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 line:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Material
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
REVLON, 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] 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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement Number:
(3) Filing Party:
(4) Date Filed:
2
REVLON, INC.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
April 29, 2002
Dear Stockholder:
You are cordially invited to attend the 2002 Annual Meeting of
Stockholders of Revlon, Inc., which will be held at 10:00 a.m., local time, on
Friday, May 31, 2002, at Revlon's Research Center, 2121 Route 27, Edison, New
Jersey 08818. The matters to be acted upon at the meeting are described in the
attached Notice of Annual Meeting of Stockholders and Proxy Statement.
While stockholders may exercise their right to vote their shares in
person, we recognize that many stockholders may not be able to attend the
Annual Meeting. Accordingly, we have enclosed a proxy which will enable you to
vote your shares on the matters to be considered at the Annual Meeting even if
you are unable to attend. If you desire to vote in accordance with management's
recommendations, you need only sign, date and return the proxy in the enclosed
postage-paid envelope to record your vote. Otherwise, please mark the proxy to
indicate your vote; date and sign the proxy; and return it in the enclosed
postage-paid envelope. In either case, you should return the proxy as soon as
conveniently possible. This will not restrict your right to attend the 2002
Annual Meeting and vote your shares in person.
Sincerely yours,
Jack L. Stahl
President and Chief Executive
Officer
REVLON, INC.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Revlon, Inc.
Notice is hereby given that the 2002 Annual Meeting of Stockholders of
Revlon, Inc., a Delaware corporation (the "Company"), will be held at 10:00
a.m., local time, on Friday, May 31, 2002, at the Company's Research Center,
2121 Route 27, Edison, New Jersey 08818, for the following purposes:
1. To elect the following persons as members of the Board of Directors of
the Company to serve until the next Annual Meeting and until such directors'
successors are elected and shall have been qualified: Ronald O. Perelman,
Donald G. Drapkin, Meyer Feldberg, Howard Gittis, Vernon E. Jordan, Jr., Edward
J. Landau, Linda Gosden Robinson, Terry Semel, Jack L. Stahl and Martha
Stewart.
2. To ratify the selection of KPMG LLP as the Company's independent
auditors for 2002.
3. To consider and approve the convertibility of the Company's 4,333
shares of Series B Preferred Stock into 433,333 shares of the Company's Class A
Common Stock.
4. To consider and approve the Revlon, Inc. Fourth Amended and Restated
1996 Stock Plan.
5. To act upon a stockholder proposal, if presented at the 2002 Annual
Meeting, that requests the Company implement a code of corporate conduct based
upon the conventions of the International Labor Organization.
6. To transact such other business as may properly come before the Annual
Meeting.
A proxy statement describing the matters to be considered at the 2002
Annual Meeting is attached to this notice. Only stockholders of record at the
close of business on April 2, 2002 (the "Record Date") are entitled to notice
of, and to vote at, the 2002 Annual Meeting and at any adjournments thereof.
For at least ten days prior to the 2002 Annual Meeting and also at the 2002
Annual Meeting, a list of stockholders entitled to vote at the 2002 Annual
Meeting will be available for inspection during normal business hours at the
Company's Research Center, 2121 Route 27, Edison, New Jersey 08818. Such list
will also be available for at least ten days prior to the 2002 Annual Meeting
for such inspection at the offices of the Company's Secretary at 625 Madison
Avenue, 6th Floor, New York, New York 10022.
To ensure that your vote will be counted, please complete, date, sign and
return the enclosed proxy card promptly in the enclosed postage-paid envelope,
whether or not you plan to attend the 2002 Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Robert K. Kretzman
Senior Vice President, General Counsel
and Secretary
April 29, 2002
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL ENSURE
THAT YOUR SHARES ARE VOTED IN ACCORDANCE WITH YOUR WISHES.
REVLON, INC.
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 31, 2002
---------------------
This proxy statement is being furnished by and on behalf of the Board of
Directors of Revlon, Inc. (the "Company") in connection with the solicitation
of proxies to be voted at the 2002 Annual Meeting of Stockholders (the "2002
Annual Meeting") to be held at 10:00 a.m., local time, on Friday, May 31, 2002,
at the Company's Research Center, 2121 Route 27, Edison, New Jersey 08818, and
at any adjournments thereof. This proxy statement and the enclosed proxy card,
Notice of Annual Meeting of Stockholders and Annual Report for the year ended
December 31, 2001 are first being sent to stockholders on or about April 29,
2002. The Annual Report does not form any part of the material for the
solicitation of proxies.
At the 2002 Annual Meeting, stockholders will be asked to (1) elect the
following persons as directors of the Company until the Company's next Annual
Meeting and until such directors' successors are elected and shall have been
qualified: Ronald O. Perelman, Donald G. Drapkin, Meyer Feldberg, Howard
Gittis, Vernon E. Jordan, Jr., Edward J. Landau, Linda Gosden Robinson, Terry
Semel, Jack L. Stahl and Martha Stewart; (2) ratify the selection of KPMG LLP
as the Company's independent auditors for 2002; (3) consider and approve the
convertibility of the Company's 4,333 shares of Series B Preferred Stock into
433,333 shares of the Company's Class A Common Stock (the "Series B Preferred
Stock Conversion Rights"); (4) consider and approve the Revlon, Inc. Fourth
Amended and Restated 1996 Stock Plan (the "Amended Stock Plan"); (5) consider a
stockholder proposal, if presented at the meeting, that requests the Company
implement a code of corporate conduct based on the conventions of the
International Labor Organization (an "ILO-Based Code of Conduct"); and (6) take
such other action as may properly come before the 2002 Annual Meeting or any
adjournments thereof.
The principal executive offices of the Company are located at 625 Madison
Avenue, New York, New York 10022 and the telephone number is (212) 527-4000.
SOLICITATION AND VOTING OF PROXIES; REVOCATION
All proxies properly executed and received by the Company, unless such
proxies have been previously revoked, will be voted on all matters presented at
the 2002 Annual Meeting in accordance with the instructions given by the person
executing such proxy or, in the absence of such instructions, will be voted (1)
FOR the election to the Board of Directors of each of the ten nominees
identified in this Proxy Statement; (2) FOR the ratification of the selection
of KPMG LLP as the Company's independent auditors for 2002; (3) FOR approval of
the Series B Preferred Stock Conversion Rights; (4) FOR approval of the Amended
Stock Plan; and (5) AGAINST the stockholder proposal concerning the Company's
implementation of an ILO-Based Code of Conduct. The Company has no knowledge of
any other matters to be brought before the meeting. The deadline for receipt by
the Secretary of the Company of stockholder proposals for inclusion in the
proxy materials for presentation at the 2002 Annual Meeting was December 31,
2001. The Company received one stockholder proposal which is included in these
proxy materials. Additionally, pursuant to the Company's by-laws, in order for
business (other than stockholder proposals submitted pursuant to Rule 14a-8
under the Exchange Act and business specified in the notice of meeting or any
supplement thereto) to be properly brought before the 2002 Annual Meeting,
notice of such business, including among other things, (i) information
regarding the proposed business to be brought before such meeting; (ii) the
identity of the stockholder; and (iii) the class of shares of the Company which
are owned beneficially or of record by such stockholder, must have been
received by the Company between March 3, 2002 and April 2, 2002. No such
matters have been received by the Company. However, if any other matters are
properly presented before the 2002 Annual Meeting for action, in the absence of
other instructions it is intended that the persons named in the enclosed proxy
and acting thereunder will vote in accordance with their best judgment on such
matters.
The submission of a signed proxy will not affect a stockholder's right to
attend, or to vote in person at, the 2002 Annual Meeting. Stockholders who
execute a proxy may revoke it at any time before it is voted by filing a
written revocation with the Secretary of the Company at 625 Madison Avenue, 6th
Floor, New York, New York 10022, Attention: Secretary, by executing a proxy
bearing a later date or by attending the 2002 Annual Meeting and voting in
person.
THE ACCOMPANYING FORM OF PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS. Solicitation of proxies may be made by mail and also may be made
by personal interview, telephone and facsimile transmission and by directors,
officers and employees of the Company without special compensation therefor.
The Company expects to reimburse banks, brokers and other persons for their
reasonable out-of-pocket expenses incurred in handling proxy materials for
beneficial owners.
RECORD DATE; VOTING RIGHTS
Only holders of record of shares of the Company's Class A common stock,
par value $.01 per share ("Class A Common Stock"), Class B common stock, par
value $.01 per share ("Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock"), and the Company's Series B Preferred Stock
(the "Series B Preferred Stock") at the close of business on April 2, 2002 (the
"Record Date") will be entitled to notice of and to vote at the 2002 Annual
Meeting or any adjournments thereof. On the Record Date, there were issued and
outstanding (i) 20,516,135 shares of the Company's Class A Common Stock, each
of which is entitled to one vote, (ii) 31,250,000 shares of the Company's Class
B Common Stock, each of which is entitled to ten votes and (iii) 4,333 shares
of the Company's Series B Preferred Stock, each of which is entitled to 100
votes. Of that total, (a) 11,650,000 shares of the Company's Class A Common
Stock, (b) all of the shares of the Company's Class B Common Stock, and (c) all
of the shares of the Company's Series B Preferred Stock (each of which are
convertible into 100 shares of the Company's Class A Common Stock, which
conversion rights are subject to approval by the Company's stockholders at the
2002 Annual Meeting (See Proposal No. 3--"Approval of Series B Preferred Stock
Conversion Rights")), are beneficially owned by MacAndrews & Forbes Holdings
Inc. ("MacAndrews Holdings"), a corporation wholly owned indirectly through
Mafco Holdings Inc. ("Mafco Holdings" and, collectively with MacAndrews
Holdings, "MacAndrews & Forbes") by Ronald O. Perelman, Chairman of the Board
of Directors of the Company. The shares identified in subclause (i), (ii) and
(iii) above represent approximately 97.3% of the combined voting power of the
outstanding shares of the Company which are entitled to vote at the 2002 Annual
Meeting, which includes the Company's Common Stock and Series B Preferred
Stock. The presence in person or by duly executed proxy of the holders of a
majority in total number of votes of the issued and outstanding shares of
Common Stock and the Series B Preferred Stock entitled to vote at the 2002
Annual Meeting is necessary to constitute a quorum in order to transact
business. MacAndrews & Forbes has informed the Company that it will vote (1)
FOR the election to the Board of Directors of each of the ten nominees
identified in this Proxy Statement; (2) FOR the ratification of the selection
of KPMG LLP as the Company's independent auditors for 2002; (3) FOR approval of
the Series B Preferred Stock Conversion Rights; (4) FOR approval of the Amended
Stock Plan; and (5) AGAINST the stockholder proposal concerning the Company's
implementation of an ILO-Based Code of Conduct. Accordingly, the affirmative
vote of MacAndrews & Forbes is sufficient, without the concurring vote of any
other stockholder of the Company, to approve and adopt proposals No. 1, No. 2,
No. 3 and No. 4 and to reject proposal No. 5, each of which are to be
considered at the 2002 Annual Meeting.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Company, pursuant to the By-laws of the
Company, has fixed the number of directors at ten effective as of the date of
the 2002 Annual Meeting. The directors nominated for election will be elected
at the 2002 Annual Meeting to serve until the next succeeding Annual Meeting of
the Company and until their successors are elected and shall have qualified.
All of the nominees are currently members of the Board of Directors. All
nominees, if elected, are expected to serve until the next succeeding Annual
Meeting. The proxies solicited hereby will be voted FOR the election of the
nominees listed herein.
The Board of Directors has been informed that all of the nominees are
willing to serve as directors, but if any of them should decline or be unable
to serve, the Board of Directors may, unless the Board by resolution provides
for a lesser number of directors, designate substitute nominees, in which event
the individuals named in the enclosed proxy will vote for the election of such
substitute nominee or nominees. The Board of Directors has no reason to believe
that any nominee will be unable or unwilling to serve.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The election to the Board of Directors of each of the ten nominees
identified in this Proxy Statement will require the affirmative vote of a
plurality of the votes cast by the holders of shares of Common Stock and the
Series B Preferred Stock present in person or represented by proxy at the 2002
Annual Meeting and entitled to vote. In tabulating the vote, abstentions will
be disregarded and have no effect on the outcome of the vote. MacAndrews &
Forbes has informed the Company that it will vote FOR the election to the Board
of Directors of each of the ten nominees identified in this Proxy Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE TEN NOMINEES IDENTIFIED
BELOW.
NOMINEES FOR ELECTION AS DIRECTORS
The name, age (as of December 31, 2001), principal occupation for the last
five years, selected biographical information and period of service as a
director of the Company of each of the nominees for election as a director are
set forth below.
MR. PERELMAN (58) has been Chairman of the Board of Directors of the
Company and of the Company's wholly owned subsidiary Revlon Consumer Products
Corporation ("Products Corporation") since June 1998, Chairman of the Executive
Committee of the Board of the Company and of Products Corporation since
November 1995, and a Director of the Company and of Products Corporation since
their respective formations in 1992. Mr. Perelman has been Chairman of the
Board and Chief Executive Officer of MacAndrews & Forbes and various of its
affiliates since 1980. Mr. Perelman is also Chairman of the Executive Committee
of the Board of Directors of M&F Worldwide Corp. ("M&F Worldwide") and Chairman
of the Board of Directors of Panavision Inc. ("Panavision"). Mr. Perelman is
also a Director of the following corporations which file reports pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"): Golden
State Bancorp Inc. ("Golden State"), Golden State Holdings Inc. ("Golden State
Holdings"), M&F Worldwide, Panavision and REV Holdings Inc. ("REV Holdings").
JACK L. STAHL (48) was appointed President and Chief Executive Officer of
Revlon, Inc. in February 2002. Mr. Stahl served as President and Chief
Operating Officer of The Coca Cola Company ("Coca Cola") from February 17, 2000
to March 4, 2001. Prior to that, Mr. Stahl held various senior executive
positions at Coca Cola where he began his career in 1979.
MR. DRAPKIN (53) has been a Director of the Company and of Products
Corporation since their respective formations in 1992. He has been Vice
Chairman of the Board of MacAndrews & Forbes and various of its affiliates
since 1987. Mr. Drapkin was a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom for more than five years prior to 1987. Mr. Drapkin is also a
Director of the following corporations which file reports pursuant to the
Exchange Act: Anthracite Capital, Inc., BlackRock Asset Investors, The Molson
Companies Limited, Panavision, Playboy Enterprises, Inc., SIGA Technologies,
Inc. and Warnaco Group, Inc.
3
PROFESSOR FELDBERG (59) has been a Director of the Company since February
1997. Professor Feldberg has been the Dean of Columbia Business School, New
York City, for more than the past five years. Professor Feldberg is also a
Director of the following corporations which file reports pursuant to the
Exchange Act: Brinson Advisors Funds (formerly known as Paine Webber Group,
Inc.) (22 directorships within such fund complex), Federated Department Stores,
Inc., PRIMEDIA Inc., sappi Limited and Select Medical Corporation.
MR. GITTIS (67) has been a Director of the Company and of Products
Corporation since their respective formations in 1992. He has been Vice
Chairman of the Board of MacAndrews & Forbes and various of its affiliates
since 1985. Mr. Gittis is also a Director of the following corporations which
file reports pursuant to the Exchange Act: Golden State, Golden State Holdings,
Jones Apparel Group, Inc., Loral Space & Communications Ltd., M&F Worldwide,
REV Holdings and Sunbeam Corporation ("Sunbeam").
MR. JORDAN (66) has been a Director of the Company since June 1996. Mr.
Jordan has been a Managing Director of Lazard Freres & Co. LLC since January
2000. Since January 2000, Mr. Jordan has been Of Counsel at the Washington,
D.C. law firm of Akin, Gump, Strauss, Hauer & Feld, LLP and was a Senior
Partner of such firm for more than five years prior thereto. Mr. Jordan is also
a Director of the following corporations which file reports pursuant to the
Exchange Act: America OnLine Latin America, American Express Company, Callaway
Golf Company, Clear Channel Communications, Inc., Dow Jones & Company, Inc.,
J.C. Penney Company, Inc., Sara Lee Corporation and Xerox Corporation. He is
also a trustee of Howard University.
MR. LANDAU (71) has been a Director of the Company since June 1996. Mr.
Landau has been Of Counsel at the law firm of Wolf, Block, Schorr and
Solis-Cohen LLP since February 1998, and was a Senior Partner of Lowenthal,
Landau, Fischer & Bring, P.C., a predecessor to such firm, for more than five
years prior to that date. He has been a Director of Products Corporation since
June 1992. Mr. Landau is also a Director of Offitbank Investment Fund, Inc.,
which files reports pursuant to the Exchange Act.
MS. ROBINSON (48) has been a Director of the Company since June 1996. Ms.
Robinson has been Chairman of Robinson Lerer & Montgomery, LLC, a New York City
strategic communications consulting firm, since May 1996. Ms. Robinson was
Chief Executive Officer of Robinson Lerer & Montgomery, from May 1996 until
January 2002. In March 2000, Robinson Lerer & Montgomery was acquired by Young
& Rubicam Inc. ("Y&R") and Ms. Robinson has served as Vice Chairman of Y&R
since March 2000. In October 2000, Y&R was acquired by the WPP Group plc. For
more than five years prior to May 1996 she was Chairman of the Board and Chief
Executive Officer of Robinson Lerer Sawyer Miller Group, or its predecessors.
Ms. Robinson is a trustee of Mt. Sinai NYU Health.
MR. SEMEL (58) has been a Director of the Company since June 1996. Mr.
Semel has been Chairman and Chief Executive Officer of Yahoo! Inc. ("Yahoo!")
since May 2001. He was Chairman of Windsor Media, Inc., Los Angeles, a
diversified media company, from October 1999 until April 2001. He was Chairman
of the Board and Co-Chief Executive Officer of the Warner Bros. Division of
Time Warner Entertainment LP ("Warner Brothers"), Los Angeles, from March 1994
until October 1999 and of Warner Music Group, Los Angeles, from November 1995
until October 1999. For more than ten years prior to that he was President of
Warner Brothers or its predecessor, Warner Bros. Inc. Mr. Semel is also a
Director of the following corporations which file reports pursuant to the
Exchange Act: Yahoo! and Polo Ralph Lauren Corporation.
MS. STEWART (60) has been a Director of the Company since June 1996. Ms.
Stewart is the Chairman of the Board and Chief Executive Officer of Martha
Stewart Living Omnimedia, Inc., New York City (formerly Martha Stewart Living
Omnimedia, LLC, New York City). She has been an author, founder of the magazine
Martha Stewart Living, creator of a syndicated television series, a syndicated
newspaper column and a catalog company, and a lifestyle consultant and lecturer
for more than the past five years. Ms. Stewart is also a Director of Martha
Stewart Living Omnimedia, Inc., which files reports pursuant to the Exchange
Act.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee and
a Compensation and Stock Plan Committee (the "Compensation Committee").
4
The Executive Committee consists of Messrs. Perelman and Gittis and Stahl.
The Executive Committee may exercise all of the powers and authority of the
Board, except as otherwise provided under the Delaware General Corporation Law.
The Executive Committee also serves as the Company's nominating committee for
Board membership.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors currently consists
of three independent directors, each of whom satisfy the independence,
financial literacy and experience requirements of the New York Stock Exchange
(the "NYSE"). The Audit Committee operates under a written charter adopted by
the Board of Directors, a copy of which was filed with the Company's proxy
statement for its 2001 Annual Meeting and which has been previously reviewed by
the Audit Committee. The charter has not been amended since such filing. The
members of the Audit Committee are Messrs. Feldberg, Landau (Chairman) and Ms.
Robinson, each of whom was a member of the Audit Committee during all of 2001
and remains a member as of the date of this report. The Audit Committee's
policy is to provide assistance to the Board of Directors in fulfilling its
oversight responsibility to the stockholders, potential stockholders, the
investment community, and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the internal audit function, the annual independent audit
of the Company's financial statements, and the legal compliance and ethics
programs as established by management and the Board. The Audit Committee makes
recommendations to the Board of Directors regarding the engagement of the
Company's independent auditors for ratification by the Company's stockholders,
discusses with the auditors their independence from management, reviews the
plan, scope and results of the audit, and reviews with the auditors and
management the Company's policies and procedures with respect to internal
accounting and financial controls, changes in accounting policy and the scope
of the non-audit services which may be performed by the Company's independent
auditors, among other things. The Audit Committee reviews interim financial
statements and the annual financial statements which are included in the
Company's Annual Report on Form 10-K with management and the auditors.
Management is responsible for the Company's financial reporting process,
the preparation of consolidated financial statements in accordance with
generally accepted accounting principles, and the system of internal controls
and procedures designed to insure compliance with accounting standards and
applicable laws and regulations. The Company's independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report thereon. The Audit Committee's responsibility is to
monitor, oversee and review these processes. In this context, the Audit
Committee has met and held in depth discussions with management and the
independent accountants on a regular basis during 2001, including regular
executive sessions with the Company's independent auditors.
The members of the Audit Committee are not professionally engaged in the
practice of accounting or auditing and are not experts in the field of
accounting or auditing. The Audit Committee relies, without independent
verification, on the information provided to it and on the representations made
by the Company's management and the independent accountants that the Company's
financial statements have been prepared in conformity with generally accepted
accounting principles.
Management represented to the Audit Committee that the Company's audited
consolidated financial statements for the year 2001 were prepared in accordance
with generally accepted accounting principles, and the Audit Committee has
reviewed and discussed the audited consolidated financial statements with
management and the independent accountants. The Audit Committee discussed with
the independent accountants matters required to be discussed by Statement on
Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU
Section 380). The Audit Committee has received the written disclosures and the
letter from the Company's independent accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees)
describing all relationships between the independent accountants and the
Company that might bear on the independent accountant's independence consistent
with Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees). The Audit Committee has discussed with the independent
accountants
5
any relationship that may have an impact on that firm's objectivity and
independence and satisfied itself as to the independent accountant's
independence. The Audit Committee also considered whether the provision of
non-audit services by the independent accountants is compatible with
maintaining the independent accountant's independence. The Audit Committee also
reviewed, among other things, the amount of fees paid to the independent
accountants for audit and non-audit services (See "Ratification of Selection of
Auditors").
Based on the Audit Committee's aforementioned review and discussions of
the Company's audited consolidated financial statements with management, the
Company's internal auditors and the independent accountants and the other
reviews and discussions with auditors referred to in the preceding paragraph,
subject to the limitations on our role and responsibility described above and
in the Audit Committee Charter, the Audit Committee recommended to the Board of
Directors that the Company's audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001 for filing with the Securities and Exchange Commission. The
Audit Committee also recommended the selection of KPMG LLP as the Company's
independent accountants for 2002, and based upon our recommendation, the Board
of Directors has selected KPMG LLP as the Company's independent accountants for
the fiscal year ending December 31, 2002, subject to stockholder ratification
(See "Ratification of Selection of Auditors").
Respectfully submitted,
Audit Committee
Edward J. Landau, Esq., Chairman
Meyer Feldberg
Linda Gosden Robinson
The Compensation Committee, currently consisting of Messrs. Gittis,
Drapkin, Landau and Semel, makes recommendations to the Board of Directors
regarding compensation and incentive arrangements (including performance-based
arrangements and bonus awards under the Revlon Executive Bonus Plan) for the
Chief Executive Officer, other executive officers, officers and other key
managerial employees of the Company. The Compensation Committee also considers
and recommends awards pursuant to the Revlon, Inc. Amended and Restated 1996
Stock Plan (the "Amended Stock Plan"), as may be amended and restated from time
to time, and administers such plan.
Beginning in 2001, pursuant to the terms of the Revlon Executive Bonus
Plan, the Compensation Committee has the right to delegate to an administrator
(who is an employee or officer of the Company) (the "Compensation
Administrator") the power and authority to administer the Revlon Executive
Bonus Plan for employees of the Company, other than the Company's chief
executive officer and other covered employees as defined in Treasury Regulation
1.162-27(c)(2) ("Section 162(m) Officers"), which would include the authority
to set business and personal performance objectives, to determine whether such
objectives were met, to determine whether bonus awards would be paid out or
deferred and to determine whether an award should be reduced or eliminated.
Additionally, in 2001 Section 157(c) of the Delaware General Corporation Law
was amended to provide that the Company's Board of Directors (or the
Compensation Committee acting on behalf of the Board) may authorize one or more
officers of the Company (the "Stock Plan Administrator") to designate officers
and employees of the Company or of any of its subsidiaries to be issued Awards
under the Amended Stock Plan and to determine the number of options, shares or
other rights to be issued to such officers and employees. The terms of the
Awards, including the exercise price of any options (which may be determined
pursuant to a formula, which in the case of the Amended Stock Plan, is the
closing price of the Company's Class A Common Stock on the NYSE on the grant
date), as well as the total number of options, shares or other rights that may
be awarded by the Stock Plan Administrator, must be set by the Board of
Directors or the Compensation Committee acting on behalf of the Board within
the resolutions appointing the Stock Plan Administrator. The Stock Plan
Administrator may not, however, designate himself or herself as a recipient of
an Award under the Amended Stock Plan; any such Award must be approved by the
Board or the Compensation Committee acting on behalf of the Board. The Company
reserves the right to adopt procedures in 2002 to implement the foregoing
provisions of the Delaware General Corporation Law.
6
During 2001, the Board of Directors held five meetings and acted three
times by unanimous written consent, the Executive Committee acted two times by
unanimous written consent, the Audit Committee held six meetings and acted once
by unanimous written consent and the Compensation Committee acted seven times
by unanimous written consent. During 2001, all Directors (other than Ms.
Stewart) attended 75% or more of the meetings of the Board of Directors and of
the committees of which they were members.
COMPENSATION OF DIRECTORS
Directors who currently are not receiving compensation as officers or
employees of the Company or any of its affiliates ("Non-Employee Directors")
are paid an annual retainer fee of $35,000, payable in quarterly installments,
and a fee of $1,000 for each meeting of the Board of Directors or any committee
thereof they attend. In addition, the Compensation Committee on July 13, 2001
granted options to purchase 7,500 shares of the Company's Class A Common Stock
to each of the Company's Non-Employee Directors, which options consist of
non-qualified options having a term of 10 years, vest 25% on each anniversary
of the grant date and will become 100% vested on the fourth anniversary of the
grant date, and have an exercise price equal to $7.26, the closing price per
share on the NYSE of the Company's Class A Common Stock on the grant date.
EXECUTIVE OFFICERS
The following table sets forth each of the executive officers of the
Company as of December 31, 2001, except for Mr. Jack L. Stahl who joined the
Company in February 2002.
NAME POSITION
---- --------
Jack L. Stahl President and Chief Executive Officer
Jeffrey M. Nugent Former President and Chief Executive Officer
Douglas H. Greeff Executive Vice President and Chief Financial Officer
Paul E. Shapiro Executive Vice President and Chief Administrative Officer
The following sets forth the ages, positions held with the Company and
selected biographical information for the executive officers of the Company, in
each case as of December 31, 2001.
MR. STAHL (48) was appointed President and Chief Executive Officer of
Revlon, Inc. in February 2002. Mr. Stahl served as President and Chief
Operating Officer of Coca Cola from February 17, 2000 to March 4, 2001. Prior
to that, Mr. Stahl held various senior executive positions at Coca Cola where
he began his career in 1979
MR. GREEFF (45) has been Executive Vice President and Chief Financial
Officer of the Company and of Products Corporation since May 2000. From
September 1998 to May 2000 he was Managing Director, Fixed Income Global Loans,
and Co-head of Leverage Finance at Salomon Smith Barney Inc. From January 1994
until August 1998 Mr. Greeff was Managing Director, Global Loans and Head of
Leverage and Acquisition Finance at Citibank N.A.
