UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
THE HAIN CELESTIAL GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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THE HAIN CELESTIAL GROUP, INC.
58 South Service Road
Melville, New York 11747
November 10, 2003
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The Hain Celestial Group, Inc., scheduled to be held on Thursday, December 4,
2003 at the conference center, located in the lower lobby, at 58 South Service
Road, Melville, New York 11747, commencing at 11:00 A.M., Eastern Standard Time.
Your board of directors and management look forward to greeting personally those
stockholders able to attend.
Details of business to be conducted at the Annual Meeting of Stockholders
are provided in the enclosed Notice of Annual Meeting of Stockholders and Proxy
Statement. Also enclosed for your information is a copy of our Annual Report for
2003.
It is important that your shares are represented at the meeting whether or
not you plan to attend. Accordingly, we request your cooperation by promptly
signing, dating and mailing the enclosed proxy in the envelope provided for your
convenience.
Sincerely,
Irwin D. Simon
President, Chief Executive
Officer and Chairman of the Board
THE HAIN CELESTIAL GROUP, INC.
58 South Service Road
Melville, New York 11747
__________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
__________________________
To the Stockholders of THE HAIN CELESTIAL GROUP, INC.:
The Annual Meeting of Stockholders of The Hain Celestial Group, Inc. will
be held on Thursday, December 4, 2003 at 11:00 A.M., Eastern Standard Time, at
the conference center, located in the lower lobby, at 58 South Service Road,
Melville, New York 11747, for the following purposes:
1. To elect a board of directors to serve until the next Annual Meeting
of Stockholders and until their successors are duly elected and
qualified;
2. To amend our 2002 Long Term Incentive and Stock Award Plan to increase
the number of shares issuable over the term of the plan by 1,500,000
shares to 3,100,000 shares in the aggregate;
3. To amend our 2000 Directors Stock Option Plan to increase the number
of shares issuable over the term of the plan by 200,000 shares to
950,000 shares in the aggregate;
4. To ratify the appointment of Ernst & Young LLP as our independent
auditors for fiscal 2004; and
5. To transact such other business as may properly come before the
meeting.
Your vote is important. If you do not expect to be present at the meeting
and wish your stock to be voted, please sign and date the enclosed Proxy and
mail it promptly in the enclosed reply envelope addressed to Continental Stock
Transfer & Trust Company, 17 Battery Place, New York, New York 10004.
SOLICITATION AND REVOCATION OF PROXIES
Proxies are being solicited on behalf of our board of directors, and we
will bear the cost of such solicitation. We expect that the solicitation of
proxies will be primarily by mail. Proxies may also be solicited by our officers
and employees at no additional cost to us, in person or by telephone, telegram
or other means of communication. We may reimburse custodians, nominees and
fiduciaries holding our common stock for their reasonable expenses in sending
proxy material to principals and obtaining their proxy. Any stockholder giving a
proxy may revoke it at any time before it is exercised by written notice to our
secretary or by voting in person at the meeting.
It is expected that this Notice of Annual Meeting of Stockholders and Proxy
Statement will first be mailed to stockholders on or about November 10, 2003.
STOCKHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on October 31, 2003
will be entitled to vote at the Annual Meeting of Stockholders. On that date,
there were 34,238,521 shares of our common stock outstanding and entitled to be
voted at the Annual Meeting of Stockholders. Each such share is entitled to one
vote. The holders of a majority of the shares entitled to vote on the record
date, represented in person or by proxy, shall constitute a quorum for the
purpose of transacting business at the Annual Meeting of Stockholders. Proxies
marked as abstaining (including proxies containing broker non-votes) on any
matter to be acted upon by stockholders will be treated as present at the
meeting for purposes of determining a quorum.
Directors will be elected by a plurality of the votes cast. Abstentions,
broker non-votes and instructions on a proxy to withhold authority to vote for
one or more of such nominees will result in the respective nominees receiving
fewer votes.
Abstentions may be specified as to all proposals to be brought before the
Annual Meeting of Stockholders, other than the election of directors. Approval
of each of the proposals to be brought before the Annual Meeting of Stockholders
(not including the election of directors) will require the affirmative vote of
at least a majority in voting interest of the stockholders represented in person
or by proxy at the Annual Meeting of Stockholders and entitled to vote thereon.
As to the proposals, if a stockholder abstains from voting on a proposal it will
have the effect of a negative vote on that proposal, but if a broker indicates
that it does not have authority to vote certain shares (i.e., a broker
non-vote), those votes will not be considered as shares present and entitled to
vote at the Annual Meeting of Stockholders with respect to that proposal and,
therefore, will have no effect on the outcome of the vote.
Proxies that are executed, but do not contain any specific instructions,
will be voted FOR the election of all the nominees for directors specified
herein, FOR the approval of the amendment of our 2002 Long Term Incentive and
Stock Award Plan, FOR the approval of the amendment of our 2000 Directors Stock
Option Plan and FOR the ratification of the appointment of Ernst & Young LLP as
our independent auditors. The persons appointed as proxies will vote in their
discretion on any other matter that may properly come before the
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Annual Meeting of Stockholders or any postponement, adjournment or adjournments
thereof, including any vote to postpone or adjourn the Annual Meeting of
Stockholders.
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BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of September 30, 2003 for (1) each
of our directors and nominees for director and each of our executive officers,
(2) each person who is known by us to beneficially own more than five percent of
the outstanding shares of our common stock and (3) all of our directors and
executive officers as a group. Beneficial ownership has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934 and does
not necessarily bear on the economic incidents of ownership or the right to
transfer the shares described below.
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Number of Percentage of
Shares Common Stock
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Irwin D. Simon (1)............................................ 3,066,215 8.3%
Beth L. Bronner (2) (3)....................................... 168,667 *
Jack Futterman (2) (4)........................................ 121,500 *
Daniel R. Glickman (2) (5).................................... 40,000 *
James S. Gold (2) (6)......................................... 109,000 *
Marina Hahn (2) (7)........................................... 109,908 *
Neil Harrison (2) (8) (14).................................... 15,000 *
Andrew R. Heyer (2) (9)....................................... 370,111 1.1%
Joseph Jimenez (2) (10) (14).................................. 95,500 *
Roger Meltzer (2)(11)......................................... 90,000 *
Larry S. Zilavy (2) (12)...................................... 40,000 *
Ira J. Lamel (13)............................................. 301,000 *
HJH One, L.L.C. (14).......................................... 6,090,351 17.8%
H.J. Heinz Company (14)....................................... 6,090,351 17.8%
Wellington Management Company, LLP (15)....................... 2,225,500 6.5%
All directors and executive officers as a group (twelve
persons)(16)............................................... 4,526,901 11.7%
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* Indicates less than 1%.
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(1) Includes 535,000 shares of common stock issuable upon the exercise of
options granted under our 1993 Executive Stock Option Plan and 2,335,000
shares of common stock issuable upon the exercise of options granted under
our 1994 Long Term Incentive and Stock Award Plan or our 2002 Long Term
Incentive and Stock Award Plan (together, the "Employee Plans"). Mr. Simon
is our President, Chief Executive Officer and Chairman of the Board of
Directors.
(2) Director of Hain.
(3) Includes 128,000 shares of common stock issuable upon the exercise of
options granted under our 1996 Directors Stock Option Plan or our 2000
Directors Stock Option Plan (together, the "Directors Plans").
(4) Includes 120,500 shares of common stock issuable upon the exercise of
options granted under our Directors Plans.
(5) Consists of 40,000 shares of common stock issuable upon exercise of options
granted under our Directors Plans.
(6) Includes 103,000 shares of common stock issuable upon the exercise of
options granted under our Directors Plans.
(7) Includes 85,000 shares of common stock issuable upon exercise of options
granted under our Directors Plans and 22,770 shares of common stock
issuable upon the exercise of options assumed upon consummation of our
merger (the "Merger") with Celestial Seasonings, Inc. ("Celestial") in May
2000.
(8) Consists of 15,000 shares of common stock issuable upon the exercise of
options granted under our Directors Plans.
(9) Includes 118,000 shares of common stock issuable upon the exercise of
options granted under our Directors Plans and 168,499 shares issuable upon
the exercise of warrants.
(10) Consists of 95,500 shares of common stock issuable upon the exercise of
options granted under our Directors Plans.
(11) Consists of 90,000 shares of common stock issuable upon exercise of options
granted under our Directors Plans.
(12) Consists of 40,000 shares of common stock issuable upon exercise of options
granted under our Directors Plans.
(13) Includes 300,000 shares of common stock issuable upon exercise of options
granted under the Employee Plans.
(14) HJH One, L.L.C., an affiliate of H.J. Heinz Company, holds 6,090,351 shares
of common stock. Mr. Jimenez is President and Chief Executive Officer of
Heinz Europe, a division of H.J. Heinz Company and Mr. Harrison is
President and Chief Executive Officer of Heinz North America, a division of
H.J. Heinz Company. Share amounts presented for Mr. Jimenez and Mr.
Harrison do not include the shares of common stock held by HJH One, L.L.C..
(15) According to a Schedule 13G dated February 14, 2003, Wellington Management
Company, LLP, in its capacity of investment advisor, may be deemed to
beneficially own 2,225,500 shares held of record by clients of Wellington.
(16) Includes 535,000 shares issuable upon the exercise of options granted under
the 1993 Plan, 2,635,000 shares issuable upon the exercise of options
granted under the Employee Plans, 22,770 shares issuable upon the exercise
of options granted under Celestial plans assumed in connection with the
Merger, 835,000 shares issuable upon the exercise of options granted under
our Directors Plans and 168,499 shares issuable upon the exercise of
warrants. See notes 1 through 13.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our board of directors is currently comprised of eleven members, all of
whom are standing for reelection at the Annual Meeting of Stockholders.
