THE TOPPS COMPANY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 28, 2001
To the Stockholders of
THE TOPPS COMPANY, INC.
I am pleased to invite you to attend the annual meeting of stockholders
(the "Annual Meeting") of The Topps Company, Inc., a Delaware corporation (the
"Company"), which will be held at J.P. Morgan Chase & Co., One Chase Manhattan
Plaza, Street Floor Auditorium, New York, New York, on June 28, 2001 at 10:30
A.M., Eastern Standard time, for the following purposes:
1. To elect three directors to serve for three-year terms until the
annual meeting of stockholders to be held in the year 2004;
2. To ratify and approve the Company's 2001 Stock Incentive Plan;
3. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as independent auditors for the Company for the fiscal year
ending March 2, 2002; and
4. To transact such other business as may properly be brought before the
Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on May 15, 2001 as
the record date for the determination of stockholders entitled to receive notice
of, and to vote at, the Annual Meeting and any adjournment or postponement
thereof.
By order of the Board of Directors,
Arthur T. Shorin
Chairman, President and
Chief Executive Officer
Dated: June 1, 2001
Whether or not you expect to be present at the Annual Meeting, please date and
sign the enclosed proxy and return it promptly in the enclosed envelope. In the
event you attend the Annual Meeting and vote in person, the proxy will not be
used.
THE TOPPS COMPANY, INC.
One Whitehall Street
New York, New York 10004
PROXY STATEMENT
GENERAL
The Board of Directors of The Topps Company, Inc. (the "Company") is
furnishing this proxy statement (the "Proxy Statement") to all stockholders of
record so that they will submit their proxies to be voted at the Annual Meeting
of stockholders of the Company (the "Annual Meeting") and at any adjournment or
postponement of the Annual Meeting. The Annual Meeting will be held at J.P.
Morgan Chase & Co., One Chase Manhattan Plaza, Street Floor Auditorium, New
York, New York, on June 28, 2001 at 10:30 A.M., Eastern Standard time. A copy of
the Company's Annual Report to Stockholders for the fiscal year ended March 3,
2001 is being mailed to all stockholders with this Proxy Statement. The
approximate mailing date of this Proxy Statement is June 1, 2001.
Proxy Information
Proxies in the form enclosed are being solicited by, or on behalf of, the
Company's Board of Directors (the "Board of Directors"). The persons named in
the accompanying form of proxy have been designated as proxies by the Board of
Directors.
All proxies received as a result of this request will be voted (except as
to matters where authority to vote is specifically withheld). Where the proxy
asks that a stockholder choose for or against a proposal, the proxy will be
voted in accordance with the stockholder's choice. If no choice is indicated on
the proposals, the Board of Directors will vote on behalf of the persons named
in the proxy: (i) for the nominees for election as directors of the Company
listed herein, (ii) for the ratification and approval of the Company's 2001
Stock Incentive Plan and (iii) for the ratification of the appointment by the
Board of Directors of Deloitte & Touche LLP as auditors for the Company for the
fiscal year ending March 2, 2002. If any other matter should be presented at the
Annual Meeting upon which a vote may properly be taken, the shares represented
by the proxy will be voted at the discretion of the proxies.
Stockholders who submit proxies may revoke them at any time before they are
voted by written notice to the Company by either submitting a new proxy or by
personal ballot at the Annual Meeting.
Record Date and Voting
As of May 15, 2001, the Company had outstanding 43,632,800 shares of common
stock, par value $.01 per share ("Common Stock"), entitled to be voted at the
Annual Meeting. Each share is entitled to one vote on each matter submitted to a
vote of stockholders. Only stockholders of record at the close of business on
May 15, 2001 will be entitled to vote at the Annual Meeting. If your shares are
registered directly in your name with the Company's transfer agent, Mellon
Investor Services, you are considered with respect to those shares the
stockholder of record, and these proxy materials are being sent directly to you.
As the stockholder of record, you have the right to submit your voting proxy
directly to the Company using the enclosed proxy card or to vote in person at
the Annual Meeting.
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in "street
name". These proxy materials are being forwarded to you by your broker who is
considered, with respect to those shares, the stockholder of record. As the
beneficial owner, you have the right to direct your broker to vote your shares,
and your broker or nominee has enclosed a voting instruction card for you to
use. You are also invited to attend the Annual Meeting; however, since you are
not the stockholder of record, you may not vote these shares in person at the
meeting.
Under Delaware law and the Company's bylaws, the presence of a quorum is
required to transact business at the Annual Meeting. A quorum is defined as the
presence, either in person or by proxy, of a majority of the shares entitled to
vote. Proxies marked "abstain" will be included in determining a quorum. On
routine matters, brokers who hold customer shares in "street name" but have not
timely received voting instructions from their customers have discretion to vote
such shares. Since all of the matters to be voted upon at the Annual Meeting are
routine, the presence of such shares will be included in determining whether a
quorum is present.
Under Delaware law and the Company's bylaws, proposals must be approved by
the affirmative vote of a majority or, in the case of the election of directors,
a plurality, of the shares present, either in person or by proxy, at the Annual
Meeting and entitled to vote. Accordingly, abstentions will have the same effect
as votes "against" a proposal, whereas instructions to withhold voting on the
election of any nominee for director will have no effect on the outcome of the
vote.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information available to the Company as to
shares of Common Stock owned as of May 15, 2001 by (i) each person known to the
Company to be the beneficial owner of more than five percent of the outstanding
Common Stock, (ii) each director and nominee for election as a director, (iii)
each person designated in the section of this Proxy Statement captioned
"Executive Compensation" and (iv) all directors and executive officers as a
group. Except as otherwise indicated, each person named below has sole
investment and voting power with respect to the shares of Common Stock shown.
Name of Amount and Nature Percent of Shares
Beneficial Owner of Beneficial Ownership Outstanding (1)
---------------- ----------------------- -----------------
Arthur T. Shorin(2)(3) ............. 3,225,489 7.3%
Ronald L. Boyum(4) ................. 224,000 *
Allan A. Feder(2)(5) ............... 122,000 *
Ira Friedman (6).................... 113,584 *
Stephen D. Greenberg(7) ............ 163,000 *
Ann Kirschner(8) ................... 34,000 *
David M Mauer (9)................... 101,000 *
Edward D. Miller(10) ............... -- --
Jack H. Nusbaum(11) ................ 140,000 *
John Perillo(12) ................... 257,100 *
Scott A. Silverstein(2)(13) ........ 221,000 *
Richard Tarlow(14) ................. 34,000 *
Stanley Tulchin(15) ................ 150,175 *
All directors and executive officers
as a group (18 persons) ........... 6,033,358 13.0
------------------
*less than 1.0%
(1) Pursuant to regulations of the Securities and Exchange Commission, shares
are deemed to be "beneficially owned" by a person if such person directly
or indirectly has or shares the power to vote or dispose of such shares, or
has the right to acquire the power to vote or dispose of such shares within
60 days, including any right to acquire through the exercise of any option,
warrant or right.
