SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
M & F WORLDWIDE CORP.
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(Name of Registrant as Specified in Its Charter)
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(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.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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 number, or
the Form or Schedule and the date of its filing.
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(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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M & F WORLDWIDE CORP.
35 EAST 62ND STREET
NEW YORK, NEW YORK 10021
TEL: 212-572-8600
April 20, 2001
To Our Stockholders:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of M & F Worldwide Corp. to be held at the offices of the Company's wholly owned
subsidiary, Mafco Worldwide Corporation, Third Street & Jefferson Avenue,
Camden, New Jersey on Thursday, May 17, 2001, at 10:00 a.m. local time.
The business of the meeting will be to elect directors, ratify the
selection of independent auditors for 2001 and consider a proposal submitted by
a stockholder of the Company. Information on each of these matters can be found
in the accompanying Proxy Statement.
While stockholders may exercise their right to vote their shares in person,
we recognize that many stockholders may not be able to attend the Annual
Meeting. Accordingly, we have enclosed a proxy which will enable you to vote
your shares on the issues to be considered at the Annual Meeting even if you are
unable to attend. If you desire to vote in accordance with management's
recommendations, you need only sign, date and return the proxy in the enclosed
postage-paid envelope to record your vote. Otherwise, please mark the proxy to
indicate your vote; date and sign the proxy; and return it in the enclosed
postage-paid envelope as soon as conveniently possible.
Sincerely,
Howard Gittis
Chairman of the Board, President
and Chief Executive Officer
M & F WORLDWIDE CORP.
35 EAST 62ND STREET
NEW YORK, NEW YORK 10021
TEL: 212-572-8600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of M & F Worldwide Corp.:
Notice is hereby given that the 2001 Annual Meeting of Stockholders of M &
F Worldwide Corp., a Delaware corporation (the "Company"), will be held on the
17th day of May 2001 at 10:00 a.m., local time, at the offices of the Company's
wholly owned subsidiary, Mafco Worldwide Corporation, Third Street and Jefferson
Avenue, Camden, New Jersey for the following purposes:
1. To elect the nominees for the Board of Directors of the Company to
serve until the annual meeting in 2004 and until such directors'
successors are duly elected and shall have qualified.
2. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 2001.
3. To consider a proposal submitted by a stockholder of the Company.
4 To transact such other business as may properly come before the Annual
Meeting or at any adjournments or postponements thereof.
A Proxy Statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only stockholders of record at the close of
business on March 26, 2001 (the "Record Date") are entitled to notice of, and to
vote at, the Annual Meeting and at any adjournments thereof. A list of
stockholders entitled to vote at the Annual Meeting will be located at the
offices of the Company at 38 East 63rd Street, New York, New York 10021, at
least ten days prior to the Annual Meeting and will also be available for
inspection at the Annual Meeting.
To ensure that your vote will be counted, please complete, date and sign
the enclosed proxy card and return it promptly in the enclosed prepaid envelope,
whether or not you plan to attend the Annual Meeting. Since proxies may be
revoked at any time, any stockholder attending the Annual Meeting may vote in
person even if that stockholder has returned a proxy.
By Order of the Board of Directors
M & F WORLDWIDE CORP.
April 20, 2001
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
THIS WILL ENSURE THAT YOUR SHARES ARE VOTED
IN ACCORDANCE WITH YOUR WISHES.
M & F WORLDWIDE CORP.
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2001
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This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors (the "Board of Directors") of M & F Worldwide Corp., a
Delaware corporation (the "Company"), of proxies to be voted at the 2001 Annual
Meeting of Stockholders to be held on the 17th day of May 2001 at 10:00 a.m.,
local time, at the offices of the Company's wholly owned subsidiary, Mafco
Worldwide Corporation, Third Street and Jefferson Avenue, Camden, New Jersey and
at any adjournments or postponements thereof (the "Annual Meeting"). This Proxy
Statement and the enclosed proxy are first being sent to stockholders on or
about April 20, 2001.
At the Annual Meeting, the Company's stockholders will be asked (1) to
elect the following persons as directors of the Company until the Company's
annual meeting in 2004 and until such directors' successors are duly elected and
shall have qualified: Ronald O. Perelman, Theo W. Folz, Ed Gregory Hookstratten
and Bruce Slovin; (2) to ratify the selection of Ernst & Young LLP as the
Company's independent auditors for 2001; (3) to consider a proposal submitted by
a stockholder of the Company; and (4) to transact such other business as may
properly come before the Annual Meeting or at any adjournments or postponements
thereof.
The principal executive offices of the Company are located at 35 East 62nd
Street, New York, New York 10021 and the telephone number is 212-572-8600.
SOLICITATION AND VOTING OF PROXIES; REVOCATION
All proxies duly executed and received by the Company will be voted on all
matters presented at the Annual Meeting in accordance with the instructions
given therein by the person executing such proxy or, in the absence of such
instructions, will be voted FOR the election to the Board of Directors of the
nominees for director identified in this Proxy Statement, FOR ratification of
the selection of Ernst & Young LLP as the Company's auditors and AGAINST the
stockholder proposal. The submission of a signed proxy will not affect a
stockholder's right to attend, or vote in person at, the Annual Meeting. Any
stockholder may revoke his or her proxy at any time before it is voted by
written notice to such effect received by the Company at 35 East 62nd Street,
New York, New York 10021, Attention: Secretary, by delivery of a subsequently
dated proxy or by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute a
revocation of a proxy).
The accompanying form of proxy is being solicited on behalf of the Board of
Directors. The solicitation of proxies may be made by mail and may also be made
by personal interview, telephone and facsimile transmission, and by directors,
officers and regular employees of the
Company without special compensation therefor. The Company will bear the costs
incurred in connection with the solicitation of proxies and expects to reimburse
banks, brokers and other persons for their reasonable out-of-pocket expenses in
handling proxy materials for beneficial owners.
RECORD DATE; OUTSTANDING SHARES; VOTING AT THE ANNUAL MEETING
Only holders of record of the Company's common stock, par value $0.01 (the
"Common Stock"), at the close of business on March 26, 2001 (the "Record Date")
were entitled to notice of and to vote at the Annual Meeting. On that date,
there were issued and outstanding 19,121,271 shares of Common Stock, each of
which is entitled to one vote. The presence, in person or by properly executed
proxy, of the holders of a majority of the shares of Common Stock outstanding
and entitled to vote at the Annual Meeting is necessary to constitute a quorum
at the Annual Meeting. Any stockholder present (including broker non-votes) at
the Annual Meeting but who abstains from voting shall be counted for purposes of
determining whether a quorum exists.
The affirmative vote of a plurality of the votes cast is required to elect
the nominees for the Board of Directors of the Company. The affirmative vote of
a majority of the shares of Common Stock present in person or represented by
proxy is required to ratify the selection of Ernst & Young LLP and approve the
stockholder proposal.
Mafco Consolidated Group Inc. ("Mafco Consolidated"), which beneficially
owns 6,648,800 shares or approximately 34.77% of the outstanding Common Stock as
of the Record Date, has informed the Company of its intention to vote its shares
of Common Stock FOR the election to the Board of Directors of the nominees for
director identified in this Proxy Statement, FOR ratification of the selection
of Ernst & Young LLP as the Company's auditors and AGAINST the stockholder
proposal. Mafco Consolidated is wholly owned by Mafco Holdings Inc. ("Mafco
Holdings"), the sole stockholder of which is Ronald O. Perelman, Chairman of the
Executive Committee of the Board of Directors of the Company. Based on the
foregoing, the affirmative vote of the holders of 2,911,836 additional shares of
Common Stock (representing approximately 15.2% of the shares of Common Stock
currently outstanding) would be required (assuming all shares of Common Stock
are voting at the meeting) to constitute a quorum, elect the director nominees
and approve the other proposals being voted upon.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors consists of Ronald O. Perelman, Jaymie A. Durnan,
Theo W. Folz, Howard Gittis, J. Eric Hanson, Ed Gregory Hookstratten, Lance
Liebman, Paul M. Meister, Bruce Slovin and Stephen G. Taub. The Company's
Restated Certificate of Incorporation and By-Laws provide that the Board of
Directors shall be divided as evenly as possible into three classes.
