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
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
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):
þ
|
|
No fee required.
|
|
o
|
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
(1)
|
|
Title of each class of securities to which transaction applies:
|
|
|
(2)
|
|
Aggregate number of securities to which transaction applies:
|
|
|
(3)
|
|
Per unit price or other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it
was determined):
|
|
|
(4)
|
|
Proposed maximum aggregate value of transaction:
|
|
|
(5)
|
|
Total fee paid:
|
o
|
|
Fee paid previously with preliminary materials.
|
|
o
|
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
|
|
(1)
|
|
Amount Previously Paid:
|
|
|
(2)
|
|
Form, Schedule or Registration Statement No.:
|
|
|
(3)
|
|
Filing Party:
|
|
|
(4)
|
|
Date Filed:
|
M &
F WORLDWIDE CORP.
35 East
62
nd
Street
New York, New York 10065
Tel:
212-572-8600
April 22, 2011
To Our Stockholders:
We cordially invite you to attend the 2011 Annual Meeting of
Stockholders of M & F Worldwide Corp., which we will
hold at the Westin Minneapolis, 88 South 6th Street,
Minneapolis, Minnesota 55402, on Thursday, May 19, 2011, at
8:00 a.m. Central Time.
Details regarding the business to be conducted at the meeting
are more fully described in the accompanying Notice of Annual
Meeting and Proxy Statement.
While stockholders may exercise their right 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
TABLE OF CONTENTS
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 2011 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
19
th
day
of May 2011 at 8:00 a.m., Central Time, at the Westin
Minneapolis, 88 South 6th Street, Minneapolis, Minnesota
55402, for the following purposes:
|
|
|
|
1.
|
To elect the nominees for the Board of Directors of the Company
to serve until the annual meeting in 2014 and until such
directors successors are duly elected and shall have
qualified;
|
|
|
2.
|
To approve certain bonus arrangements for Charles T. Dawson for
purposes of allowing such compensation to be deductible under
Section 162(m) of the Internal Revenue Code of 1986, as
amended;
|
|
|
|
|
3.
|
To approve the M & F Worldwide Corp. 2011 Long Term
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;
|
|
|
4.
|
To hold an advisory vote on executive compensation;
|
|
|
5.
|
To hold an advisory vote on the frequency of future advisory
votes on executive compensation;
|
|
|
6.
|
To ratify the selection of Ernst & Young LLP as the
Companys independent auditors for 2011; and
|
|
|
|
|
7.
|
To transact such other business as may properly come before the
Annual Meeting or at any adjournment or postponement thereof.
|
A proxy statement describing these matters is attached to this
notice. Only stockholders of record at the close of business on
April 11, 2011 (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 19, 2011
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 22, 2011
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 19, 2011
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 2011 Annual Meeting of Stockholders
to be held on the 19th day of May 2011 at 8:00 a.m.,
Central Time, at the Westin Minneapolis, 88 South
6th Street, Minneapolis, Minnesota 55402, 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 25,
2011.
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 2014 and
until such directors successors are duly elected and shall
have qualified: Philip E. Beekman, William Bevins, Viet D. Dinh,
General John M. Keane and Stephen G. Taub; (2) to approve
certain bonus arrangements for Charles T. Dawson for purposes of
allowing such compensation to be deductible under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code); (3) to approve the
M & F Worldwide Corp. 2011 Long Term Incentive Plan
for purposes of allowing compensation paid pursuant to the plan
to be deductible under Section 162(m) of the Code;
(4) to hold an advisory vote on executive compensation;
(5) to hold an advisory vote on the frequency of future
advisory votes on executive compensation; (6) to ratify the
selection of Ernst & Young LLP as the Companys
independent auditors for 2011; and (7) 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 62nd 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
approval
of certain bonus arrangements for Charles T. Dawson for purposes
of allowing such compensation to be deductible under
Section 162(m) of the Code;
FOR
approval of the 2011
LTIP for purposes of allowing compensation paid pursuant to the
2011 LTIP to be deductible under Section 162(m) of the
Code;
FOR
the approval on an advisory basis of the
compensation of the Companys named executive officers;
FOR
the approval of an advisory vote on executive
compensation to be held every three years; and
FOR
ratification of the appointment of the independent auditor.
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 62nd 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 11, 2011 (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.
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 approval of incentive compensation arrangements for
Harland Clarke Holdings President and Chief Executive
Officer for 162(m) purposes, for the approval of the M&F
Worldwide Corp. 2011 Long Term Incentive Plan for 162(m)
purposes, for the advisory vote on compensation and for the
advisory vote on frequency of future advisory votes on executive
compensation. For these proposals, 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.
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
5.2%, 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
133,334 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
approval
of certain bonus arrangements for Charles T. Dawson for purposes
of allowing such compensation to be deductible under
Section 162(m) of the Code;
FOR
approval of the 2011
LTIP for purposes of allowing compensation paid pursuant to the
2011 LTIP to be deductible under Section 162(m) of the
Code;
FOR
the approval on an advisory basis of the
compensation of the Companys named executive officers;
FOR
the approval of an advisory vote on executive
compensation to be held every three years; and
FOR
ratification of the appointment of the independent auditor.
Based on the foregoing, the presence, in person or by properly
executed proxy, of the holders of 1,406,300 additional shares of
Common Stock (representing approximately 7.3% of the shares of
Common Stock outstanding as of the Record Date) would be
required to constitute a quorum and elect the director nominees,
approve certain bonus arrangements for Charles T. Dawson for
purposes of allowing such compensation to be deductible under
Section 162(m) of the Code, approve the 2011 LTIP for
purposes of allowing compensation paid pursuant to the 2011 LTIP
to be deductible under Section 162(m) of the Code, approve
on an advisory basis the compensation of the Companys
named executive officers, approve an advisory vote on executive
compensation to be held every three years, and ratify the
appointment of the independent auditor.
2
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 (ret.), 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.
Since September 2007, we have separated the role of President
and Chief Executive Officer from the role of Chairman of the
Board. Currently, Mr. Schwartz serves as President and
Chief Executive Officer, and Mr. Perelman serves as
Non-Executive Chairman of the Board of the Company. We believe
that this board leadership structure is best for our Company and
our stockholders. The President and Chief Executive Officer is
responsible for the
day-to-day
leadership and management of the Company, and the Non-Executive
Chairman is responsible for providing oversight, direction and
leadership to the Board. Separating the role of Chief Executive
Officer and Chairman of the Board provides strong leadership for
our Board, while also positioning our Chief Executive Officer as
the leader of the Company in the eyes of our business partners,
employees and stockholders.
The Board of Directors has nominated Messrs. Beekman,
Bevins, Dinh, Keane and Taub for election as directors at the
2011 Annual Meeting to serve until the annual meeting in 2014.
Messrs. Beekman, Bevins, Dinh, Keane and Taub 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 nominees listed herein. The Board of
Directors has been informed that Messrs. Beekman, Bevins,
Dinh, Keane and Taub 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, 2011), 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
(68) 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. He also previously served as a
manager of Allied Security Holdings LLC and REV Holdings LLC and
on the board of directors of Panavision Inc. each of which
ceased to be reporting companies under the Exchange Act in 2008,
2006 and 2006, respectively. Mr. Perelmans term as a
director of the Company expires in 2013. Mr. Perelman
brings to our Board over 30 years of experience as an
investor and financier. Mr. Perelmans extensive
expertise with mergers and acquisitions, business strategy and
management provides valuable insight to our Board.
3
Philip E. Beekman
(79) 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. He also previously served on the board of
directors of Linens N Things Inc. which ceased to be a reporting
company under the Exchange Act as a result of the companys
filing for bankruptcy on May 2, 2008.
Mr. Beekmans term as a director of the Company
expires at the Annual Meeting. Mr. Beekman brings to our
Board significant general operating and management expertise as
a result of serving in the role of President, Chief Executive
Officer and Chief Operating Officer at other companies over the
past 40 years. Mr. Beekmans experience provides
our Board with insight relating to strategy, capital markets,
corporate finance, accounting and general management.
William C. Bevins
(65) has been a director of the
Company since 2008. Mr. Bevins has been Chief Executive
Officer of Panavision Inc. since June 2009 and has been Senior
Executive Vice President of MacAndrews Holdings since December
2010. 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
at the Annual Meeting. Mr. Bevins brings to our Board
significant management experience with over 30 years
experience in roles such as President and Chief Executive
Officer of Panavision Inc., Andrews Group Incorporated, Marvel
Entertainment Group, Inc. and New World Communications Group
Incorporated. In addition, through his experience as an
accountant and Chief Financial Officer, Mr. Bevins provides
our Board with guidance relating to management, accounting and
finance matters.
Martha L. Byorum
(62) 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 following company which files reports pursuant
to the Exchange Act: Northwest Natural Gas Company.
Ms. Byorums term as a director of the Company expires
in 2013. Ms. Byorum brings to our Board significant
experience working in the financial services and investment
banking sector. Ms. Byorums corporate finance,
accounting and strategic advisory experience provides valuable
insight to our Board and Audit Committee.
Charles T. Dawson
(62) 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 is Chief Executive Officer of 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 1992. 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
4
Company expires in 2012. Mr. Dawson brings to our Board
significant general operating and management expertise as a
result of his role as President and Chief Executive Officer of
Harland Clarke Holdings and his prior roles in senior management
of Clarke American. As President and Chief Executive Officer of
one of our wholly owned subsidiaries, Mr. Dawson provides
unique insight to our Board concerning the management of Harland
Clarke, Harland Financial Solutions and Scantron.
Viet D. Dinh
(43) has been a director of the Company
since 2007. Mr. Dinh is Professor of Law and
Co-Director
of Asian Law and Policy Studies at the Georgetown University Law
Center. Mr. Dinh was U.S. Assistant Attorney General
for Legal Policy from 2001 to 2003. Mr. Dinh is the founder
and principal of Bancroft PLLC and General Counsel and Corporate
Secretary of Strayer Education, Inc. He serves on the Board of
Directors of the News Corporation. Mr. Dinh also served on
the Board of Orchard Enterprises, Inc. which ceased to be a
reporting company under the Exchange Act in 2010. Mr. Dinh
also serves on the advisory boards of the Vietnam Veterans
Memorial Center, the Section on National Security Law of the
Association of American Law Schools, and the Standing Committee
on National Security of the American Bar Association.
Mr. Dinhs term as a director of the Company expires
at the Annual Meeting. Mr. Dinh brings to our Board
extensive legal, governance and regulatory experience as both a
professor of law and also from his legal service in both the
public and private sectors. Mr. Dinhs role as a
member of the boards of directors of other public and private
companies and non-profit agencies provides valuable insight to
our Board.
Theo W. Folz
(67) 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 was 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, from 1984 through
September 2009. Mr. Folzs term as a director of the
Company expires in 2013. Mr. Folz brings to our Board
significant knowledge of our Mafco Worldwide business having
previously served as its President and Chief Executive Officer.
Mr. Folzs experience in the tobacco industry also
provides unique insight to our Board.
General John M. Keane
(ret.) (68) has been a
director of the Company since September 2008 and is a senior
partner, SCP Partners. He is President of GSI, LLC, a consulting
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 Fox 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., and General Dynamics Corporation, all of which file
reports under the Exchange Act. He also previously served as a
manager of Allied Security Holdings LLC, which ceased to be a
reporting company under the Exchange Act in 2008, and as a
director of Cyalume Technologies, Inc. General Keanes term
as a director of the Company expires at the Annual Meeting.
General Keane brings to our Board significant general operating
and management expertise having served as Chief Operating
Officer of one of the worlds largest military
organizations and as an advisor to high levels of government. In
addition, General Keanes service on the boards of
directors of other public companies provides our Board with
valuable insight into public company corporate governance.
Paul M. Meister
(58) 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 is also Chairman and CEO
of Inventive Health, Inc. (outsourced services to
pharmaceutical, life science and health care industries). 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 in 2012. Mr. Meister brings to our Board
significant general operating and management expertise having
served in executive positions
5
with an S&P 500 company, including Chairman of the
Board and Chief Financial Officer. In addition,
Mr. Meisters experience as a Chief Financial Officer
and his understanding of financial statements, corporate
finance, accounting and capital markets was instrumental in the
decision to appoint him as Chairman of our Audit Committee.
Barry F. Schwartz
(62) 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 Exchange Act: Harland Clarke Holdings, Revlon
Products, Revlon and Scientific Games Corporation. He also
previously served as a manager of Allied Security Holdings LLC
and a manager of REV Holdings LLC, each of which ceased to be
reporting companies under the Exchange Act in 2008 and 2006,
respectively. Mr. Schwartzs term as a director of the
Company expires in 2012. Mr. Schwartz brings to our Board
significant general operating, management, legal and governance
expertise having served in various executive positions with
MacAndrews & Forbes for over 20 years. In
addition, Mr. Schwartzs experience on the boards of
directors of various companies in which MacAndrews &
Forbes has an investment provides valuable insight to our Board.
Bruce Slovin
(75) 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. He also previously served on the board of
directors of Sentigen Holding Corp. which ceased to be a
reporting company under the Exchange Act in 2006.
Mr. Slovins term as a director of the Company expires
in 2013. Mr. Slovin brings to our Board significant general
operating and management expertise having served in various
executive positions with MacAndrews & Forbes and
various affiliates for 20 years. In addition,
Mr. Slovins service on the boards of directors of
other public companies provides our Board with insight into
public company corporate governance.
Stephen G. Taub
(59) 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
at the Annual Meeting. Mr. Taub brings to our Board
significant general operating and management expertise having
served in various executive positions with Mafco Worldwide. As
President and Chief Executive Officer of one of our wholly owned
subsidiaries, Mr. Taub provides unique insight to our Board
concerning the tobacco industry and management of Mafco
Worldwide.
Carl B. Webb
(61) has served as a director of the
Company since January 2007. He currently is the Chief Executive
Officer and Board Member of Pacific Capital Bancorp, and is
Chairman and Chief Executive Officer of Pacific Capital Bank,
N.A. Santa Barbara, California. He is also the Senior
Partner of Ford Financial Fund, L.P., a Dallas-based private
equity firm with a focus on equity investments in financial
services firms nationally. In addition, Mr. Webb has served
as a consultant to Hunters Glen/Ford, Ltd., a private
investment partnership, since November 2002. He served as the
Co-Chairman of Triad Financial Holdings LLC, a financial
services company, from July 2007 to October 2009, until the sale
of the company to Santander Consumer USA Inc., and the interim
President and Chief Executive Officer from August 2005 to June
2007. Previously, Mr. Webb was the President, Chief
Operating Officer and director of Golden State
6
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 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
Hilltop Holdings, Inc. and AMB Property Corp., which file
reports pursuant to the Exchange Act. Mr. Webbs term
as a director of the Company will expire in 2012. He served as a
director of Plum Creek Timber Company, Inc. until 2007, and also
previously served on the board of directors of Triad Financial
SM LLC and Affordable Residential Communities LP, both of which
ceased to be reporting companies under the Exchange Act in 2009
and 2008, respectively. Mr. Webb brings to our Board
significant experience in the financial services industry.
Mr. Webbs expertise in finance, capital markets and
accounting provides valuable insight to our Audit Committee and
our Board.
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
New York Stock Exchange (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,
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 62nd 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 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
and attached hereto as Appendix 3. 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 2011.
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 2011.
7
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 under Stockholder Proposals.
While the Company does not have any formal policy on diversity,
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, in addition to consideration of diversity, age and
background in the context of the needs of the Board of
Directors. 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 2010, the services of third-party consultants to assist it in
identifying and evaluating nominees. We believe that the
composition of the current Board of Directors reflects diversity
in business and professional experience, skills and personal
background. It is anticipated that the existing members of the
Nominating and Corporate Governance Committee will continue
service in 2011.
During 2010, the Board of Directors held seven meetings, the
Audit Committee held four meetings, the Compensation Committee
held three meetings, and the Nominating and Corporate Governance
Committee held two meetings. During 2010, the Board of Directors
also acted six times 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 2010. The Company encourages the Board of Directors
to attend its annual stockholders meeting. Twelve directors
attended last years annual stockholders meeting.
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 without charge on the Companys website at
http://www.mandfworldwide.com
,
or upon request to the Secretary, M & F Worldwide
Corp., 35 East 62nd Street, New York, New York 10065:
|
|
|
|
|
the Companys Code of Business Conduct, which includes its
Code of Ethics for principal executive and senior financial
officers;
|
|
|
|
the charters for all standing committees of the Board of
Directors, namely its Audit, Compensation and Nominating and
Corporate Governance Committees;
|
|
|
|
the Companys Independence Standards; and
|
|
|
|
the Companys Corporate Governance Guidelines.
|
The
Boards Role in Risk Oversight
Our Board of Directors is responsible for the risk oversight
function of our Company and works together with our Audit,
Compensation and Nominating and Corporate Governance Committees
and our management to administer this process. The Board
receives and reviews periodic reports from the Board Committees
and members of senior management on areas of material risk to
the Company, including operational, financial, legal and
regulatory, and strategic and reputational risks. We believe our
risk oversight structure provides the appropriate balance of
management oversight and non-management oversight for our
Company.
8
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.
|
|
|
Name
|
|
Position
|
|
Barry F. Schwartz
|
|
President and Chief Executive Officer
|
Paul G. Savas
|
|
Executive Vice President and Chief Financial Officer
|
Stephen G. Taub
|
|
President and Chief Executive Officer of Mafco Worldwide
|
Charles T. Dawson
|
|
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
(48) 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. He also
previously served as a manager of REV Holdings LLC, which ceased
to be a reporting company under the Exchange Act in 2006.
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.
9
REPORT OF
THE AUDIT COMMITTEE
During fiscal year 2010, 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
2011.
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, 2010 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 2011.
THE AUDIT COMMITTEE
Paul M. Meister, Chairman
Philip E. Beekman
Martha L. Byorum
Carl B. Webb
10
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 2010, 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 2010, 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.
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.
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.
11
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, direct marketing
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 volatility in equity grants 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.
The Compensation Committee is also authorized to appoint
subcommittees and to delegate the execution of certain Company
actions to appropriate officers.
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. The pay mixes used
under employment agreements for Stephen G. Taub, President and
Chief Executive Officer of Mafco Worldwide, and Charles T.
Dawson, President and CEO of Harland Clarke Holdings, reflect
our views of how much responsibility each has for the business
division he leads. The mixes are also the product of an
arms length negotiation we conducted with each executive
when negotiating his current pay arrangement.
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 Mr. Taub based upon an
evaluation of the responsibilities of the position Mr. Taub
has held and his experience 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 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
12
improvements in relations with customers, suppliers and
employees. Mr. Taub received a base salary in 2010 of
$1,200,000, which reflects a cost of living increase and an
increase in recognition of his performance at Mafco Worldwide.
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.
The annual incentive compensation earned by Mr. Taub with
respect to 2010 was determined in accordance with the provisions
of his employment agreement. The bonus payments to Mr. Taub
may not exceed $2,000,000 with respect to any calendar year.
Mafco Worldwides EBITDA goal for 2010 was $35,700,000.
