UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a party other than the
Registrant
Check the appropriate box:
Preliminary proxy statement Confidential For Use of the
Commission Only, (as permitted,
by Rule 14a-6(e)(2))
Confidential, for use of the
Commission only (as permitted
by Rule 14a-6(e)(2)).
XDefinitive proxy statement
Definitive additional
materials
Soliciting material pursuant
to 240.14a-11(c)or
240.14a-12
LIFETIME HOAN CORPORATION
(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 0-11:1
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11
(a)(2) and identify the filing for which the offsetting fee was
paid previously.
1 Set forth the amount on which the filing fee is calculated
and state how it was determined.
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:
LIFETIME HOAN CORPORATION
One Merrick Avenue
Westbury, New York 11590
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON June 7, 2005
Notice is hereby given that the Annual Meeting of
Stockholders of Lifetime Hoan Corporation, a Delaware
corporation (the "Company"), will be held at the offices of
the Company, One Merrick Avenue, Westbury, New York 11590 on
Tuesday June 7, 2005, at 10:30 a.m., local time, for the
following purposes:
(1) To elect a board of nine directors to serve
until the next Annual Meeting of Stockholders or until
their successors are duly elected and qualified;
(2) To ratify the appointment of Ernst & Young LLP as the
independent registered public accounting firm of the
Company;
(3) To consider and act upon a proposal to amend the
Restated Certificate of Incorporation of the Company (i) to
change the name of the Company to "Lifetime Brands, Inc.",
(ii) to delete no longer needed provisions regarding the
reclassification of former shares of common stock, which
reclassification took place on April 23, 1991 and (iii) to
permit the Board of Directors to amend the By-Laws of the
Company.
(4) To transact such other business as may properly come
before the meeting, or any adjournment(s) or postponement(s)
thereof.
Stockholders of record at the close of business on
April 25, 2005 are entitled to notice of and to vote at the
Annual Meeting and any adjournment(s) or postponement(s)
thereof. A complete list of the stockholders entitled to
vote at the Annual Meeting will be available for examination
by any stockholder at the Company's offices, One Merrick
Avenue, Westbury, New York 11590, for any purpose germane to
the Annual Meeting, during ordinary business hours, for a
period of at least 10 days prior to the Annual Meeting.
By Order of the Board of Directors
Craig Phillips, Secretary
Westbury, New York
April 18, 2005
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL
STOCKHOLDERS TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN THE
ACCOMPANYING REPLY ENVELOPE. STOCKHOLDERS WHO ATTEND THE
MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON.
LIFETIME HOAN CORPORATION
One Merrick Avenue
Westbury, New York 11590
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held on June 7, 2005
INTRODUCTION
This Proxy Statement is furnished in connection with
the solicitation of proxies by the Board of Directors (the
"Board") of Lifetime Hoan Corporation, a Delaware
corporation (the "Company"), for use at the Annual Meeting
of Stockholders of the Company (the "Meeting") to be held on
the date, at the time and place and for the purposes set
forth in the accompanying Notice of Annual Meeting of
Stockholders. Stockholders of record at the close of
business on April 25, 2005 are entitled to notice of and to
vote at the Meeting. This Proxy Statement and the
accompanying Proxy shall be mailed to stockholders on or
about May 9, 2005.
THE MEETING
Voting at the Meeting
On April 25, 2005, there were 11,051,349 shares of the
Company's common stock, $.01 par value (the "Common Stock"),
issued and outstanding. Each share of Common Stock entitles
the holder thereof to one vote on all matters submitted to a
vote of stockholders at the Meeting.
A majority of the Company's outstanding shares of
Common Stock represented at the Meeting, in person or by
proxy, shall constitute a quorum. Assuming a quorum is
present, (1) the affirmative vote of a plurality of the
shares so represented is necessary for the election of
directors 2) the affirmative vote of a majority of the
shares so represented is necessary to ratify the appointment
of Ernst & Young LLP as the independent registered public
accounting firm of the Company and 3) the affirmative vote
of a majority of the outstanding shares of Commons Stock is
necessary for the amendment of the Restated Certificate of
Incorporation of the Company (i) to change the name of the
Company to "Lifetime Brands, Inc.", (ii) to delete no longer
needed provisions regarding the reclassification of former
shares of common stock, which reclassification took place on
April 23, 1991 and (iii) to permit the Board of Directors to
amend the By-Laws of the Company.
Proxies and Proxy Solicitation
All shares of Common Stock represented by properly
executed proxies will be voted at the Meeting in accordance
with the directions marked on the proxies, unless such
proxies have previously been revoked. If no directions are
indicated on such proxies, they will be voted for the
election of each nominee named below under "Election of
Directors", for the ratification of the appointment of Ernst
& Young LLP as the independent auditors of the Company and
for the amendment of the Restated Certificate of
Incorporation of the Company (i) to change the name of the
Company to "Lifetime Brands, Inc.", (ii) to delete no longer
needed provisions regarding the reclassification of former
shares of common stock, which reclassification took place on
April 23, 1991 and (iii) to permit the Board of Directors to
amend the By-Laws of the Company. If any other matters are
properly presented at the Meeting for action, the proxy
holders will vote the proxies (which confer discretionary
authority upon such holders to vote on such matters) in
accordance with their best judgment. Each proxy executed
and returned by a stockholder may be revoked at any time
before it is voted by timely submission of a written notice
of revocation or by submission of a duly executed proxy
bearing a later date (in either case directed to the
Secretary of the Company), or, if a stockholder is present
at the Meeting, he may elect to revoke his proxy and vote
his shares personally. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence
of a quorum for the transaction of business. If a
stockholder, present in person or by proxy, abstains on any
matter, such stockholder's shares of Common Stock will not
be voted on such matter. Thus, an abstention from voting on
any matter has the same legal effect as a vote "against" the
matter, even though the stockholder may interpret such
action differently. Except for determining the presence or
absence of a quorum for the transaction of business, broker
non-votes are not counted for any purpose in determining
whether a matter has been approved.
The Company will bear the cost of preparing, printing,
assembling and mailing the proxy, this Proxy Statement and
other material which may be sent to stockholders in
connection with this solicitation. It is contemplated that
brokerage houses will forward the proxy materials to
beneficial holders at the request of the Company. In
addition to the solicitation of proxies by the use of the
mails, officers and other employees of the Company may
solicit proxies by telephone without being paid any
additional compensation. The Company will reimburse such
persons for their reasonable out-of-pocket expenses in
accordance with the regulations of the Securities and
Exchange Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding
beneficial ownership of the Common Stock as of April 25,
2005 (except where otherwise noted) based on a review of
information filed with the United States Securities and
Exchange Commission ("SEC") and the Company's stock records
with respect to (a) each person known to be the beneficial
owner of more than 5% of the outstanding shares of Common
Stock, (b) each Director or nominee for a directorship of
the Company, (c) each executive officer of the Company named
in the Summary Compensation Table, and (d) all Directors,
nominees and executive officers as a group. Unless
otherwise stated, each of such persons has sole voting and
investment power with respect to such shares.
Percent of
Outstanding
Shares
Amount and Nature of Beneficially
Name and Address Beneficial Ownership Owned (19)
Jeffrey Siegel (1) 1,319,024(2) 11.9%
Ronald Shiftan (1) 106,845(3) 1.0%
Craig Phillips (1) 945,642(4) 8.5%
Howard Bernstein (1) 6,000(5) 0.1%
Cherrie Nanninga (1) 6,000(6) 0.1%
William Westerfield (1) 5,000(7) 0.0%
Sheldon Misher (1) 5,000(7) 0.0%
Robert McNally (1) 140,372(8) 1.3%
Bruce Cohen (1) 1,113,013(9) 9.9%
Evan Miller (1) 67,371(10) 0.6%
Robert Reichenbach (1) 18,750(11) 0.2%
Larry Sklute (1) 95,000(12) 0.9%
Leonard Florence (1) 126,700(6) 1.1%
Daniel Siegel (1) 630,622(13) 5.7%
Milton L. Cohen 1,313,914(14) 11.8%
133 Everit Avenue
Hewlett Bay Park, NY 11557
Jodie Glickman 1,063,067(15) 9.6%
1233 Beech Street - Unit 35
Atlantic Beach, NY 11509
Laura Miller 1,074,399(16) 9.7%
1312 Harbor Road
Hewlett Harbor, NY 11598
Tracy Wells 938,465(17) 8.5%
30 Wedgewood Drive
Hopkinton, MA 01748
All Directors and Executive
Officers as a Group (13 persons)3,992,217(18) 34.9%
(1) The address of such individuals is c/o the Company, One
Merrick Avenue, Westbury, NY 11590.
(2) Does not include 968,423 shares owned by ten separate
irrevocable trusts for the benefit of Mr. Siegel's children,
nieces and nephews. Mr. Siegel, who is not a trustee of the
trusts, disclaims beneficial ownership of the shares held by
the trusts. Mr. Jeffrey Siegel is the father of Mr. Daniel
Siegel and Mrs. Tracy Wells and is a cousin of Mr. Craig
Phillips.
