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:
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.
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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 24,
2008
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 24, 2008 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. Approving an amendment to the Omnibus Incentive
Plan (by holders of Class A and Class B common stock voting
together as a single class).
4. 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 February 25, 2008 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.
By order of the Board of Directors
Tina C. Benik
Vice President, Legal and Human Resources
Corporate Secretary
March 24,
2008
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
FOR ANNUAL SHAREHOLDERS MEETING
APRIL 24, 2008
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 24, 2008 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 other 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 $6,500, 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 24, 2008.
A copy of the Companys annual report for the year 2007
containing financial statements for the year ended
December 29, 2007 is also enclosed, but is not to be
considered a part of the proxy soliciting material.
As of February 25, 2008 the Company had outstanding
14,139,554 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 23, 2009, must be received by the Companys
Corporate Secretary not later than November 27, 2008 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 10, 2009.
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)
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For the reservation in the future of shares to be issued
pursuant to options granted or to be granted to directors,
officers or employees; and
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b)
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With respect to the acquisition of assets or shares of any other
company if:
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(1)
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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)
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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)
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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.
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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 or applicable stock exchange listing
standards, 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. The approval of the amendment to the Omnibus Incentive
Plan will be the subject of a broker non-vote.
2
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 25, 2008
(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 13, 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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1,730,038
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(3)(4)(5)(6)
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1,804,800
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(4)(5)
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12.2
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%
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100
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%
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Marjorie B.
Boss(7)
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850,931
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(3)(5)
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902,400
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(5)
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6.0
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%
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50
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%
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Paul A.
Silver(8)
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831,000
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(5)
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902,400
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(5)
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5.9
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%
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50
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%
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Edward P.
Pieroni(9)
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726,000
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(4)
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902,400
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(4)
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5.1
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%
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50
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%
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John B.
Costello(10)
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726,000
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(4)
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902,400
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(4)
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5.1
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%
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50
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%
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Dimensional Fund Advisors
LP(11)
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802,156
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5.7
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%
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Hodges Capital Management,
Inc.(12)
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824,250
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5.8
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%
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Bradford R.
Boss(13)
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185,456
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(6)
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1.3
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%
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Bernard V. Buonanno, Jr.
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26,370
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(6)
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*
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Edward J. Cooney
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4,410
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*
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Galal P.
Doss(14)
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4,253,366
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(6)
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30.1
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%
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Harlan M. Kent
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Terrence Murray
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37,774
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(6)(15)
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*
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Andrew J. Parsons
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24,253
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(6)
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*
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James C. Tappan
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27,146
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(6)
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*
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David G.
Whalen(16)
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1,140,430
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(6)(17)
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7.7
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%
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Kevin F. Mahoney
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157,691
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(6)(17)
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1.1
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%
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Charles R. MacDonald
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132,300
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(17)
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*
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Charles S. Mellen
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165,000
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(17)
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1.2
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%
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Tina C. Benik
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174,010
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(6)(17)
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1.2
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%
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All directors and executive officers as a group (17 persons)
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8,301,742
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(18)
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1,804,800
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54.3
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%
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100
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%
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(1)
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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 22.2%,
11.6%, 11.5%, 10.8% and 10.8%, respectively, of the outstanding
Class A common shares.
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(2)
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Mr. R. Bosss address is One Albion Road, Lincoln, Rhode
Island 02865.
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(3)
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Excludes shares beneficially owned by spouse.
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(4)
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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)
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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)
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Includes the following Class A shares subject to options
exercisable within 60 days: Mr. B. Boss 20,394;
Mr. Buonanno 22,406; Mr. Doss
12,000; Mr. Murray 22,310;
Mr. Parsons 12,000; Mr. Tappan
22,406; Mr. Whalen 759,351;
Mr. Mahoney 60,000; and
Ms. Benik 76,000.
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(7)
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Mrs. M. Bosss address is One Albion Road,
Lincoln, Rhode Island 02865.
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(8)
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Mr. Silvers address is 1500 Fleet Center,
Providence, Rhode Island 02903.
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(9)
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Mr. Pieronis address is One State Street,
Suite 200, Providence, Rhode Island 02908.
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(10)
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Mr. Costellos address is c/o Andsagar, Bartlett
& Pieroni, L.L.P., One State Street,
Suite 200, Providence, Rhode Island 02908.
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(11)
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Information based on its Schedule 13G filed with the SEC on
February 6, 2008, which reported ownership as of
December 31, 2007. The address of Dimensional Fund Advisors
LP is 1299 Ocean Avenue,
11th
Floor, Santa Monica, California 90401.
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(12)
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Donald W. Hodges has shared voting power with respect to
631,300 shares and shared dispositive power with respect to
824,250 shares. First Dallas Holdings, Inc. has shared
voting power with respect to 631,300 shares and shared
dispositive power with respect to 824,250 shares. First
Dallas Securities, Inc. has shared dispositive power with
respect to 67,950 shares. Hodges Capital Management, Inc.
has shared voting power with respect to 631,300 shares and
shared dispositive power with respect to 125,000 shares.
Hodges Fund has shared voting and dispositive power with respect
to 611,300 shares. Hodges Small Cap Fund has shared voting
and dispositive power with respect to 20,000 shares.
Information based on Hodges Capital Management, Inc.s
Schedule 13G filed with the SEC on February 13, 2008
reporting ownership as of September 29, 2007. The address
of Hodges Capital Management, Inc. is 2905 Maple Avenue, Dallas,
TX 75201.
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(13)
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Mr. B. Bosss address is One Albion Road, Lincoln, Rhode
Island 02865.
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(14)
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Mr. Dosss address is One Albion Road, Lincoln, Rhode
Island 02865.
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(15)
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Includes 5,000 shares held by Murray and Young Associates LLC.
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(16)
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Mr. Whalens address is One Albion Road, Lincoln, Rhode
Island 02865.
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(17)
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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
270,000; Mr. Mahoney 90,000;
Mr. MacDonald 100,000;
Mr. Mellen 156,666; Ms. Benik
90,000.
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(18)
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Includes 1,163,967 shares subject to options exercisable
within 60 days; 775,416 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.
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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 members of the Board of
Directors with the exception of Harlan M. Kent. 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 23,
2009. The following tables reflect information as of
January 1, 2008.
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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
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Galal P. Doss
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53
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Private investor.
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2000
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Andrew J. Parsons
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64
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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 (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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72
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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
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Bradford R. Boss
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74
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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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69
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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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50
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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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69
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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).(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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60
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Executive Vice President Sales and Marketing,
Amtrol, Inc., (producer and marketer of water storage,
treatment, heating, expansion, flow control and related
products) (1998-2000); thereafter Chief Financial Officer,
Speidel, Inc., (worldwide distributor of watchbands and
watchband attachments) to August 2001; thereafter Vice President
and Treasurer, Nortek, Inc., (international designer,
manufacturer and marketer of building
products).(2) (3)
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2004
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Harlan M. Kent
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44
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President and Chief Operating Officer, Yankee Candle Company
(2001 to present)
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Yankee Candle Company
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(1)
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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)
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Member of Nominating and Corporate Governance Committee.
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(3)
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Member of Audit Committee.
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(4)
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Member of Executive Committee.
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(5)
|
Bradford R. Boss and Russell A. Boss are brothers.
|
|
|
(6)
|
Russell A. Boss and Bernard V. Buonanno, Jr. are cousins by
marriage.
|
|
|
(7)
|
Edwards Angell Palmer & Dodge, LLP performed legal services
for the Company in 2007 and is expected to perform legal
services for the Company in 2008.
|
|
|
(8)
|
Member of Compensation Committee.
|
4
Corporate
Governance
Board of Director and Shareholder
Meetings: The Board of Directors met 7 times
during the fiscal year ended December 29, 2007
(fiscal year 2007). All directors attended at least
75% of the Board of Directors meetings and applicable committee
meetings in fiscal year 2007. The Company has adopted a policy
that requires members of the Board of Directors to make every
effort to attend the Companys Annual Meeting. All members
of the Board of Directors attended the Companys 2007
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 and prospective members. These factors include those
persons 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. Specifically, the Board considered that
Bernard V. Buonanno and Russell A. Boss are cousins by
marriage and that Mr. Buonanno is Senior Partner in a law
firm that performs legal work for the Company. 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(1);
Andrew J. Parsons; and 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,
Nominating and Corporate Governance, and Executive Committees.
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 407(d)(5) of
Regulation S-K.
The Audit Committee meets on an as needed basis and met
six times during fiscal year 2007.
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, as amended. A current copy of
the Charter is available on the Companys website,
www.cross.com, in the Investor Relations section. See
also the Report of the Audit Committee on
page 28.
Compensation Committee. The members of the
Compensation Committee are Mr. Murray, who serves as
Chairman, and Mr. Buonanno. The Board has determined that
the members of the Compensation Committee are independent within
the meaning of applicable
(1) Mr. Murray
is not standing for re-election to the Board of Directors in
2008.
5
AMEX Rules. The Compensation Committee met three times
during fiscal year 2007. The Compensation Committee has
responsibility for developing, overseeing and implementing the
overall compensation policy for the Company including the
implementation of an incentive compensation plan for the
Company. The Compensation Committee also determines, and/or
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 Compensation Discussion and
Analysis beginning on page 8. The Compensation
Committee has a charter which was adopted by the Board in
February 2008. That charter is available on the
Companys website, www.cross.com, in the Investor
Relations section. The Compensation Committee may not delegate
its authority for the responsibilities described in this
paragraph.
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 once during fiscal year 2007. The Executive
Committee has the authority in certain circumstances to act in
the stead of the Board between regular Board meetings.
Nominating and Corporate Governance
Committee. The members of the Nominating and
Corporate Governance Committee are Mr. Parsons, who serves as
Chairman, Mr. Cooney and Mr. Tappan. The Board has determined
that the members of the Nominating and Corporate Governance
Committee are independent within the meaning of the applicable
AMEX rules. The Nominating and Corporate Governance Committee
met four times during fiscal year 2007.
The Nominating and Corporate Governance Committee has adopted a
charter which was approved by the Board of Directors in February
2007 (the NCGC Charter). The NCGC Charter is
available on the Companys website, www.cross.com,
in the Investor Relations section.
The Nominating and Corporate Governance Committee is responsible
for identifying, 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 criteria and
attributes for Board members that will best meet the current and
future needs of the Company. The Committee is also responsible
for overseeing the Chief Executive Officer succession process by
evaluating potential successors and selecting candidates for the
Chief Executive Officer for recommendation to the Board, and for
overseeing management succession plans generally.
It is the policy of the Nominating and Corporate Governance
Committee that candidates for director possess the highest
personal and professional ethics and integrity, have
demonstrated effectiveness and sound business judgement, and
possess skills and experience relevant to the business needs and
objectives of the Company and to best serve the interests of the
Company and its shareholders.
