UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
SCHEDULE
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Systemax
Inc.
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Registrant as Specified in Its Charter)
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Systemax Inc.
11
Harbor Park Drive
Port
Washington, New York 11050
April 30,
2009
Dear
Stockholders:
You are
cordially invited to attend the 2009 Annual Meeting of Stockholders of Systemax
Inc. (the “Company”) which will be held at the Company’s corporate offices,
located at 11 Harbor Park Drive, Port Washington, New York at 2:00 p.m. on
Friday, June 12, 2009. Your Board of Directors looks forward to
greeting those stockholders who are able to attend. On the following
pages you will find the formal Notice of Annual Meeting and Proxy
Statement.
Whether or not you plan to attend the
meeting in person, it is important that your shares be represented and voted at
the Annual Meeting. Accordingly, please vote your shares over the
internet at
www.proxyvote.com
or by telephone at (800) 690-6903
until 11:59 PM (EDT) on June 11, 2009, or if you received a paper proxy card,
date, sign and return the proxy card as soon as possible in the envelope
provided or to the address set forth in the voting instructions
therein. Your cooperation will ensure that your shares are
voted.
I hope
that you will attend the Annual Meeting, and I look forward to seeing you
there.
Sincerely,
RICHARD
LEEDS
Chairman and Chief
Executive Officer
Systemax
Inc.
11
Harbor Park Drive
Port
Washington, New York 11050
_______________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held On June 12, 2009
Dear
Stockholders:
The 2009
Annual Meeting of the Stockholders of Systemax Inc. (the “Company”) will be held
at the Company’s offices, 11 Harbor Park Drive, Port Washington, New York, on
Friday, June 12, 2009 at 2:00 p.m. for the following purposes, as more fully
described in the accompanying proxy statement:
1.
|
To
elect the Company’s Board of
Directors;
|
2.
|
To
consider and vote upon a proposal to ratify the appointment of Ernst &
Young LLP as the Company’s independent registered public accountants;
and
|
3.
|
To
transact such other business as may properly come before the meeting and
any and all adjournments or postponements
thereof.
|
The Board
of Directors has fixed the close of business on April 22, 2009 as the record
date for the determination of the stockholders entitled to notice of and to vote
at the meeting and at any adjournment or postponement thereof.
Stockholders are invited to attend the
meeting. Whether or not you expect to attend, we urge you to vote
your shares. YOU CAN VOTE YOUR SHARES OVER THE INTERNET AT
www.proxyvote.com
OR BY TELEPHONE AT (800) 690-6903
UNTIL 11:59 PM (EDT) ON JUNE 11, 2009. IF YOU RECEIVED A PAPER PROXY CARD BY
MAIL, YOU MAY ALSO VOTE BY SIGNING, DATING, AND RETURNING THE PROXY CARD IN THE
ENVELOPE PROVIDED OR TO THE ADDRESS SET FORTH IN THE VOTING INSTRUCTIONS
CONTAINED THEREIN. If you attend the meeting, you may vote your shares in
person, which will revoke any previously executed proxy.
If your
shares are held of record by a broker, bank or other nominee and you wish to
attend the meeting, you must obtain a letter from the broker, bank or other
nominee confirming your beneficial ownership of the shares and bring it to the
meeting. In order to vote your shares at the meeting, you must obtain
from the record holder a proxy issued in your name.
Regardless
of how many shares you own, your vote is very important. PLEASE VOTE
YOUR SHARES OVER THE INTERNET OR BY TELEPHONE OR IF YOU RECEIVED A PAPER PROXY
CARD BY MAIL, SIGN, DATE, AND RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED
TODAY.
Sincerely,
CURT S.
RUSH
General Counsel and
Secretary
Port
Washington, New York
April 30,
2009
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 12, 2009.
Our
Proxy Statement and Annual Report are available online at:
www.proxyvote.com
Systemax
Inc.
11
Harbor Park Drive
Port
Washington, New York 11050
________________________
PROXY
STATEMENT
________________________
This
proxy statement is furnished in connection with the solicitation of proxies on
behalf of the Board of Directors (the “Board”) of Systemax Inc., a Delaware
corporation (the “Company”), for the 2009 Annual Meeting of Stockholders of the
Company to be held on June 12, 2009 (the “Annual Meeting”). The
Company has made the proxy materials available to stockholders of record as of
the close of business on April 22, 2009 at
www.proxyvote.com
beginning on April 30, 2009 and is first mailing such materials to stockholders
that requested printed copies of such materials on or about April 30,
2009.
You can
ensure that your shares are voted at the meeting by voting your shares over the
internet at
www.proxyvote.com
or by telephone at
(800) 690-6903 until 11:59 PM (EDT) on June 11, 2009 or by signing, dating and
promptly returning a proxy, if you received a proxy by mail, in the envelope
provided or to the address contained in the voting instructions
therein. Voting your shares over the internet, by telephone or by sending
in a signed proxy will not affect your right to attend the meeting and vote in
person. Stockholders of record may revoke their proxy at any time
before it is voted by notifying the Company’s Transfer Agent, American Stock
Transfer & Trust Company, 59 Maiden Lane, New York, NY 10038, Attention:
Proxy Department, in writing, or by executing and delivering a subsequently
dated proxy to the address contained in the voting instructions in the proxy,
which revokes your previously executed proxy. Beneficial holders
whose shares are held of record by a broker, bank or other nominee may revoke
their proxy at any time before it is voted by following the instructions of
their broker, bank or other nominee.
The
Company’s principal executive offices are located at 11 Harbor Park Drive, Port
Washington, New York 11050.
Voting
Procedures
Proxies
will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted for proposals 1 and
2. If any other matters properly come before the Annual Meeting, the
persons named in the proxy will vote at their discretion. Under the
Delaware General Corporation Law and the Company’s Amended and Restated
Certificate of Incorporation and By-Laws, (1) the affirmative vote of a
plurality of the outstanding shares of common stock of the Company (the
“Shares”) entitled to vote and present, in person or by properly executed proxy,
at a meeting at which a quorum is present will be required to elect the
nominated directors of the Board (Proposal 1) and (2) the affirmative vote of a
majority of the outstanding Shares entitled to vote and present, in person or by
properly executed proxy, at a meeting at which a quorum is present will be
required to ratify the appointment of Ernst & Young LLP as the Company’s
independent registered public accountants (Proposal 2).
A quorum
is representation in person or by proxy at the Annual Meeting of at least a
majority of the outstanding Shares. Abstentions will be treated as
votes cast on particular matters as well as shares present and represented for
purposes of establishing a quorum, with the result that an abstention has the
same effect as a negative vote. Where nominee record holders do not
vote on specific issues because they did not receive specific instructions on
such issues from the beneficial owners, such broker non-votes will not be
treated as votes cast on a particular matter, and will therefore have no effect
on the vote, but will be treated as shares present or represented for purposes
of establishing a quorum.
If your
shares are held through a broker, bank or other nominee, custodian, you must
provide voting instructions to such record holder in accordance with such record
holder’s requirements in order to ensure that your shares are properly
voted. Under the rules of the New York Stock Exchange, member brokers
who do not receive instructions from beneficial owners will be allowed to vote
on the election of directors of the Board, or the Directors, and on the
ratification of the independent accountants.
A list of
stockholders of the Company satisfying the requirements of Section 219 of the
Delaware General Corporation Law shall be available for inspection for any
purpose germane to the Annual Meeting during normal business hours at the
offices of the Company at least ten days prior to the Annual
Meeting.
On April
22, 2009, the record date, there were outstanding and entitled to vote
(excluding Company treasury shares) 36,628,782 Shares entitled to one vote per
share. Stockholders will not be entitled to appraisal rights in
connection with any of the matters to be voted on at the Annual
Meeting.
Internet
Posting of Proxy Materials
Why
did I receive a notice regarding the internet availability of proxy materials
instead of paper copies of the proxy materials?
This
year, we are using the Securities and Exchange Commission, or SEC, "notice only"
rule that allows us to furnish our proxy materials over the internet to our
stockholders instead of mailing paper copies of those materials to each
stockholder. As a result, beginning on or about April 30, 2009, we
sent to most of our stockholders by mail a notice containing instructions on how
to access our proxy materials over the internet and vote online. This
notice is not a proxy card and cannot be used to vote your shares. If
you received only a notice this year, you will not receive paper copies of the
proxy materials unless you request the materials by following the instructions
on the notice or on the website referred to in the notice.
The proxy
statement and annual report on Form 10-K for fiscal year 2008 are available
at
www.proxyvote.com
.
If you
own shares of common stock in more than one account—for example, in a joint
account with your spouse and in your individual brokerage account—you may have
received more than one notice. To vote all of your shares by proxy,
please follow each of the separate proxy voting instructions that you received
for your shares of common stock held in each of your different
accounts.
How
can I receive my proxy materials electronically in the future?
Although
you may request paper copies of the proxy materials, we would prefer to send
proxy materials to stockholders electronically. Stockholders who sign
up to receive proxy materials electronically will receive an e-mail prior to
next year’s annual meeting with links to the proxy materials, which may give
them faster delivery of the materials and will help us save printing and mailing
costs and conserve natural resources. Your election to receive proxy
materials by e-mail will remain in effect until you terminate your
election. To receive proxy materials electronically by e-mail in the
future, follow the instructions described in the notice.
What
is “householding”?
SEC rules
allow a single copy of the proxy materials or the notice of internet
availability of proxy materials to be delivered to multiple stockholders sharing
the same address and last name, or who we reasonably believe are members of the
same family in a manner provided by such rules. This practice is
referred to as “householding” and can result in significant savings of paper and
mailing costs. In accordance with SEC rules, stockholders sharing the
same address and last name, or who we reasonably believe are members of the same
family, will receive one copy of the proxy materials or notice of internet
availability of proxy materials.
Proposal
No. 1 on Proxy Card
At the
Annual Meeting, eight Directors are to be elected to serve until their
successors have been elected and qualified. Information regarding
such nominees is set forth below.
The
accompanying proxy will be voted for the election of the Board’s nominees unless
contrary instructions are given. If any Board nominee is unable to
serve, which is not anticipated, the persons named as proxies intend to vote,
unless the Board of Directors reduces the number of nominees, for such other
person or persons as the Board of Directors may designate.
Except as
otherwise indicated herein, each of the nominees has served as a director during
fiscal year 2008. Mr. Reinhold, the Company’s Executive Vice
President and Chief Financial Officer, was elected as a Director on March 3,
2009. Ms. Adler-Kravecas has been nominated by the Board for election
at the Annual Meeting. If voting by proxy with respect to the
election of Directors, stockholders may vote in favor of all nominees, withhold
their votes as to all nominees or withhold their votes for specific
nominees.
There were no arrangements
or understandings between any Director or nominee for Director and any other
person pursuant to which such person was selected as a Director or nominee for
Director.
There are no family relationships among any of our
Directors executive officers or nominees for Director or executive officer,
except that Richard Leeds, Bruce Leeds and Robert Leeds are
brothers.