Mafco Worldwide achieved $33,030,000 of EBITDA for 2010, which
is 93% of Mafco Worldwides EBITDA 2010 goal. For 2010,
based on achievement of the pre-set EBITDA target, a bonus of
$1,080,000 was paid to Mr. Taub, on January 5, 2011,
which is 85.7% of Mr. Taubs target bonus of
$1,260,000. 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.
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 2010.
Harland
Clarke Holdings Compensation
Harland Clarke Holdings executive compensation program
includes the following elements:
|
|
|
|
|
|
|
|
|
|
|
|
Pay Element
|
|
|
What the Pay Element Rewards
|
|
|
Purpose of the Pay Element
|
Base Salary
|
|
|
|
|
Recognized leadership skills
|
|
|
|
|
|
Provides base level of monthly income not subject to performance
risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Experience and expertise in the position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demonstrated prior achievement of Harland Clarke Holdings and
personal goals
|
|
|
|
|
|
Makes overall pay package more competitive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Executive Bonus Plan
|
|
|
|
|
Executives contributions towards Harland Clarke
Holdings achievement of performance targets
|
|
|
|
|
|
Focuses executive on achievement of annual goal most important
to Harland Clarke Holdings and investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognizes executives direct responsibility for Harland
Clarke Holdings annual performance targets
|
|
|
|
|
|
Exposes executive to risk of not receiving pay or receiving
diminished pay if Harland Clarke Holdings underperforms
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
Pay Element
|
|
|
What the Pay Element Rewards
|
|
|
Purpose of the Pay Element
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gives executive direct motivation to help Harland Clarke
Holdings achieve annual performance targets with significant
upside for achieving exceptional results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Compensation Plan
|
|
|
|
|
Achievement of sustained growth
|
|
|
|
|
|
Keeps executive focused on long-term growth of Harland Clarke
Holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Achievement of cumulative performance targets over a three-year
period
|
|
|
|
|
|
Keeps executive personally invested in the implementation of
Harland Clarke Holdings long term growth plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Employment Contract
|
|
|
|
|
Continued Service with Harland Clarke Holdings
|
|
|
|
|
|
Keeps executive focused on job and performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) and Deferred Compensation Plan
|
|
|
|
|
Long-term service with Harland Clarke Holdings
|
|
|
|
|
|
Provides retention incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Makes overall pay package more competitive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helps executive prepare for retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Perquisites
|
|
|
|
|
Continued service with Harland Clarke Holdings
|
|
|
|
|
|
Makes overall pay package more competitive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments in-kind may foster added Harland Clarke Holdings
loyalty in a way added cash pay does not
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Benefits
|
|
|
|
|
Continued service in circumstances under which executives
job is at risk
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Pay.
Harland Clarke Holdings determines
base pay by evaluating Mr. Dawsons 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 him. Management of the
Company recommends a pay level to the Compensation Committee.
The Compensation Committee then decides the base pay level.
Mr. Dawson received a base salary in 2010 of $1,000,000.
We feel that a substantial portion of an executives core
pay (base and bonus) should be subject to risk to the extent
that the executive is partially responsible for below-target
financial performance of Harland Clarke Holdings. The analysis
of how much direct responsibility Mr. Dawson has for
Harland Clarke Holdings performance targets determines how
much of his core pay should be at risk.
14
Annual Executive Bonus Plan.
The amount of
bonus paid to Mr. Dawson is tied directly to the
performance of Harland Clarke Holdings and
Mr. Dawsons individual performance. 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 the performance of the principal
business segment for which he was primarily responsible during
2010. These Adjusted EBITDA for Compensation Purposes targets
vary slightly for each of our business segments, reflecting the
appropriate adjustments we made to financial performance. We
discuss adjusted EBITDA in more detail in
Performance Measures and Performance
Targets Adjusted EBITDA for Compensation Purposes
Targets below.
Mr. Dawsons bonus plan is based on achievement of the
annual Adjusted EBITDA for Compensation Purposes target between
90% and 145.1% for Harland Clarke Holdings. 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 2010 of $1,250,000, which was paid on
March 11, 2011.
Long-Term
Incentive Compensation
We believe in linking compensation to performance of the Company
and our subsidiaries as well as individual performance. We tie
long-term incentive compensation to our overall financial goals
and, where appropriate, to the goals of individual business
units. A named executive officers compensation varies with
our financial and operating performance so that they are
rewarded when performance meets or exceeds objectives and
receive lower compensation when performance objectives are not
met. We apply objective measures of performance in setting pay
levels. The Company has a strong history of achieving
performance at and above target levels, and the Compensation
Committee has determined that linking named executive
officers compensation to certain individual and collective
performance objectives can help our Company to achieve its
targets.
The Company maintained a three-year cash-based plan tied to
multiyear Company and business segment performance for the
performance period from 2008 to 2010, and the Compensation
Committee approved a new long-term incentive plan covering the
period from 2011 to 2013, which is submitted for shareholder
approval under Proposal 3 of this Proxy Statement for the
purpose of allowing us to grant performance-based compensation
which is deductible under Section 162(m) of the Internal
Revenue Code. Each of these long-term incentive plans are
described below, followed by additional detail on the
determinations of performance measures and targets established
pursuant to these plans.
The
2008-2010
M & F Worldwide Long-Term Incentive Compensation Plan
(2008-2010
LTIP)
The
2008-2010
LTIP is a three-year cash-based plan tied to multiyear Harland
Clarke Holdings and business segment performance. It became
effective on January 1, 2008 and covers fiscal years 2008
through 2010. All payouts to the executives will be made
subsequent to the end of the three-year performance cycle, which
occurred on December 31, 2010, but no later than
March 15, 2011. Such payments were made on March 11,
2011. Mr. Dawson participated in the
2008-2010
LTIP in 2010, 2009 and 2008. The actual payout amount to
Mr. Dawson for the
2008-2010
LTIP at the end of the three-year cycle was $4,057,693.
With respect to plan design for the
2008-2010
LTIP, we determined that the best approach was to
(a) establish Adjusted EBITDA for Compensation Purposes
targets within 90 days of the beginning of each year the
plan is in effect which demonstrate benefit to shareholders of
M & F Worldwide, and (b) compensate executives
only if those Adjusted EBITDA for Compensation Purposes targets
are achieved on a cumulative basis over a three-year period,
thus providing a clear indication of sustained performance. If
an executive is terminated without cause during the course of
the plan term, he would receive a pro rata payment in respect of
the time elapsed, only if Adjusted EBITDA for Compensation
Purposes targets are achieved, and the payments, if any, would
be paid out at the end of the three-year cycle, not at the time
of termination.
15
Under the
2008-2010
LTIP, no payouts would have been made if actual three-year
performance was below 90% of the cumulative Adjusted EBITDA for
Compensation Purposes targets. If performance was between 90%
and 100% of cumulative Adjusted EBITDA for Compensation Purposes
target, the
2008-2010
LTIP would pay out a ratable amount between 50% and 100% of
target. The
2008-2010
LTIP participants would also share in 2.3% and 2.7%,
respectively, of the cumulative three-year excess over target,
up to a maximum of 120% of cumulative performance over target
for business segment performance and consolidated performance.
Adjusted EBITDA for Compensation Purposes targets under the
2008-2010
LTIP are bifurcated, granting awards with respect to each
executive based 50% on performance of the executives
individual business segment and 50% on consolidated performance.
The Compensation Committee determined that the bifurcated
structure was appropriate because there are three separate and
distinct business segments, 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 2011
M & F Worldwide Long-Term Incentive Compensation
Plan
The Compensation Committee has approved a new long-term
incentive plan covering the period from 2011 to 2013 (2011
LTIP) and the 2011 LTIP is submitted for shareholder
approval under Proposal 3 of this Proxy Statement for the
purpose of allowing us to grant performance-based compensation
which is deductible under Section 162(m) of the Code. The
2011 LTIP is a three-year cash-based plan tied to Harland Clarke
Holdings and business segment performance. The 2011 LTIP became
effective January 1, 2011 and covers fiscal years 2011
through 2013.
Subject to the approval of the 2011 LTIP by our shareholders,
Harland Clarke Holdings has granted awards to certain executives
of Harland Clarke Holdings and its subsidiaries, including
Mr. Dawson. All payouts to the executives participating
will be made, assuming the cumulative performance thresholds are
met, at the end of the three-year cycle.
The awards will provide for a cash payment at the end of the
three-year period ending December 31, 2013, and
Mr. Dawson will be entitled to a payment of $4,050,000
assuming targets are achieved at the end of such three-year
period. The performance measures used under the 2011 LTIP
include Adjusted EBITDA and a non-check revenue
performance measure (as discussed in more detail in
Performance Measures and Performance
Targets below). Each award granted under the 2011 LTIP
will be based 75% on cumulative Adjusted EBITDA for Compensation
Purposes targets and 25% on cumulative non-check revenue
targets. If less than 90% of the target is achieved, then no
payment will be made to Mr. Dawson or any other executive.
If between 90% and 100% of the targets are achieved, then
Mr. Dawsons and other executives awards will be
adjusted based on linear interpolation between 50% up to 100%,
and if between 100% and 110% of the targets are achieved, then
the amount of Mr. Dawsons and other executives
awards will be adjusted based on linear interpolation between
100% up to a maximum of 150%.
The 2011 LTIP contains clawback provisions, which
provide that if a participant is determined by the Compensation
Committee to have violated a noncompete, nonsolicit,
nondisclosure covenant or other agreement or engaged in activity
that was in conflict with or was adverse to the interests of the
Company or its affiliates (including fraud) or conduct
contributing to any financial restatement or financial
irregularities, then the Compensation Committee can cancel the
participants award. In addition, the Compensation
Committee may require the participant to repay any profits or
benefit realized by the participant. To the extent required by
applicable law (including without limitation Section 304 of
the Sarbanes-Oxley Act of 2002 and Section 954 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act), the
awards will be subject to clawback, forfeiture or similar
requirement required by applicable law.
Performance
Measures and Performance Targets
Adjusted
EBITDA for Compensation Purposes Targets
The Compensation Committee believes that an Adjusted EBITDA for
Compensation Purposes target is an appropriate performance
measure on which to base long-term incentive compensation
payments.
16
Adjusted EBITDA for Compensation Purposes is a non-GAAP measure
representing EBITDA (net income before interest
expense-net,
income taxes, depreciation and amortization) adjusted to reflect
the impact of those 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 adjustments relevant to each
segment. The Adjusted EBITDA for Compensation Purposes targets
are similar to measures of covenant compliance under the Harland
Clarke Holdings debt agreements, and securities analysts
often use similar measures to evaluate the performance of
Harland Clarke Holdings.
The Companys long-term incentive compensation plans have
Adjusted EBITDA for Compensation Purposes targets based on both
consolidated and segment performance, whereas the annual bonus
is based solely on the relevant segment Adjusted EBITDA for
Compensation Purposes targets. The 2010, 2009 and 2008
consolidated Adjusted EBITDA for Compensation Purposes targets
were $488.0 million, $498.9 million and
$470.7 million, respectively. The 2010, 2009 and 2008
segment Adjusted EBITDA for Compensation Purposes performance
targets were as follows: Harland Clarke $355.0 million,
$358.1 million and $352.0 million, Harland Financial
Solutions $80.0 million, $76.5 million and
$68.7 million , and Scantron $65.0 million,
$76.7 million and $62.8 million. The Company exceeded
its consolidated targets in 2010, 2009 and 2008. The segment
targets were met or exceeded in 2008 and 2010, and exceeded in
all segments except for Scantron in 2009.
Non-Check
Revenue Performance Measures Commencing in 2011
Commencing in 2011, the Compensation Committee implemented a new
performance measure for a portion of its long-term compensation
programs. Non-Check Revenue is the performance
measure that encourages the development of additional revenue
sources other than checks and check-related products, which are
currently the Companys largest source of revenue but,
which have been in decline in recent years and are expected to
continue to decline. This measure is intended to encourage
diversification of the Companys sources of revenue.
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 working at Mafco Worldwide and Harland
Clarke Holdings also receive benefits available to other senior
employees, 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 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 (as defined on page 27, under Potential
Payments upon Termination or Change in Control) are in the
form of severance and are set forth in an individuals
employment agreement.
17
Severance payments are generally provided as part of the
compensation package, in line with market practices. The Company
believes severance payment provisions encourage the executive
officers of its principal operating subsidiaries to continue to
perform in the best interests of the Company and make business
decisions that put the Companys interests before their own.
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 income
protection 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.
The Mafco Worldwide Corporation Replacement Defined Benefit
Pension Plan and the Mafco Worldwide Corporation Benefit
Restoration Plan are two retirement plans that Mafco Worldwide
has utilized to retain certain senior and experienced mid- to
late-career executive talent (such as Mr. Taub) necessary
to achieve growth and provide Mr. Taub with a retirement
benefit targeted to a competitive income replacement ratio at
normal retirement age.
Tax treatments of annual bonuses and the
2008-2010
LTIP affect the timing of any payout to its operating subsidiary
executives. Payments may be delayed if required 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
2008-2010
LTIP, the 2011 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 senior
employees 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.
Compensation
Consultants
In 2010, the Compensation Committee engaged Compensation
Advisory Partners, LLC to advise on the structure of the 2011
LTIP as well as other changes to the compensation of senior
executives of Harland Clarke Holdings (including
Mr. Dawsons new employment agreement and compensation
arrangement).
18
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, 2010, including by
incorporation by reference to this Proxy Statement.
THE COMPENSATION COMMITTEE
Theo Folz, Chairman
Philip E. Beekman
Bruce Slovin
19
SUMMARY
COMPENSATION TABLE FOR 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change In
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Compensation
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
(1)
|
|
($)
(2)
|
|
($)
(3)
|
|
($)
(4)
|
|
($)
|
|
Barry F. Schwartz
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President & Chief
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Savas
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVP, Chief
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
|
2010
|
|
|
|
1,200,000
|
|
|
|
1,080,000
|
|
|
|
140,714
|
|
|
|
26,050
|
|
|
|
2,446,764
|
|
President & CEO of
|
|
|
2009
|
|
|
|
1,175,000
|
|
|
|
881,250
|
|
|
|
128,812
|
|
|
|
27,942
|
|
|
|
2,213,004
|
|
Mafco Worldwide
|
|
|
2008
|
|
|
|
1,100,000
|
|
|
|
1,210,000
|
|
|
|
58,652
|
|
|
|
17,795
|
|
|
|
2,386,447
|
|
Charles T. Dawson
|
|
|
2010
|
|
|
|
1,000,000
|
|
|
|
5,307,693
|
|
|
|
909
|
|
|
|
202,196
|
|
|
|
6,510,798
|
|
President & CEO of
|
|
|
2009
|
|
|
|
1,038,462
|
|
|
|
1,250,000
|
|
|
|
|
|
|
|
166,914
|
|
|
|
2,455,376
|
|
Harland Clarke Holdings
|
|
|
2008
|
|
|
|
993,654
|
|
|
|
1,250,000
|
|
|
|
|
|
|
|
248,682
|
|
|
|
2,492,336
|
|
|
|
|
(1)
|
|
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 Company paid a total amount of
$10.0 million to MacAndrews & Forbes in each of
2010 and 2009 pursuant to the management services agreement.
|
|
(2)
|
|
The compensation paid to Mr. Dawson listed in this column
for 2010 consists of $1,250,000 paid with respect to 2010 under
the annual Harland Clarke Annual Executive Bonus Plan and
$4,057,693 earned by Mr. Dawson in connection with the
payout of the M & F Worldwide Corp.
2008-2010
Long-Term Incentive Compensation Plan.
|
|
(3)
|
|
For 2010 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, 2009
to December 31, 2010. 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 Note 11
of the consolidated financial statements included in the
Companys Annual Report on
Form 10-K
for the years ended December 31, 2009 and December 31,
2010. See Pension Benefits for 2010 for additional
information.
|
|
|
|
For 2009 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, 2008
to December 31, 2009. 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 Note 11
of the consolidated financial statements included in the
Companys Annual Report on
Form 10-K
for the years ended December 31, 2008 and December 31,
2009.
|
|
|
|
For Mr. Dawson, the Change in Pension Value represents the
above-market interest credited under the Harland Clarke Holdings
Benefits Equalization Plan (the BEP). We determined
the above-market interest credited by determining the difference
between the interest on BEP accounts calculated using the actual
rate used in the plan, and 120% of the applicable federal
long-term rate, with quarterly compounding for January of the
applicable year, as prescribed under section 1274(d) of the
Code. Interest rates credited to the BEP accounts were 5.0% for
2010.
|
|
(4)
|
|
The compensation paid to Mr. Taub listed in this column for
2010 includes: (i) a tax
gross-up
payment of $5,243 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 $1,375
for a supplemental health indemnity program which reimburses out
of pocket costs for Mr. Taub; (iv) the cost to the
Company of $9,630 for
|
20
|
|
|
|
|
health insurance premiums and (v) a nondiscretionary
employer contribution of $4,900 for Mr. Taub by Mafco
Worldwide to its 401(k) plan.
|
|
|
|
The compensation paid to Mr. Dawson listed in this column
for 2010 includes: (i) the aggregate incremental cost to
the Company of the leased vehicle and employer-provided gas of
$35,617; (ii) country club fees of $5,765; (iii) term
life insurance premiums of $2,278; (iv) employer
contributions to the Harland Clarke Holdings Financial Freedom
(401(k)) Plan in the amount of $9,800 and to the BEP, in the
amount of $80,200; (v) $36,136 for the tax
gross-up
on
the personal use of a company vehicle, a gross up for spousal
travel and a
gross-up
for
home security; (vi) $24,430 in costs related to spousal
travel and (vii) $7,970 for home security.
|
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
2008-2010
LTIP, Company policy, and application of past practice, each as
applicable to the respective officer.
GRANTS OF
PLAN-BASED AWARDS FOR 2010
The following table presents information with respect to each
award in 2010 to a named executive officer of plan-based
compensation, including annual cash awards under the Executive
Bonus Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payments
|
|
|
|
|
Under Non-Equity Incentive Plan Awards
|
Name
|
|
Award
Type
(1)(2)
|
|
Threshold
|
|
Target
|
|
Maximum
(4)
|
|
Barry F. Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Savas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
Annual Bonus
|
|
$
|
705,000
|
(4)
|
|
$
|
1,233,750
|
|
|
$
|
2,000,000
|
|
Charles T.
Dawson
(3)
|
|
Annual Bonus
|
|
$
|
900,000
|
|
|
$
|
1,250,000
|
|
|
$
|
1,750,000
|
|
|
|
Segment 2008-2010 LTIP
|
|
|
787,500
|
|
|
$
|
1,575,000
|
|
|
$
|
3,289,811
|
|
|
|
Consolidated 2008-2010 LTIP
|
|
|
1,087,500
|
|
|
$
|
2,175,000
|
|
|
$
|
4,200,133
|
|
|
|
|
(1)
|
|
The amounts shown in the rows corresponding to the heading
Annual Bonus listed in this column represent:
|
|
|
|
|
|
For Mr. Dawson, 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.
