SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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(as permitted by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
Concord Camera Corp.
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(Name of Registrant as Specified in its Charter)
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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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CONCORD CAMERA CORP.
4000 HOLLYWOOD BOULEVARD
PRESIDENTIAL CIRCLE - 6TH FLOOR, NORTH TOWER
HOLLYWOOD, FLORIDA 33021
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 3, 2005
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Concord Camera Corp., a New Jersey corporation (the
"Company"), will be held at the Marriott Residence Inn at Aventura Mall, 19900
West Country Club Drive, Aventura, Florida 33180, on February 3, 2005, beginning
at 10:00 a.m., local time, for the following purposes:
1. To elect directors for the ensuing year;
2. To ratify the appointment of Ernst & Young LLP as the independent
registered public accounting firm of the Company for the fiscal year
ending July 2, 2005; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of the Company's common stock, no par value, at the
close of business on December 8, 2004, will be entitled to notice of and to vote
at the Annual Meeting or any adjournments thereof.
In order to be admitted to the Annual Meeting, a shareholder must present
an admission ticket or proof of ownership of Company stock on the record date.
If your shares are held in the name of a bank, broker or other holder of record,
a brokerage statement or letter from a bank or broker is an example of proof of
ownership. Any holder of a proxy from a shareholder must present the proxy card,
properly executed, and an admission ticket to be admitted. Stockholders and
proxyholders must also present a form of photo identification such as a driver's
license or passport.
An admission ticket is on the back cover page of your proxy statement. If
you plan to attend the Annual Meeting, please keep this ticket and bring it with
you to the Annual Meeting. If you receive this proxy statement electronically,
you can obtain a ticket in advance of the Annual Meeting by printing the final
page of this proxy statement.
PLEASE SIGN AND DATE THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE
POSTAGE PAID, SELF-ADDRESSED ENVELOPE PROVIDED FOR YOUR CONVENIENCE. MANAGEMENT
ASKS THAT YOU DO THIS WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. SHOULD YOU
ATTEND, YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
By Order of the Board of Directors,
Alan Schutzman
Secretary
Hollywood, Florida
January 5, 2005
CONCORD CAMERA CORP.
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, FEBRUARY 3, 2005
This Proxy Statement is furnished by the Board of Directors (the "Board") of
Concord Camera Corp. (the "Company" or "Concord") in connection with the
solicitation of proxies to be voted at the Annual Meeting of Shareholders of the
Company which will be held at the Marriott Residence Inn at Aventura Mall, 19900
West Country Club Drive, Aventura, Florida 33180 on February 3, 2005, beginning
at 10:00 a.m., local time, and all adjournments thereof (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of Annual Meeting.
The Board has fixed the close of business on December 8, 2004 as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof. As of that date, there were issued
and outstanding 28,832,219 shares of common stock, no par value (the "Common
Stock"), the Company's only class of voting securities outstanding. Each share
of Common Stock entitles the holder thereof to one vote. The presence, in person
or by proxy, of holders of a majority of all the outstanding Common Stock
constitutes a quorum at the Annual Meeting. Shares of Common Stock represented
by proxies that reflect abstentions and "broker non-votes" (i.e., Common Stock
represented at the Annual Meeting by proxies held by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) will be counted for the
purpose of determining the existence of a quorum at the Annual Meeting, but will
not be counted as a vote cast for the purpose of determining the number of votes
required to approve a proposal.
Any shareholder giving a proxy will have the right to revoke it at any time
prior to the time it is voted. A proxy may be revoked by: (i) written notice to
the Company at or prior to the Annual Meeting, Attention: Secretary; (ii)
execution of a subsequent proxy; or (iii) attendance and voting in person at the
Annual Meeting. Attendance at the Annual Meeting will not automatically revoke
the proxy. All shares of Common Stock represented by effective proxies will be
voted at the Annual Meeting or at any adjournment thereof. UNLESS OTHERWISE
SPECIFIED IN THE PROXY (AND EXCEPT FOR "BROKER NON-VOTES" DESCRIBED ABOVE),
SHARES OF COMMON STOCK REPRESENTED BY PROXIES WILL BE VOTED: (I) FOR THE
ELECTION OF MANAGEMENT'S NOMINEES FOR DIRECTORS; (II) FOR THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM OF THE COMPANY FOR THE FISCAL YEAR ENDING JULY 2, 2005 ("FISCAL 2005"); AND
(III) IN THE DISCRETION OF THE PROXY HOLDERS WITH RESPECT TO SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
All information in this Proxy Statement gives effect to a two-for-one stock
split effective on April 14, 2000 to shareholders of record on March 27, 2000.
The Company's executive offices are located at 4000 Hollywood Boulevard,
Presidential Circle- 6th Floor, North Tower, Hollywood, Florida 33021. Mailing
to shareholders of this Proxy Statement, the accompanying form of proxy, and the
Company's Annual Report to Shareholders for the fiscal year ended July 3, 2004
("Fiscal 2004"), will commence on or about January 6, 2005.
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PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION OF DIRECTORS
Pursuant to Article III of the Company's By-laws, as amended, the Board has
fixed the number of directors constituting the entire Board at four. All four
directors are to be elected at the Annual Meeting, each to hold office until the
next annual meeting of shareholders and until his successor is duly elected and
qualified. In voting for directors, each shareholder is entitled to cast one
vote for each share of Common Stock held of record, either in favor of or
against the election of each nominee, or to abstain from voting on any or all
nominees. Although management does not anticipate that any nominee will be
unable or unwilling to serve as director, in the event of such an occurrence,
proxies may be voted in the discretion of the persons named in the proxy for a
substitute designated by the Board, unless the Board decides to reduce the
number of directors constituting the Board. The election of directors requires
the affirmative vote of a plurality of the votes cast by the holders of shares
of Common Stock present or represented and entitled to vote at the Annual
Meeting. THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES. PROXIES THAT DO
NOT WITHHOLD THE AUTHORITY TO VOTE FOR THE NOMINEES WILL BE VOTED FOR EACH OF
THE NOMINEES.
The following sets forth information with respect to each nominee for director,
all of whom are currently serving as directors of the Company and all of whom
have consented to serve if reelected by shareholders. The information has been
furnished to the Company by the individuals named.
YEAR FIRST
ELECTED/
NOMINATED
NAME OF NOMINEE AGE DIRECTOR POSITIONS AND OFFICES WITH THE COMPANY
--------------- --- -------- --------------------------------------
Ira B. Lampert 59 1993 Chairman of the Board, Chief Executive
Officer and President
Ronald S. Cooper 66 2000 Director
Morris H. Gindi 60 1988 Director
William J. O'Neill, Jr. 62 2001 Director
Ira B. Lampert has been the Chairman and Chief Executive Officer of the Company
since July 13, 1994. For the calendar year 1995 and again from July 31, 1998
through the present, Mr. Lampert also served as President of the Company. Mr.
Lampert is a member of the Queens College Foundation Board of Trustees (Queens
College is part of the City University system of New York), a member of the
Advisory Board of the Boys & Girls Republic, a nonprofit organization for
underprivileged children, and serves on the Boards of Trustees of the Mount
Sinai Medical Center Foundation, Inc. and the Mount Sinai Medical Center of
Florida, Inc.
Ronald S. Cooper has been a director of the Company since January 2000. Mr.
Cooper is a co-founder and principal of LARC Strategic Concepts, LLC, a
consulting firm focusing on emerging growth companies. Mr. Cooper retired from
Ernst & Young LLP in September 1998, having joined the firm in 1962. He became a
partner in 1973 and was Managing Partner of the firm's Long Island, New York
office from 1985 until he retired.
Morris H. Gindi has been a director of the Company since 1988. Mr. Gindi has
served as the Chief Executive Officer of Notra Trading Inc., an import agent in
the home textiles industry, since 1983 and as Chief Executive Officer of Morgan
Home Fashions, a manufacturer and distributor of home textiles, since 1995.
These two businesses import and distribute merchandise to all levels of the
retail trade. Mr. Gindi's career in the home textiles industry has spanned four
decades.
William J. O'Neill, Jr. has been a director of the Company since August 2001.
Mr. O'Neill is a founder and principal of O'Neill Group, Inc., a consulting firm
focused on developing business strategies, operational execution, financial
evaluations and fundraising activities. From 1969 to 1999, Mr. O'Neill held
various management positions at Polaroid Corporation, most recently as Executive
Vice President and President, Corporate Business Development. Since July
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2001, he has served as Dean of the Frank Sawyer School of Management at Suffolk
University in Boston, Massachusetts. In addition, Mr. O'Neill is a director of
CardioTech International, Inc., a manufacturer of cardiovascular devices.
CORPORATE GOVERNANCE
The Company's Common Stock is listed on the Nasdaq National Market ("Nasdaq").
Although not required by Nasdaq's corporate governance rules, the Company's
Board of Directors adopted Corporate Governance Guidelines which address
governance issues and set forth the Company's governance principles including
director qualification, Board structure, director compensation, management
succession and periodic performance evaluation of the Board and its committees.
The Company's Corporate Governance Guidelines are available on its website:
www.concord-camera.com under Investor Relations. The Company has also adopted a
code of ethics that applies to its principal executive officer, principal
financial officer, principal accounting officer and controller, as well as all
other employees and the directors of the Company. The code of ethics, which the
Company calls its Code of Conduct, is available on the Company's website:
www.concord-camera.com under Investor Relations. If the Company makes any
substantive amendments to, or grants a waiver (including an implicit waiver)
from, a provision of its Code of Conduct that applies to its principal executive
officer, principal financial officer, principal accounting officer or
controller, and that relates to any element of the code of ethics definition
enumerated in Item 406(b) of Regulation S-K, the Company will disclose such
amendment or waiver on the aforementioned website and in a current report on
Form 8-K.
INDEPENDENCE OF BOARD MEMBERS
Pursuant to Nasdaq's listing standards, beginning January 22, 2004, a majority
of the Board must be comprised of "independent" directors as defined in Rule
4200 of Nasdaq's listing standards. The Board has reviewed the independence
standard set forth in Rule 4200 and has determined that each of the Company's
directors other than Mr. Lampert is independent under Rule 4200.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board met twelve times during Fiscal 2004. The Company's independent
directors meet in executive session without management present as part of each
regularly scheduled meeting of the Board. In addition, the independent directors
also meet separately from Board meetings from time to time in their discretion.