(3) Includes 81,000 shares issuable upon the exercise of
stock options that are exercisable within 60 days.
(4)Includes 28,278 shares held by a trust of which Mr.
Phillips is a beneficiary and 18,950 shares issuable upon
the exercise of options which are exercisable within 60
days. Does not include 18,750 shares issuable upon the
exercise of stock options that are not exercisable within 60
days.
(5) Includes 1,000 shares issuable upon the exercise of
stock options that are exercisable within 60 days.
(6) Includes 6,000 shares issuable upon the exercise of
stock options that are exercisable within 60 days.
(7) Includes 5,000 shares issuable upon the exercise of
stock options that are exercisable within 60 days.
(8) Includes 89,157 shares issuable upon the exercise of
stock options that are exercisable within 60 days.
(9) Includes 261,638 shares held in an irrevocable trust of
which Mr. Bruce Cohen is the beneficiary. Also includes the
following shares, for which Mr. Bruce Cohen disclaims
beneficial ownership: 322,276 shares held in an irrevocable
trust for the benefit of Mrs. Jodie Glickman, of which Mr.
Bruce Cohen and Mrs. Miller are co-trustees, 352,123 shares
held in an irrevocable trust for the benefit of Mrs. Laura
Miller of which Mr. Bruce Cohen and Mrs. Glickman are co-
trustees, and 150,216 shares held in irrevocable trusts for
the benefit of members of Mr. Bruce Cohen's immediate family
of which Mr. Bruce Cohen is the sole trustee. Does not
include 37,500 shares issuable upon the exercise of stock
options that are not exercisable within 60 days.
(10) Includes 29,100 shares issuable upon the exercise of
options which are exercisable within 60 days. Does not
include 37,500 shares issuable upon the exercise of stock
options that are not exercisable within 60 days.
(11) Includes 18,750 shares issuable upon the exercise of
options which are exercisable within 60 days. Does not
include 56,250 shares issuable upon the exercise of stock
options that are not exercisable within 60 days.
(12) Includes 95,000 shares issuable upon the exercise of
stock options that are exercisable within 60 days.
(13) Amount and Nature of Beneficial Ownership and Percent
of Outstanding Shares Beneficially Owned is based on
Schedule 13G dated July 24, 2002 filed with the SEC
reporting beneficial ownership of securities of the Company
held by Mr. Dan Siegel as of December 31, 2002 and
subsequent information provided to the Company. Includes
309,111 shares held in an irrevocable trust for which Mr.
Daniel Siegel is the beneficiary. Also includes the
following shares, for which Mr. Daniel Siegel disclaims
beneficial ownership: 309,111 shares held in an irrevocable
trust for the benefit of Mrs. Tracy Wells, of which Mr.
Siegel and Mrs. Wells are co-trustees and a total of 6,000
shares held in two irrevocable trusts for the benefit of two
of his nieces for which Mr. Dan Siegel is the sole trustee.
(14) Includes 40,000 shares issuable upon the exercise of
stock options that are exercisable within 60 days. Does not
include 1,310,070, shares owned by nineteen separate
irrevocable trusts for the benefit of Mr. Milton L. Cohen's
children, their spouses and his grandchildren. Mr. Milton L.
Cohen, who is not a trustee of the trusts, disclaims
beneficial ownership of the shares held by the trusts. Mr.
Milton L. Cohen is the father of Mr. Bruce Cohen, Mrs. Jodie
Glickman and Mrs. Laura Miller and the father-in-law of Evan
Miller, who is married to Laura Miller.
(15) Amount and Nature of Beneficial Ownership and Percent
of Outstanding Shares Beneficially Owned is based on
Schedule 13G dated January 28, 2003 filed with the SEC
reporting beneficial ownership of securities of the Company
held by Mrs. Jodie Glickman as of December 31, 2002 and
subsequent information provided to the Company. Includes
322,276 shares held in an irrevocable trust of which Mrs.
Jodie Glickman is the beneficiary. Also includes the
following shares, for which Mrs. Jodie Glickman disclaims
beneficial ownership: 261,638 shares held in an irrevocable
trust for the benefit of Mr. Bruce Cohen, of which Mrs.
Jodie Glickman and Mr. Bruce Cohen are co-trustees, 352,123
shares held in an irrevocable trust for the benefit of Mrs.
Laura Miller of which Mrs. Jodie Glickman and Mrs. Laura
Miller are co-trustees, and 97,186 shares held in
irrevocable trusts for the benefit of members of Mrs. Jodie
Glickman's immediate family of which Mrs. Jodie Glickman is
the sole trustee.
(16) Amount and Nature of Beneficial Ownership and Percent
of Outstanding Shares Beneficially Owned is based on
Schedule 13G dated January 28, 2003 filed with the SEC
reporting beneficial ownership of securities of the Company
held by Mrs. Laura Miller as of December 31, 2002 and
subsequent information provided to the Company. Includes
352,123 shares held in an irrevocable trust of which Mrs.
Laura Miller is the beneficiary. Also includes the
following shares, for which Mrs. Laura Miller disclaims
beneficial ownership: 261,638 shares held in an irrevocable
trust for the benefit of Mr. Bruce Cohen, of which Mrs.
Laura Miller and Mr. Bruce Cohen are co-trustees, 322,276
shares held in an irrevocable trust for the benefit of Mrs.
Jodie Glickman of which Mrs. Laura Miller and Mrs. Jodie
Glickman are co-trustees, and 138,362 shares held in
irrevocable trusts for the benefit of members of Mrs. Laura
Miller's immediate family of which Mrs. Jodie Glickman is
the sole trustee.
(17) Amount and Nature of Beneficial Ownership and Percent
of Outstanding Shares Beneficially Owned is based on
Schedule 13G dated July 24, 2002 filed with the SEC
reporting beneficial ownership of securities of the Company
held by Mrs. Tracy Wells as of December 31, 2002 and
subsequent information provided to the Company. Includes
309,111 shares held in an irrevocable trust of which Mrs.
Tracy Wells is the beneficiary. Also includes the following
shares, for which Mrs. Tracy Wells disclaims beneficial
ownership: 309,111 shares held in an irrevocable trust for
the benefit of Mr. Daniel Siegel, of which Mrs. Tracy Wells
and Mr. Daniel Siegel are co-trustees, 309,111 shares held
in an irrevocable trust for the benefit of Mr. Clifford
Siegel of which Mrs. Tracy Wells and Mr. Clifford Siegel are
co-trustees, and 11,132 shares held in irrevocable trusts
for the benefit of Ms. Sarah Francis Young of which Mrs.
Tracy Wells is the sole trustee.
(18) Includes 354,957 shares issuable upon the exercise of
stock options that are exercisable within 60 days. Does not
include 150,000 shares issuable upon the exercise of stock
options that are not exercisable within 60 days.
(19) Calculated on the basis of 11,443,806 shares of Common
Stock outstanding, except that shares underlying stock
options exercisable within 60 days are deemed to be
outstanding for purposes of calculating the beneficial
ownership of securities owned by the holder of such options.
To the knowledge of the Company, no arrangement exists, the
operation of which might result in a change of control of
the Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A board of nine directors is to be elected at the Meeting
to hold office until the next Annual Meeting of
Stockholders, or until their successors are duly elected and
qualified. The following nominees have been recommended by
the Board of Directors. Each of the nominees are current
Directors of the Company with the exception of Michael
Jeary, who is a first time nominee. Mr. Leonard Florence,
who is currently a Director of the Company has declined to
stand for re-election to the Board of Directors for personal
reasons. It is the intention of the persons named in the
enclosed proxy to vote the shares covered thereby for the
election of the nine persons named below, unless the proxy
contains contrary instructions:
Director or Executive
Officer of Company or
Name Age Position Its Predecessor Since
Jeffrey Siegel 63 Chairman of the Board of 1967
Directors, Chief Executive
Officer and President
Ronald Shiftan 60 Vice Chairman and a Director 2004
Bruce Cohen 46 President of Outlet Retail 1998
Stores, Inc., Executive Vice
President and a Director
Craig Phillips 55 Senior Vice-President - 1973
Distribution, Secretary and a
Director
Howard Bernstein 84 Director 1992
Cherrie Nanninga 56 Director 2003
Sheldon Misher 64 Director 2004
William Westerfield 73 Director 2004
Michael Jeary 58
Jeffrey Siegel is Chairman of the Board of Directors,
Chief Executive Officer and President. Mr. Siegel has held
the position of Chairman of the Board since June 2001, the
position of Chief Executive Officer since December 2000 and
the position of President since December 1999. Prior to
becoming President, since 1967, Mr. Siegel was Executive
Vice President of the company. Mr. Siegel is also a member
of the board of directors of the International Housewares
Association.