Pursuant to his employment agreement, the estimated possible
Annual Bonus payouts are based on achievement of 90% to 145.1%
of the Harland Clarke business Adjusted EBITDA for
Compensation Purposes targets for 2010. Mr. Dawson was
entitled to receive as an annual bonus of 125% of his base
salary if the target was attained, increasing ratably up to 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 2010 was paid on March 11, 2011.
|
|
|
|
For Mr. Taub, the minimum threshold payment amount is
determined in accordance with Mr. Taubs employment
agreement, which entitles him to a total of salary and bonus for
2010 of no less than his total salary and bonus for 2009 only if
the Companys 2010 EBITDA equals or exceeds the
Companys EBITDA for 2009. Pursuant to his employment
agreement, Mr. Taub was entitled to receive a cash
performance award for 2010 performance. The estimated possible
payouts are based on achievement of 80% to 115% of Mafco
Worldwides EBITDA goals for 2010, subject to a maximum
limit of $2,000,000. The minimum threshold payout amount is
determined based on 2010 EBITDA achievement and is equal to
$705,000. Mr. Taubs performance bonus of $1,080,000,
earned in respect of 2010, was paid to him in early 2011.
|
|
|
|
(2)
|
|
The amounts shown in the rows corresponding to the heading
2008-2010
LTIP listed in this column represent the threshold and target
amount which might have been payable in 2011 to Mr. Dawson
at the
|
21
|
|
|
|
|
end of the three-year performance period
(2008-2010)
pursuant to the
2008-2010
LTIP, as described in more detail above under Harland
Clarke Holdings Compensation The M & F
Worldwide Long-Term Incentive Compensation Plan
(2008-2010
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. The actual amount paid to Mr. Dawson
under the
2008-201
LTIP was $4,057,693 on March 11, 2011.
|
|
(3)
|
|
Mr. Dawson received an additional grant under the
2008-2010
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.
|
|
(4)
|
|
The
2008-2010
LTIP, which was designed to meet the performance-based
compensation exemption of Section 162(m) of the Code, was
approved by the shareholders of the Company in 2008 for 162(m)
purposes for an aggregate maximum of $16.5 million. Under
the terms of the
2008-2010
LTIP, the maximum payout to any participant is $10 million
over the three-year performance period. The actual payout to any
participant was substantially lower than the maximum potential
payout.
|
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
Prior
Employment Agreement
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. The term of this employment agreement, whereby
Mr. Dawson was employed as President and Chief Executive
Officer of Harland Clarke Holdings and Chief Executive Officer
of the Harland Clarke Business (as defined in the employment
agreement), was to continue until December 31, 2013,
pursuant to an extension amendment dated February 2, 2010.
The current term is 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 was $1,000,000, and he
was entitled to receive annual bonuses based on the attainment
of a certain percentage of the Harland Clarke Business Adjusted
EBITDA for Compensation Purposes target. Mr. Dawsons
annual bonus was established at 125% of his base salary if 100%
of target was attained and increased ratably up to a maximum of
175% of his base salary if 145.1% of the target was attained.
Pursuant to his employment agreement, Mr. Dawson
participated in the
2008-2010
LTIP, for which he was eligible to receive a portion of the
2008-2010
LTIP bonus pool attributed to
22
the Harland Clarke business and a portion of the
2008-2010
LTIP bonus pool attributed to Harland Clarke Holdings. In
September 2007, Mr. Dawson became President and Chief
Executive Officer of Harland Clarke Holdings. As a result of his
increased responsibilities, he was granted an additional portion
of the
2008-2010
LTIP bonus pool that was based solely on consolidated
performance. Mr. Dawson also received other standard
officer benefits.
Amended
and Restated Employment Agreement
On January 1, 2011, M & F Worldwide and Harland
Clarke Holdings entered into an amended and restated employment
agreement with Mr. Dawson which superseded, effective
January 1, 2011, the previous employment agreement dated
February 13, 2008. Pursuant to this agreement,
Mr. Dawson will continue to serve as the President and
Chief Executive Officer of Harland Clarke Holdings and the Chief
Executive Officer of the Harland Clarke Business (as defined in
the employment agreement) until December 31, 2013, subject
to earlier termination as described therein. Under his
employment agreement, Mr. Dawsons annual base salary
is $1,050,000. He is entitled to receive an annual bonus based
on the attainment of a certain percentage of Adjusted EBITDA for
Compensation Purposes of Harland Clarke Holdings. His target
annual bonus is 125% of base salary and increases ratably up to
a maximum of 175% of his base salary if 145.1% of the targets
are attained. Mr. Dawson will also participate in the
Companys 2011 LTIP. Mr. Dawson will continue to
receive other standard officer benefits.
PENSION
BENEFITS FOR 2010
The following table shows, as of December 31, 2010 (the
pension plan measurement date used for financial statement
reporting purposes with respect to the audited financial
statements included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 filed with the
SEC on March 4, 2011), the number of years of credited
service, present value of accumulated benefit and payments
during the last fiscal year with respect to Stephen G. Taub
under the Mafco Replacement Pension Plan and the Mafco
Restoration Plan. The present values of accumulated benefits are
calculated using the methodology required for financial
statement reporting purposes, applied at the earliest unreduced
retirement age. The section below provides more information
about the terms of the plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present Value of
|
|
|
|
|
Years
|
|
Accumulated
|
Name
|
|
Plan Name
|
|
Credited Service
|
|
Benefit
($)
(1)
|
|
Barry F. Schwartz
|
|
|
|
|
|
|
|
|
|
|
Paul G. Savas
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
Mafco Worldwide
Corporation Replacement Defined Benefit
Pension Plan
|
|
|
35
|
|
|
$
|
121,717
|
|
|
|
Mafco Worldwide
Corporation Benefit
Restoration Plan
|
|
|
35
|
|
|
$
|
1,112,603
|
|
Charles T. Dawson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
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, 2010 filed with the SEC on
March 4, 2011. The relevant assumptions are:
|
|
|
|
|
|
a 5.50% discount rate for the Mafco Worldwide Corporation
Replacement Defined Benefit Pension Plan (Mafco
Replacement Pension Plan) and a 5.25% discount rate for
the Mafco Worldwide Corporation Benefit Restoration Plan
(Mafco Restoration Plan); and
|
|
|
|
post-retirement mortality rates according to the RP-2000
Combined Healthy Participant Table, with projected mortality
improvements to 2011 with Scale AA.
|
23
The amounts in the table above are estimates of the increase in
the actuarial present value of Mr. Taubs age-65
accrued benefit under each plan for 2010. 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 31% less than his full retirement benefit. The
section below provides more information about early retirement
benefits.
Mafco Worldwide provides the following retirement program to
eligible salaried employees:
|
|
|
|
|
The 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.
|
|
|
|
The 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.
|
|
|
|
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 an
amount equal to 2% of the participants eligible
compensation. Compensation is limited by the statutory limit
($245,000 in 2010). 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 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:
|
|
|
|
|
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);
|
|
|
|
subtracts the actuarial equivalent benefit of the SCOPE Plan 2%
employer contribution account balance; and
|
|
|
|
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 $245,000 in 2010. 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.
24
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 benefits accrued
in excess of the Codes Section 415 benefit limit of
$195,000 in 2010. All other provisions follow the Mafco
Replacement Pension Plan. The plan is not funded.
NONQUALIFIED
DEFERRED COMPENSATION TABLE FOR 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
|
Contributions
|
|
Earnings
|
|
Balance at
|
|
|
in Last FY
|
|
in Last FY
|
|
Last FYE
|
Name
|
|
($)
(1)
|
|
($)
|
|
($)
(2)
|
|
Barry F. Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Savas
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles T. Dawson
|
|
|
80,200
|
|
|
|
30,285
|
|
|
|
640,279
|
|
|
|
|
(1)
|
|
Harland Clarke Holdings contributions to the Benefits
Equalization Plan are reported in the Summary Compensation Table
for 2010 in the All Other Compensation column.
|
|
(2)
|
|
Reflects the total balance of the executives account as of
December 31, 2010.
|
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 tax-qualified 401(k) plan 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 2010, the rate was
5.0%. This methodology of crediting 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, assuming such an
event took place on December 31, 2010.
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;
|
25
|
|
|
|
|
willful misconduct in connection with the performance of any
material portion of duties, breach of any material provision of
the employment agreement; or
|
|
|
|
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 Code, 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;
|
26
|
|
|
|
|
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 termination with the cost of the regular
premium for such benefits shared in the same relative proportion
by the Company and Mr. Dawson as was effective on the date
of termination;
|
|
|
|
any earned but unpaid annual bonus for the year prior to the
year in which termination occurred;
|
|
|
|
a pro rata amount payable, if any, under the 2011 LTIP in
accordance with its terms; in each case, paid at the time and in
the manner the bonus or long-term incentive plan amount, as
applicable, is paid to other 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 in which Harland Clarke Holdings
fails to cure within 30 days of receiving notice from the
executive of such an event.
|
In the case of death or disability, Mr. Dawson would be
entitled to receive: (i) the pro rata annual bonus for the
year in which death or disability occurred, if it would have
otherwise been payable but for the death or disability;
(ii) any earned but unpaid annual bonus for the year prior
to the year in which death or disability occurred; and
(iii) a pro rata amount payable, if any, under the 2011
LTIP in accordance with its terms; in each case, paid at the
time and in the manner the bonus or long-term incentive plan
amount, as applicable, is paid to other executives.
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.
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. If Mr. Dawsons
employment term is not renewed and his employment is terminated
after the end of the term, other than for cause or disability,
he will be subject to a minimum of a one-year non-competition
covenant and a one-year non-solicitation covenant.
27
POTENTIAL
PAYMENTS ON TERMINATION OR CHANGE IN CONTROL FOR 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
6,000,000
|
|
|
|
240,385
|
|
|
|
187,431
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
1,112,603
|
(7)
|
|
|
13,540,419
|
|
President & CEO of Mafco Worldwide
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles T. Dawson
|
|
|
2,000,000
|
|
|
|
11,077
|
|
|
|
9,713
|
|
|
|
1,250,000
|
|
|
|
30,000
|
|
|
|
640,270
|
|
|
|
3,941,069
|
|
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 two years.
|
|
(2)
|
|
As of December 31, 2010, in the event his employment
terminates, Mr. Taub would be entitled to receive $240,385,
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 2010
based on his enrollment in Harland Clarke Holdings dental,
medical and vision plans as of December 31, 2010.
|
|
(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. To the extent actually
earned but not yet paid at the time of termination,
Mr. Dawson would also be entitled to a
2008-2010
LTIP payment in the amount of $4,057,693, representing actual
amounts earned during the three year cycle of
2008-2010.
|
|
(5)
|
|
Standard outplacement assistance for Mr. Dawson of up to
$30,000 would be paid to a mutually agreed provider of
outplacement services for a
12-month
outplacement program.
|
28
|
|
|
(6)
|
|
Upon termination, retirement, death or disability,
Mr. Dawsons total balance in his BEP would be paid in
a single lump sum on the first day of the seventh month
following the occurrence of such an event. These amounts reflect
Mr. Dawsons account balance as of December 31,
2010.
|
|
(7)
|
|
As disclosed above in the Pension Benefits for 2010 table, on
the earlier of a change in control of Mafco Worldwide and
May 25, 2016, Mafco Worldwide will purchase for
Mr. Taub a single premium annuity providing to
Mr. Taub the actuarial equivalent of the benefit under the
Mafco Restoration Plan (as described above), as in effect on
August 1, 2001 or on the annuitization date, whichever is
greater. The present value of the accumulated benefit disclosed
for Mr. Taub on the Pension Benefits Table is the value of
the benefit Mr. Taub would receive in such circumstance.
|
Compensation
Risk Assessment
We have determined that any risks arising from our compensation
policies and practices are not reasonably likely to have a
material adverse effect on us.
DIRECTOR
COMPENSATION FOR 2010
The following Director Compensation table shows all compensation
paid by the Company to its directors in respect of 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
|
Stock
|
|
|
|
|
Name
(1)
|
|
Cash
($)
(2)
|
|
|
Awards
($)
(3)
|
|
|
Total ($)
|
|
|
Ronald O. Perelman
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Taub
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles T. Dawson
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry F. Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip E. Beekman
|
|
|
106,500
|
|
|
|
50,000
|
|
|
|
156,500
|
|
William Bevins
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha L. Byorum
|
|
|
100,500
|
|
|
|
50,000
|
|
|
|
150,500
|
|
Viet D. Dinh
|
|
|
|
|
|
|
137,000
|
|
|
|
137,000
|
|
Theo W. Folz
|
|
|
103,000
|
|
|
|
50,000
|
|
|
|
153,000
|
|
John M. Keane
|
|
|
|
|
|
|
131,000
|
|
|
|
131,000
|
|
Paul M. Meister
|
|
|
|
|
|
|
154,000
|
|
|
|
154,000
|
|
Bruce Slovin
|
|
|
101,500
|
|
|
|
50,000
|
|
|
|
151,500
|
|
Carl B. Webb
|
|
|
100,500
|
|
|
|
50,000
|
|
|
|
150,500
|
|
|
|
|
(1)
|
|
Messrs. Perelman, Bevins, Dawson, Schwartz and Taub
received no compensation for their service as directors for 2010.
|
|
(2)
|
|
In 2010, 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. The Chairman of the Audit Committee was paid an
annual retainer of $15,000, in addition to the annual retainer
fee for Board membership.
|
|
(3)
|
|
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
|
29
|
|
|
|
|
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 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 the grant date. Deferred
directors compensation is recorded as a component of
selling, general and administrative expenses in the
Companys consolidated statement of operations.
|
|
|
|
In 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 to be
granted on the date of each Annual Meeting to each of the
Companys nonemployee directors pursuant to the Director
Plan.
|
|
|
|
The amounts reflect the total grant date fair value of stock
units recognized for financial statement reporting purposes for
the fiscal year ended December 31, 2010, in accordance with
FASB ASC Topic 718 (disregarding any forfeiture assumptions).
Such amounts were determined under Topic 718 by multiplying the
closing price of M & F Worldwide common stock on the
date of grant by the number of units granted on such date.
|
|
|
|
The following
sub-table
details the grant date fair value, computed in accordance with
FASB ASC Topic 718, of each stock unit granted in 2010. There
were no unvested stock unit awards outstanding as of
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Award
|
|
|
|
First Quarter Grant
|
|
|
|
Second Quarter Grant
|
|
|
|
Third Quarter Grant
|
|
|
|
Fourth Quarter Grant
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
Price
|
|
|
|
Units
|
|
|
|
Total
|
|
|
|
Price
|
|
|
|
Units
|
|
|
|
Total
|
|
|
|
Price
|
|
|
|
Units
|
|
|
|
Total
|
|
|
|
Price
|
|
|
|
Units
|
|
|
|
Total
|
|
|
|
Price
|
|
|
|
Units
|
|
|
|
Total
|
|
Philip E. Beekman
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha L. Byorum
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Viet D. Dinh
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
$
|
30.60
|
|
|
|
|
711
|
|
|
|
$
|
21,750
|
|
|
|
$
|
27.10
|
|
|
|
|
747
|
|
|
|
$
|
20,250
|
|
|
|
$
|
24.35
|
|
|
|
|
893
|
|
|
|
$
|
21,750
|
|
|
|
$
|
23.10
|
|
|
|
|
1,006
|
|
|
|
$
|
23,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theo W. Folz
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Keane
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
$
|
30.60
|
|
|
|
|
711
|
|
|
|
$
|
21,750
|
|
|
|
$
|
27.10
|
|
|
|
|
747
|
|
|
|
$
|
20,250
|
|
|
|
$
|
24.35
|
|
|
|
|
832
|
|
|
|
$
|
20,250
|
|
|
|
$
|
23.10
|
|
|
|
|
812
|
|
|
|
$
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul M. Meister
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
$
|
30.60
|
|
|
|
|
850
|
|
|
|
$
|
26,000
|
|
|
|
$
|
27.10
|
|
|
|
|
959
|
|
|
|
$
|
26,000
|
|
|
|
$
|
24.35
|
|
|
|
|
1,068
|
|
|
|
$
|
26,000
|
|
|
|
$
|
23.10
|
|
|
|
|
1,126
|
|
|
|
$
|
26,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce Slovin
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carl B. Webb
|
|
|
$
|
31.90
|
|
|
|
|
1,567
|
|
|
|
$
|
50,000
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
PROPOSAL 2
APPROVAL OF INCENTIVE COMPENSATION ARRANGEMENTS FOR
HARLAND CLARKE HOLDINGS PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Our stockholders are being asked to approve the incentive
compensation arrangements for Mr. Dawson for the purpose of
allowing such compensation to be deductible under
Section 162(m) of the Code.
Mr. Dawsons employment agreement provides for his
employment as President and Chief Executive Officer of Harland
Clarke Holdings. In addition to Mr. Dawsons annual
base salary of $1,050,000, for 2011 he is entitled to receive an
annual bonus of between 90% and 175% of his annual base salary
based on the attainment of a certain percentage of adjusted
EBITDA targets. He will also participate in the 2011 LTIP
(described above and in Proposal 3) for which he will
be eligible to receive $4,050,000 at the completion of the
three-year period ending December 31, 2013, assuming 100%
of the targets are met, which may be increased to a maximum of
$6,075,000 assuming 120% or more of the targets are met.
Compensation earned pursuant to the annual bonus and 2011 LTIP
provisions of Mr. Dawsons employment agreement is
intended to qualify as performance-based
compensation under Section 162(m) of the Code and is
subject to approval by the stockholders of the Company. A copy
of Mr. Dawsons employment agreement is attached
hereto as Appendix 1.
Under applicable rules of the NYSE, such approval 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. For this proposal,
abstentions and 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, other than for
determination of whether a quorum exists).
New Plan
Benefits
The amount of annual bonus actually payable to Mr. Dawson
is subject to the degree by which the above-mentioned adjusted
EBITDA targets are attained and, therefore, is not determinable
at this time.
The Board of Directors recommends that stockholders vote FOR
approval of Mr. Dawsons incentive compensation
arrangements for the purpose of allowing such compensation to be
deductible under Section 162(m) of the Code.
31
PROPOSAL 3
APPROVAL OF THE M & F WORLDWIDE CORP.
2011 LONG-TERM INCENTIVE PLAN
Our stockholders are being asked to approve the 2011 LTIP for
the purpose of allowing compensation paid pursuant to the 2011
LTIP to be deductible under Section 162(m) of the Code.
The Board of Directors has determined that it is advisable and
in the best interests of the Company and the stockholders to
adopt the 2011 LTIP. The purpose of the plan is to foster and
promote the long-term financial success of the Company and
increase stockholder values by (a) strengthening the
Companys capability to develop and maintain a management
team; (b) motivating superior performance by means of
long-term performance related incentives linked to business
performance of the Company; (c) attracting and retaining
qualified personnel by providing incentive compensation
opportunities competitive with other similar companies; and
(d) enabling officers and other key employees to
participate in the long-term growth and financial success of the
Company. The 2011 LTIP is generally intended to provide bonuses
that qualify as performance-based compensation within the
meaning of Section 162(m) of Code. A copy of the 2011 LTIP
is attached hereto as Appendix 2. The following summary of
the material features of the 2011 LTIP is qualified in its
entirety by reference to the complete text of the 2011 LTIP.