Each director will hold office until the next Annual Meeting of
Stockholders and until his or her successor is elected and qualified. The
persons named as proxies in the accompanying proxy, who have been designated by
the board of directors, intend to vote, unless otherwise instructed in such
proxy, FOR the election of all of the nominees listed below.
The following information describes the backgrounds and business experience
of the nominees for director:
Irwin D. Simon, President, Chief Executive Officer and Chairman of the Board,
Age 45
Irwin D. Simon has been our President and Chief Executive Officer and a
director since our inception and is our founder. Mr. Simon was appointed
Chairman of the Board of Directors in April 2000. From December 1990 through
December 1992, Mr. Simon was employed in various marketing capacities with
Slim-Fast Foods Company ("Slim Fast"), a national marketer of meal replacement
and weight loss food supplements with annual revenues in excess of $500 million.
His duties initially involved sales and marketing for the frozen and dairy
divisions of Slim Fast, which included establishing and implementing marketing
strategies and establishing a distribution system throughout the United States.
In March 1992, Mr. Simon became Vice President of Marketing for Slim Fast. From
1986 through 1990, Mr. Simon was employed by The Haagen-Dazs Company, a division
of Grand Metropolitan, plc. Haagen-Dazs is a manufacturer and distributor of
premium ice cream and related products. Mr. Simon held a number of sales and
marketing positions, including Eastern Regional Director of Haagen-Dazs Shops,
the entity managing a majority of the franchisee system and all company-owned
retail shops. Mr. Simon serves as a director of Technology Flavors & Fragrances,
Inc., Jarden Corporation and other privately held companies and is the past
chapter chairman of YPO--Gotham Chapter, New York City.
Beth L. Bronner(1), Age 52
Beth L. Bronner has been a director since November 1993 and is the
chairperson of our compensation committee. Ms. Bronner is currently Senior Vice
President and Chief Marketing Officer for Jim Beam Brands Worldwide, since
September 2003. From May 2001 to September 2003, Ms. Bronner served as a private
consultant and president of a private realty company. In addition, she served as
President and Chief Operating Officer of Advo Inc. from August 2000 until May
2001. Prior to that, Ms. Bronner was at Sunbeam Inc. from November 1998 as
President--Health Division. Prior to that, she was with Citibank, N.A. from
September 1996 as Senior Vice President and Director of Marketing for the United
States and Europe. From July 1994 to August 1996, Ms. Bronner was Vice
President--Emerging Markets of American Telephone & Telegraph Company Consumer
Communications Services business. Ms. Bronner was President of the Professional
Products Division of Revlon, Inc. from May 1993 until June
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1994. From February 1992 to May 1993 she was Executive Vice President of the
Beauty Care and Professional Products Division of Revlon, Inc. Ms. Bronner also
serves as a director of Fortis, Inc.
Jack Futterman(2)(3), Age 70
Jack Futterman has been a director since December 1996, and currently
serves as chairperson of our corporate governance and nominating committee. Mr.
Futterman served as Chairman and Chief Executive Officer of Party City Stores,
Inc. from June 1999 through December 1999. Mr. Futterman retired as Chairman and
Chief Executive Officer of the Pathmark Supermarket chain in March 1996. He
joined Pathmark in 1973 as Vice President of its drugstore and general
merchandise divisions and occupied a number of positions before becoming
Chairman and Chief Executive Officer. Mr. Futterman is a registered pharmacist
and former Chairman of the National Association of Chain Drugstores.
Daniel R. Glickman(3), Age 58
Daniel R. Glickman, who served as U.S. Secretary of Agriculture from March
1995 until January 2001, has been a director since July 2002. Secretary Glickman
currently serves as the Director of the Institute of Politics at the John F.
Kennedy School of Government at Harvard University. From January 2001 to August
2002, Secretary Glickman was a partner in the public law and policy practice
group of Akin, Gump, Strauss, Hauer & Feld, L.L.P. and continues to be a senior
advisor to the law firm. Prior to his appointment as secretary of Agriculture,
Secretary Glickman served for 18 years in the U.S. House of Representatives,
where he served as a member of the House Agriculture Committee. Secretary
Glickman serves as a director of the Chicago Mercantile Exchange; Communities in
Schools; America's Second Harvest; Food Research and Action Center; RFK Memorial
Foundation; the Farm Foundation and a privately-held company.
James S. Gold(1), Age 52
James S. Gold has been a director since March 1998. Mr. Gold is a Managing
Director in the Banking Group of Lazard Freres & Co LLC. Since joining Lazard
Freres & Co LLC in 1977, Mr. Gold has been involved in a broad range of
investment banking activities, particularly relating to the consumer products
and food industries. Mr. Gold is also a director of Smart & Final Inc.
Marina Hahn(2), Age 46
Marina Hahn has been a director since May 2000. Prior to that, she had
served as a director of Celestial since 1994. Currently, Ms. Hahn is a marketing
consultant. From 1998 to 2001, Ms. Hahn served as Executive Vice President of J.
Walter Thompson Company, an advertising agency. From 1996 to 1998, Ms. Hahn was
Head of the Corporate Advisory Group for the William Morris Agency, Inc. From
1993 to 1995, Ms. Hahn was Vice President, Advertising for Sony Electronics,
Inc., a consumer electronics manufacturer. From 1989 until joining Sony, she was
the Director of Advertising for the Pepsi-Cola Company, a beverage
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company. From 1979 to 1989, she was employed by DDB Needham Worldwide, Inc., an
advertising agency.
Neil Harrison, Age 60
Neil Harrison has been a director since September 2003. Mr. Harrison has
served as Executive Vice President, H.J. Heinz Company and President and CEO,
Heinz North America since July 2002. Mr. Harrison was President and CEO of Heinz
Frozen Foods from October 1998 to July 2002. Mr. Harrison serves on our board of
directors as our joint designee with HJH One, L.L.C.
Andrew R. Heyer(1), Age 46
Andrew R. Heyer has been a director since November 1993. Mr. Heyer is a
founder of Trimaran Capital Partners, a private asset management firm with over
$3 billion under management. Trimaran Capital Partners manages its second
private equity fund, Trimaran Fund II, a $1.043 billion fund that concentrates
on investments in the equity of private companies in the United States and
Western Europe. In addition to its private equity funds, Trimaran Capital
Partners also manages, through Trimaran Advisors, a portfolio of structured
investment funds. Mr. Heyer is also a vice-chairman of CIBC World Markets Corp.
and co-head of CIBC Argosy Merchant Banking Funds. Prior to joining CIBC in
1995, Mr. Heyer was a founder and managing director of The Argosy Group L.P. Mr.
Heyer serves as a director of Eureka Broadband Corporation, Niagara Corporation,
Fairfield Manufacturing Company, Inc., Lancer Industries, Inc., Millennium
Digital Media Holdings, L.L.C., Village Voice Media, LLC. and Reddy Ice
Holdings, Inc.
Joseph Jimenez(3), Age 43
Joseph Jimenez has been a director since September 1999. Mr. Jimenez has
served as Executive Vice President, H.J. Heinz Company and President and CEO,
Heinz Europe since July 2002. Mr. Jimenez was President and Chief Executive
Officer of Heinz North America from November 1998 through June 2002. Prior to
that, Mr. Jimenez served as president of Wesson/Peter Pan Food Co. and Orville
Redenbacher/Swiss Miss Food Co. from March 1997 to November 1998. Mr. Jimenez
serves as a director of AstraZeneca PLC. Mr. Jimenez serves on our board of
directors as a designee of HJH One, L.L.C..
Roger Meltzer(1)(3), Age 52
Roger Meltzer has been a director since December 2000. Mr. Meltzer is a
partner and a member of the executive committee of the law firm Cahill Gordon &
Reindel LLP, New York, New York, where he practices corporate law. Cahill Gordon
& Reindel LLP has represented us in various matters since 1994.
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Larry S. Zilavy(2), Age 52
Larry S. Zilavy has been a director since November 2002, and is the
chairperson of our audit committee. Mr. Zilavy has served as Executive Vice
President, Corporate Finance and Strategic Planning for Barnes & Noble, Inc.
since May 2003. Previously, Mr. Zilavy was Chief Financial Officer of Barnes &
Noble, Inc. from June 2002 through April 2003. Prior to that, he was executive
vice president of IBJ Whitehall Bank and Trust Company, where he worked since
1992. Mr. Zilavy is a trustee of St. Francis College in New York City.
(1) Compensation committee member.
(2) Audit committee member.
(3) Corporate governance and nominating committee member.
Directors' Compensation, Committees and Meeting Attendance
During the last fiscal year, the board of directors held five meetings.
During the last fiscal year, we did not pay any direct compensation to
directors, other than reimbursement of out-of-pocket expenses incurred in
connection with attendance at meetings of the board of directors. Under our
director stock option plans, during fiscal 2003 we granted each of our
independent directors who stood for election at our 2002 annual meeting of
stockholders options to purchase 25,000 shares of our common stock for his or
her services as director at exercise prices equal to the fair market value of
the common stock at the time of grant.
The board of directors has three standing committees: the audit committee,
the compensation committee and the corporate governance and nominating
committee.
Audit Committee. Our audit committee is comprised of three independent
directors, currently Mr. Zilavy, Mr. Futterman and Ms. Hahn, with Mr. Zilavy
acting as chairperson. The audit committee's principal duties include
recommending to our board of directors the selection, retention and termination
of our independent auditors, evaluating the independence of the auditors,
including whether the auditors provide any consulting services to us, reviewing
with the independent auditors their report as well as making any recommendations
with respect to our financial statements, accounting policies, procedures and
internal controls. In addition, the audit committee is charged with determining
whether there are any conflicts of interest in financial or business matters
between us and any of our officers or employees. During fiscal 2003, our audit
committee held five meetings. See "Report of the Audit Committee."
