Table of Contents
SECURITIES EXCHANGE ACT OF 1934
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under Rule 14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
15202 Graham Street
Huntington Beach, California 92649
Table of Contents
15202 Graham Street
Huntington Beach, California 92649
To Be Held March 26, 2010
Table of Contents
Chairman of the Board,
Chief Executive Officer and President
February 11, 2010
Table of Contents
15202 Graham Street
Huntington Beach, California 92649
To Be Held March 26, 2010
• | instructions have not been received from the beneficial owners or persons entitled to vote; | ||
• | the broker or nominee does not have discretionary voting power under applicable rules or the instrument under which it serves in such capacity; or | ||
• | the record holder has indicated on the proxy card or has executed a proxy and otherwise notified us that it does not have authority to vote such shares on that matter. |
Table of Contents
2
Table of Contents
Name | Age | Director Since | Positions with Quiksilver | |||||||
Douglas K. Ammerman | 58 | 2005 | Director | |||||||
William M. Barnum, Jr. | 55 | 1991 | Director | |||||||
Charles E. Crowe | 54 | 1980 | Director | |||||||
James G. Ellis | 63 | 2009 | Director | |||||||
Charles S. Exon | 60 | 2005 | Chief Administrative Officer, Secretary, General Counsel and Director | |||||||
M. Steven Langman | 48 | 2009 | Director | |||||||
Robert B. McKnight, Jr. | 56 | 1976 | Chief Executive Officer, President and Chairman | |||||||
Paul C. Speaker | 46 | 2010 | None (Appointed Director February 2010) | |||||||
Andrew W. Sweet | 38 | 2009 | Director |
3
Table of Contents
• | The audit committee; | ||
• | The compensation committee; and | ||
• | The nominating and governance committee |
• | The director must meet the bright-line independence tests under the listing standards of the NYSE; and |
4
Table of Contents
• | The board must affirmatively determine that the director otherwise has no material relationship with us, directly or as a partner, shareholder or officer of an organization that has a relationship with us. |
5
Table of Contents
• | independence under applicable listing standards; | ||
• | relevant business experience; |
6
Table of Contents
• | judgment, skill, integrity and reputation; | ||
• | the number of other boards on which the candidate serves; | ||
• | other business and professional commitments; | ||
• | potential conflicts of interest with other pursuits; | ||
• | whether the candidate is a party to any action or arbitration adverse to us; | ||
• | financial and accounting background, to enable the committee to determine whether the candidate would be suitable for audit committee membership or quality as an “audit committee financial expert;” | ||
• | executive compensation background, to enable the committee to determine whether a candidate would be suitable for compensation committee membership; and | ||
• | the size and composition of the existing board. |
• | the stockholder’s name and contact information; | ||
• | a statement that the writer is a stockholder of record and is proposing a candidate for consideration by the committee; | ||
• | the name of, and contact information for, the candidate and a statement that the candidate is willing to be considered and serve as a director, if nominated and elected; | ||
• | a statement of the candidate’s business and educational experience; | ||
• | information regarding each of the factors listed above, other than that regarding board size and composition, sufficient to enable the committee to evaluate the candidate; | ||
• | a statement of the value that the candidate would add to the board; | ||
• | a statement detailing any relationship between the candidate and any of our customers, suppliers or competitors; and | ||
• | detailed information about any relationship or understanding between the proposing stockholder and the candidate. |
7
Table of Contents
c/o Secretary/Board Communications
15202 Graham Street
Huntington Beach, CA 92649
8
Table of Contents
Compensation | ||
Annual Cash Retainers(1) | ||
Board Member | $45,000 | |
Chair of Audit Committee | $27,000 | |
Chairs of Other Committees | $18,000 | |
Non-Chair Committee Member | $13,500 | |
Clothing Allowance | $2,000 annual allowance to purchase company products at wholesale prices | |
Annual Restricted Stock Award(2) | Automatic 5,000 share restricted stock award if director has served at least 6 months on our board | |
Annual Stock Option Award(2) | Automatic 7,500 share stock option grant if director has served at least 6 months on our board |
(1) | We do not pay our non-employee directors meeting attendances fees, however, we reimburse directors for travel and other out-of-pocket expenses incidental to their service as a director. We also extend coverage to all directors under a directors’ and officers’ indemnity insurance policy. | |
(2) | In addition to the annual awards, we also automatically award 5,000 restricted shares of common stock and options to purchase 7,500 shares of common stock to non-employee directors upon their initial commencement of service as a non-employee director. |
9
Table of Contents
Fees Earned or Paid | All Other | |||||||||||||||||||
in Cash | Stock Awards | Option Awards | Compensation | Total | ||||||||||||||||
Name | $ | $(1)(2) | $(1)(3) | $ | $ | |||||||||||||||
Douglas K. Ammerman | 94,329 | 32,300 | 5,300 | 2,000 | 133,929 | |||||||||||||||
William M. Barnum, Jr. | 76,500 | 32,300 | 5,300 | 2,000 | 116,100 | |||||||||||||||
Charles E. Crowe | 70,875 | 32,300 | 5,300 | 2,000 | 110,475 | |||||||||||||||
James G. Ellis | 29,495 | 3,400 | 7,200 | 1,000 | 41,095 | |||||||||||||||
Timothy J. Harmon(4) | 27,125 | 30,100 | 3,100 | 500 | 60,825 | |||||||||||||||
M. Steven Langman | 11,250 | 1,700 | (5) | 7,500 | (5) | 500 | 20,950 | |||||||||||||
Andrew W. Sweet | 11,250 | 1,700 | (5) | 7,500 | (5) | 500 | 20,950 |
(1) | The dollar amounts listed do not necessarily reflect the dollar amounts of compensation actually realized or that may be realized by our directors. In accordance with SEC requirements, these amounts reflect the dollar amounts we recognized as compensation expense for financial statement reporting purposes for fiscal 2009 in accordance with the provisions of Financial Accounting Standards Board (“FASB”) ASC 718, “Stock Compensation” (“ASC 718”) related to awards to directors in fiscal 2009 and prior years, disregarding estimated forfeitures. See Note 10 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2009 filed with the SEC on January 12, 2010 for information regarding assumptions underlying the valuation of equity awards. | |
(2) | On March 25, 2009, the date of our 2009 annual meeting of stockholders, each non-employee director was automatically awarded 5,000 restricted shares of our common stock. The grant date fair value of each such restricted stock award, computed in accordance with ASC 718, was $5,850. There were no other stock awards to our non-employee directors during fiscal 2009. As of October 31, 2009, each non-employee director held the following number of restricted shares pursuant to awards of our restricted common stock: Douglas K. Ammerman, 20,000; William M. Barnum, Jr., 15,000; Charles E. Crowe, 15,000; James G. Ellis, 5,000; M. Steven Langman, 5,000; and Andrew W. Sweet, 5,000. | |
(3) | On March 25, 2009, the date of our 2009 annual meeting of stockholders, each non-employee director was automatically awarded an option to purchase 7,500 shares of our common stock. The grant date fair value of each such option award, computed in accordance with ASC 718, was $5,348. There were no other option awards to our non-employee directors during fiscal 2009. As of October 31, 2009, each non-employee director held options exercisable for the following number of shares: Douglas K. Ammerman, 102,500; William M. Barnum, Jr., 162,500; Charles E. Crowe, 82,500; James G. Ellis, 7,500; M. Steven Langman, 7,500; and Andrew W. Sweet, 7,500. | |
(4) | On January 23, 2009, Mr. Harmon resigned from our board of directors. |
10
Table of Contents
(5) | Messrs. Langman and Sweet have entered into an agreement by which each of them agreed to receive and hold these options and stock awards as agent of and on behalf of Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P. As noted in our Ownership of Securities table, each of Messrs. Langman and Sweet has disclaimed beneficial ownership of these securities for purposes of Section 16 and Section 13D of the Securities Exchange Act of 1934, as amended. |
TO INCREASE THE TOTAL AUTHORIZED SHARES OF COMMON STOCK
11
Table of Contents
12
Table of Contents
13
Table of Contents
TO ALLOW FOR A ONE-TIME STOCK OPTION EXCHANGE PROGRAM
FOR EMPLOYEES, INDEPENDENT ADVISORS AND CONSULTANTS, OTHER THAN
DIRECTORS AND EXECUTIVE OFFICERS
14
Table of Contents
• | Provide renewed incentives to our employees, independent advisors and consultants who participate in the exchange program. As of January 15, 2010, approximately 64% of our outstanding stock options held by our employees, independent advisors and consultants, excluding our directors and executive officers, were underwater. The weighted average exercise price of these underwater options was $10.70 as compared to a closing price of $2.44 for our common stock on January 15, 2010. As a result, these stock options do not currently provide meaningful retention or incentive value to the holders. We believe the exchange program will enable us to enhance long-term stockholder value by providing greater assurance that we will be able to retain experienced and productive employees, independent advisors and consultants, by improving their morale generally, and by aligning their interests more fully with the interests of our stockholders. | ||
• | Reduce our total number of outstanding stock options, or “overhang,” represented by outstanding options that have high exercise prices and may no longer provide adequate incentives to our employees, independent advisors and consultants. These underwater stock options currently create an equity award overhang to our stockholders of approximately 4.7 million shares. As of January 15, 2010, the total number of shares of Quiksilver common stock outstanding was 128.9 million. Retaining these underwater outstanding options does not serve the interests of our stockholders and does not provide the benefits intended by our equity compensation program. By replacing the eligible options with a lesser number of options with a lower exercise price, our overhang will be decreased. The overhang represented by the options granted pursuant to the exchange program will reflect an appropriate balance between our goals for our equity compensation program and our interest in minimizing our overhang and the dilution of our stockholders’ interests. | ||
• | Recapture value from compensation costs that we already are incurring with respect to outstanding underwater stock options. These options were granted at the then fair market value of our common stock. Under applicable accounting rules, we will have to recognize a total of approximately $15.3 million in compensation expense related to these underwater options, $13.5 million of which has |
15
Table of Contents
already been expensed as of October 31, 2009 and $1.8 million of which we will continue to be obligated to expense, even if these options are never exercised because the majority remain underwater. We believe it is not in our stockholders’ best interest to recognize compensation expense on options that are not perceived by our employees, independent advisors and consultants as providing value. We believe it is better to replace options that have little or no retention or incentive value with options that will provide both retention and incentive value while not creating additional compensation expense (other than immaterial expense that might result from fluctuations in our stock price after the exchange ratios have been set but before the exchange actually occurs). |
Before the Proposed Exchange Program: | ||||
Total shares underlying all outstanding options | 17,131,101 | |||
Weighted average exercise price of all outstanding options | $ | 6.74 | ||
Weighted average remaining contractual life of all outstanding options | 6.04 years | |||
Total shares underlying all other outstanding equity awards(1) | 1,012,003 | |||
Total shares available for future grant(1) (2) | 47,652 | |||
Total equity overhang(1) (2) | 14.1 | % | ||
