SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended.
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Filed by a party other than the registrant [ ]
Check the appropriate box:
Preliminary Proxy Statement [ ]
Confidential for Use of the Commission only(as permitted by
Rule 14a-6(e)(2) [ ]
Definitive Proxy Statement [X]
Definitive Additional Materials [ ]
Soliciting Material Pursuant to ss.ss. 240.14a-12 [ ]
1-800-FLOWERS.COM, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
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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
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statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
1-800-FLOWERS.COM, INC.
One Old Country Road
Carle Place, New York 11514
Notice of Annual Meeting of Stockholders
December 3, 2009
The Annual Meeting of Stockholders (the "Annual Meeting") of
1-800-FLOWERS.COM, Inc. (the "Company") will be held at One Old Country Road,
Carle Place, New York 11514, Fourth Floor Conference Room (the "Meeting Place"),
on Thursday, December 3, 2009 at 9:00 a.m. eastern standard time, or any
adjournment thereof, for the following purposes, as more fully described in the
Proxy Statement accompanying this notice:
(1) To elect three Directors to serve until the 2012 Annual Meeting or
until their respective successors shall have been duly elected and
qualified;
(2) To ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending June 27, 2010;
(3) To reapprove the 2003 Long Term Incentive and Share Plan, as
amended and restated as of October 22, 2009;
(4) To approve the Section 16 Executive Officers Bonus Plan, as
amended and restated as of October 22, 2009; and
(5) To transact such other matters as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on October 8, 2009
will be entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders eligible to vote at the Annual Meeting will be available for
inspection at the Annual Meeting, and for a period of ten days prior to the
Annual Meeting, during regular business hours at the Meeting Place.
All stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you expect to attend the Annual Meeting, your proxy vote
is important. To assure your representation at the Annual Meeting, you are urged
to cast your vote, as instructed in the Notice of Internet Availability of Proxy
Materials, over the Internet or by telephone as promptly as possible. If you
received a copy of the proxy materials by mail, you may sign, date and mail the
proxy card in the envelope provided. Any stockholder of record attending the
Annual Meeting may vote in person, even if he or she has voted over the
Internet, by telephone or returned a completed proxy card. You may revoke your
proxy at any time prior to the Annual Meeting. If you attend the Annual Meeting
and vote by ballot, your proxy will be revoked automatically and only your vote
at the Annual Meeting will be counted.
By Order of the Board of Directors
/s/ Gerard M. Gallagher
----------------------------------
Gerard M. Gallagher
Corporate Secretary
Carle Place, New York
October 23, 2009
YOUR VOTE IS EXTREMELY IMPORTANT. YOU ARE URGED TO VOTE BY TELEPHONE OR INTERNET
AS PROMPTLY AS POSSIBLE. ALTERNATIVELY, IF YOU RECEIVED A PAPER PROXY CARD BY
MAIL, YOU MAY COMPLETE, SIGN AND RETURN THE PROXY CARD BY MAIL.
2
1-800-FLOWERS.COM, INC.
PROXY STATEMENT
October 23, 2009
This Proxy Statement is furnished to stockholders of record of
1-800-FLOWERS.COM, Inc. (the "Company") as of October 8, 2009 (the "Record
Date") in connection with the solicitation of proxies by the Board of Directors
of the Company (the "Board of Directors" or the "Board") for use at the Annual
Meeting of Stockholders (the "Annual Meeting") which will be held at One Old
Country Road, Carle Place, New York 11514, Fourth Floor Conference Room (the
"Meeting Place"), on Thursday, December 3, 2009 at 9:00 a.m. eastern standard
time or any adjournment thereof.
In accordance with rules and regulations adopted by the Securities and
Exchange Commission, instead of mailing a printed copy of our proxy materials to
every stockholder, we are now furnishing proxy materials to our stockholders on
the Internet. If you received a Notice of Internet Availability of Proxy
Materials by mail, you may not receive a printed copy of the proxy materials
other than as described below. Instead, the Notice of Internet Availability of
Proxy Materials will instruct you as to how you may access and review all of the
important information contained in the proxy materials. The Notice of Internet
Availability of Proxy Materials also instructs you as to how you may submit your
proxy by telephone or over the Internet. If you received a Notice of Internet
Availability of Proxy Materials by mail and did not receive proxy materials by
mail and would like to receive a printed copy of our proxy materials, you should
follow the instructions for requesting such materials included in the Notice of
Internet Availability of Proxy Materials.
The Securities and Exchange Commission's rules permit us to deliver a
single Notice or set of Annual Meeting materials to one address shared by two or
more of our stockholders. This delivery method is referred to as "householding"
and can result in significant cost savings. 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 agree
to deliver promptly, upon written or oral request, a separate copy of the Notice
or Annual Meeting materials, as requested, to any stockholder at the shared
address to which a single copy of those documents was delivered. If you prefer
to receive separate copies of the proxy statement or annual report, contact
Broadridge Financial Solutions, Inc. at 1.800.542.1061 or in writing at
Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
If you are currently a stockholder sharing an address with another stockholder
and wish to receive only one copy of future Notices, proxy statements and annual
reports for your household, please contact Broadridge at the above phone number
or address.
Shares cannot be voted at the Annual Meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the Annual Meeting will be voted
at the Annual Meeting or any adjournment thereof in accordance with instructions
thereon, or if no instructions are given, will be voted "FOR" the election of
the named nominees as Directors of the Company, "FOR" the ratification of the
appointment of Ernst & Young LLP, as the Company's independent registered public
accounting firm, for the fiscal year ending June 27, 2010, "FOR" the reapproval
of the 2003 Long Term Incentive and Share Plan, as amended and restated as of
October 22, 2009, and "FOR" the approval of the Section 16 Executive Officers
Bonus Plan as amended and restated on October 22, 2009; and will be voted in
accordance with the discretion of the person appointed as proxy with respect to
other matters which may properly come before the Annual Meeting. Any person
giving a proxy may revoke it by written notice to the Company at any time prior
to the exercise of the proxy. In addition, although mere attendance at the
Annual Meeting will not revoke the proxy, a stockholder who attends the Annual
Meeting may withdraw his or her proxy and vote in person. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business at the Annual Meeting. Abstentions will
be counted in tabulations of the votes cast on each of the proposals presented
at the Annual Meeting, whereas broker non-votes will not be counted for purposes
of determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials) is being made available on www.proxyvote.com
concurrently herewith to stockholders.
The mailing address of the principal executive office of the Company is One
Old Country Road, Suite 500, Carle Place, New York 11514. It is anticipated that
the Notice of Internet Availability of Proxy Materials is first being sent to
stockholders on or about October 23, 2009. The proxy statement and form of proxy
relating to the 2009 Annual Meeting is first being made available to
stockholders on or about October 23, 2009.
VOTING SECURITIES
The Company has two classes of voting securities issued and outstanding,
its Class A common stock, par value $0.01 per share (the "Class A Common
Stock"), and its Class B common stock, par value $0.01 per share (the "Class B
Common Stock", and together with the Class A Common Stock, the "Common Stock"),
which generally vote together as a single class on all matters presented to the
stockholders for their vote or approval. At the Annual Meeting, each stockholder
of record at the close of business on October 8, 2009 of Class A Common Stock
will be entitled to one vote for each share of Class A Common Stock owned on
that date as to each matter presented at the Annual Meeting and each stockholder
of record at the close of business on October 8, 2009 of Class B Common Stock
will be entitled to ten votes for each share of Class B Common Stock owned on
that date as to each matter presented at the Annual Meeting. On October 8, 2009,
26,616,835 shares of Class A Common Stock and 36,858,465 shares of Class B
Common Stock were outstanding. A list of stockholders eligible to vote at the
Annual Meeting will be available for inspection at the Annual Meeting, and for a
period of ten days prior to the Annual Meeting, during regular business hours at
the Meeting Place.
METHODS OF VOTING
Stockholders can vote in person at the Annual Meeting or by proxy. There
are three ways to vote by proxy:
o By Telephone -- You can vote by telephone by calling 1.800.690.6903
o By Internet -- You can vote over the Internet at www.proxyvote.com
by following the instructions on the proxy card; or
o By Mail -- If you received your proxy materials by mail, you can
vote by mail by signing, dating and mailing the enclosed proxy card.
Telephone and Internet voting facilities for stockholders of record will be
available 24 hours a day and will close at 11:59 p.m. (EDT) on December 2, 2009.
2
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form
of proxy intend to vote at the Annual Meeting "FOR" the election of the nominees
named below as Class I Directors of the Company to serve until the 2012 Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominee.
The Board of Directors does not currently anticipate that any of the nominees
will be unable to be a candidate for election.
Pursuant to the Company's Third Amended and Restated Certificate of
Incorporation, the Board of Directors has been divided into three classes,
denominated Class I, Class II and Class III, with members of each class holding
office for staggered three-year terms or until their respective successors are
duly elected and qualified. The Board of Directors currently consists of nine
members, three of whom are Class I Directors and each of whose term expires at
the Annual Meeting. Each of such Class I Directors is a nominee for election.
The nominees for Class I Directors are Messrs. Lawrence Calcano, James Cannavino
and Jeffrey C. Walker. The Class II Directors are Messrs. John J. Conefry, Jr.,
Leonard J. Elmore and Ms. Jan L. Murley, whose terms expire at the 2010 Annual
Meeting. The Class III Directors are Messrs. James F. McCann, Christopher G.
McCann and Larry Zarin, whose terms expire at the 2011 Annual Meeting. At each
Annual Meeting, the successors to the Directors whose terms have expired are
elected to serve from the time of their election and qualification until the
third Annual Meeting following their election or until a successor has been duly
elected and qualified. The Company's Third Amended and Restated Certificate of
Incorporation authorizes the removal of Directors under certain circumstances.
The affirmative vote of a plurality of the Company's outstanding common
stock present in person or by proxy at the Annual Meeting is required to elect
the nominees for Directors.
Information Regarding Nominees for Election as Directors (Class I Directors)
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each of the three
nominees during the last five years has been furnished to the Company by such
nominee.
Jeffrey C. Walker, age 54, has been a Director of the Company since
February 1995. Immediately prior to his retirement in December 2007, Mr. Walker
served as the Chairman of CCMP Capital Advisors, LLC, a private equity firm,
from August 2006. Prior thereto and from 1988 he was the Managing Partner of
JPMorgan Partners, the private equity group of J.P. Morgan Chase & Co. and a
General Partner thereof from 1984. He was also a vice chairman of J.P. Morgan
Chase & Co. Mr. Walker is the Chairman of Millennium Promise, a non-profit
organization dedicated to ending extreme poverty, hunger and disease and is an
Executive in Residence at the Harvard Business School. Mr. Walker is also a
Director of several private companies.
3
James Cannavino, age 65, has been a Director of the Company since June
2007. Mr. Cannavino has been Chairman of the Board of Direct Insite since 2000
and was appointed Chief Executive Officer in December 2002. Direct Insite is a
global provider of financial supply chain automation across procure-to-pay and
order-to cash business processes. From September 1997 through April 2000, he was
elected non-executive Chairman of Softworks, Inc. (a wholly owned subsidiary of
Direct Insite, formerly Computer Concepts), which went public and was later sold
to EMC. Mr. Cannavino was also the Chief Executive Officer and Chairman of the
Board of Directors of Cybersafe, Inc., a company specializing in network
security. Prior to Cybersafe, Mr. Cannavino was hired as President and Chief
Operating Officer of Perot Systems Corporation. In 1996 he was elected to serve
as Chief Executive Officer through July 1997. Prior to Perot Systems, Mr.
Cannavino worked at IBM in a career that spanned thirty years beginning in 1963.
Mr. Cannavino presently serves on the Boards of the National Center for Missing
and Exploited Children and The International Center for Missing and Exploited
Children. He is the immediate past chairman of the Board of Marist College in
Poughkeepsie, New York and continues to serve on that board.
Lawrence Calcano, age 46, has been a Director of the Company since December
2007. Mr. Calcano is the founder and Chief Executive Officer of Calcano Capital
Advisors, Inc., an advisory and investment firm focusing on the broad technology
industry, established in June 2007. From 1990 to June 2007, Mr. Calcano was
employed by Goldman, Sachs & Co, most recently serving as the co-head of the
firm's Global Technology Banking Group from 2002 until June 2007 and as the
Co-COO of that group from 1997 to 2002. Mr. Calcano has deep domain knowledge
and deal experience across all of the sub-sectors of technology, including
software, the internet, communications equipment, service and semiconductors,
having worked on many transactions within all of these sectors. Mr. Calcano was
previously a Director of the Company from July 1999 to December 2003.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF MESSRS.
CALCANO, CANNAVINO AND WALKER AS CLASS I DIRECTORS TO SERVE IN SUCH CAPACITY
UNTIL THE 2012 ANNUAL MEETING.
INFORMATION REGARDING DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AT THIS ANNUAL
MEETING
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of each Director who is not a nominee for election at this Annual Meeting
has been furnished to the Company by such Director.
James F. McCann, age 58, has served as the Company's Chairman of the Board
and Chief Executive Officer since inception. Mr. McCann has been in the floral
industry since 1976 when he began a retail chain of flower shops in the New York
metropolitan area. Mr. McCann is a member of the Board of Directors of
Lottomatica S.p.A. and Willis Holdings Group. James F. McCann is the brother of
Christopher G. McCann, a Director and the President of the Company.
Christopher G. McCann, age 48, has been the Company's President since
September 2000 and prior to that had served as the Company's Senior Vice
President. Mr. McCann has been a Director of the Company since inception. Mr.
McCann is a member of the Board of Trustees of Marist College. Christopher G.
McCann is the brother of James F. McCann, the Company's Chairman of the Board
and Chief Executive Officer.
4
John J. Conefry, Jr., age 65, has been a Director of the Company since
October 2002. Mr. Conefry is Vice Chairman of the Board of Directors of Astoria
Financial Corporation and its wholly-owned subsidiary, Astoria Federal Savings,
since September 1998. He formerly served as the Chairman of the Board and CEO of
Long Island Bancorp and The Long Island Savings Bank from September 1993 until
September 1998. Prior thereto, Mr. Conefry was a Senior Vice President of
Merrill Lynch, Pierce, Fenner & Smith, Inc., where he served in various
capacities, including Chief Financial Officer. Mr. Conefry was a partner in the
public accounting firm of Deloitte & Touche, LLP (formerly, Deloitte Haskins &
Sells). Mr. Conefry serves on the board of St. Vincent's Services and Wheel
Chair Charities, Inc., among others.
Leonard J. Elmore, age 57, has been a Director of the Company since October
2002. Mr. Elmore was a Partner with the law firm of Dreier LLP in its New York
City headquarters from September 2008 until February 2009. Prior to his
employment with Dreier LLP in September, 2008, Mr. Elmore served as Senior
Counsel with Dewey & LeBoeuf from October 2004 until March 2008. Prior thereto,
Mr. Elmore served as the President of Test University, a leading provider of
internet-delivered learning solutions for pre-college students, from 2001 to
2003. Mr. Elmore has served on the Board of Directors of Lee Enterprises, Inc.
since February, 2007 and is currently a member of their Audit Committee. Mr.
Elmore continues to fulfill his commitment to public service as a Trustee on the
University of Maryland Board of Trustees, and a Commissioner on the John and
James L. Knight Foundation's Knight Commission on Intercollegiate Athletics.
Jan L. Murley, age 58, has been a Director of the Company since February
2007. Ms. Murley is currently serving as Interim President for the Company's
Consumer Floral business segment since September 15, 2008. From June 30, 2008 to
September 15, 2008, she rendered marketing consulting services to the Company.
Ms. Murley has served as a consultant to Kohlberg Kravis Roberts & Co. (KKR) (a
private equity firm) since November 2006. From October 2003 to July 2006, Ms.
Murley was Chief Executive Officer and a Director of The Boyds Collection, Ltd.
(a publicly traded designer and manufacturer of gifts and collectibles), which
was majority-owned by KKR. Boyds filed for bankruptcy under Chapter 11 of the US
Bankruptcy Code in October 2005 and emerged from Chapter 11 in June 2006 as a
private company. Prior to that, she was group Vice President - Marketing of
Hallmark Cards, Inc. (a publisher of greeting cards and related gifts) from 1999
to 2002. Previously, Ms. Murley was employed by Procter & Gamble for more than
20 years, with her last position being Vice President for skin care and personal
cleansing products. Ms. Murley has been a Director of The Clorox Company since
November 2001 and serves as a member of its Audit and Nominating and Governance
Committees. She also has been a Director of Qwest Communications since December
2007 and serves as a member of its Human Resource and Compensation Committee.
Larry Zarin, age 55, has been a director of the Company since March 2009.
Mr. Zarin is Senior Vice President, Marketing and Corporate Communications for
Express Scripts, a Fortune 500 company whose goal is to make the use of
prescription drugs safer and more affordable. He joined Express Scripts in 1996
as president of Express Scripts Vision, a subsidiary. He remained with the
subsidiary until the sale of the company in 1998, when he then joined the
Express Scripts parent company. During his tenure at Express Scripts, he has
taken a leading role in the successful integration of the company's numerous
major acquisitions, including ValueRx, Diversified Pharmaceutical Services, NPA,
CuraScript and Priority Healthcare. Before joining Express Scripts Vision, Mr.
Zarin headed a St. Louis consulting firm. Mr. Zarin is also a Director of
several not-for-profit organization.
5
Information about the Board and its Committees
Each of our Directors, other than Messrs. James F. McCann and Christopher
G. McCann and Ms. Jan L. Murley, qualifies as an "independent director" as
defined under the published listing requirements of the NASDAQ Stock Market. The
NASDAQ independence definition includes a series of objective tests. For
example, an independent director may not be employed by us and may not engage in
certain types of business dealings with the Company. In addition, as further
required by NASDAQ rules, the Board has made a subjective determination as to
each independent Director that no relationship exists which, in the opinion of
the Board, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a Director. In making these determinations, the
Board reviewed and discussed information provided by the Directors and by the
Company with regard to each Director's business and personal activities as they
may relate to the Company and the Company's management. In addition, as required
by NASDAQ rules, the Board determined that the members of the Audit Committee
each qualify as "independent" under special standards established by NASDAQ and
the U.S. Securities and Exchange Commission (the "Commission") for members of
audit committees.
The table below provides current membership and meeting information for
each of the Board committees for Fiscal 2009.
Current Membership:
Nominating and
Corporate Secondary
Audit Compensation Governance Compensation
Directors Committee Committee Committee Committee
---------------------------------------- -------------- ---------------- ---------------- ----------------
James F. McCann X
Christopher G. McCann
Jeffrey C. Walker X X*
Lawrence Calcano X X
Jan L. Murley
John J. Conefry, Jr. X* X X
Leonard J. Elmore X*
James Cannavino X
Larry Zarin X
Total Meetings in Fiscal 2009 6 3 2 4
-------------------
* Committee Chairperson
Audit Committee
The Audit Committee of the Board of Directors reports to the Board
regarding the appointment of the Company's independent registered public
accountants, the scope and results of its annual audits, compliance with
accounting and financial policies and management's procedures and policies
relative to the adequacy of internal accounting controls. The Company's Board of
Directors adopted a written charter for the Audit Committee in January 2000, as
amended in August 2003, which outlines the responsibilities of the Audit
Committee. A current copy of the charter of the Audit Committee is available on
our website located at www.1800flowers.com under the Investor Relations section
of the website.
6
Each member of the Audit Committee is "financially literate" as required by
NASDAQ rules. The Audit Committee also includes at least one member, John J.
Conefry, Jr., who was determined by the Board to meet the qualifications of an
"audit committee financial expert" in accordance with commission rules and to
meet the qualifications of "financial sophistication" in accordance with NASDAQ
rules. Stockholders should understand that these designations related to our
Audit Committee members' experience and understanding with respect to certain
accounting and auditing matters and do not impose upon any of them any duties,
obligations or liabilities that are greater than those generally imposed on a
member of the Audit Committee or of the Board.
Compensation Committee
The Compensation Committee of the Board of Directors establishes the
Company's compensation philosophy and makes a final determination on all forms
of compensation to be provided to the Company's Section 16 Executive Officers
("Executive Officers"), including base salary and the provisions of the Sharing
Success Program under which annual incentive compensation may be awarded. In
addition, the Compensation Committee administers the Company's 2003 Long Term
Incentive and Share Award Plan ("2003 Plan") under which option grants, stock
appreciation rights, restricted awards, performance awards and equity awards
under the Company's Long Term Incentive Plan ("LTIP") may be made to Directors,
officers, employees of, and consultants to, the Company and its subsidiaries.
See "Named Executive Officer Compensation--Compensation Discussion and
Analysis--Sharing Success Program and Long-Term Incentive Equity Awards." The
Board of Directors has authorized a Secondary Committee of the Compensation
Committee (the "Secondary Committee"), which consists of Mr. James F. McCann, to
also review awards for all of the Company's employees, other than its Executive
Officers. The Compensation Committee also makes recommendations to the Board of
Directors regarding Director's compensation. The Company's Board of Directors
adopted a written charter for the Compensation Committee in June 2003, which
outlines the responsibilities of the Compensation Committee. A current copy of
the charter of the Compensation Committee is available on our web site located
at www.1800flowers.com under the Investor Relations section of the website.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for the
oversight of the evaluation of the Board of Directors, including its size and
composition; it reviews and reassesses the adequacy of corporate governance
guidelines and practices and develops and recommends to the Board the Company's
corporate governance guidelines and practices; and identifies and evaluates
individuals qualified to become Board members and recommends to the Board,
Director nominees for election and re-election. The Nominating and Corporate
Governance Committee will consider recommendations for prospective nominees for
the Board from other members of the Board, management and others, including
Stockholders, and may employ third-party search firms. The Company's Board of
Directors adopted a written charter for the Nominating and Corporate Governance
Committee in June 2003, which outlines the responsibilities of the Committee. A
current copy of the charter of the Nominating and Corporate Governance Committee
is available on our website located at www.1800flowers.com under the Investor
Relations section of the website.
