def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
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Filed by the Registrant x |
Filed by a Party other than the Registrant o |
Check the appropriate box:
o Preliminary Proxy
Statement
x Definitive Proxy
Statement
o Definitive Additional
Materials
o Soliciting Material
Pursuant to §240.14a-11(c) or §240.14a-12
o Confidential, for Use
of the Commission Only (as permitted by
Rule 14a-6(e)(2))
A. T. Cross Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than
Registrant)
Payment of Filing Fee (Check the appropriate box):
o Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each
class of securities to which transaction applies:
2) Aggregate
number of securities to which transaction applies:
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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): |
4) Proposed
maximum aggregate value of transaction:
5) Total fee paid:
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o |
Fee paid previously with preliminary materials. |
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o |
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing. |
1) Amount
Previously Paid:
2) Form, Schedule
or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2006
TO THE SHAREHOLDERS OF A.T. CROSS COMPANY:
Notice is hereby given that the annual meeting of shareholders
of A.T. Cross Company (the Company) will be held on
Thursday, April 27, 2006 at 10:00 a.m. at the offices of the
Company, One Albion Road, Lincoln, Rhode Island 02865, for the
following purposes:
1. Fixing the number of directors at nine, of which
three shall be Class A directors and six shall be Class B
directors (by holders of Class A and Class B common stock voting
together as a single class).
2. Electing three Class A directors (by holders of
Class A common stock only) and six Class B directors (by holders
of Class B common stock only) to hold office until the next
annual meeting of shareholders or until their successors are
duly elected and qualified.
3. Transacting such other and further business as may
properly come before said meeting upon which the holders of
Class A common stock or Class B common stock, respectively, are
entitled to vote.
The stock transfer books will not be closed. The close of
business on March 1, 2006 has been fixed as the record date
for determining shareholders entitled to vote at the annual
meeting or any adjournments or postponements thereof, and only
holders of record of Class A common stock or Class B common
stock as of that time are entitled to receive notice of and to
vote at said meeting or any adjournments or postponements
thereof.
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By order of the Board of Directors |
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![-s- Tina C. Benik](b59083atb5908302.gif) |
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Tina C. Benik |
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Vice President, Legal and Human Resources |
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Corporate Secretary |
March 28, 2006
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT
AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE MEETING AND VOTE IN
PERSON, THE PROXY WILL NOT BE USED.
ONE ALBION ROAD
LINCOLN, RHODE ISLAND 02865
PROXY STATEMENT
FOR ANNUAL SHAREHOLDERS MEETING
APRIL 27, 2006
This statement is furnished in connection with the accompanying
proxy which is solicited by the Board of Directors of A.T. Cross
Company (the Company) from holders of Class A
common stock of the Company for use at the annual meeting to be
held April 27, 2006 at 10:00 a.m. at the offices of
the Company, One Albion Road, Lincoln, Rhode Island 02865.
Any shareholder giving a proxy may revoke the same prior to its
exercise by filing a later proxy with the Company, by attending
the meeting and voting in person, or by giving notice in writing
or in person to the Corporate Secretary. If not revoked, the
persons named in the accompanying proxy will vote such proxy in
the manner specified therein and, in the discretion of the
persons named, for or against any matter upon which holders of
Class A common stock are entitled to vote which properly
comes before the meeting and which has been omitted from the
proxy and proxy statement. The cost of solicitation of proxies,
including the cost of reimbursing brokerage houses and other
custodians, nominees or fiduciaries for forwarding proxies and
proxy statements to their principals, will be borne by the
Company. Solicitation may be made in person or by telephone or
telegraph by officers or regular employees of the Company, who
will not receive additional compensation. In addition, the
Company has retained Georgeson Shareholder Communications Inc.,
New York, N.Y., to aid in the solicitation of proxies. The
charges of such firm, estimated at $6,000, plus expenses, will
be paid by the Company. This proxy statement and the enclosed
form of proxy are expected to be sent to shareholders on or
about March 28, 2006.
A copy of the Companys annual report for the year 2005
containing financial statements for the year ended
December 31, 2005 is also enclosed, but is not to be
considered a part of the proxy soliciting material.
As of March 1, 2006 the Company had outstanding
13,365,437 shares of Class A common stock and
1,804,800 shares of Class B common stock. Only shareholders
of record at the close of business on that date are entitled to
vote at the annual meeting. Shareholders shall be entitled to
one vote for each share held on the foregoing record date with
respect to matters on which shares of that class are eligible to
vote.
SHAREHOLDERS PROPOSALS
Any proposal of a shareholder intended to be presented at the
next annual meeting of the Company, scheduled to be held
April 26, 2007, must be received by the Companys
Corporate Secretary not later than November 30, 2006 for
inclusion in the proxy statement and form of proxy relating to
that meeting. Any shareholder proposal intended to be presented
at the next annual meeting of the Company without being included
in the proxy statement and form of proxy relating to such
meeting must be received by the Companys Corporate
Secretary not later than February 9, 2007.
VOTING RIGHTS
Holders of Class A common stock have the right to elect
one-third of the number of directors from time to time fixed by
the holders of Class A and Class B common stock voting
together as a single class; provided, however, that if the total
number of directors is not evenly divisible by three, then the
holders of Class A common stock have the right to elect
that number of directors which is the nearest whole number when
the total number of directors is divided by three. Holders of
Class B common stock have the right to elect the remaining
directors. It is proposed that the number of directors for the
ensuing year be fixed at nine (see Election of
Directors on page 4), and if this proposal is
adopted, holders of Class A common stock will have the
right to elect three directors.
In addition, holders of Class A and Class B common
stock vote together as a single class:
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a) |
For the reservation in the future of shares to be issued
pursuant to options |
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granted or to be granted to directors, officers or employees; and |
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b) |
With respect to the acquisition of assets or shares of any other
company if: |
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(1) |
An officer, director or holder of ten percent or more of either
Class A or Class B common stock has an interest in the
transaction; |
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(2) |
The transaction would, in the reasonable judgment of the Board
of Directors, presently or potentially increase by nineteen and
one-half percent or more the aggregate of the Class A or Class B
common stock outstanding immediately prior to such transaction;
or |
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(3) |
The transaction would involve the issuance of any Class A or
Class B common stock and in the reasonable judgment of the Board
of Directors the value of the consideration furnished by the
Company is nineteen and one-half percent or more of the
aggregate market value of all Class A and Class B common stock
outstanding immediately prior to such transaction. |
If the consummation of any
transaction described above would, with respect to either the
Class A common stock or the Class B common stock, result in a
change in the designations, preferences, limitations or relative
rights of the shares of such class or have certain other effects
as specified in the Companys articles, the holders of
Class A and Class B common stock vote as separate classes on
such transaction.
Except as stated above or
otherwise required by law, all voting power is vested in the
holders of Class B common stock so long as any shares of Class B
common stock are outstanding.
VOTING PROCEDURES
The numbers of Class A and Class B directors will be
fixed by vote of the holders of a majority of the Class A
and Class B shares present at the annual meeting in person
or represented by proxy, voting as a single class. The
Class A directors will be elected in each case by vote of
the holders of a majority of the Class A shares present or
represented at the meeting, and the Class B directors will
be similarly elected by the holders of a majority of the
Class B shares.
Shares represented by proxies which are marked
abstain with respect to fixing the number of
directors or withheld with respect to the election
of any particular nominee for director, will be counted as
shares present and entitled to vote, and accordingly any such
marking of a proxy will have the same effect as a vote against
the proposal to which it relates. The Board of Directors does
not know of any matters which will be brought before the meeting
other than those specifically set forth in the accompanying
Notice of Annual Meeting. If any other matters are presented to
the meeting, the persons named in the enclosed proxy have
discretionary authority to vote and will vote all proxies with
respect to such matters in accordance with their judgment.
