UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
M & F WORLDWIDE CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
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Date Filed:
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M &
F WORLDWIDE CORP.
35 East
62
nd
Street
New York, New York 10065
Tel:
212-572-8600
April 28, 2009
To Our Stockholders:
We cordially invite you to attend the 2009 Annual Meeting of
Stockholders of M & F Worldwide Corp., which we will
hold at The Westin La Cantera, 16641 La Cantera
Parkway, San Antonio, TX 78256, on Thursday, May 21,
2009, at 10:00 a.m. central time.
The business of the meeting will be to elect directors to serve
until the annual meeting in 2012, to ratify the selection of
independent auditors for 2009, and to reapprove the
M & F Worldwide Corp. 2003 Stock Incentive Plan for
the purpose of allowing compensation paid pursuant to the plan
to be deductible under Section 162(m) of the Internal
Revenue Code of 1986, as amended. You can find information on
these matters in the accompanying Proxy Statement.
While stockholders may exercise their rights to vote their
shares in person, we recognize that many stockholders may not be
able to attend the Annual Meeting. Accordingly, we have enclosed
a proxy that will enable you to vote your shares on the matters
to be considered at the Annual Meeting even if you are unable to
attend. Additionally, you may also access the proxy materials on
the Internet at
http://mandfworldwide.com/Financial_reporting/proxy_materials.htm
.
If you desire to vote in accordance with managements
recommendations, you need only sign, date and return the proxy
in the enclosed postage-paid envelope to record your vote.
Otherwise, please mark the proxy to indicate your vote; date and
sign the proxy; and return it in the enclosed postage-paid
envelope. In either case, you should return the proxy as soon as
conveniently possible.
Sincerely yours,
Barry F. Schwartz
President and Chief Executive Officer
M &
F WORLDWIDE CORP.
35 East
62
nd
Street
New York, New York 10065
Tel:
212-572-8600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
M & F Worldwide Corp.:
Notice is hereby given that the 2009 Annual Meeting of
Stockholders (the Annual Meeting) of M & F
Worldwide Corp., a Delaware corporation (we,
us, our or the Company),
will be held on the
21
st
day
of May 2009 at 10:00 a.m., central time, at The Westin
La Cantera, 16641 La Cantera Parkway,
San Antonio, TX 78256, for the following purposes:
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1.
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To elect the nominees for the Board of Directors of the Company
to serve until the annual meeting in 2012 and until such
directors successors are duly elected and shall have
qualified;
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2.
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To ratify the selection of Ernst & Young LLP as the
Companys independent auditors for 2009;
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3.
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To reapprove the M & F Worldwide Corp. 2003 Stock
Incentive Plan for purposes of allowing compensation paid
pursuant to the plan to be deductible under Section 162(m)
of the Internal Revenue Code of 1986, as amended; and
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4.
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To transact such other business as may properly come before the
Annual Meeting or at any adjournment or postponement thereof.
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A proxy statement describing these matters is attached to this
notice. Only stockholders of record at the close of business on
April 15, 2009 (the Record Date) are entitled
to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. A list of stockholders
entitled to vote at the Annual Meeting will be located at the
offices of the Company at 35 East 62nd Street, New York,
New York 10065, for at least ten days prior to the Annual
Meeting and will also be available for inspection at the Annual
Meeting.
Important
Notice Regarding the Availability of Proxy Materials for the
Stockholder
Meeting To be Held on May 21, 2009
As permitted by new Securities and Exchange Commission rules, we
have elected to provide access to our proxy materials both by
sending you this full set of proxy materials, including a proxy
card, and by notifying you of the availability of our proxy
materials on the Internet. The proxy statement and our Annual
Report on
Form 10-K
are available at
http://mandfworldwide.com/Financial_reporting/proxy_materials.htm
,
which does not have cookies that identify visitors
to the site.
To ensure that your vote will be counted, please complete, date
and sign the enclosed proxy card and return it promptly in the
enclosed prepaid envelope, whether or not you plan to attend the
Annual Meeting. Since you may revoke a proxy at any time, you
may vote in person at the Annual Meeting even if you have
returned a proxy.
By Order of the Board of Directors,
M & F WORLDWIDE CORP.
April 28, 2009
PLEASE
COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
THIS WILL ENSURE THAT YOUR SHARES ARE VOTED
IN ACCORDANCE WITH YOUR WISHES.
M &
F WORLDWIDE CORP.
PROXY
STATEMENT
Annual Meeting of Stockholders
To Be Held May 21, 2009
This proxy statement (the Proxy Statement) is being
furnished in connection with the solicitation by the Board of
Directors (the Board of Directors) of M &
F Worldwide Corp., a Delaware corporation (we,
us, our or the Company), of
proxies to be voted at the 2009 Annual Meeting of Stockholders
to be held on the
21
st
day
of May 2009 at 10:00 a.m., central time, at The Westin
La Cantera, 16641 La Cantera Parkway,
San Antonio, TX 78256, and at any adjournment or
postponement thereof (the Annual Meeting). This
Proxy Statement and the enclosed proxy card are first being
sent to stockholders on or about April 28, 2009.
At the Annual Meeting, the Company will ask its stockholders
(1) to elect the following persons as directors of the
Company until the Companys annual meeting in 2012 and
until such directors successors are duly elected and shall
have qualified: Charles T. Dawson, Paul M. Meister, Barry F.
Schwartz and Carl B. Webb; (2) to ratify the selection of
Ernst & Young LLP as the Companys independent
auditors for 2009; (3) to reapprove the M & F
Worldwide Corp. 2003 Stock Incentive Plan (the 2003 Stock
Incentive Plan) for purposes of allowing compensation paid
pursuant to the plan to be deductible under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the
Code); and (4) to transact such other business
as may properly come before the Annual Meeting or at any
adjournment or postponement thereof.
The principal executive offices of the Company are located at 35
East
62
nd
Street,
New York, New York 10065, and the telephone number is
212-572-8600.
Solicitation
and Voting of Proxies; Revocation
All proxies duly executed and received by the Company, unless
such proxies have been previously revoked, will be voted on all
matters presented at the Annual Meeting in accordance with the
instructions given therein by the person executing such proxy
or, in the absence of such instructions, will be voted
FOR
the election to the Board of Directors of the
nominees for director identified in this Proxy Statement;
FOR
ratification of the appointment of the independent auditor;
and
FOR
reapproval of the 2003 Stock Incentive Plan for
purposes of allowing compensation paid pursuant to the 2003
Stock Incentive Plan to be deductible under Section 162(m)
of the Code. The Company has no knowledge of any other matter to
be brought before the meeting. The submission of a signed proxy
will not affect a stockholders right to attend, or vote in
person at the Annual Meeting. Any stockholder may revoke his or
her proxy at any time before it is voted by written notice to
such effect received by the Company at 35 East
62
nd
Street,
New York, New York 10065, Attention: Secretary, by delivery of a
subsequently dated proxy or by attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will
not in and of itself constitute a revocation of a proxy).
The accompanying form of proxy is being solicited on behalf of
the Board of Directors. The solicitation of proxies may be made
by mail and may also be made by personal interview, telephone
and facsimile transmission, and by directors, officers and
regular employees of the Company without special compensation
therefore. The Company will bear the costs incurred in
connection with the solicitation of proxies and expects to
reimburse banks, brokers and other persons for their reasonable
out-of-pocket expenses in handling proxy materials for
beneficial owners.
Record
Date; Outstanding Shares; Voting at the Annual Meeting
Only holders of record of the Companys common stock, par
value $.01 per share (Common Stock), at the close of
business on April 15, 2009 (the Record Date)
are entitled to notice of and to vote at the Annual Meeting. On
that date, there were issued and outstanding
19,333,931 shares of Common Stock, each of which is
entitled to one vote.
The presence, in person or by properly executed proxy, of the
holders of a majority of the shares of Common Stock outstanding
and entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Abstentions and
broker non-votes (i.e., shares held by a broker which are not
voted because the broker has not received voting instructions
from the beneficial owner of the shares and either lacks or
declines to exercise the authority to vote the shares in its
discretion), if any, shall be counted for purposes of
determining whether a quorum exists, except that broker
non-votes are not counted for purposes of determining whether a
quorum exists for the proposal to reapprove the 2003 Stock
Incentive Plan.
A plurality of the votes cast at the Annual Meeting is required
to elect the nominees for the Board of Directors of the Company.
For the election of directors, abstentions and broker non-votes
will not count as votes cast, so they will have no
effect on the outcome of the vote, other than for determination
of whether a quorum exists, as described above. The affirmative
vote of a majority of the votes cast at the Annual Meeting by
the holders of shares of Common Stock present or represented by
proxy and entitled to vote thereon, a quorum being present, is
required to ratify the appointment of the independent auditor.
For the proposal to ratify the appointment of the independent
auditor, abstentions and broker non-votes will not count as
votes cast, so they will have no effect on the
outcome of the vote, other than for determination of whether a
quorum exists, as described above. Under applicable rules of the
New York Stock Exchange (the NYSE), reapproval of
the 2003 Stock Incentive Plan requires the affirmative vote of a
majority of votes cast, provided that the total vote cast
represents over 50% in interest of all shares entitled to vote
thereon, as long as a quorum is present. Under the NYSE rules,
broker non-votes will not count as votes cast, so
they will not count in determining whether the over 50%
threshold is reached (although they will otherwise have no
effect on the outcome of the vote), but abstentions will count
as votes cast, so abstentions will have the same
effect as no votes.
MFW Holdings One LLC (Holdings One) and MFW Holdings
Two LLC (Holdings Two) each a Delaware limited
liability company, beneficially own approximately 37.5% and
4.9%, respectively, of the outstanding Common Stock as of the
Record Date. Holdings One and Holdings Two are wholly owned by
MacAndrews & Forbes Holdings Inc. (MacAndrews
Holdings), the sole stockholder of which is Ronald O.
Perelman. In addition, Mr. Perelman holds
200,000 shares of outstanding Common Stock. Holdings One,
Holdings Two and Mr. Perelman have informed the Company of
their intention to vote their shares of Common Stock
FOR
the election to the Board of Directors of the nominees for
director identified in this Proxy Statement;
FOR
ratification of the appointment of the independent auditor;
and
FOR
reapproval of the 2003 Stock Incentive Plan for
purposes of allowing compensation paid pursuant to the 2003
Stock Incentive Plan to be deductible under Section 162(m)
of the Code. Based on the foregoing, the presence, in person or
by properly executed proxy, of the holders of 1,272,967
additional shares of Common Stock (representing approximately
6.6% of the shares of Common Stock outstanding as of the Record
Date) would be required to constitute a quorum and elect the
director nominees, ratify the appointment of the independent
auditor and reapprove the 2003 Stock Incentive Plan (assuming
that there are no broker non-votes with respect to such
reapproval).
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors consists of Ronald O. Perelman, Philip E.
Beekman, William C. Bevins, Martha L. Byorum, Charles T. Dawson,
Viet D. Dinh, Theo W. Folz, General John M. Keane, Paul M.
Meister, Barry F. Schwartz, Bruce Slovin, Stephen G. Taub and
Carl B. Webb. The Companys Restated Certificate of
Incorporation and Amended and Restated By-Laws provide that the
Board of Directors shall be divided as evenly as possible into
three classes.
The Board of Directors has nominated Messrs. Dawson,
Meister, Schwartz and Webb for election as directors at the 2009
Annual Meeting to serve until the annual meeting in 2012.
Messrs. Dawson, Meister, Schwartz and Webb are currently
members of the Board of Directors whose terms expire at the
Annual Meeting. All proxies duly executed and received by the
Company, unless such proxies have been previously revoked, will
be voted in accordance with the instructions given therein by
the person executing such proxy or, in the absence of such
instructions, the proxies solicited hereby will be voted
FOR
the election of the
2
nominees listed herein. The Board of Directors has been informed
that Messrs. Dawson, Meister, Schwartz and Webb are willing
to serve as directors, but if any of them should decline or be
unable to act as a director, the Board of Directors may, unless
the Board by resolution provides for a lesser number of
directors, designate substitute nominees, in which event the
individuals named in the proxies will vote for the election of
such other person or persons. The Board of Directors has no
reason to believe that any such nominee will be unable or
unwilling to serve.
Nominees for directors will be elected by a plurality of the
votes cast at the Annual Meeting. For the election of directors,
abstentions and broker non-votes will not count as votes
cast, so they will have no effect on the outcome of the
vote, other than for determination of whether a quorum exists.
The Board of Directors recommends that stockholders vote FOR
the election of each of the nominees listed herein for
director.
Directors
and Director Nominees
The name, age (as of March 31, 2009), period of service as
a director of the Company, principal occupation and selected
biographical information of each director and director nominee
are set forth below.
Ronald O. Perelman
(66) has been a director of the
Company since 1995 and has been Chairman of the Board of the
Company from 1995 to 1997 and since September 2007.
Mr. Perelman has been Chairman of the Board and Chief
Executive Officer of MacAndrews Holdings and
MacAndrews & Forbes LLC (together with MacAndrews
Holdings, MacAndrews & Forbes), which are
diversified holding companies, and various affiliates since
1980. Mr. Perelman is also Chairman of the Board of Revlon
Consumer Products Corporation (Revlon Products) and
Revlon, Inc. (Revlon). Mr. Perelman is a
director of the following companies which file reports pursuant
to the Securities Exchange Act of 1934, as amended (the
Exchange Act): Revlon Products, Revlon and
Scientific Games Corporation. Mr. Perelmans term as a
director of the Company expires in 2010.
Philip E. Beekman
(77) has been a director of the
Company since 2003. Mr. Beekman has been President of Owl
Hollow Enterprises, a consulting and investment company, for
more than the past five years. From 1986 to 1994,
Mr. Beekman was Chairman of the Board and Chief Executive
Officer of Hook-SupeRx, Inc., from 1977 to 1986 he was President
and Chief Operating Officer of Seagram Company Limited and from
1973 to 1976 he was President of Colgate Palmolive Co.
International. Mr. Beekmans term as a director of the
Company expires in 2011.
William C. Bevins
(63) has been a director of the
Company since 2008. Mr. Bevins has been a consultant to
Faneuil, Inc. since 2008. Mr. Bevins was a consultant to
MacAndrews Holdings from 1997 to 2000. He served as President
and Chief Executive Officer and as a director of Andrews Group
Incorporated, an entertainment media holding company, from 1988
to his retirement in 1997, as well as of its two publicly traded
operating subsidiaries, New World Communications Group
Incorporated (from 1993 to 1997) and Marvel Entertainment
Group, Inc. (from 1989 to 1996). From 1979 to 1988, he was Chief
Financial Officer of Turner Broadcasting System, Inc., a media
and entertainment company, and from 1968 to 1979, he was a
certified public accountant with Price Waterhouse &
Co. Mr. Bevins term as a director of the Company
expires in 2011.
Martha L. Byorum
(59) has been a director of the
Company since 2007. Ms. Byorum is currently Senior Managing
Director of Stephens Cori Capital Advisors, a division of
Stephens, Inc., a private investment banking firm. From 2003 to
2004, Ms. Byorum served as Chief Executive Officer of Cori
Investment Advisors, LLC, which was spun off from Violy,
Byorum & Partners (VB&P) in 2003.
VB&P was an independent strategic advisory and investment
banking firm specializing in Latin America. Prior to
co-founding
VB&P in 1996, Byorum had a
24-year
career at Citibank, where, among other things, she served as
Chief of Staff and Chief Financial Officer for Citibanks
Latin American Banking Group from
1986-1990,
overseeing $15 billion of loans and coordinating activities
in 22 countries. She later was appointed the head of
Citibanks U.S. Corporate Banking Business and a
member of the banks Operating Committee and Customer Group
Executive with global responsibilities. Ms. Byorum is a
director of the
3
following companies which file reports pursuant to the Exchange
Act: Aeterna-Zentaris Laboratories, Inc. and Northwest Natural
Gas Company. Ms. Byorums term as a director of the
Company expires in 2010.
Charles T. Dawson
(60) has been a director of the
Company since 2007. Mr. Dawson is President and Chief
Executive Officer of the Companys wholly owned subsidiary,
Harland Clarke Holdings Corp. (Harland Clarke
Holdings) and its wholly owned subsidiary Harland Clarke
Corp. (Harland Clarke). He was President of Clarke
American Corp. (Clarke American), a predecessor of
Harland Clarke Holdings, from April 2005 until May 2007. His
previous roles at Clarke American were Executive Vice
President/General Manager of Partnership Development from
February 2003 to April 2005 and Senior Vice President/General
Manager of the National Account/Securities/Business Development
divisions from July 2000 to February 2003. Mr. Dawson was
the Chief Executive Officer of Rocky Mountain Bank Note prior to
joining Clarke American in 1993. Mr. Dawson is a director
of Harland Clarke Holdings, which files reports pursuant to the
Exchange Act. Mr. Dawsons term as a director of the
Company expires at the 2009 Annual Meeting.
Viet D. Dinh
(41) has been a director of the Company
since 2007. Mr. Dinh has been a Professor of Law at
Georgetown University Law Center since 1996. Mr. Dinh
served as an Assistant Attorney General for Legal Policy in the
U.S. Department of Justice from 2001 to 2003. Mr. Dinh
is also director of News Corporation and the Orchard, Inc.,
which file reports pursuant to the Exchange Act.
Mr. Dinhs term as a director of the Company expires
in 2011.
Theo W. Folz
(65) has been a director of the Company
since 1996. He served as the Companys President and Chief
Executive Officer from 1996 to 1999 and as Chairman of the Board
from 1997 to 1999. Mr. Folz has been President and Chief
Executive Officer of Consolidated Cigar Corporation and its
successor company, Altadis U.S.A., a manufacturer of cigars,
pipe tobacco and smokers accessories, since 1984.
Mr. Folzs term as a director of the Company expires
in 2010.
General John M. Keane
(66) has been a director of
the Company since September 2008. General Keane has been Senior
Managing Director of Keane Advisors, LLC, a private equity firm
that he
co-founded,
since 2004 and is an advisor to the Chairman and Chief Executive
Officer of URS Corporation, a global engineering design
firm. General Keane served in the U.S. Army for
37 years. He was Vice Chief of Staff and Chief Operating
Officer of the Army from 1999 until his retirement in October
2003. He is a military contributor and analyst with ABC News and
is a member of the United States Department of Defense Policy
Board. He is also a member of the Council on Foreign Relations,
a director of the George C. Marshall Foundation, chairman of the
Knollwood Foundation and a trustee of the Rand Corporation.
General Keane is a member of the Boards of Directors of MetLife,
Inc., General Dynamics Corporation and Cyalume Technologies,
Inc., all of which file reports under the Exchange Act. General
Keanes term as a director of the Company expires in 2011.
Paul M. Meister
(56) has been a director of the
Company since 1995. Mr. Meister is a Founder and Chief
Executive Officer of Liberty Lane Partners, LLC, a private
management and investment company. He retired as Chairman of the
Board of Thermo Fisher Scientific Inc. (scientific instruments,
equipment and supplies) in April 2007. From March 2001 to
November 2006, Mr. Meister was Vice Chairman of Fisher
Scientific International, Inc. and Chief Financial Officer of
Fisher Scientific from March 1991 to March 2001.
Mr. Meister is a director of LKQ Corporation, which files
reports pursuant to the Exchange Act. Mr. Meisters
term as a director of the Company expires at the 2009 Annual
Meeting.
Barry F. Schwartz
(60) has been a director of the
Company and President and Chief Executive Officer of the Company
since January 2008. Prior to his appointment as President and
Chief Executive Officer, he served as Executive Vice President
of the Company from 1996 to January 2008, serving as interim
President and Chief Executive Officer from September 2007
through January 2008. In addition, Mr. Schwartz served as
General Counsel of the Company from 1996 to March 2008.