7
Compensation Committee Interlocks and Insider Participation
No interlocking relationships exist between the Board of Directors or the
Compensation Committee and the Board of Directors or the compensation committee
of any other company, nor has any such interlocking relationship existed in the
past. No member of the Compensation Committee was an officer or employee of the
Company at any time during Fiscal 2009.
Communication with Board of Directors
The Nominating and Corporate Governance Committee, on behalf of the Board,
reviews letters from stockholders concerning the Company's Annual Meeting of
Stockholders and governance process, including recommendations of director
candidates, and makes recommendations to the Board based on such communications.
Stockholders can send communications to the Board and to the non-management
Directors by mail in care of the Corporate Secretary at One Old Country Road,
Suite 500, Carle Place, NY 11514, Attention: Gerard M. Gallagher, and should
specify the intended recipient or recipients. All such communications, other
than unsolicited commercial solicitations or communications will be forwarded to
the appropriate Director or Directors for review. Any such unsolicited
commercial solicitation or communication not forwarded to the appropriate
Director or Directors will be available to any non-management Director who
wishes to review it.
Attendance at Meetings
During Fiscal 2009, the Board of Directors held four meetings and acted by
unanimous written consent on two occasions. During Fiscal 2009, all incumbent
Directors, with the exception of Mr. Walker, attended at least 75 % of the
meetings of the Board of Directors and the meetings held by all committees of
the Board of which they were a member. We expect the Directors to attend the
Annual Meeting Meeting; all incumbent Directors attended last year's Annual
Meeting of the Stockholders.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act")
requires our Executive Officers and Directors, and persons who own more than 10%
of a registered class of our equity securities, to file reports of ownership and
changes in ownership with the Commission. Executive Officers, Directors, and
greater than 10% stockholders are required by Commission regulations to furnish
us with copies of all reports they file pursuant to Section 16(a). Based on a
review of the copies of such reports furnished to us, we believe that all
Section 16(a) filing requirements applicable to our Executive Officers,
Directors and greater than 10% stockholders have been satisfied, with the
exception of the following inadvertent late filings:
The following Executive Officers and Directors each filed a late Form 4
during Fiscal 2009 relating to the granting of restricted stock and/or
stock options as part of regularly scheduled grants pursuant to our
employee benefit plans between 2005 and 2009: James McCann (three
transactions), Christopher McCann (three transactions), Stephen Bozzo (two
transactions), Gerard Gallagher (four transactions), Timothy Hopkins (two
transactions), William Shea (four transactions) and David Taiclet (one
transaction). The awards for NEOs had been otherwise disclosed in our proxy
statements during that period.
8
David Taiclet and Larry Zarin each filed a late Form 3 during Fiscal 2009,
and Mark Nance filed a late Form 3 on October 15, 2009, reporting that they
had become an Executive Officer during the fiscal year ended 2007, a
Director during Fiscal 2009, and an Executive Officer during Fiscal 2009
respectively.
We have adopted procedures to enhance future compliance with Section 16
reporting requirements.
Compensation of Directors
Change in
Pension
Fees Value and
Earned Non-Equity Nonqualified
Annual Committee Committee or Paid Stock Option Incentive Deferred
Cash Meeting Chairman in Cash Awards Awards Plan Compensation All Other
Retainer Fees Fees (1) (2) (3) Compensation Earnings Compensation Total
Director ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
------------------------------------------------------------------------------------------------------------------------------------
Lawrence Calcano 12,500 15,500 0 28,000 0 15,146 0 0 0 43,146
James Cannavino 12,500 11,000 0 23,500 0 15,146 0 0 0 38,646
John J. Conefry, Jr. 12,500 19,500 10,000 42,000 0 15,146 0 0 0 57,146
Leonard J. Elmore 12,500 10,500 5,000 28,000 0 15,146 0 0 0 43,146
Jan L. Murley(4) 12,500 12,000 0 24,500 8,150 0 0 0 0 32,650
Jeffrey C. Walker 12,500 6,000 5,000 23,500 0 15,146 0 0 0 38,646
Larry Zarin 0 6,000 0 6,000 0 0 0 0 0 6,000
(1) Total Fees Earned or Paid in Cash combines the amounts in the three
preceding columns.
(2) Stock awards reflect compensation expense for restricted stock awards
(RSAs) recognized for financial reporting purposes (exclusive of any
assumption for forfeitures) under Statement of Financial Accounting
Standards No. 123(R) for the year ended June 28, 2009. Each director named
above who chose to receive restricted shares, received a grant on December
3, 2008, the date of the Company's Annual Shareholder's Meeting, of 2,500
RSAs with a grant date fair value under FAS 123R of $8,150, based on the
closing price of our common stock on that date of $3.26. RSAs granted to
members of the Company's Board of Directors immediately vested upon grant.
(3) Reflects compensation expense for stock option grants recognized for
financial reporting purposes (exclusive of any assumption for forfeitures)
under FAS 123R, for the year ended June 28, 2009. Each director named above
who chose to receive stock options, received a grant on December 3, 2008,
the date of the Company's Annual Shareholder's Meeting, of 10,000 options
with a grant date fair value under FAS 123R of $15,146, based on the
closing price of our common stock on that date of $3.26. Options granted to
members of the Company's Board of Directors immediately vested upon grant.
As of the end of fiscal 2009:
(a) Mr. Calcano has 30,000 option awards outstanding
(b) Mr. Cannavino has 20,000 option awards outstanding
(c) Mr. Conefry has 45,000 option awards outstanding
(d) Mr. Elmore has 65,000 option awards outstanding
(e) Ms. Murley has 0 option awards outstanding
(f) Mr. Walker has 10,000 option awards
outstanding
(g) Mr. Zarin has 0 options awards outstanding
9
In fiscal 2009, non-employee members of the Company's Board of Directors
received the following compensation:
* An annual retainer of $12,500 paid to Board Members on the date of
the Annual Meeting.
* A per meeting fee (Board or Committee) of $2,500 for personal
attendance and a per meeting fee (Board or Committee) of $1,000 for
telephonic attendance, excluding Committee meetings held on the same
day as a meeting of the full Board.
* An annual retainer of $5,000 for each Board Committee Chairperson,
except for the Audit Committee Chairperson who receives an annual
retainer of $10,000. These retainers are paid on the date of the
Annual Meeting
* An annual award of 10,000 options, or, in lieu thereof, the
equivalent number of RSA's based upon a 4 to 1 ratio between options
and RSA's. Such options and shares, which are granted on the date of
the Annual Meeting, vest immediately.
(4) Compensation information on James F. McCann, Christopher G. McCann and Jan
Murley, who are Directors, as well as Executive Officers of the Company, is
contained under the section titled "Executive Compensation and Other
Information--Summary Compensation Table"
10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following individuals were serving as Executive Officers of the
Company on October 8, 2009:
Name Age Position with the Company
---- --- -------------------------
James F. McCann............ 58 Chairman of the Board and Chief Executive
Officer
Christopher G. McCann...... 48 Director and President
Timothy J. Hopkins......... 55 President of Madison Brands
William E. Shea............ 50 Senior Vice President, Treasurer, Chief
Financial Officer
Gerard M. Gallagher........ 56 General Counsel, Senior Vice President of
Business Affairs, Corporate Secretary
Stephen J. Bozzo........... 54 Senior Vice President and Chief
Information Officer
David Taiclet.............. 46 President, Gourmet Food & Gift Baskets
Jan Murley................. 58 Interim President, Consumer Floral Brands
Mark L. Nance.............. 59 President, BloomNet
Information Concerning Executive Officers Who Are Not Directors
Timothy J. Hopkins has been President of the Madison Brands division since
January 2007 and prior to that served as President of Specialty Brands since
joining the Company in March 2005. Immediately before joining the Company, Mr.
Hopkins consulted for various retail companies after serving as Chief Executive
Officer and Director of Sur La Table, Inc., a multi-channel upscale specialty
retailer of gourmet culinary and serveware products where he was employed from
2001-2004. From 2000-2001 he was the CEO at LeGourmet Chef, a specialty retailer
of housewares and from 1995-2000, Mr. Hopkins was President, Corporate
Merchandising and Logistics Worldwide for BORDERS Group, Inc, a multi-channel
retailer of books and multi-media. Before this position Mr. Hopkins held other
senior level positions in the multi-channel retailing sector.
William E. Shea has been our Senior Vice President, Treasurer and Chief
Financial Officer since September 2000. Before holding his current position, Mr.
Shea was our Vice President of Finance and Corporate Controller after joining us
in April 1996. From 1980 until joining us, Mr. Shea was a certified public
accountant with Ernst & Young LLP.
Gerard M. Gallagher has been our General Counsel, Senior Vice President of
Business Affairs and Corporate Secretary since August 1999 and has been
providing legal services to the Company since its inception. Mr. Gallagher is
the founder and a managing partner in the law firm of Gallagher, Walker, Bianco
and Plastaras, based in Mineola, New York, specializing in corporate, litigation
and intellectual property matters since 1993. Mr. Gallagher is duly admitted to
practice before the New York State Courts and the United States District Courts
of both the Eastern District and Southern District of New York.
Stephen J. Bozzo has been our Senior Vice President, Chief Information
Officer since May 2007. Prior to joining the Company, Mr. Bozzo served as Chief
Information Officer for the International Division of MetLife Insurance Company
from 2001. Mr. Bozzo's business background includes senior executive positions
at Bear Stearns Inc. as Managing Director Principle, AIG as Senior Vice
11
President Telecommunications and Technical Services and Chase Manhattan Bank,
where he was Senior Vice President Global Telecommunications.
David Taiclet has been our President of Gourmet Food & Gift Baskets since
September 2008 and prior to that served as Chief Executive Officer of Fannie May
Confections Brands, Inc. from May 2006, upon our acquisition of the Company.
Prior thereto and commencing in 1995, Mr. Taiclet was a co-Founder of a business
that ultimately became known as Fannie May Confections Brands, Inc. (formerly
Alpine Confections, Inc), a multi-branded and multi-channel retailer,
manufacturer, and distributor of confectionery and specialty food products. From
May 1991 to January 1995, Mr. Taiclet served in a variety of management
positions with Cargill, Inc., including in the Strategy and Business Development
Group. Cargill, Inc. is an international marketer, processor and distributor of
food, financial and industrial products. Mr. Taiclet also served four years of
active duty in the U.S. Army, attaining the rank of Captain.
Mark L. Nance has been President of BloomNet since August 2006. Before
holding his current position, Mr. Nance was a Senior Vice President, Sales and
Marketing for BloomNet after joining us in December 2004. Before joining us, Mr.
Nance was an Executive Vice President and General Manager with Teleflora, LLC
from November 2000 until June 2004 and held various senior level positions at
American Floral Services, Inc. from 1983 to 2000.
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
This section discusses compensation to our Named Executive Officers, which
consist of our Chief Executive Officer, our Chief Financial Officer and the
three next most highly compensated Executive Officers of the Company as
determined under the rules of the Commission (collectively, the "NEO's").
The Compensation Committee believes that the compensation programs for its
NEO's, as well as all of its Executive Officers, should reflect the Company's
performance and the value created for the Company's stockholders. In addition,
the compensation programs should support the short-term and long-term strategic
goals and values of the Company and should reward individual loyalty to the
Company and contribution to the Company's success. The Company is engaged in a
very competitive industry, and the Company's success depends upon its ability to
attract and retain qualified Executive Officers through the competitive
compensation packages it offers to such individuals.
The fundamental policy of the Compensation Committee is to provide the
Company's NEO's, as well as its Executive Officers, with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company. It is the Compensation Committee's philosophy
that a significant portion of each NEO's and Executive Officer's compensation
should be contingent upon the Company's financial performance. The Company also
acknowledges the importance of attracting and retaining talented, motivated and
success-oriented Executive Officers who share our overall corporate philosophy
and will enable our Company to achieve its short and long-term goals.
Accordingly, the compensation package for each NEO and Executive Officer is
comprised of three elements: (i) base salary; (ii) annual incentives and (iii)
long-term incentive equity awards.
12
Guiding Principles:
o Growth - To create an atmosphere that encourages superior growth and
performance of the Company while also offering personal and
professional growth.
o Teamwork - To encourage executives to work together effectively and
efficiently so that company goals can be fully realized.
o Innovation - To encourage and reward creativity and innovation,
including the development of new ideas and business opportunities for
the Company.
o Market competitiveness - To offer a strong, comprehensive compensation
package that will enable the Company to attract and retain qualified
executive talent.
Setting Executive Compensation
We compete for senior executive talent with many leading companies. In
order to stay competitive in the marketplace, a critical component of which is
the recruitment and retention of executive talent, we annually review the market
competitiveness of our Executive Officer compensation programs. In connection
with this review, the Compensation Committee has retained the services of Mercer
(formerly Mercer Human Resource Consulting ("Mercer")) (see "Role of
Compensation Consultant" below for further discussion of Mercer's role).
When assessing the market competitiveness of our compensation programs, in
addition to information provided by Mercer, we review summary third-party survey
information and publicly available data relating to a specific group of
companies. For our executive compensation comparisons, we consider peer
companies. The peer companies include a broad range of companies in the internet
retail, internet content and catalog/specialty retail sector. Members of the
peer companies include: Williams-Sonoma, Inc., Tiffany & Co., Cabela's, Inc.,
American Greetings, Inc., Priceline.com, Inc., Monster Worldwide, Inc.,
EarthLink, Inc., Netflix, Inc., Orbitz Worldwide, Inc. Overstock.com, Inc., GSI
Commerce Inc., ValueClick, Inc., RealNetworks, Inc., United Online, Inc., and
Drugstore.com, Inc. Although the Compensation Committee compares the
compensation of its Executive Officers to the compensation of similar personnel
within its peer group, the Compensation Committee uses this information as a
general guideline, exercising discretion in determining base salaries and equity
grants and does not require that either be benchmarked against a specific level
relative to its peers. The Compensation Committee also reviews the Company's
recent historical compensation practices for its executives, and considers
recommendations from the Chief Executive Officer and President regarding the
compensation of their direct reports, who include the other NEO's.
Elements of Compensation
The Compensation Committee believes that we can maximize the effectiveness
of our compensation program by ensuring that all program elements are working in
concert to motivate and reward performance. The elements of our executive
compensation program are detailed below, together with the principal factors
which the Compensation Committee considers in reviewing the components of each
Executive Officer's compensation package. In general, for each compensation
element, these factors include: the key role each Executive Officer performs for
13
the Company; the benefit to the Company in assuring the retention of his or her
services; the performance of the Company during the past fiscal year; the
competitive market conditions for executive compensation; the executive's prior
year compensation; and the objective evaluation of the Executive Officer's
performance. The Compensation Committee may also, however, in its discretion,
apply other factors with respect to executive compensation. We believe that our
executive compensation program effectively strengthens the mutuality of
interests between the Executive Officers and the Company's stockholders, which
results in greater company performance.
Base Salary. The Compensation Committee views base salary as the assured
element of compensation that permits income predictability. Subject to existing
employment agreements and employment offer letters, our objective is to set base
salary levels at the competitive norm. However, individual salaries may be above
or below the competitive norm to reflect the strategic role, experience,
proficiency and performance of the executive. Incumbents who have been in their
positions for a longer period of time, and whose performance is superior, may be
paid above the competitive norm. In addition, in the case of seasoned executives
with strategic value who are newly hired into the Company, it may be necessary
to pay above the competitive norm in order to attract the best candidates to the
Company.
The minimum base salaries for Messrs. J. McCann, C. McCann, and Hopkins and
Ms. Murley are primarily prescribed in their employment agreements, employment
offer letters or consulting agreement, as the case may be (see below for
description of the employment agreements, employment offer letters and
consulting agreements in the "Narrative Disclosure to Summary Compensation
Table-Grants of Plan-Based Awards-Employment Agreements, Employment Offer
Letters and Consulting Agreements"). Annual base salary increases for the NEO's
and other Executive Officers are determined on the basis of the employment
agreements (for Messrs. J. McCann, and C. McCann), as well as the following
factors: the performance of the executive versus job responsibilities; the
relationship between current salary and the range for the executive's level,
ranges having been set based on the competitive norm in the industry; the
average size of salary increase based upon the Company's financial performance;
and whether the responsibilities or criticality of the position of the
incumbents have been changed during the preceding year. The weight given to each
of these factors may differ from individual to individual as the Compensation
Committee deems appropriate. Increases for Fiscal 2009 for Messrs. J. McCann, C.
McCann, Hopkins and Shea were approximately 0%, 1.4%, 2.4% and 3.7%,
respectively. Ms. Murley was retained as Interim President, Consumer Floral in
Fiscal 2009.
Annual Incentive Award. Annual incentive awards play a significant role in
the Company's overall compensation package for its Executive Officers. The
annual incentive award for the NEO's is based upon the Company's financial
performance and, in the case of Mr. Hopkins and Ms. Murley, also included brand
specific financial performance. This balance supports the accomplishment of the
Company's overall financial objectives and rewards the individual contributions
of our NEO's. Annual incentive programs for Executive Officers support the
following company objectives:
o Communication of important goals through performance targets that are
aligned with business strategies.
o Motivation for the entire management team to work together toward a
common set of goals.
14
o Reward executives on the basis of results achieved.
o Deliver annual incentive opportunities and payments through a
structured, performance driven, objective mechanism.
o Deliver a competitive level of compensation that is fully competitive
with industry practice.
NEO's are eligible to receive annual incentive awards under the Company's
Sharing Success Program.
Sharing Success Program. The Sharing Success Program is intended to cover
management positions, including the NEO's. Each eligible plan participant is
assigned a target award (expressed as a percentage of base salary) which
represents the level of incentive award the participant can expect to earn in
the event all performance measures are achieved at 100% during the ensuing
fiscal year. For each fiscal year, specific performance measures are established
by the Compensation Committee that reflect the key strategic and business goals
established by the business plan for that year. For Fiscal 2009, in the case of
Messrs. J. McCann, C. McCann and Shea, the growth of Company-wide Plan EBITDA,
was the performance measure selected for their annual cash incentive awards.
EBITDA as used for purposes of the Sharing Success Program and the Long Term
Incentive Plan ("LTIP") is defined as net income before interest, taxes,
depreciation, amortization and stock based compensation expense ("Plan EBITDA").
For Mr. Hopkins and Ms. Murley, performance measures were the aggregate of: (i)
the growth of both brand-specific revenue and brand-specific Plan EBITDA, and
(ii) the growth of Company-wide Plan EBITDA. The following table presents the
NEO's targeted incentive award opportunity, as a percentage of their salary
("target award"), and the performance measures and relative weighting of their
components for Fiscal 2009:
Weighting of Performance Measures
---------------------------------------------------
Target Company-wide Brand-specific
Award -------------------- ------------------------------
Name (% of Salary) EBITDA Revenue EBITDA Sub-total
--------------------------- ------------- -------------------- ---------- -------- -----------
James F. McCann 100% 100% n/a n/a n/a
Chairman of the Board and
Chief Executive Officer
William E. Shea 50% 100% n/a n/a n/a
Senior Vice President,
Treasurer, and Chief
Financial Officer
Christopher G. McCann 75% 100% n/a n/a n/a
Director and President
Tim Hopkins 50% 25% 18.75% 56.25% 75%
President of Madison
Brands
Jan Murley (1) 25% 18.75% 56.25% 75%
Director and Interim
President Consumer
Floral
(1) Ms. Murley's target award as per her consulting agreement was $200,000.
15
When Company-wide and/or brand-specific actual results exceed or fall below
performance measures, actual awards are proportionately increased or decreased
from the target awards. Participants may earn no Company-wide or brand-specific
bonus if the threshold performance measures are not met (defined as achievement
of 70% of performance measures, resulting in a 50% pay-out of target award) and
no participant may be paid an incentive award under the Sharing Success Program
in excess of maximum (defined as achievement of 135% of performance measures,
resulting in a 200% pay-out of target award), as presented in the table below.
In addition, all participants must be actively employed at the time of payment
in order to qualify for the award.
% Achievement of Target
Performance Award
Measures Multiple
---------------------- --------------
135% 200% (max)
125% 150%
110% 125%
100% 100%
85% 75%
70% 50%
Below 70% 0%
For Fiscsal 2009, the Company's performance measures were a function of
achieving specified increases in comparison to prior year actual performance and
contemplates the impact of acquisitions and management's strategic initiatives.
For Fiscal 2009, the Company-wide performance measure was as follows:
Company-wide Plan EBITDA growth in a range of 27.8%, or $17,012 mm, reflecting
an expectation of EBITDA growth similar to Fiscal 2007 levels. Pertaining to Mr.
Hopkins, brand-specific performance measures for Fiscal 2009 were as follows:
Madison Brands (Home and Children's Group) revenue growth of 5.3%, or $9,546 mm
and Plan EBITDA growth of 197.0%, or $6,771 mm, reflecting the expected return
to profitability of the Madison Brands. Pertaining to Ms. Murley, brand-specific
performance measures for Fiscal 2009 were as follows: Consumer Floral revenue
growth of4.9%, or $23,429 mm and Plan EBITDA growth of 8.5%, or $5,782mm,
reflecting an expectation of revenue and EBITDA growth to Fiscal 2007 levels.
The following table reflects the relationship of actual performance against
the Company's performance measures and the resulting Total Payout Factor for the
Company's Sharing Success Program. The performance measures range from
"threshold" (the minimum achievement level of the performance measure at which
an executive may earn 50% of the target award) to "maximum" (the maximum
achievement level of the performance measure at which an executive may earn 200%
of the target award). The Target Award Multiples are then weighted to produce a
"Total Payout Factor." The Total Payout Factor is multiplied by each executive's
target award percentage to produce the executive's cash bonus award. In Fiscal
2009, the Compensation Committee did not exercise any discretion in awarding
cash bonus compensation under the Sharing Success Program.
