SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 [ ]
Confidential, for the Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
R&B, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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R&B, INC.
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Notice of Annual Meeting of Shareholders
May 20, 2004
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Dear Shareholder:
The Annual Meeting of Shareholders of R&B, Inc. (the "Company"), a
Pennsylvania corporation, has been called and will be held at the law offices of
Blank Rome LLP, One Logan Square, Philadelphia, Pennsylvania 19103 on Thursday
May 20, 2004 at 8:30 a.m., Eastern Daylight Savings Time, to consider and act
upon the following matters:
I. Election of six directors for the ensuing year.
II. Any other business as may lawfully come before the Annual Meeting.
The Board of Directors has fixed the close of business on March 12,
2004, as the record date for determining the Shareholders of the Company
entitled to notice of and to vote at such meeting and any adjournment thereof.
Whether or not you intend to be present at the Annual Meeting, please
date, sign and mail the enclosed proxy card in the envelope provided or, if
available, use Internet or telephone voting. Use of Internet or telephone voting
will save the Company money. Instructions for using the internet or telephone
voting, if available, are included on the enclosed proxy card. You are cordially
invited to attend the Annual Meeting and your proxy will not be used if you are
present and prefer to vote in person.
By Order of the Board of Directors
/s/ Barry D. Myers
BARRY D. MYERS
Senior Vice President, General Counsel and
Assistant Secretary
Colmar, Pennsylvania
April 20, 2004
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND PROMPTLY RETURNED.
IF AVAILABLE, PLEASE USE INTERNET OR TELEPHONE VOTING WHICH WILL SAVE YOUR
COMPANY MONEY.
R&B, INC.
3400 East Walnut Street
Colmar, Pennsylvania 18915
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Proxy Statement
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This Proxy Statement and accompanying proxy card are for the
solicitation of proxies by the Board of Directors (the "Board") of R&B, Inc., a
Pennsylvania corporation (the "Company"), for its use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on Thursday May
20, 2004 at 8:30 a.m., Eastern Daylight Savings Time, and any adjournments of
the Annual Meeting. The Annual Meeting will be held at the law offices of Blank
Rome LLP, One Logan Square, Philadelphia, Pennsylvania 19103. This Proxy
Statement and proxy card are being mailed to shareholders of the Company on or
about April 20, 2004.
At the Annual Meeting, the holders of record on March 12, 2004 (the
"Shareholders") of the Company's Common Stock, par value $.01, will act upon the
following matters:
I. Election of six directors for the ensuing year.
II. Any other business as may properly come before the Annual Meeting.
All proxies which are validly completed, signed and returned to the
Company prior to the Annual Meeting will be voted in the manner designated.
Proxies may be revoked at any time prior to being voted by written notice to the
Secretary or by attending the Annual Meeting and voting in person. If no
instructions are given, the persons named in the proxy solicited by the Board
intend to vote in favor of the election of the nominees named herein. If any
other matters properly come before the Annual Meeting, the persons named in the
accompanying proxy card will vote on these matters in accordance with their best
judgment.
The Board has fixed the close of business on March 12, 2004 as the
record date (the "Record Date") for the determination of shareholders entitled
to receive notice and to vote at the Annual Meeting and any adjournments of the
Annual Meeting. As of the close of business on the Record Date, there were
8,811,190 shares of Common Stock, issued and outstanding, each of which is
entitled to one vote.
The election of directors will be determined by a plurality vote and the
six nominees receiving the most "for" votes will be elected. Approval of any
other proposal will require the affirmative vote of a majority of the shares
cast on the proposal. An abstention, withholding of authority to vote or broker
non-votes will not have the same legal effect as an "against" vote and will not
be counted in determining the votes for any nominee or whether any proposal has
received the required shareholder vote.
Election of Directors
The Bylaws of the Company provide that the business of the Company shall
be managed by or under the direction of a Board of Directors of not less than
two nor more than seven directors, which number shall be fixed from time to time
by the Board of Directors. Each director shall be elected at the Annual Meeting
of Shareholders for a term that expires at the next regular shareholder's
meeting and shall hold office for the term for which he was elected and until a
successor is elected and has qualified. The Board of Directors has fixed the
number of directors to be elected for the ensuing year at six and has nominated
the six persons named below for election as directors. Proxies solicited by the
Board of Directors will, unless otherwise directed, be voted to elect the six
nominees named below to constitute the entire Board of Directors.
1
All of the nominees are current directors of the Company. Each nominee
has indicated a willingness to serve as a director for the ensuing year, but in
case any nominee is not a candidate at the meeting for any reason, the proxy
holders named in the enclosed form of Proxy may vote for a substitute nominee in
their discretion.
The following table sets forth certain information as to each nominee
for the office of director:
Name Age Position
Richard N. Berman 47 Chairman of the Board of Directors,
President and Chief Executive Officer
Steven L. Berman 44 Executive Vice President, Secretary-
Treasurer, and Director
George L. Bernstein 72 Director
John F. Creamer, Jr. 73 Director
Paul R. Lederer 64 Director
Edgar W. Levin 71 Director
Richard N. Berman has been Chairman of the Board of Directors, President
and Chief Executive Officer of the Company since its inception in October 1978.
Steven L. Berman has been Executive Vice President, Secretary-Treasurer
and a Director of the Company since its inception.
