UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
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14A-6(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SS.240.14A-12
Cache, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(4) AND 0-11.
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(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):
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(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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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:
CACHE, INC.
1440 BROADWAY
NEW YORK, NEW YORK 10018
(212) 575-3200
October 12, 2007
Dear Shareholder:
On behalf of the officers and directors of the Company, you are
cordially invited to attend the Cache, Inc. Annual Meeting of Shareholders to be
held at 10:00 a.m. on Tuesday, November 13, 2007, at our headquarters, 1440
Broadway, 5th Floor, New York, New York.
The Notice of Meeting and Proxy Statement on the following pages
cover the formal business of the meeting, which includes proposals (i) to elect
five named nominees as directors and (ii) to ratify the appointment of Mahoney
Cohen & Company, CPA, P.C. as Cache's auditors for the fiscal year ending
December 29, 2007.
The Board of Directors unanimously recommends that shareholders vote
in favor of each proposal. We strongly encourage all shareholders to participate
by voting their shares by Proxy whether or not they plan to attend the meeting.
Please sign, date and mail the enclosed Proxy as soon as possible. If you do
attend the Annual Meeting, you may still vote in person.
Sincerely,
/s/ Brian Woolf
------------------------------------
Brian Woolf
Chairman of the Board
CACHE, INC.
1440 BROADWAY
NEW YORK, NEW YORK 10018
--------------------
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 2007
--------------------
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of Cache, Inc. will be held on
Tuesday, November 13, 2007 at 10:00 a.m. local time, at our headquarters, 1440
Broadway, 5th Floor, New York, New York, 10018, for the purpose of considering
and acting upon the following proposals as set forth in the accompanying Proxy
Statement:
1. To elect five named nominees as Directors of the Company to serve
until the next Annual Meeting of Shareholders and until their
successors are elected and qualified.
2. To ratify the appointment of Mahoney Cohen & Company, CPA, P.C.,
as auditors of the Company for the fiscal year ending December
29, 2007.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on October 1,
2007 are entitled to notice of and to vote at the meeting or any adjournment
thereof.
Whether or not you plan to attend the Annual Meeting, please
complete, date and sign the enclosed Proxy and return it promptly to the Company
in the return envelope enclosed for your use, which requires no postage if
mailed in the United States. You may revoke your Proxy at any time before it is
voted by delivering to the Secretary of the Company a written notice of
revocation bearing a later date than the Proxy, by duly executing a subsequent
Proxy relating to the same shares of Common Stock and delivering it to the
Secretary of the Company, or by attending and voting at the Annual Meeting.
You are cordially invited to attend.
By Order of the Board of Directors,
/s/ Victor J. Coster
----------------------------------
Victor J. Coster
Secretary
October 12, 2007
CACHE, INC.
1440 BROADWAY
NEW YORK, NEW YORK 10018
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PROXY STATEMENT
--------------------
Accompanying this Proxy Statement is a Notice of Annual Meeting of
Shareholders and a form of Proxy for such meeting solicited by the Board of
Directors. The Board of Directors has fixed the close of business on October 1,
2007 as the record date for the determination of shareholders who are entitled
to notice of and to vote at the meeting or any adjournment thereof. The holders
of a majority of the outstanding shares of Common Stock present in person, or
represented by proxy, will constitute a quorum at the meeting. This Proxy
Statement and the enclosed Proxy are being sent to the shareholders of the
Company on or about October 12, 2007.
Only shareholders of record at the close of business on October 1,
2007 will be entitled to vote at the Annual Meeting. At the close of business on
such record date the Company had outstanding 15,672,329 shares of Common Stock,
par value $.01 per share ("Common Stock"). No other class of voting security of
the Company is issued and outstanding. Each share of Common Stock entitles the
holder to one vote. Shareholders do not have cumulative voting rights.
As of October 1, 2007, Mr. Andrew Saul, Ms. Norma Saul and certain
Saul family trusts (sometimes collectively referred to herein as the "Sauls")
owned of record an aggregate of 1,459,690 shares of Common Stock, representing
approximately 9.3% of the outstanding shares of Common Stock. See "Principal
Shareholders and Share Ownership by Management." The Sauls intend to vote their
Common Stock in favor of Proposals 1 and 2.
A Proxy that is properly submitted to the Company may be properly
revoked at any time before it is voted. Proxies may be revoked by (i) delivering
to the Secretary of the Company at or before the Annual Meeting a written notice
of revocation bearing a later date than the Proxy, (ii) duly executing a
subsequent Proxy relating to the same shares of Common Stock and delivering it
to the Secretary of the Company at or before the Annual Meeting, or (iii)
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation of a Proxy). With
respect to Proposal 1, unless authority to vote for all Directors or any
individual Director is withheld, all the shares represented by the Proxy will be
voted for the election of Directors as set forth in the Proxy Statement. Where a
shareholder has specified a vote for or against Proposal 2, such Proxy will be
voted as specified; if no direction is given, all the shares represented by the
Proxy will be voted in favor of the Proposal.
Under SEC rules, boxes and a designated blank space are provided on
the proxy card for shareholders to mark if they wish either to vote "for,"
"against" or "abstain" on one or more of the proposals, or to withhold authority
to vote for one or more of the Company's nominees for director. Florida law
requires the presence of a quorum for the annual meeting, defined as a majority
of the votes entitled to be cast at the meeting. Votes withheld from director
nominees and abstentions will be counted in determining whether a quorum has
been reached. Broker-dealer non-votes, which are defined in the third paragraph
below, are not counted for quorum purposes.
Assuming a quorum has been reached, a determination must be made as
to the results of the vote on each matter submitted for shareholder approval:
(1) the election of directors; and (2) the ratification of auditors. Director
nominees must receive a plurality of the votes cast at the meeting, which means
that a vote withheld from a particular nominee or nominees will not affect the
outcome of the meeting. In order to pass, the proposal to ratify the Company's
auditors must be approved by a majority of the votes cast on such matter.
Abstentions are not counted in determining the number of votes cast in
connection with the ratification of auditors.
Brokers who hold shares in street name have the authority to vote on
certain items when they have not received instructions from beneficial owners.
Brokers that do not receive instructions are entitled to vote on the election of
directors and ratification of auditors. Under applicable law, a broker non-vote
will have no effect on the outcome of the election of directors or the
ratification of auditors.
The cost of soliciting Proxies will be paid by the Company, which
will reimburse brokerage firms, custodians, nominees and fiduciaries for their
expenses in forwarding proxy material to the beneficial owners of the Company's
stock.
- 1 -
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO ANY SHAREHOLDER UPON
WRITTEN REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING
EXHIBITS BUT INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES) FOR THE FISCAL YEAR ENDED DECEMBER 30, 2006 AND/OR A COPY OF ANY OF
THE COMPANY'S QUARTERLY REPORTS ON FORM 10-Q OR CURRENT REPORTS ON FORM 8-K.
SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO: VICTOR COSTER, SECRETARY, CACHE,
INC., 1440 BROADWAY, NEW YORK, NEW YORK 10018.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THIS MEETING, PLEASE SIGN, DATE
AND MAIL THE PROXY PROMPTLY.
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ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors of the Company presently consists of the
following five members: Messrs. Andrew M. Saul, Brian Woolf, Gene G. Gage,
Morton J. Schrader and Arthur S. Mintz, each of whom is a nominee for
re-election.
