UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
ASHWORTH, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TABLE OF CONTENTS
ASHWORTH, INC.
2765 Loker Avenue West
Carlsbad, California 92010
(760) 438-6610
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, AUGUST 30, 2007
The 2007 Annual Meeting of Stockholders of Ashworth, Inc., a Delaware corporation (the
“Company”), will be held at The Broadmoor Resort, 1 Lake Avenue, Colorado Springs, Colorado, 80906,
on Thursday, August 30, 2007 at 3:00 P.M. local time to:
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Elect four Class II directors of the Company to serve for the ensuing three
years, and elect one Class I director until the Class I terms expire; and |
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Vote to ratify the selection of Moss Adams LLP as our independent registered
public accounting firm for our fiscal year ending October 31, 2007. |
We will also transact such other business as may properly come before the Annual Meeting or
any postponement or adjournment thereof. Stockholders of record at the close of business on July
2, 2007 will be entitled to vote at the annual meeting or any postponement or adjournment thereof.
Please read the enclosed proxy statement carefully, as it contains important information.
All stockholders, even those not planning to personally attend the Annual Meeting, are urged
to sign and date the enclosed proxy card and return it promptly in the enclosed prepaid envelope to
ensure representation of your shares. Even if you submit a proxy card, you may still vote in
person at the 2007 Annual Meeting of Stockholders.
The Company’s Board of Directors unanimously recommends that you vote for the above proposals.
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By the order of the Board of Directors |
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/s/ Halina Balys |
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Halina Balys
Secretary |
July 30, 2007 |
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ASHWORTH, INC.
2765 Loker Avenue West
Carlsbad, California 92010
(760) 438-6610
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, AUGUST 30, 2007
This proxy statement is furnished by the Board of Directors (the “Board”) of Ashworth, Inc., a
Delaware corporation (the “Company”), in connection with the solicitation of proxies for use at the
2007 Annual Meeting of Stockholders (the “Annual Meeting”) and at any postponement or adjournment
thereof. The Annual Meeting will be held at The Broadmoor Resort, 1 Lake Avenue, Colorado Springs,
Colorado, 80906, on Thursday, August 30, 2007 at 3:00 P.M. local time. All proxies will be voted
in accordance with the stockholders’ instructions contained therein. Proxies returned without
instructions will be voted for the Company’s nominees, as described in this proxy statement and on
the enclosed proxy card, and for ratification of the Company’s appointment of Moss Adams LLP (“Moss
Adams”) as the Company’s independent registered public accounting firm. The Company anticipates
that it will mail this proxy statement and the accompanying proxy on or about July 30, 2007 to all
stockholders of the Company entitled to vote at the Annual Meeting.
Any stockholder signing and returning the enclosed proxy may revoke it at any time before it
is voted at the Annual Meeting by: (i) providing a timely, later-dated written revocation of proxy
to the Secretary of the Company; (ii) providing a timely, later-dated amended proxy to the
Secretary of the Company; or (iii) voting in person at the Annual Meeting.
Shares Outstanding and Voting Rights
All voting rights are vested exclusively in the holders of the Company’s common stock, $.001
par value per share. Only stockholders of record at the close of business on July 2, 2007 (the
“Record Date”) are entitled to notice of and to vote at the Annual Meeting or any postponement or
adjournment thereof. On the Record Date, the Company had 14,650,130 shares of common stock
outstanding, with each share entitled to one vote on all matters to be voted upon at the Annual
Meeting, including with respect to the election of directors.
Votes Required
The conduct of business at the Annual Meeting requires a quorum, meaning that stockholders
representing a majority of the votes eligible to be cast must be present in person or represented
by proxy. Under applicable law and the Company’s certificate of incorporation and bylaws,
abstentions and broker non-votes—proxies submitted by brokers that do not indicate a vote on any
of the items—count toward the quorum.
If a quorum is present, directors will be elected by a plurality of the votes cast; the
nominees receiving the highest total number of votes will be elected. Thus, abstentions and broker
non-votes have no effect on the election of directors. Ratification of the Company’s appointment
of Moss Adams as its independent registered public accounting firm requires the
affirmative vote of a majority of shares present and voting, in person or by proxy, at the
Annual Meeting. Therefore, abstentions count as votes against ratification of the appointment of
Moss Adams, while broker non-votes have no effect because they are not counted as present and
voting.
Solicitation of Proxies
The Company’s directors, officers and employees may solicit proxies personally or by
telephone, without additional salary or compensation to them. The Company will reimburse brokerage
houses, custodians, nominees and fiduciaries for the cost of forwarding proxy solicitation
materials to the beneficial owners of the Company’s stock held of record by such persons.
The expense of soliciting proxies, including the cost of preparing, assembling and mailing
this proxy material to stockholders, will be borne by the Company.
PROPOSAL NO. 1.
ELECTION OF DIRECTORS
The Company’s Board is divided into three classes with staggered three-year terms. Article 10
of the Company’s certificate of incorporation provides for three classes of directors, each
consisting of one-third of the total number of directors. At each Annual Meeting of Stockholders,
the directors of the class up for election are generally elected for a term of three years.
The Company currently has three Class I directors, three Class II directors and three Class
III directors, whose current terms expire, respectively, at the 2009, 2007 and 2008 Annual Meetings
of Stockholders (in all cases subject to the election and qualification of their successors or
their earlier death, resignation or removal). Pursuant to Article III, Section 2 of the Company’s
bylaws, Mr. Peter M. Weil, who was moved from Class II to Class I in connection with the
appointment of Mr. Eric S. Salus as director, is standing for election at the 2007 Annual Meeting
of Stockholders and will serve until the 2009 Annual Meeting of Stockholders (subject to the
election and qualification of his successor or his earlier death, resignation or removal). Mr.
Eric S. Salus was appointed to the Board subsequent to the 2006 Annual Meeting of Stockholders and
is standing for election as a Class II director. Upon the recommendation of the Corporate
Governance and Nominating Committee, in addition to Messrs. Weil and Salus, the Board has nominated
Detlef H. Adler, Stephen G. Carpenter and Michael S. Koeneke as Class II directors.
The Class II directors elected at the 2007 Annual Meeting of Stockholders will serve until the
2010 Annual Meeting of Stockholders (subject to the election and qualification of their successors
or their earlier death, resignation or removal). All directors have confirmed to the Company that
they are willing to serve for the terms indicated.
The Board recommends that you vote your shares FOR the election of: Peter M. Weil, as a Class
I director; and Detlef H. Adler, Stephen G. Carpenter, Michael S. Koeneke and Eric S. Salus, as
Class II directors.
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THE COMPANY’S DIRECTOR NOMINEES
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Peter M. Weil* (4)
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Director, Chief
Executive Officer
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Detlef H. Adler
(2) (3)
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Director
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Stephen G. Carpenter
(1) (3) (4)
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Director, Corporate
Governance and
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Michael S. Koeneke
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Director Nominee
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Eric S. Salus
(4)
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Director
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CONTINUING DIRECTORS
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John M. Hanson, Jr.
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Director, Audit
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James B. Hayes
(2) (3) (4)(5)
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Chairman of the Board
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David M. Meyer
(2) (4)(5)
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Director
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James G. O’Connor
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Director,
Compensation and
Human Resources
Committee Chairman
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John W. Richardson
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Director
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Member of the Audit Committee. |
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Member of the Compensation and Human Resources Committee. |
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Member of the Corporate Governance and Nominating Committee. |
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Member of the Special Committee. |
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As previously reported in the Company’s Form 8-K filed on June 6, 2006, it is expected that
Mr. Hayes will retire as the Chairman of the Board but continue as a Director and Mr. Meyer
will serve as the Chairman of the Board effective on the date of the 2007 Annual Meeting. |
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As noted above, in connection with the appointment of Mr. Salus to the Board, Mr. Weil was
moved from Class II to Class I. Pursuant to the Company’s bylaws, Mr. Weil is required to
stand for election at the 2007 Annual Meeting of Stockholders. |
Mr. Koeneke’s name was submitted to the Corporate Governance and Nominating Committee for
consideration as a director candidate by Mr. Meyer who is a current director. Messrs. Koeneke and
Meyer are the Managing Members of Knightspoint Partners LLC which is part of a group (filing on
Schedule 13D) that is a major shareholder of Ashworth, Inc.
There are no family relationships among the directors, director nominees and executive
officers of the Company. The principal occupation of each director and director nominee for the
last five years, as well as other information, is set forth below.
Detlef H. Adler. Mr. Adler is the Chief Executive Officer (“CEO”) of the Seidensticker Group,
which is both a supplier of woven shirts to the Company and a significant shareholder of the
Company (owning approximately 5% of the outstanding shares). Mr. Adler has been with Seidensticker
since 1994 and served as the Chief Financial Officer from 1994 to 1996, when he was named its CEO.
From 1989 to 1994, he served as the Director of Finance for Goldwell AG, then a subsidiary of Kao
Corp. Japan, where he oversaw the finance-related functions of all international subsidiaries.
Stephen G. Carpenter. Mr. Carpenter was a commercial banker for 36 years and has been retired
since 1998. He was with California United Bank and served as Chairman and Chief Executive Officer
from 1994 to 1998 and President and Chief Executive Officer from 1992 to 1994. Prior to 1992, Mr.
Carpenter served as Vice Chairman of Security Pacific Bank for three years, as Executive Vice
President with Wells Fargo Bank for seven years, and as Senior Vice President of First National
Bank of Boston for 17 years. He also served as a director of the Los Angeles Board of the Federal
Reserve Bank of San Francisco. Currently, Mr. Carpenter serves as the non-employee Chairman of
California United Bank, a new commercial bank formed in 2004 and opened in June 2005.
John M. Hanson, Jr. Mr. Hanson is a certified public accountant. He was a stockholder and officer
of the accounting firm John M. Hanson & Co. from 1968 until his retirement in 1998. He now
practices as a tax specialist for a limited number of clients.
James B. Hayes. In July 2001, Mr. Hayes retired as President and Chief Executive Officer of Junior
Achievement, Inc., a not-for-profit organization providing economic education for young people in
the U.S. and throughout the world. Mr. Hayes served as Chairman of Junior Achievement’s national
board of directors from 1991 to 1993 and as a board member from 1987 to 1995. Prior to 1995, Mr.
Hayes had a 35-year career in magazine publishing. He was Publisher of FORTUNE Magazine from 1986
to 1994. Mr. Hayes also served as Publisher of DISCOVER Magazine from 1984 to 1986, and
Advertising Sales Director of MONEY Magazine from 1982 to 1984. He held a number of executive positions
with SPORTS ILLUSTRATED from 1959 to
1982.
4
Michael S. Koeneke. Mr. Koeneke is a Managing Member of Knightspoint Partners LLC, an investment
firm he co-founded in 2003. Since 2004, Mr. Koeneke has served as a member of the Board of
Directors of CPI Corp., a consumer services company that operates the Sears Portrait Studios. Mr.
Koeneke joined the Board of Sharper Image Corporation in 2006. Mr. Koeneke was the co-head and
then the Chairman of Global Mergers and Acquisitions at Merrill Lynch & Co. from 1993 to 2002.
Prior to that, Mr. Koeneke was the Head of Global Mergers and Acquisitions at Credit Suisse First
Boston.
David M. Meyer. Mr. Meyer is a Managing Member of Knightspoint Partners LLC, an investment firm he
co-founded in 2003. Mr. Meyer was appointed to the Company’s Board of Directors on May 8, 2006.
Since 2004, Mr. Meyer has served as Chairman of the Board of Directors of CPI Corp., a consumer
services company that operates the Sears Portrait Studios, and served, from 2004 to 2005, as a
member of the interim Office of the Chief Executive of CPI Corp. Mr. Meyer joined the Board of
Directors of Sharper Image Corporation in 2006 and presently serves as Chairman of its Compensation
Committee. From 1995 to 2002, Mr. Meyer served in various capacities at Credit Suisse First
Boston, including as a director in the Mergers and Acquisitions and Global Industrial and Services
Groups in the firm’s London office. Mr. Meyer received a B.S. in Engineering/Operations Research
from Princeton University in 1990 and an M.B.A. from Stanford University in 1995.