George L. Bernstein has served as a Director since 1991. Mr Bernstein is
currently President of George L. Bernstein Consulting, a strategy and succession
planning consulting firm. He was Chief Financial Officer of Howard Fischer
Associates International, Inc., an executive search firm, from 1994 to 2002.
Previously he was Chief Operating Officer of Dilworth, Paxson, Kalish &
Kauffman, a law firm in Philadelphia, Pennsylvania that he joined in 1991.
John F. Creamer, Jr. has served as a Director since 1995. Mr. Creamer is
currently President of Distribution Marketing Services, Inc., a marketing
consulting firm for the automotive aftermarket located in Phoenix, Arizona. He
is a former director and former vice chairman of the Board of Directors of
Echlin Corporation, and past president of the Automotive Warehouse Distributors
Association (AWDA).
Paul R. Lederer has served as a Director since 1998. Mr. Lederer is past
Executive Vice President of Federal-Mogul Corporation, a global manufacturer of
a broad range of non-discretionary parts primarily for automobiles, light
trucks, heavy trucks, and farm and construction vehicles. Prior to joining
Federal-Mogul, Mr. Lederer was President and Chief Operating Officer of Fel-Pro
Incorporated, a private manufacturer of gaskets and related products for the
internal combustion engine, which was acquired by Federal-Mogul in 1998. Before
joining Fel-Pro, he was a consultant to several automotive parts companies. Mr.
Lederer is currently a director of O'Reilly Automotive, an automotive parts
retailer, TransPro, Inc., an automotive parts company, Maximus, Inc., a provider
of program management and consultive services to state and local governments,
and Vita Food Products, Inc., a speciality foods provider.
Edgar Levin has served as a Director since 1991. Mr. Levin is currently
President of Ed Levin Associates, a management consulting firm. Prior thereto,
from 1984 to 1988, he was Senior Vice President of Paramount Communications,
Inc. (Gulf & Western, Inc.), a media and entertainment company.
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None of the above nominees, except for Richard and Steven Berman who are
brothers, are related to any other nominee or to any executive officer of the
Company.
Board and Committees
During the fiscal year ended December 27, 2003 the Board held four
meetings; each director has attended at least 75% of the meetings of the Board
and Committees of which they were a member. The Board has determined that all of
the non-management directors are independent as defined under the standards of
NASDAQ. The Company's Corporate Governance information is available at
www.rbinc.com. Shareholders and other interested parties who wish to communicate
with the non-management directors of the Company should send their
correspondence to: R&B Non-Management Directors, 3400 East Walnut Street,
Colmar, Pennsylvania 18915.
The Executive Committee has general authority over the supervision and
direction of the finances and business of the Company and has the power and
authority of the Board in the management of the business and affairs of the
Company between meetings of the Board. Currently Richard Berman and Steven
Berman serve on the Executive Committee. The Executive Committee did not hold
any meetings during the fiscal year ended December 27, 2003.
The Audit Committee is responsible for reviewing reports of the
Company's financial results, audits and internal controls. The Committee selects
the Company's independent public accountants and reviews their procedures for
ensuring their independence with respect to the services performed for the
Company. The Audit Committee is composed of non- management directors.
Currently, George Bernstein, John Creamer, Paul Lederer and Edgar Levin serve on
the Audit Committee. Members of the Audit Committee, in the opinion of the
Board, are independent as defined under the standards of NASDAQ. The Board has
determined that Mr. Bernstein qualifies as an Audit Committee Financial Expert
as defined by the rules of the Securities and Exchange Commission. The Audit
Committee held four meetings in the fiscal year ended December 27, 2003. The
Board has adopted a written charter for the committee, a copy of which is
attached as Appendix A and is also available at www.rbinc.com.
The Compensation and Nominating Committee is responsible for
administering and approving all elements of compensation for elected corporate
officers and certain other senior management positions. It also approves, by
direct action or through delegation, participation in and all awards, grants and
related actions under the R&B Incentive Stock Plan, the Employee Stock Purchase
Plan and the 401(k) Retirement Plan. The committee is also responsible for
recommending qualified candidates to the Board for election as directors of the
Company, including the slate of directors that the Board proposes for election
by shareholders at the Annual Meeting. Currently George Bernstein, John Creamer,
Paul Lederer and Edgar Levin serve on the Compensation and Nominating Committee.
Members of the Compensation and Nominating Committee, in the opinion of the
Board, are independent as defined under the standards of NASDAQ. The
Compensation and Nominating Committee held one meeting during fiscal year ended
December 27, 2003. The Board has adopted a written charter for the committee
which is available at www.rbinc.com.
Each director of the Company, who is not also an employee of the
Company, receives an annual retainer of $20,000 plus $1,500 for attendance at
each meeting of the Board and $1,000 for any Committee meetings with the
Chairman of the committee receiving an additional $500. Directors are also
eligible for participation in the Incentive Stock Plan.
The Board Recommends a Vote "For" the Election of the Directors.
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Executive Compensation and Transactions
The following table sets forth certain information regarding the annual
and long-term compensation for the fiscal years ended December 27, 2003,
December 28, 2002 and December 29, 2001, to the Chief Executive Officer and to
the four most highly compensated executive officers of the Company serving on
December 27, 2003.
