UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
————————————
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of The Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): January 31,
2008
————————————
THE
HAIN CELESTIAL GROUP, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-22818
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22-3240619
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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58
South Service Road, Melville, NY 11747
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (631) 730-2200
Not
Applicable
(Former
name or former address, if changed since last report)
————————————
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
8.01 Other Events
On
January 31, 2008, The Hain Celestial Group, Inc. announced that a group of
its independent directors had completed their review of past practices
relating to stock options grants.
A
copy of
the press release containing the announcement is included as Exhibit 99.1 to
this Current Report and is incorporated herein by reference.
Item
9.01.
Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed herewith:
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Exhibit
No.
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Description
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99.1
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Press
Release dated January 31, 2008.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: January
31, 2008
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THE
HAIN CELESTIAL GROUP, INC.
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(Registrant)
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By:
/s/
Ira J. Lamel
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Name:
Ira J. Lamel
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Title:
Executive Vice President and Chief
Financial Officer
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|
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Contacts:
Ira
Lamel/Mary Anthes
The
Hain Celestial Group, Inc.
631-730-2200
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Jeremy
Fielding/David Lilly
Kekst
and Company
212-521-4800
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HAIN
CELESTIAL’S INDEPENDENT DIRECTORS
COMPLETE
REVIEW OF STOCK OPTIONS
Melville,
NY, January 31, 2008—The
Hain
Celestial Group, Inc. (NASDAQ: HAIN), a leading natural and organic food and
personal care products company, today announced that a group of independent
directors (the “Independent Directors”) established to review the Company’s past
stock option practices has reported its findings to the Board of Directors.
The
Company also announced that the Board of Directors had adopted each of the
recommendations of these Independent Directors. In connection with the
completion of the review, the Company announced that it is restating its
previously issued financial statements to correct errors related to accounting
for stock-based compensation expense.
Restatement
of Previously Issued Financial Statements
In
its
Form 10-K for the fiscal year ended June 30, 2007 (the “2007 Form 10-K”),
to be filed today, the Company is restating its consolidated balance sheet
as of
June 30, 2006, and the related consolidated statements of operations,
stockholders’ equity and cash flows for each of the fiscal years ended
June 30, 2006 and 2005. This restatement resulted from the findings of an
investigation that was undertaken by the Independent Directors of the Company’s
historical stock option granting processes and related accounting. The 2007
Form
10-K also reflects the restatement of “Selected Financial Data” for the fiscal
years ended June 30, 2006, 2005, 2004 and 2003.
Review
of Historical Equity Granting Process
On
June
15, 2007, the Company announced that it had received an informal inquiry from
the Securities and Exchange Commission (the "SEC") concerning the Company’s
stock option granting practices and related accounting and disclosures. Shortly
thereafter, the Independent Directors were established by Hain Celestial’s Board
of Directors to conduct an independent investigation relating to the Company’s
historical stock option practices. With the assistance of independent legal
counsel and experts retained by counsel, the Independent Directors conducted
an
extensive review of historical stock option practices,
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
including
all awards made by the Company since its initial public offering in November
1993 through May 6, 2005, the last date on which stock options were granted.
The
investigation also included a review of the Company’s accounting policies,
accounting records, supporting documentation, email communications and other
documentation, as well as interviews with a number of current and former
directors, officers and employees.
Based
on
this review, the Company has determined that additional pre-tax, non-cash
charges for stock-based compensation expense aggregating $16.9 million ($11.7
million after taxes) over the 12-year period from 1994 through 2005 should
be
recognized. The Company has determined that, based on revised measurement
dates for certain stock options, the pre-tax, non-cash charges for stock-based
compensation expense over this 12-year period aggregated $20.5 million, before
the reversal of a 2005 stock option vesting acceleration charge of $3.6 million
recorded in 2005. The Company granted options to purchase approximately 12
million shares to more than 1,200 employees and directors on 125 separate
grant
dates during the period reviewed. The grants included (1) broad-based grants
to
large numbers of Hain Celestial employees, (2) new hire/promotion grants,
(3)
grants to senior executives and (4) director grants.
On January 29, 2008, the Independent Directors reported to the Board their final findings. The Independent Directors indicated that they and their advisors received the Company’s full cooperation throughout the review. As described in more detail below, the review of the Company’s stock option grants and procedures identified various deficiencies in the process of granting and documenting stock options. The stock option granting process was informal and inadequately documented throughout much of the period under review. In addition, for many grants there were insufficient or incomplete approvals and inadequate or incomplete establishment of the terms of the grants, including the list of individual recipients.
The
Independent Directors’ review found, among other things, that:
| · |
There
was inadequate documentation supporting the measurement dates for
a number
of Company-wide annual grants as well as some executive grants and
grants
to new employees;
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| · |
Approximately
one-third of all options granted were priced at quarterly or annual
lows;
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| · |
Some
grant dates in earlier periods appear to have been selected with
hindsight. Beginning in 2003, documentation relating to annual and
other
grants improved, although some errors occurred thereafter in the
form of
additions, corrections or adjustments to lists of grant recipients
after
the recorded measurement dates; and
|
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
| · |
No
information came to the attention of the Independent Directors which
caused them to believe that any current officers, directors or employees
of the Company engaged in any knowing or intentional misconduct with
regard to the Company's option granting
process.
