<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Steiner Leisure Limited
(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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________
(2) Aggregate number of securities to which 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:
______________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] 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:
______________________________________________________________________
<PAGE>
[LOGO OF STEINER LEISURE LIMITED]
STEINER LEISURE LIMITED
_____________, 1999
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders
of Steiner Leisure Limited, which will be held at the Atlantis Hotel, Paradise
Island, New Providence, The Bahamas, on Friday, June 18, 1999, at 1:00 p.m.
local time.
Details of the business to be conducted at the annual meeting are given
in the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you attend the annual meeting, it is important that your
shares be represented and voted at the meeting. Therefore, I urge you to sign,
date and promptly return the enclosed proxy in the enclosed postage paid
envelope. If you decide to attend the annual meeting and vote in person, you
will still, of course, have that opportunity.
Sincerely,
/s/ Clive E. Warshaw
Clive E. Warshaw
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
STEINER LEISURE LIMITED
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 18, 1999
-----------------------
To the Shareholders:
The annual meeting of the shareholders of Steiner Leisure Limited (the
"Company") will be held at the Atlantis Hotel, Paradise Island, New Providence,
The Bahamas, on Friday, June 18, 1999 at 1:00 p.m. local time for the following
purposes:
1. To elect three Class III directors, each to serve for a term of
three years.
2. To act upon a proposal to amend the Company's Amended and Restated
Memorandum of Association to increase the number of authorized common shares
from 20,000,000 to 100,000,000;
3. To act upon a proposal to amend the Company's Amended and Restated
1996 Share Option and Incentive Plan to increase the number of common shares
available for grant thereunder from 1,620,000 to 3,500,000;
4. To ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999; and
5. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on April 20, 1999
are entitled to notice of, and to vote at, this meeting and any adjournment
or postponement thereof.
By Order of the Board of Directors
Carl S. St. Philip, Jr.
SECRETARY
____________, 1999
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE JUNE 18, 1999
ANNUAL MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN
PERSON IF YOU WISH, EVEN IF YOU PREVIOUSLY RETURNED YOUR PROXY.
<PAGE>
STEINER LEISURE LIMITED
SUITE 104A
SAFFREY SQUARE
NASSAU, THE BAHAMAS
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement and the accompanying proxy are being furnished to
shareholders of Steiner Leisure Limited, a Bahamian international business
company (the "Company"), in connection with the solicitation of proxies by the
Company's Board of Directors from holders of the Company's outstanding common
shares, (U.S.) $.01 par value per share (the "Common Shares"), for use at the
annual meeting of shareholders of the Company to be held on Friday, June 18,
1999, at the Atlantis Hotel, Paradise Island, New Providence, The Bahamas, at
1:00 p.m., local time, and at any adjournments or postponements thereof (the
"Annual Meeting"), for the purpose of considering and acting upon the matters
set forth in the accompanying Notice of Annual Meeting of Shareholders.
Only holders of record of Common Shares as of the close of business on
April 20, 1999 (the "Record Date") are entitled to notice of, and to vote at,
the Annual Meeting. At the close of business on such date, the Company had
16,607,131 Common Shares issued and outstanding. Holders of Common Shares are
entitled to one vote on each matter considered and voted upon at the Annual
Meeting for each Common Share held of record as of the Record Date. Common
Shares represented by a properly executed proxy, if such proxy is received in
time and not revoked, will be voted at the Annual Meeting in accordance with the
instructions indicated in such proxy. If no instructions are indicated, shares
represented by proxy will be voted "For" the election, as directors of the
Company, of the three nominees named in the proxy to serve until the 2002 annual
meeting of shareholders, "For" the approval of the amendment to the Company's
Amended and Restated Memorandum of Association (the "Memorandum") to increase
the number of authorized Common Shares from 20,000,000 to 100,000,000, "For" the
approval of the amendment to the Company's Amended and Restated 1996 Share
Option and Incentive Plan (the "Option Plan") to increase the number of Common
Shares available for issuance thereunder from 1,620,000 to 3,500,000, "For" the
ratification of the appointment of Arthur Anderson LLP as independent auditors
for the Company for fiscal year 1999, and in the discretion of the proxy holders
as to any other matter which may properly be presented at the Annual Meeting.
This Proxy Statement and the accompanying proxy card are being mailed
to Company shareholders on or about __________, 1999.
Any holder of Common Shares giving a proxy in the form accompanying
this Proxy Statement has the power to revoke the proxy prior to its use. A proxy
can be revoked (i) by an instrument of revocation delivered prior to the Annual
Meeting to the Secretary of the Company, (ii) by a duly executed proxy bearing a
later date than the date of the proxy being revoked or (iii) at the Annual
Meeting, if the shareholder is present and elects to vote in person. Mere
attendance at the Annual Meeting will not serve to revoke the proxy. All written
notices of revocation of proxies should be addressed as follows: Carl S. St.
Philip, Jr., Secretary, c/o CT Maritime Services, L.C., 1007 North America Way,
Fourth Floor, Miami, Florida 33132.
The holders of a majority of Common Shares issued and outstanding on
the Record Date, whether present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. Only
those votes cast for or against a proposal are used in determining the results
of a vote. Abstentions and broker non-votes are each included for purposes of
determining the presence or absence of a sufficient number of shares to
constitute a quorum, but are not considered as having voted for purposes of
determining the outcome of a vote.
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
The number of directors of the Company, as determined by the Board of
Directors pursuant to the Company's Amended and Restated Articles of Association
(the "Articles"), is six. In accordance with the Articles, the Board of
Directors of the Company consists of three classes: Class I, Class II and Class
III, consisting of one, two and three directors, respectively. One of the three
classes is elected each year to succeed the directors or director, as the case
may be, whose terms are expiring. Directors hold office until the annual meeting
for the year in which their terms expire and until their successors are elected
and qualified unless, prior to that date, they have resigned or otherwise left
office. Class III directors are to be elected at the Annual Meeting, the Class I
director is to be elected at the 2000 annual meeting of shareholders and the
Class II directors are to be elected at the 2001 annual meeting of shareholders.
At the Annual Meeting, three Class III directors are to be elected to
the Board, each to serve until the annual meeting of shareholders to be held in
2002. The nominees for election at the Annual Meeting are Leonard I. Fluxman,
Michele Steiner Warshaw and Steven J. Preston. All nominees presently are
directors of the Company. If a nominee is unable or unwilling to serve as a
director, proxies may be voted for a substitute nominee designated by the
present Board. The Board of Directors has no reason to believe that any of these
nominees will be unable or unwilling to serve as a director.
The following table sets forth the names and ages (as of the date of
the Annual Meeting) of the directors, the class (and year that class stands for
election) to which each director has been nominated for election or elected, the
positions and offices, if any, held by each director with the Company and the
year during which each became a director of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY DIRECTOR SINCE
- ---- --- -------------------------- --------------
<S> <C> <C> <C>
CLASS III
NOMINEES FOR DIRECTORS TO HOLD OFFICE
UNTIL 2002
Leonard I. Fluxman................................ 41 President and Chief 1995
Operating Officer, and
Director
Michele Steiner Warshaw........................... 53 Executive Vice President and 1995
Director
Steven J. Preston................................. 47 Director 1997
CLASS I
DIRECTOR HOLDING OFFICE UNTIL 2000
Clive E. Warshaw.................................. 57 Chairman of the Board and 1995
Chief Executive Officer
CLASS II
DIRECTORS HOLDING OFFICE
UNTIL 2001
Charles D. Finkelstein............................ 47 Director 1997
Jonathan D. Mariner............................... 44 Director 1997
</TABLE>
Leonard I. Fluxman has served as President and Chief Operating Officer
of the Company since January 1999, and as a director since November 1995. From
November 1995 through December 1998, he served as Chief Operating Officer and
Chief Financial Officer of the Company. Mr. Fluxman joined the Company in June
1994, in connection with the Company's acquisition of Coiffeur Transocean
(Overseas), Inc. ("CTO"). Mr. Fluxman served as CTO's Vice President -- Finance
from January 1990 until June 1994 and as its Chief Operating Officer from June
1994 until November 1996. Mr. Fluxman, a certified public accountant, was
employed by Laventhol and Horwath from 1986 to 1989, during a portion of which
period he served as a manager.
Michele Steiner Warshaw has served as a director of the Company since
November 1995 and served as its Senior Vice President -- Development from
January 1996 until March 1997, when she was named Executive Vice President of
the Company. Ms. Warshaw held a variety of positions with Steiner Group Limited,
now known as STGR Limited ("Steiner Group"), the Company's predecessor, from
1967 until November 1995, including assisting in the design and development of
shipboard facilities and services. Ms. Warshaw resides in The Bahamas. Ms.
Warshaw is the wife of Clive E. Warshaw.
Steven J. Preston has served as a director of the Company since April
1997. Since March 1997, Mr. Preston has served as an independent financial
consultant. Since March 1997, he has also served as Chairman of the Board of The
2
<PAGE>
203 Group, L.C., an entity formed to engage in marketing and advertising
services that is currently inactive. From 1974 through February 1997, Mr.
Preston was with Arthur Andersen LLP ("Arthur Andersen"), including, from
September 1985, as a tax partner. Since 1995, Arthur Andersen has provided tax
advice to the Company and has served as the Company's independent auditors. Mr.
Preston was the partner in charge of Arthur Andersen's engagement to provide tax
advice to the Company prior to his departure from that firm. Mr. Preston
provides consulting services to the Company from time to time.
Clive E. Warshaw has served as Chairman of the Board and Chief
Executive Officer and a director of the Company since November 1995. Mr. Warshaw
joined Steiner Group in 1982 and served as the senior officer of the Maritime
Division of Steiner Group from 1987 until November 1995. Mr. Warshaw resides in
The Bahamas. Mr. Warshaw is the husband of Michele Steiner Warshaw.
Charles D. Finkelstein has served as a director of the Company since
February 1997. Since 1985, he has served as General Counsel, Secretary and a
director of Faber Coe & Gregg, Inc., which operates shops offering gifts,
sundries and newspapers and other publications in airports, train stations,
hotels and other venues in various parts of the United States.
Jonathan D. Mariner has served as a director of the Company since
February 1997. Since January 1999, he has served as the Senior Vice President
and Chief Financial Officer of the Florida Marlins Major League Baseball Club.
He had been Vice President and Chief Financial Officer since February 1992. From
February 1989 until February 1992, Mr. Mariner served as Vice President, Finance
and Administration, for the Greater Miami Convention and Visitors Bureau.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE ELECTION OF LEONARD I. FLUXMAN, MICHELE STEINER WARSHAW AND STEVEN J.
PRESTON AS CLASS III DIRECTORS.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board met 11 times in 1998.
The Company's Board of Directors has an Audit Committee and a
Compensation Committee. The Board of Directors does not have a nominating
committee or any committee performing similar functions. The full Board of
Directors is involved in the consideration and nomination of candidates to serve
on the Board. Both the Audit Committee and the Compensation Committee consist of
Messrs. Finkelstein, Mariner and Preston. Mr. Preston serves as Chairman of each
committee.
The Audit Committee is responsible for reviewing internal accounting
controls and accounting, auditing and financial reporting matters, including the
engagement of independent auditors. The Audit Committee met four times during
1998.
The Compensation Committee is responsible for approving the
compensation arrangements for executive officers and certain other officers of
the Company and for establishing policies relating to that compensation. It is
also responsible for administering the Option Plan. The Compensation Committee
met seven times during 1998.
