UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
x
Filed by a Party other than the Registrant
¨
Check the appropriate box:
¨
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Preliminary Proxy Statement
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¨
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive Proxy Statement
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¨
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Definitive Additional Materials
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¨
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Soliciting Material Pursuant to
§240.14a-12
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R.G. Barry Corporation
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
¨
Fee
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computed on table below per Exchange Act Rules
14a-6(i)(1)
and
0-11.
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(1)
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Title of each class of securities to which the transaction applies:
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(2)
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Aggregate number of securities to which the transaction applies:
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(3)
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Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule
0-11
(set forth the amount on
which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of the transaction:
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¨
Fee
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paid previously with preliminary materials.
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¨
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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R.G. BARRY CORPORATION
13405 Yarmouth Road N.W.
Pickerington, Ohio 43147
September 19, 2013
To Our Shareholders:
You are cordially invited to attend the
2013 Annual Meeting of Shareholders of R.G. Barry Corporation (the Annual Meeting), which will be held at 11:00 a.m., Eastern Daylight Saving Time, on Wednesday, October 30, 2013 at our corporate offices located at 13405 Yarmouth
Road, Pickerington, Ohio 43147.
The formal Notice of Annual Meeting of Shareholders and Proxy Statement are
enclosed, and the matters to be acted upon by our shareholders are described in them. Our Annual Report 2013, which includes our Annual Report on Form 10-K (excluding exhibits) for the fiscal year ended June 29, 2013, is also being delivered to
you and provides additional information regarding the financial results of our Company for the fiscal year ended June 29, 2013. If you were a shareholder of record at the close of business on September 5, 2013, you are entitled to vote in
person or by proxy at the Annual Meeting.
On behalf of the Board of Directors and management, I cordially
invite you to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting and regardless of the number of common shares you own, it is important that your common shares be represented and voted at the Annual Meeting. Accordingly,
after reading the enclosed Proxy Statement, you can ensure that your common shares are represented at the Annual Meeting by promptly completing, signing, dating and returning your proxy card in the enclosed envelope provided for your convenience.
Alternatively, if you are a registered shareholder, you may transmit voting instructions for your common shares electronically through the Internet or by telephone by following the instructions on the proxy card.
Thank you for your continued support.
Very truly yours,
Greg Tunney
President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
R.G. BARRY CORPORATION
13405 Yarmouth Road N.W.
Pickerington, Ohio 43147
(614) 864-6400
Pickerington, Ohio
September 19, 2013
NOTICE IS HEREBY GIVEN
that the Annual Meeting of Shareholders of R.G. Barry Corporation (the Company)
will be held at our corporate offices located at 13405 Yarmouth Road, Pickerington, Ohio 43147 on October 30, 2013, at 11:00 a.m., Eastern Daylight Saving Time, for the following purposes:
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1.
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To elect four directors, each to serve for a two-year term expiring at the 2015 Annual Meeting of Shareholders. (Proposal 1)
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2.
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To approve the advisory resolution on executive compensation. (Proposal 2)
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3.
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To ratify the appointment of KPMG LLP as the Companys independent registered public accounting firm for the fiscal year ending June 28,
2014. (Proposal 3)
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We are asking our shareholders to cast a non-binding, advisory vote in
favor of our executive compensation programs, as set forth in
Proposal 2.
We believe that our executive compensation programs are effective in achieving our goal of providing compensation that is aligned with Company performance (both
short-term and long-term) and the long-term creation of sustained shareholder value. In evaluating the Say on Pay proposal, we recommend that you carefully review our
COMPENSATION DISCUSSION AND ANALYSIS
section that
begins on page 19 of our Proxy Statement, which explains how and why the Compensation Committee of our Board of Directors arrived at its executive compensation actions and decisions for fiscal 2013.
Your Board of Directors recommends that you vote: (i)
FOR
the election of the
director nominees listed in the Companys Proxy Statement for the Annual Meeting under the section captioned PROPOSAL 1 ELECTION OF DIRECTORS (Item 1 on the Proxy); (ii)
FOR
the
approval of the advisory resolution on executive compensation; and (iii)
FOR
the ratification of the appointment of KPMG LLP as the Companys independent registered public accounting firm for the fiscal
year ending June 28, 2014.
Only our shareholders of record at the close of business on
September 5, 2013 are entitled to receive notice of, and vote at, the Annual Meeting.
You are cordially
invited to attend the Annual Meeting. Your vote is important, regardless of the number of common shares you own. Whether or not you plan to attend the Annual Meeting, please promptly vote and submit your proxy by completing, signing, dating and
returning your proxy card in the enclosed envelope. Alternatively, refer to the instructions on the proxy card for details about transmitting your voting instructions electronically via the Internet or by telephone.
If you later decide to revoke your proxy for any reason, you may do so in the manner described in the accompanying Proxy
Statement.
Attending the Annual Meeting will not, by itself, revoke a previously-appointed proxy
.
By
Order of the Board of Directors,
Greg Tunney
President and Chief Executive Officer
R.G. BARRY CORPORATION
13405 Yarmouth Road N.W.
Pickerington, Ohio 43147
(614) 864-6400
PROXY STATEMENT
Dated: September 19, 2013
FOR THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held On October 30, 2013
GENERAL INFORMATION ABOUT VOTING
This Proxy Statement, along with the accompanying proxy card, is being furnished to shareholders in connection with the solicitation of proxies, on behalf of the Board of Directors (the Board)
of R.G. Barry Corporation, for use at the 2013 Annual Meeting of Shareholders to be held on October 30, 2013. The Annual Meeting will be held at 11:00 a.m., Eastern Daylight Saving Time, at our corporate offices located at 13405 Yarmouth Road,
Pickerington, Ohio 43147. This Proxy Statement summarizes information you will need in order to vote.
As used
in this Proxy Statement, the terms Company, R.G. Barry, we, us and our mean R.G. Barry Corporation or, where appropriate, R.G. Barry Corporation and its subsidiaries. The term common
shares means the Companys common shares, $1.00 par value per share. Other than common shares, there are no voting securities of the Company outstanding.
VOTING AT THE ANNUAL MEETING
Only shareholders of record
at the close of business on September 5, 2013 are entitled to receive notice of, and to vote at, the Annual Meeting. The Company is first sending or giving this Proxy Statement and the accompanying proxy card to those shareholders on or about
September 19, 2013. At the close of business on September 5, 2013, 11,297,144 common shares were outstanding and entitled to vote at the Annual Meeting. Each common share entitles the holder thereof to one vote on each matter to be
submitted to shareholders at the Annual Meeting. Shareholders do not have cumulative voting rights in the election of directors.
To ensure that your common shares will be voted at the Annual Meeting, please complete, sign, date and promptly return the accompanying proxy card. A return envelope, which requires no postage, if mailed
in the United States, has been provided for your use. Alternatively, you may transmit voting instructions electronically via the Internet or by using the toll-free telephone number stated on the proxy card. The deadline for transmitting voting
instructions electronically via the Internet or by telephone is 11:59 p.m., Eastern Daylight Saving Time, on October 29, 2013. The Internet and telephone voting procedures are designed to authenticate shareholders identities, to
allow shareholders to give their voting instructions and to confirm that shareholders voting instructions have been properly recorded. If you vote electronically through the Internet or by telephone, you should understand that there may be
costs associated with electronic access, such as usage charges from Internet service providers and/or telephone companies, which will be borne by you.
If you are a shareholder of record and attend the Annual Meeting, you may deliver your completed proxy card in person or you may vote by completing a ballot, which will be available at the Annual Meeting.
Those common shares represented by properly executed proxy cards, which are received prior to the Annual
Meeting and not revoked, or by properly authenticated voting instructions transmitted electronically via the Internet or by telephone prior to the deadline for transmitting those instructions and not revoked, will be voted as directed by the
shareholders. The common shares represented by all valid forms of proxy received prior to the Annual Meeting that do not specify how the common shares should be voted will be voted as recommended by the Board, as follows:
FOR
the
ratification of the appointment of KPMG LLP as the Companys independent registered public accounting firm for the fiscal year ending June 28, 2014; and, except in the case of broker non-votes: (i)
FOR
the election
of each of the director nominees identified below under the caption
PROPOSAL 1 ELECTION OF DIRECTORS
(Item 1 on the Proxy); and (ii)
FOR
the approval of the advisory resolution on executive
compensation as described under
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item 2 on the Proxy). No appraisal rights exist for any action proposed by the Company to be taken at the Annual Meeting.
1
Voting of Common Shares Held in Street Name
If you hold your common shares in street name with a nominee, such as a broker, financial institution or
other record holder, you may be eligible to provide voting instructions to the holder of record electronically via the Internet or by telephone and you may incur costs associated with electronic or telephonic access, such as usage charges from
Internet service providers and/or telephone companies. If you hold your common shares in street name, you should carefully review the information provided to you by the holder of record. This information will describe the procedures to
be followed in instructing the holder of record how to vote your street name common shares, including the deadline for submitting your voting instructions, and how to revoke your previously-given instructions.
If you hold your common shares in street name, then your nominee is considered the shareholder of record for
voting purposes and should give you instructions for voting your common shares. As a beneficial owner, you have the right to direct that nominee how to vote the common shares held in your account.
Broker non-votes are common shares held of record by brokers or other nominees which are represented in
person or by proxy at the Annual Meeting, but which are not voted because instructions have not been received from the beneficial owner with respect to a particular matter over which the broker or nominee does not have discretionary voting
authority. The ratification of the appointment of the Companys independent registered public accounting firm is considered a routine item upon which brokers or other nominees, who hold their clients common shares in
street name, may vote the common shares in their discretion on behalf of their clients if those clients have not furnished voting instructions within the required time frame before the Annual Meeting. The uncontested election of
directors and the proposal to approve the advisory resolution on executive compensation are not considered routine items and brokers or other nominees may not vote on these matters without voting instructions from their clients.
Accordingly, if your common shares are held in street name and you do not provide voting instructions to your broker or other nominee as to how to vote on the proposal to approve the advisory resolution on executive compensation or on
the election of directors, your common shares will not be voted. Broker non-votes are counted toward the establishment of a quorum.
If you hold your common shares in street name and wish to attend the Annual Meeting and vote in person, you must bring an account statement or letter from your broker, financial institution or
other nominee authorizing you to vote on behalf of such nominee. The account statement or letter must show that you were the direct or indirect beneficial owner of the common shares on September 5, 2013, the record date for voting at the Annual
Meeting.
Solicitation of Proxies
We will bear the costs of preparing, assembling, printing and mailing this Proxy Statement, the accompanying proxy card and any other related materials and all other costs incurred in connection with the
solicitation of proxies on behalf of the Board, other than the Internet access fees and telephone service fees described above. The Company has engaged Morrow & Co., LLC, 470 West Avenue, Stamford, CT 06902, to assist in the solicitation of
proxies from shareholders at a fee of not more than $6,000, plus reimbursement of reasonable out-of-pocket expenses. Although the Company is soliciting proxies by mailing the proxy materials to shareholders, proxies may be further solicited by
additional mailings, personal contact, telephone, e-mail or facsimile by directors, officers and employees of the Company, none of whom will receive additional compensation for these solicitation activities. We will also pay the standard charges and
expenses of brokers, voting trustees, financial institutions and other custodians, nominees and fiduciaries who are record holders of common shares not beneficially owned by them, for forwarding our proxy materials to the beneficial owners of common
shares entitled to vote at the Annual Meeting.
Our Annual Report 2013, which includes our Annual Report on
Form 10-K (excluding exhibits) for the fiscal year ended June 29, 2013 (fiscal 2013), is being furnished with this Proxy Statement.
Right to Revoke Proxy
If you are a registered
shareholder, you may revoke your proxy at any time before it is actually voted at the Annual Meeting by giving written notice of revocation to the Secretary of the Company at the address shown on the cover page of this Proxy Statement, by accessing
the Internet site or using the toll-free number stated on the proxy card prior to the deadline for transmitting voting instructions electronically and electing revocation as instructed or by attending the Annual Meeting and giving notice of
revocation in person. You may also change your vote by choosing one of the following options: executing and returning to the Company a later-dated proxy card prior to or at the Annual Meeting; voting in person at the Annual Meeting; submitting a
later-dated electronic vote through the designated Internet site prior to the deadline for transmitting voting instructions electronically; or voting by telephone at a later date using the toll-free telephone number stated on the proxy card
2
prior to the deadline for transmitting voting instructions by telephone.
Attending the Annual Meeting will not, by itself, revoke your previously-appointed proxy
. The last dated proxy you
submit by any means will supersede any previously-submitted proxy.
If you hold your common shares in
street name and instructed your broker, financial institution or other nominee to vote your common shares and you would like to revoke or change your vote, then you must follow the instructions provided by your nominee.
Quorum and Tabulation of Voting Results
The results of shareholder voting will be tabulated by the inspector(s) of election appointed by the Board for the Annual Meeting. A quorum for the Annual Meeting is a majority of the outstanding common
shares entitled to vote at the Annual Meeting. Common shares represented by properly executed proxy cards returned to the Company prior to the Annual Meeting or represented by properly authenticated electronic votes recorded through the Internet or
by telephone will be counted toward the establishment of a quorum for the Annual Meeting.
NOTICE REGARDING INTERNET
AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders of R.G. Barry Corporation to be held on October 30, 2013:
Applicable
rules of the United States Securities and Exchange Commission (the SEC) require the Company to post its proxy materials on the Internet and permit the Company to provide only a Notice of Internet Availability of Proxy Materials to
shareholders. For this Annual Meeting, we have chosen to follow the SECs full set delivery option. Therefore, although we are posting a full set of our proxy materials (this Proxy Statement, the Notice of Annual Meeting of
Shareholders and our Annual Report 2013 to be furnished to shareholders) online, we are also mailing a full set of our proxy materials to our shareholders. Even if you previously consented to receiving your proxy materials electronically, you will
receive a copy of our proxy materials for the Annual Meeting by mail. We believe that mailing a full set of proxy materials will help ensure that a majority of our outstanding common shares is present in person or represented by proxy at our Annual
Meeting. We also hope to help maximize shareholder participation. However, we will continue to evaluate the option of providing only a Notice of Internet Availability of Proxy Materials to some or all of our shareholders in the future.
This Proxy Statement, the Notice of Annual Meeting of Shareholders and the Companys Annual Report 2013 to be
furnished to shareholders are available at
www.proxyvote.com
.
To obtain directions to our
executive offices in order to attend the Annual Meeting and vote in person, please call
(614) 729-7275
and ask for Mr. Roy Youst.
SHARE OWNERSHIP
The following table furnishes information regarding each person known to the Company to beneficially own more than 5% of our outstanding common shares as of September 5, 2013 (unless otherwise
indicated):
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Amount and Nature of Beneficial Ownership
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Name and Address
of Beneficial Owner
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Sole Voting
Power
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Shared
Voting
Power
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Sole
Dispositive
Power
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Shared
Dispositive
Power
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Total
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Percent
of
Class
(1)
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Royce & Associates, LLC
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1,408,125
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(2)
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1,408,125
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(2)
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1,408,125
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(2)
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12.4
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%
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745 Fifth Avenue
New York, NY 10151
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RBC Global Asset Management (U.S.) Inc.
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440
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(3)
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665,559
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(3)
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440
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(3)
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1,316,838
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(3)
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1,317,278
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(3)
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11.6
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%
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100 South Fifth Street, Suite 2300
Minneapolis, Minnesota 55402
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Steven C. Leonard
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209,789
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(4)
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209,789
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(4)
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1,094,929
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(4)
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1,304,718
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(4)
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11.5
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%
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P.O. Box 710
Rancho Santa Fe, CA 92067
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Amount and Nature of Beneficial Ownership
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Name and Address
of Beneficial Owner
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Sole Voting
Power
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Shared
Voting
Power
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Sole
Dispositive
Power
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Shared
Dispositive
Power
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Total
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Percent
of
Class
(1)
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Mill Road Capital, L.P.
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(5)
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641,286
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(5)
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(5)
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641,286
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(5)
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641,286
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(5)
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5.6
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%
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Thomas E. Lynch
Scott P. Scharfman
Mill Road Capital GP LLC
382 Greenwich Avenue
Suite One
Greenwich, CT 06830
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Wellington Management Company, LLP
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598,776
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(6)
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598,776
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(6)
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598,776
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(6)
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5.3
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%
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280 Congress Street
Boston, MA 02210
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(1)
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The Percent of Class is based on 11,297,144 common shares outstanding on September 5, 2013.
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(2)
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Based on information contained in Schedule 13G filed with the SEC on February 8, 2013. With respect to the 1,408,125 common shares reported to
be beneficially owned at December 31, 2012, Royce & Associates LLC, a registered investment adviser, reported sole voting power and sole dispositive power as to all of the 1,408,125 common shares. The interest of one account, Royce
Total Return Fund, a registered investment company managed by Royce & Associates, LLC, was reported to amount to 1,048,496 common shares (9.2 % of the outstanding common shares at September 5, 2013).
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(3)
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Based on information contained in a Schedule 13G filed with the SEC on February 8, 2013. With respect to the 1,317,278 common shares reported
to be beneficially owned at December 31, 2012, RGB Global Asset Management (U.S.) Inc., a registered investment adviser, reported sole voting and sole dispositive power over 440 shares, shared voting power over 665,559 common shares, and shared
dispositive power over 1,316,838 common shares.
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(4)
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Based on information contained in an Amendment No. 6 to Schedule 13G filed with the SEC on January 28, 2009. With respect to the
1,304,718 common shares reported to be beneficially owned at December 31, 2008, Mr. Leonard reported sole voting power and sole dispositive power as to 209,789 common shares and shared dispositive power as to 1,094,929 common shares. No
amendment to Schedule 13G has been filed with the SEC on behalf of Mr. Leonard with respect to the Companys common shares since January 28, 2009.
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(5)
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Based on information contained in a Schedule 13D filed by Thomas E. Lynch, Scott P. Scharfman, Mill Road Capital GP LLC and Mill Road Capital, L.P.
with the SEC on August 29, 2012. Messrs. Lynch and Scharfman, Charles M.B. Goldman and Justin C. Jacobs were reported to be the management committee directors of Mill Road Capital GP LLC (the GP). The GP was reported to be the sole
general partner of Mill Road Capital, L.P. (the Fund). The Fund was reported to directly hold, and thus have sole voting and dispositive power over 637,782 common shares, as of August 27, 2012. The GP, as the sole general partner of
the Fund, was also reported to have sole voting and dispositive power over these 641,286 common shares, and each of Messrs. Lynch and Scharfman was reported to have the shared authority to vote and dispose of these 641,286 common shares on behalf of
the Fund. No amendment to Schedule 13D has been filed on behalf of the GP, the Fund and/or Messrs. Lynch and Scharfman with respect to the Companys common shares since August 29, 2012.
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(6)
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Based on information contained in a Form 13F Holdings Report filed with the SEC on August 14, 2012. Wellington Management Company, LLP and its
affiliate Wellington Trust Company, NA were reported to have defined investment discretion and shared voting authority as of June 29, 2013 with respect to the 598,776 common shares reported.
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4
The following table furnishes information regarding the beneficial ownership
of common shares of the Company, as of September 5, 2013, for: (a) each of the Companys current directors; (b) each of the nominees for election as a director of the Company; (c) each of the individuals named in the
Fiscal 2013 Summary Compensation Table on page 32; and (d) all current executive officers and directors of the Company as a group. The address of each of the current executive officers and directors of the Company is c/o
R.G. Barry Corporation, 13405 Yarmouth Road N.W., Pickerington, Ohio 43147.