(2) Does not include 50,000, 1,378 and 35,702 shares of Common Stock owned by
immediate family members of each of Messrs. Shorin, Feder and Silverstein,
respectively. Messrs. Shorin, Feder and Silverstein disclaim beneficial
ownership of such shares.
(3) Includes 932,500 shares of Common Stock issuable upon exercise of options.
(4) Includes 214,000 shares of Common Stock issuable upon exercise of options.
2
(5) Includes 65,000 shares of Common Stock issuable upon exercise of options.
(6) Includes 99,500 shares of Common Stock issuable upon exercise of options.
(7) Includes 86,000 shares of Common Stock issuable upon exercise of options.
(8) Includes 34,000 shares of Common Stock issuable upon exercise of options.
(9) Includes 86,000 shares of Common Stock issuable upon exercise of options.
(10) Appointed to The Board of Directors to serve out the remainder of Mr. Wm.
Brian Little's term effective June 4, 2001.
(11) Includes 96,000 shares of Common Stock issuable upon exercise of options.
(12) Includes 183,767 shares of Common Stock issuable upon exercise of options.
(13) Includes 211,000 shares of Common Stock issuable upon exercise of options.
(14) Includes 34,000 shares of Common Stock issuable upon exercise of options.
(15) Includes 75,000 shares of Common Stock issuable upon exercise of options.
ELECTION OF DIRECTORS
Effective as of June 4, 2001, the Board of Directors appointed Mr. Edward
D. Miller as a director to fill the vacancy created by the death of Mr. Wm.
Brian Little.
There are currently nine members of the Board of Directors which is divided
into three classes (each with three members), with each class serving for a
period of three years. One class of directors is elected by the stockholders
annually. The vacancy Mr. Miller filled is in the class of directors to be
elected in 2003. This year, Messrs. Allan A. Feder, David M. Mauer and Jack H.
Nusbaum have been nominated to stand for re-election for a term that expires at
the annual meeting of stockholders to be held in the year 2004.
Should any one or more of these nominees become unable to serve for any
reason or, for good cause, will not serve, which is not anticipated, the Board
of Directors may designate substitute nominees, unless the Board of Directors by
resolution provides for a lesser number of directors. In this event, the proxy
holders will vote for the election of such substitute nominee or nominees.
The following table sets forth the name, age and principal business
experience during the past five years of each director of the Company.
Business Experience Director of the
During Past 5 Years, Company or its
Name Age and Other Information Predecessors Since
---- --------------------------------------------------- ------------------
Nominees to Serve in Office
Until 2004
Allan A. Feder............. An independent business consultant for more than 1992
the past five years and Chief Executive Officer
of Vitarroz Corporation (a proprietary brand food
company) from 1988 to 2000. Mr. Feder is also a
director of Edward Don & Co., Inc. Mr. Feder is
69 years of age.
3
Business Experience Director of the
During Past 5 Years, Company or its
Name Age and Other Information Predecessors Since
---- --------------------------------------------------- ------------------
David M. Mauer............. President and Chief Executive Officer of Riddell 1996
Sports Inc. (marketer and distributor of
sporting goods and school spirit products and
services) since 1993. Mr. Mauer was President
of Mattel U.S.A. from late 1990 through the
beginning of 1993 and was President of Tonka
U.S.A. Toy Group from 1988 until 1990. Mr.
Mauer is also a member of the CEO Council of the
National Center for Missing and Exploited
Children. Mr. Mauer is 52 years of age.
Jack H. Nusbaum............ Chairman of the New York law firm of Willkie Farr 1992
& Gallagher and a partner in that firm for more
than thirty years. Mr. Nusbaum is also a
director of W. R. Berkley Corporation; Neuberger
Berman, Inc.; Pioneer Companies, Inc.; Prime
Hospitality Corp.; Strategic Distribution, Inc.;
and Hirschl & Adler Galleries, Inc. Mr. Nusbaum
is 60 years of age.
Directors to Continue in
Office Until 2002
Stephen D. Greenberg........ Chairman of Fusient Media Ventures, Inc. since 1993
January 2000. Private Investor from November
1998 to December 1999. President of Classic
Sports Network, Inc. from November 1993 through
October 1998. Mr. Greenberg is 52 years of age.
Ann Kirschner.............. Chief Executive Officer and President of FATHOM 1999
(the first interactive knowledge network) since
1999. Dr. Kirschner was Vice President of
Programming and Media Development for the
National Football League from November 1994
through January 1999. Dr. Kirschner is also on
the Board of Directors of New York New Media
Association. Dr. Kirschner is 50 years of age.
Richard Tarlow............. Chairman of Carlson & Partners (an advertising 1999
agency) since 1988. Mr. Tarlow was President of
Tarlow Advertising, a division of Revlon Inc.,
from 1987 to 2000 and Executive Vice President
of Revlon Inc. from 1988 to 2000. Mr. Tarlow is
59 years of age.
4
Business Experience Director of the
During Past 5 Years, Company or its
Name Age and Other Information Predecessors Since
---- --------------------------------------------------- ------------------
Directors to Continue in
Office Until 2003
Arthur T. Shorin........... Chairman of the Board and Chief Executive Officer 1960
of the Company and its predecessor since 1980.
Mr. Shorin was appointed the President of the
Company in November 1997. Mr. Shorin is 65
years of age.
Edward D. Miller........... President and Chief Executive Officer of AXA 2001
Financial,Inc. since August 1997 and Chairman and
Chief Executive Officer of AXA Client Solutions,
LLC. Mr. Miller was senior Vice Chairman of the
Chase Manhattan Corporation from 1996 through
July 1997. Mr. Miller is also a director of
Keyspan Corp. Mr. Miller is 60 years of age.
Stanley Tulchin............ Chairman of Stanley Tulchin Associates, Inc. (a 1987
commercial collection agency) since 1955. Mr.
Tulchin is also Chairman and Chief Executive
Officer of Reprise Capital Corporation (a
venture capital fund) for more than the past
five years. Mr. Tulchin is 74 years of age.
The Board of Directors met four times during the fiscal year ended March 3,
2001. Each of the directors who served during such period attended at least 75%
of the aggregate number of meetings of the Board of Directors and any committee
of which they were members during such period.
5
Compensation Committee
The Company has a Compensation Committee responsible for recommending
officers' remuneration and administering The Topps Company, Inc. 1996 Stock
Option Plan and the 1987 Stock Option Plan. The members of the Compensation
Committee for the fiscal year ended March 3, 2001 were Messrs. Wm. Brian Little
(until June 29, 2000), Richard Tarlow (since June 29, 2000) and Stanley Tulchin,
none of whom is an employee of the Company. The Compensation Committee held six
meetings during the fiscal year ended March 3, 2001.