After the Proposed Exchange Program (Assuming 100% Participation): | ||||
Total shares underlying all outstanding options | 13,770,411 | |||
Weighted average exercise price of all outstanding options | $ | 4.97 | ||
Weighted average remaining contractual life of all outstanding options | 6.41 years | |||
Total shares underlying all other outstanding equity awards(1) | 1,012,003 | |||
Total shares available for future grant(1) (2) | 47,652 | |||
Total equity overhang(1) (2) | 11.5 | % |
(1) | Does not include the effect of approval of (i) Proposal 3 above, in which we are proposing issuing 3,000,000 shares of restrictive common stock outside our existing equity plans, and (ii) Proposal 5 below, in which we are proposing to increase by 300,000 the maximum number of shares of common stock that may be issued under our 2000 Plan. | |
(2) | Total equity overhang is defined as the total number of options and other equity awards outstanding plus shares available for future grant, divided by the number of shares of common stock outstanding on January 15, 2010. The total number of shares of common stock outstanding on January 15, 2010 was 128.9 million. |
16
Table of Contents
• | The exchange program will be open to all U.S. and international employees, independent advisors and consultants, except as described below, who are employed by us or are providing services to us as of the start of the exchange program and remain employed or service providers through the date the exchange program ends. Eligible employees, independent advisors and consultants will be permitted to exchange all or none of the eligible options for replacement options on a grant-by-grant basis. | ||
• | The members of our board of directors and our executive officers will not be eligible to participate in the exchange program. | ||
• | The exchange ratios of shares subject to eligible options surrendered in exchange for replacement options granted will be determined in a manner intended to result in the grant of replacement options that have a fair value, for accounting purposes, approximately equal to the fair value of the eligible options they replace. The exchange ratios will be established shortly before the start of the exchange program and will depend on the original exercise price of the eligible option and the then-current fair value of the option (calculated using the Black-Scholes model). The exchange program will not be a one-for-one exchange. Instead, participating employees, independent advisors and consultants will receive replacement options covering a lesser numbers of shares (with a lower exercise price) than are covered by the surrendered eligible options. | ||
• | Each replacement option will have an exercise price per share equal to the closing price of our common stock on the date of grant, and will have a new five-year term, except the compensation committee will retain discretion as to the term for replacement options for European optionees in consideration of the longer vesting period we have set for such options in light of certain unfavorable tax implications with respect to option grants in Europe. | ||
• | None of the replacement options will be vested on the date of grant. Except for options granted to European optionees, replacement options granted in exchange for fully vested options will be scheduled to vest 12 months after the grant date and replacement options granted in exchange for unvested options will be scheduled to vest in two equal annual installments beginning 12 months after the grant date. For European optionees, all replacement options granted under the exchange program will be subject to cliff vesting on the four-year anniversary of the grant date. | ||
• | The exchange program will begin within 12 months of the date of stockholder approval. The board of directors and the compensation committee will determine the actual start date within that time period. If the exchange program does not commence within 12 months of stockholder approval, we will consider any future exchange or similar program to be a new one, requiring new stockholder approval before it could be implemented. |
17
Table of Contents
• | Increase cash compensation. To replace equity incentives, we considered whether we could substantially increase base and target bonus cash compensation. However, significant increases in cash compensation would substantially increase our compensation expenses and reduce our cash flow from operations, which could adversely affect our business and operating results. In addition, these increases would not reduce our overhang. | ||
• | Grant additional equity awards. We also considered special grants of additional stock options at current market prices or another form of equity award such as restricted stock. However, these additional grants would substantially increase our overhang, the dilution to our stockholders and our compensation expense. | ||
• | Exchange options for cash. We also considered implementing a program to exchange underwater options for cash payments. However, an exchange program for cash would increase our compensation expenses and reduce our cash flow from operations, which could adversely affect our business and operating results. It also might require the consent of our lenders who could object. In addition, we do not believe that such a program would have significant long-term retention value. | ||
• | Exchange options for restricted stock units. We also considered implementing a program to exchange underwater options for restricted stock units. However, in order to ensure that the exchange program is approximately expense-neutral from an accounting perspective, the exchange ratios for an options-for-restricted stock units exchange program would need to be substantially higher than for an options-for-options exchange program (i.e., fewer replacement awards granted). Thus, we believe that employee, independent advisor and consultant participation in an options-for-restricted stock units exchange program would be lower than with an options-for-options exchange program. Additionally, restricted stock units would be a new form of equity for many of |
18
Table of Contents
our employees, independent advisors and consultants and we believe that a lack of familiarity with restricted stock units could negatively impact participation in the exchange program. |
• | The exchange program offers a reasonable, balanced and meaningful incentive for our eligible employees, independent advisors and consultants. Under the exchange program, participating employees, independent advisors and consultants will surrender eligible underwater options for replacement options covering fewer shares with a lower exercise price that, except for replacement options granted to our European optionees, will vest either (i) in a single installment 12 months after the replacement option grant date if the replaced option was fully vested or (ii) in two equal annual installments beginning 12 months after the replacement option grant date if the replaced option was not vested. For our European optionees, all replacement options granted under the exchange program will be subject to cliff vesting on the four-year anniversary of the grant date. | ||
• | The exchange ratio will be calculated to return value to our stockholders. We will calculate the exchange ratios to result in a fair value, for accounting purposes, of the replacement options that will be approximately equal to the fair value of the eligible options that are exchanged, which we believe will have no significant adverse impact on our reported earnings. We believe this combination of fewer shares subject to options with lower exercise prices, granted with no expected significant adverse impact on our reported earnings, together with a new minimum vesting requirement, represents a reasonable and balanced exchange program with the potential for a significant positive impact on employee, independent advisor and consultant retention, motivation and performance. Additionally, stock options will provide value to employees, independent advisors and consultants only if our share price increases over time thereby aligning their interests and stockholder interests. | ||
• | The exchange program will reduce our equity award overhang. Not only do the underwater options have little or no retention value, they cannot be removed from our equity award overhang until they are exercised, expire or the employee, independent advisor or consultant who holds them leaves our service. An exchange, such as the proposed exchange program, will reduce our overhang while eliminating the ineffective options that are currently outstanding. Because employees, independent advisors and consultants who participate in the exchange program will receive a lesser number of replacement options in exchange for their surrendered eligible options, the number of shares of stock subject to all outstanding equity awards will be reduced, thereby reducing our overhang. Based on the assumptions described below, if all eligible options are exchanged, options to purchase approximately 4.7 million shares will be surrendered and cancelled, while replacement options covering approximately 1.3 million shares will be granted, resulting in a net reduction in the equity award overhang by approximately 3.4 million shares. The total number of shares subject to outstanding equity awards as of January 15, 2010 would have been approximately 13.8 million shares, including the approximately 1.3 million replacement options. As of January 15, 2010, the total number of shares of our common stock outstanding was 128.9 million. All eligible options that are not exchanged will remain outstanding and in effect in accordance with their existing terms. |
19
Table of Contents
• | Shares subject to options that are surrendered under the exchange program in excess of the number of replacement options granted under the program will not be available for future issuance. Under the exchange program, the number of shares subject to eligible options that are surrendered in exchange for a lesser number of replacement options will, to the extent they exceed the number of shares subject to replacement options, be canceled and not available for future grant. | ||
• | Members of our board of directors and our executive officers will not be eligible to participate in the exchange program. Although our directors and executive officers also hold options that are underwater, these individuals are not eligible to participate in the exchange program because our compensation committee believes that their compensation should remain at greater risk based on our stock price and, in the case of our executive officers, they have received recent grants of options at exercise prices closer to the current market price of our common stock. |
20
Table of Contents
The Exchange Ratio Would Be | ||
(Eligible Option to Replacement | ||
If the Exercise Price of an Eligible Option Is: | Option): | |
$3.83 to $10.64 | 2.5-to-1 | |
$10.65 and above | 5.0-to-1 |
21
Table of Contents
Maximum | ||||||||||||||||||||
Weighted | Number of Shares | |||||||||||||||||||
Number of | Average | Weighted Average | Underlying | |||||||||||||||||
Shares | Exercise Price | Remaining Life of | Replacement Options | |||||||||||||||||
Exercise Prices of | Underlying | of Eligible | Eligible Options | That May be | ||||||||||||||||
Eligible Options | Eligible Options | Options | (Years) | Exchange Ratio | Granted | |||||||||||||||
$3.83 to $10.64 | 2,008,014 | $ | 7.56 | 4.05 | 2.5-to-1 | 803,206 | ||||||||||||||
$10.65 and above | 2,694,852 | $ | 13.99 | 5.50 | 5.0-to-1 | 538,970 | ||||||||||||||
Total | 4,702,866 | $ | 11.25 | 4.88 | 1,342,176 |
22
Table of Contents
23
Table of Contents
INCREASE THE MAXIMUM NUMBER OF SHARES ISSUABLE UNDER THE PLAN
AND TO INCREASE THE MAXIMUM NUMBER OF SHARES ISSUABLE PURSUANT TO
RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS UNDER THE PLAN
24
Table of Contents
25
Table of Contents
26
Table of Contents
27
Table of Contents
• | Tandem stock appreciation rights, which provide the holders with the right to surrender their options for an appreciation distribution from us equal in amount to the excess of (i) the fair market value of the vested shares of common stock subject to the surrendered option over (ii) the aggregate exercise price payable for such shares. | ||