Nominees
Name of Nominee
|
Principal Occupation
|
Age
|
Director Since
|
Richard
Leeds
|
Chairman
and Chief Executive Officer of the Company
|
49
|
April
1995
|
Bruce
Leeds
|
Vice
Chairman of the Company
|
53
|
April
1995
|
Robert
Leeds
|
Vice
Chairman of the Company
|
53
|
April
1995
|
Gilbert
Fiorentino
|
Chief
Executive of the Company’s Technology Products Group
|
49
|
May
2004
|
Lawrence
P. Reinhold
|
Executive
Vice President and Chief Financial Officer of the Company
|
49
|
March
2009
|
Robert
D. Rosenthal
|
Chairman
and Chief Executive Officer of First Long Island Investors
LLC
|
60
|
July
1995
|
Stacy
S. Dick
|
Managing
Director of Rothschild Inc.
|
52
|
November
1995
|
Marie
Adler-Kravecas
|
Retired
President of Myron Corporation
|
49
|
N/A
|
Richard
Leeds joined the Company in 1982 and has served as Chairman and Chief Executive
Officer of the Company since April 1995. Mr. Leeds graduated from
New York University in 1982 with a B.S. degree in
Finance.
Bruce
Leeds joined the Company in 1977 and has served as Vice Chairman of the Company
since April 1995. Mr. Leeds also served as President of International
Operations of the Company from 1990 until March 2005. Mr. Leeds
graduated from Tufts University in 1977 with a B.A. degree in
Economics.
Robert
Leeds joined the Company in 1977 and has served as Vice Chairman of the Company
since April 1995. Mr. Leeds also served as President of Domestic
Operations of the Company from April 1995 until March 2005. Mr. Leeds
graduated from Tufts University in 1977 with a B.S. degree in Computer
Applications Engineering.
Gilbert
Fiorentino joined the Company in 1995 as President of Tiger Direct, Inc. a
subsidiary of the Company and has served as Chief Executive of the Company’s
Technology Products Group and as a Director of the Company since
2004. Mr. Fiorentino graduated from the University of Miami in 1981
with a B.S. degree in Economics and graduated from the University of Miami Law
School in 1984.
Lawrence
P. Reinhold joined the Company in January 2007 and has served as Executive Vice
President and Chief Financial Officer of the Company since that
date. In addition, Mr. Reinhold has served as a Director since March
2009. Mr. Reinhold was a business, finance and accounting consultant
in 2006. Previously he was Executive Vice President and Chief
Financial Officer of Greatbatch, Inc., a publicly traded developer and
manufacturer of components used in implantable medical devices from 2002 through
2005; Executive Vice President and Chief Financial Officer of Critical Path,
Inc. a publicly traded communications software company
in 2001;
and a Managing Partner of PricewaterhouseCoopers LLP with responsibility for its
Technology, Information, Communications, Media and Entertainment industry
practice in the Midwestern United States from 1998 until 2000 (and held other
positions at that firm from 1982 until 2000). He received his B.S.
degree
summa cum laude
in
Business Administration
in 1982 and his M.B.A. in 1987 from San
Diego State University and received his Certified Public Accountant license in
California in 1984.
Robert D.
Rosenthal has served as a Director of the Company since July 1995. He
has been the lead independent director since October 2006. Mr.
Rosenthal is Chairman and Chief Executive Officer of First Long Island Investors
LLC, which he co-founded in 1983. Mr. Rosenthal is a 1971
cum laude
graduate of Boston
University and a 1974 graduate of Hofstra University Law School.
Stacy S.
Dick has served as a Director of the Company since November 1995. Mr.
Dick became a Managing Director of Rothschild Inc. in January 2004 and has
served as an executive of other entities controlled by Rothschild family
interests since March 2001. Mr. Dick graduated from Harvard
University with an A.B. degree
magna cum laude
in 1978 and a
Ph.D. in Business Economics in 1983. He has served as an adjunct
professor of finance at the Stern School of Business (NYU) since
2004.
Marie
Adler-Kravecas joined Myron Corporation, an international, business-to-business
direct marketing company, in 1984 and served as President from 1999 to
2004. In 2005, Ms. Adler-Kravecas founded Wellconnected, LLC, a
consumer direct marketing company which was sold in 2008. Ms.
Adler-Kravecas is currently retired. Ms. Adler-Kravecas received a
B.S. degree in Marketing and Business Administration from George Washington
University in 1981. She has been a member of the Young President’s
Organization since 2003 and The Executive Group from 2004 to
2008. Ms. Adler-Kravecas has been on the Board of the Children’s Aid
and Family Service since 2004.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE
DIRECTOR
NOMINEES, WHICH IS DESIGNATED AS PROPOSAL NO. 1.
CORPORATE
GOVERNANCE
Independence
of Directors
In
connection with its annual review of director independence, the Board has
determined that each of the following Directors or nominees of the Company meets
the standards for independence required by the New York Stock Exchange and SEC
rules: Robert D. Rosenthal, Stacy S. Dick and Marie
Adler-Kravecas. In addition, Ann Leven met the standards for
independence in 2008. The Board made this determination based on (a)
the absence of any of the express disqualifying criteria relating to director
independence set forth in Section 303A of the Corporate Governance Rules of the
New York Stock Exchange and (b) the criteria for independence required of audit
committee directors by Section 10A(m)(3) of the Securities Exchange Act of 1934,
as amended, which we refer to as the Exchange Act.
As a
“controlled company,” the Company is exempt from the New York Stock Exchange
requirement that listed companies have a majority of independent
directors. A “controlled company” is defined by the New York Stock
Exchange as a company of which more than 50% of the voting power is held by an
individual, group or other company. The Company is a “controlled
company” in that more than 50% of the voting stock of the Company, in the
aggregate, is owned by certain members of the Leeds family (including
Richard Leeds, Robert Leeds and Bruce Leeds, each of whom is an officer and
Director of the Company) and certain Leeds’ family trusts (collectively, the
“Leeds Group”). The members of the Leeds Group have entered into a
Stockholders Agreement with respect to certain Shares they each
own. See “Transactions With Related Persons” below.
Meetings
of Non-Management Directors
The New
York Stock Exchange requires the “non-management directors” of a NYSE-listed
company to meet at regularly scheduled executive sessions without management and
to disclose in their annual proxy statements (1) the name of the non-management
director who is chosen to preside at all regularly-scheduled executive sessions
of the non-management members of the board of directors and (2) a method for
interested parties to communicate directly with the presiding director or with
the non-management directors as a group. The Board’s non-management directors
meet separately in executive sessions, chaired by the Lead Independent Director
(currently Robert D. Rosenthal), at least quarterly.
Corporate
Governance Guidelines
The
Company has adopted Corporate Governance Guidelines, which are available on the
Corporate Governance page of our website at
www.systemax.com
. A
copy can also be obtained by writing to Systemax Inc., Attention: Board of
Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY
11050.
Corporate
Ethics Policy
The
Company has adopted a Corporate Ethics Policy that applies to all employees of
the Company including the Company’s Chief Executive Officer, Chief Financial
Officer and Controller, its principal accounting officer. The
Corporate Ethics Policy is designed to deter wrongdoing and to promote honest
and ethical conduct, compliance with applicable laws and regulations, full and
accurate disclosure of information requiring public disclosure and the prompt
reporting of Policy violations. The Company’s Corporate Ethics Policy
is available on the Company’s website (
www.systemax.com
). A
copy can also be obtained by writing to Systemax Inc., Attention: Board of
Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY
11050. We intend to disclose on our website, in accordance with
applicable laws and regulations, amendments to, or waivers from, our Corporate
Ethics Policy.
Stockholder
Communications with Directors
Stockholders
of the Company who wish to communicate with the Board or any individual Director
can write to Systemax Inc., Attention: Investor Relations, 11 Harbor Park Drive,
Port Washington, NY 11050. Your letter should indicate that you are a
stockholder of the Company. Depending on the subject matter of your
inquiry, management will forward the communication to the Director or Directors
to whom it is addressed; attempt to handle the inquiry directly, as might be the
case if you request information about the Company or it is a stockholder related
matter; or not forward the communication if it is primarily commercial in nature
or if it relates to an improper or irrelevant topic. At each Board
meeting, a member of management presents a summary of all communications
received since the last meeting that were not forwarded and makes those
communications available to any requesting Director.
Interested
parties wishing to communicate directly with the Lead Independent Director or
the non-management members of the Board as a group should address their inquires
by mail sent to the attention of Robert D. Rosenthal, Lead Independent Director,
at the Company’s principal executive office located at 11 Harbor Park Drive,
Port Washington, NY 11050. All communications will be promptly
relayed to the appropriate recipient(s).
Interested
parties wishing to communicate directly with the Chairman of the Audit Committee
or the Audit Committee as a group should address their inquires by mail to the
attention of the Audit Committee at the Company’s principal executive office
located at 11 Harbor Park Drive, Port Washington, NY 11050. All
communications will be promptly relayed to the appropriate
recipient(s).
Director
Attendance at Annual Meetings
At last
year’s annual meeting, held on June 12, 2008, all of the Directors attended the
meeting. The Company does not have a policy with regards to
Directors’ attendance at annual stockholder meetings.
Board
Meetings
During
fiscal year 2008, the Board of Directors held five meetings, the Audit Committee
held ten meetings, the Compensation Committee held four meetings, the
Nominating/Corporate Governance Committee held four meetings and the Executive
Committee held no meetings. All of the Directors attended at least
75% of all of the meetings of the Board and the respective committees of the
Board of which they were members.
Committees of the
Board
The Board
of Directors has the following standing committees:
Audit
Committee
The Audit
Committee is appointed by the Board to assist the Board with oversight of (i)
the integrity of the financial statements of the Company, (ii) the Company’s
compliance with legal and regulatory requirements, (iii) the independence and
qualifications of the Company’s external auditors, and (iv) the performance of
the Company’s internal audit function and external auditors. It is
the Audit Committee’s responsibility to retain or terminate the Company’s
independent registered public accountants, who audit the Company’s financial
statements, to prepare the Audit Committee report that the Securities and
Exchange Commission requires to be included in the Company’s Annual Proxy
Statement. (See “Report of the Audit Committee” below.) As
part of its activities, the Audit Committee meets with the Company’s independent
registered public accountants at least annually to review the scope and results
of the annual audit and quarterly to discuss the review of the quarterly
financial results. In addition, the Audit Committee receives and
considers the independent registered public accountants’ comments and
recommendations as to internal controls, accounting staff, management
performance and auditing procedures. The Audit Committee is also
responsible for establishing procedures for (i) the receipt, retention and
treatment of complaints received by the Company regarding accounting, internal
accounting controls and auditing matters and (ii) the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
The Audit
Committee Charter was amended in February 2009. A copy of the Audit Committee
Charter is available on the Company’s website,
www.systemax.com
, or can be
obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate
Governance), 11 Harbor Park Drive, Port Washington, NY 11050.
The
current members of the Audit Committee are Stacy S. Dick, Robert D. Rosenthal
and Ann Leven (Chairperson). Ms. Leven has informed the Company that
she intends to retire from the Board effective as of June 12, 2009, the date of
the Annual Meeting. It is anticipated that if Ms. Adler-Kravecas is
elected to the Board at the Annual Meeting, she will serve on the Audit
Committee. None of the current members or nominees of the Audit
Committee are officers or employees of the Company. The Committee
meets regularly both with and without management participation. As
noted above, in the judgment of the Board, each of the members of the Audit
Committee meets the standards for independence required by the rules of the
Securities and Exchange Commission and New York Stock Exchange. In
addition, the Board has determined that Mr. Dick and Mr. Rosenthal are “audit
committee financial experts” as defined by regulations of the Securities and
Exchange Commission.
