NOTICE OF ANNUAL MEETING
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
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§ 240.14a-11(c)
or
§ 240.14a-12
ASTA FUNDING, INC.
(Name of Registrant as Specified in
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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o
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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o
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Fee paid previously with preliminary materials.
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o
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11
(a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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ASTA
FUNDING, INC.
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited
to attend the Annual Meeting of Stockholders (the
Meeting) of Asta Funding, Inc. (the
Company) to be held at the Crowne Plaza Englewood,
401 South Van Brunt Street, Englewood, New Jersey, on Thursday,
March 4, 2008 at 11:00 a.m.
The enclosed Notice of Meeting and the accompanying Proxy
Statement describe the business to be conducted at the Meeting.
I am also pleased to enclose a copy of the Companys 2007
Annual Report on
Form 10-K,
which contains certain information regarding the Company and its
financial results for the fiscal year ended September 30,
2007.
It is important that your shares of Common Stock be represented
and voted at the Meeting. Accordingly, regardless of whether you
plan to attend the Meeting in person, please complete, date,
sign and return the enclosed proxy card in the envelope
provided, which requires no postage if mailed in the United
States. Even if you return a signed proxy card, you may still
attend the Meeting and vote your shares in person. Every
stockholders vote is important, whether you own a few
shares or many.
I look forward to seeing you at the Meeting.
Sincerely,
Gary Stern
President and Chief Executive Officer
Dated: January 28, 2008
TABLE OF
CONTENTS
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Page
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Exhibit A Code of Ethics for Senior Financial
Officers
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A-1
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Exhibit B Compensation Committee Charter
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B-1
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Exhibit C Audit Committee Charter
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C-1
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Exhibit D Nominating Committee Charter
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D-1
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ASTA
FUNDING, INC
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
March 4, 2008
The Annual Meeting of Stockholders (the Meeting) of
Asta Funding, Inc. (the Company) will be held at the
Crowne Plaza Englewood, 401 South Van Brunt Street, Englewood,
New Jersey, on March 4, 2008 at 11:00 a.m. to consider
and act upon the following:
1. The election of eight directors.
2. The transaction of such other business as may properly
come before the Meeting or any adjournments or postponements
thereof.
Only holders of record of the Companys Common Stock, par
value $.01 per share, at the close of business on
January 22, 2008 will be entitled to vote at the Meeting. A
complete list of those stockholders will be open to examination
by any stockholder, for any purpose germane to the Meeting,
during ordinary business hours at the Companys executive
offices at 210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632
for a period of ten days prior to the Meeting.
By Order of the Board of Directors
Mitchell Cohen,
Chief Financial Officer and Secretary
Dated: January 28, 2008
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT
URGES YOU TO COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE. YOU MAY
REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
The enclosed proxy is solicited by the Board of Directors of
Asta Funding, Inc. (the Company) for use at the
Annual Meeting of Stockholders to be held at the Crowne Plaza
Englewood, 401 South Van Brunt Street, Englewood, New Jersey on
Thursday, March 4, 2008 at 11:00 a.m., and at any
adjournments or postponements thereof (the Meeting)
for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. A stockholder giving a proxy has the
right to revoke it by giving written notice of such revocation
to the Secretary of the Company at any time before it is voted,
by submitting to the Company a duly-executed, later-dated proxy
or by voting the shares subject to such proxy by written ballot
at the Meeting. The presence at the Meeting of a stockholder who
has given a proxy does not revoke such proxy unless such
stockholder files the aforementioned notice of revocation or
votes by written ballot.
This Proxy Statement and the enclosed form of proxy are first
being mailed to stockholders on or about January 28, 2008.
All shares represented by valid proxies pursuant to this
solicitation (and not revoked before they are exercised) will be
voted as specified in the proxy. The Board of Directors
recommends a vote FOR the proposal listed. If no
directions are given by the person(s) executing this Proxy, the
shares will be voted in favor of the listed proposal
the election of managements nominees to the Board of
Directors. This Proxy, when properly executed, will be voted in
the manner directed herein by the undersigned stockholder, and
unless otherwise specified, the shares will be voted for the
proposal.
The solicitation of proxies may be made by directors, officers
and regular employees of the Company or any of its subsidiaries
by mail, telephone, facsimile or telegraph or in person without
additional compensation payable with respect thereto.
Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy-soliciting
material to the beneficial owners of stock held of record by
such persons, and the Company will reimburse them for reasonable
out-of-pocket expenses incurred by them in so doing. All costs
relating to the solicitation of proxies will be borne by the
Company.
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of shares of the Companys Common Stock, par
value $.01 per share (Common Stock), of record on
the close of business on January 22, 2008 (the Record
Date), are entitled to vote at the Meeting. On the Record
Date, the Company had outstanding 13,918,158 shares of
Common Stock. Each holder of Common Stock will have the right to
one vote for each share standing in such holders name on
the books of the Company as of the close of business on the
Record Date with respect to each of the matters considered at
the Meeting. There are no cumulative voting rights with respect
to the election of Directors. Holders of the Common Stock will
not have any dissenters rights of appraisal in connection
with any of the matters to be voted on at the Meeting.
The presence in person or by proxy of the holders of shares
entitled to cast a majority of the votes of all shares entitled
to vote will constitute a quorum for purposes of conducting
business at the Meeting. Assuming that a quorum is present,
directors will be elected by a plurality vote. Pursuant to
Delaware corporate law, abstentions and broker non-votes will be
counted for the purpose of determining whether a quorum is
present and do not have an effect on the election of directors.
SECURITY
OWNERSHIP OF MANAGEMENT
The following table sets forth information as of
December 31, 2007 with respect to beneficial ownership of
the Companys Common Stock by (i) each director and
executive officer acting in the capacity as such on
September 30, 2007, (ii) each person known by the
Company to own beneficially more than five percent of the
Companys outstanding Common Stock, and (iii) all
directors and executive officers as a group. Unless otherwise
indicated, the address of each such person is
c/o Asta
Funding, Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey
07632. All persons listed have sole voting and investment power
with respect to their shares unless otherwise indicated.
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Amount and
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Nature
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of Beneficial
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Name and Address of Beneficial Owner
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Ownership
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Percentage(1)
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Arthur Stern
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642,683
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(2)
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4.5
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%
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Gary Stern
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1,515,987
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(3)
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10.3
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%
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Mitchell Cohen
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35,000
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(4)
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*
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Cameron Williams
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0
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(5)
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n/a
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Mary Curtin
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6,668
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(6)
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*
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Herman Badillo
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39,000
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(7)
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*
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120 Broadway
New York, NY 10271
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Edward Celano
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12,334
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(8)
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*
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2115 Scotch Gamble Road
Scotch Plains, NJ
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Harvey Leibowitz
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73,000
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(9)
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*
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159 West 53rd Street, Apt 229
New York, NY 10019
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David Slackman
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47,834
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(10)
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*
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28 Markwood Lane
East Northport, NY 11731
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Alan Rivera
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46,000
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(11)
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*
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1370 6th Avenue 25th Floor
New York, NY 10019
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Louis A. Piccolo
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27,769
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(12)
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*
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350 West 50rd Street
New York, NY 10019
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Asta Group, Incorporated
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842,000
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(13)
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6.0
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%
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Barbara Marburger
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440,451
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(14)
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3.2
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%
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9 Locust Hollow Road
Monsey, NY 10952
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Judith R. Feder
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1,573,000
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(15)
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11.3
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%
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928 East 10th Street
Brooklyn, NY 11230
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Stern Family Investors LLC
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692,000
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(16)
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5.0
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%
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928 East 10th Street
Brooklyn, NY 11230
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GMS Family Investors LLC
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862,000
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(17)
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6.3
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%
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928 East 10th Street
Brooklyn, NY 11230
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Private Capital Management
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2,468,015
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(18)
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17.7
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%
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8889 Pelican Bay Blvd. Suite 500
Naples, FL 34108
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All executive officers and directors as a group (11 persons)
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2,446,274
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(19)
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16.0
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%
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2
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* |
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Less than 1% |
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(1) |
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Any shares of common stock that any person named above has the
right to acquire within 60 days of December 31, 2007,
are deemed to be outstanding for purposes of calculating the
ownership percentage of such person, but are not deemed to be
outstanding for purposes of calculating the beneficial ownership
percentage of any other person not named in the table above. |
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Includes 286,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007, and 214,599 shares of common stock
owned by Asta Group, Incorporated which shares are attributable
to Arthur Stern based on his percentage ownership of Asta Group.
Includes 10,000 shares of restricted stock that will not
have vested within 60 days of December 31, 2007 which
Mr. Stern has the right to vote. Excludes
349,460 shares owned by Stern Family Investors LLC which
shares are attributable to Arthur Stern based on his percentage
ownership of such LLC and 948 shares owned by GMS Family
Investors LLC which shares are attributable to Arthur Stern
based on his percentage ownership of such LLC. Arthur Stern does
not have voting or investment power with respect to any of the
shares held by either LLC and disclaims beneficial ownership of
the shares owned by the LLCs. |
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Includes 786,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007, and 196,656 shares of common stock
owned by Gary Stern as custodian for his minor children and
285,607 shares of common stock owned by Asta Group, which
shares are attributable to Gary Stern based on his percentage
ownership of Asta Group. Includes 10,000 shares of
restricted stock that will not have vested within 60 days
of December 31, 2007 which Mr. Stern has the right to
vote. Excludes 684,945 shares owned by GMS Family Investors
LLC which shares are attributable to Gary Stern based on his
percentage ownership of such LLC. Gary Stern does not have
voting or investment power with respect to any of the shares
held by the LLC and disclaims beneficial ownership of the shares
owned by the LLC. Also excludes 196,656 shares of common
stock held by one of his children who is no longer a minor and
for which he disclaims beneficial ownership. |
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Includes 20,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 10,000 shares of
restricted stock that will not have vested within 60 days
of December 31, 2007 which Mr. Cohen has the right to
vote. |
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(5) |
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Cameron Williams was named Chief Operating Officer on
January 8, 2008. Mr. Williams commenced employment
with the Company on August 27, 2007. |
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(6) |
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Mary Curtin was named Senior Vice President on January 8,
2008. Includes 3,333 shares of restricted stock that will
not have vested within 60 days of December 31, 2007
which Ms. Curtin has the right to vote. |
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(7) |
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Includes 36,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 2,000 shares of restricted
stock that will not have vested within 60 days of
December 31, 2007 which Mr. Badillo has the right to
vote. Excludes 2,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2007. |
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(8) |
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Includes 9,334 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 2,000 shares of restricted
stock that will not have vested within 60 days of
December 31, 2007 which Mr. Celano has the right to
vote. Excludes 2,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2007. |
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(9) |
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Includes 71,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 2,000 shares of restricted
stock that will not have vested within 60 days of
December 31, 2007 which Mr. Leibowitz has the right to
vote. Excludes 2,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2007. |
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(10) |
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Includes 44,834 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 2,000 shares of restricted
stock that will not have vested within 60 days of
December 31, 2007 which Mr. Slackman has the right to
vote. Excludes 2,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2007. |
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(11) |
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Includes 43,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 2,000 shares of restricted
stock that will not have vested within 60 days of |
3
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December 31, 2007 which Mr. Rivera has the right to
vote. Excludes 2,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2007. |
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(12) |
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Includes 24,769 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 2,000 shares of restricted
stock that will not have vested within 60 days of
December 31, 2007 which Mr. Piccolo has the right to
vote. Excludes 2,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2007. |
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(13) |
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Asta Group, Incorporated is owned by Arthur Stern, our Chairman
of the Board and an Executive Vice President, Gary Stern, our
President and Chief Executive Officer, and other members of the
Stern family, including Barbara Marburger. |
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(14) |
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Includes 90,676 shares of common stock owned by Barbara
Marburger as custodian for her minor child and
70,907 shares of common stock owned by Asta Group, which
shares are attributable to Barbara Marburger based on her
percentage ownership of Asta Group. Excludes shares of common
stock held by her children who are no longer minors and for
which she disclaims beneficial ownership. Barbara Marburger is
the daughter of Arthur Stern and the sister of Gary Stern. |
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(15) |
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Includes 19,000 shares of common stock owned directly,
692,000 shares owned by Stern Family Investors LLC and
862,000 shares owned by GMS Family Investors LLC.