The Nominating and Corporate Governance Committees process
for identifying and evaluating nominees is as follows:
(1) in the case of incumbent directors whose terms of
office are set to expire, the Nominating and Corporate
Governance 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
(2) in the case of new director candidates, the Nominating
and Corporate Governance Committee conducts such inquiries into
the
backgrounds and qualifications of possible candidates as the
Nominating and Corporate Governance Committee deems necessary or
appropriate after considering the composition of the Board of
Directors and needs of the Company.
The Nominating and Corporate Governance 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 committee. In
seeking potential nominees, the Nominating and Corporate
Governance 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. In 2007, the Nominating and Corporate Governance
Committee engaged the services of Spencer Stuart, a global
executive search firm, to identify a candidate for the open
position being created by Mr. Murrays decision not to
stand for re-election.
The Nominating and Corporate Governance Committee is authorized
to adopt and implement such additional procedures and processes
to discharge its responsibilities as it deems appropriate.
The Nominating and Corporate Governance Committee considers
director candidates recommended by shareholders provided the
shareholders follow the procedures set forth below. The
Nominating and Corporate Governance Committee does not intend to
alter the manner in which it evaluates candidates, including
6
the criteria set forth above, based on whether the candidate was
recommended by a shareholder or otherwise.
The Nominating and Corporate Governance 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 and Corporate
Governance 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 and Corporate Governance 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 and Corporate Governance
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 and Corporate
Governance 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.
COMPENSATION
COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION
As indicated under Compensation Discussion and
Analysis below, the 2007 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.
7
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
The Compensation Committee of the Companys Board of
Directors has responsibility for developing, overseeing and
implementing the overall compensation philosophy of the Company.
It recommends for the approval of the full Board both the
incentive compensation plans that apply to all levels of
management within the Company and the specific elements of
compensation that make up the total compensation of the
Companys Chief Executive Officer and other named executive
officers.
In this analysis, the term named executive officers
refers to the Companys Chief Executive Officer, Chief
Financial Officer, and the other executive officers included in
the Summary Compensation Table on page 13.
Compensation
Philosophy and
Objectives
In general, the Companys executive compensation program is
designed to attract, motivate, reward and retain high caliber
executives to enable the Company to achieve its strategic and
operating objectives. The program is designed to compensate
executives at a level that is commensurate with both corporate
and individual performance achievement with the ultimate goal of
increasing shareholder value. The Compensation Committees
objective is to design a compensation package that is fair to
both the executives and shareholders in relation to corporate
performance and contributions to shareholder value, that is
competitive in relation to companies of similar size and
complexity of operations, and that is balanced appropriately
between cash and equity-based compensation. As part of this
compensation package, the Committee includes incentive-based
compensation designed to reward the executive for both short and
long-term company success. Short-term performance is measured
each fiscal year and is typically rewarded through cash
incentive payments. Long-term performance is typically targeted
through equity awards granted from time to time. These awards
are designed to align the executives interests with those
of other shareholders of the Company.
Overview
of Compensation and
Process
The Compensation Committee oversees the executive compensation
program and typically makes the recommendations of compensation
elements and amounts to the Board of Directors for approval.
The Compensation Committee makes recommendations relating to
compensation levels of executive officers, including the named
executive officers, and also makes recommendations relating to
the elements of compensation generally for Company management,
which in each case is presented to the Board for approval. In
making such recommendations, the Committee relies on the
involvement and recommendations of the Companys Human
Resources Department and, except with respect to his own
compensation, the Companys Chief Executive Officer. The
Companys Human Resources Department formulates a proposal
with respect to the Chief Executive Officers compensation
package that is submitted to the Committee for consideration.
This recommendation is based in significant part on third-party
data as described in the paragraph below. The Chief Executive
Officer participates in formulating the compensation proposal
for the other executive officers. The Compensation Committee can
exercise discretion to increase or decrease any recommended
compensation levels, adjustments or awards to executives not
otherwise earned under the annual incentive plan described
beginning on page 10.
The Compensation Committee has not directly engaged a
compensation consultant in connection with the structuring of
compensation programs or the setting of individual compensation
or performance targets. However, the Chief Executive Officer and
the Human Resources Department rely on materials and data
provided by Towers Perrin, a global human resource and executive
compensation consulting firm, in formulating their
recommendations to the Committee. First, the Company regularly
participates in Towers Perrin executive compensation surveys,
and it uses that survey data in benchmarking the salary
component of executive pay in comparison to other companies, as
described in more detail on page 9. Second, the Company
seeks specific advice from Towers Perrin from time to time
regarding the elements of its compensation program. For example,
Towers Perrin has been engaged in the past to review and analyze
the structure of the Companys annual incentive plan
described on page 10. Towers Perrin is not consulted every
year, however, and is not necessarily consulted with respect to
every component of the executive management teams total
compensation. The Compensation Committee has not directly
retained or obtained guidance from Towers Perrin in this
respect, but it has access to Towers Perrin personnel in
considering the proposals put forth by management. The
Compensation Committee has the authority, to the extent it deems
necessary,
8
to retain its own advisors in developing its recommendations.
The Company does not have a formal policy relating to the
allocation of compensation between cash and non-cash elements
such as equity awards. In the recent past, the Company has
utilized both cash and non-cash awards for variable compensation
programs. Since the Companys adoption of the accounting
rules for share-based payments under FASB SFAS No. 123(R)
for fiscal year 2006, the Company has limited the use of equity
grants as a form of incentive compensation. While equity grants
have not been part of a regularized or annual program in the
recent past, the Company is expecting to make long term equity
grants on a more periodic basis to a limited group of
executives. The purpose of instituting periodic grants is to
provide a more effective retention vehicle for senior executives
and to continually align their interests with the longer-term
interests of the Companys shareholders.
When structuring incentive compensation programs, the Company
will determine the appropriate form of grant cash or
equity depending on the objective of that particular
program. The Company generally uses cash incentive awards to
drive shorter term (i.e. one year) performance on a broader
basis, and equity based grants to provide recognition or to
drive longer term performance (i.e. from one to three years) on
a more limited basis.
In addition to the equity awards made from time to time to
senior management, equity grants are also made as appropriate as
a means of attracting highly qualified new executives and more
closely aligning their interests with those of the
Companys shareholders. Equity grants are also made on an
ad hoc basis to reward or incent specific individual performance.
The Company has no formal stock ownership guidelines for
officers or for directors, although directors are required to
receive a portion of their annual retainer in the form of
equity, as described in the Director Compensation
discussion on page 25.
Elements
of the 2007 Compensation
There were four primary components of the compensation package
of the named executive officers for 2007. Those components are:
|
|
|
|
|
base salary;
|
|
|
|
cash awards under the Companys annual incentive plan and
discretionary bonuses;
|
|
|
|
equity-based awards; and
|
|
|
|
retirement benefits.
|
In addition, each executive receives standard health and life
insurance benefits. The Company does not currently grant
perquisites or other personal benefits.
Base
Salary
The Company provides named executive officers, like its other
employees, a base salary in order to compensate them for the
services that they provide to the Company over the course of the
year for sustained performance. Base pay is generally designed
to reflect competitive data on salary for companies with similar
revenues, if such data is available, and for positions with
similar responsibilities.
Executive salaries are determined in part by reference to the
market data provided by the compensation surveys discussed on
page 8. Cross benchmarked executive pay data in determining
base salaries for its named executive officers. Given
Crosss revenue size, Cross benchmarked organizations in
the Towers Perrin Executive Database Survey at revenues less
than $1 billion (which is the lowest revenue size available
in the database). Forty seven companies participating in this
survey fell into this revenue scope. Typically, the Company
targets the
50th percentile
of the median of surveyed companies, however, because the
companies included in this survey are much larger than the
Company, recommended salaries may be adjusted from the median
accordingly. Of the 47 companies with revenue less than
$1 billion, the median revenue level was approximately
$788 million, which is approximately five times greater
than Crosss revenue size. As a result, recommended
salaries for Cross executives are generally in the range of the
25th
to
50th
percentile of the median of surveyed companies, depending on
factors such as the type of position, the strategic importance
of the position to the Company and the survey data available. In
the event that data from similarly sized companies is not
available, periodically the Company will ask Towers Perrin to
provide a regression analysis. This analysis provides the
Company with compensation data for companies closer in revenue
size to Cross than what is available in annual compensation
surveys.
In addition to competitive data, base pay also may reflect
individual performance and internal equity considerations
relative to other Cross executives. Salaries are typically
evaluated annually and adjusted based upon survey data, the
executives performance and level of responsibility. Like
the other elements of compensation, these adjustments are
recommended to the Compensation Committee by the Human Resources
Department for the salary of the Chief Executive Officer, and by
the Chief Executive Officer and the Human Resources Department
together for other named executives.
9
Cash
Incentive Programs
At the beginning of each year, following a proposal of the Human
Resources Department, the Compensation Committee recommends a
performance-based annual incentive plan to the Board of
Directors for its approval for that year. This annual incentive
plan is designed to be the primary compensation element to drive
and recognize performance against established business
objectives and to reward accomplishments within any given year.
The Plan for 2007 was designed to reward a combination of
corporate segment success and individual achievement, with a
heavier weighting for most participants on corporate
segment performance. Targeted award levels are generally set by
reference to a percentage of the employees base salary.
For most participants, awards were measured against a
combination of quantitative segment-level performance goals
(75%) and a combination of quantitative and qualitative
individual performance goals (25%). Certain of senior
management, however, including two of the named executive
officers, is measured entirely against segment-level performance
goals. The Chief Executive Officer and two of the named
executive officers are measured against overall corporate
performance.
For the 2007 Annual Incentive Plan, the overall corporate and
business segment goals were set based on attaining a certain
operating income before taxes (or OIBT) target. The Company
believes that achieving increasing OIBT targets is key to
enhancing shareholder value and utilizes that as the key
criterion for Company performance.
In order for participants to have earned an incentive payment
under the 2007 Annual Incentive Plan, OIBT targets that were
higher than 2006 needed to be achieved. OIBT targets consisted
either of consolidated OIBT, Optical Group OIBT or Accessory
Division OIBT, depending on the executives position.
Equity-based
Awards
The Company does not make equity awards every year. However, the
Compensation Committee considers equity-based performance awards
to be an important tool in rewarding and incenting executive
performance that will have a long term impact on shareholder
value.
Equity-based awards, including restricted stock awards, may be
made by the Compensation Committee in its sole discretion,
though in practice the Committee recommends such awards to the
full Board for approval. At the time an award of restricted
stock is made, the Committee establishes a restricted period and
prescribes conditions for the lapse of restrictions during the
restricted period, including the lapse of restrictions upon the
attainment of certain objectives designed to drive shareholder
value and, for retention purposes, upon the passage of time.
Upon the grant of restricted stock, a stock certificate
representing the number of common shares equal to the number of
shares of restricted stock granted to an employee is registered
in the employees name but is held in custody by the
Company for the employees account. The shares are issued
based on the fair market value of the common stock on the date
of the grant.
