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:
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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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(3) Filing Party:
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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 2, 2003
To Our Stockholders:
You are cordially invited to attend the 2003 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 22, 2003, at 2:00 p.m. local time.
The business of the meeting will be to elect directors for 2003.
Information on this matter 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 2003 Annual Meeting of Stockholders of
M & F Worldwide Corp., a Delaware corporation (the "Company"), will be held on
the 22nd day of May 2003 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 2006 and until such directors'
successors are duly elected and shall have qualified.
2. 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 24, 2003 (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 35 East 62nd 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 2, 2003
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 22, 2003
-------------------
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 2003 Annual Meeting of Stockholders to be held on the 22nd day of May
2003 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 2, 2003.
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 2006 and until such directors' successors are duly elected and
shall have qualified: Rosanne F. Coppola, Howard Gittis, and Paul M. Meister;
and (2) 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. 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 $.01
per share (the "Common 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 18,121,271 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. 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.
Mafco Consolidated Group Inc. ("Mafco Consolidated"), which
beneficially owns 6,648,800 shares of the outstanding Common Stock, which is
approximately 36.7% 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. 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 holders of 2,411,836 additional
shares of Common Stock (representing approximately 13.3% 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 and elect the director
nominees.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors consists of Ronald O. Perelman, Philip E.
Beekman, Jaymie A. Durnan, Theo W. Folz, Howard Gittis, J. Eric Hanson, Ed
Gregory Hookstratten, 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 Rosanne F. Coppola and Messrs.
Gittis and Meister for election as directors at the Annual Meeting to serve
until the annual meeting in 2006. Messrs. Gittis and Meister are currently
members of the Board of Directors whose terms expire at the Annual Meeting; Ms.
Coppola previously has not served as a Director of the Company. Except as herein
stated, the proxies solicited hereby will be voted FOR their election. The Board
of Directors has been informed that Ms. Coppola and Messrs. Gittis and
2
Meister 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 April 2, 2003), 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 (60) 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"), which are
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"):
Panavision, Revlon Products, Revlon, and REV Holdings LLC. Mr. Perelman's term
as a director of the Company expires in 2004.
PHILIP E. BEEKMAN (71) has been a director of the Company since 2003.
Mr. Beekman has been President of Owl Hollow Enterprises for more than the past
five years. From 1986 to 1994 Mr. Beekman was Chairman of the Board and Chief
Executive Officer of Hook-SupeRx, Inc., from 1977 to 1986 he was President and
Chief Operating Officer of Seagram Company Limited and from 1973 to 1976 he was
President of Colgate Palmolive Co. International. Mr. Beekman also is a director
of the following corporations which file reports pursuant to the Exchange Act:
The General Chemical Group Inc., The Kendle Company, Linens 'N Things Inc. and
Panavision. On March 27, 2003, Lance Liebman resigned from the Board of
Directors and Philip E. Beekman was appointed to serve on the Board of
Directors, the Audit Committee and the Compensation Committee for the remainder
of Mr. Liebman's term.
3
ROSANNE F. COPPOLA (52) is a nominee for election with a term expiring
in 2006. Ms. Coppola was Divisional Executive, Global Loans from 1994 to 1998
and Business Head, Institutional Recovery Management from 1990 to 1994 of
Citicorp. She also was Business Head, Leveraged Capital Division from 1985 to
1990 and Senior Transactor from 1978 to 1985 of Citicorp Industrial Credit, Inc.
Ms. Coppola also was a Senior Credit Officer as well as a Senior Securities
Officer.
JAYMIE A. DURNAN (49) 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 2005.
THEO W. FOLZ (59) 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 (69) 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 and Chief Administrative Officer 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: Jones Apparel Group, Inc., Loral Space & Communications Ltd.,
Revlon Products, Revlon and REV Holdings LLC. Mr. Gittis' term as a director of
the Company expires in 2003.
PAUL M. MEISTER (50) 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.,
Minerals Technologies, Inc. and National Waterworks, Inc. Mr. Meister's term as
a director of the Company expires in 2003.