Ms. Feder is the manager of each LLC and as such has sole
voting and investment power as to such shares. |
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(16) |
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A limited liability company of which Judith R. Feder has sole
voting and investment power. Arthur Stern has a 49.5% beneficial
interest in the LLC, his wife, Alice Stern, has a 1% beneficial
interest, and a trust for the benefit of the descendants of
Arthur Stern, of which Judith R. Feder is trustee, has a 49.5%
beneficial interest in the LLC. |
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(17) |
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A limited liability company of which Judith R. Feder has sole
voting and investment power. Gary Stern has a 79.46% beneficial
interest in the LLC, trusts for the benefit of the children of
Gary Stern of which Judith R. Feder is the trustee have a
combined 20.43% beneficial interest (10.215% each), and Arthur
Stern has a .11% beneficial interest in the LLC. |
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(18) |
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Based on Information reported by Private Capital Management in
its Form 13G/A filed with the Securities &
Exchange Commission on July 7, 2007. |
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(19) |
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Includes 1,323,771 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2007. Includes 45,334 shares of
restricted stock that will not have vested within 60 days
of December 31, 2007. Excludes 12,000 shares of common
stock issuable upon exercise of options that are not exercisable
within 60 days of December 31, 2007. Excludes the
shares owned in the aggregate by Stern Family Investors LLC and
GMS Family Investors LLC. |
4
PROPOSAL ONE
ELECTION
OF DIRECTORS
In accordance with the Companys Certificate of
Incorporation and Bylaws, the number of directors of the Company
has been set by the Board of Directors at eight. At the Meeting,
eight directors will be elected by the stockholders to serve
until the next annual meeting of stockholders and until their
successors are duly elected and qualified.
All eight nominees named in this proxy statement are currently
directors who will serve until their successors are duly elected
and qualified. Each person named herein as a nominee for
director has consented to serve, and it is not contemplated that
any nominee would be unable to serve, as a director. However, if
a nominee is unable to serve as a director, a substitute will be
selected by the Board of Directors and all proxies eligible to
be voted for the Board of Directors nominees will be voted
for such other person.
The current Board of Directors, based on the recommendation of
our Nominating Committee, nominated the individuals named below
for election to our Board of Directors. Background information
on each of the nominees as of December 31, 2007 is set
forth below:
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Name
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Age
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Position
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Arthur Stern
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87
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Director, Chairman of the Board and Executive Vice President
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Gary Stern
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55
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Director, President and Chief Executive Officer
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Herman Badillo
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78
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Director
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Edward Celano(1)(3)
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69
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Director
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David Slackman(1)(2)
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60
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Director
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Harvey Leibowitz(1)(2)
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73
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Director
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Alan Rivera(2)(3)
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45
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Director
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Louis A. Piccolo(3)
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55
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Director
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(1) |
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Member of Audit Committee |
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(2) |
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Member of Compensation Committee |
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(3) |
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Member of Nominating Committee |
Arthur Stern has been a director and has served as
Chairman of the Board of Directors and Executive Vice President
of the Company since the Companys inception in July 1994.
Since 1963, Mr. Arthur Stern has been President of Asta
Group, Incorporated, a consumer finance company
(Group). In such capacities, he has obtained
substantial experience in distressed consumer credit analysis
and receivables collections.
Gary Stern has been a director and the President and
Chief Executive Officer of the Company since the Companys
inception in July 1994. Mr. Gary Stern has been Vice
President, Secretary, Treasurer and a director of the Group
since 1980 and held other positions with Group prior thereto. In
such capacities, he has obtained substantial experience in
distressed consumer credit analysis and receivables collections.
Herman Badillo has been a director of the Company since
September 1995. He has been Of Counsel at Sullivan Papain Block
McGrath & Cannavo P.C. since 2005. Prior to joining
his current firm Mr. Badillo was a founding member of
Fischbein, Badillo, Wagner & Harding, a law firm
located in New York City, for more than six years. He has
formerly served as Special Counsel to the Mayor of New York City
for Fiscal Oversight of Education and as a member of the
Mayors Advisory Committee on the Judiciary.
Mr. Badillo served as a United States Congressman from 1971
to 1978 and Deputy Mayor of New York City from 1978 to 1979.
Edward Celano has been a director of the Company since
September 1995. Mr. Celano has served as a consultant to
Walters and Samuels, Incorporated since 2003. He was formally a
consultant with M.R. Weiser & Co., from 2001 to 2003
and an Executive Vice President of Atlantic Bank from May 1996
to February 2001. Prior to May 1996, Mr. Celano was a
Senior Vice President of NatWest Bank, now Bank of America,
after having held different positions at the bank for over
20 years.
5
Harvey Leibowitz has been a director of the Company since
March 2000. Mr. Leibowitz has served as a Senior Vice
President of Sterling National Bank since June 1994. Prior to
June 1994, Mr. Leibowitz was employed as a Senior Vice
President and Vice President of several banks and financial
institutions since 1963.
David Slackman has been a director of the Company since
May 2002. Mr. Slackman has served as President, Manhattan
Market New York of Commerce Bank since June 2001.
Prior to June 2001, Mr. Slackman was an Executive Vice
President of Atlantic Bank of New York from 1994 to 2001 and a
Senior Vice President of the Dime Savings Bank from 1986 to 1994.
Alan Rivera has been a director of the Company since
February 2004. Mr. Rivera has served as Chief Financial
Officer and General Counsel of Millbrook Capital Management Inc.
since September 1996. Prior to September 1996, Mr. Rivera
was an Executive Vice President of Finance and Administration
and General Counsel of the New York City Economic Development
Corporation from 1994 to 1996.
Louis A. Piccolo has been a director of the Company since
June 2004. Mr. Piccolo has served as President of A.L.
Piccolo & Co., Inc since 1988. A.L.
Piccolo & Co. is a business consulting firm
specializing in management and financial consulting. Prior to
1988, Mr. Piccolo was an Executive Vice President and Chief
Financial Officer of Alfred Dunhill of London, Inc from 1983 to
1988, and held the same positions at Debenhams PLC, from
1981 to 1983. From 1977 to 1981, Mr. Piccolo was a senior
accountant at KPMG Peat Marwick.
Arthur Stern is the father of Gary Stern. There are no other
family relationships among directors or officers of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS DESCRIBED ABOVE IN
PROPOSAL ONE.
Shareholder
Communication with Directors
Shareholders may contact an individual director, the Board as a
group, or a specified Board committee or group, including the
non-employee directors as a group, by the following means:
Mail:
Attn: Board of Directors
Asta Funding, Inc
210 Sylvan Avenue
Englewood Cliffs, NJ 07632
Each communication should specify the applicable addressee or
addressees to be contacted as well as the general topic of the
communication. We will initially receive and process
communications before forwarding them to the addressee. We also
may refer communications to other departments at Asta Funding,
Inc. We generally will not forward to the directors a
communication that is primarily commercial in nature, relates to
an improper or irrelevant topic, or requests Asta Funding, Inc.
general information.
Concerns about accounting or auditing matters or possible
violations of our business conduct should be reported pursuant
to the procedures outlined in the Asta Funding Code of Business
Conduct and Ethics which is available by writing to the
Companys Corporate Secretary, or the Code of Ethics for
Senior Financial Officers which is attached as Exhibit A.
THE
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee has reviewed and discussed the
following Compensation Discussion and Analysis with management.
Based on this review and these discussions, the Compensation
Committee recommended to the Board of Directors that the
following Compensation Discussion and Analysis be included in
this Proxy Statement.
Submitted by the Compensation Committee:
David Slackman, Chairman
Harvey Leibowitz
Alan Rivera
6
Compensation
Discussion and Analysis
Introduction
This discussion presents the principles underlying our executive
officer compensation program. Our goal in this discussion is to
provide the reasons why we award compensation as we do and to
place in perspective the data presented in the tables that
follow this discussion. The focus is primarily on our
executives compensation for the fiscal year ended
September 30, 2007, but some historical and forward-looking
information, particularly information about our 2008
compensation process, is also provided to put the fiscal 2007
information in context. The information we present principally
relates to Gary Stern, our President and Chief Executive
Officer, Mitchell Cohen, our Chief Financial Officer, and Arthur
Stern, our Chairman of the Board and Executive Vice President.
Cameron Williams first joined the Company on August 27,
2007 as a Vice President, and was promoted to Chief Operating
Officer of the Company on January 8, 2008. He was not an
employee of the Company at the time the Compensation Committee
performed its annual review last year and was only employed for
a brief period in fiscal 2007. The Compensation Committee did
review the compensation of Mary Curtin for 2007, although the
Board did not at that time consider her post to be that of an
executive officer. With her recent promotion on January 8,
2008, Ms. Curtin will now be considered an executive
officer of the Company. We have included compensation
information for Mr. Williams and Ms. Curtin in the
tables that follow this discussion to provide more complete
information, and along with Arthur Stern, Gary Stern and
Mitchell Cohen, they are sometimes referred to as the
Named Executive Officers.
Compensation
Philosophy and Objectives
We seek to have compensation programs for our Named Executive
Officers that achieve a variety of goals, including to:
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attract and retain talented and experienced executives in the
competitive debt buying industry;
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motivate and fairly reward executives whose knowledge, skills
and performance are critical to our success; and
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provide fair and competitive compensation.
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In determining executive compensation for 2007, the Compensation
Committee began to focus more on a pay-for-performance
objective, to begin a process of attempting to better link pay
and performance, and to assure that its compensation practices
are competitive with those in the industry, both for executive
officers and for directors. To that end, in the first quarter of
fiscal 2007, the Compensation Committee engaged a professional
compensation consultant, the IFM Group, Inc. (IFM)
to complete a benchmarking survey, make suggestions, and assist
it in the compensation process.
In the first quarter of fiscal 2007, the Committee determined
bonuses and equity grants for fiscal 2006 performance on a
discretionary basis consistent with past practice. In exercising
discretion, however, the Committee noted the results of the IFM
study of comparable peer companies and sought to begin to make
sure that its officers and directors had competitive
compensation consistent with the Companys excellent
financial performance in fiscal 2006.
The Committee recognized that there was a history of
compensation expectations, so that it would not be prudent to
totally revise historic practices. However, it sought for fiscal
2007 to begin the process of making sure that compensation
rewarded good performance, that a greater percentage of overall
compensation be tied to performance, and that there be a
reasonable mix of cash and equity compensation. The Company also
sought compensation levels that would put its executives within
the range of compensation for its five peer group companies in
its industry (Asset Acceptance Capital Corp., Encore Capital
Group, Inc., Newstar Financial Inc., Portfolio Recovery
Association, Inc., and Primus Guaranty Ltd.), and for comparable
companies available to our consultant from general compensation
surveys. We selected our peer group companies with the
concurrence of IFM. Our Compensation Committee realizes that
benchmarking compensation may not always be appropriate, but
believes that engaging in a comparative analysis of our
compensation practices is useful.
7
As part of the process for fiscal 2007, the Committee first had
a series of meetings and discussions with IFM, received its
report, and then reviewed its tentative conclusions with the
chief executive officer, particularly as the Committees
recommendations related to compensation to be paid to the
officers of the Company reporting to the chief executive. The
Committee then reviewed its tentative conclusions with the full
Board in December 2006 to get the input of the entire Board
about the process and the results of the Committees
deliberations. Bonus and equity grants were then made.