On October 19, 2005, the Board of Directors of Company
approved a long term incentive plan under which the named
executive officers (other than the Chief Executive Officer) and
certain other members of the senior management team each
received a restricted stock grant of 40,000 shares on the
first business day of 2006. Restrictions on 25% of the shares
would have lapsed in the event that enhanced operating income
targets established and approved by the Board were met for 2007;
restrictions on the balance of the shares will lapse only in the
event that enhanced operating income targets for 2008 are met.
The attainment of such targets would evidence a significant
improvement in the Companys financial performance. In the
event that less than 100% of the 2007 or 2008 targets are met,
but at least 75% of such targets are met, restrictions on a
corresponding percent of the shares will lapse. The enhanced
targets were not met for 2007.
The Company did not grant any options to the Chief Executive
Officer or other named executive officers in 2007. The
Companys process for granting options are prescribed in
the Companys Omnibus Incentive Plan, as amended, which is
administered by the Compensation Committee. The Omnibus
Incentive Plan specifies that the exercise price of incentive
stock options shall not be less than the fair market value of
the common stock on the date of grant. The Committee follows
this practice in setting the exercise price of nonqualified
stock options as well. The Committee has on occasion authorized
the grant of options to occur in the future, with an exercise
price equal to the fair market value as of the effective date of
the grant. The Committee has never granted options with a grant
date that preceded the Committees authorization of the
grant, nor has it granted stock options with an exercise price
of less than the fair market value on the date of grant.
Retirement-related
Benefits
401(k) plan. The 401(k) plan is a
tax-qualified retirement savings plan pursuant to which all of
the Companys U.S. based employees, including the named
executive officers, are able to contribute the lesser of 25% of
their annual salary or the limit prescribed by the Internal
Revenue Service to the plan on a before-
10
tax basis. The Company matches the participants
contributions based on the following schedule:
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Participant contribution
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Company match
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1%
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1.0%
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2%
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2.0%
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3%
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2.5%
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4%
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3.0%
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5%
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3.5%
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6% or more
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4.0%
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In addition to the Company match, all participants qualify for
an annual core contribution of 2% of pay.
For the years 2006 through 2008, certain participants also
qualify for transition benefits related to the qualified pension
plan freeze described below, as follows:
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Age at date of freeze
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Additional Contribution
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55
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1.0
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%
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56
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2.0
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%
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57
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3.0
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%
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58
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3.0
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%
|
59
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|
|
4.0
|
%
|
60
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|
|
5.0
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%
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61
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|
6.0
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%
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62
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|
|
7.0
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%
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63 or older
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8.0
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%
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The vesting schedule for all Company contributions to the 401(k)
plan is 20% for each year a participant works 1,000 hours with
100% vesting after five years of working 1,000 hours for each
year.
Pension plans. The Company maintains two
defined benefit retirement plans, as further described in the
Pension Benefits discussion beginning
on page 16. The qualified pension plan (the
A. T. Cross Company Pension Plan) provides funded,
tax-qualified benefits up to the limits on compensation and
benefits permitted under the Internal Revenue Code and was
designed to provide tax-qualified pension benefits for most
employees of the Company, including the named executive
officers. Benefits under the qualified pension plan are based on
the employees earnings up to a compensation limit under
the Internal Revenue Code ($225,000 in 2007). In addition,
benefits provided under the qualified pension plan may not
exceed a benefit limit under the Internal Revenue Code (the
limit in 2007 was $180,000 payable as a single life annuity
beginning at any age from age 62 through Social Security
normal retirement age). The Company amended its A.T. Cross
Company Pension Plan in May 2006 to freeze benefit accruals. As
a result of the freeze, any accrued benefits which participants
have in that plan as of May 20, 2006 are theirs. However,
benefits will no longer grow since compensation and years of
service after that date will not be included in calculating
pension benefits.
The nonqualified plan (the A.T. Cross Company Unfunded Excess
Benefits Plan) provides unfunded, non-qualified benefits in
excess of the limits applicable to the A.T. Cross Company
Pension Plan and the 401(k) plan.
Nonqualified deferred compensation plan. The
Company offers its executives a deferred compensation plan,
whereby the executive can elect to defer a portion of his or her
future base salary and/or cash bonus. Any amounts deferred and
interest or earnings credited on such amounts are exempt from
income taxes during the deferral period. The full amount
credited to the executives deferred compensation account
becomes payable at the earlier of the end of the deferral period
elected by the executive or upon the executives retirement
from the Company. Currently, no executive of the Company
participates in the deferred compensation plan.
Post-Termination
Compensation
In order to attract, motivate, and retain executives, the
Company believes that certain severance arrangements for the
named executive officers are appropriate and necessary. These
severance arrangements were determined using benchmark
compensation survey data. Currently, the Company relies on
several industry surveys to determine appropriate levels of
severance.
In 2005, the Board of Directors approved certain severance
arrangements whereby the Chief Executive Officer and the other
named executive officers 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)
and a subsequent termination or constructive termination, or in
the event that the executive is terminated without cause,
provided the executive signs an acceptable release agreement.
The terms of these arrangements are discussed in greater detail
on pages 19 to 21.
The Board also approved certain
gross-up
payments to the Chief Executive Officer and the other named
executive officers under certain circumstances in the event of
change in control payments. 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 or her average annual taxable compensation
over the prior five-year period (the base amount).
In the event that the change in control payments made to a named
executive officer exceed three times such base amount (the
safe harbor amount), the Company will provide a
gross-up to
the Chief Executive Officer to provide him or her the after tax
benefit he or she would have
11
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 by more than a
specified 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.
Tax and
Accounting Implications
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 any of
the corporations chief executive officer and the 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 under it, 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.
Effective January 1, 2006, the Company accounts for
equity-based grants, including stock options and restricted
stock awards, in accordance with the requirements of
SFAS 123(R). The effect of those requirements is considered
in structuring equity awards and has weighted recent total
compensation in favor of cash with a performance-based stock
grant component, where expense is recognized by the Company only
to the extent that satisfaction of the performance conditions is
probable.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee of the Company has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management. Based on this review and discussion, the
Compensation Committee recommends to the Board of Directors that
the Compensation Discussion and Analysis be included in this
Proxy Statement.
2007 Compensation Committee
Terrence Murray, Chairman
Bernard V. Buonanno, Jr.
12
SUMMARY
COMPENSATION TABLE
FISCAL YEAR 2007
The following table sets forth certain information with respect
to the Companys Chief Executive Officer and the four other
most highly compensated executive officers during 2007
(collectively, the named executive officers).
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value and
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|
|
|
|
|
|
|
|
|
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|
Non-Equity
|
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|
Nonqualified Deferred
|
|
|
|
|
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|
Name and
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus(1)
|
|
|
Awards(2)
|
|
|
Awards(2)
|
|
|
Compensation(3)
|
|
|
Earnings(4)
|
|
|
Compensation(5)
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|
|
Total
|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David G. Whalen
|
|
|
2007
|
|
|
$
|
536,540
|
|
|
$
|
24,300
|
|
|
$
|
181,868
|
(6)
|
|
|
|
|
|
$
|
425,700
|
|
|
$
|
(12,926
|
)
|
|
$
|
45,713
|
|
|
|
1,201,195
|
|
President and Chief
|
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|
|
|
|
|
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|
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|
|
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|
|
Executive Officer
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|
|
|
|
|
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|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin F. Mahoney
|
|
|
2007
|
|
|
|
243,770
|
|
|
|
4,680
|
|
|
|
|
|
|
$
|
35,194
|
(7)
|
|
|
85,320
|
|
|
|
(566
|
)
|
|
|
23,525
|
|
|
|
391,923
|
|
Vice President,
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|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance and Chief
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer
|
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|
|
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|
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|
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|
|
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|
|
|
|
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|
|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles R. MacDonald
|
|
|
2007
|
|
|
|
221,770
|
|
|
|
44,078
|
|
|
|
66,625
|
(8)
|
|
|
|
|
|
|
255,922
|
|
|
|
(1,576
|
)
|
|
|
29,802
|
|
|
|
616,621
|
|
President, Cross
|
|
|
|
|
|
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|
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|
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|
|
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|
|
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|
Optical Group and
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
Costa Del Mar
Sunglasses, Inc.
|
|
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|
|
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|
|
|
|
|
|
|
|
Charles S. Mellen
|
|
|
2007
|
|
|
|
301,509
|
|
|
|
75,000
|
|
|
|
159,482
|
(9)
|
|
|
|
|
|
|
|
|
|
|
(632
|
)
|
|
|
24,620
|
|
|
|
559,979
|
|
President,
|
|
|
|
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|
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|
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|
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|
|
Cross Accessory Division
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Tina C. Benik
|
|
|
2007
|
|
|
|
216,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,000
|
|
|
|
(11,881
|
)
|
|
|
19,566
|
|
|
|
309,455
|
|
Vice President,
|
|
|
|
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|
|
Legal and Human Resources
|
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|
|
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|
|
(1)
|
Amounts in this column reflect discretionary bonus payments
granted by the Committee in recognition of significant
improvement in Company results in fiscal year 2007 in comparison
to 2006.
|
|
(2)
|
A discussion of the assumptions used in calculating these values
may be found in Note I (Omnibus Incentive Plan) to the
Consolidated Financial Statements in the Companys Annual
Report on
Form 10-K.
|
|
(3)
|
Amounts in this column reflect 2007 earnings as a result of
achievement of pre-established performance targets under the
annual incentive plan described on page 10.
Mr. Whalens bonus was granted in recognition of
achievement beyond the consolidated OIBT target and achievement
of other predetermined qualitative and quantitative objectives.
Mr. MacDonalds bonus was granted in recognition of
achievement of several predetermined targets including OIBT,
cash flow and key market sales. Mr. Mahoneys and
Ms. Beniks amounts reflect achievement of
consolidated OIBT levels.
|
|
(4)
|
Amounts in this column reflect the change in the actuarial
values of defined benefit pension plans during 2007. Actuarial
value computations are based on FASB Statement No. 87
assumptions discussed in Note H (Employee Benefits Plan) to
the Consolidated Financial Statements in the Companys
Annual Report on
Form 10-K.
The Company does not provide above-market rates of return in the
Unfunded Excess Benefits Plan relating to the 401(k) plan as
described on page 11.
|
|
(5)
|
Amounts in this column consist of life insurance premium
payments made by the Company on behalf of each named executive
officer and Company contributions/accruals to the 401(k) plan
and/or Unfunded Excess Benefits Plan. The specific components
are shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance
|
|
|
401(K)
|
|
Name
|
|
Premium Payment
|
|
|
Contributions
|
|
|
Mr. Whalen
|
|
$
|
4,521
|
|
|
$
|
41,193
|
|
Mr. Mahoney
|
|
$
|
5,600
|
|
|
$
|
17,927
|
|
Mr. MacDonald
|
|
$
|
6,596
|
|
|
$
|
23,207
|
|
Mr. Mellen
|
|
$
|
3,230
|
|
|
$
|
21,391
|
|
Ms. Benik
|
|
$
|
3,680
|
|
|
$
|
15,887
|
|
|
|
|
|
(6)
|
This amount reflects the expense recognized by Cross for
accounting purposes calculated in accordance with FASB Statement
of Financial Accounting Standards No. 123 (revised
2004)(FASB 123R) with respect to a time-based
restricted stock grant to Mr. Whalen. Mr. Whalen
received a restricted stock award of 150,000 shares on
July 21, 2004 at a fair value of $803,250. The restrictions
lapse as to all of the shares on December 31, 2008.
|
|
(7)
|
This amount reflects the expense recognized by the Company for
accounting purposes calculated in accordance with SFAS 123R
with respect to a stock option grant to Mr. Mahoney.