Unless authority to vote on the election of all Directors or any
individual Director is specifically withheld by appropriate designation on the
face of the Proxy, the persons named in the accompanying Proxy will nominate as
Directors, and vote such Proxy for the election as Directors of, the persons
named below. If elected, such persons will serve as Directors until the next
Annual Meeting of Shareholders and until their successors are elected and
qualified.
Management does not contemplate that any of the nominees for Director
will be unable to serve, but if such a situation should arise, the persons named
in the accompanying Proxy will nominate and vote for the election of such other
person or persons as the Board of Directors may recommend.
NOMINEES FOR DIRECTORS
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ---- --- -------------------- -------------
BRIAN WOOLF.......... 58 CHAIRMAN OF THE BOARD AND CHIEF 2000
EXECUTIVE OFFICER (1)
ANDREW M. SAUL....... 60 PARTNER, SAUL PARTNERS (2) 1986
MORTON J. SCHRADER... 75 PRINCIPAL, PBS REALTY ADVISORS, LLC (3) 1989
ARTHUR S. MINTZ...... 62 CONSULTANT (4) 2002
GENE G. GAGE........ 60 FINANCIAL ADVISOR (5) 2004
- -----------------
(1) Mr. Woolf has served as our Chief Executive Officer and Chairman
of the Board since October 2000. From March 1999 to October 2000,
Mr. Woolf served as Vice President and General Merchandise
Manager for The Limited.
(2) Mr. Saul has served as one of our directors since 1986. Mr. Saul
also served as our Chairman of the Board from February 1993 to
October 2000. Since 1986, Mr. Saul has been a partner in Saul
Partners, an investment partnership.
(3) Mr. Schrader has served as one of our directors since 1989. Mr.
Schrader was the President of Abe Schrader Corp., a manufacturer
of women's apparel, from 1968 through March 1989. Since 1989, he
has been active as a real estate broker and is a principal of PBS
Realty Advisors.
(4) Mr. Mintz has served as one of our directors since September
2002. Mr. Mintz served as the President of Bees & Jam, Inc., an
apparel manufacturer, from 1971 until 2006. Since April 2007, Mr.
Mintz has been active as a consultant in the apparel industry.
(5) Mr. Gage has served as one of our directors since September 2004.
Since January 2002, Mr. Gage has served as the President and
Chief Executive Officer of Gage Associates, a firm which provides
financial planning and services to individuals and businesses.
From March 2000 to January 2002, Mr. Gage served as Chief
Executive Officer and as the director of ICDL-US, LLC, a company
providing computer literacy training skills for desktop software
applications. He is a certified public accountant, as well as a
certified financial planner.
- 3 -
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended December 30, 2006 ("Fiscal 2006"), the
Board of Directors held five meetings. Each then-current Director attended all
of such Board meetings. The Board of Directors has an Audit Committee, a
Nominating and Governance Committee, and a Compensation and Plan Administration
Committee. The Audit Committee, established in July 1989, currently consists of
Messrs. Arthur Mintz, Morton Schrader and Gene Gage. The Audit Committee held
four meetings in Fiscal 2006. Each then-current member of the Committee attended
all such Committee meetings.
Duties of the Audit Committee include meeting with the independent
accountants and certain personnel of the Company to discuss the planned scope of
their examinations, and the adequacy of internal controls and financial
reporting; reviewing the results of the annual examination of the financial
statements and periodic internal audit examinations; reviewing the services and
fees of the Company's independent accountants; authorizing special
investigations and studies; and performing any other duties or functions deemed
appropriate by the Board of Directors. The Board of Directors has determined
that Gene Gage is qualified to serve as the Audit Committee's financial expert
and Chairman. Mr. Gage is independent, as such term is defined in the Nasdaq
listing standards.
The Board of Directors has adopted a written charter for the Audit
Committee. The charter has not changed from the charter filed with our 2001
proxy statement and is available on our website at www.cache.com.
- 4 -
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is composed of three non-management directors.
All three members of the Audit Committee meet the independence and experience
requirements of Rule 4200(a)(15) of the NASDAQ Stock Exchange. Mr. Gene Gage has
served as Chairman of the Audit Committee since September 2004. He is a
certified public accountant and has over 30 years of financial experience.
During 2006, at each of its meetings, the Committee met with the
senior members of the Company's financial management team and our independent
auditors. The Committee's agenda is established by meetings with the Company's
independent auditors, at which candid discussions of financial management,
accounting and internal control issues took place.
The Committee reviews with the Company's financial managers and the
independent auditor's overall audit scopes and plans, the results of external
audit examinations, evaluations by the auditors of the Company's internal
controls and the quality of the Company's financial reporting.
Management has reviewed the audited financial statements in the
Annual Report with the Audit Committee including a discussion of the quality and
not just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements. In addressing the quality of management's accounting judgments,
members of the Audit Committee have asked whether statements of the Company have
been prepared in conformity with generally accepted accounting principles, and
have expressed to both management and auditors their general preference for
conservative policies when a range of accounting options is available.
In its meetings with representatives of the independent auditors, the
Committee asks them to address, and discuss their responses to, several
questions that the Committee believes are particularly relevant to its
oversight. These questions include:
o Are there any significant accounting judgments made by management
in preparing the financial statements that would have been made
differently had the auditors themselves prepared and been
responsible for the financial statements?
o Based on the auditors' experience, and their knowledge of the
Company, do the Company's financial statements fairly present to
investors, with clarity and completeness, the Company's financial
position and performance for the reporting period in accordance
with generally accepted accounting principles, and SEC disclosure
requirements?
o Based on the auditors' experience, and their knowledge of the
Company, has the company implemented internal controls and
internal audit procedures that are appropriate for the Company?
The Committee believes that, by thus focusing its discussions with
the independent auditors, it can promote a meaningful dialogue that provides a
basis for its oversight judgments. The Committee also discussed with the
independent auditors other matters required to be discussed by the auditors with
the Committee under Statement on Auditing Standards No. 61 (communication with
audit committees). The Committee received and discussed with the auditors their
annual written report on their independence from the Company and its management,
which is made under Independence Standards Board Standard No. 1 (independence
discussions with audit committees), and considered with the auditors whether the
provision of financial information systems design and implementation and other
non-audit services provided by them to the Company during 2006 was compatible
with the auditors' independence.
In performing all of these functions, the Audit Committee acts only
in an oversight capacity. The Committee does not complete its review prior to
the Company's public announcements of financial results and, necessarily, in its
oversight role, the Committee relies on the work and assurances of the Company's
management, which has the primary responsibility for financial statements and
reports, and of the independent auditors, who, in their report, express an
opinion on the conformity of the Company's annual financial statements to
generally accepted accounting principles.
- 5 -
In reliance on these reviews and discussions, and the report of the
independent auditors, the Audit Committee has recommended to the Board of
Directors, and the Board has approved, that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
30, 2006, for the filing with the Securities and Exchange Commission.
