SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended.
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
Preliminary Proxy Statement [ ]
Confidential for Use of the Commission only(as permitted by
Rule 14a-6(e)(2) [ ]
Definitive Proxy Statement [X]
Definitive Additional Materials [ ]
Soliciting Material Pursuant to ss.ss. 240.14a-12 [ ]
1-800-FLOWERS.COM, 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)
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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applies:
(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
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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
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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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(4) Date Filed:
1-800-FLOWERS.COM, INC.
One Old Country Road
Carle Place, New York 11514
Notice of Annual Meeting of Stockholders
December 3, 2008
The Annual Meeting of Stockholders (the "Annual Meeting") of
1-800-FLOWERS.COM, Inc. (the "Company") will be held at One Old Country Road,
Carle Place, New York 11514, Fourth Floor Conference Room (the "Meeting Place"),
on Tuesday, December 3, 2008 at 9:00 a.m. eastern standard time, or any
adjournment thereof, for the following purposes, as more fully described in the
Proxy Statement accompanying this notice:
(1) To elect two Directors to serve until the 2011 Annual Meeting or
until their respective successors shall have been duly elected and
qualified;
(2) To ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending June 28, 2009;
and
(3) To transact such other matters as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on October 8, 2008
will be entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders eligible to vote at the Annual Meeting will be available for
inspection at the Annual Meeting, and for a period of ten days prior to the
Annual Meeting, during regular business hours at the Meeting Place.
All stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you expect to attend the Annual Meeting, your proxy vote
is important. To assure your representation at the Annual Meeting, you are urged
to cast your vote, as instructed in the Notice of Internet Availability of Proxy
Materials, over the Internet or by telephone as promptly as possible. If you
received a copy of the proxy materials, you may sign, date and mail the proxy
card envelope provided. You may revoke your proxy at any time prior to the
Annual Meeting. If you attend the Annual Meeting and vote by ballot, your proxy
will be revoked automatically and only your vote at the Annual Meeting will be
counted.
By Order of the Board of Directors
/s/ Gerard M. Gallagher
----------------------------------
Gerard M. Gallagher
Corporate Secretary
Carle Place, New York
October 24, 2008
YOUR VOTE IS EXTREMELY IMPORTANT. YOU ARE URGED TO VOTE BY
TELEPHONE OR INTERNET AS PROMPTLY AS POSSIBLE. ALTERNATIVELY, IF YOU RECEIVED
A PAPER PROXY CARD BY MAIL, YOU MAY COMPLETE, SIGN AND
RETURN THE PROXY CARD BY MAIL.
1-800-FLOWERS.COM, INC.
PROXY STATEMENT
October 24, 2008
This Proxy Statement is furnished to stockholders of record of
1-800-FLOWERS.COM, Inc. (the "Company") as of October 8, 2008 (the "Record
Date") in connection with the solicitation of proxies by the Board of Directors
of the Company (the "Board of Directors" or the "Board") for use at the Annual
Meeting of Stockholders (the "Annual Meeting") which will be held at One Old
Country Road, Carle Place, New York 11514, Fourth Floor Conference Room (the
"Meeting Place"), on Wednesday, December 3, 2008 at 9:00 a.m. eastern standard
time or any adjournment thereof.
In accordance with rules and regulations adopted by the Securities and
Exchange Commission, instead of mailing a printed copy of our proxy materials to
every stockholder we are now furnishing proxy materials to our stockholders on
the Internet. If you received a Notice of Internet Availability of Proxy
Materials by mail, you may not receive a printed copy of the proxy materials
other than as described below. Instead, the Notice of Internet Availability of
Proxy Materials will instruct you as to how you may access and review all of the
important information contained in the proxy materials. The Notice of Internet
Availability of Proxy Materials also instructs you as to how you may submit your
proxy by telephone or over the Internet. If you received a Notice of Internet
Availability of Proxy Materials and did not receive proxy materials by mail and
would like to receive a printed copy of our proxy materials, you should follow
the instructions for requesting such materials included in the Notice of
Internet Availability of Proxy Materials.
The Securities and Exchange Commission's rules permit us to deliver a
single Notice or set of Annual Meeting materials to one address shared by two or
more of our stockholders. This delivery method is referred to as "householding"
and can result in significant cost savings. To take advantage of this
opportunity, we have delivered only one proxy statement and annual report to
multiple stockholders who share an address, unless we received contrary
instructions from the impacted stockholders prior to the mailing date. We agree
to deliver promptly, upon written or oral request, a separate copy of the Notice
or Annual Meeting materials, as requested, to any stockholder at the shared
address to which a single copy of those documents was delivered. If you prefer
to receive separate copies of the proxy statement or annual report, contact
Broadridge Financial Solutions, Inc. at +1.800.542.1061 or in writing at
Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
If you are currently a stockholder sharing an address with another stockholder
and wish to receive only one copy of future Notices, proxy statements and annual
reports for your household, please contact Broadridge at the above phone number
or address.
Shares cannot be voted at the Annual Meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the Annual Meeting will be voted
at the Annual Meeting or any adjournment thereof in accordance with instructions
thereon, or if no instructions are given, will be voted "FOR" the election of
the named nominees as Directors of the Company, and "FOR" the ratification of
the appointment of Ernst & Young LLP, as the Company's independent registered
public accounting firm, for the fiscal year ending June 28, 2009; and will be
voted in accordance with the discretion of the person appointed as proxy with
respect to other matters which may properly come before the Annual Meeting. Any
person giving a proxy may revoke it by written notice to the Company at any time
prior to the exercise of the proxy. In addition, although mere attendance at the
Annual Meeting will not revoke the proxy, a stockholder who attends the Annual
Meeting may withdraw his or her proxy and vote in person. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business at the Annual Meeting. Abstentions will
be counted in tabulations of the votes cast on each of the proposals presented
at the Annual Meeting, whereas broker non-votes will not be counted for purposes
of determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials) is being made available on www.proxyvote.com
concurrently herewith to stockholders.
The mailing address of the principal executive office of the Company is One
Old Country Road, Suite 500, Carle Place, New York 11514. It is anticipated that
the Notice of Internet Availability of Proxy Materials is first being sent to
stockholders on or about October 24, 2008. The proxy statement and form of proxy
relating to the 2008 Annual Meeting is first being made available to
stockholders on or about October 24, 2008.
VOTING SECURITIES
The Company has two classes of voting securities issued and outstanding,
its Class A common stock, par value $0.01 per share (the "Class A Common
Stock"), and its Class B common stock, par value $0.01 per share (the "Class B
Common Stock", and together with the Class A Common Stock, the "Common Stock"),
which generally vote together as a single class on all matters presented to the
stockholders for their vote or approval. At the Annual Meeting, each stockholder
of record at the close of business on October 8, 2008 of Class A Common Stock
will be entitled to one vote for each share of Class A Common Stock owned on
that date as to each matter presented at the Annual Meeting and each stockholder
of record at the close of business on October 8, 2008 of Class B Common Stock
will be entitled to ten votes for each share of Class B Common Stock owned on
that date as to each matter presented at the Annual Meeting. On October 8, 2008,
26,676,634 shares of Class A Common Stock and 36,858,465 shares of Class B
Common Stock were outstanding. A list of stockholders eligible to vote at the
Annual Meeting will be available for inspection at the Annual Meeting, and for a
period of ten days prior to the Annual Meeting, during regular business hours at
the Meeting Place.
METHODS OF VOTING
Stockholders can vote in person at the Annual Meeting or by proxy. There
are three ways to vote by proxy:
o By Telephone -- You can vote by telephone by calling
+1.800.690.6903
o By Internet -- You can vote over the Internet at
www.proxyvote.com by following the instructions on the proxy
card; or
o By Mail -- If you received your proxy materials by mail, you
can vote by mail by signing, dating and mailing the enclosed
proxy card.
Telephone and Internet voting facilities for stockholders of record will be
available 24 hours a day and will close at 11:59 p.m. (EDT) on December 2, 2008.
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form
of proxy intend to vote at the Annual Meeting "FOR" the election of the nominees
named below as Class III Directors of the Company to serve until the 2011 Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominee.
The Board of Directors does not currently anticipate that any of the nominees
will be unable to be a candidate for election.
Pursuant to the Company's Third Amended and Restated Certificate of
Incorporation, the Board of Directors has been divided into three classes,
denominated Class I, Class II and Class III, with members of each class holding
office for staggered three-year terms or until their respective successors are
duly elected and qualified. The Board of Directors currently consists of eight
members, two of whom are Class III Directors and each of whose term expires at
the Annual Meeting. Each of such Class III Directors is a nominee for election.
The nominees for Class III Directors are Messrs. James F. McCann and Christopher
G. McCann. The Class I Directors are Messrs. Lawrence Calcano, James Cannavino
and Jeffrey C. Walker, each of whose term expires at the 2009 Annual Meeting.
The Class II Directors are Messrs. John J. Conefry, Jr., Leonard J. Elmore and
Ms. Jan L. Murley, whose terms expire at the 2010 Annual Meeting. At each Annual
Meeting, the successors to the Directors whose terms have expired are elected to
serve from the time of their election and qualification until the third Annual
Meeting following their election or until a successor has been duly elected and
qualified. The Company's Third Amended and Restated Certificate of Incorporation
authorizes the removal of Directors under certain circumstances.
The affirmative vote of a plurality of the Company's outstanding common
stock present in person or by proxy at the Annual Meeting is required to elect
the nominees for Directors.
Information Regarding Nominees for Election as Directors (Class III Directors)
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each of the two
nominees during the last five years has been furnished to the Company by such
nominee.
2
James F. McCann, age 57, has served as the Company's Chairman of the Board
and Chief Executive Officer since inception. Mr. McCann has been in the floral
industry since 1976 when he began a retail chain of flower shops in the New York
metropolitan area. Mr. McCann is a member of the Board of Directors of
Lottomatica S.p.A. and Willis Holdings Group. James F. McCann is the brother of
Christopher G. McCann, a Director and the President of the Company.
Christopher G. McCann, age 47, has been the Company's President since
September 2000 and prior to that had served as the Company's Senior Vice
President. Mr. McCann has been a Director of the Company since inception. Mr.
McCann serves on the Board of Directors of Bluefly, Inc., and is a member of the
Board of Trustees of Marist College. Christopher G. McCann is the brother of
James F. McCann, the Company's Chairman of the Board and Chief Executive
Officer.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF MESSRS.
J. McCANN AND C. McCANN AS CLASS III DIRECTORS TO SERVE
IN SUCH CAPACITY UNTIL THE 2011 ANNUAL MEETING.
INFORMATION REGARDING DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AT THIS ANNUAL
MEETING
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of each Director who is not a nominee for election at this Annual Meeting
has been furnished to the Company by such Director.
Jeffrey C. Walker, age 53, has been a Director of the Company since
February 1995. Immediately prior to his retirement in December 2007, Mr. Walker
served as the Chairman of CCMP Capital Advisors, LLC, a private equity firm,
from August 2006. Prior thereto and from 1988 he was the Managing Partner of
JPMorgan Partners, the private equity group of J.P. Morgan Chase & Co. and a
General Partner thereof from 1984. He was also a vice chairman of J.P. Morgan
Chase & Co. Mr. Walker is the Chairman of Millennium Promise, a non-profit
organization dedicated to ending extreme poverty, hunger and disease. Mr. Walker
is also a Director of several private companies.
James Cannavino, age 64, has been a Director of the Company since June
2007. Mr. Cannavino has been Chairman of the Board of Direct Insite since 2000
and was appointed Chief Executive Officer in December 2002. Direct Insite is a
global provider of financial supply chain automation across procure-to-pay and
order-to cash business processes. From September 1997 through April 2000, he was
elected non-executive Chairman of Softworks, Inc. (a wholly owned subsidiary of
Direct Insite, formerly Computer Concepts), which went public and was later sold
to EMC. Mr. Cannavino was also the Chief Executive Officer and Chairman of the
Board of Directors of Cybersafe, Inc., a company specializing in network
security. Prior to Cybersafe, Mr. Cannavino was hired as President and Chief
Operating Officer of Perot Systems Corporation. In 1996 he was elected to serve
as Chief Executive Officer through July 1997. During his tenure at Perot, he was
responsible for all the day-to-day global operations of the Company, as well as
for strategy and organization. Prior to Perot Systems, Mr. Cannavino served as a
Senior Vice President at IBM, where he was responsible for corporate strategy
and development. Mr. Cannavino's career spanned thirty years at IBM beginning in
3
1963. Mr. Cannavino led IBM's restructuring of its $7 billion PC business to
form the IBM PC Company. He also served on the IBM Corporate Executive Committee
and Worldwide Management Council, and on the board of IBM's integrated services
and solutions company. He also was a board member for three IBM joint venture
companies, including Prodigy Services, Inc.; Digital Domain, Inc.; and New Leaf
Entertainment. Mr. Cannavino presently serves on the Boards of the National
Center for Missing and Exploited Children and The International Center for
Missing and Exploited Children. He is the immediate past chairman of the Board
of Marist College in Poughkeepsie, New York and continues to serve on that
board.
