SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.__)
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|_| Preliminary Proxy Statement
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|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-12
HOT TOPIC, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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|X| No fee required.
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2. Aggregate number of securities to which transaction applies:
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HOT TOPIC, INC.
18305 E. San Jose Avenue
City of Industry, California 91748
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 17, 2004
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of HOT TOPIC, INC., a California corporation (the "Company"). The meeting will
be held on Thursday, June 17, 2004 at 8:30 a.m. local time at the Company's
headquarters at 18305 E. San Jose Avenue, City of Industry, California 91748 for
the following purposes:
1. To elect six directors to serve until the Company's 2005 Annual Meeting
of Shareholders.
2. To ratify the selection by the Audit Committee of the Board of
Directors of Ernst & Young LLP as independent auditors of the Company
for its fiscal year ending January 29, 2005.
3. To conduct any other business properly brought before the meeting.
These items of business are more fully described in the Proxy Statement
accompanying this Notice.
The record date for the Annual Meeting is April 21, 2004. Only
shareholders of record at the close of business on that date may vote at the
meeting or any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ James McGinty
JAMES MCGINTY
Secretary
City of Industry, California
May 10, 2004
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YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT
THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED
STATES) IS ENCLOSED FOR YOUR CONVENIENCE. EVEN IF YOU HAVE VOTED BY PROXY, YOU
MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT
IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU
WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM
THAT RECORD HOLDER.
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1.
HOT TOPIC, INC.
18305 E. San Jose Avenue
City of Industry, California 91748
PROXY STATEMENT
FOR THE 2004 ANNUAL MEETING OF SHAREHOLDERS
June 17, 2004
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
WHY AM I RECEIVING THESE MATERIALS?
We sent you this proxy statement and the enclosed proxy card because
the Board of Directors of HOT TOPIC, INC. (sometimes referred to as the
"Company" or "Hot Topic") is soliciting your proxy to vote at the 2004 Annual
Meeting of Shareholders. You are invited to attend the annual meeting to vote on
the proposals described in this proxy statement. However, you do not need to
attend the meeting to vote your shares. Instead, you may simply complete, sign
and return the enclosed proxy card.
The Company intends to mail this proxy statement and accompanying proxy
card on or about May 12, 2004 to all shareholders of record entitled to vote at
the annual meeting.
WHO CAN VOTE AT THE ANNUAL MEETING?
Only shareholders of record at the close of business on April 21, 2004
will be entitled to vote at the annual meeting. On this record date, there were
48,272,012 shares of common stock outstanding and entitled to vote.
SHAREHOLDER OF RECORD: SHARES REGISTERED IN YOUR NAME
If on April 21, 2004 your shares were registered directly in your name
with Hot Topic's transfer agent, Wells Fargo Bank Minnesota, N.A., then you are
a shareholder of record. As a shareholder of record, you may vote in person at
the meeting or vote by proxy. Whether or not you plan to attend the meeting, we
urge you to fill out and return the enclosed proxy card to ensure your vote is
counted.
BENEFICIAL OWNER: SHARES REGISTERED IN THE NAME OF A BROKER OR BANK
If on April 21, 2004 your shares were held, not in your name, but
rather in an account at a brokerage firm, bank, dealer, or other similar
organization, then you are the beneficial owner of shares held in "street name"
and these proxy materials are being forwarded to you by that organization. The
organization holding your account is considered to be the shareholder of record
for purposes of voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent on how to vote the shares in your
account. You are also invited to attend the annual meeting. However, since you
are not the shareholder of record, you may not vote your shares in person at the
meeting unless you request and obtain a valid proxy from your broker or other
agent.
WHAT AM I VOTING ON?
There are two matters scheduled for a vote:
>> Election of six directors to serve until the Company's 2005 Annual
Meeting of Shareholders; and
>> Ratification of the selection by the Audit Committee of the Board of
Directors of Ernst & Young LLP as independent auditors of the Company
for its fiscal year ending January 29, 2005.
2.
HOW DO I VOTE?
You may either vote "For" all the nominees to the Board of Directors or
you may "Withhold" your vote for any nominee you specify. For each of the other
matters to be voted on, you may vote "For" or "Against" or abstain from voting.
The procedures for voting are as follows:
SHAREHOLDER OF RECORD: SHARES REGISTERED IN YOUR NAME
If you are a shareholder of record, you may vote in person at the
annual meeting or vote by proxy using the enclosed proxy card. Whether or not
you plan to attend the meeting, we urge you to vote by proxy to ensure your vote
is counted. You may still attend the meeting and vote in person if you have
already voted by proxy.
>> To vote in person, come to the annual meeting and we will have a ballot
available for you.
>> To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope provided. If
you return your signed proxy card to us before the annual meeting, we
will vote your shares as you direct.
BENEFICIAL OWNER: SHARES REGISTERED IN THE NAME OF BROKER OR BANK
If you are a beneficial owner of shares registered in the name of your
broker, bank, or other agent, you should have received a proxy card and voting
instructions with these proxy materials from that organization rather than from
Hot Topic. Simply complete and mail the proxy card to ensure that your vote is
counted. To vote in person at the annual meeting, you must obtain a valid proxy
from your broker, bank, or other agent. Follow the instructions from your broker
or bank included with these proxy materials, or contact your broker or bank to
request a proxy form.
HOW MANY VOTES DO I HAVE?
On each matter to be voted upon, you have one vote for each share of
common stock you own as of the close of business on April 21, 2004.
WHAT IF I RETURN A PROXY CARD BUT DO NOT MAKE SPECIFIC CHOICES?
If you return a signed and dated proxy card without marking any voting
selections, your shares will be voted "For" the election of all six nominees for
director, and "For" the ratification of Ernst & Young LLP as independent
auditors of Hot Topic. If any other matter is properly presented at the meeting,
your proxy (one of the individuals named on your proxy card) will vote your
shares using his or her best judgment.
WHO IS PAYING FOR THIS PROXY SOLICITATION?
We will pay for the entire cost of soliciting proxies. In addition to
these mailed proxy materials, our directors and employees may also solicit
proxies in person, by telephone, or by other means of communication. Directors
and employees will not be paid any additional compensation for soliciting
proxies. We will also reimburse brokerage firms, banks and other agents for the
cost of forwarding proxy materials to beneficial owners.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
If you receive more than one proxy card, your shares are registered in
more than one name or are registered in different accounts. Please complete,
sign and return EACH proxy card to ensure that all of your shares are voted.
CAN I CHANGE MY VOTE AFTER SUBMITTING MY PROXY?
Yes. You can revoke your proxy at any time before the final vote at the
meeting. If you are the record holder of your shares, you may revoke your proxy
in any one of three ways:
>> You may submit another properly completed proxy card with a later date.
3.
>> You may send a written notice that you are revoking your proxy to Hot
Topic's Secretary at 18305 E. San Jose Avenue, City of Industry,
California 91748.
>> You may attend the annual meeting and vote in person. Simply attending
the meeting without voting in person will not, by itself, revoke your
proxy.
If your shares are held by your broker or bank as a nominee or agent, you should
follow the instructions provided by your broker or bank.
WHEN ARE SHAREHOLDER PROPOSALS DUE FOR NEXT YEAR'S ANNUAL MEETING?
To be considered for inclusion in next year's proxy materials, your
proposal must be submitted in writing by January 7, 2005, to the Company's
Secretary at 18305 E. San Jose Avenue, City of Industry, California 91748. If
you wish to submit a proposal that is not to be included in next year's proxy
materials or nominate a director, you must do so by February 17, 2005. You are
also advised to review the Company's Amended and Restated Bylaws, which contain
additional requirements about advance notice of shareholder proposals and
director nominations.
HOW ARE VOTES COUNTED?
Votes will be counted by the inspector of election appointed for the
meeting, who will separately count "For" and "Withhold" and, with respect to
proposals other than the election of directors, "Against" votes, abstentions and
broker non-votes. A "broker non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that proposal and has not
received instructions with respect to that proposal from the beneficial owner,
despite voting on at least one other proposal for which it does have
discretionary authority or for which it has received instructions. Abstentions
and broker non-votes will not be counted towards the vote total for any
proposal.
