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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(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
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:
M & F WORLDWIDE CORP.
35 EAST 62ND STREET
NEW YORK, NEW YORK 10021
TEL: 212-572-8600
April 8, 2002
To Our Stockholders:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders
of M & F Worldwide Corp. to be held at the offices of the Company's wholly-owned
subsidiary, Mafco Worldwide Corp., Third Street & Jefferson Avenue, Camden, New
Jersey on Thursday, May 23, 2002, at 2:00 p.m. local time.
The business of the meeting will be to elect directors and ratify the
selection of independent auditors for 2002. 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 2002 Annual Meeting of Stockholders of M &
F Worldwide Corp., a Delaware corporation (the "Company"), will be held on the
23rd day of May 2002 at 2:00 p.m., local time, at the offices of the Company's
wholly-owned subsidiary, Mafco Worldwide Corp., Third Street & 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 2005 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 2002.
3. 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 25, 2002 (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 8, 2002
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.
-------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2002
-------------------
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 2002 Annual
Meeting of Stockholders to be held on the 23rd day of May 2002 at 2:00 p.m.,
local time, at the offices of the Company's wholly-owned subsidiary, Mafco
Worldwide Corp., Third Street & 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 10, 2002.
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 2005 and until such directors' successors are duly elected and
shall have qualified: Jaymie A. Durnan, Lance Liebman and Stephen G. Taub; (2)
to ratify the selection of Ernst & Young LLP as the Company's independent
auditors for 2002; and (3) 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, and FOR ratification
of the selection of Ernst & Young LLP as the Company's auditors. 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 voting stock (the "Voting Stock")
at the close of business on the Record Date were entitled to notice of and to
vote at the Annual Meeting. On that date, there were issued and outstanding
26,470,091 shares of Voting Stock, consisting of 19,621,271 shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), each of
which is entitled to one vote and 6,848,820 shares of the Company's Series B
Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01 per
share (the "Preferred 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 Voting 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. With respect to all matters considered at the Annual Meeting
(other than the election of directors), an abstention (or broker non-vote) has
the same effect as a vote against the proposal. Abstentions from voting on the
election of directors (including broker non-votes) will have no effect on the
outcome of the vote.
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 Voting Stock present in person or represented by
proxy is required to ratify the selection of Ernst & Young LLP.
Mafco Consolidated Group Inc. ("Mafco Consolidated"), which beneficially
owns 6,648,800 shares of the outstanding Common Stock, which is approximately
25.12% of the outstanding Voting 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 and FOR ratification of the selection of Ernst & Young LLP as the
Company's auditors. PX Holding Corporation ("PX Holding"), which beneficially
owns 1,500,000 shares of the outstanding Common Stock, which is approximately
5.67% of the outstanding Voting Stock as of the Record Date and 6,848,820 shares
of the Preferred Stock, which is approximately 25.87% of the Voting Stock as of
the Record Date, has informed the Company of its intention to vote its shares of
Voting Stock FOR the election to the Board of Directors of the nominees for
director identified in this Proxy statement and FOR ratification of the
selection of Ernst & Young LLP as the Company's auditors. Mafco Consolidated and
PX Holding are 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. Accordingly, since Mafco Consolidated
and PX Holding beneficially own, in the aggregate, 56.66% of the Voting Stock,
the affirmative vote of Mafco Consolidated and PX Holding is sufficient, without
the concurring vote of any other stockholder of the Company, to constitute a
quorum, elect the director nominees and approve the other proposal being voted
upon.
2
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.
The Board of Directors has nominated Messrs. Durnan, Liebman and Taub for
election as directors at the Annual Meeting to serve until the annual meeting in
2005. Messrs. Durnan, Liebman and Taub 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. Durnan, Liebman and Taub 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 Voting 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 29, 2002), 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 (59) 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 2004.
3
JAYMIE A. DURNAN (48) has been a director of the Company since 1995.
Mr. Durnan has been the Special Assistant and Chief of Staff to the Deputy
Secretary of Defense since 2001. Prior to that, Mr. Durnan was a private equity
investor with Radius Capital Partners, LLC. 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 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 (58) 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 2004.
