Tween Brands, Inc. DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
TWEEN BRANDS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
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8323 Walton Parkway
New Albany, Ohio 43054
(614) 775-3500
April 17, 2007
Dear Stockholder:
You are cordially invited to attend our 2007 Annual Meeting of Stockholders. The meeting will
be held on May 24, 2007, at 9:00 a.m. Eastern Time, at our corporate offices, located at 8323
Walton Parkway, New Albany, Ohio. If you need assistance in finding the location of the meeting,
please call our Investor Relations department at (614) 775-3500.
At the meeting, we will:
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elect three directors to the Board; |
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ratify the selection of Deloitte & Touche LLP as the Companys independent
registered public accounting firm for the 2007 fiscal year; and |
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transact other business as may come before the meeting. |
We will also report on our financial and operating performance during 2006, and update stockholders
on our strategy for future growth.
It is very important that your shares be represented and voted at the meeting. After reading
the enclosed proxy statement, please sign, date and return the enclosed proxy card, or take
advantage of voting your proxy over the telephone or the Internet.
We encourage you to take advantage of voting on the Internet because it is an easy process and
the least expensive way for us to tabulate your vote. Also, if you vote on the Internet, you will
have the option at that time to enroll in Internet delivery of our proxy materials in the future.
We look forward to seeing you at the annual meeting.
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Sincerely, |
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Michael W. Rayden |
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Chairman and Chief Executive Officer |
8323 Walton Parkway
New Albany, Ohio 43054
(614) 775-3500
NOTICE OF 2007 ANNUAL MEETING OF STOCKHOLDERS
May 24, 2007
The Annual Meeting of Stockholders of Tween Brands, Inc. will be held on May 24, 2007, at 9:00
a.m. Eastern Time at the corporate offices of Tween Brands, Inc., 8323 Walton Parkway, New Albany,
Ohio, to conduct the following items of business:
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To elect three directors, each to serve a three-year term expiring at the 2010
annual meeting of stockholders. |
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To ratify the selection of Deloitte & Touche LLP as the Companys independent
registered public accounting firm for the 2007 fiscal year. |
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To transact other business properly coming before the meeting or any
adjournment or postponement thereof. |
Stockholders who owned shares of our stock at the close of business on April 6, 2007, are
entitled to vote at the annual meeting. A complete list of these stockholders will be available at
our corporate offices prior to the annual meeting.
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By Order of the Board of Directors, |
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Michael W. Rayden |
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Chairman and Chief Executive Officer |
TABLE OF CONTENTS
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INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
The Board of Directors of Tween Brands, Inc. is soliciting your proxy to vote at the 2007
Annual Meeting of Stockholders (or any adjournment or postponement of the meeting). This proxy statement summarizes
the information you need to know to vote at the annual meeting. Throughout the proxy statement, the
terms We, Our, Tween, Tween Brands, and the Company refer to Tween Brands, Inc.
We began mailing this proxy statement and the enclosed proxy card on or about April 17, 2007,
to all stockholders entitled to vote. Our 2006 Annual Report on Form 10-K is being sent with this
proxy statement.
Date, time and place of meeting
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Date:
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May 24, 2007 |
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Time:
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9:00 a.m. Eastern Time
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Place:
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Tween Brands, Inc. |
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8323 Walton Parkway |
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New Albany, Ohio 43054 |
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Shares entitled to vote
Stockholders entitled to vote are those who owned our common stock at the close of business on
the record date, April 6, 2007. As of the record date, there were 30,678,032 shares of Tween
Brands, Inc. common stock outstanding. Each share of common stock that you own entitles you to one
vote.
Voting your proxy
Whether or not you plan to attend the annual meeting, we urge you to vote. Stockholders of
record can give proxies by mailing their signed proxy cards or by voting telephonically or on the
Internet. Submitting your completed proxy card, or voting telephonically or on the Internet, will
not affect your right to attend the annual meeting and vote.
The enclosed proxy card indicates the number of shares of our common stock that you own as of
the record date.
Instructions for the three methods of voting your proxy are listed on your proxy card. If you
complete and submit your proxy correctly, one of the individuals named on your proxy card (your
proxy) will vote your shares as you have directed. If you submit the proxy but do not make
specific choices, your proxy will follow the Boards recommendations and vote your shares:
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FOR the election of the nominees for director (as described on page 3); and |
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FOR the ratification of the selection of Deloitte & Touche LLP as the
independent registered public accounting firm of the Company for the 2007 fiscal
year (as described on page 44). |
If any other matter is presented at the annual meeting, your proxy will vote in accordance
with his/her best judgment. At the time this proxy statement went to press, we knew of no other
matters, beyond the approval of the aforementioned matters, to be acted on at the annual meeting.
Revoking your proxy
You may revoke your proxy by:
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submitting a later dated proxy; |
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notifying our Secretary in writing before the annual meeting that you have revoked your proxy; or |
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voting in person at the meeting. |
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Voting in person
If you plan to attend the meeting and vote in person, a ballot will be available when you
arrive. However, if your shares are held in the name of your broker, bank or other nominee, you
must bring a letter from the nominee indicating that you are the beneficial owner of the shares as
of the close of business on April 6, 2007, the record date for voting, and that you are authorized
to vote those shares at the annual meeting.
Quorum requirement
A quorum of stockholders is necessary to hold a valid meeting. The presence at the meeting, in
person or by proxy, of the holders of shares representing at least one-third of the votes of the
common stock entitled to vote constitutes a quorum. Abstentions and broker non-votes are counted
as present for establishing a quorum. A broker non-vote occurs on an item when a broker is not
permitted to vote on that item absent instruction from the beneficial owner of the shares and no
instruction is given.
Votes necessary
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Vote Necessary* |
Election of Directors
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Directors are elected by a plurality of the
votes represented by the shares of common
stock present at the meeting in person or by
proxy. This means that the director nominee
with the most affirmative votes for a
particular position is elected for that
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Ratification of the Selection
of Independent Registered
Public Accounting Firm
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The affirmative vote of the holders of a
majority of the shares of common stock
present at the meeting in person or by proxy
and entitled to vote. |
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Under New York Stock Exchange rules, if your broker holds your shares in its name, your
broker is permitted to vote your shares on these items even if it does not receive voting
instructions from you. |
For the election of directors, proxies that are marked Withhold Authority and broker
non-votes will not count toward a nominees achievement of a plurality, and, thus, will have no
effect. As to each other matter submitted to our stockholders for approval at the annual meeting,
for purposes of determining the number of shares of our common stock voting on the matter, (1)
abstentions will be counted and will have the effect of a negative vote, and (2) broker non-votes
will not be counted and, thus, will have no effect.
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ELECTION OF DIRECTORS
The Board of Directors has nominated three directors for election at the annual meeting. Each
of the nominees is currently serving as a director. If you re-elect them, each will hold office for
a three-year term expiring at the 2010 annual meeting or until his or her successor has been
elected.
Your proxy will vote for each of the nominees unless you specifically withhold authority to
vote for a particular nominee. If any nominee is unable to serve, your proxy may vote for another
nominee proposed by the Board. We do not know of any nominee of the Board who would be unable to
serve as director if elected.
Stockholders wishing to nominate directors for election may do so by delivering to the Chair
of the Nominating Committee of the Company, not less than 14 days nor more than 50 days before a
meeting of the stockholders called for the election of directors, a notice stating: (1) the name,
age, business address and, if known, residence address of each nominee proposed in the notice; (2)
the principal occupation or employment of each nominee; (3) the number of shares of common stock of
the Company beneficially owned by each nominee; and (4) such other information as is required by
the Companys bylaws. No person may be elected as a director of the Company unless he or she has
been nominated by a stockholder in this manner or by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THE FOLLOWING NOMINEES OF THE BOARD OF
DIRECTORS:
Nominees and Directors
Nominees of the Board of Directors for election at the 2007 annual meeting
Mr. Krinsky is a partner at the law firm of OMelveny and Myers LLP in Newport Beach,
California. Before joining the firm as a partner in 1994, he was a partner at the law firm of
Pettis, Tester, Kruse & Krinsky. Mr. Krinsky is a corporate attorney who specializes in mergers and
acquisitions and securities law. Mr. Krinsky was first elected to the Board of Directors in August
1999.
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Kenneth T. Stevens
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Age 55 |
Mr. Stevens has served as our President, Chief Operating Officer, Secretary and Treasurer
since January 2007. Prior to joining the Company, Mr. Stevens served in various capacities at
Limited Brands, Inc., including Executive Vice President and Chief Financial Officer from June 2006
to September 2006, Chief Executive Officer of Express division, from March 2004 until June 2006,
President of Bath & Body Works division from January 2003 until March 2004 and Chief Operating
Officer of Bath & Body Works division from February 2002 until January 2003. Prior to his service
at Limited Brands, Inc., Mr. Stevens was President of inChord Communications, Columbus, Ohio, an
integrated marketing firm serving pharmaceutical and healthcare clients from November 2001 until
November 2002. Mr. Stevens also served as Chairman and Chief Executive Officer of Banc Ones Retail
Group and previously held executive positions of increasing responsibility at PepsiCo, Inc. and
General Mills, Inc. He was also a partner at McKinsey & Company, Inc., serving as co-leader of the
consulting firms West Coast consumer practice. Mr. Stevens also serves on the Board of Directors
of Spartan Stores, Inc., a publicly held company. Mr. Stevens was first elected to the Board of
Directors in February 2007.
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Kenneth J. Strottman
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Age 58 |
Mr. Strottman is the founder, President and Chief Executive Officer of Strottman
International, Inc., a marketing agency specializing in developing promotional programs targeting
children and families. Before founding his firm in 1983, Mr. Strottman served as Vice President,
Marketing, at Mattel, Inc. Mr. Strottman was first elected to the Board of Directors in August
1999.
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Directors whose terms continue until the 2008 annual meeting
Mr. Mallott is an independent financial consultant and part-time retail stock analyst employed
by Coker & Palmer. Prior to his current position, Mr. Mallott spent 16 years in retail financial
management. He retired as Vice President and Chief Financial Officer of Intimate Brands, Inc. in
February 2000, a position he held since 1995. Mr. Mallott also serves on the Board of Directors of
Big Lots, Inc., a publicly held company. Mr. Mallott was first elected to the Board of Directors in
February 2000.
Mr. Rayden has served as Chief Executive Officer since March 1996. He was elected Chairman of
the Board of the Company in August 1999. Mr. Rayden also served as the Companys President from
March 1996 until January 2007. Before joining the Company, he served as President, Chief Executive
Officer and Chairman of the Board of Pacific Sunwear of California, Inc. from 1990 to 1996,
President and Chief Executive Officer of The Stride Rite Corporation from 1987 to 1989, and
President and Chief Executive Officer of Eddie Bauer Inc. from 1984 to 1987. Mr. Rayden also serves
on the Board of Directors of Strottman International, Inc., a privately held company. Mr. Rayden
was first elected to the Board of Directors in August 1999.
Directors whose terms continue until the 2009 annual meeting
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Elizabeth M. Eveillard
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Age 60 |
Ms. Eveillard is an independent consultant. Ms. Eveillard served as Senior Managing Director,
Retailing and Apparel Group, Bear, Stearns & Co., Inc., from 2000 to 2002 and as a consultant to
May 2003. Prior to that time, Ms. Eveillard served as the Managing Director, Head of Retailing
Industry, PaineWebber Incorporated from 1988 to 2000. From 1972 to 1988, Ms. Eveillard held various
executive positions including Managing Director in the Merchandising Group with Lehman Brothers.
Ms. Eveillard also serves on the Board of Directors of Retail Ventures, Inc. and Birks & Mayors
Inc., both publicly held companies. Ms. Eveillard was first elected to the Board of Directors in
February 2003.
Ms. Kramer is Chief Executive of Resource Interactive, a professional services firm
specializing in interactive marketing solutions for national brands. Resource Interactive was
founded by Ms. Kramer in 1981. Ms. Kramer was first elected to the Board of Directors in August
1999.
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Fredric M. Roberts
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Age 64 |
Mr. Roberts is President of F.M. Roberts & Company, Inc., an investment banking firm that Mr.
Roberts established in 1980. Mr. Roberts served as 1993 Chairman of the Board of Governors of the
National Association of Securities Dealers (NASD). From 1994 to 1996, he was a member of the
Nasdaq Stock Market Board of Directors and its Executive Committee. Mr. Roberts also serves as
Chairman of the Board of Directors of Cost Plus, Inc., a publicly held company. Mr. Roberts was
first elected to the Board of Directors in February 2003.
Information Concerning the Board of Directors and Corporate Governance
Our Board of Directors held five meetings in fiscal year 2006. During fiscal year 2006, all of
the directors attended 75 percent or more of the total number of meetings of the Board (held during
the period for which such person was a director) and committees of the Board on which they served
(held during the period for which such person served).
It is the Companys expectation that all members of the Board of Directors attend the annual
meeting of stockholders. All members of the Companys Board of Directors were present at the
Companys 2006 annual meeting of stockholders.
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Upon consideration of the criteria and requirements regarding director independence set forth
in the rules of the New York Stock Exchange (NYSE), the Board of Directors has determined that a
majority of its members are independent. Specifically, the Board has determined that Ms. Eveillard,
Ms. Kramer, and Messrs. Krinsky, Mallott, Roberts, and Strottman meet the standards of independence
established by NYSE Rule 303A.02. For a director to be considered independent, the Board must
determine that a director does not have any direct or indirect material relationship with the
Company. The Board has established guidelines to assist it in determining director independence,
which conform to, or are more exacting than, the independence requirements in the NYSE listing
rules. The independence guidelines are set forth on pages 2 5 of the Companys Corporate
Governance Principles, which can be obtained on the Companys website as described below.
At
the May 19, 2005 meeting, the Board of Directors discussed the
hiring of Charles Strottman,
son of Ken Strottman, as Director of Marketing of the Company. The Board determined that based on
Charles Strottmans compensation and the fact that he was not being hired as an executive officer,
Ken Strottmans independence as a director was not materially or adversely affected by the hiring.
The Board reviewed Charles Strottmans employment terms at its meeting on November 16, 2006, and
reaffirmed its decision that Ken Strottmans independence was not materially or adversely affected
by his sons continued employment.
During fiscal 2006, the presiding director at the executive sessions of the non-management
directors rotated among the Chairs of the Audit, Compensation, and Nominating and Governance
Committees, in that order. On February 20, 2007, the Board of Directors established the role of a
lead director and named Ms. Eveillard as the lead director. The lead director will preside at all
future executive sessions of the non-management directors. The Companys Board of Directors
welcomes communications from stockholders. Stockholders and other interested parties may send
communications to the Board of Directors, any director, or the non-management directors, c/o Tween
Brands, Inc., 8323 Walton Parkway, New Albany, Ohio 43054.
The Board of Directors has adopted Corporate Governance Principles, an Amended and Restated
Audit Committee Charter, an Amended and Restated Compensation Committee Charter, and a Nominating
and Governance Committee Charter. The Board of Directors has also adopted a Code of Business
Conduct and Ethics, which is applicable to all of the Companys directors, officers, and
associates, and a Code of Ethics for Senior Financial Officers. All of the above are available in
the corporate governance section of our website, www.tweenbrands.com.
Committees of the Board of Directors
The Board of Directors has standing Audit, Compensation, and Nominating and Governance
Committees. Each of the committees consists solely of directors who meet the standards of
independence established by NYSE Rule 303A.02, including the more stringent independence standard
required for audit committees.
Audit Committee
The Audit Committee of the Board of Directors selects the firm to be employed as our
independent registered public accounting firm, reviews the scope of its audit and fees, including
services provided for the review of the quarterly results and related filings, as well as reviews
and approves any non-audit fees. In addition, the Audit Committee consults with the independent
registered public accounting firm about the plan of audit and the resulting audit report. The Audit
Committee also confers with the Companys independent registered public accounting firm about the
adequacy of internal accounting controls, as appropriate, outside of the presence of management.
The Audit Committee also oversees and advises management with respect to the documentation, testing
and evaluation of the Companys system of internal control over financial reporting.
The members of the Companys Audit Committee are Philip E. Mallott, Chairman, Elizabeth M.
Eveillard, and David A. Krinsky. The Board of Directors has determined that Mr. Mallott, Chairman,
meets the requirements of a financial expert as set forth in Section 401(h) of Regulation S-K
promulgated by the SEC. The Audit Committee held 12 meetings in fiscal year 2006.
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Compensation Committee
The Compensation Committee of the Board of Directors reviews executive compensation and
administers the Companys stock option and incentive compensation performance plans. The
Compensation Committee reviews and approves on an annual basis the corporate goals and objectives
with respect to compensation for our Chief Executive Officer. In addition, the Compensation
Committee evaluates, at least once a year, our Chief Executive Officers performance in light of
these established goals and objectives and, based upon these evaluations, sets the Chief Executive
Officers compensation. Our Chief Executive Officer is not permitted to be present during voting or
deliberations on his compensation. On an annual basis, the Compensation Committee also reviews and
approves the evaluation and compensation structure for the Companys other executive officers,
including approval of salary, bonus, incentive and equity compensation. Our Chief Executive
Officer, President and Chief Operating Officer, and Executive Vice President and Chief Human
Resources Officer are present and provide input at the meeting and deliberations on the
compensation of the Companys other executive officers but are not permitted to be present at the
vote. The Compensation Committee also recommends to the Companys full Board of Directors the
compensation for non-employee Board members. From time to time, the Compensation Committee engages
an independent consulting firm to advise it with respect to executive compensation and board of
director compensation. In fiscal 2006, the committee directly engaged Mercer Human Resources
Consulting (Mercer) for this purpose. Mercer provided averages, percentiles and normative data
from salary surveys and provided specific data from proxy statements of a peer group of companies.