In Fiscal 2004, all directors attended 75% or more of the Board meetings and
meetings of the committees on which they served.
Directors are encouraged to attend the Company's annual meetings of
shareholders. Because the Board holds one of its regular meetings in conjunction
with the Company's annual meetings of shareholders, unless one or more members
of the Board are unable to attend, all of the members of the Board are present
for the annual meeting. All four of the Company's current directors attended the
2004 annual meeting in person, and J. David Hakman, who was a director at the
time, participated by means of conference telephone.
The Board has an Audit Committee, a Compensation and Stock Option Committee, an
Executive Committee, a Director Affairs Committee and a Marketing and Product
Development Committee.
The Audit Committee, which is a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), has the following members: Ronald
S. Cooper (Chairman), Morris H. Gindi and William J. O'Neill, Jr., each of whom
is independent as defined in listing standards applicable to the Company. The
Audit Committee assists the Board in its oversight of the quality and integrity
of the accounting, auditing, and financial reporting practices of the Company.
The Audit Committee's role includes discussing with management the Company's
processes to manage financial risk and for compliance with significant
applicable legal, ethical and regulatory requirements. The Audit Committee is
directly responsible for the appointment, compensation, retention and oversight
of the independent auditor engaged to prepare or issue audit reports on the
Company's financial statements or to perform other audit, review or attest
services for the Company. The Audit Committee relies on the expertise and
knowledge of management, the internal auditor, and the independent auditor in
carrying out its oversight responsibilities. The specific responsibilities in
carrying out the Audit Committee's oversight role are delineated in the Audit
Committee Charter, a copy of which was included as an appendix to the Company's
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Proxy Statement as filed on December 18, 2003 with the Securities and Exchange
Commission ("SEC"). See the "Audit Committee Report" below. The Audit Committee
met seventeen times in Fiscal 2004.
The Compensation and Stock Option Committee consists of William J. O'Neill, Jr.
(Chairman) and Ronald S. Cooper, each of whom is independent as defined in
listing standards applicable to the Company. The Compensation and Stock Option
Committee reviews, approves and makes recommendations to the Board regarding
executive compensation. See the "Compensation Committee Report on Executive
Compensation" below. The Compensation and Stock Option Committee met eight times
in Fiscal 2004.
The Director Affairs Committee, consisting of Ira B. Lampert (Chairman) and
William J. O'Neill, Jr., recommends to the independent directors of the Board
those persons who, in the opinion of the members of the Director Affairs
Committee, should be invited to stand for election to the Board as management
nominees at any and all ensuing meetings of the shareholders of the Company. The
Director Affairs Committee also evaluates new candidates and current directors,
and reviews, evaluates and recommends changes to the Company's corporate
governance practices. The Director Affairs Committee held five meetings in
Fiscal 2004.
Pursuant to Nasdaq's listing standards, director nominees must either be
selected, or recommended for the Board's selection, either by: (i) a majority of
the independent directors; or (ii) a nominations committee comprised solely of
independent directors. The Company does not have a standing Nominating
Committee. The Director Affairs Committee recommends but does not nominate
nominees for election to the Board. Nominees are selected by a majority of the
independent directors on the Board, all of whom are "independent" as
independence for nominating committee members is defined in the applicable
Nasdaq listing standards. Because a majority of the independent directors select
the Company's director nominees with input and advice from a Director Affairs
Committee, the Company believes it is not necessary to have a separately
designated Nominating Committee. In accordance with Nasdaq's listing
requirements, the Board has adopted resolutions addressing the nominations
process. The nominations process resolutions are available on the Company's
website at www.concord-camera.com under Investor Relations.
DIRECTOR NOMINATIONS PROCESS
The Director Affairs Committee may use multiple sources to identify director
candidates, including its own contacts and referrals from other directors,
management, the Company's advisers, and director search firms. In addition, the
Director Affairs Committee will consider candidates recommended by shareholders.
Shareholder suggestions of one or more nominees for election to the Board may be
sent in writing to the Director Affairs Committee, Attention: Chairman, c/o
Concord Camera Corp., Presidential Circle - 6th Floor, North Tower, 4000
Hollywood Boulevard, Hollywood, Florida 33021. The Director Affairs Committee
evaluates candidates recommended by shareholders in the same manner and using
the same criteria it uses to evaluate candidates recommended by other sources.
The Director Affairs Committee has determined that all candidates for the Board
shall, at a minimum, possess high personal and professional ethical standards,
integrity and values; an inquiring mind, intelligence, practical wisdom and
informed judgment; the ability to work effectively and collegially with other
directors; a willingness and ability to devote the required amount of time to
carrying out the duties and responsibilities of Board and committee membership;
and a commitment to representing the long-term interests of the Company's
shareholders. In addition, the Director Affairs Committee also considers certain
other qualities and skills in accordance with criteria established by the
Director Affairs Committee from time to time, including without limitation, the
candidate's independence and financial literacy, and the extent to which the
candidate possesses pertinent policy-making, business and professional
experience in government, business, finance, technology, marketing, sales,
manufacturing, worldwide diverse operations and cultures, and other areas
related to the Company's business activities.
The Director Affairs Committee reviews each recommendation for director
candidates (including shareholder recommendations) and makes an initial
determination as to whether the candidate has the ability to meet the minimum
criteria which may be modified by the Director Affairs Committee from time to
time. The Director Affairs Committee may, in its discretion, confirm a
candidate's willingness to serve on the Board, verify a candidate's education,
employment records and references, conduct background investigations, and
arrange for in-person meetings with the Director Affairs Committee or the full
Board. Following the Director Affairs Committee's determination as to the
qualified candidates, it shall recommend to the independent directors of the
Board those persons who should be invited to
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stand for election. Pursuant to the Company's By-laws, the nominees to stand for
election to the Board are then selected by a majority of the independent
directors on the Board. The independent directors are free to select nominees in
addition to, or instead of, those recommended by the Director Affairs Committee.
COMMUNICATIONS WITH THE BOARD
A shareholder may communicate directly with the Board by addressing a letter to
the Board of Directors of Concord Camera Corp. c/o Chairman, Presidential Circle
- 6th Floor, North Tower, 4000 Hollywood Boulevard, Hollywood, Florida 33021. If
a shareholder would like the letter to be forwarded directly to one of the
Chairmen of the five standing committees of the Board, he or she should so
indicate. If no specific direction is indicated, the Chairman's office will
review the letter and forward it to the appropriate Board member(s).
COMMUNICATIONS WITH THE AUDIT COMMITTEE
The Audit Committee has established procedures for the receipt, retention and
treatment of complaints regarding accounting, internal accounting controls or
auditing matters and the confidential, anonymous submission by employees of
concerns regarding questionable accounting and auditing matters. These
procedures are described in the Company's Code of Conduct which is available on
the Company's website at www.concord-camera.com under Investor Relations.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional compensation
for their services as directors. During Fiscal 2004, each non-employee member of
the Board was paid the following: (i) an annual fee of $15,000 for serving on
the Board; (ii) a $2,500 annual fee for each Board committee on which he served
($3,500 for serving as Chairman except as noted below); and (iii) $1,000 for
each Board or committee meeting attended. The Company reimburses all reasonable
expenses incurred by both employee and non-employee directors in connection with
such meetings. Independent directors do not receive additional compensation for
meetings held separately from Board meetings. Effective as of July 4, 2004, the
annual fee for serving as Chairman of the Audit Committee and Chairman of the
Compensation and Stock Option Committee was increased to $10,000 and $5,000,
respectively, in light of the additional duties and responsibilities associated
with serving as Chairman of those committees.
In addition, pursuant to the formula award provisions of the Company's 1993
Incentive Plan, as amended, prior to January 20, 2003, each non-employee
director automatically received the following options to purchase shares of the
Common Stock. Upon appointment to the Board, each non-employee director
received: (i) an option to purchase up to 40,000 shares, vesting as to 8,000
shares on the following January 1 and on each January 1 thereafter (provided
that, if a director fails to attend at least 75% of the Board meetings in any
calendar year, then the options that would have vested on the next January 1 are
forfeited); and (ii) an immediately exercisable option to purchase 13,000
shares. On each anniversary of his appointment, each non-employee director
received another immediately exercisable option to purchase 13,000 shares. All
of the foregoing options have an exercise price equal to the closing price of
the Common Stock on the date of grant and expire on the earlier of: (i) five
years from the grant date; or (ii) one year after the recipient ceases to be a
member of the Board. On January 20, 2003, the 1993 Incentive Plan was amended to
remove the provisions regarding formula awards to non-employee directors and, in
lieu of the anniversary grant that would have been received in 2003, each
non-employee director was granted an option to purchase 26,000 shares of Common
Stock at an exercise price of $5.52 per share. The foregoing options were
immediately exercisable as to 13,000 shares and vested as to the remaining
13,000 shares on January 20, 2004 provided the director continued to serve on
the Board. The 1993 Incentive Plan expired on December 1, 2003.
Effective July 31, 2003, the Company amended the outstanding options held by
William J. Lloyd, who was a member of the Board until such time, to permit such
options to be exercised until their stated expiration date, and to permit the
continued vesting through January 2005 of 12,000 shares subject to one such
option, in light of the valuable years of advice and service that had been
provided by Mr. Lloyd during his tenure as a member of the Board. The foregoing
amendments did not apply to the installment of 13,000 shares that would have
vested on January 20, 2004 under the grant made to him on January 20, 2003,
which installment was forfeited.
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Effective December 1, 2004, the Company amended the outstanding options held by
J. David Hakman, who was a member of the Board until such time, to permit such
options to be exercised until the later of (i) one year from the date of his
resignation from the Board; or (ii) their stated expiration date, in light of
the valuable years of advice and service that had been provided by Mr. Hakman
during his tenure as a member of the Board.