If your shares are held by your broker as your nominee (that is, in
"street name"), you will need to obtain a proxy form from the institution that
holds your shares and follow the instructions included on that form regarding
how to instruct your broker to vote your shares. If you do not give instructions
to your broker, your broker can vote your shares with respect to "discretionary"
items, but not with respect to "non-discretionary" items. Discretionary items
are proposals considered routine under the rules of the New York Stock Exchange
("NYSE") on which your broker may vote shares held in street name in the absence
of your voting instructions. On non-discretionary items for which you do not
give your broker instructions, the shares will be treated as broker non-votes.
HOW MANY VOTES ARE NEEDED TO APPROVE EACH PROPOSAL?
>> For the election of directors, the six nominees receiving the most
"For" votes (among votes properly cast in person or by proxy) will be
elected. Only votes "For" or "Withheld" will affect the outcome.
>> To be approved, ratification of the selection by the Audit Committee of
the Board of Directors of Ernst & Young LLP as independent auditors of
the Company for its fiscal year ending January 29, 2005 must receive a
"For" vote from the majority of shares present and entitled to vote
either in person or by proxy. Abstentions and broker non-votes will
have no effect.
WHAT IS THE QUORUM REQUIREMENT?
A quorum of shareholders is necessary to hold a valid meeting. A quorum
will be present if at least a majority of the outstanding shares are represented
by shareholders present at the meeting or by proxy. At the close of business on
the record date, there were 48,272,012 shares outstanding and entitled to vote.
Thus 24,136,007 shares must be represented by shareholders present at the
meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you submit a
valid proxy (or one is submitted on your behalf by your broker, bank or other
nominee) or if you vote in person at the meeting. Abstentions and broker
non-votes will be counted towards the quorum requirement. If there is no quorum,
a majority of the votes present at the meeting may adjourn the meeting to
another date.
4.
HOW CAN I FIND OUT THE RESULTS OF THE VOTING AT THE ANNUAL MEETING?
Preliminary voting results will be announced at the annual meeting.
Final voting results will be published in the Company's quarterly report on Form
10-Q for the second quarter of the Company's fiscal year ending January 29,
2005.
DO THE SHARE AND PER SHARE AMOUNTS REPORTED IN THIS PROXY STATEMENT REFLECT THE
COMPANY'S RECENT STOCK SPLIT?
Yes. On August 12, 2003, the Company announced that its Board of
Directors approved a three-for-two stock split (in the form of a dividend) of
its common stock. On the effective date of September 2, 2003, shareholders
received a dividend of one additional share for every two shares they owned at
the close of business on the record date of August 21, 2003. All share and per
share amounts in this proxy statement have been restated to reflect this stock
split and all previous stock splits effectuated by the Company, except as
otherwise indicated.
5.
PROPOSAL 1
ELECTION OF DIRECTORS
Hot Topic's Board of Directors currently consists of seven directors.
Edgar Berner is currently a director and has elected not to stand for reelection
this year. As of the Annual Meeting, the number of authorized directors will be
six, pursuant to the Company's charter documents and resolution of the Board of
Directors, subject to future change as permitted thereby. Accordingly, there are
six nominees for director this year. Each director to be elected will hold
office until the next annual meeting of shareholders and until his or her
successor is elected, or until the director's death, resignation or removal.
Each of the nominees listed below is currently a director of the Company who was
previously elected by the shareholders. It is the Company's policy to invite
nominees for directors to attend the Annual Meeting. All but one of the nominees
for election as a director at the 2003 Annual Meeting of Shareholders attended
the 2003 Annual Meeting of Shareholders.
The candidates receiving the highest number of "For" votes by the
shares entitled to be voted will be elected. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the six nominees named below. If any nominee becomes unavailable for election
as a result of an unexpected occurrence, your shares will be voted for the
election of a substitute nominee proposed by Hot Topic's management. Each person
nominated for election has agreed to serve if elected. We have no reason to
believe that any nominee will be unable to serve.
NOMINEES
The following is a brief biography of each nominee for director.
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
Cynthia Cohen 51 Director
Corrado Federico 63 Director
W. Scott Hedrick 58 Director
Elizabeth McLaughlin 43 Chief Executive Officer and Director
Bruce Quinnell 55 Chairman of the Board
Andrew Schuon 39 Director
CYNTHIA COHEN has served as a director of the Company since September
2001. Ms. Cohen is the President of Strategic Mindshare, a marketing and
strategy consulting firm that she founded in 1990. Prior to founding Strategic
Mindshare, Ms. Cohen was a Partner in Management Consulting with Deloitte &
Touche. Ms. Cohen is a director of Office Depot, Inc., The Sports Authority,
Inc. and bebe Stores, Inc., all publicly-traded, consumer products companies.
She is also Chairman of the Strategic Mindshare Foundation, which provides
mentoring and scholarships to young women pursuing business careers.
CORRADO FEDERICO has served as a director of the Company since December
1997. Mr. Federico is also a director of bebe Stores, Inc., a contemporary
women's fashion chain with approximately 187 stores throughout the United States
and abroad, and the President of Corado, Inc., a land development company
specializing in affordable housing. Since 2002, Mr. Federico has also served as
a retail consultant with an overseas company specializing in expanding American
retail operations. Since May 1999, he has also served as President of Solaris
Properties, Inc., a real estate company. From 1986 to 1991, Mr. Federico served
as President and Chief Executive Officer of ESPRIT's United States apparel,
retail, and mail order operations.
W. SCOTT HEDRICK has served as a director of the Company since January
2002. Mr. Hedrick was a founder and has been a General Partner of InterWest
Partners, a venture capital fund, since 1979. Since April 1991, Mr. Hedrick has
been a director of Office Depot, Inc. and from November 1986 until April 1991,
he served as a director of The Office Club, Inc., which was acquired by Office
Depot, Inc. in April 1991. Mr. Hedrick also serves as a director of Golden State
Vintners, Inc., a publicly-traded consumer products company, and several
privately-held companies.
6.
ELIZABETH MCLAUGHLIN has served as Chief Executive Officer of the
Company since August 2000, and has served as a director of the Company since May
2000. She also served as President of the Company from February 2000 through
September 2003. From June 1996 through February 2000, Ms. McLaughlin served as
Senior Vice President and General Merchandise Manager of the Company. From May
1993 through May 1996, Ms. McLaughlin was the Company's Vice President,
Operations. Prior to joining the Company, Ms. McLaughlin held various positions
with Millers Outpost and The Broadway. Ms. McLaughlin is a member of the Board
of Visitors for the Anderson School at UCLA. Ms. McLaughlin serves on the board
of directors at Noodles & Company, a privately-held casual dining restaurant
company. Ms. McLaughlin holds a B.A. degree in Economics from the University of
California at Irvine.
BRUCE QUINNELL has served as a director of the Company since September
1998. From April 1999 to February 2002, Mr. Quinnell was Vice Chairman of
Borders Group, Inc. From January 1997 to April 1999, Mr. Quinnell was the
President and Chief Operating Officer of Borders Group, Inc.
ANDREW SCHUON has served as a director of the Company since January
1998. From August 2002 to February 2004, Mr. Schuon was President of Programming
of Infinity Broadcasting. From April 2001 to August 2002, he was President and
Chief Executive Officer of Pressplay, a joint venture created by Sony Music
Entertainment and Universal Music Group. From December 1999 to April 2001, Mr.
Schuon was President and Chief Operating Officer of the Universal Music Group's
music business, Farmclub.com, Inc. Prior to that, from February 1998 to November
1999, Mr. Schuon was Executive Vice President/General Manager of Warner Bros.
Records Inc. From 1992 to December 1997, Mr. Schuon served as Executive Vice
President of MTV where he was responsible for programming, music, production,
and talent for their MTV and VH1 cable channels.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
INDEPENDENCE OF THE BOARD OF DIRECTORS
As required under the Nasdaq Stock Market ("Nasdaq") listing standards,
a majority of the members of a listed company's Board of Directors must qualify
as "independent," as affirmatively determined by the Board of Directors. The
Board consults with the Company's counsel to ensure that the Board's
determinations are consistent with all relevant securities and other laws and
regulations regarding the definition of "independent," including those set forth
in pertinent listing standards of the Nasdaq, as in effect from time to time.