• | Limited stock appreciation rights, which may be granted to our executive officers and non-employee board members as part of their option grants. Any option with such a limited stock appreciation right may (whether or not the option is at the time exercisable for vested shares) be surrendered to us upon the successful completion of a hostile tender offer for more than fifty percent (50%) of our outstanding voting securities. In return for the surrendered option, the officer will be entitled to a cash distribution from us in an amount per surrendered option share equal to the excess of (a) the tender offer price paid per share over (b) the exercise price payable per share under such option. |
28
Table of Contents
29
Table of Contents
• | Annual Award.On the date of each annual meeting of stockholders, each individual who is to continue to serve as a non-employee board member is automatically granted an option to purchase 7,500 shares of common stock and awarded 5,000 shares of restricted stock, provided such individual has served as a non-employee board member for at least six months. There is no limit on the number of such option grants and restricted stock awards that any one non-employee board member may receive over his or her period of board service. Non-employee board members who have previously been in our employ are eligible to receive one or more such annual option grants and restricted stock awards over their period of continued board service. | ||
• | Initial Award.Each individual upon first becoming a non-employee member of the board is, on the date he or she commences service as a non-employee board member, automatically granted an option to purchase 7,500 shares of common stock and awarded 5,000 shares of restricted stock. |
30
Table of Contents
31
Table of Contents
• | Stock Withholding:The election to have us withhold, from the shares otherwise issuable upon the exercise of such non-statutory option or upon the issuance of fully-vested shares, a portion of those shares with an aggregate fair market value equal to the amount of the minimum withholding taxes required to be withheld by law (using the minimum statutory withholding rates). | ||
• | Stock Delivery:The election to deliver to us certain shares of common stock previously acquired by such holder (other than in connection with such exercise, share issuance or share vesting that triggered the withholding taxes) with an aggregate fair market value equal to the amount of the minimum withholding taxes required to be withheld by law (using the minimum statutory withholding rates). The shares of common stock so delivered shall not be added to the shares of common stock authorized for issuance under the 2000 Plan. |
32
Table of Contents
Weighted Average | Number of Shares | |||||||||||
Number of | Exercise Price | of Restricted | ||||||||||
Name | Option Shares | Per Share | Common Stock(1) | |||||||||
Named Executive Officers | ||||||||||||
Robert B. McKnight, Jr. | 545,000 | $ | 2.10 | 120,000 | ||||||||
Chairman of the Board, President and Chief Executive Officer | ||||||||||||
Joseph Scirocco | 440,000 | $ | 2.10 | 90,000 | ||||||||
Chief Financial Officer | ||||||||||||
Charles S. Exon | 440,000 | $ | 2.10 | 90,000 | ||||||||
Chief Administrative Officer, Secretary and General Counsel | ||||||||||||
Pierre Agnes | 420,000 | $ | 2.12 | 85,000 | ||||||||
President – Quiksilver Europe | ||||||||||||
Craig Stevenson | 420,000 | $ | 2.12 | 85,000 | ||||||||
President – Quiksilver Americas | ||||||||||||
Martin Samuels | -0- | — | -0- | |||||||||
Former President – Quiksilver Americas | ||||||||||||
Non-Employee Directors | ||||||||||||
Douglas K. Ammerman | 7,500 | $ | 1.17 | 5,000 | ||||||||
William M. Barnum, Jr. | 7,500 | $ | 1.17 | 5,000 | ||||||||
Charles E. Crowe | 7,500 | $ | 1.17 | 5,000 | ||||||||
James G. Ellis | 7,500 | $ | 1.57 | 5,000 | ||||||||
M. Steven Langman | 7,500 | $ | 2.15 | 5,000 | ||||||||
Paul C. Speaker | -0- | — | -0- | |||||||||
Andrew W. Sweet | 7,500 | $ | 2.15 | 5,000 | ||||||||
All current executive officers as a group (5 persons) | 2,265,000 | $ | 2.11 | 470,000 | ||||||||
All current directors who are not executive officers as a group (7 persons) | 45,000 | $ | 1.56 | 30,000 | ||||||||
All employees, including all current officers who are not executive officers, as a group (approximately 7,650 persons) | 4,563,250 | $ | 1.97 | 590,000 |
(1) | All restricted stock awards were made without payment of any cash consideration. |
33
Table of Contents
• | Incentive Stock Options.No taxable income is recognized by the optionee at the time of the option grant, and, if there is no disqualifying disposition at the time of exercise, no taxable income is recognized for regular tax purposes at the time the option is exercised, although taxable income may arise at that time for alternative minimum tax purposes equal to the excess of the fair market value of the purchased shares at such time over the exercise price paid for those shares. The optionee will recognize taxable income in the year in which the purchased shares are sold or otherwise made the subject of certain dispositions. For federal tax purposes, dispositions are divided into two categories: (i) qualifying and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made more than two years after the date the option for the shares involved in such sale or disposition was granted and more than one year after the date the option was exercised for those shares. If either of these two holding periods is not satisfied, then a disqualifying disposition will result. | ||
Upon a qualifying disposition, the optionee will recognize long-term capital gain in an amount equal to the excess of (i) the amount realized upon the sale or other disposition of the purchased shares over (ii) the exercise price paid for the shares. If there is a disqualifying disposition of the shares, the excess of (i) the fair market value of those shares on the exercise date over (ii) the exercise price paid for the shares will be taxable as ordinary income to the optionee. Any additional gain or loss recognized upon the disposition will be taxable as a capital gain or loss to the optionee. | |||
If the optionee makes a disqualifying disposition of the purchased shares, we will be entitled to an income tax deduction, for its taxable year in which such disposition occurs, equal to the excess of |
34
Table of Contents
(i) the fair market value of such shares on the option exercise date over (ii) the exercise price paid for the shares. If the optionee makes a qualifying disposition, we will not be entitled to any income tax deduction. | |||
• | Non-Statutory Stock Options.No taxable income is recognized by an optionee upon the grant of a non-statutory option. The optionee will, in general, recognize ordinary income in the year in which the option is exercised, equal to the excess of the fair market value of the purchased shares on the exercise date over the exercise price paid for the shares, and we will be required to collect certain withholding taxes applicable to such income from the optionee. | ||
If the shares acquired upon exercise of the non-statutory option are unvested and subject to repurchase in the event of the optionee’s cessation of service prior to vesting in those shares, the optionee will not recognize any taxable income at the time of exercise but will have to report as ordinary income, as and when our repurchase right lapses, an amount equal to the excess of (i) the fair market value of the shares on the date the repurchase right lapses over (ii) the exercise price paid for the shares. The optionee may elect under Section 83(b) of the Code to include as ordinary income in the year of exercise of the option an amount equal to the excess of (i) the fair market value of the purchased shares on the exercise date over (ii) the exercise price paid for such shares. If the Section 83(b) election is made, the optionee will not recognize any additional income as and when the repurchase right lapses. | |||
We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the optionee with respect to the exercised non-statutory option. The deduction will in general be allowed for our taxable year in which such ordinary income is recognized by the optionee. |
35
Table of Contents
INCREASE THE SIZE OF BOTH THE INITIAL AND ANNUAL ISSUANCES OF RESTRICTED STOCK
AND GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE MEMBERS OF THE
BOARD OF DIRECTORS UNDER THE DIRECTOR AUTOMATIC GRANT PROGRAM
36
Table of Contents
• | Annual Award.On the date of each annual meeting of stockholders, each individual who is to continue to serve as a non-employee board member is automatically granted an option to purchase 7,500 shares of common stock and awarded 5,000 shares of restricted stock, provided such individual has served as a non-employee board member for at least six months. There is no limit on the number of such option grants and restricted stock awards that any one non-employee board member may receive over his or her period of board service. Non-employee board members who have previously been in our employ are eligible to receive one or more such annual option grants and restricted stock awards over their period of continued board service. | ||
• | Initial Award.Each individual upon first becoming a non-employee member of the board is, on the date he or she commences service as a non-employee board member, automatically granted an option to purchase 7,500 shares of common stock and awarded 5,000 shares of restricted stock. |
37
Table of Contents
MAJORITY VOTING STANDARD IN THE ELECTION OF DIRECTORS
38
Table of Contents
STOCKHOLDERS VOTEAGAINSTPROPOSAL 7
39
Table of Contents
40
Table of Contents
Percent of | ||||||||
Shares of | Outstanding | |||||||
Common Stock | Common Stock | |||||||
Beneficially | Beneficially | |||||||
Name of Individual or Identity of Group(1) | Owned | Owned | ||||||
Entities Affiliated with Rhone Capital III | 25,678,831 | (2) | 16.6 | % | ||||
630 Fifth Avenue, 27th Floor New York, NY 10111 | ||||||||
PRIMECAP Management Company | 11,743,296 | (3) | 9.1 | % | ||||
225 South Lake Avenue #400 Pasadena, CA 91101 | ||||||||
BlackRock Inc. | 9,669,223 | (4) | 7.5 | % | ||||
40 East 52nd Street New York, NY 10022 | ||||||||
Samana Capital, L.P. | 7,492,311 | (5) | 5.8 | % | ||||
283 Greenwich Avenue Greenwich, CT 06830 | ||||||||
Robert B. McKnight, Jr. | 4,466,766 | (6) | 3.4 | % | ||||
Martin Samuels | 666,666 | (7) | * | |||||
Charles S. Exon | 611,666 | (8) | * | |||||
William M. Barnum, Jr. | 611,150 | (9) | * | |||||
Pierre Agnes | 330,709 | (10) | * | |||||
Charles E. Crowe | 309,500 | (11) | * | |||||
Joseph Scirocco | 264,999 | (12) | * | |||||
Craig Stevenson | 151,375 | (13) | * | |||||
Douglas K. Ammerman | 130,480 | (14) | * | |||||
James G. Ellis | 12,500 | (15) | * | |||||
M. Steven Langman | 12,500 | (16) | * | |||||
Andrew W. Sweet | 12,500 | (17) | * | |||||
Paul C. Speaker | -0- | — | ||||||
All current executive officers and directors as a group (12 persons) | 6,914,145 | (18) | 5.3 | % |
* | Less than 1% of the outstanding shares | |
(1) | Unless otherwise indicated, the address for each of the named individuals is c/o Quiksilver, Inc., 15202 Graham Street, Huntington Beach, California 92649. Unless otherwise indicated, the named persons possess sole voting and investment power with respect to the shares listed (except to the extent such authority is shared with spouses under applicable law). |
41
Table of Contents