Under the rules of the American Stock Exchange, on which the
Class A shares are listed, brokers who hold Class A
shares in street name have the authority to vote such shares on
certain items, including fixing the number of and electing
directors, unless they have received instructions from the
beneficial owners to the contrary, in which case the shares are
to be voted or the votes relating thereto withheld, as directed
by the beneficial owners. Such rules also provide that brokers
may not vote shares held in street name on certain other matters
without specific instructions from their customers. Shares
subject to such broker non-votes will not be treated
as shares entitled to vote on the matters to which they relate
and will have no effect on the outcome of the voting on such
matters.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of March 1, 2006 (except
as otherwise noted) certain information concerning the ownership
of shares of Class A or Class B common stock of the Company by
(i) each person or group known by the Company to
beneficially own more than 5% of the outstanding Class A or
Class B common stock, (ii) each director and nominee for
director, (iii) each executive officer named in the Summary
Compensation Table on page 10, and (iv) all directors
and executive officers as a group. Except as otherwise
indicated, each person named has sole investment and voting
power with respect to the securities shown.
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Number of Shares | |
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Percent of Class | |
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Name |
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Class A | |
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Class B(1) | |
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Class A | |
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Class B | |
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Russell A.
Boss(2)
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1,726,001 |
(3)(4)(5)(6) |
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1,804,800 |
(4)(5) |
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12.9 |
% |
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100 |
% |
Marjorie B.
Boss(7)
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850,931 |
(3)(5) |
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902,400 |
(5) |
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6.4 |
% |
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50 |
% |
Paul A.
Silver(8)
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831,000 |
(5) |
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902,400 |
(5) |
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6.2 |
% |
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50 |
% |
Edward P.
Pieroni(9)
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726,000 |
(4) |
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902,400 |
(4) |
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5.4 |
% |
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50 |
% |
John B.
Costello(10)
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726,000 |
(4) |
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902,400 |
(4) |
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5.4 |
% |
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50 |
% |
Bank of America
Corporation(11)
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1,186,610 |
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8.9 |
% |
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Dimensional Fund Advisors,
Inc.(12)
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850,500 |
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6.4 |
% |
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Auber Investments
Ltd.(13)
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717,773 |
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5.4 |
% |
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Bradford R.
Boss(14)
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181,678 |
(6) |
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1.4 |
% |
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Bernard V. Buonanno, Jr.
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28,929 |
(6) |
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* |
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Edward J. Cooney
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3,946 |
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* |
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Galal P.
Doss(15)
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4,245,516 |
(6) |
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31.7 |
% |
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Terrence Murray
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30,333 |
(6)(16) |
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* |
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Andrew J. Parsons
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19,545 |
(6) |
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* |
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James C. Tappan
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28,370 |
(6) |
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* |
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David G.
Whalen(17)
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982,637 |
(6)(18) |
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7.0 |
% |
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Peter J. Canole
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88,534 |
(6)(18) |
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* |
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Charles S. Mellen
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90,000 |
(18) |
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* |
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Stephen A. Perreault
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164,419 |
(6)(18) |
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* |
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Kevin F. Mahoney
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61,153 |
(6)(18) |
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* |
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All directors and executive officers as a group (17 persons)
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7,986,100 |
(19) |
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1,804,800 |
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54.5 |
% |
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100 |
% |
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(1) |
The Class B common stock is convertible share for share into
Class A common stock at any time at the option of the holder. If
all of the Class B shares were converted into Class A shares,
Mr. R. Boss, Mrs. M. Boss, Mr. Silver, Mr. Pieroni and
Mr. Costello would be the beneficial owners of 23.24%,
12.30%, 12.15%, 11.41% and 11.41%, respectively, of the
outstanding Class A common shares. |
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(2) |
Mr. R. Bosss address is One Albion Road, Lincoln, Rhode
Island 02865. |
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(3) |
Excludes shares beneficially owned by spouse. |
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(4) |
Mr. R. Boss, Mr. Costello and Mr. Pieroni are co-trustees
of the W. Russell Boss, Jr. Trust A. The co-trustees jointly
exercise investment and voting powers with respect to the assets
of the trust. The 726,000 shares of Class A common stock and
902,400 shares of Class B common stock held by such trust are
included in the amounts above for each of the co-trustees. |
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(5) |
Mr. R. Boss, Mrs. M. Boss (the wife of Mr. R. Boss)
and Mr. Silver are co-trustees of the W. Russell Boss, Jr. Trust
B. The co-trustees jointly exercise investment and voting powers
with respect to the assets of the trust. The 831,000 shares of
Class A common stock and 902,400 shares of Class B common stock
held by such trust are included in the amounts above for each of
the co-trustees. |
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(6) |
Includes the following Class A shares subject to options
exercisable within 60 days: Mr. B. Boss 25,333;
Mr. R. Boss 25,333;
Mr. Buonanno 25,429; Mr. Doss
12,000; Mr. Murray 25,333;
Mr. Parsons 12,000; Mr. Tappan
25,370; Mr. Whalen 759,351;
Mr. Canole 48,000;
Mr. Perreault 109,499; and
Mr. Mahoney 20,000. |
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(7) |
Mrs. M. Bosss address is One Albion Road,
Lincoln, Rhode Island 02865. |
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(8) |
Mr. Silvers address is 1500 Fleet Center,
Providence, Rhode Island 02903. |
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(9) |
Mr. Pieronis address is One State Street,
Suite 200, Providence, Rhode Island 02908. |
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(10) |
Mr. Costellos address is c/o Andsagar, Bartlett
& Pieroni, L.L.P., One State Street,
Suite 200, Providence, Rhode Island 02908. |
(11) |
Bank of America Corporation has shared voting power with respect
to 1,178,910 shares and shared dispositive power with respect to
1,186,610 shares. NB Holdings Corporation has shared voting
power with respect to 1,178,910 shares and shared
dispositive power with respect to 1,186,610 shares. Bank of
America, NA has sole voting power with respect to
1,178,385 shares, shared voting power with respect to
525 shares, sole dispositive power with respect to
1,177,785 shares and shared dispositive power with respect
to 8,825 shares. Columbia Management Group, LLC has shared
voting power with respect to 525 shares and shared
dispositive power with respect to 525 shares. Columbia
Management Advisors, LLC has sole voting power with respect to
525 shares and sole dispositive power with respect to
525 shares. Information based on Bank of America
Corporations Schedule 13G filed with the SEC on
February 8, 2006, which reported ownership as of
December 31, 2005. The address of Bank of America
Corporation is 100 North Tryon Street, Floor 25, Bank
of America Corporate Center, Charlotte, NC 28255. |
(12) |
Information based on its Schedule 13G filed with the SEC on
February 6, 2006, which reported ownership as of
December 31, 2005. The address of Dimensional Fund
Advisors, Inc. is 1299 Ocean Avenue,
11th
Floor, Santa Monica, California 90401. |
(13) |
Information based on its Schedule 13G filed with the SEC on
January 23, 2006, which reported ownership as of
December 31, 2005. The address of Auber Investments Ltd. is
2 Grand Central Tower, 140 East 45th Street,
28th Floor, New York, NY 10017. |
(14) |
Mr. B. Bosss address is One Albion Road, Lincoln, Rhode
Island 02865. |
(15) |
Mr. Dosss address is One Albion Road, Lincoln, Rhode
Island 02865. |
(16) |
Includes 5,000 shares held by Murray and Young Associates LLC. |
(17) |
Mr. Whalens address is One Albion Road, Lincoln, Rhode
Island 02865. |
(18) |
Includes the following restricted Class A shares as to
which the holder has sole voting power but no investment power
during the restricted period: Mr. Whalen
150,000; Mr. Canole 40,000;
Mr. Mellen 90,000;
Mr. Perreault 40,000;
Mr. Mahoney 40,000. |
(19) |
Includes 1,301,498 shares subject to options exercisable
within 60 days; 424,000 shares of restricted stock as
to which there is sole voting power but no investment power
during the restricted period; and 1,557,000 shares held under
trusts as to which there is shared voting and investment power. |
3
ELECTION OF DIRECTORS
It is proposed to fix the number of directors at nine, of which
three will be designated Class A Directors and six
will be designated Class B Directors. It is also
proposed to elect three Class A directors (by holders of
Class A common stock only) and six Class B directors
(by holders of Class B common stock only) to hold office
until the next annual meeting of shareholders or until their
successors are duly elected and qualified. Proxies will be voted
for the nominees set forth below unless authorization to do so
is withheld. All nominees are currently directors of the
Company. Should any nominee become unavailable for any reason to
accept nomination or election as a director, the persons named
in the proxy will vote for the election of such other person or
persons as management may recommend unless the shareholders vote
to reduce the authorized number of directors. The terms of all
directors will expire when their successors are duly elected at
the annual meeting of shareholders scheduled to be held
April 26, 2007. The following tables reflect information as
of January 1, 2006.
