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.
- --------------------------------------------------------------------------------
(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
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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(ENESCO LOGO)
March 19, 2002
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 25,
2002, 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 25th, and thank you for your
continued support of Enesco Group, Inc.
Sincerely,
/s/ DAN DALLEMOLLE
DAN DALLEMOLLE
President and Chief Executive Officer
225 Windsor Drive, Itasca, Illinois 60143 - Telephone 630-875-5300
ENESCO GROUP, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: April 25, 2002
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 I Directors for a three-year term.
- 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, 2002 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 19, 2002
---------------------
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.
TABLE OF CONTENTS
<Table>
<Caption>
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
Committees of the Board..................................... 12
Executive Compensation...................................... 14
Compensation Committee Interlocks and Insider
Participation............................................. 17
Section 16(a) Beneficial Ownership Reporting Compliance..... 17
Compensation and Stock Option Committee Report on Executive
Compensation.............................................. 17
Report of the Audit Committee............................... 19
Performance Graph........................................... 20
Independent Public Accountants.............................. 21
Stockholder Proposals....................................... 22
</Table>
2
ENESCO GROUP, INC.
PROXY STATEMENT
March 19, 2002
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 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 25, 2002 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 19, 2002, we began mailing these proxy materials to all
stockholders of record at the close of business on March 1, 2002. On this record
date there were 13,788,350 shares outstanding and 2,668 holders of record.
Quorum Requirement
A quorum is necessary to hold a valid meeting. The attendance in person or
by proxy (by mail, 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.
3
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 (1-800-435-6710) 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
identification or 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.
4
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 I 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.
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 to solicit proxies at a fee of approximately
$5,500.
ANNUAL REPORT
The Annual Report to Stockholders of the Company for the year ended
December 31, 2001, including our financial statements for our 2001 fiscal year,
accompanies this proxy statement.
5
OUR LARGEST STOCKHOLDERS
On March 1, 2002, there were outstanding 13,788,350 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, 2002. To the best
of Enesco's knowledge, the beneficial owners of more than 5% of the common stock
as of December 31, 2001 were as follows:
<Table>
<Caption>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
David L. Babson and Company Incorporated............... 1,413,200 shares(1) 10.2%
One Memorial Drive
Cambridge, MA 02142
Dimensional Fund Advisors, Inc. ....................... 1,171,800 shares(2) 8.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Royce & Associates, Inc. ("Royce")..................... 973,000 shares(3) 7.1%
Royce Management Company ("RMC")
1414 Avenue of the Americas
New York, NY 10019
</Table>
- ---------------
(1) Based on a statement on Schedule 13G filed with the Securities and Exchange
Commission (SEC) on February 14, 2002 by David L. Babson and Company
Incorporated. David L. Babson and Company Incorporated has sole voting and
dispositive power over 1,413,200 shares.
(2) Based on a statement on Schedule 13G filed with the SEC on January 30, 2002
by Dimensional Fund Advisors, Inc. Dimensional Fund Advisors, Inc. has sole
voting and dispositive power over 1,171,800 shares.
(3) Based on a statement on Schedule 13G filed with the SEC on February 7, 2002
by Royce & Associates, Inc. Royce & Associates, Inc. has sole voting and
dispositive power over 973,000 shares.
6
SHARES HELD BY OUR DIRECTORS AND EXECUTIVE OFFICERS
Our management beneficially owned, as of March 1, 2002, shares of our
common stock as follows:
<Table>
<Caption>
OUTSTANDING SHARES OF SHARES UNDERLYING
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........................ 27,867 21,500 ***%
Daniel DalleMolle..................... 18,127(4) 0 ***%
George R. Ditomassi................... 5,368 0 ***%
Eugene Freedman....................... 100,099(5) 171,400 1.97%
Judith R. Haberkorn................... 14,147 6,000 ***%
Donald L. Krause...................... 3,222 0 ***%
Donna Brooks Lucas.................... 8,405 1,500 ***%
Homer G. Perkins...................... 27,919 7,500 ***%
Thane A. Pressman..................... 6,368 0 ***%
Anne-Lee Verville..................... 46,809 7,500 ***%
Josette V. Goldberg................... 2,104(6) 19,870 ***%
Paul B. Perez......................... 3,000 0 ***%
Jeffrey S. Smith...................... 1,096(6) 0 ***%
All Directors and Executive Officers
as a Group (16 persons)............. 265,631 254,310 3.77%
</Table>
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(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, 2002.