Audit Committee
Gene G. Gage, Chairman
Morton J. Schrader, Director
Arthur S. Mintz, Director
The Compensation and Plan Administration Committee was established in
July 1991 as the Plan Administration Committee to administer the Company's stock
option plans. In May 1993 it was renamed the Compensation and Plan
Administration Committee and delegated additional authority to determine the
remuneration arrangements for the three most senior executive officers and to
review and approve the remuneration arrangements for the Company's other
executive officers. It currently consists of Messrs. Andrew Saul, Arthur Mintz,
Morton Schrader and Gene Gage. The Compensation and Plan Administration
Committee met one time in Fiscal 2006. Each then-current member of the Committee
attended such meetings.
The Board of Directors adopted a written charter in August 2004 for
the Compensation and Plan Administration Committee, which is available on our
website at www.cache.com.
The Board of Directors established the Nominating and Governance
Committee in September 2004. The Committee currently consists of Messrs. Andrew
Saul, Gene Gage, Arthur Mintz and Morton Schrader. The Nominating and Governance
Committee is responsible for identifying, evaluating and recommending director
nominees to the Board of Directors.
The Nominating and Governance Committee will consider candidates for
the Board from any reasonable source, including stockholder recommendations. The
Nominating and Governance Committee does not evaluate candidates differently
based on who has made the proposal. Stockholders who wish to suggest qualified
candidates should write to Victor J. Coster, Corporate Secretary, at the
Company's headquarters' address. These recommendations should include detailed
biographical information concerning the nominee, his or her qualifications to be
member of the Board, and a description of any relationship the nominee has to be
a stockholder making the recommendation or to other stockholders of the Company.
A written statement from the candidate consenting to be named as a candidate
and, if nominated and elected, to serve as director, subject to the candidate's
due diligence of the Company, should accompany any such recommendation.
Stockholders who wish to nominate a director for election at an annual meeting
of stockholders of the Company must comply with the Company's By-Laws regarding
stockholder proposals and nominations.
While the Nominating and Governance Committee does not have minimum
qualification requirements for candidates, it does assess whether candidates
have good business judgment, high ethical standards, substantial experience in
the Company's line of business or other applicable fields such as science or
technology, and ability to prepare for and attend Board meetings, committee
meetings and stockholder meetings. The Nominating and Governance Committee also
considers whether candidates are independent and possess leadership qualities.
The Board of Directors has adopted a written charter for the
Nominating and Governance Committee, which is available on our website at
www.cache.com.
STOCKHOLDER COMMUNICATIONS
Company stockholders may communicate with the Board by addressing
their communications to one or more directors to our corporate headquarters at
1440 Broadway, 5th Floor, New York, NY 10018. The Company may screen such
communications to ensure that the Company forwards only material that is germane
to the Company's business to each director to whom the correspondence is
addressed.
- 6 -
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
PRINCIPAL OBJECTIVES DRIVING COMPENSATION PRACTICES
Our compensation philosophy, reflected in our compensation practices for
fiscal year 2006, was developed to drive the achievement of our two key business
objectives: consistent sales growth and consistent net income growth. We
designed our incentive compensation programs using performance metrics closely
tied to the achievement of these goals, as described below. We balanced our need
to attract and retain highly talented executives with our desire to reward
executives primarily for achieving performance targets. We accomplished this by
structuring a competitive compensation program with a fixed component of total
compensation and a significant, incentive-based component designed to motivate
and reward executives for contributions to the advancement of our key business
objectives.
We generally pay our executives annual base salaries as described below.
We design our compensation programs so that if targeted objectives are achieved,
total compensation to the executive will increase. "Total compensation" includes
the sum of base salary, short-term cash incentive compensation and equity
incentive compensation. Recognizing the importance of implementing
pay-for-performance practices, we also structure our compensation programs so
that if the Company's performance exceeds target levels, total compensation to
the executive may increase. If the Company, however, fails to achieve its
targeted objectives, total compensation will not increase. We may set target
compensation on an ad hoc basis when we believe that it is important to attract
or retain key executive officers. We will use tally sheets, as described below,
to assist us in measuring our compensation programs against our design
objectives. We will be assisted, starting in fiscal 2007, in these matters by a
compensation consultant, as described below.
We use both equity and cash in our incentive-based compensation. We
designed our short-term incentive compensation to reward executives for the
Company's achievement of annual goals and our long-term incentive compensation
to reward them based on longer term corporate performance. Our short-term
incentive compensation is paid in cash and our long-term incentive compensation
is primarily comprised of equity components. The Compensation Committee reviews
annually the allocation between the short-term and long-term and cash and equity
elements of compensation and determines the distribution based on the Company's
current business goals and competitive market practices.
Our Chief Executive Officer and our Chief Operating Officer each have an
employment agreement and our Executive Vice President of Sourcing and Production
has a letter agreement with the Company, each of which are more fully described
below. We offer minimal perquisites to our named executive officers. Our current
named executive officers participate in a broad-based, tax-qualified pension
plan on terms that do not favor such executives, and the Company does not offer
any supplemental retirement plans to its named executive officers.
PROCESSES FOR DETERMINING COMPENSATION FOR OUR NAMED EXECUTIVE OFFICERS
Compensation Committee-Working with our Compensation Consultant and Management
During fiscal year 2006, the Compensation Committee reviewed its
compensation practices and programs to ensure they were designed to drive the
attainment of the Company's key business objectives. As part of this process,
the Compensation Committee recently hired a nationally recognized compensation
consultant to provide the Committee with information regarding industry
compensation practices and developments and comparative data necessary to
evaluate executive compensation. The compensation consultant will also provide
executive compensation advice to the Company with the Compensation Committee's
authorization. The Compensation Committee will specify the services to be
performed by the consultant.
The compensation consultant will provide its views and make
recommendations to the Compensation Committee regarding executive compensation,
including that of the Chief Executive Officer. Our human resources staff will
meet regularly with the compensation consultant to ensure that it has the
compensation information it needs to advise the Compensation Committee. Although
the compensation consultant works closely with management and the Compensation
Committee, we do not believe that its independence is compromised.
Management regularly meets with the Compensation Committee to assist the
Committee in making compensation decisions regarding our executives. We believe
that since our management has extensive knowledge regarding our business, they
are in a position to provide valuable input. For example, our Chief Financial
Officer provides input relevant to setting performance goals and certifies to
the Compensation Committee the level of achievement of our performance targets
under
- 7 -
our Management Performance Compensation Plan (the "Performance Compensation
Plan"). Our Chief Executive Officer makes recommendations to the Committee
regarding the compensation of his direct reports.
Tally Sheets
As part of the Compensation Committee's annual evaluation of compensation
to our named executive officers, the Committee will review tally sheets setting
out each component of the executive's compensation, the aggregate amount of his
or her total compensation, and projected and historical compensation earned by
such person. The specific elements of compensation to be considered in the tally
sheets used by the Committee will include:
o base salary;
o annual cash incentive awards and any other bonuses, if applicable;
o equity and long-term cash incentive compensation;
o amounts realized upon the vesting of restricted stock and exercise of
stock options;
o the value of the Company's unvested restricted stock and unexercisable
stock options held by such executive officer;
o perquisites and other personal benefits;
o potential payments upon various termination scenarios, including
change in control; and
o any earnings under the Company's deferred compensation and pension
plans, if the executive participates.
The Compensation Committee's review of tally sheets will provide the
Committee with a formal mechanism through which the Committee is able to ensure
that the Company's compensation programs and practices are consistent with the
Company's compensation philosophy and its overall business objectives.
