<PAGE>
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
<TABLE>
<S> <C>
Check the appropriate line:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Material
[ ] Soliciting Material pursuant to Rule
14a-11(c) or Rule 14a-12
</TABLE>
REVLON, INC.
(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:
(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 Number:
(3) Filing Party:
(4) Date Filed:
<PAGE>
REVLON, INC.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
March 12, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Revlon, Inc., which will be held at 9:00 a.m., local time, on
Wednesday, April 7, 1999, at Revlon's Research Center, 2121 Route 27, Edison,
New Jersey 08818. The matters to be acted upon at the meeting are described in
the attached Notice of Annual Meeting of Stockholders and Proxy Statement.
While stockholders may exercise their right to vote their shares in
person, we recognize that many stockholders may not be able to attend the
Annual Meeting. Accordingly, we have enclosed a proxy which will enable you to
vote your shares on the matters to be considered at the Annual Meeting even if
you are unable to attend. If you desire to vote in accordance with management's
recommendations, you need only sign, date and return the proxy in the enclosed
postage-paid envelope to record your vote. Otherwise, please mark the proxy to
indicate your vote; date and sign the proxy; and return it in the enclosed
postage-paid envelope. In either case, you should return the proxy as soon as
conveniently possible. This will not limit your right to attend the Annual
Meeting and vote your shares in person.
Sincerely yours,
George Fellows
President and Chief Executive Officer
<PAGE>
REVLON, INC.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Revlon, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of Revlon,
Inc., a Delaware corporation (the "Company"), will be held at 9:00 a.m., local
time, on Wednesday, April 7, 1999, at the Company's Research Center, 2121 Route
27, Edison, New Jersey 08818, for the following purposes:
1. To elect the following persons as members of the Board of Directors of
the Company to serve until the next Annual Meeting and until such directors'
successors are elected and shall have qualified: Ronald O. Perelman, Donald G.
Drapkin, Irwin Engelman, Meyer Feldberg, George Fellows, Howard Gittis, Morton
L. Janklow, Vernon E. Jordan, Henry A. Kissinger, Edward J. Landau, Jerry W.
Levin, Linda Gosden Robinson, Terry Semel and Martha Stewart.
2. To consider and approve the Revlon, Inc. Second Amended and Restated
1996 Stock Plan.
3. To ratify the selection of KPMG LLP as the Company's independent
auditors for 1999.
4. To transact such other business as may properly come before the Annual
Meeting.
A proxy statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only stockholders of record at the close of
business on February 18, 1999 (the "Record Date") are entitled to notice of,
and to vote at, the Annual Meeting and at any adjournments thereof. For at
least ten days prior to the Annual Meeting and also at the Annual Meeting, a
list of stockholders entitled to vote at the Annual Meeting will be available
for inspection during normal business hours at the Company's Research Center,
2121 Route 27, Edison, New Jersey 08818. Such list will also be available for
at least ten days prior to the Annual Meeting for such inspection at the
offices of the Company's Secretary at 625 Madison Avenue, 16th Floor, New York,
New York 10022.
To ensure that your vote will be counted, please complete, date, sign and
return the enclosed proxy card promptly in the enclosed postage-paid envelope,
whether or not you plan to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Robert K. Kretzman
Senior Vice President, Deputy General
Counsel and Secretary
March 12, 1999
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL ENSURE
THAT YOUR SHARES ARE VOTED IN ACCORDANCE WITH YOUR WISHES.
<PAGE>
REVLON, INC.
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 7, 1999
---------------------
This proxy statement is being furnished by and on behalf of the Board of
Directors of Revlon, Inc. (the "Company") in connection with the solicitation
of proxies to be voted at the Annual Meeting of Stockholders to be held at 9:00
a.m., local time, on Wednesday, April 7, 1999, at the Company's Research
Center, 2121 Route 27, Edison, New Jersey 08818, and at any adjournments
thereof. This proxy statement and the enclosed proxy card, Notice of Annual
Meeting of Stockholders and Annual Report for the year ended December 31, 1998
are first being sent to stockholders on or about March 12, 1999. The Annual
Report does not form any part of the material for the solicitation of proxies.
At the Annual Meeting, stockholders will be asked to (1) elect the
following persons as directors of the Company until the Company's next Annual
Meeting and until such directors' successors are elected and shall have
qualified: Ronald O. Perelman, Donald G. Drapkin, Irwin Engelman, Meyer
Feldberg, George Fellows, Howard Gittis, Morton L. Janklow, Vernon E. Jordan,
Henry A. Kissinger, Edward J. Landau, Jerry W. Levin, Linda Gosden Robinson,
Terry Semel and Martha Stewart; (2) consider and approve the Revlon, Inc.
Second Amended and Restated 1996 Stock Plan (the "Amended Stock Plan"); (3)
ratify the selection of KPMG LLP as the Company's independent auditors for
1999; and (4) take such other action as may properly come before the Annual
Meeting or any adjournments thereof.
The principal executive offices of the Company are located at 625 Madison
Avenue, New York, New York 10022 and the telephone number is (212) 527-4000.
SOLICITATION AND VOTING OF PROXIES; REVOCATION
All proxies duly executed and received by the Company, unless such proxies
have been previously revoked, will be voted on all matters presented at the
Annual Meeting in accordance with the instructions given therein by the person
executing such proxy or, in the absence of such instructions, will be voted FOR
(1) the election to the Board of Directors of each of the fourteen nominees
identified in this Proxy Statement; (2) approval of the Amended Stock Plan; and
(3) the ratification of the selection of KPMG LLP as the Company's independent
auditors for 1999. The Company has no knowledge of any other matters to be
brought before the meeting. The deadline for receipt by the Secretary of the
Company of stockholder proposals for inclusion at the Annual Meeting was
November 13, 1998, and no proposals were received. However, if any other
matters are properly presented before the Annual Meeting for action, in the
absence of other instructions it is intended that the persons named in the
enclosed proxy and acting thereunder will vote in accordance with their best
judgment on such matters.
The submission of a signed proxy will not affect a stockholder's right to
attend, or to vote in person at, the Annual Meeting. Stockholders who execute a
proxy may revoke it at any time before it is voted by filing a written
revocation with the Secretary of the Company at 625 Madison Avenue, 16th Floor,
New York, New York 10022, Attention: Secretary, by executing a proxy bearing a
later date or by attending the Annual Meeting and voting in person.
THE ACCOMPANYING FORM OF PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS. Solicitation of proxies may be made by mail and also may be made
by personal interview, telephone and facsimile transmission and by directors,
officers and employees of the Company without special compensation therefor.
The Company expects to reimburse banks, brokers and other persons for their
reasonable out-of-pocket expenses incurred in handling proxy materials for
beneficial owners.
RECORD DATE; VOTING RIGHTS
Only holders of record of shares of the Company's Class A common stock,
par value $.01 per share ("Class A Common Stock"), and Class B common stock,
par value $.01 per share ("Class B Common
<PAGE>
Stock" and, together with the Class A Common Stock, the "Common Stock"), at the
close of business on February 18, 1999 (the "Record Date") will be entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof. On the
Record Date, there were issued and outstanding 19,986,771 shares of Class A
Common Stock, each of which is entitled to one vote, and 31,250,000 shares of
Class B Common Stock, each of which is entitled to ten votes. Of that total,
11,250,000 shares of Class A Common Stock (or approximately 56.3% of the
outstanding shares of Class A Common Stock) and all of the shares of Class B
Common Stock, which together represent approximately 97.4% of the combined
voting power of the outstanding shares of Common Stock, are beneficially owned
by MacAndrews & Forbes Holdings Inc. ("MacAndrews Holdings"), a corporation
wholly owned indirectly through Mafco Holdings Inc. ("Mafco Holdings" and,
collectively with MacAndrews Holdings, "MacAndrews & Forbes") by Ronald O.
Perelman, Chairman of the Board of Directors of the Company. The presence in
person or by duly executed proxy of the holders of a majority in total number
of votes of the issued and outstanding shares of Common Stock entitled to vote
at the Annual Meeting is necessary to constitute a quorum in order to transact
business. MacAndrews & Forbes has informed the Company that it will vote FOR
(1) the election to the Board of Directors of each of the fourteen nominees
identified in this Proxy Statement; (2) approval of the Amended Stock Plan; and
(3) the ratification of the selection of KPMG LLP as the Company's independent
auditors for 1999. Accordingly, the affirmative vote of MacAndrews & Forbes is
sufficient, without the concurring vote of any other stockholder of the
Company, to approve and adopt each of the proposals to be considered at the
Annual Meeting.
ELECTION OF DIRECTORS
The Board of Directors of the Company, pursuant to the By-laws of the
Company, has fixed the number of directors at fourteen. The directors nominated
for election will be elected at the Annual Meeting to serve until the next
succeeding Annual Meeting of the Company and until their successors are elected
and shall have qualified. All of the nominees are currently members of the
Board of Directors. All nominees, if elected, are expected to serve until the
next succeeding Annual Meeting. The proxies solicited hereby will be voted FOR
the election of the nominees listed herein.
The Board of Directors has been informed that all of the nominees are
willing to serve as directors, but if any of them should decline or be unable
to act as a director, the Board of Directors may, unless the Board by
resolution provides for a lesser number of directors, designate substitute
nominees, in which event the individuals named in the enclosed proxy will vote
for the election of such substitute nominee or nominees. The Board of Directors
has no reason to believe that any nominee will be unable or unwilling to serve.
The election to the Board of Directors of each of the fourteen nominees
identified in this Proxy Statement will require the affirmative vote of a
plurality of the votes cast by the holders of shares of Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote. In
tabulating the vote, abstentions will be disregarded and have no effect on the
outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE FOURTEEN NOMINEES
IDENTIFIED BELOW.
NOMINEES FOR ELECTION AS DIRECTORS
The name, age (as of February 18, 1999), principal occupation for the last
five years, selected biographical information and period of service as a
director of the Company of each of the nominees for election as a director are
set forth below.
MR. PERELMAN (56) has been Chairman of the Board of Directors of the
Company and of the Company's wholly owned subsidiary Revlon Consumer Products
Corporation ("Products Corporation") since June 1998, Chairman of the Executive
Committee of the Board of the Company and of Products Corporation since
November 1995, and a Director of the Company and of Products Corporation since
their respective formations in 1992. Mr. Perelman was Chairman of the Board of
the Company and of Products Corporation from their respective formations in
1992 until November 1995. Mr. Perelman has been Chairman of the Board and Chief
Executive Officer of MacAndrews & Forbes and various of its
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affiliates since 1980. Mr. Perelman is also Chairman of the Executive
Committees of the Boards of Directors of M&F Worldwide Corp. ("M&F Worldwide")
and Panavision Inc. ("Panavision"), and Chairman of the Board of Meridian
Sports Incorporated ("Meridian"). Mr. Perelman is also a Director of the
following corporations which file reports pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"): Golden State Bancorp Inc.
("Golden State"), Golden State Holdings Inc. ("Golden State Holdings"), M&F
Worldwide, Meridian, Panavision and REV Holdings Inc. ("REV Holdings"). (On
December 27, 1996, Marvel Entertainment Group, Inc. ("Marvel"), Marvel Holdings
Inc. ("Marvel Holdings"), Marvel (Parent) Holdings Inc. ("Marvel Parent") and
Marvel III Holdings Inc. ("Marvel III"), of which Mr. Perelman was a Director
on such date, filed voluntary petitions for reorganization under Chapter 11 of
the United States Bankruptcy Code.)
MR. FELLOWS (56) has been President and Chief Executive Officer of the
Company and of Products Corporation since January 1997. He was President and
Chief Operating Officer of the Company and Products Corporation from November
1995 until January 1997 and has been a Director of the Company since November
1995 and a Director of Products Corporation since September 1994. Mr. Fellows
was Senior Executive Vice President of the Company and of Products Corporation
and President and Chief Operating Officer of Products Corporation's Consumer
Group from February 1993 until November 1995. From 1989 through January 1993,
he was a senior executive officer of Mennen Corporation and then
Colgate-Palmolive Company, which acquired Mennen Corporation in 1992. From 1986
to 1989 he was Senior Vice President of Revlon Holdings Inc. ("Holdings"). Mr.
Fellows is also a Director of VF Corporation, which files reports pursuant to
the Exchange Act.
MR. ENGELMAN (64) has been Vice Chairman, Chief Administrative Officer and
a Director of the Company since November 1998. Mr. Engelman has been Vice
Chairman and Chief Administrative Officer of Products Corporation since
November 1998 and a Director of Products Corporation since 1993. Mr. Engelman
has been Executive Vice President, Chief Financial Officer and a Director of
MacAndrews & Forbes and various of its affiliates since 1992. He was Executive
Vice President, Chief Financial Officer and Director of GAF Corporation from
1990 to 1992, Director, President and Chief Operating Officer of Citytrust
Bancorp Inc. from 1988 to 1990, Executive Vice President of the Blackstone
Group LP from 1987 to 1988 and Director, Executive Vice President and Chief
Financial Officer of General Foods Corporation for more than five years prior
to 1987. Mr. Engelman is also a Director of California Federal Bank, A Federal
Savings Bank, which files reports pursuant to the Exchange Act. (On December
27, 1996, Marvel III, Marvel Parent and Marvel Holdings, of which Mr. Engelman
was an executive officer on such date, filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.)
MR. DRAPKIN (50) has been a Director of the Company and of Products
Corporation since their respective formations in 1992. He has been Vice
Chairman of the Board of MacAndrews & Forbes and various of its affiliates
since 1987. Mr. Drapkin was a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom for more than five years prior to 1987. Mr. Drapkin is also a
Director of the following corporations which file reports pursuant to the
Exchange Act: Algos Pharmaceutical Corporation, Anthracite Capital, Inc.,
BlackRock Asset Investors, Cardio Technologies, Inc., The Molson Companies
Limited, Playboy Enterprises, Inc., VIMRx Pharmaceuticals Inc. and Weider
Nutrition International, Inc. (On December 27, 1996, Marvel, Marvel Holdings,
Marvel Parent and Marvel III, of which Mr. Drapkin was a Director on such date,
filed voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code.)
PROFESSOR FELDBERG (56) has been a Director of the Company since February
1997. Professor Feldberg has been the Dean of Columbia Business School, New
York City, for more than the past five years. Professor Feldberg is also a
Director of the following corporations which file reports pursuant to the
Exchange Act: Federated Department Stores, Inc., PRIMEDIA Inc. and Paine Webber
Group, Inc. (33 directorships within such fund complex).
MR. GITTIS (65) has been a Director of the Company and of Products
Corporation since their respective formations in 1992. He has been Vice
Chairman of the Board of MacAndrews & Forbes and
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various of its affiliates since 1985. Mr. Gittis is also a Director of the
following corporations which file reports pursuant to the Exchange Act: Golden
State, Golden State Holdings, Jones Apparel Group, Inc., Loral Space &
Communications Ltd., M&F Worldwide, Panavision, REV Holdings, Rutherford-Moran
Oil Corporation and Sunbeam Corporation.
MR. JANKLOW (68) has been a Director of the Company since July 1997. He
has been of counsel to Janklow, Newborn & Ashley and Senior Partner of Janklow
& Nesbit Associates, a New York City-based literary agency, since 1989 and
Chairman of the Board and Chief Executive Officer of Morton L. Janklow
Associates, Inc., New York City since 1977. Mr. Janklow is also trustee of the
Managed Accounts Services Portfolio Trust/Pace.
MR. JORDAN (63) has been a Director of the Company since June 1996. Mr.
Jordan is a Senior Partner in the Washington, D.C. law firm of Akin, Gump,
Strauss, Hauer & Feld, LLP where he has practiced law since 1982. He is also a
Director of the following corporations which file reports pursuant to the
Exchange Act: American Express Company, Bankers Trust Company, Bankers Trust
New York Company, Callaway Golf Corporation, Chancellor Media Corporation, Dow
Jones & Company, Inc., J.C. Penney Company, Inc., Ryder System, Inc., Sara Lee
Corporation, Union Carbide Corporation and Xerox Corporation. He is also
trustee of the Ford Foundation and Howard University.
DR. KISSINGER (75) has been a Director of the Company since June 1996. Dr.
Kissinger has been Chairman of the Board and Chief Executive Officer of
Kissinger Associates, Inc., a New York City-based international consulting
firm, since 1982. Dr. Kissinger is an Advisor to the Board of Directors of
American Express Company, serves as Counselor to the Chase Manhattan Bank and
is a member of its International Advisory Committee. He is Chairman of the
International Advisory Board of American International Group, Inc. and is also
a Director of Continental Grain Company, Freeport-McMoran Copper and Gold,
Inc., Gulfstream Aerospace Corporation and Hollinger International Inc., all of
which file reports pursuant to the Exchange Act.
MR. LANDAU (69) has been a Director of the Company since June 1996. Mr.
Landau has been a Senior Partner in the law firm of Wolf, Block, Schorr and
Solis-Cohen LLP (previously Lowenthal, Landau, Fischer & Bring, P.C.) for more
than the past five years. He has been a Director of Products Corporation since
June 1992. Mr. Landau is also a Director of Offitbank Investment Fund, Inc.,
which files reports pursuant to the Exchange Act.
MR. LEVIN (54) has been a Director of the Company since its formation in
1992 and was a Director of Products Corporation from its formation in 1992
until November 1998. Mr. Levin has been President and Chief Executive Officer
and a Director of Sunbeam Corporation since June 1998. Mr. Levin was Chairman
and Chief Executive Officer of The Coleman Company, Inc. ("Coleman") from 1997
until April 1998. Mr. Levin was Chairman of the Board of the Company and of
Products Corporation from November 1995 until June 1998, Chief Executive
Officer of the Company and of Products Corporation from their respective
formations in 1992 until 1997 and President of the Company and of Products
Corporation from their respective formations in 1992 until November 1995. Mr.
Levin has been Executive Vice President of MacAndrews Holdings since March
1989. For 15 years prior to joining MacAndrews Holdings, he held various senior
executive positions with The Pillsbury Company. Mr. Levin is also a Director of
the following corporations which file reports pursuant to the Exchange Act:
Coleman, Ecolab, Inc., Meridian, Sunbeam Corporation and U.S. Bancorp, Inc.
MS. ROBINSON (46) has been a Director of the Company since June 1996. Ms.
Robinson has been Chairman of the Board and Chief Executive Officer of Robinson
Lerer & Montgomery, LLC, a New York City strategic communications consulting
firm, since May 1996. For more than five years prior to May 1996 she was
Chairman of the Board and Chief Executive Officer of Robinson Lerer Sawyer
Miller Group, or its predecessors. Ms. Robinson is also a Director of VIMRx
Pharmaceuticals Inc., which files reports pursuant to the Exchange Act, and is
a trustee of Mt. Sinai -- New York University Medical Center and Health System
and a Director of the New York University School of Medicine Foundation Board.
MR. SEMEL (55) has been a Director of the Company since June 1996. Mr.
Semel has been Chairman of the Board and Co-Chief Executive Officer of the
Warner Bros. Division of Time Warner Entertainment
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LP ("Warner Brothers"), Los Angeles, since March 1994 and of Warner Music
Group, Los Angeles, since November 1995. For more than ten years prior to that
he was President of Warner Brothers or its predecessor, Warner Bros. Inc. Mr.
Semel is also a Director of Polo Ralph Lauren Corporation, which files reports
pursuant to the Exchange Act.
MS. STEWART (57) has been a Director of the Company since June 1996. Ms.
Stewart is the Chairman of the Board and Chief Executive Officer of Martha
Stewart Living Omnimedia, LLC, New York City. She has been an author, founder
of the magazine Martha Stewart Living, creator of a syndicated television
series, a syndicated newspaper column and a catalog company, and a lifestyle
consultant and lecturer for more than the past five years.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee and
a Compensation and Stock Plan Committee (the "Compensation Committee").
The Executive Committee consists of Messrs. Perelman, Gittis and Fellows.
The Executive Committee may exercise all of the powers and authority of the
Board, except as otherwise provided under the Delaware General Corporation Law.