COMPENSATION OF DIRECTORS
Messrs. Warshaw and Fluxman and Ms. Warshaw receive no compensation for
serving on the Board except for reimbursement of reasonable expenses incurred in
connection with their attendance at Board meetings. Commencing with the Annual
Meeting, each director who is not an employee of the Company or any subsidiary
of the Company (a "Non-Employee Director") will receive an annual retainer of
$_______, plus $______ for each meeting of the Board of Directors attended. In
addition, each Non-Employee Director will be paid $_______ for each committee
meeting attended, except for the chairman of the committees, currently Mr.
Preston, who will be paid $________ for each committee meeting he attends. Under
the Company's Non-Employee Directors' Share Option Plan (the "Directors' Plan"),
each of the Non-Employee Directors was granted, at the 1998 annual meeting of
shareholders on June 26, 1998, ten-year options to purchase 2,813 Common Shares
at an exercise price per share of $29.922. The option exercise price is payable
either in cash or by surrender of Common Shares having a fair market value equal
to the option exercise price. Mr. Preston was granted an additional 750 of these
options as compensation for his position as chairman of each of the committees
of the Board. These options become exercisable commencing on the first
anniversary of the date of grant, except that in the event of a change in
control of the Company, the options are immediately exercisable. The Directors'
Plan defines a "change in control" as including, among other things, (i) the
acquisition by a person or group of more than 20% of the Company's outstanding
voting securities without the prior approval of the Company's Board of Directors
or (ii) during any period of 24 consecutive months, individuals who, at the
beginning of such period, were directors of the Company, or individuals whose
nomination or election was approved by a vote of 66 2/3% of such directors or
directors previously so elected or nominated, ceasing for any reason to
constitute a majority of the Board. The Directors' Plan was terminated by the
Board of Directors of the Company in April 1999 as a result of the inception of
the annual retainer and meeting payments described above. Non-Employee Directors
are eligible to receive awards under the Option Plan, which is described below,
although no grants under that plan have been made to date to Non-Employee
Directors. Non-Employee Directors are reimbursed for reasonable expenses in
connection with their attendance at meetings of the Board or committees thereof.
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation for
services in all capacities paid to, or earned by, those persons who were
executive officers of the Company during 1998 (the "Named Executive Officers")
with respect to the fiscal years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1)(2) SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(3) COMPENSATION
<S> <C> <C> <C> <C> <C>
Clive E. Warshaw 1998 $ 370,000 $ 370,000 53,565 $
Chairman of the Board and 1997 341,250 341,250 90,000 --
Chief Executive Officer 1996 325,000 325,000 324,000 --
Leonard I. Fluxman 1998 240,000 240,000(5) 52,110 4,800(6)
President and Chief Operating 1997 183,750 183,750(5) 369,000 2,375(6)
Officer(4) 1996 175,000 175,000(5) 162,000 716(6)
Michele Steiner Warshaw 1998 147,000 51,450 21,285 --
Executive Vice President 1997 140,000 48,510 12,150 --
1996 125,000 40,000 81,000 --
Amanda Jane Francis 1998 126,000 95,000 19,148 4,583(6)
Senior Vice President-- 1997 120,000 90,000 11,700 --
Operations of Steiner 1996 115,000 85,000 64,688 --
Transocean Limited
Sean C. Harrington 1998 138,763 138,763 20,318 4,321(7)
Managing Director of Elemis 1997 133,069(8) 39,477 49,050 4,255(7)
Limited 1996 122,926(8) 26,414 14,184 4,257(7)
- ----------
</TABLE>
(1) Certain of the Named Executive Officers' compensation during the years
in question was paid, in total or in part, in British pounds. All such
amounts are presented in U.S. dollars based on the average exchange
rate for the year in question.
(2) No other annual compensation for the Named Executive Officers is
reflected because the aggregate values of the perquisites and other
personal benefits received by each of the Named Executive Officers for
the indicated years were below the required threshold for disclosure
(the lesser of $50,000 or 10% of the total annual salary and bonus for
such executive officer).
(3) Reflects adjustment for the three-for-two splits of the Common Shares
effective on October 24, 1997 and April 28, 1998 (the "April 1998 Share
Split"), respectively (collectively, the "Share Splits").
(4) Mr. Fluxman served as Chief Operating Officer and Chief Financial
Officer of the Company through December 31, 1998.
(5) Includes $30,000 deferred pursuant to a deferred compensation agreement
between Mr. Fluxman and the Company.
(6) Represents the Company's contribution under its 401(k) plan.
(7) Consists of Company contributions to a private pension arrangement
maintained on behalf of Mr. Harrington.
(8) Includes approximately $46,796 and $44,606 for 1997 and 1996,
respectively, which is designated as a bonus, but the payment of which
was guaranteed under Mr. Harrington's employment agreement.
4
<PAGE>
OPTION GRANTS IN 1998
The following table sets forth information regarding grants of options
to purchase Common Shares made by the Company during fiscal year 1998 to each of
the Named Executive Officers. No share appreciation rights were granted during
1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#) 1998 ($/SHARE) DATE VALUE(2)
<S> <C> <C> <C> <C> <C>
Clive E. Warshaw........................ 53,565 20.22% $ 34.542 3/26/08 $ 1,060,207
Leonard I. Fluxman...................... 34,740 13.12 34.542 3/26/08 687,605
17,370 6.56 25.000 11/24/98 251,023
Michele Steiner Warshaw................. 21,285 8.04 34.542 3/26/08 421,292
Amanda Jane Francis..................... 12,765 4.82 34.542 3/26/08 252,656
6,383 2.41 25.000 11/24/98 92,244
Sean C. Harrington...................... 13,545 5.11 34.542 3/26/08 268,095
6,773 2.56 25.000 11/24/98 97,880
- ----------
</TABLE>
(1) All options were granted pursuant to the Option Plan. The options vest
and become exercisable in equal amounts over three years and have terms
of ten years. The numbers of options granted in March 1998 and the
exercise price thereof have been adjusted to reflect the April 1998
Share Split. See "Executive Compensation -- Employment Agreements" and
"-- 1996 Share Option and Incentive Plan."
(2) Based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options using the following assumptions: (a)
expected volatility of 61.03%, (b) risk-free rate of return of 6.0%,
(c) dividend yield of 0.0 and (d) exercise term of 5 years. The actual
value, if any, an executive officer may realize will depend on the
excess of the share price over the exercise price on the date the
option is exercised, so there is no assurance the value realized by an
executive officer will be at or near the value estimated by the
Black-Scholes model.
AGGREGATE OPTION EXERCISES IN 1998 AND YEAR-END 1998 VALUES
The following table sets forth information regarding option exercises
and the number and year-end value of unexercised options held at December 31,
1998 by each of the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)(1)
ACQUIRED ------------- -------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Clive E. Warshaw............................. 135,750 $ 2,846,437 108,000/329,565 $2,831,998/6,950,665
Leonard I. Fluxman........................... 79,556 1,654,249 117,692/496,806 1,886,898/6,008,508
Michele Steiner Warshaw...................... 31,050 655,857 27,000/156,285 707,999/3,153,003
Amanda Jane Francis.......................... 43,274 648,236 42/48,512 1,101/777,404
Sean C. Harrington........................... 4,730 98,608 12,600/74,096 185,045/882,617
</TABLE>
- ----------
(1) The amounts set forth represent the difference between the $32.00 per
share closing price of the Common Shares issuable upon exercise of the
options at December 31, 1998 and the exercise price of the options,
multiplied by the applicable number of shares issuable upon exercise of
the options. The numbers of underlying securities and the exercise
prices of the options reflect the Share Splits.
5
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with the Named
Executive Officers, as described below. All of those agreements provide for,
among other things: (i) the termination of the employee by the Company solely
upon the occurrence of specified events relating to the employee's conduct; (ii)
an agreement from the employee not to compete with the Company, not to disclose
certain confidential information of the Company and not to solicit employees of
the Company to leave the Company's employ; and (iii) the continuation of
compensation payments to a disabled executive officer until such officer has
been unable to perform the services required of him or her for an aggregate of
six months in any 12 month period. Each agreement also provides for an
automobile allowance and health insurance.
The Company has entered into six-year employment agreements, effective
as of January 1, 1996, with Clive E. Warshaw, Chairman of the Board and Chief
Executive Officer, and Leonard I. Fluxman, President and Chief Operating
Officer. The agreements, as amended through April 1999, provide for annual base
salaries of not less than $390,000 and $264,000, respectively, plus quarterly
incentive bonuses based on the Company's attainment of certain targeted earnings
levels (the "Company Earnings") in amounts up to the base salaries. Those
earnings levels are required to be approved for such purpose by the Compensation
Committee. The agreements also provide for payments to be used for the purchase
of disability insurance policies. Under the agreements, if, after a change in
control of the Company, the employment of Mr. Warshaw or Mr. Fluxman is
terminated, including by either of such persons as a result of a reduction in
salary or other benefits, certain relocations or a determination by such person
that his employment changed materially adversely, he would be entitled to
receive an amount equal to 2.99 times his then base salary plus any bonus then
due him, and all of his share options then not yet vested would become
immediately exercisable. For such purposes, a "change in control" means (i) a
change in control that would be required to be reported on Form 8-K under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than a
transaction arranged or approved by the Board of Directors of the Company, (ii)
any person or group, with certain exceptions, becoming the beneficial owner of
25% or more of the voting power of the then outstanding securities of the
Company otherwise than through a transaction arranged or approved by the Board
of Directors of the Company, (iii) 25% or more of the assets of the Company
being sold otherwise than through a transaction approved by the Board of
Directors of the Company or (iv) during a 12-month period, any three
individuals, each of whom is at the beginning of such period a member of the
Company's Board of Directors and an officer of the Company or an entity
controlled by the Company, ceasing to serve in such positions other than through
voluntary resignation.
The Company has also entered into a deferred compensation agreement
with Mr. Fluxman, pursuant to which Mr. Fluxman may elect to defer a designated
portion of his cash compensation. Such designated amounts are held in an account
maintained by the Company, which would include earnings, if any, realized with
respect to the funds in such account. All amounts in such account are the
property of the Company until distributed to Mr. Fluxman upon the termination of
his employment. Under an agreement between Mr. Fluxman and the Company, such
amounts are invested pursuant to a life insurance policy for the benefit of Mr.
Fluxman under which the Company pays the premiums and is entitled to receive an
amount equal to the total of such premiums from Mr. Fluxman or out of the
insurance policy's death benefit proceeds.
The Company has entered into six-year employment agreements, effective
January 1, 1996, with Michele Steiner Warshaw, Executive Vice President, and
Amanda Jane Francis, Senior Vice President -- Operations of Steiner Transocean
Limited, a Bahamian subsidiary of the Company that conducts its shipboard
operations ("Steiner Transocean"). Those agreements, as amended through April
1999, provide for the payment of annual base salaries of not less than $155,000
and $126,000, respectively, plus bonuses. The bonus payable to Ms. Warshaw is
determined by the Compensation Committee of the Board of Directors. Ms. Francis
is entitled to quarterly bonuses up to an aggregate of $126,000 based on the
attainment of targeted quarterly revenues by Steiner Transocean, which revenues
are required to be approved for such purpose by the Compensation Committee.
