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)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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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
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offsetting fee was paid previously. Identify the previous filing
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M & F WORLDWIDE CORP.
35 EAST 62ND STREET
NEW YORK, NEW YORK 10021
TEL: 212-572-8600
April 2, 2004
To Our Stockholders:
We cordially invite you to attend the 2004 Annual Meeting of
Stockholders of M & F Worldwide Corp., which we will hold at the offices of the
Company's wholly owned subsidiary, Mafco Worldwide Corporation, Third Street &
Jefferson Avenue, Camden, New Jersey 08104, on Thursday, May 6, 2004, at 11:30
a.m. local time.
The business of the meeting will be to elect directors to serve until
the annual meeting in 2007 and approve the 2003 Stock Incentive Plan. You can
find information on these matters in the accompanying Proxy Statement.
While stockholders may exercise their rights 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 that 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 yours,
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 2004 Annual Meeting of Stockholders
(the "Annual Meeting") of M & F Worldwide Corp., a Delaware corporation (the
"Company"), will be held on the 6th day of May 2004 at 11:30 a.m., local time,
at the offices of the Company's wholly owned subsidiary, Mafco Worldwide
Corporation, Third Street & Jefferson Avenue, Camden, New Jersey 08104 for the
following purposes:
1. To elect the nominees for the Board of Directors of the Company
to serve until the annual meeting in 2007 and until such
directors' successors are duly elected and shall have qualified;
2. To approve the 2003 Stock Incentive Plan; and
3. To transact such other business as may properly come before the
Annual Meeting or at any adjournment or postponement thereof.
A proxy statement describing these matters is attached to this notice.
Only stockholders of record at the close of business on MARCH 12, 2004 (THE
"RECORD DATE") are entitled to notice of, and to vote at, the Annual Meeting and
at any adjournments or postponements 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 you may
revoke a proxy at any time, you may vote in person at the Annual Meeting even if
you have returned a proxy.
By Order of the Board of Directors,
M & F WORLDWIDE CORP.
April 2, 2004
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 6, 2004
------------------------------
This proxy statement (the "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 2004 Annual Meeting of Stockholders (the "Annual
Meeting") to be held on the 6th day of May 2004 at 11:30 a.m., local time, at
the offices of the Company's wholly owned subsidiary, Mafco Worldwide
Corporation ("Mafco Worldwide"), Third Street & Jefferson Avenue, Camden, New
Jersey 08104 and at any adjournment or postponement thereof (the "Annual
Meeting"). This Proxy Statement and the enclosed proxy are first being sent to
stockholders on or about April 2, 2004.
At the Annual Meeting, the Company will ask its stockholders (1) to
elect the following persons as directors of the Company until the Company's
annual meeting in 2007 and until such directors' successors are duly elected and
shall have qualified: Ronald O. Perelman, Theo W. Folz and Bruce Slovin; (2) to
approve the 2003 Stock Incentive Plan; and (3) to transact such other business
as may properly come before the Annual Meeting or at any adjournment or
postponement 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 approval of the
2003 Stock Incentive Plan. 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 ("Common Stock") at the close of business on March 12, 2004 (the
"Record Date") were entitled to notice of and to vote at the Annual Meeting. On
that date, there were issued and outstanding 18,386,804 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., a Delaware corporation ("Mafco
Consolidated"), which beneficially owns 7,048,000 shares of the outstanding
Common Stock, which is approximately 38.3% 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 and FOR approval of the 2003 Stock
Incentive Plan. Mafco Consolidated is wholly owned by Mafco Holdings Inc., a
Delaware corporation ("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
2,145,402 additional shares of Common Stock (representing approximately 11.7% 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, Rosanne F. Coppola, Jaymie A. Durnan, Theo W. Folz, Howard Gittis, Paul
M. Meister, Bruce Slovin and Stephen G. Taub. The Company's Restated Certificate
of Incorporation and By-Laws provide that the Board of Directors shall be
divided as evenly as possible into three classes.
2
The Board of Directors has nominated Messrs. Perelman, Folz and Slovin
for election as directors at the Annual Meeting to serve until the annual
meeting in 2007. Messrs. Perelman, Folz and Slovin are currently members of the
Board of Directors whose terms expire at the Annual Meeting. Except as herein
stated, the proxies solicited hereby will be voted FOR their election. The Board
of Directors has been informed that Messrs. Perelman, Folz and Slovin are
willing to serve as directors, but if any of them should decline or be unable to
act as a director, the individuals named in the proxies will vote for the
election of such other person or persons as they, in their discretion, may
choose. The Board of Directors has no reason to believe that any such nominee
will be unable or unwilling to serve.
Directors of the Company will be elected by a plurality vote of the
outstanding shares of Common Stock present in person or represented by proxy at
the Annual Meeting. Under applicable Delaware law, in tabulating the votes,
abstentions from voting on the election of directors (including broker
non-votes) will be disregarded and have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR.
DIRECTORS AND DIRECTOR NOMINEES
The name, age (as of March 31, 2004), 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 (61) 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 organizations which file reports
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"):
Panavision, Revlon Products, Revlon, REV Holdings LLC and Scientific Games
Corporation. Mr. Perelman's term as a director of the Company expires in 2004.
PHILIP E. BEEKMAN (72) has been a director of the Company since 2003.
Mr. Beekman has been President of Owl Hollow Enterprises, a consulting and
investment company, 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 Kendle Company and Linens
'N Things Inc. Mr. Beekman's term as a director of the Company expires in 2006.
3
ROSANNE F. COPPOLA (53) has been a director of the Company since 2003.
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.
Ms. Coppola's term as a director of the Company expires in 2006.
JAYMIE A. DURNAN (50) 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, a venture capital firm. 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 (60) 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 (70) 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 organizations which file reports pursuant to the
Exchange Act: Jones Apparel Group, Inc., Loral Space & Communications Ltd,
Revlon and Scientific Games Corporation. Mr. Gittis's term as a director of the
Company expires in 2006.
PAUL M. MEISTER (51) has been a director of the Company since 1995. Mr.
Meister has been Vice Chairman of the Board of Fisher Scientific International,
Inc. ("Fisher"), a provider of scientific instruments, equipment and supplies,
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. Mr. Meister is a
director of the following corporations which file reports pursuant to the
Exchange Act: Fisher, The General Chemical Group, Inc., Minerals Technologies,
Inc. and National Waterworks, Inc. Mr. Meister's term as a director of the
Company expires in 2006.
BRUCE SLOVIN (68) 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.
4
STEPHEN G. TAUB (52) has been a director of the Company since 1998. Mr.
Taub was elected President and Chief Executive Officer of the Company's wholly
owned subsidiary, 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 adopted a set of categorical standards (the
"Independence Standards") to assist it in making its determination whether
particular members of the Board of Directors are "independent" within the
meaning of the New York Stock Exchange (the "NYSE") listing standards. A copy of
the Independence Standards is annexed to this Proxy Statement as Appendix 1.
After adopting these standards, the Board of Directors used them to determine
that a majority of the Board is "independent." The Board of Directors has also
adopted a set of Corporate Governance Guidelines, which provide that those
members of the Board of Directors present at any meeting in "executive session,"
that is, without management present, shall select the director who shall preside
over that meeting.
Anyone wishing to communicate with any director for any purpose,
including to report any issue concerning management or any suggestion concerning
candidates for the Board of Directors, may do so by sending the communication to
the director in care of the Secretary, M & F Worldwide Corp., 35 East 62nd
Street, New York, New York 10021, or by facsimile transmission to (212)
572-8435. The Secretary is obliged to forward any such communication promptly
and unaltered.
The Board of Directors has an Audit Committee, a Compensation Committee
and a Nominating/Governance Committee.
The Audit Committee, consisting of Ms. Coppola and Messrs Beekman and
Meister, (i) engages the Company's independent auditors, (ii) approves the plan,
scope and results of the audit, (iii) reviews with the auditors and management
the Company's policies and procedures with respect to internal accounting and
financial controls, (iv) reviews changes in accounting policy and (v) approves
the nature, scope and amount of audit-related and non-audit services that the
Company's independent auditors may perform. The Board of Directors has
determined that each of the members of the Audit Committee is "independent"
within the meaning of the audit committee standards that are part of the NYSE
listing standards. The Company has determined that Mr. Meister is an "audit
committee financial expert" within the meaning of Regulation S-K promulgated by
the Securities and Exchange Commission (the "SEC"). A copy of the charter of the
Audit Committee is annexed to this Proxy Statement as Appendix 2.
5
The Compensation Committee, consisting of Messrs. Beekman, Folz and
Slovin, approves compensation, benefits and incentive arrangements for the Chief
Executive Officer and certain other officers and other senior 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. The Board of Directors has determined that each of the members of
the Compensation Committee is "independent" within the meaning of the NYSE
listing standards.
The Nominating/Governance Committee, consisting of Ms. Coppola and
Messrs. Folz and Slovin, considers candidates for the Board of Directors and the
Board's committees and reviews aspects of the Company's governance structure.
The Board of Directors has determined that each of the members of the
Nominating/Governance Committee is "independent" within the meaning of the NYSE
listing standards. The Nominating/Governance Committee is amenable to evaluating
candidates for any vacancy on the Board of Directors that stockholders or other
interested parties may suggest and has adopted a policy concerning minimum
criteria for evaluating these candidates. The policy requires that the committee
consider available information concerning candidates' character and integrity,
maturity of judgment, skills and experience in relation to enhancing the ability
of the Board of Directors to oversee the affairs and business of the Company,
and demonstrated ability to cooperatively enhance the decision-making ability of
the Board of Directors as a whole. A copy of the charter of the
Nominating/Governance Committee is annexed to this Proxy Statement as Appendix
3.
During 2003, the Board of Directors held 4 meetings, the Audit
Committee held 5 meetings and the Compensation Committee held 2 meetings. The
Board of Directors did not form its Nominating/Governance Committee until
January 2004. During 2003, the Board of Directors also had an Executive
Committee, which acted 3 times by unanimous written consent. The Company invites
the Board of Directors to attend its annual stockholder meeting, but does not
require that directors do so. Two directors attended last year's annual
stockholder meeting.
6
The Company does not currently maintain a website. Current versions of the
following documents are available to any stockholder without charge upon request
to the Secretary, M & F Worldwide Corp., 35 East 62nd Street, New York, New York
10021:
o the Independence Standards;
o the Company's Code of Business Conduct, which includes its Code
of Financial Ethics for Senior Financial Officers;
o the charters for all standing committees of the Board of
Directors, namely its Audit, Compensation and
Nominating/Governance Committees;
o the Company's Corporate Governance Guidelines; and
o the policy that the Nominating/Governance Committee of the Board
of Directors adopted concerning criteria for the nomination of
candidates to the Board of Directors.