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Principal Occupation |
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Director | |
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Nominee |
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Age | |
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During Past Five Years |
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Since | |
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Other Directorships(1) |
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CLASS A DIRECTORS |
Galal P. Doss
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51 |
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Chairman and Chief Executive Officer, Family Cosmetics, S.A.E.
(an Egyptian company listed on the Egyptian Stock
Exchange).(2) |
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2000 |
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Andrew J. Parsons
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62 |
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Senior Partner and Director, McKinsey & Company (global
strategic management consulting firm) to December 2000;
thereafter Member, McKinsey Advisory Council to June 2004;
thereafter Director Emeritus, McKinsey & Company;
Chairman and Chief Executive Officer, Gulliver Growth Partners
LLC, a management advisory firm.
(2) (3) |
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2001 |
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UST Inc.
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James C. Tappan |
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70 |
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President, Tappan Capital Partners (equity investment
firm).(2) (3) |
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1994 |
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CLASS B DIRECTORS |
Bradford R. Boss
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72 |
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Chairman of the Board and Chief Executive Officer to April 1993;
thereafter Chairman of the Board to November 14, 1999;
thereafter Chairman
Emeritus.(4) (5) |
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1960 |
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Russell A. Boss
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67 |
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President and Chief Operating Officer to April 1993; thereafter
President and Chief Executive Officer to November 14, 1999;
thereafter Chairman of the Board.
(4) (5) (6) |
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1962 |
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David G. Whalen |
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48 |
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President and Chief Executive
Officer.(4) |
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1999 |
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Bernard V.
Buonanno, Jr.
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67 |
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Senior Partner, Edwards, Angell, Palmer & Dodge LLP,
Providence, RI (attorneys-at-law); Partner, Riparian Partners,
Ltd., Providence, RI (investment banking
firm).(2) (6) (7) (8) |
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1986 |
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Old Stone Corporation
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Edward J. Cooney
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58 |
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Executive Vice President Sales and Marketing,
Amtrol, Inc., a producer and marketer of water storage,
treatment, heating, expansion, flow control and related products
(1998-2000); thereafter Chief Financial Officer, Speidel, Inc.,
a worldwide distributor of watchbands and watchband attachments
to August 2001; thereafter Vice President and Treasurer, Nortek,
Inc., an international designer, manufacturer and marketer of
building
products.(2) (3) |
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2004 |
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Terrence Murray
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66 |
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Chairman and Chief Executive Officer, FleetBoston Financial
Corporation (diversified financial services corporation) to
December 31, 2001; thereafter Chairman, FleetBoston
Financial Corporation (retired January 1, 2003).
(2) (8) |
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1982 |
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CVS Corporation; ChoicePoint Inc.; Air Products and Chemicals,
Inc.
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See footnotes on page 5.
4
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(1) |
Includes only companies with a class of securities registered
pursuant to Section 12 or subject to the requirements of Section
15(d) of the Securities Exchange Act of 1934 and any company
registered as an investment company under the Investment Company
Act of 1940. |
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(2) |
Member of Nominating Committee. |
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(3) |
Member of Audit Committee. |
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(4) |
Member of Executive Committee. |
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(5) |
Bradford R. Boss and Russell A. Boss are brothers. |
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(6) |
Russell A. Boss and Bernard V. Buonanno, Jr. are cousins by
marriage. |
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(7) |
Edwards Angell Palmer & Dodge LLP performed legal services
for the Company in 2005 and is expected to perform legal
services for the Company in 2006. |
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(8) |
Member of Compensation Committee. |
Corporate Governance
Board of Director and Shareholder Meetings: The Board of
Directors met four times during the fiscal year ended
December 31, 2005 (fiscal year 2005). All
directors attended at least 75% of the Board of Directors
meetings and applicable committee meetings in fiscal year 2005.
The Company has adopted a policy that requires every member of
the Board of Directors to make every effort to attend the
Companys Annual Meeting. All members of the Board of
Directors other than Mr. Murray attended the Companys
2005 Annual Meeting.
Board of Director Independence: The Board of Directors
has reviewed the relationship that each current and nominee
director has with the Company and with other parties. Only those
directors who do not have any of the categorical relationships
that preclude them from being independent within the meaning of
applicable American Stock Exchange rules (AMEX
Rules) and who the Board of Directors affirmatively
determines have no relationships that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director, are considered to be independent
directors. The Board of Directors has reviewed a number of
factors to evaluate the independence of each of its members.
These factors include its members current and historic
relationships with the Company and its competitors, suppliers
and customers; their relationships with management and other
directors; the relationships their current and former employers
have with the Company; and the relationships between the Company
and other companies of which the Board members are directors or
executive officers. After evaluating these factors, the Board of
Directors has determined that the following directors are
independent directors within the meaning of applicable AMEX
Rules: Bernard V. Buonanno, Jr; Edward J. Cooney;
Galal P. Doss; Terrence Murray; Andrew J. Parsons;
James C. Tappan.
Independent members of the Board of Directors are scheduled to
meet at least once per year in executive session without
management, but will meet as often as is deemed necessary.
Shareholder Communications: The Companys
shareholders may communicate directly with the members of the
Board of Directors or the individual chairmen of standing Board
of Directors committees by writing directly to those individuals
at the following address: One Albion Road, Lincoln, RI 02865.
The Companys general policy is to forward, and not to
intentionally screen, any mail received at the Companys
corporate offices that is sent directly to an individual unless
the Company believes the communication may pose a security risk.
Code of Ethics: The Board of Directors originally adopted
a Code of Business Conduct and Ethics (the Code of
Ethics) in 1996 which has been periodically updated and
amended. This Code of Ethics applies to all of the
Companys employees, officers and directors, including its
principal financial officers. A link to the Code of Ethics is on
the Companys website at www.cross.com under the
Companys Investor Relations section.
Committees of the Board of Directors
The Board of Directors has standing Audit, Compensation, and
Executive Committees. The independent directors, identified
above, serve as the Companys Nominating Committee as
permitted under AMEX Rules, although the Board of Directors
expects to create a standing Corporate Governance and Nominating
Committee at the Board of Directors Meeting following the 2006
Annual Shareholders Meeting.
Audit Committee. The members of the Audit Committee are
Edward J. Cooney, who serves as Chairman, James C. Tappan and
Andrew Parsons. The Board has determined that the members of the
Audit Committee are independent within the meaning of applicable
AMEX Rules and Section 10A(m)(3) of the Securities Exchange
Act of 1934 (the Exchange Act). The Board of
Directors has determined that Edward J. Cooney is an
audit committee financial expert as defined in
Item 401(h) of
Regulation S-K.
The Audit Committee meets on an as needed basis and met five
times during fiscal year 2005.
5
The Audit Committee has oversight responsibility for the
establishment and maintenance of an effective financial controls
environment, for overseeing the procedures for evaluating the
system of internal accounting controls and for evaluating audit
performance. In addition to the responsibilities listed above,
the Audit Committee has responsibilities and authority necessary
to comply with
Rule 10A-3(b)(2),(3),(4),
and (5) under the Exchange Act. These and other aspects of
the Audit Committees authority are more particularly
described in the Audit Committee Charter adopted by the Board of
Directors in 2000, and as amended in 2002 and 2004. The Charter,
as amended, is attached to this proxy statement as Exhibit A,
and is also available on the Companys website,
www.cross.com, in the Investor Relations section. See
also the Report of the Audit Committee on
page 15.
Compensation Committee. The members of the Compensation
Committee are Mr. Murray, who serves as Chairman, and
Mr. Buonanno, Jr. The Board has determined that the members
of the Compensation Committee are independent within the meaning
of applicable AMEX Rules. The Compensation Committee met twice
during fiscal year 2005. The Compensation Committee has
responsibility for developing, overseeing and implementing the
overall compensation policy for the Company including, subject
to full Board approval, the implementation of an incentive
compensation plan for the Company. The Compensation Committee
also makes recommendations to the Board of Directors concerning
compensation, including incentive compensation, of the Chief
Executive Officer and all other executive officers. The
Compensation Committee administers the Companys equity
incentive plan. See Report to Shareholders on Compensation
Matters on page 7.
