Bonus
We do not have a bonus plan for any of our associates. Instead, at the same time that we establish salaries for the next succeeding year, we determine whether our corporate performance during the past year justified the payment of cash bonuses to our associates. If our corporate performance justifies the payment of bonuses, then the Compensation Committee receives recommendations from the Chief Executive Officer with respect to the payment of specific bonuses to specific individuals, based upon the individuals respective contributions to our corporate performance.
In 2006, we sold our investment in Artesyn Technologies, Inc. and recognized a gain of approximately $5.2 million, net of investment bankers advisory fees of $850,000. With this profit, Bels Board of Directors decided to accrue $1.0 million from operating income for the payment of bonuses to our associates, including $334,233 to our Named Officers, in January 2007.
In 2007, we sold 4.0 million shares of common stock of Toko, Inc. on the open market which resulted in a gain of approximately $2.5 million, net of investment banker fees and other expenses in the amount of $0.8 million. With this profit, Bels Board of Directors decided to accrue $0.5 million from operating income for the payment of bonuses to our associates, including $122,500 to our Named Officers, in January 2008.
Long-Term Stock Incentive Compensation
Our 2002 Equity Compensation Program,as approved by our shareholders, permits us to issue four types of non-cash awards based on our common stock: restricted stock grants, incentive stock options, non-qualified stock options and stock appreciation rights. For years, we relied upon incentive stock options as our primary form of long-term stock incentive compensation. However, as the manner in which stock options are treated for accounting purposes was substantially modified as of January 1, 2006, we presently anticipate that to the extent that we grant long-term stock incentive compensation to our associates, that compensation will likely be in
the form of restricted stock grants.
We did not grant any stock options or make any restricted stock awards to any of our Named Officers during 2007 or 2006. We granted restricted shares in 2005 to several of our associates, including each of our Named Officers. Those restricted shares do not vest until the second anniversary of the grant date, and then vest in 25% annual installments on the second, third, fourth and fifth anniversaries of the grant date. While our 2002 Equity Compensation Program does not preclude the grant of restricted shares on an annual basis, the Compensation Committee concluded that given the structure and amount of the restricted stock awards made in 2005, there
was no need to grant additional restricted stock awards to the Named Officers during 2006 or 2007.
Our experience has been to consider stock option grants and restricted stock awards at the director meetings held at the time of our annual meeting of shareholders, as opposed to granting options and stock awards throughout the year. By making our grant determinations at a single time each year, we avoid even an appearance of coordinating grants with release dates of material information not previously disclosed to the public.
Our 2002 Equity Compensation Program is designed to help attract and retain superior individuals for positions of substantial responsibility within our company and to provide these persons with an additional incentive to contribute to the success of our company, all of which we expect will result in increased shareholder value. Restricted stock grants are awards of actual shares of our common stock, without any initial cost to the associate, but subject to a vesting restriction. The shares cannot be sold or transferred until the restriction ends and the shares become vested. Shares not vested are forfeited back to us if it becomes
impossible to meet the condition for ending the restriction. Restricted stock grants offer the opportunity to obtain shares of our common stock without payment to us, provided the condition to ending the restriction is met. We award restricted stock grants because we believe that they aid in retaining our key executives, who are positioned to benefit from an increase in share value.
Retirement Benefits
We have designed our Supplemental Executive Retirement Plan, or SERP, to provide a limited number of our key management and highly compensated associates with supplemental retirement and death benefits. Each of our Named Officers is a participant in the SERP. Participants of the SERP are selected by our Compensation Committee based upon recommendations from our Chief Executive Officer. We believe that this
benefit incentivizes key associates to remain with us on a career-long basis and engenders loyalty to our company. At its April 17, 2007 meeting, our board of directors approved amendments to the SERP to, among other things, conform its terms to applicable requirements of Section 409A (discussed below) and to modify the provisions regarding benefits payable in connection with a change in control of our company. The description of the SERP that follows reflects these amendments.
Benefits available under the SERP vary depending upon when and how a participant terminates employment with us. If a participant retires on his normal retirement date (65 years old, 20 years of service, and five years of participation in the SERP), his or her normal retirement benefit under the SERP would be annual payments equal to 40% of his or her average base compensation using compensation from the highest five consecutive calendar years of SERP participation payable in monthly installments for the remainder of his or her life. If a participant retires early (55 years old, 20 years of service, and 5 years of
participation in the SERP), his or her early retirement benefit would be an amount (i) calculated as if his or her early retirement date were in fact such participants normal retirement date, (ii) multiplied by a fraction, the numerator being the actual years of service the participant has with us and the denominator being the years of service the participant would have had if he or she had retired at his or her normal retirement date, and (iii) actuarially reduced to reflect the early retirement date. If a participant dies prior to receiving 120 monthly payments under the SERP, his or her beneficiary is entitled to continue receiving benefits for the shorter of (i) the time necessary to complete 120 monthly payments or (ii) 60 months. If a participant dies while employed by us, his or her beneficiary will receive, as a survivor benefit, an annual amount equal to (i) 100% of the participants annual base salary at the date of death for one year, and (ii) 50% of the
participants annual base salary at the date of death for each of the following four years, each payable in monthly installments. Our SERP also provides for disability benefits, and a forfeiture of benefits if a participant terminates employment for reasons other than those contemplated under the SERP.
