UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
¨ Preliminary Proxy
Statement
¨ Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy
Statement
¨ Definitive
Additional Materials
¨ Soliciting
Material Pursuant to § 240.14a-12
NexCen
Brands, Inc.
(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):
¨
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Fee
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 transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of 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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Proposed
maximum aggregate value of
transaction:
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Fee
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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Form,
schedule or registration statement
no.:
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October
22, 2009
Dear
NexCen Stockholders:
On behalf
of the Board of Directors and management of NexCen Brands, Inc., I cordially
invite you to attend the 2009 Annual Meeting of Stockholders to be
held on December 1, 2009 at 10:30 a.m. Eastern Standard Time at our franchise
operations facility, NexCen Franchise Management, 1346 Oakbrook Drive, Suite
170, Norcross, Georgia 30093.
You will
find information regarding the matters to be voted on in the attached Notice of
Annual Meeting of Stockholders and proxy statement. We are sending our
stockholders a notice regarding the availability of this proxy statement, our
Annual Report on Form 10-K for 2008 and other proxy materials via the Internet.
This electronic process gives you fast, convenient access to the proxy
materials, reduces the impact on the environment and reduces our printing and
mailing costs. A paper copy of these materials can be requested using one of the
methods described in the materials.
This is
our first Annual Meeting of Stockholders since September 5, 2007. We did not
hold an Annual Meeting of Stockholders in 2008. In 2008, NexCen Brands faced
challenges, both specific to our Company and with respect to the general
economic environment. Starting in May 2008, we dedicated a significant
amount of time and resources toward addressing those challenges. We reduced
operating expenses; restructured the Company’s credit facility to provide a more
appropriate working capital structure; divested our non-core businesses; reduced
debt; improved corporate infrastructure and internal controls; and executed on
initiatives to grow our franchised brands. We believe that the Company’s
core business remains intact and the Company is better positioned for future
stability and growth. However, the Company continues to face a number of
challenges as detailed in our Annual Report on Form 10-K. As can be
imagined, the events of 2008 had a significant impact on our 2008 financial
results.
To date
in 2009, we have continued to build on our efforts from the past year. We
entered into additional favorable modifications to our credit facility; further
reduced debt and operating expenses; filed our amended Annual Report on Form
10-K/A for 2007 (which included no material changes to the Company’s 2007
financial results); filed our Annual Report on Form 10-K for 2008; and continued
to make progress towards our goal of becoming compliant with our financial
reporting obligations before year end.
In
addition, we are making significant investments in our franchise businesses
while continuing to execute on our four-pronged business strategy for 2009 to:
1) strengthen each of our brands, 2) enhance the profitability of our
franchisees, 3) complete the integration of the franchised brands into our
operating infrastructure, and 4) find ways to further leverage NexCen
University, our centralized training, research, development and operations
center. Over the last year and a half, we have introduced our franchised
brands to 13 new countries and introduced 10 of our existing international
markets with new brands utilizing our master development platform.
Further, we reached expansion milestones with Marble Slab Creamery® opening
its 50th store
in Canada and TAF™ opening its 50th
location in Mexico. We look forward to continuing to extend our franchised
brands into new markets.
Whether
or not you plan to attend, we urge you to participate in NexCen Brands’ 2009
Annual Meeting of Stockholders by promptly voting via the Internet, telephone or
completing a proxy card. Regardless of the size of your investment, your
vote is important, so please act at your earliest convenience.
We
appreciate your participation, support and interest in NexCen Brands. While we
believe we have made progress on our various initiatives in a relatively in
short period of time, we recognize that there is still work to be done and
opportunities to realize. I am confident that our core values – innovation, knowledge,
commitment and integrity – will continue to
serve as the foundation for our business. To that end, our mission to be a
leader in the global management of franchised consumer brands remains
unchanged.
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Sincerely,
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Kenneth
J. Hall
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Chief
Executive Officer
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NEXCEN
BRANDS, INC.
1330
Avenue of the Americas, 34th Floor
New
York, New York 10019
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON DECEMBER 1, 2009
DATE:
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December
1, 2009
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TIME:
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10:30
a.m. EST
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PLACE:
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NexCen
Franchise Management
1346
Oakbrook Drive, Suite 170
Norcross,
GA 30093
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Dear
NexCen Stockholder:
At the
Annual Meeting, stockholders will act upon the following matters:
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1.
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Election
of five directors to hold office until the 2010 Annual Meeting of
Stockholders or until their successors are elected and qualified;
and
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2.
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Ratification
of the appointment of KPMG LLP as NexCen’s independent registered public
accounting firm for the fiscal year ending December 31,
2009.
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Information
about the matters to be acted upon at the Annual Meeting is contained in the
attached proxy statement. Stockholders will also transact any other business
properly brought before the meeting. At this time, the Board of Directors knows
of no other matters to be presented.
Stockholders
of record as of the close of business on October 6, 2009 will be entitled to
notice of and to vote at the Annual Meeting and any adjournment or postponement
thereof.
This
Notice of Annual Meeting of Stockholders and proxy statement is accompanied by
our Annual Report on Form 10-K for 2008.
Your
vote is important. You are cordially invited to attend the Annual Meeting, but
whether or not you expect to attend, please take a moment to vote by Internet,
telephone or completing a proxy card as detailed in the “How Do I Vote?” section of
this document. Your prompt cooperation will save the Company additional
solicitation costs.
BY
ORDER OF THE BOARD OF DIRECTORS
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Sue
J. Nam
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General
Counsel, Secretary
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New York,
New York
October
22, 2009
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting
to Be Held on December 1, 2009. Our Annual Report on Form 10-K for 2008, the
2009 Proxy Statement and other proxy materials are available at www.proxyvote.com.
TABLE
OF CONTENTS
General
Information
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Voting
Instructions and Information
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1
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Item
1: Election of Directors
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4
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Item
2: Ratification of the Appointment of the Independent Registered Public
Accounting Firm
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5
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Audit
Committee Report
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6
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Corporate
Governance
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7
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Policies
and Procedures for the Review and Approval of Related Party
Transactions
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8
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Director
Nominee Criteria and Process
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9
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Committees
of the Board of Directors
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9
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Director
Compensation
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11
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Executive
Officers
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13
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Executive
Officer Compensation
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14
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Compensation
Discussion and Analysis
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14
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Process
for Determining Executive Compensation
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15
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Compensation
Committee Report
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17
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Summary
Compensation Table
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17
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Grants
of Plan-Based Awards
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19
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Outstanding
Equity Awards at Fiscal Year-End
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20
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Option
Exercises and Stock Vested in 2008
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21
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Employment
Agreements
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22
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Actual
Payments to Named Executive Officers upon Separation
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30
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Potential
Post-Employment Payments to Named Executive Officers Who Are Current
Officers
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30
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Security
Ownership of Certain Beneficial Owners and Management
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32
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Section
16(a) Beneficial Ownership Reporting Compliance
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33
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Submission
of Shareholder Proposals
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34
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Householding
of Proxy Materials
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34
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Notice
of Electronic Availability of Proxy Materials
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34
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Annual
Report on Form 10-K
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34
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Incorporation
by Reference
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35
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Other
Matters
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35
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NEXCEN
BRANDS, INC.
1330
Avenue of the Americas, 34th Floor
New
York, New York 10019
INFORMATION
ABOUT THE ANNUAL MEETING AND VOTING
GENERAL
INFORMATION
The Board
of Directors of NexCen Brands, Inc. (“NexCen”, “NexCen Brands” or the “Company”)
is providing this proxy statement in connection with the Annual Meeting of
Stockholders to be held on December 1, 2009 (the “Annual Meeting”) at 10:30 a.m.
Eastern Standard Time at NexCen Franchise Management, 1346 Oakbrook Drive, Suite
170, Norcross, GA 30093 and any adjournment or postponement thereof. On or
about October 22, 2009, we began mailing a Notice of Internet Availability of
Proxy Materials (the “Notice”) containing instructions on how to access this
proxy statement, our Annual Report on Form 10-K for 2008 and other proxy
materials via the Internet. This proxy statement contains important
information for you to consider when deciding how to vote on the matters brought
before the Annual Meeting. Please read it carefully.
PROPOSALS
TO BE CONSIDERED
At the
Annual Meeting, we will ask our stockholders to consider and vote upon the
following matters:
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1.
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Election
of five directors to hold office until the 2010 Annual Meeting of
Stockholders or until their successors are elected and qualified;
and
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2.
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Ratification
of the appointment of KPMG LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2009.
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Our Board
of Directors is not aware of any other matters to be presented at the Annual
Meeting. If any other matters should properly come before the Annual
Meeting, then stockholders present at the Annual Meeting may vote on such
items. If you are represented by proxy, your proxy will vote your shares
using his or her discretion.
VOTING
INSTRUCTIONS AND INFORMATION
Who
is Soliciting My Proxy?
You have
received these proxy materials because NexCen’s Board of Directors is soliciting
your proxy to vote your shares at the Annual Meeting. This proxy statement
is intended to assist you in deciding how to vote your shares.
Who
Pays the Costs of the Proxy Solicitation?
NexCen
will pay the costs of requesting these proxies. Our directors, officers
and employees may request proxies in person, by telephone or by electronic
transmission, but they will not receive additional compensation for their
services. The Company will not engage a proxy solicitor for the Annual
Meeting. We will reimburse brokers, banks, and other nominees for their
reasonable out-of-pocket expenses in sending notices or proxy materials to
beneficial owners of our common stock.
Who
Can Vote?
You are
entitled to vote or direct the voting of your NexCen common stock if you were a
stockholder on October 6, 2009, the record date for the Annual Meeting. On that
date, approximately 56,951,730 shares of common stock were outstanding and the
holders thereof are entitled to notice of and to vote at the Annual Meeting.
Each share of our common stock is entitled to one vote.
Who
Is the Holder of Record?
You may
own shares of our common stock either (1) directly registered in your name at
our transfer agent, Computershare; or (2) indirectly through a broker, bank or
other nominee.
If your
shares are registered directly in your name with our transfer agent,
Computershare, you are the Holder of Record of these shares, and we are sending
the Notice directly to you. If you hold shares indirectly through a broker, bank
or other nominee, the Notice is being sent to you by or on behalf of that
entity.
How
Do I Vote?
Your vote
is important. We encourage you to vote promptly. You may vote in one
of the following ways:
Holders of
Record
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·
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By Internet. You can
vote on the Internet. The website address for Internet voting is www.proxyvote.com.
Internet voting is available 24 hours a day. If you vote by Internet, you
do not need to return a proxy card. Your vote by Internet must be received
by 11:59 p.m. EST, November 30,
2009.
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·
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By Telephone. You can
vote your shares by telephone by calling 1-800-690-6903. Telephone voting
is available 24 hours a day. If you vote by telephone, you do not need to
return a proxy card. Your vote by telephone must be received by 11:59 p.m.
EST, November 30, 2009.
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·
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By Mail. If you would
like to vote by mail, follow the instructions on the Notice to request a
paper copy of the proxy materials. Then complete the proxy card,
date and sign it, and return it in the postage-paid envelope provided.
Your vote by mail must be received by 10:00 a.m. EST, December 1, 2009,
the date of the Annual Meeting.
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·
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By Attending the Annual
Meeting. If you attend the Annual Meeting, you can vote your shares
in person. You will need to have proof of ownership of NexCen common stock
on the record date and valid photo identification with you for admission
to the Annual Meeting. For directions to the meeting location,
please call 770-514-4500.
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Shares Held by Brokers,
Banks and Nominees
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·
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If
your shares of common stock are held through a broker, bank or other
nominee, you will receive instructions from that entity in connection with
the voting of your shares.
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·
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If
you plan to attend the Annual Meeting and vote in person, you will need to
contact your broker, bank or other nominee to obtain a “legal proxy” to
permit you to vote by written ballot at the Annual
Meeting.
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What
is a Quorum of Stockholders?
A quorum
is required to transact business at the Annual Meeting. We will have a quorum
and be able to conduct the business of the Annual Meeting if a majority of the
shares entitled to vote are present at the meeting, either in person or by
proxy. Abstentions and broker non-votes each will be included in determining the
number of shares present and voting at the Annual Meeting for the purpose of
determining the presence of a quorum.
How
Are Votes Counted?
All
shares that have been properly voted, and not revoked, will be voted at the
Annual Meeting in accordance with your instructions. If you sign and return the
proxy card but do not specify how you wish your shares to be voted, your shares
represented by that proxy will be voted as recommended by the Board of
Directors: “for” all of
the five nominees for Director listed in this proxy statement; “for” ratification of the
appointment of KPMG LLP as our independent registered public accounting firm for
2009.
How
Many Votes Are Required?
Each
share of our common stock issued and outstanding on October 6, 2009 will be
entitled to one vote.
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For
the election of directors in Item 1, the five candidates who receive the
highest number of votes cast “For” at the Annual Meeting shall be elected,
provided a quorum is present.
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·
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The
affirmative vote of a majority of the shares of our common stock present
in person or represented by proxy at the Annual Meeting, and entitled to
vote on the subject matter, shall be required to approve Item 2, provided
a quorum is present.
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Under the
General Corporation Law of the State of Delaware, an abstaining vote and a
broker non-vote are counted as present and are, therefore included for purposes
of determining whether a quorum of shares is present at the Annual
Meeting. A broker non-vote occurs when a broker submits a proxy card with
respect to shares of common stock held in a fiduciary capacity (typically
referred to as being held in “street name”), but declines to vote on a
particular matter because the broker has not received voting instructions from
the beneficial owner. Under the rules that govern brokers who are voting
with respect to shares held in street name, brokers have the discretion to vote
such shares on routine matters, but not on non-routine matters. Items 1
and 2 are routine matters. For the purpose of determining whether the
stockholders have approved matters other than the election of directors,
abstentions are treated as shares present or represented and voting, so
abstentions have the same effect as negative votes.
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·
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For
Item 1, abstentions and broker non-votes will not affect the outcome of
this proposal.
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·
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For
Item 2, because this proposal requires the affirmative vote of a majority
of the shares present in person or by proxy at the meeting and entitled to
vote on the subject matter, abstentions will have the same effect as votes
against the proposal because the shares will count toward the quorum but
not toward the vote needed to adopt this proposal. Broker non-votes
will have no effect on this
proposal.
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How
Can I Revoke My Proxy or Change My Vote?
You can
revoke your proxy or change your vote by:
Holders of
Record
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·
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Sending
written notice of revocation to the Secretary of
NexCen;
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·
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Submitting
another timely and later dated proxy by mail or, prior to 11:59 p.m. EST,
on November 30, 2009 by telephone or Internet;
or
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·
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Attending
the Annual Meeting and voting in person by written
ballet.
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Stock Held by Brokers, Banks
and Nominees
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·
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You
must contact your broker, bank or other nominee to obtain instructions on
how to revoke your proxy or change your vote. You may also obtain a “legal
proxy” from your broker, bank or other nominee to attend the Annual
Meeting and vote in person by written
ballot.
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Who
Will Count the Votes?
Broadridge
Financial Solutions, Inc. will tabulate and certify the votes.
ITEM
1 – ELECTION OF DIRECTORS
The
following individuals are the nominees for election to the Board of
Directors:
Name
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Age
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Position
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David
S. Oros
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49
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Chairman
of the Board
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James
T. Brady
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68
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Director,
Audit Committee (Chairman), Compensation Committee, Nominating/Corporate
Governance Committee (Chairman)
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Paul
Caine
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44
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Director,
Audit Committee, Nominating/Corporate Governance
Committee
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Edward
J. Mathias
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67
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Director,
Audit Committee, Compensation Committee (Chairman)
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George
P. Stamas
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58
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Director
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Each of
the nominees currently is a member of the Board of Directors, and each has been
recommended for re-election to the Board of Directors by the
Nominating/Corporate Governance Committee and nominated for re-election by the
Board of Directors. Each also consented to serve as a Director if
re-elected. The principal occupation and other information regarding each
Director are set forth below.
Each
Director will be elected to hold office for a one-year term until the 2010
Annual Meeting of Stockholders, unless he resigns or is removed before his term
expires, or until his replacement is elected and qualified. If any of the
nominees cannot serve for any reason (which is not anticipated), the Board of
Directors may designate a substitute nominee or nominees. If a substitute is
nominated, we will vote all valid proxies for the election of the substitute
nominee or nominees. Alternatively, the Board of Directors also may decide to
leave a board seat or seats open until a suitable candidate or candidates are
located, or it may decide to reduce the size of the board.
RECOMMENDATION
The
Board of Directors recommends that stockholders vote “FOR” all of the
nominees.
Nominees for
Director
David S.
Oros founded the Company in
1996, and currently serves as our Chairman of the Board of Directors. From 1996
until June 2006, Mr. Oros served as our Chief Executive Officer. From 1994 until
1996, Mr. Oros was President of NexGen Technologies, L.L.C., a wireless software
development company that contributed all of its assets to the Company. From 1992
until 1994, he was President of the Wireless Data Group at Westinghouse
Electric. Prior to that, from 1982 until 1992, Mr. Oros was at Westinghouse
Electric directing internal research and managing large programs in advanced
airborne radar design and development. Mr. Oros received a B.S. in mathematics
and physics from the University of Maryland. Mr. Oros is currently a managing
partner for Global Domain Partners, LLC. Other directorships include:
Evolving Systems, Inc.
James T.