HOWARD GITTIS (68) 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 (55) 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 (69) 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 2004.
LANCE LIEBMAN (60) 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
4
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 (49) 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 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 (66) 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 2004.
STEPHEN G. TAUB (50) 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,
5
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 2001, the Board of Directors held eight meetings and acted once by
unanimous written consent, the Audit Committee held six meetings and the
Compensation Committee acted twice by unanimous written consent. During 2001,
the Executive Committee of the Board of Directors acted twice by unanimous
written consent.
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, the chief executive and chief financial officers of Pneumo Abex
Corporation, which operates the Company's licorice and flavors business under
the name Mafco Worldwide Corporation and the chief executive and chief financial
officers of Panavision, which operates the Company's camera, lighting and
digital intermediates business under the name Panavision.
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
John S. Farrand President and Chief Executive Officer of Panavision
Peter W. Grace Senior Vice President-Finance, Treasurer and Secretary
of Mafco Worldwide
Scott L. Seybold Executive Vice President and Chief Financial Officer of Panavision
For biographical information about Messrs. Gittis and Taub, see "Directors
and Director Nominees."
BARRY F. SCHWARTZ (52) 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.
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TODD J. SLOTKIN (49) 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.
JOHN S. FARRAND (57) has been the President and Chief Executive Officer of
Panavision since 1999 and was President and Chief Operating Officer of
Panavision from 1985 to 1998. He has been a director of Panavision since 1996.
From 1980 to 1985, Mr. Farrand was employed by Warner Communications Inc. in
several senior executive positions. He was President of its Atari Coin-Operated
Games Division and subsequently was appointed President and Chief Operating
Officer of Atari Holdings, Inc. Prior to 1980, Mr. Farrand spent 14 years with
Music Hire Group Limited, a U.K. company specializing in coin-operated music
systems (juke boxes), and from 1973 to 1980 served as Managing Director. Mr.
Farrand is a member of the Academy of Motion Picture Arts and Sciences, a member
of the Society of Motion Picture and Television Engineers and an associate
member of the American Society of Cinematographers.
PETER W. GRACE (57) 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.
SCOTT L. SEYBOLD (45) has been Executive Vice President and Chief Financial
Officer of Panavision since 1999. Immediately prior to joining Panavision, Mr.
Seybold was Director, Corporate Planning for Harman International, Inc. From
1981 to 1994, he held various financial management positions with Allergan, Inc.
and Smith International, Inc.
EXECUTIVE COMPENSATION
The compensation paid to the Company's chief executive officer, the chief
executive and chief financial officers of Mafco Worldwide and the chief
executive and chief financial officers of Panavision, for all services rendered
during each of the three years ended December 31, 1999, 2000 and 2001 is set
forth in the following Summary Compensation Table.
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SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------------------------------
Number of
Other Securities All
Annual Underlying Other
Name and Compensation Options/ Compensation
Principal Position Year Salary ($)(a) Bonus ($)(a) ($) SARs(#) ($)
- ------------------ ---- ------------- ------------ --- ------- ---
Howard Gittis 2001 0 0 0 0 0
President and Chief 2000 0 0 0 0 0
Executive Officer
Stephen G. Taub(b) 2001 685,000 753,500 0 0 7,986
President and Chief 2000 640,000 672,000 0 0 12,057
Executive Officer of 1999 600,000 660,000 0 200,000 15,000
Mafco Worldwide
John S. Farrand(c) 2001 1,000,000 0 0 0 149,738
President and Chief 2000 900,000 810,600 0 100,000 33,984
Executive Officer of 1999 800,000 706,000 0 200,000 28,411
Panavision
Peter W. Grace (b) 2001 196,000 215,000 0 0 8,877
Senior Vice President- 2000 192,000 201,600 0 0 6,428
Finance of Mafco Worldwide 1999 186,500 205,150 0 35,000 7,943
Scott L. Seybold (c) 2001 279,400 0 0 0 40,064
Executive Vice President 2000 243,058 213,900 0 30,000 31,911
and Chief Financial 1999 116,615 55,000 0 20,000 15,885
Officer of Panavision
(a) Includes salary and bonus paid or accrued during the year indicated.