Stockholders may similarly obtain paper copies of this Proxy Statement, the
Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, any
Current Report on Form 8-K and any amendment to any of these documents.
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as officers or
employees of the Company or any of its affiliates receive an annual $35,000
retainer fee, payable in monthly installments, plus reimbursement of reasonable
out-of-pocket expenses and a fee of $1,000 for each meeting of the Board of
Directors or any board committee (other than the Audit Committee) that they
attend. Members of the Audit Committee receive an annual Audit Committee
retainer fee of $10,000 per annum in addition to their retainer fee for service
on the Board of Directors and a fee of $1,500 for each Audit Committee meeting
attended.
Non-employee directors are eligible to participate in the Company's
Outside Directors Deferred Compensation Plan. This plan enables such directors
to forego cash fees otherwise payable to them in respect of their service as a
director and to have such fees credited in the form of stock units, which will
be payable in the form of stock or cash, as elected by a director, when the
director terminates service as a director, or at such other time as he or she
elects.
7
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
For biographical information about Messrs. Gittis and Taub, see
"Directors and Director Nominees."
BARRY F. SCHWARTZ (54) 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 (51) 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.
CODE OF ETHICS
The Company has adopted a Code of Business Conduct, which includes a
Code of Ethics for the Company's principal executive and senior financial
officers. The current version of the Code is available to any stockholder
without charge upon request to the Secretary, M & F Worldwide Corp., 35 East
62nd Street, New York, New York 10021.
EXECUTIVE COMPENSATION
The compensation paid to the Company's President and Chief Executive
Officer, Executive Vice President and General Counsel and Executive Vice
President and Chief Financial Officer and Mafco Worldwide's President and Chief
Executive Officer and Senior Vice President - Finance for all services rendered
during each of the three years ended December 31, 2001, 2002 and 2003 is set
forth in the following Summary Compensation Table.
8
SUMMARY COMPENSATION TABLE
LONG-
TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------------------------------
Number of
Securities All
Other Underlying Other
Name and Annual Options/ Compen-
Principal Position Year Salary ($)(a) Bonus ($)(a) Compensation($) SARs(#) sation ($)
------------------ ---- ------------- ------------ --------------- ------- ----------
Howard Gittis 2003 0 0 0 0 0
President and Chief 2002 0 0 0 0 0
Executive Officer 2001 0 0 0 0 0
Barry F. Schwartz 2003 0 0 0 0 0
Executive Vice President 2002 0 0 0 0 0
and General Counsel 2001 0 0 0 0 0
Todd J. Slotkin 2003 0 0 0 0 0
Executive Vice President 2002 0 0 0 0 0
and Chief Financial Officer 2001 0 0 0 0 0
Stephen G. Taub(b) 2003 785,000 824,250 0 0 15,918
President and Chief 2002 735,000 918,750 0 250,000 10,054
Executive Officer of 2001 685,000 753,500 0 0 7,986
Mafco Worldwide
Peter W. Grace (b) 2003 206,000 216,300 0 0 6,945
Senior Vice President- 2002 201,000 251,250 0 35,000 6,665
Finance of Mafco Worldwide 2001 196,000 215,000 0 0 8,877
(a) Includes salary and bonus paid or accrued during the year indicated.
Messrs. Gittis, Schwartz and Slotkin receive no compensation directly
or indirectly from the Company. They provide services to the Company
under the terms of a Management Services Agreement with MacAndrews &
Forbes. MacAndrews & Forbes received payment from the Company for these
services of $1.5 million in 2003.
(b) The amounts reported for Messrs. Taub and Grace under All Other
Compensation represent the costs associated with life and disability
insurance reimbursements, supplemental medical and dental expense
benefits and matching contributions by Mafco Worldwide under its 401(k)
plan. Mr. Grace retired from Mafco Worldwide in February 2004.
STOCK OPTION TRANSACTIONS IN 2003
The Company granted no options to acquire Common Stock in 2003 to
executive officers named in the Summary Compensation Table.
9
AGGREGATED OPTION/SAR EXERCISES IN 2003 AND YEAR END 2003 OPTION/SAR VALUES
The following table shows, for 2003, the number of options to acquire
Common Stock exercised and the 2003 year-end value of the options held by the
executive officers named in the Summary Compensation Table:
Number of Shares
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at Year
Shares Acquired Value Year End End
NAME on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ------------ ------------------------- -------------------------
Howard Gittis 0 0 0/0 $0/0
Barry F. Schwartz 0 0 0/0 $0/0
Todd J. Slotkin 0 0 0/0 $0/0
Stephen G. Taub 0 0 516,667/83,331 $4,221,417/875,833
Peter W. Grace 0 0 93,333/11,677 $729,808/122,617
EQUITY COMPENSATION AT YEAR END 2003
The following table shows, at December 31, 2003, 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 be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
(excluding securities
reflected in column (a))
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans 2,772,801 $6.059 per share 455,000
approved by security holders
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not -0- -0- -0-
approved by security holders
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Total 2,772,801 $6.059 per share 455,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
10
REPORT OF THE AUDIT COMMITTEE
During fiscal year 2003, the Audit Committee consisted of Ms. Coppola
and Messrs. Beekman and Meister. 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 of
Directors. 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. In addition, the
committee approves the nature, scope and amount of audit-related and non-audit
services that the Company's independent auditors may perform.
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
("US GAAP"), including the matters required to be discussed by Statement of
Accounting Standards 61 (Codification of Statements on Auditing Standards), and
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 US GAAP. 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"), and has received the written disclosures and letter
from the independent auditors required by ISB Standard No. 1 (Independence
Discussions with Audit Committees). The ISB was created jointly by the SEC and
the American Institute of Certified Public Accountants as a 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 service provided to the Company by
the independent auditors were compatible with maintaining the auditors'
independence from management and the Company. The committee approved the
Company's request that the independent auditors be permitted to perform certain
non-audit services that the Company expects to require in 2004.
In reliance on the review and discussions referred to above, the
committee recommended to the Board of Directors that the Company include in its
Annual Report on Form 10-K for the year ended December 31, 2003 the audited
financial statements for the year.
THE AUDIT COMMITTEE
Paul M. Meister, Chairman
Philip E. Beekman
Rosanne F.Coppola
11
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
During fiscal year 2003, the Compensation Committee was comprised of
Ms. Coppola and Messrs. Beekman and Gittis. 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 those
of 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 of 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 (the "Mafco
Performance Bonus Plan"). Under the Mafco Performance Bonus Plan, participants
12
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 Mafco
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 Mafco 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 2003 was determined in accordance with such provisions. In
addition, the Compensation Committee may award discretionary bonuses to
executive officers.
OTHER INCENTIVE COMPENSATION AWARDS. The other principal component of
executive compensation is the granting of 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 Company's long-term profitability. 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.
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. In 2003, the
Company entered into a Management Services Agreement with MacAndrews & Forbes,
whereby MacAndrews & Forbes provides the services of Messrs. Gittis, Schwartz
and Slotkin to the Company to manage the business and provides other management
and advisory services to the Company. MacAndrews & Forbes received payment of
$1.5 million from the Company for these services in 2003.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. The Compensation Committee
attempts to ensure full deductibility of compensation notwithstanding 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 Mafco Performance Bonus Plan and the Company's stock option
plans (including the 2003 Stock Incentive Plan for which stockholder approval is
being sought at the Annual Meeting), 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 Section 162(m) of the
Code.
THE COMPENSATION COMMITTEE
Theo Folz, Chairman
Philip E. Beekman
Bruce Slovin
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2003, the Compensation Committee consisted of Howard
Gittis who is a non-employee officer of the Company, and Rosanne F. Coppola and
Philip E. Beekman, 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. In 2003, the Company entered into a Management Services Agreement
with MacAndrews & Forbes, whereby MacAndrews & Forbes provides the services of
Messrs. Gittis, Schwartz and Slotkin to the Company to manage the business and
provides other management and advisory services to the Company. This agreement
expires on December 31, 2005, provided, however, that the term shall be
automatically extended for successive one year periods unless either MacAndrews
& Forbes or the Company shall have given written notice to the other party at
least ninety days prior to the end of term. Such executive officers are not
compensated directly or indirectly by the Company. MacAndrews & Forbes received
payment of $1.5 million from the Company for these services in 2003.
The Chief Executive Officer of Mafco Worldwide, Mr. Taub, is a party to
an employment agreement with Mafco Worldwide. The following is a description of
certain terms of Mr. Taub's agreement.
Mr. Taub's employment agreement 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 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. Grace retired from Mafco Worldwide in February 2004. Upon his
retirement, his employment agreement with Mafco Worldwide expired by its own
terms.
14
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 "Mafco 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 "Mafco 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 Mafco 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
2003 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 Mafco 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 Mafco Restoration Plan, maximum eligible
pension earnings are limited to $500,000. The Mafco Restoration Plan is not
funded; all other vesting and payment rules follow the Mafco Salaried Pension
Plan.
15
The following table shows estimated aggregate annual benefits payable
upon retirement under the Annuities, the Mafco Salaried Pension Plan and the
Mafco Restoration Plan:
ESTIMATED ANNUAL STRAIGHT LIFE ANNUITY BENEFITS AT
HIGHEST CONSECUTIVE RETIREMENT WITH INDICATED YEARS OF CREDITED SERVICE
THREE YEAR AVERAGE -----------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------
$125,000 $31,078 $41,437 $51,796 $51,796 $51,796
150,000 38,578 51,437 64,296 64,296 64,296
175,000 46,078 61,437 76,796 76,796 76,796
200,000 53,578 71,437 89,296 89,296 89,296
225,000 61,078 81,437 101,796 101,796 101,796
250,000 68,578 91,437 114,296 114,296 114,296
300,000 83,578 111,437 139,296 139,296 139,296
400,000 113,578 151,437 189,296 189,296 189,296
450,000 128,578 171,437 214,296 214,296 214,296
500,000+ 143,578 191,437 239,296 239,296 239,296
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, 2003, Mr. Taub had 28 years of credited service and
Mr. Grace had 26 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
persons whose beneficial ownership of Common Stock exceeds ten percent must
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 persons whose beneficial ownership of
Common Stock exceeds ten percent complied with all filing requirements
applicable to them with respect to transactions during 2003.