Brady was elected director of the Company on June 28, 2002. Mr. Brady has
served as the Managing Director - Mid-Atlantic, for Ballantrae International,
Ltd., a management consulting firm, since 2000 and was an independent business
consultant from May 1998 until 2000. From May 1995 to May 1998, Mr. Brady was
the Secretary of the Maryland Department of Business and Economic Development.
Prior to May 1995, Mr. Brady was a managing partner with Arthur Andersen LLP in
Baltimore, Maryland. Mr. Brady received a B.A. from Iona College. Other
directorships include: McCormick & Company, Inc., Constellation Energy
Group, Inc. and T. Rowe Price Group.
Paul Caine
was elected director of the Company on September 5, 2007. Since October 2008,
Mr. Caine has served as President and Group Publisher of Time Inc.’s Style and
Entertainment Group overseeing the PEOPLE Group (PEOPLE, People.com, Stylewatch, People en Español, People Country), as well as
Entertainment Weekly,
EW.com., In Style and
Essence.
His career
at Time Inc. began in 1989 as an advertising sales representative for PEOPLE. During his tenure at
Time Inc., Mr. Caine has been the Associate Publisher of PEOPLE, Publisher of Teen People, Entertainment Weekly
and PEOPLE, the Group
Publisher of the PEOPLE Group and the President of the Entertainment Group.
Prior to joining Time Inc., Mr. Caine worked for USA Today and J. Walter
Thompson. Mr. Caine received a B.S. in Business Communication from Indiana
University.
Edward J.
Mathias was elected director of the Company on June 28, 2002. Mr. Mathias
has been a managing director of The Carlyle Group, a Washington, D.C. based
global private equity firm, since 1994. Mr. Mathias served as a managing
director of T. Rowe Price Associates, Inc., an investment management firm, from
1971 to 1993. He received a B.A. from the University of Pennsylvania and an
M.B.A. from Harvard University. Other directorships include: Allied
Capital, Brown Advisory Holdings, Inc. and a special purpose acquisition
corporation, Triple Crown Acquisition Corp.
George P.
Stamas was elected a director of the Company on October 20, 1999. Since
January 2002, Mr. Stamas has been a senior partner with the law firm of Kirkland
& Ellis LLP. Also, since November 2001, Mr. Stamas has been a venture
partner with New Enterprise Associates. From December 1999 until December 2001,
Mr. Stamas served as the Vice Chairman of the board of directors and Managing
Director of Deutsche Banc Alex Brown (now Deutsche Bank Securities). Mr. Stamas
is counsel to, and a limited partner of, the Baltimore Orioles baseball team and
also of Lincoln Holdings, which holds interests in the Washington Wizards and
Washington Capitals. He received a B.S. in economics from the Wharton School of
the University of Pennsylvania and a J.D. from the University of Maryland Law
School. Other directorships include: FTI Consulting, Inc.
ITEM
2 – RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit
Committee of the Board of Directors has selected KPMG LLP as the Company’s
independent registered public accounting firm for 2009, and the Board of
Directors is asking stockholders to ratify that selection. We are not required
to have the stockholders ratify the selection of KPMG LLP as our independent
auditor. We nonetheless are doing so because we believe it is a matter of good
corporate practice. If the stockholders do not ratify the selection, the Audit
Committee will reconsider the retention of KPMG LLP, but ultimately may retain
such independent auditor. Even if the selection is ratified, the Audit
Committee, in its discretion, may change the appointment at any time if it
determines that such a change would be in the best interests of NexCen and its
stockholders. A representative of KPMG LLP is expected to be present at the
Annual Meeting. Such representative will have an opportunity to make a statement
if he or she desires to do so and will be available to respond to appropriate
questions.
RECOMMENDATION
The
Board of Directors recommends that stockholders vote “FOR” ratification of the
appointment of KPMG LLP as the Company’s independent registered public
accounting firm for 2009.
Audit
Fees
The
aggregate fees billed for professional services rendered for NexCen by KPMG LLP
for the years ended December 31, 2008 and 2007 were:
|
|
2008
|
|
|
2007
|
|
Audit
Fees
|
|
$ |
1,267,900 |
|
|
$ |
668,211 |
|
Audit-Related
Fees
|
|
|
232,100 |
|
|
|
287,699 |
|
Tax
Fees
|
|
|
- |
|
|
|
37,608 |
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Total
Fees
|
|
$ |
1,500,000 |
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|
$ |
993,528 |
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“Audit
Fees” include time billed to NexCen for professional services rendered for the
annual audit for NexCen’s consolidated financial statements, the quarterly
reviews of the consolidated financial statements for fiscal years 2008 and 2007
and the audit with respect to management’s assessment of the effectiveness of
internal control over financial reporting as of December 31, 2007 and the
effectiveness of internal control over financial reporting as of December 31,
2007.
The
aggregate amount billed for all tax fees for the years ended December 31, 2008
and 2007 (see chart above under heading “Tax Fees”) principally covered tax
planning, tax consulting and tax compliance services provided to
NexCen.
“Audit
Related Fees” for 2008 include professional services performed by KPMG LLP
related primarily to a Current Report on Form 8-K/A filing related to the Great
American Cookies acquisition and procedures in connection with the Company’s
special investigation in 2008. For 2007, these fees include professional
services performed by KPMG LLP related primarily to Current Reports on Form
8-K/A filings related to Bill Blass, MaggieMoo’s, Marble Slab, Pretzel Time and
Pretzelmaker acquisitions and audits of the financial statements of certain of
our franchise brands as required by the Federal Trade Commission in preparing
Uniform Franchise Offering Circulars.
NexCen
does not use our independent auditor as our internal auditor nor do we have an
internal auditor.
No other
professional services were rendered or fees were billed by KPMG LLP for the most
recent fiscal year or for the year ending December 31, 2008 and
2007.
The Audit
Committee has adopted policies and procedures for the pre-approval of the above
fees. All requests for services to be provided by KPMG LLP are submitted to the
Audit Committee. Requests for all non-audit related services require
pre-approval from the entire Audit Committee. A schedule of approved services is
then reviewed and approved by the entire Audit Committee at each Audit Committee
meeting.
AUDIT
COMMITTEE REPORT
In
accordance with its written charter, the Audit Committee assists the Board of
Directors in its oversight of NexCen's accounting and financial reporting
practices. The Audit Committee charter is located on our website at www.nexcenbrands.com.
Management
of NexCen is responsible for the preparation, presentation and integrity of
NexCen's financial statements and for maintaining appropriate accounting and
financial reporting policies and practices, and internal controls and procedures
designed to assure compliance with accounting standards and applicable laws and
regulations. The independent auditor is responsible for auditing NexCen's
consolidated financial statements and expressing an opinion as to their
conformity with generally accepted accounting principles. The independent
auditor has free access to the Audit Committee to discuss any matters it deems
appropriate.
In
performing its oversight function, the Audit Committee reviewed and discussed
with NexCen’s management and independent auditor the audited consolidated
financial statements of the Company as of and for the year ended December 31,
2008 and management’s report on internal control over financial reporting. The
Audit Committee also discussed with NexCen’s independent auditor the matters
required to be discussed by Public Company Accounting Oversight Board (“PCAOB”)
Auditing Standard AU Section 380, “Communication with Audit Committees,” and
Rule 2-07 of Regulation S-X promulgated by the SEC, as modified or
supplemented.
The Audit
Committee received from the independent auditor formal written statements
pursuant to PCAOB Ethics and Independence Rule 3526, “Communication with Audit
Committee Concerning Independence.” The Audit Committee also discussed with the
independent auditor the auditor’s independence from management and
NexCen.
The Audit
Committee has discussed with and received regular status reports from the
independent auditor on the overall scope and plans for their audit. The Audit
Committee also met periodically with the independent auditor, with and without
management present, to discuss the results of their audit findings. The Audit
Committee also reviewed management’s assessment of the Company’s internal
control over financial reporting, the Company’s critical accounting policies and
practices and alternative treatments of financial information during the
Committee’s discussions with the independent auditor.
In
determining whether to reappoint KPMG LLP as NexCen’s independent auditor, the
Audit Committee took into consideration a number of factors, including the
quality of the Audit Committee’s ongoing discussions with KPMG LLP, an
assessment of the professional qualifications and past performance of KPMG LLP,
and the importance of KPMG LLP’s experience with and knowledge of the Company.
In light of all of these considerations, the Audit Committee believes it is in
the interest of NexCen and its stockholders for KPMG LLP to continue as its
independent auditor.
Based
upon the reports and discussions described in this report, and subject to the
limitations on the roles and responsibilities of the Audit Committee referred to
above and its charter, the Audit Committee recommended to the Board of Directors
that the audited financial statements and management’s report on internal
control over financial reporting be included in NexCen's Annual Report on Form
10-K for 2008 for filing with the SEC.
AUDIT
COMMITTEE OF THE BOARD OF DIRECTORS
James T.
Brady (Chairman)
Paul
Caine
Edward J.
Mathias
CORPORATE
GOVERNANCE
The Board
of Directors reviews the Company’s policies and business strategies and advises
and counsels the Chief Executive Officer and other executive officers who manage
NexCen’s business. The Board of Directors consists of five members, none of whom
are currently employed by the Company. Three of the directors (Messrs. Brady,
Caine and Mathias) have been determined by the Board to be “independent” as that
term is defined in the NASDAQ listing standards and in NexCen’s Corporate
Governance Guidelines.
The
Company’s Corporate Governance Guidelines, our general code of ethics, our code
of ethical conduct for senior financial officers, and the Policy and Procedures
with respect to Related Persons Transactions, as well as the charters for our
Audit Committee, Nominating/Corporate Governance Committee and Compensation
Committee, are available on our website at www.nexcenbrands.com.
This information is also available in print upon written request to Corporate
Secretary, NexCen Brands, Inc., 1330 Avenue of the Americas, 34th Floor,
New York, New York 10019.
Director
Independence
Our Board
of Directors has adopted the following standard for independence:
“Independent director” means a
person other than an executive officer or employee of the Company or any other
individual having a relationship which, in the opinion of the Company's Board,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
In
connection with, and to assist in making, this determination, the Board has
adopted the definition of independence contained in the NASDAQ listing standards
as our categorical standard of independence. However, even if a director meets
this categorical standard of independence to conclude that a director is
independent, the Board must also determine that no other relationship exists
that, in the Board’s judgment, “would interfere with the exercise of independent
judgment by that director in carrying out the responsibilities of a
director.”
Each of
our directors, other than Messrs. Oros and Stamas, qualifies as “independent” in
accordance with the Company’s independence standard. In making their affirmative
determination of independence, the directors reviewed and discussed information
provided by the directors and management with regard to each director’s business
and personal activities as they relate to NexCen and NexCen’s management. Mr.
Oros was employed during a portion of 2009 by the Company, and, as such, he does
not qualify as an independent director. The Board of Directors also determined
that Mr. Stamas should not be considered an independent director in view of the
business relationship between the Company and Kirkland & Ellis LLP. Mr.
Stamas’ business relationship with the Company is described below under the
caption “Certain
Related Party Transactions for 2008 and 2009.” All members of the Audit
Committee, Compensation Committee and Nominating/Corporate Governance Committee
are independent directors.
In 2008,
each of our directors, other than Messrs. Oros, Stamas and D’Loren (who resigned
on August 15, 2008), qualified as “independent” in accordance with the Company’s
independence standard. Messrs. Oros and D’Loren were employed during a portion
of 2008 by the Company, and, as such, neither qualified as an independent
director. Similar to 2009, the Board of Directors also determined that Mr.
Stamas should not be considered an independent director in view of the business
relationship between the Company and Kirkland & Ellis LLP as mentioned
above.
In
determining that each individual who is currently serving or served as a member
of the Board of Directors during 2008, other than Messrs. Oros, D’Loren, and
Stamas, is or was independent, the Board of Directors considered the following
relationships, which it determined did not impair such director’s
independence:
|
·
|
In
May 2008, the Company engaged FTI Consulting, Inc. (“FTI”) to assist the
Company in its restructuring efforts and public relations. Since 1992, Mr.
Dunn, a member of the Company’s Board of Directors in 2008, has served as
a director of FTI and/or as its President and Chief Executive
Officer. This engagement is described below under the caption “Certain Related Party
Transactions for 2008 and 2009.” Mr. Dunn resigned as a director on
September 25, 2008.
|
|
·
|
In
July 2007, the Company entered into a commercial agreement with Mr. Traub,
a member of the Company’s Board of Directors in 2008, and a business that
he owns and operates, Marvin Traub Associates. This agreement is described
below under the caption “Certain Related Party
Transactions for 2008 and 2009.” The Board of Directors determined
that Mr. Traub should be considered an independent director on September
25, 2008 in connection with the resignation of Mr. Dunn from the Board of
Directors. Mr. Traub resigned as a director on December 4,
2008.
|
Other
than as discussed above, the Board of Directors did not consider and was not
aware of any other transactions, relationships or arrangements that would affect
the determination of our director’s independence under the Company’s
standards.
Policies and Procedures for
the Review and Approval of Related Party Transactions
The
Company adopted the Policy and Procedures with respect to Related Persons
Transactions for the review, approval or ratification of all related party
transactions. The policy is administered by the Nominating/Corporate Governance
Committee.
Pursuant to the
Policy and Procedures, any proposed related
person transaction must be submitted for consideration at the first regular or
special meeting of the Nominating/Corporate Governance Committee that immediately precedes
or follows the Company entering into a related party transaction. In
determining whether or not to approve or ratify such transactions, the Committee
considers all the relevant facts and circumstances related to the transaction
including, but not limited to (1) the benefit to the Company; (2) if the
transaction involves a director, a member of the director’s immediate family or
an entity affiliated with a director, the impact on the director’s independence;
(3) the related person’s relationship to the Company and interest in the
transaction; (4) the availability of other sources for comparable products or
services; (5) the terms of the transaction (including dollar value of the
transaction); (6) the terms available to unrelated third parties; and (7) any
other information regarding the transaction or the related person in the context
of the transaction that is material to investors in light of the circumstances
of the particular transaction. The Nominating/Corporate Governance Committee
approves or ratifies only those transactions that are in, or are not
inconsistent with, the best interests of the Company and our
stockholders.
In the
event that the Nominating/Corporate Governance Committee determines not to
ratify a related party transaction, it may evaluate all options, including but
not limited to, termination of the transaction on a prospective basis,
rescission of such transaction, or modification of the transaction in a manner
that would permit it to be ratified by the Committee.
The
Company’s Policy and Procedures with respect to Related Persons Transactions can
be found on our website.
Certain Related Party
Transactions for 2008 and 2009
The
Company receives legal services from Kirkland & Ellis LLP, which is
considered a related party because a partner at that firm, George P. Stamas, is
a member of the Company’s Board of Directors. For the years ended December 31,
2008, 2007 and 2006, expenses related to Kirkland & Ellis LLP were
approximately $2.0 million, $1.3 million, and $1.7 million, respectively. For
the years ended December 31, 2008, 2007, 2006, the Company had outstanding
payables due to Kirkland & Ellis LLP of approximately $989,000, $121,000,
and $492,000, respectively.
In May
2008, the Company engaged FTI Consulting, Inc. (“FTI”) to assist the Company in
its restructuring efforts and public relations. Since 1992, Mr. Dunn, a former
member of the Company’s Board of Directors, has served as a director of FTI
and/or as its President and Chief Executive Officer. For the year ended December
31, 2008, expenses related to FTI were approximately $619,333. For the
year ended December 31, 2008, the Company had outstanding payables due to FTI of
approximately $89,073. As detailed above, Mr. Dunn resigned as a director
on September 25, 2008.
In July
2007, the Company entered into an agreement with Marvin Traub Associates, Inc.
an entity owned by Mr. Traub, a former member of the Company’s Board of
Directors, to help the Company identify, approach, and negotiate a deal with a
premier U.S. based big box retail chain so that such retailer might joint
venture with, or purchase a license from the Company to open MaggieMoo’s ice
cream locations within their stores. Marvin Traub Associates, Inc. received a
one-time retainer fee of $25,000 upon the agreement’s execution in 2007.
If the Company were successful in consuming a relationship with a third party,
Marvin Traub Associates, Inc. would have received an additional $100,000 success
fee. No success fee ultimately was paid. As detailed above, Mr. Traub
resigned as a director on December 4, 2008.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of
the members of our Compensation Committee is or has ever been an officer or
employee of NexCen or any of our subsidiaries. None of our executive officers
serves as a member of the board of directors or a compensation committee of any
entity that had one or more executive officers serving on our Board of Directors
or our Compensation Committee.
COMMUNICATION
WITH DIRECTORS
Interested
parties, including stockholders, may communicate with the Board of Directors as
a whole or with specified individual Directors by using the following
address:
NexCen
Brands, Inc.
Board of
Directors
c/o
Corporate Secretary
1330
Avenue of the Americas, 34th Floor
New York,
New York 10019
DIRECTOR
NOMINEE CRITERIA AND PROCESS
The
Nominating/Corporate Governance Committee unanimously recommended the nominees
for election to the Board of Directors for the Annual Meeting. The
Nominating/Corporate Governance Committee may consider suggestions from many
sources, including stockholders and third-party search firms, regarding possible
candidates for director. In accordance with NexCen’s Corporate Governance
Guidelines, the Nominating/Corporate Governance Committee will consider, among
other things, the candidate’s experience, expertise in matters affecting NexCen
and its business, ability and willingness to contribute special competencies to
board activities, personal integrity, and leadership experience. The
Nominating/Corporate Governance Committee evaluates candidates on the basis of
their qualifications, experience, skills, and ability to enhance stockholder
value and without regard to gender, race, color, national origin, or other
protected status. Once possible candidates are identified, the
Nominating/Corporate Governance Committee will discuss its recommendations with
the Board of Directors. If the candidate is approved by the Board of Directors,
the recommended candidate will be nominated for election by NexCen’s
stockholders (or appointed to fill a vacancy on the board, if applicable). When
a vacancy occurs on the Board of Directors, the Nominating/Corporate Governance
Committee may recommend to the Board of Directors a nominee to fill the vacancy.