Compensation Committee. Our compensation committee is currently comprised
of Ms. Bronner, Mr. Gold, Mr. Heyer and Mr. Meltzer, with Ms. Bronner acting as
chairperson. The compensation committee administers our employee stock option
plans, determines the compensation policies for our officers and recommends to
the entire board of directors the salaries of our executive officers. During
fiscal 2003, the compensation committee held five meetings. See "Report of the
Compensation Committee on Executive Compensation."
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Corporate Governance and Nominating Committee. Our corporate governance and
nominating committee is currently comprised of Mr. Futterman, Mr. Glickman, Mr.
Jimenez and Mr. Meltzer, with Mr. Futterman acting as chairperson. The corporate
governance and nominating committee's purpose is to identify individuals
qualified to serve on the board of directors, recommend to the board of
directors persons to be nominated for election as directors at the annual
meeting of the stockholders or to be appointed by the board of directors to fill
an existing or newly created vacancy on the board of directors, identify and
recommend members of the board of directors to serve on each board committee and
to serve as chairman thereof, and develop and recommend to the board of
directors corporate governance guidelines. The corporate governance and
nominating committee will commence meetings in fiscal 2004.
During fiscal 2003, each of our incumbent directors attended at least 75%
of the aggregate of the meetings of the board of directors and committees on
which they served.
Executive Officers
The following information describes the backgrounds and business experience
of our current executive officers who are not also directors.
Ira J. Lamel, Executive Vice President, Chief Financial Officer, Treasurer and
Corporate Secretary, Age 56
Mr. Lamel was appointed Executive Vice President and Chief Financial
Officer and Treasurer on October 1, 2001, and has served as Corporate Secretary
since January 2003. Prior to his appointment, Mr. Lamel, a certified public
accountant, was a partner at Ernst & Young LLP where he served in various
capacities from June 1973 to September 2001. Ernst & Young LLP serves as our
independent auditors, and Mr. Lamel directed all services to us, including the
audits of our financial statements, during the fiscal 1994 through fiscal 2000
periods. Mr. Lamel serves as a director of Harvey Electronics, Inc.
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PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO
THE 2002 LONG TERM INCENTIVE AND STOCK AWARD PLAN
Our board of directors has adopted, subject to stockholder approval,
amendments to our 2002 Long Term Incentive and Stock Award Plan (the "2002
Plan") to increase the number of shares of our common stock issuable under the
2002 Plan by 1,500,000 shares to 3,100,000 shares. The essential features of the
2002 Plan are summarized below. This summary does not purport to be a complete
description of the 2002 Plan. Copies of the actual plan document may be obtained
by contacting our Secretary.
General
The 2002 Plan is intended to provide incentives to attract, retain and
motivate employees, consultants and directors in order to achieve our long-term
growth and profitability objectives. The 2002 Plan provides for the grant to
eligible employees and directors of stock options, share appreciation rights
("SARs"), restricted shares, restricted share units, performance shares,
performance units, dividend equivalents and other share-based awards (the
"Awards").
The 2002 Plan was approved by our stockholders at our Annual Meeting of
Stockholders held November 12, 2002. As adopted, an aggregate of 1,600,000
shares of common stock has been reserved for issuance under the 2002 Plan (of
which during a calendar year: (i) the maximum number of shares with respect to
which options and SARs may be granted to an eligible participant under the 2002
Plan will be 1,000,000 shares, and (ii) the performance shares, performance
units, restricted shares and restricted units intended to qualify as
performance-based compensation shall be not more than the equivalent of 800,000
shares), subject to anti-dilution adjustments in the event of certain changes in
our capital structure, as described below. We are currently seeking approval
from our stockholders to increase the number of shares of common stock issuable
under the 2002 Plan by 1,500,000 shares to 3,100,000 shares. Shares issued
pursuant to the 2002 Plan will be either authorized but unissued shares or
treasury shares.
Unless earlier terminated, the Plan will expire on November 12, 2012, and
no further awards may be granted thereunder after that date.
Eligibility and Administration
Officers and other employees of Hain and its subsidiaries and affiliates,
consultants and directors of Hain who are responsible for or contribute to the
management and profitability of our business will be eligible to be granted
Awards under the 2002 Plan. The 2002 Plan will be administered by the
compensation committee or such other committee (or the entire board of
directors) as may be designated by the board of directors (the "Committee").
Unless otherwise determined by the board of directors, the Committee will
consist of two or more non-employee directors with the meaning of Rule 16b-3 of
the Securities Exchange Act of 1934 (the "Exchange Act"), each of whom is an
outside director within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Committee will determine which
eligible employees and directors receive Awards, the types of Awards to be
received and
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the terms and conditions thereof. The Committee will have authority to waive
conditions relating to an Award or accelerate vesting of Awards.
The Committee will be permitted to delegate to officers or other directors
of Hain the authority to perform administrative functions for the 2002 Plan and,
with respect to Awards granted to persons not subject to Section 16 of the
Exchange Act, to perform such other functions as the Committee may determine to
the extent permitted under Rule 16b-3 of the Exchange Act and applicable law.
If an Award is intended to be qualified performance-based compensation
under Section 162(m) of the Code, the Committee may not increase the amount of
compensation payable if it would disqualify the Award under Section 162(m) of
the Code.
Awards
Incentive stock options ("ISOs") intended to qualify for special tax
treatment in accordance with the Code and nonqualified stock options not
intended to qualify for special tax treatment under the Code may be granted for
such number of shares of common stock as the Committee determines. The Committee
will be authorized to set the terms relating to an option, including exercise
price and the time and method of exercise. The terms of ISOs will comply with
the provisions of Section 422 of the Code. ISOs may only be granted to
employees. Awards may be granted alone, in tandem with or in exchange for any
other Award.
A SAR will entitle the holder thereof to receive with respect to each share
subject thereto, an amount equal to the excess of the fair market value of one
share of common stock on the date of exercise (or, if the Committee so
determines, at any time during a specified period before or after the date of
exercise) over the exercise price of the SAR set by the Committee as of the date
of grant. Payment with respect to SARs may be made in cash or shares of common
stock as determined by the Committee.
Awards of restricted shares will be subject to such restrictions on
transferability and other restrictions, if any, as the Committee may impose.
Such restrictions will lapse under circumstances as the Committee may determine,
including upon the achievement of performance criteria referred to below. Except
as otherwise determined by the Committee, eligible employees granted restricted
shares will have all of the rights of a stockholder, including the right to vote
restricted shares and receive dividends thereon, and unvested restricted shares
will be forfeited upon termination of employment during the applicable
restriction period.
A restricted share unit will entitle the holder thereof to receive shares
of common stock or cash at the end of a specified deferral period. Restricted
share units will also be subject to such restrictions as the Committee may
impose. Such restrictions will lapse under circumstances as the Committee may
determine, including upon the achievement of performance criteria referred to
below. Except as otherwise determined by the Committee, restricted share units
subject to deferral or restriction will be forfeited upon termination of
employment during any applicable deferral or restriction period.
-12-
Performance shares and performance units will provide for future issuance
of shares or payment of cash, respectively, to the recipient upon the attainment
of corporate performance goals established by the Committee over specified
performance periods. Except as otherwise determined by the Committee,
performance shares and performance units will be forfeited upon termination of
employment during any applicable performance period. Prior to payment of
performance shares or performance units, the Committee will certify that the
performance objectives were satisfied. Performance objectives may vary from
person to person and will be based upon one or more of the following performance
criteria as the Committee may deem appropriate: appreciation in value of the
shares; total stockholder return; earnings per share; operating income; net
income; pretax earnings; pretax earnings before interest, depreciation and
amortization; pro forma net income; return on equity; return on designated
assets; return on capital; economic value added; earnings; revenues; expenses;
operating profit margin; operating cash flow; free cash flow; cash flow return
on investment; operating margin; net profit margin. The Committee may revise
performance objectives if significant events occur during the performance period
which the Committee expects to have a substantial effect on such objectives.
Dividend equivalents granted under the 2002 Plan will entitle the holder
thereof to receive cash, shares of common stock or other property equal in value
to dividends paid with respect to a specified number of shares of common stock.
Dividend equivalents may be awarded on a free-standing basis or in connection
with another Award, and may be paid currently or on a deferred basis. The
Committee is also authorized, subject to limitations under applicable law, to
grant such other Awards that may be denominated in, valued in, or otherwise
based on, shares of common stock, as deemed by the Committee to be consistent
with the purposes of the 2002 Plan.
Nontransferability
Unless otherwise set forth by the Committee in an award agreement, Awards
(except for vested shares) will generally not be transferable by the participant
other than by will or the laws of descent and distribution and will be
exercisable during the lifetime of the participant only by such participant or
his or her guardian or legal representative.
Capital Structure Changes
If the Committee determines that any dividend, recapitalization, share
split, reorganization, merger, consolidation, spin-off, repurchase, or other
similar corporate transaction or event affects the common stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of eligible participants under the 2002 Plan, then the Committee is
authorized to make such equitable changes or adjustments as it deems
appropriate, including adjustments to (i) the number and kind of shares which
may thereafter be issued under the 2002 Plan, (ii) the number and kind of
shares, other securities or other consideration issued or issuable in respect of
outstanding Awards and (iii) the exercise price, grant price or purchase price
relating to any Award.
-13-
Amendment and Termination
The 2002 Plan may be amended, suspended or terminated by our board of
directors at any time, in whole or in part. However, any amendment for which
stockholder approval is required by Section 422 of the Code will not be
effective until such approval has been attained. In addition, no amendment,
suspension, or termination of the 2002 Plan may materially and adversely affect
the rights of a participant under any Award theretofore granted to him or her
without the consent of the affected participant. The Committee may waive any
conditions or rights, amend any terms, or amend, suspend or terminate, any Award
granted, provided that, without participant consent, such amendment, suspension
or termination may not materially and adversely affect the rights of such
participant under any Award previously granted to him or her.