In the first quarter of fiscal 2008, the Committee engaged a new
compensation consultant, Compensation Resources, Inc.
(CRI), to give it additional perspectives on
compensation trends, to offer an alternative consulting view of
compensation, and to further assist it in the compensation
process. CRI assisted the Committee in determining appropriate
bonuses and equity grants made in January 2008, as well as
salary levels for the Named Executive Officers for fiscal 2008,
following a process similar to our process with IFM last year.
Again this year, the chief executive officer assisted the
Committee in determining compensation for the other Named
Executive Officers. The Committee recently engaged CRI to
develop appropriate performance metrics for variable
compensation determinations. We expect management to participate
with CRI and the committee in this effort.
Elements
of Executive Officer Compensation
Overview. Total compensation paid to our
executive officers is divided among three principal components.
Salary is generally fixed and does not vary based on our
financial and other performance. Some components, such as
bonuses, stock options and restricted stock award grants, are
variable and dependent upon our performance. Prior to the 2008
payments, judgments about these elements have been made
subjectively. The value of certain of these components, such as
stock options and restricted stock, is dependent upon our future
stock price. At the recommendation of IFM, which has been
affirmed by CRI, we have begun to move away from stock options
towards restricted stock as the preferred form of equity
compensation, as we believe it will result in less dilution and
more straightforward accounting treatment.
We view the three components of our executive officer
compensation as related but distinct. Our Compensation
Committee, with the assistance of our compensation consultant,
reviews total compensation to see if it falls in line with peer
company and overall market data, and has made a
comparison also of the relationship of variable compensation, as
well as base, to total compensation. The Compensation Committee
is of the opinion that our compensation program is generally
competitive on base salary, but has been below industry norms in
variable compensation (bonuses), and therefore total
compensation. The Compensation Committee has determined it to be
desirable and in the interest of increased productivity and
performance to align executive compensation more directly in
line with company performance by increasing the potential for
executives to earn variable compensation, while placing less
emphasis on growth in base salaries. In 2008, we did not raise
our chief executive officers salary, and granted no or
limited raises to other officers, not as a negative commentary
on their performance but more to hold salaries steady so we
could emphasize the more contingent performance related
components of compensation in the over-all mix.
Base Salary. We pay our executives a base
salary, which we review and determine annually. We believe that
a competitive base salary is a necessary element of any
compensation program. Base salaries are established, in part,
based on the individual position, responsibility, experience,
skills, historic salary levels and the executives
performance during the prior year. We are also seeking over a
period of years to align base compensation levels comparable to
our competitors and other companies similarly situated. We do
not view base salaries as primarily serving our objective of
paying for performance.
Based on the competitive marketplace, excellent Company
performance in 2006 and individual performance reviews, in
December 2006, effective for fiscal year 2007, Gary Stern, the
Chief Executive Officer was granted a 5% salary increase, Arthur
Stern was granted a 5% increase, Mitchell Cohen was granted a
15% increase, and Mary Curtin was granted a 20% increase over
fiscal 2006 salary levels.
For fiscal 2008, We held the salary level of Gary Stern and
Arthur Stern constant, as we believe their overall compensation
should have a greater reliance on performance. Mitchell Cohen
was given a small raise in part for the same reason. Raises for
Mary Curtin and Cameron Williams were more substantial to
reflect their promotions and
8
increased responsibilities as executive officers of the Company.
We believe that our salary levels are generally sufficient to
retain our existing executive officers and to hire new executive
officers when and as required.
Cash Incentive Bonuses. Consistent with our
emphasis on pay-for-performance incentive compensation programs,
our executives are eligible to receive annual cash incentive
bonuses primarily based upon their performance during the year.
As indicated above, in the past bonus levels have been
subjective, informed in part by comparisons to overall cash
compensation paid by our competitors as well as a broader range
of comparable companies. The following bonuses were paid in
fiscal 2007 based on excellent Company performance for 2006:
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Gary Stern
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$
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100,000
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Arthur Stern
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$
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50,000
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Mitchell Cohen
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$
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50,000
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Mary Curtin
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$
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50,000
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Mitchell Cohen was also awarded an additional bonus of $50,000
by the Committee in March 2007 based on his hard work on our
$300 million portfolio purchase in March 2007 and the
related financing required for such purchase.
For fiscal 2007, the following bonuses were awarded in January
2008:
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Gary Stern
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$
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250,000
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Arthur Stern
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$
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50,000
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Mitchell Cohen
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$
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25,000
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Mary Curtin
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$
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70,000
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The bonuses, while not totally based on a definitive variable
performance measurement, reflect the Committees analysis
of the financial performance of the Company compared to prior
years and to specific performance parameters of the Company as
compared to our competitors and overall market results, balanced
by certain non-financial results including management
effectiveness, timeliness, operational control and governance.
Mitchell Cohens bonus was also impacted by the bonus he
received in March 2007 for work on the Companys
$300 million portfolio acquisition. The amount of Mary
Curtins bonus reflects her recent promotion.
Mr. Williams was not considered to be entitled to a bonus
or a restricted stock grant for 2007 because of his limited
involvement with the Company in that fiscal year. He will be
eligible for a bonus and a restricted stock grant for 2008.
Under the terms of each of our executive employment agreements,
when we adopt more objective performance bonus standards,
subsequent restatement to the financial statements due to
malfeasance or negligence of the executive will subject the
executive to return of excess bonuses awarded if the executive
would have received a reduced bonus amount based on the restated
financial statements.
Equity Compensation. We believe that
restricted stock awards are an important long-term incentive for
our executive officers and employees and align officer interest
with that of our stockholders. We recognize that Gary Stern and
Arthur Stern already have a very significant equity stake in the
Company, so that for them equity grants do not serve to further
align their interests with that of our stockholders but do
assure that their overall compensation is fair from the point of
view of comparable overall compensation with our competitors. We
review our equity compensation plan annually. Officers are
eligible for annual stock option
and/or
restricted stock award grants based on subjective factors, such
as our evaluation of the Companys performance and the
individual performance of those individuals, and the financial
impact of the value of such grants on the individuals
total compensation. These options and grants are intended to
produce value for each executive officer if our stock
performance is outstanding, shareholders derive significant
sustained value, and the executive officer remains with us.
In December 2006, a discretionary system was utilized to assess
appropriate restricted stock grants for fiscal 2006 performance
as follows:
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Gary Stern
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15,000 shares
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Arthur Stern
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15,000 shares
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Mitchell Cohen
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15,000 shares
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Mary Curtin
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5,000 shares
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9
All restricted stock grants vested one third 90 days from
date of grant, and one-third on the first and second anniversary
of the initial vesting date.
For fiscal 2007 performance, the following awards were made in
January 2008:
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Gary Stern
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20,000 shares
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Arthur Stern
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5,000 shares
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Mary Curtin
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3,000 shares
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All restricted stock grants vest one third on each of
October 1, 2008, 2009, and 2010, except that Arthur
Sterns grant vests 2,333, 1,334 and 1,333 shares on
such dates to match his vesting schedule to the vesting schedule
of members of the board.
We do not have any plan or obligation that requires us to grant
equity compensation to any executive officer on specified dates.
In the last two years, we have developed the practice of
approving bonuses and equity grants at about the time our audit
of the prior fiscal year is completed to reward executives for
work in the completed year. The authority to make equity grants
to our executive officers rests with our Compensation Committee;
however our practice has been to make those grants subject to
ratification and approval by the full Board of Directors. The
Committee does consider the input of our chief executive officer
in setting the compensation of our other executive officers,
including in determining appropriate levels of equity grants.
Severance and
Change-in-Control
Benefits. Historically, we have provided our
executive officers with employment contracts. In January 2007,
we entered into three year contracts with Gary Stern and
Mitchell Cohen, and a one year contract with Arthur Stern. In
January 2008, we entered into a new one year contract with
Arthur Stern and a two year employment agreement with Cameron
Williams. All contracts are similarly structured. These
contracts set minimum base salary levels, but leave discretion
as to bonuses and equity grants, with the new agreement for
Mr. Williams setting an expected level of the maximum cash
bonus and stock grant. The contracts also provide for certain
severance benefits in the event of termination, as well as a
provision providing for a higher payment in the event of
termination or retirement following a
change-in-control
as defined in the employment agreements. Those severance and
other benefits are described under Employment
Agreements below, and certain estimates of these severance
and change of control benefits are provided in a chart below
that section included in this Proxy Statement. When the existing
employment agreements were negotiated, we did not review wealth
and retirement accumulation as a result of employment with us in
fixing severance benefits or any other compensation issues, and
we only focused on fair compensation for the year in question.
We provided this benefit to retain our executives and believed
these provisions were consistent with the provisions of similar
benefits by competitive companies.
Regulatory Considerations. We account for the
equity compensation expense for our employees under the rules of
Statement of Financial Accounting Standards No. 123R,
Share-Based Payment (SFAS 123R),
which requires us to estimate and record an expense for each
award of equity compensation over the service period of the
award. Accounting rules also require us to record cash
compensation as an expense at the time the obligation is accrued.
Share
Retention
We do not have a share retention policy or guideline for
executive officers and directors encouraging or requiring them
to retain a certain amount of equity in the Company. However,
the most recent grant of restricted stock to directors in 2008
provided that, of the 5,000 restricted shares granted to each
director, 1,000 shares would not vest until death,
disability, retirement from the board or reaching the age of 80.
10
SUMMARY
OF COMPENSATION
The following table contains information about compensation
received by the named executive officers for the fiscal year
ended September 30, 2007.
Summary
Compensation Table
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All Other
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Salary
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Bonus
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Stock Awards
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)(1)
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($)(2)
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($)(3)
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($)
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Arthur Stern
Executive Vice President
Chairman of the Board
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2007
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370,962
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50,000
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220,340
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0
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641,302
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Gary Stern
President & CEO
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2007
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570,096
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250,000
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220,340
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18,224
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1,058,660
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Mitchell Cohen
Chief Financial Officer
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2007
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260,577
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75,000
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220,340
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16,975
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572,892
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Cameron Williams
Chief Operating Officer(4)
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2007
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16,346
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0
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0
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0
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16,346
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Mary Curtin
Senior Vice President(5)
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2007
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190,577
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70,000
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73,456
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7,500
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341,533
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(1) |
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Bonuses reflected in the table above were awarded in January
2008 for fiscal year ended September 30, 2007. Also
included above is a $50,000 bonus paid to Mr. Cohen during
fiscal year 2007 for his work in connection with the
$300 million portfolio purchase in March 2007. Bonuses paid
in fiscal year 2007 for services provided in fiscal year 2006,
as reported in our 2007 proxy statement, were as follows: |
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Arthur Stern
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$
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50,000
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Gary Stern
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$
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100,000
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Mitchell Cohen
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$
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50,000
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(2) |
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The amounts shown in the Stock Awards column represent the
approximate amount we recognized for financial statement
reporting purposes in fiscal year 2007 for the fair value of
equity awards granted to the named executive officers in fiscal
year 2007 and prior years, in accordance with
SFAS No. 123(R), excluding the impact of estimated
forfeitures related to service-based vesting conditions, as
required by SEC rules. As a result, these amounts do not reflect
the amount of compensation actually received by the named
executive officer during the fiscal year. For a description of
the assumptions used in calculating the fair value of equity
awards under SFAS No. 123(R), see Note A [10] and
Note J of our financial statements in our
Form 10-K
for the year ended September 30, 2007. |
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(3) |
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These amounts consist of: |
matching Company contributions under our 401(k)
plan, and
Life insurance premiums, as follows:
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401(k)
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Life
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Company
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Insurance
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Match
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Premium
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Total
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Name
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Year
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($)
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($)
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($)
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Gary Stern
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2007
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10,000
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8,224
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18,224
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Mitchell Cohen
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2007
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7,500
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9,475
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16,975
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Mary Curtin
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2007
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7,500
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7,500
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(4) |
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Mr. Williams was appointed to the Chief Operating Officer
position on January 8, 2008. Salary represents the period
August 27, 2008 (commencement of employment with the
Company) through September 30, 2008. Salary earned for
period was in the capacity of Vice President
Strategic Initiatives. |
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(5) |
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Ms. Curtin was appointed to the Senior Vice President
position on January 8, 2008. Salary, Bonus and Stock Awards
were in a non-executive capacity. |
11
GRANTS OF
STOCK OPTION AND STOCK AWARDS
The following table provides certain information with respect to
restricted stock awards granted to our Named Executive Officers
during fiscal year 2007. None of the Named Executive Officers
received stock options during fiscal year 2007.
