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 [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
A. T. Cross Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than 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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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[A.T. Cross Company Logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 2004
TO THE SHAREHOLDERS OF A.T. CROSS COMPANY:
Notice is hereby given that the annual meeting of shareholders of A.T.
Cross Company (the "Company") will be held on Thursday, April 22, 2004 at 10:00
a.m. at the offices of the Company, One Albion Road, Lincoln, Rhode Island
02865, for the following purposes:
1. Fixing the number of directors at nine, of which three shall be Class A
directors and six shall be Class B directors (by holders of Class A and Class B
common stock voting together as a single class).
2. Electing three Class A directors (by holders of Class A common stock
only) and six Class B directors (by holders of Class B common stock only) to
hold office until the next annual meeting of shareholders or until their
successors are duly elected and qualified.
3. Approving the amendment to the Omnibus Incentive Plan (by holders of
Class A and Class B common stock voting together as a single class).
4. Transacting such other and further business as may properly come before
said meeting upon which the holders of Class A common stock or Class B common
stock, respectively, are entitled to vote.
The stock transfer books will not be closed. The close of business on March
3, 2004 has been fixed as the record date for determining shareholders entitled
to vote at the annual meeting or any adjournments or postponements thereof, and
only holders of record of Class A common stock or Class B common stock as of
that time are entitled to receive notice of and to vote at said meeting or any
adjournments or postponements thereof.
By order of the Board of Directors
/s/ Tina C. Benik
Tina C. Benik
Vice President, Legal and Human
Resources
Corporate Secretary
March 24, 2004
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT AS PROMPTLY AS
POSSIBLE. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE
USED.
[A.T. CROSS LOGO]
ONE ALBION ROAD
LINCOLN, RHODE ISLAND 02865
PROXY STATEMENT
FOR ANNUAL SHAREHOLDERS' MEETING
APRIL 22, 2004
This statement is furnished in connection with the accompanying proxy
which is solicited by the Board of Directors of A.T. Cross Company (the
"Company") from holders of Class A common stock of the Company for use at the
annual meeting to be held April 22, 2004 at 10:00 a.m. at the offices of the
Company, One Albion Road, Lincoln, Rhode Island 02865. Any shareholder giving a
proxy may revoke the same prior to its exercise by filing a later proxy with the
Company, by attending the meeting and voting in person, or by giving notice in
writing or in person to the Corporate Secretary. If not revoked, the persons
named in the accompanying proxy will vote such proxy in the manner specified
therein and, in the discretion of the persons named, for or against any matter
upon which holders of Class A common stock are entitled to vote which properly
comes before the meeting and which has been omitted from the proxy and proxy
statement. The cost of solicitation of proxies, including the cost of
reimbursing brokerage houses and other custodians, nominees or fiduciaries for
forwarding proxies and proxy statements to their principals, will be borne by
the Company. Solicitation may be made in person or by telephone or telegraph by
officers or regular employees of the Company, who will not receive additional
compensation. In addition, the Company has retained Georgeson Shareholder
Communications Inc., New York, N.Y., to aid in the solicitation of proxies. The
charges of such firm, estimated at $6,000, plus expenses, will be paid by the
Company. This proxy statement and the enclosed form of proxy are expected to be
sent to shareholders on or about March 24, 2004.
A copy of the Company's annual report for the year 2003 containing
financial statements for the year ended January 3, 2004 is also enclosed, but is
not to be considered a part of the proxy soliciting material.
As of March 3, 2004 the Company had outstanding 13,220,369 shares of
Class A common stock and 1,804,800 shares of Class B common stock. Only
shareholders of record at the close of business on that date are entitled to
vote at the annual meeting. Shareholders shall be entitled to one vote for each
share held on the foregoing record date with respect to matters on which shares
of that class are eligible to vote.
SHAREHOLDERS' PROPOSALS
Any proposal of a shareholder intended to be presented at the next
annual meeting of the Company, scheduled to be held April 28, 2005, must be
received by the Company's Corporate Secretary not later than November 27, 2004
for inclusion in the proxy statement and form of proxy relating to that meeting.
Any shareholder proposal intended to be presented at the next annual meeting of
the Company without being included in the proxy statement and form of proxy
relating to such meeting must be received by the Company's Corporate Secretary
not later than February 10, 2005.
VOTING RIGHTS
Holders of Class A common stock have the right to elect one-third of
the number of directors from time to time fixed by the holders of Class A and
Class B common stock voting together as a single class; provided, however, that
if the total number of directors is not evenly divisible by three, then the
holders of Class A common stock have the right to elect that number of directors
which is the nearest whole number when the total number of directors is divided
by three. Holders of Class B common stock have the right to elect the remaining
directors. It is proposed that the number of directors for the ensuing year be
fixed at nine (see "Election of Directors" on page 4), and if this proposal is
adopted, holders of Class A common stock will have the right to elect three
directors.
In addition, holders of Class A and Class B common stock vote together
as a single class:
a) For the reservation in the future of shares to be issued pursuant
to options
1
granted or to be granted to directors, officers or employees; and
b) With respect to the acquisition of assets or shares of any other
company if:
(1) An officer, director or holder of ten percent or more of
either Class A or Class B common stock has an interest in the
transaction;
(2) The transaction would, in the reasonable judgment of the
Board of Directors, presently or potentially increase by
nineteen and one-half percent or more the aggregate of the
Class A or Class B common stock outstanding immediately prior
to such transaction; or
(3) The transaction would involve the issuance of any Class A or
Class B common stock and in the reasonable judgment of the
Board of Directors the value of the consideration furnished
by the Company is nineteen and one-half percent or more of
the aggregate market value of all Class A and Class B common
stock outstanding immediately prior to such transaction.
If the consummation of any transaction described above would, with
respect to either the Class A common stock or the Class B common stock, result
in a change in the designations, preferences, limitations or relative rights of
the shares of such class or have certain other effects as specified in the
Company's articles, the holders of Class A and Class B common stock vote as
separate classes on such transaction.
Except as stated above or otherwise required by law, all voting power
is vested in the holders of Class B common stock so long as any shares of Class
B common stock are outstanding.
VOTING PROCEDURES
The numbers of Class A and Class B directors will be fixed by vote of the
holders of a majority of the Class A and Class B shares present at the annual
meeting in person or represented by proxy, voting as a single class. The Class A
directors will be elected in each case by vote of the holders of a majority of
the Class A shares present or represented at the meeting, and the Class B
directors will be similarly elected by the holders of a majority of the Class B
shares. The amendment to the Omnibus Incentive Plan will be approved by vote of
the holders of a majority of the Class A and Class B shares present at the
Company's annual meeting in person or represented by proxy, voting as a single
class.