16
Calculation of
Performance/Payout Relationship ($'s in thousands) Target Award Earned
------------------------------------------------------------------- --------------------------------------------
Threshold Target Maximum Total
--------------------- ---------------------- -------------------- Target Payout
Performance Payout Performance Payout Performance Payout Actual Award Weighting Factor
Performance Metric Measures % Measures % Measures % Performance(2) Multiple of Result %
------------------ ----------- --------- ------------ --------- ------------ ------- -------------- ----------- ---------- ------
Company-wide
Performance
Measures
EBITDA Growth (1) $11,908 50% $17,012 100% $22,966 200% ($28,311) 0% 100% 0%
Brand-specific
Performance
Measures
Consumer Florals
Revenue Growth $16,400 50% $23,429 100% $31,629 200% ($74,718) 0% 25% 0%
EBITDA Growth 4,047 50% 5,782 100% 7,806 200% ($23,065) 0% 75% 0%
-----
0%
Madison Brands
Revenue Growth $6,682 50% $9,546 100% $12,887 200% ($36,435) 0% 25% 0%
EBITDA Growth $4,740 50% $6,771 100% $9,141 200% ($3,423) 0% 75% 0%
-----
0%
(1) Actual performance for EBITDA growth are computed exclusive of the impact
of acquisitions/dispositions.
(2) Actual performance was below the 70% threshold performance measure.
During Fiscal 2009, the Company-wide Total Payout Factor was 0%. The
Company-wide Total Payout Factor for Fiscal 2008, 2007, 2006 and 2005 was 0%,
75%, 0%, 34% of the target award, respectively.
Long-Term Incentive Equity Awards. In order to structure a long term
incentive program for the Company's Executive Officers that would tie a
significant portion of their compensation to the profitability of the Company,
the Compensation Committee consulted with Mercer to evaluate its long term
incentive program. All award grants are designed to align the interests of each
Executive Officer with those of the stockholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the Company.
The grant of an award is set at a level intended to create a meaningful
incentive based in part on the Executive Officer's and NEO's current position
with the Company, the base salary associated with that position, the size of
comparable awards made to individuals in similar positions within the industry,
and the individual's personal performance in recent periods. The Compensation
Committee also takes into account the number of awards held by the Executive
Officer in order to maintain an appropriate level of incentive for that
individual. The Compensation Committee has the authority to review extraordinary
events that impact on the Company's performance and may adjust the calculation
of an award by taking into account the effect of any such extraordinary events.
The Compensation Committee did not exercise such authority in Fiscal 2009.
The NEO's were granted a target number of performance shares in Fiscal 2009
under our LTIP. The number of shares ("target shares") granted in the Fiscal
2009 LTIP (for performance in Fiscal Years 2009 through 2011) ("LTIP 2009") for
Messrs. J. McCann, C. McCann, Hopkins, and Shea and Ms. Murley were 112,500,
112,500, 25,000, 25,000 and 0, respectively. These target shares are earned if
the Company achieves 100% of its targeted financial performance over the three
year period subsequent to the grant. The number of target shares actually earned
will be based on actual cumulative performance results over the three year
period against the below mentioned pre-established financial measures. For LTIP
2009, the Compensation Committee selected Company-wide Plan EBITDA as the basis
for its performance measure. For LTIP 2009, the Compensation Committee
established a range of award payouts (from a threshold of 50% of target shares
(upon attaining EBITDA of $203 million) to a target of 100% of target shares
(upon attaining EBITDA of $239 million) to a maximum of 150% of target shares
(upon attaining EBITDA of $275 million)) that are directly related to the
17
percentage of the financial performance measure achieved. For LTIP 2009, the
Company currently expects to achieve 0% of its pre-established financial
measure. The number of shares granted under LTIP 2009 that are based upon time
vesting for Messrs. J. McCann, C. McCann, Hopkins, and Shea and Ms. Murley were
37,500, 37,500, 25,000, 25,000 and 0, respectively. These shares vest on the
third anniversary of the grant date.
In accordance with the Company's compensation philosophy and in an effort
to retain its Executive Officers and key talent, the Board of Directors approved
a stock award grant in May 2009. Due to the economic environment, the goals that
were set for the LTIP plans for fiscal 2007 through 2009 were no longer
achievable and therefore the awards that could have been granted under those
plans are not attainable. See "Outstanding Equity Awards at Fiscal Year End"
below.
Executive Benefits
The Company's NEO's, except for Ms. Murley, are eligible for the same level
and offering of benefits made available to other employees, including our 401(k)
Profit Sharing Plan (which includes a discretionary annual Company
contribution), health care plan and other welfare benefit programs. We do not
currently maintain any qualified or nonqualified defined benefit pension plans
or nonqualified deferred compensation plans for our NEO's, except for the
Nonqualified Supplemental Deferred Compensation Plan discussed below.
During Fiscal 2009, the Company offered a Nonqualified Supplemental
Deferred Compensation Plan for certain executives. Participants can defer from
1% up to a maximum of 100% of salary and performance and non-performance based
bonus. The Company will match 50% of the deferrals made by each participant
during the applicable period, up to a maximum of $2,500. The participants are
vested in the Company's contributions based upon years of participation in the
Plan. Distributions will be made to participants upon termination of employment
or death in a lump sum, unless installments are selected.
Perquisites
We do not routinely provide any significant perquisites to our NEO's.
Except for Messrs. J. McCann and C. McCann's perquisite which is disclosed in
the Summary Compensation Table, the value of perquisites to each other NEO in
Fiscal 2009 did not exceed $10,000.
Severance/Change of Control
We do not maintain any severance or change of control plans or agreements.
However, pursuant to the terms of employment agreements, employment offer
letters and incentive plans, certain NEO's are eligible to receive severance and
other benefits in the case of certain termination events and in the case of a
change in control. See "Potential Payments upon Termination and Change in
Control" below.
18
Management's Role in Setting Executive Compensation
Although the Compensation Committee of the Board of Directors establishes
the Company's compensation philosophy and makes the final determinations on all
compensation paid to our Executive Officers, the Chief Executive Officer and
President work closely with the Senior Vice President of Human Resources to
develop compensation programs and policies and make recommendations regarding
annual adjustments to the Executive Officers' salaries and incentive award
opportunities (other than their own compensation).
Role of Compensation Consultant
The Compensation Committee has retained the services of Mercer to provide
specialized information and targeted research to assist us in the development of
compensation and retention strategies. Mercer provides general assistance to our
Senior Vice President of Human Resources and the Compensation Committee and does
not perform any other services for the Company. For Fiscal 2009, Mercer's
services were in advising the Compensation Committee on the development of its
LTIP 2009, a review of the compensation for the Chief Executive Officer and
President, and advising the Company with respect to the May 2009 stock award
grant. Mr. J. McCann did not participate in discussions with Mercer in Fiscal
2009, but Mr. C. McCann did discuss with Mercer their recommendation for LTIP
2009.
Compensation Deductibility Policy
---------------------------------
A federal income tax deduction will generally be available for annual
compensation in excess of $1 million paid to the Chief Executive Officer and the
three other most highly compensated executive officers (other than the Chief
Financial Officer) of a public corporation only if such compensation is
"performance-based" and complies with certain other tax law requirements. The
2003 Long Term Incentive and Share Award Plan and the Section 16 Executive
Officers Bonus Plan contain certain provisions which are intended to ensure that
any compensation deemed paid in connection with the granting of Awards or bonus
compensation will qualify as performance-based compensation. Although our policy
is to maximize the deductibility of all executive compensation, the Compensation
Committee retains the discretion to award compensation that is not deductible
under Section 162(m) of the Code when it is in the best interests of the Company
to do so.
Compensation Committee Report
-----------------------------
The Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis provisions to be included in the Company's
filings pursuant to the Securities Exchange Act of 1934. Based on the reviews
and discussions referred to above, the Compensation Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis referred to
above be included in such filings.
Compensation Committee
Jeffrey Walker, Chairman
James Cannavino
Larry Zarin
Notwithstanding any Commission filing by the Company that includes or
incorporates by reference other commission filings in their entirety, this
Compensation Committee Report shall not be deemed to be "filed" with the
Commission except as specifically provided otherwise therein.
19
Summary Compensation Table
Set forth below is summary compensation information for each person who was
(1) at any time during fiscal 2009 our Chief Executive Officer or Chief
Financial Officer and (2) at June 28, 2009, one of our three most highly
compensated Executive Officers, other than the Chief Executive Officer and the
Chief Financial Officer.
Summary Compensation Table
Change In
Pension
Value and
Nonqualified
Non-Equity Deferred
Name and Stock Option Incentive Plan Compensation All Other
Principal Salary Bonus Awards (2) Awards (3) Compensation (4) Earnings Compensation (5) Total
Position Year ($) ($) ($) ($) ($) ($) ($) ($)
------------------- -------- -------- ------- ----------- ------------ ----------------- -------------- ----------------- ----------
James F.MCCann 2009 975,000 0 (286,821) 95,913.05 0 0 16,524 800,616
Chairman Of 2008 975,000 0 396,871 195,253 0 0 15,075 1,582,198
the Board and 2007 975,000 0 372,304 282,136 548,438 0 6,237 2,184,115
Chief Executive
Officer
William E. Shea 2009 312,455 0 (29,554) 32,938 0 0 1,500 317,339
Senior Vice 2008 301,200 0 104,563 38,916 0 0 1,500 446,179
President, 2007 289,990 0 88,566 79,202 87,095 0 750 545,603
Treasurer, and
Chief Financial
Officer
Christopher G. 2009 680,698 0 (308,120) 250,418 0 0 18,141 641,137
McCann 2008 671,177 0 362,964 373,695 0 0 12,878 1,420,714
Director and 2007 615,570 0 351,014 505,035 232,056 11,993 1,715,668
President
Jan L. Murley (6) 2009 411,346 0 8,150 0 0 0 0 419,496
Director and , 2008 - - - - - - - -
Interim President, 2007 - - - - - - - -
Consumer Floral
Timothy J. 2009 382,752 0 (49,462) 163,601 0 0 0 496,891
Hopkins 2008 373,846 0 104,223 163,601 0 0 0 641,670
President 2007 366,490 0 117,243 163,601 80,391 0 0 727,725
of Madison
Brands
--------------------
(1) The titles included in this column are as of June 28, 2009.
(2) Stock Awards include compensation expense for restricted stock awards
recognized for financial reporting purposes (exclusive of any assumption
for forfeitures) under SFAS 123R, for the years ended June 28, 2009, June
29, 2008 and July 1, 2007, respectively. These award fair values have been
determined based on the assumptions set forth in Note 11, "Stock Based
Compensation", in the Notes to the Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the fiscal year ended June 28,
2009. Additional information about the awards reflected in this column is
set forth in the footnotes to "Grants of Plan-Based Awards and Outstanding
Equity Awards at Fiscal Year-End" tables below.
20
(3) Option Awards include compensation expense for outstanding stock option
awards recognized for financial reporting purposes (exclusive of any
assumption for forfeitures) under SFAS 123R, for the years ended June 28,
2009, June 29, 2008 and July 1, 2007, respectively. These award fair values
have been determined based on the assumptions set forth in Note 11, "Stock
Based Compensation", in the Notes to the Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the fiscal year ended June
28, 2009. Additional information about the awards reflected in this column
is set forth in the footnotes to "Grants of Plan-Based Awards and
Outstanding Equity Awards at Fiscal Year-End" tables below.
(4) Non-Equity Incentive Plan Compensation represents cash bonuses under our
Sharing Success Program described under "Compensation Discussion and
Analysis-Elements of Compensation-Annual Cash Incentive." The annual cash
bonuses for performances related to, and recorded as compensation expense
during Fiscal 2007, were paid during the first quarter of fiscal year 2008.
There were no cash bonuses for performance for Fiscal 2008 and Fiscal 2009.
(5) Other annual compensation in the form of perquisites and other personal
benefits consists of the Company's contribution to a Qualified 401(K) Plan
($1,500 in Fiscal 2009 and Fiscal 2008 and $750 in Fiscal 2007), except for
Mssrs. James McCann and Christopher McCann, whose compensation also
consists of the personal use of a company car, which is calculated by
allocating the costs of operating the car between personal and business
use. The cost of operating the car is allocated to personal use on the
basis of miles driven for personal use to total miles driven. Perquisites
and other personal benefits for Mr. James McCann for Fiscal 2009 also
includes $1,250 of Company contributions to a Nonqualified Supplemental
Deferred Compensation Plan.
(6) Ms. Murley, a Director of the Company since 2007, began serving as Interim
President, Consumer Floral during Fiscal 2009. Amounts reported in the
table above represent compensation for Ms. Murley in her role as Interim
President. Refer to Compensation of Directors' table for amounts received
by Ms. Murley in her role as Director.
Grants of Plan-Based Awards
The following table sets forth summary information regarding all grants of
plan-based awards made to our NEO's for the fiscal year ended June 28, 2009. The
compensation plans under which the grants in the following table were made are
described in the Compensation Discussion and Analysis section above.
21
Estimated Future Payouts Estimated Future Payouts
Under Non-Equity Incentive Under Equity Incentive
Compensation Plan Awards (2) Plan Awards (3)
Committee --------------------------------- ---------------------------
Grant Approval Threshold Target Maximum Threshold Target Maximum
Name Date Date (1) ($) ($) ($) (#) (#) (#)
---------- ----------- ---------------- ---------- --------- ------------ ---------- ---------- ----------
487,500 975,000 1,950,000
James F. 10/27/2008 9/19/2008 56,250 112,500 168,750
McCann
Chairman
of the Board
and Chief
Executive
Officer
William E. 78,599 157,198 314,397
Shea 10/27/2008 9/19/2008 12,500 25,000 37,500
Senior Vice
President,
Treasurer,
and Chief
Fianancial
Officer
Christopher 255,262 510,523 1,021,047
G. McCann 10/27/2008 9/19/2008 56,250 112,500 168,750
Director
and President
Jan L. 90,000 180,000 360,000
Murley 10/27/2008 9/19/2008 0 0 0
Director and
Interim
President,
Consumer
Floral
Timothy J. 96,094 192,187 384,375
Hopkins 10/27/2008 9/19/2008 12,500 25,000 37,500
President
of Madison
Brands
-----------------------------------------------------------------------------------------------------------------------------------
All Other All Other
Stock Awards: Option Awards: Exercise or Closing Grant Date
Compensation Number of Number of Base Price Market Price Value Of Stock
Committee Shares of Securities of Option Per Share and Option
Grant Approval Stock or Underlying Awards on Grant Date Awards (1)
Name Date Date (1) Units (#) Options (#) ($/sh) (4) ($/sh) (4) ($) (5)
---------- ------------ ---------------- -------------- --------------- ------------- -------------- -------------
James F. 10/27/2008 9/19/2008 513,000
McCann 5/5/2009 4/27/2009 37,500 171,000
Chairman 5/5/2009 4/27/2009 112,055 348,491
of the 224,109 3.11 3.64 380,403
Board and
Chief
Executive
Officer
William E.
Shea 10/27/2008 9/19/2008 114,000
Senior Vice 5/5/2009 4/27/2009 25,000 114,000
President, 5/5/2009 4/27/2009 42,799 133,105
Treasurer, 85,599 3.11 3.64 145,296
and Chief
Fianancial
Officer
Christopher
G. McCann 10/27/2008 9/19/2008 513,000
Director 5/5/2009 4/27/2009 37,500 171,000
and 5/5/2009 4/27/2009 112,055 348,491
President 372,429 3.11 3.64 632,161
Jan L.
Director 10/27/2008 9/19/2008 0 0 0
and
Interim
President,
Consumer
Floral
22
Timothy J.
Hopkins 10/27/2008 9/19/2008 114,000
President 25,000 114,000
of Madison
Brands
(1) The date of grant for each award is established by the Compensation
Committee during a meeting, or by written action without a meeting, on or
prior to the date of the grant. Pursuant to the guidelines adopted by the
Compensation Committee, grants become effective as of the first trading day
of the open trading window after public disclosure of quarterly financial
information.
(2) The amounts in this column represent the threshold, target and maximum
payout under non-equity performance based incentive programs for fiscal
year 2009, as approved by the Compensation Committee in September 2008, as
described in the Compensation Discussion and Analysis. As noted in the
Fiscal 2009 Summary Compensation Table, above, neither the Company-wide,
nor in the cases of Mr. Hopkins and Ms. Murley, the brand-specific,
threshold non-equity incentive plan performance measures were achieved, and
therefore, there was no payout related to Fiscal 2009 performance.
(3) The amounts in this column represent the threshold, target and maximum
three-year performance share awards as established under the fiscal year
2009 LTIP by the Compensation Committee in October 2008, as described in
the Compensation Discussion and Analysis. The amounts reported in the last
column represent the fair value as of the date the targets were set,
computed in accordance with FAS 123(R), assuming that 100% of the target
number of shares will be earned. Related amounts disclosed in the Fiscal
2009 Summary Compensation Table, above, represent the fair value of awards,
adjusted for estimated attainment, computed in accordance with FAS 123(R).
See Note 11, "Stock Based Compensation," in the Notes to the Consolidated
Financial Statements in the Company's Annual Report on Form 10-K for an
explanation of the methodology and assumptions used in the FAS 123(R)
valuations.
(4) Pursuant to the approval of the Compensation Committee on April 27, 2009,
the equity awards were granted at the opening price of its Class A Common
Stock on the third day after the release of our quarterly financial
results.
(5) The amounts in this column represent the fair value of the stock and option
awards as determined in accordance with SFAS 123R. These fair values have
been determined based on the assumptions set forth in Note 11, "Stock Based
Compensation" in the Notes to the Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the fiscal year ended June 28,
2009.
23
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based
Awards Table
Employment Agreements, Employment Offer Letters and Consulting Agreements
Mr. James F. McCann's employment agreement became effective as of July 1,
1999. The agreement provides for a five year term, with such term extended for
one additional year on each anniversary of the effective date of the agreement,
unless either the Company or Mr. J. McCann provides at least 180 days notice
that such term will not be further extended. Under the terms of the employment
agreement, Mr. J. McCann is entitled to a minimum annual salary of $1,000,000,
with annual 10% increases during the term. However, the Compensation Committee
had recommended that Mr. J. McCann receive, and Mr. J. McCann accepted, a base
salary of $975,000 for Fiscal 2009 in order to enable the Company to comply with
Section 162(m) of the IRS Code of 1986 ("Section 162(m)"), as amended, which was
enacted into law in 1993 and he has waived his 10% increase for Fiscal 2010. Mr.
J. McCann is eligible to participate in the Company's stock incentive plans, as
well as other bonus, incentive or benefits plans, and is provided medical,
health and dental insurance coverage for himself and his dependents.
Mr. Christopher G. McCann's employment agreement became effective as of
July 1, 1999. The agreement provides for a five year term, with such term
extended for one additional year on each anniversary of the effective date of
the agreement, unless either the Company or Mr. C. McCann provides at least 180
days notice that such term will not be further extended. Under the terms of the
employment agreement, Mr. C. McCann is entitled to a minimum annual salary of
$250,000, with annual 10% increases during the term. Mr. C. McCann's annual
salary for Fiscal 2009 was $680,698 and he has waived his 10% increase for
Fiscal 2010. Mr. C. McCann is eligible to participate in the Company's stock
incentive plans, as well as other bonus, incentive or benefits plans, and is
provided medical, health and dental insurance coverage for himself and his
dependents.
Under their employment agreements, Messrs. J. McCann and C. McCann are each
restricted from participating in a competitive floral products business for a
period of one year after a voluntary resignation or termination for good cause.
Each of these executives is also bound by confidentiality provisions, which
prohibit the executive from, among other things, disseminating or using
confidential information about the Company in any way that would be adverse to
the Company.
The terms of Timothy J. Hopkins' "at will" employment are detailed in an
offer letter dated February 9, 2005 and amended on July 20, 2009. Under the
terms of the offer letter, Mr. Hopkins is entitled to an annual salary of
$350,000, such salary to be reviewed annually for merit increases. For Fiscal
2009, Mr. Hopkins' annual base salary was $384,275. Mr. Hopkins is eligible to
participate in the Company's stock incentive and bonus plans, as well as the
Company's benefit plans including medical, dental, life insurance, disability
and 401(k) plans. Mr. Hopkins also is a party to a Confidentiality and
Non-Compete Agreement, which provides for a post-termination non-compete period
for the longer of (i) one year following Mr. Hopkins' cessation of employment
with the Company or (ii) the period of one year following the last payment of
any severance compensation pay-out to Mr. Hopkins.
The terms of Jan L. Murley's consulting agreement are detailed in the
Consulting Agreement dated September 15, 2008 between Ms. Murley and the
Company. Under the terms of her Agreement, Ms. Murley is entitled to $15,384.62
on a bi-weekly basis, however, Ms.Murley voluntarily accepted a 10% decrease in
her consulting fees effective January 1, 2009. Ms. Murley is eligible to
participate in the Company's stock incentive and bonus plans but she does not
participate in any of the Company's other benefit plans. Ms. Murley also is a
party to a Confidentiality and Non-Compete Agreement, which provides for a
post-termination non-compete period for the shorter of (i) the time that the
Consulting Agreement is in effect or (ii) one year following cessation of
engagement with the Company.
Long Term Incentive Plan
For a description of our LTIP, please see the "Compensation, Discussion and
Analysis-Long Term Incentive Equity Awards" section above.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth summary information regarding the
outstanding equity awards at June 28, 2009 granted to each of the Company's
Named Executive Officers.
