson’s and Mr. Carson’s options were granted under the 1998 Plan with original vesting terms over a five year period at the graduated rate per year of 10%, 15%, 20%, 25%, and 30%.  The amount shown under “Grant Date Fair Value of Stock and Option Awards ($)” is the total expense that will be recognized for financial statement reporting purposes over the five year vesting term and was determined in accordance with Statement of Financial Accounting Standards No. 123(R).  The calculation disregards the estimate of forfeitures related to service-based vesting conditions.  Assumptions used in the calculation of this amount are discussed in Note (9) to the Company’s audited financial statements for the fiscal year ended February 28, 2009, included in the Company’s Annual Report on Form 10-K for the year then ended, filed with the SEC on May 14, 2009.

 

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2009

 

The following table sets forth certain information with respect to outstanding equity awards at February 28, 2009 with respect to our named executive officers.

 

Outstanding Equity Awards at Fiscal Year-End 2009

 

 

 

Option Awards

 

 

 

Number of

 

Number of

 

 

 

 

 

 

 

Securities

 

Securities

 

 

 

 

 

 

 

Underlying

 

Underlying

 

 

 

 

 

 

 

Unexercised

 

Unexercised

Option

 

 

 

 

 

 

Options

 

Options

Exercise

 

 

Option

 

 

 

(#)

 

(#)

Price

 

 

Expiration

 

Name

 

Exercisable

 

Unexerciseable

($)

 

 

Date (1)

 

Gerald J. Rubin (2)

 

250,000

 

-

 

15.78

 

 

5/28/2009   *

 

 

 

250,000

 

-

 

14.47

 

 

8/31/2009   *

 

 

 

250,000

 

-

 

10.63

 

 

11/30/2009 *

 

 

 

250,000

 

-

 

7.09

 

 

2/28/2010   *

 

 

 

250,000

 

-

 

9.17

 

 

5/31/11

 

 

 

250,000

 

-

 

12.53

 

 

8/31/11

 

 

 

250,000

 

-

 

10.75

 

 

11/30/11

 

 

 

250,000

 

-

 

12.63

 

 

2/28/12

 

 

 

250,000

 

-

 

13.03

 

 

5/31/12

 

 

 

250,000

 

-

 

11.84

 

 

8/31/12

 

 

 

250,000

 

-

 

10.08

 

 

11/30/12

 

 

 

250,000

 

-

 

13.13

 

 

2/28/13

 

 

 

250,000

 

-

 

14.94

 

 

5/31/13

 

 

 

250,000

 

-

 

21.47

 

 

8/31/13

 

 

 

125,000

 

-

 

22.81

 

 

11/30/13

 

Thomas J. Benson

 

56,883

 

-

 

21.21

 

 

8/22/13

 

 

 

3,375

 

4,125

(3)

18.00

 

 

11/25/15

 

 

 

750

 

6,750

(3)

26.14

 

 

5/15/17

 

 

 

-

 

5,000

(3)

22.46

 

 

8/19/18

 

Vincent D. Carson

 

10,000

 

-

 

10.71

 

 

11/1/11

 

 

 

5,000

 

-

 

14.02

 

 

11/1/12

 

 

 

5,000

 

-

 

23.38

 

 

12/1/13

 

 

 

1,800

 

2,200

(4)

18.00

 

 

11/25/15

 

 

 

-

 

7,500

(4)

22.46

 

 

8/19/18

 

 

* Exercised after February 28, 2009

 


 

(1)

All options listed in this table have a ten year term from the date of grant.

 

 

(2)

Mr. Rubin’s stock options are 100% vested. During fiscal 2009, options to purchase 1,000,000 shares of Common Stock expired unexercised. On May 14, 2009, Mr. Rubin exercised options to purchase an aggregate of 1,000,000 shares of Common Stock.

 

 

(3)

Mr. Benson’s options were granted with original vesting terms over a five year period at the graduated rate per year of 10%, 15%, 20%, 25%, and 30%.

 

 

(4)

Mr. Carson’s options were granted with original vesting terms over a five year period at the graduated rate per year of 10%, 15%, 20%, 25%, and 30%.

 

 

 

No options were exercised by our named executive officers during the fiscal year ended February 28, 2009.

 

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EMPLOYMENT CONTRACT FOR CHAIRMAN OF THE BOARD,

 

 CHIEF EXECUTIVE OFFICER AND PRESIDENT

 

Mr. Rubin serves as the Company’s chief executive officer pursuant to an employment agreement pursuant to which Mr. Rubin receives an annual base salary of $600,000 and is eligible to receive an annual cash bonus payable in accordance with the Bonus Plan. The term of Mr. Rubin’s employment agreement is three years and automatically renews daily for a three year term.

