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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by 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 Section 240.14a-11(c) or
Section 240.14a-12
ENESCO GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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[ENESCO LOGO]
March 16, 2001
Dear Stockholder:
On behalf of the Enesco Group, Inc. Board of Directors, you are invited to
attend the Annual Meeting of Stockholders to be held on Thursday, April 26,
2001, at the Enesco Showroom Theater, One Enesco Plaza (corner of Busse and
Devon), Elk Grove Village, Illinois 60007. The meeting will start at 9:30 a.m.
In addition to the formal items of business to be conducted at the meeting,
we will report on the operations of Enesco and will respond to stockholder
questions.
It is important to ensure that your shares are represented at the Annual
Meeting. Whether or not you plan on attending the meeting, we hope you will vote
as soon as possible. You may vote over the Internet, as well as by telephone or
by returning the enclosed proxy card in the envelope provided. Voting over the
Internet, by phone or by written proxy will ensure your representation at the
meeting if you do not attend in person. Please review the instructions on the
proxy card regarding each of these voting options. Space limitations may make it
necessary to limit attendance only to Enesco stockholders. Accordingly,
admission to the meeting will be on a first-come, first-served basis.
We look forward to seeing you on April 26th, and thank you for your
continued support of Enesco Group, Inc.
Sincerely,
/s/ Anne-Lee Verville
ANNE-LEE VERVILLE
Interim President and CEO
225 Windsor Drive, Itasca, Illinois 60143 - Telephone 630-875-5300
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ENESCO GROUP, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: April 26, 2001
Time: 9:30 a.m. Central
Place: Enesco Showroom Theater
One Enesco Plaza
Corner of Busse and Devon
Elk Grove Village, Illinois 60007
Purposes:
- To elect three Class III Directors for a three-year term.
- To ratify the appointment by the Board of Arthur Andersen LLP as Enesco's
independent accountants for 2001.
- To transact other business which may properly be presented at the meeting
and any postponement or adjournment of the meeting.
Stockholders of record as of the close of business on March 1, 2001 will be
entitled to vote at the meeting and any postponement or adjournment of the
meeting.
By Order of the Board of Directors,
M. FRANCES DURDEN, Clerk
Itasca, Illinois
March 16, 2001
---------------------
IMPORTANT
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. PLEASE NOTE
THAT SPACE LIMITATIONS MAY MAKE IT NECESSARY TO LIMIT ATTENDANCE ONLY TO ENESCO
STOCKHOLDERS. ACCORDINGLY, ADMISSION TO THE MEETING WILL BE ON A FIRST-COME,
FIRST-SERVED BASIS. WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON, YOU ARE URGED
TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED. THIS WILL ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE
TRANSACTION OF BUSINESS AT THE MEETING. YOU MAY ALSO VOTE OVER THE INTERNET OR
BY TELEPHONE. INSTRUCTIONS ARE PROVIDED ON THE PROXY CARD FOR VOTING OVER THE
INTERNET OR BY TELEPHONE. IF YOU DO ATTEND THE MEETING, YOU MAY VOTE IN PERSON,
EVEN IF YOU HAVE RETURNED A PROXY CARD.
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TABLE OF CONTENTS
PAGE
----
Enesco Group, Inc........................................... 3
The Annual Meeting.......................................... 3
Voting Instructions......................................... 4
Annual Report............................................... 5
Our Largest Stockholders.................................... 6
Shares Held by Our Directors and Executive Officers......... 7
Proposal 1: Election of Directors........................... 8
Compensation of Non-Employee Directors...................... 11
Board of Directors and Committee Meetings................... 11
Executive Compensation...................................... 14
Compensation Committee Interlocks and Insider
Participation............................................. 19
Section 16(a) Beneficial Ownership Reporting Compliance..... 19
Compensation and Stock Option Committee Report on Executive
Compensation.............................................. 19
Report of the Audit Committee............................... 21
Performance Graph........................................... 22
Proposal 2: Independent Public Accountants.................. 23
Stockholder Proposals....................................... 24
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ENESCO GROUP, INC.
PROXY STATEMENT
March 16, 2001
ENESCO GROUP, INC.
We are engaged in the sale of quality branded gifts, collectibles and
decorative accents, including designed and licensed collectible figurines and
ornaments, action musicals, decorative home accessories and other giftware,
principally at wholesale, to independent retailers, mass marketers, catalogers
and other direct response distributors. Our principal executive offices are
located at 225 Windsor Drive, Itasca, Illinois 60143, and our telephone number
is (630) 875-5300. Our website is located at www.enesco.com on the internet.
THE ANNUAL MEETING
Attending the Annual Meeting
Our meeting will be held on April 26, 2001 at 9:30 a.m., at the Enesco
Showroom Theater, One Enesco Plaza (corner of Busse and Devon), Elk Grove
Village, Illinois.
This Proxy Statement
We are sending you these proxy materials because our Board of Directors is
soliciting your proxy to vote your shares at the meeting. If you own Enesco
common stock in more than one account, such as individually and also jointly
with your spouse, you may receive more than one set of these proxy materials. To
assist us in saving money and to provide you with better shareholder services,
we encourage you to have all your accounts registered in the same name and
address. You may do this by contacting Mellon Investor Services LLC. In order to
vote all your shares by proxy, you should vote the shares in each different
account as described below.
On March 16, 2001, we began mailing these proxy materials to all
stockholders of record at the close of business on March 1, 2001. On this record
date there were 13,645,651 shares outstanding and 2,720 holders of record.
Quorum Requirement
A quorum is necessary to hold a valid meeting. The attendance by proxy or
in person or by telephone [or over the internet], of holders of a majority of
the shares entitled to vote at the meeting will constitute a quorum to hold the
meeting. Abstentions and broker non-votes are counted as present for
establishing a quorum. A broker non-vote occurs when a broker votes on some
matter on the proxy card but not on others because the broker does not have the
authority to do so.
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VOTING INSTRUCTIONS
You are entitled to one vote for each share of common stock that you own as
of the close of business on the record date. Please carefully read the
instructions below on how to vote your shares. Because the instructions vary
depending on how you hold your shares, it is important that you follow the
instructions that apply to your particular situation.
If Your Shares are Held in Your Name
VOTING BY PROXY. Even if you plan to attend the meeting, you can vote
before the meeting by proxy. There are three ways to vote by proxy:
- you can vote by telephone by calling toll-free (1-800-840-1208) and
following the instructions on the proxy card;
- you can vote by Internet by following the instructions on the proxy card;
or
- you can vote by mail by signing, dating and mailing the enclosed proxy
card.
VOTING IN PERSON AT THE MEETING. If you plan to attend the meeting, you can
vote in person. In order to vote at the meeting, you will need to bring a copy
of your share certificates or other evidence of your share ownership with you to
the meeting.
REVOKING YOUR PROXY. As long as your shares are registered in your name,
you may revoke your proxy at any time before it is exercised. There are several
ways you can do this:
- by filing a written notice of revocation with our Clerk;
- by following appropriate Internet or telephone voting procedures;
- by signing and delivering another proxy that bears a later date; or
- by attending the meeting and voting in person.
If Your Shares are Held in "Street Name"
VOTING BY PROXY. If your shares are registered in the name of your broker
or nominee, you will receive instructions from the holder of record that you
must follow in order for your shares to be voted. Certain brokers and banks will
also offer telephone and Internet voting.
VOTING IN PERSON AT THE MEETING. If you plan to attend the meeting and vote
in person, you should contact your broker or nominee to obtain a broker's proxy
card and bring it and your account statement or other evidence of your share
ownership as of the record date with you to the meeting
REVOKING YOUR PROXY. If your shares are held in street name, you must
contact your broker to revoke your proxy.