MR. SHAPIRO (60) has been Executive Vice President and Chief
Administrative Officer of the Company since August 2001 and of Products
Corporation since September 2001. From June 1998 until July 2001, he was
Executive Vice President and Chief Administrative Officer of Sunbeam and The
Coleman Company, Inc. ("Coleman"). Mr. Shapiro served as a Director of Coleman
from June 1998 until July 2001. Mr. Shapiro previously held the position of
Executive Vice President of Coleman from July 1997 until its acquisition by
Sunbeam in March 1998. From January 1994, before joining Coleman, he was
Executive Vice President and Chief Administrative Officer of Marvel
Entertainment Group, Inc. Mr. Shapiro is a member of the Board of Directors of
Toll Brothers, Inc., which files reports pursuant to the Exchange Act.
MR. NUGENT (55) was President and Chief Executive Officer of the Company
and of Products Corporation from December 1999 until February 14, 2002. He had
been a Director of the Company and of Products Corporation since February 2000.
He had been Worldwide President and Chief Executive
7
Officer of Neutrogena Corporation from January 1995 until December 1999. Prior
to that, Mr. Nugent held various senior executive positions at Johnson &
Johnson.
EXECUTIVE COMPENSATION
The following table sets forth information for the years indicated
concerning the compensation awarded to, earned by or paid to the persons who
served as Chief Executive Officer of the Company during 2001 and the four most
highly paid executive officers (see footnote (a) below), other than the Chief
Executive Officer, who served as executive officers of the Company during 2001
(collectively, the "Named Executive Officers"), for services rendered in all
capacities to the Company and its subsidiaries during such periods.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (a) AWARDS
---------------------------------------- -------------------------
RESTRICTED ALL OTHER
OTHER ANNUAL STOCK SECURITIES ANNUAL
SALARY COMPENSATION AWARDS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) ($) ($) (b) OPTIONS ($)
--------------------------- ---- --- --------- --- ------- ------- ---
Jeffrey M. Nugent ............... 2001 1,150,000 (c) 333,078 666,000 75,000 194,953
Former President and 2000 1,000,000 500,000 430,948 -- 100,000 489,454
Chief Executive Officer (c) 1999 160,256 0 36,382 -- 300,000 38,743
Douglas H. Greeff ............... 2001 731,375 361,200 16,513 333,000 50,000 8,786
Executive Vice 2000 422,500 450,000 7,868 -- 100,000 0
President and Chief
Financial Officer (d)
Paul E. Shapiro ................. 2001 207,692 500,000 5,671 333,000 100,000 0
Executive Vice
President and Chief
Administrative Officer (e)
----------
(a) The amounts shown in Annual Compensation for 2001, 2000 and 1999 reflect
salary, bonus and other annual compensation (including perquisites and
other personal benefits valued in excess of $50,000) and amounts reimbursed
for payment of taxes awarded to, earned by or paid to the persons listed
for services rendered to the Company and its subsidiaries. For the periods
reported, the Company had an Executive Bonus Plan in which executives
participated (including Messrs. Nugent, Greeff and Shapiro) (see
"Employment Agreements and Termination of Employment Arrangements"). The
Executive Bonus Plan provided for payment of cash compensation upon the
achievement of predetermined business and personal performance objectives
during the calendar year which are established by the Compensation
Committee. The Company did not have any "executive officers" during 2001
other than Messrs. Nugent, Greeff and Shapiro. Accordingly, for 2001 the
Company is reporting the compensation of Messrs. Nugent, Greeff and
Shapiro. Mr. Greeff's compensation is reported for 2001 and 2000 only
because he did not serve as an executive officer of the Company prior to
May 2000. Mr. Shapiro's compensation is reported for 2001 only because he
did not serve as an executive officer of the Company prior to 2001.
Effective February 14, 2002, Jeffrey M. Nugent, the Company's former
President and Chief Executive Officer, ceased employment with the Company.
On February 19, 2002, the Company announced its appointment of Jack L.
Stahl as its President and Chief Executive Officer.
(b) See footnotes (c), (d) and (e) below for information concerning the number,
value, vesting schedules and dividends on restricted stock awards to the
Named Executive Officers under the Amended Stock Plan.
(c) Mr. Nugent served as President and Chief Executive Officer of the Company
during 1999, 2000 and 2001. Mr. Nugent ceased employment with the Company
effective February 14, 2002 and is not entitled to a bonus in respect of
2001. The amount shown for Mr. Nugent under Other Annual Compensation for
2001 includes $333,078 in respect of gross ups for taxes on imputed income
arising out of (i) personal use of a Company-provided automobile, (ii)
premiums paid or reimbursed by the Company in respect of life insurance,
(iii) reimbursements for mortgage principal and interest payments pursuant
to Mr. Nugent's employment agreement and (iv) relocation expenses paid or
reimbursed by the Company in 2001. The amount shown under All Other
8
Compensation for 2001 reflects (i) $15,289 in Company-paid relocation
expenses, (ii) $38,058 in respect of life insurance premiums, and (iii)
$141,606 of additional compensation in respect of interest and principal
payments on a bank loan obtained by Mr. Nugent to purchase a principal
residence in the New York metropolitan area pursuant to his employment
agreement (See "Employment Agreements and Termination of Employment
Arrangements"). On June 18, 2001 (the "Grant Date"), Mr. Nugent was awarded
a grant of 100,000 shares of restricted stock under the Amended Stock Plan.
The value of such restricted stock award to Mr. Nugent reflected in the
table is based on $6.66, the closing price of the Company's Class A Common
Stock on the NYSE on December 31, 2001. Provided Mr. Nugent remained
continuously employed by the Company, his 2001 restricted stock award would
have vested as to one-third of the restricted shares on the day after which
the 20-day average of the closing price of the Company's Class A Common
Stock on the NYSE equals or exceeds $20.00, an additional one-third of such
restricted shares would have vested on the day after which such 20-day
average closing price equals or exceeds $25.00 and the balance would have
vested on the day after which such 20-day average closing price equals or
exceeds $30.00, provided (i) subject to clause (ii) below, no portion of
Mr. Nugent's restricted stock award would have vested until the second
anniversary of the Grant Date, (ii) all of the shares of restricted stock
awarded to Mr. Nugent would have vested immediately in the event of a
"change of control" as defined in the restricted stock agreement, and (iii)
all of the shares of restricted stock granted to Mr. Nugent which had not
previously vested would have fully vested on the third anniversary of the
Grant Date. No dividends will be paid on unvested restricted stock. Mr.
Nugent received a bonus of $500,000 in respect of 2000 pursuant to the
terms of his employment agreement. The amount shown for Mr. Nugent under
Other Annual Compensation for 2000 includes $430,948 in respect of gross
ups for taxes on imputed income arising out of (i) personal use of a
Company-provided automobile, (ii) premiums paid or reimbursed by the
Company in respect of life insurance, (iii) reimbursements for mortgage
principal and interest payments pursuant to Mr. Nugent's employment
agreement and (iv) relocation expenses paid or reimbursed by the Company in
2000. The amount shown under All Other Compensation for 2000 reflects (i)
$17,369 in life insurance premiums, (ii) $365,880 in Company-paid
relocation expenses and (iii) $106,205 of additional compensation in
respect of interest and principal payments on a bank loan obtained by Mr.
Nugent to purchase a principal residence in the New York metropolitan area
pursuant to his employment agreement (See "Employment Agreements and
Termination of Employment Arrangements"). The amount shown for Mr. Nugent
under Salary for 1999 is comprised of $76,923 in salary and $83,333 earned
by Mr. Nugent for consulting services provided by Mr. Nugent to the
Company. Mr. Nugent did not receive a bonus in respect of 1999. The amount
shown for Mr. Nugent under Other Annual Compensation for 1999 includes a
payment of $36,382 in respect of gross ups for taxes on imputed income
arising out of relocation expenses paid or reimbursed by the Company in
1999. The amount shown under All Other Compensation for 1999 reflects
$38,743 in Company-paid relocation expenses.
(d) Mr. Greeff served as Executive Vice President and Chief Financial Officer
of the Company during 2000 and 2001. Mr. Greeff received a bonus of
$361,200, of which $211,200 was paid pursuant to the terms of his
employment agreement as a special bonus in respect of the Loan Payment (see
"Employment Agreements and Termination of Employment Arrangements") and the
balance of $150,000 was paid in respect of 2001 pursuant to the Revlon
Executive Bonus Plan as a short-term cash bonus in recognition of the
Company's successful refinancing of its credit agreement in 2001 with a new
2001 Credit Agreement and issuing the new 12% Senior Secured Notes. The
amount shown for Mr. Greeff under Other Annual Compensation for 2001
includes $16,513 in respect of gross ups for taxes on imputed income
arising out of personal use of a Company-provided automobile. The amounts
shown under All Other Compensation for 2001 reflect (i) $4,436 in life
insurance premiums and (ii) $4,350 in respect of matching contributions
under the Revlon Employees' Savings, Investment, and Profit Sharing Plan.
On the Grant Date, Mr. Greeff was awarded a grant of 50,000 shares of
restricted stock under the Amended Stock Plan. The value of such restricted
stock award to Mr. Greeff reflected in the table is based on $6.66, the
closing price of the Company's Class A Common Stock on the NYSE on December
31, 2001. Provided Mr. Greeff remains continuously employed by the Company,
his 2001 restricted stock award will vest as to one-third of the restricted
shares on the day after which the 20-day average of the closing price of
the Company's Class A Common Stock on the NYSE equals or exceeds $20.00, an
additional one-third of such restricted shares will vest on the day after
which such 20-day average closing price equals or exceeds $25.00 and the
balance will vest on the day after which such 20-day average closing price
equals or exceeds $30.00, provided (i) subject to clause (ii) below, no
portion of Mr. Greeff's restricted stock award will vest until the second
anniversary of the Grant Date, (ii) all of the shares of restricted stock
awarded to Mr. Greeff will vest immediately in the event of a "change of
control" as defined in the restricted stock agreement, and (iii) all of the
shares of restricted stock granted to Mr. Greeff which have not previously
vested will fully vest on the third anniversary of the Grant Date. No
dividends will be paid on unvested restricted stock. Mr. Greeff received a
bonus of $450,000 in respect of 2000 pursuant to the terms of his
employment agreement. The amount shown for Mr. Greeff under Other Annual
Compensation for 2000 includes $7,868 in respect of gross ups for taxes on
imputed income arising out of personal use of a Company-provided
automobile.
9
(e) Mr. Shapiro became Executive Vice President and Chief Administrative
Officer of the Company in August 2001. Mr. Shapiro received a bonus of
$500,000 in respect of 2001 pursuant to the terms of his employment
agreement. The amount shown for Mr. Shapiro under Other Annual Compensation
for 2001 includes $5,671 in respect of gross ups for taxes on imputed
income arising out of personal use of a Company-provided automobile. On the
Grant Date, Mr. Shapiro was awarded a grant of (subject to his election as
an executive officer of the Company) 50,000 shares of restricted stock
under the Amended Stock Plan. The value of such restricted stock award to
Mr. Shapiro reflected in the table is based on $6.66, the closing price of
the Company's Class A Common Stock on the NYSE on December 31, 2001.
Provided Mr. Shapiro remains continuously employed by the Company, his 2001
restricted stock award will vest as to one-third of the restricted shares
on the day after which the 20-day average of the closing price of the
Company's Class A Common Stock on the NYSE equals or exceeds $20.00, an
additional one-third of such restricted shares will vest on the day after
which such 20-day average closing price equals or exceeds $25.00 and the
balance will vest on the day after which such 20-day average closing price
equals or exceeds $30.00, provided (i) subject to clause (ii) below, no
portion of Mr. Shapiro's restricted stock award will vest until the second
anniversary of the Grant Date, (ii) all of the shares of restricted stock
awarded to Mr. Shapiro will vest immediately in the event of a "change of
control" as defined in the restricted stock agreement, and (iii) all of the
shares of restricted stock granted to Mr. Shapiro which have not previously
vested will fully vest on the third anniversary of the Grant Date. Mr.
Shapiro will be considered to have been continuously employed by the
Company if his employment agreement is not extended beyond its initial term
which expires on July 31, 2003 or his employment is terminated prior to
June 18, 2003 other than either for (i) "good reason" as defined in the
Company's Executive Severance Policy, or (ii) "cause". No dividends will be
paid on unvested restricted stock.
OPTION GRANTS IN THE LAST FISCAL YEAR
During 2001, the following grants of stock options were made pursuant to
the Amended Stock Plan to the Named Executive Officers:
GRANT
DATE
INDIVIDUAL GRANTS VALUE (a)
------------------------------------------------------------------------- ---------
PERCENT OF
NUMBER OF TOTAL OPTIONS GRANT
SECURITIES UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE ($)
---- ----------- ----------- ------------ ---- ---------
Jeffrey M. Nugent ......... 75,000 7% 5.66 6/18/11 285,395
Douglas H. Greeff ......... 50,000 5% 4.90 3/26/11 163,966
Paul E. Shapiro ........... 100,000 9% 5.66 6/18/11 380,530
The grants made during 2001 under the Amended Stock Plan to Messrs. Nugent
and Shapiro were awarded on June 18, 2001 pursuant to each of their employment
agreements, consist of non-qualified options having a term of 10 years, vest
25% on each anniversary of the grant date and will become 100% vested on the
fourth anniversary of the grant date, and have an exercise price equal to the
closing price per share on the NYSE of the Company's Class A Common Stock on
the grant date, as indicated in the table above. The options granted to Mr.
Greeff in 2001 under the Amended Stock Plan were made on March 26, 2001
pursuant to his amended employment agreement, consist of non-qualified options
having a term of 10 years, vest 25% on each anniversary of the grant date and
will become 100% vested on the fourth anniversary of the grant date and have an
exercise price equal to the closing price per share on the NYSE of the
Company's Class A Common Stock on the grant date, as indicated in the table
above. During 2001, the Company also granted an option to purchase 225,000
shares of the Company's Class A Common Stock pursuant to the Amended Stock Plan
to Mr. Perelman, the Chairman of the Board of Directors of the Company. The
option will vest 25% on each anniversary of the grant date and will become 100%
vested on the fourth anniversary of the grant date and has an exercise price of
$5.66, the closing price per share on the NYSE of the Company's Class A Common
Stock on June 18, 2001, the date of the grant. During 2001, the Company also
granted 120,000 restricted shares of Revlon, Inc. Class A Common Stock to Mr.
Perelman pursuant to the Amended Stock Plan. Provided Mr. Perelman continues to
provide services as a director to the Company, such 2001 restricted stock award
will vest as to one-third of the restricted shares on the day after which the
20-day average of the closing price of the Company's Class
10
A Common Stock on the NYSE equals or exceeds $20.00, an additional one-third of
such restricted shares will vest on the day after which such 20-day average
closing price equals or exceeds $25.00 and the balance will vest on the day
after which such 20-day average closing price equals or exceeds $30.00,
provided (i) subject to clause (ii) below, no portion of such restricted stock
award will vest until the second anniversary of the grant date, (ii) all of the
shares of such restricted stock awarded will vest immediately in the event of a
"change of control" as defined in Mr. Perelman's restricted stock agreement,
and (iii) all of the shares of such restricted stock will fully vest on the
third anniversary of the grant date.
----------
(a) Grant Date Present Values were calculated using the Black-Scholes option
pricing model. The model as applied used the grant dates of March 26, 2001
with respect to the options granted to Mr. Greeff on such date and June 18,
2001 with respect to the options granted to Messrs. Nugent and Shapiro on
such date. Stock option models require a prediction about the future
movement of stock price. The following assumptions were made for purposes
of calculating Grant Date Present Values: (i) a risk-free rate of return of
4.82% with respect to the options granted to Mr. Greeff on March 26, 2001
and 5.10% with respect to the options granted to Messrs. Nugent and Shapiro
on June 18, 2001, which were the rates as of the applicable grant dates for
the U.S. Treasury Zero Coupon Bond issues with a remaining term similar to
the expected term of the options; (ii) stock price volatility of 68% based
upon the volatility of the Company's stock price; (iii) a constant dividend
rate of zero percent; and (iv) that the options normally would be exercised
on the final day of their seventh year after grant. No adjustments to the
theoretical value were made to reflect the waiting period, if any, prior to
vesting of the stock options or the transferability (or restrictions
related thereto) of the stock options. The real value of the options in the
table depends upon the actual performance of the Company's stock during the
applicable period and upon when they are exercised.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following chart shows the number of stock options exercised during
2001 and the 2001 year-end value of the stock options held by the Named
Executive Officers:
NUMBER OF SECURITIES VALUE OF IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS
SHARES OPTIONS AT FISCAL AT FISCAL YEAR-END
ACQUIRED ON VALUE YEAR-END EXERCISABLE/
EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE UNEXERCISABLE
NAME DURING 2001 DURING 2001 AT DECEMBER 31, 2001 (#) AT DECEMBER 31, 2001 (a) ($)
---- ----------- ----------- ------------------------ ----------------------------
Jeffrey M. Nugent ......... 0 0 25,000/450,000 66,500/341,000
Douglas H. Greeff ......... 0 0 25,000/125,000 0/88,000
Paul E. Shapiro ........... 0 0 0/100,000 0/100,000
----------
(a) Amounts shown represent the difference between the exercise price of the
options (exercisable or unexercisable, as the case may be) and the market
value of the underlying shares of the Company's Class A Common Stock at
year end, calculated using $6.66, the December 31, 2001 closing price per
share on the NYSE of the Company's Class A Common Stock. The actual value,
if any, an executive may realize upon exercise of a stock option depends
upon the amount by which the market price of shares of the Company's Class
A Common Stock exceeds the exercise price per share when the stock options
are exercised.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Mr. Nugent had, and each of Messrs. Greeff and Shapiro has, a current
executive employment agreement with the Company's wholly owned subsidiary,
Products Corporation. Mr. Nugent's employment agreement, as amended, provided
that he would have served as President and Chief Executive Officer at a base
salary of not less than $1,150,000 for 2001 and not less than $1,300,000 for
2002. Mr. Nugent's employment agreement provided for a grant of 100,000
restricted shares and 75,000 options during 2001 (which grants were made on
June 18, 2001).
Mr. Greeff's employment agreement with Products Corporation, as amended,
provides that he will serve as Chief Financial Officer at a base salary of not
less than $650,000 per annum and a grant of 50,000
11
restricted shares and 50,000 options during 2001 (which grants were made on
June 18, 2001 and March 26, 2001, respectively) and 50,000 options in 2002. At
any time after May 8, 2003, Products Corporation may terminate Mr. Greeff's
employment by 24 months' prior notice of non-renewal. During any such period
after notice of non-renewal, Mr. Greeff would be deemed an employee at will and
would be eligible for severance under the Executive Severance Policy (see
"Executive Severance Policy").
Mr. Shapiro's employment agreement with Products Corporation provides that
he will serve as Executive Vice President and Chief Administrative Officer at a
base salary of not less than $500,000 per annum, that he receive a $500,000
bonus in respect of 2001 and a grant of 50,000 restricted shares and 100,000
options in 2001 (which grants were made on June 18, 2001) and 100,000 options
in 2002. At any time after July 31, 2003, either Products Corporation or Mr.
Shapiro may terminate Mr. Shapiro's employment by providing written notice of
non-renewal.
Mr. Nugent's employment agreement provided, and each of Messrs. Greeff's
and Shapiro's employment agreement provides, for participation in the Executive
Bonus Plan and other executive benefit plans on a basis equivalent to other
senior executives of the Company generally and for Company-paid supplemental
disability insurance (except that Mr. Shapiro waived Company-provided life
insurance coverage). Mr. Nugent's agreement provided for Company-paid
supplemental term life insurance during employment in the amount of three times
base salary. The employment agreements for each of Messrs. Nugent, Greeff and
Shapiro provides for protection of Company confidential information and
includes a non-compete obligation.
Mr. Nugent's employment agreement provided that in the event of
termination of the term by Mr. Nugent for breach by the Company of a material
provision or failure of the Compensation Committee to adopt and implement the
recommendations of management with respect to stock option grants, or by the
Company prior to December 31, 2002 (otherwise than for "cause" as defined in
Mr. Nugent's employment agreement or disability), Mr. Nugent would be entitled,
at his election, to severance pursuant to the Executive Severance Policy (see
"Executive Severance Policy") (other than the six-month limit on lump sum
payments provided for in the Executive Severance Policy, which six-month limit
provision would not apply to Mr. Nugent) or continued payments of base salary
through December 31, 2004 and continued participation in the Company's life
insurance plan, which life insurance coverage is subject to a limit of two
years, and medical plans subject to the terms of such plans through December
31, 2004 or until Mr. Nugent were covered by like plans of another company,
continued Company-paid supplemental term life insurance and continued
Company-paid supplemental disability insurance.
Mr. Greeff's employment agreement provides that in the event of
termination of the term by Mr. Greeff for breach by the Company of a material
provision or failure of the Compensation Committee to adopt and implement the
recommendations of management with respect to stock option grants, or by the
Company prior to May 8, 2003 (otherwise than for "cause" as defined in his
employment agreement or disability), Mr. Greeff would be entitled, at his
election, to severance pursuant to the Executive Severance Policy (see
"Executive Severance Policy") (other than the six-month limit on lump sum
payments provided for in the Executive Severance Policy, which six-month limit
provision would not apply to Mr. Greeff) or continued payments of base salary
through May 8, 2005 and continued participation in the Company's life insurance
plan, which life insurance coverage is subject to a limit of two years, and
medical plans subject to the terms of such plans through May 8, 2005 or until
Mr. Greeff were covered by like plans of another company and continued
Company-paid supplemental disability insurance. In addition, Mr. Greeff's
agreement provides that if he remains employed by Products Corporation or its
affiliates until age 62, then upon any subsequent retirement he will be
entitled to a supplemental pension benefit in a sufficient amount so that his
annual pension benefit from all qualified and non-qualified pension plans of
Products Corporation and its affiliates, as well as any such plans of Mr.
Greeff's past employers or their affiliates (expressed as a straight life
annuity), equals $400,000. If Mr. Greeff's employment were to terminate on or
after January 31, 2002 and prior to January 31, 2003 then he would receive
18.18% of the supplemental pension benefit otherwise payable pursuant to his
employment agreement and thereafter an additional 9.09% would accrue as of each
January 31st on which Mr. Greeff is still employed (but in no event more than
would have been payable to Mr. Greeff under the foregoing provision had he
retired at age 62). Mr. Greeff would not receive any supplemental pension
benefit and would be required to
12
reimburse the Company for any supplemental pension benefits received if he were
to terminate his employment prior to May 8, 2003 other than for "good reason"
(as defined in his employment agreement), or if he were to breach such
agreement or be terminated by the Company for "cause" (as defined in his
employment agreement). Mr. Greeff's employment agreement provides for
continuation of life insurance and executive medical insurance coverage in the
event of permanent disability.
Mr. Shapiro's employment agreement provides that in the event of
termination of the term by Mr. Shapiro for breach by the Company of a material
provision of such agreement or failure of the Compensation Committee to adopt
and implement the recommendations of management with respect to stock option or
restricted stock grants by the Company prior to July 31, 2003 (otherwise than
for "cause" as defined in Mr. Shapiro's employment agreement or disability), or
by Mr. Shapiro or the Company upon providing notice of non-renewal of the term
at any time on or after July 31, 2003, Mr. Shapiro would be entitled to
continued payments of base salary and monthly payments of one-twelfth of the
maximum annual bonus to which he would be eligible under his employment
agreement, continued participation in the Company's medical plans, subject to
the terms of the plans, and continued Company-paid supplemental disability
insurance through the later of January 31, 2005 or 18 months after the
effective date of termination. In addition, Mr. Shapiro's employment agreement
provides that at age 65 he will be entitled to a supplemental pension benefit
in a sufficient amount so that his annual pension benefit from all qualified
and non-qualified pension plans of Products Corporation and its affiliates, as
well as any such plans of Mr. Shapiro's past employers or their affiliates
(expressed as a straight life annuity), equals $400,000. Mr. Shapiro would not
receive any supplemental pension benefit and would be required to reimburse the
Company for any supplemental pension benefits received if he were to terminate
his employment prior to July 31, 2003 other than for "good reason" (as defined
in his employment agreement), or if he were to breach the agreement or be
terminated by the Company for "cause" (as defined in his employment agreement).
The employment agreement in effect for Mr. Shapiro provides for continuation of
executive medical insurance coverage in the event of permanent disability.
Mr. Nugent's employment agreement provided that he was entitled to a loan
from Products Corporation of up to $500,000 for relocation expenses (which he
received in an installment of $400,000 in 1999 and $100,000 in 2000), which is
due and payable with interest at the applicable federal rate upon the earlier of
the termination of his employment for any reason or five years from the initial
loan. In addition, during the term of his employment, Mr. Nugent received
additional compensation payable on a monthly basis equal to the amount actually
paid by him in respect of interest and principal on a bank loan (the "Mortgage")
of up to $1,500,000 obtained by Mr. Nugent to purchase a principal residence in
the New York metropolitan area (the "Home Loan Payments"), plus a gross up for
any taxes payable by Mr. Nugent as a result of such additional compensation. In
addition, Mr. Nugent's employment agreement provided that he would be entitled
to a special bonus, payable on January 15 of the year next following the year in
which his employment terminates, equal to the product of (A) $1,500,000 less the
amount of Home Loan Payments made prior to the termination multiplied by (B) the
following percentages: for termination in 2002, 40%; for termination in 2003,
60%; for termination in 2004, 80%; and for termination in 2005 or thereafter,
100%. Notwithstanding the above, Mr. Nugent termination of his employment for
other than "good reason" or his termination for "cause" (as such terms are
defined in his employment agreement), or his breach of certain post-employment
covenants, would require that any bonus described above be forfeited or repaid
by Mr. Nugent, as the case may be.
Mr. Greeff's employment agreement provides that he is entitled to a loan
from Products Corporation in the amount of $800,000 (which he received in
2000), with the principal to be payable in five equal installments of $160,000,
plus interest at the applicable federal rate, on each of May 9, 2001 (which
installment was repaid) and the four successive anniversaries thereafter,
provided that the total principal amount of such loan and any accrued, but
unpaid, interest at the applicable federal rate (the "Loan Payment") shall be
due and payable upon the earlier of the January 15 immediately following the
termination of his employment for any reason or May 9, 2005. In addition, Mr.
Greeff's employment agreement provides that he shall be entitled to a special
bonus, payable on each May 9th commencing on May 9, 2001 (which was paid) and
ending with May 9, 2005 equal to the sum of the Loan Payment with respect to
such year, provided that he is employed on each such May 9th, and further
provided that in the
13
event that Mr. Greeff terminates his employment for "good reason" or is
terminated for a reason other than "cause" (as such terms are defined in his
employment agreement), he shall be entitled to a special bonus in the amount of
$800,000 minus the sum of any special bonuses paid through the date of such
termination plus accrued, but unpaid, interest at the applicable federal rate.
Notwithstanding the above, if Mr. Greeff terminates his employment for other
than "good reason" or is terminated for "cause" (as such terms are defined in
his employment agreement), or if he breaches certain post-employment covenants,
any bonus described above shall be forfeited or repaid by Mr. Greeff, as the
case may be.
EXECUTIVE SEVERANCE POLICY
Products Corporation's Executive Severance Policy provides that upon
termination of employment of eligible executive employees, including Messrs.