 

The annual cash bonus under the Bonus Plan to Mr. Rubin is payable based on the earnings achieved by the Company in any applicable fiscal year according to the following scale:

 

Amount Of Bonus Payable

Amount Of ECO Achieved By

As A Percent Of ECO

 The Company In The Applicable Fiscal Year

5%

 $                       - 0 -

 to

 $              30,000,000

6%

 $              30,000,001

 to

 $              40,000,000

7%

 $              40,000,001

 to

 $              50,000,000

8%

 $              50,000,001

 to

 $              60,000,000

9%

 $              60,000,001

 to

 $              70,000,000

10%

 $              70,000,001

or more

 

 

For the purposes of the bonus calculation, “earnings” means the sum of the consolidated earnings from continuing operations (“ECO”) before giving effect to Mr. Rubin’s bonus and all income taxes of the Company and its subsidiaries, minus extraordinary income, plus extraordinary expenses, minus capital gains, and plus capital losses. All components of the calculation are required to be determined in accordance with accounting principles generally accepted in the United States. The base salary paid to Mr. Rubin in the fiscal year then reduces the amount of the incentive bonus calculated above. Mr. Rubin’s incentive bonus for any fiscal year cannot exceed $15,000,000.  For fiscal 2009, “earnings” was a loss of $51,465,000 and was based on earnings (loss) before income taxes in the Company’s statement of operations for the fiscal year ended February 28, 2009.  Because the Company experienced a loss for fiscal 2009, Mr. Rubin was not entitled to and did not receive an annual cash bonus under the terms of the Bonus Plan.

 

Shareholder approval of the material terms of the Bonus Plan permits the Company to deduct, for federal income tax purposes, certain performance-based compensation over $1,000,000 paid to the chief executive officer and certain other named executive officers under the Bonus Plan. The material terms of the pre-established performance goals for the awards under the Bonus Plan must be approved by the shareholders every five years in order to permit the Company to continue to deduct fully for tax purposes the incentive awards paid under the Bonus Plan.  At the Company’s 2008 annual general meeting of shareholders on August 19, 2008, the Company’s shareholders approved the terms of the performance goals under the Bonus Plan.  The Company’s shareholders also approved amendments to the Bonus Plan to correct certain clerical errors and to clarify the timing of payments under the Bonus Plan in compliance with the requirements of Section 409A of the Code.  On December 30, 2008, the Company’s Compensation Committee approved and the Company and Mr. Rubin executed an amendment to Mr. Rubin’s employment agreement, effective as of December 30, 2008.  The intent of the amendment was to make the provisions of Mr. Rubin’s employment agreement comply with the applicable requirements of Sections 409A and 457A of the Internal Revenue Code of 1986, as amended.

 

Under the terms of his employment agreement, Mr. Rubin is entitled to receive immediately vested options to purchase 125,000 shares of Common Stock on the last business day of each of the Company’s fiscal quarters (or options to purchase a total of 500,000 shares of Common Stock each year), subject to sufficient availability for such grants under the Company’s equity compensation plans.  In the event there are not a sufficient number of shares under the stock option plans to cause the grant of stock options to Mr. Rubin, the Company agreed to use its reasonable efforts to cause the Company’s shareholders to approve additional shares of Common Stock to be subject to such stock option plans to enable such grants. In the event the Company’s shareholders do not approve additional shares to be issued under such stock option plans, the Company is not obligated to Mr. Rubin to grant such options.   Currently, Mr. Rubin is not eligible to participate in the 2008 Stock Plan or any other equity plans of the Company.  Mr. Rubin has not received any grants of stock options or other equity awards since 2003.

 

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At the 2008 annual general meeting of shareholders, the Company’s shareholders approved the 2008 Stock Plan.  For more information about the 2008 Stock Plan, see “Executive Compensation – Equity Compensation Plan Information.” At the Annual Meeting, a proposal to amend the 2008 Stock Plan is being submitted to the Company’s shareholders to allow Mr. Rubin to participate in the 2008 Stock Plan, to increase the number of shares of Common Stock available for grant and, of those shares, the number of shares available for grants of incentive stock options under the 2008 Stock Plan from 750,000 to 3,750,000, and to increase the maximum number of shares that may be awarded to a participant under the 2008 Stock Plan during a calendar year from 250,000 to 500,000.   The Company is submitting the amendment to the 2008 Stock Plan to its shareholders in order to comply with the Company’s obligations under Mr. Rubin’s employment agreement, which requires the Company to use its reasonable efforts to cause the Company’s shareholders to approve additional shares of Common Stock in the event there are not a sufficient number of shares under the Company’s equity plans to grant stock options to Mr. Rubin pursuant to his employment agreement.  For further details regarding the proposed amendment to the 2008 Stock Plan, see “Compensation Discussion and Analysis - Long Term Equity Compensation for Our Other Named Executive Officers” and “Proposal 2:  To Approve Amendments to the Helen of Troy Limited 2008 Stock Incentive Plan.”  For more information regarding the 2008 Stock Plan, see “Executive Compensation — Equity Compensation Plan Information.”

 

The Company provides Mr. Rubin with certain perquisites and other personal benefits. The Company is required to provide most of these benefits pursuant to the terms of Mr. Rubin’s employment agreement. The perquisites provided to Mr. Rubin according to his employment agreement include the following:

 

·                  Automobile. The Company provides Mr. Rubin with an automobile. All expenses of operating, maintaining, and insuring the automobile are paid by the Company. Mr. Rubin is also entitled to have a driver at the Company’s expense, but in fiscal 2009 he did not request this perquisite.

 

·                  Legal Assistance, Financial Planning, and Tax Return Preparation. The Company has agreed to pay for, or reimburse Mr. Rubin for, up to $10,000 per year for expenses incurred in connection with his obtaining routine legal assistance, financial planning and tax return preparation. In fiscal 2009, Mr. Rubin was reimbursed for $10,000 in legal fees.