The Executive Committee also serves as the Company's nominating committee for
Board membership. The Audit Committee, consisting of Mr. Landau, Professor
Feldberg and Ms. Robinson, makes recommendations to the Board of Directors
regarding the engagement of the Company's independent auditors for ratification
by the Company's stockholders, reviews the plan, scope and results of the
audit, and reviews with the auditors and management the Company's policies and
procedures with respect to internal accounting and financial controls, changes
in accounting policy and the scope of the non-audit services which may be
performed by the Company's independent auditors, among other things. The
Compensation Committee, consisting of Messrs. Gittis, Drapkin, Janklow and
Semel, makes recommendations to the Board of Directors regarding compensation
and incentive arrangements (including performance-based arrangements) for the
Chief Executive Officer, other executive officers, officers and other key
managerial employees of the Company. The Compensation Committee also considers
and recommends awards pursuant to the Revlon, Inc. 1996 Stock Plan, as amended
and restated as of December 17, 1996, and administers such plan, and, if the
Amended Stock Plan is approved by the Company's stockholders, will consider and
recommend awards pursuant to the Amended Stock Plan and will administer such
plan.
During 1998, the Board of Directors held four meetings and acted three
times by unanimous written consent, the Executive Committee acted four times by
unanimous written consent, the Audit Committee held eight meetings and the
Compensation Committee held one meeting and acted fourteen times by unanimous
written consent. During 1998, all Directors (other than Mr. Janklow) attended
75% or more of the meetings of the Board of Directors and of the Committees of
which they were members.
COMPENSATION OF DIRECTORS
Directors who currently are not receiving compensation as officers or
employees of the Company or any of its affiliates are paid an annual retainer
fee of $25,000, payable in quarterly installments, and a fee of $1,000 for each
meeting of the Board of Directors or any committee thereof they attend.
5
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APPROVAL OF THE AMENDED STOCK PLAN
At the Annual Meeting, the Company's stockholders will be asked to approve
the Amended Stock Plan. The Revlon, Inc. 1996 Stock Plan was adopted in
connection with the Company's initial public offering in February 1996 (the
"Offering"). Since the Offering, the Company has used the Revlon, Inc. 1996
Stock Plan, as amended and restated as of December 17, 1996 (the "Stock Plan"),
to advance the interests of the Company and its stockholders by providing an
incentive to attract, retain and motivate key Company employees to contribute
to the Company's growth and profitability. As of February 12, 1999, options to
purchase an aggregate of 4,117,725 shares of Class A Common Stock were
outstanding and only 882,275 shares of the 5,000,000 shares originally
authorized under the Stock Plan remained available for future grants. Options
to purchase 1,143,700 shares were granted to executive officers and employees
of the Company by the Compensation Committee in February 1999 under the Stock
Plan, conditioned upon stockholder approval of the Amended Stock Plan. In the
event the Amended Stock Plan is not approved at the Annual Meeting, the
February 1999 grants to purchase 1,143,700 shares that are subject to
stockholder approval will be ratably reduced so that the 5,000,000 share limit
under the Stock Plan is not exceeded. The Board of Directors believes that the
Company's stock option program is an important factor in attracting and
retaining the high caliber employees essential to the Company's success and in
aligning those individuals' long-term interests with those of the stockholders.
Therefore, the Board of Directors has amended the Stock Plan, subject to the
approval of the Company's stockholders, to increase by 2,000,000 shares the
maximum aggregate number of shares with respect to which awards may be granted
under the Stock Plan. The amendment is intended to ensure that the Amended
Stock Plan will have available the number of shares necessary to meet these
needs, and the Board of Directors believes that approval of the Amended Stock
Plan is in the best interests of the Company and its stockholders. The
amendment also makes certain technical amendments which are not of the type
required to be submitted to stockholders for approval, including (a) specifying
the criteria to be used in connection with stock awards intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"); (b) more specifically defining the
"extraordinary items" for which the Compensation Committee may make adjustments
in performance goals under stock awards and performance awards in accordance
with Section 162(m) of the Code; (c) providing that the fair market value of a
share of Class A Common Stock can be determined by reference to, among other
things, the closing price on the New York Stock Exchange ("NYSE") on the date
in question; and (d) providing that it is intended that the Compensation
Committee be comprised of "outside directors" within the meaning of Section
162(m) of the Code but eliminating the reference to "disinterested persons"
within the meaning of Rule 16b-3 under the Exchange Act in response to a change
in the rules under Section 16 of the Exchange Act adopted subsequent to the
Offering which makes available to the Company other methods in order for grants
of options made under the Amended Stock Plan to be exempt under Section 16(b)
of the Exchange Act.
SUMMARY OF THE AMENDED STOCK PLAN
THE AMENDED STOCK PLAN
The Stock Plan became effective on February 22, 1996, and will continue in
effect until February 21, 2006, unless terminated sooner by the board of
directors of the Company (the "Board"). The Amended Stock Plan will take effect
upon approval by the Company's stockholders.
The following summary of the Amended Stock Plan is qualified in its
entirety by the specific language of the Amended Stock Plan, a copy of which is
annexed to this Proxy Statement.
The purpose of the Amended Stock Plan is to provide for certain officers,
directors and key employees of the Company and certain of its affiliates an
incentive to maintain and enhance the long-term performance and profitability
of the Company. The Amended Stock Plan provides for grants of options to
purchase shares of Class A Common Stock in the form of incentive stock options
("ISOs") and options which do not qualify as ISOs ("NQSOs"). Options granted
under the Amended Stock Plan may be granted in tandem with stock appreciation
rights ("SARs"). The Amended Stock Plan also provides for grants of SARs not in
tandem with options, restricted stock awards, unrestricted stock awards and
performance awards (all awards granted under the Amended Stock Plan,
collectively, "Awards").
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STOCK PLAN ADMINISTRATION
The Amended Stock Plan is administered by the Compensation Committee,
which is a committee of the Board consisting of two or more directors of the
Company. Subject to the terms of the Amended Stock Plan, the Compensation
Committee has the authority to construe and interpret the Amended Stock Plan
and to establish and amend rules and regulations for administering the Amended
Stock Plan. The Compensation Committee has the authority to determine the
eligible participants under the Amended Stock Plan and the type and number of
Awards to be granted under the Amended Stock Plan.
SECURITIES SUBJECT TO THE AMENDED STOCK PLAN
The Stock Plan originally covered 5,000,000 shares of Class A Common
Stock, which may be authorized but unissued Class A Common Stock or authorized
and issued Class A Common Stock held in treasury or acquired by the Company for
purposes of the Stock Plan. As amended by the Board of Directors, subject to
stockholder approval, the Amended Stock Plan covers a total of 7,000,000 shares
(which includes the 5,000,000 shares originally authorized under the Stock
Plan) of Class A Common Stock, which may be authorized but unissued Class A
Common Stock or authorized and issued Class A Common Stock held in treasury or
acquired by the Company for purposes of the Amended Stock Plan.
The total number of shares of Class A Common Stock subject to options and
SARs which may be granted to any participant of the Amended Stock Plan in any
year may not exceed 300,000. The total number of shares of Class A Common Stock
subject to restricted or unrestricted stock Awards under the Amended Stock Plan
may not exceed 1,000,000.
The Amended Stock Plan provides that in the event of certain corporate
transactions, the Compensation Committee may make equitable adjustments as it
deems necessary or appropriate to any or all of (i) the number and kind of
shares of Class A Common Stock which may thereafter be issued in connection
with Awards, (ii) the number and kind of shares of Class A Common Stock issued
or issuable in respect of outstanding Awards, (iii) the exercise price, grant
price, or purchase price relating to any Awards; and (iv) the annual or other
limitations on the number of shares with respect to which Awards may be
granted.
ELIGIBILITY
Awards under the Amended Stock Plan may be made to such officers,
directors and executive, managerial or professional employees of the Company or
its affiliates as the Compensation Committee shall in its sole discretion
select, provided that officers and directors who are not employees of either
the Company or an affiliate will not be eligible to receive Awards under the
Amended Stock Plan.
AWARDS
Subject to the terms of the Amended Stock Plan, the Compensation Committee
may grant to participants Awards as described below. The terms of Award grants
will be set forth in written agreements ("Award Agreements") between the
Company and the participant, which Award Agreements will contain the provisions
referred to below and such other provisions as the Compensation Committee may
determine. Generally, no option or SAR may be exercised and no shares of Class
A Common Stock underlying any other Award under the Amended Stock Plan may vest
or become deliverable more than 10 years after the date of grant.
Generally, Awards may be transferred by a grantee only by will or by the
laws of descent and distribution, and may be exercised only by the grantee
during his or her lifetime, provided that the Compensation Committee may
provide in the applicable Award Agreement that options not intended to be
incentive stock options may be transferred without consideration to any member
or members of the grantee's "immediate family" (as defined in the Amended Stock
Plan), a trust for the benefit of the grantee and/or members of his or her
immediate family, or a partnership or limited liability company whose only
partners or stockholders are the grantee and/or members of his or her immediate
family.
7
<PAGE>
OPTIONS
All options when granted are intended to be NQSOs, unless the applicable
Award Agreement explicitly states that an option is intended to be an ISO. If
an option is granted with the stated intent that it be an ISO, and if for any
reason such option (or any portion thereof) shall not qualify as an ISO, then,
to the extent of such nonqualification, such option (or portion) shall be
regarded as a NQSO appropriately granted under the Amended Stock Plan, provided
that such option (or portion) otherwise satisfies the terms and conditions of
the Amended Stock Plan relating to NQSOs generally.
Options may be exercised in amounts and at times determined by the
Compensation Committee. Unless the Award Agreement provides otherwise, an
option may not be exercised prior to the first anniversary of the date of grant
and shall become exercisable with respect to 25% of the shares subject thereto
on each of the first, second, third and fourth anniversaries of the date of
grant.
Options that are not exercised during the term established by the
Compensation Committee will expire without value.
The purchase price of the Class A Common Stock purchased pursuant to the
exercise of an option ("Option Price") will be no less than 100 percent (100%),
and, in case of an ISO granted to an owner of stock possessing 10% or more of
the total combined voting power of all classes of stock of the Company, 110
percent (110%), of the fair market value (as defined in the Amended Stock Plan)
of the Class A Common Stock on the day the option is granted and may be
adjusted in accordance with the antidilution provisions contained in the
Amended Stock Plan. Upon the exercise of any option, the Option Price must be
fully paid by certified or cashier's check, in shares of Class A Common Stock
equal in fair market value to the Option Price, or, subject to the approval of
the Compensation Committee, by personal check.
The aggregate fair market value (determined as of the date of grant) of
the shares granted to any participant under the Amended Stock Plan or any other
option plan of the Company or its subsidiaries that may become exercisable for
the first time in any calendar year is limited, with respect to ISOs, to
$100,000.
STOCK APPRECIATION RIGHTS
The Compensation Committee may grant SARs either alone ("unrelated SARs")
or in conjunction with all or part of an option. Upon the exercise of a SAR a
holder generally is entitled, without payment to the Company, to receive cash,
shares of Class A Common Stock or any combination thereof, as determined by the
Compensation Committee, in an amount equal to (x) the excess of the fair market
value of one share of Class A Common Stock on the exercise date over (i) in the
case of a SAR granted in tandem with an option, the Option Price and (ii) in
the case of an unrelated SAR, the appreciation base (determined pursuant to the
Amended Stock Plan), multiplied by (y) the number of shares of Class A Common
Stock subject to the SAR or the portion thereof surrendered. SARs vest and
become exercisable in the same manner as options.
RESTRICTED STOCK AWARDS AND UNRESTRICTED STOCK AWARDS
The Compensation Committee may grant restricted or unrestricted stock
Awards alone or in tandem with other Awards under the Amended Stock Plan.
Vesting of restricted stock Awards may be conditioned upon the completion of a
specified period of service, the attainment of specific performance goals or
such other factors as the Compensation Committee may determine. The
Compensation Committee may, in its discretion, require a grantee to pay an
amount to acquire any restricted or unrestricted stock, which amount may be
refunded to such grantee upon such events as the Compensation Committee may
determine. During the restricted period, the grantee may not transfer, assign
or otherwise encumber or dispose of the restricted stock, except as permitted
by the Compensation Committee. During the restricted period, the grantee will
have the right to vote the restricted stock and to receive any cash dividends
if and to the extent so provided by the Compensation Committee.
The Compensation Committee may grant stock Awards intended to constitute
performance-based compensation within the meaning of Section 162(m) of the
Code. The following rules will apply to such performance based stock Awards (as
such rules may be modified by the Compensation Committee to
8
<PAGE>
comply with Section 162(m) and any amendments, revisions or successor
provisions): (i) payments under the stock Award shall be made solely on account
of the attainment of one or more objective performance goals established in
writing by the Compensation Committee not later than 90 days after the
commencement of the period of service to which the performance Award relates
(or, if less, 25% of such period of service); (ii) the performance goals to
which the stock Award relates shall be based on one or more of the following
business criteria applied to the participant, a business unit of the Company
and/or an affiliate of the Company: stock price, market share, sales, earnings
per share, return on equity, assets, capital or investment, net income,
operating income, EBITDA, net sales growth, expense targets, working capital
targets relating to inventory and/or accounts receivable, operating margin,
planning accuracy (as measured by comparing planned results to actual results),
and implementation or completion of critical projects or processes; (iii) in
any year, a participant may not be granted stock Awards covering a total of
more than 100,000 shares of Class A Common Stock; and (iv) once granted, the
Compensation Committee may not increase the amount payable under such stock
Award; provided, however, that whether or not a stock Award is intended to
constitute qualified performance-based compensation within the meaning of
Section 162(m) of the Code, the Committee may make appropriate adjustments in
performance goals under an Award to reflect the impact of extraordinary items
(as defined in the Amended Stock Plan) not reflected in such goals.
PERFORMANCE AWARDS
The Compensation Committee may grant performance Awards relating to a
specified number of shares to be delivered based upon attainment over a
specified performance cycle of specified measures of the performance of the
Company, one or more of its subsidiaries or affiliates or the participant as
may be established by the Compensation Committee. The Compensation Committee
may provide for full or partial credit, prior to completion of such performance
cycle or achievement of the degree of attainment of the measures of performance
specified in connection with such performance unit, in the event of the
participant's death, normal retirement, early retirement, or total or permanent
disability, or in other circumstances.
The Compensation Committee may grant performance Awards intended to
constitute performance-based compensation within the meaning of Section 162(m)
of the Code. The following rules will apply to such performance Awards (as such
rules may be modified by the Compensation Committee to comply with Section
162(m) and any amendments, revisions or successor provisions): (i) payments
under the performance Award shall be made solely on account of the attainment
of one or more objective performance goals established in writing by the
Compensation Committee not later than 90 days after the commencement of the
period of service to which the performance Award relates (or, if less, 25% of
such period of service); (ii) the performance goals to which the performance
Award relates shall be based on one or more of the following business criteria
applied to the participant, a business unit of the Company and/or an affiliate
of the Company: stock price, market share, sales, earnings per share, return on
equity, assets, capital or investment, net income, operating income, EBITDA,
net sales growth, expense targets, working capital targets relating to
inventory and/or accounts receivable, operating margin, planning accuracy (as
measured by comparing planned results to actual results), and implementation or
completion of critical projects or processes; (iii) in any year, a participant
may not be granted performance Awards covering a total of more than 100,000
shares of Class A Common Stock; and (iv) once granted, the Compensation
Committee may not increase the amount payable under such performance Award;
provided, however, that whether or not a performance Award is intended to
constitute qualified performance-based compensation within the meaning of
Section 162(m) of the Code, the Committee may make appropriate adjustments in
performance goals under an Award to reflect the impact of extraordinary items
(as defined in the Amended Stock Plan) not reflected in such goals.
EFFECT OF TERMINATION OF EMPLOYMENT
Except as otherwise provided in the applicable Award Agreement, the
following will apply upon the grantee's termination of employment with the
Company and its affiliates. Except as described below, if the employment of the
grantee terminates, exercisable options and SARs will remain exercisable, and
any
9
<PAGE>
payment or notice provided for under the terms of the vested portion of any
other outstanding Award may be given, for a period of one year from the date of
termination, and any unexercisable Awards or parts thereof will be cancelled on
the date of such termination.
If the grantee's employment is terminated for "good reason" (as defined in
the Company's Executive Severance Policy) or for "cause" under an applicable
employment agreement, or by the grantee other than for "good reason" or "cause"
under an applicable employment agreement, all outstanding Awards previously
granted to such grantee (whether or not then vested or exercisable) shall be
cancelled as of the date of termination.
If the grantee voluntarily retires with the consent of the employer or the
grantee's employment is terminated due to permanent disability, then (i) the
grantee's outstanding Awards will continue to vest and become exercisable, and
the grantee will be entitled to continue satisfying any Award conditions and
(ii) the grantee will be entitled to exercise each such option or SAR and make
payment or give notice as provided under any other Award in each case for a
period of one year (or such other period that the Compensation Committee in its
discretion may choose) from and including (x) the date on which all portions of
the Award first become fully exercisable or vested or capable of being
satisfied or (y) the date of termination of employment or retirement, whichever
of (x) or (y) occurs last, and thereafter such Awards shall be cancelled.
Upon the grantee's death during employment or during the period of
continued vesting or exercisability described above, (i) the grantee's
outstanding options and SARs will become fully exercisable, and any payment or
notice provided for under the terms of any other outstanding Award may be
immediately paid or given, and (ii) the options and SARs will remain
exercisable, and payment may be made or notice given, for one year from the
date of death (which period may extend more than 10 years after the grant of
the Award), whereupon all Awards will be cancelled.
EFFECTS OF CERTAIN CHANGES
The Amended Stock Plan provides that in the event that the Company is to
be merged or consolidated with another corporation or reorganized or
liquidated, then the Compensation Committee may, in its discretion, provide
that Awards granted to a grantee will terminate unless exercised within the
period determined by the Compensation Committee (not less than 30 days), in
which case the Compensation Committee must accelerate the exercisability and
vesting of such Awards.
AMENDMENT; TERMINATION
The Company's Board of Directors may amend, suspend or discontinue the
Amended Stock Plan at any time except that, unless approved by the vote of a
majority of total number of votes of the issued and outstanding shares of Class
A Common Stock present in person or by proxy at a meeting at which a quorum is
present and entitled to vote, no such amendment may (i) materially increase the
maximum number of shares as to which Awards may be granted under the Amended
Stock Plan, except for adjustments to reflect stock dividends or other
recapitalizations affecting the number or kind of outstanding shares, (ii)
materially increase the benefits accruing to Amended Stock Plan participants,
(iii) materially change the requirements as to eligibility for participation in
the Amended Stock Plan, (iv) permit an option or unrelated SAR to be
exercisable, a restricted stock Award to vest, or shares of Class A Common
Stock to be delivered pursuant to a performance Award, more than 10 years after
the date of grant (except where such event occurs due to the death of the
grantee), (v) permit a stock option to have an option exercise price, or a SAR
to have an appreciation base, of less than 100% of the fair market value of a
share of Class A Common Stock on the date the stock option or SAR is granted or
(vi) extend the term of the Amended Stock Plan beyond the initial 10-year
period.
PAYMENT OF TAXES
Whenever cash is to be paid pursuant to an Award, the Company shall have
the right to deduct therefrom an amount sufficient to satisfy any federal,
state and local withholding tax requirements related thereto. Whenever shares
of Class A Common Stock are to be delivered pursuant to an Award, the Company
shall have the right to require the grantee to remit to the Company in cash an
amount sufficient
10
<PAGE>
to satisfy any federal, state and local withholding tax requirements related
thereto. With the approval of the Compensation Committee, a grantee may satisfy
the foregoing requirement by delivering unrestricted shares of Class A Common
Stock owned by the grantee for at least six months having a value equal to the
amount otherwise payable or by electing to have the Company withhold from
delivery shares of Class A Common Stock having a value equal to the amount of
tax to be withheld. Such shares shall be valued at their fair market value on
the date on which the amount of tax to be withheld is determined. Such a
withholding election may be made with respect to all or any portion of the
shares to be delivered pursuant to an Award.
CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion is a brief summary of the principal United States
Federal income tax consequences under current Federal income tax laws relating
to Awards under the Amended Stock Plan. This summary is not intended to be
exhaustive and, among other things, does not describe state, local or foreign
income and other tax consequences.