In the event of a change in control (as defined in the SERP), each participant who is employed by us at the time of the change in control will be entitled to a normal retirement benefit commencing immediately following termination of employment (or in the case of certain participants who are specified employees for purposes of Section 409A of the Code (discussed below), six months after termination of employment). The normal retirement benefit payable under these circumstances will be the actuarial equivalent of the benefit that would commence upon the date that the participant would have attained his or her normal retirement
date if he or she had not terminated employment. Further, each participants average base compensation will be deemed to be equal to his or her annual base compensation in effect prior to the change in control. If we have established a trust to accumulate assets from which to pay SERP benefits, then we will fully fund the trust in connection with a change in control in order to ensure that there will be sufficient assets set aside to pay all SERP benefits. A change in control for purposes of the SERP includes a merger or consolidation with another corporation whereby our shareholders do not own a majority of the surviving or successor entity, an acquisition of 50% or more of our voting securities by one person or a group of persons acting together, a sale of all or substantially all of our assets to any person, our dissolution or liquidation or if the members of our incumbent Board of Directors (or their successors, if approved by them) cease for any reason to
constitute at least two-thirds of the members of our Board.
As of December 31, 2007, none of our Named Officers were eligible for normal retirement under the SERP. As of December 31, 2007, Mr. Meccariello was eligible for early retirement under the SERP. Had Mr. Meccariello retired on December 31, 2007, he would have been eligible for a monthly benefit under the SERP in the amount of $3,924 payable for life. Had each of our Named Officers terminated employment on December 31, 2007 in connection with a change in control, they would have been entitled under the SERP to a monthly benefit for life as follows: Mr. Bernstein, $6,067; Mr. Dunn, $5,873; Mr. Meccariello, $5,214; Mr. Ackerman, $4,126; and Mr. Wong,
$5,011. The present value of those change in control benefits for the Named Officers, using the actuarial assumptions used for our financial reporting purposes, would be as follows: Mr. Bernstein, $934,113; Mr. Dunn, $796,271; Mr. Meccariello, $762,369; Mr. Ackerman, $692,537; and Mr. Wong, $711,916.
11
Other Non-Performance Benefit Plans
Our Named Officers are eligible to participate, as are all our associates who meet service requirements under the several plans, in the following types of non-performance benefit plans:
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Those of our associates, including our Named Officers, who satisfy certain waiting periods are entitled to participate in either our domestic 401(k) plan or our Far East Retirement Plan. Pursuant to our domestic 401(k) plan, we make matching contributions of pre-tax elective deferral contributions made by associates. We match individual plan contributions in our domestic 401(k) as follows (limited to the maximum amount of salary that can be taken into account under a tax-qualified plan, which was $225,000 in 2007): we match 100% for the first $200 of an associates contribution, 50% for the next $200 and 25% for the next $200 of an associates contribution. In addition, we have been adding 3% of an associates base salary as an annual profit sharing contribution. This 3% is reviewed on an annual basis by the Board of Directors. Our matching contributions under the domestic 401(k) plan are currently made in shares of our Class B
Common Stock. The Far East Retirement Plan is a defined contribution mandatory provident fund arrangement established pursuant to Hong Kong law. Subject to certain minimum and maximum levels under Hong Kong law, five percent of a participants salary must be contributed to the Far East Retirement Plan. We match amounts contributed to the Far East Retirement Plan. Our current match equals 7% of an associates base salary. Under the Far East Retirement Plan, our matching amounts are currently made partly in shares of our Class B Common Stock approximately 10% of our contribution and partly in cash approximately 90% of our contribution. Mr. Meccariello and Mr. Wong are the only Named Officers who participate in the Far East retirement Plan.
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We maintain medical and dental health insurance plans for our associates on a non-discriminatory basis. Associates contribute 20% of the cost of our medical and dental insurance plans. We also provide life insurance for all associates.
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We believe that the insurance plans we offer are important components of our comprehensive benefit package, which should induce associates to remain with us. We believe that our domestic 401(k) plan and our Far East Retirement Plan induce our associates to save for future retirement needs, and we encourage this by matching individual plan contributions, as described above, by participating associates.
Perquisites
In 2007, we provided our Chief Executive Officer with a rental apartment for two months in San Diego, California. Mr. Bernsteins presence in San Diego enables him to be more proximate to our largest customers, major design centers and our marketing and sales groups. We also provide him with an automobile in New Jersey that we maintain for his use throughout the year. Also in 2007, we provided our Vice President of Manufacturing with a rental apartment in Hong Kong for the full year as well as a monthly travel allowance. As Mr. Meccariello has lived in Hong Kong throughout the year in order to better oversee and manage the core of our
manufacturing operations, we have subsidized his living and travel expenses accordingly. Other than these benefits, the perquisites to our Named Officers are nominal.
Severance
During 2007, our Board adopted a written severance pay plan that applies to all of our full-time, non-union associates. The written plan formalizes an approach that we have been taking on an informal basis for the past seven years. The purposes of the plan are to reward the loyalty of our associates in the context of a Sale of the Business, a phrase that is defined in the severance pay plan, and to assure that we are capable of retaining our associates in the event that we pursue a Sale of the Business. Under the plan, a Sale of the Business is defined to mean the occurrence of any of the following events:
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the acquisition of beneficial ownership of more than 50% of our voting stock or of all or substantially all of our assets; or
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the consummation of a merger, consolidation or other combination of our company with or into another entity, subject to certain exceptions; or
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12
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if the members of our incumbent Board of Directors (or their successors, if approved by them) cease for any reason to constitute at least two-thirds of the members of our Board.