Nugent, Greeff and Shapiro, other than voluntary resignation or termination by
Products Corporation for good reason, in consideration for the execution of a
release and confidentiality agreement and the Company's standard employee
non-competition agreement, the eligible executive will be entitled to receive,
in lieu of severance under any employment agreement then in effect or under
Products Corporation's basic severance plan, a number of months of severance
pay in semi-monthly installments based upon such executive's grade level and
years of service reduced by the amount of any compensation from subsequent
employment, unemployment compensation or statutory termination payments
received by such executive during the severance period, and, in certain
circumstances, by the actuarial value of enhanced pension benefits received by
the executive, as well as continued participation in medical and certain other
benefit plans for the severance period (or in lieu thereof, upon commencement
of subsequent employment, a lump sum payment equal to the then present value of
50% of the amount of base salary then remaining payable through the balance of
the severance period). Pursuant to the Executive Severance Policy, upon meeting
the conditions set forth therein, as of December 31, 2001 Messrs. Nugent,
Greeff and Shapiro would be entitled to severance pay equal to 20, 19 and 18
months' of base salary, respectively, at the base salary rate in effect on the
date of employment termination plus continued participation in the medical and
dental plans for the same respective periods on the same terms as active
employees.
DEFINED BENEFIT PLANS
In accordance with the terms of the Revlon Employees' Retirement Plan (the
"Retirement Plan"), the following table shows the estimated annual retirement
benefits payable (as of December 31, 2001) under the non-cash balance program
of the Retirement Plan (the "Non-Cash Balance Program") at normal retirement
age (65) to a person retiring with the indicated average compensation and years
of credited service, on a straight life annuity basis, after Social Security
offset, including amounts attributable to the Pension Equalization Plan, as
described below.
ESTIMATED ANNUAL STRAIGHT LIFE ANNUITY BENEFITS AT
RETIREMENT
HIGHEST CONSECUTIVE WITH INDICATED YEARS OF CREDITED SERVICE (a)
FIVE-YEAR AVERAGE -------------------------------------------------------
COMPENSATION
DURING FINAL TEN YEARS 15 20 25 30 35
---------------------- ------- ------- ------- ------- -------
600,000 151,392 201,856 252,320 302,784 302,784
700,000 177,392 236,523 295,653 354,784 354,784
800,000 203,392 271,189 338,987 406,784 406,784
900,000 229,392 305,856 382,320 458,784 458,784
1,000,000 255,392 340,523 425,653 500,000 500,000
1,100,000 281,392 375,189 468,987 500,000 500,000
1,200,000 307,392 409,856 500,000 500,000 500,000
1,300,000 333,392 444,523 500,000 500,000 500,000
1,400,000 359,392 479,189 500,000 500,000 500,000
1,500,000 385,392 500,000 500,000 500,000 500,000
2,000,000 500,000 500,000 500,000 500,000 500,000
2,500,000 500,000 500,000 500,000 500,000 500,000
----------
(a) The normal form of benefit for the Retirement Plan and the Pension
Equalization Plan is a straight life annuity.
14
The Retirement Plan is intended to be a tax qualified defined benefit
plan. Non-Cash Balance Program benefits are a function of service and final
average compensation. The Non-Cash Balance Program is designed to provide an
employee having 30 years of credited service with an annuity generally equal to
52% of final average compensation, less 50% of estimated individual Social
Security benefits. Final average compensation is defined as average annual base
salary and bonus (but not any part of bonuses in excess of 50% of base salary)
during the five consecutive calendar years in which base salary and bonus (but
not any part of bonuses in excess of 50% of base salary) were highest out of
the last 10 years prior to retirement or earlier termination. Except as
otherwise indicated, credited service includes all periods of employment with
the Company or a subsidiary prior to retirement or earlier termination. Messrs.
Nugent, Greeff and Shapiro do not participate in the Non-Cash Balance Program.
Effective January 1, 2001, Products Corporation amended the Retirement
Plan to provide for a cash balance program under the Retirement Plan (the "Cash
Balance Program"). Under the Cash Balance Program, eligible employees will
receive quarterly credits to an individual cash balance bookkeeping account
equal to 5% of their compensation for the previous quarter. Interest credits,
which commenced June 30, 2001, are allocated quarterly (based on the yield of
the 30-year Treasury bond). Employees who as of January 1, 2001 were at least
age 45, had 10 or more years of service with the Company and whose age and
years of service totaled at least 60 were "grandfathered" and continue to
participate in the Non-Cash Balance Program under the same retirement formula
described in the preceding paragraph. All other eligible employees had their
benefits earned (if any) under the Non-Cash Balance Program "frozen" at the
current level on December 31, 2000 and began to participate in the Cash Balance
Program on January 1, 2001. The "frozen" benefits will be payable at normal
retirement age. Any employee who, as of January 1, 2001 was at least age 40 but
not part of the "grandfathered" group will, in addition to the "basic" 5%
quarterly pay credits, receive quarterly "transition" pay credits of 3% of
compensation each year for up to 10 years or until he/she leaves employment
with the Company, whichever is earlier. Mr. Nugent participated, and Messrs.
Greeff and Shapiro participate, in the Cash Balance Program. Mr. Nugent was and
Mr. Greeff is eligible to receive basic and transition pay credits. As he was
not employed by the Company on January 1, 2001 (the date on which a
"transition" employee was determined), Mr. Shapiro is eligible to receive only
basic pay credits. The estimated annual benefits payable under the Cash Balance
Program as a single life annuity (assuming Messrs. Greeff and Shapiro remain
employed by the Company until age 65 at their current level of compensation) is
$248,100 for Mr. Greeff and $18,400 for Mr. Shapiro. Messrs. Nugent's, Greeff's
and Shapiro's total retirement benefits will be determined in accordance with
their respective employment agreements, each of which provides for a guaranteed
retirement benefit provided that certain conditions are met.
The Employee Retirement Income Security Act of 1974, as amended, places
certain maximum limitations upon the annual benefit payable under all qualified
plans of an employer to any one individual. In addition, the Omnibus Budget
Reconciliation Act of 1993 limits the annual amount of compensation that can be
considered in determining the level of benefits under qualified plans. The
Pension Equalization Plan, as amended effective December 14, 1998, is a
non-qualified benefit arrangement designed to provide for the payment by the
Company of the difference, if any, between the amount of such maximum
limitations and the annual benefit that would be payable under the Retirement
Plan (including the Non-Cash Balance Program and the Cash Balance Program) but
for such limitations, up to a combined maximum annual straight life annuity
benefit at age 65 under the Retirement Plan and the Pension Equalization Plan
of $500,000. Benefits provided under the Pension Equalization Plan are
conditioned on the participant's compliance with his or her non-competition
agreement and on the participant not competing with Products Corporation for
one year after termination of employment.
The number of years of credited service under the Retirement Plan and the
Pension Equalization Plan as of January 1, 2002 (rounded to full years) for Mr.
Nugent is two years and for Mr. Greeff is one year. Mr. Shapiro had no years of
credited service as of January 1, 2002.
15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors currently
consists of Messrs. Gittis, Drapkin, Landau and Semel, each of whom has been a
member of the Compensation Committee during all of 2001, and each of whom
continues as a member as of the date of this report. Pursuant to the rules
promulgated under the Exchange Act, set forth below is the report of the
Compensation Committee regarding its compensation policies for 2001 for the
Company's executive officers, including the Chief Executive Officer.
The key elements of compensation used by the Company during 2001 were base
salary and performance-based incentives, including annual performance-based
cash bonuses, short-term cash bonuses payable upon the successful
implementation of projects critical to the achievement of the Company's
strategy, stock options and restricted stock Awards, the latter of which would
vest on an accelerated schedule if certain stock price targets were achieved.
The Company's executive compensation practices in 2001 were intended to provide
both long- and short-term incentive compensation to support the Company's
strategic plan for 2001 and to increase stockholder value. These practices were
further intended to align the interests of executives and stockholders through
the use of a performance- and project-based cash bonus plan and a stock-based
compensation plan providing for the grant of stock options and restricted
shares of the Company's Class A Common Stock. In addition, basic elements of
the Company's compensation package were designed to be competitive with the
compensation practices of other leading consumer products companies.
Several components of the Company's compensation program in effect in
2001, including base salary, annual performance-based cash bonuses and Awards
of stock options under the Amended Stock Plan, were established at the time of
the Company's initial public offering in February 1996 (the "Offering"). In
2001, the Company provided for (i) Awards under the Amended Stock Plan of
restricted shares of the Company's Class A Common Stock to key senior
executives as part of a senior executive long-term incentive plan, which may
vest on an accelerated basis upon the achievement of specified levels of
appreciation in the price per share of the Company's Class A Common Stock and
(ii) short-term cash bonuses payable upon the successful implementation of key
projects in 2001, including projects affecting cash flow, cost savings and
consumption.
The Company had established a cash-based long-term incentive program in
2000, which program was terminated in 2001. No payments were made under such
plan while it was in effect.
The compensation program's elements were initially based upon
consultations with the executive compensation consulting practice of William M.
Mercer, Incorporated ("Mercer"). As part of its regular practice, the
Compensation Committee has consulted with Mercer and other consultants in the
field on compensation-related issues as it deems appropriate and considers such
input as well as the Company's existing policies in its oversight and approval
of the Company's ongoing executive officer compensation arrangements. In
addition to Company sources and consultation with Mercer, the Compensation
Committee also considered information provided by salary surveys and similar
data available from independent sources to help it assess the competitiveness
and effectiveness of the Company's executive compensation practices in general
and for the Chief Executive Officer in particular. During 2001, the
Compensation Committee consulted with Mercer with respect to the structure and
components of the 2001 incentive compensation policy and program.
BASE SALARY
The Company's policy during 2001 was to pay salaries that reflected the
executive's position in the Company and his or her contributions as determined
by the Compensation Committee and that were competitive with a comparison group
of other leading consumer products companies and certain other companies
outside of the consumer products field (the "Comparison Group"). While the
Comparison Group is comprised primarily of consumer products companies,
companies outside of the consumer products field are also included because the
Company believes, and the Compensation Committee concurs, that the market for
executive talent is broader than simply other consumer products companies.
16
In determining the salaries of executive officers, the Compensation
Committee's policy has been to target the salary range for executive officers
at a level which is competitive with the Comparison Group, with salaries above
that level available to exceptional performers and key contributors to the
success of the Company. Annual salary adjustments have been based on individual
performance, assumption of new responsibilities, competitive data from the
Comparison Group, employee retention efforts and the Company's overall annual
salary budget guidelines. If an executive officer is responsible for a
particular business unit, such unit's financial results have been taken into
account.
ANNUAL CASH BONUS
EXECUTIVE BONUS PLAN
The Executive Bonus Plan in effect during 2001 (in which executives
including Messrs. Nugent, Greeff and Shapiro participated) provided for payment
of (i) cash compensation payable annually upon the achievement of
predetermined, objective, business objectives (EBITDA) and personal Performance
Objectives during the calendar year, and (ii) short-term cash bonuses payable
upon the successful implementation of key projects, including projects
affecting cash flow, cost savings and consumption growth. Eligibility for
awards under the Executive Bonus Plan was conditioned upon the executive having
executed the Company's standard employee confidentiality and non-competition
agreement. The maximum award payable to any participant with respect to any
bonus year was 200% of base salary, not to exceed $2 million. Mr. Greeff's
employment agreement provides that he is eligible for a maximum bonus of 150%
of his base salary. Mr. Shapiro's employment agreement provides that he is
eligible for a maximum bonus of 100% of his base salary. Mr. Nugent ceased
employment with the Company on February 14, 2002 and is not entitled to a bonus
in respect of 2001.
For 2001 the business objectives were not met, but objectives for certain
key short-term projects were met (including significant reductions in selling,
general and administrative expenses, non-core asset dispositions and
consolidation of manufacturing operations). Mr. Shapiro's bonus and a portion
of Mr. Greeff's bonus were determined in accordance with their respective
employment agreements. The balance of Mr. Greeff's bonus was based upon his
substantial contribution to refinancing the Company's credit agreement by
securing the new 2001 Credit Agreement and issuing the new 12% Senior Secured
Notes.
The Company's principal compensation vehicles for encouraging long-term
growth and performance have been the grant of stock options, shares of
restricted stock or other Awards under the Amended Stock Plan.
THE AMENDED STOCK PLAN
Under the Amended Stock Plan, Awards generally have been granted annually
to executive officers and other key employees. Guidelines for the size and type
of Awards were developed based on, among other factors, the executive's
position in the Company, his or her contributions to the Company's objectives
and the practices of the Comparison Group. In 2001, the Company focused grants
of options and restricted shares to those employees who the Company viewed as
contributing substantively to the successful implementation of the Company's
strategic plan in 2001 (rather than automatic grade level-based grants). Since
the Company, with the concurrence of the Compensation Committee, also views the
granting of such Awards as a way to obtain a competitive compensation
advantage, the Company attempted to target Award levels so that, when taken
together with salary and cash bonus, total compensation was intended to be
competitive with the Comparison Group. Actual grants varied from guideline
levels based on individual performance, business unit performance, the
assumption of increased responsibilities or other factors.
The grants of stock option Awards made under the Amended Stock Plan in
2001 to Messrs. Nugent, Greeff and Shapiro were made pursuant to their
respective employment agreements. The grants of restricted stock Awards to
Messrs. Nugent, Greeff and Shapiro under the Amended Stock Plan in June 2001
were made to provide such executives with long-term compensation incentive
Awards and to take account of the fact that the Senior Executive Long-Term
Incentive Program established in 2000 was terminated without any payout in
2001.
17
In order to provide a strong incentive for senior management to achieve
the Company's strategic plan, as measured by improvement in the Company's stock
price, as well as to retain key members of the Company's management team,
restricted share Awards granted in 2001 vest over three years, provided that
vesting will accelerate if specified stock price targets were met. Each
restricted stock Award vests as to one-third of the restricted shares on the
day after which the 20-day average of the closing price of the Company's Class
A Common Stock on the NYSE equals or exceeds $20.00, an additional one-third of
such restricted shares vests on the day after which such 20-day average closing
price equals or exceeds $25.00 and the balance vests on the day after which
such 20-day average closing price equals or exceeds $30.00, provided, subject
to limited exceptions, no portion of a restricted stock Award vests until the
second anniversary of the date of grant, and all of the restricted shares which
have not previously vested will fully vest on the third anniversary of the date
of grant if the grantee remains employed until such date.
Section 162(m) of the Code generally disallows a publicly held corporation
a tax deduction for compensation in excess of $1 million per year paid to the
five most highly compensated executive officers of the Company (the "Covered
Officers"). However, an exception to the deduction limitation of Section 162(m)
applies to certain performance-based compensation, provided that the plan
pursuant to which such compensation will be paid has been approved by
stockholders in a separate vote and certain other requirements are met. The
Compensation Committee will maintain the discretion to authorize Awards under
the Amended Stock Plan and other compensation that does not qualify for an
exception to the deduction limitation if the Compensation Committee believes it
is necessary or appropriate under the circumstances.
2001 CHIEF EXECUTIVE OFFICER COMPENSATION
The Company entered into an employment agreement in December 1999 with Mr.
Nugent (see "Employment Agreements and Termination of Employment
Arrangements"). In setting Mr. Nugent's compensation in the agreement, the
Compensation Committee considered factors such as Mr. Nugent's individual
experience, his expertise in his prior position, the significance of his
position to the Company, and the pay practices in effect for chief executive
officers of other major corporations. The agreement provided for a base salary
at an annual rate of $1,000,000 during 1999 and 2000 and not less than
$1,150,000 during 2001. Mr. Nugent is not entitled to a bonus in respect of
2001 because the Company's EBITDA goals were not achieved.
The stock option Awards specified in Mr. Nugent's employment agreement, as
amended, were determined with reference to Mr. Nugent's position in the
Company. The restricted stock Award granted to Mr. Nugent in June 2001 was
determined with reference to the contributions that Mr. Nugent made towards the
Company's implementation of its turnaround strategy. In structuring Mr.
Nugent's 2001 compensation, the Compensation Committee's intent was to
condition a meaningful portion of Mr. Nugent's total compensation upon Company
performance and stockholder value.
Respectfully submitted,
Compensation and Stock Plan Committee
Howard Gittis, Chairman
Donald Drapkin
Edward Landau
Terry Semel
18
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
shares of the Company's Class A Common Stock with that of the S&P 500 Index,
the S&P Health Care Index, the S&P Household Products Index and the S&P
Cosmetics Index. The comparison for each of the periods presented assumes that
$100 was invested on December 31, 1996 in shares of the Company's Class A
Common Stock and the stocks included in the relevant index and that all
dividends were reinvested. These indices, which reflect formulas for dividend
reinvestment and weighting of individual stocks, do not necessarily reflect
returns that could be achieved by individual investors.
5-YEAR TOTAL SHAREHOLDER RETURN
REVLON, INC. VS S&P INDICES
[GRAPHIC OMITTED]
SOURCE: Bloomberg Financial Markets Database
NOTES: Assumes $100 invested on 12/31/96 in Revlon stock, in the S&P
Cosmetics, S&P Household Products, S&P 500, and S&P Health Care Indices
Year end dates reflect the last trading date for each respective year
Reflects month-end dividend reinvestment
SUMMARY 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01
------- -------- -------- -------- -------- -------- --------
Revlon, Inc. ....................... $100 $118.20 $ 54.81 $ 26.57 $ 16.60 $ 22.29
S&P Cosmetics Index ................ 100 126.71 128.90 109.25 106.28 104.05
S&P Household Prod. Index .......... 100 140.96 166.41 199.03 168.23 164.22
S&P 500 Index ...................... 100 133.35 171.46 207.54 188.65 166.24
S&P Health Care Index .............. 100 146.08 212.81 203.35 278.99 274.57
19
OWNERSHIP OF COMMON STOCK
The following table sets forth as of December 31, 2001 the number of
shares of Company's Common Stock beneficially owned, and the percent so owned,
by (i) each person known to the Company to be the beneficial owner of more than
5% of the outstanding shares of the Company's Common Stock, (ii) each director
of the Company, (iii) the Chief Executive Officer during 2001 and each of the
other Named Executive Officers during 2001 and (iv) all directors and executive
officers of the Company as a group. The number of shares owned are those
beneficially owned, as determined under the rules of the Securities and
Exchange Commission (the "SEC"), and such information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares of Common Stock as to which a person
has sole or shared voting power or investment power and any shares of Common
Stock which the person has the right to acquire within 60 days through the
exercise of any option, warrant or right, through conversion of any security or
pursuant to the automatic termination of a power of attorney or revocation of a
trust, discretionary account or similar arrangement.
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS
------------------- -------------------- -------------------
Ronald O. Perelman ...................... 43,200,000 83.5%
35 E. 62nd St. (Class A and Class B)(1) (Class A and Class B)
New York, NY 10021
Donald Drapkin .......................... 12,500 (Class A)(2) *
Meyer Feldberg .......................... 1,875 (Class A)(3) *
Howard Gittis ........................... 65,000 (Class A) *
Douglas H. Greeff ....................... 127,500 (Class A)(4) *
Vernon E. Jordan, Jr., .................. 1,875 (Class A)(5) *
Edward J. Landau ........................ 1,975 (Class A)(6) *
Jerry W. Levin .......................... 578,989 (Class A)(7) 2.8%
Jeffrey M. Nugent ....................... 25,000 (Class A)(8) *
Linda Gosden Robinson ................... 1,875 (Class A)(9) *
Terry Semel ............................. 6,875 (Class A)(10) *
Paul E. Shapiro ......................... 0
Martha Stewart .......................... 2,375 (Class A)(11) *
All Directors and Executive Officers as a
Group (13 Persons) ..................... 12,775,839 (Class A)(12) 62.3%
31,250,000 (Class B) 100.0%
----------
* Less than one percent.
(1) Mr. Perelman through Mafco Holdings (which through REV Holdings)
beneficially owns (i) 11,650,000 shares of the Company's Class A Common
Stock, which represent approximately 57% of the outstanding shares of the
Company's Class A Common Stock (which excludes the 433,333 shares of
Revlon, Inc.'s Class A Common Stock into which the 4,333 shares of Series B
Preferred Stock beneficially owned by Mafco Holdings (through REV Holdings)
are convertible, which conversion rights are subject to shareholder
approval at the 2002 Annual Meeting) (See "Approval of Series B Conversion
Rights"), (ii) all of the outstanding 31,250,000 shares of the Company's
Class B Common Stock, which together with the shares referenced in
subclause (i) above represent approximately 83% of the outstanding shares
of the Company's Common Stock, and (iii) all of the outstanding shares of
the Series B Preferred Stock. Based on the shares referenced in clauses
(i), (ii) and (iii) above, Mr. Perelman through Mafco Holdings (which
through REV Holdings) has approximately 97% of the combined voting power of
the outstanding shares of the Company's stock entitled to vote at the 2002
Annual Meeting. All of the shares of the Company's Common Stock owned by
REV Holdings are pledged by REV Holdings to secure obligations, and shares
of intermediate holding companies are or may from time to time be pledged
to secure obligations, of Mafco Holdings or its affiliates. Mr. Perelman
also holds an option to acquire 300,000 shares of the Company's Class A
Common Stock, which option vested on February 12, 1999. Such vested option
to acquire 300,000 shares of the Company's Class A Common Stock, together
with the Class A and Class B Common Stock beneficially owned by Mr.
Perelman, represents approximately 83% of the outstanding shares of the
Company's Common Stock.
20
(2) All of such shares are held by trusts for Mr. Drapkin's children and
beneficial ownership is disclaimed.
(3) Includes 1,875 shares which Mr. Feldberg may acquire under options which
vested on May 22, 2001.
(4) Includes 102,500 shares held directly by Mr. Greeff and 25,000 shares
which Mr. Greeff may acquire under options which vested on May 22, 2001.
(5) Includes 1,875 shares which Mr. Jordan may acquire under options which
vested on May 22, 2001.
(6) Includes 100 shares held directly by Mr. Landau and 1,875 shares which Mr.
Landau may acquire under options which vested on May 22, 2001.
(7) Includes 25,000 shares held directly by Mr. Levin; 1,000 shares owned by
Mr. Levin's daughter as to which beneficial ownership is disclaimed; 129
shares acquired pursuant to the Company matching under the 401(k) Plan;
360 shares that Mr. Levin has the right to receive pursuant to the Company
matching under the Excess Plan; 170,000, 170,000, 170,000 and 42,500
shares which may be acquired under options which became fully vested on
February 28, 1999, January 9, 2001, January 8, 2002 and March 2, 1999,
respectively. Mr. Levin is not standing for re-election as a director in
2002.
(8) Includes 25,000 shares which Mr. Nugent may acquire under options which
vested on December 5, 2001.
(9) Includes 1,875 shares which Ms. Robinson may acquire under options which
vested on May 22, 2001.
(10) Includes 2,000 shares owned by Mr. Semel's children as to which beneficial
ownership is disclaimed, 3,000 shares owned jointly with Mr. Semel's wife
and 1,875 shares which Mr. Semel may acquire under options which vested on
May 22, 2001.
(11) Includes 500 shares owned indirectly by the Martha Stewart Inc. Defined
Benefit Pension Plan and 1,875 shares which Ms. Stewart may acquire under
options which vested on May 22, 2001.
(12) Includes only shares beneficially held by persons who were directors and
executive officers of the Company as of December 31, 2001.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MacAndrews & Forbes beneficially owns shares of the Company's Common Stock
and Series B Preferred Stock having approximately 97.3% of the combined voting
power of the outstanding shares of Common Stock and Series B Preferred Stock.
As a result, MacAndrews & Forbes is able to elect the entire Board of Directors
of the Company and control the vote on all matters submitted to a vote of the
Company's stockholders. MacAndrews & Forbes is wholly owned by Ronald O.
Perelman, who is Chairman of the Board of Directors of the Company.
TRANSFER AGREEMENTS
In June 1992, Revlon, Inc. and Products Corporation entered into an asset
transfer agreement with Revlon Holdings Inc. ("Holdings"), an affiliate and an
indirect wholly owned subsidiary of Mafco Holdings, and certain of its
wholly-owned subsidiaries (the "Asset Transfer Agreement"), and Revlon, Inc.
and Products Corporation entered into a real property asset transfer agreement
with Holdings (the "Real Property Transfer Agreement" and, together with the
Asset Transfer Agreement, the "Transfer Agreements"), and pursuant to such
agreements, on June 24, 1992 Holdings transferred assets to Products
Corporation and Products Corporation assumed all the liabilities of Holdings,
other than certain specifically excluded assets and liabilities (the
liabilities excluded are referred to as the "Excluded Liabilities"). Certain
consumer products lines sold in demonstrator assisted distribution channels
considered not integral to Revlon, Inc.'s business and which historically had
not been profitable (the "Retained Brands") and certain other assets and
liabilities were retained by Holdings. Holdings agreed to indemnify Revlon,
Inc. and Products Corporation against losses arising from the Excluded
Liabilities, and Revlon, Inc. and Products Corporation agreed to indemnify
Holdings against losses arising from the liabilities assumed by Products
Corporation. The amount reimbursed by Holdings to Products Corporation for the
Excluded Liabilities for 2001 was $0.2 million.
REIMBURSEMENT AGREEMENTS
Revlon, Inc., Products Corporation and MacAndrews Holdings have entered
into reimbursement agreements (the "Reimbursement Agreements") pursuant to
which (i) MacAndrews Holdings is obligated to provide (directly or through
affiliates) certain professional and administrative services,
21
including employees, to Revlon, Inc. and its subsidiaries, including Products
Corporation, and purchase services from third party providers, such as
insurance, legal and accounting services and air transportation services, on
behalf of Revlon, Inc. and its subsidiaries, including Products Corporation, to
the extent requested by Products Corporation, and (ii) Products Corporation is
obligated to provide certain professional and administrative services,
including employees, to MacAndrews Holdings (and its affiliates) and purchase
services from third party providers, such as insurance and legal and accounting
services, on behalf of MacAndrews Holdings (and its affiliates) to the extent
requested by MacAndrews Holdings, provided that in each case the performance of
such services does not cause an unreasonable burden to MacAndrews Holdings or
Products Corporation, as the case may be. Products Corporation reimburses
MacAndrews Holdings for the allocable costs of the services purchased for or
provided to Products Corporation and its subsidiaries and for reasonable
out-of-pocket expenses incurred in connection with the provision of such
services. MacAndrews Holdings (or such affiliates) reimburses Products
Corporation for the allocable costs of the services purchased for or provided
to MacAndrews Holdings (or such affiliates) and for the reasonable
out-of-pocket expenses incurred in connection with the purchase or provision of
such services. The net amount reimbursed by MacAndrews Holdings to Products
Corporation for the services provided under the Reimbursement Agreements for
2001 was $1.6 million. Each of Revlon, Inc. and Products Corporation, on the
one hand, and MacAndrews Holdings, on the other, has agreed to indemnify the
other party for losses arising out of the provision of services by it under the
Reimbursement Agreements other than losses resulting from its willful
misconduct or gross negligence. The Reimbursement Agreements may be terminated
by either party on 90 days' notice. Products Corporation does not intend to
request services under the Reimbursement Agreements unless their costs would be
at least as favorable to Products Corporation as could be obtained from
unaffiliated third parties.
