UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section
14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant
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[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12
R&B, Inc.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
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statement number, or the Form or Schedule and the date of its filing.
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R&B, Inc.
________________________________________
Notice of Annual Meeting of Shareholders
May 24, 2006
________________________________________
Dear Shareholder:
The Annual Meeting of Shareholders of R&B, Inc. (the "Company"), a Pennsylvania
corporation, has been called and will be held at the law offices of Blank Rome
LLP, One Logan Square, Philadelphia, Pennsylvania 19103 on Wednesday, May 24,
2006 at 8:30 a.m., Eastern Daylight Savings Time, to consider and act upon the
following matters:
I. Election of six directors, each to serve for a term of one
year to expire at the next annual meeting of shareholders and
until his successor has been selected and qualified.
II. To approve an amendment and restatement of the Company's
Amended and Restated Articles of Incorporation to change its
name to Dorman Products, Inc., as more fully described in the
accompanying proxy statement.
III. Any other business as may properly come before the Annual
Meeting.
The Board of Directors has fixed the close of business on March 31, 2006, as the
record date for determining the Shareholders of the Company entitled to notice
of and to vote at such meeting and any adjournment thereof. If the Annual
Meeting is adjourned for one or more periods aggregating at least 15 days
because of the absence of a quorum, those shareholders entitled to vote who
attend the reconvened Annual Meeting, if less than a quorum as determined under
applicable law, shall nevertheless constitute a quorum for the purpose of acting
upon any matter set forth in this Notice of Annual Meeting.
Whether or not you intend to be present at the Annual Meeting, please date, sign
and mail the enclosed proxy card in the envelope provided. You are cordially
invited to attend the Annual Meeting and your proxy will not be used if you are
present and prefer to vote in person.
By Order of the Board of Directors
/Thomas J. Knoblauch/
THOMAS J. KNOBLAUCH
Vice President, General Counsel and
Assistant Secretary
Colmar, Pennsylvania
April 20, 2006
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IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED
AND PROMPTLY RETURNED.
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R&B, Inc.
3400 East Walnut Street
Colmar, Pennsylvania 18915
___________________________
Proxy Statement
___________________________
This Proxy Statement and accompanying proxy card are for the
solicitation of proxies by the Board of Directors (the "Board") of R&B, Inc., a
Pennsylvania corporation (the "Company"), for its use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on Wednesday, May
24, 2006 at 8:30 a.m., Eastern Daylight Savings Time, and any adjournments of
the Annual Meeting. The Annual Meeting will be held at the law offices of Blank
Rome LLP, One Logan Square, Philadelphia, Pennsylvania 19103. This Proxy
Statement and proxy card are being mailed to shareholders of the Company on or
about April 20, 2005.
At the Annual Meeting, the holders of record on March 31, 2006 (the
"Shareholders") of the Company's Common Stock, par value $.01 (the "Common
Stock"), will act upon the following matters:
I. Election of six directors, each to serve for a term of one year to expire
at the next annual meeting of shareholders and until his successor has been
selected and qualified.
II. To approve an amendment and restatement of the Company's Amended and
Restated Articles of Incorporation to change its name to Dorman Products, Inc.
III. Any other business as may properly come before the Annual Meeting.
All proxies which are validly completed, signed and returned to the
Company prior to the Annual Meeting will be voted in the manner designated.
Proxies may be revoked at any time prior to being voted at the Annual Meeting by
written notice to the Secretary of the Company or by attending the Annual
Meeting and voting in person. If no instructions are given, the persons named in
the proxy solicited by the Board intend to vote in favor of Proposals I and II
herein. If any other matters properly come before the Annual Meeting, the
persons named in the accompanying proxy card will vote on these matters in
accordance with their best judgment.
The Board has fixed the close of business on March 31, 2006 as the
record date (the "Record Date") for the determination of shareholders entitled
to receive notice and to vote at the Annual Meeting and any adjournments of the
Annual Meeting. As of the close of business on the Record Date, there were
17,744,367 shares of Common Stock, issued and outstanding, each of which is
entitled to one vote. All share information set forth in this proxy statement
has been adjusted to reflect the Company's two-for-one stock split in March
2005.
The election of directors will be determined by a plurality vote and
the six nominees receiving the most "for" votes will be elected. Approval of
Proposals II and III will require the affirmative vote of a majority of the
votes cast by all shareholders entitled to vote thereon. An abstention,
withholding of authority to vote or broker non-vote will not have the same legal
effect as an "against" vote and will not be counted in determining the votes for
any nominee or whether any proposal has received the required shareholder vote.
1
Proposal I - Election of Directors
The Bylaws of the Company provide that the business of the Company
shall be managed by or under the direction of a Board of Directors of not less
than two nor more than seven directors, which number shall be fixed from time to
time by the Board of Directors. The Board of Directors has fixed the number of
directors at six. Four of the members of the Board are independent as defined in
the applicable listing standards of the NASDAQ Stock Market. Each of the six
directors shall be elected at the Annual Meeting of Shareholders for a term that
expires at the next annual shareholder's meeting. Each director shall hold
office for the term for which he was elected and until his successor is selected
and qualified. Proxies solicited by the Board of Directors will, unless
otherwise directed, be voted to elect the six nominees named below to constitute
the entire Board of Directors.
All of the nominees are current directors of the Company and are
nominated by the Board of Directors. Each nominee has consented to being named
in this Proxy Statement and has indicated a willingness to serve as a director
for the ensuing year, but in case any nominee is not a candidate at the meeting
for any reason, the proxy holders named in the enclosed proxy card may vote for
a substitute nominee in their discretion.
The following table sets forth certain information, as of the Record
Date, as to each nominee for the office of director:
Name Age Position Director Since
----- --- ------- --------------
Richard N. Berman 49 Chairman of the Board of Directors,
President and Chief Executive Officer 1978
Steven L. Berman 46 Executive Vice President,
Secretary-Treasurer, and Director 1978
George L. Bernstein 74 Director 1991
John F. Creamer, Jr. 75 Director 1995
Paul R. Lederer 66 Director 1998
Edgar W. Levin 73 Director 1991
The following information about the Company's directors is based, in
part, upon information supplied by such persons. Unless otherwise indicated,
each individual has had the same principal occupation for more than five years.
Richard N. Berman has been Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since its inception in
October 1978.
Steven L. Berman has been Executive Vice President, Secretary-Treasurer
and a Director of the Company since its inception.
George L. Bernstein has served as a Director since 1991. Mr Bernstein
has been President of GLB Consulting, a management consulting firm, since 2002.
He was Chief Financial Officer of Howard Fischer Associates International, Inc.,
an executive search firm, from 1994 to 2002. Previously he was Chief Operating
Officer of Dilworth, Paxson, Kalish & Kauffman, a law firm in Philadelphia,
Pennsylvania that he joined in 1991.
2
John F. Creamer, Jr. has served as a Director since 1995. Mr. Creamer
is currently President of Distribution Marketing Services, Inc., a marketing
consulting firm for the automotive aftermarket located in Phoenix, Arizona. He
is a former director and former vice chairman of the Board of Directors of
Echlin Corporation, an automotive parts company, and past president of the
Automotive Warehouse Distributors Association (AWDA).
Paul R. Lederer has served as a Director since 1998. Mr. Lederer is
past Executive Vice President of Federal-Mogul Corporation, a global
manufacturer of a broad range of non-discretionary parts primarily for
automobiles, light trucks, heavy trucks, and farm and construction vehicles.
Prior to joining Federal-Mogul, Mr. Lederer was President and Chief Operating
Officer of Fel-Pro Incorporated, a private manufacturer of gaskets and related
products for the internal combustion engine, which was acquired by Federal-Mogul
in 1998. Before joining Fel-Pro, he was a consultant to several automotive parts
companies. Mr. Lederer is currently a director of O'Reilly Automotive, an
automotive parts retailer, Proliance, Inc., an automotive parts company, and
Maximus, Inc., a provider of program management and consultative services to
state and local governments.
Edgar W. Levin has served as a Director since 1991. Mr. Levin has been
President of Ed Levin Associates, a management consulting firm since 1998. Prior
thereto, from 1984 to 1988, he was Senior Vice President of Paramount
Communications, Inc. (Gulf & Western, Inc.), a media and entertainment company.