4
BRUCE SLOVIN (67) has been a director of the Company since 1995 and was
an executive officer of MacAndrews & Forbes and various affiliates from 1980 to
2000. Mr. Slovin is a director of the following corporations which file reports
pursuant to the Exchange Act: Cantel Industries and Daxor Corp. Mr. Slovin's
term as a director of the Company expires in 2004.
STEPHEN G. TAUB (51) 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 2005.
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, which consisted of Messrs. Hookstratten,
Liebman and Meister during fiscal year 2002, engages the Company's independent
auditors, approves 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, reviews changes in accounting policy
and approves the nature, scope and amount of non-audit services which may be
performed by the Company's independent auditors. The Compensation Committee,
which consisted of Messrs. Gittis, Hookstratten and Liebman during fiscal year
2002, approves 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. It is anticipated that prior to the Annual Meeting
Ed Gregory Hookstratten will resign from the Board of Directors, the Audit
Committee and the Compensation Committee, at which point the Board of Directors
will be reduced to nine directors. It is also anticipated that after the Annual
Meeting Ms. Coppola will be appointed to serve on the Audit Committee and
Compensation Committee.
During 2002, the Board of Directors held 12 meetings, the Audit
Committee held 7 meetings and the Compensation Committee held one meeting.
During 2002, the Executive Committee of the Board of Directors acted five 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 $35,000
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.
Effective April 1, 2003, in recognition of the increased requirements
of the Audit Committee, members of the Audit Committee are paid an annual Audit
Committee retainer fee of $10,000 per annum, in addition to any annual retainer
fee for board members, and a per meeting fee of $1,500.
EXECUTIVE OFFICERS
The following table sets forth as of the date hereof the executive
officers of the Company and the Chief Executive Officer and Chief Financial
Officer of Pneumo Abex Corporation ("Pneumo Abex"), which operates the Company's
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, Treasurer and Secretary
of Mafco Worldwide
For biographical information about Messrs. Gittis and Taub, see
"Directors and Director Nominees."
BARRY F. SCHWARTZ (53) 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 (50) 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.
6
PETER W. GRACE (58) 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.
EXECUTIVE COMPENSATION
The compensation paid to the Company's Chief Executive Officer and the
Chief Executive Officer and Chief Financial Officer of Mafco Worldwide for all
services rendered during each of the three years ended December 31, 2000, 2001
and 2002 is set forth in the following Summary Compensation Table.
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 ($)(a) Bonus ($)(a) ($) SARs(#) sation ($)
------------------ ---- ------------- ------------ --- ------- ----------
Howard Gittis 2002 0 0 0 0 0
President and Chief 2001 0 0 0 0 0
Executive Officer 2000 0 0 0 0 0
Stephen G. Taub(b) 2002 735,000 918,750 0 250,000 10,054
President and Chief 2001 685,000 753,500 0 0 7,986
Executive Officer of 2000 640,000 672,000 0 0 12,057
Mafco Worldwide
Peter W. Grace (b) 2002 201,000 251,250 0 35,000 6,665
Senior Vice President- 2001 196,000 215,000 0 0 8,877
Finance of Mafco Worldwide 2000 192,000 201,600 0 0 6,428
(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 2002 in the amount of $1.5 million is reflected in the
consolidated financial statements of the Company as compensation
expense and a corresponding increase to paid-in-capital.
(b) The amounts reported for Messrs. Taub and Grace under All Other
Compensation represent the costs associated with life and disability
insurance reimbursements, supplemental medical and dental expense
benefits and matching contributions by Mafco Worldwide under its 401(k)
plan.