Section 162(m) of the Code generally provides that the
Company may not take a federal income tax deduction for
compensation in excess of $1,000,000 paid to certain executive
officers in any one year. Certain performance-based compensation
is exempt from this limit. Section 162(m) does not preclude
the Company from taking a federal income tax deduction for
certain qualifying performance-based compensation paid to an
executive officer in a year even if the compensation exceeds
$1,000,000. The 2011 LTIP is structured to satisfy the
requirements for performance-based compensation within the
meaning of Section 162(m) and requires that certain terms
of the 2011 LTIP, including the business criteria and maximum
amounts payable, be approved by the Companys stockholders.
Administration.
The 2011 LTIP will be
administered by the Compensation Committee, which is selected by
our Board of Directors and is composed of two or more members of
our Board of Directors, each of whom is required to be an
outside director within the meaning of
Section 162(m) of the Code. The Compensation Committee will
have all the authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to the
2011 LTIP, including authority to determine eligibility for
participation, establish the award cycle, award term, payment
value, performance goals, performance measures and other
criteria. Except as otherwise specifically limited in the 2011
LTIP, the Compensation Committee will have full power and
authority to construe, interpret and administer the 2011 LTIP.
Eligibility.
The Compensation Committee will
retain the 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. The 2011 LTIP provides
that the Compensation Committee will select which employees of
the Company and its affiliates will be participants during any
given fiscal year the 2011 LTIP is in effect.
Performance Measures.
The Performance Measures
(as defined in the 2011 LTIP) under the 2011 LTIP will be
determined in the discretion of the Compensation Committee,
based upon the Compensation Committees determination of
the goals that will most effectively further the Companys
corporate objectives. Performance Measures may be based on
performance goals for the Company, any affiliate or any division
of the Company. The Performance Measures may be relative or
absolute and may include sales, cash flow, cash flow from
operations, operating profit or income, net income, operating
margin, net income margin, return on net assets, economic value
added, return on total assets, return on common equity, return
on total capital, total stockholder return, revenue, revenue
growth, EBITDA, EBITDA growth, cumulative EBITDA over a period
fixed by the Compensation Committee, basic earnings per share,
diluted earnings per share, funds from operations per share and
per share growth, cash available for distribution, cash
available for distribution per share and per share growth, share
price performance on an absolute basis and relative to an index
of earnings per share or improvements in the Companys (or
any affiliates, or any divisions) attainment of
expense levels, implementing or completion of critical projects,
or other criteria established by the Compensation Committee.
32
Payout Amounts.
The payout that a participant
is entitled to receive under the 2011 LTIP will be based on a
pre-determined percentage of the payment value, as set out in
the participants award agreement. The maximum payout that
a participant may receive under the 2011 LTIP will be
$15,000,000.
Clawback.
The 2011 LTIP contains
clawback provisions, which provide that, unless
specifically provided otherwise in an award agreement, if a
participant is determined by the Compensation Committee to have
violated a noncompete, nonsolicit, nondisclosure or other
agreement or otherwise have engaged in activity that is in
conflict with or adverse to the interest of the Company or any
affiliate, including fraud or conduct contributing to any
financial restatements or irregularities, the Committee may in
its sole discretion cancel such award, and the Compensation
Committee may require the participant to forfeit any gain or
profit or other benefit realized on the payout of such award and
to repay the gain or profit or other benefit to the Company. In
addition, unless specifically provided otherwise in an award
agreement, if a participant receives any amount in excess of
what he or she should have received under the terms of the award
for any reason (including without limitation by reason of a
financial restatement, mistake in calculations or other
administrative error), then the participant will be required to
repay any such excess amount to the Company. To the extent
required by applicable law (including without limitation
Section 304 of the Sarbanes-Oxley Act of 2002 and
Section 954 of the Dodd Frank Wall Street Reform and
Consumer Protection Act), awards shall be subject to clawback,
forfeiture or similar requirement.
Amendment or Termination of Plan.
The
Compensation Committee may amend, alter or terminate the 2011
LTIP at any time, provided that no amendment, alteration or
termination may be made which would impair the rights of the
participant without such participants consent, except as
required by applicable law or to permit the Company a deduction
under applicable tax law.
Application to Harland Clarke Holdings, Harland Clarke, HFS,
and Scantron.
Awards have been granted for the
three-year performance cycle under the 2011 LTIP to senior
executives of Harland Clarke Holdings, Harland Clarke, HFS and
Scantron. The three-year performance cycle under the 2011 LTIP
covers the period from January 1, 2011 until
December 31, 2013. The participating executives are
eligible to receive a fixed dollar amount pool and their
ultimate payout, if any, at the end of the third year is based
on performance over the three-year performance cycle.
New Plan
Benefits
Future amounts payable to eligible participants under the 2011
LTIP are based on satisfaction of certain performance goals in
each applicable performance period and, therefore, are not
determinable at this time.
Subject to shareholder approval of the 2011 LTIP,
Mr. Dawson was granted an award under the 2011 LTIP
effective as of January 1, 2011. The award has a target
payout of $4,050,000, which is payable based on the achievement
over a three-year period of the performance goals established by
the Compensation Committee. 75% of such award will be based on
achievement of consolidated EBITDA, and 25% of the award will be
based on achievement of Non-Check Revenue (as defined in his
award agreement).
* * * *
Under applicable rules of the NYSE, approval of the 2011 LTIP
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. For this
proposal, abstentions and broker non-votes will not count as
votes cast, 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, other than
for determination of whether a quorum exists).
The Board of Directors recommends that stockholders vote FOR
the approval of the adoption of the 2011 LTIP for the purpose of
allowing compensation paid pursuant to the 2011 LTIP to be
deductible under Section 162 (m) of the Code.
33
PROPOSAL NO. 4
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The recently enacted Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the Dodd-Frank Act) enables
the Companys stockholders to vote to approve, on an
advisory or non-binding basis, the compensation of our named
executive officers as disclosed in this proxy statement in
accordance with SEC rules.
The Company has a
pay-for-performance
philosophy that forms the foundation of all decisions regarding
compensation of the Companys named executive officers.
This compensation philosophy, and the program structure approved
by the Company and Compensation Committee, is central to the
Companys ability to attract, retain and motivate
individuals who can achieve superior financial results. Please
refer to Executive Compensation Compensation
Discussion and Analysis for an overview of the
compensation of the Companys named executive officers.
We are asking for stockholder approval of the compensation of
our named executive officers as disclosed in this proxy
statement in accordance with SEC rules, which disclosures
include the disclosures under Executive
Compensation Compensation Discussion and
Analysis, the compensation tables and the narrative
discussion following the compensation tables. This non-binding
advisory vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named
executive officers and the policies and practices described in
this proxy statement.
This vote is advisory and therefore not binding on the Company,
the Compensation Committee of the Board, or the Board. The Board
and the Compensation Committee value the opinions of the
Companys stockholders, and to the extent there is any
significant vote against the named executive officer
compensation as disclosed in this proxy statement, we will
consider those stockholders concerns, and the Compensation
Committee will evaluate whether any actions are necessary to
address those concerns.
The affirmative vote of a majority of the shares of the
Companys common stock present in person or represented by
proxy and entitled to be voted on the proposal at the annual
meeting is required for advisory approval of this proposal.
The Board of Directors recommends that stockholders vote FOR
the approval of the following resolution:
RESOLVED, that the compensation of M&F
Worldwides Named Executive Officers, as disclosed pursuant
to Item 402 of
Regulation S-K,
including the Compensation Discussion and Analysis, compensation
tables and narrative discussion on pages 11 to 29 of this
Proxy Statement is hereby APPROVED on an advisory
basis.
34
PROPOSAL NO. 5
ADVISORY VOTE ON THE FREQUENCY OF HOLDING FUTURE
ADVISORY VOTES ON EXECUTIVE COMPENSATION
The Dodd-Frank Act also enables the Companys stockholders
to vote, on an advisory or non-binding basis, on how frequently
they would like to cast an advisory vote on the compensation of
the Companys named executive officers. By voting on this
proposal, stockholders may indicate whether they would prefer an
advisory vote on named executive officer compensation once every
one, two, or three years.
After careful consideration of the frequency alternatives, the
Board believes that conducting advisory vote on executive
compensation once every three years (a triennial vote) is
appropriate for the Company and its stockholders at this time.
The affirmative vote of a majority of the shares of the
Companys common stock present in person or represented by
proxy and entitled to be voted on the proposal at the annual
meeting is required for advisory approval of this proposal. The
Board will carefully consider the outcome of the vote when
making future decisions regarding the frequency of advisory
votes on executive compensation.
The Board believes that a triennial vote on executive
compensation is appropriate for a number of reasons. Most
significantly, our compensation programs, such as our long-term
incentive plans, are designed to reward sustained performance
over a multi-year period, and a triennial vote matches the
vesting periods under our long-term incentive plans. In
addition, we believe that a triennial advisory vote on executive
compensation gives the Compensation Committee and the Board the
right amount of time to evaluate the results of the most recent
advisory vote on executive compensation, to discuss the
implications of that vote with shareholders to the extent
needed, to develop and implement any adjustments to our
executive compensation programs that may be appropriate in light
of a past advisory vote on executive compensation, and for
shareholders to see and evaluate the Compensation
Committees actions in context. In this regard, because the
advisory vote on executive compensation occurs after we have
already implemented our executive compensation programs for the
current year, and because the different elements of compensation
are designed to operate over multi-year periods, we expect that
in many cases it may not be appropriate or feasible to fully
address and respond to any one years advisory vote on
executive compensation by the time of the following years
annual meeting of shareholders.
The Board of Directors recommends that stockholders vote FOR
the approval of an advisory vote on the compensation of the
Companys named executive officers once every THREE
years.
35
PROPOSAL 6
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, 2011.
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 2010 and 2009 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 2010 and 2009 were $3,096,000 and
$3,235,000, 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 2010 and 2009 were
$1,317,700 and $350,100, respectively. Audit-related services
include due diligence services, accounting consultations, 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 2010 and 2009 were $106,700 and $107,094,
respectively. Tax services include property tax compliance
services and tax compliance planning and advice.
All Other Fees.
The aggregate fees and
expenses that Ernst & Young LLP billed to the Company
for all other services rendered in 2010 and 2009 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 2011.
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, 2011.
36
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, 2011, 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.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
of Beneficial
|
|
Percent of
|
Name
|
|
Ownership
|
|
Class
|
|
MFW Holdings One LLC
35 East 62 St.,
New York, NY 10065
|
|
|
7,248,000
|
(a)
|
|
|
37.5
|
%
|
MFW Holdings Two LLC
35 East 62 St.,
New York, NY 10065
|
|
|
1,012,666
|
(a)
|
|
|
5.2
|
%
|
Dimensional Fund Advisors LP
1299 Ocean Avenue,
Santa Monica, CA 90401
|
|
|
1,563,781
|
(b)
|
|
|
8.1
|
%
|
Philip E. Beekman
|
|
|
18,897
|
(c)
|
|
|
*
|
|
William C. Bevins
|
|
|
6,430
|
(d)
|
|
|
*
|
|
Martha L. Byorum
|
|
|
7,997
|
(e)
|
|
|
*
|
|
Charles T. Dawson
|
|
|
0
|
|
|
|
*
|
|
Viet Dinh
|
|
|
19,956
|
(f)
|
|
|
*
|
|
Theo W. Folz
|
|
|
17,997
|
(g)
|
|
|
*
|
|
John M. Keane
|
|
|
8,790
|
(h)
|
|
|
*
|
|
Paul M. Meister
|
|
|
107,387
|
(i)
|
|
|
*
|
|
Ronald O. Perelman
|
|
|
8,394,000
|
(j)
|
|
|
43.4
|
%
|
Paul G. Savas
|
|
|
6,000
|
|
|
|
*
|
|
Barry F. Schwartz
|
|
|
10,000
|
|
|
|
*
|
|
Bruce Slovin
|
|
|
129,740
|
(k)
|
|
|
*
|
|
Stephen G. Taub
|
|
|
0
|
|
|
|
*
|
|
Carl Webb
|
|
|
15,894
|
(l)
|
|
|
*
|
|
All directors and executive officers as a group (14 persons)
|
|
|
8,735,254
|
(m)
|
|
|
45.2
|
%
|
|
|
|
(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 8,260,666 shares of
Common Stock beneficially owned by Holdings One and Holdings Two
and the 133,334 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 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.
|
37
|
|
|
(b)
|
|
Beneficial ownership is based on a statement on
Schedule 13G/A filed by Dimensional Fund Advisors LP on
February 11, 2011.
|
|
(c)
|
|
Includes 7,997 shares that may be deemed to be beneficially
owned by Mr. Beekman as a result of his participation in
the Director Plan.
|
|
(d)
|
|
Represents 6,430 shares that may be deemed to be
beneficially owned by Mr. Bevins as a result of his
participation in the Director Plan.
|
|
(e)
|
|
Represents 7,997 shares that may be deemed to be
beneficially owned by Ms. Byorum as a result of her
participation in the Director Plan.
|
|
(f)
|
|
Represents 19,956 shares that may be deemed to be
beneficially owned by Mr. Dinh as a result of his
participation in the Director Plan.
|
|
(g)
|
|
Includes 7,997 shares that may be deemed to be beneficially
owned by Mr. Folz as a result of his participation in the
Director Plan.
|
|
(h)
|
|
Includes 8,790 shares that may be deemed to be beneficially
owned by General Keane as a result of his participation in the
Director Plan.
|
|
(i)
|
|
Includes 34,971 shares that may be deemed to be
beneficially owned by Mr. Meister as a result of his
participation in the Director Plan.
|
|
(j)
|
|
Of the shares set forth in the table, 25,000 are held in trust
for the benefit of a minor child and 26,000 shares are
owned directly by the wife of Mr. Slovin. Mr. Slovin
disclaims beneficial ownership of such 51,000 shares.
Includes 28,740 shares that may be deemed to be
beneficially owned by Mr. Slovin as a result of his
participation in the Director Plan.
|
|
(k)
|
|
Represents 15,894 shares that may be deemed to be
beneficially owned by Mr. Webb as a result of his
participation in the Director Plan.
|
|
(l)
|
|
Includes shares of Common Stock indirectly owned by
Mr. Perelman through MacAndrews Holdings.
|
38
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), which was until April 2011 an
indirect, wholly owned subsidiary of the Company, has various
contingent liabilities, a portion 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. During 2010, the Transfer Agreement
required 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 was required reimburse the amounts so
funded only when it receives amounts under related
indemnification and insurance agreements. In the event of
certain kinds of disputes with Pneumo Abexs indemnitors
regarding their indemnities, the Transfer Agreement permitted
Pneumo Abex to require such subsidiary to fund 50% of the
costs of resolving the disputes. In April 2011, the parties to
the Transfer Agreement entered into an amendment to that
agreement, in connection with the consummation of the
transactions contemplated by the Settlement Agreement (as
defined below), pursuant to which such subsidiary is no longer
obliged to undertake obligations with respect to contingent
liabilities of Pneumo Abex.
Settlement Agreement with Cooper Industries,
LLC.
On April 5, 2011, the Company, Pneumo
Abex, Mafco Worldwide, a subsidiary of MacAndrews &
Forbes, PCT International Holdings Inc. (a wholly owned
subsidiary of the Company), Cooper Industries plc, Cooper
Industries Ltd., Cooper Holdings, Ltd., Cooper US Inc. and
Cooper Industries, LLC (Cooper) consummated the
transactions contemplated by the Full and Final Release,
Settlement and Indemnity Agreement (the Settlement
Agreement), dated as of February 1, 2011, which they
had previously executed. Pursuant to the Settlement Agreement,
and upon the terms and subject to the conditions set forth
therein, the Parties resolved and settled certain disputes
between Pneumo Abex and Cooper, as well as certain related
parties. As a result of the closing:
|
|
|
|
|
Pneumo Abex is no longer owned or controlled, directly or
indirectly, by the Company and is instead owned by the Pneumo
Abex Asbestos Claims Settlement Trust, a Delaware statutory
trust (the Settlement Trust);
|
|
|
|
The Settlement Trust will indemnify Pneumo Abex with respect to
the defense and resolution of the asbestos-related claims
formerly subject to contractual indemnification by Cooper;
|
|
|
|
Coopers obligation to indemnify Pneumo Abex terminated;
|
|
|
|
The Company and its remaining subsidiaries will be indemnified
by the Settlement Trust against any liability for the matters
formerly subject to the Cooper indemnity;
|
|
|
|
Certain obligations related to Pneumo Abexs contingent
liabilities and arising under the Transfer Agreement and an
agreement between Mafco Worldwide and Pneumo Abex were
terminated; and
|
39
|
|
|
|
|
All other insurance and indemnification rights of Pneumo Abex
owing from third parties remain assets of Pneumo Abex.
|
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 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 each of 2010, 2009
and 2008, the Company paid to MacAndrews & Forbes LLC
$10.0 million 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.
MacAndrews & Forbes Insurance
Programs.
The Company participates in MacAndrews
Holdings directors and officers insurance program, which
covers the Company as well as MacAndrews Holdings and its 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 Holdings 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
40
arrangements require the Company to make future fixed payments
totaling $1.3 million through June 2011 at an interest rate
of 7.5%.
At December 31, 2010, the Company recorded prepaid expenses
of $1.1 million and other current liabilities of
$0.2 million relating to the directors and officers
insurance programs and financing arrangements. At
December 31, 2009, the Company recorded prepaid expenses
and other assets of $1.2 million and $0.8 million and
other current liabilities and other liabilities of
$0.7 million and $0.2 million, respectively, relating
to the directors and officers insurance programs and financing
arrangements. The Company paid $1.1 million,
$0.8 million and $0.6 million to MacAndrews Holdings
in 2010, 2009 and 2008, respectively, under the insurance
programs, including amounts due under the financing arrangements.
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, 2010 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 11, 2011, 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
.
41
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 2012 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 2012) in writing to the Secretary, M &
F Worldwide Corp., 35 East 62nd 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 2012 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 20, 2012 and not earlier than February 19,
2012.
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
2010.
42
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 22, 2011
By Order of the Board of Directors,
M & F WORLDWIDE CORP.
43
APPENDIX 1
EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of
January 1, 2011, by and among M&F Worldwide Corp., a
Delaware Corporation (
MFW
), Harland Clarke
Holdings Corp., a Delaware corporation (the
Company
), and Charles Dawson (the
Executive
).
WHEREAS, MFW, the Company and the Executive wish to restate in
its entirety the terms of the Executives employment
agreement, by and between the Company, Harland Clarke Corp.
(Harland Clarke), and the Executive, dated
May 2, 2007, as amended on February 13, 2008, and as
further amended as of December 30, 2008 and as of
February 2, 2010 (the
Prior Employment
Agreement
).
Accordingly, MFW, the Company and the Executive hereby agree as
follows:
1.
Employment, Duties and Acceptance
.