None of the above nominees, except for Richard and Steven Berman who
are brothers, are related to any other nominee or to any executive officer of
the Company.
Committees of the Board of Directors
The Board has three standing committees: the Executive Committee,
the Audit Committee and the Compensation and Nominating Committee.
Executive Committee. The Executive Committee has general authority
over the supervision and direction of the finances and business of the Company
and has the power and authority of the Board in the management of the
business and affairs of the Companybetween meetings of the Board. Currently,
Richard N. Berman and Steven L. Berman serve on the Executive Committee.
Audit Committee. The Audit Committee is responsible for reviewing
reports of the Company's financial results, audits and internal controls. The
Audit Committee selects the Company's independent registered public accounting
firm, reviews such firm's procedures for ensuring their independence with
respect to the services performed for the Company and pre-approves the
professional services provided by the independent registered public accounting
firm. The responsibilities of the Audit Committee are further described in the
Audit Committee Charter adopted by the Board of Directors, a copy of which is
available on the Company's website at www.rbinc.com.
Currently, George L. Bernstein (Chairman), John F. Creamer, Jr., Paul
R. Lederer and Edgar W. Levin serve on the Audit Committee. Each member of the
Audit Committee, in the opinion of the Board of Directors, is independent as
defined under the applicable listing standards of the NASDAQ Stock Market. The
Board has determined that Mr. Bernstein qualifies as an audit committee
financial expert as defined by the rules of the Securities and Exchange
Commission.
3
Compensation and Nominating Committee. The Compensation and Nominating
Committee is responsible for annually reviewing, approving and recommending to
the Board of Directors for its approval, the compensation of the Chairman and
Chief Executive Officer and the next four highest paid officers of the Company.
The Compensation and Nominating Committee also approves participation in and all
awards, grants and related actions under the R&B Incentive Stock Plan, the
Employee Stock Purchase Plan and the 401(k) Retirement Plan. The Compensation
and Nominating Committee is also responsible for recommending qualified
candidates to the Board for election as directors of the Company, and has
recommended to the Board the slate of directors that the Board proposes for
election by shareholders at the Annual Meeting. The responsibilities of the
Compensation and Nominating Committee are further described in the Compensation
and Nominating Committee Charter adopted by the Board of Directors, a copy of
which is available on the Company's website at www.rbinc.com.
Currently, George L. Bernstein, John F. Creamer, Jr., Paul R. Lederer
and Edgar W. Levin (Chairman) serve on the Compensation and Nominating
Committee. Each member of the Compensation and Nominating Committee, in the
opinion of the Board of Directors, is independent as defined under the
applicable listing standards of the NASDAQ Stock Market.
The information on the website listed above and elsewhere in this Proxy
Statement, is not and should not be considered part of this Proxy Statement and
is not incorporated by reference in this document. This website is and is only
intended to be an inactive textual reference.
Director Nomination Process
The Compensation and Nominating Committee is responsible for, among
other matters, annually presenting to the Board of Directors a list of
individuals recommended for nomination for election as directors at the annual
meeting of shareholders. The Compensation and Nominating Committee assists the
Board of Directors in identifying, interviewing and recruiting candidates as
necessary for the Board of Directors. The Compensation and Nominating Committee
also has the authority as it deems appropriate to retain a search firm to
identify and evaluate director candidates.
The Compensation and Nominating Committee does not currently have a
formal policy with regard to the consideration of director candidates
recommended by shareholders due to the Company's common stock not having been
widely-held and the lack of recommendation of director candidates by
shareholders in the past. The Compensation and Nominating Committee intends to
adopt a formal policy regarding consideration of director candidates recommended
by shareholders by the end of fiscal 2006.
Before recommending a director, the Compensation and Nominating
Committee reviews his or her qualifications as described below. In the case of
an incumbent director, the Compensation and Nominating Committee also reviews
the director's service to the Company during the past term, including the number
of Board and committee meetings attended, quality of participation and whether
the candidate continues to meet the qualifications for a director as described
below. After completing this evaluation the Compensation and Nominating
Committee makes a formal recommendation to the full Board of Directors as to
election or re-election of the candidate.
Director Candidates Nominated by Shareholders
Under the Company's bylaws, shareholders entitled to vote in the
election of directors generally on the record date and on the date of the
meeting at which directors are to be elected may nominate one or more persons
for election as a director by personally delivering or mailing a letter
addressed to the Company's President at 3400 East Walnut Street, Colmar,
Pennsylvania 18915. Such letter must be received by the Company not less than 50
days nor more than 75 days prior to the meeting; provided, however, that in the
event that less than 65 days notice or prior public disclosure of the date for
the meeting is given to the shareholders, the letter must be received not later
than the close of business on the tenth day following the day on which such
notice or public disclosure was made.
4
The following information must be included in the letter:
* Name of address of shareholder intending to make the nomination
and of the person or persons to be nominated;
* A representation that the shareholder intends to appear in
person or by proxy at the meeting to nominate the person
or persons specified in the notice;
* The address and principal occupation for the past five years of
each nominee; and
* The written consent of each nominee to serve as a director of
the Company if so elected.
A nomination specified in the letter may be presented at the meeting
only by the shareholder who gave such letter, in person or by proxy. The
presiding officer of the meeting may declare invalid any nomination not made in
compliance with the foregoing procedure.
Director Qualifications
In order to be nominated for director, a director candidate must be a
natural person at least eighteen (18) years of age. In addition, director
qualifications include, among other factors, capability, availability to serve,
conflicts of interest and moral character. Additional special criteria apply to
directors being considered to serve on a particular committee of the Board of
Directors. For example, members of the Audit Committee must meet additional
standards of independence and have the ability to read and understand the
Company's financial statements.
Meetings of the Board of Directors
During the fiscal year ended December 31, 2005, the Board of Directors
held five meetings. The Executive Committee did not hold any meetings, the Audit
Committee held four meetings and the Compensation and Nominating Committee held
one meeting during the fiscal year ended December 31, 2005. During the fiscal
year ended December 31, 2005, each director attended at least 75% of the
meetings of the Board and Committees of which they were a member.
Director Independence
The Board of Directors has determined that the following directors,
constituting a majority of the members of the Board, are independent as defined
in the applicable listing standards of the NASDAQ Stock Market:
George L. Bernstein, John F. Creamer, Jr., Paul R. Lederer and Edgar W. Levin.
Attendance at Annual Meeting of Shareholders
It is the policy of the Board of Directors that, absent sufficient
cause, all of the Company's directors attend the Company's Annual Meeting of
Shareholders. All of the Company's directors attended last year's Annual Meeting
of Shareholders.
5
Communication with the Board of Directors
Shareholders may communicate with the Board of Directors or any
individual director by sending a letter addressed to the Board of Directors or
the individual director c/o the Company at 3400 East Walnut Street, Colmar,
Pennsylvania 18915. All shareholder communications will be delivered to the
director to whom such correspondence is addressed.
Director Compensation
Each of the non-employee directors of the Company receives an annual
retainer of $26,000 plus $1,500 for each Board of Directors meeting attended and
$1,000 for each Committee meeting attended. The Chairman of the Audit Committee
receives an additional $1,350 for each Audit Committee meeting attended. The
Chairman of the Compensation and Nominating Committee receives an additional
$500 for each Compensation and Nominating Committee meeting attended. Directors
are also eligible for participation in the Company's Incentive Stock Plan.
The Board Recommends a Vote "For" the Election of the Directors.
Proposal II - Approval of the Proposal to Amend and Restate the Amended and
Restated Articles of Incorporation to change the Company's name
to Dorman Products, Inc.
Subject to Shareholder approval at the Annual Meeting, the Board of
Directors adopted an amendment, referred to as the amendment in this proxy
statement, to the Company's Amended and Restated Articles of Incorporation to
change its name to Dorman Products, Inc. The Board of Directors approved the
amendment and restatement of the Amended and Restated Articles of Incorporation
to change the name of the Company to Dorman Products, Inc. The complete text of
the proposed Amended and Restated Articles of Incorporation is included as
Appendix A to this proxy statement. Proxies solicited by the Board of Directors
will, unless otherwise directed, be voted in favor of approving this Proposal
II.
