Securities and Exchange Commission
Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box:
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| ¨ | Soliciting Material under Rule 14a-12 |
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NOTICE OF ANNUAL MEETING OF
STOCKHOLDERSSHAREHOLDERS
To the
StockholdersShareholders of Nautilus, Inc.:
The annual meeting of
stockholdersshareholders of Nautilus, Inc.
(the “Company”) will be held on
Wednesday,Tuesday, May
1, 2013,6, 2014, at
the Company’s formerour headquarters building,
1115 SE 164th Ave,17750 S.E. 6th Way, Vancouver, Washington 98683, beginning at 1:00 p.m. Pacific Daylight Time, for the following purposes:
1. To elect a Board of Directors, consisting of six (6) members, to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified;
2. To ratify the Audit Committee’s appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013;
3. To adopt, on an advisory basis, a resolution approving the Company’s executive compensation as reported in this Proxy Statement;
4. To approve, on an advisory basis, a resolution relating to the frequency of voting on the Company’s executive compensation; and
5. To consider and act upon any other matter which may properly come before the annual meeting or any adjournment thereof.
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| 1. | To elect a Board of Directors, consisting of six (6) members, to serve until the next annual meeting of shareholders or until their successors are duly elected and qualified; |
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| 2. | To ratify the Audit Committee's appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2014; |
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| 3. | To approve the compensation of the named executive officers for the year ended December 31, 2013 in a non-binding, advisory vote, as reported in this Proxy Statement; and |
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| 4. | To consider and act upon any other matter which may properly come before the annual meeting or any adjournment thereof. |
Only
stockholdersshareholders who held their shares at the close of business on March
15, 2013,21, 2014, the record date, are entitled to notice of and to vote at the annual meeting or any adjournment or postponement thereof.
All stockholdersshareholders are cordially invited to attend the annual meeting.Whether or not you plan to attend the annual meeting, please sign and promptly return the enclosed proxy card, which you may revoke at any time prior to its use. A prepaid, self-addressed envelope is enclosed for your convenience. Your shares will be voted at the annual meeting in accordance with your proxy. |
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By | | By Order of the Board of Directors |
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Secretary |
Vancouver, Washington
March 29, 2013
April 2, 2014
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of StockholdersShareholders to Be Held On May 1, 2013:6, 2014: Pursuant to rules promulgated by the Securities and Exchange Commission (the
“SEC”"SEC"), we have elected to provide access to our proxy materials both by sending you this full set of proxy materials, including a
noticeNotice of
annual meeting,Annual Meeting and
2012a 2013 Annual Report to
Stockholders,Shareholders, and by notifying you of the availability of our proxy materials on the Internet. The
noticeNotice of
annual meeting, proxy statement,Annual Meeting, Proxy Statement and
20122013 Annual Report to
StockholdersShareholders are available at http://www.nautilus.com/proxy. In accordance with the SEC rules, the materials on the website are searchable, readable and printable, and the website does not have “cookies” or other tracking devices which identify visitors. Directions to
the Company’sour annual meeting are
also available at http://www.nautilus.com/proxy.
2013
2014 ANNUAL MEETING OF
STOCKHOLDERSNOTICE OF ANNUAL MEETING AND SHAREHOLDERS
Vancouver, Washington 98683
Our Board of Directors (the “Board”) is furnishing this
proxy statementProxy Statement and the accompanying Annual Report to
Stockholders, noticeShareholders, Notice of
annual meetingAnnual Meeting and proxy card in connection with its solicitation of proxies for use at our
20132014 annual meeting of
stockholdersshareholders (the "Annual Meeting") or any adjournment thereof. The annual meeting will be held on
Wednesday,Tuesday, May
1, 2013,6, 2014, beginning at 1:00 p.m., Pacific Daylight Time at the following location:
1115 SE 164th Ave
17750 S.E. 6th Way
Vancouver, Washington 98683
Our Board has designated the two persons named on the enclosed proxy card,
Bruce M.
Carl Johnson, IIICazenave and
Wayne M. Bolio,Sidharth Nayar, to serve as proxies in connection with the
annual meeting.Annual Meeting. These proxy materials and the accompanying Annual Report to
StockholdersShareholders are being mailed on or about
March 29, 2013April 2, 2014 to our
stockholdersshareholders of record as of March
15, 2013.Our principal executive offices are located at 17750 SE 6th Way, Vancouver, Washington 98683. As used in this proxy statement, the terms “we,” “our,” “us,” “Nautilus,” and “Company” refer to Nautilus, Inc. and its subsidiaries.
21, 2014.
You may revoke any proxy you execute at any time prior to its use at the
annual meetingAnnual Meeting by:
•delivering written notice of revocation to our Secretary;
•delivering an executed proxy bearing a later date to our Secretary; or
•attending the annual meetingAnnual Meeting and voting in person.
Our Board has fixed the close of business on March
15, 201321, 2014 as the record date for determining which of our
stockholdersshareholders are entitled to notice of and to vote at the
annual meeting.Annual Meeting. At the close of business on the record date,
30,974,33631,182,242 shares of our common stock were outstanding.
Each share of common stock outstanding on the record date is entitled to one vote per share at the
annual meeting. StockholdersAnnual Meeting. Shareholders are not entitled to cumulate their votes. The presence, in person or by proxy, of the holders of a majority of our outstanding shares of common stock is necessary to constitute a quorum at the
annual meeting.Annual Meeting.
If you abstain from voting, your shares will be deemed present at the
annual meetingAnnual Meeting for purposes of determining whether a quorum is present.
Broker Discretionary Voting
If you hold your shares in street name, your broker, bank or other similar institution may be able to vote your shares without your instructions depending on whether the matter being voted on is “discretionary” or “non-discretionary.” In the case of a discretionary matter (for example, the ratification of the independent registered public accounting firm), your broker is permitted to vote your shares of common stock if you have not given voting instructions. In the case of a non-discretionary matter (for example, the election of directors
and the advisory vote to approve
executive compensation, and the advisory vote on the frequency of future advisory votes on executive compensation), your broker cannot vote your shares if you have not given voting instructions.
A “broker non-vote” occurs when your broker submits a proxy for the Annual Meeting with respect to discretionary matters, but does not vote on non-discretionary matters because you did not provide voting instructions on these matters. Therefore, it is important that you provide specific voting instructions regarding non-discretionary matters
(such as election of directors and matters related to executive compensation) to your broker, bank or similar institution.
Votes Required to Approve Each Proposal
At this Annual Meeting each director will be elected by the vote of the majority of the votes cast with respect to the director nominee. This means to elect the director nominee, the number of shares voted “For” the director nominee must exceed the number of shares voted “Against” the director nominee. Abstentions and broker non-votes will not be considered votes cast.
The affirmative vote of the holders of a majority of the shares of common stock present or represented and voting is required to approve
the ratification of the selection of the independent registered public accounting firm
adopt (on anand to approve on a non-binding, advisory
basis) the resolution approving the Company’sbasis, our named executive
compensation, choose (on an advisory basis) one of the three options on the frequency of future stockholder votes on executive compensation, and approve any other matters that properly come before the Annual Meeting.officer compensation. Abstentions and broker non-votes will not be considered to have been voted.
In the case of the proposal to choose (on an advisory basis) the frequency of future advisory votes on executive compensation, if none of the three frequency options receives the vote of the holders of a majority of the shares of the common stock present or represented and voting, we will consider the frequency option (one year, two years or three years) receiving the highest number of votes to be the frequency that has been recommended by stockholders. Abstentions and broker non-votes will not be considered to have been voted.
When a proxy card is properly dated, executed and returned, the shares it represents will be voted at the
annual meetingAnnual Meeting in accordance with the instructions specified in the proxy. If no specific instructions are given, the shares will be voted FOR the election of the director nominees described below, FOR the ratification of Deloitte & Touche LLP as our independent registered public accounting firm
for the year ending December 31, 2014 and FOR the proposal to
adopt anapprove, on a non-binding, advisory
resolution approvingbasis, the compensation of our named executive
compensation, and to select ONE YEARofficers as
set forth in the
frequency for future advisory votes on executive compensation.proxy statement. If other matters come before the
annual meeting,Annual Meeting, the persons named in the accompanying proxy will vote in accordance with their best judgment with respect to such matters.
Cost of Proxy Solicitation
We do not plan to hire a proxy solicitor in connection with the
annual meeting,Annual Meeting, but, to the extent we choose to use proxy solicitor services,
Nautiluswe will pay the related fees and expenses.
Procedures for
StockholderShareholder Proposals and Nominations
Under our amended and restated bylaws, as amended
(“Bylaws”("Bylaws"), nominations for directors at an annual meeting may be made only by (1) the Board or a committee of the Board, or (2) a
stockholdershareholder entitled to vote who has delivered notice to
the Companyus within 120 to 180 days before the first anniversary of the date of the mailing of the notice for the preceding
year’syear's annual meeting.
Our Bylaws also provide that business may not be brought before an annual meeting unless it
isis: (1) specified in the notice of meeting (which includes
stockholdershareholder proposals that we are required to include in our proxy statement under SEC Rule 14a-8)
,; (2) brought before the meeting by or at the direction of the
Board,Board; or (3) brought by a
stockholdershareholder entitled to vote who has delivered notice to
the Companyus (containing certain information specified in the Bylaws) within 120 to 180 days before the first anniversary of the date of the mailing of the notice for the preceding
year’syear's annual meeting. In addition, you must comply with SEC Rule 14a-8 to have your proposal included in our proxy statement.
A copy of the full text of our Bylaws may be obtained upon written request to
the Companyour Secretary at the address provided on page 1 of this
proxy statement.Proxy Statement.
Where You Can Find More Information
We file our proxy statements and other information with the SEC under the Securities Exchange Act of 1934, as amended (“Exchange Act”). You can inspect and obtain a copy of our proxy statement and other information filed with the SEC at the offices of the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10 a.m. to 3 p.m. EST. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC maintains an Internet site at http://www.sec.gov/ where you can obtain most of our SEC filings. We also make available, free of charge, on our website at www.nautilusinc.com, our proxy statements filed with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after they are filed electronically with the SEC.
According to our Bylaws, our Board shall be comprised of
no more than seven (7) directors, provided, however that the number may be decreased by resolution of our Board. The Board has fixed the authorized number of our directors at six (6).
At
this Annual Meeting, our
annual meeting, our stockholdersshareholders will elect a board consisting of six (6) directors to serve until our
20142015 annual meeting or until their respective successors are elected and qualified. Our Board has nominated the individuals listed below to serve on our Board. All of the nominees are currently members of our Board. If any nominee is unable or unwilling to serve as a director at the time of the
annual meeting,Annual Meeting, our Board may provide for a lesser number of directors or designate a substitute. If our Board designates a substitute, the proxy holders will have the discretionary authority to vote for the substitute. Proxies may not be voted for more than six (6) nominees.
Our Board unanimously recommends that you vote FOR each of the following nominees for election as director:
M. Carl Johnson, III, 64, 65, was elected to our Board on July 1, 2010. Mr. Johnson is Chairman of the Board and a member of the Compensation Committee. In January 2013,February 2014, Mr. Johnson was appointed Group Executive Vice President, Marketing and Chief Growth Officer of Del Monte Foods,Big Heart Pet Brands, with primaryline and operating responsibility for driving the company’s growthwidely distributed brands, and overseeing corporate strategy,the innovation, marketing and creative services, consumer and customer insights, research and development, communications and government relations. Additionally, he currently serves as acting general manager of Del Monte’s Pet Business.relations groups. He joined Del Monte Foods, predecessor of Big Heart Pet Brands, in November 2011 as Executive Vice President, Brands. From 2001 until April 2011, Mr. Johnson served as senior vice presidentSenior Vice President and chief strategy officerChief Strategy Officer of the Campbell Soup Company, where he had direct responsibility for corporate strategy, research & development, quality, corporate marketing services, licensing, and e-business. Mr. Johnson joined Campbell from Kraft Foods, where he ran three successively larger business divisions. Mr. Johnson earned his B.A. degree in governmentGovernment and economicsEconomics from Wesleyan University, and his M.B.A. degree from the University of Chicago. Mr. Johnson serves as an advisory board member of the Agricultural Sustainability Institute, University of California, Davis. He also serves as a member of the boardBoard of directorsDirectors of Avedro, Inc., a privately held pioneer in vision correction technology. Mr. Johnson is a trustee of the Adelphic Educational Fund, Wesleyan University, which grants scholarships and supports educational, literary and artistic programs. He is also a member of the steering committeeSteering Committee of the Kilts Center for Marketing at the University Ofof Chicago Graduate School Ofof Business, which provides scholarships to top marketing students and helps the school steer its marketing curriculum. Our Board has determined that Mr. Johnson has the requisite experience and expertise to be a director of Nautilus based on his consumer marketing expertise and strong background in corporate expansion strategy.
Ronald P. Badie, 70, 71, joined our Board in August 2005. Mr. Badie is the Chairman of the Compensation Committee and a member of the Nominating and Governance Committee and the Audit Committee. Mr. Badie spent over 35 years with Deutsche Bank and its predecessor, Bankers Trust Company, retiring in 2002 as vice chairmanVice Chairman of Deutsche Bank Alex Brown (now Deutsche Bank Securities), the firm’sfirm's investment banking subsidiary. In addition,Mr. Badie currently serves as a director of Amphenol Corporation. Mr. Badie was a director of Obagi Medical Products, Inc. from December 2006 to April 2013. He also served as the Chairman of the Compensation Committee and member of the Audit Committee for Obagi Medical Products. Mr. Badie was a director of Merisel, Inc. from October 2004 to March 2011 and Integrated Electrical Services, Inc. between October 2003 and May 2006. Mr. Badie currently serves as a director and audit committee member of Obagi Medical Products, Inc. and Amphenol Corporation. In addition, Mr. Badie is the chairman of the compensation committee for Obagi Medical Products. Mr. Badie is a graduate of Bucknell University and received an MBAM.B.A. from New York University’sUniversity's Stern School of Business. Our Board determined that Mr. Badie has the requisite experience and expertise to be a director of Nautilus based on his broad experience while serving as a director of several publicly-traded and privately-held companies. In addition, Mr. Badie spent many years as an investment banker and has extensive experience in structured finance and capital markets transactions.
Bruce M. Cazenave, 58,59, was appointed Chief Executive Officer and elected to our Board in May 2011. Mr. Cazenave also served as our Acting Chief Financial Officer from July 3, 2013 until February 27, 2014. From January 2010 until his appointment as the Company’sour Chief Executive Officer, Mr. Cazenave served as managing director of Inflection Point Consulting, a business consulting firm, where he consulted with and served as an executive advisor to private equity firms in the U.S. and Europe. From 2006 to 2009, Mr. Cazenave worked for Central Garden & Pet Company, serving as president of its Garden Décor Group. Central Garden & Pet Company is a marketer and producer of quality branded products for the lawn and garden and pet supplies markets.markets, serving as president of its Garden Décor Group. From January 2006 to August 2006, Mr. Cazenave served as a strategy consultant to Timex Corporation, a watch manufacturer, where he focused on supply chain, operational and organizational priorities for the watch manufacturer.priorities. From 2002 to 2005, Mr. Cazenave served as presidentPresident & CEO of Dorel Juvenile Group, a subsidiary of Dorel Industries, Inc. Dorel Juvenile Group is a marketer and manufacturer of juvenile products. Mr. Cazenave has also served in senior executive roles at Black & Decker U.S., Inc. and Timberland - both in the U.S and Europe. Mr. Cazenave is a graduate of John Hopkins University and received a Master's degree from George Washington University. The Board has concluded that Mr. Cazenave should continue serving as a director based on his over 20 years of senior executive leadership and extensive background running divisions of premier global consumer products companies focused on profitable growth.
