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[CENVEO LOGO]
April 3, 2006
Dear Fellow Shareholders:
Our Annual Meeting of Shareholders will be held on Friday, May 5, 2006 at
12:00 p.m. EDT at the Four Seasons Hotel, 57 East 57th Street, New York
City. We look forward to your attendance either in person or by proxy.
Holding our Annual Meeting in New York will accomplish several things.
First, it will reduce the amount of time that our senior management team
and I will need to be away from the business. Second, it will allow us
the opportunity to put on a full business presentation for our investor
base that is very concentrated within the city. Third, it will reduce
expenses related to travel. Lastly, our management team will be available
to meet with investors after the meeting for additional Q&A.
I am looking forward to this opportunity to stand before you and discuss
the progress the Company has made as well as our strategic direction for
the future of our Company. As you know, Cenveo has made great strides
over the course of the last seven months. There remains much to be
accomplished during the year and in the future. I am committed to making
this Company an outstanding success.
Again, I am looking forward to discussing with you our results, our
business plan for the future and the positive momentum the Company has
established since we took over the management of Cenveo in September of
2005. For your information, we will be serving a light lunch during the
meeting. I encourage all our investors who can attend this meeting to
join us in New York in May.
Sincerely yours,
/s/ Robert G. Burton
Robert G. Burton
Chairman and Chief Executive Officer
CENVEO, INC.
201 Broad Street, 6th Floor
One Canterbury Green
Stamford, CT 06901
(203) 595-3000
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
To Our Stockholders:
On May 5, 2006, Cenveo will hold its 2006 annual meeting of
stockholders at the Four Seasons Hotel, 57 West 57th Street, New York,
New York 10022. The meeting will begin at 12:00 p.m. Eastern Time.
Stockholders who owned shares of our common stock at the close of
business on March 17, 2006 may attend and vote at the meeting. We ask
that all stockholders be present at the meeting in person or by proxy so
that we have a quorum. At the meeting, you will be asked to:
1. Elect seven directors for terms expiring at the 2007 annual
meeting of stockholders;
2. Ratify the selection of Ernst & Young LLP by the board's audit
committee as our independent auditors for 2006; and
3. Attend to any other business properly presented at the meeting.
We do not know of any other business that will come before the
meeting. In order to vote without attending the meeting, you may sign and
date the enclosed proxy card and return it in the postage prepaid
envelope.
A copy of our 2005 Annual Report is enclosed. This notice and proxy
statement, the proxy card and the 2005 Annual Report are being mailed on
or about April 3, 2006.
By Order of the Board of Directors,
/s/ Timothy Davis
Timothy Davis
Senior Vice President, General
Counsel and Secretary
Stamford, Connecticut
April 3, 2006
YOUR VOTE IS IMPORTANT TO CENVEO.
Regardless of whether you plan to attend the meeting in person,
we urge you to vote in favor of each of the proposals as soon as possible.
PROXY STATEMENT TABLE OF CONTENTS
PROPOSALS TO BE VOTED ON.................................... 1
NOMINEES FOR THE BOARD OF DIRECTORS......................... 2
GOVERNANCE, BOARD COMMITTEES AND BOARD COMPENSATION......... 4
OWNERSHIP OF VOTING SECURITIES.............................. 7
EXECUTIVE OFFICERS AND KEY EMPLOYEES........................ 9
COMPENSATION OF EXECUTIVE OFFICERS.......................... 10
REPORT ON EXECUTIVE COMPENSATION............................ 17
REPORT OF THE AUDIT COMMITTEE............................... 19
INDEPENDENT PUBLIC AUDITORS................................. 21
RELATED PARTY TRANSACTIONS.................................. 22
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN............. 23
OTHER INFORMATION........................................... 24
QUESTIONS AND ANSWERS....................................... 25
AUDIT COMMITTEE CHARTER..................................... EXHIBIT A
PROPOSALS TO BE VOTED ON
PROPOSAL 1--ELECTION OF DIRECTORS
Seven directors will be elected this year for terms expiring in 2007. The
nominees for election are:
Robert G. Burton, Sr. Robert T. Kittel
Patrice M. Daniels Robert B. Obernier
Leonard C. Green Thomas W. Oliva
Mark J. Griffin
Each nominee is currently serving as a director of Cenveo. Each person
elected as a director will serve until the 2007 annual meeting of
stockholders or until such director's successor has been elected and
qualified or such director's earlier resignation or removal.