TAX SHARING AGREEMENT
Revlon, Inc. and Products Corporation, for federal income tax purposes,
are included in the affiliated group of which Mafco Holdings is the common
parent, and Revlon, Inc.'s and Products Corporation's federal taxable income
and loss are included in such group's consolidated tax return filed by Mafco
Holdings. Revlon, Inc. and Products Corporation also may be included in certain
state and local tax returns of Mafco Holdings or its subsidiaries. In June
1992, Holdings, Revlon, Inc., Products Corporation and certain of its
subsidiaries, and Mafco Holdings entered into a tax sharing agreement (as
subsequently amended and restated, the "Tax Sharing Agreement"), pursuant to
which Mafco Holdings has agreed to indemnify Revlon, Inc. and Products
Corporation against federal, state or local income tax liabilities of the
consolidated or combined group of which Mafco Holdings (or a subsidiary of
Mafco Holdings other than Revlon, Inc. and Products Corporation or its
subsidiaries) is the common parent for taxable periods beginning on or after
January 1, 1992 during which Revlon, Inc. and Products Corporation or a
subsidiary of Products Corporation is a member of such group. Pursuant to the
Tax Sharing Agreement, for all taxable periods beginning on or after January 1,
1992, Products Corporation will pay to Revlon, Inc., which in turn will pay to
Holdings amounts equal to the taxes that Products Corporation would otherwise
have to pay if it were to file separate federal, state or local income tax
returns (including any amounts determined to be due as a result of a
redetermination arising from an audit or otherwise of the consolidated or
combined tax liability relating to any such period which is attributable to
Products Corporation), except that Products Corporation will not be entitled to
carry back any losses to taxable periods ending prior to January 1, 1992. No
payments are required by Products Corporation or Revlon, Inc. if and to the
extent Products Corporation is prohibited under the Credit Agreement from
making tax sharing payments to Revlon, Inc. The Credit Agreement prohibits
Products Corporation from making such tax sharing payments other than in
respect of state and local income taxes. Since the payments to be made under
the Tax Sharing Agreement will be determined by the amount of taxes that
Products Corporation would otherwise have to pay if it were to file separate
federal, state or local income tax returns, the Tax Sharing Agreement will
benefit Mafco Holdings to the extent Mafco Holdings can offset the taxable
income generated by Products Corporation against losses and tax credits
generated by Mafco Holdings and its other subsidiaries. The Tax Sharing
Agreement was amended, effective as of January 1, 2001, to eliminate a
contingent payment to Revlon, Inc. under certain circumstances in return for a
$10 million note with interest at 12% and interest and principal payable by
Mafco Holdings on
22
December 31, 2005. As a result of net operating tax losses and prohibitions
under the Credit Agreement there were no federal tax payments or payments in
lieu of taxes pursuant to the Tax Sharing Agreement for 2001.
OTHER
Pursuant to a lease dated April 2, 1993 (the "Edison Lease"), Holdings
leased to Products Corporation the Edison research and development facility for
a term of up to 10 years with an annual rent of $1.4 million and certain shared
operating expenses payable by Products Corporation which, together with the
annual rent, were not to exceed $2.0 million per year. In August 1998, Holdings
sold the Edison facility to an unrelated third party, which assumed
substantially all liability for environmental claims and compliance costs
relating to the Edison facility, and in connection with the sale Products
Corporation terminated the Edison Lease and entered into a new lease with the
new owner. Holdings agreed to indemnify Products Corporation through September
1, 2013 to the extent rent under the new lease exceeds rent that would have
been payable under the terminated Edison Lease had it not been terminated. The
net amount reimbursed by Holdings to Products Corporation with respect to the
Edison facility for 2001 was $0.2 million.
During 2001, Products Corporation leased certain facilities to MacAndrews
& Forbes or its affiliates pursuant to occupancy agreements and leases. These
included space at Products Corporation's New York headquarters and through
January 31, 2001 at Products Corporation's offices in London. The rent paid to
Products Corporation for 2001 was $0.5 million.
Products Corporation's Credit Agreement and the 12% Senior Secured Notes
are supported by, among other things, guarantees from Revlon, Inc., and,
subject to certain limited exceptions, all of the domestic subsidiaries of
Products Corporation. The obligations under such guarantees are secured by,
among other things, the capital stock of Products Corporation and, subject to
certain limited exceptions, the capital stock of all of Products Corporation's
domestic subsidiaries and 66% of the capital stock of Products Corporation's
and its domestic subsidiaries' first-tier foreign subsidiaries.
Products Corporation has received a commitment from Mafco Holdings that it
is prepared to provide, if necessary, additional financial support to Products
Corporation of up to $40.0 million on appropriate terms through December 31,
2003.
Effective September 2001, Revlon, Inc. acquired from Holdings all the
assets and liabilities of the Charles of the Ritz brand (which Revlon, Inc.
contributed to Products Corporation in the form of a capital contribution), in
consideration for 400,000 newly issued shares of Revlon, Inc.'s Class A Common
Stock and 4,333 shares of newly issued voting (with 433,333 votes in the
aggregate) Series B Preferred Stock which are convertible into 433,333 shares
in the aggregate of Revlon, Inc.'s Class A Common Stock, which conversion
rights are subject to approval by the stockholders of Revlon, Inc. at the 2002
Annual Meeting (See "Approval of Series B Preferred Stock Conversion Rights").
An investment banking firm rendered its written opinion that the terms of the
transaction were fair from a financial standpoint to Revlon, Inc.
During 2000, the Company made an advance of $0.8 million to Mr. Greeff,
pursuant to his employment agreement, which bears interest at the applicable
federal rate, of which $0.2 million was repaid by Mr. Greeff to the Company
during 2001.
During 2001, Products Corporation made payments of $0.3 million to Ms.
Ellen Barkin (spouse of Mr. Perelman) under an agreement pursuant to which she
provided voiceover services for certain of the Company's advertisements, which
payments were competitive with industry rates for similarly situated talent.
Mr. Nugent's spouse provided consulting services in 2000 and 2001 for
product and concept development, for which Products Corporation paid her $0.1
million in 2001.
The law firm, of which Mr. Landau is Of Counsel, Wolf, Block, Schorr and
Solis-Cohen LLP, provided legal services to Products Corporation and its
subsidiaries during 2001 and it is anticipated that such firm will continue to
provide such services in 2002.
23
Lazard Freres & Co. LLC, an investment bank of which Mr. Jordan became a
Managing Director in January 2000, provided investment banking services to
Revlon, Inc. and its subsidiaries during 2001.
During 2001, Products Corporation placed advertisements in magazines and
other media operated by Martha Stewart Living Omnimedia, Inc. ("MSLO"), which
is controlled by Ms. Stewart, who also serves as its Chairman and Chief
Executive Officer. The Company paid MSLO $2.1 million for such services in
2001, which fees were less than 1% of our estimate of MSLO's 2001 consolidated
gross revenues. The Company's decision to place advertisements for its products
in MSLO's magazines and other media was based upon their popular appeal to
women and the rates paid were competitive with industry rates for similarly
situated magazines and media.
During 2001, Products Corporation obtained public relations and
advertising services from various subsidiaries of WPP Group plc ("WPP"). Ms.
Robinson is employed by one of WPP's subsidiaries, however, Ms. Robinson is
neither an executive officer of, nor does she hold any material equity interest
in, WPP. The Company paid WPP $2.0 million for such services in 2001, which
fees were less than 1% of our estimate of WPP's 2001 consolidated gross
revenues. The Company's decision to engage WPP was based upon their
professional expertise in understanding the advertising and public relations
needs of the consumer packaged goods industry, as well as their global presence
in many of the international markets in which the Company operates, and the
rates paid were competitive with industry rates for similarly situated public
relations and advertising agencies.
In December 2001, Products Corporation employed Mr. Perelman's daughter in
a junior entry-level marketing position, with compensation paid for 2001 of
less than $5,000.
During 2001, Products Corporation employed Mr. Drapkin's daughter in a
junior entry-level marketing position, with compensation paid for 2001 of less
than $60,000.
During 2001, Products Corporation made payments of $0.1 million to a
fitness center, in which an interest is owned by members of the immediate
family of Mr. Drapkin, for discounted health club dues for an executive health
program of Products Corporation.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Company's executive officers, directors and 10% stockholders are
required under the Exchange Act to file reports of ownership and changes in
ownership with the SEC and the NYSE. Copies of these reports also must be
furnished to the Company.
Based solely upon a review of copies of such reports furnished to the
Company through the date hereof and written representations that no other
reports were required, the Company believes that all filing requirements
applicable to its executive officers, directors and 10% holders were complied
with during 2001.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected, subject to ratification by the
Company's stockholders, KPMG LLP to audit the accounts of the Company for the
fiscal year ending December 31, 2002.
KPMG LLP has audited the consolidated financial statements of the Company
and its predecessors for more than the past five years. Representatives of KPMG
LLP will be present at the 2002 Annual Meeting, will have the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2001 and for the reviews of the financial statements
included in the Company's Quarterly Reports on Form 10-Q for 2001 (the "Audit
Services") were $2.1 million.
24
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG LLP billed no fees for professional services rendered to the Company
for information technology services relating to financial information systems
design and implementation (the "IS Services") for the fiscal year ended
December 31, 2001.
ALL OTHER FEES
The aggregate fees billed by KPMG LLP for services rendered to the
Company, other than the Audit Services and the IS Services described above
under "Audit Fees" and "Financial Information Systems Design and Implementation
Fees", respectively, for the fiscal year ended December 31, 2001 (the "Other
Services") were $1.1 million, including fees for non-audit services of $0.3
million and audit related services of $0.8 million. Non-audit services
consisted principally of tax services rendered to the Company. Audit related
services consisted principally of audits of financial statements of employee
benefit plans, the audit of closing statements for assets disposed of in 2001,
review of financial statement disclosure compliance and services in connection
with the refinancing of the Company's credit agreement in 2001.
The Audit Committee has determined that the provision of the Other
Services is compatible with maintaining KPMG LLP's independence.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The ratification of the selection of KPMG LLP as the Company's independent
auditors for 2002 will require the affirmative vote of a majority of the total
number of votes of outstanding shares of the Company's Common Stock and Series
B Preferred Stock present in person or represented by proxy at the 2002 Annual
Meeting and entitled to vote. In determining whether the proposal has received
the requisite number of affirmative votes, abstentions will be counted and will
have the same effect as a vote against the proposal. MacAndrews & Forbes has
informed the Company that it will vote FOR the selection of KPMG as the
Company's independent auditors for 2002.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR 2002.
PROPOSAL NO. 3
APPROVAL OF SERIES B PREFERRED STOCK CONVERSION RIGHTS
At the 2002 Annual Meeting, the Company's stockholders will be asked to
approve the Series B Preferred Stock Conversion Rights. On September 7, 2001
(the "Ritz Closing Date"), pursuant to a Purchase and Sale Agreement (the "Ritz
Purchase Agreement") between the Company and Holdings, the Company acquired
from Holdings all the assets and liabilities of Holdings' Charles of the Ritz
business in consideration of the issuance of 400,000 newly issued shares of the
Company's Class A Common Stock and the issuance of 4,333 shares of newly issued
voting (with 433,333 votes in the aggregate) Series B Preferred Stock which are
convertible into 433,333 shares in the aggregate of the Company's Class A
Common Stock. Upon acquiring the Charles of the Ritz business, the Company
contributed such business to Products Corporation in the form of a capital
contribution. Each share of Series B Preferred Stock is convertible into 100
shares of the Company's Class A Common Stock as further described below in the
section entitled "Rights of the Series B Preferred Stock", which Series B
Preferred Stock Conversion Rights are subject to approval by the Company's
stockholders at the 2002 Annual Meeting.
The rights, preferences and privileges of the Series B Preferred Stock are
complex and are summarized only briefly in this Proxy Statement. Stockholders
are referred to the full description of such securities contained in the
Certificate of the Designations, Powers, Preferences and Rights of Series B
Convertible Preferred Stock filed with the Delaware Secretary of State and
attached hereto as Exhibit 1 (the "Certificate of Designation"). The Company
has agreed to take any corporate action that, in the opinion of the Company's
counsel, is necessary to issue the full number of shares of its Class A Common
25
Stock issuable upon conversion of the Series B Preferred Stock, which may
include, without limitation, preparing and filing with the Securities and
Exchange Commission a registration statement covering the resale of the shares
issuable upon conversion of the Series B Preferred Stock. Such registration
obligations are set forth in the Registration Rights Agreement, the form of
which is incorporated by reference to Exhibit 10.1 to the Annual Report on Form
10-K for the year ended December 31, 1995 of Revlon Worldwide Corporation (now
known as REV Holdings), as amended by the First Amendment to Registration
Rights Agreement which is incorporated by reference as Exhibit 10.21 in the
Annual Report on Form 10-K for the year ended December 31, 2001 of REV
Holdings.
SUMMARY OF APPROVAL REQUIRED
NYSE Rule 312.03 generally requires stockholder approval prior to the
issuance of common stock or of securities convertible into common stock to a
substantial security holder of the Company or of a subsidiary, affiliate or
other closely-related person of a substantial security holder of the Company if
the number of shares of common stock to be issued, or if the number of shares
of common stock into which the securities may be convertible, exceeds either
one percent of the number of shares of common stock or one percent of the
voting power outstanding before the issuance. In connection with consummating
the transactions contemplated by the Ritz Purchase Agreement, the Board of
Directors is soliciting stockholder approval for the Series B Preferred Stock
Conversion Rights, as the conversion of the Series B Preferred Stock into
433,333 shares of the Company's Class A Common Stock, when added to the 400,000
shares of the Company's Class A Common Stock which were issued to Holdings on
the Ritz Closing Date, would exceed 1% of the 51,366,135 shares of the
Company's Common Stock which were outstanding prior to the issuance of such
shares on the Ritz Closing Date. In addition, the Series B Preferred Stock
Conversion Rights are conditioned on receipt of stockholder approval pursuant
to the terms of the Certificate of Designation.
RIGHTS OF THE SERIES B PREFERRED STOCK
LIQUIDATION PREFERENCE
The Series B Preferred Stock has a liquidation preference of $720.0554 per
share, plus the amount of any declared but unpaid dividends (the "Series B
Liquidation Value") as of the date of any liquidation, dissolution or winding
up of the Company (a "Liquidation Event"). In the event of a Liquidation Event,
the holders of shares of Series B Preferred Stock will be entitled to receive
the Series B Liquidation Value before any payments are made or any assets are
distributed to holders of the Company's Common Stock or any other class or
series of the Company's capital stock ranking junior as to liquidation rights
to the Series B Preferred Stock. If upon any Liquidation Event the Company's
assets available for payment of the Liquidation Value are insufficient to
permit payment of the full Liquidation Value to the holders of the Series B
Preferred Stock, then all of the Company's available assets shall be
distributed among the holders of the then outstanding shares of Series B
Preferred Stock and the then outstanding shares of capital stock ranking on
parity with the Series B Preferred Stock as to distributions upon a Liquidation
Event, pro rata according to the number of the then outstanding shares of
Series B Preferred Stock and the then outstanding shares of such parity stock
held by each holder thereof.
VOTING RIGHTS
In addition to such rights as specified in the Company's certificate of
incorporation which is on file with the Delaware Secretary of State and as are
provided under Delaware law, holders of the Series B Preferred Stock are
entitled to vote together with the holders of the Company's Class A and Class B
Common Stock as a single class on all matters submitted for a vote of holders
of the Company's Class A and Class B Common Stock. Each share of Series B
Preferred Stock shall entitle the holder thereof to cast 100 votes. In
addition, so long as any Series B Preferred Stock is outstanding, the Company
shall not, without the approval of at least a majority of the outstanding
shares of Series B Preferred Stock voting separately as a class (i) amend,
alter, repeal, whether by merger, consolidation, combination, reclassification
or otherwise, the Company's certificate of incorporation or by-laws or any
provision thereof if such
26
amendment, alteration or repeal would adversely alter or change the rights,
preferences or privileges of the Series B Preferred Stock, (ii) create,
authorize or issue any class, series or shares of preferred stock or any other
class or series of capital stock or other equity securities ranking either as
to payment of dividends or distribution of assets upon a Liquidation Event (A)
prior to the Series B Preferred Stock, or (B) on a parity with the Series B
Preferred Stock, or (iii) undertake any action the valid consummation of which
would require the approval of the Company's stockholders pursuant to the
Company's certificate of incorporation or by-laws or as required by applicable
law and the direct or indirect result which would adversely affect or change
the rights, preferences or privileges of the Series B Preferred Stock. The vote
of the holders of at least two-thirds of the outstanding shares of Series B
Preferred Stock, voting separately as a class, shall be required to adopt any
of the foregoing alterations, amendments or repeals, in addition to such other
vote of stockholders as may be required under applicable law.
CONVERSION RIGHTS
If the Series B Preferred Stock Conversion Rights are approved by
stockholders at the 2002 Annual Meeting, each holder of Series B Preferred
Stock would have the immediate right to convert its shares of Series B
Preferred Stock in whole or in part, with each share of Series B Preferred
Stock converting into 100 shares of the Company's Class A Common Stock.
Accordingly, if the requisite stockholder approval is obtained at the 2002
Annual Meeting, the Company would be required to issue to the holder (or
holders) of the Series B Preferred Stock up to 433,333 shares of the Company's
Class A Common Stock (subject to certain adjustments in accordance with the
terms of the Certificate of Designation). In lieu of issuing any fractional
shares which would otherwise be due upon conversion, the Company would issue a
payment in lieu of such fractional shares.
RANKING; REDEMPTION
With respect to rights to distributions upon a Liquidation Event, the
Series B Preferred Stock ranks senior to all classes of common stock of the
Company, including, without limitation, the Company's Class A and Class B
Common Stock and to each other class or series of capital stock or other equity
securities of the Company, provided that the holders of a majority of the
outstanding shares of Series B Preferred Stock may establish a series of
preferred stock the terms of which rank on a parity with or senior to the
Series B Preferred Stock as to dividends and distributions upon a Liquidation
Event.
The Series B Preferred Stock is perpetual and may not be redeemed,
purchased, retired or otherwise acquired by the Company unless such redemption,
purchase or retirement or other acquisition by the Company is expressly
authorized in the Certificate of Designation, provided that the Company may
redeem, purchase, retire or otherwise acquire any or all of the outstanding
shares of the Series B Preferred Stock of a holder thereof with the written
consent of such holder. Subject to certain limitations specified in the
Certificate of Designation, the Company has the option to redeem all or any
part of the Series B Preferred Stock at any time after 30 days following
stockholder approval of the Series B Preferred Stock Conversion Rights for cash
at a redemption price equal to the Liquidation Value thereof as of such
redemption date, provided that the holders of the Series B Preferred Stock
retain the right to convert their shares of Series B Preferred Stock into the
applicable number of shares of the Company's Class A Common Stock until the
close of business on the last business day preceding the effective date of any
such optional redemption by the Company.
DIVIDENDS
If the Company declares or pays any dividends or any other distributions
are made with respect to the Company's Class A Common Stock, the Series B
Preferred Stock holders as of the applicable record date for such dividend or
distribution shall be entitled to receive dividends or distributions in an
amount per share of Series B Preferred Stock as if the Series B Preferred Stock
had been converted into the Company's Class A Common Stock as of the date
immediately preceding the date for determining the holders of Class A Common
Stock entitled to such dividend or distribution. In addition, no dividend or
distribution shall be paid or declared on any share of Class A Common Stock
unless a dividend or distribution payable in the same consideration and manner
is simultaneously paid or declared on each share of Series B Preferred Stock.
27
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The Series B Preferred Stock Conversion Rights will require the
affirmative vote of a majority of the total number of votes of outstanding
shares of the Company's Common Stock and Series B Preferred Stock present in
person or represented by proxy at the 2002 Annual Meeting and entitled to vote.
In determining whether the proposal has received the requisite number of
affirmative votes, abstentions will be counted and will have the same effect as
a vote against the proposal. MacAndrews & Forbes has informed the Company that
it will vote FOR approval of the Series B Preferred Stock Conversion Rights.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE SERIES B PREFERRED STOCK CONVERSION RIGHTS.
PROPOSAL NO. 4
APPROVAL OF THE AMENDED STOCK PLAN
At the Annual Meeting, the Company's stockholders will be asked to approve
the Revlon Inc. Fourth Amended and Restated 1996 Stock Plan, a copy of which is
attached as Exhibit 2 (the "Fourth Amended Stock Plan"), which would (1)
increase by 2,000,000 shares the maximum number of shares with respect to which
Awards may be granted under the Amended Stock Plan, and (2) increase by
2,000,000 shares the total number of shares of the Company's Class A Common
Stock with respect to which restricted and unrestricted stock awards may be
granted under the Amended Stock Plan as of any date. The Revlon, Inc. 1996
Stock Plan (the "Original Stock Plan") was adopted in connection with the
Company's initial public offering in February 1996 (the "Offering"), and was
amended in (y) February 1999 to increase the number of shares available under
the Original Stock Plan from 5,000,000 to 7,000,000 (the "Second Amended Stock
Plan") and (z) April 2001 to increase the number of shares available under the
Second Amended Stock Plan from 7,000,000 to 8,500,000 and to increase by
300,000 the total number of shares of the Company's Class A Common Stock
subject to options and stock appreciation rights ("SARs") which may be granted
to any grantee under the Amended Stock Plan in any year (the "Third Amended
Stock Plan", and the Original Stock Plan, Second Amended Stock Plan, Third
Amended Stock Plan and Fourth Amended Stock Plan will be referred to as the
"Amended Stock Plan"). The Amended Stock Plan is intended to advance the
interests of the Company and its stockholders by providing an incentive to
attract, retain and motivate key employees and directors of the Company and its
affiliates to contribute to the Company's growth and profitability and to align
those individuals' long-term interests with those of the Company's
stockholders. The Board of Directors believes that approval of the Fourth
Amended Stock Plan is in the best interests of the Company and its
stockholders. Therefore, the Board of Directors has approved the Fourth Amended
Stock Plan, subject to the approval of the Company's stockholders.
As of March 1, 2002, options to purchase an aggregate of 7,172,379 shares
of the Company's Class A Common Stock were outstanding under the Amended Stock
Plan, options covering 73,950 shares were exercised, 1,000,000 restricted
shares of the Company's Class A Common Stock were outstanding under the Plan
and only 253,671 shares of the 8,500,000 shares authorized under the Amended
Stock Plan remained available for future grants. The Board of Directors has
amended the Amended Stock Plan, subject to the approval of the Company's
stockholders, to (1) increase by 2,000,000 the maximum aggregate number of
shares of the Company's Class A Common Stock with respect to which Awards may
be granted and (2) increase by 2,000,000 shares the total number of shares of
the Company's Class A Common Stock with respect to which restricted and
unrestricted stock awards may be granted under the Amended Stock Plan as of any
date. The Board of Directors believes that the Company's stock option program
is an important factor in attracting and retaining the high caliber of
employees and directors essential to the Company's success and in aligning
their interests with those of the Company's stockholders. These amendments are
intended to ensure that the Amended Stock Plan will have available sufficient
shares to meet these needs.
28
SUMMARY OF THE AMENDED STOCK PLAN
THE AMENDED STOCK PLAN
The Original Stock Plan became effective on February 22, 1996, and will
continue in effect until February 21, 2006, unless terminated sooner by the
Company's Board of Directors (the "Board"). The Fourth Amended Stock Plan will
take effect upon approval by the Company's stockholders at the 2002 Annual
Meeting.
The following summary of the Fourth Amended Stock Plan is qualified in its
entirety by the specific language of the Fourth Amended Stock Plan, a copy of
which is annexed to this Proxy Statement as Exhibit 2. It should be noted that
although an entire description of the Fourth Amended Stock Plan is provided,
the principal difference in terms of the Fourth Amended Stock Plan from the
terms of the Third Amended Stock Plan (which was approved by the Company's
stockholders at the 2001 Annual Meeting) is that: (1) the Fourth Amended Stock
Plan increases by 2,000,000 the maximum number of shares of the Company's Class
A Company Stock with respect to which Awards may be granted under the Amended
Stock Plan; (2) the Fourth Amended Stock Plan increases by 2,000,000 shares the
total number of shares of the Company's Class A Common Stock with respect to
which restricted and unrestricted stock awards may be granted under the Amended
Stock Plan as of any date; and (3) during 2001, the Company adopted more
restrictive provisions related to the treatment of Awards of stock options,
stock appreciation rights and restricted shares upon termination of employment
in order to increase the number of shares available for issuance to current
employees under the Amended Stock Plan and to minimize the dilutive effects of
grants under the Amended Stock Plan to employees who were subsequently
terminated (as discussed below under "Effect of Termination of Employment or
Services").
The purpose of the Amended Stock Plan is to provide for certain officers,
directors of the Company and its affiliates who are not also employed by the
Company or its affiliates ("Non-Employee Directors"), other directors and key
employees of the Company and certain of its affiliates an incentive to maintain
and enhance the long-term performance and profitability of the Company. The
Amended Stock Plan provides for grants of options to purchase shares of the
Company's Class A Common Stock in the form of incentive stock options ("ISOs")
and options which do not qualify as ISOs ("NQSOs"). Options granted under the
Amended Stock Plan may be granted in tandem with SARs. The Amended Stock Plan
also provides for grants of SARs not in tandem with options, restricted stock
awards, unrestricted stock awards and performance awards (all awards granted
under the Amended Stock Plan, collectively, "Awards").
AMENDED STOCK PLAN ADMINISTRATION
The Amended Stock Plan is administered by the Compensation Committee,
which is a committee of the Board consisting of two or more directors of the
Company. Subject to the terms of the Amended Stock Plan, the Compensation
Committee has the authority to construe and interpret the Amended Stock Plan
and to establish and amend rules and regulations for administering the Amended
Stock Plan. The Compensation Committee has the authority to determine the
eligible participants under the Amended Stock Plan and the type and number of
Awards to be granted under the Amended Stock Plan.
SECURITIES SUBJECT TO THE FOURTH AMENDED STOCK PLAN
The Original Stock Plan originally covered 5,000,000 shares of the
Company's Class A Common Stock, which may be authorized but unissued Class A
Common Stock or authorized and issued Class A Common Stock held in treasury or
acquired by the Company for purposes of the Original Stock Plan. At the 1999
Annual Meeting of Stockholders the Original Stock Plan was amended to cover a
total of 7,000,000 shares (which includes the 5,000,000 shares originally
authorized under the Original Stock Plan). At the 2001 Annual Meeting the
Second Amended Stock Plan was amended to cover a total of 8,500,000 shares
(which includes the 7,000,000 shares authorized under the Second Amended Stock
Plan) and to increase by 300,000 the total number of shares of the Company's
Class A Common Stock subject to options and SARs which may be granted to any
grantee under the Amended Stock Plan in any year. As
29
amended by the Board of Directors, subject to stockholder approval, the Fourth
Amended Stock Plan covers a total of 10,500,000 shares (which includes the
8,500,000 shares previously authorized under the Third Amended Stock Plan) of
the Company's Class A Common Stock, which may be authorized but unissued Class
A Common Stock or authorized and issued Class A Common Stock held in treasury
or acquired by the Company for purposes of the Fourth Amended Stock Plan.
As amended by the Board of Directors, subject to stockholder approval, the
Fourth Amended Stock Plan increased by 2,000,000 shares the total number of
shares of the Company's Class A Common Stock with respect to which restricted
and unrestricted stock awards may be granted under the Fourth Amended Stock
Plan as of any date. Accordingly, the total number of shares of the Company's
Class A Common Stock subject to restricted or unrestricted stock Awards under
the Fourth Amended Stock Plan may not exceed 3,000,000.
The Amended Stock Plan provides that in the event of certain corporate
transactions, the Compensation Committee may make equitable adjustments as it
deems necessary or appropriate to any or all of (i) the number and kind of
shares of the Company's Class A Common Stock which may thereafter be issued in
connection with Awards, (ii) the number and kind of shares of the Company's
Class A Common Stock issued or issuable in respect of outstanding Awards, (iii)
the exercise price, grant price or purchase price relating to any Awards, and
(iv) the annual or other limitations on the number of shares with respect to
which Awards may be granted.
ELIGIBILITY
Awards under the Amended Stock Plan may be made to such officers,
directors (including, without limitation, Non-Employee Directors) and
executive, managerial or professional employees of the Company or its
affiliates as the Compensation Committee shall in its sole discretion select.