7
STOCK OPTION TRANSACTIONS IN 2002
The following table shows, for 2002, the number of options to acquire
the Company's Common Stock granted to executive officers named in the Summary
Compensation Table:
- ------------------------------------------------------------------------------- ---------------------------- --------------
Potential realizable value Alternative
at assumed annual rates of to (f) And
stock price appreciation (g): Grant
Individual grants for option term date value
- ------------------------------------------------------------------------------- ---------------------------- --------------
Name Percent of
total
Number of options/
Securities SARs
underlying granted to Exercise
option/ employees or base Grant date
SARs in fiscal price Expiration present
granted (#) year ($/Sh) date 5% ($) 10% ($) value ($)
- ------------------------ ------------- ------------- ------------ ------------- -------------- ------------- --------------
(a) (b) (c) (d) (e) (f) (g) (h)
- ------------------------ ------------- ------------- ------------ ------------- -------------- ------------- --------------
Stephen G. Taub 250,000 53.8% $2.85 3/20/12 $449,000 $1,135,500 $472,500
- ------------------------ ------------- ------------- ------------ ------------- -------------- ------------- --------------
Peter W. Grace 35,000 7.5% $2.85 3/20/12 $62,700 $159,000 $66,150
- ------------------------ ------------- ------------- ------------ ------------- -------------- ------------- --------------
AGGREGATED OPTION/SAR EXERCISES IN 2002 AND YEAR END 2002 OPTION/SAR
VALUES
The following table shows, for 2002, the number of options to acquire
the Company's Common Stock exercised and the 2002 year-end value of the options
held by the executive officers named in the Summary Compensation Table:
Number of Shares
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Acquired Value Year End Year End
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ------------ ------------------------- -------------------------
Howard Gittis 0 0 0/0 0/0
Stephen G. Taub 0 0 433,333/166,667 $212,499/425,001
Peter W. Grace 0 0 81,666/23,334 $29,748/59,502
8
EQUITY COMPENSATION AT YEAR END 2002
The following table shows, at December 31, 2002, the number of shares
of Common Stock to be issued upon exercise of outstanding stock options,
warrants and rights; the weighted average exercise price; and the number of
shares of Common Stock remaining available for future issuance under the
Company's stock option plans.
- ----------------------------- --------------------------- --------------------------- ---------------------------
(a) (b) (c)
- ----------------------------- --------------------------- --------------------------- ---------------------------
Plan category Number of securities to Weighted-average exercise Number of securities
be issued upon exercise price of outstanding remaining available for
of outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
(excluding securities
reflected in column (a))
- ----------------------------- --------------------------- --------------------------- ---------------------------
Equity compensation plans 3,013,334 $6.126 per share 480,000
approved by security holders
- ----------------------------- --------------------------- --------------------------- ---------------------------
Equity compensation plans -0- -0- -0-
not approved by security
holders
- ----------------------------- --------------------------- --------------------------- ---------------------------
Total 3,013,334 $6.126 480,000
- ----------------------------- --------------------------- --------------------------- ---------------------------
9
REPORT OF THE AUDIT COMMITTEE
During fiscal year 2002, the Audit Committee was comprised of Messrs.
Hookstratten, Liebman and Meister, who were "independent" as such term is
defined in the relevant portion of the listing standards of the New York Stock
Exchange. 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, engage them and, if
appropriate, engage their replacement. The Committee must discuss with the
auditors the scope and plan for the audit; when appropriate, approve the plan
for the audit; and discuss 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 also approves the nature,
scope and amount of non-audit services which may be preformed by the Company's
independent auditors.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of the audited financial
statements with accounting principles generally accepted in the United States,
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 auditing standards generally accepted in the United
States. 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
and it approved the audit plan. 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 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. The Committee approved the non-audit services
expected to be provided to the Company in 2003 by Ernst & Young LLP.
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 2002
for filing with the SEC.
THE AUDIT COMMITTEE
Paul M. Meister, Chairman
Ed Gregory Hookstratten
Lance Liebman*
* Mr. Liebman was a member of the Audit Committee through March 27, 2003. As a
member of the Audit Committee, Mr. Liebman reviewed and approved the Report of
the Audit Committee.
10
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
During fiscal year 2002, the Compensation Committee was 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. 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
11
which provide eligibility to receive bonuses under Mafco Worldwide'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 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 2002 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*
* Mr. Liebman was a member of the Compensation Committee through March 27, 2003.
