SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed
by
a Party other than the Registrant o
Filed
by
the Registrant x
Check
the
appropriate box:
o
Preliminary Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
x Definitive
Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Under Rule 14a-12
Lakeland
Industries, Inc.
(Name
of
Registrant as Specified in Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x
No fee
required.
o
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1)
Title of each class of securities to which transaction
applies:
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2)
Aggregate number of securities to which transaction
applies:
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3)
Per unit price or other underlying value of transaction computed
pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
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4)
Proposed maximum aggregate value of transaction:
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5)
Total fee paid:
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o
Fee paid
previously with preliminary materials.
o
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the form
or
schedule and the date of its filing.
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1)
Amount previously paid:
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2)
Form, Schedule or Registration Statement No.:
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3)
Filing Party:
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4)
Date Filed:
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| Corporate
Headquarters
701
Koehler Avenue
Suite 7 Ronkonkoma, NYUSA11779-7410 Tel: 631-981-9700 Fax:631-981-9751 E-Mail:info@lakeland.com www.lakeland.com |
May
9, 2006
|
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| Lakeland
Limited-Use and Chemical Protective Clothing Customer Service 800-645-9291
Tel: 256-584-3565 Fax:256-350-0773 |
I
am pleased to extend to you my personal invitation to attend the
2006
Annual Meeting of Stockholders of Lakeland Industries, Inc. (the
"Company") on Wednesday, June 21, 2006 at 9:30 a.m. at the Holiday
Inn,
3845 Veterans Memorial Highway, Ronkonkoma, NY 11779.
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|
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Hand/Arm
Protection Division
Customer Service 800-645-9291
Tel:256-350-3873 Fax:256-353-9463 Fire
Protective Clothing Division
and Woven Clothing Division Customer Services 800-933-0115 Tel: 816-390-8086 Fax:816-390-8224 |
The
accompanying Notice of Annual Meeting and Proxy Statement contain
a
description of the formal business to be acted upon by the stockholders.
At the meeting, we intend to discuss our performance for the fiscal
year
ended January 31, 2006 and our plans for the current fiscal year.
Certain
members of the Company's Board of Directors and officers of the Company,
as well as a representative of Holtz Rubenstein Reminick LLP our
independent auditors, will be available to answer any questions you
may
have, or to make a statement if they wish to.
While
I am looking forward to seeing you at the meeting, it is very important
that those of you who cannot personally attend assure your shares
are
represented. I urge you therefore to sign and date the enclosed
form of
proxy and return it promptly in the accompanying envelope. If you
attend
the meeting, you may, if you wish, withdraw any proxy previously
given and
vote your shares in person.
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| Lakeland Protective Wear Inc.
Canada 5109
Harvestor Road
Unit B-7 Burlington, Ontario L7L5Y9 800-489-9131 Tel: 905-634-6400 Fax:905-634-6611 |
Sincerely,
/s/
Raymond J. Smith
Raymond
J. Smith
Chairman
of the Board
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LAKELAND
INDUSTRIES, INC.
2006
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON
June
21, 2006
TO
THE STOCKHOLDERS OF LAKELAND INDUSTRIES, INC.:
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Stockholders of Lakeland Industries,
Inc., a Delaware corporation (the "Company"), will be held on Wednesday,
June
21, 2006 at 9:30 a.m. at the Holiday Inn, 3845 Veterans Memorial Highway,
Ronkonkoma, NY 11779 for the following purposes:
1.
To
elect three Class II directors, and
2.
To
approve the 2006 Equity Incentive Plan, and
3.
To
ratify the appointment of Holtz Rubenstein Reminick LLP, as the Company’s
independent public accountants for fiscal year 2007, and
4.
To
transact such other business as properly may come before the meeting or any
adjournment thereof.
Each
share of the Company's Common Stock will be entitled to one vote upon all
matters described above. Stockholders of record at the close of business
on
April 28, 2006 will be entitled to notice of and to vote at the meeting.
Only
stockholders of record at the close of business on the date above will be
entitled to notice of and to vote at the Annual Meeting of Stockholders and
any
adjournment thereof. A list of all stockholders entitled to vote at the Annual
Meeting of Stockholders will be open for examination by any stockholder for
any
purpose germane to the Meeting during ordinary business hours for a period
of
ten (10) days before the Meeting at the offices of the Company located at
701
Koehler Ave., Suite 7, Ronkonkoma, NY 11779.
May
9,
2006
BY
ORDER OF THE BOARD OF DIRECTORS
Christopher
J. Ryan, Secretary
Whether
or not you plan to attend the Annual Meeting, please complete, date and sign
the
enclosed proxy card and return it promptly in the enclosed postage prepaid
envelope. If you sign and return your proxy card without specifying a choice,
your shares will be voted in accordance with the recommendations of the Board
of
Directors. You may, if you wish, revoke your proxy at any time prior to the
time
it is voted by filing with the Secretary of the Company a written revocation
or
a duly executed proxy bearing a later date or by attending the Annual Meeting
and voting in person
LAKELAND
INDUSTRIES, INC.
701
Koehler Ave., Suite 7
Ronkonkoma,
New York 11779
(631)
981-9700
PROXY
STATEMENT
2006
Annual Meeting of Stockholders
June
21,
2006
_________________________
This
Proxy Statement and the accompanying Proxy Card are furnished in connection
with
the solicitation by the Board of Directors of Lakeland Industries, Inc. (the
"Company") of proxies from the holders of the Company's $0.01 par value Common
Stock (the "Common Stock") for use at the 2006 Annual Meeting of Stockholders
to
be held on June 21, 2006, and at any adjournment thereof (the "Annual
Meeting").
This
Proxy Statement, the Notice of Annual Meeting of Stockholders, the Proxy
Card
and the Company's 2006 Form 10-K (which includes the Company's Annual Report
to
Stockholders) are first being sent to the Company's stockholders on or about
May
9, 2006.
About
the Annual Meeting
What
is the purpose of the Annual Meeting?
At
the
Annual Meeting, stockholders will act upon the matters outlined in the
accompanying notice of meeting, including the election of directors. In
addition, the Company’s management will report on the performance of the Company
during fiscal 2006 and respond to appropriate questions from
stockholders.
Who
is entitled to vote?
Only
stockholders of record at the close of business on the record date, April
28,
2006, are entitled to receive notice of the annual meeting and to vote the
shares of common stock that they held on that date at the meeting, or any
postponement or adjournment of the meeting. Each outstanding share entitles
its
holder to cast one vote on each matter to be voted upon.
Please
note that if you hold your shares in “street name” (that is, through a broker or
other nominee), you will need to bring appropriate documentation from your
broker or nominee to vote personally at the meeting.
What
constitutes a quorum?
The
presence at the meeting, in person or by proxy, of the holders of a majority
of
the shares of common stock outstanding on the record date will constitute
a
quorum, permitting the meeting to conduct its business. As of the record
date,
5,017,046 shares of common stock of the Company were outstanding. Proxies
received but marked as abstentions and broker non-votes will
be
included
in the calculation of the number of shares considered to be present at the
meeting for purposes of determining the presence of a quorum. A “broker
non-vote” occurs when a broker or other nominee indicates on the proxy card that
it does not have discretionary authority to vote on a particular
matter.
How
do I vote?
If
you
complete and properly sign the accompanying proxy card and return it to the
Company, it will be voted as you direct. If you are a registered stockholder
and
attend the meeting, you may deliver your completed proxy card in person.
“Street
name” stockholders who wish to vote at the meeting will need to obtain and vote
a proxy from the institution that holds their shares. The Company has made
proxy
statements, proxies and annual reports available to the nominee institutions
for
delivery to “street name” stockholders.
Can
I change my vote after I return my proxy card?
Yes.
Even
after you have submitted your proxy, you may change your vote at any time
before
the proxy is exercised by filing with the secretary of the Company either
a
notice of revocation or a duly executed proxy, bearing a later date. The
powers
of the proxy holders will be suspended if you attend the meeting in person
and
so request, although attendance at the meeting will not by itself revoke
a
previously granted proxy.
What
are the Board’s recommendations?
Unless
you give other instructions on your proxy card, the persons named as proxy
holders on the proxy card will vote in accordance with the recommendations
of
the Board of Directors. The Board’s recommendation is set forth together with
the description of each item in this proxy statement. The Board recommends
a
vote:
1)
“For”
election of the nominated slate of 3 Class II directors; and
2)
“For”
approving the 2006 Equity Incentive Plan; and
3)
“For”
ratification of the appointment of Holtz Rubenstein Reminick LLP, as the
Company’s independent public accountants for the fiscal year ending January 31,
2007.
With
respect to any other matter that properly comes before the meeting, the proxy
holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
What
vote is required to approve each item?
Election
of Directors.
The
affirmative vote of a plurality of the votes cast at the meeting is required
for
the election of directors. A properly executed proxy marked “WITHOD AUTHORITY”
with respect to the election of one or more directors will not be voted with
respect to the director or directors indicated. Abstentions and broker non-votes
will have no impact on the election of directors except to the extent failure
to
vote for an individual results in another individual receiving a larger
proportion of votes. The Company’s certificate of incorporation does not provide
for cumulative voting in the election of directors.
Ratification
of Independent Auditors and Other Items.
For the
ratification of the independent auditors and any other item voted upon at
the
annual meeting, assuming that a quorum is present,
the
affirmative vote of the holders of a majority of the shares represented in
person or by proxy will be required for approval. Abstentions will have the
same
effect as a negative vote. Broker non-votes will be treated as a vote not cast
and will have no effect on the outcome of the vote.
Ratification
of the 2006 Equity Incentive Plan and other Matters.
The
affirmative vote of holders of a majority of the issued and outstanding shares
of common stock will be required for approval of the Company’s 2006 Equity
Incentive Plan. Abstentions will have the same effect as a negative note. Broker
non-votes will be treated as a vote not cast and will have the same effect
as a
negative vote.
Is
my vote confidential?
Yes.
It
is our policy that all stockholder meeting proxies, ballots, and voting records
that identify the vote of a particular stockholder are confidential. The vote
of
any stockholder will not be disclosed to any third party before the final vote
count at the annual stockholders’ meeting except: (i) to meet legal
requirements; (ii) to assert claims for or defend claims against the Company;
(iii) to allow the inspectors of election to certify the results of the
stockholder vote; (iv) if a proxy solicitation in opposition to the Board of
Directors takes place; or (v) to respond to stockholders who have written
comments on proxy cards or who have requested disclosure.
ANNUAL
REPORT AND FORM 10-K
Will
I receive a copy of the Company’s Annual Report?
We
have
mailed you the Annual Report and 10-K for the fiscal year ended January 31,
2006, with this Proxy Statement. The Annual Report includes the Company’s
audited financial statements, along with other financial and product
information. We urge you to read it carefully.
How
can I receive a copy of our Annual Report and Form 10-K?
You
can
obtain, free of charge, a copy of our Annual Report and Form 10-K for the fiscal
year ended January 31, 2006, which we recently filed with the Securities and
Exchange Commission, by writing to:
Corporate
Secretary
Lakeland
Industries, Inc.
701
Koehler Avenue, Suite 7
Ronkonkoma,
NY 11779
You
can
also obtain a copy of our Annual Report, Form 10-K and other periodic filings
with the Securities and Exchange Commission (“SEC”) on our Internet site at
www.lakeland.com
at the
Financial Information heading then the subheading “All SEC Filings”. Our Form
10-K and other SEC filings mentioned above are also available from the SEC’s
EDGAR database at www.sec.gov.
Who
will bear the costs of soliciting proxies for the Annual
Meeting?
The
Cost
of soliciting proxies for the Annual Meeting will be borne by us. In addition
to
the use of the mails, proxies may be solicited personally or by telephone by
officers and employees of the Company who will not receive any additional
compensation for their services. Proxies and proxy
material
will also be distributed at our expense by brokers, nominees, custodians,
and
other similar parties.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
How
much stock do our directors and officers own?
The
following table sets forth information as of April 28, 2006, with respect
to
beneficial ownership of our Common Stock by all persons known by us to: (i)
own
beneficially more than 5% of the Common Stock; (ii) by each of the named
executive officers of the Company; (iii) by each director and nominee for
director of the Company; and (iv) by and all directors and executive officers
of
the Company as a group. All persons listed have sole voting and investment
power
with respect to their shares of Common Stock. All share amounts have been
adjusted for the 1 for 10 stock distributions to shareholders of record on
April
30, 2005, July 31, 2003 and 2002.
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Name
and Address
Beneficial
Owner
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Number
of Common
Shares
Beneficially
Owned
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Percent
of
Class
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Title
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||
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Raymond
J. Smith
701-7
Koehler Ave.
Ronkonkoma,
NY 11779
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479,493
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9.56
%
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Chairman
of the Board of
Directors
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||
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Christopher
J. Ryan
701-7
Koehler Ave.
Ronkonkoma,
NY 11779
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324,422
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6.47
%
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Chief
Executive
Officer,
President,
Secretary,
General
Counsel
and Director
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John
J. Collins, Jr.
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103,728(1)
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2.07
%
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Director
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||
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Eric
O. Hallman
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37,112 (1)
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0.74
%
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Director
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Michael
E. Cirenza
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550(3)
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.01%
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Director
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Stephen
M. Bachelder
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7,250(2)
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.15%
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Director
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John
Kreft
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5,500(2)
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.11%
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Director
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Gary
Pokrassa
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2,740
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.05%
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Chief
Financial
Officer
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||
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All
officers and directors
As
a group (12 persons)
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962,126
(4)
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19.2%
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|||
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Royce
& Associates, LLC
1414
Avenue of the Americas
New
York, NY 10019
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316,700
(5)
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6.31%
|
__________________________
Included
in the above are fully exercisable options to purchase the Company's common
stock, as follows:
(1)
1,210 shares granted on June 18, 2003 and 1,331 shares granted on June 21,
2000 to each of Mr. Hallman and Mr. Collins, current directors;
(2)
5,500 shares granted November 19, 2004 to each Mr. Bachelder and Mr.
Kreft, current directors;
(3)
550 shares granted June 18, 2003, to Michael Cirenza, a current
director;
(4)
17,963 shares granted between June 21, 2000 and November 19, 2004, which
also
includes 1,331
option shares outstanding to Walter J. Raleigh, a former director;
(5)
According to a Schedule 13G filed with the SEC on January 30, 2006, on
behalf of Royce & Associates,
LLC (“Royce”), Royce possesses sole investment and voting power over the
above
shares.
We
operate within a comprehensive plan of corporate governance for the purpose
of
defining responsibilities, setting high standards of professional and personal
conduct, and assuring compliance with such responsibilities and standards.
We
regularly monitor developments in the area of corporate governance and have
done
so since the year 2000. In July 2002, Congress passed the Sarbanes-Oxley
Act of
2002, which, among other things, establishes or provides the basis for a
number
of new corporate governance standards and disclosure requirements. In addition,
the Nasdaq Stock Market (“Nasdaq”) has also adopted changes to its corporate
governance and listing requirements.
Codes
|
·
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We
have adopted a “Code of Ethics” (please refer to Appendix B in this Proxy
Statement). This Code applies to all directors, officers, and employees
of
our Company. Information concerning any alleged violations are
to be
reported in writing to Michael Cirenza, EVP and CFO Country-Life,
LLC, 180
Vanderbilt Motor Parkway, Hauppauge, NY 11788. Mr. Cirenza is an
independent director and member of the Audit Committee. Additional
copies
of our “Code of Ethics” for Directors, Officers, and Employee,s our “Audit
Committee Charter”(please also refer to Appendix A in This Proxy
Statement) and our Nominating Committee Charter can be obtained
by writing
to Secretary, Lakeland Industries, Inc. 701Koehler Avenue, Suite
7,
Ronkonkoma, NY 11743, or visit our website at www.lakeland.com
under
“Corporate Governance”.
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·
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We
intend to satisfy the disclosure requirement under Item 5.05 (c)
of form
8-K regarding certain amendments to, or waivers from a provision
of this
code of ethics by posting such information on our website, at the
address
and location specified above, within four business days of such
amendment
or waiver.
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Shareholder
Communication with Members of the Board of Directors
|
·
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You
can contact any of our directors by writing them: Board of Directors,
c/o
Corporate Secretary’s Office, Lakeland Industries, Inc., 701 Koehler
Avenue, Suite 7, Ronkonkoma, NY 11779. Employees and others who
wish to
contact the Board or any member of the Audit Committee may do so
anonymously, if they wish, by using this address. Such correspondence
will
not be screened and will be forwarded in its
entirety.
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Personal
Loans to Executive Officers and Directors
|
·
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The
Company does not make loans to our directors or officers and complies
with
and will operate in a manner consistent with an act of legislation
outlawing extensions of credit in the form of personal loans to
or for its
directors and executive officers.