Richard A. Horn, 65, 66, was elected to our Board in December 2007. Mr. Horn ishas served as Chairman of the Nominating and Governance Committee since 2008 and is a member of the Audit Committee andCommittee. Effective in May, 2014 he will assume the Chairmanship of the Compensation Committee. Mr. Horn has been a private investor since February 2002. Mr. Horn was general manager of the PetsHotel Division of PETsMART, Inc., a publicly-traded company that provides products, services and solutions for the lifetime needs of pets, from April 2001 through February 2002. From January 1999 through March 2001, he was senior vice-presidentSenior Vice-President and general merchandise manager of PETsMART.com, Inc. and from July 1994 until December 1998, he was vice-presidentVice-President and general merchandise manager of PETsMART, Inc. From 1992 to 1994, Mr. Horn was chief financial officer of Weisheimer Companies, Inc., a chain of retail pet supply stores. Mr. Horn was a partner at Coopers & Lybrand (now PricewaterhouseCoopers), an international public accounting and business consulting firm, from 1980 to 1992. Mr. Horn currently serves on the boardBoard of directorsDirectors of Lucky Litter L.L.C., a privately-financed manufacturer and marketer of pet products. Mr. Horn currently serves on the Board of Trustees of The Saint Joseph’sJoseph's Hospital Foundation;Foundation in Phoenix, AZ; and on the Board of Directors of the Fiesta Bowl. Our Board has determined that Mr. Horn has the requisite experience and expertise to be a director of Nautilus. As a former retail merchandising and direct-marketing manager, former chief financial officerChief Financial Officer and a former partner at Coopers & Lybrand, Mr. Horn brings particular expertise to our Board in the areas of direct marketing sales, consumer product merchandising, and service industries, investor relations, financial reporting, accounting and auditing for complex multinational operations. Anne G. Saunders, 51, 52, was elected to our Board effectivein April 2, 2012. In2012 and has also served on the Audit Committee and the Compensation Committee since that time. Effective in May, 2014 she will assume the Chairmanship of the Nominating and Governance Committee. From August 2012,2013 to December 2013, Ms. Saunders was named Presidentpresident of Redbox, thean entertainment company. In this role, she has full P&L responsibility for the two billion dollar business. Redboxcompany that is owned and operated by Coinstar, IncInc. (NASDAQ:CSTR), one of Fortune Magazine’s 100 Fastest-Growing Companies for 2012.. From March 2009 until January 2012, Ms. Saunders was executive vice president and chief marketing officer for Knowledge Universe, a privately-held early education company with over 1600 schools nationwide. From February 2008 until March 2009, Ms. Saunders’Saunders was senior vice president, consumer bank executiveSenior Vice President, Consumer Bank Executive and, from May 2007 until February 2008, she was senior vice president, brand executive,Senior Vice President, Brand Executive, for Bank of America Corporation (NYSE:BAC). Between 2001 and 2007, Ms. Saunders held a variety of positions with Starbucks Coffee Co. (NASDAQ:SBUX), including senior vice president,Senior Vice President, global brand, during that company’scompany's period of rapid domestic and international growth. Ms. Saunders has also held executive and senior management positions with eSociety, a B2B e-commerce company, AT&T Wireless and Young & Rubicam. She received a BA from Northwestern University and a MBA from Fordham University. Additionally, Ms. Saunders previously served, from 2006 until 2007, as a director for Blue Nile, Inc. (NASDAQ:NILE). She received a B.A. from Northwestern University and an M.B.A. from Fordham University. Our Board has determined that Ms. Saunders’Saunders has the requisite experience to be a director of Nautilus. Ms. Saunders brings to our Board a strong background in marketing and building brands and understanding the consumer marketplace provides the CompanyNautilus with additional expertise with regards to its current and new product lines.understanding of the consumer marketplace. Marvin G. Siegert, 64, 65, joined our Board in August 2005. Mr. Siegert is Chairman of the Audit Committee and a member of the Compensation Committee and the Nominating and Governance Committee. Currently a private investor, Mr. Siegert was presidentPresident and chief operating officerChief Operating Officer of The Pyle Group LLC, a private equity investment group, from 1996 until July 2007. Prior to The Pyle Group, Mr. Siegert spent 26 years with Rayovac Corporation, a manufacturer of batteries and lighting products, where he held various positions, with his mostrecent position as senior vice presidentSenior Vice President and chief financial officer.Chief Financial Officer. Currently, Mr. Siegert serves as audit committee chairmanAudit Committee Chairman on the boardBoard of directorsDirectors of Great Lakes Educational Loan Services, Inc., a privately-held student loan servicing company and Behrens Manufacturing, Inc., a manufacturer and distributor of high quality metal containers. He is also a member of the boardBoard of directorsDirectors of Uniek, Inc., a manufacturer and distributor of picture frames and wall décor. From 2005 until December 2012, Mr. Siegert was a member of the boardBoard of directorsDirectors of Hy Cite Corporation, a privately-held direct sales marketing company.company . Mr. Siegert graduated from the University of Wisconsin, Whitewater with a degree in accounting and holds a master’sMaster's degree in management from the University of Wisconsin, Madison. Our Board has determined that Mr. Siegert has the requisite experience and expertise to be a director of Nautilus. As a former presidentPresident and chief operating officerChief Operating Officer of a private equity investment group and former chief financial officerChief Financial Officer of a privately-held global consumer products company, Mr. Siegert brings a particular expertise to our Board in the areas of consumer products, investor relations and financial strategies.
No family relationship exists among any of the directors or executive officers. No arrangement or understanding exists between any director or executive officer and any other person pursuant to which any director was selected as a director or executive officer of Nautilus.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Our Board oversees our overall performance on behalf of our
stockholders.shareholders. Members of our Board stay informed of our business through discussions with our Chief Executive Officer
(“CEO”("CEO") and other members of our executive team, by reviewing materials provided to them, and by participating in regularly scheduled Board and committee meetings.
Our Board is elected by our stockholdersshareholders to govern the Company’sour business and affairs. Our Board selects our senior management team, which is charged with conducting our business. Having selected our senior management team, our Board acts as an advisor to senior management
and monitors their performance. Our Board reviews
the Company’sour strategies, financial objectives and operating plans. It also plans for management succession of our Chief Executive Officer, as well as other senior management positions, and oversees our compliance efforts.
Our Board has determined that each of Ronald P. Badie, Richard A. Horn, M. Carl Johnson, III, Anne G. Saunders and Marvin G. Siegert qualify as an “independent director” under our Corporate Governance Guidelines (available on our website at www.nautilusinc.com), Section 303A.02 of the Listed Company Manual (the
“Listed"Listed Company
Manual”Manual") of the New York Stock Exchange
(“NYSE”("NYSE"), and applicable rules of the SEC, and that each such person is free of any relationship that would interfere with the individual exercise of independent judgment. Our Board has further determined that each member of the
Board’sBoard's three committees meets the independence requirements applicable to those committees prescribed by the Listed Company Manual and the SEC, including
RuleRules 10A-3(b)(1)
and 10C-1 under the Exchange Act related to
independence of audit committee
member independence.and compensation committee members, respectively.
Our Board met
sevenfour times in
20122013 and all of our directors attended at least 75% of the meetings of our Board and of the meetings held by the committee(s) on which they served. Currently, we do not have a policy requiring our Board
members’members' attendance at the annual meetings of our
stockholders. One directorshareholders. All of our directors attended our
20122013 annual
stockholdersshareholders meeting.
In order to promote open discussion among independent directors, our board of directors has a policy of conducting executive sessions of independent directors during each regularly scheduled board meeting and at such other times if requested by an independent director. These executive sessions are lead by our Chairman.
Transactions with Related Persons
Our Board recognizes that “transactions” with a “related person” (as such terms are defined in Item 404 of Regulation S-K) present a heightened risk of conflict of interest and/or improper valuation (or the perception thereof) and, therefore, has adopted a policy which shall be followed in connection with all related person transactions. Specifically, this policy addresses our procedures for the review, approval and ratification of all related person transactions.
Our Board has determined that
itsthe Audit Committee is best suited to review and approve related person transactions. Accordingly, any related person transactions recommended by management shall be presented to the Audit Committee for approval at a regularly scheduled meeting of the Audit Committee. Any related person transaction shall be consummated or shall continue only if the Audit Committee approves the transaction, the disinterested members of our Board approve the transaction, or the transaction involves compensation approved by the Compensation Committee.
Our Board currently has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each committee is governed by a written charter that may be amended by our Board at any time. The full text of each committee charter and our Corporate Governance Guidelines are available on our website located at www.nautilusinc.com or in print to any interested party who requests it. Requests should be sent to the
CompanyNautilus, Inc. Secretary at the address provided on page 1 of this
proxy statement.Proxy Statement.
The Audit Committee is established in accordance with Section 3(a)(58)(A) of the Exchange Act and represents and assists our Board in fulfilling its oversight responsibility relating to (i) the integrity of our financial statements and other financial information furnished by Nautilus, (ii) our compliance with legal and regulatory requirements, (iii) our system of internal accounting and financial controls, (iv) our registered independent public accounting firm’sfirm's qualifications, performance, compensation and independence, (v) the performance of our internal audit function, and (vi) compliance with our code of business conduct and ethics. In fulfilling the duties outlined in its charter, the Audit Committee, among other things, shall:
have the sole authority and responsibility to select, evaluate and, where appropriate, replace our registered independent public accounting firm;
review and discuss with management and our registered independent public accounting firm, prior to release to the general public and legal and regulatory agencies, our annual audited financial statements and quarterly financial statements, including disclosures contained in our Annual Report on Form 10-K under the section heading “Management’s“Management's Discussion and Analysis of Financial Condition and Results of Operations,” and matters required to be reviewed under applicable legal, regulatory or public company exchange listing requirements;
discuss polices developed by management and our Board with respect to risk assessment and risk management and steps management has taken to monitor and control financial risk exposure, including anti-fraud programs and controls;
review the responsibilities, functions and performance of our internal audit function, including internal audit’saudit's charter, plans and budget and the scope and results of internal audits;
review management’smanagement's report on internal control over financial reporting and discuss with management and the registered independent public accounting firm any significant deficiencies or material weaknesses in the design or operation of our internal controls; and
establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters or violations of our code of conduct.
As of the date of this proxy statement,
During 2013, the Audit Committee
consistsconsisted of four independent directors, Marvin G. Siegert (Chairman), Ronald P. Badie, Richard A. Horn and Anne G. Saunders.
Mr. Siegert has served as Chairman of the committee since May 2007. Mr. Horn was appointed to the Committee in December 2007, Mr. Badie in May 2011 and Ms. Saunders in June 2012.Each current member of the Audit Committee meets the independence, financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE relating to audit committees. In addition, our Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial expert” under the regulations of the SEC. Although all members of the Audit Committee meet the current NYSE regulatory requirements for accounting or related financial management expertise, and our Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial expert,” members of the Audit Committee are not professionally engaged in the practice of auditing or accounting and are not technical experts in auditing or accounting. The Audit Committee met five times during 2012.
2013.
A copy of the full text of the Audit Committee Charter can be found on our website at www.nautilusinc.com.
The Compensation Committee
The Compensation Committee is responsible for overseeing the Company’s compensation of our employees, including equity-based plans, and employee benefit plans and practices, including the compensation and benefits of our executive officers. The Compensation Committee also administers our 2005 Long-Term Incentive Plan. In fulfilling the duties outlined in its charter, the Compensation Committee, among other things, shall:
review periodically our executive compensation plans in light of the Company’sour goals and objectives with respect to such plans and, if the committee deems appropriate, adopt, or recommend to our Board the adoption of new, or the amendment of existing, executive compensation plans;
evaluate annually the performance of our Chief Executive Officer (“CEO”)CEO and, with our CEO’sCEO's participation and input, that of our other executive officers in light of the goals and objectives of our executive compensation plans. Based on this evaluation, the Compensation Committee shall determine and approve the CEO’sCEO's compensation level and, with the CEO’sCEO's participation and input, the compensation levels of our other executive officers;
approve any equity compensation awarded to any of our executive officers, subject to the requirements of the applicable compensation plans; and
with respect to SEC reporting requirements, review and discuss with management our compensation discussion and analysis, and oversee the preparation of, and approve, the Compensation Committee’sCommittee's report on executive compensation to be included in our proxy statement.
The Compensation Committee may not delegate any power or authority required by any law, regulation or listing standard to be exercised by the committee. The Compensation Committee met four times during
2012.2013. Pursuant to its charter, the Compensation Committee has the authority, to the extent it deems necessary or appropriate, to retain compensation consultants, independent legal counsel or other advisors and has the sole authority to approve the fees and other retention terms with respect to such advisors. From time to time the Compensation Committee has engaged compensation consultants to advise it on certain matters. See "Compensation Discussion and Analysis".
A copy of the full text of the Compensation Committee Charter can be found on our website at www.nautilusinc.com.
Compensation Committee Interlocks and Insider Participation
As of the date of this proxy statement,
During 2013, the Compensation Committee
iswas comprised of five independent directors, Ronald P. Badie (Chairman), Richard A. Horn, M. Carl Johnson, III, Anne G. Saunders and Marvin G.
Siegert, each of whom served on the committee during 2012. Messrs. Horn and Badie were appointed to the committee in December 2007 and Mr. Badie was named the committee’s Chairman in May 2011. Mr. Johnson was appointed to the Compensation Committee in July 2010, Mr. Siegert in May 2011 and Ms. Saunders in June 2012.Siegert. None of the members of the
committeeCompensation Committee have a relationship with Nautilus, other than as directors and
stockholders.shareholders. No member of the Compensation Committee is, or was formerly, an officer or an employee of Nautilus. None of our executive officers served, during the year ended December 31,
2012,2013, as a member of the compensation committee or on the board of directors of any entity that has an executive officer serving as a member of
theour Compensation Committee or
the Board.
The Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for considering and making recommendations concerning the membership and function of the Board, and the development and review of corporate governance guidelines.
In fulfilling the duties outlined in its charter, the Nominating and Corporate Governance Committee, among other things, shall:
identify individuals qualified to become members of our Board and to select director nominees to be presented for stockholdershareholder approval at our annual stockholdersshareholders meeting;
review our Board’sBoard's committee structure and recommend to the Board for its approval directors to serve as members of each committee;
develop and recommend to our Board for its approval a set of corporate governance guidelines;
develop and recommend to our Board for its approval an annual self-evaluation process of the Board and its committees; and
review on an annual basis director compensation and benefits.
The Nominating and Corporate Governance Committee will consider recommendations for directorships submitted by
stockholders. Stockholdersshareholders. Shareholders who wish the Nominating and Corporate Governance Committee to consider their directorship recommendations should submit their recommendations in writing to Nautilus, Inc., 17750
SES.E. 6th Way, Vancouver, WA 98683, Attn: Chairman of Nominating and Corporate Governance Committee. Recommendations by
stockholdersshareholders that are made in accordance with these procedures will receive the same consideration given to nominations made by the committee.
Nominees may be suggested by directors, members of management,
stockholdersshareholders or, in some cases, by a third party firm. In identifying and considering candidates for nomination to the Board, the Nominating and Corporate Governance Committee considers a
candidate’scandidate's quality of experience,
theour needs
of the Company and the range of talent and experience represented on
itsour Board. In evaluating particular candidates, the
committeeNominating and Corporate Governance Committee will review the
nominee’snominee's personal and professional integrity, judgment, experience, and ability to serve the long-term interest of the
stockholders.shareholders. The
committeeNominating and Corporate Governance Committee will also take into account the ability of a director to devote the time and effort necessary to fulfill his or her
responsibilities. The committee also considersresponsibilities, as well as matters of diversity, including gender, race and national origin, education, professional experience and differences in viewpoints and skills. While the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, both the Board and the
committeeNominating and Corporate Governance Committee believe that it is essential that Board members represent a diverse range of experience, expertise and viewpoints.
As of the date of this proxy statement,
During 2013, the Nominating and Corporate Governance Committee
iswas comprised of three independent directors, Richard A. Horn (Chairman), Ronald P. Badie and Marvin G. Siegert.
Messrs. Badie and Horn were appointed to the committee and Mr. Horn was named the committee’s Chairman in 2007. Mr. Siegert was appointed to the committee in May 2011. The Nominating and Corporate Governance Committee met
two timesone time during
2012.2013.
A full copy of the Nominating and Corporate Governance Committee Charter can be found on our website at www.nautilusinc.com.
Communications with Directors
All interested parties may send correspondence to our Board or to any individual director at the following address: Nautilus, Inc., 17750
SES.E. 6th Way, Vancouver, Washington 98683.
Your communications should indicate that you are a
stockholdershareholder of Nautilus. Depending on the subject matter, we will either forward the communication to the director or directors to whom it is addressed, attempt to handle the inquiry directly, or not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic. Correspondence marked confidential will not be opened prior to forwarding to the Board or any individual director.