24
Option Awards Stock Awards
----------------------------------------------------- ------------------------------------------------
Equity
Equity Incentive
Incentive Plan
Plan Awards:
Awards: Market or
Number of Payout
Unearned Value of
Market Shares, Unearned
Value Units, Shares,
Number of Number of Number of of Shares or Units
Securities Securities Shares or or Other or Other
Underlying Underlying Units of Units of Rights Rights
Option or Unexercised Unexercised Option Stock That Stock That That That
Award Options Options Exercise Option Have not Have Not Have Not Have Not
Grant Exercisable Unexercisable Price Expiration Vested Vested (1) Vested Vested (1)
Name Date (#) (#) ($/Option) Date (#) (#) (#) (#)
---------------------------- ------------ ------------- ------------ ------------- ------------ ------------ ----------- ----------
Stock Options Restricted Stock Performance Awards
James F. 12/17/1999 39,810 0 12.44 12/17/2009(2)
McCann 8/2/2001 82,730 0 11.58 8/2/2011(2)
Chairman 1/11/2002 200,000 0 12.87 1/11/2012(2)
of the 9/23/2002 200,000 0 6.42 9/23/2012(3)
Board 3/24/2003 170,148 0 6.70 3/24/2013(2)
and Chief 3/24/2003 29,852 0 6.70 3/24/2013(2)
Executive 12/2/2004 40,000 10,000 8.45 12/2/2014(2)
Officer 10/13/2005 30,000 20,000 6.52 10/13/2015(2)
10/13/2005 16,500(3) 33,165
9/21/2007 100,000(4) 201,000
10/27/2008 112,500(5) 226,125
10/27/2008 37,500(6) 75,375
5/5/2009 0 224,109 3.11 5/5/2016(7) 112,055(7) 225,231
William E. 8/2/1999 25,000 0 21.00 8/2/2009(8)
Shea 12/17/1999 19,000 0 12.44 12/17/2009(2)
Senior Vice 4/20/2000 92,000 0 4.50 4/20/2010(2)
President 12/6/2000 50,800 0 3.65 12/6/2010(2)
Treasurer 8/2/2001 12,100 0 11.58 8/2/2011(2)
and Chief 1/11/2002 21,800 0 12.87 1/11/2012(2)
Financial 9/23/2002 12,300 0 6.42 9/23/2012(2)
Officer 9/23/2002 100,000 0 6.42 9/23/2012(3)
3/24/2003 15,000 0 6.70 3/24/2013(2)
12/2/2004 20,000 5,000 8.45 12/2/2014(2)
10/13/2005 15,000 10,000 6.52 10/13/2015(2)
10/13/2005 8,250(3) 16,583
9/21/2007 25,000(4) 50,250
10/27/2008 25,000(5) 50,250
10/27/2008 25,000(6) 50,250
5/5/2009 0 85,599 3.11 5/5/1016(7) 42,799(7) 86,026
Christopher G. 7/7/1999 190,462 0 21.00 7/7/2009(8)
McCann 12/17/1999 20,400 0 12.44 12/17/2009(2)
Director and 4/20/2000 195,155 0 4.50 4/20/2010(2)
President 12/6/2000 433,700 0 3.65 12/6/2010(2)
8/2/2001 41,365 0 11.58 8/2/2011(2)
1/11/2002 250,000 0 12.87 1/11/2012(2)
9/23/2002 38,300 0 6.42 9/23/2012(2)
9/23/2002 250,000 0 6.42 9/23/2012(3)
3/24/2003 250,000 0 6.70 3/24/2013(2)
12/2/2004 30,000 7,500 8.45 12/2/2014(2)
10/13/2005 180,000 120,000 6.52 10/13/2015(2)
9/21/2007 100,000(4) 201,000
10/27/2008 112,500(5) 226,125
10/27/2008 37,500(6) 75,375
5/5/2009 0 372,429 3.11 5/5/2016(7) 186,215(7) 374,292
Jan L. - - - - - - - - -
Murley
Director and
Interim
President,
Consumer Floral
Timothy J. 3/14/2005 160,000 40,000 7.81 3/14/2015(2)
Hopkins 9/21/2007 20,000(4) 40,200
President 10/27/2008 25,000(5) 50,250
Of 10/27/2008 25,000(6) 50,250
Madison
Brands
25
(1) Market value is based on the closing price of 1-800-Flowers.com,
Inc.'s Class A Common Stock of $2.01 on June 28, 2009.
(2) Options become exercisable at a rate of 40% after the completion of
two years of service following grant date, and 20% at the completion
of each year of service thereafter.
(3) Shares will vest after the completion of four years of service
following grant date.
(4) Amounts shown represent the target number of performance shares that
have been granted in Fiscal 2008 under its LTIP program. The share
awards are earned if the Company achieves its targeted financial
performance over the three-year period (Fiscal 2008 - Fiscal 2010)
subsequent to the grant date. Actual shares earned can range from
0-150% of the target amount. (At the Company's projected earnings
level, approximately 0% of the targeted award is expected to be
achieved. See Compensation Discussion and Analysis - Long Term
Incentive Equity Awards.)
(5) Amounts shown represent the target number of performance shares that
have been granted in Fiscal 2009 under its LTIP program. The share
awards are earned if the Company achieves its targeted financial
performance over the three-year period (Fiscal 2009 - Fiscal 2011)
subsequent to the grant date. Actual shares earned can range from
0-150% of the target amount. (At the Company's projected earnings
level, approximately 0% of the targeted award is expected to be
achieved. See Compensation Discussion and Analysis - Long Term
Incentive Equity Awards.)
(6) Shares will vest after the completion of three years of service
following grant date.
(7) Options/shares become exercisable/vest at a rate of 33.3% at the
completion of each year of service following grant date.
(8) Options become exercisable at a rate of 25% at the completion of each
year of service following grant date.
26
Option Exercises and Stock Vested
The following table sets forth all stock option exercises and vesting of
stock awards for each of the Company's Named Executive Officers during fiscal
2009, which ended on June 28, 2009.
-------------------------------------------------------------------------------------------------------------------------
Option Awards Stock Awards
-------------------------------------------------------------------------------------------------------------------------
Number of Shares Value Realized on Number of Shares Value Realized on
Acquired on Exercise Exercise (1) Acquired on Vesting Vesting (2)
Name (#) ($) (#) ($)
---------------------------- ------------------------ ------------------ -------------------- -----------------------
James F. McCann -- -- 67,434 285,554
Chairman of the Board and
Chief Executive Officer
William E. Shea -- -- 17,255 67,710
Senior Vice President,
Treasurer and Chief Financial
Officer
Christopher G. McCann -- -- 63,896 274,907
Director and President
Timothy J. Hopkins -- -- 26,899 88,659
President of Madison Brands
Jan L. Murley, Director and -- -- 2,500 8,150
Interim President, Consumer
Floral
--------------------------------------------------------------------------------
(1) The value realized on exercise equals the difference between the option
exercise price and the market value of 1-800-Flowers.com, Inc.'s Class A
Common Stock on the date of exercise, multiplied by the number of shares
for which the option was exercised.
(2) The value realized on vesting equals the market value of 1-800-Flowers.com,
Inc.'s Class A Common Stock on the vesting date, multiplied by the number
of shares that vested.
Equity Compensation Plan Information
The following table displays certain information regarding our equity
compensation plans at June 28, 2009:
Number of securities
remaining available for
future issuance under
Number of securities to Weighted-average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected in
warrants and rights warrants and rights column (a))
Plan category (a) (b) (c)
-------------------------- -------------------------- ----------------------- --------------------------
Equity compensation
plans approved by 8,916,672 $7.52 1,992,249
security holders
-------------------------- -------------------------- ----------------------- --------------------------
Equity compensation
plans not approved by
security holders 0 0 0
-------------------------- -------------------------- ----------------------- --------------------------
-
Total 8,916,672 $7.52 1,992,249
-------------------------- -------------------------- ----------------------- --------------------------
27
Pension Benefits
The Company does not maintain any defined benefit plans.
Nonqualified Deferred Compensation
During Fiscal 2009, the Company offered a Nonqualified Supplemental
Deferred Compensation Plan for certain executives. Participants can defer from
1% up to a maximum of 100% of salary and performance and non-performance based
bonus. The Company will match 50% of the deferrals made by each participant
during the applicable period, up to a maximum of $2,500. Participating employees
are vested in the Company's contributions based upon years of participation in
the Plan. Distributions will be made to participants upon termination of
employment or death in a lump sum, unless installments are selected.
Potential Payments upon Termination and Change in Control
The Company does not have a formalized severance policy. In accordance with
the Company's 2003 Long Term Incentive and Share Award Plan (the "Plan") in the
event of a Change of Control, as defined in the Plan, all outstanding Awards
pursuant to which a Participant may have rights the exercise of which is
restricted or limited, shall automatically become fully exercisable immediately
prior to the time of the Change of Control and all performance criteria and
other conditions shall be deemed to be achieved or fulfilled and shall be waived
by the Company immediately prior to the time of the Change of Control so that
the Shares subject to the Award will be entitled to participate in the Change of
Control transaction.
In addition, as disclosed in Potential Payments Upon Termination and Change
in Control, certain executives within the Company have individual employment
agreements or offer letters that contain negotiated provisions that trigger
payments or provision of benefits upon termination or a change in control.
Payment and benefit levels under the various circumstances that trigger payments
or provision of benefits upon termination or a change in control for Messrs.
James McCann, Christopher McCann and Hopkins were calculated and presented in
accordance with the provisions of their respective employment agreements or
employment offer letters. For Fiscal 2009, potential payments under the
circumstances triggered upon termination or change of control did not have a
material impact on the Compensation Committee's evaluation of all other elements
of compensation or total compensation.
The following table sets forth the potential payments to our NEO's under
existing agreements, plans or arrangements, for various scenarios involving a
change in control or termination of employment, assuming a June 28, 2009
termination date and using the closing price of the Company's Class A common
stock on June 28, 2009 ($2.01). Pursuant to the terms of the Sharing Success
Program, the amounts shown do not include the Non-Equity Incentive Plan Awards
which were earned as of June 29, 2008. The exact amount of payments and benefits
that would be provided can only be determined at the actual time of the NEO's
separation from the Company.
28
James F. McCann
Triggering Event
---------------------------------------------------------------
Termination
Without Cause/
Resignation
for Good Death/
Reason (per Voluntary
Change of Employment Resignation/
Estimated Potential Payment or Benefit Control Agreement) or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (1) 7,375,000 7,375,000 0
Intrinsic value of accelerated unvested stock options (2) 0 0 0
Accelerated vesting of restricted shares (3) 333,771 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 427,125 0 0
Continuing health and welfare benefits for five years (5) 38,196 38,196 0
----------------- ------------------ ------------------------
Total 8,174,092 7,413,196 0
William E. Shea
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (6) 157,198 157,198 0
Intrinsic value of accelerated unvested stock options (2) 0 0 0
Accelerated vesting of restricted shares (3) 152,858 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 100,500 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 410,556 157,198 0
Christoper G. McCann
Triggering Event
---------------------------------------------------------------
Termination
Without Cause/
Resignation
for Good Death/
Reason (per Voluntary
Change of Employment Resignation/
Estimated Potential Payment or Benefit Control Agreement) or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (7) 3,903,485 3,903,485 0
Intrinsic value of accelerated unvested stock options (2) 0 0 0
Accelerated vesting of restricted shares 449,667 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 427,125 0 0
Continuing health and welfare benefits for five years (5) 57,294 57,294 0
----------------- ------------------ ------------------------
Total 4,837,571 3,960,779 0
Timothy J. Hopkins
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (8) 534,375 384,375 0
Intrinsic value of accelerated unvested stock options (2) 0 0 0
Accelerated vesting of restricted shares (3) 50,250 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 90,450 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 675,075 384,375 0
29
Jan L. Murley
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (9) 0 0 0
Intrinsic value of accelerated unvested stock options (2) 0 0 0
Accelerated vesting of restricted shares (3) 0 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 0 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 0 0 0
(1) Mr. James McCann is entitled to severance pursuant to his employment
agreement which entitles him to $2,500,000, plus the base salary payable to
him for the then remaining duration of the term of his contract. As of June
28, 2009, Mr. McCann's base salary was $975,000, and his employment
agreement provided for a remaining term of five years.
(2) The intrinsic value of accelerated unvested stock options was calculated
using the closing price of the Company's Class A Common Stock on June 28,
2009 ($2.01). The intrinsic value is the aggregate spread between $2.01 and
the exercise prices of the accelerated options, if less than $2.01.
(3) The value of accelerated unvested restricted shares was calculated using
the closing price of the Company's Class A Common Stock on June 28, 2009
($2.01). Refer to the column titled "Market Value of Shares or Units of
Stock that Have Not Vested" within the "Outstanding Equity Awards at Fiscal
Year End" table.
(4) Represents the estimated amounts to be paid under the Company's Fiscal 2008
and Fiscal 2009 LTIP grants in the event of a change of control. Refer to
the column titled "Equity Incentive Plan Awards: Market or Payout Value of
Unearned Shares, Units or Other Rights That Have Not Vested" within the
"Outstanding Equity Awards at Fiscal Year End" table. Amounts shown
represent the target number of performance shares that have been granted in
Fiscal 2008 and Fiscal 2009 under its LTIP program, at the closing price of
the Company's Class A Common Stock on June 28, 2009 ($2.01). The share
awards are earned if the Company achieves its targeted financial
performance over the three-year period subsequent to the grant date. Actual
shares earned can range from 0-150% of the target amount. (At the Company's
projected earnings level, approximately 0% and 0% of the Fiscal 2008 and
Fiscal 2009 LTIP targeted awards, respectively are expected to be achieved.
See Compensation Discussion and Analysis - Long Term Incentive Equity
Awards.)
(5) Represents the estimated cost of paying for continuing medical, dental,
life and long-term disability for five years. The amounts for medical and
dental insurance coverage are based on rates charged to the Company's
employees for post-employment coverage provided in accordance with the
Consolidated Omnibus Reconciliation Act of 1985, or COBRA, adjusted by a
7.5% inflation factor. The costs of providing the other insurance coverage
are based on quoted amounts for 2008, adjusted by a 7.5% inflation factor,
compounded annually.
(6) Mr. Shea does not have an employment agreement. Absent any special
arrangements approved by the Compensation Committee or the Board of
Directors, for purposes of this computation, Mr. Shea was deemed to receive
two weeks of severance for each completed year of service with the Company.
As of June 28, 2009, Mr. Shea's base salary was $314,396.
(7) Mr. Christopher McCann is entitled to severance pursuant to his employment
agreement which entitles him to $500,000, plus the base salary payable to
him for the then remaining duration of the term of his contract. As of June
28, 2009, Mr. McCann's base salary was $680,697, and his employment
agreement provided for a remaining term of five years.
(8) Mr. Hopkins is entitled to severance pursuant to his employment offer
letter which entitles him to one year of severance calculated on his base
salary at the time of cessation of employment. Mr. Hopkins offer letter was
amended on July 20, 2009 as a result of the Company discontinuing the
operations of the Madison Brands. If Madison Brands is sold and Mr. Hopkins
is: (i) offered a position with the purchaser, he receives a one-time
payment of $100,000 but no severance payments unless he is terminated
within the first year of such new employment when he would then be entitled
to a prorated payment based upon the time remaining on the first year of
his new employment following the date of termination from same, (ii)
offered a new position within the Company, he receives a one-time payment
of $100,000 but severance terms remain the same as are in his offer letter
or (iii) not offered a new position with the purchaser or the Company, he
receives a one-time payment of $100,000 and the one-year severance provided
30
in his offer letter. If Madison Brands is liquidated, Mr. Hopkins will
receive one year of severance as provided for in his offer letter. In the
event of a sale of Madison Brands, if the purchase price exceeds the
Company's target price, Mr. Hopkins may receive an additional $50,000. As
of June 28, 2009, Mr. Hopkins' base salary was $384,375.
(9) Ms. Murley's consulting agreement contains no provisions for payment upon
her separation from the Company under any circumstance. The above table
does not include payments and benefits to the extent they are provided on a
non-discriminatory basis to salaried employees generally upon termination
of employment, such as 401(k) plan vested benefits and earned but unused
vacation.
The above table does not include payments and benefits to the extent they
are provided on a non-discriminatory basis to salaried employees generally upon
termination of employment, such as 401(k) plan vested benefits and earned but
unused vacation.
Employment Agreements and Employment Offer Letters
The employment agreements of James F. McCann and Christopher G. McCann, as
well as the employment offer letter of Timothy J. Hopkins, provide for certain
payments in the event of termination of employment (and in the case of
Christopher G. McCann and Timothy J. Hopkins, terminations following a change in
control of the Company).
James F. McCann
Upon termination without Good Cause (as defined in the employment
agreement) or resignation by Mr. McCann for Good Reason (as defined in the
employment agreement) within ten days following the termination date, Mr. McCann
is entitled to severance pay in the amount of $2,500,000 plus the base salary
otherwise payable to him for the balance of the then current employment term and
any base salary, bonuses, vacation and unreimbursed expenses accrued but unpaid
as of the termination date, and health and life insurance coverage for himself
and his dependents for the balance of the then current employment term. Upon
termination for Good Cause, voluntary resignation without Good Reason or
termination due to death, Mr. McCann is not entitled to any compensation from
the Company, except for the payment of any base salary, bonuses, benefits or
unreimbursed expenses accrued but unpaid as of the termination date. As
discussed above, Mr. McCann is restricted from participating in a competitive
floral products business for a period of one year after a voluntary resignation
or termination for Good Cause. He is also bound by confidentiality provisions,
which prohibit him from, among other things, disseminating or using confidential
information about the Company in any way that would be adverse to the Company.
Christopher G. McCann
Upon termination without Good Cause (as defined in the employment
agreement) or resignation by Mr. McCann for Good Reason (as defined in the
employment agreement), within ten days following the termination date, Mr.
McCann is entitled to severance pay in the amount of $500,000 plus the base
salary otherwise payable to him for the balance of the then current employment
term and any base salary, bonuses, vacation and unreimbursed expenses accrued
but unpaid as of the termination date, and health and life insurance coverage
for himself and his dependents for the balance of the then current employment
term. The Good Reason definition includes a Change of Control (as defined in the
employment agreement) of the Company, so long as Mr. McCann's resignation occurs
no later than one year following a Change of Control. Upon termination for Good
Cause, voluntary resignation without Good Reason or termination due to death,
Mr. McCann is not entitled to any compensation from the Company, except for the
payment of any base salary, bonuses, benefits or unreimbursed expenses accrued
but unpaid as of the termination date. As discussed above, Mr. McCann is
restricted from participating in a competitive floral products business for a
period of one year after a voluntary resignation or termination for Good Cause.
He is also bound by confidentiality provisions, which prohibit him from, among
other things, disseminating or using confidential information about the Company
in any way that would be adverse to the Company.
Timothy J. Hopkins
Upon termination without Cause (as defined in the February 12, 2005 offer
letter described above) or without Cause following a Change of Control, Mr.
Hopkins is entitled to receive base salary through the date of termination, any
other amounts earned, accrued, due and owed but not yet paid, base pay for a
period of 12 months following termination of employment or until Mr. Hopkins
finds new employment, whichever occurs first, the right to exercise vested
equity awards pursuant to terms of the Company's 2003 Plan following
termination, and any other benefits payable under the Company's applicable plans
and programs. Mr. Hopkins offer letter was amended on July 20, 2009 as a result
of the Company discontinuing the operations of the Madison Brands. If Madison
Brands is sold and Mr. Hopkins is (i) offered a position with the purchaser, he
receives a one-time payment of $100,000 but no severance payments unless he is
terminated within the first year of such new employment when he would then be
entitled to a prorated payment based upon the time remaining on the first year
of his new employment following the date of termination from same, (ii) offered
a new position within the Company, he receives a one-time payment of $100,000
but severance terms remain the same as are in his offer letter or (iii) not
offered a new position with the purchaser or the Company, he receives a one-time
payment of $100,000 and the one-year severance provided for in his offer letter.
If Madison Brands is liquidated, Mr. Hopkins will receive one year of severance
31
as provided for in his offer letter. In the event of a sale of Madison Brands,
if the purchase price exceeds the Company's target price, Mr. Hopkins may
receive an additional $50,000. Upon termination for Cause or due to death,
disability or resignation, Mr. Hopkins is only entitled to base salary through
the date of termination and any other amounts earned, accrued and owed but not
yet paid. Mr. Hopkins is bound by the terms of his Confidentiality and
Non-Compete Agreement.
1999 Stock Incentive Plan
The 1999 Stock Incentive Plan provides, generally but with limitations,
that each option outstanding at the time of a change of control but not
otherwise fully-vested shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the change in control, become
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares.
2003 Long Term Incentive and Share Award Plan
The 2003 Plan provides that unless otherwise provided by the compensation
Committee at the time of the award grant, in the event of a change of control,
(i) all outstanding awards pursuant to which the participant may have rights the
exercise of which is restricted or limited, shall become fully exercisable
immediately prior to the time of the change of control so that the shares
subject to the award will be entitled to participate in the change of control
transaction, and (ii) unless the right to lapse of restrictions or limitations
is waived or deferred by a participant prior to such lapse, all restrictions or
limitations (including risks of forfeiture and deferrals) on outstanding awards
subject to restrictions or limitations under the Plan shall lapse, and all
performance criteria and other conditions to payment of awards under which
payments of cash, shares or other property are subject to conditions shall be
deemed to be achieved or fulfilled and shall be waived by the Company
immediately prior to the time of the change of control so that the shares
subject to the award will be entitled to participate in the change of control
transaction.