2
The Board of Directors has nominated Messrs. Perelman, Folz, Hookstratten
and Slovin for election as directors at the Annual Meeting to serve until the
annual meeting in 2004. Messrs. Perelman, Folz, Hookstratten and Slovin are
currently members of the Board of Directors whose terms expire at the Annual
Meeting and, except as herein stated, the proxies solicited hereby will be voted
FOR their election. The Board of Directors has been informed that Messrs.
Perelman, Folz, Hookstratten and Slovin are willing to serve as directors, but
if any of them should decline or be unable to act as a director, the individuals
named in the proxies will vote for the election of such other person or persons
as they, in their discretion, may choose. The Board of Directors has no reason
to believe that any such nominees will be unable or unwilling to serve.
Directors of the Company will be elected by a plurality vote of the
outstanding shares of Common Stock present in person or represented by proxy at
the Annual Meeting. Under applicable Delaware law, in tabulating the votes,
abstentions from voting on the election of directors (including broker
non-votes) will be disregarded and have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR.
DIRECTORS AND DIRECTOR NOMINEES
The name, age (as of March 31, 2001), principal occupation, selected
biographical information and period of service as a director of the Company of
each director and director nominee are set forth hereafter.
RONALD O. PERELMAN (58) has been a director and Chairman of the Executive
Committee of the Board of Directors since 1995 and was Chairman of the Board of
the Company from 1995 to 1997. Mr. Perelman has been Chairman of the Board and
Chief Executive Officer of Mafco Holdings and MacAndrews & Forbes Holdings Inc.
(together with Mafco Holdings, "MacAndrews & Forbes"), diversified holding
companies, and various affiliates since 1980. Mr. Perelman also is Chairman of
the Board of Panavision Inc. ("Panavision"), Revlon Consumer Products
Corporation ("Revlon Products") and Revlon, Inc. ("Revlon"). Mr. Perelman also
is a director of the following corporations which file reports pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"): Golden State Bancorp Inc.,
Golden State Holdings Inc., Panavision, Revlon Products, Revlon, and REV
Holdings Inc. Mr. Perelman's term as a director of the Company expires in 2001.
JAYMIE A. DURNAN (47) has been a director of the Company since 1995. Mr.
Durnan has been a private equity investor with Radius Capital Partners, LLC
since 2000. He was Senior Vice President of MacAndrews & Forbes and various
affiliates from 1996 to 1999, Vice President of MacAndrews & Forbes and various
affiliates from 1992 to 1996 and Special
3
Counsel to the Chairman of MacAndrews & Forbes from 1992 to 1999. Mr. Durnan was
an attorney with the law firm of Marks & Murase from 1990 to 1992 and a United
States Navy officer from 1975 to 1990. Mr. Durnan's term as a director of the
Company expires in 2002.
THEO W. FOLZ (57) has been a director of the Company since 1996. He served
as President and Chief Executive Officer from 1996 to 1999 and as Chairman of
the Board from 1997 to 1999. Mr. Folz has been President and Chief Executive
Officer of Consolidated Cigar Corporation and its successor company Altadis
U.S.A., a leading manufacturer of cigars, pipe tobacco and smokers' accessories,
since 1984. Mr. Folz's term as a director of the Company expires in 2001.
HOWARD GITTIS (67) has been a director of the Company since 1995. He has
served as Chairman of the Board, President and Chief Executive Officer since
2000. Mr. Gittis has been Vice Chairman of MacAndrews & Forbes and various
affiliates since 1985. Mr. Gittis also is a director of the following
corporations which file reports pursuant to the Exchange Act: Golden State
Bancorp Inc., Golden State Holdings Inc., Jones Apparel Group, Inc., Loral Space
& Communications Ltd., Revlon Products, Revlon, REV Holdings Inc. and Sunbeam
Corporation. Mr. Gittis' term as a director of the Company expires in 2003.
J. ERIC HANSON (54) has been a director of the Company since 1995. Mr.
Hanson has been a Managing Director at Alpha Private Equity Group since 2000. He
was Executive Vice President-Finance and Administration of the Company from 1997
to 2000. Mr. Hanson was Senior Vice President of MacAndrews & Forbes and various
affiliates from 1994 to 1999 and was Vice President of MacAndrews & Forbes and
various affiliates from 1993 to 1994. Mr. Hanson's term as a director of the
Company expires in 2003.
ED GREGORY HOOKSTRATTEN (68) has been a director of the Company since 1997.
He has been engaged in private law practice, specializing in entertainment law
as a partner in Hookstratten & Hookstratten for more than the past five years.
Mr. Hookstratten's term as a director expires in 2001.
LANCE LIEBMAN (59) has been a director of the Company since 1995. Professor
Liebman is William S. Beinecke Professor of Law at Columbia Law School and
Director of the American Law Institute. He was Dean of Columbia Law School from
1991 to 1996. From 1976 to 1991, Professor Liebman was Professor of Law at
Harvard Law School and from 1981 to 1984 also held the position of Associate
Dean. Professor Liebman is a director of Greater New York Insurance Co.,
Brookfield Financial Properties, Inc. and Tarragon Realty Investors, Inc.
Professor Liebman's term as a director of the Company expires in 2002.
PAUL M. MEISTER (48) has been a director of the Company since 1995. Mr.
Meister has been Executive Vice President and Vice Chairman of the Board of
Fisher Scientific International, Inc. (scientific instruments, equipment and
supplies) ("Fisher") since March 2001 and was Executive Vice President, Vice
Chairman and Chief Financial Officer from March 1998 to
4
March 2001. Mr. Meister was Senior Vice President-Chief Financial Officer of
Fisher from 1991 to 1998, was Senior Vice President of Abex, Inc. from 1992 to
1995 and Managing Director-Chief Financial Officer of The Henley Group Inc. from
1990 to 1992. Mr. Meister is a director of the following corporations which file
reports pursuant to the Exchange Act: Fisher, The General Chemical Group, Inc.,
GenTek Inc. and Minerals Technologies, Inc. Mr. Meister's term as a director of
the Company expires in 2003.
BRUCE SLOVIN (65) has been a director of the Company since 1995 and an
executive officer of MacAndrews & Forbes and various affiliates since 1980. Mr.
Slovin is a director of the following corporations which file reports pursuant
to the Exchange Act: Cantel Industries, Inc., Continental Health Affiliates,
Inc. and Infu-Tech, Inc. Mr. Slovin's term as a director of the Company expires
in 2001.
STEPHEN G. TAUB (49) has been a director of the Company since 1998. Mr.
Taub was elected President and Chief Executive Officer of Mafco Worldwide
Corporation ("Mafco Worldwide") in 1999 and served as President and Chief
Operating Officer of Mafco Worldwide from 1993 to 1999. Mr. Taub was elected
Senior Vice President in 1987 and his responsibilities included the
manufacturing, botanical and spice operations of Mafco Worldwide, as well as
product marketing to the confectionery and pharmaceutical industries in Western
Europe. Mr. Taub joined Mafco Worldwide in 1975 as an Industrial Engineer and in
1982 became Vice President of Manufacturing. Mr. Taub's term as a director of
the Company expires in 2002.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee; it does not have a Nominating Committee.
The Executive Committee consists of Messrs. Perelman, Folz and Gittis. The
Executive Committee may exercise all of the powers and authority of the Board of
Directors, except as otherwise provided under the Delaware General Corporation
Law. The Audit Committee, consisting of Messrs. Hookstratten, Liebman and
Meister, makes recommendations to the Board of Directors regarding the
engagement of the Company's independent auditors, reviews the plan, scope and
results of the audit, reviews with the auditors and management the Company's
policies and procedures with respect to internal accounting and financial
controls and reviews changes in accounting policy and the scope of the non-audit
services which may be performed by the Company's independent auditors. The
Compensation Committee, consisting of Messrs. Gittis, Hookstratten and Liebman,
makes recommendations to the Board of Directors regarding compensation, benefits
and incentive arrangements for officers and other key managerial employees of
the Company. The Compensation Committee considers and awards options to purchase
shares of Common Stock pursuant to the Company's stock option plans.