Code of Business Conduct and Ethics
We have adopted the Nautilus, Inc. Code of Business Conduct and Ethics (the “Code of Ethics”), which applies to all of our directors, officers and employees. You can view the Code of Ethics on our website at
www.nautilusinc.com. A copy of the Code of Ethics will be provided in print without charge to all interested parties who submit a request in writing to Nautilus, Inc., 17750 SE 6th Way, Vancouver, Washington 98683, Attn: Corporate Communications.
Board Leadership Structure
Our Board has a majority of independent directors; five out of the six (6) director nominees are independent. The Audit, Compensation, and Nominating and Corporate Governance committees each are composed solely of independent directors.
We separate the roles of Chairman of the Board and Chief Executive Officer in recognition of the differences between the two positions. Mr. Johnson acts as the Chairman, oversees
the Companyour business broadly, leads the meetings of our Board, and provides guidance to
the Company’sour management. Mr. Cazenave serves on the Board, but, as our Chief Executive Officer, he is also charged with oversight of the day-to-day operations of the business. We believe that consistency between day-to-day operations
of the Company and the overall management is reached through Mr.
Cazenave’sCazenave's service as the Chief Executive Officer and a director, but the separation of the Chairman and Chief Executive Officer roles is important to achieve a balance of oversight that is favorable to
the Companyus and our
stockholders.shareholders.
Board Role in Risk Oversight
While risk management is primarily the responsibility of our management team, our Board is responsible for overall supervision of risk management efforts as they relate to the key business risks we face. Management identifies, assesses, and manages the risks most critical to our operations and routinely advises our Board regarding those matters. Areas of material risk may include operational, financial, legal and regulatory, human capital, information technology and security, and strategic and reputational risks. Our
Board’sBoard's role in risk oversight is consistent with our leadership structure, with senior management having responsibility for assessing and managing risk exposure, and our Board and its committees providing oversight
as necessary in connection with those efforts.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, as well as persons who own more than 10% of our outstanding common stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of shares of our common stock. Based solely on a review of copies of such forms furnished to us and written representations from our executive officers, directors and 10% stockholders, we believe that all Section 16(a) filing requirements applicable to Nautilus were timely made with respect to the year ended December 31, 2012.
STOCK
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS OF NAUTILUS STOCK
AND MANAGEMENT
The following table summarizes certain information regarding the beneficial ownership of our outstanding common stock, as of February
28, 2013,1, 2014, by: 1) each director and director nominee; 2) each of the named executive officers included in the Summary Compensation Table; 3) all persons that we know are beneficial owners of more than 5% of our common stock; and 4) all
current directors and executive officers as a group. Except as otherwise indicated, and subject to applicable community property laws, each owner has sole voting and sole investment powers with respect to all shares beneficially owned.
| | | | | | | | | | | | |
| | | Total
Shares
Beneficially
Owned (2) | | | Shares
Covered
by
Options (3) | | | Percentage
Beneficially
Owned (4) | |
Name and Address of Beneficial Owner | | | | | | | | | | | | |
Norman H. and Sandra S. Pessin
366 Madison Avenue, 14th Floor
New York, NY 10017 | | | 2,180,583 | (5) | | | — | | | | 7.0 | % |
| | | | | | | | | | | | |
Headlands Strategic Opportunities Fund, LP David Park and David Cost, Senior Managing Members
One Ferry Building, Suite 255
San Francisco, CA 94111 | | | 1,593,435 | (6) | | | — | | | | 5.2 | % |
Non-Employee Directors(1) | | | | | | | | | | | | |
Ronald P. Badie, Director | | | 52,500 | | | | 45,000 | | | | * | |
Richard A. Horn, Director | | | 40,000 | | | | 35,000 | | | | * | |
M. Carl Johnson, III, Chairman of the Board of Directors | | | 12,500 | | | | 7,500 | | | | * | |
Anne G. Saunders, Director | | | 2,500 | | | | 2,500 | | | | * | |
Marvin G. Siegert, Director | | | 48,000 | (7) | | | 45,000 | | | | * | |
| | | |
Employee Director(1) | | | | | | | | | | | | |
Bruce M. Cazenave, Chief Executive Officer, Director | | | 230,335 | (8) | | | 35,675 | | | | * | |
| | | |
Named Executive Officers (1) | | | | | | | | | | | | |
Wayne M. Bolio, Senior Vice President, Law and Human
Resources, General Counsel | | | 151,551 | | | | 115,751 | | | | * | |
William B. McMahon, Chief Operating Officer | | | 97,012 | | | | 71,252 | | | | * | |
Michael D. Mulholland, Former Chief Financial Officer(9) | | | — | | | | — | | | | — | |
Robert O. Murdock, Vice President, General Manager Direct | | | 12,810 | | | | 12,810 | | | | * | |
Linda M. Pearce, Chief Financial Officer | | | 10,000 | | | | — | | | | * | |
| | | | | | | | | | | | |
Directors and Executive Officers as a Group (11 persons) | | | 657,208 | | | | 370,488 | | | | 2.1 | % |
(1) | The address for each director and executive officer is c/o Nautilus, Inc., 17750 SE 6th Way, Vancouver, Washington 98683. |
(2) | Includes 6,176 shares issuable upon settlement of restricted stock units vesting within 60 days after February 28, 2013. |
(3) | Includes currently exercisable options and options exercisable within 60 days after February 28, 2013. |
(4) | Percentages have been calculated based on 30,935,316 shares of our common stock issued and outstanding as of February 28, 2013. Shares which the person or group has the right to acquire within 60 days after February 28, 2013, are deemed to be outstanding in calculating the percentage ownership of the person or group, but are not deemed to be outstanding as to any other person or group. |
(5) | Information is based on the Schedule 13D filed on May 17, 2012 by a group consisting of Norman H. Pessin and Sandra F. Pessin. As stated in the Schedule 13D, Norman H. Pessin is the owner of 1,979,883 shares of our common stock and Sandra F. Pessin is the owner of 200,700 shares of our common stock. |
(6) | Information is based on the Schedule 13G filed on November 20, 2013 by Headlands Strategic Opportunities Fund, LP (“Opportunities”) and its related parties. Opportunities directly holds 1,593,435 Shares. Headlands Capital Management, LLC (“Management”) is the general partner of Opportunities. HCSF Management, LLC (“HCSF”) acts as investment manager for Opportunities. Headlands Capital Advisors, LLC (“Advisors”) is the managing member of HCSF. Headlands Capital, LLC (“Capital”) is the managing member of Advisors and Management. David Park is senior managing member of Advisors, member of the investment committee of Management, and managing member of Capital. David Cost is a senior managing member of Advisors and member of the investment committee of Management. According the Schedule 13G, each of Opportunities, Advisors, Capital, Management, HCSF, David Park and David Cost may be deemed to be the beneficial owner of the reported shares. |
(7) | Includes 3,000 shares held by the Siegert Trust, of which Marvin G. Siegert is a trustee. |
(8) | Includes 15,170 shares held in trust for the benefit of children of Mr. Cazenave, for which Mr. Cazenave is the trustee. |
(9) | Mr. Mulholland was Chief Financial Officer from May 7, 2011 until he left the Company effective January 20, 2012. |
|
| | | | | |
| | Total Shares Beneficially Owned (2) | | Percentage Beneficially Owned (3) |
| Name and Address of Beneficial Owner | | | |
Norman H. and Sandra S. Pessin(4) | 2,180,583 |
| | 7.0 | % |
| 366 Madison Avenue, 14th Floor | | | |
| New York, NY 10017 | | | |
| | | | |
BlackRock, Inc.(5) | 1,847,390 |
| | 5.9 | % |
| 40 E. 52nd Street | | | |
| New York, NY 10022 | | | |
| | | | |
Non-Employee Directors (1) | | | |
| Ronald P. Badie | 66,800 |
| | * |
|
| Richard A. Horn | 64,300 |
| | * |
|
| M. Carl Johnson, III | 34,300 |
| | * |
|
| Anne G. Saunders | 19,300 |
| | * |
|
Marvin G. Siegert(6) | 62,300 |
| | * |
|
| | | |
Employee Director (1) | | | |
Bruce M. Cazenave(7) | 316,875 |
| | 1.0 | % |
| | | |
Named Executive Officers (1) | | | |
| Wayne M. Bolio | 166,036 |
| | * |
|
| William B. McMahon | 143,570 |
| | * |
|
| Robert O. Murdock | 20,518 |
| | * |
|
Linda M. Pearce(8) | — |
| | — |
|
| | | | |
| All Current Directors and Executive Officers as a Group (11 persons) | 893,999 |
| | 2.9 | % |
________________
* Less than 1%
(1) The address for each director and executive officer is c/o Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683.
(2) Includes currently exercisable options, options that vest within 60 days of February 1, 2014 and restricted stock that vests within 60 days of February 1, 2014 as follows:
|
| | | | | | |
| Name | | Options | | Restricted Stock |
| Ronald P. Badie | | 52,500 |
| | — |
|
| Richard A. Horn | | 52,500 |
| | — |
|
| M. Carl Johnson, III | | 22,500 |
| | — |
|
| Anne G. Saunders | | 12,500 |
| | — |
|
| Marvin G. Siegert | | 52,500 |
| | — |
|
| Bruce M. Cazenave | | 71,338 |
| | 12,352 |
|
| Wayne M. Bolio | | 105,000 |
| | — |
|
| William B. McMahon | | 78,751 |
| | — |
|
| Robert O. Murdock | | 18,018 |
| | — |
|
| Linda M. Pearce | | — |
| | — |
|
| All current officers and directors | | 465,607 |
| | 12,352 |
|
(3) Percentages have been calculated based on 31,163,829 shares of our common stock issued and outstanding as of February 1, 2014. Shares which the person or group has the right to acquire within 60 days after February 1, 2014, are deemed to be outstanding in calculating the percentage ownership of the person or group, but are not deemed to be outstanding as to any other person or group.
(4) Information is based on the Schedule 13D filed on May 17, 2012 by a group consisting of Norman H. Pessin and Sandra F. Pessin. As stated in the Schedule 13D, Norman H. Pessin is the owner of 1,979,883 shares of our common stock and Sandra F. Pessin is the owner of 200,700 shares of our common stock.
(5) Information is based on the Schedule 13G filed on January 30, 2014 by BlackRock, Inc. (“BlackRock”), a parent holding company. BlackRock has sole dispositive power with respect to all shares reported and sole voting power with respect to 1,805,771 shares.
(6) Includes 3,000 shares held by the Siegert Trust, of which Marvin G. Siegert is a trustee.
(7) Includes 15,170 shares held in a trust for the benefit of children of Mr. Cazenave, of which Mr. Cazenave is the trustee.
(8) Ms. Pearce was Chief Financial Officer from August 9, 2012 until she left Nautilus effective July 2, 2013.
The following table identifies our executive officers as of the date of this
proxy statement,Proxy Statement, the positions they hold and the year in which they began serving as officers of Nautilus. Our Board elects all of our executive officers, who hold office until their respective successors are elected and qualified.
| | | | | | |
Name | | Age | | Current Position(s) with Nautilus | | Officer
Since |
| | | |
| Bruce M. Cazenave | | 58 | | Chief Executive Officer, Director | | 2011 |
| | | |
| William B. McMahon | | 48 | | Chief Operating Officer | | 2009 |
| | | |
| Linda M. Pearce | | 55 | | Chief Financial Officer | | 2012 |
| | | |
| Wayne M. Bolio | | 56 | | Senior Vice President, Law and Human Resources, General Counsel | | 2003 |
| | | |
| Robert O. Murdock | | 41 | | Vice President, General Manager Direct | | 2011 |
|
| | | | | | | |
| Name | | Age | | Current Position(s) with Nautilus | | Officer Since |
| Bruce M. Cazenave | | 59 |
| | Chief Executive Officer, Director | | 2011 |
| Wayne M. Bolio | | 57 |
| | Senior Vice President, Law and Human Resources, General Counsel | | 2003 |
| Jeffrey L. Collins | | 47 |
| | Vice President, Retail Sales | | 2014 |
| William B. McMahon | | 49 |
| | Chief Operating Officer | | 2009 |
| Robert O. Murdock | | 42 |
| | Vice President, General Manager, Direct | | 2012 |
| Sidharth Nayar | | 53 |
| | Chief Financial Officer | | 2014 |
For information on Bruce M.
Cazenave’sCazenave's business background, see “Nominees” under “Election of Directors” above.
Wayne M. Bolio assumed the position of Senior Vice President, Law and Human Resources in August 2011. He was named General Counsel in April 2008. Mr. Bolio joined Nautilus in June 2003 as Vice President, Human Resources. He was appointed Senior Vice President, Human Resources in March 2004 and was promoted to Senior Vice President, Law in January 2006. From 1997 to 2002 he served as the chief human resources officer for Consolidated Freightways, a major transportation company, and most recently held the position of Vice President of Human Resources and Assistant General Counsel. Prior to that, he was employed by Southern Pacific Transportation Company as assistant general counsel with responsibility for labor relations, human resources, and employment law matters. Mr. Bolio received a B.A. from the University of California at Berkeley and a J.D. from UCLA.
Jeffrey L. Collins was named Vice President, Retail Sales in August 2013 and was named an officer in February 2014. In his role, he is responsible for the Retail Channel’s strategy and direction globally along with managing both the domestic and international Retail Sales teams. Mr. Collins prior experience includes more than 20 years of sales and marketing experience in the consumer goods business segment. Prior to joining the Company, Mr. Collins held various senior sales and marketing positions with Pepsico, Pepsi Bottling Group, Handleman Co., Dyson Ltd., Halo Technologies, Techtronic Industries and Oreck Corporation. Mr. Collins attended both Grand Valley State University and Western Michigan University. Leveraging his prior experience and success in both the U.S. and International markets will support the Company’s strategic initiative to further grow the Retail Channel.
William B. McMahon was appointed Chief Operating Officer in August 2011. In this role, Mr. McMahon has responsibility for oversight of the Company’sour Retail and Direct businesses, as well as overall operations and information technology. He also has broad oversight of the Company’s product development function. Mr. McMahon joined Nautilus in October 2005 and has held a number of leadership roles, including Senior Vice President, Consumer Business from November 2009 until August 2011 and, prior to that, Vice President and General Manager of our Direct business. Before joining Nautilus, Mr. McMahon held several executive positions with the Readers Digest Association from 1989 through 1995, including chief operating officer ofgifts.com, an e-commerce portal; director of information technology; vice president, operations ofGood Catalog, a luxury home products and electronics catalog; and director of U.S. Operations for QSP Inc., the largest school fundraising program in North America. He previously spent over a decade with the United States Navy nuclear submarine force, where he oversaw reactor plant operations. Mr. McMahon is a graduate of the U.S. Naval Nuclear Engineering program. RobRobert O. Murdock was named Vice President, General Manager Direct in August 2011.2011 and was named an officer in 2012. In this role, he is responsible for the direct-to-consumer business team. Mr. Murdock originally joined Nautilus in December 2005 as Director, Go-To-Market where he was responsible for product definition, development and management of Nautilus branded retail and strength machines. Mr. Murdock has held multiple leadership roles in product development and marketing within the organization. In 2007, he was promoted to Senior Director, Go-To-Market, where he managed the product management team until January 2008 when he transferred to Director of Marketing, Consumer Insight and Brand. In November 2008, the Director of Marketing position held by Mr.
Murdock shifted focus to
the Direct channel, managing the product, place, price and promotion of Schwinn, Nautilus, Bowflex and Universal brands. Most recently, Mr. Murdock was promoted to Vice
President/President, General Manager Direct, which expanded the scope of his position to include responsibility for the entire Direct channel.
Mr. Murdock has more than 15 years of experience in hard goods product development and marketing. Prior to joining Nautilus, Mr. Murdock held management positions at high technology firms including Intel and InFocus.InFocus Corporation. Mr. Murdock earned a B.A. from Georgetown University and an M.B.A from the University of Texas.