Assuming a quorum is present, the seven nominees receiving the most
affirmative votes at the meeting will be elected as directors.
Consequently, any shares not voted at the meeting, whether by abstention
or otherwise, will have no effect on the election of directors. If any of
the nominees should unexpectedly decline or become unable to serve, the
proxies we are soliciting may be voted for a substitute nominee, or the
board may reduce the number of directors to be elected. Stockholders may
not cumulate their votes when electing directors.
Brief biographies of the director nominees are included beginning on page
2. These biographies include their age, business experience and the names
of publicly held and certain other corporations of which they are also
directors. Each director nominee has served as a director since September
12, 2005 when they were elected pursuant to the Settlement and Governance
Agreement that Cenveo entered into in settlement of the proxy contest
with Burton Capital Management, LLC and Goodwood, Inc. for control of our
board.
THE BOARD RECOMMENDS A VOTE FOR ELECTION OF THESE SEVEN DIRECTOR NOMINEES.
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PROPOSAL 2--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP has served as our independent auditor since
1999, and our audit committee has selected the firm as our independent
auditors for 2006. Neither Cenveo's governing documents nor applicable
law require stockholder ratification of the appointment of our
independent auditors. However, the audit committee has recommended, and
the board of directors has determined, to submit the appointment of Ernst
& Young to the stockholders for ratification as a matter of good
corporate practice. If the stockholders fail to ratify the appointment,
the audit committee will reconsider whether or not to retain Ernst &
Young. Even if the stockholders ratify the appointment, the audit
committee has the discretion to change the independent auditors at any
time.
The following audit services were performed by Ernst & Young for the year
ended December 31, 2005:
* examination of the financial statements of Cenveo and our
subsidiaries and employee benefit plans,
* examination of the effectiveness of Cenveo's internal controls as
required by Section 404 of the Sarbanes-Oxley Act of 2004,
* services related to our filings with the Securities and Exchange
Commission, and
* consultation on matters related to accounting, internal controls and
financial reporting.
Additional information concerning Ernst & Young's services for Cenveo can
be found on page 21. The affirmative vote of a majority of our shares
represented at the meeting will ratify the selection of Ernst & Young as
our independent auditors.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF ERNST & YOUNG AS OUR
INDEPENDENT AUDITOR FOR 2006.
- 1 -
NOMINEES FOR THE BOARD OF DIRECTORS
The following nominees are currently serving as members of Cenveo's board
of directors and are standing for re-election.
ROBERT G. BURTON, SR.
Mr. Burton, 66, has been Cenveo's Chairman and Chief
Executive Officer since September 2005. He formed
Burton Capital Management, LLC, a company that
invests in middle market manufacturing companies, in
[PHOTO] January 2003 and has been its Chairman, Chief
Executive Officer and sole managing member since its
formation. From December 2000 through December 2002,
he was the Chairman, President and Chief Executive
Officer of Moore Corporation Limited, a leading
printing company with over $2.0 billion in revenue
for fiscal year 2002. From April 1991 through October
1999, he was the Chairman, President and Chief Executive Officer of World
Color Press, Inc., a former Kohlberg Kravis Roberts & Co. portfolio
company. This NYSE company was a leading diversified printing company,
with over $2.5 billion in revenue for fiscal year 1999. From 1981 through
1991, he held a series of senior executive positions at Capital Cities/
ABC, including President of ABC Publishing. Preceding his employment at
Moore, Mr. Burton was Chairman, President and Chief Executive Officer of
Walter Industries, Inc., a diversified holding company. Mr. Burton serves
as Chair of our board's executive committee.
PATRICE M. DANIELS
Ms. Daniels, 45, has served on our board of directors
since September 2005. Ms. Daniels is Chief Operating
Officer of International Education Corporation, a
private post-secondary education company. From its
founding in 2001 until 2005, Ms. Daniels was a
[PHOTO] partner of Onyx Capital Ventures, L.P., a
minority-owned private equity investment firm. She
previously served as Managing Director, Corporate and
Leveraged Finance for CIBC World Markets and Bankers
Trust Company, investment banking firms. Ms. Daniels
serves as board member and audit committee chair of
real estate services firm CB Richard Ellis Group and
on the advisory council of the University of Chicago Graduate School of
Business. Ms. Daniels holds a B.S. from the University of California,
Berkeley and an M.B.A. from the University of Chicago Graduate School of
Business. Ms. Daniels serves on our audit committee, compensation
committee (Chair), executive committee and nominating and governance
committee (Chair).