AWARDS
Subject to the terms of the Amended Stock Plan, the Compensation Committee
may grant to participants Awards as described below. The terms of Award grants
will be set forth in written agreements ("Award Agreements") between the
Company and the participant, which Award Agreements will contain the provisions
referred to below and such other provisions as the Compensation Committee may
determine. Generally, no option or SAR may be exercised and no shares of the
Company's Class A Common Stock underlying any other Award under the Amended
Stock Plan may vest or become deliverable more than 10 years after the date of
grant.
Generally, Awards may be transferred by a grantee only by will or by the
laws of descent and distribution, and may be exercised only by the grantee
during his or her lifetime, provided that the Compensation Committee may
provide in the applicable Award Agreement that options not intended to be
incentive stock options may be transferred without consideration to any member
or members of the grantee's "immediate family" (as defined in the Amended Stock
Plan), a trust for the benefit of the grantee and/or members of his or her
immediate family, or a partnership or limited liability company whose only
partners or stockholders are the grantee and/or members of his or her immediate
family.
OPTIONS
All options when granted are intended to be NQSOs, unless the applicable
Award Agreement explicitly states that an option is intended to be an ISO. If
an option is granted with the stated intent that it be an ISO, and if for any
reason such option (or any portion thereof) shall not qualify as an ISO, then,
to the extent of such nonqualification, such option (or portion) shall be
regarded as a NQSO appropriately granted under the Amended Stock Plan, provided
that such option (or portion) otherwise satisfies the terms and conditions of
the Amended Stock Plan relating to NQSOs generally.
Options may be exercised in amounts and at times determined by the
Compensation Committee. Unless the Award Agreement provides otherwise, an
option may not be exercised prior to the first anniversary of the date of grant
and shall become exercisable with respect to 25% of the shares subject thereto
on each of the first, second, third and fourth anniversaries of the date of
grant. Options that are not exercised during the term established by the
Compensation Committee will expire without value.
30
The purchase price of the Company's Class A Common Stock purchased
pursuant to the exercise of an option ("Option Price") will be no less than 100
percent (100%), and, in case of an ISO granted to an owner of stock possessing
10% or more of the total combined voting power of all classes of stock of the
Company, 110 percent (110%), of the fair market value (as defined in the
Amended Stock Plan) of the Company's Class A Common Stock on the day the option
is granted and as may be adjusted in accordance with the anti-dilution
provisions contained in the Amended Stock Plan. Upon the exercise of any
option, the Option Price must be fully paid by certified or cashier's check, in
shares of the Company's Class A Common Stock equal in fair market value to the
Option Price, or, subject to the approval of the Compensation Committee, by
personal check.
The aggregate fair market value (determined as of the date of grant) of
the shares granted to any participant under the Amended Stock Plan or any other
option plan of the Company or its subsidiaries that may become exercisable for
the first time in any calendar year is limited, with respect to ISOs, to
$100,000.
STOCK APPRECIATION RIGHTS
The Compensation Committee may grant SARs either alone ("unrelated SARs")
or in conjunction with all or part of an option. Upon the exercise of a SAR, a
holder generally is entitled, without payment to the Company, to receive cash,
shares of the Company's Class A Common Stock or any combination thereof, as
determined by the Compensation Committee, in an amount equal to (x) the excess
of the fair market value of one share of the Company's Class A Common Stock on
the exercise date over (i) in the case of a SAR granted in tandem with an
option, the Option Price and (ii) in the case of an unrelated SAR, the
appreciation base (determined pursuant to the Amended Stock Plan), multiplied
by (y) the number of shares of the Company's Class A Common Stock subject to
the SAR or the portion thereof surrendered. SARs vest and become exercisable in
the same manner as options.
RESTRICTED STOCK AWARDS AND UNRESTRICTED STOCK AWARDS
The Compensation Committee may grant restricted or unrestricted stock
Awards alone or in tandem with other Awards under the Amended Stock Plan.
Vesting of restricted stock Awards may be conditioned upon the completion of a
specified period of service, the attainment of specific performance goals or
such other factors as the Compensation Committee may determine. The
Compensation Committee may, in its discretion, require a grantee to pay an
amount to acquire any restricted or unrestricted stock, which amount may be
refunded to such grantee upon such events as the Compensation Committee may
determine. During the restricted period, the grantee may not transfer, assign
or otherwise encumber or dispose of the restricted stock, except as permitted
by the Compensation Committee. During the restricted period, the grantee will
have the right to vote the restricted stock and/or to receive any cash
dividends if and to the extent so provided by the Compensation Committee.
The Compensation Committee may grant stock Awards intended to constitute
performance-based compensation within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The following rules
will apply to such performance based stock Awards (as such rules may be
modified by the Compensation Committee to comply with Section 162(m) and any
amendments, revisions or successor provisions): (i) payments under the stock
Award shall be made solely on account of the attainment of one or more
objective performance goals established in writing by the Compensation
Committee not later than 90 days after the commencement of the period of
service to which the performance Award relates (or, if less, 25% of such period
of service); (ii) the performance goals to which the stock Award relates shall
be based on one or more of the following business criteria applied to the
participant, a business unit of the Company and/or an affiliate of the Company:
stock price, market share, sales, earnings per share, return on equity, assets,
capital or investment, net income, operating income, EBITDA, net sales growth,
expense targets, working capital targets relating to inventory and/or accounts
receivable, operating margin, planning accuracy (as measured by comparing
planned results to actual results), and implementation or completion of
critical projects or processes; (iii) in any year, a participant may not be
granted stock Awards covering a total of more than 100,000 shares of the
Company's Class A Common Stock; and (iv) once granted, the Compensation
Committee may not increase the amount
31
payable under such stock Award; provided, however, that whether or not a stock
Award is intended to constitute qualified performance-based compensation within
the meaning of Section 162(m) of the Code, the Compensation Committee may make
appropriate adjustments in performance goals under an Award to reflect the
impact of extraordinary items (as defined in the Amended Stock Plan) not
reflected in such goals.
PERFORMANCE AWARDS
The Compensation Committee may grant performance Awards relating to a
specified number of shares to be delivered based upon attainment over a
specified performance cycle of specified measures of the performance of the
Company, one or more of its subsidiaries or affiliates or the participant as
may be established by the Compensation Committee. The Compensation Committee
may provide for full or partial credit, prior to completion of such performance
cycle or achievement of the degree of attainment of the measures of performance
specified in connection with such performance unit, in the event of the
participant's death, normal retirement, early retirement, or total or permanent
disability, or in other circumstances.
The Compensation Committee may grant performance Awards intended to
constitute performance-based compensation within the meaning of Section 162(m)
of the Code. The following rules will apply to such performance Awards (as such
rules may be modified by the Compensation Committee to comply with Section
162(m) and any amendments, revisions or successor provisions): (i) payments
under the performance Award shall be made solely on account of the attainment
of one or more objective performance goals established in writing by the
Compensation Committee not later than 90 days after the commencement of the
period of service to which the performance Award relates (or, if less, 25% of
such period of service); (ii) the performance goals to which the performance
Award relates shall be based on one or more of the following business criteria
applied to the participant, a business unit of the Company and/or an affiliate
of the Company: stock price, market share, sales, earnings per share, return on
equity, assets, capital or investment, net income, operating income, EBITDA,
net sales growth, expense targets, working capital targets relating to
inventory and/or accounts receivable, operating margin, planning accuracy (as
measured by comparing planned results to actual results), and implementation or
completion of critical projects or processes; (iii) in any year, a participant
may not be granted performance Awards covering a total of more than 100,000
shares of the Company's Class A Common Stock; and (iv) once granted, the
Compensation Committee may not increase the amount payable under such
performance Award; provided, however, that whether or not a performance Award
is intended to constitute qualified performance-based compensation within the
meaning of Section 162(m) of the Code, the Compensation Committee may make
appropriate adjustments in performance goals under an Award to reflect the
impact of extraordinary items (as defined in the Amended Stock Plan) not
reflected in such goals.
EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICES
Except as otherwise provided in the applicable Award Agreement, the
following will apply upon the grantee's termination of employment (or services
in the case of Non-Employee Directors) with the Company and its affiliates.
Except as described below, if the employment (or services in the case of
Non-Employee Directors) of the grantee terminates, exercisable options and SARs
will remain exercisable, and any payment or notice provided for under the terms
of the vested portion of any other outstanding Award may be given, for a period
of 90 days from the date of any such termination, and any unexercisable Awards
or parts thereof will be cancelled and the grantee may not satisfy any
condition limitation or restriction which is unsatisfied, in each case as of
the date of termination.
If the grantee's employment (or provision of services, in the case of
Non-Employee Directors) is terminated for "good reason" (as defined in the
Company's Executive Severance Policy) or for "cause" under an applicable
employment agreement or, in the case of a Non-Employee Director, removal for
cause as set forth in the Company's By-laws from time to time, or by the
grantee other than for "good reason" or "cause" under an applicable employment
agreement, all outstanding Awards previously granted to such grantee (whether
or not then vested or exercisable) shall be cancelled and the portion of all
restricted stock Awards which are unvested or as to which restrictions have not
lapsed shall be
32
cancelled and the grantee may not satisfy any condition limitation or
restriction which is unsatisfied, in each case as of the date of termination.
If the grantee voluntarily retires with the Company's consent or retires as a
Non-Employee Director with the consent of the Company or the grantee's
employment is or services as a Non-Employee Director are terminated due to
permanent disability, then options or stock appreciation rights vested and
exercisable as of the date of termination would be exercisable for only one
year from the date of termination and unvested options and stock appreciation
rights would expire and unvested restricted shares and any other Awards would
be forfeited on the date of termination. Upon the grantee's death during
employment (or services in the case of Non-Employee Directors) or during the
period under which continued exercisability is provided for as described above,
options or stock appreciation rights exercisable as of the date of the
grantee's death would be exercisable by the estate of the deceased grantee for
1 year from the date of the grantee's death and unvested options or stock
appreciation rights would expire and unvested restricted shares and any other
Awards would be forfeited. Upon the termination of the grantee for any other
reason, vested options or stock appreciation rights would be exercisable for 90
days and unvested options and stock appreciation rights would expire and
unvested restricted shares and any other Awards would be forfeited on the date
of termination. Additionally, if a grantee ceases employment and accepts
employment with a competitor in violation of the Company's standard Employee
Agreement as to Confidentiality and Non-Competition agreement (or any other
applicable non-compete agreement), then profits realized from the exercise of
any options or stock appreciation rights during the 12-month period prior to
the date of termination would be repayable to the Company and the value of any
vested restricted shares or other Awards for which consideration was received
during the 12-month period prior to the date of termination would be repayable
to the Company.
EFFECTS OF CERTAIN CHANGES
The Amended Stock Plan provides that in the event that the Company is to
be merged or consolidated with another corporation or reorganized or
liquidated, then the Compensation Committee may, in its discretion, provide
that Awards granted to a grantee will terminate unless exercised within the
period determined by the Compensation Committee (not less than 30 days), in
which case the Compensation Committee must accelerate the exercisability and
vesting of such Awards.
AMENDMENT; TERMINATION
The Company's Board of Directors may amend, suspend or discontinue the
Amended Stock Plan at any time except that, unless approved by a majority vote
of the Company's stockholders, no such amendment may (i) materially increase
the maximum number of shares as to which Awards may be granted under the
Amended Stock Plan, except for adjustments to reflect stock dividends or other
recapitalizations affecting the number or kind of outstanding shares, (ii)
materially increase the benefits accruing to Amended Stock Plan participants,
(iii) materially change the requirements as to eligibility for participation in
the Amended Stock Plan, (iv) permit an option or unrelated SAR to be
exercisable, a restricted stock Award to vest, or shares of the Company's Class
A Common Stock to be delivered pursuant to a performance Award, more than 10
years after the date of grant (except where such event occurs due to the death
of the grantee), (v) permit a stock option to have an option exercise price, or
a SAR to have an appreciation base, of less than 100% of the fair market value
of a share of the Company's Class A Common Stock on the date the stock option
or SAR is granted or (vi) extend the term of the Amended Stock Plan beyond the
initial 10-year period.
PAYMENT OF TAXES
Whenever cash is to be paid pursuant to an Award, the Company shall have
the right to deduct therefrom an amount sufficient to satisfy any federal,
state and local withholding tax requirements related thereto. Whenever shares
of the Company's Class A Common Stock are to be delivered pursuant to an Award,
the Company shall have the right to require the grantee to remit to the Company
in cash an amount sufficient to satisfy any federal, state and local
withholding tax requirements related thereto. With the approval of the
Compensation Committee, a grantee may satisfy the foregoing requirement by
delivering unrestricted shares of the Company's Class A Common Stock owned by
the grantee for at least
33
six months having a value equal to the amount otherwise payable or by electing
to have the Company withhold from delivery shares of the Company's Class A
Common Stock having a value equal to the amount of tax to be withheld. Such
shares shall be valued at their fair market value on the date on which the
amount of tax to be withheld is determined. Such a withholding election may be
made with respect to all or any portion of the shares to be delivered pursuant
to an Award.
CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion is a brief summary of the principal United States
Federal income tax consequences under current Federal income tax laws relating
to Awards under the Amended Stock Plan. This summary is not intended to be
exhaustive and, among other things, does not describe state, local or foreign
income and other tax consequences.
Non-Qualified Stock Options. An optionee will not recognize any taxable
income upon the grant of an NQSO and the Company will not be entitled to a tax
deduction with respect to the grant of an NQSO. Upon exercise of an NQSO, the
excess of the fair market value of the Company's Class A Common Stock on the
exercise date over the option exercise price will be taxable as compensation
income to the optionee and will be subject to applicable withholding taxes. The
Company will generally be entitled to a tax deduction at such time in the
amount of such compensation income. The optionee's tax basis for the Company's
Class A Common Stock received pursuant to the exercise of an NQSO will equal
the sum of the compensation income recognized and the exercise price.
In the event of a sale of the Company's Class A Common Stock received upon
the exercise of an NQSO, any appreciation or depreciation after the exercise
date generally will be taxed as capital gain or loss and will be long-term
capital gain or loss if the holding period for such Class A Common Stock is
more than one year.
Incentive Stock Options. An optionee will not recognize any taxable income
at the time of grant or timely exercise of an ISO and the Company will not be
entitled to a tax deduction with respect to such grant or exercise. Exercise of
an ISO may, however, give rise to taxable compensation income subject to
applicable withholding taxes, and a tax deduction to the Company, if the ISO is
not exercised on a timely basis (generally, while the optionee is employed by
the Company or within 90 days after termination of employment) or if the
optionee subsequently engages in a "disqualifying disposition," as described
below.
A sale or exchange by an optionee of shares acquired upon the exercise of
an ISO more than one year after the transfer of the shares to such optionee and
more than two years after the date of grant of the ISO will result in any
difference between the net sale proceeds and the exercise price being treated
as long-term capital gain (or loss) to the optionee. If such sale or exchange
takes place within two years after the date of grant of the ISO or within one
year from the date of transfer of the ISO shares to the optionee, such sale or
exchange will generally constitute a "disqualifying disposition" of such shares
that will have the following results: any excess of (i) the lesser of (a) the
fair market value of the shares at the time of exercise of the ISO and (b) the
amount realized on such disqualifying disposition of the shares over (ii) the
option exercise price of such shares, will be ordinary income to the optionee,
subject to applicable withholding taxes, and the Company will be entitled to a
tax deduction in the amount of such income. Any further gain or loss after the
date of exercise generally will qualify as a capital gain or loss and will not
result in any deduction by the Company.
Restricted Stock. A grantee will not recognize any income upon the receipt
of restricted stock unless the grantee elects under Section 83(b) of the Code,
within thirty days of such receipt, to recognize ordinary income in an amount
equal to the fair market value of the restricted stock at the time of receipt,
less any amount paid for the shares. If the election is made, the holder will
not be allowed a deduction for amounts subsequently required to be returned to
the Company. If the election is not made, the holder will generally recognize
ordinary income, on the date that the restrictions to which the restricted
stock is subject are removed, in an amount equal to the fair market value of
such shares on such date, less any amount paid for the shares. At the time the
holder recognizes ordinary income, the Company generally will be entitled to a
deduction in the same amount. Recipients of restricted stock awards in 2001
were prohibited from making an election under Section 83(b) of the Code.
34
Unrestricted Stock. A grantee generally will be taxed upon the grant of an
Award of unrestricted stock. However, if at the time the shares are granted
they are subject to a substantial risk of forfeiture, as defined in the Code
(including as a result of potential liability under Section 16(b) of the
Exchange Act), the grantee will be taxed at the time the shares are no longer
subject to such risk of forfeiture, subject to the grantee making an effective
election under Section 83(b) of the Code. The amount of income recognized by
the grantee will be equal to the fair market value of the shares on the date
that the income is recognized. The Company generally will be entitled to a
deduction at the time and in the amount that the employee recognizes ordinary
income.
SARs. The grant of a SAR will not result in income for the grantee or in a
tax deduction for the Company. Upon the settlement of such a right, the grantee
will recognize ordinary income equal to the aggregate value of the payment
received, and the Company generally will be entitled to a tax deduction in the
same amount.
Performance Awards. Generally, the grant of performance Awards has no
Federal income tax consequences at the time of grant. Rather, at the time the
shares are no longer subject to a substantial risk of forfeiture (as defined in
the Code) the holder will recognize ordinary income in an amount equal to the
fair market value of such shares. A holder may, however, elect to be taxed at
the time of the grant in accordance with Section 83(b) of the Code. The Company
generally will be entitled to a deduction at the time and in the amount that
the holder recognizes ordinary income.
Certain Limitations on Deductibility of Executive Compensation. Section
162(m) of the Code generally disallows a publicly held corporation a deduction
for compensation in excess of $1 million per year paid to the chief executive
officer (the "CEO") or any of the four most highly compensated executive
officers of the Company (other than the CEO) (collectively, the "Covered
Officers"). Based upon a special transition rule contained in the Treasury
regulations for private corporations that complete an initial public offering,
the Company has, to the fullest extent possible under such regulations, treated
Awards under the Amended Stock Plan made to Covered Officers as not subject to
the deduction limitations of Section 162(m) of the Code. Pursuant to Section
162(m) of the Code, the transition rule is no longer available for Awards under
the Amended Stock Plan upon grant of Awards with respect to all shares
originally authorized for Awards under the Amended Stock Plan, which in the
case of the Original Stock Plan was 5,000,000 shares, and, accordingly, the
deduction limitation of Section 162(m) of the Code applies to all grants under
the Amended Stock Plan after Awards with respect to the initial 5,000,000
shares were granted. However, an exception to the deduction limitation of
Section 162(m) applies to certain performance-based compensation provided that
the plan pursuant to which such compensation will be paid has been approved by
stockholders in a separate vote and certain other requirements are met. The
Third Amended Stock Plan, which increased the number of shares authorized for
issuance under the Original Stock Plan to 8,500,000 shares, was approved by the
Company's stockholders at the June 1, 2001 Annual Meeting, so that the Company
believes that annual Award grants under the Third Amended Stock Plan qualify
for the performance-based compensation exception to Section 162(m) of the Code.
If the adoption of the Fourth Amended Stock Plan is approved by the Company's
stockholders at the 2002 Annual Meeting, the Company believes that the Awards
granted under the Fourth Amended Stock Plan should qualify for the
performance-based compensation exception to Section 162(m) of the Code.
Nevertheless, the Compensation Committee will maintain the discretion to
authorize Awards under the Fourth Amended Stock Plan that do not qualify for an
exception to the deduction limitation if the Compensation Committee believes it
is necessary or appropriate under the circumstances.
AMENDED STOCK PLAN AWARDS, BENEFITS AND ADDITIONAL INFORMATION
The following table shows the grants of Awards made during 2001 under the
Amended Stock Plan to the Chief Executive Officer and the other Named Executive
Officers, all current executive officers as a group, all current directors who
are not executive officers as a group (the "Non-Employee Directors"), all
current employees who are not executive officers as a group, and each other
person who has received five percent or more of such options. The closing price
per share on the NYSE of the Company's Class A Common Stock as of December 31,
2001 was $6.66.
35
STOCK OPTION AND RESTRICTED SHARE GRANTS IN 2001
NAME OPTION GRANTS IN 2001 RESTRICTED SHARES
---- --------------------- -----------------
Ronald O. Perelman ............................ 225,000 120,000
Jeffrey M. Nugent (a) ......................... 75,000 100,000
Douglas H. Greeff ............................. 50,000 50,000
Paul E. Shapiro ............................... 100,000 50,000
Executive Group (b) ........................... 225,000 200,000
Non-Executive Officer Employee Group .......... 570,100 350,000
Non-Employee Director Group ................... 67,500 --
----------
(a) Mr. Nugent was President and Chief Executive Officer until February 14,
2002.
(b) The options granted to the Executive Group include options granted to
Messrs. Nugent, Greeff and Shapiro.
Future grants under the Fourth Amended Stock Plan will be made at the
discretion of the Compensation Committee and, accordingly, are not yet
determinable. In addition, benefits under the Fourth Amended Stock Plan will
depend on a number of factors, including the fair market value of the Company's
Class A Common Stock on future dates and the exercise decisions made by the
optionees. Consequently it is not possible to determine the benefits that might
be received by optionees receiving discretionary grants under the Fourth
Amended Stock Plan. However, certain executive officers' employment agreements
provide that management shall recommend to the Compensation Committee that such
officers be granted options to purchase a specified number of shares annually
(See "Employment Agreements and Termination of Employment Arrangements").
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The approval of the Fourth Amended Stock Plan will require the affirmative
vote of a majority of the total number of votes of outstanding shares of the
Company's Common Stock and Series B Preferred Stock present in person or
represented by proxy at the 2002 Annual Meeting and entitled to vote. In
determining whether approval of the Fourth Amended Stock Plan has received the
requisite number of affirmative votes, abstentions will be counted and will
have the same effect as a vote against the proposal. MacAndrews & Forbes has
informed the Company that it will vote FOR approval of the Fourth Amended Stock
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE FOURTH AMENDED STOCK PLAN.
PROPOSAL NO. 5
STOCKHOLDER PROPOSAL REQUESTING THE IMPLEMENTATION
OF A CODE OF CORPORATE CONDUCT BASED ON THE
CONVENTIONS OF THE INTERNATIONAL LABOR ORGANIZATION
The Office of the Comptroller of the City of New York, located at 1 Centre
Street, New York, New York, 10007-2341, which is the custodian and trustee of
the New York City Employees' Retirement System, the New York City Teachers'
Retirement System, the New York City Fire Department Pension Fund and the New
York City Police Pension Fund (the "Funds"), has informed the Company that the
Funds own at least $2,000 worth of Common Stock of the Company and that the
Funds intend to present the following proposal for consideration at the 2002
Annual Meeting of Stockholders of the Company (the "Funds' Proposal"):
"Whereas, Revlon, Inc. currently has extensive overseas operations,
and
Whereas, reports of human rights abuses in the overseas subsidiaries
and suppliers of some U.S.-based corporations has led to an increased
public awareness of the problems of child labor, "sweatshop" conditions,
and the denial of labor rights in U.S. corporate overseas operations, and
36
Whereas, corporate violations of human rights in these overseas
operations can lead to negative publicity, public protests, and a loss of
consumer confidence which can have a negative impact on shareholder value,
and
Whereas, a number of corporations have implemented independent
monitoring programs with respected human rights and religious organizations
to strengthen compliance with international human rights norms in
subsidiary and supplier factories, and
Whereas, these standards incorporate the conventions of the United
Nations International Labor Organization (ILO) on workplace human rights
which include the following principles:
1) All workers have the right to form and join trade unions and to
bargain collectively. (ILO Conventions 87 and 98)
2) Workers' representatives shall not be the subject of
discrimination and shall have access to all workplaces necessary
to enable them to carry out their representation functions. (ILO
Convention 135)
3) There shall be no discrimination or intimidation in employment.
Equality of opportunity and treatment shall be provided
regardless of race, color, sex, religion, political opinion, age,
nationality, social origin, or other distinguishing
characteristics. (ILO Convention 100 and 111)
4) Employment shall be freely chosen. There shall be no use of
force, including bonded or prison labor. (ILO Conventions 29 and
105)
5) There shall be no use of child labor. (ILO Convention 138), and,
Whereas, independent monitoring of corporate adherence to these
standards is essential if consumer and investor confidence in our company's
commitment to human rights is to be maintained.
Therefore, be it resolved that the shareholders request that the
company commit itself to the implementation of a code of corporate conduct
based on the aforementioned ILO human rights standards by its international
suppliers and in its own international production facilities and commit to
a program of outside, independent monitoring of compliance with these
standards."
THE COMPANY'S STATEMENT IN OPPOSITION TO THE FUNDS' PROPOSAL
THE BOARD OF DIRECTORS OPPOSES THE FUNDS' PROPOSAL AND BELIEVES THAT ITS
ADOPTION WOULD NOT BE IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS
FOR PRINCIPALLY THE FOLLOWING REASONS:
1. Implementation of the Funds' Proposal would be Duplicative of the
Company's Existing Policies with respect to Workplace Human Rights. The Board
believes the adoption of the Funds' proposal is unnecessary because the Company
has a long history of and remains strongly committed to business ethics,
compliance with all applicable laws relating to human and workers' rights and
maintaining high standards with respect to workplace human rights. The
Company's commitment to the principles contained in the Funds' Proposal is
evidenced by the policies set forth in the Company's Code of Business Conduct
(the "Code of Conduct") that was adopted in 1993. The Code of Conduct provides
for a comprehensive program to monitor and ensure compliance with the letter
and spirit of all applicable laws in every country in which the Company does
business, and it requires the same of its suppliers. By distributing the Code
of Conduct throughout all of its worldwide locations, the Company ensures that
such commitment is communicated uniformly across all levels of employees and
across all borders. The monitoring program required by the Code of Conduct has
proven to be effective in terms of ensuring compliance with the standards set
forth in the Code of Conduct and under applicable laws. The Board believes that
the Company's policies and practices fully comport with the goals expressed in
the Funds' Proposal and that the Company can continue to ensure workplace human
rights by continuing to apply and enforce the existing Code of Conduct, rather
than adopting a new code of corporate conduct, the requirements and incremental
expenses of which would be unnecessary and duplicative.
37
2. Costs Associated with the Funds' Proposal. The Board believes the
significant costs the Company would incur to implement the new code requested
by the Funds' Proposal would be a waste of the Company's resources. The
implementation of a new code would result in the Company expending substantial
human and financial resources to draft, adopt, disseminate and enforce such new
code. In addition, the Company would incur significant expenses associated with
the independent monitoring of compliance required by the Funds' Proposal. The
Board believes that these additional costs are not necessary given the
Company's current Code of Conduct, its comprehensive system of enforcement and
its long history of maintaining high standards with respect to workplace human
rights.
3. The ILO Conventions are not Designed for Corporations. The Funds'
proposal requests that the Company commit itself to the implementation of a
code of corporate conduct "based upon" the conventions of the United Nations'
International Labor Organization that are cited in the proposal (the "ILO
Conventions"). The ILO Conventions, however, are not a list of workplace human
rights standards designed for companies to adopt. Rather, in the words of the
ILO, "the ILO Conventions are international treaties, subject to ratification
by ILO member States" to "orient national policy and action" concerning
"working conditions and practices" (quoted language excerpted from
www.ilo.org). In addition, due to the nature of the ILO Conventions, it is
unclear what requirements would be imposed upon the Company by a "code of
corporate conduct" that is based upon the ILO Conventions. Moreover, the
workplace human rights standards contained in the ILO Conventions are far from
controversial, as indicated by the fact that the United States has adopted very
few of the ILO Conventions. Accordingly, the Board believes that it is not
appropriate or advisable to base a code of corporate conduct upon the ILO
Conventions.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Approval of the Funds' Proposal will require the affirmative vote of a
majority of the total number of votes of outstanding shares of the Company's
Common Stock and Series B Preferred Stock present in person or represented by
proxy at the 2002 Annual Meeting and entitled to vote. In determining whether
approval of the Funds' Proposal has received the requisite number of
affirmative votes, abstentions will be counted and will have the same effect as
a vote against the proposal. Proxies received by us will be voted "AGAINST" the
Funds' Proposal unless a contrary vote is specified. MacAndrews & Forbes has
informed the Company that it will vote AGAINST approval of the Funds' Proposal.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "AGAINST" THE FUNDS' PROPOSAL REQUESTING THE
IMPLEMENTATION OF A CODE OF CORPORATE CONDUCT BASED UPON THE ILO CONVENTIONS.