The Company has entered into a five-year employment agreement,
effective January 1, 1996, with Sean C. Harrington, the Managing Director of
Elemis Limited, a United Kingdom subsidiary of the Company which arranges for
the production, packaging and supplying of the Company's products ("Elemis").
Under that agreement, as amended through April 1999, Mr. Harrington's base
salary is approximately $141,000. In addition, for 1999, Mr. Harrington is
entitled to quarterly bonuses up to a total of approximately $141,000 based on,
among other things, the attainment by Elemis of certain targeted sales, the
attainment by the Company of the Company Earnings and the maintenance within
budgeted amounts of certain costs which are under his direction, all of which
amounts are required to be approved for such purpose by the Compensation
Committee. Those amounts are based on the British pound to U.S. dollar exchange
rate on April 9, 1999. In addition, the agreement provides that the Company will
pay annually into a pension plan maintained on behalf of Mr. Harrington an
amount equal to five percent of his base salary.
6
<PAGE>
1996 SHARE OPTION AND INCENTIVE PLAN
Under the Option Plan, directors, officers and certain other employees
of, and consultants to, the Company can be granted a variety of long term
incentives, including non-qualified share options, incentive share options,
share appreciation, rights exercise payment rights, grants of restricted and
unrestricted shares and performance share awards. Under the Option Plan, the
Compensation Committee determines, in its discretion, among other things, who
will receive awards, when the awards will be granted, the type of awards to be
granted, the number of shares or cash involved in each award, the time or times
when any options granted will become exercisable and, subject to certain
conditions, the price and duration of such options. The Option Plan is discussed
in more detail below, under "Proposal 3 - Approval of an Amendment to the
Company's Amended and Restated 1996 Share Option and Incentive Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is composed
of three outside directors: Messrs. Finkelstein, Mariner and Preston.
COMPENSATION OF CERTAIN OFFICERS
Victoria Schaverein, the Managing Director of Steiner Training Limited,
a United Kingdom subsidiary of the Company responsible for the training of
shipboard employees ("Training"), and the daughter of Mr. Warshaw and Ms.
Warshaw, received compensation of approximately $83,000 and other benefits with
an aggregate value of approximately $19,600 in 1998. In addition, in March 1998,
Ms. Schaverein was granted options to purchase 6,015 and 3,008 of the Common
Shares, respectively, at exercise prices of $34.542 and $25.00 per share,
respectively. For 1999, Ms. Schaverein will receive a salary of approximately
$76,000 plus a car allowance and certain other benefits with an aggregate value
of approximately $19,000. In addition, she will be entitled to receive a bonus
of up to approximately $16,500 if all of the budgeted targets of Training and
the budgeted revenues of Steiner Transocean are met. In March 1999, Ms.
Schaverein was granted options to purchase 7,450 of the Common Shares at an
exercise price of $30.563 per share. Robert Schaverein, the Sales Manager of
Elemis and the husband of Victoria Schaverein, received compensation of
approximately $85,500, and other benefits with an aggregate value of
approximately $10,000 in 1998. In March 1998 and November 1998, Mr. Schaverein
was granted options to purchase 3,015 and 1,508 of the Common Shares,
respectively at exercise prices of $34.542 and $25.00 per share, respectively.
For 1999, Mr. Schaverein will receive a salary of approximately $56,000 plus a
car allowance and certain other benefits with an aggregate value of
approximately $10,000. In addition, he will be entitled to receive a bonus of up
to approximately $32,000 if certain Elemis sales targets are met. In March 1999,
Mr. Schaverein was granted options to purchase 3,680 of the Common Shares at an
exercise price of $30.563 per share. The above compensation amounts for 1998 are
based on the average British pound to U.S. dollar exchange rate for 1998. The
compensation amounts for 1999 are based on the British pound to U.S. dollar
exchange rate on April 9, 1999. The numbers of underlying shares and the
exercise price with respect to the March 1998 option grants have been adjusted
to reflect the April 1998 Share Split. The compensation payable to Ms.
Schaverein and Mr. Schaverein (including the targets upon which their bonuses
are based) is required to be approved by the Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
approving the compensation of the Company's executive officers and for the
setting of policies relating to that compensation.
COMPENSATION PHILOSOPHY
The Compensation Committee believes that the Company's goal of
maximizing shareholder value is dependent to a significant extent on the
Company's ability to attract and retain qualified executive officers. In order
to do so, the Compensation Committee believes that the Company is required to
offer attractive compensation packages, including competitive salaries. The
Compensation Committee also believes that shareholder value is further enhanced
by aligning the interests of its executive officers with the interests of its
shareholders. In the opinion of the Compensation Committee, the compensation
arrangements for the Company's executive officers promote such an alignment of
interests by offering (i) compensation in the form of bonuses tied to specified
Company performance criteria or to be awarded based on other measures of
individual or Company performance and (ii) the opportunity to receive Common
Shares, or options to purchase Common Shares under the Option Plan.
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COMPONENTS OF COMPENSATION
The Company's compensation program for its executive officers is
designed to attract, motivate, reward and retain personnel capable of making
significant contributions to the long-term success of the Company. The program
consists of four components -salary, bonuses, awards under the Option Plan and
various employee benefits (including automobile allowances as well as medical
and life insurance and, for Mr. Fluxman, Ms. Francis and Carl S. St. Philip,
Jr., (who became the Company's Vice President and Chief Financial Officer in
January 1999), who are based in the United States, 401(k) plan benefits
generally available to the United States employees of the Company). The program
places a significant percentage of the Company's most senior executive officers'
compensation at risk, rewarding the executives if the performance of the Company
warrants and, accordingly, encouraging the building of shareholder value.
The compensation payable to the executive officers of the Company is
based on the Company's employment agreements with its executive officers
(collectively, the "Employment Agreements" and, individually, an "Employment
Agreement"), which are described above under "Executive Compensation--
Employment Agreements." The Employment Agreements were initially entered into
prior to the Company's initial public offering in November 1996 and prior to the
time that the Company's Board included outside directors, and have been amended
since then to increase the amounts payable thereunder.
In determining amounts of compensation, the Compensation Committee has
considered compensation practices of other publicly traded entities and the
advice of independent compensation consultants. Those sources, as well as
internally generated information, are evaluated by the Compensation Committee in
establishing and approving executive compensation. The Compensation Committee
strives to strike an appropriate balance between base salary (attracting and
retaining qualified personnel), bonuses (rewarding achievement of short-term
critical objectives) and option awards (directly aligning long term incentives
with results for shareholders). The Compensation Committee believes that these
three components help to maximize shareholder value by attracting qualified
personnel to the Company, and motivating executive officers to achieve the short
and long-term goals of the Company.
ANNUAL BASE SALARY. The Employment Agreements for all of the five Named
Executive Officers reflect increases for 1998 from prior years in base salary
and potential bonus payments (except that Ms. Warshaw's bonus is payable in the
discretion of the Compensation Committee). The Compensation Committee believed
those increases to be appropriate in view of the Company's continued strong
performance during 1997, the performance of the respective executive officers
and the increased responsibilities of those officers as a result of the growth
of the Company. The base salaries set forth in each of the Employment Agreements
may not be reduced by the Compensation Committee.
ANNUAL BONUSES. The Employment Agreements for Clive E. Warshaw,
Chairman of the Board and Chief Executive Officer, and Leonard I. Fluxman,
President and Chief Operating Officer, provide for incentive bonuses directly
tied to the performance of the Company. Those bonuses, which, in the aggregate,
may not exceed the respective base salaries of Messrs. Warshaw and Fluxman for
the year, are payable quarterly if the Company attains targeted levels of
earnings (before taxes, depreciation and amortization) through the end of each
quarter, which earnings levels are required to be approved by Compensation
Committee. The bonuses may not exceed five percent (with respect to Mr. Warshaw)
and two and one-half percent (with respect to Mr. Fluxman) of such targeted
earnings. For 1998, the targeted earnings represented an increase in earnings
for the Company's services and product sales from the prior year. The Company
exceeded the targeted earnings in each of the four quarters of 1998 and Messrs.
Warshaw and Fluxman each received the maximum bonus payable under his Employment
Agreement.
For 1998, under her Employment Agreement, Michele Steiner Warshaw,
Executive Vice President, was entitled to such bonus as the Compensation
Committee determined. For 1998, Ms. Warshaw received a bonus of $51,450. In
approving that bonus, the Compensation Committee considered, primarily, the
growth of the Company's revenues and earnings during 1998 and Ms. Warshaw's
performance. Under her Employment Agreement, Amanda Jane Francis, Senior Vice
President -- Operations, is eligible for quarterly bonuses based on the
attainment of targeted quarterly revenues of Steiner Transocean, which revenues
are required to be approved for such purpose by the Compensation Committee.
The bonus for Sean C. Harrington, Managing Director of Elemis, was
based on the attainment by Elemis of targeted sales, which were approved by the
Compensation Committee. The targeted sales for 1998 represented an increase in
such sales from the prior year. For 1998, Mr. Harrington received a bonus
8
<PAGE>
representing the maximum bonus for which he was eligible. The sales targets upon
which Mr. Harrington's bonus was based are required to be approved by the
Compensation Committee for such purpose.
LONG-TERM INCENTIVE COMPENSATION. The Option Plan was adopted in
November 1996, shortly before the Company's initial public offering. The
Compensation Committee makes annual grants of share options under the Option
Plan to executive officers (and other employees) in amounts based on the
relative salary (which the Compensation Committee believes corresponds to the
relative responsibilities) of the executive officers and with the intention of
providing additional incentives directly linked to the performance of the
Company. In addition, as described above under "Executive Compensation -- 1996
Share Option Plan," under the Option and Incentive Plan, the Compensation
Committee may award to executive officers and other employees of the Company
other forms of long-term incentives upon such terms and conditions as the
Compensation Committee may determine. In addition to the annual grant of
options, in December 1998, the Compensation Committee awarded options to the
executive officers, other than Mr. Warshaw and Ms. Warshaw (and other employees
of the Company who received options in March 1998), in view of the fact that,
despite the Company's continued strong performance, the price of the Company's
Common Shares had declined from the time of the March 1998 option grants. Mr.
Warshaw and Ms. Warshaw voluntarily declined to be considered for the grant of
such options. In view of that continued strong performance, the Compensation
Committee believed that this additional grant was appropriate to reward and
incentivize the recipients of these options.
MEMBERS OF THE COMPENSATION COMMITTEE:
Charles D. Finkelstein
Jonathan D. Mariner
Steven J. Preston
PERFORMANCE GRAPH
The following graph compares the change in the cumulative total
shareholder return on the Company's Common Shares against the cumulative total
return (assuming reinvestment of dividends) of the Nasdaq Stock Market (U.S. and
foreign) Index and the Dow Jones Industry Group REQ (other recreational products
and services) for the period beginning November 13, 1996 (the commencement date
of the Company's initial public offering) and ending December 31, 1996, and for
fiscal years 1997 and 1998. The Company has not paid dividends on its Common
Shares. The graph assumes that $100.00 was invested on November 13, 1996 in the
Common Shares at a per share price of $5.781 (which reflects adjustment for the
Share Splits), the initial public offering price, and in each of the comparative
indices. The share price performance on the following graph is not necessarily
indicative of future share price performance.