James G. O’Connor. In January 2005, Mr. O’Connor retired from his position as Ford Motor Company
Group Vice President for North America Marketing, Sales and Service. Mr. O’Connor was responsible
for overseeing Ford, Lincoln-Mercury and Ford Customer Service divisions, Dealer Development, Ford
Performance Group, Global Marketing and export markets around the world. From 1998 to 2002, he was
Ford Motor Company Vice President and President of Ford Division responsible for the marketing,
sales and distribution of all Ford brand cars and trucks in the U.S.
John W. Richardson. Mr. Richardson was appointed the Executive Vice President and Chief Financial
Officer of Qwest Communications International (“Qwest”), a global provider of a variety of
telecommunications services, effective April 1, 2007. Mr. Richardson joined Qwest in April 2003
and served as the Senior Vice President and Controller until April 2004 when he was also designated
the Chief Accounting Officer. From October 2002 to April 2003, Mr. Richardson was an independent
consultant. In October 2002, Mr. Richardson retired from Goodyear Tire & Rubber Company
(“Goodyear”), a worldwide manufacturer of tires, engineered products and chemicals, where he served
as the Vice President of Finance of the North American Tire unit from 1999 to 2002. Mr. Richardson
held general management and financial positions within the Goodyear operations in Great Britain and
Ohio from 1967 to 1999. Mr. Richardson holds a Certified Public Accountant license from the state
of Ohio (inactive) and received a B.B.A. degree from Ohio University in 1967.
Eric S. Salus. Mr. Salus has 30 plus years of experience in retail. He has held a variety of
senior executive positions with three divisions of the Federated Department Stores from 1997 to
2005. Most recently he served as the President of Macy’s Home Store from 2004 to 2005 and was
responsible for five separate operating divisions across the country. From 2003 to 2004 he
5
served as the President of Bon Macy’s, a company with 52 stores in five states. From 2000 to 2003
Mr. Salus served as the Executive Vice President of Macy’s Home Store and Cosmetics and from 1997
to 2000 he served as the Executive Vice President of Macy’s Home Store. Prior to that Mr. Salus
held a variety of merchandising and marketing management positions with Dick’s Sporting Goods and
May Department Stores. Mr. Salus received a B.A. degree in Business from University of Missouri in
1975. Mr. Salus currently serves on the Board of Directors of Oneida Ltd. (a privately held
dinnerware, flatware and giftware company) as well as the Board of Directors of The National
Housewares Charity Foundation.
Peter M. Weil. Mr. Weil, our Chief Executive Officer, previously served as a full-time consultant
to the Company and member of the Company’s Office of the Chairman (an interim executive body
utilized until a new Chief Executive Officer was identified) from September 12, 2006 until October
30, 2006 when he was appointed as Chief Executive Officer. Mr. Weil was appointed to the Company’s
Board of Directors on May 8, 2006 and continues to serve as a member of the Board. Mr. Weil is
currently an inactive Partner of Lighthouse Retail Group LLC, a consulting firm specializing in
improving operating and positioning strategies for retailers. From 1996 to 2004, Mr. Weil served
as Senior Vice President/Director of Management Horizons (formerly, PricewaterhouseCoopers —
retail consulting group). His consulting clients have included Hewlett Packard, Disney, Brooks
Brothers, Nordstroms, Family Dollar and Loblaws. Mr. Weil previously held Senior Vice President
positions with Macy’s, Marshalls and J Baker/Morse Shoe in merchandising and supply chain
management. Mr. Weil holds an M.B.A. from the Harvard Business School and a B.A. from the
University of Michigan.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board (the “Audit Committee”) has selected Moss Adams to serve as
our independent registered public accounting firm for the fiscal year ending October 31, 2007.
Representatives of Moss Adams are expected to be at the Annual Meeting, will have an opportunity to
make a statement if they so desire, and will be available to respond to appropriate questions.
Reasons for the Proposal
Selection of our independent registered public accounting firm is not required to be submitted
for stockholder approval, but the Audit Committee is seeking ratification of its selection of Moss
Adams from our stockholders as a matter of good corporate practice. If the stockholders do not
ratify this selection, the Audit Committee will reconsider its selection of Moss Adams and will
either continue to retain this firm or appoint a new independent registered public accounting firm.
Even if the selection is ratified, the Audit Committee may, in its discretion, appoint a different
independent registered public accounting firm at any time during the year if it determines that
such a change would be in the Company’s best interests and those of our stockholders.
The Board recommends that you vote FOR ratifying the selection of Moss Adams as the Company’s
independent registered public accounting firm.
6
Communicating with the Directors
Stockholders may communicate with the Board, its Committees, Mr. James B. Hayes, who is the
Company’s current Chairman, or any other member of the Board by sending a letter, care of our
Corporate Secretary, to 2765 Loker Avenue West, Carlsbad, CA 92010. The Board’s policy is to have
all stockholder communications compiled by the Corporate Secretary and forwarded directly to the
Board, the Committee or the director, as indicated in the letter. All letters will be forwarded to
the appropriate party. The Board reserves the right to revise this policy in the event that this
process is abused, becomes unworkable, or otherwise does not efficiently serve the purpose of the
policy.
Director Independence
The Board has determined that none of the Company’s directors, with the exception of Eric S.
Salus and Peter M. Weil, has a material relationship with the Company (either directly or as a
partner, shareholder or officer of an organization that has a relationship with the Company)
unrelated to his service as a director and that all of the Company’s directors, with the exception
of Messrs. Salus and Weil, are independent under the Nasdaq Stock Market, Inc. (“NASDAQ”) listing
standards. On June 5, 2007, Mr. Salus entered into an agreement with the Company dated as of June
1, 2007 whereby Mr. Salus will provide consulting services relating to corporate management and
operations (the “Agreement”). In addition to his service as a director, Mr. Salus provides
consulting services to the Company five business days per calendar month. For such services, Mr.
Salus received an upfront, non-refundable, one-time cash retainer of $25,000 and receives monthly
cash compensation of $15,500 in addition to the cash compensation he receives as a non-employee
director. As additional compensation under the Agreement, the Company granted to Mr. Salus a
non-qualified stock option grant covering 10,000 shares of Ashworth’s common stock, with an
exercise price equal to 100% of fair market value of the common stock on the date of grant. The
foregoing option shall vest 50% on September 30, 2007 and 50% on March 31, 2008. Except in the
context of a change in control, vesting shall cease upon termination of the Agreement, for any
reason, and the vested portion of the option shall remain exercisable for a period of five (5)
years after the date of grant. The foregoing option grant is in addition to, and not in lieu of,
any and all stock option grants to Mr. Salus for his continuing service on the Board. The
consulting engagement under the Agreement shall continue until March 30, 2008, but may be earlier
terminated by either party with 60-days notice. Mr. Weil serves as the Company’s Chief Executive
Officer. Due to these relationships, Messrs. Weil and Salus do not qualify as independent
directors under NASDAQ listing standards.
Meetings and Committees of the Board
The Company has standing Audit, Compensation and Human Resources, and Corporate Governance and
Nominating Committees, as well as the Special Committee, which are discussed below.
The Audit Committee
The Audit Committee represents the Board in assessing the independence and objectivity of the
Company’s independent registered public accounting firm, the integrity of management, the
appropriateness of accounting policies and procedures and the adequacy of disclosures to
stockholders. In this regard, the Audit Committee assists the Board by reviewing the financial
information disclosure, the internal control over financial reporting established by management
7
and the internal and external audit process. The Audit Committee is also responsible for the
selection and retention of an independent registered public accounting firm to audit the financial
statements of the Company and its divisions and subsidiaries.
The Audit Committee currently consists of Messrs. Hanson (Chairman), Carpenter, O’Connor and
Richardson. The Audit Committee has been established in accordance with NASDAQ and Securities and
Exchange Commission (“SEC”) rules and regulations, and all of the members of the Audit Committee
are independent as independence for audit committee members is defined under applicable NASDAQ
listing standards and SEC rules and regulations. The Audit Committee and the Board have determined
that each of Mr. Hanson and Mr. Richardson qualifies as an “audit committee financial expert”
within the meaning of SEC rules and regulations. The Audit Committee has the authority to retain
legal and other advisors of its choice, at the Company’s expense, which advisors report directly to
the Audit Committee. The Audit Committee Charter is accessible via the Company’s website at
www.ashworthinc.com under the heading “Investor Info.”
The Compensation and Human Resources Committee
The Compensation and Human Resources Committee assists the Board of Directors in discharging
its responsibilities relating to the compensation for executive officers and outside directors and
makes recommendations to the Board with respect to the Company’s incentive and equity-based
compensation plans. The Compensation and Human Resources Committee currently consists of Messrs.
O’Connor (Chairman), Adler, Hayes, Meyer and Richardson, all of whom are independent directors as
independence is defined under the NASDAQ listing standards. The Compensation and Human Resources
Committee has the authority to retain legal and other advisors of its choice, at the Company’s
expense, which advisors report directly to the Compensation and Human Resources Committee. The
Compensation and Human Resources Committee Charter is accessible via the Company’s website at
www.ashworthinc.com under the heading “Investor Info.”
Compensation and Human Resources Committee Interlocks and Insider Participation.
The members of the Compensation and Human Resources Committee, Messrs. O’Connor, Adler, Hayes,
Meyer and Richardson, are not current or former officers or employees of the Company. There are no
Compensation and Human Resources Committee interlocks between the Company and other entities
involving Ashworth’s executive officers and directors.
The Corporate Governance and Nominating Committee
The Board of Directors established the Corporate Governance and Nominating Committee in
January 2004. The purpose of the Corporate Governance and Nominating Committee is to assist the
Board by identifying qualified individuals to become directors of the Company, to consider and
recommend to the Board the director nominees for each annual meeting of stockholders and to fill
vacancies on the Board, to consider and recommend to the Board the composition of the Board, its
committees and the chairpersons thereof, to monitor and assess the effectiveness of the Board and
its committees, and to perform a leadership role in shaping and implementing the Company’s
corporate governance policies. The Company has adopted several corporate governance policies among
which are policies specifying the minimum number of independent and total directors, limiting each
director’s service to a maximum number of public company boards, limiting the length of service for
non-employee
8
directors and designating stock ownership levels for the Company’s directors and listed
executive officers. The Corporate Governance and Nominating Committee currently consists of
Messrs. Carpenter (Chairman), Adler, Hanson and Hayes, all of whom are independent directors as
independence is defined under applicable NASDAQ listing standards. The Corporate Governance and
Nominating Committee has the authority to retain legal and other advisors of its choice, at the
Company’s expense, which advisors report directly to the Corporate Governance and Nominating
Committee. The Corporate Governance and Nominating Committee Charter is accessible via the
Company’s website at www.ashworthinc.com under the heading, “Investor Info.”
The Corporate Governance and Nominating Committee considers stockholder nominations for
candidates for membership on the Board when properly submitted in accordance with the Company’s
bylaws. The Corporate Governance and Nominating Committee will review and evaluate such
stockholder nominations in the same manner as it evaluates all other nominees.
The Company’s bylaws provide that nominations for the election of directors may be made by any
stockholder entitled to vote in the election of directors; provided, however, that a stockholder
may nominate a person for election as a director at a meeting only if advance written notice of
such stockholder’s intent to make such nomination has been given to the Company’s Secretary in
accordance with the Company’s bylaws. Each notice must set forth: (i) the name and address of the
stockholder who intends to make the nomination and of the person or persons to be nominated; (ii)
the class and number of shares of the Company’s stock which are beneficially owned by the
stockholder and a representation that the stockholder is a holder of record of stock of the Company
entitled to vote at such meeting and intends to appear in person or by proxy at the meeting and
nominate the person or persons specified in the notice; (iii) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to be made by the
stockholder; (iv) such other information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC
had the nominee been nominated, or intended to be nominated, by the Board; and (v) the consent of
each nominee to serve as a director of the Company if so elected.