Shares represented by proxies which are marked "abstain" with respect to
fixing the number of directors or "withheld" with respect to the election of any
particular nominee for director, will be counted as shares present and entitled
to vote, and accordingly any such marking of a proxy will have the same effect
as a vote against the proposal to which it relates. The Board of Directors does
not know of any matters which will be brought before the meeting other than
those specifically set forth in the accompanying Notice of Annual Meeting. If
any other matters are presented to the meeting, the persons named in the
enclosed proxy have discretionary authority to vote and will vote all proxies
with respect to such matters in accordance with their judgment.
Under the rules of the American Stock Exchange, on which the Class A shares
are listed, brokers who hold Class A shares in street name have the authority to
vote such shares on certain items, including fixing the number of and electing
directors, unless they have received instructions from the beneficial owners to
the contrary, in which case the shares are to be voted or the votes relating
thereto withheld, as directed by the beneficial owners. Such rules also provide
that brokers may not vote shares held in street name on certain other matters
without specific instructions from their customers. The approval of the
amendment to the Company's Omnibus Incentive Plan is a matter that requires
brokers to obtain specific instructions from their customers prior to the broker
voting the shares. Shares subject to such "broker non-votes" will not be treated
as shares entitled to vote on the matters to which they relate and will have no
effect on the outcome of the voting on such matters.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 3, 2004 (except as otherwise
noted) certain information concerning the ownership of shares of Class A or
Class B common stock of the Company by (i) each person or group known by the
Company to beneficially own more than 5% of the outstanding Class A or Class B
common stock, (ii) each director and nominee for director, (iii) each executive
officer named in the Summary Compensation Table below, and (iv) all directors
and executive officers as a group. Except as otherwise indicated, each person
named has sole investment and voting power with respect to the securities shown.
<Table>
<Caption>
NUMBER OF SHARES PERCENT OF CLASS
------------------------------------- ------------------
NAME CLASS A CLASS B(1) CLASS A CLASS B
---- --------- ---------- ------- -------
Russell A. Boss(2) 1,716,846(3)(4)(5)(6) 1,804,800(4)(5) 13.0% 100%
Marjorie B. Boss(7) 850,931(3)(5) 902,400(5) 6.4% 50%
Noel M. Field(8) 831,000(5) 902,400(5) 6.3% 50%
Edward P. Pieroni(9) 726,000(4) 902,400(4) 5.5% 50%
John B. Costello(10) 726,000(4) 902,400(4) 5.5% 50%
Dimensional Fund Advisors, Inc.(11) 863,300 -- 6.5% --
Bradford R. Boss(12) 174,963(6) 1.3% --
John E. Buckley(13) 42,778(6) -- * --
Bernard V. Buonanno, Jr. 27,724(6) -- * --
Edward J. Cooney 900 -- -- --
Galal P. Doss(14) 4,233,950(6) -- 32.0% --
Terrence Murray 46,068(6)(15)(16) -- * --
Andrew J. Parsons 10,000(6) -- * --
James C. Tappan 25,501(6) -- * --
David G. Whalen(17) 713,117(6) -- 5.4% --
John T. Ruggieri 143,277(6) -- * --
Stephen A. Perreault 101,753(6) -- * --
Sondra L. Wellmerling 70,667(6) -- * --
Peter J. Leon 34,000(6) -- * --
All directors and executive officers
as a group (17 persons) 7,590,299(18) 1,804,800 57.4% 100%
</Table>
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(1) The Class B common stock is convertible share for share into Class A common
stock at any time at the option of the holder. If all of the Class B shares
were converted into Class A shares, Mr. R. Boss, Mrs. M. Boss, Mr.
Costello, Mr. Pieroni and Mr. Field would be the beneficial owners of
23.40%, 12.42%, 11.53%, 11.53% and 12.28%, respectively, of the outstanding
Class A shares.
(2) Mr. R. Boss's address is One Albion Road, Lincoln, Rhode Island 02865.
(3) Excludes shares beneficially owned by spouse.
(4) Mr. R. Boss, Mr. Costello and Mr. Pieroni are co-trustees of the W. Russell
Boss, Jr. Trust A. The co-trustees jointly exercise investment and voting
powers with respect to the assets of the trust. The 726,000 shares of Class
A common stock and 902,400 shares of Class B common stock held by such
trust are included in the amounts above for each of the co-trustees.
(5) Mr. R. Boss, Mrs. M. Boss (the wife of Mr. R. Boss) and Mr. Field, Jr. are
co-trustees of the W. Russell Boss, Jr. Trust B. The co-trustees jointly
exercise investment and voting powers with respect to the assets of the
trust. The 831,000 shares of Class A common stock and 902,400 shares of
Class B common stock held by such trust are included in the amounts above
for each of the co-trustees.
(6) Includes the following Class A shares subject to options exercisable within
60 days: Mr. B. Boss -- 24,128; Mr. R. Boss -- 24,128; Mr. Buckley --
24,128; Mr. Buonanno -- 24,224; Mr. Doss -- 8,000; Mr. Murray -- 24,068;
Mr. Parsons -- 8,000; Mr. Tappan -- 22,501; Mr. Whalen -- 642,685; Mr.
Ruggieri -- 125,599; Mr. Perreault -- 86,833; Ms. Wellmerling -- 68,667;
and Mr. Leon -- 34,000.
(7) Mrs. M. Boss's address is One Albion Road, Lincoln, Rhode Island 02865.
(8) Mr. Field's address is 1500 Fleet Center, Providence, Rhode Island 02903.
(9) Mr. Pieroni's address is One State Street, Suite 200, Providence, Rhode
Island 02908.
(10) Mr. Costello's address is c/o Andsagar, Bartlett & Pieroni, L.L.P., One
State Street, Suite 200, Providence, Rhode Island 02908.
(11) Information based on its Schedule 13G filed with the SEC on February 6,
2004, which reported ownership as of December 31, 2003. The address of
Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11(th) Floor, Santa
Monica, California 90401.
(12) Mr. B. Boss's address is One Albion Road, Lincoln, Rhode Island 02865.
(13) Mr. Buckley is not standing for reelection to the Board of Directors in
2004.
(14) Mr. Doss's address is One Albion Road, Lincoln, Rhode Island 02865.
(15) Excludes shares held by FleetBoston Financial Corporation in various
fiduciary capacities.