Consistent with these considerations, after review of all relevant
transactions or relationships between each director, or any of his or her family
members, and the Company, its senior management and its independent auditors,
the Board affirmatively has determined that all of the Company's directors are
independent directors within the meaning of the applicable Nasdaq listing
standards, except for Ms. McLaughlin, the Chief Executive Officer of the
Company.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
As required under new Nasdaq listing standards, the Company's
independent directors will meet in regularly scheduled executive sessions at
which only independent directors are present. Persons interested in
communicating to the Board of Directors their concerns or issues may address
correspondence to the Secretary of the Company at 18305 E. San Jose Avenue, City
of Industry, California 91748. Communications also may be sent by e-mail to the
following address: investorrelations@hottopic.com. If no particular director is
named, letters will be forwarded, depending on the subject matter, to the Chair
of the Audit, Compensation, or Governance and Nominating Committee.
7.
The Board has three committees: an Audit Committee, a Compensation
Committee, and a Governance and Nominating Committee. The following table
provides membership and meeting information for fiscal 2003 for each of the
Board committees:
Governance and
Name Audit Compensation Nominating
- --------------------------- ----- ------------ ----------
Edgar Berner X X
Cynthia Cohen X X*
Corrado Federico X X
W. Scott Hedrick X*
Bruce Quinnell X*
Andrew Schuon X X
Total meetings in fiscal year 2003 6 1 4
* Committee Chairperson
Below is a description of each committee of the Board of Directors. The
Board of Directors has determined that each member of each committee meets the
applicable rules and regulations regarding "independence" and that each member
is free of any relationship that would interfere with his or her individual
exercise of independent judgment with regard to the Company.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors oversees the Company's
corporate accounting and financial reporting process. For this purpose, the
Audit Committee performs several functions. The Audit Committee evaluates the
performance of and assesses the qualifications of the independent auditors;
determines and approves the engagement of the independent auditors; determines
whether to retain or terminate the existing independent auditors or to appoint
and engage new independent auditors; reviews and approves the retention of the
independent auditors to perform any proposed permissible non-audit services;
confers with management and the independent auditors regarding the effectiveness
of internal controls over financial reporting; establishes procedures, as
required under applicable law, for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters and the confidential and anonymous submission by
employees of concerns regarding questionable accounting or auditing matters;
reviews the financial statements to be included in the Company's Annual Report
on Form 10-K; and discusses with management and the independent auditors the
results of the annual audit and the results of the Company's quarterly financial
statements. Three directors comprised the Audit Committee during fiscal 2003:
Ms. Cohen and Messrs. Berner and Quinnell. The Audit Committee met six times and
did not act by unanimous written consent during the 2003 fiscal year. The Audit
Committee has adopted a written Audit Committee Charter that is attached as
Appendix A to these proxy materials.
The Board of Directors annually reviews the Nasdaq listing standards
definition of independence for Audit Committee members and has determined that
all members of the Company's Audit Committee are independent (as independence is
currently defined in Rule 4350(d)(2)(A)(i) and (ii) of the Nasdaq listing
standards). The Board of Directors has determined that Mr. Quinnell qualifies as
an "audit committee financial expert," as defined in applicable Securities and
Exchange Commission, or SEC, rules. The Board made a qualitative assessment of
Mr. Quinnell's level of knowledge and experience based on a number of factors,
including his formal education and experience as a public company chief
operating officer.
8.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors reviews and
approves the overall compensation strategy and policies for the Company. The
Compensation Committee reviews and approves corporate performance goals and
objectives relevant to the compensation of the Company's executive officers and
other senior management; reviews and approves the compensation and other terms
of employment of the Company's executive officers; and administers the Company's
stock option and purchase plans, pension and profit sharing plans, stock bonus
plans, deferred compensation plans and other similar programs. Three directors
comprised the Compensation Committee during fiscal 2003: Messrs. Federico,
Hedrick and Schuon. All members of the Company's Compensation Committee are
independent (as independence is currently defined in Rule 4200(a)(15) of the
Nasdaq listing standards). The Compensation Committee met one time and did not
act by unanimous written consent during the 2003 fiscal year.
GOVERNANCE AND NOMINATING COMMITTEE
The Governance and Nominating Committee of the Board of Directors
interviews, evaluates, nominates, and recommends individuals for membership on
the Board and committees thereof; nominates specific individuals to be elected
as officers of the Company by the Board; evaluates and recommends whether a
Board or committee member qualifies as an independent director; stays abreast of
developments in the area of corporate governance; and has oversight
responsibility for questions pertaining to the quality of the process by which
the Board and committees conduct their affairs, the quality of the strategic
planning process, matters of ethics and/or conflicts of interest on the part of
the directors, and the design and implementation of the Chief Executive Officer
review process. Four directors comprised the Governance and Nominating Committee
during fiscal 2003: Ms. Cohen and Messrs. Berner, Federico and Schuon. All
members of the Governance and Nominating Committee are independent (as
independence is currently defined in Rule 4200(a)(15) of the Nasdaq listing
standards). The Governance and Nominating Committee met four times and did not
act by unanimous written consent during the 2003 fiscal year. The Governance and
Nominating Committee has adopted a written Governance and Nominating Committee
Charter that is attached as Appendix B to these proxy materials.
The Governance and Nominating Committee believes that candidates for
director should have certain minimum qualifications, including being able to
read and understand basic financial statements, being over 21 years of age and
having the highest personal integrity and ethics. The Governance and Nominating
Committee also intends to consider such factors as possessing relevant expertise
upon which to be able to offer advice and guidance to management, having
sufficient time to devote to the affairs of the Company, demonstrated excellence
in his or her field, having the ability to exercise sound business judgment and
having the commitment to rigorously represent the long-term interests of the
Company's shareholders. However, the Governance and Nominating Committee retains
the right to modify these qualifications from time to time. Candidates for
director nominees are reviewed in the context of the current composition of the
Board, the operating requirements of the Company and the long-term interests of
shareholders. In conducting this assessment, the Governance and Nominating
Committee considers diversity, age, skills, and such other factors as it deems
appropriate, given the current needs of the Board and the Company, to maintain a
balance of knowledge, experience and capability. In the case of incumbent
directors whose terms of office are set to expire, the Governance and Nominating
Committee reviews such directors' overall service to the Company during their
term, including the number of meetings attended, level of participation, quality
of performance, and any other relationships and transactions that might impair
such directors' independence. In the case of new director candidates, the
Governance and Nominating Committee also determines whether the nominee must be
independent for Nasdaq purposes, which determination is based upon applicable
Nasdaq listing standards, applicable SEC rules and regulations and the advice of
counsel, if necessary. The Governance and Nominating Committee then uses its
network of contacts to compile a list of potential candidates, but may also
engage, if it deems appropriate, a professional search firm. The Governance and
Nominating Committee conducts any appropriate and necessary inquiries into the
backgrounds and qualifications of possible candidates after considering the
function and needs of the Board. The Governance and Nominating Committee meets
to discuss and consider such candidates' qualifications and then selects a
nominee for recommendation to the Board by majority vote. To date, the
Governance and Nominating Committee has not rejected a timely director nominee
from a shareholder or shareholders holding more than 5% of our voting stock.
9.
The Governance and Nominating Committee will consider director
candidates recommended by shareholders. The Governance and Nominating Committee
does not intend to alter the manner in which it evaluates candidates, including
the minimum criteria set forth above, based on whether the candidate was
recommended by a shareholder or not. Shareholders who wish to recommend
individuals for consideration by the Governance and Nominating Committee to
become nominees for election to the Board may do so by delivering a written
recommendation to the Governance and Nominating Committee at the following
address: 18305 E. San Jose Avenue, City of Industry, California 91748 at least
120 days prior to the anniversary date of the mailing of the Company's proxy
statement for the last Annual Meeting of Shareholders. Submissions must include
the full name of the proposed nominee, a description of the proposed nominee's
business experience for at least the previous five years, complete biographical
information, a description of the proposed nominee's qualifications as a
director and a representation that the nominating shareholder is a beneficial or
record owner of the Company's stock. Any such submission must be accompanied by
the written consent of the proposed nominee to be named as a nominee and to
serve as a director if elected.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met four times and acted by unanimous written
consent one time during the last fiscal year. Each Board member attended 75% or
more of the aggregate of the meetings of the Board and of the committees on
which he or she served, held during the period for which he or she was a
director or committee member, respectively.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Governance and Nominating Committee of the Board of Directors has
adopted a formal process by which shareholders may communicate with the Board or
any of its directors. Shareholders who wish to communicate with the Board may do
so by sending written communications addressed to the Secretary of Hot Topic at
18305 E. San Jose Avenue, City of Industry, California 91748. Communications
also may be sent by e-mail to the following address:
investorrelations@hottopic.com. These communications will be reviewed by the
Secretary of the Company, who will determine whether they should be presented to
the Board. The purpose of this screening is to allow the Board to avoid having
to consider irrelevant or inappropriate communications (such as advertisements,
solicitations, and hostile communications that do not raise substantive matters
for Board of Directors' review). The screening procedures have been approved by
a majority of the independent directors of the Board.