As provided in NexCen’s bylaws, the Board of Directors may appoint a new
director when a vacancy occurs between Annual Meetings of Stockholders.
Alternatively, the Board of Directors also may decide to leave a board seat or
seats open until a suitable candidate or candidates are located, or it may
decide to reduce the size of the Board of Directors.
The
Nominating/Corporate Governance Committee will consider nominations submitted by
shareholders in accordance with the procedures set forth in our bylaws, as
discussed below in “Submission of Shareholder Proposals.” Such nominations
will be evaluated in accordance with the same criteria as candidates initially
proposed by the Nominating/Corporate Governance Committee. Nominations should be
sent to the attention of Corporate Secretary, NexCen Brands, Inc., 1330 Avenue
of the Americas, 34th Floor, New York, New York 10019.
DIRECTOR
ATTENDANCE
During
2008, the Board of Directors held 20 meetings. Each of the incumbent members of
the Board of Directors attended at least 75% of the combined total meetings of
the Board of Directors and the respective committees on which such member served
in 2008. The average attendance of all Directors was 90%. Directors are expected
to attend the Annual Meeting of Stockholders. The Company did not hold an Annual
Meeting of Stockholders in 2008, but all Directors in office as of the date of
the 2007 Annual Meeting of Stockholders attended the 2007 meeting.
COMMITTEES
OF THE BOARD OF DIRECTORS
Our
bylaws authorize our Board of Directors to appoint one or more committees, each
consisting of one or more directors. The Board of Directors currently has three
standing committees: an Audit Committee, a Nominating/Corporate Governance
Committee and a Compensation Committee, each of which has adopted written
charters that are all currently available on our website. On December 5, 2008,
in connection with the approval of the reduction in size of the Board of
Directors to five members, the Board of Directors reduced the size of both the
Nominating/Corporate Governance Committee and the Compensation Committee to two
directors.
Audit
Committee
Members:
Directors Brady (Chairman), Caine and Mathias
Number of
Meetings in 2008: 13
The Audit
Committee’s responsibilities include:
|
·
|
appointing,
replacing, overseeing and compensating the work of a firm to serve as the
registered independent public accounting firm to audit the Company's
financial statements;
|
|
·
|
discussing
the scope and results of the audit with the independent registered public
accounting firm and reviewing with management and the independent
registered public accounting firm the Company's interim and year-end
operating results;
|
|
·
|
considering
the adequacy of the Company's internal accounting controls and audit
procedures;
|
|
·
|
approving
(or, as permitted, pre-approving) all audit and non-audit services to be
performed by the independent registered public accounting firm;
and
|
|
·
|
providing
an avenue of communication among the independent auditor, management,
employees and the Board of
Directors.
|
The Board
of Directors has determined that the members of the Audit Committee satisfy the
“independence” and “financial literacy” requirements for audit committee members
as set forth by the SEC and as adopted in the NASDAQ listing
standards.
The Board
of Directors also determined that Mr. Brady is an audit committee financial
expert, as defined by Item 407 of Regulation S-K and as required by Nasdaq Rule
5605(c)(2)(A), and is independent of management, as defined by Rule 10A-3(b)(1)
of the Exchange Act and Nasdaq Rule 5605(a)(2) and as required by Nasdaq Rule
5605(c)(2)(A). We believe that Mr. Brady is qualified to be an “audit committee
financial expert” because he has the following attributes: (i) an understanding
of GAAP and financial statements, (ii) the ability to assess the general
application of such principles in connection with accounting for estimates,
accruals and reserves, (iii) experience preparing, auditing, analyzing or
evaluating financial statements that present a breadth and level of complexity
of accounting issues that are generally comparable to the breadth and complexity
of issues that can reasonably be expected to be raised by the Company’s
financial statements, and experience actively supervising one or more persons
engaged in such activities, (iv) an understanding of internal control over
financial reporting and (v) an understanding of audit committee functions. Mr.
Brady acquired these attributes by having held various positions that provided
the relevant experience, including 33 years with Arthur Andersen (including 20
years as an audit partner) and membership on the audit committees of several
public companies since 1998. Mr. Brady also currently serves on the audit
committees of three other public companies, but the Board of Directors has
determined that such service does not affect his independence, responsibilities
or duties as a member of the Audit Committee.
Nominating/Corporate
Governance Committee
Members:
Directors Brady (Chairman) and Caine
Number of
Meetings in 2008: 2
The
Nominating/Corporate Governance Committee's responsibilities
include:
|
·
|
identifying,
evaluating and recommending nominees to serve on the Board of Directors
and committees of the Board of
Directors;
|
|
·
|
conducting
searches for appropriate directors and evaluating the performance of the
Board of Directors and of individual
directors;
|
|
·
|
screening
and recommending to the Board of Directors individuals qualified to become
the chief executive officer of the Company or to become senior executive
officers of the Company;
|
|
·
|
assessing
the policies, procedures and performance of the Board of Directors and its
committees;
|
|
·
|
developing,
evaluating and recommending to the Board of Directors any changes or
updates to the Company’s policies on business ethics, conflicts of
interest and related party
transactions;
|
|
·
|
making
recommendations regarding director compensation to the Board of Directors;
and
|
|
·
|
overseeing
the Company’s corporate governance procedures and
practices.
|
Compensation
Committee
Members:
Directors Mathias (Chairman) and Brady
Number of
Meetings in 2008: 10
The
Compensation Committee's responsibilities include:
|
·
|
reviewing
and approving corporate goals and objectives that are relevant to the
compensation of the chief executive officer and other executive
officers;
|
|
·
|
evaluating
the chief executive officer's performance and setting compensation in
light of corporate objectives;
|
|
·
|
reviewing
and approving the compensation of the Company's other executive
officers;
|
|
·
|
administering
the Company’s stock option and stock incentive plans;
and
|
|
·
|
reviewing
and making recommendations to the Board of Directors with respect to the
Company’s overall compensation objectives, policies and practices,
including with respect to incentive compensation and equity
plans.
|
Ad Hoc Committees of the
Board of Directors
Restructuring
Committee
On May
18, 2008, we established an ad hoc Restructuring Committee of our Board of
Directors, consisting of Messrs. Oros, Brady and Stamas. The Restructuring
Committee did not have a formal charter, but was charged with overseeing, on
behalf of the Board of Directors, the Company’s efforts to improve our financial
condition and evaluate our restructuring alternatives. On May 12, 2009, the
Restructuring Committee was disbanded after the Board’s determination that this
ad hoc committee was no longer needed in light of the progress made to date by
the Company in its restructuring efforts and the reduced number of members on
the Board of Directors.
DIRECTOR
COMPENSATION
In 2008,
non-employee Directors each received a retainer of $20,000 (paid quarterly), a
fee of $1,500 for each board meeting they attended, and reimbursement for
reasonable travel expenses relating to attendance at board meetings. Audit
Committee members received $2,500 for each Audit Committee meeting they
attended, and the chairperson of the Audit Committee received an additional
$12,500 annual retainer (paid quarterly). Each of the chairpersons of the
Compensation Committee and the Nominating/Corporate Governance Committee
receives an additional retainer of $2,500. On December 5, 2008, the Board of
Directors approved providing a fee of $1,000 commencing in 2009 to the
respective members of the Compensation Committee and the Nominating/Corporate
Governance Committee for attending each committee meeting that is held
separately from a Board of Directors meeting.
No stock
or option awards were granted to directors in 2008. In addition, as of December
31, 2008, all of the non-qualified options granted to the directors in 2007 were
cancelled either (1) voluntarily by the director through the Company’s Stock
Option Cancellation Program instituted on November 12, 2008 or (2) in accordance
with the option grant agreements which provided that the grantee would forfeit
any unvested options upon resignation. See “Compensation Discussion and
Analysis” for additional details regarding the Stock Option Cancellation
Program.
The
following table sets forth compensation information for 2008 for each current
and former member of our Board of Directors with the exception of Mr. D’Loren.
Directors who were employees, such as Messrs. D’Loren and Oros, do not receive
additional compensation for serving on the Board of Directors. See “Summary
Compensation” table and “Grants of Plan-Based Awards” table for disclosures
related to Mr. D’Loren.
Name
|
|
Fees Earned
or Paid
in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)(8)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension Value
and Nonqualified
Deferred Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
David
S. Oros
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
152,188 |
(9) |
|
$ |
152,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
T. Brady
|
|
$ |
97,500 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
97,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Caine
|
|
$ |
75,500 |
(2) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
75,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
B. Dunn, IV
(former
director)
|
|
$ |
34,228 |
(3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
34,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
J. Mathias
|
|
$ |
82,500 |
(4) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
82,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
Rovner
(former
director)
|
|
$ |
32,761 |
(5) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
32,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
P. Stamas
|
|
$ |
48,500 |
(6) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
48,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marvin
Traub
(former
director)
|
|
$ |
41,033 |
(7) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
41,033 |
|
(1)
|
Consists
of $20,000 annual retainer, $30,000 in Board attendance fees, $12,500
retainer as chairman of the Audit Committee, $32,500 in Audit Committee
meeting fees, and $2,500 retainer as chairman of the Nominating/Corporate
Governance Committee. Mr. Brady currently is and was the chairman of the
Audit Committee and the Nominating/Corporate Governance Committee
throughout the fiscal year ended December 31,
2008.
|
(2)
|
Consists
of $20,000 annual retainer, $25,500 in Board attendance fees, and $30,000
in Audit Committee meeting fees. Mr. Caine has been a member of the Audit
Committee throughout the fiscal year ended December 31,
2008.
|
(3)
|
Consists
of $14,728 annual retainer (which reflects payment of $5,000 each for the
first and second quarter and $4,728 for the third quarter prorated to the
date of resignation) and $19,500 in Board attendance fees. Mr. Dunn
resigned as a director on September 25,
2008.
|
(4)
|
Consists
of $20,000 annual retainer, $30,000 in Board attendance fees, $2,500
retainer as chairman of the Compensation Committee, and $30,000 in Audit
Committee meeting fees. Mr. Mathias currently is and was the chairman of
the Compensation Committee and a member of the Audit Committee throughout
the fiscal year ended December 31,
2008.
|
(5)
|
Consists
of $13,261 annual retainer (which reflects payment of $5,000 each for the
first and second quarter and $3,261 for the third quarter prorated to the
date of resignation) and $19,500 in Board attendance fees. Mr. Rovner
resigned as a director on August 29,
2008.
|
(6)
|
Consists
of $20,000 annual retainer and $28,500 in Board attendance
fees.
|
(7)
|
Consists
of $18,553 annual retainer (which reflects payment of $5,000 each for the
first, second and third quarter and $3,533 for the fourth quarter prorated
to the date of resignation) and $22,500 in Board attendance fees. Mr.
Traub resigned as a director on December 4,
2008.
|
(8)
|
No
stock or option awards were granted to directors in 2008. In addition, as
of December 31, 2008, all of the non-qualified options granted to the
directors in 2007 were cancelled either (1) voluntarily by the director
through the Company’s Stock Option Cancellation Program] instituted on
November 12, 2008 or (2) in accordance with the option grant agreements
which provided that the grantee would forfeit any unvested options upon
resignation.
|
(9)
|
In
June 2006, Mr. Oros relinquished his position as Chief Executive Officer
of the Company, remaining as Chairman. Under the terms of his amended
employment agreement, for a period of three years ending in June 2009, Mr.
Oros remained an employee to provide advice and guidance to the Company
and to assist with the management and business transition processes. Mr.
Oros received an annual salary of $200,000 and health care coverage as an
employee during this period. Starting in May 2008, Mr. Oros agreed to
defer payment of his salary to provide the Company with additional
liquidity. The Company recommenced payment of Mr. Oros’ salary, including
the amounts deferred, in October 2008. $54,541 of Mr. Oros’ deferred 2008
salary was paid in 2009, and thus is not included in the amounts above.
The Company paid $10,724 for the employee’s portion of the premiums for
Mr. Oros’ health care coverage in
2008.
|
EXECUTIVE
OFFICERS
In 2008,
we had extensive turnover in the composition of our executive officers. Robert
W. D’Loren, who was our President and Chief Executive Officer, and also a
director, resigned as director and officer on August 15, 2008. James Haran, who
was our Executive Vice President, M&A and Operations, resigned on August 14,
2008. The Company terminated on March 21, 2008 the employment of David Meister,
who was our Senior Vice President, Chief Financial Officer and
Treasurer.
Due to
the changes in our business strategy and in connection with expense reduction
efforts, the Company terminated on May 30, 2008 the employment of Charles A.
Zona, who was our Executive Vice President, Brand Management and Licensing, and
terminated on May 23, 2008 the employment of Joseph DiMuro, who was our
Executive Vice President, Chief Marketing Officer.
The
following table shows the names and ages of all of NexCen’s executive officers
who will continue to serve after the Annual Meeting.
Name
|
|
Age
|
|
Position
|
Kenneth
J. Hall1
|
|
51
|
|
Chief
Executive Officer
|
Mark
E. Stanko2
|
|
47
|
|
Chief
Financial Officer and Treasurer
|
Sue
J. Nam3
|
|
40
|
|
General
Counsel and Secretary
|
Chris
Dull4
|
|
36
|
|
President,
NexCen Franchise
Management
|
1
|
Mr.
Hall joined the Company on March 25, 2008 as our Executive Vice President,
Chief Financial Officer and Treasurer. He became our Chief Executive
Officer on August 15, 2008.
|
2
|
Mr.
Stanko joined the Company on April 30, 2008 as the Chief Financial Officer
and Treasurer of NexCen Franchise Management, Inc. (“NFM”), the wholly
owned subsidiary of NexCen which manages all of the Company’s franchised
brands. He became the Company’s Chief Financial Officer on November 12,
2008.
|
3
|
Ms.
Nam joined the Company on September 24, 2007 as General
Counsel. She became Secretary on December 6,
2007.
|
4
|
Mr.
Dull joined the Company on February 28, 2007 as Executive Vice President
of the QSR Franchising of NFM. On May 22, 2007, he was promoted to
President of the QSR Division of NFM. He then was appointed President of
NFM on August 31, 2007 and appointed an executive officer of the Company
on February 13, 2009.
|
Set forth
below is biographical information for our executive officers.
Kenneth J.
Hall joined the Company on March 25, 2008 as Executive Vice President,
Chief Financial Officer and Treasurer. He was appointed Chief Executive Officer
of the Company on August 15, 2008. Mr. Hall has more than 25 years of
cross-functional operating, strategic and financial leadership experience and
has held executive leadership positions with NYSE and NASDAQ listed companies as
well as private companies, including the National Football League, Global
DirectMail, Icon CMT Corp. and Mercator Software, where he helped lead its
financial turnaround following a financial restatement and SEC
investigation. Prior to joining the Company, Mr. Hall served as the
Chief Financial Officer and Treasurer of Seevast Corp., a position he held from
April 2005 to February 2008. From December 2003 to March 2005, Mr. Hall worked
as an independent consultant advising companies on strategic and financial
matters. Mr. Hall holds a B.S. in Finance from Lehigh University and a M.B.A.
from Golden Gate University.
Mark E.
Stanko joined the Company on April 30, 2008 as Chief Financial Officer of
NFM. He was appointed Chief Financial Officer and Treasurer of the
Company on November 12, 2008. Prior to joining the Company, Mr. Stanko most
recently served as Regional Controller for Levitt Corporation, a publicly traded
homebuilding and land development company, from 2006 to 2008. From 2003 to 2006,
Mr. Stanko held the position of Vice President of Finance of KB Home, a publicly
traded homebuilding company. From 2001 to 2003, Mr. Stanko was Director of
Corporate Audit, then the Director of Finance of Pulte Homes, Inc., a publicly
traded homebuilding company. Mr. Stanko began his career at Ernst & Young
LLP where he held positions of increasing responsibility over 16 years. Mr.
Stanko holds a B.B.A. in Accounting from Cleveland State University. He is a
Certified Public Accountant.
Sue J.
Nam joined
the Company on September 24, 2007 as General Counsel. She was
appointed Secretary of the Company on December 6, 2007. Prior to joining the
Company, since 2001, Ms. Nam was Vice President, Corporate Counsel for
Prudential Financial, where she served as Intellectual Property Counsel and
Assistant Corporate Secretary. Previously, Ms. Nam was in private practice with
Brobeck Phleger & Harrison LLP in its San Francisco office and Gibson, Dunn
& Crutcher LLP in its New York office. Ms. Nam earned her B.A. in English
and French Literature from Northwestern University and her J.D. from Yale Law
School.