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Voting Rules
By giving us your proxy, you authorize the individuals named on the proxy
card to vote your shares in the manner you indicate at the meeting or any
postponements or adjournments of the meeting. With respect to the election of
nominees for director, you may:
- vote "for" the election of all nominees for director named in this proxy
statement;
- "withhold" authority to vote for all nominees; or
- "withhold" authority to vote for one or more of the nominees and vote
"for" the remaining nominee(s).
If a quorum is present at the meeting, a nominee will be elected to serve
as a Class III Director if a majority of the shares of Common Stock voting at
the meeting vote for the nominee, whether present, in person, by telephone or
Internet vote or represented by proxy. Because of this rule, non-voted shares
will not affect the outcome of the election of directors and will not prevent
that nominee from being elected.
With respect to the proposal to approve the ratification of the appointment
of Arthur Andersen LLP as Enesco's independent accountants for 2001, you may:
- vote "for" ratification;
- vote "against" ratification; or
- "abstain" from voting on the proposal
If a quorum is present at the meeting, the affirmative vote of a majority
of the shares represented at the meeting and entitled to vote on this proposal
will be required to ratify the appointment of Arthur Andersen LLP as Enesco's
independent accountants for 2001. Because of this rule, broker non-votes and
votes to abstain from voting on this proposal will have the effect of votes
against ratification.
If you return your proxy card with no votes marked, your shares will be
voted as follows:
- "for" the election of all nominees for director named in this proxy
statement; and
- "for" ratification of the appointment of Arthur Andersen LLP as Enesco's
independent accountants for 2001.
We actively solicit proxy participation. We will bear the cost of
soliciting proxies. In addition to this notice by mail, we request and encourage
brokers, custodians, nominees and others to supply proxy materials to
stockholders, and we will reimburse them for their expenses. Our officers and
employees may, by letter, telephone, electronic mail, or in person, make
additional requests for the return of proxies, although we do not reimburse our
own employees for soliciting proxies. In addition, we have hired Mellon Investor
Services LLC in New York, New York for approximately $5,500.
ANNUAL REPORT
The Annual Report to Stockholders of the Company for the year ended
December 31, 2000, including our financial statements for our 2000 fiscal year,
accompanies this proxy statement.
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OUR LARGEST STOCKHOLDERS
On March 1, 2001, there were outstanding 13,645,651 shares of our common
stock, which is the only class of stock outstanding and entitled to vote at the
Annual Meeting. The holders of these shares will be entitled to cast one vote
for each share of common stock held of record as of March 1, 2001. To the best
of Enesco's knowledge, the beneficial owners of more than 5% of the common stock
as of December 31, 2000 were as follows:
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
David L. Babson and Company Incorporated............... 1,142,000 shares(2) 8.39%
One Memorial Drive
Cambridge, MA 02142
Dimensional Fund Advisors.............................. 1,136,500 shares(3) 8.35%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Royce & Associates, Inc. ("Royce")..................... 1,111,100 shares(1) 8.16%
Royce Management Company ("RMC")
1414 Avenue of the Americas
New York, NY 10019
- ---------------
(1) Based on a statement on Schedule 13G filed with the Securities and Exchange
Commission (SEC) on February 5, 2001 by Royce, RMC and Charles M. Royce as a
group. Royce has sole voting and dispositive power over 1,086,100 shares,
RMC has sole voting and dispositive power over 25,000 shares, and Charles M.
Royce may be deemed to beneficially own the shares beneficially owned by
Royce and RMC. Charles M. Royce disclaims beneficial ownership of the shares
beneficially owned by Royce and RMC.
(2) Based on a statement on Schedule 13G filed with the SEC on January 24, 2001
by David L. Babson and Company Incorporated. David L. Babson and Company
Incorporated has sole voting power over 1,142,000 shares and sole
dispositive power over 1,142,000 shares.
(3) Based on a statement on Schedule 13G filed with the Securities and Exchange
Commission on February 2, 2001 by Dimensional Fund Advisors, Inc.
Dimensional Fund Advisors, Inc. has sole voting and dispositive power over
1,136,500 shares.
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SHARES HELD BY OUR DIRECTORS AND EXECUTIVE OFFICERS
Our management beneficially owned, as of March 1, 2001, shares of our
common Stock as follows:
OUTSTANDING SHARES SHARES UNDERLYING
OF THE COMMON STOCK- STOCK OPTIONS-AMOUNT
AMOUNT AND NATURE AND NATURE OF
OF BENEFICIAL BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OWNERSHIP(1)(2) OF CLASS(3)
- ------------------------ -------------------- -------------------- -----------
John F. Cauley........................ 24,485 23,000 ***%
George R. Ditomassi................... 1,986 0 ***%
Eugene Freedman....................... 100,099(4) 158,200 1.89%
Judith R. Haberkorn................... 10,765 6,000 ***%
Jeffrey A. Hutsell(5)................. 34,831 103,000 1.01%
Allan G. Keirstead(6)................. 46,676 153,800 1.47%
Donna Brooks Lucas.................... 5,023 1,500 ***%
Homer G. Perkins...................... 26,283 9,000 ***%
Thane A. Pressman..................... 2,986 0 ***%
H. L. Tower(7)........................ 133,522 136,000 1.98%
Anne-Lee Verville..................... 18,749 7,500 ***%
Thomson J. Hudson..................... 2,558 38,600 ***%
Josette V. Goldberg................... 0 9,990 ***%
All Directors and Executive Officers
as a Group (16 persons)............. 408,163 654,670 7.79%
- ---------------
(1) Unless otherwise noted, the nature of beneficial ownership is sole voting
and/or investment power. Fractional amounts have been rounded to the nearest
whole share of the Common Stock.
(2) Reflects the number of shares of common stock which the Directors, executive
officers and Directors and executive officers as a group beneficially own by
reason of options which are exercisable within 60 days of March 1, 2001.
(3) Unless otherwise noted, the percent of class is less than 1%.
(4) Includes 89,734 shares of common stock owned by the Eugene Freedman Family
Limited Partnership, of which Mr. Freedman is the general partner, and 5,000
shares owned by the Eugene Freedman Family Foundation, of which Mr. Freedman
is an officer and a director. Mr. Freedman shares voting and investment
power over these shares and disclaims any beneficial interest in all such
shares, except to the extent of his direct and indirect pecuniary interest
in the Limited Partnership and the Foundation.
(5) Mr. Hutsell terminated his employment with the Company and resigned as a
Director on June 27, 2000.
(6) Mr. Keirstead gave notice of his intent to resign as an officer and director
of Enesco in June 2000 and terminated his employment and his Board
membership with Enesco on January 31, 2001.
(7) Mr. Tower resigned as a member of the Board of Directors for personal
reasons effective as of February 28, 2001. He was a member of Class I of the
Board, with his term expiring at the Annual Meeting in April 2002.
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PROPOSAL 1: ELECTION OF DIRECTORS
Effective as of the Annual Meeting, the Board consists of eight members who
are divided into three classes serving three years each, with one class being
elected each year. The Board has adopted several policies concerning resignation
and retirement of Directors from the Board, one providing for review by the
Board of the continued membership of a Director following a change in his or her
principal employment, and another providing for a Director's mandatory
retirement at age 72, except for Messrs. Freedman and Perkins, who are not
subject to this policy.
The three current Class III Directors, Messrs. John F. Cauley and George R.
Ditomassi and Ms. Anne-Lee Verville, are nominated for reelection to the Board.
The Board proposes their reelection for three-year terms scheduled to expire at
the Annual Meeting of stockholders in April 2004.
If for any reason any nominee is not available to serve when the election
occurs, the persons named as proxies in the proxy cards will vote the proxies in
accordance with their best judgment. The Board has no reason to believe that any
nominee will not be available to serve as a Director.