Federal Income Tax Consequences
The following is a summary of the federal income tax consequences of the
2002 Plan, based upon current provisions of the Code, the Treasury regulations
promulgated thereunder and administrative and judicial interpretation thereof,
and does not address the consequences under any state, local or foreign tax
laws.
Stock Options
In general, the grant of an option will not be a taxable event to the
recipient and it will not result in a deduction to us. The tax consequences
associated with the exercise of an option and the subsequent disposition of
shares of common stock acquired on the exercise of such option depend on whether
the option is a nonqualified stock option or an ISO.
Upon the exercise of a nonqualified stock option, the participant will
recognize ordinary taxable income equal to the excess of the fair market value
of the shares of common stock received upon exercise over the exercise price. We
will generally be able to claim a deduction in an equivalent amount. Any gain or
loss upon a subsequent sale or exchange of the shares of common stock will be
capital gain or loss, long-term or short-term, depending on the holding period
for the shares of common stock.
Generally, a participant will not recognize ordinary taxable income at the
time of exercise of an ISO and no deduction will be available to us, provided
the option is exercised while the participant is an employee or within three
months following termination of employment (longer, in the case of disability or
death). If an ISO granted under the 2002 Plan is exercised after these periods,
the exercise will be treated for federal income tax purposes as the exercise of
a nonqualified stock option. Also, an ISO granted under the 2002 Plan will be
treated as a nonqualified stock option to the extent it (together with other
ISOs granted to the participant by us) first becomes exercisable in any calendar
year for shares of common stock having a fair market value, determined as of the
date of grant, in excess of $100,000.
If shares of common stock acquired upon exercise of an ISO are sold or
exchanged more than one year after the date of exercise and more than two years
after the date of grant of the option, any gain or loss will be long-term
capital gain or loss. If shares of common stock
-14-
acquired upon exercise of an ISO are disposed of prior to the expiration of
these one-year or two-year holding periods (a "Disqualifying Disposition"), the
participant will recognize ordinary income at the time of disposition, and we
will generally be able to claim a deduction, in an amount equal to the excess of
the fair market value of the shares of common stock at the date of exercise over
the exercise price. Any additional gain will be treated as capital gain,
long-term or short-term, depending on how long the shares of common stock have
been held. Where shares of common stock are sold or exchanged in a Disqualifying
Disposition (other than certain related party transactions) for an amount less
than their fair market value at the date of exercise, any ordinary income
recognized in connection with the Disqualifying Disposition will be limited to
the amount of gain, if any, recognized in the sale or exchange, and any loss
will be a long-term or short-term capital loss, depending on how long the shares
of common stock have been held.
If an option is exercised through the use of shares of common stock
previously owned by the participant, such exercise generally will not be
considered a taxable disposition of the previously owned shares and, thus, no
gain or loss will be recognized with respect to such previously owned shares
upon such exercise. The amount of any built-in gain on the previously owned
shares generally will not be recognized until the new shares acquired on the
option exercise are disposed of in a sale or other taxable transaction.
Although the exercise of an ISO as described above would not produce
ordinary taxable income to the participant, it would result in an increase in
the participant's alternative minimum taxable income and may result in an
alternative minimum tax liability.
Restricted Stock
A participant who receives shares of restricted stock will generally
recognize ordinary income at the time that they "vest", i.e., either when they
are not subject to a substantial risk of forfeiture or when they are freely
transferable. The amount of ordinary income so recognized will be the fair
market value of the common stock at the time the income is recognized
(determined without regard to any restrictions other than restrictions which by
their terms will never lapse), less the amount, if any, paid for the stock. This
amount is generally deductible for federal income tax purposes by us. Dividends
paid with respect to common stock that is nonvested will be ordinary
compensation income to the participant (and generally deductible by us). Any
gain or loss upon a subsequent sale or exchange of the shares of common stock,
measured by the difference between the sale price and the fair market value on
the date restrictions lapse, will be capital gain or loss, long-term or
short-term, depending on the holding period for the shares of common stock. The
holding period for this purpose will begin on the date following the date
restrictions lapse.
In lieu of the treatment described above, a participant may elect immediate
recognition of income under Section 83(b) of the Code. In such event, the
participant will recognize as income the fair market value of the restricted
stock at the time of grant (determined without regard to any restrictions other
than restrictions which by their terms will never lapse), and we will generally
be entitled to a corresponding deduction. Dividends paid with respect to shares
as to which a proper Section 83(b) election has been made will not be deductible
to us. If a Section 83(b)
-15-
election is made and the restricted stock is subsequently forfeited, the
participant will not be entitled to any offsetting tax deduction.
SARs and Other Awards
With respect to SARs, restricted share units, performance shares,
performance units dividend equivalents and other Awards under the 2002 Plan not
described above, generally, when a participant receives payment with respect to
any such Award granted to him or her under the 2002 Plan, the amount of cash and
the fair market value of any other property received will be ordinary income to
such participant and will be allowed as a deduction for federal income tax
purposes to us.
Payment of Withholding Taxes
We may withhold, or require a participant to remit to us, an amount
sufficient to satisfy any federal, state or local withholding tax requirements
associated with Awards under the 2002 Plan.
Deductibility Limit on Compensation in Excess of $1 Million
Section 162(m) of the Code generally limits the deductible amount of annual
compensation paid (including, unless an exception applies, compensation
otherwise deductible in connection with Awards granted under the 2002 Plan) by a
public company to a "covered employee" (i.e., the chief executive officer and
our four other most highly compensated executive officers) to no more than $1
million. We currently intend to structure stock options granted and other Awards
made under the Plan to comply with an exception to nondeductibility under
Section 162(m) of the Code. See "Executive Compensation--Report of the
Compensation Committee of the Board of Directors."
Recommendation of the Board of Directors
The Board of Directors, which unanimously approved the proposed amendment
to our 2002 Long Term Incentive and Stock Award Plan to increase the number of
shares of our common stock issuable under the 2002 Plan by 1,500,000 shares to
3,100,000 shares, recommends a vote FOR approval of the amendment to our 2002
Long Term Incentive and Stock Award Plan.
-16-
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO
THE 2000 DIRECTORS STOCK OPTION PLAN
Our board of directors has adopted, subject to stockholder approval,
amendments to our 2000 Directors Stock Option Plan (the "2000 Directors Plan")
to increase the number of shares of our common stock issuable under the 2000
Directors Plan by 200,000 shares to 950,000 shares. The essential features of
the 2000 Directors Plan are summarized below. This summary does not purport to
be a complete description of the 2000 Directors Plan. Copies of the actual plan
document may be obtained by contacting our Secretary.
General
The 2000 Directors Plan provides for the grant to non-employee directors of
stock options. The shares of common stock issuable over the term of the 2000
Directors Plan may be authorized and unissued common stock and treasury stock,
including shares acquired in the open market or other transactions.
The 2000 Directors Plan was approved by our stockholders at the Special
Meeting of Stockholders held May 30, 2000. We are currently seeking approval
from our stockholders to increase the number of shares of common stock issuable
under the 2000 Directors Plan by 200,000 shares to 950,000 shares.
Terms of Options
Each option granted under the 2000 Directors Plan shall expire ten (10)
years from its date of grant. The exercise price of each option shall be the
fair market value, as determined under the 2000 Directors Plan, of the shares of
common stock underlying such option on its grant date.
Unless otherwise determined by the board of directors, the options shall
not be transferrable other than by will or the laws of descent and distribution.
The 2000 Directors Plan will continue in effect until all options granted
thereunder have expired or terminated or upon earlier termination as provided
for in the 2000 Directors Plan.
Grants of Options
Initial Grant. Each eligible director will, upon the date such director is
first elected as a member of the board of directors, automatically be granted an
option to purchase 15,000 shares of Hain common stock. Such option will be
immediately exercisable.
Annual Grants. Each eligible director will, upon re-election, automatically
receive an annual grant of an option to purchase 7,500 shares of Hain common
stock on each annual meeting date after his or her election as a director of the
combined company. Such option will be immediately exercisable.
-17-
Discretionary Grants. The board of directors is authorized to, in its
discretion, grant additional options to eligible directors. The date of the
grant, date first exercisable, number of shares of Hain common stock which may
be purchased upon exercise and the exercise price of the options will be
determined by the board of directors, in its discretion.
Administration. The 2000 Directors Plan will be administered by the board
of directors, which has the authority to interpret the plan, make and change
rules relating to the plan, and make all other determinations regarding the
plan, with the determination of the board of directors being final and
conclusive.
Term of 2000 Directors Plan and Amendment and Termination. The 2000
Directors Plan shall continue until all options granted thereunder have expired
or been exercised, unless sooner terminated.
The board of directors may amend or terminate the 2000 Directors Plan
without approval of the stockholders, except where such approval is required by
any law or regulation or any stock exchange or automated quotation system rule.
Generally, an amendment or termination of the 2000 Directors Plan may not
substantially impair any existing option without the optionee's consent.
Adjustments to the 2000 Directors Plan
In the event of any recapitalization, split-up or consolidation of shares,
separation, stock dividend, or other similar change in our capitalization or we
merge or consolidate or sell assets or other similar event, the board of
directors shall make such appropriate adjustments in the exercise prices of
options, in the number and kind of securities or property issued pursuant to
options and in the number of shares with respect to which options may be granted
as the board deems equitable to maintain the proportionate interest of the
directors and the value of the options.
No fractional shares of common stock shall be issued.
Federal Income Tax Consequences
The following is a summary of the federal income tax consequences of the
2002 Directors Plan, based upon current provisions of the Code, the Treasury
regulations promulgated thereunder and administrative and judicial
interpretation thereof, and does not address the consequences under any state,
local or foreign tax laws.
