1-800-FLOWERS.COM, INC.
One Old Country Road
Carle Place, New York 11514
Notice of Annual Meeting of Stockholders
December 4, 2007
The Annual Meeting of Stockholders (the "Annual Meeting") of
1-800-FLOWERS.COM, Inc. (the "Company") will be held at One Old Country Road,
Carle Place, New York 11514, Fourth Floor Conference Room (the "Meeting Place"),
on Tuesday, December 4, 2007 at 9:00 a.m. eastern standard time, or any
adjournment thereof, for the following purposes, as more fully described in the
Proxy Statement accompanying this notice:
(1) To elect three Directors to serve until the 2010 Annual Meeting or
until their respective successors shall have been duly elected
and qualified;
(2) To ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending June
29, 2008; and
(3) To transact such other matters as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on October 9, 2007
will be entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders eligible to vote at the Annual Meeting will be available for
inspection at the Annual Meeting, and for a period of ten days prior to the
Annual Meeting, during regular business hours at the Meeting Place.
All stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you expect to attend the Annual Meeting, your proxy vote
is important. To assure your representation at the Annual Meeting, please sign
and date the enclosed proxy card and return it promptly in the enclosed
envelope, which requires no additional postage if mailed in the United States.
You may revoke your proxy at any time prior to the Annual Meeting. If you attend
the Annual Meeting and vote by ballot, your proxy will be revoked automatically
and only your vote at the Annual Meeting will be counted.
By Order of the Board of Directors
/s/ Gerard M. Gallagher
Gerard M. Gallagher
Corporate Secretary
Carle Place, New York
October 29, 2007
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
1-800-FLOWERS.COM, INC.
PROXY STATEMENT
October 29. 2007
This Proxy Statement is furnished to stockholders of record of
1-800-FLOWERS.COM, Inc. (the "Company") as of October 9, 2007 (the "Record
Date") in connection with the solicitation of proxies by the Board of Directors
of the Company (the "Board of Directors" or the "Board") for use at the Annual
Meeting of Stockholders (the "Annual Meeting") which will be held at One Old
Country Road, Carle Place, New York 11514, Fourth Floor Conference Room (the
"Meeting Place"), on Tuesday, December 4, 2007 at 9:00 a.m. eastern standard
time or any adjournment thereof.
Shares cannot be voted at the Annual Meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the Annual Meeting will be voted
at the Annual Meeting or any adjournment thereof in accordance with instructions
thereon, or if no instructions are given, will be voted "FOR" the election of
the named nominees as Directors of the Company, and "FOR" the ratification of
the appointment of Ernst & Young LLP, as the Company's independent registered
public accounting firm, for the fiscal year ending June 29, 2008; and will be
voted in accordance with the discretion of the person appointed as proxy with
respect to other matters which may properly come before the Annual Meeting. Any
person giving a proxy may revoke it by written notice to the Company at any time
prior to the exercise of the proxy. In addition, although mere attendance at the
Annual Meeting will not revoke the proxy, a stockholder who attends the Annual
Meeting may withdraw his or her proxy and vote in person. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business at the Annual Meeting. Abstentions will
be counted in tabulations of the votes cast on each of the proposals presented
at the Annual Meeting, whereas broker non-votes will not be counted for purposes
of determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials) is being distributed concurrently herewith to
stockholders.
The mailing address of the principal executive office of the Company is One
Old Country Road, Suite 500, Carle Place, New York 11514. The approximate date
this Proxy Statement and the accompanying form of proxy are being mailed to the
stockholders of the Company is November 1, 2007.
VOTING SECURITIES
The Company has two classes of voting securities issued and outstanding,
its Class A common stock, par value $0.01 per share (the "Class A Common
Stock"), and its Class B common stock, par value $0.01 per share (the "Class B
Common Stock", and together with the Class A Common Stock, the "Common Stock"),
which generally vote together as a single class on all matters presented to the
stockholders for their vote or approval. At the Annual Meeting, each stockholder
of record at the close of business on October 9, 2007 of Class A Common Stock
will be entitled to one vote for each share of Class A Common Stock owned on
that date as to each matter presented at the Annual Meeting and each stockholder
of record at the close of business on October 9, 2007 of Class B Common Stock
will be entitled to ten votes for each share of Class B Common Stock owned on
that date as to each matter presented at the Annual Meeting. On October 9,
2007, 25,879,795 shares of Class A Common Stock and 36,858,465 shares of Class B
Common Stock were outstanding. A list of stockholders eligible to vote at the
Annual Meeting will be available for inspection at the Annual Meeting, and for a
period of ten days prior to the Annual Meeting, during regular business hours at
the Meeting Place.
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PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form
of proxy intend to vote at the Annual Meeting "FOR" the election of the nominees
named below as Class II Directors of the Company to serve until the 2010 Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominee.
The Board of Directors does not currently anticipate that any of the nominees
will be unable to be a candidate for election.
Pursuant to the Company's Third Amended and Restated Certificate of
Incorporation, the Board of Directors has been divided into three classes,
denominated Class I, Class II and Class III, with members of each class holding
office for staggered three-year terms or until their respective successors are
duly elected and qualified. The Board of Directors currently consists of eight
members, three of whom are Class II Directors and each of whose term expire at
the Annual Meeting. Each of such Class II Directors is a nominee for election.
The nominees for Class II Directors are Messrs. John J. Conefry, Jr., Leonard J.
Elmore and Ms. Jan L. Murley, whose terms expire at the 2007 Annual Meeting. The
Class I Directors are Messrs. Lawrence Calcano, James Cannavino and Jeffrey C.
Walker, each of whose term expires at the 2009 Annual Meeting. The Class III
Directors are Messrs. James F. McCann and Christopher G. McCann, each of whose
term expires at the 2008 Annual Meeting. At each Annual Meeting, the successors
to the Directors whose terms have expired are elected to serve from the time of
their election and qualification until the third Annual Meeting following the
election or until a successor has been duly elected and qualified. The Company's
Third Amended and Restated Certificate of Incorporation authorizes the removal
of Directors under certain circumstances.
The affirmative vote of a plurality of the Company's outstanding Common
Stock present in person or by proxy at the Annual Meeting is required to elect
the nominees for Directors.
Information Regarding Nominees for Election as Directors (Class II Directors)
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each of the three
nominees during the last five years has been furnished to the Company by such
nominee.
John J. Conefry, Jr., age 63, has been a Director of the Company since
October 2002. Mr. Conefry is Vice Chairman of the Board of Directors of Astoria
Financial Corporation and its wholly-owned subsidiary, Astoria Federal Savings
since September 1998. He formerly served as the Chairman of the Board and CEO of
Long Island Bancorp and The Long Island Savings Bank from September 1993 until
September 1998. Prior thereto, Mr. Conefry was a Senior Vice President of
Merrill Lynch, Pierce, Fenner & Smith, Inc., where he served in various
capacities, including, Chief Financial Officer. Mr. Conefry was a partner in the
public accounting firm of Deloitte & Touche, LLP (formerly, Deloitte Haskins &
Sells). Mr. Conefry serves as a member of the Board of Trustees at Hofstra
University, and on the boards of St. Vincent's Services and Wheel Chair
Charities, Inc., among others.
Leonard J. Elmore, age 55, has been a Director of the Company since October
2002. Mr. Elmore is currently Senior Counsel with the law firm of Dewey &
LeBoeuf in its New York City headquarters. Prior to his appointment with Dewey &
LeBoeuf, Mr. Elmore served as the President of Test University, a leading
provider of internet delivered learning solutions for pre-college students. Mr.
Elmore continues to fulfill his commitment to public service as a Trustee on the
University of Maryland Board of Trustees, and a Commissioner on the John and
James L. Knight Foundation's Knight Commission on Intercollegiate Athletics.
Jan L. Murley, age 56, has been a Director of the Company since February
2007. Ms. Murley has served as a consultant to Kohlberg Kravis Roberts & Co.
(KKR) (a private equity firm) since November 2006. From October 2003 to July
2006, Ms. Murley was Chief Executive Officer and a Director of The Boyds
Collection, Ltd. (a publicly traded designer and manufacturer of gifts and
collectibles), which was majority-owned by KKR. Boyds filed for bankruptcy under
Chapter 11 of the US Bankruptcy Code in October 2005 and emerged from Chapter 11
in June 2006 as a private company). Prior to that, she was group Vice President
- Marketing of Hallmark Cards, Inc. (a publisher of greeting cards and related
gifts) from 1999 to 2002. Previously, Ms. Murley was employed by Procter &
Gamble for more than 20 years, with her last position being Vice President for
skin care and personal cleansing products. Ms. Murley has been a Director of The
Clorox Company since November 2001 and serves as a member of its Audit and
Nominating and Governance Committees.
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THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
MESSRS. CONEFRY, ELMORE AND MS. MURLEY AS CLASS II DIRECTORS TO SERVE IN SUCH
CAPACITY UNTIL THE 2010 ANNUAL MEETING.
Information Regarding Directors Who Are Not Nominees for Election at this
Annual Meeting
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of each Director who is not a nominee for election at this Annual Meeting
has been furnished to the Company by such Director.
James F. McCann, age 56, has served as the Company's Chairman of the Board
and Chief Executive Officer since inception. Mr. McCann has been in the floral
industry since 1976 when he began a retail chain of flower shops in the New York
metropolitan area. Mr. McCann is a member of the Board of Directors of
Lottomatica and Willis Holdings Group. James F. McCann is the brother of
Christopher G. McCann, a Director and the President of the Company.
Christopher G. McCann, age 46, has been the Company's President since
September 2000 and prior to that had served as the Company's Senior Vice
President. Mr. McCann has been a Director of the Company since inception. Mr.
McCann serves on the Board of Directors of Bluefly, Inc., and is a member of the
Board of Trustees of Marist College. Christopher G. McCann is the brother of
James F. McCann, the Company's Chairman of the Board and Chief Executive
Officer.
Jeffrey C. Walker, age 52, has been a Director of the Company since
February 1995. Mr. Walker has served as the Chairman of CCMP Capital Advisors,
LLC since August 2006. Prior thereto and since 1988 he was the Managing Partner
of JPMorgan Partners, the private equity group of J.P. Morgan Chase & Co. and a
General Partner thereof since 1984. He was also a Vice Chairman of J.P. Morgan
Chase & Co. Mr. Walker is a Director of several private companies.
James Cannavino, age 63, has been a Director of the Company since June
2007. Mr. Cannavino has been Chairman of the Board of Direct Insite since 2000
and was appointed Chief Executive Officer in December 2002. Direct Insite is a
global provider of financial supply chain automation across procure-to-pay and
order-to cash business processes. From September 1997 through April 2000, he was
elected non-executive Chairman of Softworks, Inc. (a wholly owned subsidiary of
Direct Insite, formerly Computer Concepts), which went public and was later sold
to EMC. Mr. Cannavino was also the Chief Executive Officer and Chairman of the
Board of Directors of CyberSafe, Inc., a company specializing in network
security. Prior to Cybersafe, Mr. Cannavino was hired as President and Chief
Operating Officer of Perot Systems Corporation. In 1996 he was elected to serve
as Chief Executive Officer through July 1997. During his tenure at Perot, he was
responsible for all the day-to-day global operations of the company, as well as
for strategy and organization. Prior to Perot Systems, Mr. Cannavino served as a
Senior Vice President at IBM, where he was responsible for corporate strategy
and development. Mr. Cannavino's career spanned thirty years at IBM beginning in
1963. Mr. Cannavino led IBM's restructuring of its $7 billion PC business to
form the IBM PC Company. He also served on the IBM Corporate Executive Committee
and Worldwide Management Council, and on the board of IBM's integrated services
and solutions company. He also was a board member for three IBM joint-venture
companies, including Prodigy Services, Inc.; Digital Domain, Inc.; and New Leaf
Entertainment. Mr. Cannavino presently serves on the Boards of the National
Center for Missing and Exploited Children and The International Center for
Missing and Exploited Children. He is the immediate past Chairman of the Board
of Marist College in Poughkeepsie, New York and continues to serve on that
board.
Lawrence Calcano, age 44, has been a Director of the Company since December
2007. Mr. Calcano, is the founder of Calcano Capital Advisors, an advisory and
investment firm focusing on the broad technology industry. Prior to that, Mr.
Calcano was the co-head of the Technology Group of the Investment Banking
Division of Goldman, Sachs & Co. Mr. Calcano has deep domain knowledge and deal
experience across all of the sub-sectors of technology, including software, the
internet, communications equipment, service and semiconductors, having worked on
many transactions within all of these sectors. Mr. Calcano was previously a
Director of the Company from July 1999 to December 2003.
Information about the Board and its Committees
Each of our Directors, other than Messrs. James F. McCann and Christopher
G. McCann, qualifies as an "independent director" as defined under the published
listing requirements of The NASDAQ Stock Market. The NASDAQ independence
definition includes a series of objective tests. For example, an independent
director may not be employed by us and may not engage in certain types of
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business dealings with the Company. In addition, as further required by NASDAQ
rules, the Board has made a subjective determination as to each independent
Director that no relationship exists which, in the opinion of the Board, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a Director. In making these determinations, the Board
reviewed and discussed information provided by the Directors and by the Company
with regard to each Director's business and personal activities as they may
relate to the Company and Company's management. In addition, as required by
NASDAQ rules, the Board determined that the members of the Audit Committee each
qualify as "independent" under special standards established by NASDAQ and the
U.S. Securities and Exchange Commission (the "Commission") for members of audit
committees.
The table below provides current membership and meeting
information for each of the Board committees for Fiscal 2007.