INFORMATION AS TO BOARD OF DIRECTORS AND NOMINEES
NOMINEES FOR DIRECTORS IN CLASS III
TERMS EXPIRING IN 2004
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JOHN F. CAULEY [JOHN F. CAULEY] Chairman of the Board, 1998-2000, Office of the
Director since 1987 Chairman since 2000. Retired as President of
Age 68 Friendly Ice Cream Corporation, a subsidiary of
The Restaurant Company (restaurants and food
products), Memphis, TN, in 1990. Also, Director
of Imetrix Corporation, Cataumet, MA. Chairman
of the Governance Committee and member of the
Executive, Audit and Governance Committees.
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GEORGE R. DITOMASSI [GEORGE R. DITOMASSI] Chairman of the Board at the Milton Bradley
Director since 2000 Company and Chief Operating Officer of Hasbro,
Age 66 Inc. from 1990-1998, and past President of
Hasbro International from 1996 to 1997. Also on
Board of Directors for Milton Bradley Company,
the Basketball Hall of Fame and Toy
Manufacturers of America. Mr. Ditomassi served
on the Audit and the Compensation and Stock
Option Committee in 2000, and he currently is a
member of the Office of the Chairman and on the
Executive, Audit and Compensation and Stock
Option Committees.
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ANNE-LEE VERVILLE [ANNE-LEE VERVILLE] Chairman of the Board and Interim President and CEO
Director since 1991 beginning January, 2001; Office of the Chairman since
Age 55 2000. Retired as General Manager-Worldwide Education
Industry of International Business Machines
Corporation ("IBM") (advanced information
technologies), White Plains, NY, in 1997, after 30
years with IBM. Also, Trustee of Liberty Funds Group,
Boston, MA and Director of Learnsomething.com,
Tallahassee, FL. Chairman of the Company's
Compensation and Stock Option Committee until January
2001, and member of the Audit, Executive and
Governance Committees.
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DIRECTORS CONTINUING IN OFFICE IN CLASS I
TERMS EXPIRING IN 2002
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JUDITH R. HABERKORN [JUDITH R. HABERKORN] Retired as President-Consumer Sales and Service, Bell
Director since 1993 Atlantic Corp. (telecommunications services), New
Age 54 York, NY, in 2000. Formerly President-Public and
Operator Services, at Bell Atlantic Corp. from 1997 to
1998, having previously served as Vice President,
Individual Communication Services, NYNEX Corporation,
New York, NY ("NYNEX"), from 1995 to 1997, and as Vice
President-Consumer Markets, at NYNEX, from 1994 to
1995. Also Director of Armstrong World Industries
Inc., Lancaster, PA. Chairman of the Company's Audit
Committee and Member of the Executive, Governance and
Compensation and Stock Option Committees.
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HOMER G. PERKINS [HOMER G. PERKINS] Retired as Chairman of the Board of the Company in
Director since 1954 1982. Member of the Audit and Governance Committees.
Age 84
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DIRECTORS CONTINUING IN OFFICE IN CLASS II
TERMS EXPIRING IN 2003
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EUGENE FREEDMAN [EUGENE FREEDMAN] Founding Chairman since 1998. Formerly Executive
Director since 1997 Vice President of the Company from 1988 until
Age 76 1998 and Vice Chairman from 1997 until 1998.
Also Served as Founding Chairman of Enesco
Corporation, a former subsidiary of the Company,
of which he was a founder in 1959. Member of
Enesco's Executive Committee.
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THANE A. PRESSMAN [THANE A. PRESSMAN] President and CEO of Tone Brothers, Inc. since
Director since 1985 1998, the $300 million U.S. subsidiary of Burns
Age 55 Philip & Co., Ltd., and second largest herb and
spice company in the U.S. President and CEO,
Labatt - USA from 1993 until 1998. Previously
held positions at Proctor & Gamble and Sara Lee.
Also a Trustee, Springfield College and has
served as a Trustee of AFS International and
Director AFS-USA (American Field Service).
Member of the Audit and Compensation and Stock
Option Committees.
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DONNA B. LUCAS [DONNA B. LUCAS] President and Chief Executive Officer of DBL
Director since 1999 Multi-Media Group, Chicago, Illinois (creative
Age 48 and strategic business communications) since
1995. Formerly President, BR&R Communications,
Inc., a public relations agency specializing in
African-American consumer and healthcare
marketing, having previously served as Senior
Vice President, Director of Marketing at
Burson-Marsteller. Member of the Economic Club
of Chicago, Northwestern University Medill
School of Journalism Board of Visitors, the
Executive Leadership Council, the Urban League,
the NAACP and The Links Incorporated. Chair of
the Compensation and Stock Option Committee and
member of the Audit and Governance Committees.
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COMPENSATION OF NON-EMPLOYEE DIRECTORS
The Board establishes the compensation paid to each Director who is not an
employee of Enesco. Effective at the Annual Meeting the current compensation
amounts are as follows:
(1) For service as a non-Chairman member of the Board, a retainer of
950 shares of common stock and an additional amount of common stock worth
$15,000 per annum, valued as of the day following the Annual Meeting, plus
$1,200 for attendance at each meeting of the Board;
(2) For service as Chairman of the Board, $300,000 per annum and 950
shares of common stock; in addition, for services as Interim President and
CEO, $185,000 per annum in addition to compensation otherwise payable as
Chairman.
(3) For service as a committee member, an attendance fee of $800
($1,000 for service as Chairman of a committee) for each committee meeting
and for each other meeting attended by any Director which is held in
connection with the selection of potential nominees for positions on the
Board.
(4) For services as non-Chair member of the Office of the Chairman, a
fee of $1,000 per day for services on special projects, as assigned by the
Chairman.
In addition, each then serving non-employee Director receives a grant as of
the day following the Annual Meeting in that year, of 1,500 non-qualified
options to purchase Enesco common stock at an exercise price equal to the fair
market value per share of the common stock on the grant date. The options become
exercisable on the eighth anniversary of the grant, unless they have already
become exercisable under other provisions of the Company's 1996 Stock Option
Plan, and expire on the tenth anniversary of the grant.
Directors also receive reimbursement from Enesco for expenses incurred
while serving as Directors. Directors who are also employees of Enesco receive
no additional compensation for their services as Directors.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The following table shows the membership of Enesco's committees as of March
1, 2001. An asterisk indicates chairperson.
COMPENSATION AND
NAME AUDIT STOCK OPTION EXECUTIVE GOVERNANCE
---- ----- ---------------- --------- ----------
John F. Cauley..................................... X X* X*
George R. Ditomassi................................ X X
Eugene Freedman.................................... X
Judith R. Haberkorn................................ X* X X X
Donna Brooks Lucas................................. X X X
Homer G. Perkins................................... X X
Thane A. Pressman.................................. X X
Anne-Lee Verville.................................. X X* X X
Committees
The Audit Committee held three meetings during 2000. This Committee, which
consists entirely of non-employee Directors, provides oversight of the Enesco
audit, accounting, reporting and control practices and provides a non-management
link between the Board and the Enesco internal audit function. This Committee
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reviews the activities of the internal auditors and the Enesco independent
accountants. It also reviews the adequacy of the Enesco accounting, financial
and operating controls and reports to the full Board as necessary.
The Audit Committee operates pursuant to an Audit Committee Charter which
complies with Rule 303 of the New York Stock Exchange Listed Company Manual
relating to Audit Committee standards. A copy of the current Audit Committee
Charter is included in the Audit Committee Report filed as part of the Proxy
Statement. All members of the Audit Committee are independent as defined in Rule
303, except, H.L. Tower, former Chairman and Chief Executive Officer of the
Company. The Board of Directors appointed Mr. Tower to the audit committee in
reliance on the override provision of Section 303.02(D) of the Manual because
the Board determined in its business judgment that his membership on the
Committee was required by the best interests of the Company and its
shareholders, due to Mr. Tower's knowledge of Enesco, the industry, and his
financial background and experience. Mr. Tower announced his retirement from the
Board for personal reasons effective February 28, 2001.