Messrs. Schwartz and Slotkin, like Mr. Gittis, receive no compensation,
directly or indirectly, from the Company. However, in accordance with Staff
Accounting Bulletin 79 "Accounting for Expenses and Liabilities Paid by
Principal Stockholder(s)," the value of the services devoted by Messrs.
Gittis, Schwartz and Slotkin to the affairs of the Company during 2001 in
the amount of $1.5 million is reflected in the consolidated financial
statements of the Company as compensation expense and a corresponding
increase to paid-in-capital.
(b) The amounts reported for Messrs. Taub and Grace under All Other
Compensation represent the costs associated with life and disability
insurance reimbursements, supplemental medical and dental expense benefits
and matching contributions by Mafco Worldwide under its 401(k) plan.
(c) The amounts reported for Messrs. Farrand and Seybold under All Other
Compensation consist of life insurance premiums, matching contributions by
Panavision under its 401(k) plan, proceeds from a vacation buy-back program
and premiums and reimbursements under Panavision's health insurance
program.
8
STOCK OPTION TRANSACTIONS IN 2001
There were no stock options to acquire the Company's Common Stock granted
in 2001 to executive officers named in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN 2001 AND YEAR END 2001 OPTION/SAR VALUES
The following table shows, for 2001, the number of stock options to acquire
the Company's Common Stock exercised and the 2001 year-end value of the options
held by the executive officers named in the Summary Compensation Table:
Number of Shares
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
Shares Acquired Value Year End at Year End
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ------------ ------------------------- -------------------------
Howard Gittis 0 0 0/0 0/0
Stephen G. Taub 0 0 350,000/0 0/0
John S. Farrand 0 0 0/0 0/0
Peter W. Grace 0 0 70,000/0 0/0
Scott L. Seybold 0 0 0/0 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.
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 judgments 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 that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended 2001 for filing
with the SEC.
THE AUDIT COMMITTEE
Paul M. Meister, Chairman
Ed Gregory Hookstratten
Lance Liebman
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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, including Mafco Worldwide, but excluding
Panavision, whose compensation and benefit policies and practices are determined
by the Panavision Compensation and Stock Option Committee. 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 generally consists principally of annual
incentive compensation awards. Annual incentive compensation is payable pursuant
to contractual provisions with certain executives which provide eligibility to
receive bonuses under Mafco Worldwide's Performance Bonus Plan.
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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 Mafco Worldwide's
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 2001
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. Since that date he has
received no compensation, directly or indirectly, 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
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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
Messrs. Gittis, Schwartz and Slotkin have no employment agreement with the
Company and each serves at the pleasure of the Board of Directors. They receive
no compensation, directly or indirectly, from the Company.
The chief executive and chief financial officers of Mafco Worldwide and
Panavision are parties to employment agreements with the operating subsidiary
each is employed by. The following is a description of certain terms of such
agreements.
Mr. Taub has an employment agreement with Mafco Worldwide which provides
for his employment as President and Chief Executive Officer commencing on August
1, 2001 through July 31, 2006. Mafco Worldwide has the right at any time 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 five
years after the last day of the month in which the notice was given. The
employment term is extended on a day-to-day basis until Mafco Worldwide gives
notice of non-renewal, although in no event will the term extend beyond May 25,
2016. Mr. Taub will be paid an annual base salary of not less than $685,000,
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 Mafco Worldwide
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 five years, offset by any other compensation Mr.
Taub earns during this period. If Mafco Worldwide terminates Mr. Taub's
employment for cause, or as a result of his materially breaching the agreement,
the agreement provides that Mr. Taub is to be paid through the date of
termination only.
