<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Helen of Troy Limited
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
PRELIMINARY COPIES
HELEN OF TROY LIMITED
6827 MARKET AVENUE
EL PASO, TEXAS 79915
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 26, 1997
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Meeting") of Helen of Troy Limited, a Bermuda company, will be held at the
Camino Real Hotel, 101 S. El Paso Street, El Paso, Texas on Tuesday, August 26,
1997 at 1:00 p.m., Mountain Daylight Time, for the following purposes:
1. To elect a board of seven directors;
2. To consider approval of an amendment to the Company's 1994 Stock
Option and Restricted Stock Plan;
3. To approve a proposal to increase the number of common shares
subject to the Company's 1994 Stock Option and Restricted Stock
Plan;
4. To consider approval of a proposal to increase the Company's
authorized common shares;
5. To consider and vote upon the adoption of Helen of Troy's 1997
Cash Bonus Performance Plan and the performance goals included
therein;
6. To consider approval of certain amendments to the Company's 1995
Non-Employee Director Stock Option Plan;
7. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
A record of shareholders who will be entitled to notice of or to vote at
the Meeting has been taken as of the close of business on July 3, 1997. You
are urged to read carefully the attached Proxy Statement for additional
information concerning the matters to be considered at the Meeting.
If you do not expect to be present in person at the Meeting, please sign
and date the enclosed proxy and return it promptly in the enclosed postage-paid
envelope which has been provided for your convenience. The prompt return of
proxies will insure a quorum and save the Company the expense of further
solicitation.
You are cordially invited and encouraged to attend the Meeting in
person.
GERALD J. RUBIN
Chairman of the Board
El Paso, Texas
July 10, 1997
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. IF YOU DO
ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
<PAGE> 3
PRELIMINARY COPIES
HELEN OF TROY LIMITED
PRINCIPAL EXECUTIVE OFFICE
6827 MARKET AVENUE
EL PASO, TEXAS 79915
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 26, 1997
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Helen
of Troy Limited (the "Company") for use at its Annual Meeting of Shareholders
(the "Meeting") to be held at the Camino Real Hotel, 101 S. El Paso Street, El
Paso, Texas, on Tuesday, August 26, 1997 at 1:00 p.m., Mountain Daylight Time,
and at any adjournment thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. A proxy may be revoked by filing
written notice of revocation or an executed proxy bearing a later date with the
Secretary of the Company any time before exercise of the proxy. A shareholder
giving a proxy may attend the Meeting and vote in person. Forms of proxy and
proxy statements are to be mailed on or about July 11, 1997.
The Annual Report to Shareholders for the year ended February 28, 1997
("fiscal 1997"), including financial statements, is enclosed. It does not form
any part of the material provided for the solicitation of proxies.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, officers and employees of the Company may
solicit the return of proxies by telephone and personal interview. Forms of
proxy and proxy material may also be distributed through brokers, custodians
and like parties to beneficial owners of the Company's common shares, par value
$.10 per share (the "Common Stock") for which the Company will, upon request,
reimburse the forwarding expense.
VOTING SECURITIES
The close of business on July 3, 1997 was the record date for
determination of shareholders entitled to notice of, and to vote at, the
Meeting. At the record date, there were 13,291,666 issued and outstanding
shares of Common Stock, entitled to one vote per share. On June 4, 1996, the
Board of Directors approved a 2-for-1 stock split which was paid as a 100%
stock dividend on July 1, 1996 to shareholders of record on June 17, 1996. All
references in this Proxy Statement to number of shares of Common Stock and per
share amounts reflect the increased number of shares of Common Stock
outstanding.
1
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 27, 1997, the beneficial
ownership of common stock of the directors, the named executive officers of
the Company, all executive officers and directors of the Company as a group,
and each person known to the Company to be the beneficial owner of more than 5%
of its outstanding common stock:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT
<S> <C> <C>
Gerald J. Rubin (1)(2)(3)(4) 2,229,772 15.5 %
6827 Market Avenue
El Paso, Texas 79915
Byron H. Rubin 0 *
Aaron M. Shenkman (3) 292,640 2.0%
Daniel C. Montano 2,000 *
Gary B. Abromovitz 4,250 *
Stanlee N. Rubin (4) 2,000 *
Christopher L. Carameros 2,000 *
Sam L. Henry 51,500 *
All directors and officers as a group
(8 persons) (3) 2,583,912 18.0%
Fidelity Management and Research
Company (5) 1,361,100 9.5%
82 Devonshire Street
Boston, Massachusetts 02109
Neumeier Investment Counsel (6) 1,242,700 8.6%
26435 Carmel Rancho Blvd.
Carmel, California 93923
Brinson Partners (7) 937,700 6.5%
209 South LaSalle
Chicago, Illinois 60604
Neuberger & Berman (8) 872,600 6.1%
605 Third Avenue
New York, NY 10158
A I M Management Group Inc. (9) 750,000 5.2%
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C> <C>
David L. Babson & Company, Inc. (10) 733,800 5.1%
One Memorial Drive
Cambridge, Massachusetts 02142
</TABLE>
* ownership of less than 1% of the outstanding Common Stock.
(1) Does not include 72,000 shares in a trust for the children of Gerald J.
Rubin and Stanlee N. Rubin in which they disclaim any beneficial
ownership.
(2) Includes 138,490 shares in the case of Mr. Gerald J. Rubin held
beneficially through a partnership in which Gerald J. Rubin is a
partner.
(3) Includes 850,000 shares in the case of Gerald J. Rubin, 177,780 shares
in the case of Aaron M. Shenkman, and 1,254,111 shares in the case of
all directors and officers which are issuable pursuant to options which
are exercisable within sixty days of April 30, 1997.
(4) Includes 1,241,282 shares and all stock options granted which are
subject to a one-half undivided community property interest with Stanlee
N. Rubin.
(5) As extracted from Form 13G filed as of February 14, 1997, by Fidelity
Management and Research Company, this represents sole investment power
for 1,361,100 shares and sole voting power for no shares.
(6) As extracted from Form 13G filed January 30, 1997 by Neumeier Investment
Counsel, this represents sole investment power for 1,242,700 shares and
sole voting power for 571,700 shares.
(7) As extracted from Form 13G filed as of February 12, 1997, by Brinson
Partners, Inc., this represents shared investment power for 937,700
shares and sole voting power for no shares.
(8) As extracted from Form 13G filed as of February 10, 1997, by Neuberger &
Berman L.P., this represents shared investment power for 872,600 shares
and sole voting power for 142,300 shares.
(9) As extracted from Form 13G filed as of February 12, 1997, by A I M
Management Group Inc., this represents shared investment power for
750,000 shares and sole voting power for no shares.
(10) As extracted from Form 13G filed as of February 7, 1997 by David L.
Babson & Company, Inc., this represents sole investment power for
733,800 shares and sole voting power for 591,700.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Bye-Laws of the Company state that the number of directors of the
Company shall not be less than two directors. Accordingly, the Board of
Directors has determined by resolution that the current number of directors
shall be seven; therefore, proxies cannot be voted for more persons than the
number of nominees named. Each director elected shall serve as a director
until the next annual meeting of shareholders, or until his or her successor is
elected and qualified.
The seven persons named below are the nominating committee's nominees
for election as directors. Further information with respect to each nominee is
set forth in the following:
Directors and executive officers each serve for a one year term or until
their successors are elected and qualified to serve. Gerald J. Rubin and Byron
H. Rubin are brothers.
Set forth below are descriptions of the principal occupations during at
least the past five years of the directors and executive officers of the
Company.
3
<PAGE> 6
Gerald J. Rubin, age 53, founder of Helen of Troy Texas Corporation,
formerly known as Helen of Troy Corporation, has been the Chairman and Chief
Executive Officer of the Company since December 1993 and of Helen of Troy Texas
Corporation since 1984. Effective March 1, 1997, Mr. Rubin became the
Company's President. Mr. Rubin has been a Director of the Company since
December 1993 and of Helen of Troy Texas Corporation since 1969.
Aaron M. Shenkman, age 56, has been the Deputy Chairman, President and
Chief Operating Officer of the Company since December 1993 and President and
Chief Operating Officer of Helen of Troy Texas Corporation since 1984. Mr.
Shenkman has been a Director of the Company since December 1993 and of Helen of
Troy Texas Corporation since 1975. Effective March 1, 1997, Mr. Shenkman
retired as President and Chief Operating Officer. Mr. Shenkman now serves as
an employee of the Company.
Daniel C. Montano, age 48, has been a Director of the Company since
December 1993 and of Helen of Troy Texas Corporation since 1980. He has been
the managing Director of CK Capital since January 1997. From January 1995 to
December 1996, he was Director of Investment Banking at Brook Street
Securities. Mr. Montano was President and a Director of Montano Securities
Corporation from 1979 to January 1995. He is subject to a cease-and-desist
order pursuant to Section 8A of the Securities Act ordering him to permanently
cease and desist from committing or causing any violation, and from committing
or causing any future violation, of Sections 5(b)(1) and 17(a)(2) and (3) of
the Securities Act.
Byron H. Rubin, age 47, has been a Director of the Company since
December 1993 and of Helen of Troy Texas Corporation since 1981. He has been a
partner in the firm Daniels and Rubin, (formerly known as Integrated Financial
of Texas), an insurance and tax planning firm in Dallas, Texas since 1979.
Stanlee N. Rubin, age 52, is the wife of Gerald J. Rubin, Chairman of
the Board of Directors. She has been a Director of the Company since December
1993 and of Helen of Troy Texas Corporation since 1990. Mrs. Rubin is active
in civic and charitable organizations. She is a member of the University of
Texas at El Paso Board of Development. She is presently on the Board of
Directors of the Alumni Association of the University of Texas at El Paso, The
National Conference of Christians and Jews and the El Paso Symphony Guild.
Gary B. Abromovitz, age 54, has been a Director of the Company since
December 1993 and of Helen of Troy Texas Corporation since 1990. He has been a
partner in the law offices of Bonn/Abromovitz Law Firm in Phoenix, Arizona
since 1990. From 1985 to 1989, he was Of Counsel to the law firm Bonn &
Anderson in Phoenix, Arizona.
Christopher L. Carameros, age 43, has been a Director of the Company
since December 1993 and of Helen of Troy Texas Corporation since June 1993. He
currently is an officer, director and minority shareholder of Cactus Apparel
Inc., an apparel manufacturing company. He also serves as a Director of Farah
Incorporated.
Except as indicated above, none of the directors of the Company is a
director of any other publicly held company.
VOTE REQUIRED FOR ELECTION OF DIRECTORS
The nominees receiving a majority of the votes cast at the Meeting will
be elected as Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF
THE SEVEN NOMINEES NAMED ABOVE.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company has an Executive Committee which during fiscal 1997
consisted of Mr. Gerald J. Rubin and Mr. Aaron M. Shenkman. The Executive
Committee has the power to exercise all of the authority of the Board of
Directors in the management of the business and affairs of the Company, except
to the extent provided in the Company's bye-laws and by applicable law. All
actions and resolutions of the Executive Committee are reported to the Board of
Directors at the next meeting of the Board for its review, approval and
ratification. The Executive Committee meets periodically during the year but
no resolutions were adopted nor were any formal meetings held during fiscal
1997.
4
<PAGE> 7
The Company has an Audit Committee which during fiscal 1997 consisted of
Mr. Gary B. Abromovitz, Mr. Daniel C. Montano and Mr. Christopher L. Carameros.
The Audit Committee is responsible for evaluating accounting and control
procedures and practices of the Company and reporting on such matters to the
Board of Directors. The Audit Committee serves as a direct liaison with the
Company's independent public accountants and recommends the engagement or
discharge of such accountants. The Audit Committee meets periodically with the
Chief Financial Officer, other appropriate officers of the Company and the
Company's independent public accountants to review the Company's financial and
accounting systems, accounting and financial controls, reports by the
independent public accountants, proposed accounting changes and financial
statements and opinions on such financial statements. The Audit Committee met
or unanimously voted on resolutions one time during fiscal 1997.