In addition to stockholder nominations as described above, the Corporate Governance and
Nominating Committee may utilize a variety of methods for identifying potential nominees for
directors, including considering potential candidates who come to their attention through current
officers, directors, professional search firms or other persons. Stockholders may also recommend
director nominees for consideration to the Corporate Governance and Nominating Committee by
submitting the names and any relevant information to our Corporate Secretary at 2765 Loker Avenue
West, Carlsbad, CA 92010. Once a potential nominee has been identified, the Corporate Governance
and Nominating Committee evaluates whether the nominee has the appropriate skills and
characteristics required to become a director in light of the then current make-up of the Board of
Directors. This assessment includes an evaluation of the nominee’s judgment and skills, such as
experience at a strategy/policy setting level, financial sophistication, leadership and
objectivity, all in the context of the perceived needs of the Board of Directors at that point in
time. The Board of Directors believes that, at a minimum, all members of the Board should have the
highest professional and personal ethics and values. In addition, each member
9
of the Board must be committed to increasing stockholder value and should have enough time to
carry out his or her responsibilities as a member of the Board.
The Special Committee
The purpose of the Special Committee is to review, analyze and consider strategic alternatives
for the Company and to promptly report all conclusions and recommendations to the Company’s full
Board for the Board’s information and consideration of any binding action. Except as expressly
provided in its Charter, the Special Committee acting alone shall not have any power to act on
behalf of or otherwise bind the Company in any way. The Special Committee currently consists of
Messrs. Meyer (Chairman), Carpenter, Hayes, Salus and Weil. The Special Committee has the
authority to advise on and recommend to the full Board regarding the need for retaining any outside
counsel, experts or other advisors it determines appropriate to assist it in the full performance
of its functions. In September 2006, the Special Committee determined that future meetings would
be held only if and when strategic alternatives opportunities were presented. The Special
Committee Charter is accessible via the Company’s website at
www.ashworthinc.com under the heading,
“Investor Info.”
Board and Committee Meetings
During fiscal year 2006, the Board of Directors met in person seven times, met telephonically
17 times and took action twice by written consent in lieu of a meeting. During fiscal year 2006:
the Audit Committee met in person six times and met telephonically six times; the Compensation and
Human Resources Committee met in person seven times and met telephonically twice; the Corporate
Governance and Nominating Committee met in person five times and met telephonically five times; and
the Special Committee met telephonically five times. During fiscal year 2006, each of the
directors attended at least 75% of the aggregate number of the Board of Directors’ meetings and
meetings of the Committees on which they served.
Policy Regarding Director Attendance at Annual Meetings
The Company encourages director attendance at its Annual Meetings of Stockholders and requests
that directors make reasonable efforts to attend such meetings. The Company’s 2006 Annual Meeting
of Stockholders was attended by all of the members of the then-current Board of Directors.
Report of the Audit Committee
The Audit Committee is solely responsible for the appointment, compensation and oversight of
the work of the independent registered public accounting firm for the purpose of preparing or
issuing an audit report or related work.
The Audit Committee reviews the Company’s financial reporting process on behalf of the Board.
Management has the principal responsibility for the financial statements and the reporting process.
The Company’s independent registered public accounting firm opines on the conformity of our
audited financial statements to accounting principles generally accepted in the United States of
America.
In its oversight of the financial reporting process, the Audit Committee has reviewed and
discussed with management and the independent registered public accounting firm the
10
Company’s audited financial statements. The Audit Committee has discussed with the
independent registered public accounting firm the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), as amended by Statement on
Auditing Standards No. 89 (Audit Adjustments) and Statement on Auditing Standards No. 90 (Audit
Committee Communications). Our independent registered public accounting firm also provided to the
Audit Committee the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit Committee discussed
with the independent accountants that firm’s independence. The Audit Committee has also considered
whether the independent registered public accounting firm’s provision of non-audit services to the
Company is compatible with the independent registered public accounting firm’s independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to the Board, and the Board has approved, that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the year ended October 31, 2006, for filing with the
Securities and Exchange Commission.
This report was submitted by
the Audit Committee:
John M. Hanson, Jr., Chairman
Stephen G. Carpenter
James G. O’Connor
John W. Richardson
Report of the Compensation and Human Resources Committee
The Compensation and Human Resources Committee establishes and supervises the administration
of compensation strategy and policy. The Company’s executive compensation program is designed to:
provide competitive levels of compensation in order to attract, retain and motivate skilled
employees; tie individual total compensation to individual performance and the Company’s success;
and align the interests of the Company’s executive officers with those of its stockholders. The
Compensation and Human Resources Committee periodically reviews the Company’s compensation strategy
to evaluate its effectiveness in attaining the above goals.
Overview of Executive Compensation Program
The Company’s executive compensation program is designed to align the interests of the
Company’s executives with those of the Company’s stockholders. Executive compensation currently
consists of three components: Base Salary; Annual Bonus; and Stock Option Grants. Each component
of the compensation package and its rationale is outlined below. The Company’s standard for
appropriate cash compensation is that equivalent to the 75th percentile of the apparel
industry peer group.
The base salary for each position is reviewed annually and adjusted based upon each individual
executive’s performance and potential. The Compensation and Human Resources Committee believes
that keeping base salaries competitive with industry peers helps to retain executives.
The Company’s bonus program rewards executives for their individual performance, as measured
against standards established in consultation with each executive, their contributions to
11
the development and retention of employees, their division’s performance, and, for senior executives,
the Company’s overall performance.
Total compensation for executive officers also includes long-term incentives offered in the
form of stock options, which are generally provided through initial stock option grants at the date
of hire and periodic additional grants. The Board believes that stock option grants align the
interests of each executive officer with the interests of stockholders since the executive can
realize a gain only when the Company’s stock appreciates in value.
In determining the amount of stock option grants, the Compensation and Human Resources
Committee considers the contributions of each executive to his or her division, the overall success
of the Company in the past fiscal year, each executive’s potential contribution to the Company, his
or her contribution to the development of his or her peers and subordinates, the responsibilities
to be assumed by each executive in the upcoming fiscal year and appropriate incentives for the
promotion of the long-term growth of the Company. The Company fixes the exercise price of the
options at the common stock’s fair market value on the date of the grant.
Stock Ownership Guidelines
The Company has adopted Stock Ownership Guidelines (the “Guidelines”) for the Company’s
non-employee directors, the Chief Executive Officer and President (“CEO”), the Chief Financial
Officer (“CFO”), the Executive Vice President (“EVP”) and the Senior Vice President (“SVP”) levels
of executive management.
The Guidelines are as follows:
| |
1. |
|
each non-employee director – three (3) times the annual retainer; |
| |
| |
2. |
|
the CEO – two (2) times the annual base salary; |
| |
| |
3. |
|
each EVP and the CFO – one and a half (1.5) times the annual base
salary; and |
| |
| |
4. |
|
each SVP – one (1) times the annual base salary. |
The persons in positions covered by the Guidelines must retain stock acquired on option
exercises equaling a value of at least 50% of their net after-tax profits on each exercise of
options granted on or after March 24, 2004 until the individual ownership goal is achieved.
Chief Executive Officer Compensation
Mr. Weil was appointed to the position of Chief Executive Officer of the Company
effective as of October 30, 2006. The Company entered into an employment agreement with Mr. Weil
(the ”Employment Agreement”) on November 27, 2006. Mr. Weil’s Employment Agreement provides for
compensation consisting of, among other things: an annual base salary of $400,000; a performance
bonus opportunity of 50% of annual base salary under certain circumstances; a grant of options to
purchase 100,000 shares of the Company’s common stock, with 50% of the options vesting on each of
the first two anniversaries of the grant date; eligibility to participate in the Company’s 401(k)
plan; coverage under the Company’s medical, dental and life insurance benefits programs; a clothing
allowance in accordance with Company policy; an automobile allowance of $1,250 per month; and, an
allowance for reasonable residential expenses, in lieu of moving expenses, until such time as the
Compensation and Human Resources Committee or the Board takes further action, which will include housing and all reasonable expenses (to be grossed up
for taxes, if applicable).
12
If Mr. Weil is terminated without Cause (as defined in the Employment Agreement), then Mr.
Weil will receive (1) severance compensation in an amount equal to 12 months of his then-current
annual base salary and (2) accelerated vesting of all stock options granted under the Employment
Agreement. Mr. Weil’s option vesting will also be accelerated as a result of a change of control.
In the event that Mr. Weil becomes disabled (as defined in the Employment Agreement) during the
term of this Agreement for a continuous period up to 90 days, or upon termination of his employment
as a result of his death, the Company shall pay a pro rata share of the annual bonus in the year in
which Mr. Weil was disabled or died.
Randall L. Herrel, Sr. resigned from his position as Chief Executive Officer of the
Company effective October 17, 2006. Mr. Herrel’s employment contract provided for a base salary of
no less than $325,000 and permitted increases in salary, the grant of stock options and the award
of a cash bonus at the discretion of the Compensation and Human Resources Committee. For achieving
certain objectives as set forth in the fiscal 2004 bonus plan, Mr. Herrel was awarded bonuses
totaling $150,000 as well as options to purchase 45,000 shares. After considering the Company’s
overall performance, as measured by sales revenue, profitability, earnings per share and share
valuation for fiscal year 2004, the Compensation and Human Resources Committee voted to increase
Mr. Herrel’s salary for fiscal year 2005 to $425,000, but his salary was later reduced by 10% to
$382,500 with Mr. Herrel’s consent, effective December 19, 2005. On June 1, 2006, the Committee
approved the reinstatement of the full salary effective July 1, 2006.
In connection with his resignation effective October 17, 2006, the Company and Mr. Herrel
entered into the Agreement as to Ashworth, Inc. Executive Employment Agreement with Randall L.
Herrel, Sr. (the “Herrel Agreement”), which amended and confirmed certain understandings regarding
the Second Amended and Restated Executive Employment Agreement dated February 28, 2006 between the
Company and Mr. Herrel (the “Employment Agreement”). The Herrel Agreement provided for, among
other matters, (1) severance compensation in a cash amount equal to $629,349, (2) immediate vesting
of all outstanding stock options upon termination, which will remain exercisable for two years
after the date of termination, provided, however, that no option can be exercised
beyond its original expiration date, (3) certain employee and other benefits for one year after the
date of termination, including medical, dental, life and disability insurance, an automobile
allowance of $1,250 per month, monthly dues for a country club membership, and an Ashworth®
clothing allowance up to $100 per month, and (4) reimbursement for accrued but unpaid vacation and
out-of-pocket business expenses reimbursable under the Employment Agreement. On October 17, 2006,
the Company deposited $653,889 in a rabbi trust for Mr. Herrel for a period of six months. In May
2007, the balance in the rabbi trust account, net of payroll related taxes, was paid to Mr. Herrel.
This report was submitted by the
Compensation and Human Resources Committee:
James G. O’Connor, Chairman
Detlef H. Adler
James B. Hayes
David M. Meyer
John W. Richardson
13
Compensation of Non-Employee Directors
Each non-employee director (1) receives $30,000 in annual cash compensation plus $1,000 for
in-person attendance and $500 for telephonic attendance at each Board meeting or Committee meeting that is not held in conjunction with a Board meeting; (2)
receives an option to purchase 10,000 shares of the Company’s common stock, vesting quarterly over
a 12-month period, for service as a director; and (3) who serves as the Audit Committee chairman,
the Compensation and Human Resources Committee chairman, the Corporate Governance and Nominating
Committee chairman, the Special Committee chairman or the Lead Independent Director, if any,
receives additional annual cash compensation of $10,000, $7,500, $5,000, $5,000 and $5,000,
respectively, plus an option to purchase 5,000 shares of the Company’s common stock, vesting
quarterly, over a 12-month period, for service as a Committee chairman or Lead Independent
Director, if any. On March 19, 2007, the Compensation and Human Resources Committee approved
additional cash compensation of $5,000 plus an option to purchase 5,000 shares of the Company’s
common stock, vesting quarterly over a 12-month period, for service as the Chairman of the Special
Committee, effective March 1, 2007.
Effective September 12, 2006, James B. Hayes (formerly the Lead Independent Director) was
appointed as the (non-executive) Chairman of the Board. For all services as Chairman of the Board
and as a Director, in recognition of the time commitment associated with this position, Mr. Hayes
was previously entitled to aggregate cash compensation of $200,000 per year, payable in monthly
installments. In addition, Mr. Hayes received quarterly grants of stock options to purchase 5,000
shares (in addition to the option grants to all non-employee Directors) with an exercise price of
100% of fair market value on the date of grant and vesting on a daily basis over the three months
after the date of grant, with the first grant of such options being made on September 12, 2006.