This report included information on relative company performance, as well as relative compensation
positioning of our named executive officers. For more information on the Compensation Committee,
please refer to Executive Compensation Compensation Discussion and Analysis The Compensation
Committee beginning on page 10.
The Compensation Committee members are Fredric M. Roberts, Chairman, Nancy J. Kramer, and
Elizabeth M. Eveillard. The Compensation Committee held four meetings in fiscal year 2006.
Nominating and Governance Committee
The Nominating and Governance Committee makes recommendations to the Board of Directors
regarding the size and composition of the Board, establishes procedures for the nomination process,
recommends candidates for election to the Board of Directors, and leads the Board in its annual
evaluation of the Boards performance. When considering potential candidates, the Nominating and
Governance Committee looks for candidates who, as a group, meet the Companys strategic needs;
possess high personal values and integrity; have an understanding of the regulatory and policy
environment in which the Company does its business; and have substantial experience that is of
particular relevance to the Company. The Company generally does not pay any third parties to
identify or evaluate, or assist in identifying or evaluating, potential nominees.
The Nominating and Governance Committee also has the responsibility to develop and recommend
to the Board of Directors a set of corporate governance principles applicable to the Company. The
Companys Corporate Governance Principles are posted on the Companys website at
www.tweenbrands.com, as described previously.
The Nominating and Governance Committee will also consider the recommendations of stockholders
regarding potential director candidates. In order for stockholder recommendations regarding
possible director candidates for director to be considered by the Nominating and Governance
Committee:
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such recommendations must be provided to the Nominating and Corporate Governance
Committee c/o Tween Brands, Inc., 8323 Walton Parkway, New Albany, Ohio 43054, in
writing at least 120 days prior to the date of the next scheduled annual meeting; |
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the nominating stockholder must meet the eligibility requirements to submit a valid
stockholder proposal under Rule 14a-8 of the Securities Exchange Act of 1934, as
amended; and |
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the stockholder must describe the qualifications, attributes, skills, or other
qualities of the recommended director candidate. |
The Nominating and Governance Committee members are Nancy J. Kramer, Chairwoman, Fredric M.
Roberts, and Philip E. Mallott, who was appointed on February 20, 2007. Kenneth J. Strottman
served on the Nominating and
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Governance Committee during fiscal 2006 until November 16, 2006. The
Nominating and Governance Committee held two meetings in fiscal year 2006.
EXECUTIVE OFFICERS
In addition to Messrs. Rayden and Stevens, the following persons are our executive officers:
Mr. Bracale has served as President of Tween Brands Marketing Agency since November 2006.
Previously, Mr. Bracale served as our Executive Vice President Marketing, Web, Catalog,
Partnerships and International Licensing for Tween Brands, Inc. from February 2006 to November 2006
and as the Executive Vice President and Chief Operating Officer of Limited Too from November 2004
to February 2006. Mr. Bracale also served Limited Too as Executive Vice President Marketing,
Catalog and Web from August 2002 to October 2004, Senior Vice President General Manager
Catalog, Internet and Marketing from February 2000 to July 2002, and as Vice President and General
Manager Catalog from December 1998 to January 2000. Prior to joining the Company, Mr. Bracale was
Vice President and General Manager of Bass Pro Shops Catalog Division from 1995 to 1998.
Mr. Carbone has served as our Senior Vice President Finance since September 2006. Prior to
joining the Company, Mr. Carbone was Vice President Finance of Victorias Secret Stores, a
division of Limited Brands, Inc., from January 2006 to August 2006, Director Finance of Limited
Stores, a division of Limited Brands, Inc., from April 2004 to December 2005, Director Store
Financial Planning and Analysis of Limited Stores from August 2003 to April 2004, and Manager
Store Financial Planning and Analysis of Limited Stores from August 2001 to August 2003. He was
employed in other financial positions with Limited Stores from July 2000 to August 2001.
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Gregory J. Henchel
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Age 39 |
Mr. Henchel has served as our Senior Vice President and General Counsel since October 2005.
Prior to joining the Company, Mr. Henchel served Cardinal Health, Inc., a global medical device,
pharmaceutical and healthcare technology company, from May 1998 to October 2005 as Assistant
General Counsel (2001-2005) and Senior Litigation Counsel (1998-2001). Prior to his service at
Cardinal Health, Mr. Henchel was an associate with the law firm of Jones Day from September 1994 to
May 1998.
Ms. West has served as our Executive Vice President and Chief Human Resources Officer since
January 2007. Prior to joining the Company, Ms. West was employed by Limited Brands, Inc. from 1988
to 2006 in the following capacities: Executive Vice President of Human Resources (2003-2006),
Senior Vice President of Human Resources (2002-2003), Executive Vice President of Human Resources,
Victorias Secret Catalogue (1993-2002), Vice President of Human Resources, Victorias Secret
Catalogue (1991-1993), Director of Human Resources, Victorias Secret Catalogue (1990-1991), and
Manager of Human Resources, The Limited Stores (1988-1990). Prior to her service at Limited
Brands, Ms. West was employed in various capacities by Federated Department Stores from 1975 to
1988.
7
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
Below is a table with information providing the number of shares of Tween Brands, Inc.s
common stock beneficially owned by each of the directors of the Company, persons listed in the
Summary Compensation Table below, and all of the directors and executive officers of Tween Brands,
Inc. as a group.
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
Shares of Common |
|
|
|
|
Stock Beneficially |
|
Percent |
Name |
|
Owned(1)(2) |
|
of Class |
Sally A. Boyer |
|
|
164,121 |
(3) |
|
|
* |
|
Scott M. Bracale |
|
|
92,416 |
(4) |
|
|
* |
|
Paul C. Carbone |
|
|
0 |
|
|
|
|
|
Elizabeth M. Eveillard |
|
|
22,500 |
(5) |
|
|
* |
|
Gregory J. Henchel |
|
|
2,710 |
(6) |
|
|
* |
|
Nancy J. Kramer |
|
|
50,750 |
(7) |
|
|
* |
|
David A. Krinsky |
|
|
50,750 |
(8) |
|
|
* |
|
Philip E. Mallott |
|
|
47,145 |
(9) |
|
|
* |
|
William E. May, Jr. |
|
|
55,809 |
(10) |
|
|
* |
|
Michael W. Rayden |
|
|
570,083 |
(11) |
|
|
1.8 |
% |
Fredric M. Roberts |
|
|
19,500 |
(12) |
|
|
* |
|
Kenneth T. Stevens |
|
|
0 |
|
|
|
|
|
Kenneth J. Strottman |
|
|
63,250 |
(13) |
|
|
* |
|
Poe A. Timmons |
|
|
0 |
(14) |
|
|
|
|
|
All directors and executive officers as a group (12 persons) |
|
|
919,104 |
(15) |
|
|
2.8 |
% |
|
|
|
* |
|
Less than 1% |
|
(1) |
|
Unless otherwise indicated, each named person has voting and investment power over
the listed shares and such voting and investment power is exercised by the named person or
shared with a spouse. |
|
(2) |
|
Reflects ownership as of February 28, 2007, except as otherwise provided herein. |
|
(3) |
|
Includes options to purchase 140,477 shares exercisable within 60 days after
February 28, 2007. |
|
(4) |
|
Includes options to purchase 87,676 shares exercisable within 60 days after February
28, 2007. |
|
(5) |
|
Includes options to purchase 10,750 shares exercisable within 60 days after February
28, 2007. |
|
(6) |
|
Includes options to purchase 1,767 shares exercisable within 60 days after February
28, 2007. |
|
(7) |
|
Includes options to purchase 50,750 shares exercisable within 60 days after February
28, 2007. |
|
(8) |
|
Includes options to purchase 50,750 shares exercisable within 60 days after February
28, 2007. |
|
(9) |
|
Includes options to purchase 45,250 shares exercisable within 60 days after February
28, 2007. |
|
(10) |
|
Includes options to purchase 55,495 shares exercisable within 60 days after
February 28, 2007. Reflects direct ownership known to the Company as of January 22, 2007, the
effective date of Mr. Mays termination as an executive officer of the Company. |
|
(11) |
|
Includes options to purchase 316,398 shares exercisable within 60 days after
February 28, 2006. |
|
(12) |
|
Includes options to purchase 19,500 shares exercisable within 60 days after
February 28, 2006. |
8
|
|
|
(13) |
|
Includes options to purchase 50,750 shares exercisable within 60 days after
February 28, 2007, and excludes 2,500 shares owned by Mr. Strottmans family members, for
which Mr. Strottman disclaims beneficial ownership. |
|
(14) |
|
Reflects direct ownership known to the Company as of August 18, 2006, the effective
date of Ms. Timmons resignation. |
|
(15) |
|
Includes options to purchase 829,563 shares exercisable within 60 days after
February 28, 2007 held by all directors and executive officers as a group. |
SHARE OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table shows the names of owners of the Companys common stock who, on February
28, 2007 (unless otherwise noted), were known by Tween Brands, Inc. to be beneficial owners of more
than 5% of the shares of common stock of the Company.
|
|
|
|
|
|
|
|
|
|
|
Amount |
|
|
|
|
Beneficially |
|
Percent |
Name and Address of Beneficial Owner |
|
Owned(1) |
|
of Class(2) |
Cramer Rosenthal McGlynn, LLC
520 Madison Avenue
New York, New York 10022 |
|
|
2,125,416 |
(3) |
|
|
6.6 |
% |
|
|
|
|
|
|
|
|
|
Wellington Management Company, LLP
75 State Street
Boston, MA 02109 |
|
|
1,969,310 |
(4) |
|
|
6.1 |
% |
|
|
|
(1) |
|
Beneficial ownership is determined in accordance with the rules of the Securities
and Exchange Commission, which generally attribute beneficial ownership of securities to
persons who possess sole or shared voting power and or investment power with respect to those
securities. |
|
(2) |
|
Percent of Class is calculated by dividing the number of shares beneficially owned
by the total number of outstanding shares of the Company on February 28, 2006, plus the number
of shares such person has the right to acquire within 60 days of February 28, 2006. |
|
(3) |
|
Based on information filed on Schedule 13G with the Securities and Exchange
Commission on February 13, 2007, by Cramer Rosenthal McGlynn, LLC. |
|
(4) |
|
Based on information filed on Schedule 13G with the Securities and Exchange
Commission on February 14, 2007, by Wellington Management Company, LLP. The securities as to
which this Schedule 13G is filed by Wellington Management, in its capacity as investment
adviser, are owned of record by clients of Wellington Management. Those clients have the right
to receive, or the power to direct the receipt of, dividends from, or the proceeds from the
sale of, such securities. |
9
EXECUTIVE COMPENSATION
The following information provides discussion, analysis and data tables regarding the
compensation of our named executive officers (NEOs), who are those officers listed in our Summary
Compensation Table on page 23.
Compensation Discussion and Analysis
We have prepared this Compensation Discussion and Analysis (CD&A) to provide you with our
perspective on executive compensation so that you may understand our compensation policies and our
decisions regarding compensation for our NEOs. We recommend that you review the various executive
compensation tables below in conjunction with this CD&A. Unless otherwise noted, the policies,
plans and other information in this CD&A apply to all of our NEOs. Our CD&A covers the following
topics:
|
|
|
the role of the Compensation Committee in setting executive compensation; |
|
|
|
|
our compensation philosophy and its underlying principles including the objectives
of our executive compensation program and what it is designed to reward; |
|
|
|
|
our process for setting executive compensation; and |
|
|
|
|
the elements of our executive compensation program including a discussion of why
we choose to pay each element of compensation, how we determine the amount of such
element, and how each element fits into our overall compensation objectives and total
compensation for our NEOs. |
The Compensation Committee
The Compensation Committee (referred to herein as the Committee) was appointed by our Board
of Directors and is governed by a written charter that is available in the corporate governance
section of our website, www.tweenbrands.com. The Committee members are Fredric M. Roberts,
Chairman, Nancy J. Kramer, and Elizabeth M. Eveillard. Our Board of Directors has determined that
each of the Committee members is independent under the standards of independence established by
NYSE Rule 303A.02. In addition, each of the Committee members is a non-employee director as
defined by Rule 16b-3 under the Securities Exchange of 1934 and an outside director as defined by
the Internal Revenue Code.
Pursuant to its charter, the Committee has the authority and responsibility to:
|
|
|
discharge the Boards responsibilities relating to executive compensation, including
the review and approval of our executive compensation philosophy and policies and the
application of such policies to the compensation of our executive officers; |
|
|
|
|
review and approve on an annual basis the corporate goals and objectives with
respect to the Chief Executive Officer, evaluate the Chief Executive Officers
performance in light of such goals and objectives at least once a year and, based on
such evaluation, set the Chief Executive Officers annual compensation, including
salary, bonus, incentive and equity compensation; |
|
|
|
|
review and approve on an annual basis the evaluation process and compensation
structure for our other executive officers and to evaluate and approve the annual
compensation for such executive officers, including salary, bonus, incentive and equity
compensation; |
|
|
|
|
administer and review our compensation programs and plans, including, but not
limited to, our incentive compensation, equity, and qualified and non-qualified benefit
plans; |
|
|
|
|
establish and periodically review policies for the administration of our executive compensation program; |
|
|
|
|
approve employment arrangements with new executives; |
10
|
|
|
review recommendations to create, amend or terminate certain compensation and
benefit plans and to make a decision whether or not to approve of such recommendations;
and |
|
|
|
|
recommend to the Board the compensation arrangements with non-employee directors. |
The Committee has the sole authority, to the extent it deems necessary or appropriate, to retain
any compensation consultant to assist in the evaluation of executive compensation and has the sole
authority to approve any such firms fees. In fiscal 2006, the Committee engaged Mercer Human
Resources Consulting (Mercer) for this purpose. You can read more about Mercers role under
Compensation Benchmarking Process beginning on page 12. The Committee also has the authority to
obtain the advice and assistance from internal or external legal, accounting or other advisors, and
may request any officer or employee of our Company, our outside counsel or registered independent
public accounting firm to attend a meeting of the Committee or meet with any member, or consultants
to, the Committee.
The Committee meets as often as its members deem necessary to execute its duties and
responsibilities and held four meetings during fiscal 2006. Mr. Roberts works in conjunction with
our Chief Executive Officer and Executive Vice President and Chief Human Resources Officer to
establish the meeting agenda. The Committee typically meets with the Chief Executive Officer,
President and Chief Operating Officer, Executive Vice President and Chief Human Resources Officer
and outside advisors and, where appropriate, other executive officers of our Company. In addition,
the Committee regularly meets in executive session without management. Generally, the Committee
receives and reviews materials in advance of each meeting. These materials include information that
management believes will be helpful to the Committee as well as materials that the Committee has
specifically requested.
Compensation Philosophy
The philosophy of the Committee is to make compensation decisions based on an executive
compensation program that is designed to meet the following objectives:
|
|
|
to attract and retain qualified executives; |
|
|
|
|
to reward and reinforce performance and results; |
|
|
|
|
to provide incentives for future performance and results; and |
|
|
|
|
to align our NEOs financial interests with our stockholders financial interests. |
The Committee believes that an executive compensation program designed with these objectives in
mind has a direct impact on the success of the business by helping to ensure we have qualified
executive talent in the right positions at the right time. Our executive compensation program helps
ensure that our leadership group is focused on performing effectively to deliver results and build
long-term stockholder value.
Our philosophy is built on the following principles:
(1) Pay for performance:
We believe in paying for results. As a result, a significant amount of compensation for our
NEOs is at risk, including incentive compensation, equity compensation, and annual base salary
increases. Incentive compensation directly links our performance to pay by making a substantial
portion of an NEOs total compensation contingent upon the achievement of corporate performance
objectives. In addition, we also compensate our NEOs through the use of equity-based awards. We
believe that the grant of equity-based compensation is an effective means of linking NEO
compensation and stockholder gains. The performance targets used in our compensation of NEOs
typically require that we attain specific, pre-set financial goals for the NEOs to earn cash
incentive compensation and for the vesting of restricted stock awards (which also have service
based vesting requirements). While stock option grants vest based on service and do not
have financial performance goals, the value of these options will increase only if our stock price
increases, thereby aligning compensation with stockholder interests.
11
We also believe that total compensation and accountability should generally increase with
position and responsibility. Among our NEOs, individuals with a greater ability to impact the
achievement of the Companys performance targets bear a greater portion of the risk if goals are
not achieved and reap a greater reward if goals are achieved.
(2) Pay competitively:
We are committed to providing a total compensation program designed to attract the best senior
leaders to our business and retain the best and most consistent performers. To achieve this goal,
we periodically compare our pay practices and overall pay levels with other leading retail, and
where appropriate, non-retail companies, and adjust our compensation programs based on this review,
as needed.
In order to attract and retain top executive talent and to compete in Columbus, Ohio, which is
highly competitive due to the home office presence of several national retailers, we strive to
provide our NEOs with a total compensation package that is competitive with our Companys peer
group. You can find more information regarding our benchmarking process and our peer groups under
Compensation Benchmarking Process beginning on page 12.
(3) Pay equitably:
We believe that it is important to apply generally consistent guidelines for substantially all
associate compensation programs across our Company, considering the size of unit, area of
responsibility, complexity, development stage, competitive environment, and performance of our
Company, along with the performance of the individual executive.
In short, we strive to provide NEOs with similar qualifications, responsibilities, performance
and impact with similar compensation opportunities.