The Company has a Nominating Committee which during fiscal 1997
consisted of Mr. Gerald J. Rubin and Mr. Aaron M. Shenkman. The Nominating
Committee receives recommendations from its members or other members of the
Board of Directors for candidates to be appointed to the Board or Board
Committee positions, reviews and evaluates such candidates and makes
recommendations to the Board of Directors for nominations to fill Board and
Board Committee positions. The Nominating Committee meets periodically during
the year, but no resolutions were adopted nor were any formal meetings held
during fiscal 1997. The Nominating Committee will consider candidates
recommended by employees and shareholders. Written suggestions for candidates
accompanied by a written consent of the proposed candidate to serve as a
director if nominated and elected, a description of his or her qualifications
and other relevant biographical information should be sent in by March 6th of
the year preceding the next Annual Meeting to the Secretary of the Company,
6827 Market Avenue, El Paso, Texas 79915.
The Company has a Stock Option and Compensation Committee which during
fiscal 1997 consisted of Mr. Daniel C. Montano and Mr. Gary Abromovitz. The
Stock Option and Compensation Committee reviews and makes recommendations to
the Board of Directors on officer and senior employee compensation, grants of
stock options under the Company's stock option plans and generally oversees
matters relating to compensation of employees of the Company. The Stock Option
and Compensation Committee met or unanimously voted on resolutions one time
during fiscal 1997.
The full Board of Directors met or unanimously voted on resolutions 4
times during fiscal 1997. Each of the directors attended or acted upon at
least seventy-five percent of the aggregate number of Board of Director
meetings, consents, and Board of Director Committee meetings or consents held
or acted upon during fiscal 1997.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth the summary of compensation paid to the
Company's Chief Executive Officer and its other Executive Officers during
fiscal years 1995 through 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION($)
--------------------------------------------------------- ------------ ------------
OTHER
NAME AND ANNUAL
PRINCIPAL COMPENSATION OPTIONS/
POSITION YEAR SALARY ($) BONUS ($) $ SARS (#)
- -------- ---- ---------- ---------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Gerald J. Rubin 1997 $623,158 $551,705 $ -0- -0- $ 15,821 (1)(2)(4)
Chairman and Chief 1996 600,000 262,000 -0- 600,000 15,363 (1)(2)(4)
Executive Officer 1995 571,403 -0- 2,389,238 (3) -0- 5,748 (2)
Aaron M. Shenkman (5) 1997 588,883 354,398 -0- -0- 14,097 (1)(2)
President and Chief 1996 540,071 150,000 1,105,640 (3) 300,000 4,481 (1)(2)
Operating Officer 1995 514,353 -0- 2,607,109 (3) -0- 3,234 (2)
Sam L. Henry 1997 205,367 40,343 603,671 (3) -0- 4,517 (1)(2)
Senior Vice-President 1996 188,343 24,485 -0- 40,000 3,761 (1)(2)
Finance 1995 179,375 17,900 65,813 (3) 10,000 2,558 (1)(2)
</TABLE>
(1) These amounts represent the Company's contributions to Helen of Troy
Corporation's 401(k) Profit Sharing Plan.
(2) Amounts representing premiums for life insurance or the economic benefit
of split dollar policies paid by the Company for life insurance
arrangements on behalf of the Executive Officer.
(3) The amounts represent the income attributable to the individuals for the
exercise of stock options. The Company did not make cash payments, but
instead issued shares of stock to the respective executive officers.
(4) Amounts representing the annual lease value of a vehicle provided by the
Company.
(5) Effective March 1, 1997, Mr. Shenkman retired from his positions as
President and Chief Operating Officer of the Company. Mr. Shenkman,
however, continues to serve as a director and as an employee of the
Company.
6
<PAGE> 9
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT
ON VALUE FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
EXERCISE REALIZED ------------------------------- ----------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------- ----------- ---------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. Rubin - - 650,000 400,000 $12,590,640 $6,300,000
A. Shenkman - - 100,000 200,000 1,575,000 3,150,000
S. Henry 41,250 603,671 36,500 52,500 635,653 847,860
</TABLE>
(1) Based on the closing price of the NASDAQ National Market System -
Composite Transactions of the Company's Common Stock on February 28,
1997, which was $24.75.
EMPLOYMENT CONTRACTS
The Company has entered into contracts with each of its directors
and executive officers to indemnify them against certain fees and
expenses incurred in legal proceedings to which the officer or director
is made a party by reason of serving as an officer or director of the
Company, so long as the party to be indemnified acted in good faith or
in a manner reasonably believed to be in or not opposed to the best
interests of the Company.
The Company has an employment contract with Mr. Gerald J. Rubin.
The contract for Mr. Rubin was effective March 1, 1995, provided for a
base salary of $600,000 and a bonus equal to 5% of adjusted earnings
from continuing operations less Mr. Rubin's base salary. Mr. Rubin's
employment agreement has been amended to remove the bonus previously
provided under his employment contract; provided that if the Company's
shareholders do not approve the Helen of Troy 1997 Cash Bonus
Performance Plan, then Mr. Rubin would be entitled to receive a bonus
under his employment contract based on the same formula described above
to the extent that his total compensation (including his bonus, if any)
does not exceed the limits imposed by Section 162(m) of the Internal
Revenue Code, as amended. See "Adoption of the Helen of Troy 1997 Cash
Bonus Performance Plan."
In the event of the death of Mr. Rubin, all unpaid benefits under
this agreement are payable to his estate. Gerald J. Rubin's contract
renews itself monthly for a new five year term. Gerald J. Rubin's
contract grants him the right to elect a cash payment of the remainder
of his contract in the event of a merger, consolidation or transfer of
all or substantially all of the Company's assets to any unaffiliated
company or other person.
The Company has purchased, pursuant to the terms of Mr. Rubin's
employment contract, life insurance in the amount of $5.0 million on the
life of Gerald J. Rubin payable in the event of death to his designees.
The Company has also purchased three "second to die" life insurance
contracts in the cumulative amount of $29.0 million on the lives of
Gerald J. Rubin and Stanlee N. Rubin, payable to their respective
designee. All of the above policies referred to in this paragraph are
Split Dollar policies, which provide for the return of premiums advanced
by the Company to be reimbursed to the Company upon death of the
insured(s).
Effective March 1, 1997, Mr. Shenkman retired from his positions
as President and Chief Operating Officer of the Company and his
employment contract with the Company terminated as of such date. Mr.
Shenkman, however, continues to serve as a director and as an employee
of the Company. Effective March 1, 1997, Mr. Shenkman entered into a
new employment contract with the Company. Mr. Shenkman's contract has a
one year term and provides for a base salary of $150,000 for fiscal 1998
and a bonus equal to 1.5% of adjusted earnings from continuing
operations less the base salary. In the event of the death of Mr.
Shenkman, all unpaid benefits under this contract are payable to his
estate. Mr. Shenkman's contract also grants him the right to elect a
cash payment of the remainder of his contract in the event of merger,
consolidation or transfer of all or substantially all of the Company's
assets to any unaffiliated company or other person. The Company has
purchased, pursuant to the terms of his contract, life insurance in the
amount of $2.5 million on the life of Aaron M. Shenkman, payable in the
event of death to his designees. This policy is a Split Dollar policy,
which provides for the return of premiums advanced by the Company to be
reimbursed to the Company upon death of the insured.
7
<PAGE> 10
DIRECTOR COMPENSATION
Each director who is not an employee or officer of the Company received
a fee of $3,000 for each meeting of the Board of Directors attended, together
with travel and lodging expenses incurred in connection therewith. Additional
payments of $1,500 were made quarterly to each such director. As approved by
the Company's shareholders at the 1995 Annual Meeting of Shareholders, each
non-employee director receives 2,000 stock options on September 1st of each
year pursuant to the Company's 1995 Non-Employee Director Stock Option Plan
(the "Directors Plan"). The stock options have an exercise price equal to the
mean between the high and low market prices on the day the stock options are
issued. The stock options vest after one year. The Board of Directors and the
ineligible directors, as defined in the Directors Plan, have approved an
amendment to the Directors Plan, subject to shareholder approval, providing a
one-time grant of 10,000 options effective as of the date of shareholder
approval to each non-employee director participating under the Directors Plan.
See "Amendments to Helen of Troy Limited 1995 Non-Employee Director Stock
Option Plan".
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Stock Option and Compensation Committee has submitted the following
report:
The Stock Option and Compensation Committee is responsible for
developing the Company's executive compensation strategy and for administering
the policies and programs that implement this strategy. The Committee is
comprised entirely of independent, non-employee directors.
The executive compensation strategy reflects the Company's fundamental
philosophy of aligning the interests of management with the long-term
performance of the Company and offering competitive compensation opportunities
based on each individual's contribution to the achievement of shareholder
value. This strategy is designed to attract and retain employees with
outstanding qualifications and experience.
The three elements of the Company's executive compensation strategy, all
determined by corporate and individual performance, are:
Base salary
Annual incentive compensation
Long-term incentive compensation
Total compensation opportunities are competitive with those offered by a
range of comparable companies and are intended to align management interests
more closely with shareholder interests. The companies which the Stock Option
and Compensation Committee has reviewed in determining competitive compensation
are those of its primary competitors. Some of these competitors are private
companies and are therefore not included in the stock performance graph.
Base salary for Gerald J. Rubin (Chief Executive Officer) and Aaron M.
Shenkman for fiscal 1997 was based on the long-term employment contracts of
such individuals with the Company. See "Executive Compensation-Employment
Contracts." Base salary for the remaining executive officers is determined by
the skills and experience required by the position, the impact of the
individual on the Company and the performance and potential of the individual.
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<PAGE> 11
Annual incentive compensation consists of cash bonuses. The amount of
cash bonuses for Gerald J. Rubin and Aaron M. Shenkman are based on their
employment contracts with the Company. During fiscal 1997, the Company awarded
bonuses of $551,705 and $354,398 to Messrs. Gerald J. Rubin and Aaron M.
Shenkman, respectively.
The amount of cash bonuses for the remaining executive officers is
determined based on the pre-tax earnings of the Corporation. A maximum bonus
amount up to 25% of the executive's annual base salary is determined for each
executive. A portion of the bonus is earned as the Corporation's pre-tax
earnings exceed a minimum base amount determined as of the beginning of each
fiscal year and the earned portion of the bonus increases as pre-tax earnings
exceed this base amount. The bonus listed in the Summary Compensation Table
for fiscal 1997 for executive officers other than Messrs. Rubin and Shenkman
are for bonuses earned during fiscal 1997 and paid in fiscal 1998. It is
anticipated that bonuses will be paid to these executive officers for fiscal
1998.
Long-term incentive compensation consists of the Company's stock option
plans. Stock options are granted based on the position of the executive
officer, and Company and individual performance. During fiscal 1997, no shares
of the Company's Common Stock were awarded pursuant to stock options to Gerald
J. Rubin and Aaron M. Shenkman.
Executive officers are provided with an opportunity for ownership
positions in the Company's Common Stock through the stock option plan. This
opportunity for ownership, combined with a significant performance-based
incentive compensation opportunity, forges a strong linkage between the
Company's management and shareholders.
As stated above, the compensation to the Company's Chief Executive
Officer, Gerald J. Rubin during fiscal 1997 consisted of base salary, annual
incentive compensation and long-term incentive compensation. All of the
factors discussed above in this report were taken into consideration by the
Stock Option and Compensation Committee in determining the total compensation
for Mr. Rubin for fiscal 1997.