STANDARDS OF BUSINESS ETHICS
The Company has adopted Standards of Business Ethics that apply to all
officers, directors, and employees. The Standards of Business Ethics is
available on our website at www.corporatewindow.com/fl/hott/frame.html. If the
Company makes any substantive amendments to the Standards of Business Ethics or
grants any waiver from a provision of the Standards of Business Ethics to any
executive officer or director, the Company will promptly disclose the nature of
the amendment or waiver on its website.
10.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
January 29, 2005 and has further directed that management submit the selection
of independent auditors for ratification by the shareholders at the Annual
Meeting. Ernst & Young LLP has audited the Company's financial statements since
the Company's inception in 1988. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting. They will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions.
Neither the Company's Bylaws nor other governing documents or law
require shareholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors. However, the Board is submitting the selection
of Ernst & Young LLP to the shareholders for ratification as a matter of good
corporate practice. If the shareholders fail to ratify the selection, the Audit
Committee will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee in its discretion may direct the
appointment of different independent auditors at any time during the year if the
Audit Committee determines that such a change would be in the best interests of
the Company and its shareholders.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and voting at the Annual Meeting (which shares
voting affirmatively also constitute at least a majority of the required quorum)
will be required to ratify the selection of Ernst & Young LLP. Abstentions and
broker non-votes will not be counted for any purpose in determining whether this
matter has been approved.
INDEPENDENT AUDITORS' FEES
All fees described below were approved by the Audit Committee.
AUDIT FEES
Fees for audit services totaled approximately $170,000 for the year
ended February 1, 2003 and approximately $213,000 for the year ended January 31,
2004, including fees associated with the annual audit, reviews of the Company's
quarterly reports on Form 10-Q and assistance with and review of registration
statements filed with the SEC, including consents related to registration
statements.
AUDIT-RELATED FEES
Fees for audit-related services totaled approximately $15,000 for the
year ended February 1, 2003 and approximately $23,000 for the year ended January
31, 2004. Audit-related services principally include the audit for the Company's
benefit plan and assistance with Sarbanes-Oxley Section 404 internal control
requirements.
TAX FEES
Fees for tax services, including tax compliance, and tax advice totaled
approximately $153,000 for the year ended February 1, 2003 and approximately
$19,000 for the year ended January 31, 2004.
ALL OTHER FEES
There were no other fees for the year ended February 1, 2003 or for the
year ended January 31, 2004.
To date the Audit Committee has not established separate policies and
procedures concerning pre-approval of audit or non-audit services. However, the
Audit Committee, pursuant to its charter, is required to review and approve the
proposed retention of the independent auditors to perform any proposed
permissible non-audit services. The establishment of any separate pre-approval
policies and procedures is subject to the approval of the Audit Committee.
11.
The Audit Committee has determined that the rendering of the services
other than audit services by Ernst & Young LLP is compatible with maintaining
the principal accountant's independence.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
12.
EQUITY COMPENSATION PLAN INFORMATION(1)
The following table provides certain information with respect to all of
the Company's equity compensation plans in effect as of January 31, 2004.
Number of securities
remaining available for
Number of securities to be Weighted-average issuance under equity
issued upon exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
warrants and rights warrants and rights reflected in column (a))
(a) (b) (c)
--------------------------- --------------------- -------------------------
Equity compensation plans
approved by shareholders(2)....... 4,768,795 $11.37 4,807,926
Equity compensation plans not
approved by shareholders(3)...... 45,000 2.22 not applicable
--------------------------- --------------------- -------------------------
Total............................ 4,813,795 $11.28 4,807,926
=========================== ===================== =========================
____________
(1) On August 12, 2003, the Company announced that its Board of Directors
approved a three-for-two stock split (in the form of a dividend) of its
common stock. On the effective date of September 2, 2003, shareholders
received a dividend of one additional share for every two shares they owned
at the close of business on the record date of August 21, 2003. All share
and per share amounts in this proxy statement have been restated to reflect
this stock split and all previous stock splits effectuated by the Company,
except as otherwise indicated.
(2) Includes the 1996 Equity Incentive Plan, or the Incentive Plan, the 1996
Non-Employee Directors' Stock Option Plan, or the Directors' Plan, and the
Employee Stock Purchase Plan. 1,123,022 shares under column (c) are
attributable to the Employee Stock Purchase Plan.
(3) Includes non-plan option grants approved by the Board and granted pursuant
to individual compensation arrangements prior to the last fiscal year. The
terms of such non-plan option grants are substantially similar to the terms
of stock options granted under the Incentive Plan, the material features of
which are contained in Note 6 of the footnotes to the Consolidated
Financial Statements contained in the Company's Annual Report on Form 10-K,
filed with the SEC on April 7, 2004 (File No. 000-28784).
13.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Company's common stock as of March 12, 2004 by: (i) each
director; (ii) each of the executive officers named in the Summary Compensation
Table included later in this proxy statement; (iii) all executive officers and
directors of the Company as a group; and (iv) all those known by the Company to
be beneficial owners of more than five percent of its common stock.
SHARES BENEFICIALLY OWNED
----------------------------
NUMBER OF PERCENT OF
DIRECTORS, OFFICERS AND 5% SHAREHOLDERS(1)(2) SHARES TOTAL(3)
--------------------------------------------- ------ --------
FMR Corp.(4).............................................. 6,213,970 12.9%
82 Devonshire Street
Boston, Massachusetts 02109
Massachusetts Financial Services Company(5)............... 2,413,580 5.0%
500 Boylston Street
Boston, Massachusetts 02116
Elizabeth McLaughlin(6)................................... 1,194,236 2.4%
Edgar Berner(7)........................................... 54,554 *
Cynthia Cohen(8).......................................... 21,121 *
Corrado Federico(9)....................................... 110,680 *
W. Scott Hedrick(10)...................................... 18,568 *
Bruce Quinnell(11)........................................ 79,091 *
Andrew Schuon(12)......................................... 37,086 *
Gerald Cook(13)........................................... 118,639 *
Patricia Van Cleave(14)................................... 60,935 *
James McGinty(15)......................................... 103,069 *
Jane Cruz(16)............................................. 57,184 *
All executive officers and directors as a group
(13 persons)(17).......................................... 1,999,122 4.0%
____________
* Less than one percent.
(1) Unless otherwise indicated, the address of all the owners is: c/o Hot
Topic, Inc., 18305 E. San Jose Avenue, City of Industry, California 91748.
(2) This table is based upon information supplied by officers and directors,
and Schedules 13D and 13G filed with the SEC. Unless otherwise indicated in
the footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the shareholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
48,203,542 shares outstanding on March 12, 2004, adjusted as required by
rules promulgated by the SEC.
(3) Percent of shares beneficially owned by any person is calculated by
dividing the number of shares beneficially owned by that person by the sum
of the number of shares outstanding as of March 12, 2004 and the number of
shares as to which that person has the right to acquire voting or
investment power as of March 12, 2004 or within 60 days thereafter.
14.
(4) Based on Amendment No. 2 to Schedule 13G filed by FMR Corp. ("FMR") with
the SEC on February 17, 2004. Includes 6,093,370 shares beneficially owned
by Fidelity Management & Research Company ("FMRC") and 106,950 shares
beneficially owned by Fidelity Management Trust Company, each a
wholly-owned subsidiary of FMR. Also includes 13,650 shares beneficially
owned by Fidelity International Limited ("FIL"), which was a majority-owned
subsidiary of FMRC until the shares of FIL held by FMRC were distributed,
as a dividend, to the shareholders of FMR.