During 2000, the Board of Directors held four meetings, the Audit Committee
held six meetings and the Compensation Committee acted three times by unanimous
written consent.
5
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as officers or
employees of the Company or any of its affiliates are paid an annual $25,000
retainer fee, payable in monthly installments, plus reasonable out-of-pocket
expenses and a fee of $1,000 for each meeting of the Board of Directors or any
committee thereof they attend.
EXECUTIVE OFFICERS
The following table sets forth as of the date hereof the executive officers
of the Company and its operating subsidiary, Pneumo Abex Corporation, which
operates its licorice and flavors business under the name Mafco Worldwide
Corporation.
NAME POSITION
- ---- --------
Howard Gittis Chairman, President and Chief Executive Officer
Barry F. Schwartz Executive Vice President and General Counsel
Todd J. Slotkin Executive Vice President and Chief Financial Officer
Stephen G. Taub President and Chief Executive Officer of Mafco Worldwide
Peter W. Grace Senior Vice President-Finance of Mafco Worldwide
Pramathesh S. Vora Senior Vice President of Mafco Worldwide
For biographical information about Messrs. Gittis and Taub, see "Directors
and Director Nominees."
BARRY F. SCHWARTZ (51) has been Executive Vice President and General
Counsel of the Company since 1996. He has been Executive Vice President and
General Counsel of MacAndrews & Forbes and various affiliates since 1993 and was
Senior Vice President of MacAndrews & Forbes and various affiliates from 1989 to
1993.
TODD J. SLOTKIN (48) has been Executive Vice President and Chief Financial
Officer of the Company since 1999. He has been Executive Vice President and
Chief Financial Officer of MacAndrews & Forbes and various affiliates since 1999
and was Senior Vice President of MacAndrews & Forbes and various affiliates from
1992 to 1999. Prior to 1992, Mr. Slotkin was Senior Managing Director and Senior
Credit Officer of Citicorp.
PETER W. GRACE (56) has been Senior Vice President-Finance of Mafco
Worldwide since 1993. Mr. Grace joined Mafco Worldwide in 1978 as Controller and
was elected Vice President in 1982, responsible for all domestic and
international accounting, treasury and MIS functions.
PRAMATHESH S. VORA (54) has been Senior Vice President of Mafco Worldwide
since 1993. Mr. Vora was elected Vice President of Research and Development,
including areas of
6
quality control and technical marketing, in 1984 and in 1986, was also given
responsibility for international tobacco sales and marketing for Europe, Asia
and South America. Mr. Vora joined Mafco Worldwide in 1977 as a chemical
engineer, became the Research and Development Manager in 1978 and was given
responsibility for Quality Control in 1982.
EXECUTIVE COMPENSATION
The compensation paid to the Company's Chief Executive Officer and each of
the four most highly compensated executive officers of the Company and the
Company's principal operating business, for all services rendered during each of
the three years ended December 31, 1998, 1999 and 2000 is set forth in the
following Summary Compensation Table.
7
SUMMARY COMPENSATION TABLE
LONG-
TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------------------------------
Number of
Other Securities All
Annual Underlying Other
Name and Compensation Options/ Compen-
Principal Position Year Salary ($) Bonus ($) ($)(a) SARs(#) sation ($)(b)
------------------ ---- ---------- --------- ------ ------- -------------
James R. Maher (c) 2000 400,000 420,000 0 0 0
President and Chief 1999 250,000 0 0 550,000 0
Executive Officer
Howard Gittis 2000 0 0 0 0 0
President and Chief
Executive Officer
J. Eric Hanson (d) 2000 365,600 0 29,303 0 6,232
Executive Vice 1999 437,500 0 24,014 0 4,111
President-Finance and 1998 437,500 100,000 34,153 250,000 3,610
Administration
Stephen G. Taub 2000 640,000 672,000 7,846 0 4,211
President and Chief 1999 600,000 660,000 10,622 200,000 4,378
Executive Officer of 1998 550,000 605,000 0 150,000 3,665
Mafco Worldwide
Pramathesh S. Vora 2000 233,000 244,650 3,164 0 4,541
Senior Vice President of 1999 222,000 244,200 5,171 50,000 3,838
Mafco Worldwide 1998 206,000 226,600 0 50,000 4,098
Peter W. Grace 2000 192,000 201,600 3,028 0 3,400
Senior Vice President- 1999 186,500 205,150 4,070 35,000 3,873
Finance of Mafco Worldwide 1998 181,000 199,100 0 35,000 3,290
- ----------------
(a) Amounts in Other Annual Compensation represent the costs associated with an
automobile furnished to Mr. Hanson and life and disability insurance
reimbursements by the Company for Mr. Hanson, Mr. Taub, Mr. Vora and Mr.
Grace.
(b) Represents, in each case, 401(k) contributions of $3,200 in 1998, $3,200 in
1999 and $3,400 in 2000; the remainder represents the Supplemental Medical
and Dental Expense Plan benefits paid by Mafco Worldwide.
(c) Mr. Maher served as President and Chief Executive Officer from March 1999
to December 2000. Salary and bonus represents the amount paid to a
subsidiary of Mafco Holdings as reimbursement for Mr. Maher's services to
the Company.
(d) Mr. Hanson served as Executive Vice President-Finance and Administration
from November 1996 to January 2000. Annual salary shown is net of $100,000
reimbursed to the Company by a subsidiary of Mafco Holdings for a portion
of Mr. Hanson's time allocated to that subsidiary.
8
STOCK OPTION TRANSACTIONS IN 2000
There were no stock options granted in 2000 to executive officers named in
the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN 2000 AND YEAR END 2000 OPTION/SAR VALUES
The following table shows, for 2000, the number of stock options exercised
and the 2000 year-end value of the options held by the executive officers named
in the Summary Compensation Table:
Number of Shares
Underlying
Unexercised Value of Unexercised
Options/SARs at In-the-Money
Year End Options/SARs at Year
Shares Acquired Value Exercisable/ End Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---- --------------- ------------ ------------- -------------
Howard Gittis 0 0 0/0 0/0
Peter W. Grace 0 0 58,333/11,667 0/0
J. Eric Hanson 0 0 250,000/0 0/0
James R.Maher 0 0 550,000/0 0/0
Stephen G. Taub 0 0 283,333/66,667 0/0
Pramathesh Vora 0 0 83,333/16,667 0/0
9
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of Messrs. Hookstratten, Liebman and
Meister, who are "independent" as such term is defined in the relevant portion
of the listing standards of the New York Stock Exchange ("NYSE"). The overall
responsibility of the Audit Committee is to oversee the Company's financial
reporting process on behalf of the Board of Directors and report the results of
its activities to the Board. The Committee has the responsibility to evaluate
the independent auditors and, if appropriate, recommend to the Board their
replacement. The Committee must discuss with the auditors the scope and plan for
the audit, and with both the auditors and management the adequacy and
effectiveness of the Company's financial and accounting controls. The Committee
also reviews with both management and the auditors the Company's quarterly and
annual financial statements; it passes upon the quality of accounting
principles, reasonableness of significant judgments and clarity of disclosures
in the financial statements. These responsibilities are more fully described in
the Charter of the Audit Committee approved by the Board of Directors,
reproduced as Annex A to this Proxy Statement.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of the audited financial statements
with generally accepted accounting principles, their judgements as to the
quality, not just the acceptability, of the Company's accounting principles and
such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee discussed with
the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board (the "ISB"). The ISB was created jointly by the
Securities and Exchange Commission (the "SEC") and the American Institute of
Certified Public Accountants as the standards-setting body to provide leadership
in improving independence requirements for auditors from their audit clients.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their audit of the Company's financial statements. It met
with the independent auditors to discuss the results of their examinations,
their evaluations of the Company's internal controls and the overall quality of
the Company's financial reporting. The Committee also considered whether any
non-audit services provided to the Company by Ernst & Young LLP were compatible
with maintaining the auditors' independence from management and the Company.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended 2000 for filing with the SEC.
