Irinquiries@prestigebrands.com
Prestige Consumer Healthcare Inc.
660 White Plains Road – Ste 250
Tarrytown, NY 10591
Telephone: 914-524-6819
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
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]
Check
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[
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Additional Materials
[
] Soliciting
Material Pursuant to § 240.14a-12
Prestige
Brands Holdings, Inc.
---------------------------------------------------------------------------------------------------------------------
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of Registrant as Specified In Its Charter)
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PRESTIGE
BRANDS HOLDINGS, INC.
90
North Broadway
Irvington,
New York 10533
Telephone:
(914) 524-6810
| Dear Stockholder: |
June
29, 2007
|
You
are
cordially invited to attend our 2007 Annual Meeting of Stockholders, which
will
be held on Tuesday, July 31, 2007, at 10:00 a.m. (Eastern time), at Tappan
Hill,
81 Highland Avenue, Tarrytown, New York 10591. With this letter, we have
enclosed a copy of our Annual Report for the fiscal year ended March 31,
2007, Notice of Annual Meeting of Stockholders, Proxy Statement and Proxy Card.
These materials provide further information concerning the Annual Meeting.
If
you would like another copy of the Annual Report, please send your request
to
Prestige Brands Holdings, Inc., 90 North Broadway, Irvington, New York 10533,
Attention: Secretary, and one will be mailed to you.
At
this
year’s Annual Meeting, the agenda includes the election of directors and a
proposal to ratify the appointment of our independent registered public
accounting firm. The Board of Directors recommends that you vote FOR election
of
the nominees for directors and FOR ratification of appointment of the
independent registered public accounting firm. Members of the Board of
Directors, our executive officers and representatives from our independent
registered public accounting firm will be present to answer any questions you
may have.
It
is
important that your shares be represented and voted at the Annual Meeting,
regardless of the size of your holdings. Accordingly, please complete, sign
and
date the enclosed Proxy Card and return it promptly in the enclosed envelope
to
ensure your shares will be represented. If you do attend the Annual Meeting,
you
may, of course, withdraw your Proxy should you wish to vote in
person.
We
look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/
Mark
Pettie
Mark
Pettie
Chairman
of the Board
and Chief Executive Officer
Prestige
Brands Holdings, Inc.
90
North Broadway
Irvington,
New York 10533
Telephone:
(914) 524-6810
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
July
31,
2007
10:00
a.m. Eastern Time
The
2007
Annual Meeting of Stockholders of Prestige Brands Holdings, Inc. will be held
on
Tuesday, July 31, 2007, at 10:00 a.m. (Eastern time), at Tappan Hill, 81
Highland Avenue, Tarrytown, New York 10591. The Annual Meeting is being held
for
the following purposes:
| 1. |
To
elect directors to serve until the 2008 Annual Meeting of Stockholders
or
until their earlier removal or resignation (the Board of Directors
recommends a vote FOR each of the nominees named in the attached
Proxy
Statement);
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2.
|
To
ratify the appointment of PricewaterhouseCoopers LLP as the independent
registered public accounting firm of Prestige Brands Holdings, Inc.
for
the
fiscal year ending March 31, 2008 (the Board of Directors recommends
a vote FOR the ratification of the appointment of
PricewaterhouseCoopers
LLP as the Company’s independent registered public accounting firm);
and
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3.
|
To
transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof, including proposals
to
adjourn
or postpone the meeting.
|
Only
stockholders of record at the close of business on June 20, 2007 will be
entitled to vote at the Annual Meeting.
Accompanying
this Notice of Annual Meeting of Stockholders is a Proxy Statement, related
Proxy Card with a return envelope and our Annual Report for our fiscal year
ended March 31, 2007. The Annual Report contains financial and other
information that is not incorporated into the Proxy Statement and is not deemed
to be a part of the Proxy soliciting material.
By
Order of the Board
of Directors
/s/ Charles N. Jolly
Charles
N.
Jolly
Secretary
June
29,
2007
|
EVEN
IF YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY COMPLETE,
SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD. A SELF-ADDRESSED ENVELOPE
IS
ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE
UNITED STATES. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON BY
FOLLOWING
THE INSTRUCTIONS ON PAGE 3 OF THE PROXY
STATEMENT.
|
Prestige
Brands Holdings, Inc.
90
North Broadway
Irvington,
New York 10533
Telephone:
(914) 524-6810
PROXY
STATEMENT FOR 2007 ANNUAL MEETING OF STOCKHOLDERS
TABLE
OF CONTENTS
|
Page
|
|
| GENERAL INFORMATION...................................................................................................................................................................................... |
1
|
| VOTING MATTERS.................................................................................................................................................................................................... |
2
|
| PROPOSAL NO. 1 - ELECTION OF DIRECTORS.................................................................................................................................................. |
5
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| GOVERNANCE OF THE COMPANY....................................................................................................................................................................... |
8
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|
PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT OF THE
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING
FIRM..................................................................................................................................................................................
|
13
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| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ............................................................................ |
15
|
| SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS......................................................................... |
17
|
| COMPENSATION DISCUSSION AND ANALYSIS................................................................................................................................................ |
18
|
| COMPENSATION COMMITTEE REPORT ........................................................................................................................................................... |
24
|
| EXECUTIVE COMPENSATION AND OTHER MATTERS................................................................................................................................... |
25
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| COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION...................................................................................... |
43
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| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................................................................................................................... |
43
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| SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..................................................................................................... |
43
|
| REPORT OF THE AUDIT COMMITTEE................................................................................................................................................................. |
43
|
|
SUBMISSION OF A STOCKHOLDER PROPOSAL AND NOMINATION
OF
DIRECTOR AND
ADDITIONAL
INFORMATION................................................................................................................................................................................
|
44
|
| FORM 10-K.................................................................................................................................................................................................................. |
45
|
GENERAL
INFORMATION
What
is this document?
This
document is the Proxy Statement of Prestige Brands Holdings, Inc. for the Annual
Meeting of Stockholders to be held at 10:00 a.m., EST, on Tuesday, July 31,
2007. A form of Proxy Card is included. This document and the form of Proxy
Card
are first being mailed or given to stockholders on or about June 29,
2007.
We
refer
to our company throughout this document as “we” or “us” or the “Company”. In
addition, throughout this document, “2008” refers to our fiscal year ending
March 31, 2008, “2007” refers to our fiscal year ended March 31, 2007, and
“2006” refers to our fiscal year ended March 31, 2006.
Why
am I receiving this document?
You
are
receiving this document because you were one of our stockholders of record
on
June 20, 2007, the record date for our 2007 Annual Meeting. We are sending
this
document and the form of Proxy Card to solicit your Proxy to vote upon certain
matters at the Annual Meeting.
What
is a Proxy?
It
is your
legal designation of another person, called a “Proxy,” to vote the stock you
own. The document that designates someone as your Proxy is also called a Proxy
or a Proxy Card.
Who
is paying the costs to prepare this document and solicit my
Proxy?
We
will
pay all expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement and the form of Proxy Card.
Who
is soliciting my Proxy and will anyone be compensated to solicit my
Proxy?
Your
Proxy is being solicited by and on behalf of our Board of Directors. In
addition to solicitation by use of the mails, Proxies may be solicited by our
officers and employees in person or by telephone, telegram, electronic mail,
facsimile transmission or other means of communication. Our officers and
employees will not be additionally compensated, but may be reimbursed for
out-of-pocket expenses in connection with any solicitation. We also may
reimburse custodians, nominees and fiduciaries for their expenses in sending
Proxies and Proxy material to beneficial owners. We may incur the fees and
expenses of a solicitation agent in connection with this Proxy solicitation
to
the extent we determine that engaging a solicitation agent is in the best
interest of the Company.
Who
may attend the Annual Meeting?
Only
stockholders, their Proxy holders and our invited guests may attend the meeting.
If a broker, bank or other nominee holds your shares in street name, please
bring a copy of the account statement reflecting your ownership as of June
20,
2007 so that we may verify your stockholder status and have you check in at
the
registration desk at the meeting. For security reasons, we also may require
photo identification for admission.
What
if I have a disability?
If
you are
disabled and would like to participate in the Annual Meeting, we can provide
reasonable assistance. Please send any request for assistance to Prestige Brands
Holdings, Inc., 90 North Broadway, Irvington, New York 10533, Attention:
Secretary, at least two weeks before the meeting.
What
is Prestige Brands Holdings and where is it located?
We
sell
well-recognized, brand name over-the-counter health care, household cleaning
and
personal care products. Our leading brands in each of these segments,
respectively, are Chloraseptic®
and Compound W®, Comet® and Spic and Span®, and
Cutex®.
Our
principal executive offices are located at 90 North Broadway, Irvington, New
York 10533. Our telephone number is 914-524-6810.
1
Where
is our common stock traded?
Our
common stock is traded and quoted on the New York Stock Exchange (“NYSE”) under
the symbol “PBH”.
VOTING
MATTERS
What
am I voting on?
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You
will be voting on the following:
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•
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the
election of ten directors; and
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•
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the
ratification of the appointment of our independent registered public
accounting firm for 2008.
|
Who
is entitled to vote?
You
may
vote if you were the record owner of shares of our common stock at the close
of
business on June 20, 2007. Each share of common stock is entitled to one vote.
As of June 20, 2007, there were 50,005,289 shares of our common stock
outstanding. A list of our stockholders will be open to the examination of
any
stockholder, for any purpose germane to the meeting, at our headquarters for
a
period of ten (10) days prior to the Annual Meeting.
May
other matters be raised at the Annual Meeting; how will the meeting be
conducted?
We
currently are not aware of any business to be acted upon at the Annual Meeting
other than the two matters described above. Under Delaware law and our
governing documents, no other business aside from procedural matters may be
raised at the Annual Meeting unless proper notice has been given to the Company
by the stockholders. If other business is properly raised, your Proxies
have authority to vote as they think best, including to adjourn the
meeting.
The
Chairman has broad authority to conduct the Annual Meeting so that the business
of the meeting is carried out in an orderly and timely manner. In doing so,
he
has broad discretion to establish reasonable rules for discussion, comments
and
questions during the meeting. The Chairman is also entitled to rely upon
applicable law regarding disruptions or disorderly conduct to ensure that the
Annual Meeting proceeds in a manner that is fair to all
participants.
How
do I vote?
Proxies
may be voted by returning the printed Proxy Card enclosed herewith. For more
information about how to vote your Proxy, please see the instructions on your
Proxy Card.
In
addition to voting by Proxy, you may vote in person at the Annual Meeting.
However, in order to assist us in tabulating votes at the Annual Meeting, we
encourage you to vote by Proxy even if you plan to be present at the Annual
Meeting.
How
will my Proxy be voted?
The
individuals named on the Proxy Card will vote your Proxy in the manner you
indicate on the Proxy Card. If your Proxy Card is signed but does not
contain specific instructions, your Proxy will be voted: “FOR” all of the
directors nominated and “FOR” ratification of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal year ending March
31, 2008.
2
Can
I change my mind and revoke my Proxy?
|
|
Yes.
To revoke a Proxy given pursuant to this solicitation, you
must:
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•
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sign
another Proxy with a later date and return it to our Secretary at
or
before the Annual Meeting;
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•
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provide
our Secretary with a written notice of revocation dated later than
the
date of the Proxy at or before the Annual Meeting; or
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•
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attend
the Annual Meeting and vote in person. Note that attendance at the
Annual Meeting will not revoke a Proxy if you do not actually vote
at the
Annual Meeting.
|
What
if I receive more than one Proxy Card?
Multiple
Proxy Cards mean that you have more than one account with brokers or our
transfer agent. Please vote all of your shares. We also recommend
that you contact your broker and our transfer agent to consolidate as many
accounts as possible under the same name and address. Our transfer agent
is Computershare, Ltd., 250 Royall Street, Canton, Massachusetts 02021, and
it
may be reached at (781) 575-3400.
How
will abstentions and broker non-votes be treated?
Abstentions
and broker non-votes will be treated as shares that are present and entitled
to
vote for purposes of determining whether a quorum is present, but will not
be
counted as votes cast either in favor of or against a particular proposal.
What
are broker non-votes?
If
you
are the beneficial owner of shares held in “street name” by a broker, your
broker is the record holder of the shares, however the broker is required to
vote those shares in accordance with your instructions. If you do not give
instructions to your broker, your broker may exercise discretionary voting
power
to vote your shares with respect to routine matters, but the broker may not
exercise discretionary voting power to vote your shares with respect to
“non-routine” items. All of the matters identified in this document to be voted
upon at the meeting presently are considered to be “routine” items. In the case
of non-routine items, the shares that cannot be voted by your broker would
be
treated as “broker non-votes.”
How
many votes must be present to hold the Annual Meeting?
A
quorum
must be present at the Annual Meeting for any business to be conducted. A
quorum exists when the holders of a majority of the 50,005,289 shares of our
common stock outstanding on June 20, 2007 are present in person or by Proxy
at
the meeting.
How
many votes are needed to elect directors and approve other
matters?
Directors
are elected by a plurality of the votes cast by the holders of shares entitled
to vote at the Annual Meeting. This means that the director nominee with the
most affirmative votes for a particular slot is elected for that slot. You
may
vote in favor of all nominees, withhold your vote as to all nominees or withhold
your vote as to specific nominees.
The
ratification of the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the fiscal year ending March 31, 2008
will
be approved if the proposal receives the affirmative vote of a majority of
the
shares present and entitled to vote at the Annual Meeting.
How
many votes do I have and can I cumulate my votes?
You
have
one vote for every share of our common stock that you own. Cumulative voting
is
not allowed.
3
Will
my vote be confidential?
Yes.
We
will continue our practice of keeping the votes of all stockholders
confidential. Stockholder votes will not be disclosed to our directors,
officers, employees or agents, except:
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as
necessary to meet applicable legal requirements;
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in
a dispute regarding authenticity of Proxies and
ballots;
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in
the case of a contested Proxy solicitation, if the other party soliciting
Proxies does not agree to comply with the confidential voting policy;
or
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when
a stockholder makes a written comment on the Proxy Card or otherwise
communicates the vote to
management.
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[continues
on next page]
4
PROPOSAL
NO. 1 - ELECTION OF DIRECTORS
What
is the structure of our Board of Directors?
The
number of directors which shall constitute the Board of Directors shall be
fixed
from time to time by resolution adopted by the affirmative vote of a majority
of
the total number of directors then in office. Currently, our Board of Directors
is comprised of ten directors. All of the members of the Board of Directors
are
standing for reelection, to hold office until the next Annual Meeting of
Stockholders.
Who
are the nominees this year?
The
nominees for the Board of Directors consist of 10 current directors who, other
than Mark Pettie, were elected at our 2006 Annual Meeting of Stockholders.
If
elected, each nominee would hold office until the 2008 Annual Meeting of
Stockholders or until his earlier death, resignation or removal. These nominees,
their ages at the date of this Proxy Statement and the year in which they first
became a director are set forth in the table below. The Board of Directors
has
affirmatively determined that each of these nominees, other than Mark Pettie,
Peter C. Mann, David A. Donnini and Vincent J. Hemmer, is independent as defined
in the NYSE listing standards.
|
Name
|
Age
|
Director
Since
|
|
Mark
Pettie
|
50
|
January
2007
|
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L.
Dick Buell
|
56
|
November
2004
|
|
John
E. Byom
|
53
|
January
2006
|
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Gary
E. Costley
|
63
|
November
2004
|
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David
A. Donnini
|
41
|
June
2004
|
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Ronald
Gordon
|
63
|
May
2005
|
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Vincent
J. Hemmer
|
38
|
June
2004
|
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Patrick
Lonergan
|
72
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May
2005
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Peter
C. Mann
|
65
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June
2004
|
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Raymond
P. Silcock
|
56
|
January
2006
|
What
are
the backgrounds of this year’s nominees?
Mark
Pettie, Chairman
of the Board and Chief Executive Officer,
has
served as Chairman of the Board and Chief Executive Officer since January 2007.
Mr.
Pettie served as the President, Dairy Foods Group for Conagra Foods from 2005
to
2006 where he was directly responsible for marketing and indirectly responsible
for finance, sales, operations, research and development and human resources.
From 1981 to 2004, Mr. Pettie held various positions of increasing
responsibility at Kraft Foods and was appointed Executive Vice President/General
Manager of Kraft Foods’ Coffee Division in 2002. As the Executive Vice
President/General Manager of Kraft Foods’ Coffee Division, Mr. Pettie was
directly responsible for marketing, strategy, finance and green coffee
procurement and indirectly responsible for sales, operations and human
resources. Mr. Pettie received a B.S. from the State University of New York
at
Binghamton and a M.B.A. from Cornell University.
L.
Dick Buell, Director,
has
served as a director since November 2004. Mr. Buell is currently Chief
Executive Officer and director of Catalina Marketing Corporation, which he
joined in March 2004. From January 2002 to January 2004,
Mr. Buell was Chief Executive Officer of WS Brands, a portfolio company of
Willis Stein & Partners. From February 2000 to December 2001,
Mr. Buell was President and Chief Operating Officer of Foodbrands
America, Inc., a unit of Tyson Foods. Prior to that time, Mr. Buell
spent 10 years at Griffith Laboratories, Inc. and served as Chief Executive
Officer from 1992 to 1999. From 1983 to 1990, Mr. Buell served as Vice President
of Marketing for Kraft Grocery Products and from 1979 to 1983 as a consultant
at
McKinsey & Company. Mr. Buell earned his B.S. in Engineering from
Purdue University and his M.B.A. from the University of Chicago.
John
E. Byom, Director,
was
appointed as director in January 2006. Mr.