Summary Compensation Table
Long Term
Annual Compensation Compensation
Securities
Name and Principal Underlying All Other
-
Position Year Salary Bonus (1) Other (2) Options Compensation (3)
- -------- ---- ------ ----- --- - ----- --- ------- ------------ ---
Richard N. Berman 2003 $416,000 $332,800 $0 0 $8,000
Chairman of the Board, 2002 400,000 255,885 0 0 8,000
President and Chief 2001 400,000 164,583 0 0 6,800
Executive Officer
Steven L. Berman 2003 $416,000 $332,800 $0 0 $8,000
Executive Vice President,2002 400,000 255,885 0 0 8,000
Secretary-Treasurer and 2001 400,000 164,583 0 0 6,800
Director
Mathias J. Barton 2003 $237,952 $200,000 $0 22,500 $8,000
Senior Vice President, 2002 228,800 244,860 0 0 8,000
Chief Financial Officer 2001 220,000 164,583 0 0 6,800
Barry D. Myers 2003 $237,952 $200,000 $0 2,000 $8,000
Senior Vice President, 2002 228,800 244,860 0 0 8,000
General Counsel 2001 220,000 164,583 0 0 6,800
Edward L. Dean 2003 $243,308 $162,500 $0 5,000 $8,000
Senior Vice President, 2002 233,950 244,860 0 0 8,000
Marketing 2001 224,620 164,583 0 0 6,800
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(1) Annual bonuses received are reported in the year earned, whether paid in
that year or in the following year. The 2003 bonus was paid one half on February
27, 2004 with the remaining balance to be paid in four equal payments every
three months beginning on May 15, 2004. The executive must be employed on the
scheduled date of payment to receive that portion of the bonus.
(2) The Company provides certain perquisites and other personal benefits to its
executive officers which are not included in the table since the total to each
of the individuals named above did not exceed the lesser of $50,000 or 10% of
their respective cash compensation.
(3) "All Other Compensation" includes the estimated contribution to the
Company's 401(k) Plan on behalf of each of the named executives.
Incentive Stock Plan
The Board of Directors has adopted, and the Company's shareholders have
approved, an Incentive Stock Plan (the "Plan"), the purpose of which is to
recognize the contributions made to the Company by its employees, consultants,
advisors and members of its Board of Directors, to provide these individuals
with additional incentives to devote themselves to the
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Company's future success and to improve the Company's ability to attract, retain
and motivate individuals upon whom the Company's sustained growth and financial
success depend.
The Plan is administered by the Board of Directors, or by a committee
designated by the Board of Directors. The aggregate maximum number of shares of
Common Stock available for awards under the Plan is 1,172,500 shares (subject to
adjustments to reflect changes in the Company's capitalization). Awards under
the plan may be made to all employees, consultants, advisors and directors of
the Company, although no director may receive awards for more than 10% of the
shares reserved for issuance under the Plan.
Options granted under the Plan may be either incentive stock options
("ISOs") or non-incentive stock options ("NSOs") (together, the "Options"). ISOs
are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Unless the Option is specifically designated at the time of grant as an ISO,
Options under the Plan will be NSOs.
The exercise price of the ISOs will be at least 100% of the fair market
value of the shares of Common Stock on the date the Option is granted, or, at
least 110% of the fair market value of the shares of Common stock on the date
the Option is granted if the recipient owns, directly or by attribution under
Section 425(d) of the Code, shares possessing more than 10% of the total
combined voting power of all classes of stock of the Company. The option price
for NSO will be set at the discretion of the Board of Directors, and may be less
than, greater than or equal to the fair market value of a share on the date of
the grant. The maximum term of an Option granted under the Plan shall not exceed
(i) ten years from the date of grant, or (ii) in the case of an ISO, five years
from the date of grant if the recipient on the date of grant owns, directly or
by attribution under Section 425(d) of the Code, shares possessing more than 10%
of the total combined voting power of all classes of stock of the Company or any
subsidiary.
As of December 27, 2003 options, net of cancellations, have been
granted to approximately 65 persons to purchase up to an aggregate of 648,646
shares of common stock (457,196 shares are presently exercisable) at prices
ranging from $1.00 to $14.28 and 344,222 shares have been exercised.
Option Grants in 2003
The following table contains information about the stock options granted
in 2003 to the executive officers named in the Summary Compensation Table. No
stock appreciation rights were granted in 2003.
Individual Grants
Potential Realizable
Value at Assumed An-
Number of Secu- % of Total Options nual Rates of Stock
rities Underlying Granted to Exercise or Price Appreciation for
Options Employees Base Price Expiration Option Term (1)
------ ---- ---
Name Granted (#) in 2003 ($/Share) Date 5%($) 10%($)
- ---- ------- --- -- ---- --------- ---- ----- ------
Mr. Barton 22,500 15.2 10.15 05/30/2013 143,624 363,971
Mr. Myers 2,000 1.4 10.15 05/30/2013 12,767 32,353
Mr. Dean 5,000 3.4 10.15 05/30/2013 31,916 80,882
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(1) These amounts represent assumed rates of appreciation for the market value
of the Company's stock from the date of grant until the end of the option period
at rates arbitrarily set by the Securities and Exchange Commission. They are not
intended to forecast possible future appreciation in the Company's stock and any
actual gains on exercise of options are dependent on the future performance of
the Company's stock.
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Aggregated Option Exercises in 2003 and Year-End Option Values
The following table shows information with respect to the exercise of
stock options during 2003 by each of the named executive officers and the value
of the exercisable options on December 27, 2003.