THE AUDIT COMMITTEE
Paul M. Meister, Chairman
Ed Gregory Hookstratten
Lance Liebman
10
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised of Messrs. Gittis, Hookstratten and
Liebman. The Compensation Committee's duties include determination of the
Company's compensation and benefit policies and practices for executive officers
and key managerial employees. In accordance with rules established by the SEC,
the Company is required to provide certain data and information in regard to the
compensation provided to the Company's Chief Executive Officer and the four
other most highly compensated executive officers.
COMPENSATION POLICIES. The overall objectives of the Company's compensation
program are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the Company's
business strategy, to maximize the link between executive and stockholder
interests through a stock option plan and to recognize individual contributions
as well as overall business results. To achieve these objectives, the Company
has developed an overall compensation strategy and specific compensation plans
that tie a substantial portion of an executive's compensation to performance.
The key elements of the Company's compensation program consist of fixed
compensation in the form of base salary, and variable compensation in the forms
of annual incentive compensation and stock option awards. An executive officer's
annual base salary represents the fixed component of such executive officer's
total compensation, and variable compensation is intended to comprise a
substantial portion of an executive's total annual compensation. The
Compensation Committee's policies with respect to each of these elements are
discussed below. In addition, while the elements of compensation described below
are considered separately, the Compensation Committee takes into account the
full compensation package afforded by the Company to the individual, including
pension benefits, insurance and other benefits, as well as the programs
described below.
BASE SALARIES. Base salaries for executive officers are determined based
upon the Compensation Committee's evaluation of the responsibilities of the
position held and the experience of the individual, and by reference to
historical levels of salary paid by the Company and its predecessors.
Salary adjustments are based on a periodic evaluation of the performance of
the Company and each executive officer, as well as financial results of the
business. The Compensation Committee takes into account the effect any corporate
transactions that have been consummated during the relevant year and, where
appropriate, also considers non-financial performance measures. These include
increases in market share, manufacturing efficiency gains, improvements in
product quality and improvements in relations with customers, suppliers and
employees.
ANNUAL INCENTIVE COMPENSATION AWARDS. The variable compensation payable
annually to executive officers (including the Chief Executive Officer) generally
consists principally of annual incentive compensation awards. Annual incentive
compensation is payable pursuant to
11
contractual provisions with certain executives which provide eligibility to
receive bonuses under the Company's Performance Bonus Plan. Under the
Performance Bonus Plan, the participants are eligible to receive annual
performance bonus awards based upon achievement of performance goals established
by the Compensation Committee and set forth in their respective employment
agreements. Performance goals under the Performance Bonus Plan are based upon
the achievement of EBITDA goals set forth in the Company business plan during
each calendar year. The payments under the Performance Bonus Plan may not exceed
$1,000,000 with respect to any participant in any calendar year and shall not be
made unless the Compensation Committee certifies that the performance goals with
respect to the applicable year have been met. The annual incentive compensation
earned by the executives with respect to 2000 was determined in accordance with
such provisions. In addition, executive officers of the Company may be awarded
discretionary bonuses by the Compensation Committee.
OTHER INCENTIVE COMPENSATION AWARDS. The other principal component of
executives' compensation is stock options, which are intended as a tool to
attract, provide incentive to and retain those executives who make the greatest
contribution to the business, and who can have the greatest effect on the
long-term profitability of the Company. The exercise price of stock options is
set at a price equal to the market price of the Common Stock at the time of the
grant. The options therefore do not have any value to the executive unless the
market price of the Common Stock rises. The Compensation Committee believes that
these stock options more closely align the executives' interests with those of
its stockholders, and focus management on building profitability and long-term
stockholder value.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Gittis has served as Chief
Executive Officer of the Company since December 7, 2000. During the last fiscal
year, he received no compensation from the Company.
Mr. Maher served as Chief Executive Officer of the Company from March 4,
1999 to December 7, 2000. During the last fiscal year, he received no
compensation directly from the Company.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. The Compensation Committee
attempts to ensure full deductibility of compensation in light of the limitation
on the deductibility of certain compensation in excess of one million dollars
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Performance Bonus Plan and the Company's stock option plans,
described elsewhere in this Proxy Statement, are designed so as to cause stock
options and bonuses granted thereunder to be exempt from the limitations
contained in such Section 162(m).
THE COMPENSATION COMMITTEE
Howard Gittis, Chairman
Ed Gregory Hookstratten
Lance Liebman
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Howard Gittis who is a non-employee
officer of the Company, and Ed Gregory Hookstratten and Lance Liebman, neither
of whom is an officer or employee of the Company or its subsidiaries.
EMPLOYMENT ARRANGEMENTS
Certain of the executive officers are parties to employment agreements with
the Company or the Company's principal operating subsidiary. The following is a
description of certain terms of such agreements.
Mr. Gittis has no employment agreement with the Company and serves at the
pleasure of the Board of Directors. He receives no compensation from the
Company.
Mr. Hanson had an employment agreement with the Company which provided for
him to be employed through January 31, 2001, although he did not provide any
services to the Company pursuant to the Agreement after January 31, 2000. The
agreement provided that Mr. Hanson was paid an annual base salary of not less
than $500,000. Because Mr. Hanson allocated a certain portion of his time to the
business of an affiliate of the Company, the Company has been reimbursed
$100,000 per year by such affiliate.
Mafco Worldwide entered into an employment agreement with Mr. Taub which
provides for him to be employed commencing on August 1, 2000 through December
31, 2003. At any time on or after December 31, 2002, Mafco Worldwide will have
the right to give written notice of the non-renewal of the employment term. Upon
the giving of such notice, the employment term is automatically extended so that
it ends twelve months after the last day of the month in which the notice was
given. From and after December 31, 2003, the employment term is extended on a
day-to-day basis until Mafco Worldwide gives notice of non-renewal, as described
above. Mr. Taub will be paid an annual base salary of not less than $640,000,
subject to increase at the discretion of Mafco Worldwide. In addition, Mr. Taub
may earn a performance bonus of up to 150% of base salary, subject to an annual
maximum of $1 million, pursuant to his participation in the Performance Bonus
Plan as set forth in his employment agreement. In the event of a breach of the
agreement by Mafco Worldwide, Mr. Taub is entitled to terminate the employment
agreement; in that event or in the event that Mafco Worldwide terminates the
agreement other than for cause or Mr. Taub's disability, Mr. Taub is generally
entitled to receive payment of base salary and bonus and the continuation of
benefits for the longer of the remaining term of the agreement or twelve months,
offset by any other compensation Mr. Taub earns during this period.
Mafco Worldwide also entered into employment agreements with Messrs. Grace
and Vora which provide for each to be employed commencing on August 1, 2000,
through December 31, 2003. At any time on or after December 31, 2002, Mafco
Worldwide has the right to give notice of the non-renewal of the employment
term. Upon the giving of such notice the employ-
13
ment term is automatically extended so that it ends twelve months after the last
day of the month in which the notice was given. From and after December 31, 2003
the employment term is extended on a day-to-day basis until Mafco Worldwide
gives notice of non-renewal, as described above. Mr. Grace will be paid an
annual base salary of not less that $192,000, subject to increase at the
discretion of Mafco Worldwide. Mr. Vora will be paid an annual base salary of
not less than $233,000, also subject to increase at the discretion of Mafco
Worldwide. In addition, Messrs. Grace and Vora may each earn a performance bonus
of up to 150% of base salary, subject to an annual maximum of $1 million,
pursuant to their participation in the Performance Bonus Plan as set forth in
their respective employment agreements. In the event of a breach of an agreement
by Mafco Worldwide, Messrs. Grace and Vora are entitled to terminate their
respective employment agreements; in that event or in the event that Mafco
Worldwide terminates an agreement other than for cause or disability, the
executive is generally entitled to receive payment of base salary and bonus and
the continuation of benefits for the longer of the remaining term of the
agreement or twelve months, offset by any other compensation the executive earns
during this period.