Byom is
the former Chief Financial Officer of International Multifoods Corporation.
He
left the company in March 2005 after 26 years including four years as Vice
President Finance and Chief Financial Officer, from March 2000 to June 2004.
Most recently, after the sale of Multifoods to The J.M. Smucker Company in
June
2004, Mr. Byom was President of Multifoods Foodservice and Bakery Products.
Prior to his time as Chief Financial Officer, Mr. Byom was President
5
Gary
E. Costley, Ph.D., Director,
has
served as a director since November 2004. Dr. Costley is currently a
managing partner at C&G Capital and Management, a private investment
company, which he joined in July 2004. He previously served from 2001 to
June 2004 as Chairman and Chief Executive Officer of International
Multifoods Corporation and from 1997 to 2001 as its Chairman, President and
Chief Executive Officer. From 1995 to 1996, Dr. Costley served as Dean of
the Graduate School of Marketing
at Wake Forest University. Prior to that time, Dr. Costley spent 24 years
with the Kellogg Company where he held various positions of increasing
responsibility, including his most recent role as President of Kellogg North
America. Dr. Costley earned a B.S. in Animal Science and both an M.S. and
Ph.D. in Nutrition from Oregon State University. Dr. Costley is currently a
director of Principal Financial Group Inc., Accelrys, Inc. and Tiffany &
Co.
David
A. Donnini, Director,
has
served as a director since the Company’s incorporation in June 2004.
Mr. Donnini is currently a Principal of GTCR Golder Rauner, LLC, which he
joined in 1991. He previously worked as an associate consultant with
Bain & Company. Mr. Donnini earned a B.A. in Economics summa cum
laude, Phi Beta Kappa with distinction, from Yale University and a M.B.A. from
Stanford University where he was the Robichek Finance Award recipient and an
Arjay Miller Scholar. Mr. Donnini is a director of various companies,
including American Sanitary, Inc., Cardinal Logistics Management,
InfoHighway Communications Corporation, Coinmach Service Corporation, Synagro
Technologies Inc., Fairmount Food Group, LLC and Syniverse Holdings
Inc.
Ronald
Gordon, Director,
was
appointed as director in May 2005. Mr. Gordon was most recently President and
Chief Operating Officer of Nice-Pak Products, Inc. from 2002 until his
retirement in 2005. Prior to serving at Nice-Pak, Mr. Gordon was Chief Executive
Officer for the North American operations of Beiersdorf, Inc. from 1997 through
2001. He also founded Gordon Investment Group in 1994 to finance and oversee
a
variety of start-up businesses. Earlier in his career, Mr. Gordon was the
President and Chief Executive Officer of Goody Products Inc. and held senior
positions at Playtex Family Products Corporation and Procter & Gamble. Mr.
Gordon earned a B.S. in Finance at The Wharton School of the University of
Pennysylvania and a M.B.A. from Columbia University. Mr. Gordon is a director
of
Playtex Products, Inc.
Vincent
J. Hemmer, Director,
has
served as a director since its incorporation in June 2004. Mr. Hemmer is
currently a Principal with GTCR Golder Rauner, LLC and has been with GTCR since
1996. Mr. Hemmer previously worked as a consultant with the Monitor Company
and an investment banker with Credit Suisse First Boston. He earned a B.S.
in
Economics, magna cum laude, and was a Benjamin Franklin Scholar at The Wharton
School of the University of Pennsylvania. Mr. Hemmer received his M.B.A.
from Harvard University. Mr. Hemmer is currently a director of Fairmount
Food Group, LLC and Synagro Technologies Inc.
Patrick
Lonergan, Director,
was
appointed as a director in May 2005. Mr. Lonergan is the co-founder of Numark
Laboratories, Inc. and has served as its President since January 1989. Prior
to
Numark, Mr. Lonergan was employed from 1959 to 1989 in various senior capacities
by Johnson & Johnson, including Vice President & General Manager. Mr.
Lonergan also served on the Board of Directors of Johnson & Johnson Products
Inc., and was Chairman of the Health Care Division Management Committee. Mr.
Lonergan earned a B.S. in Business from Northern Illinois University. Mr.
Lonergan is also a director of several private companies.
Peter
C. Mann, Director,
has
served as Chairman of the Board of the Company since its incorporation in June
2004 through January 19, 2007, and is currently a member of the Board of
Directors. From June 2004 through August 2005, Mr. Mann was the Chief Executive
Officer and President of the Company. From August 2005 through March 31, 2006,
Mr. Mann served as Chief Executive Officer of the Company. On June 23, 2006,
Mr.
Mann was re-appointed Acting Chief Executive Officer and President of the
Company and resigned from such positions on January 19, 2007. Mr. Mann
previously served as President and Chief Executive Officer of Medtech Holdings,
Inc. (our predecessor company) (“Medtech”) since June 2001. From 1973 to
2001, Mr. Mann was employed by Block Drug Company, Inc. where he served in
positions of increasing responsibility and became President of the Americas
Division. Prior to his joining Block Drug Company, he held senior management
positions for such leading consumer products companies as The Mennen Company,
Swift & Co. and Chemway, Inc. Mr. Mann is a graduate of Brown
University.
6
Raymond
P. Silcock, Director,
was
appointed as a director in January 2006. Since 2006, Mr. Silcock has been
employed by Swift & Company as its Executive Vice President and Chief
Financial Officer. From 1998 to 2005, Mr. Silcock served as Executive Vice
President and Chief Financial Officer of Cott Corporation. From 1997 to 1998,
Mr. Silcock served as Chief Financial Officer of Delimex Holdings, Inc. From
1979 to 1997, Mr. Silcock was employed by Campbell Soup Company where he served
in positions of increasing responsibility and became Vice President - Finance
of
Campbell Soup Company’s Bakery and Confectionary Division. Mr. Silcock earned a
M.B.A. from the Wharton School of the University of Pennsylvania and is a Fellow
of the Chartered Institute of Management Accountants (UK). Mr. Silcock is
currently a director of Bacardi Limited and American Italian Pasta Company.
How
are our directors compensated?
Except
for Mr. Mann who will receive cash compensation and restricted common stock
grants only commencing on April 1, 2007, directors who are not our employees
or
who are not otherwise affiliated with us or our principal stockholder, GTCR
Golder Rauner, L.L.C. and its affiliates (collectively, “GTCR”), each receive
the following cash and equity compensation for his services as a
director:
|
•
|
a
one-time grant of our common stock equal to $20,000 awarded on the
date of
the first Annual Meeting of Stockholders after appointment;
|
|
•
|
annual
grant of our restricted common stock equal to $50,000 awarded on
the date
of each Annual Meeting of Stockholders (such restricted common stock
vests
in equal installments over a two year period so long as membership
on the
Board of Directors continues);
|
• a
$25,000
annual retainer fee paid quarterly; and
• attendance
fees in according with the following table:
|
Meeting
|
Fee
|
|
Board
of Directors (in person)
|
$1,500
|
|
Committee
(in person)
|
$1,000
|
|
Board
of Directors (by telephone)
|
$750
|
|
Committee
(by telephone)
|
$750
|
The
Chairman for each of our standing committees and our Lead Director receive
the
fees set forth below in the following table for their services in their
respective capacities:
|
Position
|
Annual
Fee
|
|
Chairman
of the Audit Committee
|
$7,500
|
|
Chairman
of the Compensation Committee
|
$5,000
|
|
Chairman
of the Nominating and Governance Committee
|
$5,000
|
|
Chairman
of the Strategic Planning Committee
|
$5,000
|
|
Lead
Director
|
$45,000
|
Our
directors are also reimbursed for out-of-pocket expenses incurred in connection
with Board of Directors and/or Committee participation.
7
Are
there any relationships between our directors and executive
officers?
There
are
no family relationships between or among any of our directors and executive
officers.
How
many votes are needed to elect directors?
The
affirmative vote of a plurality of the votes cast in person or by Proxy at
the
Annual Meeting of Stockholders is necessary for the election of directors
(assuming a quorum of a majority of the outstanding shares of common stock
is
present).
What
does the Board of Directors recommend?
THE
BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS NAMED
ABOVE.
GOVERNANCE
OF THE COMPANY
What
is
Corporate
Governance
and how
do we implement it?
Corporate
governance is a set of rules established by the Company to ensure that its
directors, executive officers and employees conduct the Company’s business in a
legal, impartial and ethical manner. Our Board of Directors has a strong
commitment to sound and effective corporate governance practices. The Company’s
management and our Board of Directors have reviewed and continue to monitor
our
corporate governance practices in light of Delaware corporate law, United States
federal securities laws and the listing requirements of the NYSE.
What
documents establish and implement our Corporate Governance
practices?
The
Code
of Conduct Policy, Code of Ethics for Senior Financial Employees, the Policy
and
Procedures for Complaints Regarding Accounting, Internal Controls and Auditing
Matters, the Corporate Governance Guidelines, the Audit Committee Pre-Approval
Policy, and the Charters of our Audit, Compensation, Nominating and Governance,
and Strategic Planning Committees were adopted by the Company for the purpose
of
transparency in our governance practices as well as promoting honest and ethical
conduct, promoting full, fair, accurate, timely and understandable disclosure
in
periodic reports required to be filed by the Company, and promoting compliance
with all applicable rules and regulations that apply to the Company and its
officers and directors.
Where
can I access the Company’s Corporate Governance documents?
The
Company’s Code of Conduct Policy, Code of Ethics for Senior Financial Employees,
the Policy and Procedures for Complaints Regarding Accounting, Internal Controls
and Auditing Matters, the Corporate Governance Guidelines, and the Charters
of
the Audit, Compensation, Nominating and Governance, and Strategic Planning
Committees may be accessed at the Investor Relations tab of
www.prestigebrandsinc.com, our Internet website. In addition, you may request,
without charge, a copy of the foregoing documents by submitting a written
request for any of such materials to: Prestige Brands Holdings, Inc., 90 North
Broadway, Irvington, New York 10533, Attention: Secretary.
How
often
did the Board
of
Directors
meet in
2007?
The
Board
of Directors held 13 meetings during 2007. Each director is expected to
attend each meeting of the Board of Directors and those Committees on which
he
serves. In addition to meetings, the Board of Directors and its Committees
review and act upon matters through written consent procedures. Except for
Mr.
Donnini, each of our incumbent directors attended 75% or more of the total
number of meetings of the Board of Directors and those Committees on which
he
served during the last fiscal year. The Board of Directors has a policy of
expecting members of the Board of Directors to attend the Annual Meetings of
Stockholders. Eight out of ten members of our
8
Has
the Board of Directors appointed a Lead Director for non-management sessions
of
the Board of Directors?
The
Board
of Directors has appointed Mr. Gordon as the Lead Director to preside over
non-management and executive sessions of the Board of Directors.
What
Committees have been established by the Board of
Directors?
The
Board
of Directors currently has four standing committees: the Audit Committee, the
Compensation Committee, the Nominating and Governance Committee, and the
Strategic Planning Committee Except for Messrs. Hemmer and Pettie who are
members of the Strategic Planning Committee, all of the other members of our
standing committees are independent directors. During 2007, the composition
of
the Audit Committee and the Nominating and Governance Committee was modified.
Mr. Buell resigned as a member of the Audit Committee and was appointed to
the
Nominating and Governance Committee. Mr. Lonergan resigned as a member of the
Nominating and Governance Committee and was appointed to the Audit Committee.
Except for the foregoing changes, no other changes were made to the composition
of the Committees of the Board of Directors during 2007. The following table
sets forth the current membership of the Company’s standing
committees:
|
Committee
|
Membership
|
|
Audit
Committee
|
John
E. Byom (Chairman)
Ronald
Gordon
Patrick
Lonergan
Raymond
P. Silcock
|
|
Compensation
Committee
|
Patrick
Lonergan (Chairman)
L.
Dick Buell
John
E. Byom
Gary
E. Costley
|
|
Nominating
and Governance Committee
|
Ronald
Gordon (Chairman)
L.
Dick Buell
Gary
E. Costley
Raymond
P. Silcock
|
|
Strategic
Planning Committee
|
Raymond
P. Silcock (Chairman)
Ronald
Gordon
Vincent
J. Hemmer
Patrick
Lonergan
Mark
Pettie
|
Who
are
our independent directors?
In
accordance with the NYSE’s listing requirements, the Board of Directors has
evaluated each of its directors’ independence from the Company and its
management based on the NYSE’s definition of “independence”. In its review of
each director’s independence, the Board of Directors reviewed whether any
transactions or relationships exist currently or, during the past three years
existed, between each director and the Company and its subsidiaries, affiliates,
equity investors or independent auditors. The Board of Directors also examined
whether there were any transactions or relationships between each director
and
members of the senior management of the Company or their affiliates. Based
on
the review of the Board of Directors and the NYSE’s definition of
“independence,” the Board of Directors has determined that a majority of the
Board of Directors is “independent.” The independent directors are Messrs.
Buell, Byom, Costley, Gordon, Lonergan and Silcock. The Board of
9
How
can you communicate with the Board of Directors?
Stockholders
and other interested parties may send communications to the Board of Directors
or any Committee thereof by writing to the Board of Directors or any such
Committee at Prestige Brands Holdings, Inc., 90 North Broadway, Irvington,
New
York 10533, Attention: Secretary. The Secretary will distribute all stockholder
and other interested party communications to the intended recipients and/or
distribute to the entire Board of Directors, as appropriate.
In
addition, stockholders and other interested parties may also contact the Lead
Director or the non-management directors as a group by writing to the Lead
Director c/o Prestige Brands Holdings, Inc., 90 North Broadway, Irvington,
New
York 10533, Attention: Secretary. The Secretary will forward all stockholder
and
other interested party communications to the Lead Director who will review
and
distribute, if addressed to the non-management directors, all stockholder and
other interested party communications to the non-management directors as a
group.
What
are
our Complaint
Procedures?
Complaints
and concerns about accounting, internal accounting controls or auditing or
related matters pertaining to the Company may be submitted by writing to the
Chairman of the Audit Committee c/o Prestige Brands Holdings, Inc., 90 North
Broadway, Irvington, New York 10533. Complaints may be submitted on a
confidential and anonymous basis by sending them in a sealed envelope marked
“Confidential.” Alternatively,
complaints and concerns about accounting, internal accounting controls or
auditing or related matters pertaining to the Company may be submitted by our
employees confidentially and anonymously by contacting the Company’s TeleSentry
Hotline. TeleSentry is an independent third party that the Company has retained
to receive anonymous complaints from the Company’s employees. TeleSentry may be
reached by telephone at (888) 883-1499 or P.O. Box 161, Westport, CT 06881.
TeleSentry may also be contacted by e-mail at resp@telesentry.org.
What
are
the responsibilities of the Audit
Committee?
The
Audit
Committee is responsible for, among other things:
(1)
the
appointment, compensation, retention and oversight of the work of the
independent registered public accounting firm engaged for the purpose of
preparing and issuing an audit report on the Company’s annual financial
statements;
(2)
reviewing the independence of the independent registered public accounting
firm
and taking, or recommending that our Board of Directors take, appropriate action
to oversee their independence;
(3)
approving, in advance, all audit and non-audit services to be performed by
the
independent registered public accounting firm;
(4)
overseeing our accounting and financial reporting processes and the audits
of
our financial statements;
(5)
establishing procedures for the receipt, retention and treatment of complaints
received by us regarding accounting, internal control or auditing matters and
the confidential, anonymous submission by our employees of concerns regarding
questionable accounting or auditing matters;
(6)
engaging independent counsel and other advisers as the Audit Committee deems
necessary;
(7)
determining compensation of the independent registered public accounting firm,
compensation of advisors hired by the Audit Committee and ordinary
administrative expenses;
10
(8)
reviewing and assessing the adequacy of the Audit Committee’s formal written
charter on an annual basis; and
(9)
handling such other matters that are specifically delegated to the Audit
Committee by our Board of Directors from time to time.
Our
Board
of Directors has determined that Mr. Byom is an “audit committee financial
expert” as such term is defined in the rules of the Securities and Exchange
Commission (the “ SEC”).
Our
Board
of Directors adopted a written charter for our Audit Committee, which is
available to our stockholders and other interested parties at the Investor
Relations tab on our web site at www.prestigebrandsinc.com
or is
also available in print to any stockholder or other interested party who makes
such a request to the Company’s Secretary. PricewaterhouseCoopers LLP currently
serves as our independent registered public accounting firm. The Audit Committee
met 8 times during 2007.
What
are
the responsibilities of the Compensation
Committee?
The
Compensation Committee is responsible for, among other things:
(1)
determining, or recommending to our Board of Directors for determination, the
compensation and benefits of all of our executive officers and independent
non-employee directors;
(2)
reviewing our compensation and benefit plans to ensure that they meet corporate
objectives;
(3)
administering our stock plans and other incentive compensation plans; and
(4)
such
other matters that are specifically delegated to the Compensation Committee
by
our Board of Directors from time to time.
During
2007, the Compensation Committee retained Mercer Human Resource Consulting
in
connection with its annual review and determination of executive compensation.
Specifically, the Compensation Committee requested that Mercer Human Resource
Consulting develop a peer group of companies for the Company and assist the
Compensation Committee in determining the levels of salary, non-equity incentive
compensation and equity incentive compensation under the 2005 Long-Term Equity
Incentive Plan (the “2005 Incentive Plan”) for 2008. The Company’s Chief
Executive Officer, along with certain other members of management, provided
recommendations to, and participated in meetings of, the Compensation Committee.
Each
member of the Compensation Committee is a “non-employee director” for purposes
of Rule 16b-3 under the Exchange Act and an “outside director” for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“IRC”).