(3) Unless otherwise noted, the percent of class is less than 1%.
(4) Reflects 17,300 shares owned by Mr. DalleMolle and 827 shares held in Mr.
DalleMolle's 401(k) account as of December 31, 2001.
(5) 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.
(6) Reflects the number of shares of common stock held in the named persons
401(k) account as of December 31, 2001.
7
PROPOSAL 1: ELECTION OF DIRECTORS
Effective as of the Annual Meeting, the Board consists of nine 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 Mr. Freedman, who is not subject to this
policy.
The three current Class I Directors, Ms. Judith R. Haberkorn, Mr. Thane
Pressman and Mr. Donald L. Krause, 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 2005.
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 I
TERMS EXPIRING IN 2005
- --------------------------------------------------------------------------------
<Table>
JUDITH R. HABERKORN (JUDITH R. HABERKORN) Retired as President-Consumer Sales and Service,
Director since 1993 Bell Atlantic Corp. (telecommunications
Age 55 services), New 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
Governance and Compensation and Stock Option
Committees.
- -------------------------------------------------------------------------------------------------------------
DONALD L. KRAUSE (DONALD L. KRAUSE) Retired as Senior Vice President and Controller
Director since 2001 of Newell Rubbermaid, Inc. in 1999. Formerly
Age 62 President of Newell's Industrial Companies
Business Unit from February 1988 to February
1990 and Vice President-Controller from November
1974 to January 1988. Also on the Board of
Circuit Check Inc. and the Board of Advisors for
Baird Capital Partners. Member of the Company's
Audit and Governance Committees.
- -------------------------------------------------------------------------------------------------------------
</Table>
8
<Table>
THANE A. PRESSMAN (THANE A. PRESSMAN) President and CEO of Tone Brothers, Inc. from
Director since 2000 1998 until 2001, a $300 million U.S. subsidiary
Age 56 of Burns 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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DIRECTORS CONTINUING IN OFFICE IN CLASS II
TERMS EXPIRING IN 2003
- -------------------------------------------------------------------------------------------------------------
DANIEL DALLEMOLLE (DANIEL DALLEMOLLE) President and Chief Executive Officer since
Director since 2001 March 28, 2001. Formerly Group President,
Age 51 Hardware and Tool Companies of Newell
Rubbermaid, Inc. from 1999 until 2001. President
and Chief Operating Officer of Intermatic, Inc.
from 1998 until 1999. President of Lee Rowan
Company of Newell Rubbermaid from 1996 until
1998. Also Director of Juno Lighting Inc. and
Bushnell Optics. Member of the Company's
Executive and Governance Committees.
- -------------------------------------------------------------------------------------------------------------
EUGENE FREEDMAN (EUGENE FREEDMAN) Founding Chairman since 1998. Formerly Executive
Director since 1997 Vice President of the Company from 1988 until
Age 77 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 the
Company's Executive Committee.
</Table>
9
<Table>
DONNA B. LUCAS (DONNA B. LUCAS) President and Chief Executive Officer of DBL
Director since 1999 Multi-Media Group, Chicago, Illinois (creative
Age 49 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.
- -------------------------------------------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE IN CLASS III
TERMS EXPIRING IN 2004
- -------------------------------------------------------------------------------------------------------------
JOHN F. CAULEY (JOHN F. CAULEY) Chairman of the Board, 1998-2000, Office of the
Director since 1987 Chairman from June 2000 until March 2001.
Age 69 Retired as President of 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
Company's Governance Committee and member of the
Executive and Audit Committees.
- -------------------------------------------------------------------------------------------------------------
GEORGE R. DITOMASSI (GEORGE R. DITOMASSI) Co-Chief Executive Officer and Director of Shop
Director since 2000 At Home Network since October 2001. Chairman of
Age 67 the Board at the Milton Bradley Company and
Chief Operating Officer of Hasbro, 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
Executive, Audit and Compensation and Stock
Option Committees.