16
COMMON STOCK PERFORMANCE
The graph and table set forth below present a comparison of cumulative
stockholder return through December 31, 2003, assuming reinvestment of
dividends, by an investor who invested $100 on December 31, 1998 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 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
- --------------------------- -------- -------- -------- -------- -------- --------
M & F Worldwide Corp. $100.00 $50.31 $38.51 $42.73 $53.66 $132.77
S&P 500 Index $100.00 $121.04 $110.02 $96.95 $74.52 $97.19
Dow Jones Food Index $100.00 $81.50 $103.15 $112.32 $112.79 $124.47
17
PROPOSAL 2 - APPROVAL OF THE 2003 STOCK INCENTIVE PLAN
Our stockholders are being asked to approve the 2003 Stock Incentive
Plan as a new equity incentive plan pursuant to which 2,000,000 shares of Common
Stock will be authorized for issuance to executive personnel, key employees,
directors and consultants of the Company and its affiliates. On November 11,
2003, the Board of Directors approved the Plan, subject to the approval of the
Company's stockholders. The 2003 Stock Incentive Plan is intended to (i) attract
and retain executive personnel, key employees, directors and consultants, (ii)
motivate such participants by means of performance-related incentives to achieve
longer-range performance goals and (iii) enable such participants to participate
in the long-term growth and financial success of the Company. The Board of
Directors believes that the Plan is in the best interests of the Company's
stockholders because approval of the 2003 Stock Incentive Plan will enable us to
attain the stated goals thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO APPROVE THE 2003 STOCK INCENTIVE PLAN.
GENERAL
The 2003 Stock Incentive Plan is intended to qualify for the
performance-based compensation exception from the deduction limitation of
Section 162(m) of the Code. Among the requirements for satisfying that exception
are that an equity-based incentive plan contain, and stockholders approve, (i) a
maximum number of shares that may be awarded to eligible employees during
specified periods stated in the 2003 Stock Incentive Plan and (ii) performance
criteria which must be satisfied as a condition to the vesting of awards granted
to certain employees of the Company. Section 162(m) denies a deduction by any
publicly held company for certain compensation in excess of $1 million per year
paid to the company's chief executive officer and the four other most highly
compensated executive officers of the Company.
The Company is seeking stockholders approval of the 2003 Stock
Incentive Plan (i) to satisfy certain listing standards established by the NYSE,
(ii) so that the Company may use the 2003 Stock Incentive Plan to grant
incentive stock options (options that enjoy certain favorable tax treatment
under Section 421 of the Code), and (iii) as explained above, to enhance the
Company's ability to grant awards that qualify for the performance-based
exception to the federal income tax deduction limits that otherwise might apply
under Section 162(m) of the Code.
DESCRIPTION OF PRINCIPAL FEATURES OF THE 2003 STOCK INCENTIVE PLAN
The following is a brief description of the principal features of the
2003 Stock Incentive Plan. It does not purport to be complete and is qualified
in its entirety by the full text of the 2003 Stock Incentive Plan, which is
annexed hereto as Appendix 4.
18
Administration
The 2003 Stock Incentive Plan will be administered by the Compensation
Committee of the Board of Directors. Each member of the Compensation Committee
will be an "outside director" within the meaning of Section 162(m) of the Code.
The Compensation Committee will have the authority in its sole
discretion, subject to and not inconsistent with the express provisions of the
2003 Stock Incentive Plan and applicable law, to (i) designate participants;
(ii) determine the type or types of awards to be granted to a participant; (iii)
determine the number of shares of Common Stock to be covered by awards; (iv)
determine the terms and conditions of any award, including but not limited to
whether the vesting or payment of all or any portion of any award may be made
subject to one or more performance goals; (v) determine whether, to what extent,
and under what circumstances awards may be settled or exercised in cash, shares
of Common Stock, other securities, other awards or other property, or cancelled,
forfeited, or suspended and the method or methods by which awards may be
settled, exercised, cancelled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, shares of Common Stock, other
securities, other awards, other property, and other amounts payable with respect
to an award shall be deferred either automatically or at the election of the
holder thereof or of the Compensation Committee; (vii) interpret and administer
the 2003 Stock Incentive Plan and any instrument or agreement relating to, or
award made under, the 2003 Stock Incentive Plan; (viii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the 2003 Stock Incentive Plan;
and (ix) make any other determination and take any other action that the
Compensation Committee deems necessary or desirable for the administration of
the 2003 Stock Incentive Plan.
The Compensation Committee may also determine to pay annual or other
fees to non-employee directors in whole or in part in the form of awards
available for grant under the 2003 Stock Incentive Plan. The Compensation
Committee may delegate all, or any part, of its administrative power where
consistent with applicable securities and tax law requirements. The Compensation
Committee shall not have the authority to reduce the exercise price of any
option granted under the 2003 Stock Incentive Plan.
Shares Authorized
The Company has reserved 2,000,000 shares of Common Stock for issuance
under the 2003 Stock Incentive Plan. Such shares may consist, in whole or in
part, of authorized shares and unissued shares or treasury shares. No individual
may be granted stock options or stock appreciation rights under the 2003 Stock
Incentive Plan in any calendar year covering more than 600,000 shares. In
addition, the number of shares with respect to which restricted stock and other
stock-based awards intended to qualify for the performance-based exception to
the Section 162(m) deductibility limit in the Code that may be granted to any
individual in any calendar year may not exceed 600,000 shares.
19
If an award granted under the 2003 Stock Incentive Plan is forfeited or
otherwise terminates or is cancelled without the delivery of shares, then the
shares underlying the award will again be available under the 2003 Stock
Incentive Plan. In the event of any change in the Company's capitalization or in
the event of a corporate transaction such as a merger, consolidation, separation
or similar event, the 2003 Stock Incentive Plan provides for appropriate
adjustments in the number and class of shares of stock (or other property)
available for issuance or grant and in the number and/or price of shares subject
to awards.
Eligibility
Awards may be granted under the 2003 Stock Incentive Plan to key
employees, directors and consultants of the Company and its affiliates.
Performance Goals
The Compensation Committee may condition the vesting of awards granted
under the 2003 Stock Incentive Plan upon the attainment of performance goals.
Awards may be contingent on the Company's attainment of one or more
pre-established performance goals established by the committee based on our
attainment of any one or more of the following performance criteria:
- return on total stockholder equity;
- earnings per share of common stock;
- net income (before or after taxes);
- earnings before interest, taxes, depreciation and amortization;
- revenues;
- return on assets;
- market share;
- cost reduction goals; or
- any combination of, or specified increase in, any of the
foregoing goals.
By making awards granted under the 2003 Stock Incentive Plan subject to
the attainment of performance goals, the Compensation Committee intends that
compensation paid under the 2003 Stock Incentive Plan will not be subject to the
deductibility limitation imposed under Section 162(m) of the Code.
20
Types of Awards
The Compensation Committee may grant five types of awards under the
2003 Stock Incentive Plan: (i) options (including incentive stock options within
the meaning of Section 422 of the Code and nonqualified options that do not
qualify as incentive stock options), (ii) stock appreciation rights, (iii)
restricted stock, (iv) stock awards and (v) other stock-based awards. Each award
will be evidenced by an agreement which shall contain such provisions as the
Compensation Committee may in its sole discretion deem necessary or desirable
and which are not in conflict with the terms of the 2003 Stock Incentive Plan.
Stock Options
Options entitle the holder to purchase shares of Common Stock during a
specified period at a purchase price specified by the Compensation Committee
(but not less than the fair market value of the Common Stock on the day the
option is granted for any incentive stock option). Each option granted under the
2003 Stock Incentive Plan will be exercisable for a period of 10 years from the
date of grant, or such lesser period as the Compensation Committee shall
determine. Options may be exercised in whole or in part, (i) by the payment in
cash or cash equivalents of the full option price of the shares purchased, (ii)
by tendering unrestricted shares of Common Stock owned by the participant for at
least six months that have a fair market value equal to the option price of the
shares purchased, or (iii) subject to applicable law, by a broker's cash-less
exercise procedure approved by the Compensation Committee.
Stock Appreciation Rights ("SARs")
A SAR entitles the participant, upon exercise, to an amount equal to
the excess of the fair market value of a share of Common Stock over the grant
price of the SAR. The grant price of each SAR will be determined by the
Compensation Committee. A SAR may be related to an option or unrelated. A SAR
that is related to an option may only be exercised to the extent the related
option is exercisable and to the extent the SAR is exercised, the number of
shares subject to the related option will be reduced on a one for one basis.
Restricted Stock
A restricted stock award consists of a grant of a share of Common Stock
that is subject to a risk of forfeiture before the stock becomes vested. Shares
of restricted stock may not be sold, assigned, transferred, pledged or otherwise
encumbered, except as provided in the 2003 Stock Incentive Plan or the
applicable award agreement. Dividends paid on any shares of restricted stock may
be paid directly to a participant, or may be reinvested in additional shares, as
determined by the Compensation Committee.
Stock Awards
A stock award is an award of shares of Common Stock that is not subject
to a risk of forfeiture or transfer restrictions.
21
Other Stock-Based Awards
Other stock-based awards, the form of which may be determined by the
Compensation Committee, will be valued in whole or in part by reference to or
otherwise based on shares of Common Stock.
Amendment or Termination of the 2003 Stock Incentive Plan
The Board of Directors may amend, alter, suspend, discontinue or
terminate the 2003 Stock Incentive Plan or any portion of it at any time;
provided that no such amendment, alteration, suspension, discontinuation or
termination may be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval requirement with which the Board of Directors deems it
necessary or desirable to qualify or comply. However, the Compensation Committee
may amend the 2003 Stock Incentive Plan in such manner as may be necessary to
conform with local rules and regulations in any jurisdiction outside the United
States.
2003 STOCK INCENTIVE PLAN BENEFITS
There have been no awards granted under the 2003 Stock Incentive Plan
to date. Additionally, inasmuch as awards under the 2003 Stock Incentive Plan
will be granted at the sole discretion of the Compensation Committee, the
Company cannot determine at this time either the persons who will receive awards
under the 2003 Stock Incentive Plan or the amount of any such awards.
As of March 31, 2004, the closing price of a share of Common Stock on
the NYSE was $13.69 per share.
FEDERAL INCOME TAX INFORMATION
The following is a general summary of the federal income tax
consequences that may apply to recipients of options, stock appreciation rights,
restricted stock or other stock awards under the 2003 Stock Incentive Plan. The
discussion is a summary only, and the applicable law is subject to change.
Reference is made to the Code for a complete statement of all relevant federal
tax provisions.
Nonqualified Stock Options ("NSOs")
A participant generally will not recognize taxable income upon the
grant of an NSO. Rather, at the time of exercise of such NSO, he or she will
recognize ordinary income for income tax purposes in an amount equal to the
excess of the fair market value of the shares purchased over the exercise price.
The Company will generally be entitled to a tax deduction at such time and in
the same amount that the participant recognizes ordinary income.
If shares acquired upon exercise of an NSO are later sold or exchanged,
then the difference between the amount received upon such sale, exchange or
disposition and the fair market value of such stock on the date of such exercise
will generally be taxable as long-term or
22
short-term capital gain or loss (if the stock is a capital asset of the
participant) depending upon the length of time such shares were held by the
participant.