1.1
Employment, Duties
. The Company
hereby employs the Executive for the Term (as defined in
Section 2.1), to render exclusive and full-time services to
the Company as President and Chief Executive Officer of the
Company and Chief Executive Officer of the Harland Clarke
Business, or in such other executive position as may be
mutually agreed upon by MFW, the Company and the Executive, and
to perform such other duties consistent with such position as
may be assigned to the Executive by the Board of Directors of
MFW (the
Board
) or the Chief Executive
Officer of MFW. During the Term, the Executive shall report
solely to the Board and to the Chief Executive Officer of MFW.
1.2
Acceptance
. The Executive hereby
accepts such employment and agrees to render the services
described above. During the Term, the Executive agrees to serve
the Company faithfully and to the best of the Executives
ability, to devote the Executives entire business time,
energy and skill to such employment, and to use the
Executives best efforts, skill and ability to promote the
Companys interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an
officer or director of the Company and of any subsidiary or
affiliate of the Company, without any compensation therefor
other than that specified in this Agreement, if elected to any
such position by the shareholders or by the Board or of any
subsidiary or affiliate, as the case may be.
1.3
Location
. The duties to be performed
by the Executive hereunder shall be performed primarily at the
offices of the Company in San Antonio, Texas, subject to
reasonable travel requirements on behalf of the Company.
2.
Term of Employment; Certain Post-Term Benefits
.
2.1
The Term
. This Agreement and the term
of the Executives employment under this Agreement (the
Term
) shall become effective as of
January 1, 2011 (the
Effective Date
) and
will continue until December 31, 2013 (the
Termination Date
), subject to earlier
termination pursuant to Section 4.
2.2
End-of-Term
Provisions
. Prior to the end of the Term, the
Company and the Executive shall meet to discuss whether the Term
should be extended. The Company shall have the right at any
time, however, to give written notice of non-renewal of the
Term. In the event of non-renewal of the Term by the Company and
the Executives employment is terminated by the Company
after the end of the Term, other than for (i) Cause (as
defined below), (ii) Disability (as defined below) or
(iii) death, in each case following such Company notice of
non-renewal, then such termination shall be treated as a
termination without Cause and the Restricted Period (as defined
below) shall be reduced to a period of one year post termination
of employment (the
Reduced Restricted
Period
). During such Restricted Period, the Executive
shall receive as severance pay, an amount equal to the greater
of (A) 50% of the payments set forth in
Sections 4.4(i) and 4.4(ii) or (B) severance and
benefits in accordance with Company policy as in effect at that
time, in each case payable in installments in accordance with
the Companys normal payroll practices, subject to
Executives signing and not revoking the release of claims
as set forth in Section 4.6. For the avoidance of doubt, if
the Executives employment is terminated by the Company
after the end of the Term (x) for Cause, the Executive will
not be entitled to receive any severance or other benefits, or
(y) for death or
Disability, the Executive will receive severance and benefits in
accordance with Company policy as in effect at that time. For
the avoidance of doubt, if the Company is willing to extend the
Term and Executive does not agree to extend the Term, then upon
termination of employment at or after the end of the Term, the
Executive shall be bound by the restrictive covenants set forth
in Section 5 below, the Restricted Period shall not be
reduced and Executive shall not be entitled to receive any
severance benefits with respect to such termination.
Notwithstanding the foregoing, the terms of this
Section 2.2 will not impact any payments or other benefits
to which the Executive would then be entitled under normal
Company policies or the LTIP (as defined below) pursuant to the
terms thereof.
3.
Compensation; Benefits
.
3.1
Salary
. As compensation for all
services to be rendered pursuant to this Agreement, the Company
agrees to pay the Executive a base salary, payable in accordance
with the Companys normal payroll practices, at the annual
rate of not less than $1,050,000 (effective January 1,
2011) less such deductions or amounts to be withheld as
required by applicable law and regulations (the
Base
Salary
). In the event that MFW or the Company, from
time to time determines to increase the Base Salary, such
increased amount shall, from and after the effective date of the
increase, constitute Base Salary for purposes of
this Agreement.
3.2
Incentive Compensation
.
3.2.1
Annual Bonus
. Commencing with the
2011 fiscal year, the Executive will be eligible to receive a
bonus with respect to 2011 and each later fiscal year ending
during the Term computed in accordance with the provisions
hereafter. If, with respect to any such fiscal year, the Company
achieves Consolidated EBITDA (as defined below) of
at least the percentage set forth in the table below of its
business plan for such fiscal year, such bonus shall be the
percentage set forth in the table below of Base Salary with
respect to the fiscal year for which the bonus (any such bonus,
an
Annual Bonus
) was earned:
|
|
|
|
|
Percentage of Consolidated
|
|
Percentage of
|
|
EBITDA in Business Plan
|
|
Base Salary
|
|
|
89.9% and below
|
|
|
Nil
|
|
90 94.9
|
|
|
90
|
|
95 99.9
|
|
|
107.5
|
|
100 105
|
|
|
125
|
|
105.1 110
|
|
|
130.56
|
|
110.1 115
|
|
|
136.11
|
|
115.1 120
|
|
|
141.67
|
|
120.1 125
|
|
|
147.22
|
|
125.1 130
|
|
|
152.78
|
|
130.1 135
|
|
|
158.33
|
|
135.1 140
|
|
|
163.89
|
|
140.1 145
|
|
|
169.44
|
|
145.1 and over
|
|
|
175
|
|
An Annual Bonus if earned in accordance with this Agreement
shall be paid no later than the fifteenth day of the third month
next following the year with respect to which such bonus was
earned, provided that, except as otherwise specifically provided
in this Agreement (including, without limitation,
Section 4.4), as a condition precedent to any bonus
entitlement the Executive must remain in employment with the
Company at the time that the Annual Bonus is paid.
Notwithstanding the foregoing, to the extent that
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the
Code
), may be applicable, such
Annual Bonus shall be subject to, and contingent upon, such
shareholder approval as is necessary to cause the Annual Bonus
to qualify as performance-based compensation under
Section 162(m) of the Code and the regulations promulgated
thereunder as well as approval of this Section 3.2.1 by the
MFW Compensation Committee and any other required committees.
2
For the purposes of this Agreement,
Consolidated
EBITDA
means for any fiscal year of the Company,
consolidated net income for such fiscal year of the Company
plus, without duplication and to the extent reflected as a
charge in the statement of such consolidated net income for such
fiscal year, the sum of (i) income tax expense,
(ii) interest expense, amortization or write-off of debt
discount and debt issuance costs and commissions (to the extent
not already captured in interest expense), discounts and other
fees and charges associated with indebtedness, (iii)
depreciation and amortization expense (excluding amounts of
prepaid incentives under customer contracts), (iv) any
extraordinary non-cash expenses or losses, (v) allocation
of fees charged by MFW or a subsidiary to the Company relating
to the operation of the Company, (vi) all restructuring
costs, (vii) fees paid to the Companys external
advisors in connection with acquisitions (whether or not
consummated) and (viii) effects of changes in accounting
policy and U.S. generally accepted accounting principles
(
GAAP
),and minus (x) to the extent
included in the statement of such consolidated net income for
such period, the sum of (a) interest income, (b) any
extraordinary or non-recurring non-cash income or gains
(including, whether or not otherwise includable as a separate
item in the statement of such consolidated net income for such
period, gains on the sales of assets outside of the ordinary
course of business), (c) effects of changes in accounting
policy and GAAP, and (d) income tax credits (to the extent
not netted from income tax expense) and (y) any cash
payments made during such period in respect of items described
in clause (iv) above subsequent to the fiscal quarter in
which the relevant non-cash expenses or losses were reflected as
a charge in the statement of consolidated net income, all as
determined on a consolidated basis, all of the foregoing to be
determined by the Board or the MFW Compensation Committee, as
applicable. For the purposes of determining compensation
milestones for any fiscal year, Consolidated EBITDA will be
adjusted by the Board or the MFW Compensation Committee, as
applicable, as appropriate for material acquisitions or
dispositions of any business or assets of or by the Company or
its subsidiaries for such fiscal year and thereafter.
3.2.2
Long Term Incentive Plan
. During
the Term, the Executive shall participate in the M&F
Worldwide Corp. 2011 Long Term Incentive Plan (the
LTIP). The specific terms of award or awards under
the LTIP shall be set forth in one or more Award Agreements
entered into with the Executive on or about the date hereof. If
the Term is extended, the Executive shall participate in a new
Long Term Incentive Plan that shall commence after the LTIP
ends. Notwithstanding the foregoing, to the extent that
Section 162(m) of the Code may be applicable, the LTIP (and
any subsequent Long Term Incentive Plan) shall be subject to,
and contingent upon, such shareholder approval as is necessary
to cause the LTIP to qualify as performance-based
compensation under Section 162(m) of the Code and the
regulations promulgated thereunder.
3.3
Business Expenses
. The Company shall
pay or reimburse the Executive for all reasonable expenses
actually incurred or paid by the Executive during the Term in
the performance of the Executives services under this
Agreement, upon presentation of expense statements or vouchers
or such other supporting information as the Company customarily
may require of its officers;
provided
,
however
,
that the maximum amount available for such expenses during any
period may be fixed in advance by the Board.
3.4
Vacation
. During the Term, the
Executive shall be entitled to a vacation period or periods of
four (4) weeks during any fiscal year taken in accordance
with the vacation policy of the Company during each year of the
Term.
3.5
Fringe Benefits
. During the Term, the
Executive shall be entitled to all benefits for which the
Executive shall be eligible under any qualified pension plan,
401(k) plan, group insurance or other so-called
fringe benefit plan which the Company provides to
its executive employees generally, which benefits may be
amended, modified or terminated in MFWs or the
Companys discretion.
4.
Termination
.
4.1
Death
. If the Executive dies during
the Term, the Term shall terminate forthwith upon the
Executives death. The Company shall pay to the
Executives estate: (i) any Base Salary earned but not
paid; (ii) a pro rated Annual Bonus based on the number of
days of the fiscal year worked by the Executive, which pro-rated
Annual Bonus will be paid at the time and in the manner such
Annual Bonus is paid to other executives receiving such bonus
payment; (iii) amounts payable under the LTIP in accordance
with the
3
terms thereof and (iv) Annual Bonus for the year prior to
the year in which the Executive dies if at the time of death the
Executive has earned an Annual Bonus payment for such prior year
and has not yet been paid such Annual Bonus, which prior year
Annual Bonus will be paid at the time and in the manner such
prior year Annual Bonus is paid to other executives receiving
such prior year Annual Bonus. The Executive shall have no
further rights to any compensation (including any Base Salary or
Annual Bonus) or any other benefits under this Agreement, except
to the extent already earned and vested as of the day
immediately prior to his death, or as earned, vested, or accrued
by virtue of his death.
4.2
Disability
. If, during the Term the
Executive is unable to perform his duties hereunder due to a
physical or mental incapacity for a period of 6 months
within any 12 month period (hereinafter a
Disability
), the Company shall have the right
at any time thereafter to terminate the Term upon sending
written notice of termination to the Executive. If the Company
elects to terminate the Term by reason of Disability, the
Company shall pay to the Executive promptly after the notice of
termination: (i) any Base Salary earned but not paid,
(ii) a pro rated Annual Bonus based on the number of days
of the fiscal year worked by the Executive until the date of the
notice of termination, which pro-rated Annual Bonus will be paid
at the time and in the manner such Annual Bonus is paid to other
executives receiving such bonus payment; (iii) amounts
payable under the LTIP in accordance with the terms thereof, and
(iv) Annual Bonus for the year prior to the year in which
the Executive is terminated if at the time of termination the
Executive has earned an Annual Bonus payment for such prior year
and has not yet been paid such Annual Bonus, which prior year
Annual Bonus will be paid at the time and in the manner such
prior year Annual Bonus is paid to other executives receiving
such prior year Annual Bonus, in each case less any other
benefits payable to the Executive under any disability plan
provided for hereunder or otherwise furnished to the Executive
by the Company. The Executive shall have no further rights to
any compensation (including any Base Salary or Annual Bonus) or
any other benefits under this Agreement except to the extent
already earned and vested as of the day immediately prior to his
termination by reason of Disability, or as earned, vested, or
accrued by virtue of his Disability.
4.3
Cause
. The Company may at any time by
written notice to the Executive terminate the Term for
Cause (as defined below) and, upon such termination,
this Agreement shall terminate and the Executive shall be
entitled to receive no further amounts or benefits hereunder,
except for any Base Salary earned but not paid prior to such
termination. For the purposes of this Agreement,
Cause
means: (i) continued neglect by
the Executive of the Executives duties hereunder,
(ii) continued incompetence or unsatisfactory attendance,
(iii) conviction of any felony, (iv) violation of the
rules, regulations, procedures or instructions relating to the
conduct of employees, directors, officers
and/or
consultants of the Company, (v) willful misconduct by the
Executive in connection with the performance of any material
portion of the Executives duties hereunder,
(vi) breach of fiduciary obligation owed to the Company or
commission of any act of fraud, embezzlement, disloyalty or
defalcation, or usurpation of a Company opportunity,
(vii) breach of any provision of this Agreement, including
any non-competition, non-solicitation
and/or
confidentiality provisions hereof, (viii) any act that has
a material adverse effect upon the reputation of
and/or
the
public confidence in the Company, (ix) failure to comply
with a reasonable order, policy or rule that constitutes
material insubordination, (x) engaging in any
discriminatory or sexually harassing behavior, or
(xi) 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 the Company or any of its
subsidiaries or affiliates or while working or representing the
Company or any of its subsidiaries or affiliates. A termination
for Cause by the Company of any of the events described in
clauses (i), (ii), (iv), (ix), (x) and (xi) shall only
be effective on 15 days advance written notification,
providing Executive the opportunity to cure, if reasonably
capable of cure within said
15-day
period; provided, however, that no such notification is required
if the Cause event is not reasonably capable of cure or the
Board determines that its fiduciary obligation requires it to
effect a termination of Executive for Cause immediately.
4.4
Termination by Company without Cause or by the
Executive for Good Reason
. If the
Executives employment is terminated by the Company without
Cause (other than by reason of death or Disability) or by the
Executive for Good Reason (as defined below), the Executive
shall receive: (i) as severance pay, an amount equal to two
times the Base Salary payable in installments in accordance with
the
4
Companys normal payroll practices, (ii) continuation
for a
12-month
period following the date of termination of group health plan
benefits to the extent authorized by and consistent with
29 U.S.C. § 1161 et seq. (commonly known as
COBRA), with the cost of the regular premium for
such benefits shared in the same relative proportion by the
Company and the Employee as in effect on the date of termination
(provided that the Company shall not be required to pay any
portion of the premium if such payment would result in penalty
taxes imposed on the Company), (iii) Annual Bonus for the
year in which termination occurred if the Executive would have
been eligible to receive such bonus hereunder (including due to
satisfaction by the Company of performance milestones) had the
Executive been employed at the time such Annual Bonus is
normally paid, which Annual Bonus will be paid at the time and
in the manner such Annual Bonus is paid to other executives
receiving such bonus payment, (iv) Annual Bonus for the
year prior to the year in which the Executive is so terminated
if at the time of termination the Executive has earned an Annual
Bonus payment for such prior year and has not yet been paid such
due to such termination, which prior year Annual Bonus will be
paid at the time and in the manner such prior year Annual Bonus
is paid to other executives receiving such prior year Annual
Bonus and (v) amounts payable, if any, under the LTIP in
accordance with the terms thereof. The Executive shall have no
further rights to any compensation (including any Base Salary or
Annual Bonus) or any other benefits under this Agreement. For
purposes of this Agreement,
Good Reason
means, without the advance written consent of the Executive:
(i) a reduction in Base Salary or (ii) a material and
continuing reduction in the Executives responsibilities,
provided
, that a termination by the Executive for Good
Reason shall be effective only if the Executive provides the
Company with written notice specifying the event which
constitutes Good Reason within thirty (30) days following
the occurrence of such event or date Executive became aware or
should have become aware of such event and the Company fails to
cure the circumstances giving rise to Good Reason within
30 days after such notice.
4.5
Termination by Executive other than for Good
Reason
. The Executive is required to provide the
Company with 30 days prior written notice of
termination to the Company. Subject to Section 4.4, upon
termination of employment by the Executive, the Executive shall
receive any Base Salary earned but not paid prior to such
termination and shall have no further rights to any compensation
(including any Base Salary or Annual Bonus) or any other
benefits under this Agreement, except to the extent already
earned and vested as of the day immediately prior to such
termination.
4.6
Release
. Notwithstanding any other
provision of this Agreement to the contrary, the Executive
acknowledges and agrees that any and all payments, other than
payment of any accrued and unpaid Base Salary to which the
Executive is entitled under this Section 4 are conditioned
upon and subject to the Executives execution of a general
waiver and release (for the avoidance of doubt, the restrictive
covenants contained in Section 5 of this Agreement shall
survive the termination of this Agreement), in such form as may
be prepared by the Company or MFW, of all claims, except for
such matters covered by provisions of this Agreement which
expressly survive the termination of this Agreement.
Notwithstanding anything to the contrary, the severance payments
and benefits are conditioned on the Executives execution,
delivery and nonrevocation of the general waiver and release of
claims within fifty-five days following the Executives
termination of employment (the
Release
Condition
). Payments and benefits of amounts which do
not constitute nonqualified deferred compensation and are not
subject to Section 409A (as defined below) shall commence
five (5) days after the Release Condition is satisfied and
payments and benefits which are subject to Section 409A
shall commence on the 60th day after termination of
employment (subject to further delay, if required pursuant to
Section 4.7.2 below) provided that the Release Condition is
satisfied.
4.7
Section 409A
.
4.7.1 This Agreement is intended to satisfy the
requirements of Section 409A of the Code
(
Section 409A
) with respect to amounts,
if any, subject thereto and shall be interpreted and construed
and shall be performed by the parties consistent with such
intent. If either party notifies the other in writing that one
or more or the provisions of this Agreement contravenes any
Treasury Regulations or guidance promulgated under
Section 409A or causes any amounts to be subject to
interest, additional tax or penalties under Section 409A,
the parties shall agree to negotiate in good faith to make
amendments to this
5
Agreement as the parties mutually agree, reasonably and in good
faith are necessary or desirable, to (i) maintain to the
maximum extent reasonably practicable the original intent of the
applicable provisions without violating the provisions of
Section 409A or increasing the costs to the Company of
providing the applicable benefit or payment and (ii) to the
extent possible, to avoid the imposition of any interest,
additional tax or other penalties under Section 409A upon
the parties.
4.7.2 To the extent the Executive would otherwise be
entitled to any payment or benefit under this Agreement, or any
plan or arrangement of the Company or its affiliates, that
constitutes a deferral of compensation subject to
Section 409A and that if paid during the six
(6) months beginning on the date of termination of the
Executives employment would be subject to the
Section 409A additional tax because the Executive is a
specified employee (within the meaning of
Section 409A and as determined by the Company), the payment
or benefit will be paid or provided to the Executive on the
earlier of the first day following the six (6) month
anniversary of the Executives termination of employment or
death.
4.7.3 Any payment or benefit due upon a termination of the
Executives employment that represents a deferral of
compensation within the meaning of Section 409A shall
be paid or provided to the Executive only upon a
separation from service as defined in Treas. Reg.