- -------------------------------------------------------------------------------------------------------------
</Table>
10
<Table>
ANNE-LEE VERVILLE (ANNE-LEE VERVILLE) Chairman of the Board since 2001. Interim
Director since 1991 President and CEO from January through March,
Age 56 2001; Office of the Chairman from June 2000
until March 2001. 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.
- -------------------------------------------------------------------------------------------------------------
</Table>
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, $45,000 per annum, and 950
shares of common stock;
(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.
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.
11
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The following table shows the membership of Enesco's committees as of March
1, 2002. An asterisk indicates chairperson.
<Table>
<Caption>
COMPENSATION AND
NAME AUDIT STOCK OPTION EXECUTIVE GOVERNANCE
- ---- ----- ---------------- --------- ----------
John F. Cauley..................................... X X *
Daniel DalleMolle.................................. X X
George R. Ditomassi................................ X X X
Eugene Freedman.................................... X
Judith R. Haberkorn................................ * X X
Donald L. Krause................................... X X
Donna Brooks Lucas................................. X * X
Homer G. Perkins................................... X X
Thane A. Pressman.................................. X X
Anne-Lee Verville.................................. X * X
</Table>
Committees
The Audit Committee held three meetings during 2001. 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
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 this Proxy
Statement. All members of the Audit Committee are independent as defined in Rule
303, except Anne-Lee Verville, former Interim President and Chief Executive
Officer (on a non-employee basis) from January 1, 2001 until March 28, 2001.
Under the override provision of Section 303.02(D) of the Manual, the Board of
Directors determined that during the period when serving as Interim President
and Chief Executive Officer, Ms. Verville was independent of management and had
no relationship that would interfere with her independent judgment as a member
of the Audit Committee. The Board further determined in its business judgment
that Ms. Verville's membership on the Audit Committee was required in the best
interests of the Company and its stockholders.
The Compensation and Stock Option Committee held five meetings during 2001.
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 2001. This Committee,
which consists of five Directors, three 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 2001. This Committee,
which consists entirely of non-employee Directors, provides the Board with
Director and corporate officer recommendations, proposes to
12
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, which continued
in existence until March 28, 2001.
The Office of the Chairman was made up of the Chairman of the Company, one
or more directors and certain executive officers. During 2001, the Office of
Chairman was made up of Anne-Lee Verville, Chairman, John F. Cauley, George R.
Ditomassi, Allan G. Keirstead (until January 31, 2001) and Thomson J. Hudson
(until March 13, 2001). Eugene Freedman was an advisor to the Office. 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, was to undertake the responsibilities and duties of the Chief
Executive Officer until a new President and Chief Executive Officer was hired.
When Dan DalleMolle was hired on March 28, 2001, the Office of the Chairman was
dissolved.
The Executive Search Committee of the Board met two times during 2001. 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 was to undertake the search for a new President and Chief Executive
Officer of the Company. During 2001, this Committee was made up of Anne-Lee
Verville, as Chair, H.L. Tower (until his resignation in February 2001), D.
Brooks Lucas, J.R. Haberkorn and G.R. Ditomassi. When Dan DalleMolle was hired
on March 28, 2001, the Executive Search Committee was dissolved.
In addition to the Committee meetings referred to above, the full Board
held seven regular meetings and one special meeting during 2001. 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.