Gary B. Abromovitz (Chairman)
Daniel C. Montano
The foregoing report of the Stock Option and Compensation Committee
shall not be deemed incorporated by reference by any general statement
incorporating by reference the Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
9
<PAGE> 12
HELEN OF TROY FIVE YEAR PERFORMANCE GRAPH
The graph below compares the cumulative total return of the Company to
the NASDAQ Market Index and a Peer Group Index.
The graph is made of the following data:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Helen of Troy Limited 345.17 160.38 129.00 106.34 116.80
Peer Group Index 243.05 182.54 136.68 116.20 114.30
NASDAQ Market Index 201.94 168.25 121.85 127.62 100.16
</TABLE>
ASSUMES $100 INVESTED ON MARCH 1, 1992
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING FEB. 28, 1997
(1) The peer group used was the Dow Jones Industry Companies -
Cosmetics, Personal Care Products.
TRANSACTIONS WITH MANAGEMENT
None.
10
<PAGE> 13
AMENDMENT TO THE HELEN OF TROY LIMITED
1994 STOCK OPTION AND RESTRICTED STOCK PLAN
(PROPOSAL 2)
The Board of Directors and the Stock Option and Compensation Committee
have determined that it is in the best interest of the Company and its
shareholders to amend the Helen of Troy Limited 1994 Stock Option and
Restricted Stock Plan (the "Plan"). The proposed amendment to the Plan
consists of the establishment of a provision in the Plan providing that no
employee may receive in any one fiscal year options under the Plan to acquire
in excess of 500,000 shares of Common Stock. Currently, the Plan provides that
no employee may be granted an option under the Plan, which when combined with
all other options granted under the Plan after February 28, 1995 to such
employee, aggregates more than 600,000 shares of Common Stock in a three year
period commencing February 28, 1995. The Board of Directors and the Stock
Option and Compensation Committee have approved the proposed amendment to the
Plan, to be effective as of the date of approval thereof by the Company's
shareholders. The Board of Directors and the Compensation Committee also
approved an amendment to the Plan effective of the date of approval thereof by
the Company's shareholders to increase the number of shares of Common Stock
subject to the Plan from 4,000,000 to 5,000,000. See "Proposal to Increase the
Number of Shares of Common Stock Subject to the Helen of Troy Limited 1994
Stock Option and Restricted Stock Plan (Proposal 3)". If this Proposal 2 is
approved and Proposal No. 3 is not approved by the shareholders, Section 5(a)
of the Plan will be amended as provided in Exhibit A. If this Proposal 2 is
not approved and Proposal 3 is approved by the shareholders, Section 5(a) of
the Plan will be amended as provided in Exhibit B. If both this Proposal 2 and
Proposal 3 are approved by the shareholders, then Section 5(a) of the Plan will
be amended as provided in Exhibit C. The following summary of the Plan does
not purport to be complete and is subject in all respects to, and qualified by,
the provisions of the Plan.
The Board of Directors believes that the establishment of a provision in
the Plan providing that no employee of the Company or its subsidiaries may
receive in any one fiscal year options under the Plan to acquire in excess of
500,000 shares of Common Stock is necessary to afford flexibility to the Stock
Option and Compensation Committee in making grants under the Plan.
Shareholder's approval of the amendment to the Plan is necessary to permit the
deduction by the Company of compensation attributable to options issued
pursuant to the Plan that in certain instances would not otherwise be
deductible under Section 162(m) of the Internal Revenue Code, as amended (the
"Code"). Section 162(m) generally limits to $1 million the allowable deduction
for compensation (including compensation attributable to options) paid by a
publicly held company to its chief executive officer and to each of the other
four most highly compensated employees.
The Plan was approved by the shareholders of the Company at the 1994
Special Meeting of the Shareholders held in February 1994. The Plan was
established to offer selected employees and consultants of the Company grants
of (a) options ("Options") to purchase Common Stock, and (b) awards of Common
Stock containing certain restrictions ("Restricted Stock") (Options and
Restricted Stock are hereinafter referred to collectively as "Plan Awards")
with respect to an aggregate of 4,000,000 shares of Common Stock. The Options
granted under the Plan may be incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Code or may be Options
that do not meet the requirements for Incentive Stock Options ("Nonstatutory
Options"). No Incentive Stock Options may be granted to any individual who is
not an employee on the date of grant.
The closing sale price of the Company's Common Stock on July 3, 1997, as
reported by the NASDAQ Stock Market, was $____ per share.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Stock Option and Compensation Committee,
which is comprised of at least two persons. All Stock Option and Compensation
Committee members shall be "disinterested," as such term is used in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
PRIOR GRANTS OF PLAN AWARDS
During fiscal 1997, Options to purchase 74,000 shares of Common Stock
were granted pursuant to the Plan, of which no shares represented grants of
Options to the Company's executive officers. No restricted stock awards have
been made under the Plan. The following table summarizes the Options
outstanding under the Plan as of July 3, 1997.
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<PAGE> 14
<TABLE>
<CAPTION>
Named Executive Officers Number of Options
------------------------ -----------------
<S> <C>
Gerald J. Rubin . . . . . . . . . . . . . . . . . . . . . 1,050,000
Aaron M. Shenkman (1) . . . . . . . . . . . . . . . . . . 277,780
Sam L. Henry . . . . . . . . . . . . . . . . . . . . . . 89,000
All Executive Officers as a Group (3 persons) . . . . . . . 1,416,780
Directors (who are not Executive Officers) as a
Group (no persons) . . . . . . . . . . . . . . . . . . .
--
All Other Employees (including officers who are
not Executive Officers) as a Group (80 persons) . . . . . 590,945
</TABLE>
(1) Mr. Shenkman retired from his positions as President and Chief Operating
Officer of the Company effective March 1, 1997. Mr. Shenkman, however,
continues to serve as a director and as an employee of the Company.
ELIGIBILITY FOR PLAN AWARDS
Plan Awards may be granted to selected employees and consultants of the
Company or its subsidiaries (the "Participants") in consideration for services
provided to the Company or its subsidiaries; provided, however, that no
Incentive Stock Option may be granted to any individual who is not an employee
of the Company or one of its subsidiaries on the date of grant. Any
employee-director is eligible to receive Plan Awards, unless such person serves
on the Stock Option and Compensation Committee. Actual participation in the
Plan will be determined in the sole discretion of the Stock Option and
Compensation Committee. As a result, the number of Participants in the Plan
cannot be precisely determined nor can the benefits or amounts that will be
received by or allocated to each of the Participants. Similarly, the benefits
which will be allocated to executive officers cannot be determined at this
time. As of July 3, 1997, the Company had 260 employees and no consultants.
Subject to shareholder approval of this Proposal 2, the Stock Option and
Compensation Committee is considering approval after the Meeting of a grant to
the Company's Chief Executive Officer of an option to acquire shares of Common
Stock equal to the maximum annual award under the Plan, as amended, to be
effective as of the date of shareholder approval.
Upon approval of the amendment to Section 5(a) of the Plan by the
Company's shareholders as described in this Proposal 2, the Plan will provide
that no employee may receive in any one fiscal year Options under the Plan to
acquire in excess of 500,000 shares of Common Stock. Consequently, the maximum
amount of compensation payable to an employee attributable to the exercise of
Options granted under the Plan shall be equal to the maximum number of shares
of Common Stock for which Options can be granted to an employee under the Plan
multiplied by the difference between the fair market value of the Common Stock
on the date of exercise of the Option less the exercise price of the Option.
OPTIONS UNDER THE PLAN
The exercise price of an Option shall be such price as is determined by
the Stock Option and Compensation Committee in its sole discretion; provided,
however, that in the case of an Incentive Stock Option, the exercise price
shall not be less than 100% of the fair market value of the shares subject to
such Option on the date of grant (or 110% in the case of an Option granted to a
Participant who is a ten percent shareholder on the date of grant). However, a
particular Nonstatutory Option will satisfy the "performance-based"
requirements of Section 162(m) of the Code only if the exercise price is not
less than the fair market value of the stock at the time of the grant of the
particular Nonstatutory Option. The grant of an Option at fair market value
constitutes a performance goal under Section 162(m) of the Code, which was
approved by the Company's shareholders at the Company's 1995 Annual Meeting of
the Shareholders.
Any Option granted under the Plan is exercisable at such times, under
such conditions (including, without limitation, performance criteria with
respect to the Company and/or the optionee), in such amounts and during such
period or periods as the Stock Option and Compensation Committee determines on
the date of the grant of such Option. Such Options, however, shall not be
exercisable after the expiration of ten years from the date such Option is
granted. In the case of an Incentive Stock
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<PAGE> 15
Option granted to a ten percent shareholder, the Options shall not be
exercisable after the expiration of five years from the date such Option is
granted.
Payment for the shares upon exercise of an Option shall be made in cash,
by certified check or, if authorized by the Stock Option and Compensation
Committee, by delivery of other shares of Common Stock having a fair market
value on the date of delivery equal to the aggregate exercise price of the
shares as to which Option is being exercised, or by any combination of such
methods or by any other method of payment as may be permitted by applicable
law.
To the extent that the aggregate fair market value (determined on the
date of grant) of the shares of Common Stock with respect to which an Incentive
Stock Option is exercisable for the first time by an individual during any
calendar year under the Plan and all other plans maintained by the Company
exceeds $100,000, the Option will not be treated as an Incentive Stock Option.
The Stock Option and Compensation Committee may establish procedures
under the Plan for an optionee: (a) to have withheld from the total number of
shares of Common Stock to be acquired upon exercise of an Option that number of
shares of Common Stock having a fair market value equal to the exercise price;
(b) to have withheld from the total number of shares of Common Stock to be
acquired, in the same manner as (a) above, the withholding obligation for
federal and state income and other taxes; and (c) to exercise a portion of the
Option by delivering already-owned shares of Common Stock in payment of the
exercise price.
In general, if an optionee ceases to be an employee or consultant of the
Company, as the case may be, for reasons other than Permanent and Total
Disability or Death, he will have until the earlier of 30 days or the date the
Option expires to exercise the Option, to the extent the optionee was entitled
to exercise the Option on the date of termination. If, however, the optionee
is an employee and is terminated without cause, the 30-day period described
above will be increased to 90 days, in the case of an Incentive Stock Option,
and 6 months, in the case of a Nonstatutory Option, to the extent the optionee
was entitled to exercise the Option on the date of termination.
If an optionee is unable to continue to perform services for the Company
or any of its subsidiaries as a result of Permanent and Total Disability he
will have until the earlier of 12 months from the date of such disability or
the date the Option expires to exercise the Option, in whole or in part,
notwithstanding that such Option may not be fully exercisable on such date. In
the case of an Incentive Stock Option, the optionee must have been an employee
since the date of grant and must be an employee on the date of Permanent and
Total Disability, to take advantage of this provision.
In the case of death of an optionee, the same rule applies as in the
case of Permanent and Total Disability, above.
An Option granted under the Plan may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I or ERISA, or the rules
thereunder, and is not assignable by operation of law or subject to execution,
attachment or similar process.
RESTRICTED STOCK UNDER THE PLAN
Under the Plan, awards of Restricted Stock may be granted by the Stock
Option and Compensation Committee separately or in combination with Options as
provided for by the Stock Option and Compensation Committee; provided, however,
each grant of Restricted Stock shall require the Participant to remain an
employee or consultant of the Company or any of its subsidiaries for at least
six months from the date of grant. Restricted Stock shall be granted to
Participants for services rendered to the Company, and at no additional cost to
the Participant; provided, however, that the value of such services must equal
or exceed the par value of the Restricted Stock granted to the Participant.
The Company establishes a restricted stock account for each Participant,
to which Restricted Stock granted to the Participant is credited. Every credit
of Restricted Stock is merely a bookkeeping entry and every grant of Restricted
Stock is considered contingent and unfunded until the restrictions lapse.