Our
Board
of Directors adopted a written charter for our Compensation Committee, which
is
available to our stockholders and other interested parties at the Investor
Relations tab on our web site at www.prestigebrandsinc.com
or is
also available in print to any stockholder or other interested party who makes
such a request to the Company’s Secretary. The Compensation Committee met 5
times during 2007.
What
are
the responsibilities of the Nominating
and Governance Committee?
The
Nominating and Governance Committee is responsible for, among other things:
(1)
selecting, or recommending to our Board of Directors for selection, nominees
for
election to our Board of Directors;
(2)
making recommendations to our Board of Directors regarding the size and
composition of the Board of Directors and its Committees and retirement
procedures affecting members of the Board of Directors;
(3)
monitoring our performance in meeting our obligations of fairness in internal
and external matters and our principles of corporate governance; and
11
(4)
such
other matters that are specifically delegated to the Nominating and Governance
Committee by our Board of Directors from time to time.
Our
Board
of Directors adopted a written charter for our Nominating and Governance
Committee, which is available to our stockholders and other interested parties
at the Investor Relations tab on our web site at www.prestigebrandsinc.com
or is
also available in print to any stockholder or other interested party who makes
such a request to the Company’s Secretary. The Nominating and Governance
Committee met 4 times during 2007.
The
Nominating and Governance Committee will consider as potential nominees
individuals properly recommended by stockholders. Recommendations concerning
individuals proposed for consideration by the Nominating and Governance
Committee should be addressed to Prestige Brands Holdings, Inc., 90 North
Broadway, Irvington, New York 10533, Attention: Secretary.
Each
recommendation should include a personal biography of the suggested nominee,
an
indication of the background or experience that qualifies the person for
consideration, and a statement that the person has agreed to serve if nominated
and elected. Stockholders who themselves wish to effectively nominate a person
for election to the Board of Directors, as contrasted with recommending a
potential nominee to the Nominating and Governance Committee for its
consideration, are required to comply with the advance notice and other
requirements set forth in the Company’s Amended and Restated Bylaws, as amended
(the “Amended and Restated Bylaws”), and any applicable requirements of the
Exchange Act.
The
Nominating and Governance Committee identifies potential candidates for
nomination as directors based on recommendations by our executive officers
or
directors. Generally, candidates have significant industry experience and have
been known to one or more of the members of the Board of Directors. As noted
above, the Nominating and Governance Committee considers properly submitted
stockholder recommendations for candidates for the Board of Directors. In
evaluating candidates for nomination, the Nominating and Governance Committee
will consider the factors it believes to be appropriate, which would generally
include the candidate’s personal and professional integrity, business judgment,
relevant experience and skills, and potential to be an effective director in
conjunction with the rest of the Board of Directors in collectively serving
the
interests of our stockholders. The Nominating and Governance Committee does
not
evaluate potential nominees for director differently based on whether they
are
recommended to the Nominating and Governance Committee by officers or directors
of the Company or by a stockholder.
What
are the responsibilities of the Strategic Planning
Committee?
The
Strategic Planning Committee is responsible for, among other
things:
(1)
reviewing acquisition strategies with management and investigating and
recommending acquisition candidates;
(2)
evaluating the execution and integration of acquisitions;
(3)
evaluating potential divestitures and other strategic planning strategies;
and
(4)
such
other matters that are specifically delegated to the Strategic Planning
Committee by our Board of Directors from time to time.
Our
Board
of Directors adopted a written charter for our Strategic Planning Committee,
which is available to our stockholders and other interested parties at the
Investor Relations tab on our web site at www.prestigebrandsinc.com
or is
also available in print to any stockholder or other interested party who makes
such a request to the Company’s Secretary. The Strategic Planning Committee met
5 times during 2007.
12
PROPOSAL
NO. 2 - RATIFICATION OF APPOINTMENT OF THE
INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
Who
has the Audit Committee selected as our independent accounting firm for
2008?
The
Audit
Committee has reappointed PricewaterhouseCoopers LLP as the independent
registered public accounting firm to audit the Company’s financial statements
for 2008. In making the decision to reappoint the independent registered public
accounting firm, the Audit Committee has considered whether the provision of
the
non-audit services rendered by PricewaterhouseCoopers LLP is incompatible with
maintaining that firm’s independence.
Is
stockholder approval required for the appointment of an independent accounting
firm for 2008?
Stockholder ratification
of the selection of PricewaterhouseCoopers LLP as our independent registered
public accounting firm is not required by applicable legal
requirements. However, the Board of Directors is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter
of
good corporate practice. In the event the stockholders do not ratify the
appointment of PricewaterhouseCoopers LLP, the appointment will be reconsidered
by the Audit Committee and the Board of Directors. However, the Audit Committee
and the Board of Directors may, in their discretion, still direct the
appointment of PricewaterhouseCoopers LLP.
Will
representatives of PricewaterhouseCoopers LLP attend the Annual
Meeting?
Representatives
of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting
of Stockholders, will have the opportunity to make a statement if they desire
to
do so and are expected to be available to respond to appropriate questions.
Principal
Accountant Fees and Services
What
fees were paid to our independent accounting firm in 2007 and
2006?
For
2007
and 2006, the following fees were billed by PricewaterhouseCoopers LLP to the
Company for the indicated services:
|
2007
|
2006
|
||||||
|
Audit
Fees
|
$
|
699,000
|
$
|
826,000
|
|||
|
Audit-Related
Fees
|
-
|
-
|
|||||
|
Tax
Fees
|
255,219
|
293,624
|
|||||
|
All
Other Fees
|
94,500
|
99,850
|
|||||
|
Total
Independent Accountant’s Fees
|
1,048,719
|
$
|
1,219,474
|
||||
Audit
Fees.
Consisted of fees billed for professional services rendered for (i) the audit
of
our consolidated financial statements and internal control over financial
reporting; (ii) the review of the interim consolidated financial statements
included in quarterly reports; (iii) the restatement of prior period financial
statements; and (iv) the services that are normally provided by
PricewaterhouseCoopers LLP in connection with statutory and regulatory filings
or engagements.
Audit-Related
Fees.
Consist
of fees billed for services that are reasonably related to the performance
of
the audit or review of our consolidated financial statements and are not
reported under “Audit Fees.” These services would include employee benefit plan
audits and attest services that were not required by statute or
regulation.
Tax
Fees.
Consisted of fees billed for professional services for tax compliance, tax
advice and tax planning. These services included assistance regarding federal,
state and international tax compliance, customs and duties and tax
planning.
13
All
Other Fees.
Consisted of fees for products and services other than the services reported
above. In 2006, these services included due diligence services in connection
with the acquisition of Dental Concepts LLC. In 2007, these services included
due diligence services in connection with an abandoned acquisition.
Has
the Audit Committee determined PricewaterhouseCoopers LLP’s independence from
the Company?
The
Audit
Committee has considered the non-audit services provided by
PricewaterhouseCoopers LLP and determined that the provision of such services
had no effect on PricewaterhouseCoopers LLP’s independence from the
Company.
How
does
the Audit Committee pre-approve services provided by the independent accounting
firm?
The
Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by the independent registered public accounting firm. These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent registered public
accounting firm and management are required to periodically report to the Audit
Committee regarding the extent of services provided by the independent
registered public accounting firm in accordance with this pre-approval, and
the
fees for the services performed to date. The Audit Committee may also
pre-approve particular services on a case-by-case basis. Since January 2006,
all
audit and non-audit services were approved in accordance with the Audit
Committee’s pre-approval policies.
How
many votes are needed to ratify the appointment of our independent accounting
firm for 2008?
Approval
of the proposal to ratify the appointment of PricewaterhouseCoopers LLP requires
the affirmative vote of a majority of the shares present and entitled to vote
at
the Annual Meeting of Stockholders (assuming a quorum of a majority of the
outstanding shares of common stock is present).
What
does the Board of Directors recommend?
THE
BOARD
RECOMMENDS A VOTE FOR THE RATIFICATION OF PRICEWATERHOUSECOOPERS
LLP
AS
THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2008.
[continues
on next page]
14
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information with respect to the beneficial
ownership of our common stock as of June 20, 2007 by: (1) each of the executive
officers named in the Summary Compensation Table; (2) each of our directors;
(3)
all directors and executive officers as a group; and (4) each person or entity
known to us to be the beneficial owner of more than five percent of our
outstanding shares of common stock. Except as otherwise noted below, all
information with respect to beneficial ownership of a director and executive
officer named in the Summary Compensation Table has been furnished to us by
the
respective director and executive officer. All information with respect to
beneficial ownership of a five percent beneficial owner of our common stock
was
obtained from such beneficial owner’s Schedule 13G filed with the SEC. Unless
otherwise indicated, (i) each person or entity named below has sole voting
and
investment power with respect to the number of shares set forth opposite his
or
its name; and (ii) the address of each person named in the table below is c/o
Prestige Brands Holdings, Inc., 90 North Broadway, Irvington, New York
10533.
|
Shares
Beneficially
Owned
|
|||||||
|
Name
of Beneficial Owner
|
Number
(1)
|
Percentage
(2)
|
|||||
|
5%
Stockholders:
|
|||||||
|
GTCR
Funds (3)
|
14,973,785
|
29.9
|
%
|
||||
|
FMR
Corp. (4)
|
4,171,489
|
8.3
|
%
|
||||
|
Directors
and Named Executive Officers:
|
|||||||
|
Mark
Pettie
|
7,600
|
*
|
|||||
|
Peter
C. Mann
|
631,557
|
1.3
|
%
|
||||
|
Frank
Palantoni (5)
|
2,390
|
|
*
|
||||
|
Peter
J. Anderson (6)
|
284,076
|
*
|
|||||
|
Gerard
F. Butler (7)
|
216,948
|
|
*
|
||||
|
Charles
N. Jolly
|
2,700
|
|
*
|
||||
|
Eric
M. Millar (8)
|
53,519
|
|
*
|
||||
|
John
Parkinson
|
4,000
|
|
*
|
||||
|
L.
Dick Buell (9)
|
8,871
|
*
|
|||||
|
John
E. Byom (10)
|
4,768
|
*
|
|||||
|
Gary
E. Costley (11)
|
8,871
|
|
*
|
||||
|
David
A. Donnini (12)
|
14,973,785
|
29.9
|
%
|
||||
|
Ronald
Gordon (13)
|
18,871
|
|
*
|
||||
|
Vincent
J. Hemmer (12)
|
14,973,785
|
29.9
|
%
|
||||
|
Patrick
Lonergan (14)
|
10,071
|
|
*
|
||||
|
Raymond
P. Silcock (15)
|
4,768
|
|
*
|
||||
|
All
directors and executive officers as a group (16 persons)
|
16,227,924
|
32.4
|
%
|
||||
____________
*
Denotes
less than one percent.
| (1) |
As
used in this table, a beneficial owner of a security includes any
person
who, directly or indirectly, through contract, arrangement, understanding,
relationship or otherwise has or shares (a) the power to vote, or
direct
the voting of, such security; or (b) investment power which includes
the
power to dispose, or to direct the disposition of, such security.
In
addition, a person is deemed to be the beneficial owner of a security
if
that person has the right to acquire beneficial ownership of such
security
within 60 days of June 20, 2007. Any security not within the foregoing
classifications have been excluded from this
table.
|
| (2) |
Percent
is based on 50,005,289 shares of our common stock outstanding as
of June
20, 2007.
|
| (3) |
Amounts
shown reflect the aggregate interests held by GTCR Fund VIII, L.P.
(‘‘Fund
VIII’’), GTCR Fund VIII/B, L.P. (‘‘Fund VIII/B’’), GTCR Co-Invest II, L.P.
(‘‘Co-Invest II’’) and GTCR Capital
Partners, L.P. (‘‘Capital Partners’’) (collectively, the ‘‘GTCR Funds’’).
The address of each entity comprising the GTCR Funds is c/o GTCR
Golder
Rauner, L.L.C., 6100 Sears Tower, Chicago, Illinois 60606. The shares
of
common stock reported herein may be deemed to be beneficially owned
indirectly by certain affiliates of the GTCR Funds. Each affiliate
that
may be deemed to beneficially own indirectly shares of common stock
disclaims
|
15
| beneficial ownership of any such shares in which it does not have a pecuniary interest. The information disclosed herein was obtained from the Schedule 13G/A filed with the SEC by the GTCR Funds and certain other affiliates on February 12, 2007. |
| (4) |
The
address for FMR Corp. is 82 Devonshire Street, Boston, Massachusetts
02109. The information disclosed herein was obtained from Amendment
No. 2
to Schedule 13G filed with the SEC by FMR Corp. on February 14, 2007.
|
| (5) |
Mr.
Palantoni concluded his duties as Chief Executive Officer and President
on
June 23, 2006. As Mr. Palantoni is no longer affiliated with the
Company,
the number of shares included herein is based on the most current
information in the Company’s
possession.
|
| (6) |
Includes
8,457 shares of our restricted common stock that vest during the
period
from June 21, 2007 through August 19,
2007.
|
| (7) |
Includes
8,070 shares of our restricted common stock that vest during the
period
from June 21, 2007 through August 19,
2007.
|
| (8) |
Includes
1,962 shares of our restricted common stock that vest during the
period
from June 21, 2007 through August 19,
2007.
|
| (9) |
Includes
2,222 shares of our restricted common stock that vest on July 29,
2007 and
2,649 shares of our restricted common stock that vest on August 15,
2007.
|
| (10) |
Includes
2,649 shares of our restricted common stock that vest on August 15,
2007.
|
| (11) |
Includes
2,222 shares of our restricted common stock that vest on July 29,
2007 and
2,649 shares of our restricted common stock that vest on August 15,
2007.
|
| (12) |
Represents
shares held by the GTCR Funds as described in note (3) above. Messrs.
Donnini and Hemmer are each principals and/or members of GTCR Golder
Rauner, L.L.C. (‘‘GTCR’’) and GTCR Golder Rauner II, L.L.C. (‘‘GTCR II’’).
GTCR is the general partner of GTCR Partners VI, L.P., the general
partner
of GTCR Mezzanine Partners, L.P., the general partner of Capital
Partners.
GTCR II is the general partner of GTCR Partners VIII, L.P. (‘‘Partners
VIII’’) and Co-Invest II. Partners VIII is the general partner of Fund
VIII and Fund VIII/B. Accordingly Messrs. Donnini and Hemmer may
be deemed
to beneficially own the shares owned by the GTCR Funds. Each of Messrs.
Donnini and Hemmer disclaims beneficial ownership of any such shares
in
which he does not have a pecuniary interest. The address of each
of
Messrs. Donnini and Hemmer is c/o GTCR Golder Rauner, L.L.C., 6100
Sears
Tower, Chicago, Illinois 60606.
|
| (13) |
Includes
2,222 shares of our restricted common stock that vest on July 29,
2007 and
2,649 shares of our restricted common stock that vest on August 15,
2007.
|
| (14) |
Includes
2,222 shares of our restricted common stock that vest on July 29,
2007 and
2,649 shares of our restricted common stock that vest on August 15,
2007.
|
| (15) |
Includes
2,649 shares of our restricted common stock that vest on August 15,
2007.
|
16
SECURITIES
AUTHORIZED FOR ISSUANCE
UNDER
EQUITY COMPENSATION PLANS
Equity
Compensation Plan Information
The
following table sets forth certain information regarding our 2005 Incentive
Plan
as of March 31, 2007.
|
Plan
Category
|
Number
of
securities
to be
issued
upon
exercise
of
outstanding
options,
warrants
and
rights
(a)
|
Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
(b)
|
Number
of securities remaining
available
for future issuance
under
equity compensation plans
(excluding
securities reflected in
column
(a))
(c)
|
|||
|
Equity
compensation plans
approved
by security holders
|
301,553
(1)
|
$10.98
|
4,669,321
|
|||
|
Equity
compensation plans not
approved
by security holders
|
-
|
-
|
-
|
|||
|
Total
|
301,553
|
$10.98
|
4,669,321
|
(1)
Consists of shares of non-vested restricted common stock and performance
shares.
As
we
have recently made additional grants of restricted common stock and stock
options under the 2005 Incentive Plan, we have decided to supplement the table
above with more recent information. The following table sets forth certain
information regarding our 2005 Incentive Plan as of June 20, 2007.
|
Plan
Category
|
Number
of
securities
to be
issued
upon
exercise
of
outstanding
options,
warrants
and
rights
(a)
|
Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
(b)
|
Number
of securities remaining
available
for future issuance
under
equity compensation plans
(excluding
securities reflected in
column
(a))
(c)
|
|||
|
Equity
compensation plans
approved
by security holders
|
820,675
(1)
|
$12.03
|
4,150,199
|
|||
|
Equity
compensation plans not
approved
by security holders
|
-
|
-
|
-
|
|||
|
Total
|
820,675
|
$12.03
|
4,150,199
|
(1) Consists
of shares of non-vested restricted common stock, performance shares and stock
options.
17
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
This
Compensation Discussion and Analysis has been prepared in order to provide
a
summary of the policies and procedures established by the Company in reviewing
and determining compensation for its executive officers. Specifically, the
following discussion will outline, among other things, the objectives of
executive compensation, the elements of executive compensation, how
determinations are made as to specific elements of and total executive
compensation, severance and change-in-control payments, and executive officer
involvement in setting executive compensation. It is the intent of the Company,
through the efforts of the Compensation Committee, to (i) establish executive
compensation that is competitive with the compensation offered by
similarly-situated companies; (ii) motivate and incentivize management; and
(iii) align management’s interests with those of the Company’s stockholders. As
part of the Compensation Committee’s efforts to review and structure executive
compensation for 2008, the Compensation Committee reviewed tally sheets for
executive compensation in 2007, inclusive of equity awards. The tally sheets
assisted the Compensation Committee in understanding the levels of executive
compensation that have been, and are being, received by the Company’s executive
officers. The Compensation Committee will continue to review tally sheets for
executive officers on an annual basis.