Ronald Shiftan was elected Vice Chairman of the Company
in November 2004. Mr. Shiftan has been a Director of the
Company since 1991. Mr. Shiftan had been a consultant to
the Company from October 2002 to November 2004. From
September 1998 to January 2002, Mr. Shiftan was Deputy
Executive Director of The Port Authority of New York and New
Jersey.
Bruce Cohen has been President of Outlet Retail Stores,
Inc., a wholly-owned subsidiary of the Company which
operates the Farberware outlet stores, since 2002. He is
also an Executive Vice President and a Director. Mr. Cohen
has held the position of Executive Vice President since
December 1999 and has been a Director since 1998.
Craig Phillips has been Senior Vice-President -
Distribution since July 2003, Secretary since 1973 and a
Director since 1973. Prior to July 2003, Mr. Phillips also
held the position of Vice-President - Manufacturing since
1973.
Howard Bernstein has been a Director of the Company since
1992. Mr. Bernstein has been a member of the firm of Cole,
Samsel & Bernstein LLC (and its predecessors), certified
public accountants, for approximately fifty-two years.
Cherrie Nanninga has been a Director of the Company
since 2003. Ms. Nanninga has been the Chief Operating
Officer of the New York Tri-State Region of CB Richard
Ellis, Inc., a commercial real estate firm, since 2002.
Prior thereto, Ms. Nanninga served as Deputy Chief
Financial Officer and Director of Real Estate for The Port
Authority of New York and New Jersey.
Sheldon Misher has been a Director of the Company since
April 2004. Mr. Misher has since October 2001 been a counsel
in the New York office of McCarter & English, a law firm
headquartered in Newark, New Jersey. From 1998 to 2001, Mr.
Misher was affiliated with Commonwealth Associates, LLP,
with respect to its private equity and merchant banking
activities. From 1972 to 1998, Mr. Misher was a senior
partner and member of the executive committee of Bachner,
Tally, Polevoy and Misher, a New York law firm.
William Westerfield has been a Director of the Company
since April 2004. Mr. Westerfield is retired. From 1965 to
1992 he was an audit partner at Price Waterhouse LLP. Mr.
Westerfield currently is a member of the Board of Directors
and the Chairman of the Audit Committees of Gymboree Corp.,
an international children's apparel retailer, and West
Marine, Inc., a boating supply retailer. He is also a
director of TL Administration (formerly Twinlab Corporation)
where he served as Chairman of its Audit Committee. Mr.
Westerfield also serves as a consultant in auditing
disputes.
Michael Jeary has been, since 1998, the President and
Chief Operating Officer of Della Famina Rothschild Jeary and
Partners, an advertising agency. Mr. Jeary is on the New
York Board of the American Association of Advertising
Agencies.
Jeffrey Siegel and Craig Phillips are cousins.
The Company has no reason to believe that any of the
nominees will not be a candidate or will be unable to serve.
However, should any of the foregoing nominees become
unavailable for any reason, the persons named in the
enclosed proxy intend to vote for such other person or
persons as the Board may nominate.
The Board recommends that stockholders vote FOR the
election of the nominated directors, and signed proxies
which are returned will be so voted unless otherwise
instructed on the proxy card.
MANAGEMENT AND DIRECTORS
The following table sets forth the names and ages of
each of our executive officers and directors as of December
31, 2004:
Name Position
Jeffrey Siegel Chairman of the Board of
Directors, Chief
Executive Officer and
President
Ronald Shiftan Vice Chairman and a
Director
Evan Miller President of the Sales
Division and Executive
Vice President
Robert Reichenbach President of the Cutlery
and Cutting Boards,
Bakeware and At-Home
Entertaining Divisions
and Executive Vice
President
Larry Sklute President of the
Kitchenware Division
Bruce Cohen President of Outlet
Retail Stores, Inc.,
Executive Vice President
and a Director
Craig Phillips Senior Vice-President -
Distribution,
Secretary and a Director
Robert McNally Vice-President - Finance
and Treasurer
Howard Bernstein Director
Leonard Florence Director
Cherrie Nanninga Director
Sheldon Misher Director
William Westerfield Director
Evan Miller, age 40, has been President of the
Company's Sales Division and an Executive Vice President
since March 2002. Prior thereto Mr. Miller was our Senior
Vice President - Sales since February 2000. Prior thereto,
Mr. Miller was our Vice President - National Sales Manager
since 1985.
Robert Reichenbach, age 55, has been President of the
Company's Cutlery and Cutting Boards, Bakeware and At-Home
Entertaining Divisions since February 2001. He has also
been an Executive Vice President since March 2002. Prior
thereto, Mr. Reichenbach was Senior Vice President - General
Merchandise Manager of Linens `N Things from November 1998
to March 2000.
Larry Sklute, age 60, has been President of the
Company's Kitchenware Division since February 2001. Prior
thereto Mr. Sklute was Vice President of Marketing since
1993.
Robert McNally, age 58, has been Vice President -
Finance and Treasurer since 1997.
All of the Company's officers are elected annually by
the Board of Directors and hold office at the pleasure of
the Board of Directors.
See "Election of Directors" for biographies relating to
Directors.
INFORMATION CONCERNING THE BOARD OF DIRECTORS OF LIFETIME
HOAN CORPORATION
CORPORATE GOVERNANCE
Board Independence
The Board has determined that Messrs. Howard Bernstein,
William Westerfield, Sheldon Misher and Leonard Florence
(who is not standing for re-election to the Board of
Directors) and Mrs. Cherrie Nanninga are independent
directors and Michael Jeary (a nominee for election to the
Board of Directors) when elected will be an independent
director under the listing standards of the NASDAQ. Messrs.
Jeffrey Siegel, Ronald Shiftan, Bruce Cohen and Craig
Phillips are employees of the Company and are not considered
independent directors.
Code of Conduct and Business Ethics
The Company has adopted a code of conduct that applies
to all of its directors, officers (including its chief
executive officer, chief financial officer and controller)
and employees. On an annual basis, written acknowledgement
of understanding and compliance is required of all
directors, officers and employees.
Board Meetings
The Board of Directors held six meetings during the
fiscal year ended December 31, 2004.
Board and Committee Attendance
Each director attended every Board Meeting and every
meeting of the committee(s) on which he/she served, with the
exception of Leonard Florence, who missed three Board
Meetings and three committee meetings during 2004. All of
the directors attended the Company's 2004 Annual Meeting of
Stockholders except for Mr. Florence. Directors are
expected, but not required, to attend the 2005 Annual
Meeting of Stockholders. The Board of Directors holds
meetings on at least a quarterly basis, and more often if
necessary to fulfill its responsibilities.
Stockholder Communication with Directors
Stockholders who wish to communicate with members of
the Board of Directors, including the independent directors
individually or as a group, may send correspondence to them
in care of the Secretary at the Company's principal office,
One Merrick Avenue, Westbury, New York 11590.
Alternatively, the directors may be contacted via e-mail at
BoardofDirectors@lifetime.hoan.com.
The Board Nomination Process
The Company does not have a standing nominating
committee or committee performing similar functions.
Instead, the Board of Directors as a whole acts as a
nominating committee. The Board of Directors believes that
it is appropriate for the Company not to have such a
committee in view of the fact that the Board has adopted a
policy that the Board will not nominate any nominee unless
such nominee is approved by a majority of the independent
directors of the Board.
The directors of the Company are elected annually by
the stockholders of the Company. They will serve until the
next annual meeting of the stockholders of the Company or
until their successors have been duly elected and qualified
or until their earlier resignation or removal.
Board Compensation
Directors who are not employees of the Company receive
an annual fee of $15,000, plus $1,000 for each meeting of
the Board attended and $500 for each committee meeting
attended when held on a different day than a Board of
Directors meeting. Independent directors that are committee
chairs also receive an additional annual fee of $5,000.
Directors, who are employees of the Company, do not receive
compensation for such services. The officers and directors
of the Company have entered into indemnification agreements
with the Company. In June 2004, Cherrie Nanninga, Howard
Bernstein, Leonard Florence and Ronald Shiftan each received
options to purchase 1,000 shares of Common Stock at an
exercise price of $20.09 per share. Also in June 2004,
Sheldon Misher and William Westerfield, both of whom were
then elected directors for the first time, each received
options to purchase 5,000 shares of Common Stock at an
exercise price of $20.09 per share. Annually each existing
independent director receives an option to purchase 1,000
shares of Common Stock with the exercise price being the
closing price on the date of the grant. First time
independent directors receive an option to purchase 5,000
shares of Common Stock with the exercise price being the
closing price on the date of the grant. The Compensation
Committee is reviewing the adequacy of compensation for
outside directors and committee members. This may also
entail a recommendation of the allocation of such fees
between cash and equity.