Linda M. PearceSidharth (Sid) Nayar was appointednamed Chief Financial Officer in August 2012.February 2014. In this role Ms. Pearce has responsibilityhe is responsible for alloverseeing financial, accounting, risk management and investor relations activities for all brands in the Company, and will play a key role in all strategic planning and cost optimization efforts. She brings over 25 years of financial management experience. From 2000 through just priorNautilus, Inc. portfolio. Prior to her appointment as the company’s Chief Financial Officer, shejoining Nautilus, Mr. Nayar served as ExecutiveSenior Vice President, Finance and Chief Financial Officer for Warn Industries, Inc., which is an operating company of DoverCongoleum Corporation, a NYSE listed company. Warn Industries designs, manufactures,manufacturer of residential and marketscommercial flooring products, from 1999 to February 2014. Mr. Nayar held other senior accounting and finance positions at Congoleum Corporation beginning in 1986. Mr. Nayar earned a full lineB.Sc. in Economics from the London School of off-road equipmentEconomics and accessories that enhance the performance of four-wheel-drive vehicles, ATV’s and utility vehicles. During her tenure at Warn Industries, Ms. Pearce managed all aspects of financial management and reporting, including leading the company through a leveraged buy-out and later a strategic options evaluation process resultingan M.B.A. in the acquisition by Dover Corporation. In addition,Finance from May 2010 to January 2011, Ms. Pearce served as Interim President for Warn Industries, with responsibilities for overall global operations of the business. Previously, Ms. Pearce has also held a number of financial management positions with organizations such as Gardenburger, Inc., Blount International, Inc. and Lindsay Forest Products, Inc. In September, 2012, Ms. Pearce was appointed a member of the Port of Portland Commission. Ms. Pearce holds a Bachelor of Science in Accounting and Information Systems and Quantitative Analysis from Portland State University and a Masters of Business Administration from University of Oregon.Rutgers University.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
March 29, 2013
April 2, 2014
The Compensation Committee of the Board
(the “Committee”) oversees
the Company’sNautilus' compensation programs on the
Board’sBoard's behalf.
The
Compensation Committee reviewed and discussed the Compensation Discussion and Analysis with management. Based on the review and discussion, the
Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in
the Company’s proxy statement,this Proxy Statement, for the
Company’s 20132014 Annual Meeting of
Stockholders,Shareholders, which will be filed with the SEC.
Ronald P. Badie, Chairman
Marvin G. Siegert
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
In this section of the proxy statement we identify the material elements of our compensation programs for all of our executive officers, including an overview of our executive compensation philosophy and the processes and methodology we use in making executive pay decisions. We also provide detailed information regarding compensation paid to each Named Executive Officer (“NEO”).
Our NEOs
for 2013 are
theour Chief Executive Officer
and Acting Chief Financial Officer,
andthe three
other most highly compensated executive officers
of Nautilus other than the Chief Executive Officer and
our former Chief Financial
Officer, including salary, bonus, stock awards, option awardsOfficer. Our NEOs for 2013 and
all other compensation,their titles as of
the most recently completed fiscal year. Our NEOs areDecember 31, 2013 were as follows:
|
| | |
| Name | | Position |
Bruce M. Cazenave(1) | | Chief Executive Officer |
Linda M. Pearce(1)
| | and Acting Chief Financial Officer |
Michael D. Mulholland(2)
William B. McMahon | | Former Chief FinancialOperating Officer |
Wayne M. Bolio | | Senior Vice President, Law and Human Resources, General Counsel |
William B. McMahon
| | Chief Operating Officer |
Robert O. Murdock | | Vice President, General Manager Direct |
Linda M. Pearce(1) | | Former Chief Financial Officer |
|
| |
| (1) | Ms. Pearce was appointed Chief Financial Officer effective August 9, 2012. |
(2) | Mr. Mulholland was Chief Financial Officer from May 7, 2011 until he left the Company effective January 20, 2012. From then until Ms. Pearce was appointed Chief Financial Officer effective August 9, 2012 until she left Nautilus effective July 2, 2013. Mr. Cazenave Chief Executive Officer, served as Acting Chief Financial Officer.Officer following Ms. Pearce's departure until Mr. Nayar's appointment as Chief Financial Officer effective February 28, 2014. |
Overview
In early 2012 we implemented minor revisions to our executive compensation programs with the goal of improving our financial performance and supporting our ongoing financial success. These changes included an adjustment in the targeted ratio of variable compensation to total compensation and revisions to the short-term incentive program.
The Committee has established a desired competitive position for target total cash compensation levels in the 50th to 75th percentile range of the peer group (for more information regarding the peer groups, see “Compensation Philosophy” herein). Individual levels within this range are based on experience, performance and potential.
The executive compensation program is comprised of three primary elements in support of these objectives:
| • | | Abase salary that is intended to provide a market competitive base level of compensation;
|
| • | | Ashort-term incentive program that rewards the achievement of explicit, measurable, company financial objectives in the areas of operating income and net working capital, as well as individual and company achievement of short - and long-term business objectives; and
|
| • | | An equity basedlong-term incentive program that rewards the achievement of sustained increases in stockholder value over the long term.
|
A base salary that is intended to provide a market competitive base level of compensation;
A short-term incentive program that rewards the achievement of explicit, measurable, company financial objectives in the areas of operating income, revenue growth and net working capital, as well as individual and company achievement of short - and long-term business objectives; and
An equity-based long-term incentive program that rewards the achievement of sustained increases in shareholder value over the long term.
Our executive officers are eligible to participate in our other employee benefits programs on the same terms as our eligible non-executive employees. Nautilus does not provide any material executive perquisites. Unexercised stock options held by our executive officers expire 90 days following termination, which same terms apply to our non-executive employees.
We have an employment contract with Mr. Cazenave that provides for the payment of twelve months of base salary upon termination under certain circumstances. We have employment contracts with Messrs. Bolio, McMahon and
Ms. PearceNayar that provide for the payment of six months of base salary upon termination under certain circumstances. We also have an employment contract with Mr. Murdock that provides for the payment of four months of base salary upon termination under certain circumstances.
In addition, we had anAdditionally, Mr. Collins is eligible to receive four months of base salary upon termination per the terms of his employment
agreement with Mr. Mulholland until he left the Company.offer.
Governance of
the Company’sOur Executive Compensation Program
The Committee has overall responsibility for the evaluation, approval and oversight of our compensation plans, policies and programs and the total direct compensation of our executive officers.
The Committee has sole responsibility for determining our Chief Executive Officer’s compensation and for reviewing it with our Board. Our Chief Executive Officer provides recommendations to the Committee on compensation matters for our other executive officers. TheFrom time to time the Committee seeks input from an independent consultant who advises the Committee regarding executive compensation matters.
In early 2012 the Committee engaged Compensia, Inc. (“Compensia”) to serve as its independent compensation consultant. Compensia assisted the Committee in reviewing our compensation practices and provided advice to the Committee regarding compensation of our executive officers. In latter 2012, the Committee followed its primary compensation advisor, formerly employed by Compensia and now employed by
Farient Advisors, LLC (“Farient Advisors”Farient”), and began working with Farient Advisors in preparation for early 2013 compensation decisions. Neither Compensia, Farient Advisors nor any of their respective employees earn fees from was engaged by the Company or any of its executive officers or directors, other than for providingCompensation Committee to advise it on executive compensation consulting services to the Committee,matters and neither Compensia, Farient Advisors nor any of their respective employees owns any shares of Nautilus stock. Compensia and Farient Advisors were chosen solely by the Nominating & Governance Committee allto advise it on director compensation matters. All of their feesthe services that Farient performs for Nautilus are for services provided to andperformed at the request of the committee, are related to executive and director compensation and are in support of decision making by the committee.
The Compensation Committee
considered Farient’s independence in light of Securities and Exchange Commission rules and New York Stock Exchange listing standards. The Committee requested Farient to complete a questionnaire addressing factors pertaining to the independence of Farient and the
senior advisor involved in the engagement, including the following factors: (1) other services provided to us by Farient; (2) fees paid by us as a percentage of Farient’s total revenue; (3) policies or procedures maintained by Farient that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisor and a member of the committee; (5) any company stock owned by Farient or the senior advisor; and (6) any business or personal relationships between our executive officers and Farient or the senior advisor. The Compensation Committee
has completediscussed these considerations and
sole discretion as to its hiring, continued service or termination.concluded that the work performed by Farient and Farient’s senior advisor involved in the engagement did not raise any conflict of interest.
Farient Advisors reports directly to the Committee and is anticipated to support the Committee by:
providing information on executive and director compensation best practices and current trends;
Reviewingreviewing compensation guiding principles and recommending assessment methodologies;
Conductingconducting detailed executive and director compensation assessments and providing preliminary recommendations for executive and director compensation adjustments; and
Providingproviding conceptual guidance and design advice on short-term and long-term incentive programs.
Our executive compensation program is designed with two primary objectives in mind:
attracting, retaining and motivating executives critical to our financial stability and future success; and
Rewardingrewarding executives for meeting ambitious financial, operational and individual performance goals and taking effective actions which are expected to increase stockholdershareholder value over time.
Consistent with these objectives, we offer our executive officers a mix of base salary, short-term incentive compensation, long-term equity based incentives, health and welfare benefits and employment contracts. While we do not target a specific percentage allocation for base salary, short-term incentive compensation or long-term incentives (as a percent of total direct compensation), we operate under the general philosophy of targeting a total direct compensation opportunity that is competitive within our market for executive talent. Relative to our peer group, we believe that we generally target a greater percentage of the executives’ total direct compensation opportunity as variable compensation. We do not believe the elements of our compensation program are structured so as to encourage excessive risk taking by any of our executives, but are part of an overall compensation and management philosophy designed to increase
stockholdershareholder value over time.
Peer group data is used to compare our compensation program for executive officers with that of executives in comparable roles at peer group companies. Although a comprehensive compensation review was not conducted in
2012, Compensia2013, Farient Advisors conducted a benchmark equity compensation analysis for the purpose of determining equity grants
and for development of the short-term incentive plan in
early 2012.May 2013.
Based upon the selection criteria, which targeted high-end consumer products companies with annual revenues similar to Nautilus, the following companies were chosen for our peer group:
|
| | |
| Bassett Furniture Industry, Inc. (BSET) | | Golfsmith International Holdings, Inc. (GOLF)iRobot Corp. (IRBT) |
| Cobra Electronics Corp. (COBR) | | iRobot Corp. (IRBT)Johnson Outdoors Inc. (JOUT) |
| Cross (A.T.) Co. (ATX) | | Johnson Outdoors Inc. (JOUT) |
Cybex International, Inc. (CYBI) | | Movado Group, Inc (MOV) |
| Escalade, Inc. (ESCA) | | Smith & Wesson Holding Corp. (SWHC) |
| Flexsteel Industries, Inc. (FLXS) | | Sturm Ruger & Co. Inc. (RGR) |
Peer group data for
the aforementioned companies is supplemented by data from published relevant compensation surveys, providing additional market-based analytical data for corporate executive pay at companies similar in industry, annual revenues or other relevant metrics.
The Committee has established a desired competitive position for target total cash compensation levels in the 50th to 75th percentile range of our peer group. Individual levels within this range are also affected by the executive’s experience, performance and potential, as assessed by the Committee with input from the Chief Executive Officer.
Base salaries of our executive officers are intended to attract and retain executives (as part of the total compensation package) by providing a competitive base level of compensation. Base salaries are typically considered by the Committee on an annual basis, as well as in connection with the hiring of a new executive,
from outside the Company, a promotion or other changes in an incumbent executive’s job responsibilities. Base salaries of executive officers are determined by evaluating the responsibilities of the position, the experience and performance of the individual, and by reference to the competitive marketplace median for corporate executives in comparable positions (similarity in scope, duties and responsibilities). A base salary benchmark compensation analysis was not conducted in
2012 in lieu of performing an in-depth analysis of short- and long-term incentive targets.2013. The Committee decided not to make any changes to executive officer base salaries in
2012.2013 other than an increase in Mr. Murdock's base salary as recommended by the Chief Executive Officer and approved by the Board of Directors in recognition of Mr. Murdock's increased responsibility as Vice President and General Manager, Direct. Mr. Murdock’s increase was effective March 18, 2013:
|
| | | | | | |
| | | Previous Base Salary | | Percent Increase | | New Base Salary |
| Robert O. Murdock | | $180,000 | | 16.67% | | $210,000 |
Short-Term Incentive Program
Our short-term incentive program for 2013 remained similar to the plan implemented in 2012. The plan developed for executive officers was revised in 2012 to better support the Company’sour focus on long-term strategic growth by shifting to annual performance objectives, rather than the quarterly objectives that characterized our short-term incentive plan since mid-2008. Compensia provided the Committee with benchmark compensation information in 2012 to assist in the determination of target compensation amounts under thefrom mid-2008 until 2012.
Our short-term incentive
program. The Committee made recommended changes to adjust executive targets closer to market per Compensia’s analysis and recommendation, specifically by lowering the short-term incentive target of Mr. McMahon from 100% for 2011 to 75% for 2012.The program focuses on achievement of certain annual company financial goals including operating income and net working capital (Corporate Financial Factor), as well as company-level key strategic initiatives (Key Initiative Factor) and individual performance goals that have beenwere established for the performance period. Under the short-term incentive program, individual plan participants are eligible to receive incentive compensation in the form of cash bonuses based on a target percentage of their base salary.
Individual bonus target amounts under the short-term incentive program remained unchanged in 2013.
The calculation for determining an individual’s incentive amount earned
under the short-term incentive program is a product of: 1) the individual’s annual eligible wages; 2) the individual’s target bonus percentage; 3) the achievement against the Corporate Financial Factor; 4) the achievement against the Key Initiative Factor;
and 5)
and achievement against the individual’s performance goals.
The CompanyWe must achieve a minimum of
85%30% of
either itsour operating income or
85% of our net working capital goal for any payout to be available.
TheFor 2013, the combined maximum
pay out forpayout under the plan
iswas 150% of target.
Individual Bonus Targets
Individual bonus targets established under our short-term incentive program for
20122013 for our NEOs ranged from 50% to 100% of annual eligible wages, primarily consisting of base salaries, as follows:
|
| |
| | | Individual
Bonus Target
(% of eligible wages) |
Bruce M. Cazenave | 100% |
| William B. McMahon | 75% |
| Wayne M. Bolio | | 50% |
Bruce M. Cazenave
Robert O. Murdock | | 100%50% |
William B. McMahon
Linda M. Pearce | | 75% |
Michael D. Mulholland
| | N/A(1) |
|
Robert O. Murdock
| | 50% |
Linda M. Pearce
| | 50% |
| (1) | Mr. MulhollandMs. Pearce left the company effective January 20, 2012,July 2, 2013 and, therefore, was not eligible to participate in the 20122013 short-term incentive program. |
Corporate Financial Factor
The Corporate Financial Factor is
calculated on a calendar year basis. Each company financial goal is assigned a weighting.
The 20122013 performance criteria and specific weightings were as follows:
| | | | |
Corporate Financial Criteria Weighting |
Continuing Operations Operating Income | | Net Working Capital | | Combined Corporate
Financial Factor |
| 80% | | 20% | | 100% |
|
| | | | |
| Corporate Financial Criteria Weighting |
| Continuing Operations Operating Income | | Net Working Capital | | Combined Corporate Financial Factor |
| 80% | | 20% | | 100% |
Achievement against the combined corporate financial factor
cancould range from 0% to 125%. However, a threshold of
either 30% achievement in operating income or 85% achievement
in net working capital must be met
in either operating income or net working capital in order to achieve a payout.
Key Strategic Initiatives Factor
In addition to the corporate financial factor,
strategicwe establish performance objectives
were identifiedto incent and
measured.measure successful execution of our strategic initiatives. These included, for example, goals related to new product
traction,development and introduction, market penetration, system integration and cost saving/optimization. Achievement against the
combined initiatives canobjectives could range from 50% to 125%.
Individual Performance Factor
In addition to the corporate financial factor and key strategic initiatives factor, individual performance objectives were established for each executive officer in the form of formal written goals. Performance
iswas measured against individual goals related to, for example, revenue targets, cost optimization, market research, new business development, organizational excellence, system integration and product development milestones. Achievement against the individual performance factor could range from 0% to 125%.