OUR INCENTIVE COMPENSATION PROGRAMS
Short-Term Cash Incentive Compensation
We provide our executives with short-term incentive compensation in the
form of an annual cash bonus under the Performance Compensation Plan. The
Compensation Committee has based the compensation plan objectives upon a
corporate net income target for overall corporate performance.
For fiscal year 2004, the Company as a whole did not meet its corporate
net income objectives. Based on the Company's performance during fiscal year
2004, the Company did not exceed its corporate net income target for fiscal 2004
and, accordingly, our current named executive officers did not receive a payout
for that year.
For fiscal year 2005, the Company paid its executives only a portion of
their target bonuses under the Performance Compensation Plan, since the Company
as a whole did not meet its corporate net income objectives, based on fourth
quarter performance. During the fourth quarter of fiscal 2005, the Company's
performance reached 100% of the fourth quarter fiscal 2005 corporate net income
targets.
For fiscal year 2006, the Company as a whole did not meet its corporate
net income objectives. Based on the Company's performance during fiscal year
2006, the Company did not exceed its corporate net income target for fiscal 2006
and, accordingly, our current named executive officers will not receive a payout
for that year.
We have established an incentive compensation matrix that sets out varying
levels of payment to be made to an executive based on the percentage of the
corporate net income and operating profit targets achieved. For the corporate
net income target and the operating profit target for the Company, the matrix
ranges from a minimum threshold of 80% of the target, at which the executive is
eligible to receive 50% of his or her individual target payout, and a maximum of
145% of the target, at which the executive is entitled to receive 200% of his or
her individual target payout.
-8-
From time to time, the Compensation Committee may exercise its discretion
to approve bonuses outside of the Performance Compensation Plan.
Long-Term Equity Incentive Compensation
In addition to cash incentive compensation, the Compensation Committee
awards equity grants. The Company believes that stock option awards further
align executives' interests with those of stockholders and focus management on
building long-term stockholder value.
We generally make equity grants to our named executive officers at the
time of their hire and review compensation policy annually. We also make grants
during other times of the year when required for new hires, promotions and other
business reasons. In determining the timing of equity grants, the Committee only
considers valid business purposes and does not take into account fluctuations in
the price of the Company's common stock.
The grant date of an equity award is determined as described below:
o if the award was approved at a special meeting of the Compensation
Committee, the date of that meeting; and
o if the award was made by the Chief Executive Officer under authority
delegated to her by the Compensation Committee, the date that he signs
a writing containing the key terms of the grant.
Notwithstanding the foregoing, if the award was made in connection with a
new hire, the grant date is the start date of employment of such person.
The exercise price for stock options is the fair market value of the
Company's common stock on the grant date, which is set as the closing price per
share of the common stock on the Nasdaq Stock Exchange for the trading day
immediately preceding the grant date. As a result, the options do not have any
intrinsic value to the executive unless the market price of the common stock
rises.
CHANGE IN CONTROL AND OTHER TERMINATION EVENTS
Severance
The Company has employment agreements with Mr. Woolf and Mr. Reinckens,
which were entered into on February 8, 2006, in connection with the expiration
of Mr. Woolf's previous agreement. This agreement provides for payments to be
made to Messrs. Woolf and Reinckens upon certain termination events, including a
Change in Control of the Company (as defined under their employment agreements).
During fiscal year 2006 our other current named executive officers did not have
employment agreements with the Company, except for the letter agreement with Mr.
Jacobson described below.
The Company has a letter agreement with Mr. Jacobson under which he is
entitled to receive a severance payment in an amount equal to his annual base
salary at the time of termination, payable over a 12-month period from the date
of termination.
Equity
No new incentive or non-qualified stock options were granted in fiscal
2006.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Code generally disallows deductions to publicly
traded companies for compensation paid to its named executive officers in excess
of $1.0 million in a taxable year, with certain exceptions for qualified
"performance-based compensation." The Company considers the potential
non-deductibility of certain compensation in making its compensation decisions.
For those types of compensation that can qualify as performance-based
compensation, the Company attempts to meet the qualification requirements.
- 9 -
SUMMARY COMPENSATION TABLE
The following sets forth the total compensation paid earned by Chief
Executive Officer (principal executive officer), the Chief Financial Officer
(principal financial officer) and the Company's other two most highly
compensated executive officers, collectively, the "Named Executive Officers",
for the past three years.
NAME AND PRINCIPAL OPTION ALL OTHER
POSITION FISCAL YEAR SALARY BONUS AWARDS (1) COMPENSATION (2) TOTAL
- ------------------ ------------- ----------- ------------ ------------ ---------------- -----------
Brian Woolf 2006 $ 716,346 $ 200,000 $536,458 $ 38,885 $1,491,689
Chairman and Chief
Executive Officer
Thomas E. Reinckens 2006 525,385 150,000 307,037 33,126 1,015,548
President and
Chief Operating
Officer
Margaret Feeney 2006 243,269 50,000 76,252 4,879 374,400
Executive Vice
President, Finance
and Chief
Financial Officer
Allan N. Jacobson 2006 $ 296,154 --- --- $6,769 $ 302,923
Executive Vice
President,
Sourcing and
Distribution (3)
(1) The amounts in these columns reflect the dollar amount of awards pursuant
to the Company's equity incentive plans recognized as compensation expense
for financial statement reporting purposes for the fiscal year ended
December 30, 2006 in accordance with Statement of Financial Accounting
Standards No. 123(R), Share-Based Payment, as interpreted by Securities and
Exchange Commission Staff Accounting Bulletin No. 107, ("SFAS No. 123(R)")
and thus may include amounts related to awards granted in and prior to
2006. Assumptions used in the calculation of these amounts for fiscal years
ended December 30, 2006 are included in footnote 10 to the Company's
audited financial statements for the fiscal year ended December 30, 2006 in
the Company's Annual Report on Form 10-K.
(2) Represents $17,298 for group medical insurance, $9,954 for long-term
disability insurance, $5,653 for executive life insurance, $1,857 for car
allowance, $4,123 for matching contributions made by the Company on behalf
of Mr. Woolf under the Company's 401(k) savings plan.
Represents $17,298 for group medical insurance, $6,872 for long-term
disability insurance, $3,717 for executive life insurance, $1,857 for car
allowance, $3,382 for matching contributions made by the Company on behalf
of Mr. Reinckens under the Company's 401(k) savings plan.
Represents $1,486 for car allowance, $3,393 for matching contributions
made by the Company on behalf of Ms. Feeney under the Company's 401(k)
savings plan.
Represents $6,769 for car and relocation allowances for Mr. Jacobson.
(3) Mr. Jacobson began employment with the Company on February 21, 2006.
- 10 -
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2006
The Company did not grant any new incentive or non-qualified stock
option awards during the fiscal year ended December 30, 2006.