Incentive Stock Options ("ISOs")
A participant will not recognize any ordinary income (and the Company
will not be permitted any deduction) upon the grant or timely exercise of an
ISO. However, the amount by which the fair market value of Common Stock on the
exercise date of an ISO exceeds the purchase price generally will constitute an
item which increases the participant's "alternative minimum taxable income."
Exercise of an ISO will be timely if made during its term and if the
participant remains an employee of the Company or a subsidiary at all times
during the period beginning on the date of grant of the ISO and ending on the
date three months before the date of exercise (or one year before the date of
exercise in the case of a disabled participant, and without limit in the case of
death). The tax consequences of an untimely exercise of an ISO will be
determined in accordance with the rules applicable to NSOs, discussed above.
If stock acquired pursuant to the timely exercise of an ISO is later
disposed, and if the stock is a capital asset of the participant, the
participant generally will recognize short-term or long-term capital gain or
loss (depending upon the length of time such shares were held by the
participant) equal to the difference between the amount realized upon such sale
and the exercise price. The Company, under these circumstances, will not be
entitled to any income tax deduction in connection with either the exercise of
the ISO or the sale of such stock by the participant.
If, however, stock acquired pursuant to the exercise of an ISO is
disposed of by the participant prior to the expiration of two years from the
date of grant of the ISO or within one year from the date such stock is
transferred to him or her upon exercise (a "disqualifying disposition"), any
gain realized by the participant generally will be taxable at the time of such
disqualifying disposition as follows: (i) at ordinary income rates to the extent
of the difference between the exercise price and the lesser of the fair market
value of the stock on the date the ISO is exercised or the amount realized on
such disqualifying disposition and (ii) if the stock is a capital asset of the
participant, as short-term or long-term capital gain (depending upon the length
of time such shares were held by the participant) to the extent of any excess of
the amount realized on such disqualifying disposition over the sum of the
exercise price and any ordinary income recognized by the participant. In such
case, the Company may claim an income tax deduction at the time of such
disqualifying disposition for the amount taxable to the participant as ordinary
income.
Restricted Stock
A participant generally will not be subject to tax upon the grant of a
restricted stock award, but rather will recognize ordinary income in an amount
equal to the fair market value of such shares at the time the shares are no
longer subject to a substantial risk of forfeiture (as defined in the Code). The
Company generally will be entitled to a deduction at the time when, and in the
amount that, the participant recognizes ordinary income on account of the lapse
of the restrictions. A participant's tax basis in the shares will equal their
fair market
23
value at the time the restrictions lapse, and the participant's holding period
for capital gains purposes will begin at that time. Any cash dividends paid on
the shares before the restrictions lapse will generally be taxable to the
participant as additional compensation (and not as dividend income).
SARs
The grant of a SAR will not result in income for the participant or in
a tax deduction for the Company at the time of grant. Upon the settlement of
such a right or award, the participant will recognize ordinary income equal to
the aggregate value of the cash and/or shares received, and the Company
generally will be entitled to a tax deduction in the same amount.
Stock Awards
A stock award generally will result in compensation income for the
participant, and a tax deduction for the Company, each equal to the fair market
value of the shares of Common Stock subject to the award.
Other Stock-Based Awards
The tax treatment of other stock-based awards will depend on the terms
of such awards. In general, if the award is payable in cash, the participant
will recognize ordinary income at the time of payment. In general, if the award
is payable in shares of Common Stock, the participant will recognize ordinary
income at the time such shares are no longer subject to a substantial risk of
forfeiture in an amount equal to the fair market value of the shares on that
date. In general, the Company will be entitled to a deduction in the same
amount, and at the same time as ordinary income is recognized by the
participant.
24
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, 2004. 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 FEES. The aggregate fees and expenses that Ernst & Young LLP
billed to the Company for professional services rendered for the audit of the
Company's 2003 and 2002 financial statements and reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
quarterly periods in 2003 and 2002 were $520,100 and $533,000, 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 FEES. The aggregate fees and expenses that Ernst & Young
LLP billed to the Company for audit-related services rendered in 2003 and 2002
were $348,800 and $84,950, respectively. Audit-related services include employee
benefit plan audits, assistance with compliance with the requirements under
Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC rules promulgated
pursuant thereto and reviews not required for the audit of the consolidated
financial statements.
TAX FEES. The aggregate fees and expenses that Ernst & Young LLP billed
to the Company for tax services rendered in 2003 and 2002 to the Company were
$23,900 and $39,500, respectively. Tax services include tax planning and tax
advice.
ALL OTHER FEES. The aggregate fees and expenses that Ernst & Young LLP
billed to the Company for all other services rendered in 2003 and 2002 to the
Company were $12,500 and $12,000, respectively. All other services include work
related to the proxy statement disclosures.
AUDITOR INDEPENDENCE. The Audit Committee considered whether any
audit-related and non-audit service that Ernst & Young LLP provided were
compatible with maintaining the auditors' independence from management and the
Company. It has been the Audit Committee's policy to approve in advance the plan
of audit services to be provided and an estimate of the cost for such audit
services. The Audit Committee has also adopted a policy of approving in advance
for each calendar year a plan of the expected services and a related budget,
submitted by management, for audit-related services, tax services and other
services that the Company expects the auditors to render during the year.
Throughout the year, the Audit Committee is provided with updates on the
services provided and the expected fees associated with each service. 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 2003 financial statements and the
non-audit services that the Company expects Ernst & Young LLP to provide in
2004.
25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth the total number of shares of Common
Stock that each director of the Company, each person known to the Company to be
the beneficial owner of more than 5% of the outstanding Common Stock, the
officers named in the Summary Compensation Table presented earlier in this Proxy
Statement and all directors and officers as a group beneficially owned as of
March 31, 2004, and the percent of Common Stock so owned. Common Stock is the
Company's only outstanding voting stock. "Ownership" for this purpose is
"beneficial ownership" as determined under the rules of the SEC, and such
information is not necessarily indicative of beneficial ownership for any other
purpose. Under these rules, a person beneficially owns a share if the person has
sole or shared voting power or investment power with respect to the share or the
person has the right to acquire the share within 60 days through the exercise of
any option, warrant or right, through conversion of any security or pursuant to
the automatic termination of any power of attorney or revocation of trust,
discretionary account or similar arrangement.
26
Amount and Nature
of Beneficial Percent of
Name Ownership(a) Voting Stock
- ---- ----------------- ------------
Mafco Consolidated Group Inc. 7,048,000(b) 38.3%
35 East 62nd Street
New York, NY 10021
Dimensional Fund Advisors Inc. 1,090,600 5.93%
1299 Ocean Avenue
Santa Monica, CA 90401
Philip E. Beekman 10,900 *
Rosanne F. Coppola 0 *
Jaymie A. Durnan 500 *
Theo W. Folz 535,000 2.83%
Howard Gittis 146,000 *
Peter W. Grace 93,333 *
Paul M. Meister 72,416 *
Ronald O. Perelman 500,000 2.65%
Barry F. Schwartz 5,000 *
Todd J. Slotkin 5,000 *
Bruce Slovin 10,410 (c) *
Stephen G. Taub 516,667 2.73%
All directors and executive officers as a group (12 persons) (d) 8,943,226 44.66%
* Less than 1%.
(a) Includes Common Stock and options to acquire 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. Perelman - 500,000; Mr. Taub - 516,667; Mr. Grace -
93,333.
(b) All of such shares of Common Stock are indirectly owned by Mr. Perelman
through Mafco Holdings and aggregate 38.3% 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.
27
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 Company's acquisition of 7,320,225 shares of common stock, par
value $.01 per share, of Panavision (the "Panavision Shares"), from PX Holding
Corporation, a Delaware corporation ("PX Holding").
Pursuant to the Settlement Agreement, as approved by the Delaware
Chancery Court on December 3, 2002, PX Holding purchased the Panavision Shares
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 (the "M & F Worldwide
Series B Preferred Stock"), and (iii) $80,000,000 in cash. Contemporaneously,
Mafco Holdings and the Company entered into a letter agreement, pursuant to
which 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
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 Panavision Shares and
certain shares of Panavision Series A Preferred Stock;
(ii) The Company and PX Holding entered into a letter
agreement terminating the Registration Rights Agreement, dated as of
April 19, 2001, as amended on December 21, 2001, between such parties,
pursuant to 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")
terminating the letter agreement, dated as of April 19, 2001, between
such parties;
(iv) The Company and Mafco Holdings entered into a letter
agreement terminating the letter agreement, dated as of April 19, 2001,
between such parties;
(v) The Company and Panavision entered into a letter agreement
terminating any obligation relating to the letter, dated as of April
19, 2001, between such parties;
28
(vi) The Company and Mafco Holdings entered into a letter
agreement 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 Due 2006;
(vii) The Company and Mafco Holdings entered into a letter
agreement pursuant to which Mafco Holdings purchased from the Company
for $6,700,000 in 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 stockholders 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 liability
to the former stockholders 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 Panavision's 9-5/8% Senior
Subordinated Discount Notes Due 2006 on which there was approximately
$372,498 of accrued and unpaid interest, for an aggregate purchase
price of $4,735,798 in cash.
Upon the closing of these transactions, 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 (collectively, the "EFILM 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.
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
29
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 the Instrument of Assignment and Assumption
indemnifying the Company with respect to liability, including deferred purchase
price, to the former stockholders 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 stockholders of Las Palmas and Las
Palmas.
TAX SHARING AGREEMENT WITH PANAVISION. For the period from April 19,
2001 through December 3, 2002, Panavision, for federal income tax purposes, was
in the affiliated group of which the Company is the common parent (the "M&F
Worldwide Group"), and the Company included Panavision's federal taxable income
in such group's consolidated federal income tax return. The Company also
included Panavision 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 "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 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 had to pay if it were to have filed separate federal, state or local income
tax returns (including any amount 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 attributable to Panavision),
except that Panavision was not entitled to carryback any losses to taxable
periods ending prior to April 19, 2001. No payment was necessary under the Tax
Sharing Agreement as Panavision had sufficient net operating loss carryforwards
to offset its taxable income. The Tax Sharing Agreement continues 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
another subsidiary of the Company entered into a Transfer Agreement (the
"Transfer Agreement"). Under the Transfer Agreement, Pneumo Abex retained the
assets and liabilities relating to its Abex NWL Aerospace Division
("Aerospace"), as well as certain contingent liabilities and the related assets,
including its historical insurance and indemnification arrangements. Abex
transferred substantially all of its other assets and liabilities to a
subsidiary of Mafco Consolidated. The Transfer Agreement provides for
appropriate transfer, indemnification and tax
30
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 categories of asbestos-related 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 these
categories of asbestos-related 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 Pneumo Abex sold to Parker
Hannifin Corporation in 1996.