EXECUTIVE OFFICERS
Set forth below is the name and age as of December 15, 2004, of each of the
Company's executive officers and each person chosen to become an executive
officer, together with certain biographical information for each of them (other
than Ira B. Lampert, for whom biographical information is provided above under
"Nominees for Election of Directors"):
Name of Executive Officer Age Position and Offices with the Company
------------------------- --- -------------------------------------
Ira B. Lampert 59 Chairman, Chief Executive Officer and President
(principal executive officer)
Gerald J. Angeli 52 Vice President of Worldwide Engineering and Technology
for the Company and Managing Director of Concord
Camera HK Limited ("Concord HK")
Robert A. Bosi 49 Interim Senior Vice President and Chief Financial
Officer (principal financial officer)
Keith L. Lampert 34 Executive Vice President and Chief Operating Officer
Harlan I. Press 40 Vice President, Treasurer and Assistant Secretary
Blaine A. Robinson 45 Controller (principal accounting officer)
Alan Schutzman 48 Senior Vice President, General Counsel and Secretary
Urs W. Stampfli 53 Senior Vice President and Director of Global Sales and
Marketing
Gerald J. Angeli joined the Company in April 2000 as Vice President, DMS Product
Supply. Since March 2001, he has served as the Company's Vice President of
Worldwide Engineering and Technology. In addition, on June 7, 2004, Mr. Angeli
became Co-Managing Director of Concord HK and, effective October 1, 2004, became
its sole Managing Director. From July 1997 to April 2000, Mr. Angeli was Vice
President, Global Manufacturing and Products Supply for NCR Corporation's
Systemedia Group, where he was responsible for manufacturing, customer service,
distribution and logistics. Prior to that, Mr. Angeli was employed by Eastman
Kodak Company for 20 years in various capacities, most recently as Manager of
Worldwide Manufacturing and Supply Chain and Vice President, Consumer Imaging.
Robert A. Bosi has been Interim Senior Vice President and Chief Financial
Officer of the Company since October 21, 2004. Mr. Bosi is affiliated with Tatum
CFO Partners, LLP, a nationwide partnership that provides financial and
information technology leadership. Mr. Bosi was Vice President and Chief
Financial Officer of Vesper Corporation from September 2002 to December 2003.
From 1991 to 2001, he was Vice President of Finance and Chief Financial Officer
of Curtiss-Wright Corporation, having joined the company as Treasurer in 1989.
Mr. Bosi is a Certified Public Accountant and a Certified Management Accountant.
Keith L. Lampert, who is a son of Ira B. Lampert, has been Executive Vice
President since February 2002 and Chief Operating Officer since January 1, 2003.
From February 2002 until January 2003, he also served as the Company's Director
of Worldwide Operations and was Managing Director of Concord HK from April 2000
until December 2002. From March 2001 to February 2002, Mr. Lampert also served
as the Company's Vice President of Worldwide Operations. He became a Vice
President of the Company in August 1998, having joined the Company in 1993.
Harlan I. Press has been Vice President and Treasurer since April 2000 and
Assistant Secretary of the Company since October 1996. Mr. Press served as the
Corporate Controller of the Company from October 1996 through April 2000, as
Chief Accounting Officer from November 1994 to September 20, 2004, and as
Principal Financial Officer from September 20, 2004 to October 21, 2004. Mr.
Press is a member of the American Institute of Certified Public Accountants, the
New York State Society of Certified Public Accountants and the Financial
Executives Institute.
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Blaine A. Robinson has been Controller of the Company since February 2003 and
Principal Accounting Officer since September 20, 2004. Prior to joining the
Company, from May 2002 to February 2003, Mr. Robinson was employed by Spherion
Corporation and served as a financial and accounting consultant to the Company.
Previously, Mr. Robinson was Chief Financial Officer of Green2go.com, Inc. from
March 2000 to September 2001 and Assistant Corporate Controller of AutoNation,
Inc. from March 1997 to March 2000. Mr. Robinson is a member of the American
Institute of Certified Public Accountants and the Florida Institute of Certified
Public Accountants.
Alan Schutzman joined the Company in September 2003 as Senior Vice President,
General Counsel and Secretary. From January 2001 until joining the Company, Mr.
Schutzman was Associate General Counsel of Jacuzzi Brands, Inc. ("Jacuzzi"), and
Vice President and Associate General Counsel of Jacuzzi since September 2001.
From July 1996 to December 2000, he served as Vice President and General Counsel
of various operating subsidiaries of Jacuzzi, including Ames True Temper and
Keller Ladders, Inc.
Urs W. Stampfli has been Senior Vice President since February 2002 and Director
of Global Sales and Marketing for the Company since April 2000. Mr. Stampfli
joined the Company in May 1998 as Director of Global Sales and Marketing, and
became a Vice President of the Company in April 2000. From 1990 to April 1998,
Mr. Stampfli was Vice President, Marketing, Photo Imaging Systems of Agfa
Division, Bayer Corporation.
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EXECUTIVE COMPENSATION
The following table contains certain information regarding aggregate
compensation earned, paid or payable during Fiscal 2004, Fiscal 2003 and Fiscal
2002, for services rendered to the Company and its subsidiaries during these
fiscal years, to: (a) the Chief Executive Officer; (b) each of the other four
most highly compensated executive officers who were serving as executive
officers at the end of Fiscal 2004; and (c) one former executive officer, Brian
F. King, who would have been among the executive officers described in (b) had
he still been serving as an executive officer of the Company at the end of
Fiscal 2004 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------------------
Shares LTIP
Other Annual Underlying Payouts All Other
Name and Fiscal Salary Bonus(c) Compensation Options (d) Compensation
Principal Position Year ($) ($) ($) (#) ($) ($)
------------------ -------- -------------- ----------- ------------- ------------ ------------- ---------------
Ira B. Lampert(a) 2004 $975,000(1) - $696,508(2) - - $ 54,102(9)
Chairman, Chief 2003 916,667(1) $424,834 715,109(2) - $235,919 982,595(9)
Executive Officer 2002 920,833(1) - 681,110(2) 263,004(8) - 960,447(9)
and President
Brian F. King 2004 450,000 - 28,000(3) - - 529,070(10)
Senior Executive Vice 2003 425,000 212,417 28,000(3) - 117,959 376,952(10)
President 2002 400,000 - (7,177)(3) 127,260(8) - 375,372(10)
Keith L. Lampert 2004 350,000 - 43,583(4) - - 33,136(11)
Executive Vice 2003 317,070 158,762 136,049(4) 100,000 76,674 402,555(11)
President and Chief 2002 225,000 - 228,968(4) 76,356(8) - 233,973(11)
Operating Officer
Urs W. Stampfli 2004 257,245 - 19,310(5) - - 10,273(12)
Senior Vice President 2003 264,320(1) 119,685 21,805(5) - 69,449 48,322(12)
and Director of Global 2002 210,500 - 12,000(5) 18,665(8) - 44,276(12)
Sales and Marketing
Richard Finkbeiner(b) 2004 262,500 - 13,391(6) - - 29,621(13)
Senior Vice President 2003 243,110 94,459 16,825(6) 75,000 - 13,643(13)
and Chief Financial 2002 - - - - - -
Officer
Alan Schutzman(b) 2004 218,766 - 19,500(7) 60,000 - 3,510(14)
Senior Vice President, 2003 - - - - - -
General Counsel and 2002 - - - - - -
Secretary
-----------------
8
(a) Ira B. Lampert voluntarily reduced his base salary by $100,000 for the
period from July 1, 2004 to June 30, 2005, and the amount of the annual
credit for January 2005 under his supplemental executive retirement plan
and agreement ("SERP") by $150,000, for a total of $250,000. See
"Executive Employment Contracts, Termination of Employment and Change in
Control Arrangements" below.
(b) Mr. Finkbeiner joined the Company in July 2002 (shortly after the
beginning of Fiscal 2003). Mr. Schutzman joined the Company in September
2003 (two and one half months after the beginning of Fiscal 2004).
(c) For Fiscal 2003, represents bonuses awarded on August 6, 2003 under the
Annual Incentive Compensation Plan ("AICP") in effect for Fiscal 2003. No
bonuses were awarded under the AICP in effect for Fiscal 2004 or Fiscal
2002.
(d) Represents payments received in September 2003 under awards approved on
August 6, 2003 under the Company's Amended and Restated 2002 Long-Term
Cash Incentive Plan (the "LTCIP") in effect for the Fiscal 2002-2003
performance period. The LTCIP awards made to the Named Executive Officers
for this performance period were generally in the form of contingent
deferred compensation to be earned over three years. The contingent
deferred portion of these awards will be included in the Summary
Compensation Table in the future, as and when the conditions to vesting
have been met and the amounts have been earned. See "Executive Employment
Contracts, Termination of Employment and Change in Control Arrangements -
Deferred Long Term Compensation" below.
(1) Includes payment for accrued but unused vacation.
(2) Includes: (a) auto allowances and costs, partial housing costs and
reimbursement of taxes, respectively, of $30,000, $48,000 and $105,114 in
Fiscal 2004, $30,000, $48,000 and $120,911 in Fiscal 2003, and $30,714,
$48,000 and $93,789 in Fiscal 2002; (b) the yearly credit under the
Lampert SERP (described below under "Executive Employment Contracts,
Termination of Employment and Change in Control Arrangements") of $500,000
in Fiscal 2004, Fiscal 2003 and Fiscal 2002; and (c) for Fiscal 2004 and
Fiscal 2003, reimbursements under the Company's Flexible Perquisite
Spending Account Program for Corporate Officers (the "Flexible Perquisite
Spending Account Program").
(3) For Fiscal 2004 and Fiscal 2003, this represents $18,000 in auto allowance
paid, and reimbursements under the Flexible Perquisite Spending Account
Program. For Fiscal 2002, this represents $18,000 in auto allowance paid,
less Hong Kong tax reimbursements of $25,177 repaid by Mr. King to the
Company.
(4) For Fiscal 2004, this represents $18,000 in auto allowance paid,
reimbursement of $15,583 in taxes, and reimbursements under the Flexible
Perquisite Spending Account Program. For Fiscal 2003 and Fiscal 2002, this
includes: (a) amounts paid pursuant to the Company's Executive Management
Tax Equalization Policy of $23,700 in Fiscal 2003 and $89,519 in Fiscal
2002; (b) an overseas allowance of $25,000 per annum for Fiscal 2002,
$12,500 of which was received for Fiscal 2003; (c) overseas housing costs
of $84,599 in Fiscal 2003 and $111,826 in Fiscal 2002; and (d) for Fiscal
2003, $5,250 in auto allowance paid, and reimbursements under the Flexible
Perquisite Spending Account Program.