Compensation Tax Philosophy
Internal Revenue Code Section 162(m) bars a deduction to any publicly held corporation for
compensation paid to a covered employee in excess of $1 million per year unless objective
performance criteria are set by the Committee prior to or within 90 days after the beginning of a
performance period but in no event after 25% of the performance period has elapsed (or such earlier
or later date as is permitted by Section 162(m)). Generally, we intend that compensation paid to
NEOs shall be deductible to the fullest extent permitted by law. We may make payments that are not
fully deductible if, in our judgment, such payments are necessary to achieve our compensation
objectives and to protect stockholder interests.
Only $131,973 of compensation for fiscal 2006 was non-deductible. Only Mr. Rayden had a base
salary in excess of $1 million. No other NEOs had a base salary and perquisites that exceeded $1
million. The cash incentive compensation, stock option grants and restricted stock grants to NEOs
were all performance based. The Committee believes that the tax deduction lost on the amount of
non-deductible compensation paid to Mr. Rayden was immaterial to the Company and that the small
amount of non-deductive compensation paid to Mr. Rayden was appropriate to further our compensation
objectives.
Compensation Benchmarking Process
From time to time, generally every other year, the Compensation Committee engages an
independent consulting firm to advise it with respect to executive compensation and board of
director compensation. For fiscal 2006, the Committee engaged Mercer for this purpose. Mercer
provided averages, percentiles and normative data from salary surveys and provided specific data
from proxy statements of a peer group of competitors and similar organizations. This report
included information on relative company performance, as well as relative compensation positioning
of the Companys NEOs.
12
Mercer included the following companies in our peer group in its report to the Committee for
fiscal 2006:
|
|
|
|
|
|
|
|
|
Buckle
|
|
Guess
|
|
Pacific Sunwear |
|
|
|
|
|
|
|
|
|
Childrens Place Retail Stores
|
|
Gymboree
|
|
Talbots |
|
|
|
|
|
|
|
American Eagle Outfitters
|
|
Claires Stores
|
|
Hot Topic
|
|
Wet Seal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We feel this group is largely representative of our industry, business focus and size.
In 2006, Mercer compared our performance on several different financial indicators against the
peer group. These indicators included:
|
|
|
comparable store sales % change; |
|
|
|
|
total revenue growth; |
|
|
|
|
operating income growth; |
|
|
|
|
EPS (diluted) growth; |
|
|
|
|
gross profit margin; |
|
|
|
|
return on average equity; and |
|
|
|
|
total shareholder return. |
The Committee used Mercers report in its process for reviewing and approving appropriate base
salary increases, incentive compensation and equity awards for the NEOs. The Committee reviewed our
NEOs total direct compensation (cash plus equity) as compared to the 75th percentile of
our peer group as part of this process. The Committee believes that the current compensation levels
and practices for our NEOs are largely consistent with our compensation philosophy and desired
position within the market.
Compensation Committee Process for Determining Executive Compensation
A substantial amount of the Committees annual cycle of work relates to the determination of
compensation for our executive officers, including our Chief Executive Officer. Generally, at the
beginning of the first quarter of our fiscal year, the Committee makes determinations of base
salary compensation, incentive compensation percentages for the year and targets for the Spring
season (February July), and equity grants for executive officers, including our Chief Executive
Officer. For a discussion of each individual element of compensation and how it is specifically
determined, you should refer to Compensation Program Elements beginning on page 14. As discussed
in Compensation Benchmarking Process above, for fiscal 2006, the Committee engaged Mercer to
assist the Committee in its executive compensation determinations. Generally at the beginning of
the third quarter of our fiscal year, the Committee meets to determine incentive compensation
targets for the Fall season (August January).
Although many compensation decisions are made in the first quarter of the fiscal year, our
compensation planning process is not a rigid yearly process with fixed beginning and end points.
Rather, our compensation philosophy and principles guide our compensation decisions throughout the
year. The Committee believes that evaluation of executive performance, business and succession
planning, and consideration of our business environment are year-round processes and the Committee
members monitor these as such.
Our Chief Executive Officer is not permitted to be present during deliberations or voting of
his compensation. During this process, the Committee reviews and approves any new corporate goals
and objectives with respect to
compensation for our Chief Executive Officer. In light of the established goals and objectives the
Committee evaluates the
13
performance of the Chief Executive Officer and, based upon these
evaluations, sets the Chief Executive Officers compensation. The Compensation Committee also
reviews and approves on an annual basis the evaluation and compensation structure for the Companys
other executive officers, including approval of base salary, bonus, incentive and equity
compensation. Our Chief Executive Officer, President and Chief Operating Officer, and Executive
Vice President and Chief Human Resources Officer are present and provide input at the meeting and
deliberations on the compensation of the Companys other executive officers (other than themselves)
but are not permitted to be present at the vote.
Compensation Program Elements
In fiscal 2006, our NEOs received the following elements of compensation:
|
|
|
salary; |
|
|
|
|
non-equity incentive compensation; |
|
|
|
|
equity compensation; |
|
|
|
|
deferred compensation; |
|
|
|
|
retirement benefits; |
|
|
|
|
perquisites; and |
|
|
|
|
health and welfare benefits |
The Committee carefully considered and chose each compensation program element as a critical
component in a comprehensive total compensation package. Each element is intended to reward and
motivate executives in different ways consistent with our overall compensation principles and
philosophy. Each of the elements has a critical relationship with one another with each focusing
and rewarding different areas of performance or accountability. These elements are necessary for
us to achieve our compensation program objectives.
(1) Salary:
Salary is also referred to as base salary or base compensation. Salary is the most fundamental
of all our compensation program elements. Providing a competitive salary to our NEOs is essential
in achieving one of our compensation program objectives: to attract and retain qualified
executives.
The Committee annually reviews and approves the compensation package of each NEO, including
base salary. The Committee considers an individuals qualifications and experience in setting our
executives initial base salary, including those executive officers who are hired from the outside
and those who are promoted from within. In determining base salary amounts and increases, the
Committee considers the size and responsibility of the individuals position, the business units
overall performance, the individuals overall performance and future potential, and the base
salaries and merit increases paid by competitors to employees in comparable positions. Individual
performance is measured against various factors including but not limited to the following:
|
|
|
seasonal and annual business goals; |
|
|
|
|
business growth and brand execution goals; and |
|
|
|
|
the recruitment, development and retention of future leadership talent. |
The Committee considers these factors subjectively in the aggregate. Because the Committee believes
that each of these factors is significant and the relevance of each factor may vary depending on
the duties and responsibilities of each
executive officer, the Committee does not assign a formula weight to any single factor in
determining a base salary amount or increase.
14
In February 2006, based on peer company total direct compensation benchmark information
provided by Mercer and the Committees evaluation of his total compensation package, the Committee
determined to maintain the base salary of Mr. Rayden, our Chairman and Chief Executive Officer, at
the current level for the next three fiscal years (2006 2008).
Mr. Rayden and Mr. Sykes, our former Senior Vice President of Human Resources, presented pay
recommendations to the Committee for the other NEOs. These recommendations were researched and
developed by the Companys Human Resources Department under the direction of Mr. Sykes and reviewed
prior to the meeting by Mr. Rayden and Mercer. Several factors were taken into consideration when
making these recommendations including:
|
|
|
individual and Company performance and business needs; |
|
|
|
|
Mercers report with peer company comparisons; |
|
|
|
|
internal pay equity where applicable; and |
|
|
|
|
incumbent pay history. |
In addition, Mr. Sykes provided the Committee with a performance rating summary report on each
of the NEOs with examples and justification for each rating. The Committee took this information
into consideration before approving base salary increases for the NEOs. These changes in base
salary (merit increases) were effective March 5, 2006 and are reflected in the Summary Compensation
Table where applicable.
(2) Bonus:
During fiscal 2006, discretionary bonuses were not awarded to any of our NEOs, except for a
signing bonus of $25,000 to Mr. Carbone upon the commencement of his employment with us and a
guarantee that Mr. Carbones Fall 2006 Incentive Compensation would not be less than $100,000.
(3) Non-Equity Incentive Compensation Plan:
Incentive Compensation (IC) under our Incentive Compensation Performance Plan (IC Plan) is
designed to provide a competitive cash compensation program for recruiting and retaining executive
talent, and a short-term incentive/reward program that aligns pay with performance and motivates
our executives to achieve results within a given fiscal year. Our stockholders approved the terms
of our IC Plan, which is designed to satisfy the provisions of Section 162(m) of the Internal
Revenue Code, on May 13, 2004, at the 2004 Annual Meeting of Stockholders. In order for our IC Plan
to be considered a performance-based incentive plan, the relevant performance outcome must be
substantially uncertain at the time the performance target is established and the target must be
communicated to the executive. Our IC Plan meets these criteria.
Because of the unique nature of specialty retail businesses like Tween Brands, our business
changes rapidly and we need to be positioned to be flexible and be able to reevaluate ourselves
every six months as needed. Our IC Plan has been designed with this need in mind. Rather than
setting annual targets with annual payouts, we set semi-annual targets with semi-annual payouts.
Our IC Plan provides for incentive payments to our NEOs based on the level of achievement of
pre-established financial goals for each of two operating seasons the Spring season, which is our
first and second fiscal quarters and generally runs from February through July, and the Fall
season, which is our third and fourth fiscal quarters and generally runs from August through
January. The incentive compensation plan for each of the two seasons are independent, so that
participants could earn incentive compensation for one of the seasons and not the other. We believe
that this provides an incentive for our NEOs to perform in each of our two basic operating seasons.
If we used an annual measurement period
instead, it is possible that our NEOs would not be appropriately motivated in the Fall season if
the Spring season results were so poor that the annual target appeared unachievable.
15
Since we became an independent public company in 1999, we have divided our incentive
compensation plan into two separate seasons. We have consistently weighted the two seasons of the
incentive compensation plan at Spring: 40% and Fall: 60%, to recognize that our Fall season is
larger in terms of revenues and profit opportunity. Although the Fall season generally represents
more than 60% of our profit opportunity, we believe that the 40%-60% weighting is appropriate to
provide incentive for performance in both seasons.
Target cash incentive compensation opportunities are established annually for each eligible
participant and stated as a specific percentage of base salary. The table below shows the incentive
compensation opportunities assigned by the Compensation Committee to our NEOs for fiscal 2006. If
the threshold target is achieved, the amount of incentive compensation paid to participating
executives can range from 20% (threshold) of target to 200% (maximum) of target, based upon the
extent to which performance goals are achieved or exceeded. The maximum amount payable to any
participant may not exceed $3,000,000 in any year under the terms of the IC Plan. If the threshold
target is not met, no payouts are made.
Incentive Compensation Opportunities for Fiscal Year 2006 by NEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a Percentage of Base Salary |
|
|
Threshold |
|
|
|
|
|
Maximum |
|
|
(20% of |
|
|
|
|
|
(200% of |
Named Executive Officers |
|
Target) |
|
Target |
|
Target) |
Michael W. Rayden |
|
|
24 |
% |
|
|
120 |
% |
|
|
240 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
William E. May, Jr.(1) |
|
|
15 |
% |
|
|
75 |
% |
|
|
150 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott M. Bracale(2) |
|
|
14 |
% |
|
|
70 |
% |
|
|
140 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory J. Henchel |
|
|
8 |
% |
|
|
40 |
% |
|
|
80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul C. Carbone |
|
|
8 |
% |
|
|
40 |
% |
|
|
80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sally A. Boyer |
|
|
14 |
% |
|
|
70 |
% |
|
|
140 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Poe A. Timmons(3) |
|
|
9 |
% |
|
|
45 |
% |
|
|
90 |
% |
(1) Mr. Mays last day of employment with Tween Brands, Inc. was February 28, 2007. |
|
(2) Percentages for Fall 2006 Season only. For the Spring 2006 Season, Mr. Bracales
threshold, target and maximum IC opportunities as a percentage of base salary were 13%, 65%
and 130%, respectively. |
|
(3) Ms. Timmons last day of employment with Tween Brands, Inc. was August 18, 2006. |
The Committee establishes the goals under the IC Plan for each of the Spring and Fall seasons.
These financial performance goals are generally determined near the beginning of the measurement
period, typically within 20 to 30 days after the start of measurement period, and are based on an
analysis of historical performance and growth expectations for our business, and progress toward
achieving our long-range strategic plan for the business.
The financial goals for the Spring 2006 and Fall 2006 seasons were based on our operating
income for each such season. In setting the threshold, target and maximum target amounts, the
Committee may consider last years actual performance, market trends, business projections and
extraordinary events or significant accounting or related changes. The Committee believed that the
2006 seasonal IC goals represented an appropriate and substantial degree of difficulty for
achieving a payout.
16
The table below shows the actual IC Plan payout factors achieved for each of the past five
fiscal years consisting of ten seasons:
Incentive Compensation Payout Factors Achieved for Fiscal Years 2002-2006
|
|
|
|
|
|
|
|
|
Fiscal Year |
|
Spring |
|
Fall |
2006 |
|
|
200 |
% |
|
|
55 |
% |
|
|
|
|
|
|
|
|
|
2005 |
|
|
176 |
% |
|
|
200 |
% |
|
|
|
|
|
|
|
|
|
2004 |
|
|
75 |
% |
|
|
200 |
% |
|
|
|
|
|
|
|
|
|
2003 |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
2002 |
|
|
200 |
% |
|
|
40 |
% |
The seasonal achieved payout factor is (i) multiplied by the NEOs target IC opportunity
expressed as a percentage of base salary, (ii) multiplied by the seasonal factor (40% for Spring
and 60% for Fall ), and (iii) multiplied by the NEOs base salary to arrive at the NEOs IC for the
season.
As shown in the table above, our IC payout factors over the past ten seasons have ranged from
zero to a maximum 200%, depending on our financial performance against the pre-established
financial goals. Generally, for those seasons where we did not perform as expected, the IC was
either not awarded or was less than the target payout factor. For example, our NEOs earned no IC
for either season in 2003 and earned IC at a payout factor of only 40% in Fall 2002. When we
performed above expected levels, our NEOs earned at a rate higher than the target payout factor.
For example, our NEOS earned IC at a payout factor of 200% for Fall 2004, Fall 2005 and Spring
2006.
The calculation of the amount of IC earned by an NEO under our IC Plan is dependent on the
target IC opportunity as a percentage of base salary assigned to the NEO for that year, the level
of our performance against the financial goals for each season (the payout factor, which ranges
from 20% at threshold to 200% at maximum), and the seasonal weight. No IC payments are made if we
do not meet our threshold performance target. When the performance results fall somewhere between
the threshold and target amounts or between the target and maximum amounts, the IC payout is
prorated accordingly.
As an example, if an executives base salary is $400,000 and her assigned target IC
opportunity percentage is 50%, she will earn $40,000 of IC if both seasonal targets are met at the
threshold level ($400,000 x 50% x 20%). She will earn $200,000 of IC if both seasonal targets are
achieved at the target level ($400,000 x 50% x 100%). She will earn $400,000 of IC if both seasonal
target are achieved at or above the maximum level ($400,000 x 50% x 200%).
To demonstrate how these IC amounts may vary by season, lets look at another example with our
executive who has a base salary of $400,000 and an assigned IC target percentage of 50%. Well
assume that achieved performance is at the target level for the Spring season and mid-way between
threshold and target level for the Fall season. In this example, because the Spring season has a
40% weight, a Spring target level payout is $80,000 ($400,000 x 50% x 100% x 40%) for our
executive. The Fall season has a 60% weight and because our performance is mid-way between the
threshold and target levels (i.e., at the 60% level), the NEO in this example will have an IC
payout of $72,000 ($400,000 x 50% x 60% x 60%).
(4) Equity Compensation:
The Committee believes that continued emphasis on equity-based compensation opportunities
encourages a high level of long-term performance that enhances stockholder value, thereby further
linking leadership and stockholder objectives. Equity compensation serves to attract and retain the
best available individuals to serve as our NEOs. Equity compensation is intended to motivate our
NEOs to contribute to our future growth and profitability and to reward their performance in a
manner that:
|
|
|
provides them with a means to increase their holdings of the common stock of our Company; and |
17
|
|
|
aligns their interests with the interests of the stockholders of the Company. |
Equity compensation is granted to our NEOs under our 1999 or 2005 Stock Option and Performance
Incentive Plan (collectively, the Plans). The Committee determines the award opportunity level
for each NEO based on the individuals responsibility level and potential within our Company,
competitive practices, the number of shares available for grant, business needs, individual and
Company performance, and the market price of our common stock.
