SCHEDULE 14A
(RULE(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTIONProxy Statement Pursuant to Section 14(a) OF THE SECURITIES
EXCHANGE ACT OFof the Securities
Exchange Act of 1934, AS AMENDED.as amended.
Filed by the registrant |X|
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Check the appropriate box: |_|
Preliminary proxy statement |_|
Definitive proxy statement |X|
Definitive additional materials |_|
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 |_|
1-800-FLOWERS.COM, Inc.
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(Name of Registrant as Specified in Its Charter)
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1-800-FLOWERS.COM, INC.
1600 Stewart Avenue
Westbury, New York 11590
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 6, 2000Notice of Annual Meeting of Stockholders
December 4, 2001
The Annual Meeting of Stockholders (the "Annual Meeting") of
1-800-FLOWERS.COM, Inc. (the "Company") will be held at the offices of the
Company's subsidiary, The Plow & Hearth, Inc.Bethpage
Fulfillment Center, which is located at State Route
230 West, Madison Virginia 22727700 Hicksville Road, Bethpage, NY 11714
(the "Meeting Place"), on Wednesday,Tuesday, December 6, 20004, 2001 at 9:00 a.m. eastern
standard time or any adjournment thereof for the following purposes, as more
fully described in the Proxy Statement accompanying this notice:
(1) To elect threetwo Directors to serve until the 20032004 Annual Meeting or until
their respective successors shall have been duly elected and qualified;
(2) To ratify the selection of Ernst & Young LLP, independent public
accountants, as auditors of the Company for the fiscal year ending July 1, 2001;June 30,
2002; and
(3) To approve an Employee Stock Purchase Plan; and
(4) To transact such other matters as may properly come before the Annual
Meeting.
Only stockholders of record at the close of business on October 20, 200012, 2001
will be entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders eligible to vote at the Annual Meeting will be available for
inspection at the Annual Meeting, and for a period of ten days prior to the
Annual Meeting, during regular business hours at the Meeting Place.
All stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you expect to attend the Annual Meeting, your proxy vote
is important. To assure your representation at the Annual Meeting, please sign
and date the enclosed proxy card and return it promptly in the enclosed
envelope, which requires no additional postage if mailed in the United States.
You may revoke your proxy at any time prior to the Annual Meeting. If you attend
the Annual Meeting and vote by ballot, your proxy will be revoked automatically
and only your vote at the Annual Meeting will be counted.
By Order of the Board of Directors
/s/ Gerard M. Gallagher
Gerard M. Gallagher
CORPORATE SECRETARYCorporate Secretary
Westbury, New York
November __, 20001, 2001
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
1-800-FLOWERS.COM, INC.
PROXY STATEMENT
NOVEMBER __, 2000November 1, 2001
This Proxy Statement is furnished to stockholders of record of
1-800-FLOWERS.COM, Inc. (the "Company") as of October 20, 200012, 2001 in connection
with the solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors" or the "Board") for use at the Annual Meeting of
Stockholders (the "Annual Meeting"), which will be held at the offices of the Company's subsidiary, The Plow and Hearth, Inc.,Bethpage
Fulfillment Center, which is located at State Route 230 West, Madison Virginia 22727700 Hicksville Road, Bethpage, NY 11714
(the "Meeting Place") to be held, on Wednesday,Tuesday, December 6, 20004, 2001 at 9:00 a.m. eastern
standard time or at any adjournment thereof .thereof.
Shares cannot be voted at the Annual Meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the Annual Meeting will be voted
at the Annual Meeting or any adjournment thereof in accordance with instructions
thereon, or if no instructions are given, will be voted "FOR" the election of
the named nominees as Directors of the Company, and "FOR" the ratification of
Ernst & Young LLP, independent public accountants, as auditors of the Company
for the fiscal year ending July 1, 2001, and "FOR" the approval
of the Employee Stock Purchase Plan,June 30, 2002, and will be voted in accordance with
the discretion of the persons appointed as proxies with respect to other matters
which may properly come before the Annual Meeting. Any person giving a proxy may
revoke it by written notice to the Company at any time prior to the exercise of
the proxy. In addition, although mere attendance at the Annual Meeting will not
revoke the proxy, a stockholder who attends the Annual Meeting may withdraw his
or her proxy and vote in person. Abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business at the Annual Meeting. Abstentions will be counted in
tabulations of the votes cast on each of the proposals presented at the Annual
Meeting, whereas broker non-votes will not be counted for purposes of
determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials) is being distributed concurrently herewith to
stockholders.
The mailing address of the principal executive office of the Company is
1600 Stewart Avenue, Westbury, New York 11590. This Proxy Statement and the
accompanying form of proxy are being mailed to the stockholders of the Company
on November __, 2000.1, 2001.
VOTING SECURITIES
The Company has two classes of voting securities issued and outstanding,
its Class A common stock, par value $0.01 per share (the "Class A Common
Stock"), and its Class B common stock, par value $0.01 per share (the "Class B
Common Stock", and with the Class A Common Stock, the "Common Stock"), which
generally vote together as a single class on all matters presented to the
stockholders for their vote or approval. At the Annual Meeting, each stockholder
of record at the close of business on October 20, 200012, 2001 of Class A Common Stock
will be entitled to one vote for each share of Class A Common Stock owned on
that date as to each matter presented at the Annual Meeting and each stockholder
of record at the close of business on October 20, 200012, 2001 of Class B Common Stock
will be entitled to ten votes for each share of Class B Common Stock owned on
that date as to each matter presented at the Annual Meeting. On October 20,
2000, 26,390,92812,
2001, 26,703,289 shares of Class A Common Stock were outstanding and 37,794,98537,661,665 shares of Class B
Common Stock were outstanding. A list of stockholders eligible to vote at the
Annual Meeting will be available for inspection at the Annual Meeting, and for a
period of ten days prior to the Annual Meeting, during regular business hours at
the Meeting Place.
-2-
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form
of proxy intend to vote at the Annual Meeting "FOR" the election of the nominees
named below as Class III Directors of the Company to serve until the 20032004 Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominees.
The Board of Directors does not currently anticipate that any nomineeof the nominees
will be unable to be a candidate for election.
Pursuant to the Company's Third Amended and Restated Certificate of
Incorporation, the Board of Directors has been divided into three classes,
denominated Class I, Class II and Class III, with members of each class holding
office for staggered three-year terms or until their respective successors are
duly elected and qualified. The Board of Directors currently consists of eight
members, threetwo of whom are Class III Directors whose terms expire at the Annual
Meeting and eachMeeting. Each of such Class III Directors is a nominee for election. The Class III
Directors are Messrs. David M. Beirne and Charles R. Lax. Messrs. Jeffrey C.
Walker, Lawrence V. Calcano and Kevin J. O'Connor. Messrs. David M. Beirne
and Charles R. LaxO'Connor are Class III Directors whose
terms expire at the 20012003 Annual Meeting. Messrs. James F. McCann, Christopher G.
McCann and T. Guy Minetti are Class III Directors whose terms expire at the 2002
Annual Meeting. At each Annual Meeting, the successors to the Directors whose
terms have expired are elected to serve from the time of their election and
qualification until the third Annual Meeting following the election or until a
successor has been duly elected and qualified. The Company's Third Amended and
Restated Certificate of Incorporation restrictsauthorizes the removal of Directors under
certain circumstances.
The affirmative vote of a plurality of the Company's outstanding Common
Stock present in person or by proxy at the Annual Meeting is required to elect
the nominees for Directors.
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS (CLASS I DIRECTORS)Information Regarding Nominees for Election as Directors (Class II Directors)
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each of the threetwo
nominees during the last five years has been furnished to the Company by such
nominee.
JEFFREYDavid M. Beirne, age 38, has been a Director of the Company since July
1999. Mr. Beirne is a Managing Member of Benchmark Capital Management Co. II,
L.L.C., a venture capital firm, since June 1997. Prior to joining Benchmark, Mr.
Beirne founded Ramsey/Beirne Associates, an executive search firm, and served as
its Chief Executive Officer from October 1987 to June 1997. Mr. Beirne also
serves as a director on the boards of ePhysician, Scient Corporation and 12
Entrepreneuring, Inc.
Charles R. Lax, age 42, has been a Director of the Company since July 1999.
Mr. Lax is a general partner of SOFTBANK Capital Partners, a firm he co-founded
in July 1999. Mr. Lax is also managing director of SOFTBANK Venture Capital,
which he co-founded in November 1997. Mr. Lax is also a director of SOFTBANK
Investment America Corporation. Mr. Lax founded GrandBanks Capital, a venture
capital partnership, sponsored by SOFTBANK Venture Capital in January 2001. He
is its Managing General Partner and its Chief Investment Officer. Prior to
joining SOFTBANK, Mr. Lax was previously a venture partner at VIMAC Partners
LLC, a venture capital firm specializing in investments in the information
technology and Internet-related industries, from June 1993 to July 1996. Mr. Lax
also serves on the public boards of Interliant, Inc., an Internet hosting and
services company and Webhire, Inc., a human resources staffing software company.
Mr. Lax also serves on the board of a number of private companies, currently
including Clearcross, Inc. and Coradiant, Inc.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
MESSRS. DAVID M. BEIRNE AND CHARLES R. LAX AS CLASS II DIRECTORS
TO SERVE IN SUCH CAPACITY UNTIL THE 2004 ANNUAL MEETING.
Information Regarding Directors Who Are Not Nominees for Election at this Annual
Meeting
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of each Director who is not a nominee for election at this Annual Meeting
has been furnished to the Company by such Director.
James F. McCann, age 50, has served as the Company's Chairman of the Board
and Chief Executive Officer since inception. Mr. McCann has been in the floral
industry since 1976 when he opened his retail chain of flower shops in the New
York metropolitan area. Mr. McCann is a member of the board of directors of
Gateway, OfficeMax, Boyd's Bears and Very Special Arts, as well as the board of
Hofstra University and Winthrop-University Hospital. James F. McCann is the
brother of Christopher G. McCann, a Director and the President of the Company.
Christopher G. McCann, age 40, has been the Company's President since
September 2000 and prior to that was the Company's Senior Vice President. Mr.
McCann has been a Director of the Company since inception. Mr. McCann serves on
the board of directors of Neoware, Inc. and is a member of the Board of Trustees
of Marist College. Christopher G. McCann is the brother of James F. McCann, the
Chief Executive Officer and Chairman of the Board of the Company.