(2) | According to the Schedule 13D jointly filed August 10, 2009 by Triton SPV L.P. (“Triton”), Triton Onshore SPV L.P. (“Triton Onshore”), Triton Offshore SPV L.P. (“Triton Offshore”), Triton Coinvestment SPV L.P. (“Triton Coinvestment”), Romolo Holdings C.V. (“Romolo”), Rea Silvia GP C.V. (“Rea”), Triton GP SPV LLC (“Triton GP”), Numitor Governance S.A.R.L. (“Numitor”), Rhône Capital III L.P. (“Rhône Capital III”), Rhône Holdings III L.L.C. (“Rhône Holdings III”), Rhône Capital L.L.C. (“Rhône Capital”) and Rhône Group L.L.C. (“Rhône Group”), the reporting persons hold, in the aggregate, warrants exercisable for 25,653,831 shares. Romolo, Triton, Triton Onshore, Triton Offshore and Triton Coinvestment (collectively, the “Lenders”) hold directly 1,601,774 warrants, 3,203,881 warrants, 10,343,522 warrants, 8,620,765 warrants and 1,883,889 warrants, respectively. Rea, as the general partner of Romolo, may be deemed to be the beneficial owner of the securities held and beneficially owned by Romolo. Numitor, as the managing general partner of Rea, may be deemed to be the beneficial owner of the securities that are deemed to be beneficially owned by Rea. Rhône Group, as the manager of Numitor, may be deemed to be the beneficial owner of the securities that are deemed to be beneficially owned by Numitor. Triton GP, as the general partner of each of Triton, Triton Onshore, Triton Offshore and Triton Coinvestment, may be deemed to be the beneficial owner of the securities held and beneficially owned by Triton, Triton Onshore, Triton Offshore and Triton Coinvestment. Rhône Capital III, as the sole member of Triton GP, may be deemed to be the beneficial owner of the securities that are deemed to be beneficially owned by Triton. Rhône Holdings, as the general partner of Rhône Capital III, may be deemed to be the beneficial owner of the securities that are deemed to be beneficially owned by Rhône Capital III. Rhône Capital, as the sole member of Rhône Holdings III may be deemed to be the beneficial owner of the securities that are deemed to be beneficially owned by Rhône Holdings III. M. Steven Langman and Andrew W. Sweet, directors of the Company, are also managing directors of Rhône Group. Messrs. Langman and Sweet have entered into an agreement by which each of them agreed to receive and hold any options or stock awards granted to them as a member of our board of directors as agent of and on behalf of the Lenders. Each of Messrs. Langman and Sweet hold 5,000 shares of restricted common stock and an option, exercisable within 60 days after December 31, 2009, to acquire upon exercise 7,500 shares of common stock. Romolo has shared power to dispose of and to vote 1,603,335 of the listed shares, Triton has shared power to dispose of and to vote 3,207,003 of the listed shares, Triton Onshore has shared power to dispose of and to vote 10,353,602 of the listed shares, Triton Offshore has shared power to dispose of and to vote 8,629,166 of the listed shares, Triton Coinvestment has shared power to dispose of and to vote 1,885,725 of the listed shares, Rea has shared power to dispose of and to vote 1,603,335 of the listed shares, Triton GP has shared power to dispose of and to vote 24,075,496 of the listed shares, Numitor has shared power to dispose of and to vote 1,603,335 of the listed shares, Rhône Capital III has shared power to dispose of and to vote 24,075,796 of the listed shares, Rhône Holdings III has shared power to dispose of and to vote 24,075,496 of the listed shares, Rhône Capital has shared power to dispose of and to vote 24,075,496 of the listed shares, Rhône Group has shared power to dispose of and to vote 1,603,335 of the listed shares. Each of the reporting persons disclaims beneficial ownership of the shares except for shares directly beneficially owned by such person. The address for each of the reporting persons is 630 Fifth Avenue, 27th Floor, New York, NY 10111. | |
(3) | According to the Schedule 13G filed February 11, 2009 by PRIMECAP Management Company, Primecap has the sole power to dispose of all 11,743,296 held by it, and sole power to vote 5,152,296 of such shares. | |
42
Table of Contents
(4) | According to the Schedule 13G filed January 29, 2010 by BlackRock, Inc. (“BlackRock”), BlackRock, through its subsidiaries BlackRock Advisors (UK) Limited, BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Investment Management, LLC and BlackRock International Ltd., has the sole power to dispose of and vote 9,669,223 of the listed shares. None of BlackRock’s subsidiaries beneficially own 5% or more of such shares. The address for BlackRock is 40 East 52nd Street, New York, NY 10022. | |
(5) | According to the Schedule 13G jointly filed February 17, 2009 by Samana Capital, L.P. (“Samana”), Morton Holdings, Inc. (“Morton”) and Philip B. Korsant (“Korsant”), Samana has shared power to dispose of and vote 6,716,438 of the listed shares and Morton and Korsant each has shared power to dispose of and vote all of the listed shares. Partnerships of which Morton is the general partner, including Samana, are the owners of record of the listed shares. | |
(6) | Includes an aggregate of (i) 1,926,666 shares which Mr. McKnight has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options, (ii) 235,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. McKnight maintains sole voting power with respect to all such unvested shares, and (iii) 152,670 shares owned of record by Mr. McKnight’s children. | |
(7) | Includes an aggregate of 666,666 shares which Mr. Samuels has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options. | |
(8) | Includes an aggregate of (i) 384,666 shares which Mr. Exon has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (ii) 172,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Exon maintains sole voting power with respect to all such unvested shares. | |
(9) | Includes an aggregate of (i) 162,500 shares which Mr. Barnum has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (ii) 10,001 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Barnum maintains sole voting power with respect to such unvested shares. | |
(10) | Includes an aggregate of (i) 156,000 shares which Mr. Agnes has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (ii) 155,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Agnes maintains sole voting power with respect to all such unvested shares. | |
(11) | Includes an aggregate of (i) 12,000 shares owned of record by Mr. Crowe’s children, (ii) 82,500 shares which Mr. Crowe has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (iii) 10,001 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Crowe maintains sole voting power with respect to all such unvested shares. | |
(12) | Includes an aggregate of (i) 79,999 shares which Mr. Scirocco has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (ii) 150,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Scirocco maintains sole voting power with respect to all such unvested shares. |
43
Table of Contents
(13) | Includes an aggregate of (i) 36,666 shares which Mr. Stevenson has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (ii) 95,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Stevenson maintains sole voting power with respect to such unvested shares. | |
(14) | Includes an aggregate of (i) 480 shares owned of record by Mr. Ammerman’s children, (ii) 102,500 shares which Mr. Ammerman has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (iii) 10,001 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Ammerman maintains sole voting power with respect to all such unvested shares. | |
(15) | Includes an aggregate of (i) 7,500 shares which Mr. Ellis has, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options and (ii) 5,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, Mr. Ellis maintains sole voting power with respect to such unvested shares. | |
(16) | Includes an aggregate of (i) 7,500 shares which may be acquired within 60 days after December 31, 2009 in connection with the exercise of outstanding options and (ii) 5,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares. Mr. Langman has disclaimed beneficial ownership of these securities for purposes of Section 16 and Section 13D of the Securities Exchange Act of 1934, as amended. Mr. Langman, as a Managing Director of Rhône Group L.L.C., has an understanding with Rhone Group L.L.C. and Triton GP SPV L.L.C. pursuant to which he holds his reported securities for the benefit of Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P. As a result of this understanding, these shares are also reflected under “Entities Affiliated with Rhône Capital III.” | |
(17) | Includes an aggregate of (i) 7,500 shares which may be acquired within 60 days after December 31, 2009 in connection with the exercise of outstanding options and (ii) 5,000 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares. Mr. Sweet has disclaimed beneficial ownership of these securities for purposes of Section 16 and Section 13D of the Securities Exchange Act of 1934, as amended. Mr. Sweet, as a Managing Director of Rhône Group L.L.C., has an understanding with Rhone Group L.L.C. and Triton GP SPV L.L.C. pursuant to which he holds his reported securities for the benefit of Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P. As a result of this understanding, these shares are also reflected under “Entities Affiliated with Rhône Capital III.” | |
(18) | Includes an aggregate of (i) 2,953,997 shares which the current executive officers and directors as a group have, or will have within 60 days after December 31, 2009, the right to acquire upon the exercise of outstanding options, and (ii) 852,003 restricted shares of common stock that are subject to forfeiture and transfer restrictions until the vesting date of such shares, however, each individual executive officer maintains sole voting power with respect to all of his or her unvested shares. |
(a) | (c) | |||||||||||
Number of Securities | (b) | Number of Securities | ||||||||||
to | Weighted-Average | Remaining Available for | ||||||||||
be Issued Upon | Exercise Price of | Future Issuance Under | ||||||||||
Exercise | Outstanding | Equity Compensation | ||||||||||
of Outstanding | Options, | Plans | ||||||||||
Options, | Warrants and | (Excluding Securities | ||||||||||
Plan Category | Warrants and Rights | Rights | Reflected in Column (a)) | |||||||||
Equity compensation plans approved by security holders(1) | 15,809,101 | $ | 7.34 | 3,269,652 | (2) | |||||||
Equity compensation plans not approved by security holders(3) | 100,000 | $ | 3.38 | — | ||||||||
Total | 15,909,101 | $ | 7.32 | 3,269,652 | ||||||||
44
Table of Contents
(1) | These plans consist of the 2006 Restricted Stock Plan, 2000 Stock Incentive Plan (as amended and restated) and the Employee Stock Purchase Plan (as amended). | |
(2) | Of these shares, 2,000,000 shares were available for purchase under the Employee Stock Purchase Plan. | |
(3) | The Quiksilver/Hawk Designs, Inc. Stock Option Plan was adopted by our board in 2000 in connection with an acquisition and provided for a one-time grant of options to new employees hired in connection with such acquisition. As of October 31, 2009, no shares remained available for future option grants under this plan. The plan provided that each option must have an exercise price equal to the fair market value on the date of grant, and a term of ten years. The options become exercisable in three equal annual installments beginning with the first anniversary of the date granted. The options generally expire three months following an optionee’s termination of service or 12 months in the case of death or disability. |
Name | Age | Position | ||||
Robert B. McKnight, Jr. | 56 | Chairman of the Board, Chief Executive Officer and President | ||||
Joseph Scirocco | 53 | Chief Financial Officer | ||||
Charles S. Exon | 60 | Chief Administrative Officer, Secretary and General Counsel | ||||
Pierre Agnes | 45 | President — Quiksilver Europe | ||||
Craig Stevenson | 49 | President — Quiksilver Americas |
45
Table of Contents
46
Table of Contents
• | Annual base salary; |
• | Annual discretionary cash bonuses; |
• | Long term performance-based compensation awards with respect to our Chief Executive Officer; |
• | Equity based compensation consisting of stock options and restricted stock awards; |
• | Severance benefits, including upon a change of control; and |
• | Perquisites which include health, disability and life insurance, 401(k) matching contributions (which were suspended during our 2008 fiscal year in an effort to reduce our operating expenses) and a clothing allowance to purchase our products at wholesale prices. |
47
Table of Contents
2009 Base | ||||
Executive Officer | Salary | |||
Robert B. McKnight, Jr., Chairman, Chief Executive Officer and President | $ | 903,000 | ||
Joseph Scirocco, Chief Financial Officer | $ | 550,000 | ||
Charles S. Exon, Chief Administrative Officer, General Counsel and Secretary | $ | 404,000 | ||
Craig Stevenson, President – Quiksilver Americas (since January 12, 2009) | $ | 350,000 | ||
Pierre Agnes, President – Quiksilver Europe | $ | 432,000 |
Fiscal 2009 | ||||
Discretionary | ||||
Executive Officer | Bonus | |||
Robert B. McKnight, Jr., Chairman, Chief Executive Officer and President | $ | 250,000 | ||
Joseph Scirocco, Chief Financial Officer | $ | 200,000 | ||
Charles S. Exon, Chief Administrative Officer, General Counsel and Secretary | $ | 200,000 | ||
Craig Stevenson, President – Quiksilver Americas (since January 12, 2009) | $ | 250,000 | ||
Pierre Agnes, President – Quiksilver Europe | $ | 585,000 |
48