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Provided that certain disqualifying events do not occur, severance payments will be made under the plan if a participant is terminated involuntarily within 24 months after a Sale of the Business (provided that the participant does not accept employment with the acquirer in connection with such Sale of the Business), the participant resigns for reasons permitted under the plan within 24 months after a Sale of the Business or if the participant is not offered comparable employment (as defined) with the acquirer.
The severance pay plan contains a schedule by which payment levels are determined based on years of service with us. The schedule provides for three weeks of compensation for the first two years worked with us, two weeks of compensation for the next thirteen years of service, and three weeks of compensation for each additional year of service, with an upper limit of 52 weeks of compensation. If the plan were to be triggered as of April 30, 2008, our Named Officers would be entitled to receive the following severance payments:
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Daniel Bernstein
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$
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225,000
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Colin Dunn
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$
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127,885
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Joseph Meccariello
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$
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180,000
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Dennis Ackerman
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$
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168,269
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Andrew Wong
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$
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165,000
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Compliance with Sections 162(m) and 409A of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code denies a deduction to any publicly held corporation for compensation paid to certain covered employees in a taxable year to the extent that compensation exceeds $1,000,000 for a covered employee. Certain performance-based compensation that has been approved by our shareholders is not subject to this limitation. As a result, stock options granted under our 2002 Equity Compensation Program and our prior stock option plans are not subject to the limitations of Section 162(m). However, restricted stock awards granted under our 2002 Equity Compensation Program generally will not be treated as
performance-based compensation. Restricted stock award grants made to date under the 2002 Equity Compensation Program have not been at levels that, together with other compensation, approached the $1,000,000 limit. Also, since we retain discretion over any bonuses we may grant, those bonuses also will not qualify for the exemption for performance-based compensation. The Compensation Committee intends to provide executive compensation in a manner that will be fully deductible for federal income tax purposes, so long as that objective is consistent with overall business and compensation objectives. However, we reserve the right to use our judgment to authorize compensation payments that do not comply with the exemptions in Section 162(m) when we believe that such payments are appropriate and in the best interests of our shareholders, after taking into consideration changing business conditions or the executive officers performance.
It is also our intention to maintain our executive compensation arrangements in conformity with the requirements of Section 409A of the Internal Revenue Code, which imposes certain restrictions on deferred compensation arrangements. We have been engaged in a process of reviewing our compensation arrangements since the enactment of Section 409A in 2004 in order to remain compliant with guidance issued by the Internal Revenue Service under Section 409A. As indicated above, we have amended our SERP to comply with Section 409A and we intend to continue to monitor IRS guidance to determine if further modifications to our plans and arrangements are needed
to conform with final 409A regulations recently issued by the Internal Revenue Service.
Summary of Cash and Certain Other Compensation
The following table sets forth, for the years ended December 31, 2007 and 2006, a summary of the compensation earned by our Chief Executive Officer, Vice President of Finance and our three other most highly compensated executive officers for 2007. In this proxy statement, we refer to these executive officers as the Named Officers.
13
SUMMARY COMPENSATION TABLE
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Name and
Principal Position
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Year
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Salary
($)
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Bonus
($)
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Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)
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All Other Compensation
($)
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Total
($)
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Daniel Bernstein,
President and Chief Executive Officer
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2007
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225,000
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51,923
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9,691
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|
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22,810
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309,424
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2006
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225,000
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86,538
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7,172
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22,800
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341,510
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Colin Dunn,
Vice President, Treasurer and Secretary
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2007
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190,000
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43,846
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43,725
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7,670
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285,241
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2006
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190,008
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73,078
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37,190
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7,700
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307,976
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Joseph Meccariello,
Vice President of Manufacturing
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2007
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180,000
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41,538
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17,075
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107,784
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346,397
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2006
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180,000
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69,231
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13,382
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85,778
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348,391
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Dennis Ackerman,
Vice President of Operations
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2007
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175,000
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40,385
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3,067
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7,150
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225,602
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2006
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175,008
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67,309
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2,451
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7,030
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251,798
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Andrew Wong,
Vice President Circuit Protection
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2007
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165,000
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38,077
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23,353
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12,360
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238,790
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2006
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164,687
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63,944
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18,467
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12,328
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259,426
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We accrued the bonuses set forth in the table above for 2007 in our consolidated income statement for the year ended December 31, 2007, but did not pay such bonuses until 2008. The 2006 bonuses were accrued in our 2006 consolidated financial statements and not paid until 2007.
In the table above, when we refer to changes in pension values, we are referring to the aggregate change in the present value of the Named Officers accumulated benefit under our Supplemental Executive Retirement Planfrom the measurement date used for preparing our 2006 year-end financial statements to the measurement date used for preparing our 2007 year-end financial statements.