The table below shows the number of shares of the Company's common
stock covered by exercisable and unexerciseable stock options held by the
Company's named executive officers on December 30, 2006.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS
--------------------------------------------------------
NUMBER OF NUMBER OF
SECURITIES SECURITIES
UNDERLYING UNDERLYING
UNEXERCISED UNEXERCISED OPTION OPTION
OPTIONS (#) OPTIONS (#) EXERCISE EXPIRATION
NAME EXERCISABLE UNEXERCISABLE PRICE ($) DATE
- ------ ----------- ------------- ---------- ----------
Brian Woolf 67,250 -- $4.69 April 12, 2012
232,750 131,250 (1) 12.65 July 22, 2013
34,250 15,750 (2) 15.17 January 22, 2014
Thomas E. Reinckens 6,328 -- 4.69 April 12, 2012
121,875 65,625 (1) 12.65 July 22, 2013
36,750 15,750 (2) 15.17 January 22, 2014
Margaret J. Feeney 27,550 15,750 (1) 12.65 July 22, 2013
9,000 11,000 (3) 11.53 May 3, 2015
- --------------
(1) This award vests on July 22, 2007.
(2) This award vests on January 22, 2008.
(3) This award may vest, subject to performance vesting, in two equal
installments of 5,000 shares on each of December 31, 2007 and 2008, with
the remaining 1,000 options vesting on May 3, 2009.
- 11 -
The table below shows the number of shares of the Company's common
stock acquired by each named executive officer during fiscal year 2006 upon the
exercise of stock options.
OPTION EXERCISES FOR FISCAL YEAR 2006
OPTION AWARDS
----------------------------------------
NUMBER OF SHARES VALUE REALIZED
ACQUIRED ON EXERCISE (#) ON EXERCISE($)
NAME ---------------------- -------------
-----
Brian Woolf 182,500 $3,471,843
Thomas E. Reinckens 39,922 696,731
Margaret J. Feeney 5,450 65,011
Allan N. Jacobson --- ---
CACHE 401(K) SAVINGS PLAN
The Cache 401(K) Savings Plan is a tax-qualified retirement plan generally
available to all eligible employees upon completion of a 12-month period during
which the employee completes 1,000 hours of service. Employees may defer up to
18% of his or her annual salary or a annual maximum contribution of $15,000,
whichever is less, during the calendar year. In addition, the Company matches
the first 1.25% of the first 3% deferred by each eligible employee during the
calendar year.
- 12 -
PAYMENTS AND ENTITLEMENTS UPON CHANGE IN CONTROL
AND OTHER TERMINATION EVENTS
The following is a description of the specific circumstances relating
to termination of employment and change in control of the Company that will
trigger payments to each named executive officer and a calculation of the
estimated payments to such officers as a result of the occurrence of such events
had they occurred on December 30, 2006, the end of the Company's fiscal year.
BRIAN WOOLF
The Company has a three-year employment agreement with Mr. Woolf,
which was entered into on February 8, 2006. This agreement provides for payments
to be made to Mr. Woolf upon certain termination events, including a "Change in
Control" of the Company (generally defined as (i) the acquisition of 50% or more
of Company common stock, (ii) a change in the majority of the Board of Directors
not approved by at least 50% of the incumbent directors or (iii) the occurrence
of certain reorganizations, mergers or consolidations involving the Company).
Under Mr. Woolf's employment agreement, if any of the following
termination events (the "Termination Events") occurs:
o Mr. Woolf's employment is terminated by the Company without "Cause"
(generally defined as conviction for the commission of a felony;
dishonesty; refusal to follow directions of the Board; gross nonfeasance;
breach of confidentiality or restrictive covenant provisions; or certain
other instances of willful misconduct);
o Mr. Woolf's employment is terminated by Mr. Woolf for Good Reason (as
defined below); or
o Mr. Woolf's employment is terminated due to Disability (which entails his
inability to perform his duties as a result of physical or mental
incapacity for a period of 6 consecutive months).
In the case of a termination due to Disability, the Company shall
have no further liability to Mr. Woolf, except for any unpaid salary and
benefits accrued to the date of termination. In the event of Mr. Woolf's
Disability, and until Mr. Woolf reaches the age of 65, Mr. Woolf is entitled to
receive payments under the Company's applicable short-term and long-term
disability plans.
During the term of Mr. Woolf's employment agreement, the Company is
required to maintain a supplemental life insurance policy on behalf of Mr.
Woolf. This policy provides for a death benefit to his beneficiary of no less
than three times annual salary, the proceeds of which would be paid upon his
death.
If following a Change in Control, Mr. Woolf's employment is
terminated without Cause or he terminates his employment for Good Reason, then
Mr. Woolf is entitled to receive a lump-sum cash severance payment equal to two
times his annual salary, at the time of termination.
Mr. Woolf has "Good Reason" to terminate his employment with the
Company six months after a Change in Control.
Upon a Termination Event, all time-vesting stock options granted to
Mr. Woolf will fully vest.
In the case of a Change in Control, regardless of whether his
employment is terminated, all stock option awards granted to Mr. Woolf will vest
and will become exercisable in accordance with the stock option award agreements
under which such options were granted.
Mr. Woolf is subject to non-solicitation and non-competition
covenants during his employment, during the period in which he receives
severance payments and, in the case where the Company terminates his employment
for Cause or Mr. Woolf terminates his employment without Good Reason, for the
following 24 months.
Assuming the occurrence of the following termination events and/or
change in control on December 30, 2006 (the end of the Company's 2006 fiscal
year), Mr. Woolf would be entitled to receive the additional payments set out in
the table below:
- 13 -
POTENTIAL PAYMENTS TO BRIAN WOOLF UPON THE OCCURRENCE OF CERTAIN EVENTS
Change in
Control of Change in
Termination Company Control of
Termination by the Termination Termination Termination without Company with
Executive's by the Executive by the due to the upon the the the
Component of Voluntary Company for Good Company Executive's Executive's Executive's Executive's
Compensation Termination for Cause Reason without Cause Disability Death Termination Termination
- ------------ ------------- ------ ------- ------------ ---------- --------- ------------ ------------
Cash Severance -- -- -- $1,519,712 -- -- -- $1,519,712
(base salary)
Stock Options (1) -- -- -- -- -- -- -- $722,325 $722,325
Accelerated
Health & -- -- -- $36,259 -- -- -- $ 36,259
Welfare
Other -- -- -- -- $1,215,000 (3) $2,175,000 (2) -- --
Total -- -- -- $1,155,971 $1,215,000 $2,175,000 $722,325 $2,278,296
(1) For the table above as well as for all the tables that follow in this
section entitled, "Potential Payments upon Change in Control or Other
Termination Events", for the stock options, the value represents the number
of the option shares outstanding for the executive multiplied by the
difference between the Company's 2006 fiscal year end stock price and the
option's exercise price.
(2) Represents the death benefit payable to Mr. Woolf's beneficiary under basic
and supplemental life insurance policies.
(3) Represents payments under the Company's short-term and long-term disability
plans.
- 14 -
THOMAS E. REINCKENS
The Company has a three-year employment agreement with Mr. Reinckens,
which was entered into on February 8, 2006. This agreement provides for payments
to be made to Mr. Reinckens upon certain termination events, including a "Change
in Control" of the Company (generally defined as (i) the acquisition of 50% or
more of Company common stock, (ii) a change in the majority of the Board of
Directors not approved by at least 50% of the incumbent directors or (iii) the
occurrence of certain reorganizations, mergers or consolidations involving the
Company).