(5) Based on Schedule 13G filed by Massachusetts Financial Services Company
("MFS") with the SEC on February 13, 2004.
(6) Includes 1,104,425 shares subject to options exercisable within 60 days of
March 12, 2004.
(7) Includes 6,000 shares held by The Julia A. Berner Trust, of which Mr.
Berner's wife is the trustee. Also includes 8,436 shares subject to options
exercisable within 60 days of March 12, 2004 held by Edgar Berner.
(8) Includes 16,522 shares subject to options exercisable within 60 days of
March 12, 2004.
(9) Includes 105,467 shares subject to options exercisable within 60 days of
March 12, 2004.
(10) Includes 15,116 shares subject to options exercisable within 60 days of
March 12, 2004.
(11) Includes 73,592 shares subject to options exercisable within 60 days of
March 12, 2004.
(12) Includes 31,873 shares subject to options exercisable within 60 days of
March 12, 2004.
(13) Includes 117,503 shares subject to options exercisable within 60 days of
March 12, 2004.
(14) Includes 60,935 shares subject to options exercisable within 60 days of
March 12, 2004.
(15) Includes 97,184 shares subject to options exercisable within 60 days of
March 12, 2004.
(16) Includes 56,526 shares subject to options exercisable within 60 days of
March 12, 2004.
(17) Includes shares as described in the notes above, as applicable, and 137,912
shares subject to options exercisable within 60 days of March 12, 2004,
held by two officers not required to be named in this table.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended January 31, 2004, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
15.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
As consideration for service on the Board, each director is reimbursed
for reasonable out-of-pocket expenses in connection with such director's travel
to and attendance at Board and committee meetings. In addition, in fiscal 2003,
non-employee directors received a $4,000 fee for their attendance at each
regularly scheduled Board meeting, $500 for their attendance at each
Compensation Committee and Nominating and Governance Committee meeting, and
$1,000 for their attendance at each Audit Committee meeting. In fiscal 2003, the
Chairman of the Board received a $6,000 fee for his attendance at each regularly
scheduled Board meeting, and the chairman of each committee received a $1,000
fee for attendance at each Compensation Committee, and Nominating and Governance
Committee meeting, and $2,500 for attendance at each Audit Committee meeting. In
fiscal 2003, the total compensation paid to non-employee directors was $138,750.
Each non-employee director of the Company also receives stock option
grants under the Directors' Plan. Only non-employee directors of the Company
receive options under the Directors' Plan. Options granted under the Directors'
Plan are intended by the Company not to qualify as incentive stock options under
the Internal Revenue Code.
Generally, option grants under the Directors' Plan are
non-discretionary. The Directors' Plan provides for each non-employee director
to be automatically granted an option to purchase 10,000 shares upon becoming a
member of the Board and an option to purchase 2,500 shares of common stock upon
each subsequent Annual Meeting of Shareholders of the Company. A Chairman who
has not previously served on the Board will automatically receive a stock option
grant of 15,000 shares of common stock upon joining the Board, provided that if
the Chairman has previously served on the Board, he or she will receive the
number of shares equal to the difference between 15,000 shares of common stock
and the amount of his or her initial stock option grant (received upon initially
joining the Board). The Chairman is also entitled to receive an automatic stock
option grant of 3,750 shares (rather than 2,500 shares) of common stock upon
each Annual Meeting of Shareholders of the Company. Note that the above share
amounts do not take into account the three-for-two stock split (in the form of a
dividend) of the Company's common stock, which was approved by the Board on
August 12, 2003 and was effective as of September 2, 2003. Pursuant to the terms
of the Directors' Plan, the share amounts were not adjusted as a result of this
stock split, and future grants are not to be adjusted absent future amendment of
the plan. The Company's six non-employee directors received automatic option
grants (3,750 shares to the Chairman and 2,500 shares to the other non-employee
directors) under the Directors' Plan as provided above at the time of the 2003
Annual Meeting of Shareholders and, as they were outstanding at the time of the
stock split, the share amounts and exercise prices of such grants were adjusted
post grant as a result of the stock split.
The Directors' Plan also provides that the Board may approve
discretionary grants to the non-employee directors in amounts as the Board deems
appropriate, and the Board has adopted a policy to make discretionary grants on
an annual basis. In fiscal 2003, pursuant to this policy, the Board approved
discretionary grants to each non-employee director (other than the Chairman) of
an additional option to purchase 5,000 shares of common stock and to the
Chairman of an additional option to purchase 6,250 shares (rather than 5,000
shares) of common stock, each at the time of the 2003 Annual Meeting of
Shareholders. Again, as these option grants were outstanding at the time of the
stock split, the share amounts and exercise prices were adjusted post grant as a
result of the stock split.
In March 2004, the Board amended its director compensation policy to
provide that commencing in fiscal 2004, non-employee directors will receive a
$5,000 fee for their attendance at each regularly scheduled Board meeting,
$1,000 fee for their attendance at each Compensation Committee and Nominating
and Governance Committee meeting and $1,500 for their attendance at each Audit
Committee meeting. In addition, the Chairman of the Board will receive a $7,000
fee for his attendance at each regularly scheduled Board meeting, and the
chairman of each committee will receive a $1,500 fee for attendance at each
Compensation Committee and Nominating and Governance Committee meeting and
$3,500 for attendance at each Audit Committee meeting.
16.
The exercise price of options granted under the Directors' Plan is the
fair market value of the common stock subject to the option on the date of the
option grant. An option granted under the Directors' Plan may not be exercised
until the date upon which the optionee, or the affiliate of such optionee, as
the case may be, has provided one year of continuous service as a non-employee
director following the date of grant of such option, whereupon such option shall
become exercisable as to 25% of the option shares and 6.25% of the option shares
shall become exercisable each quarter thereafter. The term of options granted
under the Directors' Plan is ten years. In the event of a merger of the Company
with or into another corporation in which the Company is not the surviving
corporation or a consolidation, acquisition of assets or other change-in-control
transaction specified in the Directors' Plan, the vesting of each option will
accelerate and the option will terminate if not exercised prior to the
consummation of the transaction.
During the last fiscal year, the Company granted options to purchase
71,250 shares of common stock under the Directors' Plan at an exercise price per
share of $17.50 on June 12, 2003, to the six non-employee directors elected at
the 2003 Annual Meeting of Shareholders. The fair market value of such common
stock on the date of grant was $17.47 per share (based on the closing sales
price reported on the Nasdaq National Market for the date of grant). As of
January 31, 2004, 343,346 options had been exercised under the Directors' Plan.
In addition, each non-employee director (other than the Chairman)
receives a stock grant with a value equal to $25,000, and the Chairman receives
a stock grant with a value equal to $30,000, for serving on the Board pursuant
to a director compensation plan adopted by the Board. The stock awards are
granted to each non-employee director immediately following his or her election
at the Company's Annual Meeting of Shareholders (although the Board can amend
its policy and change the grant or otherwise determine that no grant shall be
made). The number of shares subject to the stock grant is determined based on
the fair market value of the Company's common stock on the date of the Company's
Annual Meeting of Shareholders. Pursuant to the policy adopted by the Board,
these stock grants vest 100% on the earlier to occur of the following: (i) one
year from the date of grant, or (ii) the commencement of the Company's next
Annual Meeting of Shareholders, provided that the directors are prohibited from
selling the shares they received pursuant to such stock grants until they no
longer serve on the Board.