Mr. Schwartz has been Executive Vice Chairman and Chief
Administrative Officer of MacAndrews & Forbes and
various affiliates since October 2007. Prior to that he was
Executive Vice President and General Counsel of
MacAndrews & Forbes and various affiliates since 1993
and was Senior Vice President of MacAndrews & Forbes
and various affiliates from 1989 to 1993. Mr. Schwartz is
also a director of the following companies which file reports
under the
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Exchange Act: Harland Clarke Holdings, Revlon Products, Revlon
and Scientific Games Corporation. Mr. Schwartzs term
as a director of the Company expires at the 2009 Annual Meeting.
Bruce Slovin
(73) has been a director of the Company
since 1995 and was an executive officer of
MacAndrews & Forbes and various affiliates from 1980
to 2000. Mr. Slovin is a director of Cantel Industries and
SIGA Technologies, Inc., which file reports pursuant to the
Exchange Act. Mr. Slovins term as a director of the
Company expires in 2010.
Stephen G. Taub
(57) has been a director of the
Company since 1998. Mr. Taub was elected President and
Chief Executive Officer of the Companys wholly owned
subsidiary, Mafco Worldwide Corporation (including its
predecessor in interest, Mafco Worldwide), in 1999
and served as President and Chief Operating Officer of Mafco
Worldwide from 1993 to 1999. Mr. Taub was elected Senior
Vice President in 1987, and his responsibilities included the
manufacturing, botanical and spice operations of Mafco
Worldwide, as well as product marketing to the confectionery and
pharmaceutical industries in Western Europe. Mr. Taub
joined Mafco Worldwide in 1975 as an Industrial Engineer and in
1982 became Vice President of Manufacturing.
Mr. Taubs term as a director of the Company expires
in 2011.
Carl B. Webb
(59) has been a director of the Company
since 2007. Mr. Webb served as interim President of Triad
Financial Corporation from August 2005 to July 2007, and he is
currently co-Chairman of its Board of Directors. He has also
been a consultant to Hunters Glen Ford, Ltd., an
investment partnership, since November 2002. Previously,
Mr. Webb was the President, Chief Operating Officer and
director of Golden State Bancorp Inc. and its subsidiary,
California Federal Bank, FSB, from September 1994 to November
2002. Prior to his affiliation with California Federal Bank,
FSB, Mr. Webb was the President and CEO of First Madison
Bank, FSB (from 1993 to 1994) and First Gibraltar Bank, FSB
(from 1988 to 1993), as well as President and Director of First
National Bank at Lubbock (from 1983 to 1988). Mr. Webb is a
director of the following companies which file reports pursuant
to the Exchange Act: Triad Financial Corporation, Hilltop
Holdings Inc. (formerly Affordable Residential Communities) and
AMB Property Corp. Mr. Webbs term as a director of
the Company expires at the 2009 Annual Meeting.
Board of
Directors and Corporate Governance
The Board of Directors adopted a set of categorical standards
(the Independence Standards) to assist it in making
its determination whether particular members of the Board of
Directors are independent within the meaning of the
NYSE listing standards. The Independence Standards adopted by
the Board of Directors are in accordance with the
bright-line independence tests promulgated by the
NYSE. Pursuant to these standards, the Board of Directors has
determined that Messrs. Beekman, Bevins, Dinh, Folz, Keane,
Meister, Slovin and Webb and Ms. Byorum (comprising a
majority of the Board) are independent within the meaning of the
Independence Standards. The Board of Directors has also adopted
a set of Corporate Governance Guidelines, which provide that the
Board of Directors will meet regularly in executive
session, that is, without management present, and that the
directors present at such meetings shall select the director who
shall preside over that meeting.
Anyone wishing to communicate with any director (or group of
directors) for any purpose, including to report any issue
concerning management or any suggestion concerning candidates
for the Board of Directors, may do so by sending the
communication to the director or group of directors in care of
the Secretary, M & F Worldwide Corp., 35 East
62
nd
Street,
New York, New York 10065, or by facsimile transmission to
(212) 572-8435.
The Secretary is obliged to forward any such communication
promptly and unaltered.
The Board of Directors has an Audit Committee, a Compensation
Committee and a Nominating and Corporate Governance Committee.
The Audit Committee, consisting of Messrs. Beekman, Meister
(Chairman) and Webb and Ms. Byorum, (i) engages the
Companys independent auditors, (ii) approves the
plan, scope and results of the audit, (iii) reviews with
the auditors and management the Companys policies and
procedures with
5
respect to internal controls over financial reporting,
(iv) reviews changes in accounting policies and
(v) approves the nature, scope and amount of audit-related
and non-audit services that the Companys independent
auditors may perform. The Audit Committee operates under a
written charter which is available on the Companys website
at
http://www.mandfworldwide.com
.
The Board of Directors has determined that each of the members
of the Audit Committee is independent within the
meaning of the NYSE listing standards applicable to audit
committee members. The Board of Directors has determined that
Mr. Meister is an audit committee financial
expert within the meaning of
Regulation S-K
promulgated by the Securities and Exchange Commission (the
SEC). It is anticipated that the existing members of
the Audit Committee will continue service in 2009.
The Compensation Committee, consisting of Messrs. Beekman,
Folz (Chairman) and Slovin, approves compensation, benefits and
incentive arrangements for the Chief Executive Officer and
certain other officers and other senior managerial employees of
the Company. The Compensation Committee considers and awards
stock grants and options to purchase shares of Common Stock
pursuant to the Companys 2003 Stock Incentive Plan. The
Compensation Committee operates under a written charter which is
available on the Companys website at
http://www.mandfworldwide.com
.
The Board of Directors has determined that each of the members
of the Compensation Committee is independent within
the meaning of the NYSE listing standards. It is anticipated
that the existing members of the Compensation Committee will
continue service in 2009.
The Nominating and Corporate Governance Committee, consisting of
Messrs. Dinh, Folz and Slovin (Chairman), considers
candidates for the Board of Directors and the Boards
committees and reviews aspects of the Companys governance
structure. The Nominating and Corporate Governance Committee
operates under a written charter which is available on the
Companys website at
http://www.mandfworldwide.com
.
The Board of Directors has determined that each of the members
of the Nominating and Corporate Governance Committee is
independent within the meaning of the NYSE listing
standards. The Nominating and Corporate Governance Committee
will consider candidates for any vacancy on the Board of
Directors that stockholders may suggest in accordance with the
procedures described above. The Committee has adopted a policy
concerning minimum criteria for evaluating candidates. The
policy requires that the committee consider available
information concerning candidates character and integrity,
maturity of judgment, skills and experience in relation to
enhancing the ability of the Board of Directors to oversee the
affairs and business of the Company, and demonstrated ability to
cooperatively enhance the decision-making ability of the Board
of Directors as a whole. The Committees evaluation process
does not vary based on whether or not a candidate is recommended
by a stockholder. The Nominating and Corporate Governance
Committee identifies potential nominees from various sources
such as officers, directors and stockholders and may retain, but
did not in 2008, the services of third-party consultants to
assist it in identifying and evaluating nominees. It is
anticipated that the existing members of the Nominating and
Corporate Governance Committee will continue service in 2009.
During 2008, the Board of Directors held eight meetings, the
Audit Committee held four meetings, the Compensation Committee
held four meetings, and the Nominating and Corporate Governance
Committee held five meetings. During 2008, the Board of
Directors also acted three times by unanimous written consent,
and the Audit Committee also acted one time by unanimous written
consent. Each director attended more than 75% of the total
number of meetings of the Board and any committee on which such
director served that were held during 2008. The Company
encourages the Board of Directors to attend its annual
stockholders meeting. Eleven directors attended last years
annual stockholders meeting (Gen. Keane had not yet joined the
Board).
Copies of the Companys annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
proxy statements, reports under Section 16 of the Exchange
Act and any amendments to these documents, as well as current
versions of the following documents are available to any
stockholder
6
without charge on the Companys website at
http://www.mandfworldwide.com
,
or upon request to the Secretary, M & F Worldwide
Corp., 35 East
62
nd
Street,
New York, New York 10065:
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|
|
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the Companys Code of Business Conduct, which includes its
Code of Ethics for principal executive and senior financial
officers;
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|
the charters for all standing committees of the Board of
Directors, namely its Audit, Compensation and Nominating and
Corporate Governance Committees;
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|
the Companys Independence Standards; and
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|
the Companys Corporate Governance Guidelines.
|
Executive
Officers
The following table sets forth as of the date hereof the
executive officers of the Company, the Chief Executive Officer
of Mafco Worldwide, and the Chief Executive Officer of Harland
Clarke Holdings.
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|
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Name
|
|
Position
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Barry F. Schwartz
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President and Chief Executive Officer
|
Paul G. Savas
|
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Executive Vice President and Chief Financial Officer
|
Stephen G. Taub
|
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President and Chief Executive Officer of Mafco Worldwide
|
Charles T. Dawson
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President and Chief Executive Officer of Harland Clarke Holdings
|
For biographical information about Messrs. Dawson, Schwartz
and Taub, see Directors and Director Nominees.
Paul G. Savas
(46) has been Executive Vice President
and Chief Financial Officer of the Company since May 2006.
He has been Executive Vice President and Chief Financial Officer
of MacAndrews & Forbes and various affiliates since
April 2007 and Executive Vice President Finance of
MacAndrews & Forbes and various affiliates since 2006.
Prior to that he served in various positions at
MacAndrews & Forbes and its affiliates, including as
Senior Vice President of Finance from October 2002 until May
2006, Vice President from 1998 until 2002, and Director of
Corporate Finance from 1994 until 1998. Mr. Savas is a
director of Harland Clarke Holdings and SIGA Technologies, Inc.,
which file reports pursuant to the Exchange Act.
Code of
Ethics
The Company has adopted a Code of Business Conduct, which
includes a Code of Ethics for the Companys principal
executive and senior financial officers. The Code of Business
Conduct applies to all directors, officers, employees,
consultants and agents of the Company. The current version of
the Code of Business Conduct is available to any stockholder on
the Companys website at
http://www.mandfworldwide.com
,
or without charge upon request to the Secretary, M & F
Worldwide Corp., 35 East
62
nd
Street,
New York, New York 10065. If the Company changes the Code of
Ethics in any material respect or waives any provision of the
Code of Ethics for any of its principal executive or senior
financial officers, the Company expects to provide the public
with notice of any such change or waiver by publishing an
appropriate description of such event on its website,
http://www.mandfworldwide.com
,
or by other appropriate means as required or permitted under
applicable rules of the SEC.
Compensation
Committee Interlocks and Insider Participation
Mr. Folz served as a member of the Compensation Committee
during the last completed fiscal year and also served as the
Companys President and Chief Executive Officer from 1996
to 1999.
7
REPORT OF
THE AUDIT COMMITTEE
During fiscal year 2008, the Audit Committee consisted of
Messrs. Beekman, Meister and Webb and Ms. Byorum. The
overall responsibility of the Audit Committee is to oversee the
Companys financial reporting process on behalf of the
Board of Directors and report the results of its activities to
the Board of Directors. The committee has the responsibility to
evaluate the independent auditors, engage them and, if
appropriate, engage their replacement. The committee must
discuss with the auditors the scope and plan for the audit; when
appropriate, approve the plan for the audit; and discuss with
both the auditors and management the adequacy and effectiveness
of the Companys financial and accounting controls. The
committee also reviews with management and the auditors the
Companys quarterly and annual financial statements,
including, the quality of accounting principles, the
reasonableness of significant judgments and the clarity of
disclosures in the financial statements. In addition, the
committee approves the nature, scope and amount of audit-related
and non-audit services that the Companys independent
auditors may perform.
The committee reviewed and discussed the audited financial
statements with management and the independent auditors, who are
responsible for expressing an opinion on the conformity of the
audited financial statements with accounting principles
generally accepted in the United States (US GAAP),
including the matters required to be discussed by Statement of
Accounting Standards 61 (Codification of Statements on Auditing
Standards), and their judgments as to the quality, not just the
acceptability, of the Companys accounting principles and
such other matters as are required to be discussed with the
committee under US GAAP. In addition, the committee discussed
with the independent auditors the auditors independence
from management and the Company, including the matters in the
written disclosures required by the Public Company Accounting
Oversight Board (PCAOB), and has received the
written disclosures and letter from the independent auditors
required by PCAOB Rule 3526 (Communications with Audit
Committees Concerning Independence).
The committee discussed with the Companys independent
auditors the overall scope and plans for their audit of the
Companys financial statements, and it approved the audit
plan. It met with the independent auditors to discuss the
results of their examinations, their evaluations of the
Companys internal controls and the overall quality of the
Companys financial reporting. The committee considered
whether any non-audit services provided to the Company by the
independent auditors were compatible with maintaining the
auditors independence from management and the Company. The
committee approved the Companys request that the
independent auditors be permitted to perform certain
audit-related services that the Company expects to require in
2009.
In reliance on the review and discussions referred to above, the
committee recommended to the Board of Directors that the Company
include the audited financial statements in its Annual Report on
Form 10-K
for the year ended December 31, 2008 for filing with the
SEC. The Audit Committee has also recommended, subject to
stockholder ratification, the selection of Ernst &
Young LLP as the Companys independent auditors for 2009.
THE AUDIT COMMITTEE
Paul M. Meister, Chairman
Philip E. Beekman
Martha L. Byorum
Carl B. Webb
8
Compensation
Discussion and Analysis
Material
Compensation Principles
The material principles underlying the Companys executive
compensation policies and decisions include (1) evaluating
the performance of the Chief Executive Officers of our operating
subsidiaries, Mafco Worldwide and Harland Clarke Holdings, in
light of approved Company goals and determining such Chief
Executive Officers compensation levels based on such
evaluation, (2) recommending for approval the compensation
plans and incentive compensation plans for key executive
officers of our operating subsidiaries other than their Chief
Executive Officers, (3) establishing compensation-related
performance objectives that support and reflect the
Companys strategic plan and goals, (4) ensuring that
the compensation philosophy and structure is in line with and
supports the Companys business strategy and financial
objectives, and (5) administering and reviewing, from time
to time, the Second Amended and Restated Management Services
Agreement (described below) with MacAndrews & Forbes
LLC to take into account the scope and nature of the services
provided to the Company, the Companys performance and
growth and acquisition activity by the Company.
Management
Services Agreement and Transaction Fees
During 2008, certain executive officers of the Company,
including Messrs. Schwartz and Savas, were executives of
MacAndrews & Forbes. The Company did not compensate
such executive officers, but, in 2008, the Company paid to
MacAndrews & Forbes LLC $10.0 million for the
value of the services provided by such officers to the Company
pursuant to the Second Amended and Restated Management Services
Agreement between the Company and MacAndrews & Forbes
LLC, dated June 20, 2007. Under the terms of the Second
Amended and Restated Management Services Agreement,
MacAndrews & Forbes provides the services of the
Companys Chief Executive Officer and Chief Financial
Officer as well as other management, advisory, transactional,
corporate finance, legal, risk management, tax and accounting
services.
The Second Amended and Restated Management Services Agreement
renews year to year unless either party gives the other party
written notice at least 90 days prior to the end of the
initial term or a subsequent renewal period. The Second Amended
and Restated Management Services Agreement will also terminate
in the event that MacAndrews & Forbes LLC or its
affiliates no longer in the aggregate retain beneficial
ownership of 10% or more of the outstanding Common Stock of the
Company. The Second Amended and Restated Management Services
Agreement also contains customary indemnities covering
MacAndrews & Forbes LLC and its affiliates and
personnel.
In February 2008, the Companys wholly owned subsidiary,
Scantron, purchased all of the membership interests of Data
Management I LLC from Pearson Inc. and its wholly owned
subsidiary for $218.7 million in cash, after giving effect
to working capital adjustments of $1.6 million (the
Data Management Purchase). The Company paid
$2.0 million to MacAndrews & Forbes LLC for
services related to sourcing, analyzing, negotiating and
executing the Data Management Purchase.
Chief
Executive Officer Compensation
Mr. Schwartz has served as President and Chief Executive
Officer since January 2008. Prior to his appointment as
President and Chief Executive Officer, he served as Executive
Vice President of the Company from 1996 to January 2008, serving
as interim President and Chief Executive Officer from September
2007 through January 2008. In addition, Mr. Schwartz
served as General Counsel of the Company from 1996 to March
2008. Since 1996, Mr. Schwartz has received no
compensation, directly or indirectly, from the Company. As
described in Management Services Agreement and
Transaction Fees, the Company pays MacAndrews &
Forbes LLC a fee under the Second Amended and Restated
Management Services Agreement for the services of
Mr. Schwartz. Mr. Schwartz is compensated by
MacAndrews & Forbes, where he is Executive Vice
Chairman and Chief Administrative Officer and has held other
senior management positions since 1989.
9
Compensation
Philosophy
The objectives of the Companys compensation programs are
to enable the Company to attract, retain, and motivate key
talent and to reward achievement of short term and long term
strategic business objectives and financial goals.
The material principles underlying the Companys executive
compensation policies and decisions include recognizing that
quality talent is attracted and retained with quality pay
packages and that our executives recognize through their pay
structure that their personal success with us is subject to and
conditioned on the success of our business segments. We set pay
in a way we think best drives our executives to grow our four
principal business segments. Our four business segments include:
Harland Clarke, which provides check printing and related
products and services; Harland Financial Solutions
(HFS), which provides software products and services
to financial institutions; Scantron, which provides testing,
assessment and survey solutions to educational and commercial
institutions; and Licorice Products, which produces a variety of
licorice products.
Generally, we use cash compensation, not equity compensation. We
find a cash compensation system is easy to understand. It avoids
the need to deal with cumbersome rules companies must follow
when granting equity, and avoids shareholder dilution. We pay at
a level that we believe makes up for the absence of equity.
The Compensation Committee (1) ensures that the
compensation structure supports the Companys business
strategy and financial objectives, (2) evaluates the
performance of the named executive officers at its operating
subsidiaries in light of Company goals, (3) evaluates the
recommended compensation plans for the Companys executive
officers other than the named executive officers,
(4) establishes performance objectives for the bonus plans
and (5) reviews and approves recommendations on all
significant aspects of the Companys executive pay and
benefit programs.
Compensation can increase or decrease materially in the event of
a change in scope of position responsibilities, in light of
performance of the Companys business segments, and in
response to business need. We generally do not take one element
of pay into account when setting another pay element for the
same executive, but we have designed target total compensation
opportunities to be competitive. We do calculate target bonus as
a percentage of base pay as we explain below. We view base plus
bonus as an executives core pay, and we deliberately set
the mix of base and bonus based on the responsibility the
executive has for our financial performance.
Mafco
Worldwide Compensation
The key elements of Mafco Worldwides compensation program
consist of fixed compensation in the form of base salary and
variable compensation in the form of annual incentive
compensation. An executive officers annual base salary
represents the fixed component of such executive officers
total compensation, and variable compensation is intended to
comprise a substantial portion of an executives total
annual compensation. The Compensation Committees policies
with respect to each of these elements are discussed below. In
addition, while the elements of compensation described below are
considered separately, the Compensation Committee takes into
account the full compensation package afforded by the Company to
the individual, including pension, insurance and other benefits,
as well as the programs described below. In addition, the
general compensation principles for Mafco Worldwide are
applicable to the way the Compensation Committee considers and
evaluates compensation for Stephen G. Taub, President and Chief
Executive Officer of Mafco Worldwide. Generally, base salaries
for executive officers of Mafco Worldwide are determined based
upon an evaluation of the responsibilities of the position held
and the experience of the individual, and by reference to
historical levels of salary paid by Mafco Worldwide.
Salary.
Salary adjustments are based on a
periodic evaluation of the performance of Mafco Worldwide and
each executive officer, as well as financial results of the
business. The Compensation Committee takes into account the
effect of any corporate transaction that has been consummated
during the relevant
10
year and, where appropriate, also considers non-financial
performance measures. These measures include increases in market
share, manufacturing efficiency gains, improvements in product
quality and improvements in relations with customers, suppliers
and employees. Mr. Taub received a base salary in 2008 of
$1,100,000.
Annual Incentive Compensation.