2012
2013 Short-Term Incentive Program Payments In 2012,
For 2013 performance, our NEOs earned
an annualawards pursuant to the short-term incentive
program based on
achievement ofachieving the following company and individual performance
metrics as follows: | | | | |
Corporate Financial Achievement |
Continuing Operations
Operating Income | | Net Working Capital | | Combined Corporate Financial Factor |
| 125% | | 112.25% | | 122.5% |
metrics:
|
| | | | |
| Corporate Financial Achievement |
| Continuing Operations Operating Income | | Net Working Capital | | Combined Corporate Financial Factor |
| 125.0% | | 103.5% | | 120.7% |
|
Key Initiative
Achievement
|
Combined Key Initiative
Factor |
|
108.2%
Key Strategic Initiatives Achievement |
| Combined Key Strategic Initiatives Factor |
| 102.75% |
|
| | |
Individual Performance Goals Achievement |
WayneBruce M. Bolio
Cazenave | | 100.0% |
Bruce M. Cazenave
William B. McMahon | | 100.0% 90.0% |
William B. McMahon
Wayne M. Bolio | | 100.0% 94.0% |
Michael D. Mulholland
Robert O. Murdock | | 106.0% |
| Linda M. Pearce | | - |
Robert O. Murdock
| | 101.4% |
Linda M. Pearce
| | 100.0% |
| | | | |
Incentive Amounts Earned
| |
Wayne M. Bolio
| | $ | 154,871 | |
Bruce M. Cazenave
| | | 497,044 | |
William B. McMahon
| | | 248,522 | |
Michael D. Mulholland
| | | — | |
Robert O. Murdock
| | | 120,961 | |
Linda M. Pearce
| | | 59,339 | |
Long-term
Based on the level of goals achieved, the NEOs earned the following short-term incentive compensation related to 2013:
|
| | | | |
| Incentive Amounts Earned |
| Bruce M. Cazenave | | $ | 465,072 |
|
| William B. McMahon | | 209,282 |
|
| Wayne M. Bolio | | 136,215 |
|
| Robert O. Murdock | | 133,483 |
|
| Linda M. Pearce | | - |
Long-Term Incentive Program
Long-term incentives are intended to focus executive behavior on making decisions that meaningfully contribute to our long-term success as reflected in our stock price. Under the 2005 Long-Term Incentive Plan (the “Plan”), the Committee may grant equity awards (stock options, stock appreciation rights, restricted stock, performance units or stock units) to executive officers and other employees. Stock options have exercise prices equal to the fair market value of our common stock on the date of
the grant as defined by the Plan. In granting these awards, the Committee may establish
vesting conditions or
other restrictions it deems appropriate.
Our executive officers generally are provided an equity grant upon commencement of their employment. The Committee reviews the equity position of executive officers on a periodic basis. Additionally, an executive officer’s overall equity position is reviewed at the time of promotion and an additional grant may be considered. considered at that time. Equity awards granted to Mr. Nayar in February 2014 upon commencement of his employment were as follows:
|
| | | | | |
| | Performance Based Restricted Stock Units (1) | | Value Based Restricted Stock Units (2) |
| Sidharth Nayar | | 15,000 |
| | TBD |
|
| |
| (1) | Vesting is based on achievement of goals established for operating income and revenue growth over a three-year performance period. The number of shares vested following conclusion of the performance period will be determined based on the level at which the goals are achieved. The number of shares vesting can range from 60% of the performance unit award if minimum thresholds are achieved to a maximum of 150%. |
| (2) | Restricted stock units entitle Mr. Nayar to receive shares of Nautilus common stock on the one, two and three year anniversaries of the vesting commencement date for the award. The number of shares issuable on each annual vesting date will be determined by dividing $33,333 by the average daily closing price of our common stock during the vesting period. |
Equity Incentives
In May 2013, Farient Advisors conducted a benchmark equity compensation analysis to assist the Committee in determining equity grants. The Committee approved a grant of equity compensation, which included a mix of options and performance restricted stock unit awards, both issued under the our 2005 Long-Term Incentive Plan. The option awards vest in three equal annual installments, beginning the first anniversary of the grant date. The performance restricted stock units vest based on achieving a level of goal attainment
for growth in pre-tax income and return on assets over a three-year performance period. The actual number of performance share units vested is based on the level at which the financial goals are achieved and can range from a 60% minimum threshold to a maximum of 150%.
Equity awards granted to our NEOs in
2012 upon commencement of their employment2013 were as follows:
| | | | |
| | | Options (1) | | Performance-
Based Restricted
Stock Units(2) |
Linda M. Pearce | | 30,000 | | 12,000 |
|
| | | | | | |
| | | Options (1) | | Performance- Based Restricted Stock Units (2) |
| Bruce M. Cazenave | | 18,000 |
| | 11,500 |
|
| William B. McMahon | | 6,000 |
| | 4,450 |
|
| Wayne M. Bolio | | 3,600 |
| | 2,400 |
|
| Robert O. Murdock | | 3,000 |
| | 1,850 |
|
Linda M. Pearce(3) | | 6,000 |
| | 4,300 |
|
|
| |
| (1) | Options vest as to one-third of the number of shares subject to the award on each of the first, second and third anniversaries of the date of grant, August 9, 2012.grant. |
| (2) | Performance-based restricted stock units are subject to vesting based on achievement of specific growth targets for the three-year vesting term of the award. The actual number of restricted stock units vested can range from 0% to 150%, depending on the attainment of specific company performance goals. |
Equity Incentives
In early 2012 Compensia conducted a benchmark equity compensation analysis to assist the Committee in determining equity grants. The Committee approved a grant of equity compensation which included a mix of options and performance unit awards, both issued under the Company’s 2005 Long-Term Incentive Plan. The option awards vest in three equal annual installments, beginning the first anniversary of the grant date. The performance share units vest based on achieving a level of goal attainment for growth in pre-tax income and return on assets over a three-year performance period. The actual number of performance share units vested are based on the level at which the financial goals are achieved and can range from a 60% minimum threshold to a maximum of 150%.
Equity awards granted to our NEOs in 2012 were as follows:
| | | | | | | | |
| | | Options (1) | | | Performance-
Based Restricted
Stock Units(2) | |
Wayne M. Bolio | | | 12,000 | | | | 7,500 | |
Bruce M. Cazenave | | | 57,000 | | | | 35,500 | |
William B. McMahon | | | 22,500 | | | | 14,000 | |
Robert O. Murdock | | | 10,000 | | | | 6,500 | |
(1)(3) | Options vest as to one-thirdEquity awards received by Ms. Pearce during 2013 were canceled in connection with the termination of the number of shares subject to the award on each of the first, second and third anniversaries of the date of grant.her employment. |
(2) | Performance-based restricted stock units are subject to vesting based on achievement of specific growth targets for the three-year vesting term of the award. The actual number of restricted stock units vested can range from 0% to 150%, depending on the attainment of specific company performance goals. |
Early
20132014 Compensation Decisions
The Committee met in early 20132014 to approve revisions to the short-term incentive plan, that isapprove proposed routine adjustments to base salaries, as well as approve equity compensation awards to our NEOs.
The short-term incentive plan in place for
2013. The plan2014 remains within the same general structure as in
20122013 with the program for
20132014 focusing on achievement of certain annual company financial goals, including operating income and net
working capitalrevenue growth percentage (Corporate Financial Factor), as well as company-level key strategic initiatives (Key Initiative Factor) and individual performance goals that have been established for the performance period. The
CompanyCorporate Financial Factor has been altered slightly when compared to 2013. The Committee determined to replace the net working capital financial goal utilized in 2013 with objectives for revenue growth percentage to better align incentives with our increasing focus on increased revenue growth. We must achieve a minimum of 30% of
itsour operating income or
85%80% of
itsour net
working capitalrevenue growth percentage goal for any payout to be available with a maximum combined payout of 150% of target if the goal is exceeded. The Committee confirmed the following
new incentive targets for
2013,2014, maintaining consistency with
last year’s targets.2013 targets: |
| |
| | | Individual
Bonus Target
(% (% of eligible wages) |
WayneBruce M. Bolio
Cazenave | 100% |
| Sidharth Nayar | 50% |
Bruce M. Cazenave
| | 100% |
William B. McMahon | | 75% |
Robert O. Murdock
| Wayne M. Bolio | 50% |
Linda M. Pearce
| Robert O. Murdock | 50% |
The Committee also reviewed base salaries for our NEO’s in early 2014. Farient Advisors submitted an analysis and proposal for routine base salary increases which was subsequently reviewed and approved by the Committee. Base salary increases were effective March 3, 2014 for all NEOs as outlined below:
|
| | | | | | |
| | | Previous Base Salary | | Percent Increase | | New Base Salary |
| Bruce M. Cazenave | | $375,000 | | 14.67% | | $430,000 |
| William B. McMahon | | 250,000 | | 12.00% | | 280,000 |
| Wayne M. Bolio | | 233,688 | | 6.98% | | 250,000 |
| Robert O. Murdock | | 210,000 | | 7.14% | | 225,000 |
Additionally, the Committee approved equity compensation awards to all NEOs. The awards consist of options to purchase shares of our common stock and performance stock unit awards, both granted under our 2005 Long-Term Incentive Plan. The options vest in three equal annual installments, beginning the first anniversary of the grant date. The performance unit awards vest based on achievement of goals established for operating income and growth in revenues over a three-year performance period. The number of shares vested under the performance unit awards following conclusion of the performance period will be determined based on the level at which the goals are achieved. The number of shares vesting can range from 60% of the performance unit awards if minimum thresholds are achieved to a maximum of 150%.
Perquisites and Other Benefits
Our executive officers are eligible to participate in our medical, dental, vision, flexible spending, 401(k), life and disability programs on substantially the same terms as eligible non-executive employees, subject to legal limits on the amounts that may be contributed or paid to executive officers under these plans. No significant perquisites are provided to our executive officers.
Post-Employment Obligations
We believe that modest post-employment benefits are an important factor in maintaining the stability of our executive management
team, especially at a time when there is uncertainty about market conditions for our products and the economy in general. Nautilus hasteam. We have separate severance arrangements with each of our
NEOsexecutive officers under their respective employment agreement or employment offer. These documents outline the terms and conditions of the post employment benefits. The agreements provide that Nautilus will pay severance of six months or, in the case of Mr. Cazenave, twelve months, and four months for Mr. Murdock, of the employee’s base salary in the event of an involuntary termination of employment for reasons other than cause. In general, the definition of “cause” includes: indictment or conviction of the employee for a crime that, in
the Company’sour judgment, makes the employee unfit or unable to perform his or her duties, or adversely affects
the Company’sour reputation; employee dishonesty related to his or her employment; violation of key company policies; insubordination; serious conflicts of interest or self-dealing; intentional or grossly negligent conduct by the employee that is significantly injurious to
the Company;us; certain serious performance failures by the employee; and, death or disability of the employee.
Severance payments In addition, if the employee leaves for “good reason” (as such terms are madedefined in accordance with our normal payroll cycle over the severance period. incumbents employment agreement), the Company may be obligated to pay separation benefits to the employee. Additionally, Mr. Collins is eligible to receive four months of base salary upon termination per the terms of his employment offer.
The agreements with our
NEOsexecutives also provide for continuation, during the severance period, of health benefits under COBRA for the employee and covered dependents, at active employee premium rates. Refer to the table entitled “Other Potential Post-Employment Payments” and related notes for information regarding severance and post-employment benefits that may be payable to our NEOs upon their termination.
Severance payments are made in accordance with our normal payroll cycle over the severance period. With the exception of Mr. Cazenave, severance payments for our NEOs will cease in the event the employee obtains subsequent employment, within the salary continuation period, at a salary equal to the employee's salary at the time of termination. Severance payments will be reduced in the event the NEO, with the exception of Mr. Cazenave, obtains subsequent employment, within the salary continuation period, at a salary less than the employee's salary at the time of termination. Distributions are subject to certain restrictions imposed by Internal Revenue Code Section 409A.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code limits the amount we can deduct for compensation paid to our Chief Executive Officer and three other most highly-compensated executive officers (excluding the Chief Financial Officer) in any year to $1 million. The limit on deductibility does not apply to performance-based compensation meeting certain requirements.
Our general philosophy is to structure
The Compensation Committee generally reviews and considers the deductibility of executive compensation
under Section 162(m) when determining the compensation of executive officers however, the Committee also believes that it is important to
maximize deductibilitypreserve flexibility in administering compensation programs in a manner designed to promote varying corporate goals. Accordingly, we have not adopted a policy that all compensation must qualify as deductible under Section 162(m).
In 2012, 100% of our executive compensation was tax deductible. Base salary is not performance-based under Section 162(m), and our short-term incentive awards do not meet the performance-based compensation requirements of Section 162(m) because these awards are not granted under a
stockholder-approvedshareholder-approved plan.
However, we were able to deduct allSimilarly, performance based restricted stock unit awards do no meet the requirements of
this compensation because no executive officer’s compensation exceeded the $1 million limit. Should an executive officer’s compensation approach $1 million in the future, the Committee will consider deductibility of compensation under Section 162(m)
as one (butbecause the applicable performance criteria have not
been specifically approved by the
sole) factor in setting executive compensation.shareholders. In fiscal 2013 a portion of the compensation paid to Mr. Cazenave was not deductible.