17.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows, for the fiscal years ended February 2, 2002,
February 1, 2003, and January 31, 2004, compensation awarded or paid to, or
earned by, the Company's Chief Executive Officer during fiscal 2003 and each of
the four other most highly compensated executive officers of the Company who
earned more than $100,000 in fiscal 2003 (collectively the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ----------------------- -------
OTHER
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS(1) SATION(2) AWARD OPTIONS/ PAYOUTS COMPEN-
POSITION YEAR ($) ($) ($) ($) SARS(#) ($) SATION($)
- -------------------------- ---- -------- -------- --------- ---------- ----------- ------- ----------
Elizabeth McLaughlin, 2003 600,000 852,000 9,212 -- 300,000 -- --
Chief Executive Officer 2002 500,000 501,600 11,429 -- 150,000 -- --
and Director(3) 2001 400,000 -- 23,147 -- 375,000 -- --
Gerald Cook, 2003 385,000 272,000 3,870 -- 75,000 -- --
President, Hot Topic(4) 2002 335,000 144,050 3,870 -- 75,000 -- --
2001 300,000 150,000 99,429 -- 112,500 -- --
Patricia Van Cleave, 2003 375,000 266,000 4,808 -- 75,000 -- --
President, Torrid(5) 2002 135,000 69,300 1,020 -- 112,500 -- --
2001 -- -- -- -- -- -- --
James McGinty, 2003 265,000 188,150 6,030 -- 45,000 -- --
Chief Financial Officer 2002 235,000 101,050 5,900 -- 45,000 -- --
and Secretary 2001 200,000 100,000 18,120 -- 56,250 -- --
Jane Cruz, 2003 238,000 168,980 5,529 -- 37,500 -- --
Senior Vice President, 2002 228,000 98,384 5,493 -- 37,500 -- --
Human Resources(6) 2001 102,384 -- 1,292 -- 67,500 -- --
____________
(1) 2003 amounts reflect bonuses earned in fiscal 2003 and paid in fiscal 2004,
2002 amounts reflect bonuses earned in fiscal 2002 and paid in fiscal 2003,
and 2001 amounts reflect bonuses earned in fiscal 2001 and paid in fiscal
2002.
(2) For fiscal 2003, the amounts shown include: (i) life and long-term
disability insurance premiums: Ms. McLaughlin ($4,295), Mr. Cook ($1,120),
Ms. Van Cleave ($1,120), Mr. McGinty ($930) and Ms. Cruz ($916); (ii)
automobile allowance: Ms. McLaughlin ($4,917), Mr. Cook ($2,750), Ms. Van
Cleave ($3,688), Mr. McGinty ($5,100), and Ms. Cruz ($4,613).
(3) Does not include 150,000 shares of common stock underlying an option
granted by the Company reflecting a stock option bonus earned in fiscal
2001 and granted in fiscal 2002.
(4) Mr. Cook became the Company's President, Hot Topic, in September 2003.
(5) Ms. Van Cleave became the Company's Chief Merchandising Officer in August
2002 and the Company's President, Torrid, in September 2003.
(6) Ms. Cruz became the Company's Senior Vice President, Human Resources in
August 2001.
18.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under the
Incentive Plan. As of March 12, 2004, options to purchase a total of 4,359,598
shares were outstanding under the Incentive Plan and options to purchase
3,819,701 shares remained available for grant thereunder. The following table
sets forth certain information regarding stock options made during the fiscal
year ended January 31, 2004, to each of the Named Executive Officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS ASSUMED ANNUAL RATES OF
NUMBER OF GRANTED TO STOCK PRICE APPRECIATION FOR
SECURITIES EMPLOYEES OPTION TERM(3)
UNDERLYING IN FISCAL EXERCISE OR ($)
OPTIONS YEAR(2) BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(1) (%) ($/SH) DATE 5% 10%
- --------------------- ----------- ----------- ----------- ---------- ------------ ------------
Elizabeth McLaughlin 300,000 21.4 15.61 3/20/13 2,944,485 7,461,902
Gerald Cook 75,000 5.3 15.61 3/20/13 736,121 1,865,476
Patricia Van Cleave 75,000 5.3 15.61 3/20/13 736,121 1,865,476
James McGinty 45,000 3.2 15.61 3/20/13 441,673 1,119,285
Jane Cruz 37,500 2.7 15.61 3/20/13 368,061 932,738
____________
(1) Options become exercisable over a 4 year period with 25% vesting one year
from the date of grant and 6.25% of the remaining shares vesting quarterly
thereafter. The options will fully vest upon a change of control, as
defined in the Company's option plans, unless the acquiring company assumes
the options or substitutes similar options. The term of the options is ten
years.
(2) Based on options to purchase 1,401,931 shares granted to employees in
fiscal 2003 under the Incentive Plan, including options granted to the
Named Executive Officers.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated assuming that the
stock price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated stock
price. These amounts represent certain assumed rates of appreciation only,
in accordance with the rules of the SEC, and do not reflect the Company's
estimate or projection of future stock price performance. Actual gains, if
any, are dependent on the actual future performance of the Company's common
stock and no gain to the optionee is possible unless the stock price
increases over the option term, which will benefit all shareholders.
19.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information with respect to the number
and value of securities acquired upon the exercise of options by the Named
Executive Officers during fiscal 2003 and the number and value of securities
underlying unexercised options held by the Named Executive Officers as of
January 31, 2004:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(2)
-------------------------- ---------------------
SHARES VALUE
ACQUIRED REALIZED ON
ON EXERCISE(1) EXERCISABLE UNEXERCISABLE
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE ($) ($)
- ---- -------- ------------ ----------- ------------- ----------- -------------
Elizabeth McLaughlin 214,501 3,484,725 990,362 612,390 23,687,106 10,217,741
Gerald Cook 13,500 170,685 86,005 152,346 1,551,591 2,450,404
Patricia Van Cleave -- -- 35,155 152,346 615,213 2,468,052
James McGinty 32,500 462,875 83,981 104,770 1,679,812 1,802,952
Jane Cruz 18,000 202,500 36,371 88,131 632,518 1,444,892
____________
(1) Amounts reflected are based on the fair market value on the date of
exercise minus the exercise price and do not indicate that the optionees
sold such shares.
(2) Based on the fair market value of the common stock as of January 30, 2004
($30.47), the last business day in fiscal 2003.
20.
EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL AGREEMENTS
The Company entered into an employment agreement with Gerald Cook, its
President, Hot Topic, on January 12, 2001, with Jane Cruz, its Senior Vice
President, Human Resources, on June 11, 2001, with Patricia Van Cleave, its
President, Torrid, on August 14, 2002 and with James McGinty, its Chief
Financial Officer, on January 23, 2003. None of the employment agreements
provide for a specified term of employment and each is terminable at will. The
employment agreements specified minimum annualized initial year base salaries,
and initial participation levels in the Company's executive incentive bonus
plan, which provides eligibility for bonus awards based upon achievement goals
determined from time to time by the Board. Each of the employment agreements
also provides for an automobile allowance, and Mr. Cook's, Ms. Cruz's and Ms.
Van Cleave's employment agreements provided for initial option grants.
The employment agreements, under certain circumstances, are terminable
with or without cause. However, Mr. Cook, Ms. Cruz, Ms. Van Cleave and Mr.
McGinty are each entitled to certain benefits in the event their employment with
the Company is terminated without cause including a severance payment equal to
six months of continued pay and benefits.
Each of Mr. Cook, Ms. Cruz, Ms. Van Cleave and Mr. McGinty are entitled
to immediate vesting of all of their unvested options in the event of a "change
in control" of the Company. "Change of control" is defined in each of the
employment agreements as (i) a sale of all or substantially all of the Company's
assets, (ii) a merger or consolidation in which the Company is not the surviving
corporation and in which beneficial ownership of at least 50% of the Company's
voting securities has changed or (iii) an acquisition by an person, entity or
group of beneficial ownership of at least 50% of the combined voting power of
the Company.
The Company has no existing employment agreement with its Chief
Executive Officer, Elizabeth McLaughlin. Ms. McLaughlin's compensation is
determined annually by the Compensation Committee, as described in the Report of
the Compensation Committee, and approved by the Board.
PENSION AND LONG-TERM INCENTIVE PLANS
The Company has no pension plans or long-term incentive plans.
21.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee is
appointed by the Board of Directors and is comprised of three non-employee
directors. The Compensation Committee advises the Board of Directors on all
compensation matters concerning the Company's executive officers.
OVERALL COMPENSATION POLICY
The Compensation Committee believes that in order for the Company to
succeed it must be able to attract and retain qualified executives. The
objective of the Compensation Committee in determining the type and amount of
executive officer compensation is to provide a compensation package consisting
of a base salary, bonus, and long-term incentives in the form of stock options
that allows the Company to attract and retain talented executive officers and to
align their interests with those of shareholders.