Audit Committee
The Audit Committee is responsible for overseeing the Company's accounting
functions and internal controls and for recommending to the Board of Directors,
subject to stockholder ratification, the selection of the Company's independent
accountants. The Audit Committee is composed of independent directors of the
Company, as defined by Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards, and acts pursuant to a written charter
adopted by the Board of Directors. The members of such committee for the fiscal
year ended March 3, 2001 were Messrs. Allan A. Feder, Stephen D. Greenberg,
David M. Mauer and Stanley Tulchin. During the fiscal year ended March 3, 2001,
there was one meeting of the Audit Committee. None of the members of the Audit
Committee are employees of the Company.
The Company does not have a nominating committee.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company's executive officers, directors and ten percent stockholders
are required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to file reports of ownership and changes in ownership with the
SEC. Based solely upon its review of the copies of reports furnished to the
Company through the date hereof, or written representations that no reports were
required to be filed, the Company believes that all filing requirements
applicable to its executive officers, directors and ten percent stockholders
were complied with during the fiscal year ended March 3, 2001.
Compensation of Directors
For the fiscal year ended March 3, 2001, pursuant to the Amended and
Restated 1994 Non-Employee Director Stock Option Plan, each of Mr. Allan A.
Feder, Mr. Stephen D. Greenberg, Dr. Ann Kirschner, Mr. Wm. Brian Little, Mr.
David M. Mauer, Mr. Jack H. Nusbaum, Mr. Richard Tarlow and Mr. Stanley Tulchin,
none of whom is an employee of the Company, received options to purchase 17,000
shares of Common Stock at a price of $10.9375 per share. These options become
exercisable on June 28, 2001 and have a term of ten years from the date of
grant.
Directors who are also officers of the Company are not compensated for
their duties as a director.
6
EXECUTIVE COMPENSATION
The following table sets forth for each of the last three fiscal years
information regarding the compensation of (i) the Company's Chief Executive
Officer, (ii) the four other most highly compensated persons who were executive
officers at the end of the fiscal year ended March 3, 2001 and (iii) any other
person who would have been among the four other most highly compensated but was
not an executive officer at the end of the last fiscal year (each, a "Named
Executive Officer").
Summary Compensation Table(1)
Annual Compensation Long Term
--------------------------------- ---------------------
Fiscal Securities Underlying
Year Salary(2) Bonus Options/
Name and Principal Position Ended ($) ($) SARs (#)
--------------------------- ----- ---------- ------- ---------------------
Arthur T. Shorin............... 2001 838,082 502,849 --
Chairman, President and Chief 2000 822,269 493,361 250,000
Executive Officer 1999 614,115(3) 493,361 36,000
Ronald L. Boyum................ 2001 277,308 166,385 11,000
Vice President - Marketing and 2000 263,539 158,123 35,000
Sales and General Manager 1999 253,846 152,307 25,000
Confectionery
Scott A. Silverstein.......... 2001 245,962 147,534 60,000
Executive Vice President 2000 207,012 124,096 45,000
1999 141,334(3) 112,216 30,000
John Perillo.................. 2001 238,981 143,388 12,000
Vice President - Operations 2000 227,385 136,431 25,000
1999 163,077(3) 128,308 20,000
Ira Friedman 2001 225,316 135,190 12,000
Vice President - Publishing 2000 210,507 126,304 30,000
and New Product Development. 1999 172,123(3) 118,574 17,500
---------------------
(1) Because none of the Named Executive Officers received (a) perquisites and
other personal benefits (including, for certain of the Named Executive
Officers, medical reimbursements, moving expenses and car use allowances)
in excess of the lesser of $50,000 or 10% of such officer's annual salary
and bonus, (b) any other compensation required to be reported or (c) any
restricted stock awards, the columns entitled "Other Annual Compensation",
"Restricted Stock Awards", "LTIP Payouts" and "All Other Compensation" are
inapplicable and have therefore been omitted from the table.
(2) The Company's fiscal year ended March 3, 2001 consisted of 53 weeks, while
the two other fiscal years in the table contained 52 weeks. Therefore,
salary levels for the fiscal year ended March 3, 2001 reflect an additional
one week's salary.
(3) For calendar year 1998, as part of the Company's initiative to reduce
costs, all officers of the Company were given the right to elect to receive
stock options in lieu of up to 30% of their base salary, at the rate of one
stock option to purchase one share of Common Stock for every dollar of
salary waived. These options were issued pursuant to the Company's 1996
Stock Option Plan. The options have a term of ten years and became
exercisable in equal annual installments over two years from date of grant.
In accordance with the 1996 Stock Option Plan, the exercise price of each
stock option granted was equal to the closing price of the Common Stock on
the date prior to the date of the grant, which was $2.2187 per share.
Messrs. Shorin, Silverstein, Perillo, and Friedman, among others, elected
to waive a portion of their salary in exchange for these stock options.
7
Option/SAR Grants in Last Fiscal Year
The following table sets forth information regarding grants of stock
options made during the fiscal year ended March 3, 2001 to each of the Named
Executive Officers. There were no stock appreciation rights granted in the last
fiscal year to the Named Executive Officers.
Potential Realized Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term ($)(1)
--------------------------- ------------------------------------------------------------------------- --------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Number of Options
Securities Granted to
Underlying Options Employees in Exercise or Base
Name Granted (2) Fiscal Year Price ($/Sh) Expiration Date 5% 10%
---- ----------- ------------ ------------ --------------- -- ---
Arthur T. Shorin......... -- -- -- -- -- --
Ronald L. Boyum.......... 11,000(3) 2.54 9.375 6/08/2010 69,055 171,042
Scott A. Silverstein..... 60,000(4) 13.84 7.500 3/01/2010 252,510 668,629
John Perillo............. 12,000(3) 2.77 9.375 6/08/2010 75,332 186,592
Ira Friedman............. 12,000(3) 2.77 9.375 6/08/2010 75,332 186,592
---------------------
(1) Grant date fair market value is based on the closing price of the Common
Stock on the immediately preceding day.
(2) All grants consisted of options that were granted under the 1996 Stock
Option Plan.
(3) The options to acquire shares of Common Stock were granted on June 8, 2000.
One half become exercisable on June 8, 2001 and the remainder will become
exercisable on June 8, 2002.
(4) The options to acquire shares of Common Stock were granted on March 1,
2000. One third became exercisable on March 1, 2001, one third will become
exercisable on March 1, 2002 and the remainder will become exercisable on
March 1, 2003.
Aggregate Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
The following table provides information regarding the exercise of
options/SARs during the fiscal year ended March 3, 2001 and the number and value
of unexercised options and SARs held at fiscal year end by each of the Named
Executive Officers.