Jeffrey C. WALKER,Walker, age 45,46, has been a Director of the Company since
February 1995. Mr. Walker has been Managing Partner of Chase CapitalJPMorgan Partners, the
private equity group of TheJP Morgan Chase Manhattan Corporation,& Co., since 1988, and a General Partner
thereof since 1984. He is also a Vice Chairman of J.P. Morgan Chase & Co. Mr.
Walker is also a director of iXL, Guitar Center, House of Blues and Doane PetCare.
KEVINPetCare as
well as several other private companies.
Kevin J. O'CONNOR,O'Connor, age 39,40, has been a Director of the Company since July
1999. Mr. O'Connor co-founded DoubleClick, Inc., an Internet advertising
network, and has served as the Chairman of the Board of Directors since its
inception in January 1996. From December 1995 until January 1996, Mr. O'Connor
served as Chief Executive Officer of Internet Advertising Network, an Internet
advertising company, which he founded. From September 1994 to December 1995, Mr.
O'Connor served as director of Research for Digital Communications Associates, a
data communications company (now Attachmate Corporation), and from April 1992 to
September 1994, as its Chief Technical Officer and Vice President, Research.
LAWRENCELawrence V. CALCANO,Calcano, age 37,38, has been a Director of the Company since
August 1999. Mr. Calcano is a Managing Director and Co-Chief Operating Officer
of the High Technology Department at Goldman, Sachs & Co., a worldwide
investment banking firm. Prior to this appointment in July 1999, Mr. Calcano
managed the East Coast High Technology Group for Goldman from April 1993. Mr.
Calcano also serves on Goldman's Firmwide Technology Operating Committee as well
as the Investment Banking Division's Technology Committee.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
JEFFREY C. WALKER, KEVIN J. O'CONNOR AND LAWRENCE V. CALCANO AS CLASS I
DIRECTORS TO SERVE IN SUCH CAPACITY UNTIL THE 2003 ANNUAL MEETING.
-3-
INFORMATION REGARDING DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AT THE ANNUAL
MEETING
The following information with respect to the principal
occupation or employment, other affiliations and business experience during the
last five years of each Director who is not a nominee for election at the Annual
Meeting has been furnished to the Company by such Director.
JAMES F. MCCANN,T. Guy Minetti, age 49, has served as the Company's
Chairman of the Board and Chief Executive Officer since inception. Mr. McCann
has been in the floral industry since 1976 when he commenced his retail chain
of flower shops in the New York metropolitan area. Mr. McCann is a member of
the boards of directors of Gateway, OfficeMax, and Very Special Arts, as well
as the boards of Hofstra University and Winthrop-University Hospital. James
F. McCann is the brother of Christopher G. McCann who is a Director and
President of the Company.
CHRISTOPHER G. MCCANN, age 39, has been the Company's
President since September 2000 and prior to that was the Company's Senior Vice
President. Mr. McCann has been a Director of the Company since inception. Mr.
McCann serves on the board of directors of Neoware, Inc. and Gizmoz, Inc. and is
a member of the Board of Trustees of the Marist College. Christopher G. McCann
is the brother of James F. McCann who is the Chief Executive Officer and
Chairman of the Board of the Company.
T. GUY MINETTI, age 49,50, has been a Director of the Company since December
1993 and became the Company's Vice Chairman of Corporate Development in
September 2000. Mr. Minetti serves as President of Bayberry Advisors, an
investment banking firm, which he founded in March 1989. In September 1993, Mr.
Minetti co-founded American Sports Products Group Inc., which is a holding
company that acquired nine niche sporting goods manufacturers. Mr. Minetti
currently serves as Vice Chairman for American Sports. Prior to forming
Bayberry, Mr. Minetti was a Managing directorDirector at Kidder, Peabody & Company.
DAVID M. BEIRNE, age 37, has been a DirectorCommittees of the Company
since July 1999. Mr. Beirne has been a Managing Member of Benchmark Capital
Management Co. II, L.L.C., a venture capital firm, since June 1997. Prior to
joining Benchmark, Mr. Beirne founded Ramsey/Beirne Associates, an executive
search firm, and served as its Chief Executive Officer from October 1987 to
June 1997. Mr. Beirne serves as a director of Kana Communications, Inc.,
PlanetRx, Inc., Scient Corporation and Webvan Group, Inc.
CHARLES R. LAX, age 41, has been a Director of the Company
since July 1999. Mr. Lax is a general partner of SOFTBANK Capital Partners, a
firm he co-founded in July 1999. Mr. Lax is also managing director of SOFTBANK
Venture Capital which he co-founded in November 1997. Since 1996, Mr. Lax has
been a Vice President of SOFTBANK Holdings Inc. Mr. Lax is also a director of
SOFTBANK Investment America Corporation. Prior to joining SOFTBANK, Mr. Lax was
previously a venture partner at VIMAC Partners LLC, a venture capital firm
specializing in investments in the information technology and Internet-related
industries from June 1993 to July 1996. Mr. Lax also serves on the boards of
Global Sports Interactive, a sports equipment company, Interliant, Inc., an
Internet hosting service company and Webhire, Inc., a human resources staffing
software company. Mr. Lax also serves on the board of a number of private
companies, including Clearcross, Inc., Third Age Media, Inc., LIMITrader
Securities, Inc. and Reciprocal, Inc.
COMMITTEES OF THE BOARDBoard
The Audit Committee of the Board of Directors reports to the Board
regarding the appointment of the Company's independent public accountants, the
scope and results of its annual audits, compliance with accounting and financial
policies and management's procedures and policies relative to the adequacy of
internal accounting controls. The Company's Board of Directors adopted a written
charter for the Audit Committee in January 2000, which outlines the
responsibilities of the Audit Committee. During the fiscal year ended July 1,
2001 ("Fiscal 2000,2001"), the Audit Committee consisted of Messrs. O'Connor, CalcanoBeirne, Lax
(Chairman) and Lax. Mr.
Calcano resigned from the Audit Committee in October 2000. The Audit
Committee currently consists of Messrs. O'Connor, Beirne and Lax, who are all independent Directors of the Company as
defined by the Rulesrules and Regulationsregulations of the Nasdaq National Market. The Audit Committee's Charter is attached as
Appendix A to this Proxy Statement.
The Compensation Committee of the Board of Directors reviews and makes
recommendations to the Board regarding the Company's compensation policies and
all forms of compensation to be provided to the Company's employees, executive officers and
Directors. In addition, the Compensation Committee administers the Company's
1999 Stock Incentive Plan under which option grants, stock appreciation rights,
restricted awards and performance awards may be made to Directors and executive
officers and employees of the Company and its subsidiaries. The Board of -4-
Directors has
authorized a secondary committee of the Compensation Committee (the "Secondary
Committee"), which consists of Mr. James F. McCann, to also review stock
compensation options for all of the Company's employees, other than its
executive officers. The current members of the Compensation Committee are
Messrs. Walker (Chairman), Beirne and Lax, who are all independent Directors of
the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONCompensation Committee Interlocks and Insider Participation
No interlocking relationships exist between the Board of Directors or the
Compensation Committee and the board of directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past. No member of the Compensation Committee was an officer or employee of the
Company at any time during Fiscal 2000.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS2001.
Attendance at Board and Committee Meetings
During Fiscal 2000,2001, the Board of Directors held five meetings and acted by
unanimous written consent on sevenfive occasions. During Fiscal 2000,2001, each Director
attended at least 75% of the meetings of the Board of Directors,
except Mr. Calcano who did not attend two meetings of the Board of Directors. The Audit
Committee held two meetings during Fiscal 20002001 and did not act by unanimous
written consent. All members of the Audit Committee were present at such
meetings. The Compensation Committee, including its Secondary Committee, held
twosix meetings in Fiscal 2001 and acted by unanimous consent five times in Fiscal 2000.once. All members of
the Compensation Committee were present at such meetings.
SECTIONSection 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEBeneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and Directors, and persons who own more than 10% of a registered class of our
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission (the "Commission") and the Nasdaq Stock
Market. Officers, directors, and greater than 10% stockholders are required by
Commission regulations to furnish us with copies of all reports they file
pursuant to Section 16(a).
Based solely on a review of the copies of such reports furnished to us, we
believe that, since the Company's initial public offering, all Section 16(a)
filing requirements applicable to our officers, Directors and greater than 10%
stockholders werehave been satisfied.
COMPENSATION OF DIRECTORSCompensation of Directors
Directors currently do not receive a stated salary from the Company for
their service as members of the Board of Directors, although by resolution of
the Board they may receive a fixed sum and reimbursement for expenses in
connection with their attendance at Board and committee meetings. The Company
currently does not provide additional compensation for committee participation
or special assignments of the Board of Directors.
The Company entered into a letter agreement with Bayberry
Advisors, Inc. ("Bayberry"), pursuant to which Bayberry provided the Company
with consulting and advisory services. T. Guy Minetti, one of the Company's
Directors and the Company's Vice-Chairman, serves as Bayberry's President and
owns 70% of its outstanding stock, and James F. McCann, the Company's
Chairman of the Board and Chief Executive Officer, owns 30% of its
outstanding stock. The Company paid Bayberry $304,750 for these services,
inclusive of expenses, in Fiscal 2000. The letter agreement was voluntarily
terminated by the parties on September 13, 2000.
In August 1999,December 2000, the Company granted to each of Messrs. Beirne, Calcano,
Lax, O'Connor and O'ConnorWalker, options to purchase 10,000 shares and Mr. Minetti 50,00025,000 shares of Class A Common
Stock withat an exercise price equal to $21$3.65 per share.share; these options vested
immediately. In addition, in December 2000, the Company granted Mr. Minetti
options to purchase 11,500for 333,700 shares of Class A Common Stock withat an exercise price equal to $12.44 per share inof
$3.65, of which 300,000 vests equally over a three year period, and the balance
vests equally over a five year period, measured from December 1999,
and options to purchase 61,500 shares of Class A Common Stock with an exercise
price equal to $4.50 per share in April6, 2000.
Each individual who first becomes a non-employee member of the Board of
Directors will automatically receive an option grant for 10,000 fully vested
shares of Class A Common Stock on the date such individual joins the Board. In
addition, on the date of each Annual Meeting, each non-employee Board member who
is to continue to serve as a non-employee Board member will automatically be
granted ana fully vested option to purchase 5,000 shares of Class A Common Stock,
if such individual has served on the Board for at least six months.