Non-Qualified Stock Options. An optionee will not recognize any taxable
income upon the grant of an NQSO and the Company will not be entitled to a tax
deduction with respect to the grant of an NQSO. Upon exercise of an NQSO, the
excess of the fair market value of the Class A Common Stock on the exercise
date over the option exercise price will be taxable as compensation income to
the optionee and will be subject to applicable withholding taxes. The Company
will generally be entitled to a tax deduction at such time in the amount of
such compensation income. The optionee's tax basis for the Class A Common Stock
received pursuant to the exercise of an NQSO will equal the sum of the
compensation income recognized and the exercise price.
In the event of a sale of Class A Common Stock received upon the exercise
of an NQSO, any appreciation or depreciation after the exercise date generally
will be taxed as capital gain or loss and will be long-term capital gain or
loss if the holding period for such Class A Common Stock is more than one year.
Incentive Stock Options. An optionee will not recognize any taxable income
at the time of grant or timely exercise of an ISO and the Company will not be
entitled to a tax deduction with respect to such grant or exercise. Exercise of
an ISO may, however, give rise to taxable compensation income subject to
applicable withholding taxes, and a tax deduction to the Company, if the ISO is
not exercised on a timely basis (generally, while the optionee is employed by
the Company or within 90 days after termination of employment) or if the
optionee subsequently engages in a "disqualifying disposition," as described
below.
A sale or exchange by an optionee of shares acquired upon the exercise of
an ISO more than one year after the transfer of the shares to such optionee and
more than two years after the date of grant of the ISO will result in any
difference between the net sale proceeds and the exercise price being treated
as long-term capital gain (or loss) to the optionee. If such sale or exchange
takes place within two years after the date of grant of the ISO or within one
year from the date of transfer of the ISO shares to the optionee, such sale or
exchange will generally constitute a "disqualifying disposition" of such shares
that will have the following results: any excess of (i) the lesser of (a) the
fair market value of the shares at the time of exercise of the ISO and (b) the
amount realized on such disqualifying disposition of the shares over (ii) the
option exercise price of such shares, will be ordinary income to the optionee,
subject to applicable withholding taxes, and the Company will be entitled to a
tax deduction in the amount of such income. Any further gain or loss after the
date of exercise generally will qualify as capital gain or loss and will not
result in any deduction by the Company.
Restricted Stock. A grantee will not recognize any income upon the receipt
of restricted stock unless the grantee elects under Section 83(b) of the Code,
within thirty days of such receipt, to recognize ordinary income in an amount
equal to the fair market value of the restricted stock at the time of receipt,
less any amount paid for the shares. If the election is made, the holder will
not be allowed a deduction for amounts subsequently required to be returned to
the Company. If the election is not made, the holder will generally recognize
ordinary income, on the date that the restrictions to which the restricted
stock is subject are removed, in an amount equal to the fair market value of
such shares on such date, less any amount paid for the shares. At the time the
holder recognizes ordinary income, the Company generally will be entitled to a
deduction in the same amount.
11
<PAGE>
Unrestricted Stock. A grantee generally will be taxed upon the grant of an
Award of unrestricted stock. However, if at the time the shares are granted
they are subject to a substantial risk of forfeiture, as defined in the Code
(including as a result of potential liability under Section 16(b) of the
Exchange Act), the grantee will be taxed at the time the shares are no longer
subject to such risk of forfeiture, subject to the grantee making an effective
election under Section 83(b) of the Code. The amount of income recognized by
the grantee will be equal to the fair market value of the shares on the date
that the income is recognized. The Company generally will be entitled to a
deduction at the time and in the amount that the employee recognizes ordinary
income.
SARs. The grant of a SAR will not result in income for the grantee or in a
tax deduction for the Company. Upon the settlement of such a right, the grantee
will recognize ordinary income equal to the aggregate value of the payment
received, and the Company generally will be entitled to a tax deduction in the
same amount.
Performance Awards. Generally, the grant of performance Awards has no
Federal income tax consequences at the time of grant. Rather, at the time the
shares are no longer subject to a substantial risk of forfeiture (as defined in
the Code) the holder will recognize ordinary income in an amount equal to the
fair market value of such shares. A holder may, however, elect to be taxed at
the time of the grant in accordance with Section 83(b) of the Code. The Company
generally will be entitled to a deduction at the time and in the amount that
the holder recognizes ordinary income.
Certain Limitations on Deductability of Executive Compensation. Section
162(m) of the Code generally disallows a publicly held corporation a deduction
for compensation in excess of $1 million per year paid to the chief executive
officer (the "CEO") or any of the four most highly compensated executive
officers of the Company (other than the CEO) (collectively, the "Covered
Officers"). Based upon a special transition rule contained in the Treasury
regulations for private corporations that complete an initial public offering,
the Company has, to the fullest extent possible under such regulations, treated
Awards under the Stock Plan made to Covered Officers as not subject to the
deduction limitations of Section 162(m) of the Code. Pursuant to Section 162(m)
of the Code, the transition rule is no longer available for Awards under the
Stock Plan upon grant of Awards with respect to all shares originally
authorized for Awards under the Stock Plan, and, accordingly, the deduction
limitation of Section 162(m) of the Code will apply to all grants under the
Amended Stock Plan. However, an exception to the deduction limitation of
Section 162(m) applies to certain performance-based compensation provided that
the plan pursuant to which such compensation will be paid has been approved by
stockholders in a separate vote and certain other requirements are met. If the
adoption of the Amended Stock Plan is approved by the Company's stockholders at
the Annual Meeting, the Company believes that the Awards granted under the
Amended Stock Plan should qualify for the performance-based compensation
exception to Section 162(m) of the Code. Nevertheless, the Compensation
Committee will maintain the discretion to authorize Awards under the Amended
Stock Plan that do not qualify for an exception to the deduction limitation if
the Compensation Committee believes it is necessary or appropriate under the
circumstances.
STOCK PLAN BENEFITS AND ADDITIONAL INFORMATION
The following table shows the grants of options made in February 1999
under the Stock Plan which were made subject to stockholder approval of the
Amended Stock Plan, to the Chief Executive Officer and the other Named
Executive Officers, all current executive officers as a group, all current
directors who are not executive officers as a group and all current employees,
who are not executive officers, as a group. In the event the Amended Stock Plan
is not approved at the Annual Meeting, the February 1999 grants to purchase
1,143,700 shares that are subject to stockholder approval will be ratably
reduced so that the 5,000,000 share limit under the Stock Plan is not exceeded.
The NYSE closing price per share of the Class A Common Stock as of March 2,
1999 was $15.00.
12
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN FEBRUARY 1999 SUBJECT TO
NAME STOCKHOLDER APPROVAL
- ------------------------------------------------- ------------------------------------------
<S> <C>
George Fellows ............................... 170,000
M. Katherine Dwyer ........................... 75,000
Frank J. Gehrmann ............................ 40,000
Wade H. Nichols III .......................... 40,000
William J. Fox (a) ........................... 0
Executive Group (b) .......................... 415,000
Non-Executive Director Group ................. 0
Non-Executive Officer Employee Group ......... 728,700
</TABLE>
- ----------
(a) Mr. Fox was a Senior Executive Vice President of the Company until
January 1999.
(b) The options granted to the Executive Group include the options granted
to Messrs. Fellows, Gehrmann and Nichols and Ms. Dwyer, which are
already listed in the table, as well as options granted to other
executive officers of the Company.
Future grants under the Amended Stock Plan will be made at the discretion
of the Compensation Committee and, accordingly, are not yet determinable. In
addition, benefits under the Amended Stock Plan will depend on a number of
factors, including the fair market value of the Company's Class A Common Stock
on future dates and the exercise decisions made by the optionees. Consequently
it is not possible to determine the benefits that might be received by
optionees receiving discretionary grants under the Amended Stock Plan. However,
certain executive officers' employment agreements provide that management shall
recommend to the Compensation Committee that such officers be granted options
to purchase a specified number of shares annually. See "Employment Agreements
and Termination of Employment Arrangements."
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The approval of the Amended Stock Plan will require the affirmative vote
of a majority of the total number of votes of outstanding shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote. In determining whether approval of the Amended Stock Plan has
received the requisite number of affirmative votes, abstentions will be counted
and will have the same effect as a vote against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE AMENDED STOCK PLAN.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected, subject to ratification by the
Company's stockholders, KPMG LLP to audit the accounts of the Company for the
fiscal year ending December 31, 1999.
KPMG LLP has audited the consolidated financial statements of the Company
and its predecessors for more than the past five years. Representatives of KPMG
LLP will be present at the Annual Meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
The ratification of the selection of KPMG LLP as the Company's independent
auditors for 1999 will require the affirmative vote of a majority of the total
number of votes of outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote. In determining
whether the proposal has received the requisite number of affirmative votes,
abstentions will be counted and will have the same effect as a vote against the
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR 1999.
13
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information concerning each of the
executive officers of the Company as of February 18, 1999.
<TABLE>
<CAPTION>
NAME POSITION
- --------------------- ------------------------------------------------------------
<S> <C>
George Fellows President and Chief Executive Officer
Irwin Engelman Vice Chairman of the Board and Chief Administrative Officer
M. Katherine Dwyer Senior Vice President
Frank J. Gehrmann Executive Vice President and Chief Financial Officer
Wade H. Nichols III Executive Vice President and General Counsel
D. Eric Pogue Senior Vice President, Human Resources
</TABLE>
The following sets forth the ages (as of February 18, 1999), positions
held with the Company and selected biographical information for the current
executive officers of the Company who are not directors. Biographical
information with respect to Messrs. Fellows and Engelman is set forth above
under the caption "Nominees for Election as Directors."
MS. DWYER (49) was appointed President of Products Corporation's United
States Consumer Products business in January 1998. Ms. Dwyer was elected Senior
Vice President of the Company and of Products Corporation in December 1996.
Prior to December 1996, she served in various appointed senior executive
positions for the Company and for Products Corporation, including President of
Products Corporation's United States Cosmetics unit from November 1995 to
December 1996 and Executive Vice President and General Manager of Products
Corporation's Mass Cosmetics unit from June 1993 to November 1995. From 1991 to
1993, Ms. Dwyer was Vice President, Marketing, of Clairol, a division of
Bristol-Myers Squibb Company. Prior to 1991, she served in various senior
positions for Victoria Creations, Avon Products Inc., Cosmair, Inc. and The
Gillette Company. Ms. Dwyer is a Director of WestPoint Stevens Inc. and Reebok
International Ltd., each of which files reports pursuant to the Exchange Act.
MR. GEHRMANN (44) was elected as Executive Vice President and Chief
Financial Officer of the Company and of Products Corporation in January 1998.
From January 1997 until January 1998 he had been Vice President of the Company
and of Products Corporation. Prior to January 1997 he served in various
appointed senior executive positions for the Company and for Products
Corporation, including Executive Vice President and Chief Financial Officer of
Products Corporation's Operating Groups from August 1996 to January 1998,
Executive Vice President and Chief Financial Officer of Products Corporation's
Worldwide Consumer Products business from January 1995 to August 1996, and
Executive Vice President and Chief Financial Officer of Products Corporation's
Revlon North America unit from September 1993 to January 1994. From 1983
through September 1993, Mr. Gehrmann held positions of increasing
responsibility in the financial organizations of Mennen Corporation and the
Colgate-Palmolive Company, which acquired Mennen Corporation in 1992. Prior to
1983, Mr. Gehrmann served as a certified public accountant at the international
auditing firm of Ernst & Young.
MR. NICHOLS (56) has been Executive Vice President and General Counsel of
the Company and of Products Corporation since January 1998 and served as Senior
Vice President and General Counsel of the Company and Products Corporation from
their respective formations in 1992 until January 1998. Mr. Nichols has been
Vice President of MacAndrews Holdings since 1988.
MR. POGUE (50) was elected Senior Vice President, Human Resources of the
Company and of Products Corporation in November 1998. He was Vice President,
Human Resources, U.S. Operations for Products Corporation from July 1997 until
November 1998. From December 1994 until July 1997 he was Vice President, Human
Resources and Administration of Marvel. From September 1992 to November 1994 he
was President of Next Phase Ventures, an independent consulting and venture
capital business. From 1988 to 1992 he was Vice President of Philip Morris
Companies, Inc. Prior to 1988 he held various positions in human resource
management.
14
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information for the years indicated
concerning the compensation awarded to, earned by or paid to the persons who
served as Chief Executive Officer of the Company during 1998 and the four most
highly paid executive officers, other than the Chief Executive Officer, who
served as executive officers of the Company as of December 31, 1998
(collectively, the "Named Executive Officers"), for services rendered in all
capacities to the Company and its subsidiaries during such periods.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (A) AWARDS
------------------------------------------ -------------
SECURITIES
SALARY OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) COMPENSATION ($) OPTIONS COMPENSATION ($)
- ----------------------------- ------ ----------- ----------- ------------------ ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
George Fellows .............. 1998 1,800,000 115,000 88,549 170,000 33,181
President and Chief 1997 1,250,000 1,250,000 22,191 170,000 30,917
Executive Officer (b) 1996 1,025,000 870,000 15,242 120,000 4,500
M. Katherine Dwyer .......... 1998 875,000 420,000 9,651 75,000 21,585
Senior Vice President (c) 1997 500,000 800,000 5,948 125,000 18,377
1996 500,000 326,100 90,029 45,000 4,500
Frank J. Gehrmann ........... 1998 427,500 80,200 3,343 30,000 17,297
Executive Vice President and
Chief Financial Officer (d)
Wade H. Nichols III ......... 1998 555,000 83,600 19,457 40,000 33,195
Executive Vice President and 1997 525,000 274,600 24,215 30,000 23,089
General Counsel (e) 1996 500,000 263,100 6,465 30,000 5,953
William J. Fox .............. 1998 907,500 805,625 58,041 100,000 71,590
Senior Executive Vice 1997 825,000 772,300 55,159 50,000 71,590
President (f) 1996 750,000 598,600 50,143 50,000 56,290
</TABLE>
- ----------
(a) The amounts shown in Annual Compensation for 1998, 1997 and 1996
reflect salary, bonus and other annual compensation (including
perquisites and other personal benefits valued in excess of $50,000)
and amounts reimbursed for payment of taxes awarded to, earned by or
paid to the persons listed for services rendered to the Company and
its subsidiaries. Products Corporation has a bonus plan (the
"Executive Bonus Plan") in which executives participate (including
the Chief Executive Officer and the other Named Executive Officers
other than Mr. Fox (see "--Employment Agreements and Termination of
Employment Arrangements")). The Executive Bonus Plan provides for
payment of cash compensation upon the achievement of predetermined
corporate and/or business unit and individual performance goals
during the calendar year established pursuant to the Executive Bonus
Plan or by the Compensation Committee. Mr. Gehrmann's compensation
is reported for 1998 only because he did not serve as an executive
officer of the Company prior to 1998.
(b) The amount shown for Mr. Fellows under Other Annual Compensation for
1998 includes $18,020 in respect of personal use of a
Company-provided automobile and $15,445 in respect of membership
fees and related expenses for personal use of a health and country
club and payments in respect of gross ups for taxes on imputed
income arising out of personal use of a Company-provided automobile
and Company-provided air travel and for taxes on imputed income
arising out of premiums paid or reimbursed by the Company in respect
of life insurance. The amount shown under All Other Compensation for
1998 reflects $13,381 in respect of life insurance premiums, $4,800
in respect of matching contributions under the Revlon Employees'
Savings, Profit Sharing and Investment Plan (the "401(k) Plan") and
$15,000 in respect of matching contributions under the Revlon Excess
Savings Plan for Key Employees (the "Excess Plan"). The amounts
shown under Other Annual Compensation for 1997 and 1996 reflect
payments in respect of gross ups for taxes on imputed income arising
out of personal use of a Company-provided automobile and for taxes
on imputed income arising out of premiums paid or reimbursed by the
Company in respect of life insurance. The amount shown under All
Other
15
<PAGE>
Compensation for 1997 reflects $11,117 in respect of life insurance
premiums, $4,800 in respect of matching contributions under the 401(k)
Plan and $15,000 in respect of matching contributions under the Excess
Plan. The amount shown under All Other Compensation for 1996 reflects
matching contributions under the 401(k) Plan.
(c) The amounts shown for Ms. Dwyer under Other Annual Compensation for
1998, 1997 and 1996 reflect payments in respect of gross ups for
taxes on imputed income arising out of personal use of a Company-provided
automobile and payments in respect of gross ups for taxes on imputed
income arising out of premiums paid or reimbursed by the Company in
respect of life insurance, and for 1996 reflects $57,264 in expense
reimbursements. The amounts shown under Bonus for 1998 and 1997 include an
additional payment of $300,000 in each year pursuant to her employment
agreement. The amount shown under All Other Compensation for 1998 reflects
$1,785 in respect of life insurance premiums, $4,800 in respect of
matching contributions under the 401(k) Plan and $15,000 in respect of
matching contributions under the Excess Plan. The amount shown under All
Other Compensation for 1997 reflects $2,720 in respect of life insurance
premiums, $4,800 in respect of matching contributions under the 401(k)
Plan and $10,857 in respect of matching contributions under the Excess
Plan. The amount shown under All Other Compensation for 1996 reflects
matching contributions under the 401(k) Plan.
(d) Mr. Gehrmann became an executive officer of the Company in January
1998. The amount shown for Mr. Gehrmann under Other Annual
Compensation for 1998 reflects payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
Company-provided automobile. The amount shown under All Other
Compensation for 1998 reflects $4,800 in respect of matching
contributions under the 401(k) Plan and $12,497 in respect of
matching contributions under the Excess Plan.
(e) The amounts shown for Mr. Nichols under Bonus for 1997 and 1996 were
deferred pursuant to the Revlon Executive Deferred Compensation Plan
(the "Deferred Compensation Plan") pursuant to which eligible
executive employees who participate in the Executive Bonus Plan may
elect to defer all or a portion of the bonus otherwise payable in
respect of a calendar year. The amounts shown under Other Annual
Compensation for 1998, 1997 and 1996 reflect payments in respect of
gross ups for taxes on imputed income arising out of personal use of
a Company-provided automobile and payments for taxes on imputed
income arising out of premiums paid or reimbursed by the Company in
respect of life insurance. The amount shown under All Other
Compensation for 1998 reflects $9,990 in respect of life insurance
premiums, $4,800 in respect of matching contributions under the
401(k) Plan, $10,463 in respect of matching contributions under the
Excess Plan and $7,942 in respect of above-market earnings on
compensation deferred under the Deferred Compensation Plan that were
earned but not paid or payable during 1998. The amount shown under
All Other Compensation for 1997 reflects $4,252 in respect of life
insurance premiums, $4,800 in respect of matching contributions
under the 401(k) Plan, $11,606 in respect of matching contributions
under the Excess Plan and $2,431 in respect of above-market earnings
on compensation deferred under the Deferred Compensation Plan that
were earned but not paid or payable during 1997. The amount shown
under All Other Compensation for 1996 reflects $4,500 in respect of
matching contributions under the 401(k) Plan and $1,453 in respect
of above-market earnings on compensation deferred under the Deferred
Compensation Plan that were earned but not paid or payable during
1996.
(f) Mr. Fox was an executive officer of the Company during 1996, 1997
and 1998 and resigned from the Company effective January 31, 1999.
The amounts shown for Mr. Fox under Other Annual Compensation for
1998, 1997 and 1996 reflect payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
Company-provided automobile and payments for taxes on imputed income
arising out of premiums paid or reimbursed by the Company in respect
of life insurance. The amount shown under All Other Compensation for
1998 reflects $51,790 in respect of life insurance premiums, $4,800
in respect of matching contributions under the 401(k) Plan and
$15,000 in respect of matching contributions under the Excess Plan.
The amount shown under Bonus for 1997 includes an additional payment
of $125,000 based upon Mr. Fox's performance. The amount shown under
All Other Compensation for 1997 reflects $51,790 in respect of life
insurance premiums, $4,800 in respect of matching contributions
under the 401(k) Plan and $15,000 in respect of matching
contributions under the Excess Plan. The amount shown under All
Other Compensation for 1996 reflects $51,790 in respect of life
insurance premiums and $4,500 in respect of matching contributions
under the 401(k) Plan.