Lawrence Calcano, age 45, has been a Director of the Company since December
2007. Mr. Calcano is the founder and Chief Executive Officer of Calcano Capital
Advisors, Inc., an advisory and investment firm focusing on the broad technology
industry, established in June 2007. From 1990 to June 2007, Mr. Calcano was
employed by Goldman, Sachs & Co, most recently serving as the co-head of the
firm's Global Technology Banking Group from 2002 until June 2007 and as the
Co-COO of that group from 1997 to 2002. Mr. Calcano has deep domain knowledge
and deal experience across all of the sub-sectors of technology, including
software, the internet, communications equipment, service and semiconductors,
having worked on many transactions within all of these sectors. Mr. Calcano was
previously a Director of the Company from July 1999 to December 2003.
John J. Conefry, Jr., age 64, has been a Director of the Company since
October 2002. Mr. Conefry is Vice Chairman of the Board of Directors of Astoria
Financial Corporation and its wholly-owned subsidiary, Astoria Federal Savings,
since September 1998. He formerly served as the Chairman of the Board and CEO of
Long Island Bancorp and The Long Island Savings Bank from September 1993 until
September 1998. Prior thereto, Mr. Conefry was a Senior Vice President of
Merrill Lynch, Pierce, Fenner & Smith, Inc., where he served in various
capacities, including Chief Financial Officer. Mr. Conefry was a partner in the
public accounting firm of Deloitte & Touche, LLP (formerly, Deloitte Haskins &
Sells). Mr. Conefry serves on the board of St. Vincent's Services and Wheel
Chair Charities, Inc., among others.
Leonard J. Elmore, age 56, has been a Director of the Company since October
2002. Mr. Elmore is currently a Partner with the law firm of Dreier LLP in its
New York City headquarters. Prior to his appointment with Dreier LLP in
September, 2008, Mr. Elmore served as Senior Counsel with Dewey & LeBoeuf from
October 2004 until March 2008. Prior thereto, Mr. Elmore served as the President
of Test University, a leading provider of internet-delivered learning solutions
for pre-college students, from 2001 to 2003. Mr. Elmore has served on the Board
of Directors of Lee Enterprises, Inc. since February, 2007 and is currently a
member of their Audit Committee. Mr. Elmore continues to fulfill his commitment
to public service as a Trustee on the University of Maryland Board of Trustees,
and a Commissioner on the John and James L. Knight Foundation's Knight
Commission on Intercollegiate Athletics.
Jan L. Murley, age 57, has been a Director of the Company since February
2007. Ms. Murley is currently serving as Interim President for the Company's
Consumer Floral business segment since September 15, 2008. From June 30, 2008 to
September 15, 2008, she rendered marketing consulting services to the Company.
4
Ms. Murley has served as a consultant to Kohlberg Kravis Roberts & Co. (KKR) (a
private equity firm) from November 2006. From October 2003 to July 2006, Ms.
Murley was Chief Executive Officer and a Director of The Boyds Collection, Ltd.
(a publicly traded designer and manufacturer of gifts and collectibles), which
was majority-owned by KKR. Boyds filed for bankruptcy under Chapter 11 of the US
Bankruptcy Code in October 2005 and emerged from Chapter 11 in June 2006 as a
private company. Prior to that, she was group Vice President - Marketing of
Hallmark Cards, Inc. (a publisher of greeting cards and related gifts) from 1999
to 2002. Previously, Ms. Murley was employed by Procter & Gamble for more than
20 years, with her last position being Vice President for skin care and personal
cleansing products. Ms. Murley has been a Director of The Clorox Company since
November 2001 and serves as a member of its Audit and Nominating and Governance
Committees.
Information about the Board and its Committees
Each of our Directors, other than Messrs. James F. McCann and Christopher
G. McCann and Ms. Jan L. Murley, qualifies as an "independent director" as
defined under the published listing requirements of the NASDAQ Stock Market. The
NASDAQ independence definition includes a series of objective tests. For
example, an independent director may not be employed by us and may not engage in
certain types of business dealings with the Company. In addition, as further
required by NASDAQ rules, the Board has made a subjective determination as to
each independent Director that no relationship exists which, in the opinion of
the Board, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a Director. In making these determinations, the
Board reviewed and discussed information provided by the Directors and by the
Company with regard to each Director's business and personal activities as they
may relate to the Company and the Company's management. In addition, as required
by NASDAQ rules, the Board determined that the members of the Audit Committee
each qualify as "independent" under special standards established by NASDAQ and
the U.S. Securities and Exchange Commission (the "Commission") for members of
audit committees.
The table below provides current membership and meeting information for
each of the Board committees for Fiscal 2008.
Current Membership:
Nominating and
Corporate Secondary
Audit Compensation Governance Compensation
Directors Committee Committee Committee Committee
--------------------------------------- ------------------- ----------------- ----------------- -----------------
James F. McCann X
Christopher G. McCann
Jeffrey C. Walker X X*
Lawrence Calcano X X
Jan L. Murley
John J. Conefry, Jr. X* X X
Leonard J. Elmore X*
James Cannavino X
Total Meetings in Fiscal 2008 6 1 3 4
-----------------------------
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* Committee Chairperson
5
Audit Committee
The Audit Committee of the Board of Directors reports to the Board
regarding the appointment of the Company's independent registered public
accountants, the scope and results of its annual audits, compliance with
accounting and financial policies and management's procedures and policies
relative to the adequacy of internal accounting controls. The Company's Board of
Directors adopted a written charter for the Audit Committee in January 2000, as
amended in August 2003, which outlines the responsibilities of the Audit
Committee. A current copy of the charter of the Audit Committee is available on
our website located at www.1800flowers.com under the Investor Relations section
of the website.
Each member of the Audit Committee is "financially literate" as required by
NASDAQ rules. The Audit Committee also includes at least one member, John J.
Conefry, Jr., who was determined by the Board to meet the qualifications of an
"audit committee financial expert" in accordance with commission rules and to
meet the qualifications of "financial sophistication" in accordance with NASDAQ
rules. Stockholders should understand that these designations related to our
Audit Committee members' experience and understanding with respect to certain
accounting and auditing matters and do not impose upon any of them any duties,
obligations or liabilities that are greater than those generally imposed on a
member of the Audit Committee or of the Board.
Compensation Committee
The Compensation Committee of the Board of Directors establishes the
Company's compensation philosophy and makes a final determination on all forms
of compensation to be provided to the Company's Section 16 Executive Officers
("Executive Officers"), including base salary and the provisions of the Sharing
Success Program under which annual cash incentive compensation may be awarded.
In addition, the Compensation Committee administers the Company's 2003 Long Term
Incentive and Share Award Plan ("2003 Plan") under which option grants, stock
appreciation rights, restricted awards, performance awards and equity awards
under the Company's Long Term Incentive Plan ("LTIP") may be made to Directors,
officers, employees of, and consultants to, the Company and its subsidiaries.
See "Named Executive Officer Compensation--Compensation Discussion and
Analysis--Sharing Success Program and Long-Term Incentive Equity Awards." The
Board of Directors has authorized a Secondary Committee of the Compensation
Committee (the "Secondary Committee"), which consists of Mr. James F. McCann, to
also review awards for all of the Company's employees, other than its Executive
Officers. The Compensation Committee also makes recommendations to the Board of
Directors regarding Director's compensation. The Company's Board of Directors
adopted a written charter for the Compensation Committee in June 2003, which
outlines the responsibilities of the Compensation Committee. A current copy of
the charter of the Compensation Committee is available on our web site located
at www.1800flowers.com under the Investor Relations section of the website.
6
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for the
oversight of the evaluation of the Board of Directors, including its size and
composition; it reviews and reassesses the adequacy of corporate governance
guidelines and practices and develops and recommends to the Board the Company's
corporate governance guidelines and practices; and, in consultation with the
Chief Executive Officer and other Executive Officers, identifies and evaluates
individuals qualified to become Board members and recommends to the Board,
Director nominees for election and re-election. The Company's Board of Directors
adopted a written charter for the Nominating and Corporate Governance Committee
in June 2003, which outlines the responsibilities of the Committee. A current
copy of the charter of the Nominating and Corporate Governance Committee is
available on our website located at www.1800flowers.com under the Investor
Relations section of the website.
Compensation Committee Interlocks and Insider Participation
No interlocking relationships exist between the Board of Directors or the
Compensation Committee and the Board of Directors or the compensation committee
of any other company, nor has any such interlocking relationship existed in the
past. No member of the Compensation Committee was an officer or employee of the
Company at any time during Fiscal 2008.
Communication with Board of Directors
The Nominating and Corporate Governance Committee, on behalf of the Board,
reviews letters from stockholders concerning the Company's Annual Meeting of
Stockholders and governance process and makes recommendations to the Board based
on such communications. Stockholders can send communications to the Board and to
the non-management Directors by mail in care of the Corporate Secretary at One
Old Country Road, Suite 500, Carle Place, NY 11514, Attention: Gerard M.
Gallagher, and should specify the intended recipient or recipients. All such
communications, other than unsolicited commercial solicitations or
communications will be forwarded to the appropriate Director or Directors for
review. Any such unsolicited commercial solicitation or communication not
forwarded to the appropriate Director or Directors will be available to any
non-management Director who wishes to review it.
Attendance at Board Meetings
During Fiscal 2008, the Board of Directors held four meetings and acted by
unanimous written consent on three occasions. During Fiscal 2008, all Directors
attended at least 75% of the meetings of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our Executive
Officers and Directors, and persons who own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the Commission and the Nasdaq Stock Market. Executive Officers, Directors
and greater than 10% stockholders are required by Commission regulations to
furnish us with copies of all reports they file pursuant to Section 16(a).
Based solely on a review of the copies of such reports furnished to us, we
believe that for Fiscal 2008, all Section 16(a) filing requirements applicable
to our Executive Officers, Directors and greater than 10% stockholders have been
satisfied.
7
Compensation of Directors
Change in
Pension
Fees Value and
Earned Non-Equity Nonqualified
Annual Committee Committee or Paid Stock Option Incentive Deferred
Cash Meeting Chairman in Cash Awards Awards Plan Compensation All Other
Retainer Fees Fees (1) (2) (3) Compensation Earnings Compensation Total
Director ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)
------------------------------------------------------------------------------------------------------------------------------------
Lawrence Calcano 12,500 16,000 0 28,500 0 43,334 0 0 0 71,834
James Cannavino 12,500 8,500 0 21,000 0 43,334 0 0 0 64,334
John J. Conefry, Jr. 12,500 16,500 10,000 39,000 24,350 0 0 0 0 63,350
Leonard J. Elmore 12,500 7,500 5,000 25,000 0 43,334 0 0 0 68,334
Jan L. Murley 12,500 17,500 0 30,000 24,350 0 0 0 0 54,350
Jeffrey C. Walker 12,500 10,000 5,000 27,500 24,350 0 0 0 0 51,850
(1) Total Fees Earned or Paid in Cash combines the amounts in the three
preceding columns.
(2) Stock awards reflect compensation expense for restricted stock awards
(RSAs) recognized for financial reporting purposes (exclusive of any
assumption for forfeitures) under Statement of Financial Accounting
Standards No. 123(R) for the year ended June 29, 2008. These award fair
values have been determined based on the assumptions set forth in Note 11.
"Stock Based Compensation", in the Notes to the Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the fiscal year
ended July 29, 2008. Each director named above who chose to receive
restricted shares, received a grant on December 4, 2007, the date of the
Company's Annual Shareholder's Meeting, of 2,500 RSAs with a grant date
fair value under FAS 123R of $24,350, based on the closing price of our
common stock on that date of $9.74. RSAs granted to members of the
Company's Board of Directors immediately vested upon grant.
(3) Reflects compensation expense for stock option grants recognized for
financial reporting purposes (exclusive of any assumption for forfeitures)
under FAS 123R, for the year ended June 29, 2008. These award fair values
have been determined based on the assumptions set forth in Note 11. "Stock
Based Compensation", in the Notes to the Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the fiscal year ended July
29, 2008. Each director named above who chose to receive stock options,
received a grant on December 4, 2007, the date of the Company's Annual
Shareholder's Meeting, of 10,000 options with a grant date fair value under
FAS 123R of $43,334, based on the closing price of our common stock on that
date of $9.74. Options granted to members of the Company's Board of
Directors immediately vested upon grant. As of the end of fiscal 2008:
(a) Mr. Calcano has 20,000 option awards outstanding
(b) Mr. Cannavino has 10,000 option awards outstanding
(c) Mr. Conefry has 35,000 option awards outstanding
(d) Mr. Elmore has 55,000 option awards outstanding
(e) Ms. Murley has 0 option awards outstanding
(f) Mr. Walker has 0 option awards outstanding
In fiscal 2008, non-employee members of the Company's Board of Directors
received the following compensation:
* An annual retainer of $12,500 paid to Board Members on the
date of the Annual Meeting.
* A per meeting fee (Board or Committee) of $2,500 for
personal attendance and a per meeting fee (Board or
Committee) of $1,000 for telephonic attendance, excluding
Committee meetings held on the same day as a meeting of the
full Board.
* An annual retainer of $5,000 for each Board Committee
Chairperson, except for the Audit Committee Chairperson who
receives an annual retainer of $10,000. These retainers are
paid on the date of the Annual Meeting
* An annual award of 10,000 options, or, in lieu thereof, the
equivalent number of RSA's based upon a 4 to 1 ratio between
options and RSA's. Such options and shares, which are
granted on the date of the Annual Meeting, vest immediately.