Mr. Mahoney received a stock option grant of 60,000 shares
on January 1, 2005 at a fair value of $313,500 in
connection with his hiring. The options vested in one-third
increments on January 1, 2006, January 1, 2007 and
January 1, 2008, respectively.
|
|
(8)
|
This amount reflects the expense recognized by Cross for
accounting purposes calculated in accordance with SFAS 123R
with respect to time-based and performance-based restricted
stock grants to Mr. MacDonald. Mr. MacDonald received
a performance-based restricted stock award of 40,000 shares
on January 3, 2006 at a fair value of $166,000. Twenty-five
percent of the stock vested at the end of fiscal year 2007, and
the remaining 75% will vest at the end of fiscal year 2008, if
certain performance targets are met.
|
|
|
|
|
(9)
|
This amount reflects the expense recognized by Cross for
accounting purposes calculated in accordance with FASB 123R
with respect to time-based restricted stock grants to
Mr. Mellen. Mr. Mellen received a time-based
restricted stock award of 50,000 shares on January 31, 2005
in connection with his hiring at a fair value of $261,250. The
restrictions lapse as to all of those shares on
December 31, 2008. On October 25, 2006,
Mr. Mellen received a time-based grant of 25,000 restricted
shares at a fair value of $167,000 in recognition of his
promotion to Senior Vice President of Global Marketing and Sales
and to serve as a retention vehicle. Restrictions on
8,334 shares lapsed on October 25, 2007 and the
balance will lapse in equal increments on October 25, 2008
and October 25, 2009, respectively.
|
13
GRANTS OF
PLAN BASED AWARDS
DURING FISCAL YEAR 2007
The following table describes awards to the named executive
officers during fiscal year 2007 under the Companys
performance-based annual incentive plan and its long term
incentive plan. Both plans are described in greater detail
beginning on page 10.
|
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|
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Base
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
|
Estimated Future Payouts Under Equity Incentive Plan
Awards
|
|
|
All Other
|
|
|
All Other
|
|
|
Price of
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Approval
|
|
|
Non-Equity Incentive Plan Awards(2)
|
|
|
Threshhold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock
|
|
|
Option
|
|
|
Option
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
Date(1)
|
|
|
Threshhold
|
|
|
Target
|
|
|
Maximum
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Awards
|
|
|
Awards
|
|
|
Awards
|
|
|
$(2)
|
|
|
David G. Whalen
|
|
|
2/14/2007
|
|
|
|
2/14/2007
|
|
|
|
|
|
|
$
|
402,404
|
|
|
$
|
536,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin F. Mahoney
|
|
|
2/14/2007
|
|
|
|
2/14/2007
|
|
|
$
|
8,532
|
|
|
|
85,319
|
|
|
|
127,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles R. MacDonald
|
|
|
2/14/2007
|
|
|
|
2/14/2007
|
|
|
|
7,762
|
|
|
|
77,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Mellen
|
|
|
2/14/2007
|
|
|
|
2/14/2007
|
|
|
|
13,568
|
|
|
|
135,679
|
|
|
|
203,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tina C. Benik
|
|
|
2/14/2007
|
|
|
|
2/14/2007
|
|
|
|
8,671
|
|
|
|
86,708
|
|
|
|
130,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This grant was made under the
annual incentive plan discussed on page 9.
|
(2)
|
|
All named executive officers have a
maximum possible incentive plan award of one hundred fifty
percent of the target bonus opportunity with the exception of
Mr. MacDonald, whose annual incentive plan formula for 2007
has no maximum, and Mr. Whalen, whose maximum bonus
opportunity is equal to 100% of his base salary earnings.
|
14
OUTSTANDING
EQUITY AWARDS AT THE END OF FISCAL YEAR 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Equity Incentive
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number
|
|
|
Market
|
|
|
Plan Awards:
|
|
|
Plan Awards:
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Value of
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Shares of
|
|
|
Unearned
|
|
|
of Unearned
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
That
|
|
|
Stock That
|
|
|
Shares
|
|
|
Shares
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That Have
|
|
|
That Have
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Date
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
David G. Whalen
|
|
|
500,000
|
|
|
|
0
|
|
|
|
4.56250
|
|
|
|
11/15/2009
|
|
|
|
150,000
|
(1)
|
|
$
|
1,290,000
|
|
|
|
|
|
|
|
|
|
|
|
|
1,600
|
|
|
|
0
|
|
|
|
4.75000
|
|
|
|
11/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
0
|
|
|
|
5.75000
|
|
|
|
11/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
0
|
|
|
|
5.68750
|
|
|
|
11/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,600
|
|
|
|
0
|
|
|
|
5.87500
|
|
|
|
11/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
0
|
|
|
|
4.75000
|
|
|
|
2/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
770
|
|
|
|
0
|
|
|
|
5.44670
|
|
|
|
3/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,200
|
|
|
|
0
|
|
|
|
5.75000
|
|
|
|
5/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
562
|
|
|
|
0
|
|
|
|
5.57160
|
|
|
|
6/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
566
|
|
|
|
0
|
|
|
|
5.25830
|
|
|
|
9/29/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
653
|
|
|
|
0
|
|
|
|
5.25500
|
|
|
|
10/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
0
|
|
|
|
4.68750
|
|
|
|
10/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
7.62500
|
|
|
|
7/25/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
0
|
|
|
|
7.11000
|
|
|
|
7/24/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin F. Mahoney
|
|
|
40,000
|
|
|
|
20,000
|
|
|
|
5.22500
|
|
|
|
1/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(2)
|
|
$
|
258,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles R. MacDonald
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(2)
|
|
$
|
258,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Mellen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(3)
|
|
$
|
430,000
|
|
|
|
30,000
|
(2)
|
|
$
|
258,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,666
|
(4)
|
|
$
|
143,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tina C. Benik
|
|
|
8,000
|
|
|
|
0
|
|
|
|
6.06250
|
|
|
|
12/8/2008
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(2)
|
|
$
|
258,000
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
5.09375
|
|
|
|
7/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
|
0
|
|
|
|
7.62500
|
|
|
|
7/25/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
7.11000
|
|
|
|
7/24/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Restrictions on all of
Mr. Whalens 150,000 shares will terminate on
December 31, 2008.
|
(2)
|
|
Restrictions on all of the equity
incentive awards held by Mr. Mahoney, Mr. MacDonald,
Mr. Mellen and Ms. Benik will terminate at the end of
fiscal year 2008 if certain performance targets are met.
|
(3)
|
|
Restrictions on all of
Mr. Mellens 50,000 shares will terminate on
December 31, 2008.
|
(4)
|
|
Restrictions on
Mr. Mellens 16,666 shares will terminate in
equal increments on October 25, 2008 and October 25,
2009.
|
15
OPTION
EXERCISES AND STOCK VESTED
DURING FISCAL YEAR 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
Name
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
|
David G. Whalen
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Kevin F. Mahoney
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Charles R. MacDonald
|
|
|
0
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
91,700
|
|
Charles S. Mellen
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tina C. Benik
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
PENSION
BENEFITS
In the United States, A.T. Cross Company maintains two defined
benefit plans. One is the A.T. Cross Company Pension Plan, which
provides funded, tax-qualified benefits up to the limits on
compensation and benefits under the Internal Revenue Code
(referred to as the Qualified Pension Plan). The
other is the A.T. Cross Company Unfunded Excess Benefits Plan,
which provides unfunded, non-qualified benefits in excess of the
limits applicable to the Qualified Pension Plan and the 401(k)
plan (referred to as the Excess Plan or the
Nonqualified Excess Plan). The Excess Plan benefits
and provisions described here and shown in the Pension Benefits
Table on page 18 pertain solely to the excess pension
benefits attributable to the Qualified Pension Plan. The Excess
Plan benefits attributable to benefits in excess of the limits
applicable to the 401(k) plan are shown in the Nonqualified
Deferred Compensation Table on page 19.
The Present Value of Accumulated Benefits shown in
the Pension Benefits Table is the present value as of
December 31, 2007 of the annual pension benefit earned as
of December 31, 2007 payable under a plan for the
executives life beginning on the named executive
officers normal retirement age. The normal retirement age
is defined as age 65 in each of the plans. Certain
assumptions were used to determine the present value and to
determine the annual pension that is payable beginning at normal
retirement age. Those assumptions are described in
footnote 1 to the Pension Benefits Table on page 18.
Qualified
Pension Plan
General
The Qualified Pension Plan was designed to provide tax-qualified
pension benefits for most employees of the Company. Benefits
under the Qualified Pension Plan are funded by an irrevocable
tax-exempt trust. An executives benefits under the
Qualified Pension Plan are payable from the assets held by the
tax-exempt trust.
Benefits provided under the Qualified Pension Plan are based on
earnings up to a compensation limit under the Internal Revenue
Code (which was $225,000 in 2007). In addition, benefits
provided under the Qualified Pension Plan may not exceed a
benefit limit under the Internal Revenue Code (which in 2007 was
$180,000 payable as a single life annuity beginning at any age
from age 62 through Social Security Normal Retirement Age).
Material
terms and conditions
Effective May 20, 2006, both the Qualified Pension Plan and
the Excess Plan were amended to freeze benefit accruals.
The accrued benefit under the Qualified Pension Plan is
expressed as an annual single life annuity payable from normal
retirement age and is determined under the following formula:
40% of Average Earnings less the Social Security Credit,
prorated for less than 25 years of credited service. In no
event is the accrued benefit less than 20% of Average Earnings,
prorated for 25 years of credited service.
The Social Security Credit is equal to the lesser of
(i) and (ii), multiplied by (iii):
|
|
(i) |
the average of the three most recent years of earnings
(excluding earnings in excess of the Social Security Wage Base)
|
(ii) Social Security covered compensation
|
|
(iii) |
18.0% for participants born before 1938
16.8% for participants born between 1938 and 1954
15.6% for participants born after 1954
|
For purposes of the above formula, Average Earnings
is the average of the five consecutive years earnings that
produce the highest average and Credited Service of
one year is granted for 1,000 or more hours of service during a
plan year. No credit is recognized for employment before
January 1, 1984. Credited service was frozen as of
May 20, 2006.
16
If the participant has attained age 62 and 5 years of
service, the accrued benefit is reduced by
5/9
of 1% for each month by which the early retirement date precedes
the normal retirement date.