16
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
During 1998, the following grants of stock options were made pursuant to
the Stock Plan to the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
GRANT
DATE
INDIVIDUAL GRANTS VALUE (A)
------------------------------------------------------------------------- -------------
PERCENT OF
NUMBER OF TOTAL OPTIONS GRANT
SECURITIES UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE ($)
- ----------------------------- ----------------------- --------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
George Fellows .............. 170,000 10% 34.00 1/07/08 3,475,157
M. Katherine Dwyer .......... 75,000 4% 34.00 1/07/08 1,533,158
Frank J. Gehrmann ........... 30,000 2% 34.00 1/07/08 613,263
Wade H. Nichols III ......... 40,000 2% 34.00 1/07/08 817,684
William J. Fox .............. 75,000 34.00 1/07/08 1,533,158
{6%
25,000 48.50 6/16/08 725,658
</TABLE>
The grants made during 1998 under the Stock Plan to Messrs. Fellows,
Gehrmann and Nichols and Ms. Dwyer were made on January 8, 1998 and consist of
non-qualified options having a term of 10 years. The grants made during 1998
under the Stock Plan to Mr. Fox were made on January 8, 1998 (with respect to
an option to purchase 75,000 shares of the Company's Class A Common Stock) and
June 17, 1998 (with respect to an option to purchase 25,000 shares of the
Company's Class A Common Stock) and consist of non-qualified options having a
term of 10 years. The options listed in the table vest 25% each year beginning
on the first anniversary of the grant date and will become 100% vested on the
fourth anniversary of the grant date and have an exercise price equal to the
NYSE closing price per share of the Class A Common Stock on the grant date, as
indicated in the table above. During 1998, the Company also granted an option
to purchase 300,000 shares of the Company's Class A Common Stock pursuant to
the Stock Plan to Mr. Perelman, the Chairman of the Board of Directors of the
Company. The option will vest in full on the fifth anniversary of the grant
date and has an exercise price of $50.00, the NYSE closing price per share of
the Class A Common Stock on April 27, 1998, the date of the grant.
- ----------
(a) Grant Date Present Values were calculated using the Black-Scholes
option pricing model. The model as applied used the grant date of
January 8, 1998 with respect to the options granted on such date and
used the grant date of June 17, 1998 with respect to the option
granted to Mr. Fox on June 17, 1998. Stock option models require a
prediction about the future movement of stock price. The following
assumptions were made for purposes of calculating Grant Date Present
Values: (i) a risk-free rate of return of 5.46% with respect to the
options granted on January 8, 1998 and 5.26% with respect to the
option granted to Mr. Fox on June 17, 1998, which were the rates as
of the applicable grant dates for the U.S. Treasury Zero Coupon Bond
issues with a remaining term similar to the expected term of the
options; (ii) stock price volatility of 55.93% based upon the
volatility of the Company's stock price; (iii) a constant dividend
rate of zero percent and (iv) that the options normally would be
exercised on the final day of their seventh year after grant. No
adjustments to the theoretical value were made to reflect the
waiting period, if any, prior to vesting of the stock options or the
transferability (or restrictions related thereto) of the stock
options. The real value of the options in the table depends upon the
actual performance of the Company's stock during the applicable
period and upon when they are exercised.
17
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following chart shows the number of stock options exercised during
1998 and the 1998 year-end value of the stock options held by the executive
officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS
SHARES OPTIONS AT FISCAL AT FISCAL YEAR-END
ACQUIRED VALUE YEAR-END (#) EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE UNEXERCISABLE (A)($)
- ----------------------------- ----------------- -------------- --------------------------- ---------------------
<S> <C> <C> <C> <C>
George Fellows .............. 0 0 42,500/417,500 0/0
M. Katherine Dwyer .......... 0 0 31,250/213,750 0/0
Frank J. Gehrmann ........... 0 0 8,000/44,000 0/0
Wade H. Nichols III ......... 0 0 7,500/92,500 0/0
William J. Fox .............. 0 0 12,500/187,500 0/0
</TABLE>
- ----------
(a) The market value of the underlying shares of Class A Common Stock at
year end calculated using $16 3/8, the December 31, 1998 NYSE
closing price per share of Class A Common Stock, was less than the
exercise price of all stock options listed in the table. The actual
value, if any, an executive may realize upon exercise of a stock
option depends upon the amount by which the market price of shares
of Class A Common Stock exceeds the exercise price per share when
the stock options are exercised.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Each of Messrs. Fellows, Nichols and Fox and Ms. Dwyer has entered into an
executive employment agreement with the Company's wholly owned subsidiary,
Products Corporation. Mr. Fellows' employment agreement, as amended, provides
that he will serve as the President and Chief Executive Officer at a base
salary of not less than $1,800,000 for 1998 and thereafter, and that management
recommend to the Compensation Committee that he be granted options to purchase
170,000 shares of Class A Common Stock each year during the term of the
agreement. At any time after January 1, 2001, Products Corporation may
terminate the term of Mr. Fellows' agreement by 12 months' prior notice of
non-renewal. Ms. Dwyer's employment agreement provides that she will serve as
President of Products Corporation's United States Consumer Products business at
a base salary of not less than $875,000 per annum for 1998 to be increased as
of January 1 of each year by not less than $75,000, and that management
recommend to the Compensation Committee that she be granted options to purchase
75,000 shares of Class A Common Stock each year during the term of the
agreement. At any time on or after January 1, 2002, Products Corporation may
terminate Ms. Dwyer's agreement by 12 months' prior notice of non-renewal. Mr.
Nichols' employment agreement with Products Corporation provides that he will
serve as Executive Vice President and General Counsel through February 28, 2003
at a base salary of not less than $555,000 and that management will recommend
to the Compensation Committee that he be granted options to purchase 40,000
shares of Class A Common Stock each year during the term of the agreement. Mr.
Fox's agreement, which was amended effective as of June 1, 1998, provides for
an annual base salary of not less than $750,000 and a guaranteed annual bonus
of $805,625 through June 30, 2001. All of the agreements currently in effect
(other than in the case of Mr. Fox) provide for participation in the Executive
Bonus Plan, continuation of life insurance and executive medical insurance
coverage in the event of permanent disability and participation in other
executive benefit plans on a basis equivalent to senior executives of the
Company generally. The agreements with Messrs. Fellows and Nichols and Ms.
Dwyer provide for Company-paid supplemental term life insurance during
employment in the amount of three times base salary, and all of the agreements
currently in effect provide for Company-paid supplemental disability insurance.
Mr. Fox's agreement provides that, in lieu of any participation in Company-paid
pre-retirement life insurance coverage, through June 30, 2001 Products
Corporation will pay premiums and gross ups for taxes thereon in respect of a
whole life insurance policy on his life in the
18
<PAGE>
amount of $5,000,000 under an arrangement providing for all insurance proceeds
to be paid to the designated beneficiary under such policy. The agreements
currently in effect, other than Mr. Fox's, provide that in the event of
termination of the term of the relevant executive employment agreement by
Products Corporation (otherwise than for "cause" as defined in the employment
agreements or disability) or by the executive for failure of the Compensation
Committee to adopt and implement the recommendations of management with respect
to stock option grants, the executive would be entitled to severance pursuant
to and subject to the terms of the Executive Severance Policy (see "--Executive
Severance Policy") (or, at his or her election, to continued base salary
payments throughout the term). In addition, the employment agreement with Mr.
Fellows provides that if he remains continuously employed by Products
Corporation or its affiliates until age 60, then upon any subsequent retirement
he will be entitled to a supplemental pension benefit in a sufficient amount so
that his annual pension benefit from all qualified and non-qualified pension
plans of Products Corporation and its affiliates (expressed as a straight life
annuity) equals $500,000. Upon any earlier retirement with Products
Corporation's consent or any earlier termination of employment by Products
Corporation otherwise than for "good reason" (as defined in the Executive
Severance Policy), Mr. Fellows will be entitled to a supplemental pension
benefit in an amount equal to the product of multiplying $28,540 by the number
of anniversaries, as of the date of retirement or termination, of Mr. Fellows'
fifty-third birthday (but in no event more than would have been payable to Mr.
Fellows under the foregoing provision had he retired at age 60). In each case,
Products Corporation reserves the right to treat Mr. Fellows as having deferred
payment of pension for purposes of computing such supplemental payments.
EXECUTIVE SEVERANCE POLICY
Products Corporation's Executive Severance Policy provides that upon
termination of employment of eligible executive employees, including the Chief
Executive Officer and the other Named Executive Officers (other than Mr. Fox)
other than voluntary resignation or termination by Products Corporation for
good reason, in consideration for the execution of a release and
confidentiality agreement and the Company's standard employee non-competition
agreement, the eligible executive will be entitled to receive, in lieu of
severance under any employment agreement then in effect or under Products
Corporation's basic severance plan, a number of months of severance pay in
semi-monthly installments based upon such executive's grade level and years of
service reduced by the amount of any compensation from subsequent employment,
unemployment compensation or statutory termination payments received by such
executive during the severance period, and, in certain circumstances, by the
actuarial value of enhanced pension benefits received by the executive, as well
as continued participation in medical and certain other benefit plans for the
severance period (or in lieu thereof, upon commencement of subsequent
employment, a lump sum payment equal to the then present value of 50% of the
amount of base salary then remaining payable through the balance of the
severance period). Pursuant to the Executive Severance Policy, upon meeting the
conditions set forth therein, Messrs. Fellows, Gehrmann and Nichols and Ms.
Dwyer would be entitled to severance pay equal to two years of base salary at
the rate in effect on the date of employment termination plus continued
participation in the medical and dental plans for two years on the same terms
as active employees.
DEFINED BENEFIT PLANS
The following table shows the estimated annual retirement benefits payable
(as of December 31, 1998) at normal retirement age (65) to a person retiring
with the indicated average compensation and years of credited service, on a
straight life annuity basis, after Social Security offset, under the Revlon
Employees' Retirement Plan (the "Retirement Plan"), including amounts
attributable to the Pension Equalization Plan, each as described below.
19
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED ANNUAL STRAIGHT LIFE ANNUITY BENEFITS AT RETIREMENT
HIGHEST CONSECUTIVE WITH INDICATED YEARS OF CREDITED SERVICE (A)
FIVE-YEAR AVERAGE -----------------------------------------------------------------------------------------------------
COMPENSATION
DURING FINAL TEN YEARS 15 20 25 30 35
- ----------------------- ------------------ ------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C>
$ 600,000 $151,881 $202,508 $253,135 $303,762 $303,762
700,000 177,881 237,175 296,468 355,762 355,762
800,000 203,881 271,841 339,802 407,762 407,762
900,000 229,881 306,508 383,135 459,762 459,762
1,000,000 255,881 341,175 426,468 500,000 500,000
1,100,000 281,881 375,841 469,802 500,000 500,000
1,200,000 307,881 410,508 500,000 500,000 500,000
1,300,000 333,881 445,175 500,000 500,000 500,000
1,400,000 359,881 479,841 500,000 500,000 500,000
1,500,000 385,881 500,000 500,000 500,000 500,000
2,000,000 500,000 500,000 500,000 500,000 500,000
2,500,000 500,000 500,000 500,000 500,000 500,000
</TABLE>
- ----------
(a) The normal form of benefit for the Retirement Plan and the Pension
Equalization Plan is a straight life annuity.
The Retirement Plan is intended to be a tax qualified defined benefit
plan. Retirement Plan benefits are a function of service and final average
compensation. The Retirement Plan is designed to provide an employee having 30
years of credited service with an annuity generally equal to 52% of final
average compensation, less 50% of estimated individual Social Security
benefits. Final average compensation is defined as average annual base salary
and bonus (but not any part of bonuses in excess of 50% of base salary) during
the five consecutive calendar years in which base salary and bonus (but not any
part of bonuses in excess of 50% of base salary) were highest out of the last
10 years prior to retirement or earlier termination. Except as otherwise
indicated, credited service includes all periods of employment with the Company
or a subsidiary prior to retirement. The base salaries and bonuses of each of
the Chief Executive Officer and the other Named Executive Officers are set
forth in the Summary Compensation Table under columns entitled "Salary" and
"Bonus," respectively.
The Employee Retirement Income Security Act of 1974, as amended, places
certain maximum limitations upon the annual benefit payable under all qualified
plans of an employer to any one individual. In addition, the Omnibus Budget
Reconciliation Act of 1993 limits the annual amount of compensation that can be
considered in determining the level of benefits under qualified plans. The
Pension Equalization Plan, as amended effective December 14, 1998, is a
non-qualified benefit arrangement designed to provide for the payment by the
Company of the difference, if any, between the amount of such maximum
limitations and the annual benefit that would be payable under the Retirement
Plan but for such limitations, up to a combined maximum annual straight life
annuity benefit at age 65 under the Retirement Plan and the Pension
Equalization Plan of $500,000. Benefits provided under the Pension Equalization
Plan are conditioned on the participant's compliance with his or her
non-competition agreement and on the participant not competing with Products
Corporation for one year after termination of employment.
The number of years of credited service under the Retirement Plan and the
Pension Equalization Plan as of January 1, 1999 (rounded to full years) for Mr.
Fellows is ten years (which includes credit for prior service with Holdings),
for Ms. Dwyer is five years, for Mr. Gehrmann is five years, for Mr. Nichols
is 20 years (which includes credit for prior service with Holdings) and for Mr.
Fox is 15 years (which includes credit for prior service with MacAndrews
Holdings).
20
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee of the Company's
Board of Directors, which consists of Messrs. Gittis, Drapkin, Janklow and
Semel, each of whom has been a member of the Compensation Committee during all
of 1998. This report shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and shall not otherwise be deemed
filed under either of such Acts.
Pursuant to the rules promulgated under the Exchange Act, set forth below
is the report of the Compensation Committee regarding its compensation policies
for 1998 for the Company's executive officers, including the Chief Executive
Officer. The key elements of compensation used by the Company are base salary
and performance-based incentives, including annual cash bonuses and stock
options. This report discusses the Company's practices regarding each of these
elements as applied to the executive officers generally and concludes with a
separate discussion of Mr. Fellows' compensation in particular. The basic
elements of the Company's compensation program currently in effect were
established at the time of the Company's initial public offering in February
1996 (the "Offering"), and were based upon consultations with the executive
compensation consulting practice of KPMG LLP, which subsequently joined with
William M. Mercer, Incorporated ("Mercer"). Since the Offering, including
during 1998, the Compensation Committee has consulted with Mercer on
compensation-related issues as it deems appropriate and considers Mercer's
input as well as the Company's existing policies in its oversight and approval
of the Company's ongoing executive officer compensation arrangements.
The Company's executive compensation practices are designed to support its
business goals of fostering profitable growth and increasing stockholder value.
The Company seeks to align the interests of executives and stockholders through
the use of a performance-based cash bonus plan and a stock-based compensation
plan. In addition, the Company's policy is to pay for performance; that is, the
better the individual, team, business unit and/or Company-wide performance
against established goals and objectives, the greater the compensation reward.
Finally, the Company's compensation package is designed to be competitive with
the compensation practices of other leading consumer products companies.
In addition to Company sources and consultation with Mercer (as discussed
above), the Committee also considers information provided by salary surveys and
similar data available from independent sources to help it assess the
competitiveness and effectiveness of the Company's executive compensation
practices in general and for the Chief Executive Officer in particular.
BASE SALARY
The Company's practice is to pay salaries that reflect the executive's
position in the Company and his or her contributions as determined by the
Compensation Committee and that are competitive with a comparison group of
other leading consumer products companies and certain other companies outside
of the consumer products field (the "Comparison Group"). While the Comparison
Group is comprised primarily of consumer products companies, companies outside
of the consumer products field are also included because the Company believes,
and the Compensation Committee concurs, that the market for executive talent is
broader than simply other consumer products companies.
In determining the salaries of executive officers, the Compensation
Committee's policy is to target the salary range for executive officers at a
level which is competitive with the Comparison Group, with salaries above that
level available to exceptional performers and key contributors to the success
of the Company. The annual salaries of Messrs. Fellows, Nichols and Fox and of
Ms. Dwyer, established in their respective employment agreements and the annual
salary paid to Mr. Gehrmann are based upon this policy. Annual salary
adjustments are based on individual performance, assumption of new
responsibilities, competitive data from the Comparison Group and the Company's
overall annual salary budget guidelines. If an executive officer is responsible
for a particular business unit, such unit's financial results are taken into
account. In the case of Ms. Dwyer, minimum annual salary adjustments are
specified in her employment agreement.
21
<PAGE>
ANNUAL CASH BONUS
EXECUTIVE BONUS PLAN
The Company has a bonus plan (the "Executive Bonus Plan") in which
executives (including the Chief Executive Officer and the other Named Executive
Officers other than Mr. Fox) participate. The Executive Bonus Plan provides for
payment of cash compensation upon the achievement of predetermined corporate
and/or business unit and, in the case of executives other than Mr. Fellows,
individual performance goals during the calendar year. Eligibility for awards
under the Executive Bonus Plan is conditioned upon the executive having
executed the Company's standard employee non-competition agreement. The maximum
award payable to any participant with respect to any bonus year is 100% of base
salary.
Bonus objectives for executive officers for 1998 were based on the
performance of the Company as a whole in the case of Messrs. Fellows, Gehrmann
and Nichols, and of the Company as a whole and the business unit to which she
was assigned in the case of Ms. Dwyer. The Company-wide financial performance
measures for Messrs. Fellows, Gehrmann and Nichols were operating income, net
sales, earnings per share and return on assets. For Ms. Dwyer, the Company-wide
financial performance measure was earnings per share, and the business unit
financial measures were operating income, net sales and return on assets. Each
of Messrs. Gehrmann and Nichols and Ms. Dwyer had personal performance
objectives accounting for a portion of their respective bonus opportunities.
The Company and Ms. Dwyer's business unit achieved their respective net sales
thresholds for 1998 but neither the Company nor Ms. Dwyer's business unit
achieved their other respective financial performance measures for 1998.
Accordingly, based upon the application of the formula set forth in the
Executive Bonus Plan, Messrs. Fellows, Gehrmann and Nichols and Ms. Dwyer
received bonus amounts that were less than their respective target awards.
Messrs. Gehrmann and Nichols received special bonus awards due to their work in
connection with substantial refinancings during 1998. Mr. Fox's bonus for 1998
was determined in accordance with his employment agreement.
LONG-TERM PERFORMANCE-BASED INCENTIVES
The Company's principal compensation vehicle for encouraging long-term
growth and performance is the grant of stock options under the Revlon, Inc.
1996 Stock Plan, as amended and restated as of December 17, 1996 (the "Stock
Plan").
THE STOCK PLAN
Under the Stock Plan, stock options generally are granted annually to
executive officers. Guidelines for the size of stock option awards are
developed based on factors similar to those used to determine salary and bonus,
including the executive's position in the Company and his or her contributions
as determined by the Compensation Committee and a review of the practices of
the Comparison Group. Since the Company, with the concurrence of the
Compensation Committee, views the granting of stock options as a way to obtain
a competitive compensation advantage, it is the Company's policy to target
award levels so that, when taken together with salary and cash bonus, total
compensation would be competitive with the Comparison Group. Actual grants may
vary from target levels based on individual performance, business unit
performance, the assumption of increased responsibilities or other factors.
The grants of options made under the Stock Plan during 1998 to Messrs.
Fellows, Fox and Nichols and Ms. Dwyer were made pursuant to their respective
employment agreements. The grant to Mr. Gehrmann was based upon the factors
outlined above. These grants and the grants of options to all other executive
officers and employees of the Company during 1998 are comprised of
non-qualified options having a term of 10 years. The options will vest 25% each
year beginning on the first anniversary of the grant date and will become 100%
vested on the fourth anniversary of the grant date. This approach is designed
to motivate the creation of stockholder value over the long term since the full
benefit of the stock option grant cannot be realized unless stock price
appreciation occurs over a number of years.
22
<PAGE>
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a publicly held corporation a deduction for
compensation in excess of $1 million per year paid to the four most highly
compensated executive officers of the Company (other than the Chief Executive
Officer) (the "Covered Officers"). Based upon a special transition rule
contained in the Treasury regulations for private corporations that complete an
initial public offering, the Company has, to the fullest extent possible under
such regulations, treated payments made to Covered Officers as not subject to
the deduction limitations of Section 162(m) of the Code. Pursuant to Section
162(m), the transition rule is no longer available to awards issued under the
Stock Plan upon grant of awards with respect to all shares originally
authorized for awards under the Stock Plan, and, accordingly, the deduction
limitation of Section 162(m) will apply to all grants under the Revlon, Inc.