32
October 23, 2009
To the Board of Directors
of 1-800-FLOWERS.COM, INC. (the "Company"):
We, the members of the Audit Committee, assist the Board of Directors in
its oversight of the Company's financial accounting, reporting and controls. We
also evaluate the performance and independence of the Company's independent
registered public accounting firm. We operate under a written charter that both
the Board and we have approved. A current copy of the Audit Committee charter
can be found on the Company's website located at www.1800flowers.com under the
Investor Relations section of the website.
The Board annually reviews the NASDAQ listing standards definition of
independence for audit committee members and has determined that each member of
the Audit Committee meets that standard. In addition, although the Board has
determined that each of the members of the Audit Committee meets NASDAQ
regulatory requirements for financial literacy and that John J. Conefry, Jr. is
an "audit committee financial expert," as defined by Commission rules, and is
financially sophisticated under NASDAQ requirements, we would like to remind our
stockholders that we are not professionally engaged in the practice of auditing
or accounting and are not technical experts in auditing or accounting.
The Company's management is responsible for the preparation, presentation
and integrity of the Company's consolidated financial statements, including
setting the accounting and financial reporting principles and designing the
Company's system of internal control over financial reporting and disclosure
controls and procedures designed to ensure compliance with accounting standards,
applicable laws and regulations. The Company's management is responsible for
objectively reviewing and evaluating the adequacy, effectiveness and quality of
the Company's system of internal control. The Company's independent registered
public accounting firm, Ernst & Young LLP ("Ernst & Young"), is responsible for
performing an independent audit of the consolidated financial statements and
expressing an opinion on the conformity of those financial statements with
accounting principles generally accepted in the United States. The independent
registered public accounting firm is also responsible for expressing opinions on
management's assessment of the effectiveness of the Company's internal control
over financial reporting and on the effectiveness of the Company's internal
control over financial reporting. Although the Board is the ultimate authority
for effective corporate governance, including oversight of the management of the
Company, the Audit committee's purpose is to assist the Board in fulfilling its
responsibilities by overseeing these processes, as well as overseeing the
qualifications and performance of the Company's independent registered public
accounting firm.
The Audit Committee has policies and procedures that require the
pre-approval by the Audit Committee of all fees paid to, and all services
performed by, the Company's independent registered public accounting firm. At
the beginning of each year, the Audit Committee approves the proposed services,
including the nature, type and scope of service contemplated and the related
fees, to be rendered by the firm during the year. In addition, Audit Committee
pre-approval is also required for those engagements that may arise during the
course of the year that are outside the scope of the initial services and fees
approved by the Audit Committee. For each category of proposed service, the
independent accounting firm is required to confirm that the provision of such
services does not impair their independence. Pursuant to the Sarbanes-Oxley Act
of 2002, the fees and services provided [as noted in the table below] were
authorized and approved by the Audit Committee in compliance with the
pre-approval policies and procedures described herein.
We reviewed and discussed the audited consolidated financial statements and
related footnotes for the fiscal year ended June 28, 2009 with management and
the independent registered public accounting firm. Management represented to the
Audit Committee that the Company's consolidated financial statements were
prepared in accordance with generally accepted accounting principles. We also
discussed with the independent registered public accounting firm the matters
required to be discussed by Statement on Auditing Standards 61, as amended
(communication with Audit Committees). We received the written disclosures and
the letter from the independent registered public accounting firm required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting firm's communications
with the Audit Committee concerning independence, and discussed with Ernst Young
their independence. This review included a discussion with management and the
independent registered public accounting firm of the quality (and not merely the
acceptability) of the Company's accounting principles, the reasonableness of
significant estimates and judgments, and the disclosures in the Company's
Financial Statements, including the disclosures relating to critical accounting
policies.
33
Based on the reports, discussions and reviews described in this report, we
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 28, 2009, for filing with the Securities and Exchange
Commission. We also selected Ernst & Young as the independent registered public
accounting firm for Fiscal 2010. The Board is recommending that shareholders
ratify that selection at the Annual Meeting.
Audit Committee
John J. Conefry, Jr. (Chairman)
Lawrence Calcano
Jeffrey C. Walker
34
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of the Company's Class A common stock and Class B Common Stock, as of
October 8, 2009, or as of the dates referenced below for (i) each person known
by the Company to beneficially own more than 5% of each class; (ii) each
Director; (iii) each Named Executive Officer; and (iv) all of the Company's
Directors and Executive Officers as a group. Beneficial ownership is determined
in accordance with the rules of the commission and includes voting or investment
power with respect to the securities. Unless otherwise indicated, the address
for those listed below is c/o 1-800-FLOWERS.COM, Inc., One Old Country Road,
Suite 500, Carle Place, NY 11514. Except as indicated by footnote, and subject
to applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by them. The number of shares of Common Stock outstanding
used in calculating the percentage for each listed person includes the shares of
Common Stock underlying options held by such persons that are exercisable within
60 days of October 8, 2009, but excludes shares of Common Stock underlying
options held by any other person. Percentage of beneficial ownership is based on
26,616,835 shares of Class A Common Stock and 36,858,465 shares of Class B
Common Stock outstanding as of October 8, 2009.
Shares % of Shares
Beneficially Owned Beneficially Owned
------------------ ------------------
A Shares B Shares A Shares B Shares
-------- -------- -------- --------
Name
5% Stockholders:
Tocqueville Asset Management L.P.(1) 2,681,560 - 10.1% -
Royce & Assocites, LLC (2) 1,809,929 - 6.8% -
RLR Capital Partners, LP (3) 1,652,659 - 6.2% -
Glenhill Advisors, LLC (4) 1,626,936 - 6.1% -
U.S. Bancorp (5) 1,586,624 - 6.0% -
Barclays Global Investors, NA (6) 1,489,648 - 5.6% -
The Vanguard Group, Inc. (7) 1,457,072 - 5.5% -
Directors, not including CEO and President:
Lawrence Calcano (8) 35,000 - 0.1% -
James Cannavino (9) 82,030 - 0.3% -
John J. Conefry (10) 58,700 - 0.2% -
Leonard J. Elmore (11) 65,000 - 0.2% -
Jeffrey C. Walker (12) 78,000 - 0.3% -
Larry Zarin (13) - - - -
Named Executive Officers:
James F. McCann (14) 974,162 35,914,905 3.6% 97.4%
William E. Shea (15) 392,767 - 1.5% -
Christopher G. McCann (16) 2,023,073 2,903,178 7.1% 7.9%
Jan L. Murley (17) 5,000 - * -
Timothy J. Hopkins (18) 177,877 - 0.7% -
Directors and Executive Officers as
a Group (15 persons) (19) 4,645,591 36,765,545 15.3% 99.7%
-------------------------
* Indicates less than 0.1%.
(1) This information is based on the Schedule 13G filed with the SEC by
Tocqueville Asset Management L.P. on October 9, 2009 for shares held as of
September 30, 2009. The address of Tocqueville Asset Management L.P. is 40
West 57th Street, New York, New York 10019.
(2) This information is based on the Schedule 3 Amendment No. 3 filed with the
SEC by Royce & Associates, LLC on January 27, 2009 for shares held as of
December 31, 2008. The address of Royce & Associates, LLC is 1414 Avenue of
the Americas, New York, New York 10019.
(3) This information is based on the Schedule 13D Amendment No. 1 filed with
the SEC by RLR Capital Partners, LP ("RLR") and Robert L. Rosen on January
1, 2008 for shares held as of December 31, 2007. The reporting persons
reported that they have shared voting power and shared dispositive power
over all of the shares of Class A Common stock. The reporting persons
reported that RLR's principal business is to serve as the investment
manager of funds and/or accounts, including RLR Focus Master Fund, LP, the
holder of the Class A Shares set forth in the Schedule 13D. RLR Capital
Partners GP, LLC (the "Manager") is the sole general partner of RLR. Mr.
Robert Rosen is the managing member of the Manager. The address of RLR
Capital Partners, LP and Robert L. Rosen is 152 West 57th Street, 21st
Floor, New York, New York 10019.
35
(4) This information is based on the Schedule 13G Amendment No. 1 filed with
the SEC by Glenhill Advisors LLC, Glenn J. Krevlin, and Glenhill Capital
Management, LLC on February 17, 2009 for shares held as of December 31,
2008. The reporting persons reported that they have sole voting power and
sole dispositive power over all of these shares of Class A Common Stock.
According to the filing, Glenn J. Krevlin is the managing member and
control person of Glenhill Advisors, LLC; Glenhill Advisors, LLC is the
managing member of Glenhill Capital Management, LLC.; Glenhill Capital
Management, LLC is the general partner and investment advisor of Glenhill
Capital LP, a security holder of the issuer, managing member of Glenhill
Concentrated Long Master Fund, LLC, a security holder of the issuer, and
sole shareholder of Glenhill Capital Overseas GP, Ltd.; and Glenhill
Capital Overseas GP, Ltd. is general partner of Glenhill Capital Overseas
Master Fund, LP, a security holder of the issuer. The address of Glenhill
Advisors LLC, Glenn J. Krevlin, and Glenhill Capital Management, LLC is 598
Madison Avenue, 12th Floor, New York, NY 10022.
(5) This information is based on the Schedule 13G filed with the SEC by U.S.
Bancorp and FAF Advisors, Inc. on February 13, 2009 for shares held on
December 31, 2008. The reporting persons reported that they have sole
voting power over 1,584,479 shares of Class A Common Stock, shared voting
power over 2,145 shares of Class A Common Stock, sole dispositive power
over 1,567,655 shares of Class A Common Stock and shared dispositive power
over 16,824 shares of Class A Common Stock. According to the filing, U.S.
Bancorp is a parent holding company and FAF Advisors, Inc. is an investment
advisor. The reportingThe address of U.S. Bancorp and FAF Advisors, Inc. is
800 Nicollet Mall, Minneapolis, Minnesota 55402.
(6) This information is based on the Schedule 13G filed with the SEC by
Barclays Global Investors, NA and Barclays Global Fund Advisors. The
reporting persons reported that they have sole voting power over 1,379,447
shares of Class A Common Stock with no shared voting power and sole
dispositive power over 1,489,648 shares of Class A Common Stock. The
address of Barclays Global Investors, NA and Barclays Global Fund Advisors
is 400 Howard Street, San Francisco, CA 94105.
(7) This information is based on the Schedule 13G filed with the SEC by The
Vanguard Group, Inc. on February 13, 2009 for shares held on December 31,
2008. The reporting person reported that it has sole voting power over
36,202 shares of Class A Common Stock, with no shared voting power, and
sole dispositive power over 1,457,072 shares of Class A Common Stock. The
address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA
19355.
(8) Includes 30,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2009 through the exercise of stock options. Mr.
Calcano's address is c/o Calcano Capital Advisors, Inc., 140 Greenwich
Avenue, Greenwich, CT 06830
(9) Includes 20,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2009 through the exercise of stock options. Mr.
Cannavino's address is c/o Direct Insite Corporation, 80 Orville Drive,
Bohemia, NY 11716.
(10) Includes 45,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2009 through the exercise of stock options. Mr.
Conefry's address is c/o Astoria Federal Savings, One Astoria Federal
Plaza, Lake Success, New York 11042.
(11) Includes 65,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2009 through the exercise of stock options. Mr.
Elmore's address is c/o 1-800-FLOWERS.COM, INC., One Old Country Road,
Suite 500, Carle Place, NY 11514.
(12) Includes 10,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2009 through the exercise of stock options. Mr.
Walker's address is c/o 1-800-FLOWERS.COM, INC., One Old Country Road,
Suite 500, Carle Place, NY 11514.
(13) Mr. Zarin's address is c/o Express Scripts, One Express Way, St. Louis, MO
63121.
(14) Includes (a) 812,540 shares of Class A Common Stock that may be acquired
within 60 days of October 8, 2009 through the exercise of stock options,
(b) 5,875,000 shares of Class B Common Stock held by limited partnerships,
of which Mr. J. McCann is a limited partner and does not exercise control
and of which he disclaims beneficial ownership, (c) 52,548 shares of Class
B Common Stock held by The McCann Charitable Foundation, Inc., of which Mr.
J. McCann is a Director and the President; and (d) 28,036,068 shares of
Class B Common Stock held by five Grantor Retained Annuity Trusts of which
Mr. J. McCann is the Trustee.
(15) Includes 368,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2009 through the exercise of stock options.
(16) Includes (a) 1,756,420 shares of Class A Common Stock that may be acquired
within 60 days of October 8, 2009 through the exercise of stock options,
(b) 2,000,000 shares of Class B Common Stock held by a limited partnership,
of which Mr. C. McCann is a general partner and exercises control, and (c)
52,548 shares of Class B Common Stock held by The McCann Charitable
Foundation, Inc., of which Mr. C. McCann is a Director and Treasurer.
36
(17) Ms. Jan Murley's address is c/o 1-800-FLOWERS.COM, INC., One Old Country
Road, Suite 500, Carle Place, NY 11514.
(18) Includes 160,000 shares of class A Common Stock that may be acquired within
60 days of October 8, 2009 through the exercise of stock options.
(19) Includes 3,835,260 shares of Class A Common stock that may be acquired
within 60 days of October 8, 2009 through the exercise of stock options.
Certain Business Relationships with Directors and Officers
The Company has a policy providing that all material transactions between
it and one or more of its Directors, Executive Officers, nominees for Director
or a member of their immediate families must be approved either by a majority of
the disinterested members of the Board or by the stockholders of the Company.
The Company's legal and finance staff is primarily responsible for the
development and implementation of processes and controls to obtain information
from the directors and executive officers with respect to related person
transactions and for then determining, based on the facts and circumstances,
whether the Company or a related person has a direct or indirect material
interest in the transaction. This includes inquiries of its Directors and
Officers. As required under SEC rules, transactions that are determined to be
directly or indirectly material to the Company or a related person, are
disclosed in the Company's proxy statement. The Company considers individual
transactions, or any series of transactions which, in the aggregate exceed
$120,000, to be material and requiring of disclosure.
Below are the transactions that occurred during Fiscal 2009 in which, to
the Company's knowledge, the Company was or is a party, in which the amount
involved exceeded $120,000, and in which any Director, Director nominee,
Executive Officer, holder of more than 5% of the Common Stock or any member of
the immediate family of any of the foregoing persons had or will have a direct
or indirect material interest.
For Fiscal 2009, the Company entered into an agreement with Julie Mulligan,
the sister of Directors and Executive Officers, James F. McCann and Christopher
G. McCann, pursuant to which Ms. Mulligan was employed as a Personality Expert
Designer. The agreement was unanimously approved by the Independent Directors of
the Board. Ms. Mulligan's compensation for Fiscal 2009 was $256,658, consisting
of $130,000 in base salary and $126,658 in earned floral sales commissions for
sales of products designed by Ms. Mulligan for the Company. In consideration for
the floral sales commissions paid to Ms. Mulligan described above, Ms. Mulligan
was not eligible to receive any cash bonus under the Company's annual cash
incentive plan ("Sharing Success Program").
Gerard M. Gallagher, our General Counsel, Senior Vice President of Business
Affairs and Corporate Secretary, is the founder and managing partner in the law
firm of Gallagher, Walker, Bianco & Plastaras based in Mineola, New York.
Compensation for Mr. Gallagher's services are paid to the law firm. The Company,
with the approval of the Board, also pays the law firm fees for services
rendered by other members of the firm on the Company's behalf.
The cash compensation paid in Fiscal 2009 by the Company to the firm for
services provided by Mr. Gallagher was $375,031. For legal services provided by
the other members of the firm the Company paid $406,144.82 in fees and
$25,619.74 in disbursements. The Company believes that collectively these fees
and disbursements are fair and reasonable.
David Taiclet, our President of Gourmet Food & Gift Baskets business
segment, has less than a 15% ownership interest in Dynamic Confections, Inc.
("Dynamic"). In Fiscal 2009, certain of the Company's subsidiaries purchased
$419,950 worth of candy goods from the subsidiaries of Dynamic. Mr. Taiclet,
together with his wife, also has a 7.3 % beneficial ownership interest in OLB
Partners, LLP ("OLB"), which entity leases 19 retail locations to Fannie May
Confections, Inc. In Fiscal 2009, the lease payments to OLB totaled $1,022,706.
Both of Mr. Taiclet's interests predate the Company's 2006 acquisition of Fannie
May Confections Brands, Inc., were disclosed to the Company prior to the closing
on that acquisition and such ongoing relationships were approved by the Board of
Directors.
37
PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP to serve as the Company's independent registered
public accounting firm for the fiscal year ending June 27, 2010, and the Board
is asking stockholders to ratify such selection at the Annual Meeting. The
stockholders' ratification of the appointment of Ernst & Young LLP will not
impact the Audit Committee's responsibility pursuant to its charter, to appoint,
replace and discharge the independent auditors. In the event the stockholders
fail to ratify this selection, the matter of the selection of independent
auditors will be reconsidered by the Board of Directors.
Fees Paid to Ernst & Young LLP
The following table shows the fees that the Company paid or accrued for
audit and other services provided by Ernst & Young LLP for Fiscal 2009 and
Fiscal 2008, all of which were approved by the Audit committee.
2008 2007
--------------- ---------------
Audit Fees $599,000 $515,000
Audit-Related Fees 119,000 125,000
Tax Fees 58,200 35,000
All Other Fees -
--------------- ---------------
Total $776,2000 $675,000
=============== ===============
Audit Fees. Fees for audit services include fees associated with the annual
audit, including the Company's annual report on Form 10-K, consents and reviews
of the Company's quarterly reports on Form 10-Q. These fees also include the
audit of management's assessment of internal control over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-Related Fees. Fees for audit-related services include audits and
assurance services related to the Company's benefit plans and separate financial
statements for its franchise operations, as well as due diligence services in
connection with acquisitions.
Tax Fees. Fees for tax service include tax compliance, tax advice and tax
planning.
All Other Fees. Consists of other fees not reported in the above
categories.
Audit Committee Pre-Approval Policies and Procedures. The Audit Committee
pre-approves all audit, audit-related and non-audit services (including tax
services) provided by the independent registered public accounting firm.
Pre-approval is generally provided for up to one year, and any pre-approval is
detailed as to the particular service. The independent registered public
accounting firm and the Company's management are required to periodically report
to the Audit Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with this
pre-approval, including fees for the services performed to date. In addition,
the Audit Committee also may pre-approve particular services on a case-by-case
basis, as required.
The affirmative vote of a majority of the Company's outstanding Common
Stock present in person or by proxy is required to ratify the appointment of the
independent registered accounting firm. Unless otherwise instructed, the proxy
holders will vote the proxies received by them "FOR" the ratification of Ernst &
Young LLP as the Company's independent registered public accounting firm for
Fiscal 2010. A representative of Ernst & Young LLP will attend the Annual
Meeting with the opportunity to make a statement if he or she so desires and
will also be available to answer inquiries.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION
AND APPROVAL OF THE SELECTION OF ERNST & YOUNG LLP TO
SERVE AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR FISCAL 2010.
38
PROPOSAL 3
APPROVAL OF THE 2003 LONG TERM INCENTIVE AND SHARE AWARE PLAN, AS AMENDED AND
RESTATED OCTOBER 22, 2009
The 2003 Long Term Incentive and Share Award Plan (the "Plan") has
previously been adopted by the Board of Directors and approved by the
shareholders. The Plan has been amended, subject to shareholder approval, to
allow shares subject to forfeited awards that were granted under the Company's
1999 Stock Incentive Plan prior to the original effective date of the Plan,
December 3, 2003, to be regranted under the Plan. The 1999 Stock Incentive Plan
was previously approved by shareholders. Accordingly, the Plan, as amended, will
provide that the maximum number of shares that can be issued thereunder will be
increased by the number of shares subject to forfeited awards that were
originally granted prior to December 3, 2003 under the Company's 1999 Stock
Incentive Plan. As of June 28, 2009, 1,688,870 additional shares will be
available for issuance under the Plan from such awards that have been forfeited,
and up to 5,454,816 additional shares may become available for issuance under
the Plan if such awards that are currently outstanding are forfeited. The Plan
is also being submitted for reapproval by the shareholders so that
performance-based awards granted under the Plan to named executive officers may
continue to qualify as performance-based compensation that is exempt from the
income tax deductibility limitations under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). Unless an exception applies,
including the exception for qualified performance-based compensation, Section
162(m) of the Code generally disallows the corporate tax deduction for
compensation paid in excess of $1 million annually to each of the chief
executive officer and three other most highly compensated executive officers
(other than the chief financial officer) of a publicly held corporation. In
order for performance-based awards granted under the Plan to continue to qualify
as performance-based compensation exempt from the deductibility limitations
under Section 162(m), the performance goal criteria set forth in the Plan for
such awards is generally required to be approved periodically by shareholders.
Accordingly, we are requesting shareholder approval of the amendment and
restatement of the Plan and the performance goals thereunder.
Additional amendments to the Plan have been made that are primarily
intended to update the Plan for changes in applicable Treasury regulations and
to update the list of performance goal criteria.
The following summary of the Plan is qualified in its entirety by reference
to the Plan, which is attached as Annex "A" to this Proxy Statement.
General. The Plan is intended to provide incentives to attract, retain and
motivate employees, consultants and directors in order to achieve the Company's
long-term growth and profitability objectives. The Plan will provide for the
grant to eligible employees, consultants and directors of stock options, share
appreciation rights ("SARs"), restricted shares, restricted share units,
performance shares, performance units, dividend equivalents, and other
share-based awards (collectively the "Awards"). The total number of shares of
Common Stock reserved for issuance in connection with Awards under the Plan will
be 7,500,000 plus the number of shares subject to awards granted prior to the
effective date of the Plan (December 3, 2003) under the Company's 1999 Stock
Incentive Plan which awards have been or are forfeited, canceled, terminated, or
surrendered without a distribution of shares to the holder of the award.