Audit Committee
The Audit Committee is comprised of three directors,
who are independent, as required by the Audit Committee
charter and the listing requirements for The Nasdaq Stock
Market, Inc. The current members are William Westerfield
(Chairman), Howard Bernstein, and Cherrie Nanninga. In
addition, the Company's Board of Directors has determined
that William Westerfield is an "audit committee financial
expert," as defined by SEC rules. The Audit Committee
held six meetings during 2004.
The Audit Committee, among other things, regularly:
reviews the activities of the Company's independent
accountants.
evaluates the Company's organization and its internal
controls, policies, procedures and practices to determine
whether they are reasonably designed to:
- provide for the safekeeping of the Company's assets;
and
- assure the accuracy and adequacy of the Company's
records and financial statements.
reviews the Company's financial statements and reports.
monitors compliance with the Company's internal
controls, policies, procedures and practices.
undertakes such other activities as the Board from time
to time may delegate to it.
considers the qualifications of and appoints the
independent accountants of the Company.
reviews and approves audit fees and fees for non-audit
services rendered or to be rendered by the independent
accountants, and reviews the audit plan and the services
rendered or to be rendered by the independent accountants
for each year and the results of their audit for the
previous year.
The complete text of the Audit Committee charter is set
forth at Appendix A to this Proxy Statement.
Compensation Committee
The Compensation Committee is comprised of three
directors, who are independent. The current members are
Sheldon Misher (Chairman), Cherrie Nanninga and Leonard
Florence. The Compensation Committee held four meetings
during 2004.
The Compensation Committee, after consulting with the
Chief Executive Officer of the Company, establishes,
authorizes and administers the Company's compensation
policies, practices and plans for the Company's directors,
executive officers and other key personnel. The
Compensation Committee advises the Board of Directors
regarding directors' and officers' compensation and
management development and succession plans. The
Compensation Committee is responsible for administering the
Company's 2000 Incentive Bonus Compensation Plan and the
Company's 2000 Long-Term Incentive Plan. The Company's 1991
Stock Option Plan and 1996 Incentive Stock Option Plan are
administered by the Board of Directors. The Compensation
Committee also undertakes such other activities as may be
delegated to it from time to time by the Board of Directors.
Governance Committee
The Governance Committee is comprised of three
directors. The current members are Sheldon Misher
(Chairman), Howard Bernstein and Ronald Shiftan. The
Governance Committee held one meeting during 2004.
The Governance Committee develops and makes
recommendations to the Board of Directors regarding
governance principles applicable to the Company. The
Governance Committee's principal duties and responsibilities
include assessing the structure of the committees of the
Board of Directors, developing and recommending corporate
governance guidelines and developing and recommending
procedures for the evaluation and self evaluation of the
Board of Directors.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of the
Company reviewed and discussed the consolidated financial
statements of the Company and its subsidiaries that are set
forth in the Company's 2004 Annual Report to Stockholders
and in Item 8 of the Company's Annual Report on Form 10-K
for the year ended December 31, 2004, with management of the
Company and Ernst & Young LLP, independent registered public
accounting firm for the Company.
The Audit Committee discussed with Ernst & Young LLP
the matters required to be discussed by Statement on
Auditing Standards No. 61, "Communication with Audit
Committees," as amended, which includes, among other items,
matters relating to the conduct of an audit of the Company's
financial statements and the adequacy of internal controls.
The Audit Committee received the written disclosures
and the letter from Ernst & Young LLP required by
Independence Standards Board Standard No. 1 and discussed
with Ernst & Young LLP that firm's independence from the
Company. The Committee concluded that the provision by
Ernst & Young LLP of non-audit services, including tax
preparation services, to the Company is compatible with its
independence.
Based on the review and discussions with management of
the Company and Ernst & Young LLP referred to above, the
Audit Committee recommended to the Board of Directors that
the Company publish the consolidated financial statements of
the Company and its subsidiaries for the year ended December
31, 2004 in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004 and in the Company's 2004
Annual Report to Stockholders.
April 18, 2005
The Audit Committee
Howard Bernstein William Westerfield Cherrie Nanninga
Chairman
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Policies and Practices
The Board of Directors of the Company (the "Board") has
delegated to the Compensation Committee of the Board (the
"Committee") primary responsibility for establishing and
administering the compensation programs of the Company for
its executive officers and other key personnel.
The Committee annually reviews the Company's executive
compensation practices to determine whether the Company's
executive compensation practices (a) enable the Company to
attract and retain qualified and experienced executive
officers and other key personnel, (b) will motivate
executive officers and other key personnel to attain
appropriate short-term and long-term performance goals and
to manage the Company for sustained long-term growth, and
(c) align the interests of executive officers and other key
personnel with the interests of the stockholders.
Section 162(m) of the Internal Revenue Code (the
"Code") provides that compensation paid to a public
company's chief executive officer and its four other highest
paid executive officers in tax years 1994 and thereafter in
excess of $1 million is not deductible unless such
compensation is paid only upon the achievement of objective
performance goals where certain procedural requirements have
been satisfied. Alternatively, such compensation may be
deferred until the executive officer is no longer a covered
person under Section 162(m) of the Code. Any compensation
subject to the Section 162(m) limitations will be
automatically deferred until the payment of such
compensation would be deductible by the Company except in
those cases where the Committee determines that
nondeductible payments would be consistent with the
Company's compensation philosophy and in the best interests
of the Company and its stockholders.
Executive Officers' Disclosure
Each of the executive officers of the Company receives
a salary at a level which is commensurate with the
responsibility of such individual, and his or her prior
experience. In reviewing salaries, the Committee takes into
consideration the operating responsibility of each
individual, his or her experience in the housewares
industry, his or her expertise in overseas purchasing and
the amount of time spent abroad. The Committee also examines
the impact each individual has on the profitability and
future growth of the Company. Such salaries are intended to
be comparable to the salaries of other companies of
comparable size and nature. Each executive officer of the
Company, except for Mr. Shiftan, is employed pursuant to an
employment agreement which was entered into in 2001 (for Mr.
Siegel) and in 2003 (for the others) and expire at various
times through 2006. These agreements provide for annual
compensation including annual bonuses. The Compensation
Committee has engaged the services of an independent
compensation consultant to assist in evaluating executive
compensation.
The Company adopted the Lifetime Hoan Corporation 2000
Incentive Bonus Compensation Plan pursuant to which
executive officers, and other designated participants, are
entitled to bonuses based on performance criteria and
targets that are established for an applicable period. The
Company also adopted the Lifetime Hoan Corporation 2000 Long-
Term Incentive Plan, which permits the granting of options
(and other stock based awards) to executive officers and
other key personnel of the Company and its subsidiaries.
Chief Executive Officer Disclosure
The compensation of Jeffrey Siegel, Chairman of the
Board of Directors, Chief Executive Officer and President,
is governed by the terms of an agreement dated April 6,
2001, which was approved by the Committee and provided,
among other things, for an annual base salary of $700,000 in
2001 plus annual increments thereafter based on changes in
the Consumer Price Index and an annual bonus. His bonus for
2004 was $555,000. The agreement also provides for a
$350,000 payment at the earlier of April 6, 2006 or the
occurrence of certain termination events.
April 18, 2005
The Compensation Committee
Sheldon Misher, Chairman
Leoanard Florence Cherrie Nanninga
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information
concerning the compensation of the Company's Chief Executive
Officer and President, each of its other four most highly
compensated executive officers whose annual compensation for
the fiscal years ended December 31, 2004, 2003 and 2002
exceeded $100,000 and one additional individual for whom
disclosure would have been provided for the fiscal year
ended December 31, 2004 but for the fact that the individual
was not an employee for the entire 2004 fiscal year:
Long-Term
Compensation
No. of
Shares of
Common
Annual Compensation Stock
Underlying
Name and Stock All other
Principal Position Year Salary Bonus Options Compensation
Jeffrey Siegel 2004 $755,280 $554,743(2) -- $31,457 (1)
Chief Executive 2003 $741,000 $576,320(2) -- $28,898 (1)
Officer and President 2002 $713,000 $323,000 -- $28,578 (1)
Ronald Shiftan 2004 $61,153 -- 1,000 $3,000 (1)
Vice Chairman (6)
Bruce Cohen 2004 $313,603 -- -- $12,354 (1)
President of Outlet 2003 $313,424 -- 50,000 $9,855 (1)
Retail Stores, Inc. 2002 $304,000 $25,000(5) -- $11,178 (1)
and Executive Vice-
President
Evan Miller 2004 $325,053 $211,800(3) -- $12,877 (1)
President of Sales 2003 $313,424 $210,375(4) 50,000 $12,692 (1)
and Executive Vice- 2002 $304,000 $200,000(5) -- $16,919 (1)
President
Robert Reichenbach 2004 $300,000 $25,000(3) -- $6,600 (1)
President of Cutlery 2003 $250,000 $84,304(4) 75,000 $6,643 (1)
and Cutting Boards, 2002 $195,000 $75,000(5) -- $7,855 (1)
Bakeware and At-Home
Entertaining and
Executive Vice-
President
Robert McNally 2004 $240,000 $40,000(3) -- $11,675 (1)
Vice-President 2003 $240,000 $25,000(4) -- $11,320 (1)
Finance, Chief 2002 $227,000 $20,000(5) 150,000 $11,652 (1)
Financial Officer
and Treasurer
(1) Represents the current dollar value of premiums paid
for split dollar life insurance by the Company and
automobile related expenses paid by the Company.