The
Company does not have a standing policy on the maximum number of audit
committees of other publicly owned companies on which the members of the Audit
Committee may serve. However, if a member of the Audit Committee
simultaneously serves on the audit committee of more than two other
publicly-owned companies, the Board must determine whether such simultaneous
service would impair the ability of such member to effectively serve on the
Audit Committee. Any such determination will be disclosed in the
Company’s annual proxy statement.
Nominating/Corporate
Governance Committee
The
Nominating/Corporate Governance Committee’s responsibilities include, among
other things (i) identifying individuals qualified to become Board members and
recommending to the Board nominees to stand for election at any meeting of
stockholders, (ii) identifying and recommending nominees to fill any vacancy,
however created, in the Board, and (iii) developing and recommending to the
Board a code of business conduct and ethics and a set of corporate governance
principles (including director qualification standards, responsibilities and
compensation) and periodically reviewing the code and principles. The
current members of the Nominating/Corporate Governance Committee are Robert D.
Rosenthal (Chairman), Stacy S. Dick and Ann Leven. It is anticipated that if Ms.
Adler-Kravecas is elected to the Board at the Annual Meeting, she will serve on
the Nominating/Corporate Governance Committee. In nominating candidates to
become Board members, the Committee shall take into consideration such factors
as it deems appropriate, including the experience, skill, integrity and
background of the candidates. The Committee may consider candidates
proposed by management or stockholders but is not required to do
so. The Committee does not have any formal policy with regard to the
consideration of any Director candidates recommended by the security holders or
any minimum qualifications or specific procedure for identifying and evaluating
nominees for Director as the Board does not believe that such a formalistic
approach is necessary or appropriate at this time.
The
Nominating/Corporate Governance Committee Charter was amended in February 2009.
The Nominating/Corporate Governance Committee Charter is available on the
Company’s website (
www.systemax.com
) or can be
obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate
Governance), 11 Harbor Park Drive, Port Washington, NY 11050.
Stockholder
Nominations for Director
Stockholders may propose
candidates for Board membership by writing to Systemax Inc., Attention:
Nominating/Corporate Governance Committee, 11 Harbor Park Drive, Port
Washington, NY 11050 so that the nomination is received by the Company by
February 12, 2010 to be considered for the 2010 annual
meeting.
Any such proposal shall contain the name, Company
security holdings and contact information of the person making the nomination;
the candidate's name, address and other contact information; any direct or
indirect holdings of the Company's securities by the nominee; any information
required to be disclosed about directors under applicable securities laws and/or
stock exchange requirements; information regarding related party transactions
with the Company and/or the stockholder submitting the nomination; any actual or
potential conflicts of interest; the nominee's biographical data, current public
and private company affiliations, employment history and qualifications and
status as "independent" under applicable securities laws and stock exchange
requirements.
Nominees proposed by
stockholders will receive the same consideration as other
nominees.
Compensation
Committee
The
Compensation Committee’s responsibility is to review and approve corporate goals
relevant to the compensation of the Chief Executive Officer and, after an
evaluation of the Chief Executive Officer’s performance in light of such goals,
to set the compensation of the Chief Executive Officer. The
Compensation Committee also approves (a) the annual compensation of the other
executive officers of the Company, (b) the annual compensation of certain
subsidiary managers, and (c) all individual stock-based incentive
grants. The Committee is also responsible for reviewing and making
periodic recommendations to the Board with respect to the general compensation,
benefits and perquisite policies and practices of the Company including the
Company’s incentive-based and equity-based compensation plans. The
Compensation Committee also prepares an annual report on executive compensation
for inclusion in the annual proxy statement. (See “Compensation
Committee Report to Stockholders” below.) The current members of the
Compensation Committee are Stacy S. Dick (Chairman), Robert D. Rosenthal and Ann
Leven. It is anticipated that if Ms. Adler-Kravecas is elected to the Board at
the Annual Meeting, she will serve on the Compensation
Committee.
The
Compensation Committee Charter was amended in February 2009. The Compensation
Committee Charter is available on the Company’s website (
www.systemax.com
) or can be
obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate
Governance), 11 Harbor Park Drive, Port Washington, NY 11050.
Executive
Committee
The
Executive Committee consists of the Chairman of the Board and any Vice Chairman
and such other Directors as may be named thereto by the Board. The
current members of the Executive Committee are Messrs. Richard Leeds, Robert
Leeds, Bruce Leeds and Robert D. Rosenthal, the Lead Independent Director. Among
other duties as may be assigned by the Board from time to time, the Executive
Committee is authorized to oversee the operations of the Company, supervise the
executive officers of the Company, review and make recommendations to the Board
regarding the strategic direction of the Company and review and make
recommendations to the Board regarding all possible acquisitions or other
significant business transactions. The Executive Committee is also
authorized to manage the affairs of the Corporation between meetings of the
Board; the Committee has all of the powers of the Board not inconsistent with
any provisions of the Delaware General Corporation Law, the Company’s
Certificate of Incorporation or By-Laws or other resolutions adopted by the
Board but does not generally exercise such authority.
REPORT OF THE AUDIT
COMMITTEE
*
The Audit
Committee of the Board operates under its charter, which was originally adopted
by the Board in 2000 and revised in February 2003, August 2006 and February
2009. Management is responsible for the Company’s internal accounting
and financial controls, the financial reporting process, the internal audit
function and compliance with the Company’s policies and legal
requirements. The Company’s independent registered public accountants
are responsible for performing an independent audit of the Company’s
consolidated financial statements in accordance with standards of the Public
Company Accounting Oversight Board (United States) and for issuance of a report
thereon; they also perform limited reviews of the Company’s unaudited quarterly
financial statements.
The Audit
Committee’s responsibility is to engage the independent registered public
accountants, monitor and oversee these accounting, financial and audit processes
and report its findings to the full Board. It also investigates
matters related to the Company’s financial statements and controls as it deems
appropriate. In the performance of these oversight functions, the
members of the Audit Committee rely upon the information, opinions, reports and
statements presented to them by Company management and by the independent
registered public accountants, as well as by other experts that the Committee
hires.
The
Committee reviewed and discussed the audited consolidated financial statements
of the Company for fiscal year 2008 with management, who represented that the
Company’s consolidated financial statements for fiscal 2008 were prepared in
accordance with U.S. generally accepted accounting principles. It
discussed with Ernst & Young LLP, the Company’s independent registered
public accountants for fiscal 2008, those matters required to be reviewed
pursuant to Statement of Accounting Standards No. 61 (“Communication with Audit
Committees”), as amended by Statement of Accounting Standards No. 90 (Audit
Committee Communications). The Committee has received from Ernst
& Young LLP written independence disclosures and the letter required by
Independence Standards Board Standard No. 1 (“Independence Discussions with
Audit Committees”) and had a discussion with Ernst & Young LLP regarding
their independence.
Based on
the review of the representations of management, the discussions with management
and the independent registered public accountants and the review of the Report
of Ernst & Young LLP, Independent Registered Public Accounting Firm, to the
Committee, the Audit Committee recommended to the Board that the financial
statements of the Company for fiscal year 2008 as audited by Ernst & Young
LLP be included in the Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
AUDIT COMMITTEE
|
Ann Leven (Chair)
|
Stacy
S. Dick
|
Robert D. Rosenthal
|
_____________________________
*
|
The
information contained in this Audit Committee Report shall not be deemed
to be “soliciting material” or to be “filed” with the SEC, nor shall such
information be incorporated by reference into any filings under the
Securities Act of 1933, as amended, which we refer to as the Securities
Act, or under the Exchange Act, except to the extent that we specifically
incorporate this information by reference into any such
filing.
|
EXECUTIVE
OFFICERS
There are no arrangements or
understandings between any officer and any other person pursuant to which such
person was selected as an officer.
The
following table sets forth certain information with respect to the executive
officers of the Company as of April 22, 2009.
Name
|
Age
|
Office
|
Richard Leeds
|
49
|
Chairman
and Chief Executive Officer; Director
|
Bruce Leeds
|
53
|
Vice
Chairman; Director
|
Robert Leeds
|
53
|
Vice
Chairman; Director
|
Gilbert Fiorentino
|
49
|
Chief
Executive of the Company’s Technology Products Group;
Director
|
Lawrence P. Reinhold
|
49
|
Executive
Vice President and Chief Financial Officer; Director
|
Thomas Axmacher
|
49
|
Vice
President and Controller
|
Curt S. Rush
|
55
|
General
Counsel and Secretary
|
For
biographical information about Richard Leeds, Bruce Leeds, Robert Leeds, Gilbert
Fiorentino and Lawrence Reinhold, see pages 3-4 of this Proxy
Statement.
Thomas
Axmacher was appointed Vice President and Controller of the Company effective
October 2, 2006. He was previously Chief Financial Officer of
Curative Health Services, Inc., a publicly traded health care
company. He held that position from 2001 to 2006. From
1991 to 2001 Mr. Axmacher served as Vice President and Controller of that
company. From 1986 to 1991 Mr. Axmacher served as Vice President and
Controller of Tempo Instrument Group, an electronics
manufacturer. Mr. Axmacher received his B.S. degree in Accounting in
1982 from Albany University and his M.B.A. in 1992 from Long Island
University.
Curt S.
Rush has been General Counsel and Secretary of the Company since
1996. Prior to joining the Company, Mr. Rush was employed from 1993
to 1996 as Corporate Counsel to Globe Communications Corp. and from 1990 to 1993
as Corporate Counsel to the Image Bank, Inc. Prior to that, he was a
corporate attorney with the law firms of Shereff, Friedman, Hoffman &
Goodman and Schnader, Harrison, Segal & Lewis. Mr. Rush graduated
from Hunter College in 1981 with a B.A. degree in Philosophy and graduated with
honors from Brooklyn Law School in 1984 where he was Second Circuit Review
Editor of the Law Review. He was admitted to the Bar of the State of
New York in 1985.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The
following table provides certain information regarding the beneficial ownership
of the Shares as of April 22, 2009, by (i) each of the Directors, (ii) each
of the officers listed in the summary compensation table, (iii) all current
Directors and officers as a group and (iv) each person known to the Company
to be the beneficial owner of more than 5% of any class of the Company’s voting
securities.
As used
in this table “beneficial ownership” means the sole or shared power to vote or
direct the voting or to dispose or direct the disposition of any
security. A person is deemed as of any date to have “beneficial
ownership” of any security that such person owns or has a right to acquire
within 60 days after such date. Any security that any person named
above has the right to acquire within 60 days is deemed to be outstanding for
purposes of calculating the ownership percentage of such person, but is not
deemed to be outstanding for purposes of calculating the ownership percentage of
any other person. Unless otherwise stated, each person owns the
reported shares directly and has the sole right to vote and determine whether to
dispose of such shares.
A total
of 36,628,782 Shares were outstanding as of April 22, 2009.