The Compensation and Stock Option Committee held four meetings during 2000.
This Committee, which also consists entirely of non-employee Directors,
determines compensation policy for Enesco, approves or recommends to the Board
compensation of the Directors and officers of Enesco and reviews and acts on
recommendations from the Chief Executive Officer regarding the award of stock
options and administration of the stock option plans of Enesco and the
Non-employee Director Stock Plan.
The Executive Committee did not hold a meeting during 2000. This Committee,
which consists of five Directors, four of whom are non-employee Directors, acts
on behalf of the Board on important matters that arise between meetings of the
Board and performs other tasks as delegated by the Board.
The Governance Committee held three meetings during 2000. This Committee,
which consists entirely of non-employee Directors, provides the Board with
Director and corporate officer recommendations, proposes to the Board each year
a slate of Directors for recommendation and submission to the stockholders at
the next annual meeting of stockholders and deals with all aspects of the
Director selection process, reviewing prospective Director candidates in the
light of anticipated resignations and retirements and Board composition.
In addition to these permanent Committees of the Board of Directors, there
were two temporary Committees established by the Board in 2000. The functions of
these interim Committees continue in 2001.
The Office of the Chairman is made up of the Chair of the Company, one or
more directors and certain executive officers. During 2000, the Office of
Chairman was made up of John F. Cauley, Chairman, Anne-Lee Verville, Allan G.
Keirstead and Thomson J. Hudson, the Company's Chief Operating Officer. Eugene
Freedman was an advisor to the Board. The current Office of the Chairman is made
up of Anne-Lee Verville, Chair, John F. Cauley, George R. Ditomassi and Thomson
J. Hudson. Mr. Freedman continues as advisor. The function of the Office of the
Chairman, which was established in June 2000 on the resignation of Jeffrey A.
Hutsell as President and Chief Executive Officer of the Company, is to undertake
the responsibilities and duties of the Chief Executive Officer until a new
President and CEO has been hired.
The Executive Search Committee of the Board met six times during 2000. The
Committee was established in June 2000 on the resignation of Jeffrey A. Hutsell
as President and Chief Executive Officer of the Company. The function of this
Committee is to undertake the search for a new President and Chief Executive
Officer of the Company. During 2000, this Committee was made up of Anne-Lee
Verville, as Chair, H.L. Tower, D. Brooks Lucas and J.R. Haberkorn. The current
Committee is made up of Anne-Lee Verville, Chair, D. Brooks Lucas, J.R.
Haberkorn and G.R. Ditomassi.
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In addition to the Committee meetings referred to above, the full Board
held seven regular meetings and two special meetings during 2000. Each director
attended more than 75% of the total number of meetings of the Board and
Committees on which he or she served.
In accordance with Enesco's Restated Articles of Organization, nominations
for the election of Directors at an annual meeting of stockholders may be made
by the Board, the Governance Committee or any stockholder entitled to vote
generally in the election of Directors. However, a stockholder may nominate one
or more persons for election as a Director at an annual meeting of stockholders
only if the stockholder gives notice in writing to the Clerk of the Company at
least 45 days in advance of the anniversary of the date of the previous annual
meeting of stockholders, which notice includes:
(a) The name and address of the stockholder who intends to make the
nomination and the name and address of each person to be nominated;
(b) A representation that the stockholder is a holder of record of
common stock and intends to appear in person or by proxy at the next annual
meeting of stockholders to nominate the person or persons identified in the
notice;
(c) A description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder;
(d) Such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and
(e) The consent of each nominee to serve as a Director if so elected.
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EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 2000, 1999
and 1998, the compensation of the Chief Executive Officer, and the four other
most highly compensated executive officers in office at the end of 2000.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS(2)
-------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) OPTIONS (#) ($)(3)
--------------------------- ---- ---------- ---------- ------------ ------------ ------------
J. A. Hutsell,(4).................. 2000 $ 495,000 $ -- $ -- 80,000 $ 9,681
President and 1999 495,000 -- -- 100,000 33,964
Chief Executive Officer 1998 468,548 -- -- -- 11,204
J. F. Cauley,(5)................... 2000 -- -- -- 1,500 421,267
Interim Chief Executive Officer 1999 -- -- -- 1,500 200,133
1998 -- -- -- 15,500 73,866
E. Freedman........................ 2000 1,000,000 -- -- 40,000 72,860
Founding Chairman 1999 1,000,000 -- -- 40,000 60,500
1998 1,000,000 -- -- -- 11,204
A. G. Keirstead,(6)................ 2000 424,600 -- -- 30,000 30,956
Executive Vice President and
Chief 1999 424,600 -- -- 40,000 25,976
Administrative and Financial
Officer 1998 398,867 -- -- -- 25,449
Thomson J. Hudson,................. 2000 320,625 -- 71,846(7) 150,000 21,978
Senior Vice President, 1999 309,000 -- 44,761(7) 50,000 9,770
Operations 1998 -- -- -- -- --
Josette V. Goldberg,............... 2000 199,692 20,000 -- 11,000 --
Senior Vice President, 1999 184,300 -- -- 12,500 --
Human Resources 1998 -- -- -- -- --
- ---------------
(1) Annual compensation includes bonus compensation for the year, whether paid
in the year indicated or in the succeeding year. Annual compensation also
includes amounts deferred under Enesco's retirement plans. Other Annual
Compensation is included only if it exceeds the lesser of $50,000 or 10
percent of annual salary plus bonus. Compensation information for 1998 for
Mr. Hudson and Ms. Goldberg are not provided because they were not Named
Executive Officers during those years.
(2) All Long-Term Compensation Awards to the Named Executive Officers during the
three-year period were made in the form of non-qualified stock options
granted under the Company's 1991 and 1996 Stock Option Plans. No stock
appreciation rights ("SARs") were awarded either singly or in tandem with
the granted options.
(3) All Other Compensation in 2000 consisted of the following items on an
accrual basis for each of the Named Executive Officers: J. A. Hutsell,
$4,800 matching contribution under the 401K Plan, $3,980.79 matching
contributions under the Supplemental Retirement Plan, and $900 insurance
premiums reimbursed with respect to term life insurance for his benefit
("Insurance Premiums"); E. Freedman, $9,600 matching and guaranteed money
purchase contributions under the 401K Plan, $50,400 matching and guaranteed
money purchase contributions under the Supplemental Retirement Plan, and
$500
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PAYSOP Contribution; A. G. Keirstead, $9,600 matching and guaranteed money
purchase contributions under the 401K Plan, $18,276 matching and guaranteed
money purchase contributions under the Supplemental Retirement Plan, $500
PAYSOP Contribution and $2,580 Insurance Premiums; T. J. Hudson, $9,600
matching and guaranteed money purchase contributions under the 401K Plan,
$10,498 matching and guaranteed contributions under the Supplemental
Retirement Plan, $1,380 insurance and $500 PAYSOP Contribution; and J. V.
Goldberg, $9,600 matching and guaranteed money purchase contributions under
the 401K Plan, $3,461 matching and guaranteed contributions under the
Supplemental Retirement Plan, $415 insurance premium and $500 PAYSOP
Contribution.
(4) Mr. Hutsell terminated his employment with the Company and resigned as a
Director on June 27, 2000. Mr. Hutsell's reported compensation includes
payments under his severance agreement with the Company, which provides
continuation of salary and certain benefits for a period of three years
after his termination.