Compensation
Policies
and
Objectives
Pursuant
to the terms of the Charter for the Company’s Compensation Committee, the
Compensation Committee is responsible for setting and administering the policies
which govern executive compensation. The general philosophy of our executive
compensation program is to attract, motivate and retain talented management
while ensuring that our executive officers are compensated in a way that
advances the interests of the Company and its stockholders. The Company uses
the
following types of cash and equity compensation to compensate and reward its
executive officers for their performance: base salary, a cash-based annual
incentive plan and long-term equity awards comprised of restricted stock,
performance shares and stock options. The Compensation Committee believes that
the elements of compensation that it selected creates a flexible compensation
package that focuses and rewards executives for short and long-term performance
while aligning the executive officers with the interests of the Company’s
stockholders.
Each
element of executive compensation described above is determined based on (i)
the
executive’s level of responsibility and function within the Company; (ii) the
executive’s performance within the Company; (iii) the overall performance and
profitability of the Company; and (iv) executive compensation offered to
similarly-situated executives at peer companies. Through a combination of salary
and performance-based awards, the Compensation Committee desires to provide
attractive and competitive compensation to the executive officers, a substantial
portion of which is contingent upon the Company’s performance. To assist the
Compensation Committee with establishing executive compensation for 2008, the
Compensation Committee retained Mercer Human Resource Consulting, an independent
compensation consultant, to provide competitive market data, establish a peer
group of companies and provide guidance as to compensation levels for all
aspects of executive compensation. The group of peer companies identified by
Mercer Human Resource Consulting, and approved by the Compensation Committee,
is
comprised of the following publicly-traded companies: (i) Adams Respiratory
Therapeutics Inc.; (ii) Alpharma Inc.; (iii) Bradley Pharmaceuticals, Inc.;
(iv)
Chattem Inc.; (v) Elizabeth Arden, Inc.; (vi) Hain Celestial Group, Inc.; (vii)
Helen of Troy Limited; (viii) Inter Parfums, Inc.; (ix) Lifetime Brands, Inc.;
(x) Maidenform Brands, Inc.; (xi) Playtex Products, Inc.; and (xii) WD-40
Company.
Overview
of Executive Compensation
Components
18
|
Pay
Element
|
What
the Pay Element Rewards
|
Purpose
of the Pay Element
|
|
Base
Salary
|
Skills,
experience, competence, performance, responsibility, leadership and
contribution to the Company
|
Provide
fixed compensation for daily responsibilities
|
|
Annual
Cash Incentive Plan
|
Efforts
to achieve annual target revenue growth and profitability
|
Focuses
attention on meeting annual performance targets and short-term success
of
the Company
Provides
additional cash compensation and incentives based on the Company’s annual
performance
|
|
Long-Term
Incentives
|
Restricted
Stock
Efforts
to achieve long-term revenue growth and profitability over the three-year
vesting period
Continued
employment with the Company during the vesting period
Performance
Shares
Ability
to increase and maintain stock price
Continued
employment with the Company during the three-year vesting
period
Stock
Options
Ability
to increase and maintain stock price
Continued
employment with the Company during the three-year vesting
period
|
Focuses
attention on meeting long-term performance targets and long-term
success
of the Company
Management
retention in a competitive marketplace
Focus
efforts on long-term stock price performance
Management
retention in a competitive marketplace
Focus
efforts on long-term stock price performance
Management
retention in a competitive
marketplace
|
By
structuring executive compensation with the elements described above, and after
considering executive compensation offered by our peer group, we believe we
can
provide attractive compensation to our executive officers which motivates and
rewards them for meeting short and long-term performance targets that will
result in increased stockholder value. Our executive compensation includes
a
substantial amount of performance-based, or at-risk, compensation. The
Compensation Committee believes that the use of performance-based compensation
allows the Company to tailor the compensation paid to the executive officers
to
the Company’s performance and maintain a compensation system that significantly
affects executive compensation in the event the Company does not meet the
pre-determined performance goals. Furthermore, by utilizing threshold targets
as
a part of executive compensation, in the event the Company does not meet such
targets, incentive compensation is entirely at-risk and will not be paid to
the
executive officers. By motivating and incentivizing the executive officers
with
regard to the
19
Company’s
short and long-term goals, the Compensation Committee believes that the interest
of the executive officers and the Company’s stockholders are properly aligned.
Determination
of Amounts of Executive Compensation
In
structuring executive compensation, the Compensation Committee has offered
compensation packages targeted at the fiftieth percentile (50%) of total
executive compensation offered to similarly-situated executive officers at
the
Company’s peer group. In establishing the specific components of executive
compensation for 2008, the Compensation Committee has based such decisions
on
the market data and recommendations based on such data provided to it by Mercer
Human Resource Consulting as well as the strategic planning by the Compensation
Committee and the Board of Directors.
Base
Salary. Base
salary for our executive officers is determined based on the scope of work,
skills, experience, responsibilities, performance and seniority of the
executive, peer group salaries for similarly-situated positions and the
recommendation of the Chief Executive Officer (except in the case of his own
compensation). Base salary increases for our executive officers who received
increases for 2008 averaged 4.9% from the executive base salaries in effect
during 2007. Since Mr. Pettie joined the Company in January 2007, he did not
receive a salary increase for 2008. Except where an existing agreement
establishes an executive’s salary, the Compensation Committee reviews executive
officers’ salaries annually at the end of the fiscal year and establishes the
base salaries for the upcoming fiscal year. The Company views base salary as
a
fixed component of executive compensation that compensates the executive officer
for the daily responsibilities assumed in keeping the Company operating
throughout the year.
Annual
Cash Incentive Plan. As
part of our executive compensation, we have established an annual cash incentive
plan which provides our executive officers with the ability to receive
additional cash compensation based on a percentage of base salary and the
Company’s performance. In order to be eligible to receive incentive cash
compensation, the executive must be employed with the Company at the end of
the
Company’s fiscal year and the Company must meet certain pre-determined targets
for net sales and earnings per share on an annual basis. Under the annual cash
incentive plan, depending on the Company’s performance as measured against the
net sales and earnings per share targets, an executive officer may receive
no
additional cash compensation, a threshold amount, a target amount or the maximum
amount. The performance matrix established for 2007 had a threshold payment
equal to 60% of target bonus, a target amount equal to 100% of target bonus
and
a maximum payment equal to 200% of target bonus. For information regarding
the
annual cash incentive plan awards for 2007, please see the executive
compensation tables beginning on page 27 of this Proxy Statement. For the 2008
cash incentive plan, we have developed a performance matrix where the threshold
payout is 50% of target bonus, the target amount is 100% of the target bonus
and
the maximum payout is 200% of target bonus. Unlike the 2006 and 2007 cash
incentive plans, under the 2008 cash incentive plan the Compensation Committee
is entitled to exercise its discretion to increase the size of the cash payment
ultimately made based on the executive officer’s individual performance within
the Company. Furthermore, the performance goals established under the 2008
cash
incentive plan are exclusive of any acquisitions or divestitures that the
Company may make during such time period. As a result, in the event the Company
consummates an acquisition or a divestiture in 2008, the Compensation Committee
has the discretion to modify the performance goals after considering the effect
of such acquisition or divestiture on the expected financial performance of
the
Company. The Company views the annual cash incentive plan as a performance-based
component of executive compensation that motivates and incentivizes the
executive officers for achieving the short-term goals of the Company and its
stockholders.
Equity
Awards. Executive
officers of the Company are eligible to receive equity awards under our 2005
Incentive Plan. Awards under the 2005 Incentive Plan help relate a significant
portion of an employee’s long-term remuneration directly to stock price
appreciation realized by all of our stockholders and aligns an executive
officer’s interests with that of our stockholders. Under the existing grants
made pursuant to the 2005 Incentive Plan, our executive officers have received
restricted common stock, performance shares and stock options.
Except
for the grant of restricted common stock awarded to Mr. Pettie in April 2007,
the awards of restricted common stock given to our executive officers vest
based
on the Company’s achieving the performance targets for
20
The
performance goals established for the grants of equity awards in 2007 and 2008
under the 2005 Incentive Plan are exclusive of any acquisitions or divestitures
that the Company may make during such time period. As a result, in the event
the
Company consummates an acquisition or a divestiture during the performance
periods, the Compensation Committee has the discretion to modify the performance
goals after considering the effect of such acquisition or divestiture on the
expected financial performance of the Company. The performance goals established
for the grants of equity awards in 2006 under the 2005 Incentive Plan are
inclusive of any acquisitions that the Company may make during the performance
period. As a result, the Compensation Committee does not have the discretion
to
modify the performance goals for the 2006 restricted stock awards and any
incremental financial performance from an acquisition is used to calculate
whether such awards will vest.
In
addition to the awards of shares of restricted common stock, on July 1, 2006,
certain of our executive officers (including Messrs. Anderson, Butler, Jolly
and
Parkinson) also received a fixed number of performance shares.
The
initial price for the performance shares was set at $9.97, the closing price
for
the Company’s common stock on the NYSE on June 30, 2006, the day immediately
preceding the grant date for the performance shares. The term of the performance
share is from July 1, 2006 through March 31, 2009. In order to be eligible
for
the receipt of the appreciation, if any, on the Company’s shares of common
stock, the executive officer must be employed by the Company on March 31, 2009.
Promptly after March 31, 2009, the Company shall calculate the appreciation,
if
any, on March 31, 2009 of the performance shares in excess of the initial price
for the performance shares and
pay
the amount of such appreciation to the executive officer in cash, stock, other
Company securities or a combination thereof. With regard to Mr. Butler, pursuant
to the term of his retirement agreement with the Company, Mr. Butler’s
performance shares will vest and be calculable on March 31, 2008 with regard
to
the appreciation, if any, on the Company’s common stock.
On
May
25, 2007, our executive officers also received grants of stock options for
a
specified number of shares. The stock option grants have an exercise price
equal
to $12.86, the closing price of the Company’s common stock on the NYSE on May
25, 2007, the date of grant. The stock options vest in three equal annual
installments commencing on May 25, 2008. The term of the stock options is ten
years from the date of grant.
The
Company views the above-mentioned equity awards as performance-based components
of executive compensation that motivates and incentivizes the executive officers
for achieving the long-term performance goals (including stock price
appreciation) of the Company and its stockholders. In addition, under the 2005
Incentive Plan, the restricted stock, performance shares and stock options
awarded to the executive officers are subject to acceleration under certain
circumstances. With regard to change-in-control payments, the Compensation
Committee believes that the additional compensation that an executive officer
would be entitled to receive in connection with a change-in-control of the
Company is in the best interests of the Company as such additional compensation
is necessary to retain executive officers (who would be instrumental in
effectuating such change-in-control transaction) in the Company’s employ while a
change-in-control transaction is being contemplated, negotiated and consummated.
Notwithstanding the terms of the 2005 Incentive Plan, certain of our executive
officers have employment agreements or other arrangements which entitle them
to
certain benefits in the event of a change-in-control of the Company. For more
information regarding severance and change-in-control benefits, please see
the
section titled “Severance and Change-in-Control Payments” below.
21
The
Compensation Committee believes equity-based incentive compensation aligns
executive and stockholder interests because (i) the use of a multi-year vesting
schedule for equity awards encourages executive retention and emphasizes the
attainment of long-term performance goals; (ii) paying a significant portion
of
executive compensation with performance-based, or at-risk, compensation
motivates and incentivizes the executive officers to meet the long-term
performance goals set by the Compensation Committee; and (iii) the executive
officers will hold significant amounts of equity in the Company and will be
motivated to increase stockholder value over the long-term. The Compensation
Committee determined executive equity awards based on the market data provided
by Mercer Human Resource Consulting, the recommendations of Mercer Human
Resource Consulting and discussions by the Compensation Committee and the Board
of Directors, with and without the participation of senior
management.
Determination
of When Equity Awards Are Made
Except
for the initial grant of equity awards under the 2005 Incentive Plan that were
made in October 2005, the Company typically grants equity awards as soon as
practicable after the beginning of a fiscal year. In the past, the equity awards
have been comprised of restricted common stock, performance shares and stock
options. The equity awards are granted after the Chief Executive Officer has
presented a proposed structure and level of awards and the Compensation
Committee has fully reviewed all aspects of the awards, including, without
limitation, the value of the awards and the vesting period and payout factors.
The Company does not have any policy of coordinating the timing of equity award
grants with the release of material non-public information.
Factors
Considered in Decisions to Modify Compensation Materially
From
time
to time and at least annually in connection with our fiscal year end, the
Compensation Committee will review market data, individual performance and
retention needs in making decisions to adjust compensation materially. We do
not
have any set formula for determining the amount of each compensation element
as
a percentage in our executive officers’ compensation packages. We consider the
competitive landscape for talent in our industry and geography and base our
compensation decisions on how we want to position ourselves in the marketplace
for talent.
Adjustments
or Recoveries for Performance-based Awards
If
the
Compensation Committee and the Board of Directors determines that an executive
officer has engaged in fraudulent or intentional misconduct with regard to
the
reporting of the Company’s performance, the Compensation Committee and the Board
of Directors will immediately take corrective action with regard to such
misconduct, including without limitation, disciplinary procedures culminating
in
termination should the Compensation Committee and the Board of Directors so
determine. In addition, regardless of whether the financial statements need
to
be restated by the Company, the Compensation Committee and the Board of
Directors will pursue disgorgement of the incentive compensation that was not
actually earned by the executive officer if actual performance was used to
calculate the compensation earned.
Severance
and Change-in-Control Payments
Certain
of the Company’s executive officers have executed employment agreements with the
Company that provide for severance benefits in the event their employment with
the Company is terminated under specific circumstances. In addition, the
Company’s 2005 Incentive Plan provides certain benefits to the recipients of
equity awards under certain circumstances. The Compensation Committee has also
approved the accelerated vesting of the non-vested portion of founder shares
held by certain executive officers in the event of their death or disability.
Furthermore, the non-vested portion of founder shares held by certain executive
officers vest automatically pursuant to their terms in connection with a
change-in-control of the Company. Any severance and change-in-control benefits
accruing to an executive officer will be paid in accordance with any applicable
employment agreement, the 2005 Incentive Plan, approval of the Compensation
Committee and applicable law. For additional information regarding severance
and
change-in-control payments that the Company may be obligated to pay to a Named
Executive Officer in the future due to the termination of his employment under
certain circumstances and/or a
22
change-in-control
of the Company, please see the sections titled “Executive Compensation and Other
Matters - Potential Payments Upon Termination or Change-in-Control,” “Executive
Compensation and Other Matters - Employment Agreements” and “Executive
Compensation and Other Matters - Additional Vesting Provisions” contained
elsewhere in this Proxy Statement.
Pursuant
to the terms of the employment agreement between the Company and Mr. Pettie,
in
the event there is a change-in-control of the Company, the shares of restricted
common stock granted to Mr. Pettie will vest upon the consummation of a
change-in-control of the Company, even if Mr. Pettie remains employed by the
Company after such change-in-control. Except for the shares of restricted common
stock granted to Mr. Pettie and the performance and founder shares owned by
certain executive officers, none of our executive officers have a single trigger
for change-in-control benefits (including cash compensation) upon the
consummation of a change-in-control of the Company. Under the terms of the
2005
Incentive Plan, the restricted common stock and stock options granted to the
recipients of such grants vest upon a change-in-control and subsequent
termination of employment by the Company other than for cause within one year
after such change-in-control. The Compensation Committee has the discretion
to
make future restricted common stock and stock option grants under the 2005
Incentive Plan which vest automatically upon a change-in-control of the Company,
even if the grantee remains employed by the Company after such
change-in-control.
With
regard to the performance shares granted to certain of the Company’s executive
officers, upon the occurrence of a change-in-control of the Company, under
the
2005 Incentive Plan, a grantee shall be paid no less than the portion of the
performance award that such grantee would have been paid if the performance
cycle had terminated as of the date of the change-in-control.
The
Company has agreed to make change-in-control payments to the executive officers
in order to retain them during any period in which the Company contemplates,
negotiates and is in the process of consummating a change-in-control of the
Company. The participation of the executive officers in a change-in-control
transaction would be critical to quickly and efficiently consummating a
change-in-control transaction and such change-in-control payments would maintain
the executive officers’ focus and attention to the transaction. Except with
regard to the restricted common stock granted to Mr. Pettie and the performance
and founder shares owned by certain executive officers, each of which vest
automatically in connection with a change-in-control transaction, any other
change-in-control payment and/or benefit to be paid to the executive officers
is
conditioned on the termination of such executive officer in connection with
a
change-in-control transaction. By requiring termination as a condition to the
payment of a significant amount of severance in connection with a change in
control transaction, the Company has afforded protection to its executive
officers while also potentially maximizing stockholder value in a
change-in-control transaction. The Company agreed to the accelerated vesting
of
Mr. Pettie’s equity awards under the 2005 Incentive Plan without requiring
termination as the Company believes such a provision is customarily utilized
by
companies similarly-situated to the Company with their Chief Executive Officers.