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Amount and Nature of Beneficial
Ownership
(1)
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Name of Beneficial Owner
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Common
Shares
Presently
Held
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Common Shares Acquirable Upon
Exercise of Options Currently
Vested and Upon Exercise
of
Options or Vesting of RSUs
Which Become Vested by
November 4, 2013
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Total
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Percent
of
Class
(2)
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Nicolas DiPaolo
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49,225
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(3)
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49,225
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(3)
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(4
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)
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David Lauer
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60,236
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(5)
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60,236
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(5)
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(4
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)
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David Nichols
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67,439
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(5)
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67,439
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(5)
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(4
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)
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Janice Page
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43,236
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(5)
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43,236
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(5)
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(4
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)
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Thomas Von Lehman
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100,307
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100,307
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0.8
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%
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Harvey Weinberg
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48,013
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(5)
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48,013
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(5)
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(4
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)
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Gordon Zacks
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249,245
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(6)
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249,245
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(6)
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2.2
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%
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Greg Tunney
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72,758
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(7)
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50,354
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123,112
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(7)
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1.0
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%
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Jose Ibarra
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28,777
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16,022
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44,799
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(4
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)
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Nancy Coons
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1,483
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3,333
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4,816
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(4
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)
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Glenn Evans
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17,624
|
|
|
|
10,181
|
|
|
|
27,805
|
|
|
|
(4
|
)
|
Lee Smith
|
|
|
11,309
|
|
|
|
10,431
|
|
|
|
21,740
|
|
|
|
(4
|
)
|
All other current executive officers of the
Company (numbering 3)
|
|
|
20,193
|
|
|
|
15,656
|
|
|
|
35,849
|
|
|
|
(4
|
)
|
All current directors and executive officers of the Company as a group (numbering 15)
|
|
|
769,845
|
|
|
|
105,977
|
|
|
|
875,822
|
|
|
|
7.7
|
%
|
(1)
|
Unless otherwise indicated, the beneficial owner has sole voting and sole dispositive power as to all of the common shares reflected in the table.
|
(2)
|
The Percent of Class is based upon the sum of: (a) 11,297,144 common shares outstanding on September 5, 2013; (b) the
number of common shares, if any, as to which the named individual or group has the right to acquire beneficial ownership upon the exercise of options which are currently exercisable or which will first become exercisable by November 4, 2013;
(c) the number of common shares, if any, underlying restricted stock units (RSUs) which will vest by November 4, 2013; (d) the number of common shares, if any, underlying RSUs which are vested as of September 5, 2013,
but as to which the individual or group holding the RSUs has elected to defer receipt of the underlying common shares to a future date under the Companys Amended and Restated Deferral Plan (the Deferral Plan); and (e) the
number of common shares if any, underlying common stock units (CSUs).
|
(3)
|
Excludes 3,000 common shares held of record and beneficially by Mr. DiPaolos spouse as to which Mr. DiPaolo has no voting or
dispositive power and disclaims beneficial ownership.
|
(4)
|
Represents ownership of less than 1% of the outstanding common shares of the Company.
|
(5)
|
The common shares shown for Mr. Lauer include an aggregate of 32,313 common shares underlying 25,053 RSUs and 7,260 CSUs. All of the RSUs and
CSUs were 100% vested at September 5, 2013, but Mr. Lauer has elected to defer receipt of the underlying common shares until a future date. The common shares shown for Mr. Nichols include 19,390 common shares underlying an equal
number of RSUs, which were 100% vested at September 5, 2013, but as to which Mr. Nichols elected to defer receipt of the underlying common shares until a future date. The common shares shown for Ms. Page include 25,053 common shares
underlying an equal number of RSUs, which were 100% vested at September 5, 2013, but as to which Ms. Page elected to defer receipt of the underlying common shares until a future date. The common shares shown for Mr. Weinberg include
8,996 common shares underlying an equal number of RSUs, which were 100% vested at September 5, 2013, but as to which Mr. Weinberg elected to defer receipt of the underlying common shares until a future date.
|
(6)
|
Includes 14,905 common shares held of record and owned beneficially by Mr. Zacks as trustee. In this capacity, Mr. Zacks has sole voting
and dispositive power.
|
(7)
|
Includes 4,000 common shares held by the Tunney Family Trust, of which Mr. Tunney and his spouse are trustees.
|
5
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), requires that the
Companys directors and executive officers and greater-than-10% beneficial owners of the Companys common shares file reports with the SEC reporting their initial beneficial ownership of common shares and any subsequent changes in their
beneficial ownership. Specific due dates for such reports have been established by the SEC and the Company is required to disclose in this Proxy Statement any late report or known failure to file a required report. To the Companys knowledge,
based solely upon a review of the reports furnished to the Company and written representations that no other reports were required, the Company believes that during fiscal 2013, all Section 16(a) filing requirements applicable to officers,
directors and greater-than-10% beneficial owners of the Companys outstanding common shares were complied with.
6
PROPOSAL 1 ELECTION OF DIRECTORS
(Item 1 on the Proxy)
At the 2010 Annual Meeting of Shareholders, the Companys shareholders adopted an amendment to Article Six of the Articles of Incorporation of the Company to reduce the number of Board classes from
three to two. Since the 2010 Annual Meeting of Shareholders, the Board has consisted of eight members, divided into two classes four in the class whose terms expire at the Annual Meeting of Shareholders in 2012 and four in the class whose
terms expire at the Annual Meeting of Shareholders in 2013. One class of directors is elected each year to hold office for a two-year term.
Directors in the class standing for election at the Annual Meeting are elected by a plurality of the votes cast at the Annual Meeting. Except in the case of broker non-votes, common shares represented by
properly executed and returned proxy cards or properly authenticated electronic voting instructions recorded through the Internet or by telephone will be voted
FOR
the election of the Boards nominees, unless authority to
vote for one or more nominees is withheld. Common shares as to which the authority to vote is withheld will not be counted toward the election of directors or toward the election of the individual nominees specified on the form of proxy.
Qualifications and Independence of Board Members and Nominees
The Companys common shares are listed on The NASDAQ Stock Market (NASDAQ), and the Company is subject
to the corporate governance requirements in the NASDAQ Listing Rules Rule 5600 series (the NASDAQ Rules). The Board has reviewed, considered and discussed each directors and each director nominees relationships, either
direct or indirect, with the Company and the compensation and other payments each director or director nominee receives, directly or indirectly, from the Company in order to determine whether such director or director nominee meets the independence
requirements of the NASDAQ Rules and the applicable rules and regulations of the SEC (the SEC Rules). The Board has determined that each of Nicholas DiPaolo, David Lauer, David Nichols, Janice Page, Thomas Von Lehman, Harvey Weinberg and
Gordon Zacks, who comprise a majority of the Board, qualifies as independent and has no relationships with the Company, either directly or indirectly, including any commercial, industrial, banking, consulting, legal, accounting, charitable, familial
or other relationship, that would interfere with the exercise of his or her independent judgment in carrying out his or her responsibilities as a director. When assessing Mr. Lauers independence, the Board took into account his service as
a non-employee director of Huntington Bancshares Incorporated, the holding company of The Huntington National Bank, which is a lender under the Companys credit facility. When assessing Mr. Weinbergs independence, the Board took into
account his prior service as a member of an advisory board of Griffin Strategic Advisors LLC, an advisory firm specializing in helping organizations improve profitability and accelerate growth, which provided nominal consulting services to the
Company during fiscal 2010 through fiscal 2013. In addition, the Board took into account Mr. Weinbergs service as executive Chairman of the Board of the parent company of Optimer, Inc. and Optimer Performance Fibers, Inc., textile
technology companies (from both of which he retired in December 2012), which did nominal business with the Company during fiscal 2011 through fiscal 2013 and no business with the Company during fiscal 2010. Mr. Von Lehman was determined to
qualify as independent because he has not served as an executive officer of the Company since September 30, 2006. Mr. Zacks was determined to qualify as independent because he has not served as an executive officer of the Company since
2004 and has not received payments from the Company during the past three years in an amount or of a type which would disqualify him from being independent under the NASDAQ Rules.
The Board has determined that Greg Tunney does not qualify as independent because he is an executive officer of the
Company.
7
Each nominee has furnished to the Company the following information, as of
September 5, 2013, concerning the age, principal occupation, other affiliations and business experience of the nominee:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominee
|
|
Age
|
|
Position(s) Held
with the Company and
Principal Occupation(s)
|
|
Director of
the Company
Continuously
Since
|
|
|
Nominee
for Term
Expiring
In
|
|
David Lauer
|
|
71
|
|
Director of the Company. David Lauer served as Acting Chief Financial Officer of The Ohio State Universitys Medical Center
(2002-2005). He was President and Chief Operating Officer of Bank One, Columbus, NA (1997-2001); and was Office Managing Partner of the Columbus office of Deloitte & Touche LLP (1989-1997). He also served as a member of the board of directors of
Deloitte & Touche LLP (1988-1995). Mr. Lauer is also a director of Huntington Bancshares Incorporated, and Diamond Hill Investment Group, Inc. Mr. Lauer previously served as a director of Wendys International, Inc., Tim Hortons Inc. and
AirNetSystems, Inc. He has been a Certified Public Accountant since 1968.
We believe Mr. Lauer offers the keen financial insight of an experienced CPA whose skills have been honed during careers at the highest executive levels
in banking and public accounting and, most recently through his service as Acting Chief Financial Officer for one of the nations top medical centers, as well as his experience as a director of other public companies.
|
|
|
2003
|
|
|
|
2015
|
|
|
|
|
|
|
David Nichols
|
|
72
|
|
Director of the Company. David Nichols served as President and Chief Operating Officer of Macys South, a division of
Federated Department Stores, Inc., now known as Macys Inc., from 2000 to 2005. During a distinguished 42-year career in retailing, he also held a number of additional key executive positions, including service from 1992 to 1998 as Chairman and
Chief Executive Officer of Mercantile Stores Company, Inc. He has served as a director of The Andersons, Inc., an Ohio-based customer-focused company with diversified interests in the agriculture and transportation markets, since 1995; and
previously served as a director of the Federal Reserve Bank in Cleveland from 1994 to 2000.
We believe Mr. Nichols brings the perspective of an experienced senior executive officer of large public retailers developed during a career principally within the traditional department store arena. His
retail perspective is further enhanced by his service as a director of The Andersons, Inc. since 1995. The experience Mr. Nichols gained during his tenure as a director of the Federal Reserve Bank in Cleveland, Ohio offers our Board access to a
macroeconomic perspective not available to many other corporate boards of similarly-sized companies.
|
|
|
2005
|
|
|
|
2015
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominee
|
|
Age
|
|
Position(s) Held
with the Company and
Principal Occupation(s)
|
|
Director of
the Company
Continuously
Since
|
|
|
Nominee
for Term
Expiring
In
|
|
Thomas Von Lehman
|
|
63
|
|
Director of the Company. Thomas Von Lehman has served as the Managing Director of The Meridian Group, an investment banking and
corporate renewal consulting firm based in Pittsburgh, PA, since June 2006. For approximately two years beginning in March 2004, he took a leave from The Meridian Group and served as interim President and Chief Executive Officer of R.G. Barry
Corporation. During that time, he led the implementation of the business and financial model upon which the Companys current operations are based. Mr. Von Lehman, who holds a doctorate in chemistry from the University of Cincinnati, retired in
2001 as Vice President, Specialty Chemicals following a 21-year career with PPG Industries Inc.
We believe Mr. Von Lehmans corporate and financial expertise, his skills as a corporate renewal specialist and his two years of experience as the Companys President and Chief
Executive Officer give him unique insights into our business.
|
|
|
2005
|
|
|
|
2015
|
|
|
|
|
|
|
Gordon Zacks
|
|
80
|
|
Director of the Company. Gordon Zacks has served as non-executive Chairman of the Board of the Company since May 2004. Prior thereto,
he served as Senior Chairman of the Board from March 2004 to May 2004, Chairman of the Board and Chief Executive Officer from 1979 to March 2004; and President from 1992 to 1999 and from 2002 to 2004, of the Company.
Mr. Zacks has been active in numerous local, state and national charitable,
political and religious endeavors throughout his career. He served on the Advisory Committee for Trade Negotiations under Presidents Reagan and G.H.W. Bush, the Advisory Committee for North American Free Trade Agreement and as Chairman of the U.S.
& Foreign Commercial Service Advisory Committee. He currently serves on the Deans Advisory Council of the Fisher College of Business of The Ohio State University. He is author of the book,
Defining Moments: Stories of Character, Courage
and Leadership,
and he is frequently sought after as a speaker on leadership.
In addition to the perspective and experience gained during his long career as the Companys President and Chief Executive Officer, we believe Mr. Zacks brings to the Board broad experience relating
to domestic and international trade and policy issues. In his role as an author and authority on the qualities of leadership, Mr. Zacks lends a unique dimension to the Board.
|
|
|
1959
|
|
|
|
2015
|
|
9
THE BOARD RECOMMENDS A VOTE
FOR
THE
RE-ELECTION OF ALL OF THE NOMINEES NAMED ABOVE
While it is contemplated that all nominees will stand for re-election, if one or more nominees at the time of the Annual
Meeting should be unable or unwilling to serve, the individuals designated to vote the proxies reserve full discretion to vote the common shares represented by the proxies they hold for the re-election of the remaining nominees and for the election
of any substitute nominee designated by the Board, following recommendation by the Nominating and Governance Committee. The Board knows of no reason why any of the individuals identified above as director nominees would be unable or unwilling to
serve as a director if re-elected to the Board.
The following information, as of September 5, 2013,
concerning the age, principal occupation, other affiliations and business experience of the directors of the Company whose terms extend beyond the Annual Meeting, has been furnished to the Company by each director:
10
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position(s) Held
with the Company and
Principal
Occupation(s)
|
|
Director of
the Company
Continuously
Since
|
|
|
Term
Expires
In
|
|
Nicholas DiPaolo
|
|
71
|
|
Director of the Company. Nicholas DiPaolo served as Vice Chairman of the Board and Chief Operating Officer of Bernard Chaus Inc.,
designer and marketer of womens apparel, from 2001 to 2005. He previously served as Chairman of the Board, President and Chief Executive Officer of Salant Corporation, a $550 million diversified apparel company. He is a lead director of Foot
Locker Inc., an international footwear retailer. He previously served as a director of JPS Industries, Inc. and Bernard Chaus Inc. He has also served as a director of the American Apparel and Manufacturers Association and other industry
groups.
Mr. DiPaolo provides valuable guidance based upon his executive
experience in the womens apparel industry, which is closely aligned with a significant portion of our business, and his years of service as a member of the board of directors of a major footwear retailer.
|
|
|
2005
|
|
|
|
2014
|
|
|
|
|
|
|
Janice Page
|
|
64
|
|
Director of the Company. Janice Page has served as an independent consultant on merchandising, buying, marketing, retail store
operations and management since 1997. Prior to that, she has served as a Senior Group Vice President from 1992 to 1997 for Sears, Roebuck and Company (now Sears Holding Company). Ms. Page has also served as a director of American Eagle Outfitters,
Inc. since 2004. Ms. Page served as a director of Kellwood Company from 2000 until it was acquired in 2008, as a trustee of the Glimcher Realty Trust from 2001 to 2004 and as a director of Hampshire Group, Limited from June 2010 until August
2012.
We believe Ms. Pages experience overseeing areas for Sears,
Roebuck and Company including mens, womens and childrens apparel as well as athletic footwear and accessories, her work as an independent retail consultant and her service as a director of specialty retailer American Eagle
Outfitters, Inc., give her an insiders view of national chain stores and independent retailers that is valuable in providing a unique strategic dimension to our business.
|
|
|
2000
|
|
|
|
2014
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position(s) Held
with the Company and
Principal
Occupation(s)
|
|
Director of
the Company
Continuously
Since
|
|
|
Term
Expires
In
|
|
Harvey Weinberg
|
|
75
|
|
Director of the Company. Harvey Weinberg has served as the executive Chairman of the Board of the parent company of Optimer, Inc. and
Optimer Performance Fibers, Inc., textile technology companies, since April 2010 and he served as the non-executive Chairman of the Board from 2007 to 2009 and as Executive Chairman and Chief Executive Officer from October 2009 to April 2010.
Previously, he served as Chairman of the Board from 1990 to 1992 and as Chief Executive Officer from 1987 to 1992 of Hartmarx Corporation, clothiers. Mr. Weinberg served as a director of Kellwood Company from 2004 until it was acquired in 2008. He
has also previously served as a director of Syms Corporation; a trustee of the Glimcher Realty Trust; a member of the Deans Advisory Board of the J.L. Kellogg Graduate School of Management at Northwestern University; an Academic Director in
the Kelloggs Executive Development Program; a visiting Executive Professor at the University of North Florida School of Business; and a director of the National Retail Federations Foundation Board.
We believe Mr. Weinbergs 35-plus years in the apparel and textile industries
and his involvement with management and board educational programs allow him to contribute important insights relating to business trends and corporate governance.
|
|
|
2001
|
|
|
|
2014
|
|
|
|
|
|
|
Greg Tunney
|
|
52
|
|
Greg Tunney joined R.G. Barry Corporation in February 2006 as its President and Chief Operating Officer; assumed the additional title
of Chief Executive Officer in May 2006; and was named to the Companys Board in August 2006. He formerly was President, Chief Operating Officer and a Director of Phoenix Footwear Group Inc., a supplier of a diversified selection of mens
and womens footwear, belts, personal items, outdoor sportswear and travel apparel, from 1998 to February 2005; Vice President National Sales for Brown Shoe Co.; and a merchandising executive with May Department Store Co. He is Chairman of the
Board of Directors for the industry trade association, Footwear Distributors and Retailers of America (FDRA); and serves on the Board of Directors of the footwear industry philanthropic organization, Two Ten Foundation.
Mr. Tunneys employment agreement as Chief Executive Officer of the Company
provides for Mr. Tunney to be nominated as a director during the term of his employment. Mr. Tunney has significant experience in the footwear industry, in particular in the areas of sales and merchandising. His service as Chairman of the Board
of Directors for the industry trade association, Footwear Distributors and Retailers of America, affords him the opportunity to gain valuable insights into the business trends and issues facing the footwear industry. His experience and service with
industry groups give him valuable insights into the footwear business from various points of view.
|
|
|
2006
|
|
|
|
2014
|
|
There are no family relationships among any of the directors, director nominees and
executive officers of the Company.
12
Meetings of and Communications with the Board
The Board held eight meetings during fiscal 2013. Each director attended 75% or more of the aggregate of (i) the
total number of meetings held by the Board and (ii) the total number of meetings held by the Board committees on which he or she served, in each case during the period he or she served as a director.
In accordance with the Companys Board Charter & Corporate Governance Guidelines and applicable NASDAQ
Rules, the independent directors meet, without management or the non-independent director, in executive sessions on a regular basis.
The Board believes it is important for our shareholders to have a process to send communications to the Board and its individual members. Accordingly, shareholders who wish to communicate with the Board,
the independent directors, a group of directors or a particular director may do so by sending a letter to such individual or individuals, in care of Roger Lautzenhiser, Secretary, at the Companys executive offices, 13405 Yarmouth Road N.W.,
Pickerington, Ohio 43147. The mailing envelope must contain a clear notation indicating that the enclosed correspondence is a Shareholder Board Communication, Shareholder Director Communication or
Shareholder Independent Director Communication, or must be otherwise marked appropriately. All such correspondence must identify the author as a shareholder and clearly state the identity of the intended recipient(s). The
Companys Secretary will make copies of all such correspondence and circulate them to the appropriate director or directors. We have no screening process with respect to shareholder communications.