SUMMARY
EXECUTIVE COMPENSATION
TABLE Summary Compensation Table
The following table summarizes the compensation earned by, awarded to or paid to our NEOs in the years ended December 31,
2013, 2012
2011 and
2010: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year | | | Salary | | | Bonus(1) | | | Stock
Awards(2) | | | Option
Awards(2) | | | All Other
Compensation | | | Total | |
Bruce M. Cazenave | | | 2012 | | | $ | 375,000 | | | $ | 497,044 | | | $ | 101,175 | | | $ | 112,034 | | | | $ 36,575 | | | $ | 1,121,828 | |
Chief Executive Officer | | | 2011 | | | | 216,346 | | | | 136,365 | | | | 800,001 | | | | 87,775 | | | | 98,207 | | | | 1,338,694 | |
| | | 2010 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | |
Linda M. Pearce(3) | | | 2012 | | | | 89,538 | | | | 59,339 | | | | 29,640 | | | | 51,048 | | | | — | | | | 229,565 | |
Chief Financial Officer | | | 2011 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 2010 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Michael D. Mulholland(4) | | | 2012 | | | | 18,462 | | | | — | | | | — | | | | — | | | | — | | | | 18,462 | |
Former Chief Financial Officer | | | 2011 | | | | 163,385 | | | | 57,504 | | | | 175,230 | | | | 43,277 | | | | 39,583 | | | | 478,979 | |
| | | 2010 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | |
Wayne M. Bolio | | | 2012 | | | | 233,688 | | | | 154,871 | | | | 21,375 | | | | 23,586 | | | | 136 | | | | 433,656 | |
Senior Vice President, Law and | | | 2011 | | | | 233,688 | | | | 77,716 | | | | — | | | | — | | | | — | | | | 311,404 | |
Human Resources, General Counsel | | | 2010 | | | | 233,688 | | | | 31,254 | | | | 38,280 | | | | 19,333 | | | | — | | | | 322,555 | |
William B. McMahon | | | 2012 | | | | 250,000 | | | | 248,522 | | | | 39,900 | | | | 44,224 | | | | 136 | | | | 582,782 | |
Chief Operating Officer | | | 2011 | | | | 250,000 | | | | 191,713 | | | | — | | | | — | | | | — | | | | 441,713 | |
| | | 2010 | | | | 250,000 | | | | 69,765 | | | | 92,800 | | | | 117,046 | | | | — | | | | 529,611 | |
| | | | | | | |
Robert O. Murdock(5) | | | 2012 | | | | 180,000 | | | | 120,961 | | | | 18,525 | | | | 19,655 | | | | — | | | | 339,141 | |
Vice President, General Manager | | | 2011 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Direct | | | 2010 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year | | Salary | | Stock Awards(1) | | Option Awards(1) | | Non-Equity Incentive Plan Compensation (2) | | All Other Compensation(3) | | Total |
Bruce M. Cazenave(4) | 2013 | | $ | 375,000 |
| | $ | 76,130 |
| | $ | 80,471 |
| | $ | 465,072 |
| | $ | 24,922 |
| | $ | 1,021,595 |
|
| Chief Executive Officer and | 2012 | | 375,000 |
| | 101,175 |
| | 112,034 |
| | 497,044 |
| | 36,575 |
| | 1,121,828 |
|
| Acting Chief Financial Officer | 2011 | | 216,346 |
| | 800,001 |
| | 87,775 |
| | 136,365 |
| | 98,207 |
| | 1,338,694 |
|
| | | | | | | | | | | |
William B. McMahon | 2013 | | 250,000 |
| | 29,459 |
| | 26,824 |
| | 209,282 |
| | 8,925 |
| | 524,490 |
|
| Chief Operating Officer | 2012 | | 250,000 |
| | 39,900 |
| | 44,224 |
| | 248,522 |
| | 136 |
| | 582,782 |
|
| | 2011 | | 250,000 |
| | — |
| | — |
| | 191,713 |
| | — |
| | 441,713 |
|
| | | | | | | | | | | | | | |
| Wayne M. Bolio | 2013 | | 233,688 |
| | 15,888 |
| | 16,094 |
| | 136,215 |
| | 8,281 |
| | 410,166 |
|
| Senior Vice President, Law and | 2012 | | 233,688 |
| | 21,375 |
| | 23,586 |
| | 154,871 |
| | 136 |
| | 433,656 |
|
| Human Resources, General Counsel | 2011 | | 233,688 |
| | — |
| | — |
| | 77,716 |
| | — |
| | 311,404 |
|
| | | | | | | | | | | |
Robert O. Murdock(5) | 2013 | | 203,077 |
| | 12,247 |
| | 13,412 |
| | 133,483 |
| | 8,925 |
| | 371,144 |
|
| Vice President, General Manager | 2012 | | 180,000 |
| | 18,525 |
| | 19,655 |
| | 120,961 |
| | — |
| | 339,141 |
|
| Direct | 2011 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | |
Linda M. Pearce(6) | 2013 | | 120,000 |
| | 28,466 |
| | 26,824 |
| | — |
| | 6,277 |
| | 181,567 |
|
| Former Chief Financial Officer | 2012 | | 89,538 |
| | 29,640 |
| | 51,048 |
| | 59,339 |
| | — |
| | 229,565 |
|
| | 2011 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
______________
(1) |
| Bonuses in 2012 consist of amounts earned under our short-term incentive plan for the year ended December 31, 2012. |
(2)(1) | The amounts reported in these columns reflect the aggregate grant date fair value of the stock option, restricted stock unit and performance share unit awards granted under our 2005 Long-Term Incentive Plan or preceding plans. The amount is determined in accordance with Accounting Standards Codification (“ASC”) Topic 718. The actual amount of compensation realized, if any, by our NEOs may differ from the amounts presented in the table.Plan. For further information regarding our stock-based compensation, see notesNote 12 to our consolidated financial statements,Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2012.2013. |
| (2) | Bonuses in 2013 consist of amounts earned under our short-term incentive plan for the year ended December 31, 2013. |
| (3) | Ms. Pearce joined NautilusThe amounts reported in this column reflect compensation such as Chief Financial Officer effective August 9, 2012.employer paid 401k match and/or relocation benefits. |
| (4) | Mr. Mulholland was hired byCazenave joined Nautilus on April 21, 2011 and became Chief Financial Officer onin May 7, 2011. He left the Company effective January 20, 2012 and did not participate in our short-term incentive program during 2012. |
| (5) | Although Mr. Murdock was employed by the Companyus in 2011, and 2010, he was not a namedan executive officer during these periods.that year. |
| (6) | Ms. Pearce was hired by Nautilus on August 9, 2012 and her employment terminated effective July 2, 2013. Accordingly, Ms. Pearce did not earn any amounts pursuant to our Short-Term Incentive Program during 2013. |
GRANTS OF PLAN-BASED AWARDS
Grants of Plan-Based Awards
The following table sets forth certain information regarding
non-equity incentive plangrants of plan-based awards to our NEOs during
2012. | | | | | | | | | | | | |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | |
| | | Threshold (2) | | | Target (3) | | | Maximum (4) | |
Wayne M. Bolio | | $ | 497 | | | $ | 116,844 | | | $ | 175,266 | |
Bruce M. Cazenave | | | 1,594 | | | | 375,000 | | | | 562,500 | |
William B. McMahon | | | 797 | | | | 187,500 | | | | 281,250 | |
Robert O. Murdock | | | 383 | | | | 90,000 | | | | 135,000 | |
Linda M. Pearce | | | 190 | | | | 44,769 | | | | 67,154 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh.) | | Grant Date Fair Value of Stock and Option Awards ($)(3) |
| | Grant Date | | Thresh-old ($) | | Target ($) | | Maxi-mum ($) | | Thresh- old (#) | | Target (#) | | Maxi-mum(#) | | | |
| Bruce M. Cazenave | | | $ | 1,594 |
| | $ | 375,000 |
| | $ | 562,500 |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
|
| | 05/02/13 | | — |
| | — |
| | — |
| | 6,900 |
| | 11,500 |
| | 17,250 |
| | 18,000 |
| | 6.62 |
| | 119,160 |
|
| William B. McMahon | | | 797 |
| | 187,500 |
| | 281,250 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | 05/02/13 | | — |
| | — |
| | — |
| | 2,670 |
| | 4,450 |
| | 6,675 |
| | 6,000 |
| | 6.62 |
| | 39,720 |
|
| Wayne M. Bolio | | | 497 |
| | 116,844 |
| | 175,266 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | 05/02/13 | | — |
| | — |
| | — |
| | 1,440 |
| | 2,400 |
| | 3,600 |
| | 3,600 |
| | 6.62 |
| | 23,832 |
|
| Robert O. Murdock | | | 432 |
| | 101,538 |
| | 152,308 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | 05/02/13 | | — |
| | — |
| | — |
| | 1,110 |
| | 1,850 |
| | 2,775 |
| | 3,000 |
| | 6.62 |
| | 19,860 |
|
Linda M. Pearce(4) | | | 255 |
| | 60,000 |
| | 90,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | 05/02/13 | | — |
| | — |
| | — |
| | 2,580 |
| | 4,300 |
| | 6,450 |
| | 6,000 |
| | 6.62 |
| | 39,720 |
|
|
| |
| (1) | Amounts reflect potential payments to our NEOs under our short-term incentive program for the year ended December 31, 2012.2013. For amounts actually earned by our NEOs in 2012,2013, see “Summary Compensation Table” located herein. Participation in the program is limited to those executives who are employed by the Company at the time the incentive payments are made. For further information regarding our short-term incentive program, see “Short-Term Incentive Program” located herein. |
(2) | The amounts in this column represent the potential award for each NEO under our short-term incentive program at the threshold level. The minimum payout is calculated assuming the company financial factor and the key strategic initiatives are achieved at the minimum level, and the employee achieving an estimated lowest payout level at 5% for individual contribution. |
(3) | The amounts in this column represent the potential award for each NEO under our short-term incentive program at the target level. The target payout is calculated assuming company financial factor and the key strategic initiatives are achieved at 100%, and the employee obtaining 100% of the target payout level for individual contribution. |
(4) | The amounts in this column represent the potential award for each NEO under our short-term incentive program at the maximum level. The maximum payout is calculated assuming company financial factor and key strategic initiatives are achieved at the maximum level, and the employee achieving the highest payout level for individual contribution while taking into consideration the overall plan maximum of 150% payout. |
The following table sets forth certain information regarding stock options awarded to our NEOs during 2012.
| | | | | | | | | | | | | | | | |
Stock Option Awards | |
| | | Grant
Date | | | Number
of Shares (1) | | | Exercise
Price Per
Share (2) | | | Grant
Date Fair
Value (3) | |
Wayne M. Bolio | | | 02/16/12 | | | | 12,000 | | | $ | 2.85 | | | $ | 23,586 | |
Bruce M. Cazenave | | | 02/16/12 | | | | 57,000 | | | | 2.85 | | | | 112,034 | |
William B. McMahon | | | 02/16/12 | | | | 22,500 | | | | 2.85 | | | | 44,224 | |
Robert O. Murdock | | | 02/16/12 | | | | 10,000 | | | | 2.85 | | | | 19,655 | |
Linda M. Pearce | | | 08/09/12 | | | | 30,000 | (4) | | | 2.47 | | | | 51,048 | |
| (1) | Number of stock option shares awarded to NEOs during 2012 under our 2005 Long-Term Incentive Plan. For further information regarding equity compensation awarded to our executive officers,short-term incentive program, see “Equity Compensation”“Short-Term Incentive Program” located herein. |
| (2) | Amounts reflect potential stock to be earned pursuant to performance stock unit ("PSU") awards. The stock option exercise price was determinedPSUs vest based on the NYSE closing priceachievement of Nautilus common stock on the last business day preceding the date of grant. |
| (3) | Reflects the aggregate grant date fair value of the applicable stock option, calculated in accordance with ASC Topic 718. |
| (4) | Number of stock option shares awarded to Ms. Pearce upon commencement of her employment effective August 9, 2012. |
The following table sets forth certain information regarding performance-based restricted stock units awarded to our NEOs during 2012.
| | | | | | | | | | | | | | |
Estimated Future Payouts under Equity Incentive Plan Awards(1) |
| | | | |
| | | | | | Number of Shares | | | | |
| | | Grant
Date | | | Threshold (2) | | Target (3) | | Maximum (4) | | Grant
Price Per
Share (5) | | Grant Date Fair Value (6) |
Wayne M. Bolio | | | 02/16/12 | | | 4,500 | | 7,500 | | 11,250 | | $ 2.85 | | $ 21,375 |
Bruce M. Cazenave | | | 02/16/12 | | | 21,300 | | 35,500 | | 53,250 | | 2.85 | | 101,175 |
William B. McMahon | | | 02/16/12 | | | 8,400 | | 14,000 | | 21,000 | | 2.85 | | 39,900 |
Robert O. Murdock | | | 02/16/12 | | | 3,900 | | 6,500 | | 9,750 | | 2.85 | | 18,525 |
Linda M. Pearce(7) | | | 08/09/12 | | | 7,200 | | 12,000 | | 18,000 | | 2.47 | | 29,640 |
| (1) | Performance-based restricted stock unit award is subject to both time-based and performance-based vesting conditions. The units vest in February 2015 (except with respect to Ms. Pearce, whose units vest in August 2015) subject to determination by the Compensation Committee of the Company’s Board of Directors that the Company has achieved certain pre-taxoperating income and return on assetsasset goals established for a three-year performance period ending on December 31, 2014.period. The number of shares vestedvesting under the performance unit awardPSU awards following conclusion of the performance period will be determined based on the level at which the financial goals are achieved. The number of shares vesting can range from 60% of the performance unit awardPSU awards if minimum thresholds are achieved to a maximum of 150%. See Note 12 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 for additional information.
|
| (2) | The amounts in this column represent the number of shares potentially issuable under the restricted stock award assuming company pre-tax income and return on assets goals are achieved at the minimum level over the three-year performance period. |
| (3) | The amountsSee Note 12 of Notes to Consolidated Financial Statements included in this column representour Annual Report on Form 10-K for the number of shares potentially issuable underyear ended December 31, 2013 for detailed information regarding determining the restricted stock award assuming company pre-tax income and return on assets goals are achieved at the target level over the three-year performance period. |
| (4) | The amounts in this column represent the number of shares potentially issuable under the restricted stock award assuming company pre-tax income and return on assets goals are achieved at the maximum level over the three-year performance period. |
| (5) | The grant price per share was determined based on the NYSE closing price of Nautilus common stock on the last business day preceding the date of grant. |
| (6) | Reflects the aggregate grant date fair value of the applicable award, calculated in accordance with ASC Topic 718.stock-based awards. |
| (4) | (7) | Number of shares awarded to Ms. Pearce upon commencement of her employmentleft the company effective August 9, 2012.July 2, 2013, and, therefore was not eligible to participate in the 2013 short-term incentive program. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Outstanding Equity Awards at Fiscal Year End
The following tables set forth certain information regarding outstanding
stock options and stockstock-based awards held by our NEOs as of December 31,
2012. | | | | | | | | | | | | | | | | |
| | | Option Awards | |
| | | | | |
| | | Grant
Date | | | Number of Securities Underlying Unexercised Options | | Number of Securities Underlying Unearned Unexercised Options | | Exercise
Price | | | Expiration
Date (1) | |
| | | | | | Exercisable | | Unexercisable | | | | | | |
Bruce M. Cazenave | | | 05/30/11 | (2) | | 16,671 | | 33,329 | | $ | 2.53 | | | | 05/30/18 | |
| | | 02/16/12 | (2) | | — | | 57,000 | | | 2.85 | | | | 02/16/19 | |
| | | | | |
Linda M. Pearce | | | 08/09/12 | (2) | | — | | 30,000 | | | 2.47 | | | | 08/09/19 | |
Michael D. Mulholland(6) | | | | | | — | | — | | | — | | | | — | |
Wayne M. Bolio | | | 07/15/03 | (3) | | 1,500 | | — | | | 10.39 | | | | 07/15/13 | |
| | | 02/04/04 | (4) | | 28,000 | | — | | | 14.25 | | | | 02/04/14 | |
| | | 06/07/04 | (4) | | 25,000 | | — | | | 15.66 | | | | 06/07/14 | |
| | | 01/29/06 | (3) | | 10,500 | | — | | | 15.15 | | | | 01/29/13 | |
| | | 01/28/07 | (3) | | 12,000 | | — | | | 16.10 | | | | 01/28/14 | |
| | | 02/25/08 | (3) | | 18,000 | | — | | | 4.15 | | | | 02/25/15 | |
| | | 02/25/08 | (5) | | 18,000 | | — | | | 4.15 | | | | 02/25/15 | |
| | | 04/02/10 | (2) | | 6,167 | | 3,083 | | | 2.99 | | | | 04/02/17 | |
| | | 02/16/12 | (2) | | — | | 12,000 | | | 2.85 | | | | 02/16/19 | |
William B. McMahon | | | 01/28/07 | (3) | | 750 | | — | | | 16.10 | | | | 01/28/14 | |
| | | 02/25/08 | (3) | | 3,500 | | — | | | 4.15 | | | | 02/25/15 | |
| | | 02/25/08 | (5) | | 3,500 | | — | | | 4.15 | | | | 02/25/15 | |
| | | 04/02/10 | (2) | | 37,336 | | 18,664 | | | 2.99 | | | | 04/02/17 | |
| | | 02/16/12 | (2) | | — | | 22,500 | | | 2.85 | | | | 02/16/19 | |
| | | | | |
Robert O. Murdock | | | 01/28/07 | (3) | | 1,800 | | — | | | 16.10 | | | | 01/28/14 | |
| | | 02/25/08 | (3) | | 2,000 | | — | | | 4.15 | | | | 02/25/15 | |
| | | 04/02/10 | (2) | | 2,534 | | 1,266 | | | 2.99 | | | | 04/02/17 | |
| | | 08/05/11 | (3) | | 1,875 | | 5,625 | | | 1.85 | | | | 08/05/18 | |
| | | 02/16/12 | (2) | | — | | 10,000 | | | 2.85 | | | | 02/16/19 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| | | Grant Date | | Number of Securities Under-lying Unexer-cised Options (#) Exercis-able | | Number of Securities Underlying Unearned Unexer-cised Options (#) Unexer-cisable | | Option Exer-cise Price | | Option Expir-ation Date (1) | | Number of Shares or Units of Stock That Have Not Vested (#)(7) | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(8) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
