A “broker
non-vote” is when a broker votes in its discretion on one or more “routine”
matters, but does not receive instructions from a beneficial owner of shares as
to how to vote those shares on “non-routine” matters. Broker non-votes will be
counted for purposes of a quorum. As for the effect on the outcome of votes on
proposals, under the current Nasdaq Stock Market rules, brokers have
discretionary voting power to vote without receiving voting instructions from
the owner on “routine” matters, but not on “non-routine” matters. Routine
matters include, among other things, the uncontested election of directors and
the ratification of the appointment of independent registered public
accountants. There is one non-routine matter being voted on at this
Annual Meeting. This means that if you hold your shares through a broker, bank
or other nominee (that is, in “street name”), and do not provide voting
instructions by the tenth day before the Annual Meeting, the broker, bank or
other nominee will have the discretion to vote your shares on
Proposal No. 1 and Proposal No. 3.
WHO
WILL BEAR THE COSTS OF SOLICITING PROXIES FOR THE ANNUAL MEETING?
We are
soliciting the proxies and will bear the entire cost of this solicitation,
including the preparation, assembly, printing and mailing of this proxy
statement and any additional materials furnished to our stockholders. The
Company has retained Georgeson, Inc., a proxy solicitation firm, for assistance
in connection with the solicitation of proxies for the Annual Meeting at a cost
of $7,500 plus reimbursement of reasonable out-of-pocket expenses. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by officers and employees of the Company who will not receive any
additional compensation for their services. Proxies and proxy material will also
be distributed at our expense by brokers, nominees, custodians, and other
similar parties.
HOW
DO I VOTE IF I ATTEND THE ANNUAL MEETING?
If you
are a stockholder of record, you can attend the Annual Meeting and vote in
person the shares you hold directly in your name on any matters properly brought
before the Annual Meeting. If you choose to do that, please bring the enclosed
proxy card or proof of identification. If you want to vote in person at our
Annual Meeting and you hold our common stock through a bank, broker or other
agent or nominee, you must obtain a power of attorney or other proxy authority
from that organization and bring it to our Annual Meeting. Follow the
instructions from your bank, broker or other agent or nominee included with
these proxy materials, or contact your bank, broker or other agent or nominee to
request a power of attorney or other proxy authority. If you vote in person at
the Annual Meeting, you will revoke any prior proxy you may have
submitted.
HOW
DO I VOTE IF I DO NOT ATTEND THE ANNUAL MEETING?
Stockholders
of record who do not attend the Annual Meeting should vote by mail: Please sign,
date and return the enclosed proxy card in the enclosed postage-paid return
envelope.
By
executing and returning the enclosed proxy card, you are authorizing the
individuals listed on the proxy card to vote your shares in accordance with your
instructions.
If you
are a beneficial owner of shares registered in the name of your bank, broker or
other agent or nominee, you should have received a proxy card and voting
instructions with these proxy materials from that organization rather than from
us. Simply complete and mail the proxy card to ensure that your vote is counted.
If you did not receive a proxy card, please follow the instructions from your
bank, broker or other agent or nominee included with these proxy materials, or
contact your bank, broker or other agent or nominee to request a proxy
card.
WHAT
IF I DO NOT SPECIFY HOW MY SHARES ARE TO BE VOTED ON THE PROXY
CARD?
If you
return a signed and dated proxy card without marking any voting selections, your
shares will be voted as follows:
|
(1)
|
FOR
the election of the
three nominees for director proposed by the Board of
Directors;
|
|
(2)
|
FOR
the approval of the
adoption of the Lakeland 2009 Restricted Stock
Program;
|
|
(3)
|
FOR
the ratification of
the selection of Warren, Averett, Kimbrough & Marino LLC as our
independent registered public accounting firm for the fiscal year ending
January 31, 2010; and
|
If any
other matter is properly presented at the meeting, the individuals named on your
proxy card will vote your shares using their best judgment.
YOUR
VOTE IS VERY IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
PLEASE SIGN AND DATE THE ENCLOSED WHITE PROXY CARD AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE PROMPTLY.
WHAT
DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD FROM LAKELAND?
If you
receive more than one proxy card from us or your bank, your shares are
registered in more than one name or are registered in different accounts. Please
complete, sign and return each proxy card to ensure that all of your shares are
voted.
HAS
THE LAKELAND BOARD OF DIRECTORS MADE A RECOMMENDATION REGARDING THE MATTERS TO
BE ACTED UPON AT THE ANNUAL MEETING?
Our Board
of Directors recommends that you vote “FOR” the election of its three nominees
for director, “FOR” the adoption of the 2009 Lakeland Restricted Stock Program,
“FOR” the ratification of the selection of Warren, Averett, Kimbrough &
Marino LLC as our independent registered public accounting firm for the fiscal
year ending January 31, 2010. Please vote on the enclosed proxy
card.
CAN
I CHANGE MY VOTE?
Yes. You
may revoke your proxy by doing any of the following:
(1) You
may send a written notice that you are revoking your proxy to our Corporate
Secretary at the address indicated below, so long as it is received prior to the
Annual Meeting.
(2) You
may submit another properly completed proxy card with a later date to the
Company, so long as it is received prior to the Annual Meeting.
(3) You
may attend the Annual Meeting and vote in person. Simply attending the meeting
will not, by itself, revoke your proxy.
Any
written notice of revocation, or later dated proxy card, should be delivered
to:
Lakeland
Industries, Inc.
701
Koehler Avenue, Suite 7
Ronkonkoma,
New York 11779
Attention:
Christopher J. Ryan, Secretary
If your
shares are held by your broker or bank as a nominee or agent, you should follow
the instructions provided by your broker or bank.
HOW
CAN I FIND OUT THE RESULTS OF THE VOTING AT THE ANNUAL MEETING?
Preliminary
voting results will be announced at the Annual Meeting. Final voting results
will be published in our quarterly report on Form 10-Q for the second
quarter of FY 2010 ending July 31, 2009.
ELECTION
OF DIRECTORS
GENERAL
Our Board
of Directors, or the Board, consists of seven directors. As indicated below,
each nominee for re-election will be elected for a three-year term, which will
expire at the 2012 Annual Meeting of Stockholders and until their successors are
duly elected and qualified or until any such director’s earlier resignation or
removal. Our Board’s nominees are Stephen M. Bachelder, Chairman of the
Nominating and Governance Committee and director/member of the Audit and
Compensation Committees, John J. Collins, director/member of the Nominating and
Governance Committee, the Audit Committee and the Compensation Committee and
Eric O. Hallman, Chairman of the Compensation Committee and director/member of
the Nominating and Governance Committee and the Audit Committee, all of whom are
currently serving as Directors. Our Nominating and Governance
Committee (excluding members who are nominees) considered the qualifications of
each of the Board’s nominees for election prior to the Annual Meeting, and
unanimously recommended that each nominee be submitted for re-election to the
Board.
Directors
are elected by a plurality of the votes properly cast in person or by proxy. If
a quorum is present and voting, the three nominees receiving the highest number
of affirmative votes will be elected. Shares represented by executed proxy cards
will be voted, if authority to do so is not withheld, for the election of the
three nominees named below. Abstentions and broker non-votes will have no effect
on the votes. If any Board nominee becomes unavailable for election as a result
of an unexpected occurrence, your shares will be voted for the election of a
substitute nominee determined by our Board. Each person nominated by the Board
for election has agreed to serve if elected. We have no reason to believe that
any Board nominee will be unable to serve.
The name
and age of each director nominee, his position with us and the year in which he
first became a director is set forth below:
INCUMBENT
DIRECTORS - CLASS II
and
NOMINEES FOR
ELECTION
Terms
Expiring in June 2012
_____________________________________
Name
|
Age
|
Position
|
Director
Since
|
|
|
|
|
|
|
|
|
Stephen
M. Bachelder
|
57
|
Director
|
2004
|
John
J. Collins, Jr.
|
65
|
Director
|
1986
|
Eric
O. Hallman
|
64
|
Director
|
1982
|
The principal occupations and
employment of the nominees for director are set forth below:
Nominee
Directors
Stephen M. Bachelder
was an
executive and President of Swiftview, Inc. a Portland, Oregon based software
company from 2002-2007. Swiftview, Inc. was sold to a private equity firm in
October 2006. Mr. Bachelder is currently working on plans for a new venture.
From 1991 to 1999 Mr. Bachelder ran a consulting firm advising technology
companies in the Pacific Northwest. Mr. Bachelder was the president and owner of
an apparel company, Bachelder Imports, from 1982 to 1991 and worked in executive
positions for Giant Foods, Inc. and Pepsico, Inc. between 1976 and 1982. Mr.
Bachelder is a 1976 Graduate of the Harvard Business School. Mr.
Bachelder has served as a director since 2004 and his term as a director will
expire at our Annual Meeting of Stockholders in June 2009.
John J. Collins, Jr.
was
Executive Vice President of Chapdelaine GSI, a government securities firm, from
1977 to January 1987. He was Senior Vice President of Liberty Brokerage, a
government securities firm, between January 1987 and November
1998. Presently, Mr. Collins is self-employed, managing a direct
investment portfolio of small business enterprises for his own
accounts. Mr. Collins has served as one of our directors since 1986
and his term as a director will expire at our Annual Meeting of Stockholders in
June 2009.
Eric O. Hallman
was President
of Naess Hallman Inc., a ship brokering firm, from 1974 to 1991 owned equally by
Arne Naess and Mr. Hallman. Mr. Hallman was also affiliated between 1991 and
1992 with Finanshuset (U.S.A.), Inc., a ship brokering and international
financial services and consulting concern, and was the Owners Representative of
Sylvan Lawrence, the then largest privately owned commercial real estate
development company in New York City, between 1992 and 1998. Between 1998 and
2000, Mr. Hallman was President of PREMCO, a real estate management company, and
currently is Comptroller of the law firm Murphy, Bartol & O’Brien,
LLP. Mr. Hallman has served as one of our directors since our
incorporation in 1982 and his term as a director will expire at our Annual
Meeting of Stockholders in June 2009.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE
ELECTION OF THE CLASS II NOMINEES LISTED ABOVE.
INCUMBENT
DIRECTORS- CLASS III
Terms
Expiring in June 2010
___
______________________________________
Name
|
Age
|
Position
|
Director
Since
|
|
|
|
|
Raymond
J. Smith
|
69
|
Chairman
of the Board
|
1982
|
|
|
of
Directors
|
|
Duane
W. Albro
|
62
|
Director
|
2009
|
INCUMBENT
DIRECTORS - CLASS I
AND
NOMINEES FOR ELECTION
Terms
Expiring in June 2011
_____
____________________________________
Name
|
Age
|
Position
|
Director
Since
|
|
|
|
|
Christopher
J. Ryan
|
57
|
Chief
Executive Officer,
|
1986
|
|
|
President,
General Counsel,
|
|
|
|
Secretary
and Director
|
|
A.
John Kreft
|
58
|
Director
|
2004
|
Incumbent
Directors
Raymond J. Smith
, one
of the co-founders of Lakeland, has been Chairman of our Board of Directors
since our incorporation in 1982 and was President from 1982 to November 30,
2003. Prior to starting Lakeland, Mr. Smith was a Sales Executive
with the International Paper Company (NYSE: IP) from 1961 to 1966, then the
President of Abandaco, Inc. from 1966 to 1982. Mr. Smith received his B.A. from
Georgetown University in 1960. Mr. Smith has served as a director since 1982 and
his term as a director will expire at our Annual Meeting of Stockholders in
2010.
Christopher J. Ryan
has
served as our Chief Executive Officer and President of Lakeland since November
30, 2003, Secretary since April 1991, General Counsel since February 2000 and a
director since May 1986. Mr. Ryan was our Executive Vice President -
Finance from May 1986 until becoming our President on November 30, 2003. Mr.
Ryan also worked as a Corporate Finance Partner at Furman Selz Mager Dietz &
Birney, Senior Vice President-Corporate Finance at Laidlaw Adams & Peck,
Inc., Managing-Corporate Finance Director of Brean Murray Foster Securities, Inc
and Senior Vice President-Corporate Finance of Rodman & Renshaw,
respectively between 1983-1991. Mr. Ryan has served as a Director of Lessing,
Inc., a privately held restaurant chain based in New York, from 1995-2008. Mr.
Ryan received his BA from Stanford University, his MBA from Columbia Business
School and his J.D. from Vanderbilt Law School. Mr. Ryan is a member of the
National Association of Corporate Directors (NACD). Mr. Ryan has served as a
director since 1986 and his term as a director will expire at our Annual Meeting
of Stockholders June 2011.
A. John Kreft
has been
President of Kreft Interests, a Houston based private investment firm, since
2001. Between 1998 and 2001, he was CEO of Baker Kreft Securities, LLC, a NASD
broker-dealer. From 1996 to 1998, he was a co-founder and manager of TriCap
Partners, a Houston based venture capital firm. From 1994 to 1996 he was
employed as a director at Alex Brown and Sons. He also held senior positions at
CS First Boston including employment as a managing director from 1989 to 1994.
Mr. Kreft received his MBA from the Wharton School of Business in 1975. Mr.
Kreft is a member of the National Association of Corporate Directors (NACD). Mr.
Kreft has served as a director since November 17, 2004 and his term as a
director will expire at our Annual Meeting of Stockholders in June
2011.
Duane W. Albro
has been the
President and CEO of WVT Communications (NASDAQ: WWVY) since May 2007. From 2005
to 2006, he was President and CEO of Refinish LP, a privately held company in
the cellular phone refurbishing business. From 2004 to 2005 he was a business
consultant with the Gerson Lehrman Group in NY, NY, providing strategic and
tactical analysis and advice to investors and businesses. He has
extensive experience in the telecommunications and cable TV industry having
worked in executive positions at Cablevision, Net2000 Communications, Bell
Atlantic and Nynex between 1966 and 2003. He has also been active in supporting
the positive impact of telecommunications used in education, having served on a
White House Advisory Council on Technology in Education and provided testimony
to Congress on the benefits of technology used in education. Mr. Albro has
demonstrated his commitment to workforce issues as the founder, Chairman and
President of the Long Island Works Coalition, a non-profit organization
dedicated to enhancing the available workforce for technology industries. Mr.
Albro holds an MBA from New York Institute of Technology. Mr.
Albro
was elected
to our Board on April 17, 2009 and will join Mr. Smith as a Class III
director.
DIRECTORS’
COMPENS
A
TION
Members of the Board of Directors, in
their capacity as directors, are reimbursed for all travel expenses to and from
meetings of the Board or Committee meetings. Non-Employee or Outside
Directors received $6,250 quarterly as compensation for serving on the Board and
its committees, committee chairmen receive an additional $500 quarterly. In
addition, Directors receive only $500 if they attend meetings by telephone, but
$1,500 for meetings attended in person. There are no charitable awards or
director legacy programs and no deferred compensation programs for Directors. In
their deliberations relating to directors’ compensation, the Compensation
Committee reviewed a study conducted by the National Association of Corporate
Directors and the Center for Board Leadership, entitled “2006-2007 Director
Compensation Report”. Messrs. Collins, Hallman, Kreft, and Cirenza (a recently
retired director) participate in our Non-Employee Directors' Option Plan and
2006 Equity Incentive Plan. There has been no increase in board compensation for
three years.
The following table sets forth
compensation information for the fiscal year ended January 31, 2009 (sometimes
referred to in this proxy statement as “FY09”) for each member of the Board of
Directors who is not also an executive officer. Christopher J. Ryan
and Raymond J. Smith, as employee directors, were not compensated for their
service on our Board. Disclosures relating to compensation for
Messrs. Smith and Ryan can be found in “Executive Officers – Executive
Compensation” below.
DIRECTOR
COMPENSATION TABLE FOR FISCAL 2009
|
Name
|
Fees
Earned
or
Paid
in
Cash*
($)
|
Stock
Awards
($)
(1)
|
Option
Awards
($)(1)(2)
|
Non-
Equity
Incentive
Plan
Compens
ation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
Reimbursed
Expenses
($)
|
Total
($)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
|
|
|
|
|
|
|
|
A
|
Eric
O. Hallman
|
$35,500
|
$11,528
|
--
|
--
|
--
|
$378
|
$47,406
|
|
|
|
|
|
|
|
|
|
B
|
John
J. Collins
|
$33,500
|
$9,607
|
--
|
--
|
--
|
687
|
$43,794
|
|
|
|
|
|
|
|
|
|
C
|
Michael
Cirenza (3)
|
$36,500
|
$11,528
|
|
--
|
--
|
--
|
$58,542
|
|
|
|
|
|
|
|
|
|
D
|
A.
John Kreft
|
$33,000
|
$14,310
|
|
--
|
--
|
1,259
|
$59,083
|
|
|
|
|
|
|
|
|
|
E
|
Stephen
M. Bachelder
|
$34,000
|
$9,607
|
|
--
|
--
|
958
|
$55,079
|
|
|
|
|
|
|
|
|
|
F
|
Duane
W. Albro
|
$0
|
--
|
--
|
--
|
--
|
---
|
$0
|
(1)
|
Represents
the dollar amount recognized by us for financial statement purposes for
fiscal 2009 in accordance with
Statement of Financial
Accounting Standards No. 123 (revised 2004), Share-Based Payments (“SFAS
123 (R)”).
|
(2)
|
At
January 31, 2009 our non-employee directors owned the following
unexercised options: Mr. Hallman 2,431, Mr. Collins 2,431, Mr.
Kreft 6,050, Mr. Bachelder 6,050.
|
(3)
|
Resigned
from the Board of Directors on February 11,
2009
|
We currently grant stock options to our
directors under our non-employee directors’ option plan (the “Directors’ Plan”),
which provides for an automatic one-time grant of options to purchase 5,000
shares of common stock to each non-employee director newly elected or appointed
to the Board of Directors. Under the Directors’ Plan, 60,000 shares of common
stock have been authorized for issuance. Options are granted at not less than
fair market value, become exercisable commencing six months from the date of
grant and expire six years from the date of grant. In addition, all non-employee
directors re-elected to the Company’s Board of Directors at any annual meeting
of the stockholders will automatically be granted additional options to purchase
1,000 shares of common stock on that date which in accordance with the By-Laws
is always the third Wednesday of June each year. Grants of 1,000
options each to Mssrs. Bachelder, Cirenza and Kreft were made pursuant to the
Directors’ Plan in 2008.
The following table sets forth
information with respect to outstanding unvested performance based awards under
our 2006 Equity Incentive Plan that were made to our non-employee directors in
June 2006 that are represented in the number of minimum, baseline and maximum
number of shares that may be awarded at the end of the performance cycle in June
2009.
Grantee
Directors
|
Minimum#
of
Shares
(1)
|
Baseline#
of
Shares
|
Maximum
#
of
Shares
|
|
|
|
|
Michael
M. Cirenza
|
2,640
|
5,170
|
7,810
|
John
J. Collins, Jr.
|
2,200
|
4,290
|
6,490
|
Eric
O. Hallman
|
2,640
|
5,170
|
7,810
|
Stephen
M. Bachelder
|
2,640
|
5,170
|
7,810
|
A.
John Kreft
|
2,200
|
4,290
|
6,490
|
(1)
|
Based
on our closing stock price on January 31, 2009, at the minimum level these
awards have the following values, Messrs. Cirenza, Hallman and Bachelder:
$20,354 and Messrs. Collins and Kreft:
$16,962.
|
Director
Independence
Our Board
is currently composed of seven directors. As required under the Marketplace
Rules of the NASDAQ Stock Market LLC (“NASDAQ”), a majority of the members of a
NASDAQ listed company’s board of directors must qualify as “independent,” as
affirmatively determined by the Company. Our Board consults with our counsel to
ensure that the Board’s determinations are consistent with all relevant
securities and other laws and regulations regarding the definition of
“independent,” including those set forth in pertinent NASDAQ Marketplace Rules,
as in effect from time to time.
Consistent
with these considerations, after review of all relevant transactions or
relationships between each director, or any of his or her family members, our
senior management and our independent registered public accounting firm, the
Board affirmatively has determined that, other than Raymond J. Smith, Chairman
and founder of the Company and Christopher J. Ryan, who is our CEO, President,
General Counsel and Secretary, each of the members of our Board is an
independent director for purposes of the NASDAQ Marketplace Rules. In making
this determination, the Board found that none of these directors or nominees for
director has a direct or indirect material or other disqualifying relationship
with us, which, in the opinion of the Board, would interfere with the exercise
of independent judgment in carrying out the responsibilities of a director. The
Board holds executive sessions of its independent directors when it deems
necessary but at least once per year.