Although the Company does not have a formal policy requiring members of the Board to attend annual meetings of the
shareholders, the Company encourages all incumbent directors and director nominees to attend each annual meeting of shareholders. All of our then eight incumbent directors and director nominees attended the Companys last annual meeting of
shareholders held on November 2, 2012.
Board Leadership Structure
The Company is led by Greg Tunney, who serves as President and Chief Executive Officer and as a director, and Gordon
Zacks, who serves as the non-executive Chairman of the Board. The Companys Board is currently comprised of Mr. Tunney and seven independent directors, including Mr. Zacks.
The Board has three standing committees: Audit, Compensation and Nominating and Governance. Each of the Audit Committee,
the Compensation Committee and the Nominating and Governance Committee is chaired by a separate independent director. Detailed information on each Board committee is contained in the immediately following section captioned
Committees of the
Board
.
The Company does not have a fixed policy regarding whether the offices of the Chairman of
the Board and the Chief Executive Officer should be vested in the same person or two different people. The Board has determined that the most effective leadership structure for the Company at the present time is for a different person to serve as
each of the Chief Executive Officer and the Chairman of the Board, coupled with independent chairs for our Audit, Compensation and Nominating and Governance Committees.
The Board believes that there may be advantages to having a non-executive Chairman of the Board for matters such as
communications and relations among the Board, the Chief Executive Officer and other senior management; and assisting the Board in reaching consensus on particular strategies and policies. One of Mr. Zacks roles as a non-executive Chairman
of the Board is to oversee and manage the Board and its functions, including setting meeting agendas and running Board meetings. In this regard, Mr. Zacks and the Board in their advisory and oversight roles are particularly focused on assisting
the Chief Executive Officer and senior management in seeking and adopting successful business strategies and risk management policies.
Committees of the Board
The Board has three standing committees the Audit Committee, the Compensation Committee and the Nominating and Governance Committee.
Audit Committee.
The Audit Committee, which was established in accordance with
Section 3(a)(58)(A) of the Exchange Act, currently consists of five independent directors Nicholas DiPaolo, David Lauer, David Nichols, Janice Page and Harvey Weinberg, each of whom served on the Audit Committee throughout fiscal
2013. Mr. Weinberg serves as Chair of the
13
Audit Committee, effective since November 2, 2012 and prior to which, Mr. DiPaolo served as Chair of the committee. Each member of the Audit Committee also satisfies the independence
requirements of Rule 10A-3 under the Exchange Act.
The Board has determined that Nicholas DiPaolo, David
Nichols, David Lauer and Harvey Weinberg qualify as an audit committee financial experts under applicable SEC Rules, by virtue of their experience, including that described on pages 8 to 12 of this Proxy Statement. The Board believes
that all members of the Audit Committee can read and understand the Companys consolidated financial statements and are highly qualified to discharge their duties on behalf of the Company and our subsidiaries.
The Audit Committee is organized and conducts its business pursuant to a written charter. A current copy of the Audit
Committees charter is posted on the Investors Governance page of the Companys website at
www.rgbarry.com
.
The Audit Committees duties and responsibilities are set forth in its charter. Its primary functions are to assist the Board in its oversight of: (1) the integrity of the Companys
financial statements; (2) the Companys compliance with legal and regulatory requirements; (3) the qualifications and independence of the Companys independent public accounting firm (sometimes also referred to as the
Companys independent auditors); and (4) the performance of the independent auditors and the personnel responsible for the Companys internal audit function. The Audit Committees specific responsibilities include,
among others: (1) appointing the Companys independent auditors for each fiscal year and recommending that appointment be ratified by the Companys shareholders as well as determining the terms of engagement, including the proposed
fees and terms of service; (2) overseeing and evaluating the work of the independent auditors; (3) reviewing and approving in advance all audit services and all permitted non-audit services; (4) reviewing the independence and
objectivity of the independent auditors; (5) determining Company hiring policies for employees or former employees of the independent auditors; (6) reviewing the Companys accounting policies and practices and financial statement
presentations; (7) reviewing and evaluating the activities of the Companys independent auditors and the personnel responsible for the internal audit function; (8) reviewing with management and the independent auditors reports and
recommendations relating to the integrity of the Companys internal accounting procedures and controls; (9) preparing an annual report for inclusion in the Companys proxy statement; (10) discussing from time to time risk
management and risk assessment policies; (11) establishing procedures for the receipt, review, retention and treatment of complaints received by the Company concerning accounting, internal controls or auditing matters, as well as the
confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; (12) reviewing all related party transactions that would be required to be disclosed in the Companys annual
proxy statement for potential conflict of interest situations and approving such transactions, if appropriate; and (13) other matters required by applicable SEC Rules and NASDAQ Rules.
The Audit Committee met four times during fiscal 2013, and its related report is included on page 42 of this Proxy
Statement. Pursuant to its charter, the Audit Committee has the authority to retain such accounting, legal and other advisors as it deems appropriate to carry out its functions, including the sole authority to approve the fees and other terms of
such advisors retention.
Compensation Committee.
The Compensation
Committee is currently comprised of five independent directors Nicholas DiPaolo, David Lauer, David Nichols, Janice Page and Harvey Weinberg, each of whom served on the Compensation Committee throughout fiscal 2013. Mr. DiPaolo has
served as Chair of the Compensation Committee, since November 2, 2012 and prior thereto, Ms. Page had served as Chair of the Compensation Committee. Each member of the Compensation Committee satisfies not only the general independence
requirements under the NASDAQ Rules but also the independence requirements specific to members of compensation committees under the NASDAQ rules. Each member of the Compensation Committee is a non-employee director with the meaning of
Rule 16b-3 under the Exchange Act and an outside director within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Internal Revenue Code). The Compensation Committee is organized and
conducts its business pursuant to a written charter adopted by the Board. A current copy of the Compensation Committees charter is posted on the Investor Governance page of the Companys website at
www.rgbarry.com
.
The Compensation Committees charter sets forth the duties and responsibilities
of the Compensation Committee which include, among others: (1) reviewing, approving and overseeing the process and substance of the Companys executive compensation policy; (2) evaluating the performance of the Chief Executive Officer
and other executive officers of the Company in light of corporate goals and objectives approved by the Compensation Committee; (3) establishing and approving annually the individual elements of total compensation for the Chief Executive Officer
and other executive officers of the Company; (4) determining whether the Company should enter into employment agreements, including change in control or severance agreements, with its executive officers; (5) approving the annual base
salary, annual incentive awards and long-term incentive awards, including all equity-based awards, and other perquisites and benefits, direct and indirect, of the Chief Executive Officer and other executive officers of the Company;
(6) administering the Companys equity-based plans; (7) reviewing new executive
14
compensation programs and, on a periodic basis, the operation of the Companys existing executive compensation programs; (8) reviewing and making recommendations to the Board regarding
the appropriate fee amounts to be paid to the Companys non-employee directors; (9) recommending to the Companys shareholders the frequency with which the Company should submit to the shareholders an advisory vote on the compensation
of the Companys named executive officers; (10) reviewing the results of any shareholder advisory vote on the compensation of the Companys named executive officers and evaluating the Companys executive compensation policies and
practices in light of each advisory vote; (11) annually reviewing the risks that arise from the Companys compensation policies and determining whether such risks are likely to have a material adverse effect on the Company; and
(12) preparing the annual Compensation Committee Report, as required under applicable SEC Rules, for inclusion in the Companys proxy statement.
Pursuant to its charter, the Compensation Committee has the sole authority to retain or obtain the advice of such compensation consultants, legal counsel or other advisors as it deems appropriate to carry
out its functions, including the sole authority to approve the fees and other retention terms for any such advisors. Prior to any such retention, the Compensation Committee assesses any factors relevant to such advisors independence from
management, including the factors specified in the applicable NASDAQ Rules, to evaluate whether the services to be performed will raise any conflict of interest or compromise the independence of such advisors.
The Compensation Committee met five times during fiscal 2013, and its related report has been included on page 19 of this
Proxy Statement. The Companys processes and procedures for considering and determining compensation of our executive officers are discussed below under the caption
COMPENSATION DISCUSSION AND ANALYSIS.
Nominating and Governance Committee.
The Nominating and Governance Committee
currently consists of five of the Companys independent directors Nicholas DiPaolo, David Lauer, David Nichols, Janice Page and Harvey Weinberg, each of whom served on the Nominating and Governance Committee throughout fiscal 2013.
Mr. Lauer serves as Chair of the Nominating and Governance Committee. The Nominating and Governance Committee is organized and conducts its business pursuant to a written charter adopted by the Board. A current copy of the Nominating and
Governance Committees charter is posted on the Investors Governance page of the Companys website at
www.rgbarry.com
.
The Nominating and Governance Committees primary responsibility is to create and maintain the overall corporate governance principles and policies for the Company. The Nominating and Governance
Committees specific responsibilities include, among others: (1) recommending to the Board policies to enhance the Boards effectiveness; (2) developing and periodically reviewing the Companys corporate governance policies;
(3) creating and maintaining a Code of Business Conduct and Ethics for directors, officers and employees; (4) approving service by a director of the Company on the board of directors of another publicly-traded company; (5) assessing
on a regular basis the qualifications needed by the Board in the context of the current status of the Board; (6) conducting evaluations of the directors whose terms of office expire each year; (7) recommending to the Board the slate of
nominees to be recommended to the shareholders for election and any directors to be elected by the Board to fill vacancies; (8) recommending the directors to be selected for membership on Board committees, including the chairs of the
committees; (9) recommending to the Board annually the individual to be appointed as Chief Executive Officer of the Company for the ensuing year; and (10) periodically initiating and overseeing performance evaluations for the Board as a
whole.
The Nominating and Governance Committee met four times during fiscal 2013.
Nominating Procedures
The Nominating and Governance Committee is responsible for overseeing a broad range of issues surrounding the composition and operation of the Board, including identifying candidates qualified to become
directors and recommending director nominees to the Board. When considering candidates for the Board, the Nominating and Governance Committee evaluates the entirety of each candidates credentials but does not have specific eligibility
requirements or minimum qualifications that must be met by a Nominating and Governance Committee-recommended nominee and has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees. The Nominating
and Governance Committee considers those factors it deems appropriate, including maturity in judgment, diversity, experience, skills, accountability and integrity, financial literacy, high performance standards, other board appointments, industry
knowledge, networking/contacts and degree of independence from management. Depending on the current perceived needs of the Board, the Nominating and Governance Committee may weigh certain factors more or less heavily than others. The Nominating and
Governance Committee does, however, believe that all members of the Board should have the highest character and integrity, a reputation for working constructively with others, sufficient time to devote to Board matters and no conflicts of interest
that would interfere with the performance of the duties of a director of the Company.
15
The Nominating and Governance Committee will consider candidates for the
Board from any reasonable source, including shareholder recommendations, and does not evaluate candidates differently based on who makes the recommendation. Pursuant to its charter, the Nominating and Governance Committee has the authority to retain
consultants and search firms to assist in the process of identifying and evaluating director candidates and to approve the fees and other retention terms for any such consultant or search firm. The Nominating and Governance Committee has never used
a consultant or search firm for such purpose and, accordingly, the Company has paid no such fees.
Shareholders may recommend director candidates for consideration by the Nominating and Governance Committee by giving
written notice of the recommendation to David Lauer, Chair of the Nominating and Governance Committee, c/o R.G. Barry Corporation, 13405 Yarmouth Road N.W., Pickerington, Ohio 43147. The recommendation should include the candidates name, age,
business address, residence address and principal occupation or employment as well as a description of the candidates qualifications, attributes and other skills. A written statement from the candidate consenting to serve as a director if
elected and a commitment by the candidate to meet personally with the Nominating and Governance Committee members must accompany any such recommendation. The Nominating and Governance Committee will consider candidate recommendations from
shareholders for the 2014 Annual Meeting of Shareholders, which are submitted not later than July 12, 2014. Any shareholder who wishes to formally nominate one or more individuals must follow the procedures described below.
The Board, taking into account the recommendations of the Nominating and Governance Committee, selects nominees for
election as directors at each annual meeting of shareholders. Shareholders who wish to formally nominate one or more individuals for election as a director at an annual meeting may do so, provided they comply with the nomination procedures set forth
in the Companys Articles of Incorporation and applicable SEC Rules. Each notice of director nomination must be received by the Companys Secretary not less than 30 days or more than 60 days prior to any meeting of shareholders called for
the election of directors. However, if less than 35 days notice of the meeting is given to the shareholders, the shareholder notice must be mailed or delivered to the Companys Secretary not later than the close of business on the seventh
day following the day on which the notice of the meeting was mailed. Each shareholder notice of nomination must contain the following information: (a) the name, age, business and, if known, residence address of the nominee; (b) the
principal occupation or employment of the nominee; (c) the number of common shares beneficially owned by the nominee and by the nominating shareholder; and (d) any other information concerning the nominee that must be disclosed of nominees
in proxy solicitations under applicable SEC Rules. Each nomination must be accompanied by the written consent of the proposed nominee to serve as a director if elected. The Companys Secretary must receive notice of nominations for the 2013
Annual Meeting by September 30, 2013.
Compensation Committee Interlocks and Insider Participation
Nicholas DiPaolo, David Lauer, David Nichols, Janice Page and Harvey Weinberg served as members of the Compensation
Committee throughout fiscal 2013 and continue to serve. No member of the Compensation Committee serves or has served at any time as one of our officers or employees or has a direct or indirect material interest in any related person transaction
required to be disclosed under Item 404 of SEC Regulation S-K. None of our executive officers has served on the board of directors or compensation committee (or other committee performing equivalent functions) of any other entity that has an
executive officer serving as a member of our Board or Compensation Committee.
Board Charter & Corporate Governance Guidelines
The Board has adopted the Board Charter & Corporate Governance Guidelines, which are available
on the Investors Governance page of the Companys website at
www.rgbarry.com
. The Guidelines, which are applicable to our Board, address issues relating to: (1) Board responsibilities; (2) Board selection and
composition, including Board size and classification, independence of the Board, Board membership criteria and selection of new directors; (3) the Chairman of the Board and the Chief Executive Officer; (4) service on multiple boards of
directors; (5) Board communications, including disclosure policy and interaction with investors and other third parties; (6) Board compensation; (7) Board meetings, including agenda items, distribution of Board materials, executive
sessions of independent directors and number of Board meetings; (8) Board access to independent advisors; (9) stock ownership; (10) succession planning; (11) committee matters, including number, structure and independence of
committees, compensation of committee members, selection of committee chairs and assignment and rotation of committee members and chairs; and (12) Director Emeritus designations.
16
Director Share Ownership Requirement
Within five years after his or her initial appointment or election as a director of the Company, each director who is not
an employee/officer of the Company must acquire and continue to hold common shares with a fair market value of at least three times the cash portion of the directors annual retainer (the Director Share Ownership Requirement).
Directors who were in office on October 29, 2009 will have five years from such date to meet the Director Share Ownership Requirement. For purposes of the Director Share Ownership requirement, vested CSUs or RSUs held by or for the account of a
director will be counted as common shares owned by that director. Directors who are employees of the Company are subject to the share ownership requirements applicable to the officers of the Company, as described under the sub-caption
Share
Ownership Guidelines
beginning on page 29 of this Proxy Statement within the section captioned
COMPENSATION DISCUSSION AND ANALYSIS
. For purposes of the first sentence of this paragraph, the cash portion of a
directors retainer is the maximum amount of the retainer that the director is entitled to receive in cash even though he or she may elect to receive all or some of that amount in the form of fully-paid common shares or CSUs.
Code of Business Conduct & Ethics
The Board has adopted a Code of Business Conduct & Ethics, which is posted on the Investors Governance page of the Companys website at
www.rgbarry.com
. This Code,
which is applicable to all of our directors, officers and employees, addresses issues relating to: (1) conflicts of interest; (2) corporate opportunities; (3) use of inside information; (4) corporate communications; (5) fair
dealing; (6) confidentiality; (7) accounting practices; (8) records retention; (9) compliance with laws, rules and regulations; (10) the duty to report suspected violations and consequences of violations; and (11) other
Company policies and procedures.
Board Role in Risk Oversight
Our Board has overall responsibility for risk oversight with a focus on the most significant risks facing the Company.
Not all risks can be dealt with in the same way. Some risks may be easily perceived and controllable, and other risks are unknown. Some risks can be avoided or mitigated by particular behavior, and some risks are unavoidable as a practical matter.
For some risks, the potential adverse impact would be minor, and, as a matter of business judgment, it may not be appropriate to allocate significant resources to avoid the adverse impact. In other cases, the adverse impact could be significant, and
it is prudent to expend resources to seek to avoid or mitigate the potential adverse impact. In some cases, a higher degree of risk may be acceptable because of a greater perceived potential for reward.
Management is principally responsible for identifying risks and risk controls related to significant business activities;
mapping the risks to Company strategy; and developing programs and recommendations to determine the sufficiency of risk identification, the balance of potential risk to potential reward and the appropriate manner in which to control risk. The Board
implements its risk oversight responsibilities by having management provide periodic reports on the significant risks that the Company faces and how the Company is seeking to control or mitigate such risks, if and when appropriate. In some cases,
risk oversight is addressed as part of the full Boards engagement with the Chief Executive Officer and management. In other cases, a Board committee is responsible for oversight of specific risk topics. For example, the Audit Committee
oversees issues related to internal control over financial reporting and reviews related person transactions that would be required to be disclosed in the Companys annual proxy statement for potential conflict of interest situations; the
Nominating and Board Governance Committee oversees issues related to the Companys governance structure and corporate governance matters and processes and, together with the Audit Committee, risks arising from related person transactions; and
the Compensation Committee oversees risks related to compensation policies and programs, as discussed in greater detail below. Presentations and other information for the Board and Board committees generally identify and discuss relevant risks and
risk controls; and the Board members assess and oversee the risks as a part of their review of the related business, financial or other activity of the Company.
Risk Assessment in Compensation Programs.
Consistent with SEC disclosure
requirements, management has assessed the Companys compensation programs and has concluded that the Companys compensation policies and practices for our associates do not create risks that are reasonably likely to have a material adverse
effect on the Company. This assessment was overseen by the Compensation Committee, in consultation with its independent compensation consultant. Further information on the risk assessment undertaken in respect of the Companys compensation
programs is included under the sub-caption
Risk Assessment
beginning on page 24 of this Proxy Statement within the section captioned
COMPENSATION DISCUSSION AND ANALYSIS
.
17
COMPENSATION OF DIRECTORS
The following table summarizes compensation awarded or paid to, or earned by, each of the individuals who served as a
director of the Company during fiscal 2013.
Director Compensation for Fiscal 2013
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Name
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Fees
Earned
or
Paid
(1)(2)(3)
($)
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Stock
Awards
($)
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Option
Awards
($)
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Non-Equity
Incentive Plan
Compensation
($)
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Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)
(4)
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All Other
Compensation
($)
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Total
($)
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Gordon Zacks
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84,380
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21,513
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(5)
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105,893
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Nicholas DiPaolo
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84,380
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84,380
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David Lauer
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84,380
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84,380
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David Nichols
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77,004
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77,004
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Janice Page
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79,682
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79,682
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Thomas Von Lehman
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75,504
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75,504
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Harvey Weinberg
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79,202
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79,202
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(1)
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Non-employee directors of the Company were paid an annual retainer based on a value of $73,500 for the twelve-month period following the annual
meeting of shareholders. Non-employee directors must elect annually the portion of their annual retainer (100%, 75%, or a minimum requirement of 50%) that is to be paid to them in the form of an equity award (the Equity Award) as
described below. The balance is paid in cash in quarterly installments. The Chairman of the Board and the Chairs of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee each receive an additional annual cash
retainer of $8,876 for their role on those committees, based on time served during the twelve-month period in the respective Chair roles. These retainers are paid only in the form of cash and in quarterly installments. Mr. Nichols has continued
to serve as the Boards liaison to the Companys pension committee, and, as such, received $500 in cash for each meeting of that committee he attended. Additional director fees were approved effective at the May 21, 2012 meeting of
the Board for member participation in any special meeting, with $1,000 paid for telephonic and $1,500 paid for in-person participation in such special Board meetings from and after that date.