(16) Includes 5,000 shares held by Murray and Young Associates LLC.
(17) Mr. Whalen's address is One Albion Road, Lincoln, Rhode Island 02865.
(18) Includes 1,297,882 shares subject to options exercisable within 60 days;
and 1,557,000 shares held under trusts as to which there is shared voting
and investment power.
* Less than 1%.
3
ELECTION OF DIRECTORS
It is proposed to fix the number of directors at nine, of which three will
be designated "Class A Directors" and six will be designated "Class B
Directors". It is also proposed to elect three Class A directors (by holders of
Class A common stock only) and six Class B directors (by holders of Class B
common stock only) to hold office until the next annual meeting of shareholders
or until their successors are duly elected and qualified. Proxies will be voted
for the nominees set forth below unless authorization to do so is withheld. All
nominees except Mr. Cooney are currently directors of the Company. Should any
nominee become unavailable for any reason to accept nomination or election as a
director, the persons named in the proxy will vote for the election of such
other person or persons as management may recommend unless the shareholders vote
to reduce the authorized number of directors. The terms of all directors will
expire when their successors are duly elected at the annual meeting of
shareholders scheduled to be held April 28, 2005. The following tables reflect
information as of January 1, 2004.
<Table>
<Caption>
PRINCIPAL OCCUPATION DIRECTOR
NOMINEE AGE DURING PAST FIVE YEARS SINCE OTHER DIRECTORSHIPS(1)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A DIRECTORS
Galal P. Doss 49 Chairman and Chief Executive Officer, Fam- 2000
ily Cosmetics, S.A.E. (an Egyptian company
listed on the Egyptian Stock Exchange).(2)
Andrew J. Parsons 60 Senior Partner and Director, McKinsey & 2001
Company, a global strategic management
consulting firm (retired December 2000);
Member, McKinsey Advisory Council; Chair-
man and Chief Executive Officer, Gulliver
Growth Partners LLC, a management advi-
sory company.(2)
James C. Tappan 68 President, Tappan Capital Partners (equity 1994
investment firm).(2)
CLASS B DIRECTORS
Bradford R. Boss 70 Chairman of the Board and Chief Executive 1960
Officer to April 1993; thereafter Chairman
of the Board to November 14, 1999;
thereafter Chairman Emeritus.(3) (4)
Russell A. Boss 65 President and Chief Operating Officer to 1962
April 1993; thereafter President and Chief
Executive Officer to November 14, 1999;
thereafter Chairman of the
Board.(3) (4) (5)
David G. Whalen 46 President and Chief Executive Officer.(3) 1999
Bernard V. 65 Senior Partner, Edwards & Angell, LLP, 1986 Old Stone Corporation
Buonanno, Jr. Providence, RI (attorneys-at-law);
Partner, Riparian Partners, Ltd.,
Providence, RI. (investment banking
firm).(5) (6) (7)
Edward J. Cooney 56 Vice President and Treasurer, Nortek, --
Inc., an international designer,
manufacturer and marketer of building
products (since August 2001); Chief
Financial Officer, Speidel, Inc., a
worldwide distributor of watchbands and
watchband attachments (2000-2001); Execu-
tive Vice President -- Sales and
Marketing, Amtrol Inc., a producer and
marketer of water storage, treatment,
heating, expansion, flow control and
related products (1998-2000).
Terrence Murray 64 Chairman and Chief Executive Officer, 1982 FleetBoston Financial Corpora-
FleetBoston Financial Corporation tion; CVS Corporation; Choice-
(diversified financial services Point Inc.; Air Products and
corporation) to December 31, 2001; Chemicals, Inc.
thereafter Chairman, FleetBoston Financial
Corporation (retired January 1, 2003).(7)
</Table>
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See footnotes on page 5.
4
(1) Includes only companies with a class of securities registered pursuant
to Section 12 or subject to the requirements of Section 15(d) of the
Securities Exchange Act of 1934 and any company registered as an
investment company under the Investment Company Act of 1940.
(2) Member of Audit Committee.
(3) Member of Executive Committee.
(4) Bradford R. Boss and Russell A. Boss are brothers.
(5) Russell A. Boss and Bernard V. Buonanno, Jr. are cousins by marriage.
(6) Edwards & Angell, LLP performed legal services for the Company in 2003
and is expected to perform legal services for the Company in 2004.
(7) Member of Compensation Committee.
CORPORATE GOVERNANCE
Board of Director and Shareholder Meetings: The Board of Directors met four
times during the fiscal year ended January 3, 2004 ("fiscal year 2003"). All
directors attended at least 75% of the Board of Directors meetings and
applicable committee meetings in fiscal year 2003. The Company has adopted a
policy that requires every member of the Board of Directors to make every effort
to attend the Company's Annual Meeting. All members of the Board of Directors
attended the Company's 2003 Annual Meeting.
Board of Director Independence: The Board of Directors has reviewed the
relationship that each current and nominee director has with the Company and
with other parties. Only those directors who do not have any of the categorical
relationships that preclude them from being independent within the meaning of
applicable American Stock Exchange rules ("AMEX Rules") and who the Board of
Directors affirmatively determines have no relationships that would interfere
with the exercise of independent judgment in carrying out the responsibilities
of a director, are considered to be independent directors. The Board of
Directors has reviewed a number of factors to evaluate the independence of each
of its members. These factors include its members' current and historic
relationships with the Company and its competitors, supplier and customers;
their relationships with management and other directors; the relationships their
current and former employers have with the Company; and the relationships
between the Company and other companies of which the Board members are directors
or executive officers. After evaluating these factors, the Board of Directors
has determined that the following current and nominee directors are independent
directors within the meaning of applicable AMEX Rules: Bernard V. Buonnanno, Jr;
Edward J. Cooney; Galal P. Doss; Terrence Murray; Andrew J. Parsons; James C.
Tappan.
Independent members of the Board of Directors are scheduled to meet at
least once per year in executive session without management, but will meet as
often as is deemed necessary.
Shareholder Communications: The Company's shareholders may communicate
directly with the members of the Board of Directors or the individual chairman
of standing Board of Directors committees by writing directly to those
individuals at the following address: One Albion Road, Lincoln, RI 02865. The
Company's general policy is to forward, and not to intentionally screen, any
mail received at the Company's corporate offices that is sent directly to an
individual unless the Company believes the communication may pose a security
risk.