Compensation information on James F. cCann and Christopher G. McCann, who are
Directors, as well as Executive Officers of the Company, is contained under the
section titled "Executive Compensation and Other Information--Summary
Compensation Table."
8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following individuals were serving as Executive Officers of the
Company on October 8, 2008:
Name Age Position with the Company
---- --- -------------------------
James F. McCann............ 57 Chairman of the Board and Chief Executive
Officer
Christopher G. McCann...... 47 Director and President
Timothy J. Hopkins......... 54 President of Madison Brands
William E. Shea............ 49 Senior Vice President, Treasurer, Chief
Financial Officer
Gerard M. Gallagher........ 55 General Counsel, Senior Vice President of
Business Affairs, Corporate Secretary
Stephen J. Bozzo........... 53 Senior Vice President and Chief
Information Officer
David Taiclet.............. 45 President, Gourmet Food & Gift Baskets
Information Concerning Executive Officers Who Are Not Directors
Timothy J. Hopkins has been President of the Madison Brands division since
January 2007 and prior to that served as President of Specialty Brands since
joining the Company in March 2005. Immediately before joining the Company, Mr.
Hopkins consulted for various retail companies after serving as Chief Executive
Officer and Director of Sur La Table, Inc., a multi-channel upscale specialty
retailer of gourmet culinary and serveware products where he was employed from
2001-2004. From 2000-2001 he was the CEO at LeGourmet Chef, a specialty retailer
of housewares and from 1995-2000, Mr. Hopkins was President, Corporate
Merchandising and Logistics Worldwide for BORDERS Group, Inc, a multi-channel
retailer of books and multi-media. Before this position Mr. Hopkins held other
senior level positions in the multi-channel retailing sector.
William E. Shea has been our Senior Vice President, Treasurer and Chief
Financial Officer since September 2000. Before holding his current position, Mr.
Shea was our Vice President of Finance and Corporate Controller after joining us
in April 1996. From 1980 until joining us, Mr. Shea was a certified public
accountant with Ernst & Young LLP.
Gerard M. Gallagher has been our General Counsel, Senior Vice President of
Business Affairs and Corporate Secretary since August 1999 and has been
providing legal services to the Company since its inception. Mr. Gallagher is
the founder and a managing partner in the law firm of Gallagher, Walker, Bianco
and Plastaras, based in Mineola, New York, specializing in corporate, litigation
and intellectual property matters since 1993. Mr. Gallagher is duly admitted to
practice before the New York State Courts and the United States District Courts
of both the Eastern District and Southern District of New York.
Stephen J. Bozzo has been our Senior Vice President, Chief Information
Officer since May 2007. Prior to joining the Company, Mr. Bozzo served as Chief
Information Officer for the International Division of MetLife Insurance Company
since 2001. Mr. Bozzo's business background includes senior executive positions
at Bear Stearns Inc. as Managing Director Principle, AIG as Senior Vice
9
President Telecommunications and Technical Services and Chase Manhattan Bank,
where he was Senior Vice President Global Telecommunications.
David Taiclet has been our President of Gourmet Food & Gift Baskets since
September 2008 and prior to that served as Chief Executive Officer of Fannie May
Confections Brands, Inc. from May 2006, upon our acquisition of the Company.
Prior thereto and commencing in 1995, Mr. Taiclet was a co-Founder of a business
that ultimately became known as Fannie May Confections Brands, Inc. (formerly
Alpine Confections, Inc), a multi-branded and multi-channel retailer,
manufacturer, and distributor of confectionery and specialty food products. From
May 1991 to January 1995, Mr. Taiclet served in a variety of management
positions with Cargill, Inc., including in the Strategy and Business Development
Group. Cargill, Inc. is an international marketer, processor and distributor of
food, financial and industrial products. Mr. Taiclet also served four years of
active duty in the U.S. Army, attaining the rank of Captain.
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
This section discusses compensation to our Named Executive Officers, which
consist of our Chief Executive Officer, our Chief Financial Officer and the
three next most highly compensated Executive Officers of the Company as
determined under the rules of the Commission (collectively, the "NEO's").
The Compensation Committee believes that the compensation programs for its
NEO's, as well as all of its Executive Officers, should reflect the Company's
performance and the value created for the Company's stockholders. In addition,
the compensation programs should support the short-term and long-term strategic
goals and values of the Company and should reward individual contribution to the
Company's success. The Company is engaged in a very competitive industry, and
the Company's success depends upon its ability to attract and retain qualified
Executive Officers through the competitive compensation packages it offers to
such individuals.
The fundamental policy of the Compensation Committee is to provide the
Company's NEO's, as well as its Executive Officers, with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company. It is the Compensation Committee's philosophy
that a significant portion of each NEO's and Executive Officer's compensation
should be contingent upon the Company's financial performance. The Company also
acknowledges the importance of attracting and retaining talented, motivated and
success-oriented Executive Officers who share our overall corporate philosophy
and will enable our Company to achieve its short and long-term goals.
Accordingly, the compensation package for each NEO and Executive Officer is
comprised of three elements: (i) base salary; (ii) annual cash incentives and
(iii) long-term incentive equity awards.
Guiding Principles:
o Growth - To create an atmosphere that encourages superior growth and
performance of the Company while also offering personal and
professional growth.
10
o Teamwork - To encourage executives to work together effectively and
efficiently so that company goals can be fully realized.
o Innovation - To encourage and reward creativity and innovation,
including the development of new ideas and business opportunities for
the Company.
o Market competitiveness - To offer a strong, comprehensive
compensation package that will enable the Company to attract and
retain qualified executive talent.
Setting Executive Compensation
We compete for senior executive talent with many leading companies. In
order to stay competitive in the marketplace, a critical component of which is
the recruitment and retention of executive talent, we annually review the market
competitiveness of our Executive Officer compensation programs. In connection
with this review, the Compensation Committee has retained the services of Mercer
(formerly Mercer Human Resource Consulting ("Mercer")) (see "Role of
Compensation Consultant" below for further discussion of Mercer's role).
When assessing the market competitiveness of our compensation programs, in
addition to information provided by Mercer, we review summary third-party survey
information and publicly available data relating to a specific group of
companies. For our executive compensation comparisons, we consider peer
companies. The peer companies include a broad range of companies in the internet
retail, internet content and catalog/specialty retail sector. Members of the
peer companies include: William-Sonoma, Inc., Tiffany & Co., Cabela's, Inc.,
American Greetings, Inc., Priceline.com, Inc., Monster Worldwide, Inc.,
EarthLink, Inc., Netflix, Inc., Orbitz Worldwide, Inc., Overstock.com, Inc. GSI
Commerce Inc., ValueClick, Inc., FTD Group, Inc., RealNetworks, Inc., and
Drugstore.com, Inc. Although the Compensation Committee compares the
compensation of its executive officers to the compensation of similar personnel
within its peer group, the Compensation Committee uses this information as a
general guideline, exercising discretion in determining base salaries and equity
grants and does not require that either be benchmarked against a specific level
relative to its peers. The Compensation Committee also reviews the Company's
recent historical compensation practices for its executives, and considers
recommendations from the Chief Executive Officer and President regarding the
compensation of their direct reports, who include the other NEO's.
Elements of Compensation
The Compensation Committee believes that we can maximize the effectiveness
of our compensation program by ensuring that all program elements are working in
concert to motivate and reward performance. The elements of our executive
compensation program are detailed below, together with the principal factors
which the Compensation Committee considers in reviewing the components of each
Executive Officer's compensation package. In general, for each compensation
element, these factors include: the key role each Executive Officer performs for
the Company; the benefit to the Company in assuring the retention of his or her
services; the performance of the Company during the past fiscal year; the
competitive market conditions for executive compensation; the executive's prior
year compensation; and the objective evaluation of the Executive Officer's
11
performance. The Compensation Committee may also, however, in its discretion,
apply other factors with respect to executive compensation. We believe that our
executive compensation program effectively strengthens the mutuality of
interests between the Executive Officers and the Company's stockholders, which
results in greater company performance.
Base Salary. The Compensation Committee views base salary as the assured
element of compensation that permits income predictability. Subject to existing
employment agreements and employment offer letters, our objective is to set base
salary levels at the competitive norm. However, individual salaries may be above
or below the competitive norm to reflect the strategic role, experience,
proficiency and performance of the executive. Incumbents who have been in their
positions for a longer period of time, and whose performance is superior, may be
paid above the competitive norm. The primary exception to this general rule will
be in the case of seasoned executives with strategic value who are newly hired
into the Company. In these situations, it may be necessary to pay above the
competitive norm in order to attract the best candidates to the Company.
The minimum base salaries for Messrs. J. McCann, C. McCann, and Hopkins are
primarily prescribed in their employment agreements or employment offer letters,
as the case may be (see below for description of the employment agreements and
employment offer letters in the "Narrative Disclosure to Summary Compensation
Table--Grants of Plan-Based Awards--Employment Agreements and Employment Offer
Letters"). Annual base salary increases for the NEO's and other Executive
Officers are determined on the basis of the employment agreements (for Messrs.
J. McCann, and C. McCann), as well as the following factors: the performance of
the executive versus job responsibilities; the relationship between current
salary and the range for the executive's level, ranges having been set based on
the competitive norm in the industry; the average size of salary increase based
upon the Company's financial performance; and whether the responsibilities or
criticality of the position of the incumbents have been changed during the
preceding year. The weight given to each of these factors may differ from
individual to individual as the Compensation Committee deems appropriate.
Increases for Fiscal 2008 for Messrs. J. McCann, C. McCann, Hopkins, Gallagher
and Shea were 0%, 9%, 2%, 3.7% and 3.9%, respectively.
Annual Cash Incentive. Annual cash incentive compensation plays a
significant role in the Company's overall compensation package for its Executive
Officers. The annual cash incentive for the NEO's is based upon the Company's
financial performance and, in the case of Mr. Hopkins, also included brand
specific financial performance. This balance supports the accomplishment of the
Company's overall financial objectives and rewards the individual contributions
of our NEO's. Annual incentive programs for Executive Officers support the
following company objectives:
o Communication of important goals through performance targets that are
aligned with business strategies.
o Motivation for the entire management team to work together toward a
common set of goals.
o Reward executives on the basis of results achieved.
o Deliver annual incentive opportunities and payments through a
structured, performance driven, objective mechanism.
o Deliver a competitive level of compensation that is fully competitive
with industry practice.
NEO's are eligible to receive annual cash incentive awards under the
Company's Sharing Success Program.
12
Sharing Success Program. The Sharing Success Program is intended to cover
management positions, including the NEO's. Each eligible plan participant is
assigned a target award (expressed as a percentage of base salary) which
represents the level of cash incentive payment the participant can expect to
earn in the event all performance measures are achieved at 100% during the
ensuing fiscal year. For each fiscal year, specific performance measures are
established by the Compensation Committee that reflect the key strategic and
business goals established by the business plan for that year. For Fiscal 2008,
in the case of Messrs. J. McCann, C. McCann, Gallagher and Shea, the growth of
both Company-wide revenue and Company-wide Plan EBITDA, were the performance
measures selected for their annual cash incentive awards. EBITDA as used for
purposes of the Sharing Success Program and the Long Term Incentive Plan
("LTIP") is defined as net income before interest, taxes, depreciation,
amortization and stock based compensation expense ("Plan EBITDA"). For Mr.
Hopkins, performance measures were the aggregate of: (i) the growth of both
brand-specific revenue and brand-specific Plan EBITDA, and (ii) the growth of
both Company-wide revenue and Company-wide Plan EBITDA. The following table
presents the NEO's targeted incentive award opportunity, as a percentage of
their salary ("target award"), and the performance measures and relative
weighting of their components for Fiscal 2008:
Weighting of Performance Measures
---------------------------------------------------------------
Target Company-wide Brand-specific
Award ------------------------------- --------------------------------
Name (% of Salary) Revenue EBITDA Sub-total Revenue EBITDA Sub-total
--------------------------- ------------- ----------- -------- ---------- ---------- -------- -----------
James F. McCann 75% 25% 75% 100% n/a n/a n/a
Chairman of the Board and
Chief Executive Officer
William E. Shea 40% 25% 75% 100% n/a n/a n/a
Senior Vice President,
Treasurer, and Chief
Financial Officer
Christopher G. McCann 50% 25% 75% 100% n/a n/a n/a
Director and President
Tim Hopkins 45% 6.25% 18.75% 25% 18.75% 56.25% 75%
President of Madison
Brands
Gerard M. Gallagher 40% 25% 75% 100% n/a n/a n/a
General Counsel, Senior Vice
President of Business Affairs,
Corporate Secretary
When Company-wide and/or brand-specific actual results exceed or fall below
performance measures, actual awards are proportionately increased or decreased
from the target awards. Participants may earn no Company-wide or brand-specific
bonus if the threshold performance measures are not met (defined as achievement
of 70% of performance measures, resulting in a 50% pay-out of target award) and
no participant may be paid an incentive award under the Sharing Success Program
in excess of maximum (defined as achievement of 135% of performance measures,
resulting in a 200% pay-out of target award), as presented in the table below.