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Director
and Executive Officer Stock Transactions
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·
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Under
the regulations of the Securities and Exchange Commission (“SEC”),
directors and executive officers are required to file notice with
the SEC
within two (2) business days of any purchase or sale of the Company’s
stock. Information on filings made by any of
our
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directors
or executive officers can be found on the Company’s web site at
http://www.lakeland.com
under “Financial Information” then
“Insiders.”
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Stockholder
Approval of Equity Compensation Plans
|
·
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The
Company requires stockholder approval of all Company equity compensation
plans, and amendments thereto, including any re-pricing of options
contemplated by the Company, whenever such approval is necessary
under
NASDAQ corporate governance rules.
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Board
Attendance
|
·
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Each
member of the Board of Directors is expected to make a reasonable
effort
to attend all meetings of the Board of Directors, all applicable
committee
meetings, and each annual meeting of shareholders. While no formal
policy
with respect to attendance has been adopted, attendance at these
meetings
is encouraged and expected. All members of the Board of Directors
attended
the June, 2005 Annual Meeting of Shareholders and each of the current
members of the Board of Directors is expected to attend the June
21, 2006
Annual Meeting of Shareholders. During fiscal 2006, the Board of
Directors
met on four occasions. All directors attended at least seventy-five
percent of the aggregate number of meetings of the Board and Board
committees on which they served.
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Governance
Principles
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·
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Lakeland
has long upheld a set of basic beliefs to guide our actions. Among
those
beliefs is the responsibility to conduct ourselves with the highest
standards of ethical behavior when relating to customers, suppliers,
employees, investors and the communities where we work. Five of
our seven
directors are independent as defined by the SEC and NASDAQ. We
have three
director committees - Nominating, Compensation, and Audit - and
all three
committees are staffed only by independent directors. These three
Committees and their charters are more fully described on pages
10-11 and
Appendices A and B.
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Proposal
1
(Item
1 on Proxy Card)
Our
Certificate of Incorporation provides for three classes of directors with
staggered terms of office and provides that upon the expiration of the term
of
office for a class of directors, nominees for each class shall be elected
for a
term of three years to serve until the election and qualification of their
successors or until their earlier resignation, death or removal from office.
Our
Certificate of Incorporation and our By-Laws also provide that each class
of
directors shall be nearly equal in number as possible and consistent with
this
rule that the Board shall allocate each newly created directorship to that
of
the available classes whose term of office is due to expire at the earliest
date
following such allocation. We currently have three Class I directors, three
Class II directors and one Class III director. At the 2006 Annual Meeting
there
are three nominees for director in Class II. The incumbent Class I and Class
III
directors have two years and one year, respectively, remaining on their terms
of
office.
We
have
no reason to believe that the nominees will be disqualified or unable to
serve,
or will refuse to serve if elected. However, if a nominee is unable or unwilling
to accept election, the proxies will be voted for such substitute as our
Board
of Directors may select. It is intended that the shares represented by proxies
will be voted, in the absence of contrary instructions, for the nominees
listed
in Class II in the following table. The Board of Directors has nominated
and
Management
recommends the election of the persons listed in the following table as Class
II
directors. The table also sets forth the names of the one director in Class
III
and the three directors in Class I whose terms of office have not expired,
their
ages, their positions with the Company and the period each has served as
a
director of the Company. There are no family relationships among the Board
members.
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Position
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||||||
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With
the
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Director
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|||||
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Name
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Age
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Company
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Since
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|||
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DIRECTOR
NOMINEES - CLASS II
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||||||
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Nominees
for Three-Year Term Expiring in June 2009
|
||||||
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__________________________________________
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||||||
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John
J. Collins, Jr.
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63
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Director
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1986
|
|||
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Eric
O. Hallman
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62
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Director
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1982
|
|||
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Stephen
M. Bachelder
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55
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Director
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2004
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|||
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||||||
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INCUMBENT
DIRECTOR - CLASS III
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||||||
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One
Year remaining on Term Expiring in June, 2007
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||||||
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_________________________________________
|
||||||
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Raymond
J. Smith
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67
|
Chairman
of the Board
|
1982
|
|||
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of
Directors
|
||||||
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|
||||||
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INCUMBENT
DIRECTORS - CLASS I
|
||||||
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Two
Years remaining on Term Expiring in June 2008
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||||||
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_________________________________________
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||||||
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Christopher
J. Ryan
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54
|
Chief
Executive Officer,
|
1986
|
|||
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President,
General Counsel,
|
|||||
|
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Secretary
and Director
|
|||||
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|
||||||
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Michael
E. Cirenza
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50
|
Director
|
2003
|
|||
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John
Kreft
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55
|
Director
|
2004
|
|||
The
principal occupations and employment of the nominees for director and for
the
directors continuing in office are set forth below:
Director
Nominees
John
J. Collins, Jr.
was
Executive Vice President of Chapdelaine GSI, a government securities firm,
from
1977 to January 1987. He was Senior Vice President of Liberty Brokerage,
a
government securities firm, between January 1987 and November 1998. Presently,
Mr. Collins is self-employed, managing a direct investment portfolio of
small
business enterprises for his own accounts. Mr. Collins has served as one
of our
directors since 1986 and his term as a director will expire at our annual
meeting of stockholders in June 2006.
Eric
O. Hallman
was
President of Naess Hallman Inc., a ship brokering firm, from 1974 to 1991.
Mr.
Hallman was also affiliated between 1991 and 1992 with Finanshuset (U.S.A.),
Inc., a ship brokering and international financial services and consulting
concern, and was an officer of Sylvan Lawrence, a real estate development
company, between 1992 and 1998. Between 1998 and 2000, Mr. Hallman was
President
of PREMCO, a real estate management company, and currently is Comptroller
of the
law firm Murphy, Bartol & O’Brien, LLP. Mr. Hallman has served as one of our
directors since our incorporation in 1982 and his term as a director will
expire
at our annual meeting of stockholders in June 2006.
Stephen
M. Bachelder
has been
with Swiftview, Inc. a Portland, Oregon based software company since 1999
and
President since 2002. From 1991to 1999 Mr. Bachelder ran a consulting firm
advising software and hardware based companies in the Pacific Northwest.
Mr.
Bachelder was the president and owner of an apparel company, Bachelder
Imports,
from 1982 to 1991 and worked in executive positions for Giant Foods, Inc.
and
Pepsico, Inc. between 1976 and 1982. Mr. Bachelder is a 1976 Graduate of
the
Harvard Business School. Mr. Bachelder has served as a director since November
17, 2004 and his term as a director will expire at our annual meeting of
stockholders in June 2006.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE
NOMINEES LISTED ABOVE.
Incumbent
Directors
Raymond
J. Smith,
one of
our co-founders, has been Chairman of our board of directors since our
incorporation in 1982 and was President from 1982 to January 31, 2004. Mr.
Smith’s term as a director will expire at our annual meeting of stockholders in
June 2007.
Christopher
J. Ryan
has
served as our Chief Executive Officer and President since February 1, 2004
Secretary since April 1991, General Counsel since February 2000 and a director
since May 1986. Mr. Ryan was our Executive Vice President - Finance from
May
1986 until becoming our President on February 1, 2004 and his term as director
will expire at our annual meeting of stockholders in 2008.
Michael
E. Cirenza
has been
the Executive Vice President and Chief Financial Officer of Country Life,
LLC, a
manufacturer and distributor of vitamins and nutritional supplements, since
September 2002. Mr. Cirenza was the Chief Financial Officer and Chief Operating
Officer of Resilien, Inc., an independent distributor of computers, components
and peripherals from January 2000 to September 2002. He was an Audit Partner
with the international accounting firm of Grant Thornton LLP from August
1993 to
January 2000 and an Audit Manager with Grant Thornton LLP from May 1989 to
August 1993. Mr. Cirenza was employed by the international accounting firm
of
Price Waterhouse from July 1980 to May 1989. Mr. Cirenza is a Certified Public
Accountant in the State of New York and a member of the American Institute
of
Certified Public Accountants and the New York State Society of Certified
Public
Accountants. Mr. Cirenza has
served
as
one of our directors since June 18, 2003 and his term as a director will
expire
at our annual meeting of stockholders in 2008.
John
Kreft
has been
President of Kreft Interests, a Houston based private investment firm, since
2001. Between 1998 and 2001, he was CEO of Baker Kreft Securities, LLC, a
NASD
broker-dealer. From 1996 to 1998, he was a co-founder and manager of TriCap
Partners, a Houston based venture capital firm. From 1994 to 1996 he was
employed as a director at Alex Brown and Sons. He also held senior positions
at
CS First Boston including employment as a managing director from 1989 to
1994.
Mr. Kreft graduated from the Wharton School of Business in 1975. Mr. Kreft
has
served as a director since November 17, 2004 and his term as a director will
expire at our annual meeting of Stockholders June 2008.
Legal
Proceedings
No
officer or director was known to be involved in any legal proceeding involving
bankruptcy, criminal activity, securities or banking issues, or commodities
violations.
Certain
Relationships and Transactions
There
are
no transactions, or series of similar transactions, either during this fiscal
year 2006 or currently proposed, to which the Company was or is to be a party,
in which the amount involved exceeds $60,000 and in which any director, nominee
for director, executive officer, 5% stockholder or any immediate family member
of any of the foregoing had, or will have, a direct or indirect material
interest, other than Paul Smith our Vice President of sales is the son of
Raymond Smith the Chairman of the Board of Directors. Other than the
relationship between Raymond Smith and Paul Smith there are no known family
relationships between any of the Company’s officers or directors.
Potential
Anti-Takeover Effect
The
Board
of Directors has the authority, without further approval of our stockholders,
to
issue preferred shares (the “Preferred Shares”) having such rights, preferences
and privileges as the Board of Directors may determine. Any such issuance of
Preferred Shares could, under certain circumstances, have the effect of delaying
or preventing a change in control of the Company and may adversely affect the
rights of holders of Common Stock. In addition, we are subject to Delaware
statutes regulating business combinations, takeovers and control share
acquisitions which might hinder or delay a change in control of the Company.
Anti-takeover provisions that could be included in the Preferred Shares when
issued and the Delaware statutes regulating business combinations, takeovers
and
control share acquisitions can have a depressive effect on the market price
of
our securities and can limit stockholders’ ability to receive a premium on their
shares by discouraging takeover and tender offer bids.
The
Directors of the Company serve staggered three-year terms. Our Restated
Certificate of Incorporation sets forth a provision that requires certain
business combinations to be approved by at least two-thirds of the Company’s
voting securities, unless two-thirds of the members of the Board of Directors
have approved the transaction, and further requires approval of holders of
two-thirds of the Company’s voting shares to amend these provisions. In
addition, our stockholders have authorized an Employee Stock Ownership Plan
(“ESOP”). In the past, other companies have used similar plans to hinder or
prevent a takeover situation. The Company has also entered into employment
contracts with certain executive officers providing for lump sum
payments
of contracted salaries pursuant to various formulas, should there be a change
in
control of the Company. These factors could have an anti-takeover effect by
making it more difficult to acquire the Company by means of a tender offer,
a
proxy contest or otherwise or the removal of incumbent officers and directors.
These provisions could delay, deter or prevent a tender offer or takeover
attempt that a stockholder might consider in his or her best interest, including
those attempts that might result in a premium over the market price for the
Common Stock held by our stockholders.
Director
Independence and Other Matters
The
board
of directors has determined each of the following directors to be an
“independent director” as such term is defined in Rule 4200(a)(15) of the
listing standards of the National Association of Securities Dealers (“NASD”):
John Kreft, John J. Collins, Eric O. Hallman, Stephen Bachelder, and Michael
Cirenza.
The
board
has also determined that each member of the three committees of the board meets
the independence requirements applicable to those committees prescribed by
the
NASD and the Securities and Exchange Commission (“SEC”).
COMMITTEES
OF THE BOARD OF DIRECTORS
1-
The
Audit Committee
was
formed in September, 1987 and is responsible for recommending to the Board
of
Directors the appointment of independent auditors for the fiscal year, reviewing
with the independent auditors the scope of their proposed and completed audits,
reviewing our financial management, its independent auditors and other matters
relating to audits and the adequacy of our internal control structure. The
committee is made up of only independent directors who are: Michael E. Cirenza,
(Chairman), John J. Collins, Jr., Eric O. Hallman, John Kreft and Stephen M.
Bachelder. The committee met five times during the year ended January 31, 2006.
2-
Compensation
Committee
is responsible for evaluating the performance of our management,
fixing or determining the method of fixing compensation of our salaried
employees, administering the Director Stock Option and Employee 401-K Plan,
and
reviewing significant amendments to a subsidiary's employee pension benefit
plan. The committee is made up of only independent directors who are: Eric
O.
Hallman, (Chairman), John Kreft, John J. Collins, Michael E. Cirenza and
Stephen
M. Bachelder.
3-
Nominating Committee. Effective
April 6, 2004 the Board of Directors established a separate nominating committee
consisting of only the independent directors who are Messrs. Bachelder, Kreft,
Collins, Hallman, and Cirenza. The Nominating Committee makes recommendations
to
the Board regarding the size and composition of the Board. The Nominating
Committee is responsible for reviewing with the Board from time to time the
appropriate skills and characteristics required of Board members in the context
of the current size and make-up of the Board. This assessment includes issues
of
understanding of and achievements in manufacturing, finance, accounting,
and
marketing, and international experience and culture. These factors, and any
other qualifications considered useful by the Committee are reviewed in the
context of an assessment of the perceived needs of the Board at a particular
point in time. As a result, the priorities and emphasis of the Nominating
Committee and of the Board may change from time to time to take into account
changes in business and other trends, and the portfolio of skills and experience
of current and prospective Board members. Therefore, while focused on the
achievement and the ability of potential candidates to make a positive
contribution with respect to such factors, the Nominating Committee has not
established any specific minimum criteria or
qualification
that a nominee must possess. The Nominating Committee establishes procedures
for
the nomination process, recommends candidates for election to the Board and
also
nominates officers for election by the Board.
The
Nominating Committee will consider nominees to the Board recommended by
stockholders. Such recommendations must be in writing and sent to our Secretary
no later than January 31st
of the
calendar year in which the Annual Meeting is to be held, accompanied by a
detailed description of the proposed nominee’s principal occupation and his or
her other qualifications which, in the stockholder’s opinion, make such a person
a suitable candidate for nomination to the Board. The Committee didn’t meet
during the year ended January 31, 2006.
Compensation
Committee Interlocks and Insider Participation
Members
of the Compensation Committee are independent outside directors who do not
serve
in any other capacity with respect to the Company or any of its subsidiaries.
The members of the Compensation Committee are Eric O. Hallman, (Chairman)
John
Kreft, John J. Collins, Jr., Michael E. Cirenza and Stephen M. Bachelder.
No
Lakeland executive officer has ever served or presently serves on the
compensation committee (or equivalent), or board of directors of another
entity
whose executive officers(s) served on Lakeland’s Compensation Committee. Messrs.
Collins and Hallman were partners of POMS Holding Co. and Messrs. Collins,
and
Hallman were members of River Group Holding Co., LLC, and An Qiu Holding
Co.,
LLC. See “Certain Relationships and Related Transactions”.
REPORT
OF THE AUDIT COMMITTEE
The
following Report of the Audit Committee does not constitute soliciting material
and should not be deemed filed or incorporated by reference into any of our
filings under the Securities Act of 1933 or the Securities Exchange Act of
1934,
except to the extent that we specifically incorporate this Report by reference
therein.
During
the winter of 2000, the Audit Committee of the Board of Directors developed
a
charter for the Committee, which was approved by the full Board of Directors
on
June 21, 2000. The complete text of this charter, which reflects standards
set
forth in the regulations of the SEC and NASDAQ rules, is for your information
reproduced in Appendix A in this Proxy Statement.
As
set
forth in more detail in the charter, the Audit Committee’s primary duties and
responsibilities fall into three broad categories:
First,
the Committee serves as an independent and objective party to monitor our
financial
reporting
process and internal control system;
Second,
the Committee is responsible for reviewing and appraising the audit efforts
of
our independent accountants and internal auditing department; this includes
matters concerning the relationship between the Company and its outside
auditors, including recommending their appointment or removal; reviewing
the
scope of their audit services and related fees, as well as any other services
being provided to us and determining whether the outside auditors are
independent (based in part on the annual letter provided to us pursuant to
Independence Standards Board Standard No. 1); and
Third,
to
provide an open avenue of communication among the independent accountants,
financial and senior management, and the Board of Directors.
The
Committee has implemented procedures to ensure that during the course of
each
fiscal year it devotes the attention that it deems necessary or appropriate
to
each of the matters assigned to it under the Committee’s charter. To carry out
its responsibilities, the Committee met five times during the year ended
January
31, 2006.