Second Amended and Restated 1996 Stock Plan (the "Amended Stock Plan").
However, an exception to the deduction limitation of Section 162(m) applies to
certain performance-based compensation provided that the plan pursuant to which
such compensation will be paid has been approved by stockholders in a separate
vote and certain other requirements are met. If the adoption of the Amended
Stock Plan is approved by the Company's stockholders at the Annual Meeting, the
Company believes that the awards granted under the Amended Stock Plan should
qualify for the performance-based compensation exception to Section 162(m) of
the Code. Nevertheless, the Compensation Committee will maintain the discretion
to authorize awards under the Amended Stock Plan and other compensation that do
not qualify for an exception to the deduction limitation if the Compensation
Committee believes it is necessary or appropriate under the circumstances.
1998 CHIEF EXECUTIVE OFFICER COMPENSATION
In 1998, the Compensation Committee reassessed the overall compensation of
George Fellows, the Chief Executive Officer of the Company. The Compensation
Committee reviewed data compiled by outside compensation consultants from
Mercer, as well as data available from independent sources, on compensation
provided to chief executive officers by the Comparison Group of companies. The
review indicated that the compensation provided for in the existing employment
agreement with Mr. Fellows, including base salary, an annual performance-based
bonus of up to 100% of salary, and eligibility for an annual grant of 170,000
stock options, was no longer competitive when compared to the practices of the
Comparison Group. Mr. Fellows' employment agreement was amended to increase his
base salary to $1,800,000. The other major elements of Mr. Fellows'
compensation, including the opportunity to earn an annual performance-based
bonus of up to 100% of salary and eligibility for an annual grant of 170,000
stock options, were not modified.
As discussed above in the Annual Cash Bonus section, Mr. Fellows' annual
bonus for 1998 was paid based upon the application of the formula in the
Executive Bonus Plan.
The stock option grant to Mr. Fellows during 1998 was specified in his
Employment Agreement and, as with base salary and bonus eligibility, was
determined with reference to Mr. Fellows' position in the Company, his
contribution to the Company, his individual performance, his contributions to
the continuing operations and value of the Company and the practices of the
Comparison Group. The Compensation Committee's intent is to condition a
meaningful portion of Mr. Fellows' total compensation upon Company performance
and stockholder value and to serve as a means to retain Mr. Fellows.
Compensation and Stock Plan Committee
Howard Gittis (Chairman)
Donald Drapkin
Morton Janklow
Terry Semel
23
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
shares of Class A Common Stock with that of the S&P 500 Index, the S&P Health
Care Index, the S&P Household Products Index and the S&P Cosmetics Index. The
comparison for each of the periods presented assumes that $100 was invested on
February 29, 1996 (the date the Class A Common Stock was priced in connection
with the Company's Offering), in shares of Class A Common Stock and the stocks
included in the relevant index and that all dividends are reinvested. These
indices, which reflect formulas for dividend reinvestment and weighting of
individual stocks, do not necessarily reflect returns that could be achieved by
individual investors.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<CAPTION>
FEB. 29, 1996 DEC. 31, 1996 DEC. 31, 1997 DEC. 31, 1998
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Revlon, Inc. Class A Common Stock ....... $100 $ 124.48 $ 147.13 $ 68.23
S&P 500 Index ........................... 100 117.82 157.10 201.99
S&P Health Care Index ................... 100 121.38 177.32 258.30
S&P Household Products Index ............ 100 129.56 182.62 215.60
S&P Cosmetics Index ..................... 100 136.60 173.09 176.08
</TABLE>
24
<PAGE>
OWNERSHIP OF COMMON STOCK
The following table sets forth as of January 31, 1999 the number of shares
of Common Stock beneficially owned, and the percent so owned, by (i) each
person known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
the Chief Executive Officer during 1998 and each of the other Named Executive
Officers during 1998 and (iv) all directors and executive officers of the
Company as a group. The number of shares owned are those beneficially owned, as
determined under the rules of the Securities and Exchange Commission (the
"SEC"), and such information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares of Common Stock as to which a person has sole or shared
voting power or investment power and any shares of Common Stock which the
person has the right to acquire within 60 days through the exercise of any
option, warrant or right, through conversion of any security or pursuant to the
automatic termination of a power of attorney or revocation of a trust,
discretionary account or similar arrangement.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------------------- -------------------------------------- -----------------
<S> <C> <C>
Ronald O. Perelman ...................... 42,500,000 (Class A and Class B) (1) 83.0%
35 E. 62nd St.
New York, NY 10021
Donald Drapkin .......................... 12,000 (Class A) (2) *
M. Katherine Dwyer ...................... 130,173 (Class A) (3) *
Irwin Engelman .......................... 10,000 (Class A) (4) *
Meyer Feldberg .......................... 0
George Fellows .......................... 256,388 (Class A) (5) 1.3%
William J. Fox .......................... 104,702 (Class A) (6) *
Frank J. Gehrmann ....................... 24,798 (Class A) (7) *
Howard Gittis ........................... 15,000 (Class A) *
Morton L. Janklow ....................... 0
Vernon E. Jordan ........................ 0
Henry A. Kissinger ...................... 0
Edward J. Landau ........................ 100 *
Jerry W. Levin .......................... 323,989 (Class A) (8) 1.6%
Wade H. Nichols III ..................... 61,404 (Class A) (9) *
Linda Gosden Robinson ................... 0
Terry Semel ............................. 5,000 (Class A) (10) *
Martha Stewart .......................... 1,000 (11) *
FMR Corp. ............................... 1,561,500 (Class A) (12) 7.8%
82 Devonshire Street
Boston, MA 02109
All Directors and Executive Officers as a 12,196,250 (Class A) (13) 61.0%
Group (19 Persons) ..................... 31,250,000 (Class B) 100.0%
</TABLE>
- ----------
* Less than one percent.
(1) Mr. Perelman through Mafco Holdings (which through REV Holdings)
beneficially owns 11,250,000 shares of Class A Common Stock (representing
approximately 56.3% of the outstanding shares of Class A Common Stock)
and all of the outstanding 31,250,000 shares of Class B Common Stock,
which together represent approximately 83.0% of the outstanding shares of
Common Stock and has approximately 97.4% of the combined voting power of
the outstanding shares of Common Stock. All of the shares of Common Stock
owned by REV Holdings are pledged by REV Holdings to secure obligations,
and shares of intermediate holding companies are or may from time to time
be pledged to secure obligations of Mafco Holdings or its affiliates.
(2) All of such shares are held by trusts for Mr. Drapkin's children and
beneficial ownership is disclaimed.
25
<PAGE>
(3) Includes 3,000 shares held directly; 306 shares acquired pursuant to the
Company matching under the 401(k) Plan; 617 shares that Ms. Dwyer has the
right to receive pursuant to the Company matching under the Excess Plan;
31,250, 31,250 and 18,750 shares which may be acquired under options
which vested on January 9, 1998, January 9, 1999 and January 8, 1999,
respectively; and 45,000 shares which may be acquired under options which
vest on February 28, 1999.
(4) Includes 10,000 shares owned jointly by Mr. Engelman's wife.
(5) Includes 8,000 shares held directly; 226 shares acquired pursuant to the
Company matching under the 401(k) Plan; 662 shares that Mr. Fellows has
the right to receive pursuant to the Company matching under the Excess
Plan; 42,500, 42,500 and 42,500 shares which may be acquired under
options which vested on January 9, 1998, January 9, 1999 and January 8,
1999, respectively; and 120,000 shares which may be acquired under
options which vest on February 28, 1999.
(6) Includes 5,800 shares owned by Mr. Fox's wife and 4,200 shares owned by
his children as to which beneficial ownership is disclaimed; 227 shares
acquired pursuant to the Company matching under the 401(k) Plan; 725
shares that Mr. Fox has the right to receive pursuant to the Company
matching under the Excess Plan; 12,500, 12,500 and 18,750 shares which
may be acquired under options which vested on January 9, 1998, January 9,
1999 and January 8, 1999, respectively; and 50,000 shares which may be
acquired under options which vest on February 28, 1999.
(7) Includes 3,000 shares owned jointly by Mr. Gehrmann's wife; 327 shares
acquired pursuant to the Company matching under the 401(k) Plan; 471
shares that Mr. Gehrmann has the right to receive pursuant to the Company
matching under the Excess Plan; 2,500, 2,500, 3,000, 3,000 and 7,500
shares which may be acquired under options which vested on February 28,
1997, February 28, 1998, January 9, 1998, January 9, 1999 and January 8,
1999, respectively; and 2,500 shares which may be acquired under options
which vest on February 28, 1999.
(8) Includes 25,000 shares held directly by Mr. Levin; 1,000 shares owned by
Mr. Levin's daughter as to which beneficial ownership is disclaimed; 129
shares acquired pursuant to the Company matching under the 401(k) Plan;
360 shares that Mr. Levin has the right to receive pursuant to the
Company matching under the Excess Plan; 42,500, 42,500 and 42,500 shares
which may be acquired under options which vested on January 9, 1998,
January 9, 1999 and January 8, 1999, respectively; and 170,000 shares
which may be acquired under options which vest on February 28, 1999.
(9) Includes 5,400 shares held directly; 298 shares acquired pursuant to the
Company matching under the 401(k) Plan; 705 shares that Mr. Nichols has
the right to receive pursuant to the Company matching under the Excess
Plan; 7,500, 7,500 and 10,000 shares which may be acquired under options
which vested on January 9, 1998, January 9, 1999 and January 8, 1999,
respectively; and 30,000 shares which may be acquired under options which
vest on February 28, 1999.
(10) Includes 2,000 shares owned by Mr. Semel's children as to which
beneficial ownership is disclaimed and 3,000 shares owned jointly by Mr.
Semel's wife.
(11) Includes 500 shares owned directly and 500 shares owned indirectly by the
Martha Stewart Inc. Defined Benefit Pension Plan.
(12) Based upon a Schedule 13G filed by FMR Corp. in February 1999, FMR Corp.
has sole voting power as to 550 shares and sole dispositive power as to
all 1,561,500 shares.
(13) Includes 1,697 shares owned by one executive officer not listed in the
table. Included in this share number for such executive officer are 750
shares which may be acquired under options which vested on July 16, 1998,
750 shares which may be acquired under options which vested on January 8,
1999, and 197 shares acquired pursuant to the Company matching under the
401(k) Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MacAndrews & Forbes beneficially owns shares of Common Stock having
approximately 97.4% of the combined voting power of the outstanding shares of
Common Stock. As a result, MacAndrews & Forbes is able to elect the entire
Board of Directors of the Company and control the vote on all matters submitted
to a vote of the Company's stockholders. MacAndrews & Forbes is wholly owned by
Ronald O. Perelman, who is Chairman of the Board of Directors of the Company.
TRANSFER AGREEMENTS
In June 1992, Revlon, Inc. and Products Corporation entered into an asset
transfer agreement with Holdings and certain of its wholly owned subsidiaries
(the "Asset Transfer Agreement"), and Revlon, Inc. and Products Corporation
entered into a real property asset transfer agreement with Holdings (the "Real
Property Transfer Agreement" and, together with the Asset Transfer Agreement,
the "Transfer
26
<PAGE>
Agreements"), and pursuant to such agreements, on June 24, 1992 Holdings
transferred assets to Products Corporation and Products Corporation assumed all
the liabilities of Holdings, other than certain specifically excluded assets
and liabilities (the liabilities excluded are referred to as the "Excluded
Liabilities"). Holdings retained certain small brands that historically had not
been profitable (the "Retained Brands"). Holdings agreed to indemnify Revlon,
Inc. and Products Corporation against losses arising from the Excluded
Liabilities, and Revlon, Inc. and Products Corporation agreed to indemnify
Holdings against losses arising from the liabilities assumed by Products
Corporation. The amount reimbursed by Holdings to Products Corporation for the
Excluded Liabilities for 1998 was $0.6 million.
OPERATING SERVICES AGREEMENT
In June 1992, Revlon, Inc., Products Corporation and Holdings entered into
an operating services agreement (as amended and restated, and as subsequently
amended, the "Operating Services Agreement") pursuant to which Products
Corporation has manufactured, marketed, distributed, warehoused and
administered, including the collection of accounts receivable, the Retained
Brands for Holdings. Pursuant to the Operating Services Agreement, Products
Corporation was reimbursed an amount equal to all of its and Revlon, Inc.'s
direct and indirect costs incurred in connection with furnishing such services,
net of the amounts collected by Products Corporation with respect to the
Retained Brands, payable quarterly. The net amount due from Holdings to
Products Corporation for such direct and indirect costs for 1998 plus a fee
equal to 5% of the net sales of the Retained Brands was $0.9 million, which
amount was offset against certain notes payable to Holdings.
REIMBURSEMENT AGREEMENTS
Revlon, Inc., Products Corporation and MacAndrews Holdings have entered
into reimbursement agreements (the "Reimbursement Agreements") pursuant to
which (i) MacAndrews Holdings is obligated to provide (directly or through
affiliates) certain professional and administrative services, including
employees, to Revlon, Inc. and its subsidiaries, including Products
Corporation, and purchase services from third party providers, such as
insurance and legal and accounting services, on behalf of Revlon, Inc. and its
subsidiaries, including Products Corporation, to the extent requested by
Products Corporation, and (ii) Products Corporation is obligated to provide
certain professional and administrative services, including employees, to
MacAndrews Holdings (and its affiliates) and purchase services from third party
providers, such as insurance and legal and accounting services, on behalf of
MacAndrews Holdings (and its affiliates) to the extent requested by MacAndrews
Holdings, provided that in each case the performance of such services does not
cause an unreasonable burden to MacAndrews Holdings or Products Corporation, as
the case may be. The Company reimburses MacAndrews Holdings for the allocable
costs of the services purchased for or provided to the Company and its
subsidiaries and for reasonable out-of-pocket expenses incurred in connection
with the provision of such services. MacAndrews Holdings (or such affiliates)
reimburses the Company for the allocable costs of the services purchased for or
provided to MacAndrews Holdings (or such affiliates) and for the reasonable
out-of-pocket expenses incurred in connection with the purchase or provision of
such services. The net amount reimbursed by MacAndrews Holdings to the Company
for the services provided under the Reimbursement Agreements for 1998 was $3.1
million, $0.2 million of which was offset against certain notes payable to
Holdings. Each of Revlon, Inc. and Products Corporation, on the one hand, and
MacAndrews Holdings, on the other, has agreed to indemnify the other party for
losses arising out of the provision of services by it under the Reimbursement
Agreements other than losses resulting from its willful misconduct or gross
negligence. The Reimbursement Agreements may be terminated by either party on
90 days' notice. The Company does not intend to request services under the
Reimbursement Agreements unless their costs would be at least as favorable to
the Company as could be obtained from unaffiliated third parties.
TAX SHARING AGREEMENT
Revlon, Inc., for federal income tax purposes, is included in the
affiliated group of which Mafco Holdings is the common parent, and Revlon,
Inc.'s federal taxable income and loss is included in such
27
<PAGE>
group's consolidated tax return filed by Mafco Holdings. Revlon, Inc. also may
be included in certain state and local tax returns of Mafco Holdings or its
subsidiaries. In June 1992, Holdings, Revlon, Inc. and certain of its
subsidiaries, and Mafco Holdings entered into a tax sharing agreement (as
subsequently amended, the "Tax Sharing Agreement"), pursuant to which Mafco
Holdings has agreed to indemnify Revlon, Inc. against federal, state or local
income tax liabilities of the consolidated or combined group of which Mafco
Holdings (or a subsidiary of Mafco Holdings other than Revlon, Inc. or its
subsidiaries) is the common parent for taxable periods beginning on or after
January 1, 1992 during which Revlon, Inc. or a subsidiary of Revlon, Inc. is a
member of such group. Pursuant to the Tax Sharing Agreement, for all taxable
periods beginning on or after January 1, 1992, Revlon, Inc. will pay to
Holdings amounts equal to the taxes that Revlon, Inc. would otherwise have to
pay if it were to file separate federal, state or local income tax returns
(including any amounts determined to be due as a result of a redetermination
arising from an audit or otherwise of the consolidated or combined tax
liability relating to any such period which is attributable to Revlon, Inc.),
except that Revlon, Inc. will not be entitled to carry back any losses to
taxable periods ending prior to January 1, 1992. No payments are required by
Revlon, Inc. if and to the extent Products Corporation is prohibited under the
Credit Agreement from making tax sharing payments to Revlon, Inc. The Credit
Agreement prohibits Products Corporation from making such tax sharing payments
other than in respect of state and local income taxes. Since the payments to be
made under the Tax Sharing Agreement will be determined by the amount of taxes
that Revlon, Inc. would otherwise have to pay if it were to file separate
federal, state or local income tax returns, the Tax Sharing Agreement will
benefit Mafco Holdings to the extent Mafco Holdings can offset the taxable
income generated by Revlon, Inc. against losses and tax credits generated by
Mafco Holdings and its other subsidiaries. There were no cash payments in
respect of federal taxes made by Revlon, Inc. pursuant to the Tax Sharing
Agreement for 1998.
REGISTRATION RIGHTS AGREEMENT
Prior to the consummation of the Offering, Revlon, Inc. and Revlon
Worldwide Corporation (subsequently merged into REV Holdings), the then direct
parent of Revlon, Inc., entered into the Registration Rights Agreement pursuant
to which REV Holdings and certain transferees of Revlon, Inc.'s Common Stock
held by REV Holdings (the "Holders") have the right to require Revlon, Inc. to
register all or part of the Class A Common Stock owned by such Holders and the
Class A Common Stock issuable upon conversion of Revlon, Inc.'s Class B Common
Stock owned by such Holders under the Securities Act of 1933, as amended (the
"Securities Act") (a "Demand Registration"); provided that Revlon, Inc. may
postpone giving effect to a Demand Registration up to a period of 30 days if
Revlon, Inc. believes such registration might have a material adverse effect on
any plan or proposal by Revlon, Inc. with respect to any financing,
acquisition, recapitalization, reorganization or other material transaction, or
if Revlon, Inc. is in possession of material non-public information that, if
publicly disclosed, could result in a material disruption of a major corporate
development or transaction then pending or in progress or in other material
adverse consequences to Revlon, Inc. In addition, the Holders have the right to
participate in registrations by Revlon, Inc. of its Class A Common Stock (a
"Piggyback Registration"). The Holders will pay all out-of-pocket expenses
incurred in connection with any Demand Registration. Revlon, Inc. will pay any
expenses incurred in connection with a Piggyback Registration, except for
underwriting discounts, commissions and expenses attributable to the shares of
Class A Common Stock sold by such Holders.
OTHER
Pursuant to a lease dated April 2, 1993 (the "Edison Lease"), Holdings
leased to Products Corporation the Edison research and development facility for
a term of up to 10 years with an annual rent of $1.4 million and certain shared
operating expenses payable by Products Corporation which, together with the
annual rent, were not to exceed $2.0 million per year. Pursuant to an
assumption agreement dated February 18, 1993, Holdings agreed to assume all
costs and expenses of the ownership and operation of the Edison facility as of
January 1, 1993, other than (i) the operating expenses for which Products
Corporation was responsible under the Edison Lease and (ii) environmental
claims and compliance costs relating to matters which occurred prior to January
1, 1993 up to an amount not to exceed $8.0 million
28
<PAGE>
(the amount of such claims and costs for which Products Corporation is
responsible, the "Environmental Limit"). In addition, pursuant to such
assumption agreement, Products Corporation agreed to indemnify Holdings for
environmental claims and compliance costs relating to matters which occurred
prior to January 1, 1993 up to an amount not to exceed the Environmental Limit
and Holdings agreed to indemnify Products Corporation for environmental claims
and compliance costs relating to matters which occurred prior to January 1,
1993 in excess of the Environmental Limit and all such claims and costs
relating to matters occurring on or after January 1, 1993. Pursuant to an
occupancy agreement, during 1998 Products Corporation rented from Holdings a
portion of the administration building located at the Edison facility and space
for a retail store of Products Corporation's now discontinued retail operation.