LEONARD C. GREEN
Mr. Green, 69, has served on our board of directors
since September 2005. He has been President of The
Green Group, a financial services firm of CPAs,
consultants and entrepreneurs, since 1976. Mr. Green
[PHOTO] is a Professor of Entrepreneurship at Babson College
in Wellesley, Massachusetts. He is presently, and has
served, on the board of directors of a number of
private companies. Mr. Green serves on our audit
committee (Chair) and our executive committee.
- 2 -
MARK J. GRIFFIN
Dr. Griffin, 57, has served on our board of directors
since September 2005. He was the founder of the Eagle
Hill School, an independent private school in
Greenwich, Connecticut, and has been its headmaster
since 1975. Since 1991, Dr. Griffin has served on the
[PHOTO] board of directors of the National Center for
Learning Disabilities, and he has been a member of
its Executive Committee since 2003. Dr. Griffin has
also been on the board of the Learning Disabilities
Association of America since 1993. Dr. Griffin served
on the board of directors of World Color Press, Inc.
from October 1996 to 1999, where he was a member of
the audit committee and the compensation committee. Dr. Griffin serves on
our audit committee, compensation committee and nominating and governance
committee.
ROBERT T. KITTEL
Mr. Kittel, 34, has served on our board of directors
since September 2005. He has been a Partner of
Goodwood, Inc., an investment management firm, since
June 2003, and with Goodwood since June 2002. From
[PHOTO] June 2000 until February 2002, he was a
Vice-President at Silvercreek Management Inc., an
investment management firm. From May 1997 until May
2000, Mr. Kittel was employed by Cadillac Fairview
Corporation, a commercial real estate development
company. Mr. Kittel serves on our executive committee
and our nominating and governance committee.
ROBERT B. OBERNIER
Mr. Obernier, 68, has served on our board of
directors since September 2005. Mr. Obernier has
served as the Chairman and Chief Executive Officer of
Horizon Paper Co., Inc., a paper supply company,
since 1991. Mr. Obernier is Chairman of the Norwalk
[PHOTO] Hospital Foundation and a Trustee of the Norwalk
Hospital in Norwalk, Connecticut. Mr. Obernier also
serves on the audit committee of the Board of the
Juvenile Diabetes Research Foundation as a volunteer.
Mr. Obernier serves on our audit committee,
compensation committee and executive committee.
THOMAS W. OLIVA
Mr. Oliva, 48, has been our President since January
2006 and served as our President, Envelope and
Resale, since September 2005. From December 2002
until January 2004, Mr. Oliva was the President and
Chief Operating Officer of Moore Wallace Inc., a
[PHOTO] commercial printing company. From June 2002 until
December 2002, he was the Group President of the
outsourcing division of Moore Corporation Limited
(Moore acquired Wallace Computer Services, Inc. and
changed its name to Moore Wallace Inc. during 2003).
From December 2000 until December 2002, he was the
Group President of the Forms and Labels Division of
Moore. From 1998 until 2000, Mr. Oliva was the Group President for the
Gravure Catalog and Magazine Division of World Color Press, Inc., which
became Quebecor World (USA) Inc. following its acquisition by Quebecor
Printing Inc. in 1999. Between 1979 and 1998, Mr. Oliva served in a
number of sales and management positions at R.R. Donnelley & Sons
Company, Quebecor Printing Inc. and World Color Press.
- 3 -
GOVERNANCE, BOARD COMMITTEES AND BOARD COMPENSATION
NOMINATION OF DIRECTORS
The current term of office of all of our directors expires at the annual
meeting of stockholders. The nominating and governance committee has
nominated all seven of our current directors to be re-elected.
Our nominating and governance committee identifies and selects, or
recommends to the full board for its consideration, the director nominees
for each annual meeting of stockholders using the criteria set forth in
our corporate governance guidelines. Our guidelines provide that all
directors must have such education, training, experience, skills and
expertise as will allow them to perform the duties of a director. The
committee has not established any specific minimum qualification
standards for board nominees. However, the committee may identify certain
skills or attributes as being particularly desirable for specific
director nominees in order to complement the existing board composition.