The variable
compensation payable annually to executive officers of Mafco
Worldwide consists principally of annual incentive compensation
awards. Annual incentive compensation is payable pursuant to
contractual provisions applicable to Mr. Taub which provide
eligibility to receive annual performance bonus awards based
upon achievement of performance goals established by the
Compensation Committee and set forth in his employment
agreement. The performance goals are based upon the achievement
of 80% to 115% of EBITDA (net income before interest and
expense, income taxes, depreciation and amortization) goals set
forth in Mafco Worldwides business plan during each
calendar year and, in the case of Mr. Taub (as further
described below) with a minimum based on EBITDA achievement
relative to the prior year. While the Company expects Mafco
Worldwide will achieve its performance targets if its management
team satisfies individual and collective performance objectives,
the Company is not certain Mafco Worldwide will achieve or
exceed the targets.
The annual incentive compensation earned by Mr. Taub with
respect to 2008 was determined in accordance with such
contractual provisions. The bonus payments to Mr. Taub may
not exceed $2,000,000 with respect to any calendar year. For
2008, based on achievement of the pre-set EBITDA target, a bonus
of $1,210,000 was paid to Mr. Taub, in two installments:
$1,155,000 was paid on January 6, 2009, and $55,000 was
paid on February 20, 2009. Mafco Worldwide uses an annual
incentive bonus for Mr. Taub because the primary company
performance element that Mafco Worldwides executive
officers focus on is year over year EBITDA performance.
The annual performance-based bonus was designed to be compliant
with the performance-based exception of Section 162(m) of
the Code. The Compensation Committee established the bonus plan
and certified the results. The Company is not disclosing the
performance targets and actual performance measures for these
goals because they represent confidential financial information
that it does not disclose to the public, and it believes that
disclosure of this information would cause us competitive harm
because our direct competitors would know our historic financial
budgets with respect to each of our business segments. In our
industry segments, such information would give our competition a
particular advantage over us because we are engaged in highly
competitive industries which are very sensitive to pricing
decisions, customer wins and losses, and most importantly
customer perception. We would be at a significant disadvantage
with respect to our customers if our competitors were able to
compare themselves to us or draw inferences, particularly with
respect to our pricing and profit margins, from our budgets and
targets. The Company believes that these performance goals are
difficult to achieve for the following reason, among others: the
industry in which Mafco Worldwide is involved in is a mature
industry which makes growth more challenging.
In addition to the annual performance-based bonus, the
Compensation Committee may award a discretionary bonus to
Mr. Taub. However, the Compensation Committee did not award
Mr. Taub a discretionary bonus in respect of 2008.
Harland
Clarke Holdings Compensation
Harland Clarke Holdings executive compensation program
includes the following elements:
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Pay Element
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What the Pay Element Rewards
|
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Purpose of the Pay Element
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Base Salary
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Recognized leadership skills
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Provides base level of monthly income not subject to performance
risk
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Experience and expertise in the position
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Demonstrated prior achievement of Harland Clarke Holdings and
personal goals
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Makes overall pay package more competitive
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11
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Pay Element
|
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What the Pay Element Rewards
|
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Purpose of the Pay Element
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Annual Executive
Bonus Plan
|
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Executives contributions towards Harland Clarke
Holdings achievement of annual adjusted EBITDA target
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Focuses executive on achievement of annual goal most important
to Harland Clarke Holdings and investors
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Recognizes executives direct responsibility for Harland
Clark Holdings annual adjusted EBITDA achievements
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Exposes executive to risk of not receiving pay or receiving
diminished pay if Harland Clarke Holdings underperforms
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Gives executive direct motivation to help Harland Clarke
Holdings achieve annual performance targets with significant
upside for achieving exceptional results
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Long-Term Incentive
Compensation Plan
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Achievement of sustained growth
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Keeps executive focused on long term growth of Harland Clarke
Holdings
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Achievement of cumulative performance targets over a 3-year
period
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Keeps executive personally invested in the implementation of
Harland Clarke Holdings long term growth plan
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401(k) and Deferred Compensation Plan
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Long-term service with Harland Clarke Holdings
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Helps executive prepare for retirement
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Makes overall pay package more competitive
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Provides retention incentive
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Additional Benefits and Perquisites
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Continued service with Harland Clarke Holdings
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Makes overall pay package more competitive
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Payments in-kind may foster added Harland Clarke Holdings
loyalty in a way added cash pay does not
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Termination Benefits
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Continued service in circumstances under which executives
job is at risk
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Keeps executive focused on job and performance in best interest
of Harland Clarke Holdings even if executive works himself or
herself out of a job
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Base Pay.
Harland Clarke Holdings determines
base pay by evaluating the executives individual
leadership competencies, achievement of personal goals in
support of Harland Clarke Holdings objectives and
position-critical skills. Management of the Company conducts
this evaluation together with Mr. Dawson, where
appropriate, and discusses it with the executive. Management of
the Company recommends a pay level to the Compensation
Committee. The Compensation Committee then decides the base pay
level.
Harland Clarke Holdings increased Mr. Dawsons salary
in 2008 to $1,000,000 to reflect the transition of
Mr. Dawson from President and CEO of Harland Clarke to
President and CEO of Harland Clarke Holdings.
12
We feel that a substantial portion of an executives core
pay (base and bonus) should be subject to the risk of not being
paid if that executive is at least partially responsible for the
financial performance of Harland Clarke Holdings. The analysis
of how much direct responsibility Harland Clarke Holdings
executives have for its performance targets determines how much
of the executives core pay should be at risk.
Annual Executive Bonus Plan.
The amount of
bonus paid to executives of Harland Clarke Holdings is tied
directly to the performance of Harland Clarke Holdings and each
executives individual performance. The 2008 annual bonus
reflected the development and progress of Harland Clarke
Holdings following the acquisition of John H. Harland Company in
May 2007 and the subsequent reorganization of its business and
corporate structure along the three business segments, Harland
Clarke, HFS and Scantron. We want our annual bonus program for
Harland Clarke Holdings to properly reward Mr. Dawson for
his individual performance and contributions to Harland Clarke
Holdings. Mr. Dawsons bonus targets were set based on
adjusted EBITDA for the principal business segment for which he
was primarily responsible during 2008. We discuss adjusted
EBITDA in more detail in EBITDA As a Performance
Measure below.
The bonus plan for Harland Clarke Holdings is based on
achievement of the annual adjusted EBITDA target between 90% and
145.1% for Mr. Dawson. The amount of bonus opportunity is
tied to a percentage of salary increasing incrementally as
performance against goal increases incrementally. If at least
90% of target is not achieved, then no bonus will be paid. The
bonus was designed to be compliant with the performance-based
exception of Section 162(m) of the Code. Mr. Dawson
earned an executive bonus from the Company during 2008 of
$1,250,000, which was paid on March 13, 2009.
EBITDA As a Performance Measure.
Adjusted
EBITDA is a non-GAAP measure representing EBITDA (net income
before interest expense, income taxes, depreciation and
amortization) adjusted to reflect the impact of a number of
items Harland Clarke Holdings does not consider indicative
of its ongoing performance such as restructuring costs, certain
non-operational items, group management fees,
acquisition-related expenses, certain stand-alone costs and
other non-cash adjustments. In certain instances, EBITDA targets
are also adjusted slightly depending on the specific business
segment. In addition, a measure that is very similar to adjusted
EBITDA is used to measure covenant compliance under Harland
Clarke Holdings debt agreements, and securities analysts
often use adjusted EBITDA (or similar measures) to evaluate the
performance of Harland Clarke Holdings. Harland Clarke Holdings
believes adjusted EBITDA is the best measure of the performance
of the Harland Clarke Holdings business segments for the
foregoing reasons and also because it excludes
acquisition-related expenses.
The M & F Worldwide Corp. 2008 Long Term Incentive
Plan (the 2008 LTIP).
The 2008 LTIP
is a three-year cash-based plan tied to multiyear Harland Clarke
Holdings and business segment performance, effective
January 1, 2008, covering years 2008, 2009 and 2010. All
payouts to the executives will be made, assuming the cumulative
performance threshold is met, at the end of the three-year
cycle. While the Company expects the targets under the 2008 LTIP
to be met, the Company is not certain Harland Clarke Holdings
will achieve or exceed the targets. Mr. Dawson participated
in the M & F LTIP in 2008.
We consider the best approach to incentive compensation to
include (a) establishing targets within 90 days of the
beginning of each year the plan is in effect that demonstrate
growth and benefit to stockholders of the Company, and
(b) compensating executives only if those targets are
achieved on a cumulative basis over a three-year period, thus
providing a clear indication of sustained growth. We established
the 2008 LTIP to reflect this approach. If a participating
executive is terminated without cause, he or she would receive a
pro rata payment in respect of the time elapsed, only if targets
had been achieved, and the payments, if any, would be paid out
at the end of the three-year cycle. No payouts will be made if
actual three-year results are below 90% of the cumulative
adjusted EBITDA targets. If results are between 90% and 100% of
the cumulative adjusted EBITDA target, the 2008 LTIP will pay
out a ratable amount between 50% and 100%. Mr. Dawson will
also share in 2.3% and 2.7%, respectively, of cumulative three
year excess over target, up to a maximum of 120% of cumulative
adjusted EBITDA over target for business segment results and
Harland Clarke Holdings results. Targets under the 2008 LTIP are
bifurcated, granting awards based 50% on performance of the
executives individual business segment and 50% on
consolidated
13
Harland Clarke Holdings results. This structure is necessary
because there are three separate and distinct business segments
under Harland Clarke Holdings, each with its own challenges,
risks and opportunities, but there remains the opportunity for
the business segments to assist each other in their individual
growth. The target payout amount to all participants in the 2008
LTIP, as approved by the Board of Directors of the Company at
the end of the three-year cycle, assuming 100% of the target is
achieved, is up to $16.5 million in the aggregate.
The Company is not disclosing the performance targets and actual
performance measures for these goals because they represent
confidential financial information that it does not disclose to
the public, and it believes that disclosure of this information
would cause us competitive harm because our direct competitors
would know our historic financial budgets with respect to each
of our business segments. In our industry segments, such
information would give our competition a particular advantage
over us because we are engaged in highly competitive industries
which are very sensitive to pricing decisions, customer wins and
losses, and most importantly customer perception. We would be at
a significant disadvantage with respect to our customers if our
competitors were able to compare themselves to us or draw
inferences, particularly with respect to our pricing and profit
margins, from our budgets and targets. The Company believes that
these performance goals are difficult to achieve for the
following reasons, among others: (i) the industries in
which Harland Clarke Holdings is involved are mature industries
which makes growth more challenging; and (ii) Harland
Clarke Holdings is subject to both volatile customer wins and
losses and customer bidding processes.
Other
Benefits and Perquisites for Mafco Worldwide and Harland Clarke
Holdings
Mafco Worldwide and Harland Clarke Holdings offer other benefits
and perquisites in order to provide a competitive total
compensation and benefits package. Mafco Worldwide and Harland
Clarke Holdings provide certain personal benefits because they
believe that personal benefits with respect to certain matters
are a more effective incentive than additional salary. Executive
officers participate in other benefit plans generally available
to all employees on the same terms as similarly situated
employees, such as group medical insurance and participation in
and matching contributions through company-sponsored 401(k)
plans.
Executive officers participate in other benefit plans generally
available to all employees on the same terms as similarly
situated employees, such as group medical insurance and
participation in and matching contributions through
company-sponsored 401(k) plans. Executive officers of Mafco
Worldwide and Harland Clarke Holdings also receive benefits
available to other officers, such as a monthly car allowance,
life insurance, annual physical exams and a cell phone.
Mafco Worldwide provides tax
gross-up
payments to Mr. Taub in respect of the portions of
disability and life insurance premium payments which are taxable
income to Mr. Taub. These
gross-up
payments are made so that Mr. Taub receives the full
economic benefit of having the Company pay the premiums for
these benefits. Mr. Taub is also provided with a cell phone
and annual physical exam. Mr. Taub is permitted to travel
first class for business and has a time share of a jet for
business travel.
Mr. Dawson, along with certain other Harland Clarke
Holdings executive officers, is provided a private country club
membership. Harland Clarke Holdings provides a leased car to
Mr. Dawson and permits him to travel first class or by
charter aircraft for business travel. Mr. Dawson is also
allowed reimbursements for gas mileage. Harland Clarke Holdings
provides tax
gross-up
payments to Mr. Dawson in respect of his personal use of
the leased vehicle.
Other
Important Elements of Compensation at Mafco Worldwide and
Harland Clarke Holdings
Payments in connection with termination of employment without
cause are in the form of severance and are set forth in an
individuals employment agreement.
14
Severance payments are generally provided as part of the
compensation package, in line with market practices. The Company
believes severance payment opportunities encourage the executive
officers of its principal operating subsidiaries to continue to
perform in the best interests of the Company.
Mr. Taubs severance is intended to replace what he
would have earned for the remainder of the employment term if he
were terminated without cause, so the severance provisions of
his employment agreement are generally designed to replace those
lost amounts. The severance provided for Mr. Dawson and the
formulas used have been designed to provide the basic income
Mr. Dawson would need to enable him to have a smooth
transition out of the Company while remaining focused on the
needs of the Company at the end of his employment.
Tax treatments of annual bonuses and the 2008 LTIP affect the
timing of any payout to its operating subsidiary executives.
Payments may be delayed if permitted under applicable law in
order to avoid accelerated or additional tax under
Section 409A of the Code.
The Compensation Committee attempts to ensure full deductibility
of compensation notwithstanding the limitation on the
deductibility of certain compensation in excess of $1,000,000
under Section 162(m) of the Code. The Mafco Worldwide bonus
plan, the Harland Clarke Holdings bonus plan, the 2008 LTIP and
the Companys stock option plans are designed so as to
allow stock options and bonuses granted thereunder to be
deductible under Section 162(m) of the Code. However, the
Compensation Committee retains discretion to award or pay
non-deductible compensation when it considers it to be in the
best interests of the Company and stockholders to do so.
Role
Of Executive Officers In Compensation Process
The Companys Chief Executive Officer, in consultation with
the Compensation Committee, recommends business performance
targets and objectives applicable to, evaluates the performance
of, and recommends compensation for Messrs. Taub and
Dawson. The Companys other principal executive officers
receive no compensation from the Company. See
Management Services Agreement and Transaction
Fees and Chief Executive Officer
Compensation.
Mr. Taub and Mr. Dawson each recommend business
performance targets and objectives to the Company with respect
to the business segments that he leads, and evaluates the
performance of, and recommends compensation for, the executive
officers at his business segment.
The compensation policies and decisions for all executive
officers of Mafco Worldwide and Harland Clarke Holdings are
evaluated within their respective business segments, in
consultation with the Company. Targets are set consistent with
annual budgets presented to and approved by the Company.
15
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis set forth in this Proxy
Statement with management and based on such review and
discussions, the Compensation Committee has recommended to the
Board of Directors that the Compensation Discussion and Analysis
be included in this Proxy Statement, as well as the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2008, including by
incorporation by reference to this Proxy Statement.
THE COMPENSATION COMMITTEE
Theo Folz, Chairman
Philip E. Beekman
Bruce Slovin
16
SUMMARY
COMPENSATION TABLE FOR 2008
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Change In
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Pension
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Value and
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Non-Equity
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Nonqualified
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Incentive
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Deferred
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Plan
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Compensation
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All Other
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Name and
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Salary
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Compensation
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Earnings
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Compensation
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Total
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Principal Position
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Year
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($)
(1)
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($)
(2)
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($)
(3)
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($)
(4)
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($)
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Barry F. Schwartz
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2008
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President & Chief
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2007
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Executive Officer
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2006
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Paul G. Savas
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2008
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EVP, Chief Financial Officer
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2007
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2006
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Stephen G. Taub
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2008
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1,100,000
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1,210,000
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58,652
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17,795
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2,386,447
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President & CEO of
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2007
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1,025,000
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1,076,250
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19,258
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2,120,508
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Mafco Worldwide
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2006
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965,000
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965,000
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630
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34,079
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1,964,709
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Charles T. Dawson
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2008
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993,654
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1,250,000
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248,682
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2,492,336
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President & CEO of
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2007
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840,192
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5,085,508
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40
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151,820
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6,077,560
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Harland Clarke Holdings
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2006
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587,500
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1,002,750
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63,520
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1,653,770
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(1)
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Messrs. Schwartz and Savas received no compensation
directly or indirectly from the Company. They provided services
to the Company under the terms of a management services
agreement, which has been amended from time to time (see
Management Services Agreement and Transaction Fees
above). The total amount paid to MacAndrews & Forbes
in 2008 and 2007 pursuant to the management services agreement
was $10.0 million and $8.3 million, respectively. In
addition, on June 20, 2007, the Company paid to
MacAndrews & Forbes LLC a transaction bonus of
$10.0 million in recognition of the services it provided to
the Company in connection with the acquisition of John H.
Harland Company. On February 22, 2008, the Company also
paid $2.0 million to MacAndrews & Forbes LLC for
services related to sourcing, analyzing, negotiating and
executing the Data Management Purchase.
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(2)
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The compensation paid to Mr. Taub listed in this column
consists of $1,210,000 paid with respect to 2008, and $1,076,250
paid with respect to 2007, pursuant to the Mafco Worldwide Bonus
Plan and his employment agreement.
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The compensation paid to Mr. Dawson listed in this column
for 2008 consists of $1,250,000 paid with respect to 2008 under
the annual Harland Clarke Senior Management Bonus Plan. The
compensation earned by Mr. Dawson listed in this column for
2007 includes $4,184,474 earned by Mr. Dawson in connection
with the early termination and payout of the M & F
Worldwide Corp. 2005 Long Term Incentive Compensation Plan.
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(3)
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For 2008 for Mr. Taub, the Change in Pension Value reflects
the increase in the aggregate Present Value of Accumulated
Benefits, for all the pension plans, from December 31, 2007
to December 31, 2008. The Present Value of Accumulated
Benefits for each date was calculated based on the benefit
accumulated to that date, payable as a life annuity at
age 65, and using the assumptions set forth in
Notes 10 and 11, respectively, of the consolidated
financial statements included in the Companys Annual
Report on
Form 10-K
for the years ended December 31, 2007 and December 31,
2008. See Pensions Benefits for 2008 for additional
information.
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For 2007 for Mr. Taub, the aggregate Present Value of
Accumulated Benefits for all the pension plans in which he
participates decreased by $11,985 in 2007. The Change in Pension
Value for Mr. Taub reflects the increase in the aggregate
Present Value of Accumulated Benefits, for all the pension
plans, from December 31, 2006 to December 31, 2007.
The Present Value of Accumulated Benefits for each date was
calculated based on the benefit accumulated to that date,
payable as a life annuity at age 65, and using the
assumptions set forth in Notes 14 and 10, respectively, of
the consolidated financial statements included in the
Companys Annual Report on
Form 10-K
for the years ended December 31, 2006 and December 31,
2007.
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17
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(4)
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The compensation paid to Mr. Taub listed in this column for
2008 includes: (i) a tax
gross-up
payment of $7,688 in respect of the taxable portion of
disability premium payments; (ii) term life insurance
premiums of $4,902; (iii) the cost to the company of $605
for a supplemental health indemnity program which reimburses out
of pocket costs for Mr. Taub; and (iv) a 2%
nondiscretionary employer contribution by Mafco Worldwide under
its 401(k) plan of $4,600.
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The compensation paid to Mr. Dawson listed in this column
for 2008 includes: (i) the aggregate incremental cost to
the Company of the leased vehicle and employer-provided gas of
$29,305; (ii) country club fees of $6,748; (iii) term
life insurance premiums of $2,296; (iv) employer
contributions to the Harland Clarke Holdings Financial Freedom
Plan and a supplemental non-qualified excess benefit plan, the
Benefits Equalization Plan, of $197,931; and (v) other
compensation in the amount of $12,402 for the tax
gross-up
on
the personal use of a company vehicle.