Under Mr. Reinckens employment agreement, if any of the following
termination events (the "Termination Events") occurs:
o Mr. Reinckens' employment is terminated by the Company without "Cause"
(generally defined as conviction for the commission of a felony;
dishonesty; refusal to follow directions of the Board; gross
nonfeasance; breach of confidentiality or restrictive covenant
provisions; or certain other instances of willful misconduct);
o Mr. Reinckens' employment is terminated by Mr. Reinckens for Good
Reason (as defined below); or
o Mr. Reinckens' employment is terminated due to Disability (which
entails his inability to perform his duties as a result of physical or
mental incapacity for a period of 6 consecutive months).
In the case of a termination due to Disability, the Company shall
have no further liability to Mr. Reinckens, except for any unpaid salary and
benefits accrued to the date of termination. In the event of Mr. Reinckens'
Disability, and until Mr. Reinckens reaches the age of 65, Mr. Reinckens is
entitled to receive payments under the Company's applicable short-term and
long-term disability plans.
During the term of Mr. Reinckens' employment agreement, the Company
is required to maintain a supplemental life insurance policy on behalf of Mr.
Reinckens. This policy provides for a death benefit to his beneficiary of no
less than three times annual salary, the proceeds of which would be paid upon
his death.
If following a Change in Control, Mr. Reinckens' employment is
terminated without Cause or he terminates his employment for Good Reason, then
Mr. Reinckens is entitled to receive a lump-sum cash severance payment equal to
two times his annual salary, at the time of termination.
Mr. Reincken has "Good Reason" to terminate his employment with the
Company six months after a Change in Control.
Upon a Termination Event, all time-vesting stock options granted to
Mr. Reinckens will fully vest.
In the case of a Change in Control, regardless of whether his
employment is terminated, all stock option awards granted to Mr. Reinckens will
vest and will become exercisable in accordance with the stock option award
agreements under which such options were granted.
Mr. Reinckens is subject to non-solicitation and non-competition
covenants during his employment, during the period in which he receives
severance payments and, in the case where the Company terminates his employment
for Cause or Mr. Reinckens terminates his employment without Good Reason, for
the following 24 months.
Assuming the occurrence of the following termination events and/or
change in control on December 30, 2006 (the end of the Company's 2006 fiscal
year), Mr. Reinckens would be entitled to receive the additional payments set
out in the table below:
- 15 -
POTENTIAL PAYMENTS TO THOMAS E. REINCKENS UPON THE OCCURRENCE OF CERTAIN EVENTS
Change in
Control of Change in
Company Control of
Termination Termination Termination Termination without Company with
Executive's by the Termination by by the due to the upon the the the
Component of Voluntary Company for the Executive Company Executive's Executive's Executive's Executive's
Compensation Termination Cause for Good Reason without Cause Disability Death Termination Termination
- ------------ ------------- ------ ------------- ------------ ---------- --------- ------------ ------------
Cash Severance -- -- -- $1,110,962 -- -- -- $1,110,962
(base salary)
Stock Options -- -- -- -- -- -- -- $427,247 $427,247
Accelerated
Health & Welfare -- -- -- $36,259 -- -- -- $ 36,259
Other -- -- -- -- $1,285,100 (1) $1,590,000 (2) -- --
Total -- -- -- $1,147,221 $1,285,100 $1,590.000 $427,247 $1,574,468
(1) Represents payments under the Company's short-term and long-term disability
plans.
(2) Represents the death benefit payable to Mr. Reinckens' beneficiary under
basic and supplemental life insurance policies.
OTHER NAMED EXECUTIVE OFFICERS
MARGARET J. FEENEY
Upon a Change in Control of the Company, in accordance with the terms
of the Company's 2000 and 2003 Stock Option Plans, all stock options granted to
the named executive officer automatically vest.
The Company maintains on behalf of each executive a basic life
insurance policy, the proceeds of which are payable upon the death of the
executive.
Assuming the occurrence of the following termination events and/or
change in control of the Company on December 30, 2006 (the end of the Company's
2006 fiscal year), each named executive officer will be entitled to receive the
additional payments set out in the respective tables below.
The following table includes the additional payments to be made to
Ms. Feeney upon the occurrence of the specified events.
POTENTIAL PAYMENTS TO MS. FEENEY UPON THE OCCURRENCE OF CERTAIN EVENTS
Change in
Control of Change in
Company Control of
Termination Termination Termination Termination without Company with
Executive's by the Termination by by the due to the upon the the the
Component of Voluntary Company for the Executive Company Executive's Executive's Executive's Executive's
Compensation Termination Cause for Good Reason without Cause Disability Death Termination Termination
- ------------ ------------- ------ ------------- ------------ ---------- --------- ------------ ------------
Cash Severance -- -- -- -- -- -- -- --
(base salary)
Stock Options -- -- -- -- -- -- $263,614 $263,614
Accelerated
Health & Welfare -- -- -- -- -- -- -- --
Other -- -- -- -- -- $250,000 (1) -- --
Total -- -- -- -- -- $250,000 $263,614 $263,614
(1) Represents payments under basic life insurance policy.
- 16 -
ALLAN N. JACOBSON
As described in the "Compensation Discussion and Analysis" section of
this proxy statement, Mr. Jacobson has a letter agreement with the Company under
which, if the Company terminates his employment for any reason other than for
"cause", prior to March 1, 2007, he is entitled to receive a severance payment
in an amount equal to his annual base salary at the time of termination, payable
over a12-month period from the date of termination. Under the letter agreement,
he is required to sign a general release in favor of the Company in order to
receive these severance payments.
The following table includes the additional payments to be made to
Mr. Jacobson upon the occurrence of the specified events:
POTENTIAL PAYMENTS TO MR. JACOBSON UPON THE OCCURRENCE OF CERTAIN EVENTS
Change in Change in
Termination Termination Termination Termination Termination Control of Control of
Executive's by the by the by the due to the upon the Company without Company with
Component of Voluntary Company Executive Company Executive's Executive's the Executive's the
Compensation Termination for Cause for Good without Disability Death Termination Executive's
Reason Cause Termination
- ------------ ------------ ------ ------------- ------------ ---------- --------- -------------- ------------
Cash Severance -- -- -- $350,000 -- -- -- $350,000
(base salary)
Stock Options -- -- -- -- -- -- -- --
Accelerated
Health & Welfare -- -- -- -- -- -- -- --
Other -- -- -- -- -- $350,000 (1) -- --
Total -- -- -- $350,000 -- $350,000 -- $350,000
(1) Represents payments under basic life insurance policy.
- 17 -
DIRECTOR COMPENSATION
The Board determines and reviews director compensation annually. In
its review, the Board considers compensation paid to directors at similarly
situated companies and the time commitments required of the directors. The Board
will also receive advice and recommendations from an outside compensation
consultant regarding director compensation, starting in fiscal 2007.
Mr. Woolf, who is a Director and employee of the Company does not
receive any compensation for serving on the Board of Directors of the Company.
Directors who are not employees of the Company generally receive an annual
retainer of $20,000, payable in monthly installments.
The following Table lists the compensation paid to the Company's
non-executive directors during fiscal year 2006.