In fiscal 2006, we awarded restricted stock awards and stock options to NEOs in the amounts
set forth in the Summary Compensation Table and Grants of Plan-Based Awards Table found below
beginning on page 23, based on the following division:
|
|
|
50% of the overall grant value was awarded as stock options. The options
were valued using the Black-Scholes valuation method. The exercise price of the options
was equal to the closing price on the grant date. For a discussion of the assumptions
underlying the Black Scholes valuation method, please refer to Note 1 to our Financial
Statements found in Item 8 of our Annual Report on Form 10-K for the fiscal year ended
February 3, 2007. |
|
|
|
|
50% of the overall grant value was awarded as restricted stock. For the
NEOs, 60% of this restricted stock grant was awarded with performance-vesting
requirements tied to future earnings per share, and 40% of this restricted stock grant
was awarded with performance-vesting requirements tied to future net income, as
discussed below. Both grants have a service (time) vesting requirement in addition to
the performance-vesting criteria. |
For example, if the annual grant value for the executive is $400,000, then 50% or $200,000 is
awarded as stock options and the remaining $200,000 is awarded as restricted stock. In our example,
assuming the closing stock price is $40 on the grant date with a Black-Scholes value of $18, the
grant would be as follows:
Stock Options
|
|
|
$200,000 divided by $18 = 11,111 stock options granted. |
Restricted Stock
|
|
|
$200,000 times 60% = $120,000. $120,000 divided by $40 = 3,000 restricted shares
with performance-vesting criteria tied to achievement of earnings per share targets. |
|
|
|
|
$200,000 times 40% = $80,000. $80,000 divided by $40 = 2,000 restricted shares with
performance-vesting criteria tied to achievement of net income targets. |
Total Grant
|
|
|
Total grant is 11,111 stock options and 5,000 restricted shares. |
At the February 2006 Compensation Committee meeting, the Committee determined that, depending
on performance and in consideration of his total compensation package, Mr. Rayden would not be
granted more than 60,000 shares annually for the next three fiscal years: 2006 2008, with such
shares to be divided equally by value between stock options and restricted shares using the above
formula. The maximum number of shares is lower than the amount Mr. Rayden has received during any
fiscal year since we became an independent public company in August 1999. The intent of this
limitation of equity grants for the three year period was partly in recognition of the fact that
Mr. Raydens total cash compensation, in the form of base salary and incentive compensation, was
higher than the peer group chief executive officers.
18
(a) 2006 Restricted Stock Performance-Vesting Requirement 60% Grant:
Sixty percent of the typical annual restricted stock award grant is awarded with both a
service and performance-vesting criterion. The grant has a 2-year cliff vesting feature assuming
continued service as an employee of our Company. The performance-vesting feature of the grant is
based on the achievement of a reasonable average earnings per share growth rate target that is
measured over the 2-year period. If our earnings per share grow at the threshold target rate, then
25% of the shares vest upon the 2-year cliff vesting date. If our earnings per share grow at or
above the maximum target rate, then 100% of the shares vest upon the 2-year cliff vesting date. If
our earnings per share grow at a rate between the threshold and maximum rate, then a pro rata
amount between 25% and 100% of the shares vest upon the 2-year cliff vesting date. No shares vest
if earnings per share grow at less than the threshold rate.
(b) 2006 Restricted Stock Performance-Vesting Requirement 40% Grant:
Forty percent of the typical annual restricted stock award grant is awarded with performance
and service-based vesting criterion. The shares will vest 25% per year over a 4-year period
beginning on the first anniversary of the date of grant, assuming continued service as an employee
of our Company, and if certain net income levels are achieved by the Company for Spring 2006, Fall
2006 or Spring 2007. Our net income goals are any of the following: (i) Spring season 2006 net
income must have an increase over Spring season 2005, (ii) Fall season 2006 net income must have an
increase over Fall season 2005, or (iii) Spring season 2007 net income must have an increase over
Spring season 2006. These performance criteria were achieved based on Spring 2006 net income
results.
If the net income goals had not been achieved for Spring season 2006 or Fall season 2006, but
were achieved in Spring 2007, then no shares would have vested on the first anniversary of the date
of grant. Instead, 50% of the shares would have vested on the second anniversary of the grant date,
and 25% would have vested on each of the third and fourth anniversaries of the date of grant,
assuming continued employment and continued eligibility under the Plans.
If none of the seasonal net income goals had been attained, none of the shares would have
vested and all of the shares would be forfeited. For more information on the restricted stock
grants refer to the Grants of Plan-Based Awards table below.
(c) The timing of stock grants; selection of stock option exercise prices:
We have had a practice of generally only issuing stock grants to our associates, including our
NEOs, on (i) an executives hire date, or (ii) during the annual review process at the February
Compensation Committee meeting. There were no exceptions to this practice in fiscal year 2006. The
exercise price for stock options is the closing price on the grant date. During the annual stock
award process, the grant date and grant price used for the named executive officers is the same
grant date and grant price used for all other stock award recipients. On February 20, 2007, the
Committee adopted a new policy regarding the timing of stock option grants under which annual
grants will be made effective and priced with the closing price on the second day following
announcement of our fourth quarter and full year earnings. The date of announcement will count as
the first of the two days if such announcement is made prior to the opening of regular trading
hours of the New York Stock Exchange. The Committee will meet and determine the amounts of such
awards on or prior to such date. With respect to any award grants to new associates, such grants
will continue to be made effective on the employees first day of employment.
(5) Nonqualified Deferred Compensation Earnings:
We do not offer a defined benefit pension plan to any of our associates, including our NEOs.
Therefore we have no change in pension value to report. We do offer a nonqualified deferred
compensation (NQDC) plan to our more highly compensated salaried associates (base salary above
$135,000 in 2006), including our NEOs. Within the NQDC plan the NEOs can choose between fixed
interest or variable interest investment options. Both NEO deferrals and Company money in the form
of matching contributions and annual contributions go into the NQDC plan.
The variable interest options did not provide the NEOs with preferential earnings above that
which the fund achieved. The fixed interest option did provide the NEOs with a guaranteed interest
rate of 6.75% in 2006. This fixed
interest rate was available to all plan participants, not just the NEOs. The fixed interest fund
investments realized a 5.57% annual return.
19
Our Administrative Committee determines the fixed interest rate amounts for the NQDC plan each
year. The Administrative Committee has been given authority from the Board of Directors to
administer the employee benefit plans for the Company. The Administrative Committee is a small
group of Tween Brands executives who meet periodically to review and administer our benefit plans.
The Administrative Committee approved a fixed rate of 5.75% for 2007. This fixed interest
rate does not play a significant role in the Compensation Committees determination of the amounts
of other compensation program elements.
(6) All Other Compensation:
The all other compensation category in our Summary Compensation Table beginning on page 23
primarily consists of these items:
|
|
|
annual employer contributions into the retirement/401(k) plan; |
|
|
|
|
employer contributions into the nonqualified deferred compensation plan; |
|
|
|
|
employer-paid premiums for life insurance; |
|
|
|
|
tax gross-ups; |
|
|
|
|
perquisites; and |
|
|
|
|
amounts paid or accrued in connection with a termination of employment. |
(a) Retirement:
We sponsor a qualified retirement and 401(k) plan for eligible associates. This plan allows
NEOs to defer a portion of their total cash compensation (up to IRS limits) into this retirement
account on a pre-tax basis. Neither our NEOs nor any other NQDC plan participants receive a Company
match on any money they defer into the 401(k).
We make an annual contribution into the retirement plan for eligible associates, including the
NEOs, as follows: (i) for associates with less than five years of service: a 3% contribution on all
eligible compensation up to the Social Security wage base ($94,200 in 2006), plus a 6% contribution
on all eligible compensation above the Social Security wage base up to the compensation limit
($220,000 in 2006); or (ii) for associates with five or more years of service: a 4% contribution on
all eligible compensation up to the Social Security wage base ($94,200 in 2006), plus a 7%
contribution on all eligible compensation above the Social Security wage base up to the
compensation limit ($220,000 in 2006).
These annual employer contribution amounts to NEOs are included in the Summary Compensation
Tables All Other Compensation column on page 23.
(b) Deferred Compensation:
We sponsor a nonqualified supplemental retirement and deferred compensation plan for eligible
associates. This plan is designed to be a supplemental plan and as of the end of fiscal year 2006
the plan had 51 active participants. This compensation element is designed to reward and promote
continued employment with Tween Brands. The base salary threshold for participation in the plan was
$135,000 in 2006 and has increased to $140,000 in 2007. Participants can defer up to 50% of their
cash compensation (base compensation and incentive compensation) into this plan. Please also refer
to our discussion above under Compensation Program Elements Nonqualified Deferred Compensation
Earnings.
Participants receive a 2-for-1 Company match on the first 3% they defer into the plan. In
addition, we annually make a contribution to eligible participants as follows: (i) for associates
with less than five years of service, a 6% contribution on all eligible cash compensation above the
compensation limit ($220,000 in 2006); or (ii) for associates with five or more years of service,
an 8% contribution on all eligible cash compensation above the compensation limit ($220,000 in
2006).
20
Participants are responsible for paying Social Security and Medicare taxes on employer
matching contributions to the NQDC plan. Unlike federal and state taxes, these taxes are not
deferred on matching contributions. As a result, we gross up the employer matching contributions
for the participants to offset the impact of these taxes.
These employer matching and annual employer contribution amounts are included in the Summary
Compensation Tables All Other Compensation column on page 23.
A plan feature that promotes retention is the vesting requirement. The NEOs own deferrals
are, of course, always 100% vested; however, our Company matching contributions have a 6-year
graduated vesting schedule and our annual Company contributions have a 7-year graduated vesting
schedule.
The Company uses Corporate Owned Life Insurance (COLI) policies to finance the NQDC plan
obligation and is the beneficiary for the death benefit. The Company provides participants with an
in-service death benefit while actively employed with the Company equal to the sum of the average
annual base salary and the average annual bonus, if applicable, of the participant over the last
four years. These policies are often maintained by us even after participants terminate or retire
from the organization.
For more information and individual contribution amounts please refer to the Nonqualified
Deferred Compensation Table on page 29.
(c) Employer-Paid Premiums for Life Insurance:
We provide each of our NEOs with basic group term life insurance with a death benefit equal to
four times their annual base salary up to a maximum of $1 million of insurance. This element of
compensation, though relatively small, provides an additional item to the overall compensation
package which strengthens our ability to recruit and retain talented executives.
We also provide Mr. Rayden with an individual term life insurance policy that has a death
benefit of $5,000,000 to be paid to his beneficiary in the event of his death.
For specific premium amounts paid, please refer to the Summary Compensation Tables All Other
Compensation column and footnotes on page 23.
(d) Gross-Ups:
A gross-up occurs when we make a payment to an NEO to offset taxes associated with a specific
benefit. We provide gross-ups for NEOs for:
|
|
|
taxable relocation expenses; |
|
|
|
|
Social Security and Medicare taxes on Company contributions and earnings to the
non-qualified deferred compensation plan; and |
|
|
|
|
imputed income from the individual life insurance policy for Mr. Rayden. |
In fiscal 2006, our gross-up expenses were:
|
|
|
Zero for NEO relocation gross-up expenses, as we had no NEO relocation activity in 2006; |
|
|
|
|
$27,409 for taxes on Company contributions to the non-qualified deferred
compensation accounts on behalf of all NEOs; and |
|
|
|
|
$12,053 for imputed income on Mr. Raydens individual life insurance policy. |
21
(e) Perquisites:
We do not currently offer any notable perquisites to our NEOs, other than to Mr. Rayden. Mr.
Rayden receives limited personal use of our aircraft. At the February 2006 Compensation Committee
meeting, the Committee approved Mr. Raydens personal use of our aircraft while Mr. Rayden serves
as our Chief Executive Officer, provided that:
|
|
|
such personal use does not conflict with our business use of the aircraft; and |
|
|
|
|
Mr. Rayden reimburses the Company for the aggregate incremental cost of such
personal use in excess of $200,000 each fiscal year, with such cost calculated in the
manner the Company uses to report such costs in its annual proxy statements for
purposes of disclosure of executive compensation. |
In February 2007, the Committee reapproved this benefit for Mr. Rayden. Mr. Rayden is also
entitled to carry over any unused aircraft allowance from the prior year (up to a maximum of
$50,000), provided that amounts carried over expire if not used in the current year. The Committee
provides this amount of aircraft use benefit because the intangible value to Mr. Rayden is greater
than the tangible cost to our Company. This perquisite amount is included in the Summary
Compensation Tables All Other Compensation column on page 23.
(f) Employment/severance agreements and change-in-control arrangements:
We have entered into employment agreements with certain of our NEOs to attract or retain the
services of such NEOs. At the present time, we have employment agreements with three of our present
NEOs, Messrs. Rayden and Bracale and Ms. Boyer. We have also entered into executive agreements with
Messrs. Rayden and Bracale and Ms. Boyer, which deal with severance terms under various
circumstances following a change in control of our Company. We do not have formal employment
agreements with Messrs. Carbone or Henchel. Mr. Henchels employment terms are governed by the
terms of his offer letter and we have entered into a Separation Pay, Confidentiality &
Non-Competition Agreement with Mr. Carbone. For a discussion of these agreements, please refer to
Agreements with NEOs and Potential Payments upon Termination of Change in Control beginning on
page 29.
(7) Health and Welfare Benefits:
In addition to the compensation and benefits programs discussed in this document, we offer our
associates, including our NEOs, a comprehensive health and welfare benefits program. This program
is designed to provide the associates and their families with comprehensive coverage at competitive
rates. We strive to provide our associates with appropriate health benefits (medical, pharmacy,
dental, and vision) to help protect the physical, mental and financial health of our associates and
their immediate families.
22
Summary Compensation Table
The following table shows the compensation paid by Tween Brands, Inc. to each of the NEOs of
the Company for the 2006 fiscal year. For a discussion of the various elements of compensation
provided in the table, please refer to the discussion of the various compensation elements in our
Compensation Discussion & Analysis under the heading Compensation Program Elements beginning on
page 14.
SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2006
|
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|
|
|
|
|
|
Change in |
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|
|
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|
|
|
|
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|
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Pension |
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|
|
|
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Value and |
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Nonqualified |
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
Name and |
|
|
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Principal Position |
|
Year |
|
($)(1) |
|
($) |
|
($)(2) |
|
($)(2) |
|
($)(3) |
|
($)(4) |
|
($)(5) |
|
($) |
|
Michael W. Rayden
Chairman of the Board and
Chief Executive Officer |
|
|
2006 |
|
|
|
1,050,000 |
|
|
|
|
|
|
|
2,118,474 |
|
|
|
392,187 |
|
|
|
1,423,800 |
|
|
|
48,007 |
|
|
|
710,701 |
|
|
|
5,743,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William E. May, Jr.(6) |
|
|
2006 |
|
|
|
516,538 |
|
|
|
|
|
|
|
280,323 |
|
|
|
500,715 |
|
|
|
440,700 |
|
|
|
1,781 |
|
|
|
1,087,711 |
|
|
|
2,827,768 |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
Paul C. Carbone(7)
Senior Vice President -
Finance |
|
|
2006 |
|
|
|
123,750 |
|
|
|
82,100 |
|
|
|
24,891 |
|
|
|
9,594 |
|
|
|
42,900 |
|
|
|
|
|
|
|
916 |
|
|
|
284,151 |
|
|
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|
Poe A. Timmons(8) |
|
|
2006 |
|
|
|
177,692 |
|
|
|
|
|
|
|
11,735 |
|
|
|
19,832 |
|
|
|
111,600 |
|
|
|
69 |
|
|
|
148,480 |
|
|
|
469,408 |
|
|
|
|
|
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Scott M. Bracale
President Tween Brands
Marketing Agency |
|
|
2006 |
|
|
|
466,539 |
|
|
|
|
|
|
|
248,193 |
|
|
|
109,147 |
|
|
|
354,700 |
|
|
|
2,604 |
|
|
|
147,836 |
|
|
|
1,329,019 |
|
|
|
|
|
|
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|
Gregory J. Henchel
Senior Vice President,
General Counsel |
|
|
2006 |
|
|
|
250,000 |
|
|
|
|
|
|
|
70,397 |
|
|
|
24,254 |
|
|
|
113,000 |
|
|
|
3 |
|
|
|
4,067 |
|
|
|
461,721 |
|
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|
|
|
|
|
|
Sally A. Boyer(9)
Brand Executive President
and General Manager, Justice |
|
|
2006 |
|
|
|
462,116 |
|
|
|
|
|
|
|
268,256 |
|
|
|
150,466 |
|
|
|
367,815 |
|
|
|
7,846 |
|
|
|
153,126 |
|
|
|
1,409,625 |
|
|
|
|
(1) |
|
Figures include amounts which a named executive officer has elected to defer
under the terms of the Companys supplemental retirement and deferred compensation plan. For
more information and individual contribution amounts, please refer to the Nonqualified
Deferred Compensation Table on page 29. |
|
(2) |
|
Represents the dollar amount recognized for financial statement reporting purposes
with respect to the fiscal year in accordance with FAS 123R, disregarding any estimate of
forfeitures during the year, but accounting for any actual forfeitures by an NEO during the
fiscal year. For a discussion of the assumptions made in the valuation of the dollar amount
recognized, please refer to Note 1 to the Companys Financial Statements, which are set forth
in Item 8 to the Companys Annual Report on Form 10-K for the fiscal year ended February 3,
2007. The amounts shown in the Stock Awards and Option Awards column for Ms. Timmons includes
deductions of $11,735 and $19,832, respectively, for forfeitures of such awards by Ms. Timmons
during fiscal 2006 as a result of her resignation, effective on August 18, 2006. |
|
(3) |
|
Represents the total of the performance-based incentive compensation earned for the
spring and fall selling seasons, which is discussed in further detail under the heading
Executive Compensation Compensation Discussion and Analysis Non-Equity Incentive
Compensation Plan beginning on page 15. |
23
|
|
|
(4) |
|
Represents above-market earnings on the fixed interest investment option for
deferred compensation under the Companys nonqualified deferred compensation (NQDC) plan
equal to 1.18% of earnings. This was calculated by taking the NQDC plans fixed interest
investment option guaranteed interest rate of 6.75% for 2006, less 120% of the applicable
federal long term rate of 4.64%, or 1.18%. |
|
(5) |
|
Amounts include the following: |
|
|
|
$12,000, $9,900, $12,000, and $12,000 of employer contributions to each of the 401(k)
plan accounts of Mr. Rayden, Mr. May, Mr. Bracale, and Ms. Boyer, respectively; |
|
|
|
|
$482,200 $135,478, $750, $9,558, $130,036, $3,577 and $135,142 of employer contributions to each of the nonqualified deferred compensation accounts of Mr. Rayden, Mr.