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The elements of compensation with respect to these executive
officers are based upon, with respect to the Chief Executive
Officer and Chief Financial Officer, the management services
agreement as in effect during each period presented and, with
respect to the other executive officers, the applicable
employment contract, the 2008 LTIP, Company policy, and
application of past practice, each as applicable to the
respective officer.
Terms
of Executive Employment Agreements
Mr. Taub.
Mr. Taubs employment
agreement, dated August 1, 2001, and amended
October 31, 2006 and December 31, 2008, provides for
his employment as President and Chief Executive Officer of Mafco
Worldwide, commencing on August 1, 2001 initially through
July 31, 2006, with a five-year evergreen renewal
provision. Mafco Worldwide has the right at any time to give
written notice of the non-renewal of the employment term. Upon
the giving of such notice, the employment term is automatically
extended so that it ends five years after the last day of the
month in which the notice was given. The employment term is
extended on a day-to-day basis until Mafco Worldwide gives
notice of non-renewal, although in no event will the term extend
beyond May 25, 2016.
The salary for Mr. Taub is set under the terms of his
employment contract. For more information regarding
Mr. Taubs base salary, see Compensation
Discussion and Analysis Mafco Worldwide
Compensation Salary. Mr. Taubs
bonus plan is outlined in his employment contact. For more
information regarding the method for determining
Mr. Taubs bonus, see Compensation Discussion
and Analysis Mafco Worldwide
Compensation Annual Incentive Compensation.
For more information regarding the termination provisions of
Mr. Taubs employment contract, see Potential
Payments upon Termination or
Change-in-Control.
Mr. Dawson.
On February 13, 2008,
Harland Clarke Holdings entered into an employment agreement
with Mr. Dawson, effective as of January 1, 2008,
which superseded his prior employment agreement with Harland
Clarke Holdings dated as of May 29, 2007. This employment
agreement, whereby Mr. Dawson is employed by Harland Clarke
Holdings as President and Chief Executive Officer of Harland
Clarke Holdings and the Harland Clarke Business (as defined in
the employment agreement), will continue until December 31,
2010, subject to earlier termination as described in the
Potential Payments upon Termination or
Change-in-Control
section below. Under this employment agreement,
Mr. Dawsons annual base salary is $1,000,000 and he
is entitled to receive annual bonuses based on the attainment of
a certain percentage of Harland Clarke Business EBITDA targets.
Pursuant to this agreement, Mr. Dawson participates in the
2008 LTIP, for which he is eligible to receive a portion of the
bonus pool attributed to the Harland Clarke Business and a
portion of the bonus pool attributed to Harland Clarke Holdings.
Mr. Dawson was also granted an additional portion of the
bonus pool under the 2008 LTIP that is based solely on Harland
Clarke Holdings results, in recognition of his increased
responsibility for Harland Clarke Holdings results after taking
the additional position as President and Chief Executive Officer
of Harland Clarke Holdings. As a result of his new employment
agreement, Mr. Dawsons annual bonus was raised from
105% to 125% of his base salary if target is attained and
increases ratably up to a maximum of 175% of his base salary if
145.1% of the targets are attained.
18
GRANTS OF
PLAN-BASED AWARDS FOR 2008
The following table presents information with respect to each
award in 2008 to a named executive officer of plan-based
compensation, including annual cash awards under the Executive
Bonus Plan.
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Estimated Possible Payments
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Under Non-Equity Incentive Plan Awards
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Name
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Award
Type
(1),(2)
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Threshold
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|
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Target
|
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Maximum
(4)
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Barry F. Schwartz
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Paul G. Savas
|
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Stephen G. Taub
|
|
Annual Bonus
|
|
$
|
1,001,250
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(5)
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$
|
1,210,000
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|
|
$
|
2,000,000
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Charles T. Dawson
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Annual Bonus
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|
$
|
900,000
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|
$
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1,250,000
|
|
|
$
|
1,750,000
|
|
|
|
Segment 2008-2010 LTIP
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|
$
|
787,500
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|
|
$
|
1,575,000
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|
|
|
|
|
|
|
Consolidated 2008-2010 LTIP
|
|
$
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787,500
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|
$
|
1,575,000
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|
|
|
|
|
|
|
Consolidated 2008-2010
LTIP
(3)
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|
$
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300,000
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$
|
600,000
|
|
|
|
|
|
|
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(1)
|
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The amounts listed in this column next to the heading Annual
Bonus represent the threshold, target and maximum amount which
may be payable to Mr. Dawson pursuant to the annual
executive bonus plan, as described in more detail above under
Harland Clarke Holdings Compensation Annual
Executive Bonus Plan.
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(2)
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The amounts listed in this column next to the heading LTIP
represent the threshold and target amount which may be payable
in 2011 to Mr. Dawson at the end of the three-year
performance period
(2008-2010)
pursuant to the 2008 LTIP, as described in more detail above
under Harland Clarke Holdings Compensation The
M & F Worldwide Corp. 2008 Long Term Incentive Plan
(the 2008 LTIP). The first row labeled LTIP
represents the amount of the LTIP attributable to the
performance of Mr. Dawsons individual business
segment at the end of the three-year performance period and the
second and third row labeled LTIP represent the amount
attributable to consolidated Harland Clarke Holdings results at
the end of the three-year performance period.
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(3)
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Mr. Dawson received an additional grant under the 2008 LTIP
which represents the amount attributable to consolidated Harland
Clarke Holdings results at the end of the three-year performance
period as a result of increased responsibilities for Harland
Clarke Holdings after taking the additional position as
President and Chief Executive Officer of Harland Clarke Holdings.
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(4)
|
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The 2008 LTIP, which was designed to meet the requirements of
Section 162(m) of the Code, was approved by the
shareholders of the Company in 2008. Under the terms of the 2008
LTIP, the maximum payout to any participant is $10 million
over the three-year performance period. The actual payout to any
participant is expected to be substantially lower than the
maximum potential payout, which was provided for purposes of
Section 162(m) of the Code.
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(5)
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The minimum threshold payment amount is determined in accordance
with Mr. Taubs employment agreement, which entitles
Mr. Taub to a total of salary and bonus for 2008 of no less
than the total salary and bonus for 2007 only if the
Companys 2008 EBITDA equals or exceeds the Companys
EBITDA for 2007.
|
Pursuant to his employment agreement, Mr. Taub was entitled
to receive a cash performance award for 2008 performance. The
estimated possible payouts are based on achievement of 80% to
115% of Mafco Worldwides EBITDA goals for 2008, subject to
a maximum limit of $2,000,000. The minimum threshold payout
amount is determined based on 2007 EBITDA achievement and is
equal to $1,001,250. Mr. Taubs performance bonus of
$1,210,000, earned in respect of 2008, was paid to him in two
installments: $1,155,000 on January 6, 2009 and $55,000 on
February 20, 2009.
Pursuant to his employment agreement, Mr. Dawson was
entitled to a cash performance award for 2008 performance of the
Harland Clarke Business. The estimated possible payouts are
based on achievement of 90% to 145.1% of the Harland Clarke
business adjusted EBITDA goals for 2008. Mr. Dawson
was entitled to receive as an annual bonus 125% of his base
salary if target was attained, increasing ratably up to
19
a maximum of 175% of his base salary if 145.1% of the target was
attained. Mr. Dawsons bonus of $1,250,000 with
respect to 2008 was paid on March 13, 2009.
OUTSTANDING
EQUITY AWARDS AT YEAR-END FOR 2008
There were no equity awards to named executive officers
outstanding at December 31, 2008.
OPTION
EXERCISES AND STOCK VESTED FOR 2008
No named executive exercised options or had shares vest during
2008.
PENSION
BENEFITS FOR 2008
The following table shows, as of December 31, 2008 (the
pension plan measurement date used for financial statement
reporting purposes with respect to the audited financial
statements included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 filed with the
SEC on February 27, 2009), the number of years of credited
service, present value of accumulated benefit and payments
during the last fiscal year with respect to Stephen G. Taub
under the Mafco Replacement Pension Plan and the Mafco
Restoration Plan. The present values of accumulated benefits are
calculated using the methodology required by the SEC pursuant to
Statement of Financial Accounting Standards No. 87, as
amended by Financial Accounting Standards No. 158, applied
at the earliest unreduced retirement age. The section below
provides more information about the terms of the plans.
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Number of
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Present Value of
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Years
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Accumulated
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Name
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Plan Name
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Credited Service
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Benefit ($)(a)
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Barry F. Schwartz
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Paul G. Savas
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Stephen G. Taub
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Mafco Worldwide
Corporation Replacement
Defined Benefit
Pension Plan
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33
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$
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64,157
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Mafco Worldwide
Corporation Benefit
Restoration Plan
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33
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$
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900,637
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Charles T. Dawson
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(a)
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The amounts set forth in the Pension Benefits table are based on
the assumptions set forth in Note 11 to the consolidated
financial statements included in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2008 filed with the SEC on
February 27, 2009. The relevant assumptions are:
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a 6.25% discount rate; and
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post-retirement mortality rates according to the RP-2000
Combined Healthy Participant Table, with projected mortality
improvements to 2009 with Scale AA.
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The amounts shown are estimates of the increase in the actuarial
present value of Mr. Taubs age-65 accrued benefit
under each plan for 2008. Mr. Taub is currently eligible
for early retirement because he is over 55 years old and
has more than 10 years of service. He qualifies for a
reduced early retirement benefit that would be approximately 37%
less than his full retirement benefit. The section below
provides more information about early retirement benefits.
20
Mafco Worldwide provides the following retirement program to
eligible salaried employees:
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The Mafco Worldwide Corporation Replacement Defined Benefit
Pension Plan (Mafco Replacement Pension Plan), a
tax-qualified defined benefit plan that provides monthly
retirement benefits to all eligible employees. The plan terms
are described in the section below.
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The Mafco Worldwide Corporation Benefit Restoration Plan
(Mafco Restoration Plan) a non-tax qualified plan
that restores certain benefits that are limited by statutory
limits. The plan terms are described in the section below.
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The Mafco Worldwide Corporation Savings or Cash Option Plan for
Employees (SCOPE Plan), a defined contribution plan
qualified under Sections 401(a) and 401(k) of the Code.
Eligible employees may elect to contribute a portion of their
compensation to the plan. The Company annually contributes 2% of
the participants compensation. Compensation is limited by
the statutory limit ($230,000 in 2008). Subject to certain
restrictions, participants may make voluntary after-tax
contributions up to 10% of their aggregate compensation, and any
such contributions are fully vested and non forfeitable at all
times.
|
Mr. Taub, but no other named executive officer,
participates in the Mafco Worldwide Replacement Pension Plan and
Mafco Restoration Plan (together, the Pension
Plans), as do other Mafco salaried employees.
Eligibility:
The Pension Plans cover salaried
employees who are at least age 21 and have been credited
with at least one thousand hours of service in any Plan Year (as
defined in the Mafco Replacement Pension Plan) since the date
such employee commenced employment.
Formula:
The annual amount of benefit under
the Pension Plans is determined by a formula that:
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multiplies the Average Final Compensation, less the
Participants Primary Social Security Amount, by 50%,
reducing this amount proportionally if the participant has less
than 25 years of credited service (service over
25 years is ignored in the calculation);
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subtracts the actuarial equivalent benefit of the SCOPE Plan 2%
employer contribution account balance; and
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|
|
subtracts the annual annuity amount paid under an insurance
contract issued by the John Hancock Life Insurance Company,
providing for annuities payable to participants in a prior
pension plan sponsored by Mafco Worldwide.
|
Average Final Compensation:
Averages the
participants highest three consecutive calendar years of
compensation earned during the participants service with
Mafco Worldwide.
|
|
|
|
|
Compensation includes cash wages and salaries, including
overtime and bonuses, and excludes (a) fringe benefits and
other items, in addition to cash wages and salaries, required to
be included in taxable income, such as life insurance or stock
option exercise or disposition; and (b) employer
contributions to the Pension Plans or other deferred
compensation plans, other than salary reductions pursuant to
Section 401(k) or Section 125 of the Code.
|
|
|
|
The compensation factored into the benefits provided from the
Mafco Replacement Pension Plan is subject to the statutory limit
of $230,000 in 2008. Under the Mafco Restoration Plan, the
maximum eligible compensation is limited to $500,000.
|
Early Retirement:
When a participant
terminates on or after age 55 and completes 10 years
of service, the participant can commence his pension benefit
immediately, subject to early retirement reduction,
as defined in the Pension Plans. In general, benefits are
reduced by
1
/
2
%
for the first 60 months, and
1
/
4
%
for the next 60 months that benefits start prior to
age 65.
Mafco Restoration Plan:
The plan covers
benefits accrued on compensation above the Codes
Section 401(a)(17) compensation limit (up to $500,000 in
compensation). In addition, the plan restores
21
benefits accrued in excess of the Codes Section 415
benefit limit of $185,000 in 2008. All other provisions follow
the Mafco Replacement Pension Plan. The plan is not funded.
NONQUALIFIED
DEFERRED COMPENSATION TABLE FOR 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Earnings
|
|
|
Balance at
|
|
|
|
Last FY
|
|
|
in Last FY
|
|
|
Last FYE
|
|
Name
|
|
($)
(1)
|
|
|
($)
|
|
|
($)
(2)
|
|
|
Barry F. Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Savas
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles T. Dawson
|
|
|
188,731
|
|
|
|
20,102
|
|
|
|
429,820
|
|
|
|
|
(1)
|
|
The amounts reported are included as part of All Other
Compensation in the Summary Compensation Table.
|
|
(2)
|
|
Total balance of the executives account as of the end of
the Companys last fiscal year. Harland Clarke Holdings
contributions to the BEP reported in the Summary Compensation
Table for the prior year for Mr. Dawson are $110,767. This
amount was reported in the All Other Compensation
column.
|
Material
Features of the Harland Clarke Holdings Deferred Compensation
Plan
The Harland Clarke Holdings Deferred Compensation Plan is a
non-elective, nonqualified deferred compensation plan known as
the Benefits Equalization Plan, or BEP. It serves as a
supplemental benefit program for employees whose Harland Clarke
Holdings contributions to the 401(k) are limited due to IRS
annual qualified plan contribution limits. All employees whose
eligible earnings are greater than the IRS qualified plan
compensation limit are automatically eligible for this benefit.
Employees may not defer income into this plan. Harland Clarke
Holdings does not match contributions under its tax-qualified
401(k) plan in respect of pay above the tax-qualified plan
compensation limits. Instead, it credits a notional contribution
in respect of pay above the tax-qualified plan limits to the
employees BEP account.
The BEP is an unfunded deferred compensation plan. Interest is
compounded quarterly and credited to each participants
account based upon the
10-Year
U.S. Treasury Bond yield as in effect on the first business
day of the plan year rounded to the next higher one-half
percent, plus one percent. For plan year 2008, the rate was
5.0%. This methodology of applying interest is based on the
language outlined in the BEP. Interest rates are provided
annually by Mercer.
Distributions are allowed only at termination, retirement,
death, or disability and are paid in a single lump sum on the
first day of the seventh month following the occurrence of such
a qualifying event.
Potential
Payments upon Termination or
Change-in-Control
Set forth below is a summary of the payments and benefits that
certain named executive officers would receive upon termination
of employment or upon a change in control.
Mr. Taub.
If the Company were to
terminate Mr. Taubs employment for
cause
, he
would not become entitled to any further compensation. Pursuant
to the terms of Mr. Taubs employment agreement,
cause
means:
|
|
|
|
|
gross neglect of duties;
|
|
|
|
conviction of any felony or any lesser crime or offense
involving the property of the Company or any of its subsidiaries
or affiliates;
|
|
|
|
willful misconduct in connection with the performance of any
material portion of duties, breach of any material provision of
the employment agreement; or
|
22
|
|
|
|
|
any other conduct which would make continued employment
materially prejudicial to the best interests of the Company.
|
In the case of termination of his employment without
cause
, Mr. Taub would become entitled to receive:
|
|
|
|
|
continued payment of his base salary and bonus for a period of
five years after the termination;
|
|
|
|
continued participation in applicable welfare benefit plans for
five years after the termination;
|
|
|
|
continued contribution to the employer portion of employee
premiums of welfare benefit plans for a period of five years
after termination;
|
|
|
|
continued participation in fringe benefit arrangements for five
years after the termination; and
|
|
|
|
accrued vacation pay.
|
For each year during the severance period during which EBITDA
achieved for the year at least equals EBITDA for the immediately
preceding year, the base salary and bonus paid to Mr. Taub
will be no less than the base salary and bonus paid for the
preceding year. To the extent that Mr. Taub earns any
compensation during the severance period, any base salary and
bonus paid will be offset by such compensation.
Under Mr. Taubs employment contract, upon a
change-in-control
,
Mafco Worldwide will be required to purchase for Mr. Taub a
single-premium annuity having the terms described under
Termination and Change In Control Schedule.
For purposes of Mr. Taubs agreement, a
change-in-control
shall have occurred if any person or
group other than (a) Ronald O. Perelman or
(b) any person controlled, directly or indirectly, by
Ronald O. Perelman or his heirs;
|
|
|
|
|
shall acquire beneficial ownership (as such term is
defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of more than
35% of the total voting power of all classes of Voting Stock of
the Company then outstanding; or
|
|
|
|
shall have elected, or shall have caused to be elected, a
sufficient number of its or their nominees to the board of
directors of the Company such that the nominees so elected
(whether new or continuing directors) shall constitute a
majority of the board of directors of the Company.
|
However, Mafco Worldwide will not be required to purchase for
Mr. Taub a single-premium annuity unless the
change-in-control
satisfies the definition of a change in the ownership or
effective control of a corporation, or a change in the ownership
of a substantial portion of the assets of a corporation,
pursuant to Section 409A of the Internal Revenue Code, as
amended, and any Treasury Regulations promulgated thereunder.
Mr. Dawson.
If the Company were to
terminate Mr. Dawsons employment for
cause
, he
would not become entitled to any further compensation. Pursuant
to the terms of Mr. Dawsons employment agreement,
cause
means:
|
|
|
|
|
continued neglect of duties;
|
|
|
|
continued incompetence or unsatisfactory attendance;
|
|
|
|
conviction of any felony;
|
|
|
|
violation of the rules, regulations, procedures or instructions
relating to the conduct of employees, directors, officers
and/or
consultants of Harland Clarke Holdings;
|
|
|
|
willful misconduct in connection with the performance of any
material portion of the executives duties under the
employment agreement;
|
23
|
|
|
|
|
breach of fiduciary obligation owed to Harland Clarke Holdings
or commission of any act of fraud, embezzlement, disloyalty or
defalcation, or usurpation of a Harland Clarke Holdings
opportunity;
|
|
|
|
breach of any provision of the employment agreement, including
any non-competition, non-solicitation
and/or
confidentiality provisions;
|
|
|
|
any act that has a material adverse effect upon the reputation
of
and/or
the public confidence in Harland Clarke Holdings;
|
|
|
|
failure to comply with a reasonable order, policy or rule that
constitutes material insubordination;
|
|
|
|
engaging in any discriminatory or sexually harassing
behavior; or
|
|
|
|
using, possessing or being impaired by or under the influence of
illegal drugs or the abuse of controlled substances or alcohol
on the premises of Harland Clarke Holdings or any of its
subsidiaries or affiliates or while working or representing
Harland Clarke Holdings or any of its subsidiaries or affiliates.
|
In the case of termination of his employment without
cause
or for
good reason
(as defined below),
Mr. Dawson would become entitled to receive:
|
|
|
|
|
continued payment of his base salary for a period of two years
after the termination;
|
|
|
|
continued participation in applicable welfare benefit plans for
12 months after the termination;
|
|
|
|
continued contribution to the employer portion of employee
premiums of welfare benefit plans for a period of 12 months
after termination;
|
|
|
|
a pro rata annual bonus for the year in which termination
occurred, if it would have otherwise been payable to him but for
the termination of his employment, paid at the time and in the
manner bonuses are paid to other Harland Clarke Holdings
executives;
|
|
|
|
any earned but unpaid annual bonus for the year prior to the
year in which termination occurred, paid at the time and in the
manner bonuses are paid to other Harland Clarke Holdings
executives; and
|
|
|
|
a pro rata amount payable, if any, under the 2008 LTIP in
accordance with its terms, paid at the time and in the manner
2008 LTIP amounts are paid to other Harland Clarke Holdings
executives.
|
Pursuant to the terms of Mr. Dawsons employment
agreement,
good reason
means, without the advance written
consent of the executive:
|
|
|
|
|
a reduction in the executives base salary; or
|
|
|
|
a material and continuing reduction in the executives
responsibilities, in each case which the Company fails to cure
within 30 days of receiving notice from the executive of
such an event.
|
Mr. Taub is bound by a five-year non-competition covenant
and Mr. Dawson is bound by a two-year non-competition
covenant as well as a two-year non-solicitation covenant. Breach
of either the non-competition or the non-solicitation covenants
will result in a cessation of payment of salary and premium
rates under the group health benefits.