Upon exercise of an option granted under the 2000 Directors Plan, the
optionee will recognize ordinary income in an amount equal to the excess of the
fair market value of the shares received over the exercise price of such shares.
That amount increases the optionee's basis in the common stock acquired pursuant
to the exercise of the option. Upon a subsequent sale of the shares of common
stock, the optionee will incur short-term or long-term capital gain or loss
depending upon his holding period for the shares of common stock and upon the
shares of common stock's subsequent appreciation or depreciation in value. We
will be allowed a federal
-18-
income tax deduction for the amount recognized as ordinary income by the
optionee upon the optionee's exercise of the option.
Recommendation of the Board of Directors
The Board of Directors, which unanimously approved the proposed amendment
to our 2000 Directors Stock Option Plan to increase the number of shares of our
common stock issuable under the 2000 Directors Plan by 200,000 shares to 950,000
shares, recommends a vote FOR approval of the amendment to our 2000 Directors
Stock Option Plan.
-19-
NEW PLAN BENEFITS
Since the adoption of the 2002 Plan and the 2000 Directors Plan by the
Board of Directors and our stockholders, we have granted stock options under
those plans as follows:
2002 Plan 2000 Directors Plan
- ----------------------------------------- ------------------------------------- ----------------------------------
Exercise Exercise
Number of Price Number of Price
Name Options Per Share Options Per Share
- ----------------------------------------- ------------------------------------- ----------------------------------
Irwin D. Simon, President, Chief
Executive Officer and Chairman
of the Board....................... 300,000 $16.24 - -
Ira J. Lamel, Executive Vice
President and Chief Financial
Officer............................ 100,000 $11.84 - -
Executive Group....................... 400,000 $11.84-$16.24 - -
Non-Executive Officer Director
Group.............................. - - 550,000 $12.13-$32.16
Non-Executive Officer Employee
Group.............................. 1,071,200 $11.84-$15.14 - -
-20-
PROPOSAL NO. 4
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
It is the practice of the board of directors to designate the accounting
firm that will serve as our independent auditors. The audit committee has
recommended that Ernst & Young LLP be selected to audit our financial statements
for the fiscal year ending June 30, 2004 and the board of directors has approved
the selection of Ernst & Young LLP. Ernst & Young LLP has audited our financial
statements since 1994.
The audit committee reviews and approves the audit and non-audit services
to be provided by our independent auditors during the year, considers the effect
that performing those services might have on audit independence and approves
management's engagement of our independent auditors to perform those services.
Ernst & Young LLP expects to have a representative at our Annual Meeting of
Stockholders who will have the opportunity to make a statement and will be
available to respond to appropriate questions.
Recommendation of the Board of Directors
The board of directors recommends a vote FOR ratification of Ernst & Young
LLP as our independent auditors for our fiscal year ending June 30, 2004.
-21-
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth the compensation paid by Hain for services
rendered during the three fiscal years ended June 30, 2003 to or for the
accounts of our Chief Executive Officer, our other most highly compensated
executive officers and one individual who served as an executive officer during
a portion of fiscal 2003 but who has not serving as an executive officer at the
end of fiscal 2003, who we refer to as the named executive officers.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
----------------------------------------------- --------------
Awards
--------------
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
- ----------------------------------------- --------- --------- ---------- --------------- -------------- --------------
Irwin D. Simon 2003 $643,077 (1) $16,000 600,000 -
President, Chief Executive Officer and 2002 $520,000 $ 12,000 $12,300 300,000 -
Chairman of the Board 2001 $460,000 $161,000 $ 5,400 600,000 -
Ira J. Lamel (3) 2003 $310,417 (1) $12,700 175,000(4) -
Executive Vice President and Chief 2002 $225,000 $ 98,250(2) $ 7,800 125,000(4) -
Financial Officer
Gary M. Jacobs (5) 2003 $157,500 $100,000(5) $ 5,950 25,000 $112,500(5)
Executive Vice President and Corporate 2002 $270,000 $ 48,000(2) $ 7,800 0 -
Secretary
2001 $261,000 $ 40,000 $ 5,400 50,000 -
________________________________
(1) We have not yet determined an annual bonus for Mr. Simon or Mr. Lamel for
fiscal 2003. Executive bonuses are based on performance targets such as
volume, profit, EBITDA, acquisitions, acquisition integration, costs,
efficiencies, new products and distribution growth as well as other
objective criteria specific to each executive's responsibilities. When
determined, annual bonuses for fiscal 2003 will include a one-time bonus of
$175,000 for Mr. Simon and $50,000 for Mr. Lamel in connection with our
acquisition of Imagine Foods, Inc.
(2) Includes a one-time award of $30,000 to each of Mr. Jacobs and Mr. Lamel to
be used to purchase Hain common stock in the public market.
(3) Mr. Lamel commenced employment on October 1, 2001.
(4) 50% became exercisable on the date of grant and 50% become exercisable six
months from the date of grant.
(5) Mr. Jacobs' employment ended on January 31, 2003. "Annual Compensation -
Bonus" for Mr. Jacobs for fiscal 2003 includes a one-time bonus of $100,000
in connection with our sale of our Health Valley manufacturing facility and
"All Other Compensation" for Mr. Jacobs for fiscal 2003 includes $112,500
in severance payments.
-22-
Employment Agreements
Irwin D. Simon
We have entered into an employment agreement with Mr. Simon. The term of
the agreement is for four years. Mr. Simon's employment agreement provides for a
minimum annual base salary of $810,000 for the fiscal year ended June 30, 2004,
$875,000 for the fiscal year ended June 30, 2005, $950,000 for the fiscal year
ended June 30, 2006 and $1,050,000 for the fiscal year ending June 30, 2007. Mr.
Simon's employment agreement also provides for an annual bonus ranging from 0%
to 150% of his annual compensation upon the achievement of sales and
profitability objectives to be determined by our compensation committee. Under
the agreement, Mr. Simon receives an annual grant during each year of the term
of his agreement of options under our 2002 Plan exercisable for 300,000 shares
of our common stock at an exercise price equal to the market price on the date
of the grant. Mr. Simon also will receive an award of 150,000 shares of
restricted stock under the 2002 Plan, which will vest from the date of award
through the end of his contract. In the event that Mr. Simon is terminated
without cause or he resigns for good reason, which will include resignation upon
a change of control, he will be entitled to, among other things, three years
annual salary and three years average annual bonus plus compensation in lieu of
his granted and ungranted options (based on a black-scholes value). In addition,
if his contract is not renewed at the end of its term, Mr. Simon will be
entitled to, among other things, three years annual salary and three years
average annual bonus. Mr. Simon has also agreed not to compete with us during
his employment term or for a period of three years thereafter and has agreed to
customary provisions regarding confidentiality and proprietary rights.
Change of Control Agreement
We have entered into a change of control agreement with Mr. Lamel that
provides that, in the event that, following a change of control of Hain, the
surviving corporation takes certain actions, including a termination without
cause, diminution in duties or forced relocation, such executive officer will be
entitled to terminate his employment and receive two times annual base salary
and annual bonus, two years benefits continuation and immediate vesting of all
outstanding options.
-23-
Stock Option Grants and Exercises
The tables below set forth information with respect to grants of options
to, and exercise of options by, our Chief Executive Officer and our other named
executive officers during our fiscal year ended June 30, 2003.
Option Grants in Last Fiscal Year
---------------------------------
Individual Grants
------------------------ Potential Realizable
% of Total Value at Assumed
Options Number of Annual Rates of Stock
Granted to Securities Exercise Price Appreciation
Employees Underlying or Base for Option Term
in Fiscal Options Price Expiration
Name Year Granted ($/Sh)(1) Date 5% 10%
- ---- ---------- ---------- --------- ----------- -- ---
Irwin D. Simon 300,000 12.78% $14.25 7/22/2012 $6,963,524.53 $11,088,249.02
300,000 12.78% $16.24 5/13/2013 $7,935,974.62 $12,636,713.27
Ira J. Lamel 75,000 3.19% $12.13 8/13/2012 $1,481,886.89 $ 2,359,657.20
100,000 4.26% $11.84 2/4/2013 $1,928,611.24 $ 3,070,991.07
Gary M. Jacobs 25,000 1.06% $12.13 8/13/2012 $ 493,962.30 $ 786,552.40
____________________
(1) Options were granted at exercise prices which were not less than the fair
market value of the common stock at the time of grant.
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value Held at June 30, 2003 at June 30, 2003(1)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
Irwin D. Simon 0 $0 2,870,000 0 $8,649,225 $0
Ira J. Lamel 0 $0 250,000 50,000 $494,500 $206,500
Gary M. Jacobs 0 $0 235,000 0 $125,700 $0
_______________________
(1) Based on a price of $15.97 per share, the closing bid price for our common
stock on The Nasdaq National Market on June 30, 2003.
-24-
1993 Executive Stock Option Plan
In July 1993, we adopted the 1993 Executive Stock Option Plan, which we
refer to in this notice of annual meeting as the 1993 Plan, under which we
granted to Irwin D. Simon, our founder, president and chief executive officer,
options to purchase 600,000 shares of our common stock, 535,000 of which were
outstanding at June 30, 2003. The exercise price of options designed to qualify
as incentive options is $3.58 per share and the exercise price of non-qualified
options is $3.25 per share. The options expire in November 2003.
1994 Long Term Incentive and Stock Award Plan
In December 1994, we adopted the 1994 Long Term Incentive and Stock Award
Plan, which we refer to in this notice of annual meeting as the 1994 Plan. The
1994 Plan, as amended, provides for the granting of incentive stock options and
other stock-based awards to employees and directors to purchase up to an
aggregate of 6,400,000 shares of our common stock. The 1994 Plan is administered
by the compensation committee of the board of directors, or a subcommittee
thereof. All of the awards granted to date under the 1994 Plan have been
incentive or non-qualified stock options providing for exercise prices not less
than the fair market price at the date of grant, and expire 10 years after date
of grant. At the discretion of the compensation committee, options are
exercisable upon grant or over an extended vesting period. During fiscal 2003,
options to purchase 565,000 shares were granted at prices ranging from $12.13 to
$16.30 per share, options to purchase 1,800 shares were exercised and options to
purchase 35,916 shares were canceled. At June 30, 2003, options to purchase
167,032 shares were available for grant under the 1994 Plan.