During 1998, Products Corporation provided certain administrative services,
including accounting, for Holdings with respect to the Edison facility pursuant
to which Products Corporation paid on behalf of Holdings costs associated with
the Edison facility and was reimbursed by Holdings for such costs, less the
amount owed by Products Corporation to Holdings pursuant to the Edison Lease
and the occupancy agreement. In August 1998, Holdings sold the Edison facility
to an unrelated third party, which assumed substantially all liability for
environmental claims and compliance costs relating to the Edison facility, and
in connection with the sale Products Corporation terminated the Edison Lease
and entered into a new lease with the new owner. Holdings agreed to indemnify
Products Corporation to the extent rent under the new lease exceeds rent that
would have been payable under the terminated Edison Lease had it not been
terminated. The net amount reimbursed by Holdings to Products Corporation with
respect to the Edison facility for 1998 was $0.5 million.
On February 2, 1998, Revlon Escrow Corp., an affiliate of Products
Corporation, issued and sold in a private placement $650 million aggregate
principal amount of 8 5/8% Senior Subordinated Notes due 2008 (the "8 5/8%
Notes") and $250 million aggregate principal amount of 8 1/8% Senior Notes due
2006 (the "8 1/8% Notes" and, together with the 8 5/8% Notes, the "Notes"), with
the net proceeds deposited into escrow. The proceeds from the sale of the Notes
were used to finance the redemption of Products Corporation's $555 million
aggregate principal amount of 10 1/2% Senior Subordinated Notes due 2003 (the
"Senior Subordinated Notes") and $260 million aggregate principal amount of
9 3/8% Senior Notes due 2001 (the "Senior Notes" and, together with the Senior
Subordinated Notes, the "Old Notes"). Products Corporation delivered a
redemption notice to the holders of the Senior Subordinated Notes for the
redemption of the Senior Subordinated Notes on March 4, 1998, at which time
Products Corporation assumed the obligations under the 8 5/8% Notes and the
related indenture (the "8 5/8% Notes Assumption"), and to the holders of the
Senior Notes for the redemption of the Senior Notes on April 1, 1998, at which
time Products Corporation assumed the obligations under the 8 1/8% Notes and
the related indenture (the "8 1/8% Notes Assumption" and, together with the
8 5/8% Notes Assumption, the "Assumption"). A nationally recognized investment
banking firm rendered its written opinion that the Assumption, upon
consummation of the redemptions of the Old Notes, and the subsequent release
from escrow to Products Corporation of any remaining net proceeds from the
sale of the Notes are fair from a financial standpoint to Products Corporation
under the indenture governing Products Corporation's 9 1/2% Senior Notes
due 1999.
During 1998, Products Corporation leased certain facilities to MacAndrews
& Forbes or its affiliates pursuant to occupancy agreements and leases. These
included space at Products Corporation's New York headquarters and at Products
Corporation's offices in London and, during the first half of 1998, Hong Kong.
The rent paid to Products Corporation for 1998 was $2.9 million.
During 1998, approximately $5.7 million due to Products Corporation from
Holdings was offset against certain notes payable to Holdings.
Products Corporation's Credit Agreement is supported by, among other
things, guarantees from Holdings and certain of its subsidiaries. The
obligations under such guarantees are secured by, among other things, (i) the
capital stock and certain assets of certain subsidiaries of Holdings and (ii)
until the disposition of the Edison facility in August 1998, a mortgage on the
Edison facility.
Products Corporation borrows funds from its affiliates from time to time
to supplement its working capital borrowings. No such borrowings were
outstanding as of December 31, 1998. The interest rates for
29
<PAGE>
such borrowings are more favorable to Products Corporation than interest rates
under the Credit Agreement and, for borrowings occurring prior to the execution
of the Credit Agreement, the credit facilities in effect at the time of such
borrowing. The amount of interest paid by Products Corporation for such
borrowings for 1998 was $0.8 million.
During 1998, the Company made advances of $0.25 million and $0.3 million
to Mr. Fellows and Ms. Dwyer, respectively. During 1998, the Company made an
advance of $0.4 million to Mr. Levin, which advance was repaid in January 1999.
During 1998, Products Corporation purchased products from a company that
was an affiliate of the Company during part of 1998, for which it paid
approximately $0.4 million.
Prior to 1998, Products Corporation provided licensing services to a
company that was an affiliate of the Company during part of 1998. In connection
with the termination of the licensing arrangement and its agreement to provide
consulting services during 1998, Products Corporation received payments of $2.0
million in 1998 and is entitled to receive an additional $1.0 million in 1999.
During 1998, a company that was an affiliate of the Company during 1998
assembled lipstick cases for Products Corporation. Products Corporation paid
approximately $1.1 million for such services in 1998.
The law firm of which Mr. Jordan is a senior partner provided legal
services to Revlon, Inc. and its subsidiaries during 1998, and it is
anticipated that it will provide legal services to Revlon, Inc. and its
subsidiaries during 1999.
Revlon, Inc. believes that the terms of the foregoing transactions are at
least as favorable to Revlon, Inc. or Products Corporation, as applicable, as
those that could be obtained from unaffiliated third parties.
ADDITIONAL INFORMATION
THE COMPANY WILL MAKE AVAILABLE A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, AND ANY QUARTERLY REPORTS ON FORM
10-Q FILED THEREAFTER, WITHOUT CHARGE, UPON WRITTEN REQUEST TO ROBERT K.
KRETZMAN, CORPORATE SECRETARY, REVLON, INC., 625 MADISON AVENUE, NEW YORK, NEW
YORK 10022. EACH SUCH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT,
AS OF THE RECORD DATE, FEBRUARY 18, 1999, THE PERSON MAKING THE REQUEST WAS A
BENEFICIAL OWNER OF SHARES OF COMMON STOCK ENTITLED TO VOTE.
In order to ensure timely delivery of such documents prior to the Annual
Meeting, any request should be received by the Company promptly.
Stockholders who are not stockholders of record who wish to attend the
Annual Meeting should bring evidence of beneficial ownership of the Common
Stock to the Annual Meeting.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company's executive officers, directors and 10% stockholders are
required under the Exchange Act to file reports of ownership and changes in
ownership with the SEC and the NYSE. Copies of these reports also must be
furnished to the Company.
Based solely upon a review of copies of such reports furnished to the
Company through the date hereof and written representations that no other
reports were required, the Company believes that all filing requirements
applicable to its executive officers, directors and 10% holders were complied
with during 1998.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the SEC as currently in effect, any
holder of at least one percent or $2,000 in market value of shares of Common
Stock held for at least one year who desires to have a proposal presented in
the Company's proxy material for use in connection with the Annual Meeting of
Stockholders to be held in 2000 must transmit that proposal (along with his or
her name, address, the
30
<PAGE>
number of shares of Common Stock that he or she holds of record or
beneficially, the dates on which the securities were acquired and documentary
support for a claim of beneficial ownership) in writing by certified
mail--return receipt requested to the Secretary of the Company at Revlon, Inc.,
625 Madison Avenue, New York, New York 10022. Proposals of stockholders
intended to be presented at the Annual Meeting of Stockholders to be held in
2000 must be received by the Secretary of the Company not later than November
12, 1999.
Holders of shares of Common Stock desiring to have proposals submitted for
consideration at future meetings of the stockholders should consult the
applicable rules and regulations of the SEC with respect to such proposals,
including the permissible number and length of proposals and other matters
governed by such rules and regulations.
OTHER BUSINESS
Management does not intend to present any other items of business and is
not aware of any matters other than those set forth in this proxy statement
that will be presented for action at the Annual Meeting. However, if any other
matters properly come before the Annual Meeting, the persons named in the
enclosed proxy intend to vote the shares of Common Stock they represent in
accordance with their best judgment.
New York, New York
March 12, 1999 By Order of the Board of Directors
Robert K. Kretzman
Senior Vice President, Deputy General
Counsel and Secretary
31
<PAGE>
APPENDIX A
REVLON, INC.
SECOND AMENDED AND RESTATED 1996 STOCK PLAN
(Amended and Restated as of February 12, 1999)
GENERAL
1.1 Purpose. The purpose of this Second Amended and Restated 1996
Stock Plan (the "Plan") is to provide for certain officers, directors and key
employees of Revlon, Inc. ("Revlon" and, together with its subsidiaries, the
"Company") and certain of its Affiliates an incentive to maintain and enhance
the long-term performance and profitability of the Company. It is the further
purpose of the Plan to permit the granting of awards that will constitute
performance based compensation for certain executive officers, as described in
section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations promulgated thereunder.
1.2 Administration.
(a) The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of Revlon (the "Board"), which
committee shall consist of two or more directors. It is intended that the
directors appointed to serve on the Committee shall be "outside directors"
(within the meaning of Code section 162(m) and the Treasury Regulations
thereunder as may be in effect from time to time, and any amendments, revisions
or successor provisions thereto) to the extent Code section 162(m) is
applicable; however, the mere fact that a Committee member shall fail to
qualify under the foregoing requirements shall not invalidate any award made by
the Committee which award is otherwise validly made under the Plan. The members
of the Committee shall be appointed by, and may be changed at any time and from
time to time in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise
all of the powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and Plan agreements executed pursuant to Section 2.6, (iii)
to prescribe, amend and rescind rules and regulations relating to the Plan,
(iv) to make all determinations necessary or advisable in administering the
Plan, and (v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan.
(c) The determination of the Committee on all matters
relating to the Plan or any Plan agreement (as defined in Section 2.6) shall be
conclusive.
(d) No member of the Committee shall be liable for any Plan
Action (as defined in Section 3.2), including without limitation any action or
determination made in good faith with respect to the Plan or any Award
hereunder.
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1.3 Persons Eligible for Awards. Awards under the Plan may be made to
such officers, directors and executive, managerial or professional employees
("key personnel") of the Company or its Affiliates as the Committee shall in
its sole discretion select; provided, that officers and directors who are not
employees of either the Company or an Affiliate shall not be eligible to
receive Awards under the Plan.
1.4 Types of Awards Under Plan.
(a) Awards may be made under the Plan in the form of (i)
stock options ("options"), (ii) stock appreciation rights ("stock appreciation
rights") related to an option ("related stock appreciation rights"), (iii)
stock appreciation rights not related to any option ("unrelated stock
appreciation rights"), (iv) restricted stock awards, (v) unrestricted stock
awards and (vi) performance awards, all as more fully set forth in Article II
(collectively, "Awards").
(b) Options granted under the Plan may be either (i)
"nonqualified" stock options subject to the provisions of Code section 83 or
(ii) options intended to qualify for incentive stock option treatment described
in Code section 422.
(c) All options when granted are intended to be nonqualified
options, unless the applicable Plan agreement explicitly states that an option
is intended to be an incentive stock option. If an option is granted with the
stated intent that it be an incentive stock option, and if for any reason such
option (or any portion thereof) shall not qualify as an incentive stock option,
then, to the extent of such nonqualification, such option (or portion) shall be
regarded as a nonqualified option appropriately granted under the Plan provided
that such option (or portion) otherwise satisfies the terms and conditions of
the Plan relating to nonqualified options generally.
1.5 Shares Available for Awards.
(a) Subject to Section 3.5 (relating to adjustments upon
changes in capitalization), as of any date the total number of shares of Common
Stock with respect to which Awards may be granted shall be equal to the excess
(if any) of (i) 7,000,000 shares over (ii) the sum (without duplication) of (A)
the number of shares subject to outstanding options, outstanding unrelated
stock appreciation rights, outstanding restricted stock awards not vested
pursuant to the lapse of restrictions and outstanding performance awards as to
which the performance cycle has not expired, granted under the Plan, (B) the
number of shares previously issued pursuant to the exercise of options granted
under the Plan, (C) the number of shares subject to an option, restricted stock
award or performance award or part thereof which is canceled by the Committee
and for which cash is paid in respect thereof pursuant to Section 2.8(f), (D)
the number of shares in respect of which stock appreciation rights granted
under the Plan shall have previously been exercised, (E) the number of shares
previously vested pursuant to the lapse of restrictions under restricted stock
awards granted under the Plan, (F) the number of shares previously issued
pursuant to unrestricted stock awards, and (G) the number of shares previously
issued or issuable pursuant to performance units as to which the performance
cycle has expired. In accordance with (and without limitation upon) the
preceding sentence, if and to the extent an Award under the Plan expires,
terminates or is canceled for any reason whatsoever without the grantee having
received any benefit therefrom, the shares covered by such Award shall again
become available
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for future Awards under the Plan. For purposes of the foregoing sentence,
a grantee shall not be deemed to have received any "benefit" (i) in
the case of forfeited restricted stock awards by reason of having enjoyed
voting rights and dividend rights prior to the date of forfeiture or (ii) in
the case of an Award canceled pursuant to subsection (c) of this Section 1.5 by
reason of a new Award being granted in substitution therefor.
(b) Shares of Common Stock that shall be subject to issuance
pursuant to Awards made under the Plan shall be authorized and unissued or
treasury shares of Common Stock.
(c) Without limiting the generality of the preceding
provisions of this Section 1.5, the Committee may, but solely with the
grantee's consent, agree to cancel any Award under the Plan and issue a new
Award in substitution therefor upon such terms as the Committee may in its sole
discretion determine, provided that the substituted Award satisfies all
applicable Plan requirements as of the date such new Award is made.
(d) In any calendar year, a person eligible for Awards under
the Plan may not be granted options or stock appreciation rights covering in
the aggregate a total of more than 300,000 shares of Common Stock.
1.6 Definitions of Certain Terms.
(a) The term "Affiliate" as used herein means any person or
entity which, at the time of reference, directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, the Company.
(b) The term "Common Stock" as used herein means the shares
of Class A Common Stock of the Company as constituted on the effective date of
the Plan, and any other shares into which such Common Stock shall thereafter be
changed by reason of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like.
(c) Except as otherwise determined by the Committee, the term
"fair market value" as used herein as of any date and in respect of any share
of Common Stock shall mean, as determined by the Committee, either (i) the
closing price of a share of Common Stock as reported on the New York Stock
Exchange as of such date or (ii) the mean between the high and low sales prices
of a share of Common Stock as reported on the New York Stock Exchange as of
such date.
(d) In no event shall the fair market value of any share of
Common Stock, the option exercise price of any option, the appreciation base
per share of Common Stock under any stock appreciation right, or the amount
payable per share of Common Stock under any other Award, be less than the par
value per share of Common Stock.
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ARTICLE II.
STOCK OPTIONS;
STOCK APPRECIATION RIGHTS;
STOCK AWARDS; PERFORMANCE AWARDS
2.1 Grant of Stock Options. The Committee may grant options under the
Plan to purchase shares of Common Stock to such key personnel, in such amounts
and subject to such terms and conditions as the Committee shall from time to
time determine in its sole discretion, subject to the terms and provisions of
the Plan.
2.2 Grant of Stock Appreciation Rights.
(a) The Committee may grant a related stock appreciation
right in connection with all or any part of an option granted under the Plan,
either at the time such option is granted or at any time thereafter prior to
the exercise, termination or cancellation of such option, and subject to such
terms and conditions as the Committee shall from time to time determine in its
sole discretion, consistent with the terms and provisions of the Plan. The
grantee of a related stock appreciation right shall, subject to the terms and
conditions of the Plan and the applicable Plan agreement, thereby have the
right by exercise thereof to surrender to the Company for cancellation all or a
portion of such related stock appreciation right, but only to the extent that
the related option is then exercisable, and to be paid therefor an amount equal
to the excess (if any) of (i) the aggregate fair market value of the shares of
Common Stock subject to the related stock appreciation right or portion thereof
surrendered (determined as of the exercise date), over (ii) the aggregate
appreciation base (determined pursuant to Section 2.6(d)) of the shares of
Common Stock subject to the stock appreciation right or portion thereof
surrendered.
(b) The Committee may grant an unrelated stock appreciation
right to such key personnel, and in such amount and subject to such terms and
conditions, as the Committee shall from time to time determine in its sole
discretion, subject to the terms and provisions of the Plan. The grantee of an
unrelated stock appreciation right shall, subject to the terms and conditions
of the Plan and the applicable Plan agreement, have the right to surrender to
the Company for cancellation all or a portion of such stock appreciation right,
but only to the extent that such stock appreciation right is then exercisable,
and to be paid therefor an amount equal to the excess (if any) of (i) the
aggregate fair market value of the shares of Common Stock subject to the stock
appreciation right or portion thereof surrendered (determined as of the
exercise date), over (ii) the aggregate appreciation base (determined pursuant
to Section 2.6(d)) of the shares of Common Stock subject to the stock
appreciation right or portion thereof surrendered.
(c) Payment due to the grantee upon exercise of a stock
appreciation right shall be made (i) by check, (ii) in Common Stock (valued at
the fair market value thereof as of the date of exercise), or (iii) partly in
the manner provided in clause (i) and partly in the manner provided in clause
(ii), all as determined by the Committee in its sole discretion. If the
Committee shall determine to make all of such payments in Common Stock, no
fractional shares shall be issued and no payments shall be made in lieu of
fractional shares.
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(d) The grant or exercisability of any stock appreciation
right may be subject to such conditions as the Committee, in its sole
discretion, shall determine, including a change of ownership or control of the
Company or an Affiliate. A stock appreciation right may be deemed to be
automatically exercised upon the occurrence of such events or conditions as may
be determined by the Committee in an applicable Plan agreement.
2.3 Special ISO Requirements. In order for a grantee to receive
special tax treatment with respect to stock acquired under an option granted as
an incentive stock option, the grantee of such option must be, at all times
during the period beginning on the date of grant and ending on the day three
months before the date of exercise of such option, an employee of the Company
or any of the Company's parent corporations (within the meaning of Code section
424), or of a corporation or a parent or subsidiary corporation of such
corporation issuing or assuming a stock option in a transaction in which Code
section 424(a) applies. If an option granted under the Plan is intended to be
an incentive stock option, and if the grantee, at the time of grant, owns stock
possessing 10 percent or more of the total combined voting power of all classes
of stock of the grantee's employer corporation or of its parent or subsidiary
corporation, then (i) the option exercise price per share shall in no event be
less than 110% of the fair market value of the Common Stock on the date of such
grant and (ii) such option shall not be exercisable after the expiration of
five years after the date such option is granted.
2.4 Restricted and Unrestricted Stock Awards.
(a) The Committee may grant restricted stock awards, alone or
in tandem with other Awards under the Plan, to such key personnel, and subject
to such restrictions, terms and conditions, as the Committee shall determine in
its sole discretion and as shall be evidenced by the applicable Plan
agreements. The vesting of a restricted stock award granted under the Plan may
be conditioned upon the completion of a specified period of employment with the
Company or any Affiliate, upon the attainment of specified performance goals,
and/or upon such other criteria as the Committee may determine in its sole
discretion.
(b) The Committee may grant unrestricted stock awards, alone
or in tandem with other Awards under the Plan, to such key personnel and
subject to such terms and conditions as the Committee shall determine in its
sole discretion and as shall be evidenced by the applicable Plan agreements.
(c) Each Plan agreement with respect to a restricted stock
award shall set forth the amount (if any) to be paid by the grantee with
respect to such Award and when or in what circumstances such payment is
required to be made. If a grantee made any payment for a restricted stock award
or portion thereof which does not vest, appropriate payment shall be made to
the grantee upon or following such forfeiture if and on such terms and
conditions as the Committee may determine.
(d) The Committee may provide that a certificate or
certificates representing the shares underlying a restricted stock award shall
be registered in the grantee's name and bear
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an appropriate legend specifying that such shares are not transferable and are
subject to the provisions of the Plan and the restrictions, terms and
conditions set forth in the applicable Plan agreement, or that such certificate
or certificates shall be held in escrow by the Company on behalf of the grantee
until such shares become vested or are forfeited, all on such terms and
conditions as the Committee may determine. Except as the applicable Plan
agreement may otherwise provide, no shares underlying a restricted stock award
may be assigned, transferred, or otherwise encumbered or disposed of by the
grantee until such shares have vested in accordance with the terms of such
Award. Subject to the provisions of Section 3.2, as soon as practicable after
any restricted stock award shall vest, the Company shall issue or reissue to
the grantee (or to the grantee's designated beneficiary in the event of the
grantee's death) a certificate or certificates for the Common Stock underlying
such restricted stock award without such restrictive legend.