GENERAL RULES APPLICABLE TO STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, any holder of at least one
percent or $2,000 in market value of shares of Common Stock held for at least
one year who desires to have a proposal presented in the Company's proxy
material for use in connection with the Annual Meeting of Stockholders to be
held in 2003 must transmit that proposal (along with his or her name, address,
the number of shares of Common Stock that he or she holds of record or
beneficially, the dates on which the securities were acquired and documentary
support for a claim of beneficial ownership) in writing by certified
mail--return receipt requested to the Secretary of the Company at Revlon, Inc.,
625 Madison Avenue, New York, New York 10022. Proposals of stockholders
intended to be presented in the Company's proxy material for use in connection
with the Annual Meeting of Stockholders to be held in 2003 must be received by
the Secretary of the Company not later than December 30, 2002, except as
discussed in the next paragraph.
Effective June 30, 2001, the Company's Board of Directors amended Article
II, Section 3 of the Company's By-laws, regarding the nature of business to be
conducted at meetings of stockholders, including the 2002 Annual Meeting.
Pursuant to Article II, Section 3 of the Company's By-laws, in order for
business to be properly brought before an annual meeting (other than business
specified in the notice
38
of meeting or any supplement thereto), notice of such business, including among
other things, (i) information regarding the proposed business to be brought
before such meeting; (ii) the identity of the stockholder; and (iii) the class
of shares of the Company which are owned beneficially or of record by such
stockholder must be received by the Company not less than sixty (60) days nor
more than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting; provided, however, that in the event that the annual
meeting is called for a date that is not within thirty (30) days before or
after such anniversary date, notice by the stockholder in order to be timely
must be received not later than the close of business on the tenth day
following the day on which such notice of the date of the annual meeting was
mailed or such disclosure of the date of the annual meeting was made, whichever
occurs first. As a result, as the 2002 Annual Meeting is within 30 days before
or after the anniversary date of the 2001 Annual Meeting of Stockholders, then
a notice of a stockholder nomination for candidates for the Board of Directors
or any other stockholder proposal (other than stockholder proposals submitted
pursuant to Rule 14a-8 under the Exchange Act) must have been received by the
Company between March 3, 2002 and April 2, 2002. No such proposals were
received. In addition, if the Company's Annual Meeting of Stockholders for 2003
is within 30 days before or after the anniversary date of the 2002 Annual
Meeting, then notice of a stockholder nomination for candidates for the Board
of Directors or any other stockholder proposal (other than stockholder
proposals submitted pursuant to Rule 14a-8 under the Exchange Act) must be
received by the Company between March 2, 2003 and April 1, 2003.
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Exchange Act. The amendment
to Rule 14a-4(c)(1) governs the Company's use of its discretionary proxy voting
authority with respect to a stockholder proposal that is not addressed in the
Company's proxy statement. Such amendment provides that if a proponent of a
proposal fails to notify the Company at least 45 days prior to the first
anniversary date of the date of mailing of the prior year's proxy statement (or
a date specified in an advance notice provision), then the Company will be
allowed to use its discretionary voting authority when the proposal is raised
at the meeting, without any discussion of the matter in the proxy statement.
With respect to the 2002 Annual Meeting, if the Company has not been
provided with notice of a stockholder proposal (other than a proposal which has
been properly submitted for inclusion in the Company's proxy statement in a
timely manner), between March 3, 2002 and April 2, 2002, the Company will be
permitted to use its voting authority as outlined above. With respect to the
Company's 2003 Annual Meeting of Stockholders, if the Company is not provided
notice of a stockholder proposal (other than a proposal which has been properly
submitted for inclusion in the Company's proxy statement in a timely manner),
between March 2, 2003 and April 1, 2003, the Company will be permitted to use
its voting authority as outlined above.
Additionally, holders of shares of Common Stock desiring to have proposals
submitted for consideration at future meetings of the stockholders should
consult the applicable rules and regulations of the SEC, including Rule 14a-8
under the Exchange Act, with respect to such proposals, including the
permissible number and length of proposals and other matters governed by such
rules and regulations.
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 2001, and any Quarterly Reports on Form
10-Q filed thereafter, without charge, upon written request to Robert K.
Kretzman, Senior Vice President, General Counsel and Corporate Secretary,
Revlon, Inc., 625 Madison Avenue, New York, New York 10022. Each such request
must set forth a good faith representation that, as of the Record Date, April
2, 2002, the person making the request was a beneficial owner of shares of the
Company's Common Stock entitled to vote. In order to ensure timely delivery of
such documents prior to the 2002 Annual Meeting, any request should be received
by the Company promptly.
Stockholders who are not stockholders of record who wish to attend the
2002 Annual Meeting should bring written evidence of beneficial ownership of
the Company's Common Stock, together with a form of picture identification, to
the 2002 Annual Meeting.
39
For your convenience, please note such Annual Report on Form 10-K is
available on the SEC's website at www.sec.gov, through the Filings and Forms
(EDGAR) pages, as well as through the Company's corporate website at
www.revloninc.com by clicking on "Investor Relations" and then "Financial
Reports and Filings". Additionally, any person wishing to receive an electronic
copy of Revlon's Annual Report on Form 10-K for the fiscal year ended December
31, 2001, without charge, may send an email making such a request and including
a return email address to robert.kretzman@revlon.com.
OTHER BUSINESS
Management does not intend to present any other items of business and is
not aware of any matters other than those set forth in this proxy statement
that will be presented for action at the 2002 Annual Meeting. However, if any
other matters properly come before the 2002 Annual Meeting, the persons named
in the enclosed proxy intend to vote the shares of Common Stock and Series B
Preferred Stock that they represent in accordance with their best judgment.
New York, New York
April 29, 2002
By Order of the Board of Directors
Robert K. Kretzman
Senior Vice President, General Counsel
and Secretary
40
EXHIBIT 1
CERTIFICATE OF THE DESIGNATIONS,
POWERS, PREFERENCES AND RIGHTS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
REVLON, INC.
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
Revlon, Inc., a Delaware corporation (the "Company"), hereby certifies
that the following resolution was adopted by the Board of Directors of the
Company:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company (the "Board of Directors") by the
provisions of the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation"), there is hereby created, out of
the 20,000,000 shares of Preferred Stock, par value $0.01 per share, of the
Company authorized in Article Fourth of the Certificate of Incorporation (the
"Preferred Stock"), a series of the Preferred Stock consisting of 4,333 shares,
which series shall have the following powers, designations, preferences and
relative, participating, optional or other rights, and the following
qualifications, limitations and restrictions (in addition to any powers,
designations, preferences and relative, participating, optional or other
rights, and any qualifications, limitations and restrictions, set forth in the
Certificate of Incorporation which are applicable to the Preferred Stock):
1. Designation of Amount.
The shares of Preferred Stock created hereby shall be designated the
"Series B Convertible Preferred Stock" (the "Series B Preferred Stock") and the
authorized number of shares constituting such series shall be 4,333.
2. Ranking; Term.
(a) The Series B Preferred Stock shall, with respect to rights to
distributions upon the liquidation, winding-up or dissolution of the Company,
rank senior to all classes of common stock, par value $0.01 per share, of the
Company (the "Common Stock") and to each other class or series of capital stock
or other equity securities of the Company authorized, issued or otherwise
established; provided, however, that the holders of a majority of the
outstanding shares of Series B Preferred Stock, in accordance with the
provisions of Section 7(b) hereof, may approve the authorization, issuance or
establishment of a series of Preferred Stock the terms of which rank on a
parity with or senior to the Series B Preferred Stock as to dividends and
distributions upon the liquidation, winding-up or dissolution of the Company.
(b) The Series B Preferred Stock shall be perpetual and may not be
redeemed, purchased, retired or otherwise acquired by the Company unless such
redemption, purchase, retirement or other acquisition by the Company is
expressly authorized herein and consummated in accordance with the provisions
specified herein; provided, however, that the Company may, with the written
consent of a holder of outstanding shares of Series B Preferred Stock, redeem,
purchase, retire or otherwise acquire any or all of the outstanding shares of
Series B Preferred Stock held by such holder.
3. Dividends
In the event any dividends are declared or paid or any other distribution
is made on or with respect to the Class A Common Stock, par value $0.01 per
share, of the Company ("Class A Common Stock"), the holders of the Series B
Preferred Stock as of the record date established by the Board of Directors for
such dividend or distribution on the Class A Common Stock shall be entitled to
receive dividends (the "Dividends") in an amount (whether in the form of cash,
securities or other property) per share of Series
1
B Preferred Stock, as if the Series B Preferred Stock had been converted into
shares of Class A Common Stock as of the date immediately prior to the date for
determining the holders of Class A Common Stock entitled to receive such
dividend or distribution, equal to the amount (and in the form) of the
dividends declared or paid or distribution made on or with respect to each
share of Class A Common Stock, such Dividends to be payable on the same payment
date or distribution date as the dividend or distribution on the Class A Common
Stock established by the Board of Directors. The record date for any such
Dividends shall be the record date for the applicable dividend or distribution
on the Class A Common Stock, and any such Dividends shall be payable to the
persons in whose name the Series B Preferred Stock is registered at the close
of business on the applicable record date.
No dividend shall be paid or declared on any share of Class A Common
Stock, unless a dividend, payable in the same consideration and manner, is
simultaneously paid or declared, as the case may be, on each share of Series B
Preferred Stock in an amount determined as set forth in paragraph (a) above.
For purposes hereof, the term "dividends" shall include any pro rata
distribution by the Company of cash, property, securities (including, but not
limited to, rights, warrants or options) or other property or assets to the
holders of the Class A Common Stock, whether or not paid out of capital,
surplus or earnings.
4. Liquidation Preference.
In the event of a liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary (a "Liquidation"), the holders of the Series B
Preferred Stock then outstanding shall be entitled to receive out of the
available assets of the Company, whether such assets are stated capital or
surplus of any nature, an amount on such date equal to $720.0554 per share of
Series B Preferred Stock plus the amount of any declared but unpaid Dividends
as of such date (the "Liquidation Preference"). Such payment shall be made
before any payment shall be made or any assets distributed to the holders of
any class or series of the Common Stock or any other class or series of the
Company's capital stock ranking junior as to liquidation rights to the Series B
Preferred Stock. If upon any Liquidation the assets available for payment of
the Liquidation Preference are insufficient to permit the payment to the
holders of the Series B Preferred Stock of the full preferential amounts
described in this Section 4, then all the available assets shall be distributed
among the holders of the then outstanding shares of Series B Preferred Stock
and the then outstanding shares of capital stock ranking on a parity with the
Series B Preferred Stock as to distributions upon Liquidation, pro rata
according to the number of then outstanding shares of Series B Preferred Stock
and then outstanding shares of parity stock held by each holder thereof.
5. Optional Redemption by Company.
(a) At any time after thirty (30) days following the Requisite Stockholder
Approval (as defined herein), the Company may, in accordance with the
provisions of Section 5(b) hereof, redeem all or any part of the then
outstanding shares of Series B Preferred Stock for cash at a redemption price
equal to the Liquidation Preference thereof as of such date.
(b) In order to exercise its right of optional redemption, the Company
shall, not more than ninety (90) nor less than sixty (60) days prior to the
redemption date, give to each holder of record of the Series B Preferred Stock,
at such holder's address as it shall appear upon the stock register of the
Company on such date, notice by first class mail, postage prepaid. Each such
notice of redemption shall be irrevocable and shall specify the date that is
the redemption date (the "Optional Redemption Date"), the redemption price, the
identification of the shares to be redeemed, the place or places of payment and
that payment will be made upon presentation and surrender of the certificate(s)
evidencing the shares of Series B Preferred Stock to be redeemed.
(c) The holders of the Series B Preferred Stock shall retain their right
to convert such shares pursuant to Section 8 hereof until the close of business
on the last Business Day preceding the Optional Redemption Date.
2
6. Restricted Payments; Status of Redeemed Shares.
(a) After the Optional Redemption Date, unless and until the full
redemption price for the shares of Series B Preferred Stock to be redeemed has
been paid to, or set aside in trust with a bank or trust company, (i) no
dividends or other distribution shall be paid or declared or set aside for
payment on any capital stock or other securities of the Company (other than
dividends payable in Common Stock), and (ii) no shares of capital stock or
other securities of the Company or any Subsidiary shall be redeemed, retired,
purchased or otherwise acquired for any consideration (or any payment made to
or available for a sinking fund for the redemption of any such shares) by the
Company.
(b) Any shares of Series B Preferred Stock which shall at any time have
been redeemed pursuant to Section 5 hereof shall, after such redemption, have
the status of authorized but unissued shares of Preferred Stock, without
designation as to series.
7. Voting Rights.
(a) The holders of outstanding shares of the Series B Preferred Stock:
(i) shall be entitled to vote together with the holders of the
Common Stock as a single class on all matters submitted for a vote of
holders of Common Stock;
(ii) shall have such other voting rights as are specified in the
Certificate of Incorporation or as otherwise provided by Delaware law;
and
(iii) shall be entitled to receive notice of any meeting of the
stockholders of the Company in accordance with the Certificate of
Incorporation and By-laws of the Company.
For purposes of the voting rights set forth in this Section 7(a), each
share of Series B Preferred Stock shall entitle the holder thereof to cast one
vote for each whole vote that such holder would be entitled to cast had such
holder converted its Series B Preferred Stock into shares of Class A Common
Stock as of the date immediately prior to the record date for determining the
stockholders of the Company eligible to vote on any such matter.
(b) In addition to the other voting rights set forth herein, so long as
any shares of Series B Preferred Stock remain outstanding, the Company shall
not, without the written consent or affirmative vote of the holders of at least
a majority of the outstanding shares of Series B Preferred Stock voting
separately as one class, (i) amend, alter or repeal, whether by merger,
consolidation, combination, reclassification or otherwise, the Certificate of
Incorporation or By-laws of the Company or any provisions thereof (including
the adoption of a new provision thereof) if such amendment, alteration or
repeal would adversely alter or change the rights, preferences or privileges of
the Series B Preferred Stock, (ii) create, authorize or issue any class, series
or shares of Preferred Stock or any other class or series of capital stock or
other equity securities of the Company ranking either as to payment of
dividends or distribution of assets upon Liquidation (x) prior to the Series B
Preferred Stock or (y) on a parity with the Series B Preferred Stock, or (iii)
undertake any action (x) the valid consummation of which would require the
approval of the Company's stockholders pursuant to the Company's Certificate of
Incorporation or Bylaws or as required by applicable law and (y) the direct or
indirect result of which would adversely affect or change the rights,
preferences or privileges of the Series B Preferred Stock. The vote of the
holders of at least two-thirds of the outstanding shares of Series B Preferred
Stock, voting separately as one class, shall be necessary to adopt any
alteration, amendment or repeal of this Section 7, in addition to any other
vote of stockholders required by law.
8. Conversion Rights.
(a) Conversion Upon Obtaining Requisite Stockholder Approval. Subject to
and upon compliance with the provisions of this Section 8, upon receipt of
Requisite Stockholder Approval, each share of Series B Preferred Stock shall be
convertible into a number of shares of Class A Common Stock determined by
dividing (x) the Liquidation Preference of such Series B Preferred Stock as of
the Conversion Date (as defined herein) by (y) the Conversion Price (as defined
herein) in effect at the close of business on the Conversion Date (determined
as provided in this Section 8).
3
(b) Conversion Price. The conversion price (the "Conversion Price") shall
initially be $7.20, subject to adjustment from time to time in accordance with
Section 8(c).
(c) Adjustments to Conversion Price. The number of shares of Class A
Common Stock issuable upon conversion of the Series B Preferred Stock shall be
subject to adjustment from time to time as follows:
(i) Upon Stock Dividends, Subdivisions or Split -Ups, or
Combinations. If, at any time after the original date of issuance of
the Series B Preferred Stock (the "Issue Date"), the number of shares
of Class A Common Stock outstanding is (x) increased by a stock
dividend payable in shares of Class A Common Stock or by a subdivision
or split-up of shares of Class A Common Stock, or (y) decreased by a
combination of the outstanding shares of Class A Common Stock into a
smaller number of shares of Class A Common Stock, then, following the
record date for the determination of holders of Class A Common Stock
entitled to receive such stock dividend, or to be affected by such
subdivision or split-up or combination, the Conversion Price shall be
appropriately decreased (in the case of a stock dividend, subdivision
or split-up) or increased (in the case of a combination) so that the
number of shares of Class A Common Stock issuable upon conversion of
Series B Preferred Stock shall be increased (in the case of a stock
dividend, subdivision or split-up) or decreased (in the case of a
combination) in proportion to such increase or decrease, as the case
may be, in outstanding shares.
(ii) Upon Reclassifications, Reorganizations, Consolidations or
Mergers. In the event of any capital reorganization of the Company, any
reclassification of the stock of the Company (other than a change in
par value or from par value to no par value or from no par value to
par value or as a result of a stock dividend or subdivision, split-up
or combination of shares), or any consolidation or merger of the
Company with or into another corporation (where the Company is not the
surviving corporation or where there is a change in or distribution
with respect to the Common Stock), each share of Series B Preferred
Stock shall after such reorganization, reclassification, consolidation
or merger be convertible into the kind and number of shares of stock
or other securities or property of the Company or of the successor
corporation resulting from such consolidation or surviving such
merger, if any, to which the holder of the number of shares of Class A
Common Stock deliverable upon conversion of such Series B Preferred
Stock (had such conversion taken place immediately prior to the time
of such reorganization, reclassification, consolidation or merger)
would have been entitled upon such reorganization, reclassification,
consolidation or merger. The provisions of this clause shall similarly
apply to successive reorganizations, reclassifications, consolidations
or mergers.
(d) Fractions of Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of the Series B Preferred
Stock. If any such conversion would otherwise require the issuance of a
fractional share of Class A Common Stock, an amount equal to such fraction
multiplied by the current Market Price (as defined herein) per share of Class A
Common Stock on the Conversion Date shall be paid to the holder in cash by the
Company.
(e) Exercise of Conversion Privilege. Upon obtaining Requisite Stockholder
Approval, the following procedures would apply:
(i) To convert shares of Series B Preferred Stock, a holder must
(A) surrender the certificate or certificates evidencing such holder's
shares of Series B Preferred Stock to be converted, duly endorsed in a
form satisfactory to the Company, at the office of the Company and (B)
notify the Company at such office that such holder elects to convert
shares of Series B Preferred Stock and the number of shares such
holder wishes to convert. Such notice (the "Conversion Notice")
referred to in clause (B) above shall be delivered substantially in
the following form:
NOTICE TO EXERCISE CONVERSION RIGHT
The undersigned, being a holder of the Series B Convertible Preferred
Stock of Revlon, Inc. irrevocably exercises the right to convert ______________
outstanding shares of Series B Convertible
4
Preferred Stock on _______________, ______________, into shares of Class A
Common Stock of Revlon, Inc., in accordance with the terms of the shares of
Series B Convertible Preferred Stock, and directs that the shares issuable and
deliverable upon the conversion be issued and delivered in the denominations
indicated below to the registered holder hereof unless a different name has
been indicated below.
Dated: [At least one Business Day prior to the date fixed for conversion]
Fill in for registration of
shares of Class A Common Stock
if to be issued otherwise
than to the registered
holder:
Name _________________________________________
Address _________________________________________
_________________________________________
___________________________________
Please print name and (Signature)
address, including postal
code number
Denominations:___"
(ii) Series B Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day (the
"Conversion Date") of surrender of such shares of Series B Preferred
Stock for conversion in accordance with the foregoing provisions and
at such time the rights of the holders of such shares of Series B
Preferred Stock as holder shall cease, and the Person or Persons
entitled to receive the Class A Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of
such Class A Common Stock as and after such time. As promptly as
practicable on or after the Conversion Date, the Company shall issue
and shall deliver at any office or agency of the Company maintained
for the surrender of Series B Preferred Stock a certificate or
certificates for the number of full shares of Common Stock issuable
upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 8(d).
In the case of any certificate evidencing shares of Series B Preferred
Stock which is converted in part only, upon such conversion the Company shall
execute and deliver a new certificate representing an aggregate number of
shares of Series B Preferred Stock equal to the unconverted portion of such
certificate.
(f) Company to Reserve Series A Preferred Stock. The Company shall at all
times reserve and keep available, out of the authorized but unissued Class A
Common Stock or out of the Class A Common Stock held in treasury, for the
purpose of effecting the conversion of Series B Preferred Stock, the full
number of shares of Class A Common Stock then issuable upon the conversion of
all outstanding shares of Series B Preferred Stock.
Before taking any action that would cause the number of shares of Class A
Common Stock deliverable upon conversion of the Series B Preferred Stock to
exceed (when taken together with all other outstanding shares of Class A Common
Stock) the number of shares of Class A Common Stock that the Company is
authorized to issue, the Company will take any corporate action that, in the
opinion of its counsel, is necessary in order that the Company may validly and
legally issue the full number of fully paid and non-assessable shares of Class
A Common Stock issuable upon conversion of the Series B Preferred Stock.
5
(g) Taxes on Conversions. The Company will pay any and all original
issuance, transfer, stamp and other similar taxes that may be payable in
respect of the issue or delivery of shares of Class A Common Stock on
conversion of Series B Preferred Stock pursuant hereto.
(h) Cancellation of Converted Series B Preferred Stock. All Series B
Preferred Stock delivered for conversion shall be delivered to the Company to
be cancelled and shall have the status of authorized but unissued shares of
Preferred Stock, without designation as to series.
(i) Certain Definitions. The following terms shall have the following
respective meanings herein:
"Market Price" means, on any date, the amount per share of the Class A
Common Stock, equal to the closing price on the New York Stock Exchange (the
"NYSE") on such date as reported by Bloomberg, L.P. (or by such other Person as
the holders of the Series B Preferred Stock and the Company may agree).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Requisite Stockholder Approval" means (i) the approval by the
stockholders of the Company required by the corporate governance rules of the
NYSE, or any applicable law, to permit the conversion of shares of Series B
Preferred Stock into shares of Class A Common Stock or (ii) the delivery of an
opinion of counsel reasonably satisfactory to the holders of two-thirds of the
then outstanding shares of Series B Preferred Stock that such approval by
stockholders is not required.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by Robert K. Kretzman, its Senior Vice President,
General Counsel and Secretary, and attested by Michael T. Sheehan, its Vice
President and Assistant Secretary, this 28th day of August, 2001.
By: /s/ ROBERT K. KRETZMAN
----------------------------------------
Robert K. Kretzman
Senior Vice President,
General Counsel and Secretary
Attested:
By: /s/ MICHAEL T. SHEEHAN
----------------------------------------
Michael T. Sheehan
Vice President and
Assistant Secretary
6
EXHIBIT 2
REVLON, INC.
FOURTH AMENDED AND RESTATED 1996 STOCK PLAN
(AMENDED AND RESTATED AS OF MARCH 26, 2002)
ARTICLE I
GENERAL
1.1 Purpose. The purpose of this Fourth Amended and Restated 1996 Stock
Plan (the "Plan") is to provide for certain officers, directors and key
employees of Revlon, Inc. ("Revlon" and, together with its subsidiaries, the
"Company") and certain of its Affiliates an incentive to maintain and enhance
the long-term performance and profitability of the Company. It is the further
purpose of the Plan to permit the granting of awards that will constitute
performance based compensation for certain executive officers, as described in
section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations promulgated thereunder.
1.2 Administration.
(a) The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of Revlon (the "Board"), which
committee shall consist of two or more directors. It is intended that the
directors appointed to serve on the Committee shall be "outside directors"
(within the meaning of Code section 162(m) and the Treasury Regulations
thereunder as may be in effect from time to time, and any amendments,
revisions or successor provisions thereto) to the extent Code section
162(m) is applicable; however, the mere fact that a Committee member shall
fail to qualify under the foregoing requirements shall not invalidate any
award made by the Committee which award is otherwise validly made under the
Plan. The members of the Committee shall be appointed by, and may be
changed at any time and from time to time in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and Plan agreements executed pursuant to Section 2.6,
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan, (iv) to make all determinations necessary or advisable in
administering the Plan, and (v) to correct any defect, supply any omission
and reconcile any inconsistency in the Plan.
(c) The determination of the Committee on all matters relating to the
Plan or any Plan agreement (as defined in Section 2.6) shall be conclusive.
(d) No member of the Committee shall be liable for any Plan Action (as
defined in Section 3.2), including without limitation any action or
determination made in good faith with respect to the Plan or any Award
hereunder.
1.3 Persons Eligible for Awards. Awards under the Plan may be made to such
officers, directors and executive, managerial or professional employees ("key
personnel") of the Company or its Affiliates as the Committee shall in its sole
discretion select. The Committee may make grants of Awards conditional upon
execution by the grantee of the Company's standard Agreement on Confidentiality
and Non Competition as in effect from time to time.
1.4 Types of Awards Under Plan.
(a) Awards may be made under the Plan in the form of (i) stock options
("options"), (ii) stock appreciation rights ("stock appreciation rights")
related to an option ("related stock appreciation rights"), (iii) stock
appreciation rights not related to any option ("unrelated stock
appreciation rights"), (iv) restricted stock awards, (v) unrestricted stock
awards and (vi) performance awards, all as more fully set forth in Article
II (collectively, "Awards").
(b) Options granted under the Plan may be either (i) "nonqualified"
stock options subject to the provisions of Code section 83 or (ii) options
intended to qualify for incentive stock option treatment described in Code
section 422.
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(c) All options when granted are intended to be nonqualified options,
unless the applicable Plan agreement explicitly states that an option is
intended to be an incentive stock option. If an option is granted with the
stated intent that it be an incentive stock option, and if for any reason
such option (or any portion thereof) shall not qualify as an incentive
stock option, then, to the extent of such nonqualification, such option (or
portion) shall be regarded as a nonqualified option appropriately granted
under the Plan provided that such option (or portion) otherwise satisfies
the terms and conditions of the Plan relating to nonqualified options
generally.
1.5 Shares Available for Awards.
(a) Subject to Section 3.5 (relating to adjustments upon changes in
capitalization), as of any date the total number of shares of Common Stock
with respect to which Awards may be granted shall be equal to the excess
(if any) of (i) 10,500,000 shares over (ii) the sum (without duplication)
of (A) the number of shares subject to outstanding options, outstanding
unrelated stock appreciation rights, outstanding restricted stock awards
not vested pursuant to the lapse of restrictions and outstanding
performance awards as to which the performance cycle has not expired,
granted under the Plan, (B) the number of shares previously issued pursuant
to the exercise of options granted under the Plan, (C) the number of shares
subject to an option, restricted stock award or performance award or part
thereof which is canceled by the Committee and for which cash is paid in
respect thereof pursuant to Section 2.8(f), (D) the number of shares in
respect of which stock appreciation rights granted under the Plan shall
have previously been exercised, (E) the number of shares previously vested
pursuant to the lapse of restrictions under restricted stock awards granted
under the Plan, (F) the number of shares previously issued pursuant to
unrestricted stock awards, and (G) the number of shares previously issued
or issuable pursuant to performance units as to which the performance cycle
has expired. In accordance with (and without limitation upon) the preceding
sentence, if and to the extent an Award under the Plan expires, terminates
or is canceled for any reason whatsoever without the grantee having
received any benefit therefrom, the shares covered by such Award shall
again become available for future Awards under the Plan. For purposes of
the foregoing sentence, a grantee shall not be deemed to have received any
"benefit" (i) in the case of forfeited restricted stock awards by reason of
having enjoyed voting rights and dividend rights prior to the date of
forfeiture or (ii) in the case of an Award canceled pursuant to subsection
(c) of this Section 1.5 by reason of a new Award being granted in
substitution therefor.