Board
and Committee Meetings and Attendance
The Board
has three standing committees: an Audit Committee, a Compensation Committee, and
a Nominating and Governance Committee. Each of these committees operates under a
written charter adopted by the Board. Copies of these charters are available on
our website at
www.lakeland.com
under the headings Investor Relations – Corporate
Governance. Board committee charters are also available in print to stockholders
upon request, addressed to the Corporate Secretary, at 701 Koehler Avenue, Suite
7, Ronkonkoma, New York 11779.
The Board
held seven meetings during the fiscal year ended January 31, 2009. Each director
attended at least 75% of the aggregate of the meetings of the Board and of the
committees, on which he served, held during the period for which he was a
director or committee member, respectively. The following table sets forth the
standing committees of the Board, the number of meetings held by each committee
and the membership of each committee currently.
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominating
& Governance
|
|
|
Alfred
J. Kreft
|
|
Chairman
|
|
Member
|
|
Member
|
Stephen
Bachelder
|
|
Member
|
|
Member
|
|
Chairman
|
Eric
O. Hallman
|
|
Member
|
|
Chairman
|
|
Member
|
John
J. Collins
|
|
Member
|
|
Member
|
|
Member
|
Michael
Cirenza (retired 2/11/09)
|
|
Chairman
|
|
Member
|
|
Member
|
Number
of Meetings held in FY09
|
|
5
|
|
1
|
|
2
|
Audit
Committee
Our Audit
Committee currently consists of A. John Kreft (Chairman), Stephen Bachelder,
Eric O. Hallman and John J. Collins. The Board annually reviews the definition
of independence for Audit Committee members and has determined that all members
of our Audit Committee are independent (as independence is currently defined in
Rule IM-5605-4 of the NASDAQ Marketplace Rules). Our Board has
determined that Mr. Kreft is an “audit committee financial expert,” as such
term is defined in applicable rules and regulations based on, among other
things, he has an MBA in finance from the Wharton School of Business, 4 ½ years
experience with two “Big 4” accounting firms, 17 years of investment
banking/underwriting/advisory services with several brokerage firms such as
Credit Suisse and Alex Brown and 3 years as CEO of a NASD broker dealer. Mr.
Kreft has held at various times 5 levels of security licenses including General
Securities Principal.
The
formal report of our Audit Committee is included in this proxy statement. The
Audit Committee’s responsibilities include, among other things:
|
|
|
|
•
|
the
oversight of the quality of our consolidated financial statements and our
compliance with legal and regulatory requirements;
|
|
|
|
•
|
the
selection, evaluation and oversight of our independent registered public
accountants, including conducting a review of their independence,
determining fees for our independent registered public accountants,
overseeing the independent registered public accountants’ audit work, and
reviewing and pre-approving any non-audit services that may be performed
by them;
|
|
|
|
|
•
|
the
oversight of annual audit and quarterly reviews, including review of our
consolidated financial statements, our critical accounting policies and
the application of accounting principles and any material related-party
transactions; and
|
|
|
|
•
|
the
oversight of financial reporting process and internal controls, including
a review of the adequacy of our accounting and internal controls and
procedures.
|
Compensation
Committee
Our
Compensation Committee currently consists of Eric O. Hallman (Chairman), A. John
Kreft, Stephen Bachelder and John J. Collins, each of whom is an independent
director (as independence is currently defined in Rule IM-5605-4 of
the NASDAQ Marketplace Rules). This proxy statement includes the report of our
Compensation Committee and management’s Compensation Discussion &
Analysis, included under the heading “Executive Compensation” herein, which
focuses on executive compensation. Our Compensation Committee’s role includes
setting and administering the policies governing the compensation of executive
officers, including cash compensation and equity incentive programs, and
reviewing and establishing the compensation of the Chief Executive Officer and
other executive officers. Our Compensation Committee’s principal
responsibilities, which have been authorized by the Board, are:
|
|
|
|
•
|
approving
the compensation for the Chief Executive Officer and other executive
officers (after considering the recommendation of our Chief Executive
Officer with respect to the form and amount of compensation for executive
officers other than the Chief Executive Officer);
|
|
|
|
•
|
approving
the amount of and vesting of equity awards; and
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•
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advising
the Board on our compensation and benefits matters, including making
recommendations and decisions where authority has been granted regarding
our restricted stock plan, bonuses and incentive compensation
plans.
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Our
Compensation Committee does not delegate any of its responsibilities to other
committees or persons. Participation by executive officers in the recommendation
or determination of compensation for executive officers or directors is limited
to (i) recommendations our Chief Executive Officer makes to our
Compensation Committee regarding the compensation of executive officers other
than himself and (ii) our Chief Executive Officer’s participation in Board
determinations of compensation for non-employee directors.
Nominating
and Governance Committee
Our
Nominating and Governance Committee currently consists of Stephen Bachelder
(Chairman), A. John Kreft, Eric O. Hallman and John J. Collins, each of whom is
an independent director (as independence is currently defined in
Rule 4200(a)(15) of the NASDAQ Marketplace Rules). The purpose of the
Nominating and Governance Committee is to identify, screen and recommend to the
Board qualified candidates to serve as directors, to develop and recommend to
the Board a set of corporate governance principles applicable to us, and to
oversee corporate governance and other organizational matters. The Nominating
and Governance Committee’s responsibilities include, among other
things:
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reviewing
qualified candidates to serve as directors;
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aiding
in attracting qualified candidates to serve on the
Board;
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considering,
reviewing and investigating (including with respect to potential conflicts
of interest of prospective candidates) and either accepting or rejecting
candidates suggested by our stockholders, directors, officers, employees
and others;
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recommending
to the full Board nominees for new or vacant positions on the Board
and providing profiles of the qualifications of the
candidates;
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monitoring
our overall corporate governance and corporate compliance
program;
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reviewing
and adopting policies governing the qualification and composition of the
Board;
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recommending
remuneration for non-employee Board members;
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reviewing
and making recommendations to the Board regarding Board structure,
including establishing criteria for committee membership, recommending
processes for new Board member orientation, and reviewing and monitoring
the performance of incumbent directors;
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recommending
to the Board action with respect to implementing resignation, retention
and retirement policies of the Board;
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reviewing
the role and effectiveness of the Board, the respective Board committees
and the directors in our corporate governance
process; and
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reviewing
and making recommendations to the Board regarding the nature and duties of
Board committees, including evaluating the committee charters,
recommending appointments to committees, and recommending the appropriate
chairperson for the Board.
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Director
Nomination Procedures
The
Nominating and Governance Committee will consider director candidates
recommended by stockholders. In considering candidates submitted by
stockholders, the Nominating and Governance Committee will take into
consideration the needs of the Board and the qualifications of the candidate.
The Nominating and Governance Committee may also take into consideration the
number of shares held by the recommending stockholder and the length of time
that such shares have been held. To have a candidate considered by the
Nominating and Governance Committee, a stockholder must submit the
recommendation in writing and must include the following
information:
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the
name of the stockholder and evidence of the person’s ownership of our
stock, including the number of shares owned and the length of time of
ownership;
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the
name of the candidate, the candidate’s written detailed resume and a
listing of his or her qualifications to be a director of the company
and;
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the
written consent of the proposed candidate to be named as a nominee and to
serve as a director if elected.
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The
stockholder recommendation and information described above must be sent to the
Corporate Secretary at 701 Koehler Avenue, Suite 7, Ronkonkoma, New York 11779
and must be delivered to, or mailed and received by the Corporate Secretary not
earlier than the one hundred fiftieth (150
th
)
calendar day, and not later than the close of business on the one hundred
twentieth (120
th
)
calendar day, prior to the first anniversary of the immediately preceding year’s
Annual Meeting of Stockholders.
The
Nominating and Governance Committee believes that the minimum qualifications for
serving as a director are that a nominee demonstrate, by significant
accomplishment in his or her field, an ability to make a meaningful contribution
to the Board’s oversight of the business and affairs of Lakeland and have an
impeccable record and reputation for honest and ethical conduct in both his or
her professional and personal activities. In addition, the Nominating and
Governance Committee examines a candidate’s specific experiences and skills,
relevant industry background and knowledge, time availability in light of other
commitments, potential conflicts of interest, interpersonal skills and
compatibility with the Board, and independence from management and the company.
The Nominating and Governance Committee also seeks to have the Board represent a
diversity of backgrounds and experience.
The
Nominating and Governance Committee identifies potential nominees through
independent research and through consultation with current directors and
executive officers and other professional colleagues. The Nominating and
Governance Committee looks for persons meeting the criteria above, and takes
note of individuals who have had a change in circumstances that might make them
available to serve on the Board — for example, retirement as a Chief
Executive Officer or Chief Financial Officer of a company. The Nominating and
Governance Committee also, from time to time, may engage firms that specialize
in identifying director candidates. As described above, the Nominating and
Governance Committee will also consider candidates recommended by
stockholders.
Once a
person has been identified by the Nominating and Governance Committee as a
potential candidate, the committee may collect and review publicly available
information regarding the person to assess whether the person should be
considered further. If the Nominating and Governance Committee determines that
the candidate warrants further consideration by the committee, the Chairman or
another member of the committee contacts the person. Generally, if the person
expresses a willingness to be considered and to serve on the Board, the
Nominating and Governance Committee requests a resume and other information from
the candidate, reviews the person’s accomplishments and qualifications,
including in light of any other candidates that the committee might be
considering. The Nominating and Governance Committee may also conduct one or
more interviews with the candidate, either in person, telephonically or both. In
certain instances, Nominating and Governance Committee members may conduct a
background check, may contact one or more references provided by the candidate
or may contact other members of the business community or other persons that may
have greater first-hand knowledge of
the
candidate’s accomplishments. The Nominating and Governance Committee’s
evaluation process does not vary based on whether or not a candidate is
recommended by a stockholder, although, as stated above, the committee may take
into consideration the number of shares held by the recommending stockholder and
the length of time that such shares have been held.
Stockholder
Communications with Directors
The Board
has established a process to receive communications from stockholders.
Stockholders may contact any member (or all members) of the Board by mail. To
communicate with the Board, any individual director or any group or committee of
directors, correspondence should be addressed to the Board or any such
individual director or group or committee of directors by either name or title.
All such correspondence should be sent c/o Corporate Secretary, 701 Koehler
Avenue, Suite 7, Ronkonkoma, New York 11779.
All
communications received as set forth in the preceding paragraph will be opened
by the office of our Corporate Secretary for the sole purpose of determining
whether the contents represent a message to our directors. Any contents that are
not in the nature of advertising, promotions of a product or service, or
patently offensive material will be forwarded promptly to the addressee. In the
case of communications to the Board or any group or committee of directors, the
Corporate Secretary’s office will make sufficient copies of the contents to send
to each director who is a member of the group or committee to which the envelope
is addressed.
Director
Attendance at Annual Stockholder Meetings
We expect
that each of our directors attend our Annual Stockholder Meetings, as provided
in our Corporate Governance Guidelines. All of our directors were in attendance
at the June 17, 2008 Annual Meeting of Stockholders.
Corporate
Governance Guidelines and Practices
We are
committed to good corporate governance practices and as such we have adopted
formal Corporate Governance Guidelines. A copy of the Corporate Governance
Guidelines may be found at our website at www.lakeland.com by following the
headings “Financial Information/Corporate Governance.” Below are some highlights
of our corporate governance guidelines and practices:
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Board
Independence
.
We believe
that the Board should be comprised of a substantial majority of
independent directors and that no more than two management executives may
serve on the Board at the same time. Currently, the Board has seven
directors, five of whom are independent directors under the Marketplace
Rules and only one who is an active member of
management.
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Board
Committees.
All of our Board committees consist entirely
of independent directors.
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Chairman, CEO and Lead
Independent Director.
The offices of Chairman and Chief
Executive Officer are held by two different people. In our case
the Chairman is not an independent director, thus the Board’s policy is to
designate one of the independent directors to serve as the Lead
Independent Director to preside at executive sessions of the independent
directors, where any possible conflicts could
arise.
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Executive Session of
Independent Directors.
The Board’s current practice is
to hold an executive session of its independent directors at least once a
year. In FY 2009, the independent members of our Board met in executive
session three times.
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Independent
Advisors.
The Board and each committee has the power to
hire independent legal, financial or other advisors at any time as they
deem necessary and appropriate to fulfill their Board and committee
responsibilities.
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Directors Are
Su
bject to our Code of
Conduct.
Board members must act at all times in
accordance with the requirements of our Code of Conduct. This obligation
includes adherence to our policies with respect to conflicts of interest,
ethical conduct in business dealings and respect for and compliance with
applicable law. Any requested waiver of the requirements of the Code of
Conduct with respect to any individual director or executive officer must
be reported to, and subject to, the approval of the Board, or the Audit
Committee.
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Board
Engagement.
The Board has regularly scheduled
presentations from our finance, products, sales and marketing departments.
The Board’s annual agenda also includes, among other items, the long-term
strategic plan for us as well as management succession
planning.
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No Corporate
Loans.
Our stock plans and practices prohibit us from
making corporate loans to employees for the exercise of stock options or
for any other purpose.
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New Director
Orientation.
New directors are provided with orientation
information designed to familiarize new directors with our businesses,
strategies and challenges, and to assist new directors in developing and
maintaining the skills necessary or appropriate for the performance of
their responsibilities.
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Code
of Ethics
The Board
adopted our Code of Ethics on December 1, 2000 that applies to all officers,
directors and employees. The Code of Ethics is available on our website at
www.lakeland.com under the headings “Investor Relations/Corporate Governance.”
Amendments to, and waivers from, the Code of Ethics will be disclosed at
the same website address provided above and in such filings as may be required
pursuant to applicable law or listing standards. We intend to satisfy the
disclosure requirement under Item 5.05(c) of Form 8-K regarding certain
amendments to, or waivers from a provision of this code of ethics by posting
such information on our website at www.lakeland.com under “Corporate
Governance”.
Whistleblower
Procedures
In
accordance with the Sarbanes-Oxley Act of 2002, the Audit Committee has
established procedures for the receipt, retention and treatment of complaints
regarding accounting, internal accounting controls or auditing matters and for
the confidential, anonymous submission by our employees of concerns regarding
accounting or auditing matters. We have established a confidential email and
hotline for employees to report violations of our Code of Ethics or other
company policy and to report any ethical concerns.
Director
and Executive Officer Stock Transactions
Under the
regulations of the SEC, directors and executive officers are required to file
notice with the SEC within two (2) business days of any purchase or sale of the
Company’s stock. Information on filings made by any of our directors or
executive officers can be found on the Company’s website at
http://www.lakeland.com under “Investor Relations” then “Insiders, or “all SEC
filings” Form 4(s)”
RECOMMENDATION
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
ELECTION
OF THE BOARD’S THREE NOMINEES IDENTIFIED ABOVE
IN
PROPOSAL NO. 1 ON THE PROXY CARD
PROPOSAL
TO APPROVE THE LAKELAND INDUSTRIES, INC. 2009
RESTRICTED
STOCK INCENTIVE PLAN AND THE PERFORMANCE GOALS SET FORTH
THEREIN
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(Item 2
on Proxy Card)
General
The Board
of Directors adopted the Lakeland Industries, Inc 2009 Restricted Stock
Incentive Plan (the “2009 Incentive Plan” or the “Plan”) on April 13, 2009,
subject to approval of the Company’s shareholders. The 2009 Incentive Plan is
intended to provide equity-based compensation to executive officers and other
key employees of the Company, its subsidiaries and affiliates. The Plan also
provides for the establishment of performance goals that will be used to define
the vesting period for performance-based equity awards granted under the Plan.
If approved by shareholders at the Annual Meeting, the Plan will become
effective immediately. The Plan and the performance goals are discussed in more
detail below. The full text of the 2009 Incentive Plan is included as Exhibit A
to this Proxy Statement. The following description of the material features of
the 2009 Incentive Plan is qualified in its entirety by reference to that
text.
The grant
or award of equity-based incentives is intended to enable the Company to
attract, retain and reward key employees and to strengthen the mutuality of
interests between key employees and the Company’s shareholders. Thus,
in 2009, the Company plans to grant restricted stock in lieu of stock options as
the primary equity-based incentive for executives and other key employees. The
Company believes that, among other benefits, the transition from stock options
to restricted stock awards will result in a better alignment between the
interests of executives and other key employees and the Company’s shareholders,
will permit recipients to more easily understand the value of the grants
received and will promote the accuracy and transparency of the Company’s
financial reporting. Performance goals will be established by the Compensation
Committee of the Board of Directors (the “Committee”).
Shareholder
Approval Requirements
The Plan
is being submitted to the Company’s shareholders for approval pursuant to
Sections 162(m) and 422 of the Internal Revenue Code, as amended (the
“Code”). Section 162(m) of the Code limits to $1 million
per year the deduction allowed for Federal income tax purposes for remuneration
paid to a “covered employee” of a public company (“Deduction Limit”). Under
Section 162(m), the term “covered employee” includes the chief executive
officer and the four other most highly compensated executive officers. The
Deduction Limit applies to remuneration which does not qualify for any of the
limited number of exceptions provided for in Section 162(m).
Under
Section 162(m), the Deduction Limit does not apply to “performance-based
compensation” if the following requirements are met: (a) the compensation
must be payable on account of the attainment of one or more pre-established
objective performance goals; (b) the performance goals must be established
by a compensation committee of the Board of Directors that is comprised solely
of two or more “independent directors”; (c) the material terms of the
compensation and performance goals must be disclosed to and approved by
shareholders before payment; and (d) the compensation committee must
certify in writing that the performance goals have been satisfied prior to
payment.
However,
restricted stock that vests after the expiration of a specific period of time,
rather than upon the achievement of pre-established performance goals, will not
be exempt from the Deduction Limit, and the income realized in connection with
such time-based restricted stock will be included, together with other
non-exempt compensation, to determine whether a specific covered employee’s
compensation exceeds the Deduction Limit.
Stock
options, on the other hand, are generally treated as “performance-based
compensation” which is exempt from the Deduction Limit of Section 162(m),
provided that the exercise price is equal to or greater than the fair market
value of the employer’s stock on the date of grant. Under these circumstances,
the amount earned, if any, results solely from an increase in the employer’s
stock price. The awards must be approved by a board committee comprised solely
of independent directors. Further, to qualify for the exemption, the material
terms of the plan must be disclosed to and approved by shareholders and the plan
must state the maximum number of shares that may be awarded to any employee
under the plan within a specified period.
If the
shareholders fail to approve the 2009 Incentive Plan, the Plan will not become
effective. In that event, the Board of Directors may consider adopting other
incentive programs without any shareholder approval, provided the Company can do
so in compliance with applicable laws, in order to maintain the competitiveness
of the Company’s executive compensation program, and some or all of the
compensation earned under such a program might likewise be subject to the
Deduction Limit.
Administration
The
2009 Incentive Plan will be administered by the Committee, although under the
Plan the Committee may delegate aspects of the day-to-day administration of the
Plan to officers, employees or agents of the Company. The Committee consists of
not less than three directors of the Company, all of whom are “independent”
directors, as defined in Section 162(m) of the Code, and “non-employee”
directors, as defined in Rule 16b-3 under the Securities Exchange Act of
1934 (the “1934 Act”). Committee members serve at the pleasure of the
Board.
The
Committee will have full power to interpret and administer the 2009 Incentive
Plan, and full authority to select the individuals to whom awards will be
granted. It will determine the type and amount of awards to be
granted, the consideration (if any) to be paid for such awards, the timing of
such awards, the terms and conditions of awards granted, and the terms and
conditions of the related award agreements which will be entered into with any
executive or other key employee to whom an award is granted under the Plan
(“Participant”). As to time-based restricted stock, the Committee will also
determine the time periods and other conditions upon which such restricted
shares will vest.
The
Committee will also have the authority to adopt, alter, change and repeal such
rules, regulations, guidelines and practices governing the 2009 Incentive Plan
as it deems advisable, to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any award agreement relating thereto), and
otherwise to supervise the administration of the Plan.