Executive Committee. The members of the Executive
Committee are Russell A. Boss, Bradford R. Boss and David G.
Whalen. The Executive Committee meets on an as needed basis and
met twice during fiscal year 2005. The Executive Committee has
the authority in certain circumstances to act in the stead of
the Board between regular Board meetings.
Nominating Committee. The Board of Directors has
designated by resolution the identified independent directors
(see Corporate Governance Board of Director
Independence on page 5) to act as the Companys
Nominating Committee. Pursuant to the board resolution, the
Nominating Committee has the power to select a Chairman and to
adopt its own operating rules and procedures. Mr. Parsons
serves as Chairman of the Nominating Committee. The Nominating
Committee does not have a charter. The Nominating Committee met
once during fiscal year 2005. The Board of Directors expects to
create a standing Corporate Governance and Nominating Committee
at its meeting following the 2006 Annual Shareholders Meeting,
and will make the written charter of that committee available on
the Companys website shortly thereafter.
The Nominating Committee is responsible for evaluating and
recommending individuals for election or reelection to the Board
of Directors, including those recommendations submitted by the
Class A and Class B shareholders, and is also
responsible for determining, with input from the Board, the
desired competencies and attributes for Board members that will
best meet the current and future needs of the Company.
It is the policy of the Nominating Committee that candidates for
director possess the highest personal and professional
integrity, have demonstrated superior ability and sound business
judgement, and possess skills and expertise appropriate to meet
the Companys needs and advance the long-term interests of
the shareholders.
The Nominating Committees process for identifying and
evaluating nominees is as follows:
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(1) in the case of incumbent directors whose terms of
office are set to expire, the Nominating Committee reviews such
directors overall service to the Company during their
term, including the number of meetings attended, level of
participation, quality of performance, any change of status and
any related party transactions with the Company during the
applicable time period; and |
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(2) in the case of new director candidates, the Nominating
Committee conducts such inquiries into the backgrounds and
qualifications of possible candidates as the Nominating
Committee deems necessary or appropriate after considering the
composition and needs of the Board of Directors. |
The Nominating Committee discusses and considers such
candidates qualifications, including whether the nominee
is independent for purposes of Exchange Act
Rule 10A-3(b) and
the AMEX Rules, and selects candidates for recommendation to the
Board of Directors by majority vote of the Nominating Committee.
In seeking potential nominees, the Nominating Committee uses its
network of contacts to identify potential candidates, but may
also engage, if it deems appropriate, a professional search
firm, at the Companys expense.
6
The Nominating Committee is authorized to adopt and implement
such additional procedures and processes to discharge its
responsibilities as it deems appropriate.
The Nominating Committee considers director candidates
recommended by shareholders provided the shareholders follow the
procedures set forth below. The Nominating Committee does not
intend to alter the manner in which it evaluates candidates,
including the criteria set forth above, based on whether the
candidate was recommended by a shareholder or otherwise.
The Nominating Committee considers all bona fide candidates for
Class A director positions recommended by Class A
shareholders holding Class A common stock of the Company.
The Nominating Committee considers all bona fide candidates for
Class B director positions recommended by Class B
shareholders holding Class B common stock of the Company.
The Nominating Committee considers such Class A and
Class B candidates using the same screening criteria as are
applied to all other potential nominees for election based on
the considerations set forth above. Third parties wishing to
recommend candidates for consideration by the Nominating
Committee may do so in writing by providing the recommended
candidates name, biographical data, qualifications and a
statement describing the basis for the recommendation, together
with the recommended candidates consent to serve if
nominated, to the Chairman of the Nominating Committee.
In addition, the Companys by-laws also permit shareholders
entitled to vote in the election of directors for the class of
shares that they hold to nominate candidates for election as
Class A directors or Class B directors, as the case
may be. For nominees for election to the Board of Directors
proposed by shareholders under the by-laws to be considered, the
following information concerning each nominee must be timely
submitted in accordance with the required procedures:
(1) the nominees name, age, business address,
residence address, principal occupation or employment, the class
and number of shares of the Companys capital stock the
nominee beneficially owns, the nominees qualifications to
serve as a director of the Company and any other information
relating to the nominee that is required to be disclosed in
solicitations for proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and
regulations thereunder; and (2) as to the shareholder
proposing such nominee, that shareholders name and
address, the class and number of shares of the Companys
capital stock that the shareholder beneficially owns, a
description of all arrangements and understandings between the
shareholder and the nominee or any other person or persons
(including their names) pursuant to which the nomination is
made, a representation that the shareholder intends to appear in
person or by proxy at the meeting to nominate the person named
in its notice and any other information relating to the
shareholder that is required to be disclosed in solicitations
for proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and
regulations thereunder. The notice must also be accompanied by a
written consent of the proposed nominee to being named as a
nominee and to serve as a director if elected.
DIRECTOR COMPENSATION
Members of the Companys Board of Directors who are not
employees of the Company were compensated for their services
during 2005 at the rate of $25,000 per annum (the
Retainer), plus $1,000 for each Board meeting
attended. During 2005, the Board of Directors held four
meetings. In addition, non-employee members of the Compensation
and Executive Committees received $800 ($1,000 in the case of
the committee chair) for each committee meeting attended.
Members of the Audit Committee receive $1,500 ($2,500 in the
case of the committee chair) for each committee meeting
attended. Board and Committee members receive $500 for
participation in special (i.e., not regularly scheduled)
telephonic meetings.
Sixty percent of the Retainer paid to non-employee directors is
paid in Class A common stock of the Company (the
Mandatory Shares). Non-employee directors may elect
to receive the balance of the Retainer and any supplemental
committee fees in Class A common stock. There are certain
restrictions on the sale or transfer of the Mandatory Shares by
the directors.
REPORT TO SHAREHOLDERS ON
COMPENSATION MATTERS
The 2005 total compensation of the President and Chief Executive
Officer and of the other named executive officers of the Company
was established by the members of the Compensation Committee and
recommended to the Board of Directors for its approval. See also
Compensation Committee Interlocks and Insider
Participation on page 9, Committees of the
Board of Directors on page 5 and Compensation
Committee on page 6.
The elements of compensation for the President and Chief
Executive Officer consist of base pay,
7
annual incentive bonus and long-term incentives. The
compensation for this position was based on three primary
factors:
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The performance of the executive in meeting key strategic
objectives; |
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The external competitiveness of the Companys pay levels
with those of other companies with similar revenues and scope of
operations; and |
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The goal of retaining and motivating the executive. |
The Compensation Committee is privy to external compensation
data through the Companys participation in, and analysis
of, periodic compensation surveys conducted by independent
consulting firms and associations which report on compensation
paid to executives at companies of similar size. There are a
substantial number of participating companies in the various
survey groups. The Compensation Committee reviewed the summary
survey information which included company sales comparisons. In
addition, the Compensation Committee utilized survey data to
gauge the Companys competitive position with other
companies with respect to bonus and equity based grants.
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public corporations for
compensation over $1,000,000 paid for any fiscal year to the
corporations chief executive officer and four other most
highly compensated executive officers as of the end of any
fiscal year. However, the statute exempts qualifying
performance-based compensation from the deduction limit if
certain requirements are met. The Board and the Compensation
Committee currently intend to structure performance-based
compensation, including equity based grants and annual bonuses,
to executive officers who may be subject to Section 162(m)
in a manner that satisfies those requirements.
The Board and the Compensation Committee reserve the authority
to award non-deductible compensation in other circumstances as
they deem appropriate. Because of ambiguities and uncertainties
as to the application and interpretation of Section 162(m)
and the regulations issued thereunder, no assurance can be
given, despite the Companys efforts, that compensation
intended by the Company to satisfy the requirements for
deductibility under Section 162(m) does in fact do so.
The following is a more specific discussion of each compensation
component:
Base Salary:
In considering a base salary adjustment for Mr. Whalen, the
Compensation Committee reviewed the pay of similar level
officers in the survey groups referred to above, the industry
trends relating to merit increases and the merit pay budgeted
for the rest of the Company. For 2005 Mr. Whalen forwent a
base pay increase consistent with other Company management.
The remaining four highest paid executive officers, two of whom
were hired in January 2005, did not receive pay increases in
2005.