Directors
and Executive Officers
|
|
Amount
and
Nature
of
Beneficial
Ownership
(a)
|
|
|
Percent
of Class
|
|
Richard
Leeds
(1)
|
|
|
12,702,100
|
|
|
|
34.7
|
%
|
Bruce
Leeds
(2)
|
|
|
9,200,835
|
|
|
|
25.1
|
%
|
Robert
Leeds
(3)
|
|
|
9,948,721
|
|
|
|
27.2
|
%
|
Gilbert
Fiorentino
(4)
|
|
|
1,317,763
|
|
|
|
3.6
|
%
|
Stacy
S. Dick
(5)
|
|
|
24,228
|
|
|
|
*
|
|
Robert
D. Rosenthal
(6)
|
|
|
50,228
|
|
|
|
*
|
|
Ann
Leven
(7)
|
|
|
18,228
|
|
|
|
*
|
|
Lawrence
P. Reinhold
(8)
|
|
|
67,500
|
|
|
|
*
|
|
All
current Directors and executive officers of the Company (10
persons)
|
|
|
26,339,473
|
|
|
|
71.9
|
%
|
|
|
|
|
|
|
|
|
|
Other Beneficial Owners of 5% or More of the
Company’s Voting Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
(a)
|
Amounts
listed in this column may include shares held in partnerships or trusts
that are counted in more than one individual’s
total.
|
(1)
|
Includes
3,136,666 shares owned by Mr. Leeds directly, 2,449,845 shares owned by
the Richard Leeds 2008 GRAT and 183,306 shares owned by the Richard Leeds
2007 GRAT. Also includes 1,838,583 shares owned by a limited
partnership of which Richard Leeds is the general partner, 235,850 shares
owned by a limited partnership of which a limited liability company
controlled by Mr. Leeds is the general partner, 4,338,050 shares owned by
trusts for the benefit of his brothers’ children for which Richard Leeds
acts as co-trustee and 519,800 shares owned by a limited partnership in
which Richard Leeds has an indirect pecuniary interest. Mr.
Leeds’ mailing address is Richard Leeds, c/o Systemax Inc., 11 Harbor Park
Drive, Port Washington, NY 11050.
|
(2)
|
Includes
3,137,166 shares owned by Mr. Leeds directly, 1,736,229 shares owned by
the Bruce Leeds 2008 GRAT and 183,306 shares owned by the Bruce Leeds
2007 GRAT. Also includes 3,624,334 shares owned by trusts for
the benefit of his brothers’ children for which Bruce Leeds acts as
co-trustee and 519,800 shares owned by a limited partnership in which
Bruce Leeds has an indirect pecuniary interest. Mr. Leeds’
mailing address is Bruce Leeds, c/o Systemax Inc., 11 Harbor Park Drive,
Port Washington, NY 11050.
|
(3)
|
Includes
2,137,168 shares owned by Mr. Leeds directly, 3,063,651 shares owned by
the Robert Leeds 2008 GRAT and 229,826 shares owned by the Robert Leeds
2007 GRAT. Also includes 3,998,276 shares owned by trusts for
the benefit of his brothers’ children for which Robert Leeds acts as
co-trustee and 519,800 shares owned by a limited partnership in which
Robert Leeds has an indirect pecuniary interest. Mr. Leeds’
mailing address is Robert Leeds, c/o Systemax Inc., 11 Harbor Park Drive,
Port Washington, NY 11050.
|
(4)
|
Includes
options to acquire 500,003 shares that are currently exercisable pursuant
to the terms of the Company’s 1995 and 1999 Long-Term Stock Incentive
Plan.
|
(5)
|
Includes
options to acquire a total of 19,500 shares that are exercisable
immediately pursuant to the terms of the Company’s 1995 Stock Plan for
Non-Employee Directors
|
(6)
|
Includes
options to acquire a total of 11,000 shares that are exercisable
immediately pursuant to the terms of the Company’s 1995 Stock Plan for
Non-Employee Directors.
|
(7)
|
Includes
options to acquire a total of 13,000 shares that are exercisable
immediately pursuant to the terms of the Company’s 1995 Stock Plan for
Non-Employee Directors.
|
(8)
|
Includes
options to acquire 62,500 shares that are currently exercisable pursuant
to the terms of the Company’s 1999 Long-Term Stock Incentive
Plan.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the Company’s executive officers and
Directors and persons who own more than ten percent of a registered class of the
Company’s equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Executive officers,
Directors and ten-percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of Section 16(a) forms received by it, or
written representations from certain reporting persons, the Company believes its
executive officers, Directors and ten-percent stockholders complied with all
such filing requirements for fiscal year 2008, except for the inadvertent
failure to timely file a Form 4 for each of our independent directors in
connection with their annual grant of restricted stock.
TRANSACTIONS
WITH RELATED PERSONS
Under the
Company’s Corporate Ethics Policy, all officers, Directors and employees
(collectively the “Company Representatives”) are required to avoid conflicts of
interest, appearances of conflicts of interest and potential conflicts of
interest. A “conflict of interest” occurs when a Company
Representative’s private interest interferes in any way with the interests of
the Company. A conflict can arise when a Company Representative takes
actions or has interests that may make it difficult to perform his or her
Company work objectively and effectively. Conflicts of interest also
arise when a Company Representative, or a member of his or her family, receives
improper personal benefits as a result of his or her position in the
Company. Company Representatives cannot allow any consideration such
as the receipt of gifts or financial interests in other businesses or personal
or family relationships to interfere with the independent exercise of his or her
business judgment and work activities to the benefit of the
Company. Loans to, or guarantees of obligations of, Company
Representatives are prohibited unless permitted by law and authorized by the
Board or a Committee designated by the Board. If a Company
Representative becomes aware of a potential conflict of interest he or she must
communicate such potential conflict of interest to the Company.
The
Company’s corporate approval policy requires related party transactions
(specifically Company agreements, including leases, with “related parties” and
sales or purchases of inventory or other Company assets by “related parties”) to
be approved by the Company’s Audit Committee as well as the Company’s CEO, CFO
and General Counsel.
Leases
The
Company has leased its facility in Port Washington, NY since 1988 from Addwin
Realty Associates, an entity owned by Richard Leeds, Bruce Leeds and Robert
Leeds, Directors of the Company and the Company’s three senior officers and
principal stockholders. Rent expense under this lease totaled $
860,000
for fiscal year 2008. The Company believes that these payments were
no higher than would be paid to an unrelated lessor for comparable
space.
Stockholders
Agreement
Certain
members of the Leeds family (including Richard Leeds, Bruce Leeds and Robert
Leeds) and family trusts of Messrs. Leeds entered into a stockholders agreement
pursuant to which the parties agreed to vote in favor of the nominees for the
Board designated by the holders of a majority of the Shares held by such
stockholders at the time of the Company’s initial public offering of the
Shares. In addition, the agreement prohibits the sale of the Shares
without the consent of the holders of a majority of the Shares held by all
parties to the agreement, subject to certain exceptions, including sales
pursuant to an effective registration statement and sales made in
accordance
with Rule 144. The agreement also grants certain drag-along rights in
the event of the sale of all or a portion of the Shares held by holders of a
majority of the Shares. As of the end of fiscal year 2008, the
parties to the stockholders agreement beneficially owned 25,296,800 Shares
subject to such agreement (constituting approximately 69 % of the Shares
outstanding).
Pursuant
to the stockholders agreement, the Company granted to the parties demand and
incidental, or “piggy-back,” registration rights with respect to the
Shares. The demand registration rights generally provide that the
holders of a majority of the Shares may require, subject to certain restrictions
regarding timing and number of Shares, that the Company register under the
Securities Act all or part of the Shares held by such
stockholders. Pursuant to the incidental registration rights, the
Company is required to notify such stockholders of any proposed registration of
any Shares under the Securities Act and if requested by any such stockholder to
include in such registration any number of shares of Shares held by it subject
to certain restrictions. The Company has agreed to pay all expenses
and indemnify any selling stockholders against certain liabilities, including
under the Securities Act, in connection with the registration of Shares pursuant
to such agreement.
Related
Business
Richard
Leeds and Robert Leeds are minority owners of a wholesale business that sells
certain products to mass merchant customers. These products are, in
some instances, similar to the type of products sold by the Company. In 2008 the
Company subleased office space to this business at an annual rent of
approximately $2
4,000
.
The Company believes this sublease was entered into on an arms-length basis. The
Company did not transact any other business with this wholesale business in
2008.
|
EQUITY
COMPENSATION PLAN INFORMATION
|
Information
for our equity compensation plans in effect as of the end of fiscal year 2008 is
as follows:
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Plan category
|
|
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
|
|
Equity
compensation plans approved by security holders
|
|
|
2,202,584
|
|
|
|
$9.23
|
|
|
|
4,941,514
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
|
2,202,584
|
|
|
|
$9.23
|
|
|
|
4,941,514
|
|
|
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
In this
section, we discuss the material elements of our compensation programs and
policies, including the objectives of our compensation programs and the reasons
why we pay each element of our executives’ compensation. Following
this discussion, you will find a series of tables containing more specific
details about the compensation earned by, or awarded to, the following
individuals, whom we refer to as the Named Executive Officers or
NEOs. This discussion focuses on compensation practices relating to
the Named Executive Officers for our 2008 fiscal year.
Our Named
Executive Officers in 2008 (based on total 2008 compensation earned) were as
follows:
Richard
Leeds
|
Chairman; Chief
Executive Officer
|
Bruce
Leeds
|
Vice
Chairman
|
Robert
Leeds
|
Vice
Chairman
|
Gilbert
Fiorentino
|
Chief Executive -
Technology Products Group
|
Lawrence
Reinhold
|
Executive
Vice President; Chief Financial Officer
|
|
|
Objectives
and Philosophy of Our Executive Compensation Programs
The
Company’s executive compensation programs are designed to achieve a number of
important objectives, including attracting and retaining individuals of superior
ability and managerial talent, rewarding individual contributions to the
achievement of the Company’s short and long-term financial and business
objectives, promoting integrity and good corporate governance, and motivating
executive officers to manage the Company in a manner that will enhance the
Company’s growth and financial performance for the benefit of our stockholders,
customers and employees.
Compensation
of the Company’s named executive officers is based primarily upon an evaluation
of Company performance as it relates to three general business
areas:
·
|
Operational
and Financial Performance (utilizing standard metrics such as net sales,
operating income, consolidated net income, earnings before interest and
taxes (“EBIT”), gross margin, operating margin, earnings per share,
working capital, return on invested capital, stockholder equity and peer
group comparisons);
|
·
|
Strategic
Accomplishments (including growth in the business, implementation of
systems, process and technology improvements, and growth in the value of
the Company’s assets, including through strategic acquisition
transactions); and
|
·
|
Corporate
Governance and Oversight (encompassing legal and regulatory compliance and
adherence to Company policies including the timely filing of periodic
reports with the SEC, the Sarbanes-Oxley Act, environmental, employment
and safety laws and regulations and the Company’s corporate ethics
policy).
|
Accordingly,
in determining the amount and mix of compensation, the Compensation Committee
seeks both to provide a competitive compensation package and to structure annual
and long-term incentive programs that reward achievement of performance goals
that directly correlate to the enhancement of sustained, long-term shareholder
value, as well as to promote executive retention. To accomplish these
objectives, the Committee has structured our compensation programs to reward
achievement in the foregoing areas.