§ 1.409A-1(h). Each payment made under this Agreement
shall be deemed to be a separate payment for purposes of
Section 409A. Amounts payable under this Agreement shall be
deemed not to be a deferral of compensation subject
to Section 409A to the extent provided in the exceptions in
Treasury Regulation §§ 1.409A-1(b)(4)
(short-term deferrals) and (b)(9) (separation
pay plans, including the exception under subparagraph
(iii)) and other applicable provisions of Treasury Regulation
§ 1.409A-1 through
A-6.
4.7.4 Notwithstanding anything to the contrary in
Agreement, any payment or benefit under this Agreement or
otherwise that is exempt from Section 409A pursuant to
Treasury Regulation § 1.409A-1(b)(9)(v)(A) or (C)
(relating to certain reimbursements and in-kind benefits) shall
be paid or provided to the Executive only to the extent that the
expenses are not incurred, or the benefits are not provided,
beyond the last day of the second calendar year following the
calendar year in which the Executives separation
from service occurs; and provided further that such
expenses are reimbursed no later than the last day of the third
calendar year following the calendar year in which the
Executives separation from service occurs. To
the extent any expense reimbursement or the provision of any
in-kind benefit is determined to be subject to Section 409A
(and not exempt pursuant to the prior sentence or otherwise),
the amount of any such expenses eligible for reimbursement, or
the provision of any in-kind benefit, in one calendar year shall
not affect provision of in-kind benefits or expenses eligible
for reimbursement in any other calendar year (except for any
life-time or other aggregate limitation applicable to medical
expenses), and in no event shall any expenses be reimbursed
after the last day of the calendar year following the calendar
year in which the Executive incurred such expenses, and in no
event shall any right to reimbursement or the provision of any
in-kind benefit be subject to liquidation or exchange for
another benefit.
5.
Protection of Confidential Information; Restrictive
Covenants
.
5.1 Prior to the Effective Date, the Company has shared
confidential and trade secret information of the Company and its
subsidiaries and affiliates with the Executive. From the
Effective Date, the Company will share with the Executive
confidential and trade secret information regarding not only the
Company but also its subsidiaries and affiliates. In view of the
fact that the Executives work for the Company will bring
the Executive into close contact with many confidential affairs
of the Company not readily available to the public, trade secret
information and plans for future developments, the Executive
agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, including, without
limitation, know how, trade secrets, customer lists,
pricing policies, operational methods, technical processes,
formulae, inventions and research projects, other business
affairs of the Company, and any material confidential
information whatsoever concerning any director, officer,
employee, shareholder, partner, customer or agent of the Company
or their respective family members learned by the Executive
heretofore or hereafter, and not to disclose them to anyone
outside of the Company, either during or after the
Executives employment with the Company, except in the
course of performing the Executives duties hereunder or
with the Companys express written consent. The
6
foregoing prohibitions shall include, without limitation,
directly or indirectly publishing (or causing, participating in,
assisting or providing any statement, opinion or information in
connection with the publication of) any diary, memoir, letter,
story, photograph, interview, article, essay, account or
description (whether fictionalized or not) concerning any of the
foregoing, publication being deemed to include any presentation
or reproduction of any written, verbal or visual material in any
communication medium, including any book, magazine, newspaper,
theatrical production or movie, or television or radio
programming or commercial; and
5.1.2 To deliver promptly to the Company on termination of
the Executives employment by the Company, or at any time
the Company may so request, all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and
all copies thereof), including data stored in computer memories
or on other media used for electronic storage or retrieval,
relating to the Companys business and all property
associated therewith, which the Executive may then possess or
have under the Executives control, and not retain any
copies, notes or summaries;
provided
Executive shall be
entitled to keep a copy of this Agreement and compensation and
benefit plans to which Executive is entitled to receive benefits
thereunder.
5.2 In support of Executives commitments to maintain
the confidentiality of the Companys confidential and trade
secret information, (i) during the Term and for any period
the Executive is employed by the Company after the Term, and
(ii) for a period of two years following termination of the
Executives employment for any reason (the
Restricted Period
), the Executive shall not
in the United States and in any non-US jurisdiction where the
Company may then do business: (a) directly or indirectly,
enter the employ of, or render any services to, any person, firm
or entity engaged in any business competitive with any business
of the Company or of any of its subsidiaries or affiliates;
(b) engage in such business on the Executives own
account; and the Executive shall not become interested in any
such business, directly or indirectly, as an individual,
partner, shareholder, director, officer, principal, agent,
employee, trustee, consultant, or in any other relationship or
capacity; (c)directly or indirectly, solicit or encourage (or
cause to be solicited or encouraged) or cause any client,
customer or supplier of the Company to cease doing business with
the Company, or to reduce the amount of business such client,
customer or supplier does with the Company or (d) directly
or indirectly, solicit or encourage (or cause to be solicited or
encouraged) to cease to work with the Company, or hire (or cause
to be hired), any person who is an employee of or consultant
then under contract with the Company or who was an employee of
or consultant then under contract with the Company within the
six month period preceding such activity without the
Companys written consent, provided however that this
clause (d) shall not apply during the Restricted Period to
a consulting or advisory firm which is also then currently
engaged or under a retainer relationship (in each case, without
any action by the Executive, whether directly or indirectly) by
a subsequent employer of the Executive.
5.3 If the Executive commits a breach, or poses a serious
and objective threat to commit a breach, of any of the
provisions of Sections 5.1 or 5.2 hereof, the Company shall
have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate
remedy to the Company;
5.3.2 The right and remedy to require the Executive to
account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived
or received by the Executive as the result of any transactions
constituting a breach of any of the provisions of the preceding
paragraph, and the Executive hereby agrees to account for and
pay over such benefits to the Company. Each of the rights and
remedies enumerated above shall be independent of the other, and
shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in
equity; and
7
5.3.3 In addition to any other remedy which may be
available (i) at law or in equity, or (ii) pursuant to
any other provision of this Agreement, the payments by the
Company of Base Salary and the regular premium for group health
benefits pursuant to Section 4.4 will cease as of the date
on which such violation first occurs. In addition, if the
Executive breaches any of the covenants contained in
Sections 5.1 and 5.2 and the Company obtains injunctive
relief with respect thereto (that is not later reversed or
otherwise terminated or vacated by judicial order), the period
during which the Executive is required to comply with that
particular covenant shall be extended by the same period that
the Executive was in breach of such covenant prior to the
effective date of such injunctive relief.
5.4 If any of the covenants contained in Sections 5.1
or 5.2, or any part thereof, hereafter are held by a court to be
invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given
full effect, without regard to those portions found invalid.
5.5 If any of the covenants contained in Sections 5.1
or 5.2, or any part thereof, are held to be unenforceable
because of the duration of such provision or the area covered
thereby, the parties agree that the court making such
determination shall have the power to reduce the duration
and/or
area
of such provision and, in its reduced form, said provision shall
then be enforceable.
5.6 The Executive agrees (whether during or after the
Executives employment with the Company) not to issue,
circulate, publish or utter any false or disparaging statements,
remarks or rumors about the Company or its affiliates or the
officers, directors, managers, customers, partners, or
shareholders of the Company or its affiliates, provided that
nothing herein shall prohibit the Executive from providing
truthful testimony if such testimony is required by law.
5.7 For purposes of this Section 5 only, the term
Company includes the Company and its subsidiaries
and affiliates.
6.
Inventions and Patents
.
6.1 The Executive agrees that all processes, technologies
and inventions (collectively,
Inventions
),
including new contributions, improvements, ideas and
discoveries, whether patentable or not, conceived, developed,
invented or made by him during the Term shall belong to the
Company,
provided
that such Inventions grew out of the
Executives work with the Company or any of its
subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of
its subsidiaries or affiliates or are conceived or made on the
Companys time or with the use of the Companys
facilities or materials. The Executive shall further:
(a) promptly disclose such Inventions to the Company;
(b) assign to the Company, without additional compensation,
all patent and other rights to such Inventions for the United
States and foreign countries; (c) sign all papers necessary
to carry out the foregoing; and (d) give testimony in
support of the Executives inventorship.
6.2 If any Invention is described in a patent application
or is disclosed to third parties, directly or indirectly, by the
Executive within two years after the termination of the
Executives employment by the Company, it is to be presumed
that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert
any rights to any Invention as having been made or acquired by
the Executive prior to the date of this Agreement, except for
Inventions, if any, disclosed to the Company in writing prior to
the date hereof.
7.
Intellectual Property
.
The Company shall be the sole owner of all the products and
proceeds of the Executives services hereunder, including,
but not limited to, all materials, ideas, concepts, formats,
suggestions, developments, arrangements, packages, programs and
other intellectual properties that the Executive may acquire,
obtain, develop or create in connection with and during the
Term, free and clear of any claims by the Executive (or anyone
claiming under the Executive) of any kind or character
whatsoever (other than the Executives right to receive
payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other
instruments as the Company may from time to time deem necessary
8
or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend its right, title or interest in or to any such
properties.
8.
Notices
.
All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered
personally, sent by overnight courier or mailed first class,
postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as
follows (or to such other address as either party shall
designate by notice in writing to the other in accordance
herewith):
If to the Company, to:
Harland Clarke Holdings Corp.
10931 Laureate Drive
San Antonio, TX 78249
Attention: General Counsel
With a copy to:
c/o M&F
Worldwide Corp.
35 E. 62
nd
Street
New York, NY 10065
Attention: Chief Legal Officer
If to the Executive, to:
Such address as shall most currently appear on the records of
the Company.
9.
Governing Law; Dispute Resolution
.
9.1 It is the intent of the parties hereto that all
questions with respect to the construction of this Agreement and
the rights and liabilities of the parties hereunder shall be
determined in accordance with the laws of the State of Delaware,
without regard to principles of conflicts of laws thereof that
would call for the application of the substantive law of any
jurisdiction other than the State of Delaware.
9.2 Each party irrevocably agrees for the exclusive benefit
of the other that any and all suits, actions or proceedings
relating to Section 5 of this Agreement (a
Proceeding
) shall be maintained in either the
courts of the State of Delaware or the federal District Courts
sitting in Bexar County, Texas or Wilmington, Delaware
(collectively, the
Chosen Courts
) and that
the Chosen Courts shall have exclusive jurisdiction to hear and
determine or settle any such Proceeding and that any such
Proceedings shall only be brought in the Chosen Courts. Each
party irrevocably waives any objection that it may have now or
hereafter to the laying of the venue of any Proceedings in the
Chosen Courts and any claim that any Proceedings have been
brought in an inconvenient forum and further irrevocably agrees
that a judgment in any Proceeding brought in the Chosen Courts
shall be conclusive and binding upon it and may be enforced in
the courts of any other jurisdiction.
9.3 Each of the parties hereto agrees that this Agreement
involves at least $100,000 and that this Agreement has been
entered into in express reliance on Section 2708 of
Title 6 of the Delaware Code. Each of the parties hereto
irrevocably and unconditionally agrees (i) that, to the
extent such party is not otherwise subject to service of process
in the State of Delaware, it will appoint (and maintain an
agreement with respect to) an agent in the State of Delaware as
such partys agent for acceptance of legal process and
notify the other parties hereto of the name and address of said
agent, (ii) that service of process may also be made on
such party by pre-paid certified mail with a validated proof of
mailing receipt constituting evidence of valid service sent to
such party at the address set forth in Section 8 of this
Agreement, as such address may be changed from time to time
pursuant hereto, and (iii) that service made pursuant to
clause (i) or (ii) above
9
shall, to the fullest extent permitted by applicable law, have
the same legal force and effect as if served upon such party
personally within the State of Delaware.
9.4 Any controversy or claim arising out of or related to
any other provision of this Agreement shall be settled by final,
binding and non-appealable arbitration in Bexar County, Texas or
Wilmington, Delaware by a single arbitrator. Subject to the
following provisions, the arbitration shall be conducted in
accordance with the applicable rules of JAMS then in effect. Any
award entered by the arbitrator shall be final, binding and
nonappealable and judgment may be entered thereon by either
party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrator shall have no authority
to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit
specifically provided under or by virtue of the Agreement. Each
party shall be responsible for its own expenses relating to the
conduct of the arbitration or litigation (including reasonable
attorneys fees and expenses) and shall share the fees of
JAMS and the arbitrator, if applicable, equally.
10.
General
.
10.1
JURY TRIAL WAIVER
. THE PARTIES
EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE
EVENT ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE EXECUTIVES EMPLOYMENT WITH THE COMPANY IS
LITIGATED OR HEARD IN ANY COURT.
10.2
Continuation of Employment
. Unless
the parties otherwise agree in writing, continuation of the
Executives employment with the Company beyond the
expiration of the Term shall be deemed an employment at will and
shall not be deemed to extend any of the provisions of this
Agreement, and Executives employment may thereafter be
terminated at will by the Executive or the Company
and Executive will be entitled to fringe benefits which the
Executive is eligible to receive for so long as the Executive
continues to be employed with the Company and the Executive
shall be eligible for severance in accordance with the terms of
the Companys severance policy then in effect.
Notwithstanding the foregoing, the Executive shall be subject to
the restrictive covenants set forth in Section 5.2 for the
Restricted Period or if applicable, the Reduced Restricted
Period in accordance with Section 2.2.
10.3
Headings
. The section headings
contained herein are for reference purposes only and shall not
in any way affect the meaning or interpretation of this
Agreement.
10.4
Entire Agreement
. This Agreement
sets forth the entire agreement and understanding of the parties
relating to the Executives employment by the Company, and
supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the
Executives employment by the Company and its affiliates
including, without limitation, effective as of the Effective
Date, the Prior Employment Agreement and any severance,
retention, change in control or similar types of benefits.
Notwithstanding the preceding sentence, to the extent not yet
paid, the Executive will be entitled to receive payment of
(i) his Annual Bonus, if any, for 2010 and
(ii) amounts payable in accordance with the LTIP, if any
with respect to
2008-2010,
in each case in accordance with the terms of (and at the times
provided for in) the Prior Employment Agreement. No
representation, promise or inducement has been made by either
party that is not embodied in this Agreement, and neither party
shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
10.5
Assignment
. This Agreement, and the
Executives rights and obligations hereunder, may not be
assigned by the Executive. The Company and MFW may assign their
respective rights, together with their respective obligations,
hereunder (i) to any affiliate or (ii) to third
parties in connection with any sale, transfer or other
disposition of all or substantially all of the business or
assets of MFW or the Company; in any event the obligations of
the Company hereunder shall be binding on its successors or
assigns, whether by merger, consolidation or acquisition of all
or substantially all of its business or assets.
10.6
Waiver
. This Agreement may be
amended, modified, superseded, canceled, renewed or extended and
the terms or covenants hereof may be waived, only by a written
instrument executed by all of the parties hereto, or in the case
of a waiver, by the party waiving compliance. The failure of
either
10
party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later
time to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any
other term or covenant contained in this Agreement.
10.7
Withholding Taxes
. The Company may
withhold from any amounts payable under this Agreement such
federal, state, local and other taxes as may be required to be
withheld pursuant to any applicable law or regulation.
11.
Subsidiaries and Affiliates
.
11.1 As used herein, the term
subsidiary
shall mean any corporation or other business entity controlled
directly or indirectly by the corporation or other business
entity in question, and the term
affiliate
shall mean and include any corporation or other business entity
directly or indirectly controlling, controlled by or under
common control with the corporation or other business entity in
question.
[Remainder
of Page Intentionally Left Blank]
11
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
HARLAND CLARKE HOLDINGS CORP.
Name: Peter Fera
|
|
|
|
Title:
|
Chief Financial Officer
|
M&F WORLDWIDE CORP.
Name: Barry F. Schwartz
|
|
|
|
Title:
|
President and Chief Executive Officer
|
Charles Dawson
12
APPENDIX 2
M&F
WORLDWIDE CORP.
2011 Long
Term Incentive Plan
ARTICLE 1.
ESTABLISHMENT AND PURPOSE
1.1
Establishment.
The M&F Worldwide
Corp. 2011 Long Term Incentive Plan is established effective as
of January 1, 2011, subject to approval by the
Companys shareholders. Awards may be made under the Plan
prior to shareholder approval of the Plan so long as such Awards
are subject to such shareholder approval. Awards may be made
under the Plan until December 31, 2016, unless the Plan is
terminated earlier by the Board. Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to
such termination of the Plan shall remain in effect until such
Awards have been satisfied or terminated in accordance with the
Plan and the terms of such Awards.
1.2
Purpose.
The purpose of the Plan is
to foster and promote the long-term financial success of the
Company and increase shareholder value by:
(a) strengthening the Companys capability to develop
and maintain a management team; (b) motivating superior
performance by means of long-term performance related incentives
linked to business performance of the Company or an Affiliate;
(c) attracting and retaining qualified personnel by
providing incentive compensation opportunities competitive with
other similar companies; and (d) enabling officers and
other key employees to participate in the long-term growth and
financial success of the Company or an Affiliate.
ARTICLE 2.
DEFINITIONS
The following Sections of this Article provide terms used in
this Plan, and whenever used herein in a capitalized form, the
terms shall be deemed to have the meanings set forth in this
Article. In addition, certain other terms used in the Plan but
not specifically defined in this Article have the definitions
given to them in the first place in which they are used.
2.1
Affiliate
means any
corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated
association or other entity (other than the Company) that
directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the
Company, including the subsidiaries of the Company and other
entities controlled by such subsidiaries.
2.2
Award
means a grant under the
Plan, based upon criteria specified by the Committee. Awards
shall be subject to the terms and conditions of the Plan and
shall be evidenced by an Award Agreement containing such
additional terms and conditions as the Committee shall deem
desirable.
2.3
Award Agreement
means any
agreement, letter or other instrument by which an Award is
granted to a Participant.
2.4
Award Cycle
means any period
designated in an Award Agreement as an Award Cycle.
2.5
Award Term
means the period
designated in an Award Agreement as the Award Term.
2.6
Board
means the Board of
Directors of the Company.
2.7
Cause
with respect to any
Participant, shall have the meaning set forth in any employment
agreement between such Participant and the Company or an
Affiliate. Absent such term in any such agreement, and in the
case of other Participants who do not have such an agreement,
Cause shall mean the following: (i) continued
neglect by the Participant of the Participants duties to
the Company or its Subsidiaries, (ii) continued
incompetence or unsatisfactory attendance, (iii) conviction
of any felony, (iv) violation of the rules, regulations,
procedures or instructions relating to the conduct of employees,
directors, officers
and/or
consultants of the Company, (v) willful misconduct by the
Participant in connection with the performance of any material
portion of the Participants duties to the Company or its
Subsidiaries, (vi) breach of fiduciary obligation owed to
the Company or commission of any act of fraud, embezzlement,
disloyalty or defalcation, or usurpation of a Company
opportunity, (vii) breach of any provision of an employment
agreement or an Award agreement with the Company or its
Subsidiaries, including any non-competition, non-solicitation
and/or
confidentiality provisions, (viii) any act that has a
material adverse effect upon the reputation of
and/or
the
public confidence in the Company, (ix) failure to comply
with a reasonable order, policy or rule that constitutes
material insubordination, (x) engaging in any
discriminatory or sexually harassing behavior or
(xi) 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 the Company or any of its
subsidiaries or affiliates or while working or representing the
Company or any of its subsidiaries or affiliates. A termination
for Cause by the Company of any of the events described in
clauses (i), (ii), (iv), (ix), (x) and (xi) shall only
be effective on 15 days advance written notification,
providing the Participant the opportunity to cure, if reasonably
capable of cure within said
15-day
period; provided, however, that no such notification is required
if the Cause event is not reasonably capable of cure or the
Board determines that its fiduciary obligation requires it to
effect a termination of the Participant for Cause immediately.