(2) Includes $545,000 earned and paid in 2004 and $9,743
accrued in 2004 and paid in 2005 and $532,691 earned and
paid during 2003 and $43,629 accrued in 2003 and paid in
2004.
(3) Such amounts were accrued in 2004 and paid in 2005.
(4) Such amounts were accrued in 2003 and paid in 2004.
(5) Such amounts were accrued in 2002 and paid in 2003.
(6) Mr. Shiftan became Vice-Chairman of the Company in
November 2004. Mr. Shiftan had been a consultant to the
Company from October 2002 to November 2004. For his
services as a consultant during 2004, Mr. Shiftan received
compensation of $400,000, which included a bonus of
$100,000 awarded to Mr. Shiftan by the Company in April
2005. Mr. Shiftan received a stock option grant in June
2004 in his capacity as an outside director.
Option/SAR Grants in Last Fiscal Year
Individual Grants
No. of Shares
of Common % of Total
Stock Options
Underlying Granted to Grant Date
Options Employees in Exercise Expiration Present
Name Granted Fiscal Year Price Date Value
Ronald Shiftan 1,000 2.04% $20.09 6/9/2014 $70,400 (a)
(a) Option values reflect Black-Scholes model output for
options. The assumptions used in the model for the grant to
Mr. Shiftan are an expected volatility of .349, a risk-free
rate of return of 3.59%, a dividend yield of 1.24% and an
expected option life of 6 years.
Aggregated Option/SAR Exercises in the Last Fiscal Year and
Fiscal Year-End Option/SAR Values
The following table sets forth certain information with
respect to each exercise of stock options during the fiscal
year ended December 31, 2004 by each of the Named Executive
Officers and the number and value of unexercised options
held by each of the Named Executive Officers as of December
31, 2004:
Number of Shares
of Common Stock Value of
Shares Underlying Unexercised Unexercised
Acquired on Value Options/SARs at In-The-Money Options/SARS
Name Exercise Realized December 31, 2004 at December 31, 2004 (1)
Exercisable Unexercisable Exercisable Unexercisable
Jeffrey Siegel -- -- -- -- -- --
Ronald Shiftan -- -- 80,000 -- $813,000 --
Bruce Cohen 12,500 $155,250 -- 37,500 -- $306,750
Evan Miller 10,000 $105,000 29,100 37,500 $237,008 $306,750
Robert Reichenbach-- -- 18,750 56,250 $153,375 $460,125
Robert McNally 44,970 $568,182 89,157 -- $855,907 --
(1) Calculated based on the difference between the closing
sale price of the Common Stock, as reported on the Nasdaq
National Market on December 31, 2004 ($15.90 per share), and
the exercise price of each option multiplied by the number
of shares of Common Stock underlying such option.
PERFORMANCE GRAPH
The following graph compares the cumulative total
return on the Company's Common Stock with the Nasdaq
Market Value Index and the Housewares Index - Media
General Industry Group. The comparisons in this table are
required by the Securities and Exchange Commission and are
not intended to forecast or be indicative of the possible
future performance of the Company's Common Stock.
LIFETIME HOAN CORPORATION
Cumulative Total Stockholder Return for the Period December 31,
1999 through December 31, 2004. 2
Nasdaq
Lifetime Market Housewares
Date Hoan Index Index
12/31/99 $100.00 $100.00 $100.00
12/31/00 142.84 62.85 83.73
12/31/01 122.92 50.10 97.71
12/31/02 101.78 34.95 105.06
12/31/03 372.84 52.55 90.07
12/31/04 356.66 56.97 94.88
2 Assumes $100 invested on December 31, 1999 and assumes
dividends reinvested. Measurement points are at the last
trading day of each of the fiscal years ended December 2004,
2003, 2002, 2001 and 2000. The material in this chart is
not soliciting material, is not deemed filed with the
Securities and Exchange Commission and is not incorporated
by reference in any filing of the Company under the
Securities Act of 1993, as amended, or the Securities
Exchange Act of 1934, as amended, whether or not made before
or after the date of this Proxy Statement and irrespective
of any general incorporation language in such filing. A
list of the companies included in the housewares index will
be furnished by the Company to any stockholder upon written
request to the Vice President, Finance and Treasurer of the
Company.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
Effective as of April 6, 2001, Mr. Jeffrey Siegel
entered into an employment agreement with the Company that
provides that the Company will employ him as its President
and Chief Executive Officer for a term that commenced on
April 5, 2001, and as its Chairman of the Board that
commenced immediately following the 2001 Annual Meeting of
stockholders, and continuing until April 6, 2006, and
thereafter for additional consecutive one year periods
unless terminated by either the Company or Mr. Siegel as
provided in the agreement. The agreement provides for an
annual salary of $700,000 with annual increments based on
changes in the Consumer Price Index and for the payment each
year of a bonus in an amount equal to 3.5% of our pre-tax
income for such fiscal year, adjusted to include, amounts
payable during such year to Mr. Siegel under the employment
agreement and to Milton Cohen in his capacity as a
consultant to the Company plus all significant non-recurring
charges deducted in determining such pre-tax income. The
Company's pre-tax income upon which Mr. Siegel's bonuses are
to be based is determined by the committee responsible for
administering and interpreting the 2000 Incentive Bonus
Compensation Plan. Under the terms of the employment
agreement, up to 80% of Mr. Siegel's annual bonus (as
estimated in accordance with an annual budget) may be paid
in advance. In addition, under the terms of the employment
agreement, Mr. Siegel is entitled to $350,000 payable at the
earlier of April 5, 2006 or the occurrence of certain
termination events and to bonuses under our 2000 Incentive
Bonus Compensation Plan. The agreement provides for, among
other things, fringe benefits. The agreement further
provides that if Mr. Siegel is Involuntarily Terminated (as
defined in the agreement) subsequent to our being merged or
otherwise consolidated with any other organization and as a
result control of the Company changes or substantially all
of our assets are sold or any person or persons acquire 50%
or more of the Company's outstanding voting stock, the
Company would be obligated to pay to him or his estate the
base salary and bonus required pursuant to the employment
agreement for three years following such termination. The
employment agreement also contains restrictive covenants
preventing Mr. Siegel from competing with the Company during
the term of his employment and for a period of five years
thereafter.
Effective as of July 1, 2003, Mr. Evan Miller entered
into an employment agreement with the Company that provides
that the Company will employ him as an Executive Vice
President and President of Sales for a term that commenced
on July 1, 2003 and continuing until July 31, 2006, and
thereafter for additional consecutive one year periods
unless terminated by either the Company or Mr. Miller as
provided in the agreement. The agreement provides for an
initial annual salary of $313,424 and the payment each year
of a bonus in an amount equal to 2.5% of the Company's net
income for such fiscal year. The agreement also provides
for certain fringe benefits. The employment agreement also
(a) provides for a severance benefit equal to his base
salary plus his pro-rated bonus if (i) Mr. Miller resigns
for Good Cause (as defined in the agreement), (ii) the
Company terminates Mr. Miller's employment without Cause (as
defined in the agreement), or (iii) the Company fails to
renew Mr. Miller's employment agreement upon the expiration
of the term, and (b) contains restrictive covenants
preventing Mr. Miller from competing with the Company during
the term of his employment and for a period of at least one
year thereafter.
Effective as of July 1, 2003, Mr. Bruce Cohen entered
into an employment agreement with the Company that provides
that the Company will employ him as an Executive Vice
President and President of Outlet Retail Stores, Inc., a
wholly owned subsidiary of the Company, for a term that
commenced on July 1, 2003 and continuing until June 30,
2006, and thereafter for additional consecutive one year
periods unless terminated by either the Company or Mr. Cohen
as provided in the agreement. The agreement provides for an
initial annual salary of $313,424 and the payment each year
of a bonus based on the profitability of the Outlet Retail
Stores, Inc. for such fiscal year. The agreement also
provides for certain fringe benefits. The employment
agreement also (a) provides for a severance benefit equal to
his base salary plus his pro-rated bonus if (i) Mr. Cohen
resigns for Good Cause (as defined in the agreement), (ii)
the Company terminates Mr. Cohen's employment without Cause
(as defined in the agreement), or (iii) the Company fails to
renew Mr. Cohen's employment agreement upon the expiration
of the term, and (b) contains restrictive covenants
preventing Mr. Cohen from competing with the Company during
the term of his employment and for a period of at least one
year thereafter.