In
determining the compensation of a particular executive, consideration is given
to the specific corporate responsibilities that such executive is charged with
as they relate to the foregoing business areas.
Elements
of Our Executive Compensation Programs
To
promote the objectives described above, our executive compensation programs
consist of the following principal elements:
·
|
Stock–based
incentives (other than for the Chairman/CEO and the two Vice Chairmen of
the Company who are considered majority stockholders of the Company);
and
|
·
|
Benefits,
perquisites and other compensation.
|
The
Committee does not maintain formal policies for specifically allocating
compensation among current and long-term compensation or among cash and non-cash
compensation elements. Instead, the Committee maintains flexibility
and adjusts different elements of compensation based upon its evaluation of the
Company’s key compensation goals set forth above. The Company does
not have a formal policy regarding internal pay equity.
Base Salary -
Salary levels
generally are determined based on individual and Company performance as well as
a subjective assessment of prevailing levels among the Company’s competitors and
an objective assessment (derived by management from widely available published
reports) of the average of prevailing salary levels for comparable companies
(based on industry, revenues, number of employees, location and similar
factors).
Cash Bonuses -
In
establishing annual bonuses, the Compensation Committee considers generally the
same factors it considers in determining base salaries and assigns such weight
to each such factor as the Compensation Committee, in its discretion, deems
appropriate. The Compensation Committee may also consider its
assessment of each individual’s contribution to the Company’s
performance. In certain cases, threshold, target and maximum bonus
awards based on achieving specific financial goals are established.
Stock-Based Incentives
-
Stock-based incentives, at the present time consisting of (a) stock options
granted at 100% of the stock’s fair market value on the grant date and/or (b)
restricted stock units granted subject to certain conditions, constitute the
long-term portion of the Company’s executive compensation
package. Stock options provide an incentive for executives to manage
the Company with a view to achieving results which would increase the Company’s
stock price and, therefore, the return to the Company’s
stockholders. The size of stock option and restricted stock unit
grants are decided in part based on the Company’s subjective assessment of
prevailing levels of similar compensation among the Company’s
competitors. Stock option and restricted stock unit grants must be
approved by the Compensation Committee, or, with respect to grantees who are not
officers or directors, by the Compensation Committee’s designee. We do not use
any specific allocation percentage or formula in determining the size of the
cash and equity based components of compensation in relation to each
other.
Richard
Leeds (Chairman and CEO), Bruce Leeds (Vice Chairman) and Robert Leeds (Vice
Chairman) have not historically received stock options or other stock-based
incentives as part of their compensation since the Company's initial public
offering. As described below, Gilbert Fiorentino (Chief Executive - Technology
Products Group) has received stock-based compensation in the past; however, he
did not receive new equity compensation grants in 2007 or
2008.
Benefits, Perquisites and Other
Compensation
- The Company provides various employee benefit programs to
its executive officers, including medical, dental and life insurance benefits
and our 401(k) plan, which includes Company contributions. The
Company also provides Company-owned or leased cars or automobile allowances and
gasoline cost reimbursement to certain executive officers and other Company
managers as well as other benefits generally available to all
employees. Certain Company executives also have or are entitled to
receive severance payments, relocation allowances and/or change of control
payments pursuant to negotiated employment agreements they have with the Company
(see below). The Company does not provide to executive officers
any (a) pension benefits or (b) deferred compensation under any defined
contribution or other plan on a basis that is not tax-qualified.
The
Systemax Executive Incentive Plan
The
Systemax Executive Incentive Plan, approved by stockholders at the 2008 Annual
Meeting, assists the Company in providing competitive incentive opportunities to
executive officers of the Company who can significantly influence the Company’s
performance and improve its ability to attract and motivate its management team.
Under the plan, executive officers of the Company are eligible to receive an
annual cash bonus, not to exceed 500% of their base salary, based on the
Company’s achievement of certain annual performance-based goals.
The
purpose of the Systemax Executive Incentive Plan is to promote the achievement
of the Company’s business objectives by providing cash bonus awards to those
executive officers who significantly impact the Company’s performance towards
those objectives. Further, the Executive Incentive Plan enhances the
Company’s ability to attract, develop and motivate individuals as members of a
talented management team. As described herein, the cash bonus awards
made under the Executive Incentive Plan may recognize Company, business unit,
team and/or individual performance. Currently, seven Company
executives are eligible to participate in the Executive Incentive Plan,
including the named executive officers.
The
Compensation Committee administers the plan, and may amend the
plan. This committee is composed entirely of independent directors of
the Company, as defined under Section 162(m) of the Code.
Cash
bonus awards made under the Systemax Executive Incentive Plan are subject to a
participant achieving one or more performance goals established by the
Compensation Committee. The performance goals may be based on the
overall performance of the Company, and also may recognize business unit, team
and/or individual performance. No payment will be made under the
Executive Incentive Plan unless the Compensation Committee determines that at
least the minimum objective performance measures have been met.
Performance
goals are determined based primarily upon the three general business areas
described above: Operational and Financial Performance, Strategic
Accomplishments, and Corporate Governance and Oversight.
In
determining the compensation of a particular executive, consideration is given
to the specific corporate responsibilities that executive is charged with as
they relate to the foregoing business areas. The Compensation
Committee has the discretion to reduce the amount payable to, or to determine
that no amount will be paid to, a participant.
The
amount of any cash bonus award varies based on the level of actual
performance. The amount of any award for a given year is determined
for each participant by multiplying the individual participant’s actual base
salary in effect at the end of that year by a target percentage (from 0% to
500%), related to the attainment of one or more performance goals, determined by
the Compensation Committee. The maximum amount payable under the
Executive Incentive Plan to any participant for any fiscal year of the Company
is $5 million. In the event that an award contains more than one performance
goal, participants in the plan will be entitled to receive the portion of the
target percentage allocated to the performance goal achieved. In the
event that the Company does not achieve at least the minimum performance goals
established, no award payment will be made.
The
actual amount of future payments under the Executive Incentive Plan will be
based on the Company’s future performance as it relates to the three
aforementioned general business areas, the applicable future performance goals
for a particular executive and the target percentages established by the
Compensation Committee.
Role
of the Compensation Committee and CEO in Compensation Decisions
The
Compensation Committee’s responsibility is to review and approve corporate goals
relevant to the compensation of the Chief Executive Officer and, after an
evaluation of the Chief Executive Officer’s performance in light of such goals,
to set the compensation of the Chief Executive Officer. The
Compensation Committee also approves, upon the recommendation of the Chief
Executive Officer (following consultation with the Chief Financial Officer and
Chief Executive of the Technology Products Group), (a) the annual compensation
of the other executive officers of the Company, (b) the annual compensation of
certain subsidiary managers, and (c) all individual stock incentive grants to
other executive officers. The Committee is also responsible for
reviewing and making periodic recommendations to the Board with respect to the
general compensation, benefits and perquisite policies and practices of the
Company including the Company’s stock-incentive based compensation
plans. The Compensation Committee has the authority to retain third
party compensation consultants to provide assistance with respect to
compensation strategies, market practices, market research data and the
Company’s compensation goals. The Compensation Committee retained a
third party consultant in 2008 with respect to a long-term incentive plan
and is taking their suggestions under advisement.
Stock
Option Grant Practices
In order
to avoid any impropriety, or even the appearance of any impropriety, with
respect to the timing of equity grants, the Compensation Committee adopted the
following policies in 2007:
1.
|
The
Compensation Committee will not, except in unusual circumstances, delegate
to the Company officers the authority to grant options to
employees. Instead, Company management will present to the
Compensation Committee in advance a list of prospective grantees with the
specific number of option shares proposed to be granted to each
grantee. The Compensation Committee shall then consider and if
agreed, in its discretion, approve the list (with or without
modification). The grant date of such options shall be the date
that the Committee approves the list and the exercise price of such
options shall be the NYSE closing price of the Company stock on the grant
date.
|
2.
|
The
Compensation Committee will be cognizant of timing the grant of options in
relation to the publication of Company earnings releases and other public
announcements so as to avoid any perception of “spring-loading” or
“bullet-dodging,” i.e. granting options just after the release of
unfavorable news or before the release of favorable news. Stock
option grants will not be made, generally, until after the Company has
disclosed, and the market has had an opportunity to react to, material,
potentially market-moving, information concerning the
Company.
|
3.
|
In
general, employee stock option grants will be made at fixed times each
year.
|
Tax
Deductibility Considerations
It is our
policy generally to qualify compensation paid to executive officers for
deductibility under section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”). Section 162(m) generally prohibits
deducting the compensation of executive officers that exceeds $1,000,000 unless
that compensation is based on the satisfaction of objective performance
goals. Our stock incentive plans (the 1995 Long-term Stock Incentive
Plan, the 1999 Long-term Stock Incentive Plan, as amended, the 1995 Stock Option
Plan for Non-Employee Directors, the 2006 Stock Incentive Plan for Non-Employee
Directors and the Systemax Executive Incentive Plan) are structured to permit
awards under such plans to qualify as performance-based compensation and to
maximize the tax deductibility of such awards. However, we reserve
the discretion to pay compensation to our executive officers, including under
the Systemax Executive Incentive Plan, that may not be deductible.
Compensation
of Executive Officers in 2008
In
determining the compensation of the Company’s Chief Executive Officer for fiscal
year 2008 and approving the compensation of the Company’s other named executive
officers, the Committee considered, among other factors, the Company’s 8% growth
in revenues from the prior year; its maintaining a 15.3% consolidated gross
margin; its maintaining overall profitability; and its ending the year with $116
million in cash and equivalents despite spending $37 million for a special
dividend; $31 million for the acquisition of CompUSA and in excess of $20
million to stock inventory in new stores, all in the most challenging economic
environment in generations. The Compensation Committee also considered the
Company's improved controls over internal accounting and financial
reporting during 2008, as disclosed in the Company's Form 10-K for 2008 and as
attested to by Ernst & Young LLP.
The
compensation earned by the NEO’s in 2008 was generally determined based on the
various factors indicated above. However, Gilbert Fiorentino’s bonus
for 2008 of $1.4 million was determined in accordance with a table which
provided for a scale of bonus amounts, ranging from $1.3 million to $10.0
million, depending upon the fiscal 2008 adjusted operating profit of the
Company’s Technology Products Group
.
This bonus table was negotiated by Mr. Fiorentino and Messrs. Leeds and
approved by the Compensation Committee in the first quarter of 2008, and was
tied to the performance of the Technology Products Group in order to most
accurately reflect Mr. Fiorentino’s direct contribution to the Company and the
sustained year over year growth of the business. See the Grants of
Plan-Based Awards table below for additional information with respect
to awards payable to Mr. Fiorentino for 2008.
Mr.
Reinhold was the only NEO to receive a grant of equity compensation in 2008, in
the form of stock options. The decision by the Compensation Committee to award
Mr. Reinhold stock options was based on Mr. Reinhold’s significant
accomplishments in 2008 as well as a desire to further align his interests with
those of the Company’s stockholders.