---------------------------------------------------------------------------------------------------------------------
Directors Audit Compensation Nominating and Secondary
--------- Committee Committee Corporate Compensation
--------- ------------ Governance Committee
Committee
--------------- --------------
James F. McCann X
Christopher G. McCann
Jeffrey C. Walker X*
Lawrence Calcano. X X
Jan L. Murley X X
John J. Conefry, Jr. X* X X
Leonard J. Elmore X*
James Cannavino X
Total Meetings in Fiscal 2007 6 1 7 5
---------------------------------------------------------------------------------------------------------------------
* Committee Chairperson
Audit Committee
The Audit Committee of the Board of Directors reports to the Board
regarding the appointment of the Company's independent registered public
accountants, the scope and results of its annual audits, compliance with
accounting and financial policies and management's procedures and policies
relative to the adequacy of internal accounting controls. The Company's Board of
Directors adopted a written charter for the Audit Committee in January 2000, as
amended in August 2003, which outlines the responsibilities of the Audit
Committee. A current copy of the charter of the Audit Committee is available on
our website located at www.1800flowers.com under the Investor Relations section
of the website and is also attached to this Proxy as Annex A.
Each member of the Audit Committee is "financially literate" as required by
NASDAQ rules. The Audit Committee also includes at least one member, John J.
Conefry, Jr. who was determined by the Board to meet the qualifications of an
"audit committee financial expert" in accordance with Commission rules and to
meet the qualifications of "financial sophistication" in accordance with NASDAQ
rules. Stockholders should understand that these designations related to our
Audit Committee members' experience and understanding with respect to certain
accounting and auditing matters and do not impose upon any of them any duties,
obligations or liabilities that are greater than those generally imposed on a
member of the Audit Committee or of the Board.
Compensation Committee
The Compensation Committee of the Board of Directors establishes the
Company's compensation philosophy and makes a final determination on all forms
of compensation to be provided to the Company's Section 16 Executive Officers
("Executive Officers"), including base salary and the provisions of the Sharing
Success Program under which annual cash incentive compensation may be awarded.
In addition, the Compensation Committee administers the Company's 2003 Long Term
Incentive and Share Award Plan ("2003 Plan") under which option grants, stock
appreciation rights, restricted awards and performance awards may be made to
Directors, officers, employees of, and consultants to, the Company and its
subsidiaries, as well as, the Company's Long Term Incentive Plan ("LTIP") under
which equity awards can be earned if the Company achieves its targeted financial
performance over the three year period subsequent to the grant. See "Named
Executive Officer Compensation-Compensation Discussion and Analysis-Sharing
Succcess Program and Long-Term Incentive Equity Awards. "The Board of Directors
has authorized a Secondary Committee of the Compensation Committee (the
"Secondary Committee"), which consists of Mr. James F. McCann, to also review
awards for all of the Company's employees, other than its Executive Officers.
The Compensation Committee also makes recommendations to the Board of Directors
regarding Director's compensation. The Company's Board of Directors adopted a
written charter for the Compensation Committee in June 2003, which outlines the
responsibilities of the Compensation Committee. A current copy of the charter of
the Compensation Committee is available on our website located at
www.1800flowers.com under the Investor Relations section of the website.
4
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for the
oversight of the evaluation of the Board of Directors, including its size and
composition; it reviews and reassesses the adequacy of corporate governance
guidelines and practices and develops and recommends to the Board the Company's
corporate governance guidelines and practices; and, in consultation with the
Chief Executive Officer and other Executive Officers, identifies and evaluates
individuals qualified to become Board members and recommends to the Board,
Director nominees for election and re-election. The Company's Board of Directors
adopted a written charter for the Nominating and Corporate Governance Committee
in June 2003, which outlines the responsibilities of the Committee. A current
copy of the charter of the Nominating and Corporate Governance Committee is
available on our website located at www.1800flowers.com under the Investor
Relations section of the website.
Compensation Committee Interlocks and Insider Participation
No interlocking relationships exist between the Board of Directors or the
Compensation Committee and the Board of Directors or the compensation committee
of any other company, nor has any such interlocking relationship existed in the
past. No member of the Compensation Committee was an officer or employee of the
Company at any time during Fiscal 2007.
Communication with Board of Directors
The Nominating and Corporate Governance Committee, on behalf of the Board,
reviews letters from stockholders concerning the Company's Annual Meeting of
Stockholders and governance process and makes recommendations to the Board based
on such communications. Stockholders can send communications to the Board and to
the non-management Directors by mail in care of the Corporate Secretary at One
Old Country Road, Suite 500, Carle Place, NY 11514: Attention: Gerard M.
Gallagher, and should specify the intended recipient or recipients. All such
communications, other than unsolicited commercial solicitations or
communications, will be forwarded to the appropriate Director or Directors for
review. Any such unsolicited commercial solicitation or communication not
forwarded to the appropriate Director or Directors will be available to any
non-management Director who wishes to review it.
Attendance at Board Meetings
During Fiscal 2007, the Board of Directors held four meetings and acted by
unanimous written consent on one occasion. During Fiscal 2007, all Directors
attended at least 75% of the meetings of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our Executive
Officers and Directors, and persons who own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the Commission and the Nasdaq Stock Market. Executive Officers, Directors,
and greater than 10% stockholders are required by Commission regulations to
furnish us with copies of all reports they file pursuant to Section 16(a).
5
Based solely on a review of the copies of such reports furnished to us, we
believe that for Fiscal 2007, all Section 16(a) filing requirements applicable
to our Executive Officers, Directors and greater than 10% stockholders have been
satisfied.
Compensation of Directors
Fees Earned
Annual Committee Committee or Paid Stock Option
Cash Meeting Chairman in Cash Awards Awards
Retainer Fees Fees (1) (2) (3) Total
Director ($) ($) ($) ($) ($) ($) ($)
-------------------------------------------------------------------------------------------------------------
Lawrence Calcano (4) 12,500 13,000 0 25,500 0 26,090 51,590
James Cannavino (4) 0 2,500 0 2,500 0 0 2,500
John J. Conefry, Jr. 12,500 24,500 10,000 47,000 0 26,090 73,090
Leonard J. Elmore 12,500 17,000 5,000 34,500 0 26,090 60,590
Jan L. Murley (4) 0 7,500 0 7,500 0 0 7,500
Jeffrey C. Walker (5) 12,500 11,000 5,000 28,500 13,775 0 42,275
(1) Total Fees Earned or Paid in Cash combines the amounts in the three
preceding columns.
(2) Reflects compensation expense for restricted stock awards (RSAs) recognized
for financial reporting purposes (exclusive of any assumption for forfeitures)
under Statement of Financial Accounting Standards No. 123(R), (FAS 123R), for
the year ended July 1, 2007. Each Director named above who chose to receive
RSA's, received a grant on December 7, 2006, the date of the
Company's Annual Meeting, of 2,500 RSAs with a grant date fair value under FAS
123R of $13,775, based on the closing price of our Common Stock on that date of
$5.51. RSAs granted to members of the Company's Board of Directors immediately
vested upon grant.
(3) Reflects compensation expense for stock option grants recognized for
financial reporting purposes (exclusive of any assumption for forfeitures) under
FAS 123R, for the year ended July 1, 2007. Each Director named above who chose
to receive stock options, received a grant on December 7, 2006, the date of the
Company's Annual Meeting, of 10,000 options with a grant date fair value under
FAS 123R of $26,090, based on the closing price of our Common stock on that date
of $5.51. Options granted to members of the Company's Board of Directors
immediately vested upon grant. As of the end of fiscal 2007:
(a) Mr. Calcano has 10,000 option awards outstanding
(b) Mr. Cannavino has 0 option awards outstanding
(c) Mr. Conefry has 35,000 option awards outstanding
(d) Mr. Elmore has 45,000 option awards outstanding
(e) Ms. Murley has 0 option awards outstanding
(f) Mr. Walker has 25,000 option awards outstanding and owns 2,500
fully vested restricted shares of the Company's Class A Common
Stock, all of which are in the name of JP Morgan Partners (SBIC),
LLC, Mr. Walker's former employer.
(4) Mr. Calcano, Mr. Cannavino and Ms. Murley were appointed to the Board of
Directors on December 7, 2006, June 27, 2007, and February 8, 2007,
respectively.
(5) Mr. Walker's compensation includes cash compensation of $23,500, which was
paid to JP Morgan Partners (SBIC), LLC, Mr. Walker's former employer and $5,000
of cash compensation paid to CCMP, Capital Advisors, LLC, his current employer,
as well as $13,775 of RSA's, granted to JP Morgan Partners (SBIC), LLC, Mr.
Walker's former employer.
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In fiscal 2007, non-employee members of the Company's Board of Directors
received the following compensation:
* An annual retainer of $12,500 paid to Board Members on the date of
the Annual Meeting.
* A per meeting fee (Board or Committee) of $2,500 for personal
attendance and a per meeting fee (Board or Committee) of $1,000
for telephonic attendance, excluding Committee meetings held on
the same day as a meeting of the full Board .
* An annual retainer of $5,000 for each Board Committee Chairperson,
except for the Audit Committee Chairperson who receives an annual
retainer of $10,000. these retainers are paid on the date of the
Annual Meeting
* An annual award of 10,000 options, or, in lieu thereof, the
equivalent number of RSA's based upon a 4 to 1 ratio between
options and RSA's. Such options and shares, which are granted on
the date of the Annual Meeting, vest immediately.
Compensation information on James F. McCann and Christopher G. McCann, who
are Directors, as well as Executive Officers of the Company, is contained under
the section titled "Executive Compensation and Other Information-Summary
Compensation Table"
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following individuals were serving as Executive Officers of the Company
on October 9, 2007:
Name Age Position with the Company
---- --- -------------------------
James F. McCann............. 56 Chairman of the Board and Chief Executive
Officer
Christopher G. McCann....... 46 Director and President
Monica L. Woo............... 51 President of Consumer Floral
Timothy J. Hopkins.......... 53 President of Madison Brands
William E. Shea............. 48 Senior Vice President, Treasurer, Chief
Financial Officer
Gerard M. Gallagher......... 54 Senior Vice President of Business Affairs,
General Counsel, Corporate Secretary
Stephen J. Bozzo............ 52 Senior Vice President and Chief
Information Officer
David Taiclet............... 44 Chief Executive Officer, Fannie May
Confections Brands, Inc.
Information Concerning Executive Officers Who Are Not Directors
Monica L. Woo has been President of 1-800-Flowers.com's Consumer Floral
brand since July 2006 after having been the Company's Chief Marketing Officer,
since joining the Company in January 2004. Prior to joining the Company, Ms. Woo
had founded a successful consulting practice focusing on growth strategies for
such multi-national clients as Deutsche Bank, Northwest Airlines and Campbell's
Soup. Prior to that, Ms. Woo was the President of Bacardi Global Brands, Inc.,
of Bacardi Limited. Before holding this position, Ms. Woo had assumed a number
of senior executive positions in the financial services and consumer packaged
goods sectors, including the Global Marketing Director/SVP of Citibank On-line
and the Citibank Private Bank, and the SVP, European Marketing Director of
Diageo PLC. Ms. Woo graduated with an MBA from the Wharton School of the
University of Pennsylvania and a BA from Mills College in Oakland, California.
Timothy J. Hopkins has been President of the Madison Brands division since
January 2007 and prior to that served as President of Specialty Brands since
joining the Company in March 2005. Before joining the Company, Mr. Hopkins was
Chief Executive Officer and Director of Sur La Table, Inc., a multi-channel
upscale specialty retailer of gourmet culinary and serveware products. Prior to
Sur La Table, Inc., Mr. Hopkins was President, Corporate Merchandising and
Logistics Worldwide for BORDERS Group, Inc. Before this position Mr. Hopkins
held other senior level positions in the multi-channel retailing sector.
William E. Shea has been our Senior Vice President, Treasurer and Chief
Financial Officer since September 2000. Before holding his current position, Mr.
Shea was our Vice President of Finance and Corporate Controller after joining us
in April 1996. From 1980 until joining us, Mr. Shea was a certified public
accountant with Ernst & Young LLP.
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Gerard M. Gallagher has been our Senior Vice President of Business Affairs,
General Counsel and Corporate Secretary since August 1999 and has been providing
legal services to the Company since its inception. Mr. Gallagher is the founder
and a managing partner in the law firm of Gallagher, Walker, Bianco and
Plastaras, based in Mineola, New York, specializing in corporate, litigation and
intellectual property matters since 1993. Mr. Gallagher is duly admitted to
practice before the New York State Courts and the United States District Courts
of both the Eastern District and Southern District of New York.
Stephen J. Bozzo has been our Senior Vice President, Chief Information
Officer since May 2007. Prior to joining the Company, Mr. Bozzo served as Chief
Information Officer for the International Division of MetLife Insurance Company
since 2001. Mr. Bozzo's business background includes senior executive positions
at Bear Stearns Inc. as Managing Director Principle, AIG as Senior Vice
President Telecommunications and Technical Services and Chase Manhattan Bank,
where he was Senior Vice President Global Telecommunications.
David Taiclet has been our Chief Executive Officer of Fannie May
Confections Brands, Inc. since May 2006, upon our acquisition of the Company.
Mr. Taiclet was a Co-Founder of Fannie May Confections Brands, Inc. (formerly
Alpine Confections, Inc), a multi-brand and multi-channel retailer,
manufacturer, and distributor of confectionery and specialty food products.
Prior thereto, Mr. Taiclet spent four years in a variety of management
positions, including the Strategy and Business Development Group of Cargill,
Inc., an international marketer, processor and distributor of food, financial
and industrial products. Mr. Taiclet also served four years of active duty in
the U.S. Army, attaining the rank of Captain.