If Proposal II is approved by the Shareholders at the Annual Meeting,
the name of the Company will be changed to Dorman Products, Inc. The Board of
Directors believes it is in the Company's and the Shareholders' best interest to
change the name of the Company to Dorman Products, Inc. In November 2005, the
Company launched its DORMAN(R) NEW SINCE 1918(TM) marketing campaign and
repositioned its brands under a single corporate umbrella - DORMAN.
Approximately 90% of the Company's products are now sold under one of the seven
DORMAN sub-brands. The change from the Company's current name (R&B, Inc.) to
Dorman Products, Inc. will present a sharper image of the Company and strengthen
its corporate identity by connecting it directly to the Company's strongest
brand.
If Proposal II is approved by the Shareholders at the Annual Meeting,
Article I of the Amended and Restated Articles of Incorporation will be revised
to read as follows:
ARTICLE I
The name of the Corporation is Dorman Products, Inc.
6
The effective date of the amendment and restatement of the Articles of
Incorporation will be the date on which the Amended and Restated Articles of
Incorporation are filed with the Department of State of the Commonwealth of
Pennsylvania following approval of the Shareholders, which date will be selected
by the Board of Directors. If, at any time prior to the effective date of the
amendment and restatement, the Board of Directors, in its sole discretion,
determines that the amendment and restatement of the Amended and Restated
Articles of Incorporation is no longer in the best interest of the Company and
its shareholders, the amendment and restatement of the Amended and Restated
Articles of Incorporation may be abandoned without any further action by the
shareholders.
The Company's common stock is currently listed for quotation on the
NASDAQ National Market under the symbol "RBIN." In anticipation of the name
change, the Company has reserved the symbol "DORM" with the NASDAQ National
Market. If Proposal II is approved by the Shareholders, following the effective
date of the amendment and restatement of the Company's Amended and Restated
Articles of Incorporation, the Company's common stock will be listed for
quotation on the NASDAQ National Market under the new symbol "DORM."
Shareholders are not required to have new stock certificates issued
reflecting the name change. New stock certificates will be issued to
Shareholders when old stock certificates are returned to the Company's transfer
agent in connection with a transfer of shares or if requested by the
Shareholder. Please do not send any stock certificates to the Company with your
proxy card.
The Board Recommends a Vote "For" the Approval of the Proposal to Amend and
Restate the Amended and Restated Articles of Incorporation to change the
Company's name to Dorman Products, Inc.
7
Executive Compensation
The following table sets forth certain information regarding the annual
and long-term compensation earned during the fiscal years ended December 31,
2005, December 25, 2004, and December 27, 2003, by the Chief Executive Officer
and the four most highly compensated executive officers (or the "named executive
officers") of the Company whose aggregate salaries and bonuses exceeded $100,000
for services rendered in all capacities during the fiscal year ended December
31, 2005.
Summary Compensation Table
Long Term
Annual Compensation* Compensation
__________________________________ ______________________________
Securities
Underlying All Other
Name and Principal Position FiscalYear Salary Bonus Options (1) Compensation
--------------------------- --------- ------ ------ ---------- ------------
Richard N. Berman....................... 2005 $ 465,000 $ 75,000 (2) - $ 8,400 (3)
Chairman of the Board, 2004 428,480 345,242 - 8,000
President and Chief Executive Officer 2003 416,000 332,800 - 8,000
Steven L. Berman........................ 2005 $ 465,000 $ 75,000 (2) - $ 8,400 (3)
Executive Vice President, 2004 428,480 345,242 - 8,000
Secretary-Treasurer and Director 2003 416,000 332,800 - 8,000
Mathias J. Barton....................... 2005 $ 257,345 $ - 20,000 $ 8,400 ((3))
Senior Vice President, 2004 245,091 153,592 - 8,000
Chief Financial Officer 2003 237,952 200,000 45,000 8,000
Joseph M. Beretta....................... 2005 $ 255,150 $ - 20,000 $ 6,300 (3)
Senior Vice President, Product (4) 2004 243,000 153,592 100,000 -
Donald J. Barry......................... 2005 $ 117,692 $ - 50,000 $50,671 (6)
Senior Vice President, of
Sales and Trade Marketing (5)
----------------------------------------
* As part of the named executive officers' annual compensation, the Company
provides certain perquisites and other personal benefits, including an
annual automobile allowance, which are not included in the table since the
total to each of the individuals named above did not exceed the lesser of
$50,000 or 10% of their respective cash compensation.
(1) Adjusted to reflect the two-for-one stock split in March 2005.
(2) In fiscal 2005, each of Richard N. Berman and Steven L. Berman earned a
discretionary bonus pursuant to the Executive Bonus Plan in the amount of
$75,000. Each of Richard N. Berman and Steven L. Berman opted to delay
receipt of the bonus payment until the first quarter of fiscal 2007. The
executive officers must be employed on the scheduled date of payment to
receive their bonus.
(3) Includes the estimated contribution to the Company's 401(k) Plan on behalf
of each of the named executives.
(4) Mr. Beretta joined the Company in January 2004.
(5) Mr. Barry joined the Company in July 2005.
(6) Reflects amounts paid by the Company as reimbursement for Mr. Barry's
relocation expense.
8
Option Grants in Fiscal Year Ended December 31, 2005
The following table contains information regarding stock options
granted in the fiscal year ended December 31, 2005 to the executive officers
named in the Summary Compensation Table. The table has been adjusted to reflect
the Company's two-for-one stock split in March 2005. The exercise price per
share of each option was equal to the fair market value of the Common Stock at
the grant date.
Individual Grants
% of Total Value at Assumed
Options Annual Rates of Stock
Number of Granted to Price Appreciation
Securities Employees in for Option Term (1)
Underlying Fiscal Year Exercise ---------------------
Options Ended December Price Expiration
Name Granted (#) 31, 2005 ($/Share) Date 5% 10%
----------------------------- ----------- ------------- -------- ---------- ----- -------
Richard N. Berman............ - - - - - -
Steven L. Berman............. - - - - - -
Mathias J. Barton............ 20,000 (2) 13.0% $12.48 01/03/2015 $156,972 $397,798
Donald J. Barry.............. 50,000 (3) 32.0% $11.10 09/01/2015 $349,037 $884,527
Joseph M. Beretta............ 20,000 (2) 13.0% $12.48 01/03/2015 $156,972 $397,798
-----------------------------
(1) These amounts represent the potential realizable value based on assumed
annualized rates of appreciation for the market value of the Company's
stock of 5% and 10% from the date of grant until the end of the option
period. The rules of the Securities and Exchange Commission mandate the 5%
and 10% assumed rates of appreciation. They are not intended to forecast
possible future appreciation in the Company's stock and any actual gains on
exercise of options are dependent on the future performance of the
Company's stock.
(2) These options vest in five equal annual installments beginning on January
3, 2006.
(3) These options vest in three equal annual installments
beginning on September 1, 2008.
9
Aggregated Option Exercises in 2005 and Year-End Option Values
The following table shows information with respect to the exercise of
stock options during 2005 by each of the named executive officers and the value
of the unexercised options on December 31, 2005. The table has been adjusted to
reflect the Company's two-for-one stock split in March 2005.
Shares
Acquired Number of Securities Value of Unexercised
on Value Underlying Unexercised In-the-Money Options at
Name Exercise Realized Options at Fiscal Year-End Fiscal Year-End (1)
-------------------------- --------- -------- -------------------------- ----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Richard N. Berman.......... - - - - - -
Steven L. Berman........... - - - - - -
Mathias J. Barton.......... - - 93,000 47,000 $ 677,700 $ 118,800
Donald J. Barry............ - - - 50,000 - -
Joseph M. Beretta.......... - - - 120,000 - 147,000
----------------------------
(1) The "Value of Unexercised In-the-Money Options at Year-End" is equal to the
difference between the option exercise price and the Common Stock's
December 31, 2005 closing price of $9.48 per share as reported on the
NASDAQ National Market System.