Number of Securities Value of Unexercised In-the-
Shares Value Underlying Unexercised Money Options
Acquired on Realized Options at Year-End at Year-End ($) (1)
------- -- -------- -- -------- --- ---
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- --- ----------- ------------- ----------- -------------
Mr. Barton 0 0 37,500 22,500 452,625 110,700
Mr. Myers 0 0 58,000 2,000 749,940 9,840
Mr. Dean 4,304 46,268 50,696 5,000 662,090 24,600
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(1) The "Value of Unexercised In-the-Money Options at Year-End" is equal to the
difference between the option exercise price and the Common Stock's December 27,
2003 closing price of $15.07 per share as reported on the NASDAQ National Market
System.
Employee Stock Purchase Plan
The Board of Directors has adopted, and the Company's shareholders have
approved, the 1992 Employee Stock Purchase Plan (the "1992 Plan") the purpose of
which is to advance the interests of the Company, its shareholders and employees
by encouraging its employees to acquire a vested interest in the growth and
earnings of the Company.
Under the 1992 Plan, a committee appointed by the Board consisting
initially of a minimum of two and a maximum of seven members of the Board will
administer the 1992 Plan (the "Committee"). The aggregate maximum number of
shares of Common Stock available for grants under the 1992 Plan is 300,000
shares, (with suitable adjustments to reflect changes in the Company's
capitalization). Grants under the 1992 Plan may be made to all employees of the
Company, although no employee may receive such a grant if immediately after the
grant he would own more than 5% of the Company's Common Stock or which, at the
date the option is granted, would permit such person's rights to purchase stock
under the 1992 Plan and all other employee stock purchase or option plans of the
Company, or its parent or subsidiaries, if any, to accrue at a rate exceeding
$25,000 of the fair market value of such stock (determined at the time such
option is granted) for each year such option is outstanding.
If the Committee decides to issue options pursuant to the 1992 Plan,
options must be granted to all employees of the Company who have been employed
for at least ninety days, other than those employees whose customary employment
is 20 hours or less per week and those employees whose customary employment is
for not more than five months in any calendar year. All options will expire on
the last day of the fiscal year during which the option was granted. The option
price will equal 85% of the fair market value of the shares on the date of
exercise.
The 1992 Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. Under the Code, an employee
who is granted an option under the 1992 Plan will not realize income at either
the time of grant of the option, or upon exercise of the option. If an employee
disposes of shares acquired upon exercise of an option after two years from the
date of grant of such option and after one year from the date of exercise of
such option, the employee will be required to include in income, as compensation
for the year in which such disposition occurs, an amount equal to the lesser of
(i) the excess of the fair market value of such shares at the time of
disposition over the exercise price or (ii) the excess of the fair market value
of such shares at the time the option was granted over the exercise price. The
employee's basis in the shares disposed of will be increased by an amount equal
to the amount so includible in his or her income as compensation, and any gain
or loss computed with reference to such adjusted basis which is recognized at
the time of disposition will be long-term capital gain or loss. In such event,
the Company (or the subsidiary by which the employee is employed) will not be
entitled to any deduction from income.
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If any employee disposes of the shares purchased under the 1992 Plan
within such two year and one year period, the employee will be required to
include in income, as compensation for the year in which such disposition
occurs, an amount equal to the excess of the fair market value of such shares on
the date of purchase over the exercise price. The employee's basis in such
shares disposed of will be increased by an amount equal to the amount includible
in his or her income as compensation, and any gain or loss computed with
reference to such adjusted basis which is recognized at the time of disposition
will be capital gain or loss, either short-term or long-term, depending on the
holding period for such shares. In the event of a disposition within such two
year or one year period, the Company (or the subsidiary by which the employee is
employed) will be entitled to a deduction from income equal to the amount the
employee is required to include in income as compensation as a result of such
disposition.
The Board of Directors may modify or amend the 1992 Plan in any way
which will not destroy the status of the 1992 Plan as a qualified employee stock
purchase plan as defined in Section 423 of the Code, but no such amendment or
modification may affect options granted under the 1992 Plan prior to the date of
such amendment or modification.
As of December 27, 2003, no options were outstanding but optionees had
exercised rights during 2003 to purchase 568 shares at prices ranging from $7.64
to $11.64 for total net proceeds of $5,000.
401(k) Retirement Plan
On January 1, 1992, the Company adopted the amended and restated R&B,
Inc. 401(k) Retirement Plan and Trust (the "401(k) Plan"), a defined
contribution discretionary profit-sharing plan. The 401(k) Plan is administered
by the Company and is available to all employees once they have met certain age
and service requirements. Individual accounts are maintained for the cash
contributions made on behalf of each eligible employee and each eligible
employee has a choice of investment options from among a variety of mutual funds
and professionally managed accounts as to the contributions to his account.
There are two types of contributions to the 401(k) Plan: (1) an employee can
make a voluntary contribution of the employee's compensation which is deducted
by the Company from the employees normal compensation (legal limitations may
restrict the maximum voluntary contribution by an employee in any given year);
and (2) the Company may make discretionary contributions, in cash, common stock
or a combination thereof, which is allocated among the participants based on the
employee's annual compensation compared to the total annual compensation of all
eligible employees.