2.8
Code
means the Internal
Revenue Code of 1986, as amended, or any successor thereto.
2.9
Committee
means the
Compensation Committee of the Board or other committee or
subcommittee authorized by the Board to administer the Plan
2.10
Company
means M&F
Worldwide Corp., a Delaware corporation, and includes any
successor or assignee corporation or corporations into which the
Company may be merged, changed or consolidated, any corporation
for whose securities the securities of the Company shall be
exchanged, and any assignee of or successor to substantially all
of the assets of the Company.
2.11
Disability
means
Disability as defined in any existing employment
agreement between a Participant and the Company or an Affiliate,
or, in the absence of such an employment agreement, a mental or
physical illness that entitles the Participant to receive
benefits under the long-term disability plan of the Company, or
if there is no such plan or the Participant is not covered by
such a plan or the Participant is not an employee of the
Company, a mental or physical illness that renders a Participant
totally and permanently incapable of performing the
Participants duties for the Company, as determined by the
Committee. The determination of Disability for purposes of this
Plan shall not be construed to be an admission of disability for
any other purpose.
2.12
EBITDA
means earnings before
interest, taxes, depreciations and amortization, or as specified
in any Award Agreement.
2.13
Eligible Employee
means an
Employee who is employed or serves in a position or capacity
designated by the Committee as eligible to participate in the
Plan.
2.14
Employee
means any person
who is considered to be an employee of the Company or an
Affiliate pursuant to its personnel policies.
2.15
Participant
means an
Eligible Employee who satisfies the eligibility conditions of
the Plan and who has been selected by the Committee for
participation in the Plan.
2.16
Payout
means the actual
amount to be distributed under the Plan to a Participant with
respect to the Award Term or an Award Cycle.
2.17
Performance Goals
means the
level of performance for the Award Term or Award Cycle, as
determined by reference to one or more of the Performance
Measures, the attainment of which results in a right (subject to
the provisions of the Plan and the Award Agreement) to receive a
Payout for the Award Term or an Award Cycle.
2.18
Performance Measures
mean
the particular performance measures for the Award Term or an
Award Cycle determined in the discretion of the Committee, based
upon the Committees determination of the goals that will
further the Companys corporate objectives. Performance
Measures may (i) be based on performance goals for the
Company, any Affiliate or any division of the Company or an
Affiliate, (ii) be
2
relative, absolute or adjusted and (iii) include sales;
cash flow; cash flow from operations; operating profit or
income; net income; operating margin; net income margin; return
on net assets; economic value added; return on total assets;
return on common equity; return on total capital; total
shareholder return; revenue; revenue growth; EBITDA; EBITDA
growth; cumulative EBITDA over a period fixed by the Committee;
adjusted EBITDA; basic earnings per share; diluted earnings per
share; funds from operations per share and per share growth;
cash available for distribution; cash available for distribution
per share and per share growth; share price performance on an
absolute basis and relative to an index of earnings per share or
improvements in the Companys or an Affiliates (or
any division thereof) attainment of expense levels; implementing
or completion of critical projects; or other reasonable criteria
established by the Committee. Unless otherwise specifically
defined in the Plan, the foregoing criteria shall have any
reasonable definitions that the Committee may specify, which may
include or exclude any or all of the following items as the
Committee may specify: extraordinary, unusual or non-recurring
items; effects of accounting changes; effects of financing
activities; expenses for restructuring or productivity
initiatives; other non-operating items; spending for
acquisitions; effects of divestitures
and/or
acquisitions; and effects of litigation activities and
settlements.
2.19
Plan
means the M&F
Worldwide Corp. 2011 Long Term Incentive Plan, as herein set
forth and as may be amended from time to time.
2.20
Termination of Employment
means the occurrence of any act or event whether pursuant to an
employment agreement or otherwise that actually or effectively
causes or results in the persons ceasing, for whatever
reason, to be an officer or employee of the Company and its
Affiliates, including, without limitation, death, Disability,
dismissal, resignation, or separation from employment as a
result of the discontinuance, liquidation, sale or transfer by
the Company and or any Affiliate of a business such entity owns
or operates.
ARTICLE 3.
ADMINISTRATION
3.1
Committee.
The Plan shall be
controlled, managed and administered by the Committee, which
shall consist of two or more members. Each member of the
Committee shall be a Non-employee Director as that
term is defined by
Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the
Exchange Act
) or any similar rule which may
subsequently be in effect
(
Rule 16b-3
)
and shall be an outside director within the meaning
of Section 162(m)(4)(C)(i) of the Code and the Treasury
Regulations promulgated thereunder. The Committee shall have the
discretion to interpret the provisions of the Plan, and its
interpretations and determinations shall be final and binding on
all persons, including the Company, all Affiliates and
Participants. The Committee may, from time to time, adopt rules
or guidelines with respect to the administration of the Plan and
the rights granted hereunder which are consistent with the
provisions of the Plan and may amend any and all rules or
guidelines previously established. No determination or decision
of the Committee shall be subject to
de novo
court review
if the procedures of this Article have been followed by the
Committee. Subject to the express provisions of the Plan and to
the extent not inconsistent with the provisions of
Section 162(m) of the Code and the Treasury Regulations
promulgated thereunder regarding performance-based compensation,
the Committee may, from time to time, delegate or allocate the
performance of any part or all its ministerial duties under the
Plan as it considers desirable to such person or persons as it
may select. All costs of Plan administration will be paid by the
Company.
3.2
Powers of Committee.
For purposes of
the Plan, the Committees powers shall include, but not be
limited to, the following authority, in addition to all other
powers provided by, or necessary to administer, the Plan:
|
|
|
|
3.2.1
|
to determine the Award Cycle(s), Award Term, Performance Goals,
Performance Measures and other criteria for which the Committee
has discretion under the Plan;
|
|
|
3.2.2
|
to select or designate, for the Award Term or any Award Cycle,
the Eligible Employees (if any) to become Participants under the
Plan;
|
3
|
|
|
|
3.2.3
|
to determine the terms and conditions of any Awards granted
hereunder and to adjust the terms and conditions of any Award
under the provisions of the Plan;
|
|
|
3.2.4
|
to provide for the forms of Award Agreement to be utilized in
connection with the Plan;
|
3.2.5 to determine the Payout to a Participant and
any other right to compensation under the Plan;
|
|
|
|
3.2.6
|
to appoint such agents, counsel, accountants, consultants,
claims administrator and other persons as may be necessary or
appropriate to assist in administering the Plan;
|
|
|
3.2.7
|
to sue or cause suit to be brought in the name of the Plan or
the Company;
|
|
|
3.2.8
|
to determine whether and with what effect an individual has
incurred a Termination of Employment;
|
|
|
3.2.9
|
to obtain from Participants such information as is necessary for
the proper administration of the Plan;
|
|
|
3.2.10
|
to execute and file such returns and reports as may be required
with respect to the Plan; and
|
|
|
3.2.11
|
to make any adjustments or modifications permitted under the
provisions of the Plan.
|
ARTICLE 4.
PARTICIPATION, PERFORMANCE MEASURES
AND PERFORMANCE GOALS
4.1
Participation.
The Committee shall
select which Eligible Employees will become Participants in the
Plan during any given fiscal year the Plan is in effect. The
Committee may consider any factors it deems pertinent in
selecting an Eligible Employee as a Participant. Upon the
selection of the Participants, the Committee shall provide the
notices described in Section 4.6 below. A person will
become a Participant only upon returning to the Company a
signed, written Award Agreement received from the Committee
stating the person is a Participant and providing such
additional information the Committee deems relevant, including
the Award Term and, if applicable, the Award Cycle(s).
4.2
Participation of Newly Hired
Employees.
Except as provided in the sole
discretion of the Committee, an individual must be an Eligible
Employee as of the beginning of an Award Term in order to be
selected as a Participant. If an individual first becomes an
Eligible Employee after the beginning of an Award Term, the
Committee may, in its discretion, designate such new Eligible
Employee as a Participant. Unless the Committee, in its sole
discretion, determines otherwise, all amounts payable under this
Plan to such Participant for the Award Term shall be pro-rated
with respect to the date he or she first became an Eligible
Employee or such later date as designated by the Committee. The
Committee may make such adjustments as it deems appropriate in
order to effectuate this Section.
4.3
Payout Amounts.
The Payouts that a
Participant is entitled to receive under the Plan for an Award
Term or an Award Cycle, upon the achievement of the Performance
Goals, will be based upon the amount set forth in an Award
Agreement.
4.4
Performance Measures.
The Committee
shall establish one or more Performance Measures for the Award
Term or an Award Cycle. It is the intent of the Committee that
the Performance Goals and Performance Measures established for
the Award Term or an Award Cycle will not change during such
period. However, certain circumstances identified at the
discretion of the Committee may warrant a modification to the
Performance Goals and Performance Measures. These circumstances
would include, but not be limited to, unforeseen events such as
changes in law, regulations, or rulings; changes in accounting
principles or practices; or a merger, acquisition, divestiture
or other significant transaction. Participants will be notified
of any such modification as soon as practicable. Different
Performance Measures
and/or
Performance Goals may be awarded to similarly situated
Participants, and the Performance Measures and Performance Goals
awarded to one Participant shall not have an effect on or in any
way limit the Performance Measures and Performance Goals awarded
to any other Participant.
4
4.5
Performance Goals.
For any
Performance Measure established by the Committee, the Committee
shall establish the levels of the Performance Goals. After
establishing the Performance Goals for a Performance Measure,
the Committee shall have the discretion, where practicable, to
provide that the amounts payable in respect of the Performance
Goals shall be prorated if the actual performance for the Award
Term is between the Performance Goals established by the
Committee.
4.6
Notice of Participation.
After an
Eligible Employee has been designated as a Participant, the
Committee shall provide such Participant with an Award Agreement
setting forth the Payment Value, the Award Term, the Award
Cycle(s) during the Award Term, if any, the Performance
Measure(s) and the Performance Goal(s).
ARTICLE 5.
CALCULATING THE PAYOUT
5.1
General.
As soon as practicable
following the end of the Award Term or an Award Cycle, as
applicable, the Committee shall calculate the Payout to each
Participant based upon the actual performance of the Company and
the Performance Measure(s) and Performance Goal(s) for such
period.
5.2
The Payout.
The actual Payout amount
to be distributed with respect to an Award Term or Award Cycle,
as applicable, may range over a set of compensation values
determined by the Committee, as further described in this
Section and in an Award Agreement. The amount payable to a
Participant shall not exceed the Maximum Payment applicable to
such Participant. If the actual performance during the Award
Term or an Award Cycle, as applicable, shall be less than the
minimum Performance Goal(s) for any Performance Measure(s), the
Payout shall be zero.
ARTICLE 6.
PAYMENT OF BENEFITS
6.1
Normal Payout.
Except as otherwise
provided in the Plan or an Award Agreement, and subject to the
condition of continued employment with the Company or an
Affiliate, as set forth in Section 6.2 below, the Payout to
a Participant for the Award Term or an Award Cycle shall be made
on the date that is two and one-half months following the close
of the Award Term or such Award Cycle in the form described in
Section 6.4; provided, however, that the Committee may, in
its discretion, defer payment until audited financial data is
available (but in any event no later than the end of the
calendar year after such Award Term or Award Cycle ends) unless
such deferral would cause any such payment to be subject to
additional taxes pursuant to Code Section 409A. Except as
otherwise provided in the subsequent Sections of this
Article 6 or in an Award Agreement, each Participant shall
receive a payment equal to the full value of his or her Payout
for the Award Term or applicable Award Cycle. Payouts under this
Section 6.1 are conditioned upon the Participants
compliance with any non-compete, non-solicitation
and/or
confidentiality provision in any written agreement or policy
between the Participant and the Company or its subsidiaries and
Affiliates. Unless the Committee provides otherwise in writing,
upon the date of any violation of any such non-compete,
non-solicitation
and/or
confidentiality provision, the person shall immediately cease to
be a Participant, and any amount not yet distributed to such
Participant under this Section 6.1 shall immediately and
automatically be forfeited, whether or not such violation
results in a Termination of Employment with the Company during
the Award Term, in addition to any other rights and remedies
available to the Company or an Affiliate as set forth in such
Participants Award Agreement.
6.2
Forfeiture.
Unless an applicable
Award Agreement provides otherwise, if a Participant initiates a
Termination of Employment with the Company for any reason other
than for death or due to Disability, or the Participant incurs a
Termination of Employment for Cause, unless the Committee
provides otherwise in writing, the Participant shall immediately
cease to be a Participant, and any amount not yet distributed to
such Participant under Section 6.1 shall immediately and
automatically be forfeited, whether or not such Termination of
Employment occurs before the end of the Award Term.
5
6.3
Disability or Death.
Unless an
applicable Award Agreement provides otherwise, a
Participants Termination of Employment with the Company
under the circumstances set forth in this Section 6.3 shall
not result in the forfeiture of the Participants Payout or
the right to receive a Payout under the Plan. Unless an
applicable Award Agreement provides otherwise, if the
Participant incurs a Termination of Employment with the Company
that is the result of the Participants death or
Disability, then, on the date the Payout would have been made if
the Participant had not incurred a Termination of Employment
prior to that date, the Participant shall receive a payment
equal to the Payout multiplied by a fraction, the numerator of
which is the number of days from January 1, 2011 through
the date on which the Participant incurred a Termination of
Employment and the denominator of which is the number of days in
the Award Term or Award Cycle, as applicable.
6.4
Form of Payment.
Any Payout shall be
made in cash in a single lump sum.
6.5
Deferral of Payout.
If so permitted
by the Committee, a Participant may elect to defer receipt of
all or a portion of a Payout pursuant to the terms of any
deferred compensation plan maintained by the Company or an
Affiliate in which such Participant participates or as otherwise
permitted by the Committee.
ARTICLE 7.
AMENDMENT OR TERMINATION
7.1
Amendment or Termination.
The Board
or the Committee may amend, alter, or terminate the Plan at any
time, but no amendment, alteration or termination shall be made
which would impair the rights of a Participant under an Award
theretofore granted without the Participants consent,
except such an amendment (a) made to cause the Plan to
comply with applicable law (including without limitation,
Section 409A of the Code), or (b) made to permit the
Company a deduction under applicable tax law. The Committee may
amend, alter or discontinue the terms of any Award theretofore
granted, prospectively or retroactively, on the same conditions
and limitations (and exceptions to limitations) as apply to the
Board, and further subject to any approval or limitations the
Board may impose.
ARTICLE 8.
GENERAL PROVISIONS
8.1
Nonalienation of Plan Benefits.
A
Participant or beneficiary may not sell, assign, margin,
transfer, pledge, encumber, convey, gift, hypothecate or
otherwise dispose of any interest in a Payout or the right to
receive Payout under this Plan, either voluntarily or
involuntarily, except by will, by the laws of descent or
distribution, or as set forth in Section 6.3 above.
8.2
No Employment Rights.
Under no
circumstances shall the terms of employment of any Participant
be modified or in any way affected by the establishment or
continuance of this Plan. The maintenance of this Plan shall not
constitute a contract of employment. The Plan will not give any
Participant a right to be retained in the employment of the
Company or its Affiliates.
8.3
No Personal Liability.
To the extent
permitted by law, no person (including any member of the
Committee or any present or former employee of the Company)
shall be personally liable for any act done or omitted to be
done in good faith in the administration of the Plan.
8.4
Final Decisions.
Any ruling,
regulation, procedure or decision of the Committee shall be
conclusive and binding upon all persons affected by this Plan.
8.5
Withholding of Taxes.
The Company
shall deduct from any Payout such amount as the Company, in its
sole discretion, deems proper to protect it against liability
for the payment of taxes, and out of the money so deducted, the
Company may discharge any such liability and pay the amount
remaining to the Participant or his or her beneficiary, as the
case may be.
8.6
Applicable Law.
The Plan and all
Awards made and actions taken under the Plan shall be governed
by and construed in accordance with the laws of the State of
Delaware and any applicable
6
subdivision thereof. The Plan shall be construed to comply with
all applicable laws and to avoid liability to the Company or a
Participant.
8.7
Successors.
The Plan is binding on
all persons entitled to benefits hereunder and their respective
heirs and legal representatives, on the Committee and its
successor, and on the Company and its successor, whether by way
of merger, consolidation, purchase or otherwise.
8.8
Severability.
If any provision of the
Plan shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining
provisions of the Plan, and the Plan shall be enforced as if the
invalid provisions had never been set forth herein.
8.9
Provisions Relating to Code
Section 162(m).
The Plan and any Award to
any Participant who is (or who, in the judgement of the
Committee, could reasonably be expected at the time of any
payment of the Award to be) a
Covered
Employee
(as defined in Section 162(m)(3) of the
Code) (any such Participant, an
Applicable
Participant
) under the Plan shall be administered, and
the provisions of the Plan and each Award Agreement with an
Applicable Participant shall be interpreted, in a manner
consistent with the requirements of Code Section 162(m) and
the Treasury Regulations promulgated thereunder. If any
provision of the Plan or any Agreement relating to an Award to
such a Participant does not comply or is inconsistent with the
requirements of Code Section 162(m)(4)(c) and the Treasury
Regulations promulgated thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform
to such applicable requirements, if any such construction or
deemed amendment can satisfy Code Section 162(m) and the
Treasury Regulations promulgated thereunder. In addition, the
following provisions shall apply to the Plan or an Award to the
extent necessary to avoid the disallowance of a tax deduction
for the Company or an Affiliate:
|
|
|
|
8.9.1
|
Not later than the date required or permitted for
qualified performance-based compensation under Code
Section 162(m) and the Treasury Regulations promulgated
thereunder, the Committee shall determine the Participants who
are Applicable Participants who will receive Awards that are
intended as qualified performance-based compensation and the
amount or method for determining the amount of such
compensation. Any Award intended to constitute qualified
performance-based compensation shall be designated in writing as
such by the Committee at the time it is granted.
|
|
|
8.9.2
|
For Awards that are designated as performance-based
compensation (as that term is used in Code
Section 162(m)) in accordance with Section 8.9.1
above, no more than $15,000,000 (the
Maximum
Payment
) may be subject to any such Award granted to
any Applicable Participant and payable with respect to the
Awards entire Award Term. In the manner required by Code
Section 162(m) and the Treasury Regulations promulgated
thereunder, the Committee shall, promptly after the date on
which the necessary financial and other information for the
Award Term or an Award Cycle becomes available, certify the
extent to which Performance Goals have been achieved with
respect to any Award intended to qualify as
performance-based compensation under Code Section
162(m) and the Treasury Regulations promulgated thereunder. In
addition, the Committee may, in its discretion, reduce or
eliminate the amount of any Award payable to any Participant,
based on such factors as the Committee may deem relevant, but
the Committee may not increase the amount of any Award payable
to any Participant above the amount established in accordance
with the relevant Performance Goals with respect to any Award
intended to qualify as performance-based
compensation under Code Section 162(m) and the
Treasury Regulations promulgated thereunder.
|
|
|
8.9.3
|
Notwithstanding any other provision of this Plan to the contrary
(including, without limitation, Section 4.5), with respect
to any Award granted to an Applicable Participant: (i) the
Performance Goals and Performance Measures established for the
Award Term or an Award Cycle shall not change during such period
but may be adjusted to take into account significant corporate
events (including mergers, acquisitions and divestitures), and
(ii) the terms of the award shall specify at the time of
grant whether amounts payable pursuant to the Award will or
|
7
|
|
|
|
|
will not be prorated if actual performance for the Award Term is
between the applicable Performance Goals established by the
Committee.
|
8.10
Unsecured Interest.