13
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 2001, 2000
and 1999, the compensation of the Chief Executive Officer, and the four other
most highly compensated executive officers in office at the end of 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS(2)
------------------------------------ ------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(3) OPTIONS (#) ($)
--------------------------- ---- ---------- -------- ------------ ------------ ------------
D. DalleMolle,(4).................... 2001 $ 350,769 $312,000 $ -- 300,000 $140,000
President and 2000 -- -- -- -- --
Chief Executive Officer 1999 -- -- -- -- --
A.L. Verville,(5).................... 2001 -- -- -- 1,500 176,200
Interim Chief Executive Officer 2000 -- -- -- 1,500 199,600
1999 -- -- -- 1,500 19,200
E. Freedman,......................... 2001 615,385 -- -- -- --
Founding Chairman 2000 1,000,000 -- 60,500 40,000 --
1999 1,000,000 -- 60,500 40,000 --
J.S. Smith, (6)...................... 2001 151,400 80,000 -- 50,000 83,996
Senior Vice President, 2000 -- -- -- -- --
Operations 1999 -- -- -- -- --
P.B. Perez,(7)....................... 2001 111,461 80,000 -- 35,994 35,000
Senior Vice President of Sales and 2000 -- -- -- -- --
Marketing 1999 -- -- -- -- --
J.V. Goldberg,....................... 2001 225,462 -- -- 25,000 --
Senior Vice President, 2000 199,692 20,000 -- 11,000 --
Human Resources and Administration 1999 184,300 -- -- 12,500 --
</Table>
- ---------------
(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. Compensation
information for 2000 and 1999 for Messrs. DalleMolle, Perez and Smith are
not provided because they were not employed at the Company 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 for Mr. Freedman consisted of the following items on
an accrual basis: In each of 2000 and 1999, $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 PAYSOP contribution.
14
(4) Mr. DalleMolle commenced his employment at the Company on March 28, 2001.
Under the terms of his employment agreement, in addition to his base salary,
he was paid a guaranteed bonus of $312,000 for 2001 and a signing bonus of
$140,000.
(5) Ms. Verville became Interim Chief Executive Officer on a non-employee basis
on January 1, 2001. Ms. Verville was paid $108,750 for her services as
Chairman of the Board in 2001 (a portion of which was paid in cash and a
portion of which was paid in stock) and $46,250 was paid in 2001 for her
services as Interim Chief Executive Officer in 2001 (a portion of which was
paid in cash and a portion of which was paid in stock). In addition, Ms.
Verville received $21,200 for attending the meetings of the Board and the
Audit and Governance Committees in 2001. During 1999 and 2000 all
compensation received by Ms. Verville was for her services as a Director and
member of certain Board Committees including, Chair of the Executive Search
Committee and as a member of the Office of the Chairman. All stock options
received by Ms. Verville were for her services as a non-employee Director.
(6) Mr. Smith commenced his employment at the Company on June 5, 2001. In
addition to his base salary, he was paid a guaranteed bonus of $80,000 for
2001. All Other Compensation is comprised of a $35,000 starting bonus and
relocation expense reimbursement of $48,996.
(7) Mr. Perez commenced his employment at the Company on June 21, 2001. In
addition to his base salary, he was paid a guaranteed bonus of $80,000 for
2001. All Other Compensation consists of a $35,000 starting bonus.
The following table contains information concerning individual grants of
stock options made by the Company to each of the Named Executive Officers during
2001:
OPTION GRANTS IN 2001
<Table>
<Caption>
GRANT DATE
INDIVIDUAL GRANTS(1) VALUE
-------------------------------------------------------- ----------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE GRANT DATE
GRANTED IN FISCAL PRICE PRESENT
NAME (#)(2) YEAR ($/SH) EXPIRATION DATE VALUE $(3)
- ---- ---------- ---------- -------- ---------------- ----------
D. DalleMolle........................ 300,000 36.8 $6.20 March 27, 2011 1,578,000
A.L. Verville........................ 1,500(4) 0.2 6.17 April 26, 2011 7,830
E. Freedman.......................... 0 0 -- -- 0
P.B. Perez........................... 35,994 4.4 6.39 June 21, 2011 192,208
J. S. Smith.......................... 50,000 6.1 5.60 June 5, 2011 234,000
J.V. Goldberg........................ 25,000 3.1 5.06 January 16, 2011 108,500
</Table>
- ---------------
(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 2001.
(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.
15
(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 2001. The following table sets forth information concerning the value of
unexercised stock options held by each of them as of the end of 2001:
2001 YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR-END(#) YEAR-END($)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
D. DalleMolle..................................... 0/300,000 $0/$30,000
A.L. Verville..................................... 7,500/15,000 2,235/0
E. Freedman....................................... 171,400/127,200 39,932/19,668
P.B. Perez........................................ 0/35,994 0/0
J.S. Smith........................................ 0/50,000 0/35,000
J.V. Goldberg..................................... 19,870/33,630 10,981/28,658
</Table>
Employment Contracts and Change in Control Arrangements
Mr. DalleMolle, President and Chief Executive Officer, has an employment
agreement through March 31, 2003. Under the terms of the agreement, Mr.