In
overseeing the preparation of our financial statements, the Committee met
with
both management who has the primary responsibility for the financial statements,
the reporting process and the systems of internal control, and our outside
auditors who are responsible for expressing an opinion on the conformity
of our
audited financial statements under generally accepted auditing standards,
and
reviewing and discussing all financial statements under generally accepted
auditing standards, and reviewing and discussing all financial statements
prior
to their issuance and to discussing significant accounting issues. Management
advised the Committee that all financial statements were prepared in accordance
with generally accepted accounting principles, and the Committee discussed
the
statements with both management and the outside auditors. The Committee’s review
included discussion with the outside auditors of matters required to be
discussed pursuant to Statement on Auditing Standards Nos. 61 and 90,
“Communication With Audit Committees”.
With
respect to our outside auditors, the Committee, among other things, discussed
with Holtz Rubenstein Reminick LLP matters relating to its independence,
including the disclosures made to the Committee and received written disclosure
and the letter from the independent auditors as required by the Independence
Standards Board Standard No. 1, “Independence Discussions with Audit
Committees”.
The
Audit
Committee includes at least one independent director who is determined by
the
Board to meet the qualifications of an “audit committee financial expert” in
accordance with SEC Rules. Michael E. Cirenza is the independent director
who
has been determined to be an audit committee financial expert. Stockholders
should understand that this designation is an SEC
disclosure
requirement related to Mr. Cirenza’s experience and understanding with respect
to certain accounting and auditing matters. The designation does not impose
on
Mr. Cirenza any duties, obligations or liability that are greater than are
generally imposed on him as a member of the Audit Committee and the Board,
and
his designation as an audit committee financial expert pursuant to this SEC
requirement does not affect the duties, obligations or liability of any other
member of the Audit Committee.
On
the
basis of these reviews and discussions, the Committee recommended to the
Board
of Directors that the Board approve the inclusion of our audited financial
statements in the Company’s Annual Report on Form 10-K for the fiscal year ended
January 31, 2006, for filing with the Securities and Exchange Commission.
The
Committee and the Board have also recommended the selection of our independent
auditors.
THE
AUDIT COMMITTEE:
Michael
E. Cirenza
John
J.
Collins, Jr.
Eric
O.
Hallman
Stephen
M. Bachelder
John
Kreft
Fees
billed to the Company by Holtz Rubenstein Reminick LLP and
PricewaterhouseCoopers LLP for the years ended January 31, 2006 and
2005:
The
Company incurred the fees shown in the following table for professional services
provided by Holtz Rubenstein Reminick LLP (“HRR”) and PricewaterhouseCoopers LLP
(“PWC”), respectively for 2006 and 2005:
|
HRR
|
HRR
|
-----PWC-----
|
||||||||
|
2006
|
2005
|
2005
|
||||||||
|
Audit
Fees (1)
|
$
|
191,693
|
$
|
9,000
|
$
|
80,600
|
||||
|
Tax
Fees (2)
|
34,866
|
--
|
29,625
|
|||||||
|
Secondary
offering
|
0
|
--
|
222,816
|
|||||||
|
Acquisition
Audit
|
17,520
|
|||||||||
|
All
Other Fees (3)
|
$
|
6100
|
50
|
42,000
|
||||||
|
Total
(4)
|
$
|
250,179
|
$
|
9,050
|
$
|
375,041
|
||||
Audit
Fees:
1) Audit
fees include audit of the Company’s financial statements and the review of the
Company’s quarterly financial statements included in the Quarterly Reports on
Form 10-Q.
2)
Tax
fees
relate to the preparation of tax returns and other tax compliance
activities.
3)
All
other
fees consist of regulatory advisory services and expense
reimbursement.
4)
Aggregate
fees for professional services rendered by Holtz Rubenstein Reminick LLP
and
PricewaterhouseCoopers LLP in connection with its audit of our consolidated
financial statements as of and for the years ended January 31, 2006 and
2005,
respectively, and its limited reviews of our unaudited condensed consolidated
interim financial statements were $173,000 and $121,000.
Financial
Information Systems Design and Implementation Fees:
During
the years ended January 31, 2006 and 2005, Holtz Rubenstein Reminick LLP
and
PricewaterhouseCoopers LLP, respectively, rendered no professional services
to
us in connection with the design and implementation of financial information
systems.
|
PROPOSAL
TO APPROVE THE LAKELAND INDUSTRIES INC 2006
INCENTIVE
PLAN AND THE PERFORMANCE GOALS SET FORTH
THEREIN
|
(Item
2
on Proxy Card)
General
The Board of Directors adopted the Lakeland Industries, Inc 2006 Incentive
Plan
(the “2006 Incentive Plan” or the “Plan”) on April 11, 2006, subject to approval
of the Company’s shareholders. The 2006 Incentive Plan is intended to provide
equity-based compensation to executive officers and other key employees of
the
Company, its subsidiaries and affiliates. The Plan also provides for the
establishment of performance goals that will be used to define the vesting
period for performance-based equity awards granted under the Plan. If approved
by shareholders at the Annual Meeting, the Plan will become effective
immediately. The Plan and the performance goals are discussed in more detail
below. The full text of the 2006 Incentive Plan is included as Exhibit C
to this
Proxy Statement. The following description of the material features of the
2006
Incentive Plan is qualified in its entirety by reference to that text.
The
grant or award of equity-based incentives is intended to enable the Company
to
attract, retain and reward key employees and to strengthen the mutuality
of
interests between key employees and the Company’s shareholders. Beginning in
2006, the Company plans to grant restricted stock in lieu of stock options
as
the primary equity-based incentive for executives and other key employees.
The
Company believes that, among other benefits, the transition from stock options
to restricted stock awards will result in a better alignment between the
interests of executives and other key employees and the Company’s shareholders,
will permit recipients to more easily understand the value of the grants
received and will promote the accuracy and transparency of the Company’s
financial reporting. Performance goals will be established by the Compensation
Committee of the Board of Directors (the “Committee”).
Shareholder
Approval Requirements
The Plan is being submitted to the Company’s shareholders for approval pursuant
to Sections 162(m) and 422 of the Internal Revenue Code, as amended (the
“Code”). Section 162(m) of the Code limits to $1 million
per year the deduction allowed for Federal income tax purposes for remuneration
paid to a “covered employee” of a public company (“Deduction Limit”). Under
Section 162(m), the term “covered employee” includes the chief executive
officer and the four other most highly compensated executive officers. The
Deduction Limit applies to remuneration which does not qualify for any of
the
limited number of exceptions provided for in Section 162(m).
Under Section 162(m), the Deduction Limit does not apply to
“performance-based compensation” if the following requirements are not met:
(a) the compensation must be payable on account of the attainment of one or
more pre-established objective performance goals; (b) the performance goals
must be established by a compensation committee of the Board of Directors
that
is comprised solely of two or more “outside directors”; (c) the material
terms of the compensation and performance goals must be disclosed to and
approved by shareholders before
payment;
and (d) the compensation committee must certify in writing that the
performance goals have been satisfied prior to payment.
However,
restricted stock that vests after the expiration of a specific period of
time,
rather than upon the achievement of pre-established performance goals, will
not
be exempt from the Deduction Limit, and the income realized in connection
with
such time-based restricted stock will be included, together with other
non-exempt compensation, to determine whether a specific covered employee’s
compensation exceeds the Deduction Limit.
Stock options, on the other hand, are generally treated as “performance-based
compensation” which is exempt from the Deduction Limit of Section 162(m),
provided that the exercise price is equal to or greater than the fair market
value of the employer’s stock on the date of grant. Under these circumstances,
the amount earned, if any, results solely from an increase in the employer’s
stock price. The awards must be approved by a board committee comprised solely
of outside directors. Further, to qualify for the exemption, the material
terms
of the plan must be disclosed to and approved by shareholders and the plan
must
state the maximum number of shares that may be awarded to any employee under
the
plan within a specified period.
It is the Company’s policy to structure its incentive compensation programs to
satisfy the requirements for the “performance-based compensation” exception to
the Deduction Limit and, thus, to preserve the full deductibility of all
compensation paid thereunder, to the extent practicable. As a consequence,
the
Board has directed that the 2006 Incentive Plan and the performance goals
be
submitted to the Company’s shareholders for approval in order to satisfy the
requirements for the “performance-based compensation” exception to the Deduction
Limit for all grants made to covered employees under the Plan, other than
restricted stock which vests on a time-based formula. Pursuant to the 2006
Incentive Plan, all grants will be determined by the Committee. If approved
by
shareholders, the Plan and the performance goals will become effective on
the
date of such approval.
If the shareholders fail to approve the 2006 Incentive Plan, the Plan will
not
become effective. In that event, the Board of Directors may consider adopting
other incentive programs without may shareholder approval, provided the Company
can do so in compliance with applicable laws, in order to maintain the
competitiveness of the Company’s executive compensation program, and some or all
of the compensation earned under such a program might likewise be subject
to the
Deduction Limit.
Administration
The 2006 Incentive Plan will be administered by the Committee, although under
the Plan the Committee may delegate aspects of the day-to-day administration
of
the Plan to officers, employees or Agents of the Company. The Committee consists
of not less than three directors of the Company, all of whom are “outside”
directors, as defined in Section 162(m) of the Code, and “non-employee”
directors, as defined in Rule 16b-3 under the Securities Exchange Act of
1934 (the “1934 Act”). Committee members serve at the pleasure of the Board.
The Committee will have full power to interpret and administer the 2006
Incentive Plan, and full authority to select the individuals to whom awards
will
be granted. It will determine the type and amount of awards to be granted,
the
consideration (if any) to be paid for such awards, the timing of such awards,
the terms and conditions of awards granted, and the terms and conditions
of the
related award agreements which will be entered into with any executive or
other
key
employee
to whom an award is granted under the Plan (“Participant”). As to time-based
restricted stock, the Committee will also determine the time periods and
other
conditions upon which such restricted shares will vest.
The Committee will also have the authority to adopt, alter, change and repeal
such rules, regulations, guidelines and practices governing the 2006 Incentive
Plan as it deems advisable, to interpret the terms and provisions of the
Plan
and any award issued under the Plan (and any award agreement relating thereto),
and otherwise to supervise the administration of the Plan.
Eligibility
Officers and other key employees of the Company and its subsidiaries and
affiliates (but excluding members of the Committee and any other person who
serves only as a director) who are responsible for or contribute to the
management, growth or profitability of the business of the Company, its
subsidiaries or affiliates (“Eligible Persons”) will be eligible to receive
awards under the Plan. “Affiliate” is defined under the Plan to mean any entity
(other than the Company and its subsidiaries) that is designated by the Board
as
a participating employer under the Plan.
Stock
Subject to the Plan
The total number of the Company’s Common Shares, $0.01 par value, reserved and
available for awards under the Plan is 230,000, subject to adjustment as
discussed below. All shares issued under the Plan will consist only of
authorized and unissued shares or treasury shares. The closing price of the
Company’s Common Shares on the NASDAQ on April 21, 2006, was $18.70 per share.
The categories and number of shares in each category presently contemplated
for
issuance under the Plan by the Committee are as follows:
|
Restricted
stock grants - employees
|
120,000
|
|
Restricted
stock grants - directors
|
40,000
|
|
Matching
award program
|
30,000
|
|
Bonus
in stock program - employees
|
30,000
|
|
Retainer
in stock program - directors
|
10,000
|
|
Total
|
230,000
|
No Participant may be granted awards under the Plan with respect to an
aggregate
of more than 20,000 shares of stock (subject to adjustment as described
below)
during any calendar year.
If any stock subject to any award granted under the Plan is forfeited,
or an
award otherwise terminates or expires without the issuance of stock, such
stock
will again be available for distribution in connection with future awards
under
the Plan, unless the Participant has received dividends or other “benefits of
ownership” with respect to such stock as defined in the Plan. In such a case,
the shares which were the subject of the award in question will not be
available
for future awards.
In the event of any merger, reorganization, consolidation, recapitalization,
share dividend, share split, reverse share split, combination of shares
or other
change in the corporate or capital structure of the Company affecting the
Company’s Common Shares, an appropriate substitution or adjustment will be made
in (i) the aggregate number of shares of stock reserved for
issuance
under
the
Plan, (ii) the maximum number of shares that may be subject to awards
granted under the Plan to any Eligible Person during any calendar year or
other
period, (iii) the number and option exercise price of shares subject to
outstanding options granted under the Plan, and (iv) the number of shares
subject to restricted stock awards granted under the Plan, as may be approved
by
the Committee to prevent dilution or enlargement of rights.
Restricted
Stock
Performance
Goals
For restricted stock awards that are performance based, the Committee will
from
time to time establish performance goals and other conditions that must be
satisfied as a condition to vesting under the Plan. Such performance goals,
which serve as guidelines only for the Committee members, may include one
or
more of the following measures, as determined by the Committee: Return on
Equity
(ROE), Return on Investment (ROI), Return on Assets (ROA), Sales, Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA), or Earnings
Per
Share (EPS). Performance goals may be measured on a Company-wide, subsidiary
or
business-unit basis, or any combination thereof, as determined by the Committee
and the Committee reserves the right to alter, amend or waive the necessity
for
achievement of specific goals in its discretion. Performance goals may also
reflect the performance of the Company, a subsidiary or business unit alone,
or
may involve a relative comparison of such performance to the performance
of a
peer group of entities or other external measure selected by the Committee.
As a
general matter, the Committee presently intends to establish goals that measure
performance over a three year period, at the end of which an evaluation will
be
made by the Committee, in its judgment, as to the degree to which the goals
have
been met. The Committee will designate, based on its judgment of Company
performance, one of the four categories for the stock plan: Zero, minimum,
baseline or maximum.
General
Terms and Conditions for Restricted Stock Awards
Restricted stock awarded under the Plan will be subject to the following
terms
and conditions and will contain such additional terms and conditions as the
Committee deems advisable:
|
|
•
|
The
purchase price will be determined by the Committee at the time
of grant
and may be equal to par value, zero or otherwise.
|
|
|
||
|
|
•
|
A
Participant who accepts the award of restricted stock must deliver
an
executed copy of the Restricted Stock Award Agreement to the Company
and
pay the required purchase price (if any).
|
|
|
||
|
|
•
|
Each
Participant will receive a stock certificate registered in his
or her name
that bears a legend referring to the terms, conditions and restrictions
applicable to the award.
|
|
|
||
|
|
•
|
The
stock certificates evidencing such shares of restricted stock with
a
related stock power will be delivered to and held by the Company
until the
restrictions have lapsed or any conditions to the vesting of such
award
have been satisfied.
|
|
|
||
|
|
•
|
At
the discretion of the Company, such stock may be held in book entry
form.
In such event, no stock certificates will be issued to the Participant.
|
|
|
|
stock
certificates will be issued to the Participant.
|
|
|
||
|
|
•
|
Restricted
stock awards may include either time-based or performance-based
restricted
stock, or both. Awards of time-based restricted stock will vest,
and all
restrictions thereon will terminate, upon the lapse of the period
of time
specified by the Committee at the time of grant, provided all other
conditions to vesting have been met. Performance-based restricted
stock
awards will vest and all restrictions thereon will terminate upon
the
certification by the Committee of the achievement of the specified
performance goals, provided all other conditions to vesting have
been met.
|
|
|
||
|
|
•
|
Except
as permitted by the Committee or by will or the laws of descent
and
distribution, a Participant will not be permitted to sell, transfer,
pledge, assign or otherwise encumber the shares of restricted stock.
|
|
|
||
|
|
•
|
Except
as provided in the Plan or the applicable award agreement, a Participant
will have all of the rights of a shareholder of the Company, including
the
right to vote the stock and the right to receive any dividends
declared by
the Board of Directors. At the time of the award, the Committee
may permit
or require the payment of cash dividends to be deferred and, if
the
Committee so determines, reinvested in additional restricted stock
to the
extent shares are then available or otherwise reinvested. Stock
dividends
will be treated as restricted stock subject to the same restrictions,
terms and conditions applicable to the Plan shares.
|
|
|
||
|
|
•
|
If
a Participant’s employment by the Company or any subsidiary or affiliate
terminates by reason of death or permanent disability, any restricted
stock held by such Participant at the time of death as to which
restrictions remain at the time of such death or permanent disability
shall immediately lapse. However, if, in the case of such death
or
disability the vesting of an award is conditioned on or subject
to the
achievement of specified performance goals, and such performance
goals
must be achieved prior to the earlier of the expiration of such
one year
period or the expiration date of the award, such stock will vest,
or such
restrictions shall lapse, as of the date of such death or disability.