Impact
of the Accounting and Tax Treatments of Compensation
The
accounting and tax treatment of executive compensation generally has not been
a
factor in the Compensation Committee’s decisions regarding the amounts of
compensation paid to the Company’s executive officers. In addition, due to the
adoption of FAS 123R, we do not expect accounting treatment of differing forms
of equity awards to vary significantly and, therefore, accounting treatment
is
not expected to have a material effect on the Compensation Committee’s future
selection of differing types of equity awards.
Section
162(m) of the IRC imposes a $1 million limit on the amount a public company
may
deduct for compensation paid to its Chief Executive Officer or any of the
company’s four other most highly compensated executive officers who are employed
by the Company as of the end of the fiscal year. However, Section 162(m) does
not apply to compensation that satisfies the requirements of Section 162(m)
for
“qualifying performance-based” compensation. The
Compensation Committee desires to maximize deductibility of compensation under
Section 162(m) of the IRC to the extent practicable while maintaining a
competitive, performance-based compensation program. However, the Compensation
Committee also believes that it must reserve the right to award compensation
which it deems to be in our best interest and our stockholders, but which may
not be tax deductible under Section 162(m) of the IRC.
23
Role
of Executive Officers in Determining Compensation
Mr.
Pettie, our Chairman of the Board and Chief
Executive Officer, with the assistance of certain members of senior management,
participates in discussions with, and makes recommendations to, the Compensation
Committee regarding the setting of base salaries and cash and equity incentive
plan targets and payouts for the executive officers other than himself. For
executive compensation awarded in 2008, Mr. Pettie was assisted by certain
members of senior management and Mercer Human Resource Consulting in reviewing
the competitive landscape for executive talent and structuring the types and
levels of executive compensation for review by the Compensation Committee.
The
Compensation Committee and the Board of Directors are responsible for
establishing Mr. Pettie’s compensation package. The Compensation Committee and
the Board of Directors consulted with Mercer Human Resource Consulting in
determining the executive compensation to be awarded to Mr. Pettie in 2008.
As
Mr. Pettie joined the Company near the end of 2007, Mr. Pettie’s base salary and
equity award for 2008 was set forth in his employment agreement. Mr. Pettie’s
base salary did not increase with the commencement of 2008, but he did receive
a
restricted common stock grant in the amount of $1.125 million that vests
entirely on April 1, 2010. Mr. Pettie’s bonus for his service in 2007 was
$62,877 and was paid in May 2007 concurrently with the payments under the annual
cash incentive plan paid to the eligible employees of the Company under such
plan. Under the terms of Mr. Pettie’s employment agreement, Mr. Pettie is also
entitled to a retention payment on each of April 1, 2007 and 2008 in the amount
of $75,000 so long as he is still employed by the Company on such dates. In
addition, the Company reimbursed Mr. Pettie in the amount of $15,000 for his
legal fees incurred in connection with the negotiation and execution of his
employment agreement with the Company.
COMPENSATION
COMMITTEE
REPORT
This
Compensation Committee report shall not be deemed incorporated by reference
by
any general statement incorporating by reference this Proxy Statement into
any
filing under the Securities Act of 1933, as amended (the “Securities Act"), or
the Exchange Act, except to the extent that we specifically incorporate this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with management. Based on its review and discussions of the
Compensation Discussion and Analysis with Management, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this Proxy Statement and incorporated by reference
into
our Annual Report on Form 10-K for 2007.
| MEMBERS OF THE COMPENSATION COMMITTEE |
| Patrick Lonergan (Chairman) |
| L. Dick Buell |
| John E. Byom |
| Gary E. Costley |
24
EXECUTIVE
COMPENSATION AND OTHER MATTERS
Who
are
our Executive Officers?
Our
executive officers are as follows:
|
Name
|
Age
|
Position
|
|||
|
Mark
Pettie
|
50
|
Chairman
of the Board and Chief Executive Officer
|
|||
|
Peter
J. Anderson
|
52
|
Chief
Financial Officer
|
|||
|
Jean
A. Boyko, Ph.D.
|
51
|
Senior
Vice President, Science and Technology
|
|||
|
Charles
N. Jolly
|
64
|
General
Counsel and Secretary
|
|||
|
James
E. Kelly
|
49
|
Senior
Vice President - Marketing
|
|||
|
Eric
M. Millar
|
63
|
Senior
Vice President - Operations
|
|||
|
John
Parkinson
|
54
|
Senior
Vice President - International
|
|||
|
Charles
Schrank
|
57
|
Senior
Vice President - Marketing
|
|||
What
are the backgrounds of our executive officers?
Biographical
information for Mr. Pettie is set forth above under “Proposal No. 1 - Election
of Directors.”
Peter
J. Anderson, Chief
Financial Officer,
has
served as Chief Financial Officer of the Company since its incorporation in
June
2004 and previously served as Chief Financial Officer of Medtech since joining
in April 2001. Prior to joining Medtech, Mr. Anderson served as the
Chief Financial Officer for Block Drug Company, Inc. from April 1999 to
March 2001. From 1996 to 1999, Mr. Anderson served as the Chief Financial
Officer of the Coach and Aris/Isotoner Divisions of the Sara Lee Corporation.
From 1994 to 1996, Mr. Anderson served as the Chief Financial Officer of
Lancaster Group USA, a division of Benckiser. Other prior positions include
Vice
President of Finance of the International Division at Sterling
Winthrop Inc. and Vice President of Finance at Sterling Health-USA.
Mr. Anderson received his B.A. and M.B.A. from Fairleigh Dickinson
University and is a certified public accountant.
Jean
A. Boyko, Ph.D., Senior
Vice President - Science and Technology,
has
served as Senior Vice President - Science and Technology of the Company since
May 2007 and previously served as Senior Vice President - Quality Assurance
and
Regulatory Affairs of the Company since August 2006. From 2001 to 2005, Dr.
Boyko was employed by Purdue Pharma as an Executive Director for Manufacturing
Quality from 2003 to 2005 and Research QA from 2001 to 2003. From 1980 to 2001,
Dr. Boyko was employed by Block Drug Company, Inc. where she held positions
of
increasing responsibility through Vice President, Quality Services. Dr. Boyko
was also previously employed by Schering Plough Research Institute and Hoechst
Roussel Pharmaceutical Inc. Dr. Boyko received a B.A., M.S. and Ph.D. from
Rutgers University.
Charles
N. Jolly, General
Counsel and Secretary, has
served as General Counsel and Secretary since August 2005. Prior to joining
the
Company, Mr. Jolly was Of Counsel in the law firm Baker, Donelson, Bearman,
Caldwell and Berkowitz, PC from January 1998 to August 2005. Mr. Jolly also
served as Vice President and General Counsel of Chattem, Inc. from January
1977
to January 1994. Mr. Jolly has also served in the legal departments of Miles
Laboratories, Inc. and Swift & Company. Mr. Jolly received a B.A. from Holy
Cross College and a J.D. from George Washington University. Mr. Jolly is
licensed to practice law in the District of Columbia and Tennessee.
James
E. Kelly, Senior
Vice President - Marketing,
has
served as Senior Vice President - Marketing since April 2007. Prior
to
joining the Company, Mr. Kelly had been actively providing consulting services
to various consumer products companies since 2006. From 2001 to 2005, Mr. Kelly
served as Senior Vice President, Marketing and Sales, North America for Combe,
Incorporated where his responsibility included, among other things, strategy
for
North American product management, market research, media planning and buying,
and sales and advertising. From 1999 to 2001, Mr. Kelly was a principal of
Business Development Resources Consulting, Inc. through which he provided
marketing/new business development consulting services to the consumer packaged
goods industry. From 1995 to 1998, Mr. Kelly served as Vice President and Group
Marketing Director, Men’s Hair Care, U.S. Operation, for Combe Incorporated.
From 1982 to 1995, Mr. Kelly held positions of increasing responsibility at
Warner Lambert Company where he was Vice President/Business Director, OTC
Products, from
25
1992
to
1995. Mr. Kelly received a B.A. from Rutgers University and a M.B.A. from
Rutgers Graduate School of Management.
Eric M.
Millar, Senior
Vice President - Operations,
has
served as Senior Vice President - Operations of the Company since its
incorporation in June 2004. Mr. Millar was employed by The Spic and Span
Company, one of the Company’s subsidiaries, from December 2001 through June
2004. From January 2000 to November 2001, Mr. Millar was the
owner and director of Point Management Services, a business consultancy based
in
the United Kingdom, and carried out manufacturing and logistics assignments
for
both UK and USA based companies.
John
Parkinson, Senior
Vice President - International,
has
served as Senior Vice President - International of the Company since March
2005.
From September 1999 to February 2005, Mr. Parkinson was employed by ConAgra
Foods where he was the Business Director, Asia Pacific, from February 2002
to
February 2005 and Business Director, Asia Pacific, Grocery Division, from
September 1999 to February 2002. From January 1998 to September 1999, Mr.
Parkinson served as a consultant to the Tait Group where he assisted senior
management with new business development projects. From November 1984 to January
1998, Mr. Parkinson held positions of increasing responsibility at the Tait
Group where he was a Managing Director for Tait Asia Ltd. from January 1993
to
January 1998 and a General Manager for Tait Taiwan from November 1984 to January
1993. Mr. Parkinson was also previously employed by Harrisons + Smurthwaite
Ltd., Boyd Briggs + Co. Ltd. and Monsanto Ltd. Mr. Parkinson received a B.A.
from the University of Leeds in the United Kingdom.
Charles Schrank, Senior
Vice President - Marketing,
has
served as Senior Vice President - Marketing of the Company since its
incorporation in June 2004 and previously served as a Senior Vice President
-
Marketing of Medtech since joining Medtech in January 2001. Prior to
joining Medtech, Mr. Schrank served as Vice President of Marketing for
Block Drug Company, Inc. from August 1994 to January 2001. Prior to
that time, Mr. Schrank held various marketing positions of increasing
responsibility after joining Block Drug Company in 1978.
[continues
on next page]
26
2007
SUMMARY COMPENSATION TABLE
The
following table includes information regarding the compensation paid or awarded
to the individuals listed below (each a “Named Executive Officer,” and
collectively, the “Named Executive Officers”) during 2007. We have no pension or
deferred compensation plans and, therefore, have omitted the column regarding
compensation under such plans.
|
Name
and Principal Position
(a)
|
Fiscal
Year
(b)
|
Salary
($)
(c)
|
Bonus
(1)
($)
(d)
|
Stock
Awards (2)
($)
(e)
|
Option
Awards (3)
($)
(f)
|
Non-
Equity
Incentive
Plan
Compen-
sation
(4)
($)
(g)
|
All
Other
Compen-
sation
($)
(i)
|
Total
($)
(j)
|
|
Mark
Pettie
Chairman
of the Board and Chief Executive Officer
|
2007
|
84,115
|
62,877
(5)
|
-
|
-
|
-
|
15,000
(6)
|
162,015
|
|
Peter
C. Mann
Chairman
of the Board, Acting Chief Executive Officer and President
|
2007
|
349,624
|
-
|
-
|
-
|
249,200
|
109,898
(7)
|
708,722
|
|
Frank
Palantoni
Chief
Executive Officer and President
|
2007
|
113,760
|
-
|
-
|
-
|
-
|
581,600
(8)
|
695,360
|
|
Peter
J. Anderson
Chief
Financial Officer
|
2007
|
309,000
|
-
|
20,394
|
2,291
|
176,200
|
40,172
(9)
|
548,057
|
|
Charles
N. Jolly
General
Counsel and Secretary
|
2007
|
300,000
|
75,000
(10)
|
193,333
|
6,737
|
128,300
|
6,600
(11)
|
709,970
|
|
John
Parkinson
Senior
Vice President - International
|
2007
|
200,000
|
-
|
105,000
|
3,369
|
85,500
|
6,000
(12)
|
399,869
|
|
Eric
M. Millar
Senior
Vice President - Operations
|
2007
|
213,000
|
-
|
-
|
-
|
91,100
|
15,254
(13)
|
319,354
|
|
Gerard
F. Butler
Chief
Sales Officer
|
2007
|
255,515
|
-
|
11,800
(14)
|
1,326
(15)
|
100,900
|
15,850
(16)
|
385,391
|
|
(1)
|
Except
as otherwise noted, bonus payments are accrued for the fiscal year
in
which earned but are paid promptly after completion of the audit
for such
fiscal year.
|
27
(2) The
fair
value of non-vested restricted common stock is determined as the closing price
of the Company’s common stock on the day preceding the grant date. Such amounts
are amortized on a straight-line basis over the vesting period and recorded
as
compensation costs in the statement of operations.
(3) The
fair
value of each performance share award was estimated on the date of grant using
the Black-Scholes Option Pricing Model (“Black-Scholes Model”) and certain
assumptions about expected volatility of the Company’s common stock, the
expected term of the performance shares and risk-free interest rates. For
additional information regarding the assumptions used in the Black-Scholes
Model, please see Note 13 to the financial statements contained in our Annual
Report on Form 10-K for 2007, which is included in the Annual Report to
Stockholders accompanying this Proxy Statement.
(4) Non-equity
incentive plan awards are accrued for the fiscal year in which earned but are
paid promptly after the completion of the audit for such fiscal
year.
|
(5)
|
Represents
the amount paid to Mr. Pettie as a bonus pursuant to his employment
agreement with the Company.
|
|
(6)
|
Represents
the amount of legal fees paid by the Company to Mr. Pettie’s legal counsel
in connection with the negotiation and execution of his employment
agreement.
|
|
(7)
|
Consists
of (i) a $6,600 matching contribution by the Company on Mr. Mann’s behalf
to the Company’s 401(k) plan; and (ii) the aggregate payment by the
Company of $103,298 to Mr. Mann’s legal counsel in connection with (a) the
negotiation and execution of Mr. Mann’s Senior Management Agreement dated
as of March 21, 2006; and (b) certain litigation pending against
the
Company, Mr. Mann and certain other defendants. $36,115 of the $39,145
payment to Mr. Mann’s legal counsel regarding his Senior Management
Agreement that was reported for 2006 in last year’s Proxy Statement was
actually accrued and paid in 2007. 401(k) plan matching contributions
by
the Company were earned during the fiscal year and paid into the
401(k)
plan promptly after completion of the audit for such fiscal
year.
|
|
(8)
|
Consists
of (i) a $6,600 matching contribution by the Company on Mr. Palantoni’s
behalf to the Company’s 401(k) plan; (ii) severance payments in an
aggregate amount equal to $525,000 pursuant to Mr. Palantoni’s employment
agreement with the Company; and (iii) consulting fees in an aggregate
amount equal to $50,000. 401(k) plan matching contributions by the
Company
were earned during the fiscal year and paid into the 401(k) plan
promptly
after completion of the audit for such fiscal
year.
|
|
(9)
|
Consists
of (i) a $6,600 matching contribution by the Company on Mr. Anderson’s
behalf to the Company’s 401(k) plan; and (ii) the payment by the Company
of $33,572 to Mr. Anderson’s legal counsel in connection with certain
litigation pending against the Company, Mr. Anderson and certain
other
defendants. 401(k) plan matching contributions by the Company were
earned
during the fiscal year and paid into the 401(k) plan promptly after
completion of the audit for such fiscal
year.
|
|
(10)
|
Represents
a discretionary bonus paid to Mr. Jolly by the Company in 2007 for
his
services in 2006.
|
|
(11)
|
Represents
a $6,600 matching contribution by the Company on Mr. Jolly’s behalf to the
Company’s 401(k) plan. 401(k) plan matching contributions by the Company
were earned during the fiscal year and paid into the 401(k) plan
promptly
after completion of the audit for such fiscal
year.
|
|
(12)
|
Represents
a $6,000 matching contribution by the Company on Mr. Parkinson’s behalf to
the Company’s 401(k) plan. 401(k) plan matching contributions by the
Company were earned during the fiscal year and paid into the 401(k)
plan
promptly after completion of the audit for such fiscal
year.
|
|
(13)
|
Consists
of (i) a $6,390 matching contribution by the Company on Mr. Millar’s
behalf to the Company’s 401(k) plan; and (ii) the payment by the Company
of $8,864 to Mr. Millar’s legal counsel in connection with the negotiation
of Mr. Millar’s retirement agreement with the Company which will be
executed by the Company and Mr. Millar at a later date. 401(k) plan
matching contributions by the Company were earned during the fiscal
year
and paid into the 401(k) plan promptly after completion of the audit
for
such fiscal year.
|
|
(14)
|
The
grant of 4,734 shares of restricted common stock was forfeited by
Mr.
Butler on January 2, 2007 in connection with his resignation from
the
Company as Chief Sales Officer.
|
28
|
(15)
|
Mr.
Butler’s award of 1,184 performance shares awarded on July 1, 2006 shall
mature pursuant to the terms of the award; provided, that the valuation
of
the amount payable, if any, under the award shall be calculated using
the
closing stock price of the Company’s common stock on March 31, 2008, so
long as Mr. Butler retires as an employee from the Company on such
date.
|
(16)
Consists
of (i) a $6,600 matching contribution by the Company on Mr. Butler’s behalf to
the Company’s 401(k) plan; and (ii) the payment by the Company of $9,250 to Mr.
Butler’s legal counsel in connection with the negotiation and execution of Mr.
Butler’s retirement agreement with the Company. 401(k) plan matching
contributions by the Company were earned during the fiscal year and paid into
the 401(k) plan promptly after completion of the audit for such fiscal
year.
[continues
on next page]
29
GRANTS
OF
PLAN-BASED AWARDS IN FISCAL 2007
The
following Grants of Plan-based Awards table provides additional information
regarding non-equity and equity incentive plan awards granted to the Named
Executive Officers during 2007. The non-equity incentive plan awards were
granted pursuant to the 2007 Management Bonus Plan and the equity incentive
plan
awards were granted pursuant to the 2005 Incentive Plan. The equity incentive
plan awards are comprised of restricted common stock and performance shares.