Chris
Dull joined
the Company on February 28, 2007 as Executive Vice President of the QSR
Franchising of NFM. On May 22, 2007, he was promoted to President of the QSR
Division of NFM. He then was appointed President of NFM on August 31, 2007 and
appointed an executive officer of NexCen Brands on February 13, 2009. Prior to
joining the Company, Mr. Dull most recently served as the Executive Vice
President for Marble Slab Creamery, Inc. from 2004 to 2007 and served as Vice
President of Franchise Development for Marble Slab Creamery, Inc. from 1999 to
2004. Mr. Dull began his career in franchise management with Marble Slab
Creamery, where he held positions of increasing responsibility over 13
years. Mr. Dull received a B.A. from Baylor University.
EXECUTIVE
OFFICER COMPENSATION
Compensation Discussion and
Analysis
Overview
In May
2008, the Company disclosed issues related to our debt structure that placed the
very future of the Company in doubt. The Company’s efforts to address the
challenges that we faced led to extensive changes in the composition of our
executive management and a reduction in staff, especially in our New York
office. As a result, the overriding factor in the Company’s compensation
decisions in the latter half of 2008 was to smoothly transition the management
team and to retain certain key executives and employees whom management and/or
the Board of Directors identified as being crucial to the Company’s turn-around
strategy, transition plans and on-going operations.
With
respect to employees who were not executive officers, we instituted a retention
program on June 27, 2008, comprised of option grants and minimum severance
agreements with respect to twelve employees of NexCen Brands and eleven
employees NFM, who were deemed important to the core operations of the Company
(the “2008 Retention Program”). Under the 2008 Retention Program, the Company
granted stock options pursuant to our 2006 Equity Incentive Plan (the “2006
Plan”) with more favorable vesting and exercise provisions than the Company
typically provides. The stock option grants provided for vesting equally over
four quarters assuming continued employment as opposed to over our typical three
year vesting period. The stock option grants also provided for accelerated
vesting of the stock option grant upon a termination of employment without Cause
or a Change in Control (as those terms are defined in the 2006 Plan). In
addition, the stock option grants once vested remain exercisable for one year
after termination of employment as opposed to our typical 90 day period. The
minimum severance agreements provided that employees would be eligible to
receive severance if they were terminated without Cause (as defined in the
severance agreement) and if they provided customary releases to the
Company.
Although
the 2008 Retention Program was effective in retaining the targeted employees at
NFM, it proved ineffective in retaining employees at NexCen Brands. After five
employees terminated their employment with the Company despite being part of the
2008 Retention Program, the Company agreed to provide periodic cash bonuses to
certain employees at NexCen Brands, including certain executive officers, upon
the closing of key transactions and/or continued employment through specified
dates in 2009.
With
respect to executive officers who are current officers of the Company, we
entered into new employment agreements or amended existing employment agreements
in light of their respective additional responsibilities, the changed
circumstances of the Company, and as a means to ensure key executive
retention. Each new employment agreement or amendment was negotiated directly
with the executive officers either by the Board of Directors or by the Company’s
Chief Executive Officer, and in all cases were ultimately reviewed and approved
by the Compensation Committee. Each new employment agreement or amendment
generally provided for increasing each executives officer’s base salary,
providing new equity-based awards, ensuring cash bonuses (in the form of
retention cash bonuses or event specific cash bonuses), and increasing severance
payments upon certain specified events. As discussed below under the caption
“Elements of Compensation,” the mix of compensation components was necessary to
attract and retain these key executive officers given the decline in our stock
price and the doubt as to the Company’s ability to continue as a going concern.
Additional details regarding each named executive officer’s employment
agreements and amendments thereto, if applicable, are provided below under the
caption “Employment Agreements.”
On
November 12, 2008, in light of the dwindling number of shares available for
future issuance under the 2006 Plan, the Company instituted a stock option
cancellation program for vested or unvested stock options issued under the 2006
Plan for certain eligible directors and employees (the “Stock Option
Cancellation Program”). The Stock Option Cancellation Program was a voluntary,
non-incentivized program. The Company provided no remuneration or consideration
of any kind for the cancellation of stock options. In addition, to ensure that
the program was in no way coercive or perceived to be coercive, we limited the
program to directors and executives at the level of vice president or above. As
of December 31, 2008, the Company recaptured 856,666 options through this
program.
The
Company’s ultimate goal is to provide an attractive, flexible and market-based
total compensation program tied to performance and aligned with stockholder
interest. However, we believe that our business and strategies must stabilize
and mature before we can fully understand the critical elements to our financial
and operational success for which we can set appropriate metrics for short and
long-term compensation. In that regard, on April 29, 2009, the Board
of Directors formally terminated the 2006 Management Bonus Plan, which was
established before the recent changes in our business and management team. No
bonuses were paid under such plan since its inception.
Process
for Determining Compensation
General. Our Compensation
Committee plays an integral role in shaping the Company’s overall compensation
objectives, policies and practices. The Compensation Committee is responsible
for, among other things, reviewing and recommending approval of the compensation
of our executive officers; administering our equity incentive and stock option
plans; reviewing and making recommendations to the Board of Directors with
respect to incentive compensation and equity incentive and stock option plans;
evaluating our chief executive officer's performance in light of corporate
objectives; and setting our chief executive officer's compensation based on the
achievement of corporate objectives.
Employment
Agreements
Each
executive officer named in the Summary Compensation Table in this proxy
statement is or was employed by the Company pursuant to a written agreement of
employment, which was approved by the Compensation Committee. Each employment
agreement separately reflects the terms that the Compensation Committee believed
were appropriate and/or necessary to retain the services of the particular
executive officer, within the framework of the Company’s compensation policies.
All employment agreements entered into by the Company provide the Company with
protection in the form of restrictive covenants, including non-competition,
non-solicitation, and confidentiality covenants, for the benefit of the Company.
The Compensation Committee has considered the advisability of using employment
agreements and determined that under certain circumstances it is in the best
interests of the Company insofar as it permits the Company to achieve its
desired goals of retaining executive talent and obtaining post employment
covenants from executive officers. Some of the terms of these employment
agreements were modified in connection with changed circumstances of employment
or in connection with a termination of employment. See the section captioned
“Employment Agreements” below for additional information regarding each
executive’s employment agreement and, where applicable, separation
agreement.
Process for Approving Equity
Grants. The Compensation Committee administers the 2006 Plan, which is
our long-term incentive plan that was approved by our stockholders in October
2006. The Compensation Committee is required to approve all grants of all awards
under that plan, and has not delegated any grant authority. Under the terms of
the 2006 Plan, stock options are required to be priced at the closing price of
the Company’s common stock on the date of grant. Our long-term incentive plan
does not permit the re-pricing of options. Previously, we did not have a policy
that addressed the specific issue of whether equity grants may be approved prior
to the release of material information. In February 25, 2008, the Compensation
Committee established a policy to grant options on a quarterly basis on the
third trading day after the Company publicly announces its quarterly financial
results following each of the first three fiscal quarters of each year and after
annual financial results following the fourth fiscal quarter of each year.
Because the Company has been delayed in the filing of its periodic reports with
the SEC, we suspended the policy of granting options on a quarterly basis and
instead have granted the options on the date they are approved by the
Compensation Committee or as soon thereafter as permitted under applicable law,
regulatory rules or Company policies.
Share Ownership Guidelines.
We do not currently have any requirements for any of our executive officers or
other employees to own specified amounts of NexCen common stock.
Compensation Deduction Limit.
Section 162(m) of the Internal Revenue Code generally limits the compensation
that a corporation can deduct for payments to a chief executive officer and the
four other most highly compensated executive officers to $1 million per officer
per year. However, compensation that is “performance-based,” as defined by
Section 162(m), is exempt from this limitation on deductibility. In general,
compensation attributable to the exercise of stock options granted with an
exercise price at or above the market price of the underlying stock at the time
of the grant qualifies as performance-based compensation. In 2008, we did not
pay our chief executive officer or our four other most highly compensated
executive officers compensation in excess of $1 million (excluding compensation
with respect to options that if exercised at a gain would qualify, we believe,
as performance-based compensation). In addition, the Compensation Committee
takes into account Section 409A of the Internal Revenue Code in determining the
form and timing of compensation paid to our executive officers.
Elements
of Compensation
For 2008,
the principal components of compensation for our named executive officers
consisted of:
|
·
|
Perquisites
and other personal benefits; and
|
These
principal elements have been chosen to create a flexible package that can reward
both our short and long-term performance, while providing the executive with a
competitive compensation package. In previous years, we relied more heavily on
our equity-based awards to attract and retain executive officers and employees.
In light of the decline in our stock price and the doubt as to the Company’s
ability to continue as a going concern, we increased base salaries and
instituted periodic cash bonuses in 2008 to retain certain key executives and
employees of the Company, whom management and/or the Board of Directors
identified as being crucial to the Company’s turn-around strategy, transition
plans and on-going operations. We anticipate that as the Company continues to
stabilize, periodic cash bonuses for executive officers generally will not be a
significant part of each person’s overall annual compensation.
Base salary. We provide named
executive officers and other employees with a base salary to compensate them for
basic services rendered during the fiscal year. Initial base salaries
for our named executive officers were determined for each executive at the time
of hire based on negotiations between the new executive, on the one hand, and
the Company, on the other. The Compensation Committee reviews salary levels at
least annually, as well as upon a promotion or other changes in job
responsibility. Merit based increases to salaries, if any, will be based on the
Compensation Committee’s review and overall assessment of an individual’s
performance.
Equity-based awards. We
provide equity-based compensation to promote our long-term growth and
profitability. We believe equity-based awards provide directors, executive
officers, and employees with incentives to maximize stockholder value and
otherwise contribute to our long-term success. Such awards also allow us to
attract, retain and reward executives and employees, although, as discussed
above, equity-based awards were not as effective a retention tool as in previous
years.
Awards of
stock options and restricted stock are made under our 2006 Plan, which was
approved by our stockholders in October 2006. The Compensation Committee
administers the 2006 Plan and has not delegated any grant authority. Shares of
restricted stock are issued subject to a vesting schedule and cannot be sold
until and to the extent the shares have vested. Stock options are issued at an
exercise price of no less than fair market value on the date of grant and are
subject to vesting requirements, which may include time-based vesting,
performance-based vesting, or both. Historically, we have not issued any options
subject to performance-based vesting.
Cash bonuses. We provide cash
bonus compensation to motivate, reward and retain key executives. During 2008,
we provided interim cash bonuses tied to continued employment and/or the
completion of key transactions such as the refinancing of our credit facility,
the sale of our Bill Blass and Waverly businesses.
Perquisites and other personal
benefits. We provide certain executive officers with perquisites and
other personal benefits that we and the Compensation Committee believe are
reasonable to better enable us to attract and retain superior employees for key
positions. Perquisites are generally granted as part of our executive
recruitment and retention efforts. During 2008, our named executive officers
received a limited amount of perquisites and other personal benefits that we
paid on their behalf. These perquisites and other personal benefits included,
among other things:
|
·
|
Payments
of life, health and/or disability insurance premiums;
and/or
|
Other
Compensation. In addition to the compensation discussed above,
we also provide our named executive officers with customary employee benefits,
available to all employees, including health, disability and life insurance. In
general, these benefits are substantially the same as those available to all of
our employees.
Compensation Committee
Report
The
Compensation Committee has reviewed the Compensation Discussion and Analysis and
discussed that analysis with management. Based on its review and its discussions
with management, the Committee has recommended to our Board of Directors that
the Compensation Discussion and Analysis be included in the Company’s Annual
Report on Form 10-K for 2008 and the Company’s 2009 Proxy Statement. This Report
is provided by the following independent directors, who comprise the
Compensation Committee:
Edward
J. Mathias (Chairman)
James
Brady
Summary Compensation
Table
The table
below summarizes the total compensation paid to or earned by each of our named
executive officers for the fiscal year ended December 31, 2008.
The
Company has no defined benefit plans or actuarial plans, and no non-qualified
deferred compensation plans in which obligations to named executive officers
remain outstanding. The Company also did not award any stock awards in
2008.
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Hall
|
|
2008
|
|
$ |
369,102 |
|
|
$ |
375,000 |
|
|
|
- |
|
|
$ |
86,648 |
|
|
|
- |
|
|
|
- |
|
|
$ |
17,766 |
|
|
$ |
848,516 |
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
E. Stanko
|
|
2008
|
|
$ |
132,218 |
|
|
|
- |
|
|
|
- |
|
|
$ |
2,710 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
135,088 |
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sue
J. Nam
General
Counsel
|
|
2008
|
|
$ |
265,937
|
|
|
$ |
238,000
|
|
|
|
-
|
|
|
$ |
22,515
|
|
|
|
-
|
|
|
|
-
|
|
|
$ |
3,954 |
|
|
$ |
530,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
W. D’Loren
|
|
2008
|
|
$ |
454,827 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
18,143 |
(6) |
|
$ |
427,950 |
|
Former
Chief Executive Officer
|
|
2007
|
|
$ |
750,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
35,167 |
(7) |
|
$ |
785,167 |
|
|
|
2006
|
|
$ |
427,083 |
|
|
|
|
|
|
|
|
|
|
$ |
701,406 |
|
|
|
|
|
|
|
|
|
|
$ |
40,162 |
(8) |
|
$ |
1,168,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister
|
|
2008
|
|
$ |
51,563 |
|
|
|
- |
|
|
|
- |
|
|
$ |
277,245 |
|
|
|
- |
|
|
|
- |
|
|
$ |
1,033 |
|
|
$ |
329,841 |
|
Former Chief
Financial Officer
|
|
2007
|
|
$ |
225,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
4,863 |
|
|
$ |
229,863 |
|
|
|
2006
|
|
$ |
69,375 |
|
|
|
|
|
|
|
|
|
|
$ |
40,671 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
$ |
110,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran
|
|
2008
|
|
$ |
227,404 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
7,175 |
|
|
$ |
234,579 |
|
Former
Executive Vice President
|
|
2007
|
|
$ |
375,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
15,150 |
|
|
$ |
390,150 |
|
|
|
2006
|
|
$ |
338,542 |
|
|
|
|
|
|
|
|
|
|
$ |
145,117 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
$ |
483,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona
|
|
2008
|
|
$ |
125,000 |
|
|
$ |
100,000 |
|
|
|
- |
|
|
$ |
433,066 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
658,066 |
|
Former
Executive Vice President
|
|
2007
|
|
$ |
300,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
300,000 |
|
|
|
2006
|
|
$ |
18,182 |
|
|
|
|
|
|
|
|
|
|
$ |
10,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
29,176 |
|
(1)
|
Mr.
Hall has been the Company’s Chief Executive Officer since August 15, 2008.
Mr. Hall joined the Company as the Executive Vice President, Chief
Financial Officer and Treasurer on March 25, 2008. Mr. Stanko has been the
Company’s Chief Financial Officer and Treasurer since November 12, 2008.
He joined the Company on April 30, 2008 as the Chief Financial Officer of
NFM. Ms. Nam has been the Company’s General Counsel since she joined the
Company on September 26, 2007 and was appointed Secretary on December 6,
2008. Mr. D’Loren was the Chief Executive Officer of the Company from June
6, 2006 to August 15, 2008. Mr. Meister was the Senior Vice President,
Chief Financial Officer and Treasurer from September 12, 2006 to March 21,
2008. Mr. Haran was the Executive Vice President, M&A and Operations
from June 6, 2006 until August 14, 2008. Mr. Zona was the Executive Vice
President, Licensing and Brands from December 11, 2006 until May 30,
2008.
|
(2)
|
The
amount for the year ended December 31, 2008 for Mr. Hall is based on an
initial base salary of $400,000, prorated from March 25, 2008 (the date
his employment commenced) to May 31, 2008, and his current base salary of
$500,000, prorated from June 1, 2008 through December 31, 2008. The amount
for the year ended December 31, 2008 for Mr. Stanko is based on an initial
base salary of $185,000, prorated from April 30, 2008 (the date his
employment commenced) to October 15, 2008, and his current base salary of
$225,000, prorated from October 16, 2008 to December 31, 2008. The amount
included for the year ended December 31, 2008 for Ms. Nam is based on a
base salary of $250,000, prorated from January 1, 2008 through September
30, 2008, and her current base salary of $300,000, prorated from October
1, 2008 to December 31, 2008. The amounts included for the year ended
December 31, 2008 for Messrs. D’Loren, Meister, Haran and Zona is based on
a base salary of $750,000, $225,000, $375,000 and $300,000, respectively,
prorated to their separation dates of August 15, 2008, March
21, 2008, August 14, 2008 and May 30, 2008, respectively. See the section
captioned “Employment Agreements” below for more in-depth information
regarding each executive’s employment agreement and, where applicable,
separation agreement. The amounts included for the year ended December 31,
2006 for Messrs. D’Loren, Meister, Haran and Zona is based on a base
salary of $750,000, $225,000, $375,000 and $300,000, respectively,
prorated from their employment start dates of June 6, 2006, September 12,
2006, June 6, 2006 and December 11, 2006, respectively. Mr. Meister’s
amount for 2006 does not include $29,000 which was paid to Mr. Meister for
services as a consultant with the Company from July 2006 until September
2006. The amount for Mr. Haran for 2006 includes a deferred bonus of
$125,000 from UCC Capital that the Company assumed upon the
acquisition.
|
(3)
|
For
the year ended December 31, 2008, Mr. Hall received a total of $375,000 in
quarterly cash bonuses in accordance with the amendment to his employment
agreement. Ms. Nam received $25,000 on March 31, 2008 pursuant to her
original employment agreement, an additional $5,000 on March 31, 2008 as a
discretionary interim bonus, and $208,000 in retention bonuses in the
latter half of 2008 pursuant to the amendments to her employment
agreement. Mr. Zona received $100,000 on March 31, 2008 as a
discretionary interim bonus. See the section captioned “Employment
Agreements” below for more in-depth information regarding payment of
bonuses pursuant to each executive’s respective employment agreements and
payment of discretionary interim bonuses. For the years ended
December 31, 2007 and December 31, 2006, respectively, Messrs. D’Loren,
Meister, Haran and Zona did not receive any
bonuses.
|
(4)
|
The
amounts in the Option Awards column represents expenses for stock options
in each respective year as prescribed by FAS 123R. For the year ended
December 31, 2008, Mr. Hall received a grant of 250,000 stock options on
June 24, 2008 in connection with his initial hire under the same terms as
those stock options granted under the 2008 Retention Program. He also
received 250,000 additional stock options on August 26, 2008 in connection
with his promotion to the position of Chief Executive Officer. Mr. Stanko
received a grant of 20,000 stock options on June 24, 2008 in connection
with the 2008 Retention Program and 30,000 stock options on November 12,
2008 in connection with his promotion to the position of Chief Financial
Officer and Treasurer. Ms. Nam received a grant of 25,000 stock options on
March 19, 2008 in connection with a discretionary interim bonus and
100,000 stock options on June 24, 2008 in connection with the first
amendment to her employment agreement under the same terms as those stock
options granted under the 2008 Retention Program. On November 12, 2008,
Ms. Nam voluntarily agreed to cancel, pursuant to the Stock Option
Cancellation Program, 100,000 stock options that were granted to her on
September 24, 2007 in accordance with her employment agreement and in
connection with her hire. Mr. Meister was not granted any options in
2008. However, pursuant to a separation agreement between the
Company and Mr. Meister, the Company agreed to accelerate the vesting of
the 200,000 options that he received on September 12, 2006 and extend the
post-employment exercise period for those options until December 31, 2009.