(5) For Fiscal 2004 and Fiscal 2003, this represents $12,000 in auto allowance
paid, and reimbursements under the Flexible Perquisite Spending Account
Program. For Fiscal 2002, this represents auto allowances paid.
(6) For Fiscal 2004 and Fiscal 2003, this represents $7,500 and $6,825 in auto
allowance paid, respectively, and reimbursements under the Flexible
Perquisite Spending Account Program.
(7) Represents $9,500 in auto allowance paid and reimbursements under the
Flexible Perquisites Spending Account Program.
(8) This stock option was granted on October 17, 2001 in connection with the
Company's exchange offer, in exchange for a stock option granted in Fiscal
2000 which was cancelled.
(9) For Fiscal 2004, this represents payments by the Company for insurance
premiums. For Fiscal 2003 and Fiscal 2002, this represents: (a) $516,666,
the amount of the April 19, 2000 grant of deferred compensation that
vested in these fiscal years (as described under "Executive Employment
Contracts, Termination of Employment and Change in Control Arrangements"
below, this grant vested in three equal annual installments beginning
January 1, 2001); (b) payments by the Company for insurance premiums of
$37,939 and $27,838, respectively; (c) payments by the Company for
companion travel; and (d) $404,883 repaid to Ira B. Lampert in Fiscal 2003
and Fiscal 2002 as deferred compensation pursuant to the conditional
release program (which, as described under "Transactions under Management
Equity Provisions of 1993 Incentive Plan" below, began in May 1999 and
continued on January 1 each year through January 1, 2003) because he
prepaid the total amount of the indebtedness before it was scheduled to be
forgiven by the Company.
(10) For Fiscal 2004, this represents payments of $519,285 to be made under Mr.
King's separation agreement (described under "Executive Employment
Contracts, Termination of Employment and Change in Control
9
Arrangements" below), and payments by the Company for insurance premiums.
For Fiscal 2003 and Fiscal 2002, this represents: (a) $250,000, the amount
of the April 19, 2000 grant of deferred compensation that vested in each
such fiscal year (as described under "Executive Employment Contracts,
Termination of Employment and Change in Control Arrangements" below, this
grant vested in three equal annual installments beginning January 1,
2001); (b) payments by the Company for insurance premiums; and (c)
$116,140 and $122,714 repaid to Brian F. King in Fiscal 2003 and Fiscal
2002, respectively, as deferred compensation pursuant to the conditional
release program (which, as described under "Transactions under Management
Equity Provisions of 1993 Incentive Plan" below, began in May 1999 and
continued on January 1 each year through January 1, 2003) because he
prepaid the total amount of the indebtedness before it was scheduled to be
forgiven by the Company.
(11) For Fiscal 2004, this represents $28,878 in housing benefits received in
connection with Mr. Lampert's promotion to Chief Operating Officer and as
an inducement to his repatriation to the United States, and payments for
insurance premiums. For Fiscal 2003 and Fiscal 2002, this represents: (a)
$150,000, the amount of the April 19, 2000 grant of deferred compensation
that vested in each such fiscal year (as described under "Executive
Employment Contracts, Termination of Employment and Change in Control
Arrangements" below, this grant vested in three equal annual installments
beginning January 1, 2001); (b) payments by the Company for insurance
premiums; (c) $78,857 and $83,321 repaid to Keith L. Lampert in Fiscal
2003 and Fiscal 2002, respectively, as deferred compensation pursuant to
the conditional release program (which, as described under "Transactions
under Management Equity Provisions of 1993 Incentive Plan" below, began in
May 1999 and continued on January 1 each year through January 1, 2003)
because he prepaid the total amount of the indebtedness before it was
scheduled to be forgiven by the Company; and (d) for Fiscal 2003, a
one-time grant of $100,000 in deferred compensation, a $58,333 relocation
payment, and certain housing benefits, all of which were received in
connection with Mr. Lampert's promotion to Chief Operating Officer and as
an inducement to his repatriation to the United States. See "Executive
Employment Contracts, Termination of Employment and Change in Control
Arrangements" below.
(12) For Fiscal 2004, this represents insurance premiums paid by the Company.
For Fiscal 2003 and Fiscal 2002, this represents $36,667, the amount of
the April 19, 2000 grant of deferred compensation that vested in the
fiscal year (as described under "Executive Employment Contracts,
Termination of Employment and Change in Control Arrangements" below, this
grant vested in three equal annual installments beginning January 1,
2001), and insurance premiums paid by the Company.
(13) For Fiscal 2004, this represents $25,000, the amount of the July 22, 2002
grant of deferred compensation (described under "Executive Employment
Contracts, Termination of Employment and Change in Control Arrangements"
below) that vested in the fiscal year, and insurance premiums paid by the
Company. For Fiscal 2003, this represents $7,618 of housing benefits
received by Mr. Finkbeiner in connection with his relocation, and
insurance premiums paid by the Company.
(14) Represents insurance premiums paid by the Company.
10
STOCK OPTIONS
The following table sets forth information concerning stock option grants made
during Fiscal 2004 to the Named Executive Officers.
STOCK OPTION GRANTS IN FISCAL 2004
Potential Realizable
Value at Assumed
% of Total Annual Rates of Stock
Number of Options Exercise Price Appreciation
Shares Granted to Price for Option Term
Underlying Employees Per ------------ -------------
Options in Share Expiration 5% 10%
Name Granted Fiscal 2004 ($) Date ($) ($)
----------------------------------------------------------------------------------------------------------
Alan Schutzman 60,000(1) 16.8 $11.87 09/14/13 $447,899 $1,135,063
----------------
(1) This option vested as to 20,000 shares on September 15, 2004, with the
balance to vest in installments of 20,000 shares on each of September 15,
2005 and 2006, or immediately upon a change in control of the Company.
The following table sets forth information concerning stock option exercises
during Fiscal 2004 by each of the Named Executive Officers and the fiscal
year-end value of unexercised options held by such officers, based on the
closing price of $3.31 for the Common Stock on July 2, 2004.
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 2004
AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Number of Shares Underlying In-the-Money Options
Shares Value Unexercised Options at FY End at FY End ($)
Acquired on Realized
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
Ira B. Lampert 570,032(a) $3,940,187 954,972(b) - $1,574,789 -
Brian F. King 195,000 1,366,225 127,260 - 90,500 -
Keith L. Lampert - - 249,689 66,667 280,325 -
Urs W. Stampfli 15,000 142,500 63,665 - 25,200 -
Richard Finkbeiner - - 18,750 56,250 - -
Alan Schutzman - - - 60,000 - -
----------------
(a) None of the shares acquired upon these exercises have been sold. Ira B.
Lampert exercised these options and held the shares so acquired, and
deferred the delivery of 331,011 of these shares under the Company's
Deferred Delivery Plan.
(b) As reported in a Form 4 filed with the SEC, Ira B. Lampert exercised an
option for 314,312 shares on August 9, 2004 and deferred the delivery of
178,043 of those shares under the Company's Deferred Delivery Plan.
11
The following table sets forth information concerning awards made under the
Company's Amended and Restated 2002 Long-Term Cash Incentive Plan (the "2002
LTCIP") during Fiscal 2004 to the Named Executive Officers.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 2004(1)
Total
Number of Amount of
Shares, Amount of Deferred Vesting Schedule for
Units or Cash Award(1) Deferred Award, in
Other Award(1) ($) Equal Installments
Name Rights ($) on:
--------------------------- ------------- ------------- --------------- -----------------------
Ira B. Lampert N/A $235,919 $670,474 08/06/05(3)
08/06/06(3)
08/06/07(3)
--------------------------- ------------- ------------- --------------- -----------------------
Brian F. King N/A 117,959 335,237(2) 08/06/04
08/06/05
08/06/06
--------------------------- ------------- ------------- --------------- -----------------------
Keith L. Lampert N/A 76,674 389,629 08/06/04
08/06/05
08/06/06
--------------------------- ------------- ------------- --------------- -----------------------
Urs W. Stampfli N/A 69,449 274,021 08/06/04
08/06/05
08/06/06
--------------------------- ------------- ------------- --------------- -----------------------
Richard M. Finkbeiner N/A 0 224,722(2) 08/06/04
08/06/05
08/06/06
--------------------------- ------------- ------------- --------------- -----------------------
(1) These awards were all granted on August 6, 2003. The cash amount is
included in the Summary Compensation Table under the LTIP Payout column
for Fiscal 2003 since these awards were made with respect to the Fiscal
2002-2003 performance period. For a description of the deferred element of
these awards, see "Deferred Long Term Compensation" below.
(2) The amount of the deferred awards to Messrs. King and Finkbeiner were
forfeited in their entirety when their employment terminated.
(3) Ira B. Lampert voluntarily delayed the vesting of his Deferred Award by
one year. See "Deferred Long Term Compensation" below.
EXECUTIVE EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The following is a summary of the employment agreements between the Company and
each of the Named Executive Officers. The employment agreements provide for each
named executive to serve in the respective capacities indicated in the Summary
Compensation Table.
The employment agreement for Ira B. Lampert (the "Lampert Agreement") has a
four-year term that automatically extends each day, by one day, until one party
notifies the other that the term should not be further extended. The terms of
the employment agreements for Keith L. Lampert, Urs W. Stampfli and Alan
Schutzman expire on January 1, 2006, January 1, 2006 and September 14, 2006,
respectively, unless renewed by mutual agreement of the parties, and may be
terminated by the Company on thirty (30) days' notice at any time or by the
executive after the expiration of the stated term. The term of the employment
agreements for Brian F. King and Richard M. Finkbeiner terminated effective as
of July 1, 2004 and July 27, 2004, respectively. Their Separation Agreements are
described below.
The employment agreements provide that the Company will pay Ira B. Lampert and
Keith L. Lampert annual base salaries of $900,000 and $350,000, respectively,
effective as of January 1, 2003, an annual base salary of $250,000 to Urs W.