Compensation information on James F. McCann, Christopher G. McCann and James
F. McCann,T.
Guy Minetti, who are Directors, as well as executive officers of the Company, is
contained under the section titled "Executive Compensation and Other
Information."
-5-
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following individuals were serving as executive officers of the Company and
certain of its subsidiaries on October 20, 2000:12, 2001:
NAME AGE POSITION WITH THE COMPANY
-
Name Age Position with the Company
---- --- -------------------------
James F. McCann ....................... 4950 Chairman of the Board and Chief Executive Officer
Christopher G. McCann.................. 3940 Director and President
T. Guy Minetti......................... 4950 Director and Vice Chairman of Corporate Development
Peter G. Rice.......................... 5556 President of The Plow & Hearth, Inc.
William E. Shea........................ 4142 Senior Vice President of Finance and Administration, Treasurer,
Chief Financial Officer
Gerard M. Gallagher.................... 4748 Senior Vice President, General Counsel, Corporate Secretary
Thomas G. Hartnett..................... 3738 Senior Vice President of Retail and Fulfillment
Vincent J. McVeigh..................... 4041 Senior Vice President
Enzo J. Micali......................... 42 Senior Vice President of Information Technology
Pamela Knox............................ 4243 Senior Vice President of Marketing
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
PETERInformation Concerning Executive Officers Who Are Not Directors
Peter G. RICE,Rice, President -of The Plow & Hearth, Inc., was co-founder of The
Plow & Hearth, Inc. and served as its President and Chairman of the Board since
its inception in November 1980. Mr. Rice was founder of Blue Ridge Mountain
Sports, a chain of retail backpacking/outdoor stores, and co-founder of Phoenix
Products, a manufacturer of kayaks. He is a member of the Catalog Advisory
Committee of the Direct Marketing Association and a past director of the New
England Mail Order Association and of the U.S. Senate Productivity and Quality
Award Board for Virginia.
WILLIAMWilliam E. SHEAShea has been our Senior Vice President of Finance and
Administration and our Chief Financial Officer since September 2000. Before holding
his current position, Mr. Shea was our Vice President of Finance and Corporate
Controller after joining us in April 1996. From 1980 until joining us, Mr. Shea
was a certified public accountant with Ernst & Young LLP.
GERARDGerard M. GALLAGHERGallagher has been our Senior Vice President, , General Counsel and
Corporate Secretary since August 1999 and has been providing legal services to
the Company since its inception. Mr. Gallagher is the founder and a managing
partner in the law firm Gallagher, Walker, Bianco and Plastaras, based in
Mineola, New York, specializing in corporate, litigation and intellectual
property matters since 1993. Mr. Gallagher is duly admitted to practice before
the New York State Courts and the United States District Courts of both the
Eastern District and Southern District of New York.
THOMASThomas G. HARTNETTHartnett has been our Senior Vice President of Retail and
Fulfillment since September 2000. Before holding this position, Mr. Hartnett
held various positions within the Company since joining the Company in 1991,
including Controller, Director of Store Operations, Vice President of Retail
Operations and most recently as Vice President of Strategic Development.
VINCENTVincent J. MCVEIGHMcVeigh has been our Senior Vice President since October 2000.
Before holding this position, Mr. McVeigh held various positions within the
Company since joining the Company in 1991, including Bloomnet Manager, Director
of Call Center Operations and, most recently, as Vice President of
Merchandising.
PAMELA KNOXPamela Knox has been our Senior Vice President of Marketing since October
2000. Prior to joining the Company, Ms. Knox served as Vice President of the
Marketing Delivery Group of CitibankCitigroup Inc. since March 1997. Prior to Citigroup
Inc., formerly Citibank, Ms. Knox held several Marketing Director positions with
SBC Communications Inc., formerly Ameritech, since March 1995.
-6-
SUMMARY COMPENSATION TABLEEnzo J. Micali has been our Senior Vice President of Information Technology
and Chief Technology Officer since December 2000. Prior to joining the Company,
Mr. Micali served as Chief Technology Officer for InsLogic. Prior to joining
InsLogic, Mr. Micali spent 12 years in various technology management positions
with J.P. Morgan Chase & Co., formerly Chase Manhattan Bank.
Summary Compensation Table
The following table sets forth the annual and long-term compensation paid
by the Company during Fiscal 20002001 and the fiscal years ended July 2, 2000 and
June 27, 1999 and June 28, 1998 ("Fiscal 1999"2000" and "Fiscal 1998"1999") to the Company's Chief Executive
Officer and the four highest compensated other executive officers of the Company
whose total compensation during Fiscal 20002001 exceeded $100,000 (collectively, the
"Named Executive Officers"):
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------
Long-Term
Annual Compensation Compensation
--------------------------------------- ------------
------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEARSecurities
Other Annual Underlying All Other
Fiscal Salary Bonus Compensation Options Compensation
Name and Principal Position Year ($) ($) ($)(1) (#)(2) ($)
- --------------------------- ------ ------ ---------- ----------- ------------- ----------------------- ------------
James F. McCann................... 2001 $1,000,000 $170,000 - - -
Chief Executive Officer 2000 $1,000,000 $196,000 - 80,000 -
Chief Executive Officer 1999 1,229,930 - - - -
1998 1,229,930$1,230,000 - - - -
Christopher G. McCann............. 2001 $ 330,220 $ 89,000 - 433,700 -
President 2000 $ 250,000 85,750$ 86,000 - 451,000 -
Senior Vice President 1999 216,667$ 217,000 $ 36,000 - 353,000 -
1998 191,667 42,600T. Guy Minetti.................... 2001 $ 291,000 $ 77,000 - 333,700 -
Vice Chairman (3) 2000 $ 189,000 $ 74,000 - 123,000 -
1999 - - -
Peter G. Rice..................... 2000 211,000 65,0002001 $ 233,000 $ 52,000 - 136,500122,550 -
President of The Plow & Hearth, 2000 $ 211,000 $ 65,000 - 169,000 -
Inc. 1999 $ 200,000 26,368$ 26,000 - - -
1998 51,236Gerard M. Gallagher............... 2001 $ 282,000 $ 70,000 - -
John W. Smolak (3)................ 2000 260,000 91,000 - -110,900 -
Senior Vice President, of Finance 1999 125,000 39,000General 2000 $ 188,000 $ 74,000 - 150,000148,000 -
and Administration 1998 -
Jeremiah J. NoonanCounsel, Secretary (4)............ 2000 272,000 100,000 - 351,000 -
Senior Vice President of Marketing 1999 - - - -
1998 - - - ----------------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted as the aggregate amount of such perquisites and other
personal benefits constituted the lesser of $50,000 or 10% of the total
annual salary and bonus for the executive officer for such year.
(2) The Company did not grant any stock appreciation rights or make any
long-term incentive plan payments to any Named Executive Officers in Fiscal
2001, Fiscal 2000 or Fiscal 1999.
(3) Of the amount listed in the summary compensation table for Mr. Minetti as
compensation paid, the Company paid all of Fiscal 2000, and $50,000 of Mr.
Minetti's Fiscal 2001 compensation to Bayberry Advisors, Inc. ("Bayberry")
More information regarding Mr. Minetti's affiliation with Bayberry may be
found under the section titled "Related Party Transactions".
(4) The compensation listed in the summary compensation table for Mr. Gallagher
for Fiscal 2000 and Fiscal 2001 was paid by the Company to the law firm of
Gallagher, Walker, Bianco and Plastaras. More information regarding Mr.
Gallagher's affiliation with Gallagher, Walker, Bianco and Plastaras may be
found under the section titled "Related Party Transactions".
- ---------------------------
(1) Other compensation
Option Grants in the form of perquisites and other personal
benefits has been omitted as the aggregate amount of such perquisites
and other personal benefits constituted the lesser of $50,000 or 10% of
the total annual salary and bonus for the executive officer for such
year.
(2) The Company did not grant any stock appreciation rights or make any
long-term incentive plan payments to any Named Executive Officers in
2000, 1999 or 1998.
(3) Mr. Smolak served as the Company's Senior Vice President of Finance and
Administration during the period January 1999 until September 1, 2000.
(4) Mr. Noonan served as the Company's Senior Vice President of Marketing
during the period August 1999 through June 30, 2000.
OPTION GRANTS IN LAST FISCAL YEARLast Fiscal Year
The following table provides information with respect to the stock option
grants made during Fiscal 20002001 to the Named Executive Officers. No stock
appreciation rights were granted during Fiscal 2000.
-7-
2001.
POTENTIAL REALIZABLE
VALUE AT ASSUMED RATES
% OF TOTAL OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OPTION TERM (4)
UNDERLYING EMPLOYEES PRICE ----------------------
OPTIONS IN FISCAL ($/SHARE) EXPIRATION
NAME GRANTED (1) 2000 (2) (3) DATE 5% 10%
- ---- ----------- ---------- --------- ---------- ----------------------
Potential Realizable
% of Total Value at Assumed Rates
Number of Options of Stock Price
Securities Granted to Exercise Appreciation for
Underlying Employees Price Option Term (4)
Options in Fiscal ($/Share) Expiration
Name Granted (1) 2001 (2) (3) Date 5% 10%
------------------------------ ----------- ----------- ---------- ----------- ----------- -----------
James F. McCann............... 40,190 0.8% $13.69 12/09 $345,966 $876,855
39,810 0.8 12.44 12/09 311,405 789,258
Christopher G. McCann......... 200,000 3.9 21.00 8/09 2,640,960 6,693,540
25,500 0.5 12.44 12/09 199,468 505,554
225,500 4.4 4.50 4/10 638,075 1,617,207
Peter G. Rice................. 25,000 0.5 21.00 8/09 330,120 836,693
11,000 0.2 12.44 12/09 86,045 218,082
100,500 2.0 4.50 4/10 284,375 750,751
John W. Smolak................ - - - - - -
Jeremiah J. Noonan............ 300,000 5.9 16.00 8/09 3,018,240 7,649,760
25,500 0.5 12.44Christopher G. McCann......... 433,700 20.2% $3.65 12/09 199,468 505,554
25,500 0.5 4.50 4/6/10 72,155 182,877$995,394 $2,522,835
T. Guy Minetti................ 333,700 15.6% $3.65 12/6/10 $765,882 $1,941,135
Peter G. Rice................. 122,550 5.7% $3.65 12/6/10 $281,267 $ 712,874
Gerard M. Gallagher........... 110,900 5.2% $3.65 12/6/10 $254,529 $ 645,106
(1) The options listed in the table, that expire in August 2009, except for 50,000300,000 of Mr. Minetti's
options, granted to Mr. Noonan, which vested upon
issuance, become exercisable at a rate of 25% after completion of
the first year of service and 25% at the completion of each year of
service thereafter. The options listed in the table that expire
later than August 2009 become exercisable at a rate of 20% afterupon the completion of the
first year of service and 20% at the completion of each year of service
thereafter. Upon a merger or other change in
control,In regard to 300,000 of Mr. Minetti's options, such options
become exercisable with respect to one third (33%) of the option shares
shall vest in full if outstanding options
are not assumed by the acquiring entity.upon Mr. Minetti's completion of each year of service over a three (3) year
period measured from December 6, 2000. Each option has a maximum term of
ten years, subject to earlier termination in the event of the optionee's
cessation of employment with the Company.Company pursuant to the terms of the
Company's 1999 Stock Incentive Plan.