In order to receive any of the payments or benefits described
above which are payable upon termination of employment,
Mr. Dawson must execute an irrevocable release of claims in
favor of the Company.
24
TERMINATION
AND CHANGE IN CONTROL SCHEDULE FOR 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
Health/
|
|
Annual
|
|
|
|
Compensation
|
|
|
|
|
Separation
|
|
|
|
Welfare
|
|
Bonus
|
|
Outplacement
|
|
Plan
|
|
|
Name &
|
|
Pay
(1)
|
|
Vacation
(2)
|
|
Plans
(3)
|
|
Plan
(4)
|
|
Assistance
(5)
|
|
Balance/Pension
(6)
|
|
Total
|
Principal Position
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Barry F. Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Savas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVP, Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
|
5,500,000
|
|
|
|
225,961
|
|
|
|
192,538
|
|
|
|
5,500,000
|
|
|
|
|
|
|
|
|
(7)
|
|
|
11,418,499
|
|
President & CEO of Mafco Worldwide
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles T. Dawson
|
|
|
2,000,000
|
|
|
|
11,077
|
|
|
|
6,583
|
|
|
|
1,250,000
|
|
|
|
30,000
|
|
|
|
429,820
|
|
|
|
3,727,480
|
|
President & CEO of Harland Clarke Holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In the case of the termination of Mr. Taub without
cause
(as defined in the employment agreement), he would be
entitled to receive continued payment of base salary for a
period of five years. In the case of the termination of
Mr. Dawson without
cause
or resignation for
good
reason
(each as defined in the employment agreement), he
would be entitled to receive continued payment of base salary
for a period of 2 years.
|
|
(2)
|
|
As of December 31, 2008, in the event his employment
terminates, Mr. Taub would be entitled to receive $225,961,
which reflects the dollar value of unused vacation under the
Mafco Worldwide vacation policy. Upon termination,
Mr. Dawson would be entitled to his earned and unused
vacation for the current year. Mr. Dawson would also be
entitled to his balance of frozen vacation of $11,077.
|
|
(3)
|
|
Mr. Taub, upon his termination other than for
cause
(as defined in the employment agreement), would be entitled
to continued participation in applicable welfare benefit plans
for five years after the termination. Mr. Taubs total
assumes reasonable increases in healthcare costs over the
applicable period. Mr. Dawson, upon his termination other
than for
cause
or resignation for
good reason
(each as defined in the employment agreement), would be
entitled to continued participation in applicable welfare
benefit plans for 12 months after the termination and
continued contribution by Harland Clarke Holdings to the
employer portion of the employee premiums of welfare benefit
plans for 12 months after the termination. The amounts set
forth here for Mr. Dawson reflect employer cost for 2008
based on his enrollment in Harland Clarke Holdings dental,
medical and vision plans as of December 31, 2008.
|
|
(4)
|
|
Mr. Taub, in the case of his termination without
cause
(as defined in the employment agreement), would receive
annually a bonus for each year of the five-year severance
period, assuming that he would have been eligible to receive
such bonus (including due to the satisfaction of Mafco
Worldwides performance targets) had he been employed at
the time such bonus would normally have been paid. In
calculating this amount, we assumed that the EBITDA Mafco
Worldwide will have achieved over the next five years will
remain stable. Mr. Dawson, in the case of his termination
without
cause
or resignation for
good reason
(each
as defined in the employment agreement), would be entitled to
receive a prorated bonus for the year in which the termination
occurred, only if he would have been eligible to receive such
bonus (including due to the satisfaction of Harland Clarke
Holdings performance targets) had he been employed at the
time such bonus would normally have been paid. The amounts
provided in this column assume that the bonus is paid at a level
at which 100% of the target is achieved.
|
|
(5)
|
|
Standard outplacement assistance for Mr. Dawson of up to
$30,000 would be paid to a mutually agreed provider of
outplacement services for a
12-month
outplacement program.
|
|
(6)
|
|
Upon termination, retirement, death or disability,
Mr. Dawsons total balance in his BEP would be paid in
a single lump sum on the first day of the seventh month
following the occurrence of such an event. These amounts reflect
Mr. Dawsons account balance as of December 31,
2008.
|
25
|
|
|
(7)
|
|
As disclosed above in the Pension Benefits for 2008 table,
following the earlier of a
change-in-control
of Mafco Worldwide and May 25, 2016, Mafco Worldwide will
purchase for Mr. Taub a single premium annuity providing to
Mr. Taub the actuarial equivalent of the benefit under the
Mafco Restoration Plan (as described above), as in effect on
August 1, 2001 or on the annuitization date, whichever is
greater.
|
DIRECTOR
COMPENSATION FOR 2008
The following Director Compensation table shows all compensation
paid by the Company to its directors in respect of 2008. While
there are many ways to describe the value of an equity award
granted to a director, SEC rules require that the Director
Compensation Table show an accounting charge rather than a fair
value for an equity award. The table includes, under the column
Stock Awards the expense that the Company must
recognize pursuant to Statement of Financial Accounting
Standards No. 123(R) for 2008 (excluding forfeiture
assumptions) in respect of outstanding stock units to the
directors listed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
Stock
|
|
|
|
|
Name (a)
|
|
Cash ($)(b)
|
|
|
Awards ($)(c)
|
|
|
Total ($)
|
|
|
Ronald O. Perelman
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles T. Dawson
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry F. Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip E. Beekman
|
|
|
111,000
|
|
|
|
49,048
|
|
|
|
160,048
|
|
William Bevins
|
|
|
54,677
|
|
|
|
49,048
|
|
|
|
103,725
|
|
Martha L. Byorum
|
|
|
103,500
|
|
|
|
49,048
|
|
|
|
152,548
|
|
Viet D. Dinh
|
|
|
|
|
|
|
98,273
|
|
|
|
98,273
|
|
Jaymie A. Durnan
|
|
|
|
|
|
|
5,416
|
|
|
|
5,416
|
|
Theo W. Folz
|
|
|
106,000
|
|
|
|
49,048
|
|
|
|
155,048
|
|
John M. Keane
|
|
|
21,292
|
|
|
|
|
|
|
|
21,292
|
|
Paul M. Meister
|
|
|
|
|
|
|
(371,334
|
)
(d)
|
|
|
(371,334
|
)
|
Bruce Slovin
|
|
|
|
|
|
|
(291,300
|
)
(d)
|
|
|
(291,300
|
)
|
Carl B. Webb
|
|
|
|
|
|
|
44,987
|
|
|
|
44,987
|
|
|
|
|
(a)
|
|
Messrs. Perelman, Taub, Dawson and Schwartz received no
cash compensation for their service as directors for 2008.
|
|
(b)
|
|
In 2008, directors who did not receive compensation as officers
or employees of the Company or any of its affiliates were paid
an annual retainer fee of $75,000 payable in monthly
installments and a fee of $1,500 for each meeting of the Board
of Directors or any committee (other than the Audit Committee)
that they attended. Members of the Audit Committee were paid an
annual Audit Committee retainer fee of $10,000, payable in
monthly installments, in addition to the annual retainer fee for
Board membership, and a per meeting fee of $2,000 for each
meeting of the Audit Committee that they attend. The Chairmen of
the Compensation Committee and the Nominating and Corporate
Governance Committee were each paid an annual retainer of
$10,000, in addition to the annual retainer fee for Board
membership. Effective October 1, 2008, the annual retainer
fee for the Chairman of the Audit Committee was increased from
$10,000 to $15,000.
|
|
(c)
|
|
Non-employee directors are eligible to participate in the
Companys Outside Directors Deferred Compensation Plan (the
Director Plan). The Director Plan enables such
directors to forego cash fees otherwise payable to them in
respect of their service as a director and to have such fees
credited at the end of each quarter in the form of stock units,
which will be payable in the form of stock or cash, as elected
by a director, when the director terminates service as a
director, or at such other time as he or she elects. The Company
classifies deferred directors compensation as a liability
in the Companys consolidated balance sheet and expenses
the full value of each award at the time of grant and
|
26
|
|
|
|
|
remeasures the liability at fair market value at the end of each
measuring period until settlement. For purposes of this table,
the appropriate charge is determined as of December 31,
2008. Deferred directors compensation is recorded as a
component of selling, general and administrative expenses in the
Companys consolidated statement of operations.
|
|
|
|
On September 25, 2008, in recognition of the increased
responsibilities of the Board and based upon the advice of
Mercer Consulting, the Board of Directors approved a grant of
$50,000 in stock units and an automatic annual grant on the date
of each subsequent Annual Meeting to each of the Companys
nonemployee directors pursuant to the Director Plan.
|
|
|
|
As of December 31, 2008, there were 64,464 stock units
outstanding in total related to all compensation deferred by the
nonemployee directors other than Messrs. Perelman and
Keane. As of December 31, 2008, 3,175, stock units were
credited to the accounts of Messrs. Beekman, Bevins, Folz
and Ms. Byorum, and 6,362, 19,476, 17,444 and 8,482 stock
units were credited to the accounts of Messrs. Dinh,
Meister, Slovin and Webb, respectively. The grant date fair
value of stock unit awards granted in 2008 to
Messrs. Beekman, Bevins and Folz and Ms. Byorum was
$50,000, and the grant date fair value of awards granted in 2008
to Messrs. Dinh, Durnan, Meister, Slovin and Webb were
$143,000, $37,145, $154,787, 157,500 and $156,500, respectively.
The grant date fair value for Messrs. Dinh, Durnan,
Meister, Slovin and Webb represents the grant date fair value of
each grant awarded in respect of annual retainer fees to each of
these individuals, in an amount equal to $18,750. With respect
to Messrs. Dinh, Meister, Slovin and Webb, the grant date
fair value for each of these individuals also represents the
grant date fair value of each grant awarded in respect of board
or committee meeting fees in an amount equal to $1,500. With
respect to Messrs. Meister and Webb, the grant date fair
value for each of these individuals also represents the grant
date fair value of each grant awarded in respect of Audit
Committee retainer fees in an amount equal to $2,500 (and $3,750
for Mr. Meister for the fourth quarter of 2008) and Audit
Committee meeting fees in an amount equal to $2,000.
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(d)
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The negative amounts reflect the reversal of accounting charges
taken in 2006 and 2007 due to a decline in the fair market value
of Common Stock during 2008.
|
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The Audit Committee has selected, subject to ratification by the
stockholders, Ernst & Young LLP to audit the accounts
of the Company for the fiscal year ending December 31, 2009.
The ratification of the selection of Ernst & Young LLP
will require the affirmative vote of a majority of the votes
cast at the Annual Meeting by the holders of shares of Common
Stock present or represented by proxy and entitled to vote
thereon, a quorum being present. For this proposal, abstentions
and broker non-votes will not count as votes cast,
so they will have no effect on the outcome of the vote, other
than for determination of whether a quorum exists.
Ernst & Young LLP representatives will be present at
the Annual Meeting and will have an opportunity to make a
statement if they desire to do so and will be available to
respond to appropriate questions.
Audit Fees.
The aggregate fees and expenses
that Ernst & Young LLP billed to the Company for
professional services rendered for the audit of the
Companys 2008 and 2007 annual financial statements
included in the Companys Annual Report on
Form 10-K,
and reviews of the financial statements included in the
Companys Quarterly Reports on
Form 10-Q
for the quarterly periods in 2008 and 2007 were $4,089,000 and
$4,593,000, respectively. Audit services include fees associated
with the annual audit, the audit of the Companys internal
controls under Section 404 of the Sarbanes-Oxley Act of
2002, the reviews of the Companys quarterly reports on
Form 10-Q
and statutory audits required internationally.
Audit-Related Fees.
The aggregate fees and
expenses that Ernst & Young LLP billed to the Company
for audit-related services rendered in 2008 and 2007 were
$114,550 and $1,782,000, respectively. Audit-related services
include assistance with the offering memorandum of Harland
Clarke Holdings for its senior notes, assistance in responding
to a comment letter from the SEC staff, due diligence services,
27
employee benefit plan audits, and audits and reviews not
required for the audit of the consolidated financial statements.
Tax Fees.
The aggregate fees and expenses that
Ernst & Young LLP billed to the Company for tax
services rendered in 2008 and 2007 were $103,324 and $130,000,
respectively. Tax services include tax planning and tax advice.
All Other Fees.
The aggregate fees and
expenses that Ernst & Young LLP billed to the Company
for all other services rendered in 2008 and 2007 to the Company
were $0 and $0, respectively.
Auditor Independence and Pre-Approval.
The
Audit Committee considered whether any audit-related and
non-audit service that Ernst & Young LLP provided were
compatible with maintaining the auditors independence from
management and the Company. It has been the Audit
Committees policy to approve in advance the plan of audit
services to be provided and an estimate of the cost for such
audit services. The Audit Committee has also adopted a policy of
approving in advance for each calendar year a plan of the
expected services and a related budget, submitted by management,
for audit-related services, tax services and other services that
the Company expects the auditors to render during the year.
Throughout the year, the Audit Committee is provided with
updates on the services provided and the expected fees
associated with each service. Any expenditure in excess of the
approval limits for approved services, and any engagement of the
auditors to render services in addition to those previously
approved, requires advance approval by the Audit Committee. The
Audit Committee approved the audit plan, all of the fees
disclosed above and the services that the Company expects
Ernst & Young LLP to provide in 2009.
The Board of Directors recommends that the stockholders vote FOR
the ratification of the selection of Ernst & Young LLP
to audit the accounts of the Company for the fiscal year ending
December 31, 2009.
PROPOSAL 3
REAPPROVAL OF THE 2003 STOCK INCENTIVE PLAN
The Company established the 2003 Stock Incentive Plan, effective
as of October 7, 2003, after approval by its stockholders
at the 2004 Annual Meeting. At the Annual Meeting, you are being
asked to approve the applicable performance goals and other
performance-based provisions of the 2003 Stock Incentive Plan to
ensure that awards made under the 2003 Stock Incentive Plan
based on the performance criteria set forth in the 2003 Stock
Incentive Plan will be deductible by the Company. A copy of the
2003 Stock Incentive Plan is attached as Annex A hereto.
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code), and the regulations and guidance
promulgated thereunder (collectively,
Section 162(m)), generally do not allow a
publicly held company to obtain tax deductions for compensation
of more than $1.0 million paid in any year to its chief
executive officer, or any of its other three most highly
compensated executive officers (other than its chief financial
officer) (the Section 162(m) executive
officers), unless these payments are
performance-based in accordance with conditions
specified under Section 162(m). One of those conditions
requires the Company to obtain stockholder approval of each
performance criterion that a committee of outside directors may
use in granting an award under the 2003 Stock Incentive Plan
that is intended to satisfy the requirements of
Section 162(m). In addition, if the Compensation Committee
has the authority to change the targets under a performance goal
after stockholder approval of the goal, the material terms of
the performance goals must be disclosed and reapproved by
stockholders no later than five years after the stockholder
approval was first received. The Compensation Committee, which
administers the 2003 Stock Incentive Plan, has the authority to
change the targets with respect to awards granted under the 2003
Stock Incentive Plan.
If this proposal is approved, and if the applicable performance
goals are satisfied, this proposal would enable the Company to
issue awards under the 2003 Stock Incentive Plan to its
Section 162(m) executive officers and to obtain tax
deductions with respect to these awards, without regard to the
limitations of Section 162(m). If this proposal is not
approved by stockholders, compensation attributable to grants of
awards under the 2003 Stock Incentive Plan to our
Section 162(m) executive officers may not be tax deductible
by us. Therefore, the Compensation Committee and the Board of
Directors recommend that the
28
stockholders approve in their entirety the material terms of the
performance goals applicable to awards granted under the 2003
Stock Incentive Plan that are intended to satisfy the
requirements of Section 162(m) as described below. The
Compensation Committee reserves the right to issue awards under
the 2003 Stock Incentive Plan to our Section 162(m)
executive officers that are not tax deductible under
Section 162(m).
Under applicable rules of the NYSE, approval of the 2003 Stock
Incentive Plan requires the affirmative vote of a majority of
votes cast on the proposal, provided that the total vote cast on
the proposal represents over 50% in interest of all shares
entitled to vote on the proposal, assuming a quorum is present.
Under the NYSE rules, broker non-votes will not count as
votes cast on this proposal, so they will not count
in determining whether the 50% threshold is reached (although
they will otherwise have no effect on the outcome of the vote),
but abstentions will count as votes cast on this
proposal, so abstentions will have the same effect as
no votes on this proposal.
The following is a summary of provisions of the 2003 Stock
Incentive Plan and is qualified in its entirety by reference to
the complete text of the 2003 Stock Incentive Plan attached to
this Proxy Statement as Appendix A.
DESCRIPTION
OF PRINCIPAL FEATURES OF THE 2003 STOCK INCENTIVE PLAN
The purpose of the 2003 Stock Incentive Plan is to
(i) attract and retain executive personnel, key employees,
directors and consultants, (ii) motivate such participants
by means of performance-related incentives to achieve
longer-range performance goals and (iii) enable such
participants to participate in the long-term growth and
financial success of the Company.
Administration
The 2003 Stock Incentive Plan is administered by the
Compensation Committee of the Board of Directors. Each member of
the Compensation Committee or a subcommittee thereof is an
outside director within the meaning of
Section 162(m) of the Code.
The Compensation Committee has the authority in its sole
discretion, subject to and not inconsistent with the express
provisions of the 2003 Stock Incentive Plan and applicable law,
to (i) designate participants; (ii) determine the type
or types of awards to be granted to a participant;
(iii) determine the number of shares of Common Stock to be
covered by awards; (iv) determine the terms and conditions
of any award, including but not limited to whether the vesting
or payment of all or any portion of any award may be made
subject to one or more performance goals; (v) determine
whether, to what extent, and under what circumstances awards may
be settled or exercised in cash, shares of Common Stock, other
securities, other awards or other property, or cancelled,
forfeited, or suspended and the method or methods by which
awards may be settled, exercised, cancelled, forfeited, or
suspended; (vi) determine whether, to what extent, and
under what circumstances cash, shares of Common Stock, other
securities, other awards, other property, and other amounts
payable with respect to an award shall be deferred either
automatically or at the election of the holder thereof or of the
Compensation Committee; (vii) interpret and administer the
2003 Stock Incentive Plan and any instrument or agreement
relating to, or award made under, the 2003 Stock Incentive Plan;
(viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate
for the proper administration of the 2003 Stock Incentive Plan;
and (ix) make any other determination and take any other
action that the Compensation Committee deems necessary or
desirable for the administration of the 2003 Stock Incentive
Plan.
The Compensation Committee may also determine to pay annual or
other fees to non-employee directors in whole or in part in the
form of awards available for grant under the 2003 Stock
Incentive Plan. The Compensation Committee may delegate all, or
any part, of its administrative power where consistent with
applicable securities and tax law requirements. Except with
respect to adjustments made under Section 4(c) of the 2003
Stock Incentive Plan in connection with certain corporate
events, the Compensation Committee does not have the authority
to reduce the exercise price of any option granted under the
2003 Stock Incentive Plan.
29
Shares
Authorized
The Company has reserved 2,000,000 shares of Common Stock
for issuance under the 2003 Stock Incentive Plan.