Table of Contents
3 Year Average EPS Growth | % of Base Salary | |||
<4% | 0 | % | ||
4% | 20 | % | ||
6% | 40 | % | ||
8% | 60 | % | ||
10% | 80 | % | ||
12% | 100 | % | ||
14% | 120 | % | ||
16% | 140 | % | ||
18% | 160 | % | ||
20% | 180 | % | ||
³22% | Capped at 200 | % |
49
Table of Contents
Fiscal 2009 | ||||
Executive Officer | Options (#) | |||
Robert B. McKnight, Jr., Chairman, Chief Executive Officer and President | 545,000 | |||
Joseph Scirocco, Chief Financial Officer | 440,000 | |||
Charles S. Exon, Chief Administrative Officer and General Counsel | 440,000 | |||
Craig Stevenson, President – Quiksilver Americas (since January 12, 2009) | 420,000 | |||
Pierre Agnes, President – Quiksilver Europe | 420,000 |
50
Table of Contents
Fiscal 2009 | ||||
Restricted | ||||
Executive Officer | Stock (#) | |||
Robert B. McKnight, Jr., Chairman, Chief Executive Officer and President | 120,000 | |||
Joseph Scirocco, Chief Financial Officer | 90,000 | |||
Charles S. Exon, Chief Administrative Officer and General Counsel | 90,000 | |||
Craig Stevenson, President – Quiksilver Americas (since January 12, 2009) | 85,000 | |||
Pierre Agnes, President – Quiksilver Europe | 85,000 |
51
Table of Contents
Non-Equity | ||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||
Stock | Option | Plan | All Other | |||||||||||||||||||||||||||||
Name and Principal Position(1) | Year | Salary $ | Bonus $ | Awards(2) $ | Awards(2) $ | Compensation(3) $ | Compensation(4) $ | Total $ | ||||||||||||||||||||||||
Robert B. McKnight, Jr. | 2009 | 914,800 | 250,000 | 336,900 | 263,800 | — | 29,662 | 1,795,162 | ||||||||||||||||||||||||
Chairman of the Board, | 2008 | 981,300 | — | 289,300 | 530,800 | — | 76,600 | 1,878,000 | ||||||||||||||||||||||||
President and Chief Executive Officer | 2007 | 950,000 | 650,000 | 147,900 | 1,068,600 | — | 13,157 | 2,829,657 | ||||||||||||||||||||||||
Joseph Scirocco(5) | 2009 | 550,000 | 200,000 | 204,200 | 219,900 | — | 12,500 | 1,186,600 | ||||||||||||||||||||||||
Chief Financial Officer | 2008 | 562,500 | 200,000 | 153,100 | 263,400 | — | 58,100 | 1,237,100 | ||||||||||||||||||||||||
2007 | 297,900 | 200,000 | — | 80,400 | — | 3,811 | 582,111 | |||||||||||||||||||||||||
Charles S. Exon | 2009 | 409,300 | 200,000 | 236,000 | 185,300 | — | 21,600 | 1,052,200 | ||||||||||||||||||||||||
Chief Administrative | 2008 | 431,300 | — | 202,200 | 259,700 | — | 17,100 | 910,300 | ||||||||||||||||||||||||
Officer, Secretary and General Counsel | 2007 | 425,000 | 315,000 | 145,600 | 384,800 | — | 12,077 | 1,282,477 | ||||||||||||||||||||||||
Pierre Agnes(6) | 2009 | 437,800 | 585,000 | 197,700 | 298,900 | — | — | 1,519,400 | ||||||||||||||||||||||||
President – Quiksilver Europe | 2008 | 455,000 | 585,000 | 171,500 | 458,900 | — | — | 1,670,400 | ||||||||||||||||||||||||
Craig Stevenson | 2009 | 359,400 | 250,000 | 52,100 | 113,600 | — | 269,002 | 1,044,102 | ||||||||||||||||||||||||
President – Quiksilver Americas | ||||||||||||||||||||||||||||||||
Martin Samuels | 2009 | 88,700 | — | 44,900 | 114,000 | — | 828,500 | (7) | 1,076,100 | |||||||||||||||||||||||
Former President – Quiksilver Americas | 2008 | 447,500 | — | 38,300 | 268,500 | — | 17,100 | 771,400 |
(1) | The principal position for each executive officer reflects the executive office and title held by each of them during the fiscal year ended October 31, 2009. Mr. Samuels resigned on January 12, 2009. |
52
Table of Contents
(2) | The dollar amounts listed do not necessarily reflect the dollar amounts of compensation actually realized or that may be realized by our executive officers. In accordance with SEC requirements, these amounts reflect the dollar amounts we recognized as compensation expense for financial statement reporting purposes for fiscal 2007, 2008 and 2009 in accordance with the provisions of ASC 718 related to awards to executive officers in fiscal 2007, fiscal 2008, fiscal 2009 and prior years. See Note 10 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2009 filed with the SEC on January 12, 2010 for information regarding assumptions underlying the valuation of equity awards. No estimate of forfeitures has been included in such calculations. During our 2009 fiscal year, Mr. Samuels forfeited 15,000 restricted shares of common stock. | |
(3) | Mr. McKnight was eligible to receive cash awards under our AIP and our LTIP during fiscal 2007. Mr. McKnight was also eligible to receive a cash award under our LTIP in fiscal 2008 and fiscal 2009. No AIP awards were made for fiscal 2008 or fiscal 2009. None of the threshold performance targets under either the AIP or LTIP were achieved and, consequently, no amounts were paid under our AIP or LTIP for any of those fiscal years. | |
(4) | The amount disclosed in this column for fiscal 2009 for Mr. McKnight includes $10,062 for a personal life insurance policy premium, $2,100 for a supplemental long-term disability policy premium and $12,500 for certain financial planning services paid for by us. For Mr. Scirocco for fiscal 2009 it includes $5,400 for a personal life insurance premium and $2,100 for a supplemental long-term disability policy premium. For fiscal 2009 for Mr. Exon, it includes $14,500 for a personal life insurance premium and $2,100 for a supplemental long-term disability policy premium. For Mr. Stevenson for fiscal 2009 it includes an expatriate compensation package which includes $15,140 for an automobile allowance, $188,962 for use of a company-leased home and $57,000 to cover educational and other cost of living expenses. Mr. Stevenson’s other compensation for fiscal 2009 also includes $1,170 for a personal life insurance premium and $1,730 for a supplemental long-term disability policy premium. In addition, in fiscal 2009, each executive officer received a quarterly clothing allowance of $1,250, or $5,000 annually, to purchase products at our wholesale prices. | |
(5) | Mr. Scirocco became an executive officer in April 2007 and his salary for fiscal 2007 reflects a prorated amount that was paid to him during such fiscal year, based on an annual base salary rate of $550,000. | |
(6) | Prior to fiscal 2008, we agreed to pay Mr. Agnes’ base salary to him in euros at an agreed exchange rate of 1.30 dollars per euro. His base salary amounts reflect the dollar value of these payments at the agreed exchange rate. The actual average exchange rate during fiscal 2009 was approximately 1.3666 dollars per euro. Mr. Agnes’ discretionary bonus for fiscal 2009 was paid in euros at an exchange rate of 1.30 dollars per euro. | |
(7) | This amount includes a personal life insurance policy premium of $2,100, $400 for a supplemental long-term disability policy premium, $200,000 of consulting services and $5,000 in clothing allowance paid to Mr. Samuels after the termination of his employment in January 2009. In addition, pursuant to Mr. Samuels’ separation agreement, we paid him $408,000 in July 2009 and $66,000 per month beginning in August 2009 and continuing through July 2010, as well as $15,000 in transition services through a third party management services company. | |
53
Table of Contents
All | ||||||||||||||||||||
Other | All Other | |||||||||||||||||||
Stock | Option | |||||||||||||||||||
Awards: | Awards: | Exercise | ||||||||||||||||||
Number | Number of | Base | ||||||||||||||||||
of Shares | Securities | Price of | Grant | |||||||||||||||||
of Stock | Underlying | Option | Date Fair | |||||||||||||||||
Grant | or Units | Options | Awards | Value | ||||||||||||||||
Name | Date | #(1) | #(1) | $/Share | $(2) | |||||||||||||||
Robert B. McKnight, Jr. | 01/16/09 | 40,000 | 100,000 | 1.7700 | 101,600 | |||||||||||||||
04/06/09 | — | 25,000 | 1.2500 | 19,045 | ||||||||||||||||
08/07/09 | (3) | 80,000 | 420,000 | 2.2300 | 462,882 | |||||||||||||||
Joseph Scirocco | 01/16/09 | 30,000 | 80,000 | 1.7700 | 81,280 | |||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 15,236 | ||||||||||||||||
08/07/09 | (3) | 60,000 | 340,000 | 2.2300 | 374,714 | |||||||||||||||
Charles S. Exon | 01/16/09 | 30,000 | 80,000 | 1.7700 | 81,280 | |||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 15,236 | ||||||||||||||||
08/07/09 | (3) | 60,000 | 340,000 | 2.2300 | 374,714 | |||||||||||||||
Pierre Agnes | 01/16/09 | 25,000 | 60,000 | 1.7700 | 60,960 | |||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 15,236 | ||||||||||||||||
08/07/09 | (3) | 60,000 | 340,000 | 2.2300 | 374,714 | |||||||||||||||
Craig Stevenson | 01/16/09 | 25,000 | 60,000 | 1.7700 | 60,960 | |||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 15,236 | ||||||||||||||||
08/07/09 | (3) | 60,000 | 340,000 | 2.2300 | 374,714 | |||||||||||||||
Martin Samuels | — | — | — | — | — |
(1) | Each stock option and restricted stock award in our 2009 fiscal year was made pursuant to our 2000 Stock Incentive Plan. With the exception of the awards to Mr. Agnes and the awards made in August 2009, each stock option award listed in the table above will vest in three equal and successive annual installments over the three year period commencing upon the grant date provided the executive remains in our service through the vesting date. Mr. Agnes’ stock option awards will vest in a lump sum on the fourth anniversary of the grant date, provided he remains in our service through the vesting date. With the exception of the award to Mr. Agnes, the stock option awards made in August 2009 are subject to cliff vesting on the three-year anniversary of the grant date. Each option has a maximum term of ten years. Each restricted stock award will vest in a lump sum upon the three year anniversary of the grant date. Additional information regarding the vesting acceleration provisions applicable to these equity awards and other material terms of such stock option and restricted stock awards are set forth below under the heading “Employment Agreements” and “Potential Payments Upon Termination, Change in Control or Corporate Transaction — Award Agreements and LTIP”. | |
(2) | The grant date fair value of each equity award has been computed in accordance with ASC 718. | |
(3) | As discussed above, these awards were made in connection with a condition subsequent to the closing of our $153.1 million five year senior secured term loans in July 2009, pursuant to which the lender required the adoption of an equity incentive plan or significant equity award to each of our executive officers. | |
54
Table of Contents
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||
Number | Value of | |||||||||||||||||||||||||||
Number of | Number of | of Shares | Shares | |||||||||||||||||||||||||
Securities | Securities | or Units | or Units | |||||||||||||||||||||||||
Underlying | Underlying | of Stock | of Stock | |||||||||||||||||||||||||
Unexercised | Unexercised | Option | That | That | ||||||||||||||||||||||||
Options | Options | Exercise | Option | Have Not | Have Not | |||||||||||||||||||||||
# | # | Price | Expiration | Vested | Vested | |||||||||||||||||||||||
Name | Grant Date | Exercisable(1) | Unexercisable(1) | $ | Date | # | $(2) | |||||||||||||||||||||
Robert B. McKnight, Jr. | 02/11/00 | 200,000 | — | 2.9844 | 02/12/10 | — | — | |||||||||||||||||||||
03/31/00 | 240,000 | — | 4.3907 | 04/01/10 | — | — | ||||||||||||||||||||||
12/22/00 | 200,000 | — | 4.6094 | 12/23/10 | — | — | ||||||||||||||||||||||
12/03/01 | 400,000 | — | 3.5250 | 12/04/11 | — | — | ||||||||||||||||||||||
12/19/02 | 400,000 | — | 6.6575 | 12/20/12 | — | — | ||||||||||||||||||||||
11/12/03 | 400,000 | — | 8.7250 | 11/13/13 | — | — | ||||||||||||||||||||||
09/29/06 | — | — | — | — | 60,000 | (3) | 119,400 | |||||||||||||||||||||
10/17/07 | — | — | — | — | 20,000 | (4) | 39,800 | |||||||||||||||||||||
12/26/07 | 26,666 | 53,334 | 9.0000 | 12/27/17 | ||||||||||||||||||||||||
12/26/07 | — | — | — | — | 35,000 | (5) | 69,650 | |||||||||||||||||||||
01/16/09 | — | 100,000 | 1.7700 | 01/17/19 | — | — | ||||||||||||||||||||||
01/16/09 | — | — | — | — | 40,000 | (6) | 79,600 | |||||||||||||||||||||
04/06/09 | — | 25,000 | 1.2500 | 04/07/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | 420,000 | 2.2300 | 08/08/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | — | — | — | 80,000 | (7) | 159,200 | |||||||||||||||||||||
Joseph Scirocco | 12/26/07 | 26,666 | 53,334 | 9.0000 | 12/27/17 | — | — | |||||||||||||||||||||
12/26/07 | — | — | — | — | 60,000 | (5) | 119,400 | |||||||||||||||||||||
01/16/09 | — | 80,000 | 1.7700 | 01/17/19 | — | — | ||||||||||||||||||||||
