Kid Brands Inc Reports Operating Results (10-K/A)
Kid Brands Inc has a market cap of $223.4 million; its shares were traded at around $10.35 with a P/E ratio of 17.3 and P/S ratio of 0.9. KID is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Although we fine-tune our compensation programs as conditions change, we believe it is important to maintain consistency in our compensation philosophy and approach. We recognize that value-creating performance by an executive or group of executives does not always translate immediately into appreciation in our stock price, particularly in periods of severe economic stress. However, the Committee believes that it may be appropriate for certain components of compensation to decline during periods of economic stress, reduced earnings and significantly lower stock prices (as was experienced during a large portion of 2009). As a result: (i) base salaries were not increased in 2009; (ii) the Company temporarily suspended its matching contributions under its 401(k) plan (which were reinstated for the full year at the end of 2009); and (iii) with respect to our executive incentive compensation program for 2009, higher minimum corporate performance than in prior years was needed to trigger entitlement to any award (from 80% of a specified target to 90%), a greater portion of potential awards were geared towards corporate performance (a 75%/25% split between corporate and individual goals, as opposed to 50%/50% in prior years), and all incentive compensation based on individual goals would be forfeited unless specified levels of corporate performance were achieved (50% was subject to forfeiture in prior years).
The objective of cash incentive compensation is to assure that a significant portion of total compensation is based on a reward of superior performance with respect to specific objectives, initiatives and strategic goals. The opportunity for a more significant award increases when both the Company or a specific operating group and the executive achieve high levels of performance. Commencing in 2005, we initiated our Incentive Compensation Program (the IC Program). The IC Program in 2009 provided designated employees of the Company and its subsidiaries with an opportunity to earn substantial cash remuneration beyond their base salary based on: (i) the attainment of specified operating objectives by the Company (or specified divisions thereof); and (ii) fulfillment of specified individual goals and objectives established for specified participants. The objectives of the IC Program are to, among other things: (1) more closely align participants interests with those of shareholders; (2) reward participants for contributing to the short and long-term growth of the business; (3) provide participants with a more meaningful role in the attainment of maximum compensation levels; (4) provide a competitive platform for compensation vis-à-vis the marketplace; and (5) serve as a recruitment and retention tool. Incentive compensation awards under the IC Program are based on specified percentages of base salary. The determination of such percentages is discussed below, and with respect to our named executive officers in 2009, ranged from a maximum potential payment of approximately 75% to 130% of base salary in the event that the maximum targets and the highest level of individual objectives and initiatives were achieved. See Operation of the 2009 IC Program below for a detailed discussion of potential and actual cash incentive compensation awarded to the NEOs in 2009.
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