During the period of restrictions, such accounts shall be subject to the claims
of the Company's creditors. The Participant's rights to the restricted stock
account are no greater than that of a general creditor of the Company. On the
date the restrictions lapse, the Restricted Stock shall vest in the
Participant.
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<PAGE> 16
The terms, conditions and restrictions of the Restricted Stock are
determined by the Stock Option and Compensation Committee on the date of grant.
The restrictions shall lapse based upon performance measures, targets, holding
period requirements and other criteria established by the Stock Option and
Compensation Committee. The Restricted Stock criteria may vary among grants of
Restricted Stock; provided, however, that once the Restricted Stock has been
granted and the criteria are established, such criteria may not be further
modified with respect to such grant. The Restricted Stock may not be sold,
assigned, transferred, redeemed, pledged or otherwise encumbered during the
period that the restrictions apply.
The Stock Option and Compensation Committee, in its sole discretion, may
establish procedures by which a Participant may defer the transfer of
Restricted Stock to the Participant.
The Stock Option and Compensation Committee may provide from time to
time that amounts equivalent to dividends paid with respect to Common Stock be
payable with respect to the Restricted Stock held in the restricted stock
account. Such amounts shall be credited to the restricted stock account but
shall be payable to the Participant only when the restrictions lapse.
If a Participant, with the consent of the Stock Option and Compensation
Committee, ceases to be an employee or ceases to provide services to the
Company or any of its subsidiaries, or dies or suffers from permanent
disability, the restrictions applicable to the Participant's Restricted Stock
shall lapse in accordance with such determination as the Stock Option and
Compensation Committee, in its sole discretion, shall make. A Participant who
ceases to be an employee or to perform services for the Company or any of its
subsidiaries for any other reason shall forfeit all of his grants of Restricted
Stock which are under restriction.
CAPITALIZATION ADJUSTMENTS; MERGER; CHANGE IN CONTROL
Subject to any required action by the shareholders of the Company, the
number of shares covered by each outstanding Option, the aggregate number of
shares that have been authorized for issuance under the Plan and the number of
shares of Restricted Stock credited to any restricted stock account of a
Participant (as well as the exercise price covered by any outstanding Option),
shall be proportionately adjusted for any increase or decrease in the number of
issued shares resulting from a stock split, payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company.
In the event of the proposed dissolution or liquidation of the Company,
or a proposed sale of all or substantially all of the assets of the Company, or
the proposed merger of the Company with or into another corporation, any
Options and grants of Restricted Stock shall terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Stock
Option and Compensation Committee. The Stock Option and Compensation Committee
may, in the exercise of its sole discretion, in such instances declare that any
Option shall terminate as of a date fixed by the Stock Option and Compensation
Committee and give each optionee the right to exercise the optionee's option as
to all or any part of the shares covered by such Option, including shares as to
which the Option would not otherwise be exercisable.
Subject to the above paragraph, upon a Change in Control (as defined
below) of the Company, (a) all the outstanding Options shall immediately become
fully exercisable, and (b) any restrictions on the Restricted Stock will lapse
and such Restricted Stock shall immediately vest in the Participant. For these
purposes, a "Change in Control" shall have occurred if: (a) any person other
than the Company or its subsidiaries, or an employee benefit plan of the
Company or its subsidiaries, is or becomes the beneficial owner of 50% or more
of the Common Stock; or (b) a majority of the present members of the Company's
Board of Directors cease to be members of the Board of Directors.
TERM AND TERMINATION OF THE PLAN; AMENDMENT
The Plan will continue in effect until February 8, 2004, unless sooner
terminated. The Stock Option and Compensation Committee may terminate the Plan
at any time in its sole discretion. The Stock Option and Compensation
Committee in its sole discretion may, from time to time, amend the Plan;
provided, however, that no amendment will be made without the requisite
approval of the shareholders of the Company, that will (a) change the aggregate
number of shares of Common Stock that may be issued under the Plan, other than
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, payment of a stock dividend or any other increase
or decrease in the number of issued shares of
14
<PAGE> 17
Common Stock effected without receipt of consideration by the Company, (b)
change the designation of the Participants eligible to be granted Plan Awards,
(c) change the Plan so as to materially increase the benefits accruing to the
Participants under the Plan. Neither Restricted Stock nor Options may be
granted after the Plan is terminated. The termination of the Plan, or any
amendment thereto, shall not affect any shares previously issued to a
Participant, any Option previously granted under the Plan or any shares of
Restricted Stock previously granted to a Participant.
MISCELLANEOUS
The Plan is not qualified under the provisions of Section 401(a) of the
Code and is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
FEDERAL INCOME TAX CONSEQUENCES
The following general summary is based upon the Internal Revenue Code
and does not include a discussion of any state or local tax consequences.
Incentive Stock Options
An optionee does not realize taxable income upon the grant or exercise
of an Incentive Stock Option.
The income tax treatment of any gain or loss realized upon an optionee's
disposition of shares of Common Stock received upon exercise of an Incentive
Stock Option depends on the timing of the disposition. If the optionee holds
the Common Stock received upon exercise of an Incentive Stock Option for at
least two years from the date such Incentive Stock Option was granted, or one
year from the date of exercise, the difference (if any) between the amount
realized from the sale of such shares and the optionee's tax basis will be
taxed as long-term capital gain or loss.
If an optionee disposes of the Common Stock before the end of the
applicable holding periods described above (i.e., he makes a "disqualifying
disposition"), such optionee may be deemed to be in receipt of taxable income
in the year of the disqualifying disposition, depending on the selling price.
If the selling price exceeds the fair market value of the Incentive Stock
Option on the date of exercise, the excess of the fair market value over the
exercise price is taxable to the optionee as ordinary income, and the excess of
the selling price over the fair market value is taxable to the optionee as
capital gain. If the selling price exceeds the exercise price but not the fair
market value on the date of exercise, the excess of the selling price over the
exercise price is taxable to the optionee as ordinary income. If the selling
price is less than the exercise price, the difference is treated as capital
loss.
The Company is not entitled to a deduction for federal income tax
purposes with respect to the grant or exercise of an Incentive Stock Option or
the disposition of Common Stock acquired upon exercise (if the applicable
holding periods have been met). In the event of a disqualifying disposition,
however, the Company is entitled to a federal income tax deduction in an amount
equal to the ordinary income recognized by the optionee.
Certain optionees may be subject to the alternative minimum tax which in
individual cases could reduce or eliminate any tax benefits to them under the
Plan.
Nonstatutory Stock Options
An optionee will not recognize any taxable income upon the grant of a
Nonstatutory Option. However, upon exercise of a Nonstatutory Option, an
optionee must recognize ordinary income in an amount equal to the excess of the
fair market value of the Common Stock at the time of exercise over the exercise
price. Upon the subsequent disposition of the Common Stock, the optionee will
realize a capital gain or loss, depending on whether the selling price exceeds
the fair market value of the Common Stock on the date of exercise. The
optionee's holding period in the Common Stock, for capital gains and losses
purposes, begins on the date of exercise.
Different rules may apply with respect to exercises by optionees subject
to the short-swing profit recapture provisions of Section 16(b) of the Exchange
Act (in general, officers, directors and ten percent shareholders who have not
held their
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<PAGE> 18
options for at least six months). Section 83 of the Code provides that such an
optionee will not recognize ordinary income upon exercise (and the capital
gains holding period will not begin) if the sale of Common Stock acquired by
such optionee pursuant to an Option could subject the optionee to suit under
Section 16(b). Such an optionee would then recognize ordinary income (and the
capital gains holding period would begin) when the optionee is no longer
subject to suit under Section 16(b). Persons acquiring Common Stock subject to
such a restriction, however, may elect (within 30 days of exercise of the
Option) under Section 83(b) of the Code, to be taxed as of the date of
exercise, thereby fixing the ordinary income recognized from the exercise to
the spread between the fair market value on the date of exercise and the
exercise price paid for the Common Stock. Any change in the value of the
Common Stock after the date of exercise would be recognized as capital gain or
loss only if and when the Common Stock are disposed of by the optionee. If the
Section 83(b) election is made, the optionee's capital gains holding period
begins on the date of exercise.
An optionee's tax basis in the Common Stock received on exercise of a
Nonstatutory Option will be equal to the amount of consideration paid by the
optionee on exercise, plus the amount of ordinary income recognized as a result
of the receipt of such shares. The Company will be entitled to a deduction for
federal income tax purposes at the same time and in the same amount as the
optionee recognizes taxable income, provided that the Company satisfies its
withholding tax obligation with respect to such income.
If an optionee exercises a Nonstatutory Option by delivering other
shares of Common Stock of the Company, the optionee will not recognize gain or
loss with respect to the Common Stock delivered by the optionee, even if the
then fair market value of such shares is different from the optionee's tax
basis therein. The optionee, however, will be taxed as described above with
respect to the exercise of the Nonstatutory Option as if he had paid the
exercise price in cash, and the Company likewise generally will be entitled to
an equivalent tax deduction. The optionee's tax basis in the Common Stock
received on such exercise will be equal to his basis in the number of shares
surrendered on such exercise plus the fair market value of the number of shares
of Common Stock received in excess of the number of shares of Common Stock
surrendered and the holding period for such number of shares of Common Stock
received will include the holding period of the Common Stock surrendered.
Restricted Stock
The Participant will not recognize taxable income upon the grant of
Restricted Stock because the Restricted Stock will be nontransferable and
subject to a substantial risk of forfeiture. The Participant will recognize
ordinary income at the time at which the restrictions that impose a substantial
risk of forfeiture of such shares (the "Restrictions") lapse, in an amount
equal to the fair market value of such shares at such time. The ordinary
income recognized by a Participant with respect to shares awarded pursuant to
the Plan will be deemed compensation income subject to applicable wage
withholding.
A Participant may elect, pursuant to Section 83(b) of the Code, to
include in gross income the fair market value of the Restricted Stock,
notwithstanding that the Restricted Stock would otherwise not be includible in
gross income at that time. If such election is made within 30 days of the date
of grant, then the Participant would include in gross income the fair market
value of the Restricted Stock on the date of grant, and any change in the value
of the Common Stock after the date of grant would be capital gain or capital
loss only if and when the Common Stock is disposed of by the Participant. If
the Section 83(b) election is made, the Participant's capital gains holding
period begins on the date of grant.
If a Section 83(b) election is made and the Participant then forfeits
the Restricted Stock, the Participant may not deduct as an ordinary loss the
amount previously included in gross income.
Dividends received on the Common Stock when the Restrictions on such
shares lapse will be treated as additional compensation, and not dividend
income, for federal income tax purposes and will be subject to applicable wage
withholding.
A Participant's tax basis in shares of Restricted Stock received
pursuant to the Plan will be equal to the ordinary income recognized by such
Participant. Unless a Section 83(b) election is made, the Participant's
holding period for such shares for purposes of determining gain or loss on a
subsequent sale will begin on the date the Restrictions on such shares lapse.
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<PAGE> 19
In general, the Company will be entitled to a deduction for federal
income tax purposes in an amount equal to the ordinary income recognized by a
Participant with respect to shares of Restricted Stock awarded pursuant to the
Plan, provided that the Company satisfies its withholding obligation with
respect to such income.
If, subsequent to the lapse of Restrictions on his or her shares, the
Participant sells such shares, the difference, if any, between the amount
realized from such sale and the tax basis of such shares to the Participant
will be taxed as long-term or short-term capital gain or loss, depending on
whether the Participant's holding period for such shares exceeds the applicable
holding period at the time of sale.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO ALL INDIVIDUALS. PARTICIPANTS
SHOULD CONSULT THEIR OWN TAX ADVISORS FOR A DETERMINATION AS TO THE SPECIFIC
TAX CONSEQUENCES APPLICABLE TO THEM.