Benefits are payable at age 65 (normal retirement), total disability,
death, or upon early employment termination. There are vesting requirements for
the Company's contributions, but not for the employee's voluntary contributions.
The vesting schedule provides for twenty percent vesting each year after one
year of service, with one hundred percent vesting at six years or more.
For the fiscal year ended December 27, 2003, the Company contributed an
amount equal to four percent of each eligible employee's annual compensation
(with certain limitations to highly compensated employees). The Company's
contribution was funded three percent in cash and one percent in Company common
stock.
7
Management Compensation Policy Committee Report on Executive Compensation
The current members of the Compensation and Nominating Committee are
George Bernstein, John Creamer, Paul Lederer and Edgar Levin.
This report is not deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission (the "SEC") or subject to the SEC's
proxy rules or to the liabilities of Section 18 of the Securities Exchange Act
of 1934 (the "1934 Act"), and the report shall not be deemed to be incorporated
by reference into any prior or subsequent filing by the Company under the
Securities Act of 1933 or the 1934 Act.
General
The Compensation and Nominating Committee is composed of four non-
management directors, Edgar W. Levin, Chairman, George L. Bernstein, John F.
Creamer and Paul R. Lederer. In the opinion of the Board, each are independent
as defined under the standards of NASDAQ. The committee is responsible for,
among other matters, setting and administering executive officer salaries,
bonuses and other employee benefits.
Policy
The Company's compensation philosophy reflects a commitment to
compensate executives competitively with other companies in the industry while
rewarding specific executives for achieving levels of operational excellence and
financial returns which insure positive short and long-term business performance
and continual growth in shareholder value. The Board of Directors believes that
the Company's overall compensation program must be competitive in order to
attract and retain the qualified individuals necessary to manage the Company and
address the significant challenges facing the Company and the industry.
Base Salary
The Committee establishes base salaries annually upon recommendation of
the Chief Executive Officer taking into consideration independent compensation
studies prepared periodically on behalf of the Committee. The Committee desires
that overall compensation reflect the performance of each individual executive
over time. Base salaries are set at levels subjectively determined by the
Committee to adequately reward and retain capable executives, including the
Chief Executive Officer, without targeting any specific quartile of the
compensation survey data for total compensation or any component of total
compensation. The Committee considers the importance of and skills required in a
particular executive position in establishing base salary.
Bonuses
The Committee has established a discretionary bonus plan for the Chief
Executive Officer and the Executive Vice President based upon the Company
meeting various annual financial targets. The bonuses to be awarded to all other
executive officers of the Company are based upon the Company meeting various
financial targets in addition to each such officer's contribution,
responsibility and performance during the year, and thus are both objective and
subjective in nature. In formulating its recommendation for the bonuses of such
other executive officers of the Company, the Committee considers, among other
things, the evaluation of the Chief Executive Officer with regard to the
contribution, responsibility and performance of the executive officer in
question and his views on the appropriate compensation level of such executive
officer.
Long-Term Incentives
Long-term incentives offered by the Company are based on incentive stock
options. Incentive stock options are awarded to the Chief Executive Officer and
the other executive officers by the Committee based upon the recommendation of
the Chief Executive Officer, taking into consideration the responsibility of
each executive officer, the financial performance of the Company and such other
factors as it deems appropriate, consistent with the Company's compensation
policies.
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However, the Committee has not established specific target awards governing the
receipt, timing or size of option grants. Thus, determinations with respect to
the granting of stock options are subjective in nature.
Chief Executive Officer Compensation
The compensation of Richard Berman, Chairman of the Board , Chief
Executive Officer and President, is determined as set forth above. Mr. Berman
received a base salary of $416,000 in 2003. The Committee granted Mr. Berman a
bonus for 2003 of $332,800.
Conclusion
The Committee is satisfied that the short-term and long-term
compensation paid to the executive officers of the Company create alignment with
the Company's strategic objectives and ensure that payouts are driven by Company
performance and employee contribution to the Company.
The foregoing report has been furnished by:
Edgar W. Levin, Chairman
George L. Bernstein
John F. Creamer
Paul R. Lederer
Compensation Committee Interlocks and Insider Transactions
Richard Berman and Steven Berman receive a salary set by the
Compensation and Nominating Committee of the Board of Directors and also serve
as directors. However, they do not participate in deliberations regarding their
own salary. Richard Berman and Steven Berman are partners in the Berman Real
Estate Partnership.
Leases of Real Property: The Company leases its Colmar, Pennsylvania facility
from a partnerships of which Richard Berman, Steven Berman, their father, Jordan
Berman, and their brothers, Marc Berman and Fred Berman, are partners. Under the
lease for the Pennsylvania property, the Company paid rent of $3.56 per square
foot ($1.2 million per year) in 2003. The rents payable on the Pennsylvania
property are adjusted on January 1 of each year to reflect annual changes in the
Consumer Price Index for All Urban Consumers - U.S. City Average, All Items. The
lease is "net" leases, under which the Company is responsible for all expenses
attributable to the leased properties (including maintenance and repair) and for
the conduct of its operations in compliance with all applicable laws and
regulations. The lease was extended and will expire on December 31, 2007. In the
opinion of management, the terms of this lease is no less favorable than those
which could have been obtained from an unaffiliated party.