As a member of the Compensation Committee, Mr. Liebman reviewed and approved the
Report of the Compensation Committee.
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2002, the Compensation Committee consisted 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.
EXECUTIVE 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 Officer and Chief Financial Officer of Mafco
Worldwide are parties to employment agreements with the operating subsidiary.
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.
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
13
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 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.
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.
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
2002 was $160,000 based on a maximum allowable compensation of $200,000. 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 $160,000 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 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 $ 31,304 $41,739 $ 52,174 $ 52,174 $ 52,174
150,000 38,804 51,739 64,674 64,674 64,674
175,000 46,304 61,739 77,174 77,174 77,174
200,000 53,804 71,739 89,674 89,674 89,674
225,000 61,304 81,739 102,174 102,174 102,174
250,000 68,804 91,739 114,674 114,674 114,674
300,000 84,304 111,739 139,674 139,674 139,674
400,000 113,804 151,739 189,674 189,674 189,674
450,000 128,804 171,739 214,674 214,674 214,674
500,000+ 143,804 191,739 239,674 239,674 239,674
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, 2002, credited years of service for Mr. Taub was 27
years and for Mr. Grace, 25 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 2002.
15
COMMON STOCK PERFORMANCE
The graph and table set forth below present a comparison of cumulative
stockholder return through December 31, 2002, assuming reinvestment of
dividends, by an investor who invested $100 on December 31, 1997 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 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
- --------------------------- -------- -------- -------- -------- -------- --------
M & F Worldwide Corp. $100.00 $102.55 $51.59 $39.49 $43.82 $55.03
S&P 500 Index $100.00 $128.58 $155.63 $141.46 $124.65 $97.10
Dow Jones Food Index $100.00 $98.56 $80.33 $101.66 $110.72 $111.16
16
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2003.
Ernst & Young LLP representatives will be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
AUDIT SERVICES. The aggregate fees and expenses billed to the Company
by Ernst & Young LLP for professional services rendered for the audit of the
Company's 2002 financial statements and reviews of the financial statements
included in the Company's Forms 10-Q for 2002 and 2001 were $523,000 and
$501,200, respectively. Audit services include fees associated with the annual
audit, the reviews of the Company's quarterly reports on Form 10-Q and statutory
audits required internationally.
AUDIT RELATED SERVICES. The aggregate fees and expenses billed to the
Company by Ernst & Young LLP for audit-related services rendered in 2002 and
2001 to the Company were $105,600 and $94,950, respectively. Audit related
services include employee benefit plan audits and reviews not required for the
audit of the consolidated financial statements.
TAX SERVICES. The aggregate fees and expenses billed to the Company by
Ernst & Young LLP for tax services rendered in 2002 and 2001 to the Company were
$39,500 and $93,300, respectively. Tax services include tax planning and tax
advice.
ALL OTHER SERVICES. The aggregate fees and expenses billed to the
Company by Ernst & Young LLP for all other services rendered in 2002 and 2001 to
the Company were $12,000 and $11,500, respectively. All other services include
work related to the proxy statement disclosures.
AUDITOR INDEPENDENCE. The Audit Committee 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. It
has been the policy of the Audit Committee to approve in advance the plan and a
maximum allowable cost for the audit of the Company's financial statements. The
Audit Committee has also adopted a policy of approving in advance for each
calendar year a budget, submitted by management, for audit-related services, tax
services and other services expected to be rendered during the year by the
Company's auditors. Any expenditure in excess of the approval limits for
approved services, and any engagement of the auditors to render services in
addition to those previously approved, requires approval by the Audit Committee.
The Audit Committee approved the audit plan and fees for the Company's 2002
financial statements and the non-audit services expected to be provided to the
Company in 2003 by Ernst & Young LLP.
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth as of March 31, 2003, the total number of shares
of Common 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, 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 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.