(e) If and to the extent that the applicable Plan agreement
may so provide, a grantee shall have the right to vote and receive dividends on
the shares underlying a restricted stock award granted under the Plan. Unless
otherwise provided in the applicable Plan agreement, any stock received as a
dividend on, or in connection with a stock split of, the shares underlying a
restricted stock award shall be subject to the same restrictions as the shares
underlying such restricted stock award.
(f) Subject to Section 3.5 (relating to adjustments upon
changes in capitalization), as of any date the total number of shares of Common
Stock with respect to which restricted and unrestricted stock awards may be
granted pursuant to this Section 2.4 shall not exceed (i) 1,000,000 shares less
(ii) the sum (without duplication) of (A) the number of shares subject to
outstanding restricted stock awards or parts thereof not vested pursuant to the
lapse of restrictions, (B) the number of shares subject to restricted stock
awards or parts thereof which are canceled by the Committee and for which cash
is paid in respect thereof pursuant to Section 2.8(f), (C) the number of shares
subject to restricted stock awards which have vested pursuant to the lapse of
restrictions and (D) the number of shares subject to unrestricted stock awards,
plus (iii) the number of shares subject to restricted stock awards or parts
thereof not vested pursuant to the lapse of restrictions which are canceled
without payment of cash or other consideration in connection with termination
of the grantee's employment or otherwise.
(g) In the event that the Committee grants a stock award that
is intended to constitute qualified performance-based compensation within the
meaning of Code section 162(m), the following rules shall apply (as such rules
may be modified by the Committee to conform with Code section 162(m) and the
Treasury Regulations thereunder as may be in effect from time to time, and any
amendments, revisions or successor provisions thereto): (i) payments under the
stock award shall be made solely on account of the attainment of one or more
objective performance goals established in writing by the Committee not later
than 90 days after the commencement of the period of service to which the stock
award relates (or if less, 25% of such period of service); (ii) the performance
goal(s) to which the stock award relates shall be based on one or more of the
following business criteria applied to the grantee, a business unit or the
Company and/or an Affiliate: stock price, market share, sales, earnings per
share, return on
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equity, assets, capital or investment, net income, operating income, operating
income before restructuring charges, plus depreciation and amortization other
than relating to early extinguishment of debt and debt issuance costs, net
sales growth, expense targets, working capital targets relating to inventory
and/or accounts receivable, operating margin, planning accuracy (as measured by
comparing planned results to actual results), and implementation or completion
of critical projects or processes; (iii) in any year, a grantee may not be
granted stock awards covering a total of more than 100,000 shares of Common
Stock pursuant to this Section 2.4; and (iv) once granted, the Committee may
not have discretion to increase the amount payable under such stock award,
provided, however, that whether or not a stock award is intended to constitute
qualified performance-based compensation within the meaning of Code section
162(m), the Committee shall make appropriate adjustments in performance goals
under an Award to reflect the impact of extraordinary items not reflected in
such goals. For purposes of the Plan, extraordinary items shall be defined as
(1) any profit or loss attributable to acquisitions or dispositions of stock or
assets, (2) any changes in accounting standards that may be required or
permitted by the Financial Accounting Standards Board or adopted by the Company
after the goal is established, (3) all items of gain, loss or expense for the
year related to restructuring charges for the Company, (4) all items of gain,
loss or expense for the year determined to be extraordinary or unusual in
nature or infrequent in occurrence or related to the disposal of a segment of a
business all determined in accordance with standards established by Opinion No.
30 of the Accounting Principles Board (APB Opinion No. 30), (5) all items of
gain, loss or expense for the year related to discontinued operations that do
not qualify as a segment of a business as defined in APB Opinion No. 30, and
(6) such other items as may be prescribed by Code section 162(m) and the
Treasury Regulations thereunder as may be in effect from time to time, and any
amendments, revisions or successor provisions and any changes thereto. The
Committee shall, prior to making any award under this Section 2.4(g), certify
in writing that all applicable performance goals have been attained.
2.5 Performance Awards.
(a) The Committee may grant performance awards, alone or in
tandem with other Awards under the Plan, to acquire shares of Common Stock to
such key personnel and in such amounts and subject to such terms and conditions
as the Committee shall from time to time in its sole discretion determine,
subject to the terms of the Plan.
(b) Each performance award under the Plan shall relate to a
specified maximum number of shares, and shall be exchangeable for all or a
portion of such shares, or for cash (or such other form of consideration as may
be determined by the Committee equivalent in value thereto) in up to an amount
equal to the fair market value of an equal number of unrestricted shares, at
the end of such specified period (a "performance cycle") as may be established
by the Committee. The number of such shares which may be deliverable pursuant
to such performance award shall be based upon the degree of attainment over
such performance cycle of such measure of the performance of the Company, an
Affiliate, one or more of its or their respective divisions or other business
units, or the grantee, all as may be established by the Committee. The
Committee may make such provision in the Plan agreement for full or partial
credit, prior to completion of such performance cycle or achievement of the
degree of attainment
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of the measures of performance specified in connection with such performance
award, in the event of the participant's death, retirement or disability, or in
such other circumstances, as the Committee in its sole discretion may determine
to be fair and equitable to the participant or in the interest of the Company.
(c) In the event that the Committee grants a performance
award that is intended to constitute qualified performance-based compensation
within the meaning of Code section 162(m), the following rules shall apply (as
such rules may be modified by the Committee to conform with Code section 162(m)
and the Treasury Regulations thereunder as may be in effect from time to time,
and any amendments, revisions or successor provisions, and any changes
thereto): (i) payments under the performance award shall be made solely on
account of the attainment of one or more objective performance goals
established in writing by the Committee not later than 90 days after the
commencement of the period of service to which the performance award relates
(or if less, 25% of such period of service); (ii) the performance goal(s) to
which the performance award relates shall be based on one or more of the
following business criteria applied to the grantee, a business unit or the
Company and/or an Affiliate: stock price, market share, sales, earnings per
share, return on equity, assets, capital or investment, net income, operating
income, operating income before restructuring charges, plus depreciation and
amortization other than relating to early extinguishment of debt and debt
issuance costs, net sales growth, expense targets, working capital targets
relating to inventory and/or accounts receivable, operating margin, planning
accuracy (as measured by comparing planned results to actual results), and
implementation or completion of critical projects or processes; (iii) in any
year, a grantee may not be granted performance awards covering a total of more
than 100,000 shares of Common Stock pursuant to this Section 2.5; and (iv) once
granted, the Committee may not have discretion to increase the amount payable
under such performance award, provided, however, that whether or not a
performance award is intended to constitute qualified performance-based
compensation within the meaning of Code section 162(m), the Committee shall
make appropriate adjustments in performance goals under an Award to reflect the
impact of extraordinary items not reflected in such goals. For purposes of the
Plan, extraordinary items shall be defined as (1) any profit or loss
attributable to acquisitions or dispositions of stock or assets, (2) any
changes in accounting standards that may be required or permitted the Financial
Accounting Standards Board or adopted by the Company after the goal is
established, (3) all items of gain, loss or expense for the year related to
restructuring charges for the Company (4) all items of gain, loss or expense
for the year determined to be extraordinary or unusual in nature or infrequent
in occurrence or related to the disposal of a segment of a business all
determined in accordance with standards established by Opinion No. 30 of the
Accounting Principles Board (APB Opinion No. 30), (5) all items of gain, loss
or expense for the year related to discontinued operations that do not qualify
as a segment of a business as defined in APB Opinion No. 30, and (6) such other
items as may be prescribed by Code section 162(m) and the Treasury Regulations
thereunder as may be in effect from time to time, and any amendments, revisions
or successor provisions and any changes thereto. The Committee shall, prior to
making any award under this Section 2.5(c), certify in writing that all
applicable performance goals have been attained.
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2.6 Agreements Evidencing Awards.
(a) Awards granted under the Plan shall be evidenced by
written agreements ("Plan agreements") which shall contain such provisions not
inconsistent with the terms and provisions of the Plan as the Committee may in
its sole discretion deem necessary or desirable.
(b) Each Plan agreement with respect to the granting of an
Award other than a related stock appreciation right shall set forth the number
of shares of Common Stock subject to the Award granted thereby. Each Plan
agreement with respect to the granting of a related stock appreciation right
shall set forth the number of shares of Common Stock subject to the related
option which shall also be subject to the related stock appreciation right
granted thereby.
(c) Each Plan agreement with respect to the granting of an
option shall set forth the amount (the "option exercise price") payable by the
grantee to the Company in connection with the exercise of the option evidenced
thereby. The option exercise price per share shall in no event be less than
100% of the fair market value of a share of Common Stock on the date the option
is granted.
(d) Each Plan agreement with respect to a stock appreciation
right shall set forth the amount (the "appreciation base") over which
appreciation will be measured upon exercise of the stock appreciation right
evidenced thereby. The appreciation base per share of Common Stock subject to
an unrelated stock appreciation right shall in no event be less than 100% of
the fair market value of a share of Common Stock on the date the stock
appreciation right is granted. The appreciation base per share of Common Stock
subject to a related stock appreciation right shall in all cases be the option
exercise price per share of Common Stock subject to the related option.
2.7 Exercise of Related Stock Appreciation Right Reduces Shares
Subject to Option. Upon any exercise of a related stock appreciation right or
any portion thereof, the number of shares of Common Stock subject to the
related option shall be reduced by the number of shares of Common Stock in
respect of which such stock appreciation right shall have been exercised.
2.8 Exercisability of Options, Stock Appreciation Rights and Other
Awards; Cancellation of Awards in Certain Cases. Subject to the other
provisions of the Plan:
(a) Except as hereinafter provided, each Plan agreement with
respect to an option or stock appreciation right shall set forth the period
during which and the conditions subject to which the option or stock
appreciation right evidenced thereby shall be exercisable, and each Plan
agreement with respect to a restricted stock award or performance award shall
set forth the period after which and the conditions subject to which the shares
underlying such Award shall vest or be deliverable, all such periods and
conditions to be determined by the Committee in its sole discretion. Unless the
applicable Plan agreement otherwise specifies: no option or stock appreciation
right shall be exercisable prior to the first anniversary of the date of grant,
and each option or stock appreciation right granted under the Plan shall become
cumulatively exercisable with respect to 25% of the shares of Common Stock
subject thereto, rounded down to the next lower full share, on the first
anniversary of the date of grant, and with respect to an additional 25% of the
shares of Common Stock subject thereto,
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rounded down to the next lower full share, on each of the second and third
anniversaries of the date of grant, and shall become 100% exercisable on the
fourth anniversary of the date of grant, and shall remain 100% exercisable
until the day prior to the tenth anniversary of the date of grant and shall
terminate and cease to be exercisable on the tenth anniversary of the date of
grant.
(b) Except as provided in Section 2.10(e), no option or stock
appreciation right may be exercised and no shares of Common Stock underlying
any other Award under the Plan may vest or become deliverable more than 10
years after the date of grant.
(c) Unless the applicable Plan agreement otherwise provides,
a related stock appreciation right shall be exercisable at any time during the
period that the related option may be exercised.
(d) Unless the applicable Plan agreement otherwise provides,
an option or stock appreciation right granted under the Plan may be exercised
from time to time as to all or part of the full number of shares as to which
such option or stock appreciation right shall then be exercisable.
(e) An option or stock appreciation right shall be
exercisable by the filing of a written notice of exercise with the Company, on
such form and in such manner as the Committee shall in its sole discretion
prescribe, and by payment in accordance with Section 2.9.
(f) Unless the applicable Plan agreement otherwise provides:
in the case of an option or stock appreciation right, at any time after the
Company's receipt of written notice of exercise of an option or stock
appreciation right and prior to the option or stock appreciation right exercise
date (as defined in subsection (g) of this Section 2.8), and in the case of a
stock award or performance award, at any time within the six business days
immediately preceding the otherwise applicable date on which the previously
restricted stock award or performance award would otherwise have become
unconditionally vested or the shares subject thereto unconditionally
deliverable, the Committee, in its sole discretion, shall have the right, by
written notice to the grantee, to cancel such Award or any part thereof if the
Committee, in its sole judgment, determines that legal or contractual
restrictions and/or blockage and/or other market considerations would make the
Company's acquisition of Common Stock from, and/or the grantee's sale of Common
Stock to, the public markets illegal, impracticable or inadvisable. If the
Committee determines to cancel all or any part of an Award, the Company shall
pay to the grantee an amount equal to the excess of (i) the aggregate fair
market value of the shares of Common Stock subject to the Award or part thereof
canceled (determined as of the option or stock appreciation right exercise
date, or the date that shares would have been unconditionally vested or
delivered in the case of a stock award or performance award), over (ii) the
aggregate option exercise price or appreciation base of the option or stock
appreciation right or part thereof canceled (in the case of an option or stock
appreciation right) or any amount payable as a condition of delivery of shares
(in the
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case of a stock award or performance award). Such amount shall be delivered to
the grantee as soon as practicable after such Award or part thereof is
canceled.
(g) Unless the applicable Plan agreement otherwise provides,
the "option exercise date" and the "stock appreciation right exercise date"
shall be the date that written notice of exercise, together with payment, are
received by the Company; provided that if subsection (f) of this Section 2.8 is
applicable, the option exercise date or stock appreciation right exercise date
shall be the later of: (i) the sixth business day following the date written
notice of exercise is received by the Company; and (ii) the date when payment
is received by the Company.
2.9 Payment of Award Price.
(a) Unless the applicable Plan agreement otherwise provides
or the Committee in its sole discretion otherwise determines, any written
notice of exercise of an option or stock appreciation right must be accompanied
by payment of the full option or stock appreciation exercise price. If Section
2.8(g) applies, and the six business day delay for the option exercise date or
stock appreciation right exercise date is applied, the grantee shall have no
right to pay the option or stock appreciation right exercise price or to
receive Common Stock with respect to the option or stock appreciation right
exercise prior to the lapse of such six business days.
(b) Payment of the option exercise price and of any other
payment required by the Plan agreement to be made pursuant to any other Award
shall be made in any combination of the following: (i) by certified or official
bank check payable to the Company (or the equivalent thereof acceptable to the
Committee); (ii) with the consent of the Committee in its sole discretion, by
personal check (subject to collection) which may in the Committee's discretion
be deemed conditional; and/or (iii) unless otherwise provided in the applicable
Plan agreement, by delivery of previously-acquired shares of Common Stock owned
by the grantee for at least six months (or such longer or shorter period as the
Committee may in its discretion determine that will not result in variable
accounting treatment) having a fair market value (determined as of the option
exercise date, in the case of options, or other relevant payment date as
determined by the Committee, in the case of other Awards) equal to the portion
of the exercise price being paid thereby, provided that the Committee may
require, as a condition of accepting any such delivery of shares of Common
Stock, that the grantee furnish an opinion of counsel acceptable to the Company
to the effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act and does not require any Consent (as
defined in Section 3.2) (a "Compliance Opinion"). Payment in accordance with
clause (i) of this Section 2.9(b) may be deemed to be satisfied, if and to the
extent that the applicable Plan agreement so provides or the Committee permits,
by delivery to the Company of an assignment of a sufficient amount of the
proceeds from the sale of Common Stock to be acquired pursuant to the Award to
pay for all of the Common Stock to be acquired pursuant to the Award and an
authorization to the broker or selling agent to pay that amount to the Company
and to effect such sale at the time of exercise or other delivery of shares of
Common Stock, provided that the Committee may require, as a
11
<PAGE>
condition of accepting any such payment, that the grantee furnish a Compliance
Opinion. In the case of payment made in accordance with clause (iii) of this
Section 2.9(b) or clause (ii) of Section 3.4(b), if (A) the person paying the
option exercise price or other payment required by a Plan agreement is the
grantee of the Award and is actively employed on the exercise date and (B) all
or any portion of the previously-acquired shares of Common Stock so delivered
in payment were acquired by the grantee upon exercise of an option or stock
appreciation right, then, if and to the extent that the applicable Plan
agreement so provides or the Committee in its sole discretion so determines,
the grantee shall be granted a replacement option on the option exercise date
or other payment date to purchase a number of shares of Common Stock equal to
the number of shares so delivered in payment, at an exercise price equal to the
fair market value of the Common Stock on the exercise date and upon such other
terms, conditions and restrictions (which may be the same as or different than
the terms, conditions and restrictions of the Award so exercised) as the
Committee may determine and set forth in the Plan agreement evidencing such
replacement option. As soon as practicable after receipt of full payment, the
Company shall, subject to the provisions of Sections 2.8(f) and 3.2, deliver to
the grantee a certificate or certificates for the shares of Common Stock
deliverable pursuant to such Award, which certificate or certificates may bear
such legends as the Company may deem appropriate concerning restrictions on
their disposition in accordance with applicable federal and state securities
laws, rules and regulations or otherwise.
(c) Notwithstanding any other provision of this Plan or the
applicable Plan agreement, no grantee shall, directly or indirectly, sell any
shares of Common Stock unless (i) such grantee owns the shares to be sold or
has exercised an Award with respect thereto and the shares to be sold are
immediately issuable to the grantee pursuant to such exercise (subject to
Section 2.8(g) if applicable) and (ii) such grantee delivers such shares in
settlement in accordance with all settlement rules applicable to such
transaction.
2.10 Termination of Employment.
(a) The following "default rules" set forth in this Section
2.10 shall govern the exercisability of options and the continuation of other
Awards following termination of employment of a grantee with the Company and
its Affiliates except where: (i) other provisions of the Plan specify a
different rule (e.g., Section 3.11 dealing with early termination of an option
following certain corporate events); or (ii) the Plan agreement provides for a
different rule (as specified by the Committee pursuant to its authority under
the Plan).
(b) Upon termination of a grantee's employment with the
Company and its Affiliates (i) by the Company or its Affiliate either for (A)
"good reason" as defined in the Revlon Executive Severance Policy as in effect
on the date of adoption of this Plan or (B) "good reason", "cause" or any like
term as defined under any employment agreement to which a grantee may be a
party or (ii) by a grantee otherwise than either for (A) "good reason", "cause"
or any like term as defined under any employment agreement to which a grantee
may be a party or (B) the reasons described in subsection (d) or (e) hereof,
all outstanding options and stock appreciation rights granted to such grantee
shall cease to be
12
<PAGE>
exercisable, and such grantee may not satisfy any condition or limitation which
is unsatisfied (and no additional portion shall otherwise become vested) under
any other outstanding Award, following the date of such termination of
employment, and all outstanding Awards held by such grantee shall in all
respects automatically be canceled on the date of such termination of
employment.
(c) Upon termination of a grantee's employment with the
Company and its Affiliates for any reason other than as described in subsection
(b), (d) or (e) hereof, the portions of outstanding options and stock
appreciation rights granted to such grantee that are exercisable as of the date
of termination of employment of such grantee may continue to be exercised, and
any payment or notice provided for under the terms of any other outstanding
Award as respects the portion thereof vested as of the date of termination of
employment may be given, for a period of one year from and including the date
of termination of employment, but no additional portions of outstanding options
or stock appreciation rights granted to such grantee shall become exercisable,
and such grantee may not satisfy any condition or limitation which is
unsatisfied (and no additional portion shall otherwise become vested) under any
other outstanding Award, following the date of such termination of employment,
and such unexercisable Awards or parts thereof shall in all respects
automatically be canceled on the date of such termination of employment.
(d) If the grantee voluntarily retires with the consent of
the grantee's employer or the grantee's employment terminates due to permanent
disability, all outstanding options and stock appreciation rights granted to
such grantee shall continue to become exercisable, all other outstanding Awards
granted to such grantee shall continue to vest, and the grantee shall be
entitled to continue satisfying any performance or other condition under all
other Awards, in each case in accordance with the terms of the applicable Plan
agreements, and the grantee shall be entitled to exercise each such option or
stock appreciation right and to make any payment, give any notice and satisfy
any performance or other condition under each such other Award, in each case,
for a period of one year from and including (x) the date on which all portions
of the Award first become fully exercisable or vested or capable of being
satisfied, as the case may be, or (y) the date of termination of employment or
retirement, whichever of (x) or (y) occurs last, and thereafter such Awards or
parts thereof shall be canceled. Notwithstanding the foregoing, the Committee
may in its sole discretion provide for a longer or shorter period for exercise
of an option or stock appreciation right or may permit a grantee to continue
vesting under an option, stock appreciation right or restricted stock award or
to make any payment, give any notice and continue satisfying any performance or
other condition under any other Award in the case of a grantee whose employment
terminates solely because such grantee's employer ceases to be an Affiliate of
the Company or a grantee who transfers employment with the Company's consent to
a purchaser of a business disposed of by the Company. The Committee may in its
sole discretion determine (i) whether any termination of employment is a
voluntary retirement with employer consent or is due to permanent disability
for purposes of the Plan, (ii) whether any leave of absence (including any
short-term or long-term disability or medical leave) constitutes a termination
of employment within the meaning of the Plan, (iii) the applicable date of any
such termination of employment, and (iv) the impact, if any, of any of the
foregoing on Awards under the Plan.