May, Mr. Carbone, Ms. Timmons, Mr. Bracale, Mr. Henchel, and Ms. Boyer, respectively; |
|
|
|
|
$16,246, $1,442 $66, $4,331 and $4,410 of gross-ups to each of Mr. Rayden, Mr. May,
Ms. Timmons, Mr. Bracale, and Ms. Boyer, respectively, for Social Security and Medicare
taxes on employer contributions to the NEOs non qualified deferred compensation accounts; |
|
|
|
|
$4,903, $4,891, $166, $548, $1,469, $490 and $1,574 of group term insurance premiums
paid on behalf of each of Mr. Rayden, Mr. May, Mr. Carbone, Ms. Timmons, Mr. Bracale, Mr.
Henchel, and Ms. Boyer, respectively; |
|
|
|
|
a $6,575 executive life insurance premium paid on behalf of Mr. Rayden; |
|
|
|
|
a $5,478 gross-up for taxes on imputed income on Mr. Raydens individual executive life insurance policy; |
|
|
|
|
$183,299 for Mr. Rayden, which is the aggregate incremental cost to the Company for Mr.
Raydens personal use of the Companys aircraft; and |
|
|
|
|
$131,154 of severance payments that were paid in fiscal 2006 to Ms. Timmons and $936,000
and $7,154 of severance costs that were accrued by the Company in fiscal 2006 for each of
Mr. May and Ms. Timmons, respectively, and to be paid at a later date. |
|
|
|
(6) |
|
Mr. May resigned as our Executive Vice President and Chief Operating Officer,
effective January 22, 2007. He is deemed to be a named executive officer because he served as
the Companys principal financial officer for a portion of fiscal 2006. |
|
(7) |
|
In connection with the commencement of his employment, Mr. Carbone was guaranteed
that his Fall 2006 Incentive Compensation would not be less than $100,000. Amounts for Mr.
Carbone in the Bonus column reflect the difference between $100,000 and the amount of Mr.
Carbones allocated IC payout for Fall 2006. This column also reflects a $25,000 sign-on
bonus. |
|
(8) |
|
Ms. Timmons resigned as our Senior Vice President and Chief Financial Officer,
effective August 18, 2006. She is deemed to be a named executive officer because she served as
the Companys principal financial officer for a portion of fiscal 2006. |
|
(9) |
|
Ms. Boyers position was determined to be no longer an executive officer of the
Company as of November 16, 2006. She is deemed to be a named executive officer for fiscal 2006
because of the level of her total compensation and because she was designated as such for a
portion of fiscal 2006. |
24
Grants of Plan-Based Awards Table
The following table provides certain information concerning each grant of any award made to
the listed officers in the last completed fiscal year under any plan. For more information on the
grants represented in this table, please refer to the discussions in our Compensation Discussion &
Analysis under the headings Non-Equity Incentive Compensation Plan beginning on page 15 and
Equity Compensation beginning on page 17.
GRANTS OF PLAN-BASED AWARDS TABLE FOR FISCAL YEAR 2006
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Awards: |
|
Exercise |
|
Grant |
|
|
|
|
|
|
Estimated Potential Payouts |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Number of |
|
or Base |
|
Date Fair |
|
|
|
|
|
|
Under Non-Equity |
|
Estimated Future Payouts Under |
|
Shares of |
|
Securities |
|
Price of |
|
Value of |
|
|
|
|
|
|
Incentive Plan Awards |
|
Equity Incentive Plan Awards |
|
Stock or |
|
Underlying |
|
Option |
|
Stock and |
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Units |
|
Options |
|
Awards |
|
Option |
Name |
|
Grant Date |
|
($)(1) |
|
($) |
|
($) |
|
(#)(1) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($/Sh) |
|
Awards($) |
|
Michael W. Rayden |
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,379 |
|
|
$ |
29.75 |
|
|
|
586,340 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,793 |
|
|
|
11,172 |
|
|
|
11,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
332,144 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221,459 |
|
|
|
|
n/a |
|
|
|
252,000 |
|
|
|
1,260,000 |
|
|
|
2,520,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William E. May, Jr. |
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,241 |
|
|
$ |
29.75 |
|
|
|
244,305 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,164 |
|
|
|
4,655 |
|
|
|
4,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,393 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,282 |
|
|
|
|
n/a |
|
|
|
78,000 |
|
|
|
390,000 |
|
|
|
780,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul C. Carbone |
|
|
09/05/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
$ |
31.86 |
|
|
|
76,750 |
|
|
|
|
09/05/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
95,580 |
|
|
|
|
n/a |
|
|
|
26,000 |
|
|
|
130,000 |
|
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poe A. Timmons(2) |
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,448 |
|
|
$ |
29.75 |
|
|
|
48,858 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
233 |
|
|
|
931 |
|
|
|
931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,679 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,462 |
|
|
|
|
n/a |
|
|
|
11,160 |
|
|
|
55,800 |
|
|
|
111,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott M. Bracale |
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,224 |
|
|
$ |
29.75 |
|
|
|
173,214 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
825 |
|
|
|
3,301 |
|
|
|
3,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,139 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,406 |
|
|
|
|
n/a |
|
|
|
65,920 |
|
|
|
329,600 |
|
|
|
659,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory J. Henchel |
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,069 |
|
|
$ |
29.75 |
|
|
|
29,318 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140 |
|
|
|
559 |
|
|
|
559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,619 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,060 |
|
|
|
|
n/a |
|
|
|
20,000 |
|
|
|
100,000 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sally A. Boyer |
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,172 |
|
|
$ |
29.75 |
|
|
|
214,987 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,024 |
|
|
|
4,097 |
|
|
|
4,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,804 |
|
|
|
|
02/14/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,193 |
|
|
|
|
n/a |
|
|
|
65,100 |
|
|
|
325,500 |
|
|
|
651,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
|
(1) |
|
If the threshold target is not met, there is no award. |
|
(2) |
|
Represents Spring 2006 only. |
25
Outstanding Equity Awards at Fiscal Year-End Table
The following table provides information concerning unexercised options, stock that has not
vested, and equity incentive plan awards outstanding as of the end of the last completed fiscal
year:
OUTSTANDING
EQUITY AWARDS AT FISCAL 2006 YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1) |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Equity |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
Incentive Plan |
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Awards: |
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Market or |
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
Number |
|
Market |
|
Unearned |
|
Payout Value |
|
|
Number of |
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
of Shares |
|
Value of |
|
Shares, |
|
of Unearned |
|
|
Securities |
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
or Units |
|
Shares or |
|
Units or |
|
Shares, Units |
|
|
Underlying |
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
of Stock |
|
Units of |
|
Other |
|
or Other |
|
|
Unexercised |
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
|
That Have |
|
Stock That |
|
Rights |
|
Rights That |
|
|
Options |
|
Options |
|
Unearned |
|
Exercise |
|
Option |
|
Not |
|
Have Not |
|
That Have |
|
Have Not |
|
|
(#) |
|
(#) |
|
Options |
|
Price |
|
Expiration |
|
Vested |
|
Vested |
|
Not Vested |
|
Vested |
Name |
|
Exercisable |
|
Unexercisable |
|
(#) |
|
($) |
|
Date |
|
(#)(2) |
|
($) |
|
(#)(3) |
|
($) |
|
Michael W. Rayden |
|
|
156,339 |
|
|
|
|
|
|
|
|
|
|
|
27.31 |
|
|
|
05/10/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,162 |
|
|
|
|
|
|
|
|
|
|
|
26.05 |
|
|
|
02/12/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
31,250 |
|
|
|
|
|
|
|
15.16 |
|
|
|
02/11/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500 |
|
|
|
25,000 |
|
|
|
|
|
|
|
16.26 |
|
|
|
02/10/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,151 |
|
|
|
33,451 |
|
|
|
|
|
|
|
28.25 |
|
|
|
02/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,379 |
|
|
|
|
|
|
|
29.75 |
|
|
|
02/14/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
255,940 |
|
|
|
8,922,068 |
|
|
|
32,002 |
|
|
|
1,115,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William E. May, Jr. |
|
|
|
|
|
|
37,500 |
|
|
|
|
|
|
|
18.37 |
|
|
|
02/23/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
6,250 |
|
|
|
|
|
|
|
28.25 |
|
|
|
02/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,620 |
|
|
|
|
|
|
|
29.75 |
|
|
|
02/14/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,567 |
|
|
|
54,626 |
|
|
|
10,894 |
|
|
|
379,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul C. Carbone |
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
31.86 |
|
|
|
09/05/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
104,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poe A. Timmons |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott M. Bracale |
|
|
861 |
|
|
|
|
|
|
|
|
|
|
|
16.50 |
|
|
|
02/01/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,260 |
|
|
|
|
|
|
|
|
|
|
|
16.50 |
|
|
|
08/23/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
27.31 |
|
|
|
05/10/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
26.05 |
|
|
|
02/12/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
25.95 |
|
|
|
07/24/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
6,250 |
|
|
|
|
|
|
|
16.26 |
|
|
|
02/10/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
9,375 |
|
|
|
|
|
|
|
28.25 |
|
|
|
02/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,224 |
|
|
|
|
|
|
|
29.75 |
|
|
|
02/14/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,629 |
|
|
|
963,147 |
|
|
|
8,636 |
|
|
|
301,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory J. Henchel |
|
|
1,250 |
|
|
|
3,750 |
|
|
|
|
|
|
|
28.46 |
|
|
|
10/10/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,069 |
|
|
|
|
|
|
|
29.75 |
|
|
|
02/14/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,122 |
|
|
|
143,693 |
|
|
|
559 |
|
|
|
19,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sally A. Boyer |
|
|
6,060 |
|
|
|
|
|
|
|
|
|
|
|
16.50 |
|
|
|
08/23/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
27.31 |
|
|
|
05/10/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
16.20 |
|
|
|
02/15/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
26.05 |
|
|
|
02/12/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
|
|
|
|
|
|
|
|
25.95 |
|
|
|
07/24/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250 |
|
|
|
6,250 |
|
|
|
|
|
|
|
16.26 |
|
|
|
02/10/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
9,375 |
|
|
|
|
|
|
|
28.25 |
|
|
|
02/15/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,172 |
|
|
|
|
|
|
|
29.75 |
|
|
|
02/14/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,629 |
|
|
|
963,147 |
|
|
|
9,963 |
|
|
|
347,310 |
|
26
|
|
|
(1) |
|
Options become exercisable in four equal annual installments beginning on the first
anniversary date of grant. |
|
(2) |
|
The shares of restricted stock represented vest as follows: |
|
|
|
Mr. Rayden: 2,125 shares on February 10, 2007; 20,000 shares on February 12, 2007;
27,230 shares on February 15, 2007; 2,125 shares on February 10, 2008; 27,230 shares on
February 15, 2008; 39,730 shares on February 15, 2009; 62,500 shares on February 15,
2010; and 75,000 shares of February 15, 2011. All but 4,250 of these shares had
performance-based vesting conditions when granted. Those performance conditions have
been achieved and the restricted stock has only a time-based vesting condition
remaining. |
|
|
|
|
Mr. May: 523 shares on February 15, 2007; 522 shares on February 15, 2008; and 522
shares on February 15, 2009. All of these shares had performance-based vesting
conditions when granted. Those performance conditions have been achieved and the
restricted stock has only a time-based vesting condition remaining. |
|
|
|
|
Mr. Carbone: 750 shares on September 5, 2007; 750 shares on September 5, 2008; 750
shares on September 5, 2009; and 750 shares on September 5, 2010. |
|
|
|
|
Mr. Bracale: 531 shares on February 10, 2007; 523 shares on February 15, 2007;
25,000 shares on August 12, 2007; 531 shares on February 10, 2008; 522 shares on
February 15, 2008 and 522 shares on February 15, 2009. All but 1,062 of these shares
had performance-based vesting conditions when granted. Those performance conditions
have been achieved and the restricted stock has only a time-based vesting condition
remaining. |
|
|
|
|
Mr. Henchel: 93 shares on February 14, 2007; 1,250 shares on October 10, 2007; 93
shares on February 14, 2008; 1,250 shares on October 10, 2008; 93 shares on February
14, 2009; 1,250 shares on October 10, 2009; and 93 shares on February 14, 2010. |
|
|
|
|
Ms. Boyer: 531 shares on February 10, 2007; 523 shares on February 15, 2007; 25,000
shares on August 12, 2007; 531 shares on February 10, 2008; 522 shares on February 15,
2008; and 522 shares on February 15, 2009. All but 1,062 of these shares had
performance-based vesting conditions when granted. Those performance conditions have
been achieved and the restricted stock has only a time-based vesting condition
remaining. |
(3) |
|
Subject to the achievement of specified performance criteria, the shares of restricted stock
represented vest as follows: |
|
|
|
Mr. Rayden: 1,862 shares of February 14, 2007; 13,381 shares on February 15, 2007;
13,034 on February 14, 2008; 1,862 shares on February 14, 2009; and 1,863 shares on
February 14, 2010. |
|
|
|
|
Mr. May: 776 shares of February 14, 2007; 3,135 shares on February 15, 2007; 5,431
shares on February 14, 2008; 776 shares on February 14, 2009; and 776 shares on
February 14, 2010. |
|
|
|
|
Mr. Bracale: 550 shares on February 14, 2007; 3,135 shares on February 15, 2007;
3,851 shares on February 14, 2008; 550 shares on February 14, 2009; and 550 shares on
February 14, 2010. |
|
|
|
|
Mr. Henchel: 559 shares on February 14, 2008. |
|
|
|
|
Ms. Boyer: 682 shares on February 14, 2007; 3,135 shares on February 15, 2007;
4,780 shares on February 14, 2008; 683 shares on February 14, 2009; and 683 shares on
February 14, 2010. |
27
Option Exercises and Stock Vested Table
The following table provides certain information concerning each exercise of stock options,
and each vesting of stock, including restricted stock, during the last completed fiscal year:
OPTION EXERCISES AND STOCK VESTED TABLE FOR FISCAL YEAR 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
|
|
Number of Shares |
|
|
Value Realized |
|
|
Acquired |
|
|
Value Realized on |
|
|
|
Acquired on Exercise |
|
|
on Exercise |
|
|
on Vesting |
|
|
Vesting |
|
Name |
|
(#) |
|
|
($)(1) |
|
|
(#) |
|
|
($)(2) |
|
Michael W. Rayden |
|
|
103,748 |
|
|
|
2,131,291 |
|
|
|
61,855 |
|
|
|
1,846,631 |
|
William E. May, Jr. |
|
|
18,750 |
|
|
|
226,313 |
|
|
|
523 |
|
|
|
15,863 |
|
Paul C. Carbone |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Poe A. Timmons |
|
|
2,500 |
|
|
|
35,300 |
|
|
|
|
|
|
|
|
|
Scott M. Bracale |
|
|
20,744 |
|
|
|
372,952 |
|
|
|
4,154 |
|
|
|
122,904 |
|
Gregory J. Henchel |
|
|
|
|
|
|
|
|
|
|
1,250 |
|
|
|
49,525 |
|
Sally A. Boyer |
|
|
31,037 |
|
|
|
802,002 |
|
|
|
4,154 |
|
|
|
122,904 |
|
|
|
|
(1) |
|
Value realized was calculated based on the number of shares exercised
multiplied by the excess of the fair market value of a share of the Companys common stock on
the date of exercise over the exercise price of the stock option. |
|
(2) |
|
Value realized was calculated based on the number of shares vested multiplied by the
fair market value of a share of the Companys common stock on the date of vesting. |
28
Nonqualified Deferred Compensation Table
The following table provides certain information concerning the Companys nonqualified
supplemental retirement and deferred compensation plan. For more information on the Companys
nonqualified supplemental retirement and deferred compensation plan, please refer to the discussions
in our Compensation Discussion & Analysis under the headings Deferred Compensation beginning on
page 20.
NONQUALIFIED DEFERRED COMPENSATION TABLE FOR FISCAL YEAR 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
|
Registrant |
|
|
|
|
|
|
Aggregate |
|
|
Aggregate |
|
|
|
Contributions |
|
|
Contributions |
|
|
Aggregate Earnings |
|
|
Withdrawals/ |
|
|
Balance at |
|
|
|
in Last FY |
|
|
in Last FY |
|
|
in Last FY |
|
|
Distributions |
|
|
Last FY end |
|
Name |
|
($)(1) |
|
|
($)(2) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Michael W. Rayden |
|
|
178,500 |
|
|
|
482,200 |
|
|
|
315,290 |
|
|
|
|
|
|
|
4,902,860 |
|
William E. May, Jr. |
|
|
37,204 |
|
|
|
135,478 |
|
|
|
11,650 |
|
|
|
|
|
|
|
271,313 |
|
Paul C. Carbone |
|
|
625 |
|
|
|
750 |
|
|
|
18 |
|
|
|
|
|
|
|
1,393 |
|
Poe A. Timmons |
|
|
4,779 |
|
|
|
9,558 |
|
|
|
402 |
|
|
|
|
|
|
|
14,738 |
|
Scott M. Bracale |
|
|
31,702 |
|
|
|
130,036 |
|
|
|
122,434 |
|
|
|
|
|
|
|
1,006,160 |
|
Gregory J. Henchel |
|
|
5,769 |
|
|
|
3,577 |
|
|
|
176 |
|
|
|
|
|
|
|
9,522 |
|
Sally A. Boyer |
|
|
421,943 |
|
|
|
135,142 |
|
|
|
281,742 |
|
|
|
|
|
|
|
2,651,357 |
|
|
|
|
(1) |
|
Amounts were included as part of the total in the Salary, Bonus or
Non-Equity Incentive Plan Compensation columns of the Summary Compensation Table on page 23. |
|
(2) |
|
Vested amounts were included as part of the total in the All Other Compensation
column of the Summary Compensation Table on page 23. |
Agreements with NEOs and Potential Payments upon Termination or Change in Control
We have entered into employment agreements with Messrs. Rayden and Bracale and Ms. Boyer,
effective September 15, 2003. We had employment arrangements with Ms. Timmons, until her
resignation, effective on August 18, 2006, and Mr. May, until his resignation as an executive
officer on January 22, 2007. The payments to Ms. Timmons and Mr. May, respectively, thereunder are
described below under the heading Agreements with Departed
Executives beginning on page 39.