SHAREHOLDER APPROVAL
The affirmative vote of the majority of the votes cast at the Meeting is
required to approve the amendment to Section 5(a) of the Plan described in this
Proposal 2. If the amendments described in this Proposal 2 and in Proposal 3
are not approved by the Company's shareholders, the Plan, as previously
approved, will continue in effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
SUBJECT TO THE HELEN OF TROY LIMITED
1994 STOCK OPTION AND RESTRICTED STOCK PLAN
(PROPOSAL 3)
The Board of Directors and the Stock Option and Compensation Committee
have determined that it is in the best interest of the Company and its
shareholders to amend the Plan to add 1,000,000 shares of Common Stock to the
Plan. There are currently 4,000,000 shares of Common Stock subject to the
Plan, of which 2,960,220 shares of Common Stock were issued or are currently
subject to Options or awards of Restricted Stock under the Plan at July 3,
1997. The Board of Directors and the Stock Option and Compensation Committee
have approved this proposed amendment to the Plan, to be effective as of the
date of approval thereof by the Company's shareholders. The Board of
Directors and the Compensation Committee also approved an amendment to the Plan
effective of the date of approval thereof by the Company's shareholders
providing that no employee may receive in any one fiscal year options under the
Plan to acquire in excess of 500,000 shares of Common Stock. See "Amendment to
the Helen of Troy Limited 1994 Stock Option and Restricted Stock Plan (Proposal
2)". If this Proposal 3 is not approved and Proposal No. 2 is approved by the
shareholders, Section 5(a) of the Plan will be amended as provided in Exhibit
A. If this Proposal 3 is approved and Proposal 2 is not approved by the
shareholders, Secton 5(a) of the Plan will be amended as provided in Exhibit B.
If both this Proposal 3 and Proposal 2 are approved by the shareholders, then
Section 5(a) of the Plan will be amended as provided in Exhibit C.
The Plan's objectives are to offer selected employees and consultants of
the Company or its subsidiaries an equity ownership interest in the financial
success of the Company or its subsidiaries, to provide the Company an
opportunity to attract and retain the best available personnel for positions of
substantial responsibility and to equity participation in the Company by
eligible Participants.
As of July 3, 1997, there were 1,024,280 shares of Common Stock
available for the grant of stock options and restricted stock awards under the
Plan. The Board of Directors believes that this is not a sufficient number of
shares of Common Stock to accomplish the objectives described above. The
inclusion of 1,000,000 additional shares of Common Stock subject to the Plan
will enable the Company to further promote these objectives.
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<PAGE> 20
SHAREHOLDER APPROVAL
The affirmative vote of the majority of the votes cast at the Meeting is
required to approve the amendment to Section 5(a) of the Plan described in this
Proposal 3. If the amendments described in this Proposal 3 and in Proposal 2
are not approved by the Company's shareholders, the Plan, as previously
approved, will continue in effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
INCREASE OF THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK
(PROPOSAL 4)
GENERAL
The Board of Directors has approved, subject to shareholder approval, a
resolution increasing the number of authorized shares of Common Stock from
25,000,000 to 50,000,000. The Company's shareholders are asked to approve the
following resolution (the "Resolution") at the Meeting:
RESOLVED, that the Company is hereby authorized to increase the
authorized share capital of the Company from US$4,500,000 to
US$7,000,000 by the creation of an additional 25,000,000 common
shares of a par value of US$0.10 each ranking pari pasu with the
existing common shares of the Company, and deposit a Memorandum
of Increase of Share Capital with the Registrar of Companies of
Bermuda reflecting such increase.
PURPOSE AND EFFECT OF INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
The Company's Memorandum of Association currently authorize the issuance
of up to twenty-five million (25,000,000) common shares, par value US$.10 per
share, and two million (2,000,000) preference shares, par value US$1.00 per
share. As of July 3, 1997, 13,291,666 shares of Common Stock were issued and
outstanding and an additional 2,269,475 shares of Common Stock were reserved
for future issuance, including issuance in connection with the Company's
outstanding stock options, leaving a balance of 9,438,859 shares of Common
Stock available for other purposes. No preference shares have been issued by
the Company. If the Resolution is adopted by the shareholders at the Meeting,
the Company will have 34,438,859 shares of Common Stock available for issuance
in addition to the shares of Common Stock currently reserved for future
issuance. The Board of Directors believes it is desirable to have the
additional shares of Common Stock available for possible future acquisitions,
stock dividends, stock splits, or other stock distributions. Subject to
shareholder approval of this Proposal 4, the Board of Directors is
contemplating approval after the Meeting of a 2-for-1 stock split of the Common
Stock to be paid as a 100% stock dividend to the Company's shareholders. There
can be no assurance that the Board of Directors will approve a stock split of
the Common Stock, or if approved, such stock split will be effected as
described above. Other than the possible payment of this stock dividend, the
Company does not currently have any agreements or understandings regarding the
issuance of any additional shares of Common Stock at this time.
The Board of Directors believes that increasing the number of authorized
shares of Common Stock will provide the Company with additional flexibility for
possible future financing transactions, acquisitions, employee benefit plans,
and other corporate purposes. Having additional authorized shares of Common
Stock available may allow the Company to take advantage of opportunities that
arise and that require prompt action. In such cases, the Company can issue
available authorized shares of Common Stock without the delay and expense of
seeking shareholder approval each time. Future authorization for the issuance
of such Common Stock by a vote of the shareholders would not be solicited prior
to such issuance unless required by law or regulation of applicable authority.
In the event that shares of such Common Stock were issued, other than pursuant
to a stock split or stock dividend, the percentage ownership of the Company of
each shareholder would be proportionately reduced, but no other rights of
shareholders would be affected. Shareholders of the Company have no preemptive
right to subscribe for or purchase any additional shares of Common Stock issued
by the Company.
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VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The Board of Directors believes that the Resolution is in the best
interest of the Company and the shareholders. Under Bermuda law, the
Resolution must be approved by an affirmative vote of the majority of the votes
cast at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
ADOPTION OF THE HELEN OF TROY
1997 CASH BONUS PERFORMANCE PLAN
(PROPOSAL 5)
Effective March 1, 1997, the Company's Board of Directors has approved
the Helen of Troy 1997 Cash Bonus Performance Plan (the "Bonus Plan") and the
performance goals established therein, subject to shareholder approval. The
Bonus Plan is designed to recognize the significant contributions of the
Company's executive officers to the growth, profitability and success of the
Company by rewarding participating executive officers for the achievement of
preestablished annual performance goals. The following summary of the Bonus
Plan contains all material provisions of the Bonus Plan, but does not purport
to be complete, and is subject in all respects to, and qualified by, the
provisions of the Bonus Plan which appear as Exhibit D to this Proxy Statement.
In 1993, Section 162(m) of the Code was enacted to limit deductibility
of compensation in excess of $1,000,000 paid during the Company's taxable year
to the chief executive officer or any of the four other most highly compensated
officers unless the compensation is performance-based and paid pursuant to
plans approved by the shareholders. The Bonus Plan is intended to allow the
Stock Option and Compensation Committee to pay benefits that qualify as
performance- based compensation within the meaning of Section 162(m) of the
Code and the Board of Directors is submitting the Bonus Plan for shareholder
approval in order to permit full deductibility of all bonus awards under the
Bonus Plan. In furtherance of this purpose, the Bonus Plan authorizes the
Company's Stock Option and Compensation Committee to establish and administer
performance criteria pursuant to which eligible executives may receive
designated cash bonus (the "Incentive Bonus") compensation.
The Bonus Plan will be administered by the Stock Option and Compensation
Committee, which consists of two or more "outside directors" within the meaning
of Section 162(m) of the Code. The Stock Option and Compensation Committee has
the authority to construe and interpret the Bonus Plan, except as otherwise
provided in the Bonus Plan, and may adopt rules and regulations governing the
administration thereof. The Bonus Plan including the performance goals stated
therein can be amended by the Stock Option and Compensation Committee alone,
unless such amendment is required to be approved by the Company shareholders
under applicable law. The Stock Option and Compensation Committee in its sole
discretion determines the executives (the "Participating Executives") eligible
for Incentive Bonus awards and, subject to the terms of the Bonus Plan, the
amount of such Incentive Bonuses.
Performance goals established under the Bonus Plan may be, but need not
be, different for each fiscal year, and different performance goals may be
applicable to different Participating Executives. The specific performance
criteria must be established by the Stock Option and Compensation Committee in
advance of the deadlines applicable under Section 162(m) and while the
performance relating to the performance criteria remains substantially
uncertain within the meaning of Section 162(m). Each Participating Executive
may receive an Incentive Bonus if and only if the performance criteria
established by the Stock Option and Compensation Committee is attained.
Notwithstanding the fact that the performance criteria established by the Stock
Option and Compensation Committee has been met, the Board of Directors may, in
its discretion, reduce or eliminate the amount of any Incentive Bonus payable
to any Participating Executive, but the Board of Directors may not approve, and
the Company may not pay, any amount constituting any increase in the amount of
any Incentive Bonus payable to any Participating Executive above the amount
determined by the performance standards established with respect to such
Participating Executive by the Stock Option and Compensation Committee.
Additionally, no such reduction or elimination of the amount of any Incentive
Bonus payable to any Participating Executive may increase the Incentive Bonus
payable to another Participating Executive notwithstanding that such other
Participating Executive is otherwise entitled to an increase in his or her
Incentive Bonus based on the performance formula established by the Stock
Option and Compensation Committee.
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<PAGE> 22
No Participating Executive shall receive an Incentive Bonus under the
Bonus Plan for any fiscal year in excess of $_________, in the case of the
Company's Chief Executive Officer, or $___________, in the case of any other
Participant. In addition, no Participating Executive shall receive any payment
under the Bonus Plan unless the Stock Option and Compensation Committee has
certified, by resolution or other appropriate action in writing, that the
amount thereof has been accurately determined in accordance with the terms,
conditions and limits of the Bonus Plan and that the performance criteria and
any other material terms previously established by the Stock Option and
Compensation Committee or set forth in the Bonus Plan were in fact satisfied.
Any Incentive Bonus granted by the Stock Option and Compensation
Committee under the Bonus Plan shall be paid as soon as practicable, unless the
Stock Option and Compensation Committee elects to defer such payment in its
sole discretion following the Stock Option and Compensation Committee's written
certification of its determination. Any such payment shall be in cash or cash
equivalents, subject to applicable withholding requirements.
No Incentive Bonus will be paid for any fiscal year unless the
Participating Executive is an employee of the Company at the end of that fiscal
year, except that if the Participating Executive's employment terminates during
a fiscal year by reason of death, disability, retirement or any other reason as
defined by the Stock Option and Compensation Committee, the Participating
Executive (or the Participating Executive's beneficiary) will receive, in a
single cash payment, the Incentive Bonus for that fiscal year, prorated to the
date of termination of employment.
For this fiscal year ending February 28, 1998, the Stock Option and
Compensation Committee selected the Company's Chief Executive Officer, Mr.
Gerald Rubin, to participate in the Bonus Plan. For the fiscal year 1998, the
performance goal under the Bonus Plan will be linked to earnings from
continuing operations before income taxes adjusted for extraordinary items and
capital gains and losses ("Earnings"). An Incentive Bonus will be payable to
Mr. Rubin for fiscal year 1998 only if five percent of the Earnings for such
fiscal year exceeds Mr. Rubin's base salary and, if payable, such Incentive
Bonus will equal five percent of the excess of Earnings over Mr. Rubin's base
salary. Because the Incentive Bonus is linked to Earnings during this fiscal
year, the actual Incentive Bonus to be received by Mr. Rubin for this fiscal
year pursuant to the Bonus Plan is not currently determinable. If the Bonus
Plan had been in effect during the fiscal year ended February 28, 1997, Mr.