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Revision
of Measurement Dates as a Result of the Review
As
a
result of the deficiencies, the Independent Directors recommended, among other
things, that the Company revise the accounting measurement dates for 48 dates
where the market price of the Company’s stock on the revised dates was higher
than on the measurement dates previously used by the Company. A number of these
revised measurement dates impacted stock option grants made to senior management
and directors of the Company.
Economic
Remediation
Following
completion of the stock option review, the Company’s current Section 16 officers
and directors holding incorrectly priced and unexercised stock options have
agreed to voluntarily reprice such options to the closing share price on the
revised measurement date. The Section 16 officers and directors will not receive
cash payments to compensate them for the increase in exercise price due to
their
voluntary agreements to reprice such options. Consistent with this
recommendation, current Section 16 officers and directors also voluntarily
agreed to repay to the Company (either in cash or through further repricing
of
outstanding options for options) an amount equal to the difference in the price
at which stock options were exercised by them and the price at which the
Independent Directors believe the stock options should have been priced, net
of
any allocable portion of income taxes paid in connection with such
exercise.
Corporate
Governance Remediation
On
September 21, 2006, the Company’s Board of Directors adopted revised approval
procedures for equity grants. Pursuant to those procedures, all equity grants
will be recommended by the Compensation Committee to the full Board for
approval. All option grants will have an exercise price equal to the closing
price of the Company’s stock on the date of the Board’s approval of the
grant.
Following
completion of the stock option review, the Independent Directors recommended
and
the Board of Directors approved on January 29, 2008, the following additional
changes:
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·
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the
Compensation Committee will be reconstituted and will be chaired
by an
independent director;
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The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
|
·
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all
equity awards other than new hire grants will generally be considered
by
the Compensation Committee and Board of Directors annually following
each
fiscal year end;
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·
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the
Board of Directors will delegate to the Compensation Committee the
authority to grant new hire grants during meetings on a quarterly
basis,
and will provide that these options will have an exercise price equal
to
the closing price of the Company’s stock on the last day of the quarter in
which they were granted;
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·
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details
of recommended grants will be circulated to the Compensation Committee
in
advance of meeting;
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·
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corporate
counsel will attend all Compensation Committee meetings as secretary
and
will promptly prepare minutes of the meetings;
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·
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corporate
counsel will oversee the documentation of equity grants; and
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·
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one
Board meeting per year will be focused on corporate governance and
compliance matters.
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The
Company expects to file its annual report on Form 10-K for the year ended
June
30, 2007, and its quarterly report on Form 10-Q for the quarter ended September
30, 2007, today.
The
Hain Celestial Group
The
Hain
Celestial Group (NASDAQ: HAIN), headquartered in Melville, NY, is a leading
natural and organic food and personal care products company in North America
and
Europe. Hain Celestial participates in almost all natural food categories with
well-known brands that include Celestial Seasonings®, Terra®, Garden of Eatin’®,
Health Valley®, WestSoy®, Earth’s Best®, Arrowhead Mills®, DeBoles®, Hain Pure
Foods®, FreeBird™, Plainville Farms®, Hollywood®, Spectrum Naturals®, Spectrum
Essentials®, Walnut Acres Organic®, Imagine®, Rice Dream®, Soy Dream®, Rosetto®,
Ethnic Gourmet®, Yves Veggie Cuisine®, Granose®, Realeat®, Linda McCartney®,
Lima®, Grains Noirs®, Natumi®, JASON®, Zia® Natural Skincare, Avalon Organics®,
Alba Botanica®, Queen Helene®, Tushies® and TenderCare®. Hain Celestial
has been providing “A Healthy Way of Life” since 1993. For more
information, visit www.hain-celestial.com.
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
Safe
Harbor Statement
This
press release contains forward-looking statements within and constitutes
a "Safe
Harbor" statement under the Private Securities Litigation Act of 1995. Except
for the historical information contained herein, the matters discussed in
this
press release are forward-looking statements that involve known and unknown
risks and uncertainties, which could cause our actual results to differ
materially from those described in the forward-looking statements. These
risks
include but are not limited to general economic and business conditions;
our
ability to implement our business and acquisition strategy; our ability to
effectively integrate our acquisitions; competition; availability and retention
of key personnel; our reliance on third party distributors, manufacturers
and
suppliers; changes in customer preferences; international sales and operations;
the results of our stock option investigation and the SEC’s inquiry; changes in,
or the failure to comply with, government regulations; and other risks detailed
from time-to-time in the Company’s reports filed with the SEC, including the
annual report on Form 10-K, for the fiscal year ended June 30, 2007. As a
result
of the foregoing and other factors, no assurance can be given as to future
results, levels of activity and achievements and neither the Company nor
any
person assumes responsibility for the accuracy and completeness of these
statements.
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com