However, no more than 7,500,000 shares of Common Stock may be issued under the
Plan as incentive stock options intended to qualify for special tax treatment
under the Code. In addition, during a calendar year (i) the maximum number of
shares with respect to which options and SARs may be granted to an eligible
participant under the Plan will be 1,000,000 shares, and (ii) the maximum number
of shares with respect to which Awards intended to qualify as performance-based
compensation other than options and SARs may be granted to an eligible
participant under the Plan will be 500,000 shares. These share amounts are
subject to anti-dilution adjustments in the event of certain changes in the
Company's capital structure, as described below. Shares issued pursuant to the
Plan will be either authorized but unissued shares or treasury shares.
Eligibility and Administration. Officers and other employees of, and
consultants to, the Company and its Subsidiaries and Affiliates and Directors of
the Company will be eligible to be granted Awards under the Plan. The Plan will
be administered by the Compensation Committee or such other Board committee (or
the entire Board) as may be designated by the Board (the "Committee"). Unless
otherwise determined by the Board, the Committee will consist of two or more
members of the Board who are nonemployee directors within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act") and "outside
directors" within the meaning of Section162(m) of the Code. The Committee will
determine which eligible employees, consultants and directors receive Awards,
the types of Awards to be received and the terms and conditions thereof. The
Committee will have authority to waive conditions relating to an Award or
accelerate vesting of Awards. All full time employees are currently eligible to
participate in the Plan.
The Chief Executive Officer shall have the power and authority to make
Awards under the Plan to employees and consultants not subject to Section 16 of
the Exchange Act, subject to limitations imposed by the Committee.
39
Except for certain antidilution adjustments, unless the approval of
shareholders of the Company is obtained, options and SARs issued under the Plan
will not be amended to lower their exercise price and options and SARs issued
under the Plan will not be exchanged for other Options or SARs with lower
exercise prices.
Awards. Incentive stock options ("ISOs") intended to qualify for special
tax treatment in accordance with the Code and nonqualified stock options not
intended to qualify for special tax treatment under the Code may be granted for
such number of shares of Common Stock as the Committee determines. The Committee
will be authorized to set the terms relating to an option, including exercise
price and the time and method of exercise. However, the exercise price of
options will not be less than the fair market value of the shares on the date of
grant, and the term will not be longer than ten years from the date of grant of
the options.
A SAR will entitle the holder thereof to receive with respect to each share
subject thereto, an amount equal to the excess of the fair market value of one
share of Common Stock on the date of exercise over the exercise price of the SAR
set by the Committee as of the date of grant. However, the exercise price of the
SARs will not be less than the fair market value of the shares on the date of
grant, and the term will not be longer than ten years from the date of grant of
the SARs. Payment with respect to SARs may be made in cash or shares of Common
Stock as determined by the Committee.
Awards of restricted shares will be subject to such restrictions on
transferability and other restrictions, if any, as the Committee may impose.
Such restrictions will lapse under circumstances as the Committee may determine,
including based upon a specified period of continued employment or upon the
achievement of performance criteria referred to below. Except as otherwise
determined by the Committee, eligible employees granted restricted shares will
have all of the rights of a stockholder, including the right to vote restricted
shares and receive dividends thereon, and unvested restricted shares will be
forfeited upon termination of employment during the applicable restriction
period.
A restricted share unit will entitle the holder thereof to receive shares
of Common Stock or cash at the end of a specified deferral period. Restricted
share units will also be subject to such restrictions as the Committee may
impose. Such restrictions will lapse under circumstances as the Committee may
determine, including based upon a specified period of continued employment or
upon the achievement of performance criteria referred to below. Except as
otherwise determined by the Committee, restricted share units subject to
restriction will be forfeited upon termination of employment during any
applicable restriction period.
Performance shares and performance units will provide for future issuance
of shares or payment of cash, respectively, to the recipient upon the attainment
of corporate performance goals established by the Committee over specified
performance periods. Except as otherwise determined by the Committee,
performance shares and performance units will be forfeited upon termination of
employment during any applicable performance period. Prior to payment of
performance shares or performance units, the Committee will certify that the
performance objectives were satisfied. Performance objectives may vary from
person to person and will be based upon one or more of the following performance
criteria as the Committee may deem appropriate: appreciation in value of the
shares; total shareholder return; earnings per share; earnings per share growth;
operating income; net income; pro forma net income; return on equity; return on
designated assets; return on capital; economic value added; earnings; earnings
before interest, taxes, depreciation and amortization ("EBITDA"); EBITDA on a
pre-bonus basis adjusted for the for the change in inventory for the plan year
("modified free cash flow"), free cash flow; revenues; revenue growth; expenses;
operating profit margin; operating cash flow; gross profit margin; net profit
margin; or any of the above criteria as compared to the performance of a
published or special index deemed applicable by the Committee, including, but
not limited to, the Standard & Poor's 500 Stock Index. The Committee may revise
performance objectives if significant events occur during the performance period
which the Committee expects to have a substantial effect on such objectives, as
set forth in the Plan.
The Committee may also grant dividend equivalent rights and it is
authorized, subject to limitations under applicable law, to grant such other
Awards that may be denominated in, valued in, or otherwise based on, shares of
Common Stock, as deemed by the Committee to be consistent with the purposes of
the Plan.
Nontransferability. Unless otherwise set forth by the Committee in an Award
agreement, Awards (except for vested shares) will generally not be transferable
by the participant other than by will or the laws of descent and distribution
and will be exercisable during the lifetime of the participant only by such
participant or his or her guardian or legal representative.
Change of Control. In the event of a change of control (as defined in the
Plan), all Awards granted under the Plan then outstanding but not then
exercisable (or subject to restrictions) shall become immediately exercisable,
all restrictions shall lapse, and any performance criteria shall be deemed
satisfied, unless otherwise provided in the applicable Award agreement.
40
Capital Structure Changes. If the Committee determines that any dividend in
shares, recapitalization, share split, reorganization, merger, consolidation,
spin-off, combination, repurchase, share exchange, extraordinary distribution or
other similar corporate transaction or event affects the Common Stock such that
an adjustment is appropriate in order to prevent dilution or enlargement of the
rights of eligible participants under the Plan, then the Committee shall make
such equitable changes or adjustments as it deems appropriate, and shall make
adjustments to (i) the number and kind of shares which may thereafter be issued
under the Plan, (ii) the number and kind of shares, other securities or other
consideration issued or issuable in respect of outstanding Awards, and (iii) the
exercise price, grant price or purchase price relating to any Award, or provide
for a distribution of cash or property with respect to an Award.
Amendment and Termination. The Plan may be amended, suspended or terminated
by the Board of Directors at any time, in whole or in part. However, any
amendment for which stockholder approval is required under the rules of any
stock exchange or automated quotation system on which the Common Stock may then
be listed or quoted will not be effective until such stockholder approval has
been obtained. In addition, no amendment, suspension, or termination of the Plan
may materially and adversely affect the rights of a participant under any Award
theretofore granted to him or her without the consent of the affected
participant. The Committee may waive any conditions or rights, amend any terms,
or amend, suspend or terminate, any Award granted, provided that, without
participant consent, such amendment, suspension or termination may not
materially and adversely affect the rights of such participant under any Award
previously granted to him or her.
Effective Date and Term. The Plan was effective as of December 3, 2003, and
was originally scheduled to terminate ten years thereafter. So long as the Plan
is reapproved by shareholders, unless earlier terminated, the Plan will
terminate on October 22, 2019, and no further awards may be granted thereunder
after such date.
Market Value. The per share closing price of the Common Stock on October 8,
2009 was $3.63.
Federal Income Tax Consequences. The following is a summary of the federal
income tax consequences of the Plan, based upon current provisions of the Code,
the Treasury regulations promulgated thereunder and administrative and judicial
interpretation thereof, and does not address the consequences under any state,
local or foreign tax laws.
Stock Options
In general, the grant of an option will not be a taxable event to the
recipient and it will not result in a deduction to the Company. The tax
consequences associated with the exercise of an option and the subsequent
disposition of shares of Common Stock acquired on the exercise of such option
depend on whether the option is a nonqualified stock option or an ISO.
Upon the exercise of a nonqualified stock option, the participant will
recognize ordinary taxable income equal to the excess of the fair market value
of the shares of Common Stock received upon exercise over the exercise price.
The Company will generally be able to claim a deduction in an equivalent amount.
Any gain or loss upon a subsequent sale or exchange of the shares of Common
Stock will be capital gain or loss, long-term or short-term, depending on the
holding period for the shares of Common Stock.
Generally, a participant will not recognize ordinary taxable income at the
time of exercise of an ISO and no deduction will be available to the Company,
provided the option is exercised while the participant is an employee or within
three months following termination of employment (longer, in the case of
disability or death). If an ISO granted under the Plan is exercised after these
periods, the exercise will be treated for federal income tax purposes as the
exercise of a nonqualified stock option. Also, an ISO granted under the Plan
will be treated as a nonqualified stock option to the extent it (together with
other ISOs granted to the participant by the Company) first becomes exercisable
in any calendar year for shares of Common Stock having a fair market value,
determined as of the date of grant, in excess of $100,000.
If shares of Common Stock acquired upon exercise of an ISO are sold or
exchanged more than one year after the date of exercise and more than two years
after the date of grant of the option, any gain or loss will be long-term
capital gain or loss. If shares of Common Stock acquired upon exercise of an ISO
are disposed of prior to the expiration of these one-year or two-year holding
periods (a "Disqualifying Disposition"), the participant will recognize ordinary
income at the time of disposition, and the Company will generally be entitled to
a deduction, in an amount equal to the excess of the fair market value of the
shares of Common Stock at the date of exercise over the exercise price. Any
additional gain will be treated as capital gain, long-term or short-term,
depending on how long the shares of Common Stock have been held. Where shares of
Common Stock are sold or exchanged in a Disqualifying Disposition (other than
certain related party transactions) for an amount less than their fair market
value at the date of exercise, any ordinary income recognized in connection with
the Disqualifying Disposition will be limited to the amount of gain, if any,
recognized in the sale or exchange, and any loss will be a long-term or
short-term capital loss, depending on how long the shares of Common Stock have
been held.
41
If an option is exercised through the use of shares of Common Stock
previously owned by the participant, such exercise generally will not be
considered a taxable disposition of the previously owned shares and, thus, no
gain or loss will be recognized with respect to such previously owned shares
upon such exercise. The amount of any built-in gain on the previously owned
shares generally will not be recognized until the new shares acquired on the
option exercise are disposed of in a sale or other taxable transaction.
Although the exercise of an ISO as described above would not produce
ordinary taxable income to the participant, it would result in an increase in
the participant's alternative minimum taxable income and may result in an
alternative minimum tax liability.
Restricted Stock
A participant who receives shares of restricted stock will generally
recognize ordinary income at the time that they "vest", i.e., when they are not
subject to a substantial risk of forfeiture. The amount of ordinary income so
recognized will generally be the fair market value of the Common Stock at the
time the shares vest, less the amount, if any, paid for the stock. This amount
is generally deductible for federal income tax purposes by the Company.
Dividends paid with respect to Common Stock that is nonvested will be ordinary
compensation income to the participant (and generally deductible by the
Company). Any gain or loss upon a subsequent sale or exchange of the shares of
Common Stock, measured by the difference between the sale price and the fair
market value on the date the shares vest, will be capital gain or loss,
long-term or short-term, depending on the holding period for the shares of
Common Stock. The holding period for this purpose will begin on the date
following the date the shares vest.
In lieu of the treatment described above, a participant may elect immediate
recognition of income under Section 83(b) of the Code. In such event, the
participant will recognize as income the fair market value of the restricted
stock at the time of grant (determined without regard to any restrictions other
than restrictions which by their terms will never lapse), and the Company will
generally be entitled to a corresponding deduction. Dividends paid with respect
to shares as to which a proper Section 83(b) election has been made will not be
deductible to the Company. If a Section 83(b) election is made and the
restricted stock is subsequently forfeited, the participant will not be entitled
to any offsetting tax deduction.
SARs and Other Awards
With respect to SARs, restricted share units, performance shares,
performance units, dividend equivalents and other Awards under the Plan not
described above, generally, when a participant receives payment with respect to
any such Award granted to him or her under the Plan, the amount of cash and the
fair market value of any other property received will be ordinary income to such
participant and will be allowed as a deduction for federal income tax purposes
to the Company.
Payment of Withholding Taxes
The Company may withhold, or require a participant to remit to it, an
amount sufficient to satisfy any federal, state or local withholding tax
requirements associated with Awards under the Plan.
Deductibility Limit on Compensation in Excess of $1 Million
Section 162(m) of the Code generally limits the deductible amount of annual
compensation paid (including, unless an exception applies, compensation
otherwise deductible in connection with Awards granted under the Plan) by a
public company to each "covered employee" (i.e., the chief executive officer and
three other most highly compensated executive officers of the Company other than
the chief financial officer) to no more than $1 million. The Company
currently intends to structure stock options and other Awards granted under the
Plan to certain of the covered employees to comply with an exception to
nondeductibility under Section 162(m) of the Code. See "Compensation Committee
Report"
New Plan Benefits. No benefits have been received or allocated to any
employee, consultant or director under the Plan, and therefore a "New Plan
Benefits" table has not been included.
The affirmative vote of a majority of the Company's outstanding Common
Stock present in person or by proxy is required to approve the 2003 Long Term
Incentive and Share Award Plan as amended and restated on October 22, 2009.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them "FOR" the approval of the 2003 Long Term Incentive and Share Award Plan as
amended and restated on October 22, 2009.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2003
LONG TERM INCENTIVE AND SHARE AWARD PLAN AS AMENDED AND
RESTATED ON OCTOBER 22, 2009.
42
PROPOSAL 4
APPROVAL OF THE SECTION 16 EXECUTIVE OFFICERS BONUS PLAN, AS AMENDED AND
RESTATED ON OCTOBER 22, 2009
General
The Company's Board of Directors has adopted, and the shareholders have
previously approved, the Section 16 Executive Officers Bonus Plan pursuant to
which Section 16 executive officers of the Company may be entitled to receive
annual bonus compensation contingent upon the attainment of certain performance
goals.
In order to qualify under the performance-based compensation exception
under Section 162(m) of the Code, and thereby avoid potential nondeductibility
of bonus compensation paid to certain executive officers, the material terms of
the Section 16 Executive Officers Bonus Plan (including the class of eligible
participants, the performance criteria contemplated by the plan and the maximum
amount payable under the plan) must be approved by the stockholders, and the
performance criteria generally need to be periodically reapproved. Accordingly,
the Section 16 Executive Officers Bonus Plan, as amended and restated is being
submitted for approval by stockholders.
A copy of the Section 16 Executive Officers Bonus Plan is attached as Annex
"B" hereto. The material features of the Section 16 Executive Officers Bonus
Plan are described below, but this description is only a summary and is
qualified in its entirety by reference to the actual text of the Section 16
Executive Officers Bonus Plan.
Purpose
The purpose of the Section 16 Executive Officers Bonus Plan is to provide
Section 16 executives of the Company with an opportunity to earn annual bonus
compensation as an incentive and reward for their leadership, ability and
exceptional services.
Administration
The Section 16 Executive Officers Bonus Plan will be administered by a
committee of the Board of Directors of the Company consisting of not less than
two persons who, to the extent required to satisfy the exception for performance
based compensation under Section 162(m) of the Code, will be "outside directors"
within the meaning of such section.
Subject to the express provisions of the Section 16 Executive Officers
Bonus Plan, the committee of outside directors has the authority to (i)
establish performance goals for the granting of annual bonuses for each plan
year, (ii) determine the Section 16 executives to whom annual bonus awards are
to be made for each plan year, (iii) determine whether the performance goals for
any plan year have been achieved, (iv) authorize payment of annual bonuses under
the Section 16 Executive Officers Bonus Plan, (v) adopt, alter and repeal such
administrative rules, guidelines and practices governing the Section 16
Executive Officers Bonus Plan as it deems advisable, and (vi) interpret the
terms and provisions of the Section 16 Executive Officers Bonus Plan.
Determination of Awards
The amount of any annual bonus granted to a Section 16 executive for any
plan year will be an amount not greater than $2 million, which amount will be
determined based on the achievement of one or more performance goals established
by the committee of outside directors with respect to such executive.
Performance goals may vary from executive to executive and shall be based upon
such one or more of the following performance criteria as the committee of
outside directors may deem appropriate: appreciation in stock value, total
stockholder return, earnings per share, earnings per share growth, operating
income, net income, pro forma net income, return on equity, return on designated
assets, return on capital, economic value added, earnings, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), EBITDA on a per-bonus
basis adjusted for the change in inventory for the year ("modified free cash
flow"), free cash flow, revenues, revenue growth, expenses, operating profit
margin, operating cash flow, gross profit margin or net profit margin. The
performance goals may be determined by reference to the performance of the
Company, or of a subsidiary or affiliate, or of a division or unit of any of the
foregoing. Not later than the ninetieth day of the plan year (or another date as
may be permitted pursuant to Section 162(m) of the Code), the committee of
outside directors will establish (i) the Section 16 executives who will be
eligible for an annual bonus for such plan year, (ii) the performance goals for
such plan year, and (iii) the corresponding annual bonus amounts payable under
the Section 16 Executive Officers Bonus Plan upon achievement of the performance
goals.
Payment of Award
An annual bonus (if any) to any Section 16 executive for a plan year will
be paid after the end of the plan year, provided, however, that the committee of
outside directors shall have first certified in writing (i) that a performance
goal with respect to the executive for such fiscal year was satisfied and the
level of the goal attained, and (ii) the amount of each executive's annual
bonus. The Committee, unless it determines otherwise, shall have the discretion
to decrease the amount otherwise payable under an award. If an executive dies
after the end of a plan year but before receiving payment of any annual bonus,
the amount will be paid to a designated beneficiary or, if no beneficiary has
been designated, to the executive's estate. Notwithstanding the foregoing, the
committee of outside directors may determine by separate employment agreement
with any executive or otherwise, that all or a portion of an executive's annual
bonus for a plan year will be payable to such executive upon his death or
disability, or upon a change of control of the Company, during the plan year.
43
Non-Transferability
No annual bonuses or rights under the Section 16 Executive Officers Bonus
Plan may be transferred or assigned other than by will or by the laws of descent
and distribution.
Amendments and Termination
The Board of Directors may terminate the Section 16 Executive Officers
Bonus Plan and may amend it from time to time; provided, however, that no
termination or amendment of the Section 16 Executive Officers Bonus plan will
materially and adversely affect the rights of an executive or a beneficiary to a
previously certified annual bonus. Amendments to the Section 16 Executive
Officers Bonus Plan may be made without stockholder approval except as required
to satisfy Section 162(m) of the Code.
Certain Federal Income Tax Consequences
The following is a summary of certain Federal income tax aspects with
respect to the Section 16 Executive Officers Bonus Plan based upon the laws in
effect on the date hereof.
Upon payment of an annual bonus to an executive for any plan year pursuant
to the Section 16 Executive Officers Bonus Plan, such executive will recognize
ordinary income in the amount of such annual bonus on the date the compensation
is paid.
The Company will generally be entitled to a deduction in the amount taxable
as ordinary income to an executive, subject to the limitation imposed by Section
162(m) of the Code. The Company intends that compensation paid to an executive
pursuant to the Section 16 Executive Officers Bonus Plan will generally qualify
as "performance-based compensation" under Section 162(m) of the Code and,
consequently, should generally not be subject to the $1 million deduction limit
thereunder.
The foregoing is based upon Federal income tax laws and regulations as
presently in effect and does not purport to be a complete description of the
Federal income tax aspects of the Section 16 Executive Officers Bonus Plan.
Also, the state and local tax consequences to an executive and the Company may
vary, depending upon the laws of the various states and localities and the
individual circumstances of the executive.
New Plan Benefits
The amount of benefits payable in the future under the Section 16 Executive
Officers Bonus Plan is not currently determinable.
The affirmative vote of a majority] of the Company's outstanding Common
Stock present in person or by proxy is required to approve the Section 16
Executive Officers Bonus Plan as amended and restated on October 22, 2009.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them "FOR" the approval of the Section 16 Executive Officers Bonus Plan as
amended and restated on October 22, 2009.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE SECTION 16 EXECUTIVE
OFFICERS BONUS PLAN AS AMENDED AND RESTATED ON OCTOBER 22, 2009
OTHER MATTERS
The Board of Directors does not intend to bring any other business before
the Annual Meeting, and so far as is known to the Board, no matters are to be
presented for action at the Annual Meeting other than those set forth above. If
any other matters properly come before the Annual Meeting, the persons named in
the enclosed form of proxy will vote the shares represented by proxies in their
discretion on such matters.
STOCKHOLDER PROPOSALS FOR THE 2010 ANNUAL MEETING
Shareholders who, in accordance with Commission Rule 14a-8 wish to present
proposals for inclusion in the proxy materials to be distributed in connection
with next year's Annual Meeting Proxy Statement must submit their proposals so
that they are received at the Company's principal executive offices no later
than the close of business on June 26, 2010. As the rules of the Commission make
clear, simply submitting a proposal does not guarantee that it will be included.
In accordance with our Bylaws, in order to be properly brought before the
2010 Annual Meeting, a shareholder's notice of the matter the shareholder wishes
to present, or the person or persons the shareholder wishes to nominate as a
director, must be delivered to the secretary of the Company at its principal
executive offices not later than the close of business on the 90th day, nor
earlier than the close of business on the 120th day, prior to the first
anniversary date of the 2009 Annual Meeting date. As a result, any notice given
a shareholder pursuant to these provisions of our Bylaws (and not pursuant to
the Commission's Rule 14a-8) must be received no earlier than August 5, 2010 and
no later than September 4, 2010. If, however, our 2010 Annual Meeting date is
advanced by more than 30 days before, or delayed more than 70 days after, the
one year anniversary of the 2010 Annual Meeting date, then proposals must be
received no earlier than the close of business on the 120th day prior to the
2010 Annual Meeting and not later than the close of business on the later of the
90th day before the 2010 Annual Meeting or the 10th day following the date on
which the 2010 Annual Meeting date is publicly announced.