Mr. Hayes received subsequent quarterly grants of options for 5,000 shares on each of December 12,
2006, March 12, 2007 and June 12, 2007. Effective March 1, 2007, in recognition of the reduced
time commitment requirement, the aggregate cash compensation was reduced to $75,000 per year,
payable in monthly installments, for all services provided by Mr. Hayes as the Chairman of the
Board and as a Director. The quarterly grants of stock options to purchase 5,000 shares, as
described above, will continue as long as Mr. Hayes continues to serve as the Chairman of the
Board.
Executive Officers of the Company
Below are the names and business backgrounds of the current executive officers of the Company
(other than Mr. Weil, our CEO, whose business background is described above).
Edward J. Fadel, age 51
President
Mr. Fadel re-joined the Company on May 23, 2007. He most recently served as Vice President of
Merchandising at Greg Norman / Reebok. Previously, from 2005 to 2006, he served as Chief
Strategist of Apparel at Ahead, Inc. where he formulated apparel and headwear strategies for both
the Ahead men’s line and Kate Lord women’s line. Prior to that, Mr. Fadel served as Senior Vice
President of Merchandising and Design at the Company from 2002 to 2004. Mr. Fadel joined the
Company in 2001 and served as Vice President — Callaway Golf Apparel Merchandising and Design until
his promotion in 2002. Mr. Fadel worked as a consultant with various apparel manufacturers from
2000 until 2001. Prior to that, Mr. Fadel founded and served
14
as President of Elandale Golfwear, a women’s sportswear producer, from 1995 to 2000 and as President of Cutter & Buck Big &
Tall (a division of The Jeremy Dold Co.) from 1992 to 1995.
Eric R. Hohl, age 45
Executive Vice President, Chief Financial Officer and Treasurer
Mr. Hohl joined the Company on March 19, 2007 from ISE Corporation where he served as Chief
Financial Officer since April 2005. ISE Corporation designs, engineers and assembles hybrid and
hydrogen drive systems for heavy duty vehicles. From March 2004 to April 2005, Mr. Hohl served as
the Chief Financial Officer and Chief Operating Officer at B.B. Dakota, Inc., a women’s apparel
company. From September 2000 to February 2004, Mr. Hohl served as Chief Financial Officer for Ritz
Interactive, Inc., an E-commerce company.
Former Executive Officers
Randall L. Herrel, Sr. age 57
Chief Executive Officer
Mr. Herrel served as a Director and the Chief Executive Officer of the Company from December 1996
until his resignation effective October 2006. Mr. Herrel also served as the Company’s Chairman
from April 2001 until September 2006 and as the President from December 1996 until September 2006.
From 1994 to 1996, Mr. Herrel served as President and Chief Operating Officer of Quiksilver, Inc.,
a young men’s and women’s apparel company. Mr. Herrel joined Quiksilver in 1989 and also served at
various times as Chief Financial Officer, Chief Operating Officer, Treasurer and Secretary. Mr.
Herrel resigned from the Company effective October 17, 2006.
Gary I. (“Sims”) Schneiderman, age 46
President
Mr. Schneiderman joined the Company in September 2001 and served as Vice President of Sales for
Ashworth and Callaway Golf apparel Retail Sales until January 2004 when he was promoted to Senior
Vice President of Sales and had the added responsibility for Callaway Golf apparel Green Grass
Sales. In September 2005, Mr. Schneiderman was promoted to Executive Vice President of Sales,
Marketing and Customer Service and in September 2006 he was promoted to President. Prior to
joining the Company, Mr. Schneiderman was with Tommy Hilfiger USA where he served in a number of
capacities including as National Sales Manager for men’s sportswear. Prior to 1990, he served as a
Regional Sales Manager for Pincus Brothers Maxwell Tailored Clothing from 1985 to 1990. Mr.
Schneiderman resigned from his position with the Company effective May 21, 2007.
Winston E. Hickman, age 64
Executive Vice President, Chief Financial Officer and Treasurer
Mr. Hickman joined the Company on February 23, 2006. Mr. Hickman previously served as Executive
Vice President and Chief Financial Officer of REMEC, Inc., a NASDAQ-listed designer and
manufacturer of advanced wireless subsystems used in commercial and defense communications
applications. Mr. Hickman joined REMEC in 2003 from privately held Paradigm Wireless System, Inc.
where, beginning in 2000, he was an investor, Chief Financial Officer and a member of the board of
directors. Mr. Hickman has also served as board member, Chief Financial Officer and financial
advisor to a number of public and private companies. Mr.
15
Hickman served as Chief Financial Officer of Pacific Scientific Company, a NYSE-listed company with sales in excess of $300 million. Prior to
Pacific Scientific, he held senior financial positions at Rockwell International, Allied-Signal and
Vans, Inc. He currently serves as a member of the board of directors of SRS Labs, Inc., a
NASDAQ-listed company, where he is Chairman of the Audit Committee. Mr. Hickman holds an M.B.A.
from the University of Southern California and a B.A. from California State University, Long Beach.
Mr. Hickman resigned from his position with the Company effective November 17, 2006.
Peter E. Holmberg, age 55
Executive Vice President – Green Grass Sales and Merchandising
Mr. Holmberg joined the Company in July 1998 and served as the Director of Corporate Sales
until December 1999. He served as Vice President of Corporate Sales from December 1999 to August
2001, when he was promoted to Senior Vice President of Sales and became responsible for Ashworth
Green Grass Sales. Mr. Holmberg then served as the Senior Vice President of Merchandising and
Design from May 2005 until his promotion to Executive Vice President of Merchandising, Design and
Production in September 2005. From October 2006, Mr. Holmberg served as the Company’s Executive
Vice President of Green Grass Sales and Merchandising. Prior to joining the Company, Mr. Holmberg
served as National Corporate Sales Manager for Cutter & Buck, Inc., from 1995 to 1998, and as
Regional Manager and Buyer for Patrick James, Inc. from 1992 to 1995. Mr. Holmberg was the
proprietor of The Country Gentleman, an upscale retail store in Bellevue, Washington, from 1975 to
1992. Mr. Holmberg resigned from his position with the Company effective May 21, 2007.
Greg W. Slack, age 45
Vice President — Finance, Corporate Controller and Principal Accounting Officer
Mr. Slack was appointed Principal Accounting Officer on October 25, 2006. Mr. Slack joined
the Company as Director of Internal Audit in October 2005, was promoted to Corporate Controller in
February 2006 and appointed Vice President of Finance in July 2006. From September 2004 until
October 2005, Mr. Slack worked on the Company’s Sarbanes-Oxley project as an independent
consultant. Mr. Slack was with JMC Management, Inc. from December 2001 through August 2004 where
he served as the Chief Financial Officer from January 2003 to August 2004 and as the Controller
from December 2001 to January 2003. Prior to that Mr. Slack held various accounting related
positions at Bay Logics, Inc. and PricewaterhouseCoopers LLP. He holds a Certified Public
Accountant license from the State of California and a B.S. degree in Accountancy from San Diego
State University. Mr. Slack resigned from his position with the Company effective July 27, 2007.
16
Executive Compensation
Summary Compensation Table
The following information sets forth the compensation for the Company’s named executive
officers for fiscal year 2006, as well as the compensation paid to each such individual for the two
previous fiscal years.
Summary Compensation Table
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
| |
|
Annual Compensation |
|
Long-Term Compensation |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
Incentive |
|
|
| |
|
Fiscal |
|
|
|
|
|
|
|
|
|
Other Annual |
|
Underlying |
|
Plan |
|
All Other |
| Name and Principal Position |
|
Year |
|
Salary |
|
Bonus |
|
Compensation |
|
Options |
|
Payouts |
|
Compensation |
| |
|
|
|
|
|
($) |
|
($) |
|
($) |
|
(#) |
|
($) |
|
($) |
Peter M. Weil (1) |
|
|
2006 |
|
|
|
3,077 |
|
|
|
– |
|
|
|
– |
|
|
|
129,808 |
(2) |
|
|
– |
|
|
|
– |
|
Chief Executive Officer |
|
|
2005 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
2004 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary I. Schneiderman(3) |
|
|
2006 |
|
|
|
288,180 |
|
|
|
125,000 |
(4) |
|
|
– |
|
|
|
20,000 |
(5) |
|
|
– |
|
|
|
– |
|
Former President |
|
|
2005 |
|
|
|
216,701 |
|
|
|
85,000 |
(6) |
|
|
80,891 |
(7) |
|
|
38,000 |
(8) |
|
|
– |
|
|
|
– |
|
|
|
|
2004 |
|
|
|
187,338 |
|
|
|
123,769 |
(9) |
|
|
– |
|
|
|
4,015 |
(10) |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter E. Holmberg(11) |
|
|
2006 |
|
|
|
211,754 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Former Executive Vice |
|
|
2005 |
|
|
|
197,716 |
|
|
|
– |
|
|
|
– |
|
|
|
35,000 |
(12) |
|
|
– |
|
|
|
– |
|
President
– Green Grass Sales and |
|
|
2004 |
|
|
|
191,812 |
|
|
|
20,000 |
|
|
|
– |
|
|
|
6,755 |
(10) |
|
|
– |
|
|
|
– |
|
Merchandising |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winston E. Hickman(13) |
|
|
2006 |
|
|
|
206,538 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Former Executive Vice |
|
|
2005 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
President, Chief Financial |
|
|
2004 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Officer and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory W. Slack(14) |
|
|
2006 |
|
|
|
147,072 |
|
|
|
154,453 |
(15) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Former Vice-President – Finance, |
|
|
2005 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
5,000 |
(5) |
|
|
– |
|
|
|
– |
|
Corporate
Controller and Principal |
|
|
2004 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Accounting Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall L. Herrel, Sr. (16) |
|
|
2006 |
|
|
|
429,810 |
|
|
|
– |
|
|
|
653,889 |
(17) |
|
|
– |
|
|
|
– |
|
|
|
7,280 |
(18) |
Former President and Chief |
|
|
2005 |
|
|
|
422,074 |
|
|
|
– |
|
|
|
– |
|
|
|
45,000 |
(19) |
|
|
– |
|
|
|
4,209 |
(18) |
Executive Officer |
|
|
2004 |
|
|
|
387,231 |
|
|
|
150,000 |
|
|
|
– |
|
|
|
17,713 |
(10) |
|
|
– |
|
|
|
4,209 |
(18) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
Mr. Weil was appointed the Company’s Chief Executive Officer effective October
30, 2006. Under Mr. Weil’s employment agreement, Mr. Weil’s annual base salary is $400,000. |
| |
| (2) |
|
Mr. Weil was granted an option for 4,808 shares on June 1, 2006 for service as a
member of the Board of Directors. Mr. Weil was granted an option for 25,000 shares on
September 12, 2006 upon entry into a consulting services agreement with the Company. Options
for 12,100 shares of the 25,000 granted under the consulting services agreement were
terminated upon Mr. Weil’s appointment as Chief Executive Officer effective October 30, 2006.
On November 1, 2006, Mr. Weil was granted an option for 100,000 shares as part of his
compensation as the Company’s Chief Executive Officer. |
17
|
|
|
| (3) |
|
Mr. Schneiderman resigned from the Company effective May 21, 2007. |
| |
| (4) |
|
Mr. Schneiderman was paid a retention bonus of $85,000 in February 2006 and a
retention bonus of $40,000 in January 2007 pursuant to an employment agreement. |
| |
| (5) |
|
Option grant made on offer of employment or pursuant to an employment agreement. |
| |
| (6) |
|
Mr. Schneiderman was paid a retention bonus of $85,000 in September 2005 pursuant to
an employment agreement. |
| |
| (7) |
|
Includes a payment of $45,000 for the purchase of a golf club membership plus
$25,039 for the gross-up of applicable income taxes. Upon termination of his employment, Mr.