1,800,000 shares of Common Stock remain available for
future grants. Such shares may consist, in whole or in part, of
authorized shares and unissued shares or treasury shares. No
individual may be granted stock options or stock appreciation
rights under the 2003 Stock Incentive Plan in any calendar year
covering more than 600,000 shares. In addition, the number
of shares with respect to which restricted stock and other
stock-based awards intended to qualify for the performance-based
exception to the Section 162(m) deductibility limit in the
Code that may be granted to any individual in any calendar year
may not exceed 600,000 shares.
If an award granted under the 2003 Stock Incentive Plan is
forfeited or otherwise terminates or is cancelled without the
delivery of shares, then the shares underlying the award will
again be available under the 2003 Stock Incentive Plan. In the
event of any change in the Companys capitalization or in
the event of a corporate transaction such as a merger,
consolidation, separation or similar event, the 2003 Stock
Incentive Plan provides for appropriate adjustments, in the
discretion of the Compensation Committee, in the number and
class of shares of stock (or other property) available for
issuance or grant and in the number
and/or
price
of shares subject to awards.
Eligibility
Awards may be granted under the 2003 Stock Incentive Plan to
employees, directors and consultants of the Company and its
affiliates.
Performance
Goals
The Compensation Committee may condition the vesting of awards
granted under the 2003 Stock Incentive Plan upon the attainment
of performance goals. Awards may be contingent on the
Companys attainment of one or more pre-established
performance goals established by the Compensation Committee
based on our attainment of any one or more of the following
performance criteria:
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return on total stockholder equity;
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earnings per share of Common Stock (which may include the manner
in which such earnings goals were met);
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net income (before or after taxes);
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earnings before interest, taxes, depreciation and amortization;
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revenues;
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return on assets;
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market share;
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cost reduction goals; or
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|
any combination of, or specified increase in, any of the
foregoing goals.
|
As discussed above, by making awards granted under the 2003
Stock Incentive Plan subject to the attainment of performance
goals, the Compensation Committee intends that compensation paid
under the 2003 Stock Incentive Plan will not be subject to the
deductibility limitation imposed under Section 162(m) of
the Code.
Types of
Awards
The Compensation Committee may grant five types of awards under
the 2003 Stock Incentive Plan: (i) options (including
qualified or incentive stock options within the
meaning of Section 422 of the Code and nonqualified options
that do not qualify as incentive stock options), (ii) stock
appreciation rights,
30
(iii) restricted stock, (iv) stock awards and
(v) other stock-based awards. Each award is evidenced by an
agreement which contains such provisions as the Compensation
Committee may in its sole discretion deem necessary or desirable
and which are not in conflict with the terms of the 2003 Stock
Incentive Plan.
Stock
Options
Options entitle the holder to purchase shares of Common Stock
during a specified period at a purchase price specified by the
Compensation Committee (but not less than the fair market value
of the Common Stock on the day the option is granted for any
incentive stock option). Each option granted under the 2003
Stock Incentive Plan is exercisable for a period of
10 years from the date of grant, or such lesser period as
the Compensation Committee determines. Options may be exercised
in whole or in part, (i) by the payment in cash or cash
equivalents of the full option price of the shares purchased,
(ii) by tendering unrestricted shares of Common Stock owned
by the participant for at least six months that have a fair
market value equal to the option price of the shares purchased,
or (iii) subject to applicable law, by a brokers
cash-less exercise procedure approved by the Compensation
Committee.
Stock
Appreciation Rights (SARs)
A SAR entitles the participant, upon exercise, to an amount
equal to the excess of the fair market value of a share of
Common Stock over the grant price of the SAR. The grant price of
each SAR is determined by the Compensation Committee. A SAR may
be related to an option or unrelated. A SAR that is related to
an option may only be exercised to the extent the related option
is exercisable and to the extent the SAR is exercised, the
number of shares subject to the related option is reduced on a
one for one basis.
Restricted
Stock
A restricted stock award consists of a grant of a share of
Common Stock that is subject to a risk of forfeiture before the
stock becomes vested. Shares of restricted stock may not be
sold, assigned, transferred, pledged or otherwise encumbered,
except as provided in the 2003 Stock Incentive Plan or the
applicable award agreement. Dividends paid on any shares of
restricted stock may be paid directly to a participant, or may
be reinvested in additional shares, as determined by the
Compensation Committee.
Stock
Awards
A stock award is an award of shares of Common Stock that is not
subject to a risk of forfeiture or transfer restrictions.
Other
Stock-Based Awards
Other stock-based awards, the form of which may be determined by
the Compensation Committee, are valued in whole or in part by
reference to or otherwise based on shares of Common Stock.
Amendment
or Termination of the 2003 Stock Incentive Plan
The Board of Directors may amend, alter, suspend, discontinue or
terminate the 2003 Stock Incentive Plan or any portion of it at
any time; provided that no such amendment, alteration,
suspension, discontinuation or termination may be made without
stockholder approval if such approval is necessary to comply
with any tax or regulatory requirement, including for these
purposes any approval requirement with which the Board of
Directors deems it necessary or desirable to qualify or comply.
However, the Compensation Committee may amend the 2003 Stock
Incentive Plan in such manner as may be necessary to conform
with local rules and regulations in any jurisdiction outside the
United States.
Cancellation
of Awards
The Compensation Committee may cause any award to be cancelled
for a cash payment or alternative award equal in value to the
fair market value of such cancelled award.
31
FEDERAL
INCOME TAX INFORMATION
U.S.
Federal Income Tax Consequences
The following is a general summary of the material
U.S. federal income tax consequences of the grant and
exercise of awards under the 2003 Stock Incentive Plan and the
disposition of shares purchased pursuant to the exercise of such
awards and is intended to reflect the current provisions of the
Code and the regulations thereunder. This summary is not
intended to be a complete statement of applicable law, nor does
it address foreign, state, local and payroll tax considerations.
Moreover, the U.S. federal income tax consequences to any
particular participant may differ from those described herein by
reason of, among other things, the particular circumstances of
such participant.
Options
The Code requires that, for treatment of an option as a
qualified option, shares of Common Stock acquired through the
exercise of a qualified option cannot be disposed of before the
later of (i) two years from the date of grant of the
option, or (ii) one year from the date of exercise. Holders
of qualified options will generally incur no federal income tax
liability at the time of grant or upon exercise of those
options. However, the spread at exercise will be an item
of tax preference, which may give rise to
alternative minimum tax liability for the taxable
year in which the exercise occurs. If the holder does not
dispose of the shares before two years following the date of
grant and one year following the date of exercise, the
difference between the exercise price and the amount realized
upon disposition of the shares will constitute long-term capital
gain or loss, as the case may be. Assuming both holding periods
are satisfied, no deduction will be allowed to us for federal
income tax purposes in connection with the grant or exercise of
the qualified option. If, within two years following the date of
grant or within one year following the date of exercise, the
holder of shares acquired through the exercise of a qualified
option disposes of those shares, the participant will generally
realize taxable compensation at the time of such disposition
equal to the difference between the exercise price and the
lesser of the fair market value of the share on the date of
exercise or the amount realized on the subsequent disposition of
the shares, and that amount will generally be deductible by us
for federal income tax purposes, subject to the possible
limitations on deductibility under Sections 280G and 162(m)
of the Code for compensation paid to executives designated in
those Sections. Finally, if an otherwise qualified option
becomes first exercisable in any one year for shares having an
aggregate value in excess of $100,000 (based on the grant date
value), the portion of the qualified option in respect of those
excess shares will be treated as a non-qualified stock option
for federal income tax purposes. No income will be realized by a
participant upon grant of a non-qualified stock option. Upon the
exercise of a non-qualified stock option, the participant will
recognize ordinary compensation income in an amount equal to the
excess, if any, of the fair market value of the underlying
exercised shares over the option exercise price paid at the time
of exercise. We will be able to deduct this same amount for
U.S. federal income tax purposes, but such deduction may be
limited under Sections 280G and 162(m) of the Code for
compensation paid to certain executives designated in those
Sections.
Restricted
Stock
A participant will not be subject to tax upon the grant of an
award of restricted stock unless the participant otherwise
elects to be taxed at the time of grant pursuant to
Section 83(b) of the Code. On the date an award of
restricted stock becomes transferable or is no longer subject to
a substantial risk of forfeiture, the participant will have
taxable compensation equal to the difference between the fair
market value of the shares on that date over the amount the
participant paid for such shares, if any, unless the participant
made an election under Section 83(b) of the Code to be
taxed at the time of grant. If the participant made an election
under Section 83(b), the participant will have taxable
compensation at the time of grant equal to the difference
between the fair market value of the shares on the date of grant
over the amount the participant paid for such shares, if any.
Special rules apply to the receipt and disposition of restricted
shares received by officers and directors who are subject to
Section 16(b) of the Exchange Act. We will be able to
deduct, at the same time as it is recognized by the participant,
the amount of taxable compensation to the participant for
32
U.S. federal income tax purposes, but such deduction may be
limited under Sections 280G and 162(m) of the Code for
compensation paid to certain executives designated in those
Sections.
SARs
No income will be realized by a participant upon grant of a SAR.
Upon the exercise of a SAR, the participant will recognize
ordinary compensation income in an amount equal to the fair
market value of the payment received in respect of the SAR. We
will be able to deduct this same amount for U.S. federal
income tax purposes, but such deduction may be limited under
Sections 280G and 162(m) of the Code for compensation paid
to certain executives designated in those Sections.
Stock
Awards
A participant will have taxable compensation equal to the
difference between the fair market value of the shares on the
date the award is made over the amount the participant paid for
such shares, if any. We will be able to deduct, at the same time
as it is recognized by the participant, the amount of taxable
compensation to the participant for U.S. federal income tax
purposes, but such deduction may be limited under
Sections 280G and 162(m) of the Code for compensation paid
to certain executives designated in those Sections.
Other
Stock-Based Awards
The tax treatment of other stock-based awards will depend on the
terms of such awards. In general, if the award is payable in
cash, the participant will recognize ordinary income at the time
of payment. In general, if the award is payable in shares of
Common Stock, the participant will recognize ordinary income at
the time such shares are no longer subject to a substantial risk
of forfeiture in an amount equal to the fair market value of the
shares on that date. The Company will be able to deduct, at the
same time as it is recognized by the participant, the amount of
taxable compensation to the participant for U.S. federal
income tax purposes, but such deduction may be limited under
Sections 280G and 162(m) of the Code for compensation paid
to certain executives designated in those Sections.
Section 162(m)
In general, as noted above, Section 162(m) of the Code
denies a publicly held corporation a deduction for
U.S. federal income tax purposes for compensation in excess
of $1,000,000 per year per person to its chief executive officer
and its three other officers (other than its chief financial
officer) whose compensation is disclosed in its proxy statement,
subject to certain exceptions. The 2003 Stock Incentive Plan is
intended to satisfy an exception with respect to grants of
options to covered employees. In addition, the 2003 Stock
Incentive Plan is designed to permit certain awards of
restricted stock and other awards to be awarded in a manner
intended to qualify under either the performance-based
compensation exception to Section 162(m) of the Code
or applicable transitional rule requirements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE PROPOSAL TO REAPPROVE THE 2003 STOCK INCENTIVE PLAN.
STOCKHOLDERS ARE NOT BEING ASKED TO APPROVE ADDITIONAL SHARES
FOR ISSUANCE UNDER THE 2003 STOCK INCENTIVE PLAN, TO MODIFY THE
TERMS OF THE 2003 STOCK INCENTIVE PLAN, OR TO APPROVE ANY CHANGE
TO ANY OF THE ANNUAL LIMITS ON GRANTS THAT CAN BE MADE UNDER THE
2003 STOCK INCENTIVE PLAN.
NEW PLAN
BENEFITS
Future amounts payable to eligible participants under the 2003
Stock Incentive Plan are based upon the making of future grants
and upon the satisfaction of certain performance goals in each
applicable performance period and, therefore, are not
determinable at this time.
33
EQUITY
COMPENSATION AT YEAR END 2008
The following table provides information, as of
December 31, 2008, regarding the securities authorized for
issuance under the Companys equity compensation plans:
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Number of
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Number of
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Securities Remaining
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Securities to Be
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Available for Future
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Issued Upon
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Issuance Under
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Exercise of
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Weighted-average
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Equity Compensation
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Outstanding
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Exercise Price of
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Plans (Excluding
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Options, Warrants
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Outstanding Options,
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Securities Reflected in
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Plan Category
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and Rights (a)
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Warrants and Rights (b)
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(a)) (c)
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Equity Compensation
Plans Approved by
Security Holders
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2,225,000
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(1)
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Equity Compensation
Plans Not Approved
by Security Holders
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(2)
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Total
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2,225,000
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(1)
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Includes 1,800,000 shares under the 2003 Stock Incentive
Plan, 445,000 shares under the M&F Worldwide Corp.
2000 Stock Option Plan, and 10,000 shares under the
M&F Worldwide Corp. 1995 Stock Option Plan.
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(2)
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The number of securities remaining available for future issuance
under the Director Plan cannot be determined because there is no
limit to the number of deferred stock units that may be granted
under the plan. For a brief description of the Director Plan,
see footnote (c) in the table under Director
Compensation for 2008.
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34
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth the total number of shares of
Common Stock that each director of the Company, each person
known to the Company to be the beneficial owner of more than 5%
of the outstanding Common Stock, the officers named in the
Summary Compensation Table presented in this Proxy Statement and
all directors and executive officers as a group beneficially
owned as of March 31, 2009, and the percent of Common Stock
so owned. Common Stock is the Companys only outstanding
voting stock. Beneficial ownership for this purpose
is as determined under the rules of the SEC, and such
information is not necessarily indicative of beneficial
ownership for any other purpose. Under these rules, a person
beneficially owns a share if the person has sole or shared
voting power or investment power with respect to the share or
the person has the right to acquire the share within
60 days through the exercise of any option, warrant or
right, through conversion of any security or pursuant to the
automatic termination of any power of attorney or revocation of
trust, discretionary account or similar arrangement.
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Amount and Nature
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of Beneficial
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Percent of
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Name
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Ownership
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Class
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MFW Holdings One LLC
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7,248,000
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(a)
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37.5
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%
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35 East 62nd St.,
New York, NY 10065
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MFW Holdings Two LLC
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946,000
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(a)
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4.9
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%
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35 East 62nd St.,
New York, NY 10065
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Bay Harbour Management, L.C
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1,909,306
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(b)
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9.9
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%
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885 Third Ave,
New York, NY 10022
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Dimensional Fund Advisors LP
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1,639,048
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(c)
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8.5
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%
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1299 Ocean Avenue,
Santa Monica, CA 90401
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|
|
|
|
|
Philip E. Beekman
|
|
|
10,900
|
|
|
|
*
|
|
William C. Bevins
|
|
|
3,175
|
(d)
|
|
|
*
|
|
Martha L. Byorum
|
|
|
3,175
|
(e)
|
|
|
*
|
|
Charles T. Dawson
|
|
|
0
|
|
|
|
*
|
|
Viet Dinh
|
|
|
8,347
|
(f)
|
|
|
*
|
|
Theo W. Folz
|
|
|
10,000
|
|
|
|
*
|
|
John M. Keane
|
|
|
0
|
|
|
|
*
|
|
Paul M. Meister
|
|
|
94,240
|
(g)
|
|
|
*
|
|
Ronald O. Perelman
|
|
|
8,394,000
|
(a)
|
|
|
43.4
|
%
|
Paul G. Savas
|
|
|
1,000
|
|
|
|
*
|
|
Barry F. Schwartz
|
|
|
5,000
|
|
|
|
*
|
|
Bruce Slovin
|
|
|
70,771
|
(h)
|
|
|
*
|
|
Stephen G. Taub
|
|
|
0
|
|
|
|
*
|
|
Carl Webb
|
|
|
9,603
|
(i)
|
|
|
*
|
|
All directors and executive officers as a group (14 persons)
|
|
|
8,610,211
|
(j)
|
|
|
44.5
|
%
|
|
|
|
(a)
|
|
All of such shares of Common Stock are beneficially owned by
Ronald O. Perelman. Holdings One and Holdings Two are wholly
owned subsidiaries of MacAndrews Holdings, of which
Mr. Perelman owns 100%. MacAndrews Holdings may be deemed
to share beneficial ownership of the 8,194,000 shares of
Common Stock beneficially owned by Holdings One and Holdings Two
and the 200,000 shares of Common Stock deemed beneficially
owned by Mr. Perelman as a result of
Mr. Perelmans grant of restricted stock, by virtue of
MacAndrews Holdings ownership of 100% of the common stock
of
|
35
|
|
|
|
|
Holdings One and Holdings Two and Mr. Perelmans 100%
ownership of MacAndrews Holdings common stock. The shares
so owned and shares of intermediate holding companies are, or
may from time to time be, pledged to secure obligations of
MacAndrews Holdings or its affiliates.
|
|
|
|
(b)
|
|
Beneficial ownership is based on a statement on
Schedule 13G/A filed by Bay Harbour Management, L.C. on
February 13, 2009.
|
|
|
|
(c)
|
|
Beneficial ownership is based on a statement on
Schedule 13G/A filed by Dimensional Fund Advisors LP
on February 9, 2009.
|
|
|
|
(d)
|
|
Represents 3,175 shares that may be deemed to be
beneficially owned by Mr. Bevins as a result of his
participation in the Director Plan.
|
|
|
|
(e)
|
|
Represents 3,175 shares that may be deemed to be
beneficially owned by Ms. Byorum as a result of her
participation in the Director Plan.
|
|
|
|
(f)
|
|
Represents 8,347 shares that may be deemed to be
beneficially owned by Mr. Dinh as a result of his
participation in the Director Plan.
|
|
|
|
(g)
|
|
Includes 21,824 shares that may be deemed to be
beneficially owned by Mr. Meister as a result of his
participation in the Director Plan.
|
|
|
|
(h)
|
|
Of the shares set forth in the table, 25,000 are held in trust
for the benefit of a minor child and 16,000 shares are
owned directly by the wife of Mr. Slovin. Mr. Slovin
disclaims beneficial ownership of such 41,000 shares.
Includes 19,771 shares that may be deemed to be
beneficially owned by Mr. Slovin as a result of his
participation in the Director Plan.
|
|
|
|
(i)
|
|
Represents 9,603 shares that may be deemed to be
beneficially owned by Mr. Webb as a result of his
participation in the Director Plan.
|
|
(j)
|
|
Includes shares of Common Stock indirectly owned by
Mr. Perelman through MacAndrews Holdings.
|
36
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Companys Code of Business Conduct (the Code of
Conduct) covers transactions and other activities by
employees of the Company and its subsidiaries that give rise to
conflicts of interest. The conflicts of interest policy in the
Code of Conduct limits or prohibits, among other things,
transactions between the employee and the Company and
transactions by the employee with (and employment with or
substantial investments in) an enterprise that is a present or
potential supplier, customer or competitor, or that engages or
may engage in any other business with the Company. In addition,
the policy also prohibits employees from appropriating for
personal benefit business opportunities that should be first
offered to the Company. The Code of Conduct also limits similar
transactions by family members of employees. Any waivers of the
Code of Conduct must be approved by either the Board of
Directors or the Audit Committee of the Company. As a Delaware
corporation, the Company is also subject to the requirement for
disinterested director or shareholder approval of transactions
by the Company with its directors and officers, as set forth in
Section 144 of the Delaware General Corporation Law.
Transfer Agreement.