13
<PAGE>
(e) If the grantee's employment terminates by reason of
death, or if the grantee's employment terminates under circumstances providing
for continued rights under subsection (c) or (d) of this Section 2.10 and
during the period of continued rights described in subsection (c) or (d) the
grantee dies, all outstanding options and stock appreciation rights granted to
such grantee shall become fully exercisable, and any payment or notice provided
for under the terms of any other outstanding Award may be immediately paid or
given and any condition may be satisfied, by the person to whom such rights
have passed under the grantee's will (or if applicable, pursuant to the laws of
descent and distribution) for a period of one year from and including the date
of the grantee's death (notwithstanding that such period may extend more than
10 years after the grant of the Award) and thereafter all such Awards or parts
thereof shall be canceled.
MISCELLANEOUS
3.1 Amendment of the Plan; Modification of Awards
(a) The Board may, without shareholder approval, at any time
and from time to time suspend or discontinue the Plan or revise or amend it in
any respect whatsoever, except that no such amendment shall impair any rights
under any Award theretofore made under the Plan without the consent of the
person to whom such Award was made. Furthermore, except as and to the extent
otherwise permitted by Section 3.5 or 3.11, no such amendment shall, without
shareholder approval:
(i) materially increase the benefits accruing
to grantees under the Plan;
(ii) materially increase the number of shares
of Common Stock in respect of which Awards
may be issued under the Plan pursuant to
Section 1.5 or pursuant to grants of
restricted or unrestricted stock awards
pursuant to Section 2.4, or increase the
number of shares of Common Stock in respect
of which Awards may be granted in any year
under Section 1.5 or 2.5;
(iii) materially modify the designation in
Section 1.3 of the class of persons
eligible to receive Awards under the Plan;
(iv) except as provided in Section 2.10(e),
permit a stock option or unrelated stock
appreciation right to be exercisable, or
shares of Common Stock underlying any other
Award to vest or become deliverable, more
than 10 years after the date of grant;
(v) permit a stock option to have an option
exercise price, or a stock appreciation
right to have an appreciation base, of
less than
14
<PAGE>
100% of the fair market value of a share
of Common Stock on the date the stock
option or stock appreciation right is
granted; or
(vi) extend the term of the Plan beyond the
period set forth in Section 3.14.
(b) With the consent of the grantee (unless otherwise
provided in the Plan or the applicable Plan agreement) and subject to the terms
and conditions of the Plan (including Section 3.1(a)), the Committee may amend
outstanding Plan agreements with such grantee, including, without limitation,
any amendment which would (i) accelerate the time or times at which an Award
may vest or be exercised and/or (ii) extend the scheduled expiration date of
the Award.
3.2 Restrictions.
(a) If the Committee shall at any time determine that any
Consent (as hereinafter defined) is necessary or desirable as a condition of,
or in connection with, the granting of any Award under the Plan, the
acquisition, issuance or purchase of shares or other rights thereunder, any
determination regarding vesting or termination of any Award or satisfaction of
any performance or other condition thereunder or the taking of any other action
thereunder (each such action being hereinafter referred to as a "Plan Action"),
then such Plan Action shall not be required to be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the full
satisfaction of the Committee. Without limiting the generality of the
foregoing, in the event that (i) the Committee shall be entitled under the Plan
to make any payment in cash, Common Stock or both, and (ii) the Committee shall
determine that Consent is necessary or desirable as a condition of, or in
connection with, payment in any one or more of such forms, then the Committee
shall be entitled to determine not to make any payment whatsoever until such
Consent shall have been obtained in the manner aforesaid.
(b) The term "Consent" as used herein with respect to any
Plan Action means (i) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or other self-regulatory
organization or under any federal, state, local or foreign law, rule or
regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state, local or
foreign law, rule or regulation or the rules of any securities exchange or
other self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies or any parties to any loan agreements or other
contractual obligations of the Company or any of its Affiliates.
15
<PAGE>
3.3 Nontransferability.
(a) No Award granted to any grantee under the Plan and no
rights under any Plan agreement shall be assignable or transferable by the
grantee (voluntarily or by operation of law) other than by will or by the laws
of descent and distribution to the extent provided by the Plan and any
applicable Plan agreement. During the lifetime of the grantee, all rights with
respect to any Award granted to the grantee under the Plan or under any Plan
agreement shall be exercisable only by such grantee.
(b) Notwithstanding Section 3.3(a), the Committee may in the
applicable Plan Agreement or at any time thereafter provide that options
granted hereunder which are not intended to qualify as incentive stock options
under Code section 422 may be transferred without consideration by the grantee,
subject to such rules as the Committee may adopt to preserve the purposes of
the Plan, to:
(i) the grantee's spouse, children or grandchildren
(including adopted and stepchildren and
grandchildren) (collectively, the "Immediate
Family");
(ii) a trust solely for the benefit of the grantee and
or members of his or her Immediate Family; or
(iii) a partnership or limited liability company whose
only partners or shareholders are the grantee
and/or members of his or her Immediate Family
members.
(each transferee described in clauses (i), (ii) and (iii)
above is hereinafter referred to as a "Permitted
Transferee"); provided that the grantee provides the
Committee with advance written notice describing the
terms and conditions of the proposed transfer and the
Committee notifies the grantee in writing that such a
transfer would comply with the requirements of the Plan
and any applicable Plan Agreement; and provided further
that with respect to options granted to officers and
directors subject to the reporting requirements of
Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") no such options may be
transferred within six months of the grant date to the
extent such transfer would result in the grant of the
option being deemed to constitute a non-exempt purchase
under Section 16 of the Exchange Act. The terms of any
such transferred option shall apply to the Permitted
Transferee, except that (a) Permitted Transferees shall
not be entitled to transfer any options, other than by
will or the laws of descent and distribution; and (b)
Permitted Transferees shall not be entitled to exercise
any transferred options unless there shall be in effect a
registration statement on an appropriate form under the
Securities Act of 1933, as amended, covering the shares
to be acquired pursuant to the exercise of such option if
the Committee determines that such a registration
16
<PAGE>
statement is necessary or appropriate. Upon notice from a
Permitted Transferee of its intent to exercise an option,
the Committee shall advise such Permitted Transferee if a
registration statement is necessary and if so whether
such registration statement is in effect.
3.4 Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to be
delivered upon exercise of an option or stock appreciation right, upon the
lapse of restrictions on restricted stock awards, pursuant to performance
awards or otherwise, the Committee shall be entitled to require as a condition
of delivery that the grantee remit an amount sufficient to satisfy all federal,
state and other governmental withholding tax requirements related thereto.
Whenever cash is to be paid to a grantee under the Plan (whether upon the
exercise or cancellation of an Award or otherwise), the Company shall be
entitled as a condition of its payment to deduct therefrom, or from any
compensation, expense reimbursement or other payments due to the grantee, an
amount sufficient to satisfy all federal, state and other governmental
withholding tax and like requirements related thereto or to the delivery of any
shares of Common Stock under the Plan.
(b) A grantee may satisfy, in whole or in part, the foregoing
withholding requirements by delivery of unrestricted shares of Common Stock
owned by the grantee for at least six months (or such shorter or longer period
as the Committee may approve or require that will not result in variable
accounting treatment) having a fair market value (determined as of the date of
such delivery by the grantee) equal to the amount otherwise payable. Without
limiting the generality of the foregoing: (i) the Committee may require, as a
condition of accepting any such delivery of shares of Common Stock, that the
grantee furnish a Compliance Opinion and (ii) such delivery may be made by
withholding shares of Common Stock from the shares otherwise issuable pursuant
to the exercise of the Award giving rise to the tax withholding obligation (in
which event the date of delivery shall be deemed the date the Award was
exercised).
3.5 Adjustments Upon Changes in Capitalization. If and to the extent
specified by the Committee, the number of shares of Common Stock which may be
issued under the Plan, the number of shares of Common Stock subject to or
underlying options, unrelated stock appreciation rights, and restricted stock
awards and performance awards theretofore granted under the Plan, any annual or
other limitation on the number of shares with respect to which Awards may be
granted, and the option exercise price of options, the appreciation base of
stock appreciation rights and any payments due with respect to other Awards
theretofore granted under the Plan, may be appropriately adjusted (as the
Committee may determine) for any increase or decrease in the number of issued
shares of Common Stock resulting from the subdivision or combination of shares
of Common Stock or other capital adjustments, or the payment of a stock
dividend after the effective date of the Plan, or other increase or decrease in
such shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that any options, unrelated stock appreciation
rights, restricted stock awards or performance awards, to the extent covering
fractional shares of Common Stock resulting from any such adjustment, shall be
eliminated and terminated, and provided further, that each incentive stock
option granted under the Plan shall not be adjusted in a manner that causes
such option to fail to
17
<PAGE>
continue to qualify as an "incentive stock option" within the meaning of Code
section 422. Adjustments under this Section shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive.
3.6 Right of Discharge Reserved. Nothing in the Plan or in any Plan
agreement shall confer upon any officer, director, employee or other person the
right to continue in the employment of the Company or any of its Affiliates or
affect any right which the Company or any of its Affiliates may have to
terminate the employment of such officer, director, employee or other person.
3.7 No Rights as a Stockholder. No grantee or other person exercising
an option or stock appreciation right or entitled to delivery of shares of
Common Stock pursuant to any other Award shall have any of the rights of a
stockholder of the Company with respect to shares subject to an option or stock
appreciation right or shares deliverable upon exercise of any other Award until
the issuance of a stock certificate to such person for such shares. Except as
otherwise provided in Section 3.5, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether
in cash, securities or other property) for which the record date is prior to
the date such stock certificate is registered in the name of the grantee. In
the case of a grantee of a restricted stock award, the grantee shall have the
rights of a stockholder of the Company if and only to the extent provided in
the applicable Plan agreement.
3.8 Nature of Payments.
(a) Any and all grants of options, stock appreciation rights,
stock awards and performance awards and payments of cash or issuances of shares
of Common Stock hereunder shall be granted, issued, delivered or paid, as the
case may be, in consideration of services performed for the Company or for its
Affiliates by the grantee.
(b) All such grants, issuances and payments shall constitute
a special incentive payment to the grantee and shall not, unless otherwise
determined by the Committee, be taken into account in calculating the amount of
compensation of the grantee for the purposes of determining any pension,
retirement, death or other benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate or (ii) any
agreement between the Company or any Affiliate, on the one hand, and the
grantee on the other hand.
(c) By accepting an Award under the Plan, the grantee shall
thereby be understood to have waived any claim to continued exercise or vesting
of an Award or to damages or severance entitlement related to non-continuation
of the Award beyond the period provided herein or in the applicable Plan
agreement, notwithstanding any contrary provision in any written employment
contract or other agreement with the grantee, whether any such agreement is
executed before or after the grant date of the Award.
18
<PAGE>
3.9 Non-Uniform Determinations. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons
who receive, or are eligible to receive, Awards under the Plan (whether or not
such persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Plan agreements, as to (a) the persons to receive Awards under the
Plan, (b) the terms and provisions of Awards under the Plan, (c) the exercise
by the Committee of its discretion in respect of the exercise of rights
pursuant to the terms of the Plan or any Plan agreement, and (d) the treatment
of leaves of absences, disability leaves, terminations for good reason and
other determinations under the Plan or any Plan agreement.
3.10 Other Payments or Awards. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Company, any Affiliate or the
Committee from making any award or payment or granting any right to any person
under any other plan, arrangement or understanding, whether now existing or
hereafter in effect.
3.11 Reorganization.
(a) In the event that Revlon or any successor is merged or
consolidated with another corporation and, whether or not Revlon or such
successor shall be the surviving corporation, there shall be any change in the
shares of Common Stock as then constituted by reason of such merger or
consolidation, or in the event that all or substantially all of the assets of
the Company are acquired by another person, or in the event of a reorganization
or liquidation of Revlon or any successor (each such event being herein after
referred to as a "Reorganization Event") or in the event that the Board shall
propose that Revlon or any successor enter into a Reorganization Event, then
the Committee may in its discretion, by written notice to a grantee, provide
that such grantee's options and stock appreciation rights and all other Awards
requiring action on the part of such grantee will be terminated unless such
grantee exercises or takes such action within 30 days (or such longer period as
the Committee shall determine in its sole discretion) after the date of such
notice; provided however that if the Committee takes such action the Committee
also shall accelerate to an appropriate earlier date the dates upon which all
outstanding options and stock appreciation rights of such grantee shall be
exercisable and such action under such other Awards may be taken. The Committee
also may in its discretion, by written notice to a grantee, provide that the
restrictions on restricted stock awards lapse and the performance and other
conditions of other Awards shall be adjusted in the event of a Reorganization
Event upon such terms and conditions as the Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions
referred to in Section 3.11(a) may be made conditional upon the consummation of
the applicable Reorganization Event.
3.12 Legend on Certificates. All certificates for shares of Common
Stock issued pursuant to Awards hereunder may be stamped or otherwise imprinted
with a legend in such form as the Company may require with respect to any
applicable restrictions on the sale or transfer of shares.
19
<PAGE>
3.13 Section Headings. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
3.14 Effective Date and Term of Plan.
(a) This Plan shall be deemed adopted and become effective
upon the approval thereof by the Board; provided that, notwithstanding any
other provision of the Plan, no Award made under the Plan shall be exercisable
unless the Plan is approved, directly or indirectly, by the express consent of
shareholders holding at least a majority in voting power of the Company's
voting stock voting in person or by proxy at a duly held stockholders' meeting,
within 12 months after the date the Plan is adopted.
(b) The Plan shall terminate on February 22, 2006, and no
Awards shall thereafter be made under the Plan. Notwithstanding the foregoing,
all Awards made under the Plan prior to such termination date shall remain in
effect until such Awards have been satisfied or terminated in accordance with
the terms and provisions of the Plan and the applicable Plan agreement.
3.15 Tenure. A participant's right, if any, to continue to serve the
Company or any of its subsidiaries or affiliates as an officer, employee, or
otherwise, shall not be enlarged or otherwise affected by his or her
designation as a participant under the Plan.
3.16 Unfunded Plan. Participants shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be
paid from the general funds of the Company and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan. The Plan is
not intended to be subject to the Employee Retirement Income Security Act of
1974, as amended.
3.17 Governing Law. This Plan shall be governed by the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state.
3.18 Conditions. If pursuant to Section 2.10(e) or Section 3.11(a) the
dates upon which options shall be exercisable are accelerated, it shall be on
the condition that with respect to options granted to officers and directors
subject to the reporting requirements of Section 16 of the Exchange Act the
shares underlying such options may not be sold by any such individual (or their
estate or Permitted Transferee) within 6 months after the grant of the option
to the extent such sale would result in the grant of the option being deemed to
constitute a non-exempt purchase under Section 16 of the Exchange Act.
20
<PAGE>
REVLON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 7, 1999
The undersigned hereby appoints Wade H. Nichols and Robert K. Kretzman,
as proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of
this card, all shares of Class A Common Stock of Revlon, Inc. (the "Company")
held of record by the undersigned at the close of business on February 18,
1999, at the Annual Meeting of Stockholders to be held on April 7, 1999 or any
adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
A [X] Please mark your
votes as in this
example. |__
WITHHOLD Nominees: Ronald O. Perelman
AUTHORITY Donald G. Drapkin
to vote for all nominees Irwin Engelman
1. ELECTION OF FOR listed at right Meyer Feldberg
DIRECTORS [ ] [ ] George Fellows
Howard Gittis
FOR all nominees listed Morton L. Janklow
(except as marked to the contrary below): Vernon E. Jordan
Henry A. Kissinger
Edward J. Landau
- ----------------------------------- Jerry W. Levin
Linda Gosden Robinson
Terry Semel
Martha Stewart
FOR AGAINST ABSTAIN
2. Proposal to approve the Revlon, Inc. Second [ ] [ ] [ ]
Amended and Restated 1996 Stock Plan.
FOR AGAINST ABSTAIN
3. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ]
serve as the Company's independent accountants
for fiscal 1999.
4. In their discretion, upon such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED
FOR THE FOURTEEN NOMINEES FOR ELECTION AND FOR PROPOSALS 2 AND 3.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
SIGNATURES: ____________________________________ DATE: _________________, 1999
NOTE: PLEASE SIGN EXACTLY AS NAME OR NAMES APPEAR ON STOCK CERTIFICATE
(AS INDICATED HEREON.)
<PAGE>
REVLON, INC.
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 7, 1999
FOR REVLON EMPLOYEES' SAVINGS, INVESTMENT AND PROFIT SHARING PLAN PARTICIPANTS
The undersigned hereby appoints Wade H. Nichols and Robert K. Kretzman,
as proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of
this card, all shares of Class A Common Stock of Revlon, Inc. (the "Company")
held of record by the undersigned at the close of business on February 18,
1999, at the Annual Meeting of Stockholders to be held on April 7, 1999 or any
adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
A [X] Please mark your
votes as in this
example. |__
WITHHOLD Nominees: Ronald O. Perelman
AUTHORITY Donald G. Drapkin
to vote for all nominees Irwin Engelman
1. ELECTION OF FOR listed at right Meyer Feldberg
DIRECTORS [ ] [ ] George Fellows
Howard Gittis
FOR all nominees listed Morton L. Janklow
(except as marked to the contrary below) Vernon E. Jordan
Henry A. Kissinger
Edward J. Landau
- ---------------------------------------- Jerry W. Levin
Linda Gosden Robinson
Terry Semel
Martha Stewart
FOR AGAINST ABSTAIN
2. Proposal to approve the Revlon, Inc. Second [ ] [ ] [ ]
Amended and Restated 1996 Stock Plan.
FOR AGAINST ABSTAIN
3. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ]
serve as the Company's independent accountants
for fiscal 1999.
4. In their discretion, upon such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED
FOR THE FOURTEEN NOMINEES FOR ELECTION AND FOR PROPOSALS 2 AND 3.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
SIGNATURES: ____________________________________ DATE: __________________, 1999
NOTE: PLEASE SIGN EXACTLY AS NAME OR NAMES APPEAR ON STOCK CERTIFICATE
(AS INDICATED HEREON.)
<PAGE>
REVLON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 7, 1999
The undersigned hereby appoints Wade H. Nichols and Robert K. Kretzman,
as proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of
this card, all shares of Class B Common Stock of Revlon, Inc. (the "Company")
held of record by the undersigned at the close of business on February 18,
1999, at the Annual Meeting of Stockholders to be held on April 7, 1999 or any
adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
A [X] Please mark your
votes as in this
example. |__
WITHHOLD Nominees: Ronald O. Perelman
AUTHORITY Donald G. Drapkin
to vote for all nominees Irwin Engelman
1. ELECTION OF FOR listed at right Meyer Feldberg
DIRECTORS [ ] [ ] George Fellows
Howard Gittis
FOR all nominees listed Morton L. Janklow
(except as marked to the contrary below) Vernon E. Jordan
Henry A. Kissinger
Edward J. Landau
- --------------------------------- Jerry W. Levin
Linda Gosden Robinson
Terry Semel
Martha Stewart
FOR AGAINST ABSTAIN
2. Proposal to approve the Revlon, Inc. Second [ ] [ ] [ ]
Amended and Restated 1996 Stock Plan.
FOR AGAINST ABSTAIN
3. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ]
serve as the Company's independent accountants
for fiscal 1999.
4. In their discretion, upon such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED
FOR THE FOURTEEN NOMINEES FOR ELECTION AND FOR PROPOSALS 2 AND 3.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
SIGNATURES: ____________________________________ DATE: __________________, 1999
NOTE: PLEASE SIGN EXACTLY AS NAME OR NAMES APPEAR ON STOCK CERTIFICATE
(AS INDICATED HEREON.)