(2) Based on an aggregate of 5,099,5502,143,925 options granted in Fiscal 2000.2001.
(3) The exercise price may be paid in cash, by surrendering shares owned by the
optionee for a sufficient period of time or through a cashless exercise
procedure.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels. Unless the
market price of the Common Stock appreciates over the option term, no value
will be realized from the option grants made to the executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth the number of options exercised during
Fiscal 20002001 and the number and value of unexercised options held by each of the
named executive officers at July 2, 2000.1, 2001.
SHARES VALUE NUMBER OF SECURITIES UNDERLYING
ACQUIRED ON REALIZED UNEXERCISED OPTIONS AT FISCAL VALUE OF UNEXERCISED IN-THE-MONEY
EXERCISE (#) ($)(1) YEAR-END (#) OPTIONS AT FISCAL YEAR END ($)(2)
------------ -------- -------------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Shares Value Number of Securities Underlying
Acquired on Realized Unexercised Options at Fiscal Value of Unexercised In-The-Money
Exercise (#) ($)(1) Year-End (#) Options at Fiscal Year End ($)(2)
------------ -------- ----------- ------------- -------------- --------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- -------------- --------------
James F. McCann............ - - - 80,000 - -16,000 64,000 $ 28,353 $ 113,410
Christopher G. McCann...... - - 741,400 485,600 $2,397,505 $464,533876,200 784,500 $10,738,514 $6,767,399
T. Guy Minetti............. - - 84,600 392,100 $ 389,502 $4,264,911
Peter G. Rice.............. 15,000 $53,000 35,300 256,250 $ 250,134 $2,371,871
Gerard M. Gallagher........ - - - 136,500 - 62,813
John W. Smolak (3)......... 37,500 $300,000 - 112,500 - 351,563
Jeremiah J. Noonan (3)..... - - - - - -89,600 189,300 $ 441,202 $1,978,579
-
---------------------------
(1) Amounts calculated by subtracting the exercise price of the options from
the market value of the underlying Class A Common Stock using the closing
selling price as reported on the Nasdaq National Market on the date of
exercise of these options.
(2) Amounts calculated by subtracting the exercise price of the options from
the market value of the underlying Class A Common Stock using the closing
selling price of $14.84 as reported on the Nasdaq National Market of
$5.125 per share of Class A Common Stock on July 2, 2000,for the
last trading day of Fiscal 2000.
(3) Mr. Smolak's unexercised options at July 2, 2000 were terminated
effective with his cessation of employment in September 2000. All of
Mr. Noonan's stock options were terminated upon cessation of his
employment in June 2000.
-8-
EMPLOYMENT AGREEMENTS2001.
Employment Agreements
Mr. James F. McCann's employment agreement became effective as of July 1,
1999. The agreement provides for a five year term, and on each anniversary of
the agreement, the term is extended for one additional year. Mr. McCann is
eligible to participate in the Company's management incentive plan, other bonus
or benefits plans, stock option plan, and is entitled to health and life
insurance coverage for himself and his dependents. The agreement providedprovides for an
annual base salary of $1,000,000 for Fiscal 2000 with provisions allowing for annual increases. Mr. McCann's
annual salary for Fiscal 2001 was $1,000,000. Upon termination without good
cause or resignation for good reason, including a change of control, Mr. McCann
is entitled to severance pay in the amount of $2,500,000, plus the base salary
otherwise payable to him for the balance of the then current employment term and
any base salary, bonuses, vacation and unreimbursed expenses accrued but unpaid
as of the termination date, and health and life insurance coverage for himself
and his dependents for the balance of the then current employment term. Upon
termination due to death, or for good cause or a voluntary resignation, Mr.
McCann is not entitled to any compensation from the Company, except for the
payment of any base salary, bonuses, benefits or unreimbursed expenses accrued
but unpaid as of the date of termination.
Mr. Christopher G. McCann's employment agreement became effective as of
July 1, 1999. The agreement provides for a five year term, and on each
anniversary of the agreement, the term is extended for one additional year. Mr.
McCann is eligible to participate in the Company's management incentive plan,
other bonus or benefits plans, stock option plan, and is entitled to health and
life insurance coverage for himself and his dependents. The agreement providedprovides
for an annual base salary of $250,000 for
Fiscal 2000, with provisions allowing for annual increases. Mr.
McCann's annual salary for Fiscal 2001 was $330,220. Upon termination without
good cause or resignation for good reason, including a change of control, Mr.
McCann is entitled to severance pay in the amount of $500,000, plus the base
salary otherwise payable to him for the balance of the then current employment
term and any base salary, bonuses, vacation and unreimbursed expenses accrued
but unpaid as of the termination date, and health and life insurance coverage
for himself and his dependents for the balance of the then current employment
term. Upon termination due to death, or for good cause, or a voluntary
resignation, Mr. McCann is not entitled to any compensation from the Company,
except for the payment of any base salary, bonuses, benefits or unreimbursed
expenses accrued but unpaid as of the date of such termination.
Mr. Rice has entered into anPeter G. Rice's employment agreement with The Plow & Hearth, whichInc.
became effective as of April 3, 1998.1998 and has been automatically renewed through
April 3, 2002. The agreement terminates on April
3, 2001, withcontains automatic one-year renewals unless prior
notice of termination is given. Mr. Rice's annual salary is $211,000for Fiscal 2001 was
$233,000 and he iswas eligible to participate in the Company's management
incentive plan. Upon termination without cause, Mr. Rice is entitled to an
amount equal to his salary through the end of the agreement, any amounts earned,
accrued or owing but not yet paid as of the date of the termination and other
benefits, if any, as are payable to or for the benefit of Mr. Rice as of the
date of his termination until the end of the agreement.
Under their employment agreements, Messrs. James F. McCann and Christopher
G. McCann are each restricted from participating in a competitive floral
products business for a period of one year after a voluntary resignation or
termination for good cause. Mr. Rice has agreed not to compete with the Company
or solicit its clients or employees during his term of employment and for two
years immediately following his termination. Each of these executives is also
bound by confidentiality provisions, which prohibit the executive from, among
other things, disseminating or using confidential information about the
Company's clients in any way that would be adverse to the Company.
Messrs. Noonan and Smolak had employment agreements with
the Company, but which agreements have been terminated pursuant to separation
agreements and general releases, and the Company has no continuing financial
obligations to either of these individuals. Pursuant to the Separation
Agreement and General Release entered into by Mr. Noonan, he was paid the
balance due him under the bonus guaranteed in his employment agreement in
addition to accrued vacation and expenses. All stock options previously
granted to Mr. Noonan were terminated. Pursuant to the Separation Agreement
and General Release entered into by Mr. Smolak, he was paid a sum equal to
his base salary through September 30,
-9-
2000, accrued vacation and the sum due him pursuant to the Company's bonus
plan. All unexercised stock options previously granted to Mr. Smolak were
terminated.
COMPENSATION COMMITTEE REPORT
The Compensation Committee advises the Board of Directors on issues
concerning the Company's compensation philosophy, and the compensation of
executive officers and other individuals compensated by the Company. The
Compensation Committee is responsible for the administration of the Company's
1999 Stock Incentive Plan under which option grants, stock appreciation rights,
restricted awards and performance awards may be made to Directors, executive
officers and employees of the Company and its subsidiaries. The Board of
Directors has authorized a secondary committee of the Compensation Committee to
also review stock compensation options for all of the Company's employees other
than its executive officers.
The Compensation Committee believes that the compensation programs for the
Company's executive officers should reflect the Company's performance and the
value created for the Company's stockholders. In addition, the compensation
programs should support the short-term and long-term strategic goals and values
of the Company and should reward individual contribution to the Company's
success. The Company is engaged in a very competitive industry, and the
Company's success depends upon its ability to attract and retain qualified
executives through the competitive compensation packages it offers to such
individuals.
GENERAL COMPENSATION POLICY.General Compensation Policy. The fundamental policy of the Compensation
Committee is to advise the Board of Directors on information which will aid the
Board of Directors in providing the Company's executive officers with
competitive compensation opportunities based upon their contribution to the
development and financial success of the Company and their personal performance.
It is the Compensation Committee's philosophy to advise the Board of Directors
that a portion of each executive officer's compensation should be contingent
upon the Company's performance as well as upon such executive officer's own
level of performance. Accordingly, the compensation package for each executive
officer should be comprised of two elements: (i) base salary and bonus which
reflects experience and individual and Company performance and is designed to be
competitive with salary levels in the industry, and (ii) long-term stock-based
incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
FACTORS.Factors. The principal factors which the Compensation Committee considers
in reviewing the components of each executive officer's compensation package are
summarized below. The Compensation Committee may, however, in its discretion
apply entirely different factors in advising the Board of Directors with respect
to executive compensation for future years.
o BASE SALARY.Base Salary. The suggested base salary for each executive officer is
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within and
without the industry and internal base salary comparability considerations. The
weight given to each of these factors shall differ from individual to individual
as the Compensation Committee deems appropriate.appropriate and subject to any applicable
employment agreements.
o LONG-TERM INCENTIVE COMPENSATION.Bonus. The bonus for Messrs. James F. McCann, Christopher G. McCann, T.