DIRECTOR COMPENSATION FOR FISCAL YEAR 2006
FEES EARNED OR ALL OTHER
NAME PAID IN CASH ($) COMPENSATION ($) TOTAL ($)
- ------------------------ ------------------ ----------------- ---------
Gene G. Gage $ 20,000 $ -- $ 20,000
Arthur S. Mintz 20,000 -- 20,000
Andrew M. Saul -- 11,930 (1) 11,930
Morton J. Schrader 20,000 -- 20,000
(1) Mr. Saul is a non-employee director, who previously has served as Chairman
of the Board of Directors of the Company. He is compensated by
participation in our group medical insurance program at a cost of $11,930
in fiscal 2006.
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
Our Articles of Incorporation require us, to the extent permitted by
law, to indemnify our directors and officers against any personal liabilities
incurred as a result of their positions as directors or officers of our company.
We maintain directors' and officers' insurance providing
indemnification for our directors, officers and management employees for
liabilities arising as a result of their services to us.
The indemnification provision in our articles of incorporation may
discourage stockholders from bringing a lawsuit against our directors for breach
of their fiduciary duty. They may also reduce the likelihood of derivative
litigation against our directors and officers, even though such an action, if
successful, might otherwise benefit us and our stockholders. Furthermore, a
stockholder's investment may be adversely affected to the extent we pay the cost
of settlement and damage awards against any of our directors and officers under
indemnification provisions. We believe that these indemnification provisions are
necessary to attract and retain qualified directors and officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation and Plan Administration Committee (the "Compensation
Committee") presently consists of Messrs. Andrew Saul, Arthur Mintz, Morton
Schrader and Gene Gage. No member of our Compensation Committee has been an
employee of ours. None of our executive officers serves as a member of the board
of directors or compensation committee of any other entity that has one or more
executive officers serving as a member of our board of directors of our
Compensation Committee.
- 18 -
REPORT OF THE COMPENSATION AND PLAN ADMINISTRATION COMMITTEE
The Compensation and Plan Administration Committee has reviewed and
discussed the Compensation Discussion and Analysis included in this Proxy
Statement with management and, based on such review and discussions, the
Compensation and Plan Administration Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy Statement.
The Compensation Committee's Report shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this Compensation Committee's Report by reference, and
shall not otherwise be deemed filed under such Acts.
Compensation and Plan
Administration Committee
Andrew M. Saul, Chairman
Morton J. Schrader, Director
Arthur S. Mintz, Director
Gene G. Gage, Director
CODE OF ETHICS
The Company has adopted a Code of Ethics that applies to all of the
Company's directors, officers and employees. The Code of Ethics is available on
our website at www.cache.com. We will disclose any amendment to, other than
technical, administrative or non-substantive amendments, or waiver of its code
of ethics granted to a director or executive officer by filing a Form 8-K
disclosing the amendment or waiver within two business days.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
See Also "Executive Compensation--Compensation Committee Interlocks
and Insider Participation."
As of October 1, 2007, the Sauls beneficially owned in the aggregate
1,459,690 shares of the Company's outstanding Common Stock, representing
approximately 9.3% of the Company's outstanding Common Stock. See "Principal
Shareholders and Share Ownership by Management."
- 19 -
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP BY
CERTAIN BENEFICIAL OWNERS AND BY MANAGEMENT
The following table sets forth certain information as of September 15,
2007 concerning the beneficial ownership of the Company's common stock by (i)
each stockholder who is known by the Company to own beneficially in excess of 5%
of the outstanding common stock, (ii) each current director, (iii) the executive
officers listed in the Summary Compensation Table above, and (iv) all current
directors and executive officers as a group. Except as otherwise indicated, each
stockholder listed below has sole voting and investment power with respect to
his/her shares of common stock. The Securities and Exchange Commission has
defined the term "beneficial ownership" to include any person who has or shares
voting power or investment power with respect to any security or who has the
right to acquire beneficial ownership of any security within 60 days.
NO. OF
SHARES OF PERCENT
NAME OF BENEFICIAL OWNER COMMON STOCK OF CLASS
- ---------------------------------------------------------------- --------------- ----------
Royce and Associates LLC (1) 1,686,750 10.8%
Andrew M. Saul and affiliates (2) 1,459,690 9.3%
Vardon Capital, LLC and affiliates (3) 1,281,381 8.2%
Palo Alto Investors, LLC (4) 1,242,600 7.9%
Brian Woolf (5) 479,000 2.9%
Thomas E. Reinckens (5) 253,078 1.5%
Margaret J. Feeney (5) 57,750 *
Philip Morris (5) --- *
Adrienne Kantor (5) --- *
Robert Kantor (5) --- *
Morton J. Schrader (5) 19,500 *
Gene G. Gage (5) --- *
Arthur S. Mintz (5) --- *
All Current Executive Officers and Directors as a Group (12 persons) 2,269,018 13.8%
- ----------------------------
* Less than 1%
(1) In an amended Schedule 13G filed with the Securities and Exchange
Commission on May 7, 2007, Royce and Associates, LLC, reported beneficial
ownership of 1,686,750 shares and sole and the sole voting power and sole
dispositive power over 1,686,750 common shares. The address for Royce and
Associates, LLC is: Royce and Associates, 1414 Avenue of the Americas, New
York, NY 10019.
(2) In an amended Schedule 13G filed with the Securities and Exchange
Commission on November 21, 2006, Andrew M. Saul, Joseph E. Saul and Norma
G. Saul reported beneficial ownership of 1,459,690 shares, of which Andrew
M. Saul has sole voting power to vote or direct the vote of 425,630 shares.
As of April 2007, Norma G. Saul now has sole voting power to vote or direct
the vote of 702,460 shares previously controlled by Joseph E. Saul as well
as sole voting power to vote or direct the vote 311,600 shares. The address
for each of Andrew M. Saul and Norma G. Saul is: c/o Saul Partners, LP, 9
West 57th Street, New York, NY 10019.
(3) In a Schedule 13G filed with the Securities and Exchange Commission on
September 12, 2007, Vardon Capital Management, LLC. ("Vardon"); Vardon
Capital, LLC; Richard W. Shea, Jr.; Vardon Partners, LP; Vardon Partners
II, LP; Vardon Continuum Fund, LP; Vardon International, Ltd.; Vardon
International BP, Ltd.; Vardon Focus Fund, LP; Vardon Focus Fund II, LP;
Vardon Focus Fund International, Ltd.; Vardon Focus International BP, Ltd.,
reported beneficial ownership of 1,281,381 shares. Vardon is the beneficial
owner of, and has shared voting power over, 1,281,381. The address for the
Domestic Funds is 120 West 45th Street, 17th Floor, New York, NY 10036. The
address for the Offshore Funds is Admiral Financial Center, P.O. Box 32021
SMB, 90 Fort Street, Grand Cayman, Grand Cayman Islands, B.W.I.
(4) In an amended Schedule 13G filed with the Securities and Exchange
Commission on May 11, 2007, Palo Alto Investors, LLC; Palo Alto Investors;
William Leland Edwards; Palo Alto Small Cap Master Fund, L.P.; and Palo
Alto Small Cap Fund, L.P., reported beneficial ownership of 1,242,600
shares, shared voting power and shared dispositive power over 1,242,600
shares. The address for Palo Alto Investors, LLC is: 470 University
Avenue, Palo Alto, CA 94301.
- 20 -
(5) The shares listed include shares subject to stock options that are or will
become exercisable within 60 days of September 15, 2007 as follows: Mr.