The
balance of the restricted stock will be forfeited.
|
|
|
||
|
|
||
|
|
•
|
Unless
otherwise determined by the Committee, and except for a “qualifying
retirement” (discussed below), if a Participant’s employment by the
Company or any subsidiary or affiliate terminates for any reason
other
than death or disability, all restricted stock held by such Participant
which is unvested or subject to restriction at the time of such
termination will be immediately forfeited.
|
|
|
||
|
|
•
|
If
a Participant’s employment with the Company or any of its subsidiaries or
affiliates terminates for any reason other than death, disability
or the
involuntary termination for cause (as defined in the Plan), and
if
immediately prior thereto (i) the Participant is 55 years of age
or older, and (ii) the sum of the Participant’s age and completed
years of service as an employee of the Company or its subsidiaries
or
affiliates (disregarding fractions in both cases) totals 70 or
more (a
“qualifying retirement”), the following provisions will apply:
|
|
|
•
|
All
shares of restricted stock which have previously vested will be
free of
restrictions.
|
|
|
•
|
With
respect to any time-based restricted stock award which has not
vested,
effective as of the Participant’s retirement date: (a) fifty percent
(50%) of the award will remain in effect and, on the vesting date,
shall
become vested and free of restrictions; and (b) fifty percent
|
19
(50%)
of
the award will be terminated.
|
|
|||
|
|
•
|
With
respect to any performance-based restricted stock award which
has not
vested, effective as of the Participant’s retirement date: (a) fifty
percent (50%) of the award will remain in effect and will
vest upon the
achievement of the related performance goals (unless an award
expires
according to its terms prior to the satisfaction of the performance
goals,
in which event the award will terminate and applicable shares
of
restricted stock will be forfeited); and (b) fifty percent (50%) of
the award will terminate. However, in the case of the Chief
Executive
Officer or a member of his or her direct reporting group
who has given the
Company written notice at least one (1) full year prior to his or her
qualifying retirement, and all unvested performance-based
restricted
stock, and all of the shares covered by such awards will
remain in effect
and will vest upon the achievement of the related performance
goals
(unless an award expires according to its terms prior to
the satisfaction
of the performance goals, in which event the award will terminate
and
applicable shares of restricted stock will be forfeited).
|
|
If
the
Committee determines that a Participant is or has engaged in any
disqualifying
activity (as defined below), then the Participant will have the right
to receive
all shares of restricted stock which are vested as of the disqualification
date
and any award not yet vested as of the disqualification date will
terminate. Any
determination by the Committee will be final and conclusive. For
purposes of
this provision, the term “disqualifying activity include, among other
activities:
|
|
•
|
directly
or indirectly being an owner, officer, employee, advisor
or consultant to
a company that competes with the Company or its subsidiaries
or affiliates
to an extent deemed material by the Committee, or
|
|
|
|
|||
|
|
•
|
disclosure
to third parties or misuse of any confidential information
or trade
secrets of the Company, its subsidiaries or affiliates, or
|
|
|
|
|||
|
|
•
|
any
material violation of the Company’s Code of Business Conduct and Ethics or
any other agreement between the Company and the Participant,
or
|
|
|
|
|||
|
|
•
|
failure
in any material respect to perform assigned responsibilities
as an
employee of the Company or any of its subsidiaries or affiliates,
as
determined by the Committee, in its sole judgment, after
consulting with
the Chief Executive Officer.
|
|
|
|
|
The
ownership of less than 2% of the outstanding voting securities
of a
publicly traded corporation which competes with the Company
or any of its
subsidiaries or affiliates will not constitute a disqualifying
activity.
|
|
|
||
|
|
|
The
term “disqualifying date” is defined in the Plan as the earliest date as
of which the Participant engaged in any disqualifying activity,
as
determined by the Committee.
|
Amendments
and Termination
The Board may amend, alter or discontinue the Plan at any time, provided that
the rights under any award previously granted under the Plan may not be impaired
without the Participant’s consent. The Company will submit to the shareholders
of the Company, for their approval, any amendments to the Plan which require
shareholder approval, either by law or the rules and regulations of any
governmental authority or any stock exchange upon which the stock is then
traded. The Company’s Common Shares are currently listed on the National NASDAQ
market. In any event, subject to changes in law or other legal requirements
that
would permit otherwise, the 2006 Equity Incentive Plan may not be amended
without shareholder approval, to (a) increase the total number of shares of
stock that may be issued under the Plan or to any individual during any calendar
year (except for adjustments described above), (b) permit the granting of
stock options with option exercise prices lower than 100% of the fair market
value of the stock on the date of the grant, (c) modify the Plan’s
eligibility requirements or (d) change the performance goals which are
specified in the Plan and discussed under “Restricted Stock” above.
In
the case of any stock option award, the Company will not, without the
Participant’s consent, reduce the option exercise price relating to a stock
option or, reduce the purchase price (if any) of stock which is subject to
an
outstanding award; nor will any such amendment be made which would make the
applicable exemptions provided by Rule 16b-3 under the 1934 Act unavailable
to any person holding an award without that person’s consent. In addition, no
performance-based award may be amended if such amendment would adversely affect
the award’s qualification as performance-based compensation under
Section 162(m) of the Code.
Subject to the above provisions, the Board will have all necessary authority
to
amend the Plan to take into account changes in applicable securities, tax laws
and accounting rules, or otherwise as it seems necessary or appropriate.
Federal
Income Tax Consequences of the Equity Incentive Plan
The following is a brief summary of the general federal income tax consequences
of transactions under the Plan based on federal income tax laws in effect as
of
February 28, 2006. This summary is not intended to be exhaustive and does
not describe any foreign, state or local tax consequences.
Tax
Treatment of Restricted Stock
Unless a Participant makes an election under Section 83(b) of the Internal
Revenue Code, restricted stock awards are not included in his or her income
until the award vests. At vesting, the Participant is taxed, at ordinary income
rates, on the fair market value of the stock on the vesting date. Any subsequent
appreciation in the stock price would be taxed at capital gains rates (assuming
the stock has been held for a period of more than one (1) year from the
date of vesting).
Within 30 days of receipt of a restricted stock award, a Participant may
elect, under Section 83(b) of the Internal Revenue Code, to include in
ordinary income on the date of receiptof the restricted stock the fair market
value of the stock (without taking into account any restrictions other than
those which by their terms never lapse) reduced by the amount, if any, that
he
or she pays for the stock. Any subsequent appreciation would then be eligible
for capital gain
treatment
(assuming the stock has been held for a period of more than one (1) year
from
the date of grant).
In general, the Company is entitled to a deduction equal to the amount
included
in the Participant’s ordinary income in the year in which such amount is
reported for tax purposes by the Participant, provided the Company satisfies
applicable withholding and reporting requirements. The amount of the deduction
may be limited under Section 162(m) of the Code if a covered employee’s
non-performance-based compensation exceeds $1 million in any year, which is
discussed in more detail beginning on page 25 of this Proxy Statement.
Directors’
Incentive Shares
With
respect to up to 40,000 shares authorized under the Plan, the Committee
may
grant equity-based awards to its outside directors. The grant of such awards
is
designed to align a significant portion of the director compensation package
with the long-term interests of the Company's shareholders by providing
an
incentive that focuses attention on managing the Company from the perspective
of
an owner with an equity stake in the business.
The
shares set aside for outside directors may be registered by the Company
in a
Form S-8 filed with the SEC so that the shares can be fully registered
and
freely transferable. They will be, however, subject to 3 year performance
vesting. For 2006, subject to shareholder approval of the Plan, a maximum
of
31,974 shares has been awarded to directors all of which are subject to
the
performance goals above.
Matching
Award Program
Lakeland
has established a mandatory share ownership program. The first phase of
this
program requires officers and members of the Board of Directors to hold
a
minimum of 3,000 shares each by the later of July 2009 or three years from
the date the individual is appointed to a position subject to the share
ownership program.
To
encourage officers and directors subject to the mandatory ownership requirements
to buy Lakeland shares, the Plan includes a matching award program to provide
an
incentive to the officers and directors to purchase Lakeland shares and
30,000 shares under the Plan have been reserved for that purpose. For each
two
shares an executive subject to the ownership requirements purchases during
the
three year compliance period, the Committee will grant the executive a
one share
stock bonus award under the 2006 Equity Incentive Plan in the form of restricted
stock, up to a maximum match per participant of 3,000 shares. These
matching awards vest as to 100% of the shares subject to the award three
years
after the award date, or on the officer’s death or disability and a pro-rata
basis upon certain terminations of employment. (Time-vesting at the end
of the
three year period).
Stock
Bonus Award and Director Stock Award:
As
part
of the Plan, for the same group of key employees eligible for the Restricted
Stock Plan, shares may be granted as part of an annual bonus (the “Stock Bonus
Award”). A cash bonus amount for each eligible individual shall be determined
in
the usual manner by the Board. Oncedetermined, the recipient shall have
the
option of accepting the bonus in cash or 133% of the cash amount in stock
from
the Plan. Should stock be chosen, the amount of shares may be netted
for
taxes
to be withheld on such stock. Such shares shall be subject to 2 year time
vesting. A total of 30,000 shares have been reserved for this
program.
Term
of Plan
No award will be granted pursuant to the 2006 Equity Incentive Plan on or
after
April 8, 2016, but awards granted prior to such date may extend beyond that
date.
Other
Benefit Plans for Executives and Other Key Employees
The Company maintains other benefits and plans to compensate and reward
executives and other key employees in addition to their regular salary. Each
such employee has the potential to earn an annual cash bonus, is eligible
to
participate in the Company’s 401k plan and may participate in the health and
other employee benefit plans that are generally available to regular employees
of the Company who satisfy minimum requirements. Further information concerning
certain of the Company’s annual cash bonus plans can be found beginning on
page 25 of this proxy statement.
Vote
Required for Approval
The affirmative vote of a majority of the votes cast on this proposal, provided
the total number of votes cast represents a majority of the outstanding Common
Shares, is required for the approval of this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE
EQUITY INCENTIVE PLAN.
RATIFICATION
OF AUDITORS
(Item
3
on Proxy Card)
The
Board
of Directors, on the recommendation of the Audit Committee, has appointed
the
firm Holtz Rubenstein Reminick LLP (hereinafter referred to as “HRR”) as our
independent public accountants for the fiscal years ending January 31, 2007,
and
recommends that the stockholders vote “FOR” ratification of such appointment. It
is expected that a representative of HRR will be present at the Meeting and
will
have the opportunity to make a statement and will be available to respond
to
appropriate questions.
Stockholder
ratification of the appointment of HRR as our independent public accountants
is
not required by our by-laws or other applicable legal requirement. However,
the
Board is submitting the appointment of HRR to the stockholders for ratification
as a matter of good corporate practice. If the stockholders fail to ratify
the
appointment, the Audit Committee and the Board will reconsider whether or
not to
retain that firm. Even if the appointment is ratified, the Board may direct
the
appointment of a different independent accounting firm at any time during
the
one year period if it determines that such a change would be in our best
interests and in the best interests of our stockholders.
Ratification
of the appointment of auditors requires a majority of the votes cast thereon.
Abstentions with respect to this proposal have the same effect as a vote
against
the proposal. Broker non-votes with respect to this proposal will not be
counted
with regard to this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR”
RATIFICATION OF THE APPOINTMENT OF HOLTZ RUBENSTEIN REMINICK LLP AS OUR
INDEPENDENT PUBLIC ACCOUNTANTS.
______________________________________
The
table
below sets forth all salary, bonus and all other compensation paid to our
chief
executive officer and each of our other executive officers (who earned more
than
$100,000 per year in salary and bonus) for the years ended January 31, 2006,
2005 and 2004:
|
Long-term
|
||||||||||||||||
|
Annual
Compensation
|
Compensation
Awards
|
|||||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(g)
|
|||||||||||
|
Name
and
Principal
Position
|
Year
(Fiscal)
|
Salary
|
Bonus
|
All
Other
Compensation
|
Securities
Underlying
Options/SARs
(#)
|
|||||||||||
|
Raymond
J. Smith,
|
2006
|
$
|
251,042
|
$
|
0
|
$
|
22,721
|
0
|
||||||||
|
Chairman
(Former
|
2005
|
250,000
|
200,000
|
24,728
|
0
|
|||||||||||
|
President)
|
2004
|
276,000
|
132,500
|
30,041
|
0
|
|||||||||||
|
Christopher
J. Ryan,
|
2006
|
$
|
338,077
|
$
|
107,500
|
$
|
31,613
|
0
|
||||||||
|
President
|
2005
|
295,000
|
44,950
|
13,311
|
0
|
|||||||||||
|
(Former
Executive V.P.),
General
Counsel and
Secretary
|
2004
|
241,000
|
27,300
|
9,453
|
0
|
|||||||||||
|
Gary
Pokrassa
|
2006
|
$
|
183,115
|
$
|
30,000
|
$
|
6,124
|
0
|
||||||||
|
Chief
Financial Officer
|
||||||||||||||||
|
Gregory
D. Willis
|
2006
|
$
|
103,846
|
$
|
0
|
$
|
295,592
|
0
|
||||||||
|
Executive
Vice President
|
||||||||||||||||
|
Harvey
Pride, Jr.
|
2006
|
$
|
191,565
|
$
|
43,000
|
$
|
25,892
|
0
|
||||||||
|
Vice
President,
|
2005
|
170,000
|
31,000
|
35,216
|
0
|
|||||||||||
|
Manufacturing
|
2004
|
152,000
|
16,800
|
4,799
|
0
|
|||||||||||
|
James
M. McCormick
|
2006
|
$
|
149,300
|
$
|
43,000
|
$
|
12,729
|
|||||||||
|
Controller
and Treasurer
|
2005
|
170,000
|
31,000
|
11,961
|
0
|
|||||||||||
|
2004
|
152,000
|
21,000
|
12,037
|
0
|
||||||||||||
|
Paul
C. Smith
|
2006
|
$
|
130,000
|
$
|
43,000
|
$
|
57,200
|
|||||||||
|
Vice
President
|
2005
|
130,000
|
0
|
73,955
|
0
|
|||||||||||
|
|
||||||||||||||||
1 Amounts
primarily include the Company’s contributions to 401(k) plan, premiums under
existing life and group disability policies, rent, car allowances,
and sales
commissions and overrides.
during
fiscal year 2006. We have entered into employment contracts with all executive
officers providing for fiscal 2007 annual compensation of $250,000 for Mr.
Smith
and $400,000 for Mr. Ryan, $220,000 for Mr. Pride, $193,500 for Mr. Pokrassa,
$140,000 for Mr. McCormick and $130,000 for Mr. P. Smith. Messrs.
Paul Smith and Raymond Smith each have a three year contract which expires
on
January 31, 2007; Mr. Ryan and Mr. Pride have a two and ¼ year and two year
contract, respectively, expiring April 30, 2008 and February 1, 2008 and Mr.
McCormick has a one year contract expiring January 31, 2007. In addition we
entered into an employment contract with Gregory D. Willis as Executive Vice
President, commencing May 1, 2005. This contract provides for base annual
compensation of $135,000 and commissions based upon sales volumes achieved
and
expires on April 30, 2007. Some contracts are automatically renewable for two,
one year terms, unless in various instances 30 to 120 days notice is given
by
either party. The above named executives participate in the Company's 401-(k)
Plan which commenced on January 1, 1995. The Company made a contribution to
this
plan totaling $126,547 during the plan year ended December 31,
2005.
These
employment contracts are similar in nature and include disability benefits,
vacation time, non- compete and confidentiality clauses. There are no provisions
for retirement. The P. Smith, Ryan, and Pride contracts have an additional
provision for annual bonus based on the Company's performance and based upon
earnings per share formulas determined by the Compensation Committee of the
Board of Directors of the Company. Accordingly, the annual bonus accrued at
January 31, 2006 (for payment in May 2006) were Messrs. P. Smith $14,000, Ryan
$35,000, and Pride $14,000. For fiscal 2007, Mr. P. Smith’s contract is the only
one that provides for annual bonus to the increase in earnings per share. Four
of the contracts provide for lump sum payments of contracted salaries pursuant
to various formulas should there be a change in control of the Company. Mr.
Ryan
has a minimum bonus provision contained in his contract of $20,000.
REPORT
OF THE COMPENSATION COMMITTEE
The
Compensation Committee of the Board oversees the administration of the Company’s
executive compensation programs. The Committee is responsible for establishing
and interpreting the Company’s compensation policies and approving all
compensation paid to executive officers, including the Named Executive Officers
listed in the Compensation of Executive Officers Table of this Proxy
Statement.
Each
member of the Committee is a non-employee director and is independent as defined
by the NASDAQ corporate governance rules.
Compensation
Philosophy
The
Company’s executive compensation program consists of three principal elements: a
base salary, a performance-based annual incentive plan based upon the Company’s
earnings per share and long-term incentives. The purpose of the program is
to
attract, motivate and retain high quality key executives and
managers.
When
setting the base and incentive compensation levels for executives, the Committee
normally compares such compensation levels primarily with those of peer
companies and other companies of similar size in revenues and market
capitalization. The Committee normally makes such comparison because it believes
that it is with these companies that the Company must compete for qualified
and
experienced executives.
The
Committee recognizes that a variety of circumstances may influence the
performance of an individual or the Company at any given time. Accordingly,
the
Committee uses its judgment to make discretionary awards or adjustments under
compensation plans when it believes that doing so serves the long-term interests
of the Company’s shareholders.