Eligibility
Officers,
directors and other key employees of the Company and its subsidiaries and
affiliates who are responsible for or contribute to the management, growth or
profitability of the business of the Company, its subsidiaries or affiliates
(“Eligible Persons”) will be eligible to receive awards under the Plan.
“Affiliate” is defined under the Plan to mean any entity (other than the Company
and its subsidiaries) that is designated by the Board as a participating
employer under the Plan.
Stock
Subject to the Plan
The total
number of the Company’s Common Shares, $0.01 par value, reserved and available
for awards under the Plan is 253,000, subject to adjustment as discussed below.
All shares issued under the Plan will consist only of authorized and unissued
shares or treasury shares. The closing price of the Company’s Common Shares on
the NASDAQ on April 27, 2009, was $7.46 per share.
The
categories and number of shares in each category presently contemplated for
issuance under the Plan by the Committee are as follows:
Restricted
stock grants – employees
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132,000
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Restricted
stock grants – directors
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44,000
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Matching
award program
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33,000
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Bonus
in stock program – employees
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33,000
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Retainer
in stock program – directors
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11,000
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Total
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253,000
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No
Participant may be granted awards under the Plan with respect to an aggregate of
more than 33,000 shares of stock (subject to adjustment as described below)
during any calendar year.
If any
stock subject to any award granted under the Plan is forfeited, or an award
otherwise terminates or expires without the issuance of stock, such stock will
again be available for distribution in connection with future awards under the
Plan, unless the Participant has received dividends or other “benefits of
ownership” with respect to such stock as defined in the Plan. In such a case,
the shares which were the subject of the award in question will not be available
for future awards.
In the
event of any merger, reorganization, consolidation, recapitalization, share
dividend, share split, reverse share split, combination of shares or other
change in the corporate or capital structure of the Company affecting the
Company’s Common Shares, an appropriate substitution or adjustment will be made
in (i) the aggregate number of shares of stock reserved for issuance under
the Plan, (ii) the maximum number of shares that may be subject to awards
granted under the Plan to any Eligible Person during any calendar year or other
period, (iii) the number and option exercise price of shares subject to
outstanding options granted under the Plan, and (iv) the number of shares
subject to restricted stock awards granted under the Plan, as may be approved by
the Committee to prevent dilution or enlargement of rights, and (v) the ability
to accelerate vesting periods.
Restricted
Stock
Performance
Goals
For
restricted stock awards that are performance based, the Committee will from time
to time establish performance goals and other conditions that must be satisfied
as a condition to vesting under the Plan. Such performance goals, which serve as
guidelines only for the Committee members, may include one or more of the
following measures, as determined by the Committee: Return on Equity (ROE),
Return on Investment (ROI), Return on Assets (ROA), Sales, Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA), or Earnings Per Share
(EPS). Performance goals may be measured on a Company-wide,
subsidiary or business-unit basis, or any combination thereof, as determined by
the Committee and the Committee reserves the right to alter, amend or waive the
necessity for achievement of specific goals in its
discretion. Performance goals may also reflect the performance of the
Company, a subsidiary or business unit alone, or may involve a relative
comparison of such
performance
to the performance of a peer group of entities or other external measure
selected by the Committee. As a general matter, the Committee
presently intends to establish goals that measure performance over a three year
period, at the end of which an evaluation will be made by the Committee, in its
judgment, as to the degree to which the goals have been met. The
Committee will designate, based on its judgment of Company performance, one of
the three categories for the stock plan: Zero, baseline or
maximum.
General
Terms and Conditions for Restricted Stock Awards
Restricted
stock awarded under the Plan will be subject to the following terms and
conditions and will contain such additional terms and conditions as the
Committee deems advisable:
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The
purchase price will be determined by the Committee at the time of grant
and may be equal to par value, zero or
otherwise.
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A
Participant who accepts the award of restricted stock must deliver an
executed copy of the Restricted Stock Award Agreement to the Company and
pay the required purchase price (if
any).
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Each
Participant will receive a stock certificate registered in his or her name
that bears a legend referring to the terms, conditions and restrictions
applicable to the award.
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The
stock certificates evidencing such shares of restricted stock with a
related stock power will be delivered to and held by the Company until the
restrictions have lapsed or any conditions to the vesting of such award
have been satisfied.
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At
the discretion of the Company, such stock may be held in book entry form.
In such event, no stock certificates will be issued to the
Participant.
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Restricted
stock awards may include either time-based or performance-based restricted
stock, or both. Awards of time-based restricted stock will vest, and all
restrictions thereon will terminate, upon the lapse of the period of time
specified by the Committee at the time of grant, provided all other
conditions to vesting have been met. Performance-based restricted stock
awards will vest and all restrictions thereon will terminate upon the
certification by the Committee of the achievement of the specified
performance goals, provided all other conditions to vesting have been
met.
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Except
as permitted by the Committee or by will or the laws of descent and
distribution, a Participant will not be permitted to sell, transfer,
pledge, assign or otherwise encumber the shares of restricted
stock.
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Except
as provided in the Plan or the applicable award agreement, a Participant
will have all of the rights of a shareholder of the Company, including the
right to vote the stock and the right to receive any dividends declared by
the Board of Directors. At the time of the award, the Committee may permit
or require the payment of cash dividends to be deferred and, if the
Committee so determines, reinvested in additional restricted stock to the
extent shares are then available or otherwise reinvested. Stock dividends
will be treated as restricted stock subject to the same restrictions,
terms and conditions applicable to the Plan
shares.
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If
a Participant’s employment by the Company or any subsidiary or affiliate
terminates by reason of death or permanent disability, any restricted
stock held by such Participant at the time of death as to which
restrictions remain at the time of such death or permanent disability
shall immediately lapse. However, if, in the case of such death or
disability the vesting of an award is conditioned on or subject to the
achievement of specified performance goals, and such performance goals
must be achieved prior to the earlier of the expiration of such one year
period or the expiration date of the award, such stock will vest, or such
restrictions shall lapse, as of the date of such death or disability. The
balance of the restricted stock will be
forfeited.
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Unless
otherwise determined by the Committee, and except for a “qualifying
retirement” (discussed below), if a Participant’s employment by the
Company or any subsidiary or affiliate terminates for any reason other
than death or disability, all restricted stock held by such Participant
which is unvested or subject to restriction at the time of such
termination will be immediately
forfeited.
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If
a Participant’s employment with the Company or any of its subsidiaries or
affiliates terminates for any reason other than death, disability or the
involuntary termination for cause (as defined in the Plan), and if
immediately prior thereto (i) the Participant is 55 years of age
or older, and (ii) the sum of the Participant’s age and completed
years of service as an employee of the Company or its subsidiaries or
affiliates (disregarding fractions in both cases) totals 70 or more (a
“qualifying retirement”), the following provisions will
apply:
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All
shares of restricted stock which have previously vested will be free of
restrictions.
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With
respect to any time-based restricted stock award which has not vested,
effective as of the Participant’s retirement
date:
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§
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(a) fifty
percent (50%) of the award will remain in effect and, on the vesting date,
shall become vested and free of
restrictions;
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§
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(b) fifty
percent (50%) of the award will be
terminated.
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With
respect to any performance-based restricted stock award which has not
vested, effective as of the Participant’s retirement date: (a) fifty
percent (50%) of the award will remain in effect and will vest upon the
achievement of the related performance goals (unless an award expires
according to its terms prior to the satisfaction of the performance goals,
in which event the award will terminate and applicable shares of
restricted stock will be forfeited); and (b) fifty percent (50%) of
the award will terminate. However, in the case of the Chief Executive
Officer or a member of his or her direct reporting group who has given the
Company written notice at least one (1) full year prior to his or her
qualifying retirement, and all unvested performance-based restricted
stock, and all of the shares covered by such awards will remain
in effect and will vest upon the achievement of the related performance
goals (unless an award expires according to its terms prior to the
satisfaction of the performance goals, in which event the award will
terminate and applicable shares of restricted stock will be
forfeited).
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If
the Committee determines that a Participant is or has engaged in any
disqualifying activity (as defined below), then the Participant will have
the right to receive all shares of restricted stock which are vested as of
the disqualification date and any award not yet vested as of the
disqualification date will terminate. Any determination by the Committee
will be final and conclusive. For purposes of this provision, the term
“disqualifying activity” include, among other
activities
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directly
or indirectly being an owner, officer, employee, advisor or consultant to
a company that competes with the Company or its subsidiaries or affiliates
to an extent deemed material by the Committee,
or
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disclosure
to third-parties or misuse of any confidential information or trade
secrets of the Company, its subsidiaries or affiliates,
or
|
|
o
|
any
material violation of the Company’s Code of Business Conduct and Ethics or
any other agreement between the Company and the Participant,
or
|
|
o
|
any
material violation of the Company’s Code of Business Conduct and Ethics or
any other agreement between the Company and the Participant,
or
|
|
o
|
failure
in any material respect to perform assigned responsibilities as an
employee of the Company or any of its subsidiaries or affiliates, as
determined by the Committee, in its sole judgment, after consulting with
the Chief Executive Officer.
|
|
o
|
The
ownership of less than 2% of the outstanding voting securities of a
publicly traded corporation which competes with the Company or any of its
subsidiaries or affiliates will not constitute a disqualifying
activity.
|
|
o
|
The
term “disqualifying date” is defined in the Plan as the earliest date as
of which the Participant engaged in any disqualifying activity, as
determined by the Committee.
|
Amendments
and Termination
The Board
may amend, alter or discontinue the Plan at any time, provided that the rights
under any award previously granted under the Plan may not be impaired without
the Participant’s consent. The Company will submit to the shareholders of the
Company, for their approval, any amendments to the Plan which require
shareholder approval, either by law or the rules and regulations of any
governmental authority or any stock exchange upon which the stock is then
traded. The Company’s Common Shares are currently listed on the National NASDAQ
market. In any event, subject to changes in law or other legal requirements that
would permit otherwise, the 2009 Incentive Plan may not be amended without
shareholder approval, to (a) increase the total number of shares of stock
that may be issued under the Plan or to any individual during any calendar year
(except for adjustments described above), (b) permit the granting of stock
with exercise prices lower than 100% of the fair market value of the stock on
the date of the grant, or (c) substantially change the performance goals
which are specified in the Plan and discussed under “Restricted Stock”
above.
In the
case of any stock option award, the Company will not, without the Participant’s
consent, reduce the exercise price relating to a stock grant or, reduce the
purchase price (if any) of stock which is subject to an outstanding award; nor
will any such amendment be made which would make the applicable exemptions
provided by Rule 16b-3 under the 1934 Act unavailable to any person holding
an award without that person’s consent. In addition, no performance-based award
may be amended if such amendment would adversely affect the award’s
qualification as performance-based compensation under Section 162(m) of the
Code.
Subject
to the above provisions, the Board will have all necessary authority to amend
the Plan to take into account changes in applicable securities, tax laws and
accounting rules, or otherwise as it seems necessary or
appropriate.
Federal
Income Tax Consequences of the Equity Incentive Plan
The
following is a brief summary of the general federal income tax consequences of
transactions under the Plan based on federal income tax laws in effect as of
January 31, 2009. This summary is not intended to be exhaustive and does not
describe any foreign, state or local tax consequences.
Tax
Treatment of Restricted Stock
Unless a
Participant makes an election under Section 83(b) of the Internal Revenue
Code, restricted stock awards are not included in his or her income until the
award vests. At vesting, the Participant is taxed, at ordinary income rates, on
the fair market value of the stock on the vesting date. Any subsequent
appreciation in the stock price would be taxed at capital gains rates (assuming
the stock has been held for a period of more than one (1) year from the
date of vesting).
Within
30 days of receipt of a restricted stock award, a Participant may elect,
under Section 83(b) of the Internal Revenue Code, to include in ordinary
income on the date of receipt of the restricted stock the fair market value of
the stock (without taking into account any restrictions other than those which
by their terms never lapse) reduced by the amount, if any, that he or she pays
for the stock. Any subsequent appreciation would then be eligible for capital
gain treatment (assuming the stock has been held for a period of more than one
(1) year from the date of grant).
In
general, the Company is entitled to a deduction equal to the amount included in
the Participant’s ordinary income in the year in which such amount is reported
for tax purposes by the Participant, provided the Company satisfies applicable
withholding and reporting requirements. The amount of the deduction may be
limited under Section 162(m) of the Code if a covered employee’s
non-performance-based compensation exceeds $1 million in any
year.
Directors’
Incentive Shares
With
respect to up to 44,000 shares authorized under the Plan, the Committee may
grant equity-based awards to its non-management directors. The grant
of such awards is designed to align a significant portion of the director
compensation package with the long-term interests of the Company's shareholders
by providing an incentive that focuses attention on managing the Company from
the perspective of an owner with an equity stake in the business.
The
shares set aside for non-management directors may be registered by the Company
in a Form S-8 filed with the SEC so that the shares can be fully registered and
freely transferable. They will be, however, subject to 3 year
performance vesting. For 2009, subject to shareholder approval of the
Plan, a maximum of 44,000 shares has been awarded to directors all of which are
subject to the performance goals above.
Matching
Award Program
Lakeland
has established a mandatory share ownership program. The first phase of this
program requires officers and members of the Board of Directors to hold a
minimum of 3,000 shares each by the later of July 2010 or three years from
the date the individual is appointed to a position subject to the share
ownership program.
To
encourage officers and directors subject to the mandatory ownership requirements
to buy Lakeland shares, the Plan includes a matching award program to provide an
incentive to the officers and directors to purchase Lakeland shares and
33,000 shares under the Plan have been reserved for that purpose. For each two
shares an executive subject to the ownership requirements purchases during the
three year compliance period, the Committee will grant the executive a one share
stock bonus award under the 2009 Incentive Plan in the form of restricted stock,
up to a maximum match per participant of 3,000 shares. These matching
awards vest as to 100% of the shares subject to the award three years after the
award date, or on the officer’s death or disability and a pro-rata basis upon
certain terminations of employment. (Time-vesting at the end of the three year
period).
Stock
Bonus Award and Director Stock Award
As part
of the Plan, for the same group of key employees eligible for the Restricted
Stock Plan, shares may be granted as part of an annual bonus (the “Stock Bonus
Award”). A cash bonus amount for each eligible individual shall be
determined in the usual manner by the Board. Once determined, the
recipient shall have the option of accepting the bonus in cash or 133% of the
cash amount in stock from the Plan. Should stock be chosen, the
amount of shares may be netted for taxes to be withheld on such
stock. Such shares shall be subject to 2 year time
vesting. A total of 33,000 shares have been reserved for this
program.
Term
of Plan
No award
will be granted pursuant to the 2009 Incentive Plan on or after June 18, 2019,
but awards granted prior to such date may extend beyond that date.
Other
Benefit Plans for Executives and Other Key Employees
The
Company maintains other benefits and plans to compensate and reward executives
and other key employees in addition to their regular salary. Each such employee
has the potential to earn an annual cash bonus, is eligible to participate in
the Company’s 401k plan and may participate in the health and other employee
benefit plans that are generally available to regular employees of the Company
who satisfy minimum requirements. Further information concerning certain of the
Company’s annual cash bonus plans can be found beginning on page 33 of this
proxy statement.
Vote
Required for Approval
The
affirmative vote of a majority of the votes cast on this proposal, provided the
total number of votes cast represents a majority of the outstanding Common
Shares, is required for the approval of this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
INCENTIVE PLAN.
IN
PROPOSAL NO. 2 ON THE PROXY CARD
RATIFICATION
OF SELECTION OF WARREN, AVERETT, KIMBROUGH & MARINO LLC
AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee of our Board has selected Warren, Averett, Kimbrough & Marino LLC
or (“Warren Averett”), as our independent registered public accounting firm to
audit our consolidated financial statements for the fiscal year ending
January 31, 2010, and has directed that management submit the selection of
Warren, Averett, Kimbrough & Marino LLC as our independent registered public
accounting firm for ratification by the stockholders at the Annual Meeting. A
representative of Warren, Averett, Kimbrough & Marino LLC is expected to be
present or available by phone at the Annual Meeting and will be available to
respond to appropriate questions from our stockholders and will be given an
opportunity to make a statement if he or she desires to do so.
Previous
independent accountant
On April
27, 2009, Lakeland Industries, Inc. (the “Company”) notified Holtz Rubenstein
Reminick LLP (“Holtz”) that effective April 27, 2009 the Company decided to
dismiss Holtz as the Company’s independent registered public accounting firm.
The decision to dismiss Holtz was made and approved by the Audit Committee of
the Board of Directors. A representative of Holtz Rubenstein Reminick LLP will
not be present at the Annual Meeting.
The audit
reports of Holtz on the Company’s financial statements for the fiscal years
ended January 31, 2009 and 2008 did not contain an adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope,
or accounting principles.
During
the two most recent fiscal years and the subsequent interim period through April
27, 2009, the Company had no disagreements with Holtz on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement, if not resolved to their satisfaction
would have caused Holtz to make reference to the subject matter of the
disagreement in connection with its reports.
As
reported in the Auditors Report on Internal Controls over Financial Reporting
included in the Company
’
s
Form 10-K for the fiscal years ended January 31, 2009 and 2008, Holtz advised
the Company that certain of its internal controls over financial reporting were
not effective.
The
Company has provided Holtz with a copy of the disclosures required by Item
304(a) contained in this Report on Form 8-K and has requested that Holtz furnish
the Company with a letter addressed to the SEC stating whether Holtz agrees with
the statements made by the registrant in this Form 8-K and, if not, stating the
respects in which it does not agree. A copy of Holtz’s letter dated April 28,
2009 is filed as Exhibit 16.1 to this Form 8-K.
New
independent accountant
Effective
as of April 28, 2009, the Company engaged Warren, Averett, Kimbrough &
Marino LLC (“Warren Averett”) as its new independent registered public
accounting firm. The decision to engage Warren Averett was made and approved by
the Audit Committee of the Board of Directors.
During
the two most recent fiscal years and through April 27, 2009, the Company has not
consulted with Warren Averett regarding either: (i) the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company’s financial
statements; or (ii) any matter that was either subject of a disagreement (as
that term is defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable
event (as that term is described in Item 304(a)(1)(iv) of Regulation
S-K).
Stockholder
ratification of the selection of Warren, Averett, Kimbrough & Marino LLC as
our independent registered public accounting firm is not required by our Bylaws
or otherwise. However, the Audit Committee is submitting the selection of
Warren, Averett, Kimbrough & Marino LLC to the stockholders for ratification
as a matter of good corporate governance. If the stockholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee may in its
discretion direct the appointment of different independent registered public
accountants at any time during the year if they determine that such a change
would be in the best interests of us and our stockholders.
The
affirmative vote of the holders of a majority of the shares present in person or
represented by proxy and entitled to vote will be required to ratify the
selection of Warren, Averett, Kimbrough & Marino LLC. Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
RECOMMENDATION
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
RATIFICATION OF THE SELECTION OF
WARREN,
AVERETT, KIMBROUGH & MARINO LLC
AS
OUR
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
IN
PROPOSAL NO. 3 ON THE PROXY CARD
Fees
Paid to Holtz Rubenstein
R
eminick LLP
For
Fiscal Years 2008 and 2009
For the
fiscal years ended January 31, 2009 and January 31, 2008, the total fees we
incurred for services by our independent registered public accounting firm,
Holtz Rubenstein Reminick LLP, were as follows:
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
2009
|
|
Audit
Fees (1)
|
|
$
|
292,000
|
|
|
|
$
|
359,100
|
|
Tax
Preparation Fees(2)
|
|
|
35,000
|
|
|
|
|
35,000
|
|
All
Other Fees
|
|
|
74,000
|
(b)
|
|
|
|
44,000
|
|
Total
|
|
$
|
401,000
|
|
|
|
$
|
438,100
|
|
|
|
|
(1)
|
|
Fees
for professional services rendered in connection with the audit of our
annual financial statements in our Forms 10-K, including income tax
provision procedures, the reviews of the financial statements included in
our Forms 10-Q, services related to acquisitions, overseas statutory
audits, consents to Securities and Exchange Commission (the “SEC”)
filings, assistance with review of documents filed with the SEC, and
attestation-related services in connection with Section 404 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
(2)
|
|
Fees
for professional services rendered in connection with tax services
including tax compliance, tax advice and tax planning, as
follows:
|
|
|
|
|
a.