Mr. Zona received a grant of 25,000 options on March 19, 2008. Pursuant to
a separation agreement between the Company and Mr. Zona, Mr. Zona agreed
to voluntarily surrender 166,666 of his unvested options granted on
December 11, 2006, and the Company agreed to accelerate the vesting of
25,000 options granted to Mr. Zona on March 19, 2008 and to extend the
post-employment exercise period on the 25,000 options and his vested
83,334 options until December 31, 2009. For the year ended December 31,
2007, Messrs. D’Loren, Meister, Haran and Zona did not receive any stock
option awards. For the year ended December 31, 2006, Messrs. D’Loren,
Meister, Haran and Zona received option awards pursuant to the terms of
their employment agreements. See “Grants of Plan-Based Awards Table,”
“Outstanding Equity Awards at Fiscal Year-End Table,” and accompanying
notes for additional information.
|
(5)
|
For
the year ended December 31, 2008, Mr. Hall received a total of $17,766
comprised of the Company’s payment pursuant to his employment agreement of
$3,267 for the employee
portion of premiums for life and health insurance and $14,499 for car
expenses; Ms. Nam received a total of $3,954 comprised of the Company’s
payment pursuant to her employment agreement of the employee portion of
premiums for life and health insurance; Mr. Haran received a total of
$7,175 comprised of the Company’s payment pursuant to his employment
agreement of car expenses; and Mr. Meister received a total of $1,033
comprised of the Company’s payment pursuant to his employment agreement of
the employee portion of premiums for life and health insurance. For the
year ended December 31, 2007 for “All Other Compensation,” Mr. Meister
received a total of $4,863 comprised of the Company’s payment of the
employee portion of premiums for health insurance, and Mr. Haran received
a total of $15,150 comprised of the Company’s payment of car expenses. See
notes 6, 7 and 8 below for discussion regarding payments to and from Mr.
D’Loren in 2008, 2007 and 2006,
respectively.
|
(6)
|
For
the year ended December 31, 2008, Mr. D’Loren received a total of $18,143,
comprised of the Company’s payment of $7,001 for the employee portion of
premiums for life and health insurance, $10,764 for car expenses and $378
for club dues. The amount of “All Other Compensation” for 2008 takes into
account reimbursements by Mr. D’Loren in 2008, pursuant to the Separation
Agreement by and between the Company and Mr. D’Loren dated August 15, 2008
(the “D’Loren Separation Agreement”). In reviewing our executives’
compensation and expense reimbursements for 2007 and 2008, we became aware
that certain expenses that the Company had agreed to pay pursuant to Mr.
D’Loren’s employment agreement, such as health and life insurance
premiums, in fact were not paid by the Company, whereas other expenses
that arguably were not authorized under Mr. D’Loren’s employment agreement
or by the Compensation Committee had been paid or reimbursed by the
Company. After netting these expenses, the Company came to believe that
the classification of $65,069 of expenses that we paid in 2008 and $65,923
of expenses that we paid in 2007 as business expenses or authorized
perquisites was questionable. Mr. D’Loren did not agree with the Company’s
conclusion. Nonetheless, pursuant to the D’Loren Separation Agreement, he
reimbursed the Company $130,992, which represented the entire amount of
the disputed expenses for 2008 and
2007.
|
(7)
|
For
the year ended December 31, 2007, Mr. D’Loren received a total of $35,167
comprised of the Company’s payment of $13,383 for the employee portion of
premiums for life and health insurance, $16,027 for car expenses, and
$5,757 for club dues. The amount of “All Other Compensation” for 2007
takes into account reimbursements by Mr. D’Loren in 2008, pursuant to the
D’Loren Separation Agreement.
|
(8)
|
For
the year ended December 31, 2006, Mr. D’Loren received a total of $40,162
in all other compensation which included insurance premiums for life and
long term disability of $28,830, car expenses of $9,842 and club dues of
$1,490. This amount was not affected by the D’Loren Separation
Agreement.
|
Grants of Plan-Based Awards
Table
During
fiscal year ended December 31, 2008, we granted the following stock options to
our named executive officers. We did not grant any restricted stock awards.
Information with respect to each of these awards on a grant-by-grant basis is
set forth in the table below. All of our stock options were granted with an
exercise price equal to the fair market value of our common stock on the date of
grant. Under our 2006 Plan, fair market value is defined as the closing sale
price of our common stock on the date of grant
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Options
Granted (#)
|
|
|
Exercise or
Base Price
($/Sh)
|
|
|
Expiration
Date
|
|
|
Grant Date Fair Value of
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Hall
|
|
06/24/08
|
|
|
|
250,000 |
|
|
$ |
0.41 |
|
|
06/24/18
|
|
|
$ |
32,534 |
|
|
|
08/26/08
|
|
|
|
250,000 |
|
|
$ |
0.41 |
|
|
08/26/18
|
|
|
$ |
54,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
E. Stanko
|
|
06/24/08
|
|
|
|
20,000 |
|
|
$ |
0.41 |
|
|
06/24/18
|
|
|
$ |
2,603 |
|
|
|
11/12/08
|
|
|
|
30,000 |
|
|
$ |
0.12 |
|
|
11/12/18
|
|
|
$ |
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sue
J. Nam
|
|
03/19/08
|
|
|
|
25,000 |
|
|
$ |
2.83 |
|
|
03/19/18
|
|
|
$ |
9,501 |
|
|
|
06/24/08
|
|
|
|
100,000 |
|
|
$ |
0.41 |
|
|
06/24/18
|
|
|
$ |
13,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
W. D’Loren
|
|
-
|
|
|
|
- |
|
|
|
- |
|
|
-
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Meister
|
|
-
|
|
|
|
- |
|
|
|
- |
|
|
-
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran
|
|
-
|
|
|
|
- |
|
|
|
- |
|
|
-
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona (1)
|
|
03/19/08
|
|
|
|
25,000 |
|
|
$ |
0.17 |
|
|
12/31/09
|
|
|
$ |
4,250 |
|
(1)
|
Pursuant
to a separation agreement between the Company and Mr. Zona, Mr. Zona
agreed to voluntarily surrender 166,666 of his unvested options granted on
December 11, 2006 and the Company agreed to accelerate the vesting of
25,000 options granted to Mr. Zona on March 19, 2008 and to extend the
post-employment exercise period on the 25,000 options until December 31,
2009. We have provided this additional information in tabular form above
by the addition of an “Expiration Date” column, even though not required
by SEC rules. For additional information with respect to Mr. Zona’s
employment agreement and separation agreement, see “Employment Agreements
- Charles A. Zona.”
|
Outstanding Equity Awards at
Fiscal Year-End Table
The
following table sets forth information with respect to outstanding equity-based
awards at December 31, 2008 for our named executive officers. The Company has
not issued any stock awards to named executive officers.
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or
Units of
Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value
of
Shares
or Units
of Stock
That
Have
Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Hall(1)
|
|
|
125,000 |
|
|
|
125,000 |
|
|
|
- |
|
|
$ |
0.41 |
|
|
06/24/18
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
125,000 |
|
|
|
125,000 |
|
|
|
|
|
|
$ |
0.41 |
|
|
08/26/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
E. Stanko(2)
|
|
|
10,000 |
|
|
|
10,000 |
|
|
|
- |
|
|
$ |
0.41 |
|
|
06/24/18
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
30,000 |
|
|
|
|
|
|
$ |
0.12 |
|
|
11/12/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sue
J. Nam(3)
|
|
|
- |
|
|
|
25,000 |
|
|
|
|
|
|
$ |
2.83 |
|
|
03/19/18
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
50,000 |
|
|
|
50,000 |
|
|
|
|
|
|
$ |
0.41 |
|
|
06/24/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
W. D’Loren(4)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister(5)
|
|
|
200,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
6.08 |
|
|
12/31/2009
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran(6)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona(7)
|
|
|
88,334 |
|
|
|
- |
|
|
|
- |
|
|
$ |
6.96 |
|
|
12/31/2009
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
$ |
0.17 |
|
|
12/31/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
On
June 24, 2008, Mr. Hall was granted 250,000 stock options, encompassing
the initial grant of options that was supposed to have been awarded in
accordance with his employment agreement and in connection with his hire
but were not issued because of delays in the filing of our periodic
financial statements. Mr Hall was granted the initial 250,000 stock
options on terms consistent with those options granted under the 2008
Retention Program. Accordingly, the June 24, 2008 grant provided for the
stock options to vest in equal amounts over four quarters after the date
of grant on September 24, 2008, December 24, 2008, March 24, 2009 and June
24, 2009 and for accelerated vesting upon certain events. On August 26,
2008, in accordance with an amendment to Mr. Hall’s employment agreement
in connection with his promotion to the position of Chief Executive
Officer, Mr. Hall was granted an additional 250,000 stock options. The
August 26, 2008 grant provides for 125,000 of the options to vest
immediately upon the grant date and 125,000 of the options to vest on
February 1, 2009 with accelerated vesting upon certain events. For
additional information with respect to Mr. Hall’s employment agreement and
amendments thereto, see “Employment Agreements – Kenneth J.
Hall.”
|
(2)
|
On
June 24, 2008, as part of the 2008 Retention Program, Mr. Stanko was
granted 20,000 stock options, encompassing the initial grant of options
that were supposed to have been awarded in connection with his hire but
were not issued because of delays in the filing of our periodic financial
statements. The June 24, 2008 grant provides for the options to vest in
equal amounts over four quarters after the date of grant on September 24,
2008, December 24, 2008, March 24, 2009 and June 24, 2009 and for
accelerated vesting upon certain events. On November 12, 2008, in
accordance with his employment agreement, Mr. Stanko was granted an
additional 30,000 stock options. The November 12, 2008 grant provides for
the stock options to vest in equal amounts on the three anniversaries of
grant and for accelerated vesting upon certain events. For additional
information with respect to Mr. Stanko’s employment agreement and
amendments thereto, see “Employment Agreements – Mark E.
Stanko.”
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(3)
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On
September 24, 2007, in accordance with her employment agreement and in
connection with her hire, Ms. Nam was granted 100,000 stock options. The
options were to vest in equal amounts on the three anniversaries of grant.
On November 12, 2008, Ms. Nam voluntarily agreed to cancel the 100,000
stock options pursuant to the Stock Option Cancellation Program. On March
19, 2008, Ms. Nam was granted 25,000 stock options that vest in equal
amounts on the three anniversaries of grant. On June 24, 2008, in
accordance with the first amendment to Ms Nam’s employment agreement, she
was granted 100,000 stock options on terms consistent with those options
granted under the 2008 Retention Program. Accordingly, the June 24, 2008
grant provided for the stock options to vest in equal amounts over four
quarters after the date of grant on September 24, 2008, December 24, 2008,
March 24, 2009 and June 24, 2009 and for accelerated vesting upon certain
events. For additional information with respect to Ms. Nam’s employment
agreement and amendments thereto, see “Employment Agreements – Sue J.
Nam.”
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(4)
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On
June 6, 2006, in accordance with his employment agreement and in
connection with his hire, Mr. D’Loren was granted a warrant to purchase
125,000 shares and 2,686,976 stock options. Both the warrant and stock
options were to vest in equal amounts on the three anniversaries of grant.
Accordingly, 83,334 shares underlying the warrant and 1,641,317 shares
underlying the options vested on June 6, 2008. (Mr. D’Loren partially
exercised his options and purchased 150,000 shares in 2007.) Mr. D’Loren
resigned from the Company on August 15, 2008. Pursuant to his employment,
separation and warrant/option grant agreements, respectively, all of Mr.
D’Loren’s unexercisable warrants and options, totaling 937,325 shares,
expired upon his resignation. Mr. D’Loren did not exercise any of his
exercisable warrants or options, totaling 1,724,651 shares, within the 90
day post-employment exercise period provided in the warrant and option
grant agreements. Thus, all of the securities underlying Mr. D’Loren’s
exercisable and unexercisable warrants and options listed above expired in
2008. For additional information with respect to Mr. D’Loren’s employment
agreement and separation agreement, see “Employment Agreements – Robert W.
D’Loren.”
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(5)
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On
September 12, 2006, in accordance with his employment agreement and in
connection with his hire, Mr. Meister was granted 200,000 stock options
that were to vest in equal amounts on the three anniversaries of grant.
Accordingly, 66,667 stock options vested on September 12, 2007. On March
21, 2008, Mr. Meister’s employment was terminated without “Cause,” and all
unvested options immediately vested and became fully exercisable pursuant
to his employment agreement. Pursuant to a separation agreement, the
Company agreed to extend the post-employment exercise period on Mr.
Meister’s 200,000 options until December 31, 2009. For additional
information with respect to Mr. Meister’s employment agreement and
separation agreement, see “Employment Agreements - David B.
Meister.”
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(6)
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On
June 6, 2006, in accordance with his employment agreement and in
connection with his hire, Mr. Haran was granted 581,788 stock options that
were to vest in equal amounts on the three anniversaries of grant.
Accordingly, 193,930 stock options vested on June 6, 2007. Mr. Haran
resigned from the Company on August 14, 2008. Pursuant to his employment,
separation and option grant agreements, respectively, all of Mr. Haran’s
unexercisable options, totaling 387,858 shares, expired upon his
resignation. Mr. Haran did not exercise any of his exercisable options,
totaling 193,930 shares, within the 90 day post-employment exercise period
provided in the option grant agreement. Thus, all of the securities
underlying Mr. Haran’s exercisable and unexercisable options listed above
expired in 2008. For additional information with respect to Mr. Haran’s
employment agreement and separation agreement, see “Employment Agreements
– James Haran.”
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(7)
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On
December 11, 2006, in accordance with his employment agreement and in
connection with his hire, Mr. Zona was granted 250,000 stock options that
were to vest in equal amounts on the three anniversaries of grant.
Accordingly, 83,334 stock options vested on December 11, 2007. Mr. Zona’s
employment was terminated on May 30, 2008. Under his employment agreement,
Mr. Zona was entitled to accelerated vesting of all unvested options of
the December 2006 grant. However, pursuant to a
separation agreement, Mr. Zona agreed to voluntarily surrender 166,666 of
his unvested options from the December 2006 grant. The Company agreed to
extend the post-employment exercise period on Mr. Zona’s vested 83,334
options through December 31, 2009, accelerate the vesting of 25,000
options granted to Mr. Zona on March 19, 2008, and extend the
post-employment exercise period on the 25,000 options until December 31,
2009. For additional information with respect to Mr. Zona’s employment
agreement and separation agreement, see “Employment Agreements - Charles
A. Zona.”
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Option Exercises and Stock
Vested in 2008
None of
our named executive officer exercised their respective option awards during the
year ended December 31, 2008. In addition, none of our named
executive officers were ever awarded restricted stock thus had none that vested
during the year ended December 31, 2008.
Employment
Agreements
The form
of the employment agreements for all of our executive officers holding positions
at NexCen Brands are similar in structure as an initial matter, although
particular agreements have been amended due to subsequent changes in
circumstances. The initial term of each of the employment agreements is three
years with the agreement automatically renewing for successive one-year periods,
unless either party provides at least 90 days’ advance written notice of a
decision not to renew. The agreements each provide for competitive base
salaries, discretionary bonus opportunities calculated as a percentage of the
“Bonus Pool,” as defined in the employment agreements, and customary benefit
packages. The agreements each provide for a grant of options to purchase shares
of the Company’s common stock, subject to the approval of the Company’s
Compensation Committee, under the terms of the Company’s 2006 Plan and a
customary grant agreement. The options have a 10-year term and an exercise price
equal to the fair market value of the Company’s common stock on the grant date.