Stampfli effective as of July 1, 2003, and an annual base salary of $275,000 to
Alan Schutzman effective as of
12
September 15, 2003. Ira B. Lampert voluntarily reduced his base salary from
$900,000 to $800,000 per annum for the period from July 1, 2004 to June 30,
2005. The employment agreements for Brian F. King and Richard M. Finkbeiner
provided for annual base salaries of $450,000 and $262,500, respectively;
however, as described below, these agreements terminated effective as of July 1,
2004 and July 27, 2004, respectively.
In connection with Keith L. Lampert's promotion to Chief Operating Officer, the
Board granted him an option to purchase 100,000 shares of the Company's Common
Stock at $5.18 per share (the closing price on the grant date of November 11,
2002) with vesting in equal installments over three years from the grant date,
approved a relocation package, and authorized a one-time grant, effective as of
January 1, 2003, of $100,000 in fully vested deferred compensation as an
inducement for his repatriation to the United States. Mr. Lampert was also
provided with housing at the Company's expense while he was on overseas
assignment and tax equalization in accordance with the Company's Executive
Management Tax Equalization Policy.
Pursuant to their respective employment agreements, Mr. Finkbeiner was also
provided with a relocation package, and Messrs. Finkbeiner and Schutzman were
each provided with a one-time grant of $100,000 in deferred compensation. These
grants of deferred compensation are described below under "Supplemental
Executive Retirement Plans for Named Executive Officers."
The Lampert Agreement provides that if his employment with the Company is
terminated by reason of death or disability, Mr. Lampert, or his legal
representative, would be entitled to receive, in addition to accrued
compensation (including, without limitation, any earned but unpaid bonus or
long-term incentive awards, any amount of base salary accrued or earned but
unpaid, any deferred compensation earned but unpaid, any accrued but unused
vacation pay and unreimbursed business expenses (the "Accrued Amounts")), his
base salary for the scheduled balance of the term (payable in the case of death
in a lump sum), a prorated bonus for the year in which the death or disability
occurred, and any other or additional benefits owed to the executive under the
then applicable employee benefit plans or policies of the Company, subject in
the case of disability to offset against the base salary payment by the amount
of any disability benefits provided to him by the Company or under any
disability insurance provided by or paid for by the Company.
The Lampert Agreement entitles Ira B. Lampert to participate generally in all
pension, retirement, insurance, savings, welfare and other employee benefit
plans and arrangements and fringe benefits and perquisites maintained by the
Company from time to time for senior executives of a comparable level. In
addition to any life insurance provided pursuant to one of the Company's plans,
Mr. Lampert is also provided with term life insurance, for such beneficiaries as
are designated by Mr. Lampert, of $5 million face value, and long-term
disability coverage with a $600,000 annual benefit payable in the event that Mr.
Lampert's employment with the Company is terminated due to his disability (the
"Additional Life and Disability Insurance"). In addition, the Company may
purchase key man life insurance on the life of Mr. Lampert, which may be used to
satisfy the Company's obligations under the Lampert Agreement in the event of
Mr. Lampert's death. The Company currently maintains $5 million in key man life
insurance on the life of Mr. Lampert.
If Mr. Lampert's employment is terminated by the Company without cause (as
defined in the Lampert Agreement) or if there is a constructive termination
without cause, Mr. Lampert would be entitled to receive the Accrued Amounts, his
base salary and continuation of his benefits (or the economic equivalent of such
benefits), the Additional Life and Disability Insurance and certain perquisites
for the scheduled balance of the term and for an additional twelve months
thereafter, and a prorated bonus for the year in which the termination occurred.
If such termination followed a change of control of the Company, Mr. Lampert
would be entitled to receive the salary continuation benefit as a lump sum
payment without any discount and, subject to limited exceptions, any benefits,
including options, in which he is not at such time fully vested would become
fully vested and any options would remain exercisable for the full stated term
of the option. If the automatic extensions of the term of the Lampert Agreement
are discontinued at the request of the Company and Mr. Lampert's employment is
terminated upon expiration of the term, Mr. Lampert would be entitled to receive
the Accrued Amounts, his base salary and continuation of his benefits (or the
economic equivalent of such benefits), the Additional Life and Disability
Insurance and certain perquisites for twelve months after the end of the term,
and a prorated bonus for the year in which the termination occurred. In
addition, if the severance payments to Mr. Lampert under the Lampert Agreement
follow a change in control and, together with other amounts paid to Mr. Lampert,
exceed certain threshold amounts and are determined to constitute a parachute
payment (as defined in Section 280G(b)(2) of the Internal Revenue Code), Mr.
Lampert is to receive an additional amount to cover the federal excise tax with
respect thereto on a "grossed
13
up" basis. If Ira B. Lampert is terminated for cause, or he voluntarily resigns,
he will only receive the Accrued Amounts and benefits provided in benefit plans.
Pursuant to the employment agreements for Keith L. Lampert, Urs W. Stampfli,
Alan Schutzman and Brian F. King, if the Company terminates the executive's
employment at any time without cause (as defined in such agreements), or if the
executive terminates his employment after the stated term of his employment
agreement, the executive is entitled to severance payments equal to one year of
the executive's then base salary plus his automobile allowance, payable in
installments in accordance with the normal payroll schedule. Mr. Finkbeiner's
employment agreement provided that, if the Company terminates his employment
without cause, Mr. Finkbeiner is entitled to severance payments equal to twelve
months' of his then base salary. The employment agreement for Keith L. Lampert
also provides that if his employment were to be terminated by the Company
without cause, or upon a change of control, the stock option for 100,000 shares
granted to Mr. Lampert on November 11, 2002 would automatically become
exercisable in full.
The employment agreements of all of the Named Executive Officers prohibit them
from competing with the Company for one year following the termination of their
employment with the Company; however, if Ira B. Lampert's employment is
terminated without cause, the duration of his non-compete covenants would extend
throughout the period in which his base salary and other benefits are continued
if such period exceeds twelve months.
The Company and Brian F. King entered into a separation agreement, dated as of
March 29, 2004, pursuant to which Mr. King's employment terminated effective
July 1, 2004. Pursuant to this agreement, in addition to any other benefits he
is entitled to receive under any employee benefit plan or deferred compensation
plan (including his supplemental executive retirement plan and agreement
("SERP"), which is described below), Mr. King is to receive the equivalent of
his base salary of $450,000 per annum and auto allowance of $18,000 per annum
(in installments in accordance with the normal payroll schedule) through June
30, 2005, in accordance with the severance provisions of his employment
agreement; and he has received (a) pay for accrued but unused vacation, accrued
as though he had remained employed through December 31, 2004; (b) reimbursement
of premiums for continuation of his health insurance coverage through June 30,
2005 under COBRA; and (c) reimbursement of premiums for substantially similar
life and disability insurance coverage through June 30, 2005.
Richard M. Finkbeiner's employment with the Company terminated effective as of
July 27, 2004. Mr. Finkbeiner and the Company entered into a separation
agreement, dated as of August 18, 2004, pursuant to which, in addition to any
other benefits he is entitled to receive under the Company's 401(k) plan, he is
to receive the equivalent of his base salary of $262,500 per annum (in
installments in accordance with the normal payroll schedule) through July 26,
2005, in accordance with the severance provisions of his employment agreement;
and he has received (a) a lump sum payment of $12,500; (b) pay for accrued but
unused vacation; and (c) a lump sum payment of $75,000, representing the funds
in his SERP that had vested prior to or as a result of the termination of his
employment.
Under these separation agreements, Messrs. King and Finkbeiner must not compete
with the Company for one year, must provide the Company with certain cooperation
and assistance (without receiving additional compensation for same during the
period covered by the severance payments), and were required to execute a
release prior to receiving any severance payments.
Supplemental Executive Retirement Plans for Named Executive Officers
Pursuant to the Lampert Agreement, the Company adopted a SERP for the benefit of
Ira B. Lampert (the "Lampert SERP"). A specified amount of deferred
compensation, currently $500,000, is credited to the Lampert SERP account each
year. These yearly credits are 100% vested and not subject to forfeiture. Mr.
Lampert voluntarily reduced the amount of the credit to be made in January 2005
from $500,000 to $350,000.
Effective as of April 19, 2000, in connection with a one-time grant of deferred
compensation to certain executive officers, the Company adopted certain SERPs,
including those with respect to deferred compensation in the following amounts
for the following named executive officers (the "Executive SERPs"): (i) Brian F.
King, $750,000; (ii) Keith L. Lampert, $450,000; and (iii) Urs W. Stampfli,
$110,000. The amounts in the Executive SERP accounts vested in three equal
annual installments on January 1st of 2001, 2002 and 2003. The Company
simultaneously approved a one-time grant of deferred compensation to Ira B.
Lampert in the amount of $1,549,998 with the same vesting schedule as under the
14
Executive SERPs, and the Lampert SERP was amended to include appropriate terms
to govern this one-time grant of deferred compensation.
In connection with a one-time grant of $100,000 in deferred compensation to
Richard M. Finkbeiner as of July 22, 2002, the Company adopted a SERP for his
benefit. Pursuant to his SERP, the amounts in the SERP accounts vested, so long
as Mr. Finkbeiner continued to be employed by the Company, in four annual
installments of $25,000 each on July 22nd of 2003, 2004, 2005 and 2006, however,
if the Company terminates Mr. Finkbeiner's employment without cause, half of
each year's installment would immediately become vested. When Mr. Finkbeiner's
employment terminated on July 27, 2004, half of the installments scheduled to
vest on July 22, 2005 and July 22, 2006 were forfeited and the other half
immediately vested.
In connection with a one-time grant of $100,000 in deferred compensation to Alan
Schutzman as of September 15, 2003, the Company adopted a SERP for his benefit.
Pursuant to Mr. Schutzman's SERP, the amounts in the SERP accounts vest, so long
as he continues to be employed by the Company, in three equal annual
installments on September 15th of 2004, 2005 and 2006, or immediately upon: (i)
a change in control; or (ii) the termination of his employment as a result of
his death or disability, or by the Company without "cause."
Each time the Company credits an executive's account under a SERP agreement, the
Company simultaneously contributes an equal amount to a trust established for
the purpose of accumulating funds to satisfy the obligations incurred by the
Company pursuant to the SERP.