If the participant is vested in the Qualified Pension Plan and
dies while still employed by the Company, his or her spouse will
receive a life annuity equal to 100% of the amount the
participant would have received if he or she had elected a 100%
Joint & Survivor annuity payment form commencing on
his or her earliest retirement date and died the next day. If
the participant dies after terminating employment, the benefit
is the same as above, except that the spouses annuity is
reduced to 50% of the amount the participant would have received
under the above analysis.
Eligibility
of the named executive officers for unreduced pensions before
normal retirement age
None; the pension benefit under the Qualified Pension Plan is
reduced if paid before normal retirement age.
Elements
of compensation included in applying the payment and benefit
formula
Compensation includes base salary, bonus, overtime, commissions,
any deferrals to the Companys 401(k) plan, and other
pre-tax contributions to a Section 125,
Section 402(e)(3) or Section 402(h) plan.
Company
policy with regard to granting extra years of Credited
Service
Generally, an eligible employee earns one year of Credited
Service for each plan year in which he or she completes
1,000 hours of service. Additional years of Credited
Service are generally not granted to participants in this plan
and no extra years of service have been granted to the named
executives. Their respective years of Credited Service are
included in the Pension Benefits Table on page 18.
Form of
payment
Lump sum payments are generally only available on de minimis
amounts. Based on current benefit levels, the named
executives benefits are only payable in the form of a
monthly annuity. Optional annuity forms with the spouse as
beneficiary are available which are approximately equal in value.
Excess
Plan
General
The Excess Plan provides participants with benefits that may not
be provided under the Qualified Pension Plan and the 401(k) plan
because of the limits on compensation and benefits. The Excess
Plan is unfunded and maintained as a book reserve account. No
funds are set aside in a trust or otherwise; participants in the
Excess Plan are general creditors of the Company with respect to
the payment of their Excess Plan benefits.
Material
terms and conditions
The Excess Plan provides a benefit that is equal to the benefit
that would be provided under the Qualified Pension Plan and the
401(k) plan if the compensation and benefit limits did not
exist, less the benefit actually provided under the Qualified
Pension Plan. Due to the benefit freeze under the Qualified
Pension Plan, the benefits under this plan as they apply to the
Qualified Pension Plan were also frozen effective May 20,
2006.
Eligibility
for unreduced pensions before normal retirement age
None; the pension benefit under the Excess Plan is reduced if
paid before normal retirement age.
Elements
of compensation included in applying the payment and benefit
formula
Compensation includes the same elements as under the Qualified
Pension Plan, but without regard to Internal Revenue Code
401(a)(17) limits on compensation.
Company
policy with regard to granting extra years of Credited
Service
The Companys policy with respect to the Excess Plan is
identical to the Companys policy with respect to the
Qualified Pension Plan, as stated above.
Form of
payment
For the named executives, benefits have generally been payable
as provided under the Qualified Pension Plan or 401(k) plan, as
applicable. Effective January 1, 2007, participants may
receive their benefit in the form of a lump sum payment or
annuity based upon their election made subject to the
requirements of Internal Revenue Code Section 409A.
17
FOR FISCAL YEAR 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present
|
|
|
Payments
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
During
|
|
|
|
|
|
Years of
|
|
|
Accumulated
|
|
|
Last
|
|
|
|
|
|
Credited
|
|
|
Benefits at
|
|
|
Fiscal
|
|
Name
|
|
Plan Name
|
|
Service
|
|
|
12/31/2007(1)
|
|
|
Year
|
|
|
|
|
David G. Whalen
|
|
Qualified
Pension Plan
|
|
|
6
|
|
|
$
|
66,165
|
|
|
$
|
0
|
|
|
|
Nonqualified
Excess Plan
|
|
|
6
|
|
|
|
182,996
|
|
|
|
0
|
|
Kevin F. Mahoney
|
|
Qualified
Pension Plan
|
|
|
1
|
|
|
|
9,326
|
|
|
|
0
|
|
|
|
Nonqualified
Excess Plan
|
|
|
1
|
|
|
|
|
|
|
|
0
|
|
Charles R. MacDonald
|
|
Qualified
Pension Plan
|
|
|
3
|
|
|
|
45,168
|
|
|
|
0
|
|
|
|
Nonqualified
Excess Plan
|
|
|
3
|
|
|
|
8,313
|
|
|
|
0
|
|
Charles S. Mellen
|
|
Qualified
Pension Plan
|
|
|
1
|
|
|
|
8,170
|
|
|
|
0
|
|
|
|
Nonqualified
Excess Plan
|
|
|
1
|
|
|
|
|
|
|
|
0
|
|
Tina C. Benik
|
|
Qualified
Pension Plan
|
|
|
16
|
|
|
$
|
161,858
|
|
|
|
0
|
|
|
|
Nonqualified
Excess Plan
|
|
|
16
|
|
|
$
|
20,413
|
|
|
|
0
|
|
(1) Assumptions
for Calculation of Present Value of Accumulated Benefit
disclosed in Pension Benefits Table:
|
|
|
Measurement Date
|
|
12/31/2007
|
Interest Rate for Present Value
|
|
6.4%
|
Mortality (Pre Benefit Commencement)
|
|
None
|
Mortality (Post Benefit Commencement)
|
|
RP-2000 w/ 5 yr projection
|
Withdrawal and Disability Rates
|
|
None
|
Retirement Rates prior to Age 65
|
|
None
|
Normal Retirement Age
|
|
65
|
18
NONQUALIFIED
DEFERRED COMPENSATION
FOR FISCAL YEAR 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Earnings in
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Last
|
|
|
Distributions
|
|
|
Balance at
|
|
|
|
|
|
in Last Fiscal
|
|
|
in Last Fiscal
|
|
|
Fiscal
|
|
|
in Last Fiscal
|
|
|
Last Fiscal
|
|
Name
|
|
Plan
|
|
Year(1)
|
|
|
Year(2)
|
|
|
Year
|
|
|
Year
|
|
|
Year End
|
|
|
|
|
David G. Whalen
|
|
Nonqualified Excess Plan
|
|
$
|
0
|
|
|
$
|
27,692
|
|
|
$
|
15
|
|
|
$
|
0
|
|
|
$
|
27,707
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Kevin F. Mahoney
|
|
Nonqualified Excess Plan
|
|
|
0
|
|
|
|
4,426
|
|
|
|
154
|
|
|
|
0
|
|
|
|
4,580
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Charles R. MacDonald
|
|
Nonqualified Excess Plan
|
|
|
0
|
|
|
|
9,706
|
|
|
|
647
|
|
|
|
0
|
|
|
|
10,353
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Charles S. Mellen
|
|
Nonqualified Excess Plan
|
|
|
0
|
|
|
|
7,891
|
|
|
|
(136
|
)
|
|
|
0
|
|
|
|
7,755
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tina C. Benik
|
|
Nonqualified Excess Plan
|
|
|
0
|
|
|
|
2,386
|
|
|
|
(10
|
)
|
|
|
0
|
|
|
|
2,376
|
|
|
|
Deferred Compensation Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(1)
|
|
None of the named executive
officers have elected to participate in the Deferred
Compensation Plan.
|
(2)
|
|
The amounts in this column are also
included in the Summary Compensation Table on page 13, in
the All Other Compensation column as a portion of the
Companys 401(k) contribution.
|
The Nonqualified Deferred Compensation Table above shows
information about two Company programs: the Excess Plan
described on page 17, and the deferred compensation plan
described below. The Excess Plan is designed to allow each
executive to receive a Company contribution of match, core
contribution (2% of eligible compensation), and for participants
age 55 or older for 2006, 2007 and 2008, transitional
benefits as a result of the pension plan freeze beyond the
contribution limits prescribed by the IRS with regard to 401(k)
plans. The Excess Plan is administered in the same manner as the
Companys 401(k) plan, with the same participation and
investment elections.
Executive officers may also defer receipt of all or part of
their cash compensation under the Companys deferred
compensation plan. Amounts deferred by executives under this
program are credited with interest. The participant may elect
that amounts credited to his or her account be allocated between
two sub-accounts: the Interest Income Account and
the Fixed Income Account. The rate of interest to be
credited to the Interest Income Account is equal to the
six-month treasury bill rate in effect at the time interest is
credited. The Fixed Income Account will be credited with income,
gains, or losses that would have been earned during that period
had such account been invested in the Stable Asset Fund (or such
successor fund as offered under the Companys qualified
defined contribution plan). Interest is credited each
June 30 and December 31. Participants may elect to
receive the funds in a lump sum or in up to 10 annual
installments following retirement, but may not make withdrawals
during their employment, except in the event of hardship as
approved by the Company. All deferral elections and associated
distribution schedules are irrevocable. Both plans are unfunded
and subject to forfeiture in the event of bankruptcy.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The named executive officers of the Company qualify for certain
benefits in the event of termination of such executives
employment. The amount of compensation payable to each named
executive officer is dependent on the nature of the termination.
Payments that may be made in cases of voluntary termination,
early retirement, involuntary termination, termination following
a change in control and in the event of disability or death of
the executive are discussed below. The amounts payable
referenced in the discussion assume that such termination was
effective as of December 31, 2007, and thus include amounts
earned through such time and are estimates of the amounts which
would be paid out to the executives upon their termination.
Generally, amounts are reported in the tables below only to the
extent that they are more favorable to the named executive
officer than what is available to the Companys other
employees and are in addition to accrued benefits or earned
compensation noted elsewhere in this proxy statement. The actual
amounts to be paid out upon termination or change in control can
only be determined at the time of such executives
separation from the Company.
Payments
Made Upon Termination
Regardless of the nature of a named executive officers
termination, he or she may be entitled to receive benefits
accrued and compensation earned
19
during his or her term of employment. Such amounts may include:
|
|
|
|
|
non-equity incentive compensation earned during the fiscal year
in the same manner as other employee participants;
|
|
|
|
vested outstanding equity grants in the same manner as other
employee participants;
|
|
|
|
extension of exercise period for vested stock options if
executive is age 62 or older in the same manner as other
employee participants;
|
|
|
|
vested amounts contributed by the Company under the 401(k) plan
in the same manner as other employee participants, the related
Excess Plan and the nonqualified deferred compensation program;
|
|
|
|
unused vacation pay in the same manner as other employee
participants; and
|
|
|
|
amounts accrued and vested through the Company Qualified Pension
Plan in the same manner as other employee participants, and the
related Excess Plan.
|
Payments
Made Upon Retirement
In the event of the retirement of a named executive officer, in
addition to the items identified above, the retiring executive
officer will have the option to continue medical benefits until
age 65 at the full premium cost in the same manner as
offered to other employee participants.
Payments
Made Upon Death or Disability
In the event of the death or disability of a named executive
officer, in addition to the applicable benefits listed under the
headings Payments Made Upon Termination and
Payments Made Upon Retirement above, the named
executive officer or his or her estate may receive benefits
under the Companys disability plan or payments under the
Companys life insurance plan, as appropriate and in the
same manner as other employee participants.