The
Compensation Committee determined that the Company and management had performed
well, particularly given trends in the general economic environment that had
affected the Company’s business in the second half of fiscal 2008, and that
management had executed well on strategic business initiatives to position the
Company for growth while managing risk. Based on Company and
individual performance, the Compensation Committee believes that compensation
levels for fiscal year 2008 were appropriate and consistent with the philosophy
and objectives of the Company’s compensation programs.
Compensation
Arrangements of the Named Executive Officers
Richard
Leeds
Richard
Leeds, Chairman and Chief Executive Officer of the Company, has no employment
agreement. Mr. Leeds received an annual salary of $550,000 in 2008
and $442,600 in 2007. He received a cash bonus of $550,000 in 2008
and $600,000 in 2007. Mr. Leeds received $26,522 in other
compensation in 2008 and $19,843 in 2007. He received no stock options or other
stock-based incentive grants in either 2008 or 2007.
Bruce
Leeds
Bruce
Leeds, the Vice Chairman of the Company has no employment agreement. Mr. Leeds
received an annual salary of $450,000 in 2008 and $405,365 in
2007. He received a cash bonus of $375,000 in 2008 and $400,000 in
2007. Mr. Leeds received $21,329 in other compensation in 2008 and $21,912 in
2007. Mr. Leeds received no stock options or other stock-based incentive grants
in either 2008 or 2007.
Robert
Leeds
Robert
Leeds, Vice Chairman of the Company, has no employment agreement. Mr.
Leeds received an annual salary of $450,000 in 2008 and $405,365 in
2007. He received a cash bonus of $375,000 in 2008 and $400,000 in
2007. Mr. Leeds received $20,003 in other compensation in 2008 and $18,923 in
2007. Mr. Leeds received no stock options or other stock-based incentive grants
in either 2008 or 2007.
Gilbert
Fiorentino
On
October 12, 2004, the Company entered into an employment agreement with Gilbert
Fiorentino, the Chief Executive of the Company’s Technology Products Group, and
a director of the Company. The agreement was effective as of June 1,
2004 and expires on December 31, 2013 unless terminated sooner under the terms
of the agreement.
Mr.
Fiorentino’s compensation consists of a base salary at the initial annual rate
of $400,000 (which is increased by five percent per year subject to certain
Company earnings requirements) and a performance bonus of $250,000 per year
(similarly increasing annually) provided that he meets certain performance
criteria previously established from time to time by the Executive Committee of
the Board of Systemax. He is also eligible for an additional bonus,
in the discretion of the Board.
In 2008,
Mr. Fiorentino, received $476,875 in annual salary and a non-equity incentive
plan payment of $1,400,000. In 2007, Mr. Fiorentino received $456,484 in
annual salary and a cash bonus of $1,938,000. He received $622,945 in other
compensation in 2008 (including a $600,000 dividend equivalent payment) and
$624,916 (including a $600,000 dividend equivalent payment) in other
compensation in 2007. His cash bonus in 2008 was determined based on the
increase in 2008 in the operating income (EBITDA) of the Technology Products
segment of the Company as compared with 2007. See the Grants of Plan-Based
Awards table below for
threshold,
target and maximum awards payable to Mr. Fiorentino for 2008. Mr.
Fiorentino received no stock options or other stock based incentive grants in
either 2008 or 2007.
Additional
benefits include medical and life insurance, benefits available to all employees
generally, and an automobile allowance. The Company has also agreed
to make certain “gross up” payments if other payments to Mr. Fiorentino are
deemed by the IRS to be subject to excise tax.
The
vesting schedule of previously granted options was accelerated as follows: Mr.
Fiorentino’s option to purchase 350,000 shares of Company stock, granted on
February 28, 2003, at an exercise price of $1.76 per Share and his option to
purchase 50,000 shares of Company stock, granted on April 1, 2003, at an
exercise price of $1.95 per Share both now vest at 20% per year with the first
20% vesting on October 12, 2004 (the date of execution of the employment
agreement). Mr. Fiorentino also was granted new options under the
Company’s 1999 Long Term Stock Incentive Plan for 166,667 shares, and the
agreement obligated the Company to issue additional options on 166,667 shares in
each of August 2005 and 2006, at the then-fair market value. Options
vest in five annual cumulative installments of 20% each.
Mr.
Fiorentino was also granted, pursuant to a restricted stock unit agreement (the
form of which is part of his employment agreement), 1,000,000 restricted stock
units under the 1999 Long Term Stock Incentive Plan conditioned on stockholder
approval and the satisfaction of certain performance conditions based on the
earnings before interest, taxes, depreciation and amortization in fiscal 2004 or
fiscal 2005. Such restricted stock units vest in accordance with the
following schedule: 200,000 on May 31, 2005 and 100,000 on April 1, 2006 and
each April thereafter, until April 1, 2015. The restricted stock
units do not reflect actual issued Shares; Shares are distributed within 30 days
after a “Distribution Event”. A Distribution Event is defined as the
earliest of the date that Mr. Fiorentino is no longer employed by the Company,
the date of a change of control (as defined) or January 1, 2006 for the units
that vest in 2005 or the date on which any subsequent units vest for units that
vest after 2005. If the Company pays dividends or makes other
distributions during the term of the restricted stock agreement, however, Mr.
Fiorentino has the right to receive equivalent payments under certain
circumstances, but shares of Company stock shall only be distributed when there
is a Distribution Event.
Compensation
that may become payable following the termination of his employment or a change
in control of the company, and other terms of the employment agreement related
to such events, are discussed below under “—Potential Payments Upon Termination
or Change in Control.”
Lawrence
P. Reinhold
Lawrence
P. Reinhold was appointed Executive Vice President and Chief Financial Officer
effective January 17, 2007. The Company entered into an employment agreement
with Mr. Reinhold. The agreement provides for a minimum base salary of $400,000
(which may be increased at the discretion of the Company) and a bonus (which the
agreement states is expected to be at least equal to 50% of the base salary)
assuming Mr. Reinhold meets certain performance objectives (including the
Company’s financial performance objectives) established for him by the
Company. He is entitled to receive a car allowance or a
Company-leased car.
In 2008,
Mr. Reinhold received $455,250 in annual salary, a cash bonus of $325,000, a
stock option grant of 50,000 shares of Company stock and $22,923 in other
compensation. In 2007, Mr. Reinhold received $380,385 in annual
salary, a cash bonus of $325,000, a stock option grant of 100,000 shares of
Company stock pursuant to his employment agreement and $20,921 in other
compensation.
Compensation
that may become payable following the termination of his employment or a change
in control of the company, and other terms of the employment agreement related
to such events, are discussed below under “—Potential Payments Upon Termination
or Change in Control.”
2009
NAMED EXECUTIVE OFFICER CASH BONUS PLAN
In March
2009, pursuant to the Company’s Executive Incentive Plan approved by our
stockholders in 2008, the Compensation Committee, with input from our Chief
Executive Officer, established target cash bonuses for the Named Executive
Officers based on
the
achievement of certain performance-based criteria in 2009. Messrs. Richard,
Bruce and Robert Leeds and Mr. Reinhold can receive cash bonuses (up to an
aggregate multiple of base salary) based on (i) the Company’s achievement of
certain short-term and long-term achievements. Short-term achievements include
consolidated earnings targets and peer group financial comparisons. Long-term
achievements include strategic achievements (such as mergers and acquisitions
(M&A) and major process improvements) and corporate governance/compliance
achievements (such as ethics and safety achievements). Mr. Fiorentino
would be entitled to receive cash bonuses for 2009 based on (i) the Company’s
Technology Products Group achieving certain earnings targets and (ii) the
Company successfully implementing technology enhancements in certain of our
retail stores. In addition, each of the named executive officers will be
entitled to an additional cash bonus in connection with the Company implementing
certain management financial reporting technology enhancements in
2009.
Compensation
Committee Report to Stockholders*
The
Compensation Committee of the Board has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K, which
appears in this proxy statement, with the management of
Systemax. Based on this review and discussion, the Compensation
Committee recommended to the Board that the Compensation Discussion and Analysis
be included in Systemax’s proxy statement on Schedule 14A.
COMPENSATION
COMMITTEE
|
Stacy
S. Dick
|
Robert D.
Rosenthal
|
Ann
Leven
|
*
|
The
information contained in this Compensation Committee Report shall not be
deemed to be “soliciting material” or to be “filed” with the SEC, nor
shall such information be incorporated by reference into any filings under
the Securities Act of 1933, as amended, which we refer to as the
Securities Act, or under the Exchange Act, except to the extent that we
specifically incorporate this information by reference into any such
filing.
|
Compensation
Committee Interlocks and Insider Participation
The
members of the Company’s Compensation Committee for fiscal year 2008 were Ann R.
Leven, Robert D. Rosenthal and Stacy S. Dick. The Company employs no
member of the Compensation Committee. In addition, none of our
directors has any interlocking relationship with our Board, Compensation
Committee or executive officers that requires disclosure under SEC
regulations.
SUMMARY COMPENSATION TABLE
The
following table sets forth the compensation earned by the Chief Executive
Officer (“CEO”, our principal executive officer), Chief Financial Officer
(“CFO”, our principal financial officer), and the three most highly compensated
officers other than the CEO and CFO (collectively the “Named Executive
Officers”) for fiscal years 2006, 2007 and 2008:
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
(1)
|
Non-Equity
Incentive
Plan
Compensation
($)
(2)
|
All
Other
Compensation
($)
|
Total
($)
|
Richard
Leeds
|
2008
|
550,000
|
550,000
|
-
|
-
|
-
|
26,522
(3)
|
1,126,522
|
Chairman
and Chief Executive Officer
|
2007
|
442,600
|
600,000
|
-
|
-
|
-
|
19,843
|
1,062,443
|
|
2006
|
420,000
|
600,000
|
-
|
-
|
-
|
27,795
|
1,047,795
|
Lawrence
P. Reinhold
|
2008
|
455,250
|
325,000
|
-
|
567,161
|
-
|
22,923
(4)
|
1,370,334
|
Vice
President and Chief
Financial
Officer
|
2007
2006
|
380,385
-
|
325,000
-
|
-
-
|
714,073
-
|
-
-
|
20,921
-
|
1,440,379
-
|
Bruce
Leeds
|
2008
|
450,000
|
375,000
|
-
|
-
|
-
|
21,329
(5)
|
846,329
|
Vice
Chairman
|
2007
|
405,365
|
400,000
|
-
|
-
|
-
|
21,912
|
827,277
|
|
2006
|
389,881
|
250,000
|
-
|
-
|
-
|
26,061
|
665,942
|
Robert
Leeds
|
2008
|
450,000
|
375,000
|
-
|
-
|
-
|
20,003
(6)
|
845,003
|
Vice
Chairman
|
2007
|
405,365
|
400,000
|
-
|
-
|
-
|
18,923
|
824,288
|
|
2006
|
389,881
|
250,000
|
-
|
-
|
-
|
21,890
|
661,771
|
Gilbert
Fiorentino
|
2008
|
476,875
|
-
|
-
|
329,045
|
1,400,000
|
622,945
(7)
|
2,828,865
|
Chief
Executive –
Technology
Products Group
|
2007
2006
|
|
|
|
|
-
-
|
|
|
|
(1) This column
represents the dollar amount recognized for financial statement purposes
with respect to the 2006, 2007 and 2008 fiscal years for the fair value of
stock options granted in 2006, 2007 and 2008 as well as in prior
years, in accordance with SFAS 123R. As per SEC rules relating
to executive compensation disclosure, the amounts shown exclude the impact
of forfeitures related to service based vesting
conditions. These amounts were calculated using the
Black-Scholes option-pricing model.