PENSION PLAN FOR SALARIED EMPLOYEES
The following table sets forth information concerning the estimated annual
benefits payable to Messrs. Hanson, Taub, Grace and Vora under Mafco Worldwide's
Defined Benefit Pension Plan (the "Salaried Pension Plan") effective as of
December 31, 1990, established in replacement of a prior plan. Participants in
the Salaried Pension Plan generally include participants under the prior plan
and certain salaried employees who are at least age 21 and credited with at
least one thousand hours of service in any Plan Year (as defined in the Salaried
Pension Plan) since the date such employee commenced employment.
Benefits to participants vest fully after five years of service and such
benefits are determined primarily by a formula taking into account an average
final compensation determined by averaging the three consecutive completed
calendar years of greatest compensation earned during the participant's service
to Mafco Worldwide and the number of years of service attained by the individual
participants. Benefits are subject to the maximum limitations imposed by federal
law on pension benefits. The annual limitation in 2000 was $135,000 based on a
maximum allowable compensation of $170,000. Such compensation is composed
primarily of regular base salary, bonus and employers' contributions to
qualified deferred compensation plans. Subject to certain restrictions,
participants may make voluntary after-tax contributions of up to ten percent of
their aggregate compensations. Any such voluntary contributions are fully vested
and nonforfeitable at all times.
Mafco Worldwide has established the Mafco Worldwide Corporation Benefit
Restoration Plan (the "Restoration Plan"), which was designed to restore
retirement benefits to those employees whose eligible pension earnings are
limited to $170,000 under regulations enacted by the Internal Revenue Service.
Under the Restoration Plan, maximum eligible pension earnings are limited to
$500,000. The Restoration Plan is not funded; all other vesting and payment
rules follow the Salaried Pension Plan.
14
The following table shows estimated annual benefits payable upon retirement
under the Salaried Pension Plan and the Restoration Plan:
HIGHEST
CONSECUTIVE ESTIMATED ANNUAL STRAIGHT LIFE ANNUITY BENEFITS AT
THREE YEAR RETIREMENT WITH INDICATED YEARS OF CREDITED SERVICE
AVERAGE ---------------------------------------------------
COMPENSATION
------------
15 20 25 30 35
-- -- -- -- --
$125,000 $ 31,970 $42,627 $ 53,284 $ 53,284 $ 53,284
150,000 39,470 52,627 65,784 65,784 65,784
175,000 46,970 62,627 78,284 78,284 78,284
200,000 54,470 72,627 90,784 90,784 90,784
225,000 61,970 82,627 103,284 103,284 103,284
250,000 69,470 92,627 115,784 115,784 115,784
300,000 84,470 112,627 140,784 140,784 140,784
400,000 114,470 152,627 190,784 190,784 190,784
450,000 129,470 172,627 215,784 215,784 215,784
500,000+ 144,470 192,627 240,784 240,784 240,784
Benefits shown above reflect the straight life annuity benefit form of payment
for employees, assume normal retirement at age 65 and reflects the deduction for
Social Security amounts.
As of December 31, 2000, credited years of service for each of the
following individuals were as follows: Mr. Taub, 25 years; Mr. Hanson, 8 years;
Mr. Grace, 23 years; and Mr. Vora, 24 years.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC and the NYSE. Officers, directors and
greater than ten percent owners are required to furnish the Company with copies
of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and representations from certain reporting persons that they were not
required to file such forms for a specified fiscal year, the Company believes
that all its officers, directors and greater than ten percent beneficial owners
complied with all filing requirements applicable to them with respect to
transactions during 2000.
15
COMMON STOCK PERFORMANCE
The Company's Common Stock commenced trading on the NYSE on June 16, 1995.
The graph and table set forth below present a comparison of cumulative
stockholder return through December 31, 2000, assuming reinvestment of
dividends, by an investor who invested $100 on December 31, 1995 in each of (i)
the Common Stock, (ii) the S & P 500 Composite Index (the "S & P 500 Index") and
(iii) a peer group composed of the companies in the Dow Jones Food Index.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
COMPANY COMMON STOCK, THE S & P 500
INDEX AND THE DOW JONES FOOD INDEX
[GRAPHIC OMITTED]
Value of Initial Investment 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- --------------------------- -------- -------- -------- -------- -------- --------
M & F Worldwide Corp. $100.00 $93.75 $122.66 $125.78 $63.28 $48.44
S&P 500 Index $100.00 $122.95 $164.18 $211.09 $255.50 $232.25
Dow Jones Food Index $100.00 $115.74 $160.20 $157.89 $128.68 $162.87
16
PROPOSAL 2 - RATIFICATION OF SELECTION OF AUDITORS
The Audit Committee has selected, subject to ratification by the
stockholders, Ernst & Young LLP to audit the accounts of the Company for the
fiscal year ending December 31, 2001.
The ratification of the selection of Ernst & Young LLP will require the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote. Under applicable Delaware law, in tabulating the votes,
abstentions from voting on the ratification of the auditors (including broker
non-votes) will be counted and will have the same effect as a vote against the
proposal.
Ernst & Young LLP representatives will be present at the Annual Meeting and
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
AUDIT FEES. The aggregate fees and expenses billed to the Company by Ernst
& Young LLP for professional services rendered for the audit of the Company's
2000 financial statements and reviews of the financial statements included in
the Company's Forms 10-Q for 2000 were $300,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The aggregate
fees and expenses billed to the Company by Ernst & Young LLP for professional
services rendered in 2000 for financial information systems design and
implementation were $-0-.
ALL OTHER FEES. The aggregate fees and expenses billed to the Company by
Ernst & Young LLP for all other services rendered in 2000 to the Company were
$49,700, including audit related fees of $45,200 and all other services of
$4,500. Audit related fees generally include employee benefit plan audits,
statutory audits and reviews not required for the audit of the consolidated
financial statements and other accounting consultations.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
2001.
17
PROPOSAL 3 - STOCKHOLDER PROPOSAL
Marathon Partners L.P., 52 Vanderbilt Avenue, New York, New York 10017,
claiming that it has owned 75,000 common shares of the Company for more than one
year and that it will continue to hold common shares of the Company with a
market value in excess of $2,000 through the date of the Annual Meeting, has
submitted the following resolution and supporting statement for inclusion in
this Proxy Statement and has stated its intention to present same at the Annual
Meeting. THE COMPANY'S BOARD OF DIRECTORS OPPOSES THIS RESOLUTION FOR THE
REASONS STATED IN ITS RESPONSE BELOW.
STOCKHOLDER PROPOSAL OF MARATHON PARTNERS L.P.
RESOLVED: That the stockholders of M & F Worldwide Corp ("M&F") hereby request
that the Board of Directors immediately initiate discussions with possible
purchasers relating to an acquisition of M&F by merger or tender offer.
PROPONENT'S SUPPORTING STATEMENT: The proponent, a holder of 75,000 shares of
M&F, believes that in order to maximize shareholder value M&F should be sold.
M&F is the worldwide leader in the production of licorice flavors. As such, M&F
has been and continues to be well positioned for increasing shareholder value.
Despite its dominant position the Company has failed to increase value for
shareholders.
M&F's share price performance has been very poor since acquiring the licorice
business. At the time that this proposal was written the shares had fallen
approximately 40% since mid 1997. This performance is inferior in absolute terms
and relative to several established equity indices. Given M&F's duty to increase
shareholder value the proponent believes that the sale of the Company is
appropriate.
Although the proponent is not aware at this time of another company that may be
interested in acquiring M&F, the proponent believes that another entity may be
willing to pay a price considerably above the current market price of M&F.