Effective as of July 1, 2003, Mr. Robert McNally
entered into an employment agreement with the Company that
provides that the Company will employ him as Vice President
- Finance, Treasurer and Chief Financial Officer for a term
that commenced on July 1, 2003 and continuing until July 31,
2006, and thereafter for additional consecutive one year
periods unless terminated by either the Company or Mr.
McNally as provided in the agreement. The agreement
provides for an initial annual salary of $240,000 and the
payment of each year of a bonus based on income from
continuing operations of the Company for such fiscal year.
The agreement also provides for certain fringe benefits.
The employment agreement also (a) provides for a severance
benefit equal to his base salary plus his pro-rated bonus if
(i) Mr. McNally resigns for Good Cause (as defined in the
agreement), (ii) the Company terminates Mr. McNally's
employment without Cause (as defined in the agreement), or
(iii) the Company fails to renew Mr. McNally's employment
agreement upon the expiration of the term, and (b) contains
restrictive covenants preventing Mr. McNally from competing
with the Company during the term of his employment and for a
period of twelve months thereafter.
Effective as of July 1, 2003, Mr. Robert Reichenbach
entered into an employment agreement with the Company that
provides that the Company will employ him as an Executive
Vice President and President of the Cutlery, Bakeware and
Home Entertaining Divisions for a term that commenced on
July 1, 2003 and continuing until June 30, 2006, and
thereafter for additional consecutive one year periods
unless terminated by either the Company or Mr. Reichenbach
as provided in the agreement. The agreement provides for an
annual salary of $250,000 in 2003, $300,000 in 2004 and
$350,000 in 2005 provided that the Company's Diluted
Earnings Per Share in 2004 is greater than 2003. His 2006
base salary shall increase in proportion to the increase, if
any, in the Company's Diluted Earnings Per Share for 2005
compared to 2004 with a limit on the potential annual salary
increase at $50,000. Mr. Reichenbach is also eligible to
receive each year a bonus based on the profitability of the
Cutlery and Cutting Boards, Bakeware and At-Home
Entertaining Divisions for such fiscal year. The agreement
also provides for certain fringe benefits. The employment
agreement also (a) provides for a severance benefit equal to
his base salary plus his pro-rated bonus if (i) Mr.
Reichenbach resigns for Good Cause (as defined in the
agreement), (ii) the Company terminates Mr. Reichenbach's
employment without Cause (as defined in the agreement), or
(iii) the Company fails to renew Mr. Reichenbach's
employment agreement upon the expiration of the term, and
(b) contains restrictive covenants preventing
Mr. Reichenbach from competing with the Company during the
term of his employment and for a period of twelve months
thereafter.
Effective as of July 1, 2003, Mr. Larry Sklute
entered into an employment agreement with the Company that
provides that the Company will employ him as President of
the Kitchenware Division for a term that commenced on July
1, 2003 and continuing until July 31, 2006, and thereafter
for additional consecutive one year periods unless
terminated by either the Company or Mr. Sklute as provided
in the agreement. The agreement provides for an initial
annual salary of $220,000 and the payment each year of a
bonus based on the profitability of the Kitchenware
Division for such fiscal year. The agreement also provides
for certain fringe benefits. The employment agreement
also (a) provides for a severance benefit equal to his
base salary plus his pro-rated bonus if (i) Mr. Sklute
resigns for Good Cause (as defined in the agreement), (ii)
the Company terminates Mr. Sklute's employment without
Cause (as defined in the agreement), or (iii) the Company
fails to renew Mr. Sklute's employment agreement upon the
expiration of the term, and (b) contains restrictive
covenants preventing Mr. Sklute from competing with the
Company during the term of his employment and for a period
of twelve months thereafter.
Effective as of July 1, 2003, Craig Phillips entered
into an employment agreement with the Company that provides
that the Company will employ him as Senior Vice President -
Distribution for a term that commenced on July 1, 2003 and
continuing until July 31, 2006 and thereafter for additional
consecutive one year periods unless terminated by either the
Company or Mr. Phillips as provided in the agreement. The
agreement provides for an annual salary of $220,000 and an
annual bonus based the relationship of warehouse personnel
expenses to net shipments for such fiscal year. The
agreement also provides for certain fringe benefits. The
employment agreement also (a) provides for a severance
benefit equal to his base salary plus his pro-rated bonus if
(i) Mr. Phillips resigns for Good Cause (as defined in the
agreement), (ii) the Company terminates Mr. Phillips's
employment without Cause (as defined in the agreement), or
(iii) the Company fails to renew Mr. Phillips's employment
agreement upon the expiration of the term, and (b) contains
restrictive covenants preventing Mr. Phillips from competing
with the Company during the term of his employment and for a
period of two years thereafter.
Limitation on Directors' Liability
The Company's Restated Certificate of Incorporation
contains a provision which eliminates the personal
liability of a director for monetary damages other than
for breaches of the director's duty of loyalty to the
Company or its stockholders, acts or omissions not in good
faith or which involve intentional misconduct or a knowing
violation of law or, violations under Section 174 of the
Delaware General Corporation Law or for any transaction
from which the director derived an improper personal
benefit.
The Company has entered into indemnification
agreements with each of its officers and directors which
provide that the Company will indemnify the indemnitee
against expenses, including reasonable attorney's fees,
judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or her in
connection with any civil or criminal action or
administrative proceeding arising out of the performance
of his or her duties as an officer, director, employee or
agent of the Company. Such indemnification is available
if the acts of the indemnitee were in good faith, if the
indemnitee acted in a manner he or she reasonably believed
to be in or not opposed to the best interests of the
Company and, with respect to any criminal proceeding, the
indemnitee had no reasonable cause to believe his or her
conduct was unlawful.
The Company maintains directors and officers
liability insurance policies with the St. Paul Insurance
Company and the Illinois Insurance Company. The policies
insure the directors and officers of the Company against
loss arising from certain claims made against such
directors or officers by reason of certain wrongful acts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 6, 1984, the Company, pursuant to its 1984
Stock Option Plan, which has since been terminated, issued
options to Messrs. Milton L. Cohen, Jeffrey Siegel and Craig
Phillips, officers and directors of the Company. On
December 17, 1985, these individuals exercised their options
and the following table reflects the respective numbers of
shares issued (the "Option Shares"), the aggregate purchase
price, average price per share and method of payment.
Number of
Shares of Average
Common Aggregate Price Method of Payment
Stock Purchase Per
Name Issued Price Share Cash Notes
Milton L. Cohen 1,713,204 $469,120 $0.27 $46,912 $422,208
Jeffrey Siegel 1,390,860 382,720 0.27 38,272 344,448
Craig Phillips 519,334 149,120 0.27 14,912 134,208
Phillips
Total 3,623,398 $1,000,960 $100,096 $900,864
The promissory notes issued by Messrs. Milton L. Cohen,
Jeffrey Siegel and Craig Phillips all bear interest at the
rate of 9% per annum, are secured by the individuals'
respective Option Shares and were originally due and payable
on December 17, 1995. From time to time the due dates of the
notes have been extended and, in December 2000, the Company
extended the due dates of each of the notes to December 31,
2005. The interest has been paid each year when due.
As of April 6, 2001, the promissory note issued by Mr.
Milton L. Cohen was canceled and replaced by a new
promissory note in the principal amount of $855,777
(representing the principal amount of $422,208 of the
promissory note referred to above and $433,569 of other
outstanding loans owing by Mr. Milton L. Cohen to the
Company) bearing interest at the rate of 4.85% per annum,
payable in twenty equal quarterly installments (principal
and interest combined) of $48,404 on the last day of June,
September, December and March of each year commencing June
30, 2001. As of December 31, 2004, Mr. Milton L. Cohen owed
$278,489 on the promissory note.
Mr. Cohen and the Company entered into a consulting
agreement dated as of April 6, 2001 pursuant to which the
Company retained Mr. Cohen as a consultant to the Company
for a period of 5 years. Pursuant to this consulting
agreement, the Company pays to Mr. Cohen a fee of $440,800
per year, payable in equal monthly installments of
$36,733.33. Pursuant to the terms of this consulting
agreement, effective April 6, 2001, the Company granted to
Mr. Cohen an option to purchase 40,000 shares of Common
Stock of the Company at an exercise price of $6.00 per
share.
Mr. Jeffrey Siegel, Chairman of the Board of Directors,
Chief Executive Officer and President of the Company, had an
outstanding loan, due to overadvances of bonuses in years
1999 and 2000. The outstanding loan balance of $94,054 at
December 31, 2002 was fully repaid by Mr. Siegel during
2003.
On October 1, 2002 the Company entered into a
consulting agreement with Ronald Shiftan, a director of the
Company. The term of the consulting agreement was a one
year period, which automatically renewed for additional one
year periods unless either party terminated the consulting
agreement by providing written notice of such termination to
the other party thereto at least thirty days prior to the
expiration of the initial or additional term then in effect.