DalleMolle receives an annual base salary of $480,000. For 2001, Mr. DalleMolle
received $350,769 as annual base salary for the period of March 28, 2001 through
December 31, 2001, a signing bonus of $140,000 and a guaranteed bonus payment of
$312,000. Beginning in 2002, Mr. DalleMolle's bonus will be subject to the
attainment of certain operating profit and return on asset targets, as
determined and approved by the Board's Compensation and Stock Option Committee.
In addition, Mr. DalleMolle receives certain executive officer fringe benefits,
including medical insurance coverage. The employment agreement also contains
confidentiality, non-compete and non-solicitation covenants.
The Company has separate change in control agreements or commitments with
Messrs. DalleMolle, Freedman, Perez, Smith, 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, 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 Messrs. Perez and Smith, and Ms. Goldberg)
times the annual base salary rate plus bonus and (ii) certain fringe benefits
for up
16
to a three-year term. In accordance with their change in control agreements and
severance agreements, Messrs. DalleMolle and Freedman 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 26 weeks of 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 2001, Ms. Brooks Lucas, Ms. Haberkorn, Mr. Ditomassi and Mr.
Pressman 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,
2001 were satisfied, except that a Form 4 filing report for Robert Hipple,
former General Counsel and Secretary, was filed on January 16, 2001.
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 2001 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 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
17
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. Except for Messrs.
DalleMolle, Smith and Perez pay for performance bonuses in 2001 were 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. Beginning in 2002, pay for
performance bonuses for all Enesco employees, including Messrs. DalleMolle,
Smith and Perez, will be determined under Enesco's new bonus program based on
achieving certain specified targets for operating profit and return on assets.
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 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 or (2) 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, in each case 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.
No further grants will be made under the 1991 Stock Option Plan. 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.
While the Company was involved in a search for a new Chief Executive
Officer, Anne-Lee Verville served as Interim President and Chief Executive
Officer during 2001 and was paid $46,250 in 2001 for her services.
Compensation paid in 2001 to Mr. DalleMolle, President and Chief Executive
Officer as of March 28, 2001 consisted of $350,769 as base salary based on an
annual rate of $480,000, a guaranteed bonus for 2001 of $312,000 and a signing
bonus of $140,000 in relation to his employment agreement. The Committee also
awarded, on March 28, 2001, Mr. DalleMolle a grant of 300,000 non-qualified
stock options to purchase common stock in connection with his employment at the
Company.
Since Mr. DalleMolle was not employed by the Company at the end of 2000
when the 2001 budget and sales plan were initially developed, the Committee
determined it was appropriate to guarantee him payment of a bonus for 2001 of
$312,000; however, beginning in 2002, Mr. DalleMolle's bonus will be based on
the attainment of certain operating profit and return on asset targets, as
determined and approved by the Board's Compensation and Stock Option Committee.
The Compensation and Stock Option Committee:
D.B. Lucas (Chair)
G.R. Ditomassi
J.R. Haberkorn
T.A. Pressman
18
REPORT OF THE AUDIT COMMITTEE
March 5, 2002
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, 2001 and 2000, and for the three years
in the period ended December 31, 2001.
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, 2001.
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
D.L. Krause
H.G. Perkins
T.A. Pressman
A.L. Verville
19
PERFORMANCE GRAPH
During 2001, 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
(PERFORMANCE GRAPH)
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- ------------------------------------------------------------------------------------------------------------------
Enesco Group, Inc. $100.00 100.88 95.28 48.65 21.43 28.80
- ------------------------------------------------------------------------------------------------------------------
S&P SmallCap 600 $100.00 125.58 123.95 139.32 155.76 165.94
- ------------------------------------------------------------------------------------------------------------------
Company's Peer Group $100.00 110.29 90.17 52.36 33.14 51.65
- ------------------------------------------------------------------------------------------------------------------
</Table>
- ---------------
(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 1996 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 seven companies:
<Table>
S&P Consumer (Jwlry & Novelty)--Small Cap 600 Enesco Group, Inc.