For additional
information regarding assumptions made in calculating the amounts
reflected in this column for grants made in fiscal years 2006, 2007 and
2008, please refer to Note 7 to our audited consolidated financial
statements, included in our Annual Report on Form 10-K for fiscal
year 2008. For additional information regarding assumptions made in
calculating the amounts reflected in this column for grants made prior to
fiscal year 2006, see the “Shareholders’ Equity” note to our audited
consolidated financial statements, included in our Annual Report on
Form 10-K for the respective fiscal
years.
|
|
(2) This
column represents the amount earned in fiscal year 2008 (although paid in
fiscal year 2009) pursuant to the Systemax Executive Incentive Plan. For
more information, see the Grants of Plan-Based Awards table below and the
section entitled “—Compensation Arrangements of the Named Executive
Officers—Gilbert Fiorentino” beginning on page 17 of this proxy
statement.
|
|
(3)
Includes $26,522 in auto-related
expenses.
|
|
(4)
Includes (i) $19,473 in auto-related expenses and (ii) Company 401(k)
contributions.
|
|
(5)
Includes $21,329 in auto-related
expenses.
|
|
(6)
Includes $20,003 in auto-related
expenses.
|
|
(7)
Includes (i) $600,000 in a dividend equivalent payment, (ii) $22,248 in
auto-related expense and (iii) Company 401(k)
contributions.
|
GRANTS OF PLAN-BASED AWARDS
The
following table sets forth the stock options granted to our named executive
officers in 2008 and the estimated possible payouts under the cash incentive
awards granted to our named executive officers in respect of 2008
performance.
|
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)
(1)
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under
Non-Equity
Incentive
Plan
Awards
|
|
|
|
|
|
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
|
|
|
|
Lawrence
P. Reinhold
|
3/13/2008
|
-
|
-
|
-
|
|
50,000
|
11.51
|
353,250
|
Gilbert
Fiorentino
|
-
|
1,300,000
|
2,000,000
|
10,000,000
|
|
-
|
-
|
-
|
(1)
|
This
column represents the fair value of the stock option on the granted dated
determined in accordance with the provisions of SFAS 123R. As per SEC
rules relating to executive compensation disclosure, the amounts shown
exclude the impact of forfeitures related to service based vesting
conditions. These amounts were calculated using the Black-Scholes
option-pricing model. For additional information regarding
assumptions made in calculating the amount reflected in this
column please refer to Note 7 to our audited consolidated
financial statements, included in our Annual Report on Form 10-K for
fiscal year 2008.
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
2008
The
following table sets forth information regarding stock option and restricted
stock awards previously granted which were outstanding at the end of fiscal year
2008.
The
market value of the stock award is based on the closing price of one share of
our common stock as of January 2, 2009, which was $10.87.
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or Units
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares or
Units
of Stock
That
Have Not
Vested
($)
|
(a)
|
(b)
|
(c)
|
(e)
|
(f)
|
(g)
|
(h)
|
Lawrence
P. Reinhold
|
25,000
|
75,000
(1)
|
$20.15
|
1/17/17
|
-
|
-
|
|
|
|
|
|
|
|
Gilbert
Fiorentino
|
20,000
|
-
|
$7.31
|
10/25/09
|
-
|
-
|
|
70,000
|
-
|
$1.76
|
2/28/13
|
-
|
-
|
|
10,000
|
-
|
$1.95
|
4/1/13
|
-
|
-
|
|
166,667
|
-
|
$5.65
|
10/11/14
|
-
|
-
|
|
133,334
|
33,333 (2)
|
$6.80
|
3/22/16
|
-
|
-
|
|
100,000
|
66,667
(2)
|
$8.06
|
8/25/16
|
-
|
-
|
|
-
|
-
|
-
|
-
|
600,000
(3)
|
$6,522,000
|
|
(1)
Options vest 25% per year over four years from
date of grant.
|
(2)
Granted pursuant to Mr. Fiorentino’s employment
agreement (see pages 17-18). Options vest 20% per year over five years
from date of grant.
|
|
(3) The
restrictions shall lapse annually in 100,000 share increments through
April 2013.
|
OPTION
EXERCISES AND STOCK VESTED
The
following table sets forth information regarding exercise of options to purchase
shares of the Company’s common stock and vesting of restricted stock by the
named executive officers that exercised options or whose restricted stock vested
during fiscal year 2008:
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
Name
|
Number
of Shares
Acquired
on Exercise
(#)
|
|
Value
Realized on
Exercise
($)
(1)
|
|
Number
of Shares Acquired on Vesting
(#)
|
|
Value
Realized
on
Vesting
($)
(2)
|
(a)
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
Gilbert
Fiorentino
|
421,666
|
|
$3,159,779
|
|
100,000
|
|
$1,301,000
|
(1)
The amount in
this column reflects the aggregate dollar amount realized upon the exercise of
the options, determined by the difference between the market price of the
underlying shares of common stock at exercise and the exercise price of the
options.
(2)
The amount in
this column reflects the aggregate dollar amount realized upon the vesting of
the restricted stock, determined by the market value of the underlying shares of
common stock on the vesting date.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Gilbert
Fiorentino
Pursuant
to Mr. Fiorentino’s employment agreement, the Company may terminate the
agreement without cause on 30 days’ notice provided certain severance payments
are made. If Mr. Fiorentino is terminated by the Company without
cause (as defined in the agreement), under most circumstances he would become
vested in at least half of the restricted stock units that were awarded to him
(or all of such units under certain circumstances if a “Qualified Change of
Control” as, defined in the agreement, had occurred), subject to the Company’s
right to redeem such units. In addition, Mr. Fiorentino is entitled
to a special bonus of 0.85% of the total proceeds of a “qualified” change of
control transaction upon the first occurrence of a change of control meeting
certain conditions.
Mr.
Fiorentino is subject to a two-year non-competition covenant following
termination of employment, although such period can be shortened to one year or
lengthened to three years by the Company in the event of a termination without
“cause” (as defined). The Company is obligated to continue the
employee’s salary and certain other benefits for such non-competition period
after an early termination by (a) the Company other than for cause or (b) the
employee for “good reason” (as defined) or after the expiration of the agreement
at its scheduled termination date. In the event of a termination
without “cause” by the Company or a termination by the employee for “good
reason,” certain unvested restricted stock units generally vest and certain
options may vest. In certain instances the Company has the right to
redeem vested restricted stock units at fair market value.
Lawrence
Reinhold
Mr.
Reinhold’s employment agreement is terminable upon death or total disability, by
the Company for “cause” (as defined) or without cause, or by the employee
voluntarily for any reason or for “good reason” (as defined). In the
event of termination for death, disability, cause or voluntary termination by
Mr. Reinhold, the Company will owe no further payments other than as applicable
under disability or medical plans, any accrued but unused vacation time (up to
four weeks) and, in the event of termination for disability or death, the pro
rata portion of any bonus which would otherwise be paid. If Mr.
Reinhold resigns for good reason or if the Company terminates him for any reason
other than disability, death or cause, he shall also receive severance payments
equal to 12 months’ base salary (or 24 months’ base salary if termination is
within 60 days prior to or one year following a “change of control,” as
defined), one year’s bonus based on his average annual bonus for the prior two
years (unless he was employed for less than two years in which case he will
receive a prorated bonus) and a reimbursement of costs for COBRA insurance
coverage in addition to the payments paid for other terminations.
Termination
of Employment Without Change In Control
The table
below sets forth the severance payments that would have been made had the
employment of Mr. Fiorentino or Mr. Reinhold (as defined in their employment
agreements) been terminated without cause in a situation not involving a change
in control, based on a hypothetical termination date of January 3, 2009, the
last day of the Company’s fiscal year 2008, and using the closing price of our
common stock on that date. These amounts are estimates and the actual
amounts to be paid can only be determined at the time of the termination of the
officer’s employment.
Name
|
Cash
Compensation
(Salary
and Bonus)
($)
|
|
Value
of
Accelerated
Vesting
of
Stock Awards
($)
|
|
Medical
and
Other
Benefits
($)
|
|
Total
($)
|
Gilbert
Fiorentino
|
2,353,750
(1)
|
|
1,087,000
(2)
|
|
34,800
(3)
|
|
3,475,550
|
Lawrence
P. Reinhold
|
780,250
(4)
|
|
-
|
|
-
|
|
780,250
|
(1)
Represents two years’ salary of $476,875 per year and cash bonus of $1.4
million for fiscal year 2008.
(2)
Represents accelerated vesting of 100,000 restricted stock units.
(3)
Represents two years’ medical and other benefits.
(4)
Represents one year’s salary of $455,250 and cash bonus of $325,000 for fiscal
year 2008.
Change
In Control Payments
The table
below sets forth the change in control payments that would have been made based
on a hypothetical change of control date of January 3, 2009, the last day of the
Company’s fiscal year 2008, and using the closing price of our common stock on
that date. These amounts are estimates and the actual amounts to be
paid can only be determined at the time of the change of control.
|
Cash
Compensation
(Salary
and Bonus)
($)
|
Value
of
Accelerated
Vesting
of
Stock Awards
($)
|
Medical
and
Other
Benefits
($)
|
Total
($)
|
Gilbert
Fiorentino
|
2,353,750
(1)(2)
|
5,435,000
(3)
|
34,800
(4)
|
7,823,550
(5)
|
Lawrence
P. Reinhold
|
1,235,500
(6)
|
|
34,800
|
1,270,300
(7)
|
(1)
Represents two years’ salary of $476,875 per year and cash bonus of $1.4 million
for fiscal year 2008.
(2) Upon
a “Qualifying Change of Control” as defined in his employment agreement, Mr.
Fiorentino would also receive 0.85% of “Qualifying Value” of “Qualifying Change
of Control” transaction as defined in his employment agreement.
(3)
Represents accelerated vesting of 500,000 restricted stock units and options to
purchase 66,666 shares of Company stock.
(4) Upon
a change in control, Mr. Fiorentino may be subject to certain excise taxes under
Section 280G of the Code. The Company has agreed to reimburse Mr.
Fiorentino for those excise taxes as well as for any income and excise taxes
payable by the officers as a result of any such reimbursement capped at $6
million in the aggregate.
(5) Total
additional amounts for change of control payment as described in footnote
(5). Reimbursement of excise taxes as described in footnote (7) may
also be due.
(6)
Represents two years’ salary of $455,250 per year and a cash bonus of $325,000
for fiscal year 2008.
(7)
Payments are to Mr. Reinhold only if he is terminated without “cause” or resigns
for “good reason” within 60 days prior to, or one year following, a Change of
Control.