Mr. Farrand has an employment agreement with Panavision which provides for
his employment as President and Chief Executive Officer for a stated term
commencing January 1, 1999 and ending December 31, 2001. Panavision may give
notice of non-renewal at any time on or after December 31, 1999 and the term of
employment will end 24 months after the last day of the month in which such
notice is given. The agreement provides for a base salary of not less than
$800,000 in 1999, $900,000 in 2000 and $1,000,000 in 2001 and thereafter. The
agreement also provides for participation by Mr. Farrand in Panavision's
Executive Incentive Compensation Plan. In the event of Mr. Farrand's death, or
termination of his employment agreement by Panavision as a consequence of his
being disabled and unable to perform his duties for more than six months, the
agreement terminates except that Mr. Farrand's estate in the case of death or
Mr. Farrand in the case of disability will continue to receive 60% of base
salary for the balance of the term or 24 months,
13
whichever is longer. If Panavision terminates Mr. Farrand's employment other
than for disability or cause (as defined in the agreement) or if Mr. Farrand
quits as a consequence of a material breach of the agreement by Panavision, for
the balance of the term or 24 months, whichever is longer, Mr. Farrand will
continue to receive base salary, incentive compensation prorated to the date of
termination and at a rate equal to 50% of Base Salary thereafter, and fringe
benefits, subject, however, to a duty on his part to mitigate damages by seeking
other employment. If Panavision terminates Mr. Farrand's employment for cause,
or as a result of his materially breaching the agreement, the agreement provides
that Mr. Farrand is to be paid through the date of termination only.
Mafco Worldwide also entered into an employment agreement with Mr. Grace
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
has the right to give 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. Grace will be paid an annual base salary of not less than $192,000,
subject to increase at the discretion of Mafco Worldwide. In addition, Mr. Grace
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 Mafco Worldwide
Performance Bonus Plan as set forth in his employment agreements. In the event
of a breach of an agreement by Mafco Worldwide, Mr. Grace is entitled to
terminate his employment agreement; 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.
Mr. Seybold has an employment agreement with Panavision which provides that
if at any time his employment with Panavision is terminated by Panavision other
than for cause, death or disability, he will be entitled to a lump sum severance
payment equal to the greater of (i) $200,000 or (ii) his annual base salary in
effect at that time. Mr. Seybold also participates in Panavision's Executive
Incentive Compensation Plan.
MAFCO WORLDWIDE PENSION PLAN FOR SALARIED EMPLOYEES
The following table sets forth information concerning the estimated annual
pension benefits payable to Messrs. Taub and Grace. A portion of the benefits
will be paid under the Mafco Worldwide Corporation Replacement Defined Benefit
Pension Plan (the "Salaried Pension Plan") , a portion will be paid under an
insurance contract issued by the John Hancock Life Insurance Company providing
for annuities (the "Annuities") payable to participants in a prior pension plan
sponsored by Mafco Worldwide and a portion will be paid under the Mafco
Worldwide Corporation Benefit Restoration Plan (the "Restoration 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.
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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 2001 was $140,000 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 established 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.
15
The following table shows estimated aggregate annual benefits payable upon
retirement under the Annuities, 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 $ 31,524 $42,032 $ 52,540 $ 52,540 $ 52,540
150,000 39,024 52,032 65,040 65,040 65,040
175,000 46,524 62,032 77,540 77,540 77,540
200,000 54,024 72,032 90,040 90,040 90,040
225,000 61,524 82,032 102,540 102,540 102,540
250,000 69,024 92,032 115,040 115,040 115,040
300,000 84,024 112,032 140,040 140,040 140,040
400,000 114,024 152,032 190,040 190,040 190,040
450,000 129,024 172,032 215,040 215,040 215,040
500,000+ 144,024 192,032 240,040 240,040 240,040
Benefits shown above reflect the straight life annuity benefit form of payment
for employees, assume normal retirement at age 65 and reflect the deduction for
Social Security amounts, but do not reflect the offset for the actuarial
equivalent of the benefit derived from the employer contribution account in the
401(k) Plan.
As of December 31, 2001, credited years of service for Mr. Taub was 26
years and for Mr. Grace, 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 2001, except that Mr. Gittis was delayed in reporting 25,000
shares of Common Stock he purchased in June 2001.
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COMMON STOCK PERFORMANCE
The graph and table set forth below present a comparison of cumulative
stockholder return through December 31, 2001, assuming reinvestment of
dividends, by an investor who invested $100 on December 31, 1996 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
Value of Initial Investment 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- --------------------------- -------- -------- -------- -------- -------- --------
M & F Worldwide Corp. $100.00 $130.83 $134.17 $67.50 $51.67 $57.33
S&P 500 Index $100.00 $133.36 $171.47 $207.56 $188.66 $166.24
Dow Jones Food Index $100.00 $131.85 $181.78 $137.67 $171.83 $154.95
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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, 2002.