Code of Ethics: The Board of Directors originally adopted a Code of
Business Conduct and Ethics (the "Code of Ethics") in 1996. This Code of Ethics
applies to all of the Company's employees, officers and directors, including its
principal financial officers. A link to the Code of Ethics is on the Company's
website at www.Cross.com under the Company's Investor Relations section.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a standing Audit Committee, Compensation
Committee, and Executive Committee. The designated independent directors,
identified above, serve as the Company's Nominating Committee as permitted under
AMEX Rules. The Executive Committee is comprised of Messrs. B. Boss, R. Boss and
Whalen.
Audit Committee. The current members of the Audit Committee are James C.
Tappan, who serves as Chairman, Galal Doss and Andrew Parsons. The proposed
members of the Audit Committee for 2004 are Messrs. Tappan and Parsons and
Edward J. Cooney (the "2004 Audit Committee"). The Board has determined that the
members of the 2004 Audit Committee are independent within the meaning of
applicable AMEX Rules and Section 10A(m)(3) of the Securities Exchange Act of
1934 (the "Exchange Act"). The Board of Directors has determined that Edward J.
Cooney, a director nominee, is an "audit committee financial expert" as defined
in Item 401(h) of Regulation S-K.
The Audit Committee has oversight responsibility for the establishment and
maintenance of an effective financial control environment, for oversee-
5
ing the procedures for evaluating the system of internal accounting control and
for evaluating audit performance. In addition to the responsibilities listed
above, the Audit Committee has responsibilities and authority necessary to
comply with Rule 10A-3(b)(2),(3),(4), and (5) under the Exchange Act. These and
other aspects of the Audit Committee's authority are more particularly described
in the Audit Committee Charter adopted by the Board of Directors in 2000, and as
amended in 2002 and 2004. The Charter and amendments are available on the
Company's website, www.Cross.com, in the Investor Relations section. See also
the "Report of the Audit Committee" on page 14.
Compensation Committee. The members of the Compensation Committee are Mr.
Murray, who serves as Chairman, and Mr. Buonanno, Jr. The Board has determined
that the members of the Compensation Committee are independent within the
meaning of applicable AMEX Rules. The Compensation Committee met three times
during fiscal year 2003. The Compensation Committee has responsibility for
developing, overseeing and implementing the overall compensation policy for the
Company including, subject to full Board approval, the implementation of an
incentive compensation plan for the Company. The Compensation Committee also
makes recommendations to the Board of Directors concerning compensation,
including incentive compensation, of the Chief Executive Officer and all other
executive officers. The Compensation Committee administers the Company's equity
incentive plan. See "Report to Shareholders on Compensation Matters" on page 8.
Nominating Committee. In February of 2004, the Board of Directors
designated by resolution the identified (See "Corporate Governance -- Board of
Director Independence" on page 5) independent current and nominee directors (the
"ID") to act as the Company's Nominating Committee effective as of April 22,
2004. Pursuant to the board resolution, the ID has the power to select a
Chairman and to adopt its own operating rules and procedures. The ID does not
have a charter.
The ID is responsible for evaluating and recommending individuals for
election or reelection to the Board of Directors, including those
recommendations submitted by the Class A and Class B shareholders, and is also
responsible for determining, with input from the Board, the desired competencies
and attributes for Board members that will best meet the current and future
needs of the Company.
It is the policy of the ID that candidates for director possess the highest
personal and professional integrity, have demonstrated superior ability and
sound business judgement, and possess skills and expertise appropriate to meet
the Company's needs and advance the long-term interests of the shareholders.
The ID's process for identifying and evaluating nominees is as follows:
(1) in the case of incumbent directors whose terms of office are set
to expire, the ID reviews such directors' overall service to the Company
during their term, including the number of meetings attended, level of
participation, quality of performance, any change of status and any related
party transactions with the Company during the applicable time period; and
(2) in the case of new director candidates, the ID generally first
conducts such inquiries into the backgrounds and qualifications of possible
candidates as the ID deems necessary or appropriate after considering the
composition and needs of the Board of Directors.
The ID discusses and considers such candidates' qualifications, including
whether the nominee is independent for purposes of Exchange Act Rule 10A-3(b)
and the AMEX Rules, and selects candidates for recommendation to the Board of
Directors by majority vote of the ID. In seeking potential nominees, the ID uses
its network of contacts to identify potential candidates, but may also engage,
if it deems appropriate, a professional search firm, at the Company's expense.
The ID is authorized to adopt and implement such additional procedures and
processes to discharge its responsibilities as it deems appropriate.
The ID considers director candidates recommended by shareholders provided
the shareholders follow the procedures set forth below. The ID does not intend
to alter the manner in which it evaluates candidates, including the criteria set
forth above, based on whether the candidate was recommended by a shareholder or
otherwise.
The ID considers all bona fide candidates for Class A director positions
recommended by Class A shareholders holding Class A common stock of the Company.
The ID considers all bona fide candidates for Class B director positions
recommended by Class B shareholders holding Class B common stock of the Company.
The ID considers such Class A and Class B candidates using the same screening
criteria as are applied to all other potential nominees for election, provided
that the shareholder nominations
6
are submitted in a timely and complete manner, in conformity with the rules and
regulations promulgated by the Securities and Exchange Commission and the
American Stock Exchange and with applicable provisions of the Company's by-laws,
as they may be amended from time to time, and as set forth below.
For nominees for election to the Board of Directors proposed by
shareholders to be considered, the following information concerning each nominee
must be timely submitted in accordance with the required procedures: (1) the
nominee's name, age, business address, residence address, principal occupation
or employment, the class and number of shares of the Company's capital stock the
nominee beneficially owns, the nominee's qualifications to serve as a director
of the Company and any other information relating to the nominee that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
thereunder; and (2) as to the shareholder proposing such nominee, that
shareholder's name and address, the class and number of shares of the Company's
capital stock that the shareholder beneficially owns, a description of all
arrangements and understandings between the shareholder and the nominee or any
other person or persons (including their names) pursuant to which the nomination
is made, a representation that the shareholder intends to appear in person or by
proxy at the meeting to nominate the person named in its notice and any other
information relating to the shareholder that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Section 14 of
the Exchange Act and the rules and regulations thereunder. The notice must also
be accompanied by a written consent of the proposed nominee to being named as a
nominee and to serve as a director if elected.
DIRECTOR COMPENSATION
Members of the Company's Board of Directors who are not employees of the
Company were compensated for their services during 2003 at the rate of $15,000
per annum, plus $1,000 for each Board meeting attended. During 2003, the Board
of Directors held four meetings. In addition, non-employee members of the Audit,
Compensation and Executive Committees received $800 ($1000 in the case of the
committee chair) for each committee meeting attended.