18
Amount and Nature
of Beneficial Percent of
Name Ownership(a) Voting Stock
- ---- ----------------- ------------
Mafco Consolidated Group Inc. 6,648,800(b) 36.69%
35 East 62nd Street
New York, NY 10021
Dimensional Fund Advisors Inc. 1,331,000 7.35%
1299 Ocean Avenue
Santa Monica, CA 90401
Philip E. Beekman 10,900 *
Jaymie A. Durnan 500 *
Theo W. Folz 535,000 2.86%
Howard Gittis 146,000 *
Peter W. Grace 81,666 *
J. Eric Hanson 262,500 1.42%
Ed Gregory Hookstratten 0 *
Paul M. Meister 72,416 *
Ronald O. Perelman 500,000 2.69%
Barry F. Schwartz 5,000 *
Todd J. Slotkin 5,000 *
Bruce Slovin(c) 10,410 *
Stephen G. Taub 433,333 2.34%
All directors and executive officers 8,711,525 43.75%
as a group (13 persons)(d)
* Less than 1%.
(a) Includes Common 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 - 433,333;
Mr. Grace - 81,666.
(b) All of such shares of Common Stock are indirectly owned by Mr. Perelman
through Mafco Holdings and aggregate 36.7% of the outstanding Common
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) Of the shares owned, 5,000 are held in trust for a minor child. Mr. Slovin
disclaims beneficial ownership of such 5,000 shares.
(d) Includes shares of Common Stock indirectly owned by Mr. Perelman through
Mafco Holdings.
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PANAVISION DISPOSITION. On July 26, 2002, the Company entered into a
settlement agreement (the "Settlement Agreement") pursuant to which the parties
thereto agreed to settle and dismiss a consolidated derivative and class action,
In re M & F Worldwide Corp. Shareholder Litigation (No. 18502), and a derivative
action, Furtherfield Partners, et al. v. Ronald O. Perelman (No. 19203),
relating to the acquisition by the Company of 7,320,225 shares of common stock,
par value $.01 per share, of Panavision (the "Shares"), from PX Holding
Corporation, a Delaware corporation ("PX Holding").
The Delaware Court of Chancery approved the Settlement Agreement on
October 1, 2002 and entered a Final Order and Judgment in Civil Action No. 18502
on that date, and a Final Order and Judgment in Civil Action No. 19203 on
October 28, 2002. The terms of the Settlement Agreement required the parties
thereto to undertake certain actions (as described below) within ten business
days of Final Approval of the Settlement Agreement, as that term is defined
therein. As no party to Civil Action Nos. 18502 and 19203 filed an appeal, Final
Approval occurred on November 27, 2002.
In connection with the Settlement Agreement, on December 3, 2002 (the
"Closing Date"), PX Holding, the Company and PVI Acquisition Corp., a Delaware
Corporation ("PVI Acquisition") and a direct wholly owned subsidiary of the
Company, entered into a letter agreement, pursuant to which PX Holding purchased
the Shares from PVI Acquisition for an aggregate consideration consisting of (i)
1,500,000 shares of Common Stock, (ii) 6,182,153 shares of Series B
Non-Cumulative Perpetual Participating Preferred Stock, par value $.01 per share
of the Company ("M & F Worldwide Series B Preferred Stock"), and (iii)
$80,000,000 in cash. In addition, on the Closing Date, Mafco Holdings and the
Company entered into a letter agreement, pursuant to which Mafco Holdings Inc.,
a Delaware corporation ("Mafco Holdings"), delivered 666,667 shares of M & F
Worldwide Series B Preferred Stock to the Company in exchange for (i) 1,381,690
shares of Series A Non-Cumulative Perpetual Participating Preferred Stock, par
value $.01 per share, of Panavision (the "Panavision Series A Preferred Stock"),
and (ii) $976,250 in cash.