44
To be in proper form, a shareholder's notice must include the specified
information concerning the proposal or nominee as described in our Bylaws. A
shareholder who wishes to submit a proposal or nomination is encouraged to seek
independent counsel about our Bylaws and Commission requirements. The Company
will not consider any proposal or nomination that does not meet the Bylaws
requirements and the Commission's requirements for submitting a proposal or
nomination. Notices of intention to present proposals at the 2010 Annual Meeting
should be addressed to Corporate Secretary, 1-800-FLOWERS.COM, Inc., One Old
Country Road, Suite 500, Carle Place, New York 11514. The Company reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
SOLICITATION OF PROXIES
Proxies are being solicited by the Board of Directors of the Company.
Proxies may be solicited by officers, Directors and regular supervisory and
executive employees of the Company, none of whom will receive any additional
compensation for their services. Such solicitations may be made personally or by
mail, facsimile, telephone, telegraph, messenger, or via the Internet. The
Company may pay persons holding shares of Common Stock in their names or in the
names of nominees, but not owning such shares beneficially, such as brokerage
houses, banks and other fiduciaries, for expenses of forwarding solicitation
materials to their principals. All of the costs of solicitation will be paid by
the Company.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each beneficial holder of its
Common Stock on the Record Date who did not receive a copy of the Company's
Annual Report for the fiscal year ended June 28, 2009, on the written request of
such person, a copy of the Company's Annual Report on Form 10-K as filed with
the Commission. Any such request should be made in writing to the Secretary of
the Company at the address set forth on the first page of this Proxy Statement.
By order of the Board of Directors
/s/ James F. McCann
----------------------------------
James F. McCann
Chairman of the Board and Chief
Executive Officer
Carle Place, New York
October 23, 2009
45
1-800-FLOWERS.COM, INC. ONE OLD COUNTRY ROAD CARLE PLACE, NY 11514
VOTE BY INTERNET - www.proxyvote.com
Use 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 PROXY MATERIALS
If you would like to reduce the costs incurred by our company 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 proxy
materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use 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 MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
-------------------------------------------------------------- -------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
The BOARD of Directors recommends that you vote FOR the following
Vote on Directors For All Withhold All For All Except To withhold authority to vote for any individual
nominee(s), mark "For All Except" and write the
1. ELECTION OF DIRECTORS 0 0 0 number(s) of the nominee(s) on the line below.
Nominees
01) Lawrence Calcano 02) James Cannavino 03) Jeffrey C. Walker
The Board of Directors recommends a vote FOR the following proposal(s):
For Against Abstain
2. RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 0 0 0
Proposal to ratify the appointment of Ernst & Young LLP as the
Company's independent registered public accounting firm for the
fiscal year ending June 27, 20010 as described in the Proxy Statement.
3. APPROVAL OF 2003 LONG TERM INCENTIVE AND SHARE AWARD PLAN 0 0 0
4. APPROVAL OF SECTION 16 EXECUTIVE OFFICERS BONUS PLAN
NOTE: Such other business as may properly come before the meeting or any
adjournment thereof.
Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, or other fiduciary, please give full
title as such. Joint owners should each sign personally. All holders must
sign. If a corporation or partnership, please sign in full corporate or
partnership name, by authorized officer.
Signature [PLEASE SIGN WITHIN BOX]
Date
Signature (Joint Owners)
Date
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting: The Notice & Proxy Statement, Form 10-K is/are available at
www.proxyvote.com .
1-800-FLOWERS.COM, INC.
Annual Meeting of Stockholders
December 3, 2009
9:00 AM
This proxy is solicited by
the Board of Directors
The undersigned stockholder of 1-800-FLOWERS.COM, INC. hereby appoints Gerard M.
Gallagher, Corporate Secretary, with full power of substitution, as proxy to
vote the shares of stock, in accordance with the undersigned's specifications,
which the undersigned could vote if personally present at the Annual Meeting of
Stockholders of 1-800-FLOWERS.COM, INC. to be held at One Old Country Road,
Carle Place, New York 11514, Fourth Floor Conference Room (the "Meeting Place"),
on Thursday, December 3, 2009 at 9:00 a.m. eastern standard time or any
adjournment thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS, "FOR" RATIFICATION OF
ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING JUNE 27, 2010, "FOR" APPROVAL OF THE 2003 LONG TERM INCENTIVE
AND SHARE AWARD PLAN, "FOR" APPROVAL OF SECTION 16 EXECUTIVE OFFICERS BONUS PLAN
AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY AS TO OTHER MATTERS WHICH
PROPERLY COME BEFORE THE ANNUAL MEETING.
All of the proposals set forth are proposals of the Company. None of the
proposals is related to or conditioned upon approval of any other proposal.
Continued and to
be signed on
reverse side
ANNEX A
1-800-FLOWERS.COM, INC.
2003 LONG TERM INCENTIVE AND SHARE AWARD PLAN
(as amended and restated as of October 22, 2009)
1. Purposes.
The purposes of the 2003 Long Term Incentive and Share Award Plan are to
advance the interests of 1-800-Flowers.com, Inc. and its shareholders by
providing a means to attract, retain, and motivate employees, consultants and
directors of the Company upon whose judgment, initiative and efforts the
continued success, growth and development of the Company is dependent.
2. Definitions.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board or the Committee as a
participating employer under the Plan; provided, however, that the
Company directly or indirectly owns at least 20% of the combined
voting power of all classes of stock of such entity or at least 20% of
the ownership interests in such entity.
(b) "Award" means any Option, SAR, Restricted Share, Restricted
Share Unit, Performance Share, Performance Unit, Dividend Equivalent,
or Other Share-Based Award granted to an Eligible Person under the
Plan.
(c) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts
which have been designated by an Eligible Person in his or her most
recent written beneficiary designation filed with the Company to
receive the benefits specified under this Plan upon the death of the
Eligible Person, or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to
receive such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time. References to any provision of the Code shall be
deemed to include successor provisions thereto and regulations
thereunder.
(g) "Committee" means the Compensation Committee of the Board, or
such other Board committee (which may include the entire Board) as may
be designated by the Board to administer the Plan; provided, however,
that, unless otherwise determined by the Board, the Committee shall
consist of two or more directors of the Company, each of whom is a
"non-employee director" within the meaning of Rule 16b-3 under the
Exchange Act, to the extent applicable, and each of whom is an
"outside director" within the meaning of Section 162(m) of the Code,
to the extent applicable; provided, further, that the mere fact that
the Committee shall fail to qualify under either of the foregoing
requirements shall not invalidate any Award made by the Committee
which Award is otherwise validly made under the Plan.
(h) "Company" means 1-800-Flowers.com, Inc., a corporation
organized under the laws of Delaware, or any successor corporation.
(i) "Director" means a member of the Board who is not an employee
of the Company, a subsidiary or an Affiliate.
(j) "Dividend Equivalent" means a right, granted under Section
5(g), to receive cash, Shares, or other property equal in value to
dividends paid with respect to a specified number of Shares. Dividend
Equivalents may be awarded on a free-standing basis or in connection
with another Award, and may be paid currently or on a deferred basis.
(k) "Eligible Person" means (i) an employee or consultant of the
Company, a Subsidiary or an Affiliate, including any director who is
an employee, or (ii) a Director. Notwithstanding any provisions of
this Plan to the contrary, an Award may be granted to an employee or
consultant in connection with his or her hiring or retention prior to
the date the employee or consultant first performs services for the
Company, a Subsidiary or an Affiliate; provided, however, that any
such Award shall not become vested prior to the date the employee or
consultant first performs such services.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange
Act shall be deemed to include successor provisions thereto and
regulations thereunder.
(m) "Fair Market Value" means, with respect to Shares or other
property, the fair market value of such Shares or other property
determined by such methods or procedures as shall be established from
time to time by the Committee. If the Shares are listed on any
established stock exchange or a national market system, unless
otherwise determined by the Committee in good faith, the Fair Market
Value of Shares shall mean the closing price per Share on the date in
question (or, if the Shares were not traded on that day, the next
preceding day that the Shares were traded) on the principal exchange
or market system on which the Shares are traded, as such prices are
officially quoted on such exchange.
(n) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(o) "NQSO" means any Option that is not an ISO.
(p) "Option" means a right, granted under Section 5(b), to
purchase Shares.
(q) "Other Share-Based Award" means a right, granted under
Section 5(h), that relates to or is valued by reference to Shares.
2
(r) "Participant" means an Eligible Person who has been granted
an Award under the Plan.
(s) "Performance Share" means a performance share granted under
Section 5(f).
(t) "Performance Unit" means a performance unit granted under
Section 5(f).
(u) "Plan" means this 2003 Long Term Incentive and Share Award
Plan.
(v) "Restricted Shares" means an Award of Shares under Section
5(d) that may be subject to certain restrictions and to a risk of
forfeiture.
(w) "Restricted Share Unit" means a right, granted under Section
5(e), to receive Shares or cash at the end of a specified deferral
period.
(x) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
and applicable to the Plan and Participants, promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange
Act.
(y) "SAR" or "Share Appreciation Right" means the right, granted
under Section 5(c), to be paid an amount measured by the difference
between the exercise price of the right and the Fair Market Value of
Shares on the date of exercise of the right, with payment to be made
in cash, Shares, or property as specified in the Award or determined
by the Committee.
(z) "Shares" means common stock, $.01 par value per share, of the
Company.
(aa) "Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if
each of the corporations (other than the last corporation in the
unbroken chain) owns shares possessing 50(degree)s or more of the
total combined voting power of all classes of stock in one of the
other corporations in the chain.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
committee, and the Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select Eligible Persons to whom Awards may be granted;
(ii) to designate Affiliates;
(iii) to determine the type or types of Awards to be granted to
each Eligible Person;
(iv) to determine the type and number of Awards to be granted,
the number of Shares to which an Award may relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, grant price, or purchase price, any
restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability,
or settlement of an Award, and waiver or accelerations thereof, and
waivers of performance conditions relating to an Award, based in each
case on such considerations as the Committee shall determine), and all
other matters to be determined in connection with an Award;
(v) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an
Award may be paid, in cash, Shares, other Awards, or other property,
or an Award may be canceled, forfeited, exchanged, or surrendered;
(vi) to determine whether, to what extent, and under what
circumstances cash, Shares, other Awards, or other property payable
with respect to an Award will be deferred either automatically, at the
election of the Committee, or at the election of the Eligible Person,
provided that such deferral shall be intended to be in compliance with
Section 409A of the Code;
(vii) to prescribe the form of each Award Agreement, which need
not be identical for each Eligible Person;
(viii) to adopt, amend, suspend, waive, and rescind such rules
and regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the Plan
and any Award, rules and regulations, Award Agreement, or other
instrument hereunder;
(x) to accelerate the exercisability or vesting of all or any
portion of any Award or to extend the period during which an Award is
exercisable;
(xi) to determine whether uncertificated Shares may be used in
satisfying Awards and otherwise in connection with the Plan; and
(xii) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
(b) Manner of Exercise of Committee Authority. The Committee shall have
sole discretion in exercising its authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, Subsidiaries, Affiliates, Eligible Persons,
any person claiming any rights under the Plan from or through any Eligible
Person, and shareholders. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate
to other members of the Board or officers or managers of the Company or any
4
Subsidiary or Affiliate the authority, subject to such terms as the Committee
shall determine, to perform administrative functions. Notwithstanding any
provision of the Plan to the contrary, the Chief Executive Officer of the
Company ("CEO") shall have the power and authority, subject to the terms and
conditions of the Plan, to make awards under the Plan to employees or
consultants who are not officers or directors of the Company for purposes of
Section 16(b) of the Exchange Act; provided, however, that the authority of the
CEO to make such awards shall be subject to limitations as may be imposed from
time to time by the Committee; provided further, however, that the resolution so
authorizing the CEO to make the awards shall specify the total number of rights
or options that the CEO may so award.
(c) Limitation of Liability. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or other employee of the Company or any Subsidiary or
Affiliate, the Company's independent certified public accountants, or other
professional retained by the Company to assist in the administration of the
Plan. No member of the Committee, and no officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
(d) Limitation on Committee's Discretion. Anything in this Plan to the
contrary notwithstanding, in the case of any Award which is intended to qualify
as "performance-based compensation" within the meaning of Section 162(m)(4)(C)
of the Code, the Committee shall have no discretion to increase the amount of
compensation payable under the Award to the extent such an increase would cause
the Award to lose its qualification as such performance-based compensation.
(e) No Option or SAR Repricing Without Shareholder Approval. Except as
provided in the first sentence of Section 4(c) hereof relating to certain
antidilution adjustments, unless the approval of shareholders of the Company is
obtained, Options and SARs issued under the Plan shall not be amended to lower
their exercise price and Options and SARs issued under the Plan will not be
exchanged for other Options or SARs with lower exercise prices.
4. Shares Subject to the Plan.
(a) Subject to adjustment as provided in Section 4(c) hereof, the total
number of Shares reserved for issuance in connection with Awards under the Plan
shall be (i) 7,500,000 plus (ii) the number of Shares subject to awards granted
prior to the Effective Date of this Plan under the Company's 1999 Stock
Incentive Plan or the Company's 1997 Stock Option Plan which awards have been or
are forfeited, canceled, terminated, surrendered, settled in cash or otherwise
terminated without a distribution of Shares to the holder of the award;
provided, however, that, subject to adjustment as provided in Section 4(c)
hereof, no more than 7,500,000 Shares may be issued as ISOs under this Plan. No
Award may be granted if the number of Shares to which such Award relates, when
added to the number of Shares previously issued under the Plan and the number of
Shares subject to Awards outstanding under the Plan, exceeds the number of
Shares reserved under the applicable provisions of the preceding sentence. If
any Awards are forfeited, canceled, terminated, exchanged or surrendered or such
Award is settled in cash or otherwise terminates without a distribution of
Shares to the Participant, any Shares counted against the number of Shares
reserved and available under the Plan with respect to such Award shall, to the
extent of any such forfeiture, settlement, termination, cancellation, exchange
or surrender, again be available for Awards under the Plan. Upon the exercise of
any Award granted in tandem with any other Awards, such related Awards shall be
canceled to the extent of the number of Shares as to which the Award is
exercised.
(b) Subject to adjustment as provided in Section 4(c) hereof, the maximum
number of Shares (i) with respect to which Options or SARs may be granted during
a calendar year to any Eligible Person under this Plan shall be 1,000,000
Shares, and (ii) with respect to Performance Shares, Performance Units,
Restricted Shares or Restricted Share Units intended to qualify as
performance-based compensation within the meaning of Section 162(m)(4)(C) of the
Code shall be the equivalent of 500,000 Shares during a calendar year to any
Eligible Person under this Plan.
(c) In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, extraordinary
distribution or other similar corporate transaction or event, affects the Shares
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Eligible Persons under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems appropriate and, in
such manner as it may deem equitable, (i) adjust any or all of (x) the number
and kind of shares which may thereafter be issued under the Plan, (y) the number
and kind of shares, other securities or other consideration issued or issuable
in respect of outstanding Awards, and (z) the exercise price, grant price, or
purchase price relating to any Award, or (ii) provide for a distribution of cash
or property in respect of any Award; provided, however, in each case that, with
respect to ISOs, such adjustment shall be made in accordance with Section 424(a)
of the Code, unless the Committee determines otherwise; provided further,
however, that no adjustment shall be made pursuant to this Section 4(c) that
causes any Award that is not otherwise deferred compensation subject to Section
409A of the Code to be treated as deferred compensation pursuant to Section 409A
of the Code. In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria and performance objectives, if any,
included in, Awards in recognition of unusual or non-recurring events
(including, without limitation, events described in the preceding sentence)
affecting the Company or any Subsidiary or Affiliate or the financial statements
of the Company or any Subsidiary or Affiliate, or in response to changes in
applicable laws, regulations, or accounting principles; provided, however, that
the Committee shall not have discretion to increase the amount of compensation
payable under any Award intended to qualify as performance-based compensation
for purposes of Section 162(m)(4)(C) of the Code to the extent such an increase
would cause the Award to lose its qualification as performance-based
compensation for purposes of Section 162(m)(4)(C) of the Code and the
regulations thereunder.
(d) Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares including Shares
acquired by purchase in the open market or in private transactions.
5. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in
this Section 5. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(d)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms regarding forfeiture
of Awards or continued exercisability of Awards in the event of termination of
service by the Eligible Person.
6
(b) Options. The Committee is authorized to grant Options, which may be
NQSOs or ISOs, to Eligible Persons on the following terms and conditions:
(i) Exercise Price. The exercise price per Share purchasable
under an Option shall be determined by the Committee; provided,
however, that the exercise price per Share of an Option shall not be
less than the Fair Market Value of a Share on the date of grant of the
Option. The Committee may, without limitation, set an exercise price
that is based upon achievement of performance criteria if deemed
appropriate by the Committee.
(ii) Option Term. The term of each Option shall be determined by
the Committee; provided, however, that such term shall not be longer
than ten years from the date of grant of the Option.
(iii) Time and Method of Exercise. The Committee shall determine
at the date of grant or thereafter the time or times at which an
Option may be exercised in whole or in part (including, without
limitation, upon achievement of performance criteria if deemed
appropriate by the Committee), the methods by which such exercise
price may be paid or deemed to be paid (including, without limitation,
broker-assisted exercise arrangements), the form of such payment
(including, without limitation, cash, Shares or other property), and
the methods by which Shares will be delivered or deemed to be
delivered to Eligible Persons; provided, however, that in no event may
any portion of the exercise price be paid with Shares acquired either
under an Award granted pursuant to this Plan, upon exercise of a stock
option granted under another Company plan or as a stock bonus or other
stock award granted under another Company plan unless, in any such
case, the Shares were acquired and vested more than six months in
advance of the date of exercise.
(iv) ISOs. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code,
including but not, limited to the requirement that the ISO shall be
granted within ten years from the earlier of the date of adoption or
shareholder approval of the Plan. ISOs may only be granted to
employees of the Company or a Subsidiary or to employees of an entity
that is treated as the Company or a Subsidiary under the Code.
(c) SARs. The Committee is authorized to grant SARs (Share Appreciation Rights)
to Eligible Persons on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Eligible Person
to whom it is granted a right to receive with respect to each Share
subject thereto, upon exercise thereof, the excess of (1) the Fair
Market Value of one Share on the date of exercise, over (2) the
exercise price per Share of the SAR as determined by the Committee as
of the date of grant of the SAR (which shall not be less than the Fair
Market Value per Share on the date of grant of the SAR and, in the
case of a SAR granted in tandem with an Option, shall be equal to the
exercise price of the underlying option).
7
(ii) Other Terms. The Committee shall determine, at the time of
grant or thereafter, the time or times at which a SAR may be exercised
in whole or in part (which shall not be more than ten years after the
date of grant of the SAR), the method of exercise, method of
settlement, form of consideration payable in settlement, method by
which Shares will be delivered or deemed to be delivered to Eligible
Persons, whether or not a SAR shall be in tandem with any other Award,
and any other terms and conditions of any SAR. Unless the Committee
determines otherwise, a SAR (1) granted in tandem with an NQSO may be
granted at the time of grant of the related NQSO or at any time
thereafter and (2) granted in tandem with an ISO may only be granted
at the time of grant of the related ISO.
(d) Restricted Shares. The Committee is authorized to grant Restricted Shares
to Eligible Persons on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Shares shall be subject
to such restrictions on transferability and other restrictions, if
any, as the Committee may impose at the date of grant or thereafter,
which restrictions may lapse separately or in combination at such
times, under such circumstances (including, without limitation, upon
achievement of performance criteria if deemed appropriate by the
Committee), in such installments, or otherwise, as the Committee may
determine. Except to the extent restricted under the Award Agreement
relating to the Restricted Shares, an Eligible Person granted
Restricted Shares shall have all of the rights of a shareholder
including, without limitation, the right to vote Restricted Shares and
the right to receive dividends thereon. If the lapse of restrictions
is conditioned on the achievement of performance criteria, the
Committee shall select the criterion or criteria from the list of
criteria set forth in Section 5(f)(i). The Committee must certify in
writing prior to the lapse of restrictions conditioned on achievement
of performance criteria that such performance criteria were in fact
satisfied.
(ii) Forfeiture. Except as otherwise determined by the Committee,
at the date of grant or thereafter, upon termination of service during
the applicable restriction period, Restricted Shares and any accrued
but unpaid dividends or Dividend Equivalents that are at that time
subject to restrictions shall be forfeited; provided, however, that
the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Shares will be waived
in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive in whole
or in part the forfeiture of Restricted Shares.
(iii) Certificates for Shares. Restricted Shares granted under
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Shares are
registered in the name of the Eligible Person, such certificates shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Shares, and the Company
shall retain physical possession of the certificate.
8
(iv) Dividends. Dividends paid on Restricted Shares shall be
either paid at the dividend payment date, or deferred for payment to
such date as determined by the Committee, in cash or in restricted or
unrestricted Shares having a Fair Market Value equal to the amount of
such dividends. Shares distributed in connection with a Share split or
dividend in Shares, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Shares with respect to which such Shares or
other property has been distributed.