Payments
Made Upon Involuntary Termination Without Cause
In the event of an involuntary termination without cause, in
addition to the items identified above under the heading
Payments Made Upon Termination above, each of the
named executive officers other than Mr. Whalen will receive
a severance payment equal to 1.0 times the executives base
salary and Mr. Whalen will receive a severance payment equal to
2.0 times his base salary and target bonus under the annual
incentive plan (75% of his base salary).
Payments
Made Upon a Change in Control
The Company has a Change in Control Severance Program (the
Program). Pursuant to this Program, if an
executives employment is actually or constructively
terminated following a change in control (other than termination
by the Company for cause), in addition to the items identified
above under the heading Payments Made Upon Involuntary
Termination Without Cause, the named executives may
receive the following payments and benefits:
|
|
|
|
|
with the exception of Mr. Whalen, each of the named executive
officers actually or constructively terminated in the 24 month
period following a change in control will receive:
|
|
|
|
|
o
|
severance payment equal to 1.5
times the executives base salary;
|
|
|
o
|
an amount equal to 1.5 times the
executives target bonus under the annual incentive plan;
|
|
|
o
|
in certain circumstances, an amount
as described on page 12 under the heading Post-Termination
Compensation which represents excise tax charged to the
named executive officer as a result of any change in control
payments; and
|
|
|
o
|
any unvested stock options held by
the executive will vest and become exercisable, and any
restrictions on restricted stock grants held by the executive
will lapse.
|
|
|
|
|
|
If actively or constructively terminated following a change in
control, Mr. Whalen will receive:
|
|
|
|
|
o
|
a severance payment equal to
3.0 times his base salary;
|
|
|
o
|
an amount equal to 3.0 times his
target bonus under the annual incentive plan (75% of base
salary);
|
|
|
o
|
an amount as described on page 12
under the heading Post-Termination Compensation
which represents excise tax charged to Mr. Whalen as a
result of any change in control payments; and
|
|
|
o
|
Any unvested stock options held by
Mr. Whalen will vest and become exercisable, and any
restrictions on restricted stock grants held by Mr. Whalen
will lapse.
|
Generally, pursuant to the Program, a change in control is
deemed to occur if (a) there is a change in the beneficial
ownership of more than fifty percent of the Class B common
stock of the Company, or (b) the
20
Companys stockholders approve a consolidation or merger in
which the Company will not be the surviving corporation, or
approve the sale of substantially all of the Companys
assets.
The following tables set forth the estimated value of payments
and benefits that the Companys named executive officers
would be entitled to receive assuming certain terminations of
employment and/or assuming a change in control of the Company,
in each case occurring on December 31, 2007.
Mr. Whalen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
or by Executive
|
|
|
|
|
|
|
|
|
|
Without Cause (no
|
|
|
for Good Reason
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Separation
|
|
Change in Control)
|
|
|
(Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Plan(1)
|
|
$
|
825,000
|
|
|
$
|
1,237,500
|
(4)
|
|
$
|
412,500
|
|
|
$
|
412,500
|
|
Stock Options(2)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Performance-Based Restricted Stock Awards(3)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based Restricted Stock Awards(5)
|
|
|
0
|
|
|
|
1,290,000
|
|
|
|
1,290,000
|
|
|
|
1,290,000
|
|
Health and Welfare Benefits(6)
|
|
|
20,459
|
|
|
|
30,668
|
|
|
|
0
|
|
|
|
0
|
|
Life Insurance Benefits(7)
|
|
|
9,042
|
|
|
|
13,563
|
|
|
|
|
|
|
|
|
|
Cash Severance(8)
|
|
|
1,100,000
|
|
|
|
1,650,000
|
|
|
|
0
|
|
|
|
0
|
|
TOTAL
|
|
$
|
1,954,501
|
|
|
$
|
4,221,731
|
|
|
$
|
1,702,500
|
|
|
$
|
1,702,500
|
|
|
|
|
(1)
|
See discussion on page 20 regarding payments to
Mr. Whalen pursuant to the annual incentive plan under the
headings Payments Made Upon Involuntary Termination
Without Cause and Payments Made Upon a Change in
Control. Additionally, as noted on page 20, in the
event of disability or death Mr. Whalen would receive any
earned bonus for that year under the annual incentive plan. The
dollar amounts shown above assume that Mr. Whalen achieved
his target bonus for 2007.
|
|
(2)
|
Mr. Whalen currently has no unvested stock options.
|
|
(3)
|
Mr. Whalen has no outstanding performance-based restricted
stock awards.
|
|
(4)
|
In the event of a change in control, the executive would receive
an amount equal to 3 times his target bonus under the annual
incentive plan.
|
|
(5)
|
Mr. Whalen has an outstanding time-based restricted stock
award, as described in footnote 6 to the Summary
Compensation Table on page 13. Unless the Board of
Directors in its sole discretion determines otherwise,
(a) if an employees employment with the Company is
terminated during the restricted period other than by reason of
death, disability or change in control, the employee shall
thereupon forfeit all restricted shares, (b) if an
employees employment with the Company is terminated during
the restricted period because of death or disability occurring
within the twelve month period immediately preceding the end of
a restricted period, the restricted period shall terminate with
respect to any restricted shares for which the restrictions
would have lapsed in such following twelve month period, and
(c) upon a change in control all restricted periods shall
end and the restrictions applicable to all outstanding awards of
restricted shares shall terminate.
|
|
(6)
|
These amounts represent Company paid premiums toward continued
medical and dental coverage for the executive during the
severance period.
|
|
(7)
|
These amounts represent Company paid premiums toward continued
life insurance coverage during the severance period. As noted on
page 20, in the event of disability or death the executive
or his or her estate may receive benefits under the
Companys life insurance plan in the same manner as other
employee participants.
|
|
(8)
|
See discussion on page 20 regarding severance payments to
the Chief Executive Officer under the headings Payments
Made Upon Involuntary Termination Without Cause and
Payments Made Upon a Change in Control.
|
21
Mr. Mahoney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
or by Executive
|
|
|
|
|
|
|
|
|
|
Without Cause (no
|
|
|
for Good Reason
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Separation
|
|
Change in Control)
|
|
|
(Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Plan
|
|
$
|
NA
|
|
|
$
|
132,825
|
(2)
|
|
$
|
88,550
|
(1)
|
|
$
|
88,550
|
(1)
|
Stock Options(3)
|
|
|
NA
|
|
|
|
67,500
|
|
|
|
0
|
|
|
|
0
|
|
Performance-Based Restricted Stock Awards(4)
|
|
|
NA
|
|
|
|
258,000
|
|
|
|
258,000
|
|
|
|
258,000
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based Restricted Stock Awards(5)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Health and Welfare Benefits(6)
|
|
|
4,026
|
|
|
|
6,038
|
|
|
|
0
|
|
|
|
0
|
|
Life Insurance Benefits(7)
|
|
|
5,600
|
|
|
|
8,400
|
|
|
|
|
|
|
|
|
|
Cash Severance(8)
|
|
|
253,000
|
|
|
|
379,500
|
|
|
|
0
|
|
|
|
0
|
|
TOTAL
|
|
$
|
262,626
|
|
|
$
|
852,264
|
|
|
$
|
346,550
|
|
|
$
|
346,550
|
|
|
|
|
(1)
|
See discussion on page 20 regarding payments to the named
executive officers pursuant to the annual incentive plan under
the headings Payments Made Upon Involuntary Termination
Without Cause and Payments Made Upon Death or
Disability. The dollar amounts shown above assume that the
executive achieved his target bonus for 2007.
|
|
(2)
|
In the event of a change in control, the executive would receive
an amount equal to 1.5 times his target bonus under the annual
incentive plan.
|
|
(3)
|
Mr. Mahoney has unvested stock options as described in
footnote 7 to the Summary Compensation Table on
page 13. In the event of change in control while any option
remains outstanding, unless the Board of Directors determines or
the terms of any award agreement provide otherwise, all options
shall become immediately exercisable, and shall expire as of the
effective date of the change in control.
|
|
(4)
|
Mr. Mahoney has an outstanding performance-based restricted
stock award as described in footnote 2 to the Outstanding
Equity Awards Table on page 15. Unless the Board of
Directors in its sole discretion determines otherwise,
(a) if an employees employment with the Company is
terminated during the restricted period other than by reason of
death, disability or change in control, the employee shall
thereupon forfeit all restricted shares, (b) if an
employees employment with the Company is terminated during
the restricted period because of death or disability occurring
within the twelve month period immediately preceding the end of
a restricted period, the restricted period shall terminate with
respect to any restricted shares for which the restrictions
would have lapsed in such following twelve month period, and
(c) upon a change in control all restricted periods shall
end and the restrictions applicable to all outstanding awards of
restricted shares shall terminate.
|
|
(5)
|
Mr. Mahoney has no outstanding time-based restricted stock
awards.
|
|
(6)
|
These amounts represent Company paid premiums toward continued
medical and dental coverage for the executive during the
severance period.
|
|
(7)
|
These amounts represent Company paid premiums toward continued
life insurance coverage during the severance period. As noted on
page 20, in the event of disability or death the executive
or his or her estate may receive benefits under the
Companys life insurance plan in the same manner as other
employee participants.
|
|
(8)
|
See discussion on page 20 regarding severance payments to
the named executive officers under the headings Payments
Made Upon Involuntary Termination Without Cause and
Payments Made Upon a Change in Control.
|
22
Mr. MacDonald
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
|
Involuntary Termination
|
|
|
or by Executive
|
|
|
|
|
|
|
|
|
|
Without Cause (no
|
|
|
for Good Reason
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Separation
|
|
Change in Control)
|
|
|
(Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Plan
|
|
$
|
NA
|
|
|
$
|
118,125
|
(2)
|
|
$
|
78,750
|
(1)
|
|
$
|
78,750
|
(1)
|
Stock Options(3)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Performance-Based Restricted Stock Awards(4)
|
|
|
NA
|
|
|
|
258,000
|
|
|
|
258,000
|
|
|
|
258,000
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based Restricted Stock Awards(4)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Health and Welfare Benefits(5)
|
|
|
9,152
|
|
|
|
13,728
|
|
|
|
0
|
|
|
|
0
|
|
Life Insurance Benefits(6)
|
|
|
6,595
|
|
|
|
9,893
|
|
|
|
|
|
|
|
|
|
Cash Severance(7)
|
|
|
225,000
|
|
|
|
337,500
|
|
|
|
0
|
|
|
|
0
|
|
TOTAL
|
|
$
|
240,748
|
|
|
$
|
737,247
|
|
|
$
|
336,750
|
|
|
$
|
336,750
|
|
|
|
|
(1)
|
See discussion on page 20 regarding payments to the named
executive officers pursuant to the annual incentive plan under
the headings Payments Made Upon Involuntary Termination
Without Cause and Payments Made Upon Death or
Disability. The dollar amounts shown above assume that the
executive achieved his target bonus for 2007.
|
|
(2)
|
In the event of a change in control, the executive would receive
an amount equal to 1.5 times his target bonus under the annual
incentive plan.