Tax Compliance/Preparation
Fees:
$35,000 for 2008 and 2009, respectively,
representing fees in connection with tax compliance preparation services
including assistance in the preparation of our U.S. federal, state
and local tax returns as well as international subsidiaries returns, tax
audits and appeals, and tax services for employee benefit
plans; and
|
|
|
|
|
b.
Tax Consulting
Fees:
$48,855 and $41,400 (included in “All Other
Fees”, above) for 2008 and 2009, respectively, representing fees in
connection with tax consulting services including tax advice related to an
IRS audit, mergers and acquisitions and restructuring of foreign
operations.
|
The Audit
Committee determined that the rendering of non-audit services by Holtz
Rubenstein Reminick LLP was compatible with maintaining their
independence.
Financial
Information Systems Design and Implementation Fees
During
the years ended January 31, 2009 and 2008, Holtz Rubenstein Reminick LLP
rendered no professional services to us in connection with the design and
implementation of financial information systems.
Audit
Committee Pre-Approval Policy
In
accordance with applicable laws and regulations, the Audit Committee reviews and
pre-approves any non-audit services to be performed by our independent
registered public accounting firm to ensure that the work does not compromise
their independence in performing their audit services. The Audit
Committee generally also reviews and pre-approves all audit, audit related, tax
and all other fees, as applicable. In some cases, pre-approval is
provided by the full committee for up to a year, and relates to a particular
category or group of services and is subject to a specific budget and SEC rules.
In other cases, the chairman of the Audit Committee has the delegated authority
from the committee to pre-approve additional services, and such pre-approvals
are then communicated to the full Audit Committee at its next
meeting.
The
following is the report of the Audit Committee of the Board of Directors of
Lakeland Industries, Inc., describing the Audit Committee’s responsibilities and
practices, specifically with respect to matters involving Lakeland’s accounting,
auditing, financial reporting and internal control functions. Among other
things, the Audit Committee reviews and discusses with management and with
Lakeland’s independent registered public accounting firm the results of
Lakeland’s year-end audit, including the audit report and audited financial
statements. We, the members of the Audit Committee of the Board, are presenting
this report for the fiscal year ended January 31, 2009.
The Audit
Committee acts pursuant to a written charter that was originally adopted by the
Board in 2001. The Nominating and Governance Committee and the Board consider
membership of the Audit Committee annually. The Audit Committee reviews and
assesses the adequacy of its charter annually. The Audit Committee held five
meetings during the fiscal year ended January 31, 2009.
All
members of the Audit Committee are independent directors, qualified to serve on
the Audit Committee pursuant to Marketplace Rules. In accordance with its
charter, the Audit Committee oversees accounting, financial reporting, internal
control over financial reporting, financial practices and audit activities of
Lakeland and its subsidiaries. The Audit Committee provides advice, counsel and
direction to management and the independent registered public accounting firm on
the basis of the information it receives, discussions with management and the
independent registered public accounting firm, and the experience of the Audit
Committee’s members in business, financial and accounting matters. The Audit
Committee relies, without independent verification, on the information provided
by Lakeland and on the representations made by management that the financial
statements have been prepared with integrity and objectivity, on the
representations of management, and the opinion of the independent registered
public accounting firm that such financial statements have been prepared in
conformity with accounting principles generally accepted in the United States,
or GAAP.
In
connection with its review of Lakeland’s audited financial statements for the
fiscal year ended January 31, 2009, the Audit Committee reviewed and
discussed the audited financial statements with management and discussed with
Holtz Rubenstein Reminick LLP (“HRR”), Lakeland’s independent registered public
accounting firm, the matters required to be discussed by SAS 114 (Codification
of Statements on Auditing Standards, AU §380). The Audit Committee received the
written disclosures and the letter from HRR required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees) and
discussed with HRR its independence from Lakeland. The Audit Committee has also
considered whether the provision of certain permitted non-audit services by HRR
is compatible with their independence.
Based on
the reviews and discussions referred to above, the Audit Committee recommended
to the Board that the audited financial statements be included in Lakeland’s
Annual Report on Form 10-K for its fiscal year ended January 31, 2009,
for filing with the SEC.
During
Fiscal 2009, the Audit Committee met with management and Lakeland’s independent
registered public accountants and received the results of the audit examination,
evaluations of Lakeland’s internal controls and the overall quality of
Lakeland’s financial organization and financial reporting. The Audit Committee
also meets at least once each quarter with Lakeland’s independent registered
public accountants and management to review Lakeland’s interim financial results
before the publication of Lakeland’s quarterly earnings press releases. The
Audit Committee believes that a candid, substantive and focused dialogue with
the independent registered public accountants is fundamental to the committee’s
responsibilities. To support this belief, the Audit Committee meets separately
with the independent registered public accountants without the members of
management present on at least an annual basis.
The Audit
Committee has established procedures for the receipt, retention and treatment of
complaints received by Lakeland regarding accounting, internal accounting
controls, or auditing matters, including the confidential, anonymous submission
by Lakeland employees, received through established procedures, of concerns
regarding questionable accounting or auditing matters. We have established a
confidential email and hotline for employees to report violations of Lakeland’s
Code of Ethics or other company policies and to report any ethical
concerns.
The
information contained in this report shall not be deemed “soliciting material”
or to be “filed” with the SEC, nor shall such information be incorporated by
reference into any future filing under the Securities Act of 1933, as amended,
(the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), except to the extent that Lakeland specifically incorporates it
by reference into such filing.
|
Audit
Committee: A. John Kreft (Chairman), John J. Collins, Stephen
Bachelder, and Eric O. Hallman
|
Our
Executive Officers are appointed by our Board and serve at its discretion.
Set forth below is information regarding our current Executive
Officers:
Name
|
Position
|
Age
|
Christopher
J. Ryan
|
Chief
Executive Officer, President, General Counsel and
Secretary
|
57
|
Gregory
Willis
|
Executive
Vice President
|
52
|
Gary
Pokrassa
|
Chief
Financial Officer
|
61
|
Harvey
Pride, Jr.
|
Senior
Vice President, Manufacturing
|
62
|
Paul
Smith
|
Vice
President, Sales
|
42
|
Gregory
Pontes
|
Vice
President, Manufacturing
|
42
|
Phillip
Willingham
|
Vice
President, MIS
|
51
|
Charles
Roberson
|
Vice
President, International Sales
|
46
|
Biographical
information regarding our Senior Executive Officers can be found in our Annual
Report on Form 10-K for the fiscal year ended January 31, 2009.
We
currently qualify as a “smaller reporting company” as such term is defined in
Rule 405 of the Securities Act of 1933, as amended, and Item 10 of Regulation
S-K. Accordingly, and in accordance with relevant Securities and
Exchange Commission rules and guidance, we have elected, with respect to the
disclosures required by Item 402 (Executive Compensation) of Regulation S-K, to
comply, in some cases, with the requirements applicable to larger companies and,
in other cases, with the disclosure requirements applicable to smaller reporting
companies. The following Executive Compensation Overview is not
comparable to the “Compensation Discussion and Analysis” that is required of SEC
reporting companies that are not smaller reporting companies.
Executive
Compensation
O
verview
Compensation Committee.
The
Compensation Committee of the board of directors (the “Committee”) assists the
board of directors of the Company in discharging its responsibilities relating
to compensation of the Company’s executive officers and supervision of the
Company’s Restricted Stock and 401-K Plans. The Committee reports to the board
of directors and is responsible for:
|
§
|
Developing
guidelines for, and reviewing the compensation and performance of, the
Company’s executive officers;
|
|
§
|
Evaluating
the executive officers’ performance in light of these goals and
objectives; and
|
|
§
|
Making
recommendations to the board of directors regarding the management
contracts of executive officers when they are proposed or
renewed.
|
The
Committee also is responsible for approving the compensation of the Chief
Executive Officer.
Compensation Philosophy and
Objectives.
The Company seeks to pay its executive officers total
compensation that is competitive with other companies of comparable size and
complexity. Generally, the types of compensation and benefits provided to the
Chief Executive Officer and other executive officers are comparable to those
provided to other executive officers of small cap, publicly traded and similarly
sized companies in the industry in which the Company operates.
The
compensation policies of the Company are designed to:
|
§
|
Increase
stockholder value,
|
|
§
|
Increase
the overall performance of the
Company,
|
|
§
|
Attract,
motivate and retain experienced and qualified executives,
and
|
|
§
|
Incentivize
the executive officers to achieve the highest level of Company financial
performance.
|
While the
Company seeks to maintain competitive compensation arrangements for its
executives, it also strongly believes that the competitiveness of the
compensation packages should be based on the total compensation achievable by
the executive officers and that a portion of that compensation should be linked
to the performance of the Company. Accordingly, the executive compensation
packages provided to the Chief Executive Officer and the other executive
officers are structured to include, among other things and in addition to base
salary and benefits, equity incentives. A reasonable portion of the compensation
packages for executive officers is in the form of Restricted Stock grants, which
are intended to provide incentives to executive officers to achieve long-term
growth in the price of the Company’s common stock and additionally annual cash
bonus opportunities, which are intended to reward executive officers for meeting
annual financial performance goals. Overall compensation levels are set such
that, for executive officers to achieve a competitive compensation level, there
must be both growth in the market price of the Company’s common stock and growth
in the Company’s earnings and revenues at rates that equal or exceed the recent
growth rate of the Company’s earnings and revenues. The determination
that such goals have been met and merit pay-outs pursuant to the
incentive-portion of the overall compensation rests with the
Committee.
The
Committee believes that executive officer compensation should seek to align the
interests of executives with those of the Company’s stockholders, by seeking to
reward long-term growth (not short term) in the value of the Company’s common
stock and to reward the achievement of annual financial goals by the Company.
The incentive components of compensation, Restricted Stock grants and annual
cash bonuses, for executive officers are linked to corporate financial
performance as well as individual goals. This is intended to keep the executive
team focused on the core goal of overall long term corporate
performance.
When
setting or recommending compensation levels, the Committee considers the overall
performance of the Company, the individual performance of each of the executive
officers, and their individual contributions to and ability to influence the
Company’s performance, and also seeks to encourage teamwork amongst the
executives. The Committee believes that the level of total compensation,
including base salary, bonus, restricted stock grants and benefits, of
executives should generally be maintained to compete with other public and
private companies of comparable size and complexity. The Committee bases its
determinations on a variety of factors, including the personal knowledge of
market conditions that each member of the Committee has gained in his own
experience managing businesses, salary surveys available to the Company, the
knowledge of the Chief Executive Officer and other executives as to local market
conditions, and information learned regarding the compensation levels at other
small cap companies in the industrial apparel industry and other similarly sized
businesses. The Committee periodically evaluates the types and levels of
compensation paid by the Company to ensure that it is able to attract and retain
qualified executive officers and that their compensation remains comparable to
compensation paid to similarly situated executives in comparable
companies.
The
following describes in more specific terms the elements of compensation that
implement the compensation philosophy and objectives described above, with
specific reference to compensation earned by the named executive officers for
the fiscal year ended January 31, 2009.
Base Salaries
. The base
salary of each of our named executive officers is fixed pursuant to the terms of
their respective employment agreements with us at the time a person initially
becomes an executive officer by evaluating the responsibilities of the position,
the experience and knowledge of the individual and the competitive marketplace
at that time for executive talent, including a comparison to base salaries for
comparable positions (considered in the context of the total compensation paid
by such companies). Salaries are reviewed from time to time thereafter,
generally in connection with the expiration of employment agreements or when
other considerations warrant such review in the discretion of the Committee
and board of directors, considering the foregoing factors as well as the
executive’s performance and the other factors considered in setting total
compensation described above.
When
salary adjustments are considered, they are made in the context of the total
compensation for executive officers, consistent with the core principles
discussed earlier in this Compensation Discussion and Analysis, included under
the header “Executive Compensation” herein. In each case, the participants
involved in recommending and approving salary adjustments consider the
performance of each executive officer, including consideration of new
responsibilities and the previous year’s corporate performance. Individual
performance evaluations take into account such factors as achievement of
specific goals that are driven by the Company’s strategic plan and attainment of
specific individual objectives. The factors impacting base salary levels are not
assigned specific weights but are considered as a totality, against the backdrop
of the Company’s overall compensation philosophy, and salary adjustments are
determined in the discretion of the Committee and the board of directors. The
majority of base salaries paid in FY09 were set in prior years; no base salary
adjustments were made in FY09, for those executive officers under
contract.
Bonuses
. The Company has
historically paid annual bonuses to its executive officers based on corporate
performance, as measured by reference to factors which the Committee believes
reflect objective performance criteria over which management generally has the
ability to exert some degree of control. For each of our named executive
officers, all cash bonuses are at the discretion of the Committee, when formulas
are set.
Restricted Stock Grants
. A
third component of executive officers’ compensation is grants of Restricted
Shares of common stock issued pursuant to the 2006 Equity Incentive Plan. The
Committee or the full Board of Directors grants Restricted Stock to the
Company’s executives in order to align their interests with the interests of the
stockholders. In the fiscal year ended January 31, 2009, 3,000
options were granted to the Company’s directors; however no options to executive
officers were made. Restricted stock grants are considered by the
Company to be an effective long-term incentive because the executives’ gains are
linked to increases in stock value, which in turn provides stockholder gains.
Restricted Stock was granted to executive officers in accordance with the terms
of the 2006 Equity Incentive Plan approved by the Company’s shareholders in June
2006. The full benefit of the Restricted Stock grants is realized only as a
result of appreciation of the stock price in future periods, thus providing an
incentive to create value for the Company’s stockholders through appreciation of
stock price. The Restricted Stock granted to executive officers “cliff” vest at
the end of three years, which the Company believes makes the grants a more
effective retention incentive.
Restricted
Stock grants made to the executive officers in the fiscal year ended January 31,
2009 reflected the significant individual contributions the Committee expects
they will make to the Company’s operations and implementation of the Company’s
development and growth programs, and the amounts of such grants were determined
based on the same considerations discussed above in the context of setting
salaries and annual bonuses. The number of shares of Restricted Stock granted is
not tied to a formula or comparable company target ranges, but rather determined
at the end of the three-year performance period in the discretion of the
Committee and the Board of Directors consistent with the compensation philosophy
described above. At the end of the three-year performance period, the
determined number of shares (baseline, minimum, maximum or zero) will then
vest.
Setting Executive
Compensation.
Base salaries and other compensation for the Chief
Executive Officer and other executive officers are set by the Committee and
reflect a number of elements including recommendations by Mr. Ryan as to
the other executive officers based on evaluation of their performance and the
other factors described above. The Committee works closely with Mr. Ryan in
establishing compensation levels for the other executive officers. Mr. Ryan
and the individual executive typically engage in discussions regarding the
executive’s salary, and Mr. Ryan reports on such discussions and makes his
own recommendations to the Committee. The Committee will separately discuss with
Mr. Ryan any proposed adjustment to his own compensation. The Committee
reports to the board of directors on all proposed changes in executive
compensation, after it has formed a view on appropriate
adjustments,
and makes recommendations for consideration of the Board for the Chief Executive
Officer and the other executive officers. The Committee considers such
recommendations and, thereafter, sets the compensation level for Mr. Ryan,
and for the other executive officers. Salary levels and other aspects of
compensation for executive officers historically have been set forth in
employment agreements having terms of two to three years.
The
Committee is charged with the responsibility for approving the compensation
package for the Chief Executive Officer. The Chief Executive Officer is not
present during voting or deliberation on his performance or
compensation.
The board
of directors or the Committee can exercise the right to modify any recommended
adjustments or awards to the executive officers.
Retirement Benefits.
The
Company does not provide any retirement benefits to its executive officers,
other than matching a portion of employee contributions to a 401-K plan. This
benefit is generally available to all employees of the Company.
Employment Agreements
. The
Company currently enters into employment agreements with its executive officers
because it generally believes that, in respect of key executive officers, there
is a significant value in its competitive markets to setting out compensation
and benefit expectations in a writing, maintaining appropriate non-competition,
non-solicitation of employees and confidentiality agreements with key
executives, and agreeing in advance on post-termination payments and other
obligations. These employment agreements are described in more detail under the
caption “Employment Agreements.”
Taxation and Accounting Matters.
The Committee considers the deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code, which provides that the
Company may not deduct compensation of more than $1,000,000 that is paid to
certain individuals. Generally, the Company is certain that compensation paid to
its executive officers will be fully deductible for federal income tax purposes.
However, in certain situations, the Company may approve compensation that will
not meet these requirements in order to ensure competitive levels of total
compensation for its executive officers.
SUMMAR
Y
COMPENSATION TABLE
The table below sets forth all
salary, bonus and other compensation paid to our chief executive officer, chief
financial officer and each of our three highest paid executive officers other
than the chief executive officer and chief financial officer (our “Named
Executive Officers”) for the fiscal years ended January 31, 2009, 2008 and
2007:
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
(1)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
other
Compensation
($)
|
Total
Compensation
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
|
|
|
|
|
|
|
|
|
Christopher
J. Ryan
CEO
|
2009
2008
2007
|
400,000
400,000
400,000
|
--
--
(2)
--
(2)
|
38,792
38,792
20,561
|
--
--
--
|
--
--
--
|
--
--
--
|
30,835
(3)
33,335
31,600
|
469,627
472,127
452,161
|
|
|
|
|
|
|
|
|
|
|
Gary
Pokrassa
CFO
|
2009
2008
2007
|
223,170
208,015
195,733
|
--
--
--
|
29,906
23,613
10,757
|
--
--
--
|
--
--
--
|
--
--
--
|
19,378
(4)
16,447
15,089
|
272,454
248,075
221,579
|
|
|
|
|
|
|
|
|
|
|
Gregory
D. Willis
Executive
VP
|
2009
2008
2007
|
200,000
200,000
135,000
|
--
--
15,000
|
32,351
25,005
9,590
|
--
--
--
|
--
--
--
|
--
--
--
|
296,640
(5)
236,963
269,417
|
528,991
461,968
438,343
|
|
|
|
|
|
|
|
|
|
|
Raymond
J. Smith
Chairman
|
2009
2008
2007
|
250,000
250,000
250,000
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
39,851
(6)
31,522
33,461
|
289,851
281,522
283,461
|
|
|
|
|
|
|
|
|
|
|
Paul
C. Smith
Vice
President
|
2009
2008
2007
|
130,000
130,000
130,000
|
--
--
14,000
|
13,712
10,918
6,556
|
--
--
--
|
--
--
--
|
--
--
--
|
169,071
(7)
126,772
106,612
|
312,783
267,290
257,168
|
(1)
|
The
amounts shown in this column represent the dollar amounts recognized as an
expense by us for financial statement reporting purposes in the fiscal
years ended January 31, 2009, 2008 and 2007 as expense as
determined pursuant to SFAS 123(R). See Note 1 to the
Consolidated Financial Statements included in our Form 10-K for the fiscal
year ended January 31, 2009 for a discussion of the relevant assumptions
used in calculating grant date fair value pursuant to SFAS
123(R).
|
(2)
|
Mr.
Ryan voluntarily declined any bonus for FY07 and
FY08.
|
(3)
|
Includes
$24,085 in life and disability insurance premiums paid by us and a $6,750
matching 401(k) contribution.
|
(4)
|
Includes
$1,628 in life insurance and disability insurance premiums paid by us,
$9,000 in automobile allowance and a $6,750 matching 401(k)
contribution.
|
(5)
|
Includes
$280,890 in sales commissions, $9,000 in automobile allowance and a $6,750
matching 401(k) contribution.
|
(6)
|
Includes
$23,081 in life and disability insurance premiums paid by us, $10,020 in
automobile allowance and a $6,750 matching 401(k)
contribution.
|
(7)
|
Includes
$162,321 in sales commissions and a $6,750 matching 401(k)
contribution.
|
GRANTS
OF PLA
N
– BASED AWARDS
The
following table set forth information for the fiscal year ended January 31, 2009
regarding all grants of plan-based awards made to our Named Executive Officers
under our incentive plans.