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(2)
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A non-employee director can elect to receive his or her Equity Award in the form of fully-paid common shares or CSUs. The common shares or CSUs are
issued to the non-employee director following authorization by the Board at the Board meeting immediately following the annual meeting of shareholders. The number of common shares or CSUs granted annually to a non-employee director is determined by
dividing the amount of the annual retainer that the non-employee director has elected to receive in the form of an Equity Award by the market value of one common share of the Company at the close of the market at the grant date. Non-employee
directors must submit their elections regarding the form of their Equity Award for approval by the full Board before the Equity Awards are granted and as a condition to any grant.
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CSUs convert into common shares when the director leaves the Board. CSUs are accompanied by dividend equivalent rights so
that the non-employee director receives, when he or she leaves the Board, an amount in cash equal to the aggregate amount of dividends paid on an equivalent number of common shares from the grant date of the corresponding CSUs through the date the
CSUs are converted into common shares.
All non-employee directors elected to receive 2,673 fully-paid common
shares as their Equity Award during fiscal 2013. Each Equity Award had a fair value of $13.75 per fully-paid common share on the grant date (November 8, 2012).
(3)
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Greg Tunney, the Companys President and Chief Executive Officer, is not included in this table because, as an employee of the Company, he
received no additional compensation for service as a director during fiscal 2013. The compensation received by Mr. Tunney as an employee of the Company is shown in the Fiscal 2013 Summary Compensation Table beginning on page 32 of
this Proxy Statement.
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(4)
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Mr. Zacks is a participant in the Companys qualified and supplemental pension plans as a result of his prior service as employee of the
Company. None of the payments received by Mr. Zacks during fiscal 2013 under the Companys pension plans were conditioned on service as a director of the Company, and no continuing benefit accruals were or will be made on behalf of
Mr. Zacks under the Companys pension plans as a result of his service as a director of the Company.
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(5)
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Mr. Zacks retired as an employee of the Company on July 1, 2004. Mr. Zacks and the Company are parties to a separation agreement
dated March 10, 2004 pursuant to which Mr. Zacks retired from his positions as President and Chief Executive
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18
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Officer of the Company. The Company is obligated under that agreement to maintain Mr. Zacks life insurance benefits, including a split-dollar policy, until his death for as long as the
Company can maintain such insurance without additional premium costs. In fiscal 2013, there was $13,564 in attributed income on payments made by the Company on behalf of Mr. Zacks on a split-dollar life insurance policy held by the Company on
his life. The Company is obligated to gross up for taxes from the impact of the split-dollar payments attributed to Mr. Zacks, which amounted to $7,949 for fiscal 2013.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the following
COMPENSATION DISCUSSION AND ANALYSIS
with management. Based on such review and discussion, the Compensation Committee
has recommended to the full Board and the full Board approved that the
COMPENSATION DISCUSSION AND ANALYSIS
be included in this Proxy Statement and incorporated by reference into the Companys 2013 Form 10-K.
Submitted by the Compensation Committee of the Board of Directors:
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Nicholas DiPaolo, Chair
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David Nichols
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Harvey Weinberg
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David Lauer
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Janice Page
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COMPENSATION DISCUSSION AND ANALYSIS
Introduction:
This Compensation Discussion and
Analysis (CD&A) describes the Companys compensation approach and specifically describes the total compensation for the following named executive officers (NEOs):
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Greg Tunney, President and Chief Executive Officer (CEO)
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Jose Ibarra, Senior Vice President-Finance and Chief Financial Officer (CFO)
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Glenn Evans, Senior Vice President-Global Operations
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Lee Smith, Senior Vice President-Strategic Brand & Channel Services
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Nancy Coons, Brand Unit President-Footwear
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Executive Summary
Company Financial and Operating
Performance
Profitable, sustainable growth that benefits all of our stakeholders remains the ultimate
goal of the Company and its evolving business model. Some strategies currently being used to achieve this type of growth include: investment in various initiatives related to strengthening our existing brand lines and retailer relationships; the
acquisition of additional established brands from within the accessories; pursuit of domestic, international and eCommerce market expansion; and the identification and implementation of best-in-class business systems, techniques and data to hasten
and maintain profitable growth.
During fiscal 2013, we remained focused on achieving our principal goals:
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grow our business profitably by pursuing key initiatives based on innovation within our product lines and acquisition opportunities outside of our
core footwear business;
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continue efforts to strengthen the relationships with our retailing partners and open distribution of our products in new retail channels; and
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further enhance the image of our brands through both customer and consumer advertising.
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19
During fiscal 2013, we accomplished the following:
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Maintained profitability in the Footwear segment in a challenging fiscal 2013.
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Successfully implemented and integrated new information technology systems.
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Successfully continued to grow our accessory products businesses within multiple channels achieving the levels of profitability targets established
for the Accessories segment for fiscal 2013.
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Reported consolidated net earnings of $13.3 million, or 9.0% of net sales.
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Reported cash, cash equivalents and short-term investments of $39.5 million at the end of fiscal 2013
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Executive Compensation Highlights for Fiscal 2013:
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For fiscal 2013, above target bonuses were paid to the NEOs under the Companys annual incentive plan, based on the Companys consolidated
pre-incentive, pre-tax income reached the fiscal 2013 and Management Bonus Plan (the 2013 Bonus Plan) provisions.
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During the annual review of executive compensation in September 2012, the Compensation Committee approved an increase to the CFOs base salary
of 4% from $275,000 to $285,000, as well as an increase to the base salary of the Brand Unit President Footwear of 7% from $172,500 to $185,000 representing both a market adjustment and an adjustment based on her performance in fiscal 2012.
No other executive officer received an increase in base salary for fiscal 2013 during the annual review.
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2012 Shareholder Advisory Vote on Executive Compensation (Say on Pay):
The 2012 Annual Meeting of Shareholders was held on November 2, 2012. The shareholders overwhelmingly showed their
support of the Companys executive philosophy and approach as reported for fiscal 2012, with over 99% of all votes cast at the Annual Meeting (broker non-votes not being counted as votes cast) being voted in favor of the executive compensation
programs. The Compensation Committee and the Board were very appreciative of the positive vote and the strong message it delivered. Accordingly, the Compensation Committee has continued to use a similar approach for fiscal 2013. The Compensation
Committee will continue to consider shareholder feedback in the design and development of the Companys executive compensation programs.
Compensation Committee
The Compensation Committee of the Board is responsible for overseeing our executive compensation programs and is comprised entirely of independent, non-employee directors. The Compensation Committee
annually reviews the performance and compensation of the CEO and determines the appropriateness of his compensation. The Compensation Committee reviews the performance and compensation of the CEO in executive session, without the CEO or other
members of Company management present. Decisions on executive officer compensation are made by the Compensation Committee, although compensation levels for executive officers other than the Companys CEO have historically been recommended to
the Compensation Committee by the CEO, who has substantial knowledge of the contributions made by the individual executive officers.
Philosophy and Objectives
The compensation program for the Companys CEO and other executive officers is administered in a manner that:
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Pays for Performance A significant portion of each executive officers compensation opportunity is tied to the performance of the
individual and the Company overall.
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Responds to Competitiveness All components of compensation are set competitively as compared against appropriate peer companies so that the
Company can continue to attract, retain and motivate high performing executive talent.
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20
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Focuses Accountability on Short-term and Long-term Performance Annual performance-based bonuses and long-term incentives are designed to
reward an appropriate balance of short-term and long-term financial and strategic business results, with an emphasis on managing the Companys business for the long term.
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Provides Alignment with Shareholder Interests Long-term incentives align decision-making with the interests of the Companys
shareholders.
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The Compensation Committee has the responsibility to create compensation
programs that embrace the above philosophy in a manner that attempts to achieve the optimal balance between employee attraction, retention and motivation and expense control. In seeking that balance, the Compensation Committee looks to market data
to set compensation targets that are competitive with an executive compensation peer group consisting of companies that are similar in revenue and industry with the Company, but the Compensation Committee also takes into account the current
financial performance of the Company.
Role of CEO
After a review of the analyses conducted by the independent compensation consultant retained by the Compensation
Committee along with the performance of the Company and individual executive officers, the CEO recommends to the Compensation Committees base salaries, target annual bonus levels, and long-term incentive grants for the Companys executive
officers, other than himself. The Compensation Committee then considers, discusses, modifies as appropriate, and acts on such proposals in determining the overall compensation programs for the Companys executive officers.
Role of Compensation Consultant
During fiscal 2013, the Compensation Committee retained Meridian Compensation Partners LLC (Meridian) as its independent consultant on executive and director compensation. Meridian worked at
the direction of the Compensation Committee as a compensation consultant on executive officer compensation. During its period of service, Meridian worked with a mandate to serve and work for the Compensation Committee in its review of executive
officer and director compensation practices, including the competitiveness of pay levels, executive compensation design issues, market trends, and technical considerations. The nature and scope of services that could be rendered by Meridian on the
Compensation Committees behalf are described below:
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Performing benchmarking analyses, including executive compensation peer group surveys, proxy data studies, director pay studies, dilution analyses
and market trends;
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Ongoing support with regard to the latest relevant regulatory, technical and/or accounting considerations impacting compensation and benefit
programs;
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Assistance with the redesign of any compensation or benefit programs, as desired or needed;
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Preparation for and attendance at selected management, Compensation Committee or Board meetings; and
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Other miscellaneous requests that occurred throughout the year.
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The Compensation Committee did not direct Meridian to perform the above services in any particular manner or under any
particular method. The Compensation Committee has final authority to hire and terminate Meridian or any other consultant at any time, and the Compensation Committee evaluates the performance of the consultant annually. Meridian attended Compensation
Committee meetings in fiscal 2013. Meridian did not provide any other consulting services during fiscal 2013.
In fiscal 2013, the Compensation Committee asked Meridian to review overall executive compensation market trends and
continue to review R.G. Barrys peer group. Meridian recommended to the Compensation Committee a peer group of companies, based on the following methodology and criteria:
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Same or similar industry with emphasis on footwear and apparel/ accessories companies with operations at national level;
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Comparable size as defined by revenue and market value R.G. Barrys revenue should ideally fall near the median for peer group
companies;
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21
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Ownership structure based on U.S. publicly-traded companies;
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Location of peer group companies should provide a broad, national representation; and
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Market benchmarks developed should be based on a sufficient number of companies to be considered credible market benchmarks.
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The specific peer companies referenced for fiscal 2013 pay decisions included:
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Crown Crafts, Inc.
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Hampshire Group, Limited
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Delta Apparel, Inc.
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Joes Jeans Inc.
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Lakeland Industries, Inc.
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Rocky Brands, Inc.
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Steven Madden, Ltd.
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Tandy Brands Accessories, Inc.
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Weyco Group, Inc.
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Vera Bradley, Inc.
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Deckers Outdoor Corporation
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Since each of Heelys Inc., K-Swiss Inc. and Lacrosse Footwear, Inc. was acquired
during fiscal 2013, they were not included in our fiscal 2013 peer group list although they had been included in fiscal 2012.
Compensation Program Elements
For fiscal 2013, the Compensation Committee continued to target the Companys executive officer
total compensation between the 50
th
and 65
th
percentile range of the peer group companies for similar positions.
The Companys market compensation objectives provide a directional reference for competitiveness when both the Company and the individual executive officer are meeting performance expectations. Further, in applying compensation objectives to
actual pay decisions, the Compensation Committees use of market data as a reference point provides the flexibility for the Compensation Committee to apply judgment in reviewing the specific facts and circumstances of other areas the
Compensation Committee considers in the pay process. Overall, the Compensation Committee believes that the amounts and elements of its executive compensation programs are reasonable and in the best interests of the Company and our shareholders in
light of current market conditions and given the limited pool of top accessory and footwear executive candidates.
22
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Element
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Description
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Competitive Compensation
Philosophy versus Peer
Group
Companies
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Base Salary
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Fixed compensation element to pay for experience, expertise and knowledge
Provide base level of compensation at or slightly above peer group companies to
attract and retain executive officers
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50
th
65
th
percentile
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Annual Performance Bonus
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Focus on attaining annual Company financial goals and other strategic objectives
Set individual target opportunities at or slightly above peer group companies to
attract, retain and motivate executive officers to drive shareholder value
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50
th
65
th
percentile
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Total Cash
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Base Salary plus Annual Performance Bonus
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50
th
65
th
percentile
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Long-Term Incentive Award
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RSUs link the interests of executive officers and shareholders
Performance-based RSUs are based on
pre-established goals and emphasize Company financial performance
Time-based RSUs encourage stock ownership and retention
Designed to be competitive with peer group companies and maintain a balanced focus on short-term and long-term performance while managing share dilution levels
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50
th
percentile
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Total Direct Compensation
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Base Salary, Annual Performance Bonus, and Long-Term Incentive Award
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50
th
65
th
percentile
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Benefits
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Basic 401(k) plan and health and welfare benefits provide financial security
Other benefits, which are limited, provided to meet competitive needs
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We have no stated percentile target for benefits except to be generally competitive with our peer group companies
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Total Compensation
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Base Salary, Annual Performance Bonus, Long-Term Incentive Award, and Benefits
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50
th
65
th
percentile
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Compensation Committees Process for Setting Executive Compensation
The process for setting annual levels of the key compensation elements is conducted in the beginning of the fiscal year.
However, compilation of information regarding peer group company practices and trend development, analysis of our programs and outcomes and discussion of possible program changes begin several months earlier. Also, throughout the year, the
Compensation Committee considers the overall structure and elements of compensation and updates the types of compensation incentives and/or benefits deemed appropriate.
23
The Compensation Committee seeks information and advice from the
compensation consultant in fulfilling the Compensation Committees responsibilities to determine executive compensation. The Compensation Committee generally considers multiple factors when establishing the annual levels for the compensation
elements.
For each executive officer, the Committee considers the following:
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The market value of each compensation element and the total of all the compensation elements representing the annual package and the consistency
thereof with the program objectives;
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Prior years compensation levels and payouts;
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Performance, including accomplishment of individual objectives and demonstrated leadership, change in scope of responsibilities and evaluation by
the CEO;
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The portion of pay tied to both short-term and long-term performance-based incentives, with a greater percent of compensation being at
risk as the scope of responsibilities increases; and
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The CEOs recommendations and performance ratings.
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Other factors the Committee considers include:
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Internal equity among executive officers for each element and the total compensation opportunity;
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Peer group company data, which serve as a baseline for considering base salary, annual performance bonus and total compensation;
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Prior year Company performance and the context of performance results;
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Companys financial position, current year budget and projections;
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Number of common shares available for grants under our Amended and Restated 2005 Long-Term Incentive Plan (the 2005 LTIP), dilution
based on previously-issued and current equity awards and overhang calculations; and
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External factors, such as market conditions for a particular job or skill set.
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There is no established formula for weighting these factors, some of which are intangible and not readily quantifiable,
or a pre-established priority. Depending on the given year or the particular executive officer, the Compensation Committee may find certain factors more significant than others. In total, however, they provide necessary context and perspective for
determining the relative value of different executive officers to the Company and for developing compensation programs that will meet our compensation objectives and provide the appropriate performance incentives.
Risk Assessment
Our compensation programs are balanced and focused on creating shareholder value over the long term. Under this structure, the highest amount of compensation can be achieved through consistent superior
performance over sustained periods of time. This provides strong incentives to manage the Company for the long term, while avoiding excessive risk taking in the short term. Goals and objectives reflect a balanced mix of quantitative and qualitative
performance measures to avoid excessive weight on a single performance metric. Nonetheless, because performance-based incentives play a large role in our executive compensation programs, we believe that it is important to ensure that these
incentives do not result in our executive officers taking actions that may conflict with the long-term best interests of the Companys shareholders. We address this is several ways. First, we believe that base salaries are a sufficient
component of the total compensation to discourage excessive risk-taking. Second, the earnings goals under our annual performance bonus plan are based primarily upon budgeted earnings levels that are reviewed and approved by the Board. We
believe they are challenging yet attainable without the need to take inappropriate risks or make material changes to our operating business model or strategy. Third, our RSU awards are based on executive officer leadership competencies, primarily
assessed by the CEO and approved by the Board. These RSU awards are broken down into both time-based and performance-based awards.
24
The Companys incentive programs do not currently incorporate a
clawback or recoupment provision. However, the Company will implement a clawback policy when the SEC releases its final rules under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In fiscal 2013, the Compensation Committee, along with Meridian, conducted a thorough risk assessment of the
Companys compensation policies and programs. As a result of the review, the Compensation Committee concluded that the Companys programs reflect a well-balanced approach that encourages an appropriate level of risk-taking behavior.
Base Salary
The base salaries of the CEO and other executive officers and subsequent adjustments to those base salaries are determined relative to the following factors: (1) the importance to the Company of the
executive officers job function; (2) the individuals performance in his/her position; (3) the individuals potential to make a significant contribution to the Company in the future; and (4) a comparison of industry
pay practices. The Compensation Committee believes that all of these factors are important and the relevance of each factor varies from individual to individual. The Compensation Committee historically has not assigned any specific weight to any of
these factors in the evaluation of any executive officers base salary. The Compensation Committee believes that it is important for the Company to remain competitive in the base salaries of its management team in order to attract and retain
the small group of senior managers who are key to the success of the Companys operations.
Before making
salary recommendations to the Compensation Committee, the CEO reviews peer group data and general survey information from Meridian to determine competitive compensation levels for each Companys senior management position.
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During the annual review of executive compensation in September 2012, the Compensation Committee approved an increase to the CFOs base salary
of 4% from $275,000 to $285,000, as well as an increase to the Brand Unit President Footwears base salary of 7% from $172,500 to $185,000 representing both a market adjustment and an adjustment based on her performance in fiscal 2012.
No other executive officer received an increase in base salary for fiscal 2013 during the annual review.
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Annual Performance Bonus
The Company has historically maintained one or more annual bonus plans for its employees, including the Companys executive officers. The Compensation Committee evaluates on an annual basis the
performance metrics as well as the performance goal levels used to establish the matrix of potential payouts. The Compensation Committee believes these performance levels promote Company growth without sacrificing quality of earnings. The
Compensation Committee also considers that both metrics and goal levels are significant in measuring of executive officer efforts in managing the business consistent with the business plan and operating strategy and are in the best interest of the
shareholders.
Target bonus award opportunities under the 2013 Bonus Plan were designed
to achieve our competitive pay philosophy of paying between the 50
th
and 65
th
percentile of the Companys peer group companies in respect of total cash compensation. An executive officers payout opportunity under the 2013 Bonus Plan (expressed as a percentage of base salary) was based on the executive
officers position with the Company, with more senior positions receiving a higher payout opportunity. The participation percentages of the executive officers were established by the Compensation Committee based on market survey data provided
by Meridian.