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Compensation Discussion and Analysis
------------------------------------
Compensation Philosophy and Objectives
--------------------------------------
This section discusses compensation to our Named Executive Officers, which
consist of our Chief Executive Officer, our Chief Financial Officer and the
three next most highly compensated Executive Officers of the Company as
determined under the rules of the Commission (collectively, the "NEO's").
The Compensation Committee believes that the compensation programs for its
NEO's, as well as all of its Executive Officers, should reflect the Company's
performance and the value created for the Company's stockholders. In addition,
the compensation programs should support the short-term and long-term strategic
goals and values of the Company and should reward individual contribution to the
Company's success. The Company is engaged in a very competitive industry, and
the Company's success depends upon its ability to attract and retain qualified
Executive Officers through the competitive compensation packages it offers to
such individuals.
The fundamental policy of the Compensation Committee is to provide the
Company's NEO's, as well as its Executive Officers, with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company. It is the Compensation Committee's philosophy
that a significant portion of each NEO's and Executive Officer's compensation
should be contingent upon the Company's financial performance. The Company also
acknowledges the importance of attracting and retaining talented, motivated and
success-oriented Executive Officers who share our overall corporate philosophy
and will enable our Company to achieve its short and long-term goals.
Accordingly, the compensation package for each NEO and Executive Officer is
comprised of three elements: (i) base salary; (ii) annual cash incentives and
(iii) long-term incentive equity awards.
Guiding Principles:
o Growth - To create an atmosphere that
encourages superior growth and performance
of the Company while also offering personal
and professional growth.
o Teamwork - To encourage executives to work
together effectively and efficiently so that
Company goals can be fully realized.
o Innovation - To encourage and reward
creativity and innovation, including the
development of new ideas and business
opportunities for the Company.
o Market Competitiveness - To offer a strong,
comprehensive compensation package that will
enable the Company to attract and retain
qualified executive talent.
Setting Executive Compensation
------------------------------
We compete for senior executive talent with many leading companies. In
order to stay competitive in the marketplace, a critical component of which is
the recruitment and retention of executive talent, we annually review the market
competitiveness of our Executive Officer compensation programs. In connection
with this review, the Compensation Committee has retained the services of Mercer
(formerly Mercer Human Resource Consulting ("Mercer")) (see "Role of
Compensation Consultant" below for further discussion of Mercer's role).
When assessing the market competitiveness of our compensation programs, in
addition to information provided by Mercer, we review third-party surveys and
publicly available data relating to a specific group of companies. For our
executive compensation comparisons, we consider peer companies. The peer
companies include a broad range of companies in the internet retail, internet
content and catalog/specialty retail sector. Members of the peer companies
include: Overstock.com, Inc., Netflix, Inc., FTD Group, Inc., Drugstore.com,
Inc., 1-800-Contacts, Inc., United Online, Inc., CNET Networks, Inc.
William-Sonoma, Inc., Tiffany & Co., American Greetings, Inc., Cabela's, Inc.,
Sharper Image Corp., and The Yankee Candle, Inc. The Compensation Committee also
reviews the Company's recent historical compensation practices for its
executives, and considers recommendations from the Chief Executive Officer and
President regarding the compensation of their direct reports, who include the
other NEO's.
Elements of Compensation
------------------------
The Compensation Committee believes that we can maximize the effectiveness
of our compensation program by ensuring that all program elements are working in
9
concert to motivate and reward performance. The elements of our executive
compensation program are detailed below, together with the principal factors
which the Compensation Committee considers in reviewing the components of each
Executive Officer's compensation package. In general, for each compensation
element, these factors include: the key role each Executive Officer performs for
the Company; the benefit to the Company in assuring the retention of his or her
services; the performance of the Company during the past fiscal year; the
competitive market conditions for executive compensation; the executive's prior
year compensation; and the objective evaluation of the Executive Officer's
performance. The Compensation Committee may also, however, in its discretion
apply other factors with respect to executive compensation. We believe that our
executive compensation program effectively strengthens the mutuality of
interests between the Executive Officers and the Company's stockholders, which
results in greater Company performance.
Base Salary. The Compensation Committee views base salary as the assured
element of compensation that permits income predictability. Subject to existing
employment agreements and employment offer letters, our objective is to set base
salary levels at the competitive norm. However, individual salaries may be above
or below the competitive norm to reflect the strategic role, experience,
proficiency and performance of the executive. Incumbents who have been in their
positions for a longer period of time, and whose performance is superior, may be
paid above the competitive norm. The primary exception to this general rule will
be in the case of seasoned executives with strategic value who are newly hired
into the Company. In these situations, it may be necessary to pay above the
competitive norm in order to attract the best candidates to the Company.
The minimum base salaries for Messrs. J. McCann, C. McCann, Hopkins and Ms.
Woo are primarily prescribed in their employment agreements or employment offer
letters, as the case may be (see below for description of the employment
agreements and employment offer letters in the "Narrative Disclosure to Summary
Compensation Table-Grants of Plan-Based Awards-Employment Agreements and
Employment Offer Letters"). Annual base salary increases for the NEO's and other
Executive Officers are determined on the basis of the employment agreements (for
Messrs. J. McCann, and C. McCann), as well as the following factors: the
performance of the executive versus job responsibilities; the relationship
between current salary and the range for the executive's level, ranges having
been set based on the competitive norm in the industry; the average size of
salary increase based upon the Company's financial performance; and whether the
responsibilities or criticality of the position of the incumbents have been
changed during the preceding year. The weight given to each of these factors may
differ from individual to individual as the Compensation Committee deems
appropriate. Increases for Fiscal 2007 for Messrs. J. McCann, C. McCann,
Hopkins, Shea and Ms. Woo were 0%, 9.4%, 4.7%, 2.0% and 0%, respectively.
Annual Cash Incentive. Annual cash incentive compensation plays a
significant role in the Company's overall compensation package for its Executive
Officers. The annual cash incentive for the NEO's is based upon the Company's
financial performance and, in the case of Ms. Woo and Mr. Hopkins also included
brand specific financial performance as well as leadership development goals for
Fiscal 2007. This balance supports the accomplishment of the Company's overall
financial objectives and rewards the individual contributions of our NEO's.
Annual incentive programs for Executive Officers support the following Company
objectives:
o Communication of important goals through performance targets that are
aligned with business strategies.
o Motivation for the entire management team to work together toward a
common set of goals.
o Reward executives on the basis of results achieved.
o Deliver annual incentive opportunities and payments through a
structured, performance driven, objective mechanism.
o Deliver a competitive level of compensation that is fully competitive
with industry practice.
NEO's are eligible to receive annual cash incentive awards under the
Company's Sharing Success Program.
Sharing Success Program. The Sharing Success Program is intended to cover
management positions, including the NEO's. Each eligible plan participant is
assigned a target award (expressed as a percentage of base salary) which
represents the level of cash incentive payment the participant can expect to
earn in the event all performance measures are achieved at 100% during the
ensuing fiscal year. For Fiscal 2007, the target award for Messrs. J. McCann, C.
McCann, Hopkins, Shea and Ms. Woo were 75%, 50%, 50%, 40% and 45%, respectively,
of their annual base salary for Fiscal 2007.
For each fiscal year, specific performance measures and goals are
established by the Compensation Committee that reflect the key strategic and
10
business goals established by the business plan for that year. EBITDA as used
for purposes of the Sharing Success Program and the Long Term Incentive Plan
("LTIP") is defined as net income before interest, taxes, depreciation,
amortization and stock based compensation expense ("Plan EBITDA"). For Fiscal
2007, in the case of Messrs. J. McCann, C. McCann and Shea, the growth of
Company-wide revenue (25%), Company-wide Plan EBITDA growth (60%) and
maintaining non-marketing operating expenses at targeted levels (15%), were the
performance measures selected for their annual cash incentive awards. For Mr.
Hopkins and Ms. Woo, their respective performance measures were the aggregate of
(i) brand-specific revenue and brand-specific Plan EBITDA growth (50%), (ii) the
growth of Company-wide revenue, Company-wide Plan EBITDA growth and maintaining
non-marketing operating expenses at targeted levels (25%) and (iii) the
achievement of personal leadership development goals (25%).
When Company-wide and/or brand-specific performance measures exceed or fall
below expectations, actual awards are proportionately increased or decreased
from target; however, participants may earn no Company-wide or brand-specific
bonus if such threshold performance measures are not met (defined as achievement
of 70% of performance measures, resulting in a 50% pay-out of target) and no
participant may be paid an incentive award under the Sharing Success Program in
excess of maximum (defined as achievement of 135% of performance measures,
resulting in a 200% pay-out of target). In addition, all participants must be
actively employed at the time of payment in order to qualify for the award.
For Fiscal 2007, Company-wide performance measures, which included
anticipated contributions from the Fannie May Confections Brands business
acquired in May 2006, were as follows: Company-wide revenue growth in a range of
16.5% to 31.9%, Company-wide Plan EBITDA growth in a range of 89% to 171% and
attaining a non-marketing expense ratio to total revenue of 22.1%. Pertaining to
Ms. Woo, brand-specific performance measures for Fiscal 2007 were as follows:
1-800-Flowers.com's Consumer Floral brand revenue and its Plan EBITDA growth in
a range of 6.5% to 12.5% and 19% to 36.5% respectively, and attaining a
non-marketing expense ratio to 1-800-Flowers.com's Consumer Floral brand
revenues of 13.2%. For Mr. Hopkins, Madison Brands (Home and Children's Group)
revenue and its Plan EBITDA growth in a range of 12% to 23% and 95% to 189%
respectively, and attaining a non-marketing expense ratio to Madison Brands
revenue of 14.3%. The threshold performance measures are intended to be
reasonable and attainable while performance measures above the threshold are
intended as stretch goals.
The Compensation Committee has the authority to review extraordinary events
that impact the Company's performance and may adjust the calculation of an award
by taking into account the effect of any such extraordinary events. The
Compensation Committee also retains the discretionary authority to award
"special bonus compensation" to Executive Officers who have, in the opinion of
the Compensation Committee, significantly contributed to the performance of the
Company. However, the Compensation Committee did not exercise such discretion in
determining Fiscal 2007 annual cash incentive awards for the NEO's.
In Fiscal 2007, the Compensation Committee awarded Messrs. J. McCann, C.
McCann and Shea 75% of their target awards discussed above, based upon the level
of achievement of the Company-wide performance measures in Fiscal 2007. For
Fiscal 2007, Mr. Hopkins' brand-specific performance measures did not reach
threshold, however since he achieved his personal leadership development goals
and earned 75% of the Company wide performance measures, the Compensation
Committee awarded Mr. Hopkins 44% of his target award. Ms. Woo exceeded her
brand-specific performance measures, achieved her personal leadership
development goals and earned 75% of the Company-wide performance measures, and
therefore the Compensation Committee awarded Ms. Woo 100% of her target award.
See the column under "Summary Compensation Table-Non-Equity Incentive Plan
Compensation."
For Fiscal 2008, the target award for Messrs. J. McCann, C. McCann,
Hopkins, Shea and Ms. Woo are 75%, 50%, 50%, 45% and 50%, respectively. The
target awards for Mr. Shea and Ms. Woo were increased from Fiscal 2007 to Fiscal
2008 in recognition of their performance in Fiscal 2007.
For Fiscal 2008, the Compensation Committee determined to use the growth of
Company-wide revenue (25%) and Company-wide Plan EBITDA growth (75%) as the
performance measures for Messrs. J. McCann, C. McCann and Shea and to use those
Company-wide performance measures (25%), along with growth of the
1-800-Flowers.com's Consumer Floral brand revenue and its Plan EBITDA growth
(75%) as the performance measures for Ms. Woo. In addition for Fiscal 2008, the
Compensation Committee determined to use those Company-wide measures (25%),
along with growth of the Madison Brands (Home and Children's Group) revenue and
its Plan EBITDA growth performance (75%) as the performance measures for Mr.
Hopkins. The Compensation Committee adjusted the performance measures for Fiscal
2008, to place a greater emphasis on the profitability of the Company.
For Fiscal 2008, Company-wide performance measures are as follows: revenue
growth in a range of 6.1% to 11.7% and Company-wide Plan EBITDA growth in a
range of 21.4% to 41.3%. Brand-specific performance measures for Fiscal 2008 are
as follows: 1-800-Flowers.com's Consumer Floral brand revenue growth in a range
of 6.3% to 12.1% and its Plan EBITDA growth in a range of 8.0 to 15.5%; Madison
Brands (Home and Children's Group) revenue growth in a range of 1.6% to 3.0% and
its Plan EBITDA growth in a range of 525.1% to 1,012.6% . The threshold
performance measures are intended to be reasonable and attainable while
performance measures above the threshold are intended as stretch goals.
11
Long-Term Incentive Equity Awards. In order to structure a long term
incentive program for the Company's Executive Officers that would tie a
significant portion of their compensation to the profitability of the Company,
the Compensation Committee consulted with Mercer to evaluate its long term
incentive programs. The Company's past practice had been to grant stock options
or restricted stock, which vest over time, as long-term incentive equity awards
to its Executive Officers. After a review of peer companies and an analysis of
various long term incentive plans, the Compensation Committee, in consultation
with Mercer, made a determination to award long-term incentive equity awards
through grants of performance shares. In order to drive improved profitability
of the Company, the Compensation Committee determined to align a significant
portion of an Executive Officer's compensation with the stockholders' interests
and determined that performance shares are more incentive based. All award
grants are designed to align the interests of each Executive Officer with those
of the stockholders and provide each individual with a significant incentive to
manage the Company from the perspective of an owner with an equity stake in the
Company.