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All Other Stock
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Awards: Number of
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Shares of
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Grant Date Fair
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Stocks or Units
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Value of Stock and
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Name
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Grant Date
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(#)(1)
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Option Awards ($)
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Arthur Stern
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12/19/06
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15,000
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431,250
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Gary Stern
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12/19/06
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15,000
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431,250
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Mitchell Cohen
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12/19/06
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15,000
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431,250
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Cameron Williams
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Mary Curtin
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12/19/06
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5,000
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143,750
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(1) |
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These restricted stock awards vest in three equal annual
installments beginning 90 days after the date of grant. |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
The following table provides information on exercisable and
unexercisable options and unvested stock awards held by the
Named Executive Officers on September 30, 2007.
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Option Awards
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Stock Awards
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Number of
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Securities
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Underlying
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Market Value of
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Unexercised
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Number of Shares or
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Shares or Units of
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Options
|
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Option
|
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Units of Stock That
|
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Stock That
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(#)
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Exercise Price
|
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Option
|
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Have Not Vested
|
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Have Not Vested
|
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Name
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Exercisable
|
|
|
($)
|
|
|
Expiration Date
|
|
|
(#)
|
|
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($)(1)
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|
|
Arthur Stern
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100,000
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|
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2.625
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|
9/18/10
|
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10,000
|
|
|
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383,200
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6,000
|
|
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5.96
|
|
|
|
11/14/11
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
4.725
|
|
|
|
11/1/12
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
14.87
|
|
|
|
11/3/13
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
18.22
|
|
|
|
10/28/14
|
|
|
|
|
|
|
|
|
|
Gary Stern
|
|
|
200,000
|
|
|
|
0.8125
|
|
|
|
6/1/09
|
|
|
|
10,000
|
|
|
|
383,200
|
|
|
|
|
300,000
|
|
|
|
2.625
|
|
|
|
9/18/10
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
5.96
|
|
|
|
11/14/11
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
4.725
|
|
|
|
11/1/12
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
14.87
|
|
|
|
11/3/13
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
18.22
|
|
|
|
10/28/14
|
|
|
|
|
|
|
|
|
|
Mitchell Cohen
|
|
|
20,000
|
|
|
|
16.57
|
|
|
|
9/9/14
|
|
|
|
10,000
|
|
|
|
383,200
|
|
Cameron Williams
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary Curtin
|
|
|
3,334
|
|
|
|
18.76
|
|
|
|
11/16/14
|
|
|
|
3,334
|
|
|
|
127,759
|
|
|
|
|
(1) |
|
Based on $38.32 per share, the closing price of the common stock
as reported by NASDAQ on September 30, 2007. |
12
OPTION
EXERCISES AND VESTING OF RESTRICTED STOCK AWARDS
The following table provides information on option exercises and
vesting of stock awards of Named Executive Officers during the
fiscal year ended September 30, 2007
OPTION
EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Value
|
|
|
Number of
|
|
|
Value
|
|
|
|
Shares
|
|
|
Realized
|
|
|
Shares
|
|
|
Realized
|
|
|
|
Acquired
|
|
|
on
|
|
|
Acquired
|
|
|
on
|
|
|
|
on Exercise
|
|
|
Exercise
|
|
|
on
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
Vesting (#)
|
|
|
($)(2)
|
|
|
Arthur Stern
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
202,300
|
|
Gary Stern
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
202,300
|
|
Mitchell Cohen
|
|
|
10,000
|
|
|
|
201,900
|
|
|
|
5,000
|
|
|
|
202,300
|
|
Cameron Williams
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Mary Curtin
|
|
|
3,333
|
|
|
|
62,260
|
|
|
|
1,666
|
|
|
|
67,406
|
|
|
|
|
(1) |
|
Represents the difference between the market price of the
underlying securities at exercise and the exercise price of the
option. |
|
(2) |
|
Represents the number of shares vested multiplied by the market
value of the shares on the vesting date. |
Employment
Agreements
In January 2007, the Company entered into employment agreements
(each as Employment Agreement) with each of Gary
Stern, the Companys President and Chief Executive Officer,
Arthur Stern, the Companys Executive Vice President and
Mitchell Cohen, the Companys Chief Financial Officer
(each, an Executive). Each of Gary Sterns and
Mitchell Cohens Employment Agreements expire on
December 31, 2009, provided, however, that the parties are
required to provide ninety days prior written notice if
they do not intend to seek an extension or renewal of the
Employment Agreement. Arthur Sterns agreement had a one
year term. If each Employment Agreement is not renewed by the
expiration dates each executive will continue in their
respective roles as officers of the Company at the discretion of
the Board of Directors. In January 2008, the Company entered
into a similar two year employment agreement with Cameron
Williams, and a one year agreement with Arthur Stern.
The following is a summary of the employment agreements in place
between the Company and its Named Executive Officers. The actual
agreements are on file with the Securities and Exchange
Commission.
The employment agreements each provide for a base salary, which
may be increased by the Board in its sole discretion, except
that by June 1, 2009, Mr. Williams base salary
shall equal or exceed $350,000. The base contractual salary for
each Executive Officer under their employment agreements is as
follows:
|
|
|
|
|
Gary Stern
|
|
$
|
577,500
|
|
Arthur Stern
|
|
$
|
355,000
|
|
Cameron Williams
|
|
$
|
300,000
|
|
Mitchell Cohen
|
|
$
|
270,000
|
|
Each executive is eligible to receive bonuses and equity awards
in amounts to be determined by the Compensation Committee of the
Board of Directors. Each executive may also participate in all
of the Companys employee benefit plans and programs
generally available to other employees. Mr. Williams
contract provides that he will be entitled to a cash bonus of up
to $175,000 and a restricted stock grant of up to $175,000 if
all performance goals for 2008 are satisfied at the highest
level set by the Board. If the executives employment is
terminated Without Cause (as such term is defined in
the Employment Agreement), subject to the execution of a general
release agreement by the executive in favor of the Company, the
Company must continue to pay the executive his base salary for
12 months following the effective date of termination and
maintain insurance benefits for that period. (18 months for
Mr. Williams.) Except as provided above, the executive will
not be eligible to participate in the
13
Companys benefit plans and programs as of the last day of
his employment by the Company; provided, however that he will
not be precluded from exercising his rights, if any, under COBRA
or with respect to grants made under the Companys 1995
Stock Option Plan, the 2002 Plan, or the Equity Compensation
Plan, pursuant to the terms of such plans and the applicable
grant agreements thereunder. The Company must provide the
executive either ninety days prior written notice of such
termination Without Cause or an amount equal to ninety
days of his base salary in lieu of such notice of
termination. Each party is required to provide ninety days
prior written notice if it does not intend to seek an extension
or renewal of the Employment Agreement. The term
Cause under the contract includes:
(i) the employees failure or refusal to perform his
duties and responsibilities under the contract or the
Companys policies and procedures (subject to certain cure
rights); (ii) the employees conviction of a felony or
of any crime involving moral turpitude; (iii) the
commission by the employee of a fraudulent, illegal or dishonest
act in connection with the performance of his duties; or
(iv) the commission by the employee of any willful
misconduct or gross negligence which reasonably could be
expected to have the effect of injuring the Company.
If the executives employment with the Company is
terminated for any reason within 180 days following a
change of control of the Company (as such term is
defined in the 2002 Plan), the Company is required to pay:
|
|
|
|
|
a lump sum amount in cash equal to two (2) times the sum of
the executives base salary in effect on the date of
termination and the highest annual bonus earned by the executive
during his employment with the Company, and
|
|
|
|
the executive will continue to receive the benefits and
perquisites as provided in the employment agreement for two
years from the date of termination.
|
If the executive is terminated by the Company Without
Cause prior to the date of a change in control, but the
executive reasonably demonstrates that the termination
(A) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a
change in control or (B) otherwise arose in connection
with, or in anticipation of, a change in control which has been
threatened or proposed, such termination shall be deemed to have
occurred after such change in control occurs. In the event that
any payment that an executive would receive upon termination
would otherwise constitute a parachute payment
under Section 280G of the Internal Revenue Code and be
subject to the excise tax imposed by Section 4999 of the
Code, such payment and benefits will be reduced to an amount
equal to the maximum amount that would avoid such payment.
The executive is also subject to standard non-compete and
confidentially provisions contained in the employment agreement.
The following table describes the potential payments and
benefits upon employment termination for each of our Named
Executive Officers pursuant to applicable law an the terms of
their employment agreements with us, as if their employment had
terminated on September 30, 2007 (the last day of the
fiscal year) under the various scenarios described in the column
headings as explained in the footnotes below: No severance is
paid on a termination with Cause, if the executive terminates
employment, if employment terminates at the end of the
employment period, or if termination is because of death. Upon
disability the individual will be paid his base salary for the
remainder of the agreement from the date of disability.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change-in
|
|
|
|
Termination
|
|
|
Control Trigger
|
|
Name(1)
|
|
Without Cause(2)
|
|
|
Event(3)
|
|
|
Arthur Stern
|
|
$
|
375,000
|
|
|
$
|
850,000
|
|
Gary Stern
|
|
$
|
577,500
|
|
|
$
|
1,355000
|
|
Mitchell Cohen
|
|
$
|
270,000
|
|
|
$
|
690,000
|
|
|
|
|
(1) |
|
Neither Mr. Williams nor Ms. Curtin had an employment
agreement at September 30, 2007. |
|
(2) |
|
Executive is paid for a period of twelve months following
termination date. Chart does not include the value of
12 months continued health, medical and other benefits nor
the effects of the requirement to give 90 days notice of
termination or pay for such 90 day period. |
14
|
|
|
(3) |
|
Executive is paid a lump sum amount in cash equal to two
(2) times the sum of the executives base salary in
effect on the date of termination and the highest annual bonus
earned by the executive during his employment with the Company.