For fiscal 2013, performance weightings for executive officers were slightly changed to focus
additional accountability on the individual. Bonus awards were based on the combination of Company financial performance (evaluating consolidated pre-incentive, pre-tax income), business unit financial performance (evaluating business unit
pre-incentive, pre-tax income and business unit net sales) and/or individual performance review rating.
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Consolidated
Financial
Results
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Business
Unit
Financial
Results
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Business
Unit
Net Sales
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Individual
Performance
Review
Rating
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Greg Tunney
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100
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%
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Jose Ibarra
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Glenn Evans
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75
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%
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25
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%
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Lee Smith
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|
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Nancy Coons
|
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25
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%
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|
|
25
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%
|
|
|
25
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%
|
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|
25
|
%
|
25
The Compensation Committee approved the following individual threshold,
target and maximum potential bonuses (if applicable objectives were met) as a percentage of base salary for the NEOs under the 2013 Bonus Plan:
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Threshold
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Target
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Maximum
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|
Greg Tunney
|
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37.5
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%
|
|
|
65.64
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%
|
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|
150
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%
|
Jose Ibarra
|
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|
22.5
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%
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|
39.39
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%
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|
90
|
%
|
Glenn Evans
|
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|
20.0
|
%
|
|
|
35.00
|
%
|
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|
80
|
%
|
Lee Smith
|
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|
20.0
|
%
|
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|
35.00
|
%
|
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|
80
|
%
|
Nancy Coons
|
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|
20.0
|
%
|
|
|
35.00
|
%
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|
80
|
%
|
The threshold, target and maximum bonus levels for fiscal 2013 were associated with
consolidated pre-incentive, pre-tax corporate income levels of $18.1 million, $21.3 million and $25.5 million, respectively.
Long-Term Incentive Awards
Long-term incentive awards are designed to align the interests of management with those of our shareholders, create a stock retention vehicle for our executive officers, provide a common reward structure
across the executive officer population and contribute to an entrepreneurial environment among our executive officers.
The Compensation Committee believes that the granting of RSUs strengthens the Companys pay-for-performance philosophy and encourages stock ownership by the Companys executive officers. The
Compensation Committees objective is to keep dilution through equity awards to below 10% of the Companys outstanding common shares on a fully-diluted basis. When compared to options, fewer RSUs are required since RSUs have more value
than options and result in less dilution than do options.
We establish target dollar values for each
executive officer position when granting RSU awards. We target the 50th percentile of competitive market practice determined by reference to our peer group companies when establishing the annual dollar value of our long-term incentive awards for our
executive officers; however, award sizes may be adjusted based on individual performance considerations, which include primarily leadership competencies and values. The CEO makes award recommendations based on his assessment and reviews them with
the Compensation Committee members for their final approval.
Under this program, annual long-term incentive
grants have two components: (i) 75% of the grant value is in the form of performance-based RSUs and (ii) 25% of the grant value is in the form of time-based RSUs. In September 2012, the Compensation Committee began granting these two forms
of RSUs in order to place more emphasis on performance-based compensation and the achievement of pre-established Company financial goals, while encouraging stock ownership and retention.
On September 13, 2012, the Committee approved the following long-term incentive grants to the NEOs:
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Number of Performance-
Based RSUs (at Target)
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Number of
Time-Based RSUs
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Total Grant Date
Value
(at Target)
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|
Greg Tunney
|
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20,162
|
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6,720
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$
|
400,000
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|
Jose Ibarra
|
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6,300
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2,100
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$
|
125,000
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|
Glenn Evans
|
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|
3,780
|
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|
1,260
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|
$
|
75,000
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Lee Smith
|
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|
4,284
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|
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|
1,428
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$
|
85,000
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|
Nancy Coons
|
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3,276
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1,092
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$
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65,000
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Annual grant values were determined for each position based on our compensation
philosophy, internal equity, and external market data.
The amount of the performance-based RSUs earned is
determined following the end of the fiscal year in which the award is granted based on the Companys achievement of the pre-established financial goals for the fiscal year. Once the actual performance for the fiscal year has been certified by
the Compensation Committee and actual payout determined, the award will vest in three annual installments, with the first installment vesting when such performance is certified. The performance-based RSUs will be settled in cash (50%) and in
common shares (50%) upon each annual vesting date.
26
The awards granted in September 2012 were based on fiscal 2013 diluted
earnings per share goals established by the Compensation Committee on September 13, 2012. Approved diluted earnings per share goals for fiscal 2013 with respect to these performance-based awards and corresponding payouts for the achievement of
various performance levels included: (i) below threshold, less than $0.95 diluted earnings per share; (ii) threshold at $0.95 diluted earnings per share; (iii) target at $1.12; and (iv) maximum at $1.28 diluted earnings per
share, respectively. Under this matrix, payouts are to be interpolated between threshold and maximum based on actual performance levels achieved.
On August 15, 2013, the Compensation Committee certified that the diluted earnings per share for fiscal 2013 were at a level above the target goal, and therefore approved the settlement of one-third
of the earned performance-based RSUs at an above target level for all of the NEOs. Settlement of this portion occurred on the third business day following the release of fiscal 2013 earnings by the Company. The remaining two-thirds will
be settled in accordance with the vesting installment schedule discussed above. As a result the following performance-based RSUs were earned and vested or will vest as follows:
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Total Performance-
Based RSUs Earned
based on FY
2013
Diluted Earnings Per
Share Performance
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Portion
vested in
August
2013
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Portion that will
Vest in September
2014 (assuming
continued
service)
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Portion that will
Vest in September
2015 (assuming
continued
service)
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|
Greg Tunney
|
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|
22,052
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|
|
7,351
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|
|
|
7,351
|
|
|
|
7,350
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|
Jose Ibarra
|
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|
6,891
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|
|
|
2,297
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|
|
|
2,297
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|
|
2,297
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|
Glenn Evans
|
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|
4,134
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|
|
|
1,378
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|
1,378
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|
|
|
1,378
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|
Lee Smith
|
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|
4,686
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|
|
|
1,562
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|
|
|
1,562
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|
|
|
1,562
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|
Nancy Coons
|
|
|
3,583
|
|
|
|
1,194
|
|
|
|
1,195
|
|
|
|
1,194
|
|
The forgoing performance-based RSUs were and will be settled with 50% of the value of the
award being settled in the form of Company common shares and the other 50% in the form of cash payment equivalent to the market value at the date of settlement of the Company common shares underlying the RSUs so settled.
Time-Based RSUs
Time-based RSUs granted to the executive officers will vest in three annual installments, with vesting concurrent with the annual certification of financial results by the Compensation Committee following
the close of each respective fiscal year. Vesting for the time-based RSUs is conditioned upon continued service through to that time with the Company or one of its subsidiaries. Time-based RSUs will be settled in common shares upon following such
certification.
Performance-Based and Time-Based RSUs granted during fiscal 2012
The number or value of the performance-based RSUs earned with respect to fiscal 2012 was determined following the end of
fiscal 2012 based on the Companys achievement of the pre-established financial goals for the fiscal year. One-third of the earned award vested when financial goals were certified by the Compensation Committee with the balance of the award to
vest in equal installments in 2014 and 2015 contingent on continued service. The performance-based RSUs are settled in cash (50%) and in common shares (50%) upon each annual vesting date.
The following table provides information regarding the vesting status of RSUs granted to each of the NEOs on
September 26, 2011:
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|
Total Number of Earned
Common Shares
Underlying RSU
Grant
|
|
|
Cumulative Vested
Portion of RSUs as
of August 15, 2013
|
|
Greg Tunney
|
|
|
32,112
|
|
|
|
21,408
|
|
Jose Ibarra
|
|
|
13,380
|
|
|
|
8,920
|
|
Glenn Evans
|
|
|
8,028
|
|
|
|
5,352
|
|
Lee Smith
|
|
|
9,099
|
|
|
|
6,066
|
|
Nancy Coons
|
|
|
6,959
|
|
|
|
4,638
|
|
27
Long-Term Incentive Awards Prior To Fiscal 2012
The RSUs that had been granted through fiscal 2011 had a five-year cliff-vesting period with a performance-based
accelerated vesting feature (performance-accelerated RSUs). Each year, the Compensation Committee set a financial performance target to trigger accelerated vesting of 20% of the original RSUs granted. In the last half of August each year
(August 15, 2013 for the determination in respect of fiscal 2013 results), the Compensation Committee is to meet to review results for the just-completed fiscal year against the target set for that fiscal year. If the fiscal years target is
not met, the vesting of that 20% of the RSUs is not accelerated and that percentage would continue to vest on the fifth anniversary of the original RSU grant date subject to continued employment with the Company by the respective executive officers.
If a fiscal years target is met, 20% of the RSUs originally granted vest and are immediately settled in an equal number of common shares. In the event of an executive officers termination of employment because of death or disability, all
performance-accelerated RSUs immediately vest. If an executive officers service terminates because of retirement, a pro-rata number of performance-accelerated RSUs will vest and be settled in common shares in the year of retirement. Pro-rata
numbers are determined based on the number of months worked by an executive officer versus the full number of months included in the original vesting period. If an executive officers termination of employment occurs for any reason other than
death, disability or retirement, all unvested performance-accelerated RSUs are forfeited. Upon vesting, each performance-accelerated RSU award is settled in the form of a common share.
Since the Companys consolidated pre-incentive, pre-tax income met the threshold level, RSUs granted on
September 10, 2010 as well as any other RSU granted prior to 2011 were eligible for accelerated vesting at the close of fiscal 2013 for any individual participant, including the CEO. The same threshold was used to determine both the level of
payout under the 2013 Bonus Plan and eligibility for accelerated vesting with respect to any outstanding performance-accelerated RSU grants.
The following table provides information regarding the vesting status of RSUs granted to each of the NEOs on September 10, 2010:
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|
|
|
|
|
|
|
|
|
Total Common Shares
Underlying Original RSU Grants
|
|
|
Cumulative Vested
Portion of RSUs as
of August 15, 2013
|
|
Greg Tunney
|
|
|
35,587
|
|
|
|
14,234
|
|
Jose Ibarra
|
|
|
11,862
|
|
|
|
4,744
|
|
Glenn Evans
|
|
|
9,490
|
|
|
|
3,796
|
|
Lee Smith
|
|
|
9,490
|
|
|
|
3,796
|
|
Nancy Coons
|
|
|
2,372
|
|
|
|
948
|
|
Ms. Coons employment with the Company commenced July 2010 and accordingly, she
did not participate in any of the awards made in fiscal 2009 or prior years. The following table provides information regarding the vesting status of RSUs granted to each of the NEOs on September 9, 2009:
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|
|
|
|
|
|
|
Total Common Shares
Underlying RSU Grant
|
|
|
Cumulative Vested
Portion of RSUs as
of August 15, 2013
|
|
Greg Tunney
|
|
|
38,636
|
|
|
|
23,181
|
|
Jose Ibarra
|
|
|
12,134
|
|
|
|
7,278
|
|
Glenn Evans
|
|
|
8,724
|
|
|
|
5,232
|
|
Lee Smith
|
|
|
8,464
|
|
|
|
5,232
|
|
The Compensation Committee granted RSUs (a) to the then serving NEOs except the CEO
on September 11, 2008, (b) to Greg Tunney on November 5, 2008, in his capacity as CEO, and (c) to Jose Ibarra on January 5, 2009 (an additional 5,145 RSUs, commensurate with his then promotion to CFO). The following table
provides information regarding the vesting status of RSUs granted to each of the identified NEOs during fiscal 2009:
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|
|
|
|
|
|
|
|
|
Total Common Shares
Underlying Original RSU Grant
|
|
|
Cumulative Vested
Portion of RSUs as
of August 15, 2013
|
|
Greg Tunney
|
|
|
51,246
|
|
|
|
51,246
|
|
Jose Ibarra
|
|
|
12,832
|
|
|
|
12,832
|
|
Glenn Evans
|
|
|
8,103
|
|
|
|
8,103
|
|
Lee Smith
|
|
|
7,759
|
|
|
|
7,759
|
|
28
Any RSU grants awarded after the mid-point of a fiscal year are evaluated on
a pro-rata basis in determining the amount of such award that might vest in that fiscal year if performance targets are achieved by the Company.
Benefits
The Company previously maintained
the R.G. Barry Corporation Associates Retirement Plan, providing for the accrual of pension related benefits for employees (and the R.G. Barry Corporation Supplemental Retirement Plan providing for the earning of additional pension benefits by
specified eligible participants, none of whom is a current executive officer). In February 2004, the Associates Retirement Plan was amended to freeze all benefits at the levels accrued as of March 31, 2004 under the plan. The frozen
Associates Retirement Plan was the only such plan in which some of the current NEOs participated. Effective January 2005, the Company elected to provide general retirement benefits to the executive officers and all other employees through a
401(k) plan. The Company provides an annual 3% of base salary contribution to each employees 401(k) plan account (i.e., the 401(k) Safe Harbor contribution), regardless of the participants contribution level.
All executive officers participate in the Companys medical, dental, disability and life insurance benefit plans on
the same basis as all other full-time employees of the Company. In lieu of the Companys general corporate group life insurance policy, Mr. Tunney is provided a life insurance policy that has a death benefit of $500,000, and he is
responsible for payment of any taxes attributable to imputed income based on the premiums.
The Compensation
Committee worked with Hewitt Associates during fiscal 2009 to review the competitiveness of the CEOs total benefits package against the benefits of chief executive officers at peer group companies and other similarly-sized public companies.
The Compensation Committee observed a competitive gap in the value of Mr. Tunneys benefits versus the market and included an annual benefit to address the competitive gap in his total benefits package. The benefit adjustment is provided
annually during the duration of the employment agreement and does not obligate the Company beyond the term of that agreement. This benefit adjustment provides an effective retirement-oriented compensation benefit as part of the compensation package.
The amount can be found in the All Other Compensation column of the Fiscal 2013 Summary Compensation Table.
In 2010, management contracted with Aon Consulting to review the competitiveness of the NEOs total benefits package against those at peer group companies and other similarly-sized public companies.
They observed a similar competitive gap to that found the previous year for Mr. Tunney. Therefore, the Compensation Committee authorized the Company to make annual payments beginning in fiscal 2011 of $42,750 to Messrs. Ibarra, Evans and Smith
which are intended to be used by these individuals, after payment of applicable income taxes, to fund and maintain in force individually-owned life insurance plans. The Company believes that this additional retirement benefit, when combined with the
Companys current retirement program, provides competitive retirement benefits for its NEOs.
Mr. Tunney has a Company-paid membership to a country club for the purpose of conducting business on behalf of the
Company. This benefit provides Mr. Tunney access to an appropriate setting for business networking and other business functions and meetings. Any meal or other expenses incurred at the club that are not business-related are the responsibility
of Mr. Tunney.
Share Ownership Guidelines
The Companys Executive Share Ownership Guidelines provide that each executive officer must achieve ownership of a
number of common shares or unvested RSUs (sometimes referred to as Qualifying Shares) with a market value equal to a multiple of the executive officers base salary (as in effect on the later of October 29, 2009 or the date he
or she first becomes an executive officer). The market value of the common shares and unvested RSUs (only those subject to time-based vesting) each executive officer is required to own and hold (the executive officers Required
Market Value) is as follows:
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|
|
CEO: A multiple of three (3) times base salary.
|
|
|
|
CFO and other executive officers: A multiple of one (1) times base salary.
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Covered executive officers are expected to achieve ownership of a number of Qualifying Shares meeting the Required Market
Value within five years after the later of the adoption of the Executive Share Ownership Guidelines or the date he or she first becomes an executive offer.
29
Executive officers who become subject to the Executive Share Ownership
Guidelines after October 29, 2009, will have their individual guidelines established based upon their respective base salaries at the time they become subject to the Executive Share Ownership Guidelines. Once established, a participants
guideline generally does not change as a result of fluctuations in the price of the Companys common shares.
Compliance with the Executive Share Ownership Guidelines will be measured on the first trading day of each fiscal year, and is subject to annual review by the Compensation Committee.
No additional post-vesting holding periods are placed on our RSU awards beyond the Executive Share Ownership Guidelines.
Employment Agreement and Severance
:
Below is a summary of key terms of Mr. Tunneys current employment agreement:
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|
|
Executive Employment Agreement renewed effective as of May 1, 2012 providing for service as the Companys President and CEO.
|
|
|
|
Term of the Executive Employment Agreement extends until July 1, 2017 unless sooner terminated. Following the initial term, the Executive
Employment Agreement will automatically renew for additional one-year periods, unless either the Company or Mr. Tunney gives 90 days prior written notice of intent not to renew.
|
|
|
|
Base salary at a minimum annual rate of $526,000 and subject to annual review.
|
|
|
|
Participation in Companys annual performance bonus program and long-term incentive plan.
|
|
|
|
Participation in the Companys benefit plans.
|
|
|
|
Payment of sum of $75,000 on January 15 of each year during the employment term to cover Mr. Tunneys participation in a personal
life insurance-based retirement program.
|
|
|
|
Provisions concerning consequences of termination of employment under specified circumstances (see
Potential Payments upon Termination or
Change in Control
). Additionally, the provision addressing an excise tax gross-up payable upon a qualifying termination following a change-in-control was removed from the employment agreement
|
|
|
|
Confidentiality, non-solicitation, non-disparagement and non-compete obligations were undertaken by Mr. Tunney. The non-solicitation and
non-competition covenants survive for two years following his termination of employment and the confidentiality covenant is generally perpetual.
|
We have no employment agreements with any of the other NEOs. Each of Messrs. Ibarra, Evans and Smith is a party to an
individual change in control severance agreement with the Company providing for a severance payment in the event of a qualified termination following a change in control of the Company.
Mr. Tunneys employment agreement and the change in control agreements to which the above named officers are
party are summarized further under the caption
Potential Payments upon Termination or Change in Control
beginning on page 36 of this Proxy Statement.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally prohibits the Company from deducting non-performance-based
compensation in excess of $1,000,000 per taxable year paid to the CEO and the Companys three most highly compensated executive officers (other than the CEO and the CFO) as of the end of the Companys fiscal year. The Company may continue
to deduct compensation paid to such executive officers in excess of $1,000,000 if the payment of that compensation qualifies for an exception, including an exception for certain qualified performance-based compensation.
30
The Company does not have a policy that requires the Companys
executive compensation programs to qualify as performance-based compensation under Section 162(m), although the Company will continue to work to structure components of its executive compensation package to achieve maximum deductibility under
Section 162(m), while at the same time considering the goals of its executive compensation philosophy. The Company had no instances of non-deductible compensation during fiscal 2013.