We do not have formal employment agreements with Messrs. Carbone or Henchel, but we will
discuss the terms of their employment below, including the Separation Pay, Confidentiality and
Non-Competition Agreement between the Company and Mr. Carbone.
Employment Agreements
Except for Mr. Rayden, whose agreement has an initial term of five years, each agreement has
an initial term of three years, after which it will renew automatically for additional one year
periods on the same terms and conditions, unless either party provides notice to the other of an
intention not to extend it at least 90 days prior to the anniversary date. Further, if a change in
control (as defined in the agreement) occurs during the term of the agreement, the term of the
agreement will be extended for two years from the date of the change in control. A change in
control means the occurrence of any of the following:
29
|
|
|
a person becoming the beneficial owner of Company securities representing 25% or
more of the combined voting power of our then outstanding securities (a 25%
Shareholder); provided, however, a person shall not be deemed a 25% Shareholder if
such person would not otherwise be a 25% Shareholder but for a reduction in the number
of our outstanding voting shares resulting from a stock repurchase program, self-tender
offer or similar plan, unless such person thereafter acquires 1% or more of our voting
shares then outstanding and is otherwise a 25% Shareholder at such time; and provided,
further, that if the Board of Directors determines in good faith that a person
inadvertently became a 25% Shareholder and such person promptly notifies the Board of
Directors of such status and as promptly as practicable thereafter takes such actions
so as to longer be a 25% Shareholder, then such person shall no longer be deemed to be
a 25% shareholder; |
|
|
|
|
a change in composition of the Board of Directors occurring any time during a
consecutive two-year period as a result of which fewer than a majority of the Board of
Directors are Continuing Directors (Continuing Director means a director who was
either first elected or appointed as a Director prior to the date of the employment
agreement, or subsequently elected or appointed as a director if such director was
nominated or appointed by at least a majority of the then Continuing Directors); or |
|
|
|
|
any of the following occurs: |
|
|
|
a merger or consolidation of the Company, other than a merger or consolidation in
which the voting securities of the Company immediately prior to the merger or
consolidation continue to represent (either by remaining outstanding or being
converted into securities of the surviving entity) sixty percent (60%) or more of
the combined voting power of the Company or surviving entity immediately after the
merger or consolidation with another entity; |
|
|
|
|
a sale, exchange, or other disposition (in a single transaction or a series of
related transactions) of all or substantially all of the assets of the Company which
shall include, without limitation, the sale of assets aggregating more than fifty
percent (50%) of the assets of the Company on a consolidated basis; |
|
|
|
|
a liquidation or dissolution of the Company; |
|
|
|
|
a reorganization, reverse stock split, or recapitalization of the Company which
would result in any of the foregoing; or |
|
|
|
|
a transaction or series of related transactions having, directly or indirectly,
the same effect as any of the foregoing. |
Each employment agreement provides for a minimum annual base salary, plus any increases in
base compensation as may be authorized by the Board of Directors after the date of the agreement.
The agreements also provide for each officers continued participation in the Companys incentive
compensation and stock option plans and other benefits as described in the agreements.
The employment agreements require the Company to compensate each officer and provide him or
her with certain benefits if his or her employment is terminated before the agreement expires. The
compensation and benefits each officer is entitled to receive vary depending upon whether his or
her employment is terminated:
|
|
|
by the Company for cause (as defined below), or voluntarily by the officer, or in
the case of Mr. Rayden, other than for Good Reason (as defined below); |
|
|
|
|
by the Company other than for cause, or in the case of Mr. Rayden, for Good Reason; |
|
|
|
|
involuntarily due to disability; |
|
|
|
|
upon retirement; or |
|
|
|
|
upon the officers death, under which circumstance the applicable compensation and
benefits are payable to the officers beneficiaries. |
30
For purposes of the employment agreements, cause means the executive:
|
|
|
was grossly negligent in the performance of his or her duties with the Company
(other than a failure resulting from the executives incapacity due to physical or
mental illness) causing material harm to the Company; |
|
|
|
|
has pled guilty or no contest to, or has been convicted of an act which is
defined as, a felony under federal or state law; |
|
|
|
|
engaged in intentional misconduct or fraud which caused, or could reasonably be
expected to cause, material harm to the Companys business or its reputation; or |
|
|
|
|
committed a material breach of his or her employment agreement (including a
violation of the noncompete and nondisclosure provisions) which is materially and
demonstrably injurious to the Company. |
For purposes of Mr. Raydens employment agreement, Good Reason means:
|
|
|
a significant reduction in Mr. Raydens positions, duties, authority,
responsibilities and reporting requirements; |
|
|
|
|
a reduction in or a material delay in payment of Mr. Raydens total cash
compensation, incentives and benefits; |
|
|
|
|
the Company, the Board or any person controlling the Company relocates Mr. Rayden to
a location in excess of 50 miles from the location where he is currently based; |
|
|
|
|
the failure of the Company to abide by the employment agreement or to obtain a
satisfactory agreement from any successor to the Company to assume and agree to perform
this Agreement; or |
|
|
|
|
the failure of the Company to obtain the assumption in writing of its obligation to
perform the employment agreement by any successor to all or substantially all of the
assets of the Company within 15 days after a merger, consolidation, sale or similar
transaction. |
Notwithstanding the above, Good Reason shall not include (i) acts not taken in bad faith which are
cured by the Company in all respects not later than 30 days from the date of receipt by the Company
of a written notice from Mr. Rayden identifying in reasonable detail the act or acts constituting
Good Reason (Preliminary Notice of Good Reason as defined above) or (ii) acts taken by the
Company by reason of Mr. Raydens physical or mental infirmity which impairs his ability to
substantially perform the duties under the employment agreement. A Preliminary Notice of Good
Reason shall not, by itself, constitute a Notice of Termination.
If the officers employment is terminated by the Company for cause, voluntarily by the
officer, or in the case of Mr. Rayden, if his employment is terminated by the Company for cause or
by Mr. Rayden for other than Good Reason (as defined above), the officers severance benefits
payable under the employment agreement will include:
|
|
|
any accrued base salary and accrued vacation not paid as of the termination date; |
|
|
|
|
vested benefits as of the termination date under the Companys benefit, retirement,
incentive and other plans; and |
|
|
|
|
in Mr. Raydens case, continued payment of life insurance premiums through the end
of the calendar year. |
If the officers employment is terminated by the Company other than for cause, or in the case
of Mr. Rayden, for Good Reason, the officers severance benefits payable under the employment
agreement will include:
|
|
|
any accrued base salary and accrued vacation not paid as of the termination date; |
31
|
|
|
a pro-rated bonus amount; |
|
|
|
|
vested benefits as of the termination date under the Companys benefit, retirement,
incentive and other plans; |
|
|
|
|
continued payment of 100% of base salary for 18 months for Mr. Bracale and Ms. Boyer
and, in the case of Mr. Rayden, a lump sum amount equal to two times the sum of (i)
base salary and (ii) the greater of Mr. Raydens (a) annual par target bonus
opportunity in the year of termination or (b) the actual annual bonus earned by Mr.
Rayden in the year prior to the year of termination; |
|
|
|
|
continued insurance benefits for 18 months for Mr. Bracale and Ms. Boyer and two
years for Mr. Rayden; |
|
|
|
|
outplacement services and related travel costs up to a maximum of $10,000 and, in
Mr. Raydens case, $30,000; |
|
|
|
|
in Mr. Raydens case, acceleration of vesting of most stock awards by 24 additional
months, and in Mr. Bracale and Ms. Boyers case, acceleration of vesting of most stock
awards by 12 additional months; and |
|
|
|
|
in Mr. Raydens case, continued payment of life insurance premiums through the end
of the calendar year. |
If the officers employment is terminated involuntarily due to disability, the officers
severance benefits payable under the employment agreement will include:
|
|
|
any accrued base salary and accrued vacation not paid as of the disability date; |
|
|
|
|
a pro-rated bonus amount; |
|
|
|
|
vested benefits as of the termination date under the Companys benefit, retirement,
incentive and other plans; |
|
|
|
|
100%, 80% and 60%, respectively, of base salary for the first, second and third 12
months following the disability date (reduced by amounts received by the officer under
the Companys disability plans); |
|
|
|
|
additional salary benefits if the officer is disabled beyond 36 months; and |
|
|
|
|
in Mr. Raydens case, continued payment of life insurance premiums through the end of the calendar year. |
Notwithstanding the above, the salary continuation payments will cease upon the earlier of (a) the
disability ceasing to exist or (b) the officers retirement.
If the officers employment is terminated by reason of his or her retirement, the officers
severance benefits will include the following:
|
|
|
accrued base salary and accrued vacation not paid as of the termination date; |
|
|
|
|
a pro-rated bonus amount; and |
|
|
|
|
vested benefits as of the termination date under the Companys benefit, retirement,
incentive and other plans. |
If the officers employment is terminated by reason of his or her death, the Companys sole
obligation will be to pay the officers spouse, estate or designated beneficiary, as the case may
be, the same amounts due the officer if he or she had retired, as described above.
The employment agreements also prohibit the officer from becoming directly or indirectly
connected with any business or entity that competes directly or indirectly with the Company during
the officers employment with the Company and for a period of one year (or in the case of Mr.
Rayden, two years) from the date of termination if employment is terminated: (1) by the Company for
any reason, (2) by the officer for any reason, or (3) by reason of either
32
the Companys or the
officers decision not to extend the term of the agreement. Mr. Raydens non-competition period
will terminate after a change in control, upon a termination by the Company for other than cause,
or upon a termination by Mr. Rayden for Good Reason. The non-competition periods of the other
officers will terminate upon termination by the Company other than for cause after a change in
control, or by the officer for Good Reason after a change in control.
Under the employment agreements and the executive agreements with Messrs. Rayden and Bracale
and Ms. Boyer, if it is determined that any payment of any type to or for the benefit of the
executive, including the acceleration of stock vesting, is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code and any interest or penalties with respect to such tax
(golden parachute excise taxes), the executive will be entitled to receive an additional payment
(a gross-up payment) in an amount, after taking into account all federal, state and local income
taxes payable by the executive as a result of the receipt of such additional compensation, to place
the executive in the same after-tax position the executive would have been in had no such excise
tax been paid or incurred with respect to any such amounts (the tax gross-up).
Agreement with Mr. Carbone
We have not entered into any binding employment agreement with Mr. Carbone; however, we have
entered into a Separation Pay, Confidentiality and Non-Competition Agreement with Mr. Carbone,
effective July 26, 2006 (the Carbone Agreement). Under the terms of the Carbone Agreement, in
consideration of his receipt of confidential information and equity stock award grants, Mr. Carbone
agreed to certain confidentiality, non-solicitation and non-competition provisions. Specifically,
Mr. Carbone agreed not to directly or indirectly solicit, induce or attempt to influence any
Company associate to leave the employment of the Company for a period of 12 months after Mr.
Carbones separation from the Company. In addition, Mr. Carbone agreed not to directly or
indirectly work for or contribute to the efforts of any business organization that competes, or
plans to compete, with the Company or its products for a period of 12 months after Mr. Carbones
separation from the Company.
The Carbone Agreement also states that Mr. Carbones employment is at will; provided,
however, if Mr. Carbones employment is terminated by the Company other than for cause, the Company
agrees to pay Mr. Carbone his weekly base salary for a period of fifty-two (52) weeks, minus the
deductions required by law and subject to a deduction of any salary or compensation that Mr.
Carbone earns from other employment or self-employment during the time period in question,
regardless of when such amount is payable. Under the terms of the Carbone Agreement, cause is
defined as any of the following:
|
|
|
the willful failure of Mr. Carbone to perform his duties with the Company (other
than incapacity due to physical or mental illness); |
|
|
|
|
the conviction of Mr. Carbone of an act which is a felony under federal or state law
or a plea by Mr. Carbones of guilty or no-contest to any such act; or |
|
|
|
|
the engagement by Mr. Carbone in willful misconduct in bad faith which could
reasonably be expected to materially harm the Companys business or its reputation. |
Agreement with Mr. Henchel
The term of Mr. Henchels employment are generally described in his offer letter, dated August
19, 2005, which provides for an annual base salary, plus any increases in base compensation as may
be determined from time to time. The
offer letter also provides for Mr. Henchels continued participation in the Companys
incentive compensation and stock option plans and other benefits as described in the agreements.
Mr. Henchels employment is at will.
Executive Agreements
We also entered into executive agreements with Messrs. Rayden and Bracale, and Ms. Boyer
effective October 30, 2000. Each agreement had an initial term of three years, after which it
renews automatically for additional one year periods on the same terms and conditions, unless the
Company provides notice to the officer of an intention not to extend the executive agreement at
least 30 days prior to the anniversary date. Furthermore, if a change in control (as defined above
33
under the heading Employment Agreements) occurs during the term of the executive agreement, the
term of the agreement will be extended for two years from the date of the change in control.
Under each executive agreement, the Company must provide severance benefits to the officer if
his or her employment is terminated (other than on account of death or disability or for cause):
|
|
|
by the Company at any time six months prior to a change in control if such
termination was in contemplation of such change in control and was done to avoid the
effects of the agreement; |
|
|
|
|
by the Company within 24 months after a change in control; |
|
|
|
|
by the officer for Good Reason (as defined above under the heading Employment
Agreements)) at any time within 24 months after a change in control; or |
|
|
|
|
in the case of Mr. Rayden, by him with or without Good Reason during the period
beginning on the one year anniversary date of a change in control and lasting for 30
days. |
In addition to accrued compensation, bonuses, vested benefits and stock options, the officers
severance benefits payable under the executive agreement include:
|
|
|
a lump sum cash payment equal to the sum of: (1) any accrued base salary and
vacation time payable as of the termination and (2) the officers base annual salary
(as defined in the agreement), multiplied by three; |
|
|
|
|
a lump sum cash payment equal to the sum of: (1) the pro-rated bonus amount (as
defined in the agreement) and (2) the highest annual incentive compensation to which
the officer would be entitled, multiplied by three; |
|
|
|
|
36 months of continued insurance benefits; |
|
|
|
|
outplacement services and related travel costs up to a maximum of $10,000 and, in
Mr. Raydens case, $60,000. |
Potential Payments upon Termination or Change in Control Tables
Potential payments upon termination and/or change in control under the agreements with Messrs.
Rayden, Bracale, and Carbone and Ms. Boyer are and shown in the tables below. We have used
estimates where it is not possible to give a precise dollar amount for the potential payments. The
estimates assume that the triggering event took place on February 3, 2007, the last day of the
Companys prior fiscal year. For purposes of valuing the Companys common stock on February 3,
2007, we have used the Companys closing stock price of $34.86 on February 2, 2007, the last
trading date prior to February 3, 2007. In each of the tables below, we have assumed that all
accrued base salary has been paid as of termination date.
34
Mr. Rayden
The following table shows the potential payments upon termination or a change of control of
the Company for Mr. Rayden, the Companys Chairman and Chief Executive Officer.
POTENTIAL PAYMENTS TO MR. RAYDEN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminations |
|
|
|
|
|
|
Termination by |
|
|
|
|
|
|
|
|
|
|
|
|
|
Involving a |
|
|
Termination by |
|
Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
Company with Cause |
|
without Cause or |
|
|
|
|
|
|
|
|
|
|
|
|
|
Control under |
|
|
or by Mr. Rayden |
|
by Mr. Rayden for |
|
Termination |
|
Termination |
|
|
|
|
|
Executive |
Executive Benefits and Payments Upon |
|
without Good Reason |
|
Good Reason |
|
upon Disability |
|
upon Death |
|
Retirement |
|
Agreement(1) |
Termination |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance Payment) |
|
|
|
|
|
|
2,100,000 |
(2) |
|
|
2,520,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
3,150,000 |
(2) |
Incentive Compensation (Accrued but Unpaid) |
|
|
|
|
|
|
415,800 |
(2)(4) |
|
|
415,800 |
(2)(4) |
|
|
415,800 |
(2)(4) |
|
|
415,800 |
(2)(4) |
|
|
415,800 |
(2)(4) |
Incentive Compensation (Severance Payment) |
|
|
|
|
|
|
4,798,080 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,379,040 |
(2) |
Stock Options (Acceleration of Vesting)(5) |
|
|
|
|
|
|
1,333,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,513,183 |
|
Restricted Stock (Acceleration of Vesting)(6) |
|
|
|
|
|
|
2,743,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,037,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Vacation Pay(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, Health and Welfare Benefits(8) |
|
|
|
|
|
|
420,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
420,000 |
|
Outplacement Services |
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
Tax Gross-ups |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total value: |
|
|
|
|
|
|
11,841,472 |
|
|
|
2,935,800 |
|
|
|
415,800 |
|
|
|
415,800 |
|
|
|
19,975,681 |
|
|
|
|
(1) |
|
For a discussion of the relevant scenarios where Mr. Rayden would be entitled
to payments regarding a Change in Control, please refer to the discussion under Executive
Agreements beginning on page 33. |
|
(2) |
|
Payable in a lump sum. |
|
(3) |
|
Payments are made or reimbursed over a three-year period from the date of the
disability as follows: 100% of base salary for the first 12 months following the date of
disability, 80% of base salary for the second 12 months following the date of disability and
60% of base salary for the third 12 months following the date of disability; provided,
however, that such payment shall be reduced by the amount of any benefits the executive
receives by reason of his disability under the Companys relevant disability plan. For example
purposes, the figure in the table assumes payments for three years following the date of
disability and no reimbursement under the Companys relevant disability programs. If the
executive is disabled beyond 36 months from the date of disability, the Company shall continue
to pay executive $250,000 per year for the period of executives disability; provided,
however, that such payment shall be reduced by the amount of any benefits the executive
receives by reason of his disability under the Companys relevant disability plan. |
|
(4) |
|
Represents accrued but unpaid pro-rata incentive compensation of Mr. Rayden. |
|
(5) |
|
Represents the value of unvested and accelerated stock options by multiplying the
number of such options by the excess of the fair market value of a share of the Companys
common stock on the date of termination over the exercise price of the stock option. |
|
(6) |
|
Represents the fair market value of all restricted shares whose vesting would be
accelerated as of February 3, 2007. |
35
|
|
|
(7) |
|
Assumes all vacation days were used. Vacation days do not roll over from year to
year. |
|
(8) |
|
Estimate of the aggregate amount needed to maintain Mr. Raydens health and welfare
benefits for a two-year period after the Termination Date. |
Mr. Bracale
The following table shows the potential payments upon termination or a change of control of
the Company for Mr. Bracale, the Companys President of Tween Brands Marketing Agency.