Guy Minetti, Gerard M. Gallagher, and William E. Shea is determined by the
Company's financial performance. For other executive officers, consideration is
also given to performance of the specific areas of the Company under the
executive officer's direct control. This balance supports the accomplishment of
the Company's overall financial objectives and rewards the individual
contributions of our executive officers.
o Long-Term Incentive Compensation. Long-term incentives are provided
primarily through grants of stock options. The grants are designed to align the
interests of each executive officer with those of the stockholders and provide
each individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the Company. Each option grant
allows the individual to acquire shares of the Company's Common Stock at a fixed
price per share over a specified period of time. Each option generally becomes
exercisable in installments over a fixed period, contingent upon the executive
officer's continued employment with the Company. Accordingly, the option grant
will provide a return to the executive officer only if the executive officer
remains employed by the Company during the vesting period, and then only if the
market price of the underlying shares appreciates.
The number of shares subject to each option grant is set at a level
intended to create a meaningful opportunity for stock ownership based on the
executive officer's current position with the Company, the base salary
associated with that position, the size of comparable awards made to individuals
in similar positions within the industry, the individual's potential for
increased responsibility and promotion over the option term and the individual's
personal performance in recent periods. The Compensation Committee also intends
to consider the number of unvested options -10-
held by the executive officer in
order to maintain an appropriate level of equity incentive for that individual.
However, the Compensation Committee has not and will not adhere to any specific
guidelines as to the relative option holdings of the Company's executive
officers.
CEO COMPENSATION.Compensation. In July 1999, the Board of Directors approved the
Employment Agreement between the Company and James F. McCann, its Chairman of
the Board and Chief Executive Officer, which initially provided for an annual
salary of $1,000,000 and eligibility to participate in the Company's management
incentive plan, or other bonus or benefits plans, stock option plan, and which
is discussed in further detail under "Employment Agreements". The Board
determined it to be in the best interests of the Company to enter into the
Employment Agreement with Mr. McCann as of such date and believes that the
Agreementagreement with Mr. McCann and the compensation paid thereunder for Fiscal 20002001
was fair and reasonable. In determining the total compensation for Mr. McCann,
and that such compensation was fair and reasonable in Fiscal 2000,2001, a number of
factors were taken into account. These factors includedincluded: the key role Mr. McCann
has performed with the Company from its inception to the
successful completion of the initial public offering (the "IPO") in August
1999 and which he continues to fill to date;inception; the benefit to the Company in
assuring the retention of his services; the performance of the Company compared
to its budgeted performance both pre-IPO and during Fiscal 2000;2001; the competitive market
conditions for executive compensation; and the objective evaluation of Mr.
McCann's performance of his duties as Chairman of the Board and Chief Executive
Officer.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTIONCompliance with Internal Revenue Code Section 162(m). As a result of
Section 162(m) of the Internal Revenue Code of 1986 ("Section 162(m)"), as
amended, which was enacted into law in 1993, the Company will not be allowed a
federal income tax deduction for compensation paid to certain executive
officers, to the extent that compensation exceeds $1 million per officer in any
one year. This limitation will apply to all compensation paid to the covered
executive officers which is not considered to be performance based. Compensation
which does qualify as performance-based compensation will not have to be taken
into account for purposes of this limitation. The 1999 Stock Incentive Plan
contains certain provisions which are intended to assureensure that any compensation
deemed paid in connection with the exercise of stock options granted under that
plan with an exercise price equal to the market price of the option shares on
the grant date will qualify as performance-based compensation.
The Compensation Committee does not expect that the non-performance based
compensation to be paid to any of the Company's executive officers for Fiscal
20012002 will exceedbe subject to the $1 million limit per
officer.deduction limitations of Section 162(m). Further, in
accordance with issued Treasury Regulations relating to the $1 million
limitation, the Committee may in the future determine to restructure one or more
components of the compensation paid to the executive officers so as to qualify
those components as performance-based compensation that will not be subject to
the $1 million limitation.
THE COMPENSATION COMMITTEE
Jeffrey C. Walker, Chairman
David M. Beirne
Charles R. Lax
Jeffrey C. Walker
-11-
STOCK PERFORMANCE GRAPHAUDIT COMMITTEE REPORT
September 6, 2001
To the Board of Directors
of 1-800-flowers.com, Inc. (the "Company"):
Our Audit Committee has reviewed and discussed the audited financials of the
Company for the year ended July 1, 2001 (the "Audited Financial Statements"). In
addition, we have discussed with Ernst & Young LLP, the independent auditing
firm for the Company, the matters required by Codification of Statements on
Auditing Standards No. 61.
The Committee also has received the written disclosures and the letter from
Ernst & Young LLP required by Independence Standards Board Standard No. 1 and we
have discussed with that firm its independence from the Company. We also have
discussed with management of the Company and the auditing firm such other
matters and reviewed such assurances from them as we deemed appropriate.
Based on the foregoing review and discussions and relying thereon, we have
recommended to the Company's Board of Directors the inclusion of the Audited
Financial Statements in the Company's Annual Report for the year ended July 1,
2001 on Form 10-K.
THE AUDIT COMMITTEE
Charles R. Lax, Chairman
David M. Beirne
Kevin J. O'Connor
---------------
1 This report is not deemed to be "soliciting material" or deemed to be
filed with the Securities and Exchange Commission or subject to
Regulation 14A of the 1934 Act, except to the extent specifically
requested by the Company or incorporated in documents otherwise filed.
Stock Performance Graph
The following graph compares the percentage change in the cumulative total
stockholder return on the Company's common stock during the period from the
Company's initial public offering in August 3, 1999, through July 2, 2000,1, 2001, with
the cumulative total returns of the Russell 2000 and the Nasdaq Non-Financial
indices. The comparison assumes $100 was invested on the close of business of
August 3, 1999 in each of the foregoing indices, and assumes dividends, if any
were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Cumulative Total Return
----------------------------------------------------
Cumulative Total Return
-----------------------------
8/3/99 12/99 3/6/00 6/0001
1-800-FLOWERS.COM, INC. 100.00 58.77 39.18 28.18 81.59
RUSSELL 2000 100.00 114.09 110.12 105.96119.83 120.51
NASDAQ NON-FINANCIAL 100.00 160.06 181.45 156.57159.92 81.50
-12-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial ownership
of the Company's Class A Common Stock and Class B Common Stock, as of October
20, 2000,12, 2001, for (i) each person known by the Company to beneficially own more than
5% of each class; (ii) each Director; (iii) each Named Executive Officer; and
(iv) all of the Company's executive officers and Directors as a group.
Information provided regarding Named Executive Officers no longer employed by
the Company is based on the Company's best knowledge of the ownership of each of
such individuals on October 20, 2000.12, 2001. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and includes
voting or investment power with resectrespect to the securities. Unless otherwise
indicated, the address for those listed below is c/o 1-800-FLOWERS.COM, Inc.,
1600 Stewart Avenue, Westbury, New York 11590. Except as indicated by footnote,
and subject to applicable community property laws, the persons named in the
table have sole voting and investment power with respect to all shares of common
stock shown as beneficially toowned by them. The number of shares of common stock
outstanding used in calculating the percentage for each listed person includes
the shares of common stock underlying options held by such persons that are
exercisable within 60 days of October 20, 2000,12, 2001, but excludes shares of common
stock underlying options held by any other person. Percentage of beneficial
ownership is based on 26,390,92826,703,289 shares of Class A Common Stock and 37,794,98537,661,665
shares of Class B Common Stock outstanding as of October 20, 2000.12, 2001.
SHARES
Shares % OF SHARES
------ -----------
BENEFICIALLY OWNED BENEFICIALLY OWNEDof Shares
Beneficially Owned Beneficially Owned
------------------ ------------------
NAME OF BENEFICIAL OWNERName of Beneficial Owner A SHARESShares B SHARESShares A SHARESShares B SHARES
-Shares
------------------------ -------- -------- -------- --------
James F. McCann(1)......................... 16,00032,000 36,605,105 * 96.9%0.1% 97.2%
Christopher G. McCann(2)................... 5,100 3,704,540 *292,040 3,689,140 1.1% 9.6%
T. Guy Minetti(3).......................... 24,400183,240 20,000 * *
John W. Smolak(4).......................... 42,200 - * -
Jeremiah J. Noonan(5)...................... - - - -0.7% 0.1%
Peter G. Rice(6)........................... 33,540Rice (4).......................... 88,179 - *0.3% -
Gerard M. Gallagher(5)..................... 107,430 20,000 0.4% 0.1%
Jeffrey C. Walker(7)Walker(6)....................... 4,064,5893,986,589 - 15.4%14.9% -
David M. Beirne(8)Beirne(7)......................... 7,399,0805,424,080 - 28.0%20.3% -
Charles R. Lax(9)Lax(8).......................... 3,836,5603,861,560 - 14.5%14.4% -
Kevin J. O'Connor(10)...................... 73,500O'Connor(9)....................... 98,500 - *0.4% -
Lawrence V. Calcano(11)Calcano(10).................... 15,00040,000 - *0.1% -
Chase Venture Capital
Associates, L.P.(12)....................... 4,064,589J.P. Morgan Partners (SBIC), LLC (11)...... 3,986,589 - 15.4%14.9% -
Benchmark Capital Partners(13)Partners(12)............. 7,399,0805,424,080 - 28.0%20.3% -
SOFTBANK America Inc.(14)(13).................. 3,836,5603,861,560 - 14.5% -
Waelinvest S.A.(15)........................ 1,912,850 - 7.2%14.4% -
All directors and executive officers as a
group (15 persons)(16)(14).................. 17,526,019 38,349,645 66.0% 99.3%14,290,378 38,334,245 51.9% 99.5%
---------------
- -----------
* Indicates less than 1%.
(1) Includes (a) 16,000 shares of Class A Common Stock issuable upon the
exercise of options which vest within 60 days and 16,000 shares of Class A
Common Stock issuable upon the exercise of currently exercisable stock
options, and (b) 5,875,000 shares of Class B Common Stock held by limited
partnerships, of which Mr. McCann is a limited partner and does not
exercise control and of which he disclaims beneficial ownership.
-13-
(2) Includes (a) 5,10091,840 shares of Class A Common Stock issuable upon the
exercise of options which vest within 60 days and 200,200 shares of Class A
Common Stock issuable upon the exercise of currently exercisable stock
options, (b) 2,000,000 shares of Class B Common Stock held by a limited
partnership, of which Mr. McCann is a general partner and exercises control
and (c) 791,400776,000 shares of Class B Common Stock issuable upon the exercise
of currently exercisable stock options and options which vest within 60 days.options.