Schneiderman was contractually required to reimburse the golf club membership cost to the
Company, which was waived in connection with Mr. Schneiderman’s resignation from the Company. |
| |
| (8) |
|
Includes 20,000 options granted pursuant to an employment agreement and 18,000
options granted on December 21, 2004 based upon performance for fiscal year 2004. |
| |
| (9) |
|
Mr. Schneiderman’s bonus in fiscal 2004 consists of $78,769 earned for calendar year
2003 and $45,000 earned for fiscal year 2004. |
| |
| (10) |
|
Option grant made in fiscal year 2004 based upon performance for fiscal year 2003. |
| |
| (11) |
|
Mr. Holmberg resigned from the Company effective May 21, 2007. |
| |
| (12) |
|
Includes 20,000 options granted pursuant to an employment agreement and 15,000
options granted on December 21, 2004 based upon performance for fiscal year 2004. |
| |
| (13) |
|
Mr. Hickman joined the Company on February 23, 2006 and served as Executive Vice
President, Chief Financial Officer and Treasurer until he resigned effective November 17,
2006. |
| |
| (14) |
|
Mr. Slack joined the Company on October 10, 2005 and served as Director of Internal
Audit until February 8, 2006 when he was promoted to Corporate Controller. Mr. Slack was
promoted to Vice President of Finance on July 17, 2006 and appointed the Principal Accounting
Officer on October 25, 2006. Mr. Slack resigned from his position with the Company effective
July 27, 2007. |
| |
| (15) |
|
Mr. Slack was paid a retention bonus of $145,603 in September 2006 pursuant to an
employment agreement and a bonus of $8,850 based upon performance for fiscal year 2006. |
| |
| (16) |
|
Mr. Herrel resigned effective October 17, 2006. |
| |
| (17) |
|
Mr. Herrel’s severance payment of $653,889 pursuant to an agreement related to Mr.
Herrel’s employment agreement was deposited in a rabbi trust account on October 17, 2006 and
was paid to Mr. Herrel on May 1, 2007. |
| |
| (18) |
|
Includes a $1,138 premium payment made for life insurance and a $3,071 premium
payment made for disability insurance for fiscal years 2005 and 2004. Fiscal year 2006 amount
includes a $1,138 premium payment made for life insurance and a $6,142 premium payment made
for disability insurance. |
| |
| (19) |
|
Option grant made on December 21, 2004 based upon performance for fiscal year 2004. |
18
Fiscal Year 2006 Stock Option Grants
The following table provides information regarding stock options granted under the Company’s
equity incentive plans during fiscal year 2006 to the named executive officers.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Individual Grants |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable |
| |
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value at Assumed |
| |
|
Securities |
|
% of Total |
|
|
|
|
|
|
|
|
|
Annual Rate of Stock |
| |
|
Underlying |
|
Options Granted |
|
|
|
|
|
|
|
|
|
Price Appreciation |
| |
|
Options |
|
to Employees in |
|
Exercise or |
|
Expiration |
|
for Option Term |
| |
|
Granted |
|
Fiscal Year |
|
Base Price |
|
Date |
|
5% |
|
10% |
| |
|
(#) |
|
(%) |
|
($/sh) |
|
|
|
|
|
($) |
|
($) |
Peter M. Weil |
|
|
4,808 |
(1) |
|
|
4.19 |
|
|
|
9.21 |
|
|
|
6/1/16 |
|
|
|
27,849 |
|
|
|
70,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter M. Weil |
|
|
25,000 |
(2) |
|
|
21.78 |
|
|
|
6.55 |
|
|
|
9/12/11 |
|
|
|
45,241 |
|
|
|
99,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary I. Schneiderman |
|
|
20,000 |
(3) |
|
|
17.42 |
|
|
|
6.55 |
|
|
|
9/12/16 |
|
|
|
121,691 |
|
|
|
308,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winston E. Hickman |
|
|
23,555 |
(4) |
|
|
20.52 |
|
|
|
8.49 |
|
|
|
2/23/16 |
|
|
|
125,773 |
|
|
|
318,733 |
|
Winston E. Hickman |
|
|
26,444 |
(4) |
|
|
23.03 |
|
|
|
8.49 |
|
|
|
2/23/16 |
|
|
|
141,193 |
|
|
|
357,810 |
|
|
|
|
| (1) |
|
These options were granted on June 1, 2006 for service as a member of the Board
of Directors. |
| |
| (2) |
|
These options were granted on September 12, 2006 upon entry into a consulting
services agreement. Options for 12,100 shares of the 25,000 granted were terminated upon Mr.
Weil’s appointment as Chief Executive Officer effective October 30, 2006. On November 1,
2006, Mr. Weil was granted an option for 100,000 shares as part of his compensation as the
Company’s Chief Executive Officer. |
| |
| (3) |
|
These options were granted per an employment contract. |
| |
| (4) |
|
These options terminated upon Mr. Hickman’s resignation effective November 17, 2006. |
Aggregated Option Exercises and Fiscal Year-End Option Values
The following table provides information on the number of options exercised and the value
realized from such exercises in fiscal year 2006, as well as the number and value of the options
remaining to each executive after such exercises.
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Number of Securities |
|
Value of Unexercised |
| |
|
|
|
|
|
|
|
|
|
Underlying Unexercised |
|
In-The-Money Options |
| |
|
Shares Acquired |
|
|
|
|
|
Options at Fiscal Year-End |
|
at Fiscal Year-End |
| |
|
on Exercise |
|
Value Realized |
|
Exercisable/Unexercisable |
|
Exercisable/Unexercisable |
| |
|
(#) |
|
($) |
|
(#) |
|
($) |
Peter M. Weil |
|
|
– |
|
|
|
– |
|
|
15,208 / 100,000 |
|
84,495 / 0 |
Gary I. Schneiderman(1) |
|
|
– |
|
|
|
– |
|
|
47,015 / 20,000 |
|
30,250 / 131,000 |
Peter E. Holmberg(2) |
|
|
– |
|
|
|
– |
|
|
55,755 / 0 |
|
228,510 / 0 |
Greg W. Slack.(3) |
|
|
– |
|
|
|
– |
|
|
5,000 / 0 |
|
0 / 0 |
Randall L. Herrel, Sr.(4) |
|
|
99,000 |
|
|
|
225,910 |
|
|
147,213 / 0 |
|
580,938 / 0 |
Winston E. Hickman (5) |
|
|
– |
|
|
|
– |
|
|
0/0 |
|
0/0 |
19
|
|
|
| (1) |
|
Mr. Schneiderman resigned effective May 21, 2007. |
| |
| (2) |
|
Mr. Holmberg resigned effective May 21, 2007. |
| |
| (3) |
|
Mr. Slack resigned effective July 27, 2007. |
| |
| (4) |
|
Mr. Herrel resigned effective October 17, 2006. |
| |
| (5) |
|
Mr. Hickman resigned effective November 17, 2006. |
Executive Employment Agreements, Termination of Employment and Change in Control Arrangements
The Company has previously entered into executive employment agreements with: Peter M. Weil,
the Chief Executive Officer; Edward J. Fadel, President; Eric R. Hohl, Executive Vice President,
Chief Financial Officer and Treasurer; Randall L. Herrel, Sr., former Chief Executive Officer and
President; Winston E. Hickman, former Executive Vice President, Chief Financial Officer and
Treasurer; Peter S. Case, former Executive Vice President, Chief Financial Officer and Treasurer;
Peter E. Holmberg, the former Executive Vice President – Green Grass Sales and Merchandising; Gary
I. “Sims” Schneiderman, the former President; and Greg W. Slack, the former Vice President of
Finance, Corporate Controller and Principal Accounting Officer. Messrs. Slack, Schneiderman,
Holmberg, Hickman, Herrel and Case resigned from the Company effective July 27, 2007, May 21, 2007,
May 21, 2007, November 17, 2006, October 17, 2006 and February 1, 2006, respectively.
Agreements With Current Executive Officers
In connection with Peter M. Weil’s appointment effective October 30, 2006 as Chief Executive
Officer of Ashworth, Inc., the Company entered into an employment agreement with Mr. Weil (the
“Weil Employment Agreement”) on November 27, 2006. The Weil Employment Agreement provides for
compensation consisting of, among other things: an annual base salary of $400,000; a performance
bonus opportunity of 50% of annual base salary under certain circumstances; a grant of options to
purchase 100,000 shares of the Company’s common stock, with 50% of the options vesting on each of
the first two anniversaries of the grant date; eligibility to participate in the Company’s 401(k)
plan; coverage under the Company’s medical, dental and life insurance benefits programs; a clothing
allowance in accordance with Company policy; an automobile allowance of $1,250 per month; and an
allowance for reasonable residential expenses, in lieu of moving expenses, and until such time as
the Compensation and Human Resources Committee or the Board takes further action, which will
include housing and all reasonable expenses (to be grossed up for taxes, if applicable). If Mr.
Weil is terminated without Cause (as defined in the Employment Agreement), then Mr. Weil will
receive (1) severance compensation in an amount equal to 12 months of his then-current annual base
salary and (2) accelerated vesting of all stock options granted under the Weil Employment
Agreement. Mr. Weil’s option vesting will also be accelerated as a result of a termination
resulting from a change of control. In the event that Mr. Weil becomes disabled (as defined in the
Weil Employment Agreement) during the term of this Agreement for a continuous period up to 90 days,
or upon termination of his employment as a result of his death, the Company shall pay a pro rata
share of the annual bonus in the year in which Mr. Weil was disabled or died.
Effective May 23, 2007, Edward J. Fadel was appointed President of the Company. The Company
entered into an employment agreement (the “Fadel Employment Agreement”) with Mr. Fadel that
provides for compensation which includes: an annual base salary of $240,000;
20
eligibility for up to a target bonus of 40% of base salary, with the actual payment subject to the Board’s discretion and
in accordance with any applicable bonus plan; the grant of options to purchase 40,000 shares of the
Company’s common stock, with an exercise price equal to the closing price of the Company’s common
stock on May 23, 2007 and with half of the options vesting on each of the first two anniversaries
of Mr. Fadel’s employment with the Company (and which immediately vest upon Mr. Fadel’s termination
without cause); and, a monthly auto allowance of $1,000, a monthly housing allowance of $2,500 for
12 months and coverage under the Company’s benefits programs. If Mr. Fadel is terminated without
cause as defined in the Fadel Employment Agreement and he delivers a fully executed release and
waiver of all claims against the Company, the severance provisions of the Fadel Employment
Agreement grant him a lump sum payment of 25% to 50% of his then current annual salary, depending
on the timing and circumstances of his termination.
Effective March 19, 2007, Eric R. Hohl was appointed Executive Vice President, Chief Financial
Officer and Treasurer of the Company. The Company entered into an employment agreement (the “Hohl
Employment Agreement”) with Mr. Hohl that provides for compensation which includes: an annual base
salary of $240,000; eligibility for up to a target bonus of 40% of base salary, with the actual
payment subject to the Board’s discretion and in accordance with any applicable bonus plan; the grant
of options to purchase 40,000 shares of the Company’s common stock, with an exercise price equal to
the closing price of the Company’s common stock on March 19, 2007, and with half of the options
vesting on each of the first two anniversaries of Mr. Hohl’s employment with the Company; and
coverage under the Company’s benefits programs. If Mr. Hohl is terminated without cause as defined
in the Agreement and he delivers a fully executed release and waiver of all claims against the
Company, the severance provisions of the Hohl Employment Agreement grant him: a lump sum payment of
25% to 50% of his then current annual salary, depending on the timing and circumstances of his
termination and immediate vesting of the above stock options.
Agreements With Former Executive Officers
In connection with certain Board and management changes on September 12, 2006, the Company and
Randall L. Herrel, Sr., the Company’s Chief Executive Officer, entered into the Agreement as to
Ashworth, Inc. Executive Employment Agreement with Randall L. Herrel, Sr. (the “Herrel Agreement”),
which amended and confirmed certain understandings regarding the Second Amended and Restated
Executive Employment Agreement dated February 28, 2006 between the Company and Mr. Herrel (the
“Herrel Employment Agreement”). The Herrel Agreement provided for, among other matters, (1) Mr.