Rubin, would have received $551,705 as an Incentive Bonus for that fiscal year.
The Earnings formula described above constitutes a performance goal under
Section 162(m) of the Code for which the Company seeks shareholder approval.
For fiscal 1997, Mr. Rubin's employment contract provided an incentive bonus
based on the same Earnings formula described above. Mr. Rubin's employment
contract has been amended to remove the bonus previously provided under his
contract; provided that if the Company's shareholders do not approve the Bonus
Plan, then Mr. Rubin would be entitled to receive a bonus under his employment
contract based on the same Earnings formula described above to the extent that
his total compensation (including his bonus, if any) does not exceed the limits
imposed by Section 162(m) of the Internal Revenue Code, as amended. See
"Executive Compensation; Employment Contracts."
Because the other Participating Executives under the Bonus Plan are to
be determined from time to time by the Stock Option and Compensation Committee,
in its discretion, it is impossible at this time to indicate the precise
number, name or positions of the other executives who will receive Incentive
Bonuses or the amounts of such Incentive Bonuses.
VOTE REQUIRED FOR ADOPTION
The proposal to adopt the Helen of Troy 1997 Cash Bonus Performance Plan
must receive the favorable vote of a majority of the votes cast at the Meeting
or any adjournment thereof for approval. An affirmative vote by a shareholder
shall also be deemed to be approval of the performance goals under the Helen of
Troy 1997 Cash Bonus Performance Plan for purposes of Section 162(m) of the
Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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AMENDMENTS TO THE HELEN OF TROY LIMITED
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(PROPOSAL 6)
The Board of Directors has determined that it is in the best interest of
the Company and its shareholders to amend the Directors Plan. The Board of
Directors has approved certain amendments to the Directors Plan, to be
effective as of the date of approval thereof by the Company's shareholders.
The following summary of the Directors Plan does not purport to be complete and
is subject in all respects to, and qualified by, the provisions of the
Directors Plan.
The Directors Plan currently provides for an automatic annual
grant of options for 2,000 shares of Common Stock to each director, who is not
at the time of the grant an officer or employee of the Company or any of its
affiliates (each an "Eligible Director"). Section 3(a) of the Directors Plan
has been amended, subject to shareholder approval, to provide for, in addition
to the automatic annual grant of options for 2,000 shares of Common Stock to
each Eligible Director, a one time grant of stock options to each Eligible
Director of 10,000 shares of Common Stock effective as of the date of
shareholder approval. The full text of this proposed amendment to Section 3(a)
of the Directors Plan is set forth as follows:
(a) The Company shall (i) automatically grant to each
Director, annually on the 1st day of September following the Director's
appointment, election, reappointment, or reelection as a member of the
Board, a Stock Option for 2,000 shares of Common Stock and (ii) grant to
each Director on August 26, 1997 a Stock Option for 10,000 shares of
Common Stock; provided, however, the aggregate number of shares of
Common Stock issued under Stock Options granted under the Plan shall not
exceed 240,000.
Section 8(d)(i) of the Directors Plan has been amended, subject to
shareholder approval, to permit an Eligible Director who ceases to be a
director of the Company or one or more of its affiliates, for any reason other
than death or disability, and does not remain or thereupon become an employee
of the Company or one or more of its affiliates, to exercise all options to the
extent then exercisable for a period of six months after the date of cessation
of directorship or employment (if such director remained or became an employee
of the Company following the cessation of directorship). Currently, the
Directors Plan provides that in the event that an optionee ceases to be a
director of the Company or one or more of its affiliates, for any reason other
than death or disability, and such optionee does not remain or thereupon become
an employee of the Company or one or more of its affiliates, all unexercised
options (including any not yet vested) shall expire on the date the Eligible
Director ceases to be a director (or, if upon ceasing to be a director the
Eligible Director remained or became an employee of the Company or one or more
of its affiliates, on the date the Eligible Director ceases to be an employee).
The Company believes that this amendment will facilitate recruitment and
retention of qualified outside directors. The full text of this proposed
amendment to Section 8(d)(i) of the Directors Plan is set forth as follows:
(i) If a Director ceases, for any reason other than such
Director's death or disability (as defined in Section 22(e)(3) of the
Code), to be a director of at least one of the corporations in the group
of corporations consisting of the Company and its Affiliates and the
Director does not remain or thereupon become an employee of the Company
or one or more of its Affiliates, such Director shall have the right,
for a period of six (6) months after the date of the Director's ceasing
to be a director (or, if upon ceasing to be a director the Director
remained or became an employee of the Company or one or more of its
Affiliates, on the date of the Director's ceasing to be an employee), to
exercise a Stock Option to the extent such Stock Option is exercisable
on the date of his cessation of directorship or employment, and the
Stock Option shall terminate and cease to be exercisable as of the end
of such six (6) month period.
If the amendments to the Directors Plan are not approved by the
shareholders of the Company, options will continue to be automatically granted
in accordance with the terms of the current Directors Plan.
GENERAL PLAN INFORMATION
The Directors Plan was adopted by the Board of Directors on June 6,
1995, subject to shareholder approval, which was subsequently obtained on
August 23, 1995 at the Annual Meeting of Shareholders. The purpose of the
Directors Plan is to attract and to retain the services of experienced and
knowledgeable independent individuals as members of the Board of
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<PAGE> 24
Directors, to extend to them the opportunity to acquire a proprietary interest
in the Company so that they will apply their best efforts for the benefit of
the Company, and to provide those individuals with an additional incentive to
continue in their position, for the best interest of the Company and its
shareholders. A total of 240,000 shares of Common Stock are reserved and
available for issuance under the Directors Plan, subject to adjustments to
reflect certain changes in capitalization.
Options will be awarded under the Directors Plan only to members of the
Board of Directors who are not at the time of the grant an officer or employee
of the Company or any of its affiliates.
ADMINISTRATION OF THE DIRECTORS PLAN
The Directors Plan is administered by the members of the Board of
Directors who are either an employee of the Company or one of its affiliates
(the "Ineligible Directors"). The Ineligible Directors have the authority and
discretion to interpret the Directors Plan and to make all other determinations
necessary for the administration of the Directors Plan and to prescribe, amend
and rescind any rules and regulations relating to the Directors Plan. However,
the Ineligible Directors have no discretion or authority to disregard or change
any of the terms and conditions under which options are granted to the Eligible
Directors or may be exercised under the Directors Plan.
PRIOR GRANTS OF PLAN AWARDS
During fiscal 1997, options to purchase 10,000 shares of Common Stock
were granted pursuant to the Directors Plan. The following table summarizes
the options outstanding under the Directors Plan as of July 3, 1997.
<TABLE>
<CAPTION>
Position Number of Options
-------- -----------------
<S> <C>
Non-Employee Directors as a
Group (5 persons) . . . . . . . . . . . . . 16,000
</TABLE>
OPTIONS UNDER THE DIRECTORS PLAN
An option granted under the Directors Plan becomes fully vested for one
hundred percent (100%) of the number of shares of Common Stock subject to the
option one year after the date such option was granted. The exercise price
under each option shall be equal to the mean between the high and low prices of
the Common Stock reported on the NASDAQ National Market System or other primary
market or exchange on the last trading day preceding the date on which such
option is granted to an Eligible Director. The option shall be deemed
exercised on the day when written notice of such exercise has been received by
the Company from the person entitled to exercise the option, accompanied by
full payment of the purchase price in cash or check. No option is exercisable
after the tenth anniversary of its grant.
Subject to shareholder approval of this Proposal 5, in the event that an
optionee ceases to be a director of the Company or one or more of its
affiliates, for any reason other than death or disability, and such optionee
does not remain or thereupon become an employee of the Company or one or more
of its affiliates, all options to the extent then exercisable may be exercised
for a period of six months after the date of cessation of directorship or
employment. In the event that the optionee dies while serving on the Board of
Directors of the Company or the Board of Directors of an affiliate of the
Company or while an employee thereof, all options granted to such optionee may
be exercised by the optionee's legal representatives, legatees or distributees
to the extent such options are exercisable at any time prior to the first
anniversary of his or her death, and his or her unexercised options shall
expire at the end of such period. If an option holder becomes disabled while a
director or an employee of the Company or one or more of its affiliates and
thereafter ceases to be such a director by reason of a disability, all options
to the extent then exercisable may be exercised for a period of 90 days after
the date of cessation of directorship or employment. In no event, however,
shall the period during which such options may be exercised extend beyond the
term of the options.
Under the Directors Plan, an option may not be transferred, assigned,
encumbranced, pledged or charged, other than by will or the laws of descent or
distribution.
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CAPITALIZATION ADJUSTMENTS; MERGER; CHANGE IN CONTROL
Adjustments to prevent dilution will be made in the event of a stock
dividend, or split, combination, exchange of shares or other recapitalization,
merger, or otherwise, in which the Company is the surviving corporation. No
fractional shares of Common Stock shall be issued under the Directors Plan on
account of any such adjustments. Such adjustments shall be made by the
Ineligible Directors.
TERM AND TERMINATION OF THE DIRECTORS PLAN; AMENDMENT
The Directors Plan will continue in effect until June 6, 2005, unless
sooner terminated. The Board of Directors may make such changes in and
additions to the Directors Plan as it may deem proper; provided, however,
except for adjustments to reflect certain changes in capitalization permitted
under the Directors Plan, shareholder approval is required for any amendment
that (i) materially increases the benefits accruing to the Eligible Directors
under the Directors Plan; (ii) changes the class of persons eligible to receive
options under the Directors Plan; or (iii) increases the duration of the
Directors Plan. The Board of Directors may not, without the Eligible
Director's written consent, modify the terms and conditions of an option
previously granted under the Directors Plan. In addition, no amendment,
suspension or termination of the Directors Plan shall, without the Eligible
Director's written consent, alter, terminate or impair any right or obligation
under any option previously granted under the Directors Plan. An amendment
revising the price, date of exercisability, option term or amount of shares of
Common Stock covered by an option granted under the Directors Plan may not be
made more frequently than every six months, unless such an amendment is
required to comply with the Code, or the Employee Retirement Income Security
Act of 1974, as amended, or the rules promulgated thereunder.
In the event that regulations and rules of the Securities and Exchange
Commission cease to require shareholder approval as a condition of exemption
under Rule 16b-3 of the Exchange Act or any successor rule or regulation, and
shareholder approval is not required as a condition of registration or listing
with an applicable national market system or stock exchange, the Directors Plan
shall cease to be subject to shareholder approval, and any amendment,
suspension or termination of the Directors Plan shall be deemed to be effective
upon adoption by the Board of Directors.
MISCELLANEOUS
The Directors Plan is not qualified under the provisions of Section
401(a) of the Code and is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
FEDERAL INCOME TAX CONSEQUENCES
The following general summary is based upon the Internal Revenue Code
and does not include a discussion of any state or local tax consequences.
A participant will not recognize any taxable income upon the grant of an
option. However, upon exercise of an option, a participant must recognize
ordinary income in an amount equal to the excess of the fair market value of
the shares of Common Stock at the time of exercise over the exercise price.