Chart does not include the value of 24 months continued
health, medical and other benefits. |
DIRECTOR
COMPENSATION
Mr. Arthur Stern and Mr. Gary Stern receive no
compensation for serving as directors, except that they, like
all directors, are eligible to be reimbursed for any expenses
incurred in attending Board and committee meetings. During
fiscal year 2007, each director, other than Mr. Arthur
Stern and Mr. Gary Stern, received compensation for serving
on our Board of Directors and committees of the Board as follows:
|
|
|
|
|
a total annual fee of $27,500 per year
|
|
|
|
An annual fee of $6,875 for Chairman of Audit Committee,
|
|
|
|
An annual fee of $5,000 for Chairman of the Compensation
Committee, and
|
|
|
|
a fee of $1,250 for Chairman of the Nominating Committee.
|
These fees have been increased for 2008 as follows:
|
|
|
|
|
Annual fee
|
|
$
|
35,000
|
|
Audit Committee Chair
|
|
$
|
20,000
|
|
Audit Committee Member
|
|
$
|
10,000
|
|
Compensation and Nominating Committee Chair
|
|
$
|
15,000
|
|
Compensation and Nominating Committee Member
|
|
$
|
7,500
|
|
The following table summarizes compensation paid to outside
directors in fiscal 2007:
DIRECTOR
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)
|
|
|
Herman Badillo
|
|
|
27,500
|
|
|
|
23,502
|
|
|
|
44,074
|
|
|
|
95,076
|
|
Edward Celano
|
|
|
28,750
|
|
|
|
23,502
|
|
|
|
44,074
|
|
|
|
96,326
|
(2)
|
Harvey Leibowitz
|
|
|
34,375
|
|
|
|
23,502
|
|
|
|
44,074
|
|
|
|
101,951
|
(3)
|
David Slackman
|
|
|
32,500
|
|
|
|
23,502
|
|
|
|
44,074
|
|
|
|
100,076
|
(4)
|
Alan Rivera
|
|
|
27,500
|
|
|
|
23,502
|
|
|
|
44,074
|
|
|
|
95,076
|
|
Louis Piccolo
|
|
|
27,500
|
|
|
|
23,502
|
|
|
|
44,074
|
|
|
|
95,076
|
|
|
|
|
(1) |
|
The amounts shown in the Stock Awards and Option Awards columns
represents the approximate amount we recognized for financial
statement reporting purposes in fiscal year 2007 for the fair
value of equity awards granted to the outside directors in
fiscal year 2007 and prior years, in accordance with
SFAS No. 123(R), excluding the impact of estimated
forfeitures related to service-based vesting conditions, as
required by SEC rules. As a result, these amounts do not reflect
the amount of compensation actually received by the named
executive officer during the fiscal year. For a description of
the assumptions used in calculating the fair value of equity
awards under SFAS No. 123(R), see Note A [10] and
Note J of our financial statements in our
Form 10-K
for the year ended September 30, 2007. |
|
(2) |
|
Includes $1,250 paid in cash for Chairmanship of the Nominating
Committee |
|
(3) |
|
Includes $6,875 paid in cash for Chairmanship of the Audit
Committee |
|
(4) |
|
Includes $5,000 paid in cash for Chairmanship of the
Compensation Committee |
15
BOARD
ORGANIZATION AND MEETINGS
Composition of the Board of Directors. Since
the adoption of the Sarbanes-Oxley Act in July 2002, there has
been a growing public and regulatory focus on the independence
of directors. Additional requirements relating to independence
are imposed by the Sarbanes-Oxley Act with respect to members of
the Audit Committee. The Board has established procedures
consistent with the Sarbanes-Oxley Act of 2002, the Securities
and Exchange Commission and The NASDAQ Stock Market. The Board
of Directors has also determined that the following members of
the Board satisfy the NASDAQ definition of independence: Edward
Celano, Harvey Leibowitz, David Slackman, Alan Rivera and Louis
A. Piccolo.
During the fiscal year ended September 30, 2007, the Board
of Directors held seven meetings and acted one time by unanimous
consent, the Audit Committee held four meetings, the
Compensation Committee held five meetings and the Nominating
Committee held one meeting. During the 2007 fiscal year, all
members of the Board of Directors attended at least 75% of all
the meetings of the Board of Directors that such Director was
eligible to attend, and committees of the Board of Directors of
which such director was a member. There are three standing
committees of the Board of Directors, each of which is described
below.
Compensation Committee. During the fiscal year
ended September 30, 2007, the Compensation Committee
consisted of David Slackman (Chairman), Harvey Leibowitz and
Alan Rivera. The Compensation Committee is empowered by the
Board of Directors to review the executive compensation of the
Companys officers and directors and to recommend any
changes in compensation to the full Board of Directors.
Compensation Committee Charter. The Board of
Directors has adopted a Compensation Committee charter to govern
its Compensation Committee. The Compensation Committee charter
is filed as Exhibit B to the Companys Proxy Statement.
Audit
Committee Matters
Audit Committee. During the fiscal year ended
September 30, 2007, the Audit Committee consisted of Harvey
Leibowitz (Chairman), David Slackman and Edward Celano. The
Audit Committee is empowered by the Board of Directors to, among
other things: serve as an independent and objective party to
monitor the Companys financial reporting process, internal
control system and disclosure control system; review and
appraise the audit efforts of the Companys independent
accountants; assume direct responsibility for the appointment,
compensation, retention and oversight of the work of the outside
auditors and for the resolution of disputes between the outside
auditors and the Companys management regarding financial
reporting issues; and provide an open avenue of communication
among the independent accountants, financial and senior
management, and the Board of Directors.
Eisner LLP served as the Companys independent registered
public accounting firm during the fiscal year ended
September 30, 2007. A representative of Eisner LLP is
expected to be present at the Annual Meeting to make such
statements as Eisner LLP may desire and will be available to
answer appropriate questions from shareholders.
Audit Committee Financial Expert. The Board of
Directors has determined that Harvey Leibowitz is an audit
committee financial expert as such term is defined by the
Securities and Exchange Commission (SEC). As noted
above, Mr. Leibowitz as well as the other
members of the Audit Committee has been determined
to be independent within the meaning of SEC and
NASDAQ regulations.
Audit Committee Charter. The Audit Committee
performed its duties during fiscal 2007 under a written charter
approved by the Board of Directors. The Audit Committee charter
is filed as Exhibit C to the Companys Proxy Statement.
Independence of Audit Committee Members. The
Companys Common Stock is listed on the NASDAQ Global
Select Market and the Company is governed by the listing
standards applicable thereto. All members of the Audit Committee
of the Board of Directors have been determined to be
independent directors pursuant to the definition
contained in Rule 4200(a)(15) of the National Association
of Securities Dealers Marketplace Rules and under the
SECs
Rule 10A-3.
16
Audit Committee Report. In connection with the
preparation and filing of the Companys Annual Report on
Form 10-K
for the fiscal year ended September 30, 2007:
(1) The Audit Committee reviewed and discussed the audited
financial statements with the Companys management.
(2) The Audit Committee discussed with the Companys
independent registered public accounting firm the matters
required to be discussed by SAS 61, Communication with Audit
Committees, as may be modified or supplemented.
(3) The Audit Committee received and reviewed the written
disclosures and the letter from the Companys independent
registered public accounting firm required by the Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), as may be modified or supplemented, and
discussed with the Companys independent registered public
accounting firm any relationships that may impact their
objectivity and independence and satisfied itself as to the
auditors independence.
Based on 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 2007 Annual Report on
Form 10-K.
Audit Committee Members:
Harvey Leibowitz (Chairman)
David Slackman
Edward Celano
The foregoing report of the Audit Committee is not to be deemed
soliciting material or deemed to be filed with the
SEC or subject to Regulation 14A of the Securities Exchange
Act of 1934, except to the extent specifically requested by the
Company or incorporated by reference in documents otherwise
filed.
Audit Fees. The Company was billed $727,000
for the audit of the Companys annual financial statements
for the year ended September 30, 2007 and for the review of
the financial statements included in the Companys
Quarterly Reports on
Form 10-Q
filed during fiscal 2007. Such fees included the audit of the
Companys evaluation of internal controls as required by
the Sarbanes- Oxley Act of 2002. The Company was billed $491,000
for the audit of the Companys annual financial statements
for the year ended September 30, 2006 and for the review of
the financial statements included in the Companys
Quarterly Reports on
Form 10-Q
filed during fiscal 2006.
Financial Information Systems Design Implementation
Fees. The Company was not billed for and did not
receive any professional services described in Paragraph
(c)(4)(ii) of
Rule 2-01
of the SECs
Regulation S-X
(in general, information technology services) from the
Companys independent registered public accounting firm
during the year ended September 30, 2007 or 2006.
Tax fees and All Other Fees. The Company was
not billed for any tax compliance or any other services by
Eisner LLP during fiscal years 2007 and 2006.
The Audit Committee has approved the engagement of Eisner LLP as
the Companys independent registered public accounting
firm. The Audit Committee requires the Companys
independent registered public accounting firm to advise the
Audit Committee in advance of the independent registered public
accounting firms intent to provide any professional
services to the Company other than services provided in
connection with an audit or a review of the Companys
financial statements. The Audit Committee shall approve, in
advance, any non-audit services to be provided to the Company by
the Companys independent registered public accounting firm.
Other Matters. No other matters were
considered by the Audit Committee of the Board of Directors.
Of the time expended by the Companys independent
registered public accounting firm to audit the Companys
financial statements for the fiscal year ended
September 30, 2007, less than 50% of such time involved
work performed by persons other than the principal
accountants full-time, permanent employees.
17
Nominating
Committee Matters
Nominating Committee. During the fiscal year
ended September 30, 2007 the Nominating Committee consisted
of Edward Celano (Chairman), Louis Piccolo, and Alan Rivera. The
Nominating Committee is empowered by the Board of Directors to,
among other things, recommend to the Board of Directors
qualified individuals to serve on the Companys Board of
Directors and to identify the manner in which the Nominating
Committee evaluates nominees recommended for the Board.
Nominating Committee Charter. The Board of
Directors has adopted a Nominating Committee charter to govern
its Nominating Committee. The Nominating Committee charter is
filed as Exhibit D to the Companys Proxy Statement.
In January 2008, the Board determined to re-name this committee
to the Nominating and Corporate Governance Committee and to
expand its functions. The Committee is in process of developing
a new charter.
Independence of Nominating Committee
Members. All members of the Nominating Committee
of the Board of Directors have been determined to be
independent directors pursuant to the definition
contained in Rule 4200(a)(15) of the National Association
of Securities Dealers Marketplace rules.
Procedures for Considering Nominations Made by
Shareholders. The Nominating Committees
charter and guidelines developed by the Nominating Committee
describe procedures for nominations to be submitted by
shareholders and other third-parties, other than candidates who
have previously served on the Board of Directors or who are
recommended by the Board of Directors. The guidelines state that
a nomination must be delivered to the Secretary of the Company
at the principal executive offices of the Company not later than
the close of business on the 90th day nor earlier than the
close of business on the 120th day prior to the first
anniversary of the preceding years annual meeting;
provided, however , that if the date of the annual
meeting is more than 30 days before or more than
60 days after such anniversary date, notice to be timely
must be so delivered not earlier than the close of business on
the 120th day prior to such annual meeting and not later
than the close of business on the later of the 90th day
prior to such annual meeting or the close of business on the
10th day following the day on which public announcement of
the date of such meeting is first made by the Company. The
public announcement of an adjournment or postponement of an
annual meeting will not commence a new time period (or extend
any time period) for the giving of a notice as described above.
The guidelines require a nomination notice to set forth as to
each person whom the proponent proposes to nominate for election
as a director: (a) all information relating to such person
that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such
persons written consent to being named in the proxy
statement as a nominee and to serving as a director it elected)
and (b) information that will enable the Nominating
Committee to determine whether the candidate or candidates
satisfy the criteria established pursuant to the charter and the
guidelines for director candidates.
Qualifications. The charter and guidelines
developed by the Nominating Committee describe the minimum
qualifications for nominees and the qualities or skills that are
necessary for directors to possess. Each nominee:
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must satisfy any legal requirements applicable to members of the
Board of Directors;
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must have business or professional experience that will enable
such nominee to provide useful input to the Board of Directors
in its deliberations;
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must have a reputation, in one or more of the communities
serviced by the Company, for honesty and ethical conduct;
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must have a working knowledge of the types of responsibilities
expected of members of the board of directors of a public
company; and
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must have experience, either as a member of the board of
directors of another public or private company or in another
capacity, which demonstrates the nominees capacity to
serve in a fiduciary position.