2002 Long Term Incentive and Stock Award Plan
In November 2002, we adopted the 2002 Long Term Incentive and Stock Award
Plan, which we refer to in this notice of annual meeting as the 2002 Plan. The
2002 Plan currently provides for the granting of incentive stock options and
other stock-based awards to employees, directors and consultants to purchase up
to an aggregate of 1,600,000 shares of our common stock with a maximum
individual limit of 1,000,000 shares. The 2002 Plan is administered by the
compensation committee of the board of directors, or a subcommittee thereof. All
of the options granted to date under the 2002 Plan have been incentive or
non-qualified stock options providing for exercise prices equivalent to the fair
market price at date of grant, and expire 10 years after date of grant. At the
discretion of the Compensation Committee, options are exercisable upon grant or
over a five year period. During fiscal 2003, 1,471,200 options were granted at
prices ranging from $11.84 to $16.24 per share, no options were exercised and
600 options were terminated. At June 30, 2003, 1,470,600 options are outstanding
and 129,400 shares are available for grant. The board of directors has approved,
subject to stockholder approval, amendments to the 2002 Plan to increase the
number of shares issuable over the term of the 2002 Plan by 1,500,000 shares to
3,100,000 shares in the aggregate. See "Proposal No. 2 - Approval of Amendments
to the 2002 Long Term Incentive and Stock Award Plan."
-25-
1996 Directors Stock Option Plan
In December 1995, we adopted the 1996 Directors Stock Option Plan, which we
refer to in this notice of annual meeting as the 1996 Directors Plan. The 1996
Directors Plan provides for the granting of stock options to non-employee
directors to purchase up to an aggregate of 750,000 shares of our common stock.
No options may be granted under the Directors Plan after December 2000 and, as
of June 30, 2003 options to purchase 380,000 shares were outstanding under the
1996 Directors Plan.
2000 Directors Stock Option Plan
In May 2000, we adopted a new 2000 Directors Stock Option Plan, which we
refer to in this notice of annual meeting as the 2000 Directors Plan. The 2000
Directors Plan provides for granting of stock options to non-employee directors
to purchase up to an aggregate of 750,000 shares of our common stock. During
fiscal 2003, 300,000 options were granted at prices ranging from $12.13 to
$17.88 and no options were exercised or canceled. At June 30, 2003, 195,000
options were available for grant under the 2000 Directors Plan. The board of
directors has approved, subject to stockholder approval, amendments to the 2000
Directors Plan to increase the number of shares issuable over the term of the
2000 Directors Plan by 200,000 shares to 950,000 shares in the aggregate. See
"Proposal No. 3 - Approval of Amendments to the 2000 Directors Stock Option
Plan."
Celestial Plans
In connection with the merger of Celestial Seasonings, Inc. with and into
our wholly owned subsidiary on May 30, 2000 (the "Merger"), we assumed
Celestial's 1993 Long-Term Incentive Plan and 1994 Non-Employee Director
Compensation Plan, which we refer to in this notice of annual meeting
collectively as the Celestial Plans. Following the consummation of the Merger,
no options to purchase shares of common stock will be granted under the
Celestial Plans. During fiscal 2003, options to purchase 66,021 shares were
exercised and options to purchase 25 shares were cancelled. As of June 30, 2003,
options to purchase 348,674 shares of common stock were outstanding under the
Celestial Plans.
-26-
Equity Compensation Plan Information
The table below sets forth information with respect to our compensation
plans as of June 30, 2003.
Number of securities
Number of securities remaining available for
to be issued upon Weighted-average future issuance under
exercise of exercise price of equity compensation plans
outstanding options, outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights reflected in column (a))
- -------------------------------------- -------------------- -------------------- -------------------------
(a) (b) (c)
Equity compensation plans approved by
security holders 8,266,721 $17.75 491,432
Equity compensation plans not approved
by security holders N/A N/A N/A
Total 8,266,721 $17.75 491,432
-27-
REPORT OF THE AUDIT COMMITTEE
Our audit committee is comprised of three independent directors and
operates under a written charter. A copy of the amended and restated audit
committee charter, which becomes effective following our 2003 meeting of
stockholders, is attached as Annex A to this Proxy Statement. The audit
committee, in its oversight role over (1) our financial accounting and reporting
process, (2) our system of internal controls established by management and (3)
the external audit process, has met with management and our independent
auditors. Discussions about our audited financial statements included our
independent auditor's judgments about the quality, not just the acceptability,
of our accounting principles and underlying estimates used in our financial
statements, as well as other matters, as required by Statement on Auditing
Standards No. 61, Communication with Audit Committees ("SAS 61"), as amended by
Statement on Auditing Standards No. 90, Audit Committee Communications, and by
our Audit Committee Charter. In conjunction with the specific activities
performed by the audit committee in its oversight role, it issued the following
report:
1. The audit committee has reviewed and discussed the audited financial
statements as of and for the year ended June 30, 2003 with our
management.
2. The audit committee has discussed with the independent auditors the
matters required to be discussed by SAS 61.
3. The audit committee has received from the independent accountants, as
required by Independence Standards Board Standard No.1, Independence
Discussions with Audit Committee, (i) a written disclosure, indicating
all relationships, if any, between the independent auditor and its
related entities and the company and its related entities which, in
the auditor's professional judgment, reasonably may be thought to bear
on the auditor's independence, and (ii) a letter from the independent
auditor confirming that, in its professional judgment, it is
independent of the company; and the audit committee has discussed with
the auditor the auditor's independence from the company.
Based on the review and discussions referred to in paragraphs (1) through
(3) above, the audit committee recommended to the board of directors, and the
board has approved, that the audited financial statements should be included in
our Annual Report on Form 10-K for the fiscal year ended June 30, 2003 for
filing with the Securities and Exchange Commission.
Larry S. Zilavy, Chairperson
Jack Futterman
Marina Hahn
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PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees, Financial Information Design and Implementation Fees and All Other
Fees Paid to Ernst & Young LLP during Fiscal 2003 and Fiscal 2002
For its fiscal 2003 and 2002 services, we paid Ernst & Young LLP total fees
of $1,057,332 and $912,000, respectively, comprised of:
o Audit Fees: $482,900 and $420,000 for services rendered for audit
services for fiscal 2003 and 2002, respectively.
o Financial Information Systems Design and Implementation Fees: There
were no services rendered related to information systems in fiscal
2003 or 2002.
o All Other Fees: $574,400 and $492,000 in fiscal 2003 and 2002,
respectively, for all other matters.
The audit committee has considered whether the provision of audit-related
and other non-audit services by Ernst & Young LLP is compatible with maintaining
Ernst & Young LLP's independence.
REPORT OF THE
COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Compensation Committee. Our compensation committee is responsible for
determining the compensation of our executive officers. The compensation
committee, or a sub-committee thereof, also administers the 1994 Plan and
discretionary grants under our 2000 Directors Plan and the 2002 Plan.
The compensation committee is currently comprised of Ms. Bronner, Mr.
Heyer, Mr. Gold and Mr. Meltzer, with Ms. Bronner acting as chairperson.
Decisions and recommendations by the compensation committee are made on the
basis of an assessment of corporate performance and a review of supporting data,
including historical compensation data of other companies within the industry.
Although actions with respect to various programs are taken at different times,
consideration of each is made in the context of our overall compensation
package.
Section 162(m) of the Internal Revenue Code generally limits the deductible
amount of annual compensation paid to certain individual executive officers
(i.e., the chief executive officer and our other most highly compensated
executive officers) to no more than $1 million. Considering the current
structure of executive officer compensation, the compensation committee believes
that we will not be denied any significant tax deductions for fiscal 2003. The
compensation committee will continue to review tax consequences as well as other
relevant considerations in connection with compensation decisions.
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Compensation Philosophy. Our executive compensation program is designed to
provide competitive levels of remuneration and assist us in attracting and
retaining qualified executives. The compensation committee is committed to the
objectives of linking executive compensation to corporate performance and
providing incentives which align the interests of our executives with the
interests of our stockholders. This philosophy underlies executive compensation
policies designed to integrate rewards with the attainment of annual and
long-term performance goals, reward significant corporate performance and
recognize individual initiatives and achievements. It is performance which most
significantly influences an individual executive's compensation level. As a
result, actual compensation levels in any particular year may be above or below
those of our competitors, depending upon our performance. The executive
compensation program is comprised of salary, annual cash incentives and
long-term, stock-based incentives. The following is a discussion of each of the
elements of the executive compensation program along with a description of the
decisions and actions taken by the compensation committee with regard to fiscal
2003 compensation:
Base Salary. We establish salary ranges for each of our executive
positions based on appropriate external comparisons, internal
responsibilities and relationships to other corporate positions. Existing
base salaries and annual escalations for the named executives were
established based on the foregoing factors and in negotiation with each of
the executives in connection with their employment by us.
Annual Incentive. We may pay annual cash bonuses in any year to reward
significant corporate accomplishments and individual initiatives which
contributed to the attainment of targeted goals relating to product sales,
product margins, return on capital employed, earnings per share and
stockholder return. If the compensation committee determines that corporate
results are such that a bonus program is warranted, then each executive's
accomplishments are assessed as to their impact on corporate results. The
chief executive officer consults with compensation committee members to
review corporate results, the individual executive's contributions and his
recommendations as to annual incentive payments.