|
|
(3)
|
Mr. MacDonald has received no stock option awards.
|
|
(4)
|
Mr. MacDonald has outstanding performance-based restricted
stock awards as described in footnote 2 to the Outstanding
Equity Awards Table on page 15. Unless the Board of
Directors in its sole discretion determines otherwise,
(a) if an employees employment with the Company is
terminated during the restricted period other than by reason of
death, disability or change in control, the employee shall
thereupon forfeit all restricted shares, (b) if an
employees employment with the Company is terminated during
the restricted period because of death or disability occurring
within the twelve month period immediately preceding the end of
a restricted period, the restricted period shall terminate with
respect to any restricted shares for which the restrictions
would have lapsed in such following twelve month period, and
(c) upon a change in control all restricted periods shall
end and the restrictions applicable to all outstanding awards of
restricted shares shall terminate.
|
|
(5)
|
These amounts represent Company paid premiums toward continued
medical and dental coverage for the executive during the
severance period.
|
|
(6)
|
These amounts represent Company paid premiums toward continued
life insurance coverage during the severance period. As noted on
page 20, in the event of disability or death the executive
or his or her estate may receive benefits under the
Companys life insurance plan in the same manner as other
employee participants.
|
|
(7)
|
See discussion on page 20 regarding severance payments to
the named executive officers under the headings Payments
Made Upon Involuntary Termination Without Cause and
Payments Made Upon a Change in Control.
|
Mr. Mellen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
|
Involuntary Termination
|
|
|
or by Executive
|
|
|
|
|
|
|
|
|
|
Without Cause (no
|
|
|
for Good Reason
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Separation
|
|
Change in Control)
|
|
|
(Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Plan
|
|
$
|
NA
|
|
|
$
|
219,375
|
(2)
|
|
$
|
146,250
|
(1)
|
|
$
|
146,250
|
(1)
|
Stock Options(3)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Performance-Based Restricted Stock Awards(4)
|
|
|
NA
|
|
|
|
258,000
|
|
|
|
258,000
|
|
|
|
258,000
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based Restricted Stock Awards(4)
|
|
|
NA
|
|
|
|
573,328
|
|
|
|
501,664
|
|
|
|
501,664
|
|
Health and Welfare Benefits(5)
|
|
|
9,152
|
|
|
|
13,728
|
|
|
|
0
|
|
|
|
0
|
|
Life Insurance Benefits(6)
|
|
|
3,229
|
|
|
|
4,844
|
|
|
|
|
|
|
|
|
|
Cash Severance(7)
|
|
|
325,000
|
|
|
|
487,500
|
|
|
|
0
|
|
|
|
0
|
|
TOTAL
|
|
$
|
337,382
|
|
|
$
|
1,556,776
|
|
|
$
|
905,914
|
|
|
$
|
905,914
|
|
See footnotes on page 24.
23
|
|
(1)
|
See discussion on page 20 regarding payments to the named
executive officers pursuant to the annual incentive plan under
the headings Payments Made Upon Involuntary Termination
Without Cause and Payments Made Upon Death or
Disability. The dollar amounts shown above assume that the
executive achieved his target bonus for 2007.
|
|
(2)
|
In the event of a change in control, the executive would receive
an amount equal to 1.5 times his target bonus under the annual
incentive plan.
|
|
(3)
|
Mr. Mellen has received no stock option awards
|
|
(4)
|
Mr Mellen has outstanding performance- and time-based
restricted stock awards as described in footnotes 2, 3 and
4 to the Outstanding Equity Awards Table on page 15. Unless
the Board of Directors in its sole discretion determines
otherwise, (a) if an employees employment with the
Company is terminated during the restricted period other than by
reason of death, disability or change in control, the employee
shall thereupon forfeit all restricted shares, (b) if an
employees employment with the Company is terminated during
the restricted period because of death or disability occurring
within the twelve month period immediately preceding the end of
a restricted period, the restricted period shall terminate with
respect to any restricted shares for which the restrictions
would have lapsed in such following twelve month period, and
(c) upon a change in control all restricted periods shall
end and the restrictions applicable to all outstanding awards of
restricted shares shall terminate.
|
|
(5)
|
These amounts represent Company paid premiums toward continued
medical and dental coverage for the executive during the
severance period.
|
|
(6)
|
These amounts represent Company paid premiums toward continued
life insurance coverage during the severance period. As noted on
page 20, in the event of disability or death the executive
or his or her estate may receive benefits under the
Companys life insurance plan in the same manner as other
employee participants.
|
|
(7)
|
See discussion on page 20 regarding severance payments to
the named executive officers under the headings Payments
Made Upon Involuntary Termination Without Cause and
Payments Made Upon a Change in Control.
|
Ms. Benik
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
|
|
|
|
|
|
|
Involuntary Termination
|
|
|
or by Executive
|
|
|
|
|
|
|
|
|
|
Without Cause (no
|
|
|
for Good Reason
|
|
|
|
|
|
|
|
Executive Benefits and Payments Upon Separation
|
|
Change in Control)
|
|
|
(Change in Control)
|
|
|
Disability
|
|
|
Death
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Plan
|
|
|
NA
|
|
|
$
|
132,000
|
(2)
|
|
$
|
88,000
|
(1)
|
|
$
|
88,000
|
(1)
|
Stock Options(3)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Performance-Based Restricted Stock Awards(4)
|
|
|
NA
|
|
|
|
258,000
|
|
|
|
258,000
|
|
|
|
258,000
|
|
Benefits & Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-Based Restricted Stock Awards(5)
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Health and Welfare Benefits(6)
|
|
|
9,152
|
|
|
|
13,728
|
|
|
|
0
|
|
|
|
0
|
|
Life Insurance Benefits(7)
|
|
|
3,680
|
|
|
|
5,520
|
|
|
|
|
|
|
|
|
|
Cash Severance(8)
|
|
|
220,000
|
|
|
|
330,000
|
|
|
|
0
|
|
|
|
0
|
|
TOTAL
|
|
$
|
232,832
|
|
|
$
|
739,248
|
|
|
$
|
346,000
|
|
|
$
|
346,000
|
|
|
|
|
(1)
|
See discussion on page 20 regarding payments to the named
executive officers pursuant to the annual incentive plan under
the headings Payments Made Upon Involuntary Termination
Without Cause and Payments Made Upon Death or
Disability. The dollar amounts shown above assume that the
executive achieved his target bonus for 2007.
|
|
(2)
|
In the event of a change in control, the executive would receive
an amount equal to 1.5 times his target bonus under the annual
incentive plan.
|
|
(3)
|
Ms. Benik has no unvested stock option awards.
|
|
(4)
|
Ms. Benik has an outstanding performance-based restricted
stock award as described in footnote 2 to the Outstanding
Equity Awards Table on page 15. Unless the Board of
Directors in its sole discretion determines otherwise,
(a) if an employees employment with the Company is
terminated during the restricted period other than by reason of
death, disability or change in control, the employee shall
thereupon forfeit all restricted shares, (b) if an
employees employment with the Company is terminated during
the restricted period because of death or disability occurring
within the twelve month period immediately preceding the end of
a restricted period, the restricted period shall terminate with
respect to any restricted shares for which the restrictions
would have lapsed in such following twelve month period, and
(c) upon a change in control all restricted periods shall
end and the restrictions applicable to all outstanding awards of
restricted shares shall terminate.
|
|
(5)
|
Ms. Benik has no outstanding time-based restricted stock
awards.
|
|
(6)
|
These amounts represent Company paid premiums toward continued
medical and dental coverage for the executive during the
severance period.
|
|
(7)
|
These amounts represent Company paid premiums toward continued
life insurance coverage during the severance period. As noted on
page 20, in the event of disability or death the executive
or his or her estate may receive benefits under the
Companys life insurance plan in the same manner as other
employee participants.
|
|
(8)
|
See discussion on page 20 regarding severance payments to
the named executive officers under the headings Payments
Made Upon Involuntary Termination Without Cause and
Payments Made Upon a Change in Control.
|
24
DIRECTOR
COMPENSATION
Members of the Companys Board of Directors who are not
employees of the Company were compensated for their services
during 2007 at the rate of $25,000 per annum (the
Retainer), plus $1,000 for each Board meeting
attended. During 2007, the Board of Directors held seven
meetings. In addition, non-employee members of the Compensation,
Nominating and Corporate Governance, and Executive Committees
received $1,500 ($2,000 in the case of the committee chair) for
each committee meeting attended. Members of the Audit Committee
received $2,000 ($3,000 in the case of the committee chair) for
each committee meeting attended. Board and Committee members
received $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
Board and committee meeting fees in Class A common stock.
The Retainer is paid in quarterly increments on the date of the
first Board meeting in each quarter. The number of shares of
Class A common stock awarded as Mandatory Shares or as
shares which the director has elected to receive in lieu of cash
is determined by dividing the dollar amount of the compensation
payable by the fair market value of those shares on the payment
date. Non-employee directors also have the option of deferring
any or all of their compensation. If they elect to defer stock
payments, they receive phantom stock units, the cash value of
which is calculated and paid to them at the end of the election
period they specify. Said election period must be at least three
years. All deferred compensation is paid out at the end of the
election period or when the individual ceases to serve as a
director, whichever occurs first. The director can elect to
receive the deferred compensation in a lump sum or in up to ten
annual installments.
DIRECTOR
SUMMARY COMPENSATION TABLE
FISCAL YEAR 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name
|
|
Cash(1)
|
|
|
Awards
|
|
|
Awards(2)
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradford R. Boss
|
|
$
|
32,970
|
(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
32,970
|
|
Russell A. Boss
|
|
|
33,470
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
33,470
|
|
Bernard V. Buonanno
|
|
|
36,000
|
(5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
36,000
|
|
Edward J. Cooney
|
|
|
53,500
|
(6)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
53,500
|
|
Galal P. Doss
|
|
|
30,476
|
(7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
30,476
|
|
Terrence Murray
|
|
|
37,500
|
(8)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,500
|
|
Andrew J. Parsons
|
|
|
50,470
|
(9)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
50,470
|
|
James C. Tappan
|
|
|
47,000
|
(10)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
47,000
|
|
|
|
|
|
(1)
|
This column shows the total fees paid to each director in fiscal
year 2007 for Board and committee service, paid in a combination
of cash and Class A common stock as described above.
|
|
(2)
|
The aggregate number of option awards outstanding as of
December 29, 2007 is as follows: Mr. B.
Boss 20,394; Mr. R. Boss none;
Mr. Buonanno 22,406;
Mr. Cooney none; Mr. Doss
12,000; Mr. Murray 22,310;
Mr. Parsons 12,000; and
Mr. Tappan 22,406.
|
|
(3)
|
Mr. B. Bosss compensation consisted of cash in the
amount of $18,000 and 1,505 shares of Class A common stock
of the Company with a fair value of $14,970 on the grant date.
Mr. B. Boss did not elect to defer any of his compensation.
|
|
(4)
|
Mr. R. Bosss compensation consisted of cash in the
amount of $18,500 and 1,505 shares of Class A common stock
of the Company with a fair value of $14,970 on the grant date.