(5) Mr. Cauley became Interim Chief Executive Officer on a non-employee basis on
June 28, 2000. Mr. Cauley was paid $300,000 for his services as Chairman of
the Board in 2000 and $92,500 was paid in 2001 for his services as Interim
Chief Executive Officer in 2000. In addition, Mr. Cauley received $121,267
for attending the meetings of the Board and the Audit and Governance
Committee in 2000. During 1998 and 1999 all compensation received by Mr.
Cauley was for his services as Chairman of the Board and as a member of
certain Board Committees. All stock options received by Mr. Cauley were for
his services as a non-employee Director; however, in 1998 Mr. Cauley
received an additional stock option grant for 14,000 shares with respect to
his services as Chairman of the Board.
(6) Mr. Keirstead resigned as a Director and as Executive Vice President and
Chief Financial Officer effective January 31, 2001.
(7) Includes $57,510 in relocation expense reimbursement and $14,336 car
allowance in 2000 and $29,761 in relocation expense reimbursement and
$15,000 car allowance in 1999.
The following table contains information concerning individual grants of
stock options made by the Company to each of the Named Executive Officers during
2000:
OPTION GRANTS IN 2000
INDIVIDUAL GRANTS(1) GRANT DATE
------------------------------------------------------ ----------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES OR BASE PRESENT
GRANTED IN FISCAL PRICE EXPIRATION VALUE
NAME (#)(2) YEAR ($/SH) DATE $(3)
- ---- ---------- ---------- -------- -------------- ----------
J.A. Hutsell.......................... 80,000 12.6 $4.8125 April 26, 2010 $110,240
J.F. Cauley........................... 1,500(4) 0.2 4.8125 April 26, 2000 2,067
E. Freedman........................... 40,000 6.3 4.8125 April 26, 2010 55,120
A.G. Keirstead........................ 30,000 4.7 4.8125 April 26, 2010 41,340
T.J. Hudson........................... 40,000 6.3 4.8125 April 26, 2010 55,120
150,000 23.6 5.00 Dec. 5, 2010 304,800
J.V. Goldberg......................... 11,000 1.7 4.8125 April 26, 2010 15,158
- ---------------
(1) The individual grants described were all made in the form of non-qualified
stock options under Enesco's 1991 and 1996 Stock Option Plans. No SARs were
granted during 2000.
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(2) All options granted under the 1991 Stock Option Plan have a ten-year term
and become exercisable at the rate of twenty-five percent for each one year
period after the grant of the option. All options granted under the 1996
Stock Option Plan have a ten-year term and become exercisable only (a) after
six months from date of grant and upon Enesco's achievement of certain stock
value performance criteria or (b) on the eighth anniversary of the date of
grant, regardless of whether the stock value performance criteria have been
achieved.
(3) Enesco used the Black-Scholes option pricing model to determine the present
value of each option granted as of its date of grant. The assumptions used
relating to the expected volatility, risk-free rate of return, dividend
yield and time of exercise were as follows: (i) volatility was calculated
based on the daily change in the common stock price during the 250 trading
days preceding the option grant date; (ii) risk-free rate of return was the
yield as of the option grant date on U.S. Treasury bonds maturing in ten
years; (iii) dividend yield was computed based on the then most recent four
quarterly dividends paid on the common stock divided by the average of the
highest and lowest closing prices for the common stock during the
twelve-month period ending on the grant date; and (iv) time of exercise was
the full term of the option granted. There were no adjustments made in the
option pricing model for non-transferability or risk of forfeiture of the
options granted.
(4) Automatic annual stock option grant awarded to each Director as of the day
after the annual meeting of stockholders.
No stock options were exercised by any of the Named Executive Officers
during 2000. The following table sets forth information concerning the value of
unexercised stock options held by each of them as of the end of 2000:
2000 YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END(#) AT YEAR-END($)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
J. A. Hutsell..................................... 103,000/118,000 $0/$0
J.F. Cauley....................................... 23,000/6,000 0/ 0
E. Freedman....................................... 158,200/140,400 0/ 0
A.G. Keirstead.................................... 153,800/110,800 0/ 0
T.J. Hudson....................................... 38,600/216,400 0/ 0
J.V. Goldberg..................................... 9,990/43,510 0/ 0
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Pension Plan
Enesco maintained a qualified defined benefit pension plan (the "Pension
Plan") which it terminated effective November 15, 1998, and it maintains certain
supplemental retirement agreements requiring contributions in amounts determined
annually by independent actuaries.
PENSION PLAN TABLE(1)
REMUNERATION YEARS OF SERVICE
FINAL AVERAGE --------------------------------------------------------------------------------------------
COMPENSATION 5 10 15 20 25 30 35 40
------------- -------- -------- -------- -------- -------- -------- -------- --------
$ 300,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000
400,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
500,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000
600,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000
700,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000
800,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000
900,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000
1,000,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
- ---------------
(1) The information contained herein represents the aggregate estimated annual
benefits payable to eligible employee Director participants under the
Pension Plan, supplemental pension plans and supplemental retirement
agreements.
Under the termination agreement of Mr. Keirstead, severance benefits of
$16,384.62 will be paid on a bi-weekly basis for a three year term, commencing
February 1, 2001 and ending January 31, 2004; however, upon the occurrence of a
change in control of the Company (within the meaning of the agreement), the
present value of the aggregate expected remaining annual benefits will be paid
in one lump sum.
Under the Pension Plan and the supplemental retirement agreement of Mr.
Keirstead, he will be entitled to a benefit equal to fifty percent of his final
average compensation, which includes total wage, salary, bonus, automobile
benefit and any amount which is contributed pursuant to a salary reduction
agreement and which is not includible in gross income under the Internal Revenue
Code, but it does not include other payments to benefit plans, other perquisite
compensation or reimbursement for business expenses. For purposes of the Pension
Plan, the number of credited years of service was 35 years for Mr. Keirstead.
Substantially all of the items of current compensation covered by the Pension
Plan and supplemental retirement agreement for Mr. Keirstead are included in
the Summary Compensation Table columns entitled "Salary ($)" and "Bonus ($)".
Mr. Keirstead became fully vested in his supplemental retirement agreement on
November 17, 1999. The supplemental retirement agreement of Mr. Keirstead also
includes disability and surviving spouse benefits. This agreement provides for a
monthly retirement benefit in an amount based upon the individual taking a
normal or early retirement from the Company. An early retirement prior to age 62
subjects the monthly retirement benefit to a stipulated percentage reduction.
For purposes of the Pension Plan, supplemental pension plans and
supplemental retirement agreements referred to above, "compensation" includes
total wage, salary, bonus, Company automobile benefit and any amount which is
contributed by the employer pursuant to a salary reduction agreement and which
is not includible in gross income under the Internal Revenue Code of 1986, as
amended (the "Code"), but it does
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not include other payments to benefit plans, other perquisite compensation or
reimbursement for business expenses. Substantially all of the items of current
compensation covered by the Pension Plan, supplemental pension plan and
supplemental retirement agreement for Mr. Keirstead are included in the Summary
Compensation Table columns entitled "Salary ($)" and "Bonus ($)". The Pension
Plan benefit is based on the employee's "Final Average Compensation" which means
the highest average of annual compensation paid during any five consecutive
calendar years during the employee's last ten years of employment through
December 31, 1996. For purposes of the Pension Plan, and of the supplemental
pension plans and supplemental retirement agreements in the event of an
involuntary termination, the number of credited years of service is currently 34
years for Mr. Keirstead, 15 years for Mr. Tower and 13 years for Mr. Johnson.
Each of Messrs. Tower, Keirstead and Johnson is fully vested in the Pension Plan
and Mr. Keirstead is fully vested in his supplemental pension plan and will
become (unless terminated for cause) fully vested in his supplemental retirement
agreement on November 17, 1999 or, if applicable, the date of his earlier
involuntary termination.