01/16/09 | — | — | — | — | 30,000 | (6) | 59,700 | |||||||||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 04/07/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | 340,000 | 2.2300 | 08/08/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | — | — | — | 60,000 | (7) | 119,400 | |||||||||||||||||||||
Charles S. Exon | 08/01/00 | 30,000 | — | 3.2969 | 08/02/10 | — | — | |||||||||||||||||||||
12/03/01 | 80,000 | — | 3.5250 | 12/04/11 | — | — | ||||||||||||||||||||||
12/19/02 | 88,000 | — | 6.6575 | 12/20/12 | — | — | ||||||||||||||||||||||
11/12/03 | 120,000 | — | 8.7250 | 11/13/13 | — | — | ||||||||||||||||||||||
09/29/06 | — | — | — | — | 60,000 | (3) | 119,400 | |||||||||||||||||||||
12/26/07 | 20,000 | 40,000 | 9.0000 | 12/27/17 | — | — | ||||||||||||||||||||||
12/26/07 | — | — | — | — | 22,000 | (5) | 43,780 | |||||||||||||||||||||
01/16/09 | — | 80,000 | 1.7700 | 01/17/19 | — | — | ||||||||||||||||||||||
01/16/09 | — | — | — | — | 30,000 | (6) | 59,700 | |||||||||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 04/07/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | 340,000 | 2.2300 | 08/08/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | — | — | — | 60,000 | (7) | 119,400 |
55
Table of Contents
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Market | ||||||||||||||||||||||||||||
Number | Value of | |||||||||||||||||||||||||||
Number of | Number of | of Shares | Shares | |||||||||||||||||||||||||
Securities | Securities | or Units | or Units | |||||||||||||||||||||||||
Underlying | Underlying | of Stock | of Stock | |||||||||||||||||||||||||
Unexercised | Unexercised | Option | That | That | ||||||||||||||||||||||||
Options | Options | Exercise | Option | Have Not | Have Not | |||||||||||||||||||||||
# | # | Price | Expiration | Vested | Vested | |||||||||||||||||||||||
Name | Grant Date | Exercisable(1) | Unexercisable(1) | $ | Date | # | $(2) | |||||||||||||||||||||
Pierre Agnes | 12/03/01 | 8,000 | — | 3.5250 | 12/04/11 | — | — | |||||||||||||||||||||
12/19/02 | 28,000 | — | 6.6575 | 12/20/12 | — | — | ||||||||||||||||||||||
03/31/03 | 40,000 | — | 7.6550 | 04/01/13 | — | — | ||||||||||||||||||||||
11/12/03 | 80,000 | — | 8.7250 | 11/13/13 | — | — | ||||||||||||||||||||||
09/29/06 | — | — | — | — | 60,000 | (3) | 119,400 | |||||||||||||||||||||
12/26/07 | — | 55,000 | 9.0000 | 12/27/17 | — | — | ||||||||||||||||||||||
12/26/07 | — | — | — | — | 10,000 | (6) | 19,900 | |||||||||||||||||||||
01/16/09 | — | 60,000 | 1.7700 | 01/17/19 | — | — | ||||||||||||||||||||||
01/16/09 | — | — | — | — | 25,000 | (7) | 49,750 | |||||||||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 04/07/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | 340,000 | 2.2300 | 08/08/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | — | — | — | 60,000 | (7) | 119,400 | |||||||||||||||||||||
Craig Stevenson | 12/26/07 | 8,333 | 16,667 | 9.0000 | 12/27/17 | — | — | |||||||||||||||||||||
12/26/07 | — | — | — | — | 10,000 | (5) | 19,900 | |||||||||||||||||||||
01/16/09 | — | 60,000 | 1.7700 | 01/17/19 | — | — | ||||||||||||||||||||||
01/16/09 | — | — | — | — | 25,000 | (6) | 49,750 | |||||||||||||||||||||
04/06/09 | — | 20,000 | 1.2500 | 04/07/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | 340,000 | 2.2300 | 08/08/19 | — | — | ||||||||||||||||||||||
08/07/09 | — | — | — | — | 60,000 | (7) | 119,400 | |||||||||||||||||||||
Martin Samuels | 02/11/00 | 80,000 | — | 2.9844 | 02/12/10 | — | — | |||||||||||||||||||||
12/22/00 | 80,000 | — | 4.6094 | 12/23/10 | — | — | ||||||||||||||||||||||
12/03/01 | 88,000 | — | 3.5250 | 12/04/11 | — | — | ||||||||||||||||||||||
12/19/02 | 88,000 | — | 6.6575 | 12/20/12 | — | — | ||||||||||||||||||||||
11/12/03 | 80,000 | — | 8.7250 | 11/13/13 | — | — | ||||||||||||||||||||||
05/03/04 | 20,000 | — | 11.1250 | 05/04/14 | — | — | ||||||||||||||||||||||
01/25/05 | 104,000 | — | 14.3050 | 01/26/15 | — | — | ||||||||||||||||||||||
12/27/05 | 50,000 | — | 13.7700 | 12/28/15 | — | — | ||||||||||||||||||||||
12/20/06 | 26,666 | 13,334 | 15.5500 | 12/21/16 | — | — | ||||||||||||||||||||||
12/26/07 | 18,333 | 36,667 | 9.0000 | 12/27/17 | — | — |
(1) | Except for Mr. Agnes’ stock options and the options granted in August 2009, all stock options listed vest and become exercisable in three equal and successive annual installments over the three year period commencing on the date of grant, provided the executive officer remains in our service through the vesting date. Mr. Agnes’ stock options vest in a lump sum on the fourth anniversary of the grant date, provided he remains in our service through such date. With the exception of the award made to Mr. Agnes, the stock option awards made in August 2009 are subject to cliff vesting on the three-year anniversary of the grant date. | |
(2) | The market value of the restricted shares of common stock are calculated by multiplying the number of shares of stock held by the applicable executive officer by $1.99, the fair market value of our common stock on October 31, 2009, which is the last day of our fiscal year. | |
(3) | The restricted shares of common stock granted pursuant to this award will vest on September 29, 2011 provided the executive officer remains in our service through that date. | |
(4) | The restricted shares of common stock granted pursuant to this award will vest on October 17, 2012 provided the executive officer remains in our service through that date. | |
(5) | The restricted shares of common stock granted pursuant to this award will vest on December 26, 2010 provided the executive officer remains in our service through that date. | |
(6) | The restricted shares of common stock granted pursuant to this award will vest on January 16, 2012 provided the executive officer remains in our service through that date. | |
(7) | The restricted shares of common stock granted pursuant to this award will vest on August 7, 2012 provided the executive officer remains in our service through that date. |
56
Table of Contents
Option Awards | ||||||||
Number of | Value | |||||||
Shares | Realized | |||||||
Acquired | Upon | |||||||
on Exercise | Exercise | |||||||
Name | # | $ | ||||||
Robert B. McKnight, Jr. | -0- | -0- | ||||||
Joseph Scirocco | -0- | -0- | ||||||
Charles S. Exon | -0- | -0- | ||||||
Pierre Agnes | -0- | -0- | ||||||
Craig Stevenson | -0- | -0- | ||||||
Martin Samuels | -0- | -0- |
57
Table of Contents
58
Table of Contents
59
Table of Contents
• | Termination of employment occurred on October 31, 2009, the last day of our 2009 fiscal year. |
• | We have valued equity awards using the $1.99 per share closing market price of our common stock on the NYSE on October 30, 2009, the last trading day of our 2009 fiscal year. |
• | We have valued stock options at their intrinsic value, equal to the difference between $1.99 and the per share exercise price, multiplied by the number of shares underlying the stock options. |
• | In the event of termination of employment, the payment of certain long-term incentive awards and other amounts may be delayed, depending upon the terms of each specific award agreement, the provisions of the applicable named executive officer’s employment agreement and the applicability of Section 409A of the IRS Code. In quantifying aggregate termination payments, we have not taken into account the timing of the payments and we have not discounted the value of payments that would be made over time, except where otherwise disclosed. |
• | We have assumed that IRS Code Section 280G will not apply to any of the amounts paid by us to the applicable named executive officers. |
60
Table of Contents
Robert B. | Joseph | Charles S. | Pierre | Craig | ||||||||||||||||
Elements | McKnight | Scirocco | Exon | Agnes(6) | Stevenson(7) | |||||||||||||||
Salary continuation(1) | $ | 1,806,000 | $ | 825,000 | $ | 606,000 | $ | 648,000 | $ | 600,000 | ||||||||||
Severance(2) | 650,000 | 400,000 | 315,000 | 585,000 | 246,000 | |||||||||||||||
Early vesting of stock options(3) | 40,500 | 32,400 | 32,400 | 28,000 | 28,000 | |||||||||||||||
LTIP(4) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Discretionary bonus(5) | 250,000 | 200,000 | 200,000 | 585,000 | 250,000 | |||||||||||||||
Total | $ | 2,746,500 | $ | 1,457,400 | $ | 1,153,400 | $ | 1,846,000 | $ | 1,124,000 | ||||||||||
(1) | Represents base salary continuation for eighteen months (twenty-four months for Mr. McKnight) following termination. | |
(2) | Represents severance equal to twice the executive’s average annual bonus earned during the two most recently completed fiscal years (i.e., fiscal 2007 and fiscal 2008), payable over eighteen months (twenty-four months for Mr. McKnight) following termination. | |
(3) | Represents the value of unvested stock options as of October 31, 2009 which accelerate on termination for Good Reason. | |
(4) | During our 2009 fiscal year, Mr. McKnight was the only executive officer listed above participating in the LTIP. Under the LTIP, if an executive terminates his employment for Good Reason, awards for any performance cycles which have not been completed are forfeited. However, our compensation committee has discretionary authority to approve payment of all or a portion of such awards. For purposes of this table, we have assumed that awards for the three-year performance cycle ending on October 31, 2009 would not have been paid since the minimum performance targets were not achieved, and that award for the three-year performance cycle ending October 31, 2010 would have been forfeited. | |
(5) | Under each executive’s employment agreement (except Mr. McKnight’s), if an executive terminates his employment for Good Reason during a fiscal year, the executive is entitled to receive a pro rata portion of any discretionary bonus approved by the compensation committee for such year. In December 2009, our compensation committee approved discretionary bonus amounts for certain of our executive officers for fiscal 2009. The amounts listed above represent the full amount of such bonuses for each executive officer, since we are assuming they were terminated on the last day of the fiscal year. | |
(6) | The dollar amounts indicated for salary continuation, severance and discretionary bonus for Mr. Agnes are based on an assumed exchange rate of 1.3 U.S. dollars per euro, since Mr. Agnes’ base salary and discretionary bonus are paid in euros. | |
(7) | The dollar amounts indicated for severance for Mr. Stevenson are based on an assumed exchange rate of 0.65 U.S. dollars per Australian dollar, since Mr. Stevenson’s 2007 and 2008 discretionary bonuses were paid in Australian dollars. |
61
Table of Contents
Robert B. | Joseph | Charles S. | Pierre | Craig | ||||||||||||||||
Elements | McKnight | Scirocco | Exon | Agnes(6) | Stevenson(7) | |||||||||||||||
Salary continuation(1) | $ | 1,806,000 | $ | 825,000 | $ | 606,000 | $ | 648,000 | $ | 600,000 | ||||||||||
Severance(2) | 650,000 | 400,000 | 315,000 | 585,000 | 246,000 | |||||||||||||||
Early vesting of stock options(3) | 40,500 | 32,400 | 32,400 | 28,000 | 28,000 | |||||||||||||||
LTIP(4) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Discretionary bonus(5) | 250,000 | 200,000 | 200,000 | 585,000 | 250,000 | |||||||||||||||
Total | $ | 2,746,500 | $ | 1,457,400 | $ | 1,153,400 | $ | 1,846,000 | $ | 1,124,000 | ||||||||||
(1) | Represents base salary continuation for eighteen months (twenty-four months for Mr. McKnight) following termination. | |
(2) | Represents severance equal to twice the executive’s average annual bonus earned during the two most recently completed fiscal years (i.e., fiscal 2007 and fiscal 2008), payable over eighteen months (twenty-four months for Mr. McKnight) following termination. | |
(3) | Represents the value of unvested stock options as of October 31, 2009 which accelerate on termination without Cause. | |
(4) | During our 2009 fiscal year, Mr. McKnight was the only executive officer listed above participating in the LTIP. Under the LTIP, if we terminate an executive’s employment without Cause, awards for any performance cycles which have not been completed are forfeited. However, our compensation committee has discretionary authority to approve payment of all or a portion of such awards. For purposes of this table, we have assumed that awards for the three-year performance cycle ending on October 31, 2009 would not have been paid since the minimum performance targets were not achieved, and that award for the three-year performance cycle ending October 31, 2010 would have been forfeited. | |