In
fiscal
year 2006, the Committee continued an extensive review of the Company’s
executive compensation strategy and programs. The Committee believes it was
necessary to focus on the overall cost and competitiveness of executive
compensation, while rewarding and retaining the management team in a period
of
challenging business conditions. In August 2005 the Committee retained the
services of Shareholder Value Adviser, Inc. to provide the Committee with
estimates of competitive compensation for the senior executives and directors
at
the Company, and to recommend cost efficient incentives. Going forward, the
Committee believes that overall executive pay will be close to the median
of the
market in both the mix of direct pay elements and total direct compensation
value. Individuals can also earn compensation above or below the median based
on
the Company’s financial performance and their individual contributions.
The
Compensation Committee's responsibilities include overseeing the Company's
compensation policies, supervising compensation for management and employee
benefits and administering other employee benefit plans.
The
Compensation Committee also develops and negotiates employment and agreements
with key executive officers. These employment agreements include base salaries
and incentive compensation arrangements designed to reward management for
achieving certain earnings or performance levels. The Compensation Committee
is
also responsible for developing or reviewing incentive compensation arrangements
which the Company enters into with executives and key individuals, other
than
those senior executives who have written employment agreements. See
"Compensation of Executive Officers".
In
order
to determine appropriate levels of executive compensation, the Compensation
Committee reviews various factors, including individual performance, and
evaluates the progress of the Company towards attaining its long-term profit
and
return on equity goals. Compensation packages for senior executive officers
have
been structured to attempt to compensate them to a substantial extent based
on
the profitability of the Company as a whole.
Base
Salary
In
addition to market competitiveness, the Committee also considers certain
qualitative factors in determining base salaries. Such factors can include
the
executive’s (1) past performance and contributions to the Company’s success, (2)
additional responsibilities arising from internal and external factors impacting
the Company, (3) expected future position and contributions, (4) tenure in
the
executive’s current position, and (5) vulnerability to recruitment by other
companies.
Annual
Incentive Awards
Each
year, the Committee establishes earnings-related goals for certain Executive
Officers for the fiscal year. The Executive Officers are eligible to receive
a
cash award based primarily on the extent to which the Company increases its
earnings from the prior year, which may be modified by other measures related
to
service, quality and ethics.
Long-Term
Incentives
The
Committee’s objective for long-term compensation will be to provide executives
with an interest in common with that of the Company’s shareholders and an
incentive to enhance the Company’s long-term financial performance, and thus
shareholder value. The Committee’s policy with respect to setting long-term
compensation awards is to consider the practices of peer companies and other
companies of similar size and market capitalization value. This is because
the
Company must compete with such other companies in order to attract and retain
qualified executives and because shareholders consider investing not only in
other companies but also other companies generally when evaluating where best
to
invest their capital. Grant guidelines are established for each executive
position based on what the Committee believes to be close to the median of
market value for peer companies with similar market capitalization as outlined
by Shareholder Value Advisers, Inc.
In
fiscal
2006, the Company made no stock option grants to executive management. The
plan
expired in May 2004.
Compensation
for the Executive Officers
Messrs.
Smith, Ryan, Pride, McCormick, Pokrassa, Willis, and Smith have been awarded
base compensation of $250,000, $400,000, $220,000, $140,000, $193,500, 135,000,
and $130,000, respectively, for fiscal 2007. In addition, the Committee reviewed
what was normally paid the Chairman in Mr. Smith's case and President, Secretary
and General Counsel in Mr. Ryan's case, the Chief Manufacturing Executive in
Mr.
Pride's case, Controller and Treasurer in Mr. McCormick’s case, CFO in Mr.
Pokrassa’s case, Executive Vice President in Mr. Willis’s case, and Vice
President in Mr. P. Smith’s case in public companies of Lakeland's size and
concluded that the compensation package represented close to the median of
officer compensation in like public companies of comparable size after reviewing
Shareholder Value Advisors Inc. August 2005 Report to the Committee.
The
employment contracts for such executive officers also provide for bonuses based
upon the Company's increase in earnings. (See Directors and Principal
Stockholders.) The Compensation Committee believes that the contracts covering
Messrs. P. Smith, Pride, McCormick, Pokrassa and Ryan are appropriately tied
to
their respective levels of expertise, were constructed at or below industry
norms, and any increases in compensation were and will be tied to increases
in
the Company's earnings. The Compensation Committee also took into consideration
that since the inception of the Company 23 years ago there have been no
executive pension plans, deferred compensation plans, or other compensation
or
benefit plans for executives of the Company other than the Company’s Stock
Option Plan and the 401(k) Plan, the latter of which did not go into effect
until January 1, 1995.
The
Board
Compensation Committee Report on Executive Compensation 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 or
the
Securities Exchange Act of 1934, except to the extent that we specifically
incorporate this information by reference, and shall not otherwise be deemed
filed under such Acts.
Members
of the Compensation Committee
Eric.
O
Hallman
John
Kreft
John
J.
Collins, Jr.
Michael
E. Cirenza
Stephen
M. Bachelder
Performance
Graph
The
following Corporate Performance Graph, obtained from Core Data Group of
Virginia, compares the five year cumulative total return of our common stock
with that of the S&P composite market index, including dividend
reinvestment, and with that of a peer group for the five fiscal years commencing
January 31, 2001 and ending January 31, 2006 assuming an investment of $100
and
the re-investment of any dividends:
|
COMPARISON
OF CUMULATIVE TOTAL RETURN OF OE OR MORE
COMPANIES,
PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
|
||||||
|
-------------------------
FISCAL YEAR ENDING -------------------
|
||||||
|
COMPANY/INDEX/MARKET
|
1/31/2001
|
1/31/2002
|
1/31/2003
|
1/31/2004
|
1/31/2005
|
1/31/2006
|
|
Lakeland
Industries, Inc.
|
100.00
|
193.90
|
162.72
|
376.48
|
506.51
|
522.51
|
|
Customer
Selected Stock List
|
100.00
|
129.01
|
197.85
|
238.49
|
288.06
|
193.22
|
|
S&P
Composite
|
100.00
|
83.85
|
64.55
|
86.87
|
92.28
|
101.86
|
The
Customer Selected Stock List is made up of the following
securities:
ANGELICA
CORP
SUPERIOR
UNIFORM GROUP
The
comparisons in the graph and tables above are based upon historical data and
are
not indicative of, nor intended to forecast, future performance of the Company’s
Common Stock.
The
information contained in the Stock Performance Graph and the Reports of the
Audit and Compensation Committee sections shall not be deemed to be “soliciting
material” or “filed” or incorporated by reference in future filings with the
SEC, or subject to the liabilities of Section 18 of the Securities Exchange
Act
of 1934, as amended (the “Exchange Act”), except to the extent that the Company
specifically incorporates it by reference into a document filed under the
Securities Act of 1933, as amended, or the Exchange Act.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
We
currently grant stock options under one plan which was approved by our
stockholders in 1994. This is our Non-Employee Directors’ Option Plan. There are
currently no option shares available for future grant under the Employee
Incentive Stock Option Plan as it expired in May 2004 and 19,000 option shares
are available for future grant under the our Non-Employee Directors’ Option
Plan. Employee Incentive Stock Option awards were made at the discretion
of the
Compensation Committee of the Board of Directors. No Employee Incentive Stock
Options were awarded for the fiscal years ending January 31, 2005, 2004,
2003,
2002 and 2001. The Director’s Option Plan stipulates that upon an independent
director’s initial election to the Board of Directors that director is to
receive 5,000 options and upon each re-election (a period of three years)
a
director is to receive 1,000 options. This plan only covers independent
directors who are neither officers nor employees of Lakeland.
Equity
Compensation Plan Information
The
following table provides information as of January 31, 2006 about our common
stock that may be issued upon the exercise of options granted to members
of our
Board of Directors.
|
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
|
17,963
|
$12.61
|
19,000
|
|||
|
Equity
compensation
plans
not approved by
security
holders
|
None
|
0
|
0
|
|||
|
Total
|
17,963
|
$12.61
|
19,000
|
Option/SAR
Grants in Last Fiscal Year
- No
stock options were granted to any employee in fiscal 2006 and no SAR grants
have
been made since inception of the Stock Option Plan, see “Directors'
Compensation”.
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values.
Prior
to
2001 Messrs. R. Smith, Ryan, Pride and McCormick participated in the Company’s
Incentive Stock Option Plan (common stock). There are no outstanding incentive
stock options as of January 31, 2006.
There
are
currently no option shares available for future grant under this plan since
it
expired on May 1, 2004. During the year ended January 31, 2005, no stock
options
were granted or exercised.
*Share
amount, option price, and exercise price have been adjusted for the 1 for
10
stock distributions to shareholders of record on April 30, 2005, July 31,
2003
and 2002.
_____________________________
Members
of the Board of Directors, in their capacity as directors, are reimbursed
for
all travel expenses to and from meetings of the Board or Committee meetings.
Non-Employee or Outside Directors received $5,000 quarterly as compensation
for
serving on the Board and its committees. Employee directors are not compensated
for their service on the Board. There are no charitable award or director
legacy
programs. Messrs. Collins, Hallman, Raleigh, Cirenza, Kreft, and Bachelder
participate in our Non-Employee Directors' Option Plan as
follows:
|
Director
|
#
of
Shares*
|
Option
Price*
|
Date
of
Grant
|
Expiration
Date
|
Value
of Unexer-
cised
In-the-Money
Options/SARS
at
FY-End
($)
Exercisable
|
|||||||||||||||
|
Mr.
Collins:
|
1,210
|
$
|
7.942
|
6/18/03
|
6/18/2009
|
$
|
12,799
|
|||||||||||||
|
|
1,331
|
$
|
4.461
|
6/21/00
|
6/21/2006
|
$
|
18,713
|
|||||||||||||
|
Mr.
Hallman:
|
1,210
|
$
|
7.942
|
6/18/03
|
6/18/2009
|
$
|
12,799
|
|||||||||||||
|
|
1,331
|
$
|
4.461
|
6/21/00
|
6/21/2006
|
$
|
18,713
|
|||||||||||||
|
Mr.
Raleigh:
(Former
Director)
|
1,331
|
$
|
5.026
|
6/20/01
|
6/21/2007
|
$
|
17,961
|
|||||||||||||
|
Mr.
Cirenza:
|
550
|
$
|
7.942
|
6/18/03
|
6/18/2009
|
$
|
5,818
|
|||||||||||||
|
Mr.
Kreft:
|
5,500
|
$
|
16.755
|
11/19/04**
|
11/18/2010
|
$
|
9,708
|
|||||||||||||
|
Mr.
Bachelder:
|
5,500
|
$
|
16.755
|
11/19/04**
|
11/18/2010
|
$
|
9,708
|
|||||||||||||
|
17,963
|
||||||||||||||||||||
*Share
amounts exercise and option price have been adjusted for the 1 for 10 stock
distributions to shareholders of record on April 30, 2005, July 31, 2003
and
2002.
**
Granted during the fiscal year ended January 31, 2005 upon election or
re-election to the Board of Directors.
There
are
currently 19,000 option shares available for future grant under this plan.
During the year ended January 31, 2006, no stock options were granted or
exercised.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
__________________________________________________
Related
Party Leases
In
the
past, because our access to third party financing was insufficient, we entered
into arrangements with our directors and executive officers in order to fund
the
construction or acquisition of our assembly facilities. In such cases, we
commissioned independent appraisals in 1999, 2002 and 2004 to ensure that these
arrangements approximated arrangements made on an arms length basis. We believe
that we currently have sufficient access to financing to fund our current and
anticipated facility needs, and we do not anticipate entering into additional
arrangements with our directors or executive officers in the future. A
description of our past arrangements with our directors and executive officers
follows.
POMS
Holding Co., or POMS, was formed in 1984 to lease both land and a building
to us
because bank financing was unavailable. POMS is a partnership whose partners
included three of our directors, one of our officers and six other individuals
who were stockholders of Lakeland at the time of the formation of POMS. Raymond
J. Smith, the chairman of our board of directors, Harvey Pride, Jr., our Vice
President - Manufacturing, and John J. Collins and Eric O. Hallman, both of
whom
are directors, had 20%, 20%, 8.75% and 5% interest in POMS, respectively. POMS
leased to us a 91,788 square foot disposable garment manufacturing facility
in
Decatur, Alabama. Under a lease effective September 1, 1999, we paid an annual
rent of $364,900. This lease was renewed on April 1, 2004 through March 31,
2009
at the same rental rate. We purchased this facility from POMS on April 25,
2005.
On
June
1, 1999, we entered into a five year lease agreement (expiring May 31, 2004)
with River Group Holding Co., L.L.C. for a 49,500 sq. ft. warehouse facility
located next to our existing facility in Decatur, Alabama. River Group Holding
Co., L.L.C. is a limited liability company, the members of which were Raymond
Smith, John Collins, Eric Hallman, Walter Raleigh (a former Director),
Christopher Ryan and Harvey Pride, who all had an equal ownership interest.
Mr.
Ryan is our Chief Executive Officer, President, Secretary, General Counsel
and a
director of our company, Messrs. Smith, Collins and Hallman are all directors
of
our company, and Mr. Pride is our Vice President - Manufacturing. We paid an
annual rent of $199,100 for this facility. We were the sole occupant of the
facility. This lease was renewed on April 1, 2004 through March 31, 2009 at
the
same rental rate. We purchased this facility from River Group on May 25,
2005.
On
March
1, 1999, we entered into a one year (renewable for four additional one year
terms) lease agreement with Harvey Pride, Jr., our Vice President -
Manufacturing, for a 2,400 sq. ft. customer service office located next to
our
existing Decatur, Alabama facility. We paid an annual rent of $18,000 for this
facility under the lease agreement in fiscal 2004 and 2005. This lease was
renewed on March 1, 2004 through March 31, 2009 at the same rental
rate.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16 (a) of the Securities Exchange Act of 1934 (the “Exchange Act”), requires the
Company’s directors, officers and beneficial owners of more than 10% of the
Common Stock to file with the SEC initial reports of ownership of the Company’s
equity securities and to file subsequent reports when there are changes in
such
ownership. Officers, directors and beneficial owners of more than 10% of the
Common Stock are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports they file.
Based
upon a review of Forms 3, 4, and 5 furnished to the Company during or with
respect to the preceding fiscal year and written representations from certain
reporting persons, we were not aware of any failure by a reporting person
to
make timely filings of those Forms as required by Section 16(a) of the
Securities Exchange Act of 1934.
__________________
The
Board
of Directors knows of no matters other than those described above that may
come
before the Annual Meeting. As to other matters, if any, that properly may
come
before the Annual Meeting, the Board of Directors intends that proxies in
the
accompanying form will be voted in respect thereof in accordance with the
judgment of the person or persons voting the proxies.
STOCKHOLDER
PROPOSALS FOR 2007 ANNUAL MEETING
_________________________________________________________
Stockholder
proposals for inclusion in the Company's Proxy Statement for the 2007 Annual
Meeting of Stockholders must be received by the Company not later than January
31, 2007. The person submitting the proposal must have been a record or
beneficial owner of the Company's Common Stock for at least one year and
must
continue to own such securities through the date on which the meeting is
held,
and the securities so held must have a market value of at least $1,000. Any
such
proposal will be included in the Proxy Statement for such Annual Meeting
if the
rules of the Securities and Exchange Commission are complied with as to the
timing and form of such proposal, and the content of such stockholder's proposal
is determined by the Company to be appropriate under rules promulgated by
the
Commission.
HOUSEHOLDING
OF PROXY MATERIALS
_______________________________________________
Some
banks, brokers and other nominee record holders may be participating in the
practice of “householding” proxy statements and annual reports. This means that
only one copy of this proxy statement may have been sent to multiple
shareholders in your household. If you would like to obtain another copy
of the
proxy, please contact Secretary, Lakeland Industries, Inc. 701-7 Koehler
Avenue,
Ronkonkoma, New York, 11779 by mail. If you want to receive separate copies
of
our proxy statements and annual reports in the future, or if you are receiving
multiple copies and would like to receive only one copy for your household,
you
should contact your bank, broker, or other nominee record holder.
|
By
the Order of the Board of Directors
|
|
|
Christopher
J. Ryan,
|
|
|
Secretary
|
|
May
9,
2006
Appendix
A
LAKELAND
INDUSTRIES, INC.
AUDIT
COMMITTEE CHARTER
Membership
The
audit
committee will be composed of not less than three members of the board. They
will be selected by the board, taking into account prior experience in matters
to be considered by the committee, probable availability at times required
for
consideration of these matters, and their individual independence and
objectivity.
The
committee membership will meet the requirements of the audit committee policy
of
the NASDAQ Independent Director and Audit Committee Requirements. Accordingly,
all of the members will be directors independent of management and free from
any
relationship that, in the opinion of the board of directors, would interfere
with the exercise of independent judgment as a committee member.