The named Executive Officers except Mr. Cauley, Mr. Hudson and Ms. Goldberg
are each fully vested participants in Enesco's Retirement and Supplemental
Retirement Plans for which covered compensation was not limited in 2000. The
Enesco Retirement and Supplemental Retirement Plans require five years of
service before vesting.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Mr. Hutsell, President and Chief Executive Officer, received his annual
base salary of $495,000 through June 27, 2000 and was eligible for a target
bonus of 65% of his annual base salary under Enesco's Management Incentive Plan
("MIP") program pursuant to an employment agreement which had a rolling
three-year term. In addition to standard executive officer fringe benefits, he
was eligible to receive special medical insurance coverage, including his spouse
and dependents. The employment agreement also contains confidentiality, non-
compete and non-solicitation convenants.
Mr. Hutsell terminated his employment with the Company on June 27, 2000 and
entered into a Severance Agreement with the Company confirming the salary and
benefit continuation provisions of his employment agreement for the three year
period ending June 24, 2003. All non-vested outstanding stock option awards
previously made to Mr. Hutsell were forfeited automatically under the terms of
the 1991 and 1996 Stock Option Plans on his termination.
The Company entered into both a supplemental retirement agreement and a
severance agreement with Mr. Keirstead. The Company also entered into a
relocation letter agreement with Mr. Keirstead providing for Mr. Keirstead's
continuation as Executive Vice President and Chief Administrative and Financial
Officer. In addition to summarizing his base salary, bonus opportunity and other
employee benefits, the letter agreement provided for the receipt by Mr.
Keirstead (subject to certain conditions) of the severance payments, retention
benefits and other related termination benefits (including the post-termination
insurance benefits already described) in connection with a termination of his
employment, whether voluntary or involuntary, during a period of two years
following the relocation of his employment to Illinois on March 1, 1999. Mr.
Keirstead gave notice of his intention to terminate his employment under the
severance and relocation agreements in June 2000, and resigned as an officer and
director of the Company on January 31, 2001.
The Company has separate change in control agreements or commitments with
Messrs. Hutsell, Freedman, Keirstead, Hudson and Ms. Goldberg under which each
of these individuals is entitled to both (i) a severance benefit, payable upon
or before termination for any reason (other than death, disability,
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retirement, termination for substantial cause or voluntary termination without
good reason) occurring within two years following a change in control of the
Company, up to three (two in the case of each of Mr. Hudson and Ms. Goldberg)
times the annual base salary rate plus bonus under the MIP program and (ii)
certain fringe benefits for up to a three-year term. In accordance with their
change in control agreements and severance agreements, Messrs. Hutsell and
Keirstead also will be reimbursed for any excise tax and other taxes incurred as
a result of such reimbursement. The types of events constituting a change in
control under these agreements include those that require reporting under Item
6(e) of Schedule 14A of Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and certain other events specified in the
change in control agreements.
Any terminations of the remaining Named Executive Officers absent a change
in control of the Company will be governed by the employee severance policy of
Enesco under which each of them may (subject to certain conditions) be entitled
to a severance benefit of up to one year of annual base salary depending on
designated criteria and to certain other continuing group medical, life and
accidental death and dismemberment insurance coverage.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2000, Ms. Verville, Ms. Brooks Lucas and Ms. Haberkorn served on the
Board's Compensation and Stock Option Committee. None of them were then an
officer or employee of Enesco or any of its subsidiaries. No current member of
the Committee is a former officer of Enesco or any of its subsidiaries, and none
had any other relationship requiring disclosure.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Enesco records and other information, Enesco believes that all SEC
filing requirements under Section 16(a) of the Exchange Act applicable to its
Directors and executive officers with respect to the year ending December 31,
2000 were satisfied, except that the Form 3 filing reports for new Directors
George Ditomassi and Thane Pressman, elected to the Board on July 18, 2000, were
filed on August 14, 2000 and August 2, 2000, respectively.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Enesco's executive compensation program is administered by the Compensation
and Stock Option Committee of the Board. The Committee is comprised of
non-employee Directors who approve or recommend to the Board salary and bonus
amounts and other annual compensation and long-term compensation awards for the
Executive Officers.
Enesco's executive compensation program during 2000 consisted of three
components: base salary and fringe benefits; incentive bonus opportunity; and
option awards to purchase shares of common stock. The Committee's compensation
policies regarding these components are designed to provide a compensation
package which is targeted between the median and third quartile level of total
compensation for similarly situated executive officers in a comparator group of
other U.S. companies of comparable size and geographic diversity. The comparator
group used in establishing Enesco's compensation levels is composed of companies
that participate in the "Watson Wyatt Executive Compensation Survey," a well
established and nationally recognized annual executive compensation survey. This
survey includes some of the companies included in the indices shown in the
Performance Graph set forth below. The Committee believes that evaluating data
from
19
22
the broad group of industries and companies represented in this survey is
important in establishing the true market for executive talent. To compete
effectively in this market, Enesco believes that it must be aware of
compensation levels in various industries and companies of all sizes and,
accordingly, does not limit its compensation analyses to those constituting the
indices shown in the Performance Graph.
Base salaries and fringe benefits are set at the annual base salary and
fringe benefit amounts of comparable executive officers. Pay for performance
bonuses are determined under Enesco's MIP program, which provides for annual
incentive opportunities amounting to pre-determined percentages of the
respective executive officers' annual base salaries with the amount of the
actual bonus payment being based on the achievement of pre-selected personal
performance criteria and certain specified profitability and performance goals.
Options to purchase shares of common stock are granted in amounts that are
competitive with long-term incentive award practices of comparable U.S.
companies, considering the number of options that have been previously granted
to each of the executive officers. The options, which correlate to executive
grade levels, are granted generally on an annual basis at the then market value
of common stock and are exercisable at any time after one year from the date of
grant in increments of twenty-five percent per year under the 1991 Stock Option
Plan (six months from the date of grant, subject to the achievement of certain
stock value performance criteria or upon the eighth anniversary of the date of
grant under provisions of the 1996 Stock Option Plan), for a ten-year term, thus
providing a direct relationship between the executive officers' potentially
realizable long-term compensation amounts and actually recognizable increases in
stockholder value. Executive officer and Director stock ownership guidelines
have been adopted with the objective of further aligning the executive officers'
and Directors' and stockholders' interests. The Committee's compensation
policies are intended to reinforce Enesco's performance-oriented compensation
practices and are not impacted by potential non-deductibility of certain
compensation amounts for federal tax purposes under the provisions of Section
162(m) of the Internal Revenue Code.
The Committee awarded Mr. Hudson, Executive Vice President and Chief
Operating Officer, a grant of 150,000 non-qualified stock options to purchase
common stock. The size of the grant relative to all other 2000 option grants
made by the Committee and based upon its projected value as of the grant date
was determined to be within the guidelines which were developed by the
Committee's executive compensation consulting firm, Watson Wyatt. This grant was
made under Enesco's 1991 Stock Option Plan, becomes exercisable after one year
to the extent of twenty five percent of the grant and in annual increments of
twenty five percent thereafter until fully vested after four years, and has a
term of ten years from the date of grant.
Compensation paid to Mr. Hutsell, former President and Chief Executive
Officer, who terminated his employment with the Company on June 27, 2000,
included his base salary at the annual rate of $495,000 and an annualized MIP
target opportunity of $321,750. Mr. Hutsell did not receive any MIP bonus for
2000, due to the Company's performance. The Committee also awarded Mr. Hutsell a
grant of 80,000 non-qualified stock options to purchase Common Stock in 2000,
which award was forfeited on his termination of employment. While the Company is
involved in a search for a new Chief Executive Officer, John Cauley served as
Interim Chief Executive Officer during 2000 and was paid $92,500 in 2001 for his
services.
The Compensation and Stock Option Committee:
A.L. Verville (Chair)
D. Brooks Lucas
J.R. Haberkorn
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REPORT OF THE AUDIT COMMITTEE
February 27, 2001
To the Board of Directors of Enesco Group, Inc.