Mr. R. Boss did not elect to defer any of his compensation.
|
|
(5)
|
Mr. Buonannos compensation consisted of cash in the
amount of $21,000 and 1,505 shares of Class A common stock
of the Company with a fair value of $15,000 on the grant date.
Mr. Buonanno elected to defer both Mandatory Shares and
meeting fees.
|
|
(6)
|
Mr. Cooneys compensation consisted of cash in the
amount of $28,500 and 2,511 shares of Class A common stock
of the Company with a fair value of $25,000 on the grant date.
Mr. Cooney elected to defer 100% of his Retainer.
|
|
(7)
|
Mr. Dosss compensation consisted of cash in the
amount of $5,500 and 2,511 shares of Class A common stock
of the Company with a fair value of $24,976 on the grant date.
Mr. Doss did not elect to defer any of his compensation.
|
|
(8)
|
Mr. Murrays compensation consisted of cash in the
amount of $22,500 and 1,505 shares of Class A common stock
of the Company with a fair value of $15,000 on the grant date.
Mr. Murray elected to defer his Mandatory Shares.
|
|
(9)
|
Mr. Parsonss compensation consisted of cash in the
amount of $33,500 and 1,505 shares of Class A common stock
of the Company with a fair value of $15,000 on the grant date.
Mr. Parsons did not elect to defer any of his compensation.
|
|
|
(10) |
Mr. Tappans compensation consisted of cash in the
amount of $32,000 and 1,505 shares of Class A common stock
of the Company with a fair value of $15,000 on the grant date.
Mr. Tappan elected to defer 100% of his director
compensation.
|
25
APPROVAL
OF OMNIBUS INCENTIVE PLAN AMENDMENT
In April 1998, the stockholders approved the adoption of the
Omnibus Incentive Plan (the Omnibus Plan). The
Omnibus Plan provides a flexible structure through which the
Compensation Committee of the Board of Directors may make
long-term incentive awards, such as option grants and grants of
restricted stock, from one pool of reserved shares to officers
and key employees of, and other key contributors to, the Company.
The purpose of the Omnibus Plan is to attract, retain and
motivate management personnel by providing them with long-term
performance based equity interests in the Company. The Board of
Directors has recommended that the number of shares available
for grant under the Omnibus Plan be increased by
800,000 shares, and the proposed amendment would
accordingly increase the authorized shares by 800,000.
Currently, there are 176,267 shares available for the grant
of options, restricted stock, or other awards under the Omnibus
Plan. As of December 29, 2007, there were 1,262,234 stock
options outstanding at a weighted average exercise price of
$5.67 per share and 464,666 shares of restricted stock
outstanding under the Omnibus Plan.
The proposed increase in the number of shares authorized for
awards under the Plan is intended to provide for a reasonable
reservoir of authorized shares for future grants.
SUMMARY
OF THE OMNIBUS INCENTIVE PLAN
A summary of the terms and provisions of the Omnibus Plan is set
forth below.
The Omnibus Plan is administered by the Compensation Committee.
So long as it acts consistently with the express provisions of
the Omnibus Plan, the Compensation Committee has the authority
to (a) determine the persons to whom awards shall be
granted; (b) determine the size of and to grant awards;
(c) determine the terms and conditions applicable to
awards; (d) determine the terms and provisions of award
agreements; (e) interpret the Omnibus Plan, and
(f) prescribe, amend and rescind rules and regulations
relating to the Omnibus Plan.
The Board may suspend, terminate, modify or amend the Omnibus
Plan at any time without shareholder approval except to the
extent that shareholder approval is required by law, exchange
requirements, the Companys Articles of Incorporation or
by-laws. The Board may not, however, without the consent of the
employee to whom an award was previously granted, adversely
affect the rights of that employee under the award.
The Omnibus Plan provides for grants to eligible employees of
awards including but not limited to (a) options to purchase
shares of common shares (Options) consisting of
(i) Incentive Stock Options at not less than the full
market value on the date of grant (except in the case of a
shareholder possessing more than 10% of the total combined
voting power of all classes of Company stock, in which case the
exercise price shall be not less than 110% of the fair market
value on the date of grant); (ii) Non-qualified Stock
Options at an exercise price determined by the Compensation
Committee; (b) Stock Appreciation Rights (either tandem or
freestanding) which are rights to receive an amount equal to the
increase, between the date of grant and the date of exercise, in
the fair market value of the number of shares of common shares
subject to the Stock Appreciation Right; (c) shares of
Restricted Stock which are common shares granted to an employee
but which have certain conditions attached to them which must be
satisfied in order for the employee to have unencumbered rights
to the Restricted Stock; and (d) Performance Awards which
are awards in common shares or cash and which may be awarded
based on the extent to which the employee achieves selected
performance objectives over a specified period of time. All
material terms of such awards shall be determined by the
Compensation Committee. At the discretion of the Compensation
Committee, in the event of a change in control, as defined in
the Omnibus Plan, certain awards may vest immediately.
Pursuant to the terms of the Omnibus Plan, at the discretion of
the Compensation Committee, awards may be granted to employees
of the Company or its Affiliates, including members of the board
of directors of the Company. Non-employee directors may also
receive awards under the Omnibus Plan but may not receive
Incentive Stock Options. The fair market value of the shares to
be reserved for grant pursuant to the proposed amendment was
$5,868,000 as of February 25, 2008.
Unless terminated by the Board of Directors, the Omnibus Plan
continues indefinitely.
Awards under the Omnibus Plan, as amended, will be granted at
the discretion of the Compensation Committee and, accordingly,
are not yet determinable. In addition, benefits under the
Omnibus Plan, as amended, will depend on a number of factors,
including fair market value of the Companys common stock
on future dates, actual performance against performance goals
established with respect to performance awards and decisions
made by participants. Consequently, it is not currently possible
to determine the benefits that might be received by participants
under the Omnibus Plan.
26
TAX
CONSEQUENCES OF OPTION AWARDS
No income is recognized by an optionee when an incentive stock
option is granted or exercised. If the stock obtained upon
exercise is sold more than one year after exercise and two years
after grant, the difference between the option price and the
amount realized on the sale is taxable to the optionee as
long-term capital gain. The Company is not entitled to a
deduction as a result of the grant or exercise of an incentive
stock option or the sale of the stock acquired upon exercise if
the stock is held by the optionee for the requisite periods.
If, however, the stock acquired upon exercise of an incentive
stock option is sold less than one year after exercise or less
than two years after grant, the lesser of (i) the
difference between the fair market value on the date of exercise
and the option price or (ii) the difference between the
amount realized on the sale and the option price is taxable to
the optionee as ordinary income and the Company is entitled to a
corresponding deduction. The excess of the amount realized on
the sale over the fair market value on the date of exercise, if
any, is taxable as long-term or short-term capital gain,
depending on the length of time the stock is held.
The excess of the fair market value of the stock over the option
price on the date of exercise of an incentive stock option will
increase the optionees alternative minimum taxable income,
which, in certain instances, may result in the optionees
being subject to the alternative minimum tax.
There will be no federal income tax consequences to either the
optionee or the Company on the grant of a non-qualified option.
Upon the exercise of a non-qualified option, the optionee has
taxable ordinary income equal to the excess of the fair market
value of the shares of stock received on the exercise date (or
the date on which any substantial risk of forfeiture lapses)
over the option price of the shares. The Company will be
entitled to a federal income tax deduction in an amount equal to
such excess. Upon a subsequent sale or taxable exchange of
shares acquired upon exercise of an option, an optionee will
recognize long-term or short-term capital gain or loss equal to
the difference between the amount realized on the sale and the
tax basis of such shares.
The Board of Directors unanimously recommends a vote
for approval of the amendment to the Omnibus
Incentive Plan to increase the number of shares reserved for
option and other equity awards by 800,000 shares, and the
enclosed proxy will be voted in favor of the amendment unless
the proxy specifically indicates otherwise.
27
APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee reappointed Deloitte & Touche LLP
to serve as the Companys independent auditors for 2007.
Representatives of Deloitte & Touche LLP 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
December 29, 2007 and December 30, 2006 by the
Companys principal accounting firm, Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and
their respective affiliates (collectively, Deloitte):
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2007
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2006
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Audit Fees
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$
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1,258,725
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$
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798,550
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Tax Fees
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Transfer Pricing Study
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$
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56,346
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$
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1,500
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International Tax Consultation
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$
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116,904
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$
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166,910
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Multistate Tax Consultation
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$
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0
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$
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9,660
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All Other
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Mergers & Acquisitions
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$
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60,785
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$
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0
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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 require 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
2007, 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:
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the adequacy of the Companys internal controls and
financial reporting process and the quality and integrity of the
Companys financial statements.
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the independence and performance of the Companys internal
auditor and independent auditors.
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the Companys compliance with legal and regulatory
requirements and adherence to business ethics.
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In fiscal 2007, 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 29, 2007.
2007 Audit Committee
Edward J. Cooney, Chairman
James C. Tappan
Andrew J. Parsons
28
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 2007 its Insiders complied with all
applicable Section 16(a) filing requirements except that
Joseph V. Bassi inadvertently failed to file a Form 4
on a timely basis relating to a stock option exercise in May
2007 and Charles R. MacDonald inadvertently failed to file
a Form 4 on a timely basis relating to a sale of stock in
August 2007.
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
24, 2008
29
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000004 |
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000000000.000000 ext 000000000.000000 ext |
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000000000.000000 ext 000000000.000000 ext |
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000000000.000000 ext 000000000.000000 ext
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MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
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Using a black ink pen, mark your votes with an X
as shown in
this example. Please do not write outside the designated areas.
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x |
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Annual Meeting Proxy Card
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6
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE. 6
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A |
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Proposals
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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 - 3. The Board of Directors recommends a vote FOR the following proposals.
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For
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Abstain |
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1. NUMBER OF DIRECTORS: |
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Fixing the number of Class A directors at
three and Class B directors at six. |
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2. ELECTION OF CLASS A DIRECTORS: |
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For
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Withhold
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For
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Withhold
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For
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Withhold |
01 - Galal P. Doss
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02 - Andrew J. Parsons
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03 - James C. Tappan
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o
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For
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Abstain |
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3. APPROVAL OF AMENDMENT TO OMNIBUS
INCENTIVE PLAN: |
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4. OTHER BUSINESS: |
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In their discretion, the proxies are authorized to vote upon such other
business as may properly come before said meeting or any adjournment
thereof upon which Class A common shareholders are entitled to vote. |
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Change of Address
Please print your
new address below.
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C |
Authorized
Signatures This section must be completed for your vote to be
counted. Date and Sign Below |
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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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Date (mm/dd/yyyy) Please print date below. |
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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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<STOCK#> 00UMAB
6
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE. 6
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Proxy
A.T. Cross Company
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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 24, 2008 at 10:00 A.M. and at any and all adjournments thereof as designated.
(Continued and to be voted on reverse side.)