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End ($)
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
Arthur T. Shorin.............. 0 - 932,500 - 3,918,325* -
Ronald L. Boyum............... 0 - 211,000 28,500 713,781 84,719
Scott A. Silverstein.......... 0 - 193,500 62,500 1,077,721* 200,781
John Perillo.................. 0 - 171,667 24,500 807,766* 58,656
Ira Friedman.................. 15,416 94,749 160,584 27,000 511,855* 71,938
------------------------------
* The value does not reflect the fact that certain of these options were granted
during calendar year 1998 in exchange for a salary waiver at the rate of one
option for each dollar of salary waived. Giving effect to this salary waiver
would reduce the value of unexercised in-the-money options.
8
Pension Benefits
The Company maintains a tax qualified non-contributory defined benefit
pension plan for its eligible employees (the "Retirement Plan"). The Summary
Compensation Table contained in this Proxy Statement does not include the
benefit accruals in respect of the Named Executive Officers under the Retirement
Plan. The estimated annual pension benefits under the Retirement Plan, assuming
retirement at age 65, at various levels of compensation and years of credited
service are illustrated by the following table:
Annual Retirement Benefit for Specified
Years of Credited Service(1)(2)
Highest Average
Compensation(3) 15 20 25 30 35 40 50
$ 125,000............ $ 26,115 $ 35,656 $ 45,694 $ 55,811 $ 57,102 $ 58,635 $61,760
$ 160,000............ $ 34,865 $ 47,322 $ 60,278 $ 73,312 $ 75,010 $ 77,010 $81,010
$ 175,000............ $ 38,615 $ 52,323 $ 66,528 $ 80,812 $ 82,727 $ 84,885 $89,260
$ 200,000............ $ 44,865 $ 60,656 $ 76,945 $ 93,312 $ 95,540 $ 98,010 $103,010
$ 225,000............ $ 51,115 $ 68,990 $ 87,362 $105,812 $108,352 $111,135 $116,760
$ 250,000............ $ 57,365 $ 77,323 $ 97,779 $118,313 $121,165 $124,260 $130,510
$ 300,000............ $ 69,866 $ 93,990 $118,613 $143,313 $146,790 $150,510 $158,010
$ 400,000............ $ 94,866 $127,324 $160,280 $193,314 $198,040 $203,010 $213,010
$ 450,000............ $107,366 $143,991 $181,114 $218,315 $223,665 $229,260 $240,510
$ 500,000............ $119,867 $160,658 $201,948 $243,315 $249,290 $255,510 $268,010
$ 600,000............ $144,867 $193,992 $243,615 $293,316 $300,540 $308,010 $323,010
$ 800,000............ $194,868 $260,660 $326,950 $393,318 $403,040 $413,010 $433,010
$1,000,000............. $244,869 $327,328 $410,285 $493,320 $505,540 $518,010 $543,010
-----------------------
(1) These are hypothetical benefits based upon the Retirement Plan's normal
retirement benefit formula. The maximum annual benefit permitted under
Section 415 of the Internal Revenue Code of 1986, as amended (the "Code"),
is generally limited to $140,000 at present and will be adjusted to reflect
cost-of-living increases in 2002 and succeeding plan years.
(2) The benefits shown corresponding to these compensation ranges are
hypothetical benefits based upon the Retirement Plan's normal retirement
benefit formula. Under Section 401(a)(17) of the Code, compensation in
excess of $170,000 (as adjusted to reflect cost-of-living increases) is
disregarded for purposes of determining highest average compensation of
participants in the Retirement Plan for 2001. Benefits accrued as of the
last day of the plan year beginning in 1993 on the basis of compensation in
excess of the applicable dollar limit are preserved. The $170,000 limit
will be adjusted for cost-of-living increases in 2002 and succeeding plan
years.
(3) This table includes supplemental pension benefits payable to Mr. Shorin in
excess of the limitations on compensation and benefits under the Code and
other applicable laws, pursuant to an agreement entered into on May 19,
1986 and amended May 18, 1994 (the "Supplemental Pension Agreement"). These
benefits are computed in accordance with the same formula provided under
the Retirement Plan without regard to the aforementioned limitations.
However, compensation attributable to stock appreciation rights and stock
options is not taken into account in determining highest average
compensation for purposes of the Supplemental Pension Agreement.
The normal retirement benefit under the Retirement Plan is payable in the
form of a "straight life" annuity and is equal to the greater of (i) 1.667% of a
participant's highest average W-2 compensation multiplied by the participant's
years of credited service not in excess of 30 years, plus .25% of the
9
participant's highest average compensation multiplied by the participant's years
of credited service in excess of 30 years, reduced by 50% of the participant's
estimated primary Social Security benefit determined on the basis of the
participant's earnings from the Company, or (ii) $204 multiplied by the
participant's years of credited service not in excess of 20 years, plus $144
multiplied by the participant's credited service in excess of 20 years (but not
to exceed 10 additional years). The "highest average compensation" for purposes
of determining the normal retirement benefit is equal to 1/5 of the total
compensation that is paid to a participant by the Company for the 60
consecutive-month period in which the participant's compensation was greatest
during the 120-month period prior to the participant's retirement or termination
of employment. Subject to the $170,000 compensation limit in the case of an
executive officer other than Mr. Shorin, such compensation includes all
compensation reflected in the Summary Compensation Table to the extent included
in gross income for the applicable base years, except for income attributable to
reimbursement of moving expenses.
As of March 1, 2001, the persons named in the Summary Compensation Table
were credited with the following years of service: Mr. Shorin - 42, Mr. Boyum -
11, Mr. Silverstein - 8, Mr. Perillo - 23, Mr. Friedman - 12.
Employment Agreements
Effective March 1, 1999, the Company entered into an amended and restated
employment agreement (the "Agreement") with Arthur T. Shorin, Chairman of the
Board, President and Chief Executive Officer. The Agreement provides for a
three-year term ending on March 2, 2002. The Agreement continues the same annual
base salary of $822,269 subject to an increase at the discretion of the
Compensation Committee. Mr. Shorin's agreement provides for an annual target
bonus opportunity which is not less favorable than that provided for other
executive officers of the Company. During calendar year 1998, Mr. Shorin agreed
to waive $246,000 of salary in exchange for options to purchase 246,000 shares
of common stock. See "Summary Compensation Table".
If Mr. Shorin is terminated without "Cause" or resigns for "Good Reason"
(as defined in the Agreement), a lump sum severance payment will be made as
liquidated damages equal to three times Mr. Shorin's base salary plus his
highest annual bonus paid for the three fiscal years ended prior to the date of
termination. Unvested stock options vest and remain exercisable in accordance
with their terms.