THE 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 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. In 2003, the Company entered into a Management
Services Agreement with MacAndrews & Forbes, whereby MacAndrews & Forbes
provides the services
31
of three of its executives, Messrs. Gittis, Schwartz and Slotkin, to the Company
to manage the business and provides other management and advisory services to
the Company. This agreement expires on December 31, 2005, provided, however,
that the term shall be automatically extended for successive one year periods
unless either MacAndrews & Forbes or the Company shall have given written notice
to the other party at least ninety days prior to the end of term. Such executive
officers are not compensated directly or indirectly by the Company. MacAndrews &
Forbes received payment of $1.5 million from the Company for these services in
2003.
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, 2003, the Company has recorded prepaid expenses, other assets,
accrued liabilities and other liabilities of $1.5 million, $6.0 million, $2.7
million and $2.8 million relating to the financing of the directors and officers
insurance program.
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 2003 and any Quarterly Report on
Form 10-Q filed thereafter, without charge, upon written request to the
Secretary, M & F Worldwide Corp., 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 12, 2004, 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 such request should be made
promptly to the Company.
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 2005 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 shares of Common Stock 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 annual meeting of
stockholders to be held in 2005) in writing as set forth below. Proposals of
stockholders intended to be presented at the annual meeting of stockholders to
be held in 2005 must be received by the Secretary, M & F Worldwide Corp., 35
East 62nd Street, New York, New York 10021, not later than January 6, 2005. 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, the Secretary must receive such proposals at the above address
by March 7, 2005. In accordance with the Company's by-laws, proposals of
stockholders made outside of
32
Rule 14a-8 under the Exchange Act must be submitted not later than March 7, 2005
and not earlier than February 5, 2005.
OTHER BUSINESS
The Company knows of no other matter that may come before the Annual
Meeting. However, if any such matter properly comes before the meeting, the
individuals named in the proxies will vote on such matters in accordance with
their best judgment.
April 2, 2004
By Order of the Board of Directors,
M & F WORLDWIDE CORP.
33
APPENDIX 1
M & F WORLDWIDE CORP.
BOARD STANDARDS FOR ASSESSING DIRECTOR INDEPENDENCE
The Board of Directors of M & F Worldwide Corp. shall consider any Director on
the Board satisfying the following standards to be "independent":
1. NO MATERIAL RELATIONSHIP WITH THE COMPANY. The Board of Directors has
determined that the Director does not have any material relationship
with the Company (as defined below), either directly or as a partner,
substantial shareholder or officer of an organization that has a
relationship with the Company. In making such determinations, the Board
will consider any relationship that does not exceed the standards set
forth in Sections (2) to (7) to be immaterial.
2. EMPLOYMENT WITH THE COMPANY. The Director is not, and has not within
the past three years been, an officer or employee of the Company, and
no member of his or her Immediate Family (as defined below) is, or
within the past three years has been, an executive officer of the
Company.
3. DIRECT COMPENSATION FROM THE COMPANY OF LESS THAN $100,000. Neither the
Director nor any of his or her Immediate Family has received more than
$100,000 per year in direct compensation from the Company within the
past three years. In calculating compensation, the following will be
excluded: (a) Director and committee fees and expenses and pension or
other forms of deferred compensation for prior service to the Company
(provided such deferred compensation is not contingent in any way on
continued service); (b) compensation paid to a Director for service as
an interim Chairman or Chief Executive Officer of the Company and (c)
compensation paid to an Immediate Family member for service as a
non-executive employee.
4. NO MATERIAL BUSINESS DEALINGS. The Director has not been an executive
officer or an employee of, and no Immediate Family member of the
Director has been an executive officer of, another company (including
parent and subsidiary companies within such other company's
consolidated group) within the past three years that has made payments
to or has received payments from the Company or its affiliates for
property or services in an amount exceeding the greater of $1.0 million
or 2% of such other company's consolidated gross revenues (as reported
for the most recently completed fiscal year of such other company);
provided that, at the time of making such assessment, the Director or
his or her Immediate Family member remains employed by such other
company.
5. NO AFFILIATION WITH THE COMPANY'S AUDITOR. The Director has not been
affiliated with or employed by, and no Immediate Family member of the
Director has been affiliated with or employed in a professional
capacity by, the independent auditor of the Company or any other
independent auditor of the Company within the past three years.
34
6. NO INTERLOCKING DIRECTORATES. The Director has not been employed, and
no Immediate Family member of the Director has been employed, within
the past three years as an executive officer of another company where
either the Company's Chief Executive Officer, Chief Financial Officer
or other executive officer served on such other company's compensation
committee.
7. NO MATERIAL CHARITABLE CONTRIBUTIONS. The Director has not been an
executive officer of a company or other organization to which the
Company or any of its executive officers has made, within the past
three years, charitable contributions in any one year exceeding the
greater of (1) $1 million or (2) 2% of the charitable entity's annual
consolidated gross revenues.
For purposes of these guidelines--
1. References to the "COMPANY" in items 1 through 7 above include M & F
Worldwide Corp., its subsidiaries and any entity owning a sufficient stake
in M & F Worldwide Corp. such that it consolidates the entities' financial
results.
2. The "IMMEDIATE FAMILY" of an individual includes the individual's
spouse, parents, children, siblings, mother- and father-in-law, daughters-
and sons-in-law, sisters- and brothers-in-law and anyone who shares the
individual's home (excluding unrelated employees of the individual). The
Board need not consider the otherwise-disqualifying activities of an
individual who dies, becomes incapacitated or otherwise ceases to be an
Immediate Family member prior to the time of the Board's determination.
3. The Board may accept a Director's good-faith representation as to the
consolidated gross revenues of another entity when such data is not readily
available from public sources.
Publication Date: January 29, 2004
35
APPENDIX 2
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
M & F WORLDWIDE CORP.
In accordance with the By-Laws of M & F Worldwide Corp. (the "Company") and
applicable laws, rules and regulations, there will be a standing committee of
the Board of Directors of the Company (the "Board") known as the Audit Committee
(the "Committee").
I. PURPOSE
The primary objective of the Committee is to assist the Board in fulfilling the
Board's oversight responsibilities with respect to (a) the integrity of the
financial statements and other financial information provided by the Company to
its stockholders and the public, (b) the Company's financial reporting process,
(c) its systems of internal accounting and financial controls, (d) its
compliance with legal and regulatory requirements, (e) the independent auditors'
qualifications, independence and performance, (f) the performance of the
Company's internal audit function and (g) any other matter required of the
Committee pursuant to the listing standards of the New York Stock Exchange (the
"NYSE") or under applicable law. Although the Committee has the powers and
responsibilities set forth in this Charter, the role of the Committee is
oversight. Consequently, it is not the duty of the Committee to plan or conduct
audits; to otherwise investigate the Company's affairs; to assure compliance
with law or Company policy; or to determine that the Company's financial
statements and disclosures are complete and accurate, fairly present the
Company's financial condition, results of operations or cash flows, or are in
accordance with those accounting principles generally accepted in the United
States ("GAAP") or applicable laws, rules and regulations. These are the
responsibilities of management and the independent auditors.
II. ORGANIZATION
1. Generally.
a. Composition. The Committee will consist of three or more Directors of
the Company as set by the Board from time to time, each of whom should
satisfy the qualifications discussed in Paragraph 2 below. The Board
will appoint the members of the Committee as needed to fill any
vacancy, upon the recommendation of the Nominating/Governance
Committee. Unless removed by the Board, each member may serve for as
long as he or she is a Director.
b. Committee Chair. The Committee will have a Chairman, who may be any
member of the Committee that the Board shall from time to time select.
The Chairman may resign the chair without resigning from the
Committee.
36
c. Quorum. Unless otherwise provided in the By-Laws of the Company, a
quorum of the Committee will consist of two members, whether or not
the Chairman of the Committee shall be present.
d. Delegation of Authority. The Committee may form subcommittees and
delegate authority to subcommittees or its Chairman when appropriate.
In particular, the Committee shall permit the Chairman to
"pre-approve" certain audit-related and non-audit-related matters
pursuant to Sections 10A(h) and (i) of the Securities Exchange Act of
1934 (as amended by the Sarbanes-Oxley Act of 2002) to the extent
permitted by law or applicable SEC regulation. The Chairman shall
report to the Committee any action he or she may have taken since a
Committee meeting pursuant to any grant of delegated authority at the
Committee's next meeting.
2. Qualifications of Members of the Committee. Each member of the Committee,
and where applicable the Committee as a whole, should, at the time
being considered for appointment and at all times thereafter, satisfy
the following criteria:
a. Independence. Each member of the Committee must be "independent"
within the meaning of the NYSE listing standards and the rules of the
Securities and Exchange Commission (the "SEC") pertaining to audit
committees.
b. Financial Literacy. To the extent required by applicable laws or the
NYSE listing standards, each member of the Committee must be
financially literate, as such qualification is determined from time to
time by the Company's Board in the exercise of its business judgment,
or must become financially literate within a reasonable period of time
after his or her appointment to the Committee.
c. Accounting or Related Financial Management Expertise. To the extent
required by applicable laws or the NYSE listing standards, at least
one member of the Committee must have accounting or related financial
management expertise, as such qualification is determined from time to
time by the Company's Board in the exercise of its business judgment,
provided that the Board may presume that a member who qualifies as an
"audit committee financial expert," as discussed below, has the
requisite accounting or related financial management expertise.
d. Audit Committee Financial Expert. While not a requirement for
membership on the Committee, it is the Board's view that, if possible,
it is desirable to have at least one "audit committee financial
expert" serving on the Committee, as such term is defined in the
applicable SEC rules.
e. Membership on Other Audit Committees. In selecting members of the
Committee, the Board should consider whether a potential member serves
on the audit committee of more than two other public companies and, if
so, whether such simultaneous service would impair the ability of the
Director to serve effectively on the Committee. Service under these
circumstances must be disclosed in the Company's annual proxy
statement to the extent required by applicable laws or the NYSE
listing standards.
37
III. MEETINGS
The Committee will meet as often as it determines is necessary or desirable, but
not less frequently than quarterly. To foster open communication, the Committee
will endeavor to meet with management, the head of the internal audit function
and the senior independent auditors in separate executive sessions to discuss
any matter that the Committee or each of these groups believe should be
discussed privately. The Committee may request any officer or employee of the
Company or the Company's outside counsel or independent auditor to attend a
meeting of the Committee or to meet with any member of, or consultant to, the
Committee. The Committee may from time to time decide to act by unanimous
written consent in lieu of a meeting.