(b) Shares of Common Stock that shall be subject to issuance pursuant
to Awards made under the Plan shall be authorized and unissued or treasury
shares of Common Stock.
(c) Without limiting the generality of the preceding provisions of
this Section 1.5, the Committee may, but solely with the grantee's consent,
agree to cancel any Award under the Plan and issue a new Award in
substitution therefor upon such terms as the Committee may in its sole
discretion determine, provided that the substituted Award satisfies all
applicable Plan requirements as of the date such new Award is made.
(d) In any calendar year, a person eligible for Awards under the Plan
may not be granted options or stock appreciation rights covering in the
aggregate a total of more than 600,000 shares of Common Stock.
1.6 Definitions of Certain Terms.
(a) The term "Affiliate" as used herein means any person or entity
which, at the time of reference, directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, the Company.
(b) The term "Common Stock" as used herein means the shares of Class A
Common Stock of the Company as constituted on the effective date of the
Plan, and any other shares into which such Common Stock shall thereafter be
changed by reason of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like.
(c) Except as otherwise determined by the Committee, the term "fair
market value" as used herein as of any date and in respect of any share of
Common Stock shall mean, as determined by the
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Committee, either (i) the closing price of a share of Common Stock as
reported on the New York Stock Exchange as of such date or (ii) the mean
between the high and low sales prices of a share of Common Stock as
reported on the New York Stock Exchange as of such date.
(d) In no event shall the fair market value of any share of Common
Stock, the option exercise price of any option, the appreciation base per
share of Common Stock under any stock appreciation right, or the amount
payable per share of Common Stock under any other Award, be less than the
par value per share of Common Stock.
ARTICLE II
STOCK OPTIONS;
STOCK APPRECIATION RIGHTS;
STOCK AWARDS; PERFORMANCE AWARDS
2.1 Grant of Stock Options. The Committee may grant options under the Plan
to purchase shares of Common Stock to such key personnel, in such amounts and
subject to such terms and conditions as the Committee shall from time to time
determine in its sole discretion, subject to the terms and provisions of the
Plan.
2.2 Grant of Stock Appreciation Rights.
(a) The Committee may grant a related stock appreciation right in
connection with all or any part of an option granted under the Plan, either
at the time such option is granted or at any time thereafter prior to the
exercise, termination or cancellation of such option, and subject to such
terms and conditions as the Committee shall from time to time determine in
its sole discretion, consistent with the terms and provisions of the Plan.
The grantee of a related stock appreciation right shall, subject to the
terms and conditions of the Plan and the applicable Plan agreement, thereby
have the right by exercise thereof to surrender to the Company for
cancellation all or a portion of such related stock appreciation right, but
only to the extent that the related option is then exercisable, and to be
paid therefor an amount equal to the excess (if any) of (i) the aggregate
fair market value of the shares of Common Stock subject to the related
stock appreciation right or portion thereof surrendered (determined as of
the exercise date), over (ii) the aggregate appreciation base (determined
pursuant to Section 2.6(d)) of the shares of Common Stock subject to the
stock appreciation right or portion thereof surrendered.
(b) The Committee may grant an unrelated stock appreciation right to
such key personnel, and in such amount and subject to such terms and
conditions, as the Committee shall from time to time determine in its sole
discretion, subject to the terms and provisions of the Plan. The grantee of
an unrelated stock appreciation right shall, subject to the terms and
conditions of the Plan and the applicable Plan agreement, have the right to
surrender to the Company for cancellation all or a portion of such stock
appreciation right, but only to the extent that such stock appreciation
right is then exercisable, and to be paid therefor an amount equal to the
excess (if any) of (i) the aggregate fair market value of the shares of
Common Stock subject to the stock appreciation right or portion thereof
surrendered (determined as of the exercise date), over (ii) the aggregate
appreciation base (determined pursuant to Section 2.6(d)) of the shares of
Common Stock subject to the stock appreciation right or portion thereof
surrendered.
(c) Payment due to the grantee upon exercise of a stock appreciation
right shall be made (i) by check, (ii) in Common Stock (valued at the fair
market value thereof as of the date of exercise), or (iii) partly in the
manner provided in clause (i) and partly in the manner provided in clause
(ii), all as determined by the Committee in its sole discretion. If the
Committee shall determine to make all of such payments in Common Stock, no
fractional shares shall be issued and no payments shall be made in lieu of
fractional shares.
(d) The grant or exercisability of any stock appreciation right may be
subject to such conditions as the Committee, in its sole discretion, shall
determine, including a change of ownership or control of the Company or an
Affiliate. A stock appreciation right may be deemed to be automatically
exercised upon the occurrence of such events or conditions as may be
determined by the Committee in an applicable Plan agreement.
3
2.3 Special ISO Requirements. In order for a grantee to receive special
tax treatment with respect to stock acquired under an option granted as an
incentive stock option, the grantee of such option must be, at all times during
the period beginning on the date of grant and ending on the day three months
before the date of exercise of such option, an employee of the Company or any
of the Company's parent corporations (within the meaning of Code section 424),
or of a corporation or a parent or subsidiary corporation of such corporation
issuing or assuming a stock option in a transaction in which Code section
424(a) applies. If an option granted under the Plan is intended to be an
incentive stock option, then the option exercise price per share shall in no
event be less than 100% of the fair market value of the Common Stock on the
date of such grant. If an option granted under the Plan is intended to be an
incentive stock option, and if the grantee, at the time of grant, owns stock
possessing 10 percent or more of the total combined voting power of all classes
of stock of the grantee's employer corporation or of its parent or subsidiary
corporation, then (i) the option exercise price per share shall in no event be
less than 110% of the fair market value of the Common Stock on the date of such
grant and (ii) such option shall not be exercisable after the expiration of
five years after the date such option is granted.
2.4 Restricted and Unrestricted Stock Awards.
(a) The Committee may grant restricted stock awards, alone or in
tandem with other Awards under the Plan, to such key personnel, and subject
to such restrictions, terms and conditions, as the Committee shall
determine in its sole discretion and as shall be evidenced by the
applicable Plan agreements. The vesting of a restricted stock award granted
under the Plan may be conditioned upon the completion of a specified period
of employment, or in the case of directors who are not employees of the
Company or its Affiliates, their services as such, with the Company or any
Affiliate, upon the attainment of specified performance goals, and/or upon
such other criteria as the Committee may determine in its sole discretion.
(b) The Committee may grant unrestricted stock awards, alone or in
tandem with other Awards under the Plan, to such key personnel and subject
to such terms and conditions as the Committee shall determine in its sole
discretion and as shall be evidenced by the applicable Plan agreements.
(c) Each Plan agreement with respect to a restricted stock award shall
set forth the amount (if any) to be paid by the grantee with respect to
such Award and when or in what circumstances such payment is required to be
made. If a grantee made any payment for a restricted stock award or portion
thereof which does not vest, appropriate payment shall be made to the
grantee upon or following such forfeiture if and on such terms and
conditions as the Committee may determine.
(d) The Committee may provide that a certificate or certificates
representing the shares underlying a restricted stock award shall be
registered in the grantee's name and bear an appropriate legend specifying
that such shares are not transferable and are subject to the provisions of
the Plan and the restrictions, terms and conditions set forth in the
applicable Plan agreement, or that such certificate or certificates shall
be held in escrow by the Company on behalf of the grantee until such shares
become vested or are forfeited, all on such terms and conditions as the
Committee may determine. Except as the applicable Plan agreement may
otherwise provide, no shares underlying a restricted stock award may be
assigned, transferred, or otherwise encumbered or disposed of by the
grantee until such shares have vested in accordance with the terms of such
Award. Subject to the provisions of Section 3.2, as soon as practicable
after any restricted stock award shall vest, the Company shall issue or
reissue to the grantee (or to the grantee's designated beneficiary in the
event of the grantee's death) a certificate or certificates for the Common
Stock underlying such restricted stock award without such restrictive
legend.
(e) If and to the extent that the applicable Plan agreement may so
provide, a grantee shall have the right to vote and receive dividends on
the shares underlying a restricted stock award granted under the Plan.
Unless otherwise provided in the applicable Plan agreement, any stock
received as a dividend on, or in connection with a stock split of, the
shares underlying a restricted stock award shall be subject to the same
restrictions as the shares underlying such restricted stock award.
4
(f) Subject to Section 3.5 (relating to adjustments upon changes in
capitalization), as of any date the total number of shares of Common Stock
with respect to which restricted and unrestricted stock awards may be
granted pursuant to this Section 2.4 shall not exceed (i) 3,000,000 shares
less (ii) the sum (without duplication) of (A) the number of shares subject
to outstanding restricted stock awards or parts thereof not vested pursuant
to the lapse of restrictions, (B) the number of shares subject to
restricted stock awards or parts thereof which are canceled by the
Committee and for which cash is paid in respect thereof pursuant to Section
2.8(f), (C) the number of shares subject to restricted stock awards which
have vested pursuant to the lapse of restrictions and (D) the number of
shares subject to unrestricted stock awards, plus (iii) the number of
shares subject to restricted stock awards or parts thereof not vested
pursuant to the lapse of restrictions which are canceled without payment of
cash or other consideration in connection with termination of the grantee's
employment, services or otherwise.
(g) In the event that the Committee grants a stock award that is
intended to constitute qualified performance-based compensation within the
meaning of Code section 162(m), the following rules shall apply (as such
rules may be modified by the Committee to conform with Code section 162(m)
and the Treasury Regulations thereunder as may be in effect from time to
time, and any amendments, revisions or successor provisions thereto): (i)
payments under the stock award shall be made solely on account of the
attainment of one or more objective performance goals established in
writing by the Committee not later than 90 days after the commencement of
the period of service to which the stock award relates (or if less, 25% of
such period of service); (ii) the performance goal(s) to which the stock
award relates shall be based on one or more of the following business
criteria applied to the grantee, a business unit or the Company and/or an
Affiliate: stock price, market share, sales, earnings per share, return on
equity, assets, capital or investment, net income, operating income,
operating income before restructuring charges, plus depreciation and
amortization other than relating to early extinguishment of debt and debt
issuance costs, net sales growth, expense targets, working capital targets
relating to inventory and/or accounts receivable, operating margin,
planning accuracy (as measured by comparing planned results to actual
results), and implementation or completion of critical projects or
processes; (iii) in any year, a grantee may not be granted stock awards
covering a total of more than 100,000 shares of Common Stock pursuant to
this Section 2.4; and (iv) once granted, the Committee may not have
discretion to increase the amount payable under such stock award, provided,
however, that whether or not a stock award is intended to constitute
qualified performance-based compensation within the meaning of Code section
162(m), the Committee shall make appropriate adjustments in performance
goals under an Award to reflect the impact of extraordinary items not
reflected in such goals. For purposes of the Plan, extraordinary items
shall be defined as (1) any profit or loss attributable to acquisitions or
dispositions of stock or assets, (2) any changes in accounting standards
that may be required or permitted by the Financial Accounting Standards
Board or adopted by the Company after the goal is established, (3) all
items of gain, loss or expense for the year related to restructuring
charges for the Company, (4) all items of gain, loss or expense for the
year determined to be extraordinary or unusual in nature or infrequent in
occurrence or related to the disposal of a segment of a business all
determined in accordance with standards established by Opinion No. 30 of
the Accounting Principles Board (APB Opinion No. 30), (5) all items of
gain, loss or expense for the year related to discontinued operations that
do not qualify as a segment of a business as defined in APB Opinion No. 30,
and (6) such other items as may be prescribed by Code section 162(m) and
the Treasury Regulations thereunder as may be in effect from time to time,
and any amendments, revisions or successor provisions and any changes
thereto. The Committee shall, prior to making any award under this Section
2.4(g), certify in writing that all applicable performance goals have been
attained.
2.5 Performance Awards.
(a) The Committee may grant performance awards, alone or in tandem
with other Awards under the Plan, to acquire shares of Common Stock to such
key personnel and in such amounts and subject to such terms and conditions
as the Committee shall from time to time in its sole discretion determine,
subject to the terms of the Plan.
5
(b) Each performance award under the Plan shall relate to a specified
maximum number of shares, and shall be exchangeable for all or a portion of
such shares, or for cash (or such other form of consideration as may be
determined by the Committee equivalent in value thereto) in up to an amount
equal to the fair market value of an equal number of unrestricted shares,
at the end of such specified period (a "performance cycle") as may be
established by the Committee. The number of such shares which may be
deliverable pursuant to such performance award shall be based upon the
degree of attainment over such performance cycle of such measure of the
performance of the Company, an Affiliate, one or more of its or their
respective divisions or other business units, or the grantee, all as may be
established by the Committee. The Committee may make such provision in the
Plan agreement for full or partial credit, prior to completion of such
performance cycle or achievement of the degree of attainment of the
measures of performance specified in connection with such performance
award, in the event of the participant's death, retirement or other
cessation of services, or disability, or in such other circumstances, as
the Committee in its sole discretion may determine to be fair and equitable
to the participant or in the interest of the Company.
(c) In the event that the Committee grants a performance award that is
intended to constitute qualified performance-based compensation within the
meaning of Code section 162(m), the following rules shall apply (as such
rules may be modified by the Committee to conform with Code section 162(m)
and the Treasury Regulations thereunder as may be in effect from time to
time, and any amendments, revisions or successor provisions, and any
changes thereto): (i) payments under the performance award shall be made
solely on account of the attainment of one or more objective performance
goals established in writing by the Committee not later than 90 days after
the commencement of the period of service to which the performance award
relates (or if less, 25% of such period of service); (ii) the performance
goal(s) to which the performance award relates shall be based on one or
more of the following business criteria applied to the grantee, a business
unit or the Company and/or an Affiliate: stock price, market share, sales,
earnings per share, return on equity, assets, capital or investment, net
income, operating income, operating income before restructuring charges,
plus depreciation and amortization other than relating to early
extinguishment of debt and debt issuance costs, net sales growth, expense
targets, working capital targets relating to inventory and/or accounts
receivable, operating margin, planning accuracy (as measured by comparing
planned results to actual results), and implementation or completion of
critical projects or processes; (iii) in any year, a grantee may not be
granted performance awards covering a total of more than 100,000 shares of
Common Stock pursuant to this Section 2.5; and (iv) once granted, the
Committee may not have discretion to increase the amount payable under such
performance award, provided, however, that whether or not a performance
award is intended to constitute qualified performance-based compensation
within the meaning of Code section 162(m), the Committee shall make
appropriate adjustments in performance goals under an Award to reflect the
impact of extraordinary items not reflected in such goals. For purposes of
the Plan, extraordinary items shall be defined as (1) any profit or loss
attributable to acquisitions or dispositions of stock or assets, (2) any
changes in accounting standards that may be required or permitted the
Financial Accounting Standards Board or adopted by the Company after the
goal is established, (3) all items of gain, loss or expense for the year
related to restructuring charges for the Company (4) all items of gain,
loss or expense for the year determined to be extraordinary or unusual in
nature or infrequent in occurrence or related to the disposal of a segment
of a business all determined in accordance with standards established by
Opinion No. 30 of the Accounting Principles Board (APB Opinion No. 30), (5)
all items of gain, loss or expense for the year related to discontinued
operations that do not qualify as a segment of a business as defined in APB
Opinion No. 30, and (6) such other items as may be prescribed by Code
section 162(m) and the Treasury Regulations thereunder as may be in effect
from time to time, and any amendments, revisions or successor provisions
and any changes thereto. The Committee shall, prior to making any award
under this Section 2.5(c), certify in writing that all applicable
performance goals have been attained.
2.6 Agreements Evidencing Awards.
(a) Awards granted under the Plan shall be evidenced by written
agreements ("Plan agreements") which shall contain such provisions not
inconsistent with the terms and provisions of the Plan as the Committee may
in its sole discretion deem necessary or desirable.
6
(b) Each Plan agreement with respect to the granting of an Award other
than a related stock appreciation right shall set forth the number of
shares of Common Stock subject to the Award granted thereby. Each Plan
agreement with respect to the granting of a related stock appreciation
right shall set forth the number of shares of Common Stock subject to the
related option which shall also be subject to the related stock
appreciation right granted thereby.
(c) Each Plan agreement with respect to the granting of an option
shall set forth the amount (the "option exercise price") payable by the
grantee to the Company in connection with the exercise of the option
evidenced thereby. The option exercise price per share shall in no event be
less than 100% of the fair market value of a share of Common Stock on the
date the option is granted.
(d) Each Plan agreement with respect to a stock appreciation right
shall set forth the amount (the "appreciation base") over which
appreciation will be measured upon exercise of the stock appreciation right
evidenced thereby. The appreciation base per share of Common Stock subject
to an unrelated stock appreciation right shall in no event be less than
100% of the fair market value of a share of Common Stock on the date the
stock appreciation right is granted. The appreciation base per share of
Common Stock subject to a related stock appreciation right shall in all
cases be the option exercise price per share of Common Stock subject to the
related option.
2.7 Exercise of Related Stock Appreciation Right Reduces Shares Subject to
Option. Upon any exercise of a related stock appreciation right or any portion
thereof, the number of shares of Common Stock subject to the related option
shall be reduced by the number of shares of Common Stock in respect of which
such stock appreciation right shall have been exercised.
2.8 Exercisability of Options, Stock Appreciation Rights and Other Awards;
Cancellation of Awards in Certain Cases. Subject to the other provisions of the
Plan:
(a) Except as hereinafter provided, each Plan agreement with respect
to an option or stock appreciation right shall set forth the period during
which and the conditions subject to which the option or stock appreciation
right evidenced thereby shall be exercisable, and each Plan agreement with
respect to a restricted stock award or performance award shall set forth
the period after which and the conditions subject to which the shares
underlying such Award shall vest or be deliverable, all such periods and
conditions to be determined by the Committee in its sole discretion. Unless
the applicable Plan agreement otherwise specifies: no option or stock
appreciation right shall be exercisable prior to the first anniversary of
the date of grant, and each option or stock appreciation right granted
under the Plan shall become cumulatively exercisable with respect to 25% of
the shares of Common Stock subject thereto, rounded down to the next lower
full share, on the first anniversary of the date of grant, and with respect
to an additional 25% of the shares of Common Stock subject thereto, rounded
down to the next lower full share, on each of the second and third
anniversaries of the date of grant, and shall become 100% exercisable on
the fourth anniversary of the date of grant, and shall remain 100%
exercisable until the day prior to the tenth anniversary of the date of
grant and shall terminate and cease to be exercisable on the tenth
anniversary of the date of grant.
(b) Except as provided in Section 2.10(e), no option or stock
appreciation right may be exercised and no shares of Common Stock
underlying any other Award under the Plan may vest or become deliverable
more than 10 years after the date of grant.
(c) Unless the applicable Plan agreement otherwise provides, a related
stock appreciation right shall be exercisable at any time during the period
that the related option may be exercised.
(d) Unless the applicable Plan agreement otherwise provides, an option
or stock appreciation right granted under the Plan may be exercised from
time to time as to all or part of the full number of shares as to which
such option or stock appreciation right shall then be exercisable.
(e) An option or stock appreciation right shall be exercisable by the
filing of a written notice of exercise with the Company, on such form and
in such manner as the Committee shall in its sole discretion prescribe, and
by payment in accordance with Section 2.9.
7
(f) Unless the applicable Plan agreement otherwise provides: in the
case of an option or stock appreciation right, at any time after the
Company's receipt of written notice of exercise of an option or stock
appreciation right and prior to the option or stock appreciation right
exercise date (as defined in subsection (g) of this Section 2.8), and in
the case of a stock award or performance award, at any time within the six
business days immediately preceding the otherwise applicable date on which
the previously restricted stock award or performance award would otherwise
have become unconditionally vested or the shares subject thereto
unconditionally deliverable, the Committee, in its sole discretion, shall
have the right, by written notice to the grantee, to cancel such Award or
any part thereof if the Committee, in its sole judgment, determines that
legal or contractual restrictions and/or blockage and/or other market
considerations would make the Company's acquisition of Common Stock from
the public markets, the Company's issuance of Common Stock to the grantee,
the grantee's acquisition of Common Stock from the Company and/or the
grantee's sale of Common Stock to the public markets illegal, impracticable
or inadvisable. If the Committee determines to cancel all or any part of an
Award, the Company shall pay to the grantee an amount equal to the excess
of (i) the aggregate fair market value of the shares of Common Stock
subject to the Award or part thereof canceled (determined as of the option
or stock appreciation right exercise date, or the date that shares would
have been unconditionally vested or delivered in the case of a stock award
or performance award), over (ii) the aggregate option exercise price or
appreciation base of the option or stock appreciation right or part thereof
canceled (in the case of an option or stock appreciation right) or any
amount payable as a condition of delivery of shares (in the case of a stock
award or performance award). Such amount shall be delivered to the grantee
as soon as practicable after such Award or part thereof is canceled.
(g) Unless the applicable Plan agreement otherwise provides, the
"option exercise date" and the "stock appreciation right exercise date"
shall be the date that written notice of exercise, together with payment,
are received by the Company; provided that if subsection (f) of this
Section 2.8 is applicable, the option exercise date or stock appreciation
right exercise date shall be the later of: (i) the sixth business day
following the date written notice of exercise is received by the Company;
and (ii) the date when payment is received by the Company.
2.9 Payment of Award Price.
(a) Unless the applicable Plan agreement otherwise provides or the
Committee in its sole discretion otherwise determines, any written notice
of exercise of an option or stock appreciation right must be accompanied by
payment of the full option or stock appreciation exercise price. If Section
2.8(g) applies, and the six business day delay for the option exercise date
or stock appreciation right exercise date is applied, the grantee shall
have no right to pay the option or stock appreciation right exercise price
or to receive Common Stock with respect to the option or stock appreciation
right exercise prior to the lapse of such six business days.
(b) Payment of the option exercise price and of any other payment
required by the Plan agreement to be made pursuant to any other Award shall
be made in any combination of the following: (i) by certified or official
bank check payable to the Company (or the equivalent thereof acceptable to
the Committee); (ii) with the consent of the Committee in its sole
discretion, by personal check (subject to collection) which may in the
Committee's discretion be deemed conditional; and/or (iii) unless otherwise
provided in the applicable Plan agreement, by delivery of
previously-acquired shares of Common Stock owned by the grantee for at
least six months (or such longer or shorter period as the Committee may in
its discretion determine that will not result in variable accounting
treatment) having a fair market value (determined as of the option exercise
date, in the case of options, or other relevant payment date as determined
by the Committee, in the case of other Awards) equal to the portion of the
exercise price being paid thereby, provided that the Committee may require,
as a condition of accepting any such delivery of shares of Common Stock,
that the grantee furnish an opinion of counsel acceptable to the Company to
the effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act and does not require any Consent
(as defined in Section 3.2) (a "Compliance Opinion"). Payment in accordance
with clause (i) of this Section 2.9(b) may be deemed to be satisfied, if
and to the extent
8
that the applicable Plan agreement so provides or the Committee permits, by
delivery to the Company of an assignment of a sufficient amount of the
proceeds from the sale of Common Stock to be acquired pursuant to the Award
to pay for all of the Common Stock to be acquired pursuant to the Award and
an authorization to the broker or selling agent to pay that amount to the
Company and to effect such sale at the time of exercise or other delivery
of shares of Common Stock, provided that the Committee may require, as a
condition of accepting any such payment, that the grantee furnish a
Compliance Opinion. In the case of payment made in accordance with clause
(iii) of this Section 2.9(b) or clause (ii) of Section 3.4(b), if (A) the
person paying the option exercise price or other payment required by a Plan
agreement is the grantee of the Award and is actively employed by, or
serving as a director of, the Company or its Affiliates on the exercise
date and (B) all or any portion of the previously-acquired shares of Common
Stock so delivered in payment were acquired by the grantee upon exercise of
an option or stock appreciation right, then, if and to the extent that the
applicable Plan agreement so provides or the Committee in its sole
discretion so determines, the grantee shall be granted a replacement option
on the option exercise date or other payment date to purchase a number of
shares of Common Stock equal to the number of shares so delivered in
payment, at an exercise price equal to the fair market value of the Common
Stock on the exercise date and upon such other terms, conditions and
restrictions (which may be the same as or different than the terms,
conditions and restrictions of the Award so exercised) as the Committee may
determine and set forth in the Plan agreement evidencing such replacement
option. As soon as practicable after receipt of full payment, the Company
shall, subject to the provisions of Sections 2.8(f) and 3.2, deliver to the
grantee a certificate or certificates for the shares of Common Stock
deliverable pursuant to such Award, which certificate or certificates may
bear such legends as the Company may deem appropriate concerning
restrictions on their disposition in accordance with applicable federal and
state securities laws, rules and regulations or otherwise.
(c) Notwithstanding any other provision of this Plan or the applicable
Plan agreement, no grantee shall, directly or indirectly, sell any shares
of Common Stock unless (i) such grantee owns the shares to be sold or has
exercised an Award with respect thereto and the shares to be sold are
immediately issuable to the grantee pursuant to such exercise (subject to
Section 2.8(g) if applicable) and (ii) such grantee delivers such shares in
settlement in accordance with all settlement rules applicable to such
transaction.
2.10 Termination of Employment or Services.
(a) The following "default rules" set forth in this Section 2.10 shall
govern the exercisability of options and the continuation of other Awards
following termination of employment of a grantee with the Company and its
Affiliates, or the termination of services as a director for the Company
and its Affiliates for directors who are not employees of the Company or
its Affiliates, except in each case where: (i) other provisions of the Plan
specify a different rule (e.g., Section 3.11 dealing with early termination
of an option following certain corporate events); or (ii) the Plan
agreement provides for a different rule (as specified by the Committee
pursuant to its authority under the Plan).
(b) Upon termination of a grantee's employment with the Company and
its Affiliates, or in the case of termination of services for directors who
are not employees, (i) by the Company or its Affiliate either for (A) "good
reason" as defined in the Revlon Executive Severance Policy as in effect on
the date of adoption of this Plan, with respect to employees or (B) "good
reason", "cause" or any like term as defined under any employment agreement
to which a grantee may be a party or, in the case of non-employee
directors, removal for cause as set forth in the Company's By-laws from
time to time or (ii) by a grantee otherwise than either for (A) "good
reason", "cause" or any like term as defined under any employment agreement
to which a grantee may be a party from time to time or (B) the reasons
described in subsection (d) or (e) hereof, all outstanding options and
stock appreciation rights granted to such grantee shall cease to be
exercisable, the portions of all restricted stock Awards which are unvested
or as to which all restrictions have not lapsed shall be automatically
cancelled and such grantee may not satisfy any condition, limitation or
restriction which is unsatisfied (and no additional portion shall otherwise
become vested) under any other outstanding Award,
9
following the date of such termination of employment with respect to
employees or termination of services in the case of non-employee directors,
and all outstanding Awards held by such grantee shall in all respects
automatically be canceled on the date of such termination of employment or
services, as the case may be.