The
columns regarding All Other Stock Awards and Stock Options have been omitted
since there were no equity awards granted by the Company to the Named Executive
Officers in 2007 that were not incentive plan awards.
|
Name
(a)
|
Grant
Date
(b)
|
Board
Ap-proval
Date
(b-1)
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
Grant
Date
Fair
Value
of Stock And Option Awards
(l)
|
||||
|
Thresh-
old
($)
(c)
|
Target
($)
(d)
|
Maxi-
mum
($)
(e)
|
Thresh-
old
(#)
(f)
|
Target
(#)
(g)
|
Maxi-
mum
(#)
(h)
|
||||
|
Mark
Pettie
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Peter
C. Mann
|
5/9/06
|
139,230
|
331,500
|
613,270
|
|||||
|
Frank
Palantoni (1)
|
5/9/06
|
134,400
|
320,000
|
592,000
|
|||||
|
Peter
J. Anderson
|
5/9/06
7/1/06
(2)
7/1/06
(3)
|
5/9/06
5/9/06
|
77,870
|
185,400
|
342,990
|
4,091
|
8,182
2,046
|
8,182
|
81,576
7,529
|
|
Charles
N. Jolly
|
5/9/06
7/1/06
(2)
7/1/06
(3)
|
5/9/06
5/9/06
|
56,700
|
135,000
|
249,750
|
12,036
|
24,072
6,018
|
24,072
|
240,000
22,146
|
|
John
Parkinson
|
5/9/06
7/1/06
(2)
7/1/06
(3)
|
5/9/06
5/9/06
|
37,800
|
90,000
|
166,500
|
6,018
|
12,036
3,009
|
12,036
|
120,000
11,073
|
|
Eric
M. Millar
|
5/9/06
|
40,250
|
95,850
|
177,320
|
|
||||
|
Gerard
F. Butler
|
5/9/06
7/1/06
(2)(4)
7/1/06
(3)(5)
|
5/9/06
5/9/06
|
44,600
|
106,200
|
196,470
|
2,367
|
4,734
1,184
|
4,734
|
47,200
4,357
|
30
|
(1)
|
On
June 23, 2006, all of the non-equity incentive plan awards granted
to Mr.
Palantoni were forfeited by Mr. Palantoni when he concluded his duties
as
Chief Executive Officer and President of the
Company.
|
|
(2)
|
Represents
the date on which restricted common stock was granted to the Named
Executive Officer. The restricted common stock may vest on March
31, 2009,
subject to the Company’s meeting certain net sales and earnings per share
targets.
|
|
(3)
|
Represents
the date on which performance shares were granted to the Named Executive
Officer. The price for the performance shares was set at $9.97, the
closing price for the Company’s common stock on the NYSE on June 30, 2006,
the day immediately preceding the grant date for the performance
shares.
The Named Executive Officer will be entitled to receive the appreciation,
if any, on March 31, 2009 of the performance shares over the initial
price
and
the Company, at the sole discretion of the Board of Directors, will
pay
the amount of such appreciation in cash, stock, other Company securities
or a combination thereof.
|
|
(4)
|
On
January 2, 2007, the equity incentive plan awards granted to Mr.
Butler in
the amount of 4,734 shares of restricted common stock were forfeited
by
Mr. Butler when he resigned from his position as Chief Sales Officer
of
the Company.
|
(5) Mr.
Butler’s award of 1,184 performance shares awarded on July 1, 2006 shall mature
pursuant to the terms of the award; provided, that the valuation of the amount
payable, if any, under the award shall be calculated using the closing stock
price of the Company’s common stock on March 31, 2008, so long as Mr. Butler
retires as an employee from the Company on such date.
Narrative
Disclosure for the Summary Compensation Table and Grants of Plan-based Awards
Table
Certain
elements of the executive compensation presented in the tables above were
expressly included in the executive’s employment agreement with the Company and
therefore not subject to the discretion of the Compensation Committee. For
example, the bonus paid to Mr. Pettie for 2007 and the payment by the Company
of
Mr. Pettie’s legal fees incurred in connection with the negotiation of his
employment agreement were governed by express provisions in his employment
agreement with the Company. As for Mr. Palantoni, the severance he received
in
2007 was paid pursuant to the terms of his employment agreement with the
Company. In addition, during 2007, the Company paid the legal fees incurred
by
each of Messrs. Mann and Anderson in connection with the class action law suit
pursuant to the Company’s obligation to indemnify them in their capacities as
executive officers of the Company. Furthermore, the Company also paid legal
fees
incurred by each of Messrs. Mann, Butler and Millar in connection with their
respective Senior Management Agreements with the Company.
During
2007, the Named Executive Officers other than Mr. Pettie received non-equity
and
equity incentive plan awards based on their positions within the Company. The
non-equity incentive plan awards were established under the Company’s 2007
Management Bonus Plan and were paid in cash to the Named Executive Officers
since certain net sales and earnings per share targets were attained by the
Company in 2007. Pursuant to the terms of the non-equity incentive plan awards,
based on the Company’s financial performance, the Named Executive Officers may
receive no cash payment or a cash payment ranging from a threshold amount to
a
maximum amount based on the Company’s performance and a performance grid
approved by the Compensation Committee. The equity incentive plan awards granted
to certain of the Named Executive Officers during 2007 were comprised of
restricted common stock and performance shares. The restricted common stock
vests at the end of a three-year period if certain net sales and earnings per
share targets are attained by the Company during such period. Under the terms
of
the equity incentive plan awards, none of the shares of restricted common stock
may vest or a number of shares of the restricted common stock may vest ranging
from a threshold amount to a maximum amount based on the Company’s performance
and a performance grid approved by the Compensation Committee.
In
addition to the grant of restricted common stock, certain of the Named Executive
Officers received performance shares which have a performance period ending
on
March 31, 2009. The performance shares are equivalent to stock appreciation
rights and the grantees of such performance shares are entitled to the
appreciation, if any, on March 31, 2009 in excess of the initial price of the
performance shares. The performance shares were priced at $9.97 per share on
June 30, 2006, the day immediately preceding the grant date for the performance
shares.
The
Company has prepared what its believes to be a reasonable budget and forecast
for 2008 and is in the process of implementing a long-term strategic plan due
to
the arrival of new members of the management team. As
31
OUTSTANDING
EQUITY AWARDS AT 2007 FISCAL YEAR-END
The
following table summarizes the equity awards made to the Named Executive
Officers which are outstanding as of March 31, 2007.
|
Option
Awards
|
Stock
Awards
|
||||||||
|
Name
(a)
|
Number
Of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
Number
Of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
|
Equity
Incentive
Plan
Awards:
Number
Of
Securities
Underlying
Unexercised
Unearned
Options
(1)
(#)
(d)
|
Option
Exercise
Price
(2)
($)
(e)
|
Option
Expiration
Date
(3)
(f)
|
Number
Of
Shares
Or
Units
Of
Stock
That
Have
Not
Vested
(#)
(g)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(h)
|
Equity
Incentive
Plan
Awards:
Number
Of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested (4)
(#)
(i)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
Of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(5)
($)
(j)
|
|
Mark
Pettie
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Peter
C. Mann
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Frank
Palantoni
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Peter
J. Anderson
|
-
|
-
|
2,046
|
9.97
|
3/31/09
|
-
|
-
|
4,091
(6)
|
48,478
|
|
Charles
N. Jolly
|
-
|
-
|
6,018
|
9.97
|
3/31/09
|
-
|
-
|
28,270
(7)
|
335,000
|
|
John
Parkinson
|
-
|
-
|
3,009
|
9.97
|
3/31/09
|
-
|
-
|
15,150
(8)
|
179,522
|
|
Eric
M. Millar
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Gerard
F. Butler
|
-
|
-
|
1,184
|
9.97
|
3/31/09
|
-
|
-
|
-
|
-
|
32
| (1) |
This
column discloses the number of performance shares granted by the
Company
to a Named Executive Officer. The performance shares entitle the
recipient
to the appreciation, if any, on March 31, 2009 of the common stock
price
in excess of the initial price for the performance
shares.
|
| (2) |
The
initial price for the performance shares granted on July 1, 2006
was
$9.97, the closing price for the Company’s common stock on the NYSE on
June 30, 2006, the day immediately preceding the grant date for the
performance shares.
|
| (3) |
Represents
the date on which the performance period for the performance shares
expires. Promptly after the expiration date, the Compensation Committee
will determination the appreciation, if any, in excess of the initial
price for the performance shares.
|
| (4) |
Represents
the number of shares of restricted common stock that have not vested
as of
March 31, 2007, assuming threshold performance by the Company for
each
grant of restricted common stock.
|
| (5) |
Represents
the value of non-vested shares of restricted common stock on March
31,
2007 which was calculated using $11.85 per share, the closing price
of the
Company’s common stock on the NYSE on March 31,
2007.
|
| (6) |
Represents
a grant of restricted common stock on July 1, 2006 that may vest
on March
31, 2009, subject to certain net sales and earnings per share
targets.
|
| (7) |
Consists
of (i) 16,234 shares of restricted common stock that may vest on
September
30, 2008, subject to the Company’s achieving certain net sales and
earnings per share targets; and (ii) 12,036 shares of restricted
common
stock that may vest on March 31, 2009, subject to the Company’s achieving
certain net sales and earnings per share
targets.
|
| (8) |
Consists
of (i) 9,132 shares of restricted common stock that may vest on September
30, 2008, subject to the Company’s achieving certain net sales and
earnings per share targets; and (ii) 6,018 shares of restricted common
stock that may vest on March 31, 2009, subject to the Company’s achieving
certain net sales and earnings per share
targets.
|
OPTION
EXERCISES AND STOCK VESTED IN FISCAL 2007
As
there
were no stock options in existence during 2007 and none of the stock awards
granted to the Named Executive Officers vested in 2007, no tabular disclosure
is
required.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Our
Named
Executive Officers are entitled to certain benefits in the event their
employment is terminated under specified circumstances. Circumstances which
would trigger payments and/or other benefits to certain of our Named Executive
Officers include death, disability, termination of employment by the Company
without cause, termination by the Named Executive Officer for good reason or
a
change-in-control of the Company.
In
order
for a Named Executive Officer to receive the payment and/or benefits to which
he
is entitled pursuant to any applicable employment agreement, he must execute
and
deliver to the Company a release in a form satisfactory to the Company. So
long
as any Named Executive Officer who is receiving payments and/or benefits from
the Company has not breached any applicable restrictive covenants (including,
without limitation, non-compete, non-solicitation, non-disparagement and/or
confidentiality agreements), the Company will continue to make any required
payments. In the event a Named Executive Officer breaches any applicable
restrictive covenant, the Company will cease making any future payments and
providing any other benefits to the Named Executive Officer, and will also
consider pursuing all legal and equitable remedies available to the Company
under any applicable employment agreement and applicable law.
The
following table sets forth payments and benefits that may be received by our
Named Executive Officers under any existing employment agreements, equity grant
agreements, plans or arrangements, whether written or unwritten, in the event
of
termination for specified reasons and/or a change-in-control of the Company.
Only payments and benefits that a Named Executive Officer may receive that
are
not also available to other
33
executive
officers and salaried employees are disclosed in the table below. The following
information has been prepared based on the assumption that the Named Executive
Officer was terminated, or a change-in-control of the Company occurred, on
March
31, 2007. The closing price for our common stock on March 30, 2007 was
$11.85.
| Name |
Termination
By
Company
Without
Cause
($)
|
||||
|
Termination
By
Named
Executive
Officer
With
Good
Reason
($)
|
Death
($)
|
Disability
($)
|
Change-in-
Control
($)
|
||
|
Mark
Pettie
|
1,135,300
(1)
|
1,135,300
(1)
|
1,118,400
(2)
|
1,118,400
(2)
|
1,880,900
(3)
|
|
Peter
C. Mann
|
-
|
-
|
-
|
-
|
-
|
|
Frank
Palantoni (4)
|
192,500
|
-
|
-
|
-
|
-
|
|
Peter
J. Anderson
|
496,900
(5)
|
496,900
(5)
|
971,200
(6)
|
971,200
(6)
|
1,468,100
(7)(8)
|
|
Charles
N. Jolly
|
453,600
(5)
|
453,600
(5)
|
3,800
(9)
|
3,800
(9)
|
453,600
(7)(10)
|
|
John
Parkinson
|
-
|
-
|
1,900
(9)
|
1,900
(9)
|
1,900
(9)
|
|
Eric
M. Millar
|
321,500
(5)
|
321,500
(5)
|
237,900
(11)
|
237,900
(11)
|
559,500
(7)(11)
|
|
Gerard
F. Butler (12)
|
356,000
(13)
|
356,000
(13)
|
1,282,700
(14)
|
1,282,700
(14)
|
1,282,700
(7)(8)
|
|
(1)
|
Consists
of (i) installment payments over 12 months (or a lump sum payment
with the
consent of Mr. Pettie) in an amount equal to base salary and applicable
annual bonus; (ii) a lump sum payment equal to one-third of the value
of
the unvested portion of the restricted common stock granted to Mr.
Pettie
under the 2005 Incentive Plan; and (iii) certain installment payments
made
on behalf of Mr. Pettie by the Company for twelve months of life,
medical
and disability insurance.
|
|
(2)
|
Consists
of an amount equal to the value of the accelerated vesting of the
restricted common stock owned by Mr. Pettie, notwithstanding that
Mr.
Pettie’s restricted common stock grant was awarded in
2008.
|
|
(3)
|
Consists
of (i) installment payments over 12 months (or a lump sum payment
with the
consent of Mr. Pettie) in an amount equal to base salary and applicable
annual bonus; (ii) an amount equal to the value of the accelerated
vesting
of the restricted common stock owned by Mr. Pettie, notwithstanding
that
Mr. Pettie’s restricted common stock grant was awarded in 2008; and (iii)
certain installment payments made on behalf of Mr. Pettie by the
Company
for twelve months of life, medical and disability insurance. Except
for
the restricted common stock which vests automatically upon a
change-in-control, the calculation has been made assuming that Mr.
Pettie’s employment is terminated without cause in connection with the
change-in-control.
|
|
(4)
|
Amounts
payable to Mr. Palantoni are being paid over a three month period
pursuant
to a separation agreement between the Company and Mr.
Palantoni.
|
|
(5)
|
Consists
of (i) installment payments over 12 months in an amount equal to
base
salary and applicable annual bonus; and (ii) certain installment
payments
made on behalf of the Named Executive Officer by the Company for
twelve
months of life, medical and disability insurance.
|
34
|
(6)
|
Consists
of an amount equal to the value of the performance shares and accelerated
vesting of the non-vested portion of the founder
shares.
|
|
(7)
|
Assumes
that the Named Executive Officer was terminated without cause in
connection with a change-in-control of the
Company.
|
|
(8)
|
Includes
an amount equal to the value of the performance shares and accelerated
vesting of the non-vested portion of the founder
shares.
|
|
(9)
|
Consists
of an amount equal to the value of the performance
shares.
|
|
(10)
|
Includes
an amount equal to the value of the performance
shares.
|
|
(11)
|
Includes
an amount equal to the value of the accelerated vesting of the non-vested
portion of the founder shares.
|
|
(12)
|
Amounts
payable to Mr. Butler are being paid pursuant to a separation agreement
between the Company and Mr. Butler.
|
|
(13)
|
Consists
of (i) installment payments over 12 months through March 31, 2008;
and
(ii) certain installment payments made on behalf of the Named Executive
Officer by the Company for twelve months of life, medical and disability
insurance .
|
|
(14)
|
Consists
of (i) a lump sum payment to Mr. Butler or his estate, as applicable,
promptly after termination; and (ii) an amount equal to the total
value of
the performance shares and accelerated vesting of the non-vested
portion
of the founder shares.
|
For
additional information regarding payments required to be made to a Named
Executive Officer pursuant to his employment agreement or any other arrangement
with the Company in connection with a termination of employment and/or a
change-in-control of the Company, please see the sections titled “Executive
Compensation and Other Matters - Employment Agreements” and “Executive
Compensation and Other Matters - Additional Vesting Provisions” contained
elsewhere in this Proxy Statement.
[continues
on next page]
35
DIRECTOR
COMPENSATION IN FISCAL 2007
The
following table sets forth the cash and equity compensation paid or awarded
to
our directors during 2007. The columns regarding option awards and non-equity
incentive, pension and deferred compensation plans have been omitted as the
Company does not provide such elements of compensation to its directors for
their services.
|
Name
(a)
|
Fees
Earned
or
Paid
in
Cash
($)
(b)
|
Stock
Awards
(1)
($)
(c)
|
Total
($)
(h)
|
|
Mark
Pettie
|
-
|
-
|
-
|
|
L.
Dick Buell (2)
|
46,801
|
40,625
|
87,426
|
|
John
E. Byom (3)
|
68,093
|
35,625
|
103,718
|
|
Gary
E.
Costley
(2)
|
48,529
|
40,625
|
89,154
|
|
David
A.
Donnini
|
-
|
-
|
-
|
|
Ronald
B.
Gordon
(2)
|
66,647
|
40,625
|
107,272
|
|
Vincent
J.
Hemmer
|
-
|
-
|
-
|
|
Patrick
M.
Lonergan
(2)
|
70,195
|
40,625
|
110,820
|
|
Peter
C. Mann
|
-
|
-
|
-
|
|
Frank
Palantoni
|
-
|
-
|
-
|
|
Raymond
P.