Herrel’s confirmation that he would no longer be Chairman of the Board of Directors or President,
and (2) Mr. Herrel’s continued service as Chief Executive Officer until such service was scheduled
to terminate automatically on October 17, 2006, unless earlier terminated pursuant to the Herrel
Agreement. Concurrent with the Herrel Agreement, Mr. Herrel submitted a letter of resignation (the
“Resignation Letter”), which confirmed that Mr. Herrel’s resignation of all employment and director
positions effective October 17, 2006 was not a result of any material disagreement with the Company
as to its operations, policies or practices.
The Herrel Agreement provided that if Mr. Herrel’s employment terminated on October 17, 2006
in accordance with the Resignation Letter or if he resigned earlier for Constructive Discharge (as
defined in the Herrel Agreement), Mr. Herrel would receive (1) severance compensation in a cash
amount equal to $629,349, (2) immediate vesting of all outstanding stock
21
options upon termination, which will remain exercisable for two years after the date of termination, provided,
however, that no option can be exercised beyond its original expiration date, (3) certain
employee and other benefits for one year after the date of termination, including medical, dental,
life and disability insurance, an automobile allowance of $1,250 per month, monthly dues for a
country club membership, and a clothing allowance up to $100 per month, and (4) reimbursement for
accrued but unpaid vacation and out-of-pocket business expenses reimbursable under the Herrel
Employment Agreement.
Had Mr. Herrel been terminated without Cause (as defined in the Herrel Agreement) or by death
or disability prior to October 17, 2006, then Mr. Herrel would have been entitled to receive (1)
severance compensation in a cash amount equal to $608,973 plus $582 per each calendar day that Mr.
Herrel was employed by the Company after September 12, 2006 (including weekends and holidays) until
the date of his termination, (2) immediate vesting of all outstanding stock options upon
termination, which will remain exercisable for two years after the date of termination, provided,
however, that no option can be exercised beyond its original expiration date, (3) certain employee
and other benefits for one year after the date of termination, including medical, dental, life and
disability insurance, an automobile allowance of $1,250 per month, monthly dues for a country club
membership, and a clothing allowance up to $100 per month, and (4) reimbursement for accrued but
unpaid vacation and out-of-pocket business expenses reimbursable under the Herrel Employment
Agreement.
Had Mr. Herrel been terminated prior to October 17, 2006 either for Cause by the Company or
because Mr. Herrel resigned earlier for any reason other than Constructive Discharge, then the
amount (if any) of severance compensation and benefits would have been determined in accordance
with the relevant provisions of the Herrel Employment Agreement.
The Herrel Employment Agreement provided for a base salary of not less than $325,000 and
bonuses to be determined by the Board on the basis of merit and the Company’s financial success and
progress. No cash bonus or stock options were awarded to Mr. Herrel under either the fiscal 2006
or fiscal 2005 bonus plans. For achieving certain objectives as set forth in the fiscal 2004 bonus
plan, Mr. Herrel was awarded bonuses totaling $150,000 as well as options to purchase 45,000
shares. The Herrel Employment Agreement also provided, among other benefits, for a monthly
automobile allowance and for the Company to maintain a life insurance policy for $1,000,000, the beneficiary of which may
be named by Mr. Herrel. The Herrel Employment Agreement also included severance payments, ranging
from one to two times his then annual base salary, upon termination of employment under specific
circumstances, including death, termination without cause, or change of control. In addition, in
case of death or termination without cause or in connection with a change of control, all of his
unvested stock options would immediately vest.
On February 23, 2006, the Company entered into an employment agreement with Winston E. Hickman
which terminated in connection with his resignation effective November 17, 2006. The agreement
provided for: a base salary of $300,000; a target bonus of 50% of base salary, with the actual
payment subject to the Board’s discretion; the grant of options to purchase 50,000 shares of the
Company’s common stock, with half of the options vesting on each of the first two anniversaries of
Mr. Hickman’s employment with the Company; and coverage under the Company’s benefits programs. No
bonus was awarded to Mr. Hickman for fiscal 2006. The agreement also provided that if Mr. Hickman
had been terminated without Cause or resigned under certain specified circumstances, Mr. Hickman
would have been entitled to: a lump sum
22
payment of either one-half or all of his then current annual salary, depending on the timing and circumstances of his termination or resignation; a pro
rata bonus; and immediate vesting of a pro rata number of stock options.
In connection with Mr. Hickman’s resignation effective November 17, 2006 as Executive Vice
President, Chief Financial Officer and Treasurer of Ashworth, Inc., the Company entered into a
release agreement with Mr. Hickman (the “Release Agreement”) on November 16, 2006 whereby Mr.
Hickman provided a standard release of any claims, complaints and lawsuits against the Company and
other related entities and persons. The Release Agreement also provides that Mr. Hickman will
receive continuing medical, dental and Exec-U-Care insurance coverage for a period of 18 months
from December 1, 2006 through May 31, 2008 in exchange for ten (10) full days of consulting
services to be provided by Mr. Hickman on reasonable and mutually agreed upon dates between
November 20, 2006 and May 30, 2008, to assist with a professional transition of Executive Vice
President and Chief Financial Officer responsibilities and to advise on related matters.
On February 28, 2006, the Company entered into an Amended and Restated Employment Agreement
with Gary I. “Sims” Schneiderman (the “Schneiderman Employment Agreement”). The Schneiderman
Employment Agreement provided for: a minimum base salary of $300,000; bonuses to be determined by
the Board on the basis of merit and the Company’s financial success and progress up to a maximum of
82.5% of his base salary; three guaranteed minimum non-compete/retention payments of $85,000 on
September 12, 2005, $85,000 on November 24, 2005 and $40,000 following the close of final
accounting records for fiscal year 2006; stock options to purchase 20,000 shares for each of fiscal
years 2005, 2006 and 2007; an automobile allowance of $1,000 per month; and a club membership. The
Schneiderman Employment Agreement also provided that if a Qualifying Termination (as defined in the
Schneiderman Agreement) occurred, Mr. Schneiderman would be entitled to receive severance payments
equal to 12 months of his then-current annual base salary, an additional cash payment of $50,000,
payment of insurance premiums for a period of 12 months, and immediate vesting of all options.
In connection with Mr. Schneiderman’s resignation effective May 21, 2007, on May 25, 2007, the
Company entered into a severance and release agreement with Mr. Schneiderman (the “Schneiderman
Severance Agreement”) which provides for a modification of prior employment agreements and
arrangements with Mr. Schneiderman. Under the Schneiderman Severance Agreement, Mr. Schneiderman is
entitled to the continuation of bi-weekly payments of his base salary, automobile allowance and
club dues for nine (9) months, the continuation of his employee insurance benefits for twelve (12)
months and a waiver of the requirement for Mr. Schneiderman to reimburse the Company for the cost
of the club membership of $45,000. The Company received a customary release of all claims against
the Company. Mr. Schneiderman was also entitled to acceleration of 20,000 outstanding stock options
that were not yet vested, which were deemed vested as of May 21, 2007.
Effective October 25, 2006, the Company and Peter E. Holmberg entered into the Amended and Restated
Employment Agreement (the “Holmberg Employment Agreement”). Under the Holmberg Employment
Agreement, Mr. Holmberg received an annual base salary of $225,000 and was eligible to earn an
annual bonus up to a maximum of 40% of his annual base salary based and conditioned on the
Company’s achievement of certain financial targets. Mr. Holmberg also received, among other
things, an automobile allowance of $1,000 per month. If Mr. Holmberg was terminated within two years of the effective
date of the Holmberg
23
Employment Agreement as a result of a Qualifying Termination (as defined in the Holmberg
Employment Agreement) and if Mr. Holmberg delivered and did not revoke a fully executed release and
waiver of all claims against the Company, then the Company was to pay Mr. Holmberg the equivalent
of 12 months of his then-current annual base salary and continued insurance benefits for up to one
year, which was to be in lieu of any other severance payment benefits that otherwise might at that
time be available under the Company’s applicable policies; provided, however, that the Holmberg
Employment Agreement was not intended to modify or supersede the change in control agreement
between the Company and Mr. Holmberg.
In connection with Mr. Holmberg’s resignation effective May 21, 2007, on May 25, 2007, the
Company entered into a severance and release agreement with Mr. Holmberg (the “Holmberg Severance
Agreement”) which provided for a modification of prior employment agreements and arrangements with
Mr. Holmberg. Under the Holmberg Severance Agreement, Mr. Holmberg was entitled to a lump sum
severance payment of $112,500 and an automobile allowance of $6,000 and he agreed to provide a
customary release of all claims against the Company.
The October 5, 2005 offer of employment agreement with Mr. Greg W. Slack provided for at-will
employment with an initial annual salary of $125,000. The agreement also provided for initial
options to purchase 5,000 shares of the Company’s common stock as well as the opportunity to earn a
bonus of up to 20% of base salary based upon reaching certain performance-related goals. Effective
February 10, 2006, the employment agreement was modified. Mr. Slack was promoted to Corporate
Controller, his base annual salary was set at $140,000, and his bonus opportunity was increased to
up to 25% of base salary. The February 2006 agreement also includes a retention bonus due and
payable in two installment payments. The first installment payment made on September 11, 2006 was
for $145,602. The second installment payment made on July 6, 2007 was for $44,250. Mr. Slack’s
current annual salary is $177,000. Mr. Slack resigned from the Company effective July 27, 2007.
On September 16, 2005, the Company entered into an employment agreement with Peter S. Case
(the “Case Employment Agreement”), which terminated in connection with his resignation effective on
February 1, 2006. The Case Employment Agreement provided for a base salary of $225,000 and bonuses
to be determined by the Board on the basis of merit and the Company’s financial success and
progress up to a maximum of 50% of the base salary, and a monthly automobile allowance. Mr. Case
was also awarded options to purchase 20,000 shares of the Company’s stock with vesting on the first
anniversary of the date of grant. No bonus was awarded to Mr. Case under the fiscal 2005 bonus
plan. The Case Employment Agreement also provided that if a Qualifying Termination (as defined in
the Case Employment Agreement) had occurred within two years of the effective date of the Case
Employment Agreement, Mr. Case would have been entitled to severance payments equal to his
then-current annual base salary, immediate vesting of the options awarded under the Case Employment
Agreement, and continued insurance benefits for up to one year. Mr. Case submitted a letter of
resignation, which confirmed that Mr. Case’s resignation of all employment positions effective
February 1, 2006 was not a result of any material disagreement with the Company as to its
operations, policies or practices.
24
Change in Control Agreements
Additionally, the Company has entered into change in control agreements with the following
current or former executives: Randall L. Herrel, Sr., Winston E. Hickman, Peter S. Case, Peter E.
Holmberg, Gary I. “Sims” Schneiderman and Greg W. Slack. The change in control agreements with
Messrs. Slack, Schneiderman, Holmberg, Hickman, Herrel and Case terminated due to their
resignations from the Company. Upon a qualifying termination in connection with a change in
control, as defined in each respective agreement, if the agreement were still in effect, the
executive would be entitled to severance payments (generally equal to the executive’s highest base
salary with the Company in the prior three years, except that Mr. Slack, if his agreement were
still in effect, would receive an amount that is equal to nine months of his highest base salary
for the prior three years, that Mr. Herrel, if his agreement were still in effect, would receive an
amount equal to twice the sum of his highest base salary for the prior three years and his average
bonus for the prior two years, and Mr. Hickman, if his agreement were still in effect, would
receive an amount equal to one and a half times his highest base salary for the prior three years),
grossed up for applicable excise taxes imposed by Section 4999 of the Internal Revenue Code of
1986, as amended. In addition, Mr. Herrel’s and Mr. Hickman’s change in control agreements, if
they were still in effect, provide for the immediate vesting of all unexercised stock options and
the continuation of insurance benefits for up to two years or 18 months, respectively. Mr. Slack’s
change in control agreement provided for continuation of insurance benefits for up to nine (9)
months. Effective as of February 28, 2006, the employment and change in control agreements for
each of the then-current executive officers were amended in light of Section 409A of the Internal
Revenue Code, as amended.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of
common stock of the Company as of June 30, 2007 (unless otherwise noted) by: (i) each person known
by the Company to own beneficially more than 5% of the Company’s outstanding shares of common
stock, (ii) each of the Company’s directors, (iii) the Company’s named executive officers, and (iv)
all directors and executive officers of the Company as a group. Unless otherwise noted, each
person listed below has sole voting power and sole investment power with respect to shares shown as
owned by him, her or it. Information as to beneficial ownership is based upon statements furnished
to the Company or filed with the Securities and Exchange Commission by such persons.