 

·                  Medical Care Reimbursement. Mr. Rubin is entitled to reimbursement for medical care for himself and his wife, to the extent those expenses are not reimbursed by insurance. In fiscal 2009, Mr. Rubin did not request this perquisite.

 

·                  Disability Insurance. The Company has historically provided Mr. Rubin with an individual disability insurance policy that provided for a 360 day waiting period from the date on which Mr. Rubin may have become disabled, and would have paid a monthly benefit of $l4,038 until age 65.  As long as Mr. Rubin remained employed by the Company and was paid the full compensation specified in his employment agreement, any disability benefits payable to him under this policy had to be endorsed over to the Company.  In May 2009, this policy expired.  Since Mr. Rubin reached age 65 during fiscal 2009, the Company will no longer purchase supplemental disability insurance.  Mr. Rubin is also covered by our group disability insurance policy, which is generally available to all our employees.

 

·                  Life Insurance. Prior to fiscal 2002, the Company paid premiums on an executive universal life insurance policy on the life of Mr. Rubin in the initial insured amount of $5,000,000. In June 2000, the Company and Mr. Rubin entered into a split-dollar agreement, pursuant to which the Company is entitled to reimbursement for all premiums it has paid on the policy out of any death benefits paid on the life of Mr. Rubin. No premiums have been paid on the policy since fiscal 2002. As of February 28, 2009, the total aggregate death benefit under the policy was $5,156,934, the aggregate cash surrender value of the policy was $156,934, and the aggregate premiums paid by the Company since inception of the policy was $922,774.

 

Prior to July 2003, the Company also had paid premiums for survivorship life insurance policies on the lives of Mr. and Mrs. Rubin in the initial aggregate insured amount of $29,000,000. The Company and a trust established for the benefit of Mr. and Mrs. Rubin, which was the owner of the life insurance policies (the “Trust”), entered into a split dollar insurance agreement in March 1994 whereby the Trust agreed to repay the Company all of the premiums paid under the policies from the proceeds of the policies. The Trust owned the policies and collaterally assigned the proceeds from these policies as collateral for the obligation to repay the

 

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aggregate premiums paid by the Company under these policies. In July 2003, the Trust and the Company entered into a split dollar life insurance agreement under which the Trust transferred ownership of the policies to the Company. Upon the death of the second to die of Mr. and Mrs. Rubin, the Company will receive the cash surrender value of the policies, and the Trust will receive the balance of the proceeds. The Company will also be entitled to the cash surrender value of the policies if the policies are cancelled. The Board of Directors decides annually whether to pay annual premiums of up to $360,417 on the policies.  During fiscal 2009, the Board of Directors decided to make payments of $360,417 toward the next year’s premiums. As of February 28, 2009, the total aggregate death benefit of the policies was $33,405,396, the aggregate cash surrender value of the policies was $7,015,534, and the aggregate premiums paid by the Company since inception of the policies was $5,702,169.

 

The Company also provides other benefits to Mr. Rubin, such as a 401(k) plan, group medical, group life and group dental insurance, as well as vacation and paid holidays. These benefits are available to all our employees, including each named executive officer, and we believe they are comparable to those provided at other companies.

 

Mr. Rubin’s employment agreement provides that the Company must pay or reimburse Mr. Rubin for reasonable travel and other expenses incurred by him in performing his obligations under his employment agreement, including travel expenses incurred by his spouse if she travels with him while he performs his obligations under the employment agreement.  Under the employment agreement, the Company will also reimburse Mr. Rubin for any taxes incurred by him with respect to these payments.

 

If Mr. Rubin’s employment with the Company is terminated by an occurrence other than death, disability, voluntary termination or for cause, he will receive the following:

 

·                  payments, each in an amount equal to his monthly rate of basic compensation, that would otherwise have been payable to him if he had continued in the employ of the Company until the employment contract would have expired but for said occurrence; and

 

·                  payments, payable annually after the close of each of the next three fiscal years of the Company, each in an amount equal to the highest annual incentive compensation and bonus award made to Mr. Rubin with respect to the Company’s most recent three fiscal years ending prior to the date of termination.

 

If any of these payments are payable during the six month period following Mr. Rubin’s separation from service then that amount will be paid in a single lump sum payment on the earlier to occur of Mr. Rubin’s death or the first day of the seventh month following Mr. Rubin’s separation from service.

 

His employment agreement was amended in April 2005 to provide that upon termination in no event will the severance payments to Mr. Rubin exceed 2.99 times his base amount, as defined in Section 280G of the Code.

 

Under Mr. Rubin’s employment agreement, if Mr. Rubin’s employment is terminated by an occurrence other than by death, disability, voluntary termination or cause, Mr. Rubin will also receive: (1) all amounts earned, accrued or owing but not yet paid to him, (2) immediate vesting of all options granted to him, (3) removal of all restrictions on restricted stock awarded to him and immediate vesting of the rights to such stock, if any, (4) medical benefits for him and his wife for life and (5) paid premiums of his life insurance policies, as required under his employment agreement.  At June 28, 2009, Mr. Rubin did not own any restricted stock or options that were not already vested. Mr. Rubin will also continue to participate in all employee benefits plans, programs or arrangements available to Company executives in which he was participating on the date of termination until the date the employment agreement would have expired but for said occurrence or, if earlier, until he receives equivalent benefits and coverage by another employer.