The Agreement also requires that, in the event any payments made upon
termination of employment are treated as "parachute payments" subject to excise
taxes under federal tax law, the Company will make an additional payment to the
applicable tax authorities on behalf of Mr. Shorin so that his after-tax
position is the same as if the payments were not subject to an excise tax.
Mr. Shorin's Agreement also requires the Company to make annual
contributions, to an irrevocable Company trust account, of assets equal to the
present value of the supplemental pension benefits which accrue during each
fiscal year for Mr. Shorin under his Supplemental Pension Agreement. In the
event of a termination without Cause or Resignation for Good Reason, the
Agreement also counts severance compensation paid to Mr. Shorin in determining
highest average compensation and credits Mr. Shorin with three additional years
of service for pension purposes.
If Mr. Shorin works until the end of the term and is not offered a two-year
extension on equivalent terms with a minimum base salary adjustment for
increases in the cost of living since March 1, 1999 and a $500,000 signing bonus
(in lieu of an option grant), he will receive, for two years from March 2, 2002,
continued base salary and annual bonus equal to the highest annual bonus paid
with respect to the three fiscal years prior to termination, at the same time as
such compensation would otherwise have been paid. If an offer meeting the
foregoing terms is made and Mr. Shorin elects to retire at the end of the term,
Mr. Shorin will receive the severance compensation outlined above for one year
instead of two. The Company is currently in discussions with Mr. Shorin
regarding the extension of his contract.
10
Report of The Audit Committee of The Board of Directors
The Audit Committee is responsible for overseeing the Company's accounting
functions and internal controls and for recommending to the Board of Directors,
subject to stockholder ratification, the selection of the Company's independent
accountants. The Audit Committee is composed of independent directors of the
Company, as defined by Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards, and acts pursuant to a written charter
adopted by the Board of Directors. A copy of the Audit Committee Charter is
attached as Appendix A to this Proxy Statement.
The Audit Committee has reviewed and discussed with management and the
independent accountants the audited financial statements for the fiscal year
ended March 3, 2001. In addition, the Audit Committee has discussed with the
independent accountants the matters required to be discussed by the Statement on
Auditing Standards No. 61, Communications with Audit Committees, as amended, by
the Auditing Standards Board of the American Institute of Certified Public
Accountants.
The independent accountants provided to the Audit Committee the written
disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, as amended. The Audit Committee has reviewed and discussed with the
independent accountants the firm's independence and has considered the
compatibility of any non-audit services with the auditors' independence.
Based on its review of the audited financial statements and the various
discussions referred to above, the Audit Committee has recommended to the Board
of Directors that the audited financial statements be included in the Company's
annual report on Form 10-K for the fiscal year ended March 3, 2001.
Audit Fees
Audit fees billed to the Company by Deloitte & Touche LLP during the
Company's fiscal year ended March 3, 2001 for the Audit of the Company's annual
financial statements and for the review of the financial statements included in
the Company's quarterly reports on Form 10-Q totaled $273,600.
Financial Information Systems Design and Implementation Fees
The Company did not engage Deloitte & Touche LLP to provide advice to the
Company regarding financial information systems design or implementation during
the Company's fiscal year ended March 3, 2001.
All Other Fees
Fees billed to the Company by Deloitte & Touche LLP during the Company's
fiscal year ended March 3, 2001 for all other services rendered to the Company
totaled $21,900 .
April 30, 2001 Allan A. Feder
Stephen D. Greenberg
David M. Mauer
Stanley Tulchin
11
Report of the Compensation Committee on Executive Compensation
The Compensation Committee is responsible for setting the Company's
compensation objectives and policies. It regularly approves compensation plans
and sets specific compensation levels for all executive officers. In addition,
the Compensation Committee administers the Company's 1996 Stock Option Plan (the
"Option Plan") and determines the degree and extent of awards granted
thereunder.
Compensation Policy
The Compensation Committee seeks to provide a total compensation package
that is competitive and intended to retain and motivate the Company's executive
officers. In structuring the compensation package for executive officers, the
Committee seeks to provide financial incentives tied to the achievement of the
Company's short-term and long-term business objectives and intended to enhance
stockholder value.
Base Salary
In setting base salary for the executive officers for fiscal 2001, the
Compensation Committee considered the base salary levels of executives with
similar responsibilities in companies of similar size, business and complexity.
The Committee also considered each executive officer's experience in his
position at the Company and his actual performance over the prior fiscal year.
Based on the above criteria, the Compensation Committee made subjective
determinations with respect to the compensation of all of the Company's
executive officers other than Mr. Shorin (whose compensation was governed by an
Employment Agreement).
Bonus Awards
For fiscal 2001, bonuses were intended to reward achievements by the
executive officers and were contingent upon the Company's financial performance
during the year. The Company's Bonus Plan for fiscal 2001 was structured to
reward executive officers for increases in the Company's operating profits.
Bonus levels for fiscal 2001 were set by the Compensation Committee after
consideration of bonus levels for executives with similar responsibilities in
companies of similar size, business and complexity. Bonus payments for fiscal
2001 reflected attainment of the maximum earnings objectives for all executive
officers.
Stock Option Awards
Long-term incentive compensation opportunities are provided through grants
of stock options under the Option Plan. All options granted under the Option
Plan have exercise prices which are at least equal to the fair market value of
the Common Stock on the date of grant so as to directly align such incentive
compensation with an increase in stockholder value. In continuing its practice
of making discretionary grants of stock options to the Company's executive
officers and taking into consideration each executive officer's experience and
seniority within the Company, the Compensation Committee made grants of stock
options to certain executive officers of the Company on a subjective basis
during fiscal 2001.
Chief Executive Officer
Mr. Shorin's base salary is set under the terms of his Employment
Agreement.
Mr. Shorin's bonus for fiscal 2001 was determined entirely by reference to
uniform, preestablished earnings targets that were developed for all senior
executives at the beginning of the fiscal year. These targets were fully
attained.
12
Section 162(m)
Section 162(m) of the Code generally disallows a tax deduction to public
companies for annual compensation over $1 million paid to each of the Company's
Chief Executive Officer and four other most highly compensated executive
officers, except to the extent such compensation qualifies as
"performance-based." Only Mr. Shorin has received compensation in excess of the
Section 162(m) limits and all other compensation has been fully deductible by
the Company. While the Committee's policy has always been to pursue a strategy
of maximizing deductibility of compensation for the Named Executive Officers, it
also believes it is important to maintain the flexibility to take actions it
considers in the best interests of the Company and its stockholders, which are
necessarily based on considerations in addition to Section 162(m). In light of
the competitive market for highly qualified executives, the Company has
exercised that flexibility with respect to Mr. Shorin.
The Compensation Committee:
Richard Tarlow
Stanley Tulchin
13
CERTAIN RELATIONSHIPS
Jack H. Nusbaum, a director, is a partner in the law firm of Willkie Farr &
Gallagher, outside counsel to the Company. David M. Mauer, a director, is
President and Chief Executive Officer of Riddell Sports Inc., which supplied
promotional material for one of the Company's sports products.