Incentive Stock Plan
The Board of Directors has adopted, and the Company's shareholders have
approved, an Incentive Stock Plan (the "Plan"), the purpose of which is to
recognize the contributions made to the Company by its employees, consultants,
advisors and members of its Board of Directors, to provide these individuals
with additional incentives to devote themselves to the Company's future success
and to improve the Company's ability to attract, retain and motivate individuals
upon whom the Company's sustained growth and financial success depend.
The Plan is administered by the Board of Directors, or by a committee
designated by the Board of Directors. The aggregate maximum number of shares of
Common Stock available for awards under the Plan is 2,345,000 shares (subject to
adjustments to reflect changes in the Company's capitalization). Awards under
the Plan may be made to all employees, consultants, advisors and directors of
the Company, although no director may receive awards for more than 10% of the
shares reserved for issuance under the Plan.
Options granted under the Plan may be either incentive stock options
("ISOs") or non-incentive stock options ("NSOs") (together, the "Options"). ISOs
are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Unless the Option is specifically designated at the time of grant as an ISO,
Options under the Plan will be NSOs.
10
The exercise price of the ISOs will be at least 100% of the fair market
value of the shares of Common Stock on the date the Option is granted, or, at
least 110% of the fair market value of the shares of Common stock on the date
the Option is granted if the recipient owns, directly or by attribution under
Section 425(d) of the Code, shares possessing more than 10% of the total
combined voting power of all classes of stock of the Company. The option price
for NSO will be set at the discretion of the Board of Directors, and may be less
than, greater than or equal to the fair market value of a share on the date of
the grant. The maximum term of an Option granted under the Plan shall not exceed
(i) ten years from the date of grant, or (ii) in the case of an ISO, five years
from the date of grant if the recipient on the date of grant owns, directly or
by attribution under Section 425(d) of the Code, shares possessing more than 10%
of the total combined voting power of all classes of stock of the Company or any
subsidiary.
As of December 31, 2005, there were options to purchase 995,216 shares
of Common Stock outstanding under the Plan. Shares available for future grants
under the Plan amounted to 296,511 shares as of December 31, 2005.
Executive Bonus Plan
The Compensation and Nominating Committee has established the Executive
Bonus Plan (the "Bonus Plan"). As of December 31, 2005, the executive officers
named in the Summary Compensation Table and one other executive officer were
eligible to participate in the Bonus Plan. The Bonus Plan has three components:
(i) an annual bonus, (ii) a three-year compounded growth bonus, and (iii) a
discretionary bonus. The annual bonus and the three-year compounded growth bonus
are each based on the Company's growth in pre-tax income (but including amounts
paid under the Bonus Plan) subject to adjustment as described in the Bonus Plan.
The amount of the annual bonus is equal to the executive officer's
eligible bonus amount, as set forth in the Bonus Plan, multiplied by two times
the percentage annual growth in the Company's pre-tax income. The eligible bonus
amount for each of Richard N. Berman and Steven L. Berman is $520,000. The
eligible bonus amount for each of the other four participating executive
officers is $280,000. Amounts earned as annual bonuses for the named executive
officers are included in the Summary Compensation Table under the column heading
"Annual Compensation - Bonus." During the fiscal year ended December 31, 2005,
none of the named executive officers received an award pursuant to the annual
bonus component of the Bonus Plan because there was no percentage annual growth
in the Company's pre-tax income.
The three-year compounded growth bonus component is based on the
Company's growth in pre-tax income over a three-year performance cycle. The
Bonus Plan provides for three three-year performance cycles: fiscal 2004 through
fiscal 2006, fiscal 2005 through fiscal 2007 and fiscal 2006 through 2008. After
the completion of a three-year cycle, the participating officers will each
receive a bonus payment of $50,000 if the Company's compounded three-year growth
in pre-tax income is between 5.0% and 10.0%, a payment of $100,000 if the
pre-tax income increase is between 10.0% and 15.0% and a payment of $150,000 if
the pre-tax income increase is greater than 15%. No compounded growth bonus will
be paid if the compounded three-year growth in pre-tax income is below 5.0%.
Awards pursuant to the three-year compounded growth component of the Bonus Plan
will commence beginning with the fiscal year ending December 30, 2006.
Fifty percent of an executive officer's earned bonus pursuant to the
annual bonus component, the three-year compounded growth component and the
discretionary bonus component will be paid in the first quarter of the year
following the year in which the bonus was earned; the remaining fifty percent is
paid in four equal quarterly installments 180, 270, 360 and 450 days after the
fiscal year end. The executive officer must be employed on the scheduled date of
payment to receive that portion of the bonus.
11
In addition, the Compensation and Nominating Committee has the
authority to award discretionary bonuses pursuant to the Bonus Plan to executive
officers based upon the executive officer's contribution, responsibility and
performance during the year. Amounts earned as discretionary bonuses by the
named executive officers are included in the Summary Compensation Table under
the column heading "Annual Compensation - Bonus."
Employee Stock Purchase Plan
The Board of Directors has adopted, and the Company's shareholders have
approved, the 1992 Employee Stock Purchase Plan (the "1992 Plan") the purpose of
which is to advance the interests of the Company, its shareholders and employees
by encouraging its employees to acquire a vested interest in the growth and
earnings of the Company.
Under the 1992 Plan, a committee appointed by the Board consisting
initially of a minimum of two and a maximum of seven members of the Board will
administer the 1992 Plan (the "Committee"). The aggregate maximum number of
shares of Common Stock available for grants under the 1992 Plan is 600,000
shares, (with suitable adjustments to reflect changes in the Company's
capitalization). As of December, 31, 2005, optionees had exercised rights to
purchase 709 shares at prices ranging from $9.42 to $11.48 for total net
proceeds of $7,000. Grants under the 1992 Plan may be made to all employees of
the Company, although no employee may receive such a grant if immediately after
the grant he would own more than 5% of the Company's Common Stock or which, at
the date the option is granted, would permit such person's rights to purchase
stock under the 1992 Plan and all other employee stock purchase or option plans
of the Company, or its parent or subsidiaries, if any, to accrue at a rate
exceeding $25,000 of the fair market value of such stock (determined at the time
such option is granted) for each year such option is outstanding.
If the Committee decides to issue options pursuant to the 1992 Plan,
options must be granted to all employees of the Company who have been employed
for at least 90 days, other than those employees whose customary employment is
20 hours or less per week and those employees whose customary employment is for
not more than five months in any calendar year. All options will expire on the
last day of the fiscal year during which the option was granted. The option
price will equal 85% of the fair market value of the shares on the date of
exercise.
The 1992 Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. Under the Code, an employee
who is granted an option under the 1992 Plan will not realize income at either
the time of grant of the option, or upon exercise of the option. If an employee
disposes of shares acquired upon exercise of an option after two years from the
date of grant of such option and after one year from the date of exercise of
such option, the employee will be required to include in income, as compensation
for the year in which such disposition occurs, an amount equal to the lesser of
(i) the excess of the fair market value of such shares at the time of
disposition over the exercise price or (ii) the excess of the fair market value
of such shares at the time the option was granted over the exercise price. The
employee's basis in the shares disposed of will be increased by an amount equal
to the amount so includible in his or her income as compensation, and any gain
or loss computed with reference to such adjusted basis which is recognized at
the time of disposition will be long-term capital gain or loss. In such event,
the Company (or the subsidiary by which the employee is employed) will not be
entitled to any deduction from income.
12
If any employee disposes of the shares purchased under the 1992 Plan
within such two year and one year period, the employee will be required to
include in income, as compensation for the year in which such disposition
occurs, an amount equal to the excess of the fair market value of such shares on
the date of purchase over the exercise price. The employee's basis in such
shares disposed of will be increased by an amount equal to the amount includible
in his or her income as compensation, and any gain or loss computed with
reference to such adjusted basis which is recognized at the time of disposition
will be capital gain or loss, either short-term or long-term, depending on the
holding period for such shares. In the event of a disposition within such two
year or one year period, the Company (or the subsidiary by which the employee is
employed) will be entitled to a deduction from income equal to the amount the
employee is required to include in income as compensation as a result of such
disposition.