31
COMPENSATION OF EXECUTIVE OFFICERS
Fiscal 2013 Summary Compensation Table
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Fiscal
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
(1)
($)
|
|
|
Option
Awards
(2)
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
(3)
($)
|
|
|
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(4)
($)
|
|
|
All
Other
Compensation
(5)(6)
($)
|
|
|
Total
($)
|
|
Greg Tunney,
|
|
|
2011
|
|
|
|
512,000
|
|
|
|
|
|
|
|
353,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,160
|
|
|
|
925,183
|
|
President and Chief
|
|
|
2012
|
|
|
|
514,154
|
|
|
|
|
|
|
|
412,496
|
|
|
|
|
|
|
|
789,000
|
|
|
|
|
|
|
|
72,227
|
|
|
|
1,787,877
|
|
Executive Officer
|
|
|
2013
|
|
|
|
526,000
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
345,056
|
|
|
|
|
|
|
|
102,564
|
|
|
|
1,373,620
|
|
|
|
|
|
|
|
|
|
|
|
Jose Ibarra,
|
|
|
2011
|
|
|
|
249,462
|
|
|
|
|
|
|
|
117,671
|
|
|
|
|
|
|
|
|
|
|
|
9,154
|
|
|
|
50,324
|
|
|
|
426,611
|
|
Senior Vice President-Finance and
|
|
|
2012
|
|
|
|
271,615
|
|
|
|
|
|
|
|
171,870
|
|
|
|
|
|
|
|
247,500
|
|
|
|
32,629
|
|
|
|
50,898
|
|
|
|
774,512
|
|
Chief Financial Officer
|
|
|
2013
|
|
|
|
283,462
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
111,684
|
|
|
|
20,190
|
|
|
|
51,254
|
|
|
|
591,590
|
|
|
|
|
|
|
|
|
|
|
|
Glenn Evans,
|
|
|
2011
|
|
|
|
216,769
|
|
|
|
|
|
|
|
94,141
|
|
|
|
|
|
|
|
|
|
|
|
9,397
|
|
|
|
49,253
|
|
|
|
369,560
|
|
Senior Vice
|
|
|
2012
|
|
|
|
218,673
|
|
|
|
|
|
|
|
103,124
|
|
|
|
|
|
|
|
144,324
|
|
|
|
38,163
|
|
|
|
49,310
|
|
|
|
553,595
|
|
President-Global Operations
|
|
|
2013
|
|
|
|
218,673
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
76,536
|
|
|
|
22,719
|
|
|
|
49,310
|
|
|
|
442,238
|
|
|
|
|
|
|
|
|
|
|
|
Lee Smith,
|
|
|
2011
|
|
|
|
211,248
|
|
|
|
|
|
|
|
94,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,087
|
|
|
|
354,476
|
|
Senior Vice
|
|
|
2012
|
|
|
|
213,103
|
|
|
|
|
|
|
|
116,892
|
|
|
|
|
|
|
|
140,648
|
|
|
|
|
|
|
|
49,143
|
|
|
|
519,786
|
|
President-Creative Services
|
|
|
2013
|
|
|
|
213,103
|
|
|
|
|
|
|
|
85,000
|
|
|
|
|
|
|
|
74,586
|
|
|
|
|
|
|
|
49,143
|
|
|
|
421,832
|
|
|
|
|
|
|
|
|
|
|
|
Nancy Coons,
|
|
|
2012
|
|
|
|
172,933
|
|
|
|
4,000
|
|
|
|
89,388
|
|
|
|
|
|
|
|
113,850
|
|
|
|
|
|
|
|
55.956
|
|
|
|
436,127
|
|
Business Unit President-Footwear
|
|
|
2013
|
|
|
|
183,077
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
64,077
|
|
|
|
|
|
|
|
80,255
|
|
|
|
392,409
|
|
(1)
|
The amounts reported for 2011 represent the aggregate grant date fair value of RSUs at the target levels expected at grant date for the awards
granted during that fiscal year to NEOs, as computed in accordance with FASB ASC 718 (the Stock Compensation topic). These amounts exclude the impact of estimated forfeitures, as required by applicable SEC Rules. The amounts reported for fiscal 2012
and fiscal 2013 represent the aggregate grant date fair value of RSUs at maximum and above target levels expected, respectively, for the performance-based portion of the award based on the Companys financial results reported for each of those
respective fiscal periods.
|
For grants made prior to fiscal 2012, RSUs generally have had a
five-year cliff-vesting period with a performance-based accelerated vesting feature. Each fiscal year, the Compensation Committee sets a financial performance target to trigger accelerated vesting of 20% of the original RSUs granted. If the fiscal
years target is not met, the vesting of that portion of RSUs is not accelerated, and they continue to vest on the fifth anniversary of the original RSU grant date. Vested RSUs are settled on a one-for-one basis in the Companys common
shares. For RSU grants made in fiscal 2012 and fiscal 2013, 25% of the award is a three-year pro rata time-vested RSU grant and the other 75% is a performance-based RSU grant, with variable levels of earned RSUs potential based on actual financial
performance against a target set by the Board for the first year of the grant. Earned RSUs then vest in their annual installments based on continued service with the first installment vesting upon certification of the applicable financial
performance. 50% of the vested award is settled in Company common shares and the other 50% is settled by payment of cash an amount equivalent to the fair market value of Company common shares equal in number to the RSUs so settled. See Note
(1) (o) Shareholders Equity and Note (12) Shareholders Equity of the Notes to Consolidated Financial Statements included in
Item 8. Financial Statements and Supplementary
Data.
of the Companys Form 2013 10-K for the assumptions used and additional information regarding the RSU awards.
(2)
|
There were no stock options granted to any NEOs during fiscal 2013, fiscal 2012 or fiscal 2011.
|
(3)
|
The amounts reflected in this column for fiscal 2012 and fiscal 2013 represent payments received under the R.G. Barry Management Bonus Plan in
effect for each of those respective years. None of the NEOs received payments under the R.G. Barry Management Bonus Plan for fiscal 2011 since the Company did not meet consolidated pre-tax, pre-incentive corporate income goals as set by the Board.
|
(4)
|
The amounts reflected in this column represent the aggregate change in the actuarial present value of vested benefits under the Companys
Associates Retirement Plan from the measurement dates used for our fiscal 2013, fiscal 2012 and fiscal 2011 consolidated financial statements (June 29, 2013, June 30, 2012 and July 2, 2011, respectively). The assumptions used to
determine benefit obligations are described in Note (11) Employment Retirement Plans of the Notes to Consolidated Financial Statements included in
Item 8. Financial Statements and Supplementary Data.
of the Companys 2013 Form 10-K. The Companys Associates Retirement Plan is described under the caption
Pension Benefits
on page 35 of this Proxy Statement. Mr. Tunney, Mr. Smith and Ms. Coons are
not participants in the Companys Associates Retirement Plan.
|
(5)
|
All Other Compensation as a compensation category for NEOs includes benefits including 401(k) plan employer contributions, certain
personal individual life insurance benefits, as well as nominal gasoline reimbursement allowances and, for Mr. Tunney, financial and tax planning as well as health and country club benefits.
|
32
(6)
|
All Other Compensation includes both non-perquisite and perquisite items paid or accrued for the benefit of the NEOs during fiscal 2012.
Non-perquisite items included the Companys 3% contribution to each of the NEOs 401(k) plan account made in fiscal 2012 and insurance premiums paid for an individual insurance policy on the life of Mr. Tunney, the CEO, and on the
lives of each of the other NEOs. Any 401(k) plan contributions made for the benefit of the NEOs vest to the individuals immediately. In fiscal 2012, 401(k) plan contributions in the amount of $15,780 were made by the Company on behalf of
Mr. Tunney. In fiscal 2012, the Company paid $75,000 to Mr. Tunney in reimbursement of premiums paid on life insurance for his benefit and paid $42,750 to Messrs. Ibarra, Evans and Smith in reimbursement of premiums paid on life insurance
for their respective benefit. In addition, Mr. Tunney was reimbursed $27,564 in personal tax and financial planning costs and Ms. Coons was benefited by $61,913 in relocation costs paid for directly by the Company and $12,850 in related
tax gross up payments. There were no other non-perquisite compensation items for others (including 401(k) plan contributions for the benefit of NEOs other than Mr. Tunney) in excess of $10,000 in fiscal 2013 for any of the NEOs.
|
All Other Compensation in the form of perquisites and personal benefits provided
by the Company to its NEOs in fiscal 2013 included nominal gasoline reimbursement allowances and financial and tax planning benefits. No perquisites or personal benefits were provided to any of our NEOs during fiscal 2013 that exceeded the greater
of $25,000 or 10% of the total amount of perquisites and personal benefits provided to such NEO in fiscal 2013. Perquisites are valued based on the aggregate incremental cost to the Company.
Grants of Plan-Based Awards
The following table
supplements the information in the Fiscal 2013 Summary Compensation Table with respect to cash and stock-based incentive awards granted to each of the NEOs during fiscal 2013 under the 2013 Bonus Plan (Bonus) and the 2005
LTIP (RSUs), respectively.
Grants of Plan-Based Awards for Fiscal 2013
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity and
Equity Incentive Plan Awards
(1)
|
|
|
All Other
Stock Awards: Number
of Shares of Stock or
Units
(2)
|
|
|
Grant Date
Fair Value of Stock
Awards
(3)
|
|
Name
|
|
Grant Date
|
|
Grant
Type
|
|
|
Threshold
($)/Units
|
|
|
Target
($)/Units
|
|
|
Maximum
($)/Units
|
|
|
|
Greg Tunney
|
|
|
|
|
Bonus
|
|
|
$
|
197,250
|
|
|
$
|
345,056
|
|
|
$
|
789,000
|
|
|
|
|
|
|
|
|
|
|
|
9/13/12
|
|
|
RSUs
|
|
|
|
10,081
|
|
|
|
20,162
|
|
|
|
30,243
|
|
|
|
6,720
|
|
|
$
|
400,000
|
|
Jose Ibarra
|
|
|
|
|
Bonus
|
|
|
$
|
63,779
|
|
|
$
|
111,684
|
|
|
$
|
255,115
|
|
|
|
|
|
|
|
|
|
|
|
9/13/12
|
|
|
RSUs
|
|
|
|
3,150
|
|
|
|
6,300
|
|
|
|
9,450
|
|
|
|
2,100
|
|
|
$
|
125,000
|
|
Glenn Evans
|
|
|
|
|
Bonus
|
|
|
$
|
43,735
|
|
|
$
|
76,536
|
|
|
$
|
174,939
|
|
|
|
|
|
|
|
|
|
|
|
9/13/12
|
|
|
RSUs
|
|
|
|
1,890
|
|
|
|
3,780
|
|
|
|
5,670
|
|
|
|
1,260
|
|
|
$
|
75,000
|
|
Lee Smith
|
|
|
|
|
Bonus
|
|
|
$
|
42,621
|
|
|
|
74,586
|
|
|
$
|
170,483
|
|
|
|
|
|
|
|
|
|
|
|
9/13/12
|
|
|
RSUs
|
|
|
|
2,142
|
|
|
|
4,284
|
|
|
|
6,426
|
|
|
|
1,428
|
|
|
$
|
85,000
|
|
Nancy Coons
|
|
|
|
|
Bonus
|
|
|
$
|
36,615
|
|
|
$
|
64,077
|
|
|
$
|
146,461
|
|
|
|
|
|
|
|
|
|
|
|
9/13/12
|
|
|
RSUs
|
|
|
|
1,638
|
|
|
|
3,276
|
|
|
|
4,914
|
|
|
|
1,092
|
|
|
$
|
65,000
|
|
(1)
|
Additional information with respect to threshold, target and maximum annual Bonus opportunities associated with the non-equity awards made to each
of the NEOs under the Companys 2013 Bonus Plan is provided above under the sub-caption
Annual Performance Bonus
beginning on page 25 of this Proxy Statement in the section captioned
COMPENSATION
DISCUSSION AND ANALYSIS
. Additional information with respect to threshold, target and maximum performance-based RSU opportunities associated with the annual long-term incentive grants made to the NEOs under the Companys 2005 LTIP is
provided above under the sub-caption
Long-Term Incentive Awards
beginning on page 26 of the Proxy Statement in the section captioned
COMPENSATION DISCUSSION AND ANALYSIS
.
|
(2)
|
This column shows the number of time-based RSUs granted under the Companys 2005 LTIP. Each RSU represents a contingent right to receive one
common share of the Company. The RSUs provide for a pro-rated three-year vesting period contingent on continued employment at the close of each fiscal year over the three-term period of the grant. Additional information with respect to the RSUs
granted to the NEOs during fiscal 2013 is provided under the sub-caption
Long-Term Incentive Awards
beginning on page 25 of this Proxy Statement in the section captioned
COMPENSATION DISCUSSION AND
ANALYSIS
.
|
(3)
|
Represents the grant date fair value of the RSU awards, based on $10.51 per common share at the date of grant for: (1) RSUs granted with
vesting contingent only on service; and (2) the maximum number of RSUs which may be granted for
|
33
|
performance- based awards, with vesting on this latter award contingent on the level of achievement of diluted earnings per share for fiscal 2013 against threshold, target and maximum goals set
by the Board. Board determination was made effective on August 15, 2013 that the Companys diluted earnings per share were such that an above target number of performance-based RSUs were earned by the participants. The performance-based
RSUs were issued to each NEO, with pro rata vesting to occur over the three-year term of the grant, contingent on continued employment with the Company. 50% of these performance-based RSUs earned is to be settled by issuance of common shares and the
other 50% is to be settled by payment equivalent to the fair market value of common shares equal in number to the RSUs so settled.
|
Options and Other Equity-Based Award Holdings
The
following table summarizes the outstanding options and RSUs held at the end of fiscal 2013 by the Companys NEOs.
Outstanding Equity Awards at Fiscal Year-End for Fiscal 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number
of
Common
Shares
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Common
Shares
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of Shares
or Units
of Stock
that
Have Not
Vested
(1)
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock
that Have
Not Vested
(2)
($)
|
|
Greg Tunney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,141
|
|
|
|
1,509,609
|
|
Jose Ibarra
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,341
|
|
|
|
606,418
|
|
Glenn Evans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,974
|
|
|
|
405,578
|
|
Lee Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,868
|
|
|
|
420,096
|
|
Nancy Coons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,618
|
|
|
|
156,196
|
|
(1)
|
Unvested RSUs outstanding at June 29, 2013 include: (a) a September 2008 grant to each NEO other than Mr. Tunney, as to which 60% was
unvested; (b) a November 2008 grant to Mr. Tunney, as to which 40% was unvested; (c) a January 2009 grant to Mr. Ibarra, as to which 50% was unvested; (d) a September 2009 grant to each NEO then employed, as to which 60% was
unvested; (e) a September 2010 grant to each NEO, as to which 80% was unvested, (f) a September 2011 grant to each NEO, as to which 67% was unvested, and (g) a September 2012 grant to each NEO, as to which 100% was unvested. Each
Grant made prior to fiscal 2012 vests 100% at the end of five years from date of grant, subject to potential accelerated vesting of 20% of the original RSUs granted in each of the next four years after grant if certain financial performance goals
set annually by the Board are met. The respective grants made in fiscal 2013 and fiscal 2012 had a 25% time-based and 75% performance-based composition; the RSUs earned in respect to the performance-based portion are contingent on the level of
diluted earnings per share achieved in the year of grant, compared to the goal as set by the Board for that year. The time-based and performance-based RSU grants vest pro rata at the certification by the Compensation Committee of annual fiscal
results for the respective fiscal year ended during the term of the grant, contingent on continued employment at the end of each fiscal year by the grant recipient. With regards to settlement of the respective fiscal 2013 and fiscal 2012 grants of
RSUs, the time-based RSUs and 50% of the performance-based units vested are to be settled by issuance of common shares and 50% of the performance-based units vested are to be settled by cash payments equivalent to the fair market value of common
shares underlying the RSUs at the end of third business day after release of annual earnings by the Company. See footnote (1) to the Fiscal 2013 Summary Compensation Table above for further discussion of the manner in which RSUs
vest. Also see the general discussion of RSUs granted, included under the sub-caption
Long-Term Incentive Awards
beginning on page 26 of this Proxy Statement in the section captioned
COMPENSATION
DISCUSSION AND ANALYSIS
.
|
(2)
|
Market value was determined based upon $16.24, which was the closing price of the Companys common shares on June 29, 2013, the last
trading day of fiscal 2013. Vesting and related settlement of the common shares and cash portion underlying the performance-based RSUs for fiscal 2013 occurred after Board reviewed and approved the annual results for fiscal 2013. For
performance-based RSUs granted in fiscal 2013, Board determination of the portion earned was made effective on August 15, 2013 based upon the fact that the Companys diluted earnings per share were at the level as to which the maximum
number of RSUs would be earned by the participants.
|
34
Exercises and Vesting of Previously-Awarded Equity-Based Compensation
The following table provides information regarding the aggregate dollar value realized by the NEOs in connection with the
exercise of options and/or the vesting of RSUs during fiscal 2013.
Fiscal 2013 Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Common Shares
Acquired
on Exercise
(#)
|
|
|
Value Realized
on
Exercise
(1)
($)
|
|
|
Number of
Common Shares
Acquired
on Vesting
(2)
(#)
|
|
|
Value Realized
on
Vesting
(3)
($)
|
|
Greg Tunney
|
|
|
|
|
|
|
|
|
|
|
43,784
|
|
|
|
651,506
|
|
Jose Ibarra
|
|
|
|
|
|
|
|
|
|
|
12,505
|
|
|
|
186,074
|
|
Glenn Evans
|
|
|
|
|
|
|
|
|
|
|
9,661
|
|
|
|
143,756
|
|
Lee Smith
|
|
|
|
|
|
|
|
|
|
|
9,799
|
|
|
|
145,809
|
|
Nancy Coons
|
|
|
|
|
|
|
|
|
|
|
2,150
|
|
|
|
31,992
|
|
(1)
|
The value realized upon exercise of options, if any, is calculated by multiplying (a) the difference between the market price of the underlying
common shares on the exercise date and the exercise price of each option exercised by (b) the number of common shares covered by the portion of such option exercised.
|
(2)
|
Common shares acquired reflect: (a) the vesting of RSUs granted in years prior to fiscal 2012, (i) based on acceleration of 20% of the
respective award based on achievement of earnings goals for fiscal 2013 or (ii) as to which the five-year cliff vesting period has lapsed and the pro-rated vesting of RSUs of the time-based portion and performance-based (with equity
settlement) portion of the RSU award, with a three-year pro-rata vesting period, granted in September 2012. For all RSUs vested as described, the underlying common shares were issued during fiscal 2013.
|
(3)
|
The value realized upon the vesting of RSUs is calculated by multiplying the number of common shares underlying the vested portion of each RSU award
by the market value of the underlying common shares on the vesting date.
|
Pension Benefits
The following table discloses the actuarial present value, as of June 29, 2013, based on measurements made for our
fiscal 2013 consolidated financial statements, of the accumulated benefit for Messrs. Ibarra and Evans under the Companys Associates Retirement Plan (as amended, the ARP), as well as other information concerning the ARP. No
other NEOs participate in the ARP or any other plan that provides for payments or other benefits at, following or in connection with retirement.
Pension Benefits for Fiscal 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years
Credited Service
(1)
(#)
|
|
|
Present Value of
Accumulated Benefit
($)
|
|
|
Payments
During Last
Fiscal Year
($)
|
|
Jose Ibarra
|
|
R.G. Barry Corporation ARP
|
|
|
14.0
|
|
|
|
181,360
|
|
|
|
|
|
Glenn Evans
|
|
R.G. Barry Corporation ARP
|
|
|
17.6
|
|
|
|
200,575
|
|
|
|
|
|
(1)
|
The number of years credited service for Messrs. Ibarra and Evans for the ARP covers each individuals term of employment with the Company up
to March 31, 2004, at which point the ARP was frozen.
|
The ARP provides for the payment
of monthly benefits to salaried employees at age 65 based upon 48% of a participants final average monthly compensation (subject to a limitation imposed by law on the amount of annual compensation upon which benefits may be based)
less a designated percentage of the participants primary social security benefits. Benefits under the ARP are reduced by 1/30th for each year of credited service less than 30 years.