The Chairman of the Committee will (a) in consultation with the Company's
Secretary, set the time and place of Committee meetings and notify members of
meetings, (b) preside at meetings and (c) in consultation with the other members
of the Committee and the Company's Secretary, set the agenda of items to be
addressed at each upcoming meeting. Each member of the Committee may suggest the
inclusion of items on such agenda, and may raise at any Committee meeting
appropriate and relevant business subjects that are not on the agenda for that
meeting. The Chairman of the Committee and the Company's Secretary will endeavor
to ensure, to the extent feasible, that the agenda for each upcoming meeting of
the Committee is circulated to each member of the Audit Committee in advance of
the meeting.
IV. AUTHORITY AND RESPONSIBILITIES
The Committee will, to the extent consistent with applicable law or the NYSE
listing standards, have the following authority and principal responsibilities:
1. Independent Auditor. With respect to the independent auditor, the
Committee will:
a. Be directly and solely responsible for the appointment, compensation,
retention and oversight of the work of any public accounting firm
registered with the Public Company Accounting Oversight Board (the
"PCAOB"), including the Company's independent auditor for the purpose
of preparing and issuing its audit report or performing other audit,
review or attest services for the Company. Such registered public
accounting firms will report directly to the Committee, and the
Committee will be directly responsible for resolving any disagreement
between management and the independent auditor regarding financial
reporting.
b. Review in advance, and grant any appropriate pre-approval of, (i) all
proposed auditing services to be provided by the independent auditor
and (ii) all proposed non-audit services to be provided by the
independent auditor as permitted by applicable law, and in connection
therewith to approve all fees and other terms of engagement, as
required by applicable law and subject to the exemptions provided in
the SEC's or PCAOB's rules.
38
c. At least annually, obtain and review a report from the independent
auditor describing (i) the independent auditor's internal quality
control procedures, (ii) any material issue raised by the most recent
internal quality control review, or peer review, of the independent
auditor, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years concerning
one or more independent audits carried out by the independent auditor,
and any step taken to deal with any such issue, and (iii) all
relationships between the independent auditor and the Company.
d. Periodically review with the independent auditor any problem or
difficulty encountered during the course of the audit, including any
restriction on the scope of work or access to required information,
and management's response.
2. Review of Financial Statements and Other Financial Oversight. The
Committee will:
a. Discuss with management and the independent auditor the Company's
annual audited and quarterly unaudited financial statements, including
disclosures made in "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
b. Render the audit committee report required by the SEC's proxy rules to
be included in the Company's annual proxy statement and any other
report of the Committee required by applicable law or the NYSE listing
standards.
c. Discuss generally the Company's earnings press releases, as well as
the type of financial information and earnings guidance provided to
analysts or rating agencies.
d. Review major issues regarding accounting principles and financial
statement presentations, including any significant change in the
Company's selection or application of accounting principles, and major
issues as to the adequacy of the Company's internal controls and any
special audit step adopted in light of any material control
deficiency.
e. Review analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues, if any, and
judgments made in connection with the preparation of the financial
statements, including analyses of the effects of alternative GAAP
methods on the financial statements.
f. Review the effect of regulatory and accounting initiatives, as well as
any off-balance sheet structure, on the Company's financial
statements.
g. Meet separately, periodically, with the Company's management, with the
personnel implementing the Company's internal audit function and with
the Company's independent auditor.
39
3. Internal Controls. With respect to the internal audit function and
internal controls, the Committee will:
a. Review on an annual basis the composition, functions, staffing, budget
and performance of the internal audit function.
b. Discuss the Company's risk assessment and risk management guidelines
and policies.
4. Complaint Procedures. The Committee will:
a. Establish and maintain procedures for (i) the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and (ii) the
confidential, anonymous submission by Company employees of concerns
regarding questionable accounting or auditing matters.
b. Have the power to investigate any matter brought to its attention and
the right to obtain full access to all books, records, facilities and
personnel of the Company.
5. Other Responsibilities. The Committee will:
a. (i) Review and advise the Board with respect to the Company's policies
and procedures regarding compliance with the Company's Code of
Business Conduct (the "Code"); (ii) obtain reports from management,
the head of the Company's internal audit function and the independent
auditor concerning any issue of which they are aware concerning
compliance with the Code; (iii) approve, if the Board has not done so,
any appropriate waiver of the Code for (A) the Company's executive
officers and directors or (B) in the case of the portion of the Code
entitled "Code of Ethics for Senior Financial Officers," the Company's
Senior Financial Officers (as defined in the Code); provided, however,
that any such waiver shall be promptly disclosed as required by law or
any listing standard of the NYSE.
b. Establish policies with respect to the hiring of employees or former
employees of the independent auditor who have participated in any
capacity in the Company's audit.
c. Endeavor to evaluate at least annually whether any change to this
Charter is necessary or appropriate.
d. Report orally or in writing to the Board concerning each meeting of
the Committee as it deems necessary or appropriate.
e. Review its own performance annually.
f. Perform any other activity consistent with this Charter and the
Company's By-Laws or as are required under applicable law or the NYSE
listing standards, as in effect from time to time.
40
V. RESOURCES
The Committee will have the authority to retain independent legal, accounting
and other advisors and consultants, as appropriate, to advise the Committee or
its subcommittees as they determine necessary to carry out their duties, without
seeking Board or management approval. The Committee will determine the extent of
funding necessary for payment of compensation by the Company to the independent
auditor for its work in preparing or issuing the annual audit report or for
providing any other permissible audit-related or non-audit service and to any
independent legal, accounting and other advisor or consultant retained to advise
the Committee or its subcommittees, which funds will be provided by the Company.
The Company will also reimburse ordinary administrative expenses of the
Committee.
Publication Date: January 2, 2004
41
APPENDIX 3
CHARTER OF
THE NOMINATING/GOVERNANCE COMMITTEE
OF THE BOARD OF DIRECTORS OF
M & F WORLDWIDE CORP.
In accordance with the By-Laws of M & F Worldwide Corp. (the "Company") and
applicable laws, rules and regulations, there will be a standing committee of
the Board of Directors of the Company (the "Board") known as the
Nominating/Governance Committee (the "Committee").
I. ORGANIZATION
The Committee will consist of three or more Directors of the Company as set by
the Board from time to time. These members must be "independent" within the
meaning of the New York Stock Exchange ("NYSE") listing standards pertaining to
corporate governance. The Board will appoint the members of the Committee as
needed to fill any vacancy, upon the recommendation of the Committee. Unless
removed by the Board, each member may serve for as long as he or she is a
Director.
The Committee will have a Chairman, who may be any member of the Committee that
the Board shall from time to time select. The Chairman may resign the chair
without resigning from the Committee.
Unless otherwise provided in the By-Laws of the Company, a quorum of the
Committee will consist of two members, whether or not the Chairman of the
Committee shall be present.
II. MEETINGS
The Committee will meet as often as it determines is necessary or desirable, but
not less frequently than annually. The Committee may from time to time decide to
act by unanimous written consent in lieu of a meeting.
The Chairman of the Committee will (a) in consultation with the Company's
Secretary, set the time and place of Committee meetings and notify members of
meetings, (b) preside at meetings and (c) in consultation with the other members
of the Committee and the Company's Secretary, set the agenda of items to be
addressed at each upcoming meeting. Each member of the Committee may suggest the
inclusion of items on such agenda, and may raise at any Committee meeting
appropriate and relevant business subjects that are not on the agenda for that
meeting. The Chairman of the Committee and the Company's Secretary will endeavor
to ensure, to the extent feasible, that the agenda for each upcoming meeting of
the Committee is circulated to each member of the Committee in advance of the
meeting.
42
III. AUTHORITY AND RESPONSIBILITIES
The Committee will have the following authority and principal responsibilities:
a. Identifying individuals qualified to become members of the Board
(consistent with any criteria that the Board or this Committee shall
approve), conducting background checks for those individuals it would
like to recommend to the Board as director nominees and recommending
to the Board selections as needed for Director nominees for each
annual meeting of stockholders and filling vacancies on the Board that
may occur between annual meetings of stockholders;
b. Considering any qualified candidate for an open Board position timely
submitted to the Committee by any security holder of the Company
entitled to vote in an election of Directors;
c. Retaining, terminating and approving bills and expenses for, as
appropriate and in its sole discretion, any search firm used to
identify any director candidate;
d. Making recommendations to the Board as to membership on the Board's
committees and as to the appointment of a chairman for each committee
of the Board;
e. Identifying potential candidates for, and making recommendations to,
the full Board with respect to potential successors to the Company's
Chief Executive Officer;
f. Overseeing the evaluation of management's performance and the Board's
and Board committees' performance, including conducting an annual
self-evaluation of the Committee;
g. Developing and recommending to the Board any revision to the Company's
Corporate Governance Guidelines;
h. Endeavoring to establish and maintain, in conjunction with the
Company's Secretary, an informal orientation and continuing education
program for Directors to familiarize and update Directors as to the
Company's strategic plans; significant financial, accounting and risk
management matters; compliance programs; Code of Business Conduct and
corporate governance guidelines; principal officers; and internal and
independent auditors;
i. Endeavoring to plan for the succession of the Company's Chief
Executive Officer, which may include discussing with the Chief
Executive Officer a succession plan for key senior officers of the
Company with an assessment of senior managers and their potential to
succeed the Chief Executive Officer and other senior management
positions;
j. Endeavoring to evaluate at least annually whether any change to this
Charter is necessary or appropriate;
43
k. Reporting orally or in writing to the Board concerning each meeting of
the Committee as it deems necessary or appropriate;
l. Appointing subcommittees to perform any or all of its functions and
delegating to appropriate Company officers execution of certain
actions as may be appropriate from time to time; and
m. Performing any other activity consistent with this Charter and the
Company's By-Laws or as required under the rules and regulations of
the Securities and Exchange Commission and the NYSE, as in effect from
time to time, pertaining to the nomination of directors or the
administration of corporate governance by the Board.
Publication Date: December 29, 2003
44
APPENDIX 4
M & F WORLDWIDE CORP.
2003 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE. The purposes of the M & F Worldwide Corp.
2003 Stock Incentive Plan are to promote the interests of M & F Worldwide Corp.
(the "Company") and its stockholders by (i) attracting and retaining qualified
directors, executive personnel, other key employees and consultants of the
Company and its Affiliates, as defined below; (ii) motivating such directors,
employees and consultants by means of performance-related incentives to achieve
longer-range performance goals; and (iii) enabling such directors, employees and
consultants to participate in the long-term growth and financial success of the
Company.
SECTION 2. DEFINITIONS. As used in the Plan, the following
terms shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company and (ii) any entity in which the Company has a significant equity
interest, in either case as determined by the Committee.
"Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Stock Award or Other Stock-Based Award granted under the Plan.
"Award Agreement" shall mean any written agreement, contract,
or other instrument or document evidencing any Award, which may, but need not,
be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean the compensation committee of the
Board, which shall be composed at all times of persons who are "outside
directors" as defined in Section 162(m) of the Code.
"Company" shall mean M & F Worldwide Corp., together with any
successor thereto.
"Disability" shall mean permanent disability as determined
pursuant to the Company's or the applicable Affiliate's long-term disability
plan or policy, in effect at the time of such Disability.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
45
"Fair Market Value" per Share as of a particular date shall
mean (i) the closing price per share of Common Stock on a national securities
exchange or on the NASDAQ stock market for the last preceding date on which
there was a sale of Shares on such exchange, or (ii) if the Shares are then
traded on any other over-the-counter market, the average of the closing bid and
asked prices for the Shares in such over-the-counter market for the last
preceding date on which there was a sale of Shares in such market or (iii) if
the Shares are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee in its discretion may
determine.
"Incentive Stock Option" shall mean a right to purchase Shares
from the Company that is granted under Section 6 of the Plan, that is intended
to meet the requirements of Section 422 of the Code or any successor provision
thereto, and that is identified in an Award Agreement as an Incentive Stock
Option.
"Non-Qualified Stock Option" shall mean a right to purchase
Shares from the Company that is granted under Section 6 of the Plan and that is
not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
"Other Stock-Based Award" shall mean an Award granted under
Section 10 of the Plan.
"Participant" shall mean any director, officer or employee of
the Company or any Affiliate, or any consultant to the Company or any Affiliate
(provided that such consultant is an individual) selected by the Committee to
receive an Award under the Plan.
"Performance Goals" shall mean one or more of the following
pre-established criteria, determined in accordance with generally accepted
accounting principles, where applicable: (i) return on total stockholder equity;
(ii) earnings per Share (which may include the manner in which such earnings
goals were met); (iii) net income (before or after taxes); (iv) earnings before
interest, taxes, depreciation and amortization; (v) revenues; (vi) return on
assets; (vii) market share; (viii) cost reduction goals; or (ix) any combination
of, or a specified increase in, any of the foregoing. The Committee shall have
the authority to make equitable adjustments in the Performance Goals in
recognition of unusual or non-recurring events affecting the Company, in
response to changes in applicable laws or regulations, or to account for items
of gain, loss or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of a business
or related to a change in accounting principles.
"Permitted Transferee" means (i) any of the Participant's
immediate family members (any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother in law,
father in law, son in law, daughter in law, brother in law or sister in law,
including adoptive relationships of the Participant, any person sharing the
Participant's household (other than a tenant or employee)), (ii) any trust in
which the Participant or the Participant's immediate family members have more
than 50% of the beneficial interest, (iii) any foundation in which the
Participant or the Participant's immediate family members
46
control the management of the assets or (iv) any other entity in which the
Participant or the Participant's immediate family members own more than 50% of
the voting interests.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.
"Plan" shall mean the M & F Worldwide Corp. 2003 Stock
Incentive Plan.
"Related SAR" shall mean a SAR that is related to an Option.
"Restricted Stock" shall mean any Share granted under Section
8 of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated and
interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto and shall include the staff thereof.
"Shares" shall mean shares of the Common Stock, par value $.01
per share, of the Company, or such other securities of the Company as may be
designated by the Committee from time to time.
"Stock Appreciation Right" or "SAR" shall mean a stock
appreciation right granted under Section 7 of the Plan.
"Stock Award" shall mean an Award of one or more unrestricted
Shares granted to a Participant under Section 9 of the Plan.
"Ten Percent Shareholder" shall mean a Participant who, at the
time an Incentive Stock Option is granted, owns shares possessing more than 10%
of the total combined voting power of all classes of stock of the Company or of
its Affiliates.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. Subject
to the terms of the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Committee by the Plan, the Committee
shall have full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to a Participant; (iii)
determine the number of Shares to be covered by Awards; (iv) determine the terms
and conditions of any Award, including but not limited to whether the vesting or
payment of all or any portion of any Award may be made subject to one or more
Performance Goals; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or cancelled, forfeited, or
suspended and the method or methods by which Awards may be settled, exercised,
cancelled, forfeited, or suspended; (vi) determine whether, to what extent, and
under what circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable with
47
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, and any stockholder of the Company.
(c) Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company or any
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify or waive rights with respect to, or to alter,
discontinue, suspend, or terminate Awards held by, Participants who are not
officers or directors of the Company for purposes of Section 16 of the Exchange
Act, or any successor section thereto, or who are otherwise not subject to such
Section.
(d) Subject to Section 4(c), the Committee shall not have the
authority to take any action which has the effect of reducing the exercise price
of an Option previously granted.
(e) The Committee is appointed by the Board and serves for a
period of time as determined by the Board. Committee members may be removed by
action of the Board. The full Board shall also have the authority, in its
discretion, to grant Awards and to administer the Plan. For all purposes under
the Plan, any entity which performs the duties described herein shall be
referred to as the "Committee."
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) Shares Available. Subject to adjustment as provided in
Section 4(c), the aggregate number of Shares with respect to which Awards may be
granted under the Plan shall not exceed 2,000,000. If, after the effective date
of the Plan, any Award is forfeited or otherwise terminates or is cancelled
without the delivery of Shares, then the Shares covered by such Award, or to
which such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be granted, to the
extent of any such forfeiture, termination or cancellation, shall again be, or
shall become, Shares with respect to which Awards may be granted.
(b) Individual Limits. Subject to adjustment as provided in
Section 4(c), no individual shall be granted Options or SARs during any calendar
year with respect to more than 600,000 Shares. In addition, for any calendar
year, the aggregate number of Shares subject to Restricted Stock or Other
Stock-Based Awards granted to any individual that are intended to be
"performance-based compensation" within the meaning of Section 162(m) of the
Code shall not exceed 600,000 Shares, subject to adjustment as provided in
Section 4(c). The aggregate Fair
48
Market Value of Shares with respect to which Incentive Stock Options are granted
under the Plan or any other option plan of the Company or any Affiliate become
exercisable for the first time by any Participant during any calendar year shall
not exceed $100,000.
(c) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number of Shares or other securities of the Company (or number and kind
of other securities or property) with respect to which Awards may be granted, in
aggregate or to any individual, (ii) the number of Shares or other securities of
the Company (or number and kind of other securities or property) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to any
Award or, if deemed appropriate, make provision for a cash payment to the holder
of an outstanding Award.
(d) Sources of Shares Deliverable Under Awards. Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.
SECTION 5. ELIGIBILITY. Any employee, including any officer or
employee-director of the Company or any Affiliate, any director of the Company
and any consultant to the Company who is an individual shall be eligible to be
designated a Participant, except that only employees of the Company or an
Affiliate that qualifies as a "parent corporation" of the Company (within the
meaning of Section 424(e) of the Code and applicable regulations) or "subsidiary
corporation" of the Company (within the meaning of Section 424(f) of the Code
and applicable regulations) shall be eligible for the grant of Incentive Stock
Options.
SECTION 6. STOCK OPTIONS.
(a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Participants
to whom Options shall be granted, the number of Shares to be covered by each
Option, the exercise price therefor and the conditions and limitations
applicable to the exercise of the Option. The Committee shall have the authority
to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to
grant both types of Options. In the case of Incentive Stock Options, the terms
and conditions of such grants shall be subject to and comply with such rules as
may be prescribed by Section 422 of the Code, as from time to time amended, and
any regulations implementing such statute.
49
(b) Exercise Price. The Committee shall establish the exercise
price at the time each Option is granted, which price for an Incentive Stock
Option shall not be less than 100% of the Fair Market Value per Share on the
date of grant. In the case of an Incentive Stock Option granted to a Ten Percent
Shareholder, the exercise price shall not be less than 110% of the Fair Market
Value of a Share on the date of grant of such Incentive Stock Option.
(c) Exercise. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any conditions relating to the application of
federal or state securities laws, as it may deem necessary or advisable. The
exercise of an Option, or the cancellation, termination or expiration of an
Option (other than pursuant to Section 7(a) upon exercise of a Related SAR),
with respect to a number of Shares shall cause the automatic and immediate
cancellation of any Related SARs to the extent of the number of Shares subject
to such Option which is so exercised, cancelled, terminated or expired. An
Option may not be exercised at any time as to fewer than 100 Shares (or such
number as to which the Option is then exercisable if such number of Shares is
less than 100).
(d) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the exercise price therefor is
received by the Company. Such payment may be made as follows: (i) in cash or its
equivalent; (ii) if and to the extent permitted by the Committee, by tendering
to the Company already owned unrestricted Shares that have been held for at
least six months; (iii) to the extent permitted under applicable law, pursuant
to a broker's cashless exercise procedure approved by the Committee; or (iv) by
a combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any such Shares tendered to the
Company as of the date of such tender is at least equal to such exercise price.
(e) Term. The exercise period shall be determined by the
Committee; provided, however, that in the case of an Incentive Stock Option,
such exercise period shall not exceed five years from the date of grant to a Ten
Percent Shareholder or ten years from the date of grant to any other
Participant.
SECTION 7. STOCK APPRECIATION RIGHTS.
(a) Related SARs. The Committee may grant a Related SAR in
connection with all or any part of an Option granted under the Plan, either at
the time such Option is granted or at any time thereafter prior to the exercise,
termination or cancellation of such Option, and subject to such terms and
conditions as the Committee shall from time to time determine in its sole
discretion, consistent with the terms and provisions of the Plan. The holder of
a Related SAR shall, subject to the terms and conditions of the Plan and the
applicable Award Agreement, have the right by exercise thereof to surrender to
the Company for cancellation all or a portion of such Related SAR, but only to
the extent that the related Option is then exercisable, and to be paid therefor
an amount equal to the excess (if any) of (i) the aggregate Fair
50
Market Value of the Shares subject to the Related SAR or portion thereof
surrendered (determined as of the exercise date), over (ii) the aggregate
appreciation base of the Shares subject to the SAR or portion thereof
surrendered. Upon any exercise of a Related SAR or any portion thereof, the
number of Shares subject to the related Option shall be reduced by the number of
Shares in respect of which such Related SAR shall have been exercised.
(b) Unrelated SARs. The Committee may grant unrelated Stock
Appreciation Rights in such amount and subject to such terms and conditions as
the Committee shall from time to time determine in its sole discretion, subject
to the terms and provisions of the Plan. The holder of an unrelated SAR shall,
subject to the terms and conditions of the Plan and the applicable Agreement,
have the right to surrender to the Company for cancellation all or a portion of
such SAR, but only to the extent that such SAR is then exercisable, and to be
paid therefor an amount equal to the excess (if any) of (i) the aggregate Fair
Market Value of the Shares subject to the Stock Appreciation Right or portion
thereof surrendered (determined as of the exercise date), over (ii) the
aggregate appreciation base of the Shares subject to the SAR or portion thereof
surrendered.