Non-employee directors also automatically receive non-qualified stock
options pursuant to the Company's Omnibus Incentive Plan. The number of options
granted is determined every two years by benchmarking the size of option grants
in other similarly situated companies. Companies are chosen to be benchmarked
against based on revenue levels. Options to directors under the Omnibus
Incentive Plan are granted with exercise prices equal to the fair market value
of the Class A common stock on the date of grant. In 2003, all non-employee
Board members received options to purchase 4,000 shares of Class A common stock.
APPROVAL OF OMNIBUS INCENTIVE PLAN AMENDMENT
Commencing in 2004, the compensation for non-employee members of the Board
of Directors will be $25,000 (the "Retainer"), plus $1,000 for each Board
meeting attended. Committee fees will be $800 per meeting for members of the
Compensation and Executive Committees and $1,500 per meeting for members of the
Audit Committee. The Chairmen of the Compensation and Executive Committees each
will receive $1,000 per meeting; the Chairman of the Audit Committee will
receive $2,500 per meeting. The Omnibus Incentive Plan (the "Plan") was
originally approved by the shareholders in April 1998 and amended in 2000 with
shareholder approval to increase the number of shares reserved for awards or
options granted under the Plan. Currently the Plan only permits the automatic
grant of non-qualified stock options to non-employee directors; no other equity
based grants or payments are permitted under the Plan to non-employee directors.
The Board of Directors is recommending amendments to the Plan to eliminate the
annual automatic stock option grant to non-employee directors and to permit the
issuance or grant of other equity based payments or awards to non-employee
directors.
If approved by the Company's shareholders at the 2004 annual meeting, the
Plan will be amended to provide that 60% of the Retainer will be paid in Class A
common stock of the Company (the "Mandatory Shares"). Non-employee directors may
elect to receive the balance of the Retainer and any supplemental fees for
committee chair positions and Board and committee meeting fees in Class A common
stock. The number of shares of Class A common stock to be issued in lieu of any
compensation will be determined by dividing the amount required or elected to be
paid in Class A common stock by the fair market value of the Class A common
stock on the date the compensation is otherwise payable. Directors may not sell
or otherwise transfer the Mandatory Shares for a period of three years following
the last day of the fiscal year in which the Mandatory Shares were issued. In
the event that a
7
director leaves the Board, he may not sell or otherwise transfer the Mandatory
Shares for a period of twelve months following the date that he ceases to be a
director. The amendment also permits other equity based payments or awards to be
made to non-employee directors (employee directors are already permitted to
receive other awards under the Plan) within the limits of the Plan.
NEW PLAN BENEFITS
OMNIBUS INCENTIVE PLAN
Assuming no increase in the Retainer, the following table sets forth the
annual dollar value that the non-employee directors will receive under the
amended Omnibus Incentive Plan.
<Table>
<Caption>
DOLLAR NUMBER
NAME & POSITION VALUE ($) OF UNITS
--------------- --------- --------
Non-Executive Director
Group...................... 120,000(1) (2)
</Table>
- ------------------------------------------------------------
(1) Dollar value may be greater if individual non-employee directors elect to
take all or a portion of their Retainers (that portion not represented by
the Mandatory Shares) in Class A common stock.
(2) The number of units will be determined by dividing the amount required or
elected to be paid in Class A common stock by the fair market value of the
Company's Class A common stock on the date the compensation is otherwise
payable.
REPORT TO SHAREHOLDERS ON
COMPENSATION MATTERS
The 2003 total compensation of the President and Chief Executive Officer of
the Company was established by the members of the Compensation Committee and
submitted to the Board of Directors for its approval. See also "Compensation
Committee Interlocks and Insider Participation" on page 9, and "Committees of
the Board of Directors" and "Compensation Committee" on page 5. The 2003
compensation of all other executive officers of the Company was either set by,
or reviewed and approved by, the President and Chief Executive Officer with
input from the Company's Human Resources Department, and reviewed with the
Compensation Committee.
The elements of compensation for the President and Chief Executive Officer
consist of base pay, annual incentive bonus and long-term incentives. The
compensation for this position was based on three primary factors:
-- The performance of the executive in meeting key strategic objectives,
including increasing shareholder value.
-- The external competitiveness of the Company's pay levels with those of
other companies with similar revenues and scope of operations.
-- The internal pay equity that exists among individual executives and
other Company employees.
The Compensation Committee is privy to external compensation data through
the Company's participation in, and analysis of, periodic compensation surveys
conducted by independent consulting firms and associations, including but not
limited to Towers-Perrin and Hewitt Associates, which report on compensation
paid to other executives at companies of similar size. There are large numbers
of participating companies in the various survey groups. The Compensation
Committee reviewed the survey information which had been extrapolated using
single regression analysis. Factors considered included, but were not limited
to, corporate sales, company assets, shareholders' equity, return on equity,
board membership, and years of service. In addition, the Compensation Committee
utilized survey data to gauge the Company's competitive position with other
companies with respect to bonus and stock option grants.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 paid for any
fiscal year to the corporation's chief executive officer and four other most
highly compensated executive officers as of the end of any fiscal year. However,
the statute exempts qualifying performance-based compensation from the deduction
limit if certain requirements are met. The Board and the Compensation Committee
currently intend to structure performance-based compensation, including stock
option grants and annual bonuses, to executive officers who may be subject to
Section 162(m) in a manner that satisfies those requirements.
The Board and the Compensation Committee reserve the authority to award
non-deductible compensation in other circumstances as they deem appropriate.
Because of ambiguities and uncertainties as to the application and
interpretation of Section 162(m) and the regulations issued thereunder, no
assurance can be given, despite the Company's efforts, that compensation
intended by the Company to satisfy the requirements for deductibility under
Section 162(m) does in fact do so.
The following is a more specific discussion of each compensation component:
BASE SALARY:
The Compensation Committee targets its base pay for the Chief Executive
Officer at the 50th to
8
65th percentile of executive officers in organizations of approximately the same
size (less than $500 million in annual sales) and scope of company operations.
Based on survey data, the Compensation Committee believes the base pay for the
Chief Executive Officer has been approximately within this range for the last
several years.
Mr. Whalen's base salary for 2003 remained at $450,000 which was the same
level as his base salary for 2002. Mr. Whalen forewent a base pay increase in
2003 as part of the Company's efforts to control expenses.
The remaining four highest paid executives also did not receive a base pay
increase in 2003.