(3) Includes (a) 14,800109,040 shares of Class A Common Stock issuable upon the
exercise of options which vest within 60 days and 64,600 shares of Class A
Common Stock issuable upon the exercise of currently exercisable stock
options, and (b) 20,000 shares of Class B Common Stock issuable upon the
exercise of currently exercisable stock options.
(4) Mr. Smolak's address is 158 Brewster Road, Wyckoff, New Jersey 07481.
(5) Mr. Noonan's address is 3 Annie King Lane, Dover, MA 02030.
(6) Includes (a) 9,5003,874 shares of Class A Common Stock held by Mr. Rice's wife,
of which he disclaims beneficial ownership, (b) 9,65025,790 shares of Class A
Common Stock issuable upon the exercise of options which vest within 60
days and 42,800 shares of Class A Common Stock issuable upon the exercise
of currently exercisable stock options, and (c) 1,490335 shares of Class A
Common Stock issuable upon the exercise of options held by Mr. Rice's wife
which vest within 60 days, of which he disclaims beneficial ownership and
(d) 2,5502,980 shares of Class A Common Stock issuable upon the exercise of
currently exercisable stock options held by Mr. Rice's son, which vest within
60 days, of which he disclaims beneficial
ownerhip.ownership. Mr. Rice's address is c/o The Plow & Hearth, Inc., State Road
230 West, Madison, VA 22727.
(7) All(5) Includes (a) 24,480 shares indicated as owned by Mr. Walker are included because of Mr.
Walker's affiliation with Chase Venture Capital Associates.Class A Common Stock issuable upon the
exercise of options which vest within 60 days and 69,600 shares of Class A
Common Stock issuable upon the exercise of currently exercisable stock
options, and (b) 20,000 shares of Class B Common Stock issuable upon the
exercise of currently exercisable stock options.
(6) The general partner of Chase Venture Capital AssociatesJ.P. Morgan Partners (SBIC), LLC is Chase CapitalJ.P. Morgan
Partners of which Mr. Walker is a general partner. The remaining general
partners of Chase Capital Partners who are natural persons are John R.
Baron, Christopher C. Behrens, Mitchell J. Blutt, Arnold L. Chavkin,
David Gilbert, Eric Green, Michael R. Hannon, Donald J. Hofmann,
Stephen P. Murray, John M. B. O'Connor, Robert Ruggiero, Susan Segal,
Shahan D. Soghikian, Lindsay Stuart, Timothy Walsh, Rick Waters and
Damion E. Wicker.(BHCA), L.P. Mr. Walker disclaims beneficial ownership of all
shares owned by Chase.J.P. Morgan Partners (SBIC), LLC. Mr. Walker's address is
c/o Chase Venture
Capital Associates, 380 MadisonJ.P. Morgan Partners (SBIC), LLC, 1221 Avenue 12thof the Americas, 40th
Floor, New York, New York 10017.
(8) All10020. Includes 25,000 shares indicatedof Class A Common
Stock issuable to Mr. Walker, for his services as owned by Mr. Beirne are includeda Director of the
Company, upon the exercise of currently exercisable stock options because
of Mr. Beirne'sWalker's affiliation with the Benchmark entities.J.P. Morgan Partners (SBIC), LLC.
(7) Mr. Beirne disclaims beneficial ownership of all shares owned by the
Benchmark entities. Mr. Beirne's address is c/o Benchmark Capital Partners,
2480 Sand Hill Road, Suite 200, Menlo Park, California 94025. (9) AllIncludes
25,000 shares indicatedof Class A Common Stock issuable to Mr. Beirne, for his
services as owned by Mr. Lax are includeda Director of the Company, upon the exercise of currently
exercisable stock options because of Mr. Lax'sBeirne's affiliation with Softbank.the
Benchmark entities.
(8) Mr. Lax disclaims beneficial ownership of all shares owned by Softbank. Mr.
Lax's address is c/o Softbank America Inc., 10 Langley Road, Suite 202,
Newton Center, Massachusetts 02459. (10) Includes 10,00025,000 shares of Class A
Common Stock issuable to Mr. Lax, for his services as a Director of the
Company, upon the exercise of currently exercisable stock options because
of Mr. Lax's affiliation with Softbank.
(9) Includes 35,000 shares of Class A Common Stock issuable upon the exercise
of currently exercisable stock options. Mr. O'Connor's address is c/o
DoubleClick, Inc., 41 Madison Ave., 32nd Floor, New York, New York, 10010.
(11)(10) Includes 10,00035,000 shares of Class A Common Stock issuable upon the exercise
of currently exercisable stock options. Mr. Calcano's address is c/o
Goldman Sachs & Co., 85 Broad Street, New York, New York 10004.
(12)(11) The address of ChaseJ.P. Morgan Partners (SBIC), LLC is 380 Madison1221 Avenue 12thof the
Americas, 40th Floor, New York, New York 10017.
(13)10020.
(12) Consists of (a) 951,870694,574 shares of Class A Common Stock owned by Benchmark
Capital Partners II, L.P., (b) 2,543,1701,855,742 shares of Class A Common Stock
owned by Benchmark Capital Partners III, L.P., and (c) 3,904,0402,848,764 shares of
Class A Common Stock owned by Benchmark Investors III, L.P. Benchmark
Capital Management Co. II, L.L.C. is the general partner of Benchmark
Capital Partners II, L.P. and directs its investment decisions, and
Benchmark Capital Management Co. III, L.L.C. is the general partner of
Benchmark Capital Partners III, L.P. and Benchmark Investors III, L.P. and
controls their investment decision. Both Benchmark Capital Management Co.
II and Benchmark Capital Management Co. III are controlled by David M.
Beirne, Bruce W. Dunlevie, J. William Gurley, Kevin R. Harvey, Robert C.
Kagel, Andrew S. Rachleff and Steven M. Spurlock. The address of the
Benchmark entities is 2480 Sand Hill Road, Suite 200, Menlo Park,
California 94025. -14-
(14)Includes 25,000 shares of Class A Common Stock issuable
to Mr. Beirne, for his services as a Director of the Company, upon the
exercise of currently exercisable stock options because of Mr. Beirne's
affiliation with the Benchmark entities.
(13) SOFTBANK America Inc. is an indirect wholly-owned subsidiary of SOFTBANK
Corp. Approximately 43.3% of the outstanding common stock of SOFTBANK Corp.
is owned by Masayoshi Son. SOFTBANK's address is 10 Langley Road, Suite
202, Newton Center, Massachusetts 02459. (15) Waelinvest is indirectly controlled byIncludes 25,000 shares of Class A
Common Stock issuable to Mr. Bernard Arnault, who also
controls, indirectly, LVMH Moet Hennessy Louis Vuitton S.A. The addressLax, for his services as a Director of Waelinvest is rue Waelhem, 102, 1030 Brussels, Belgium.
(16)the
Company, upon the exercise of currently exercisable stock options because
of Mr. Lax's affiliation with Softbank.
(14) Includes (a) 148,890326,845 shares of Class A Common Stock issuable upon exercise
of a currently exercisable stock options and options which vest within 60
days, and 650,180 shares of Class A Common Stock issuable upon the exercise
of currently exercisable stock options, and (b) 831,400868,825 shares of Class B
Common Stock issuable upon the exercise of currently exercisable stock
options and options which vest within 60 days.
RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH CHASE
In January 1995, the Company entered into an investment
agreementCertain Business Relationships with the predecessor of Chase Venture Capital Associates ("Chase")
under which Chase purchased shares of the Company's Class C Common StockDirectors and a warrant to purchase 2,371,040 shares of Class A Common Stock with a nominal
exercise price for an aggregate of $10.0 million. The warrant was exercised
by Chase in May 2000. Chase currently holds over 5% of the Class A Common
Stock and Jeffrey C. Walker, one of the Company's Directors, is a Managing
Partner of Chase. With respect to the Company's private placement completed
in May 1999, the Company entered into an amendment to the investment
agreement, under which Chase agreed to allow the Company to redeem the Class
C Common Stock owned by them in exchange for 263,452 shares of Class A Common
Stock and approximately $14.9 million. The Company sold shares of preferred
stock to Chase in the May 1999 private placement for a purchase price equal
to the $14.9 million proceeds from the redemption of their Class C Common
Stock.
In March 1999, the Company entered into a credit agreement with The
Chase Manhattan Bank ("Chase Bank"), an affiliate of Chase Venture Capital
Associates and Jeffrey C. Walker, under which Chase Bank agreed to provide the
Company with a term loan of $18.0 million and a revolving loan commitment of
$12.0 million. A portion of the proceeds from the Company's initial public
offering were used to repay all of its outstanding indebtedness under the credit
facility.
TRANSACTIONS REGARDING PLOW & HEARTH
With respect to the Company's acquisition of 88% of the
outstanding common stock of Plow & Hearth, it entered into a stockholders
agreement, under which the remaining stockholders of Plow & Hearth had the right
to either convert their shares of Plow & Hearth and Plow & Hearth options
granted under one of its option plans into cash or shares of Class A Common
Stock. The Plow & Hearth stockholders agreement was amended to provide that each
of these minority holders were to have their interests redeemed upon
effectiveness of the initial public offering for an aggregate of $8.4 million.
In addition, Plow & Hearth's other option plan was amended so that upon
effectiveness of the initial public offering, 40% of these options were
accelerated and redeemed for an aggregate of $354,000 and the remaining 60%
terminated. Peter G. Rice, an executive officer, received an aggregate of $4.0
million under these amendments.
TRANSACTIONS WITH DIRECTORS AND OFFICERSofficers
The Company terminated as of September 13, 2000 an agreement with Bayberry
Advisors, Inc., under which Bayberry provided consulting and advisory services.
These consulting and advisory services included advice on capital raising,
business expansion and acquisitions, product line expansion, and on our business
plan in general. T. Guy Minetti, one of the Company's Directors, serves as
Bayberry's President and owns 70% of its outstanding stock, and James F. McCann,
the Company's Chairman of the Board and Chief Executive Officer, owns 30% of its
outstanding stock. Bayberry was paid $304,750,$50,000, inclusive of expenses, for these
services for Fiscal 2000.
-15-
2001.