In addition, the following agreements were also entered into in
connection with the Settlement Agreement:
(i) The Company and Panavision entered into a letter
agreement, dated as of the Closing Date, terminating the Registration
Rights Agreement, dated as of June 5, 1998, as amended on December 21,
2001, between such parties (formerly between Panavision and PX
Holding), pursuant to which the Company had received registration
rights with regard to the Shares and certain shares of Panavision
Series A Preferred Stock
(ii) The Company and PX Holding entered into a letter
agreement, dated as of the Closing Date, terminating the Registration
Rights Agreement, dated as of April 19, 2001, as amended on December
21, 2001, between such parties, pursuant to
20
which PX Holding had received registration rights with regard to
certain shares of Common Stock and M & F Worldwide Series B Preferred
Stock;
(iii) The Company and Mr. Perelman entered into a letter
agreement (the "M & F Worldwide-Perelman Termination Agreement"), dated
as of the Closing Date, terminating the letter agreement, dated as of
April 19, 2001, between such parties;
(iv) The Company and Mafco Holdings entered into a letter
agreement, dated as of the Closing Date, terminating the letter
agreement, dated as of April 19, 2001, between such parties;
(v) The Company and Panavision entered into a letter
agreement, dated as of the Closing Date, terminating any obligations
relating to the letter, dated as of April 19, 2001, between such
parties;
(vi) The Company and Mafco Holdings entered into a letter
agreement, dated as of the Closing Date, terminating the letter
agreement, dated as of June 27, 2002, between such parties. The letter
agreement had given the Company an option, no part of which was
exercised, to purchase from Mafco Holdings 39,199 shares of
Panavision's Series B Cumulative Pay-In-Kind Preferred Stock and
$78,355,000 principal amount of Panavision's 9-5/8% Senior Subordinated
Discount Notes;
(vii) The Company and Mafco Holdings entered into a letter
agreement, dated as of the Closing Date, pursuant to which Mafco
Holdings purchased from the Company for in $6,700,000 cash a $6,700,000
promissory note issued by Panavision to the Company, as the purchase
price for Panavision's acquisition of Las Palmas Productions, Inc.
("Las Palmas") from the Company on July 2, 2002;
(viii) The Company, Mafco Holdings and Panavision entered into
an amendment ("Amendment No. 1") to the Instrument of Assignment and
Assumption, dated as of July 1, 2002, by and between the Company and
Panavision (the "Instrument of Assignment and Assumption"). Pursuant to
the Instrument of Assignment and Assumption, which was entered into in
connection with the sale by the Company to Panavision of Las Palmas,
the Company agreed to indemnify Panavision for any liability, including
deferred purchase price, to the former shareholders of Las Palmas in
connection with their sale of Las Palmas to the Company in 2001.
Pursuant to Amendment No. 1, the Company, Mafco Holdings and Panavision
amended the Instrument of Assignment and Assumption to make Mafco
Holdings a co-indemnitor of the Company with respect to any liabilities
to the former shareholders of Las Palmas; and
(ix) The Company, Mafco Holdings and Pneumo Abex entered into
a letter agreement pursuant to which Mafco Holdings purchased from
Pneumo Abex $11,420,000 principal amount of 9-5/8% Senior Subordinated
Discount Notes Due 2006 of Panavision on which there was approximately
$372,498 of accrued and unpaid interest, for an aggregate purchase
price of $4,735,798 in cash.
21
Upon the closing of the transactions described above, the Company
canceled the Certificate of Designations, Powers, Preferences and Rights of the
M & F Worldwide Series B Preferred Stock.
LAS PALMAS DISPOSITION. In July 2001, the Company purchased all of the
capital stock of Las Palmas, which operated EFILM, a provider of digital
processing services to the motion picture and television industries. From that
date through July 1, 2002, Panavision operated EFILM pursuant to various
agreements with Las Palmas. Pursuant to those agreements, 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 to Panavision
until July 2, 2008 a worldwide, nonexclusive license to certain technology and
intellectual property to be used solely in connection with servicing customers,
which automatically renewed for successive one year terms unless prior written
notice was provided by a party (collectively, the "EFILM Agreements"). In
addition to monthly payments, the EFILM Agreements required that Panavision pay
the Company a 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 Agreements) or (b)
$1.5 million, such payment to occur no earlier than 2004 and no later than 2007.