In addition, all participants must be actively employed at the time of payment
in order to qualify for the award.
% Achievement of
Performance Award
Measures Multiple
---------------------- --------------
135% 200% (max)
125% 150%
110% 125%
100% 100%
85% 75%
70% 50%
Below 70% 0%
The Company's performance measures are a function of achieving specified
increases in comparison to prior year actual performance and contemplates the
impact of acquisitions and management's strategic initiatives. For Fiscal 2008,
Company-wide performance measures were as follows: Company-wide revenue growth
of 8.8%, or $79.9mm, and Company-wide Plan EBITDA growth in a range of 30.6%, or
$17.6mm, reflecting an expectation of growth similar to Fiscal 2007, exclusive
13
of acquisitions, and the ability to continue to leverage revenue growth to
provide continued improvement in EBITDA. Pertaining to Mr. Hopkins,
brand-specific performance measures for Fiscal 2008 were as follows: Madison
Brands (Home and Children's Group) revenue growth of 2.2%, or $4.2mm and Plan
EBITDA growth of 750.0%, or $9.1mm, reflecting the expected return to
profitability of the Madison Brands, which was unsuccessful in its efforts to
profitably introduce new catalog titles and products outside of its core brands
during Fiscal 2007.
The following table reflects the relationship of actual performance against
the Company's performance measures and the resulting Total Payout Factor for the
Company's Sharing Success Program. The performance measures range from
"threshold" (the minimum achievement level of the performance measure at which
an executive may earn 50% of the target award) to "maximum" (the maximum
achievement level of the performance measure at which an executive may earn 200%
of the target award). The Target Award Multiples are then weighted to produce a
"Total Payout Factor." The Total Payout Factor is multiplied by each executive's
target award percentage to produce the executive's cash bonus award. In Fiscal
2008, the Compensation Committee did not exercise any discretion in awarding
cash bonus compensation under the Sharing Success Program.
Calculation of
Performance/Payout Relationship ($'s in thousands) Target Award Earned
------------------------------------------------------------------- --------------------------------------------
Threshold Target Maximum Total
--------------------- ---------------------- -------------------- Target Payout
Performance Payout Performance Payout Performance Payout Actual Award Weighting Factor
Performance Metric Measures % Measures % Measures % Performance(2) Multiple of Result %
------------------ ----------- --------- ------------ --------- ------------ ------- -------------- ----------- ---------- ------
Company-wide
Performance
Measures
Revenue Growth (1) $55,942 50% $79,917 100% $107,888 200% $6,751 0% 25% 0%
EBITDA Growth (1) $12,309 50% $17,584 100% $23,738 200% $4,872 0% 75% 0%
-----
0%
Madison Brands
Revenue Growth $2,922 50% $4,175 100% $5,636 200% ($6,767) 0% 25% 0%
EBITDA Growth $6,378 50% $9,111 100% $12,300 200% $4,653 0% 75% 0%
-----
0%
(1) Actual performance for revenue and EBITDA growth are computed exclusive of
the impact of acquisitions/dispositions.
(2) Actual performance was below the 70% threshold performance measure.
During Fiscal 2008, the Company-wide Total Payout Factor was 0%. The
Company-wide Total Payout Factor for Fiscal 2007, 2006, 2005 and 2004 was 75%,
0%, 34% and 0% of the target award, respectively.
Long-Term Incentive Equity Awards. In order to structure a long term
incentive program for the Company's Executive Officers that would tie a
significant portion of their compensation to the profitability of the Company,
the Compensation Committee consulted with Mercer to evaluate its long term
incentive program. All award grants are designed to align the interests of each
Executive Officer with those of the stockholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the Company.
The grant of an award is set at a level intended to create a meaningful
incentive based in part on the Executive Officer's and NEO's current position
with the Company, the base salary associated with that position, the size of
comparable awards made to individuals in similar positions within the industry,
14
and the individual's personal performance in recent periods. The Compensation
Committee also takes into account the number of awards held by the Executive
Officer in order to maintain an appropriate level of incentive for that
individual. The Compensation Committee has the authority to review extraordinary
events that impact on the Company's performance and may adjust the calculation
of an award by taking into account the effect of any such extraordinary events.
The Compensation Committee did not exercise such authority in Fiscal 2008.
The NEO's were granted a target number of performance shares in Fiscal 2008
under our LTIP. The number of shares ("target shares") granted in the Fiscal
2008 LTIP (for performance in Fiscal Years 2008 through 2010) ("LTIP 2008") for
Messrs. J. McCann, C. McCann, Hopkins, Gallagher and Shea were 100,000, 100,000,
20,000, 20,000 and 25,000, respectively. These target shares are earned if the
Company achieves 100% of its targeted financial performance over the three year
period subsequent to the grant. The number of target shares actually earned will
be based on actual cumulative performance results over the three year period
against the below mentioned pre-established financial measures. For LTIP 2008,
the Compensation Committee selected Company-wide Plan EBITDA as the basis for
its performance measure. For LTIP 2008, the Compensation Committee established a
range of award payouts (from a threshold of 50% of target shares (upon attaining
EBITDA of $205 million) to a target of 100% of target shares (upon attaining
EBITDA of $241 million) to a maximum of 150% of target shares (upon attaining
EBITDA OF $289 million)) that are directly related to the percentage of the
financial performance measure achieved. For LTIP 2008, the Company currently
expects to achieve 59% of its pre-established financial measure.
Executive Benefits
The Company's NEO's, except for Mr. Gallagher, are eligible for the same
level and offering of benefits made available to other employees, including our
401(k) Profit Sharing Plan (which includes a discretionary annual Company
contribution), health care plan and other welfare benefit programs. We do not
currently maintain any qualified or nonqualified defined benefit pension plans
or nonqualified deferred compensation plans for our NEO's, except for the
Nonqualified Supplemental Deferred Compensation Plan discussed below.
During Fiscal 2008, the Company adopted a Nonqualified Supplemental
Deferred Compensation Plan for certain executives. Participants can defer from
1% up to a maximum of 100% of salary and performance and non-performance based
bonus. The Company will match 50% of the deferrals made by each participant
during the applicable period, up to a maximum of $2,500. The participants are
vested in the Company's contributions based upon years of participation in the
Plan. Distributions will be made to participants upon termination of employment
or death in a lump sum, unless installments are selected.
Perquisites
We do not routinely provide any significant perquisites to our NEO's.
Except for Messrs. J. McCann and C. McCann's perquisite which is disclosed in
the Summary Compensation Table, the value of perquisites to each other NEO in
Fiscal 2008 did not exceed $10,000.
15
Severance/Change of Control
We do not maintain any severance or change of control plans or agreements.
However, pursuant to the terms of employment agreements, employment offer
letters and incentive plans, certain NEO's are eligible to receive severance and
other benefits in the case of certain termination events and in the case of a
change in control. See "Potential Payments upon Termination and Change in
Control" below.
Management's Role in Setting Executive Compensation
Although the Compensation Committee of the Board of Directors establishes
the Company's compensation philosophy and makes the final determinations on all
compensation paid to our Executive Officers, the Chief Executive Officer and
President work closely with the Vice President of Human Resources to develop
compensation programs and policies and make recommendations regarding annual
adjustments to the Executive Officers' salaries and incentive award
opportunities (other than their own compensation).
Role of Compensation Consultant
The Compensation Committee has retained the services of Mercer to provide
specialized information and targeted research to assist us in the development of
compensation and retention strategies. Mercer provides general assistance to our
Vice President of Human Resources and the Compensation Committee and does not
perform any other services for the Company. For Fiscal 2008, Mercer's services
were in advising the Compensation Committee on the development of its LTIP 2008.
Mr. J. McCann did not participate in discussions with Mercer in Fiscal 2008, but
Mr. C. McCann did discuss with Mercer their recommendation for LTIP 2008.
Compensation Deductibility Policy
A federal income tax deduction will generally be available for annual
compensation in excess of $1 million paid to the Chief Executive Officer and the
three other most highly compensated executive officers (other than the Chief
Financial Officer) of a public corporation only if such compensation is
"performance-based" and complies with certain other tax law requirements.
Although our policy is to maximize the deductibility of all executive
compensation, the Compensation Committee retains the discretion to award
compensation that is not deductible under Section 162(m) of the Code when it is
in the best interests of the Company to do so.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis provisions to be included in the Company's
filings pursuant to the Securities Exchange Act of 1934. Based on the reviews
and discussions referred to above, the Compensation Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis referred to
above be included in such filings.
Compensation Committee
Jeffrey Walker, Chairman
John J. Conefry, Jr.
James Cannavino
Notwithstanding any Commission filing by the Company that includes or
incorporates by reference other commission filings in their entirety, this
Compensation Committee Report shall not be deemed to be "filed" with the
Commission except as specifically provided otherwise therein.
16
Summary Compensation Table
Set forth below is summary compensation information for each person who was
(1) at any time during fiscal 2008 our Chief Executive Officer or Chief
Financial Officer and (2) at June 29, 2008, one of our three most highly
compensated Executive Officers, other than the Chief Executive Officer and the
Chief Financial Officer.
Non-Equity
Name and Stock Option Incentive Plan All Other
Principal Salary Awards (2) Awards (3) Compensation (4) Compensation (5) Total
Position Year ($) ($) ($) ($) ($) ($)
------------------- -------- -------- -------------- ------------ ----------------- ----------------- --------------
James F.MCCann 2008 975,000 396,871 195,253 0 15,075 1,582,198
Chairman Of 2007 975,000 372,304 282,136 548,438 6,237 2,184,115
the Board and
Chief Executive
Officer
William E. Shea 2008 301,200 104,563 38,916 0 1,500 446,179
Senior Vice 2007 289,990 88,566 79,202 87,095 750 545,603
President,
Treasurer, and
Chief Financial
Officer
Christopher G. 2008 671,177 362,964 373,695 0 12,878 1,420,714
McCann 2007 615,570 351,014 505,035 232,056 11,993 1,715,668
Director and
President
Timothy J. 2008 373,846 104,223 163,601 0 0 641,670
Hopkins 2007 366,490 117,243 163,601 80,391 0 727,725
President
of Madison
Brands
Gerard M. 2008 361,644 107,160 57,006 0 0 525,810
Gallagher 2007 348,356 117,475 91,064 104,514 0 661,409
General
Counsel
Senior Vice
President
of Business
Affairs, and
Corporate Secretary
(1) The titles included in this column are as of June 29, 2008.
(2) Stock Awards include compensation expense for restricted stock awards
recognized for financial reporting purposes (exclusive of any assumption
for forfeitures) under SFAS 123R, for the years ended June 29, 2008 and
July 1, 2007, respectively. These award fair values have been determined
based on the assumptions set forth in Note 11, "Stock Based Compensation",
in the Notes to the Consolidated Financial Statements in the Company's
Annual Report on Form 10-K for the fiscal year ended July 29, 2008.
Additional information about the awards reflected in this column is set
forth in the footnotes to "Grants of Plan-Based Awards and Outstanding
Equity Awards at Fiscal Year-End" tables below.
17
(3) Option Awards include compensation expense for outstanding stock option
awards recognized for financial reporting purposes (exclusive of any
assumption for forfeitures) under SFAS 123R, for the years ended June 29,
2008 and July 1, 2007, respectively. These award fair values have been
determined based on the assumptions set forth in Note 11, "Stock Based
Compensation", in the Notes to the Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the fiscal year ended June 29,
2008. Additional information about the awards reflected in this column is
set forth in the footnotes to "Grants of Plan-Based Awards and Outstanding
Equity Awards at Fiscal Year-End" tables below.
(4) Non-Equity Incentive Plan Compensation represents cash bonuses under our
Sharing Success Program described under "Compensation Discussion and
Analysis-Elements of Compensation-Annual Cash Incentive." The annual cash
bonuses for performances related to, and recorded as compensation expense
during Fiscal 2008 and Fiscal 2007, were paid during the first quarters of
fiscal year 2009 and fiscal year 2008, respectively.
(5) Other annual compensation in the form of perquisites and other personal
benefits consists of the Company's contribution to a Qualified 401(K) Plan
($1,500 in Fiscal 2009 and $750 in Fiscal 2008), except for Mssrs. James
McCann and Christopher McCann, whose compensation also consists of the
personal use of a company car, which is calculated by allocating the costs
of operating the car between personal and business use. The cost of
operating the car is allocated to personal use on the basis of miles driven
for personal use to total miles driven.
18
Grants of Plan-Based Awards
The following table sets forth summary information regarding all grants of
plan-based awards made to our NEO's for the fiscal year ended June 29, 2008. The
compensation plans under which the grants in the following table were made are
described in the Compensation Discussion and Analysis section above.