(c) Upon termination of a grantee's employment with the Company and
its Affiliates, or in the case of termination of services for non-employee
directors, for any reason other than as described in subsection (b), (d) or
(e) hereof, the portions of outstanding options and stock appreciation
rights granted to such grantee that are exercisable as of the date of
termination of employment or, in the case of non-employee directors,
services, may continue to be exercised, and any payment or notice provided
for under the terms of any other outstanding Award as respects the portion
thereof vested as of the date of termination of such employment or
services, as the case may be, may be given for a period of ninety (90) days
from and including the date of termination of such employment or services,
but no additional portions of outstanding options or stock appreciation
rights granted to such grantee shall become exercisable, and such grantee
may not satisfy any condition, limitation or restriction which is
unsatisfied (and no additional portion shall otherwise become vested) under
any other outstanding Award, following the date of such termination of
employment or services, and such unexercisable or unvested Awards or parts
thereof, including the portions of all restricted stock awards which are
unvested or as to which all restrictions have not lapsed, shall in all
respects automatically be canceled on the date of such termination of
employment or services.
(d) If the grantee voluntarily retires with the consent of the
grantee's employer or retires as a non-employee director with the consent
of the Company or the grantee's employment or services as a non-employee
director terminates due to permanent disability, the portions of
outstanding options and stock appreciation rights granted to such grantee
that are exercisable as of the date of voluntary retirement or termination
of employment or, in the case of non-employee directors, services, may
continue to be exercised, and any payment or notice provided for under the
terms of any other outstanding Award as respects the portion thereof vested
as of the date of termination of such employment or services, as the case
may be, may be given for a period of one year from and including the date
of termination of such employment or services, but no additional portions
of outstanding options or stock appreciation rights granted to such grantee
shall become exercisable, and such grantee may not satisfy any condition,
limitation or restriction which is unsatisfied (and no additional portion
shall otherwise become vested) under any other outstanding Award, following
the date of such termination of employment or services, and such
unexercisable or unvested Awards or parts thereof, including the portions
of all restricted stock awards which are unvested or as to which all
restrictions have not lapsed, shall in all respects automatically be
canceled on the date of such termination of employment or services.
(e) If the grantee's employment or services (in the case of
non-employee directors) terminates by reason of death, or if the grantee's
employment or services (in the case of non-employee directors) terminates
under circumstances providing for continued exercisability under subsection
(c) or (d) of this Section 2.10 and during the period of continued
exercisability described in subsection (c) or (d) the grantee dies, the
portions of outstanding options and stock appreciation rights granted to
such grantee that are exercisable as of the date of the grantee's death may
continue to be exercised, and any payment or notice provided for under the
terms of any other outstanding Award as respects the portion thereof vested
as of the date of death of such grantee may be given by the person to whom
such rights have passed under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) for a period of one year
from and including the date of the grantee's death (notwithstanding that
such period may extend more than 10 years after the grant of the Award),
but no additional portions of outstanding options or stock appreciation
rights granted to such grantee shall become exercisable, and such grantee
(or the person to whom such rights have passed under the grantee's will
(or, if applicable, pursuant to the laws of descent and distribution)) may
not satisfy any condition, limitation or restriction which is unsatisfied
(and no additional portion shall otherwise become vested) under any other
outstanding Award, following either the date of death of such grantee as
respects a grantee whose employment or services terminates by reason of
death, or the
10
date provided in subsection (c) or (d) as respects a grantee whose death
occurs during the period of continued exercisability provided in subsection
(c) or (d), and such unexercisable or unvested Awards or parts thereof,
including the portions of all restricted stock awards which are unvested or
as to which all restrictions have not lapsed, shall in all respects
automatically be canceled either on the date of death of such grantee as
respects a grantee whose employment or services terminates by reason of
death, or the date provided in subsections (c) or (d) as respects a grantee
whose death occurs during the period of continued exercisability provided
in subsections (c) or (d).
(f) Notwithstanding the foregoing, the Committee may in its sole
discretion provide for a longer or shorter period for exercise of an option
or stock appreciation right or may permit a grantee to continue vesting
under any option, stock appreciation right or restricted stock award or to
make any payment, give any notice and continue satisfying any performance
or other condition under any other Award in the case of a grantee whose
employment terminates for any reason, including without limitation: (1)
such grantee's employer ceases to be an Affiliate of the Company; or (2) a
grantee transfers employment with the Company's consent to a purchaser of a
business disposed of by the Company; or (3) a grantee voluntarily retires
with the consent of the grantee's employer or retires as a non-employee
director with the consent of the Company; or (4) a grantee's employment or
services as a non-employee director terminates due to permanent disability;
or (5) a grantee dies. The Committee may in its sole discretion determine:
(i) whether any termination of employment or services (in the case of
non-employee directors) is a voluntary retirement with employer or Company
consent or is due to permanent disability for purposes of the Plan; (ii)
whether any leave of absence (including any short-term or long-term
disability or medical leave) constitutes a termination of employment within
the meaning of the Plan; or (iii) the applicable date of any such
termination of employment or services (in the case of non-employee
directors) or permanent disability, and (iv) the impact, if any, of any of
the foregoing on Awards under the Plan.
(g) Any grantee who terminates employment with the Company and its
Affiliates who accepts employment with a competitor of the Company in
violation of the Company's Employee Agreement as to Confidentiality and
Non-Competition, as in effect from time to time, or in violation of any
other non-competition agreement or covenant executed by the grantee, as in
effect from time to time shall, within ten (10) days of such acceptance of
employment, make a cash payment to the Company equal to the value of any:
(1) profits realized from the exercise of any option or stock appreciation
right during the twelve (12) month period immediately prior to termination
of employment; and (2) restricted stock which vested, or any other Award
which vested or for which consideration was received, during the twelve
(12) month period immediately prior to the date of such termination of
employment and the Company shall be authorized to deduct such amounts from
any amounts otherwise due such grantee.
ARTICLE III
MISCELLANEOUS
3.1 Amendment of the Plan; Modification of Awards
(a) The Board may, without shareholder approval, at any time and from
time to time suspend or discontinue the Plan or revise or amend it in any
respect whatsoever, except that no such amendment shall impair any rights
under any Award theretofore made under the Plan without the consent of the
person to whom such Award was made. Furthermore, except as and to the
extent otherwise permitted by Section 3.5 or 3.11, no such amendment shall,
without shareholder approval:
(i) materially increase the benefits accruing to grantees under
the Plan;
(ii) materially increase the number of shares of Common Stock in
respect of which Awards may be issued under the Plan pursuant to
Section 1.5 or pursuant to grants of restricted or unrestricted stock
awards pursuant to Section 2.4, or increase the number of shares of
Common Stock in respect of which Awards may be granted in any year
under Section 1.5 or 2.5;
11
(iii) materially modify the designation in Section 1.3 of the
class of persons eligible to receive Awards under the Plan;
(iv) except as provided in Section 2.10(e), permit a stock option
or unrelated stock appreciation right to be exercisable, or shares of
Common Stock underlying any other Award to vest or become deliverable,
more than 10 years after the date of grant;
(v) permit a stock option to have an option exercise price, or a
stock appreciation right to have an appreciation base, of less than
100% of the fair market value of a share of Common Stock on the date
the stock option or stock appreciation right is granted; or
(vi) extend the term of the Plan beyond the period set forth in
Section 3.14.
(b) With the consent of the grantee (unless otherwise provided in the
Plan or the applicable Plan agreement) and subject to the terms and
conditions of the Plan (including Section 3.1(a)), the Committee may amend
outstanding Plan agreements with such grantee, including, without
limitation, any amendment which would (i) accelerate the time or times at
which an Award may vest or be exercised and/or (ii) extend the scheduled
expiration date of the Award.
3.2 Restrictions.
(a) If the Committee shall at any time determine that any Consent (as
hereinafter defined) is necessary or desirable as a condition of, or in
connection with, the granting of any Award under the Plan, the acquisition,
issuance or purchase of shares or other rights thereunder, any
determination regarding vesting or termination of any Award or satisfaction
of any performance or other condition thereunder or the taking of any other
action thereunder (each such action being hereinafter referred to as a
"Plan Action"), then such Plan Action shall not be required to be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee. Without limiting the
generality of the foregoing, in the event that (i) the Committee shall be
entitled under the Plan to make any payment in cash, Common Stock or both,
and (ii) the Committee shall determine that Consent is necessary or
desirable as a condition of, or in connection with, payment in any one or
more of such forms, then the Committee shall be entitled to determine not
to make any payment whatsoever until such Consent shall have been obtained
in the manner aforesaid.
(b) The term "Consent" as used herein with respect to any Plan Action
means (i) any and all listings, registrations or qualifications in respect
thereof upon any securities exchange or other self-regulatory organization
or under any federal, state, local or foreign law, rule or regulation, (ii)
the expiration, elimination or satisfaction of any prohibitions,
restrictions or limitations under any federal, state, local or foreign law,
rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares,
or with respect to any other matter, which the Committee shall deem
necessary or desirable to comply with the terms of any such listing,
registration or qualification or to obtain an exemption from the
requirement that any such listing, qualification or registration be made,
and (iv) any and all consents, clearances and approvals in respect of a
Plan Action by any governmental or other regulatory bodies or any parties
to any loan agreements or other contractual obligations of the Company or
any of its Affiliates.
3.3 Nontransferability.
(a) No Award granted to any grantee under the Plan and no rights under
any Plan agreement shall be assignable or transferable by the grantee
(voluntarily or by operation of law) other than by will or by the laws of
descent and distribution to the extent provided by the Plan and any
applicable Plan agreement. During the lifetime of the grantee, all rights
with respect to any Award granted to the grantee under the Plan or under
any Plan agreement shall be exercisable only by such grantee.
(b) Notwithstanding Section 3.3(a), the Committee may in the
applicable Plan Agreement or at any time thereafter provide that options
granted hereunder which are not intended to qualify as incentive stock
options under Code section 422 may be transferred without consideration by
the grantee, subject to such rules as the Committee may adopt to preserve
the purposes of the Plan, to:
12
(i) the grantee's spouse, children or grandchildren (including
adopted and stepchildren and grandchildren) (collectively, the
"Immediate Family");
(ii) a trust solely for the benefit of the grantee and or members
of his or her Immediate Family; or
(iii) a partnership or limited liability company whose only
partners or shareholders are the grantee and/or members of his or her
Immediate Family members.
(each transferee described in clauses (i), (ii) and (iii) above is
hereinafter referred to as a "Permitted Transferee"); provided that
the grantee provides the Committee with advance written notice
describing the terms and conditions of the proposed transfer and the
Committee notifies the grantee in writing that such a transfer would
comply with the requirements of the Plan and any applicable Plan
Agreement; and provided further that with respect to options granted
to officers and directors subject to the reporting requirements of
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") no such options may be transferred within six months
of the grant date to the extent such transfer would result in the
grant of the option being deemed to constitute a non-exempt purchase
under Section 16 of the Exchange Act. The terms of any such
transferred option shall apply to the Permitted Transferee, except
that (a) Permitted Transferees shall not be entitled to transfer any
options, other than by will or the laws of descent and distribution;
and (b) Permitted Transferees shall not be entitled to exercise any
transferred options unless there shall be in effect a registration
statement on an appropriate form under the Securities Act of 1933, as
amended, covering the shares to be acquired pursuant to the exercise
of such option if the Committee determines that such a registration
statement is necessary or appropriate. Upon notice from a Permitted
Transferee of its intent to exercise an option, the Committee shall
advise such Permitted Transferee if a registration statement is
necessary and if so whether such registration statement is in effect.
3.4 Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to be delivered
upon exercise of an option or stock appreciation right, upon the lapse of
restrictions on restricted stock awards, pursuant to performance awards or
otherwise, the Committee shall be entitled to require as a condition of
delivery that the grantee remit an amount sufficient to satisfy all
federal, state and other governmental withholding tax requirements related
thereto. Whenever cash is to be paid to a grantee under the Plan (whether
upon the exercise or cancellation of an Award or otherwise), the Company
shall be entitled as a condition of its payment to deduct therefrom, or
from any compensation, expense reimbursement or other payments due to the
grantee, an amount sufficient to satisfy all federal, state and other
governmental withholding tax and like requirements related thereto or to
the delivery of any shares of Common Stock under the Plan.
(b) A grantee may satisfy, in whole or in part, the foregoing
withholding requirements by delivery of unrestricted shares of Common Stock
owned by the grantee for at least six months (or such shorter or longer
period as the Committee may approve or require that will not result in
variable accounting treatment) having a fair market value (determined as of
the date of such delivery by the grantee) equal to the amount otherwise
payable. Without limiting the generality of the foregoing: (i) the
Committee may require, as a condition of accepting any such delivery of
shares of Common Stock, that the grantee furnish a Compliance Opinion and
(ii) such delivery may be made by withholding shares of Common Stock from
the shares otherwise issuable pursuant to the exercise of the Award giving
rise to the tax withholding obligation (in which event the date of delivery
shall be deemed the date the Award was exercised).
3.5 Adjustments Upon Changes in Capitalization. If and to the extent
specified by the Committee, the number of shares of Common Stock which may be
issued under the Plan, the number of shares of Common Stock subject to or
underlying options, unrelated stock appreciation rights, and restricted stock
awards and performance awards theretofore granted under the Plan, any annual or
other limitation on the number of shares with respect to which Awards may be
granted, and the option exercise price of options,
13
the appreciation base of stock appreciation rights and any payments due with
respect to other Awards theretofore granted under the Plan, may be
appropriately adjusted (as the Committee may determine) for any increase or
decrease in the number of issued shares of Common Stock resulting from the
subdivision or combination of shares of Common Stock or other capital
adjustments, or the payment of a stock dividend after the effective date of the
Plan, or other increase or decrease in such shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that any
options, unrelated stock appreciation rights, restricted stock awards or
performance awards, to the extent covering fractional shares of Common Stock
resulting from any such adjustment, shall be eliminated and terminated, and
provided further, that each incentive stock option granted under the Plan shall
not be adjusted in a manner that causes such option to fail to continue to
qualify as an "incentive stock option" within the meaning of Code section 422.
Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
3.6 Right of Discharge Reserved. Nothing in the Plan or in any Plan
agreement shall confer upon any officer, director, employee or other person the
right to continue in the employment of, or to continue performing services as a
director for, the Company or any of its Affiliates or affect any right which
the Company or any of its Affiliates may have to terminate the employment or
services of such officer, director, employee or other person.
3.7 No Rights as a Stockholder. No grantee or other person exercising an
option or stock appreciation right or entitled to delivery of shares of Common
Stock pursuant to any other Award shall have any of the rights of a stockholder
of the Company with respect to shares subject to an option or stock
appreciation right or shares deliverable upon exercise of any other Award until
the issuance of a stock certificate to such person for such shares. Except as
otherwise provided in Section 3.5, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether
in cash, securities or other property) for which the record date is prior to
the date such stock certificate is registered in the name of the grantee. In
the case of a grantee of a restricted stock award, the grantee shall have the
rights of a stockholder of the Company if and only to the extent provided in
the applicable Plan agreement.
3.8 Nature of Payments.
(a) Any and all grants of options, stock appreciation rights, stock
awards and performance awards and payments of cash or issuances of shares
of Common Stock hereunder shall be granted, issued, delivered or paid, as
the case may be, in consideration of services performed for the Company or
for its Affiliates by the grantee.
(b) All such grants, issuances and payments shall constitute a special
incentive payment to the grantee and shall not, unless otherwise determined
by the Committee, be taken into account in calculating the amount of
compensation of the grantee for the purposes of determining any pension,
retirement, death or other benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate or (ii) any
agreement between the Company or any Affiliate, on the one hand, and the
grantee on the other hand.
(c) By accepting an Award under the Plan, the grantee shall thereby be
understood to have waived any claim to continued exercise or vesting of an
Award or to damages or severance entitlement related to non-continuation of
the Award beyond the period provided herein or in the applicable Plan
agreement, notwithstanding any contrary provision in any written employment
contract or other agreement with the grantee, whether any such agreement is
executed before or after the grant date of the Award.
3.9 Non-Uniform Determinations. The Committee's determinations under the
Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, Awards under the Plan (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Plan agreements, as to (a) the persons to
14
receive Awards under the Plan, (b) the terms and provisions of Awards under the
Plan, (c) the exercise by the Committee of its discretion in respect of the
exercise of rights pursuant to the terms of the Plan or any Plan agreement, and
(d) the treatment of leaves of absences, disability leaves, terminations for
cause or good reason and other determinations under the Plan or any Plan
agreement.
3.10 Other Payments or Awards. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Company, any Affiliate or the
Committee from making any award or payment or granting any right to any person
under any other plan, arrangement or understanding, whether now existing or
hereafter in effect.
3.11 Reorganization.
(a) In the event that Revlon or any successor is merged or
consolidated with another corporation and, whether or not Revlon or such
successor shall be the surviving corporation, there shall be any change in
the shares of Common Stock as then constituted by reason of such merger or
consolidation, or in the event that all or substantially all of the assets
of the Company are acquired by another person, or in the event of a
reorganization or liquidation of Revlon or any successor (each such event
being herein after referred to as a "Reorganization Event") or in the event
that the Board shall propose that Revlon or any successor enter into a
Reorganization Event, then the Committee may in its discretion, by written
notice to a grantee, provide that such grantee's options and stock
appreciation rights and all other Awards requiring action on the part of
such grantee will be terminated unless such grantee exercises or takes such
action within 30 days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice; provided
however that if the Committee takes such action the Committee also shall
accelerate to an appropriate earlier date the dates upon which all
outstanding options and stock appreciation rights of such grantee shall be
exercisable and such action under such other Awards may be taken. The
Committee also may in its discretion, by written notice to a grantee,
provide that the restrictions on restricted stock awards lapse and the
performance and other conditions of other Awards shall be adjusted in the
event of a Reorganization Event upon such terms and conditions as the
Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 3.11(a) may be made conditional upon the consummation of the
applicable Reorganization Event.
3.12 Legend on Certificates. All certificates for shares of Common Stock
issued pursuant to Awards hereunder may be stamped or otherwise imprinted with
a legend in such form as the Company may require with respect to any applicable
restrictions on the sale or transfer of shares.
3.13 Section Headings. The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.
3.14 Effective Date and Term of Plan.
(a) This Plan shall be deemed adopted and become effective upon the
approval thereof by the Board; provided that, notwithstanding any other
provision of the Plan, no Award made under the Plan shall be exercisable
unless the Plan is approved, directly or indirectly, by the express consent
of shareholders holding at least a majority in voting power of the
Company's voting stock voting in person or by proxy at a duly held
stockholders' meeting, within 12 months after the date the Plan is adopted.
(b) The Plan shall terminate on February 22, 2006, and no Awards shall
thereafter be made under the Plan. Notwithstanding the foregoing, all
Awards made under the Plan prior to such termination date shall remain in
effect until such Awards have been satisfied or terminated in accordance
with the terms and provisions of the Plan and the applicable Plan
agreement.
3.15 Tenure. A participant's right, if any, to continue to serve the
Company or any of its Affiliates as a director, officer, employee or otherwise,
shall not be enlarged or otherwise affected by his or her designation as a
participant under the Plan.
15
3.16 Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and any
participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be
paid from the general funds of the Company and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan. The Plan is
not intended to be subject to the Employee Retirement Income Security Act of
1974, as amended.
3.17 Governing Law. This Plan shall be governed by the laws of the State
of New York applicable to agreements made and to be performed entirely within
such state.
3.18 Conditions. If pursuant to Section 2.10(f) or Section 3.11(a) the
dates upon which options shall be exercisable are accelerated, it shall be on
the condition that with respect to options granted to officers and directors
subject to the reporting requirements of Section 16 of the Exchange Act the
shares underlying such options may not be sold by any such individual (or their
estate or Permitted Transferee) within 6 months after the grant of the option
to the extent such sale would result in the grant of the option being deemedto
constitute a non-exempt purchase under Section 16 of the Exchange Act.
16
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
REVLON, INC.
CLASS A COMMON STOCK
MAY 31, 2002
Please Detach and Mail in the Envelope Provided
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
WITHHOLD
AUTHORITY
to vote for all nominees
FOR listed at right
1. ELECTION OF [ ] [ ]
DIRECTORS
FOR all nominees listed
(except as marked to the contrary below):
NOMINEES: Ronald O. Perelman Donald G. Drapkin Meyer Feldberg Howard Gittis Vernon E. Jordan Edward J.
Landau Linda Gosden Robinson Terry Semel Jack L. Stahl Martha Stewart
FOR AGAINST ABSTAIN
2. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ]
serve as the Company's independent accountants
for fiscal 2002.
3. Proposal to approve the Series B [ ] [ ] [ ]
Preferred Stock Conversion Rights.
4. Proposal to approve the Revlon, Inc. Fourth Amended [ ] [ ] [ ]
and Restated 1996 Stock Plan.
5. Stockholder proposal requesting the implementation of [ ] [ ] [ ]
a code of corporate conduct based on the conventions of the International
Labor Organization, if such proposal is presented at the meeting.
6. In their discretion, upon such other business as may properly come before the Annual Meeting or any postponement or adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION,
THIS PROXY WILL BE VOTED FOR THE TEN NOMINEES FOR ELECTION, FOR PROPOSALS 2, 3 AND 4 AND AGAINST PROPOSAL 5.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES.
SIGNATURES: Date: , 2002
NOTE: Please sign exactly as name or names appear on stock certificate (as indicated hereon.)
REVLON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 31, 2002
The undersigned hereby appoints Robert K. Kretzman and Michael T. Sheehan, as
proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of this
card, all shares of Class A Common Stock of Revlon, Inc. (the "Company") held of
record by the undersigned at the close of business on April 2, 2002, at the
Annual Meeting of Stockholders to be held on May 31, 2002 or any adjournment
thereof.
(TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
REVLON, INC.
CLASS B COMMON STOCK
MAY 31, 2002
Please Detach and Mail in the Envelope Provided
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
WITHHOLD
AUTHORITY
to vote for all nominees
FOR listed at right
1. ELECTION OF [ ] [ ]
DIRECTORS
FOR all nominees listed (except as marked to the contrary below):
NOMINEES: Ronald O. Perelman Donald G. Drapkin Meyer Feldberg Howard Gittis Vernon E. Jordan Edward J.
Landau Linda Gosden Robinson Terry Semel Jack L. Stahl Martha Stewart
FOR AGAINST ABSTAIN
2. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ]
serve as the Company's independent accountants
for fiscal 2002.
3. Proposal to approve the Series B [ ] [ ] [ ]
Preferred Stock Conversion Rights.
4. Proposal to approve the Revlon, Inc. Fourth Amended [ ] [ ] [ ]
and Restated 1996 Stock Plan.
5. Stockholder proposal requesting the implementation of a [ ] [ ] [ ]
code of corporate conduct based on the conventions of the
International Labor Organization, if such proposal is presented at the meeting.
6. In their discretion, upon such other business as may properly come before the Annual Meeting or any postponement or adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION,
THIS PROXY WILL BE VOTED FOR THE TEN NOMINEES FOR ELECTION, FOR PROPOSALS 2, 3 AND 4 AND AGAINST PROPOSAL 5.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES.
SIGNATURES: Date: , 2002
NOTE: Please sign exactly as name or names appear on stock certificate (as indicated hereon.)
REVLON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 31, 2002
The undersigned hereby appoints Robert K. Kretzman and Michael T. Sheehan, as
proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of this
card, all shares of Class B Common Stock of Revlon, Inc. (the "Company") held of
record by the undersigned at the close of business on April 2, 2002, at the
Annual Meeting of Stockholders to be held on May 31, 2002 or any adjournment
thereof.
(TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
REVLON, INC.
SERIES B CONVERTIBLE PREFERRED STOCK
MAY 31, 2002
Please Detach and Mail in the Envelope Provided
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
WITHHOLD
AUTHORITY
to vote for all nominees
FOR listed at right
1. ELECTION OF [ ] [ ]
DIRECTORS
FOR all nominees listed (except as marked to the contrary below):
NOMINEES: Ronald O. Perelman Donald G. Drapkin Meyer Feldberg Howard Gittis Vernon E. Jordan Edward J.
Landau Linda Gosden Robinson Terry Semel Jack L. Stahl Martha Stewart
FOR AGAINST ABSTAIN
2. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ]
serve as the Company's independent accountants
for fiscal 2002.
3. Proposal to approve the Series B [ ] [ ] [ ]
Preferred Stock Conversion Rights.
4. Proposal to approve the Revlon, Inc. Fourth Amended [ ] [ ] [ ]
and Restated 1996 Stock Plan.
5. Stockholder proposal requesting the implementation of a [ ] [ ] [ ]
code of corporate conduct based on the conventions of the
International Labor Organization, if such proposal is presented at the meeting.
6. In their discretion, upon such other business as may properly come before the Annual Meeting or any postponement or adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION,
THIS PROXY WILL BE VOTED FOR THE TEN NOMINEES FOR ELECTION, FOR PROPOSALS 2, 3 AND 4 AND AGAINST PROPOSAL 5.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES.
SIGNATURES: Date: , 2002
NOTE: Please sign exactly as name or names appear on stock certificate (as indicated hereon.)
REVLON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 31, 2002
The undersigned hereby appoints Robert K. Kretzman and Michael T. Sheehan, as
proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of this
card, all shares of Series B Convertible Preferred Stock of Revlon, Inc. (the
"Company") held of record by the undersigned at the close of business on April
2, 2002, at the Annual Meeting of Stockholders to be held on May 31, 2002 or any
adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
REVLON, INC.
PROXY CARD FOR REVLON EMPLOYEES' SAVINGS, INVESTMENT AND PROFIT SHARING
PLAN PARTICIPANTS
MAY 31, 2002
Please Detach and Mail in the Envelope Provided
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
WITHHOLD
AUTHORITY
to vote for all nominees
FOR listed at right
1. ELECTION OF [ ] [ ]
DIRECTORS
FOR all nominees listed (except as marked to the contrary below):
NOMINEES: Ronald O. Perelman Donald G. Drapkin Meyer Feldberg Howard Gittis Vernon E. Jordan Edward J.
Landau Linda Gosden Robinson Terry Semel Jack L. Stahl Martha Stewart
FOR AGAINST ABSTAIN
2. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ]
serve as the Company's independent accountants
for fiscal 2002.
3. Proposal to approve the Series B [ ] [ ] [ ]
Preferred Stock Conversion Rights.
4. Proposal to approve the Revlon, Inc. Fourth Amended [ ] [ ] [ ]
and Restated 1996 Stock Plan.
5. Stockholder proposal requesting the implementation of a [ ] [ ] [ ]
code of corporate conduct based on the conventions of the
International Labor Organization, if such proposal is presented at the meeting.
6. In their discretion, upon such other business as may properly come before the Annual Meeting or any postponement or adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION,
THIS PROXY WILL BE VOTED FOR THE TEN NOMINEES FOR ELECTION, FOR PROPOSALS 2, 3 AND 4 AND AGAINST PROPOSAL 5.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES.
SIGNATURES: Date: , 2002
NOTE: Please sign exactly as name or names appear on stock certificate (as indicated hereon.)
REVLON, INC.
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS MAY 31, 2002
FOR REVLON EMPLOYEES' SAVINGS, INVESTMENT AND PROFIT SHARING PLAN PARTICIPANTS
The undersigned hereby appoints Robert K. Kretzman and Michael T. Sheehan, as
proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side of this
card, all shares of Class A Common Stock of Revlon, Inc. (the "Company") held of
record by the undersigned at the close of business on April 2, 2002, at the
Annual Meeting of Stockholders to be held on May 31, 2002 or any adjournment
thereof.
(TO BE SIGNED ON REVERSE SIDE)