The Board of Directors may modify or amend the 1992 Plan in any way
which will not destroy the status of the 1992 Plan as a qualified employee stock
purchase plan as defined in Section 423 of the Code, but no such amendment or
modification may affect options granted under the 1992 Plan prior to the date of
such amendment or modification.
401(k) Retirement Plan
On January 1, 1992, the Company adopted the amended and restated R&B,
Inc. 401(k) Retirement Plan and Trust (the "401(k) Plan"), a defined
contribution discretionary profit-sharing plan. The 401(k) Plan is administered
by a third-party administrator and is available to all employees once they have
met certain age and service requirements. Individual accounts are maintained for
the cash contributions made on behalf of each eligible employee and each
eligible employee has a choice of investment options from among a variety of
mutual funds and professionally managed accounts as to the contributions to his
account. There are two types of contributions to the 401(k) Plan: (1) an
employee can make a voluntary contribution of the employee's compensation which
is deducted by the Company from the employees normal compensation (legal
limitations may restrict the maximum voluntary contribution by an employee in
any given year); and (2) the Company may make discretionary contributions, in
cash, common stock or a combination thereof, which is allocated among the
participants based on the employee's annual compensation compared to the total
annual compensation of all eligible employees.
Benefits are payable at age 65 (normal retirement), total disability,
death, or upon early employment termination. There are vesting requirements for
the Company's contributions, but not for the employee's voluntary contributions.
The vesting schedule provides for twenty percent vesting each year after one
year of service, with one hundred percent vesting at six years or more.
For the fiscal year ended December 31, 2005, the Company contributed an
amount equal to four percent of each eligible employee's annual compensation
(with certain limitations to highly compensated employees). The Company's
contribution was funded entirely in cash.
Compensation and Nominating Committee Report on Executive Compensation
This report is not deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission (the "SEC") or subject to the SEC's
proxy rules or to the liabilities of Section 18 of the Securities Exchange Act
of 1934 (the "1934 Act"), and the report shall not be deemed to be incorporated
by reference into any prior or subsequent filing by the Company under the
Securities Act of 1933 or the 1934 Act.
13
General
The Compensation and Nominating Committee is composed of four
non-management directors, Edgar W. Levin (Chairman), George L. Bernstein, John
F. Creamer and Paul R. Lederer. In the opinion of the Board, each are
independent as defined under the standards of NASDAQ. The committee is
responsible for, among other matters, setting and administering executive
officer salaries, bonuses, incentive compensation plans and other employee
benefits. The Committee ensures that the compensation policies and practices
support the successful recruitment, development and retention of executive
talent. The Committee typically meets once per fiscal year.
Policy
The Company's compensation philosophy reflects a commitment to
compensate executives competitively with other companies in the industry while
rewarding specific executives for achieving levels of operational excellence and
financial returns which insure positive short and long-term business performance
and continual growth in shareholder value. The Board of Directors believes that
the Company's overall compensation program must be competitive in order to
attract and retain the qualified individuals necessary to manage the Company and
address the significant challenges facing the Company and the industry.
Base Salary
The Committee establishes base salaries annually upon recommendation of
the Chief Executive Officer taking into consideration independent compensation
studies prepared periodically on behalf of the Committee. The Committee desires
that overall compensation reflect the performance of each individual executive
over time. Base salaries are set at levels subjectively determined by the
Committee to adequately reward and retain capable executives, including the
Chief Executive Officer, without targeting any specific quartile of the
compensation survey data for total compensation or any component of total
compensation. The Committee considers the executive's individual performance,
the importance of and skills required in a particular executive position, and
the executive's total amount of experience in establishing base salary.
Bonus Compensation
Bonus compensation is paid annually to executive officers dependent
upon the Company's financial performance pursuant to the Executive Bonus Plan.
In addition, the Compensation and Nominating Committee has the authority under
the Executive Bonus Plan to award discretionary bonuses to executive officers.
Discretionary bonuses are based upon the executive officer's contribution,
responsibility and performance during the year. The Committee considers, among
other things, the evaluation of the Chief Executive Officer with regard to the
contribution, responsibility and performance of the executive officer in
question and his views on the appropriate compensation level of such executive
officer.
Long-Term Incentives
Long-term incentives offered by the Company are based on incentive
stock options. Incentive stock options are awarded to the Chief Executive
Officer and the other executive officers by the Committee based upon the
recommendation of the Chief Executive Officer, taking into consideration the
responsibility of each executive officer, the financial performance of the
Company and such other factors as it deems appropriate, consistent with the
Company's compensation policies. However, the Committee has not established
specific target awards governing the receipt, timing or size of option grants.
Thus, determinations with respect to the granting of stock options are
subjective in nature.
14
Policy with Respect to Section 162(m) of the Internal Revenue Code
Generally, Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder, denies a deduction to any publicly held
corporation, such as the Company, for certain compensation exceeding $1,000,000
paid during a calendar year to the chief executive officer and the four other
highest paid executive officers, excluding, among other things, certain
performance-based compensation. Where appropriate, the Committee has taken
action to reduce the impact of this provision. For example, the Committee
intends that the Company's Incentive Stock Plan qualify for the
performance-based exclusion.
Chief Executive Officer Compensation
The compensation of Richard N. Berman, Chairman of the Board,
Chief Executive Officer and President of the Company, is determined as set
forth above. Mr. Berman received a base salary of $465,000 in 2005. The
Committee granted Mr. Berman a bonus for 2005 of $75,000 payable in the first
quarter of 2007. For 2006, Mr. Berman will receive a base salary of $485,000.
Conclusion
The Committee is satisfied that the short-term and long-term
compensation paid to the executive officers of the Company create alignment with
the Company's strategic objectives and ensure that payouts are driven by Company
performance and employee contribution to the Company.
The foregoing report has been furnished by:
Edgar W. Levin, Chairman
George L. Bernstein
John F. Creamer
Paul R. Lederer
Compensation Committee Interlocks and Insider Participation
The Compensation and Nominating Committee consisted of George L.
Bernstein, John F. Creamer, Jr., Paul R. Lederer and Edgar W. Levin in the
fiscal year ended December 31, 2005. No person who served as a member of the
Compensation and Nominating Committee during the fiscal year ended December 31,
2005 was a current or former officer or employee of the Company or engaged in
certain transactions with the Company required to be disclosed by regulations of
the SEC. Additionally, there were no compensation committee "interlocks" during
this period, which generally means that no executive officer of the Company
served as a director or member of the compensation committee of another entity,
one of whose executive officers served as a director or member of the
Compensation Committee of the Company.
Certain Relationships and Related Transactions
The Company has entered into a noncancelable operating lease for its
primary operating facility in Colmar, Pennsylvania with BREP I, a Pennsylvania
limited partnership of which Richard N. Berman, Steven L. Berman, their father,
Jordan S. Berman, and their brothers, Marc H. Berman and Fred B. Berman, are
limited partners. Richard J. Berman and Steven L. Berman are the controlling
shareholders of BREP, Inc., a Pennsylvania corporation, which is the general
partner of BREP I. Jordan S. Berman, Marc H. Berman and Fred B. Berman are each
directors and officers of BREP, Inc. Under the lease, the Company paid rent of
$3.75 per square foot ($1.3 million per year) in 2005. The rents payable on the
Pennsylvania property are adjusted on January 1 of each year to reflect annual
changes in the Consumer Price Index for All Urban Consumers - U.S. City Average,
All Items. The lease is a "net" lease, under which the Company is responsible
for all expenses attributable to the leased property (including maintenance and
repair) and for the conduct of its operations in compliance with all applicable
laws and regulations. In 2002, the lease was extended and will expire on
December 31, 2007. In the opinion of management, the terms of this lease are no
less favorable than those which could have been obtained from an unaffiliated
party.
15
Report of Audit Committee
In February 2006, the Audit Committee met with management to review and
discuss the audited financial statements for the year ended December 31, 2005.
The Audit Committee also conducted discussions with its independent registered
public accounting firm, KPMG LLP ("KPMG"), regarding the matters required by the
Statement on Auditing Standards No. 61. As required by Independence Standards
Board Standard No. 1, "Independence Discussion with Audit Committees," the Audit
Committee has discussed with and received the required written disclosures and a
confirming letter from KPMG regarding its independence and has discussed with
KPMG its independence. The Audit Committee also considered the non-audit
services provided by KPMG set forth below in their review of KPMG's
independence. Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2005.