Action Performance Cos Inc. Fossil Inc.
Cross (A.T.) & Co--CLA Franklin Covey Co.
Department 56, Inc--Ser A Russ Berrie & Co. Inc.
</Table>
20
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been engaged by Enesco as independent public
accountants since 1971. Enesco has had no disagreements with Arthur Andersen on
accounting and financial disclosures.
For the 2002 fiscal year, the Audit Committee of the Board has not
appointed an independent public accounting firm. The Board and the Audit
Committee annually review the performance of our independent public accountants
and the fees charged for their service. The Audit Committee has commenced the
process of obtaining competitive proposals from a number of independent public
accounting firms, including Arthur Andersen LLP, for Enesco's annual audit.
Based upon the Board and the Audit Committee's analysis of this information, we
will determine by June 2002 which independent public accounting firm to engage
for the 2002 fiscal year.
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 2001 AUDIT FIRM FEE SUMMARY
During fiscal year 2001, the company retained its principal auditor, Arthur
Andersen, to provide services in the following categories and amounts:
<Table>
Audit Fees.................................................. $411,000
Financial Information Systems Design and Implementation
Fees...................................................... $ 0
All Other Fees
Audit Related Fees........................................ $ 54,000
Other Fees................................................ $147,000
--------
Total All Other Fees...................................... $201,000
</Table>
The Audit Committee has considered whether the provision of non-audit
services by the Company's principal auditor is compatible with maintaining
auditor independence.
21
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
Stockholders in 2003, stockholder proposals for that meeting must be received by
Enesco on or before November 18, 2002. 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 30,
2003. 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, 2001 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 19, 2002
22
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.
A-1
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.
A-2
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.
A-3
<Table>
THIS PROXY WILL BE VOTED AS DIRECTED BUT IN THE ABSENCE OF SUCH DIRECTION, IT WILL BE VOTED FOR ITEM Please mark [X]
BELOW. THIS PROXY REVOKES ANY PROXY PREVIOUSLY GIVEN. your vote as
indicated in
this example
1. To elect 01 Judith R. Haberkorn, 02 Thane A. Pressman and 03 Donald L. Krause as Class 1 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 for one or more individual nominees,
LISTED ABOVE AUTHORITY TO VOTE write the nominee's name in the space provided below.)
(EXCEPT AS MARKED FOR ALL NOMINEES
TO THE CONTRARY) LISTED ABOVE
---------------------------------------------------------------------------------
[ ] [ ]
2. To transact such other business as may properly come before
the meeting and any postponement or adjournment thereof. I plan to attend the meeting. [ ]
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
SIGNATURE SIGNATURE DATE , 2002
------------------------------------------- ------------------------------------------ ----------------
Please sign above exactly as names(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 INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
Internet and telephone voting is available through 4PM Eastern Time
the business day prior to annual meeting day.
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE SAME MANNER
AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
---------------------------------------- --------------------------------------- -----------------------
INTERNET TELEPHONE MAIL
http://www.eproxy.com/enc 1-800-435-6710
Use the Internet to vote your proxy. Use any touch-tone telephone to Mark, sign and date
Have your proxy card in hand when vote your proxy. Have your proxy your proxy card
you access the web site. You will be OR card in hand when you call. You will OR and
prompted to enter your control number, be prompted to enter your control return it in the
located in the box below, to create number, located in the box below. enclosed postage-paid
and submit an electronic ballot. and then follow the directions given. envelope.
---------------------------------------- --------------------------------------- -----------------------
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
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<Table>
PROXY ENESCO GROUP, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTIONS
The undersigned, having read the Notice of Annual Meeting of Stockholders and Proxy Statement dated March 19, 2002, receipt of
which is hereby acknowledged, does hereby appoint and constitute DANIEL DALEMOLLE, JEFFREY W. LEMAJEUR and CHARLES E SANDERS, and
each of 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 25, 2002 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 25, 2002
9:30 a.m.
Enesco Showroom Theater
One Enesco Plaza (corner of Busse and Devon)
Elk Grove Village, Illinois 60007
</Table>