In the table above, all other compensation for 2007 consists of the following:
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for Mr. Bernstein: (i) a contribution to his 401(k) account of $6,350 that we made in shares of our Class B Common Stock, matching Mr. Bernsteins 2007pre-tax elective deferral contributions (included under Salary), (ii) $1,760 in dividends that we paid with respect to restricted shares that we previously granted to him under our 2002 Equity Compensation Program, (iii) $7,400, the cost to us of providing Mr. Bernstein with an automobile in New Jersey and maintaining that automobile, (iv) $7,000, the cost to us of providing Mr. Bernstein with living quarters for a two month period while he worked from our facility in San Diego, California and (v) $300 for airline lounge fees.
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for Mr. Dunn: (i) a contribution to his 401(k) account of $6,050 that we made in shares of our Class B Common Stock, matching his 2007pre-tax elective deferral contributions (included under Salary), (ii) $1,320 in dividends that we paid with respect to restricted shares that we previously granted to him under our 2002 Equity Compensation Program and (iii) $300 for airline lounge fees.
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for Mr. Meccariello: (i) a contribution to his Far East Retirement Plan account of $12,600, an amount in excess of Mr. Meccariellos 2007pre-tax elective deferral contributions (included under Salary), (ii) a housing allowance of $88,480 associated with the work he performs in the Far East, (iii) a travel allowance of $5,384 associated with Mr. Meccariellos international travel for personal leave and (iv) $1,320 in dividends that we paid with respect to restricted shares that we previously granted to him under our 2002 Equity Compensation Program.
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for Mr. Ackerman: (i) a contribution to his 401(k) account of $5,600 that we made in shares of our Class B Common Stock, matching Mr. Ackermans 2007pre-tax elective deferral contributions (included under Salary), (ii) $1,320 in dividends that we paid with respect to restricted shares that we previously granted to him under our 2002 Equity Compensation Program and (iii) $230 for airline lounge fees.
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for Mr. Wong: (i) a contribution to his Far East Retirement Plan account of $11,550, an amount in excess of Mr. Wongs 2007 pre-tax elective deferral contributions (included under Salary), and (ii) $810 in dividends that we paid with respect to restricted shares that we previously granted to him under our 2002 Equity Compensation Program.
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Stock Options and Stock Awards
We are authorized to grant stock options and stock awards under our 2002 Equity Compensation Program. Options granted under this program generally have terms of five years and terminate at or within a specified period of time after the optionees employment with us ends. Options are exercisable in installments determined at the date of grant. No such options were granted to the Named Officers in 2007. We are also permitted to grant restricted stock awards under our 2002 Equity Compensation Program. Participants have the right to vote (if applicable) and receive dividends on their restricted shares. Restrictions lapse in 25% increments commencing
two years after the grant date. No restricted shares were awarded to the Named Officers in 2007.
None of the Named Officers exercised any stock options during 2007 and none of the Named Officers owned any of our stock options as of December 31, 2007. A total of 8,500 restricted stock awards previously granted to the Named Officers vested during 2007.
The following table sets forth, for each of the Named Officers, information regarding stock awards outstanding at December 31, 2007 for each of the Named Officers. Each of the stock awards referred to in the table below were granted pursuant to our 2002 Equity Compensation Program. The vesting dates applicable to each stock award are set forth in footnotes that follow the columnar explanations below the table.
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Stock Awards Outstanding at December 31, 2007
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Name
(a)
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Number of Shares
or Units of Stock
That Have Not Vested
(#)
(b)
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Market Value of Shares
or Units of Stock
That Have Not Vested
($)
(c)
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Daniel Bernstein
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6,000
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175,620
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Colin Dunn
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4,500
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131,750
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Joseph Meccariello
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4,500
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131,750
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Dennis Ackerman
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4,500
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131,750
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Andrew Wong
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3,000
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87,810
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In the table above, we are disclosing:
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in column (b), the number of shares of our common stock covered by stock awards granted under our 2002 Equity Compensation Program that were not vested or earned as of December 31, 2007; and
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in column (c), the aggregate market value or payout value as of December 31, 2007 of the stock awards referenced in column (b).
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In the table above, the vesting dates for the Named Officers stock awards are as follows:
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As of December 31, 2007, Mr. Bernstein had:
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6,000 restricted shares of Class B Common Stock, vesting as follows: 2,000 shares vest as of November 1, 2008, 2,000 shares vest as of November 1, 2009 and 2,000 shares vest as of November 1, 2010.
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As of December 31, 2007, Mr. Dunn had:
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4,500 restricted shares of Class B Common Stock, vesting as follows: 1,500 shares vest as of November 1, 2008, 1,500 shares vest as of November 1, 2009 and 1,500 shares vest as of November 1, 2010.
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As of December 31, 2007, Mr. Meccariello had:
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4,500 restricted shares of Class B Common Stock, vesting as follows: 1,500 shares vest as of November 1, 2008, 1,500 shares vest as of November 1, 2009 and 1,500 shares vest as of November 1, 2010.
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As of December 31, 2007, Mr. Ackerman had:
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4,500 restricted shares of Class B Common Stock, vesting as follows: 1,500 shares vest as of November 1, 2008, 1,500 shares vest as of November 1, 2009 and 1,500 shares vest as of November 1, 2010.
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As of December 31, 2007, Mr. Wong had:
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3,000 restricted shares of Class B Common Stock, vesting as follows: 1,000 shares vest as of October 3, 2008, 1,000 shares vest as of October 3, 2009 and 1,000 shares vest as of October 3, 2010.