Performance Graph
The graph set forth below shows the yearly percentage change in the
Company's cumulative total stockholder return against each of the S&P MidCap 400
and a composite index (the "Composite Index"), in each case assuming an
investment of $100 on March 3, 1996 and the accumulation and reinvestment of
dividends paid thereafter through March 3, 2001.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Topps Co Inc $100.00 $ 87.18 $ 56.41 $ 89.74 $153.85 $200.00
S & P Midcap 400 $100.00 $116.93 $159.63 $163.02 $213.54 $233.61
Composite Index $100.00 $105.77 $139.78 $155.07 $121.81 $155.38
The Composite Index is comprised of four industry groups reported in the
"Directory of Companies required to file Annual Reports with the Securities and
Exchange Commission," for the period ended September 30, 1993, and based upon
the Standard Industrial Classification ("SIC") codes developed by the Office of
Management and Budget, Executive Office of the President. The four industry
groups are Miscellaneous Publishing (SIC Code 2741), Sugar and Confectionery
Products (SIC Code 2060), Periodicals: Publishing or Publishing and Printing
(SIC Code 2721), and Wholesale - Miscellaneous Durable Goods (SIC Code 5090).
14
PROPOSAL TO RATIFY AND APPROVE THE 2001 STOCK INCENTIVE PLAN
The Board of Directors haS unanimously approved the adoption of the 2001
Stock Incentive Plan (the "Plan"), subject to the approval of the stockholders
of the Company at the Annual Meeting. The Board of Directors recommends that the
stockholders approve the adoption of the Plan. If approved, the Plan will
replace the 1996 Stock Option Plan, which would otherwise terminate by its terms
in 2001. As a result, no further grants may be made under the 1996 Stock Option
Plan following the date stockholder approval for the 2001 Stock Incentive Plan
is received.
Description of the 2001 Stock Incentive Plan
Purpose
The purpose of the Plan is to enable the Company and its subsidiaries and
affiliates to attract and retain the best available personnel, to encourage them
to make substantial contributions to the Company's future success, and to ensure
that the Company can provide competitive compensation opportunities to its
personnel.
Administration
The Plan may be administered by either the Board of Directors or the
Compensation Committee of the Board of Directors. Currently, the Plan is
administered by the Compensation Committee (the entity administering the Plan
from time to time shall be referred to herein as the "Committee"). The Committee
serves at the pleasure of the Board of Directors and may determine the terms and
conditions of Awards, choose the individuals to whom Awards may be granted, fix
the number of Awards granted and the number of shares subject to each Award, set
the expiration date, vesting schedule and exercise price, and may accelerate the
vesting of outstanding Awards. Subject to the provisions of the Plan, the
Committee may construe and interpret the Plan, determine all questions
thereunder and adopt and amend such rules and regulations for the administration
of the Plan as it may deem desirable.
Awards
The Plan allows for the grant of stock options ("Options"), stock
appreciation rights ("SARs") and restricted stock (Options, SARs and restricted
stock are referred to herein as "Awards") to employees and non-employee
directors of, and persons or entities which provide significant services to, the
Company, its subsidiaries, and entities directly or indirectly controlled by or
affiliated with the Company and designated by the Committee. Approximately 350
persons are currently eligible to participate in the Plan.
Options granted under the Plan may be "incentive stock options" ("ISOs"),
within the meaning of Section 422 of the Code, or nonqualified stock options
("NQSOs"); provided, however, that ISOs may only be granted to participants who
are also employees of the Company or a subsidiary corporation within the meaning
of Section 424 of the Code. The exercise price of the options or SARs will be
determined by the Committee when granted, but may not be less than the Fair
Market Value (as defined in the Plan) of the Common Stock on the date of grant.
The option exercise price may be paid (i) in cash, by check or in shares of
Common Stock having an aggregate Fair Market Value equal to the aggregate option
exercise price, or (ii) by delivering to the Company a copy of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay the aggregate exercise price.
SARs may be granted as an alternative or a supplement to a related stock
option. SARs entitle its holder to be paid an amount equal to the Fair Market
Value of the Common Stock subject to the SAR on the date of exercise less the
exercise price of the SAR established at the time of grant.
15
Except as otherwise determined by the Committee, Options and SARs will
expire either upon or shortly after termination of the employment or service of
the holder as set forth below. All unvested Options and SARs will expire
immediately upon termination of a holder's employment or service with the
Company for any reason. Vested Options and SARs will expire immediately upon a
holder's termination of employment or service with the Company for any reason
other than retirement at age 55 or older, death or disability. Upon an holder's
termination of employment with the Company on account of retirement at age 55 or
older or disability, all vested Options and SARs held by him will expire three
months after the date of termination. Vested Options and SARs held by a holder
who retires at age 55 or older with 10 years or more of service with the Company
will expire two years after such termination. Upon the death of a holder of
vested Options or SARs, while employed or in the service of the Company or
within any post termination exercise period, the Awards will expire one year
after the date of death. In no event will an Option or SAR be exercisable after
the term as set forth in the holder's Award agreement.
Shares of Restricted Stock may be granted subject to certain restrictions
on transferability and forfeiture provisions. Holders of restricted stock will
generally have all the rights and privileges of a stockholder including the
right to vote such restricted stock. To the extent such shares are forfeited,
the stock certificates shall be canceled, and all rights of the holder to such
shares and as a shareholder will terminate. The restricted period for restricted
stock, during which time shares are non-transferable and subject to forfeiture,
will commence on the date of grant and will expire from time to time as to that
part of the restricted stock Award indicated in a schedule established by the
Committee and set forth in the respective Award agreement. The Committee, in its
sole discretion, may remove any or all restrictions on the restricted stock
whenever it determines that such action is appropriate.
The following forfeiture provisions will apply to Awards of Restricted
Stock. In the event the recipient of such Award resigns or is discharged from
employment or service with the Company or its subsidiary for any reason other
than retirement at age 55 or older, death or disability, the non-vested portion
of the Award will be completely forfeited. Upon the termination of employment of
a holder of a restricted stock Award on account of retirement at age 55 or older
or disability, the non-vested portion of the Award will be prorated for service
during the restricted period and paid as soon as practicable after termination.
If the recipient of such an Award dies, the non-vested portion of the Award will
be prorated for service during the restricted period and paid to the recipient's
beneficiary as soon as practicable following death. Upon the expiration of the
restricted period with respect to any shares of restricted stock, a stock
certificate evidencing the shares of Common Stock will be delivered without
charge to the participant, or his beneficiary, free of all restrictions under
the Plan.