(c) Conditions. The grant or exercisability of any Stock
Appreciation Right shall be subject to such conditions as the Committee, in its
sole discretion, shall determine.
SECTION 8. RESTRICTED STOCK.
(a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Participants
to whom Shares of Restricted Stock shall be granted, the number of Shares of
Restricted Stock to be granted to each Participant, the duration of the period
during which, and the conditions under which, the Restricted Stock may be
forfeited to the Company, and the other terms and conditions of such Awards,
including, but not limited to, determining whether the vesting of any such Award
may be, in whole or in part, subject to the attainment of one or more
Performance Goals.
(b) Transfer Restrictions. Shares of Restricted Stock may not
be sold, assigned, transferred, pledged or otherwise encumbered, except as
provided in the Plan or the applicable Award Agreement. Certificates issued in
respect of Shares of Restricted Stock shall be registered in the name of the
Participant and deposited by such Participant, together with a stock power
endorsed in blank, with the Company. Upon the lapse of the restrictions
applicable to such Shares of Restricted Stock, the Company shall deliver such
certificates to the Participant or the Participant's legal representative.
(c) Dividends. Dividends paid on any Shares of Restricted
Stock may be paid directly to the Participant, or may be reinvested in
additional Shares, as determined by the Committee in its sole discretion.
SECTION 9. STOCK AWARD. In the event that the Committee grants
a Stock Award, a certificate for the Shares comprising such Stock Award shall be
issued in the name of the Participant to whom such grant was made and delivered
to such Participant as soon as practicable after the date on which such Stock
Award is payable.
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Section 10. OTHER STOCK-BASED AWARDS. Other Stock-Based
Awards, the form of which is to be determined by the Committee, shall be valued
in whole or in part by reference to or otherwise based on Shares. Other
Stock-Based Awards may be granted either alone or in addition to other Awards
under the Plan. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Participants to whom and the time
or times at which such Other Stock-Based Awards shall be granted, the number of
Shares to be made subject to such Other Stock-Based Awards and all other
conditions of such Other Stock-Based Awards, including, but not limited to,
determining whether the vesting or payment of any portion of any such Other
Stock-Based Award will be subject to the attainment of one or more Performance
Goals.
SECTION 11. DIRECTOR FEES. In the Committee's discretion,
annual or other fees paid to non-employee directors may be paid in whole or in
part in the form of Awards.
SECTION 12. AMENDMENT AND TERMINATION.
(a) Amendments to the Plan. The Board may amend, alter,
suspend, discontinue or terminate the Plan or any portion thereof at any time;
provided that no such amendment, alteration, suspension, discontinuation or
termination shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval requirement with which the Board deems it necessary or
desirable to qualify or comply. Notwithstanding anything to the contrary herein,
the Committee may amend the Plan in such manner as may be necessary so as to
have the Plan conform with local rules and regulations in any jurisdiction
outside the United States.
(b) Amendments to Awards. The Committee may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted, prospectively or
retroactively; provided that, except as otherwise provided in the Plan, any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of any Participant or any holder or
beneficiary of any Award theretofore granted shall not to that extent be
effective without the consent of the affected Participant, holder or
beneficiary.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(c) hereof) affecting the capitalization of the
Company, any Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
52
(d) Termination of Employment or Service Except for Death or
Disability. Unless otherwise provided by the Committee or by an employment
contract between the Participant and the Company or any Affiliate, upon
termination of a Participant's employment or service with the Company or an
Affiliate for any reason except death or Disability, the outstanding unvested
Awards of such Participant, to the extent not then vested, shall terminate
immediately upon the termination of such employment or service. For purposes of
the Plan, a transfer of a Participant's employment between the Company and an
Affiliate shall not be deemed to be a termination of employment or service for
purposes of this Section 12(d). If an Affiliate by which the Participant is
employed or to which the Participant is a service provider ceases to be an
Affiliate of the Company, such cessation will be deemed to be a termination of
Participant's employment or service with the Company and its Affiliates for
purposes of this Section 12(d). Unless otherwise provided by the Committee, any
and all vested Options and SARs held by a Participant at the time of termination
which have not been exercised by the Participant within three months after the
date of termination shall expire and be forfeited. The Committee may specify
longer or shorter post-termination exercise periods for vested Options and SARs;
provided, however, that any Incentive Stock Options so exercisable that are not
exercised within three months after termination of employment with the Company
shall not be eligible for treatment under Section 421(a) of the Code and shall
be treated as Non-Qualified Stock Options; and provided further, however, that
no Option or SAR may be exercised after the expiration date specified in the
Award Agreement.
(e) Termination of Employment or Service due to Death or
Disability. Unless otherwise provided by the Committee, in the event that a
Participant's employment or service with the Company or Affiliate terminates due
to the Participant's death or Disability, Options, SARs and Restricted Stock
held by the Participant shall become immediately vested and exercisable and all
such Options and SARs shall remain exercisable for one year after the date of
death or termination and shall terminate thereafter; provided, however, that in
no event shall any such Option or SARs be exercisable after the expiration date
specified in the Award Agreement.
(f) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any Award
granted hereunder to be cancelled in consideration of a cash payment or
alternative Award made to the holder of such cancelled Award equal in value to
the Fair Market Value of such cancelled Award.
SECTION 13. GENERAL PROVISIONS.
(a) Nontransferability.
(i) Each Award, and each right under any Award, shall be
exercisable only by the Participant during the Participant's lifetime.
(ii) No Award may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant otherwise than by
will or by the laws of descent and distribution, and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate; provided that
the designation by a Participant of a beneficiary shall not constitute an
assignment,
53
alienation, pledge, attachment, sale, transfer or encumbrance. Notwithstanding
the foregoing, during the Participant's lifetime, the Committee may, in its sole
discretion, permit the transfer of certain Awards by a Participant to a
Permitted Transferee, subject to any conditions that the Committee may
prescribe, provided that no such transfer by any Participant may be made in
exchange for consideration.
(b) Compliance with Guidelines. Awards granted to directors
and officers of the Company may, in the Committee's discretion, be subject to
such additional terms and conditions as the Committee deems desirable for
purposes of compliance with any equity ownership guidelines that the Company may
establish for its directors and certain of its officers from time to time.
(c) No Rights to Awards. No employee, director or consultant
of the Company or any Affiliate, or any Participant or other Person shall have
any claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards. The terms and
conditions of Awards need not be the same with respect to each recipient.
(d) Share Certificates. All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the SEC, any stock exchange upon
which such Shares or other securities are then listed, and any applicable
federal or state laws, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
(e) Withholding. Whenever cash is to be paid pursuant to an
Award, the Company shall have the right to deduct therefrom an amount sufficient
to satisfy any federal, state and local withholding tax requirements related
thereto. Whenever Shares are to be delivered pursuant to an Award, the Company
shall have the right to require the Participant to remit to the Company an
amount sufficient to satisfy any federal, state and local withholding tax
requirements related thereto. Subject to the approval of the Committee, a
Participant may satisfy the foregoing requirement by electing to have the
Company withhold from delivery Shares or by delivering already owned
unrestricted Shares that have been held for at least six months, in each case,
having a value equal to the minimum amount of tax required to be withheld. Such
Shares shall be valued at their Fair Market Value on the date as of which the
amount of tax to be withheld is determined. To the extent permitted under
applicable law, the Committee may provide for additional cash payments to
holders of Awards to defray or offset any tax arising from the grant, vesting or
exercise of any Award.
(f) Award Agreements. Each Award hereunder shall be evidenced
by an Award Agreement which shall be delivered to the Participant and shall
specify the terms and conditions of the Award and any rules applicable thereto,
including, but not limited to, the effect on such Award of a change in control
of the Company.
54
(g) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of Options, Stock Appreciation Rights, Restricted
Sock, Stock Awards and Other Stock-Based Awards (subject to stockholder approval
if such approval is required), and such arrangements may be either generally
applicable or applicable only in specific cases.
(h) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ or
service of the Company or any Affiliate. Further, the Company or an Affiliate
may at any time dismiss a Participant from employment or service, free from any
liability or any claim under the Plan, unless otherwise expressly provided in
the Plan or in any Award Agreement.
(i) No Rights as Stockholder. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be distributed
under the Plan until he or she has become the holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of
such Restricted Stock.
(j) Governing Law. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware.
(k) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
(l) Other Laws. The Committee may refuse to issue or transfer
any Shares or other consideration under an Award if, acting in its sole
discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary. Without limiting the generality of
the foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that any such offer,
if made, would be in compliance with all applicable requirements of the U.S.
federal securities laws.
55
(m) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(n) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional Shares
or any rights thereto shall be cancelled, terminated, or otherwise eliminated.
(o) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
SECTION 14. TERM OF THE PLAN.
(a) Effective Date. The Plan shall be effective as of the date
of its adoption by the Board, but the Plan (and any Awards granted thereunder)
shall be subject to the approval of the stockholders of the Company, which
approval must occur within twelve months after the date the Plan is adopted by
the Board.
(b) Expiration Date. No Award shall be granted under the Plan
after the tenth anniversary of the effective date. Unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award granted
hereunder may, and the authority of the Board or the Committee to amend, alter,
adjust, suspend, discontinue, or terminate any such Award or to waive any
conditions or rights under any such Award shall, continue after the tenth
anniversary of the effective date.
56
ANNUAL MEETING OF STOCKHOLDERS OF
M & F WORLDWIDE CORP.
MAY 6, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
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FOR AGAINST ABSTAIN
1. To elect as directors of M & F Worldwide Corp. for terms expiring in 2. Approve the adoption of the [ ] [ ] [ ]
2007 and until their successors are duly elected and qualified. 2003 Stock Option Plan.
NOMINEES: 3. In their discretion, the proxies are authorized
[ ] FOR ALL NOMINEES O Ronald O. Perelman to vote upon such other business as may properly
O Theo W. Folz come before the meeting or any adjournments
[ ] WITHHOLD AUTHORITY O Bruce Slovin thereof.
FOR ALL NOMINEES
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY
[ ] FOR ALL EXCEPT USING THE ENCLOSED ENVELOPE.
(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.
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Signature of Stockholder Date: Signature of Stockholder Date:
------------------------------ -------- --------------------- --------
NOTE: Please sign exactly as your name or names appear on this Proxy. 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
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD ON MAY 6, 2004
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 6, 2004 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)