COMPARISON OF CUMULATIVE RETURN
NASDAQ STOCK
STEINER MARKET (U.S. DOW JONES
MEASUREMENT PERIOD LEISURE AND FOREIGN) INDUSTRY
(FISCAL YEAR COVERED) LIMITED INDEX GROUP REQ
11/13/96 100 100 100
12/31/96 155 103 98
12/31/97 357 126 121
12/31/98 553 173 133
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of April 14,
1999, regarding the beneficial ownership of the Common Shares (adjusted, where
applicable, to reflect the Share Splits) of (i) each director and each Named
Executive Officer of the Company, (ii) directors and executive officers of the
Company as a group and (iii) each person known by the Company to be the
beneficial owner of more than five percent of the outstanding Common Shares. All
of the individuals listed are executive officers and/or, as the case may be,
directors of the Company. The address for the Named Executive Officers and
directors of the Company is the address of the Company, Suite 104A, Saffrey
Square, Nassau, The Bahamas. Unless otherwise indicated, the beneficial owner
had sole voting and dispositive power with respect to the shares.
9
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED PERCENTAGE
- ------------------------------------ ------------ ----------
<S> <C> <C>
Clive E. Warshaw 2,746,172(1) 16.38%
Leonard Fluxman 162,580(2) *
Michele Steiner Warshaw 38,202(3) *
Amanda Jane Francis 19,307(4) *
Sean C. Harrington 18,465(5) *
Charles D. Finkelstein 1,963(6) *
Jonathan D. Mariner 5,957(7) *
Steven J. Preston 556 *
Directors and executive officers as a
group (9 persons) 2,998,377(8) 17.7%
The Northwestern Mutual Life Insurance Company 949,400(9) 5.7%
720 East Wisconsin Avenue
Milwaukee, WI 53202
</TABLE>
- ------------------------
* Less than one percent
(1) Includes 155,912 shares issuable upon exercise of currently
exercisable options. Excludes 38,202 shares owned by Michele Steiner
Warshaw, Mr. Warshaw's wife and the Executive Vice President of the
Company. Mr. Warshaw disclaims beneficial ownership of these shares.
(2) Includes 144,272 shares issuable upon exercise of currently
exercisable options.
(3) Represents shares issuable upon exercise of currently exercisable
options. Excludes 2,746,172 shares owned by Clive E. Warshaw as to
which Ms. Warshaw disclaims beneficial ownership.
(4) Includes 8,197 shares issuable upon exercise of currently exercisable
options.
(5) Represents shares issuable upon exercise of currently exercisable
options.
(6) Includes 1,813 shares issuable upon exercise of currently exercisable
options.
(7) Includes 3,707 shares issuable upon exercise of currently exercisable
options.
(8) Includes 375,343 shares issuable upon exercise of currently
exercisable options.
(9) According to a Schedule 13G, dated February 8, 1999, filed by The
Northwestern Mutual Life Insurance Company ("Northwestern Life"),
Northwestern Life has sole voting and dispositive power over 332,900
shares and shared voting and dispositive power over 626,500 shares.
That Schedule 13G also indicated that (i) 480,150 shares are owned by
the Growth Stock Portfolio of Northwestern Mutual Series Fund, Inc.,
a wholly owned subsidiary of Northwestern Life and a registered
investment company; (ii) 115,200 shares are held in the Northwestern
Life Group Annuity Separate Account; (iii) 3,450 shares are owned by
the Asset Allocation Fund and 25,900 shares are owned by the
Aggressive Growth Stock Fund of Mason Street Funds, Inc., an
affiliate of Northwestern Life and a registered investment company;
and (iv) 1,800 shares are owned by Northwestern Long Term Care
Insurance Company, a wholly owned subsidiary of Northwestern Life.
According to the Schedule 13G, Northwestern Mutual Investment
Services, LLC, a wholly owned subsidiary of Northwestern Life and a
registered investment advisor, serves as an investment advisor to the
Growth Stock Portfolio, Asset Allocation Fund, Aggressive Growth
Stock Fund, and Northwestern Long Term Care Insurance Company.
10
<PAGE>
CERTAIN TRANSACTIONS
Effective January 1, 1996, the Company purchased all of the outstanding
shares of Elemis for non-interest bearing promissory notes in the aggregate
principal amount of $543,000 (based on an exchange rate of approximately $1.53
U.S. dollars to the British pound), which was the book value of Elemis at the
time the shares were purchased. During 1997, the Company made payments totaling
$217,000 under the notes. The shares of Elemis were owned 95% and 5% by Nicolas
D. Steiner and Clive E. Warshaw, respectively. Mr. Steiner and Mr. Warshaw owned
67% and 33%, respectively, of a company (the "Former Parent") that, until
October 31, 1996, owned all of the shares of the Company. Mr. Steiner is the
brother of Michele Steiner Warshaw, the Executive Vice President and a director
of the Company, and directed the land-based activities of Steiner Group until
December 1995.
In March 1999, Mr. Warshaw sold 1,725,000 of the Common Shares in an
underwritten public offering. Mr. Warshaw incurred expenses in connection with
that offering of approximately $425,000. Those expenses have been, and, in the
future as they come due will be, advanced by the Company. Mr. Warshaw has agreed
to repay those expense advances to the Company within 30 days after receiving
invoices with respect thereto.
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<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the directors and certain
officers of the Company, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Such persons are required
to furnish the Company with copies of all Section 16(a) reports they file.
Based upon a review of such forms furnished to the Company and upon
representations from certain persons subject to the reporting requirements of
Section 16(a), the Company is not aware of any person who has not timely filed
reports required by Section 16(a) of the Exchange Act during 1998.
PROPOSAL 2 - APPROVAL OF AN AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION
INTRODUCTION
The Memorandum authorizes the issuance of 20,000,000 Common Shares and
10,000,000 preferred shares, (U.S.) $.01 par value per share (the "Preferred
Shares"). As of April 14, 1999, 16,607,131 Common Shares were issued and
outstanding and a total of 1,416,446 Common Shares were reserved for issuance
upon exercise of options (the "Outstanding Options") granted under the Option
Plan and the Directors' Plan (collectively, with the Option Plan, the "Plans").
On such date, a total of additional shares were reserved for issuance under the
Directors' Plan. No Preferred Shares have been issued to date. On March 20,
1999, the Board of Directors of the Company unanimously approved, subject to
shareholder approval, an amendment to the Memorandum to increase the authorized
number of Common Shares from 20,000,000 to 100,000,000 (the "Memorandum
Amendment") and the submission of the Memorandum Amendment for approval by the
shareholders of the Company at the Annual Meeting. If the Memorandum Amendment
is adopted, it would become effective upon the filing of a certified copy of the
amended Memorandum with the Registrar General's Department of the Commonwealth
of The Bahamas.
PURPOSE AND EFFECT OF MEMORANDUM AMENDMENT
The Board of Directors recommends that the shareholders approve the
Memorandum Amendment in order to provide the Company with a sufficient number of
Common Shares for the Company's general corporate needs. The Board of Directors
believes that the availability of additional Common Shares is in the best
interests of the Company because it would provide the Company with the
flexibility to issue Common Shares in connection with possible future
acquisitions, equity financings, grants of share options or Common Shares, share
splits or for other appropriate corporate purposes, without the delay generally
involved in the calling of a special meeting of shareholders to approve the
authorization of additional Common Shares.
The additional Common Shares to be authorized by adoption of the
Memorandum Amendment would have rights identical to the currently outstanding
Common Shares. Such adoption would not affect the rights of holders of currently
issued Common Shares, except that it would, if additional Common Shares were
issued pursuant to the Memorandum Amendment, have a dilutive effect on the
Company's earnings per share, and would dilute the voting rights of current
shareholders who do not acquire sufficient additional shares to maintain their
percentage of share ownership. While not the intent of the Board of Directors in
approving the Memorandum Amendment, the additional Common Shares that would
become available for issuance if the Memorandum Amendment were approved by the
shareholders could also be used by the Company to oppose a hostile takeover
attempt, or otherwise delay or prevent changes in control or management of the
Company. For example, in the event of an attempt to acquire control of the
Company, it might be possible for the Company to impede such an attempt by
issuing Common Shares through a private placement of Common Shares to a friendly
party thereby diluting the voting power of outstanding shares and increasing the
potential cost to acquire control of the Company. The overall effect, therefore,
of an increase in the authorized number of Common Shares could be to discourage
unsolicited takeover attempts. By potentially discouraging initiation of any
such unsolicited takeover attempt, the Memorandum Amendment could limit the
opportunity for the Company's shareholders to receive a premium for their shares
over the then current market price generally available in connection with
changes in control. It also may have the effect of permitting the Company's
current management, including members of the Board of Directors, to retain their
positions and place the Company in a better position to resist changes the
shareholders may wish to make if they are dissatisfied with the conduct of the
Company's business.
12
<PAGE>
The Company's Amended and Restated Articles of Association (the
"Articles") include certain provisions which may also have the effect of
delaying or preventing a future takeover or change in control of the Company
that shareholders may consider to be in their best interests. Among other
things, the Articles provide for a Board of Directors consisting of three
classes serving staggered terms of three years each, supermajority voting
requirements with respect to certain significant transactions and restrictions
on certain transactions with holders of 15% or more of the voting shares of the
Company. In addition, under the Memorandum, the Company has an authorized class
of 10,000,000 preferred shares which may be issued in one or more series by the
Board of Directors without further action by the shareholders on such terms and
with such rights, preferences and designations as the Board of Directors may
determine. Furthermore, the Option Plan and certain of the Company's employment
agreements provide certain rights to plan participants and Company officers,
respectively, in the event of a change in control of the Company.
Except with respect to the shares reserved for issuance under the Plans
(including shares underlying options granted under the Option Plan in March 1999
subject to approval of the amendment to the Option Plan described below (the
"Additional Options")), the Company currently has no commitments or arrangements
for the issuance of any of its Common Shares, although opportunities for
acquisitions or financings involving the use of Common Shares could arise at any
time in the future. If the Board of Directors deems it to be in the best
interest of the Company and its shareholders to issue additional Common Shares
in the future, the Board of Directors generally will not seek further
authorization for such issuance from the shareholders, unless such authorization
is otherwise required by applicable law or regulations or the Nasdaq National
Market or any other securities trading market or exchange on which the Common
Shares may be traded or listed.
REQUIRED VOTE
The affirmative vote of a majority of the outstanding Common Shares
entitled to vote at the Annual Meeting is required to approve the Memorandum
Amendment. As a result, abstentions and broker non-votes will have the same
effect as negative votes.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE MEMORANDUM AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED COMMON
SHARES FROM 20,000,000 TO 100,000,000.
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED 1996 SHARE OPTION AND INCENTIVE PLAN
INTRODUCTION
In November 1996, prior to the Company's initial public offering, the
Board of Directors and shareholders of the Company adopted the Option Plan,
under which the Participants (as defined below) can be granted a variety of long
term incentives, including non-qualified share options, incentive share options,
share appreciation rights, exercise payment rights, grants of restricted and
unrestricted shares, and performance share awards. The recipients and the terms
of awards made under the Option Plan are determined by, and the Option Plan is
administered by the Compensation Committee of the Board of Directors of the
Company.
The purpose of the Option Plan is to (i) aid the Company in attracting
and retaining qualified officers, key employees, directors and consultants; (ii)
provide incentives and rewards for persons eligible for awards that are directly
linked to the financial performance of the Company in order to motivate such
persons to achieve long-range performance goals; and (iii) allow persons
receiving awards to participate in the growth of the Company.