Name
|
Grant
Date
|
Estimated
Future
Payouts
Under Non-
Equity
Incentive Plan
Awards
|
Estimated
Future
Payouts
Under Equity
Incentive
Plan Awards
(1)
|
All
Other
Stock
Awards
Number
of
Shares
of
Stock
or
Units
(#)
|
All
other
Option
Awards;
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
|
|
|
Threshold
|
Target
|
Maxi-mum
|
Threshold
|
Target
|
Maxi-mum
|
|
|
|
|
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
(l)
|
Christopher
J. Ryan
CEO
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary
Pokrassa
CFO
|
Feb.
2008
|
|
|
|
|
|
|
500
(2)
|
|
|
$5,230
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
D. Willis
Exec.
VP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond
J. Smith Chairman
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
C. Smith, Vice President
|
June
2008
Jan.
2009
|
|
|
|
|
|
|
470
(2)
500
(2)
338
(2)
|
|
|
$4,916
6,315
2,693
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
No
performance based awards were granted in FY09. In FY07 we
granted performance based awards the amount of which
will
be determined in June 2009. These awards are set forth, at the
threshold amount, in the outstanding equity awards table,
below.
|
|
(2)
|
Shares
granted pursuant to Company’s Stock Matching Plan under the 2006 Equity
Incentive Plan.
|
NARRATIVE
TO SUMMARY COMPENSATION TABLE AND PLAN-BASED AWARDS TABLE
Employment
Agreements
Raymond J.
Smith
, a co-founder of the Company, has served as the Chairman of the
Board since 1982. Mr. Smith retired as President and CEO in November
2003, but continues to serve as the Chairman of the Board pursuant to a contract
dated April 16, 2007, the term of which commenced on May 1, 2007 and expired on
April 30, 2009.
Mr. Smith
receives an annual base salary at the rate of $250,000 and participates in
benefit plans available to all other senior executives. Mr. Smith
receives, to the extent eligible, health coverage, disability and life
insurance, 401(k) plan contributions and travel expenses to board meetings as
well as an auto allowance of $835 monthly. The disability and life
insurance ($23,081), 401(k) plan matching contributions ($6,750), and car
allowance totaled $39,851 for the fiscal year ended January 31,
2009.
If Mr.
Smith's employment were terminated "for cause," he would be paid within 30 days
that portion of his base salary and benefits accrued but unpaid as of the date
of such termination. "Cause" is defined as (i) the failure to
substantially perform his duties, (ii) an act of fraud, theft, misappropriation,
dishonesty or embezzlement, (iii) conviction for a felony or pleading
nolo contendere
to a felony,
(iv) failure to follow a lawful directive of the Board of Directors, or (v)
material breach of his employment agreement.
Mr. Smith
has the right to terminate his agreement at any time on 45 days written
notice. The Company has the right to terminate Mr. Smith’s employment
at any time for any reason other than cause, death or disability, in which
event, it can, in exchange for a general release, pay to Mr. Smith six months’
Base Salary.
Upon
death, Mr. Smith’s estate is entitled to receive his base salary through the
last day of the month in which his death occurs and all benefits generally paid
by the Company on an employees death. In the event of disability for
more than 90 consecutive days (or for periods aggregating 120 days within a 180
day period), Mr. Smith's agreement will terminate.
Pursuant
to the agreement, Mr. Smith has agreed that during the term of his employment
and for a period of one year thereafter, he shall not directly or indirectly,
whether as agent, employee, stockholder, director or investor or otherwise,
engage in any activities in competition with the Company, solicit any employee
of the Company for employment or solicit any of the Company's customers for
business. Mr. Smith has also agreed not to disclose at any time any
confidential information relating to the Company's business.
Christopher J.
Ryan
serves as Chief Executive Officer, President, General Counsel, and
Secretary of the Company. He also serves as President and Chief
Operating Officer or Director and Secretary/Assistant Secretary of all the
Company’s subsidiaries. Pursuant to Mr. Ryan’s contract with the
Company, which commenced on April 13, 2008 and will expire on April 13, 2010, he
was paid an annual base salary at the rate of $400,000 in FY09. He
has received no stock option grants since FY01, but is eligible for incentive
cash bonuses based upon increases in earning per share set by the Compensation
Committee and participates in benefit plans and other benefits available to all
other senior executives. These benefits include health coverage,
disability and life insurance, 401-K plan contribution, a mobile phone and the
use of a non-luxury company car. The premium payments for disability
and life coverage ($26,585) and matching 401-K plan contribution ($6,750)
totaled $33,335 in FY08. Mr. Ryan voluntarily declined any bonuses for FY07 and
FY08. Mr. Ryan has a contractual bonus for FY09 based on $3,000 per each penny
of EPS over $0.70, subject to certain limitations. Thus, Mr. Ryan has earned a
bonus of $42,000 which will be paid in FY10. Mr. Ryan has agreed to an 8%
reduction of this bonus along with all compensation for a temporary period, and
in March 2009 has elected to receive one half of this bonus in stock pursuant to
the Company’s Bonus in Stock Plan pursuant to the 2006 Equity Incentive Plan.
Mr. Ryan also participates in the Company’s 2006 Equity Incentive Plan. All
Restricted Stock under this plan is awarded on a Minimum, Baseline or Maximum
basis, at the discretion of the independent Compensation Committee, and has been
held at Threshold for the last 2 fiscal years.
Mr. Ryan
may terminate his employment agreement for “good reason”, including the
Company’s failure after 30 days written notice to perform or observe any of the
material terms or provisions of the employment agreement or a material reduction
in the scope of Mr. Ryan’s responsibilities and duties. The Company
may terminate the agreement if Mr. Ryan becomes disabled for more than 90
consecutive days or for periods aggregating 120 days in any 180 period or on the
date of his death. In addition, the Company may terminate the agreement for
“cause”, which includes his failure to substantially perform his duties (except
due to his incapacity), his commission of an act of fraud, theft, or dishonesty,
conviction of a felony, failure to follow a lawful directive of the Board or a
material breach of his employment agreement. If the Company terminates the
agreement for cause or upon Mr. Ryan’s death or disability, or if Mr. Ryan
terminates it other than for “good reason”, the Company must pay Mr. Ryan his
full base salary through the date of termination, and all other paid amounts, if
any, to which he is entitled as of the date of termination in connection with
any benefits or under any incentive compensation plan or programs. If Mr. Ryan
is terminated without cause or Mr. Ryan terminates for “good reason”, the
Company is obligated to pay him, within 30 days, (a) his annual base salary and
target bonus as of the date of termination and (b) his base salary and current
target bonus as though he had remained in the Company’s employ until the
contract expiration date or, if longer, for a period of one year after the
termination date. The Company may elect to make the balance of such
payments then remaining in a lump sum discounted to present value. In addition
Mr. Ryan would be entitled to a continuation of his medical and health benefits
for a period of two years beginning on the date of termination.
Pursuant
to the agreement, Mr. Ryan has agreed that during the term of his employment and
for a period of two years thereafter (unless his employment is terminated by the
Company without “cause” or by Mr. Ryan for “good reason”), he will not compete
with the Company or solicit its employees. The ownership by Mr. Ryan
of less than 5% of any competitive business will not be viewed as a violation of
his non-competition agreement.
Gregory
Willis
serves as our Executive Vice President. Pursuant to Mr.
Willis' employment contract with the Company, the term of which commenced on May
1, 2007 and which expires on April 30, 2009, Mr. Willis was paid a base salary
of $200,000 for FY09. He received no grants of stock options in
FY08. Pursuant to his employment agreement, Mr. Willis is entitled to
commissions in the form of sales overrides on various products that he directly
oversees and in FY09, Mr. Willis received $280,890 in such
overrides. Mr. Willis participates in benefit plans and other
benefits available to
all other senior executives and received health coverage, life insurance, 401(k)
contributions and a car allowance of $750 per month. The life
coverage, 401(k) plan contributions ($6,750) and car allowance ($9,000) totaled
$15,750 in FY09. Mr. Willis also participates in the 2006 Equity
Incentive Plan. All Restricted Stock under this plan is awarded on a
minimum, baseline, or maximum basis, at the total discretion of the Compensation
Committee.
If Mr.
Willis' employment were terminated "for cause," he would be paid within 30 days
that portion of his base salary and all benefits under his contract that were
due as of the date of his termination. "Cause" is defined as (i) the
failure to substantially perform his duties, (ii) an act of fraud, theft,
misappropriation, dishonesty or embezzlement, (iii) conviction for a felony or
pleading
nolo
contendere
to a felony, (iv) failure to follow a lawful directive of the
Board of Directors, or (v) material breach of his employment
agreement.
Mr.
Willis has the right to terminate his employment at any time on 45 days written
notice. The Company also has the right to terminate Mr. Willis’
employment at any time for any other reason in which event it can, in exchange
for a general release, pay to Mr. Willis six month’s Base Salary, and the bonus
and commissions to which he would have been entitled for that six month
period.
Upon
death, Mr. Willis’s estate is entitled to receive his base salary and all
benefits through the last day of the month in which his death occurred, as well
as a pro rata portion of his annual bonus for the year in which his death
occurred. In the event of disability for more than 90 consecutive
days (or for periods aggregating 120 days within a 180 day period), Mr. Willis'
agreement will terminate.
Pursuant
to the agreement, Mr. Willis has agreed that during the term of his employment
and for a period of six months thereafter, he will not directly or indirectly,
whether as agent, employee, stockholder, director or investor or otherwise,
engage in any activities in competition with the Company, solicit any employee
of the Company for employment or solicit any of the Company's customers for
business. Mr. Willis has also agreed not to disclose at any time any
confidential information relating to the Company's business.
Paul C.
Smith
,
the son
of Raymond J. Smith, the Chairman of the Company, serves as a Vice President of
the Company. Pursuant to a contract dated April 4, 2007 Mr. Smith’s
employment is for a two year period which commenced May 1, 2007 and expires on
April 30, 2009.
Mr. Smith
receives an annual base salary at the rate of $130,000 and participates in
benefit plans and other benefits available to all other senior
executives. Mr. Smith received no grants or stock options in
FY09. Mr. Smith receives, to the extent eligible, health coverage,
disability and life insurance, 401(k) plan contributions, and the use of a
non-luxury car. Mr. Smith is entitled to receive sales overrides on various
products and earned $162,321 in sales commissions in FY09. In
addition, the Company made a matching 401(k) contribution in the amount of
$6,750.
If Mr.
Smith's employment were terminated "for cause," he would be paid within 30 days
that portion of his base salary and benefits under his contract that were due as
of the date of his termination. "Cause" is defined as (i) the failure
to substantially perform his duties, (ii) an act of fraud, theft,
misappropriation, dishonesty or embezzlement, (iii) conviction for a felony or
pleading
nolo
contendere
to a felony, (iv) failure to follow a lawful directive of the
Board of Directors, or (v) material breach of his employment
agreement.
Mr. Smith
has the right to terminate his agreement at any time on 45 days written
notice. The Company also has the right to terminate Mr. Smith’s
employment at any time for any other reason, in which event, it can, in exchange
for a general release, pay to Mr. Smith six months’ Base Salary, and the bonus
and commission to which he would have been entitled for that six-month
period.
Upon
death, Mr. Smith’s estate is entitled to receive his base salary and all
benefits through the last day of the month in which his death
occurred. In the event of disability for more than 90 consecutive
days (or for periods aggregating 120 days within a 180 day period), Mr. Smith's
agreement will terminate.
Pursuant
to the agreement, Mr. Smith has agreed that during the term of his employment
and for a period of one year thereafter, he shall not directly or indirectly,
whether as agent, employee, stockholder, director or investor or otherwise,
engage in any activities in competition with the Company, solicit any employee
of the Company for employment or solicit any of the Company's customers for
business. Mr. Smith has also agreed not to disclose at any time any
confidential information relating to the Company's business.
Gary
Pokrassa
serves as the Chief
Financial Officer of the Company. Pursuant to his contract with the Company
which commenced on January 31, 2008 and will expire on January 31, 2010, he is
paid an annual base salary at the annual rate of $225,000. He received no stock
option grants during FY07, FY08 and FY09. Mr. Pokrassa received health coverage,
disability and life insurance, 401(k) plan contributions, and a $750 per month
car allowance. The disability and life coverage’s, 401-K plan contributions
($6,750) and car allowance ($9,000) totaled $17,378 in FY09. His
annual bonus is at the discretion of the Compensation Committee. Mr.
Pokrassa has a contractual bonus for FY09 based on $2,000 per each penny of EPS
over $0.70, subject to certain limitations. Thus, Mr. Pokrassa has earned a
bonus of $28,000 which will be paid in FY10. Mr. Pokrassa has agreed to an 8%
reduction of this bonus along with all compensation for a temporary period, and
in March 2009 has elected to receive this entire bonus in stock pursuant to the
2006 Equity Incentive Plan. Mr. Pokrassa also participates in the 2006 Equity
Incentive Plan. All performance based Restricted Stock under this plan is
awarded on a minimum, baseline, or maximum basis, at the total discretion of the
Compensation Committee.
If Mr.
Pokrassa’s employment were terminated "for cause," he would be paid within 30
days that portion of his base salary and benefits under his contract that were
due as of the date of his termination. "Cause" is defined as (i) the
failure to substantially perform his duties, (ii) an act of fraud, theft,
misappropriation, dishonesty or embezzlement, (iii) conviction for a felony or
pleading
nolo
contendere
to a felony, (iv) failure to follow a lawful directive of the
Board of Directors, or (v) material breach of his employment
agreement.
Mr.
Pokrassa has the right to terminate his agreement at any time on 60 days written
notice. The Company also has the right to terminate Mr. Pokrassa’s
employment at any time for any other reason, in which event, it can, in exchange
for a general release, pay to Mr. Pokrassa six months’ Base Salary, and the
bonus and commission to which he would have been entitled for that six-month
period.
Upon
death, Mr. Pokrassa’s estate is entitled to receive his base salary and all
benefits through the last day of the month in which his death
occurred. In the event of disability for more than 90 consecutive
days (or for periods aggregating 120 days within a 180 day period), Mr.
Pokrassa's agreement will terminate.
Pursuant
to his employment agreement, Mr. Pokrassa has agreed that during the term of his
employment and for a period of one year thereafter, he will not compete with the
Company or solicit its employees.
OUTSTANDING
EQUITY AWARDS AT JANUARY 31, 2009
The
following table sets forth information with respect to outstanding equity-based
awards at January 31, 2009 for our named executive officers.
|
Option
Awards
|
Stock
Awards
|
Name
(a)
|
Number
of
Securities
Underlying
Un-
exercised
Options
(#)
Exercisable
(b)
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercised
(c)
|
Equity
Incentive
Plan
Awards
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
Option
Exercise
Price
($)
(e)
|
Option
Expiration
Date
(f)
|
Number
of
Shares
or
Units
of
Stock
that
have
not
Vested
(#)(2)
(g)
|
Market
Value
of
Shares
or
Units
of
Stock
that
have
not
Vested
($)
(h)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
that
have
not
Vested
(#)
(1)
(i)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
of
Unearned
Shares,
Units
or
Other
Rights
that
have
not
Vested
($)
(1)
(j)
|
|
|
|
|
|
|
|
|
|
|
Christopher
J. Ryan
CEO
|
--
|
--
|
--
|
--
|
--
|
3,138
|
$24,190
|
6,050
|
46,646
|
|
|
|
|
|
|
|
|
|
|
Gary
Pokrassa CFO
|
--
|
--
|
--
|
--
|
--
|
2,547
|
$19,636
|
3,520
|
27,139
|
|
|
|
|
|
|
|
|
|
|
Gregory
D. Willis Executive VP
|
--
|
--
|
--
|
--
|
--
|
2,352
|
$18,135
|
3,630
|
27,987
|
|
|
|
|
|
|
|
|
|
|
Raymond
J. Smith Chairman
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
Paul
C. Smith VP
|
--
|
--
|
--
|
--
|
--
|
1,503
|
$11,590
|
2,310
|
17,810
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Number
of shares and grant date fair values reflect the threshold number of
performance shares.
|
(2)
|
Number
of invested shares granted and outstanding at January 31, 2009 pursuant to
Matching Program and Bonus in Stock Plan pursuant to 2006 Equity Incentive
Plan.
|
OPTION
EXERCISES AND
S
TOCK VESTED TABLE
The
following table sets forth certain information regarding exercise of options and
vesting of restricted stock held by our named executive officers during the year
ended January 31, 2009.
|
Option
Awards
|
Stock
Awards
|
Name
(a)
|
Number
of
Shares
Acquired
on
Exercise
(#)
(b)
|
Value
Realized
on
Exercise
($)
(c)
|
Number
of
Shares
Acquired
on
Vesting
(#)
(d)
|
Value
Realized
on
Vesting
($)
(e)
|
|
|
|
|
|
Christopher
J. Ryan
CEO
|
--
|
--
|
--
|
--
|
|
|
|
|
|
Gary
Pokrassa
CFO
|
--
|
--
|
--
|
--
|
|
|
|
|
|
Gregory
D. Willis
Executive
VP
|
--
|
--
|
--
|
--
|
|
|
|
|
|
Raymond
J. Smith
Chairman
|
--
|
--
|
--
|
--
|
|
|
|
|
|
Paul
C. Smith
Vice
President
|
--
|
--
|
--
|
--
|
|
|
|
|
|
POTENTIAL
PAYMENT
S
UPON TERMINATION
OR
CHANGE
IN CONTROL PROVISIONS
Raymond J.
Smith,
If Mr. Smith's employment were terminated "for cause,"
he would be paid within 30 days that portion of his base salary and benefits
accrued but unpaid as of the date of such termination. "Cause" is
defined as (i) the failure to substantially perform his duties, (ii) an act of
fraud, theft, misappropriation, dishonesty or embezzlement, (iii) conviction for
a felony or pleading
nolo
contendere
to a felony, (iv) failure to follow a lawful directive of the
Board of Directors, or (v) material breach of his employment
agreement.
Mr. Smith
has the right to terminate his agreement at any time on 45 days written
notice. The Company has the right to terminate Mr. Smith’s employment
at any time for any reason other than cause, death or disability, in which
event, it can, in exchange for a general release, pay to Mr. Smith six months’
Base Salary.
Upon
death, Mr. Smith’s estate is entitled to receive his base salary through the
last day of the month in which his death occurs and all benefits generally paid
by the Company on an employees death. In the event of disability for
more than 90 consecutive days (or for periods aggregating 120 days within a 180
day period), Mr. Smith's agreement will terminate.
Christopher J.
Ryan
Under the terms of his employment agreement in
effect at January 31, 2009, Mr. Ryan may terminate his employment agreement for
“good reason”, including the Company’s failure after 30 days written notice to
perform or observe any of the material terms or provisions of the employment
agreement or a material reduction in the scope of Mr. Ryan’s responsibilities
and duties. In addition, Mr. Ryan can terminate his agreement for
“good reason” if, in the event of a “Triggering Event” (essentially a change of
control), any successor to the Company fails to expressly assume and agree to
perform the Company’s then current obligations under Mr. Ryan’s then current
employment agreement. A change of control is defined as (i) the acquisition by
any individual, entity or group of more than 50% of the voting power of the
company’s voting securities, (ii) individuals who constituted the board (and
those board members approved by those individuals) at the time of entering into
the contract fail to constitute at least a majority of the board, and (iii) a
liquidation of the Company, a sale of substantially all of the Company’s assets
or a sale of more than 50% of the then outstanding voting power of the Company’s
securities (subject to certain exceptions). If Mr. Ryan is terminated
without cause or Mr. Ryan terminates for “good reason”, the Company is obligated
to pay him, within 30 days, (a) his annual base salary and target bonus as of
the date of termination and (b) his base salary and current target bonus as
though he had remained in the Company’s employ until the contract expiration
date (April 30, 2010) or, if longer, for a period of one year after the
termination date. The Company may elect to make the balance of such
payments then remaining in a lump sum discounted to present value. In addition
Mr. Ryan would be entitled to a continuation of his medical and health benefits
for a period of two years beginning on the date of termination.