(5) | Under each executive’s employment agreement (except Mr. McKnight’s), if we terminate an executive’s employment without Cause during a fiscal year, the executive is entitled to receive a pro rata portion of any discretionary bonus approved by the compensation committee for such year. In December 2009, our compensation committee approved discretionary bonus amounts for certain of our executive officers for fiscal 2009. The amounts listed above represent the full amount of such bonuses for each executive officer, since we are assuming they were terminated on the last day of the fiscal year. | |
(6) | The dollar amounts indicated for salary continuation, severance and discretionary bonus for Mr. Agnes are based on an assumed exchange rate of 1.3 U.S. dollars per euro, since Mr. Agnes’ base salary and discretionary bonus are paid in euros. | |
(7) | The dollar amounts indicated for severance for Mr. Stevenson are based on an assumed exchange rate of 0.65 U.S. dollars per Australian dollar, since Mr. Stevenson’s 2007 and 2008 discretionary bonuses were paid in Australian dollars. |
62
Table of Contents
Robert B. | Joseph | Charles S. | Pierre | Craig | ||||||||||||||||
Elements | McKnight | Scirocco | Exon | Agnes(8) | Stevenson(9) | |||||||||||||||
Salary continuation(2) | $ | 2,709,000 | $ | 1,100,000 | $ | 808,000 | $ | 648,000 | $ | 600,000 | ||||||||||
Severance(3) | 975,000 | 400,000 | 315,000 | 585,000 | 246,000 | |||||||||||||||
Early vesting of stock options(4) | 40,500 | 32,400 | 32,400 | 28,000 | 28,000 | |||||||||||||||
Early vesting of restricted stock(5) | 467,650 | 298,500 | 342,280 | 308,450 | 189,050 | |||||||||||||||
LTIP(6) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Discretionary bonus(7) | 0 | 200,000 | 200,000 | 585,000 | 250,000 | |||||||||||||||
Total | $ | 4,192,150 | $ | 2,030,900 | $ | 1,697,680 | $ | 2,154,450 | $ | 1,313,050 | ||||||||||
(1) | For purposes of this table, “change in control” has the meaning set forth in the executive officer employment agreements described above. | |
(2) | Represents base salary continuation for twenty-four months for Messrs. Scirocco and Exon, thirty-six months for Mr. McKnight and eighteen months for Messrs. Agnes and Stevenson following termination. | |
(3) | Represents severance equal to twice (three times for Mr. McKnight) the executive’s average annual bonus earned during the two most recently completed fiscal years (i.e., fiscal 2007 and fiscal 2008), payable over twenty-four months for Messrs. Scirocco and Exon, thirty-six months for Mr. McKnight and eighteen months for Messrs. Agnes and Stevenson following termination. | |
(4) | These amounts represent the value of unvested stock options as of October 31, 2009 which accelerate on termination for Good Reason or without Cause, assuming the unvested stock options had not previously accelerated in connection with the change in control. | |
(5) | These amounts represent the value of unvested shares of restricted common stock as of October 31, 2009 which would accelerate after a corporate transaction or change in control if the executive officer was terminated by the successor corporation for any reason, other than misconduct, assuming the unvested restricted stock had not previously vested in connection with the change in control, calculated by multiplying the number of accelerated shares by the closing price of our common stock on October 30, 2009, the last trading day of our 2009 fiscal year. | |
(6) | During our 2009 fiscal year, Mr. McKnight was the only executive officer listed above participating in the LTIP. Under the LTIP, upon a change in control, awards for performance cycles that have not been completed are deemed earned at the time of the change in control at the target level, with payment made pro rata for the portion of the performance cycle completed prior to the change in control. Since all benefits with respect to outstanding LTIP awards would have been paid upon the date of the change in control, no benefits would have been paid under the LTIP upon the subsequent termination of the executive. | |
(7) | Under each executive’s employment agreement (except Mr. McKnight’s), if an executive terminates his employment for Good Reason or we terminate his employment without Cause during a fiscal year, the executive is entitled to receive a pro rata portion of any discretionary bonus approved by the compensation committee for such year. In December 2009, our compensation committee approved discretionary bonus amounts for our executive officers for fiscal 2009. The amounts listed above represent the full amount of such bonuses for each executive officer, since we are assuming they were terminated on the last day of the fiscal year. | |
(8) | The dollar amounts indicated for salary continuation, severance and discretionary bonus for Mr. Agnes are based on an assumed exchange rate of 1.3 U.S. dollars per euro, since Mr. Agnes’ base salary and discretionary bonus are paid in euros. |
63
Table of Contents
(9) | The dollar amounts indicated for severance for Mr. Stevenson are based on an assumed exchange rate of 0.65 U.S. dollars per Australian dollar, since Mr. Stevenson’s 2007 and 2008 discretionary bonuses were paid in Australian dollars. |
Robert B. | Joseph | Charles S. | Pierre | Craig | ||||||||||||||||
Elements | McKnight | Scirocco | Exon | Agnes | Stevenson | |||||||||||||||
LTIP(1) | -0- | -0- | -0- | -0- | -0- | |||||||||||||||
Total | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | -0- | ||||||||||
(1) | During our 2009 fiscal year, Mr. McKnight was the only executive officer listed above participating in the LTIP. If an executive’s employment is terminated due to retirement, LTIP awards for any performance cycle which have not been completed are determined with reference to the performance goals for the entire performance cycle and the payments are pro rated based on the percentage of the performance cycle completed prior to the date of termination. Since retirement under the LTIP is defined as termination of employment after the age of 65 and Mr. McKnight has not reached that age, no benefits under the LTIP would have been payable upon retirement on October 31, 2009. If an executive’s employment is terminated by the executive without Good Reason, LTIP awards for any performance cycles which have not been completed are forfeited. As a result, no amounts are included in the table as benefits payable upon termination by the named executive without Good Reason. Notwithstanding the foregoing, the compensation committee may approve payment of all or a portion of an award that would have been earned but for the termination of employment. |
Robert B. | Joseph | Charles S. | Pierre | Craig | ||||||||||||||||
Elements | McKnight | Scirocco | Exon | Agnes(5) | Stevenson | |||||||||||||||
Early vesting of stock options(1) | $ | 40,500 | $ | 32,400 | $ | 32,400 | $ | 28,000 | $ | 28,000 | ||||||||||
Early vesting of restricted stock(2) | 467,650 | 298,500 | 342,280 | 308,450 | 189,050 | |||||||||||||||
LTIP(3) | 602,000 | 0 | 0 | 0 | 0 | |||||||||||||||
Discretionary bonus(4) | 0 | 200,000 | 200,000 | 585,000 | 250,000 | |||||||||||||||
Total | $ | 1,110,150 | $ | 530,900 | $ | 574,680 | $ | 921,450 | $ | 467,050 | ||||||||||
(1) | Represents the value of unvested stock options as of October 31, 2009 which accelerate on termination due to death or disability. | |
(2) | Represents the value of unvested shares of restricted stock as of October 31, 2009 which accelerate on termination due to death or disability, calculated by multiplying the number of accelerated shares by the closing price of our common stock on October 30, 2009, the last trading day of our 2009 fiscal year. | |
(3) | During our 2009 fiscal year, Mr. McKnight was the only executive officer listed above participating in the LTIP. If an executive’s employment is terminated due to death or disability, LTIP awards for any performance cycle which have not been completed are determined with reference to the performance goals for the entire performance cycle and the payments are pro rated based on the percentage of the performance cycle completed prior to the date of termination. The compensation committee may elect to determine the amount of the award earned and make the payout after the end of the applicable performance cycle or earlier based on its determination of the level of performance achieved through the date of executive’s termination or to be achieved for the cycle. For purposes of this table, we have assumed that (i) the award for the three-year performance cycle ending October 31, 2009 would not have been paid since the minimum performance targets were not achieved and such performance cycle was completed on October 31, 2009, and (ii) the award for the three-year performance cycle ending October 31, 2010 was paid at the target level, pro rated for the portion of the performance cycle the executive completed on the date of termination. |
64
Table of Contents
(4) | Under each executive’s employment agreement (except Mr. McKnight’s), if an executive’s employment is terminated due to death or disability during a fiscal year, the executive is entitled to receive a pro rata portion of any discretionary bonus approved by the compensation committee for such year. In December 2009, our compensation committee approved discretionary bonus amounts for our executive officers for fiscal 2009. The amounts listed above represent the full amount of such bonuses for each executive officer, since we are assuming they were terminated on the last day of the fiscal year. | |
(5) | The dollar amount indicated for Mr. Agnes is based on an assumed exchange rate of 1.3 U.S. dollars per euro, since Mr. Agnes’ discretionary bonus is paid in euros. |
Robert B. | Joseph | Charles S. | Pierre | Craig | ||||||||||||||||
Elements | McKnight | Scirocco | Exon | Agnes | Stevenson | |||||||||||||||
Early vesting of stock options(2) | $ | 40,500 | $ | 32,400 | $ | 32,400 | $ | 28,000 | $ | 28,000 | ||||||||||
Early vesting of restricted stock(3) | 467,650 | 298,500 | 342,280 | 308,450 | 189,050 | |||||||||||||||
Total | $ | 508,150 | $ | 330,900 | $ | 374,680 | $ | 336,450 | $ | 217,050 | ||||||||||
(1) | For purposes of this table, “corporate transaction” has the meaning set forth in our 2000 Stock Incentive Plan described above. | |
(2) | Represents the value of unvested stock options as of October 31, 2009 which accelerate on a corporate transaction, assuming the options are neither assumed by the successor corporation nor replaced with a cash incentive program preserving the spread existing at the time of the corporate transaction. | |
(3) | Represents the value of unvested shares of restricted stock as of October 31, 2009 which accelerate on a corporate transaction, assuming the rights and obligations with respect to the shares are not assigned to the successor corporation or new agreements of comparable value are not substituted for such shares of restricted stock. The amount is calculated by multiplying the number of accelerated shares by the closing price of our common stock on October 30, 2009, the last trading day of our 2009 fiscal year. |
Robert B. | Joseph | Charles S. | Pierre | Craig | ||||||||||||||||
Elements | McKnight | Scirocco | Exon | Agnes | Stevenson | |||||||||||||||
LTIP(2) | $ | 602,000 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | ||||||||||
Total | $ | 602,000 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | ||||||||||
(1) | For purposes of this table, “change in control” has the meaning set forth in our LTIP described above. | |
(2) | During our 2009 fiscal year, Mr. McKnight was the only executive officer listed above participating in the LTIP. Under the LTIP, upon a change in control, awards for any performance cycles which have not been completed are deemed earned at the time of the change in control at the “target” level, with payment made pro rata for the portion of the performance cycle completed. For purposes of this table, we have assumed that (i) the award for the three-year performance cycle ending October 31, 2009 would not have been paid since the minimum performance targets were not achieved and such performance cycle was completed on October 31, 2009, and (ii) the award for the three-year performance cycle ending October 31, 2010 was paid at the target level, pro rated for the portion of the performance cycle the executive completed on the date of such change in control. |
65
Table of Contents
the Board of Directors
William M. Barnum, Jr.