Upon the subsequent disposition of the shares, the participant will realize a
capital gain or loss, depending on whether the selling price exceeds the fair
market value of the shares on the date of exercise. The participant's holding
period in the shares, for capital gains and losses purposes, begins on the date
of exercise. A participant's tax basis in the shares received on exercise of
an option will be equal to the amount of consideration paid by the participant
on exercise, plus the amount of ordinary income recognized as a result of the
receipt of such shares. If a participant exercises an option by delivering
shares of Common Stock, the participant will not recognize gain or loss with
respect to the shares delivered by the participant, even if the then fair
market value of such shares is different from the participant's tax basis
therein. The participant, however, will be taxed as described above with
respect to the exercise of the option as if he had paid the exercise price in
cash. The participant's tax basis in the shares received on such exercise will
be equal to his basis in the number of shares surrendered on such exercise plus
the fair market value of the number of shares received in excess of the number
of shares surrendered and the holding period for such number of shares received
will include the holding period of the shares surrendered. The Company will
not be entitled to a deduction for federal income tax purposes for the
compensation paid to the participants under the Directors Plan.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO ALL INDIVIDUALS. PARTICIPANTS
SHOULD
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<PAGE> 26
CONSULT THEIR OWN TAX ADVISORS FOR A DETERMINATION AS TO THE SPECIFIC TAX
CONSEQUENCES APPLICABLE TO THEM.
SHAREHOLDER APPROVAL
The affirmative vote of the majority of the votes cast at the Meeting is
required to approve the amendments to the Directors Plan. If the amendments
thereto are not approved by the Company's shareholders, the Directors Plan, as
previously approved, will continue in effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next annual
meeting must be received at the executive offices of the Company by March 6,
1998, for inclusion in the proxy statement and form of proxy of the Company.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
No action is to be taken with respect to the selection or approval of
independent public accountant for the Company. KPMG Peat Marwick LLP has
served as independent public accountants for the Company since 1978. A
representative of KPMG Peat Marwick LLP is expected to be present at the Annual
Meeting of Shareholders with the opportunity to make a statement if he desires
to do so, and he is also expected to be available to respond to appropriate
questions.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Executive officers, directors and greater than ten percent
shareholders are required by SEC Regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during fiscal 1997, all Section 16(a) filing
requirements applicable to the officers, directors and greater than ten percent
beneficial owners were complied with.
QUORUM; VOTING
The presence in person of two or more persons, representing throughout
the Meeting, in person or by proxy, at least a majority of the issued shares of
Common Stock entitled to vote is necessary to constitute a quorum at the
Meeting. Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present. If a quorum is present, the seven
nominees for directors receiving a majority of the votes cast at the Meeting in
person or by proxy shall be elected. The affirmative vote of the majority of
the votes cast at the Meeting in person or by proxy shall be the act of the
shareholders with respect to Proposals 2 through 6. If within half an hour
from the time appointed for the Meeting a quorum is not present or represented
by proxy, the Meeting shall stand adjourned to the same day one week later, at
the same time and place or to such other day, time or place the Board of
Directors may determine, provided that at least two persons are present at such
adjourned meeting, representing throughout the meeting, in person or by proxy,
at least a majority of the issued shares of Common Stock entitled to vote. At
any such adjourned meeting at which a quorum is presented or represented, any
business may be transacted that might have been transacted at the Meeting as
originally called.
Broker non-votes are shares held by a broker or nominee which are
represented at the Meeting, but with respect to which such broker or nominee is
not empowered to vote on a particular proposal. Such broker non-votes will be
counted towards
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<PAGE> 27
a quorum. Abstentions and broker non-votes are not counted in determining the
total number of votes cast and will have no effect with respect to Proposals 1
through 6.
OTHER MATTERS
The Board of Directors knows of no matters to be presented at the
Meeting other than the election of directors. If other matters properly come
before the Meeting or any adjournment thereof, the holders of the proxies are
authorized to vote on these matters in accordance with management's discretion.
YOUR VOTE IS IMPORTANT
You are encouraged to let us know your preference by completing and
returning the enclosed proxy card.
Gerald J. Rubin
Chairman of the Board
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<PAGE> 28
EXHIBIT A
(a) Basic Limitation. Shares offered under this Plan may be
authorized but unissued Shares or Shares that have been reacquired by
the Company. The aggregate number of Shares that are available for
issuance under this Plan shall not exceed four million (4,000,000)
Shares, subject to adjustment pursuant to Section 9 of this Plan. The
Committee shall not issue more Shares than are available for issuance
under this Plan. The number of Shares that are subject to unexercised
Options at any time under this Plan shall not exceed the number of
Shares that remain available for issuance under this Plan. The Company,
during the term of this Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of this Plan.
Notwithstanding anything herein to the contrary, and subject to
potential changes specified in Section 9(a), no Participant may be
granted an Option which, in combination with all other Options granted
after February 28, 1997 to such Participant under the Plan (regardless
of whether they have been exercised or canceled) aggregates more than
500,000 Shares in any one (1) year period commencing on or after
February 28, 1997.
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<PAGE> 29
EXHIBIT B
(a) Basic Limitation. Shares offered under this Plan may be
authorized but unissued Shares or Shares that have been reacquired by
the Company. The aggregate number of Shares that are available for
issuance under this Plan shall not exceed five million (5,000,000)
Shares, subject to adjustment pursuant to Section 9 of this Plan. The
Committee shall not issue more Shares than are available for issuance
under this Plan. The number of Shares that are subject to unexercised
Options at any time under this Plan shall not exceed the number of
Shares that remain available for issuance under this Plan. The Company,
during the term of this Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of this Plan.
Notwithstanding anything herein to the contrary, and subject to
potential changes specified in Section 9(a), no Participant may be
granted an Option which, in combination with all other Options granted
after February 28, 1995 to such Participant under the Plan (regardless
of whether they have been exercised or canceled) aggregates more than
600,000 Shares in a three (3) year period commencing on or after
February 28, 1995.
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<PAGE> 30
EXHIBIT C
(a) Basic Limitation. Shares offered under this Plan may be
authorized but unissued Shares or Shares that have been reacquired by
the Company. The aggregate number of Shares that are available for
issuance under this Plan shall not exceed five million (5,000,000)
Shares, subject to adjustment pursuant to Section 9 of this Plan. The
Committee shall not issue more Shares than are available for issuance
under this Plan. The number of Shares that are subject to unexercised
Options at any time under this Plan shall not exceed the number of
Shares that remain available for issuance under this Plan. The Company,
during the term of this Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of this Plan.
Notwithstanding anything herein to the contrary, and subject to
potential changes specified in Section 9(a), no Participant may be
granted an Option which, in combination with all other Options granted
after February 28, 1997 to such Participant under the Plan (regardless
of whether they have been exercised or canceled) aggregates more than
500,000 Shares in any one (1) year period commencing on or after
February 28, 1997.
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EXHIBIT D
HELEN OF TROY
1997 CASH BONUS PERFORMANCE PLAN
Section 1. PURPOSE OF PLAN
The purpose of the Plan is to promote the success of the Company and its
Subsidiaries by providing to the participating executives of the Company and
its Subsidiaries bonus incentives that qualify as performance-based
compensation within the meaning of Section 162(m) of the Code. Subject to the
approval of the shareholders of the Company, the Plan shall be effective as of
March 1, 1997.
Section 2. DEFINITIONS AND TERMS
2.1. Accounting Terms. Except as otherwise expressly provided or the
context otherwise requires, financial and accounting terms are used as defined
for purposes of, and shall be determined in accordance with, GAAP.
2.2. Specific Terms. The following words and phrases as used herein
shall have the following meanings:
"Bonus" means a cash payment or payment opportunity as a context
requires.
"Business Criteria" means any one or any combination of financial
goals or other objective goals, which may be Company-wide, on an
individual basis or otherwise, and (i) with respect to financial goals,
may be expressed, for example, in terms of Net Income, EPS, ECO, cash
flow, Return on Equity, Return on Assets or other return ratios, or
stock price of the Company, and (ii) with respect to objective goals,
may include the attainment of various productivity and long term growth
objectives, including for example, reductions in the Company's overhead
ratio and expenses to sales ratios.
"Change in Control" shall mean to have occurred at such time as
either (i) any "person", as such term is used in section 14(d) of the
Exchange Act, other than the Company, a wholly-owned subsidiary of the
Company or any employee benefit plan of the Company, or its
subsidiaries, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act (or any successor rule), directly or
indirectly, of fifty percent (50%) or more of the combined voting power
of the Company's common stock, or (ii) individuals who constitute the
Board of the Directors on the effective date of this Plan (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election or nomination for election
by the Company's shareholders was approved by a vote of at least three
quarters of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for the director without
objection to such nomination) shall be, for purposes of this clause (ii)
considered as though such person was a member of the Incumbent Board.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" means the Stock Option and Compensation Committee of
the Company which has been established to administer the Plan in
accordance with Section 3.1 and Section 162(m) of the Code.
"Company" means Helen of Troy Limited, a Bermuda company, and any
successor whether by merger, ownership or all or substantially all of
its assets or otherwise.
"Disability" shall have such meaning attributed thereto in the
Company's long-term disability plan, or, if no such plan exists, shall
mean a "Permanent and Total Disability" as defined in Code Section
22(e).
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"ECO" shall mean the sum of (i) the consolidated earnings from
continuing operations before all income taxes of the Company and its
Subsidiaries for each Year, (ii) minus extraordinary income, plus
extraordinary expenses (as defined by GAAP), and (iii) minus capital
gains, plus capital losses (as defined by GAAP).
"EPS" for any Year means earnings per share of the Company as
reported in the Company's Consolidated Statement of Income set forth in
the audited consolidated financial statements of the Company for the
Year.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and as interpreted by the rules and regulations promulgated
thereunder.
"Executive" means a key employee (including any officer) of the
Company or the Subsidiaries.
"GAAP" shall mean generally accepted accounting principles used
and applied in the United States of America.
"Net Income" for any Year means the consolidated net income of
the Company as reported in the audited consolidated financial statements
of the Company for the Year.
"Participant" means an Executive selected to participate in the
Plan by the Committee.
"Performance Period" means the Year or Years with respect to
which the Performance Targets are set by the Committee.
"Performance Target(s)" means the specific objective goal or
goals (which may be cumulative and/or alternative) that are timely set
in writing by the Committee for each Executive for the Performance
Period with respect to any one or more of the Business Criteria.
"Plan" means the Helen of Troy 1997 Cash Bonus Performance Plan
as amended from time to time.
"Return on Assets" means Net Income divided by the average of the
total assets of the Company at the end of the fiscal quarters of the
Year as reported by the Company in its consolidated financial
statements.
"Return on Equity" means the Net Income divided by the average of
the common shareholders equity of the Company at the end of each of the
fiscal quarters of the Year as reported by the Company in its
consolidated financial statements.
"Section 162(m)" means Section 162(m) of the Code, and the
regulations promulgated thereunder, all as amended from time to time.
"Subsidiary" means any corporation, partnership or other entity
as to which more than fifty percent (50%) of the voting securities or
other voting ownership interests shall now or hereafter be owned or
controlled, directly by a person, any Subsidiary of such person, or any
Subsidiary of such Subsidiary.
"Year" means any one or more fiscal years of the Company
commencing on or after March 1, 1997, that represent(s) the applicable
Performance Period.
Section 3. ADMINISTRATION OF THE PLAN
3.1. The Committee. The Plan shall be administered by a Committee
consisting solely of at least two members of the Board of Directors of the
Company, duly authorized by the Board of Directors of the Company to administer
the Plan, who (i) are not eligible to participate in the Plan and (ii) are
"outside directors" within the meaning of Section 162(m).
3.2. Powers of the Committee. The Committee shall have the sole
authority to establish and administer the Performance Target(s) and the
responsibility of determining from among the Executives those persons who will
participate in and receive Bonuses under the Plan and, subject to Sections 4
and 5 of the Plan, the amount of such Bonuses and shall otherwise be
responsible for the administration of the Plan, in accordance with its terms.
The Committee shall have the authority to construe and interpret the Plan
(except as otherwise provided herein) and any agreement or other document
relating
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to any Bonus under the Plan, may adopt rules and regulations governing the
administration of the Plan, and shall exercise all other duties and powers
conferred on it by the Plan, or which are incidental or ancillary thereto. For
each Performance Period, the Committee shall determine, at the time the
Business Criteria and the Performance Target(s) are set, those Executives who
are selected as Participants in the Plan.