(e) Restricted Share Units. The Committee is authorized to grant Restricted
Share Units to Eligible Persons, subject to the following terms and
conditions:
(i) Award and Restrictions. Delivery of Shares or cash, as the
case may be, will occur upon expiration of the deferral period
specified for Restricted Share Units by the Committee (or, if
permitted by the Committee, as elected by the Eligible Person). In
addition, Restricted Share Units shall be subject to such restrictions
as the Committee may impose, if any (including, without limitation,
the achievement of performance criteria if deemed appropriate by the
Committee), at the date of grant or thereafter, which restrictions may
lapse at the expiration of the deferral period or at earlier or later
specified times, separately or in combination, in installments or
otherwise, as the Committee may determine. If the lapse of
restrictions is conditioned on the achievement of performance
criteria, the Committee shall select the criterion or criteria from
the list of criteria set forth in Section 5(f)(i). The Committee must
certify in writing prior to the lapse of restrictions conditioned on
the achievement of performance criteria that such performance criteria
were in fact satisfied.
(ii) Forfeiture. Except as otherwise determined by the Committee at
date of grant or thereafter, upon termination of service (as determined
under criteria established by the Committee) during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as provided
in the Award Agreement evidencing the Restricted Share Units), or upon
failure to satisfy any other conditions precedent to the delivery of Shares
or cash to which such Restricted Share Units relate, all Restricted Share
Units that are at that time subject to deferral or restriction shall be
forfeited; provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual
case, that restrictions or forfeiture conditions relating to Restricted
Share Units will be waived in whole or in part in the event of termination
resulting from specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Restricted Share Units.
(f) Performance Shares and Performance Units. The Committee is authorized to
grant Performance Shares or Performance Units or both to Eligible Persons
on the following terms and conditions:
9
(i) Performance Period. The Committee shall determine a performance
period (the "Performance Period") of one or more years or other periods and
shall determine the performance objectives for grants of Performance Shares
and Performance Units. Performance objectives may vary from Eligible Person
to Eligible Person and shall be based upon one or more of the following
performance criteria as the Committee may deem appropriate: appreciation in
value of the Shares; total shareholder return; earnings per share; earnings
per share growth; operating income; net income; pro forma net income;
return on equity; return on designated assets; return on capital; economic
value added; earnings; earnings before interest, taxes, depreciation and
amortization ("EBITDA"); EBITDA on a pre-bonus basis adjusted for the
change in inventory for the Plan Year ("modified free cash flow"); free
cash flow; revenues; revenue growth; expenses; operating profit margin;
operating cash flow; gross profit margin; net profit margin; or any of the
above criteria as compared to the performance of a published or special
index deemed applicable by the Committee, including, but not limited to,
the Standard & Poor's 500 Stock Index. The performance objectives may be
determined by reference to the performance of the Company, or of a
Subsidiary or Affiliate, or of a division or unit of any of the foregoing.
Performance Periods may overlap and Eligible Persons may participate
simultaneously with respect to Performance Shares and Performance Units for
which different Performance Periods are prescribed.
(ii) Award Value. At the beginning of a Performance Period, the
Committee shall determine for each Eligible Person or group of Eligible
Persons with respect to that Performance Period the range of number of
Shares, if any, in the case of Performance Shares, and the range of dollar
values, if any, in the case of Performance Units, which may be fixed or may
vary in accordance with such performance or other criteria specified by the
Committee, which shall be paid to an Eligible Person as an Award if the
relevant measure of Company performance for the Performance Period is met.
The Committee must certify in writing that the applicable performance
criteria were satisfied prior to payment under any Performance Shares or
Performance Units.
(iii) Significant Events. If during the course of a Performance Period
there shall occur significant events as determined by the Committee which
the Committee expects to have a substantial effect on a performance
objective during such period, the Committee may revise such objective;
provided, however, that, in the case of any Award intended to qualify as
performance-based compensation for purposes of Section 162(m)(4)(C) of the
Code, the Committee shall not have any discretion to increase the amount of
compensation payable under the Award to the extent such an increase would
cause the Award to lose its qualification as performance-based compensation
for purposes of Section 162(m)(4)(C) of the Code and the regulations
thereunder.
(iv) Forfeiture. Except as otherwise determined by the Committee, at
the date of grant or thereafter, upon termination of service during the
applicable Performance Period, Performance Shares and Performance Units for
which the Performance Period was prescribed shall be forfeited; provided,
however, that the Committee may provide, by rule or regulation or in any
Award Agreement, or may determine in an individual case, that restrictions
or forfeiture conditions relating to Performance Shares and Performance
Units will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Performance Shares and Performance
Units; provided further, however, that, in the case of any Award intended
10
to qualify as performance-based compensation for purposes of Section
162(m)(4)(C) of the Code, any such waiver of restrictions or forfeiture
conditions shall only be made under circumstances that do not cause the
Award to lose its qualification as performance-based compensation for
purposes of Section 162(m)(4)(C) of the Code and the regulations
thereunder.
(v) Payment. Each Performance Share or Performance Unit may be paid in
whole Shares, or cash, or a combination of Shares and cash either as a lump
sum payment or in installments, all as the Committee shall determine, at
the time of grant of the Performance Share or Performance Unit or
otherwise, commencing as soon as practicable after the end of the relevant
Performance Period. The Committee must certify in writing prior to the
payment of any Performance Share or Performance Unit that the performance
objectives and any other material terms were in fact satisfied.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Eligible Persons. The Committee may provide, at the date of grant
or thereafter, that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Shares, or
other investment vehicles as the Committee may specify; provided, however, that
Dividend Equivalents (other than freestanding Dividend Equivalents) shall be
subject to all conditions and restrictions of the underlying Awards to which
they relate.
(h) Other Share-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Persons such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Shares, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
unrestricted shares awarded purely as a "bonus" and not subject to any
restrictions or conditions, other rights convertible or exchangeable into
Shares, purchase rights for Shares, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the
Committee, and Awards valued by reference to the performance of specified
Subsidiaries or Affiliates. The Committee shall determine the terms and
conditions of such Awards at date of grant or thereafter. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 5(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Shares
or other property, as the Committee shall determine. Cash awards, as an element
of or supplement to any other Award under the Plan, shall also be authorized
pursuant to this Section 5(h).
6. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible
Persons either alone or in addition to, in tandem with, or in exchange or
substitution for, any other Award granted under the Plan or any award granted
under any other plan or agreement of the Company, any Subsidiary or Affiliate,
or any business entity to be acquired by the Company or a Subsidiary or
Affiliate, or any other right of an Eligible Person to receive payment from the
Company or any Subsidiary or Affiliate. Awards may be granted in addition to or
in tandem with such other Awards or awards, and may be granted either as of the
11
same time as or a different time from the grant of such other Awards or awards.
Subject to the provisions of Section 3(e) hereof prohibiting Option and SAR
repricing without shareholder approval, the per Share exercise price of any
Option, grant price of any SAR, or purchase price of any other Award conferring
a right to purchase Shares which is granted, in connection with the substitution
of awards granted under any other plan or agreement of the Company or any
Subsidiary or Affiliate or any business entity to be acquired by the Company or
any Subsidiary or Affiliate, shall be determined by the Committee, in its
discretion.
(b) Term of Awards. The term of each Award granted to an Eligible Person
shall be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any Option or SAR exceed a period of
ten years from the date of its grant.
(c) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Shares or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis,
provided that any such deferral shall be intended to be in compliance with
Section 409A of the Code. The Committee may make rules relating to installment
or deferred payments with respect to Awards, including the rate of interest to
be credited with respect to such payments, and the Committee may require
deferral of payment under an Award if, in the sole judgment of the Committee, it
may be necessary in order to avoid nondeductibility of the payment under Section
162(m) of the Code.
(d) Nontransferability. Unless otherwise set forth by the Committee in an
Award Agreement, Awards shall not be transferable by an Eligible Person except
by will or the laws of descent and distribution (except pursuant to a
Beneficiary designation) and shall be exercisable during the lifetime of an
Eligible Person only by such Eligible Person or his guardian or legal
representative. An Eligible Person's rights under the Plan may not be pledged,
mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to
claims of the Eligible Person's creditors.
(e) Noncompetition. The Committee may, by way of the Award Agreements or
otherwise, establish such other terms, conditions, restrictions and/or
limitations, if any, of any Award, provided they are not inconsistent with the
Plan, including, without limitation, the requirement that the Participant not
engage in competition with the Company.
7. Change of Control Provisions.
(a) Acceleration of Exercisability and Lapse of Restrictions. Unless
otherwise provided by the Committee at the time of the Award grant, in the event
of a Change of Control, (i) all outstanding Awards pursuant to which the
Participant may have rights the exercise of which is restricted or limited,
shall become fully exercisable immediately prior to the time of the Change of
Control so that the Shares subject to the Award will be entitled to participate
in the Change of Control transaction, and (ii) unless the right to lapse of
restrictions or limitations is waived or deferred by a Participant prior to such
lapse, all restrictions or limitations (including risks of forfeiture and
deferrals) on outstanding Awards subject to restrictions or limitations under
12
the Plan shall lapse, and all performance criteria and other conditions to
payment of Awards under which payments of cash, Shares or other property are
subject to conditions shall be deemed to be achieved or fulfilled and shall be
waived by the Company immediately prior to the time of the Change of Control so
that the Shares subject to the Award will be entitled to participate in the
Change of Control transaction.
(b) Definition of Change of Control. For purposes of this Section 7,
"Change of Control" shall mean:
(i) a merger, consolidation or reorganization approved by the
Company's stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Company's outstanding voting securities
immediately prior to such transaction;
(ii) any stockholder-approved transfer or other disposition of all of
substantially all of the Company's assets; or
(iii) the acquisition after the Effective Date, directly or
indirectly, by any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company), of beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power
of the Company's outstanding securities.
8. General Provisions.
(a) Compliance with Legal and Trading Requirements. The Plan, the granting
and exercising of Awards thereunder, and the other obligations of the Company
under the Plan and any Award Agreement, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Shares under any Award
until completion of such stock exchange or market system listing or registration
or qualification of such Shares or other required action under any state or
federal law, rule or regulation as the Company may consider appropriate, and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Shares in compliance with applicable laws, rules and regulations. No
provisions of the Plan shall be interpreted or construed to obligate the Company
to register any Shares under federal, state or foreign law. The Shares issued
under the Plan may be subject to such other restrictions on transfer as
determined by the Committee.
(b) No Right to Continued Employment or Service. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee, consultant or
director the right to be retained in the employ or service of the Company or any
of its Subsidiaries or Affiliates, nor shall it interfere in any way with the
right of the Company or any of its Subsidiaries or Affiliates to terminate any
employee's, consultant's or director's employment or service at any time.
13
(c) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Person, amounts of withholding and other taxes due in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Eligible Persons to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Person's tax obligations;
provided, however, that the amount of tax withholding to be satisfied by
withholding Shares shall be limited to the minimum amount of taxes, including
employment taxes, required to be withheld under applicable Federal, state and
local law.
(d) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders of the Company or
Participants, except that (i) any such amendment or alteration as it applies to
ISOs shall be subject to the approval of the Company's shareholders to the
extent such shareholder approval is required under Section 422 of the Code, and
(ii) any such amendment or alternation shall be subject to the approval of the
Company's shareholders to the extent such shareholder approval is required under
the rules of any stock exchange or automated quotation system on which the
Shares may then be listed or quoted; provided, however, that, without the
consent of an affected Participant, no amendment, alteration, suspension,
discontinuation, or termination of the Plan may materially and adversely affect
the rights of such Participant under any Award theretofore granted to him or
her. The Committee may waive any conditions or rights under, amend any terms of,
or amend, alter, suspend, discontinue or terminate, any Award theretofore
granted, prospectively or retrospectively; provided, however, that, without the
consent of a Participant, no amendment, alteration, suspension, discontinuation
or termination of any Award may materially and adversely affect the rights of
such Participant under any Award theretofore granted to him or her.
(e) No Rights to Awards; No Shareholder Rights. No Eligible Person or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Eligible Persons and employees.
No Award shall confer on any Eligible Person any of the rights of a shareholder
of the Company unless and until Shares are duly issued or transferred to the
Eligible Person in accordance with the terms of the Award.
(f) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any rights that are greater than those of
a general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, Shares, other Awards, or
other property pursuant to any Award, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
(g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of options and other awards otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
14
(h) Not Compensation for Benefit Plans. No Award payable under this Plan
shall be deemed salary or compensation for the purpose of computing benefits
under any benefit plan or other arrangement of the Company for the benefit of
its employees, consultants or directors unless the Company shall determine
otherwise.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of New York without giving effect to
principles of conflict of laws thereof.
(k) Effective Date; Plan Termination. The Plan became effective as of
December 3, 2003 (the "Effective Date"). As originally adopted, the Plan was
scheduled to terminate on December 3, 2013. However, so long as the Plan is
approved by shareholders, the Plan shall terminate as to future awards on
October 22, 2019.
(l) Section 409A. Awards under the Plan are intended to comply with, or be
exempt from, the applicable requirements of Section 409A of the Code and shall
be limited, construed and interpreted in accordance with such intent. Although
the Company does not guarantee any particular tax treatment, to the extent that
any Award is subject to Section 409A of the Code, it shall be paid in a manner
that is intended to comply with Section 409A of the Code, including regulations
and any other guidance issued by the Secretary of the Treasury and the Internal
Revenue Service with respect thereto. In no event whatsoever shall the Company
be liable for any additional tax, interest or penalties that may be imposed on
the Participant by Section 409A of the Code or any damages for failing to comply
with Section 409A of the Code.
(m) Titles and Headings. The titles and headings of the sections in the
Plan are for convenience of reference only. In the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.
15
ANNEX B
1-800-FLOWERS.COM, INC.
SECTION 16 EXECUTIVE OFFICERS BONUS PLAN
(as amended and restated as of October 22, 2009)
SECTION 1. Purpose.
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1-800-FLOWERS.COM, Inc. (the "Company") has established this Section 16
Executive Officers Bonus Plan (the "Plan") in order to provide the Company's
Section 16 executive officers with an opportunity to earn annual bonus
compensation, contingent on the achievement of certain performance goals, as an
incentive and reward for their leadership, ability and exceptional services. The
Company intends that compensation payable under the Plan will constitute
"qualified performance-based compensation" under Section 162(m) of the Code (as
hereinafter defined), and the Plan shall be interpreted and construed in a
manner consistent with such intent.
SECTION 2. Definitions.
-----------
2.1. "Award" means the amount of cash bonus compensation to which an
Eligible Employee is entitled for each Plan Year as determined by the Committee
pursuant to Sections 4 and 5 of the Plan.
2.2. "Code" means the Internal Revenue Code of 1986, as amended, including
applicable regulations thereunder.
2.3. "Committee" means the Compensation Committee of the Company's Board of
Directors (the "Board") consisting of not less than two persons who, to the
extent required to satisfy the exception for performance-based compensation
under Section 162(m) of the Code are "outside directors" within the meaning of
such section. The members of the Committee shall serve at the pleasure of the
Board.
2.4. "Determination Date" means the day not later than the 90th day of a
Plan Year or such other date by which the Committee may establish performance
goals for a Plan Year without causing an Award to be treated as other than
performance-based compensation within the meaning of Section 162(m) of the Code.
2.5. "Eligible Employee" means any Section 16 executive officer of the
Company.
2.6. "Plan Year" means the Company's fiscal year or such other period
established by the Committee.
SECTION 3. Administration.
--------------
The Plan shall be administered by the Committee. The Committee shall have
the authority to establish performance goals for the awarding of Awards for each
Plan Year, to determine the Eligible Employees to whom Awards are to be made for
each Plan Year; to determine whether performance goals for each Plan Year have
been achieved; to authorize payment of Awards under the Plan, including
determining the form and timing of payment and any conditions (such as further
service requirements) that will apply to such payment; to adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan as
it shall deem advisable; and to interpret the terms and provisions of the Plan.
All determinations made by the Committee with respect to the Plan and Awards
thereunder shall be final and binding on all persons, including the Company and
all Eligible Employees.
SECTION 4. Determination of Awards.
-----------------------
The amount of an Award for any Plan Year shall be an amount not greater
than $2,000,000, which amount shall be determined based on the achievement of
one or more performance goals established by the Committee with respect to the
Eligible Employee. Performance goals may vary from Eligible Employee to Eligible
Employee and shall be based upon such one or more of the following performance
criteria as the Committee may deem appropriate: appreciation in share value;
total shareholder return; earnings per share; earnings per share growth;
operating income; net income; pro forma net income; return on equity; return on
designated assets; return on capital; economic value added; earnings; earnings
before interest, taxes, depreciation and amortization ("EBITDA"); EBITDA on a
pre-bonus basis adjusted for the change in inventory for the Plan Year
("modified free cash flow"); free cash flow; revenues; revenue growth; expenses;
operating profit margin; operating cash flow; gross profit margin or net profit
margin. Performance goals may be expressed as absolute goals, goals compared to
past performance, goals compared to the performance of a published or special
index or benchmark deemed applicable by the Committee, or otherwise as
determined by the Committee. The performance goals may be determined by
reference to the performance of the Company, or of a subsidiary or affiliate, or
of a division or unit of any of the foregoing. No later than the Determination
Date, the Committee shall establish (i) the Eligible Employees who shall be
eligible for an Award for such Plan Year, (ii) the performance goals for such
Plan Year and (iii) the corresponding Award amounts payable under the Plan upon
achievement of such performance goals and satisfaction of other conditions under
the Plan or specified by the Committee. So long as an Award is fully contingent
upon a measure of performance as specified in this Section 4, the Committee may
consider other measures of performance or other circumstances in its exercise of
discretion ("negative discretion") to reduce the final Award. The Committee may
specify at the time an Award opportunity is authorized or at any other time such
other performance measures or other terms upon which it will exercise negative
discretion.
SECTION 5. Payment of Award.
----------------
Unless otherwise determined by the Committee at the time the terms of the
Award are originally established, an Award (if any) to any Eligible Employee for
a Plan Year shall be paid after the end of the Plan Year and on or prior to the
fifteenth day of the third month following the end of the Plan Year, provided,
however, that the Committee shall have first certified in writing (i) that the
applicable performance goal or goals with respect to such Eligible Employee for
such Plan Year were satisfied and the level of attainment of such goals, (ii)
that all other material terms (if any) upon which payment of the Award is
conditioned were satisfied and (iii) the amount of each such Eligible Employee's
Award. The Committee, unless it determines otherwise, may exercise discretion to
decrease the amount otherwise payable under an Award by reason of the applicable
performance goals having been achieved. If an Eligible Employee dies after the
end of a Plan Year but before receiving payment of any Award, the amount of such
Award (determined as set forth herein) shall be paid to a designated beneficiary
2
or, if no beneficiary has been designated, to the Eligible Employee's estate, in
the form of a lump sum payment at the time set forth above for payment of
Awards. Notwithstanding the foregoing, the Committee may determine, by separate
employment agreement with any Eligible Employee or otherwise, that all or a
portion of an Award for a Plan Year shall be payable to the Eligible Employee
upon the Eligible Employee's death or disability or upon a change of control of
the Company, during the Plan Year.
SECTION 6. Non-transferability.
-------------------
No Award or rights under this Plan may be transferred or assigned other
than by will or by the laws of descent and distribution.
SECTION 7. Amendments and Termination.
--------------------------
The Board may terminate the Plan at any time and may amend it from time to
time, provided, however, that no termination or amendment of the Plan shall
materially and adversely affect the rights of an Eligible Employee or a
beneficiary with respect to a previously certified Award except with the written
consent of such Eligible Employee or beneficiary. Amendments to the Plan may be
made without shareholder approval except as required to satisfy Section 162(m)
of the Code.
SECTION 8. General Provisions.
------------------
8.1. Nothing set forth in this Plan shall prevent the Board from adopting
other or additional compensation arrangements. Neither the adoption of the Plan
or any Award hereunder shall confer upon an Eligible Employee any right to
continued employment.
8.2. No member of the Board or the Committee, nor any officer or employee
of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board or the Committee and all
officers or employees of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.
8.3. The Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, the authorization of Awards and
performance goals in recognition of unusual or nonrecurring events, including
stock splits, stock dividends, reorganizations, mergers, consolidations, large,
special and non-recurring dividends, and acquisitions and dispositions of
businesses and assets, affecting the Company and its subsidiaries or any
business unit thereof, or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
subsidiary or affiliate or business unit thereof, performance of comparable
organizations, economic and business conditions, and any other circumstances
deemed relevant; provided, however, that no such adjustment shall be authorized
or made if and to the extent that the existence or exercise of such authority
would cause an Award hereunder to fail to qualify as "performance-based
compensation" under Section 162(m) of the Code.
3
8.4 The Company may deduct from any payment in settlement of an Award or
other payment to an Eligible Employee any Federal, state, or local withholding
or other tax or charge which the Company is then required to deduct under
applicable law with respect to the Award.
8.5 The validity, construction, and effect of the Plan and any rules and
regulations or document hereunder shall be determined in accordance with the
laws (including those governing contracts) of State of New York, without giving
effect to principles of conflict of laws thereof.
8.6 Awards under the Plan are intended to comply with, or be exempt from,
the applicable requirements of Section 409A of the Code and shall be limited,
construed and interpreted in accordance with such intent. Although the Company
does not guarantee any particular tax treatment, to the extent that any Award is
subject to Section 409A of the Code, it shall be paid in a manner that is
intended to comply with Section 409A of the Code, including regulations and any
other guidance issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto. In no event whatsoever shall the Company be liable
for any additional tax, interest or penalties that may be imposed on an Eligible
Employee by Section 409A of the Code or any damages for failing to comply with
Section 409A of the Code.
SECTION 9. Effective Date of Plan.
----------------------
The Plan originally became effective as of June 30, 2003 and was approved
by the shareholders of the Company. The Plan was amended and restated on October
22, 2009, subject to shareholder approval. To the extent required to comply with
Section 162(m) of the Code and determined by the Board to be appropriate, the
Plan shall be submitted to shareholders for reapproval no later than the first
meeting of shareholders of the Company that occurs in 2014.
4