This Audit Committee Report shall not be deemed incorporated by
reference in any document previously or subsequently filed with the SEC that
incorporates by reference all or any portion of this proxy statement, except to
the extent that the Company specifically requests that the Report be
specifically incorporated by reference.
The foregoing report has been furnished by:
George L. Bernstein, Chairman
John F. Creamer, Jr.
Paul R. Lederer
Edgar W. Levin
16
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of the
Company's Common Stock as of March 31, 2006 by (i) each director and nominee for
director, (ii) each person who is known by the Company to be the beneficial
owner of more than 5% of the Common Stock, (iii) each executive officer named in
the Summary Compensation Table contained in this proxy statement, and (iv) all
directors, director nominees and executive officers as a group. Except as
otherwise indicated, to the knowledge of the Company, the beneficial owners of
the Common Stock listed below have sole investment and voting power with respect
to such shares. The business address of the directors, director nominees and
executive officers of the Company is that of the Company.
Shares Beneficially
Owned (1)
-----------------------
Name of Beneficial Owner Number Percent
--------------------------------------------------- ------- --------
Steven L. Berman (2)................................. 2,665,236 (3)(4) 15.0%
Richard N. Berman (2)................................ 2,482,685 (3)(5) 14.0
Jordan S. Berman (2) ................................ 1,423,656 (3)(6) 8.0
T. Rowe Price Associates, Inc., and
T. Rowe Price Small-Cap Value Fund, Inc......... 1,081,000 (7) 6.1
Bank of America Corporation,
NB Holdings Corporation,
Bank of America, NA,
Columbia Management Group, LLC, and
Columbia Management Advisors, LLC............... 1,112,227 (8) 6.3
Royce & Associates, LLC.............................. 1,050,333 (9) 5.9
Dimensional Fund Advisors, Inc....................... 969,579(10) 5.5
Mathias J. Barton.................................... 167,880(11) *
Edgar W. Levin....................................... 66,000 *
George L. Bernstein.................................. 58,000 *
Paul R. Lederer...................................... 60,000(12) *
John F. Creamer, Jr.................................. 54,600(13) *
Joseph M. Beretta...................................... 4,000 *
Donald J. Barry .................................... 170 *
Executive officers and
directors as a group (11 persons)................ 5,629,562(14) 31.7%
----------------------------
* Denotes less than 1%.
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission (the "SEC") and,
accordingly, may include securities owned by or for, among others, the
spouse, children or certain other relatives of such person as well as other
securities as to which the person has or shares voting or investment power
or has the right to acquire within 60 days of March 31, 2006. The same
shares may be beneficially owned by more than one person. Beneficial
ownership may be disclaimed as to certain of the securities. Fractional
shares are rounded up to the closest whole number. Share numbers in the
table may, as indicated in the appropriate notes, include shares held for
the person's account in the Company's 401(k) Plan. The number of shares
held in the 401(k) Plan is based on a 401(k) Plan statement dated March 31,
2006.
(2) Pursuant to the Amended and Restated Shareholders' Agreement, dated as of
August 1, 2004 (the "Shareholders' Agreement"), among Richard N. Berman,
Steven L. Berman, their father Jordan S. Berman, their brothers Marc H.
Berman and Fred B. Berman, their mother Deanna Berman and the additional
shareholders named therein, except as otherwise provided in the
Shareholders' Agreement with respect to Jordan S. Berman and Deanna Berman,
each shareholder has granted the others rights of first refusal,
exercisable on a pro rata basis or in such other proportions as the
exercising shareholders may agree, to purchase shares of Common Stock of
the Company which any of them, or upon their deaths their respective
estates, proposes to sell to third parties. The Company has agreed with
these shareholders that, upon their deaths, to the extent that any of their
shares are not purchased by any of these surviving shareholders and may not
be sold without registration under the Securities Act of 1933, as amended
(the "1933 Act"), the Company will use its best efforts to cause those
shares to be registered under the 1933 Act. The expenses of any such
registration will be borne by the estate of the deceased shareholder. The
additional shareholders party to the Shareholders' Agreement are trusts for
which either Richard N. Berman, Steven L. Berman, Marc H. Berman or Fred B.
Berman act as trustee for the benefit of their own children.
17
(3) Steven L. Berman, Richard N. Berman and Jordan S. Berman share with each
other voting and dispositive power with respect to the following shares of
Common Stock: (i) 161,800 shares held by BREP I, a Pennsylvania limited
partnership ("BREP I"); and (ii) 190,200 shares held by BREP III, a
Pennsylvania limited partnership ("BREP III," and together with BREP I, the
"Partnerships"). The general partner of each of the Partnerships is BREP,
Inc., a Pennsylvania corporation. Steven L. Berman and Richard N. Berman
are each a limited partner of each of the Partnerships and a controlling
shareholder of BREP, Inc. Jordan S. Berman is the President, a director and
a shareholder of BREP, Inc.
(4) Includes: (i) 2,100,558 shares held directly; (ii) 88,000 shares held by
the Steven L. Berman 2005 GRAT (the "Steven L. Berman GRAT"); (iii) 74,586
shares held by The Steven L. Berman 2004 Charitable Remainder Trust (the
"Steven L. Berman CRUT"); and (iv) 33,600 shares held by three different
trusts, each dated October 27, 2003, for the benefit of Steven L. Berman's
children (together, the "Steven L. Berman Trusts"). Steven L. Berman is the
trustee for each of the Steven L. Berman GRAT, the Steven L. Berman CRUT
and the Steven L. Berman Trusts, in which capacity he has the sole power to
vote and dispose of the shares held. Steven L. Berman has the right to
direct the trustee of the Company's 401(k) Plan as to the voting of 16,492
shares of Common Stock held for his account in the 401(k) Plan; he does not
have dispositive power over these shares. Excludes 4,723,908 shares that
may be deemed beneficially owned by the shareholders party to the
Shareholders' Agreement (as defined in note (2) above) other than Steven L.
Berman, as to all of which shares he disclaims beneficial ownership.
(5) Includes: (i) 1,882,878 shares held directly; (ii) 88,000 shares held by
the Richard N. Berman 2005 GRAT (the "Richard N. Berman GRAT"); (iii)
74,586 shares held by The Richard N. Berman 2004 Charitable Remainder Trust
(the "Richard N. Berman CRUT"); (iv) 67,200 shares held by six different
trusts, each dated October 27, 2003, for the benefit of each of Richard N.
Berman's children (together, the "Richard N. Berman Trusts"); and (v) 1,400
shares held in custody for his child. Richard N. Berman is the trustee for
each of the Richard N. Berman GRAT, the Richard N. Berman CRUT and the
Richard N. Berman Trusts, in which capacity he has the sole power to vote
and dispose of the shares held. Richard N. Berman has the right to direct
the trustee of the Company's 401(k) Plan as to the voting of 16,492 shares
of Common Stock held for his account in the 401(k) Plan; he does not have
dispositive power over these shares. Excludes 4,906,459 shares that may be
deemed beneficially owned by the shareholders party to the Shareholders'
Agreement (as defined in note (2) above) other than Richard N. Berman, as
to all of which shares he disclaims beneficial ownership.
(6) Includes 299,200 shares owned by Jordan S. Berman's spouse, Deanna Berman,
as to all of which shares he disclaims beneficial ownership. Jordan S.
Berman may be deemed to have sole voting and dispositive power over the
299,200 shares owned by his spouse. The above amount excludes the following
shares, as to all of which shares Jordan S. Berman disclaims beneficial
ownership: (i) 76,600 shares held by The Jordan and Deanna Berman Family
Charitable Foundation, for which Jordan S. Berman serves as a trustee; and
(ii) 5,962,083 shares that may be deemed beneficially owned by the
shareholders party to the Shareholders' Agreement (as defined in note (2)
above) other than Jordan S. Berman. The address of Jordan S. Berman is c/o
R & B, Inc., 3400 East Walnut Street, Colmar, Pennsylvania 18915.