BONUS:
Bonus payments to executives for 2003 performance were governed by the
Executive Compensation Program approved by the Compensation Committee and the
Board of Directors for 2003. All of the highest paid executives were
participants in the plan except for Mr. Whalen. Mr. Whalen's bonus is determined
by the Compensation Committee considering attainment of predetermined
performance objectives. The annual incentive payments to eligible executives are
designed to provide rewards based on meeting approved business plans.
Performance measures are determined based on specific job responsibilities and
may include one or more of the following measures: operating income before taxes
(OIBT), sales, return on assets and inventory level management at the corporate,
territory and regional levels. Individual performance goals may also be assigned
to the executives.
Under the program, performance objectives for 2003 were set based on the
Company's operating plan for 2003. None of the named officers earned a bonus for
2003 performance based on the benchmarks and other objectives in the 2003 plan.
In its discretion, the Compensation Committee may reward participants beyond the
provisions of the plan. In an exercise of that discretion, Mr. Ruggieri was
awarded a $30,000 bonus for 2003 performance related to the acquisition of Costa
Del Mar.
The Company analyzes its total cash compensation (base salary plus bonuses)
in relation to other similarly sized companies and targets the 75th percentile
as a competitive norm assuming the maximum bonus percentage is earned. Applying
the most recent survey data available to the Company (2003), the total cash
compensation for the named officers as a group, as a result of not making the
maximum bonus, was approximate to the 50th percentile compared to other
companies included in the surveys.
LONG-TERM INCENTIVES:
The Company has relied upon grants under the Omnibus Incentive Plan to
provide named executive officers and other managers with an ownership position
in the Company to create a long-term incentive to increase shareholder value. No
named executives received stock option grants in 2003.
The foregoing report is presented by the following:
2003 Compensation Committee
Terrence Murray, Chairman
Bernard V. Buonanno, Jr.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION
As indicated under "Report to Shareholders on Compensation Matters" above,
the 2003 compensation of David G. Whalen, a member of the Board of Directors of
the Company, was established by the Compensation Committee and submitted to the
Board of Directors for approval. The Compensation Committee is comprised of
Terrence Murray and Bernard V. Buonanno, Jr. The compensation of the remaining
executive officers of the Company was either set by, or reviewed and approved
by, Mr. Whalen with input from the Company's Human Resources Department, and
reviewed with the Compensation Committee.
There are no Compensation Committee interlocks.
9
EXECUTIVE COMPENSATION
The following table sets forth certain information for the last three
fiscal years with respect to the Company's Chief Executive Officer and the four
other most highly compensated executive officers during 2003.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION(2)
------------------------------------- ------------ ---------------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS
------------------ ---- ------ ----- --------------- ------------
David G. Whalen 2003 $450,000 -- $ 4,320 -- $6,000
President and Chief 2002 450,000 $225,000 4,320 125,000 5,500
Executive Officer 2001 450,000 380,000 46,129(3) 100,000 5,100
John T. Ruggieri 2003 220,000 30,000 3,600 -- 6,000
Sr. Vice-President/ 2002 220,000 25,000 3,600 25,000 5,500
Chief Financial Officer 2001 220,000 67,414 3,600 18,000 5,100
Sondra L. Wellmerling 2003 184,000 -- 3,600 -- 6,000
Sr. Vice President, 2002 184,000 13,800 3,600 20,000 5,500
Marketing and New 2001 182,406 63,108 11,957(4) 18,000 5,100
Product Development
Stephen A. Perreault 2003 182,000 -- 3,600 -- 6,000
Vice President, Operations 2002 182,000 25,000 3,600 25,000 5,500
2001 180,473 99,000 3,600 18,000 5,100
Peter J. Leon 2003 180,000 -- 3,600 -- 5,580
Vice President, Sales and 2002 176,250 6,000 3,600 30,000 5,500
Marketing, Americas 2001 160,000 50,509 24,959(5) 18,000 362
</Table>
- --------------------------------------------------------------------------------
(1) Amounts listed under All Other Compensation consist of 401(k) contributions
for the named individuals.
(2) Except as otherwise indicated, amounts listed under Other Annual
Compensation consist of tax reimbursement payments made to the named
individuals relating to amounts paid to these individuals as automobile
allowances.
(3) Mr. Whalen's Other Annual Compensation for 2001 includes a tax reimbursement
payment of $26,808 relating to amounts paid to him in connection with
relocation expenses.
(4) Ms. Wellmerling's Other Annual Compensation for 2001 includes reimbursement
of relocation expenses of $7,292 and a tax reimbursement payment of $1,065
relating to the relocation expenses paid.
(5) Mr. Leon's Other Annual Compensation for 2001 includes reimbursement of
relocation expenses of $1,450 and a tax reimbursement payment of $19,545
relating to the relocation expenses paid in 2000.
10
STOCK OPTIONS
The following tables set forth, as to the Chief Executive Officer and the
four other most highly compensated executive officers of the Company,
information with respect to stock option grants in 2003, options exercised
during 2003 and year-end values of unexercised options. No options were
exercised by these officers in 2003.
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted to the Chief Executive Officer and the four
other most highly compensated executive officers of the Company in 2003.
OPTION VALUES AT FISCAL YEAR END
<Table>
<Caption>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(1)
------------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
David G. Whalen 642,685(2) 116,666 $1,120,868 $0
John T. Ruggieri 125,599 22,666 81,488 0
Sondra L. Wellmerling 68,667 19,333 101,625 0
Stephen A. Perreault 86,833 22,666 60,623 0
Peter J. Leon 34,000 26,000 19,515 0
</Table>
- ---------------
(1) Based on the mean between the high and low trading prices of the Class A
common stock on January 3, 2004 ($6.72) minus the exercise price.
(2) Includes 653 options granted to Mr. Whalen as a director of the Company
during 2000 under the then in effect formula provisions of the Company's
Omnibus Incentive Plan.