 

Under the terms of  Mr. Rubin’s employment agreement, Mr. Rubin may elect to terminate his employment within six months of a change of control (as defined in the employment agreement).  In the event that Mr. Rubin elects to terminate his employment in that circumstance, he will be entitled to receive the same payments as he would have been entitled to receive had his employment terminated by an occurrence other than by death, disability, voluntary termination or cause in accordance with the same payment terms.

 

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EQUITY COMPENSATION PLAN INFORMATION

 

Stock Option and Restricted Stock Plans

 

1998 Stock Option and Restricted Stock Plan

 

The 1998 Stock Option and Restricted Stock Plan (the “1998 Plan”) was approved by the Company’s shareholders at the 1998 annual general meeting.  The purpose of the 1998 Plan is (1) to offer selected employees of the Company or its subsidiaries an equity ownership interest in the financial success of the Company, (2) to provide the Company an opportunity to attract and retain the best available personnel for positions of substantial responsibility and (3) to encourage equity participation in the Company by eligible participants.  The Compensation Committee and the Board of Directors believe that the executive officers and key employees of the Company should be rewarded for earnings performance that may result from their efforts and believes this is best accomplished by awarding equity compensation to these individuals.  Since August 2005, Mr. Rubin has not been eligible to receive grants under the 1998 Plan. The 1998 Plan expired by its own terms on August 25, 2008.

 

The Compensation Committee administers the 1998 Plan. Under the 1998 Plan, the Compensation Committee could grant incentive stock options, non-qualified options and restricted stock to our named executive officers, other than our chief executive officer, and to other employees.  The number and the nature of equity awards granted to each eligible employee were determined on a discretionary rather than formula basis by the Compensation Committee with the recommendation of the chief executive officer.  The exercise price for any option granted under the 1998 Plan was at a price that the committee may determine, but could not be less than the average of the highest and lowest sale price of our Common Stock on NASDAQ on the date of the grant.  Any award granted under the 1998 Plan is exercisable or vests at such times, under such conditions and in such amounts and during such period or periods as the Compensation Committee determines on the date the award is granted.

 

During fiscal 2009, stock option grants for 250,000 shares at an average exercise price of $22.46 were awarded to employees under the 1998 Plan. Recipients of stock option awards may exercise their options at any time after they vest and before they expire, except that no awards may be exercised after ten years from the date of grant. Awards are generally not transferable by the recipient during the recipient’s life.  Awards granted under the plan were evidenced by either an agreement that was signed by us and the recipient or a confirming memorandum issued by us to the recipient setting forth the terms and conditions of the awards. Award recipients and beneficiaries of award recipients have no right, title or interest in or to any shares subject to any award or to any rights as a shareholder, unless and until shares are actually issued to the recipient.

 

According to the terms of the 1998 Plan, any unvested options immediately vest upon death, disability or a change in control (as defined in the 1998 Plan) of the Company. In addition, if a participant’s employment with the Company is terminated, any exercisable options held by that employee may be exercised for a period of:

 

 

·

for both incentive stock options (“ISOs”) and nonstatutory options (“NSOs”), up to twelve months if the termination of employment was due to the employee’s death or disability;

 

 

 

 

·

for ISO’s, up to ninety days, where the employee is terminated without cause;

 

 

 

 

·

for NSO’s, up to six months, where the employee is terminated without cause; or

 

 

 

 

·

up to thirty days, if the termination of employment was for any other reason.

 

The 1998 Plan requires participants to comply with specified confidentiality and non-competition provisions.  If the participant violates these provisions, then the participant may be required to forfeit his or her rights and benefits under the 1998 Plan, return to the Company any unexercised options, forfeit the rights under any awards of restricted stock and return any shares held by the participant received upon exercise of any option or the lapse of restrictions relating to restricted stock.

 

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2008 Stock Plan

 

The Company’s shareholders approved the 2008 Stock Plan at the 2008 annual general meeting of shareholders. The purpose of the 2008 Stock Plan is to (1) aid the Company and its subsidiaries and affiliates in attracting, securing and retaining employees of outstanding ability, (2) attract consultants to provide services to the Company and its subsidiaries and affiliates, as needed, and (3) motivate such persons to exert their best efforts on behalf of the Company and its subsidiaries and its affiliates by providing incentives through the granting of awards.

 

The 2008 Stock Plan is administered by the Compensation Committee of the Board of Directors.  The 2008 Stock Plan permits the granting of stock options, including incentive stock options and non-qualified stock options, unrestricted shares of Common Stock, stock appreciation rights (“SARs”), restricted stock, restricted stock units and other stock-based awards.  Currently, the maximum number of shares reserved for issuance under the 2008 Stock Plan is 750,000 shares and the maximum number of shares with respect to which awards of any and all types may be granted during a calendar year to any participant is limited, in the aggregate, to 250,000 shares. As of June 28, 2009, options to purchase 288,350 shares have been awarded under the 2008 Stock Plan.  The plan will expire by its terms on August 19, 2018. The 2008 Stock Plan provides that if the chief executive officer of the Company is a member of the Board of Directors, the Board of Directors may, upon recommendation of the Compensation Committee, authorize him or her to grant awards of up to an aggregate of 350,000 shares of Common Stock (subject to adjustment in certain circumstances), provided that any such grants will be subject to the terms and conditions of the Board authorization and that the chief executive officer must notify the Compensation Committee of any such grants.