(7) Based solely on a Schedule 13G/A filed with the SEC on February 14, 2006 by
T. Rowe Price Associates, Inc. ("Price Associates") and T. Rowe Price
Small-Cap Value Fund, Inc. ("Price Small-Cap" and together with Price
Associates, "T. Rowe Price"). The filing indicates that, as of December 31,
2005, (i) Price Associates had sole voting power with respect to 162,300
shares, shared voting power over no shares, sole dispositive power over
1,081,000 shares and shared dispositive power over no shares, and (ii)
Price Small-Cap had sole voting power over 918,700 shares and did not have
shared voting power, sole dispositive power or shared dispositive power
over any shares. The address of T. Rowe Price is 100 E. Pratt Street,
Baltimore, Maryland 21202.
18
(8) Based solely on a Schedule 13G/A filed with the SEC on February 8, 2006 by
Bank of America Corporation ("Bank of America Corp."), NB Holdings
Corporation ("NB"), Bank of America, NA ("Bank of America, NA"), Columbia
Management Group, LLC ("Columbia Group") and Columbia Management Advisors,
LLC ("Columbia Advisors" and together, "Bank of America"). The filing
indicates that, as of December 31, 2005: (i) Bank of America Corp. had sole
voting power over no shares, shared voting power over 785,622 shares, sole
dispositive power over no shares and shared dispositive power over
1,112,227 shares; (ii) NB had sole voting power over no shares, shared
voting power over 785,622 shares, sole dispositive power over no shares and
shared dispositive power over 1,112,227 shares; (iii) Bank of America, NA
had sole voting power over 252,831 shares, shared voting power over 532,791
shares, sole dispositive power over 282,564 shares and shared dispositive
power over 829,663 shares; (iv) Columbia Group had sole voting power over
no shares, shared voting power over 532,791 shares, sole dispositive power
over no shares and shared dispositive power over 825,874 shares; and (v)
Columbia Advisors had sole voting power over 532,791 shares, shared voting
power over no shares, sole dispositive power over 825,874 shares and shared
dispositive power over 825,874 shares. The address of Bank of America is 1
Tryon Street, Floor 25, Bank of America Corporate Center, Charlotte, North
Carolina 28255.
(9) Based solely on a Schedule 13G/A filed with the SEC on January 31, 2006 by
Royce & Associates, LLC ("Royce"). The filing indicates that, as of
December 31, 2005, Royce had sole voting power over 1,050,333 shares,
shared voting power over no shares, sole dispositive power over 1,050,333
shares and shared dispositive power over no shares. The address of Royce is
1414 Avenue of the Americas, New York, New York 10019.
(10) Based solely on a Schedule 13G/A filed with the SEC on February 2, 2006 by
Dimensional Fund Advisors Inc. ("Dimensional"). The filing indicates that,
as of December 31, 2005, Dimensional had sole voting power over 969,579
shares, shared voting power over no shares, sole dispositive power over
969,579 shares and shared dispositive power over no shares.
(11) Includes: (i) 9,000 shares subject to options exercisable within 60 days of
the Record Date, (ii) 1,302 shares held for his account in the Company's
401(k) Plan, and (iii) 400 shares held in trust for the benefit of Mr.
Barton's children.
(12) Includes: (i) 6,000 shares subject to options exercisable within 60 days
of the Record Date.
(13) Includes: (i) 1,200 shares subject to options exercisable within 60 days
of the Record Date.
(14) Includes: (i) 16,200 shares subject to options exercisable within 60 days
of the Record Date and (ii) 40,875 shares held for the accounts of the
Company's executive officers in the Company's 401(k) Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
the rules thereunder require the Company's officers and directors and persons
who own more than 10% of the Company's common stock to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers and to furnish the Company copies.
Based on its review of the copies of such forms received by it, or
written representation from certain reporting persons, the Company believes that
all filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with during the last fiscal year.
19
Stock Performance Graph
Set forth below is a line graph comparing, for the period from December
30, 2000 to December 31, 2005, the cumulative total shareholder return on the
Company's Common Stock with the cumulative total shareholder return on the
Automotive Parts & Accessories Peer Group of the Hemscott Group Index and the
NASDAQ Market Index. The Automotive Parts & Accessories Peer Group is comprised
of 52 public companies and the information was furnished by Hemscott plc
(formerly CenterPoint Data, Inc.). The graph assumes $100 invested on December
30, 2000 in the Company's Common Stock and each of the indices, and that the
dividends were reinvested when and as paid. In calculating the cumulative total
shareholder return of the peer group index, the shareholder returns of the
companies included are weighted according to the stock market capitalization of
such companies.
Fiscal Year Ending
----------------------------------------------------------------------------------
December 30, December 29, December 28, December 27, December 25, December 31,
2000 2001 2002 2003 2004 2005
----------- ----------- ----------- ----------- ----------- ------------
R&B, Inc. $ 100 $ 420 $ 609 $ 910 $ 1,489 $ 1,145
Automotive Parts &
Accessories Peer Group $ 100 $ 126 $ 113 $ 166 $ 171 $ 152
The NASDAQ Market Index
$ 100 $ 80 $ 56 $ 84 $ 91 $ 93
20
Shareholder Proposals
Proposals by shareholders to be presented at the Company's meeting to
be held in 2007 must be received by the Company no later than December 19, 2006
in order to be considered for inclusion in the Company's proxy statement and
form of proxy for that meeting. Any such proposal must also comply with the
proxy rules under the Exchange Act, including Rule 14a-8.
In addition, shareholders are notified that the deadline for providing
the Company timely notice of any shareholder proposal to be submitted outside of
the Rule 14a-8 process for consideration at the Company's 2007 annual meeting of
shareholders is not less than 50 days nor more than 75 days prior to the
meeting; provided, however, that in the event that less than 65 days notice or
prior public disclosure of the date for the meeting is given to the
shareholders, the letter must be received not later than the close of business
on the tenth day following the day on which such notice or public disclosure was
made. Any such notice must comply with the Company's bylaws, a copy of which may
be obtained on the Company's website located at www.rbinc.com. As to all such
matters which the Company does not have notice on or prior to such date,
discretionary authority shall be granted to the persons designated in the
Company's proxy statement related to the 2007 annual meeting of shareholders to
vote on such proposal.
Annual Report
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 2005 is being furnished concurrently with this Proxy
Statement to all persons who were Shareholders on the Record Date. The Annual
Report should not be regarded as proxy soliciting material.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2005 can also be obtained without charge by writing to R&B,
Inc., 3400 East Walnut Street, Colmar, Pennsylvania 18915, Attn: Thomas J.
Knoblauch, Assistant Secretary. The Company also makes available, free of
charge, on its website located at www.rbinc.com, its Annual Report on Form 10-K,
including all amendments thereto, if any.
Solicitation of Proxies
All expenses incurred in connection with the solicitation of the
enclosed proxy card will be paid by the Company. In addition to solicitation by
mail, officers, directors and regular employees of the Company, who will receive
no additional compensation for their services, may solicit proxies in person or
by telephone or facsimile. The Company has requested that brokers and nominees
who hold stock in their names furnish this proxy material to their customers;
the Company will reimburse these brokers and nominees for their out-of-pocket
and reasonable expenses.
Although it is not anticipated, the Company reserves the right to
retain a professional firm of proxy solicitors to assist in solicitation of
proxies. The Company estimates that it would be required to pay such firm fees
ranging from $5,000 to $10,000 plus out-of-pocket expenses.
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Independent Registered Public Accounting Firm
The accounting firm of KPMG LLP acted as the Company's independent
registered public accounting firm for the fiscal year ended December 31, 2005
and has been selected by the Audit Committee of the Board of Directors to serve
as the Company's independent registered public accounting firm for the fiscal
year ending December 30, 2006. A representative of KPMG LLP is expected to be
present at the Annual Meeting and to have the opportunity to make a statement,
if he desires to do so, and is expected to be available to respond to
appropriate questions.