We have reviewed and discussed with management the Company's audited
financial statements as of December 31, 2000 and 1999, and for the three years
in the period ended December 31, 2000.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10K for the year ended December 31, 2000.
A copy of the current Audit Committee Charter is attached as an Appendix to
this Proxy Statement.
J.R. Haberkorn, Chair
J.F. Cauley
D. Brooks Lucas
G.R. Ditomassi
H.G. Perkins
T.A. Pressman
A.L. Verville
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PERFORMANCE GRAPH
During 2000, Enesco common stock was included in the Standard & Poor's
Small Cap 600 Index. A performance graph comparing Enesco common stock
performance with the performance of this stock index is provided.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
THE STANDARD & POOR'S ("S&P") SMALL CAP 600 INDEX AND THE COMPANY'S PEER
GROUP INDEX (1)
TOTAL SHAREHOLDER RETURNS
ENESCO GROUP, INC. S&P MIDCAP 400 COMPANY'S PEER GROUP
------------------ -------------- --------------------
12/31/95 100.00 100.00 100.00
12/31/96 94.55 121.32 121.32
12/31/97 95.38 152.36 133.81
12/31/98 90.09 150.37 109.40
12/31/99 45.99 169.02 63.52
12/31/00 20.26 188.96 40.21
- ---------------------------------------------------------------------------------------------------------------------
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- ---------------------------------------------------------------------------------------------------------------------
Enesco Group, Inc. $100.00 94.55 95.38 90.09 45.99 20.26
- ---------------------------------------------------------------------------------------------------------------------
S&P Smallcap 600 $100.00 121.32 152.36 150.37 169.02 188.96
- ---------------------------------------------------------------------------------------------------------------------
Company's Peer Group $100.00 121.32 133.81 109.40 63.52 40.21
- ---------------------------------------------------------------------------------------------------------------------
- ---------------
(1) This graphic presentation assumes (a) one-time $100 investments in the
Common Stock and in market capital base-weighted amounts apportioned among
all the companies whose equity securities constitute the above named board
equity market index and the Company's selected peer group index, in each
case made as of the market close on the last trading day in 1995 and (b) the
automatic reinvestment of dividends, if any, in additional shares of the
same class of equity securities constituting such investments at the
frequency with which dividends were paid on such securities during the
applicable fiscal years. Enesco has chosen to present a peer group index
composed of the companies that constitute the S&P SmallCap 600 Products
Index, in which Enesco is now included. Enesco's peer group is made up of
the following eleven companies:
S&P Consumer (Jwlry & Novelty) -- Small Cap 600
Action Performance Cos Inc.
Cross (A.T.) & Co -- CLA
Cyrk Inc.
Department 56, Inc -- Ser A
Enesco Group, Inc.
Fossil Inc.
Franklin Covey Co.
Mayors Jewelers
Russ Berrie & Co. Inc.
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25
PROPOSAL 2: INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been engaged by Enesco as independent public
accountants since 1971. As recommended by its Audit Committee, the Board has
appointed that firm as independent accountants for 2001, subject to ratification
by the stockholders. Valid proxies of stockholders containing no designation to
the contrary will be voted for the reappointment of that firm as recommended by
the Audit Committee. Representatives of Arthur Andersen LLP are expected to
attend the Annual Meeting and be available to respond to appropriate questions
and to make a statement if they so desire.
FISCAL 2000 AUDIT FIRM FEE SUMMARY
During fiscal year 2000, the company retained its principal auditor, Arthur
Andersen, to provide services in the following categories and amounts:
Audit Fees.................................................. $466,000
Financial Information Systems Design and Implementation
Fees...................................................... $ 0
All Other Fees.............................................. $247,000
The audit committee has considered whether the provision of non-audit
services by the company's principal auditor is compatible with maintaining
auditor independence.
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STOCKHOLDER PROPOSALS
The Annual Meeting is called for the purposes set forth in the Notice.
Although Enesco knows of no items of business which will be presented at the
Annual Meeting other than those described, proxies in the accompanying form will
confer discretionary authority to Enesco's management proxy holders to use in
accordance with their best judgment with respect to any such items which may
come before the Annual Meeting to the extent permitted by the applicable rules
of the SEC. In order to be considered under Rule 14a-8 for inclusion in Enesco's
proxy materials to be distributed in connection with the Annual Meeting of the
stockholders in 2001, stockholder proposals for that meeting must be received by
Enesco on or before November 19, 2001. In order for a stockholder proposal
submitted outside of Rule 14a-8 to be considered "timely" within the meaning of
Rule 14a-4(c) for possible presentation at the meeting (other than a proposal
with respect to the nomination for election of one or more directors, for which
procedures are set forth above under the caption "Committees of the Board"),
such a proposal must be received by the Clerk of Enesco on or before January 31,
2002. Enesco's management proxy holders will be permitted to use their
discretionary voting authority, as conferred by any valid proxy, in accordance
with their best judgment when such a proposal is raised at that meeting.
ENESCO FILES AN ANNUAL REPORT ON FORM 10-K WITH THE SECURITIES AND EXCHANGE
COMMISSION. STOCKHOLDERS MAY OBTAIN A COPY OF THE ANNUAL REPORT FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2000 WITHOUT CHARGE BY WRITING TO THE CLERK OF ENESCO,
AT 225 WINDSOR DRIVE, ITASCA, ILLINOIS 60143.
By order of the Board of Directors,
ENESCO GROUP, INC.
M. FRANCES DURDEN
Clerk
March 16, 2001
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ADDENDUM
ENESCO GROUP, INC.
AUDIT COMMITTEE CHARTER
ROLE AND INDEPENDENCE
The Audit Committee of the Board of Directors (the "Committee") assists the
Board in fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing and reporting practices of the Company and
such other duties as are directed by the Board of Directors. The membership of
the Committee shall consist of at least three directors who are generally
knowledgeable in financial and auditing matters, including at least one member
with accounting or related financial management expertise. Each member shall be
free of any relationship that, in the opinion of the Board of Directors, would
interfere with his or her individual exercise of independent judgement, and
shall meet the director's independence requirements for serving on audit
committees as set forth in the corporate governance standards of the New York
Stock Exchange. The Committee is expected to maintain free and open
communication (including private executive sessions) with the independent
accountants and the internal auditors.
The Board of Directors shall appoint one member of the Committee as
chairperson. He or she shall be responsible for leadership of the Committee,
including approving the agenda, presiding over the meetings, making Committee
assignments and reporting to the Board of Directors. The chairperson will also
maintain regular liaison with the CEO, CFO, the lead independent audit partner
and the director of internal audit.
The Committee shall meet with such frequency and at such intervals, as it
shall determine is necessary to carry out its duties and responsibilities.
Routine meetings are scheduled for March, June and December. The Secretary of
the Corporation shall serve as the Secretary of the Committee except for the
private executive sessions.
A. RESPONSIBILITIES REGARDING THE ENGAGEMENT OF THE INDEPENDENT ACCOUNTANTS AND
THE APPOINTMENT OF THE INTERNAL AUDITOR
1. Review and recommend to the Board of Directors the independent accountants to
be selected to audit the annual financial statements and review the quarterly
financial statements of the Company. The Committee shall determine the
qualifications and adequacy of the outside auditors. The independent auditor
shall be accountable to the Board of Directors and the Audit Committee. The
Audit Committee shall have the authority and responsibility to select,
evaluate, and replace the independent auditor. The Committee will also review
and approve fees paid to the independent accountants.
2. Oversee the independent auditor relationship by initially reviewing and
approving the scope of the audit and subsequently discussing with the auditor
the nature and rigor of the audit process, changes in scope, receiving and
reviewing audit reports, and providing the auditor full access to the
Committee (and the Board of Directors) to report on any and all appropriate
matters.