Estimated Future Payouts Estimated Future Payouts Grant Date
Under Non-Equity Incentive Under Equity Incentive Fair Value
Plan Awards (1) Plan Awards (2) Of Stock
---------------------------- ------------------------- and Option
Grant Threshold Target Maximum Threshold Target Maximum Awards (1)
Name Date ($) ($) ($) (#) (#) (#) ($)
---------- --------- ---------- -------- --------- --------- ------- ------- ----------------
James F. 9/21/2007 (1) - - - 50,000 100,000 150,000 1,139,000
McCann (2) 365,625 731,250 1,462,500 - - - -
Chairman
of the
Board and
Chief
Executive
Officer
William E. 9/21/2007 (1) - - - 12,500 25,000 37,500 284,750
Shea (2) 60,636 121,272 242,543 - - - -
Senior Vice
President,
Treasurer,
and Chief
Fianancial
Officer
Christopher 9/21/2007 (1) - - - 50,000 100,000 150,000 1,139,000
G. McCann (2) 170,175 340,349 680,698 - - - -
Director
and
President
Timothy J. 9/21/2007 (1) - - - 10,000 20,000 30,000 227,800
Hopkins (2) 93,750 187,500 375,000 - - - -
President
of Madison
Brands
Gerard M. 9/21/2007 (1) - - - 10,000 20,000 30,000 227,800
Gallagher (2) 72,763 145,526 291,053 - - - -
General
Counsel,
Senior Vice
President of
Business
Affairs,
and
Corporate
Secretary
----------------------
(1) The amounts in this row represent the threshold, target and maximum
three-year performance share awards as established under the fiscal
year 2008 LTIP by the Compensation Committee in September 2007, as
described in the Compensation Discussion and Analysis. The amounts
reported in the last column represent the fair value as of the date
the targets were set, computed in accordance with FAS 123(R), provided
that 100% of the target number of shares will be earned.
(2) The amounts in this row represent the threshold, target and maximum
potential payout under non-equity performance based incentive program
(Sharing Success Program) for fiscal year 2008, as approved by the
Compensation Committee in September 2007, and as described in the
Compensation Discussion and Analysis. Actual payouts for non-equity
performance based incentive plan awards for Fiscal 2008 was $0 for all
NEOs.
19
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based
Awards Table
Employment Agreements and Employment Offer Letters
Mr. James F. McCann's employment agreement became effective as of July 1,
1999. The agreement provides for a five year term, with such term extended for
one additional year on each anniversary of the effective date of the agreement,
unless either the Company or Mr. J. McCann provides at least 180 days notice
that such term will not be further extended. Under the terms of the employment
agreement, Mr. J. McCann is entitled to a minimum annual salary of $1,000,000,
with annual 10% increases during the term. However, the Compensation Committee
had recommended that Mr. J. McCann receive, and Mr. J. McCann accepted, a base
salary of $975,000 for Fiscal 2008 in order to enable the Company to comply with
Section 162(m) of the IRS Code of 1986 ("Section 162(m)"), as amended, which was
enacted into law in 1993 and he has waived his 10% increase for Fiscal 2009. Mr.
J. McCann is eligible to participate in the Company's stock incentive plans, as
well as other bonus, incentive or benefits plans, and is provided medical,
health and dental insurance coverage for himself and his dependents.
Mr. Christopher G. McCann's employment agreement became effective as of
July 1, 1999. The agreement provides for a five year term, with such term
extended for one additional year on each anniversary of the effective date of
the agreement, unless either the Company or Mr. C. McCann provides at least 180
days notice that such term will not be further extended. Under the terms of the
employment agreement, Mr. C. McCann is entitled to a minimum annual salary of
$250,000, with annual 10% increases during the term. Mr. C. McCann's annual
salary for Fiscal 2008 was $671,177 and he has waived his 10% increase for
Fiscal 2009. Mr. C. McCann is eligible to participate in the Company's stock
incentive plans, as well as other bonus, incentive or benefits plans, and is
provided medical, health and dental insurance coverage for himself and his
dependents.
Under their employment agreements, Messrs. J. McCann and C. McCann are each
restricted from participating in a competitive floral products business for a
period of one year after a voluntary resignation or termination for good cause.
Each of these executives is also bound by confidentiality provisions, which
prohibit the executive from, among other things, disseminating or using
confidential information about the Company in any way that would be adverse to
the Company.
The terms of Timothy J. Hopkins' "at will" employment are detailed in an
offer letter dated February 9, 2005. Under the terms of the offer letter, Mr.
Hopkins is entitled to an annual salary of $350,000, such salary to be reviewed
annually for merit increases. For Fiscal 2008, Mr. Hopkins' annual base salary
was $373,846. Mr. Hopkins is eligible to participate in the Company's stock
incentive and bonus plans, as well as the Company's benefit plans including
medical, dental, life insurance, disability and 401(k) plans. Mr. Hopkins also
is a party to a Confidentiality and Non-Compete Agreement, which provides for a
post-termination non-compete period for the longer of (i) one year following Mr.
Hopkins' cessation of employment with the Company or (ii) the period of one year
following the last payment of any severance compensation pay-out to Mr. Hopkins.
Long Term Incentive Plan
For a description of our LTIP, please see the "Compensation, Discussion
and Analysis-Long Term Incentive Equity Awards" section above.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth summary information regarding the
outstanding equity awards at June 29, 2008 granted to each of the Company's
Named Executive Officers.
20
Option Awards Stock Awards
----------------------------------------------------- ------------------------------------------------
Equity
Equity Incentive
Incentive Plan
Plan Awards:
Awards: Market or
Number of Payout
Unearned Value of
Market Shares, Unearned
Value Units, Shares,
Number of Number of Number of of Shares or Units
Securities Securities Shares or or Other or Other
Underlying Underlying Units of Units of Rights Rights
Option or Unexercised Unexercised Option Stock That Stock That That That
Award Options Options Exercise Option Have not Have Not Have Not Have Not
Grant Exercisable Unexercisable Price Expiration Vested Vested (1) Vested Vested (1)
Name Date (#) (#) ($/Option) Date (#) (#) (#) (#)
---------------------------- ------------ ------------- ------------ ------------- ------------ ------------ ----------- ----------
Stock Options Restricted Stock Performance Awards
James F. 12/17/1999 39,810 0 12.44 12/17/2009 (2)
McCann 8/2/2001 82,730 0 11.58 8/2/2011 (2)
Chairman 1/11/2002 200,000 0 12.87 1/11/2012 (2)
of the 9/23/2002 200,000 0 6.42 9/23/2012 (3)
Board 3/24/2003 170,148 0 6.70 3/24/2013 (2)
and Chief 3/24/2003 29,852 0 6.70 3/24/2013 (2)
Executive 12/2/2004 30,000 20,000 8.45 12/2/2014 (2)
Officer 12/2/2004 16,500 (3) 111,210
10/13/2005 20,000 30,000 6.52 10/13/2015 (2)
10/13/2005 16,500 (3) 111,210
9/22/2006 177,677 (6) 1,197,543
9/21/2007 100,000 (7) 674,000
William E. 8/2/1999 25,000 0 21.00 8/2/2009 (5)
Shea 12/17/1999 19,000 0 12.44 12/17/2009 (2)
Senior Vice 4/20/2000 92,000 0 4.50 4/20/2010 (2)
President 12/6/2000 50,800 0 3.65 12/6/2010 (2)
Treasurer 8/2/2001 12,100 0 11.58 8/2/2011 (2)
and Chief 1/11/2002 21,800 0 12.87 1/11/2012 (2)
Financial 9/23/2002 12,300 0 6.42 9/23/2012 (2)
Officer 9/23/2002 100,000 0 6.42 9/23/2012 (3)
3/24/2003 15,000 0 6.70 3/24/2013 (2)
12/2/2004 15,000 10,000 8.45 12/2/2014 (2)
12/2/2004 8,250 (3) 55,605
10/13/2005 10,000 15,000 6.52 10/13/2015 (2)
10/13/2005 8,250 (3) 55,605
9/22/2006 31,413 (6) 211,724
9/21/2007 25,000 (7) 168,500
Christopher G. 7/7/1999 190,462 0 21.00 7/7/2009 (5)
McCann 12/17/1999 20,400 0 12.44 12/17/2009 (2)
Director and 4/20/2000 195,155 0 4.50 4/20/2010 (2)
President 12/6/2000 433,700 0 3.65 12/6/2010 (2)
8/2/2001 41,365 0 11.58 8/2/2011 (2)
1/11/2002 250,000 0 12.87 1/11/2012 (2)
9/23/2002 38,300 0 6.42 9/23/2012 (2)
9/23/2002 250,000 0 6.42 9/23/2012 (3)
3/24/2003 250,000 0 6.70 3/24/2013 (2)
12/2/2004 22,500 15,000 8.45 12/2/2014 (2)
12/2/2004 12,375 (3) 83,408
10/13/2005 120,000 180,000 6.52 10/13/2015 (2)
9/22/2006 179,724 (6) 1,211,340
9/21/2007 100,000 (7) 674,000
Timothy J. 3/14/2005 120,000 80,000 7.81 3/14/2015 (2)
Hopkins 3/14/2005 12,500 (2) 84,250
President 9/22/2006 50,228 (6) 338,537
Of 9/21/2007 20,000 (7) 134,800
Madison
Brands
Gerard M. 8/21/1999 50,000 0 21.00 8/2/2009 (5)
Gallagher 12/17/1999 11,500 0 12.44 12/17/2009 (2)
Senior VP, 4/20/2000 86,500 0 4.50 4/20/2010 (2)
General 12/6/2000 60,900 0 3.65 12/6/2010 (2)
Counsel, 8/2/2001 38,000 0 11.58 8/2/2011 (2)
Corporate 1/11/2002 100,000 0 12.87 1/11/2012 (2)
Secretary 9/23/2002 20,400 0 6.42 9/23/2012 (2)
9/23/2002 75,000 0 6.42 9/23/2012 (3)
3/24/2003 25,000 0 6.70 3/24/2013 (2)
12/2/2004 15,000 10,000 8.45 12/2/2014 (2)
12/2/2004 8,250 (3) 55,605
10/13/2005 10,000 15,000 6.52 10/13/2015 (2)
10/13/2005 8,250 (3) 55,605
9/22/2006 47,615 (6) 320,925
9/21/2007 20,000 (7) 134,800
21
(1) Market value is based on the closing price of 1-800-Flowers.com,
Inc.'s Class A Common Stock of $6.74 on June 27, 2008.
(2) Options become exercisable at a rate of 40% after the completion of
two years of service following grant date, and 20% at the completion
of each year of service thereafter.
(3) Shares will vest after the completion of four years of service
following grant date.
(4) Options become exercisable after the completion of five years of
service following grant date.
(5) Options become exercisable at a rate of 25% at the completion of each
year of service.
(6) Amounts shown represent the target number of performance shares that
have been granted under its LTIP 2007. The share awards are earned if
the Company achieves its targeted financial performance over the
three-year period (Fiscal 2007 - Fiscal 2009) subsequent to the grant
date. Actual shares earned can range from 0-150% of the target amount.
(The Company currently expects to achieve approximately 73% of the
targeted award.)
(7) Amounts shown represent the target number of performance shares that
have been granted under its LTIP 2008. The share awards are earned if
the Company achieves its targeted financial performance over the
three-year period (Fiscal 2008 - Fiscal 2010) subsequent to the grant
date. Actual shares earned can range from 0-150% of the target amount.
(The Company currently expects to achieve approximately 59% of the
targeted award. See Compensation Discussion and Analysis - Long Term
Incentive Equity Awards.)
22
Option Exercises and Stock Vested
The following table sets forth all stock option exercises and vesting of
stock awards for each of the Company's Named Executive Officers during fiscal
2008, which ended on June 29, 2008.
Option Awards Stock Awards
------------------------------------ ----------------------------------------
Number of Shares Value Realized Number of Value Realized
Acquired on on Shares Acquired on
Exercise Exercise (1) on Vesting Vesting (2)
Name (#) ($) (#) ($)
----------------------- ----------------- ----------------- ----------------- ---------------------
James F. McCann - - - -
Chairman of the Board
and Chief Executive
Officer
William E. Shea - - - -
Senior Vice President,
Treasurer and Chief
Financial Officer
Christopher G. McCann 243,575 2,024,883 - -
Director and President
Timothy J. Hopkins - - 1,274 14,791
President of Madison
Brands
Gerard M. Gallagher 55,000 386,520 - -
General Counsel,
Senior Vice President of
Business Affairs, Corporate
Secretary
----------------------------
(1) The value realized on exercise equals the difference between the
option exercise price and the market value of 1-800-Flowers.com,
Inc.'s Class A Common Stock on the date of exercise, multiplied by the
number of shares for which the option was exercised.
(2) The value realized on vesting equals the market value of
1-800-Flowers.com, Inc.'s Class A Common Stock on the vesting date,
multiplied by the number of shares that vested.
23
Equity Compensation Plan Information
The following table displays certain information regarding our equity
compensation plans at June 29, 2008:
Number of securities
remaining available for
future issuance under
Number of securities to Weighted-average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected in
warrants and rights warrants and rights column (a))
Plan category (a) (b) (c)
-------------------------- -------------------------- ----------------------- --------------------------
Equity compensation
plans approved by 7,883,869 $8.47 6,353,334
security holders
-------------------------- -------------------------- ----------------------- --------------------------
Equity compensation
plans not approved by
security holders 0 0 0
-------------------------- -------------------------- ----------------------- --------------------------
-
Total 7,883,869 $8.47 6,353,334
-------------------------- -------------------------- ----------------------- --------------------------
Pension Benefits
The Company does not maintain any defined benefit plans.