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In calculating market values in the table above, we have multiplied the closing market price of our Class A Common Stock or Class B Common Stock on the last trading day in 2007 (whichever is applicable) $34.00 and $29.27, respectively by the applicable number of shares of common stock underlying the Named Officers stock awards.
None of the Named Officers have any stock options and beginning in 2005, the Companys policy is to grant stock awards in lieu of stock options going forward. The following table sets forth, for each of the Named Officers, information regarding stock awards that vested during 2007. The value realized on vesting represents the number of shares of Class B Common Stock set forth in column (d) multiplied by the market price of our Class B Common Stock on the date on which the Named Officers stock award vested.
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Name
(a)
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Number of Shares Acquired on Vesting
(#)
(d)
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Value Realized on Vesting
($)
(e)
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Daniel Bernstein
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2,000
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61,800
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Colin Dunn
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1,500
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46,350
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Joseph Meccariello
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1,500
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46,350
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Dennis Ackerman
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1,500
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|
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46,350
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Andrew Wong
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1,000
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34,710
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Equity Compensation Plan Information
The following table provides information as of December 31, 2007 with respect to shares of Class A and Class B Common Stock that may be issued under our 2002 Equity Compensation Program and our prior stock option plan (which prior plan expired in April 2002), each of which has been approved by the Companys stockholders.
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Plan Category
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(a)
Number of Securities
to Be Issued Upon
Exercise of Outstanding Options, Warrants
and Rights
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(b)
Weighted-Average
Exercise Price
of Outstanding
Options, Warrants
and Rights
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(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
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Equity Compensation
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|
|
|
|
|
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Plans Approved by
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Class A: 0
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Class A: 0
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Class A: 0
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Security Holders
|
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Class B: 70,000
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Class B: $28.42
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Class B: 816,285
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Equity Compensation
|
|
|
|
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Plans Not Approved by
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Security Holders
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TOTAL
|
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Class A: 0
|
|
Class A: 0
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Class A: 0
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Class B: 70,000
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Class B: $28.42
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Class B: 816,285
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16
Retirement Plan Benefits
The following table sets forth, for each of the Named Officers, information regarding the benefits payable under each of our plans that provides for payments or other benefits at, following, or in connection with such Named Officers retirement. The following table does not provide information regarding tax-qualified defined contribution plans or nonqualified defined contribution plans.
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Name
(a)
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Plan Name
(b)
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Number of Years Credited Service
(#)
(c)
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Present Value of Accumulated Benefit
($)
(d)
|
|
Payments During Last Fiscal Year
($)
(e)
|
Daniel Bernstein
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
29
|
|
|
|
312,717
|
|
|
|
0
|
|
Colin Dunn
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
16
|
|
|
|
438,484
|
|
|
|
0
|
|
Joseph Meccariello
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
27
|
|
|
|
362,068
|
|
|
|
0
|
|
Dennis Ackerman
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
21
|
|
|
|
77,900
|
|
|
|
0
|
|
Andrew Wong
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
33
|
|
|
|
407,304
|
|
|
|
0
|
|
In the table above:
|
|
we have determined the years of credited service based on the same measurement date that we used in preparing our audited financial statements for the year ended December 31, 2007; we refer to that date as the Plan Measurement Date;
|
|
|
when we use the phrase present value of accumulated benefit, we are referring to the actuarial present value of the Named Officers accumulated benefits under our Supplemental Executive Retirement Plan, calculated as of the Plan Measurement Date; and
|
|
|
column (e) refers to the dollar amount of payments and benefits actually paid or otherwise provided to the Named Officer during 2007 under the SERP. For a description of the SERP, see Compensation Discussion and Analysis Compensation Elements Retirement Benefits.
|
17
BOARD OF DIRECTORS
Director Compensation
The following table sets forth certain information regarding the compensation we paid to our directors, other than Daniel Bernstein, during 2007.
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Fees Earned or Paid in Cash
($)
(b)
|
|
StockAwards
($)
(c)
|
|
All Other
Compensation
($)
(g)
|
|
Total
($)
(j)
|
Howard B. Bernstein
|
|
|
19,000
|
|
|
|
145,600
|
|
|
|
|
|
|
|
164,600
|
|
Avi Eden
|
|
|
19,000
|
|
|
|
145,600
|
|
|
|
60,000
|
|
|
|
224,600
|
|
Peter Gilbert
|
|
|
23,500
|
|
|
|
145,600
|
|
|
|
|
|
|
|
169,100
|
|
John S. Johnson
|
|
|
23,500
|
|
|
|
145,600
|
|
|
|
|
|
|
|
169,100
|
|
Robert H. Simandl
|
|
|
19,000
|
|
|
|
145,600
|
|
|
|
27,000
|
|
|
|
191,600
|
|
John F. Tweedy
|
|
|
23,500
|
|
|
|
145,600
|
|
|
|
|
|
|
|
169,100
|
|
With respect to compensation of our directors:
|
|
when we refer to Fees Earned or Paid in Cash, we are referring to all cash fees that we paid or were accrued in 2007, including annual retainer fees, committee and/or chairmanship fees and meeting fees; in 2007, our non-employee directors received an annual retainer of $15,000, plus $1,000 for each Board meeting they attended in person and $750 for each non-audit committee meeting they attended in person. Audit Committee members received $750 for the first in-person meeting of 2007 and $1,250 for each subsequent in-person meeting in 2007.