Long-Term Incentives. The 2002 Plan, 1994 Plan and 1993 Plan were
approved by stockholders for the purpose of promoting the interests of our
stockholders by: (1) attracting and retaining executives and other key
employees of outstanding ability; (2) strengthening our capability to
develop, maintain and direct a competent management team; (3) motivating
executives and other key employees, by means of performance-related
incentives, to achieve longer-range performance goals; (4) providing
incentive compensation opportunities which are competitive with those of
other comparably situated corporations; and (5) enabling such employees to
participate in our long-term growth and financial success.
Chief Executive Officer Compensation. The compensation committee is
responsible for determining the appropriate compensation for our chief
executive officer based on a variety of criteria, including our performance
and the chief executive officer's performance, the compensation of the
chief executive officers of comparable companies and other market factors.
In fiscal 2003, the compensation committee worked with
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Mr. Simon in the preparation of his employment agreement described above,
then recommended the adoption of the employment agreement to our board of
directors, which adopted it unanimously.
Compensation Committee: Beth L. Bronner, Chairperson
Andrew R. Heyer
James S. Gold
Roger Meltzer
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PERFORMANCE GRAPH
The following graph compares the performance of our common stock to the S&P
500 Index and to the Standard & Poor's Food Group Index for the period from June
30, 1998 through June 30, 2003. The comparison assumes $100 invested on June 30,
1998.
Hain S&P 500 S&P Food Group
---- ------- --------------
6/30/98 100.0 100.0 100.0
6/30/99 79.7 121.1 88.6
6/30/00 141.8 128.3 75.3
6/30/01 85.0 108.0 86.3
6/30/02 71.5 87.3 96.4
6/30/03 61.7 85.9 92.7
CERTAIN RELATIONSHIPS
On September 27, 1999, we announced an agreement with H.J. Heinz Company to
form a strategic alliance for the global production and marketing of natural and
organic foods and soy-based beverages. In connection with the alliance, we
issued 2,837,343 investment shares of our common stock to Boulder, Inc.
(formerly known as Earth's Best), a wholly owned subsidiary of Heinz, for an
aggregate purchase price of $82,383,843. In addition, in a separate transaction,
we announced on September 27, 1999 that we had purchased the Earth's Best
trademarks. In consideration for the trademarks, we paid $4,620,000 in cash and
issued 670,234 shares of our common stock to Boulder, valued at $17,380,000.
These shares were subsequently transferred to HJH One, L.L.C., an affiliate of
Heinz. In connection with the issuance of these shares, Hain and Boulder
(currently HJH One, L.L.C.) entered into an investor's agreement that provides
for the appointment to our board of directors of one member nominated by HJH
One, L.L.C., currently Mr. Jimenez, and one member jointly nominated by HJH One,
L.L.C. and Hain, currently Mr. Harrison. Mr. Jimenez is President and Chief
Executive Officer of Heinz Europe, a division of Heinz. Mr. Harrison is
President and Chief Executive Officer of Heinz North America, a division of
Heinz.
In accordance with the provisions of the investor's agreement relating to
HJH One, L.L.C.'s right to maintain its ownership percentage following certain
issuances by us of our common stock, on June 19, 2000, we issued an additional
2,582,774 shares of common stock to HJH One, L.L.C. at an aggregate purchase
price of $79,743,147 in connection with the Merger. Under the investor's
agreement described above, HJH One, L.L.C. has agreed to vote its shares in
favor of nominees for directors listed in Proposal No. 1.
In fiscal 2003, we paid to H.J. Heinz Company approximately $1,531,450 in
purchases, royalties and profit sharing fees, and they paid us approximately
$600,000 in royalties.
Mr. Gold, who is nominated for re-election as a director, is a managing
director of Lazard Freres & Co LLC, which provides financial advisory and other
investment banking services to us from time to time. Mr. Meltzer, who is
nominated for re-election as a director, is a partner at the
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law firm Cahill Gordon & Reindel LLP. Cahill Gordon & Reindel LLP provides legal
services to us from time to time. In addition, Mr. Simon's wife serves as our
director of international sales, and Mr. Simon's brother-in-law serves as our
Vice President-Purchasing and Procurement, and each are paid at competitive
rates with employees serving other companies in comparable positions.
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 initial reports of beneficial ownership and
changes in such with the SEC. Such officers, directors and stockholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished to us
and written representations from our executive officers and directors, all
persons subject to the reporting requirements of Section 16(a) filed the
required reports on a timely basis, except for one late filing on behalf of each
of our directors relating to our annual stock option grant.
OTHER MATTERS
Management does not know of any other matters that will come before the
meeting, but should any other matters requiring a vote of stockholders arise,
including any question as to an adjournment of the meeting, the persons named on
the enclosed proxy will vote thereon according to their best judgment in our
interests.
STOCKHOLDER PROPOSALS
We will not consider including a stockholder's proposal for action at our
2004 annual meeting of stockholders in the proxy material to be mailed to our
stockholders in connection with such meeting unless such proposal is received at
our principal office no later than July 16, 2004.
HOUSEHOLDING
We have adopted a procedure approved by the Securities and Exchange
Commission called "householding." Under this procedure, multiple stockholders
who share the same last name and address will receive only one copy of the
annual proxy materials, unless they notify us that they wish to continue
receiving multiple copies. We have undertaken householding to reduce our
printing costs and postage fees.
If you wish to opt-out of householding and receive multiple copies of the
proxy materials at the same address, you may do so at any time prior to thirty
days before the mailing of proxy materials, which typically are mailed in
October of each year, by notifying us in writing at: 58 South Service Road,
Melville, New York 11747, Attention: Corporate Secretary. You also may request
additional copies of the proxy materials by notifying us in writing at the same
address.
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If you share an address with another stockholder and currently are
receiving multiple copies of the proxy materials, you may request householding
by notifying us at the above-referenced address.
By order of the board of directors,
Ira J. Lamel
Corporate Secretary
Dated: November 10, 2003
Your vote is important. Stockholders who do not expect to be present at the
Annual Meeting of Stockholders and who wish to have their stock voted are
requested to sign and date the enclosed proxy and return it in the enclosed
envelope. No postage is required if mailed in the United States.
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Annex A
The Hain Celestial Group, Inc.
Audit Committee Charter
Organization
The Board of Directors of The Hain Celestial Group, Inc. (the "Company")
shall designate annually, based upon the recommendation of the Nominating and
Governance Committee, an Audit Committee comprised of three or more Directors,
who may be removed by the Board of Directors in its discretion. Each member of
the Audit Committee shall be, as determined and disclosed by the Board of
Directors, (1) "independent" as determined in accordance with the rules and
regulations of the Nasdaq Stock Market, Inc. ("Nasdaq"), and, if determined
applicable by the Board of Directors, the New York Stock Exchange (the "NYSE")
and (2) sufficiently financially literate to enable him or her to discharge the
responsibilities of an Audit Committee member. Additionally, at least one member
of the Audit Committee shall have accounting or related financial management
expertise and qualify as an "audit committee financial expert," as defined in
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC"). Audit Committee members shall not simultaneously serve on the audit
committees of more than two other public companies. The members of the Audit
Committee shall comply with and satisfy the rules and regulations of the SEC,
applicable securities laws, the rules and regulations of the Nasdaq and NYSE, if
applicable, and all other applicable laws, rules, and regulations. The Audit
Committee shall report regularly to the Board of Directors.
A Chairman of the Audit Committee shall be elected annually by the Board of
Directors based upon the recommendation of the Nominating and Governance
Committee.
Purpose
The primary purpose of the Audit Committee is to assist the Board of
Directors' oversight of (1) the integrity of the Company's financial statements,
(2) the independent auditor's qualifications, independence, and performance, (3)
the performance of the Company's internal controls and procedures, and (4) the
Company's compliance with legal and regulatory requirements. The Audit Committee
shall also function as the Company's qualified legal compliance committee
("QLCC"), as defined under applicable SEC rules and regulations.
The Audit Committee shall prepare an Audit Committee report, as required by
the rules and regulations of the SEC, to be included in the Company's annual
proxy statement.
While the Audit Committee recognizes the importance of its role, it is not
the responsibility of the Audit Committee to plan or conduct audits, to
determine that the Company's financial statements are in all material respects
complete, accurate, and prepared in accordance with generally accepted
accounting principles ("GAAP"), or to certify the Company's financial
statements. These are the responsibilities of management and the independent
auditor. It is also not the responsibility of the Audit Committee to guarantee
the independent auditor's report. The Audit Committee shall assist the Board of
Directors in overseeing management's fulfillment of
its responsibilities in the financial reporting process of the Company. The
Audit Committee also shall be directly responsible for the oversight of the
independent auditor's fulfillment of its responsibilities in the financial
reporting process of the Company.
Meetings
The Audit Committee shall meet at least four times each year, or more
frequently as it deems necessary or appropriate to carry out its
responsibilities and may, in its sole discretion, form and delegate authority to
subcommittees (comprised only of Audit Committee members) in furtherance of such
responsibilities. Meetings of the Audit Committee shall be called by the
Chairman of the Audit Committee, the Chairman of the Board of Directors, or the
Chief Executive Officer of the Company. All such meetings shall be held pursuant
to the By-Laws of the Company with regard to notice and waiver thereof, and
written minutes of each such meeting shall be duly filed in the Company's
records. In order to foster open communications, the Audit Committee shall meet
periodically with senior management, the person responsible for the Company's
internal controls and procedures, and the independent auditor in separate
private sessions to discuss any matters that the Audit Committee or any such
persons believe appropriate and may also ask members of management or others to
attend Audit Committee meetings and provide pertinent information as necessary.