Bonus:
Bonus payments to executives for 2005 performance were governed
by the Annual Incentive Plan approved by the Compensation
Committee and the Board of Directors for 2005. All of the
highest paid executives were participants in the plan except for
Mr. Whalen. Mr. Whalens bonus is determined by
the Compensation Committee considering attainment of
predetermined performance objectives.
Based on the achievement of certain of the Companys
strategic objectives for 2005, Mr. Whalen was awarded a
bonus in the amount of $50,000. (In the event that all
objectives had been met, Mr. Whalen would have been
eligible to earn a bonus equal to 75% of his base salary.)
The annual incentive payments to eligible executives are
designed to provide rewards based on meeting approved business
plans. Performance measures are determined in part based on
specific job responsibilities and may include one or more of the
following measures: operating income before taxes (OIBT), sales,
return on assets and inventory level management at the
corporate, territory and regional levels. Other performance
goals that are not quantitative may also be assigned to the
executives.
Under the program, performance objectives for 2005 for the named
executives were set based on the attainment of the
Companys operating plan for 2005. In addition, in its
discretion, the Compensation Committee may recommend to the
Board rewards for participants outside of the provisions of the
plan. Pursuant to discretion exercised by the Compensation
Committee and the Board of Directors, certain of the named
executive officers were awarded a portion of their target bonus
for 2005 performance.
The Company analyzes its total cash compensation (base salary
plus bonuses) for executive officers in relation to other
similarly sized companies.
8
The goal is to provide competitive compensation based upon
assessment of the responsibilities relative to the
individuals position, as well as the individuals
background, training and experience and by reference to the
competitive marketplace for comparable talent. Additionally, the
compensation program is designed to enable the Company to
attract, retain, motivate and appropriately reward highly
qualified individuals.
Compensation Arrangements:
The Board of Directors of the Company has approved certain
compensation arrangements whereby the Chief Executive Officer
and the other named executives will receive payments in the
event that there is a change in control of the Companys
Class B stock (i.e., a sale of more than 50% to
unaffiliated parties) or in the event that they are terminated
without cause.
In the event of an involuntary termination for reasons other
than cause but not including a change in control, the Chief
Executive Officer will receive a severance payment equal to
twenty-four (24) months of his then current salary and target
bonus. In the event of a change in control where the Chief
Executive Officer is either involuntarily terminated or not
offered a similar position, he will receive three (3) years
of his then current salary and target bonus, plus medical
benefits for that three year period.
In the event of an involuntary termination for reasons other
than cause but not including a change in control, the other
named executives will receive severance equal to twelve
(12) months of their then current base salary. In the event
of an involuntary termination resulting from a change in control
which occurs within two years of the change in control and where
the named executive is not offered a similar position, he will
receive eighteen (18) months base salary and target bonus.
In the event of an involuntary termination or a change in
control, the restrictions on a portion of the restricted shares
granted to Charles Mellen will lapse on an accelerated basis if
the termination or change in control occurs between 2005 and
2008, and certain options granted to Kevin Mahoney will vest on
an accelerated basis if the termination or change in control
happens between 2005 and 2007.
The Board of Directors also approved certain
gross-up payments to
the Chief Executive Officer and the named executive officers
under certain circumstances in the event of a change in control.
Internal Revenue Code Section 4999 imposes a non-deductible
20% excise tax on a recipient for any change in control payments
that are in excess of three times his average annual taxable
compensation over the prior
5-year period (the
base amount). In the event that the change in
control payments made to a named executive exceed three times
such base amount (the safe harbor amount), the
Company will provide a
gross-up to the Chief
Executive Officer to provide the executive the after tax benefit
he would have received had the excise tax not been triggered,
and will provide a conditional
gross-up to the other
named executives in the event that the change in control
payments exceed the safe harbor amount. The conditional
gross-up provides that
the change in control payments will be capped to fall below the
safe harbor amount if the amount by which the change in control
payments exceed such safe harbor amount is $50,000 or less. If
the change in control payments exceed such safe harbor amount by
greater than $50,000, the named executive will receive a
gross-up. Any change in control payments that exceed the safe
harbor amount (including any gross-up) are not deductible by the
Company.
Long-Term Incentives:
The Company has relied upon grants under the Omnibus Incentive
Plan to provide named executive officers and other managers with
an ownership position in the Company to create a long-term
incentive to increase shareholder value.
Mr. Mellen received a restricted stock grant of
50,000 shares in 2005 pursuant to his offer of employment
dated November 21, 2004. Mr. Mahoney received a stock
option grant of 60,000 options for shares of Class A
common stock pursuant to his offer of employment dated
January 11, 2005. No other named executive received stock
option or equity grants in 2005.
Review of All Components of CEO Compensation and
Conclusion:
The Compensation Committee has reviewed all components of
Mr. Whalens compensation, including salary, bonus,
equity and long-term incentive compensation, accumulated
realized and unrealized stock option and restricted stock gains
and losses, the dollar value to the executive and cost to the
Company of all perquisites and other personal benefits and the
actual projected payout obligations under several potential
severance and
change-in-control
scenarios.
Based on this review, the Committee believes
Mr. Whalens total compensation (and, in the case of
the severance and
change-in-control
scenarios, the potential payouts) in the aggregate to be
reasonable and not excessive.
9
The foregoing report is presented by the following:
2005 Compensation Committee
Terrence Murray, Chairman
Bernard V. Buonanno, Jr.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION
As indicated under Report to Shareholders on Compensation
Matters above, the 2005 compensation of David G. Whalen, a
member of the Board of Directors of the Company, was established
by the Compensation Committee and submitted to the Board of
Directors for approval. The Compensation Committee is comprised
of Terrence Murray and Bernard V. Buonanno, Jr. The compensation
of the remaining executive officers of the Company was similarly
reviewed and approved by the Compensation Committee and
submitted to the Board of Directors for approval.
There are no Compensation Committee interlocks.
10
EXECUTIVE COMPENSATION
The following table sets forth certain information for the last
three fiscal years with respect to the Companys Chief
Executive Officer and the four other most highly compensated
executive officers during 2005 (collectively, the named
executive officers).