|
|
|
when we refer to stock awards, we are referring to the dollar amount recognized by us for financial statement purposes in accordance with FAS 123(R).
|
|
|
the aggregate number of option awards outstanding for each director at December 31, 2007 were as follows: Howard B. Bernstein: 0; Avi Eden: stock options covering 8,000 shares of Class B Common Stock; Peter Gilbert: 0; John S. Johnson: 0; Robert H. Simandl: 0; and John F. Tweedy: 0.
|
|
|
in May 2007, each of the directors noted above received 4,000 shares of restricted stock, which vest as follows: 1,000 shares vest as of May 11, 2009; 1,000 shares vest as of May 11, 2010; 1,000 shares vest as of May 11, 2011 and 1,000 shares vest as of May 11, 2012.
|
|
|
all other compensation consists of the following:
|
|
|
For Avi Eden: consulting fees paid to Mr. Eden with respect to advice rendered regarding corporate development issues
|
|
|
For Robert H. Simandl: fees paid to Mr. Simandls law firm for services rendered and disbursements incurred on our behalf during 2007
|
In 2007, non-employee directors of the Company received an annual retainer of $15,000, plus $1,000 for each Board meeting they attended in person and $750 for each non-audit committee meeting they attended in person. Audit Committee members received $750 for the first in-person meeting of 2007 and $1,250 for each subsequent in-person meeting in 2007. In 2007, directors who were executive officers of the Company did not receive directors fees. In 2007, directors of the Companys foreign subsidiaries did not receive a retainer or meeting fees.
The Board of Directors; Committees of the Board
Since the adoption of the Sarbanes-Oxley Act in July 2002, there has been a growing public and regulatory focus on the independence of directors. Nasdaq has adopted amendments to its definition of independence. Additional requirements relating to independence are imposed by the Sarbanes-Oxley Act with respect to members of the Audit Committee. As noted below, the Board has determined that the members of the Audit Committee satisfy all such definitions of independence. The Board has also determined that the following members of the Board satisfy the Nasdaq definition of independence: Howard Bernstein, Peter
18
Gilbert, John S. Johnson, John F. Tweedy, Robert Simandl and Avi Eden. The Board concluded that while Mr. Simandl is compensated for certain legal services that he provides to the Company and Mr. Eden is compensated for certain business development consulting services that he provides to the Company, the fees paid to these individuals ($60,000 to Mr. Eden and $27,000 to Mr. Simandl) were not of a magnitude that such fees would impair Mr. Simandls or Mr. Edens independence. In considering the independence of Mr. Simandl and Mr. Eden, the Board also took note of the willingness of these individuals to express their views without concern for
economic repercussions.
The Companys Board of Directors holds a regular meeting immediately before the Annual Meeting of Shareholders and meets regularly throughout the year. During 2007, the Board held five meetings.
Bels Board has an Executive Committee, a Compensation Committee, an Audit Committee and a Nominating Committee. The Executive Committee is composed of Daniel Bernstein, Robert H. Simandl and John F. Tweedy; the Compensation Committee is composed of Peter Gilbert and Robert H. Simandl; the Audit Committee is composed of Peter Gilbert, John S. Johnson and John F. Tweedy; and the Nominating Committee is composed of Howard Bernstein, Robert H. Simandl and John F. Tweedy.
The function of the Executive Committee is to act in the place of the Board when the Board cannot be convened.
The Compensation Committee is charged with the responsibility of administering the Companys employee benefit plans, reviews the compensation of Bels executive officers and establishes general compensation policies.
The Audit Committee reviews significant audit and accounting principles, policies and practices, and meets with the Companys independent auditors. The Board of Directors has determined that John S. Johnson constitutes an audit committee financial expert, as such term is defined by the SEC. As noted above, Mr. Johnson as well as the other members of the Audit Committee has been determined to be independent within the meaning of SEC and Nasdaq regulations.
The Nominating Committee is responsible for nominating candidates for election to the Companys Board of Directors.
During 2007, the Executive Committee held no meetings, the Audit Committee held sevenmeetings, the Compensation Committee held one meeting and the Nominating Committee held one meeting.
For a description of services provided to the Company by Robert H. Simandl and Avi Eden during 2007, see Compensation Committee Interlocks and Insider Participation.
Nominating Committee Matters
Nominating Committee Charter.
The Board has adopted a Nominating Committee charter to govern its Nominating Committee. A copy of the charter was set forth as
Appendix A
to the Companys 2007 proxy statement; the charter is not presently included on the Companys Web site.
Independence of Nominating Committee Members.
All members of the Nominating Committee of the Board of Directors have been determined to be independent directors pursuant to the definition contained in Rule 4200(a)(15) of the National Association of Securities Dealers Marketplace rules.
Procedures for Considering Nominations Made by Shareholders.
The Nominating Committees charter describes procedures for nominations to be submitted by shareholders and other third-parties, other than candidates who have previously served on the Board or who are recommended by the Board. The charter states that a nomination must be delivered to the Secretary of the Company at the principal executive offices of the Company not later than the close of business on the 90th day nor earlier than the close of business on the 120
th
day prior to the first anniversary of the preceding years annual meeting; provided,
however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the close of business on the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. The public announcement of an adjournment or postponement
19
of an annual meeting will not commence a new time period (or extend any time period) for the giving of a notice as described above. The charter requires a nomination notice to set forth as to each person whom the proponent proposes to nominate for election as a director: (a) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such persons written consent to being named in the proxy statement as a nominee and to serving
as a director if elected), and (b) information that will enable the Nominating Committee to determine whether the candidate or candidates satisfy the criteria established pursuant to the charter for director candidates.