 

Currently, employees of the Company, its subsidiaries and affiliates (excluding Gerald J. Rubin, the Company’s Chairman of the Board, Chief Executive Officer and President) and consultants to the Company and its subsidiaries, are eligible to participate in the 2008 Stock Plan.  As of June 28, 2009, the Company, its subsidiaries and affiliates, had approximately 890 employees that are eligible to receive awards under the 2008 Stock Plan, and approximately 155 have received awards.

 

The 2008 Stock Plan provides that the option price pursuant to which Common Stock may be purchased will be determined by the Compensation Committee, but will not be less than the fair market value of the Common Stock on the date the option is granted.  No option granted under the 2008 Stock Plan will be exercisable more than 10 years after the date of grant. If a participant’s service terminates by reason of death or Disability (as defined in the 2008 Stock Plan), to the extent the participant was entitled to exercise the option on the date of death or Disability, the option may be exercised within one year after the date of death or Disability. If a participant’s service with the Company terminates for any reason (other than death or Disability), each option then held by the participant may be exercised within 90 days after the date of such termination, but only to the extent such option was exercisable at the time of termination of service. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested options held by a participant if the participant is terminated without “cause” (as determined by the Compensation Committee) by the Company.

 

The 2008 Stock Plan also provides for certain terms and conditions pursuant to which restricted stock and restricted stock units may be granted under the 2008 Stock Plan. The vesting of a restricted stock award or restricted stock unit granted under the 2008 Stock Plan may be conditioned upon the completion of a specified period of employment with the Company or a subsidiary, upon attainment of specified performance goals, and/or upon such other criteria as the Compensation Committee may determine in its sole discretion. If a participant’s service is terminated for any reason, the participant will only be entitled to the restricted stock or restricted stock units vested at the time of such termination of service. The participant’s unvested restricted stock and restricted stock units will be forfeited. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested restricted stock or restricted stock units held by a participant if the participant is terminated without “cause” (as determined by the Compensation Committee) by the Company.

 

The terms and conditions of other stock-based awards will be determined by the Compensation Committee. Other stock-based awards may be granted in a manner that will enable the Company to deduct any amount paid by the Company under Section 162(m) of the Code (“Performance-Based Awards”). Performance-Based Awards are rights to receive amounts denominated in cash or shares of Common Stock, based on the Company’s or a participant’s performance between the date of grant and a pre-established future date. The 2008 Stock Plan provides that the maximum amount of a performance-based award to any Covered Employee (as defined in the 2008 Stock Plan) for any fiscal year of the Company will be $1,000,000.

 

In the event of a Change of Control (as defined in the 2008 Stock Plan), (1) the participating employees will have the right to exercise or settle from and after the date of the Change of Control any option, SAR or restricted stock unit held by

 

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such participating employee in whole or in part, notwithstanding that such option, SAR or restricted stock unit may not be fully exercisable or vested, and (2) any and all restrictions on any participating employee’s other stock-based award will lapse and such stock will immediately vest in the participating employee, notwithstanding that the other stock-based award was unvested.

 

At the Annual Meeting, a proposal to amend the 2008 Stock Plan is being submitted to the Company’s shareholders to allow Mr. Rubin to participate in the 2008 Stock Plan, to increase the number of shares of Common Stock available for grant and, of those shares, the number of shares available for grants of ISOs under the 2008 Stock Plan from 750,000 to 3,750,000, and to increase the maximum number of shares that may be awarded to a participant under the 2008 Stock Plan during a calendar year from 250,000 to 500,000 (the “Amendment”).   The Company is submitting the Amendment to the shareholders to comply with the Company’s obligations under Mr. Rubin’s employment agreement, which requires the Company to use its reasonable efforts to cause the Company’s shareholders to approve additional shares of Common Stock in the event there are not a sufficient number of shares under the Company’s equity plans to grant stock options to Mr. Rubin pursuant to his employment agreement.  If the Amendment is approved by our shareholders, all of our employees, including Mr. Rubin, would be eligible to participate in the 2008 Stock Plan.

 

Employee Stock Purchase Plans

 

Prior to fiscal 2009, selected employees participated in the 1998 Employee Stock Purchase Plan, which expired by its terms on July 17, 2008.  On August 19, 2008, at the 2008 annual general meeting, the shareholders approved the Helen of Troy Limited 2008 Employee Stock Purchase Plan (the “2008 ESPP”) and reserved 350,000 shares of Common Stock for issuance under the plan.  It is the intention of the Company that the 2008 ESPP qualify as an “employee stock purchase plan” under Section 423 of the Code.