While the adoption of this proposal will not legally bind the Board of
Directors, the proponent trusts that given their fiduciary responsibilities, the
directors will honor their stockholders' request.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST ADOPTION OF
THIS STOCKHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
The subject of stockholder value is considered often by the Board of
Directors and management of the Company. For several reasons, the Board strongly
believes that implementation of the stockholder proposal will not be in the best
interests of the stockholders of the Company and will not maximize value for the
stockholders of the Company.
18
The Board of Directors is cognizant of its fiduciary duties to stockholders
and strives to discharge these duties in a manner that the Board of Directors
believes is in the best interests of the Company and stockholders. Consistent
with its fiduciary duties and responsibilities to its stockholders, the Board of
Directors continually reviews and monitors the business and progress of the
Company. Accordingly, the Board of Directors is in the best and most informed
position to evaluate and consider all of the options that may be available to
the Company from time to time, including a merger, acquisition or other sale of
the Company.
This process is ongoing. The Board of Directors has always been active in
exploring alternatives to enhance stockholder value, including efforts with
investment bankers, and it regularly assesses the long-term outlook for the
Company, reviewing the prospects for the Company's current businesses as well as
future plans, and continually evaluating the range of credible and realistic
strategic opportunities.
Indeed, on April 19, 2001, as more fully described under the caption
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; PANAVISION ACQUISITION, the
Company acquired 7,320,225 shares of common stock, representing 83.47% of the
outstanding common stock, of Panavision, a New York Stock Exchange listed
corporation which trades under the ticker symbol "PVI". Panavision is a leading
designer and manufacturer of high-precision film camera systems, comprising
cameras, lenses and accessories for the motion picture and television
industries. It rents its systems through a domestic and international owned and
operated facilities and agent network,
Accordingly, as a result of the Panavision Acquisition and based on current
market conditions, the Board of Directors believes that a sale of the Company at
this time would not properly recognize the value inherent in the operations and
future prospects of the Company, and, therefore, would not be in the best
interest of the Company and its stockholders.
The success of the Company is highly dependent on its ability to maintain
strong relationships with, and the confidence of, its suppliers, customers,
employees and stockholders. Although the stockholder proposal only requests and
does not obligate the Board of Directors to take certain action, the Board of
Directors believes that the approval of the resolution would make our suppliers,
customers, employees and stockholders uncertain about the Company's future. Such
uncertainty could undermine confidence in the Company, which would adversely
affect the Company's relationship with suppliers, customers and employees.
In summary, the Board of Directors remains committed to maximizing the
value of the Company for all stockholders. The Board of Directors will continue
to work toward enhancing stockholder value by evaluating and pursuing strategic
opportunities, focusing on steps to increase the Company's results of
operations, controlling expenses, and providing blue ribbon service to its
customers. BECAUSE THE BOARD OF DIRECTORS DOES NOT BELIEVE THAT THE STOCKHOLDER
PROPOSAL DESCRIBED ABOVE IS IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS,
THE BOARD VIGOROUSLY OPPOSES THE STOCKHOLDER PROPOSAL DESCRIBED ABOVE.
19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth as of April 19, 2001, the total number of shares
of Common Stock and Preferred Stock beneficially owned, and the percent so
owned, by each director of the Company, by each person known to the Company to
be the beneficial owner of more than 5% of the outstanding Common Stock or
Preferred Stock, by the officers named in the summary compensation table and by
all directors and officers as a group. The number of shares owned are those
"beneficially owned," as determined under the rules of the SEC, and such
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which
a person has sole or shared voting power or investment power and any shares of
Common Stock or Preferred Stock which the person has the right to acquire within
60 days through the exercise of any option, warrant or right, through conversion
of any security, or pursuant to the automatic termination of power of attorney
or revocation of trust, discretionary account or similar arrangement.
20
Amount and Nature Percent of
of Beneficial Common Stock
Ownership(a) (except as noted)
-------------------- ----------------------
Ronald O. Perelman(b) 8,148,800 39.52%
35 East 62nd Street 6,182,153(c) 100.00%(c)
New York, NY 10021
Dimensional Fund Advisors Inc. 1,375,250 6.67%
1299 Ocean Avenue
Santa Monica, CA 90401
Jaymie A. Durnan 500 *
Theo W. Folz 535,000 2.59%
Howard Gittis 5,000 *
J. Eric Hanson 262,500 1.27%
Ed Gregory Hookstratten 0
Lance Liebman 2,000 *
Paul M. Meister 72,416 *
Bruce Slovin(d) 10,410 *
Stephen G. Taub 283,333 1.37%
Peter W. Grace 58,333 *
Pramathesh S. Vora 83,333 *
All directors and executive officers 9,461,625 45.88%
as a group (12 persons)
* Less than 1%.
(a) Includes Common Stock, Series B Non-Cumulative Perpetual Participating
Preferred Stock (the "Series B Preferred Stock") and options on Common
Stock exercisable within 60 days. Of the shares of Common Stock shown for
each individual listed, the following amounts represent options exercisable
within 60 days: Mr. Folz - 525,000; Mr. Hanson - 250,000; Mr. Taub -
283,333; Mr. Grace - 58,333; Mr. Vora - 83,333.
(b) All of such shares of Common Stock and Series B Preferred Stock are
indirectly owned by Mr. Perelman through Mafco Holdings. The shares owned
and shares of intermediate holding companies are or may from time to time
be pledged to secure obligations of Mafco Holdings or its affiliates.
(c) Series B Preferred Stock; each of such shares has one vote. Mr. Perelman
owns 53.47% of the Voting Stock (i.e. Common Stock and Series B Preferred
Stock taken together) of the Company.
(d) Of the shares owned, 5,000 are held in trust for a minor child. Mr. Slovin
disclaims beneficial ownership of such 5,000 shares.
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PANAVISION ACQUISITION
Pursuant to a Stock Purchase Agreement dated as of April 19, 2001 (the
"Stock Purchase Agreement") between PX Holding and the Company, the Company
acquired from PX Holding 7,320,225 shares of common stock (the "Acquired
Shares") of Panavision. The aggregate consideration for the Acquired Shares
consisted of (i) $80,000,000 in cash, (ii) 1,500,000 shares of Common Stock and
(iii) 6,182,153 shares of Series B Preferred Stock. Immediately following the
Panavision Acquisition, the Company contributed the Acquired Shares to the
capital of a wholly owned subsidiary, PVI Acquisition Corp. ("PVI Acquisition").
At the closing of the Panavision Acquisition, Ronald O. Perelman delivered
a letter to the Company in which Mr. Perelman agreed that, if the Company
determines in its good faith reasonable judgment that Panavision is unable to
make required payments of principal or interest under its bank credit facilities
or senior subordinated notes, he or corporations under his control will provide
such financial support as may be required by Panavision in connection with such
payments of principal and interest. The financial support from Mr. Perelman will
be in an amount as the Company determines. Also at the closing of the Panavision
Acquisition, Mafco Holdings delivered a letter to the Company pursuant to which
Mafco Holdings agreed that it or corporations under its control will disburse to
the Company an aggregate amount of $10,000,000 to be invested by the Company in
Panavision if Panavision is unable to make required payments of principal or
interest under its bank credit facilities or senior subordinated notes, but in
any event no later than December 31, 2001, pursuant to a letter to be delivered
by the Company to Panavision and otherwise on terms to be agreed between the
Company and Panavision. The financial support to be provided by Mr. Perelman and
Mafco Holdings will be evidenced by either or both of (i) subordinated debt of
the Company, maturing as the Company determines based on its cash flow
projections and bearing an interest rate equal to that of the bank credit
facilities outstanding at Pneumo Abex Corporation and (ii) newly issued shares
of Series B Preferred Stock priced at the greater of (a) $15.00 per share and
(b) the then fair market value of the Company's Common Stock.