EQUITY COMPENSATION PLAN INFORMATION
The following table details the Company's equity compensation plans as of
January 3, 2004:
<Table>
<Caption>
(C)
(A) (B) NUMBER OF SECURITIES
NUMBER OF SECURITIES WEIGHTED AVERAGE REMAINING AVAILABLE FOR
TO BE ISSUED UPON EXERCISE PRICE OF FUTURE ISSUANCE UNDER
EXERCISE OF OUTSTANDING OUTSTANDING EQUITY COMPENSATION PLANS
OPTIONS, WARRANTS OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- ----------------------- ------------------- -------------------------
Equity compensation plans approved by
security holders 2,246,364 $6.48 642,533
Equity compensation plans not
approved by security holders -- -- --
--------- ----- -------
Total 2,246,364 $6.48 642,533
========= ===== =======
</Table>
11
PENSION PLAN TABLE
<Table>
<Caption>
AVERAGE YEARS OF SERVICE
PAY 15 20 25 30 35
- ------------------------------------------------------------------
$125,000 $ 30,000 $40,000 $ 50,000 $ 50,000 $ 50,000
150,000 36,000 48,000 60,000 60,000 60,000
175,000 42,000 56,000 70,000 70,000 70,000
200,000 48,000 64,000 80,000 80,000 80,000
225,000 54,000 72,000 90,000 90,000 90,000
250,000 60,000 80,000 100,000 100,000 100,000
300,000 72,000 96,000 120,000 120,000 120,000
400,000 96,000 128,000 160,000 160,000 160,000
450,000 108,000 144,000 180,000 180,000 180,000
500,000 120,000 160,000 200,000 200,000 200,000
</Table>
- --------------------------------------------------------------------------------
The Company maintains a non-contributory qualified retirement plan for the
benefit of its employees, including the individuals named in the Summary
Compensation Table. In addition, participants in the plan whose retirement
benefits would exceed amounts permitted under the Internal Revenue Code
participate in a non-qualified excess retirement plan which provides a
supplemental unfunded benefit equal to the amount of any benefit that would have
been payable under the qualified retirement plan but for certain limitations
under the Internal Revenue Code. The benefits set forth in the Pension Plan
Table above reflect the aggregate of the benefits under both the qualified and
non-qualified plans. In each case, the indicated benefit will be reduced by the
individual's social security credit. The qualified plan and the non-qualified
plan are collectively referred to as the "Plan".
Covered compensation under the Plan includes base salary, cash bonuses,
overtime pay, and amounts contributed by the employee to the A.T. Cross Savings
Plan maintained by the Company under Section 401(k) of the Internal Revenue
Code. The Salary and Bonus columns of the Summary Compensation Table set forth
above reflect all covered compensation of executive officers for 2003.
For purposes of the Plan, the years of credited service as of December 31,
2003 were: Mr. Whalen, 4 years; Mr. Ruggieri, 20 years; Ms. Wellmerling, 4
years; Mr. Perreault, 9 years; and Mr. Leon, 4 years.
The amounts payable shown in the above Table are based on the following
assumptions:
(i) The individual shall have retired at the normal retirement age of
65,
(ii) "Average pay" is the highest average of the covered compensation
paid to such individual over five consecutive years preceding retirement,
and
(iii) Benefits are paid in the form of a straight-life annuity. Payment
options for spousal benefits are available.
12
PERFORMANCE GRAPH
The following graph compares the market performance of the Company's Class
A common stock over the Company's last five fiscal years to the American Stock
Exchange Market Value Index and to the Russell Group 2000 (as the Company's peer
group index), over the Company's last five fiscal years. The graph assumes that
the value of the investment in the Company's Class A common stock and each index
was $100 at December 31, 1998 and that all dividends were reinvested.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG A.T. CROSS COMPANY,
AMEX MARKET INDEX AND RUSSELL 2000 INDEX
[PERFORMANCE GRAPH]
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
12/31/1998 12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003
- ---------------------------------------------------------------------------------------------------
A.T. Cross Co. 100.00 83.72 82.57 109.77 99.53 124.09
- ---------------------------------------------------------------------------------------------------
Russell 2000 Index 100.00 119.59 114.43 115.60 90.65 131.78
- ---------------------------------------------------------------------------------------------------
AMEX Market Index 100.00 124.67 123.14 117.47 112.78 153.50
- ---------------------------------------------------------------------------------------------------
</Table>
The Company has chosen the Russell Group 2000 as a meaningful peer group
against which to compare its performance. The Russell Group 2000 represents a
broad based group of small capitalization stocks and is generally believed to be
indicative of market performance for small capitalization companies.
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Exchange Act that might incorporate future filings,
including this proxy statement in whole or in part, the foregoing Performance
Graph and the "Report to Shareholders on Compensation Matters" on pages 8-9
shall not be deemed incorporated by reference to any such filing.
13
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee reappointed Deloitte & Touche LLP to serve as the
Company's independent auditors for 2003. Representatives of Deloitte & Touche
will be present at the annual meeting to answer appropriate questions. They will
also have the opportunity to make a statement if they desire to do so.
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to the Company for the fiscal years ending December
28, 2002 and January 3, 2004 by the Company's principal accounting firm,
Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their
respective affiliates (collectively, "Deloitte"):
<Table>
<Caption>
2002 2003
-------- --------
Audit Fees................... $507,030 $609,500
Audit Related................ $159,000 $129,000
Tax Fees
Extended Tax Consulting
Services in connection with
Global EMEA Restructuring.. $116,000
Transfer Pricing Study..... $ 26,000
International Tax
Consultation............... $ 91,000 $ 53,000
Multistate Tax
Consultation............... $ 11,000 $ 9,000
Irish Intangible
Valuation.................. $ 34,000
All Other
Benefit Plan Compliance.... $ 16,000 $ 9,000
Payroll Tax Services....... $ 12,000 $ 10,000
</Table>
The Audit Committee has considered whether the provision of services other
than audit services is compatible with maintaining the principal accountant's
independence.
The Audit Committee's policies and procedures regarding pre-approval of
non-audit and non-tax services provided by the Company's independent accountants
requires pre-approval of all services, regardless of de minimis exceptions, by
the full Audit Committee. The Audit Committee has delegated such pre-approval
authority to the Audit Committee Chair. Following revision of the Audit
Committee's charter in July 2002 (see Report of the Audit Committee), all
non-audit and non-tax services were pre-approved by the Audit Committee Chair.
REPORT OF THE AUDIT COMMITTEE
The audit functions of the Audit Committee are focused on three areas:
- the adequacy of the Company's internal controls and financial reporting
process and the quality and integrity of the Company's financial
statements.
- the independence and performance of the Company's internal auditor and
independent auditors.
- the Company's compliance with legal and regulatory requirements and
adherence to business ethics.
In fiscal 2003, the Audit Committee met with management four times to
consider the adequacy of the Company's internal controls and the objectivity of
its financial reporting. We discuss these matters with the Company's independent
auditors and with appropriate Company financial personnel and internal auditor.
We regularly meet privately with both the independent auditors and the
internal auditor, each of whom has unrestricted access to the Committee.