The grant of an award is set at a level intended to create a meaningful
incentive based in part on the Executive Officer's and NEO's current position
with the Company, the base salary associated with that position, the size of
comparable awards made to individuals in similar positions within the industry,
and the individual's personal performance in recent periods. The Compensation
Committee also takes into account the number of awards held by the Executive
Officer in order to maintain an appropriate level of incentive for that
individual. The Compensation Committee has the authority to review extraordinary
events that impact on the Company's performance and may adjust the calculation
of an award by taking into account the effect of any such extraordinary events.
The NEO's were granted a target number of performance shares in Fiscal 2007
under our LTIP. The number of shares granted in Fiscal 2007 for Messrs. J.
McCann, C. McCann, Hopkins, Shea and Ms. Woo were 177,677, 179,724, 50,228,
31,413, and 51,253, respectively. These share awards are earned if the Company
achieves its targeted financial performance over the three year period
subsequent to the grant. The number of shares actually earned will be based on
actual cumulative performance results over the three year period against the
below mentioned pre-established financial measures. However, for the inaugural
cycle of the LTIP (Fiscal 2007 through Fiscal 2009), upon completion of the
second year, participants in the LTIP will receive one-third of the shares
projected to be earned by the end of the three-year performance cycle, with the
balance issued at the end of the performance cycle. For Fiscal 2007, the
Compensation Committee selected Company-wide Plan EBITDA as the basis for its
performance measure. For Fiscal 2007 grants to the NEO's, the Compensation
Committee established a range of a three year cumulative Company-wide Plan
EBITDA of $176 million to $248 million. The LTIP provides for a range of award
payouts (from 50% (threshold) to 150% (maximum)of target shares) that are
directly related to the percentage of the financial performance measure
achieved. For Fiscal 2007, the Company achieved 100% of its pre-established
financial measure. For Fiscal 2008, the Compensation Committee has also selected
Company-wide Plan EBITDA as the basis for its performance measure (Fiscal 2008
through Fiscal 2010). For Fiscal 2008 grants to the NEO's, the Compensation
Committee established a range of a three year cumulative Company-wide Plan
EBITDA of $205 million to $289 million. The threshold performance measures are
intended to be reasonable and attainable while performance measures above the
threshold are intended as stretch goals.
Executive Benefits
------------------
The Company's NEO's are eligible for the same level and offering of
benefits made available to other employees, including our 401(k) Profit Sharing
Plan (which includes a discretionary annual Company contribution), health care
plan and other welfare benefit programs. We do not currently maintain any
qualified or nonqualified defined benefit pension plans or nonqualified deferred
compensation plans for our NEO's.
Perquisites
-----------
We do not routinely provide any significant perquisites to our NEO's.
Except for Chris McCann's perquisite which is disclosed in the Summary
Compensation Table, the value of perquisites to each other NEO in Fiscal 2007
did not exceed $10,000.
Severance/Change of Control
---------------------------
We do not maintain any severance or change of control plans or agreements.
However, pursuant to the terms of employment agreements, employment offer
letters and incentive plans, certain NEO's are eligible to receive severance and
other benefits in the case of certain termination events and in the case of a
change in control. See "Potential Payments upon Termination and Change in
Control" below.
12
Management's Role in Setting Executive Compensation
---------------------------------------------------
Although the Compensation Committee of the Board of Directors establishes
the Company's compensation philosophy and makes the final determinations on all
compensation paid to our Executive Officers, the Chief Executive Officer and
President work closely with the Vice President of Human Resources to develop
compensation programs and policies and make recommendations (often in
consultation with Mercer) regarding annual adjustments to the Executive
Officers' salaries and incentive award opportunities (other than their own
compensation).
13
Role of Compensation Consultant
-------------------------------
The Compensation Committee has retained the services of Mercer to provide
specialized information and targeted research to assist us in the development of
compensation and retention strategies. Mercer provides general assistance to the
Compensation Committee and does not perform any other services for the Company.
In Fiscal 2007, Mercer was retained by the Compensation Committee to review its
annual and long-term incentive programs and to also assess the total competitive
compensation levels for Messrs. J. McCann and C. McCann in relation to the then
current market conditions. As part of its services, Mercer advised the
Compensation Committee on the development of its LTIP in Fiscal 2007.
Compensation Deductibility Policy
---------------------------------
A federal income tax deduction will generally be available for annual
compensation in excess of $1 million paid to the Chief Executive Officer and the
four other most highly compensated executive officers of a public corporation
only if such compensation is "performance-based" and complies with certain other
tax law requirements. Although our policy is to maximize the deductibility of
all executive compensation, the Compensation Committee retains the discretion to
award compensation that is not deductible under Section 162(m) of the Code when
it is in the best interests of the Company to do so.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis provisions to be included in the Company's
filings pursuant to the Securities Exchange Act of 1934. Based on the reviews
and discussions referred to above, the Compensation Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis referred to
above be included in such filings.
Compensation Committee
Jeffrey Walker, Chairman
John J. Conefry, Jr.
Jan L. Murley
James Cannavino
Notwithstanding any Commission filing by the Company that includes or
incorporates by reference other Commission filings in their entirety, this
Compensation Committee Report shall not be deemed to be "filed" with the
Commission except as specifically provided otherwise therein.
14
Summary Compensation Table
Set forth below is summary compensation information for each person who was
(1) at any time during fiscal 2007 our Chief Executive Officer or Chief
Financial Officer and (2) at July 1, 2007, one of our three most highly
compensated Executive Officers, other than the Chief Executive Officer and the
Chief Financial Officer.
Summary Compensation Table
The following table sets forth summary information concerning the compensation
awarded to, paid to or earned by each of the NEO's for the fiscal year ended
July 1, 2007.
Non-Equity
Stock Option Incentive Plan All Other
Name and Principal Salary Awards (2) Awards (3) Compensation (4) Compensation (5) Total
Position (1) Year ($) ($) ($) ($) ($) ($)
-------------------- ----------- --------- ------------ ------------ ---------------- ------------------ ----------------
James F. McCann 2007 975,000 366,552 282,136 548,438 750 2,172,876
Chairman of the
Board and Chief
Executive Officer
William E. Shea 2007 289,990 87,549 79,202 87,095 750 544,586
Senior Vice
President,
Treasurer,
and Chief
Financial Officer
Christopher G.
McCann 2007 615,570 345,195 505,035 232,056 11,993 1,709,849
Director and
President
Monica L. Woo 2007 375,000 112,232 50,804 168,750 750 707,536
President of
Consumer Floral
Timothy J. Hopkins 2007 366,490 115,617 163,601 80,391 - 726,099
President of
Madison Brands
----------------------------
(1) The titles included in this column are as of July 1, 2007. During
Fiscal 2007, Mr. Hopkins was President of Specialty Brands, until
January 2007 when he became President of Madison Brands.
(2) Stock Awards include compensation expense for restricted stock awards
recognized for financial reporting purposes (exclusive of any
assumption for forfeitures) under SFAS 123R, for the year ended July
1, 2007. These award fair values have been determined based on the
assumptions set forth in Note 11, "Stock Based Compensation", in the
Notes to the Consolidated Financial Statements in the Company's Annual
Report on Form 10-K for the fiscal year ended July 1, 2007. Additional
information about the awards reflected in this column is set forth in
the footnotes to "Grants of Plan-Based Awards and Outstanding Equity
Awards at Fiscal Year- End" tables below.
(3) Option Awards include compensation expense for outstanding stock
option awards recognized for financial reporting purposes (exclusive
of any assumption for forfeitures) under SFAS 123R, for the year ended
July 1, 2007. These award fair values have been determined based on
the assumptions set forth in Note 11, "Stock Based Compensation", in
the Notes to the Consolidated Financial Statements in the Company's
Annual Report on Form 10-K for the fiscal year ended July 1, 2007.
Additional information about the awards reflected in this column is
set forth in the footnotes to "Grants of Plan-Based Awards and
Outstanding Equity Awards at Fiscal Year-End" tables below.
15
(4) Non-Equity Incentive Plan Compensation represents cash bonuses
described under "Compensation Discussion and Analysis-Elements of
Compensation-Annual Cash Incentive". These annual cash bonuses were
paid during the first quarter of fiscal 2008 for performance related
to, and recorded as compensation expense during, Fiscal 2007.
(5) Other annual compensation in the form of perquisites and other
personal benefits consist of the Company's contribution to a Qualified
401(K) Plan ($750), except with respect to Mr. Christopher McCann,
whose compensation also consists of the personal use of a Company
car ($11,243), which is calculated by allocating the costs of
operating the car between personal and business use. The cost of
operating the car is allocated to personal use on the basis of miles
driven for personal use to total miles driven.
16
Grants of Plan-Based Awards
The following table sets forth summary information regarding all grants of
plan-based awards made to our NEO's for the fiscal year ended July 1, 2007. The
compensation plans under which the grants in the following table were made are
described in the Compensation Discussion and Analysis section above.
Estimated Future Payouts Estimated Future Payouts Grant Date
Under Non-Equity Incentive Under Equity Incentive Fair Value
Plan Awards (1) Plan Awards (2) Of Stock
----------------------------- ------------------------- and Option
Grant Threshold Target Maximum Threshold Target Maximum Awards (3)
Name Date ($) ($) ($) (#) (#) (#) ($)
---------- --------- ---------- -------- --------- --------- ------- -------------------------------------------------------------
James F. 365,625 731,250 1,462,500
McCann 9/22/2006 88,838 177,677 266,515 915,037
Chairman
of the
Board and
Chief
Executive
Officer
William E. 58,064 116,127 232,254
Shea 9/22/2006 15,706 31,413 47,119 161,777
Senior Vice
President,
Treasurer,
and Chief
Fianancial
Officer
Christopher 154,704 309,408 618,816
G. McCann 9/22/2006 89,862 179,724 269,587 925,579
Director
and
President
Monica L. 63,281 168,750 295,313
Woo 9/22/2006 25,626 51,253 76,879 263,953
President
of Consumer
Floral
Timothy J. 68,906 183,750 321,563
Hopkins 9/22/2006 25,114 50,228 75,342 258,674
President
of Madison
Brands
----------------------
(1) Amounts shown represent the threshold, target and maximum payout under
non-equity incentive programs for Fiscal 2007. For Messrs. J. McCann,
C. McCann and Shea, the growth of Company-wide revenue and Company-
wide Plan EBITDA, and maintaining non-marketing operating expenses
at targeted levels were the performance measures selected for their
annual cash incentive awards. For Ms. Woo and Mr. Hopkins, their
respective performance measures were the aggregate of: (i) brand-
specific revenue growth, brand-specific Plan EBITDA growth, and
maintaining brand-specific non-marketing operating expenses at
targeted levels, (ii) the growth of Company-wide revenue and Company-
wide Plan EBITDA growth and maintaining non-marketing operating
expenses at targeted levels, and (iii) the achievement of personal
leadership development goals. The threshold for Company-wide non-
equity incentive plan performance measures, is at achievement of 70%
of Company-wide and, where applicable, brand-specific measures, at
17
which level there is a payout of 50% of the individual's target. (If
performance falls below the threshold level of achievement of 70% of
the Company-wide and, where applicable, brand-specific measures, no
participant may earn any Company-wide or brand-specific bonus. Upon
achievement of 100% of the Company-wide and, where applicable, brand-
specific non-equity incentive plan performance measures, there is a
payout of 100% of the individual's Company-wide or brand specific
target. Upon achievement of 135% of Company-wide and, where
applicable, brand-specific non-equity incentive plan performance
measures, there is a maximum payout of 200% of the individual's
Company-wide or brand specific target. The threshold level of
performance under Ms. Woo's and Mr. Hopkins' leadership development
goals is 0%, while the target and maximum which can be earned under
the leadership development component is 100% of target. These non-
equity incentive awards represent cash bonuses under the Company's
"Sharing Success Program" which is described under "Compensation
Discussion and Analysis-Elements of Compensation-Annual Cash
Incentive." These cash bonuses were paid during the first quarter
of fiscal year 2008. The actual amounts awarded are reported in the
"Non-Equity Incentive Plan Compensation" column of the Summary
Compensation Table.
(2) Amounts shown under the target column represent the number of
performance shares that have been granted in Fiscal 2007 under the
Company's LTIP (see Compensation Discussion and Analysis - Long-Term
Incentive Equity Awards). The awards are earned if the Company
achieves its targeted financial performance over the three-year period
(Fiscal 2007 - Fiscal 2009) subsequent to the grant date. Actual
shares earned can range from 0-150% of the target amount. The
"threshold" number is 50% of the shares granted, the "target" number
is 100% of the shares granted and the "maximum" number is 150% of the
shares granted. The "threshold" number of shares represents the
minimum number of units other than zero, that would be earned if any
threshold level of performance is achieved. If the threshold level
of performance is not achieved, no performance shares would be earned.
As the performance period has not ended, no shares have been earned to
date. See "Compensation Discussion and Analysis-Long-Term Incentive
Equity Awards".
(3) Amounts shown represent the fair value of the awards in accordance
with SFAS 123R, and is based on an estimate that 100% of the target
number of shares will be earned. The number of estimated shares to be
earned was then multiplied by $5.15 which was the closing price of the
Common Stock on the grant date.