The Company pays Gallagher, Walker, Bianco and Plastaras, a law firm in
which our Senior Vice President and General Counsel, Gerard M. Gallagher, is a
partner, a fee for Mr. Gallagher's services to the Company. The Company, with
the approval of the Board, also pays Gallagher, Walker fees for other services
rendered by other members of the firm on the Company's behalf. The fees paid in
Fiscal 20002001 by the Company to the firm for services provided by Mr. Gallagher
were $302,700are set forth under the section titled "Summary Compensation Table" and for other
legal services provided by other members of the firm in the sum of $335,600$352,276,
inclusive of disbursements; which fees the Company believes are fair and
reasonable.
In July 1998, the Company loaned Christopher G. McCann, its
Senior Vice President and a Director, an amount of $67,631 at an interest rate
of 7% per annum. This loan was repaid in full in July 1999.
The Company maintains life insurance for each of its executive officers,
except Mr. Gallagher, and Mr. Minetti, in the amount of $50,000 and also maintains a directors'
and officers' insurance policy.
GENERALGeneral
The Company has adopted a policy providing that all future material transactions between
it and its officers, Directors and other affiliates must be on fair terms and be
approved by either a majority of the disinterested members of the Board or the
stockholders.
PROPOSAL 2
----------
INDEPENDENT PUBLIC ACCOUNTANTSAUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors
appointed Ernst & Young LLP, independent public accountants and auditors of the
Company since the Company's inception,1993, as auditors of the Company to serve for the year ending July 1, 2001June
30, 2002 (the "Fiscal 2001"2002"), subject to the ratification of such appointment by
the stockholders at the Annual Meeting. The aggregate fees for professional
services rendered for (i) the audit of the Company's annual financial statements
set forth in the Company's Annual Report on Form 10-K for the fiscal year ended
July 1, 2001, and (ii) the review of the Company's quarterly financial
statements set forth in the Company's Quarterly Report on Form 10-Q were
approximately $159,000. The aggregate fees for services other than those
described above for the fiscal year ended July 1, 2001 were approximately
$124,000. The affirmative vote of a plurality of the Company's outstanding
Common Stock present in person or by proxy is required to ratify the appointment
of the auditors. Unless otherwise instructed, the proxy holders will vote the
proxies received by them "FOR" the ratification of Ernst & Young LLP to serve as
the Company's auditors for Fiscal 2001.2002. A representative of Ernst & Young LLP
will attend the Annual Meeting with the opportunity to make a statement if he or
she so desires and will also be available to answer inquiries.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
AND APROVALAPPROVAL OF THE SELECTION OF ERNST & YOUNG LLP TO SERVE AS
THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL 2001.
PROPOSAL 3
APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN
The stockholders are being asked to approve the 1-800-Flowers.com, Inc.
2001 Employee Stock Purchase Plan (the "Purchase Plan"), which has been
approved by the Board. The Purchase Plan, and the right of participants to make
purchases thereunder, is intended to meet the requirements of an "employee stock
purchase plan" as defined in Section 423 of the Internal Revenue Code (the
"Code"). If the stockholders do not approve the Purchase Plan, the Purchase Plan
will not be implemented by the Company.
The Purchase Plan is intended to benefit the Company as well as its
stockholders and employees. The Purchase Plan gives employees an opportunity to
purchase shares of Common Stock at a favorable price. The Company believes that
the stockholders will correspondingly benefit from the increased interest on the
part of participating employees in the profitability of the Company. Finally,
the Company will benefit from the periodic investments of equity capital
provided by participants in the Purchase Plan.
-16-
The following summary of certain Purchase Plan provisions is qualified,
in its entirety, by reference to the Purchase Plan. Copies of the Purchase Plan
document may be obtained by a stockholder upon written request to the Secretary
of the Company at the executive offices in Westbury, New York.
PURPOSE. The purpose of the Purchase Plan is to provide employees of
the Company and designated parent or subsidiary corporations (collectively,
"Participating Companies") an opportunity to participate in the ownership of the
Company by purchasing Common Stock of the Company through payroll deductions.
ADMINISTRATION. The Purchase Plan will be administered by the
Compensation Committee of the Board (the "Committee") and may be administered by
the Board. All costs and expenses incurred in plan administration will be paid
by the Company without charge to participants. All cash proceeds received by the
Company from payroll deductions under the Purchase Plan shall be credited to a
non-interest-bearing book account.
SHARES AND TERMS. The stock issuable under the Purchase Plan is the
Company's authorized but unissued or reacquired Common Stock. The maximum number
of shares of Common Stock that may be issued under the Purchase Plan is
1,300,000. The share pool under the Purchase Plan shall be increased on the
first trading day of each calendar year, beginning in 2002, by a number equal to
the lesser of (a) 1% of the total number of shares of the Company's Common Stock
then outstanding or (b) 750,000 shares of Common Stock. Common Stock subject to
a terminated purchase right shall be available for purchase pursuant to purchase
rights subsequently granted.
ADJUSTMENTS. If any change in the Common Stock occurs (through
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares, or other change affecting the outstanding Common Stock as a class
without the Company's receipt of consideration), appropriate adjustments shall
be made by the Company to the class and maximum number of shares subject to the
Purchase Plan, to the class and maximum number of shares purchasable by each
participant on any one purchase date, and the class and number of shares and
purchase price per share subject to outstanding purchase rights in order to
prevent the dilution or enlargement of benefits thereunder.
ELIGIBILITY. Generally, any individual who is customarily employed
by a Participating Company more than 20 hours per week and for more than five
months per calendar year is eligible to participate in the Purchase Plan
after the employee has completed six months of service with the Company.
However, for the first offering period of the Purchase Plan, the six-month
service requirement mentioned above will be waived. Approximately 1,500
employees, including 6 officers, will be eligible to participate in the
Purchase Plan as of October 20, 2000.
OFFERING PERIODS. The Purchase Plan is implemented by offering periods
that generally have a duration of 6 months. A new offering period commences
every six months. Generally, offering periods start on the first day in each of
May and November and end, respectively, on the last day of October of the same
year and April of the following year. The first offering period will begin on
February 1, 2001 and will end on April 30, 2001.
The participant will have a separate purchase right for each offering
period in which he or she participates. The purchase right will be granted on
the first day of the offering period and will be automatically exercised on the
last day of the offering period.
PURCHASE PRICE. The purchase price per share under the Purchase Plan is
85% of the lower of (i) the fair market value of a share of Common Stock on the
last trading day before the commencement of the applicable offering period, or
(ii) the fair market value of a share of Common Stock on the purchase date.
Generally, the fair market value of the Common Stock on a given date is the
closing price of the Common Stock, as reported on the Nasdaq National Market
System. The market value of the Common Stock as reported on the Nasdaq Stock
Market at the close of business on October 20, 2000 was $4.06.
LIMITATIONS. The plan imposes certain limitations upon a participant's
rights to acquire Common Stock, including the following:
1. No purchase right shall be granted to any person who immediately
thereafter would own, directly or indirectly, stock or hold outstanding options
or rights to purchase stock possessing more than five percent (5%) of the total
combined voting power or value of all classes of stock of the Company or any of
its parent or subsidiary corporations.
-17-
2. In no event shall a participant be permitted to purchase more than
500 shares on any one purchase date.
3. The right to purchase Common Stock under the Purchase Plan (or any
other employee stock purchase plan that the Company or any of its subsidiaries
may establish) in an offering intended to qualify under Section 423 of the Code
may not accrue at a rate that exceeds $25,000 in fair market value of such
Common Stock (determined at the time such purchase right is granted) for any
calendar year in which such purchase right is outstanding.
The purchase right shall be exercisable only by the participant during
the participant's lifetime and shall not be assignable or transferable by the
participant.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS. Payment for shares by
participants shall be by accumulation of after-tax payroll deductions during the
offering period. The deductions may not exceed 15% of a participant's cash
compensation paid during an offering period. Cash compensation for this purpose
will include elective contributions that are not includable in income under Code
Sections 125 or 401(k) and all bonuses, overtime, commissions, and other amounts
to the extent paid in cash.
The participant will receive a purchase right for each offering period
in which he or she participates to purchase up to the number of shares of Common
Stock determined by dividing such participant's payroll deductions accumulated
prior to the purchase date by the applicable purchase price (subject to the
"Limitations" section). The Plan Administrator may allow for the purchase of
fractional shares. In the event that participants are allowed to purchase only
whole shares, any payroll deductions accumulated in a participant's account that
are not sufficient to purchase a full share will be retained in the
participant's account for the subsequent offering period or refunded at the
discretion of the Plan Administrator. No interest shall accrue on the payroll
deductions of a participant in the Purchase Plan.
TERMINATION AND CHANGE TO PAYROLL DEDUCTIONS. A purchase right shall
terminate at the end of the offering period or earlier if (i) the participant
terminates employment and any payroll deductions that the participant may have
made with respect to a terminated purchase right will be refunded or (ii) the
participant elects to withdraw from the Purchase Plan. Any payroll deductions
that the participant may have made with respect to a terminated purchase right
under clause (ii) will be refunded unless the participant elects to have the
funds applied to the purchase of shares on the next purchase date. A participant
may decrease his or her deductions during an offering period as permitted by the
Committee.
AMENDMENT AND TERMINATION. The Purchase Plan shall continue in effect
until the earlier of (i) the date that is 20 years following the date the Board
adopted the Purchase Plan (ii) the date on which all shares available for
issuance under the Purchase Plan shall have been issued or (iii) a Corporate
Reorganization, unless the Purchase Plan is earlier terminated by the Board in
its discretion.
The Board may at any time alter, amend, suspend or discontinue the
Purchase Plan. The approval of the stockholders will be obtained as to any share
increase (except for the automatic share increase described under "Shares and
Terms") and to the extent required by applicable law.
In addition, the Company has specifically reserved the right,
exercisable in the sole discretion of the Board, to modify or terminate the
Purchase Plan immediately following any six-month offering period. If such right
is exercised by the Board, then the Purchase Plan may terminate in its entirety
and no further purchase rights will be granted or exercised, and no further
payroll deductions shall thereafter be collected under the Purchase Plan, or the
Purchase Plan may continue with a new offering period.