A total of 1,620,000 Common Shares are available for grant under the
Option Plan. As of the date hereof, the only awards issued under the Option Plan
have been share options to purchase a total of 1,822,941 Common Shares,
including the Additional Options and options to purchase 8,730 Common Shares
that were cancelled as a result of the termination of employment of the
recipients thereof. On March 20, 1999, the Board of Directors of the Company
unanimously approved, subject to shareholder approval, an amendment to the
Option Plan to increase the number of Common Shares that may be issued under the
Option Plan to 3,500,000 (the "Plan Amendment") and the submission of the Plan
Amendment for approval by the shareholders of the Company at Annual Meeting.
As of April 14, 1999, approximately 125 employees of the Company are
eligible to receive grants under the Option Plan.
13
<PAGE>
PURPOSE OF PLAN AMENDMENT
The Board believes that it is in the best interests of the Company to
increase the number of Common Shares that may be granted under the Option Plan
so that the Company would be able to continue to (i) reward and motivate those
executive officers and other officers and employees eligible to receive awards
under the Option Plan with compensation in a form allowing them to participate
in the growth of the Company and (ii) enhance the ability of the Company to
attract highly qualified individuals for positions with the Company. The Board
recommends that the shareholders approve the Plan Amendment.
The Option Plan is summarized below. Such summary is qualified by the
terms of the Option Plan, a copy of which, including the proposed Plan
Amendment, is attached hereto as Exhibit "A."
SUMMARY OF THE OPTION PLAN
Persons eligible to participate in the Option Plan ("Participants") are
required to be (i) employees of the Company or a subsidiary of the Company
serving in managerial, administrative or professional positions, (ii) directors
of the Company or (iii) consultants to the Company or a subsidiary of the
Company. As of the date hereof, no awards have been made under the Option Plan
to any person in such person's capacity as a director of the Company.
The types of awards that may be made under the Option Plan are
described below.
SHARE OPTIONS. Share options granted under the Option Plan may be
either (i) options intended to qualify as "incentive stock options" (hereinafter
"incentive share options") under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or (ii) non-qualified share options. Incentive
share options may be granted under the Option Plan to employees of the Company
and its subsidiaries. Non-qualified share options may be granted to consultants,
directors or employees of the Company and its subsidiaries. Share options may be
made to vest and become exercisable in specified installments.
A share option by its terms shall vest in a Participant to whom it is
granted and be exercisable only after the earliest of (i) such period of time as
the Compensation Committee shall determine and specify in the grant, but, with
respect to employees, in no event less than one year following the date of
grant; (ii) the Participant's death; or (iii) a change in control (as defined in
the Option Plan) of the Company.
The exercise price of incentive share options, as determined by the
Compensation Committee, may not be less than the fair market value of the Common
Shares on the date of grant and the term of any such option may not exceed ten
years from the date of grant. With respect to any Participant who owns shares
representing more than 10% of the voting power of the outstanding capital shares
of the Company, the exercise price of any incentive share option may not be less
than 110% of the fair market value of such shares on the date of grant and the
term of such option may not exceed five years from the date of grant. The
aggregate fair market value, determined as of the date the related share option
is granted, of all Common Shares with respect to which incentive share options
are exercisable for the first time by a Participant in any one calendar year,
under the Option Plan or any other share option plan maintained by the Company,
may not exceed $100,000.
The exercise price of non-qualified share options is determined by the
Compensation Committee on the date of grant, and the term of such option may not
exceed ten years from the date of grant.
Payment of the option price may be made by certified or bank cashier's
check, by tender of Common Shares then owned by the Participant or by any other
means acceptable to the Compensation Committee and must be made within ten
business days after the date of exercise. Incentive share options granted
pursuant to the Option Plan are not transferable, except by will or the laws of
descent and distribution in the event of death. Non-qualified share options may
be subject to restrictions on transfer. With respect to Participants who are
employees, during the Participant's lifetime, generally, the option may be
exercised only while the Participant is in active employment with the Company or
within 30 days after such employment is voluntarily terminated. With respect to
non-qualified share options, however, where such employment is terminated as a
result of the death, retirement or disability (as defined in the Option Plan) of
the employee, or by the Company, other than for cause, or upon a change of
control of the Company, the option may be exercised within three years after
14
<PAGE>
such death, retirement, disability or termination by the Company. Incentive
share options may be exercised within one year after termination of employment
as a result of death or disability and within three months after termination
other than for cause.
An option holder will have no rights as a shareholder with respect to
any Common Shares covered by a share option until the option holder becomes a
holder of record of such Common Shares, and shall not be entitled to any
dividends or distributions or other rights in respect of such shares for which
the record date is prior to the date on which the option holder becomes the
holder of record thereof.
SHARE APPRECIATION RIGHTS. Share appreciation rights ("SARs") may be
granted to Participants who have received a share option under the Option Plan.
An SAR entitles the recipient to receive, upon exercise thereof, the excess of
the fair market value per share option over the share option exercise price of
the related Common Share. The number of SARs granted to a recipient may not
exceed the number of shares that the recipient may acquire upon exercise of the
related share option and any unexercised SAR will terminate upon the expiration
or termination of the related share option. An SAR may not be exercised by a
recipient subject to Section 16 of the Exchange Act within six months after the
grant of the related share option unless permitted by law. Upon exercise of a
share option by a Participant, the SAR relating to the Common Share covered by
such exercise shall terminate. Upon termination or expiration of a share option,
any unexercised SAR related to that share option shall also terminate. Upon
exercise of SARs, such rights and the related share options, to the extent of an
equal number of Common Shares, are required to be surrendered to the Company,
and such SARs and the related share options shall terminate. An SAR is only
vested, exercisable and transferable during the period when the share option to
which it is related is also vested, exercisable and transferable, respectively.
Payment of an SAR may be made in cash, Common Shares, Restricted Shares (as
defined below) or any combination thereof, as determined by the Compensation
Committee. Unless otherwise determined by the Compensation Committee,
outstanding SARs will become exercisable and vest in the event of a change in
control of the Company. If a Participant exercises an SAR during the 60-day
period commencing with such change in control, the form of payment of such SARs
will be in cash if such SAR was granted more than six months prior to the date
of exercise, and in Common Shares if such SAR was granted six months or less
prior to the date of exercise.
PERFORMANCE AWARDS. Under the Option Plan, the Compensation Committee
may grant performance awards entitling the Participant to receive Common Shares
or other securities of the Company, cash or other property based upon the
achievement of individual or Company performance goals and upon such other
conditions as the Compensation Committee may determine. Performance awards may
be granted subject to such restrictions as may be determined by the Compensation
Committee. Unless otherwise provided in the award, an employee receiving a
performance award must be an employee at the end of the performance period to
receive the award unless the employee dies, reaches retirement or incurs a
disability.
RESTRICTED SHARES. Common Shares may be awarded under the Option Plan
subject to such terms and conditions as the Compensation Committee may determine
("Restricted Shares"). Such terms and conditions may include, but are not
limited to, the requirement of continued service with the Company, achievement
of specified business objectives and other measurements of individual or
business unit performance, the manner in which such Restricted Shares are held,
the extent to which the holder of such Restricted Shares has rights of a
shareholder and the circumstances under which such Restricted Shares shall be
forfeited. A Participant is not permitted to sell, assign, transfer, pledge or
otherwise encumber shares received prior to the date on which any applicable
restriction established by the Compensation Committee lapses. Upon the
termination of employment of a Participant who is an employee during the period
any restrictions are in effect, all Restricted Shares shall be forfeited unless
otherwise provided in the grant of such Restricted Shares.
UNRESTRICTED SHARES. The Committee may also grant shares (at no cost or
for a purchase price determined by the Compensation Committee) that are free
from any forfeitability restrictions.
EXERCISE PAYMENT RIGHTS. Under the Option Plan, holders of share
options may also be granted the right to receive payments relating to the
purchase of shares covered by the holder's share options. Payments may be made
upon the exercise of the related share option in an amount determined by the
Compensation Committee, which amount may not be greater than 60% of the excess
of the fair market value (as of the date of exercise) over the purchase price of
the shares acquired upon the exercise of the share option. An exercise payment
may take the form of cash, Common Shares, Restricted Shares or any combination
thereof and may be subject to such restrictions as the Compensation Committee
may determine.
DEDUCTIONS. Under the Plan, the Company has the right to (i) make
deductions from any settlement of an award, including delivery or vesting of
15
<PAGE>
shares, or require that shares or cash, or both, be withheld from any award, in
each case in an amount sufficient to satisfy withholding of any foreign,
federal, state or local taxes required by law or (ii) take such other action as
may be necessary or appropriate to satisfy any such withholding obligations. The
Compensation Committee may determine the manner in which such tax withholding is
to be satisfied and may permit Common Shares to be used to satisfy required tax
withholding.
GENERAL. The Option Plan will expire in 2006, after which no awards may
be granted thereunder. Except as may be required under any applicable regulatory
rules, the Board of Directors has the right at any time to amend or discontinue
the Option Plan without the consent of Participants or the Company's
shareholders, provided that no such action may adversely affect awards
previously granted without the recipient's consent.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion outlines certain United States federal income
tax consequences of participation in the Option Plan. Individual circumstances
may vary these results. Additionally, federal income tax laws and regulations
are complex and frequently amended, and each Participant should rely on his own
tax counsel for advice regarding the federal income tax consequences of
participation in the Option Plan.
FEDERAL INCOME TAX TREATMENT OF INCENTIVE SHARE OPTIONS. A Participant
will not recognize taxable income on the grant or the exercise of incentive
share options (although the exercise of an incentive share option can increase a
Participant's alternative minimum tax liability because the difference between
the fair market value of the Common Shares acquired and the exercise price will
be included in the Participant's alternative minimum taxable income). A
Participant will recognize taxable income if and when the Participant disposes
of the Common Shares acquired under an incentive share option. If the
disposition occurs more than two years after the grant of the incentive share
option and more than one year after the Common Shares are transferred to the
Participant on exercise of the incentive share options (the "Incentive Share
Options Holding Period"), the Participant will recognize capital gain (or loss)
equal to the excess (or deficiency) of the amount realized from disposition of
the Common Shares less the Participant's tax basis in the Common Shares. A
Participant's tax basis in the Common Shares generally is the amount the
Participant paid on exercise of the incentive share options. The capital gain
(or loss) will be long-term or short-term depending on the length of time the
Participant held the Common Shares.
If Common Shares acquired under an incentive share option are disposed
of before the expiration of the Incentive Share Options Holding Period (a
"Disqualifying Disposition"), a Participant generally will recognize as ordinary
income, in the year of the Disqualifying Disposition, an amount equal to the
excess of the fair market value of the Common Shares on the date of exercise
over the exercise price paid by the Participant. Any additional gain will be
treated as long-term or short-term capital gain depending on the length of time
the Participant held the Common Shares.
A special rule applies to a Disqualifying Disposition of Common Shares
where the amount realized on the disposition is less than the fair market value
of the Common Shares on the date of exercise of the incentive share option. In
that event, the Participant generally will recognize as ordinary income the
difference between the amount realized on the disposition of the Common Shares
and the exercise price paid by the Participant.
The foregoing discussion assumes that the Participant exercises the
incentive share option while the Participant is an employee of the Company or
within three months of termination of employment. The three-month period is
extended (i) to one year if the Participant terminates employment as a result of
a total and permanent disability and (ii) indefinitely if the termination is
caused by the Participant's death. If the Participant exercises an incentive
share option outside of these time limits, the Participant's tax consequences
will be the same as described for non-qualified share options.