Nonqualified Deferred Compensation
During Fiscal 2008, the Company adopted a Nonqualified Supplemental
Deferred Compensation Plan for certain executives. Participants can defer from
1% up to a maximum of 100% of salary and performance and non-performance based
bonus. The Company will match 50% of the deferrals made by each participant
during the applicable period, up to a maximum of $2,500. Participating employees
are vested in the Company's contributions based upon years of participation in
the Plan. Distributions will be made to participants upon termination of
employment or death in a lump sum, unless installments are selected.
24
Potential Payments upon Termination and Change in Control
The Company does not have a formalized severance policy. In accordance with
the Company's 2003 Long Term Incentive and Share Award Plan (the "Plan") in the
event of a Change of Control, as defined in the Plan, all outstanding Awards
pursuant to which a Participant may have rights the exercise of which is
restricted or limited, shall automatically become fully exercisable immediately
prior to the time of the Change of Control and all performance criteria and
other conditions shall be deemed to be achieved or fulfilled and shall be waived
by the Company immediately prior to the time of the Change of Control so that
the Shares subject to the Award will be entitled to participate in the Change of
Control transaction.
In addition, as disclosed in Potential Payments Upon Termination and Change
in Control, certain executives within the Company have individual employment
agreements or offer letters that contain negotiated provisions that trigger
payments or provision of benefits upon termination or a change in control.
Payment and benefit levels under the various circumstances that trigger payments
or provision of benefits upon termination or a change in control for Messrs.
James McCann, Christopher McCann and Hopkins were calculated and presented in
accordance with the provisions of their respective employment agreements or
employment offer letters. For Fiscal 2008, potential payments under the
circumstances triggered upon termination or change of control did not have a
material impact on the Compensation Committee's evaluation of all other elements
of compensation or total compensation.
The following table sets forth the potential payments to our NEO's under
existing agreements, plans or arrangements, for various scenarios involving a
change in control or termination of employment, assuming a June 29, 2008
termination date and using the closing price of the Company's Class A Common
Stock on June 27, 2008 $6.74. Pursuant to the terms of the Sharing Success
Program, the amounts shown do not include the Non-Equity Incentive Plan Awards
which were earned as of June 27, 2008. The exact amount of payments and benefits
that would be provided can only be determined at the actual time of the NEO's
separation from the Company.
25
James F. McCann
Triggering Event
---------------------------------------------------------------
Termination
Without Cause/
Resignation
for Good Death/
Reason (per Voluntary
Change of Employment Resignation/
Estimated Potential Payment or Benefit Control Agreement) or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (1) 7,375,000 7,375,000 0
Intrinsic value of accelerated unvested stock options (2) 6,600 0 0
Accelerated vesting of restricted shares (3) 222,420 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 1,871,543 0 0
Continuing health and welfare benefits for five years (5) 57,155 57,155 0
----------------- ------------------ ------------------------
Total 9,532,718 7,432,155 0
William E. Shea
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (6) 139,929 139,929 0
Intrinsic value of accelerated unvested stock options (2) 3,300 0 0
Accelerated vesting of restricted shares (3) 111,210 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 380,224 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 634,662 139,929 0
Christoper G. McCann
Triggering Event
---------------------------------------------------------------
Termination
Without Cause/
Resignation
for Good Death/
Reason (per Voluntary
Change of Employment Resignation/
Estimated Potential Payment or Benefit Control Agreement) or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (7) 3,903,485 3,903,485 0
Intrinsic value of accelerated unvested stock options (2) 39,600 0 0
Accelerated vesting of restricted shares 83,408 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 1,885,340 0 0
Continuing health and welfare benefits for five years (5) 86,638 86,638 0
----------------- ------------------ ------------------------
Total 5,998,470 3,990,123 0
Timothy J. Hopkins
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (8) 375,000 375,000 0
Intrinsic value of accelerated unvested stock options (2) 0 0 0
Accelerated vesting of restricted shares (3) 84,250 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 473,337 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 932,587 375,000 0
26
Gerard M. Gallagher
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (9) 0 0 0
Intrinsic value of accelerated unvested stock options (2) 3,300 0 0
Accelerated vesting of restricted shares (3) 55,605 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 455,725 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 514,630 0 0
(1) Mr. James McCann is entitled to severance pursuant to his employment
agreement which entitles him to $2,500,000, plus the base salary payable to
him for the then remaining duration of the term of his contract. As of June
29, 2008, Mr. McCann's base salary was $975,000, and his employment
agreement provided for a remaining term of four years.
(2) The intrinsic value of accelerated unvested stock options was calculated
using the closing price of the Company's Class A Common Stock on June 27,
2008 ($6.74). The intrinsic value is the aggregate spread between $6.74 and
the exercise prices of the accelerated options, if less than $6.74.
(3) The value of accelerated unvested restricted shares was calculated using
the closing price of the Company's Class A Common Stock on June 27, 2008
($6.74). Refer to the column titled "Market Value of Shares or Units of
Stock that Have Not Vested" within the "Outstanding Equity Awards at Fiscal
Year End" table.
(4) Represents the estimated amounts to be paid under the Company's LTIP 2007
and LTIP 2008 grants in the event of a change of control. Refer to the
column titled "Equity Incentive Plan Awards: Market or Payout Value of
Unearned Shares, Units or Other Rights That Have Not Vested" within the
"Outstanding Equity Awards at Fiscal Year End" table. Amounts shown
represent the target number of performance shares that have been granted
under LTIP 2007 and LTIP 2008, at the closing price of the Company's Class
A Common Stock on June 27, 2008 ($6.74). The share awards are earned if the
Company achieves its targeted financial performance over each of the
three-year periods under the LTIP program. Actual shares earned can range
from 0-150% of the target amount. The Company currently expects to achieve
approximately 73% and 59% of the LTIP 2007 and LTIP 2008 targeted
awards. See Compensation Discussion and Analysis - Long Term Incentive
Equity Awards.)
(5) Represents the estimated cost of paying for continuing medical, dental,
life and long-term disability for five years. The amounts for medical and
dental insurance coverage are based on rates charged to the Company's
employees for post-employment coverage provided in accordance with the
Consolidated Omnibus Reconciliation Act of 1985, or COBRA, adjusted by a
7.5% inflation factor. The costs of providing the other insurance coverage
are based on quoted amounts for 2007, adjusted by a 7.5% inflation factor,
compounded annually.
(6) Mr. Shea does not have an employment agreement. Absent any special
arrangements approved by the Compensation Committee or the Board of
Directors, for purposes of this computation, Mr. Shea was deemed to receive
two weeks of severance for each completed year of service with the Company.
As of June 29, 2008, Mr. Shea's base salary was $303,179.
(7) Mr. Christopher McCann is entitled to severance pursuant to his employment
agreement which entitles him to $500,000, plus the base salary payable to
him for the then remaining duration of the term of his contract. As of June
29, 2008, Mr. McCann's base salary was $680,697, and his employment
agreement provided for a remaining term of four years.
(8) Mr. Hopkins is entitled to severance pursuant to his employment offer
letter which entitles him to one year of severance. As of June 29, 2008,
Mr. Hopkins' base salary was $375,000.
(9) Mr. Gallagher is not eligible for any payment upon termination of his
relationship.
27
The above table does not include payments and benefits to the extent they
are provided on a non-discriminatory basis to salaried employees generally upon
termination of employment, such as 401(k) plan vested benefits and earned but
unused vacation.
The above table does not include payments and benefits to the extent they
are provided on a non-discriminatory basis to salaried employees generally upon
termination of employment such as 401(k) plan vested benefits and earned but
unused vacation.
Employment Agreements and Employment Offer Letters
The employment agreements of James F. McCann and Christopher G. McCann, as
well as the employment offer letter of Timothy J. Hopkins, provide for certain
payments in the event of termination of employment (and in the case of
Christopher G. McCann and Timothy J. Hopkins, terminations following a change in
control of the Company).
James F. McCann
Upon termination without Good Cause (as defined in the employment
agreement) or resignation by Mr. McCann for Good Reason (as defined in the
employment agreement) within ten days following the termination date, Mr. McCann
is entitled to severance pay in the amount of $2,500,000 plus the base salary
otherwise payable to him for the balance of the then current employment term and
any base salary, bonuses, vacation and unreimbursed expenses accrued but unpaid
as of the termination date, and health and life insurance coverage for himself
and his dependents for the balance of the then current employment term. Upon
termination for Good Cause, voluntary resignation without Good Reason or
termination due to death, Mr. McCann is not entitled to any compensation from
the Company, except for the payment of any base salary, bonuses, benefits or
unreimbursed expenses accrued but unpaid as of the termination date. As
discussed above, Mr. McCann is restricted from participating in a competitive
floral products business for a period of one year after a voluntary resignation
or termination for Good Cause. He is also bound by confidentiality provisions,
which prohibit him from, among other things, disseminating or using confidential
information about the Company in any way that would be adverse to the Company.
Christopher G. McCann
Upon termination without Good Cause (as defined in the employment
agreement) or resignation by Mr. McCann for Good Reason (as defined in the
employment agreement), within ten days following the termination date, Mr.
McCann is entitled to severance pay in the amount of $500,000 plus the base
salary otherwise payable to him for the balance of the then current employment
term and any base salary, bonuses, vacation and unreimbursed expenses accrued
but unpaid as of the termination date, and health and life insurance coverage
for himself and his dependents for the balance of the then current employment
term. The Good Reason definition includes a Change of Control (as defined in the
employment agreement) of the Company, so long as Mr. McCann's resignation occurs
no later than one year following a Change of Control. Upon termination for Good
Cause, voluntary resignation without Good Reason or termination due to death,
Mr. McCann is not entitled to any compensation from the Company, except for the
payment of any base salary, bonuses, benefits or unreimbursed expenses accrued
but unpaid as of the termination date. As discussed above, Mr. McCann is
restricted from participating in a competitive floral products business for a
period of one year after a voluntary resignation or termination for Good Cause.
He is also bound by confidentiality provisions, which prohibit him from, among
other things, disseminating or using confidential information about the Company
in any way that would be adverse to the Company.
Timothy J. Hopkins
Upon termination without Cause (as defined in the February 12, 2005 offer
letter described above), Constructive Termination without Cause (as defined in
the February 12, 2005 employment offer letter described above) or without Cause
following a Change of Control, Mr. Hopkins is entitled to receive base salary
through the date of termination, any other amounts earned, accrued, due and owed
but not yet paid, base pay for a period of 12 months following termination of
employment or until Mr. Hopkins finds new employment, whichever occurs first,
the right to exercise vested equity awards pursuant to terms of the Company's
2003 Plan following termination, and any other benefits payable under the
Company's applicable plans and programs. Upon termination for Cause or due to
death, disability or resignation, Mr. Hopkins is only entitled to base salary
through the date of termination and any other amounts earned, accrued and owed
but not yet paid. Mr. Hopkins is bound by the terms of his Confidentiality and
Non-Compete Agreement.
28
1997 Stock Option Plan
The 1997 Stock Option Plan provides that in the event of any sale, merger,
transfer or acquisition of the Company or substantially all of its assets, in
which the Company is not the surviving corporation, each outstanding option
which is not to be assumed by the successor corporation, will automatically
accelerate, so that each option shall, immediately prior to such event, become
exercisable for all of the shares of Common Stock at such time subject to that
option and may be exercised for any or all of those shares.
1999 Stock Incentive Plan
The 1999 Stock Incentive Plan provides, generally but with limitations,
that each option outstanding at the time of a change of control but not
otherwise fully-vested shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the change in control, become
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares.
2003 Long Term Incentive and Share Award Plan
The 2003 Plan provides that unless otherwise provided by the compensation
Committee at the time of the award grant, in the event of a change of control,
(i) all outstanding awards pursuant to which the participant may have rights the
exercise of which is restricted or limited, shall become fully exercisable
immediately prior to the time of the change of control so that the shares
subject to the award will be entitled to participate in the change of control
transaction, and (ii) unless the right to lapse of restrictions or limitations
is waived or deferred by a participant prior to such lapse, all restrictions or
limitations (including risks of forfeiture and deferrals) on outstanding awards
subject to restrictions or limitations under the Plan shall lapse, and all
performance criteria and other conditions to payment of awards under which
payments of cash, shares or other property are subject to conditions shall be
deemed to be achieved or fulfilled and shall be waived by the Company
immediately prior to the time of the change of control so that the shares
subject to the award will be entitled to participate in the change of control
transaction.
29
October 24, 2008
To the Board of Directors
of 1-800-FLOWERS.COM, INC. (the "Company"):
We, the members of the Audit Committee, assist the Board of Directors in
its oversight of the Company's financial accounting, reporting and controls. We
also evaluate the performance and independence of the Company's independent
registered public accounting firm. We operate under a written charter that both
the Board and we have approved. A current copy of the Audit Committee charter
can be found on the Company's website located at www.1800flowers.com under the
Investor Relations section of the website.
The Board annually reviews the NASDAQ listing standards definition of
independence for audit committee members and has determined that each member of
the Audit Committee meets that standard. In addition, although the Board has
determined that each of the members of the Audit Committee meets NASDAQ
regulatory requirements for financial literacy and that John J. Conefry, Jr. is
an "audit committee financial expert," as defined by Commission rules, and is
financially sophisticated under NASDAQ requirements, we would like to remind our
stockholders that we are not professionally engaged in the practice of auditing
or accounting and are not technical experts in auditing or accounting.