Compensation was paid to Mr. Shiftan under the consulting
agreement at a rate of $30,000 per month. In April
2005, Mr. Shiftan was awarded a bonus of $100,000 by the
Company for his work as a consultant during 2004. Effective
November 2004, with Mr. Shiftan becoming Vice-Chairman of
the Company, the consulting agreement was terminated.
Certain relatives of Jeffrey Siegel, Chairman of the
Board of Directors, Chief Executive Officer and President of
the Company and the beneficial owner of 11.9% of the
outstanding shares of Common Stock of the Company, are
employed by the Company or are retained by the Company to
render services on behalf of the Company. Craig Philips, a
cousin of Jeffrey Siegel, is employed by the Company as
Senior Vice President - Distribution and Secretary and is a
director of the Company. Daniel Siegel, a son of Jeffrey
Siegel, is employed by the Company as a Senior Vice
President - Sales. James Wells, a son-in-law of Jeffrey
Siegel and the husband of Tracy Wells, is employed by the
Company as a Senior Vice President - Sales. Clifford
Siegel, a son of Jeffrey Siegel, is employed by the Company
as Vice President - Inventory Forecasting & Replenishment.
Tracy Wells, a daughter of Jeffrey Siegel, from time-to-time
provides legal services to the Company's Outlet Stores
division.
Certain relatives of Milton L. Cohen, a former Chairman
of the Board of Directors, Chief Executive Officer and
President of the Company and the beneficial owner of 11.8%
of the outstanding shares of Common Stock of the Company,
are employed by the Company. Bruce Cohen, the son of Milton
L. Cohen, is employed by the Company as an Executive Vice
President of the Company and a director of the Company and
by Outlet Retail Stores, Inc., a wholly-owned subsidiary of
the Company, as its President. Evan Miller, a son-in-law of
Milton L. Cohen and the husband of Laura Miller, is employed
by the Company as an Executive Vice President and President
of the Sales Division. Stuart Glickman, a son-in-law of
Milton L. Cohen and the husband of Jodie Glickman, is
employed by the Company as a Vice President - Sales.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to stockholder ratification, the Audit
Committee reappointed the firm of Ernst & Young LLP as the
independent accountants to audit the Company's financial
statements for the fiscal year ending December 31, 2005.
Ernst & Young LLP has audited the Company's financial
statements since 1984.
The Audit Committee has adopted a policy that requires
advance approval of all audit, audit-related, tax services,
and other services performed by the independent auditor.
The policy provides for pre-approval by the Audit Committee
of specifically defined audit and non-audit services.
Unless the specific service has been previously pre-
approved with respect to that year, the Audit Committee
must approve the permitted service before the independent
auditor is engaged to perform it. The Audit Committee has
delegated to the Chair of the Audit Committee authority to
approve permitted services provided that the Chair reports
any decisions to the Committee at its next scheduled
meeting.
In addition to rendering audit services during 2004 and
2003, Ernst & Young LLP performed other non-audit services
for the Company and its subsidiaries. The following table
sets for fees paid to Ernst & Young for services provided
in the years ended December 31, 2004 and 2003 (in
thousands).
2004 2003
Audit Fees $606,000 $253,000
Tax Preparation and Consulting Services 68,291 84,940
Total $674,291 $337,940
Included in 2004 audit fees are Sarbanes-Oxley
compliance fees of approximately $280,000.
In making its appointment, the Audit Committee reviewed
past audit results and other non-audit services performed
during 2004. In selecting Ernst & Young LLP, the Audit
Committee carefully considered their independence. The
Audit Committee has determined that the performance of such
non-audit services did not impair the independence of Ernst
& Young LLP.
Ernst & Young LLP has confirmed to the Audit Committee
that it is in compliance with all rules, standards and
policies of the Independence Standards Board and the
Securities and Exchange Commission governing auditor
independence.
If the stockholders do not ratify this appointment,
other independent auditors will be considered by the Audit
Committee.
Representatives of Ernst & Young LLP are expected to be
present at the Meeting and will have the opportunity to
make a statement if they desire and to respond to
appropriate questions of stockholders.
The Audit Committee recommends that stockholders vote
FOR the approval and ratification of the appointment of
Ernst & Young, LLP.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT OF RESTATED CERTIFICATE OF
INCORPORATION
The Board of Directors has adopted resolutions
declaring it advisable that, subject to the approval of the
stockholders of the Company, the Restated Certificate of
Incorporation of the Company be amended (i) to change the
name of the Company to "Lifetime Brands, Inc.", (ii) to
delete no longer needed provisions regarding the
reclassification of former shares of common stock, which
reclassification took place on April 23, 1991 and (iii) to
permit the Board of Directors to amend the By-Laws of the
Company. Attached as Appendix B is a copy of the proposed
Certificate of Amendment of Restated Certificate of
Incorporation that would be filed with the Secretary of
State of Delaware assuming the approval of these amendments
by the stockholders of the Company.
Change of Name
In 1983 the Company was incorporated under the name L C
Acquisition Corp. and immediately thereafter changed it name
to Lifetime Cutlery Corporation. In 1991 the Company then
changed its name to Lifetime Hoan Corporation.
These names reflected the fact that the principal
business of the Company was designing, developing and
marketing primarily cutlery and related kitchenware
products. Today, we are a leading designer, developer and
marketer of a broad range of branded consumer products used
in the home, including Kitchenware, Cutlery and Cutting
Board, Bakeware, At-Home Entertaining Accessories,
Pantryware and Spices, Functional Glassware and Bath
Accessories. Our products are marketed under various
tradenames, including Farberware, KitchenAid, Cuisinart,
Hoffritz, Sabatierr, DBK-Daniel Boulud KitchenT, Joseph
Abboud Environmentsr, Roshcor, Baker's Advantager,
Kamensteinr, Casa-Modar, Hoanr, Gemcor and "USEr.
Accordingly, the Board of Directors has determined that
it would be advisable to change the name of the Company to
"Lifetime Brands, Inc." to better reflect the present
business of the Company.
Deletion of Provisions regarding Reclassification of
Former Common Stock
In 1991 the Company amended its Certificate of
Incorporation to provide that the Company was authorized to
issue 10,000,000 shares of Common Stock of the par value of
One Cent ($.01) per share ("New Common Stock") instead of
2,400 shares of Common Stock of the par value of One Dollar
($1.00) per share ("Old Common Stock"). At the same time
the Company reclassified each of the 1,214 shares of Old
Common Stock then outstanding into 2,471 shares of New
Common Stock by further amending its Certificate of
Incorporation to include a provision effecting such
reclassification. At the same time the Company restated its
Certificate of Incorporation and included within the
provisions of the Restated Certificate of Incorporation the
provision effecting such reclassification. Because such
reclassification took effect in 1991 it is no longer
necessary to include this provision in the Restated
Certificate of Incorporation of the Company and the Board of
Directors of the Company deems it advisable that the
provision be deleted.
Provision permitting Board of Directors to Amend By-
Laws
Section 109 of the Delaware General Corporation Law
provides that any corporation may, in its Certificate of
Incorporation, confer upon the Directors the power to adopt,
amend or repeal By-Laws. Section 109 also provides that the
fact that conferring such power upon the Directors does not
divest the stockholders of the power, nor limit their power,
to adopt, amend or repeal By-Laws.
The Board of Directors believes that it should have the
power to adopt, amend or repeal the By-Laws of the
Corporation and that the Board should not have to wait until
the next annual meeting of stockholders of the Company or
call a special meeting of stockholders of the Company if it
determines that it is advisable for the By-Laws of the
Company to be adopted, amended or repealed. Conferring the
power to adopt, amend or repeal By-Laws upon the Directors
will permit the Board of Directors to make any such changes
promptly and without the added expense of a stockholder
vote.
Conferring the power to adopt, amend or repeal By-Laws
upon the Directors will not prevent the stockholders from
acting in this regard as indicated above. The Delaware
General Corporation Law specifically provides that the
stockholders of the Company will continue to retain the
power to do so.
The Board of Directors has no present plans to adopt,
amend or repeal the present By-Laws of the Company.
The Board of Directors recommends that the stockholders
vote FOR these amendments to the Restated Certificate of
Incorporation of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors, executive officers, and
persons who own more than ten percent of a registered class
of the Company's equity securities to file with the Company,
the Securities and Exchange Commission, and the National
Association of Securities Dealers initial reports of
ownership and reports of changes in ownership of any equity
securities of the Company. During Fiscal 2004, to the best
of the Company's knowledge, all required reports were filed
on a timely basis. In making this statement, the Company
has relied on the written representations of its directors
and executive officers and copies of Forms 3, 4 and 5
provided to the Company.
STOCKHOLDER PROPOSALS
A stockholder proposal intended to be presented at the
Company's 2006 Annual Meeting of Stockholders must be
received by the Company at its principal executive offices
on or before January 7, 2006, to be included in the
Company's proxy statement and proxy relating to that
meeting.