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
Voting 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
2001 financial statements and reviews of the financial statements included in
the Company's Forms 10-Q for 2001 were $1,095,100.
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 2001 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 2001 to the Company were
$486,400, including audit related fees of $110,900 and all other services of
$375,500. 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
2002.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth as of March 25, 2002, the total number of
shares of Common Stock and Preferred Stock beneficially owned, and the percent
of Voting Stock 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.
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Amount and Nature
of Beneficial Percent of
Ownership(a) Voting Stock
----------------- ------------
Mafco Consolidated Group Inc. 6,648,800(b) 25.12%
35 East 62nd Street
New York, NY 10021
PX Holding Corporation 1,500,000(b) 5.67%
35 East 62nd Street 6,848,820(b)(c) 25.87%
New York, NY 10021
Dimensional Fund Advisors Inc. 1,374,850 5.19%(d)
1299 Ocean Avenue
Santa Monica, CA 90401
Jaymie A. Durnan 500 *
Theo W. Folz 535,000 2.02%
Howard Gittis 132,500 *
Peter W. Grace 70,000 *
J. Eric Hanson 262,500 *
Ed Gregory Hookstratten 0
Lance Liebman 2,000 *
Paul M. Meister 72,416 *
Ronald O. Perelman 500,000 1.89%
Barry F. Schwartz 5,000 *
Todd J. Slotkin 5,000 *
Bruce Slovin(e) 10,410 *
Stephen G. Taub 350,000 1.32%
All directors and executive officers 16,942,946 64.01%
as a group (13 persons)(f)
* Less than 1%.
(a) Includes Common Stock, 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. Perelman -
500,000; Mr. Taub - 350,000.
(b) All of such shares of Common Stock and Preferred Stock are indirectly owned
by Mr. Perelman through Mafco Holdings and aggregate 56.66% of the Voting
Stock. The shares so 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) Preferred Stock
(d) Represents 7.01% of Common Stock outstanding
(e) Of the shares owned, 5,000 are held in trust for a minor child. Mr. Slovin
disclaims beneficial ownership of such 5,000 shares.
(f) Includes shares of Common Stock and Preferred Stock indirectly owned by Mr.
Perelman through Mafco Holdings.
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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 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, the sole
stockholder of Mafco Holdings, 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 existing bank credit facilities dated as of June 4, 1998, as
amended through the Third Amendment dated as of March 15, 2002 (the "Existing
Credit Agreement") or its 9-5/8% Senior Subordinated Notes due 2006 (the
"Existing Notes"), he or corporations under his control will provide such
financial support to the Company 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. However, there can be
no assurance that the Company will make such determination or if such
determination is made, whether such determination will be adequate and timely in
order to meet Panavision's needs, if such needs arise. 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 would disburse to the Company an aggregate amount of $10 million to be
invested by the Company in Panavision (the "M & F Investment") if Panavision was
unable to make required payments of principal or interest under its Existing
Credit Agreement or Existing Notes, but in any event no later than December 31,
2001. Concurrently, the Company delivered to Panavision a letter pursuant to
which the Company agreed that it would make available to Panavision an aggregate
amount of $10 million as required by Panavision to make payments of principal or
interest under its Existing Credit Agreement or Existing Notes, but in any event
no later than December 31, 2001, in exchange for subordinated debt, common stock
or voting preferred stock of Panavision. The M & F Investment was conditioned
upon the Company having previously received an equivalent cash amount pursuant
to its letter agreement with Mafco Holdings. The financial support to be
provided by Mr. Perelman and Mafco Holdings to the Company would 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 on interest rate equal
to that of the bank credit facilities outstanding at the Pneumo Abex Corporation
and (ii) newly issued shares of 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.