18
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based
Awards Table
Employment Agreements and Employment Offer Letters
Mr. James F. McCann's employment agreement became effective as of July 1,
1999. The agreement provides for a five year term, with such term extended for
one additional year on each anniversary of the effective date of the agreement,
unless either the Company or Mr. J. McCann provides at least 180 days notice
that such term will not be further extended. Under the terms of the employment
agreement, Mr. J. McCann is entitled to a minimum annual salary of $1,000,000,
with annual 10% increases during the term. However, the Compensation Committee
had recommended that Mr. J. McCann receive, and Mr. J. McCann accepted, a base
salary of $975,000 for Fiscal 2007 in order to enable the Company to comply with
Section 162(m) of the IRS Code of 1986 ("Section 162(m)") as amended, which was
enacted into law in 1993. Mr. J. McCann is eligible to participate in the
Company's stock incentive plans, as well as other bonus, incentive or benefits
plans, and is provided medical, health and dental insurance coverage for himself
and his dependents.
Mr. Christopher G. McCann's employment agreement became effective as of
July 1, 1999. The agreement provides for a five year term, with such term
extended for one additional year on each anniversary of the effective date of
the agreement, unless either the Company or Mr. C. McCann provides at least 180
days notice that such term will not be further extended. Under the terms of the
employment agreement, Mr. C. McCann is entitled to a minimum annual salary of
$250,000, with annual 10% increases during the term. Mr. C. McCann's annual
salary for Fiscal 2007 was $615,570. Mr. C. McCann is eligible to participate in
the Company's stock incentive plans, as well as other bonus, incentive or
benefits plans, and is provided medical, health and dental insurance coverage
for himself and his dependents.
Under their employment agreements, Messrs. J. McCann and C. McCann are each
restricted from participating in a competitive floral products business for a
period of one year after a voluntary resignation or termination for good cause.
Each of these executives is also bound by confidentiality provisions, which
prohibit the executive from, among other things, disseminating or using
confidential information about the Company in any way that would be adverse to
the Company.
The terms of Monica L. Woo's "at will" employment are detailed in an offer
letter dated November 25, 2003. Under the terms of the offer letter, Ms. Woo is
entitled to an annual salary of $350,000, such salary to be reviewed annually
for merit increases. For Fiscal 2007, Ms. Woo's annual base salary was $375,000.
Ms. Woo is eligible to participate in the Company's stock incentive and bonus
plans, as well as the Company's benefit plans including medical, dental, life
insurance, disability and 401(k). Ms. Woo also is a party to a Confidentiality
and Non-Compete Agreement, which provides for a one year post-termination
non-compete period.
The terms of Timothy J. Hopkin's "at will" employment are detailed in an
offer letter dated February 9, 2005. Under the terms of the offer letter, Mr,
Hopkins is entitled to an annual salary of $350,000, such salary to be reviewed
annually for merit increases. For Fiscal 2007, Mr. Hopkin's annual base salary
was $362,115. Mr. Hopkins is eligible to participate in the Company's stock
incentive and bonus plans, as well as the Company's benefit plans including
medical, dental, life insurance, disability and 401(k). Mr. Hopkins also is a
party to a Confidentiality and Non-Compete Agreement, which provides for a
post-termination non-compete for the longer of (i) one year following Mr.
Hopkin's cessation of employment with the Company or (ii) the period of one year
following the last payment of any severance compensation pay-out to Mr. Hopkins.
Long Term Incentive Plan
For a description of our LTIP, please see the "Compensation, Discussion and
Analysis-Long Term Incentive Equity Awards" section above.
19
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth summary information regarding the outstanding
equity awards at July 1, 2007 granted to each of the Company's Named Executive
Officers.
Option Awards Stock Awards
------------------------------------------------- -------------------------------------------------------------
Equity Incentive
Equity Incentive Plan Awards:
Plan Awards Market or
Number of Payout
Number of Number of Number of Market Value Unearned Value of
Securities Securities Shares or of Shares or Shares, Units, Unearned
Underlying Underlying Units of Units of or Other Rights Shares, Units
Option or Unexercised Unexercised Option Stock That Stock That Rights That or Other Rights
Award Options Options Exercise Option Have Not Have Not Have Not That Have
Grant Exercisable Unexercisable Price Expiration Vested Vested (1) Vested Not Vested (1)
Name Date (#) (#) ($/Option) Date (#) ($) (#) ($)
------------------- ----------- ------------- ---------- ----------- ------------ ------------ ---------------- ----------------
Stock Options Restricted Stock Performance Awards
James F. 12/17/1999 39,810 0 12.44 12/17/2009 (2)
McCann 8/2/2001 82,730 0 11.58 8/2/2011 (2)
Chairman 1/11/2002 200,000 0 12.87 1/11/2012 (2)
of the 9/23/2002 200,000 0 6.42 9/23/2012 (3)
Board 3/24/2003 23,881 5,971 6.70 3/24/2013 (2)
and Chief 3/24/2003 145,073 25,075 6.70 3/24/2013 (2)
Executive 12/2/2004 20,000 30,000 8.45 12/2/2014 (2)
Officer 12/2/2004 16,500 (3) 155,595
10/13/2005 0 50,000 6.52 10/13/2015 (2)
10/13/2005 16,500 (3) 155,595
9/22/2006 177,677 (7) 1,675,494
William 8/2/1999 25,000 0 21.00 8/2/2009 (6)
E. Shea 12/17/1999 19,000 0 12.44 12/17/2009 (2)
Senior 4/20/2000 92,000 0 4.50 4/20/2010 (2)
VP, 12/6/2000 50,800 0 3.65 12/6/2010 (2)
Treasurer, 8/2/2001 12,100 0 11.58 8/2/2011 (2)
and Chief 1/11/2002 21,800 0 12.87 1/11/2012 (2)
Financial 9/23/2002 9,840 2,460 6.42 9/23/2012 (2)
Officer 9/23/2002 100,000 0 6.42 9/23/2012 (3)
3/24/2003 12,000 3,000 6.70 3/24/2013 (2)
12/2/2004 10,000 15,000 8.45 12/2/2014 (2)
12/2/2004 8,250 (3) 77,798
10/13/2005 0 25,000 6.52 10/13/2015 (2)
10/13/2005 8,250 (3) 77,798
9/22/2006 31,413 (7) 296,225
Christ- 7/1/1998 243,575 0 2.00 7/1/2008 (6)
opher G. 7/7/1999 190,462 0 21.00 7/7/2009 (6)
McCann 12/17/1999 20,400 0 12.44 12/17/2009 (2)
Director 4/20/2000 195,155 0 4.95 4/20/2010 (2)
and 12/6/2000 433,700 0 3.65 12/6/2010 (2)
President 8/2/2001 41,365 0 11.58 8/2/2011 (2)
1/11/2002 250,000 0 12.87 1/11/2012 (2)
9/23/2002 30,640 7,660 6.42 9/23/2012 (2)
9/23/2002 250,000 0 6.42 9/23/2012 (3)
3/24/2003 208,954 41,046 6.70 3/24/2013 (2)
12/2/2004 15,000 22,500 8.45 12/2/2014 (2)
12/2/2004 12,375 (3) 116,696
10/13/2005 0 300,000 6.52 10/13/2015 (2)
9/22/2006 179,724 (7) 1,694,797
Monica 1/15/2004 35,000 0 10.30 1/15/2014 (2)
L. Woo 1/15/2004 50,000 0 10.30 1/15/2014 (4)
President 12/2/2004 5,000 7,500 8.45 12/2/2014 (2)
of 12/2/2004 4,125 (3) 38,899
Consumer 10/13/2005 50,000 6.52 10/13/2015 (2)
Floral 10/13/2005 5,000 (3)
9/22/2006 860 (5) 8,110
9/22/2006 51,253 (7) 483,316
Timothy J.3/14/2005 80,000 120,000 7.81 3/14/2015 (2)
Hopkins 3/14/2005 12,500 (2) 117,875
President 9/22/2006 1,274 (5) 12,014
of 9/22/2006 50,228 (7) 473,650
Madison
Brands
-----------------------------------------------------------------------------------------------------------------------------------
(1) Market value is based on the closing price of 1-800-Flowers.com,
Inc.'s Class A Common Stock of $9.43 on June 29, 2007.
20
(2) Options become exercisable at a rate of 40% after the completion of
two years of service following grant date, and 20% at the completion
of each year of service thereafter.
(3) Shares will vest after the completion of four years of service
following grant date.
(4) Options become exercisable after the completion of five years of
service following grant date.
(5) Shares will vest after the completion of one year of service following
grant date.
(6) Options become exercisable at a rate of 25% at the completion of each
year of service.
(7) Amounts shown represent the target number of performance shares that
have been granted in Fiscal 2007 under the LTIP. The share awards
are earned if the Company achieves its targeted financial performance
over the three-year period (Fiscal 2007-Fiscal 2009) subsequent to
the grant date. Actual shares earned can range from 0-150% of the
target amount.(See Compensation Discussion and Analysis - Long Term
Incentive Equity Awards).
21
Option Exercises and Stock Vested
The following table sets forth all stock option exercises and vesting of stock
awards for each of the NEO's during Fiscal 2007, which ended on July 1, 2007.
Option Awards Stock Awards
------------------------------------ ----------------------------------------
Number of Shares Value Realized Number of Value Realized
Acquired on on Shares Acquired on
Exercise Exercise (1) on Vesting Vesting (2)
Name (#) ($) (#) ($)
----------------------- ----------------- ----------------- ----------------- ---------------------
James F. McCann - - - -
Chairman of the Board
and Chief Executive
Officer
William E. Shea 20,000 131,000 2,104 10,772
Senior Vice President,
Treasurer and Chief
Financial Officer
Christopher G. McCann - - 7,828 40,079
Director and President
Monica L. Woo - - 2,964 15,176
President of Consumer
Floral
Timothy J. Hopkins - - - -
President of Madison
Brands
----- ------ ------
(1) The value realized on exercise equals the difference between the
option exercise price and the market value of 1-800-Flowers.com,
Inc.'s Class A Common Stock on the date of exercise, multiplied by the
number of shares for which the option was exercised.
(2) The value realized on vesting equals the market value of
1-800-Flowers.com, Inc.'s Class A Common Stock on the vesting date,
multiplied by the number of shares that vested.
22
Pension Benefits
The Company does not maintain any defined benefit plans.
Nonqualified Deferred Compensation
The Company does not maintain any nonqualified deferred compensation plans.
Potential Payments Upon Termination and Change in Control
---------------------------------------------------------
Upon certain types of terminations of employment, not related to a change in
control of the Company, severance benefits may be paid to the Named Executive
Officers. With regard to Messrs. J. McCann, C. McCann and Hopkins and Ms. Woo,
severance in certain situations is provided in their employment agreements or
employment offer letters. See discussion below for further specifics on the
terms of the NEO's termination agreements.
The following table sets forth the potential payments to our NEO's under
existing agreements, plans or arrangements, for various scenarios involving a
change in control or termination of employment, assuming a July 1, 2007
termination date and using the closing price of the Company's Class A Common
Stock on June 29, 2007 ($9.43). The amounts shown do not include the Non-Equity
Incentive Plan Awards which were earned as of July 1, 2007. The exact amount
of payments and benefits that would be provided can only be determined at the
actual time of the NEO's separation from the Company.
James F. McCann
Triggering Event
---------------------------------------------------------------
Termination
Without Cause/
Resignation
for Good Death/
Reason (per Voluntary
Change of Employment Resignation/
Estimated Potential Payment or Benefit Control Agreement) or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (1) 7,375,000 7,375,000 0
Intrinsic value of accelerated unvested stock options (2) 259,656 0 0
Accelerated vesting of restricted shares (3) 311,190 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 1,675,494 0 0
Continuing health and welfare benefits for five years (5) 59,940 59,940 0
----------------- ------------------ ------------------------
Total 9,681,280 7,434,940 0
William E. Shea
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (6) 122,827 122,827 0
Intrinsic value of accelerated unvested stock options (2) 103,045 0 0
Accelerated vesting of restricted shares (3) 155,595 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 296,225 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 677,691 122,827 0
Christoper G. McCann
Triggering Event
---------------------------------------------------------------
Termination
Without Cause/
Resignation
for Good Death/
Reason (per Voluntary
Change of Employment Resignation/
Estimated Potential Payment or Benefit Control Agreement) or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (7) 3,594,080 3,594,080 0
Intrinsic value of accelerated unvested stock options (2) 1,030,162 0 0
Accelerated vesting of restricted shares 116,696 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 1,694,797 0 0
Continuing health and welfare benefits for five years (5) 90,832 90,832 0
----------------- ------------------ ------------------------
Total 6,526,567 3,684,912 0
23
Monica L. Woo
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (8) 43,269 43,269 0
Intrinsic value of accelerated unvested stock options (2) 152,850 0 0
Accelerated vesting of restricted shares (3) 94,159 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 483,316 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 773,594 43,269 0
Timothy J. Hopkins
Triggering Event
---------------------------------------------------------------
Death/
Voluntary
Change of Termination Resignation/
Estimated Potential Payment or Benefit Control Without Cause or Good Cause
------------------------------------------------ ----------------- ------------------ ------------------------
Lump sum cash severance payment (9) 367,500 367,500 0
Intrinsic value of accelerated unvested stock options (2) 194,400 0 0
Accelerated vesting of restricted shares (3) 129,889 0 0
Accelerated vesting of performance shares under long-term
incentive equity award plan (4) 473,650 0 0
Continuing health and welfare benefits for five years (5) 0 0 0
----------------- ------------------ ------------------------
Total 1,165,439 367,500 0
-------------------------------------
(1) Mr. James McCann is entitled to severence pursuant to his employment
agreement which entitles him to $2,500,000, plus the base salary payable
to him for the then remaining duration of the term of his contract. As
of July 1, 2007, Mr. McCann's base salary was $975,000, and his
employment agreement provided for a remaining term of five years.
(2) The intrinsic value of accelerated unvested stock options was calculated
using the closing price of the Company's Class A Common Stock on June
29, 2007 ($9.43). The intrinsic value is the aggregate spread between
$9.43 and the exercise prices of the accelerated options, if less than
$9.43.