The options typically vest and become exercisable in equal installments on each
of the first three anniversaries of the grant date. Upon termination of
employment, each of the agreements provide the Company with protection in the
form of restrictive covenants, including non-competition, non-solicitation, and
confidentiality covenants, for the benefit of NexCen. Each agreement also
provides payments and other benefits, such as the immediate vesting of all
unvested options and continued health care coverage, to the executive if the
executive's employment were to terminate under certain circumstances, namely by
the Company without “Cause,” by the executive for “Good Reason,” by the Company
not renewing the agreement, or in the event of a “Change of Control,” as these
terms are defined in the employment agreements.
“Bonus
Pool” is defined in each employment agreement as, with respect to any fiscal
year, an amount equal to 5% of the annual net income of the Company for such
fiscal year, as reported by the Company in its audited annual financial
statements or any other amount authorized as the “Bonus Pool” by the Board or
Compensation Committee under the 2006 Management Bonus Plan (which was plan was
formally terminated by the Board on May 12, 2009) or any other management bonus
plan adopted by the Company.
“Cause”
is defined in each employment agreement as the occurrence of one or more of the
following: (i) indictment of a felony involving moral turpitude,
misappropriation of Company property, embezzlement of Company funds, violation
of the securities laws or dishonesty, (ii) persistent and repeated refusal
to comply with material directives that are not inconsistent with the
executive’s fiduciary obligations, (iii) reporting to work under the
influence of alcohol or illegal drugs, or the use of illegal drugs (whether or
not at the workplace), or (iv) any willful breach of certain terms of the
employment agreement.
“Good
Reason” is defined in each employment agreement as the occurrence, without the
executive’s written consent, of one or more of the following events:
(i) the Company reduces the amount of executive’s base salary,
(ii) the Company requires that the executive relocate his
principal place of employment to a site that is more than 50 miles from the
Company’s offices in New York City or Norcross, Georgia, as applicable, or the
Company changes the location of our headquarters without the consent of the
executive to a location that is more than 50 miles from such location,
(iii) the Company materially reduces the executive’s responsibilities or
removes the executive from his position other than pursuant to a termination of
his employment for Cause or upon the executive’s death or disability,
(iv) the failure or unreasonable delay of the Company to provide to the
executive any of the payments or benefits due under the employment agreement, or
(v) the Company otherwise materially breaches the terms of the employment
agreement.
A “Change
of Control” is defined in each employment agreement by reference to our 1999
Equity Incentive Plan or 2006 Plan, which is defined to include a change in
majority of our Board of Directors, consummation of certain mergers, the sale of
all or substantially all of our assets or the acquisition of at least 80% of the
undiluted total voting power of our then-outstanding securities. In addition, if
within twelve months following a change of control, our named executive officers
are terminated without “Cause” or they terminate their employment for “Good
Reason,” then all unvested stock options, shares of restricted stock and other
equity awards shall vest immediately, and remain exercisable for the lesser of
180 days after termination or the remaining term of the applicable
grant.
Employment Agreements for
Named Executive Officers Who Are Currently Officers of the
Company
Kenneth
J. Hall
On March
25, 2008, Mr. Hall joined the Company as Executive Vice President, Chief
Financial Officer and Treasurer. In connection with his hire, we entered into an
employment agreement, which was subsequently amended when he became our Chief
Executive Officer on August 15, 2008.
Original Employment
Agreement
Pursuant
to the original terms of his employment agreement, Mr. Hall received an initial
annual base salary of $400,000, subject to periodic review and upward
adjustment; participation in customary employee benefit programs; the Company’s
payment of, or reimbursement for, certain insurance premiums; and a monthly
automobile allowance comparable to other senior executive officers (but in no
event less than $1,250 per month). (Mr. Halls’ base salary was increased to
$500,000 effective June 1, 2008 under the amendment to his employment agreement
discussed below.) For each calendar year during the term of the employment
agreement, Mr. Hall was and is eligible to receive an annual performance-based
bonus calculated as a percentage of the “Bonus Pool,” based on achieving annual
performance goals recommended by the Chief Executive Officer and subject to
review and confirmation by the Compensation Committee or Board of Directors. No
such annual bonus was paid to Mr. Hall in 2008.
Pursuant
to the original terms of his employment agreement, Mr. Hall also was to be
granted a total of 250,000 stock options, subject to the approval of the
Company’s Compensation Committee, under the terms of the Company’s 2006 Plan and
a customary grant agreement. The options were to vest and become exercisable in
equal installments on each of the first three anniversaries of the grant date,
which under the Company’s policy was to be the third trading day after the
Company publicly announces financial results for the three month period ending
March 31, 2008. Although the Compensation Committee approved the grant of
options, the Company was delayed in filing its periodic financial reports. Mr.
Hall’s 250,000 options ultimately were granted on June 24, 2008 with the same
terms as the stock options granted on that date under the broader 2008 Retention
Program, namely vesting over four quarters instead of three years and an
exercise period of twelve months after termination of employment.
Under the
original terms of his employment agreement, if (i) we terminated Mr. Hall’s
employment without “Cause,” (ii) Mr. Hall terminated his employment for “Good
Reason,” (iii) or we did not renew the agreement, he would have been entitled to
receive a severance package consisting of:
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any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
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an
amount equal to his base salary (at the rate then in effect) for the
greater of the remainder of the initial three year term or eighteen
months, payable over a six-month period or such shorter period as is
required to comply with Section 409A of the Internal Revenue Code and
applicable regulations adopted
thereunder;
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·
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continued
participation in NexCen’s group medical plan on the same basis as he
previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the
COBRA premium) for an eighteen month period following termination, subject
to termination of this arrangement if a successor employer provides him
with health insurance coverage; and
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accelerated
vesting of all unvested options issued under the employment agreement with
the vested options remaining exercisable for twelve
months.
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Under the
original terms of his employment agreement, if Mr. Hall’s employment had been
terminated without Cause or if he had resigned for Good Reason within a year of
a Change of Control, he would have been entitled to receive the same severance
as described above. However, the amount of severance would have been increased
to equal $100 less than two times the sum of (i) Mr. Hall’s base salary (at the
rate in effect on the date of termination) and (ii) the annual bonus paid to Mr.
Hall in the year prior to such Change of Control. However, if the severance
payment owed to Mr. Hall would have constituted an “excess parachute payment”
(as defined in Section 280G of the Internal Revenue Code), then his severance
would have been reduced to the largest amount that would not have resulted in
receipt by Mr. Hall of an “excess parachute payment.” The severance
provisions under the original employment agreement were amended as discussed
below.
During
the term of employment and for two years thereafter, or one year if Mr. Hall’s
employment is terminated without Cause or if he resigns for Good Reason, Mr.
Hall agreed not to compete with the Company. In addition, for two years
following the term of employment, Mr. Hall agreed not to (i) solicit, induce or
attempt to induce any customer, supplier, licensee or other business relation to
cease doing business with the Company, (ii) solicit, induce or attempt to induce
any person who is, or was during the then-most recent one year period, a
corporate officer, general manager or other employee of the Company or any of
its subsidiaries to terminate such employee’s employment with the Company, or
hire any such person unless such person’s employment was terminated by the
Company, or (iii) in any way interfere with the relationship between any
customer, supplier, licensee, employee or business relation of the Company or
any of its subsidiaries.
Amendment
On August
15, 2008, we entered into an amendment to Mr. Hall’s employment agreement in
connection with his promotion to the position of Chief Executive Officer. Under
that amendment, Mr. Hall’s base salary was increased to $500,000 (retroactive to
June 1, 2008). The amendment also provided that, commencing with the calendar
quarter ending on June 30, 2008, Mr. Hall would be entitled to payment
of a minimum quarterly bonus equal to 25% of Mr. Hall’s base salary
in effect on the last day of the calendar quarter to which such minimum bonus
relates (or, if applicable, on the date of any termination of Mr. Hall’s
employment during the quarter). As a result, Mr. Hall will be
entitled to an annual minimum bonus equal to 100% of this base
salary.
Mr. Hall
also was awarded an additional stock option grant of 250,000 options, 125,000 of
which vested upon the date of grant and the remaining 125,000 vesting on
February 1, 2009 contingent upon Mr. Hall’s continued employment with the
Company on such date.
The
provisions regarding severance were amended so that if (i) we terminate Mr.
Hall’s employment without “Cause,” (ii) Mr. Hall terminates his employment for
“Good Reason,” (iii) or we do not renew the agreement, he is entitled to a
severance payment under the following new formula, with all other severance
benefits remaining the same:
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an
amount equal to the greater of (x) his base salary (at the rate then in
effect) for the remainder of the initial three year term or (y) two times
the sum of (1) his base salary (at the rate then in effect) and (2) a
bonus calculated as 100% of Mr. Hall’s base salary at the rate then in
effect, but in any event not to exceed $1,400,000 in the event that Mr.
Hall’s employment is terminated on or before January 31, 2009, with any
such payment to be paid over a six-month period or such shorter period as
is required to comply with Section 409A of the Internal Revenue Code and
applicable regulations adopted
thereunder;
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The
provisions regarding severance in the event of a Change of Control were amended
to calculate severance as $100 less than two times the sum of Mr. Hall’s base
salary at the rate then in effect plus a bonus calculated as 100% of that base
salary.
Finally,
the amendment requires that Mr. Hall travel to the Company’s Norcross, Georgia
office not less than once a month, so long as such travel does not interfere
with his performance of his obligations and responsibilities as the Company’s
Chief Executive Officer.
Other
than these changes, the terms of Mr. Hall’s original employment agreement remain
in effect.
Mark
E. Stanko
On
November 12, 2008, Mr. Stanko became the Company’s Chief Financial Officer and
Treasurer, while retaining his duties as Chief Financial Officer of NFM. In
connection with this promotion, we entered into an employment agreement on
November 12, 2008 whereby Mr. Stanko receives an annual base salary of $225,000
effective as of October 16, 2008, subject to periodic review and upward
adjustment, and participation in customary employee benefit programs. For each
calendar year during the term of the employment agreement, Mr. Stanko also is
eligible to receive an annual performance-based bonus calculated as a percentage
of the “Bonus Pool,” based on achieving annual performance goals recommended by
the Chief Executive Officer and subject to review and confirmation by the
Compensation Committee or Board of Directors. No such annual bonus was paid to
Mr. Stanko in 2008.
Pursuant
to his employment agreement, on November 12, 2008, Mr. Stanko was granted
options to purchase a total of 30,000 shares of the Company’s common stock under
the terms of the Company’s 2006 Plan and a customary grant agreement. The
options are to vest and become exercisable in equal installments on each of the
first three anniversaries of the grant date.
If (i) we
terminate Mr. Stanko’s employment without “Cause,” (ii) Mr. Stanko terminates
his employment for “Good Reason,” or (iii) we do not renew the agreement, he
will be entitled to receive a severance package consisting of:
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any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
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an
amount equal to his base salary (at the rate then in effect) for twelve
months, payable over a six-month period or such shorter period as is
required to comply with Section 409A of the Internal Revenue Code and
applicable regulations adopted
thereunder;
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continued
participation in NexCen’s group medical plan on the same basis as he
previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the
COBRA premium) for twelve months following termination, subject to
termination of this arrangement if a successor employer provides him with
health insurance coverage; and
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accelerated
vesting of all unvested options issued under the employment agreement with
the vested options remaining exercisable for 90 days pursuant to the 2006
Plan.
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If Mr.
Stanko’s employment is terminated without Cause or if he resigns for Good Reason
within a year of a Change of Control, he will be entitled to receive the same
severance as described above, however, the amount of severance would be
increased to equal $100 less than one times the sum of (i) Mr. Stanko’s base
salary (at the rate in effect on the date of termination) and (ii) the annual
bonus paid to Mr. Stanko in the year prior to such Change of Control. However,
if the severance payment owed to Mr. Stanko would constitute an “excess
parachute payment” (as defined in Section 280G of the Internal Revenue Code),
then his severance will be reduced to the largest amount that will not result in
receipt by Mr. Stanko of an “excess parachute payment.”
During
the term of employment and for one year thereafter, or six months if Mr.
Stanko’s employment is terminated without Cause or if he resigns for Good
Reason, Mr. Stanko agreed not to compete with the Company. In addition, for one
year following the term of employment, Mr. Stanko agreed not to (i) solicit,
induce or attempt to induce any customer, supplier, licensee or other business
relation to cease doing business with the Company, (ii) solicit, induce or
attempt to induce any person who is, or was during the then-most recent one year
period, a corporate officer, general manager or other employee of the Company or
any of its subsidiaries to terminate such employee’s employment with the
Company, or hire any such person unless such person’s employment was terminated
by the Company, or (iii) in any way interfere with the relationship between any
customer, supplier, licensee, employee or business relation of the Company or
any of its subsidiaries.
Sue
J. Nam
On
September 24, 2007, Ms. Nam joined the Company as General Counsel. In connection
with her hire, we entered into an employment agreement on August 29, 2007, which
was subsequently amended as of July 15, 2008 and September 26,
2008.
Original Employment
Agreement
Pursuant
to the original terms of her employment agreement, Ms. Nam received an initial
annual base salary of $215,000, subject to periodic review and upward
adjustment; participation in customary employee benefit programs; and the
Company’s payment of, or reimbursement for, certain insurance premiums (her base
salary was increased to $250,000 effective January 1, 2008, and later increased
to $300,000 effective October 1, 2008 under the second amendment to her
employment agreement discussed below). For each calendar year during the term of
the employment agreement, Ms. Nam was and is eligible to receive an annual
performance-based bonus calculated as a percentage of the “Bonus Pool,” based on
achieving annual performance goals recommended by the Chief Executive Officer
and subject to review and confirmation by the Compensation Committee or Board of
Directors. No such annual bonus was paid to Ms. Nam in 2008, but Ms. Nam
did receive an interim discretionary bonus of $5,000 (paid on March 31, 2008)
and an award of 25,000 options (granted on March 19, 2008). In addition, she was
paid $25,000 on March 31, 2008 pursuant to her original employment agreement,
which provided for such one-time payment.
Pursuant
to the original terms of her employment agreement, on September 24,
2008, Ms. Nam also was granted options to purchase a total of 100,000 shares of
the Company’s common stock under the terms of the Company’s 2006 Plan and a
customary grant agreement. The options were to vest and become exercisable in
equal installments on each of the first three anniversaries of the grant date.
On November 12, 2008, Ms. Nam voluntarily agreed to cancel the 100,000 options
pursuant to the Stock Option Cancellation Program.
Under the
original terms of her employment agreement, if (i) we terminated Ms. Nam
employment without “Cause,” (ii) Ms. Nam terminated her employment for “Good
Reason,” or (iii) we did not renew the agreement, she would have been entitled
to receive a severance package consisting of:
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any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
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an
amount equal to her base salary (at the rate then in effect) for six
months, payable over a six-month period or such shorter period as is
required to comply with Section 409A of the Internal Revenue Code and
applicable regulations adopted
thereunder;
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continued
participation in NexCen’s group medical plan on the same basis as she
previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the
COBRA premium) for six months following termination, subject to
termination of this arrangement if a successor employer provides her with
health insurance coverage; and
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accelerated
vesting of all unvested options issued under the employment agreement with
the vested options remaining exercisable for 90 days pursuant to the 2006
Plan.
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Under the
original terms of her employment agreement, if Ms. Nam’s employment had been
terminated without Cause or if she had resigned for Good Reason within a year of
a Change of Control, she would have been entitled to receive the same severance
as described above, however, the amount of severance would have been increased
to equal $100 less than one times the sum of (i) Ms. Nam’s base salary (at the
rate in effect on the date of termination) and (ii) the annual bonus paid to Ms.
Nam in the year prior to such Change of Control. However, if the severance
payment owed to Ms. Nam would have constituted an “excess parachute payment” (as
defined in Section 280G of the Internal Revenue Code), then her severance would
have been reduced to the largest amount that would not have resulted in receipt
by Ms. Nam of an “excess parachute payment.” In addition, vested options would
remain exercisable for 180 days rather than 90 days. The severance
provisions under the original employment agreement were amended as discussed
below.
During
the term of employment and for one year thereafter, or six months if Ms. Nam’s
employment is terminated without Cause or if she resigns for Good Reason, Ms.
Nam agreed not to compete with the Company. In addition, for one year following
the term of employment, Ms. Nam agreed not to (i) solicit, induce or attempt to
induce any customer, supplier, licensee or other business relation to cease
doing business with the Company, (ii) solicit, induce or attempt to induce any
person who is, or was during the then-most recent one year period, a corporate
officer, general manager or other employee of the Company or any of its
subsidiaries to terminate such employee’s employment with the Company, or hire
any such person unless such person’s employment was terminated by the Company,
or (iii) in any way interfere with the relationship between any customer,
supplier, licensee, employee or business relation of the Company or any of its
subsidiaries.
First
Amendment
On July
15, 2008, we entered into an amendment to Ms. Nam’s employment agreement in
connection with the Company’s efforts to retain key employees. The amendment
provided for the payment of retention cash bonuses of $29,000 to be paid on each
of August 15, 2008, November 15, 2008, February 14, 2009 and May 15, 2009,
subject to Ms. Nam’s continued employment through those dates.
Ms. Nam
also was awarded an additional stock option grant of 100,000 options under the
amendment with the same terms as the stock options granted under the broader
2008 Retention Program, namely vesting over four quarters instead of three
years, accelerated vesting upon termination of employment without “Cause” and an
exercise period of twelve months after termination of employment.