25
| |
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|
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|
|
| |
|
|
|
|
|
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|
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|
|
|
|
Percent |
| |
|
Shares |
|
Options (2) |
|
Total |
|
Owned (3) |
| Name and Address (1) |
|
(#) |
|
(#) |
|
(#) |
|
(%) |
| |
Detlef H. Adler |
|
|
– |
|
|
|
15,833 |
|
|
|
15,833 |
|
|
|
* |
|
Stephen G. Carpenter |
|
|
17,500 |
(4) |
|
|
86,250 |
|
|
|
103,750 |
|
|
|
* |
|
John M. Hanson, Jr. |
|
|
87,200 |
(5) |
|
|
81,250 |
|
|
|
168,450 |
|
|
|
1.1 |
|
James B. Hayes |
|
|
10,500 |
|
|
|
67,623 |
|
|
|
78,123 |
|
|
|
* |
|
Randall L. Herrel, Sr.(6) |
|
|
– |
|
|
|
64,747 |
|
|
|
64,747 |
|
|
|
* |
|
Winston E. Hickman(7) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Peter E. Holmberg (8) |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
30,000 |
|
|
|
* |
|
David M. Meyer |
|
|
34,200 |
|
|
|
14,391 |
|
|
|
48,591 |
(9) |
|
|
* |
|
James G. O’Connor |
|
|
15,500 |
(10) |
|
|
42,083 |
|
|
|
57,583 |
|
|
|
* |
|
John M. Richardson |
|
|
– |
|
|
|
16,375 |
|
|
|
16,375 |
|
|
|
* |
|
Gary I. Schneiderman(11) |
|
|
1,000 |
|
|
|
67,015 |
|
|
|
68,015 |
|
|
|
* |
|
Greg W. Slack(12) |
|
|
– |
|
|
|
5,000 |
|
|
|
5,000 |
|
|
|
* |
|
Peter M. Weil(13) |
|
|
6,500 |
|
|
|
15,208 |
|
|
|
21,708 |
|
|
|
* |
|
All executive officers and
directors as a group (16 persons) (14) |
|
|
188,400 |
|
|
|
493,692 |
|
|
|
682,092 |
|
|
|
4.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Knightspoint Partners II, L.P. |
|
|
2,130,458 |
(15) |
|
|
18,141 |
|
|
|
2,148,599 |
|
|
|
14.6 |
|
787 Seventh Avenue, 9th Floor,
New York, NY 10019 |
|
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|
Dimensional Fund Advisors LP |
|
|
1,222,332 |
(16) |
|
|
— |
|
|
|
1,222,332 |
|
|
|
8.3 |
|
1299 Ocean Avenue
Santa Monica, CA 90401 |
|
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|
Heartland Advisors, Inc. |
|
|
1,044,737 |
(17) |
|
|
— |
|
|
|
1,044,737 |
|
|
|
7.1 |
|
789 North Water Street
Milwaukee, WI 53202 |
|
|
|
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Disciplined Growth Investors, Inc. |
|
|
897,875 |
(18) |
|
|
— |
|
|
|
897,875 |
|
|
|
6.1 |
|
100 South Fifth St.
Suite 2100
Minneapolis, MN 55402 |
|
|
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Diker Management LLC |
|
|
725,757 |
(19) |
|
|
— |
|
|
|
725,757 |
|
|
|
5.0 |
|
745 Fifth Avenue
Suite 1409
New York, NY 10151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
|
Less than one percent. |
| |
| (1) |
|
Unless otherwise indicated, the address for each stockholder is the same as the
address of the Company. |
| |
| (2) |
|
Represents shares of common stock that may be acquired pursuant to currently
exercisable stock options or stock options exercisable within 60 days of June 30, 2007. |
| |
| (3) |
|
Applicable percentage of ownership is based upon 14,650,130 shares of common stock
outstanding as of June 30, 2007, together with applicable stock options for such
stockholder. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and
investment power with respect to shares. Shares of common stock subject to options currently
exercisable or exercisable within 60 days after June 30, 2007 are deemed outstanding for
computing the percentage of ownership of the person holding such stock options, but are not
deemed outstanding for computing the percentage ownership of any other person. |
26
|
|
|
| (4) |
|
The shares are owned by the Stephen G./Jannell S. Carpenter Trust. Stephen G.
Carpenter and Jannell S. Carpenter have shared voting and investment powers. |
| |
| (5) |
|
69,700 of these shares are held by 7296 LTD, a family partnership. Mr. John M.
Hanson, Jr. is the General Partner of 7296 LTD and has sole voting and investment powers.
Mr. Hanson has direct ownership of the remaining 19,700 shares with sole voting and
investment powers. |
| |
| (6) |
|
Mr. Herrel resigned from the Company effective October 17, 2006. |
| |
| (7) |
|
Mr. Hickman was appointed Executive Vice President, Chief Financial Officer and
Treasurer effective February 23, 2006. Mr. Hickman resigned effective November 17, 2006. |
| |
| (8) |
|
Mr. Holmberg resigned from the Company effective May 21, 2007. |
| |
| (9) |
|
Includes 200 shares of common stock beneficially owned by Knightspoint Partners
II, L.P. The General Partner of Knightspoint Partners II, L.P. is Knightspoint Capital
Management II LLC. The sole Member of Knightspoint Capital Management II LLC is
Knightspoint Partners LLC. Mr. Meyer is a managing member of Knightspoint Partners LLC, and
thus is deemed to beneficially own shares owned by Knightspoint Partners II, L.P. The
48,591 shares beneficially owned by Mr. Meyer are also included in the 2,148,599 shares
beneficially owned by the Knightspoint Group. (See footnote 15 below.) |
| |
| (10) |
|
The shares are owned by the James G. O’Connor Revocable Trust. Mr. O’Connor has
sole voting and investment powers. |
| |
| (11) |
|
Mr. Schneiderman resigned from the Company effective May 21, 2007. |
| |
| (12) |
|
Mr. Slack was appointed the Principal Accounting Officer on October 25, 2006 and
resigned from the Company effective July 27, 2007. |
| |
| (13) |
|
Mr. Weil was appointed the Chief Executive Officer effective October 30, 2006 and
continues to serve as a director on the Company’s Board of Directors. Mr. Weil was
appointed to the Board of Directors on May 8, 2006. |
| |
| (14) |
|
The “All executive officers and directors as a group” figure includes the
ownership of two executive officers and a director who were appointed to their respective
positions in fiscal 2007. Edward J. Fadel, the Company’s President, was appointed on May
23, 2007, Eric R. Hohl, the Company’s Executive Vice President, Chief Financial Officer and
Treasurer, was appointed on March 19, 2007 and Eric S. Salus, a non-employee director, was
appointed on April 19, 2007. As of June 30, 2007, Mr. Hohl beneficially owned 1,000 shares
of the Company’s common stock, and Mr. Salus beneficially owned stock options for 2,917
shares of the Company’s common stock. Mr. Fadel did not own any stock options or shares of
common stock as of June 30, 2007. |
| |
| (15) |
|
This information is based upon a Schedule 13D/A filed with the Securities and
Exchange Commission on April 12, 2007. This Schedule 13D/A was filed jointly by
Knightspoint Partners II, L.P., Knightspoint Capital Management II LLC, Knightspoint
Partners, LLC, Michael Koeneke, David Meyer, Starboard Value and Opportunity Master Fund
Ltd., Parche, LLC, Admiral Advisors, LLC, Ramius Capital Group, LLC, C4S & Co., LLC, Peter
A. Cohen, Jeffrey M. Solomon, Morgan B. Stark, Thomas W. Strauss, Black Sheep Partners, LLC,
Black Sheep Partners II, LLC and Brian Black (collectively, the “Knightspoint Group”). As
of April 12, 2007, the Knightspoint Group owned an aggregate of 2,148,599 shares. |
| |
| (16) |
|
This information is based upon a Schedule 13G/A filed by Dimensional Fund
Advisors LP with the Securities and Exchange Commission on February 9, 2007. As of December
31, 2006, Dimensional Fund Advisors LP has sole voting and investment power of the 1,222,332
shares that it beneficially owned, and, as a company registered under the Investment
Advisors Act of 1940, disclaims beneficial ownership of these shares. |
| |
| (17) |
|
This information is based upon a Schedule 13G/A filed by Heartland Advisors, Inc.
and William J. Nasgovitz with the Securities and Exchange Commission on February 13, 2007.
Mr. Nasgovitz is the President and principal shareholder of Heartland Advisors, Inc.
Heartland Advisors, Inc. and Mr. Nasgovitz have shared dispositive power for 1,044,737 shares and shared voting power for 976,329 shares. Heartland
Advisors, Inc. and Mr. Nasgovitz each specifically disclaim beneficial ownership of any of the
shares reported in such Schedule 13G/A. |
27
|
|
|
| (18) |
|
This information is based upon a Schedule 13G/A filed by Disciplined Growth
Investors, Inc. with the Securities and Exchange Commission on May 2, 2007. As of March 31,
2007, Disciplined Growth Investors, Inc. had the sole voting and investment power of the
897,875 shares reported as beneficially owned. |
| |
| (19) |
|
This information is based upon a Schedule 13G filed by Diker Management, LLC,
Diker GP, LLC, Charles M. Diker and Mark N. Diker, as a group, with the Securities and
Exchange Commission on January 29, 2007. As of January 18, 2007, Diker Management, LLC,
Diker GP, LLC, Charles M. Diker and Mark N. Diker had the shared voting and investment power
of the 725,757 shares reported as beneficially owned, and, as affiliates of a registered
investment advisor under the Investment Advisors Act of 1940, disclaim beneficial ownership
of these shares. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the rules
promulgated thereunder, and the requirements of NASDAQ, executive officers and directors of the
Company and persons who beneficially own more than 10% of the common stock of the Company are
required to file with the Securities and Exchange Commission and NASDAQ and furnish to the Company
reports of ownership and change in ownership with respect to all equity securities of the Company.
Based solely on its review of the copies of such reports received by the Company during or
with respect to the fiscal year ended October 31, 2006 and/or written representations from such
reporting persons, the Company believes that its officers, directors and 10% stockholders
complied with all Section 16(a) filing requirements applicable to such individuals, except that
Mr. Slack inadvertently filed a late Form 3, the initial statement of beneficial ownership. Mr.
Slack has since filed his initial statement of beneficial ownership.
28
Performance Graph
Set forth below is a line graph comparing the yearly percentage change in the cumulative total
stockholder returns on the Company’s common stock over a five-year period with the cumulative total
return of the Nasdaq Stock Market (U.S. Companies) and the stocks of companies in the same Standard
Industrial Classification as the Company (SIC 2300-2399). The graph assumes that $100.00 was
invested on October 31, 2001 in the Company’s common stock and each index and that all dividends
were reinvested. The comparisons in the graph are required by the Securities and Exchange
Commission and are not intended to forecast nor are they necessarily indicative of possible future
performance of the Company’s common stock .
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Ashworth, Inc., The NASDAQ Composite Index
And SIC Code 2300 — 2399
|
|
|
| * |
|
$100 invested on 10/31/01 in stock or index-including reinvestment of dividends.
Fiscal year ending October 31. |
29
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company’s subsidiary, Gekko Brands, LLC, leases its Phenix City, Alabama distribution
facility from STAG II Phenix City, LLC, which purchased the building in fiscal 2006 from 16
Downing, LLC, which was a related party owned by certain members of Gekko Brands, LLC’s management.
Total payments under the operating lease for this facility made during the fiscal years ended
October 31, 2006, 2005 and 2004 were $400,000, $400,000 and $133,000, respectively. The lease
agreement requires monthly payments of $33,000 through June 6, 2012.
Seidensticker (Overseas) Limited (“Seidensticker”), a supplier of inventoried products to the
Company, owned approximately 5% of the Company’s outstanding common stock at October 31, 2006.