CORPORATE REORGANIZATION. In the event of (i) the consummation of a
merger or consolidation of the Company with or into another entity or any other
corporate reorganization; or (ii) the sale, transfer or other disposition of all
or substantially all of the Company's assets or the complete liquidation or
dissolution of the Company (a "Corporate Reorganization"), the purchase right
under the Purchase Plan will automatically be exercised immediately before
consummation of the Corporate Reorganization as if such date were the last
purchase date of the offering period. The purchase price per share shall be
equal to eighty-five percent (85%) of the lower of the fair market value per
share of Common Stock on the last trading date immediately prior to the start of
the offering period or the fair market value per share of Common Stock
immediately prior to the effective date of such Corporate Reorganization. Any
payroll deductions not applied to such purchase shall be promptly refunded to
the participant.
-18-
The grant of purchase rights under the Purchase Plan will in no way
affect the right of the Company to adjust, reclassify, reorganize, or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
PRORATION OF PURCHASE RIGHTS. If the total number of shares of Common
Stock for which purchase rights are to be granted on any date exceeds the number
of shares then remaining available under the Purchase Plan, the Committee shall
make a pro rata allocation of the shares remaining.
FEDERAL INCOME TAX CONSEQUENCES. The following is a general description
of certain federal income tax consequences of the Purchase Plan. This
description does not purport to be complete.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. Under a plan which so qualifies, no taxable
income will be reportable by a participant, and no deductions will be allowable
to the Company, by reason of the grant or exercise of the purchase rights issued
thereunder. A participant will, however, recognize taxable income in the year in
which the purchased shares are sold or otherwise made the subject of
disposition.
A sale or other disposition of the purchased shares will be a
disqualifying disposition if made before the later of two years after the start
of the offering period in which such shares were acquired or one year after the
shares are purchased. If the participant makes a disqualifying disposition of
the purchased shares, then the Company will be entitled to an income tax
deduction for the taxable year in which such disposition occurs, equal to the
amount by which the fair market value of such shares on the date of purchase
exceeded the purchase price, and the participant will be required to satisfy the
employment and income tax withholding requirements applicable to such income. In
no other instance will the Company be allowed a deduction with respect to the
participant's disposition of the purchased shares.
Any additional gain or loss recognized upon the disposition of the
shares will be a capital gain, which will be long-term if the shares have been
held for more than one (1) year following the date of purchase under the
Purchase Plan.
The foregoing is only a summary of the federal income taxation
consequences to the participant and the Company with respect to the shares
purchased under the Purchase Plan. In addition, the summary does not discuss the
tax consequences of a participant's death or the income tax laws of any city,
state or foreign country in which the participant may reside.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
COMPANY'S 2001 EMPLOYEE STOCK PURCHASE PLAN.2002.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in their discretion on such matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the solicitation
will be borne by the Company.
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Securities and Exchange
Commission by certified mail-return receipt requested, stockholder proposals
intended for presentation at the 20012002 Annual Meeting of Stockholders must be
delivered to the Secretary of the Company at the principal executive office of
the Company no earlier than
-19-
August 8, 2001, and not later than September 7, 2001by July 3, 2002 if such proposals are to be considered for inclusion
in the Company's Proxy Statement for the 20012002 Annual Meeting of Stockholders. If
a stockholder desires to bring business before an annual meeting which is not
the subject of a proposal timely submitted for inclusion in the Proxy Statement,
written notice of such business must be received by September 16, 2002.
By Order of the Board of Directors
/s/ James F. McCann
James F. McCann
Chairman of the Board and Chief
Executive Officer
Westbury, New York
November__, 2000
-20-
APPENDIX A
AUDIT COMMITTEE CHARTER
ORGANIZATION
The audit committee of the board of directors shall be comprised of at least
three directors who are independent of management and the Company. Members of
the audit committee shall be considered independent if they have no relationship
to the Company that may interfere with the exercise of their independence from
management and the Company. All audit committee members will be financially
literate, and at least one member will have accounting or related financial
management expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the directors in fulfilling
their responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices of the Company,
and the quality and integrity of financial reports of the Company. In so doing,
it is the responsibility of the audit committee to maintain free and open
communication between the directors, the independent auditors, the internal
auditors, and the financial management of the Company.
RESPONSIBILITIES
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Company are in accordance with all
requirements and are the highest quality.
In carrying out these responsibilities, the audit committee will:
o Obtain the full board of directors' approval of this Charter and review and
reassess this Charter as conditions dictate (at least annually).
o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the Company and its divisions
and subsidiaries.
o Have a clear understanding with the independent auditors that they are
ultimately accountable to the board of directors and the audit committee,
as the shareholders' representatives, who have the ultimate authority in
deciding to engage, evaluate, and if appropriate, terminate their services.
o Review and concur with management's appointment, termination, or
replacement of the director of internal audit.
o Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit and timely quarterly reviews for
the current year and the procedures to be utilized, the adequacy of the
independent auditor's compensation, and at the conclusion thereof review
such audit or review, including any comments or recommendations of the
independent auditors.
o Review with the independent auditors, the Company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal controls or particular
areas where new or more detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of internal controls to
expose any payments, transactions, or procedures that might be deemed
illegal or otherwise improper. Further, the committee periodically should
review Company policy statements to determine their adherence to the code
of conduct.
o Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related Company compliance policies.
-21-
o Review the internal audit function of the Company including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year, and the coordination of such plans with the
independent auditors.
o Inquire of management, the internal auditor, and the independent auditors
about significant risks or exposures and assess the steps management has
taken to minimize such risks to the Company.
o Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit plan,
with explanations for any deviations from the original plan.
o Review the quarterly financial statements with financial management and the
independent auditors prior to the filing of the Form 10-Q (or prior to the
press release of results, if possible) to determine that the independent
auditors do not take exception to the disclosure and content of the
financial statements, and discuss any other matters required to be
communicated to the committee by the auditors. The chair of the committee
may represent the entire committee for purposes of this review.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Review with
financial management and the independent auditors the results of their
timely analysis of significant financial reporting issues and practices,
including changes in, or adoptions of, accounting principles and disclosure
practices, and discuss any other matters required to be communicated to the
committee by the auditors. Also review with financial management and the
independent auditors their judgments about the quality, not just
acceptability, of accounting principles and the clarity of the financial
disclosure practices used or proposed to be used, and particularly, the
degree of aggressiveness or conservatism of the organization's accounting
principles and underlying estimates, and other significant decisions made
in preparing the financial statements.
o Provide sufficient opportunity for the internal and independent auditors to
meet with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the Company's financial, accounting,
and auditing personnel, and the cooperation that the independent auditors
received during the course of audit.
o Review accounting and financial human resources and succession planning
within the Company.
o Report the results of the annual audit to the board of directors. If
requested by the board, invite the independent auditors to attend the full
board of directors meeting to assist in reporting the results of the annual
audit or to answer other directors' questions (alternatively, the other
directors, particularly the other independent directors, may be invited to
attend the audit committee meeting during which the results of the annual
audit are reviewed).
o On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional services
as required by Independence Standards Board Standard No.November 1, Independence
Discussions with Audit Committees. In addition, review with the independent
auditors the nature and scope of any disclosed relationships or
professional services and take, or recommend that the board of directors
take, appropriate action to ensure the continuing independence of the
auditors.
o Review the Annual Report on Form 10-K disclosing whether or not the
committee had reviewed and discussed with management and the independent
auditors, as well as discussed within the committee (without management or
the independent auditors present), the financial statements and the quality
of accounting principles and significant judgments affecting the financial
statements. In addition, disclose the committee's conclusion on the
fairness of presentation of the financial statements in conformity with
GAAP based on those discussions.
o Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors.
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o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
o Review the Company's disclosure in the proxy statement for its annual
meeting of shareholders that describes that the Committee has satisfied its
responsibilities under this Charter for the prior year. In addition,
include a copy of this Charter in the annual report to shareholders or the
proxy statement at least triennially or the year after any significant
amendment to the Charter.
-23-2001
(Form of Proxy)
1-800-FLOWERS.COM, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - December 6, 2000
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)4, 2001
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of 1-800-FLOWERS.COM, Inc. hereby appoints James F.
McCann, Chairman of the Board and Chief Executive Officer, and Gerard M.
Gallagher, Senior Vice President, General Counsel, or any one of them, with full
power of substitution in each, as proxies to vote the shares of stock, in
accordance with the undersigned's specifications, which the undersigned could
vote if personally present at the Annual Meeting of Stockholders of
1-800-FLOWERS.COM, Inc. to be held at the offices of the Company's subsidiary, The Plow & Hearth Inc.,Bethpage Fulfillment Center,
which is located at State Route 230 West,
Madison, Virginia 22727,700 Hicksville Road, Bethpage, NY 11714 (the "Meeting
Place"), (the "Meeting Place"), on Wednesday,Tuesday, December 6, 20004, 2001 at 9:00 a.m.
eastern standard time or any adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
FOR all nominees below WITHHOLD AUTHORITY
|_| (EXCEPT AS MARKED TO THE CONTRARY)(except as marked to the contrary) |_| to vote for all nominees below
Jeffrey C. Walker, Kevin J. O'Connor, Lawrence V. CalcanoDavid M. Beirne and Charles R. Lax
INSTRUCTION: To withhold authority to vote for an individual nominee, write
the nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. RATIFICATION OF ACCOUNTANTSINDEPENDENT AUDITORS
FOR AGAINST ABSTAIN WITH RESPECT TO
|_| |_| |_|
proposal to ratify the selection of Ernst & Young LLP, independent public
accountants, as auditors of the Company for the fiscal year ending July 2, 2001 as described in the Proxy Statement.
3. APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
FOR AGAINST ABSTAIN WITH RESPECT TO
|_| |_| |_|
proposal to approve the Company's Employee Stock Purchase PlanJune 30,
2002 as described in the Proxy Statement.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF
THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS, "FOR"
PROPOSAL 2, "FOR" PROPOSAL 3, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES AS TO
OTHER MATTERS WHICH PROPERLY COME BEFORE THE ANNUAL MEETING.
All of the proposals set forth are proposals of the Company. None of the
proposals is related to or conditioned upon approval of any other proposal.
-24-
Please date and sign exactly as your name appears on the envelope in which this
material was mailed. If shares are held jointly, each stockholder should sign.
Executors, administrators, trustees, etc. should use full title and, if more
than one, all should sign. If the stockholder is a corporation, please sign full
corporate name by an authorized officer. If the stockholder is a partnership,
please sign full partnership name by an authorized person.
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Signature(s) of Stockholder
Dated:____________________
-25-