On July 2, 2002, Panavision purchased the capital stock of Las Palmas from the
Company in exchange for a promissory note in the principal amount of $6.7
million plus interest at 10% per annum, payable on the earlier to occur of (a)
September 30, 2005 or (b) a refinancing of Panavision's bank credit facilities.
The EFILM Agreements were terminated. In connection with its purchase of Las
Palmas, Panavision entered into an Instrument of Assignment and Assumption with
the Company, indemnifying the Company with respect to liability, including
deferred purchase price, to the former shareholders of Las Palmas in connection
with their sale of Las Palmas to the Company in 2001. Panavision also assumed
all liabilities and obligations of the Company under the Non-competition
Agreement dated July 2, 2001 by and among the Company, the former shareholders
of Las Palmas and Las Palmas.
PANAVISION/COMPANY TAX SHARING AGREEMENT. For the period from April 19,
2001 through December 3, 2002, Panavision, for federal income tax purposes, was
included in the affiliated group of which the Company is the common parent (the
"M&F Worldwide Group"), and Panavision's federal taxable income was included in
such group's consolidated tax return filed by the Company. Panavision was also
included in certain state and local tax returns of the Company or its
subsidiaries for that period. 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
agreed to indemnify Panavision against federal, state or local income tax
liabilities of the M&F Worldwide Group for taxable periods beginning on or after
April 19, 2001 during which Panavision or a subsidiary of Panavision was a
member of such group. Pursuant to the Panavision/Company Tax Sharing Agreement,
for all taxable periods beginning on or after April 19, 2001 and ending December
3, 2002, Panavision was obligated to 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
22
period which is attributable to Panavision), except that Panavision was not
entitled to carryback any losses to taxable periods ending prior to April 19,
2001. No payments were required under the Panavision/Company Tax Sharing
Agreement as Panavision had sufficient net operating loss carryforwards to
offset its taxable income. The Panavision/Company Tax Sharing Agreement will
continue in effect after December 3, 2002 only as to matters such as audit
adjustments and indemnities.
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 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
23
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 2002, 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.
The Company participates in Mafco Holdings' directors and officers
insurance program, which covers the Company as well as Mafco Holdings and its
other affiliates. The limits of coverage are available on aggregate losses to
any or all of the participating companies and their respective directors and
officers. The Company reimburses Mafco Holdings for its allocable portion of the
premiums for such coverage, which the Company believes is more favorable than
the premiums the Company could secure were it to secure stand alone coverage. At
December 31, 2002, the Company has recorded prepaid expenses, other assets,
accrued liabilities and other liabilities of $1.7 million, $6.4 million, $3.0
million and $5.5 million relating to the financing of the directors and officers
insurance program.
24
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 2002 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 24, 2003, 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.
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 2004 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 2004 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, 2003. 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, 2004. 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, 2004 and not earlier than February 23, 2004.
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 2, 2003
By Order of the Board of Directors
M & F WORLDWIDE CORP.
25
ANNUAL MEETING OF SHAREHOLDERS OF
M & F WORLDWIDE CORP.
May 22, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach and mail in the envelope provided.
- ---------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
- ---------------------------------------------------------------------------------------------------------------------------------
1. To elect as directors of M & F Worldwide Corp. for terms expiring in 2. In their discretion, the proxies are authorized
2006 and until their successors are duly elected and qualified. to vote upon such other business as may properly
NOMINEES come before the meeting or any adjournments
thereof.
[ ] FOR ALL NOMINEES O Rosanne F. Coppola
O Howard Gittis PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY
[ ] WITHHOLD AUTHORITY O Paul M. Meister USING THE ENCLOSED ENVELOPE.
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
- ----------- "FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: O
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that [ ]
changes to the registered name(s) on the account may not be submitted via
this method.
- -------------------------------------------------------------------------------
Signature of Stockholder Date: Signature of Stockholder Date:
------------------------------ -------- --------------------- --------
NOTE: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.
M & F WORLDWIDE CORP.
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING TO BE HELD ON MAY 22, 2003
The undersigned appoints Michael C. Borofsky, 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 22, 2003 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. 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 THE REVERSE SIDE)