Report of Audit Committee
The Audit Committee (the "Committee") oversees the Company's financial
reporting process on behalf of the Board of Directors. Management has primary
responsibility for the financial statements, reporting process and internal
controls. The committee monitors the disclosure and content of the Company's
financial statements, the quality of the accounting principles used, and the
independent audit process. It reviews the adequacy of the Company's internal
controls, and selects the Company's independent certified public accountants.
The Committee operates pursuant to a written charter that was adopted by the
Board of Directors, a copy of which is attached as Appendix A and is also
available at www.rbinc.com. (the "Charter"). The Board of Directors has
determined that all members of the Committee are independent as defined under
the standards of
9
NASDAQ. The Board has determined that Mr. Bernstein qualifies as an Audit
Committee Financial Expert as defined by the rules of the Securities and
Exchange Commission.
In March 2004, the Audit Committee met with management and the
independent auditors to review and discuss the audited financial statements for
the year ended December 27, 2003. The Audit Committee also conducted discussions
with its independent auditors, KPMG, LLP ("KPMG"), regarding the matters
required by the Statement on Auditing Standards No. 61. As required by
Independence Standards Board Standard No. 1, "Independence Discussion with Audit
Committees," the Audit Committee has discussed with and received the required
written disclosures and a confirming letter from KPMG regarding its independence
and has discussed with KPMG its independence. The Audit Committee also
considered the non- audit services provided by KPMG set forth below in their
review of KPMG's independence. Based upon the review and discussions referred to
above, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 27, 2003.
The foregoing report has been furnished by:
George L. Bernstein, Chairman
John F. Creamer, Jr.
Paul R. Lederer
Edgar W. Levin
Audit and Non-Audit Fees Paid To Independent Auditors
During the fiscal year ended December 27, 2003, the fees, billed or to
be billed, for the audit and review of the Company's consolidated financial
statements by KPMG, LLP were $162,390. All other fees paid or payable by the
Company for services other than the consolidated financial statement audit and
review services performed by KPMG, LLP during fiscal year 2003 were $99,360 and
related to tax preparation services and other audit-related fees, including an
employee benefit plan. KPMG, LLP did not perform any other professional services
during fiscal year 2003.
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Beneficial Ownership of Common Stock
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 12, 2004 by (i) each director and nominee, (ii) each
person known by the Company to be the beneficial owner of five percent or more
of the Common Stock, (iii) each executive officer named in the summary
compensation table below, and (iv) all directors and executive officers as a
group.
Name of Beneficial Owner Amount and Nature of Percentage of
or Identity of Group Beneficial Ownership (1) Outstanding Shares
--------------------- ------------------------ ------------------
Steven L. Berman (2)(3)(4) 1,197,497 13.6%
Richard N. Berman (2)(3)(4) 1,150,109 13.1%
Jordan S. Berman (2)(5) 766,560 8.7%
FleetBoston Financial Corporation (6) 609,626 6.9%
Dimensional Fund Advisors, Inc.(7) 490,600 5.6%
Fred B. Berman (2)(8) 390,807 4.4%
Marc H. Berman (2)(8) 388,389 4.4%
Barry D. Myers 72,092 *
Mathias J. Barton 68,290 *
Edward L. Dean 61,855 *
Paul R. Lederer 11,000 *
Edgar W. Levin 9,000 *
John F. Creamer, Jr. 6,000 *
George L. Bernstein 3,000 *
Executive officers and directors as a
group (12 persons) 2,595,343 29.5%
- ------------------------
* Less than 1%
(1) The securities "beneficially owned" by a person are determined in accordance
with the definition of "beneficial ownership" set forth in the regulations of
the Securities and Exchange Commission (the "Commission") and accordingly, may
include securities owned by or for, among others, the spouse, children or
certain other relatives of such person as well as other securities as to which
the person has or shares voting or investment power or has the right to acquire
within 60 days of March 12, 2004. The same shares may be beneficially owned by
more than one person. Beneficial ownership may be disclaimed as to certain of
the securities. Fractional shares are rounded to the closest whole number. (2)
Pursuant to an agreement among Richard Berman and Steven Berman, their father
Jordan Berman, and their brothers, Fred Berman and Marc Berman, each of them has
granted the others rights of first refusal, exercisable on a pro rata basis or
in such other proportions as the exercising shareholders may agree, to purchase
shares of Common Stock of the Company which any of them, or upon their deaths
their respective estates, proposes to sell to third parties. The Company has
agreed with these shareholders that, upon their deaths, to the extent that any
of their shares are not purchased by any of these surviving shareholders and may
not be sold without registration under the 1933 Act, the Company will use its
best efforts to cause those shares to be registered under the 1933 Act. The
expenses of any such registration will be borne by the estate of the deceased
shareholder.
(3) Does not reflect 457,997 shares of common stock held by the R&B, Inc. 401(k)
Retirement Plan for which Richard Berman and Steven Berman are trustees. (4)
Address of this shareholder is c/o R&B, Inc. P.O. Box 1800, Colmar, Pennsylvania
18915. (5) Address of this shareholder is P.O. Box 474, Springhouse,
Pennsylvania 19477.
(6) Based upon a Schedule 13G filed on February 13, 2004 by FleetBoston
Financial Corporation ("Fleet"). The principal address of Fleet is 111
Westminster Street, Providence, Rhode Island, 02903. (7) Based upon a Schedule
13G filed on February 6, 2004 by Dimensional Fund Advisors, Inc.