35
See the Critical Accounting Policies and Use of Significant Estimates
(e) Pension Liability section of
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
included in the Companys 2013 Form 10-K for related
disclosures on the ARP, as well as Note (11) Employee Retirement Plans of the Notes to Consolidated Financial Statements in
Item 8. Financial Statements and Supplementary Data
.
of the Companys
2013 Form 10-K as to the methods and assumptions used in the computations set forth in the table above.
Nonqualified Deferred Compensation
The following table sets forth for Messrs. Ibarra and Evans the dollar amount of interest earnings
accrued during fiscal 2013 and the dollar amount of the total balance, as of June 29, 2013, for their respective accounts under the Companys nonqualified Deferred Compensation Plan. No other NEOs participate in the Deferred Compensation
Plan.
Nonqualified Deferred Compensation for Fiscal 2013
|
|
|
|
|
|
|
|
|
Name
|
|
Aggregate Earnings in
Last FY
(1)
($)
|
|
|
Aggregate Balance
at Last FYE
(1)
($)
|
|
Jose Ibarra
|
|
|
1,755
|
|
|
|
55,093
|
|
Glenn Evans
|
|
|
720
|
|
|
|
22,608
|
|
(1)
|
Interest earnings accrued during fiscal 2013 under the Deferred Compensation Plan are based on market rates. As a result, no above-market or
preferential earnings were included as compensation for fiscal 2013 in the Fiscal 2013 Summary Compensation Table. In addition, none of the amounts reported in the aggregate balance at June 29, 2013 column were previously reported as
compensation for Messrs. Ibarra and Evans in the Companys Summary Compensation Tables for previous years.
|
The Companys Deferred Compensation Plan was established as a nonqualified, unfunded retirement plan designed to provide additional benefits to those employees of the Company earning an annual salary
of at least $95,000. Under the Deferred Compensation Plan, each eligible participant could defer up to 25% of his or her base salary and 100% of his or her bonus per year. The combination of base salary and bonus deferrals, however, could not exceed
25% of the eligible participants base salary. Amounts deferred by a participant under the Deferred Compensation Plan were immediately vested. The Company uses the prime rate as listed in the Wall Street Journal for determining rates of return,
computed quarterly. Distributions from the Deferred Compensation Plan are made upon a participants termination of employment, death or disability, and are made in the form of a lump-sum or annual installments over a five-year or a ten-year
period. On February 21, 2004, the Company froze the Deferred Compensation Plan. From and after February 21, 2004, (a) no new employee can become a participant in the Deferred Compensation Plan and (b) eligible participants cannot
defer additional base salary or bonus amounts into their accounts.
Potential Payments upon Termination or Change in Control
Greg Tunney.
Pursuant to the terms of his executive employment agreement, effective on
May 1, 2012 (the 2012 employment agreement), Mr. Tunney is employed as the Companys President and CEO. The 2012 employment agreement provides for severance benefits in the event that Mr. Tunneys employment is
terminated by the Company without cause or by him for good reason (each as defined in the 2012 employment agreement). Examples of good reason for which Mr. Tunney may terminate his employment include:
(i) assignment of any duty or responsibility without Mr. Tunneys consent that is inconsistent in any material respect with the position (including, without limitation, his status, office and titles), authority, duties or
responsibilities as contemplated in the 2012 employment agreement; (ii) a reduction in his base salary or a material reduction in the extent of his participation in the Companys bonus or incentive plans or his receipt of benefits or
perquisites; (iii) a material change or reduction in his authority, duties or responsibilities; (iv) failure of the Company to assign the 2012 employment agreement to a successor to the Company or failure of a successor to explicitly
assume and agree to be bound by the 2012 employment agreement; (v) a requirement that he be principally based at any office or location more than 30 miles from the Companys current corporate offices in Columbus, Ohio; and
(vi) the failure of the Company to nominate him for re-election to the Board at each shareholder meeting at which he is up for election. Examples of cause for which the Company may terminate Mr. Tunneys employment
include: (i) gross negligence materially detrimental to the Company; (ii) conviction of a felony or any lesser crime involving a breach of trust or fiduciary duty owed to the Company or any of its subsidiaries; (iii) willful and
continued failure to perform his job duties and responsibilities; and (iv) intentional misconduct that is materially and demonstrably injurious to the Company.
36
In the event Mr. Tunneys employment is terminated by the Company
without cause or by him for good reason: (i) he will continue to receive his base salary at the rate in effect on the employment termination date for a period of 24 months after termination of his employment; (ii) he will be entitled to
continue his participation in all Company health and welfare plans for up to 24 months; (iii) he will receive the Annual Retirement Payment (defined as $75,000 per annum) for the calendar year in which his termination occurs within 70 days
following his termination of employment; (iv) he will receive, at the time that annual bonuses are next paid to other senior executives under the applicable bonus plan, his target opportunity bonus under the Companys senior management
bonus program for the performance year in which his termination occurs or, if greater, a pro-rata portion of any annual performance bonus that he otherwise would be entitled to receive based upon actual performance for his partial service during the
performance year in which his termination occurs; and (v) the Company will provide him with reasonable outplacement services, not to exceed $20,000.
Mr. Tunney is entitled to enhanced severance benefits if his employment is terminated in connection with a change in control. A change in control includes: (i) the
acquisition by any person or group (with specified exceptions) of more than 50% of the outstanding common shares of the Company; (ii) the Companys incumbent directors (including any person who becomes a director with the approval of at
least 50% of the incumbent directors) cease for any reason to constitute at least a majority of the Board; (iii) the consummation of a reorganization, merger or consolidation or sale or disposition of all or substantially all of the assets of
the Company, unless the Companys shareholders immediately prior to such business combination retain a majority of the voting power of the resulting entity; or (iv) the approval by the Companys shareholders of a complete liquidation
or dissolution of the Company; provided, in each case, that the change in control also constitutes a change in control event under Section 409A of the Internal Revenue Code.
If, within 12 months after a change in control of the Company, Mr. Tunneys employment is terminated by the
Company without cause or by Mr. Tunney for good reason, he will (i) receive, within 30 days following his termination of employment, a lump-sum cash payment equal to two times the sum of (a) his base salary in effect on the employment
termination date or, if greater, on the date of the change in control, plus (b) his target opportunity bonus in effect as of the employment termination date or, if greater, as of the date of the change in control; (ii) be entitled to
continue his participation in all Company health and welfare plans for up to 24 months; and (iii) receive the Annual Retirement Payment for the year in which his termination occurs, if not yet paid, and an additional $75,000 for the year
following the year in which his employment is terminated, within 30 days following his termination of employment.
If Mr. Tunneys employment terminates by reason of death, Mr. Tunneys estate or beneficiaries will receive a pro-rata portion of any annual performance bonus that Mr. Tunney
otherwise would be entitled to receive for his partial service during the year in which his death occurs, payable at the time annual bonuses are next paid to other similar executives under the applicable bonus plan. If Mr. Tunneys
employment terminates due to his disability, Mr. Tunney will receive (i) a pro-rata portion of any annual performance bonus that he otherwise would be entitled to for his partial service during the year in which his termination occurs,
payable at the time annual bonuses are next paid to other senior executives under the applicable bonus plan, and (ii) the Annual Retirement Payment for the calendar year in which the termination occurs, payable within 70 days following his
termination of employment.
During Mr. Tunneys employment with the Company and for a period of two
years following his termination, Mr. Tunney may not (i) engage directly or indirectly in, or render services to, any business or enterprise that operates, in whole or in substantial part, as a manufacturer, wholesaler or distributor of
(a) slippers, (b) comfort footwear inserts or (c) handbags that are competitive with handbags marketed and sold by the Company or our subsidiaries or (ii) solicit, on behalf of himself or any other person or entity, (a) any
of the managerial level employees of the Company or our affiliates to leave their employment or (b) any customer of the Company or our affiliates to purchase goods from any other person or entity. In addition, during his employment with the
Company and at any time thereafter, Mr. Tunney is to keep and maintain confidential, and may not use or disclose, non-public information relating to the business of the Company and our affiliates.
Change in Control Agreements
.
Three of the other NEOs Messrs. Ibarra,
Evans and Smith are parties to three-year change in control agreements with the Company, which provide for severance payments to the NEOs if their employment is terminated within 24 months after the occurrence of a change in
control. Messrs. Ibarra, Evans and Smith executed their change in control agreements effective as of January 7, 2011 with terms which continue through January 7, 2014. These agreements are intended to serve as a retention tool and to
provide incentive to the NEOs to continue focusing on our business in the event of a potential change in control.
For purposes of these agreements, a change in control occurs (i) if any person or group acquires shares of the Company possessing more than 50.1% of the total voting power of the Companys
outstanding shares or (ii) as a result of, or in connection
37
with, a tender or exchange offer, merger or other business combination, sale of assets or contested director election, the persons who were directors of the Company immediately before the
completion of such transaction cease to constitute a majority of the Board of the Company or any successor to the Company.
If the NEOs employment is terminated within 24 months following a change in control for cause (as defined in the agreement) or due to the NEOs disability (as defined in the
agreement) or death, the NEO or his or her beneficiaries, as applicable, will receive the NEOs base salary through the date of termination, but will not be entitled to receive any further benefits under the agreement. Examples of
cause for which the Company may terminate the NEOs employment in connection with a change in control include: (i) willful and continued refusal by the NEO to substantially perform his duties with the Company (other than any
such refusal resulting from his incapacity due to a disability); (ii) failure of the NEO to comply with any applicable law or regulation affecting the Companys business; (iii) commission by the NEO of an act of fraud, bad faith or
dishonesty toward the Company; (iv) conviction of the NEO of any felony or misdemeanor involving moral turpitude; (v) misappropriation by the NEO of any funds, property or rights of the Company; and (vi) breach by the NEO of any
provision of the change in control agreement.
If the NEOs employment is terminated within 24 months
following a change in control without cause or by the NEO for good reason (as defined in the agreement), he will receive, within 30 days following the date of termination, a lump-sum cash severance payment equal to the sum of
(i) the NEOs base salary at the rate in effect on the termination date, or, if greater, the NEOs base salary in effect on the date of the change in control and (ii) an amount equal to the NEOs target bonus opportunity in
effect at the termination date, or, if greater, the NEOs target bonus opportunity in effect on the date of the change in control. In addition, if the NEO elects to continue benefits under COBRA, the Company will make available to the NEO and
the NEOs spouse and other dependents (who otherwise qualify for coverage under the Companys programs), for a period of 12 months following such termination of employment, at the same cost such benefits are provided to active full-time
employees of the Company. Examples of good reason for which the NEO may terminate his employment in connection with a change in control include: (i) a reduction in the NEOs title, duties, responsibilities or status;
(ii) assignment of duties to the NEO inconsistent with the NEOs position; (iii) a reduction in the NEOs base salary or a reduction in his total compensation (including bonus) such that his total compensation for a given
calendar year is less than 90% of his total compensation for the prior calendar year; (iv) the failure by the Company to provide specified fringe benefits; (v) the relocation of the Companys principal executive offices to a location
outside the greater Columbus, Ohio area or requiring the NEO to relocate his principal residence in connection with a business relocation; (vi) the Companys failure to continue in effect any material compensation, retirement, life
insurance, health, welfare or benefit or plan in which the NEO participates; and (vii) any breach of the NEO of the change in control agreement by the Company.
During the NEOs employment with the Company and for a period of one year following his termination of employment
(or, in the case of a termination without cause or for good reason following a change in control, for such number of months as the NEO receives severance payments under the agreement), the NEO may not engage directly or indirectly in any business or
enterprise which is in competition with the Company. In addition, the NEO must at all times keep and maintain confidential, and must not use or disclose, non-public information relating to the business of the Company and our affiliates.
In addition to the benefits and payments described above, the NEOs may be entitled to accelerated vesting of some or all
of their outstanding options, RSUs and other equity awards, in accordance with the terms of the Companys equity compensation plans.
Summary of Employment Termination Payments and Benefits:
The following tables show the potential payments and benefits that would have been provided under Mr. Tunneys existing employment agreement and the change in control agreements with Messrs.
Ibarra, Evans and Smith discussed above. Ms. Coons is not a party to either an employment agreement or a change in control agreement.
38
Mr. Tunney
(1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Element
|
|
Termination
Without Cause
or for Good
Reason Prior to
a Change in
Control
($)
|
|
|
Termination
for Cause or
Without
Good Reason
($)
|
|
|
Termination
Without Cause or
for Good Reason
within 12 Months
Following a
Change
in
Control ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
Cash Severance Payment
|
|
|
1,397,056
|
|
|
|
|
|
|
|
1,742,112
|
|
|
|
345,056
|
|
|
|
345,056
|
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefit Plan Continuation
|
|
|
26,802
|
|
|
|
|
|
|
|
26,802
|
|
|
|
|
|
|
|
|
|
Life Insurance Continuation
|
|
|
75,000
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
Outplacement
|
|
|
20,000
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Value of Long-Term Incentives
(3)
|
|
|
1,509,609
|
|
|
|
|
|
|
|
1,509,609
|
|
|
|
1,509,609
|
|
|
|
1,509,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payments
|
|
|
3,028,467
|
|
|
|
|
|
|
|
3,448,523
|
|
|
|
1,854,665
|
|
|
|
1,854,665
|
|
(1)
|
Mr. Tunney is not a participant in the Companys ARP or in the Deferred Compensation Plan.
|
(2)
|
The potential payments and benefits that would have been provided to Mr. Tunney are dictated by the terms of his 2012 employment agreement.
|
(3)
|
The value of long-term incentives includes RSUs qualifying for vesting at June 29, 2013, but that were not vested due to pending Compensation
Committee certification of annual results which occurred at that Committees August 15, 2013 meeting.
|
Mr.
Ibarra
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Element
|
|
Termination Without Cause
or for Good Reason Within
24 Months Following a
Change of
Control ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
Cash Severance
|
|
|
395,146
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefit Plan Continuation
|
|
|
13,402
|
|
|
|
13,402
|
|
|
|
13,402
|
|
Value of Long-Term Incentives
(2)
|
|
|
|
|
|
|
606,418
|
|
|
|
606,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payments
|
|
|
408,548
|
|
|
|
619,820
|
|
|
|
619,820
|
|
(1)
|
The present value of the post-employment benefits for which Mr. Ibarra would have been eligible as of June 29, 2013 under the ARP and
under the Deferred Compensation Plan is described on page 36 of this Proxy Statement.
|
(2)
|
The value of long-term incentives includes RSU units qualifying for vesting at June 29, 2013, but that were not vested due to pending
Compensation Committee certification of annual results which occurred at that Committees August 15, 2013 meeting.
|
Mr. Evans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Element
|
|
Termination Without Cause
or for Good Reason Within
24 Months Following a
Change of
Control ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
Cash Severance
|
|
|
295,209
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefit Plan Continuation
|
|
|
13,402
|
|
|
|
13,402
|
|
|
|
13,402
|
|
Value of Long-Term Incentives
(2)
|
|
|
|
|
|
|
405,578
|
|
|
|
405,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payments
|
|
|
308,611
|
|
|
|
418,980
|
|
|
|
418,980
|
|
(1)
|
The present value of the post-employment benefits for which Mr. Evans would have been eligible as of June 29, 2013 under the ARP and under
the Deferred Compensation Plan is described on page 36 of this Proxy Statement.
|
(2)
|
The value of long-term incentives includes RSUs qualifying for vesting at June 29, 2013, but that were not vested due to pending Compensation
Committee certification of annual results which occurred at that Committees August 15, 2013 meeting.
|
39
Mr. Smith
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Element
|
|
Termination Without Cause
or for Good Reason Within
24 Months Following a
Change of
Control ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
Cash Severance
|
|
|
287,689
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefit Plan Continuation
|
|
|
13,402
|
|
|
|
13,402
|
|
|
|
13,402
|
|
Value of Long-Term Incentives
(2)
|
|
|
|
|
|
|
420,096
|
|
|
|
420,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payments
|
|
|
301,091
|
|
|
|
433,498
|
|
|
|
433,498
|
|
(1)
|
Mr. Smith is not a participant in the Companys ARP or in the Deferred Compensation Plan.
|
(2)
|
The value of long-term incentives includes RSUs qualifying for vesting at June 29, 2013, but that were not vested due to pending Compensation
Committee certification of annual results which occurred at that Committees August 15, 2013 meeting.
|
EQUITY COMPENSATION PLAN INFORMATION
The Company
maintains four equity compensation plans (collectively, the Plans) under which common shares may be issued to eligible directors, officers and employees, each of which has been approved by the Companys shareholders: (1) the
R.G. Barry Corporation 1997 Incentive Stock Plan (as amended, the 1997 Plan); (2) the R. G. Barry Corporation 2002 Stock Incentive Plan (the 2002 Plan); (3) the R. G. Barry Corporation Employee Stock Purchase Plan
(as amended, the Stock Purchase Plan); and (4) the 2005 LTIP. No new equity-based awards may be granted under the 1997 Plan or the 2002 Plan.
The 2005 LTIP authorizes the issuance of 1,000,000 of the Companys common shares, plus (1) the number of common shares that were authorized to be the subject of awards under the 1997 Plan and
the 2002 Plan but which had not yet been granted as of May 20, 2005, and (2) any common shares underlying awards granted under the 1997 Plan and the 2002 Plan, which are forfeited after May 20, 2005. In addition, no more than 500,000
common shares are available for the grant of incentive stock options under the 2005 LTIP.
The following table
shows for the Plans, as a group, (1) the number of common shares issuable upon exercise of outstanding options and vesting of outstanding RSUs, (2) the weighted-average exercise price of outstanding options and (3) the number of
common shares remaining available for future equity-based awards, in each case, as of June 29, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan category
|
|
Number of Common
Shares to be Issued
Upon Exercise of
Outstanding
Options,
Warrants
and Rights
(1)
(a)
|
|
|
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(2)
(b)
|
|
|
Number of Common Shares
Remaining Available for
Future Issuance Under
Equity Compensation
Plans
(Excluding Common Shares
Reflected in Column(a))
(3)
(c)
|
|
Equity compensation plans approved by shareholders
|
|
|
306,400
|
|
|
$
|
8.82
|
|
|
|
818,999
|
|
Equity compensation plans not approved by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
306,400
|
|
|
$
|
8.82
|
|
|
|
818,999
|
|
(1)
|
Includes 6,250 common shares issuable upon exercise of options granted under the 2002 Plan; 10,734 common shares issuable upon exercise of options
granted under the 2005 LTIP; and 289,416 common shares underlying RSUs granted under the 2005 LTIP. Any director awards previously vested and deferred as to receipt of the underlying common shares are included in the amount of issuable shares
reported as underlying RSUs and CSUs. Performance-based awards granted during fiscal 2013 are reflected at the maximum RSUs associated with the award, since the Company achieved the corresponding earnings as established in September 2012 for fiscal
2013. No options were outstanding under the Stock Purchase Plan as of June 29, 2013.
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(2)
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Weighted-average exercise price is based on outstanding options at June 29, 2013 and does not include any effect of CSUs or RSUs, which require
no cash contribution upon vesting and subsequent issuance of common shares of the Company.
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(3)
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Includes 312,900 common shares remaining available for future issuance under the 2005 LTIP and 506,099 common shares remaining available for future
issuance under the Stock Purchase Plan.
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40
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item 2 on Proxy)
We are asking shareholders to approve an advisory resolution on the Companys executive compensation as reported in this Proxy Statement. As described above in the
COMPENSATION DISCUSSION
AND ANALYSIS
section of this Proxy Statement beginning on page 19, the Compensation Committee has structured the Companys executive compensation programs, primarily to achieve the following key objectives:
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Align executive pay with the achievement of financial and operational objectives;
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Create and sustain long-term shareholder value; and
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Reflect the strong team-based culture of the Company.