 

The purpose of the 2008 ESPP is to provide employees of the Company or its subsidiaries designated by the Board of Directors or the Committee (defined below) (“Designated Subsidiaries”) as eligible to participate in the 2008 ESPP an opportunity to purchase shares of Common Stock and thereby have an additional incentive to contribute to the prosperity of the Company. The aggregate number of shares of Common Stock that may be sold pursuant to all offerings of the Company’s Common Stock under the 2008 ESPP will not exceed 350,000 shares, as adjusted for any recapitalization or reorganization of the Company as set forth in the 2008 ESPP.  The 2008 ESPP provides that eligible full-time employees of the Company or its Designated Subsidiaries may purchase shares of Common Stock with payroll deductions accumulated on behalf of such employee.   Employees may authorize payroll deductions of up to 15% of their compensation, which is accumulated over an option period and then used to purchase Common Stock.  Option periods end in February and August of each fiscal year.   The purchase price is 85% of the closing sale price of the Common Stock on NASDAQ on either the first day or last day of each option period, whichever is less.  Employees may suspend or discontinue their participation in the plan at any time.

 

At June 28, 2009, the Company had approximately 665 full-time employees eligible to participate in the 2008 ESPP and approximately 75 employees have participated or have elected to participate in the plan.

 

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Table of Contents

 

The following table summarizes certain equity compensation plan information as of February 28, 2009:

 

Equity Compensation Plan Information

 

 

 

 

Number of securities

 

 

 

remaining available for

 

 

 

future issuance under

 

Number of securities to

Weighted-average

equity compensation

 

be issued upon exercise

exercise price of

plans (excluding

 

of outstanding options,

outstanding options,

securities reflected in

Plan Category

warrants, and rights

warrants, and rights

the first column) (1)

 Equity compensation plans approved by

 

 

 

security holders

4,835,576

 $         15.37

1,259,518

 


 

(1)

Includes 334,518 shares authorized and available for issuance in connection with the 2008 ESPP, 750,000 shares authorized and available for issuance under the 2008 Stock Plan and 175,000 shares authorized and available for issuance under 2008 Directors’ Plan.

 

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

The information below describes certain compensation that would be paid under Mr. Rubin’s employment agreement in the event of a termination of his employment with the Company and/or change in control of the Company. The amounts shown in the table below assume that such a termination of employment and/or change in control occurred on February 28, 2009 and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to Mr. Rubin upon his termination and/or a change in control (based upon his compensation and service levels as of such date).  The actual amounts to be paid out can only be determined at the time of a change in control and/or termination of employment with the Company.  For further information regarding the terms of Mr. Rubin’s employment agreement, see “Employment Contract for Chairman of the Board, Chief Executive Officer and President.”

 

Chief Executive Officer - Gerald J. Rubin

 

Triggering Event

 

 

Compensation Component

 

How Paid

 

Payout($)

 

 

 

 

 

 

 

 

 

Death

 

 

·

Any accrued payroll to date of death (1)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Any accrued incentive compensation prorated to date of death (2)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Medical benefits for Mr. Rubin’s Spouse for her life (3)

 

Over Time

 

275,189

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

275,189

 

 

 

 

 

 

 

 

 

Disability (7)

 

 

·

Any accrued payroll to date of termination (1)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Any accrued incentive compensation prorated to date of termination (2)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Company payment of premiums on $5,000,000 life insurance policy (4)

 

Over Time

 

503,905

 

 

 

 

 

 

 

 

 

 

 

 

·

Medical benefits for Mr. Rubin and his spouse for life (5)

 

Over Time

 

428,522

 

 

 

 

 

 

 

 

 

 

 

 

·

Continued participation in employee benefit plans in which Mr. Rubin was participating through the end of the fiscal year of termination (6)

 

 

 

 

 

 

 

 

 

Over Time

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

932,427

 

 

 

 

 

 

 

 

 

Termination With Cause (7)

 

 

·

Any accrued payroll to date of termination (1)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Any accrued incentive compensation prorated to date of termination (2)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

-

 

 

 

 

 

 

 

 

 

Voluntary Termination (7)

 

 

·

Any accrued payroll to date of termination (1)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Any accrued incentive compensation prorated to date of termination (2)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Medical benefits for Mr. Rubin and his spouse for life (5)

 

Over Time

 

428,522

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

428,522

 

 

 

 

 

 

 

 

 

Change in Control, Termination Without Cause by the Company or For Good Reason by Mr. Rubin (7)

 

 

·

Three years of annual base salary

 

Over Time

 

1,800,000

 

·

Three years of annual incentive compensation and cash bonuses, as computed per existing agreement, in an amount equal to the highest annual incentive compensation and cash bonus paid in the latest three fiscal years prior to termination.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over Time

 

15,162,702

 

 

 

 

 

 

 

 

 

 

 

 

·

Any accrued payroll to date of termination (1)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Any accrued incentive compensation prorated to date of termination (2)

 

Lump Sum

 

-

 

 

 

 

 

 

 

 

 

 

 

 

·

Company payment of premiums on $5,000,000 life insurance policy (4)

 

Over Time

 

503,905

 

 

 

 

 

 

 

 

 

 

 

 

·

Medical benefits for Mr. Rubin and his spouse for life (5)

 

Over Time

 

428,522

 

 

 

 

 

 

 

 

 

 

 

 

·

Continued participation in employee benefit plans in which Mr. Rubin was participating through the earlier of three years from the date of termination, or on the date he receives equivalent benefits under similar plans provided by a subsequent employer (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over Time

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

17,895,129

 

 

 

 

 

 

 

 

 

 


 

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(1)          Accrued wages due were estimated using actual amounts that would have been payable had termination occurred at February 28, 2009.