DIRECTOR
COMPENSATION
The
Company’s policy is not to pay compensation to Directors who are also employees
of the Company or its subsidiaries. Each non-employee Director receives annual
compensation as follows: $50,000 per year as base compensation, $5,000 per year
for each committee of which such director is a non-chair member, $15,000 per
year for each committee chair, and a grant each year of shares of Company stock
(restricted for sale for two years) in an amount equal to $25,000 divided by the
fair market value of such stock on the date of grant. The Lead
Independent Director, currently Robert D. Rosenthal, also receives an additional
$10,000 per year. The restricted stock grants are made pursuant to
the Company’s 2006 Stock Incentive Plan for Non-Employee Directors, which was
approved by the Company’s stockholders at the 2006 Annual Stockholders’
Meeting.
DIRECTOR COMPENSATION FOR FISCAL YEAR
2008
The
following table sets forth compensation on information regarding payments in
2008 to our non-employee Directors:
Name
|
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards
($)
(1)
|
Total
($)
|
(a)
|
(b)
|
(c)
|
(h)
|
Ann
R. Leven
|
$75,000
|
$25,000
|
$100,000
|
Robert
D. Rosenthal
|
$85,000
|
$25,000
|
$110,000
|
Stacy
S. Dick
|
$75,000
|
$25,000
|
$100,000
|
(1)
|
This
column represents the grant date fair value recognized for financial
reporting purposes with respect to restricted stock grants made in 2008,
as determined under SFAS 123R. Grant date fair value was
calculated by multiplying the closing price of the Shares on the date of
grant by the number of shares subject to the grants. In
accordance with SEC rules, this amount disregards the estimate of
forfeitures on service-based
awards.
|
The
following table presents the aggregate number of outstanding stock awards
and stock option awards held by each of our non-employee Directors at the
end of fiscal year 2008:
|
|
Name :
|
Stock
Awards
|
Option
Awards
|
Ann
R. Leven
|
4,228
|
13,000
|
Robert
D. Rosenthal
|
4,228
|
11,000
|
Stacy
S. Dick
|
4,228
|
19,500
|
RATIFICATION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Proposal
No. 2 on Proxy Card
Action is
to be taken at the Annual Meeting to ratify the selection of Ernst & Young
LLP as independent registered public accountants for the Company for fiscal year
2009.
Representatives
of Ernst & Young LLP are expected to be present at the Annual Meeting and to
be available to respond to appropriate questions. They will have an
opportunity to make a statement if they so desire.
Principal
Accounting Fees and Services
The
following are the fees billed by Ernst & Young LLP for services rendered
during fiscal years 2007 and 2008:
Audit and Audit-related
Fees
Ernst
& Young billed the Company $2,583,000 for professional services rendered for
the audit of the Company’s annual consolidated financial statements for fiscal
year 2008 and its reviews of the interim financial statements included in the
Company’s Forms 10-Q for that fiscal year and $3,450,745 for professional
services rendered for the audit of the Company’s annual consolidated financial
statements and its internal control over financial reporting for fiscal year
2007 and its interim reviews of the financial statements included in the
Company’s Forms 10-Q for that fiscal year.
Tax Fees
Tax fees
included services for international tax compliance, planning and advice. Ernst
&Young LLP billed the Company for professional services rendered for tax
compliance, planning and advice in 2007 an aggregate of $22,500.
All Other
Fees
No other
fees were billed by Ernst & Young LLP for fiscal years 2007 and
2008.
The Audit
Committee is responsible for approving every engagement of the Company’s
independent registered public accountants to perform audit or non-audit services
on behalf of the Company or any of its subsidiaries before such accountants can
be engaged to provide those services. The Audit Committee does not
delegate its pre-approval authority. The Audit Committee has reviewed
the services provided to the Company by Ernst & Young LLP and believes that
the non-audit/review services it has provided are compatible with maintaining
the auditor’s independence.
Stockholder
ratification of the selection of Ernst & Young LLP as the Company’s
independent registered public accountants is not required by the Company’s
By-Laws or other applicable legal requirement. However, the Board is
submitting the selection of Ernst & Young LLP to the stockholders for
ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee will reconsider
whether or not to continue to retain that firm. Even if the selection
is ratified, the Audit Committee at its discretion may direct the appointment of
different independent registered public accountants at any time during the year
or thereafter if it determines that such a change would be in the best interests
of the Company and its stockholders.
Vote
Required for Approval
Ratification
of the selection of Ernst & Young LLP as the Company’s independent
registered public accountants will require the affirmative vote of the holders
of a majority of the Shares present in person or by proxy and entitled to vote
on the issue. There are no rights of appraisal or dissenter’s rights
as a result of a vote on this issue.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS FOR FISCAL 2009, WHICH IS DESIGNATED AS PROPOSAL NO. 2.
ADDITIONAL
MATTERS
Solicitation
of Proxies
This year, we are using the Securities and Exchange Commission,
or SEC, notice and access rule that allows us to furnish our proxy materials
over the internet to our stockholders instead of mailing paper copies of those
materials to each stockholder. As a result, beginning on or about
April 30, 2009, we sent to most of our stockholders by mail a notice containing
instructions on how to access our proxy materials over the internet and vote
online. This notice is not a proxy card and cannot be used to vote
your shares. If you received only a notice this year, you will not
receive paper copies of the proxy materials unless you request the materials by
following the instructions on the notice or on the website referred to in the
notice.
The proxy
statement and annual report on Form 10-K for fiscal year 2008 are available
at
www.proxyvote.com
.
The cost
of soliciting proxies for the Annual Meeting will be borne by the
Company. In addition to solicitation by mail and over the internet,
solicitations may also be made by personal interview, fax and
telephone. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to their
principals, and the Company will reimburse them for expenses in so
doing. Consistent with the Company’s confidential voting procedure,
Directors, officers and other regular employees of the Company, as yet
undesignated, may also request the return of proxies by telephone or fax, or in
person.
Stockholder Proposals
Stockholder
proposals intended to be presented at the Annual Meeting, including proposals
for the nomination of Directors, must be received by February 12, 2010, to be
considered for the 2010 annual meeting pursuant to Rule 14a-8 under the Exchange
Act. Stockholders proposals should be mailed to Systemax Inc.,
Attention: Investor Relations, 11 Harbor Park Drive, Port Washington, NY
11050.
Other
Matters
The Board
does not know of any matter other than those described in this proxy statement
that will be presented for action at the meeting. If other matters
properly come before the meeting, the persons named as proxies intend to vote
the Shares they represent in accordance with their judgment.
A COPY OF THE COMPANY’S FORM 10-K FOR
FISCAL YEAR 2008 IS INCLUDED AS PART OF THE COMPANY’S ANNUAL REPORT ALONG WITH
THIS PROXY STATEMENT, WHICH ARE AVAILABLE AT
www.proxyvote.com
. AN ADDITIONAL COPY MAY BE
OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST. Such request should be
sent to: Systemax Inc., 11 Harbor Park Drive, Port Washington, New York 11050,
Attention: Investor Relations or via email to
investinfo@systemax.com.
Available
Information
The
Company maintains an internet web site at
www.systemax.com
. The
Company files reports with the Securities and Exchange Commission and makes
available free of charge on or through this web site its annual reports on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including
all amendments to those reports. These are available as soon as is
reasonably practicable after they are filed with the SEC. All reports
mentioned above are also available from the SEC’s web site
(www.sec.gov). The information on the Company’s web site or any
report the Company files with, or furnishes to, the SEC is not part of this
proxy statement.
The Board
has adopted the following corporate governance documents (the “Corporate
Governance Documents”):
·
|
Corporate
Ethics Policy for officers, Directors and
employees;
|
·
|
Charter
for the Audit Committee of the
Board;
|
·
|
Charter
for the Compensation Committee of the
Board;
|
·
|
Charter
for the Nominating/Corporate Governance Committee of the Board;
and
|
·
|
Corporate
Governance Guidelines and
Principles.
|
In
accordance with the corporate governance rules of the New York Stock Exchange,
each of the Corporate Governance Documents is available on the Company’s Company
web site (
www.systemax.com
) or can be
obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate
Governance), 11 Harbor Park Drive, Port Washington, NY 11050.
28
SYSTEMAX
INC.
11
HARBOR PARK DRIVE
PORT
WASHINGTON, NY 11050
VOTE
BY INTERNET -
www.proxyvote.com
Use the
Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off date or
meeting date. Have your proxy card in
hand when you access the web site and follow the
instructions to obtain your records and to
create an electronic voting instruction form.
VOTE
BY PHONE - 1-800-690-6903
Use any
touch-tone telephone to transmit your voting
instructions up until
11:59 P.M.
Eastern Time the day
before the cut-off date or
meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS
PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION ONLY
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SYSTEMAX
INC.
The
Board of Directors recommends that you vote
FOR the
following:
1. Election
of Directors
Nominees:
01) Richard
Leeds
02) Bruce
Leeds
03) Robert Leeds
04) Gilbert
Fiorentino
05) Lawrence P.
Reinhold
06) Stacy
S. Dick
07) Robert D.
Rosenthal
08) Marie Adler-Kravecas
For
Withhold
For
All
All
All Except
[ ]
[ ]
[ ]
To
withhold authority to vote for any individual nominee(s),
mark “For All Except” and write the number(s) of the nominee(s) on the line
below.
____________________________________________________
The
Board of Directors recommends
that you vote FOR the following:
2.
|
Proposal
to ratify the appointment of Ernst & Young LLP as independent
registered public accountants for the company for
the fiscal year
ending December 31, 2009.
|
[
]
[
]
[
]
NOTE:
The
shares represented by this proxy,
when properly executed, will
be voted in
the manner directed herein by the
undersigned Stockholder(s). If no direction is made, this
proxy will be voted FOR items 1 and 2. If any
other matters properly come before the
meeting, the person named in this proxy will
vote in their discretion. This proxy is solicicted on
behalf of the Board of directors and may
be revoked.
T
o
change
the add
r
ess
on
your
account,
please
check
the following
box
and indicate your new address in
the space above.
[
]
Please
sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator,
or other fiduciary, please give full title
as such.
Joint owners should each sign personally. All holders must sign.
If a
corporation or partnership, please sign in full corporate or partnership
name, by
authorized officer.
________________________________ ______________
________________________
_____________
Signature
[PLEASE SIGN WITHIN BOX]
Date
Signature
(Joint Owners)
Date
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting:
The
Notice and Proxy Statement and Annual Report are available at
www.proxyvote.com.
______________________________________________________________________________________________________________________________________________________________
SYSTEMAX
INC.
THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD
OF
DIRECTORS
ANNUAL MEETING
OF STOCKHOLDERS - JUNE 12, 2009
The
stockholder(s) hereby appoint(s) Curt Rush and Thomas Axmacher, or either of
them, as proxies, each with the power to appoint his substitute, and hereby
authorize(s) them to represent and to vote, as designated on the reverse side of
this ballot, all of the shares of Common Stock of SYSTEMAX INC. that the
stockholder(s) is/are entitled to vote at the Annual meeting of Stockholder(s)
to be held at 2:00 PM, EDT on June 12, 2009, at the Company's Corporate Offices,
11 Harbor Park Drive, Port Washington, NY 11050, and any adjournment or
postponement thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED BY THE STOCKHOLDERS. IF NO SUCH
DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE
BOARD OF DIRECTORS AND FOR EACH PROPOSAL.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED REPLY
ENVELOPE
Continued
and to be signed on reverse side
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