In 1995, a subsidiary of
MacAndrews & Forbes, the Company and two of the
Companys subsidiaries entered into a transfer agreement
(the Transfer Agreement). Pneumo Abex LLC (together
with its predecessor in interest Pneumo Abex Corporation,
Pneumo Abex), an indirect, wholly owned subsidiary
of the Company, has various contingent liabilities, most of
which are indemnified by third parties. Among the indemnified
liabilities are certain environmental and asbestos-related
claims, as well as certain tax and other matters. Under the
Transfer Agreement, Pneumo Abex retained the assets and
liabilities relating to its former Abex NWL Aerospace Division,
as well as certain contingent liabilities and the related
assets, including its historical insurance and indemnification
arrangements. Pneumo Abex transferred substantially all of its
other assets and liabilities to a subsidiary of
MacAndrews & Forbes. The Transfer Agreement provides
for appropriate transfer, indemnification and tax sharing
arrangements, in a manner consistent with applicable law and
existing contractual arrangements.
The Transfer Agreement requires such subsidiary of
MacAndrews & Forbes to undertake certain
administrative and funding obligations with respect to certain
categories of asbestos-related claims and other liabilities,
including environmental claims, retained by Pneumo Abex. Pneumo
Abex must reimburse the amounts so funded only when it receives
amounts under related indemnification and insurance agreements.
Such administrative and funding obligations would be terminated
as to these categories of asbestos-related claims in the case of
a bankruptcy of Pneumo Abex or the Company or of certain other
events affecting the availability of coverage for such claims
from third-party indemnitors and insurers. In the event of
certain kinds of disputes with Pneumo Abexs indemnitors
regarding their indemnities, the Transfer Agreement permits
Pneumo Abex to require such subsidiary to fund 50% of the
costs of resolving the disputes.
The Company/Mafco Consolidated Registration Rights
Agreement.
Mafco Consolidated Group LLC, a
Delaware limited liability company and the successor by
conversion to Mafco Consolidated Group Inc. (Mafco
Consolidated), and the Company are parties to a
registration rights agreement (as amended, the
Company/Mafco Consolidated Registration Rights
Agreement providing Mafco Consolidated with the right to
require the Company to use its best efforts to register under
the Securities Act of 1933 (the Securities Act), and
the securities or blue sky laws of any jurisdiction designated
by Mafco Consolidated, all or portion of the issued and
outstanding Common Stock owned by Mafco Consolidated or any of
its affiliates (the Registrable Shares). Such demand
rights are subject to the conditions that the Company is not
required to (1) effect a demand registration more than once
in any
12-month
period, (2) effect more than one demand registration with
respect to the Registrable Shares, or (3) file a
registration statement during periods (not to exceed three
months) (a) when the Company is contemplating a public
offering, (b) when the Company is in possession of certain
material non-public information, or (c) when audited
financial statements are not available and their inclusion in a
registration statement is required. In addition, and subject to
certain conditions described in the Company/Mafco Consolidated
Registration Rights Agreement, if at any time the Company
proposes to register under the Securities Act an offering of
Common Stock or any other class of equity securities, then Mafco
Consolidated will have the right to require the Company to use
its best efforts to effect the registration under the Securities
Act and the
37
securities or blue sky laws of any jurisdiction designated by
Mafco Consolidated of all or a portion of the Registrable Shares
as designated by Mafco Consolidated. The Company is responsible
for all expenses relating to the performance of, or compliance
with, the Company/Mafco Consolidated Registration Rights
Agreement except that the seller of the Registrable Shares is
responsible for underwriters discounts and selling
commissions with respect to the Registrable Shares it sells.
Mafco Consolidated, Holdings One and Holdings Two are each
wholly owned subsidiaries of MacAndrews Holdings, and the shares
of Common Stock held by Holdings One and Holdings Two are
Registrable Shares under the Company/Mafco Consolidated
Registration Rights Agreement.
Management Services Agreement and Transaction
Fees.
Since 2005, MacAndrews & Forbes
LLC has provided the services of the Companys Chief
Executive Officer and Chief Financial Officer, as well as other
management, advisory, transactional, corporate finance, legal,
risk management, tax and accounting services pursuant to the
terms of a management services agreement, which has been amended
from time to time. Under the terms of the management services
agreement, the Company pays MacAndrews & Forbes LLC an
annual fee for these services. The annual rate is currently
$10.0 million. The fee was set at an annual rate of
$5.0 million for the period July 1, 2006 to
April 30, 2007 and at an annual rate of $1.5 million
for periods prior to July 1, 2006. In 2008, 2007 and 2006,
the Company paid to MacAndrews & Forbes LLC
$10.0 million, $8.33 million and $3.25 million,
respectively, for the services provided pursuant to the
management services agreement.
The management services agreement renews year to year, unless
either party gives the other party written notice at least
90 days prior to the end of the initial term or a
subsequent renewal period. The management services agreement
will also terminate in the event that MacAndrews &
Forbes LLC or its affiliates no longer in the aggregate retain
beneficial ownership of 10% or more of the outstanding Common
Stock of the Company. The Management Services Agreement also
contains customary indemnities covering MacAndrews &
Forbes LLC and its affiliates and personnel.
The Company paid $10.0 million to MacAndrews &
Forbes in the second quarter of 2007 for services related to
sourcing, analyzing, negotiating and executing the acquisition
of John H. Harland Company. In addition, in February 2008, the
Company paid $2.0 million to MacAndrews & Forbes
for services related to sourcing, analyzing, negotiating and
executing the Data Management Purchase.
Restricted Stock Grant.
On May 30, 2007,
the Company issued 200,000 shares of restricted common
stock to Ronald O. Perelman under the Companys 2003 Stock
Incentive Plan (the Restricted Stock).
Mr. Perelman is the Chairman of the Companys Board of
Directors and is the sole stockholder of MacAndrews Holdings.
The Restricted Stock vests in equal installments on each of the
first three anniversaries of the issuance date, provided that
from the issuance date to each such vesting date,
Mr. Perelman continues to provide services to the Company
as a director, officer or consultant. The Restricted Stock will
vest 100% upon the occurrence of a change in control of the
Company.
MacAndrews & Forbes Insurance
Programs.
The Company participates in MacAndrews
Holdings directors and officers insurance program, which
covers the Company as well as MacAndrews Holdings other
affiliates. The limits of coverage are available on aggregate
losses to any or all of the participating companies and their
respective directors and officers. The Company reimburses
MacAndrews & Forbes for its allocable portion of the
premiums for such coverage, which the Company believes is more
favorable than premiums the Company could secure were it to
secure its own coverage. In December 2008, the Company elected
to participate in third party financing arrangements, together
with MacAndrews & Forbes and certain of MacAndrews
Holdings affiliates, to finance a portion of premium
payments. The financing arrangements require the Company to make
future fixed payments totaling $1.3 million through June
2011 with interest rates ranging from 6.4% to 7.5%.
At December 31, 2008, the Company recorded prepaid expenses
and other assets of $1.7 million and $1.7 million and
other current liabilities and other liabilities of
$0.7 million and $0.6 million, respectively, relating
to the directors and officers insurance programs and financing
arrangements. At December 31, 2007, the Company recorded
prepaid expenses and other assets of $1.5 million and
$1.0 million, respectively, relating to the directors and
officers insurance program. The Company paid $0.6 million
and $0.4 million to
38
MacAndrews Holdings in 2008 and 2007, respectively, under the
insurance programs, including amounts due under the financing
arrangements. No payments to MacAndrews Holdings were made in
2006 under the insurance program.
Security Services.
Allied Security Holdings
LLC (Allied) provides contract security officer
services to Mafco Worldwide and Harland Clarke Holdings. Allied
was an affiliate of MacAndrews Holdings until August 2008. Mafco
Worldwide and Harland Clarke Holdings made aggregate payments to
Allied Security for such services of approximately
$0.1 million and $0.6 million, respectively, through
August 2008, $0.2 million and $0.9 million,
respectively, for the full fiscal year 2007 and
$0.2 million and $0.1 million, respectively, for the
full fiscal year 2006, which the Company believes is competitive
with industry rates for similarly situated security firms and as
favorable as terms that could have been obtained from an
unrelated party in an arms-length transaction.
Tax Sharing Agreement.
On December 15,
2005, the Company and each of the direct parent companies of
Harland Clarke Holdings and Mafco Worldwide entered into a tax
sharing agreement (the Tax Sharing Agreement)
whereby the Company elects to file consolidated federal income
tax returns on behalf of Harland Clarke Holdings, Mafco
Worldwide and their respective affiliated subsidiaries as well
as certain other subsidiaries of the Company. Under the Tax
Sharing Agreement, each of Harland Clarke Holdings and Mafco
Worldwide will make quarterly payments to the Company. These
payments generally are based on the applicable federal income
tax liability that Harland Clarke Holdings and Mafco Worldwide
and their respective affiliated subsidiaries would have had for
each taxable period if Harland Clarke Holdings or Mafco
Worldwide, as the case may be, had not been included in the
Companys consolidated group. Similar provisions apply with
respect to any foreign, state or local income or franchise tax
returns filed by any Company consolidated, combined or unitary
group for each year that Harland Clarke Holdings, Mafco
Worldwide or any of their respective subsidiaries, as the case
may be, is included in any such group for foreign, state or
local tax purposes. During 2008, 2007 and 2006, Harland Clarke
Holdings made payments totaling $57.4 million,
$5.3 million and $19.3 million, respectively, to the
Company pursuant to the terms of Tax Sharing Agreement. During
2008, 2007 and 2006, Mafco Worldwide made payments totaling
$0.3 million, $0.04 million and $2.2 million,
respectively, to the Company pursuant to the terms of Tax
Sharing Agreement.
Stockholders Agreement.
On January 20,
2009, the Company and MacAndrews Holdings entered into a
Stockholders Agreement. Pursuant to the Stockholders Agreement,
MacAndrews Holdings agreed to provide advance notice and make
certain representations and warranties to the Company in the
event of certain future acquisitions of Common Stock of the
Company. In addition, MacAndrews Holdings agreed that, so long
as the Company has public equity securities outstanding,
MacAndrews Holdings would use its best efforts to assure that
the Company will continue to maintain a Board of Directors
comprised of a majority of independent directors (under
applicable stock exchange rules) and nominating and compensation
committees comprised solely of independent directors.
ADDITIONAL
INFORMATION
The Company will make available a copy of its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 and any
Quarterly Report on
Form 10-Q
filed thereafter, without charge, upon written request to the
Secretary, M & F Worldwide Corp., 35 East
62nd Street, New York, New York 10065. Each such request
must set forth a good faith representation that, as of the
Record Date, April 15, 2009, the person making the request
was a beneficial owner of Common Stock entitled to vote. In
order to ensure timely delivery of such documents prior to the
Annual Meeting, any such request should be made promptly to the
Company. A copy of any exhibit to the Annual Report on
Form 10-K
may be obtained upon written request by a stockholder (for a fee
limited to the Companys reasonable expenses in furnishing
such exhibit) to the Secretary, M & F Worldwide Corp.,
35 East 62nd Street, New York, New York 10065.
For your convenience, please note that the Companys Annual
Reports on
Form 10-K
and Quarterly Reports on
Form 10-Q
are available on the Companys website at
http://www.mandfworldwide.com
,
as well as on the SECs website at
http://www.sec.gov
.
39
STOCKHOLDER
PROPOSALS
Pursuant to
Rule 14a-8
under the Exchange Act, any holder of at least $2,000 in market
value of Common Stock who has held such securities for at least
one year and who desires to have a proposal presented in the
Companys proxy material for use in connection with the
annual meeting of stockholders to be held in 2010 must transmit
that proposal (along with his or her name, address, the number
of shares of Common Stock that he or she holds of record or
beneficially, the dates upon which the shares of Common Stock
were acquired, documentary support for a claim of beneficial
ownership and a statement of willingness to hold such Common
Stock through the date of the annual meeting of stockholders to
be held in 2010) in writing to the Secretary, M &
F Worldwide Corp., 35 East
62
nd
Street,
New York, New York 10065, not less than 120 calendar
days before the first anniversary of the date of this Proxy
Statement. In accordance with the Companys Amended and
Restated By-laws, assuming the annual meeting of stockholders to
be held in 2010 is within 30 days before or after the first
anniversary date of the Annual Meeting, proposals of
stockholders made outside of
Rule 14a-8
under the Exchange Act (which the Company will not be required
to include in its proxy material) must be submitted not later
than March 22, 2010 and not earlier than February 20,
2010.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Companys executive officers, directors and 10%
stockholders may be required under the Exchange Act to file
reports of ownership and changes in ownership with the NYSE and
the SEC. Copies of these reports also must be furnished to the
Company.
Based solely upon a review of copies of such reports furnished
to the Company through the date hereof and written
representations as to transactions consummated by the
Companys executive officers, directors and 10% holders
during the year, if any, the Company believes that all
Section 16 filing requirements applicable to its executive
officers, directors and 10% holders were complied with during
2008.
40
OTHER
BUSINESS
The Company knows of no other matter that may come before the
Annual Meeting. However, if any such matter properly comes
before the meeting, the individuals named in the proxies will
vote on such matters in accordance with their best judgment.
April 28, 2009
By Order of the Board of Directors,
M & F WORLDWIDE CORP.
41
APPENDIX A
M &
F WORLDWIDE CORP. 2003 STOCK INCENTIVE PLAN
Section 1.
Purpose
. The
purposes of the M & F Worldwide Corp. 2003 Stock
Incentive Plan are to promote the interests of M & F
Worldwide Corp. (the Company) and its stockholders
by (i) attracting and retaining qualified directors,
executive personnel, other key employees and consultants of the
Company and its Affiliates, as defined below;
(ii) motivating such directors, employees and consultants
by means of performance-related incentives to achieve
longer-range performance goals; and (iii) enabling such
directors, employees and consultants to participate in the
long-term growth and financial success of the Company.
Section 2.
Definitions
. As
used in the Plan, the following terms shall have the meanings
set forth below:
Affiliate shall mean (i) any entity that,
directly or indirectly, controls, is controlled by, or is under
common control with, the Company and (ii) any entity in
which the Company has a significant equity interest, in either
case as determined by the Committee.
Award shall mean any Option, Stock Appreciation
Right, Restricted Stock, Stock Award or Other Stock-Based Award
granted under the Plan.
Award Agreement shall mean any written agreement,
contract, or other instrument or document evidencing any Award,
which may, but need not, be executed or acknowledged by a
Participant.
Board shall mean the Board of Directors of the
Company.
Code shall mean the Internal Revenue Code of 1986,
as amended from time to time.
Committee shall mean the compensation committee of
the Board, which shall be composed at all times of persons who
are outside directors as defined in
Section 162(m) of the Code.
Company shall mean M & F Worldwide Corp.,
together with any successor thereto.
Disability shall mean permanent disability as
determined pursuant to the Companys or the applicable
Affiliates long-term disability plan or policy, in effect
at the time of such Disability.
Exchange Act shall mean the Securities Exchange Act
of 1934, as amended.
Fair Market Value per Share as of a particular date
shall mean (i) the closing price per share of Common Stock
on a national securities exchange or on the NASDAQ stock market
for the last preceding date on which there was a sale of Shares
on such exchange, or (ii) if the Shares are then traded on
any other over-the-counter market, the average of the closing
bid and asked prices for the Shares in such over-the-counter
market for the last preceding date on which there was a sale of
Shares in such market or (iii) if the Shares are not then
listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee in its
discretion may determine.
Incentive Stock Option shall mean a right to
purchase Shares from the Company that is granted under
Section 6 of the Plan, that is intended to meet the
requirements of Section 422 of the Code or any successor
provision thereto, and that is identified in an Award Agreement
as an Incentive Stock Option.
Non-Qualified Stock Option shall mean a right to
purchase Shares from the Company that is granted under
Section 6 of the Plan and that is not intended to be an
Incentive Stock Option.
Option shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
Other Stock-Based Award shall mean an Award granted
under Section 10 of the Plan.
Participant shall mean any director, officer or
employee of the Company or any Affiliate, or any consultant to
the Company or any Affiliate (provided that such consultant is
an individual) selected by the Committee to receive an Award
under the Plan.
Performance Goals shall mean one or more of the
following pre-established criteria, determined in accordance
with generally accepted accounting principles, where applicable:
(i) return on total stockholder equity; (ii) earnings
per Share (which may include the manner in which such earnings
goals were met); (iii) net income (before or after taxes);
(iv) earnings before interest, taxes, depreciation and
amortization; (v) revenues; (vi) return on assets;
(vii) market share; (viii) cost reduction goals; or
(ix) any combination of, or a specified increase in, any of
the foregoing. The Committee shall have the authority to make
equitable adjustments in the Performance Goals in recognition of
unusual or non-recurring events affecting the Company, in
response to changes in applicable laws or regulations, or to
account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence
or related to the disposal of a segment of a business or related
to a change in accounting principles.
Permitted Transferee means (i) any of the
Participants immediate family members (any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother in law, father in
law, son in law, daughter in law, brother in law or sister in
law, including adoptive relationships of the Participant, any
person sharing the Participants household (other than a
tenant or employee)), (ii) any trust in which the
Participant or the Participants immediate family members
have more than 50% of the beneficial interest, (iii) any
foundation in which the Participant or the Participants
immediate family members control the management of the assets or
(iv) any other entity in which the Participant or the
Participants immediate family members own more than 50% of
the voting interests.
Person shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision
thereof or other entity.
Plan shall mean the M & F Worldwide Corp.
2003 Stock Incentive Plan.
Related SAR shall mean a SAR that is related to an
Option.
Restricted Stock shall mean any Share granted under
Section 8 of the Plan.
Rule 16b-3
shall mean
Rule 16b-3
as promulgated and interpreted by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect
from time to time.
SEC shall mean the Securities and Exchange
Commission or any successor thereto and shall include the staff
thereof.
Shares shall mean shares of the Common Stock, par
value $.01 per share, of the Company, or such other securities
of the Company as may be designated by the Committee from time
to time.
Stock Appreciation Right or SAR shall
mean a stock appreciation right granted under Section 7 of
the Plan.
Stock Award shall mean an Award of one or more
unrestricted Shares granted to a Participant under
Section 9 of the Plan.
Ten Percent Shareholder shall mean a
Participant who, at the time an Incentive Stock Option is
granted, owns shares possessing more than 10% of the total
combined voting power of all classes of stock of the Company or
of its Affiliates.
Section 3.
Administration
.
(a) The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on
the Committee by the Plan, the Committee shall have full power
and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to
a Participant; (iii) determine the number of Shares to be
covered by Awards; (iv) determine the terms and conditions
of any Award, including but not limited to whether the vesting
or payment of all or any portion of any Award may be made
subject to one or more Performance Goals; (v) determine
whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other
Awards or other property, or cancelled, forfeited, or suspended
and the method or methods by which Awards may be settled,
exercised, cancelled, forfeited, or
2
suspended; (vi) determine whether, to what extent, and
under what circumstances cash, Shares, other securities, other
Awards, other property, and other amounts payable with respect
to an Award shall be deferred either automatically or at the
election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument
or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (ix) make
any other determination and take any other action that the
Committee deems necessary or desirable for the administration of
the Plan.
(b) Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall
be within the sole discretion of the Committee, may be made at
any time and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant,
any holder or beneficiary of any Award, and any stockholder of
the Company.
(c) Subject to the terms of the Plan and applicable
law, the Committee may delegate to one or more officers or
managers of the Company or any Affiliate, or to a committee of
such officers or managers, the authority, subject to such terms
and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify or waive rights with respect to,
or to alter, discontinue, suspend, or terminate Awards held by,
Participants who are not officers or directors of the Company
for purposes of Section 16 of the Exchange Act, or any
successor section thereto, or who are otherwise not subject to
such Section.
(d) Subject to Section 4(c), the Committee shall
not have the authority to take any action which has the effect
of reducing the exercise price of an Option previously granted.
(e) The Committee is appointed by the Board and
serves for a period of time as determined by the Board.
Committee members may be removed by action of the Board. The
full Board shall also have the authority, in its discretion, to
grant Awards and to administer the Plan. For all purposes under
the Plan, any entity which performs the duties described herein
shall be referred to as the Committee.
Section 4.
Shares Available for Awards
.