The Company's management is responsible for the preparation, presentation
and integrity of the Company's consolidated financial statements, including
setting the accounting and financial reporting principles and designing the
Company's system of internal control over financial reporting and disclosure
controls and procedures designed to ensure compliance with accounting standards,
applicable laws and regulations. The Company's management is responsible for
objectively reviewing and evaluating the adequacy, effectiveness and quality of
the Company's system of internal control. The Company's independent registered
public accounting firm, Ernst & Young LLP ("Ernst & Young"), is responsible for
performing an independent audit of the consolidated financial statements and
expressing an opinion on the conformity of those financial statements with
accounting principles generally accepted in the United States. The independent
registered public accounting firm is also responsible for expressing opinions on
management's assessment of the effectiveness of the Company's internal control
over financial reporting and on the effectiveness of the Company's internal
control over financial reporting. Although the Board is the ultimate authority
for effective corporate governance, including oversight of the management of the
Company, the Audit committee's purpose is to assist the Board in fulfilling its
responsibilities by overseeing these processes, as well as overseeing the
qualifications and performance of the Company's independent registered public
accounting firm.
The Audit Committee has policies and procedures that require the
pre-approval by the Audit Committee of all fees paid to, and all services
performed by, the Company's independent registered public accounting firm. At
the beginning of each year, the Audit Committee approves the proposed services,
including the nature, type and scope of service contemplated and the related
fees, to be rendered by the firm during the year. In addition, Audit Committee
pre-approval is also required for those engagements that may arise during the
course of the year that are outside the scope of the initial services and fees
approved by the Audit Committee. For each category of proposed service, the
30
independent accounting firm is required to confirm that the provision of such
services does not impair their independence. Pursuant to the Sarbanes-Oxley Act
of 2002, the fees and services provided [as noted in the table below] were
authorized and approved by the Audit Committee in compliance with the
pre-approval policies and procedures described herein.
We reviewed and discussed the audited consolidated financial statements and
related footnotes for the fiscal year ended June 29, 2008 with management and
the independent registered public accounting firm. Management represented to the
Audit Committee that the Company's consolidated financial statements were
prepared in accordance with generally accepted accounting principles. We also
discussed with the independent registered public accounting firm the matters
required to be discussed by Statement on Auditing Standards 61, as amended
(communication with Audit Committees). We received the written disclosures and
the letter from the independent registered public accounting firm required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting firm's communications
with the Audit Committee concerning independence, and discussed with Ernst Young
their independence; and discussed with Ernst & Young their independence. This
review included a discussion with management and the independent registered
public accounting firm of the quality (and not merely the acceptability) of the
Company's accounting principles, the reasonableness of significant estimates and
judgments, and the disclosures in the Company's Financial Statements, including
the disclosures relating to critical accounting policies.
Based on the reports, discussions and reviews described in this report, we
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 29, 2008, for filing with the Securities and Exchange
Commission. We also selected Ernst & Young as the independent registered public
accounting firm for Fiscal 2009. The Board is recommending that shareholders
ratify that selection at the Annual Meeting.
Audit Committee
John J. Conefry, Jr. (Chairman)
Lawrence Calcano
Jeffrey C. Walker
31
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of the Company's Class A common stock and Class B Common Stock, as of
October 8, 2008, or as of the dates referenced below for (i) each person known
by the Company to beneficially own more than 5% of each class; (ii) each
Director; (iii) each Named Executive Officer; and (iv) all of the Company's
Directors and Executive Officers as a group. Beneficial ownership is determined
in accordance with the rules of the commission and includes voting or investment
power with respect to the securities. Unless otherwise indicated, the address
for those listed below is c/o 1-800-FLOWERS.COM, Inc., One Old Country Road,
Suite 500, Carle Place, NY 11514. Except as indicated by footnote, and subject
to applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by them. The number of shares of Common Stock outstanding
used in calculating the percentage for each listed person includes the shares of
Common Stock underlying options held by such persons that are exercisable within
60 days of October 8, 2008, but excludes shares of Common Stock underlying
options held by any other person. Percentage of beneficial ownership is based on
26,676,634 shares of Class A Common Stock and 36,858,465 shares of Class B
Common Stock outstanding as of October 8, 2008.
Shares % of Shares
Beneficially Owned Beneficially Owned
------------------ ------------------
A Shares B Shares A Shares B Shares
-------- -------- -------- --------
Name
5% Stockholders:
RLR Capital Partners, LP (1) 1,652,659 - 6.2% -
AXA (2) 1,643,693 - 6.2% -
Tocqueville Asset Management L.P. (3) 1,620,675 - 6.1% -
Eagle Boston Investment
Management, Inc. (4) 1,389,122 - 5.2% -
Directors, not including CEO and President:
Lawrence Calcano (5) 25,000 - 0.1% -
James Cannavino (6) 60,000 - 0.2% -
John J. Conefry (7) 48,700 - 0.2% -
Leonard J. Elmore (8) 55,000 - 0.2% -
Jan L. Murley (9) 2,500 - - -
Jeffrey C. Walker (10) 43,000 - 0.2% -
Named Executive Officers:
James F. McCann (11) 860,454 35,914,905 3.1% 97.4%
William E. Shea (12) 405,348 - 1.5% -
Christopher G. McCann (13) 2,067,631 2,903,178 7.2% 7.9%
Timothy J. Hopkins (14) 135,243 - 0.5% -
Gerard M. Gallagher (15) 540,075 - 2.0% -
Directors and Executive Officers as
a Group (13 persons) (16) 4,282,950 36,765,545 14.0% 99.7%
-------------------------
* Indicates less than 0.1%.
32
(1) This information is based on the Schedule 13D Amendment No. 1 filed with
the SEC by RLR Capital Partners, LP ("RLR") and Robert L. Rosen on January
1, 2008 for shares held as of December 31, 2007. The reporting persons
reported that they have shared voting power and shared dispositive power
over all of the shares of Class A Common stock. The reporting persons
reported that RLR's principal business is to serve as the investment
manager of funds and/or accounts, including RLR Focus Master Fund, LP, the
holder of the Class A Shares set forth in the Schedule 13D. RLR Capital
Partners GP, LLC (the "Manager") is the sole general partner of RLR. Mr.
Robert Rosen is the managing member of the Manager. The address of RLR
Capital Partners, LP and Robert L. Rosen is 152 West 57th Street, 21st
Floor, New York, New York 10019.
(2) This information is based on the Schedule 13G Amendment No. 2 filed with
the SEC by AXA Financial, Inc.; AXA, which owns AXA Financial, Inc.; and
AXA Assurances I.A.R.D. Mutuelle ("IARD"), AXA Assurances Vie Mutuelle
("Vie") and AXA Courtage Assurance Mutuelle (collectively with IARD and
Vie, the "Mutuelles AXA"), as members of a group, on February 14, 2008 for
shares beneficially owned as of December 31, 2007. According to the filing,
AXA Rosenberg Investment Management LLC, as to which AXA serves as parent
holding company, has sole power to vote or direct the vote of 624,284
shares of Class A Common Stock and the sole power to dispose or direct the
disposition of 1,614,893 shares of class A Common Stock. AXA Financial,
Inc.'s subsidiary, AllianceBernstein L.P., has sole power to dispose or
direct the disposition of 27,800 shares of Class A Common Stock, and AXA
Financial, Inc.'s subsidiary, AXA Equitable Life Insurance Company, has
sole power to vote or direct the vote and the sole power to dispose or
direct the disposition of 1,000 shares of Class A Common Stock. The address
of the Mutuelles AXA is 26, rue Drout, 75009 Paris, France, the address of
AXA is 25, avenue Matignon, 75008 Paris, France, and the address of AXA
Financial, Inc. is 1290 Avenue of the Americas, New York, New York 10104.
(3) This information is based on the Schedule 13G Amendment No. 1 filed with
the SEC by Tocqueville Asset Management L.P. on February 14, 2008 for
shares held as of December 31, 2007. The address of Tocqueville Asset
Management L.P. is 40 West 57th Street, New York, New York 10019.
(4) This information is based on the Schedule 13G/A filed with the SEC by Eagle
Boston Investment Management on January 24, 2008 for shares held as of
December 31, 2007. The address of Eagle Boston Investment Management is 4
Liberty Square, Boston, Massachusetts 02109.
(5) Includes 20,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2008 through the exercise of stock options. Mr.
Calcano's address is c/o Calcano Capital Advisors, Inc., 140 Greenwich
Avenue, Greenwich, CT 06830
(6) Includes 10,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2008 through the exercise of stock options. Mr.
Cannavino's address is c/o Direct Insite Corporation, 80 Orville Drive,
Bohemia, NY 11716.
(7) Includes 35,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2008 through the exercise of stock options. Mr.
Conefry's address is c/o Astoria Federal Savings, One Astoria Federal
Plaza, Lake Success, New York 11042.
(8) Includes 55,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2008through the exercise of stock options. Mr.
Elmore's address is c/o Drier LLP, 499 Park Avenue, New York, New York
10022.
(9) Ms. Jan Murley's address is c/o 1-800-FLOWERS.COM, INC., One Old Country
Road, Suite 500, Carle Place, NY 11514.
(10) Mr. Walker's address is c/o 1-800-FLOWERS.COM, INC., One Old Country Road,
Suite 500, Carle Place, NY 11514.
(11) Includes (a) 792,540 shares of Class A Common Stock that may be acquired
within 60 days of October 8, 2008 through the exercise of stock options,
(b) 5,875,000 shares of Class B Common Stock held by limited partnerships,
of which Mr. J. McCann is a limited partner and does not exercise control
and of which he disclaims beneficial ownership, (c) 52,548 shares of Class
B Common Stock held by The McCann Charitable Foundation, Inc., of which Mr.
J. McCann is a Director and the President; and (d) 13,744,149 shares of
Class B Common Stock held by five Grantor Retained Annuity Trusts of which
Mr. J. McCann is the Trustee.
(12) Includes 383,000 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2008 through the exercise of stock options.
33
(13) Includes (a) 1,879,382 shares of Class A Common Stock that may be acquired
within 60 days of October 8, 2008 through the exercise of stock options,
(b) 2,000,000 shares of Class B Common Stock held by a limited partnership,
of which Mr. C. McCann is a general partner and exercises control, and (c)
52,548 shares of Class B Common Stock held by The McCann Charitable
Foundation, Inc., of which Mr. C. McCann is a Director and Treasurer.
(14) Includes 120,000 shares of class A Common Stock that may be acquired within
60 days of October 8, 2008 through the exercise of stock options.
(15) Includes 502,300 shares of Class A Common Stock that may be acquired within
60 days of October 8, 2008 through the exercise of stock options.
(16) Includes (a) 3,817,222 shares of Class A Common stock that may be acquired
within 60 days of October 8, 2008 through the exercise of stock options.
34
Certain Business Relationships with Directors and Officers
The Company has a policy providing that all material transactions between
it and one or more of its Directors, Executive Officers, nominees for Director
or a member of their immediate families must be approved either by a majority of
the disinterested members of the Board or by the stockholders of the Company.
The Company's legal and finance staff is primarily responsible for the
development and implementation of processes and controls to obtain information
from the directors and executive officers with respect to related person
transactions and for then determining, based on the facts and circumstances,
whether the Company or a related person has a direct or indirect material
interest in the transaction. This includes inquiries of its Directors and
Officers. As required under SEC rules, transactions that are determined to be
directly or indirectly material to the Company or a related person, are
disclosed in the Company's proxy statement. The Company considers individual
transactions, or any series of transactions which, in the aggregate exceed
$120,000, to be material and requiring of disclosure.
Below are the transactions that occurred during Fiscal 2008 in which, to
the Company's knowledge, the Company was or is a party, in which the amount
involved exceeded $120,000, and in which any Director, Director nominee,
Executive Officer, holder of more than 5% of the Common Stock or any member of
the immediate family of any of the foregoing persons had or will have a direct
or indirect material interest.
For Fiscal 2008, the Company entered into an agreement with Julie Mulligan,
the sister of Directors and Executive Officers, James F. McCann and Christopher
G. McCann, pursuant to which Ms. Mulligan was employed as a Personality Expert
Designer. The agreement was unanimously approved by the Independent Directors of
the Board. Ms. Mulligan's compensation for Fiscal 2008 was $340,307, consisting
of $130,000 in base salary and $210,307 in earned floral sales commissions for
sales of products designed by Ms. Mulligan for the Company. In consideration for
the floral sales commissions paid to Ms. Mulligan described above, Ms. Mulligan
was not eligible to receive any cash bonus under the Company's annual cash
incentive plan ("Sharing Success Program"). During Fiscal 2008, Ms. Mulligan was
awarded, pursuant to the 2003 Plan, 2,000 shares of restricted stock. The grant
date for these awards was October 26, 2007. The restricted stock vests 100% on
the third anniversary of the grant date, assuming Ms. Mulligan remains employed
by the Company as of that time.
Gerard M. Gallagher, our General Counsel, Senior Vice President of Business
Affairs and Corporate Secretary, is the founder and managing partner in the law
firm of Gallagher, Walker, Bianco & Plastaras based in Mineola, New York.