POTENTIAL PAYMENTS TO MR. BRACALE
|
|
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|
|
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Certain |
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|
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|
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|
|
|
|
|
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|
|
|
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|
|
|
|
Terminations |
|
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|
|
|
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|
|
|
|
|
|
|
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Involving a |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Change in |
|
|
Termination by |
|
Termination by |
|
|
|
|
|
|
|
|
|
|
|
|
|
Control under |
|
|
Company with Cause |
|
Company |
|
Termination |
|
Termination |
|
|
|
|
|
Executive |
|
|
or by Mr. Bracale |
|
without Cause |
|
upon Disability |
|
upon Death |
|
Retirement |
|
Agreement(1) |
Executive Benefits and Payments Upon Termination |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
Base Salary (Severance Payment) |
|
|
|
|
|
|
750,000 |
(2) |
|
|
1,200,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
1,500,000 |
(4) |
Incentive Compensation (Accrued but Unpaid) |
|
|
|
|
|
|
115,500 |
(4)(5) |
|
|
115,500 |
(4)(5) |
|
|
115,500 |
(4)(5) |
|
|
115,500 |
(4)(5) |
|
|
115,500 |
(4)(5) |
Incentive Compensation (Severance Payment) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,001,920 |
(4) |
Stock Options (Acceleration of Vesting)(6) |
|
|
|
|
|
|
94,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,683 |
|
Restricted Stock (Acceleration of Vesting)(7) |
|
|
|
|
|
|
908,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,264,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Vacation Pay(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, Health and Welfare Benefits(9) |
|
|
|
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
Outplacement Services |
|
|
|
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
Tax Gross-ups |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
863,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total value: |
|
|
|
|
|
|
2,028,139 |
|
|
|
1,315,500 |
|
|
|
115,500 |
|
|
|
115,500 |
|
|
|
5,145,421 |
|
|
|
|
(1) |
|
For a discussion of the relevant scenarios where Mr. Bracale would be entitled
to payments regarding a Change in Control, please refer to the discussion under Executive
Agreements beginning on page 33. |
|
(2) |
|
Payable over 18 months in accordance with normal payroll practices. |
|
(3) |
|
Payments are made or reimbursed over a three-year period from the date of the
disability as follows: 100% of base salary for the first 12 months following the date of
disability, 80% of base salary for the second 12 months following the date of disability and
60% of base salary for the third 12 months following the date of disability; provided,
however, that such payment shall be reduced by the amount of any benefits the executive
receives by reason of his disability under the Companys relevant disability plan. For example
purposes, the figure in the table assumes payments for three years following the date of
disability and no reimbursement under the Companys relevant disability programs. If the
executive is disabled beyond 36 months from the date of disability, the Company shall continue
to pay executive $300,000 per year for the period of executives disability; provided,
however, that such payment shall be reduced by the amount of any benefits the executive
receives by reason of his disability under the Companys relevant disability plan. |
|
(4) |
|
Payable in a lump sum. |
|
(5) |
|
Represents accrued but unpaid pro-rata incentive compensation of Mr. Bracale. |
36
|
|
|
(6) |
|
Represents the value of unvested and accelerated stock options by multiplying the
number of such options by the excess of the fair market value of a share of the Companys
common stock on the date of termination over the exercise price of the stock option |
|
(7) |
|
Represents the fair market value of all restricted shares whose vesting would be
accelerated as of February 3, 2007. |
|
(8) |
|
Assumes all vacation days were used. Vacation days do not roll over from year to
year. |
|
(9) |
|
Estimate of the aggregate amount needed to maintain Mr. Bracales health and welfare
benefits for an 18-month period after the Termination Date. |
Ms. Boyer
The following table shows the potential payments upon termination or a change of control of
the Company for Ms. Boyer, one of the Companys brand executives President and General Manager,
Justice.
POTENTIAL PAYMENTS TO MS. BOYER
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involving a |
|
|
Termination by |
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
Company with |
|
by Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
Control under |
|
|
Cause or by |
|
without |
|
Termination upon |
|
Termination |
|
|
|
|
|
Executive |
Executive Benefits and Payments Upon |
|
Ms. Boyer |
|
Cause |
|
Disability |
|
upon Death |
|
Retirement |
|
Agreement(1) |
Termination |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance Payment) |
|
|
|
|
|
|
697,500 |
(2) |
|
|
1,116,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
1,395,000 |
(4) |
Incentive Compensation (Accrued but Unpaid) |
|
|
|
|
|
|
107,415 |
(4)(5) |
|
|
107,415 |
(4)(5) |
|
|
107,415 |
(4)(5) |
|
|
107,415 |
(4)(5) |
|
|
107,415 |
(4)(5) |
Incentive Compensation (Severance Payment) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,049,232 |
|
Stock Options (Acceleration of Vesting)(6) |
|
|
|
|
|
|
98,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
255,748 |
|
Restricted Stock (Acceleration of Vesting)(7) |
|
|
|
|
|
|
908,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,310,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Vacation Pay(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance Premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, Health and Welfare Benefits(9) |
|
|
|
|
|
|
139,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139,500 |
|
Outplacement Services |
|
|
|
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
Tax Gross-ups |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
926,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total value: |
|
|
|
|
|
|
1,960,820 |
|
|
|
1,223,415 |
|
|
|
107,415 |
|
|
|
107,415 |
|
|
|
5,194,092 |
|
|
|
|
(1) |
|
For a discussion of the relevant scenarios where Ms. Boyer would be entitled to
payments regarding a Change in Control, please refer to the discussion under Executive
Agreements beginning on page 39. |
|
(2) |
|
Payable over 18 months in accordance with normal payroll practices. |
|
(3) |
|
Payments are made or reimbursed over a three-year period from the date of the
disability as follows: 100% of base salary for the first 12 months following the date of
disability, 80% of base salary for the second 12 months following the date of disability and
60% of base salary for the third 12 months following the date of disability; provided,
however, that such payment shall be reduced by the amount of any benefits the executive
receives by reason of her disability under the Companys relevant disability plan. For example
purposes, the figure in the table assumes payments for three years following the date of
disability and no reimbursement under the Companys relevant disability programs. If the
executive is disabled beyond 36 months from the date of disability, the Company shall continue to pay executive $279,000 per year for the period of
executives disability; provided, |
37
|
|
|
|
|
however, that such payment shall be reduced by the amount
of any benefits the executive receives by reason of his disability under the Companys
relevant disability plan. |
|
(4) |
|
Payable in a lump sum. |
|
(5) |
|
Represents accrued but unpaid pro-rata incentive compensation of Ms. Boyer. |
|
(6) |
|
Represents the value of unvested and accelerated stock options by multiplying the
number of such options by the excess of the fair market value of a share of the Companys
common stock on the date of termination over the exercise price of the stock option. |
|
(7) |
|
Represents the fair market value of all restricted shares whose vesting would be
accelerated as of February 3, 2007. |
|
(8) |
|
Assumes all vacation days were used. Vacation days do not roll over from year to
year. |
|
(9) |
|
Estimate of the aggregate amount needed to maintain Ms. Boyers health and welfare
benefits for a 18-month period after the Termination Date. |
Mr. Carbone
The following table shows the potential payments upon termination of the Company for Mr.
Carbone, the Companys Senior Vice President Finance.
POTENTIAL PAYMENTS TO MR. CARBONE
|
|
|
|
|
|
|
|
|
|
|
Termination by |
|
|
|
|
Company with |
|
Termination |
|
|
Cause by Mr. |
|
by Company |
|
|
Carbone or |
|
without |
Executive Benefits and Payments Upon |
|
upon Death |
|
Cause |
Termination |
|
($) |
|
($) |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance Payment)
|
|
|
|
|
|
|
325,000 |
(1) |
Incentive Compensation (Accrued but Unpaid) |
|
|
|
|
|
|
|
|
Incentive Compensation (Severance Payment) |
|
|
|
|
|
|
|
|
Stock Options (Acceleration of Vesting) |
|
|
|
|
|
|
|
|
Restricted Stock (Acceleration of Vesting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Vacation Pay(2) |
|
|
|
|
|
|
|
|
Life Insurance Premiums |
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation |
|
|
|
|
|
|
|
|
Medical, Health and Welfare Benefits |
|
|
|
|
|
|
|
|
Outplacement Services |
|
|
|
|
|
|
|
|
Tax Gross-ups |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total value: |
|
|
|
|
|
|
325,000 |
|
|
|
|
(1) |
|
Payable over 12 months in accordance with normal payroll practices. |
|
(2) |
|
Assumes all vacation days were used. Vacation days do not roll over from year to
year. |
38
Mr. Henchel
Mr. Henchel is not entitled to any potential payments upon termination or a change of control
of the Company, except for accrued vacation pay, which is assumed to be zero. Vacation days do not
roll over from year to year.
Agreements with Departed Executives
The Company has entered into agreements with respect to the following departed executives: Poe
Timmons and William E. May, Jr.
Ms. Timmons
We entered into Separation Pay, Confidentiality and Non-Competition agreement with Ms. Timmons
effective June 10, 2005. Under this agreement, if her employment was terminated other than for
cause, the Company agreed to pay Ms. Timmons her weekly base salary for a period of 52 weeks, minus
the deductions required by law and subject to a deduction of any salary or compensation earned from
other employment or self-employment during that 52-week period.
Ms. Timmons resigned her employment under an agreement with the Company pursuant to which the
termination was treated in effect as a termination by the Company without cause. Subsequently, the
Company entered into a General Release & Severance Agreement with Ms. Timmons on August 29, 2006.
Under this agreement, among other provisions, Ms. Timmons agreed to comply with:
|
|
|
confidentiality restrictions, for an indefinite period of time, as contained in her
Separation Pay, Confidentiality and Non-Competition Agreement; |
|
|
|
|
non-solicitation restrictions, for a period of 12 months from the date of
resignation, as contained in her Separation Pay, Confidentiality and Non-Competition
Agreement; and |
|
|
|
|
non-competition restrictions for a period of 12 months from the date of resignation. |
In consideration for Ms. Timmons agreement to and continued compliance with the terms of the
General Release and Severance Agreement, the Company agreed to pay Ms. Timmons $11,923 (minus any
deductions required by law, including applicable withholding), on a bi-weekly basis over a period
of 52 weeks and ending after Ms. Timmons has received a total of 26 payments, or the date that she
is employed (including self-employed) at an equivalent rate of pay, whichever occurs first. If Ms.
Timmons obtains employment (including self-employment) at a lower rate of pay, she will continue to
receive the differential between the two rates of pay for the balance of the 52 weeks. Further, the
general release and severance agreement provided Ms. Timmons with the following benefits:
|
|
|
all vacation entitlement that was then currently earned, but unused, amounting to
zero; |
|
|
|
|
full incentive compensation for the Spring 2006 Season pursuant to the Companys IC
Plan, or $111,600; and |
|
|
|
|
outplacement services of $5,000, which services will be offered through a provider
previously approved by the Company. |
Mr. May
We entered into an Employment Agreement with William E. May, Jr., our former Executive Vice
President, Chief Operating Officer, Treasurer and Secretary on February 23, 2004. In connection
with Mr. Mays resignation, the Company and Mr. May entered into a letter agreement, dated January
18, 2007. This letter agreement provides that Mr. May will be entitled to the compensation listed
under terminations without cause under Mr. Mays Employment Agreement, except that Mr. May is not
entitled to any pro-rata bonus for the Spring 2007 season. As a result, under his Employment
Agreement, Mr. May is entitled to:
|
|
|
accrued but unpaid base salary and accrued vacation; |
39
|
|
|
all vested benefits as of his termination date pursuant to the Companys benefit,
retirement, incentive and other plans; |
|
|
|
|
his annual base salary of $520,000 for an 18-month period after his termination
date, payable in accordance with the Companys customary payroll practices; |
|
|
|
|
continued insurance benefits for 18 months valued at $156,000; |
|
|
|
|
outplacement services and related travel costs up to a maximum of $10,000; and |
|
|
|
|
acceleration of vesting of stock awards by 12 additional months, providing a value
of $377,529 of accelerated stock options (calculated by multiplying the number of such
options by the excess of the fair market value of a share of the Companys common stock
on the date of termination over the exercise price of the stock option) and $46,520 of
accelerated restricted stock (calculated by the fair market value of all restricted
shares whose vesting would be accelerated as of the date of Mr. Mays termination). |
Also, under the letter agreement, the Company and Mr. May also generally agreed to release
each other from any and all claims that either party ever had or may now have up to and including
the date of the Letter Agreement.
Director Compensation
Associates and officers who are directors receive no additional compensation for services as
directors. The Board of Directors, upon the recommendation of the Compensation Committee, sets the
cash compensation for non-employee directors. Compensation for our non-associate directors is
initially considered and reviewed by the Compensation Committee. The Compensation Committee engaged
Mercer in February 2005 to provide information about director compensation at peer group companies.
Based on this review and consideration, the Compensation Committee recommended that the Board of
Directors set the compensation of our outside directors for fiscal 2005, and the Board of Directors
accepted the recommendation and unanimously approved the outside director compensation for fiscal
2005. For fiscal 2006, the Company did not engage an outside compensation consultant to review
board compensation. The outside board compensation for fiscal 2006, was reviewed by the
Compensation Committee and it recommended that no changes be made in the cash or equity
compensation of the Board members. The Board of Directors made no changes to cash compensation
during fiscal 2006.
Cash compensation for non-associate directors in fiscal 2006 included the following:
|
|
|
an annual retainer of $35,000 for service on the Board of Directors, paid quarterly in arrears; |
|
|
|
|
an annual retainer of $7,500 for service as Chairman of the Audit Committee, payable quarterly in arrears; |
|
|
|
|
an annual retainer of $4,000 for service as Chairman of the Compensation Committee,
payable quarterly in arrears; |
|
|
|
|
$1,500 for each Board meeting attended; and |
|
|
|
|
$1,000 for each committee meeting attended. |
In addition, as effective for fiscal 2006, each director who is not an associate of our Company receives:
|
|
|
upon a directors election to the Board, an initial grant to purchase 10,000 shares of our common stock; |
|
|
|
|
an annual grant of options to purchase 10,000 shares of our common stock at a price
equal to the fair market value of the shares at the grant date; and |
|
|
|
|
after three years of service as a director, a one-time grant of options to purchase
15,000 shares. |
On February 14, 2006, the Compensation Committee authorized the grant of 10,000 options to
each non-employee director of the Company, which was the same date that the Committee authorized
the grant of stock options and restricted shares to our executives. Also, on February 14, 2006, the
Compensation Committee authorized the one-time grant of
40
options on 15,000 shares to each of
directors Eveillard and Roberts, as each had served three years as members of the Board of
Directors. All present board members have now received their one time grant of 15,000 stock options
upon serving three years. The annual and one-time option grants to directors vest and become
exercisable at the rate of 25% per year of continued service and terminate on the earlier of the
tenth anniversary of the grant date or one year from termination of service as a director. Stock
options were granted to directors on the same date as stock options were granted to executives and
other associates of the Company. Such options had exercise prices equal to the closing price of our
stock on the date of grant.
All of the 2006 director options were issued under the Companys 2005 Stock Plan for
Non-Associate Directors. The options may be granted from time to time by action of the Board of
Directors and must be priced at 100% of the fair market value of the stock on the date of grant,
which the Board has determined to be the closing price of the stock on the date of grant. The
options become exercisable on an annual basis at the rate of 25% of the initial shares subject to
the options, commencing on the first anniversary of the date of grant provided that the holder
remains a director on such anniversary, and are exercisable until the earlier of the tenth
anniversary of the date of grant or one year from termination of service as a director, provided
that in no event shall the options be exercised beyond the ten year term.