(3) The value of accelerated unvested restricted shares was calculated using
the closing price of the Company's Class A Common Stock on June 29, 2007
($9.43).
(4) Represents the estimated amounts to be paid under the Company's Fiscal
2007 LTIP grant in the event of a change of control. The value of
the accelerated performance shares was calculated using the closing
price of the Company's Class A Common Stock on June 29, 2007 ($9.43),
and assumes the Company's financial performance was at targeted levels
to achieve 100% of share awards at the time of the change in control.
(5) Represents the estimated cost of paying for continuing medical, dental,
life and long-term disability for five years. The amounts for medical
and dental insurance coverage are based on rates charged to the
Company's employees for post-employment coverage provided in accordance
with the Consolidated Omnibus Reconciliation Act of 1985, or COBRA,
adjusted by a 10% inflation factor. The costs of providing the other
insurance coverage are based on quoted amounts for Fiscal 2007, adjusted
by a 10% inflation factor, compounded annually.
(6) Mr. Shea does not have an employment agreement. Absent any special
arrangements approved by the Compensation Committee or the Board of
Directors, for purposes of this computation, Mr. Shea was deemed to
receive two weeks of severance for each completed year of service with
the Company. As of July 1, 2007, Mr. Shea's base salary was $290,318.
(7) Mr. Christopher McCann is entitled to severence pursuant to his
employment agreement which entitles him to $500,000, plus the base
salary payable to him for the then remaining duration of the term of his
contract. As of July 1, 2007, Mr. McCann's base salary was $618,816, and
his employment agreement provided for a remaining term of five years.
(8) Ms. Woo is entitled to severence pursuant to her offer letter which,
absent any special arrangements approved by the Compensation Committee
or the Board of Directors, entitles her to two weeks of severance
for each completed year of service with the Company. As of July 1, 2007,
Ms. Woo's base salary was $375,000.
24
(9) Mr. Hopkins is entitled to severence pursuant to his employment offer
letter which, absent any special arrangements approved by the
Compensation Committee or the Board of Directors, entitles him to
one year of severance. As of July 1, 2007, Mr. Hopkins' base salary was
$367,500.
The above table does not include payments and benefits to the extent they
are provided on a non-discriminatory basis to salaried employees generally upon
termination of employment such as 401(k) plan vested benefits and earned but
unused vacation.
Employment Agreements and Employment Offer Letters
--------------------------------------------------
The employment agreements of James F. McCann and Christopher G. McCann, as
well as the employment offer letters of Monica L. Woo and Timothy J. Hopkins,
provide for certain payments in the event of termination of employment (and in
the case of Christopher G. McCann, Monica L. Woo and Timothy J. Hopkins,
terminations following a change in control of the Company). William E. Shea will
be provided severance payments under the Company's general severance policy. In
addition, the terms of the 2003 Plan, the 1999 Stock Incentive Plan and the 1997
Stock Option Plan provide for the acceleration of vesting and/or lapse of award
restrictions in the event of a change of control.
James F. McCann
Upon termination without Good Cause (as defined in the employment
agreement) or resignation by Mr. McCann for Good Reason (as defined in the
employment agreement) within ten days following the termination date, Mr. McCann
is entitled to severance pay in the amount of $2,500,000 plus the base salary
otherwise payable to him for the balance of the then current employment term and
any base salary, bonuses, vacation and unreimbursed expenses accrued but unpaid
as of the termination date, and health and life insurance coverage for himself
and his dependents for the balance of the then current employment term. Upon
termination for Good Cause, voluntary resignation without Good Reason or
termination due to death, Mr. McCann is not entitled to any compensation from
the Company, except for the payment of any base salary, bonuses, benefits or
unreimbursed expenses accrued but unpaid as of the termination date. As
discussed above, Mr. McCann is restricted from participating in a competitive
floral products business for a period of one year after a voluntary resignation
or termination for Good Cause. He is also bound by confidentiality provisions,
which prohibit him from, among other things, disseminating or using confidential
information about the Company in any way that would be adverse to the Company.
Christopher G. McCann
Upon termination without Good Cause (as defined in the employment
agreement) or resignation by Mr. McCann for Good Reason (as defined in the
employment agreement), within ten days following the termination date, Mr.
McCann is entitled to severance pay in the amount of $500,000 plus the base
salary otherwise payable to him for the balance of the then current employment
term and any base salary, bonuses, vacation and unreimbursed expenses accrued
but unpaid as of the termination date, and health and life insurance coverage
for himself and his dependents for the balance of the then current employment
term. The Good Reason definition includes a Change of Control (as defined in the
employment agreement) of the Company, so long as Mr. McCann's resignation occurs
no later than one year following a Change of Control. Upon termination for Good
Cause, voluntary resignation without Good Reason or termination due to death,
Mr. McCann is not entitled to any compensation from the Company, except for the
payment of any base salary, bonuses, benefits or unreimbursed expenses accrued
but unpaid as of the termination date. As discussed above, Mr. McCann is
restricted from participating in a competitive floral products business for a
period of one year after a voluntary resignation or termination for Good Cause.
He is also bound by confidentiality provisions, which prohibit him from, among
other things, disseminating or using confidential information about the Company
in any way that would be adverse to the Company.
Monica L. Woo
Upon termination without Cause (as defined in the November 25, 2003 offer
letter described above), Constructive Termination without Cause (as defined in
the November 25, 2003 employment offer letter described above) or without Cause
following a Change of Control, Ms. Woo is entitled to receive base salary
through the date of termination, any other amounts earned, accrued and owed but
not yet paid, two weeks of base pay for each completed year of service, a
pro-rata portion of any bonus due under the Company's incentive plans, the right
to exercise vested equity awards for a period of one year following termination
and any other benefits payable under the Company's applicable plans and
programs. Upon termination for Cause or due to death, disability or resignation,
Ms. Woo is only entitled to base salary through the date of termination and any
other amounts earned, accrued and owed but not yet paid. Ms. Woo is bound by the
terms of her Confidentiality and Non-Compete Agreement.
25
Timothy J. Hopkins
Upon termination without Cause (as defined in the February 12, 2005 offer
letter described above), Constructive Termination without Cause (as defined in
the February 12, 2005 employment offer letter described above) or without Cause
following a Change of Control, Mr. Hopkins is entitled to receive base salary
through the date of termination, any other amounts earned, accrued, due and owed
but not yet paid, base pay for a period of 12 months following termination of
employement or until Mr. Hopkins finds new employment, whichever occurs first,
the right to exercise vested equity awards pursuant to terms of the Company's
2003 Plan following termination, and any other benefits payable under the
Company's applicable plans and programs. Upon termination for Cause or due to
death, disability or resignation, Mr. Hopkins is only entitled to base salary
through the date of termination and any other amounts earned, accrued and owed
but not yet paid. Mr. Hopkins is bound by the terms of his Confidentiality and
Non-Compete Agreement.
1997 Stock Option Plan
----------------------
The 1997 Stock Option Plan provides that in the event of any sale, merger,
transfer or acquisition of the Company or substantially all of its assets, in
which the Company is not the surviving corporation, each outstanding option
which is not to be assumed by the successor corporation, will automatically
accelerate, so that each option shall, immediately prior to such event, become
exercisable for all of the shares of Common Stock at such time subject to that
option and may be exercised for any or all of those shares.
1999 Stock Incentive Plan
-------------------------
The 1999 Stock Incentive Plan provides, generally but with limitations,
that each option outstanding at the time of a change of control but not
otherwise fully-vested shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the change in control, become
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares.
2003 Long Term Incentive and Share Award Plan
---------------------------------------------
The 2003 Plan provides that unless otherwise provided by the Compensation
Committee at the time of the award grant, in the event of a change of control,
(i) all outstanding awards pursuant to which the participant may have rights the
exercise of which is restricted or limited, shall become fully exercisable
immediately prior to the time of the change of control so that the shares
subject to the award will be entitled to participate in the change of control
transaction, and (ii) unless the right to lapse of restrictions or limitations
is waived or deferred by a participant prior to such lapse, all restrictions or
limitations (including risks of forfeiture and deferrals) on outstanding awards
subject to restrictions or limitations under the Plan shall lapse, and all
performance criteria and other conditions to payment of awards under which
payments of cash, shares or other property are subject to conditions shall be
deemed to be achieved or fulfilled and shall be waived by the Company
immediately prior to the time of the change of control so that the shares
subject to the award will be entitled to participate in the change of control
transaction.
26
October 29, 2007
To the Board of Directors
of 1-800-FLOWERS.COM, INC. (the "Company"):
We, the members of the Audit Committee, assist the Board of Directors in its
oversight of the Company's financial accounting, reporting and controls. We also
evaluate the performance and independence of the Company's independent
registered public accounting firm. We operate under a written charter that both
the Board and we have approved. A current copy of the Audit Committee charter
can be found on the Company's website located at www.1800flowers.com under the
Investor Relations section of the website and is attached hereto as Annex "A".
The Board annually reviews the NASDAQ listing standards definition of
independence for audit committee members and has determined that each member of
the Audit Committee meets that standard. In addition, although the Board has
determined that each of the members of the Audit Committee meets NASDAQ
regulatory requirements for financial literacy and that John J. Conefry, Jr. is
an "audit committee financial expert," as defined by Commission rules, and is
financially sophisticated under NASDAQ requirements, we would like to remind our
stockholders that we are not professionally engaged in the practice of auditing
or accounting and are not technical experts in auditing or accounting.
The Company's management is responsible for the preparation, presentation and
integrity of the Company's consolidated financial statements, including setting
the accounting and financial reporting principles and designing the Company's
system of internal control over financial reporting and disclosure controls and
procedures designed to ensure compliance with accounting standards, applicable
laws and regulations. The Company's management is responsible for objectively
reviewing and evaluating the adequacy, effectiveness and quality of the
Company's system of internal control. The Company's independent registered
public accounting firm, Ernst & Young LLP ("Ernst & Young"), is responsible for
performing an independent audit of the consolidated financial statements and
expressing an opinion on the conformity of those financial statements with
accounting principles generally accepted in the United States. The independent
registered public accounting firm is also responsible for expressing opinions on
management's assessment of the effectiveness of the Company's internal control
over financial reporting and on the effectiveness of the Company's internal
control over financial reporting. Although the Board is the ultimate authority
for effective corporate governance, including oversight of the management of the
Company, the Audit Committee's purpose is to assist the Board in fulfilling its
responsibilities by overseeing these processes, as well as overseeing the
qualifications and performance of the Company's independent registered public
accounting firm.
The Audit Committee has policies and procedures that require the pre-approval by
the Audit Committee of all fees paid to, and all services performed by, the
Company's independent registered public accounting firm. At the beginning of
each year, the Audit Committee approves the proposed services, including the
nature, type and scope of service contemplated and the related fees, to be
rendered by the firm during the year. In addition, Audit Committee pre-approval
is also required for those engagements that may arise during the course of the
year that are outside the scope of the initial services and fees approved by the
Audit Committee. For each category of proposed service, the independent
accounting firm is required to confirm that the provision of such services does
not impair their independence. Pursuant to the Sarbanes-Oxley Act of 2002, the
fees and services provided [as noted in the table below] were authorized and
approved by the Audit Committee in compliance with the pre-approval policies and
procedures described herein.
We reviewed and discussed the audited consolidated financial statements and
related footnotes for the fiscal year ended July 1, 2007 with management and the
independent registered public accounting firm. Management represented to the
Audit Committee that the Company's consolidated financial statements were
prepared in accordance with generally accepted accounting principles. We also
discussed with the independent registered public accounting firm the matters
required to be discussed by Statement on Auditing Standards 61, as amended
(Communication with Audit Committees). We received the written disclosures and
the letter from the independent registered public accounting firm required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and discussed with Ernst & Young their independence. This review
included a discussion with management and the independent registered public
accounting firm of the quality (and not merely the acceptability) of the
Company's accounting principles, the reasonableness of significant estimates and
judgments, and the disclosures in the Company's financial statements, including
the disclosures relating to critical accounting policies.
Based on the reports, discussions and reviews described in this report, we
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended July 1, 2007, for filing with the Securities and Exchange
Commission. We also selected Ernst & Young as the independent registered public
accounting firm for Fiscal 2008. The Board is recommending that shareholders
ratify that selection at the Annual Meeting.
Audit Committee
John J. Conefry, Jr. (Chairman)
Lawrence Calcano
Jan L. Murley
27
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock, as of
October 9, 2007, or as of the dates referenced below for (i) each person known
by the Company to beneficially own more than 5% of each class; (ii) each
Director; (iii) each Named Executive Officer; and (iv) all of the Company's
Directors and Executive Officers as a group. Beneficial ownership is determined
in accordance with the rules of the Commission and includes voting or investment
power with respect to the securities. Unless otherwise indicated, the address
for those listed below is c/o 1-800-FLOWERS.COM, Inc., One Old Country Road,
Suite 500, Carle Place, NY 11514. Except as indicated by footnote, and subject
to applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by them. The number of shares of Common Stock outstanding
used in calculating the percentage for each listed person includes the shares of
Common Stock underlying options held by such persons that are exercisable within
60 days of October 9, 2007, but excludes shares of Common Stock underlying
options held by any other person. Percentage of beneficial ownership is based on
25,879,795 shares of Class A Common Stock and 36,858,465 shares of Class B
Common Stock outstanding as of October 9, 2007.