Qualifications.
The charter describes the minimum qualifications for nominees and the qualities or skills that are necessary for directors to possess. Each nominee:
|
|
must satisfy any legal requirements applicable to members of the Board;
|
|
|
must have business or professional experience that will enable such nominee to provide useful input to the Board in its deliberations;
|
|
|
must have a reputation for honesty and ethical conduct;
|
|
|
must have a working knowledge of the types of responsibilities expected of members of the board of directors of a public company; and
|
|
|
must have experience, either as a member of the board of directors of another public or private company or in another capacity, that demonstrates the nominees capacity to serve in a fiduciary position.
|
Identification and Evaluation of Candidates for the Board.
Candidates to serve on the Board will be identified from all available sources, including recommendations made by shareholders. The Nominating Committees charter provides that there will be no differences in the manner in which the Nominating Committee evaluates nominees recommended by shareholders and nominees recommended by the Committee or management, except that no specific process shall be mandated with respect to the nomination of any individuals who have previously served on the Board. The evaluation process for individuals other than existing Board members will
include:
|
|
a review of the information provided to the Nominating Committee by the proponent;
|
|
|
a review of reference letters from at least two sources determined to be reputable by the Nominating Committee; and
|
|
|
a personal interview of the candidate, together with a review of such other information as the Nominating Committee shall determine to be relevant.
|
Third Party Recommendations.
In connection with the 2008 Annual Meeting, the Nominating Committee did not receive any nominations from any shareholder or group of shareholders which owned more than 5% of the Companys Class A Common Stock or Class B Common Stock for at least one year.
Audit Committee Matters
Audit Committee Charter.
The Audit Committee performed its duties during 2007 under a written charter approved by the Board of Directors. A copy of the charter was set forth as
Appendix B
to the Companys 2007 proxy statement; the charter is presently included on the Companys Web site under the Investor Information tab.
Independence of Audit Committee Members.
The Class A and Class B Common Stock are listed on the NASDAQ Global Select Market and the Company is governed by the listing standards applicable thereto. All members of the Audit Committee of the Board of Directors have been determined to be independent directors pursuant to the definition contained in Rule 4200(a)(15) of the National Association of Securities Dealers Marketplace Rules and under the SECs Rule 10A-3.
20
Audit Committee Report.
In connection with the preparation and filing of the Companys Annual Report on Form 10-K for the year ended December 31, 2007:
|
(1)
|
the Audit Committee reviewed and discussed the audited financial statements with the Companys management;
|
|
(2)
|
the Audit Committee discussed with the Companys independent auditors the matters required to be discussed by SAS 61;
|
|
(3)
|
the Audit Committee received and reviewed the written disclosures and the letter from the Companys independent auditors required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and discussed with the Companys independent auditors any relationships that may impact their objectivity and independence and satisfied itself as to the auditors independence; and
|
|
(4)
|
based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the 2007 Annual Report on Form 10-K.
|
By: The Audit Committee of the Board of Directors
Peter Gilbert
John S. Johnson
John F. Tweedy
Compensation Committee Report
The Compensation Committee has reviewed and discussed the information provided under the caption Compensation Discussion and Analysis set forth above. Based on that review and those discussions, the Compensation Committee recommended to our Board that such Compensation Discussion and Analysis be included in this proxy statement.
By: The Compensation Committee of the Board of Directors
Peter Gilbert
Robert H. Simandl
Compensation Committee Interlocks and Insider Participation
Peter Gilbert and Robert H. Simandl served as members of the Compensation Committee of the Companys Board of Directors during 2007.
Mr. Simandl served as the Companys Secretary through May 2003. Mr. Simandl and his predecessor firms have served as general counsel to the Company for more than the past five years. Fees received by Mr. Simandls firm from the Company during 2007 were not material. The Company will retain Mr. Simandl in 2008.
Director Avi Eden served as a special consultant to the Company on matters related to potential acquisitions during 2007. Fees received by Mr. Eden from the Company in 2007 were not material. The Company expects Mr. Eden to continue in this role in 2008.
The Audit Committee of the Board of Directors monitors the Companys related party transactions and must approve in advance any new related party transactions. On a quarterly basis, the Audit Committee makes inquiry of managements disclosure committee to determine whether any of the members of that committee are aware of any related party transactions. Managements disclosure committee did not report any related party transactions to the Audit Committee during 2007.
Other Compensation Committee Matters
Charter.
Our Board of Directors has defined the duties of its Compensation Committee in a charter. A copy of the Compensation Committees charter was attached to the Companys 2007 proxy statement as Appendix C; the charter is not presently included on the Companys Web site.
Authority, Processes and Procedures.