21
On December 21, 2001, in satisfaction of the obligation set forth in the
letter dated April 19, 2001 from Mafco Holdings to the Company, PX Holding paid
$10 million to the Company in exchange for which the Company issued 666,667
shares of Preferred Stock to PX Holding. Also on December 21, 2001, the Company
purchased from PX Holding $22 million principal amount of Panavision's Existing
Notes for $8,140,000. Such notes, together with $2,525,000 principal amount of
Panavision's Existing Notes owned by the Company, were delivered to Panavision
in exchange for 1,381,690 (the "Exchanged Shares") newly-issued shares of
Panavision's Series A Non-Cumulative Perpetual Participating Preferred Stock in
satisfaction of the Company's obligation to make the M & F Investment.
PANAVISION/COMPANY REGISTRATION RIGHTS AGREEMENT. Panavision and the
Company entered into a letter agreement dated as of December 21, 2001, pursuant
to which Panavision and the Company agreed to amend the Registration Rights
Agreement originally between PX Holding and Panavision, dated as of June 5, 1998
(the "Panavision/Company Registration Rights Agreement") to, among other things,
include the Exchanged Shares within the definition of "Registrable Securities").
In connection with the Panavision Acquisition, on April 19, 2001 PX Holding had
assigned to the Company and the Company had assumed the Panavision/Company
Registration Rights Agreement pursuant to which the Company and certain
transferees of Registrable Securities held by the Company (the "Holders") have
the right to require Panavision to register all or part of the Registrable
Securities 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 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 Registrable
Securities 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 Registrable
Securities sold by such Holders.
COMPANY/PX HOLDING REGISTRATION RIGHTS AGREEMENT. PX Holding and the
Company entered into a letter agreement, dated as of December 21, 2001, pursuant
to which the Company and PX Holding agreed to amend the Registration Rights
Agreement, dated as of April 19, 2001, entered into in connection with the
Panavision Acquisition (the "Company/PX Holding Registration Rights Agreement"),
to, among other things, include within the definition of "Registrable
Securities" any additional shares of the Company which may be issued to PX
Holding in the future. Pursuant to the Company/PX Holding Registration Rights
Agreement, PX Holding and certain transferees of Common Stock and 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
22
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.
PANAVISION/COMPANY 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 will be 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/Company
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/Company 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/Company 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/Company 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. To the
extent that Panavision has losses for tax purposes, the Panavision/Company Tax
Sharing Agreement permits Panavision to carry those losses back to April 19,
2001 and forward for so long as Panavision is included in the affiliated group
of which the Company is the common parent (in both cases, subject to federal,
state and local rules on limitation and expiration of net operating losses) to
reduce the amount of the payments Panavision otherwise would be required to make
to the Company in years in which Panavision has current income for tax purposes.
23
PANAVISION/MAFCO HOLDINGS TAX SHARING AGREEMENT. For the period from
February 1, 1999 through April 19, 2001, Panavision, for federal income tax
purposes, was included in the affiliated group of which Mafco Holdings is the
common parent, and for such period Panavision's federal taxable income and loss
was 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 "Panavision/Mafco Holdings
Tax Sharing Agreement") containing terms and conditions substantially the same
as those in the Panavision/Company Tax Sharing Agreement. The Panavision/Mafco
Holdings Tax Sharing Agreement governed tax matters between Panavision and Mafco
Holdings for the period from February 1, 1999 through April 19, 2001 and
continues in effect as to matters such as audit adjustments and indemnities.