Shares % of Shares
Beneficially Owned Beneficially Owned
------------------ ------------------
A Shares B Shares A Shares B Shares
-------- -------- -------- --------
Name
----
5% Stockholders:
-----------------------
Bear Stearns Asset Management, Inc. (1) 3,106,232 - 12.0% -
Awad Asset Management, Inc. (2) 1,970,494 - 7.6% -
AXA (3) 1,817,011 - 7.0% -
Tocqueville Asset Management L.P. (4) 1,617,615 - 6.3% -
Royce & Associates LLC (5) 1,599,300 - 6.2% -
RLR Capital Partners, LP (6) 1,307,000 - 5.1% -
The TCW Group, Inc., on behalf
of the TCW Business Unit (7) 1,285,760 - 5.0% -
Directors, not including CEO and President:
-------------------------------------------
Lawrence Calcano (8) 15,000 - 0.1% -
James Cannavino (9) - - - -
John J. Conefry (10) 46,200 - 0.2% -
Leonard J. Elmore (11) 45,000 - 0.2% -
Jan L. Murley (12) - - - -
Jeffrey C. Walker (13) 27,500 - 0.1% -
Named Executive Officers:
-------------------------
James F. McCann (14) 741,974 35,914,905 2.8% 97.4%
William E. Shea (15) 375,093 - 1.4% -
Christpher G. McCann (16) 1,776,019 3,146,753 6.4% 8.5%
Monica L. Woo (17) 115,033 - 0.4% -
Timothy J. Hopkins (18) 80,844 - 0.3% -
Directors and Executive Officers 3,795,838 37,014,120 12.8% 99.7%
as a Group (14 persons)(19)
-------------------------------------------------------------------------------
* Indicates less than 0.1%.
(1) This information is based on the Schedule 13G filed with the Commission
by Bear Stearns Asset Management Inc. on August 10, 2007 for shares held as
of July 31, 2007. Bear Stearns Asset Management Inc. reported that it had
sole voting power over 2,022,444 shares of Class A Common Stock, shared
voting power over 845,441 shares of Class A Common Stock, sole dispositive
power over 2,208,931 shares of Class A Common Stock and shared dispositive
power over 897,300 shares of Class A Common Stock. The address of Bear
Stearns Asset Management Inc. is 237 Park Avenue, New York, New York 10017.
(2) This information is based on the Schedule 13G Amendment No. 1 filed with
the SEC by Awad Asset Management, Inc. on January 29, 2007 for shares
beneficially owned as of December 31, 2006. The address of Awad Asset
Management, Inc. is 250 Park Avenue, 2nd Floor, New York, New York 10177.
28
(3) This information is based on the Schedule 13G Amendment No. 1 filed with
the SEC by AXA Financial, Inc.; AXA, which owns AXA Financial, Inc.; and
AXA Assurances I.A.R.D. Mutuelle ("IARD"), AXA Assurances Vie Mutuelle
("Vie") and AXA Courtage Assurance Mutuelle (collectively with IARD and
Vie, the "Mutuelles AXA"), as members of a group, on February 14, 2007 for
shares beneficially owned as of December 31, 2006. According to the filing,
AXA Rosenberg Investment Management LLC, as to which AXA serves as parent
holding company, has sole power to vote or direct the vote of 751,704
shares of Class A Common Stock and the sole power to dispose or direct the
disposition of 1,842,211 shares of Class A Common Stock. AXA Financial,
Inc.'s subsidiary, AllianceBernstein L.P., has sole power to dispose or
direct the disposition of 27,800 shares of Class A Common Stock, and AXA
Financial, Inc.'s subsidiary, AXA Equitable Life Insurance Company, has
sole power to vote or direct the vote and the sole power to dispose or
direct the disposition of 1,000 shares of Class A Common Stock. The address
of the Mutuelles AXA is 26, rue Drout, 75009 Paris, France, the address of
AXA is 25, avenue Matignon, 75008 Paris, France, and the address of AXA
Financial, Inc. is 1290 Avenue of the Americas, New York, New York 10104.
(4) This information is based on the Schedule 13G filed with the SEC by
Tocqueville Asset Management L.P. on February 14, 2007 for shares held as
of December 31, 2006. The address of Tocqueville Asset Management L.P. is
40 West 57th Street, New York, New York 10019.
(5) This information is based on the Schedule 13G filed with the SEC by Royce &
Associates LLC on January 24, 2007 for shares beneficially owned as of
December 31, 2006. The address of Royce & Associates LLC is 1414 Avenue
of the Americas, New York, New York 10019.
(6) This information is based on the Schedule 13D filed with the SEC by RLR
Capital Partners, LP ("RLR") and Robert L. Rosen on June 27, 2007 for
shares held as of June 22, 2007. The reporting persons reported that they
have shared voting power and shared dispositive power over 1,307,000 shares
of Class A Common Stock. The reporting persons reported that RLR's
principal business is to serve as the investment manager of funds and/or
accounts, including RLR Focus Master Fund, LP, the holder of the Class A
Shares set forth in the Schedule 13D. RLR Capital Partners GP, LLC (the
"Manager"), is the sole general partner of RLR. Mr. Robert Rosen is the
managing member of the Manager. The address of RLR Capital Partners, LP and
Robert L. Rosen is 152 West 57th Street, 21st Floor, New York, New York
10019.
(7) This information is based on the Schedule 13G filed with the SEC by The TCW
Group, Inc., on behalf of The TCW Business Unit on February 9, 2007 for
shares beneficially owned as of December 31, 2006. The Schedule 13G was
filed by the TCW Group, Inc. on behalf of itself and its direct and
indirect subsidiaries, including Trust Company of the West, TCW Asset
Management Company and TCW Investment Management Company, which
collectively constitute The TCW Group, Inc. business unit (the "TCW
Business Unit"). TCW Group, Inc. reported that, as of July 6, 2001, the
ultimate parent company of TCW is Societe Generale, S.A. ("SG"). TCW Group,
Inc. reported that SG disclaims beneficial ownership of Shares beneficially
owned by the reporting person. The reporting person disclaimed beneficial
ownership of Shares beneficially owned by SG and any of SG's other business
units. The TCW Group, Inc., on behalf of the TCW Business Unit, reported
that it has shared voting power over 1,137,459 shares of Class A Common
Stock and shared dispositive power over 1,285,760 shares of Class A Common
Stock. The address of The TCW Group, Inc., on behalf of the TCW Business
Unit is 865 South Figueroa Street, Los Angeles, California 90017.
(8) Includes 10,000 shares of Class A Common Stock that may be acquired within
60 days of October 9, 2007 through the exercise of stock options. Mr.
Calcano's address is 140 Greenwich Avenue, Greenwich, CT 06830
(9) Mr. Cannavino's address is c/o Direct Insite Corporation, 80 Orville Drive,
Bohemia, NY 11716
(10) Includes 35,000 shares of Class A Common Stock that may be acquired within
60 days of October 9, 2007 through the exercise of stock options. Mr.
Conefry's address is c/o Astoria Federal Savings, One Astoria Federal
Plaza, Lake Success, New York 11042.
(11) Includes 45,000 shares of Class A Common Stock that may be acquired within
60 days of October 9, 2007 through the exercise of stock options. Mr.
Elmore's address is c/o Dewey & LeBoeufcRae, LLP, 125 West 55th, Street,
New York, New York 10019-5389.
(12) Ms. Jan Murley's address is c/o 1-800-FLOWERS.COM, INC., One Old Country
Road, Suite 500, Carle Place, NY 11514.
(13) Includes 25,000 shares of Class A Common Stock that may be acquired within
60 days of October 9, 2007 through the exercise of stock options. Mr.
Walker disclaims beneficial ownership to these shares, as well as, the
2,500 RSA's. Mr. Walker's address is c/o CCMP Capital Advisors, LLC, 245
Park Avenue, New York, NY 10167.
29
(14) Includes (a) 741,494 shares of Class A Common Stock that may be acquired
within 60 days of October 9, 2007 through the exercise of stock options,
(b) 5,875,000 shares of Class B Common Stock held by limited partnerships,
of which Mr. J. McCann is a limited partner and does not exercise control
and of which he disclaims beneficial ownership, (c) 52,548 shares of Class
B Common Stock held by The McCann Charitable Foundation, Inc., of which
Mr. J. McCann is a Director and the President; and (d) 15,006,237 shares
of Class B Common Stock held by five Grantor Retained Annuity Trusts of
which Mr. J. McCann is the Trustee.
(15) Includes 370,000 shares of Class A Common Stock that may be acquired
within 60 days of October 9, 2007 through the exercise of stock options.
(16) Includes (a) 1,770,836 shares of Class A Common Stock that may be acquired
within 60 days of October 9, 2007 through the exercise of stock options,
(b) 2,000,000 shares of Class B Common Stock held by a limited partnership,
of which Mr. C. McCann is a general partner and exercises control, (c)
243,575 shares of Class B Common Stock that may be acquired within 60
days of October 9, 2007 through the exercise of stock options, and (d)
52,548 shares of Class B Common Stock held by The McCann Charitable
Foundation, Inc., of which Mr. C. McCann is a Director and Treasurer.
(17) Includes 90,000 shares of Class A Common Stock that may be acquired within
60 days of October 9, 2007 through the exercise of stock options.
(18) Includes 80,000 shares of Class A Common Stock that may be acquired
within 60 days of October 9, 2007 through the exercise of stock options.
(19) Includes (a) 3,727,130 shares of Class A Common Stock that may be acquired
within 60 days of October 9, 2007 through the exercise of stock options,
and (b) 248,575 shares of Class B Common Stock that may be acquired within
60 days of October 9, 2007 through the exercise of stock options.
..................
30
Certain Business Relationships with Directors and Officers
The Company has a policy providing that all material transactions between
it and one or more of its Directors, Executive Officers, nominees for Director
or a member of their immediate families must be approved either by a majority of
the disinterested members of the Board or by the stockholders of the Company.
Below are the transactions that occurred during Fiscal 2007 in which, to
the Company's knowledge, the Company was or is a party, in which the amount
involved exceeded $120,000, and in which any Director, Director nominee,
Executive Officer, holder of more than 5% of the Common Stock or any member of
the immediate family of any of the foregoing persons had or will have a direct
or indirect material interest.
In Fiscal 2007, the Company entered into an agreement with Julie Mulligan,
the sister of Directors and Executive Officers, James F. McCann and Christopher
G. McCann, pursuant to which Ms. Mulligan was employed as a Personality Expert
Designer. Ms. Mulligan's compensation for Fiscal 2007 was $392,000, consisting
of $130,000 in base salary and $262,000 in earned floral sales commissions for
sales of products designed by Ms. Mulligan for the Company. In consideration for
the floral sales commissions paid to Ms. Mulligan described above, Ms. Mulligan
was not eligible to receive any cash bonus under the Company's annual cash
incentive plan ("Sharing Success Program"). During Fiscal 2007, Ms. Mulligan was
awarded, pursuant to the 2003 Plan, 3,500 shares of restricted stock. The grant
date for these awards was October 13, 2006. The restricted stock vests 100% on
the third anniversary of the grant date, assuming Ms. Mulligan remains employed
by the Company as of that time.
Gerard M. Gallagher, our Senior Vice President of Business Affairs, General
Counsel and Corporate Secretary, is the founder and managing partner in the law
firm of Gallagher, Walker, Bianco & Plastaras based in Mineola, New York. The
Company pays the law firm a fee for Mr. Gallagher's services to the Company. The
Company, with the approval of the Board, also pays the law firm fees for
services rendered by other members of the firm on the Company's behalf.
The fees paid in Fiscal 2007 by the Company to the firm for services
provided by Mr. Gallagher totaled $453,000, which represented an annual retainer
of $348,000 and an earned cash bonus under the Company's Sharing Success Program
of $105,000. For legal services provided by the other members of the firm the
Company paid the sum of $485,000 inclusive of disbursements, which collective
fees the Company believes are fair and reasonable. In addition, as a result of
the position Mr. Gallagher holds with the Company, he is eligible to participate
in its Long Term Incentive Plan ("LTIP") and under such plan, Mr. Gallagher was
granted 47,615 performance shares in Fiscal 2007. (See "Compensation Discussion
and Analysis- Long Term Incentive Equity Awards" for a description of the LTIP).
Except for his participation in the Company's Sharing Success Plan and the LTIP,
Mr. Gallagher does not participate in any other Company benefit or other plans.
The Company maintains life insurance for each of its NEO's in the amount of
$50,000 and also maintains a directors' and officers' insurance policy.
31
PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed E&Y to serve as the Company's independent registered public accounting
firm for the fiscal year ending June 29, 2008, and the Board is asking
stockholders to ratify such selection at the Annual Meeting. The stockholders'
ratification of the appointment of E&Y will not impact the Audit Committee's
responsibility pursuant to its charter, to appoint, replace and discharge the
independent auditors. In the event the stockholders fail to ratify this
selection, the matter of the selection of independent auditors will be
reconsidered by the Board of Directors.
Fees Paid to Ernst & Young LLP
The following table shows the fees that the Company paid or accrued for
audit and other services provided by E & Y for Fiscal 2007 and Fiscal 2006, all
of which were approved by the Audit Committee.
----------------------------------------------
2007 2006
----------------------------------------------
(in thousands)
Audit Fees $475 $480
Audit-Related Fees 108 340
Tax Fees 91 18
All Other Fees 0 0
---- ----
Total $674 $838
==== ====
----------------------------------------------
Audit Fees. Fees for audit services include fees associated with the annual
audit, including the Company's annual report on Form 10-K, consents and reviews
of the Company's quarterly reports on Form 10-Q. These fees also include the
audit of management's assessment of internal control over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-Related Fees. Fees for audit-related services include audits and
assurance services related to the Company's benefit plans and separate financial
statements for its franchise operations, as well as due diligence services in
connection with acquisitions.