Silcock
(3)
|
59,519
|
35,625
|
95,144
|
|
(1)
|
The
FAS 123R grant date fair value for the grant of common stock and
restricted common stock is $20,000 and $50,000,
respectively.
|
|
(2)
|
As
of March 31, 2007, the director had 2,222 shares of restricted common
stock that vest on July 29, 2007, 2,649 shares of restricted common
stock
that vest on August 15, 2007 and 2,648 shares of restricted common
stock
that vest on August 15, 2008.
|
|
(3)
|
As
of March 31, 2007, the director had 2,649 shares of restricted common
stock that vest on August 15, 2007 and 2,648 shares of restricted
common
stock that vest on August 15, 2008.
|
36
Narrative
to Director Compensation Table
Except
for Mr. Mann, directors who are not our employees or who are not otherwise
affiliated with us or our principal stockholder, GTCR, each receive a one-time
grant of common stock equal to $20,000 as of the date of the first Annual
Meeting of Stockholders held after such director became a member of the Board
of
Directors. In addition, each independent director and Mr. Mann receive an annual
$50,000 grant of restricted common stock with one-half of such grant vesting
on
each of the first and second anniversary of the grant date. The fair value
of
all common stock awards is determined by multiplying the number of shares by
the
closing price of the Company’s common stock on the grant date. The value of
grants of unrestricted common stock is recorded as compensation costs in the
statement of operations while the value of the grants of restricted common
stock
is amortized on a straight-line basis over the vesting period and recorded
as
compensation costs in the statement of operations.
On
July
29, 2005, each of Messrs. Buell, Costley, Gordon and Lonergan received (i)
1,778
shares of common stock, representing $20,000 divided by $11.25; and (ii) 4,444
shares of restricted common stock, representing $50,000 divided by $11.25.
$11.25 was the closing price of our common stock on the NYSE on July 29, 2005.
2,222 shares of the restricted common stock grant vested on July 29, 2006 and
2,222 shares of the restricted common stock grant will vest on July 29,
2007.
On
August
15, 2006, each of Messrs. Byom and Silcock received 2,119 shares of common
stock, representing $20,000 divided by $9.44. In addition, on August 15, 2006,
each of Messrs. Buell, Byom, Costley, Gordon, Lonergan and Silcock received
5,297 shares of restricted common stock, representing $50,000 divided by $9.44.
$9.44 was the closing price of our common stock on the NYSE on August 15, 2006.
2,649 shares of the restricted common stock grant will vest on August 15, 2007
and 2,648 shares of the restricted common stock grant will vest on August 15,
2008.
For
more
information regarding the compensation arrangements we have with our directors,
please see “How are our directors compensated?” on page 7 of this Proxy
Statement.
Employment
Agreements
Mark
Pettie
On
January 12, 2007, Mr. Pettie entered into an Employment Agreement with the
Company (the “Pettie Employment Agreement”) effective as of January 19, 2007.
Subject to the terms and conditions of the Pettie Employment Agreement, Mr.
Pettie shall serve as the Company’s Chairman of the Board and Chief Executive
Officer through March 31, 2008. Pursuant to the terms of the Pettie Employment
Agreement, Mr. Pettie’s base salary shall be $425,000 per annum, subject to
periodic review by the Board of Directors of the Company, which first such
review shall take place during or before April 2008.
During
the term of the Pettie Employment Agreement, Mr. Pettie shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to senior executive officers of the Company,
and on the same basis as such senior executive officers, except as to benefits
that are specifically applicable to Mr. Pettie pursuant to the Pettie Employment
Agreement. With regard to the Company’s annual bonus plan, Mr. Pettie shall be
entitled to an annual bonus (including a guaranteed prorated target bonus of
no
less than $62,877 for the fiscal year ending March 31, 2007 based upon days
of
service from the effective date through March 31, 2007), the amount of which
shall be determined by the Company’s Compensation Committee. During the term of
the Pettie Employment Agreement, Mr. Pettie’s annual target (subject to such
performance and other criteria as may be established by the Company’s
Compensation Committee) bonus shall be no less than 75% of base salary and
the
maximum bonus shall be no less than 150% of base salary; provided, that any
bonus payable for the fiscal year ending March 31, 2008 shall be reduced by
any
amounts paid to Mr. Pettie as a retention bonus in accordance with the terms
of
the Pettie Employment Agreement.
Pursuant
to the terms of the Pettie Employment Agreement, Mr. Pettie and his eligible
dependents shall be eligible for participation in, and shall receive all
benefits under, the Company’s welfare benefit plans, practices,
37
The
Pettie Employment Agreement may be terminated (i) by the Company for cause,
without cause or due to Mr. Pettie’s disability; (ii) by Mr. Pettie for good
reason or no reason; or (iii) upon the death of Mr. Pettie.
In
the
event the Company terminates Mr. Pettie’s employment for cause, the Company
shall have no liability to Mr. Pettie other than his accrued base salary through
the date of termination and any other applicable benefits. In the event the
Pettie Employment Agreement is terminated due to Mr. Pettie’s death or
disability, or Mr. Pettie terminates the Pettie Employment Agreement without
good reason, the Company shall have no liability to Mr. Pettie other than the
payment of Accrued Obligations (as defined in the Pettie Employment Agreement)
and any other applicable benefits. With regard to a termination of the Pettie
Employment Agreement due to the death or disability of Mr. Pettie, any award
granted under the 2005 Incentive Plan shall immediately vest upon Mr. Pettie’s
death or disability.
In
the
event Mr. Pettie is terminated by the Company without cause, or Mr. Pettie
terminates the Pettie Employment Agreement for good reason, the Company shall
pay to Mr. Pettie (i) cash in an aggregate amount equal to the sum of (a) Mr.
Pettie’s base salary through the date of termination; (b) any accrued expenses
and vacation pay; and (c) any deferred compensation, as applicable; (ii) in
installments ratably over 12 months in accordance with the Company’s normal
payroll practices (or in a lump sum with the consent of Mr. Pettie), the
aggregate amount equal to the sum of (a) Mr. Pettie’s base salary in effect as
of the date of termination; and (b) Mr. Pettie’s applicable annual bonus; and
(iii) cash in the aggregate amount equal to the Prorated Unvested 2005 Incentive
Plan Award Value (as defined below) for each 2005 Incentive Plan award;
provided, that with respect to clause (iii), such termination occurs prior
to
March 31, 2010. In addition to the foregoing, Mr. Pettie shall be entitled
to
participate in the Company’s life, medical and disability insurance programs on
the same basis as an active employee of the Company for up to 12 months after
the date of termination. Thereafter, Mr. Pettie shall be entitled to
continuation of benefits pursuant to the provisions of COBRA. “Prorated Unvested
2005 Incentive Plan Award Value” shall equal the product of (i) a fraction, the
numerator of which shall be the number 1 if Mr. Pettie has been employed for
12
months or less from the applicable grant date of the 2005 Incentive Plan award
in question (the “Grant Date”), the number 2 if Mr. Pettie has been employed for
more than 12 months but less than 24 months from the Grant Date, and the number
3 if Mr. Pettie has been employed for more than 24 months from the Grant Date,
and the denominator of which shall be the number 3; and (ii) the value (based,
in the case of restricted stock, upon the closing market price of the Company’s
common stock on the day prior to the date of termination of employment) of
the
unvested portion of each 2005 Incentive Plan award.
The
Pettie Employment Agreement also contains certain confidentiality,
non-competition and non-solicitation provisions as well as other provisions
that
are customary for an executive employment agreement.
38
Peter
J. Anderson
As
of
February 4, 2005, Prestige International Holdings, LLC (“Holdings LLC”), the
Company and Prestige Brands, Inc. (together with Holdings LLC and the Company,
the “Employer”) entered into an Amended and Restated Senior Management Agreement
with Mr. Anderson (the “Anderson Senior Management Agreement”) which amended and
restated the Senior Management Agreement, as amended, dated as of February
6,
2004, by and among the Employer and Mr. Anderson. Pursuant to the Anderson
Senior Management Agreement, Mr. Anderson is employed by the Employer for the
period beginning as of February 6, 2004 through and including his separation
from the Employer pursuant to the terms of the Anderson Senior Management
Agreement (the “Anderson Employment Period”). From the commencement of the
Anderson Employment Period through and including termination of employment
pursuant to the Anderson Senior Management Agreement, Mr. Anderson shall serve
as the Chief Financial Officer of the Employer. During the Anderson Employment
Period, the Employer will pay Mr. Anderson a base salary of $285,000 per annum.
In addition, during the Anderson Employment Period, Mr. Anderson will be
entitled to such other benefits approved by the Board of Directors and made
available to the senior management of the Employer and its subsidiaries, which
shall include vacation time and medical, dental, life and disability insurance.
The Board of Directors, on a basis consistent with past practice, shall review
the annual base salary of Mr. Anderson and may increase the annual base salary
by such amount as the Board of Directors, in its sole discretion, shall deem
appropriate.
Pursuant
to the terms of the Anderson Senior Management Agreement, Mr. Anderson’s
employment will continue until (i) his death, disability or resignation from
employment with the Employer and its subsidiaries; or (ii) the Employer and
its
subsidiaries decide to terminate Mr. Anderson’s employment with or without
cause. If (A) Mr. Anderson’s employment is terminated without cause; or (B) Mr.
Anderson resigns from employment with the Employer or any of its subsidiaries
for good reason, then during the period commencing on the date of termination
of
employment and ending on the first anniversary date thereof, the Employer shall
pay to Mr. Anderson, in equal installments in accordance with the Employer’s
regular payroll, an aggregate amount equal to (I) Mr. Anderson’s annual base
salary, plus (II) an amount equal to the annual bonus, if any, paid or payable
to Mr. Anderson by the Employer for the last fiscal year ended prior to the
date
of termination. In addition, if Mr. Anderson is entitled on the date of
termination to coverage under the medical and prescription portions of the
welfare plans, such coverage shall continue for Mr. Anderson and his covered
dependents for a period ending on the first anniversary of the date of
termination at the active employee cost payable by Mr. Anderson with respect
to
those costs paid by Mr. Anderson prior to the date of termination.
As
of the
date of the Anderson Senior Management Agreement, Mr. Anderson owned 456,864
founder shares of common stock that were subject to vesting. Pursuant to the
terms of the Anderson Senior Management Agreement, the founder shares of common
stock subject to vesting shall vest on a straight line pro rata basis through
February 6, 2009. If Mr. Anderson ceases to be employed by the Employer and
its
respective subsidiaries, the cumulative percentage of founder shares of common
stock subject to vesting that will vest shall be determined on a pro rata basis
according to the number of days elapsed since the relevant milestone date.
Upon
the occurrence of a sale of the Employer, all founder shares of common stock
subject to vesting shall become vested at the time of the consummation of the
sale of the Employer, if, as of such time, Mr. Anderson has been continuously
employed by the Employer or any of its subsidiaries.
Subject
to certain restrictions, the Employer will have the right to repurchase from
Mr.
Anderson and his transferees all or any portion of the founder shares of common
stock subject to vesting in the event Mr. Anderson ceases to be employed by
the
Employer and its subsidiaries for any reason. The purchase price to be paid
by
the Employer for each founder share of common stock subject to vesting will
be
the lesser of (i) Mr. Anderson’s original cost for a common unit in Holdings
LLC; and (ii) the fair market value of such unvested founder share as of the
date upon which the Employer notifies Mr. Anderson or his transferees of its
election to repurchase the unvested founder shares.
The
Anderson Senior Management Agreement also contains certain confidentiality,
non-competition and non-solicitation provisions, securities transfer
restrictions and other provisions that are customary for an executive employment
agreement.
39
Charles
N. Jolly
As
of
August 1, 2005, the Company entered into an Executive Employment Agreement
with
Mr. Jolly (the “Jolly Employment Agreement”) pursuant to which Mr. Jolly shall
serve as the Company’s Secretary and General Counsel. During the term of Mr.
Jolly’s employment, the Company will pay to him a base salary of $300,000 per
annum. In addition, Mr. Jolly shall be eligible for and participate in the
Company’s Annual Incentive Compensation Plan under which he shall be eligible
for an annual target bonus payment of not less than 45%. During the term of
Mr.
Jolly’s employment with the Company, he will be entitled to such other benefits
approved by the Board of Directors and made available to the senior management
of the Company and its subsidiaries, which shall include vacation time and
medical, dental, life and disability insurance. The Board of Directors, on
a
basis consistent with past practice, shall review the annual base salary of
Mr.
Jolly and may increase the annual base salary by such amount as the Board of
Directors, in its sole discretion, shall deem appropriate.
Pursuant
to the terms of the Jolly Employment Agreement, Mr. Jolly’s employment will
continue until (i) his death, disability or resignation from employment with
the
Company and its subsidiaries; or (ii) the Company and its subsidiaries decide
to
terminate Mr. Jolly’s employment with or without cause. If (A) Mr. Jolly’s
employment is terminated without cause; or (B) Mr. Jolly resigns from employment
with the Company or any of its subsidiaries for good reason, then during the
period commencing on the date of termination of employment and ending on the
first anniversary date thereof, the Company shall pay to Mr. Jolly, in equal
installments in accordance with the Company’s regular payroll, an aggregate
amount equal to (I) Mr. Jolly’s annual base salary, plus (II) an amount equal to
the annual bonus, if any, paid or payable to Mr. Jolly by the Company for the
last fiscal year ended prior to the date of termination. In addition, if Mr.
Jolly is entitled on the date of termination to coverage under the medical
and
prescription portions of the welfare plans, such coverage shall continue for
Mr.
Jolly and his covered dependents for a period ending on the first anniversary
of
the date of termination at the active employee cost payable by Mr. Jolly with
respect to those costs paid by Mr. Jolly prior to the date of termination.
The
Jolly
Employment Agreement also contains certain confidentiality, non-competition
and
non-solicitation provisions as well as other provisions that are customary
for
an executive employment agreement.
Eric
M. Millar
As
of
February 4, 2005, the Employer entered into an Amended and Restated Senior
Management Agreement with Mr. Millar (the “Millar Senior Management Agreement”)
which amended and restated the Senior Management Agreement, dated as of March
17, 2004, between the Employer and Mr. Millar. Pursuant to the Millar Senior
Management Agreement, Mr. Millar is employed by the Employer for the period
beginning as of March 17, 2004 through and including his separation from the
Employer pursuant to the terms of the Millar Senior Management Agreement (the
“Millar Employment Period”). From the commencement of the Millar Employment
Period through and including termination of employment pursuant to the Millar
Senior Management Agreement, Mr. Millar shall serve as the Senior Vice President
- Operations of the Employer. During the Millar Employment Period, the Employer
will pay Mr. Millar a base salary of $205,000 per annum. In addition, during
the
Millar Employment Period, Mr. Millar will be entitled to such other benefits
approved by the Board of Directors and made available to the senior management
of the Employer and its subsidiaries, which shall include vacation time and
medical, dental, life and disability insurance. The Board of Directors, on
a
basis consistent with past practice, shall review the annual base salary of
Mr.
Millar and may increase the annual base salary by such amount as the Board
of
Directors, in its sole discretion, shall deem appropriate.
Pursuant
to the terms of the Millar Senior Management Agreement, Mr. Millar’s employment
will continue until (i) his death, disability or resignation from employment
with the Employer and its subsidiaries; or (ii) the Employer and its
subsidiaries decide to terminate Mr. Millar’s employment with or without cause.
If (A) Mr. Millar’s employment is terminated without cause; or (B) Mr. Millar
resigns from employment with the Employer or any of its subsidiaries for good
reason, then during the period commencing on the date of termination of
employment and ending on the first anniversary date thereof, the Employer shall
pay to Mr. Millar, in equal installments in accordance with the Employer’s
regular payroll, an aggregate amount equal to (I) Mr. Millar’s annual base
salary, plus (II) an amount equal to the annual bonus, if any, paid or payable
to Mr. Millar by the Employer for the last fiscal year ended prior to the date
of termination. In addition, if Mr. Millar is entitled on the date of
termination to coverage under the medical and prescription portions of the
welfare plans, such coverage shall
40
As
of the
date of the Millar Senior Management Agreement, Mr. Millar owned 95,217 founder
shares of common stock that were subject to vesting. Pursuant to the terms
of
the Millar Senior Management Agreement, the founder shares of common stock
subject to vesting shall vest on a straight line pro rata basis through March
17, 2009. If Mr. Millar ceases to be employed by the Employer and its
subsidiaries, the cumulative percentage of founder shares of common stock
subject to vesting that will vest shall be determined on a pro rata basis
according to the number of days elapsed since the relevant milestone date.
Upon
the occurrence of a sale of the Employer, all founder shares of common stock
subject to vesting shall become vested at the time of the consummation of the
sale of the Employer, if, as of such time, Mr. Millar has been continuously
employed by the Employer or any of its subsidiaries.
Subject
to certain restrictions, the Employer will have the right to repurchase from
Mr.
Millar and his transferees all or any portion of the founder shares of common
stock subject to vesting in the event Mr. Millar ceases to be employed by the
Employer and its subsidiaries for any reason. The purchase price to be paid
by
the Employer for each founder share of common stock subject to vesting will
be
the lesser of (i) Mr. Millar’s original cost for a common unit in Holdings LLC;
and (ii) the fair market value of such unvested founder share as of the date
upon which the Employer notifies Mr. Millar or his transferees of its election
to repurchase the unvested founder shares.
The
Millar Senior Management Agreement also contains certain confidentiality,
non-competition and non-solicitation provisions, securities transfer
restrictions and other provisions that are customary for an executive employment
agreement.