The total number of shares of Common Stock which may be issued under the
Plan is limited to the sum of (i) that number of shares of Common Stock which
remain available for grant of options under the 1996 Stock Option Plan on June
28, 2001 and (ii) 2,100,000 shares, as increased from time to time, by (A) that
number of shares of Common Stock which were or are reserved for issuance upon
the exercise of options granted under the Plan, or under the 1996 Stock Option
Plan, which shall expire, be cancelled, or terminated for any reason without
having been exercised in full, and (B) that number of shares which are exchanged
by an optionee as full or partial payment to the Company of the purchase price
of shares being acquired through the exercise of a stock option granted under
the Plan or the 1996 Stock Option Plan or as withheld to satisfy any federal,
state or local tax liability with respect to any award under the Plan or the
1996 Stock Option Plan. The maximum aggregate number of shares for which Awards
other than Options may be granted under the Plan may not exceed 660,000 shares.
In no event may a single individual be granted Options or SARs covering more
than 500,000 shares of Common Stock under the Plan during any fiscal year of the
Company.
Unless otherwise determined by the Committee, either at the date of grant
or some later date, all Awards under the Plan will be nontransferable and may be
exercised only by the grantee or the grantee's heirs, legatees or personal
representatives. Each Award granted under the Plan will automatically become
fully vested and exercisable and no longer subject to forfeiture, as applicable,
upon the occurrence of a Change in Control (as defined in the Plan), whether or
not the Award was then vested. A Change in Control is generally limited to
acquisitions of 50% or more of the Common Stock, tender offers for a majority of
16
the Common Stock by third parties or a change in more than 50% of the membership
of the Board of Directors, in each case, without the prior approval of the Board
of Directors.
The Committee also has discretion to make adjustments to the Plan and
outstanding Awards in the event of certain adjustments in capitalization of the
Company and other corporate events, including adjusting the number of shares
subject to an Award and the exercise price, shortening the term and accelerating
the vesting and exercisability of Awards and cashing out Awards.
The Plan may be amended or terminated by the Board of Directors at any
time, except that the maximum number of shares of Common Stock available for
issuance under the Plan may not be increased and the minimum exercise price with
respect to which Awards may be granted may not be reduced, without the approval
of the Company's stockholders. The Plan terminates automatically ten years from
the date the Plan is approved by the Company's stockholders and no Award may be
granted under the Plan after that date.
Market Value
The market value of the Common Stock at the close of trading on May 25,
2001 was $10.16 per share.
Federal Tax Consequences
Set forth below is a brief description of the federal income tax
consequences applicable to Options granted under the Plan.
ISOs
No taxable income is realized by the optionee upon the grant or exercise of
an ISO. If Common Stock is issued to an optionee pursuant to the exercise of an
ISO, and if no disqualifying disposition of such shares is made by such optionee
within two years after the date of grant or within one year after the transfer
of such shares to such optionee, then (1) upon sale of such shares, any amount
realized in excess of the option price will be taxed to such optionee as a
long-term capital gain and any loss sustained will be a long-term capital loss,
and (2) no deduction will be allowed to the optionee's employer for federal
income tax purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally (1)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the option price paid for such shares, and (2) the optionee's employer will
be entitled to deduct such amount for federal income tax purposes if the amount
represents an ordinary and necessary business expense. Any further gain (or
loss) realized by the optionee will be taxed as short-term or long-term capital
gain (or loss), as the case may be, and will not result in any deduction by the
employer.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the option will generally be taxed as the exercise of a NQSO.
For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his alternative minimum taxable income, and
compute the tax basis in the stock so acquired, in the same manner as if the
optionee had exercised an NQSO. Each optionee is potentially subject to the
alternative minimum tax. In substance, a taxpayer is required to pay the higher
of his alternative minimum tax liability or his "regular" income tax liability.
As a result, a taxpayer has to determine his potential liability under the
alternative minimum tax.
17
NQSOs
With respect to NQSOs: (1) no income is realized by the optionee at the
time the Option is granted; (2) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the positive difference between
the option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise, and the optionee's employer is generally
entitled to a tax deduction in the same amount subject to applicable tax
withholding requirements; and (3) at sale, appreciation (or depreciation) after
the date of exercise is treated as either short-term or long-term capital gain
(or loss) depending on how long the shares have been held.
Special Rules Applicable to Corporate Insiders
As a result of the rules under Section 16(b) of the Exchange Act ("Section
16(b)"), and depending upon the particular exemption from the provisions of
Section 16(b) utilized, officers and directors of the Company and persons owning
more than 10 percent of the outstanding shares of stock of the Company
("Insiders") may not receive the same tax treatment as set forth above with
respect to the grant and/or exercise of Options. Generally, Insiders will not be
subject to taxation until the expiration of any period during which they are
subject to the liability provisions of Section 16(b) with respect to any
particular Option.
NEW PLAN BENEFITS
Because the Plan is a discretionary plan, it is not possible to determine
what awards the Committee will grant under the Plan in the future. Options
granted to the Company's Named Executive Officers under the 1996 Stock Option
Plan during the Company's fiscal year ended March 3, 2001 are set forth in the
"Option/SAR Grants in Last Fiscal Year" Table above.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION AND
APPROVAL OF THE 2001 STOCK INCENTIVE PLAN.
APPOINTMENT OF AUDITORS
The Board of Directors has retained Deloitte & Touche LLP as independent
certified public accountants to report on the consolidated financial statements
of the Company for the fiscal year ending March 2, 2002 and to perform such
other services as may be required of them. The Board of Directors has directed
that management submit the appointment of auditors for ratification by the
stockholders at the Annual Meeting. Representatives of Deloitte & Touche LLP are
expected to be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate stockholder questions.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE TOPPS COMPANY, INC. AUDITORS
18
STOCKHOLDER PROPOSALS -- 2002 ANNUAL MEETING
Any proposals of stockholders of the Company intended to be included in the
Company's proxy statement and form of proxy relating to the Company's next
annual meeting of stockholders must be in writing and received by the Assistant
Treasurer of the Company at the Company's office at One Whitehall Street, New
York, New York 10004-2109 no later than January 24, 2002. In the event that the
next annual meeting of stockholders is called for a date that is not within 30
days before or after June 29, 2002, in order to be timely, notice by the
stockholder must be received no later than the close of business on the tenth
day following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs.
Any stockholder interested in making a proposal is referred to Article II,
Section 4 of the Company's Restated By-Laws.
OTHER MATTERS
Management does not know of any matters other than the foregoing that will
be presented for consideration at the Annual Meeting. However, if other matters
properly come before the Annual Meeting, the proxy holders should vote upon them
in accordance with their best judgment.
SOLICITATION OF PROXIES
The entire cost of soliciting management proxies will be borne by the
Company. In addition to the use of the mails, proxies may be solicited
personally by directors, officers or regular employees of the Company, who will
not be compensated for their services. Management of the Company intends to
request banks, brokerage houses, custodians, nominees and fiduciaries to forward
soliciting material to the beneficial owners of the Common Stock held of record
by such persons and entities.