The
Company may terminate Mr. Ryan’s employment agreement if he becomes disabled for
more than 90 consecutive days or for periods aggregating 120 days in any 180
period or on the date of his death. In addition, the Company may terminate the
agreement for “cause”, which includes his failure to substantially perform his
duties (except due to his incapacity), his commission of an act of fraud, theft,
or dishonesty, conviction of a felony, failure to follow a lawful directive of
the Board or a material breach of his employment agreement. If the Company
terminates the agreement for cause or upon Mr. Ryan’s death or disability, or if
Mr. Ryan terminates it other than for “good reason”, the Company must pay Mr.
Ryan his full base salary through the date of termination, and all other paid
amounts, if any, to which he is entitled as of the date of termination in
connection with any benefits or under any incentive compensation plan or
programs.
Gregory
Willis
Under
the terms of his employment agreement, if Mr. Willis' employment were terminated
"for cause," he would be paid within 30 days that portion of his base salary and
all benefits under his contract that were due as of the date of his
termination. "Cause" is defined as (i) the failure to substantially
perform his duties, (ii) an act of fraud, theft, misappropriation, dishonesty or
embezzlement, (iii) conviction for a felony or pleading
nolo contendere
to a felony,
(iv) failure to follow a lawful directive of the Board of Directors, or (v)
material breach of his employment agreement.
Mr.
Willis has the right to terminate his employment at any time on 45 days written
notice. The Company also has the right to terminate Mr. Willis’
employment at any time for any other reason in which event it can, in exchange
for a general release, pay to Mr. Willis six month’s Base Salary, and the bonus
and commissions to which he would have been entitled for that six month
period.
Upon
death, Mr. Willis’s estate is entitled to receive his base salary and all
benefits through the last day of the month in which his death occurred, as well
as a pro rata portion of his annual bonus for the year in which his death
occurred. In the event of disability for more than 90 consecutive
days (or for periods aggregating 120 days within a 180 day period), Mr. Willis'
agreement will terminate.
Paul C. Smith
Under the terms of his employment agreement, if Mr. Smith's employment
were terminated "for cause," he would be paid within 30 days that portion of his
base salary and benefits under his contract that were due as of the date of his
termination. "Cause" is defined as (i) the failure to substantially
perform his duties, (ii) an act of fraud, theft, misappropriation, dishonesty or
embezzlement, (iii) conviction for a felony or pleading
nolo contendere
to a felony,
(iv) failure to follow a lawful directive of the Board of Directors, or (v)
material breach of his employment agreement.
Mr. Smith
has the right to terminate his agreement at any time on 45 days written
notice. The Company also has the right to terminate Mr. Smith’s
employment at any time for any other reason, in which event, it can, in exchange
for a general release, pay to Mr. Smith six months’ Base Salary, and the bonus
and commission to which he would have been entitled for that six-month
period.
Upon
death, Mr. Smith’s estate is entitled to receive his base salary and all
benefits through the last day of the month in which his death
occurred. In the event of disability for more than 90 consecutive
days (or for periods aggregating 120 days within a 180 day period), Mr. Smith's
agreement will terminate.
Gary Pokrassa,
Under the terms of his employment agreement, if Mr. Pokrassa’s employment
were terminated "for cause," he would be paid within 30 days that portion of his
base salary and benefits under his contract that were due as of the date of his
termination. "Cause" is defined as (i) the failure to substantially
perform his duties, (ii) an act of fraud, theft, misappropriation, dishonesty or
embezzlement, (iii) conviction for a felony or pleading
nolo contendere
to a felony,
(iv) failure to follow a lawful directive of the Board of Directors, or (v)
material breach of his employment agreement.
Mr.
Pokrassa has the right to terminate his agreement at any time on 60 days written
notice. The Company also has the right to terminate Mr. Pokrassa’s
employment at any time for any other reason, in which event, it can, in exchange
for a general release, pay to Mr. Pokrassa six months’ Base Salary, and the
bonus and commission to which he would have been entitled for that six-month
period.
Upon
death, Mr. Pokrassa’s estate is entitled to receive his base salary and all
benefits through the last day of the month in which his death
occurred. In the event of disability for more than 90 consecutive
days (or for periods aggregating 120 days within a 180 day period), Mr.
Pokrassa's agreement will terminate.
Compensation Committee
interlocks and insider participation
As
discussed above, during FY09 our Compensation Committee consisted of Messrs.
Hallman (Chairman), Cirenza (now retired), Kreft, Bachelder and Collins. None of
these members is an officer or employee of Lakeland, and none of our executive
officers serve as a member of a Compensation Committee of any entity that has
one or more executive officers serving as a member of our Compensation
Committee.
Indemnification of Directors
and Executive Officers
Our
Restated Certificate of Incorporation provides for Indemnification of its
Directors and Officers in accordance with Delaware Law.
Equity
Compensation Pl
a
n Information
The
following table provides information as of January 31, 2009 about our common
stock that may be issued upon the exercise of options granted to members of our
Board of Directors.
|
|
Number
of securities to be
issued
upon exercise of
outstanding
options,
warrants
and rights
(a)
|
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
(b)
|
|
Number
of securities remaining
available
for future issuance under
equity
compensation plans
(excluding
securities reflected in
column
(a))
(c)
|
Equity
compensation plans
approved
by security holders
|
|
20,567
|
|
$13.42
|
|
204,082
(1)
|
Equity
compensation plans not
approved
by security holders
|
|
None
|
|
--
|
|
--
|
Total
|
|
20,567
|
|
$13.42
|
|
204,082
(1)
|
(1)
includes 14,000 securities available for future issuance under the Directors’
Stock Option Plan and up to 190,082 shares available for grant under our 2006
Equity Incentive Plan as set forth in the table below:
Plan
Category
|
Number
of
securities
to be
issued
upon
attainment
of
performance
goals
or
meeting
conditions
of grant
(1)
|
Weighted-average
exercise
price per share
of
outstanding options,
warrants
and rights (1)
|
Number
of securities remaining
available
for future issuance
under
equity compensation plans
(excluding
securities reflected in
column
(a)(1))
|
Restricted
stock grants-employees
|
30,415
|
$0
|
101,585
|
Restricted
stock grants-directors
|
12,320
|
$0
|
31,680
|
Matching
award program
|
7,541
|
$0
|
25,459
|
Bonus
on stock program-employees
|
11,346
|
$0
|
21,654
|
Retainer
in stock program-directors
|
1,296
|
$0
|
9,704
|
Total
Restricted Stock Plans
|
62,918
|
$0
|
190,082
|
(1)
Indicates number of shares to be awarded at minimum threshold
levels. These restricted shares have a weighted average grant date
fair value of $13.37.
SECURITY
OWNERSHIP
O
F CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of the Company’s outstanding common stock as of April 27, 2009: (i) by
each person who is known by the Company to, beneficially own more than 5% of the
Common Stock; (ii) by each of the named executive officers of the Company; (iii)
by each director and nominee for director of the Company; and (iv) all directors
and executive officers of the Company as a group.
The
shares “beneficially owned” by a person are determined in accordance with the
definition of “beneficial ownership” set forth in the regulations of the SEC
and, accordingly, shares of our common stock underlying options and other
convertible securities that are exercisable or convertible within 60 days of
April 27, 2009 and shares of our common stock underlying restricted stock awards
that vest within 60 days of the Record Date are deemed to be beneficially owned
by the person holding such securities and to be outstanding for purposes of
determining such holder’s percentage ownership. Shares of common stock subject
to options or other convertible securities that are not exercisable or
convertible and restricted stock awards that do not vest within 60 days from the
Record Date are not included in the table below as “beneficially
owned”. The same securities may be beneficially owned by more than
one person.
Except as
otherwise noted, the persons named in the table have sole voting and investment
power with respect to their shares of Common Stock shown as beneficially owned
by them and the address for each beneficial owner, unless otherwise noted, is
c/o Lakeland Industries, Inc. 701 Koehler Avenue, Suite 7, Ronkonkoma, New York
11779.
|
|
|
|
Directors
and Officers
Name
|
Number
of
Common
Shares
Beneficially
Owned
(C)
|
Percent
of
Class
|
Title
|
|
|
|
|
Raymond
J. Smith
|
527,442
|
9.70
%
|
Chairman
of the Board of Directors
|
Christopher
J.
Ryan
|
411,781(A)(B)(C)
|
7.58%
|
Chief
Executive Officer, President, General Counsel, Secretary and
Director
|
John
J. Collins, Jr.
|
117,401(1)
|
2.16
%
|
Director
|
Eric
O. Hallman
|
40,163(1)(C)
|
*
|
Director
|
Stephen
M. Bachelder
|
12,115(2)(C)
|
*
|
Director
|
John
Kreft
|
10,450(2)(A)(C)
|
*
|
Director
|
Duane
W. Albro
|
-----
|
*
|
Director
|
Gary
Pokrassa
|
14,134(A)(C)
|
*
|
Chief
Financial Officer
|
Paul
C. Smith
|
5,317(A)(C)
|
*
|
Vice
President
|
Harvey
Pride, Jr.
|
3,410(C)
|
*
|
Sr.
Vice President-Manufacturing
|
Greg
Willis
|
3,630(C)
|
*
|
Executive
Vice President
|
Gregory
D. Pontes
|
1,870(C)
|
*
|
Vice
President-Manufacturing
|
Phillip
Willingham
|
1,760(C)
|
*
|
Vice
President, MIS
|
Charles
D. Roberson
|
-----
|
*
|
Vice
President, International Sales
|
|
|
|
|
All
officers and directors as a group (14 persons)
|
1,149,479
(4)(A)
|
21.15%
|
|
|
|
|
|
5%
Shareholders
|
|
|
|
Heartland
Advisors
789
N. Water Street, Ste. 500
Milwaukee,
Wisconsin 53202 (5)
|
500,000
|
9.20%
|
|
Dimensional
Fund Advisors, LP (6)
Palisades
West
6300
Bee Cave Road, Bldg #1
Austin,
TX 78746
|
397,506
|
7.31%
|
|
Signia
Capital Management, LLC
108
N. Washington St. Ste 305
Spokane,
Washington 99201 (7)
|
383,527
|
7.06%
|
|
Robeco
Investment Management, Inc.
909
Third Avenue
New
York, New York 10022 (8)
|
539,151(8)
|
9.92%
|
|
Holtzman
Opportunity Fund LP
c/o
Jewelcor Companies
100
N. Wilkes Barre Blvd.
Wilkes
Barre, Pennsylvania 18702
Seymour
Holtzman (6)
|
395,661(9)
|
7.28%
|
|
*
Less than 1%.
(1)
|
Includes
1,331 options granted on June 18, 2003 and 1,100 options granted on June
21, 2006 to each of Mr. Hallman and Mr. Collins, current
directors;
|
(2)
|
Includes
6,050 options granted November 19, 2004 to each Mr. Bachelder and Mr.
Kreft, current directors;
|
(4)
|
Includes
17,567 options granted between June 18, 2003 and June 21,
2006.
|
(5)
|
According
to a Schedule 13G/A jointly filed on behalf of Heartland Advisors, Inc. on
February 11, 2009.
|
(6)
|
According
to a Schedule 13G/A filed on behalf of Dimensional Fund Advisors on
February 9, 2009.
|
(7)
|
According
to a Schedule 13G/A filed on behalf of Signia Capital Management, LLC on
February 13, 2009.
|
(8)
|
According
to a Schedule 13G/A filed on behalf of Robeco Investment Management
(“Robeco”) on February 6, 2009. Robeco possesses shared investment and
voting power over the above shares.
|
(9)
|
According
to a Schedule 13D filed on April 22, 2008, which was jointly filed on
behalf of the Holtzman Opportunity Fund, Seymour Holtzman and Evelyn
Holtzman.
|
(A)
|
Does
not include 6,703 shares to be issued pursuant to the matching shares
provision of the 2006 Equity Incentive Plan as follows: Christopher J.
Ryan, 3,137 shares; Gary Pokrassa, 1,050 shares; Paul C. Smith, 665
shares; John Kreft, 1,100 shares; Stephen Bachelder, 750 shares. Also
excludes 5,346 shares to be issued pursuant to the bonus in shares plan as
follows: Gary Pokrassa 1,497 shares; Harvey Pride Jr. 1,497 shares;
Gregory Willis 2,352 shares.
|
(B)
|
Includes
14,641 shares owned by Mr. Ryan’s wife, and 42,592 which Mr. Ryan votes as
Co-Executor of the Estate of Bernard J.
Ryan.
|
(C)
|
Table
does not include the following stock grants under the Company’s 2006
Equity Incentive Plan (performance vesting at end of 3 years, date of
grant June 2006) at baseline or maximum. Table DOES include the below
shares at minimum since they are scheduled to vest within 60 days of April
27, 2009:
|
Grantee
Directors
|
Minimum#
of
Shares
|
Baseline#
of
Shares
|
Maximum
#
of
Shares
|
Michael
M. Cirenza (retired)
|
2,640
|
5,170
|
7,810
|
John
J. Collins, Jr.
|
2,200
|
4,290
|
6,490
|
Eric
O. Hallman
|
2,640
|
5,170
|
7,810
|
Stephen
M. Bachelder
|
2,640
|
5,170
|
7,810
|
A.
John Kreft
|
2,200
|
4,290
|
6,490
|
|
12,320
|
24,090
|
36,410
|
Officers
|
|
|
|
Christopher
J. Ryan (Director)
|
6,050
|
11,990
|
18,040
|
Gregory
D. Willis
|
3,630
|
7,150
|
10,780
|
Harvey
Pride, Jr.
|
3,410
|
6,820
|
10,230
|
Gary
A. Pokrassa
|
3,520
|
6,930
|
10,450
|
Paul
C. Smith
|
2,310
|
4,620
|
7,040
|
Gregory
D. Pontes
|
1,870
|
3,630
|
5,500
|
Phillip
Willingham
|
1,760
|
3,410
|
5,170
|
Charles
D. Roberson
|
-----
|
-----
|
-----
|
|
22,550
|
44,550
|
67,210
|
Key
Employees as a group
|
8,360
|
16,830
|
25,190
|
|
31,680
|
63,030
|
94,820
|
Grand
Total
|
44,000
|
87,120
|
131,230
|
CERTAIN
RELATIONSHIP
S
AND RELATED TRANSACTIONS
__________________________________________________
It is the
Company’s policy that directors, officers and any other person that is a related
person within the meaning of SEC regulations are required to report any related
party transactions to our Chief Executive Officer. All such transactions also
are required to be reported to the Audit Committee, which, with the assistance
of legal counsel and such other advisors as it deems appropriate, is responsible
for reviewing and approving or ratifying any related party transaction. The
Audit Committee intends to approve only those related party transactions that it
believes are in, or not inconsistent with, the best interests of the Company. A
written policy to this effect has been adopted by the board of directors.
Pursuant to our written policy, a related party transaction is defined as any
transaction in which (1) the Company is a participant, (2) any related
person has a direct or indirect material interest and (3) the amount
involved exceeds $15,000, but excludes any transaction that does not require
disclosure under Item 404(a) of Regulation S-K
A related person
is:
|
•
|
|
an
executive officer, director or director nominee of the
Company;
|
|
•
|
|
any
person who is known to be the beneficial owner of more than 5% of the
Company’s common stock;
|
|
•
|
|
any
person who is an immediate family member (as defined under Item 404
of Regulation S-K) of an executive officer, director or director nominee
or beneficial owner of more than 5% of the Company’s common stock;
and
|
|
•
|
|
any
firm, corporation or other entity in which any of the foregoing persons is
employed or is a partner or principal or in a similar position or in which
such person, together with any other of the foregoing persons, has a 5% or
greater beneficial ownership
interest.
|
In
addition, every quarter, a report maintained by the Company’s accounting staff
is reviewed and approved by the Chief Executive Officer and Chief Financial
Officer. The Audit Committee of the Board of Directors conducts an annual review
of all transactions between related parties and the Company.
On April
1, 2008, we entered into a 3 year lease agreement with Harvey Pride, Jr., our
Sr. Vice President of Manufacturing, for a 2,400 sq. ft. customer service office
located next to our existing Decatur, Alabama facility. This lease was renewed
on April 1, 2008 to run through March 31, 2011 at an annual rent of $18,000 for
2008, 18,900 for 2009, and 19,845 for 2010 for this facility. We
believe that the lease contains terms no less favorable to us than we could have
obtained from an unrelated third-party.
We have
been doing business with Madison Mobile Storage, Inc., a company owned and
operated by the son of Harvey Pride, Jr. for over 20 years. The
orders for Lakeland’s storage trailers and the release of the trailers are
handled by Greg Pontes, our VP of manufacturing, who is unrelated to Mr. Pride.
The storage trailers are a bid item and they are on an open rental by the
month. In FY09 we paid $20,835 to Madison Mobile Storage Inc. for
storage services. We believe that these services were provided on
terms no less favorable to us than we could have obtained from an unrelated
third-party.
In July
2005 as part of the acquisition of Mifflin Valley Inc., (merged into Lakeland
Industries, Inc. on September 1, 2006) the Company entered into a five year
lease with Michael Gallen (an employee) to lease an 18,520 sq. ft. manufacturing
facility in Shillington, PA for $55,560 annually or a per square foot rental of
$3.00. This amount was agreed to prior to the acquisition after an
independent appraisal of the fair market rental value per square
foot. In addition the Company, commencing January 1, 2006 is renting
12,000 sq ft of warehouse space in a second location is Pennsylvania from this
employee, on a month-by-month basis, for the monthly amount of $3,350 or $3.35
per square foot annually. We believe that these lease terms are no
less favorable to us than could have been obtained from an unrelated
third-party.
Mifflin
Valley also utilizes the services of Gallen Insurance (an affiliate of Michael
& Donna Gallen) to provide certain insurance in
Pennsylvania. Such payments for insurance aggregated approximately
$27,000, $34,000 and $40,000 in fiscal 2009, 2008 and 2007,
respectively. We believe that this insurance was procured on
terms that are no less favorable to us than could have been obtained from an
unrelated third-party.
Paul
Smith, our Vice President of Sales, is the son of Raymond Smith the Chairman of
our Board of Directors. Paul Smith’s compensation for 2009 is set
forth in the Executive Compensation section of this proxy
statement.
Section
16(a) Beneficial Ownership Reporting
C
ompliance
Section 16 (a) of the Securities
Exchange Act of 1934 (the “Exchange Act”), requires the Company’s directors,
officers and beneficial owners of more than 10% of the Common Stock to file with
the SEC initial reports of ownership of the Company’s equity securities and to
file subsequent reports when there are changes in such ownership.
Officers, directors and beneficial owners of more than 10% of the Common Stock
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) reports they file.
Based solely upon our review of Forms
3, 4, and 5 filed by or received from our reporting persons (or written
representations received from such persons), we are not aware of any failure by
a reporting person to make timely filings of those Forms as required by Section
16(a) of the Securities Exchange Act of 1934 with respect to the year ended
January 31, 2009.
STOCKHO
L
DER
PROPOSALS FOR 2009 ANNUAL MEETING
Stockholder
proposals may be included in our proxy materials for consideration at an Annual
Meeting so long as they are provided to us on a timely basis and satisfy the
requirements and conditions set forth in Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). For a stockholder
proposal to be included in our proxy materials for the 2010 Annual Meeting of
Stockholders, the proposal must be submitted in accordance with our By-Laws in
writing not earlier than the 150
th
calendar day, and not later than the close of business on the 120
th
calendar day, prior to the first anniversary of the immediately preceding year’s
annual meeting of stockholders, being June 17, 2009, to our Corporate Secretary
at 701 Koehler Avenue, Suite 7, Ronkonkoma, New York 11779.
If you
wish to submit a proposal outside of the process of Rule 14a-8 under the
Exchange Act for consideration at the 2009 Annual Meeting of Stockholders, in
order for such proposal to be considered “timely” for the purposes of Rule
14a-4(c) under the Exchange Act, the proposal must be received at the above
address not later than April 6, 2009. Pursuant to Rule 14a-4(c) under
the Exchange Act, management is permitted to vote proxies in its discretion if
Lakeland: (1) receives notice of the proposal before the close of business on
April 6, 2010 and advises stockholders in the 2010 Annual Meeting Proxy
Statement about the nature of the matter and how management intends to vote on
such matter; or (2) does not receive notice of the proposal prior to the close
of business on April 6, 2010.