Deferred Long Term Compensation
On August 6, 2003, Named Executive Officers were awarded the following amounts
of contingent deferred compensation under the 2002 LTCIP with respect to the
Fiscal 2002-2003 performance period (the "Deferred LTCIP Awards"): (i) Ira B.
Lampert, $670,474; (ii) Brian F. King, $335,237; (iii) Keith L. Lampert,
$389,629; (iv) Urs W. Stampfli, $274,021; and (v) Richard M. Finkbeiner,
$224,722. The Deferred LTCIP Awards to Keith L. Lampert and Urs W. Stampfli
vest, so long as the executive continues to be employed by the Company, in three
equal annual installments on August 6, 2004, 2005 and 2006, or immediately upon:
(i) a change of control of the Company; or (ii) the executive's death or
disability. The Deferred LTCIP Awards to Brian King and Rick Finkbeiner were
forfeited when their employment terminated before any vesting had occurred. Ira
B. Lampert voluntarily agreed to delay the vesting of his Deferred LTCIP Award
by one year, such that it vests in three equal installments on August 6, 2005,
2006 and 2007 instead of August 6, 2004, 2005 and 2006. Otherwise, the Deferred
LTCIP Award granted to Ira B. Lampert has substantially the same terms and
conditions as the other Deferred LTCIP Awards, however, in addition to the
events that will accelerate the vesting of the other Deferred LTCIP Awards, it
provides for immediate vesting in the event of termination without cause, a
constructive termination of employment without cause, or the non-renewal of his
employment contract. The Lampert SERP, the Executive SERPs and the Finkbeiner
SERP were all amended to include appropriate terms to govern the Deferred LTCIP
Awards. The Company contributed the foregoing amounts to trusts established for
the purpose of holding funds to satisfy the Company's obligations under the
Deferred LTCIP Awards. The trusts established in connection with the Deferred
LTCIP Awards to Messrs. King and Finkbeiner have since been terminated and those
funds were returned to the Company.
TRANSACTIONS UNDER MANAGEMENT EQUITY PROVISIONS OF 1993 INCENTIVE PLAN
On August 23, 1995, the Compensation and Stock Option Committee approved stock
purchase awards under the Management Equity Provisions ("MEP") of the Company's
1993 Incentive Plan pursuant to which 1,000,000 shares of Common Stock were made
available for purchase by senior management of the Company at a price per share
equal to $2.6875 per share (the closing price of the Common Stock on August 23,
1995, adjusted for the two-for-one stock split effective on April 14, 2000)
pursuant to binding commitments to be made by such persons by August 31, 1995.
The Company received commitments for the purchase of 888,000 shares (the
"Purchased Shares"). Each purchaser was also granted the right to receive a
contingent restricted stock award, that would have vested over a three-year
period, covering a number of shares equal to the number of shares he had
purchased based upon attainment of increases in shareholder value in accordance
with the plan.
15
In November 1995, members of the Company's senior management entered into
purchase agreements (the "Purchase Agreements") for the Purchased Shares.
Pursuant to the Purchase Agreements, each purchaser executed a full recourse
note for the purchase price of such shares (each a "Note"; collectively, the
"Notes") and pledged the Purchased Shares as security for the payment of the
Note. The Notes bore interest at an annual rate of 6%. Concurrently, each
purchaser entered into a Voting Agreement pursuant to which each purchaser
agreed to vote all of his Purchased Shares and contingent restricted stock in
accordance with the determination of the holders of a majority of all of the
Purchased Shares and contingent restricted stock held by the purchasers. To
effect the foregoing, each of the purchasers delivered an irrevocable proxy to
Ira B. Lampert.
Pursuant to Amendments to each of the Purchase Agreements dated February 28,
1997 (the "Amendments"), the Company was relieved of its obligation to issue any
contingent restricted stock. Instead, each participating member of senior
management received, as of December 22, 1996, options to purchase that number of
shares of Common Stock (the "Option Shares") equal to the number of Purchased
Shares purchased by such person, at an exercise price of $0.9063 per share. The
options vested as to 20% of the Option Shares as of December 22, 1996, and the
balance of the shares covered thereby began vesting December 31, 1996 in equal
monthly installments over a four-year period during the term of employment or
consultancy. The unvested portion became vested on August 19, 1998 when the
average closing price of the Common Stock was at least $2.50 (after adjustment
for the stock split effective on April 14, 2000) for 90 consecutive trading
days. Concurrently with the Amendments, the Voting Agreement and the irrevocable
proxies were amended and restated to include the Option Shares and delete any
mention of the contingent restricted stock.
In April 1999, the Board approved a conditional release program whereby the
Company agreed to forgive a portion of the indebtedness represented by each Note
and concurrently release a proportionate number of Purchased Shares held by the
Company as security for payment of the Notes. The debt forgiveness and share
release program (the "Release Program") began on May 1, 1999 and continued on
January 1 each year through January 1, 2003. The total principal sum subject to
forgiveness under the Release Program was $2,386,500, together with interest
owed under the Notes. The debt forgiveness was conditioned upon the person's
continued employment with the Company.
As contemplated by the MEP, subsequent to 1995 certain Purchased Shares and the
related options were transferred to other eligible members of the Company's
senior management upon their execution of the required agreements and Notes.
Notes previously delivered to secure payment for such shares were canceled upon
delivery of new Notes by such transferees.
In January 2000, the Board further provided that a participant in the MEP would
have the right to prepay all or any portion of the indebtedness represented by a
Note, and that the amount so prepaid would be repaid to the participant as
deferred compensation at such time as the amount would otherwise have been
forgiven in accordance with the Release Program.
The Purchased Shares and options awarded pursuant to the MEP are presently held
by Ira B. Lampert, Keith L. Lampert and Arthur Zawodny. Harlan I. Press and
Brian F. King ceased to be members of the MEP Group when they sold all of their
Purchased Shares and Option Shares in August 2003 and August 2004, respectively.
16
The following were the scheduled release dates, and the total amounts that were
forgiven* on such dates, under the Release Program.
Total Principal
Indebtedness Total Purchased
Releasee Release Dates Forgiven Shares Released
--------------------------- ----------------------------------- ------------------ -------------------
Brian F. King May 1, 1999, and January 1st of $ 430,000* 160,000
2000, 2001, 2002 and 2003
Ira B. Lampert May 1, 1999, and January 1st of $ 1,612,500* 600,000
2000, 2001, 2002 and 2003
Keith L. Lampert May 1, 1999, and January 1st of $ 295,625* 110,000
2000, 2001, 2002 and 2003
Harlan I. Press January 6, 2000, and January 1st $ 10,750 4,000
of 2001, 2002 and 2003
Arthur Zawodny May 1, 1999, and January 1st of $ 37,625* 14,000
2000, 2001, 2002 and 2003
-------------------
* After the January 1, 2000 release date, the balance of these amounts were
repaid in full. Ira B. Lampert, Brian F. King, Keith L. Lampert and Arthur
Zawodny each prepaid in full the balance of the debts represented by their
Notes and, as a result of their continued employment with the Company,
received deferred compensation in lieu of the amounts scheduled to be
forgiven under the Release Program.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The membership of the Compensation and Stock Option Committee of the Board
during Fiscal 2004 consisted of Messrs. O'Neill and Cooper. No member of the
Compensation and Stock Option Committee is now or ever was an officer or an
employee of the Company or any of its subsidiaries. No executive officer of the
Company serves as a member of the compensation committee or as a director of any
entity one or more of whose executive officers serves as a member of the
Company's Board or the Compensation and Stock Option Committee. There were no
compensation committee interlocks during fiscal 2004.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board (hereinafter, the
"Committee") is comprised of two independent directors as determined in
accordance with the listing standards applicable to the Company. The Committee
seeks to ensure that the Company's compensation policies are designed and
implemented to promote the goal of enhancing long-term shareholder value. The
Committee believes that the key to achieving this goal is to attract, retain and
motivate qualified and experienced executive officers and employees. The
Committee therefore favors forms of compensation that encourage and reward
long-term service to the Company, and enable those who succeed in building
shareholder value to share in the value they have helped to create. As such, the
Committee believes that critical components of compensation for executives are:
(i) the award of stock options at the time the executive joins the Company and
periodically thereafter; (ii) the payment of annual cash incentive compensation
based upon the attainment by the Company of a specified return on equity set by
the Board each fiscal year; and (iii) the payment of compensation based upon the
attainment by the Company of specified long-term performance-based goals. The
Committee continues to evaluate the critical components of executive
compensation from time to time through the utilization of outside compensation
consultants. The Committee believes that providing executives with opportunities
to acquire significant stakes in the Company's growth and prosperity through the
grant of stock options and other incentive awards will enable the Company to
attract and retain qualified and experienced executive officers.
Executive Officers. Pursuant to the Company's By-laws, compensation of the Chief
Executive Officer ("CEO") and any executive officer or employee having a
familial relationship to the CEO is determined by a majority of the Company's
independent directors (based on the Committee's recommendation) or by the
Committee. The compensation of all other executive officers is determined by the
Committee.
17
Before the levels of compensation reflected in the "Summary Compensation Table"
were established for the Named Executive Officers, outside compensation
consultants were engaged to obtain information and advice about competitive
levels of compensation and particular compensation techniques used by public
companies of comparable size (i.e., with comparable annual sales volume, results
of operations, earnings per share, return on equity, market capitalization
and/or assets) and survey data. After completing an internal recommendation and
approval process involving the CEO and other executive officers, many factors
are taken into consideration in determining an executive's compensation
including: individual performance; the Company's financial performance; the
compensation of executives at corporations of comparable size and operations;
years of service to the Company; the executive's responsibilities; the amount of
time and travel required by the position; and the desire to encourage the
long-term commitment of the executive. With respect to new executives, the
results of any arms-length negotiations between the Company and such executive
are also taken into consideration.
Executive officers may also participate in an annual incentive compensation plan
("AICP") pool equal to a percentage of the annual base salaries (in the
aggregate) of all AICP participants selected for the fiscal year, provided that
the Company's return on shareholders' equity is not less than a percentage
established by the Board for each fiscal year (unless this requirement is
otherwise waived by the Board). At the suggestion of senior management, the
Committee decided that no AICP awards would be made to any of the Company's
executive officers with respect to Fiscal 2004.