(a)
Shares Available
. Subject to
adjustment as provided in Section 4(c), the aggregate
number of Shares with respect to which Awards may be granted
under the Plan shall not exceed 2,000,000. If, after the
effective date of the Plan, any Award is forfeited or otherwise
terminates or is cancelled without the delivery of Shares, then
the Shares covered by such Award, or to which such Award
relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be
granted, to the extent of any such forfeiture, termination or
cancellation, shall again be, or shall become, Shares with
respect to which Awards may be granted.
(b)
Individual Limits
. Subject to
adjustment as provided in Section 4(c), no individual shall
be granted Options or SARs during any calendar year with respect
to more than 600,000 Shares. In addition, for any calendar
year, the aggregate number of Shares subject to Restricted Stock
or Other Stock-Based Awards granted to any individual that are
intended to be performance-based compensation within
the meaning of Section 162(m) of the Code shall not exceed
600,000 Shares, subject to adjustment as provided in
Section 4(c). The aggregate Fair Market Value of Shares
with respect to which Incentive Stock Options are granted under
the Plan or any other option plan of the Company or any
Affiliate become exercisable for the first time by any
Participant during any calendar year shall not exceed $100,000.
(c)
Adjustments
. In the event that
the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or
other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number of
Shares or
3
other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be
granted, in aggregate or to any individual, (ii) the number
of Shares or other securities of the Company (or number and kind
of other securities or property) subject to outstanding Awards,
and (iii) the grant or exercise price with respect to any
Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award.
(d)
Sources of Shares Deliverable Under
Awards
. Shares delivered pursuant to an Award may
consist, in whole or in part, of authorized and unissued Shares
or of treasury Shares.
Section 5.
Eligibility
. Any
employee, including any officer or
employee-director
of the Company or any Affiliate, any director of the Company and
any consultant to the Company who is an individual shall be
eligible to be designated a Participant, except that only
employees of the Company or an Affiliate that qualifies as a
parent corporation of the Company (within the
meaning of Section 424(e) of the Code and applicable
regulations) or subsidiary corporation of the
Company (within the meaning of Section 424(f) of the Code
and applicable regulations) shall be eligible for the grant of
Incentive Stock Options.
Section 6.
Stock Options
.
(a)
Grant
. Subject to the
provisions of the Plan, the Committee shall have sole and
complete authority to determine the Participants to whom Options
shall be granted, the number of Shares to be covered by each
Option, the exercise price therefor and the conditions and
limitations applicable to the exercise of the Option. The
Committee shall have the authority to grant Incentive Stock
Options, or to grant Non-Qualified Stock Options, or to grant
both types of Options. In the case of Incentive Stock Options,
the terms and conditions of such grants shall be subject to and
comply with such rules as may be prescribed by Section 422
of the Code, as from time to time amended, and any regulations
implementing such statute.
(b)
Exercise Price
. The Committee
shall establish the exercise price at the time each Option is
granted, which price for an Incentive Stock Option shall not be
less than 100% of the Fair Market Value per Share on the date of
grant. In the case of an Incentive Stock Option granted to a Ten
Percent Shareholder, the exercise price shall not be less
than 110% of the Fair Market Value of a Share on the date of
grant of such Incentive Stock Option.
(c)
Exercise
. Each Option shall be
exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify
in the applicable Award Agreement or thereafter. The Committee
may impose such conditions with respect to the exercise of
Options, including without limitation, any conditions relating
to the application of federal or state securities laws, as it
may deem necessary or advisable. The exercise of an Option, or
the cancellation, termination or expiration of an Option (other
than pursuant to Section 7(a) upon exercise of a Related
SAR), with respect to a number of Shares shall cause the
automatic and immediate cancellation of any Related SARs to the
extent of the number of Shares subject to such Option which is
so exercised, cancelled, terminated or expired. An Option may
not be exercised at any time as to fewer than 100 Shares
(or such number as to which the Option is then exercisable if
such number of Shares is less than 100).
(d)
Payment
. No Shares shall be
delivered pursuant to any exercise of an Option until payment in
full of the exercise price therefor is received by the Company.
Such payment may be made as follows: (i) in cash or its
equivalent; (ii) if and to the extent permitted by the
Committee, by tendering to the Company already owned
unrestricted Shares that have been held for at least six months;
(iii) to the extent permitted under applicable law,
pursuant to a brokers cashless exercise procedure approved
by the Committee; or (iv) by a combination of the
foregoing, provided that the combined value of all cash and cash
equivalents and the Fair Market Value of any such Shares
tendered to the Company as of the date of such tender is at
least equal to such exercise price.
(e)
Term
. The exercise period shall
be determined by the Committee; provided, however, that in the
case of an Incentive Stock Option, such exercise period shall
not exceed five years from the date of grant to a Ten
Percent Shareholder or ten years from the date of grant to
any other Participant.
Section 7.
Stock Appreciation Rights
.
4
(a)
Related SARs
. The Committee may
grant a Related SAR in connection with all or any part of an
Option granted under the Plan, either at the time such Option is
granted or at any time thereafter prior to the exercise,
termination or cancellation of such Option, and subject to such
terms and conditions as the Committee shall from time to time
determine in its sole discretion, consistent with the terms and
provisions of the Plan. The holder of a Related SAR shall,
subject to the terms and conditions of the Plan and the
applicable Award Agreement, have the right by exercise thereof
to surrender to the Company for cancellation all or a portion of
such Related SAR, but only to the extent that the related Option
is then exercisable, and to be paid therefor an amount equal to
the excess (if any) of (i) the aggregate Fair Market Value
of the Shares subject to the Related SAR or portion thereof
surrendered (determined as of the exercise date), over
(ii) the aggregate appreciation base of the Shares subject
to the SAR or portion thereof surrendered. Upon any exercise of
a Related SAR or any portion thereof, the number of Shares
subject to the related Option shall be reduced by the number of
Shares in respect of which such Related SAR shall have been
exercised.
(b)
Unrelated SARs
. The Committee
may grant unrelated Stock Appreciation Rights in such amount and
subject to such terms and conditions as the Committee shall from
time to time determine in its sole discretion, subject to the
terms and provisions of the Plan. The holder of an unrelated SAR
shall, subject to the terms and conditions of the Plan and the
applicable Agreement, have the right to surrender to the Company
for cancellation all or a portion of such SAR, but only to the
extent that such SAR is then exercisable, and to be paid
therefor an amount equal to the excess (if any) of (i) the
aggregate Fair Market Value of the Shares subject to the Stock
Appreciation Right or portion thereof surrendered (determined as
of the exercise date), over (ii) the aggregate appreciation
base of the Shares subject to the SAR or portion thereof
surrendered.
(c)
Conditions
. The grant or
exercisability of any Stock Appreciation Right shall be subject
to such conditions as the Committee, in its sole discretion,
shall determine.
Section 8.
Restricted Stock
.
(a)
Grant
. Subject to the
provisions of the Plan, the Committee shall have sole and
complete authority to determine the Participants to whom Shares
of Restricted Stock shall be granted, the number of Shares of
Restricted Stock to be granted to each Participant, the duration
of the period during which, and the conditions under which, the
Restricted Stock may be forfeited to the Company, and the other
terms and conditions of such Awards, including, but not limited
to, determining whether the vesting of any such Award may be, in
whole or in part, subject to the attainment of one or more
Performance Goals.
(b)
Transfer Restrictions
. Shares
of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as provided in the Plan
or the applicable Award Agreement. Certificates issued in
respect of Shares of Restricted Stock shall be registered in the
name of the Participant and deposited by such Participant,
together with a stock power endorsed in blank, with the Company.
Upon the lapse of the restrictions applicable to such Shares of
Restricted Stock, the Company shall deliver such certificates to
the Participant or the Participants legal representative.
(c)
Dividends
. Dividends paid on
any Shares of Restricted Stock may be paid directly to the
Participant, or may be reinvested in additional Shares, as
determined by the Committee in its sole discretion.
Section 9.
Stock Award
. In the
event that the Committee grants a Stock Award, a certificate for
the Shares comprising such Stock Award shall be issued in the
name of the Participant to whom such grant was made and
delivered to such Participant as soon as practicable after the
date on which such Stock Award is payable.
Section 10.
Other Stock-Based
Awards
. Other Stock-Based Awards, the form of
which is to be determined by the Committee, shall be valued in
whole or in part by reference to or otherwise based on Shares.
Other Stock-Based Awards may be granted either alone or in
addition to other Awards under the Plan. Subject to the
provisions of the Plan, the Committee shall have sole and
complete authority to determine the Participants to whom and the
time or times at which such Other Stock-Based Awards shall be
5
granted, the number of Shares to be made subject to such Other
Stock-Based Awards and all other conditions of such Other
Stock-Based Awards, including, but not limited to, determining
whether the vesting or payment of any portion of any such Other
Stock-Based Award will be subject to the attainment of one or
more Performance Goals.
Section 11.
Director Fees
. In
the Committees discretion, annual or other fees paid to
non-employee directors may be paid in whole or in part in the
form of Awards.
Section 12.
Amendment and Termination
.
(a)
Amendments to the Plan
. The
Board may amend, alter, suspend, discontinue or terminate the
Plan or any portion thereof at any time; provided that no such
amendment, alteration, suspension, discontinuation or
termination shall be made without stockholder approval if such
approval is necessary to comply with any tax or regulatory
requirement, including for these purposes any approval
requirement with which the Board deems it necessary or desirable
to qualify or comply. Notwithstanding anything to the contrary
herein, the Committee may amend the Plan in such manner as may
be necessary so as to have the Plan conform with local rules and
regulations in any jurisdiction outside the United States.
(b)
Amendments to Awards
. The
Committee may waive any conditions or rights under, amend any
terms of, or alter, suspend, discontinue, cancel or terminate,
any Award theretofore granted, prospectively or retroactively;
provided that, except as otherwise provided in the Plan, any
such waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination that would impair the rights of any
Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective
without the consent of the affected Participant, holder or
beneficiary.
(c)
Adjustment of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events
. The Committee is
hereby authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 4(c)
hereof) affecting the capitalization of the Company, any
Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan.
(d)
Termination of Employment or Service Except
for Death or Disability
. Unless otherwise
provided by the Committee or by an employment contract between
the Participant and the Company or any Affiliate, upon
termination of a Participants employment or service with
the Company or an Affiliate for any reason except death or
Disability, the outstanding unvested Awards of such Participant,
to the extent not then vested, shall terminate immediately upon
the termination of such employment or service. For purposes of
the Plan, a transfer of a Participants employment between
the Company and an Affiliate shall not be deemed to be a
termination of employment or service for purposes of this
Section 12(d). If an Affiliate by which the Participant is
employed or to which the Participant is a service provider
ceases to be an Affiliate of the Company, such cessation will be
deemed to be a termination of Participants employment or
service with the Company and its Affiliates for purposes of this
Section 12(d). Unless otherwise provided by the Committee,
any and all vested Options and SARs held by a Participant at the
time of termination which have not been exercised by the
Participant within three months after the date of termination
shall expire and be forfeited. The Committee may specify longer
or shorter post-termination exercise periods for vested Options
and SARs; provided, however, that any Incentive Stock Options so
exercisable that are not exercised within three months after
termination of employment with the Company shall not be eligible
for treatment under Section 421(a) of the Code and shall be
treated as Non-Qualified Stock Options; and provided further,
however, that no Option or SAR may be exercised after the
expiration date specified in the Award Agreement.
(e)
Termination of Employment or Service due to
Death or Disability
. Unless otherwise provided by
the Committee, in the event that a Participants employment
or service with the Company or Affiliate terminates due to the
Participants death or Disability, Options, SARs and
Restricted Stock held by the
6
Participant shall become immediately vested and exercisable and
all such Options and SARs shall remain exercisable for one year
after the date of death or termination and shall terminate
thereafter; provided, however, that in no event shall any such
Option or SARs be exercisable after the expiration date
specified in the Award Agreement.
(f)
Cancellation
. Any provision of
this Plan or any Award Agreement to the contrary
notwithstanding, the Committee may cause any Award granted
hereunder to be cancelled in consideration of a cash payment or
alternative Award made to the holder of such cancelled Award
equal in value to the Fair Market Value of such cancelled Award.
Section 13.
General Provisions
.
(a)
Nontransferability
.
(i) Each Award, and each right under any Award, shall
be exercisable only by the Participant during the
Participants lifetime.
(ii) No Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent and
distribution, and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void
and unenforceable against the Company or any Affiliate; provided
that the designation by a Participant of a beneficiary shall not
constitute an assignment, alienation, pledge, attachment, sale,
transfer or encumbrance. Notwithstanding the foregoing, during
the Participants lifetime, the Committee may, in its sole
discretion, permit the transfer of certain Awards by a
Participant to a Permitted Transferee, subject to any conditions
that the Committee may prescribe, provided that no such transfer
by any Participant may be made in exchange for consideration.
(b)
Compliance with
Guidelines
. Awards granted to directors and
officers of the Company may, in the Committees discretion,
be subject to such additional terms and conditions as the
Committee deems desirable for purposes of compliance with any
equity ownership guidelines that the Company may establish for
its directors and certain of its officers from time to time.
(c)
No Rights to Awards
. No
employee, director or consultant of the Company or any
Affiliate, or any Participant or other Person shall have any
claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or
beneficiaries of Awards. The terms and conditions of Awards need
not be the same with respect to each recipient.
(d)
Share Certificates
. All
certificates for Shares or other securities of the Company or
any Affiliate delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other
requirements of the SEC, any stock exchange upon which such
Shares or other securities are then listed, and any applicable
federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
(e)
Withholding
. Whenever cash is
to be paid pursuant to an Award, the Company shall have the
right to deduct therefrom an amount sufficient to satisfy any
federal, state and local withholding tax requirements related
thereto. Whenever Shares are to be delivered pursuant to an
Award, the Company shall have the right to require the
Participant to remit to the Company an amount sufficient to
satisfy any federal, state and local withholding tax
requirements related thereto. Subject to the approval of the
Committee, a Participant may satisfy the foregoing requirement
by electing to have the Company withhold from delivery Shares or
by delivering already owned unrestricted Shares that have been
held for at least six months, in each case, having a value equal
to the minimum amount of tax required to be withheld. Such
Shares shall be valued at their Fair Market Value on the date as
of which the amount of tax to be withheld is determined. To the
extent permitted under applicable law, the Committee may provide
for additional cash payments to holders of Awards to defray or
offset any tax arising from the grant, vesting or exercise of
any Award.
7
(f)
Award Agreements
. Each Award
hereunder shall be evidenced by an Award Agreement which shall
be delivered to the Participant and shall specify the terms and
conditions of the Award and any rules applicable thereto,
including, but not limited to, the effect on such Award of a
change in control of the Company.
(g)
No Limit on Other Compensation
Arrangements
. Nothing contained in the Plan shall
prevent the Company or any Affiliate from adopting or continuing
in effect other compensation arrangements, which may, but need
not, provide for the grant of Options, Stock Appreciation
Rights, Restricted Sock, Stock Awards and Other Stock-Based
Awards (subject to stockholder approval if such approval is
required), and such arrangements may be either generally
applicable or applicable only in specific cases.
(h)
No Right to Employment
. The
grant of an Award shall not be construed as giving a Participant
the right to be retained in the employ or service of the Company
or any Affiliate. Further, the Company or an Affiliate may at
any time dismiss a Participant from employment or service, free
from any liability or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.
(i)
No Rights as
Stockholder
. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any
Award shall have any rights as a stockholder with respect to any
Shares to be distributed under the Plan until he or she has
become the holder of such Shares. Notwithstanding the foregoing,
in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder
in respect of such Restricted Stock.
(j)
Governing Law
. The validity,
construction, and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of
Delaware.
(k)
Severability
. If any provision
of the Plan or any Award is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction or as to
any Person or Award, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision
shall be stricken as to such jurisdiction, Person or Award and
the remainder of the Plan and any such Award shall remain in
full force and effect.
(l)
Other Laws
. The Committee may
refuse to issue or transfer any Shares or other consideration
under an Award if, acting in its sole discretion, it determines
that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation,
and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such
Award shall be promptly refunded to the relevant Participant,
holder or beneficiary. Without limiting the generality of the
foregoing, no Award granted hereunder shall be construed as an
offer to sell securities of the Company, and no such offer shall
be outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would be
in compliance with all applicable requirements of the
U.S. federal securities laws.
(m)
No Trust or
Fund Created
. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company or
any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general
creditor of the Company or any Affiliate.
(n)
No Fractional Shares
. No
fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be cancelled,
terminated, or otherwise eliminated.
8
(o)
Headings
. Headings are given to
the Sections and subsections of the Plan solely as a convenience
to facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 14.
Term of the Plan
.
(a)
Effective Date
. The Plan shall
be effective as of the date of its adoption by the Board, but
the Plan (and any Awards granted thereunder) shall be subject to
the approval of the stockholders of the Company, which approval
must occur within twelve months after the date the Plan is
adopted by the Board.
(b)
Expiration Date
. No Award shall
be granted under the Plan after the tenth anniversary of the
effective date. Unless otherwise expressly provided in the Plan
or in an applicable Award Agreement, any Award granted hereunder
may, and the authority of the Board or the Committee to amend,
alter, adjust, suspend, discontinue, or terminate any such Award
or to waive any conditions or rights under any such Award shall,
continue after the tenth anniversary of the effective date.
9
M & F WORLDWIDE CORP.
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD ON MAY 21, 2009
The undersigned appoints Barry F. Schwartz, Michael C. Borofsky and Edward P. Taibi, and each
of them, attorneys and proxies, each with power of substitution, to vote all shares of Common Stock
of M & F Worldwide Corp. (the Company) that the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held on May 21, 2009 on the proposals set forth on the
reverse side hereof and on such other matters as may properly come before the meeting and any
adjournments or postponements thereof.
The proxy holders will vote the shares represented by this proxy in the manner indicated on the
reverse side hereof. Unless a contrary direction is indicated, the proxy holders will vote such
shares FOR election of the persons nominated as directors by the Board of Directors; FOR
ratification of the selection of Ernst & Young LLP as the Companys independent auditors for 2009
and FOR approval of the M&F Worldwide 2003 Stock Incentive Plan for purposes of allowing
compensation paid pursuant to the Plan to be deductible under Section 162(m) of the Code. If any
further matters properly come before the Annual Meeting, it is the intention of the persons named
above to vote such proxies in accordance with their best judgment.
(Continued and to be signed on the reverse side.)
|
ANNUAL MEETING OF STOCKHOLDERS OF
M & F WORLDWIDE CORP.
May 21, 2009
Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting To Be Held on May 21, 2009.
The proxy statement and our Annual Report on Form 10-K are available
at http://mandfworldwide.com/Financial_reporting/proxy_materials.htm
Please sign, date and mail your proxy card in the envelope provided as soon as possible.
Please detach along perforated line and mail in the
envelope provided.
20430300000000000000 2 052109
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND
FOR PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE
x 1. To elect as directors of M & F Worldwide Corp. (the
Company) for FOR AGAINST ABSTAIN terms expiring in 2012 and until their successors are duly
elected and 2. To ratify the selection of Ernst & Young LLP as the Companys qualified.
independent auditors for 2009.
NOMINEES:
FOR ALL NOMINEES
O Charles T.
Dawson O Paul M. Meister
O 3. To approve the M&F Worldwide 2003 Stock Incentive Plan for
WITHHOLD AUTHORITY
Barry F. Schwartz
FOR ALL NOMINEES
O purposes of allowing compensation paid pursuant to the Plan to Carl B.
Webb be deductable under Section 162(m) of the Code.
FOR ALL EXCEPT
(See instructions below)
4.
In their discretion, the
proxies are authorized to
vote upon such other
business as may properly
come before the meeting or
any adjournments thereof.
PLEASE MARK, SIGN, DATE, AND
RETURN THE PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
INSTRUCTIONS:
To withhold authority to vote for any individual
nominee(s), mark
FOR ALL EXCEPT
and fill in the circle next
to each nominee you wish to withhold, as shown here:
To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be
submitted via this method.
Signature of Stockholder Date: Signature of Stockholder Date:
Note:
Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
|
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