 

(2)          Accrued incentive compensation due used actual amounts that would have been payable had termination occurred at February 28, 2009.   No amount was due for fiscal 2009 as a result of the Company incurring a net loss during the year.  Cash bonuses, when due, are normally paid in May of the following fiscal year.

 

(3)          Medical benefits for Mr. Rubin’s wife were estimated using the actuarial present value of the accumulated cost of medical insurance premiums plus an estimate of expenses not covered by insurance (estimated as the projected value of deductibles and insurance co-payments the insured would normally be responsible for).  Key assumptions used in this computation were:

 

·      Current annual premium cost (one individual) – $6,250

·      Additional medical payments not covered by insurance, including deductibles and co-payments – $3,500

·      Expected annual medical insurance cost inflation – 8.0%

·      Mortality of the executive’s wife  – 20.8 years from the date of termination

·      Risk free discount rate  – 5.00%

 

(4)          Life insurance benefits were estimated using the present value of the accumulated cost of the insurance premiums payable under the policy.  Key assumptions used in this computation were:

 

·      Annual fixed premium cost – $43,431

·      Expected number of years of insurance premium payments –  17.2 years from date of termination

·      Risk free discount rate  – 5.00%

 

(5)          Medical benefits for Mr. Rubin and his wife were estimated using the actuarial present value of the accumulated cost of medical insurance premiums plus an estimate of expenses not covered by insurance (estimated as the projected value of deductibles and insurance co-payments the insured would normally be responsible for).  Key assumptions used in this computation were:

 

·      Current annual premium cost (two individuals) – $9,688

·      Current annual premium cost (one individual) – $6,250

·      Expected annual medical insurance cost inflation – 8.0%

·      Additional medical payments for each individual which was not covered by insurance, including deductibles - $3,500

·      Mortality of the executive – 17.2 years from the date of termination

·      Mortality of the executive’s wife – 20.8 years from the date of termination

·      Risk free discount rate – 5.00%

 

(6)  Through December 31, 2008, the Company paid matching contributions on employee 401(k) contributions.  Due to Company performance and economic conditions, the Company indefinitely suspended its matching contributions for all employee 401(k) contributions made after December 31, 2008.  Accordingly, at February 28, 2009, there were no benefits the Company would be liable for in the event of a termination or change in control.

 

(7)  The terms “Disability,” “Termination With Cause,” “Termination Without Cause,” “Good Reason,” “Voluntary Termination,” and “Change in Control,” have the same meanings as defined in Mr. Rubin’s employment agreement and its associated amendments.

 

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Other Named Executive Officers

 

Stock options granted to the other named executive officers are subject to the terms of the 1998 Plan for grants issued before August 25, 2008 and the 2008 Stock Plan which governs grants made after August 25, 2008.  Under both plans, any unvested options immediately vest upon a change in control of the Company (as defined under each plan). In addition, if an option holder’s employment with the Company is terminated due to his death or disability, all of his options will immediately vest and will remain exercisable for one year after such termination.  If an option holder’s employment is terminated voluntarily or with cause, all of his options that are exercisable as of the date of termination will remain exercisable for thirty days for the 1998 Plan and ninety days for the 2008 Stock Plan.  Under the 1998 Plan, if an option holder’s employment is terminated without cause, all of his options that are exercisable as of the date of termination will remain exercisable for ninety days, if incentive stock options (“ISOs”), or six months, if nonstatutory options (“NSOs”).  Under the 2008 Stock Plan, if an option holder’s employment is terminated without cause, all of his options that are exercisable as of the date of termination will remain exercisable for ninety days, regardless of whether ISOs or NSOs.

 

If Mr. Benson or Mr. Carson died or suffered a disability or the Company experienced a change in control on February 28, 2009, they would not receive any benefit by reason of the immediate vesting of their options as the exercise prices of their unvested options exceeded the market price per share of the Company’s common stock on February 28, 2009 of $10.04.

 

CERTAIN RELATIONSHIPS - RELATED PERSON TRANSACTIONS

 

Procedures for the Approval of Related Person Transactions

 

The Audit Committee Charter provides that the Audit Committee has the authority to establish, and communicate to the full board and management, policies that restrict the Company and its affiliates from entering into related person transactions without the Audit Committee’s prior review and approval. In accordance with these policies, the Audit Committee on a timely basis reviews and, if appropriate, approves all related person transactions.

 

At any time in which an executive officer, Director or nominee for Director becomes aware of any contemplated or existing transaction that, in that person’s judgment may be a related person transaction, the executive officer, Director or nominee for Director is expected to notify the Chairman of the Audit Committee of the transaction.  Generally, the Chairman of the Audit Committee reviews any reported transaction and may consult with outside legal counsel regarding whether the transaction is, in fact, a related person transaction requiring approval by the Audit Committee.  If the transaction is considered to be a related person transaction, then the Audit Committee will review the transaction at its next scheduled meeting or at a special meeting of the committee.