SUMMARY COMPENSATION TABLE
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Long Term | |
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All Other | |
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Annual Compensation | |
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Compensation | |
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Compensation(1) | |
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Other | |
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Securities | |
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Name and |
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Annual | |
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Restricted | |
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Underlying | |
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Principal Position |
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Year | |
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Salary(2) | |
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Bonus | |
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Compensation(3) | |
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Stock Awards | |
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Options | |
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David G. Whalen
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2005 |
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$ |
480,500 |
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$ |
50,000 |
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$ |
6,300 |
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President and Chief
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2004 |
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475,520 |
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50,000 |
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$ |
803,250 |
(4) |
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6,500 |
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Executive Officer
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2003 |
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450,000 |
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$ |
4,320 |
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6,000 |
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Peter J. Canole
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2005 |
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225,000 |
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10,000 |
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159,097 |
(5) |
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6,300 |
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Vice President,
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2004 |
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185,450 |
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35,000 |
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362,887 |
(6) |
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5,564 |
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Global Sales
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2003 |
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152,792 |
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158,231 |
(7) |
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6,000 |
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Charles S. Mellen(8)
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2005 |
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207,693 |
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30,000 |
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129,343 |
(9) |
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261,250 |
(10) |
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6,321 |
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Vice President,
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2004 |
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Global Marketing
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2003 |
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Stephen A. Perreault
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2005 |
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205,000 |
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20,000 |
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6,300 |
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Vice President,
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2004 |
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201,554 |
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30,000 |
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6,047 |
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Operations
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2003 |
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182,000 |
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3,600 |
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6,000 |
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Kevin F. Mahoney(11)
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2005 |
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194,327 |
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20,000 |
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60,000 |
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1,613 |
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Vice President,
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2004 |
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Finance and Chief
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2003 |
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Financial Officer
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(1) |
Except as otherwise indicated, amounts listed under All Other
Compensation consist of 401(k) contributions for the named
individuals. |
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(2) |
None of the named executive officers received salary increases
for 2005. The base salary amounts reported in the Summary
Compensation Table for Messrs. Whalen and Perreault for 2005 are
slightly higher than the amounts reported for 2004 because
salary increases for 2004 were not implemented until the second
quarter of that year. The difference between
Mr. Canoles 2005 and 2004 base salary amounts is more
significant because Mr. Canole received an additional
salary increase in late 2004 in recognition of his assumption of
increased responsibilities. |
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(3) |
Except as otherwise indicated, amounts listed under Other Annual
Compensation consist of tax reimbursement payments made to the
named individuals relating to amounts paid to these individuals
as automobile allowances. |
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(4) |
Mr. Whalen received a restricted stock award of
150,000 shares on July 21, 2004 at a market value of
$803,250. The restrictions lapse as to all of the shares on
December 31, 2008. |
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(5) |
Mr. Canoles Other Annual Compensation figure for 2005
consists of (a) a cost of living adjustment of $12,981 in
connection with his expatriate assignments, (b) relocation
and living expense reimbursements of $34,641 in connection with
his expatriate assignment, and (c) a tax reimbursement
payment of $111,475 relating to taxable expense reimbursements
and third party payments made in 2004 and 2005 in connection
with relocation and living expense reimbursements associated
with his expatriate assignment. Some of these amounts were paid
to Mr. Canole in British pounds; the U.S. dollar amount was
calculated based on exchange rates of between 1.7512 and 1.7576. |
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(6) |
Mr. Canoles Other Annual Compensation figure for 2004
consists of (a) a cost of living adjustment of $25,000 in
connection with his expatriate assignments, (b) relocation
and living expense reimbursements of $34,032 in connection with
his expatriate assignment in Hong Kong and $289,662 in
connection with his expatriate assignment in the U.K., and
(c) a tax reimbursement payment of $14,193 relating to
taxable expense reimbursements and third party payments made in
2003 and 2004 in connection with relocation and living expenses
associated with his expatriate assignments. The relocation and
living expense reimbursement paid in connection with
Mr. Canoles U.K. assignment was paid in British
pounds; the U.S. dollar amount was calculated based on an
exchange rate of 1.8324. All other amounts referred to in this
footnote were paid in Hong Kong dollars; the U.S. dollar
amount was calculated based on exchange rates of between 7.6161
and 7.7992. |
|
(7) |
Mr. Canoles Other Annual Compensation figure for 2003
consists of (a) a cost of living adjustment of $42,000 in
connection with his expatriate assignment in Hong Kong,
(b) relocation and living expense reimbursements of
$108,746 in connection with his expatriate assignment, and
(c) a tax reimbursement payment of $7,485 relating to
taxable expense reimbursements and third party payments made in
2002 in connection with relocation and living expenses
associated with his expatriate assignment. These amounts were
paid to Mr. Canole in Hong Kong dollars; the
U.S. dollar amount was calculated based on exchange rates
of between 7.63940 and 7.75700. |
|
(8) |
Mr. Mellen was hired on January 24, 2005. |
|
(9) |
Mr. Mellens Other Annual Compensation figure for 2005
consists of (a) a relocation expense reimbursement of
$119,968 and (b) a tax reimbursement payment of $9,375
relating to taxable expense reimbursements and third party
payments made in 2005 in connection with relocation expenses. |
|
|
(10) |
Mr. Mellen received a restricted stock award of
50,000 shares on January 31, 2005 at a market value of
$261,250. The restrictions lapse as to all of the shares on
December 31, 2008. |
(11) |
Mr. Mahoney was hired on January 31, 2005. |
11
STOCK OPTIONS
Set forth below is information as to the named executive
officers of the Company with respect to stock option grants in
2005, options exercised during 2005 and year-end values of
unexercised options.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants | |
|
|
|
|
| |
|
Potential Realizable | |
|
|
|
|
Percentage | |
|
|
|
Value at Assumed | |
|
|
Number of | |
|
of Total | |
|
|
|
Annual Rates of Stock | |
|
|
Securities | |
|
Options/SARs | |
|
|
|
Price Appreciation for | |
|
|
Underlying | |
|
Granted to | |
|
|
|
the Option/SAR Term | |
|
|
Options/SARs | |
|
Employees | |
|
Exercise | |
|
Expiration | |
|
| |
Name |
|
Granted(1) | |
|
in 2005(2) | |
|
Price | |
|
Date(3) | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
David G. Whalen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter J. Canole
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Mellen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen A. Perreault
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin F. Mahoney
|
|
|
60,000 |
|
|
|
85.71 |
% |
|
$ |
5.23 |
|
|
|
January 31, 2015 |
|
|
$ |
197,158 |
|
|
$ |
499,638 |
|
|
|
(1) |
One-third vest in 2006, one-third vest in 2007, and the final
third vest in 2008. |
(2) |
The total number of options granted to employees in 2005 was
70,000. |
(3) |
Subject to earlier expiration in the event of termination of the
grantees employment. |
OPTION VALUES AT FISCAL YEAR END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities Underlying | |
|
Value of Unexercised | |
|
|
Unexercised Options at | |
|
In-the-Money Options at | |
|
|
Fiscal Year End | |
|
Fiscal Year End(1) | |
|
|
| |
|
| |
Name |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
David G. Whalen
|
|
|
759,351 |
(2) |
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
Peter J. Canole
|
|
|
48,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Charles S. Mellen
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Stephen A. Perreault
|
|
|
109,499 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
Kevin F. Mahoney
|
|
|
20,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(1) |
Based on the mean between the high and low trading prices of the
Class A common stock on December 30, 2005 ($4.00) minus the
exercise price. |
(2) |
Includes 653 options granted to Mr. Whalen as a director of the
Company during 2000 under the formula provisions of the
Companys Omnibus Incentive Plan then in effect. |
12
PENSION PLAN TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average | |
|
Years of Service | |
Pay | |
|
15 | |
|
20 | |
|
25 | |
|
30 | |
|
35 | |
| |
$ |
125,000 |
|
|
$ |
30,000 |
|
|
$ |
40,000 |
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
|
$ |
50,000 |
|
|
150,000 |
|
|
|
36,000 |
|
|
|
48,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
|
175,000 |
|
|
|
42,000 |
|
|
|
56,000 |
|
|
|
70,000 |
|
|
|
70,000 |
|
|
|
70,000 |
|
|
200,000 |
|
|
|
48,000 |
|
|
|
64,000 |
|
|
|
80,000 |
|
|
|
80,000 |
|
|
|
80,000 |
|
|
225,000 |
|
|
|
54,000 |
|
|
|
72,000 |
|
|
|
90,000 |
|
|
|
90,000 |
|
|
|
90,000 |
|
|
250,000 |
|
|
|
60,000 |
|
|
|
80,000 |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
300,000 |
|
|
|
72,000 |
|
|
|
96,000 |
|
|
|
120,000 |
|
|
|
120,000 |
|
|
|
120,000 |
|
|
400,000 |
|
|
|
96,000 |
|
|
|
128,000 |
|
|
|
160,000 |
|
|
|
160,000 |
|
|
|
160,000 |
|
|
450,000 |
|
|
|
108,000 |
|
|
|
144,000 |
|
|
|
180,000 |
|
|
|
180,000 |
|
|
|
180,000 |
|
|
500,000 |
|
|
|
120,000 |
|
|
|
160,000 |
|
|
|
200,000 |
|
|
|
200,000 |
|
|
|
200,000 |
|
The Company maintains a non-contributory qualified retirement
plan for the benefit of its employees, including the individuals
named in the Summary Compensation Table. In addition,
participants in the plan whose retirement benefits would exceed
amounts permitted under the Internal Revenue Code participate in
a non-qualified excess retirement plan which provides a
supplemental unfunded benefit equal to the amount of any benefit
that would have been payable under the qualified retirement plan
but for certain limitations under the Internal Revenue Code. The
benefits set forth in the Pension Plan Table above reflect the
aggregate of the benefits under both the qualified and
non-qualified plans. In each case, the indicated benefit will be
reduced by the individuals social security credit. The
qualified plan and the non-qualified plan are collectively
referred to as the Plan.
Covered compensation under the Plan includes base salary, cash
bonuses, overtime pay, and amounts contributed by the employee
to the A.T. Cross Savings Plan maintained by the Company under
Section 401(k) of the Internal Revenue Code. The Salary and
Bonus columns of the Summary Compensation Table set forth above
reflect all covered compensation of executive officers for 2005.
For purposes of the Plan, the years of credited service as of
December 31, 2005 were: Mr. Whalen, 6 years;
Mr. Canole, 19 years; Mr. Perreault,
11 years; Mr. Mahoney, 1 year; and
Mr. Mellen, 1 year.