No
officers or employees of the company or its subsidiaries will serve on the
committee. A former officer of the company or any of its subsidiaries may serve
on the committee (even though the former officer may be receiving pension or
deferred compensation payments from the company) if, in the opinion of the
board
of directors, the former officer will exercise independent judgment and will
materially assist the committee’s function. However, a majority of the committee
will be directors who were not formerly officers of the company or any of its
subsidiaries.
In
considering relationships that might affect independence, including possible
affiliate status, the board of directors will give appropriate consideration
to
guidelines issued by the NASDAQ as supplementary material to its audit committee
policy, which were provided to assist boards of directors in observing the
spirit of the policy.
Actions
of the Committee
|
The
activities of the committee may result in the following types of
actions.
|
|||
|
a.
|
Those
in which the committee will inform the board that action has been
taken in
the board’s interest and does not require prior board
approval.
|
||
|
1.
|
Review
and approve the scope of the annual audit for the company and its
subsidiaries recommended jointly by the independent CPAs and the
president.
|
||
|
2.
|
Review
and approve the scope of the company’s annual profit and pension trusts
audits.
|
||
|
|
3.
|
When
requested by the chairman of the board during an annual shareholders’
meeting, the committee chairman will answer questions raised by a
shareholder on matters relating to the committee’s
activities.
|
|
|
4.
|
Request
the president to have the internal audit staff study a particular
area of
interest or concern.
|
||
|
b.
|
Those
which the committee will review and study and then recommend action
by the
board.
|
||
|
1.
|
Appoint
independent public accountants
|
||
|
2.
|
Review
major accounting policy changes before implementation.
|
||
|
3.
|
Review
SEC registration statements before signature by other board
members
|
||
|
4.
|
Review
annual audit reports and the content of proposed published
reports.
|
||
|
c.
|
Those
which the committee will review and study and provide summary information
reports to the board when appropriate.
|
||
|
1.
|
Review
trends in accounting policy changes proposed or adopted by organizations
such as the Financial Accounting Standards Board, the Securities
and
Exchange Commission (SEC), and the American Institute of Certified
Public
Accountants or by comparable bodies outside the United
States.
|
||
|
2.
|
Interview
independent CPAs for review and analysis of strengths and weaknesses
of
the company’s financial staff, systems, adequacy of controls, and other
factors which might be pertinent to the integrity of published
financial
reports.
|
||
|
3.
|
Participate
in financial review preceding publication of quarterly
reports.
|
||
|
4.
|
Review
administration of the company’s “conflict of interest”
policy.
|
||
|
5.
|
Review
the performance of management and operating personnel under the
company’s
code of ethics.
|
||
|
6.
|
Review
insurance programs from the standpoint of gaps and exposure as
well as
fraud.
|
||
|
7.
|
Review
reports on the company or its subsidiaries by agencies of governments
in
countries where the company or its subsidiaries
operate.
|
||
|
8.
|
Review
periodic SEC filings by the company and assure that adequate programs
and
procedures exist to comply with SEC regulations and regulations
of
securities exchanges (such as the
NASDAQ).
|
||
12/1/00
LAKELAND
INDUSTRIES, INC.
CODE
OF ETHICS
FOR
DIRECTORS, OFFICERS AND EMPLOYEES.
Introduction
For
the
past several years, the activities of business organizations, both large
and
small, have been the subject of increased scrutiny and criticism by the public,
the government, and the news media.
This
is
particularly true of multinational corporations, which have been the object
of
worldwide demands for public statements of their corporate codes of
ethics.
For
that
reason, it is appropriate for Lakeland Industries, Inc. to restate it position
on ethical conduct, based on the original precepts of the business and on
policies formulated as the corporation has grown.
As
a good
corporate citizen, Lakeland Industries, Inc. has always endeavored to conduct
its business in a manner conforming to the highest ethical standards. The
company’s reputation for unquestionable integrity is its most valuable asset in
its relationships with its customers, employees, shareholders, and the
communities in which its plants are located.
The
following statement of business principles has been prepared to guide the
future
conduct of company activities in an ethical and legal manner. It is not intended
to supply answers for every business activity; rather, it is an effort to
reiterate the continuing policies of the corporation on ethical business
behavior, which must be observed by all Lakeland Industries, Inc. employees
and
representatives throughout the world. It is essential that all employees
and
representatives conform to these principles as they perform their activities
on
behalf of Lakeland Industries, Inc.
Lakeland
and its employees
Employees
are the corporation’s greatest asset, and it is a Lakeland Industries, Inc.
policy to treat them fairly in all matters and to pay them
competitively.
Lakeland
and its domestic subsidiaries are engaged in a program of full compliance
with
all federal and state laws applicable to hiring and promoting people on the
basis of demonstrated ability, experience, and training without regard to
race,
religion, sex age, national origin, or other factors requiring affirmative
action. The corporation requires continuous management attention at all
corporate levels to assure compliance with the spirit and letter of this
policy.
With
this
in mind, it is the intent of Lakeland to:
Choose
its employees on the basis of their ability to perform the work for which
they
are hired without regard to race, religion, sex, age, national origin, or
other
factors requiring affirmative action.
Offer
employees a safe, healthy, and clean work environment.
Offer
work that challenges the employees and gives them a feeling of
satisfaction.
Pay
employees fairly in relation to their contributions to the company’s efforts,
within the boundaries of current standards.
Lakeland
and the Community
The
corporation shall conduct its business in a manner that is socially responsible.
In addition to manufacturing and selling products, it shall protect the quality
of the environment and endeavor to conserve energy and other valuable
resources.
Each
of
the corporation’s facilities is expected to make every effort to be an integral
part of the community in
which
it operates, and to participate in its activities as a concerned and responsible
citizen. Like individual citizens, it benefits from such activities as health,
welfare, character building, education, and culture. And like individuals,
it
has the responsibility to support and develop these social and
civic
activities.
The
company recognizes that employee participation in cultural, social or volunteer
organizations can be public service of a higher order, and all Lakeland
employees are encouraged to participate in public activities of their individual
choice.
Lakeland
and its Customers
The
corporation shall endeavor to supply its customers with quality products,
delivered on schedule and sold at a fair price. Lakeland products will be
manufactured to the company’s high quality standards and will offer customers
all the technical skills of its employees and the expertise of Lakeland
technology and know-how.
Lakeland
and the Law
It
is the
policy of Lakeland to comply fully with all valid laws and regulations that
govern its operations in the various communities, states and countries in
which
it operates and to conduct its affairs in keeping with the highest moral,
legal
and ethical standards.
There
is
an obligation, both corporate and individual, to fulfill the intent of the
above
statement. It is not expected that every employee will have full knowledge
of
the laws affecting his or her responsibilities. The company does, however,
expect that employees with significant responsibilities will have a general
knowledge of prohibited activities involved in their work and will seek guidance
on any matter on which there is a question, either directly from the
corporation’s legal department or through their supervisors.
Honesty
is not subject to equivocation at any time in any culture, and even where
the
law may be permissive; your corporation chooses to follow the course of highest
integrity. The reputation of the company for scrupulous dealing is a priceless
asset, just as it is for individuals. The intent of these principles is to
maintain and develop the corporation’s reputation in the future as it has in the
past.
Lakeland
and Business Ethics
The
law
is a base for ethical business conduct which should normally be at a level
well
above the minimum required by law. In its relationships with customers, the
corporation will offer the same advantages to all and will be fair in all
its
endeavors. Gifts or bribes for the purpose of influencing the buying decisions
of employees of customers or potential customers or persons in a position
to
influence a buying decision are clearly improper and prohibited.
In
dealing with suppliers, an employee shall not solicit, accept, or countenance
payments or substantial gifts, regardless of motive, from either a vendor
or a
potential vendor.
In
its
relationships with its competitors, the corporation and its employees will
fully
understand and strictly adhere to the requirements of the antitrust laws.
These
laws, which, in the United States, include the Sherman Act, Clayton Act,
Robinson-Patman Act, and Federal Trade Commission Act, seek to advance and
maintain the free enterprise system and take precedence over any business
objective of the corporation, notwithstanding any resulting increases in
sales
or profits.
Such
acts
as price-fixing, restrictive agreements, boycotts, tie-in arrangements exclusive
of reciprocal dealings, monopolizing, price inducements, and discriminatory
allowances are or may be illegal. All employees shall scrupulously avoid
violations of the antitrust laws. The corporation will not condone any actions
which an employee knew or should have known would violate the antitrust laws
or
any other valid law or regulation.
The
corporation and its units shall make no financial contributions to a political
party or to a candidate running for any elective office. This policy applies
to
all political parties or candidates worldwide, even when permitted by local
law.
Payments, regardless of amount, to any government employee, or gifts or services
of substantial value or lavish entertainment, regardless of motive, are
prohibited.
Relationships
with public employees shall be so conducted that neither the officials nor
the
company’s integrity would be compromised if the full details of the relationship
became a matter of public knowledge.
Lakeland
and Conflicts of Interest
It
has
always been, and continues to be, the corporation’s intent that its employees
maintain the highest standards of loyalty in their conduct of company affairs.
In essence, company employees shall deal with suppliers, customers, and other
persons doing business or seeking to do business with the corporation in
a
manner that eliminates considerations of personal advantage.
Because
they hold positions of trust in the corporation, a director, an officer,
or any
employees may not make a profit from the corporation because of their official
position. They are also clearly prohibited from engaging in a competing
business.
In
addition to the legal responsibility of the directors and officers, it is
the
duty of all employees to act in the best interests of the corporation and
to
avoid situations which might produce a conflict between their own interests
and
those of the corporation. Employees shall have no financial interest in any
firm
doing business with or seeking to do business with the corporation, nor shall
they accept employment outside the company which may result in a conflict
of
interest, unless same is fully disclosed and approved by a disinterested
group
of officers and/or directors.
Enforcement
and Protection for Reporting Persons
Any
director, officer or employee can report, anonymously, if they want, violations
of the above Code of Ethics directly to Michael Cirenza an independent director
and member to our Audit Committee. Mr. Cirenza will then inform the other
independent directors Messrs. Hallman, Collins, and Raleigh and they will
determine whether a violation has occurred, according to the standards outlined
above, hold a formal meeting, if required, to question the officer, employee
or
director reported, and if necessary recommend a disciplinary remedy,
termination, or notify the appropriate legal authorities. The reporting contact
is Michael Cirenza, EVP and CFO Country-Life, LLC, 180 Vanderbilt Motor Parkway,
Hauppauge, NY 11788, Tel. # 631-232-5482; E-mail: michaelc@country-life.com.
EXHIBIT
C
2006
INCENTIVE PLAN
|
1.
|
|
Purpose.
The purpose of Lakeland Industries, Inc.’s 2006 Incentive Plan (the
“Plan”) is to motivate key employees and directors to produce a superior
return to the stockholders of Lakeland Industries, Inc. by offering
them
an opportunity to participate in stockholder gains, by facilitating
stock
ownership and by rewarding them for achieving a high level of corporate
financial performance. The Plan is also intended to facilitate recruiting
and retaining talented executives for key positions by providing
an
attractive capital accumulation opportunity.
|
|
2.
|
|
Definitions.
|
|
|
2.1
|
|
The
following terms, whenever used in this Plan, shall have the meanings
set
forth below:
|
|
|
(a)
|
|
“Affiliate”
means any corporation or limited liability company, a majority of
the
voting stock or membership interests of which is directly or indirectly
owned by the Company, and any partnership or joint venture designated
by
the Committee in which any such corporation or limited liability
company
is a partner or joint venturer.
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|
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(b)
|
|
“Award”
means a grant made under this Plan in the form of Performance Shares,
Restricted Stock, Restricted Share Rights, or Stock Awards.
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(c)
|
|
“Award
Agreement” means a written agreement or other communication evidencing the
terms and conditions of an Award in the form of either an agreement
to be
executed by both the Participant and the Company (or an authorized
representative of the Company) or a certificate, notice, term sheet
or
similar communication.
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(d)
|
|
“Beneficiary”
means the person or persons determined in accordance with Section
12.
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(e)
|
|
“Board”
means the Board of Directors of the Company.
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(f)
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Intentionally
left blank
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(g)
|
|
“Code”
means the Internal Revenue Code of 1986, as amended from time to
time, and
the rulings and regulations issued thereunder.
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(h)
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|
“Committee”
has the meaning set forth in Section 3.
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(i)
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|
“Company”
means Lakeland Industries, Inc., a Delaware corporation.
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(j)
|
|
“Earnings
Per Share” means the Company’s diluted earnings per share as reported in
the Company’s consolidated financial statements for the applicable
performance period, adjusted in the same manner as provided below
for Net
Income.
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(k)
|
|
“Employee”
means an individual who is a common law employee (including an officer
or
director who is also an employee) of the Company or an Affiliate.
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(l)
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|
“Fair
Market Value” as of any date means, unless a different calculation measure
is specified by the Committee, the immediately preceding trading
day’s
closing sales price of a Share on the NASDAQ.
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(m)
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|
Intentionally
left blank.
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(n)
|
|
“Net
Income” shall mean the Company’s net income for the applicable performance
period as reported in the Company’s consolidated financial statements,
adjusted to eliminate the effect of (i) losses resulting from discontinued
operations, (ii) extraordinary gains or losses, (iii) the cumulative
effect of changes in generally accepted accounting principles, and
(iv)
any other unusual or non-recurring gain or loss which is separately
identified and quantified.
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(o)
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Intentionally
left blank
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(p)
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Intentionally
left blank
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(q)
|
|
“Participant”
means a person described in Section 5 designated by the Committee
to
receive an Award under the Plan.
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(r)
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|
“Performance
Cycle” means the period of time of not fewer than two years nor more than
five years as specified by the Committee over which Performance Shares
or
Performance Units are to be earned.
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(s)
|
|
“Performance
Shares” means an Award made pursuant to Section 6 which entitles a
Participant to receive Shares, their cash equivalent, or a combination
thereof, based on the achievement of performance targets during a
Performance Cycle.
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(t)
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Intentionally
left blank
|
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(u)
|
|
“Plan”
means this 2006 Incentive Plan, as amended from time to time.
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(v)
|
|
“Qualifying
Performance Criteria” has the meaning set forth in Section 16.2.
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(w)
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|
Intentionally
left blank.
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(x)
|
|
“Restricted
Stock” means Stock granted under Section 7 that is subject to restrictions
imposed pursuant to said Section.
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(y)
|
|
“Retirement”
means termination of employment after reaching the earliest of (i)
age 55
with 10 completed years of service, or (ii) 80 points (with one point
credited for each completed age year and one point credited for each
completed year of service), or (iii) age 65. For purposes of this
definition, a Participant is credited with one year of service after
completion of each full 12-month period of employment with the Company
or
an Affiliate as determined by the Company or Affiliate.
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(y.1)
|
|
“Return
on Assets” (ROA) means the Net Income of the Company on an annualized
basis, divided by the Company’s average total assets as reported in the
Company’s consolidated financial statements for the relevant performance
period.
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(z)
|
|
“Return
on Equity” (ROE) means the Net Income of the Company on an annualized
basis, divided by the Company’s average total common equity excluding
average accumulated comprehensive income as reported in the Company’s
consolidated financial statements for the relevant performance
period.
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(z.1)
|
|
“Return
on Investment” (ROI) means the Net Income of the Company on an annualized
basis, divided by the Company’s average total common equity , long term
debt including current maturities thereof, and short term borrowings,
excluding average accumulated comprehensive income as reported in
the
Company’s consolidated financial statements for the relevant performance
period.
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(aa)
|
|
“Share”
means a share of Stock.
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|
(bb)
|
|
“Stock”
means the common stock, $0.01
par value, of the Company.
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|
(cc)
|
|
Intentionally
left blank
|
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|
(dd)
|
|
“Stock
Award” means an award of Stock granted to a Participant pursuant to
Section 8.
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(ee)
|
|
“Term”
means the period during which the restrictions placed on a Restricted
Share Right or Restricted Stock are in effect.
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|
2.2
|
|
Gender
and Number.
Except when otherwise indicated by context, reference to the masculine
gender shall include, when used, the feminine gender and any term
used in
the singular shall also include the plural.
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|
3.
|
|
Administration.
|
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|
3.1
|
|
Administration
of the Plan.
The Plan shall be administered by the Compensation Committee of the
Board
or such other committee selected by the Board and consisting of two
or
more members of the Board (the “Committee”). Any power of the Committee
may also be exercised by the Board, except to the extent that the
grant or
exercise of such authority would cause any Award or transaction to
become
subject to (or lose an exemption under) the short-swing profit recovery
provisions of Section 16 of the Securities Exchange Act of 1934,
as
amended, or cause an Award not to qualify for treatment as “performance
based compensation” under Section 162(m) of the Code. To the extent that
any permitted action taken by the Board conflicts with action taken
by the
Committee, the Board action shall control. The Committee may delegate
any
or all aspects of the day-to-day administration of the Plan to one
or more
officers or employees of the Company or any Affiliate, and/or to
one or
more agents.
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3.2
|
|
Powers
of the Committee.