Tax Fees. Fees for tax service include tax compliance, tax advice and tax
planning.
All Other Fees. Consists of other fees not reported in the above
categories.
Financial Information Systems Design and Implementation Fees. E&Y did not
render professional services relating to financial information systems design
and implementation for Fiscal 2007 and Fiscal 2006.
Audit Committee Pre-Approval Policies and Procedures. The Audit Committee
pre-approves all audit, audit-related and non-audit services (including tax
services) provided by the independent registered public accounting firm.
Pre-approval is generally provided for up to one year, and any pre-approval is
detailed as to the particular service. The independent registered public
accounting firm and the Company's management are required to periodically report
to the Audit Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with this
pre-approval, including fees for the services performed to date. In addition,
the Audit Committee also may pre-approve particular services on a case-by-case
basis, as required.
The affirmative vote of a plurality of the Company's outstanding Common
Stock present in person or by proxy is required to ratify the appointment of the
independent registered accounting firm. Unless otherwise instructed, the proxy
holders will vote the proxies received by them "FOR" the ratification of E&Y as
the Company's independent registered public accounting firm for Fiscal 2008. A
representative of E&Y will attend the Annual Meeting with the opportunity to
make a statement if he or she so desires and will also be available to answer
inquiries.
32
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION
AND APPROVAL OF THE SELECTION OF ERNST & YOUNG LLP TO
SERVE AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR FISCAL 2008.
OTHER MATTERS
The Board of Directors does not intend to bring any other business before
the Annual Meeting, and so far as is known to the Board, no matters are to be
presented for action at the Annual Meeting other than those set forth above. If
any other matters properly come before the Annual Meeting, the persons named in
the enclosed form of proxy will vote the shares represented by proxies in their
discretion on such matters.
STOCKHOLDER PROPOSALS FOR THE 2008 ANNUAL MEETING
Shareholders who, in accordance with Commission Rule 14a-8 wish to present
proposals for inclusion in the proxy materials to be distributed in connection
with next year's Annual Meeting Proxy Statement must submit their proposals so
that they are received at the Company's principal executive offices no later
than the close of business on July 1, 2008. As the rules of the Commission make
clear, simply submitting a proposal does not guarantee that it will be included.
In accordance with our Bylaws, in order to be properly brought before the
2008 Annual Meeting, a shareholder's notice of the matter the shareholder wishes
to present, or the person or persons the shareholder wishes to nominate as a
director, must be delivered to the Secretary of the Company at its principal
executive offices not later than the close of business on the 90th day, nor
earlier than the close of business on the 120th day, prior to the first
anniversary date of the 2007 Annual Meeting date. As a result, any notice given
by a shareholder pursuant to these provisions of our Bylaws (and not pursuant to
the Commission's Rule 14a-8) must be received no earlier than August 6, 2008 and
no later than September 5, 2008. If, however, our 2008 Annual Meeting date is
advanced by more than 30 days before, or delayed more than 70 days after, the
one year anniversary of the 2007 Annual Meeting date, then proposals must be
received no earlier than the close of business on the 120th day prior to the
2008 Annual meeting and not later than the close of business on the later of the
90th day before the 2008 Annual Meeting or the 10th day following the date on
which the 2008 Annual Meeting date is publicly announced.
To be in proper form, a shareholder's notice must include the specified
information concerning the proposal or nominee as described in our Bylaws. A
shareholder who wishes to submit a proposal or nomination is encouraged to seek
independent counsel about our Bylaws and Commission requirements. The Company
will not consider any proposal or nomination that does not meet the Bylaws
requirements and the Commission's requirements for submitting a proposal or
nomination. Notices of intention to present proposals at the 2008 Annual Meeting
should be addressed to Corporate Secretary, 1-800-FLOWERS.COM, Inc., One Old
Country Road, Suite 500, Carle Place, New York 11514. The Company reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
SOLICITATION OF PROXIES
The Proxy accompanying this Proxy Statement is solicited by the Board of
Directors of the Company. Proxies may be solicited by officers, Directors and
regular supervisory and executive employees of the Company, none of whom will
receive any additional compensation for their services. Such solicitations may
be made personally or by mail, facsimile, telephone, telegraph, messenger, or
via the Internet. The Company may pay persons holding shares or Common Stock in
their names or in the names of nominees, but not owning such shares
beneficially, such as brokerage houses, banks and other fiduciaries, for
expenses of forwarding solicitation materials to their principals. All of the
costs of solicitation will be paid by the Company.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each beneficial holder of its
Common Stock on the Record Date who did not receive a copy of the Company's
Annual Report for the fiscal year ended July 1, 2007, on the written request of
such person, a copy of the Company's Annual Report on Form 10-K as filed with
the Commission. Any such request should be made in writing to the Secretary of
the Company at the address set forth on the first page of this Proxy Statement.
By Order of the Board of Directors
/s/ James F. McCann
James F. McCann
Chairman of the Board and Chief Executive
Officer
Carle Place, New York
October 29, 2007
33
Annex "A"
AUDIT COMMITTEE CHARTER
Organization
The Audit Committee (the "Committee") of the Board of Directors (the "Board")
shall be com-prised of at least three directors. The members of the Committee
shall meet the independence requirements of the Nasdaq National Market, Inc.
Members of the Committee must be able to read and understand fundamental
financial statements, including the Company's balance sheet, income statement
and cash flow statement, and have the ability to understand key business and
financial risks and related controls and control processes. At least one
director must be a com-mittee expert with education and employment experience as
a principal financial officer, princi-pal accounting officer, controller, public
accountant or auditor or experience in one or more posi-tions that involve the
performance of similar functions; experience actively supervising a princi-pal
financial officer, principal accounting officer, controller, public accountant,
auditor or per-forming similar functions; experience overseeing or assessing the
performance of companies or public accountants with respect to the preparation,
auditing or evaluation of financial statements; or other relevant experience.
Statement of Policy
The Committee shall provide assistance to the directors in fulfilling their
responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices of the Company,
and the quality and integrity of financial reports of the Company. In so doing,
it is the responsibility of the Committee to maintain free and open
com-munication between the directors, the independent auditors, the internal
auditors, and the finan-cial management of the Company.
Responsibilities
In carrying out its responsibilities, the Committee believe its policies and
procedures should re-main flexible in order to best react to changing conditions
and to ensure to the directors and shareholders that the corporate accounting
and reporting practices of the Company are in accor-dance with all requirements
and are the highest quality.
In carrying out these responsibilities, the Committee will:
o Obtain the full board of directors' approval of this Charter and
review and reassess this Charter as conditions dictate (at least
annually).
o Discuss with management and the independent auditor, as appropriate,
earnings press releases and financial information and earnings
guidance provided to analysts and to rating agencies.
o Select the independent auditors to audit the financial statements of
the Company and its divisions and subsidiaries and approve the
independent auditor's compensation.
o Have a clear understanding with the independent auditors that they are
ultimately accountable to the board of directors and the Committee, as
the shareholders' representatives, who have the ultimate authority in
de-ciding to engage, evaluate, and if appropriate, terminate their
services.
o Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit and timely quarterly
reviews for the current year and the procedures to be utilized, and at
the conclusion thereof review such audit or review, including any
comments or recommendations of the independent auditors.
o Pre-approve all audit services and permitted non-audit services
(includ-ing the fees and terms thereof) to be performed for the
Company by the independent auditor. The Committee may delegate
authority to pre-approve audit services, other than the audit of the
Company's annual fi-nancial statements, and permitted non-audit
services to one or more members, provided that decisions made pursuant
to such delegated au-thority shall be presented to the full committee
at its next scheduled meeting.
o Discuss with the internal auditors, if applicable, and the independent
auditors the overall scope and plans for the respective audits,
including the adequacy of staffing and compensation. The Committee
shall discuss with management, the internal auditors, if any, and the
independent auditors the adequacy and effectiveness of the accounting
and financial con-trols, including the Company's policies and
procedures to assess, moni-tor, and manage business risk, and legal
and ethical compliance pro-grams (e.g. Company's Code of Ethics).
o Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
re-lated Company compliance policies.
o Review the internal controls of the Company, the proposed audit plans
34
for the coming year, and the coordination of such plans with the
inde-pendent auditors.
o Inquire of management and the independent auditors about significant
risks or exposures and assesses the steps management has taken to
minimize such risks to the Company.
o Review the interim financial statements and the disclosures under
Man-agement's Discussion and Analysis of Financial Condition and
Results of Operations with management and the independent auditors
prior to the filing of the Company's Quarterly Report on Form 10-Q.
The Committee shall also discuss the results of the quarterly review
and any other mat-ters required to be communicated to the Committee by
the independent auditors under generally accepted auditing standards.
The Chair of the Committee may represent the entire Committee for
purposes of this re-view.
o Review the financial statements contained in the annual report to
share-holders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented to
the shareholders. Review with financial management and the independent
auditors the results of their timely analysis of significant financial
reporting issues and practices, in-cluding changes in, or adoptions
of, accounting principles and disclosure practices, and discuss any
other matters required to be communicated to the committee by the
auditors. Also review with financial management and the independent
auditors their judgments about the quality, not just acceptability, of
accounting principles and the clarity of the financial disclosure
practices used or proposed to be used, and particularly, the
reasonableness of significant judgements and estimates , and other
sig-nificant decisions made in preparing the financial statements.
o Provide sufficient opportunity for the independent auditors to meet
with the members of the Committee without members of management
pre-sent. Among the items to be discussed in these meetings are the
inde-pendent auditors' evaluation of the Company's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors re-ceived during the course of audit.
o Review accounting and financial human resources within the Company.
o Report the results of the annual audit to the board of directors. If
re-quested by the board, invite the independent auditors to attend the
full board of directors meeting to assist in reporting the results of
the annual audit or to answer other directors' questions
(alternatively, the other di-rectors, particularly the other
independent directors, may be invited to at-tend the Committee meeting
during which the results of the annual audit are reviewed).
o On an annual basis, obtain from the independent auditors a written
com-munication delineating all relationships and professional services
as re-quired by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. In addition, review
with the inde-pendent auditors the nature and scope of any disclosed
relationships or professional services and take, or recommend that the
board of directors take, appropriate action to ensure the continuing
independence of the auditors.
o Review the report of the Committee in the annual report to
shareholders and disclosing whether or not the committee had reviewed
and discussed with management and the independent auditors the
financial statements and the quality of accounting principles and
significant judgments affect-ing the financial statements. In
addition, disclose the committee's con-clusion on the fairness of
presentation of the financial statements in con-formity with GAAP
based on those discussions.
o Submit the minutes of all meetings of the Committee to, or discuss the
matters discussed at each committee meeting with, the board of
directors.
o Investigate any matter brought to its attention within the scope of
its du-ties, with the power to retain outside counsel or other
auditors for this purpose if, in its judgment, that is appropriate,
and receive funding for these services as necessary.
o Review the Company's disclosure in the proxy statement for its annual
meeting of shareholders that describes that the Committee has
satisfied its responsibilities under this Charter for the prior year.
In addition, in-clude a copy of this Charter in the annual report to
shareholders or the proxy statement at least triennially or the year
after any significant amendment to the Charter.
o The Committee shall have authority to retain such outside counsel,
ex-perts and other advisors as the Committee may deem appropriate in
its sole discretion. The Committee shall have sole authority to
approve re-lated fees and retention terms.
35
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended.
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box: |_|
Preliminary Proxy Statement |_|
Confidential for Use of the Commission only ?
Definitive Proxy Statement |X|
Definitive Additional Materials |_|
Soliciting Material Pursuant to ss. 240.14a-12 |_|
1-800-FLOWERS.COM, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
(Form of Proxy)
1-800-FLOWERS.COM, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - December 4,, 2007
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of 1-800-FLOWERS.COM, Inc. hereby appoints Gerard M.
Gallagher, Corporate Secretary, with full power of substitution, as proxy to
vote the shares of stock, in accordance with the undersigned's specifications,
which the undersigned could vote if personally present at the Annual Meeting of
Stockholders of 1-800-FLOWERS.COM, Inc. to be held at One Old Country Road,
Carle Place, New York 11514, Fourth Floor Conference Room (the "Meeting Place"),
on Thursday, December 4, 2007 at 9:00 a.m. eastern standard time or any
adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
FOR all nominees below WITHHOLD AUTHORITY
|_| (except as marked to the contrary) |_| to vote for all nominees below
John J. Conefry, Jr., Leonard J. Elmore and Jan L. Murley
INSTRUCTION: To withhold authority to vote for an individual nominee, write
the nominee's name in the space provided below.
______________________________________________
2. RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR AGAINST ABSTAIN WITH RESPECT TO
|_| |_| |_|
proposal to ratify the appointment of Ernst & Young LLP as the
Company's independent registered public accounting firm for the fiscal
year ending June 29, 2008 as described in the Proxy Statement.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION
OF THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS, "FOR"
RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 29, 2008, AND IN
ACCORDANCE WITH THE DISCRETION OF THE PROXY AS TO OTHER MATTERS WHICH
PROPERLY COME BEFORE THE ANNUAL MEETING.
All of the proposals set forth are proposals of the Company. None of
the proposals is related to or conditioned upon approval of any other
proposal.
Please date and sign exactly as your name appears on the envelope in which this
material was mailed. If shares are held jointly, each stockholder should sign.
Executors, administrators, trustees, etc. should use full title and, if more
than one, all should sign. If the stockholder is a corporation, please sign full
corporate name by an authorized officer. If the stockholder is a partnership,
please sign full partnership name by an authorized person.
Dated:
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Signature(s) of Stockholder