Woolf 465,500 shares; Mr. Reinckens, 230,578 shares and Ms. Feeney, 52,300
shares. The address for Cache officers and directors is: c/o Cache, Inc.,
1440 Broadway, 5th Floor, New York, NY 10018.
See Item 5 in Part II of our 10-K filed on March 16, 2007 for information
regarding "Securities Authorized For Issuance Under Equity
Compensation Plans."
- 21 -
RATIFICATION OF THE APPOINTMENT OF MAHONEY COHEN & COMPANY AS AUDITORS
(PROPOSAL 2)
The Board of Directors has appointed the firm of Mahoney Cohen &
Company, CPA, P.C. to examine the financial statements of the Company for the
year ending December 29, 2007, subject to ratification by shareholders. Deloitte
& Touche LLP was employed by the Company, as its independent auditors for Fiscal
2005 and Fiscal 2006. Shareholders are asked to ratify the action of the Board
of Directors in making such appointment.
The Board of Directors recommends a vote for ratification. The
affirmative vote of a majority of the votes cast with respect to this proposal
is required for the ratification of the appointment of auditors. The Sauls
intend to vote shares of Common Stock they own in favor of Proposal 2.
Representatives of Mahoney Cohen will attend the Annual Meeting. They
also will have the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
The Company notified Deloitte & Touche LLP that it would not
re-appoint Deloitte & Touche LLP as the Company's independent registered
accountants for fiscal 2007 and Deloitte & Touche would cease to represent the
Company as its auditor upon completion of the audit of the Company's financial
statements as of and for the year ended December 30, 2006 (fiscal 2006), and
management's assessment of the effectiveness of internal control over financial
reporting and the effectiveness of internal control over financial reporting as
of December 30, 2006, and the issuance of their reports thereon. Deloitte &
Touche LLP performed audits of the Company's consolidated financial statements
for the fiscal years ended December 31, 2005 (fiscal 2005) and December 3, 2006
(fiscal 2006). Deloitte's reports for these periods did not contain an adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the two most recent fiscal years and the interim period
through March 17, 2007, (i) there have been no disagreements with Deloitte on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Deloitte, would have caused it to make reference to the subject
matter of the disagreements in connection with its report, and (ii) there were
no "reportable events" (as defined in Item 304(a)(1)(v) of Regulation S-K).
The following table sets forth the aggregate fees billed to the
Company for the fiscal years ended December 31, 2005 (Fiscal 2005) and December
30, 2006 (fiscal 2006) by KPMG LLP and Deloitte & Touche LLP. Deloitte and
Touche LLP replaced KPMG LLP during the first quarter of Fiscal 2005.
FISCAL 2005 FISCAL 2006
FEES AMOUNT AMOUNT
- ----- ------------ ------------
AUDIT FEES $320,000 $295,400
AUDIT-RELATED FEES $403,000 $633,000
TAX FEES $ -- $ --
ALL OTHER FEES $ -- $ --
TOTAL FEES $723,000 $928,400
The Audit Committee of the Board of Directors has considered whether
the provision of these services is compatible with maintaining the principal
accountants' independence.
Audit fees includes fees for annual audit and reviews of the
Company's quarterly reports on Form 10-Q, as well as statutory audits and audits
of subsidiaries.
Audit-related fees include fees for audits of benefit plans and
audits related to a secondary stock offering, as well as testing of internal
controls for Sarbannes Oxley compliance during Fiscal 2005 and Fiscal 2006.
- 22 -
All other fees include fees for evaluations and advisory services.
The Audit Committee implemented a procedure to require pre-approval of all
services performed by the Independent Auditors.
Consequently during Fiscal 2005 and 2006, any project for which
management hired the principal accountants to perform was presented to the Audit
Committee, along with an estimate of the costs to be incurred. The Audit
Committee would review and approve the estimate. The Audit Committee was updated
by management, if additional costs were incurred. All projects were performed by
the independent accountants, and were approved by the Audit Committee, during
fiscal 2005 and 2006.
OTHER BUSINESS
Management knows of no business to be brought before the meeting
other than Proposals 1 and 2 in the Notice of Annual Meeting. If any other
proposals come before the meeting, it is intended that the shares represented by
Proxies shall be voted in accordance with the judgment of the person or persons
exercising the authority conferred by the Proxies.
Financial statements of the Company, the Company's certified public
accountants' report thereon and management's discussion and analysis of the
Company's financial condition and results of operations are contained in the
Company's 2006 Annual Report to Shareholders, a copy which has been sent to each
shareholder of record along with a copy of this Proxy Statement. The Annual
Report is not to be regarded as proxy soliciting material or a communication by
means of which any solicitation is to be made.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the next Annual
Meeting (to be held in 2008) must be received by the Company on or before May 5,
2008 in order to be included in the Proxy Statement and Proxy for that meeting.
The mailing address of the Company for submission of any such proposal is given
on the first page of the Proxy Statement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain officers and holders of more than 10% of the
Company's Common Stock to file with Securities and Exchange Commission and the
NASDAQ Stock Exchange reports of their ownership and changes in the ownership of
Common Stock.
Based solely upon a review of copies of Section 16(a) reports
furnished to the Company pursuant to Rule 16a-3(c) promulgated under the
Exchange Act, the Company is not aware of any failure of any officer, director
or beneficial owner of more than 10% of the Common Stock to timely file with the
Commission any Form 3, 4 or 5 in respect of the Company during fiscal 2006,
except for the following instances: Officer Lisa Decker filed one late Form 4;
Officer Joanne Marselle filed one late Form 4; and Officer Allan Jacobson filed
one late Form 3.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS ARE REQUESTED TO SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS
POSSIBLE, WHETHER OR NOT THEY EXPECT TO ATTEND THE 2007 ANNUAL MEETING IN
PERSON.
By Order of the Board of Directors,
/s/ Victor J. Coster
---------------------------
Victor J. Coster
Secretary
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CACHE, INC.
ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 13, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brian Woolf and Thomas E. Reinckens,
and each of them, with full power of substitution, Proxies of the undersigned to
vote all shares of Common Stock of Cache, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
on November 13, 2007, and all adjournments thereof, with all the powers the
undersigned would possess if personally presented, and particularly, without
limiting the generality of the foregoing, to vote and act as follows:
1. Election of five directors of the Company.
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY vote for
(except as marked to the contrary below) all nominees listed below
Andrew M. Saul, Brian Woolf, Gene G. Gage, Arthur S. Mintz, Morton J. Schrader.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THE NOMINEE'S NAME IN THE SPACE BELOW.)
- -------------------------------------------------------------------------------
2. Ratification of the appointment of Mahoney Cohen & Company, CPA, P.C.
as the Company's independent auditors for the fiscal year ending December 29,
2007.
___ FOR ___ AGAINST ___ ABSTAIN
3. In their discretion, upon such matters as may properly come before the
meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF EACH DIRECTOR NAMED HEREIN AND "FOR"
ITEM 2.
Dated ______________________, 2007
(please fill in date)
Note: Please sign as name appears. Joint
owners should each sign.
-----------------------------
Signature of Shareholder
-----------------------------
Signature of Shareholder
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION,
PLEASE SIGN WITH FULL CORPORATION NAME BY DULY
AUTHORIZED OFFICER OR OFFICERS.
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