No director had a different compensation arrangement with the Company in 2006. The table below
shows the compensation earned by each of the Companys non-employee directors during fiscal year
2006:
DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2006
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|
|
|
|
|
|
|
|
|
|
|
|
|
Fees earned |
|
Option |
|
|
|
|
in cash |
|
awards |
|
Total |
Name |
|
($) |
|
($)(1) |
|
($) |
Elizabeth M. Eveillard(2) |
|
|
58,500 |
|
|
|
139,393 |
|
|
|
197,893 |
|
Nancy J. Kramer(3) |
|
|
53,500 |
|
|
|
86,255 |
|
|
|
139,755 |
|
David A. Krinsky(4) |
|
|
54,500 |
|
|
|
86,255 |
|
|
|
140,755 |
|
Philip E. Mallott(5) |
|
|
63,500 |
|
|
|
116,593 |
|
|
|
180,093 |
|
Fredric M. Roberts(6) |
|
|
53,500 |
|
|
|
139,393 |
|
|
|
192,893 |
|
Kenneth J. Strottman(7) |
|
|
44,500 |
|
|
|
86,255 |
|
|
|
130,755 |
|
|
|
|
(1) |
|
Represents the dollar amount recognized for financial statement reporting
purposes with respect to the fiscal year in accordance with FAS 123R, disregarding any
estimate of forfeitures during the year, but accounting for any actual forfeitures by an
non-employee director during the fiscal year. For a discussion of the assumptions made in the
valuation of the dollar amount recognized, please refer to Note 1 to the Companys Financial
Statements, which are set forth in Item 8 to the Companys Annual Report on Form 10-K for the
fiscal year ended February 3, 2007. |
|
(2) |
|
Ms. Eveillard has vested and unvested options to purchase 36,250 shares of the
Companys common stock as of February 3, 2007. |
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(3) |
|
Ms. Kramer has vested and unvested options to purchase 65,000 shares of the
Companys common stock as of February 3, 2007. |
|
(4) |
|
Mr. Krinsky has vested and unvested options to purchase 65,000 shares of the
Companys common stock as of February 3, 2007. |
|
(5) |
|
Mr. Mallott has vested and unvested options to purchase 63,250 shares of the
Companys common stock as of February 3, 2007. |
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(6) |
|
Mr. Roberts has vested and unvested options to purchase 45,000 shares of the
Companys common stock as of February 3, 2007. |
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(7) |
|
Mr. Strottman has vested and unvested options to purchase 65,000 shares of the
Companys common stock as of February 3, 2007. |
41
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth additional information as of February 3, 2007, concerning
shares of our common stock that may be issued upon the exercise of options and other rights under
our existing equity compensation plans and arrangements. This includes information on shares in
plans approved by our stockholders and plans or arrangements not submitted to our stockholders for
approval. It includes the number of shares covered by, and the weighted average exercise price of,
outstanding options and other rights and the number of shares remaining available for future grants
excluding the shares to be issued upon exercise of outstanding options, warrants, and other rights.
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|
|
Number of securities |
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|
|
|
|
|
|
|
|
|
|
remaining available for |
|
|
|
Number of Securities to |
|
|
|
|
|
|
issuance under equity |
|
|
|
be issued upon exercise |
|
|
Weighted-average exercise |
|
|
compensation plans |
|
|
|
of outstanding options, |
|
|
price of outstanding options, |
|
|
(excluding securities |
|
|
|
warrants and rights |
|
|
warrants and rights |
|
|
reflected in column (a)) |
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|
|
(a) |
|
|
(b) |
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|
(c) |
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Equity
compensation plans
approved by
security holders |
|
|
1,620,849 |
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|
$ |
25.57 |
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|
|
1,777,549 |
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|
|
|
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|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
by security holders |
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|
|
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|
|
|
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Total |
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|
1,620,849 |
|
|
$ |
25.57 |
|
|
|
1,777,549 |
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TRANSACTIONS WITH RELATED PERSONS
The Company entered into an employment arrangement in 2005 with Charles Strottman, son of
director Kenneth J. Strottman. His employment continued throughout 2006. Charles Strottman is
employed by the Company as Director of Client Services, a non-executive position, with annual
compensation in excess of $120,000. The Company finds that the terms of Charles Strottmans
employment are reasonable and consistent with the terms of employment that are offered to similarly
situated associates. The employment was reviewed by the Companys Audit Committee as the committee
delegated the authority by the Board to review transactions with related persons. During fiscal
2006, the Company began a process to develop a more formal written policy concerning related-party
transactions.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis
contained in this proxy statement with management. Based on that review and discussions, the
Compensation Committee has recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in the Companys annual report on Form 10-K for the year ended February 3,
2007 and this proxy statement for filing with the Securities and Exchange Commission.
Compensation Committee
Fredric M. Roberts, Chairman
Nancy J. Kramer
Elizabeth M. Eveillard
42
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Fredric M. Roberts, Nancy J. Kramer, and Elizabeth M. Eveillard, who are not associates of the
Company, are members of the Compensation Committee. There are no Compensation Committee interlocks
or insider participation in the determination of compensation of our NEOs.
AUDIT COMMITTEE REPORT
A primary responsibility of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities relating primarily to the quality and integrity of Tween
Brands, Inc.s financial reporting process and reports, its systems of internal accounting and
controls, and the independent audit of its financial statements. Management is responsible for
preparing the financial statements, and the Companys independent registered public accounting firm
is responsible for auditing those financial statements. The Audit Committee, which consists of
three independent directors, functions in accordance with a written charter adopted by the Board of
Directors. The Amended and Restated Audit Committee Charter is available on the Companys Corporate
Governance page on its website at www.tweenbrands.com. The Charter requires the Audit Committee to
perform a self-assessment and review the Charter annually.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the
audited financial statements in the Annual Report on Form 10-K for the fiscal year ended February
3, 2007, with management and the Companys independent registered public accounting firm, including
their judgment about the quality and appropriateness of accounting principles, the reasonableness
of significant judgments, and the clarity of the disclosures in the financial statements. In
addition, the Audit Committee discussed with the Companys independent registered public accounting
firm the matters required to be communicated under generally accepted auditing standards by
Statement on Auditing Standards 61. The Audit Committee also discussed with the Companys
independent registered public accounting firm the independence of the independent registered public
accounting firm from management and the Company, and discussed the matters contained in the
independent registered public accounting firms formal written statement received by the Company
and required by the Independence Standards Board Standard No. 1.
The Audit Committee discussed with the Companys independent registered public accounting firm
the overall scope and plan for their audit. The Audit Committee met separately with the Companys
independent registered public accounting firm, with and without management present, to discuss the
results of their examinations, including the integrity, adequacy, and effectiveness of the
accounting and financial reporting processes and controls, and the overall quality of Tween Brands,
Inc.s reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to the Board, and the Board has approved, that the audited financial statements be included in the
Annual Report on Form 10-K for the year ended February 3, 2007, for filing with the Securities and
Exchange Commission.
Audit Committee
Philip E. Mallott, Chairman
Elizabeth M. Eveillard
David A. Krinsky
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers,
directors, and greater than 10% stockholders to file reports of ownership and changes in ownership
of the Companys securities with the Securities and Exchange Commission. SEC regulations require
that copies of the reports be provided to the Company. Based solely on our review of such reports,
we believe that all reporting persons complied with all filing requirements during the fiscal year
ended February 3, 2007, except for one late Form 4 filing for Ms. Eveillard and one late Form 4
filing for Mr. Bracale.
43
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP (Deloitte & Touche) was appointed by the Audit Committee of the Board
of Directors on February 14, 2006, and served as the Companys independent registered public
accounting firm for the fiscal year ended February 3, 2007.
On February 9, 2006, the Audit Committee determined that it would dismiss
PricewaterhouseCoopers LLP (PwC) as the Companys independent registered public accounting firm.
PwC was dismissed on April 10, 2006, upon completion by PwC of its procedures on the Companys
financial statements as of and for the fiscal year ended January 28, 2006 and the Form 10-K in
which such financial statements were included.
PwCs reports on the Companys consolidated financial statements for the fiscal years ended
January 29, 2005 and January 31, 2004, did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting
principles.
During the Companys fiscal years ended January 29, 2005 and January 31, 2004, and through
April 10, 2006, there were no disagreements with PwC on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure (within the meaning of
Item 304(a)(1)(iv) of Regulation S-K) which, if not resolved to PwCs satisfaction, would have
caused PwC to make reference thereto in its report on the Companys consolidated financial
statements for such years. There were no reportable events (as defined by Item 304(a)(1)(v) of
Regulation S-K), except for a material weakness in the Companys internal control over the
selection and application of our lease accounting policies, which failed to identify misstatements
in property and equipment, deferred credits from landlords, rent expense, depreciation expense and
the related impact of these items on cash provided by operating activities and cash used for
investing activities (the Material Weakness), as reported in the Companys Annual Report on Form
10-K for the fiscal year ended January 29, 2005 (the 2004 Form 10-K). PwC discussed the Material
Weakness with the Audit Committee during the Companys preparation of the 2004 Form 10-K. As
reported in the Quarterly Report on Form 10-Q for the fiscal quarter ended July 30, 2005, the
Material Weakness was remediated. The Company has authorized PwC to respond fully to any inquiries
by Deloitte & Touche relating to the Material Weakness.
The Company requested PwC to furnish the Company with a letter addressed to the Securities and
Exchange Commission stating whether PwC agreed with the above statements. A copy of PwCs letter
was filed as Exhibit 16.2 to Amendment No. 2 to the Current Report on Form 8-K filed on April 14,
2006.
During the Companys fiscal years ended January 29, 2005 and January 31, 2004, and through
April 10, 2006, neither the Company nor anyone on its behalf consulted with Deloitte & Touche
regarding any of the matters or events set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected, subject to the ratification of the
stockholders of the Company, Deloitte & Touche as the independent registered public accounting firm
for the Company for the 2007 fiscal year. It is intended that persons acting under the
accompanying proxy will vote the shares represented thereby in favor of ratification of such
appointment. It is anticipated that representatives of Deloitte & Touche will be present at the
annual meeting to respond to appropriate questions and to make a statement if such representatives
so desire.
Ratification of the selection of the independent registered public accounting firm requires
the affirmative vote of the holders of a majority of the shares of common stock voting on the
matter. Abstentions have the same effect as votes cast against ratification, and broker non-votes
have no effect. Unless a contrary choice is specified, proxies solicited by the Board of Directors
will be voted for ratification of the selection of the independent registered public accounting
firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF DELOITTE &
TOUCHE LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2007 FISCAL YEAR.
44
FEES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table shows the aggregate fees billed to the Company by Deloitte & Touche, its
independent registered public accounting firm for services rendered during the fiscal year ended
February 3, 2007, and by its former independent registered public accounting firm, PwC, for
services rendered during the fiscal year ended January 28, 2006.
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|
|
|
|
|
Fiscal Year Ended |
|
|
February 3, |
|
January 28, |
|
|
2007 |
|
2006 |
Audit Fees(1) |
|
$ |
897,452 |
|
|
$ |
838,554 |
|
Audit-Related Fees(2) |
|
|
15,100 |
|
|
|
159,743 |
|
Tax Fees(3) |
|
|
|
|
|
|
330,810 |
|
All Other Fees |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes fees for the annual integrated audit of the consolidated financial
statements, audits to meet statutory requirements and review of regulatory filings and
internal control. |
|
(2) |
|
Includes fees related to accounting consultations and Section 404 advisory
services. |
|
(3) |
|
Includes fees for services related to tax compliance and tax planning. |
The Audit Committee has considered whether the provision of services other than those
performed in connection with the Audit Fees above is compatible with maintaining the principal
accountants independence.
The Audit Committee has a policy that the Committee will pre-approve all audit and non-audit
services provided by the independent registered public accounting firm. The Audit Committee may
delegate pre-approval authority to a member of the Committee. The decisions of the member to whom
pre-approval authority is delegated must be presented to the full Committee at its next scheduled
meeting. The Audit Committee has delegated pre-approval authority to the Chairman.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the proxy statement for the 2008 Annual Meeting of
Stockholders should be submitted to the Secretary of the Company at our corporate offices by
December 15, 2007, but not before November 15, 2007. The Company may omit from the proxy statement
and form of proxy relating to the next annual meeting of stockholders any proposals that are not
received by the Secretary by December 15, 2007, or which are received before November 15, 2007. Any
stockholder proposal submitted outside the processes of Rule 14a-8 under the Securities Exchange
Act of 1934, as amended, for presentation at our 2008 Annual Meeting will be considered untimely
for purposes of Rule 14a-4 and 14a-5 if notice thereof is received by the Company after February
28, 2008. To be submitted at the meeting, any such proposal must be a proper subject for
stockholder action under the laws of the State of Delaware.
Stockholder nominations for the Board of Directors to be elected at the 2008 Annual Meeting of
Stockholders should be submitted not less than 14 days, nor more than 50 days, before the 2008
Annual Meeting.
SOLICITATION EXPENSES
The Company will pay the expense of preparing, assembling, printing and mailing the proxy form
and the form of material used in solicitation of proxies. Our associates may solicit proxies by
telephone, mail services, electronic mail, mailgram, facsimile, telegraph, cable and personal
interview.
45
CERTAIN MATTERS RELATING TO PROXY MATERIALS AND ANNUAL REPORTS
The Securities and Exchange Commission has adopted amendments to its rules regarding delivery
of proxy statements and annual reports to stockholders sharing the same address. We may now satisfy
these delivery rules by delivering a single proxy statement and annual report to an address shared
by two or more of our stockholders. This delivery method is referred to as householding and can
result in significant costs savings for us. To take advantage of this opportunity, we have
delivered only one proxy statement and annual report to multiple stockholders who share an address,
unless we received contrary instructions from the impacted stockholders prior to the mailing date.
We undertake to deliver promptly upon written or oral request a separate copy of the proxy
statement or annual report, as requested, to a stockholder at a shared address to which a single
copy of those documents was delivered. If you prefer to receive separate copies of a proxy
statement or annual report, either now or in the future, you can request a separate copy of the
proxy statement or annual report by writing to us at the following address: Investor Relations,
Tween Brands, Inc., 8323 Walton Parkway, New Albany, Ohio 43054, Attention: Robert C. Atkinson, or
by telephoning us at (614) 775-3500.
If you are currently a stockholder sharing an address with another Tween Brands, Inc.
stockholder and wish to have your future proxy statements and annual reports householded, please
contact Investor Relations at the above address or telephone number.
OTHER MATTERS
Copies of the exhibits to our 2006 Annual Report on Form 10-K may be downloaded from our
corporate website, www.tweenbrands.com. Printed copies are also available, at a reasonable charge
for copying and mailing, by writing to us at the following address: Investor Relations, Tween
Brands, Inc., 8323 Walton Parkway, New Albany, Ohio 43054, Attention: Robert C. Atkinson, or by
telephoning us at (614) 775-3500.
The Board of Directors knows of no other matters to be brought before the annual meeting.
However, if other matters should come before the meeting, each of the persons named in the proxy
intends to vote in accordance with their judgment on such matters.
By
Order of the Board of Directors,
Michael W. Rayden
Chairman and Chief Executive Officer
46
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TWEEN BRANDS, INC. INVESTOR RELATIONS 8323 WALTON PARKWAY NEW ALBANY, OH 43054 |
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VOTE BY INTERNET -
www.proxyvote.comUse the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER
COMMUNICATIONS If you would like to reduce the costs incurred
by Tween Brands, Inc. in mailing proxy materials, you can consent
to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To sign
up for electronic delivery, please follow the instructions above to vote using
the Internet and, when prompted, indicate that you agree to receive or access
stockholder communications electronically in future years.
VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone
to transmit your voting instructions up until 11:59 P.M. Eastern Time the
day before the cut-off date or meeting date. Have your proxy card in hand when you
call and then follow the instructions. VOTE BY
MAILMark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to Tween
Brands, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. |
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS: |
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TWEEN1 |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH
AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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TWEEN BRANDS, INC. |
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Vote on Directors |
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The Board of Directors recommends a vote FOR the election of the nominees for the Board of Directors. |
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For
All |
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Withhold
All |
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For All
Except |
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To
withhold authority to vote for any individual nominee(s), mark
For All Except and write the number(s) of the nominee(s)
on the line below.
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1.
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To elect as Directors of Tween Brands, Inc. the nominees listed below:
01) David A. Krinsky
02) Kenneth T. Stevens
03) Kenneth J. Strottman
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¨
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Vote on Proposal |
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For |
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Against |
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Abstain |
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The Board of Directors recommends a vote FOR the following proposal. |
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2.
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TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2007 FISCAL YEAR. |
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¨
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¨ |
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3.
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TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. |
The shares represented by this
proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder(s). If no direction is made, this proxy will be voted FOR the election of the nominees for the Board of Directors and FOR the ratification of the selection of Deloitte & Touche LLP as the Companys independent registered public
accounting firm for the 2007 fiscal year. If any other matters properly come before the meeting, the proxies named on the reverse side will vote in their discretion.
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For address changes and/or comments, please check this box and write them on the back where indicated. |
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Signature
[PLEASE SIGN WITHIN
BOX] |
Date |
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Signature
(Joint Owners) |
Date |
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TWEEN BRANDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2007
The undersigned stockholder(s) hereby appoint(s)
Michael W. Rayden and Kenneth T. Stevens, or either of them acting alone, as proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side
of this ballot, all of the shares of Common Stock of Tween Brands, Inc. that the undersigned stockholder(s)
is/are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 a.m., Eastern Time on May 24, 2007, at the Companys corporate offices, and any adjournment or
postponement thereof.
THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS
AND FOR THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANYS INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE 2007 FISCAL YEAR.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
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Address Changes/Comments: |
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(If you
noted any Address Changes/Comments above, please mark corresponding
box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE