<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RUSS BERRIE AND COMPANY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
RUSS BERRIE AND COMPANY, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
- ---------------
/1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
RUSS BERRIE AND COMPANY, INC.
111 BAUER DRIVE
OAKLAND, NEW JERSEY 07436
March 15, 1994
Dear Shareholder:
It is my pleasure, on behalf of your Board of Directors, to extend to you a
cordial invitation to attend our Annual Meeting of Shareholders which will be
held at the Sheraton International Crossroads, One International Boulevard,
Route 17 North, Mahwah, New Jersey, at 2:00 P.M. on Monday, April 25, 1994.
At the meeting, shareholders will be asked to elect 10 directors and to
transact such other business as may properly come before the meeting.
I look forward to greeting you at the meeting. Whether or not you expect to
attend, I urge you to sign and return your proxy card immediately.
Sincerely,
Russell Berrie
RUSSELL BERRIE
Chairman of the Board
<PAGE> 3
RUSS BERRIE AND COMPANY, INC.
111 BAUER DRIVE
OAKLAND, NEW JERSEY 07436
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, APRIL 25, 1994
The Annual Meeting of Shareholders of Russ Berrie and Company, Inc. will be
held at the Sheraton International Crossroads, One International Boulevard,
Route 17 North, Mahwah, New Jersey, on Monday, April 25, 1994, at 2:00 P.M., for
the following purposes:
1. To elect 10 directors to serve until the next Annual Meeting of
Shareholders and until their successors shall have been elected and qualified;
and
2. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on March 9, 1994, are
entitled to notice of and to vote at such meeting.
BY ORDER OF THE
BOARD OF DIRECTORS,
Arnold S. Bloom
ARNOLD S. BLOOM
Secretary
Oakland, New Jersey
March 15, 1994
Please complete, date, sign and promptly return your proxy card in the enclosed
envelope.
<PAGE> 4
RUSS BERRIE AND COMPANY, INC.
111 BAUER DRIVE
OAKLAND, NEW JERSEY 07436
PROXY STATEMENT
DATED MARCH 15, 1994
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Russ Berrie and Company, Inc. (the "Company") of
proxies for use at the Annual Meeting of Shareholders of the Company to be held
on Monday, April 25, 1994, at 2:00 P.M., at the Sheraton International
Crossroads, One International Boulevard, Route 17 North, Mahwah, New Jersey, and
at any adjournments thereof.
Shareholders of record at the close of business on March 9, 1994, will be
entitled to one vote for each share they then held on all matters to come before
the meeting. There were outstanding on that date 21,432,911 shares of common
stock of the Company, stated value $.10 per share ("Common Stock"). The Company
has no other class of stock outstanding. The holders of a majority of the shares
of Common Stock entitled to vote at the meeting will constitute a quorum.
An executed proxy may be revoked at any time by written notification to the
Secretary of the Company if such notice is actually received by the Secretary
before such proxy is exercised, or by attending and voting at the meeting in
person. Proxies in the accompanying form which are properly executed by
shareholders, duly returned to the Company and not revoked will be voted in the
manner specified. If no specification is indicated, the proxy will be voted as
indicated below. The cost of solicitation will be borne by the Company.
The Annual Report of the Company for the fiscal year ended December 31,
1993, accompanies this Proxy Statement, but is not part of the proxy soliciting
materials.
This Proxy Statement and the form of proxy will be mailed to shareholders
on or about March 25, 1994.
ELECTION OF DIRECTORS
Ten directors are to be elected to hold office until the next Annual
Meeting of Shareholders and until their respective successors are elected and
qualified. The election of directors requires the affirmative vote of the
holders of a plurality of the shares of Common Stock voting at the meeting. It
is intended that proxies in the accompanying form which do not withhold the
authority to vote for any or all of the nominees will be voted for the election
as directors of the persons named below. Should any nominee become unable or
unwilling to serve as a director, the proxies will be voted in favor of the
remainder of those named and may be voted for substitute nominees who would be
nominated by the Board of Directors in place of those who are not candidates. At
this time, the Board of Directors knows of no reason why any nominee might not
be a candidate at the meeting. The information concerning the nominees has been
furnished by them to the Company.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION;
NAME AGE SINCE OTHER DIRECTORSHIPS
- -------------------------------- --- -------- -----------------------------------------------
<S> <C> <C> <C>
Raphael Benaroya................ 43 1993 Chairman of the Board, President and Chief
Executive Officer, since 1988, of United Retail
Group, Inc., which operates a chain of retail
specialty stores.
Russell Berrie.................. 61 1966 Chairman of the Board and Chief Executive
Officer of the Company since its incorporation
in 1966. Mr. Berrie is the founder of the
Company. Until October 1, 1988, Mr. Berrie was
also President and Chief Operating Officer of
the Company. Mr. Berrie is also a director of
United Retail Group, Inc.
</TABLE>
1
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION;
NAME AGE SINCE OTHER DIRECTORSHIPS
- -------------------------------- --- -------- -----------------------------------------------
<S> <C> <C> <C>
Arthur D. Charpentier........... 47 1987 President of Merritt Research Corporation,
Investment Advisor, from January 1987 to the
present. Mr. Charpentier was also general
partner of Prescott Associates, an investment
partnership, from November 1988 to April 1991.
Mr. Charpentier is also a director of
Heilig-Meyers Company.
A. Curts Cooke.................. 57 1982 President and Chief Operating Officer of the
Company since March 17, 1990; Executive Vice
President, Chief Financial Officer and
Secretary of the Company from 1984 to March 17,
1990.
Jimmy Hsu....................... 44 1988 Senior Vice President -- Product Development
and Far East Operations of the Company since
August 8, 1991. Mr. Hsu's title changed in
August 1991 from Senior Vice President -- Far
East Operations of the Company, which he held
from January 1987, to better reflect the job
responsibilities held by Mr. Hsu for the prior
four years.
Charles Klatskin................ 59 1983 Chairman of the Board and President of Charles
Klatskin Company Inc., a commercial real estate
brokerage and development firm, since its
incorporation in 1966.
Joseph Kling.................... 64 1988 President of Pamsco, Inc., a consulting
company, since April 1991. Prior thereto, he
was President of Sharon Industries, Inc., a
manufacturer and distributor of toy products,
from January 1, 1989 until April 1991. Director
since 1994 of Lancit Media Productions, Ltd.
which produces children's television
programming.
William A. Landman.............. 41 -- Co-Director of Acquisitions of CMS Companies,
an investment firm, since 1987. Mr. Landman is
also a director of Comtrex Systems Corporation,
which manufactures cash registers.
Sidney Slauson.................. 84 1978 Of Counsel to Rosner and Feltman, a law firm
which provides legal services to the Company.
Mr. Slauson acted as corporate counsel to the
Company from 1966 through 1990.
Bernard H. Tenenbaum............ 39 1989 Vice President -- Corporate Development of the
Company since January 14, 1993. Mr. Tenenbaum
also serves as President and Chief Executive
Officer of a division of the Company which
focuses on the development of sales to mass
merchandisers. From September 1988 until
joining the Company as an officer, Mr.
Tenenbaum was a founding Director of the George
Rothman Institute of Entrepreneurial Studies,
Fairleigh Dickinson University, and was
previously Associate Director of the Snider
Entrepreneurial Center of The Wharton School.
</TABLE>
2
<PAGE> 6
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held four meetings during 1993. The
Audit Committee of the Board of Directors, which held two meetings during 1993,
consisted of Messrs. Charpentier and Klatskin. The Audit Committee is
responsible for ensuring maintenance of an adequate system of internal financial
controls, causing the books of account and annual financial statements of the
Company to be audited by certified public accountants, discussing with the
certified public accountants the results of their audit, and recommending to the
Board of Directors the appointment of certified public accountants. The
Compensation Committee, which held one meeting during 1993, consisted of Messrs.
Kling, Slauson and Benaroya. The Compensation Committee reviews and recommends
to the Board of Directors remuneration arrangements for senior management of the
Company and various Company compensation plans. The report of the Compensation
Committee is set forth in this Proxy Statement. There is no standing nominating
committee. All of the directors attended, in 1993, at least 75% of the aggregate
number of meetings of the Board of Directors and the Audit Committee and
Compensation Committee (if they were members of those Committees).
Directors who are full-time employees of the Company receive no additional
compensation for services as a director. Each director who is not an employee of
the Company receives $8,000 per year plus $1,000 for each Board meeting and
$1,000 for each Audit or Compensation Committee meeting attended. In addition,
until December 31, 1988, the Russ Berrie and Company, Inc. Stock Option Plan for
Outside Directors (the "1984 Directors Plan") provided for the granting of
nonqualified stock options (and was amended to include stock appreciation rights
("SARs")) to members of the Board of Directors who were not officers or other
employees of the Company and who did not own Common Stock as of the effective
date of the plan. (See "1984 Directors Plan" below.) Commencing January 1, 1989,
directors who were not officers or other employees of the Company became
eligible to receive nonqualified stock options and related stock appreciation
rights, if granted, under the Company's 1989 Stock Option Plan for Outside
Directors. (See "1989 Directors Plan" below.) Commencing January 1, 1994,
directors who were not officers or other employees of the Company became
eligible to receive nonqualified stock options under the Company's 1994 Stock
Option Plan for Outside Directors. (See "1994 Directors Plan" below.)
1984 DIRECTORS PLAN
The 1984 Directors Plan is administered by a committee comprised of three
members of the Board of Directors who are not participants in the plan: Russell
Berrie, A. Curts Cooke and Jimmy Hsu. An amendment to the 1984 Directors Plan in
1988 gave the committee the discretion to grant SARs relating to options granted
under the plan. (See last paragraph of "1989 Directors Plan" below for an
explanation of SARs.) Options granted under the 1984 Directors Plan vested and
became exercisable one year after the date of grant and remain exercisable for
ten years from the date of grant. If a grantee ceases to serve on the Board of
Directors, he ceases to be eligible for the grant of options and, except in the
event of death or disability, non-vested options expire immediately and vested
options are only exercisable for thirty days thereafter or the remaining option
term, if shorter. Options are non-transferable except that in the event of a
grantee's death or disability options vest immediately and are exercisable for
twelve months thereafter or the remaining option term, if shorter. The grant of
the SARs was subject to the same terms and conditions as the related options and
are exercisable only to the same extent as the related options. Exercise prices
of options and SARs granted pursuant to the 1984 Directors Plan were based upon
the closing market price of the Common Stock on the New York Stock Exchange on
the first trading day of each year.
A total of 75,000 shares of Common Stock had been reserved for the grant of
options under the 1984 Directors Plan. Each eligible director received options
to purchase 3,000 shares of Common Stock in each year from 1984 through 1988. In
addition, each eligible director was granted SARs relating to the options
granted under the 1984 Directors Plan in January 1988.
3
<PAGE> 7
No options granted under the 1984 Directors Plan were exercised in 1993.
This plan terminated on December 31, 1988, although options and SARs previously
granted may be exercised beyond that date.
1989 DIRECTORS PLAN
The 1989 Stock Option Plan for Outside Directors (the "1989 Directors
Plan") provides for the grant of stock options and related SARs to members of
the Board of Directors who are not officers or other employees of the Company.
The plan is administered by a committee comprised of three members of the Board
of Directors who are not participants in the plan: Russell Berrie, A. Curts
Cooke and Jimmy Hsu.
A total of 150,000 shares of Common Stock have been reserved for the grant
of options and related SARs, if any, under the plan. Grantees have been granted
options to purchase 3,000 shares of Common Stock on each January 1, from 1989
through 1993 at an exercise price equal to the closing market price of the
Common Stock on the New York Stock Exchange on the first trading day of each
such year. Options were granted to all eligible directors (Messrs. Charpentier,
Klatskin, Kling, Slauson and Tenenbaum) in 1992 and 1993 at an exercise price of
$12.50 and $17.67 per share, respectively, the closing market prices of the
Common Stock on the first trading day of each of such years. No options granted
under the 1989 Directors Plan were exercised in 1993.
Options granted under the plan vest and are exercisable one year after the
date of grant and remain exercisable for ten years from the date of grant.
Options are not transferable other than by will or under the laws of descent and
distribution, and are exercisable only by the grantee or by the grantee's legal
representatives after death or disability. If the grantee ceases to be a member
of the Board of Directors for reasons other than death or disability, nonvested
options expire immediately and vested options are only exercisable for 30 days
thereafter, or the remaining option term, if shorter. In the event of the
grantee's death or disability, nonvested options shall vest and all outstanding
options may be exercised within 12 months after the death or disability or the
remaining option term, if shorter.
Until December 31, 1991, the committee administering the 1989 Directors
Plan had the discretion to grant SARs subject to related options, which are
exercisable only to the same extent and subject to the same terms and conditions
as the related options. In general, a grantee who exercises an SAR will be
entitled to an amount equal to the excess of the closing market price of the
Common Stock on the New York Stock Exchange on the date of exercise over the
exercise price of the related option, multiplied by the number of shares as to
which the SAR is exercised. Exercise of all or any part of an SAR will reduce on
a share-for-share basis the number of shares subject to a grantee's related
option. Payment due upon exercise of an SAR shall be made (i) in cash, (ii) in
Common Stock, or (iii) partly in cash and partly in Common Stock, all as
determined by the committee in its discretion.
This plan terminated on December 31, 1993, although options and SARs
previously granted may be exercised beyond that date.
1994 DIRECTORS PLAN
The 1994 Stock Option Plan for Outside Directors (the "1994 Directors
Plan") provides for the grant of stock options to members of the Board of
Directors who are not officers or other employees of the Company. The plan is
administered by a committee comprised of three members of the Board of Directors
who are not participants in the plan: Russell Berrie, A. Curts Cooke and Jimmy
Hsu.
A total of 150,000 shares of Common Stock have been reserved for the grant
of options under the plan. Grantees may be granted options to purchase 3,000
shares of Common Stock on each January 1, from 1994 through 1998 at an exercise
price equal to the closing market price of the Common Stock on the New York
4
<PAGE> 8
Stock Exchange on the first trading day of each such year. Options were granted
to all eligible directors (Messrs. Benaroya, Charpentier, Klatskin, Kling and
Slauson ) in 1994 at an exercise price of $14.875 per share, the closing market
price of the Common Stock on the first trading day of such year.
Options granted under the plan vest and are exercisable one year after the
date of grant and remain exercisable for ten years from the date of grant.
Options are not transferable other than by will or under the laws of descent and
distribution, and are exercisable only by the grantee or by the grantee's legal
representatives after death or disability. If the grantee ceases to be a member
of the Board of Directors for reasons other than death or disability, nonvested
options expire immediately and vested options are only exercisable for 30 days
thereafter, or the remaining option term, if shorter. In the event of the
grantee's death or disability, nonvested options shall vest and all outstanding
options may be exercised within 12 months after the death or disability or the
remaining option term, if shorter.
COMPENSATION COMMITTEE REPORT
CHIEF EXECUTIVE OFFICER
Mr. Russell Berrie, Chairman and Chief Executive Officer of the Company, is
party to an employment arrangement with the Company that provides for
compensation consisting of a base salary at an annual rate of $400,000 and a
bonus equal to 1% of the Company's net income after taxes. Mr. Berrie does not
participate in any of the Company's stock option or restricted stock plans. The
bonus arrangement has been in effect since July 1, 1983.
The Committee and Mr. Berrie discuss his base compensation annually. For
1993, the Committee and Mr. Berrie concluded that his base compensation, which
had been reduced to $350,000 in the three preceding years, should be restored to
the $400,000 rate contemplated by his employment arrangement in recognition of
the Company's results of operations for 1992.
The Committee has not conducted a formal study of chief executive officer
compensation at companies comparable to the Company; however, the Committee
believes that Mr. Berrie's base compensation is reasonable when compared with
the base compensation of chief executives at companies engaged in the toy
business with which members of the Committee are familiar. The Committee also
believes that basing a substantial portion of Mr. Berrie's compensation on a
fixed percentage of the Company's net income after taxes provides an appropriate
linkage between his compensation and the Company's performance. The Committee
also notes that, although Mr. Berrie does not participate in any of the
Company's stock option or restricted stock plans, he is the beneficial owner of
more than 50% of the Company's outstanding common stock.
OTHER EXECUTIVE OFFICERS
The Committee determines the compensation of executive officers, other than
the chief executive officer, in consultation with Mr. Berrie. Generally, the
compensation received by these individuals consists of three principal
components: base salary, cash bonuses, stock options and, in some cases,
restricted stock awards under the Company's 1994 Stock Option and Restricted
Stock Plan (including predecessor plans, the "Restricted Stock Plans"). The
Committee has followed a policy of setting base compensation at levels
considered to be reasonable when compared with the base compensation of
executives at companies engaged in the toy business with which members of the
Committee are familiar (although no formal study has been conducted), with
annual increases that are not necessarily based on the Company's performance.
Base salaries and annual increases are based on the subjective judgment of the
Committee after discussion with Mr. Berrie.
The Committee views stock options and restricted stock awards as serving
two functions; compensation to executive officers and providing executive
officers with an equity stake in the Company that aligns their
5
<PAGE> 9
interests with shareholders. In 1993 and several prior years, three of the
executive officers named in the Summary Compensation Table received annual
grants of stock options and restricted stock awards under the Restricted Stock
Plans covering shares having a fair market value (measured at the date of grant)
equal to 80% of base compensation. One-third of those shares were subject to
stock options, exercisable at a price equal to fair market value at the date of
grant, and two-thirds of the shares were the subject of restricted stock awards.
Other executive officers received annual grants of stock options under the
Restricted Stock Plans covering shares having a fair market value (measured at
the date of grant) equal to 40% of base compensation. Although the amount of
these awards did not vary on the basis of the Company's performance or the
recipients' other holdings of the Company's stock, their ultimate value to the
recipient depends upon the market price of the Company's common stock.
Awards of cash bonuses to executive officers are based upon a bonus pool in
which approximately 65 of the Company's management personnel participate. The
amount of the bonus pool is based upon a formula relating to the Company's
pre-tax profit from its core domestic business. Participants are eligible to
receive a maximum award ranging from 50% (in the case of most executive
officers) to 4% of the recipient's base salary. Participants will receive the
maximum bonus for which they are eligible if the amount of the bonus pool is
sufficient to pay the maximum bonus to all participants; otherwise, the bonus
payable will be calculated so that each participant receives the same percentage
of the maximum bonus for which he or she was eligible and the total bonuses paid
equal the amount of the bonus pool.
Mr. Berrie does not participate in the Restricted Stock Plans or the bonus
pool described above.
LIMITATIONS ON DEDUCTIBILITY
The Committee has not reviewed the Company's compensation policies in light
of amendments to the Internal Revenue Code enacted during 1993 that generally
limit deductions for compensation paid to certain executive officers to
$1,000,000 per annum (certain performance based compensation is not subject to
that limit). The Committee intends to review the application of those amendments
to the Company and to consider whether any changes in the Company's compensation
policies are appropriate.
Russ Berrie and Company, Inc. Compensation Committee
Raphael Benaroya, Joseph Kling and Sidney Slauson, 1993 Members
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Russell Berrie, the Chairman of the Board and Chief Executive Officer of
the Company, serves as a member of the Board of Directors of United Retail
Group, Inc. Raphael Benaroya, the Chairman of the Board, President and Chief
Executive Officer of United Retail Group, Inc., serves on the Compensation
Committee of the Board of Directors of the Company.
Mr. Slauson, a Director of the Company and a member of the Compensation
Committee, is of counsel to Rosner and Feltman, a law firm which provides legal
services to the Company. Such law firm receives (and had received during 1993) a
retainer of $10,000 per month for its services.
Mr. Kling, a Director of the Company and a member of the Compensation
Committee, received a broker's fee of $100,000 for services rendered in
connection with the Company's acquisition of substantially all of the assets of
Cap Toys, Inc. in October, 1993, $50,000 of which was paid by the Company.
6
<PAGE> 10
RUSS BERRIE AND COMPANY, INC.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
RUSS BERRIE AND COMPANY, INC., THE S & P 500 INDEX
AND PEER GROUP COMPANIES
<TABLE>
<CAPTION>
MEASUREMENT PERIOD RUSS BERRIE & S&P 500 IN-
(FISCAL YEAR COVERED) CO. INC. DEX PEER GROUP
<S> <C> <C> <C>
1988 100 100 100
1989 79.21 131.69 133.10
1990 84.17 127.60 114.18
1991 113.85 166.47 187.53
1992 164.75 179.15 216.03
1993 143.44 197.21 259.82
</TABLE>
Assumes $100 invested December 31, 1988 and reinvestment of all dividends.
Peer Group Companies are as follows: American Greetings (Class A), Cross
(A.T.) & Co. (Class A), Galoob (Lewis) Toys Inc., Gibson Greetings Inc., Hasbro
Inc., Kiddie Products Inc., Ohio Art Co. and Tandycrafts Inc. Peer Group
Companies were selected on the basis of similarity of their products or
distribution channels to those of the Company. Goody Products Inc. has been
removed from the Peer Group as a result of its acquisition by Newell Company on
December 13, 1993.
7
<PAGE> 11
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 1, 1994, the shares of Common
Stock beneficially owned by each director of the Company, by certain executive
officers of the Company (and one former officer, see Note 5 below) and by all
directors and officers of the Company as a group.
<TABLE>
<CAPTION>
TOTAL SHARES APPROXIMATE
SHARES OF OF COMMON PERCENTAGE OF
COMMON STOCK OUTSTANDING
NAME OF DIRECTOR STOCK BENEFICIALLY COMMON
OR IDENTITY OF GROUP OWNED(1) OWNED(1)(2) STOCK(1)(2)
- ---------------------------------------------------------- ---------- ------------ -------------
<S> <C> <C> <C>
Raphael Benaroya.......................................... 720 720 *
Russell Berrie(3)......................................... 11,728,508 11,728,508 54.7
Arthur D. Charpentier..................................... 750 12,750 *
A. Curts Cooke(4)......................................... 40,841 52,131 *
Jimmy Hsu(4).............................................. 37,398 47,883 *
Charles Klatskin.......................................... 7,500 37,500 *
Joseph Kling.............................................. -0- 9,000 *
James A. Madonna, Jr.(5).................................. 50 50 *
Sidney Slauson............................................ 11,250 20,250 *
Bernard H. Tenenbaum...................................... -0- 12,000 *
Barker T. Torrey, Jr...................................... 100 4,221 *
Charles Klatskin and Sidney Slauson, as co-trustees under
various trusts for the Benefit of Leslie Berrie and
Scott Berrie(6)......................................... 241,699 241,699 1.1
All directors and officers as a group (14
persons)(3)(4)(7)(8).................................... 12,068,916 12,212,604 57.3
</TABLE>
- ---------------
*Less than 1%
(1) Each individual has the sole power to vote and dispose of the shares of
Common Stock, except as provided in notes 3, 4 and 6 below; and, in the case
of restricted shares granted under Russ Berrie and Company, Inc. Stock
Option and Restricted Stock Plans, subject to the provisions of such plans.
(2) Includes the number of shares subject to stock options granted by the
Company which are exercisable within 60 days.
(3) Includes (a) 9,203,542 shares held of record by The Russell Berrie 1991
Trust, of which Mr. Russell Berrie is the grantor and a trustee possessing
sole voting and dispositive power (other than to Mr. Berrie) as to the
shares held by the Trust, (b) 1,500,000 shares held of record by The Russell
Berrie 1992 Charitable Trust, of which Mr. Berrie is the grantor and a
trustee who shares voting and dispositive power as to the shares held by
such trust, and (c) 150 shares held of record by Mr. Berrie as custodian for
one of his daughters. Does not include shares of Common Stock held
beneficially and of record by The Russell Berrie Foundation (148,200
shares). Mr. Russell Berrie is a trustee of the Foundation.
(4) Includes shares awarded under the Company's Stock Option and Restricted
Stock Plans which are not vested as of March 1, 1994, as follows: 19,839
shares for Mr. Cooke; 15,334 shares for Mr. Hsu; and 35,173 shares for all
directors and officers as a group.
(5) Mr. Madonna resigned from his position as Senior Vice President -- Marketing
and Sales of the Company on February 25, 1994.
(6) Charles Klatskin and Sidney Slauson, as co-trustees, share power to vote and
dispose of these shares, but disclaim beneficial ownership of these shares.
(7) Includes shares held by trusts included in the table.
(8) Excludes shares owned by James A. Madonna, Jr. Mr. Madonna resigned from the
Board of Directors of the Company in December, 1993. See Note (5) above.
8
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 1, 1994, with respect to each
person who is known to the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock: (i) the name and address of
such owner, (ii) the number of shares beneficially owned, and (iii) the
percentage of the total number of shares so owned.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- --------------------------------------------------------------------- ------------------ --------
<S> <C> <C>
Russell Berrie (1)................................................... 11,728,508 54.7
111 Bauer Drive
Oakland, New Jersey 07436
</TABLE>
- ---------------
(1) Includes (a) 9,203,542 shares held of record by The Russell Berrie 1991
Trust, of which Mr. Russell Berrie is the grantor and a trustee possessing
sole voting and dispositive power (other than to Mr. Berrie) as to the
shares held by the Trust, (b) 1,500,000 shares held of record by The Russell
Berrie 1992 Charitable Trust, of which Mr. Berrie is the grantor and a
trustee who shares voting and dispositive power as to the shares held by
such trust, and (c) 150 shares held of record by Mr. Berrie as custodian for
one of his daughters. Does not include shares of Common Stock held
beneficially and of record by The Russell Berrie Foundation (148,200
shares). Mr. Russell Berrie is a trustee of the Foundation.
EXECUTIVE COMPENSATION
The following table sets forth compensation for the years ended December
1993, 1992 and 1991 paid to or accrued for the benefit of the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company as of December 31, 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> ANNUAL
COMPENSATION(1) LONG-TERM COMPENSATION
------------------- --------------------------- ALL
RESTRICTED OTHER
STOCK OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(S)(2) SARS(SHARES) SATION(3)
- ---------------------------------- ---- -------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Russell Berrie, .................. 1993 $400,000 $136,820 -0- -0- $497,844
Chairman of the Board and 1992 350,000 607,518 -0- -0- 497,545
Chief Executive Officer 1991 350,000 224,458 -0- -0- 510,521
A. Curts Cooke, .................. 1993 263,520 132,612 $140,547 3,978 43,017
President and Chief 1992 244,000 166,692 130,125 5,205 39,054
Operating Officer 1991 232,000 120,462 123,726 6,455 63,150
Jimmy Hsu, Senior................. 1993 210,000 105,678 112,010 3,170 42,972
Vice President -- 1992 190,000 123,654 101,325 4,053 39,013
Product Development 1991 170,000 88,269 90,663 4,730 63,068
and Far East Operations
James A. Madonna, Jr., ........... 1993 200,000 100,646 106,674 3,018 56,708
Senior Vice President -- 1992 190,000 123,654 101,325 4,053 51,703
Marketing and Sales(4) 1991 186,000 96,577 99,188 5,175 88,213
Barker T. Torrey, Jr., ........... 1993 182,000 91,588 -0- 4,121 98,656
Senior Vice President -- 1992 171,600 104,100 -0- 5,490 93,381
Operations 1991 165,000 85,673 -0- 6,887 170,974
</TABLE>
- ---------------
(1) Certain other annual compensation received by the named executive officers
has been omitted from this table since the aggregate amount of such
compensation is lower than the lesser of $50,000 or 10 percent
9
<PAGE> 13
of total annual salary and bonus for each named executive officer. All
salary and bonus payments are reported for the year in which they are
earned.
(2) Value is calculated by multiplying the number of shares awarded by the
closing price of the Common Stock on the New York Stock Exchange on the date
of the grant. 76,774 shares of restricted stock were held by the named
executive officers on December 31, 1993 with an aggregate value as of such
date of $1,170,807 (calculated by multiplying the number of shares held by
the closing price of the Common Stock on the New York Stock Exchange on
December 31, 1993, the last day of the Company's last completed fiscal
year). At December 31, 1993, the value of Mr. Cooke's holdings was $453,125,
Mr. Hsu's was $350,781 and Mr. Madonna's was $366,901. The number of shares
of restricted stock awarded in 1993 to Messrs. Cooke, Hsu and Madonna is
7,954, 6,339 and 6,037, respectively; in 1992, 10,410, 8,106 and 8,106,
respectively; in 1991, 12,910, 9,460 and 10,350 respectively. Restricted
Stock awards vest over five years at 20 percent per year, provided the
recipient remains in the employment of the Company. Dividends are paid on
all outstanding restricted stock. Awards of restricted stock are customarily
made on the first trading day of each calendar year. No grants of restricted
stock have been made to any officer of the Company in 1994.
(3) Includes for Mr. Berrie $256,995 paid in 1993 for split dollar life
insurance policies on the joint lives of Mr. Berrie and his spouse. The
policies have been assigned to the Company to secure repayment of the
premiums. Includes for all named executive officers retirement plan
contributions and other allocations earned during the applicable year, which
includes contributions by the Company to the retirement plan (which are
proportional to compensation subject to Internal Revenue Service
regulations), investment gains or losses and reallocation of forfeitures.
Since the Company contributions to the retirement plan are not fixed, and
because it is impossible to calculate future income and forfeitures, it is
not currently possible to calculate an individual participant's retirement
benefits.
(4) James A. Madonna, Jr. resigned from his position as Senior Vice
President -- Marketing and Sales of the Company on February 25, 1994. Mr.
Madonna resigned from the Board of Directors of the Company in December,
1993. As a result of his resignation, all non-vested restricted stock awards
and outstanding options were forfeited.
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
The Company has an employment arrangement with Russell Berrie providing for
compensation in 1994 at the annual rate of $350,000 plus 1% of the Company's net
income after income taxes ("Incentive Compensation"). During 1993, Mr. Berrie
received annual compensation of $400,000 plus the Incentive Compensation.
Pursuant to Mr. Berrie's compensation arrangement with the Company, the Company
pays the cost of certain split dollar life insurance policies insuring the joint
lives of Mr. Berrie and his spouse. The policies have been assigned to the
Company to secure repayment of the premiums. (See also "Compensation Committee
Report" and "Certain Transactions".)
The Company has an agreement with A. Curts Cooke, President and Chief
Operating Officer of the Company, which provides that in the event of a change
of control of the Company, he will be entitled to be employed at his then
compensation level for a period of three years. (See also "Certain
Transactions".) The Company had an agreement with James A. Madonna, Jr., which
provided for his employment as Senior Vice President -- Marketing and Sales. Mr.
Madonna resigned from that position on February 25, 1994.
10
<PAGE> 14
1993 OPTION GRANTS
The following table sets forth the options granted to the named officers in
the Summary Compensation Table of the Company during the year ended December 31,
1993.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
---------------------------------------- STOCK PRICE
PERCENT OF TOTAL APPRECIATION FOR 10
OPTIONS OPTIONS GRANTED EXERCISE OR YEAR OPTION TERM
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME (#)(1) IN FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ------------------------------- ------- ---------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Russell Berrie................. -0- -0- -0- -0- -0- -0-
A. Curts Cooke................. 3,978 0.82 $ 17.67 1/4/03 $ 44,205 $ 112,026
Jimmy Hsu...................... 3,170 0.65 17.67 1/4/03 35,227 89,272
James A. Madonna, Jr.(2)....... 3,018 0.62 17.67 1/4/03 33,537 84,991
Barker T. Torrey, Jr........... 4,121 0.85 17.67 1/4/03 45,795 116,053
</TABLE>
- ---------------
(1) All options granted vest and become exercisable one year from the date of
grant. In any twelve month period, an option holder may exercise no more
than the number of options received in the most recent grant plus one-third
of the option holder's remaining exercisable options.
(2) Options granted to Mr. Madonna were cancelled as of the date of his
resignation on February 25, 1994.
AGGREGATED OPTION/SAR EXERCISES IN 1993 AND
YEAR-END OPTION/SAR VALUES
The following table sets forth option and SAR exercises during 1993 and
year-end option and SAR values for the named officers in the Summary
Compensation Table of the Company based upon the closing price of the Common
Stock of the Company on the New York Stock Exchange on December 31, 1993
($15.25).
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES ACQUIRED VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END($)
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------- --------------- --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Russell Berrie............ -0- -0- -0- -0-
A. Curts Cooke............ 9,622 $30,438 -0-/3,407 -0-/$ 3,704
Jimmy Hsu................. 5,793 10,566 1,746/ 950 $1,746/ 950
James A. Madonna,
Jr.(2).................. 6,775 24,344 876/2,343 876/ 2,343
Barker T. Torrey, Jr...... 8,107 23,513 46/3,943 119/ 10,173
</TABLE>
- ---------------
(1) Value is calculated by determining the difference between the price of the
Common Stock underlying the options or SARs on the New York Stock Exchange
at the time of exercise and the exercise or base price of the options or
SARs.
(2) Options granted to Mr. Madonna were cancelled as of the date of his
resignation on February 25, 1994.
CERTAIN TRANSACTIONS
Several warehouse, office and distribution facilities are leased to the
Company by Russell Berrie, Chairman of the Board of the Company, or trusts for
the benefit of members of his immediate family or by a
11
<PAGE> 15
partnership in which he and Murray Berrie, his brother, are both general
partners. The Company believes that the terms of those leases are no less
favorable to the Company than could have been obtained from an unaffiliated
third party. The Company is also a guarantor under mortgage loan payments on the
facilities in South Brunswick and Oakland, New Jersey. The aggregate amount
outstanding on the loans as of December 31, 1993 was $8,455,000. The table below
lists such facilities, the current rentals and the lease expiration dates.
<TABLE>
<CAPTION>
ANNUAL LEASE
FACILITY RENTAL(1) EXPIRATION(2)
--------------------------------------------------- ---------- -----------------
<S> <C> <C>
Petaluma, California............................... $1,110,004 June 30, 2004
Lakeland, Florida(3)............................... 274,861 February 28, 1998
Oakland, New Jersey................................ 399,350 April 1, 2004
South Brunswick, New Jersey........................ 2,506,598 May 31, 1999
----------
Total......................................... $4,290,813
----------
----------
</TABLE>
- ---------------
(1) Reflects base rental obligations. Does not include payments for real estate
taxes and certain other items applicable to the premises. Base rentals are
subject to periodic increases during the remainder of the term of certain of
the leases. Under an amendment to the lease for Petaluma, California, the
term has been extended to 2004 from 1997, and the annual base rent will be
reduced from $1,375,008 to $845,000 on July 1, 1994. The annual rental shown
above is for 1994.
(2) Not including renewal options, if any.
(3) This facility was closed in March, 1990 in connection with a restructuring
undertaken by the Company and is currently subleased.
------------------------
As of March 1, 1994, Mr. Cooke, President, Chief Operating Officer and a
Director, was indebted to the Company in the aggregate amount of $111,337, the
highest outstanding balance of the loan since January 1, 1993. As of March 1,
1994, Mr. Hsu, Senior Vice President -- Product Development and Far East
Operations and a Director, was indebted to the Company in the aggregate amount
of $71,970, and the highest outstanding balance of the loan since January 1,
1993 was $98,733. The proceeds of these borrowings were used by Mr. Cooke and
Mr. Hsu to pay for certain tax obligations resulting from the lapse of
restrictions on shares of Common Stock awarded under the Company's Restricted
Stock Plans. The Company lends to various officers who receive restricted shares
of Common Stock under the Restricted Stock Plans amounts equal to the tax
obligations incurred by such officers resulting from the lapse of restrictions
on such shares. Under this arrangement in 1994, the indebtedness from the
officer is represented by an agreement or promissory note providing for loans
for a five-year period bearing interest at the Applicable Federal Rate as
determined by the Internal Revenue Service. The principal amounts of and accrued
interest on these loans are required to be paid upon the termination of the
officer's employment with the Company or his disposition of the shares giving
rise to the indebtedness. Prior to 1994, loans were interest-free for a five
year period, and following that period, were subject to annual interest at a
rate of one percent below the prime interest rate.
The Company leases a warehouse and office facility located in Dayton, New
Jersey from a partnership in which Charles Klatskin, a Director of the Company,
is a general partner. This facility was closed in July, 1989, in connection with
a restructuring undertaken by the Company. Since July, 1991, the Company has
occupied some office and warehouse space in this building (currently
approximately 31% of the building). The lease for this facility expires on
October 31, 1997 (not including renewal options) and provides for annual base
rental payments (not including payments for real estate taxes and certain other
items) of $996,369. Mr. Klatskin and certain of his affiliated companies have
been engaged as a real estate broker to assist with selling or arranging
12
<PAGE> 16
subleases for certain properties which the Company currently owns or leases and
is not fully utilizing, including the facilities in Dayton, New Jersey,
Marietta, Georgia and Lakeland, Florida and a facility formerly owned by the
Company in Grand Prairie, Texas. During 1993, Mr. Klatskin and companies
affiliated with Mr. Klatskin received from the Company, directly or indirectly,
$18,121 for performing such activities. Mr. Klatskin and his affiliated
companies continue to act in a real estate brokerage capacity for certain real
estate properties of the Company, and the Company believes that the terms of the
leases and the arrangements with Mr. Klatskin and his affiliated companies to
arrange sales and subleases of certain of the Company's facilities are no less
favorable to the Company than could have been obtained from an unaffiliated
third party.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and director's, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission") and the New York Stock Exchange. Officers, directors and
greater than ten percent shareholders are required by regulation of the
Commission to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal year
ended December 31, 1993, all filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with on a
timely basis except that Mr. Jimmy Hsu filed late one report on Form 4 covering
the sale of shares of the Company's Common Stock.
OTHER MATTERS
The Board of Directors knows of no business to be presented at the meeting
other than that set forth in the accompanying Notice of Annual Meeting of
Shareholders. However, if other matters properly come before the meeting, the
holders of the proxies intend to vote the proxies in accordance with their best
judgment on such matters.
The Board of Directors, upon the recommendation of the Audit Committee, has
selected Coopers & Lybrand to be the Company's independent accountants for 1994.
It is expected that representatives of Coopers & Lybrand will be present at the
meeting to respond to appropriate questions and, if they so desire, to make a
statement.
VOTING PROCEDURES
Election of Directors: Directors are elected by a plurality of the votes
cast at the annual meeting. Only shares that are voted in favor of a particular
nominee will be counted toward such nominee's achievement of a plurality. Shares
present at the meeting that are not voted for a particular nominee or shares
present by proxy where the shareholder properly withheld authority to vote for
such nominee (including broker non-votes) will not be counted toward such
nominee's achievement of a plurality.
Other Matters: The affirmative vote of the majority of shares present in
person or represented by proxy at the annual meeting for a particular matter is
required for the matter to be deemed an act of the shareholders. Shares electing
to abstain are considered present at the meeting for the particular matter, but
since they are not affirmative votes for the matter, abstentions have the same
effect as votes against the matter. In the event of broker non-votes, shares are
not considered present at the meeting for the particular matter as to which the
broker withheld authority. Broker non-votes are not counted in respect of the
matter, but have the practical effect of reducing the number of affirmative
votes required to achieve a majority for such matter by reducing the total
number of shares from which the majority is calculated.
13
<PAGE> 17
SHAREHOLDER PROPOSALS
In order to be included in the proxy statement and form of proxy relating
to the 1995 Annual Meeting of Shareholders, proposals of shareholders intended
to be presented at such meeting must be received by the Company on or before
November 14, 1994. Any such proposals should be submitted in writing to:
Secretary, Russ Berrie and Company, Inc., 111 Bauer Drive, Oakland, New Jersey
07436.
By Order of the Board of Directors
ARNOLD S. BLOOM
Secretary
Oakland, New Jersey
March 15, 1994
14
<PAGE> 18
PROXY
RUSS BERRIE AND COMPANY, INC.
111 BAUER DRIVE
OAKLAND, NEW JERSEY 07436
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Russell Berrie, A. Curts Cooke and
Jimmy Hsu, and each of them severally, as proxies of the undersigned, each with
the power to appoint his substitute, and hereby authorizes them to represent
and to vote as designated below all the shares of Common Stock of Russ Berrie
and Company, Inc. held of record by the undersigned on March 9, 1994, at the
Annual Meeting of Shareholders to be held on April 25, 1994 and any adjournment
thereof.
Election of Directors. Nominees: (Change of Address/Comments)
Raphael Benaroya, Russell Berrie, __________________________
Arthur D. Charpentier, A. Curts Cooke, __________________________
Jimmy Hsu, Charles Klatskin, Joseph Kling, __________________________
William A. Landman, Sidney Slauson __________________________
and Bernard H. Tenenbaum.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
A VOTE FOR PROPOSAL 1 IS RECOMMENDED. SEE REVERSE SIDE.
Your vote for the election of Directors may be indicated on the reverse.
<PAGE> 19
/X/ PLEASE MARK YOUR 0000
VOTES AS IN THIS
EXAMPLE.
1. ELECTION OF DIRECTORS TO SERVE UNTIL THE 1995 ANNUAL MEETING OF SHAREHOLDERS
AND UNTIL THEIR SUCCESSORS SHALL HAVE BEEN ELECTED AND QUALIFIED.
FOR nominees listed on WITHHOLD AUTHORITY
the front of this card to vote for all nominees listed
(except as marked to the on the front of the card.
contrary below).
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominees, check
the box marked "FOR" above and write that nominee's name on the line provided.)
______________________________________________________________________________
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears on the other side. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please sign your name and indicate full
title as such. If a corporation, an authorized officer should sign his name
and indicate his title. If a partnership, please sign in partnership name by
authorized person.
___________________________ Date:____________________
Signature
___________________________ Date:____________________
Signature if held jointly