In
addition to the above, stockholders are advised to review Lakeland’s bylaws, as
they may be amended from time to time, for additional requirements and deadlines
applicable to the submission of stockholder proposals, including, but not
limited to, proposals relating to the nomination of one or more candidates for
election to the Lakeland Board of Directors.
HOUSEHOLDING OF PROXY
MATERIALS
Some banks, brokers and other nominee
record holders may be participating in the practice of “householding” proxy
statements and annual reports. This means that only one copy of this
proxy statement may have been sent to multiple stockholders in your
household. If you would like to obtain another copy of the proxy,
please contact Secretary, Lakeland Industries, Inc. 701 Koehler Avenue, Suite 7,
Ronkonkoma, New York, 11779 by mail. If you want to receive separate
copies of our proxy statements and annual reports in the future, or if you are
receiving multiple copies and would like to receive only one copy for your
household, you should contact your bank, broker, or other nominee record
holder.
The Board
of Directors knows of no matters other than those described above that have been
submitted for consideration at this Annual Meeting. As to other matters, if any,
that properly may come before the Annual Meeting; the Board of Directors intends
that the proxy cards will be voted in respect thereof in accordance with the
judgment of the person or persons named thereon.
A copy of
our Annual Report on Form 10-K for the fiscal year ended January 31, 2009
is being mailed concurrently with this proxy statement (as part of our annual
report to stockholders). A copy of our Annual Report on Form 10-K is also
available without charge from our website at www.lakeland.com or upon written
request to: Lakeland Investor Relations, Lakeland Industries, Inc., 701 Koehler
Avenue, Suite 7, Ronkonkoma, NY 11779
|
By
Order of the Board of Directors,
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Christopher
J. Ryan
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Corporate
Secretary
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May 9,
2009
Ronkonkoma,
New York
2009
INCENTIVE PLAN
1.
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Purpose.
The
purpose of Lakeland Industries, Inc.’s 2009 Incentive Plan (the “Plan”) is
to motivate key employees and directors to produce a superior return to
the stockholders of Lakeland Industries, Inc. by offering them an
opportunity to participate in stockholder gains, by facilitating stock
ownership and by rewarding them for achieving a high level of corporate
financial performance. The Plan is also intended to facilitate recruiting
and retaining talented executives for key positions by providing an
attractive capital accumulation
opportunity.
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2.1
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The
following terms, whenever used in this Plan, shall have the meanings set
forth below:
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(a)
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“Affiliate”
means any corporation or limited liability company, a majority of the
voting stock or membership interests of which is directly or indirectly
owned by the Company, and any partnership or joint venture designated by
the Committee in which any such corporation or limited liability company
is a partner or joint venture.
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(b)
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“Award”
means a grant made under this Plan in the form of Performance Shares,
Restricted Stock, Restricted Share Rights, or Stock
Awards.
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(c)
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“Award
Agreement” means a written agreement or other communication evidencing the
terms and conditions of an Award in the form of either an agreement to be
executed by both the Participant and the Company (or an authorized
representative of the Company) or a certificate, notice, term sheet or
similar communication.
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(d)
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“Beneficiary”
means the person or persons determined in accordance with Section
12.
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(e)
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“Board”
means the Board of Directors of the
Company.
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(f)
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Intentionally
left blank
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(g)
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“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and
the rulings and regulations issued
thereunder.
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(h)
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“Committee”
has the meaning set forth in Section
3.
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(i)
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“Company”
means Lakeland Industries, Inc., a Delaware
corporation.
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(j)
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“Earnings
Per Share” means the Company’s diluted earnings per share as reported in
the Company’s consolidated financial statements for the applicable
performance period, adjusted in the same manner as provided below for Net
Income.
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(k)
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“Employee”
means an individual who is a common law employee (including an officer or
director who is also an employee) of the Company or an
Affiliate.
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(l)
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“Fair
Market Value” as of any date means, unless a different calculation measure
is specified by the Committee, the immediately preceding trading day’s
closing sales price of a Share on the
NASDAQ.
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(m)
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Intentionally
left blank.
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(n)
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“Net
Income” shall mean the Company’s net income for the applicable performance
period as reported in the Company’s consolidated financial statements,
adjusted to eliminate the effect of (i) losses resulting from discontinued
operations, (ii) extraordinary gains or losses, (iii) the cumulative
effect of changes in generally accepted accounting principles, and (iv)
any other unusual or non-recurring gain or loss which is separately
identified and quantified.
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(o)
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Intentionally
left blank
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(p)
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Intentionally
left blank
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(q)
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“Participant”
means a person described in Section 5 designated by the Committee to
receive an Award under the Plan.
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(r)
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“Performance
Cycle” means the period of time of not fewer than two years or more than
five years as specified by the Committee over which Performance Shares or
Performance Units are to be earned.
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(s)
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“Performance
Shares” means an Award made pursuant to Section 6 which entitles a
Participant to receive Shares, their cash equivalent, or a combination
thereof, based on the achievement of performance targets during a
Performance Cycle.
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(t)
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Intentionally
left blank
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(u)
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“Plan”
means this 2009 Incentive Plan, as amended from time to
time.
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(v)
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“Qualifying
Performance Criteria” has the meaning set forth in Section
16.2.
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(w)
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Intentionally
left blank.
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(x)
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“Restricted
Stock” means Stock granted under Section 7 that is subject to restrictions
imposed pursuant to said Section.
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(y)
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“Retirement”
means termination of employment after reaching the earliest of (i) age 55
with 10 completed years of service, or (ii) 80 points (with one point
credited for each completed age year and one point credited for each
completed year of service), or (iii) age 65. For purposes of this
definition, a Participant is credited with one year of service after
completion of each full 12-month period of employment with the Company or
an Affiliate as determined by the Company or
Affiliate.
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(y.1)
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“Return
on Assets” (ROA) means the Net Income of the Company on an annualized
basis, divided by the Company’s average total assets as reported in the
Company’s consolidated financial statements for the relevant performance
period.
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(z)
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“Return
on Equity” (ROE) means the Net Income of the Company on an annualized
basis, divided by the Company’s average total common equity excluding
average accumulated comprehensive income as reported in the Company’s
consolidated financial statements for the relevant performance
period.
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(z.1)
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“Return
on Investment” (ROI) means the Net Income of the Company on an annualized
basis, divided by the Company’s average total common equity , long term
debt including current maturities thereof, and short term borrowings,
excluding average accumulated comprehensive income as reported in the
Company’s consolidated financial statements for the relevant performance
period.
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(aa)
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“Share”
means a share of Stock.
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(bb)
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“Stock”
means the common stock, $0.01 par value, of the
Company.
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(cc)
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Intentionally
left blank
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(dd)
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“Stock
Award” means an award of Stock granted to a Participant pursuant to
Section 8.
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(ee)
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“Term”
means the period during which the restrictions placed on a Restricted
Share Right or Restricted Stock are in
effect.
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2.2
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Gender and
Number
. Except when otherwise indicated by context, reference to
the masculine gender shall include, when used, the feminine gender and any
term used in the singular shall also include the
plural.
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3.1
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Administration of the
Plan
. The Plan shall be administered by the Compensation Committee
of the Board or such other committee selected by the Board and consisting
of two or more members of the Board (the “Committee”). Any power of the
Committee may also be exercised by the Board, except to the extent that
the grant or exercise of such authority would cause any Award or
transaction to become subject to (or lose an exemption under) the
short-swing profit recovery provisions of Section 16 of the Securities
Exchange Act of 1934, as amended, or cause an Award not to qualify for
treatment as “performance based compensation” under Section 162(m) of the
Code. To the extent that any permitted action taken by the Board conflicts
with action taken by the Committee, the Board action shall control. The
Committee may delegate any or all aspects of the day-to-day administration
of the Plan to one or more officers or employees of the Company or any
Affiliate, and/or to one or more
agents.
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3.2
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Powers of the
Committee
. Subject to the express provisions of this Plan, the
Committee shall be authorized and empowered to take all actions that it
determines to be necessary or appropriate in connection with the
administration of this Plan, including, without limitation: (i) to
prescribe, amend and rescind rules and regulations relating to this Plan
and to define terms not otherwise defined herein; (ii) to determine which
persons are eligible to be granted Awards under Section 5, to which of
such persons, if any, Awards shall be granted hereunder and the timing of
any such Awards; (iii) to grant Awards to Participants and determine the
terms and conditions of Awards, including the number of Shares subject to
Awards, the exercise or exercise price of such Shares, and the
circumstances under which Awards become exercisable or vested or are
forfeited or expire, which terms may but need not be conditioned upon the
passage of time, continued employment, the satisfaction of performance
criteria, the occurrence of certain events, or other factors; (iv) to
establish and certify the extent of satisfaction of any performance goals
or other conditions applicable to the grant, issuance, exercisability,
vesting and/or ability to retain any Award; (v) to prescribe and amend the
terms of Award Agreements or other documents relating to Awards made under
this Plan (which need not be identical) and the terms of or form of any
document or notice required to be delivered to the Company by Participants
under this Plan; (vi) to determine whether, and the extent to which,
adjustments are required pursuant to Section 25; (vii) to interpret and
construe this Plan, any rules and regulations under this Plan, and the
terms and conditions of any Award granted hereunder, and to make
exceptions to any such provisions in good faith and for the benefit of the
Company; and (viii) to make all other determinations deemed necessary or
advisable for the administration of this
Plan.
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3.3
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Determinations by the
Committee
. All decisions, determinations and interpretations by the
Committee regarding the Plan, any rules and regulations under the Plan,
and the terms and conditions of or operation of any Award granted
hereunder, shall be final and binding on all Participants, Beneficiaries,
heirs, assigns or other persons holding or claiming rights under the Plan
or any Award. The Committee shall consider such factors as it deems
relevant, in its sole and absolute discretion, to making such decisions,
determinations and interpretations including, without limitation, the
recommendations or advice of any officer or other employee of the Company
and such attorneys, consultants and accountants as it may
select.
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4.
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Shares Available Under
the Plan; Limitation on
Awards
.
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4.1
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Aggregate
Limits
. Subject to adjustment as provided in Section 25, the
aggregate number of Shares issuable pursuant to all Awards under this Plan
on or after April 13, 2009 shall not exceed 253,000 Shares. The Shares
issued pursuant to Awards granted under this Plan may consist, in whole or
in part, of authorized but unissued Stock or treasury Stock not reserved
for any other purpose.
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4.2
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Issuance of
Shares
. For purposes of this Section 4, the aggregate number of
Shares available for Awards under this Plan at any time shall not be
reduced by Shares subject to Awards that have been canceled, expired,
forfeited or settled in cash.
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4.3
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No
Participant may be granted awards under the 2009 Incentive Plan with
respect to an aggregate of more than 30,000 shares of stock (subject to
adjustment as described below) during any fiscal
year.
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5.
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Participation
.
Participation in the Plan shall be limited to Employees or Directors of
the Company or an Affiliate selected by the Committee. Participation is
entirely at the discretion of the Committee, and is not automatically
continued after an initial period of
participation.
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6.
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Performance Shares and
Performance Units
. An Award of Performance Shares or Performance
Units under the Plan shall entitle the Participant to future payments or
Shares or a combination thereof based upon the level of achievement with
respect to one or more pre-established performance criteria (including
Qualifying Performance Criteria) established for a Performance
Cycle.
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6.1
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Amount of
Award
. The Committee shall establish a baseline and maximum amount
of a Participant’s Award, which amount shall be denominated in
Shares.
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6.2
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Communication of
Award
. Each Award Agreement evidencing an Award of Performance
Shares or Performance Units shall contain provisions regarding (i) the
target and maximum amount payable to the Participant pursuant to the
Award, (ii) the performance criteria and level of achievement versus these
criteria that shall determine the amount of such payment, (iii) the
Performance Cycle as to which performance shall be measured for
determining the amount of any payment, (iv) the timing of any payment
earned by virtue of performance, (v) restrictions on the alienation
or transfer of the Award prior to actual payment, (vi) forfeiture
provisions and (vii) such further terms and conditions, in each case not
inconsistent with this Plan, as may be determined from time to time by the
Committee.
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6.3
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Performance
Criteria
. Performance criteria established by the Committee shall
relate to corporate, group, unit or individual performance, and may be
established in terms of earnings, growth in earnings, ratios of earnings
to equity or assets, or such other measures or standards determined by the
Committee; provided, however, that the performance criteria for any
portion of an Award of Performance Shares or Performance Units that is
intended by the Committee to satisfy the requirements for
“performance-based compensation” under Code Section 162(m) shall be a
measure based on one or more Qualifying Performance Criteria selected by
the Committee and specified at the time the Award is granted. Multiple
performance targets may be used and the components of multiple performance
targets may be given the same or different weighting in determining the
amount of an Award earned, and may relate to absolute performance or
relative performance measured against other groups, units, individuals or
entities.
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6.4
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Discretionary
Adjustments
. Notwithstanding satisfaction of any performance goals,
the amount paid under an Award of Performance Shares or Performance Units
on account of either financial performance or personal performance
evaluations may be reduced by the Committee on the basis of such further
considerations as the Committee shall
determine.
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6.5
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Payment of
Awards
. Following the conclusion of each Performance Cycle, the
Committee shall determine the extent to which performance criteria have
been attained, and the satisfaction of any other terms and conditions with
respect to an Award relating to such Performance Cycle. The Committee
shall determine what, if any, payment is due with respect to an Award and
whether such payment shall be made in cash, Stock or a combination
thereof. Payment shall be made in a lump sum or installments, as
determined by the Committee at the time the Award is granted, commencing
as promptly as practicable following the end of the applicable Performance
Cycle, subject to such terms and conditions and in such form as may be
prescribed by the Committee. Payment in Stock may be in Restricted Stock
at the discretion of the Committee at the time the Award is
granted.
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6.6
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Termination of
Employment.
Unless the Committee provides
otherwise:
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(a)
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Due to Death or
Disability
. If a Participant ceases to be an Employee before the
end of a Performance Cycle by reason of his death or permanent disability,
the Performance Cycle for such Participant for the purpose of determining
the amount of Award payable shall end at the end of the calendar quarter
immediately preceding the date on which said Participant ceased to be an
Employee. The amount of an Award payable to a Participant (or the
Beneficiary of a deceased Participant) to whom the preceding sentence is
applicable shall be paid at the end of the Performance Cycle, and shall be
that fraction of the Award computed pursuant to the preceding sentence the
numerator of which is the number of calendar quarters during the
Performance Cycle during all of which said Participant was an Employee and
the denominator of which is the number of full calendar quarters in the
Performance Cycle.
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(b)
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Due to Reasons Other
Than Death or Disability
. Upon any other termination of employment
of a Participant during a Performance Cycle, participation in the Plan
shall cease and all outstanding Awards of Performance Shares or
Performance Units to such Participant shall be
cancelled.
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7.
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Restricted Stock
Awards
. An Award of Restricted Stock under the Plan shall consist
of Shares the grant, issuance, retention, vesting and/or transferability
of which are subject, during specified periods of time, to such conditions
and terms as the Committee deems appropriate. Restricted Stock granted
pursuant to the Plan need not be identical, but each grant of Restricted
Stock must contain and be subject to the terms and conditions set forth
below.
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7.1
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Award
Agreement
. Each Award of Restricted Stock shall be evidenced by an
Award Agreement. Each Award Agreement shall contain provisions regarding
(i) the number of Shares subject to the Award or a formula for determining
such number, (ii) the purchase price of the Shares, if any, and the means
of payment, (iii) such terms and conditions on the grant, issuance,
vesting and/or forfeiture of the Restricted Stock as may be determined
from time to time by the Committee, (iv) restrictions on the
transferability of the Award and (v) such further terms and conditions, in
each case not inconsistent with this Plan, as may be determined from time
to time by the Committee. Shares issued under an Award of Restricted Stock
may be issued in the name of the Participant and held by the Participant
or held by the Company, in each case as the Committee may
provide.
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7.2
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Vesting and Lapse of
Restrictions
. The grant, issuance, retention, vesting and/or
settlement of Shares of Restricted Stock shall occur at such time and in
such installments as determined by the Committee or under criteria
established by the Committee. The Committee shall have the right to make
the timing of the grant and/or the issuance, ability to retain, vesting
and/or settlement of Shares of Restricted Stock subject to continued
employment, passage of time and/or such performance criteria as deemed
appropriate by the Committee; provided that in no event shall the grant,
issuance, retention, vesting and/or settlement of Shares under an Award of
Restricted Stock that is based on performance criteria and the level of
achievement measured against such criteria be subject to a performance
period of less than one year and no condition that is based solely upon
continued employment or the passage of time shall provide for vesting or
settlement in full of an Award of Restricted Stock over a Term of less
than three years from the date the Award is granted, in each case other
than as a result of or upon the death, disability or Retirement of the
Participant or a change in control of the Company. Notwithstanding
anything herein to the contrary, the limitations contained in the
preceding sentence shall not apply to Restricted Stock that is granted in
lieu of salary, cash bonus or other cash compensation, in which case there
may be no minimum Term.
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7.3
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Rights as a
Stockholder
. A Participant shall have all voting, dividend,
liquidation and other rights with respect to Restricted Stock held by such
Participant as if the Participant held unrestricted Stock; provided that
the unvested portion of any award of Restricted Stock shall be subject to
any restrictions on transferability or risks of forfeiture imposed
pursuant to Sections 7.1, 7.2 and 7.4. Unless the Committee otherwise
determines or unless the terms of the applicable Award Agreement or grant
provides otherwise, any noncash dividends or distributions paid with
respect to shares of unvested Restricted Stock shall be subject to the
same restrictions and vesting schedule as the Shares to which such
dividends or distributions relate.
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7.4
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Termination of
Employment
. Unless the Committee provides
otherwise:
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(a)
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Due to Death, or
Permanent Disability
. If a Participant ceases to be an Employee
prior to the lapse of restrictions on Shares of Restricted Stock by reason
of his death, permanent disability or retirement, all restrictions on
Shares of Restricted Stock held for his benefit shall immediately
lapse.
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(b)
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Due to Reasons Other
Than Death, Permanent Disability or Retirement
. Upon any other
termination of employment prior to the lapse of restrictions,
participation in the Plan shall cease and all Shares of Restricted Stock
held for the benefit of a Participant shall be forfeited by the
Participant.
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7.5
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Certificates
.
The Committee may require that certificates representing Shares of
Restricted Stock be retained and held in escrow by a designated employee
or agent of the Company or any Affiliate until any restrictions applicable
to Shares of Restricted Stock so retained have been satisfied or lapsed.
Each certificate issued in respect to an Award of Restricted Stock may, at
the election of the Committee, bear the following
legend:
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“This
certificate and the shares of stock represented hereby are subject to the
terms and conditions (including forfeiture provisions and restrictions
against transfer) contained in the 2009 Incentive Plan and the Restricted
Stock Award. Release from such terms and conditions shall obtain only in
accordance with the provisions of the Plan and the Award, a copy of each
of which is on file in the office of the Secretary of Lakeland Industries,
Inc..”
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8.1
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Grant
. A
Participant may be granted one or more Stock Awards under the Plan;
provided that such Award is granted in lieu of salary, cash bonus or other
cash compensation. Stock Awards shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee.
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8.2
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Rights as a
Stockholder
. A Participant shall have all voting, dividend,
liquidation and other rights with respect to Shares issued to the
Participant as a Stock Award under this Section 8 upon the Participant
becoming the holder of record of the Shares granted pursuant to such Stock
Award; provided that the Committee may impose such restrictions on the
assignment or transfer of Shares awarded pursuant to a Stock Award as it
considers appropriate.
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9.
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Qualifying Retirement
and Disqualifying Activity
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9.1
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Qualifying
Retirement
.
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•
|
Unless
otherwise determined by the Committee at or after the time of granting any
award, and except for a “qualifying retirement” (discussed below), if a
Participant’s employment by the Company or any subsidiary or affiliate
terminates for any reason other than death or permanent disability, all
restricted stock held by such Participant which is unvested or subject to
restriction at the time of such termination will be forfeited at such
time.