No Participant
in the Plan shall have any interest in any fund or specific
asset of the Company by reason of the Plan. No trust fund shall
be created in connection with the Plan or any Payout thereunder,
and there shall be no required funding of amounts, which may
become payable to any Participant.
8.11
Offset.
Any amounts owed to the
Company by the Participant of whatever nature may be offset by
the Company from the value of any Payout due under this Plan
unless prohibited under Section 409A of the Code, and no
Payout shall be made under this Plan unless and until all
disputes between the Company and the Participant have been fully
and finally resolved and the Participant has waived all claims
to such against the Company.
8.12
Indemnification.
The officers and
directors of the Company, as well as the Committee members,
shall be indemnified and held harmless by the Company against
and from any and all loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by them in connection
with or resulting from any claim, action, suit, or proceeding
(collectively, a
Proceeding
) to which they
may be a party or in which they may be involved by reason of any
action taken or failure to act under this Plan and against and
from any and all amounts paid by them in settlement (with the
Companys written approval) or paid by them in satisfaction
of a judgement in any such Proceeding. The foregoing provision
shall not be applicable to any person if the loss, cost,
liability or expense is due to such persons gross
negligence or willful misconduct. Notwithstanding the foregoing,
an officer, director or Committee member who initiates a
Proceeding against the Company shall not be indemnified pursuant
to this Section 8.12, unless such indemnification is
approved in advance in writing by the Company.
8.13
Obligation.
The Plan shall be
sponsored by the Company and administered by the Committee,
provided however that the obligation for the payment of the
Payout, if any, shall be solely an obligation of Harland Clarke
Holdings Corp. (a subsidiary of the Company), unless otherwise
provided in an Award Agreement, and the Company shall not have
any obligation for any payment with respect to the Plan.
8.14
Headings.
The headings contained in
this Plan are for reference purposes only and shall not affect
the meaning or interpretation of this Plan.
8.15
Gender and Number.
Words denoting
the masculine gender includes the feminine gender, and the
singular shall include the plural and the plural shall include
the singular wherever required by the context.
8.16
Section 409A of the
Code.
Notwithstanding any provision of the Plan
to the contrary, it is intended that the provisions of this Plan
comply with or be exempt from Section 409A of the Code, and
all provisions of this Plan shall be construed and interpreted
in a manner consistent with the requirements for avoiding taxes
or penalties under Section 409A of the Code. Each
Participant is solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on
or in respect of such Participant in connection with this Plan
or any other plan maintained by the Company (including any taxes
and penalties under Section 409A of the Code), and neither
the Company nor any Affiliate shall have any obligation to
indemnify or otherwise hold such Participant (or any
beneficiary) harmless from any or all of such taxes or
penalties. With respect to any Award that is considered
deferred compensation subject to Section 409A
of the Code, references in the Plan to termination of
employment (and substantially similar phrases) shall mean
separation from service within the meaning of
Section 409A of the Code. For purposes of Section 409A
of the Code, each of the payments that may be made in respect of
any Award granted under the Plan is designated as separate
payments. To the extent a Participant would otherwise be
entitled to any payment or benefit under this Plan, which
constitutes (i) a deferral of compensation
which would be due or payable on account of the
Participants separation from service (within
the meaning of Section 409A of the Code and as determined
by the Committee), (ii) subject to Section 409A of the
Code and (iii) if paid during the six (6) months
beginning on the date of termination of the Participants
employment would be subject to the Section 409A additional
tax because the Participant is a specified
8
employee (within the meaning of Section 409A of the
Code and as determined by the Committee), then if such six month
delay is required to avoid the Section 409A additional tax
the payment or benefit will be paid or provided to the
Participant on the earlier of the first day following the six
(6) month anniversary of the Participants termination
of employment or death.
8.17
Clawback.
Notwithstanding anything
to the contrary contained herein, unless specifically provided
otherwise in an Award agreement, the Committee may in its sole
discretion cancel such Award if the Participant, without the
consent of the Company, while employed by or providing services
to the Company or any Affiliate or after termination of such
employment or service, violates a non-competition,
non-solicitation or non-disclosure covenant or agreement or
otherwise has engaged in or engages in activity that is in
conflict with or adverse to the interest of the Company or any
Affiliate, including fraud or conduct contributing to any
financial restatements or irregularities, as determined by the
Committee in its sole discretion. Unless specifically provided
otherwise in an Award agreement, if the Participant otherwise
has engaged in or engages in any activity referred to in the
preceding sentence, the Participant will forfeit any gain or
profit or other benefit realized on the Payout of such Award,
and must repay the gain or profit or other benefit to the
Company. Unless specifically provided otherwise in an Award
agreement, if the Participant receives any amount in excess of
what the Participant should have received under the terms of the
Award for any reason (including without limitation by reason of
a financial restatement, mistake in calculations or other
administrative error), then the Participant shall be required to
repay any such excess amount to the Company. To the extent
required by applicable law (including without limitation
Section 304 of the Sarbanes-Oxley Act and Section 954
of the Dodd-Frank Act), Awards shall be subject to clawback,
forfeiture or similar requirement.
9
APPENDIX 3
AUDIT
COMMITTEE
In accordance with the By-Laws of M & F Worldwide
Corp. (the Company) and applicable laws, rules and
regulations, there will be a standing committee of the Board of
Directors of the Company (the Board) known as the
Audit Committee (the Committee).
The primary objective of the Committee is to assist the Board in
fulfilling the Boards oversight responsibilities with
respect to (a) the integrity of the financial statements
and other financial information provided by the Company to its
stockholders and the public, (b) the Companys
financial reporting process, (c) its systems of internal
accounting and financial controls, (d) its compliance with
legal and regulatory requirements, (e) the independent
auditors qualifications, independence and performance,
(f) the performance of the Companys internal audit
function and (g) any other matter required of the Committee
pursuant to the listing standards of the New York Stock Exchange
(the NYSE) or under applicable law. Although the
Committee has the powers and responsibilities set forth in this
Charter, the role of the Committee is oversight. Consequently,
it is not the duty of the Committee to plan or conduct audits;
to otherwise investigate the Companys affairs; to assure
compliance with law or Company policy; or to determine that the
Companys financial statements and disclosures are complete
and accurate, fairly present the Companys financial
condition, results of operations or cash flows, or are in
accordance with those accounting principles generally accepted
in the United States (GAAP) or applicable laws,
rules and regulations. These are the responsibilities of
management and the independent auditors.
1. Generally.
a. Composition. The Committee will consist of
three or more Directors of the Company as set by the Board from
time to time, each of whom should satisfy the qualifications
discussed in Paragraph 2 below. The Board will appoint the
members of the Committee as needed to fill any vacancy, upon the
recommendation of the Nominating/Governance Committee. Unless
removed by the Board, each member may serve for as long as he or
she is a Director.
b. Committee Chair. The Committee will have a
Chairman, who may be any member of the Committee that the Board
shall from time to time select. The Chairman may resign the
chair without resigning from the Committee.
c. Quorum. Unless otherwise provided in the
By-Laws of the Company, a quorum of the Committee will consist
of two members, whether or not the Chairman of the Com-mittee
shall be present.
d. Delegation of Authority. The Committee may
form subcommittees and delegate authority to subcommittees or
its Chairman when appropriate. In particular, the Committee
shall permit the Chairman to pre-approve certain
audit-related and non-audit-related matters pursuant to
Sections 10A(h) and (i) of the Securities Exchange Act
of 1934 (as amended by the Sarbanes-Oxley Act of 2002) to
the extent permitted by law or applicable SEC regulation. The
Chairman shall report to the Committee any action he or she may
have taken since a Committee meeting pursuant to any grant of
delegated authority at the Committees next meeting.
2. Qualifications of Members of the
Committee. Each member of the Committee, and where
applicable the Committee as a whole, should, at the time being
considered for appointment and at all times thereafter, satisfy
the following criteria:
|
|
|
|
a.
|
Independence. Each member of the Committee must be
independent within the meaning of the NYSE listing
standards and the rules of the Securities and Exchange
Commission (the SEC) pertaining to audit committees.
|
1
|
|
|
|
b.
|
Financial Literacy. To the extent required by
applicable laws or the NYSE listing standards, each member of
the Committee must be financially literate, as such
qualification is determined from time to time by the
Companys Board in the exercise of its business judgment,
or must become financially literate within a reasonable period
of time after his or her appointment to the Committee.
|
|
|
|
|
c.
|
Accounting or Related Financial Management
Expertise. To the extent required by applicable laws
or the NYSE listing standards, at least one member of the
Committee must have accounting or related financial management
expertise, as such qualification is determined from time to time
by the Companys Board in the exercise of its business
judgment, provided that the Board may presume that a member who
qualifies as an audit committee financial expert, as
discussed below, has the requisite accounting or related
financial management expertise.
|
|
|
|
|
d.
|
Audit Committee Financial Expert. While not a
requirement for membership on the Committee, it is the
Boards view that, if possible, it is desirable to have at
least one audit committee financial expert serving
on the Committee, as such term is defined in the applicable SEC
rules.
|
|
|
|
|
e.
|
Membership on Other Audit Committees. In selecting
members of the Committee, the Board should consider whether a
potential member serves on the audit committee of more than two
other public companies and, if so, whether such simultaneous
service would impair the ability of the Director to serve
effectively on the Committee. Service under these circumstances
must be disclosed in the Companys annual proxy statement
to the extent required by applicable laws or the NYSE listing
standards.
|
III. MEETINGS
The Committee will meet as often as it determines is necessary
or desirable, but not less frequently than quarterly. To foster
open communication, the Committee will endeavor to meet with
management, the head of the internal audit function and the
senior independent auditors in separate executive sessions to
discuss any matter that the Committee or each of these groups
believe should be discussed privately. The Committee may request
any officer or employee of the Company or the Companys
outside counsel or independent auditor to attend a meeting of
the Committee or to meet with any member of, or consultant to,
the Committee. The Committee may from time to time decide to act
by unanimous written consent in lieu of a meeting.
The Chairman of the Committee will (a) in consultation with
the Companys Secretary, set the time and place of
Committee meetings and notify members of meetings,
(b) preside at meetings and (c) in consultation with
the other members of the Committee and the Companys
Secretary, set the agenda of items to be addressed at each
upcoming meeting. Each member of the Committee may suggest the
inclusion of items on such agenda, and may raise at any
Committee meeting appropriate and relevant business subjects
that are not on the agenda for that meeting. The Chairman of the
Committee and the Companys Secretary will endeavor to
ensure, to the extent feasible, that the agenda for each
upcoming meeting of the Committee is circulated to each member
of the Audit Committee in advance of the meeting.
|
|
IV.
|
AUTHORITY
AND RESPONSIBILITIES
|
The Committee will, to the extent consistent with applicable law
or the NYSE listing standards, have the following authority and
principal responsibilities:
1. Independent Auditor. With respect to the
independent auditor, the Committee will:
|
|
|
|
a.
|
Be directly and solely responsible for the appointment,
compensation, retention and oversight of the work of any public
accounting firm registered with the Public Company Accounting
Oversight Board (the PCAOB), including the
Companys independent auditor for the purpose of preparing
and issuing its audit report or performing other audit, review
or attest services for the Company. Such registered public
accounting firms will report directly to the Committee, and the
Committee will be directly responsible for resolving any
disagreement between management and the independent auditor
regarding financial reporting.
|
2
|
|
|
|
b.
|
Review in advance, and grant any appropriate pre-approval of,
(i) all proposed auditing services to be provided by the
independent auditor and (ii) all proposed non-audit
services to be provided by the independent auditor as permitted
by applicable law, and in connection therewith to approve all
fees and other terms of engagement, as required by applicable
law and subject to the exemptions provided in the SECs or
PCAOBs rules.
|
|
|
|
|
c.
|
At least annually, obtain and review a report from the
independent auditor describing (i) the independent
auditors internal quality control procedures,
(ii) any material issue raised by the most recent internal
quality control review, or peer review, of the independent
auditor, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years
concerning one or more independent audits carried out by the
independent auditor, and any step taken to deal with any such
issue, and (iii) all relationships between the independent
auditor and the Company.
|
|
|
|
|
d.
|
Periodically review with the independent auditor any problem or
difficulty encountered during the course of the audit, including
any restriction on the scope of work or access to required
information, and managements response.
|
2. Review of Financial Statements and Other Financial
Oversight.
The Committee will:
|
|
|
|
a.
|
Discuss with management and the independent auditor the
Companys annual audited and quarterly unaudited financial
statements, including disclosures made in
Managements Discussion and Analysis of Financial
Condition and Results of Operations.
|
|
|
b.
|
Render the audit committee report required by the SECs
proxy rules to be included in the Companys annual proxy
statement and any other report of the Committee required by
applicable law or the NYSE listing standards.
|
|
|
|
|
c.
|
Discuss generally the Companys earnings press releases, as
well as the type of financial information and earnings guidance
provided to analysts or rating agencies.
|
|
|
|
|
d.
|
Review major issues regarding accounting principles and
financial statement presentations, including any significant
change in the Companys selection or application of
accounting principles, and major issues as to the adequacy of
the Companys internal controls and any special audit step
adopted in light of any material control deficiency.
|
|
|
|
|
e.
|
Review analyses prepared by management
and/or
the
independent auditor setting forth significant financial
reporting issues, if any, and judgments made in connection with
the preparation of the financial statements, including analyses
of the effects of alternative GAAP methods on the financial
statements.
|
|
|
|
|
f.
|
Review the effect of regulatory and accounting initiatives, as
well as any off-balance sheet structure, on the Companys
financial statements.
|
|
|
|
|
g.
|
Meet separately, periodically, with the Companys
management, with the personnel implementing the Companys
internal audit function and with the Companys independent
auditor.
|
3. Internal Controls. With respect to the
internal audit function and internal controls, the Committee
will:
|
|
|
|
a.
|
Review on an annual basis the composition, functions, staffing,
budget and performance of the internal audit function.
|
|
|
b.
|
Discuss the Companys risk assessment and risk management
guidelines and policies.
|
4. Complaint Procedures. The Committee will:
|
|
|
|
a.
|
Establish and maintain procedures for (i) the receipt,
retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing
matters
|
3
|
|
|
|
|
and (ii) the confidential, anonymous submission by Company
employees of concerns regarding questionable accounting or
auditing matters.
|
|
|
|
|
b.
|
Have the power to investigate any matter brought to its
attention and the right to obtain full access to all books,
records, facilities and personnel of the Company.
|
5. Other Responsibilities. The Committee will:
|
|
|
|
a.
|
(i) Review and advise the Board with respect to the
Companys policies and procedures regarding compliance with
the Companys Code of Business Conduct (the
Code); (ii) obtain reports from management, the
head of the Companys internal audit function and the
independent auditor concerning any issue of which they are aware
concerning compliance with the Code; (iii) approve, if the
Board has not done so, any appropriate waiver of the Code for
(A) the Companys executive officers and directors or
(B) in the case of the portion of the Code entitled
Code of Ethics for Senior Financial Officers, the
Companys Senior Financial Officers (as defined in the
Code); provided, however, that any such waiver shall be promptly
disclosed as required by law or any listing standard of the NYSE.
|
|
|
b.
|
Establish policies with respect to the hiring of employees or
former employees of the independent auditor who have
participated in any capacity in the Companys audit.
|
|
|
|
|
c.
|
Endeavor to evaluate at least annually whether any change to
this Charter is necessary or appropriate.
|
|
|
|
|
d.
|
Report orally or in writing to the Board concerning each meeting
of the Committee as it deems necessary or appropriate.
|
|
|
|
|
e.
|
Review its own performance annually.
|
|
|
|
|
f.
|
Perform any other activity consistent with this Charter and the
Companys By-Laws or as are required under applicable law
or the NYSE listing standards, as in effect from time to time.
|
V. RESOURCES
The Committee will have the authority to retain independent
legal, accounting and other advisors and consultants, as
appropriate, to advise the Committee or its subcommittees as
they determine necessary to carry out their duties, without
seeking Board or management approval. The Committee will
determine the extent of funding necessary for payment of
compensation by the Company to the independent auditor for its
work in preparing or issuing the annual audit report or for
providing any other permissible audit-related or non-audit
service and to any independent legal, accounting and other
advisor or consultant retained to advise the Committee or its
subcommittees, which funds will be provided by the Company. The
Company will also reimburse ordinary administrative expenses of
the Committee.
Publication Date: January 2, 2004
4
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 19, 2011
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 19, 2011 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 approval
of certain bonus arrangements for Charles T. Dawson for purposes of allowing such compensation to
be deductible under Section 162(m) of the Code; FOR approval of the 2011 LTIP for purposes of
allowing compensation paid pursuant to the 2011 LTIP to be deductible under Section 162(m) of the
Code; FOR the approval, on an advisory basis, of the compensation of the Companys named executive
officers; FOR the approval of an advisory vote on executive compensation to be held every three
years; and FOR ratification of the selection of Ernst & Young LLP as the Companys independent
auditors for 2011. 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 19, 2011
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be
Held on May 19, 2011.
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.
20530030030403000000 4 051911
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS
AND FOR PROPOSALS 2, 3, 4 AND 6 AND 3 YEARS ON PROPOSAL 5.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN HERE
1. To elect as directors of M & F Worldwide Corp. (the Company) for terms expiring in 2014 and
until their successors are duly elected and qualified.
FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
Philp E.Beekman
William C.Bevins
Viet D. Dinh
John M. Keane
Stephen G. Taub
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.
2. To approve certain bonus arrangements for
Charles T. Dawson for purposes of allowing such
compensation to be deductible under Section
162(m) of the Internal Revenue Code of 1986, as
amended.
FOR AGAINST ABSTAIN
3. To approve the M&F Worldwide Corp. 2011 Long
Term 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.
FOR AGAINST ABSTAIN
4. To approve, on an advisory basis, the
compensation of the Companys named executive
officers.
FOR AGAINST ABSTAIN
5. To approve, on an advisory basis, the
frequency of future advisory votes on the
compensation of the Companys named
executive officers.
1 year 2 years 3 years ABSTAIN
6. To ratify the selection of Ernst & Young LLP
as the Companys independent auditors for 2011.
FOR AGAINST ABSTAIN
7. 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.
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.
|
M & F (NYSE:MFW)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
M & F (NYSE:MFW)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024