Gerard
F. Butler
On
December 22, 2006, the Company entered into an Agreement with Mr. Butler (the
“Butler Agreement”), the Company’s Chief Sales Officer, pursuant to which Mr.
Butler’s Senior Management Agreement dated as of February 4, 2005 (the “Butler
Senior Management Agreement”) with the Company was superseded by the terms of
the Butler Agreement. Under the terms of the Butler Agreement, Mr. Butler has
agreed to resign as an officer of the Company on a date to be selected by the
Company, but in any event prior to January 31, 2007 (the “Resignation Date”).
From the Resignation Date to March 31, 2007, Mr. Butler’s primary responsibility
to the Company will be transitioning his position to his replacement. For the
period beginning on the Resignation Date and ending on March 31, 2007, Mr.
Butler will receive his current salary and benefits. Effective April 1, 2007,
Mr. Butler will become a “Work At Home” employee of the Company for a period of
one year (the “Work At Home Period”) during which period Mr. Butler will provide
advice, information or guidance to the Company on an as needed basis. Mr.
Butler’s employment with the Company shall terminate on April 1, 2008. During
the Work At Home Period, Mr. Butler’s annual salary shall be $236,000, subject
to applicable withholding taxes, payable in accordance with the Company’s normal
payroll practices. For the fiscal year ending March 31, 2007, Mr. Butler will
be
eligible for an annual bonus, as determined by the Compensation Committee and
the Board of Directors of the Company and also subject to the performance of
the
Company against the established bonus objectives. Mr. Butler will not be
eligible to receive a bonus for the fiscal year ending March 31, 2008; provided,
however, on or about May 1, 2008, Mr. Butler will receive a payment equivalent
to the greater of (i) the bonus paid for the fiscal year ending March 31, 2007;
or (ii) a target bonus of 45% of Mr. Butler’s salary paid during the Work At
Home Period.
With
regard to Mr. Butler’s Carried Shares (as defined in the Butler Senior
Management Agreement and otherwise known as founder shares), the provisions
contained in the Butler Senior Management Agreement relating to the Carried
Shares are incorporated by reference into the Butler Agreement. Pursuant to
the
terms of the Butler Agreement, Mr. Butler’s Carried Shares will continue to vest
on a straightline pro rata basis through February 6, 2009. Any Carried Shares
that have not vested at the expiration of the Work At Home Period will be
repurchased by the Company so long as Mr. Butler has not breached the terms
of
the Butler Agreement. The sale of any vested Carried Shares or Co-invest Common
Shares (as defined in the Butler Senior Management Agreement) will be subject
to
the applicable terms of the Butler Agreement and the Butler Senior Management
Agreement. During the
41
In
the
Butler Agreement, Mr. Butler agreed to surrender and forfeit the grant of 4,734
shares of restricted common stock made as of July 1, 2006. Mr. Butler also
acknowledged and agreed in the Butler Agreement that he will not be eligible
to
receive any future Long-Term Incentive Awards in calendar years 2007 and 2008,
or at any time subsequent thereto. Mr. Butler’s award of 1,184 Performance
Shares awarded as of July 1, 2006 shall mature pursuant to the terms of the
award; provided, that the valuation of the amount payable, if any, under the
award shall be calculated using the closing stock price of the Company’s common
stock on March 31, 2008 so long as Mr. Butler retires as an employee from the
Company on such date.
In
the
event of the death or disability of Mr. Butler prior to April 1, 2008, all
amounts payable to Mr. Butler pursuant to the Butler Agreement shall be paid
to
Mr. Butler’s estate or Mr. Butler, as applicable, as though Mr. Butler had fully
performed all of his obligations through April 1, 2008.
The
Butler Agreement contains customary provisions for an executive separation
agreement which include, among other things, a general release of claims against
the Company and confidentiality and non-competition provisions.
Additional
Vesting Provisions
Restricted
Common Stock
Our
2005
Incentive Plan provides that the Compensation Committee may, at its discretion,
decide to vest the non-vested portion of a restricted stock grant if a grantee’s
employment is terminated due to death, disability or retirement. In addition,
any non-vested portion of a restricted stock grant shall vest in the event
of a
change-in-control of the Company and the subsequent termination of the grantee’s
employment by the Company other than for cause within one year after such
change-in-control. The Compensation Committee may, at its discretion, also
grant
shares of restricted common stock that vest automatically upon a
change-in-control of the Company, whether or not the grantee is subsequently
terminated.
Stock
Options
Our
2005
Incentive Plan provides that all of a grantee’s options shall fully vest and be
exercisable upon the occurrence of a change-in-control of the Company and the
grantee’s subsequent termination from employment other than for cause by the
Company within one year after such change-in-control occurs. The vested options
shall remain exercisable for up to one year after the date of the grantee’s
termination, except as otherwise set forth in the 2005 Incentive Plan. In
addition, the Company’s Compensation Committee may, at its discretion, (i)
decide to fully vest any non-vested options in the event that a grantee’s
employment with the Company is terminated due to death, disability or
retirement; and (ii) grant options that vest and become exercisable
automatically upon a change-in-control, whether or not the grantee is
subsequently terminated.
Performance
Shares
Pursuant
to the terms of our 2005 Incentive Plan, except as otherwise determined by
the
Compensation Committee, should a grantee’s employment with the Company be
terminated due to death, disability or retirement prior to the end of a
performance cycle, the grantee shall earn a portion of the performance shares
based upon the elapsed portion of the performance cycle and the Company’s
performance over that portion of such cycle. Furthermore, upon the occurrence
of
a change-in-control of the Company, the 2005 Incentive Plan provides that a
grantee shall earn no less than the portion of the performance award that the
grantee would have earned if the performance cycle had terminated as of the
date
of the change-in-control.
Founder
Shares
The
Compensation Committee has also approved accelerated vesting of the non-vested
founder shares owned by Messrs. Anderson, Butler and Millar in the event of
their death or disability.
42
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During
2007, none of the members of our Compensation Committee, (i) served as an
officer or employee of the Company or its subsidiaries, (ii) was formerly an
officer of the Company or its subsidiaries, or (iii) entered into any
transactions with the Company or its subsidiaries. During 2007, none of our
executive officers (i) served as a member of the Compensation Committee (or
other board committee performing equivalent functions or, in the absence of
any
such committee, the board of directors) of another entity, one of whose
executive officers served on our Compensation Committee, (ii) served as a
director of another entity, one of whose executive officers served on our
Compensation Committee, and (iii) served as a member of the Compensation
Committee (or other board committee performing equivalent functions or, in
the
absence of any such committee, the board of directors) of another entity, one
of
whose executive officers served as a director of the Company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Except
as
disclosed under “Executive Compensation and Other Matters” and “Proposal No. 1 -
Election of Directors,” our executive officers, directors, director nominees and
greater than 5% stockholders did not have significant business relationships
with us in 2007 which would require disclosure under applicable SEC regulations,
and no other transactions which need to be disclosed under SEC regulations
are
currently planned for 2008.
We
review
and approve or ratify transactions with related persons on an as needed basis.
Our senior management team will refer transactions with related persons to
the
Board of Directors for their review and approval or ratification to the extent
senior management deems such review by the Board of Directors to be necessary.
The Board of Directors will review a related person transaction and consider
approving or ratifying the transaction if the entering into such transaction
is
in the best interest of the Company and the terms of such transaction are no
less favorable than the terms of a transaction that could be negotiated by
the
Company with a third-party on an arm’s length basis. For any related person
transactions that have been executed without the prior review of our senior
management, upon senior management’s discovering such transactions, senior
management will review the related person transaction and refer it to our Board
of Directors to the extent it deems the review by our Board of Directors to
be
necessary. We currently do not have a written related person transactions
policy. However, we have begun our review of a written related person
transactions policy and will make such policy available on our Internet website
promptly after it has been adopted by our Board of Directors. During 2007,
there
were no related person transactions and none are currently planned for 2008.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our officers, directors and persons who
beneficially own more than ten percent of our common stock to file reports
of
securities ownership and changes in such ownership with the SEC, the NYSE and
the Company.
We
believe that during 2007 all forms required by Section 16(a) of the Exchange
Act
that were required to be filed with the SEC, the NYSE and the Company by our
officers, directors and persons who beneficially own more than ten percent
of
our common stock were timely filed.
REPORT
OF THE AUDIT COMMITTEE
This
Audit Committee report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or the Exchange Act, except to the extent that
we specifically incorporate this information by reference, and shall not
otherwise be deemed filed under such Acts.
The
Audit
Committee is composed of four directors appointed by the Board of Directors,
all
of whom are independent from the Company as defined in the NYSE listing
standards and Rule 10A-3 under the Exchange Act. The members of the Audit
Committee are financially literate as that qualification is interpreted by
the
Board of
43
Management
is responsible for the Company’s internal accounting and financial controls, the
financial reporting process and compliance with the Company’s legal and ethics
programs. The Company’s independent registered public accounting firm is
responsible for performing an independent audit of the Company’s consolidated
financial statements and internal control over financial reporting in accordance
with auditing standards generally accepted in the United States of America
and
for issuance of a report thereon. The Audit Committee’s responsibility is to
monitor and oversee these processes and report its findings to the full Board
of
Directors.
In
this
context, the Audit Committee has met and held discussions regarding the
Company’s audited consolidated financial statements separately and jointly with
each of management and the independent registered public accounting firm.
Management represented to the Audit Committee that the Company’s audited
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America, on a consistent
basis, and the Audit Committee has reviewed and discussed the quarterly and
annual earnings press releases and consolidated financial statements with
management and the independent registered public accounting firm. The Audit
Committee discussed with the independent registered public accounting firm
matters required to be discussed by the Statement on Auditing Standards No.
61
(Communication with Audit Committees), as amended, as adopted by the Public
Company Accounting Oversight Board in Rule 3200T.
The
Company’s independent registered public accounting firm also provided to the
Audit Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
as adopted by the Public Company Accounting Oversight Board in Rule 3600T,
and
the Audit Committee discussed with the independent registered public accounting
firm the firm’s independence from the Company and its management. The Audit
Committee also considered whether the independent registered public accounting
firm’s provision of non-audit services to the Company is compatible with
maintaining the independent registered public accounting firm’s independence.
The Audit Committee concluded that the independent registered public accounting
firm is independent from the Company and its management.
The
Audit
Committee discussed with the Company’s internal auditor and independent
registered public accounting firm the overall scope and plans for their
respective audits. The Audit Committee discussed with the internal auditor
and
the independent registered public accounting firm, with and without management
present, the results of their examinations, the evaluations of the Company’s
internal controls, and the overall quality and integrity of the Company’s
financial reporting.
Based
on
the Audit Committee’s discussion with management and the independent registered
public accounting firm, its review of the representations of management, and
the
report of the independent registered public accounting firm, the Audit Committee
recommended to the Board of Directors that the Company’s audited consolidated
financial statements be included in the Company’s Annual Report on Form 10-K for
2007.
MEMBERS
OF THE AUDIT
COMMITTEE
John
E. Byom
(Chairman)
Ronald
Gordon
Patrick
Lonergan
Raymond
P.
Silcock
SUBMISSION
OF A STOCKHOLDER PROPOSAL AND
NOMINATION
OF DIRECTOR AND ADDITIONAL INFORMATION
Under
the
rules of the SEC, if a stockholder wants us to include a proposal in our Proxy
Statement and Proxy Card for presentation at our 2008 Annual Meeting of
Stockholders, the proposal must be received by us at our principal executive
offices at 90 North Broadway, Irvington, New York 10533 by March 1, 2008 (or,
if
the 2008
44
Our
Amended and Restated Bylaws provide that a stockholder wishing to present a
nomination for election of a director or to bring any other matter before an
Annual Meeting of Stockholders must give written notice to the Company’s
Secretary at the Company’s principal executive offices not less than 90 nor more
than 120 days prior to the date of the first anniversary of the previous year’s
Annual Meeting (provided that in the event that the Annual Meeting is scheduled
to be held on a date more than 30 days prior to or delayed by more than 60
days
after such anniversary date, notice by the stockholder in order to be timely
must be received not later than the close of business on the tenth day following
the earlier of the day on which notice of the date of meeting was mailed or
public disclosure of such meeting was made). In the event we call a special
meeting of our stockholders, we must receive a notice of your intention to
introduce a director nomination (if directors are to be elected at such special
meeting of stockholders) or to present an item of business at the special
meeting of stockholders not later than the close of business on the tenth day
following the earlier of the day on which notice of the date of the meeting
was
mailed or public disclosure of the meeting was made.
Any
written stockholder proposal or nomination for director to be presented at
a
meeting of our stockholders must comply with the procedures and such other
requirements as may be imposed by our Amended and Restated Bylaws, Delaware
law,
the NYSE, the Exchange Act and the rules and regulations of the SEC and must
include the information necessary for the Board of Directors to determine
whether the candidate (with respect to a nomination for director only) qualifies
as independent under the NYSE’s rules.
Assuming
that our 2008 Annual Meeting is not more than 30 days prior to or delayed by
more than 60 days after the first anniversary date of this year’s Annual Meeting
of Stockholders, we must receive notice of your intention to introduce a
director nomination or other item of business at that meeting not less than
90
nor more than 120 days prior to July 31, 2008. If we do not receive notice
within the prescribed dates, or if we meet other requirements of the SEC’s
rules, the persons named as Proxies in the Proxy materials relating to the
2008
Annual Meeting of Stockholders will use their discretion in voting the Proxies
when these matters are raised at the meeting. In addition, nominations or
proposals not made in accordance herewith may be disregarded by the Chairman
of
the meeting. Any stockholder interested in making such a nomination or proposal
should request a copy of our Amended and Restated Bylaws from the Company’s
Secretary.
FORM
10-K
We
will furnish without charge to each person whose Proxy is being solicited,
upon
written request of any such person, a copy of our Annual Report on Form 10-K
for
the fiscal year ended March 31, 2007, as filed with the SEC, including the
financial statements and financial statement schedules thereto. Written requests
for copies of our Annual Report on Form 10-K for the fiscal year ended March
31,
2007 should be directed to Prestige Brands Holdings, Inc., 90 North Broadway,
Irvington, New York 10533, Attention: Secretary. Our Annual Report on
Form 10-K for the fiscal year ended March 31, 2007 can also be downloaded
without charge from the Investor Relations tab of our website at
www.prestigebrandsinc.com.
By
Order of the Board
of Directors
/s/
Charles N.
Jolly
Charles
N.
Jolly
Secretary
June
29,
2007
45
Using
a
black ink pen, mark your votes with an X as shown
in x
this
example. Please do not write outside the designated areas.
_____________________________________________________________________________________
Annual
Meeting Proxy Card
_____________________________________________________________________________________
ÚPLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE. Ú
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
A. Proposals—
The
Board of Directors recommends a vote FOR each of the nominees listed and FOR
Proposal 2.
1.
To
elect directors to serve until
the
2008 Annual Meeting of Stockholders.
01-Mark
Pettie
02-L.
Dick
Buell
03-John
E. Byom
04-
Gary
E.
Costley 05-David
A.
Donnini
06-Ronald
Gordon
07-Vincent
J, Hemmer 08-Patrick
Lonergan
09-Peter
C. Mann
10-Raymond
P.
Silcock
o Mark
here
to vote FOR
all
nominees
o Mark
here
to WITHHOLD
vote
from all nominees
o For
All
EXCEPT-
To
withhold a vote for one or more nominees, mark
o o o o o o o o o o
the box to the left and the corresponding numbered box(es) to the
right.
|
2. Proposal to ratify the appointment
of PricewaterhouseCoopers LLP as the
independent registered public accounting firm
of
Prestige Brands Holdings, Inc. for the fiscal year
ending March 31, 2008.
|
For
Against
Abstain
o
o
o
|
3. To transact such other business as may properly
come before the Annual Meeting and any
postponement or adjournment thereof.
|
~ B. Non-Voting
Items
Change
of Address —
Please
print new address below.
|
|
C. Authorized
Signatures—
This
section must be completed for your vote to be counted.—
Date
and Sign Below
Please
sign as your name appears hereon. If shares are held jointly, all holders
should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please
give your full title. If a corporation, please sign full corporate name
by the
president or other authorized officer. If a partnership, please sign in
partnership name by an
authorized
person, indicating official position or capacity.
Date
(mm/dd/yyyy) -
Please print date
below Signature
1 - Please keep signature within the
box
Signature 2 - Please keep signature within
&
#160;
the box.
| / / |
ÚPLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE. Ú
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PrestigeBrands
Proxy
- Prestige Brands Holdings, Inc.
90
North Broadway
Irvington, New
York
10533
This
proxy is
solicited
on Behalf of the Board of Directors for the Annual Meeting of Stockholders
on
July 31, 2007.
The
undersigned hereby appoints Peter J. Anderson and Thomas W. Haller, and each
of
them, lawful agents and proxies with full power of substitution, to represent
and to vote as designated below, all shares of common stock of PRESTIGE
BRANDS HOLDINGS, INC.
held by
the undersigned at the close of business on June 20, 2007, at the Annual Meeting
of Stockholders to be held on July 31, 2007 at Tappan Hill, 81 Highland Avenue,
Tarrytown, New York 10591, and at any postponement or adjournment thereof,
on
all matters coming before said meeting.
This
proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted
FOR
all nominees in Item I and FOR Proposal 2. In their discretion, the Proxies
are
authorized to vote upon such other business as may properly come before the
Annual Meeting or any postponement or adjournment thereof.
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE AND SIGN THIS PROXY
CARD ON THE REVERSE SIDE. PLEASE PROMPTLY RETURN THIS PROXY CARD IN THE ENCLOSED
ENVELOPE.