Principal Accountant Fees and Services
Aggregate fees for professional services rendered for the Company by
KPMG LLP as of or for the fiscal years ended December 31, 2005 and December 25,
2004 were:
Fiscal Year Ended
Services Rendered (1) December 31, 2005 December 25, 2004
-------------------- ----------------- -----------------
Audit Fees.............................. $ 444,967 $ 489,669
Audit Related Fees...................... - -
Tax Fees................................ 98,200 98,345
All Other Fees.......................... 1,500 15,000
Total................................... $ 544,667 $ 603,014
---------------------------------------
(1) The aggregate fees included in Audit Fees are fees billed for the
fiscal years. The aggregate fees included in each of the other categories are
fees billed in the fiscal years.
Audit Fees. Audit fees for the fiscal year ended December 31, 2005 and
the fiscal year ended December 25, 2004 were for professional services rendered
for the audits of the consolidated financial statements of the Company, and for
the attestation of the Company's internal control over financial reporting as
required by the Sarbanes-Oxley Act of 2002, quarterly reviews, issuance of
consents, and assistance with review of documents filed with the SEC.
Audit Related Fees. Audit related fees are for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company's consolidated financial statements and are not reported under
"Audit Fees." There were no audit related fees for the years ended December 31,
2005 or December 25, 2004.
Tax Fees. Tax fees for the fiscal year ended December 31, 2005 and the
fiscal year ended December 25, 2004 were for services relating to tax
preparation services and tax advice and planning other than those directly
related to the audit of the income tax accrual.
All Other Fees. All other fees for the fiscal year ended December 31,
2005 were for the annual subscription for accounting software used by the
Company. All other fees for the fiscal year ended December 25, 2004 were for the
annual subscription for accounting software used by the Company and the audit of
the Company's 401(k) Retirement Plan.
The Audit Committee has considered and determined that the services
provided by KPMG LLP are compatible with KPMG LLP maintaining its independence.
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Pre-Approval Policies and Procedures
The Audit Committee Charter provides that one of the Audit Committee's
responsibilities is pre-approval of all audit, audit related, tax services and
other services performed by the independent registered public accounting firm.
Unless the specific service has been previously pre-approved with respect to
that year, the Audit Committee must approve the permitted service before the
independent registered public accounting firm is engaged to perform it. The
Audit Committee pre-approved all of the audit and non-audit services provided by
KPMG LLP to the Company during the fiscal years ended December 31, 2005 and
December 25, 2004.
Other Matters
As of the date of this Proxy Statement, no other matter is known which
will be brought before the Annual Meeting. However, the enclosed proxy confers
discretionary authority to vote with respect to any and all of the following
matters that may come before the meeting: (i) matters that the Company's Board
of Directors does not know, 10 calendar days after notice of the meeting is
mailed, are to be presented for approval at the meeting; (ii) approval of the
minutes of a prior meeting of shareholders, if such approval does not constitute
ratification of the action at the meeting; (iii) the election of any person to
any office for which a bona fide nominee is unable to serve or for good cause
will not serve; (iv) any proposal omitted from this Proxy Statement and the form
of proxy pursuant to Rule 14a-8 or Rule 14a-9 under the Exchange Act, as
amended; and (v) matters incidental to the conduct of the meeting. If any such
matters come before the meeting, the proxy agents named in the accompanying
proxy card will vote in accordance with their best judgment and discretion.
By Order of the Board of Directors
/Thomas J. Knoblauch/
Thomas J. Knoblauch
Vice President, General Counsel and
Assistant Secretary
Colmar, Pennsylvania
April 20, 2006
Appendix A
DORMAN PRODUCTS, INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
ARTICLE I
The name of the corporation is Dorman Products, Inc.
ARTICLE II
The location and post office address of the corporation's current
registered office in this Commonwealth is 3400 East Walnut Street, Colmar,
Pennsylvania 18915.
ARTICLE III
The purposes for which the corporation is organized are:
To have unlimited power to engage in and to do any lawful act
concerning any or all lawful business for which corporations may be incorporated
under the Pennsylvania Business Corporation Law.
ARTICLE IV
The aggregate number of shares which the corporation shall have
authority to issue is One Hundred Million (100,000,000) shares, of which:
(1) not less than Twenty Five Million (25,000,000) shares, subject to increase
by resolution of the Board of Directors, shall be Common Stock, par value $.01
per share; and
(2) with respect to that portion of the balance of such
Seventy Five Million (75,000,000) shares which are not designated by resolution
of the Board of Directors to be Common Stock, the Board of Directors shall have
the full authority permitted by law to fix by resolution full, limited, multiple
or fractional, or no voting rights, in such designations, preferences,
qualifications, privileges, limitations, restrictions, options, conversion
rights, and other special or relative rights of, and a number of authorized
shares (within the total number of shares of all classes and series authorized
by these Articles) of, any class or any series of any class that may be desired.
ARTICLE V
The term for which the corporation is to exist is perpetual.
ARTICLE VI
(1) No director of the corporation, as such, shall be personally liable for
monetary damages for any action taken, or any failure to take any action,
unless:
(a) The director has breached or failed to perform the duties
of his or her office under Section 1721 of the Pennsylvania Business Corporation
Law of 1988 (the "1988 BCL") or any successor provision thereto; and
(b) The breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness; provided, however, that the provisions of
this Section shall not apply to the responsibility or liability of a director
pursuant to any criminal statute, or to the liability of a director for the
payment of taxes pursuant to local, Pennsylvania or Federal law.
(2) Pursuant to Section 2541(a)(3) of the 1988 BCL, the provisions of
Subchapter E of Chapter 25 of the 1988 BCL, and any successor provisions
thereto, shall not be applicable to the corporation.
(3) Pursuant to Section 2551(b)(3)(ii) of the 1988 BCL, the provisions
of Subchapter F of Chapter 25 of the 1988 BCL, and any successor provisions
thereto, shall not be applicable to the corporation.
(4) Pursuant to Section 2561(b)(2)(ii) of the 1988 BCL, the provisions
of Subchapters G, I and J of Chapter 25 of the 1988 BCL, and any successor
provisions thereto, shall not be applicable to the corporation.
(5) Pursuant to Section 2571(b)(2)(ii) of the 1988 BCL, the provisions
of Subchapter H of Chapter 25 of the 1988 BCL, and any successor provisions
thereto, shall not be applicable to the corporation.
ARTICLE VII
Henceforth, these Amended and Restated Articles of Incorporation
supersedes the original Articles of Incorporation and all amendments thereto.
R&B, INC.
3400 EAST WALNUT STREET
COLMAR, PENNSYLVANIA 18915
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard N. Berman and Steven L. Berman, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes either of them to represent and to vote, as designated below,
all the shares of Common Stock of R&B, Inc. (the "Company") held of record on
March 31, 2006 by the undersigned, at the Annual Meeting of Shareholders to be
held on May 24, 2006 or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR election of all of the director nominees listed below in Proposal 1
and FOR the approval of Proposal 2. Discretionary authority is conferred by this
proxy as to certain matters as described in the Company's Proxy Statement. At
the present time, the Board of Directors knows of no other business to be
presented at the Annual Meeting.
1. Election of six directors, each to serve for a term of one year to expire at
the next annual meeting of shareholders and until his successor has been
selected and qualified.
Richard N. Berman Steven L. Berman George L. Bernstein
John F. Creamer, Jr. Paul R. Lederer Edgar W. Levin
[ ] FOR all of the nominees listed above (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees
(Instruction: To withhold authority to vote for any individual nominees,
write those nominees' names in the space provided below.)
-------------------------------------------------------------------------------
2. To approve an amendment and restatement of the Company's Amended and Restated
Articles of Incorporation to change its name to Dorman Products, Inc. as more
fully described in the Proxy Statement accompanying this Proxy.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Any other business as may properly come before the Annual Meeting.
The undersigned hereby acknowledges receipt of the Company's fiscal 2005 Annual
Report to Shareholders, Notice of the Company's Annual Meeting of Shareholders
and the Proxy Statement relating thereto.
Date: ____________________________,2006
Signature: _____________________________
Signature if held jointly: __________________________
This Proxy Must be Signed
Exactly as Name Appears Hereon
Executors, administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name by duly
authorized officer. If shares are registered in more than one name, all
owners should sign.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
26