The amounts payable shown in the above Table are based on the
following assumptions:
|
|
|
(i) The individual shall have retired at the normal
retirement age of 65, |
|
|
(ii) Average pay is the highest average of the
covered compensation paid to such individual over five
consecutive years preceding retirement, and |
|
|
(iii) Benefits are paid in the form of a straight-life
annuity. Payment options for spousal benefits are available. |
13
PERFORMANCE GRAPH
The following graph compares the market performance of the
Companys Class A common stock over the Companys last
five fiscal years to the American Stock Exchange Market Value
Index and to the Russell Group 2000 (as the Companys peer
group index), over the Companys last five fiscal years.
The graph assumes that the value of the investment in the
Companys Class A common stock and each index was $100 at
December 29, 2000 and that all dividends were reinvested.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG A.T. CROSS COMPANY,
AMEX MARKET INDEX AND RUSSELL 2000 INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
COMPANY/INDEX/ | |
MARKET |
|
12/29/2000 | |
|
12/31/2001 | |
|
12/31/2002 | |
|
12/31/2003 | |
|
12/31/2004 | |
|
12/30/2005 | |
| |
A.T. Cross Co.
|
|
|
100.00 |
|
|
|
132.94 |
|
|
|
120.55 |
|
|
|
150.29 |
|
|
|
111.54 |
|
|
|
91.26 |
|
|
Russell 2000 Index
|
|
|
100.00 |
|
|
|
101.02 |
|
|
|
79.22 |
|
|
|
115.16 |
|
|
|
135.31 |
|
|
|
139.81 |
|
|
AMEX Market Index
|
|
|
100.00 |
|
|
|
95.39 |
|
|
|
91.58 |
|
|
|
124.66 |
|
|
|
142.75 |
|
|
|
157.43 |
|
|
The Company has chosen the Russell Group 2000 as a meaningful
peer group against which to compare its performance. The Russell
Group 2000 represents a broad based group of small
capitalization stocks and is generally believed to be indicative
of market performance for small capitalization companies.
Notwithstanding anything to the contrary set forth in the
Companys previous filings under the Exchange Act that
might incorporate future filings, including this proxy statement
in whole or in part, the foregoing Performance Graph and the
Report to Shareholders on Compensation Matters on
page 7 shall not be deemed incorporated by reference to any
such filing.
14
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee reappointed Deloitte & Touche LLP
to serve as the Companys independent auditors for 2005.
Representatives of Deloitte & Touche will be present at
the annual meeting to answer appropriate questions. They will
also have the opportunity to make a statement if they desire to
do so.
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to the Company for the fiscal years ending
January 1, 2005 and December 31, 2005 by the
Companys principal accounting firm, Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and
their respective affiliates (collectively, Deloitte):
|
|
|
|
|
|
|
|
|
|
|
|
2004 | |
|
2005 | |
|
|
| |
|
| |
Audit Fees
|
|
$ |
555,350 |
|
|
$ |
517,357 |
|
|
|
|
|
Audit Related
|
|
$ |
58,970 |
|
|
$ |
45,955 |
|
Tax Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extended Tax Consulting Services in connection with Global EMEA
Restructuring |
|
$ |
55,290 |
|
|
|
0 |
|
|
|
|
|
|
Transfer Pricing Study |
|
$ |
81,200 |
|
|
$ |
30,000 |
|
|
|
|
|
|
International Tax Consultation |
|
$ |
48,350 |
|
|
$ |
74,440 |
|
|
|
|
|
|
Multistate Tax Consultation |
|
$ |
9,175 |
|
|
$ |
9,850 |
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit Plan Compliance |
|
$ |
4,410 |
|
|
$ |
20,461 |
|
|
|
|
|
|
Mergers & Acquisitions |
|
$ |
5,000 |
|
|
$ |
11,839 |
|
|
|
|
|
|
Technical Consultation |
|
$ |
4,450 |
|
|
$ |
22,080 |
|
The Audit Committee has considered whether the provision of
services other than audit services is compatible with
maintaining the principal accountants independence.
The Audit Committees policies and procedures regarding
pre-approval of non-audit and non-tax services provided by the
Companys independent accountants requires pre-approval of
all services, regardless of de minimis exceptions, by the full
Audit Committee. The Audit Committee has delegated such
pre-approval authority to the Audit Committee Chair. During
2005, all non-audit and non-tax services were pre-approved by
the Audit Committee Chair.
REPORT OF THE AUDIT COMMITTEE
The audit functions of the Audit Committee are focused on three
areas:
|
|
|
|
|
the adequacy of the Companys internal controls and
financial reporting process and the quality and integrity of the
Companys financial statements. |
|
|
|
the independence and performance of the Companys internal
auditor and independent auditors. |
|
|
|
the Companys compliance with legal and regulatory
requirements and adherence to business ethics. |
In fiscal 2005, the Audit Committee met with management to
consider the adequacy of the Companys internal controls
and the objectivity of its financial reporting. We discuss these
matters with the Companys independent auditors and with
appropriate Company financial personnel and the internal auditor.
We regularly meet privately with both the independent auditors
and the internal auditor, each of whom has unrestricted access
to the Committee.
We also have the sole authority to retain and dismiss the
independent auditors and review periodically their performance
and independence from management.
Management has primary responsibility for the Companys
financial statements and the overall reporting process,
including the Companys system of internal controls.
The independent auditors audit the annual financial statements
prepared by management, express an opinion as to whether those
financial statements fairly present the financial position,
results of operations and cash flows of the Company in
conformity with generally accepted accounting principles and
discuss with us any issues they believe should be raised with us.
This year, we reviewed the Companys audited financial
statements and met with both management and the independent
auditors to discuss those financial statements. Management has
represented to us that the financial statements were prepared in
accordance with accounting principles generally accepted in the
United States.
We have received from and discussed with the independent
auditors the written disclosure and the letter required by
Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). These items relate to that
firms independence from the Company. We also discussed
with the independent auditors any matters required to be
discussed by Statement on Auditing Standards No. 61, as
amended (Communication with Audit Committees).
Based on these reviews and discussions, we recommended to the
Board that the Companys audited financial statements be
included in the Companys Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005.
2005 Audit Committee
Edward J. Cooney, Chairman
James C. Tappan
Andrew J. Parsons
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys executive officers and directors,
and persons who own more than 10 percent of the Companys
Class A common stock (Insiders), to file with
the Securities and Exchange Commission and the American Stock
Exchange reports of ownership and changes in ownership of such
stock. Insiders are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based solely on a review
of the copies of such reports furnished to the Company, the
Company believes that during 2005 its Insiders complied with all
applicable Section 16(a) filing requirements, except that a
Form 4 was inadvertently filed one day late on behalf of
David G. Whalen relating to a November 2005 purchase.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no
business that will be presented for consideration at the annual
meeting other than the items referred to above. However, if
other business upon which holders of Class A common stock are
entitled to vote shall properly come before the meeting, proxies
in the enclosed form returned as instructed will be voted in
accordance with the recommendation of the Board of Directors, or
in the absence of such a recommendation, in accordance with the
judgement of the proxy holder.
IMPORTANT
NO MATTER HOW SMALL YOUR HOLDINGS, YOU ARE RESPECTFULLY
REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED, PREPAID ENVELOPE AT YOUR EARLIEST CONVENIENCE.
|
|
|
Tina C. Benik |
|
Vice President, Legal and |
|
Human Resources |
|
Corporate Secretary |
Dated: March 28, 2006
16
EXHIBIT A
Date: February 2004
A.T. CROSS COMPANY
Audit Committee Charter
The Audit Committee (the Committee) of the Board of
Directors (Board) shall be comprised of three or
more directors of the A.T. Cross Company (the
Company) as determined by the Board, each of whom
shall be independent except as may be permitted under
Section 121A of the American Stock Exchange
(AMEX) Company Guide. The members of the Committee
shall be appointed annually at the Board meeting held in April
of each year. Independent Directors are defined as set forth in
Rule 10A-3(b)(1) of the Securities Exchange Act of 1934 and
Section 121A of the AMEX Company Guide. All members of the
Audit Committee will meet the competency requirements regarding
reading and understanding financial statements set forth in the
AMEX Company Guide Section 121B(2)(a) and at least one
member of the Audit Committee will be financially
sophisticated as defined in AMEX Company Guide
Section 121B(2)(a). At least one member of the Audit
Committee will also meet the audit committee financial
expert definition of Item 401 (h)(2) of the
Securities Exchange Commissions
Regulation S-K.