We also have the sole authority to retain and dismiss the independent
auditors and review periodically their performance and independence from
management.
The Audit Committee has considered the various new and proposed rules and
requirements under the Sarbanes-Oxley Act and the American Stock Exchange rules
(the "AMEX Rules"). The Audit Committee met with management, Deloitte & Touche
LLP and the internal Company auditor to discuss required and proposed changes to
the Audit Committee's and the Company's policies and procedures needed to comply
with Sarbanes-Oxley and the AMEX Rules. As part of that process, the Audit
Committee recommend changes to the Audit Committee Charter to the Board of
Directors in February 2004. See "Committees of the Board of Directors -- Audit
Committee" on page 5.
Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls.
The independent auditors audit the annual financial statements prepared by
management, express an opinion as to whether those financial statements fairly
present the financial position, results of operations and cash flows of the
Company in conformity with generally accepted accounting principles and discuss
with us any issues they believe should be raised with us.
This year, we reviewed the Company's audited financial statements and met
with both management and the independent auditors to discuss those financial
statements. Management has represented to us that the financial statements were
prepared in accordance with accounting principles generally accepted in the
United States.
We have received from and discussed with the independent auditors the
written disclosure and the
14
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). These items relate to that firm's
independence from the Company. We also discussed with the independent auditors
any matters required to be discussed by Statement on Auditing Standards No. 61,
as amended (Communication with Audit Committees).
Based on these reviews and discussions, we recommend to the Board that the
Company's audited financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended January 3, 2004.
2003 Audit Committee
James C. Tappan, Chairman
Galal P. Doss
Andrew J. Parsons
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective December 31, 2000, John E. Buckley's employment with the Company
terminated. At the time of his termination, Mr. Buckley served as the Company's
Executive Vice President and Chief Operating Officer. Mr. Buckley and the
Company originally contemplated that he would resign his position in May 2000
and become a consultant to the Company. However, for purposes of continuity, and
because Mr. Buckley had been instrumental in developing the Pen Computing Group
business, he agreed to remain as an employee until the end of 2000 and the
consulting arrangement never commenced.
Pursuant to a series of letter agreements between the Company and Mr.
Buckley, Mr. Buckley received the following as an incentive to remain with the
Company until December 31, 2000: (i) a termination fee of $135,420, paid on
January 15, 2001, (ii) a cash payment of $36,135, paid on February 9, 2001
equivalent to the fair market value of 6,667 shares of the Company's Class A
common stock on February 3, 2001 (the number of Mr. Buckley's restricted shares
of Class A common stock as to which restrictions would have lapsed on February
3, 2001 had Mr. Buckley remained an employee), and (iii) stock appreciation
rights as to 67,152 units of "phantom" Class A common stock of the Company using
as the baseline the fair market value on July 1, 2000 (the date of grant) of
$4.88 per share. On November 3, 2003, Mr. Buckley exercised his stock
appreciation rights on all 67,152 units of the phantom Class A common stock. The
fair market value on that date was $6.09. The stock appreciation rights, if not
earlier exercised, would have expired on July 1, 2005.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10 percent of
the Company's Class A common stock ("Insiders"), to file with the Securities and
Exchange Commission and the American Stock Exchange reports of ownership and
changes in ownership of such stock. Insiders are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based solely on a review of the copies of such
reports furnished to the Company, the Company believes that during 2003 its
Insiders complied with all applicable Section 16(a) filing requirements except
that filings for the automatic annual stock option grant made to non-employee
directors on October 1, 2003 were inadvertently filed approximately one month
late on November 6, 2003 and the filing related to a grant on October 22, 2003
to Gary Simpson, an Insider officer, of 5,000 non-qualified stock options was
inadvertently filed approximately three weeks late on November 14, 2003.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the annual meeting other than the
items referred to above. However, if other business upon which holders of Class
A common stock are entitled to vote shall properly come before the meeting,
proxies in the enclosed form returned as instructed will be voted in accordance
with the recommendation of the Board of Directors, or in the absence of such a
recommendation, in accordance with the judgement of the proxy holder.
IMPORTANT
NO MATTER HOW SMALL YOUR HOLDINGS, YOU ARE RESPECTFULLY REQUESTED TO SIGN, DATE,
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED, PREPAID ENVELOPE AT YOUR EARLIEST
CONVENIENCE.
Tina C. Benik
Vice President, Legal and
Human Resources
Corporate Secretary
Dated: March 24, 2004
15
CRS-PS-04
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
- --------------------------------------------------------------------------------
X Please mark #CRS
- --- votes as in
this example.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned. If no direction is made, this proxy will be voted FOR proposals
1, 2 and 3.
1. NUMBER OF DIRECTORS:
Fixing the number of Class A directors
at three and Class B directors at six.
FOR AGAINST ABSTAIN
---- ---- ----
2. ELECTION OF CLASS A DIRECTORS:
Nominees; (01) Galal P. Doss, (02) Andrew J.
Parsons, (03) James C. Tappan
FOR WITHHELD
---- ----
- ------------------------------------------------
For all nominees except as noted above
3. APPROVAL of AMENDMENT TO OMNIBUS INCENTIVE PLAN
FOR AGAINST ABSTAIN
---- ---- ----
4. OTHER BUSINESS:
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before said meeting or any adjournment thereof
upon which Class A common shareholders are entitled to vote.
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT
-----
Please date, sign and mail promptly in the enclosed
envelope. This proxy will not be used if you attend the
meeting in person and so request.
Important: Please sign exactly as your name or names
appear at left. When signing as attorney, executor,
administrator, trustee, guardian, or in any other
representative capacity, give full title as such.
Corporate shareholders sign with full corporate name
by a duly authorized officer. If a partnership, sign in
partnership name by authorized person.
Signature: Date:
------------------------------------------ -----------------------
Signature: Date:
------------------------------------------ -----------------------
DETACH HERE
PROXY
A.T. CROSS COMPANY
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Class A common stock of A.T. Cross Company does
hereby constitute and appoint Bradford R. Boss, Russell A. Boss, and David G.
Whalen, or any one of them as attorneys and proxies of the undersigned, with
full power of substitution for, and in the name and stead of, the undersigned to
appear and vote all shares of Class A common stock of A.T. Cross Company held of
record in the name of the undersigned at the annual meeting of A.T. Cross
Company to be held at the offices of the Company, One Albion Road, Lincoln,
Rhode island 02865 on Thursday, April 22, 2004 at 10:00 A.M. and at any and all
adjournments thereof as designated.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------