 

Related Person Transactions

 

Byron H. Rubin, a member of the Company’s Board of Directors, earns insurance agent’s commissions paid by certain of our insurers directly to him in connection with certain life insurance policies. During fiscal 2009, he received commissions of approximately $7,500 from policies sold to the Company. This transaction has been reviewed, approved and ratified by the Company’s Audit Committee.

 

Prior to July 2003, the Company had paid premiums for survivorship life insurance policies on the lives of Mr. Gerald J. Rubin and Mrs. Stanlee N. Rubin in the initial aggregate insured amount of $29,000,000.  The Company and a trust established for the benefit of Mr. and Mrs. Rubin, which was the owner of the life insurance policies (the “Trust”), entered into a split dollar insurance agreement in March 1994 whereby the Trust agreed to repay the Company all of the premiums paid under the policies from the proceeds of the policies. The Trust owned the policies and collaterally assigned the proceeds from these policies as collateral for the obligation to repay the aggregate premiums paid by the Company under these policies.  In July 2003, the Trust and the Company entered into a split dollar life insurance agreement under which the Trust transferred ownership of the policies to the Company.  The Company agreed to pay annual premiums of up to $360,417 on the policies, and upon the death of the second to die of Mr. and Mrs. Rubin, the Company shall receive the cash surrender value of the policies, and the Trust shall receive the balance of the proceeds.  The Company will also be entitled to the cash surrender value of the policies if the policies are cancelled.  The Board of Directors decides annually whether to pay annual premiums of up to $360,417 on the policies.  During fiscal 2009, the Board of Directors approved $360,417 of policy premiums for payment. As of February 28, 2009, the total aggregate death benefit of the policies was $33,405,396, the

 

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aggregate cash surrender value of the policies was $7,015,534, and the aggregate premiums paid by the Company since inception of the policies was $5,702,169.

 

Through fiscal 2002, the Company paid premiums on an executive universal life insurance policy on the life of Gerald J. Rubin in the initial insured amount of $5,000,000.  Under the split dollar agreement for this policy, entered into in June 2000, the Company is entitled to reimbursement for all premium payments it has made on the policy out of any death benefits paid on the life of Gerald J. Rubin. No premiums have been paid on the policy since fiscal 2002.  As of February 28, 2009, the total aggregate death benefit of the policies was $5,156,934, the aggregate cash surrender value of the policies was $156,934, and the aggregate premiums paid by the Company since inception of the policies was $922,774.

 

REPORT OF THE AUDIT COMMITTEE

 

Composition.     The Audit Committee of the Board of Directors of the Company (the “Audit Committee”) is composed of three directors: Adolpho R. Telles, Gary B. Abromovitz and John B. Butterworth. Each member of the Audit Committee meets the independence and financial experience requirements under both SEC and NASDAQ rules. In addition, the Board has determined that Adolpho R. Telles is an “audit committee financial expert” as defined by SEC rules.

 

Responsibilities.    The Audit Committee operates under a written charter that has been adopted by the Board. The charter is reviewed annually for changes, as appropriate.

 

The Audit Committee is responsible for oversight, on behalf of the Board of Directors, of:

 

·                                    The Company’s auditing, accounting and financial reporting processes, and the integrity of its financial statements;

 

·                                    The audits of the Company’s financial statements and the appointment, compensation, qualifications, independence and performance of the Company’s auditor and independent registered public accounting firm;

 

·                                    The Company’s compliance with legal and regulatory requirements; and

 

·                                    The staffing and ongoing operation of the Company’s internal audit function.

 

The Company’s management is responsible for: (a) maintaining the Company’s books of account and preparing periodic financial statements based thereon; and (b) maintaining the system of internal controls. The independent registered public accounting firm is responsible for auditing the Company’s consolidated annual financial statements.

 

The Audit Committee’s function is one of oversight only and does not relieve management of its responsibilities for preparing financial statements that accurately and fairly present the Company’s financial results and condition, nor the independent registered public accounting firm of their responsibilities relating to the audit or review of the financial statements.

 

In accordance with Audit Committee policy and the requirements of law, the Audit Committee pre-approves all services to be provided by the Company’s auditor and independent registered public accounting firm. Pre-approved services include audit services, audit-related services, tax services and other services. In some cases, the full Audit Committee provides pre-approval for up to a year related to a particular defined task or scope of work and subject to a specific budget. In other cases, the chairman of the Audit Committee has the delegated authority from the Audit Committee to pre-approve additional services, and the chairman then communicates such pre-approvals to the full Audit Committee for ratification. To avoid potential conflicts of interest, the law prohibits a publicly traded company from obtaining certain non-audit services from its independent registered public accounting firm. The Company obtains these services from other service providers as needed.

 

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Review with Management and Independent Registered Public Accounting Firm.    In this context, the Audit Committee hereby reports as follows:

 

1.  The Audit Committee has reviewed and discussed with management and the independent registered public accounting firm, together and separately, the Company’s audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the 2009 fiscal year.

 

2.  The Audit Committee has discussed with the auditor and independent registered public accounting firm matters required to be discussed by Statement on Auditing Standards No. 114 (The Auditor’s Communication With Those Charged With Governance), as amended, modified or superseded.

 

3.  The Audit Committee has received from the auditor and independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the 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 held discussions regarding independence with its auditor and independent registered public accounting firm.