The
provisions regarding severance were amended so that if (i) we terminate Ms.
Nam’s employment without “Cause” or (ii) Ms. Nam terminates her employment for
“Good Reason,” she is entitled to a severance payment calculated pursuant to a
new formula based on twelve months (rather than six months) of her base salary,
twelve months (rather than six months) of continued healthcare coverage, and a
prorated retention cash bonus (based on the number of days worked during such
period), with all other severance benefits remaining the same. If (i) we do not
renew her agreement or (ii) we terminate Ms. Nam’s employment without “Cause” or
Ms. Nam terminates her employment for “Good Reason” during any renewal term, she
would be entitled to a severance payment calculated pursuant to the formula in
her original employment agreement based on six months of her base
salary and six months of continued healthcare coverage.
The
provisions regarding severance in the event of a Change of Control also were
amended to calculate severance as $100 less than one times the sum of Ms. Nam’s
base salary at the rate then in effect plus any annual bonus or retention bonus
paid in the twelve month period prior to the Change of Control. In
addition, Ms. Nam would be entitled to a prorated retention cash bonus (based on
the number of days worked during such period), if applicable.
Second
Amendment
Ms. Nam’s
employment agreement was further amended as of September 26, 2008 in connection
with the Company’s additional efforts to retain certain employees of NexCen
Brands after the initial bonus program proved ineffective at the parent level.
The second amendment provided for a base salary increase to $300,000 per year
effective on October 1, 2008 and additional cash bonuses as
follows:
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$50,000
upon the successful closing of the restructuring of the Company’s credit
facility, with such bonus payable on or about October 15,
2008;
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$50,000
upon the successful closing of the sale of the Bill Blass
business;
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$50,000
upon the successful closing of the sale of the Waverly business;
and
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$50,000
upon continued employment through March 31,
2009.
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These
additional bonuses are not included in any calculation of severance in the event
of a Change of Control.
Other
than the changes described above, the terms of Ms. Nam’s original employment
agreement remain in effect.
Employment
Agreements for Named Executive Officers Who Are No Longer Officers of the
Company
Robert
W. D’Loren
Simultaneous
with the acquisition of UCC Capital, on June 6, 2006, we entered into an
employment agreement with Mr. D’Loren, and he joined the Company as the Chief
Executive Officer and a director. Pursuant to a Separation Agreement by and
between the Company and Mr. D’Loren dated August 15, 2008, Mr. D’Loren resigned
from the Company as of the date of the agreement.
Pursuant
to the terms of Mr. D’Loren’s employment agreement, Mr. D’Loren received an
initial annual base salary of $750,000 (which was not adjusted) and certain
perquisites and benefits. For each calendar year during the term of the
employment agreement, Mr. D’Loren was entitled to receive an annual incentive
bonus equal to 50% of amounts awarded under the 2006 Management Bonus Plan to be
payable 50% percent in cash and 50% in restricted shares of NexCen’s common
stock that would vest in three equal installments over three years following the
date of their issuance, unless otherwise agreed. No bonuses were paid to Mr.
D’Loren or any executive under the 2006 Management Bonus Plan since its
inception, and the Board of Directors formally terminated the plan on May 12,
2009.
On June
6, 2006, as specified in Mr. D’Loren’s employment agreement, we granted Mr.
D’Loren options to purchase an aggregate of 2,686,976 shares of our common stock
under the terms of the Company’s 1999 Equity Incentive Plan and issued to Mr.
D’Loren a ten-year warrant to purchase 125,000 shares of our common stock, at an
exercise price of $4.10 per share. The terms of the warrant were identical to
those of the option grant he received on June 6, 2006. See “Outstanding Equity
Awards at Fiscal Year-End” table for details of Mr. D’Loren’s stock options and
warrants.
The
initial term of Mr. D’Loren’s employment agreement was three years. Under the
employment agreement, if (i) we terminated Mr. D’Loren’s employment without
“Cause,” (ii) Mr. D’Loren terminated his employment for “Good Reason,” or (iii)
we did not renew the agreement, he would have been entitled to receive a
severance package consisting of:
|
·
|
any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
|
|
·
|
an
amount equal to his base salary (at the rate then in effect) for the
greater of the remainder of the initial three-year term or two years,
payable over a six-month period or such shorter period as is required to
comply with Section 409A of the Internal Revenue Code and applicable
regulations adopted thereunder;
|
|
·
|
continued
participation in NexCen’s group medical plan on the same basis as he
previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the
COBRA premium) for a two-year period following termination, subject to
termination of this arrangement if a successor employer provides him with
health insurance coverage; and
|
|
·
|
accelerated
vesting of all unvested options and restricted shares issued on June 6,
2006 pursuant to the 1999 Equity Incentive
Plan.
|
Pursuant
to the separation agreement, Mr. D’Loren agreed to voluntarily resign. The
Company agreed to pay Mr. D’Loren all earned but unpaid base salary and vacation
pay. (Starting on May 29, 2008, Mr. D’Loren had agreed to defer payment of his
base salary to provide the Company with additional liquidity.) The Company did
not provide any cash severance payments or any other severance benefit other
than continued health insurance coverage. The Company agreed to allow Mr.
D’Loren to continue to participate in NexCen’s group medical plan on the same
basis as he previously participated or receive payment of, or reimbursement for,
COBRA premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the COBRA
premium) until August 15, 2009, subject to termination of this arrangement if a
successor employer provides him with health insurance coverage. Mr. D’Loren
agreed to abide by certain continuing obligations of his employment agreement,
including non-solicitation, non-competition, confidentiality, non-interference
and non-disparagement provisions, as amended.
In the
separation agreement, the Company and Mr. D’Loren also reached a settlement with
respect to certain expense discrepancies. In reviewing our executives’
compensation and expense reimbursements for 2007 and 2008, we came to realize
that the Company had not paid certain expenses that we had agreed to pay
pursuant to Mr. D’Loren’s employment agreement, such as health and life
insurance premiums, but had paid other expenses that arguably were not
authorized under Mr. D’Loren’s employment agreement or by the Compensation
Committee. After netting these expenses, the Company came to believe that the
classification of $130,992 of expenses that we paid in 2007 and 2008 as business
expenses or authorized perquisites was questionable. Although Mr. D’Loren did
not agree with the Company’s assessment, he agreed to reimburse the Company all
disputed expenses in the context of a separation agreement.
Consistent
with the employment, separation and warrant/option grant agreements, Mr.
D’Loren’s unvested options and warrants (937,327 as of August 15, 2008) were
forfeited on the separation date, and all vested options and warrants (1,724,649
as of August 15, 2008) remained exercisable for 90 days following the separation
date. Mr. D’Loren did not exercise his vested options and warrants within this
post-employment exercise period, and they expired and were forfeited at the end
of such period.
David
B. Meister
On
September 12, 2006, we entered into an employment agreement with Mr. Meister,
and Mr. Meister joined the Company as Senior Vice President, Chief Financial
Officer, Treasurer and Secretary. Mr. Meister’s employment was terminated by the
Company on March 21, 2008.
Pursuant
to the terms of Mr. Meister’s employment agreement, Mr. Meister received an
initial annual base salary of $225,000 (which was not adjusted), participation
in customary employee benefit programs, and the Company’s payment of, or
reimbursement for, certain insurance premiums. For each calendar year during the
term of the employment agreement, Mr. Meister was eligible to receive an annual
performance-based bonus calculated as a percentage of the “Bonus Pool,” based on
achieving annual performance goals recommended by the Chief Executive Officer
and subject to review and confirmation by the Compensation Committee or Board of
Directors. No such annual bonus was ever paid to Mr. Meister.
On
September 12, 2006, as contemplated by the employment agreement, Mr. Meister was
granted options to purchase an aggregate of 200,000 shares of the Company’s
common stock under the terms of the Company’s 1999 Equity Incentive Plan. See
“Outstanding Equity Awards at Fiscal Year-End” table for details of Mr.
Meister’s stock options.
The
initial term of Mr. Meister’s employment agreement was three years. Under the
employment agreement, if (i) we terminated Mr. Meister’s employment without
“Cause” or (ii) Mr. Meister terminated his employment for “Good Reason,” he
would have been entitled to receive a severance package consisting
of:
|
·
|
any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
|
|
·
|
an
amount equal to his base salary (at the rate then in effect) for a period
of twelve months, payable over a six-month period or such shorter period
as is required to comply with Section 409A of the Internal Revenue Code
and applicable regulations adopted
thereunder;
|
|
·
|
continued
participation in NexCen’s group medical plan on the same basis as he
previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the
COBRA premium) for a one-year period following termination, subject to
termination of this arrangement if a successor employer provides him with
health insurance coverage; and
|
|
·
|
accelerated
vesting of all unvested options issued on September 12, 2006 pursuant to
the 1999 Equity Incentive Plan.
|
Under the
Separation and Release Agreement by and between the Company and Mr. Meister
dated April 28, 2008, the Company acknowledged that Mr. Meister’s termination
was without “Cause.” Consistent with the terms of Mr. Meister’s employment
agreement, the Company (i) agreed to pay Mr. Meister all earned but unpaid base
salary and accrued but unused vacation time (ii)
agreed to pay Mr. Meister severance in an amount equal to his base salary for a
period of twelve months payable over a six-month period, and (iii) agreed to
allow Mr. Meister to continue to participate in the Company’s group medical plan
on the same basis as he previously participated until March 21, 2009, subject to
termination of this arrangement if a successor employer provides him with health
insurance coverage. Consistent with the employment and option grant agreements,
all unvested options from his September 12, 2006 grant immediately vested as of
the date of termination and became fully exercisable. In the separation
agreement, the Company provided the additional benefit of an extension of the
post-employment exercise period for Mr. Meister’s 200,000 options until December
31, 2009. Mr. Meister provided a general release in favor of the Company and
agreed to abide by certain continuing obligations of his employment agreement,
including the non-solicitation, non-competition, confidentiality,
non-interference and non-disparagement provisions.
James
Haran
Simultaneous
with the acquisition of UCC Capital in June 2006, we entered into an employment
agreement with Mr. Haran. Pursuant to a Separation and General Release Agreement
by and between the Company and Mr. Haran dated August 14, 2008, Mr. Haran
resigned from the Company as of the date of the agreement.
Pursuant
to the terms of Mr. Haran’s employment agreement, Mr. Haran received an initial
annual base salary of $375,000 (which was not adjusted) and participation in
customary employee benefit programs. For each calendar year during the term of
the employment agreement, Mr. Haran was eligible to receive an annual
performance-based bonus calculated as a percentage of the “Bonus Pool,” based on
achieving annual performance goals recommended by the Chief Executive Officer
and subject to review and confirmation by the Compensation Committee or Board of
Directors. No such annual bonus was ever paid to Mr. Haran.
On June
6, 2006, as specified in Mr. Haran’s employment agreement, we granted Mr. Haran
options to purchase an aggregate of 581,788 shares of our common stock under the
terms of the Company’s 1999 Equity Incentive Plan. See “Outstanding Equity
Awards at Fiscal Year-End” table for details of Mr. Haran’s stock
options.
The
initial term of Mr. Haran’s employment agreement was three years. Under the
employment agreement, if (i) we terminated Mr. Haran’s employment without
“Cause” or (ii) Mr. Haran terminates his employment for “Good Reason,” he would
have been entitled to receive a severance package consisting
of:
|
·
|
any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
|
|
·
|
an
amount equal to his base salary (at the rate then in effect) for a period
of eighteen months, payable over a six-month period or such shorter period
as is required to comply with Section 409A of the Internal Revenue Code
and applicable regulations adopted
thereunder;
|
|
·
|
continued
participation in NexCen’s group medical plan on the same basis as he
previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the
COBRA premium) for a one-year period following termination, subject to
termination of this arrangement if a successor employer provides him with
health insurance coverage; and
|
|
·
|
accelerated
vesting of all unvested options issued on June 6, 2006 pursuant to the
1999 Equity Incentive Plan.
|
Pursuant
to the separation agreement, Mr. Haran agreed to voluntarily resign. The Company
agreed to pay Mr. Haran all earned but unpaid base salary and vacation pay.
(Starting on May 29, 2008, Mr. Haran had agreed to defer payment of a portion of
his base salary to provide the Company with additional liquidity.) The Company
also agreed to pay Mr. Haran severance in an amount equal to his base salary for
a nine-month period to be paid over a period of nine months in accordance with
the Company’s normal payroll practices, and agreed to allow him to continue to
participate in NexCen’s group medical plan on the same basis as he previously
participated or receive payment of, or reimbursement for, COBRA premiums (or, if
COBRA coverage is not available, reimbursement of premiums paid for other
medical insurance in an amount not to exceed the COBRA premium) until August 31,
2009, subject to termination of this arrangement if a successor employer
provides him with health insurance coverage. Mr. Haran provided a general
release in favor of the Company and agreed to abide by certain continuing
obligations of his employment agreement, including the non-solicitation,
non-competition, confidentiality, non-interference and non-disparagement
provisions, as amended.
Consistent
with the employment, severance and option grant agreement, Mr. Haran’s unvested
options (193,929 as of August 14, 2008) were forfeited as of the separation
date, and all vested options (387,859 as of August 14, 2008) remained
exercisable for 90 days following the separation date. Mr. Haran did not
exercise his vested options within this post-employment exercise
period.
Charles
A. Zona
On
December 11, 2006, we entered into an employment agreement with Mr. Zona, and
Mr. Zona joined the Company on that date as Executive Vice President, Brand
Management and Licensing. Mr. Zona’s employment with the Company was terminated
on May 30, 2008.
Pursuant
to the terms of the employment agreement, Mr. Zona received an initial annual
base salary of $300,000 (which was not adjusted) and participation in customary
employee benefit programs. For each calendar year during the term of the
employment agreement, Mr. Zona was eligible to receive an annual
performance-based bonus calculated as a percentage of the “Bonus Pool,” based on
achieving annual performance goals recommended by the Chief Executive Officer
and subject to review and confirmation by the Compensation Committee or Board of
Directors. No such annual bonus was ever paid to Mr. Zona, but Mr. Zona did
receive an interim discretionary bonus of $100,000 (paid on March 31, 2008) and
an award of 25,000 options (granted on March 19, 2008).
On
December 11, 2006, as contemplated by the employment agreement, Mr. Zona was
granted options to purchase a total of 250,000 shares of the Company’s common
stock pursuant to the terms of the Company’s 2006 Plan. See “Outstanding Equity
Awards at Fiscal Year-End” table for details of Mr. Zona’s stock
options.
The
initial term of Mr. Zona’s employment agreement was three years. Under the
employment agreement, if (i) we terminated Mr. Zona’s employment without “Cause”
or (ii) Mr. Zona terminated his employment for “Good Reason,” he would have been
entitled to receive a severance package consisting of:
|
·
|
any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
|
|
·
|
an
amount equal to his base salary (at the rate then in effect) for a period
of six months, payable over a six-month period or such shorter period as
is required to comply with Section 409A of the Internal Revenue Code and
applicable regulations adopted
thereunder;
|
|
·
|
continued
participation in NexCen’s group medical plan on the same basis as he
previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of
premiums paid for other medical insurance in an amount not to exceed the
COBRA premium) for a one-year period following termination, subject to
termination of this arrangement if a successor employer provides him with
health insurance coverage; and
|
|
·
|
accelerated
vesting of all unvested options issued on December 11, 2006 pursuant to
the 2006 Plan.
|
Under the
Separation and Release Agreement by and between the Company and Mr. Zona dated
June 26, 2008, the Company acknowledged that Mr. Zona’s termination was without
“Cause.” Consistent with the terms of Mr. Zona’s employment agreement, the
Company (i) agreed to pay Mr. Zona all earned but unpaid base salary and accrued
but unused vacation time, (ii) agreed to pay Mr. Zona severance in an amount
equal to his base salary for a period of six months payable over a six-month
period, and (iii) agreed to allow Mr. Zona to continue to participate in the
Company’s group medical plan on the same basis as he previously participated
until May 30, 2009, subject to termination of this arrangement if a successor
employer provides him with health insurance coverage. Although Mr. Zona was
entitled to accelerated vesting of all unvested options under his employment
agreement, he agreed to voluntarily surrender 166,666 of his unvested options
granted on December 11, 2006. The Company agreed to extend the post-employment
exercise period on Mr. Zona’s vested 83,334 options through December 31, 2009,
accelerate the vesting of 25,000 options granted to Mr. Zona on March 19, 2008,
and extend the post-employment exercise period on the 25,000 options until
December 31, 2009. Mr. Zona provided a general release in favor of the Company
and agreed to abide by certain continuing obligations of his employment
agreement, including the non-solicitation, non-competition, confidentiality,
non-interference and non-disparagement provisions, as amended.
Actual Payments to Named
Executive Officers Upon Separation
The
following table provides a summary of the actual amounts of payments and
benefits provided to the named executive officers who are no longer officers
under their respective separation agreements in 2008.