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Identification and Evaluation of Candidates for the
Board. Candidates to serve on the Board of
Directors will be identified from all available sources,
including recommendations made by shareholders. The guidelines
18
developed by the Nominating Committee provide that there will be
no differences in the manner in which the Nominating Committee
evaluates nominees recommended by shareholders and nominees
recommended by the Committee or management, except that no
specific process shall be mandated with respect to the
nomination of any individuals who have previously served on the
Board of Directors. The evaluation process for individuals other
than existing Board members will include:
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a review of the information provided to the Nominating Committee
by the proponent;
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a review of reference letters from at least two sources
determined to be reputable by the Nominating Committee; and
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a personal interview of the candidate,
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together with a review of such other information as the
Nominating Committee shall determine to be relevant.
Third Party Recommendations. In connection
with the 2008 Annual Meeting, the Nominating Committee did not
receive any nominations from any shareholder or group of
shareholders which owned more than 5% of the Companys
Common Stock for at least one year.
STOCK
OPTION AND STOCK AWARD PLANS
Equity
Compensation Plan
On December 1, 2005, the Board of Directors adopted the
Companys Equity Compensation Plan (the Equity
Compensation Plan), which was approved by the stockholders
of the Company on March 1, 2006. The Equity Compensation
Plan was adopted to supplement the Companys existing 2002
Stock Option Plan. In addition to permitting the grant of stock
options as are permitted under the 2002 Stock Option Plan, the
Equity Compensation Plan allows the Company flexibility with
respect to equity awards by also providing for grants of stock
awards (i.e. restricted or unrestricted), stock purchase rights
and stock appreciation rights. The Company has
1,000,000 shares of Common Stock authorized under the
Equity Compensation Plan, with 932,000 available for awards as
of December 31, 2007. The following description does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Equity Compensation Plan,
which is included as an exhibit to the Companys reports
filed with the SEC.
The general purpose of the Equity Compensation Plan is to
provide an incentive to our employees, directors and
consultants, including executive officers, employees and
consultants of any subsidiaries, by enabling them to share in
the future growth of our business. The Board of Directors
believes that the granting of stock options and other equity
awards promotes continuity of management and increases incentive
and personal interest in the welfare of the Company by those who
are primarily responsible for shaping and carrying out our long
range plans and securing our growth and financial success.
The Board believes that the Equity Compensation Plan will
advance the Companys interests by enhancing our ability to
(a) attract and retain employees, directors and consultants
who are in a position to make significant contributions to our
success; (b) reward employees, directors and consultants
for these contributions; and (c) encourage employees,
directors and consultants to take into account our long-term
interests through ownership of our shares.
2002
Stock Option Plan
On March 5, 2002, the Board of Directors adopted the Asta
Funding, Inc. 2002 Stock Option Plan (the 2002
Plan), which plan was approved by the Companys
stockholders on May 1, 2002. The 2002 Plan was adopted in
order to attract and retain qualified directors, officers and
employees of, and consultants to, the Company. The following
description does not purport to be complete and is qualified in
its entirety by reference to the full text of the 2002 Plan,
which is included as an exhibit to the Companys reports
filed with the SEC.
19
The 2002 Plan authorizes the granting of incentive stock options
(as defined in Section 422 of the Code) and non-qualified
stock options to eligible employees of the Company, including
officers and directors of the Company (whether or not employees)
and consultants of the Company.
The Company has 1,000,000 shares of Common Stock authorized
for issuance under the 2002 Plan and 393,334 shares were
available as of September 30, 2007. Future grants under the
2002 Plan have not yet been determined.
1995
Stock Option Plan
The 1995 Stock Option Plan expired on September 14, 2005.
The plan was adopted in order to attract and retain qualified
directors, officers and employees of, and consultants, to the
Company. The following description does not purport to be
complete and is qualified in its entirety by reference to the
full text of the 1995 Stock Option Plan, which is included as an
exhibit to the Companys reports filed with the SEC.
The 1995 Stock Option Plan authorized the granting of incentive
stock options (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the Code)) and
non-qualified stock options to eligible employees of the
Company, including officers and directors of the Company
(whether or not employees) and consultants to the Company.
The Company authorized 1,840,000 shares of Common Stock
authorized for issuance under the 1995 Stock Option Plan. All
but 96,002 shares were utilized. As of September 14,
2005, no more options could be issued under this plan.
EQUITY
COMPENSATION PLAN INFORMATION
The following table gives information about the Companys
Common Stock that may be issued upon the exercise of options,
warrants and rights under the Companys Equity Compensation
Plan and 2002 Stock Option Plan, as of September 30, 2007.
These plans were the Companys only equity compensation
plans in existence as of September 30, 2007. The 1995 Stock
Option Plan expired September 14, 2005.
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(c)
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Number of Securities
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(a)
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Remaining Available for
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Number of Securities
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(b)
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Future Issuance Under
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to Be Issued Upon
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Weighted-Average
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Equity Compensation
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Exercise of
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Exercise Price of
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Plans (Excluding
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Outstanding Options,
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Outstanding Options,
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Securities Reflected in
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Plan Category
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Warrants and Rights
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Warrants and Rights
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Column (a))
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Equity Compensation Plans Approved by Shareholders
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1,337,438
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$
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9.39
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1,325,334
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Equity Compensation Plans Not Approved by Shareholders
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Total
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1,337,438
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$
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9.39
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1,325,334
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SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys directors, executive officers and
persons holding more than 10% of a registered class of the
equity securities of the Company to file with the SEC and to
provide the Company with initial reports of ownership, reports
of changes in ownership and annual reports of ownership of
Common Stock and other equity securities of the Company. Based
solely upon a review of such reports furnished to the Company,
the Company believes that all such Section 16(a) reporting
requirements were timely fulfilled during the fiscal year ended
September 30, 2007, except for a Form 3 filed
September 13, 2007 by Cameron Williams, currently the Chief
Operating Officer of the Company, announcing the commencement of
his employment with the Company on August 27, 2007.
20
CERTAIN
RELATED PARTY TRANSACTIONS
The Company has entered into employment agreements with its
executive officers. See Executive Compensation
Employment Agreements.
Transactions with officers, directors and affiliates of the
Company are anticipated to be minimal and will be approved by a
majority of the Board of Directors, including a majority of the
disinterested members of the Board of Directors, and will be
made on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
On March 1, 2006, the Company entered into a consulting
agreement with Herman Badillo, Esq. a director of the
Company. Mr. Badillo has extensive experience regarding
matters related to the Companys business and the Company
seeks to benefit from Mr. Badillos expertise by
retaining him as a consultant. The Company pays Mr. Badillo
the sum of $5,000 per month with an initial payment of $15,000
paid upon execution of the agreement.
STOCKHOLDER
PROPOSALS
SEC regulations permit shareholders to submit proposals for
consideration at annual meetings of shareholders. Any such
proposals for the Companys Annual Meeting of Shareholders
to be held in 2009 must be submitted to the Company on or before
September 30, 2008, and must comply with applicable
regulations of the SEC in order to be included in proxy
materials relating to that meeting. If a shareholder notifies
the Company after December 14, 2008, of an intent to
present a proposal at the Companys Annual Meeting of
Shareholders to be held in 2009, the Company will have the right
to exercise its discretionary voting authority with respect to
such proposal, if presented at the meeting, without including
information regarding such proposal in its proxy materials.
The Board of Directors has established a procedure that enables
shareholders to communicate in writing with members of the Board
of Directors. Any such communication should be addressed to
Mitchell Cohen, Chief Financial Officer and Secretary, Asta
Funding, Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey
07632. Any such communication must state, in a conspicuous
manner, that it is intended for distribution to the entire Board
of Directors. Under the procedures established by the Board of
Directors, upon the Secretarys receipt of such a
communication, the Companys Secretary will send a copy of
such communication to each member of the Board of Directors,
identifying it as a communication received from a shareholder.
Absent unusual circumstances, at the next regularly scheduled
meeting of the Board of Directors held more than two days after
such communication has been distributed, the Board of Directors
will consider the substance of any such communication.
Pursuant to a policy adopted by the Board, Board members are
required to attend the Companys annual meeting of
shareholders. Each of the members of the Board of Directors
attended the Companys 2007 annual meeting of shareholders.
OTHER
MATTERS
The Board of Directors does not know of any matters, other than
those referred to in the accompanying Notice of the Annual
Meeting, to be presented at the Meeting for action by the
stockholders. However, if any other matters are properly brought
before the Meeting or any adjournments thereof, it is intended
that votes will be cast with respect to such matters, pursuant
to the proxies, in accordance with the best judgment of the
person acting under the proxies.
The Company will provide without charge to each person being
solicited by this Proxy Statement, on the written request of any
such person, a copy of the Annual Report of the Company on
Form 10-K,
for the fiscal year
21
ended September 30, 2007 (as filed with the SEC), including
the financial statements thereto. All such requests should be
directed to the Secretary of Asta Funding, Inc., 210 Sylvan
Avenue, Englewood Cliffs, New Jersey 07632.
By Order of the Board of Directors
Mitchell Cohen
Chief Financial Officer and Secretary
A COPY OF THE COMPANYS ANNUAL REPORT ON
FORM 10-K,
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2007 ACCOMPANIES THIS
PROXY STATEMENT. THIS REPORT IS NOT TO BE REGARDED AS PROXY
SOLICITING MATERIAL OR AS A COMMUNICATION BY MEANS OF WHICH ANY
SOLICITATION IS TO BE MADE.
22
Exhibit A
CODE OF
ETHICS
FOR
SENIOR FINANCIAL OFFICERS
Section 1. Purpose.
The Board of Directors (the Board) of Asta Funding,
Inc. (the Company) has adopted the following Code of
Ethics (the Code) to apply to the Companys
Chief Executive Officer; Chief Financial Officer; Chief
Accounting Officer; Controller; and Treasurer (the Senior
Financial Officers). This Code is intended to focus Senior
Financial Officers on areas of ethical risk, provide guidance to
help them recognize and deal with ethical issues, provide
mechanisms to report unethical conduct, foster a culture of
honesty and accountability, deter wrongdoing and promote fair
and accurate disclosure and financial reporting.
No code or policy can anticipate every situation that may arise.
Accordingly, this Code is intended to serve as a source of
guiding principles. Senior Financial Officers are encouraged to
bring questions about particular circumstances that may involve
one or more of the provisions of this Code to the attention of
the Chair of the Audit Committee, who may consult with inside or
outside legal counsel as appropriate.
Section 2. Introduction
Each Senior Financial Officer is expected to adhere to a high
standard of ethical conduct. The good name of the Company
depends on the way Senior Financial Officers conduct business
and the way the public perceives that conduct. Unethical
actions, or the appearance of unethical actions, are not
acceptable. Senior Financial Officers are expected to be guided
by the following principles in carrying out their
responsibilities.
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Loyalty. Senior Financial Officers should not be, or appear to
be, subject to influences, interests or relationships that
conflict with the best interests of the Company.
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Compliance with Applicable Laws. Senior Financial Officers are
expected to comply with all laws, rules and regulations
applicable to the Companys activities.
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Observance of Ethical Standards. Senior Financial Officers must
adhere to high ethical standards in the conduct of their duties.
These include honesty and fairness.
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Section 3. Integrity
of Records and Financial Reporting.
Senior Financial Officers are responsible for the accurate and
reliable preparation and maintenance of the Companys
financial records. Accurate and reliable preparation of
financial records is of critical importance to proper management
decisions and the fulfillment of the Companys financial,
legal and reporting obligations. Diligence in accurately
preparing and maintaining the Companys records allows the
Company to fulfill its reporting obligations and to provide
stockholders, governmental authorities and the general public
with full, fair, accurate, timely and understandable disclosure.
Senior Financial Officers are responsible for establishing and
maintaining adequate disclosure controls and procedures, and
internal controls and procedures, including procedures that are
designed to enable the Company to: (a) accurately document
and account for transactions on the books and records of the
Company; and (b) maintain reports, vouchers, bills,
invoices, payroll and service records, business measurement and
performance records and other essential data with care and
honesty.