BASE SALARY
During fiscal 2003, the base salaries for the Company's executive
officers were intended to be competitive with salaries of similar executive
positions in comparable companies in the Company's industry. Annual adjustments
in base salaries (except for the Chief Executive Officer, which is determined as
provided below) are made effective at the beginning of the third month of the
fiscal year for which they are intended to apply and therefore reflect in large
part the prior year's business and individual performance achievements. The
Chief Executive Officer's base salary for fiscal 2003 was determined in this
manner to be $600,000 for Elizabeth McLaughlin, as noted in the summary
compensation table, based upon a 52-week fiscal year.
BONUS
Annual incentive bonuses are intended to reflect the Compensation
Committee's belief that a significant portion of the annual compensation of each
executive officer should be contingent upon the performance of the Company, as
well as the individual contribution of each officer. Accordingly, the executive
officers of the Company, including the Chief Executive Officer, participate in
an annual executive incentive bonus plan, referred to as the Executive Bonus
Plan, which provides for cash bonuses based upon the Company's overall financial
performance and the achievement of certain specified levels of profitability for
the fiscal year. The Board of Directors, upon receiving the Compensation
Committee's recommendations, makes awards. The Compensation Committee annually
establishes targeted profitability levels for the ensuing fiscal year in
conjunction with the Company's annual financial plan. Upon the achievement of
various increasing levels of profitability above the minimum target level, the
Compensation Committee may choose to increase bonuses accrued to the Executive
Bonus Plan. The purpose of the Executive Bonus Plan is to reward and reinforce
executive management's commitment to achieve levels of profitability and return
consistent with increasing shareholder value.
Cash bonuses earned under the Executive Bonus Plan are paid each year
upon completion of the Company's annual audit of the results of operations for
the previous fiscal year by the Company's independent auditors.
LONG-TERM INCENTIVES
The final portion of the executive officers' compensation during fiscal
2003 consisted of incentive stock options as listed in this Proxy Statement in
the table entitled "Option Grants in Last Fiscal Year." It is this award that
the Company has utilized to provide long-term incentives.
- -------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the Securities and Exchange Commission, and is not to be
incorporated by reference into any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended.
22.
CHIEF EXECUTIVE OFFICER COMPENSATION
As Chief Executive Officer of the Company, Ms. McLaughlin received a
base salary in 2003 at an annual rate of $600,000. During fiscal 2003, as part
of her overall compensation package, Ms. McLaughlin was granted an option under
the Incentive Plan to purchase a total of 300,000 shares of Common Stock at an
exercise price of $15.61 per share. Further, Ms. McLaughlin was eligible to earn
a bonus under the Company's Executive Bonus Plan.
Among the factors considered by the Committee in its evaluation of Ms.
McLaughlin's performance in fiscal 2003 were earnings per share results and the
performance of the Torrid business.
Upon the Committee's recommendation, the Board of Directors determined
that Ms. McLaughlin earned an incentive bonus award for fiscal 2003 under the
Executive Bonus Plan based substantially on the financial performance of the
Company in fiscal 2003. On that basis, Ms. McLaughlin received an incentive
bonus award of $852,000 for the fiscal year.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Code limits the Company to a deduction for
federal income tax purposes of no more than $1 million of compensation paid to
certain executive officers in a taxable year. Compensation above $1 million may
be deducted if it is "performance-based compensation" within the meaning of the
Code.
The Compensation Committee has determined that incentive bonus awards
and stock options granted under the Incentive Plan with an exercise price at
least equal to the fair market value of the Common Stock on the date of grant
shall be treated as "performance-based compensation." The Compensation Committee
currently believes that the Company should be able to continue to manage its
executive compensation program for named executive officers so as to preserve
the related federal income tax deductions, although individual exceptions may
occur.
COMPENSATION COMMITTEE
W. Scott Hedrick, Chairman
Andrew Schuon
Corrado Federico
23.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS(1)
We have reviewed and discussed with management the Company's
consolidated financial statements as of and for the fiscal year ended January
31, 2004.
We have discussed with the independent public accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
COMMUNICATION WITH AUDIT COMMITTEES, as amended.
We have received and reviewed the written disclosures and the letter
from the independent public accountants required by Independence Standard No.
1., INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES, as amended, and have
discussed with the independent public accountants their 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 10-K.
AUDIT COMMITTEE
Bruce Quinnell, Chairman
Edgar Berner
Cynthia Cohen
- --------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the Securities and Exchange Commission, and is not to be
incorporated by reference into any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended.
24.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Hedrick, Schuon and Federico currently serve as members of the
Compensation Committee. Compensation of Messrs. Hedrick, Schuon and Federico, as
well as the Company's other non-employee directors, is determined by the entire
Board with a view to attracting and retaining talented individuals to serve as
directors. No executive officer of the Company serves as a member of the board
of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Board or Compensation Committee.
25.
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows a comparison of 5 year cumulative total
returns for the Company, the Nasdaq Stock Market (U.S.) Index and the Nasdaq
Retail Trade Index for the period that commenced February 1, 1999 and ended on
January 31, 2004. The graph assumes an initial investment of $100 and that all
dividends have been reinvested (there have been no dividends declared by the
Company other than stock dividends).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG HOT TOPIC, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX,
AND THE NASDAQ RETAIL TRADE INDEX
[performance graph here]
Cumulative Total Return
-------------------------------------------------------------------------------------------------------
2/1/99 6/30/99 1/31/00 6/30/00 2/5/01 6/29/01 2/4/02 6/28/02 2/1/03 6/30/03 1/31/04
------ ------- ------- ------- ------ ------- ------ ------- ------ ------- -------
HOT TOPIC INC. 100.00 201.87 256.07 478.50 715.90 930.09 973.46 1198.15 1063.12 1209.36 2050.11
NASDAQ STOCK MARKET (U.S.) 100.00 117.62 178.62 188.39 103.40 79.48 61.67 67.83 58.06 64.60 84.11
NASDAQ RETAIL TRADE 100.00 109.43 105.26 78.26 66.83 83.43 83.58 89.07 83.60 108.34 133.08
- ---------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the Securities and Exchange Commission, and is not to be
incorporated by reference into any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended.
26.
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers
and directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he or she may
be required to pay in actions or proceedings which he or she is or may be made a
party by reason of his or her position as a director, officer or other agent of
the Company, and otherwise to the fullest extent permitted under California law
and the Company's Bylaws. The Company has also entered into and may in the
future enter into employment agreements with certain of its executive officers.
See "Employment, Severance and Change of Control Agreements."
27.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries
(e.g., brokers) to satisfy the delivery requirements for proxy statements and
annual reports with respect to two or more shareholders sharing the same address
by delivering a single proxy statement addressed to those shareholders. This
process, which is commonly referred to as "householding," potentially means
extra convenience for shareholders and cost savings for companies.
This year, a number of brokers with account holders who are Company
shareholders will be "householding" our proxy materials. A single proxy
statement will be delivered to multiple shareholders sharing an address unless
contrary instructions have been received from the affected shareholders. Once
you have received notice from your broker that it will be "householding"
communications to your address, "householding" will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in "householding" and would prefer to receive a
separate proxy statement and annual report, please notify your broker, and
direct a written request for the separate proxy statement and annual report to
Corporate Secretary, Hot Topic, Inc., 18305 E. San Jose Avenue, City of
Industry, California 91748 or contact James McGinty at (626) 839-4681.
Shareholders whose shares are held by their broker as nominee and who currently
receive multiple copies of the proxy statement at their address that would like
to request "householding" of their communications should contact their broker.
28.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ James McGinty
JAMES MCGINTY
Secretary
May 10, 2004
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2004 IS AVAILABLE WITHOUT
CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, HOT TOPIC, INC., 18305 E.
SAN JOSE AVENUE, CITY OF INDUSTRY, CALIFORNIA 91748.
29.
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of Hot Topic, Inc. (the
"Company") shall consist of at least three independent members of the Board of
Directors and shall be charged with the following functions:
1. To recommend annually to the full Board the firm of certified public
accountants to be employed by the Company as its independent auditors for the
ensuing year.
2. To review and pre-approve the engagement of the independent
auditors, including the scope, extent and procedures of the audit and the
compensation to be paid therefore, and all other matters the Committee deems
appropriate.