In order to further the Company's interest in retaining the services of certain
of its executive officers, and in order to provide additional long-term
incentive to such executives, the Company established the Company's Long-Term
Incentive Plan Commencing Fiscal 2004 (the "LTIP") under which certain executive
officers are eligible to participate. The LTIP is linked to Concord's long-term
financial performance and the achievement of pre-determined performance criteria
based on overlapping three-year fiscal cycles. The first such LTIP cycle is
comprised of Fiscal 2004, Fiscal 2005 and Fiscal 2006. If the performance
criteria established by the Committee are met, the first LTIP awards may be made
after the end of Fiscal 2006. In addition, as part of the compensation package
of each newly hired executive, the CEO may recommend, and the Committee
considers, the grant of stock options based on the above factors.
Chief Executive Officer. Before considering an increase in the level of
compensation for the CEO, the Committee engages the services of outside
compensation consultants to obtain information and advice about competitive
levels of compensation and particular compensation techniques used by public
companies of comparable size (i.e., with comparable annual sales volume, results
of operations, earnings per share, return on equity, market capitalization
and/or assets) and survey data.
The annual base salary of the CEO was not increased in Fiscal 2004. As discussed
in greater detail elsewhere in this Proxy Statement, the CEO voluntarily agreed:
(i) to have his base salary reduced from $900,000 to $800,000 for the period
from July 1, 2004 to June 30, 2005; (ii) to have the amount of the annual credit
for January 2005 under his SERP reduced from $500,000 to $350,000; and (iii) to
delay the vesting of his Deferred LTCIP Award by one year, such that it vests in
three equal installments on August 6, 2005, 2006, and 2007, instead of August
2004, 2005, and 2006. See "Executive Compensation - Executive Employment
Contracts, Termination of Employment and Change in Control Arrangements" above.
The independent directors of the Board and/or the Committee, as the case may be,
approve the CEO's compensation based on criteria such as: (i) the complex
international structure and operations of the Company, which are equivalent to
those of much larger international corporations; (ii) the parity of CEO pay with
other executive officers of the Company and executive officers to be hired in
the future; (iii) the Company's financial performance in meeting and exceeding
certain targets and benchmarks; and (iv) the extensive worldwide travel and time
requirements that the CEO position entails.
William J. O'Neill, Jr., Chairman
Ronald S. Cooper
18
AUDIT COMMITTEE REPORT
The members of the Audit Committee of the Board (the "Audit Committee") are
Messrs. Cooper, Gindi and O'Neill, all of whom are independent, as that term is
defined in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. The primary
purpose of the Audit Committee is to assist the Board in its general oversight
of the Company's accounting and financial reporting processes. The Audit
Committee's functions are more fully described in its charter, which the Board
has adopted. A copy of its charter was included as an appendix to the Company's
Proxy Statement as filed on December 18, 2003 with the SEC. The Audit Committee
reviews and reassesses the adequacy of its charter on an annual basis. Based on
its review in October 2004, the Audit Committee determined that no amendments to
its charter were necessary. The Board annually reviews the Nasdaq listing
standards' definition of independence for audit committee members and has
determined that each member of the Audit Committee meets that standard.
Management is responsible for the preparation, presentation, and integrity of
the Company's financial statements, accounting and financial reporting
principles, internal controls and procedures designed to ensure compliance with
accounting standards, applicable laws and regulations. The Company's independent
registered public accounting firm, Ernst & Young LLP, is responsible for
performing an independent audit of the consolidated financial statements and
expressing an opinion on the conformity of those financial statements with
United States generally accepted accounting principles.
In conjunction with its activities during the Company's 2004 fiscal year, the
Audit Committee reviewed and discussed the Company's unaudited and annual
audited financial statements with management of the Company and its independent
auditor. The members of the Audit Committee discussed the quarterly agreed upon
procedures and annual audit procedures performed by the independent auditor in
connection with the quarterly unaudited and annual audited financial statements
with management of the Company and its independent auditor. The members of the
Audit Committee also discussed with the Company's independent auditor the
matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standards, AU Section 380), as amended by Statement of Auditing
Standards No. 90. In addition, the Audit Committee received from the Company's
independent auditor the written disclosures and the letter required by
Independence Standards Board No. 1, and discussed with the independent auditor
the independent auditor's independence. Based on the foregoing reviews and
discussions, the Audit Committee recommended to the Board that the annual
audited financial statements be included in the Company's Annual Report on Form
10-K for Fiscal 2004 for filing with the SEC.
Ronald S. Cooper, Chairman
Morris H. Gindi
William J. O'Neill, Jr.
19
BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 8, 2004 about
the beneficial ownership of our Common Stock by: (i) each person or group who we
know beneficially owns more than 5% of our Common Stock; (ii) each director and
each nominee for director; (iii) each Named Executive Officer; and (iv) all
directors and executive officers as a group:
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership(1) of Class(1)
------------------------ ----------------------- -----------
(i) Beneficial Owners of More Than 5% of the Common Stock
MT Trading LLC, Sondra Beit, RH Trading LLC and 4,427,302(2) 15.4%
LTC Racing LLC as a group
c/o MT Trading LLC
530 Silas Deane Highway, Suite 130
Wethersfield, CT 06109
MT Trading LLC 3,930,862(2) 13.6%
530 Silas Deane Highway, Suite 130
Wethersfield, CT 06109
Dimensional Fund Advisors Inc. 1,492,894(2) 5.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
"MEP Group" of Company Officers or 2,400,618(3) 7.9%
Employees as described in note (3) below
(ii) Directors
Ira B. Lampert 1,991,846(3)(4) 6.6%
Ronald S. Cooper 101,500(5) *
Morris H. Gindi 95,500(6) *
William J. O'Neill, Jr. 84,000(7) *
(iii) Named Executive Officers
Brian F. King 0 *
Keith L. Lampert 493,022(3)(8) 1.7%
Alan Schutzman 23,000(9) *
Urs W. Stampfli 63,665(7) *
Richard M. Finkbeiner 0 *
(iv) Directors and executive officers as a group (11 persons)(10) 2,969,981 9.6%
--------------------
* Indicates less than one percent (1%).
(1) For purposes of this table, beneficial ownership was determined in
accordance with Rule 13d-3 under the Exchange Act based upon information
furnished by the persons listed or contained in filings made by them with
the SEC; the inclusion of shares as beneficially owned should not be
construed as an admission that such shares are beneficially owned for
purposes of Section 16 of the Exchange Act. As of December 8, 2004, the
Company had 28,832,219 shares of Common Stock issued and outstanding. All
shares were owned directly with sole voting and investment power unless
otherwise indicated.
20
(2) Based on information contained in a Schedule 13D/A filed December 2, 2004
by MT Trading LLC as to the beneficial ownership of MT Trading LLC and
other members of the group at December 2, 2004, a Form 4 filed on December
1, 2004 by LTC Racing LLC, as to its beneficial ownership at December 1,
2004, and a Schedule 13G filed February 6, 2004 by Dimensional Fund
Advisors Inc. as to its beneficial ownership at December 31, 2003. The
3,930,862 shares beneficially owned by MT Trading LLC at December 2, 2004
constitute the majority of the 4,427,302 shares beneficially owned by MT
Trading LLC and the other members of the group listed first in this table.
(3) As of December 8, 2004, a group comprised of three officers or employees
of the Company (Messrs. Ira B. Lampert, Keith L. Lampert and Arthur
Zawodny) (collectively, the "MEP Group") beneficially owned, in the
aggregate, 1,451,186 shares and options to purchase 949,432 shares of
Common Stock, or 7.9% of 30,290,705 (the number of shares outstanding on
that date plus the number of shares that would have been outstanding if
all options held by the members of the MEP Group which were exercisable
within 60 days of December 8, 2004 were exercised and the 509,054 shares
deferred by Ira B. Lampert were outstanding). Of that total, 550,744
shares and options to purchase 391,656 shares of Common Stock were
purchased under the Management Equity Provisions ("MEP") of the Company's
1993 Incentive Plan and are subject to the terms of an Amended and
Restated Voting Agreement, dated February 28, 1997, as amended (the
"Voting Agreement") pursuant to which MEP shares are voted in accordance
with the will of the holders of a majority of the shares governed by the
Voting Agreement. The balance of 900,442 shares and options to purchase
557,776 shares of Common Stock were purchased or held outside the MEP. See
"Transactions under Management Equity Provisions of 1993 Incentive Plan"
above. The MEP Group's address is c/o Concord Camera Corp., 4000 Hollywood
Boulevard, Presidential Circle - 6th Floor, North Tower, Hollywood,
Florida 33021.
(4) Represents: (i) 640,660 shares that may be acquired pursuant to stock
options exercisable within 60 days of December 8, 2004; (ii) 695,732
shares owned, as to all of which Mr. Lampert has sole dispositive power;
(iii) 509,054 shares, the delivery of which was deferred by Mr. Lampert
into future years under the Company's Deferred Delivery Plan, but which
could be acquired by him within 60 days of December 8, 2004 under certain
limited circumstances described in that plan; (iv) 28,000 shares held by a
ss.501(c)(3) charitable trust of which Mr. Lampert is a trustee with
voting and dispositive power; and (v) 118,400 additional MEP shares
(550,744 MEP shares, less the 432,344 MEP shares owned directly by Mr.
Lampert) that Mr. Lampert has the right to vote since he currently owns a
majority of the shares governed by the Voting Agreement. Since Mr. Lampert
is part of the MEP Group, the shares beneficially owned by him are
included in footnote (3) above; the MEP Group is deemed to have acquired
the shares beneficially owned by any member of the MEP Group described in
footnote (3) above.
(5) Includes 88,500 shares that may be acquired pursuant to stock options
exercisable within 60 days of December 8, 2004.
(6) Represents 80,500 shares that may be acquired pursuant to stock options
exercisable within 60 days of December 8, 2004, and 15,000 shares held by
the Notra Trading Inc. Profit Sharing Plan & Trust, a retirement plan of
which Mr. Gindi is a co-trustee and participant.