Additionally, the Chief Executive Officer of the Seidensticker Group was elected to the Company’s
Board of Directors effective January 1, 2006. During the years ended October 31, 2006, 2005 and
2004, the Company purchased approximately $1,571,000, $5,800,000 and $4,000,000, respectively, of
products from Seidensticker. The Company believes that the terms upon which it purchased the
inventoried products from Seidensticker are consistent with the terms offered to other, unrelated
parties.
On May 5, 2006, the Company entered into a settlement agreement (the “Agreement”) with
Knightspoint Partners II, L.P. and certain other entities and individuals, including Mr. Peter M.
Weil and Mr. David M. Meyer (collectively, the “Knightspoint Group”) under which, among other
matters, the Company agreed to appoint Mr. Weil and Mr. Meyer to its Board of Directors effective
May 8, 2006. Pursuant to the Agreement, the Company reimbursed Knightspoint Group for its actual
expenses incurred in connection with the proxy contest in the amount of approximately $165,000.
Mr. Meyer is a managing member of Knightspoint Partners LLC, an affiliate of Knightspoint Partners
II, L.P. Mr. Meyer currently serves as a director on the Company’s Board.
On September 12, 2006, concurrent with his appointment to the Office of the Chairman, Mr.
Weil, who is currently CEO and a director of the Board, entered into an agreement with the Company
to provide consulting services on corporate management and operations and decision-making within
the Office of the Chairman (the “Weil Agreement”). Mr. Weil was paid approximately $48,000 for
such services for the period of September 12, 2006 through October 29, 2006. Mr. Weil also
received an option grant to purchase 25,000 shares with an exercise price of 100% of then-current
fair market value, 12,900 of which vested and 12,100 were terminated as of October 30, 2006
pursuant to the terms of the Weil Agreement. The Weil Agreement was terminated upon Mr. Weil’s
appointment as Chief Executive Officer effective October 30, 2006.
On June 5, 2007, Eric S. Salus entered into an agreement with the Company dated as of June 1,
2007 whereby Mr. Salus will provide consulting services relating to corporate management and
operations (the “Salus Agreement”). All assignments under the Salus Agreement must be approved by
mutual agreement of Mr. Salus and the Chief Executive Officer of the Company. Mr. Salus has agreed
to provide such services for five (5) business days per calendar month. The consulting engagement
under the Salus Agreement shall continue until March 30, 2008, but may be earlier terminated by either party
with 60-days notice.
In consideration of the time commitments associated with the duties under the Salus Agreement,
Mr. Salus shall be compensated for the duration of service under this Agreement
30
with (a) an upfront, non-refundable, one-time cash retainer of $25,000, and (b) an additional cash retainer of
$15,500 per month, payable at the end of each month of service. The foregoing cash compensation
will be in addition to, and not in lieu of, any and all cash compensation paid to Mr. Salus for his
continuing service on the Board. Provided that he submits verification of expenses as the Company
may reasonably require, Mr. Salus shall be reimbursed for reasonable out-of-pocket expenses
incurred in connection with the performance of his services under the Salus Agreement.
As additional compensation under the Salus Agreement, the Company granted to Mr. Salus a
non-qualified stock option grant covering 10,000 shares of Ashworth’s common stock, with an
exercise price equal to 100% of the fair market value of the common stock on the date of grant.
The foregoing option shall vest 50% on September 30, 2007 and 50% on March 31, 2008. Except in the
context of a “Change in Control” as described below, vesting shall cease upon termination of the
Salus Agreement, for any reason, and the vested portion of the option shall remain exercisable for
a period of five (5) years after the date of grant. The foregoing option grant is in addition to,
and not in lieu of, any and all stock option grants to Mr. Salus for his continuing service on the
Board.
In the event that the Company terminates the Salus Agreement prior to March 31, 2008 but on or
after a “Change in Control,” (a) all of Mr. Salus’ non-qualified stock options granted under the
Salus Agreement shall become immediately vested, and (b) all monthly retainers that are due and
those that would become payable assuming the Salus Agreement’s term continued to March 31, 2008
shall become immediately due and payable.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Policy on Audit Committee Pre-approval of Audit and Permissible Non-audit Services of Independent
Registered public accounting firm
Consistent with the rules and regulations of the Securities and Exchange Commission regarding
auditor independence and the Audit Committee Charter, the Audit Committee has the responsibility
for appointing, setting compensation and overseeing the work of the independent registered public
accounting firm. The Audit Committee’s policy is to pre-approve all audit and permissible
non-audit services provided by the independent registered public accounting firm. Pre-approval is
detailed as to the particular service or category of services and is generally subject to a
specific budget. The Audit Committee may also pre-approve particular services on a case-by-case
basis. In assessing requests for services by the independent registered public accounting firm,
the Audit Committee considers whether such services are consistent with the independent registered
public accounting firm’s independence, whether the independent registered public accounting firm is
likely to provide the most effective and efficient service based upon its familiarity with the Company and staffing, and whether the service could enhance the
Company’s ability to manage or control risk or improve audit quality.
Change in Independent Registered Public Accounting Firm
Pursuant to its periodic review of its outside audit requirements, the Audit Committee of the
Company’s Board requested proposals for its independent audit services and interviewed several
accounting firms in connection with selecting the Company’s independent auditor for its 2005 fiscal
year. As a result of this process, on March 16, 2005, the Audit Committee dismissed
31
KPMG LLP (“KPMG”) as the Company’s independent auditor and approved the engagement of Moss Adams, effective
March 17, 2005, to serve as the Company’s independent auditor for its fiscal year ended October 31,
2005. Pursuant to the Audit Committee’s Charter, which grants the Audit Committee the sole
authority to terminate and to appoint the Company’s independent auditor, the dismissal of KPMG and
the appointment of Moss Adams was approved solely by the Audit Committee.
The reports issued by KPMG on the financial statements of the Company for the fiscal years
ended October 31, 2004 and 2003 did not contain any adverse opinion or a disclaimer of opinion, or
any qualification or modification as to uncertainty, audit scope or accounting principles. During
the fiscal years ended October 31, 2004 and 2003, and the subsequent interim period through March
16, 2005, there were no disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject
matter of the disagreement in connection with its reports. In addition, during the fiscal years
ended October 31, 2004 and 2003 and the subsequent interim period through March 16, 2005, there
were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
During the fiscal years ended October 31, 2004 and 2003, and the subsequent interim period
through March 16, 2005, the Company did not consult with Moss Adams with respect to the application
of accounting principles to a specified transaction, either completed or proposed, or the type of
audit opinion that might be rendered on the Company’s financial statements, or any other matters or
reportable events described in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Independent Registered Public Accounting Firms’ Fees and Services
Set forth below are the aggregate fees paid or accrued for professional services rendered to
the Company by Moss Adams, the Company’s independent registered public accounting firm for fiscal
years 2006 and 2005, and KPMG LLP (“KPMG”), the Company’s independent auditor for fiscal year 2004.
| |
|
|
|
|
|
|
|
|
| |
|
Fiscal Years Ended October 31, |
|
| |
|
2006 |
|
|
2005 |
|
Audit Fees – KPMG(1) |
|
$ |
25,000 |
|
|
$ |
287,700 |
|
Audit Fees – Moss Adams(1) |
|
|
691,216 |
|
|
|
455,616 |
|
Audit-related Fees – Moss Adams(2) |
|
|
13,000 |
|
|
|
12,000 |
|
Tax Fees – KPMG(3) |
|
|
26,330 |
|
|
|
– |
|
|
|
|
|
|
|
|
Total Fees |
|
$ |
755,546 |
|
|
$ |
755,316 |
|
|
|
|
|
|
|
|
|
|
|
| |
(1) |
Audit fees represent fees billed for professional services rendered by the
Company’s independent registered public accounting firm for the audits of the Company’s
annual financial statements and internal control over financial reporting, review of the
interim financial statements included in the Company’s quarterly reports on Form 10-Q,
auditors’ consents and statutory audits and other SEC filings. |
| |
| |
(2) |
Audit-related fees consisted primarily of employee benefit plan audits. |
| |
| |
(3) |
For fiscal years 2006 and 2005, the Company retained an outside consultant to
provide the tax compliance and tax consulting services except for the $26,330 paid to KPMG
in fiscal 2006 for tax compliance work for the Company’s United Kingdom subsidiary. |
32
STOCKHOLDER PROPOSALS FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS
Any eligible stockholder of the Company wishing to have a proposal considered for inclusion in
the Company’s 2008 Annual Meeting proxy solicitation materials must set forth such proposal in
writing and file it with the Company’s Secretary on or before April 1, 2008. The Board will review
new proposals from eligible stockholders if they are received by April 1, 2008 and will determine
whether such proposals will be included in the Company’s 2008 proxy solicitation materials. A
stockholder is eligible to present proposals to the Board if he or she is the record or beneficial
owner of at least one percent, or $2,000 in market value, of Company securities entitled to be
voted at the 2008 Annual Meeting and has held such securities for at least one year, and he or she
continues to own such securities through the date on which the meeting is held. Proposals must be
submitted in accordance with the Company’s bylaws and comply with Securities and Exchange
Commission regulations promulgated pursuant to Rule 14a-8 of the Exchange Act of 1934, as amended.
If a stockholder desires to have a proposal presented at the Company’s 2008 Annual Meeting of
Stockholders, including director nominations, and the proposal is not intended to be included in
the Company’s related 2008 proxy solicitation materials, the stockholder must give advance notice
to the Company in accordance with the Company’s bylaws.
According to the bylaws of the Company, in order for a stockholder proposal to be properly
brought before any meeting of stockholders, the stockholder must give notice of the proposal in
writing to the Company’s Secretary at the Company’s principal executive offices not less than 90
days nor more than 120 days in advance of the meeting; provided further, that if less than 95 days’
notice or prior public disclosure of the date of the scheduled meeting is given or made, notice by
the stockholder to be timely must be so delivered or received not later than the close of business
on the seventh day following the earlier of the date of the first public announcement of the date
of the meeting and the date on which such notice of the scheduled meeting was mailed. All
stockholder proposals must include the information required by the Company’s bylaws. The address of the Company’s
principal executive offices is as follows:
Secretary
Ashworth, Inc.
2765 Loker Avenue West
Carlsbad, California 92010
Stockholders may contact the Company’s Secretary at the address set forth above for a copy of
the bylaw provisions that set forth the requirements for making stockholder proposals and
nominating director candidates.
ANNUAL REPORT
The Company’s Annual Report to Stockholders for the fiscal year ended October 31, 2006,
including audited financial statements, accompanies this proxy statement. Copies of the
33
Company’s Annual Report on Forms 10-K and 10-K/A for the fiscal year ended October 31, 2006 (without
exhibits) are available from the Company without charge upon written request of a stockholder.
Copies of the Form 10-K and Form 10-K/A are also available online through the Securities and
Exchange Commission at www.sec.gov as well as the Company’s website at
www.ashworthinc.com under the heading “Investor Info.”
INCORPORATION BY REFERENCE
In our filings with the Securities and Exchange Commission, information is sometimes
“incorporated by reference.” This means that we are referring you to information that has
previously been filed with the Securities and Exchange Commission, which information should be
considered as part of the filing that you are reading. Based upon Securities and Exchange
Commission regulations, the reports of the Audit Committee and the Compensation and Human Resources
Committee, beginning on pages 10 and 11, respectively, are not specifically incorporated by
reference into any other filings that we make with the Securities and Exchange Commission. This
proxy statement is sent to you as part of the proxy materials for the 2007 Annual Meeting of
Stockholders. You may not consider this proxy statement as material for soliciting the purchase or
sale of our common stock.
OTHER MATTERS
At the time of the preparation of this proxy statement, the Board was not aware of any other
matters that will be presented for action at the 2007 Annual Meeting. Should any other matters
properly come before the meeting, action may be taken thereon pursuant to the proxies in the form
enclosed, which confer discretionary authority on the persons named therein or their substitutes
with respect to such matters.
By the order of the Board of Directors
/s/ Halina Balys
Halina Balys
Secretary
Carlsbad, California
July 30, 2007
34