PANAVISION REGISTRATION RIGHTS AGREEMENT. In connection with the Panavision
Acquisition, PX Holding assigned to the Company and the Company assumed a
Registration Rights Agreement dated as of June 15, 1998 pursuant to which the
Company and certain transferees of Acquired Shares held by the Company (the
"Holders") have the right to require Panavision to register all or part of the
Acquired Shares owned by such Holders under the Securities Act of 1933 (a
"Demand Registration"). Panavision may postpone giving effect to a Demand
Registration for up to a period of 30 days if Panavision believes such
registration might have a material adverse effect on any plan or proposal by
Panavision with respect to any financing, acquisition, recapitalization,
reorganization or other material transaction, or Panavision is in possession of
material non-public information that, if publicly disclosed, could result in a
material disruption of a major corporate development or transaction then pending
or in progress or in other material adverse consequences to Panavision. In
addition, the Holders will
22
have the right to participate in registrations by Panavision of its common stock
(an "Incidental Registration") subject, however, to certain rights in favor of
Panavision to reduce, or eliminate entirely, the number of shares of Acquired
Shares the Holders may have registered in an Incidental Registration. Panavision
will pay all out-of-pocket expenses incurred in connection with a Demand
Registration or an Incidental Registration, except for underwriting discounts,
commissions and related expenses attributable to the Acquired Shares sold by
such Holders.
PANAVISION TAX SHARING AGREEMENT. Since the closing of the Panavision
Acquisition on April 19, 2001, Panavision, for federal income tax purposes, has
been included in the affiliated group of which the Company is the common parent,
and Panavision's federal taxable income and loss has been included in such
group's consolidated tax return filed by the Company. Panavision also may be
included in certain state and local tax returns of the Company or its
subsidiaries. As of April 19, 2001, Panavision and certain of its subsidiaries
and the Company entered into a tax sharing agreement (the "Panavision Tax
Sharing Agreement"), pursuant to which the Company has agreed to indemnify
Panavision against federal, state or local income tax liabilities of the
consolidated or combined group of which the Company (or a subsidiary of the
Company other than Panavision or its subsidiaries) is the common parent for
taxable periods beginning on or after April 19, 2001 during which Panavision or
a subsidiary of Panavision is a member of such group. Pursuant to the Panavision
Tax Sharing Agreement, for all taxable periods beginning on or after April 19,
2001, Panavision will pay to the Company amounts equal to the taxes that
Panavision would otherwise have to pay if it were to file separate federal,
state or local income tax returns (including any amounts determined to be due as
a result of a redetermination arising from an audit or otherwise of the
consolidated or combined tax liability relating to any such period which is
attributable to Panavision), except that Panavision will not be entitled to
carry back any losses to taxable periods ending prior to April 19, 2001. Since
the payments to be made under the Panavision Tax Sharing Agreement will be
determined by the amount of taxes that Panavision would otherwise have to pay if
it were to file separate federal, state and local income tax returns, the
Panavision Tax Sharing Agreement will benefit the Company to the extent the
Company can offset the taxable income generated by Panavision against losses and
tax credits generated by the Company and its other subsidiaries.
For the period from February 1, 1999 through April 18, 2001, Panavision,
for federal income tax purposes, had been included in the affiliated group of
which Mafco Holdings was the common parent, and for such period Panavision's
federal taxable income and loss had been included in such group's consolidated
tax return filed by Mafco Holdings. As of February 1, 1999, Panavision and
certain of its subsidiaries and Mafco Holdings entered into a tax sharing
agreement (the "Mafco Tax Sharing Agreement") containing terms and conditions
substantially the same as those in the Panavision Tax Sharing Agreement. The
Mafco Tax Sharing Agreement governed tax matters between Panavision and Mafco
Holdings for the period from February 1, 1999 through April 18, 2001 and
continues in effect as to post Mafco Holdings consolidation matters such as
audit adjustments and indemnities.
23
ABEX MERGER
TRANSFER AGREEMENT. In connection with the merger on June 15, 1995 of Abex,
Inc. ("Abex"), currently known as Mafco Consolidated, and a wholly owned
subsidiary of Mafco Holdings (the "Abex Merger") and the related transfer (the
"Transfer") to a subsidiary of Mafco Consolidated of substantially all of Abex's
consolidated assets and liabilities with the remainder being retained by the
Company, the Company, a subsidiary of Abex, Pneumo Abex and PCTI entered into a
Transfer Agreement (the "Transfer Agreement"). The Transfer Agreement provides
for appropriate transfer, indemnification and tax sharing arrangements, in a
manner consistent with applicable law and existing contractual arrangements.
The Transfer Agreement requires such subsidiary of Mafco Consolidated to
undertake certain administrative and funding obligations with respect to certain
asbestos claims and other liabilities retained by the Company. The Company will
be obligated to make reimbursement for the amounts so funded only when amounts
are received by the Company under related indemnification and insurance
arrangements. Such administrative and funding obligations would be terminated as
to asbestos products claims in the case of a bankruptcy of Pneumo Abex or the
Company or of certain other events affecting the availability of coverage for
such claims from third party indemnitors and insurers. The Transfer Agreement
further provides that Mafco Consolidated will indemnify the Company with respect
to all environmental matters associated with Abex's former operations to the
extent not paid by third party indemnitors or insurers, other than the
operations relating to the Company's aerospace business which was sold to Parker
Hannifin Corporation in April 1996. The Transfer Agreement also provides for
certain funding, indemnification and cooperation arrangements between the
Company and such subsidiary of Mafco Consolidated in respect of certain
liabilities which may arise under the Employee Retirement Income Security Act of
1974 in respect of the sale of Abex Friction Products in 1994.
COMPANY REGISTRATION RIGHTS AGREEMENTS
In connection with the Abex Merger, Mafco Consolidated and the Company
entered into a registration rights agreement (the "Company/Mafco Consolidated
Registration Rights Agreement") providing Mafco Consolidated with the right to
require the Company to use its best efforts to register under the Securities Act
of 1933, as amended (the "Securities Act"), and the securities or blue sky laws
of any jurisdiction designated by Mafco Consolidated all or a portion of the
issued and outstanding Common Stock, if any, retained (the "Retained Shares") by
Mafco Consolidated in the Abex Merger (the "Registrable Shares"). Such demand
rights are subject to the conditions that the Company is not required to (i)
effect a demand registration more than once in any 12 month period, (ii) effect
more than one demand registration with respect to the Retained Shares, or (iii)
file a registration statement during periods (not to exceed three months) (a)
when the Company is contemplating a public offering, (b) when the Company is in
possession of certain material non-public information, or (c) when audited
financial statements are not available and their inclusion in a registration
statement is required. In addition, and subject to certain conditions described
in the Company/Mafco Consolidated Registration Rights Agreement, if at any time
the Company proposes to register under the Securities Act an offering of Common
24
Stock or any other class of equity securities, then Mafco Consolidated will have
the right to require the Company to use its best efforts to effect the
registration under the Securities Act and the securities or blue sky laws of any
jurisdiction designated by Mafco Consolidated of all or a portion of the
Registrable Shares as designated by Mafco Consolidated. The Company is
responsible for all expenses relating to the performance of, or compliance with,
the Company/Mafco Consolidated Registration Rights Agreement except that Mafco
Consolidated is responsible for underwriters' discounts and selling commissions
with respect to the Registrable Shares being sold. In subsequent amendments to
the Company/Mafco Consolidated Registration Rights Agreement, the Company has
agreed that shares of Common Stock acquired from time to time by Mafco
Consolidated will be treated as "Registrable Shares."
In connection with the Panavision Acquisition, the Company and PX Holding
entered into a Registration Rights Agreement dated as of April 19, 2001 pursuant
to which PX Holding and certain transferees of Common Stock and Series B
Preferred Stock (collectively, "Registrable Shares") held by PX Holding (the
"Holders") have the right to require the Company to register all or part of the
Registrable Shares owned by such Holders under the Securities Act of 1933 (a
"Demand Registration"). The Company may postpone giving effect to a Demand
Registration for up to a period of 30 days if the Company's Board of Directors
believes such registration might have a material adverse effect on any plan or
proposal by the Company with respect to any financing, acquisition,
recapitalization, reorganization or other material transaction, or if the
Company is in possession of material non-public information that, if publicly
disclosed, could result in a material disruption of a major corporate
development or transaction then pending or in progress or in other material
adverse consequences to the Company. In addition, the Holders will have the
right to participate in registrations by the Company of its equity securities
(an "Incidental Registration") subject, however, to certain rights in favor of
the Company to reduce, or eliminate entirely, the number of Registrable Shares
the Holders have requested to be registered in an Incidental Registration. The
Company will pay all out-of-pocket expenses incurred in connection with a Demand
Registration or an Incidental Registration, except for underwriting discounts
and commissions attributable to the Registrable Shares sold by such Holders and
the fees of any counsel retained by holders in connection with any Demand or
Incidental Registration.