OTHER MATTERS
The Management of the Company does not know of any
matters other than those stated in this Proxy Statement
which are to be presented for action at the Meeting. If any
other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted
on any such other matters in accordance with the judgement
of the persons voting such proxies. Discretionary authority
to vote on such matters is conferred by such proxies upon
the persons voting them.
Financial statements for the Company are included in
the Annual Report of the Company for the fiscal year ended
December 31, 2004 which accompanies this Proxy Statement.
Upon the written request of any person who on the
record date was a record owner of Common Stock of the
Company, or who represents in good faith that he or she was
on such date a beneficial owner of Common Stock of the
Company, the Company will send to such person, without
charge, a copy of its Annual Report on Form 10-K for the
fiscal year ended December 31, 2004, including financial
statements and schedules, as filed with the Securities and
Exchange Commission. Requests for this report should be
directed to Robert McNally, Vice President Finance,
Treasurer and Chief Financial Officer, Lifetime Hoan
Corporation, One Merrick Avenue, Westbury, New York 11590.
By Order of the Board of Directors,
Craig Phillips, Secretary
Dated: April 18, 2005
APPENDIX A
LIFETIME HOAN CORPORATION
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee (the "Committee") of the Board of
Directors (the "Board") of Lifetime Hoan Corporation (the
"Company") serves as the representative of the Board for the
general oversight of the Company's accounting and financial
reporting processes and the internal control environment
established by management. Through its activities, the
Committee seeks to facilitate open communication amongst
Committee members, the Board, outside auditors, management
and the internal auditor (or any third party engaged to
carry out the internal audit function) by holding periodic
meetings with these parties.
The Committee's primary purpose is to provide oversight
as to the integrity of the Company's financial statements,
the outside auditor's qualifications and independence, and
the performance of the Company's internal and outside
auditors. In carrying out its oversight responsibilities,
the Committee does not itself prepare financial statements
or plan or perform audits, and it is not the duty or
responsibility of the Committee or its members to serve as
auditors or to certify or provide other special or
professional assurances with respect to the Company's
financial statements.
The Committee may delegate authority to one or more
designated members of the Committee where appropriate,
provided that any resulting decisions are presented at the
following Committee meeting.
DUTIES AND RESPONSIBILITIES
Among other functions, the Committee will:
1. Determine, at least annually, the retention or
replacement of the Company's auditors (including the
replacement of the lead and reviewing partners every five
years and certain other audit partners after seven years),
who will report directly to the Committee and who are
ultimately accountable to the Board, as representatives of
the stockholders of the Company.
2. Review and approve the proposed scope and timing of
each year's audit plan and the proposed audit fee of the
outside auditors.
3. Review and pre-approve any permitted non-audit services
and the fees for such services proposed to be provided by
the outside auditors. Pre-approval of audit and non-audit
services may be delegated to one or more Committee members
who will report any resulting decisions at the following
Committee meeting. In considering whether to pre-approve
any non-audit services, the Committee will consider whether
the provision of such services is compatible with
maintaining the independence of the outside auditors.
4. Resolve any disagreements between management and
the outside auditors.
5. Review, at least annually, the appointment,
responsibilities, functions, performance and compensation of the
internal auditor, including audit plans and results.
6. Review with the outside auditors, the internal auditor and
management, the audited financial statements and related opinion
and costs of the audit of that year. In conferring with these
parties, the Committee will:
a. Review the letter and written disclosures from the outside
auditors consistent with Independence Standards Board Standard
No. 1, including a formal written statement delineating all
services provided and any relationships between the outside
auditors and the Company; actively engage in dialogue with the
outside auditors with respect to their independence and any
disclosed services or relationships that may impact the
independence and objectivity of the outside auditors; and take,
or recommend that the Board take, appropriate action to oversee
the outside auditors' independence; and
b. Consider the control environment, including the outside
auditors' judgment as to the Company's accounting policies and
the consistency of their application to the financial statements.
7. Review with management and the outside auditors any material
financial or non-financial arrangements that do not appear in the
financial statements.
8. Review with management and the outside auditors the
accounting policies, alternative treatments of financial
information that have been discussed, and any material written
communications between the outside auditors and management.
9. Review with management and the outside auditors, the
Company's annual financial statements prior to the distribution
to the Company's stockholders, and the filing with the SEC of the
Company's related Form 10-K report, and recommend to the Board
whether such financial statements should be distributed to the
Company's stockholders and included in the Company's Form 10-K
report.
10. Review with management and the outside auditors earnings
press releases and interim financial results and reports prior to
publication and distribution to the Company's stockholders, and
the filing with the SEC of the earnings press releases and the
Company's related Form 10-Q report.
11. Review with management and the outside auditors the
Company's disclosure controls and procedures.
12. Review periodic reports from the chief financial officer of
significant accountant developments including emerging issues and
the impact of accounting changes, where material, on the
effectiveness of, or any deficiencies in, the design or operation
of the Company's system of internal controls for financial
reporting, any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Company's internal controls, and any report issued by the outside
auditors regarding their and management's assessment of the
Company's internal controls.
13. Provide the Committee report required to be included in the
Company's annual proxy statement.
14. Review and discuss with the Company's counsel, and, if
appropriate, other counsel such matters as may warrant the
attention of the Committee.
15. Review the Company's hiring policy with respect to employees
or former employees of the outside auditor.
16. Review and approve related-party transactions.
17. Oversee compliance with the Company's Code of Conduct for
its chief executive officer, senior financial officers, other
personnel and the Board.
18. Meet, at least annually, in separate executive session with
the internal auditor and the outside auditors.
19. Establish procedures, in conjunction with the Company's
counsel and internal auditor, for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and
the confidential, anonymous submission by employees of any
concerns regarding questionable accounting or auditing matters.
20. Review with the outside auditors any audit problems or
difficulties and management's response, including disagreements
with management, any adjustments noted by the outside auditor but
not taken by management, communication between the audit team and
their national office, and any management or internal control
letters issued or proposed to be issued.
21. Report to the Board any significant matters arising from the
Committee's work and provide minutes of Committee meetings.
22. Review and reassess at least annually the adequacy of this
charter.
MEMBERSHIP
The Committee will consist of at least three members appointed
by the Board, including one member of the Committee as
chairperson. Each member of the Committee will be an
"independent" member of the Board and "financially literate", and
at least one Committee member will be qualified as a "financial
expert."
MEETING, INVESTIGATIONS AND OUTSIDE ADVISORS
The Committee will convene at least four times each year. It
will endeavor to determine that auditing procedures and controls
are adequate to safeguard Company assets and to assess compliance
with policies. The Committee will be given full access to the
Company's internal auditor, Chairman of the Board, executives,
outside auditors and counsel. The Committee will have the
authority to conduct or authorize investigations into any matters
within its scope of responsibilities and to retain such outside
counsel, accounting and other professionals, experts and advisors
as it determines appropriate to assist in the performance of any
of its functions, including determining the fees to be paid and
the other terms of engagement for such advisors.
APPENDIX B
Proposed Certificate of Amendment of Restated Certificate of
Incorporation
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
LIFETIME HOAN CORPORATION
Pursuant to Section 242 of the Delaware
General Corporation Law
LIFETIME HOAN CORPORATION, a Delaware corporation,
hereby certifies as follows:
FIRST: The Restated Certificate of Incorporation of
the Corporation is hereby amended to change the name of the
Corporation by deleting in its entirety Article FIRST of the
Restated Certificate of Incorporation and inserting a new Article
FIRST which reads as follows:
FIRST: The name of the corporation is LIFETIME
BRANDS, INC.
SECOND: The Restated Certificate of Incorporation of
the Corporation is hereby amended to delete provisions regarding
the reclassification of the former shares of Common Stock of the
par value of One Dollar ($1.00) per share of the Corporation into
shares of Common Stock of the par value of One Cent ($.01) per
share of the Corporation, which reclassification took place upon
the filing on April 23, 1991 of the Restated Certificate of
Incorporation of the Corporation, by deleting in its entirety the
second paragraph of Article FOURTH of the Restated Certificate of
Incorporation.
THIRD: The Restated Certificate of Incorporation of the
Corporation is hereby amended to permit the Board of Directors of the
Corporation to adopt, amend or repeal By-Laws of the Corporation by
adding a new Article SEVENTH which reads as follows:
SEVENTH: The Board of Directors of the
Corporation may make By-Laws and from time
to time may alter, amend or repeal By-
Laws.
FOURTH: This Amendment to the Restated Certificate of
Incorporation of the Corporation was duly adopted by the Board of
Directors and by the holders of the outstanding stock of the
Corporation entitled to vote thereon in accordance with Section 242
of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment of Restated Certificate of Incorporation of
the Corporation to be executed by its President this __ day of June,
2005.
LIFETIME HOAN CORPORATION
By:____________________________
Name: Jeffrey Siegel
Title: President