Subject to the express provisions of this Plan, the Committee shall
be
authorized and empowered to take all actions that it determines to
be
necessary or appropriate in connection with the administration of
this
Plan, including, without limitation: (i) to prescribe, amend and
rescind
rules and regulations relating to this Plan and to define terms not
otherwise defined herein; (ii) to determine which persons are eligible
to
be granted Awards under Section 5, to which of such persons, if any,
Awards shall be granted hereunder and the timing of any such Awards;
(iii)
to grant Awards to Participants and determine the terms and conditions
of
Awards, including the number of Shares subject to Awards, the exercise
or
exercise price of such Shares, and the circumstances under which
Awards
become exercisable or vested or are forfeited or expire, which terms
may
but need not be conditioned upon the passage of time, continued
employment, the satisfaction of performance criteria, the occurrence
of
certain events, or other factors; (iv) to establish and certify the
extent
of satisfaction of any performance goals or other conditions applicable
to
the grant, issuance, exercisability, vesting and/or ability to retain
any
Award; (v) to prescribe and amend the terms of Award Agreements or
other
documents relating to Awards made under this Plan (which need not
be
identical) and the terms of or form of any document or notice required
to
be delivered to the Company by Participants under this Plan; (vi)
to
determine whether, and the extent to which, adjustments are required
pursuant to Section 25; (vii) to interpret and construe this Plan,
any
rules and regulations under this Plan, and the terms and conditions
of any
Award granted hereunder, and to make exceptions to any such provisions
in
good faith and for the benefit of the Company; and (viii) to make
all
other determinations deemed necessary or advisable for the administration
of this Plan.
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|
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3.3
|
|
Determinations
by the Committee.
All decisions, determinations and interpretations by the Committee
regarding the Plan, any rules and regulations under the Plan, and
the
terms and conditions of or operation of any Award granted hereunder,
shall
be final and binding on all Participants, Beneficiaries, heirs, assigns
or
other persons holding or claiming rights under the Plan or any Award.
The
Committee shall consider such factors as it deems relevant, in its
sole
and absolute discretion, to making such decisions, determinations
and
interpretations including,
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|
|
|
|
without
limitation, the recommendations or advice of any officer or other
employee
of the Company and such attorneys, consultants and accountants
|
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4.
|
|
Shares
Available Under the Plan; Limitation on Awards.
|
|
|
4.1
|
|
Aggregate
Limits.
Subject to adjustment as provided in Section 25, the aggregate number
of
Shares issuable pursuant to all Awards under this Plan on or after
April
11, 2006 shall not exceed 230,000 Shares. The Shares issued pursuant
to
Awards granted under this Plan may consist, in whole or in part,
of
authorized but unissued Stock or treasury Stock not reserved for
any other
purpose.
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|
|
4.2
|
|
Issuance
of Shares.
For purposes of this Section 4, the aggregate number of Shares available
for Awards under this Plan at any time shall not be reduced by Shares
subject to Awards that have been canceled, expired, forfeited or
settled
in cash.
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|
|
4.3
|
|
No
Participant may be granted awards under the 2006 Incentive Plan with
respect to an aggregate of more than 20,000 shares of stock (subject
to
adjustment as described below) during any fiscal
year.
|
|
5.
|
|
Participation.
Participation in the Plan shall be limited to Employees or Directors
of
the Company or an Affiliate selected by the Committee. Participation
is
entirely at the discretion of the Committee, and is not automatically
continued after an initial period of participation.
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|
6.
|
|
Performance
Shares and Performance Units.
An Award of Performance Shares or Performance Units under the Plan
shall
entitle the Participant to future payments or Shares or a combination
thereof based upon the level of achievement with respect to one or
more
pre-established performance criteria (including Qualifying Performance
Criteria) established for a Performance Cycle.
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|
6.1
|
|
Amount
of Award.
The Committee shall establish a baseline, minimum threshold, and
maximum
amount of a Participant’s Award, which amount shall be denominated in
Shares.
|
|
|
6.2
|
|
Communication
of Award.
Each Award Agreement evidencing an Award of Performance Shares or
Performance Units shall contain provisions regarding (i) the target
and
maximum amount payable to the Participant pursuant to the Award,
(ii) the
performance criteria and level of achievement versus these criteria
that
shall determine the amount of such payment, (iii) the Performance
Cycle as
to which performance shall be measured for determining the amount
of any
payment, (iv) the timing of any payment earned by virtue of performance,
(v) restrictions on the alienation or transfer of the Award prior to
actual payment, (vi) forfeiture provisions and (vii) such further
terms and conditions, in each case not inconsistent with this Plan,
as may
be determined from time to time by the Committee.
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|
|
6.3
|
|
Performance
Criteria.
Performance criteria established by the Committee shall relate to
corporate, group, unit or individual performance, and may be established
in terms of earnings, growth in earnings, ratios of earnings to equity
or
assets, or such other measures or standards determined by the Committee;
provided, however, that the performance criteria for any portion
of an
Award of Performance Shares or Performance Units that is intended
by the
Committee to satisfy the requirements for “performance-based compensation”
under Code Section 162(m) shall be a measure based on one or more
Qualifying Performance Criteria selected by the Committee and specified
at
the time the Award is granted. Multiple performance targets may be
used
and the components of multiple performance targets may be given the
same
or different weighting in determining the amount of an Award earned,
and
may relate to absolute performance or relative performance measured
against other groups, units, individuals or entities.
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|
6.4
|
|
Discretionary
Adjustments.
Notwithstanding satisfaction of any performance goals, the amount
paid
under an Award of Performance Shares or Performance Units on account
of
either financial performance or personal performance evaluations
may be
reduced by the Committee on the basis
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|
|
of
such further considerations as the Committee shall determine.
|
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|
6.5
|
|
Payment
of Awards.
Following the conclusion of each Performance Cycle, the Committee
shall
determine the extent to which performance criteria have been attained,
and
the satisfaction of any other terms and conditions with respect to
an
Award relating to such Performance Cycle. The Committee shall determine
what, if any, payment is due with respect to an Award and whether
such
payment shall be made in cash, Stock or a combination thereof. Payment
shall be made in a lump sum or installments, as determined by the
Committee at the time the Award is granted, commencing as promptly
as
practicable following the end of the applicable Performance Cycle,
subject
to such terms and conditions and in such form as may be prescribed
by the
Committee. Payment in Stock may be in Restricted Stock at the discretion
of the Committee at the time the Award is granted.
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6.6
|
|
Termination
of Employment.
Unless the Committee provides otherwise:
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|
|
(a)
|
|
Due
to Death or Disability.
If a Participant ceases to be an Employee before the end of a Performance
Cycle by reason of his death or permanent disability, the Performance
Cycle for such Participant for the purpose of determining the amount
of
Award payable shall end at the end of the calendar quarter immediately
preceding the date on which said Participant ceased to be an Employee.
The
amount of an Award payable to a Participant (or the Beneficiary of
a
deceased Participant) to whom the preceding sentence is applicable
shall
be paid at the end of the Performance Cycle, and shall be that fraction
of
the Award computed pursuant to the preceding sentence the numerator
of
which is the number of calendar quarters during the Performance Cycle
during all of which said Participant was an Employee and the denominator
of which is the number of full calendar quarters in the Performance
Cycle.
|
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|
(b)
|
|
Due
to Reasons Other Than Death or Disability.
Upon any other termination of employment of a Participant during
a
Performance Cycle, participation in the Plan shall cease and all
outstanding Awards of Performance Shares or Performance Units to
such
Participant shall be cancelled.
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|
7.
|
|
Restricted
Stock Awards.
An Award of Restricted Stock under the Plan shall consist of Shares
the
grant, issuance, retention, vesting and/or transferability of which
are
subject, during specified periods of time, to such conditions and
terms as
the Committee deems appropriate. Restricted Stock granted pursuant
to the
Plan need not be identical, but each grant of Restricted Stock must
contain and be subject to the terms and conditions set forth below.
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|
|
7.1
|
|
Award
Agreement.
Each Award of Restricted Stock shall be evidenced by an Award Agreement.
Each Award Agreement shall contain provisions regarding (i) the number
of
Shares subject to the Award or a formula for determining such number,
(ii)
the purchase price of the Shares, if any, and the means of payment,
(iii)
such terms and conditions on the grant, issuance, vesting and/or
forfeiture of the Restricted Stock as may be determined from time
to time
by the Committee, (iv) restrictions on the transferability of the
Award
and (v) such further terms and conditions, in each case not inconsistent
with this Plan, as may be determined from time to time by the Committee.
Shares issued under an Award of Restricted Stock may be issued in
the name
of the Participant and held by the Participant or held by the Company,
in
each case as the Committee may provide.
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|
|
7.2
|
|
Vesting
and Lapse of Restrictions.
The grant, issuance, retention, vesting and/or settlement of Shares
of
Restricted Stock shall occur at such time and in such installments
as
determined by the Committee or under criteria established by the
Committee. The Committee shall have the right to make the timing
of the
grant and/or the issuance, ability to retain, vesting and/or settlement
of
Shares of Restricted Stock subject to continued employment, passage
of
time and/or such performance criteria as deemed appropriate by the
Committee; provided that in no event shall the grant, issuance, retention,
vesting and/or settlement of Shares under an Award of Restricted
Stock
that is based on performance criteria and the level of achievement
measured against such criteria be subject to a performance period
of less
than one year and no condition that is based solely upon
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|
|
|
continued
employment or the passage of time shall provide for vesting or settlement
in full of an Award of Restricted Stock over a Term of less than
three
years from the date the Award is granted, in each case other than
as a
result of or upon the death, disability or Retirement of the Participant
or a change in control of the Company. Notwithstanding anything herein
to
the contrary, the limitations contained in the preceding sentence
shall
not apply to Restricted Stock that is granted in lieu of salary,
cash
bonus or other cash compensation, in which case there may be no minimum
Term.
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|
|
7.3
|
|
Rights
as a Stockholder.
A
Participant shall have all voting, dividend, liquidation and other
rights
with respect to Restricted Stock held by such Participant as if the
Participant held unrestricted Stock; provided that the unvested portion
of
any award of Restricted Stock shall be subject to any restrictions
on
transferability or risks of forfeiture imposed pursuant to Sections
7.1,
7.2 and 7.4. Unless the Committee otherwise determines or unless
the terms
of the applicable Award Agreement or grant provides otherwise, any
noncash
dividends or distributions paid with respect to shares of unvested
Restricted Stock shall be subject to the same restrictions and vesting
schedule as the Shares to which such dividends or distributions relate.
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|
|
7.4
|
|
Termination
of Employment.
Unless the Committee provides otherwise:
|
|
|
(a)
|
|
Due
to Death, or Permanent Disability.
If a Participant ceases to be an Employee prior to the lapse of
restrictions on Shares of Restricted Stock by reason of his death,
permanent disability or retirement, all restrictions on Shares of
Restricted Stock held for his benefit shall immediately lapse.
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|
|
(b)
|
|
Due
to Reasons Other Than Death, Permanent Disability or
Retirement.
Upon any other termination of employment prior to the lapse of
restrictions, participation in the Plan shall cease and all Shares
of
Restricted Stock held for the benefit of a Participant shall be forfeited
by the Participant.
|
|
|
7.5
|
|
Certificates.
The Committee may require that certificates representing Shares of
Restricted Stock be retained and held in escrow by a designated employee
or agent of the Company or any Affiliate until any restrictions applicable
to Shares of Restricted Stock so retained have been satisfied or
lapsed.
Each certificate issued in respect to an Award of Restricted Stock
may, at
the election of the Committee, bear the following legend:
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|
|
|
|
“This
certificate and the shares of stock represented hereby are subject
to the
terms and conditions (including forfeiture provisions and restrictions
against transfer) contained in the 2006 Incentive Plan and the Restricted
Stock Award. Release from such terms and conditions shall obtain
only in
accordance with the provisions of the Plan and the Award, a copy
of each
of which is on file in the office of the Secretary of Lakeland Industries,
Inc..”
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|
8.
|
|
Stock
Awards.
|
|
|
8.1
|
|
Grant.
A
Participant may be granted one or more Stock Awards under the Plan;
provided that such Award is granted in lieu of salary, cash bonus
or other
cash compensation. Stock Awards shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as
may be
determined by the Committee.
|
|
|
8.2
|
|
Rights
as a Stockholder.
A
Participant shall have all voting, dividend, liquidation and other
rights
with respect to Shares issued to the Participant as a Stock Award
under
this Section 8 upon the Participant becoming the holder of record
of the
Shares granted pursuant to such Stock Award; provided that the Committee
may impose such restrictions on the assignment or transfer of Shares
awarded pursuant to a Stock Award as it considers appropriate.
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|
|
||
|
|
•
|
9.
Qualifying
Retirement and Disqualifying Activity
|
|
|
9.1
Qualifying
Retirement.
|
|
|
|
•
|
Unless
otherwise determined by the Committee at or after the time of granting
any
award, and except for a “qualifying retirement” (discussed below), if a
Participant’s employment by the Company or any subsidiary or affiliate
terminates for any reason other than death or permanent disability,
all
restricted stock held by such Participant which is unvested or subject
to
restriction at the time of such termination will be forfeited at
such
time.
|
|
|
||
|
|
•
|
If
a Participant’s employment with the Company or any of its subsidiaries or
affiliates terminates for any reason other than death, permanent
disability or the Participant’s involuntary termination for cause, and if
immediately prior to the date of such termination of employment
(i) the Participant is 55 years of age or older, and
(ii) the sum of the Participant’s age and completed years of service
as an employee of the Company or its subsidiaries or affiliates
(disregarding fractions in both cases) totals 70 or more (a “qualifying
retirement”), the following provisions will apply:
|
|
|
•
|
All
shares of restricted stock awarded to the Participant which have
vested as
of the date of the qualifying retirement will be free of restrictions.
|
|
|
||
|
|
•
|
With
respect to any time-based restricted stock award which has not vested,
effective as of the Participant’s retirement date: (a) the award will
remain in effect with respect to fifty percent (50%) of the shares
covered
thereby, and such award will vest on the Participant’s retirement date and
such shares will be free of restrictions as of the vesting date;
and
(b) the award will be terminated with respect to the remaining fifty
percent (50%) of the shares covered thereby.
|
|
|
||
|
|
•
|
With
respect to any performance-based restricted stock award which has
not
vested, effective as of the Participant’s retirement date: (a) the
award will remain in effect with respect to fifty percent (50%) of
the
shares covered thereby and will vest upon the achievement of the
related
performance goals (unless an award expires according to its terms
prior to
the satisfaction of the performance goals, in which event the award
will
terminate and applicable shares of restricted stock will be forfeited);
and (b) the award will terminate as to the remaining fifty percent
(50%) of the shares covered thereby. However, if the Participant
is the
Chief Executive Officer or a member of his or her direct reporting
group,
and such person has given the Company written notice at least one
(1) full year prior to his or her qualifying retirement, no unvested
performance-based restricted stock awards will terminate upon such
retirement, and one hundred percent (100%) of the shares covered
by such
awards will remain in effect and will vest upon the achievement of
the
related performance goals (unless an award expires according to its
terms
prior to the satisfaction of the performance goals, in which event
the
award will terminate and applicable shares of restricted stock will
be
forfeited).
|
|
9.2
Disqualifying
Activity.
Notwithstanding
the foregoing, if the Committee determines that the Participant is
or has
engaged in any disqualifying activity (as defined below), then (1) to
the extent that any restricted stock award held by such Participant
has
vested as of the disqualification date (as defined below), the Participant
will have the right to receive all shares of restricted stock which
are
vested as of such date and (2) to the extent that any restricted
stock award held by such Participant has not vested as of the
disqualification date, the award will terminate, and all related
shares
will be forfeited, as of such date. Any determination by the Committee,
which may act upon the recommendation of the Chief Executive Officer
or
other senior officer of the Company, that the Participant is or has
engaged in any disqualifying activity, and as to the disqualification
date, will be final and conclusive.
|
|
|
For
purposes of this provision, the term “disqualifying activity” is defined
in the Plan to include, among other activities:
|
|
|
•
|
directly
or indirectly being an owner, officer, employee, advisor or consultant
to
a company that competes with the Company or its subsidiaries or affiliates
to an extent deemed material by the Committee, or
|
|
|
||
|
|
•
|
disclosure
to third parties or misuse of any confidential information or trade
secrets of the Company, its subsidiaries or affiliates, or
|
|
|
||
|
|
•
|
any
material violation of the Company’s Code of Business Conduct and Ethics or
any other agreement between the Company and the Participant, or
|
|
|
||
|
|
•
|
failing
in any material respect to perform his or her assigned responsibilities
as
an employee of the Company or any of its subsidiaries or affiliates,
as
determined by the Committee, in its sole judgment, after consulting
with
the Chief Executive Officer.
|
|
|
|
The
ownership of less than 2% of the outstanding voting securities of
a
publicly traded corporation which competes with the Company or any
of its
subsidiaries or affiliates will not constitute a disqualifying activity.
|
|
|
||
|
|
|
The
term “disqualifying date” is defined in the Plan as the earliest date as
of which the Participant engaged in any disqualifying activity, as
determined by the Committee.
|
|
10.