Our Compensation Committee is responsible for administering our employee benefit plans, for establishing the compensation of our Chief Executive Officer and for determining
21
the compensation of our other executive officers. Our Compensation Committee also establishes policies and monitors compensation for our associates in general. While the Compensation Committee may, and does in fact, delegate authority with respect to the compensation of associates in general, the Compensation Committee retains overall supervisory responsibility for associate compensation. With respect to executive compensation, the Compensation Committee receives recommendations and information from our Chief Executive Officer regarding issues relevant to determinations made by the Compensation Committee. Our Chief Executive Officer participates in
Compensation Committee deliberations regarding the compensation of other executive officers, but does not participate in deliberations regarding his own compensation.
Consultants.
We typically do not involve consultants in establishing the compensation of our associates or directors, other than attorneys who assist us in the drafting of benefit plans and comparable arrangements.
Shareholder Communication With the Board
The Board of Directors has established a procedure that enables shareholders to communicate in writing with members of the Board. Any such communication should be addressed to the Companys Chief Executive Officer and should be sent to such individual c/o Bel Fuse Inc., 206 Van Vorst Street, Jersey City, New Jersey 07302. Any such communication must state, in a conspicuous manner, that it is intended for distribution to the entire Board of Directors. Under the procedures established by the Board, upon the Chief Executive Officers receipt of such a communication, the Companys Secretary will send a copy of such communication to each
member of the Board, identifying it as a communication received from a shareholder. Absent unusual circumstances, at the next regularly scheduled meeting of the Board held more than two days after such communication has been distributed, the Board will consider the substance of any such communication.
Board members are encouraged, but not required by any specific Board policy, to attend the Companys annual meeting of shareholders. All of the members of the Board attended the Companys 2007 annual meeting of shareholders.
22
PROPOSAL TWO
RATIFICATION OF THE DESIGNATION OF DELOITTE & TOUCHE LLP
TO AUDIT BELS BOOKS AND ACCOUNTS FOR 2008
The Audit Committee has selected Deloitte & Touche LLP to audit Bels books and accounts for the year ending December 31, 2008 and will offer a resolution at the meeting for shareholders to ratify the designation. Although shareholder ratification is not required, the designation of Deloitte & Touche LLP is being submitted for ratification at the 2008 Annual Meeting of Shareholders because it is perceived to be a matter of good corporate governance practice to submit this issue for ratification by shareholders. Ultimately, the Audit Committee retains full discretion and will make all determinations with respect to the appointment of
Bels independent registered public accounting firm.
The Board of Directors recommends a vote FOR Proposal Two.
23
OTHER MATTERS
Relationship With Independent Public Accountants
Deloitte & Touche LLP, independent certified public accountants, has been selected by the Board of Directors to audit and report on Bels financial statements for the year ending December 31, 2008.
Deloitte & Touche LLP began auditing Bel in 1983. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he so desires. The representative is expected to be available to respond to appropriate questions from shareholders.
Audit Fees and Related Matters
In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the Audit Committees charter, all audit and audit-related work and all non-audit work performed by the Companys independent accountants, Deloitte & Touche LLP, is approved in advance by the Audit Committee, including the proposed fees for such work. The Audit Committee is informed of each service actually rendered.
Audit Fees.
Audit fees billed or expected to be billed to the Company by Deloitte & Touche LLP for the audit of the financial statements included in the Companys Annual Reports on Form 10-K, and reviews of the financial statements included in the Companys Quarterly Reports on Form 10-Q, for the years ended December 31, 2007 and 2006 totaled $1,146,528 and $1,180,650, respectively.
Audit-Related Fees.
The Company was not billed by Deloitte & Touche LLP for assurance and related services for the years ended December 31, 2007 and 2006. Such services are defined as services which are reasonably related to the performance of the audit or review of the Companys financial statements and are not reported under the caption Audit Fees above.
Tax Fees.
The Company was billed $365,022 and $229,582 by Deloitte Tax LLP (an affiliate of Deloitte & Touche LLP) for the years ended December 31, 2007 and 2006, respectively, for tax services, principally representing advice regarding the preparation of income tax returns.
All Other Fees.
For the years ended December 31, 2007 and 2006, the Company was not billed by Deloitte & Touche LLP for services not covered in the three immediately preceding paragraphs.
Other Matters.
The Audit Committee of the Board of Directors has considered whether the provision of Audit-Related Fees, Tax Fees and All Other Fees are compatible with maintaining the independence of the Companys principal accountant.
Applicable law and regulations provide an exemption that permits certain services to be provided by the Companys outside auditors even if they are not pre-approved. The Company has not relied on this exemption at any time since the Sarbanes-Oxley Act was enacted.
Miscellaneous
At the time that this Proxy Statement was mailed to shareholders, management was not aware that any matter other than the election of directors and the ratification of the designation of Deloitte & Touche LLP to audit Bels books and accounts for 2008 would be presented for action at the Annual Meeting. If other matters properly come before the Meeting, it is intended that the shares represented by proxies will be voted with respect to those matters in accordance with the best judgment of the persons voting them.
By Order of the Board of Directors
Colin Dunn, Secretary
Dated: April 14, 2008
A copy of the Companys annual report for the year ended December 31, 2007, including financial statements, accompanies this Proxy Statement. The annual report is not to be regarded as proxy soliciting material or as a communication by means of which any solicitation is to be made.
A copy of the Companys annual report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission, is available (excluding exhibits) without cost to shareholders upon written request made to Jerry Kimmel, Bel Fuse Inc., 206 Van Vorst Street, Jersey City, New Jersey 07302.
24