Senior Financial Officers shall immediately bring to the
attention of the Audit Committee any information they may have
concerning:
(a) Defects, deficiencies, or discrepancies related to the
design or operation of internal controls which may affect the
Companys ability to accurately record, process, summarize,
report and disclose its financial data or
(b) Any fraud, whether or not material, that involves
management or other employees who have roles in the
Companys financial reporting, disclosures or internal
controls.
A-1
Section 4. Conflict
of Interest.
Senior Financial Officers must avoid any conflicts of interest
between themselves and the Company. Any situation that involves,
or may involve, a conflict of interest with the Company, should
be disclosed promptly to the Chair of the Audit Committee, who
may consult with inside or outside legal counsel as appropriate.
A conflict of interest can occur when an
individuals personal interest is adverse to or
may appear to be adverse to the interests of the
Company as a whole. Conflicts of interest also arise when an
individual, or a member of his or her family, receives improper
personal benefits as a result of his or her position with the
Company.
This Code does not attempt to describe all possible conflicts of
interest which could develop. Some of the more common conflicts
from which Senior Financial Officers must refrain, however, are
set forth below:
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Improper conduct and activities. Senior Financial Officers may
not engage in any conduct or activities that are inconsistent
with the Companys best interests or that disrupt or impair
the Companys relationship with any person or entity with
which the Company has, or proposes to enter into, a business or
contractual relationship.
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Compensation from non-Company sources. Senior Financial Officers
may not accept compensation for services performed for the
Company from any source other than the Company. Senior Financial
Officers should obtain the approval of the Audit Committee prior
to accepting any paid employment or consulting position with
another entity.
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Gifts. Senior Financial Officers and members of their immediate
families may not accept gifts from persons or entities where any
such gift is being made in order to influence their actions in
their position with the Company, or where acceptance of the
gifts could create the appearance of a conflict of interest.
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Personal use of Company assets. Senior Financial Officers may
not use Company assets, labor or information for personal use,
other than incidental personal use, unless approved by the Chair
of the Audit Committee or as part of a compensation or expense
reimbursement program.
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Financial Interests in other Businesses. Senior Financial
Officers should avoid having an ownership interest in any other
enterprises, such as a customer, supplier or competitor if that
interest compromises the officers loyalty to the Company.
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Section 5. Corporate
Opportunities.
Senior Financial Officers are prohibited from: (a) taking
for themselves personally opportunities related to the
Companys business without first presenting those
opportunities to the Company and obtaining approval from the
Board; (b) using the Companys property, information,
or position for personal gain; or (c) competing with the
Company for business opportunities.
Section 6. Confidentiality.
Senior Financial Officers should maintain the confidentiality of
information entrusted to them by the Company and any other
confidential information about the Company, its business or
finances, customers or suppliers that comes to them, from
whatever source, except when disclosure is authorized or legally
mandated. For purposes of this Code, confidential
information includes all non-public information relating
to the Company, its business or finances, customers or suppliers.
Section 7. Compliance
with Laws, Rules and Regulations.
Senior Financial Officers shall comply with laws, rules and
regulations applicable to the Company, including insider trading
laws, and all other Company policies. Transactions in Company
securities are governed by the Companys Insider Trading
Policy.
Section 8. Encouraging
the Reporting of Any Illegal or Unethical Behavior.
Senior Financial Officers must promote ethical behavior and
create a culture of ethical compliance. Senior Financial
Officers should foster an environment in which the Company:
(a) encourages employees to talk to supervisors, managers
and other appropriate personnel when in doubt about the best
course of action in a particular
A-2
situation; (b) encourages employees to report violations of
laws, rules and regulations to appropriate personnel; and
(c) informs employees that the Company will not allow
retaliation for reports made in good faith.
Section 9. Conclusion.
Senior Financial Officers should communicate any suspected
violations of this Code promptly to the Chair of the Audit
Committee. The Board or a person or persons designated by the
Board will investigate violations, and appropriate disciplinary
action will be taken by the Board in the event of any violation
of the Code, up to and including termination. Only the Audit
Committee may grant any waivers of this policy.
A-3
Exhibit B
ASTA
FUNDING, INC.
COMPENSATION COMMITTEE CHARTER
Purpose
The Compensation Committee of Asta Funding, Inc. (the
Corporation) is appointed by the Board
of Directors to assist the Board in carrying out the
Boards responsibilities relating to compensation of the
Corporations directors and officers. The Compensation
Committee has overall responsibility for evaluating and
approving the director and officer compensation plans, policies
and programs of the Corporation.
The Compensation Committee is also responsible for producing an
annual report on executive compensation for inclusion in the
Corporations proxy statement, in accordance with
applicable rules and regulations.
Composition
The Compensation Committee shall consist of no fewer than two
members. Each member of the Compensation Committee must
(i) be an independent director of the Corporation
satisfying the independence requirements of the NASDAQ and other
applicable regulatory requirements; (ii) qualify as an
outside director under Section 162(m) of the
Internal Revenue Code, as amended; and (iii) meet the
requirements of a non-employee director for purposes
of Section 16 of the Securities Exchange Act of 1934, as
amended.
The Board of Directors shall appoint the members of the
Compensation Committee. Subject to earlier removal by the Board
of Directors, each member shall serve until he or she is no
longer a director of the Corporation, and until his or her
successor shall have been duly elected and qualified. A
Compensation Committee member may be removed by the Board of
Directors at any time in its discretion, whereupon the resulting
vacancy shall be filled by the Board of Directors upon
recommendation of the Nominating Committee. The Compensation
Committee members shall elect a chairperson by a vote of a
majority of the full Compensation Committee, or, if the members
have failed to do so, then the Board of Directors shall
designate a chairperson.
The Compensation Committee may form and delegate authority to
subcommittees of the Compensation Committee when appropriate.
Structure
and Meetings
The Compensation Committee shall meet not less than one time per
year. The chairperson of the Compensation Committee shall
preside at each meeting of the Compensation Committee, except
that in the absence of the chairperson at any particular
meeting, then the Compensation Committee member designated by
the chairperson shall preside at such meeting. The chairperson
shall, after consultation with the other members of the
Compensation Committee, (i) determine the dates, times and
places for meetings of the Compensation Committee, and
(ii) set the agenda for each meeting. A majority of the
total number of Compensation Committee members then in office
shall constitute a quorum for the transaction of committee
business and all matters to be decided by the Compensation
Committee shall be decided by the affirmative vote of a majority
of the members present in person or by proxy at a duly called
meeting of the Compensation Committee.
Duties
and Responsibilities
The Compensation Committee shall have the following power,
authority and direct responsibilities:
1 Review and approve annually corporate goals and
objectives relevant to the compensation of the
Corporations Chief Executive Officer (CEO),
annually evaluate the CEOs performance in light of those
goals and objectives, and, consistent with the requirements of
any employment agreement, recommend the CEOs compensation
levels based on this evaluation. The CEO shall not be permitted
to be present during voting or deliberations relating to CEO
compensation.
B-1
2 Make recommendations to the Board with respect to
director and non-CEO officer compensation, incentive
compensation plans and equity-based plans. The CEO may, at the
discretion of the Compensation Committee, be permitted to be
present during voting or deliberations relating to non-CEO
compensation.
3 Produce a Compensation Committee Report on executive
compensation and participate in the production of the
Compensation Discussion and Analysis as required by the SEC to
be included in the Corporations annual proxy statement or
annual report on
Form 10-K
filed with the SEC.
4 Annually review and recommend to the Board the following
items with respect to the CEO and the executive officers of the
Corporation (as defined by Section 16 and
Rule 16a-1(f)
of the Securities and Exchange Act of 1934): (a) the annual
base salary level, (b) the annual incentive opportunity
level, (c) the long-term incentive opportunity level,
(d) employment agreements, severance agreements, and change
in control agreements/provisions, in each case as, when and if
appropriate, and (e) any special or supplemental benefits,
in each case subject to the terms of any existing applicable
employment agreement terms.
5 Make regular reports to the Board.
6 Annually review and reassess the adequacy of this Charter
and recommend to the Board for approval any proposed changes to
this Charter.
7 Perform such other duties and responsibilities as may be
assigned to the Compensation Committee from time to time by the
Board of Directors, including without limitation:
8 Periodic analysis of, and recommendations to the Board of
Directors with respect to, the functions, duties and
responsibilities of each of the executive officers of the
Corporation;
9 Oversight and analysis of, and recommendations to the
Board of Directors with respect to, the Corporations
policies regarding the engagement, advancement, promotion,
reassignment and termination of its executive officers;
10 The implementation and administration of the
Corporations incentive and equity-based compensation plans
to the extent permitted by such plans;
11 Review and make recommendations to the Board of
Directors on (i) the competitiveness of the
Corporations compensation and benefit plans for directors
and key management employees and the employee relations policies
and procedures applicable to key management employees; and
(ii) such other matters relating to the organization of the
Corporation and the compensation of executive officers and key
management employees as the Compensation Committee may in its
own discretion deem desirable.
Operating
Policies
1 The Compensation Committee shall keep the minutes of all
Compensation Committee meetings (designating in its discretion
an individual to record the minutes) and approve the minutes by
subsequent action. The Compensation Committee shall circulate
the approved minutes of the Compensation Committee meetings to
the full Board of Directors for review.
2 The Compensation Committee shall determine its rules of
procedure in accordance with the Corporations principles
of corporate governance and its Bylaws.
3 At each regular meeting of the Board of Directors held
following a Compensation Committee meeting, the Compensation
Committee shall report to the Board of Directors regarding the
actions, activities and findings of the Compensation Committee
since the last Board of Directors meeting, as well as any
recommendations for action by the Board of Directors, when
appropriate.
4 In discharging its responsibilities, the Compensation
Committee shall have full access to any relevant records of the
Corporation and may also request that any officer or employee of
the Corporation or the Corporations outside counsel meet
with members of, or consultants to, the Compensation Committee.
5 The Compensation Committee shall have the authority to
engage such compensation consultants and counsel as it deems
necessary or desirable from time to time to discharge its
functions.
B-2
Exhibit C
ASTA
FUNDING, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee shall assist the Board of Directors (the
Board) of Asta Funding, Inc. (Asta) in
fulfilling its oversight responsibility by reviewing the
accounting and financial reporting processes of Asta and its
subsidiaries (collectively, the Company), the
Companys system of internal controls regarding finance,
accounting, legal compliance and ethics, and the audits of the
Companys financial statements. In so doing, it is the
responsibility of the Audit Committee to maintain free and open
means of communications among the Companys Board of
Directors, outside auditors and senior management. The Audit
Committees primary responsibilities and duties are:
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Serve as an independent and objective party to monitor the
Companys financial reporting process, internal control
system and disclosure control system.
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Review and appraise the audit efforts of the Companys
independent accountants.
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Assume direct responsibility for the appointment, compensation,
retention and oversight of the work of the outside auditors and
for the resolution of disputes between the outside auditors and
the Companys management regarding financial reporting
issues.
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Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board.
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The Audit Committee will primarily fulfill these
responsibilities by carrying out the activities identified in
Section IV of this Charter.
The Company shall be responsible for the providing the Audit
Committee with appropriate funding, as determined by the Audit
Committee, in order to compensate the outside auditors and
advisors engaged by or employed by the Audit Committee.
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II.
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COMPOSITION
OF THE AUDIT COMMITTEE
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The Audit Committee shall consist of at least three
independent Directors of Asta and shall serve at the
pleasure of the Board. An independent Director is
defined as an individual who (a) is not an officer or
salaried employee or an affiliate of the Company, (b) does
not have any relationship that, in the opinion of the Board,
would interfere with his or her exercise of independent judgment
as an Audit Committee member, (c) meets the independence
requirements of the Securities and Exchange Commission (the
SEC) and the NASDAQ Stock Market or such other
securities exchange or market on which Astas securities
are traded and (d) except as permitted by the SEC and the
NASDAQ Stock Market or such other securities exchange or market
on which Astas securities are traded, does not accept any
consulting, advisory or other compensatory fee from the Company.