(7) Represents shares that may be acquired pursuant to stock options
exercisable within 60 days of December 8, 2004.
(8) Represents 283,022 shares that may be acquired pursuant to stock options
exercisable within 60 days of December 8, 2004 and 210,000 shares owned,
as to all of which Keith Lampert has sole dispositive power. Since Mr.
Lampert is part of the MEP Group, the shares beneficially owned by him are
included in footnote (3) above; the MEP Group is deemed to have acquired
the shares beneficially owned by any member of the MEP Group described in
footnote (3) above.
(9) Represents 20,000 shares that may be acquired pursuant to stock options
exercisable within 60 days of December 8, 2004 and 3,000 shares owned by
an IRA account of Mr. Schutzman.
(10) Messrs. Finkbeiner and King are not part of this group.
21
COMPARATIVE STOCK PERFORMANCE
The graph and table set forth below compare the cumulative total shareholder
return on the Common Stock for the years ended June 30, 2000 through June 30,
2004 with the Nasdaq Stock Market - U.S. Index and a Peer Group Index for the
same periods. The Peer Group Index is comprised of the other members of the
S.I.C. Code 3861 (Photographic Equipment and Supplies) as listed in the 1999
Nasdaq Stock Market Fact Book. The graph and table assume an investment of $100
in the Common Stock and each index on June 30, 1999 and the reinvestment of all
dividends. The stock performance shown is not intended to forecast, and may not
be indicative of, future stock performance.
[GRAPHIC OMITTED]
6/99 6/00 6/01 6/02 6/03 6/04
---- ---- ---- ---- ---- ----
(dollars)
Concord Camera Corp. 100 795 225 194 265 126
Nasdaq Stock Market - U.S. Index 100 193 69 58 56 77
Peer Group Index 100 143 127 108 120 141
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
William J. Lloyd, who was a director of the Company until July 31, 2003, was
late in filing a report on Form 4 relating to an amendment to his stock option
agreement in July 2003.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Another son of Ira B. Lampert, Christopher Lampert, worked for the Company in
Hong Kong and the PRC as a project analyst and product operations manager until
December 12, 2003. In Fiscal 2004, the Company paid a total of $51,649 for his
salary and his housing in Hong Kong. Christopher Lampert is no longer employed
by the Company or any of its subsidiaries. Housing is customarily provided to
the Company's employees on foreign assignment and stationed by the Company in
Hong Kong and/or the PRC.
22
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL TWO)
Ernst & Young LLP ("Ernst & Young"), an independent registered public accounting
firm, was appointed by the Audit Committee to audit the Company's financial
statements for Fiscal 2005. This firm has acted as independent auditor for the
Company since 1996. A representative of Ernst & Young is expected to attend the
Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
Fees for professional services provided by Ernst & Young to the Company during
Fiscal 2004 and Fiscal 2003 are:
FY 2004 FY 2003
(in thousands) (in thousands)
------------------ -----------------
Audit Fees $ 1,422 $ 420
Audit-Related Fees 421 66
Tax Fees - -
All Other Fees - -
--------------- ---------------
Total $ 1,843* $ 486
=============== ===============
--------------------
* Revised from the Company's Form 10-K for the fiscal year ended July 3,
2004 for actual billing.
Audit Fees include fees for services rendered for the audit of the Company's
annual financial statements, reviews of financial statements included in the
Company's quarterly reports on Form 10-Q, and consents and other services
normally provided in connection with statutory and regulatory filings or
engagements for those fiscal years.
Audit-Related Fees principally include fees for advisory services related to
Section 404 of the Sarbanes-Oxley Act of 2002, due diligence in connection with
the Jenimage acquisition and other possible transactions, and accounting
consultations.
Tax Fees would include fees for services rendered for tax compliance, tax advice
and tax planning. The Company obtains these types of services from an accounting
firm other than Ernst & Young.
All Other Fees would include fees for all other services rendered to the Company
that do not constitute Audit Fees, Audit-Related Fees or Tax Fees.
In considering the nature of the services provided by Ernst & Young LLP, the
Audit Committee determined that such services are compatible with the provision
of independent audit services. The Audit Committee discussed these services with
Ernst & Young and management to determine that they are permitted under the
rules and regulations concerning auditor independence promulgated by the SEC to
implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of
Certified Public Accountants.
PRE-APPROVAL POLICY
All services rendered by Ernst & Young are pre-approved by the Audit Committee
in accordance with the Company's Audit and Non-Audit Pre-Approval Policy for
independent auditor services and are monitored both as to spending level and
work content by the Audit Committee to maintain the appropriate objectivity and
independence of Ernst & Young 's core service, which is the audit of the
Company's consolidated financial statements. Under the policy, the terms and
fees of annual audit services, and any changes thereto, must be approved by the
Audit Committee. The policy also sets forth detailed pre-approved categories of
other audit, audit-related and other non-audit services that may be performed by
the Company's independent auditors during the fiscal year, subject to the dollar
limitations set by the Committee. The Audit Committee may, in accordance with
the policy, delegate to any member of the Audit Committee the authority to
approve audit and non-audit services to be performed by the independent
auditors. Any Audit Committee member who exercises
23
this delegated authority must report any approval decisions to the Audit
Committee at its next scheduled meeting. The foregoing pre-approval requirements
are subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit
Committee prior to completion of the audit.
All of the services described above were approved by the Audit Committee in
accordance with its pre-approval policy. The Board is seeking shareholder
approval of its selection of Ernst & Young since it is customary for a public
company to obtain shareholder approval of its auditors. If shareholders do not
approve the appointment of Ernst & Young as the independent registered public
accounting firm of the Company for Fiscal 2005 at the Annual Meeting, the Audit
Committee may reconsider the selection.
The affirmative vote of a majority of the votes cast by the holders of shares
present or represented and entitled to vote at the Annual Meeting is required
for shareholder approval. THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE COMPANY FOR FISCAL 2005.
OTHER INFORMATION
SHAREHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Pursuant to Rule 14a-8 under the Exchange Act, shareholders of the Company may
present proper proposals for inclusion in the Company's Proxy Statement and form
of proxy and for consideration at the next annual meeting by submitting their
proposals to the Company in a timely manner. Any shareholder of the Company who
wishes to present a proposal for inclusion in the Proxy Statement and form of
proxy for action at the 2006 annual meeting of shareholders (the "2006 Annual
Meeting") must comply with the Company's By-laws and the rules and regulations
of the SEC, each as then in effect. Such proposals must be mailed to the Company
at its offices at 4000 Hollywood Boulevard, Presidential Circle - 6th Floor,
North Tower, Hollywood, Florida 33021, Attention: Secretary. Under the rules of
the SEC, any shareholder proposal intended to be presented at the 2006 Annual
Meeting must be received no later than September 8, 2005 in order to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to such meeting. If a shareholder notifies the Company of an intent to
present a proposal at the 2006 Annual Meeting at any time after November 22,
2005 (and for any reason the proposal is voted on at that annual meeting), the
Company's proxy holders will have the right to exercise discretionary voting
authority with respect to the proposal, if presented at the meeting, without
including information regarding the proposal in its proxy materials.
EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Company. In addition to
the use of the mails, some regular employees of the Company, without additional
remuneration, may solicit proxies personally or by telephone or facsimile. The
Company will reimburse brokers, dealers, banks, and other custodians, nominees
and fiduciaries for their reasonable expenses in forwarding solicitation
materials to beneficial owners of Common Stock.
OTHER BUSINESS
As of the date of this proxy statement, the Board knows of no business to be
presented at the Annual Meeting other than as set forth in this proxy statement.
If other matters properly come before the Annual Meeting, or any of its
adjournments, the persons named as proxies will vote on such matters in their
discretion.
23
[CONCORD THE INNOVATOR LOGO]
ADMISSION TICKET
------------------------------
CONCORD CAMERA CORP. 2005 ANNUAL MEETING OF SHAREHOLDERS
------------------------------
FEBRUARY 3, 2005
10:00 A.M., LOCAL TIME
MARRIOTT RESIDENCE INN AT AVENTURA MALL
19900 WEST COUNTRY CLUB DRIVE
AVENTURA, FL 33180
-------------------------------------------------------------------------------
PROXY
CONCORD CAMERA CORP.
4000 HOLLYWOOD BOULEVARD, PRESIDENTIAL CIRCLE - 6TH FLOOR, NORTH TOWER
HOLLYWOOD, FLORIDA 33021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - FEBRUARY 3, 2005
The undersigned hereby appoints Alan Schutzman, Robert A. Bosi and Harlan I.
Press, and each of them severally, as proxies of the undersigned, each with
full power to appoint his substitute, to represent the undersigned at the
Annual Meeting of Shareholders of Concord Camera Corp. (the "Company") to be
held on February 3, 2005, and at any adjournments thereof, and to vote thereat
all shares of common stock of the Company held of record by the undersigned at
the close of business on December 8, 2004 in accordance with the instructions
set forth on this proxy card and, in their discretion, to vote such shares on
any other business as may properly come before the meeting and on matters
incident to the conduct of the meeting. Any proxy heretofore given by the
undersigned with respect to such stock is hereby revoked.
|_|PLEASE CHECK IF YOU PLAN TO ATTEND THE MEETING
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
1. ELECTION OF DIRECTORS.
NOMINEES: Ira B. Lampert, Ronald S. Cooper, Morris H. Gindi and William J. O'Neill, Jr.
|_| FOR ALL nominees listed above (except as indicated to the contrary)
__________________________________________________________.
(Instruction: To withhold authority to vote on any individual nominee, write the name above.)
|_| WITHHOLD AUTHORITY to vote for all nominees listed above.
(Continued and to be signed on reverse side)
(Continued from other side)
2. RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE FISCAL YEAR ENDING JULY 2, 2005.
|_| FOR |_| AGAINST |_| ABSTAIN
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 LISTED ABOVE.
Dated:__________________________________
Signature:______________________________
________________________________________
Signature if jointly held
PLEASE SIGN EXACTLY AS NAME OR NAMES APPEAR ON THIS PROXY. FOR JOINT ACCOUNTS, EACH JOINT OWNER MUST SIGN.
PLEASE GIVE FULL TITLE IF SIGNING IN A REPRESENTATIVE CAPACITY.