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The Companys executive compensation programs have a number of features that we believe are designed to promote
these objectives. The Companys executive compensation programs seek to align pay for performance by providing a large portion of executive compensation via at-risk vehicles. For example, the Companys President and Chief
Executive Officer receives a significant portion of his annual compensation in the form of a performance-based incentive bonus opportunity and RSU grants. Prior to fiscal 2012, RSUs were granted with a five-year, cliff-vesting feature and eligible
for accelerated vesting if the Company meets annual performance objectives set by the Compensation Committee and Board. Beginning with the RSUs granted in fiscal 2012, the awards have had and will have two components: (i) 25% of the grant value
will be in the form of time-based RSUs, with vesting based on continuous service only; and (ii) 75% of the grant value will be in the form of performance-based RSUs, with vesting contingent on Company financial performance against financial
goals set by the Board for diluted earnings per share for the year in which the award was granted. For fiscal 2013, the performance-based RSU grants provided for these key elements: (1) while a maximum potential award was provided via the
initial grant, the RSUs actually earned by each recipient was based on the Companys level of achievement relative to the pre-established financial goals. Once the actual performance for the fiscal year of grant has been certified by the
Compensation Committee and the actual amount earned by each NEO determined, each award will vest in three annual installments on the annual certification date set for the respective fiscal year subject to the NEOs continued employment with the
Company. The performance-based RSUs with the first year being within initial level of achievement determined RSUs will be settled 50% in cash and 50% in common shares on each vesting date. The Compensation Committee granted these two forms of RSUs
in order to place more emphasis on performance-based compensation and the achievement of pre-established Company financial goals, while encouraging stock ownership and retention.
All of NEOs other incentive bonus opportunities, provided in the form of short-term annual incentives, are also
contingent upon Company financial performance against annual targets established by the Board. The Company fosters a team-based approach and an environment of cooperation by tying both annual cash incentive compensation and long-term equity
compensation to the financial results of the Company as a whole.
In addition to the foregoing, in recent
years, the Company has made changes to its executive compensation programs to conform to best practices and to make a larger portion of compensation dependent on performance. The Company has also implemented share ownership guidelines
for all directors and executive officers.
The Company has taken actions to realign our organization,
strengthen our focus and competitiveness in the accessory footwear business and completed four major acquisitions, which significantly diversify the Company in accessory categories outside the accessory footwear segment. These business acquisitions
involved existing business activities with a consistent level of growth and profitability. The Company believes that its executive compensation programs provide incentives that have facilitated and will continue to facilitate the Companys
long-term performance.
Shareholders are urged to read the
COMPENSATION DISCUSSION AND
ANALYSIS
beginning on page 19, which describes in more detail how the Companys executive compensation policies and procedures achieve the Companys compensation objectives, as well as the Fiscal 2013 Summary Compensation
Table beginning on page 32 and related compensation tables and narrative, which provide detailed information on the compensation of the NEOs.
In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, the Company is asking shareholders to approve the following advisory resolution at the Annual
Meeting:
RESOLVED, that the shareholders of R.G. Barry Corporation (the Company) approve, on an
advisory basis, the compensation of the Companys Named Executive Officers as disclosed in the Compensation Discussion and Analysis, the Fiscal
41
2013 Summary Compensation Table and the related executive compensation tables, notes and narrative in the Proxy Statement for the Companys 2013 Annual Meeting of Shareholders.
This advisory resolution, commonly referred to as a Say on Pay vote, is not binding on the Board or the
Compensation Committee. Although non-binding, the Board and the Compensation Committee will carefully review and consider the voting results when evaluating our executive compensation programs.
Taking into account the advisory vote of shareholders regarding the frequency of future advisory votes to approve
executive compensation at our 2011 Annual Meeting of Shareholders, the Boards current policy is to include an advisory resolution regarding approval of the compensation of our NEOs annually. Accordingly, unless the Board modifies its policy on
the frequency of future votes, the next advisory vote to approve our executive compensation will occur at the 2014 Annual Meeting of Shareholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
THE APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
Required Vote
Approval of the advisory resolution on executive compensation requires the approval of the holders of a
majority of the votes entitled to be cast by the holders of all then outstanding common shares, present in person or by proxy, and entitled to vote on the proposal. Under applicable NASDAQ Rules, broker non-votes will not be treated as entitled to
vote on the proposal. The effect of an abstention is the same as a vote
AGAINST
the proposal.
PROPOSAL 3 RATIFICATION OF THE APPOINTMENT OF
KPMG LLP AS THE COMPANYS INDEPENDENT REGISTERED
PUBLIC ACCOUNTING
FIRM FOR FISCAL 2014
(Item 3 on the Proxy)
The Audit Committee of the Companys Board has appointed KPMG LLP (KPMG) to serve as the Companys
independent registered public accounting firm for the fiscal year ending June 28, 2014, and recommends that the shareholders of the Company vote for the ratification of that appointment. KPMG audited the Companys consolidated financial
statements as of and for the fiscal years ended June 29, 2013 and June 30, 2012 and the effectiveness of the Companys internal control over financial reporting as of June 29, 2013 and June 30, 2012. Representatives of KPMG
are expected to be present at the Annual Meeting and will be given the opportunity to make a statement if they so desire, and to respond to appropriate questions.
The appointment of the Companys independent registered public accounting firm is made annually by the Audit
Committee. The Company has determined to submit the appointment of the independent registered public accounting firm to the shareholders for ratification because of such firms role in reviewing the quality and integrity of the Companys
consolidated financial statements and internal control over financial reporting. Before appointing KPMG, the Audit Committee carefully considered that firms qualifications as the independent registered public accounting firm for the Company
and the audit scope.
THE AUDIT COMMITTEE AND THE BOARD RECOMMEND THAT THE SHAREHOLDERS OF THE COMPANY VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF KPMG.
Required Vote
The affirmative vote of the holders of a majority of the votes entitled to be cast by the holders of all then outstanding
common shares, present in person or by proxy, and entitled to vote on the proposal, is required to ratify the appointment of KPMG as the Companys independent registered public accounting firm for the fiscal year ending June 29, 2013. The
effect of an abstention is the same as a vote
AGAINST
the proposal. Even if the appointment of KPMG is ratified by the shareholders, the Audit Committee, in its discretion, could decide to terminate the engagement of KPMG
and to appoint another firm if the Audit Committee determines such action is necessary or desirable. If the appointment of KPMG is not ratified, the Audit Committee will reconsider (but may decide to maintain) the appointment.
42
AUDIT COMMITTEE MATTERS
Report of the Audit Committee for the Fiscal Year Ended June 29, 2013
In accordance with applicable SEC Rules, the Audit Committee has issued the following report:
Role of the Audit Committee
.
The Audit Committee currently consists of five directors and operates under the charter adopted by the Companys Board.
Because the Companys common shares are listed on NASDAQ, the Company is subject to the NASDAQ Rules regarding the independence of Audit Committee members. Each member of the Audit Committee qualifies as independent under both the applicable
NASDAQ Rules and the applicable SEC Rules. In accordance with its charter, the purpose of the Audit Committee is to assist the Board with respect to its oversight of: (1) the integrity of the Companys financial statements; (2) the
Companys compliance with legal and regulatory requirements; (3) the Companys independent registered public accounting firms qualifications and independence; and (4) the performance of the Companys internal audit
function and the Companys independent registered public accounting firm. In addition, the Audit Committee must prepare an audit committee report in accordance with applicable SEC Rules to be included in the Companys annual proxy
statement.
Review and Discussion with Independent Registered Public Accounting
Firm.
In fulfilling its oversight responsibility as to the audit process, the Audit Committee obtained from KPMG, the Companys independent registered public accounting firm, the written disclosures and the letter
from KPMG required by applicable requirements of the Public Company Accounting Oversight Board (United States) regarding KPMGs communications with the Audit Committee concerning independence. The Audit Committee discussed with KPMG any
relationships with or services to the Company or our subsidiaries that may impact the objectivity and independence of KPMG, and the Audit Committee has satisfied itself as to KPMGs independence. In addition, the Audit Committee reviewed and
discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 114,
The Auditors Communication With Those Charged With Governance,
as amended
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Review and Discussion with Management.
The Audit Committee reviewed and discussed
the audited consolidated financial statements of the Company as of and for the fiscal year ended June 29, 2013 with management and KPMG. Management has the primary responsibility for the preparation, presentation and integrity of the
Companys consolidated financial statements and the reporting process, for the appropriateness of the accounting principles and reporting policies that are used by the Company, for the establishment and maintenance of effective systems of
disclosure controls and procedures and internal control over financial reporting, and for the preparation of the annual report on managements assessment of the effectiveness of the Companys internal control over financial reporting as of
June 29, 2013. KPMG is responsible for auditing the Companys annual consolidated financial statements included in the Companys 2013 Form 10-K in accordance with the standards of the Public Company Accounting Oversight Board (United
States) and issuing its report thereon based on such audit and for issuing an audit report on the effectiveness of the Companys internal control over financial reporting as of June 29, 2013.
Conclusion.
Based on the Audit Committees discussions with management and KPMG
as well as the Audit Committees review of the report of KPMG to the Audit Committee, the Audit Committee recommended to the Board that the Companys audited consolidated financial statements be included (and the Board approved such
inclusion) in the Companys 2013
Form 10-K
filed with the SEC on September 11, 2013. The Audit Committee has also appointed KPMG as the Companys independent registered public accounting
firm for the fiscal year ending June 29, 2013 and recommends that the shareholders ratify such appointment.
Submitted by the Audit Committee of the Board of Directors:
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Harvey Weinberg, Chair
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Nicholas DiPaolo
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David Lauer
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David Nichols
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Janice Page
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Pre-Approval Policies and Procedures
Under applicable SEC Rules, the Audit Committee is required to pre-approve the audit and permitted non-audit services
performed by the Companys independent registered public accounting firm. SEC Rules specify the types of non-audit services that an independent registered public accounting firm may not provide to its audit client and establish the Audit
Committees responsibility for administration of the engagement of the independent registered public accounting firm.
Consistent with applicable SEC Rules, the charter of the Audit Committee requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the
Companys independent registered public
43
accounting firm to the Company or any of our subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and, if it does so, the decisions of that
member must be presented to the full Audit Committee at its next scheduled meeting. During fiscal 2013, the Audit Committee did not delegate pre-approval authority with respect to audit or non-audit services to any member of the Audit Committee.
Fees of Independent Registered Public Accounting Firm
At the 2012 Annual Meeting of Shareholders held on November 2, 2012, the shareholders ratified the appointment of
KPMG to serve as the independent registered public accounting firm of the Company for fiscal 2013. Fees billed for services rendered by KPMG for fiscal 2013 and fiscal 2012 were as follows:
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Area
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Fiscal 2013
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Fiscal 2012
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Audit Fees
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$
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485,360
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$
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468,418
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Audit-Related Fees
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$
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22,140
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None
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Tax Fees
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$
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98,600
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$
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79,925
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All Other Fees
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None
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None
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Audit fees include fees for professional services rendered by KPMG in connection with the
audit of the Companys annual consolidated financial statements, and the review of the interim consolidated financial statements included in the Companys Quarterly Reports on Form 10-Q.
Tax fees include fees for tax services rendered in preparation of the Companys U.S. federal and state corporate tax
returns.
All of the services rendered by KPMG to the Company and our subsidiaries during fiscal 2013 and
fiscal 2012 were pre-approved by the Audit Committee. There was no approval pursuant to delegated authority during fiscal 2013 or fiscal 2012.
TRANSACTIONS WITH RELATED PERSONS
Under an existing
agreement, the Company is obligated for up to two years after the death of Gordon Zacks, the non-executive Chairman of the Board, to purchase, if the estate elects to sell, up to $4,000,000 of the Companys common shares, at their fair market
value. For a period of 24 months following the Chairman of the Boards death, the Company has a right of first refusal to purchase any common shares owned by the Chairman of the Board at the time of his death if his estate elects to sell such
common shares and has the right to purchase such common shares on the same terms and conditions as the estate proposes to sell such common shares to a third party.
The Companys Code of Business Conduct & Ethics requires that in the case of any potential conflict of
interest involving a transaction or proposed transaction between the Company and a third party with whom an insider (
i.e.
, a director, officer or employee of the Company or a relative of any such person) is affiliated or in which
the insider has an interest, the interest should be disclosed immediately by the insider to his or her management supervisor and local facilities management, in the case of an employee. The Chief Executive Officer and members of the Board must
report any such circumstance to the Nominating and Governance Committee of the Board for review and approval. In addition, pursuant to its charter, the Audit Committee reviews all related person transactions that would be required to be disclosed in
the Companys annual proxy statement for potential conflicts of interest situations and, on an ongoing basis, approves such transactions, if appropriate. Any material related person transactions are included within the disclosures in the Notes
to the Companys Consolidated Financial Statements.
SHAREHOLDER PROPOSALS FOR 2014 ANNUAL MEETING
To be eligible for inclusion in the Companys proxy materials relating to the 2014 Annual Meeting of Shareholders,
the Company must receive proposals of shareholders intended to be presented at the 2014 Annual Meeting no later than May 20, 2014. Timely received proposals may be included in the Companys proxy materials for the 2014 Annual Meeting of
Shareholders if they comply with applicable SEC Rules.
The SEC has promulgated rules relating to the exercise
of discretionary voting authority under proxies solicited by the Board. If a shareholder intends to present a proposal at the 2014 Annual Meeting of Shareholders and does not notify the Company of the proposal by August 3, 2014, the management
proxies of the Company will be entitled to use their discretionary
44
voting authority, to the extent permitted by applicable law, should the proposal then be raised, without any discussion of the matter in the Companys proxy statement for the 2014 Annual
Meeting.
In each case, written notice must be given to the Companys Secretary, Roger Lautzenhiser, at
the following address: R.G. Barry Corporation, 13405 Yarmouth Road N.W., Pickerington, Ohio 43147.
Shareholders desiring to nominate candidates for election as directors at the 2014 Annual Meeting of Shareholders or to
recommend candidates to the Nominating and Governance Committee of the Board must follow the procedures described above under the caption
Nominating Procedures.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The SEC has implemented rules regarding the delivery of proxy materials (
i.e.
, annual reports and proxy statements) to households. This method of delivery often referred to as
householding, generally permits the Company to send one annual report and/or one proxy statement to any household at which two or more record shareholders reside if such shareholders have affirmatively consented to householding or have
not opted out of the householding process after receiving appropriate notice that the Company has instituted householding. The householding process may also be used for the delivery of Notices of Internet Availability of Proxy Materials, when
applicable. Each shareholder would continue to receive a separate notice of any meeting of shareholders and a separate proxy card. The householding procedure reduces the volume of duplicate information you receive and may reduce the Companys
expenses. Although the Company does not currently household its proxy materials, the Company may institute householding in the future and will notify record shareholders who will be affected by householding at that time.
Many brokerage firms and other holders of record have instituted householding. If your family has one or more
street name accounts holding common shares of the Company, you may have received householding information from your broker, financial institution or other nominee in the past. Please contact the holder of record directly if you have
questions, require additional copies of this Proxy Statement or our Annual Report 2013 furnished to shareholders or wish to revoke your decision to household and thereby receive multiple copies of our proxy materials. You should also contact the
holder of record if you wish to institute householding.
Registered shareholders sharing an address may
request delivery of a single copy of annual reports to shareholders, proxy statements and/or Notices of Internet Availability of Proxy Materials by contacting Mr. Roy Youst of the Company at R.G. Barry Corporation, 13405 Yarmouth Road N.W.,
Pickerington, Ohio 43147, telephone number (614) 729-7275.
45
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no matter that will be presented for action at the 2013 Annual
Meeting of Shareholders other than those matters discussed in this Proxy Statement. If any other matter requiring a vote of the shareholders properly comes before the Annual Meeting, the individuals acting under the proxies solicited by the Board
will vote and act according to their best judgments in light of the conditions then prevailing, to the extent permitted by applicable law.
It is important that your form of proxy be submitted promptly. If you do not expect to attend the Annual Meeting in person, please complete, date, sign and return the accompanying proxy card in the
self-addressed envelope provided or vote through the Internet or by telephone in accordance with the instructions on accompanying proxy card.
By Order of the Board of Directors,
Greg Tunney
President and Chief Executive Officer
September 19, 2013
46
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R.G. BARRY CORPORATION
ATTN: JOSÉ G. IBARRA
13405 YARMOUTH ROAD N.W.
PICKERINGTON, OH 43147
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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 Daylight Saving Time, on October 29, 2013. Have your proxy card in hand
when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, annual reports and Notices of Internet
Availability of Proxy Materials electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
VOTE BY
PHONE1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M., Eastern Daylight Saving Time, on October 29, 2013. 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.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: M49622-P29797 KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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R.G. BARRY CORPORATION
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For
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Withhold
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For All
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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.
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All
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All
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Except
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The Board of Directors recommends you vote FOR the
following Directors to be elected for terms expiring in 2015:
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1. Election of Directors
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¨
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¨
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¨
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Nominees:
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01) David Lauer
02) David Nichols
03) Thomas Von Lehman
04) Gordon Zacks
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The Board of Directors recommends you vote FOR the proposals 2 and 3.
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For
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Against
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Abstain
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2. Proposal to approve the advisory resolution on executive
compensation.
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¨
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¨
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¨
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3. Ratification of the appointment of KPMG LLP as the
Companys independent registered public accounting firm for the fiscal year ending
June 28, 2014.
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¨
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¨
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¨
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NOTE:
In their discretion, the proxies are authorized to vote on such other business as may properly come before the meeting.
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For address change/comments, mark here.
(see reverse for instructions)
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¨
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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 must sign personally. All holders must sign. If shareholder is a corporation, partnership or other entity, an authorized person must sign in the entitys full name.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders of R.G. Barry
Corporation to be held on October 30, 2013:
The Notice of Annual Meeting of Shareholders, the Proxy Statement and the Companys Annual Report 2013 are available at
www.proxyvote.com
.
M49623-P29797
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R.G. BARRY CORPORATION
Annual Meeting of Shareholders
October 30, 2013 at 11:00 A.M.,
Eastern Daylight Saving Time
This proxy is solicited by the Board of Directors
The shareholder(s) of R.G. Barry Corporation (the
Company) identified herein hereby constitute(s) and appoint(s) Greg Tunney and José G. Ibarra, and each of them, the lawful agents and proxies of the shareholder(s), with full power of substitution in each, to attend the Annual
Meeting of Shareholders of the Company (the Annual Meeting) to be held on Wednesday, October 30, 2013, at the Companys corporate offices located at 13405 Yarmouth Road N.W, Pickerington, Ohio 43147, at 11:00 A.M., Eastern
Daylight Saving Time, and to vote all of the common shares which such shareholder(s) is/are entitled to vote at such Annual Meeting as directed on the reverse side with respect to the matters set forth on the reverse side, and to vote such common
shares with discretionary authority on all other matters (none known at the time of solicitation of this proxy) that may properly come before the Annual Meeting.
This proxy, when properly executed, will be voted in
the manner you direct. If no direction is made, the proxies will vote
FOR
Proposal 3 and, except in the case of broker non-votes,
FOR
the election of all of the director nominees
identified on the reverse side and
FOR
Proposal 2, and in accordance with the recommendations of the Board of Directors. All proxies previously given or exercised by the shareholder(s) identified herein are
hereby revoked. The shareholder(s) identified herein acknowledge(s) receipt of the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement for the October 30, 2013 meeting and the Annual Report 2013 of the
Company.
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Address changes/comments:
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(If you
noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
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