AFFILIATE PAYMENTS
The Company paid a subsidiary of Mafco Holdings $820,000 to reimburse to it
a portion of Mr. Maher's salary and bonus expense in 2000 representing time
devoted by him to the affairs of the Company. The Company received from a
subsidiary of Mafco Holdings $100,000 to reimburse to it a portion of Mr.
Hanson's salary expense in 2000 representing time devoted by him to the affairs
of such subsidiary of Mafco Holdings.
25
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 2000 and any Quarterly Reports on Form
10-Q filed thereafter, without charge, upon written request to the Secretary, M
& F Worldwide, 35 East 62nd Street, New York, New York 10021. Each such request
must set forth a good faith representation that, as of the Record Date, March
26, 2001, the person making the request was a beneficial owner of Common Stock
entitled to vote. In order to ensure timely delivery of such documents prior to
the Annual Meeting, any request should be received by the Company promptly.
The Company currently expects that the 2002 Annual Meeting of Stockholders
will be held on May 16, 2002.
STOCKHOLDER PROPOSALS
Under Rule 14a-8 of the SEC as currently in effect, any holder of at least
$2,000 in market value of Common Stock who has held such securities for at least
one year and who desires to have a proposal presented in the Company's proxy
material for use in connection with the Annual Meeting of stockholders to be
held in 2002 must transmit that proposal (along with his or her name, address,
the number of shares of Common Stock that he or she holds of record or
beneficially, the dates upon which the securities were acquired, documentary
support for a claim of beneficial ownership and a statement of willingness to
hold such Common Stock through the date of the 2002 meeting) in writing as set
forth below. Proposals of stockholders intended to be presented at the next
annual meeting must be received by the Secretary, M & F Worldwide Corp., 35 East
62nd Street, New York, New York 10021, not later than November 30, 2001. In
order for proposals of stockholders made outside of Rule 14a-8 under the
Exchange Act to be considered "timely" within the meaning of Rule 14a-4(c) under
the Exchange Act, such proposals must be received by the Secretary at the above
address by April 17, 2002. The Company's By-laws require that proposals of
stockholders made outside of Rule 14a-8 under the Exchange Act must be
submitted, in accordance with the requirements of the By-laws, not later than
April 17, 2002 and not earlier than March 18, 2002.
OTHER BUSINESS
The Company knows of no other matters which may come before the annual
meeting. However, if any such matters properly come before the meeting, the
individuals named in the proxies will vote on such matters in accordance with
their best judgment.
April 20, 2001
By Order of the Board of Directors
M & F WORLDWIDE CORP.
26
ANNEX A
As approved by the Board of Directors
May 18, 2000
M & F WORLDWIDE CORP.
CHARTER OF THE AUDIT COMMITTEE
Organization
This charter governs the operations of the audit committee. The committee
shall obtain the approval of the board of directors for this charter and shall
review and reassess the charter at least annually. The committee shall be
appointed by the board of directors and shall consist of at least three
directors, each of whom is independent of management and the Company. Members of
the committee shall be considered independent if they have no relationship with
management or the Company that may interfere (or give the appearance of
interfering) with the exercise of the responsibilities of the Audit Committee.
All committee members shall be financially literate, or shall become financially
literate within a reasonable period of time after appointment to the committee,
and at least one member shall have accounting or related financial management
expertise.
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling its oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication among the committee, the independent auditors and management of
the Company. In discharging its oversight role, the committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and to retain outside counsel
or other experts to assist the Committee in carrying out its responsibilities.
Although so empowered, however, the Committee shall not have a duty to conduct
investigations, resolve disagreements between management and the independent
auditors or assure compliance with law or conformity with the Company's legal
compliance and ethics programs.
Responsibilities and Processes
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board of directors and
report the results of its activities to the board. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. The committee in carrying
out its responsibilities believes its policies and procedures should
27
remain flexible, in order to best react to changing conditions and
circumstances. The committee should take the appropriate actions to set the
overall corporate "tone" for quality financial reporting, sound business risk
practices, and ethical behavior.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the committee may supplement them
as appropriate.
1. The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately accountable to
the board of directors and the audit committee, as representatives of the
Company's shareholders. The committee shall have the authority and
responsibility to evaluate and, where appropriate, recommend to the board
appointment or replacement of the independent auditors. The committee shall
discuss with the auditors their independence from management and the Company and
the matters included in the written disclosures required by the Independence
Standards Board. Annually, the committee shall review and recommend to the board
the selection of the Company's independent auditors, subject to shareholder
approval.
2. The committee shall discuss with the independent auditors the overall
scope and plans for their audit including the adequacy of staffing and
compensation. Also, the committee shall discuss with management and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk and legal and ethical compliance programs. Further, the committee
shall meet separately with the independent auditors, with and without management
present, to discuss the results of their examinations.
3. The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the Company's
quarterly report on Form 10-Q. Also, the committee shall discuss the results of
the quarterly review and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards. The chair of the committee may represent the entire committee for the
purposes of this review.
4. The committee shall review with management and the independent auditors
the financial statements to be included in the Company's annual report on Form
10-K (or the annual report to shareholders if distributed prior to the filing of
Form 10-K), including its judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments, and the
clarity of the disclosures in the financial statements. Also, the committee
shall discuss the results of the annual audit and any other matters required to
be communicated to the committee by the independent auditors under generally
accepted auditing standards.
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PROXY M & F WORLDWIDE CORP.
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING TO BE HELD ON MAY 17, 2001
The undersigned appoints Glenn P. Dickes, Barry F. Schwartz and Todd J.
Slotkin, and each of them, attorneys and proxies, each with power of
substitution, to vote all shares of Common Stock of M & F Worldwide Corp.
("MFW") that the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of MFW to be held on May 17, 2001 on the proposals set forth on the
reverse side hereof and on such other matters as may properly come before the
meeting and any adjournments or postponements thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE
MANNER INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS
INDICATED, THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" ELECTION OF THE PERSONS
NOMINATED AS DIRECTORS BY THE BOARD OF DIRECTORS AND "FOR" PROPOSAL 2 AND
"AGAINST" PROPOSAL 3. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL
MEETING, IT IS THE INTENTION OF THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN
ACCORDANCE WITH THEIR BEST JUDGMENT.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
M & F WORLDWIDE CORP.
MAY 17, 2001
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
--- PLEASE MARK YOUR
A X VOTES AS IN THIS
--- EXAMPLE.
WITHHOLD
AUTHORITY
FOR to vote for
all nominees all nominees
1. To elect as directors of M & F Worldwide
Corp. for terms expiring in 2004 and until [ ] [ ]
their successors are duly elected and
qualified.
Withhold for the following only: (Write the name of the nominee(s) in the space
below.)
- --------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
NOMINEES:
Ronald O. Perelman
Theo W. Folz
Ed Gregory Hookstratten
Bruce Slovin
FOR AGAINST ABSTAIN
2. To ratify the appointment of Ernst & Young [ ] [ ] [ ]
LLP as independent certified public
accountants of M & F Worldwide Corp. for
2001.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THE FOLLOWING PROPOSAL:
3. To approve a stockholder proposal. [ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or Any adjournments
thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE DATE
----------------------------------------------------- ------------
NOTE: Please sign exactly as name appears hereon. If a joint account, each
joint owner must sign. If signing for a corporation or partnership or
as agent, attorney or fiduciary, indicate the capacity in which you are
signing.
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