FEDERAL INCOME TAX TREATMENT OF NON-QUALIFIED SHARE OPTIONS. A
Participant will not recognize taxable income on the grant of a non-qualified
share option. On the exercise of a non-qualified share option, a Participant
will recognize as ordinary income an amount equal to the excess of the fair
market value of the Common Shares acquired over the exercise price paid by the
Participant. A Participant's tax basis in the Common Shares acquired upon the
exercise of a non-qualified stock option is the amount paid for the Common
16
<PAGE>
Shares plus any amount included in income with respect to the exercise. Any gain
or loss that a Participant recognizes on a subsequent disposition of Common
Shares acquired upon the exercise of a non-qualified stock option generally will
be long-term or short-term capital gain or loss depending on the length of time
the Participant held the Common Shares. The amount of the gain (or loss) will
equal the excess (or deficiency) of the amount realized on the subsequent
disposition less the Participant's tax basis in the Common Shares.
The ordinary income a Participant is required to recognize on the
exercise of a non-qualified share option will constitute wages for withholding
and employment tax purposes. Accordingly, depending on the terms of a particular
award, the Company will be required to either withhold from wages, or obtain
payment from the Participant of, the amount of required withholding and
employment taxes.
The foregoing discussion assumes that the Participant pays the exercise
price in cash. Special rules apply to a Participant who exercises an incentive
share option or a non-qualified share option by paying the exercise price, in
whole or in part, by the transfer of Common Shares the Participant already owns.
FEDERAL INCOME TAX TREATMENT OF SHARE APPRECIATION RIGHTS. No income
will be recognized by a Participant in connection with the grant of an SAR. When
the SAR is exercised, the Participant generally will be required to include as a
taxable ordinary income in the year of exercise an amount equal to the sum of
the amount of cash received and the fair market value of any Common Shares
received on the exercise. In the case of a recipient who is also an employee,
any income recognized on exercise of an SAR will constitute wages for which
withholding will be required. If the recipient receives Common Shares upon the
exercise of an SAR, any gain or loss on the subsequent sale of such shares will
be treated in the same manner as discussed above with respect to non-qualified
share options.
FEDERAL INCOME TAX TREATMENT OF OTHER AWARDS. Awards granted under the
Option Plan that are settled in cash or Common Shares that are either
transferable or not subject to a substantial risk of forfeiture are taxable as
ordinary income in an amount equal to the cash or the fair market value of the
shares received. Awards granted under the Option Plan that are settled in Common
Shares that are subject to restrictions as to transferability or subject to a
substantial risk of forfeiture are taxable as ordinary income in an amount equal
to the fair market value of the shares received at the first time such shares
become transferable or not subject to a substantial risk of forfeiture,
whichever occurs earlier, unless the Participant makes an election under Section
83(b) of the Code. If a Section 83(b) election is made, the Participant must
include in income the value of the shares as of the date the shares are
transferred to such Participant.
While the exercise of a non-qualified share option or SAR generally
would entitle an employer to claim a federal income tax deduction equal to the
amount of ordinary income recognized by the recipient, the Company believes that
the grant of awards under the Option Plan will have minimal United States tax
effects to the Company due to the Company's belief that the income of its
principal subsidiary, Steiner Transocean Limited, will be foreign-source income,
none of which will be effectively connected to a fixed place of business in the
United States as a result of which such income would not be subject to United
States (or other) taxation.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL
INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE GRANT OF
AWARDS UNDER THE OPTION PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
PARTICIPANT MAY RESIDE.
17
<PAGE>
1998 AND 1999 GRANTS UNDER THE OPTION PLAN
The following table sets forth the number of Common Shares underlying
share options granted under the Option Plan in 1998 to (i) each of the Named
Executive Officers; (ii) all current executive officers as a group; (iii) each
associate of any of the foregoing individuals; and (iv) all employees, including
all current officers who are not executive officers, as a group, and the value
of these options at December 31, 1998, based on the difference of between the
closing price per share of the Common Shares at that date ($32.00) and the
exercise price of the corresponding options.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF OPTIONS
NAME OPTIONS $(1)
---- ---------------- ----------------
<S> <C> <C>
Clive E. Warshaw......................... 53,565 $ -0-
Leonard I. Fluxman....................... 52,110 121,590
Michele Steiner Warshaw.................. 21,285 -0-
Amanda Jane Francis...................... 19,148 44,681
Sean Harrington.......................... 20,318 47,411
Victoria Shaverein(2).................... 9,023 21,056
Robert Shaverein(3)...................... 4,523 10,556
Current executive officers as a group.... 177,901 240,457
All other employees as a group........... 73,404 208,791
</TABLE>
- ---------------
(1) Options with an exercise price greater than $32.00 are considered to have no
value for purposes of this table.
(2) Associate of Clive E. Warshaw and Michele Steiner Warshaw (daughter).
(3) Associate of Clive E. Warshaw and Michele Steiner Warshaw (son-in-law).
In March 1999, the Company's executive officers and their associates were
granted options to purchase a total of 185,950 Common Shares at an exercise
price of $30.563 per share. The grant of these options is subject to the
approval of the Plan Amendment by the shareholders at the Annual Meeting.
BENEFITS OF AMENDMENT
The Company is unable to determine the dollar value or number of share
options or other awards that will be received as a result of the Plan Amendment
by the Company's executive officers or other officers, employees or directors,
who are not executive officers, because awards are made by the Compensation
Committee on a discretionary basis.
REQUIRED VOTE
The affirmative vote of a majority of the outstanding Common Shares
entitled to vote at the Annual Meeting is required to approve the Plan
Amendment. As a result, abstentions and broker non-votes will have the same
effect as negative votes.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PLAN AMENDMENT TO INCREASE THE NUMBER OF COMMON SHARES AVAILABLE
FOR ISSUANCE UNDER THE OPTION PLAN FROM 1,620,000 TO 3,500,000.
18
<PAGE>
PROPOSAL 4 -- RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee,
has selected Arthur Andersen as independent auditors of the Company for the
fiscal year ending December 31, 1999, subject to ratification by the
shareholders. Arthur Andersen served as the Company's independent auditors for
the six fiscal years ended December 31, 1998 and has provided tax advice to the
Company since 1995. Steven J. Preston, who became a director of the Company on
April 1, 1997, was a tax partner of Arthur Andersen through February 1997 and,
prior to his departure, was the partner in charge of Arthur Andersen's
engagement to provide tax advice to the Company.
Although ratification by the shareholders of the appointment of
independent auditors is not legally required, the Board of Directors believes
that such action is desirable. If the appointment of Arthur Andersen is not
ratified, the Board will seek other independent auditors. However, due to the
difficulty and expense of making any change of auditors so long after the
beginning of the current fiscal year, it is likely that the appointment would
stand for 1999 unless the Audit Committee and the Board found other good reason
for making a change.
Ratification of the selection of Arthur Andersen as the Company's
independent auditors requires the affirmative vote of a majority of votes cast
by holders of the Common Shares voting in person or by proxy at the Annual
Meeting. A representative of Arthur Andersen will be present at the Annual
Meeting and will have an opportunity to make a statement if he or she desires to
do so, and is expected to be available to respond to appropriate questions which
the shareholders might have.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE 1999 FISCAL YEAR.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no other matters that will be brought before the Annual Meeting. In the event
that any other business is properly presented at the Annual Meeting, it is
intended that the persons named in the enclosed proxy will have authority to
vote such proxy in accordance with their judgment on such business.
EXPENSE OF SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, solicitations may also be made by telephone,
telegram, facsimile or in person by directors, officers or employees of the
Company, who will receive no additional compensation for such services. In
addition, the Company will reimburse brokers and other shareholders of record
for their expenses in forwarding proxy material to beneficial owners.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals that shareholders wish to have considered for inclusion in
the proxy statement for the 2000 annual meeting of shareholders must be received
at the Company's principal executive offices on or before _______________, 2000.
Proposals should be directed to the Corporate Secretary, Suite 104A, Saffrey
Square, Nassau, The Bahamas.
19
<PAGE>
The Company's Articles provide that for business to be properly brought
before future annual meetings by a shareholder, in addition to other applicable
requirements, the shareholder must be present at the meeting and written notice
thereof must be received by the Company's Secretary not less than 75 days nor
more than 120 days prior to the anniversary date of the immediately preceding
annual meeting (the "Anniversary Date"), or between February 19, 2000 and April
4, 2000. If the annual meeting is to be held more than 30 days before, or more
than 60 days after the Anniversary Date, such notice must be received not later
than the later of the 75th day prior to the annual meeting or the 10th day
following the day on which the public announcement of the annual meeting date is
first made by the Company. The shareholder's notice to the Company must include
a description of the proposal and certain information regarding the shareholder.
ANNUAL REPORT
A copy of the Company's 1998 Annual Report to Shareholders (consisting
primarily of the Company's annual report on Form 10-K, without exhibits, for
fiscal year 1998) is being mailed with this Proxy Statement to each shareholder
entitled to vote at the Annual Meeting. Additional copies of the Annual Report
or Form 10-K may be obtained, without charge, by any shareholder by writing or
calling Carl S. St. Philip, Jr., Secretary, c/o CT Maritime Services, L.C., 1007
North America Way, 4th Floor, Miami, Florida 33132, telephone (305) 358-9002.
By Order of the Board of Directors
Carl S. St. Philip, Jr.
Secretary
______________, 1999
20
<PAGE>
[FORM OF PROXY CARD]
STEINER LEISURE LIMITED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 1999
The undersigned hereby appoints Clive E. Warshaw and Carl S. St.
Philip, Jr., and each of them, with power of substitution, proxies for the
undersigned and authorizes them to represent and vote, as designated on the
reverse side, all of the common shares of Steiner Leisure Limited held of record
by the undersigned on April 20, 1999 at the Annual Meeting of Shareholders to be
held on June 18, 1999, and at any adjournments or postponements thereof for
purposes identified on the reverse side of this proxy and with discretionary
authority as to any other matters that may properly come before the Annual
Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF THIS PROXY IS RETURNED WITHOUT
DIRECTION BEING GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1, FOR PROPOSAL 2,
FOR PROPOSAL 3 AND FOR PROPOSAL 4.
(IMPORTANT -- TO BE SIGNED AND DATED ON THE REVERSE SIDE)
SEE REVERSE SIDE
Please Detach and Mail in the Envelope Provided
/x/ Place mark your votes as in this example
The Board of Directors recommends a vote
FOR the election of the nominees listed below and
FOR each of proposals 2, 3 and 4
<TABLE>
<CAPTION>
Withhold
Authority to Nominees:
Vote for Leonard I. Fluxman
For Nominees Nominees Michele Steiner Warshaw
Listed at Right Listed at Right Steven J. Preston
<S> <C> <C> <C>
1. Election of Class III Directors / / / /
(INSTRUCTION: YOU MAY WITHHOLD
AUTHORITY TO VOTE FOR AN INDIVIDUAL
NOMINEE BY LINING THROUGH THE NAME
OF THAT NOMINEE)
FOR AGAINST ABSTAIN
2. Amendment of Amended and / / / / / /
Restated Memorandum of
Association to increase
the number of authorized
common shares from 20,000,000
to 100,000,000.