3. To have familiarity, through the individual efforts of its members,
with the accounting and reporting principles and practices applied by the
Company in preparing its financial statements including without limitation the
policies for recognition of revenues in financial statements.
4. To review with the senior management of the Company and the
independent auditors, upon completion of the quarterly reviews and year-end
audit, financial results for the quarters and full year, as reported in the
Company's financial statements, supplemental disclosures to the Securities and
Exchange Commission or other disclosures.
5. To assist and interact with the independent auditors in order that
they may carry out their duties in the most efficient and cost effective manner.
6. To evaluate the cooperation received by the independent auditors
during their audit examination, including their access to all requested records,
data and information, and elicit the comments of management regarding the
responsiveness of the independent auditors to the Company's needs.
7. To review the Company's financial statements for each quarterly
period, and any changes in accounting policy that have occurred during the
quarterly period.
8. To review and pre-approve those professional services allowed within
the scope of the Sarbanes-Oxley Act of 2002 to be provided to the Company by its
independent auditors and consider the possible effect of such services on the
independence of such auditors.
9. To review director and officer insurance policies and provide the
Board of Directors with recommendations as to any proposed modifications.
10. To ensure receipt from the independent auditors of a formal written
statement delineating all relationships between the independent auditors and the
Company, consistent with Independent Standards Board Standard 1, to actively
engage in a dialogue with the independent auditors with respect to any disclosed
relationships or services that may impact the objectivity and independence of
the independent auditors, and to take, or recommend that the Board take,
appropriate action to oversee the independence of the auditors.
11. To consult with the independent auditors and discuss with the
senior management of the Company the scope and quality of internal accounting
and financial reporting controls in effect.
12. To investigate, review and report to the Board the propriety and
ethical implications of any transactions, as reported or disclosed to the
Committee by the independent auditors, employees, officers, members of the Board
or otherwise, between (a) the Company and (b) any employee, officer or member of
the Board of the Company, or any affiliates of the foregoing.
A-1.
13. Review with the internal audit partner, the audit scope, plan,
budget and results of the internal auditors. Address the coordination of
external and internal audit efforts to assure the completeness of coverage,
reduction of redundant efforts, and the effective use of audit resources. Ensure
that internal auditors have access to all information required to complete their
audit objectives.
14. To perform such other functions and have such power as may be
necessary or convenient in the efficient and lawful discharge of the foregoing.
15. To report to the Board from time to time, or whenever it shall be
called upon to do so.
16. To adopt and review a code of ethics for all Company senior
officers.
17. To establish procedures for receiving and treating complaints
regarding accounting and auditing matters, including claims from those who wish
to remain anonymous.
Minutes of each meeting of the Audit Committee shall be prepared and
distributed to each director of the Company promptly after each meeting.
The operation of the Audit Committee shall be subject to the Bylaws as
in effect from time to time and Section 311 of the California Corporations Code.
A-2.
APPENDIX B
CHARTER OF THE GOVERNANCE AND NOMINATING COMMITTEE
This charter ("Charter") is adopted as and for the Charter of the
Governance and Nominating Committee of the Board of Directors of Hot Topic,
Inc., a California corporation (herein the "Corporation") by action of the Board
of Directors, dated August 22, 2002. The Governance and Nominating Committee of
the Corporation shall consist of at least two "independent" members of the Board
of Directors as required under the applicable rules of the National Association
of Securities Dealers, Inc. (the "NASD"), if the Corporation's common stock is
listed on the Nasdaq Stock Marked, Inc. or the Nasdaq SmallCap Market, Inc., or
the applicable rules of any other national securities exchange or other
self-regulatory organization (within the meaning of such term in the Securities
Exchange Act of 1934) on which the Corporation's common stock may then be listed
("Independent Director"). The Governance and Nominating Committee shall meet at
least semi-annually.
1. The Governance and Nominating Committee has been created for the
purposes of oversight of (i) corporate governance issues of the
Corporation and (ii) director qualifications and assessment, including
but not limited to:
a. Evaluating and recommending from time to time, the size,
composition and functional needs of the Board of Directors;
b. Overseeing the recruitment process for new board members,
including interviewing, evaluating, nominating and
recommending individuals that are candidates for directors and
executive officers of the Corporation;
c. To evaluate, and when appropriate, make a recommendation to
the Board of Directors as to whether a member of the Board of
Directors or any committee of the Board of Directors meets the
criteria to qualify as an Independent Director;
d. Evaluating the performance of the Board of Directors on an
ongoing basis, including that of the Chairman and individual
directors annually;
e. Periodically reviewing, evaluating and recommending any
necessary changes in the Corporate Charter or the Bylaws of
the Corporation to the full Board of Directors;
f. Staying abreast of developments in the area of corporate
governance generally to ensure that the Corporation remains
current in its governance policies; and
g. Such other matters as may be delegated to it by the full Board
of Directors.
2. The Governance and Nominating Committee shall have oversight
responsibility for any and all questions pertaining to:
a. The quality of the process by which the full Board of
Directors and its committees conduct their affairs, including
providing recommendations on major agenda items for Board
meetings, providing for meetings in executive session, both
with and without management members of the Board of Directors
present and assuming that the Chairman has responsibility to
work with the CEO to identify additional agenda items as
appropriate;
b. The quality of the strategic planning process, in particular
plans for the annual board meeting devoted primarily to
strategic planning;
c. Matters of ethics and/or conflicts of interest on the part of
the directors of the Corporation; and
d. The design and implementation of the CEO review process as
follows:
B-1.
i) The Committee shall develop the criteria and process
to be used for the CEO review and seek to advise the
CEO of the review criteria and process one year in
advance of the review scheduled to be given to the
CEO;
ii) Each individual Board member shall be asked to
complete an individual review of the CEO for
discussion by the full Board of Directors in order to
develop a consensus review to be given to the CEO;
and
iii) The Chairman of the Board shall be responsible to
present the annual review to the CEO.
B-2.
HOT TOPIC, INC.
ANNUAL MEETING OF SHAREHOLDERS
JUNE 17, 2004
8:30 a.m.
18305 E. SAN JOSE AVENUE
CITY OF INDUSTRY, CA 91748
HOT TOPIC, INC.
18305 E. SAN JOSE AVENUE
CITY OF INDUSTRY, CA 91748 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
OF SHAREHOLDERS OF HOT TOPIC, INC. (THE "COMPANY") ON JUNE 17, 2004.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify below.
UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1 AND "FOR" PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
By signing the proxy, you revoke all prior proxies and appoint Elizabeth
McLaughlin and James McGinty, and each of them, as attorneys and proxies of the
undersigned with full power of substitution, to vote the undersigned's shares on
the matters shown on the reverse side, and at any and all continuations,
adjournments or postponements thereof with all powers that the undersigned would
possess if personally present, upon in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the Annual Meeting of
Shareholders of the Company.
SEE REVERSE FOR VOTING INSTRUCTIONS.
PLEASE DETACH HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. To elect directors to hold office until the Company's 2005 Annual Meeting of
Shareholders.
01 Cynthia Cohen |_| Vote FOR all |_| Vote WITHHELD
02 Corrado Federico Nominees from all Nominees
03 W. Scott Hedrick (except as marked)
04 Elizabeth McLaughlin
05 Bruce Quinnell
06 Andrew Schuon
+-------------------------------------+
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO | |
VOTE FOR ANY INDICATED NOMINEE, WRITE | |
THE NUMBER NEXT TO THE NAME(S) OF SUCH | |
NOMINEE(S) IN THE BOX PROVIDED TO +-------------------------------------+
THE RIGHT.)
2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the fiscal year ending January 29, 2005.
|_| For |_| Against |_| Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
ADDRESS CHANGE? MARK BOX |_|
INDICATE CHANGES BELOW: DATE:________________________________
SIGNATURE(S):________________________
NAME OF SHAREHOLDER:_________________
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON PROXY. IF HELD IN JOINT
TENANCY, ALL PERSONS MUST SIGN. TRUSTEES, ADMINISTRATORS, ETC., SHOULD INCLUDE
THEIR TITLE AND AUTHORITY. CORPORATIONS SHOULD PROVIDE FULL NAME OF CORPORATION
AND TITLE OF AUTHORIZED OFFICER SIGNING THE PROXY.