Compensation for Mr. Gallagher's services are paid to the law firm. The Company,
with the approval of the Board, also pays the law firm fees for services
rendered by other members of the firm on the Company's behalf.
This section titled "Summary Compensation Table" sets forth the cash
compensation paid in Fiscal 2008 by the Company to the firm for services
provided by Mr. Gallagher. For legal services provided by the other members of
the firm the Company paid $465,919 in fees and $37,192 in disbursements. The
Company believes that collectively these fees and disbursements are fair and
reasonable.
Jan L. Murley, a member of our Board of Directors, began serving as our
Interim President of Consumer Floral Brands business segment on September 15,
2008. Ms. Murley began acting as a consultant for the Company on June 30, 2008
and resigned from the Audit Committee and Compensation Committee upon
commencement of such consulting service. Ms. Murley's compensation for her
services as Interim President is $15,385 on a bi-weekly basis and she is
eligible to receive a performance bonus for Fiscal 2009 of up to $200,000 based
75% on satisfactory attainment of the Consumer Floral Brands business segment's
revenue growth and profitability and 25% on the Company's Fiscal 2009 EBITDA
targets. Except for her participation in the 2003 Plan, Ms. Murley does not
participate in any Company benefit or other plans.
David Taiclet, our President of Gourmet Food & Gift Baskets business
segment, has an 18.25% ownership interest in Dynamic Confections, Inc.
("Dynamic"). In Fiscal 2008, certain of the Company's subsidiaries purchased
$491,183 worth of candy goods from the subsidiaries of Dynamic. Mr. Taiclet,
together with his wife, also has a 7.3% beneficial ownership interest in OLB
Partners, LLP ("OLB"), which entity leases 19 retail locations to Fannie May
Confections, Inc. In Fiscal 2008, the lease payments to OLB totaled $1,360,384.
Both of Mr. Taiclet's interests predate the Company's 2006 acquisition of Fannie
May Confections Brands, Inc., were disclosed to the Company prior to the closing
on that acquisition and such ongoing relationships were approved by the Board of
Directors.
35
PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP to serve as the Company's independent registered
public accounting firm for the fiscal year ending June 28, 2009, and the Board
is asking stockholders to ratify such selection at the Annual Meeting. The
stockholders' ratification of the appointment of Ernst & Young LLP will not
impact the Audit Committee's responsibility pursuant to its charter, to appoint,
replace and discharge the independent auditors. In the event the stockholders
fail to ratify this selection, the matter of the selection of independent
auditors will be reconsidered by the Board of Directors.
Fees Paid to Ernst & Young LLP
The following table shows the fees that the Company paid or accrued for
audit and other services provided by E & Y for Fiscal 2008 and Fiscal 2007, all
of which were approved by the Audit committee.
2008 2007
--------------- ---------------
Audit Fees $515,000 $475,000
Audit-Related Fees 125,000 108,000
Tax Fees 35,000 91,000
All Other Fees - -
--------------- ---------------
Total $675,000 $674,000
=============== ===============
Audit Fees. Fees for audit services include fees associated with the annual
audit, including the Company's annual report on Form 10-K, consents and reviews
of the Company's quarterly reports on Form 10-Q. These fees also include the
audit of management's assessment of internal control over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-Related Fees. Fees for audit-related services include audits and
assurance services related to the Company's benefit plans and separate financial
statements for its franchise operations, as well as due diligence services in
connection with acquisitions.
Tax Fees. Fees for tax service include tax compliance, tax advice and tax
planning.
All Other Fees. Consists of other fees not reported in the above
categories.
Audit Committee Pre-Approval Policies and Procedures. The Audit Committee
pre-approves all audit, audit-related and non-audit services (including tax
services) provided by the independent registered public accounting firm.
Pre-approval is generally provided for up to one year, and any pre-approval is
detailed as to the particular service. The independent registered public
accounting firm and the Company's management are required to periodically report
to the Audit Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with this
pre-approval, including fees for the services performed to date. In addition,
the Audit Committee also may pre-approve particular services on a case-by-case
basis, as required.
The affirmative vote of a plurality of the Company's outstanding Common
Stock present in person or by proxy is required to ratify the appointment of the
independent registered accounting firm. Unless otherwise instructed, the proxy
holders will vote the proxies received by them "FOR" the ratification of ERNST &
YOUNG LLP as the Company's independent registered public accounting firm for
Fiscal 2009. A representative of ERNST & YOUNG LLP will attend the Annual
Meeting with the opportunity to make a statement if he or she so desires and
will also be available to answer inquiries.
36
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION
AND APPROVAL OF THE SELECTION OF ERNST & YOUNG LLP TO
SERVE AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR FISCAL 2009.
OTHER MATTERS
The Board of Directors does not intend to bring any other business before
the Annual Meeting, and so far as is known to the Board, no matters are to be
presented for action at the Annual Meeting other than those set forth above. If
any other matters properly come before the Annual Meeting, the persons named in
the enclosed form of proxy will vote the shares represented by proxies in their
discretion on such matters.
STOCKHOLDER PROPOSALS FOR THE 2009 ANNUAL MEETING
Shareholders who, in accordance with Commission Rule 14a-8 wish to present
proposals for inclusion in the proxy materials to be distributed in connection
with next year's Annual Meeting Proxy Statement must submit their proposals so
that they are received at the Company's principal executive offices no later
than the close of business on June 26, 2009. As the rules of the Commission make
clear, simply submitting a proposal does not guarantee that it will be included.
In accordance with our Bylaws, in order to be properly brought before the
2009 Annual Meeting, a shareholder's notice of the matter the shareholder wishes
to present, or the person or persons the shareholder wishes to nominate as a
director, must be delivered to the secretary of the Company at its principal
executive offices not later than the close of business on the 90th day, nor
earlier than the close of business on the 120th day, prior to the first
anniversary date of the 2008 Annual Meeting date. As a result, any notice given
a shareholder pursuant to these provisions of our Bylaws (and not pursuant to
the Commission's Rule 14a-8) must be received no earlier than August 5, 2009 and
no later than September 4, 2009. If, however, our 2009 Annual Meeting date is
advanced by more than 30 days before, or delayed more than 70 days after, the
one year anniversary of the 2008 Annual Meeting date, then proposals must be
received no earlier than the close of business on the 120th day prior to the
2009 Annual Meeting and not later than the close of business on the later of the
90th day before the 2009 Annual Meeting or the 10th day following the date on
which the 2009 Annual Meeting date is publicly announced.
To be in proper form, a shareholder's notice must include the specified
information concerning the proposal or nominee as described in our Bylaws. A
shareholder who wishes to submit a proposal or nomination is encouraged to seek
independent counsel about our Bylaws and Commission requirements. The Company
will not consider any proposal or nomination that does not meet the Bylaws
requirements and the Commission's requirements for submitting a proposal or
nomination. Notices of intention to present proposals at the 2008 Annual Meeting
should be addressed to Corporate Secretary, 1-800-FLOWERS.COM, Inc., One Old
Country Road, Suite 500, Carle Place, New York 11514. The Company reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
37
SOLICITATION OF PROXIES
Proxies are being solicited by the Board of Directors of the Company.
Proxies may be solicited by officers, Directors and regular supervisory and
executive employees of the Company, none of whom will receive any additional
compensation for their services. Such solicitations may be made personally or by
mail, facsimile, telephone, telegraph, messenger, or via the Internet. The
Company may pay persons holding shares of Common Stock in their names or in the
names of nominees, but not owning such shares beneficially, such as brokerage
houses, banks and other fiduciaries, for expenses of forwarding solicitation
materials to their principals. All of the costs of solicitation will be paid by
the Company.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each beneficial holder of its
Common Stock on the Record Date who did not receive a copy of the Company's
Annual Report for the fiscal year ended June 29, 2008, on the written request of
such person, a copy of the Company's Annual Report on Form 10-K as filed with
the Commission. Any such request should be made in writing to the Secretary of
the Company at the address set forth on the first page of this Proxy Statement.
By order of the Board of Directors
/s/ James F. McCann
-----------------------------------
James F. McCann
Chairman of the Board and Chief Executive
Officer
Carle Place, New York
October 24, 2008
38
1-800-FLOWERS.COM, INC. Shareholder Meeting to be held on 12/03/08
** IMPORTANT NOTICE ** Proxy Materials Available
Regarding the Availability of Proxy Materials o Notice and Proxy Statement
o Annual Report
You are receiving this communication because you hold shares in the above
company, and the materials you should review before you cast your vote are now
available.
This communication presents only an overview of the more complete proxy
materials that are available to you on the Internet. We encourage you to access
and review all of the important information contained in the proxy materials
before voting.
PROXY MATERIALS - VIEW OR RECEIVE You can choose to
view the materials online or receive a paper or
e-mail copy. There is NO charge for requesting a
copy. Requests, instructions and other inquiries
will NOT be forwarded to your investment advisor.
To facilitate timely delivery please make the
request as instructed below on or before 11/19/08.
HOW TO VIEW MATERIALS VIA THE INTERNET
----------------------------------------------------
Have the 12 Digit Control Number(s) available and
visit: www.proxyvote.com
HOW TO REQUEST A COPY OF MATERIALS
---------------------------------------------------
1) BY INTERNET - www.proxyvote.com
2) BY TELEPHONE - 1-800-579-1639
3) BY E-MAIL* - sendmaterial@proxyvote.com
*If requesting materials by e-mail, please send a
blank e-mail with the 12 Digit Control Number
(located on the following page) in the subject line.
See the Reverse Side for Meeting Information and Instructions on How to Vote
Meeting Information
Meeting Type: Annual
Meeting Date: 12/03/08
Meeting Time: 9:00 A.M. EST For holders as of: 10/08/08
Meeting Location:
Fourth Floor Conference Room
One Old Country Road
Carle Place, NY 11514 How To Vote
Vote In Person
---------------------------------------------------
Should you choose to vote these shares in person at
the meeting you must request a "legal proxy". To
request a legal proxy please follow the instructions
at www.proxyvote.com or request a paper copy of the
materials. Many stockholder meetings have attendance
requirements including, but not limited to, the
possession of an attendance ticket issued by the
entity holding the meeting. Please check the meeting
materials for any special requirements for meeting
attendance.
To vote now by Internet, go to WWW.PROXYVOTE.COM.
Use the Internet to transmit your voting
instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have
your notice in hand when you access the web site and
follow the instructions.
Voting items
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement) FOR
all nominees below: 01) James F. McCann 02) Christopher G. McCann
2. RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Proposal to
ratify the appointment of Ernst & Young LLP as the Company's independent
registered public accounting firm for the fiscal year ending June 28, 2009
as described in the Proxy Statement.
The Board of Directors recommends a vote FOR all nominees and FOR Proposal 2.
(Form of Proxy)
1-800-FLOWERS.COM, INC. ONE OLD COUNTRY ROAD CARLE PLACE, NY 11514
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site and follow the instructions to obtain your records and to create an
electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage- paid envelope
we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FLOWR1 KEEP THIS PORTION FOR YOUR RECORDS
-------------------------------------------------------------- -------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
1-800-FLOWERS.COM, INC.
Vote on Directors For All Withhold All For All Except To withhold authority to vote for any individual
nominee(s), mark "For All Except" and write the
1. ELECTION OF DIRECTORS 0 0 0 number(s) of the nominee(s) on the line below.
(for terms as described in the Proxy Statement)
FOR all nominees below:
01) James F. McCann
02) Christopher G. McCann
Vote on Proposal
For Against Abstain
2. RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 0 0 0
Proposal to ratify the appointment of Ernst & Young LLP as the
Company's independent registered public accounting firm for the
fiscal year ending June 28, 2009 as described in the Proxy Statement.
The Board of Directors recommends a vote FOR all nominees and FOR Proposal
Please date and sign exactly as your name appears on the envelope in which this
material was mailed. If shares are held jointly, each stockholder should sign.
Executors, administrators, trustees, etc. should use full title and, if more
than one, all should sign. If the stockholder is a corporation, please sign full
corporate name by an authorized officer. If the stockholder is a partnership,
please sign full partnership name by an authorized person.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
1-800-FLOWERS.COM,
INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - December 3,
2008 (This Proxy is solicited by the Board of Directors
of the Company)
The undersigned stockholder of 1-800-FLOWERS.COM, INC. hereby appoints
Gerard M. Gallagher, Corporate Secretary, with full power of substitution, as
proxy to vote the shares of stock, in accordance with the undersigned's
specifications, which the undersigned could vote if personally present at the
Annual Meeting of Stockholders of 1-800-FLOWERS.COM, INC. to be held at One Old
Country Road, Carle Place, New York 11514, Fourth Floor Conference Room (the
"Meeting Place"), on Wednesday, December 3, 2008 at 9:00 a.m. eastern standard
time or any adjournment thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF
THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS, "FOR" RATIFICATION
OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
THE FISCAL YEAR ENDING JUNE 28, 2009, AND IN ACCORDANCE WITH THE DISCRETION OF
THE PROXY AS TO OTHER MATTERS WHICH PROPERLY COME BEFORE THE ANNUAL MEETING.
All of the proposals set forth are proposals of the Company. None of the
proposals is related to or conditioned upon approval of any other proposal.