3. Review and approve requests for any significant management consulting
engagements to be performed by the independent accountants.
4. Review and concur in the appointment, replacement, reassignment or dismissal
of the Director of Internal Audit and determine the reporting structure
appropriate for independence.
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5. Ensure that the independent accountants deliver to the Committee annually a
formal written statement delineating all relationships between the
independent accountants and the Company and addressing at least the matters
set forth in Independence Standards Board Standard No. 1; discuss with the
independent accountants any relationships or services disclosed in such
statement that may impact the objectivity and recommend that the Board of
Directors take appropriate action in response to this statement to satisfy
itself of the independent accountants' independence.
6. Review on an annual basis other services performed by the external auditors
and related fees, and inquire as to the extent to which independent public
accountants other than the principal auditor are to be used and understand
the rationale for using them. The Committee should request that the work of
other independent public accountants be coordinated and that an appropriate
review of their work be performed by the principal auditor.
B. RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT AND
THE REVIEW OF FINANCIAL STATEMENTS
THE COMMITTEE WILL:
1. Request the independent accountants to confirm that they are accountable to
the Board of Directors and the Committee and that they will provide the
Committee with timely analyses of significant financial reporting and
internal control issues.
2. Review with management significant risks and exposures identified by
management and steps undertaken by management to minimize such risks.
3. Review the scope of the internal and external audits with the Director of
Internal Audit and the independent accountants.
4. Provide guidance and oversight to the internal audit activities of the
Company including reviewing the organization, plans and results of such
activity.
5. Review with management, the independent accountants and the Director of
Internal Audit:
a. The Company's internal controls, including computerized information
system controls and security.
b. Any significant findings and recommendations made by the independent
accountants or internal audit staff.
6. Review the audited financial statements, proxy and 10K and discuss them with
management and the independent auditor. These discussions shall include
consideration of the quality of the Company's accounting principles as
applied in its financial reporting, including review of estimates, reserves
and accruals, review of judgmental areas, review of audit adjustments whether
or not recorded and such other inquiries as may be appropriate. Based on the
review, the Committee shall make its recommendation to the Board of Directors
as to the inclusion of the Company's audited financial statements in the
Company's annual report on Form 10-K.
7. Review with management and the independent accountants the quarterly
financial information prior to the Company's filing of Form 10-Q. The
Committee or its chairperson may perform this review.
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C. OTHER RESPONSIBILITIES:
1. Review recent and prospective opinions of the FASB and similar organizations
and their impact upon the Company's accounting and financial statements.
2. Review on an annual basis, policies and procedures covering officers' expense
accounts and perquisites, including the use of corporate assets, and consider
the results of any review of those areas by the Director of Internal Audit or
the independent accountants.
3. Review periodically with the General Counsel any legal and regulatory matters
that may have a material effect on the Company's financial statements,
operations, compliance policies and programs.
4. Review on an annual basis with the General Counsel the monitoring of
compliance with the Company's Code of Conduct.
5. Report Audit Committee activities to the full Board of Directors and issue
annually a report to be included in the proxy statement (including
appropriate oversight conclusions) for submission to the shareholders.
6. Review and reassess the adequacy of its charter on an annual basis, provide
the New York Stock Exchange with an annual written affirmation regarding the
annual review and reassessment of the adequacy of the charter, and affirm the
independence and other qualifications of the Audit Committee members. If
revised, the Charter will be published in the next proxy. Otherwise the
Charter will be published every third year in the proxy.
7. Set guidelines for committee education and orientation to assure
understanding of the business and the environment in which the company
operates.
8. Set guidelines for development of an annual audit committee plan which is
responsive to the primary audit committee responsibilities, and for the
review and approval of the plan by the full board.
9. Communicate committee expectations and the nature, timing, and extent of
committee information needs to management, internal and external auditors,
and others.
D. OTHER AUTHORITY
The Committee is authorized to confer with Company management and other
employees to the extent it may deem necessary or appropriate to fulfill its
duties. The Committee is authorized to conduct or authorize investigations or
special audits into any matters within the Committee's scope of
responsibilities. The Committee also is authorized to seek outside legal or
other advice to the extent it deems necessary or appropriate, provided it shall
keep the Board advised as to the nature and extent of such outside advice. The
Committee will perform such other functions as are authorized for this Committee
by the Board of Directors.
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THIS PROXY WILL BE VOTED AS DIRECTED BUT IN THE ABSENCE OF SUCH DIRECTION, IT PLEASE MARK
WILL BE VOTED FOR ITEMS 1 AND 2 BELOW. THIS PROXY REVOKES ANY PROXY PREVIOUSLY YOUR VOTES AS [X]
GIVEN. INDICATED IN
THIS EXAMPLE
1. To elect 01 John F. Cauley, 02 George R. Ditomassi and 03 Anne-Lee Verville
as Class III Directors for a three-year term. If any such nominees should be
unavailable, the proxies or any of them may vote for substitute nominee(s)
at their discretion.
FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority to vote
listed above AUTHORITY for one or more individual nominees write
(except as marked to vote for the nominee's name in the space provided
to the contrary) all nominees below.)
listed above
[ ] [ ] ------------------------------------------ I plan to attend the meeting.[ ]
2. To ratify the appointment by the Board of Directors of Arthur 3. To transact such other business as may properly come before
Andersen LLP as the Company's independent accountants for 2001. the meeting and any postponement or adjournment thereof.
FOR AGAINST ABSTAIN PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
[ ] [ ] [ ]
Signature Signature Date ,2001
----------------------------- ----------------------------- ----------------------
Please sign above exactly as name(s) appear(s) hereon. (When signing as attorney, executor, administrator, trustee, guardian, etc.,
give title as such. If joint account, each joint owner should sign.)
/\ FOLD AND DETACH HERE /\
VOTE BY TELEPHONE OR INTERNET
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1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone
telephone 24 hours a day-7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the
lower right hand corner of this form.
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: If you choose to vote on each proposal separately, press 0. You will
hear these instructions:
Proposal 1 - to vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to the
instructions.
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OR
2. VOTE BY INTERNET: Follow the instructions at our Website Address:
http://www.proxyvoting.com/enc
OR
3. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: If you vote by internet or telephone, THERE IS NO NEED TO MAIL BACK your
Proxy Card. TELEPHONE AND INTERNET VOTING WILL NOT BE AVAILABLE AFTER 4 P.M.
EDT ON WEDNESDAY APRIL 25, 2001.
THANK YOU FOR VOTING.
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PROXY ENESCO GROUP, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having read the Notice of Annual Meeting of Stockholders and
Proxy Statement dated March 16, 2001, receipt of which is hereby acknowledged,
does hereby appoint and constitute ANNE-LEE VERVILLE, JEFFREY W. LEMAJEUR, and
CHARLES SANDERS, and each or any of them, the attorneys and proxies of the
undersigned, with power of substitution to each, for and in the name of the
undersigned to vote and act at the Annual Meeting of Stockholders of Enesco
Group, Inc. to be held at the Enesco Showroom Theater, One Enesco Plaza
(corner of Busse and Devon), Elk Grove Village, Illinois, on Thursday, April 26,
2001 at 9:30 a.m. and at any postponement or adjournment thereof, with respect
to all shares of Common Stock, par value $.125 per share, of said Company,
standing in the name of the undersigned or with respect to which the
undersigned is entitled to vote or act, with all the powers that the
undersigned would possess if personally present and acting, as follows:
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE)
/\ FOLD AND DETACH HERE /\
ENESCO GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, APRIL 26, 2001
9:30 A.M.
Enesco Showroom Theater
One Enesco Plaza (corner of Busse and Devon)
Elk Grove Village, Illinois 60007