| Bruce M. Cazenave | | 05/30/11 |
| (2) | 33,336 |
| | 16,664 |
| | $ | 2.53 |
| | 05/30/18 |
| | 104,990 |
| | $ | 885,066 |
| | — |
| | $ | — |
|
| | | 02/16/12 |
| (2) | 19,004 |
| | 37,996 |
| | 2.85 |
| | 02/16/19 |
| | — |
| | — |
| | 35,500 |
| | 299,265 |
|
| | | 05/02/13 |
| (2) | — |
| | 18,000 |
| | 6.62 |
| | 05/02/20 |
| | — |
| | — |
| | 11,500 |
| | 96,945 |
|
| | | | | | | | | | | | | | | | | | | |
| William B. McMahon | | 1/28/2007 |
| (3) | 750 |
| | — |
| | 16.10 |
| | 01/28/14 |
| | — |
| | — |
| | — |
| | — |
|
| | | 2/25/2008 |
| (3) | 3,500 |
| | — |
| | 4.15 |
| | 02/25/15 |
| | — |
| | — |
| | — |
| | — |
|
| | | 2/25/2008 |
| (5) | 3,500 |
| | — |
| | 4.15 |
| | 02/25/15 |
| | — |
| | — |
| | — |
| | — |
|
| | | 4/2/2010 |
| (2) | 56,000 |
| | — |
| | 2.99 |
| | 04/02/17 |
| | — |
| | — |
| | — |
| | — |
|
| | | 2/16/2012 |
| (2) | 7,502 |
| | 14,998 |
| | 2.85 |
| | 02/16/19 |
| | — |
| | — |
| | 14,000 |
| | 118,020 |
|
| | | 5/2/2013 |
| (2) | — |
| | 6,000 |
| | 6.62 |
| | 05/02/20 |
| | — |
| | — |
| | 4,450 |
| | 37,514 |
|
| | | | | | | | | | | | | | |
| Wayne M. Bolio | | 02/04/04 |
| (4) | 28,000 |
| | — |
| | 14.25 |
| | 02/04/14 |
| | — |
| | — |
| | — |
| | — |
|
| | | 06/07/04 |
| (4) | 25,000 |
| | — |
| | 15.66 |
| | 06/07/14 |
| | — |
| | — |
| | — |
| | — |
|
| | | 01/28/07 |
| (3) | 12,000 |
| | — |
| | 16.10 |
| | 01/28/14 |
| | — |
| | — |
| | — |
| | — |
|
| | | 02/25/08 |
| (3) | 18,000 |
| | — |
| | 4.15 |
| | 02/25/15 |
| | — |
| | — |
| | — |
| | — |
|
| | | 02/25/08 |
| (5) | 18,000 |
| | — |
| | 4.15 |
| | 02/25/15 |
| | — |
| | — |
| | — |
| | — |
|
| | | 02/16/12 |
| (2) | — |
| | 7,999 |
| | 2.85 |
| | 02/16/19 |
| | — |
| | — |
| | 7,500 |
| | 63,225 |
|
| | | 05/02/13 |
| (2) | — |
| | 3,600 |
| | 6.62 |
| | 05/02/20 |
| | — |
| | — |
| | 2,400 |
| | 20,232 |
|
| | | | | | | | | | | | | | |
| Robert O. Murdock | | 01/28/07 |
| (3) | 1,800 |
| | — |
| | 16.10 |
| | 01/28/14 |
| | — |
| | — |
| | — |
| | — |
|
| | | 02/25/08 |
| (3) | 2,000 |
| | — |
| | 4.15 |
| | 02/25/15 |
| | — |
| | — |
| | — |
| | — |
|
| | | 04/02/10 |
| (2) | 3,800 |
| | — |
| | 2.99 |
| | 04/02/17 |
| | — |
| | — |
| | — |
| | — |
|
| | | 08/05/11 |
| (3) | 3,750 |
| | 3,750 |
| | 1.85 |
| | 08/05/18 |
| | — |
| | — |
| | — |
| | — |
|
| | | 02/16/12 |
| (2) | 3,335 |
| | 6,665 |
| | 2.85 |
| | 02/16/19 |
| | — |
| | — |
| | 6,500 |
| | 54,795 |
|
| | | 05/02/13 |
| (2) | — |
| | 3,000 |
| | 6.62 |
| | 05/02/20 |
| | — |
| | — |
| | 1,850 |
| | 15,596 |
|
| | | | | | | | | | | | | | | | | | | |
Linda M. Pearce (6) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
|
| |
| (1) | Options granted under our 2005 Long-Term Incentive Plan generally expire seven years from the date of grant. Outstanding options granted to our NEOs under previous plans (granted prior to June 6, 2005) generally expire ten years from the date of grant. |
| (2) | Option awards vest in three equal annual installments, beginning the first anniversary of the grant date. |
| (3) | Option awards vest in four equal annual installments, beginning the first anniversary of the grant date. |
| (4) | Option awards vest in five equal annual installments, beginning the first anniversary of the grant date. |
| (5) | Option awards vest in two equal annual installments, beginning the first anniversary of the grant date. |
| (6) | Mr. Mulholland left the company on January 20, 2012Ms. Pearce's employment terminated effective July 2, 2013 and she held no outstanding stock optionsstock-based awards as of December 31, 2012.2013. |
| | | | | | | | | | | | | | | | | | | | |
Stock Awards | |
| | | | | | | | | Equity Incentive Plan Awards | |
| | | Grant
Date | | | Number of
Shares or
Units that
Have Not
Vested | | | Market
Value of
Shares or
Units that
Have Not
Vested(4) | | | Number of
Unearned
Shares or
Units that
Have Not
Vested | | | Market
Value of
Unearned
Shares or
Units that
Have Not
Vested (4) | |
Bruce M. Cazenave | | | 05/30/11 | (1) | | | 179,100 | | | $ | 628,641 | | | | | | | | | |
| | | 02/16/12 | (2) | | | | | | | 35,500 | | | $ | 124,605 | |
| | | | |
Linda M. Pearce | | | 08/09/12 | (2) | | | | | | | 12,000 | | | | 42,120 | |
Wayne M. Bolio | | | 04/02/10 | (3) | | | | | | | 16,500 | | | | 57,915 | |
| | | 02/16/12 | (2) | | | | | | | 7,500 | | | | 26,325 | |
| | | | |
William B. McMahon | | | 04/02/10 | (3) | | | | | | | 40,000 | | | | 140,400 | |
| | | 02/16/12 | (2) | | | | | | | 14,000 | | | | 49,140 | |
Robert O. Murdock | | | 02/16/12 | (2) | | | | | | | 6,500 | | | | 22,815 | |
(1)(7) | Restricted stock unit award subject only to time-based vesting. The unvested shares willawards vest 25% at the end of the first anniversary of the grant date. Thereafter, the remaining 75% vest in thirty-six substantially equal monthly installments through May 30, 2015.installments. |
(2)(8) | Performance-basedPerformance restricted stock unit award. The award is subject to both time-based and performance-based vesting conditions. The units vest in February 2015 (except with respect to Ms. Pearce, whose units vest in August 2015) subject to determination by the Compensation Committee of the Company’s Board of Directors that the Company has achieved certain pre-tax income and return on assets goals established for a three-year performance period ending on December 31, 2014. The number of shares vested under the performance unit award following conclusion of the performance periodawards will be determinedearned and vest based on a 3-year cliff if the level at which the financial goals areapplicable performance goal(s) have been achieved. The number of shares vesting can range from 60% of the performance unit award if minimum thresholds are achieved to a maximum of 150%. The number of unearned shares was determined based on achievement of company performance goals at the target level. |
Option Exercises and Stock Vested
The following table provides information about options exercised and stock awards vested for the NEOs during the fiscal year ended December 31, 2013.
|
| | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| | | Number of Shares Acquired on Exercise | | Value Realized on Exercise | | Number of Shares Acquired on Vesting | | Value Realized on Vesting (1) |
| Bruce M. Cazenave | | — |
| | $ | — |
| | 74,111 |
| | $ | 545,209 |
|
| William B. McMahon | | — |
| | — |
| | 40,000 |
| | 272,934 |
|
| Wayne M. Bolio | | 13,251 |
| | 39,060 |
| | 16,500 |
| | 112,585 |
|
| Robert O. Murdock | | — |
| | — |
| | — |
| | — |
|
| Linda Pearce | | — |
| | — |
| | — |
| | — |
|
(3) |
| Performance share unit award. The award is subject to both time-based vesting (one-third annually over three years) and achievement of a stock price target. The stock price performance condition is achieved if our stock price closes at or above two times the grant date price of $2.99 per share on 20 days of any period of 30 consecutive trading days during the three-year vesting period. If the stock price target is not achieved during the vesting period, the entire award is forfeited. |
(4)(1) | The market value of unvestedvested shares was determined based on the NYSE closing price of Nautilus common stock on December 31, 2012. |
OPTION EXERCISES AND STOCK VESTED
No stock options were exercised by our NEOs in 2012. The following stock was vested by our NEOs in 2012.
| | | | | | | | | | | | |
Restricted Stock Unit Awards | |
| | | Grant
Date | | | Number of
Shares
Acquired
on Vesting | | | Value
Realized
on Vesting (1) | |
Bruce M. Cazenave | | | 5/30/2011 | | | | 137,105 | | | $ | 405,105 | |
(1) | The market value of vested shares was aggregated based on the NYSE closing price of Nautilus common stock on the respective vesting dates.date. |
OTHER
POTENTIAL POST-EMPLOYMENT PAYMENTS
Each of our NEOs is employed “at-will,” meaning employment may be terminated by either party with or without cause. Upon termination of employment by us without “cause” or if the NEO leaves for “good reason” (as such terms are defined in the NEO’s employment agreement), we may be obligated to pay separation benefits. For a description of such benefits, see "Compensation Discussion and Analysis - Post-Employment Obligations" above. The following table sets forth
certain information regarding amounts
potentiallythat would have been payable to our
NEOs. | | | | | | | | |
| | | Salary
Continuation
or Severance(1) | | | Benefits or
Perquisites(2) | |
Wayne M. Bolio | | $ | 116,844 | | | $ | 2,698 | |
Bruce M. Cazenave | | | 375,000 | | | | 13,971 | |
William B. McMahon | | | 125,000 | | | | 2,698 | |
Michael D. Mulholland(3) | | | — | | | | — | |
Robert O. Murdock | | | 60,000 | | | | 1,799 | |
Linda M. Pearce | | | 120,000 | | | | 4,972 | |
|
| | | | | | | |
| | Salary Continuation or Severance(1) | | Benefits or Perquisites(2) |
Bruce M. Cazenave(3) | $ | 375,000 |
| | $ | 12,392 |
|
| William B. McMahon | 125,000 |
| | 2,429 |
|
| Wayne M. Bolio | 116,844 |
| | 2,429 |
|
| Robert O. Murdock | 70,000 |
| | 1,619 |
|
Linda M. Pearce(4) | — |
| | — |
|
|
| |
| (1) | Amounts that may be paid under the applicable employment agreement, assuming termination occurred on December 31, 2012.2013. |
| (2) | UnderPer their respectiveindividual employment agreements, Messrs. Bolio, Cazenave, McMahon, Murdock and Ms. Pearceall NEOs are entitled to continued health benefits for themselves and their covered dependents, at active-employee premium rates, during the period in which they are entitled to severance payments. |
| (3) | In addition, Mr. Mulholland resigned fromCazenave is entitled to a pro-rated bonus payment for the Companyportion of the fiscal year completed prior to the termination. |
| (4) | Ms. Pearce did not receive post-employment benefits in connection with her resignation effective January 20, 2012 and, therefore, was not eligible for post-employment benefits. Mr. Mulholland received four months of subsidized health insurance coverage in 2012.July 2, 2013. |
Each of our NEOs is employed “at-will,” meaning employment may be terminated by either party with or without cause. Upon termination of employment by the Company without “cause” or, in the case of Messrs. Bolio, McMahon, Murdock and Ms. Pearce, if the NEO leaves for “good reason” (in each instance, as such terms are defined in the NEO’s employment agreement), the Company may be obligated to pay separation benefits to the NEOs as indicated above. Separation benefits for the NEOs include continued payments of the individual’s base salary, paid biweekly according to the Company’s normal payroll schedule, for six months or, in the case of Mr. Cazenave, for twelve months, and four months for Mr. Murdock. Severance payments may cease or be reduced in the event the NEO obtains subsequent employment, within the salary continuation period, at a salary equal to or greater than the NEO’s initial salary with the Company or, in the case of Mr. Cazenave, salary at the time of termination. Distributions are subject to certain restrictions imposed by Internal Revenue Code Section 409A.
Nautilus has a Director Compensation Program that provides for compensation of the non-employee members of our Board. Director compensation consists of annual retainers, meeting fees, fees for service as a committee chair, and awards of equity compensation. Directors who are
Company employees
if any, receive no additional or special remuneration for serving as directors.
Annual Retainer, Committee Chair and Meeting Fees
Under the Director Compensation Program, each non-employee director receives an annual retainer of $35,000 and a fee of $1,500 for attendance at each Board meeting. Our
Board’sBoard's Non-executive Chairman receives an additional annual fee of $30,000. Each director serving on a committee of our Board receives an additional fee of $1,500 for attendance at each committee meeting. The Chair of the Audit Committee receives an additional annual retainer of $10,000, while the Chairs of the Compensation Committee and the Nominating & Corporate Governance Committee each receive an additional annual retainer of $5,000.
Initial Equity Grant
The Director Compensation Program provides that, upon initial election to our Board, each non-employee director may be granted an option to purchase up to 10,000 shares of Nautilus common stock. Upon joining our Board on April 2, 2012, Ms. Saunders was granted a stock option representing the right to purchase 2,500 shares of Nautilus common stock at an exercise price of $2.80 per share, and vesting as to 100% of the shares on the one year anniversary of the grant. Annual Equity Grant The Director Compensation Program also provides for annual awards of options to non-employee directors upon
Upon re-election to the Board at
theour 2013 annual
stockholders’ meeting. The awards have historically consistedmeeting of
options to purchase 10,000 shares of Nautilus common stock at an exercise price equal to the closing price of the common stock on the NYSE on the last business day preceding the date of the award. On May 17, 2012, our Board granted toshareholders, each non-employee director
a stock option representing the right to purchase 10,000 shares of Nautilus common stock at an exercise price of $2.77 per share. Stock optionswas granted
to directors prior to March 26, 2012, were subject to vesting ratably over four years. Stock options granted to directors on or after March 26, 2012 are subject to 100% vesting after one year.Future Annual GrantsOn March 14, 2013, our Board approved a change to the annual equity grants awarded under the Director Compensation Program. Effective after March 14, 2013, upon re-election to the Board, each non-employee director will be granted 7,5006,800 restricted shares of Nautilus common stock, subject to 100% vesting after one year. The grant of 7,500Beginning in 2014, each non-employee director will be granted restricted shares is in lieu of the grant of options to purchase 10,000 shares of Nautilus common stock.
2012 Directors Compensation
| | | | | | | | | | | | |
| | | Fees Earned
or Paid in
Cash | | | Option
Awards (1) | | | Total | |
Ronald P. Badie (2) | | $ | 67,000 | | | $ | 19,180 | | | $ | 86,180 | |
Richard A. Horn(3) | | | 67,000 | | | | 19,180 | | | | 86,180 | |
M. Carl Johnson, III(4) | | | 81,500 | | | | 19,180 | | | | 100,680 | |
Anne G. Saunders(5) | | | 38,250 | | | | 24,027 | | | | 62,277 | |
Marvin G. Siegert(2) | | | 72,000 | | | | 19,180 | | | | 91,180 | |
|
| | | | | | | | | | | |
| 2013 Director Compensation |
| | Fees Earned or Paid in Cash | | Stock Awards (1) | | Total |
Ronald P. Badie | $ | 64,000 |
| | $ | 45,016 |
| | $ | 109,016 |
|
| Richard A. Horn | 64,000 |
| | 45,016 |
| | 109,016 |
|
| M. Carl Johnson, III | 78,500 |
| | 45,016 |
| | 123,516 |
|
| Anne G. Saunders | 54,500 |
| | 45,016 |
| | 99,516 |
|
| Marvin G. Siegert | 69,000 |
| | 45,016 |
| | 114,016 |
|
|
| |
| (1) | OptionStock award amounts reflect the aggregate grant date fair value of stock optionsawards granted during 2012, as calculated2013. See Note 12 of Notes to Consolidated Financial Statements included in accordance with ASC Topic 718. |
(2) | As ofour Form 10-K for the year ended December 31, 2012, Messrs. Badie and Siegert each held outstanding2013 for additional information on determining the fair value of stock option awards representing the right to purchase 70,000 shares of Nautilus common stock.awards. |
(3) | As of December 31, 2012, Mr. Horn held outstanding stock option awards representing the right to purchase 60,000 shares of Nautilus common stock. |
(4) | As of December 31, 2012, Mr. Johnson held outstanding stock option awards representing the right to purchase 30,000 shares of Nautilus common stock. |
(5) | As of December 31, 2012, Ms. Saunders held outstanding stock option awards representing the right to purchase 12,500 shares of Nautilus common stock. |
|
| | | | | |
| Equity Awards Outstanding at December 31, 2013 |
| | Unvested Stock Awards (#) | | Option Awards (#) |
| Ronald P. Badie | 6,800 |
| | 60,000 |
|
| Richard A. Horn | 6,800 |
| | 60,000 |
|
| M. Carl Johnson, III | 6,800 |
| | 30,000 |
|
| Anne G. Saunders | 6,800 |
| | 12,500 |
|
| Marvin G. Siegert | 6,800 |
| | 60,000 |
|
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return of our common stock with the cumulative total return of theNYSE Composite Index, theS&P SmallCap 600 Index, and theNASDAQ, for the period commencing December 31, 2007 and ending on December 31, 2012. TheS&P SmallCap 600 Index was chosen because we do not believe we can reasonably identify an industry index or specific peer issuer that would offer a meaningful comparison. TheS&P SmallCap 600 Index represents a broad-based index of companies with similar market capitalization.