The Company will provide to any stockholder of record at the close of
business on May 15, 2001, without charge upon written request to Investor
Relations at One Whitehall Street, New York, New York 10004-2109, a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended March 3, 2001.
By order of the Board of Directors,
Arthur T. Shorin
Chairman, President and
Chief Executive Officer
19
APPENDIX "A"
THE TOPPS COMPANY, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") of the Topps Company, Inc. (the "Company") assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting and reporting practices of the Company and other such duties as
directed by the Board.
ESTABLISHMENT
o The Committee shall be elected by a majority of the Board, who may change
the composition of the Committee at its discretion.
o The Committee shall consist of at least three directors of the Company who
are generally knowledgeable in financial and auditing matters, including at
least one member with accounting or related financial management expertise.
In addition, one or more directors may be designated as alternate members
of the Committee to serve in the place of any absent or disqualified
member.
o The Committee shall be composed entirely of non-employee directors each of
whom are free of any relationship which, in the opinion of the Board, would
interfere with the exercise of independent judgment, and shall meet the
director independence requirements for serving on audit committees as set
forth in the corporate governance standards of the NASDAQ Marketplace
Rules.
o The Board shall appoint one member of the Committee as chairperson. He or
she shall be responsible for leadership of the Committee, including
approving the agenda, presiding over meetings, making Committee assignments
and reporting to the Board. The chairperson will also maintain regular
liaison with the Chief Executive Officer, Chief Financial Officer and the
lead independent audit partner.
o The Committee is empowered to investigate any matter brought to its
attention and shall have sufficient resources, including standing
authority, to retain special counsel or seek assistance from advisers and
experts from outside the Company.
PROCEDURES
o The Committee shall meet at least two times each year.
o A quorum must be present at each Audit Committee meeting, with a quorum
consisting of at least 50% of the Committee's members.
o One of the Audit Committee meetings shall be held after the conclusion of
the annual audit. Both the Company's Chief Financial Officer and the
Company's independent public auditor shall be present at this meeting.
RESPONSIBILITES
o The Committee shall inquire as to the independence of the independent
auditors and shall obtain from the independent auditors, on a periodic
basis, a formal written statement delineating all relationships between the
independent auditors and the Company, discuss with the independent auditors
any relationships or services that may impact the independent auditors'
objectivity and independence and take, or recommend that the Board take,
any actions necessary to oversee the independent auditors' independence.
20
o The Committee and the Board have the ultimate authority and responsibility
to select, evaluate and, where appropriate, replace the independent
auditors (or to nominate the independent auditors to be proposed for
shareholder approval in the Company's proxy statement).
o The Committee should have a clear understanding with the independent
auditors that the independent auditors must maintain an open and
transparent relationship with the Committee and that the independent
auditors are ultimately accountable to the Board and the Committee.
o The Committee shall oversee the independent auditor relationship by
discussing with the auditor the nature and rigor of the audit process,
reviewing audit reports (including the Report to Management) and providing
the auditor full access to the Committee (and the Board, as appropriate) to
report on any and all appropriate matters.
o The Committee is expected to maintain free and open communication between
the Board, the independent auditors and the Company's management. The
Committee shall meet with the independent auditors, without management
present, at least annually, to discuss the results of the annual audit, the
auditor's evaluation of internal controls and the overall quality of
financial reporting.
o The Committee shall review the audited financial statements and discuss
them with management and the independent auditor. These discussions shall
include consideration of the quality of the Company's accounting principles
as applied in its financial reporting, including review of estimates,
reserves and accruals, judgmental areas, any audit adjustments whether or
not recorded and such other inquiries as may be appropriate. Based on the
review, the Committee shall make its recommendation to the Board as to the
inclusion of the Company's audited financial statements in the Company's
annual report on Form 10-K.
o The Committee shall review with management and the independent auditor the
quarterly financial information prior to the Company's filing of Form 10-Q.
This review may be performed by the Committee or its chairperson.
o The Committee shall discuss with management and the independent auditor the
quality and adequacy of the Company's internal controls. As appropriate,
the Committee shall also discuss with management the status of pending
litigation, tax matters and other areas of oversight to the legal and
compliance area.
o The Committee shall report its activities to the Board on a regular basis,
emphasizing that the work of the Committee does not relieve other directors
of their responsibility with respect to the Company's accounting and
financial reporting processes.
o The Committee shall issue annually a report to be included in the proxy
statement (including appropriate oversight conclusions) for submission to
shareholders.
OTHER
o This charter shall be reviewed, updated and approved annually by the Board.
It shall be filed as an appendix to the Company's proxy statements at least
once every three years.
21
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. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create your electronic voting ins-
truction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instruction 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. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
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 the The Topps Company, Inc., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK IN AS FOLLOWS: TOPPS1 KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE TOPPS COMPANY, INC.
(Please read both sides before signing)
The Board of Directors recommends a vote FOR all
nominees for director and FOR items 2 and 3.
The undersigned authorizes and instructs
said proxies to vote as follows: For Withhold For All To withhold authority to vote, mark
All All Except "For All Except" and write the
nominee's number on the line below
ELECTION OF DIRECTORS
1. 01) Allan A. Feder, 02) David M. Mauer
and 03) Jack H. Nusbaum ___ ___ ___ __________________________________
Vote On Proposals For Against Abstain
2. To ratify and approve the 2001 Stock ___ ___ ___
Incentive Plan. /__/ /__/ /__/
3. To ratify the appointment of Deloitte
& Touche LLP as independent auditors for
The Topps Company, Inc. for the fiscal ___ ___ ___
year ending March 2, 2002 /__/ /__/ /__/
Please sign exactly as your name appears above.
_______________________________________ ________________________________
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Signature(PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
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PROXY
THE TOPPS COMPANY, INC.
The undersigned hereby appoints ARTHUR T. SHORIN AND SCOTT A. SILVERSTEIN, each of them, the attorneys
and proxies of the undersigned, with full power of substitution, to vote on beheft of the undersigned all
the shares of stock of THE TOPPS COMPANY, INC., which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at J.P. Morgan Chase & Co., One Chase Manhattan Plaza,
Street Level, New York, New York on Thursday, June 28, 2001 at 10:30 a.m.(local time)and at any adjournments
thereof, hereby revoking any proxy heretofore given with respect to such stock.
This Proxy when properly executed will be voted in the manner directed herein and in the discretion
of the aforementioned proxies on all other matters which may properly come before the meeting. If no
instructions to the contrary is indicated, this Proxy will be voted FOR all nominees for director and FOR
Items 2 and 3.
Please return this proxy in the accompanying business reply envelope even if you expect to attend in
person.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
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