Name
|
|
Cash
Severance
Payment
($)
|
|
|
Continuation of
Medical/Welfare
Benefits (Present
Value)
($)(1)
|
|
|
Value of
Accelerated
Vesting of Equity
Awards
($)(2)
|
|
|
Accrued but
Unused Paid
Time off
($)
|
|
|
Total Termination
Benefits
($)
|
|
Robert
W. D’Loren
|
|
$ |
0 |
|
|
$ |
14,722 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
14,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister
|
|
$ |
225,000 |
|
|
$ |
15,330 |
|
|
$ |
256,994 |
|
|
$ |
26,827 |
|
|
$ |
524,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran
|
|
$ |
281,250 |
|
|
$ |
14,722 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
295,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona
|
|
$ |
150,000 |
|
|
$ |
9,466 |
|
|
$ |
372,165 |
|
|
$ |
29,000 |
|
|
$ |
560,631 |
|
|
(1)
|
Calculated
at insurance premium rates in effect at December 31, 2008 for the period
of time of the benefit.
|
|
(2)
|
This
amount represents the unamortized portion of the expense related to the
accelerated vesting of stock options granted to those named executive
officers whose employment was terminated without Cause, as of the date of
termination, the event that triggered
acceleration.
|
Potential Post-Employment
Payments to Named Executive Officers Who Are Current
Officers
The
employment agreements with each of our named executive officers who are current
officers provide for certain payments and other benefits if the executive’s
employment is terminated under circumstances specified in his or her employment
agreement, including a “Change of Control” of the Company. The following table
provides information with respect to potential post-employment payments for
named executive officers, who are current officers of the Company in the event
of:
|
·
|
Involuntary
termination without “Cause” or termination by the executive for “Good
Reason;”
|
|
·
|
Termination
without “Cause” or termination by the executive for “Good Reason” within
twelve months of a “Change of Control;”
or
|
|
·
|
Separation
due to disability or death.
|
We have
provided additional information concerning these termination events following
the table. The amounts of potential payments in the following tables are
hypothetical and calculated based on the rules of the SEC and as if the named
executive officers’ respective employment terminated as of December 31, 2008.
The value of what was actually paid by the Company in 2008 upon the respective
separations of certain of our named executive officers is provided
above.
Name
|
|
Payment/Benefits
Upon Termination
($)
|
|
Voluntary Termination/
With Cause
($)
|
|
|
Involuntary Termination
Without
Cause/Termination With
Good Reason
($)
|
|
|
Separation Due to
Change of Control
($)
|
|
|
Separation Due to
Death/Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Hall
|
|
Accrued
but unused vacation time
|
|
$ |
1,923 |
|
|
$ |
1,923 |
|
|
$ |
1,923 |
|
|
$ |
1,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared
but unpaid annual bonus
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment
|
|
|
n/a |
|
|
$ |
1,400,000 |
|
|
$ |
1,999,900 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued
healthcare coverage (1)
|
|
|
n/a |
|
|
$ |
31,195 |
|
|
$ |
31,195 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Accelerated Vesting of Equity Awards(2)
|
|
|
n/a |
|
|
$ |
35,852 |
|
|
$ |
35,852 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$ |
1,923 |
|
|
$ |
1,468,970 |
|
|
$ |
2,068,870 |
|
|
$ |
1,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark E. Stanko
|
|
Accrued
but unused vacation time
|
|
$ |
6,599 |
|
|
$ |
6,599 |
|
|
$ |
6,599 |
|
|
$ |
6,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared
but unpaid annual bonus
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment
|
|
|
n/a |
|
|
$ |
225,000 |
|
|
$ |
224,900 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued
healthcare coverage (1)
|
|
|
n/a |
|
|
$ |
20,297 |
|
|
$ |
20,297 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Accelerated Vesting
of Equity Awards(2)
|
|
|
n/a |
|
|
$ |
4,690 |
|
|
$ |
4,690 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$ |
6,599 |
|
|
$ |
256,586 |
|
|
$ |
256,486 |
|
|
$ |
6,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sue
J. Nam
|
|
Accrued
but unused vacation time
|
|
$ |
5,192 |
|
|
$ |
5,192 |
|
|
$ |
5,192 |
|
|
$ |
5,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared
but unpaid annual bonus
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment
|
|
|
n/a |
|
|
$ |
300,000 |
|
|
$ |
357,900 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued
healthcare coverage(1)
|
|
|
n/a |
|
|
$ |
11,780 |
|
|
$ |
11,780 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Accelerated Vesting of Equity Awards(2)
|
|
|
n/a |
|
|
$ |
38,735 |
|
|
$ |
38,735 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$ |
5,192 |
|
|
$ |
355,707 |
|
|
$ |
413,607 |
|
|
$ |
5,192 |
|
(1)
|
Calculated
at the present value of insurance premiums to be paid over the benefit
period:
|
Kenneth
J. Hall - 1.5 years
Mark E.
Stanko - 1 year
Sue J.
Nam - 1 year
(2)
|
This
amount represents the unamortized portion of the expense related to each
respective named executive officer’s acceleration of stock option awards
as of December 31, 2008.
|
Voluntary
Termination by the Executive, Termination by the Company for “Cause,” or
Termination Due to Death or Disability
Under
each of the named executive officer’s respective employment agreement, the
executive will be entitled to receive his or her base salary through the
termination date and any other accrued benefits, but will not be entitled to
receive any severance benefits or any other benefits after the termination
date.
Involuntary
Termination without “Cause” or Termination by the Executive for “Good
Reason”
Under Mr.
Hall’s employment agreement, the cash severance payment upon termination is
capped at $1,400,000 for terminations occurring on or before January 31, 2009.
After January 31, 2009, severance is calculated as an amount equal to the
greater of (x) his base salary (at the rate then in effect) for the remainder of
the initial three year term or (y) two times the sum of (1) his base salary (at
the rate then in effect) and (2) a bonus calculated as 100% of Mr. Hall’s base
salary at the rate then in effect. The employment agreements of Mr. Stanko and
Ms. Nam respectively provide that their cash severance amount is calculated as
an amount equal their respective annual base salary at the rate then in
effect.
Involuntary
Termination without “Cause” or Termination by the Executive for “Good Reason” in
Connection with a “Change of Control”
Under Mr.
Hall’s employment agreement, Mr. Hall’s severance payment in connection with a
“Change of Control” would equal to $100 less than two times the sum of his base
salary at the rate then in effect plus a bonus calculated as 100% of his base
salary at the rate then in effect. Under Mr. Stanko’s employment agreement, Mr.
Stanko’s separation amount would equal $100 less than one times his base salary
at the rate then in effect and any annual bonus received in the prior year.
Under Ms. Nam’s employment agreement, Ms. Nam’s separation amount would equal
$100 less than one times her base salary at the rate then in effect and any
annual bonus received in the prior year and certain of the retention bonuses
received in the prior year. For each of our named executive officers, in the
event that the foregoing calculation, together with all other cash and non-cash
amounts that the executive has the right to receive from us, would result in the
severance payment being treated as an “excess parachute payment” within the
meaning of Section 280G of the Internal Revenue Code, then the payment is
reduced automatically to the largest amount that will not result in the payment
being treated as an “excess parachute payment.” Because this formula is intended
to avoid the lump sum being treated as a parachute payment subject to an excise
tax under the tax code, we do not provide for any “gross-up” payments to cover
federal excise taxes in the event that the severance payments are treated as a
parachute payment.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following tables set forth certain information with respect to beneficial
ownership of our common stock as of September 30, 2009, as to:
|
·
|
each
of our directors, nominees and executive officers individually;
and
|
|
·
|
all
our directors, nominees and executive officers as a
group.
|
To our
knowledge, no person or entity, other than Mr. D’Loren, is the beneficial owner
of more than 5% of our common stock. In preparing the following table, we relied
upon statements filed with the SEC by beneficial owners of more than 5% of the
outstanding shares of our common stock pursuant to Section 13(d) or 13(g) of the
Exchange Act, unless we knew or had reason to believe that the information
contained in such statements was not complete or accurate, in which case we
relied upon information which we considered to be accurate and
complete.
For the
purposes of calculating percentage ownership, 56,951,730 shares were issued and
outstanding as of September 30, 2009. For any individual, who beneficially owned
shares of restricted stock that vested or shares represented by options that
were or became exercisable within 60 days of September 30, 2009, those shares
were treated as if outstanding for that person, but not for any other person.
The address of each of the individuals and entities named below is: c/o NexCen
Brands, Inc., 1330 Avenue of the Americas, 34th Floor, New York, New York
10019.
Current directors, nominees
and named executive officers for 2008:
|
|
Beneficial Ownership
of Shares
|
|
Name
|
|
Number
|
|
|
Percent
|
|
|
|
|
|
|
|
|
David
S. Oros (1)
|
|
|
2,385,879 |
|
|
|
3.56 |
% |
James
T. Brady (2)
|
|
|
127,500 |
|
|
|
* |
|
Paul
Caine
|
|
|
- |
|
|
|
- |
|
Edward
J. Mathias (3)
|
|
|
175,700 |
|
|
|
* |
|
George
P. Stamas (4)
|
|
|
171,868 |
|
|
|
* |
|
Kenneth
J. Hall (5)
|
|
|
530,000 |
|
|
|
* |
|
Mark
E. Stanko (6)
|
|
|
20,000 |
|
|
|
* |
|
Sue
J. Nam (7)
|
|
|
108,334 |
|
|
|
* |
|
Robert
W. D’Loren (8)
|
|
|
3,692,103 |
|
|
|
6.48 |
% |
David
Meister (9)
|
|
|
200,000 |
|
|
|
* |
|
James
Haran (10)
|
|
|
517,499 |
|
|
|
* |
|
Charles
A. Zona (11)
|
|
|
118,334 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
All
current directors, nominees and named executive officers for 2008 as a
group (12 Persons)
|
|
|
|
|
|
|
11.13 |
% |
(1)
|
Consists
of (i) 1,261,000 shares of common stock owned directly by Mr. Oros, (ii)
764,279 shares of common stock owned by Mr. Oros and his wife, (iii)
exercisable warrants to purchase 155,000 shares of common stock, (iv)
exercisable options to purchase 55,600 shares of common stock and (v)
150,000 shares of exercisable restricted
stock.
|
(2)
|
Consists
of (i) 2,500 shares of common stock owned directly by Mr. Brady and (ii)
exercisable options to purchase 125,000 shares of common
stock.
|
(3)
|
Consists
of (i) 14,000 shares of common stock owned directly by Mr. Mathias, (ii)
exercisable options to purchase 125,000 shares of common stock, (iii)
29,000 shares of common stock held indirectly in a retirement account and
(iv) 7,700 shares of common stock held as custodian for Ellen
Mathias.
|
(4)
|
Consists
of (1) 11,268 shares of common stock owned directly by Mr. Stamas and (ii)
exercisable options to purchase 160,600 shares of common
stock.
|
(5)
|
Consists
of (i) 30,000 shares of common stock owned directly by Mr. Hall and (ii)
exercisable options to purchase 500,000 shares of common
stock.
|
(6)
|
Consists
of exercisable options to purchase 20,000 shares of common
stock.
|
(7)
|
Consists
of exercisable options to purchase 108,334 shares of common
stock.
|
(8)
|
Consists
of (i) 1,041,384 shares of common stock owned directly by Mr. D’Loren,
(ii) 1,775,193 shares of common stock owned by D’Loren Realty LLC, which
is solely owned and managed by Mr. D’Loren and (iii) 875,526 shares of
common stock owned by D’Loren 2008 Retained Annuity Trust. The shares of
common stock held by Mr. D’Loren exclude 537,308 shares held by the Robert
D’Loren Family Trust Dated March 29, 2002 (the “Family Trust”), the
beneficiaries of which are two minor children of Mr. D’Loren. The Family
Trust is irrevocable, the trustee is not a member of Mr. D’Loren’s
immediate family, and the trustee has independent authority to vote and
dispose of the shares held by the Family Trust. As a result, Mr. D’Loren
disclaims any beneficial ownership of the shares held by the Family
Trust.
|
(9)
|
Consists
of exercisable options to purchase 200,000 shares of common stock, which
remain exercisable through December 31,
2009.
|
(10)
|
Consists
of 517,499 shares of common stock owned directly by Mr.
Haran.
|
(11)
|
Consists
of (i) 10,000 shares of common stock owned directly by Mr. Zona and (ii)
exercisable options to purchase 108,334 shares of common stock, which
remain exercisable through December 31,
2009.
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our officers (as defined in regulations
issued by the SEC) and directors, and persons who own more than ten percent of
our common stock, to file with the SEC initial reports of ownership and reports
of changes in ownership of our common stock (including options and warrants to
acquire common stock). Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file.
Based
solely on a review of the copies of such reports of ownership received by us and
certifications from our executive officers and directors, we believe that during
fiscal year 2008 all filing requirements applicable to our executive officers,
directors and such greater than ten percent stockholders were complied with on a
timely basis other than the following: a late report on Form 4 by Ms. Nam filed
on April 29, 2008, reporting the acquisition of 25,000 options to acquire the
Company’s common stock, and a late report on Form 4 Filed by Mr. Zona filed on
April 29, 2008, reporting the acquisition of 25,000 options to acquire the
Company’s common stock.
SUBMISSION
OF STOCKHOLDER PROPOSALS
Bylaw Provisions – Under
NexCen’s bylaws stockholders may propose business to be brought before an
annual meeting. In order for a stockholder to submit a proposal for
consideration at NexCen’s annual meeting, the stockholder must fulfill the
requirements set forth in our bylaws and notify the Corporate Secretary not less
than 45 or more than 90 days prior to the first anniversary of the proxy
statement for this year’s Annual Meeting. For each stockholder proposal, the
stockholder must provide: (i) a brief description of the business desired to be
brought before the meeting; (ii) the reasons for bringing such business and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (iii) the class and number of
shares of NexCen which are beneficially owned and of record for such stockholder
and such beneficial owner, if applicable. Proposals should be addressed to
Corporate Secretary, NexCen Brands, Inc., 1330 Avenue of the Americas, 34th
Floor, New York, New York 10019.
Inclusion in Next Year’s Proxy
Statement – A stockholder who desires to present a proposal for inclusion
in next year’s proxy statement must deliver the proposal to our principal
executive offices so that materials are received by the Corporate Secretary, no
later than June 25, 2010. Submissions should be address to Corporate Secretary,
NexCen Brands, Inc. 1330 Avenue of the Americas, 34th Floor, New York, New York
10019, and should comply with all applicable SEC rules.
HOUSEHOLDING
OF PROXY MATERIALS
We have
adopted a procedure approved by the SEC called “householding” Householding means
that stockholders who share the same last name and address will receive only one
copy of the Notice and, as applicable, a printed copy of our annual report and
proxy statement, unless we receive contrary instructions from any stockholder at
that address. This procedure reduces our printing costs and postage fees and
conserves natural resources. Each stockholder who participates in householding
will continue to have access to and use separate voting
instructions.
If any
stockholder in your household wishes to receive a separate Notice, and if
applicable, annual report and proxy statement, we will provide additional copies
to you promptly upon request. If you are a stockholder of record, please contact
Corporate Secretary, NexCen Brands, Inc., 1330 Avenue of the Americas, 34th
Floor, New York, New York 10019, or at telephone number 212-277-1100. Eligible
stockholders of record receiving multiple Notices, annual reports and proxy
statements can request householding by contacting us in the same
manner.
If you
are a beneficial owner, you may request additional Notices, annual reports and
proxy statements or you may request householding by contacting your broker, bank
or nominee.
NOTICE
OF ELECTRONIC AVAILABILITY OF PROXY MATERIALS
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting
to Be Held on December 1, 2009. Our Annual Report on Form 10-K for 2008, the
2009 Proxy Statement and other proxy materials are available at www.proxyvote.com.
As
permitted by rules recently adopted by the Securities and Exchange Commission,
we are making our proxy material available to our stockholders electronically
via the Internet. We have mailed many of our stockholders a Notice containing
instructions on how to access this proxy statement and our annual report and
vote online. If you received a Notice by mail, you will not receive a printed
copy of the proxy materials in the mail. Instead, the Notice instructs you on
how to access and review all of the important information contained in the proxy
statement and annual report. The notice also instructs you on how you may submit
your voting instructions over the Internet. If you received a Notice by mail and
would like to receive a printed copy of our proxy materials, you should follow
the instructions for requesting such materials included in the
Notice.
ANNUAL
REPORT ON FORM 10-K
Our
Annual Report on Form 10-K for 2008 is available without exhibits on www.nexcenbrands.com and with exhibits
at the website maintained by the Securities and Exchange Commission (www.sec.gov). The Company will provide
by mail, without charge, a copy of its Annual Report on Form 10-K for 2008, at
your request. Please direct all inquiries to Corporate Secretary, NexCen Brands,
Inc., 1330 Avenue of the Americas, 34th Floor, New York, New York
10019.
INCORPORATION
BY REFERENCE
To the
extent that this proxy statement has been or will be specifically incorporated
by reference into any other of NexCen’s filings under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of this proxy statement entitled, “Audit Committee Report” and
“Compensation Committee Report” shall not be deemed to be so incorporated (to
the extent permitted under the rules of the SEC), unless specifically provided
otherwise in such filing, and shall not be deemed “Soliciting Material.” In
addition, this proxy statement includes several website addresses. These website
addresses are intended to provide inactive, textual references only. The
information on these websites is not part of this proxy statement.
OTHER
MATTERS
The Board
of Directors is not aware of any matters other than those set forth in this
proxy statement that will be presented for action at the Annual Meeting.
However, if any other matters should properly come before the meeting, your
proxy will vote and act with respect thereto in a manner that he or she believes
is in the interests of NexCen and its shareholders.
A list of
shareholders entitled to vote at the Annual Meeting will be available for
examination by shareholders at the Annual Meeting.