The graph assumes $100 was invested, on December 31, 2007, in our common stock and each index presented. The comparisons in the table below are not intended to forecast or be indicative of future performance of our common stock.
AUDIT COMMITTEE REPORT TO
STOCKHOLDERSSHAREHOLDERS *
Each current member of the Audit Committee meets the independence, financial literacy and experience requirements contained in the corporate governance listing standards of the New York Stock Exchange (NYSE) relating to audit committees. In addition, our Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial expert” under the regulations of the SEC. Although all members of our Audit Committee meet the current NYSE regulatory requirements for accounting or related financial management expertise, and the Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial
expert,expert.”
membersMembers of our Audit Committee are not professionally engaged in the practice of auditing or accounting and are not technical experts in auditing or accounting.
The Audit Committee oversees
Nautilus’sNautilus's financial reporting process on behalf of the Board and operates under a written charter, approved by the Audit Committee and ratified by the Board. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report on Form 10-K for the year ended December 31,
20122013 with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
Management has the primary responsibility for the preparation, presentation and integrity of
the Company’sNautilus' financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures. Management is responsible for maintaining and evaluating appropriate accounting and financial reporting principles and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations.
The Audit Committee reviewed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of Nautilus’Nautilus' audited financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, not just the acceptability, of the Company’sNautilus' accounting principles. The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing StandardsStandard No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T,Communication16, Communications with Audit Committees. The Audit Committee has received the written disclosures and the letter from the independent accountant required by the Public Company Accounting Oversight Board regarding the independent accountant’saccountant's communications with the audit committeeAudit Committee concerning independence, and has discussed with the independent accountant the independent accountant’saccountant's independence from the CompanyNautilus and its management, and has considered whether the independent registered public accounting firm’sfirm's provision of any non-audit services to the CompanyNautilus is compatible with maintaining such firm’sfirm's independence. The Audit Committee discussed with
the Company’sNautilus' independent registered public accounting firm the overall scope and plans for their audit. In addition, the Audit Committee met with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of the
Company’sNautilus' internal control over financial reporting, and the overall quality of
the Company’sNautilus' financial reporting for the year ended December 31,
2012.2013.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements and
management’smanagement's report on internal control over financial reporting be included in the Annual Report on Form 10-K for the year ended December 31,
2012.2013. The Audit Committee has determined that provision by Deloitte & Touche LLP of other non-audit services is compatible with maintaining Deloitte & Touche
LLP’sLLP's independence. The Audit Committee and the Board have also recommended, subject to
stockholdershareholder ratification, the selection of Deloitte & Touche LLP as
the Company’sNautilus' independent registered public accounting firm for the year ending December 31,
2013.2014.
Marvin G. Siegert, Chairman
* The information contained in the Report of the Audit Committee shall not be deemed “soliciting material” or be incorporated by reference by any general statement incorporating this proxy statement into any filings under either the Securities Act of 1933, as amended, or the Exchange Act (together the “Acts”), except to the extent Nautilus specifically incorporates such report by reference, and further, such Report shall not otherwise be deemed filed under the Acts.
RATIFICATION OF APPOINTMENT OF REGISTERED INDEPENDENT PUBLIC
ACCOUNTING FIRM FOR
20132014
The Audit Committee has appointed Deloitte & Touche LLP, the member firms of Deloitte Touche Tomatsu and their respective affiliates (collectively, “Deloitte & Touche”) as our registered independent public accounting firm to audit our consolidated financial statements for the year
endedending December 31,
2013.2014. Although we are not required to seek
stockholdershareholder approval of this appointment, the Board has determined it to be sound corporate governance to do so. If the appointment is not ratified by
stockholders,shareholders, the Audit Committee will investigate the possible bases for the negative vote and will reconsider the appointment in light of the results of its investigation.
We employed Deloitte & Touche as our registered independent public accounting firm during
2012.2013. There have been no disagreements with Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Deloitte & Touche, would have caused Deloitte & Touche to make reference to the matter in their report. A representative of Deloitte & Touche is expected to be present at the annual
stockholders’shareholders' meeting. The representative will be given the opportunity to make a statement on behalf of Deloitte & Touche if the representative so desires, and the representative will be available to respond to appropriate
stockholdershareholder questions.
We understand the need for Deloitte & Touche to maintain objectivity and independence in its audit of our financial statements. To minimize relationships that could appear to impair the objectivity of Deloitte & Touche, our Audit Committee has restricted the non-audit services that Deloitte & Touche may provide. These determinations are among the key practices adopted by the Audit Committee in its “Policies and Procedures for the Approval of Audit and Non-audit Services Provided by the Independent Auditor,” effective April 2003.
Under these policies, with Audit Committee pre-approval, we may use Deloitte & Touche for the following categories of non-audit services: merger and acquisition due diligence and audit services; tax services; internal control reviews; employee benefit plan audits; and reviews and procedures that we engage Deloitte & Touche to undertake to provide assurances on matters not required by laws or regulations.
The
aggregatefollowing presents fees
and expenses billed for professional
audit services rendered by Deloitte & Touche for the
audit of our annual financial statements for the years ended December 31,
2013 and 2012, and
2011 were as follows: | | | | | | | | |
Type of Fees | | 2012 | | | 2011 | |
Audit Fees | | $ | 476,078 | | | $ | 616,000 | |
Tax Fees | | | 139,142 | | | | 74,000 | |
All Other Fees | | | 9,558 | | | | 74,000 | |
| | | | | | | | |
Total | | $ | 624,778 | | | $ | 764,000 | |
| | | | | | | | |
fees billed for other services rendered by Deloitte & Touche during those periods.
|
| | | | | | | | |
| Type of Fees | | 2013 | | 2012 |
| Audit Fees | | $ | 707,855 |
| | $ | 658,349 |
|
| Tax Fees | | 73,268 |
| | 139,142 |
|
| All Other Fees | | — |
| | 9,558 |
|
| Total | | $ | 781,123 |
| | $ | 807,049 |
|
“Audit fees” are fees for the audit of our consolidated financial statements included in Form 10-K, review of our condensed consolidated financial statements included in Form 10-Q and services that are normally provided by the accountant in connection with our statutory and regulatory filings or engagements, including the audit
of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002.
Section 404 audit requirements did not apply for the year ended December 31, 2011 due to our status then as a non-accelerated filer.“Tax fees” are fees billed for tax compliance, tax advice and tax planning services rendered during the respective periods.
“All other fees” are fees billed
for any services rendered during the years ended December 31,
2013 and 2012
and 2010. “All other fees”that are
fees for any services not included in the first two categories, consisting of royalty contract compliance review
services, billed during the years ended December 31, 2012 and 2011.services.
All of the services performed by Deloitte & Touche LLP in
20122013 and
20112012 were pre-approved in accordance with the pre-approval policy and procedures adopted by the Audit Committee. This policy describes the permitted audit, audit-related, tax and other services that the independent auditors may perform. Generally, pre-approval is provided at regularly scheduled committee meetings; however, the authority to pre-approve services between meetings, as necessary, has been delegated to the Chairman of the Audit Committee, subject to formal approval by the committee at the next regularly scheduled meeting.
The Audit Committee believes that the foregoing expenditures are compatible with maintaining the independence of our
registered independent
registered public accounting firm.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERSSHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE AUDIT
COMMITTEE’SCOMMITTEE'S APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR
REGISTERED INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are asking
stockholdersshareholders to
adopt,approve, on
ana non-binding, advisory basis, a resolution approving
the Company’sour executive compensation as reported in this Proxy Statement.
We urge
stockholdersshareholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes how our executive compensation program is designed and operates, as well as the Summary Compensation Table and other related compensation tables, which provide additional information on the compensation of our named executive officers. The Board and the Compensation Committee believe that our executive compensation program
as described in the “Compensation Discussion and Analysis” section has supported and contributed to
the Company’sour recent and long-term success and the creation of long-term
stockholdershareholder value and is effective in helping
the Companyus attract and retain the high caliber of executive talent necessary to drive our business forward and build sustainable value for our
stockholders.shareholders.
In accordance with regulations issued under Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking
stockholdersshareholders to approve the following non-binding, advisory resolution at the Annual Meeting:
RESOLVED, that the compensation paid to
the Company’sNautilus' Named Executive Officers, as disclosed in the Compensation Discussion and Analysis section, compensation tables and narrative discussion of the Proxy Statement for the
20132014 Annual Meeting of
Stockholders,Shareholders, is hereby APPROVED.
While this advisory resolution, commonly referred to as a “say on pay” resolution, is non-binding, the Compensation Committee will carefully review and consider the voting results when making future decisions regarding our executive compensation program.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR THE RESOLUTION APPROVING NAUTILUS’ EXECUTIVE COMPENSATION.
PROPOSAL NO. 4:
ADVISORY VOTE REGARDING FREQUENCY OF VOTE ON EXECUTIVE COMPENSATION
The regulations that require us to hold a “say on pay” advisory vote also require that stockholders be asked how often they wish to vote on a “say on pay” proposal. In accordance with these requirements, we are asking stockholders to vote on whether future “say on pay” votes should occur every year, every two years, or every three years. The vote on the frequency of “say on pay” votes is advisory in nature and must be held at least once every six years.
After careful consideration, the Board has determined that holding an advisory vote on executive compensation every one year is the most appropriate policy for the Company at this time, and recommends that stockholders vote for future advisory votes on executive compensation to occur every one year.
In accordance with regulations promulgated under Section 14A of the Exchange Act, stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years, or abstain. Although the advisory vote is non-binding on the Company, the Board has adopted a policy of adopting any recommendation of the stockholders regarding the frequency of advisory votes on executive compensation which receives the vote of a majority of the Company’s stockholders voting on the proposal. If none of the three frequency options receives the vote of the holders of a majority of the shares of the common stock present or represented and voting, we will consider the frequency option (one year, two years or three years) receiving the highest number of votes to be the frequency that has been recommended by stockholders, and the Board and the Compensation Committee will give careful consideration to the voting results on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD ADVISORY VOTES ON“FOR” THE RESOLUTION
APPROVING NAUTILUS' EXECUTIVE
COMPENSATION EVERY ONE YEAR.COMPENSATION.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers, as well as persons who own more than 10% of our outstanding common stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of shares of our common stock. Based solely on a review of copies of such forms furnished to us and written representations from our executive officers, directors and 10% shareholders, we believe that all Section 16(a) filing requirements applicable to Nautilus were timely made with respect to the year ended December 31, 2013, except that on March 26, 2014 Robert O. Murdock, an executive officer, filed an amendment to his Form 3 originally filed on May 6, 2013. The amendment corrected the inadvertent omission of 2,500 shares owned by Mr. Murdock. The shares were issued to him pursuant to a restricted stock award in August 2007.
CODE OF ETHICS
We have adopted the Nautilus, Inc. Code of Business Conduct and Ethics (the “Code of Ethics”), which applies to all of our directors, officers and employees. You can view the Code of Ethics on our website at www.nautilusinc.com. A copy of the Code of Ethics will be provided in print without charge to all interested parties who submit a request in writing to Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683, Attn: Corporate Communications.
HOUSEHOLDING
In accordance with applicable regulations, we deliver a single Annual Report and Proxy Statement to certain persons who share an address, unless we have been notified that such persons prefer to receive individual copies of those documents. This practice is referred to as “householding.” If you reside at an address that received only one copy of proxy materials as a result of householding, we will deliver additional copies upon oral or written request. If you wish to receive separate copies in the future, please contact us at Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683, or by phone at (360) 859-2900. If you and others living at your address received multiple copies of proxy materials and prefer to receive a single copy, you may request that a single copy be sent in the future by contacting us as described above.
As of the date of this proxy statement, the Board is not aware of any other matters that may come before the
annual meeting.Annual Meeting. The persons named in the enclosed proxy card intend to vote the proxy in accordance with their best judgment if any other matters properly come before the
annual meeting.Annual Meeting.
We will provide, without charge, on the written request of any beneficial owner of shares of our common stock entitled to vote at the Annual Meeting,
of Stockholders, a copy of our Annual Report on Form 10-K as filed with the SEC for our fiscal year ended December 31,
2012.2013. Written requests should be mailed to Nautilus, Inc., 17750
SES.E. 6th Way, Vancouver, Washington 98683, Attn: Company Secretary.
Please return the enclosed proxy card as soon as possible. Unless a quorum consisting of a majority of the outstanding shares entitled to vote is represented at the
annual stockholders’ meeting,Annual Meeting, no business can be transacted. Therefore, please be sure to date and sign your proxy card exactly as your name appears on your stock certificate and return it in the enclosed postage prepaid return envelope. Please act promptly to ensure that you will be represented at this important meeting.
|
By Order of the Board of Directors |
|
|
Wayne M. Bolio
Secretary
|
Vancouver, Washington
March 29, 2013
| | | | | | | | |
Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | | x | | | | | | |
qPLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
| | | | |
A
| | Proposals — | | The Board of Directors unanimously recommends stockholders voteFOR all of the nominees listed,FOR Proposal 2,FOR Proposal 3 and selectONE YEAR as the frequency for future advisory votes on Nautilus executive compensation. |
| | |
1. Election of Directors:
| | |
| | | | | | | | | | | | | | | | | | | | | | |
| | For | | Withhold | | | | For | | Withhold | | | | For | | Withhold | | +
| | |
01 - Ronald P. Badie | | ¨ | | ¨ | | 02 - Bruce M. Cazenave | | ¨ | | ¨ | | 03 - Richard A. Horn | | ¨ | | ¨ | | | |
| | | | | | | | | | |
04 - M. Carl Johnson, III | | ¨ | | ¨ | | 05 - Anne G. Saunders | | ¨ | | ¨ | | 06 - Marvin G. Siegert | | ¨ | | ¨ | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | For | | Against | | Abstain | | | | | | | | For | | Against | | Abstain |
| 2. | | Ratification of selection of Deloitte & Touche LLP as Registered Independent Public Accounting Firm. | | ¨ | | ¨ | | ¨ | | | | 3. | | To adopt an advisory resolution approving Nautilus’ executive compensation. | | ¨ | | ¨ | | ¨ |
| | | | | | | | | | | | | | | | | | |
| | | | 1 Year
| | 2 Years
| | 3 Years
| | Abstain
| | | | | | | | |
4. | | To recommend, on an advisory basis, that future advisory votes to approve executive compensation be held every: | | ¨
| | ¨
| | ¨
| | ¨
| | | | | | | | |
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of meeting and proxy statement are available at http://nautilus.com/proxy.
| | | | | | |
B
| | Non-Voting Items | | | | |
| | |
Change of Address— Please print new address below.
| | Meeting Attendance
Mark box to the right if you plan to attend the Annual Meeting.
| | |
| | | | | ¨ |
| | | | |
| | | | | |
| | | | | | |
C | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | | | | |
|
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
| | | | | | | | |
| | | | |
Date (mm/dd/yyyy) — Please print date below.
| | | | Signature 1 — Please keep signature within the box.
| | | | Signature 2 — Please keep signature within the box.
|
// | | | | | | | | |
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — Nautilus, Inc.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 1, 2013
The undersigned hereby acknowledges receipt of the NoticeBoard of Annual Meeting of Stockholders and Proxy Statement, each dated March 29, 2013 and names, constitutes and appoints M. Carl Johnson, III and Directors
Wayne M. Bolio
or either of them acting in absence of the other, with full power of substitution, my true and lawful attorneys and proxies for me and in my place and stead to attend the Annual Meeting of the Stockholders of Nautilus, Inc., to be held at 1:00 p.m. PDT on May 1, 2013, and at any adjournment thereof, and to vote all the shares of common stock held of record in the name of the undersigned on March 15, 2013, with all the powers that the undersigned would possess if personally present.Our Board of Directors is soliciting this proxy. If no specific direction is given as to the items stated on the reverse side, this proxy will be votedFOR all of the nominees listed,FOR Proposal 2,FOR Proposal 3 andONE YEAR will be selected as the frequency for future advisory votes onNautilus executive compensation.
The stockholder signed on the reverse side reserves the right to revoke this proxy at any time prior to its exercise by written notice delivered to our
Secretary at our corporate offices at17750 SE 6thWay,
Vancouver, Washington
98683,prior to the annual meeting. The power of the proxy holders shall also be suspended if the stockholder signed above appears at the annual meeting and elects in writing to vote in person.(Items to be voted appear on reverse side.)
April 2, 2014