LAS PALMAS ACQUISITION. In July 2001 the Company purchased all of the
issued and outstanding shares of Las Palmas Productions, Inc. ("Las Palmas")
which runs EFILM. As a result, Las Palmas became a wholly-owned subsidiary of
the Company. The consideration paid by the Company at closing consisted of $5.4
million to the selling shareholders and $600,000 to Las Palmas. The Company also
agreed to make additional payment to the selling shareholders based on the
EBITDA of EFILM (with a guaranteed minimum of $1.5 million). Las Palmas entered
into a series of transactions with Panavision to provide it substantially all of
the benefits of, and obligate it with respect to, EFILM. Specifically, Las
Palmas (i) subleased the real estate used in the business to Panavision, (ii)
leased the property and equipment used in the business to Panavision on a
month-to-month basis, (iii) seconded all of Las Palmas employees to Panavision
until July 2, 2008 or such later date mutually agreed upon, and (iv) granted a
worldwide, nonexclusive license to certain technology and intellectual property
to be used solely in connection with servicing customers to Panavision until
July 2, 2008, which agreement automatically renews for successive one year terms
unless prior written notice is provided by a party (collectively, the "EFILM
Agreements"). In addition to monthly payments, the EFILM Agreements require that
Panavision pay to Las Palmas one-time cash payment equal to the greater of (a)
90% of the average annual EBITDA (as defined in the EFILM Agreements) of the
EFILM business over a two-year Incentive Period (as defined in the EFILM
Agreement) or (b) $1.5 million, such payment to occur no earlier than 2004 and
no later than 2007. The Company has agreed to sell to Panavision all of the
issued and outstanding shares of Las Palmas. Panavision has agreed to purchase
these shares, for a price of $6.7 million cash, subject to the consummation of a
refinancing of Panavision's Existing Credit Agreement.
24
TRANSFER OF PANAVISION'S EXISTING NOTES. Mafco Holdings has agreed to sell
and the Company has agreed to purchase $37.7 million principal amount of
Panavision's Existing Notes for $17.3 million, consisting of the assumption by
the Company of $6.85 million of margin debt and issuance by the Company of
shares of preferred stock at $15.00 per share for the $10.45 million balance of
the purchase price. The Company has agreed to contribute these $37.7 million
principal amount of Panavision's Existing Notes to Panavision in exchange for
shares of preferred stock of Panavision. In addition, Pneumo Abex has agreed to
sell and Panavision has agreed to purchase $11.4 million principal amount of
Panavision's Existing Notes for $4.56 million cash. These transactions are
subject to the consummation by Panavision of a refinancing of its Existing
Credit Agreement.
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 certain other
subsidiaries of the Company entered into a Transfer Agreement (the "Transfer
Agreement"). Under the Transfer Agreement, substantially all of Abex's
consolidated assets and liabilities, other than those relating to its Abex NWL
Aerospace Division ("Aerospace") were transferred to a subsidiary of Mafco
Consolidated, with the remainder being retained by Pneumo Abex. 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, including environmental claims, retained
by Pneumo Abex. 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. In the event of certain kinds of disputes with Pneumo Abex's
indemnitors regarding their indemnities, the Transfer Agreement permits the
Company to require such subsidiary to fund 50% of the costs of resolving the
disputes. 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 Aerospace which was sold to
Parker Hannifin Corporation in 1996.
COMPANY/MAFCO CONSOLIDATED REGISTRATION RIGHTS AGREEMENT. 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
25
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
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."
AFFILIATE ACCOUNTING. During fiscal 2001, the three executive officers of
the Company were executives of Mafco Holdings. Such executive officers were not
compensated, directly or indirectly, by the Company. Accordingly, in accordance
with Staff Accounting Bulletin 79, "Accounting for Expenses or Liabilities Paid
by Principal Stockholder(s)," the value of the services provided by such
officers to the Company in the amount of $1.5 million is reflected in the
consolidated financial statements of the Company as compensation expense and a
corresponding increase to paid-in-capital. Neither Mafco Holdings nor any of
such executive officers received any payment from the Company in connection with
its recognition for accounting purposes of such $1.5 million of compensation
expense.
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 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 25,
2002, 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.
26
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, 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 2003 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 2003 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, 2002. 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 March 24, 2003. 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
March 24, 2003 and not earlier than February 22, 2003.
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 8, 2002
By Order of the Board of Directors
M & F WORLDWIDE CORP.
27
- --------------------------------------------------------------------------------
PROXY M & F WORLDWIDE CORP.
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING TO BE HELD ON MAY 23, 2002
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 23, 2002 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 . 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 23, 2002
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark your
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 2005 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:
Jaymie A. Durnan
Lance Liebman
Stephen G. Taub
FOR AGAINST ABSTAIN
2. To ratify the appointment of Ernst & Young LLP
as independent certified public accountants of [ ] [ ] [ ]
M & F Worldwide Corp. for 2002.
3. 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.