3. Amendment of Amended and / / / / / /
Restated 1996 Share Option
and Incentive Plan to
increase the number of
common shares available
for grant thereunder from
1,620,000 to 3,500,000.
4. Ratification of the appointment / / / / / /
of Arthur Andersen LLP as
independent auditors for the
1999 fiscal year.
</TABLE>
5. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
<PAGE>
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournment or postponement thereof. The signer hereby
acknowledges the receipt of the Notice of Annual Meeting and Proxy Statement.
I will attend the meeting
/ /
I will not attend the meeting
/ /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
______________________________ Date_______________
Signature
______________________________ Date________________
Signature, if held jointly
NOTE: Please sign exactly as your name appears hereon. If acting as attorney,
executor, trustee or in other representative capacity, sign name and
title. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If held jointly, both parties
must sign and date.
<PAGE>
EXHIBIT "A"
STEINER LEISURE LIMITED
AMENDED AND RESTATED
1996 SHARE OPTION AND INCENTIVE PLAN
<PAGE>
STEINER LEISURE LIMITED AMENDED AND RESTATED 1996 SHARE OPTION AND INCENTIVE
PLAN
1. PURPOSE.
-------
The purpose of the Steiner Leisure Limited Amended and Restated 1996
Share Option and Incentive Plan (hereinafter referred to as this "Plan") is to
(i) assist Steiner Leisure Limited (the "Company") in attracting and retaining
highly qualified, officers, key employees, directors and consultants for the
successful conduct of its business; (ii) provide incentives and rewards for
persons eligible for awards which are directly linked to the financial
performance of the Company in order to motivate such persons to achieve
long-range performance goals; and (iii) allow persons receiving awards to
participate in the growth of the Company.
2. DEFINITIONS.
-----------
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" A Change in Control of the Company shall be
deemed to occur if any of the following circumstances have occurred after the
closing of initial public offering of the Shares:
(i) any transaction as a result of which a change in control of the
Company would be required to be reported in response to Item 1(a) of
the Current Report on Form 8-K as in effect on the date hereof,
pursuant to Sections 13 or 15(d) of the Exchange Act, whether or not
the Company is then subject to such reporting requirement, otherwise
than through an arrangement or arrangements consummated with the prior
approval of the Board;
(ii) any "person" or "group" within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act (a) becomes the "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act, of more than 20% of the
then outstanding voting securities of the Company, otherwise than
through a transaction or transactions arranged by, or consummated with
the prior approval of, the Board or (b) acquires by proxy or otherwise
the right to vote for the election of directors, for any merger or
consolidation of the Company or for any other matter or question, more
than 20% of the then outstanding voting securities of the Company,
otherwise than through an arrangement or arrangements consummated with
the prior approval of the Board;
(iii)during any period of 24 consecutive months (not including any period
prior to the adoption of this Plan), Present Directors and/or New
Directors cease for any reason to constitute a majority of the Board.
For purposes of the preceding sentence, "Present Directors" shall mean
individuals who, at the beginning of such consecutive 24 month period,
were members of the Board and "New Directors" shall mean any director
whose election by the Board or whose nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
of the Directors then still in office who were Present Directors or
New Directors;
(iv) any "person" or "group" within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20% or more of the then
outstanding voting securities of the Company commences soliciting
proxies; and
(v) with respect to a particular Employee, there occurs a "change in
control," as such term is defined under any employment agreement or
service agreement between the Company or any direct or indirect
subsidiary thereof and such Employee, entered into before or after the
date of adoption of this Plan (a "Change in Control Agreement"), which
provides for, upon such change in control, the acceleration of the
vesting of share options or otherwise affects awards that may be made
under this Plan; provided, however, that this Section 2.2.(v) applies
only with respect to the award or awards accelerated, or otherwise
affected by such change in control under such Change in Control
Agreement.
2
<PAGE>
2.3 "CODE" means the United States Internal Revenue Code of 1986, as
currently in effect or hereafter amended.
2.4 "COMMITTEE" means the committee appointed to administer this Plan
in accordance with Section 4 of this Plan.
2.5 "DISABILITY" means "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
2.6 "EMPLOYEE" means any employee of the Company or any direct or
indirect subsidiary of the Company (a "Subsidiary"), including officers of the
Company and any Subsidiary, as well as such officers who are also directors of
the Company.
2.7 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
2.8 "EXERCISE PAYMENT" means a payment described in Section 8 upon the
exercise of a Share Option.
2.9 "FAIR MARKET VALUE," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
date, the mean of the high and low prices reported per Share on the applicable
date (i) as quoted on the Nasdaq National Market or the Nasdaq Small Cap Market
(each, a "Nasdaq Market") or (ii) if not traded on a Nasdaq Market, as reported
by any principal national securities exchange in the United States on which it
is then traded (or if the Shares have not been quoted or reported, as the case
may be, on such date, on the first day prior thereto on which the Shares were
quoted or reported, as the case may be), except that in the case of a Share
Appreciation Right that is exercised for cash during the first three (3) days of
the ten (10) day period set forth in Section 7.4 of this Plan, "Fair Market
Value" means the highest daily closing price per Share as reported on such
Nasdaq Market or exchange during such ten (10) day period. Notwithstanding the
foregoing, if a Share Appreciation Right is exercised during the sixty (60) day
period commencing on the date of a Change in Control, the Fair Market Value for
purposes of determining the Share Appreciation shall be the highest of (i) the
Fair Market Value per Share, as determined under the preceding sentence; (ii)
the highest Fair Market Value per Share during the ninety (90) day period ending
on the date of exercise of the SAR; (iii) the highest price per Share shown on
Schedule 13D or an amendment thereto filed pursuant to Section 13(d) of the
Exchange Act 1934 by any person holding 20% of the combined voting power of the
Company's then outstanding voting securities; or (iv) the highest price paid or
to be paid per Share pursuant to a tender or exchange offer as determined by the
Committee. If the Shares are not reported or quoted on a Nasdaq Market or a
national securities exchange, its Fair Market Value shall be as determined in
good faith by the Committee.
2.10 "INCENTIVE SHARE OPTION" or "ISO" means any Share Option granted
to an Employee pursuant to this Plan which is designated as such by the
Committee and which complies with Section 422 of the Code or any successor
provision.
2.11 "NON-QUALIFIED SHARE OPTION" means any Share Option granted to a
Participant pursuant to this Plan which is not an ISO.
2.12 "OPTION PRICE" means the purchase price of one Share upon exercise
of a Share Option.
2.13 "PERFORMANCE AWARD" means an award described in Section 10 of this
Plan.
3
<PAGE>
2.14 "RETIREMENT" means retirement from employment by the Company or
any Subsidiary by a Participant who has attained the normal retirement age under
any applicable retirement plan (which is qualified under Section 401(a) of the
Code) of the Company in which such Participant participates.
2.15 "RESTRICTED SHARES" means Shares subject to restrictions on the
transfer of such Shares, conditions of forfeitability of such Shares or any
other limitations or restrictions as determined by the Committee.
2.16 "SETTLEMENT DATE" means, (i) with respect to any Share
Appreciation Rights that have been exercised, the date or dates upon which cash
payment is to be made to the Participant, or in the case of Share Appreciation
Rights that are to be settled in Shares, the date or dates upon which such
Shares are to be delivered to the Participant; (ii) with respect to Performance
Awards, the date or dates upon which Shares are to be delivered to the
Participant; (iii) with respect to Exercise Payments, the date or dates upon
which payment thereof is to be made; and (iv) with respect to grants of Shares,
including Restricted Shares, the date or dates upon which such Shares are to be
delivered to the Participant, in each case determined in accordance with the
terms of the grant (including any award agreement) under which any such award
was made.
2.17 "SHARE" or "SHARES" means the common shares of the Company.
2.18 "SHARE APPRECIATION" means the excess of the Fair Market Value
per Share over the Option Price of the related Share, as determined by the
Committee.
2.19 "SHARE APPRECIATION RIGHT" or "SAR" means an award that entitles a
Participant to receive an amount described in Section 7.2.
2.20 "SHARE OPTION" or "OPTION" means an award that entitles a
Participant to purchase one Share for each Option granted.
3. PARTICIPATION.
-------------
The participants in this Plan ("Participants") shall be those persons
who are selected to participate in this Plan by the Committee and who are (i)
Employees serving in managerial, administrative or professional positions, (ii)
directors of the Company or (iii) consultants to the Company or any Subsidiary.
4. ADMINISTRATION.
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This Plan shall be administered and interpreted by a committee of two
or more members of the Board appointed by the Board. Members of the Committee
shall be "Non-Employee Directors" as that term is defined for purposes of Rule
16b-3(b)(3)(i) under the Exchange Act. All decisions and acts of the Committee
shall be final and binding upon all Participants. The Committee shall: (i)
determine the number and types of awards to be made under this Plan; (ii) set
the Option Price, the number of Options to be awarded and the number of Shares
to be awarded out of the total number of Shares available for award; (iii)
establish any applicable administrative regulations to further the purpose of
this Plan; (iv) approve forms of award agreements between a Participant and
the Company; and (v) take any other action desirable or necessary to interpret,
construe or implement the provisions of this Plan. Prior to the appointment of
the Committee by the Board, or if the Committee shall not be in existence at any
time during the term of this Plan, this Plan shall be administered and
interpreted by the Board and, in such case, all references to the Committee
herein shall be deemed to refer to the Board.
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5. AWARDS.
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5.1 FORM OF AWARDS. Awards under this Plan may be in any of the
following forms (or a combination thereof): (i) Share Options; (ii) Share
Appreciation Rights; (iii) Exercise Payment rights; (iv) grants of Shares,
including Restricted Shares; or (v) Performance Awards. The Committee may
require that any or all awards under this Plan be made pursuant to an award
agreement between the Participant and the Company. Such award agreements shall
be in such form as the Committee may approve from time to time. The Committee
may accelerate awards and waive conditions and restrictions on any awards to the
extent it may deem appropriate.
5.2 MAXIMUM AMOUNT OF SHARES AVAILABLE. The total number of Shares
(including Restricted Shares, if any) granted, or covered by Options granted,
under this Plan during the term of this Plan shall not exceed 3,500,000. Solely
for the purpose of computing the total number of Shares optioned or granted
under this Plan, there shall not be counted any Shares which have been forfeited
and any Shares covered by Options which, prior to such computation, have
terminated in accordance with their terms or have been canceled by the
Participant or the Company.
5.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION, ETC. In the event of
any change in the outstanding Shares of the Company by reason of any share
split, share dividend, recapitalization, merger, consolidation, combination or
exchange of shares or other similar corporate change or in the event of any
special distribution to the shareholders, the Committee shall make such
equitable adjustments in the number of Shares and prices per Share applicable to
Options then outstanding and in the number of Shares which are available
thereafter for Option awards or other awards, both under this Plan as a whole
and with respect to individuals, as the Committee determines are necessary and
appropriate. Any such adjustment shall be conclusive and binding for all
purposes of this Plan.
6. SHARE OPTIONS.
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6.1 GRANT OF AWARD. The Company may award Options to purchase Shares,
including Restricted Shares (hereinafter referred to as "Share Option Awards")
to such Participants as the Committee authorizes and under such terms as the
Committee establishes. The Committee shall determine with respect to each Share
Option Award, and designate in the grant whether a Participant is to receive an
ISO or a Non-Qualified Share Option.