The Committee shall assist the Board in fulfilling its oversight
responsibilities relating to the review of audit functions,
including the accounting and financial reporting practices and
procedures of the Company, the adequacy of information
technology used to support internal financial systems, the
quality and integrity of the Companys financial
statements, relations with independent auditors and oversight of
business ethics.
It is the primary responsibility of management to ensure that
overall controls are adequate to meet operating, financial and
compliance objectives. It is the primary responsibility of
management and the independent auditors to plan and conduct
audits to determine that the Companys financial statements
are free from material misstatement in accordance with
U.S. Generally Accepted Accounting Principles.
The Committee may undertake any tasks it sees fit and will also
undertake any specific tasks assigned to it by the Board and
conduct such reviews as it deems necessary.
The Committee will be directly responsible for the appointment,
compensation, retention, oversight, and if necessary,
termination, of the Companys independent auditors.
The Committee shall have access to all information related to
the Company.
The Committee shall be empowered, at the Companys expense,
to retain special counsel or other experts to assist in the
accomplishment of its duties and responsibilities.
The Committee shall meet at least quarterly with additional
meetings as necessary. At the request of the Committee, the
Chief Financial Officer (or any other members of management, if
needed) shall attend meetings of the Committee. The Committee
shall, during its regularly scheduled meetings, meet separately
from management with the independent auditors and the Manager,
Internal Audit of the Company. The independent auditors, the
Chief Financial Officer and the Manager, Internal Audit shall,
at all times, have access to the Committee. The Committee, in
turn, shall, at all times, have access to the independent
auditors, the Chief Financial Officer and the Manager, Internal
Audit.
The Committee will receive from the Companys independent
auditors periodic reports on 1) all critical accounting
policies used by the Company, 2) all alternative accounting
treatments of financial information within generally accepted
accounting principles that have been discussed with management
and the treatment preferred by the independent auditors, and
3) other material written communications between the
independent auditors and Companys management.
The Committee will receive annual and quarterly reports from
management regarding any significant deficiencies in internal
controls and any fraud involving management or other employees
with a significant role in internal controls.
The Committee will establish procedures for (i) the
receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or
auditing matters; and (ii) the confidential, anonymous
submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
The Committee will review and oversee all related party
transactions.
The Committee shall approve all hiring and firing decisions made
with respect to the position of the Manager, Internal Audit.
The Committee will review and reassess the adequacy of the
Charter on an annual basis.
17
The Board shall approve this charter and any subsequent
modifications.
THE COMMITTEE SHALL REVIEW, APPRAISE, AND REPORT TO THE BOARD,
IF APPLICABLE, AFTER EACH AUDIT COMMITTEE MEETING AND OTHER
TIMES WHEN APPROPRIATE ON THE FOLLOWING MATTERS:
|
|
|
|
1. |
The selection of independent auditors to be retained by the
Company, their independence and whether to retain such auditors
for each future fiscal year after consultation with appropriate
management of the Company. The Committee shall review, at least
annually, a formal written statement delineating all
relationships between the independent auditors and the Company,
consistent with Independence Standards Board Standard 1.
The Committee shall actively engage in a dialogue with the
independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence of
the independent auditor. The Committee shall take, or shall
recommend to the Board of Directors to take, appropriate action
to oversee the independence of the independent auditors. |
|
|
2. |
The fees to be paid to the independent auditors of the Company
on an annual basis. |
|
|
3. |
The non-auditing and non-tax services to be performed by and
associated fees of the independent auditors of the Company. The
Committee, through its Chairman, must give prior approval to all
non-audit and non-tax services provided by the independent
auditor and sign all engagement letters. The Committee will
consider both the nature and related fees of the non-audit and
non-tax services in making its determination. |
|
|
4. |
With respect to the systems of internal accounting control,
including Electronic Data Processing (EDP) controls,
throughout the Company, (i) the adequacy, quality and
security thereof after consultation with appropriate management
of the Company, Manager, Internal Audit and the independent
auditors, (ii) managements performance in maintaining
and improving these systems, and (iii) recommendations and
findings made by the independent auditors and Manager, Internal
Audit of the Company relative to improvements to these systems. |
|
|
5. |
The planned scope of the audit work to be undertaken each year
by the Companys Manager, Internal Audit as well as the
audit reports, findings and recommendations of the Manager,
Internal Audit. |
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Prior to the commencement thereof, the planned scope of the
annual examination to be undertaken by the independent auditors
of the Company. |
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7. |
Following the inquiry of management and the independent
auditors, significant accounting issues (including accounting
for goodwill and other intangible assets), changes and
prospective changes in significant accounting policies
(including the effect of each such change on the overall
financial statements of the Company), and whether
material items exist that are not accounted for in
accordance with U.S. Generally Accepted Accounting
Principles. Management shall consult with the Committee or
its Chairman when seeking a second opinion on a significant
accounting issue. |
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8. |
Significant issues raised by in-house or outside counsel, after
discussing the same with management and the independent
auditors. The Committee will conclude on its understanding of
the basis for inclusion or exclusion of such matters in the
financial statements. |
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9. |
The open years on federal income tax returns,
whether there are any significant items that have been or might
be disputed by the IRS, and the status of the related tax
reserves. |
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10. |
The draft annual financial statements (including footnotes
thereto) and related financial material and the independent
auditors reports, to be included in the Companys
Annual Report to Shareholders and
Form 10-K prior to
presentation to the Board. The Companys
Form 10-Q prior to
its filing or prior to the release of earnings, including a
discussion with the independent auditors of the matters required
to be discussed by SAS No. 61. |
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11. |
Any management letters or other recommendations from the
Companys auditors. |
Approved and adopted by the Board of Directors on
February 11, 2004.
18
![(CROSS LOGO)](b59083atb5908300.gif) |
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Mark
this box with an X if you have made changes to your name or
address details above. |
Annual Meeting Proxy Card
This Proxy when properly executed will be voted in the manner directed herein by the
undersigned. If no direction is made, this proxy will be voted FOR
proposals
1 and 2.
The Board of Directors recommends a vote FOR the following proposals.
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1.
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NUMBER OF DIRECTORS:
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For
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Against
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Abstain
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Fixing the number of Class A
directors at three and Class B directors at six.
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2. |
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ELECTION OF CLASS A DIRECTORS: |
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For
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Withheld |
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01 - Galal P. Doss
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02 - Andrew J. Parsons
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03 - James C. Tappan
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3.
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OTHER BUSINESS: |
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In
their discretion, the proxies are authorized to vote upon such other
business as |
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may
properly come before said meeting or any adjournment thereof upon
which |
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Class A
common shareholders are entitled to vote. |
B |
Authorized Signatures -
Sign Here - This section must be completed for your
instructions to be executed. |
Please date, sign and mail promptly in the enclosed envelope. This proxy will not be used
if you attend the meeting in person and so request.
Important: Please sign exactly as your name or names appear at left. When signing as attorney,
executor, administrator, trustee, guardian, or in any other representative capacity, give full
title as such. Corporate shareholders sign with full corporate name by a duly authorized
officer. If a partnership, sign in partnership name by authorized
person.
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Signature 1 - Please keep signature within the box
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Signature 2 - Please keep signature within the box
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Date (mm/dd/yyyy) |
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/ / |
Proxy
- A.T. Cross
THIS
PROXY IS BEING SOLICITED ON BEHALF OF THE COMPANYS BOARD OF DIRECTORS
The
undersigned holder of Class A common stock of A.T. Cross Company does hereby constitute
and appoint Bradford R. Boss, Russell A. Boss, and David G. Whalen, or any one of them, as
attorneys and proxies of the undersigned, with full power of substitution for, and in the name
and stead of, the undersigned to appear and vote all shares of Class A common stock of A.T.
Cross Company held of record in the name of the undersigned at the
annual meeting of A.T. Cross
Company to be held at the offices of the Company, One Albion Road, Lincoln, Rhode Island 02865
on Thursday, April 27, 2006 at 10:00 A.M. and at any and all adjournments thereof as designated.
(Continued and to be voted on reverse side.)