Relationship With Independent Auditors
The Audit Committee shall have the sole authority to appoint, retain, and
terminate the Company's independent auditor, which shall report directly to the
Audit Committee. The Audit Committee shall be directly responsible for the
evaluation, compensation (including as to fees and terms), and oversight of the
work of the Company's independent auditor (including resolution of disagreements
between management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work. All
related fees and costs of the independent auditor, as determined by the Audit
Committee, shall be paid promptly by the Company in accordance with its normal
business practices. All auditing services and permitted non-audit services
performed for the Company by the independent auditor shall be pre-approved by
the Audit Committee subject to applicable laws, rules, and regulations. The
Audit Committee may form and delegate to a subcommittee the authority to grant
pre-approvals with respect to auditing services and permitted non-auditing
services, provided that any such grant of pre-approval shall be reported to the
full Audit Committee at its next meeting.
Powers and Responsibilities
A. Oversight of the Company's Financial Statements and Disclosure Practices
The Audit Committee shall:
1) Discuss with management and the independent auditor the Company's
annual audited financial statements, including the Company's
disclosures made under "Management's Discussion and Analysis of
Financial Condition and Results of
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Operations," and recommend to the Board of Directors whether such
audited financial statements should be included in the Company's
annual report on Form 10-K.
2) Discuss with management and the independent auditor the Company's
quarterly financial statements, including the Company's disclosures
made under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
3) Review the Company's disclosure controls and procedures, internal
controls and procedures for financial reporting, and the
certifications required to be made by any officer of the Company in
each of the Company's quarterly reports on Form 10-Q and the Company's
annual report on Form 10-K (the "Periodic Reports").
4) Prepare the annual report referred to under "Purpose" above.
5) Review all reports from the independent auditor pursuant to applicable
laws, rules and regulations concerning:
a) all critical accounting policies and practices to be used;
b) all alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor; and
c) other material written communications between the independent
auditor and management, such as any management letter or schedule
of unadjusted differences.
6) Discuss with the independent auditor certain matters related to the
conduct of the audit pursuant to Statement of Auditing Standards No.
61, as amended, including any:
a) problems or difficulties encountered by the independent auditor
in the course of the audit work;
b) restrictions on the scope of the independent auditor's activities
or access to information;
c) significant disagreements with management;
d) communications between the independent auditing team and such
team's national office with respect to auditing or accounting
issues presented by the engagement;
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e) accounting adjustments noted or proposed by the independent
auditor, but not adopted by the Company; and
f) management or internal control letter issued or proposed to be
issued by the independent auditor and the Company's response to
that letter.
7) Discuss generally with management the types of information to be
disclosed and presentations to be made in connection with the
Company's (a) issuance of earnings press releases (including the
Company's use of "pro forma" or "adjusted" non-GAAP financial
information) and (b) disclosure of financial information, earnings
releases, and earnings guidance to analysts and rating agencies. The
Audit Committee need not discuss in advance each earnings release or
each instance in which the Company may provide earnings guidance.
8) Discuss the Company's policies and guidelines which govern the
Company's risk assessment and risk management efforts as well as
discuss the Company's major financial risk exposures and the steps
management has taken to monitor and control such exposures.
9) Review and discuss with management and the independent auditor, as it
deems necessary or appropriate:
a) major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles,
major issues as to the adequacy of the Company's internal
controls, and any special audit steps adopted in light of
material control deficiencies;
b) analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and
judgments made in connection with the preparation of the
financial statements, including analyses of the effects of
alternative GAAP methods on the Company's financial statements;
and
c) the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the Company's financial
statements.
10) Review disclosures made to the Audit Committee by the Company's Chief
Executive Officer and Chief Financial Officer during their
certification process for the Periodic Reports about any significant
deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving management or
other employees who have a significant role in the Company's internal
controls
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B. Oversight of the Company's Independent Auditor
The Audit Committee shall:
1) Obtain and review a report from the independent auditor on at least an
annual basis describing:
a) the internal quality-control procedures of such independent
auditor;
b) any material issues raised by the independent auditor's most
recent internal quality-control review or peer review and any
steps taken to deal with such issues;
c) any material issues raised by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, with respect to one or more independent audits
carried out by the independent auditor and any steps taken to
address such issues; and
d) all relationships between the independent auditor and the
Company.
2) Evaluate the qualifications, performance, and independence of the
independent auditor and report such conclusions to the Board of
Directors, taking into account:
a) the foregoing report;
b) discussion with the independent auditor regarding any disclosed
relationship with or services provided to the Company that may
impact the objectivity and independence of the independent
auditor;
c) the services provided by the independent auditor; and
d) the opinions of management and the Company's internal auditors.
3) Evaluate the lead (or coordinating) audit partner having primary
responsibility for the audit, taking into account the opinions of
management and the Company's internal auditors.
4) Ensure the required rotation of the lead (or coordinating) audit
partner having primary responsibility for the audit and the audit
partner responsible for reviewing the independent audit, and consider
whether it is appropriate or necessary, in order to assure continuing
independence, to rotate the Company's independent auditor on a regular
basis.
5) Take, or recommend that the full Board take, appropriate action to
oversee the independence of the independent auditor.
-5-
6) Recommend policies to the Board of Directors with respect to the
employment of current and former employees of the independent auditor
who were engaged on the Company's account.
7) Review and discuss with management and the independent auditor the
proposed plan and overall scope of the Company's annual audit.
C. Oversight of the Company's Compliance with Legal and Regulatory
Requirements
The Audit Committee shall:
1) Obtain assurance from the independent auditor that the Company is in
compliance with the provisions of Section 10A of the Securities
Exchange Act of 1934, as amended.
2) Review with management and the independent auditor the Company's Code
of Business Conduct and Ethics (the "Code of Conduct"), which
prohibits unethical or illegal activities by the Company's directors,
officers and employees, as well as review the actions taken to monitor
compliance with the Code of Conduct.
3) To the extent authorized by the Board of Directors, approve any
proposed waivers for directors or executive officers and review any
material waivers for non-executive officers or employees granted under
the "Amendment, Modification and Waiver" section of the Company's Code
of Conduct.
4) Review with management, the independent auditor, and the Company's
counsel any legal, regulatory, and environmental matters that may have
a material impact on the Company's financial statements or accounting
policies.
5) Establish procedures for the (a) receipt, retention, and treatment of
complaints received by the Company regarding the Company's accounting,
internal accounting controls or auditing matters and (b) confidential,
anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters.
6) Review and approve all related-party transactions.
7) Review and assess on an annual basis the compliance with all
applicable laws, rules, and regulations, including those of the SEC,
Nasdaq, and NYSE, specifically applicable to the composition and
responsibilities of the Audit Committee.
Qualified Legal Compliance Committee
The Audit Committee, in its capacity as a QLCC, shall establish written
procedures for the privileged and confidential receipt, retention, and
consideration of reports to the QLCC by
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the Company's internal legal officer or any other attorney representing the
Company of evidence of a material violation of the securities laws, breaches of
fiduciary duties, or similar violations.
Additional Powers and Responsibilities
The Audit Committee shall have the authority to engage and obtain advice
and assistance from independent or outside legal counsel, accountants, and other
advisors as it determines is necessary or appropriate to carry out its duties.
All related fees and costs of such advisors, as determined by the Audit
Committee, shall be paid promptly by the Company in accordance with its normal
business practices.
The Audit Committee shall, on an annual basis, review and reassess the
adequacy of this Charter and conduct an evaluation of the Audit Committee's own
performance during such past year.
The Audit Committee shall perform such other activities as the Audit
Committee or the Board of Directors may from time to time deem necessary or
appropriate.
Effectiveness
This Audit Committee charter amends and restates the Company's existing
Audit Committee charter and becomes effective as of the date of the Company's
2003 meeting of stockholders.
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THE HAIN CELESTIAL GROUP, INC.
This Proxy is solicited on Behalf of the Board of Directors of The Hain
Celestial Group, Inc. (the "Company"). The undersigned hereby appoints Irwin D.
Simon and Ira J. Lamel, or any of them, proxies, each with full power of
substitution, to vote the shares of the undersigned at the Annual Meeting of
Stockholders of the Company on Thursday, December 4, 2003, and any adjournments
thereof, upon all matters as may properly come before the meeting. Without
otherwise limiting the foregoing general authorization, the proxies are
instructed to vote as indicated herein. If no instruction is given the shares
will be voted "FOR" items 1, 2, 3 and 4 below, each of said items being more
fully described in accompanying the Notice of Annual Meeting and Proxy
Statement, receipt of which are hereby acknowledged.
The Board of Directors Recommends You Vote "FOR" items 1, 2, 3 and 4 below
1. Election of Directors
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the contrary to vote for all nominees
below) listed below
(Instructions: to withhold authority to vote for an individual
nominee, strike a line through the nominee's name listed below.)
Irwin D. Simon, Beth L. Bronner, Jack Futterman, Daniel R.
Glickman, James S. Gold, Marina Hahn, Neil Harrison, Andrew R.
Heyer, Joseph Jimenez, Roger Meltzer, Larry S. Zilavy
2. To approve the amendment to the 2002 Long Term Incentive and Stock
Plan to increase the number of shares issuable over the term of the
plan by 1,500,000 shares to 3,100,000 shares in the aggregate.
For / / Against / / Abstain / /
3. To approve the amendment to the 2000 Directors Stock Option Plan to
increase the number of shares issuable over the term of the plan by
200,000 shares to 950,000 shares in the aggregate.
For / / Against / / Abstain / /
4. To ratify the appointment of Ernst & Young LLP, to act as independent
auditors of the Company for the fiscal year ending June 30, 2003.
For / / Against / / Abstain / /
In their discretion, the proxies named above are authorized to vote upon
such other business as may properly come before the meeting.
Please Complete All Information Below
Signature:________________________________________
Signature:________________________________________
Dated:_______________________________________ 2003
Please sign exactly as names appear hereon,
indicating official position or representa-
tive capacity, if any. If shares are held
jointly, both owners should sign.
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