("Dimensional"). The principal address of Dimensional is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401 (8) Address of this shareholder is c/o
Service Champ, LP 180 New Britain Blvd., Chalfont, Pennsylvania 18914.
11
Filing Disclosure
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
the rules thereunder require the Company's officers and directors and persons
who own more than 10% of the Company's common stock to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers and to furnish the Company copies.
Based on its review of the copies of such forms received by it, or
written representation from certain reporting persons, the Company believes
that, during the last fiscal year all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with.
Shareholder Return Performance Presentation
Set forth below is a line graph comparing, for the period from December
26, 1998 to December 27, 2003, the cumulative total shareholder return on the
Company's Common Stock with the cumulative total shareholder return on the
NASDAQ Market Index and the Automotive Parts and Accessories Peer Group index.
The graph assumes $100 invested on December 26, 1998 in the Company's Common
Stock and each of the indices, and that the dividends were reinvested when and
as paid. In calculating the cumulative total shareholder return of the peer
group index, the shareholder returns of the companies included are weighted
according to the stock market capitalization of such companies.
Comparison of Total Return
R&B, Inc. Common, NASDAQ Market Index and
Automotive Parts & Accessories Peer Group Index*
MEASUREMENT NASDAQ
PERIOD R&B, INC. TOTAL RETURN AP&A PEER GROUP
12/26/98 100.00 100.00 100.00
12/25/99 57.69 176.37 84.71
12/30/00 20.38 110.86 68.15
12/29/01 85.54 88.37 86.00
12/28/02 124.18 61.64 76.70
12/27/03 185.48 92.68 92.68
- ---------------
* Automotive Parts & Accessories Peer Group is comprised of 65 public companies
and the information was furnished by Media General Financial Services.
Shareholder Proposals
Proposals by shareholders to be presented at the Company's meeting to be
held in 2004 must be received by the Company no later than December 25, 2004 in
order to be considered for inclusion in the Company's proxy statement and form
of proxy for that meeting.
Annual Report
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended December 27, 2003 is being furnished concurrently with this Proxy
Statement to all persons who were Shareholders on the Record Date. The Annual
Report should not be regarded as proxy soliciting material.
12
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 27, 2003 CAN BE OBTAINED WITHOUT CHARGE BY WRITING TO R&B, INC.
3400 EAST WALNUT STREET, COLMAR, PENNSYLVANIA 18915, ATT: BARRY D. MYERS,
ASSISTANT SECRETARY.
Solicitation of Proxies
All expenses incurred in connection with the solicitation of the
enclosed proxy card will be paid by the Com pany. In addition to solicitation by
mail, officers, directors and regular employees of the Company, who will receive
no additional compensation for their services, may solicit proxies by mail,
telephone, telegraph or personal call if proxies are not received in a timely
fashion. The Company has requested that brokers and nominees who hold stock in
their names furnish this proxy material to their customers; the Company will
reimburse these brokers and nominees for their out-of-pocket and reasonable
expenses.
Although it is not anticipated, the Company reserves the right to retain
a professional firm of proxy solicitors to assist in solicitation of proxies.
The Company estimates that it would be required to pay such firm fees ranging
from $5,000 to $10,000 plus out-of-pocket expenses.
Independent Public Accountants
The accounting firm of KPMG, LLP acted as the Company's independent
public accountants for the fiscal year ended December 27, 2003 and has been
selected by the Board of Directors to serve as the Company's independent public
accountants for the fiscal year ending December 25, 2004. A representative of
KPMG, LLP is expected to be present at the Annual Meeting and to have the
opportunity to make a statement, if he desires to do so, and is expected to be
available to respond to appropriate questions.
Other Matters
As of the date of this Proxy Statement, no other matter is known which
will be brought before the Annual Meeting. However, the enclosed proxy confers
discretionary authority to vote with respect to any and all of the following
matters that may come before the meeting: (i) matters that the Company's Board
of Directors does not know, 45 days before the meeting, are to be presented for
approval at the meeting (ii) approval of the minutes of a prior meeting of
shareholders, if such approval does not constitute ratification of the action at
the meeting; (iii) the election of any person to any office for which a bona
fide nominee is unable to serve or for good cause will not serve; (iv) any
proposal omitted from this Proxy Statement and the form of proxy pursuant to
Rule 14a-8 under the Exchange Act, as amended; and (v) matters incidental to the
conduct of the meeting. If any such matters come before the meeting, the proxy
agents named in the accompanying proxy card will vote in accordance with their
best judgment and discretion.
By Order of the Board of Directors
\s\ Barry D. Myers
BARRY D. MYERS
Senior Vice President, General Counsel and
Assistant Secretary
Colmar, Pennsylvania
April 20, 2004
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<page>
APPENDIX A
R&B, Inc.
Amended and Restated
Audit Committee Charter
Status
The Audit Committee is a committee of the Board of Directors.
Membership
The Audit Committee shall consist of three or more directors all of
whom, in the judgment of the Board of Directors, shall be independent in
accordance with the rules and regulations of the Securities and Exchange
Commission and the NASDAQ. Each member shall, in the judgment of the Board of
Directors, be financially literate and have the ability to read and understand
the Company's basic financial statements or shall at the time of appointment
undertake training for that purpose. As the Board of Directors decides, from
time to time, one or more members of the Audit Committee may be designated as a
financial expert in accordance with the rules and regulations of the Securities
and Exchange Commission.