11.
|
|
Options.
Options are not part of this Plan.
Stock
Appreciation Rights.
Stock Appreciation rights are not part of this
Plan.
|
|
12.
|
|
Nontransferability
of Rights.
Unless the Committee provides otherwise, (i) no rights under any
Award
will be assignable or transferable and no Participant or Beneficiary
will
have any power to anticipate, alienate, dispose of, pledge or encumber
any
rights under any Award, and (ii) the rights and the benefits of any
Award
may be exercised and received during the lifetime of the Participant
only
by the Participant or by the Participant’s legal representative. The
Participant may, by completing and signing a written beneficiary
designation form which is delivered to and accepted by the Company,
designate a beneficiary to receive any payment and/or exercise any
rights
with respect to outstanding Awards upon the Participant’s death. If at the
time of the Participant’s death there is not on file a fully effective
beneficiary designation form, or if the designated beneficiary did
not
survive the Participant, the person or persons surviving at the time
of
the Participant’s death in the first of the following classes of
beneficiaries in which there is a survivor, shall have the right
to
receive any payment and/or exercise any rights with respect to outstanding
Awards:
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(a)
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Participant’s
surviving spouse;
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(b)
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Equally
to the Participant’s children, except that if any of the Participant’s
children predecease the Participant but leave descendants surviving,
such
descendants shall take by right of representation the share their
parent
would have taken if living;
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(c)
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Participant’s
surviving parents equally;
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(d)
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Participant’s
surviving brothers and sisters equally; or
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(e)
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The
legal representative of the Participant’s estate.
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If
a person in the class surviving dies before receiving any payment
and/or
exercising any rights with
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respect
to outstanding Awards (or the person’s share of any payment and/or rights
in case of more than one person in the class), that person’s right to
receive any payment and/or exercise any rights with respect to outstanding
Awards will lapse and the determination of who will be entitled to
receive
any payment and/or exercise any rights with respect to outstanding
Awards
will be determined as if that person predeceased the Participant.
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13.
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Termination
of Employment.
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13.1
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Transfers
of employment between the Company and an Affiliate, or between Affiliates,
will not constitute termination of employment for purposes of any
Award.
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13.2
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The
Committee may specify whether any authorized leave of absence or
absence
for military or government service or for any other reasons will
constitute a termination of employment for purposes of the Award
and the
Plan.
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14.
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Reorganization.
Unless the Committee or the Board otherwise determines either at
the time
the Award is granted or at any time thereafter, if substantially
all of
the assets of the Company are acquired by another corporation or
in case
of a reorganization of the Company involving the acquisition of the
Company by another entity, then as to each Participant who is an
Employee
immediately prior to the consummation of the transaction:
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(a)
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Intentionally
left blank
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(b)
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All
restrictions with respect to Restricted Stock shall lapse immediately
prior to the consummation of the transaction, and Shares free of
restrictive legend shall be delivered to the Participant.
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(c)
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All
Performance Cycles for the purpose of determining the amounts of
Awards of
Performance Shares and Performance Units payable shall end at the
end of
the calendar quarter immediately preceding the consummation of the
transaction. The amount of an Award payable shall be that fraction
of the
Award computed pursuant to the preceding sentence, the numerator
of which
is the number of calendar quarters completed in the Performance Cycle
through the end of the calendar quarter immediately preceding the
consummation of the transaction and the denominator of which is the
number
of full calendar quarters in the Performance Cycle. The amount of
an Award
payable shall be paid within sixty days after consummation of the
transaction.
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For
avoidance of doubt, this Section 14 shall not apply to the sale or
other
disposition by the Company of the assets of, or stock or other ownership
interests in, an Affiliate unless such disposition would constitute
a
disposition of substantially all of the assets of the Company.
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The
Committee shall take such action as in its discretion may be necessary
or
advisable to carry out the provisions of this Section.
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15.
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Board
Changes.
Unless the Committee or the Board otherwise determines either at
the time
the Award is granted or at any time thereafter, on the date that
a
majority of the Board shall be persons other than persons (a) for
whose
election proxies shall have been solicited by the Board or (b) who
are
then serving as directors appointed by the Board to fill vacancies
on the
Board caused by death or resignation (but not by removal) or to fill
newly-created directorships, then as to any Participant who is an
Employee
immediately prior to said date and who ceases to be an Employee within
six
months after said date for any reason other than as a result of death,
permanent disability or Retirement:
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(i)
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Intentionally
left blank
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(ii)
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All
restrictions with respect to Restricted Stock shall lapse and Shares
free
of restrictive legend shall be delivered to the Participant.
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(iii)
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All
Performance Cycles for the purpose of determining the amounts of
Awards of
Performance
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Shares
and Performance Units payable shall end at the end of the calendar
quarter
immediately preceding the date on which said Participant ceased to
be an
Employee. The amount of an Award payable to said Participant shall
be that
fraction of the Award computed pursuant to the preceding sentence,
the
numerator of which is the number of calendar quarters during the
Performance Cycle during all of which said Participant was an Employee
and
the denominator of which is the number of full calendar quarters in
the
Performance Cycle. The amount of an Award payable shall be paid within
sixty days after said Participant ceases to be an Employee.
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The
Committee shall take such action as in its discretion may be necessary
or
advisable to carry out the provisions of this Section.
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16.
|
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Qualifying
Performance-Based Compensation.
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16.1
|
|
General.
The Committee may specify that all or a portion of any Award is intended
to satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code; provided that the performance criteria
for any
portion of an Award that is intended by the Committee to satisfy
the
requirements for “performance-based compensation” under Section 162(m) of
the Code shall be a measure based on one or more Qualifying Performance
Criteria selected by the Committee and specified at the time such
Award is
granted. The Committee shall certify the extent to which any Qualifying
Performance Criteria has been satisfied, and the amount payable as
a
result thereof, prior to payment, settlement or vesting of any Award
that
is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Notwithstanding
satisfaction of any performance goals, the number of Shares issued
or the
amount paid under an Award may be reduced by the Committee on the
basis of
such further considerations as the Committee shall determine.
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16.2
|
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Qualifying
Performance Criteria.
For purposes of this Plan, the term “Qualifying Performance Criteria”
shall mean any one or more of the following performance criteria,
either
individually, alternatively or in any combination, applied to either
the
Company as a whole or to a business unit or Affiliate, either
individually, alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute basis
or
relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Committee:
Return on Equity (ROE), Return on Investment (ROI), Return on Assets
(ROA), Sales, Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA), or Earnings Per Share
(EPS).
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17.
|
|
Effective
Date of the Plan.
|
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|
17.1
|
|
Effective
Date.
The Plan was approved by the Board as of April 11, 2006, but it will
only
become effective (the “Effective Date”) when it is approved by the
Company’s stockholders at the annual meeting of the Company’s stockholders
on June 21, 2006 or any adjournment thereof (the “2006 Annual Meeting”).
If this plan is not approved by the affirmative vote of the holders
of a
majority of the outstanding Shares of the Company present, or represented
by proxy, and entitled to vote, at the 2006 Annual Meeting in accordance
with the laws of the State of Delaware, this plan shall be void.
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17.2
|
|
Duration
of the Plan.
The Plan shall remain available for the grant of Awards until the
tenth
(10th) anniversary of the Effective Date. Notwithstanding the foregoing,
the Plan may be terminated at such earlier time as the Board may
determine. Termination of the Plan will not affect the rights and
obligations of the Participants and the Company arising under Awards
theretofore granted and then in effect.
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18.
|
|
Right
to Terminate Employment.
Nothing in the Plan shall confer upon any Participant the right to
continue in the employment of the Company or any Affiliate or affect
any
right which the Company or any Affiliate may have to terminate employment
of the Participant.
|
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19.
|
|
Compliance
With Laws; Listing and Registration of Shares.
All Awards granted under the Plan (and all issuances of Stock or
other
securities under the Plan) shall be subject to all applicable laws,
rules
and regulations, and to the requirement that if at any time the Committee
shall determine that the listing, registration or qualification of
the
Shares covered thereby upon any securities exchange or under any
state or
federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection
with,
the grant of such Award or the issue or purchase of Shares thereunder,
such Award may not be exercised in whole or in part, or the restrictions
on such Award shall not lapse, unless and until such listing,
registration, qualification, consent or approval shall have been
effected
or obtained free of any conditions not acceptable to the Committee.
|
|
20.
|
|
Conditions
and Restrictions Upon Securities Subject to Awards.
The Committee may provide that the Shares subject to or issued under
an
Award shall be subject to such further agreements, restrictions,
conditions or limitations as the Committee in its discretion may
specify
prior to the grant, vesting or settlement of such Award, including
without
limitation, conditions on vesting or transferability, forfeiture
or
repurchase provisions and method of payment for the Shares issued
upon
exercise, vesting or settlement of such Award (including the actual
or
constructive surrender of Shares already owned by the Participant)
or
payment of taxes arising in connection with an Award. Without limiting
the
foregoing, such restrictions may address the timing and manner of
any
resales by the Participant or other subsequent transfers by the
Participant of any Shares issued under an Award, including without
limitation (a) restrictions under an insider trading policy or pursuant
to
applicable law, (b) restrictions designed to delay and/or coordinate
the
timing and manner of sales by Participant and holders of other Company
equity compensation arrangements, and (c) restrictions as to the
use of a
specified brokerage firm for such resales or other transfers.
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21.
|
|
Withholding
Taxes.
The Company or an Affiliate shall be entitled to: (a) withhold and
deduct
from future wages of a Participant (or from other amounts that may
be due
and owing to a Participant from the Company or an Affiliate), including
all payments under this Plan, or make other arrangements for the
collection of (including through the sale of Shares otherwise issuable
pursuant to the applicable Award), all legally required amounts necessary
to satisfy any and all federal, state, local and foreign withholding
and
employment-related tax requirements attributable to an Award, including,
without limitation, the grant, exercise or vesting of, or payment
of
dividends with respect to, an Award or a disqualifying disposition
of
Common Stock received upon exercise of an Incentive Stock Option;
or (b)
require a Participant promptly to remit the amount of such withholding to
the Company before taking any action with respect to an Award. To
the
extent specified by the Committee, withholding may be satisfied by
withholding Stock to be received upon exercise or vesting of an Award
or
by delivery to the Company of previously owned Stock. In addition,
the
Company may reasonably delay the issuance or delivery of Shares pursuant
to an Award as it determines appropriate to address tax withholding
and
other administrative matters.
|
|
22.
|
|
Deferral
of Payments.
The Committee may, in an Award Agreement or otherwise, provide for
the
deferred delivery of Shares upon settlement, vesting or other events
with
respect to Restricted Stock, or in payment or satisfaction of an
Award of
Performance Shares or Performance Units. Notwithstanding anything
herein
to the contrary, in no event will any deferral of the delivery of
Shares
or any other payment with respect to any Award be allowed if the
Committee
determines, in its sole discretion, that the deferral would result
in the
imposition of the additional tax under Section 409A(1)(B) of the
Code.
|
|
23.
|
|
No
Liability of Company.
The Company and any Affiliate which is in existence or hereafter
comes
into existence shall not be liable to a Participant, Beneficiary
or any
other person as to: (a) the non-issuance or sale of Stock as to which
the
Company has been unable to obtain, from any regulatory body having
jurisdiction over the matter, the authority deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder; (b) any tax consequence to any Participant, Beneficiary
or
other person due to the receipt, exercise or settlement of any Award
granted hereunder; or (c) any provision of law or legal restriction
that
prohibits or restricts the transfer of Shares issued pursuant to
any
Award.
|
|
24.
|
|
Amendment,
Modification and Termination of the Plan.
The Board or Committee may at any time terminate, suspend or modify
the
Plan, except that the Board or Committee will not, without authorization
of the stockholders of the Company, effect any change (other than
through
adjustment for changes in capitalization as provided in Section 25)
which
will:
|
|
|
(a)
|
|
increase
the total amount of Stock which may be awarded under the Plan;
|
|
|
(b)
|
|
increase
the individual maximum limits in Section 4.3;
|
|
|
(c)
|
|
change
the class of Employees eligible to participate in the Plan;
|
|
|
(d)
|
|
permit
any person, while a member of the Committee, to be eligible to participate
in the Plan;
|
|
|
(e)
|
|
Intentionally
left blank.
|
|
|
(f)
|
|
extend
the duration of the Plan; or
|
|
|
(g)
|
|
otherwise
amend the Plan in any manner requiring stockholder approval by law.
|
|
|
|
No
termination, suspension, or modification of the Plan will adversely
affect
any right acquired by any Participant or any Beneficiary under an
Award
granted before the date of termination, suspension, or modification,
unless otherwise agreed to by the Participant; but it will be conclusively
presumed that any adjustment for changes in capitalization provided
for in
Section 25 does not adversely affect any right.
|
|
25.
|
|
Adjustment
for Changes in Capitalization.
|
|
|
(a)
|
|
In
the event that the number of Shares shall be increased or decreased
through a reorganization, reclassification, combination of shares,
stock
split, reverse stock split, spin-off, dividend (other than regular,
quarterly cash dividends), or otherwise, then each Share that has
been
authorized for issuance under the Plan, whether such Share is then
currently subject to or may become subject to an Award under the
Plan, as
well as the per share limits set forth in Section 4, shall be
appropriately adjusted by the Committee to reflect such increase
or
decrease, unless the Company provides otherwise under the terms of
such
transaction. The terms of any outstanding Award shall also be adjusted
by
the Committee as to price, number of Shares subject to such Award
and
other terms to reflect the foregoing events.
|
|
|
(b)
|
|
In
the event there shall be any other change in the number or kind of
outstanding Shares, or any stock or other securities into which such
Shares shall have been changed, or for which it shall have been exchanged,
whether by reason of a merger, consolidation or otherwise, then the
Committee shall, in its sole discretion, determine the appropriate
adjustment, if any, to be effected. In addition, in the event of
such
change described in this paragraph, the Committee may accelerate
the time
or times at which any Award may be exercised and may provide for
cancellation of such accelerated Awards that are not exercised within
a
time prescribed by the Committee in its sole
discretion.
|
|
|
(c)
|
|
No
right to purchase fractional Shares shall result from any adjustment
in
Awards pursuant to this Section 25. In case of any such adjustment,
the
Shares subject to the Award shall be rounded down to the nearest
whole
Share. Notice of any adjustment shall be given by the Company to
each
Participant, which shall have been so adjusted and such adjustment
(whether or not notice is given) shall be effective and binding for
all
purposes of the Plan.
|
|
REVOCABLE
PROXY
|
||
|
ý PLEASE
MARK VOTES
AS
IN
THIS EXAMPLE
|
LAKELAND
INDUSTRIES, INC.
701-07
Koehler Avenue, Ronkonkoma, New York 11779-7410
|
|
For
|
With-
hold
|
For
All
Except
|
|||
|
THIS
PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS. |
1. Election
of Directors
|
o
|
o
|
o
|
|
|
The
undersigned hereby appoints Christopher J. Ryan and Raymond
J. Smith as
proxies, each with power to appoint his substitute, and hereby
authorizes
them to represent and to vote, as designated hereon, all the
shares of
common stock of Lakeland Industries, Inc., held of record by
the
undersigned on April 28, 2006 at the annual meeting of stockholders
to be
held on June 21, 2006 or any adjournment there
of.
|
John
J. Collins, Jr. Eric
O.Hallman Stephen
M. Bachelder
INSTRUCTION:
To withhold authority to vote for any individual nominee, mark
“For All
Except” and write that nominee’s name in the space provided
below.
|
||||
|
For
|
Against
|
Abstain
|
|||
|
|
2. To
approve the 2006 Equity Incentive Plan.
|
o
|
o
|
o
|
|
|
|
|
||||
|
3. Ratify
appointment of Auditors Holtz
Rubenstein Reminick LLP for fiscal
year 2007.
|
o
|
o
|
o
|
||
|
4. Other
Business.
|
|||||
|
In
their discretion, the Proxies are authorized to vote upon such
other
business as may properly come before the meeting.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
|
||||
|
Please
be sure to sign and date
this Proxy in the box below |
Date |
Please
sign exactly as your name appears on this card. When shares are
held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a
corporation, please sign in full corporate name by President or
other
authorized officer. If a partnership, please sign in partnership
name by
authorized person.
|
||
|
Stockholder
sign above
|
Co-holder
(if any) sign above)
|
|||
Ç Detach
above card, sign, date and mail in postage paid envelope
provided. Ç
LAKELAND
INDUSTRIES, INC.
|
PLEASE
ACT PROMPTLY
SIGN,
DATE & MAIL YOUR PROXY CARD
TODAY
|
IF
YOUR
ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW
AND
RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.