3.3. Requisite Action. A majority (but not fewer than two) of the
members of the Committee shall constitute a quorum. The vote of a majority of
those present at a meeting at which a quorum is present or the unanimous
written consent of the Committee shall constitute action by the Committee.
3.4. Express Authority (and Limitations on Authority) to Change Terms
and Conditions of Bonus. Without limiting the Committee's authority under
other provisions of the Plan, but subject to any express limitations of the
Plan and Section 5.8, the Committee shall have the authority to accelerate a
Bonus (after the attainment of the applicable Performance Target(s)) and to
waive restrictive conditions for a Bonus (including any forfeiture conditions,
but not Performance Target(s)), in such circumstances as the Committee deems
appropriate. In the case of any acceleration of a Bonus after the attainment
of the applicable Performance Target(s), the amount payable shall be discounted
to its present value using an interest rate equal to Moody's Average Corporate
Bond Yield of the month preceding the month in which such acceleration occurs.
Section 4. BONUS PROVISIONS
4.1. Provision for Bonus. Each Participant may receive a Bonus if and
only if the Performance Target(s) established by the Committee, relative to the
applicable Business Criteria, are attained. The applicable Performance Period
and Performance Target(s) shall be determined by the Committee consistent with
the terms of the Plan and Section 162(m). Notwithstanding the fact that the
Performance Target(s) have been attained, the Board of Directors of the Company
may, in its discretion, reduce or eliminate the amount of any Bonus payable to
any Participant; provided that the Board of Directors may not approve, and the
Company may not pay, any amount constituting an increase in the amount of any
Bonus payable to any Participant above the amount determined by the formula or
standard established with respect to such Participant pursuant to Section 4.2;
provided further that any such reduction or elimination of the amount of any
Bonus payable to any Participant shall not have the effect of increasing the
Bonus payable to another Participant notwithstanding such other Participant
being otherwise entitled to an increase in his or her Bonus pursuant to the
formula or standard established with respect to such Participant pursuant to
Section 4.2.
4.2. Selection of Performance Target(s). The specific Performance
Target(s) with respect to the Business Criteria must be established by the
Committee in advance of the deadlines applicable under Section 162(m) and while
the performance relating to the Performance Target(s) remains substantially
uncertain within the meaning of Section 162(m). At the time the Performance
Target(s) are selected, the Committee shall provide, in terms of an objective
formula or standard for each Participant, and for any person who may become a
Participant after the Performance Target(s) are set, the method of computing
the specific amount that will represent the maximum amount of Bonus payable to
the Participant if the Performance Target(s) are attained, subject to Sections
4.1, 4.7, 4.10 5.1 and 5.8.
4.3. Selection of Participants. For each Performance Period, the
Committee shall determine, at the time the Business Criteria and the
Performance Target(s) are set, those Executives who will participate in the
Plan.
4.4. Effect of Mid-Year Commencement of Service. To the extent
compatible with Sections 4.2 and 5.8, if services as an Executive commence
after the adoption of the Plan and the Performance Target(s) are established
for a Performance Period, the Committee may grant a Bonus that is
proportionately adjusted based on the period of actual service during the Year;
the amount of any Bonus paid to such person shall not exceed that proportionate
amount.
4.5. Termination of Employment During Year. Unless otherwise
determined by the Committee or required by applicable law or pursuant to any
written agreement between the Company and the Executive:
(a) no Bonus shall be payable to an Executive if the Executive
is not employed by the Company or any Subsidiary of the Company on the
last day of the Performance Period for which the Bonus is otherwise
payable, unless the Executive's employment with the Company and its
Subsidiaries terminates during the Performance Period by reason of the
Executive's death or Disability or following a Change in Control, and
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(b) in the event of the Executive's death or Disability during
the Performance Period, or in the event of the termination of the
Executive's employment for any reason following a Change in Control that
occurs during the Performance Period, the Executive (or the Executive's
legal representative or beneficiary) shall receive a Bonus equal to the
product of (i) the Bonus he would have received for the entire
Performance Period, multiplied by (ii) a fraction, the numerator of
which is the number of days during the Performance Period in which the
Executive was an employee of the Company or its Subsidiaries, and the
denominator of which is the number of days in the Performance Period.
Payment of such Bonus shall be made in accordance with Section 4.9 hereof.
4.6. Accounting Changes. Subject to Section 5.8, if, after the
Performance Target(s) are established for a Performance Period, a change occurs
in the applicable accounting principles or practices, the amount of the Bonuses
paid under this Plan for such Performance Period shall be determined without
regard to such change.
4.7. Committee Discretion to Determine Bonuses. The Committee has the
sole discretion to determine the standard or formula pursuant to which each
Participant's Bonus shall be calculated (in accordance with Section 4.2),
whether all or any portion of the amount so calculated will be paid, and the
specific amount (if any) to be paid to each Participant, subject in all cases
to the terms, conditions and limits of the Plan and of any other written
commitment authorized by the Committee. To this same extent, the Committee may
at any time establish additional conditions and terms of payment of Bonuses
(including, but not limited to the achievement of other financial, strategic or
individual goals, which may be objective or subjective) as it may deem
desirable in carrying out the purposes of the Plan and may take into account
such other factors as it deems appropriate in administering any aspect of the
Plan. The Committee may not, however, increase the maximum amount permitted to
be paid to any individual under Section 4.2 or 4.10 of the Plan or award a
Bonus under this Plan if the applicable Performance Target(s) have not been
satisfied.
4.8. Committee Certification. No Executive shall receive any payment
under the Plan unless the Committee has certified, by resolution or other
appropriate action in writing, that the amount thereof has been accurately
determined in accordance with the terms, conditions and limits of the Plan and
that the Performance Target(s) and any other material terms previously
established by the Committee or set forth in the Plan were in fact satisfied.
4.9. Time of Payment. Any Bonuses granted by the Committee under the
Plan shall be paid as soon as practicable following the Committee's
determinations under this Section 4 and the certification of the Committee's
findings under Section 4.8. Any such payment shall be in cash or cash
equivalents, subject to applicable withholding requirements. If and to the
extent permitted by the Committee, and in accordance with such rules as the
Committee may from time to time adopt, Participants may, prior to the beginning
of any Performance Period, elect to defer the payout of all or any portion of a
Bonus relating to such Performance Period. In the case of the delay of a Bonus
otherwise payable at or after the attainment and certification of the
applicable Performance Target(s), any additional amount payable shall be based
on Moody's Average Corporate Bond Yield over the deferral period.
4.10. Maximum Individual Bonus. Notwithstanding any other provision
hereof, no Executive shall receive a Bonus under the Plan for any fiscal year
in excess of $_________, in the case of the Chief Executive Officer of the
Company, or $__________, in the case of any other Executive.
Section 5. GENERAL PROVISIONS
5.1. No Right to Bonus or Continued Employment. Neither the
establishment of the Plan nor the provision for or payment of any amounts
hereunder nor any action of the Company (including, for purposes of this
Section 5.1, any predecessor or Subsidiary), the Board of Directors of the
Company or the Committee in respect of the Plan, shall be held or construed to
confer upon any person any legal right to receive, or any interest in, a Bonus
or any other benefit under the Plan, or any legal right to be continued in the
employ of the Company. The Company expressly reserves any and all rights to
discharge an Executive in its sole discretion, without liability of any person,
entity or governing body under the Plan or otherwise, except to the extent
otherwise provided in any written employment agreement between the Company and
the Executive. Notwithstanding any other provision hereof and notwithstanding
the fact that the Performance Target(s) have been attained and/or the
individual maximum amounts pursuant to Section 4.2 have been calculated, the
Company shall have no obligation to pay any Bonus hereunder nor to pay the
maximum amount so calculated, unless the Committee otherwise expressly provides
by written contract or other written commitment.
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5.2. Discretion of the Company, Board of Directors and Committee. Any
decision made or action taken by the Company or by the Board of Directors of
the Company or by the Committee arising out of or in connection with the
creation, amendment, construction, administration, interpretation and effect of
the Plan shall be within the absolute discretion of such entity and shall be
conclusive and binding upon all persons. No member of the Committee shall have
any liability for actions taken or omitted under the Plan by the member or any
other person.
5.3. Absence of Liability. A member of the Board of Directors of the
Company or a member of the Committee or any officer of the Company shall not be
liable for any act or inaction hereunder, whether of commission or omission.
5.4. No Funding of Plan. The Company shall not be required to fund or
otherwise segregate any cash or any other assets which may at any time be paid
to Participants under the Plan. The Plan shall constitute an "unfunded" plan
of the Company. The Company shall not, by any provisions of the Plan, be
deemed to be a trustee of any property, and any obligations of the Company to
any Participant under the Plan shall be those of a debtor and any rights of any
Participant or former Participant shall be limited to those of a general
unsecured creditor.
5.5. Non-Transferability of Benefits and Interests. Except as
expressly provided by the Committee, no benefit payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any such attempted action shall be void and
no such benefit shall be in any manner liable for or subject to debts,
contracts, liabilities, engagements or torts of any Participant or former
Participant. This Section 5.5 shall not apply to an assignment of a
contingency or payment due after the death of the Executive to the deceased
Executive's legal representative or beneficiary.
5.6. Law to Govern. All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of Texas.
5.7. Non-Exclusivity. Subject to Section 5.8, the Plan does not limit
the authority of the Company, the Board or the Committee, or any Subsidiary of
the Company, to grant awards or authorize any other compensation under any
other plan or authority, including, without limitation, awards or other
compensation based on the same Performance Target(s) used under the Plan. In
addition, Executives not selected to participate in the Plan may participate in
other plans of the Company.
5.8. Section 162(m) Conditions; Bifurcation of Plan. It is the intent
of the Company that the Plan and Bonuses paid hereunder satisfy and be
interpreted in a manner, that, in the case of Participants who are or may be
persons whose compensation is subject to Section 162(m), satisfies any
applicable requirements as performance-based compensation. Any provision,
application or interpretation of the Plan inconsistent with this intent to
satisfy the standards in Section 162(m) of the Code shall be disregarded.
Notwithstanding anything to the contrary in the Plan, the provisions of the
Plan may at any time be bifurcated by the Board or the Committee in any manner
so that certain provisions of the Plan or any Bonus intended or required in
order to satisfy the applicable requirements of Section 162(m) are only
applicable to persons whose compensation is subject to Section 162(m).
Section 6. EFFECTIVE DATE, AMENDMENTS, SUSPENSION OR TERMINATION OF PLAN
The Plan shall be effective as of March 1, 1997, subject to its approval
by shareholders of the Company at the annual meeting of shareholders to be held
August 26, 1997, or any adjournment or postponement thereof. The Board of
Directors or the Committee may from time to time amend, suspend or terminate in
whole or in part, and if suspended or terminated, may reinstate, any or all of
the provisions of the Plan. Notwithstanding the foregoing, no amendment may be
effective without Board of Directors and/or shareholder approval if such
approval is necessary to comply with the applicable rules under Section 162(m)
of the Code. Unless sooner terminated by the Board of Directors or the
Committee, to the extent necessary to ensure that Bonuses paid to Executives
may be deductible under Section 162(m) for federal income tax purposes, the
Plan shall terminate as of the date of the Company's first meeting of the
Company's shareholders occurring during the year 2002, unless the term of the
Plan is extended and reapproved at such shareholders' meeting. No additional
Bonuses may be payable after termination of the Plan. Termination of the Plan
shall not affect any Bonuses due and outstanding on the date of termination and
such Bonuses shall continue to be subject to the terms of the Plan
notwithstanding its termination.
5