Purpose
The Audit Committee will assist the Board of Directors with the
oversight of (a) the integrity of the Company's financial statements, (b) the
Company's compliance with legal and regulatory requirements, (c) the independent
auditor's qualifications and independence, and (d) the performance of the
Company's independent auditors.
Responsibilities
1. Appoint the public accounting firm (independent auditor, outside
auditor) for the purpose of preparing or issuing an audit report or to
perform related work and set their compensation. The appointed public
accounting firm reports directly to the Audit Committee. The Audit
Committee may also reappoint or terminate the services of the public
accounting firm.
2. Pre-approve all audit and permitted non-audit services to be performed
by the public accounting firm; or delegate the authority to pre-approve
such services to one or more members of the Audit Committee, who shall
report any decision to pre-approve any services to the full Audit
Committee at its regularly scheduled meetings.
3. Report the pre-approval of any permitted non-audit services to
management for disclosure in the Company's periodic reports.
4. Review with members of the appointed public accounting firm the scope
of the prospective audit, the estimated fees therefore and such other
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matters pertaining to such audit as the Audit Committee may deem
appropriate.
5. Receive and review:
(a) a report by the outside auditor describing (i) the outside auditor's
internal quality-control procedures; (ii) any material issues raised by
the most recent quality-control review, or peer review, of the firm, or
by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
audits carried out by the firm, and any steps taken to deal with any
such issues; and (iii) in the effort to assess the auditor's
independence, all relationships between the auditors and the Company;
(b) all other reports from the outside auditors, including the annual
comments from them on accounting procedures and systems of internal
control;
6. Review and consider whether the provision by the outside auditors of
any permitted non-audit services is compatible with maintaining their
independence; review and approve the non-audit fees of the outside
auditors; review with them any questions, comments or suggestions they
may have relating to the internal controls, accounting practices or
procedures of the Company or its subsidiaries, and any accounting
disagreements or audit problems or difficulties and management's
response; review alternative treatment of financial information, in
accordance with GAAP, discussed with management; and other relevant
communications between the outside auditors and management.
7. Make or cause to be made, from time to time, such other examinations or
reviews as the Audit Committee may deem advisable with respect to the
adequacy of the systems of internal controls and accounting practices
of the Company and its subsidiaries and with respect to current
accounting trends and developments, and take such action with respect
thereto as may be deemed appropriate.
8. Review with management and the public accounting firm selected as out-
side auditors for the Company the annual and quarterly financial
statements of the Company, including the Company's disclosures
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations", critical accounting principles and practices of
the Company, and any material changes in accounting principles or
practices used in preparing the statements prior to the filing of a
report on Form10-K or 10-Q with the Securities and Exchange Commission.
Such review will include the items required by SAS 61 as in effect at
that time in the case of the annual statements and SAS 100 as in effect
at that time in the case of the quarterly statements. During such
review, or otherwise, the Audit Committee shall work to resolve any
disagreements between management and the outside auditors regarding
financial reporting. At year-end the Audit Committee will discuss with
the outside auditors the quality of the accounting principles and the
underlying estimates used in the audited financial statements.
9. Review earnings press releases, as well as financial information and
earnings guidance provided to analysts, and discuss Company policies
with respect to risk assessment and risk management.
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10. Review and approve related party transactions.
11. Receive from the outside auditors the report required by Independence
Standards Board Standard No. 1 as in effect at that time and discuss it
with the outside auditors.
12. Review the status of compliance with laws, regulations and internal
procedures, contingent liabilities and risks that may be material to
the Company, the scope and status of systems designed to assure Company
compliance with laws, regulations and internal procedures, through
receiving reports from management, legal counsel and other third
parties as determined by the Audit Committee on such matters, as well
as major legislative and regulatory developments which could materially
impact the Company's contingent liabilities and risks.
13. Establish and maintain procedures for the confidential and anonymous
receipt, retention and treatment of complaints regarding the Company's
accounting, internal controls or auditing matters, and establish clear
hiring policies for employees or former employees of the Company's
outside auditor.
14. Obtain the advice and assistance, as appropriate, of independent
counsel and other advisors as necessary to fulfill the
responsibilities of the Audit Committee. Funding shall be provided by
the Company.
15. Review the Audit Committee Charter annually.
Meetings
The Audit Committee shall meet at least four times each year and at
such other times as it deems necessary to fulfill its responsibilities. A quorum
of the Committee shall be declared when a majority of the members are in
attendance in person or by telephone. The Audit Committee shall meet regularly
in executive session without management present. The audit Committee shall also
meet with the Company's outside auditors in executive session to discuss any
matters the Committee or the outside auditors believe should be discussed
privately.
Limitations
The Audit Committee is responsible for the duties set forth in this
Charter but is not responsible for either the preparation of the financial
statements or the auditing of the financial statements. Management has the
responsibility for preparing the financial statements and implementing internal
controls, and independent auditors have the responsibility for auditing the
financial statements and monitoring the effectiveness of the internal controls.
The review of the financial statements by the Audit Committee is not intended to
be at the same scope, level or quality as the audit performed by the independent
auditors. In carrying out its responsibilities, the Audit Committee will keep
its policies and procedures flexible to best react to a changing environment.
Last Revised: February 26, 2004
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