6.2 OPTION PRICE. The Option Price per Share subject to a Share Option
Award shall be specified in the grant, but, to the extent any Share Option is an
Incentive Share Option, the Option Price in no event shall be less than the Fair
Market Value per Share on the date of grant. Notwithstanding the foregoing, if
the Participant to whom an ISO is granted owns, at the time of the grant, more
than ten percent (10%) of the combined voting power of the Company, the Option
Price per Share subject to such grant shall be not less than one hundred ten
percent (110%) of the Fair Market Value.
6.3 TERMS OF OPTION. A Share Option that is an ISO shall not be
transferable by the Participant other than as permitted under Section 422 of the
Code or any successor provision, and, during the Participant's lifetime, shall
be exercisable only by the Participant. Non-Qualified Share Options may be
subject to such restrictions on transferability and exercise as may be provided
for by the Committee in the terms of the grant thereof. A Share Option shall be
of no more than ten (10) years' duration, except that an ISO granted to a
Participant who, at the time of the grant, owns Shares representing more than
ten percent (10%) of the combined voting power of the Company shall by its terms
be of no more than five (5) years' duration. A Share Option by its terms shall
vest in a Participant to whom it is granted and be exercisable only after the
earliest of: (i) such period of time as the Committee shall determine and
specify in the grant, but, with respect to Employees, in no event less than one
(1) year following the date of grant of such award; (ii) the Participant's
death; or (iii) a Change in Control.
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6.4 EXERCISE OF OPTION. A Non-Qualified Share Option is only
exercisable by a Participant who is an Employee while such Participant is in
active employment with the Company or a Subsidiary or within thirty (30) days
after termination of such employment, except (i) during the three-year period
after a Participant's death, Disability or Retirement; (ii) during a three-year
period commencing on the date of a Participant's termination of employment by
the Company or a Subsidiary other than for cause; (iii) during a three-year
period commencing on the date of termination, by the Participant or the Company
or a Subsidiary, of employment after a Change in Control unless such termination
of employment is by the Company or a Subsidiary for cause; or (iv) if the
Committee decides that it is in the best interest of the Company to permit other
exceptions. A Non-Qualified Share Option may not be exercised pursuant to this
paragraph after the expiration date of the Share Option.
An ISO is only exercisable by a Participant while the Participant is in
active employment with the Company or a Subsidiary or within thirty (30) days
after termination of such employment, except (i) during a one-year period after
a Participant's death, where the Option is exercised by the estate of the
Participant or by any person who acquired such Option by bequest or inheritance;
(ii) during a three-month period commencing on the date of the Participant's
termination of employment other than due to death, a Disability or by the
Company or a Subsidiary other than for cause; or (iii) during a one-year period
commencing on the Participant's termination of employment on account of
Disability. An ISO may not be exercised pursuant to this paragraph after the
expiration date of the Share Option.
An Option may be exercised with respect to part or all of the Shares
subject to the Option by giving written notice to the Company of the exercise of
the Option. The Option Price for the Shares for which an Option is exercised
shall be paid on or within ten (10) business days after the date of exercise in
cash (by certified or bank cashier's check), in whole Shares owned by the
Participant prior to exercising the Option, in a combination of cash and such
Shares or on such other terms and conditions as the Committee may approve. The
value of any Share delivered in payment of the Option Price shall be its Fair
Market Value on the date the Option is exercised.
6.5 LIMITATION APPLICABLE TO ISOs. The aggregate Fair Market Value,
determined as of the date the related Share Option is granted, of all Shares
with respect to which ISO are exercisable for the first time by a Participant in
any one calendar year, under this Plan or any other share option plan maintained
by the Company, shall not exceed $100,000.
7. SHARE APPRECIATION RIGHTS.
-------------------------
7.1 GENERAL. The Committee may, in its discretion, grant SARs to
Participants who have received a Share Option Award. The SARs may relate to such
number of Shares, not exceeding the number of Shares that the Participant may
acquire upon exercise of a related Share Option, as the Committee determines in
its discretion. Upon exercise of a Share Option by a Participant, the SAR
relating to the Share covered by such exercise shall terminate. Upon termination
or expiration of a Share Option, any unexercised SAR related to that Option
shall also terminate. Upon exercise of SARs, such rights and the related Share
Options, to the extent of an equal number of Shares shall be surrendered to the
Committee, and such SARs and the related Share Options shall terminate.
7.2 AWARD. Upon a Participant's exercise of some or all of the
Participant's SARs, the Participant shall receive an amount equal to the value
of the Share Appreciation for the number of SARs exercised, payable in cash,
Shares, Restricted Shares, or a combination thereof, at the discretion of the
Committee.
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7.3 FORM OF SETTLEMENT. The Committee shall have the discretion to
determine the form in which payment of an SAR will be made, or to permit an
election by the Participant to receive cash in full or partial settlement of the
SAR. Unless otherwise specified in the grant of the SAR, if a Participant
exercises an SAR during the sixty (60) day period commencing on the date of a
Change in Control, the form of payment of such SAR shall be cash, provided that
such SAR was granted at least six (6) months prior to the date of exercise, and
shall be Shares if such SAR was granted six (6) months or less prior to the date
of the exercise. Settlement for exercised SARs may be deferred by the Committee
in its discretion to such date and under such terms and conditions as the
Committee may determine.
7.4 RESTRICTIONS ON CASH EXERCISE. Except in the case of an SAR that
was granted at least six (6) months prior to exercise and is exercised for cash
during the sixty (60) day period commencing on the date of the Change in
Control, any election by a Participant to receive cash in full or partial
settlement of the SAR, as well as any exercise by a Participant of the
Participant's SAR for such cash, shall be made only during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
7.5 RESTRICTIONS. An SAR is only vested, exercisable and transferable
during the period when the Share Option to which it is related is also vested,
exercisable and transferable, respectively. If the Participant is a person
subject to Section 16 of the Exchange Act, the SAR may not be exercised within
six (6) months after the grant of the related Share Option, unless otherwise
permitted by law.
8. EXERCISE PAYMENTS.
-----------------
The Committee may grant to Participants holding Share Options the right
to receive payments in connection with the exercise of a Participant's Share
Options ("Exercise Payments") relating to such number of Shares covered by such
Share Options, and subject to such restrictions and pursuant to such other terms
as the Committee may determine. Exercise Payments shall be in an amount
determined by the Committee in its discretion, which amount shall not be greater
than 60% of the excess of the Fair Market Value (as of the date of exercise)
over the Option Price of the Shares acquired upon the exercise of the Option. At
the discretion of the Committee, the Exercise Payment may be made in cash,
Shares, including Restricted Shares, or a combination thereof.
9. GRANTS OF SHARES.
----------------
9.1 AWARDS. The Committee may grant, either alone or in addition to
other awards granted under this Plan, Shares (including Restricted Shares) to
such Participants as the Committee authorizes and under such terms (including
the payment of a purchase price) as the Committee establishes. The Committee, in
its discretion, may also make a cash payment to a Participant granted Shares or
Restricted Shares under this Plan to allow such Participant to satisfy tax
obligations arising out of receipt of such Shares or Restricted Shares.
9.2 RESTRICTED SHARE AWARD. Awards of Restricted Shares shall be
subject to such terms and conditions as are established by the Committee. Such
terms and conditions may include, but are not limited to, the requirement of
continued service with the Company, achievement of specified business objectives
and other measurements of individual or business unit performance, the manner in
which such Restricted Shares are held, the extent to which the holder of such
Restricted Shares has rights of a shareholder and the circumstances under which
such Restricted Shares shall be forfeited. The Participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber Shares
7
<PAGE>
received pursuant to this Section 9 prior to the date on which any applicable
restriction established by the Committee lapses. The Participant shall have,
with respect to Restricted Shares, all of the rights of a shareholder of the
Company, including the right to vote the Restricted Shares and the right to
receive any dividends, unless the Committee shall otherwise provide in the grant
of such Restricted Shares. Restricted Shares may not be sold or transferred by
the Participant until any restrictions that have been established by the
Committee have lapsed. Upon the termination of employment of a Participant who
is an Employee during the period any restrictions are in effect, all Restricted
Shares shall be forfeited without compensation to the Participant unless
otherwise provided in the grant of such Restricted Shares.
10. PERFORMANCE AWARDS.
------------------
The Committee may grant, either alone or in addition to other awards
granted under this Plan, awards of Shares based on the attainment, over a
specified period, of individual performance targets or other parameters to such
Participants as the Committee authorizes and under such terms as the Committee
establishes. Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee, are met. The
Committee, shall determine the times at which Performance Awards are to be made
and all conditions of such awards. The Participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber Shares received pursuant to
this Section 10 prior to the date on which any applicable restriction or
performance period established by the Committee lapses. Performance Awards may
be paid in Shares, Restricted Shares or other securities of the Company, cash
or any other form of property that the Committee shall determine. Unless
otherwise provided in the Performance Award, a Participant who is an Employee
must be an Employee at the end of the performance period in order to receive a
Performance Award, unless the Participant dies, has reached Retirement or incurs
a Disability or under such other circumstances as the Committee may determine.
11. GENERAL PROVISIONS.
------------------
11.1 Any assignment or transfer of any awards granted under this Plan
may be effected only if such assignment or transfer does not violate the terms
of the award.
11.2 Nothing contained herein shall require the Company to segregate
any monies from its general funds, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any
Participant for any year.
11.3 Participation in this Plan shall not affect the Company's right to
discharge a Participant or constitute an agreement of employment between a
Participant and the Company.
11.4 This Plan shall be interpreted in accordance with, and the
enforcement of this Plan shall be governed by, the laws of The Bahamas, subject
to any applicable United States federal or state securities laws.
11.5 The headings preceding the text of the sections of this Plan have
been inserted solely for convenience of reference and do not affect the meaning
or interpretation of this Plan.
12. AMENDMENT, SUSPENSION OR TERMINATION.
------------------------------------
12.1 GENERAL RULE. Except as otherwise required under applicable rules
of a Nasdaq Market or a securities exchange or other market where the securities
of the Company are traded or applicable law, the Board may suspend, terminate or
amend this Plan, including, but not limited to, such amendments as may be
necessary or desirable resulting from changes in the United States federal
income tax laws and other applicable laws without the approval of the Company's
shareholders or Participants; provided, however, that no such action shall
adversely affect any awards previously granted to a Participant without the
Participant's consent.
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12.2 COMPLIANCE WITH RULE 16B-3. With respect to any person subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with the requirements of Rule 16b-3 under the Exchange Act, as applicable
during the term of this Plan. To the extent that any provision of this Plan or
action of the Committee or its delegates fail to so comply, it shall be deemed
null and void.
13. EFFECTIVE DATE AND DURATION OF PLAN.
-----------------------------------
This Plan shall be effective on August 15, 1996. No award shall be
granted under this Plan subsequent to August 15, 2006.
14. TAX WITHHOLDING.
---------------
The Company shall have the right to (i) make deductions from any
settlement of an award, including delivery or vesting of Shares, or require that
Shares or cash, or both, be withheld from any award, in each case in an amount
sufficient to satisfy withholding of any foreign, federal, state or local taxes
required by law or (ii) take such other action as may be necessary or
appropriate to satisfy any such withholding obligations. The Committee may
determine the manner in which such tax withholding shall be satisfied, and may
permit Shares (rounded up to the next whole number) to be used to satisfy
required tax withholding based on the Fair Market Value of such Shares as of the
Settlement Date of the applicable award.
9