Charles E. Crowe
the Board of Directors
William M. Barnum, Jr.
James G. Ellis
66
Table of Contents
Fiscal 2009 | Fiscal 2008 | |||||||
Audit Fees(1) | $ | 2,243,000 | $ | 3,218,000 | ||||
Audit-Related Fees(2) | 120,000 | 20,000 | ||||||
Tax Fees(3) | 1,236,000 | 1,522,000 | ||||||
All Other Fees(4) | -0- | -0- | ||||||
Total Fees | $ | 3,599,000 | $ | 4,760,000 | ||||
(1) | Audit Fees— These are fees for professional services performed by Deloitte & Touche for the audit of our annual financial statements and review of financial statements included in our 10-Q filings, Section 404 attest services, consents and comfort letters and services that are normally provided in connection with statutory and regulatory filings or engagements. | |
(2) | Audit-Related Fees— These are fees for assurance and related services performed by Deloitte & Touche that are reasonably related to the performance of the audit or review of our financial statements. This includes employee benefit plan audits, due diligence related to mergers and acquisitions, and consulting on financial accounting/reporting standards. | |
(3) | Tax Fees— These are fees for professional services performed by Deloitte & Touche with respect to tax compliance, tax advice and tax planning. This includes the preparation of Quiksilver and our consolidated subsidiaries’ original and amended tax returns, refund claims, payment planning, tax audit assistance and tax work stemming from “Audit-Related” items. | |
(4) | All Other Fees— These are fees for other permissible work performed by Deloitte & Touche that does not meet the above category descriptions. |
67
Table of Contents
• | any employment by us of an executive officer if: |
• | the related compensation is required to be reported in our proxy statement under Item 402 of the SEC’s compensation disclosure requirements; or |
• | the executive officer is not an immediate family member of another of our executive officers or directors, the related compensation would be reported in our proxy statement under Item 402 of the SEC’s compensation disclosure requirements if the executive officer was a “named executive officer,” and our compensation committee approved (or recommended that the board approve) such compensation; |
• | any compensation paid to a director if the compensation is required to be reported in our proxy statement under Item 402 of the SEC’s compensation disclosure requirements; |
• | any transaction with another organization for which a related person’s only relationship is as an employee (other than an executive officer), director or beneficial owner of less than 10% of that organization, if the amount involved does not exceed the greater of $1,000,000, or 1% of that organization’s gross annual revenue; |
• | any charitable contribution by us to a charitable or educational organization for which a related person’s only relationship is as an employee (other than an executive officer), a trustee or a director, if the amount involved does not exceed the lesser of $1,000,000, or 1% of the charitable organization’s gross annual revenues; |
• | any transaction where the related person’s interest arises solely from the ownership of our securities and all holders of such securities received the same benefit on a pro rata basis; and |
• | any transaction where the rates or charges involved are determined by competitive bids. |
68
Table of Contents
69
Table of Contents
70
Table of Contents
• | a brief description of the business desired to be brought before the meeting; |
• | the stockholder’s name and address as they appear on our books; |
• | the class and number of shares of stock beneficially owned by the stockholder; and |
• | any material interest of the stockholder in such business. |
71
Table of Contents
QUIKSILVER, INC.
Chairman of the Board,
Chief Executive Officer and President
February 11, 2010
72
Table of Contents
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
QUIKSILVER, INC.
QUIKSILVER, INC. | ||||||
By: | ||||||
Name: | ||||||
Title: |
Annex A-1
Table of Contents
Individual: | Kelly Slater | |
Grant Date: | **/**/20** | |
Number of Shares of Restricted Stock Granted: | 3,000,000 |
Annex B-1
Table of Contents
Annex B-2
Table of Contents
Annex B-3
Table of Contents
Annex B-4
Table of Contents
QUIKSILVER, INC., a Delaware corporation | ||||
By: | ||||
Print Name: | ||||
Its: | ||||
INDIVIDUAL | ||||
Signature | ||||
Print Name | ||||
Annex B-5
Table of Contents
Annex B-6
Table of Contents
Annex B-7
Table of Contents
TO AUTHORIZE OPTION EXCHANGE
Annex C-1
Table of Contents
2000 STOCK INCENTIVE PLAN1
1 | All share amounts in this document have been revised to reflect a 2 for 1 stock split effected through a stock dividend on April 30, 2003 and a 2 for 1 stock split effected through a stock dividend on April 27, 2005. |
Annex D-1
Table of Contents
1.4. | ELIGIBILITY |
Annex D-2
Table of Contents
Annex D-3
Table of Contents
Annex D-4
Table of Contents
Annex D-5
Table of Contents
Annex D-6
Table of Contents
Annex D-7
Table of Contents
Annex D-8
Table of Contents
Annex D-9
Table of Contents
Annex D-10
Table of Contents
3.1. | RESTRICTED STOCK TERMS |
Annex D-11
Table of Contents
Annex D-12
Table of Contents
Annex D-13
Table of Contents
3.2. | CORPORATE TRANSACTION/CHANGE IN CONTROL |
Annex D-14
Table of Contents
Annex D-15
Table of Contents
Annex D-16
Table of Contents
Annex D-17
Table of Contents
Annex D-18
Table of Contents
Annex D-19
Table of Contents
Annex D-20
Table of Contents
Annex D-21
Table of Contents
Annex D-22
Table of Contents
Annex D-23
Table of Contents
Annex D-24
Table of Contents
Annex D-25
Table of Contents
Annex D-26
Table of Contents
Annex D-27
Table of Contents
Annex D-28
Table of Contents
Annex D-29
Table of Contents
Annex D-30
Table of Contents
Annex D-31
Table of Contents
Annex D-32
Table of Contents
Annex D-33
Table of Contents
AUTOMATIC AWARDS UNDER DIRECTOR AUTOMATIC GRANT PROGRAM
Annex E-1
Table of Contents
Annex E-2
Table of Contents
HUNTINGTON BEACH, CA 92649
Table of Contents
your proxy card in the
envelope provided as soon
as possible.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1 THROUGH 6 AND A VOTE “AGAINST” PROPOSAL 7. | |||||||||
1. Election of Directors oFOR ALL NOMINEES oWITHHOLD AUTHORITY FOR ALL NOMINEES oFOR ALL EXCEPT (See instructions below) | NOMINEES: o Douglas K. Ammermano William M. Barnum, Jr. o Charles E. Crowe o James G. Ellis o Charles S. Exon o M. Steven Langman o Robert B. McKnight, Jr. o Paul C. Speaker o Andrew W. Sweet | 2. Approval of amendment of Quiksilver, Inc. Restated Certificate of Incorporation to increase the total authorized shares of Common Stock as described in the accompanying proxy statement. o FOR o AGAINST o ABSTAIN 3. Approval of the grant of shares of restricted Common Stock to Kelly Slater as described in the accompanying proxy statement. o FOR o AGAINST o ABSTAIN 4. Approval of amendment of Quiksilver, Inc. 2000 Stock Incentive Plan to allow for a one-time stock option exchange program as described in the accompanying proxy statement. | �� | ||||||
o FOR o AGAINST o ABSTAIN | |||||||||
5. Approval of amendment of the Quiksilver, Inc. 2000 Stock Incentive Plan to increase the maximum number of shares reserved for issuance under the Plan and the maximum number of reserved shares issuable pursuant to restricted stock and restricted stock units under the Plan as described in the accompanying proxy statement. This Proposal 5 is conditioned on the approval of Proposal 4. | |||||||||
o FOR o AGAINST o ABSTAIN | |||||||||
6. Approval of amendment of Quiksilver, Inc. 2000 Stock Incentive Plan to increase the size of the initial and annual issuances of restricted stock and grants of stock options to non-employee members of the Board of Directors as described in the accompanying proxy statement. | |||||||||
o FOR o AGAINST o ABSTAIN | |||||||||
7. Approval of a non-binding stockholder proposal requesting the adoption of a majority vote standard in the election of directors. | |||||||||
o FOR o AGAINST o ABSTAIN | |||||||||
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the box next to each nominee you wish to withhold, as shown here:n | THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED AND FOR PROPOSALS 2, 3, 4, 5 AND 6 AND AGAINST PROPOSAL 7. IN THEIR DISCRETION, THE NAMED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. AT THE TIME OF PREPARATION OF THE PROXY STATEMENT, THE BOARD OF DIRECTORS KNOWS OF NO BUSINESS TO COME BEFORE THE MEETING OTHER THAN THAT REFERRED TO IN THE PROXY STATEMENT. | ||||||||
All other proxies heretofore given by the undersigned to vote shares of stock of Quiksilver, Inc., which the undersigned would be entitled to vote if personally present at the Annual Meeting or any adjournment or postponement thereof, are hereby expressly revoked. | |||||||||
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | o | ||||||||
Signature of Stockholder Date: | Signature of Stockholder Date: |