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•
|
If
a Participant’s employment with the Company or any of its subsidiaries or
affiliates terminates for any reason other than death, permanent
disability or the Participant’s involuntary termination for cause, and if
immediately prior to the date of such termination of employment
(i) the Participant is 55 years of age or older, and
(ii) the sum of the Participant’s age and completed years of service
as an employee of the Company or its subsidiaries or affiliates
(disregarding fractions in both cases) totals 70 or more (a “qualifying
retirement”), the following provisions will
apply:
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•
|
All
shares of restricted stock awarded to the Participant which have vested as
of the date of the qualifying retirement will be free of
restrictions.
|
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|
|
|
•
|
With
respect to any time-based restricted stock award which has not vested,
effective as of the Participant’s retirement date: (a) the award will
remain in effect with respect to fifty percent (50%) of the shares covered
thereby, and such award will vest on the Participant’s retirement date and
such shares will be free of restrictions as of the vesting date; and
(b) the award will be terminated with respect to the remaining fifty
percent (50%) of the shares covered thereby.
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|
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•
|
With
respect to any performance-based restricted stock award which has not
vested, effective as of the Participant’s retirement date: (a) the
award will remain in effect with respect to fifty percent (50%) of the
shares covered thereby and will vest upon the achievement of the related
performance goals (unless an award expires according to its terms prior to
the satisfaction of the performance goals, in which event the award will
terminate and applicable shares of restricted stock will be forfeited);
and (b) the award will terminate as to the remaining fifty percent
(50%) of the shares covered thereby. However, if the Participant is the
Chief Executive Officer or a member of his or her direct reporting group,
and such person has given the Company written notice at least one
(1) full year prior to his or her qualifying retirement, no unvested
performance-based restricted stock awards will terminate upon such
retirement, and one hundred percent (100%) of the shares covered by such
awards will remain in effect and will vest upon the achievement of the
related performance goals (unless an award expires according to its terms
prior to the satisfaction of the performance goals, in which event the
award will terminate and applicable shares of restricted stock will be
forfeited).
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9.2
Disqualifying
Activity
.
Notwithstanding
the foregoing, if the Committee determines that the Participant is or has
engaged in any disqualifying activity (as defined below), then (1) to
the extent that any restricted stock award held by such Participant has
vested as of the disqualification date (as defined below), the Participant
will have the right to receive all shares of restricted stock which are
vested as of such date and (2) to the extent that any restricted
stock award held by such Participant has not vested as of the
disqualification date, the award will terminate, and all related shares
will be forfeited, as of such date. Any determination by the Committee,
which may act upon the recommendation of the Chief Executive Officer or
other senior officer of the Company, that the Participant is or has
engaged in any disqualifying activity, and as to the disqualification
date, will be final and conclusive.
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For
purposes of this provision, the term “disqualifying activity” is defined
in the Plan to include, among other
activities:
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•
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directly
or indirectly being an owner, officer, employee, advisor or consultant to
a company that competes with the Company or its subsidiaries or affiliates
to an extent deemed material by the Committee, or
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•
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disclosure
to third parties or misuse of any confidential information or trade
secrets of the Company, its subsidiaries or affiliates,
or
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•
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any
material violation of the Company’s Code of Business Conduct and Ethics or
any other agreement between the Company and the Participant,
or
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•
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failing
in any material respect to perform his or her assigned responsibilities as
an employee of the Company or any of its subsidiaries or affiliates, as
determined by the Committee, in its sole judgment, after consulting with
the Chief Executive Officer.
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The
ownership of less than 2% of the outstanding voting securities of a
publicly traded corporation which competes with the Company or any of its
subsidiaries or affiliates will not constitute a disqualifying
activity.
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The
term “disqualifying date” is defined in the Plan as the earliest date as
of which the Participant engaged in any disqualifying activity, as
determined by the Committee.
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10.
11.
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Options.
Options
are not part of this Plan.
Stock Appreciation
Rights
. Stock Appreciation rights are not part of this
Plan.
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12.
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Nontransferability of
Rights
. Unless the Committee provides otherwise, (i) no rights
under any Award will be assignable or transferable and no Participant or
Beneficiary will have any power to anticipate, alienate, dispose of,
pledge or encumber any rights under any Award, and (ii) the rights and the
benefits of any Award may be exercised and received during the lifetime of
the Participant only by the Participant or by the Participant’s legal
representative. The Participant may, by completing and signing a written
beneficiary designation form which is delivered to and accepted by the
Company, designate a beneficiary to receive any payment and/or exercise
any rights with respect to outstanding Awards upon the Participant’s
death. If at the time of the Participant’s death there is not on file a
fully effective beneficiary designation form, or if the designated
beneficiary did not survive the Participant, the person or persons
surviving at the time of the Participant’s death in the first of the
following classes of beneficiaries in which there is a survivor, shall
have the right to receive any payment and/or exercise any rights with
respect to outstanding Awards:
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(a)
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Participant’s
surviving spouse;
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(b)
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Equally
to the Participant’s children, except that if any of the Participant’s
children predecease the Participant but leave descendants surviving, such
descendants shall take by right of representation the share their parent
would have taken if living;
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(c)
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Participant’s
surviving parents equally;
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(d)
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Participant’s
surviving brothers and sisters equally;
or
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(e)
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The
legal representative of the Participant’s
estate.
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If
a person in the class surviving dies before receiving any payment and/or
exercising any rights with respect to outstanding Awards (or the person’s
share of any payment and/or rights in case of more than one person in the
class), that person’s right to receive any payment and/or exercise any
rights with respect to outstanding Awards will lapse and the determination
of who will be entitled to receive any payment and/or exercise any rights
with respect to outstanding Awards will be determined as if that person
predeceased the Participant.
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13.
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Termination of
Employment.
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13.1
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Transfers
of employment between the Company and an Affiliate, or between Affiliates,
will not constitute termination of employment for purposes of any
Award.
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13.2
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The
Committee may specify whether any authorized leave of absence or absence
for military or government service or for any other reasons will
constitute a termination of employment for purposes of the Award and the
Plan.
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14.
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Reorganization
.
Unless the Committee or the Board otherwise determines either at the time
the Award is granted or at any time thereafter, if substantially all of
the assets of the Company are acquired by another corporation or in case
of a reorganization of the Company involving the acquisition of the
Company by another entity, then as to each Participant who is an Employee
immediately prior to the consummation of the
transaction:
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(a)
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Intentionally
left blank
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(b)
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All
restrictions with respect to Restricted Stock shall lapse immediately
prior to the consummation of the transaction, and Shares free of
restrictive legend shall be delivered to the
Participant.
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(c)
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All
Performance Cycles for the purpose of determining the amounts of Awards of
Performance Shares and Performance Units payable shall end at the end of
the calendar quarter immediately preceding the consummation of the
transaction. The amount of an Award payable shall be that fraction of the
Award computed pursuant to the preceding sentence, the numerator of which
is the number of calendar quarters completed in the Performance Cycle
through the end of the calendar quarter immediately preceding the
consummation of the transaction and the denominator of which is the number
of full calendar quarters in the Performance Cycle. The amount of an Award
payable shall be paid within sixty days after consummation of the
transaction.
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For
avoidance of doubt, this Section 14 shall not apply to the sale or other
disposition by the Company of the assets of, or stock or other ownership
interests in, an Affiliate unless such disposition would constitute a
disposition of substantially all of the assets of the
Company.
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The
Committee shall take such action as in its discretion may be necessary or
advisable to carry out the provisions of this
Section.
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15.
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Board Changes
.
Unless the Committee or the Board otherwise determines either at the time
the Award is granted or at any time thereafter, on the date that a
majority of the Board shall be persons other than persons (a) for whose
election proxies shall have been solicited by the Board or (b) who are
then serving as directors appointed by the Board to fill vacancies on the
Board caused by death or resignation (but not by removal) or to fill
newly-created directorships, then as to any Participant who is an Employee
immediately prior to said date and who ceases to be an Employee within six
months after said date for any reason other than as a result of death,
permanent disability or Retirement:
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(i)
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Intentionally
left blank
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(ii)
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All
restrictions with respect to Restricted Stock shall lapse and Shares free
of restrictive legend shall be delivered to the
Participant.
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(iii)
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All
Performance Cycles for the purpose of determining the amounts of Awards of
Performance Shares and Performance Units payable shall end at the end of
the calendar quarter immediately preceding the date on which said
Participant ceased to be an Employee. The amount of an Award payable to
said Participant shall be that fraction of the Award computed pursuant to
the preceding sentence, the numerator of which is the number of calendar
quarters during the Performance Cycle during all of which said Participant
was an Employee and the denominator of which is the number of full
calendar quarters in the Performance Cycle. The amount of an Award payable
shall be paid within sixty days after said Participant ceases to be an
Employee.
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The
Committee shall take such action as in its discretion may be necessary or
advisable to carry out the provisions of this
Section.
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16.
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Qualifying
Performance-Based
Compensation
.
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16.1
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General
. The
Committee may specify that all or a portion of any Award is intended to
satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code; provided that the performance criteria for any
portion of an Award that is intended by the Committee to satisfy the
requirements for “performance-based compensation” under Section 162(m) of
the Code shall be a measure based on one or more Qualifying Performance
Criteria selected by the Committee and specified at the time such Award is
granted. The Committee shall certify the extent to which any Qualifying
Performance Criteria has been satisfied, and the amount payable as a
result thereof, prior to payment, settlement or vesting of any Award that
is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Notwithstanding
satisfaction of any performance goals, the number of Shares issued or the
amount paid under an Award may be reduced by the Committee on the basis of
such further considerations as the Committee shall
determine.
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16.2
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Qualifying Performance
Criteria
. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following
performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business
unit or Affiliate, either individually, alternatively or in any
combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to
previous years’ results or to a designated comparison group, in each case
as specified by the Committee: Return on Equity (ROE), Return on
Investment (ROI), Return on Assets (ROA), Sales, Earnings Before Interest,
Taxes, Depreciation and Amortization (EBITDA), or Earnings Per Share
(EPS).
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17.
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Effective Date of the
Plan
.
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17.1
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Effective Date
.
The Plan was approved by the Board as of April 13, 2009, but it will only
become effective (the “Effective Date”) when it is approved by the
Company’s stockholders at the annual meeting of the Company’s stockholders
on June 17, 2009 or any adjournment thereof (the “2009 Annual Meeting”).
If this plan is not approved by the affirmative vote of the holders of a
majority of the outstanding Shares of the Company present, or represented
by proxy, and entitled to vote, at the 2009 Annual Meeting in accordance
with the laws of the State of Delaware, this plan shall be
void.
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17.2
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Duration of the
Plan
. The Plan shall remain available for the grant of Awards until
the tenth (10th) anniversary of the Effective Date. Notwithstanding the
foregoing, the Plan may be terminated at such earlier time as the Board
may determine. Termination of the Plan will not affect the rights and
obligations of the Participants and the Company arising under Awards
theretofore granted and then in
effect.
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18.
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Right to Terminate
Employment
. Nothing in the Plan shall confer upon any Participant
the right to continue in the employment of the Company or any Affiliate or
affect any right which the Company or any Affiliate may have to terminate
employment of the Participant.
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19.
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Compliance With Laws;
Listing and Registration of Shares
. All Awards granted under the
Plan (and all issuances of Stock or other securities under the Plan) shall
be subject to all applicable laws, rules and regulations, and to the
requirement that if at any time the Committee shall determine that the
listing, registration or qualification of the Shares covered thereby upon
any securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable
as a condition of, or in connection with, the grant of such Award or the
issue or purchase of Shares thereunder, such Award may not be exercised in
whole or in part, or the restrictions on such Award shall not lapse,
unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
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20.
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Conditions and
Restrictions Upon Securities Subject to Awards
. The Committee may
provide that the Shares subject to or issued under an Award shall be
subject to such further agreements, restrictions, conditions or
limitations as the Committee in its discretion may specify prior to the
grant, vesting or settlement of such Award, including without limitation,
conditions on vesting or transferability, forfeiture or repurchase
provisions and method of payment for the Shares issued upon exercise,
vesting or settlement of such Award (including the actual or constructive
surrender of Shares already owned by the Participant) or payment of taxes
arising in connection with an Award. Without limiting the foregoing, such
restrictions may address the timing and manner of any resales by the
Participant or other subsequent transfers by the Participant of any Shares
issued under an Award, including without limitation (a) restrictions under
an insider trading policy or pursuant to applicable law, (b) restrictions
designed to delay and/or coordinate the timing and manner of sales by
Participant and holders of other Company equity compensation arrangements,
and (c) restrictions as to the use of a specified brokerage firm for such
resales or other transfers.
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21.
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Withholding
Taxes
. The Company or an Affiliate shall be entitled to: (a)
withhold and deduct from future wages of a Participant (or from other
amounts that may be due and owing to a Participant from the Company or an
Affiliate), including all payments under this Plan, or make other
arrangements for the collection of (including through the sale of Shares
otherwise issuable pursuant to the applicable Award), all legally required
amounts necessary to satisfy any and all federal, state, local and foreign
withholding and employment-related tax requirements attributable to an
Award, including, without limitation, the grant, exercise or vesting of,
or payment of dividends with respect to, an Award or a disqualifying
disposition of Common Stock received upon exercise of an Incentive Stock
Option; or (b) require a Participant promptly to remit the amount of such
withholding to the Company before taking any action with respect to an
Award. To the extent specified by the Committee, withholding may be
satisfied by withholding Stock to be received upon exercise or vesting of
an Award or by delivery to the Company of previously owned Stock. In
addition, the Company may reasonably delay the issuance or delivery of
Shares pursuant to an Award as it determines appropriate to address tax
withholding and other administrative
matters.
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22.
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Deferral of
Payments
. The Committee may, in an Award Agreement or otherwise,
provide for the deferred delivery of Shares upon settlement, vesting or
other events with respect to Restricted Stock, or in payment or
satisfaction of an Award of Performance Shares or Performance Units.
Notwithstanding anything herein to the contrary, in no event will any
deferral of the delivery of Shares or any other payment with respect to
any Award be allowed if the Committee determines, in its sole discretion,
that the deferral would result in the imposition of the additional tax
under Section 409A(1)(B) of the
Code.
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23.
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No Liability of
Company
. The Company and any Affiliate which is in existence or
hereafter comes into existence shall not be liable to a Participant,
Beneficiary or any other person as to: (a) the non-issuance or sale of
Stock as to which the Company has been unable to obtain, from any
regulatory body having jurisdiction over the matter, the authority deemed
by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder; (b) any tax consequence to any Participant,
Beneficiary or other person due to the receipt, exercise or settlement of
any Award granted hereunder; or (c) any provision of law or legal
restriction that prohibits or restricts the transfer of Shares issued
pursuant to any Award.
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24.
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Amendment,
Modification and Termination of the Plan.
The Board or Committee
may at any time terminate, suspend or modify the Plan, except that the
Board or Committee will not, without authorization of the stockholders of
the Company, effect any change (other than through adjustment for changes
in capitalization as provided in Section 25) which
will:
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(a)
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increase
the total amount of Stock which may be awarded under the
Plan;
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(b)
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increase
the individual maximum limits in Section
4.3;
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(c)
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change
the class of Employees eligible to participate in the
Plan;
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(d)
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Intentionally
left blank.
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(e)
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Intentionally
left blank.
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(f)
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extend
the duration of the Plan; or
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(g)
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otherwise
amend the Plan in any manner requiring stockholder approval by
law.
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No
termination, suspension, or modification of the Plan will adversely affect
any right acquired by any Participant or any Beneficiary under an Award
granted before the date of termination, suspension, or modification,
unless otherwise agreed to by the Participant; but it will be conclusively
presumed that any adjustment for changes in capitalization provided for in
Section 25 does not adversely affect any
right.
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25.
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Adjustment for Changes
in Capitalization.
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(a)
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In
the event that the number of Shares shall be increased or decreased
through a reorganization, reclassification, combination of shares, stock
split, reverse stock split, spin-off, dividend (other than regular,
quarterly cash dividends), or otherwise, then each Share that has been
authorized for issuance under the Plan, whether such Share is then
currently subject to or may become subject to an Award under the Plan, as
well as the per share limits set forth in Section 4, shall be
appropriately adjusted by the Committee to reflect such increase or
decrease, unless the Company provides otherwise under the terms of such
transaction. The terms of any outstanding Award shall also be adjusted by
the Committee as to price, number of Shares subject to such Award and
other terms to reflect the foregoing
events.
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(b)
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In
the event there shall be any other change in the number or kind of
outstanding Shares, or any stock or other securities into which such
Shares shall have been changed, or for which it shall have been exchanged,
whether by reason of a merger, consolidation or otherwise, then the
Committee shall, in its sole discretion, determine the appropriate
adjustment, if any, to be effected. In addition, in the event of such
change described in this paragraph, the Committee may accelerate the time
or times at which any Award may be exercised and may provide for
cancellation of such accelerated Awards that are not exercised within a
time prescribed by the Committee in its sole
discretion.
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(c)
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No
right to purchase fractional Shares shall result from any adjustment in
Awards pursuant to this Section 25. In case of any such adjustment, the
Shares subject to the Award shall be rounded down to the nearest whole
Share. Notice of any adjustment shall be given by the Company to each
Participant, which shall have been so adjusted and such adjustment
(whether or not notice is given) shall be effective and binding for all
purposes of the Plan.
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PROXY
CARD
LAKELAND
INDUSTRIES, INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF STOCKHOLDERS SCHEDULED TO BE HELD ON JUNE 17,
2009
The
undersigned hereby appoints Christopher J. Ryan and A. John Kreft, and each of
them, as attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to vote all shares of common stock of Lakeland Industries, Inc.
which the undersigned would be entitled to vote at the Annual Meeting of
Stockholders of Lakeland Industries, Inc. scheduled to be held on Wednesday,
June 17, 2009, at 10:00 a.m., local time, at the Holiday Inn, located at
3845 Veterans Memorial Highway, Ronkonkoma, NY 11779 and at any postponements or
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting or any
postponements or adjournments thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE
REVERSE SIDE. UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED
“FOR” ALL NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSAL 2, AND “FOR” PROPOSAL 3
AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT, IF SPECIFIC INSTRUCTIONS
ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
IMPORTANT
– TO BE SIGNED AND DATED ON REVERSE SIDE
Mark the
“Household Option” box on the reverse side to enroll this account to receive
certain future security holder document in a single package per
household
SEE
REVERSE SIDE
*************
LAKELAND
INDUSTRIES, INC.
INSTRUCTIONS
— T
O
VOTE BY MAIL
Simply
sign and date your proxy card and return it in the enclosed postage-paid
envelope.
PLEASE
DETACH PROXY CARD HERE
þ
PLEASE MARK VOTES AS IN
THIS EXAMPLE
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES LISTED IN PROPOSAL 1,
“FOR” PROPOSAL 2, AND “FOR” PROPOSAL 3
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Proposal
1.
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To
elect three (3) directors to serve on our Board of Directors until
the 2012 Annual Meeting of Stockholders and until their respective
successors have been elected and qualified.
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FOR
all nominees
listed
(except as
indicated
to the
contrary)
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WITHHOLD
AUTHORITY
to
vote for
all
nominees
listed
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o
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o
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Nominees:
Eric O. Hallman, Stephen M. Bachelder
and
John J. Collins.
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(INSTRUCTION:
To withhold authority to vote for any individual nominee, check the “FOR”
box and write the nominee’s name in the following space.)
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Proposal
2.
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Approval
of the adoption of the 2009 Lakeland Restricted Stock Program (the
“Incentive Proposal”).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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Proposal
3.
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Ratification
of the selection of Warren, Averett, Kimbrough & Marino LLC as
Lakeland’s independent registered public accounting firm for the fiscal
year ending January 31, 2010.
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FOR
o
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AGAINST
o
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ABSTAIN
o
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To
transact such other business as may properly come before the meeting, or
any adjournments, continuations or postponements thereof.
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The
undersigned hereby acknowledges receipt of Lakeland’s Annual Report for
the fiscal year ended January 31, 2009 and the accompanying Notice of
Annual Meeting and Proxy Statement and hereby revokes any proxy or proxies
heretofore given with respect to the matters set forth above. Date:
, 2009
_____________________________________________________
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_____________________________________________________
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Signatures(s)
of Stockholders
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IMPORTANT:
Please sign as name(s) appear on this proxy and date this proxy. If a
joint account, each joint owner should sign. If signing for a corporation,
trust or partnership or as agent, attorney or fiduciary, indicate the
capacity in which you are signing.
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