At least one member of the Audit Committee shall be a
financial expert as defined by the SEC and the
NASDAQ Stock Market or such other securities exchange or market
on which Astas securities are traded. Each Audit Committee
member must be able to read and understand financial statements,
including a balance sheet, income statement, and cash flow
statement.
The members of the Audit Committee shall be designated by the
full Board from time to time. The Board shall designate one
member of the Audit Committee to serve as chairperson of the
committee.
III. MEETINGS
AND MINUTES
The Audit Committee shall meet at least quarterly, with
additional meetings if circumstances require, for the purpose of
satisfying its responsibilities. The Audit Committee shall
maintain minutes of each meeting of the Audit
C-1
Committee and shall report the actions of the Audit Committee to
the Board with such recommendations as the Audit Committee deems
appropriate.
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IV.
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RESPONSIBILITIES
AND DUTIES OF THE AUDIT COMMITTEE
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The Audit Committee shall oversee and monitor the Companys
accounting and financial reporting process, internal control
system and disclosure control system, review the audits of the
Companys financial statements and review and evaluate the
performance of the Companys outside auditors. In
fulfilling these duties and responsibilities, the Audit
Committee shall take the following actions, in addition to
performing such functions as may be assigned by law, the
Companys certificate of incorporation, the Companys
bylaws or the Board.
1. The Audit Committee shall assume direct responsibility
for the appointment, retention and oversight of the work of the
outside auditors and, when appropriate, the replacement of the
outside auditors. As part of the audit process, the Audit
Committee shall meet with the outside auditors to discuss and
decide the audits scope. The Audit Committee shall
determine that the outside audit team engaged to perform the
external audit consists of competent, experienced, auditing
professionals. The Audit Committee shall also review and approve
the compensation to be paid to the outside auditors and shall be
authorized to compensate the outside auditors.
2. The Audit Committee shall take, or recommend that the
full Board take, appropriate action to ensure the independence
of the outside auditors. The Audit Committee shall require the
outside auditors to advise the Company of any fact or
circumstances that might adversely affect the outside
auditors independence or judgment with respect to the
Company under applicable auditing standards. The Audit Committee
shall require the outside auditors to submit, on an annual
basis, a formal written statement setting forth all
relationships between the outside auditors and the Company that
may affect the objectivity and independence of the outside
auditors. Such statement shall confirm that the outside auditors
are not aware of any conflict of interest prohibited by
Section 10A(l) of the Securities Exchange Act of 1934 (the
Exchange Act). The Audit Committee shall actively
engage in a dialogue with the outside auditors with respect to
any disclosed relationships or services that may impact the
objectivity and independence of the outside auditors.
3. The Audit Committee shall require the outside auditors
to advise the Audit Committee in advance in the event that the
outside auditors intend to provide any professional services to
the Company other than services provided in connection with an
audit or a review of the Companys financial statements
(non-audit services); provided that such non-audit
services are not listed in Section 10A(g) of the Exchange
Act (prohibited services). The Audit Committee shall
approve, in advance, any non-audit services to be provided to
the Company by the Companys outside auditing firm.
4. The Audit Committee shall obtain confirmations from time
to time from the Companys outside auditing firm that such
firm is not providing to the Company (i) any prohibited
services, or (ii) any other non-audit service or any
auditing service that has not been approved in advance by the
Audit Committee. The Audit Committee shall have the authority to
approve the provision of non-audit services that have not been
pre-approved by the Audit Committee, but only to the extent that
such non-audit services qualify under the de minimus
exception set forth in Section 10A(i)(1)(B) of the Exchange
Act. The Audit Committee shall record in its minutes and report
to the Board all approvals of non-audit services granted by the
Audit Committee.
5. The Audit Committee shall meet with the outside
auditors, with no management in attendance, to openly discuss
the quality of the Companys accounting principles as
applied in its financial reporting, including issues such as
(a) the appropriateness, not just the acceptability, of the
accounting principles and financial disclosure practices used or
proposed to be used by the Company, (b) the clarity of the
Companys financial disclosures and (c) the degree of
aggressiveness or conservatism that exists in the Companys
accounting principles and underlying estimates and other
significant decisions made by the Companys management in
preparing the Companys financial disclosures. The Audit
Committee shall then meet, without operating management or the
outside auditors being present, to discuss the information
presented to it.
6. The Audit Committee shall meet with the outside auditors
and management to review the Companys quarterly reports on
Form 10-Q
and annual report on
Form 10-K
and discuss any significant adjustments, management judgments
and accounting estimates and any significant new accounting
policies before such forms
C-2
are filed with the SEC. The Audit Committee shall require the
outside auditors to report to the Audit Committee all critical
accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with the
Companys management, ramifications of the use of such
alternative disclosures and treatments, the treatments preferred
by the outside auditors and other material written
communications between the outside auditors and the
Companys management, including managements letters
and schedules of unadjusted differences.
7. Upon the completion of the annual audit, the Audit
Committee shale review the audit findings reported to it by the
outside auditors, including any comments or recommendations of
the outside auditors, with the entire Board.
8. The Audit Committee shall review all reports received
from the federal and state regulatory authorities and assure
that the Board is aware of the findings and results. In
addition, it will meet with the appropriate members of senior
management designated by the Audit Committee to review the
responses to the respective regulatory reports.
9. The Audit Committee shall consider and review with
management: (a) significant findings during the year and
managements responses thereto, including the status of
previous audit recommendations and (b) any difficulties
encountered in the course of their audits, including any
restrictions on the scope of activities or access to required
information.
10. The Audit Committee shall consider and approve, if
appropriate, changes to the Companys auditing and
accounting principles and practices, as suggested by the outside
auditors or management, and the Audit Committee shall review
with the outside auditors and management the extent to which
such changes have been implemented (to be done at an appropriate
amount of time prior to the implementation of such changes as
decided by the Audit Committee).
11. The Audit Committee shall prepare a letter for
inclusion in the Companys proxy statement describing the
discharge of the Audit Committees responsibilities.
12. The Audit Committee will review and update this Charter
periodically, at least annually, and as conditions may dictate.
The Audit Committee Charter shall be presented to the full Board
for its approval of any changes.
13. Commencing on such date as Section 102(a) of the
Sarbanes-Oxley Act of 2002 (the Act) becomes
effective, the Audit Committee shall obtain confirmation from
the outside auditors at the commencement of each audit that such
firm is a registered public accounting firm as such
term is defined under the Act.
14. The Audit Committee shall have the authority to engage
independent counsel and other advisers as it determines
necessary to perform its duties.
15. The Audit Committee shall establish procedures for
(i) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal
accounting controls or auditing matters and (ii) the
confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing
matters.
16. The Audit Committee shall investigate or consider such
other matters within the scope of its responsibilities and
duties as the Audit Committee may, in its discretion, determine
to be advisable.
C-3
Exhibit D
ASTA
FUNDING, INC.
NOMINATING COMMITTEE CHARTER
PURPOSE
OF THE NOMINATING COMMITTEE
The purpose of the Nominating Committee is:
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to identify qualified individuals for membership on the
Companys board of directors; and
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to recommend to the board the director nominees for election at
the next annual meeting of stockholders.
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MEMBERSHIP
OF THE NOMINATING COMMITTEE
The Nominating Committee:
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shall consist of not less than three members of the board of
directors, the exact number to be established by the board of
directors from time to time;
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members shall consist solely of individuals who meet the
independence standards set forth in Securities and Exchange
Commission rules and in the listing standards applicable to the
Company; and
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members shall be appointed and may be removed by the board of
directors.
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DUTIES OF
THE NOMINATING COMMITTEE
The Nominating Committee shall:
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establish general criteria for identifying and selecting
individuals who may be nominated for election to the board of
directors, which criteria shall
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reflect, at a minimum, all applicable laws, rules, regulations
and listing standards applicable to the Company, and
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include, without limitation, a potential candidates
experience, areas of expertise and other factors relative to the
overall composition of the board of directors;
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annually review the size, composition and needs of the board of
directors and make recommendations to the board;
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recommend to the board of directors the director nominees for
election at the next annual meeting of stockholders;
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consider and recommend candidates for appointment to the board
to the extent vacancies arise between annual meetings of
stockholders;
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consider director candidates submitted by stockholders, in
accordance with guidelines developed by the Nominating
Committee; and
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annually review the Nominating Committee charter and recommend
to the board any changes it deems necessary or desirable.
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D-1
MEETINGS
OF THE NOMINATING COMMITTEE
The Nominating Committee shall meet as often as necessary to
carry out it responsibilities, but not less than once each year.
At the discretion of the chairperson of the Nominating
Committee, but at least once each year, the members of the
Nominating Committee shall meet in executive session, without
any members of management present.
ADDITIONAL
AUTHORITY OF THE NOMINATING COMMITTEE
The Nominating Committee shall have the authority to do the
following, in its discretion, to the extent it deems appropriate
in carrying out its duties under this Charter:
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delegate any of its responsibilities to a subcommittee or
subcommittees; and
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retain outside counsel and other advisors.
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D-2
PROXY
ASTA FUNDING, INC.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 4,
2008
The undersigned hereby appoints Gary Stern and Mitchell Cohen,
and each of them, attorneys and proxies with power of
substitution, to vote for and on behalf of the undersigned at
the Asta Funding, Inc. (the Company) Annual Meeting
of Stockholders to be held on March 4, 2008 and at any
adjournments or postponements thereof (the Meeting),
upon the following matters and upon any other business that may
properly come before the Meeting, as set forth in the related
Notice of Meeting and Proxy Statement, both of which have been
received by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS
EXECUTED BUT NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE BOARDS NOMINEES FOR DIRECTOR.
(Continued
and to be signed on the reverse side)
ANNUAL
MEETING OF STOCKHOLDERS OF ASTA FUNDING, INC.
March 4, 2008
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF ASTA FUNDING,
INC.
Please date, sign and mail your proxy card in the envelope
provided as soon as possible.
Please detach along perforated line and mail in the envelope
provided.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR LISTED
NOMINEES. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE þ
1. Election of Directors:
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NOMINEES:
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o
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FOR ALL NOMINEES
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o Gary
Stern
o Arthur
Stern
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o
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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o Herman
Badillo
o David
Slackman
o Edward
Celano
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o
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FOR ALL EXCEPT
(See instructions below)
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o Harvey
Leibowitz
o Alan
Rivera
o Louis
A. Piccolo
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INSTRUCTION: |
To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT and fill in the circle next to
each nominee you wish to withhold, as shown
here: o
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To change the address on your account, please check the box at
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the
account may not be submitted via this
method. o
In their discretion, the above named proxies are authorized to
vote upon such other business as may properly come before the
meeting or any adjournment thereof and upon matters incident to
the conduct of the meeting.
THIS PROXY WILL BE VOTED AS
DIRECTED. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED IN NAMED ABOVE,
OR IF ANY ONE OR MORE OF THE NOMINEES BECOMES UNAVAILABLE, FOR
ANOTHER NOMINEE OR OTHER NOMINEES TO BE SELECTED BY THE BOARD OF
DIRECTORS.
Please sign this proxy and return
it promptly whether or not you expect to attend this Meeting.
You may nevertheless vote in person if you attend.
Signature of
Stockholder
Date:
,2008
Signature of
Stockholder
Date:
,2008
NOTE: Please sign
exactly as your name or names appear on this Proxy. When shares
are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please
sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in
partnership name by authorized person.