To date, the committee has identified and evaluated nominees for
directors based on several factors, including:
* referrals from our management, existing directors and advisors,
* business and industry experience,
* education,
* diversity,
* leadership abilities,
* professional reputation and affiliation, and
* personal interviews.
All of our current directors were elected pursuant to the Settlement and
Governance Agreement that Cenveo entered into in settlement of the proxy
contest with Burton Capital Management, LLC and Goodwood, Inc. for
control of our board.
We do not currently pay any fee to a third party to identify or evaluate
potential director nominees, although we may in the future retain search
firms to assist in finding qualified candidates.
The committee currently has no policy in place regarding the
consideration of director candidates recommended by stockholders.
Instead, it considers nominees identified in the manner described above.
We believe that our nominating and governance committee, consisting
entirely of independent directors, can successfully identify appropriate
candidates for our board. Stockholders of record are entitled to nominate
director candidates in the manner provided in Cenveo's bylaws.
CORPORATE GOVERNANCE
Our board and management are committed to diligently exercising their
oversight responsibilities throughout Cenveo and managing Cenveo's
affairs consistent with the highest principles of business ethics. We
have adopted a code of business conduct and ethics that applies to all
employees, including our senior officers. We continue to review our
corporate governance policies and practices to ensure compliance with the
provisions of the Sarbanes-Oxley Act of 2002, the rules of the Securities
and Exchange Commission and the listing standards of the New York Stock
Exchange. Since our 2005 annual stockholders meeting, the board has
determined that:
* all of our current directors, except for Mr. Burton and Mr. Oliva,
qualify as independent directors as defined by the rules of the New
York Stock Exchange and our corporate governance guidelines, and
* Mr. Green qualifies as an audit committee financial expert under the
rules of the Securities and Exchange Commission.
- 4 -
You can view the following documents on our website at www.cenveo.com
under "Investor--Governance," or receive copies by writing to our
corporate secretary at Cenveo, Inc., 201 Broad Street, 6th Floor, One
Canterbury Green, Stamford, CT 06901:
* the current committee charters for our nominating and governance
committee, our audit committee and our compensation committee,
* our corporate governance guidelines, and
* our code of business conduct and ethics.
DIRECTOR INDEPENDENCE
We believe that independent directors play a critical role in governing
Cenveo, and we are committed to ensuring that a majority of our directors
are independent. Currently five of our seven directors satisfy the
independence requirements of the New York Stock Exchange's listing
standards and the "standards of independence" required by our corporate
governance guidelines. Messrs. Burton and Oliva are not considered
independent because of their positions with Cenveo. Our corporate
governance guidelines can be accessed on our website at www.cenveo.com
under "Investor--Governance."
In addition to the board's determination that five of the seven nominees
for election meet the foregoing independence standards, the board has
also determined that each member of our audit committee, our nominating
and governance committee and our compensation committee is independent
under these standards. These determinations were made after reviewing all
relevant transactions and relationships between each director and any of
his or her family members, on one hand, and Cenveo, our senior management
and our independent auditor, on the other hand.
BOARD PROCEDURES AND COMMITTEES
Our full board of directors considers all major decisions. However, we
have established an audit committee, a compensation committee, a
nominating and governance committee and an executive committee so that
some matters can be addressed in more depth than may be possible in a
full board meeting.
NOMINATING AND GOVERNANCE COMMITTEE. The current members of the
nominating and governance committee are Ms. Daniels (Chair), Dr. Griffin
and Mr. Kittel. This committee:
* identifies candidates for open director positions,
* selects, or recommends that our board select, the director nominees
for each annual stockholders meeting,
* oversees the evaluation of our board's effectiveness, and
* develops and recommends to our board our corporate governance
principles.
The nominating and governance committee met three times during 2005.
EXECUTIVE COMMITTEE. The current members of our executive committee are
Mr. Burton (Chair), Ms. Daniels, Mr. Green, Mr. Kittel and Mr. Obernier.
The executive committee exercises the full powers of the board in
intervals between meetings of the board. This committee did not meet
during 2005.
AUDIT COMMITTEE. The current members of our audit committee are Mr. Green
(Chair), Ms. Daniels, Dr. Griffin and Mr. Obernier. The board has
determined that each member of the committee is financially literate
under the New York Stock Exchange's listing standards and is independent
under special standards established by the Securities and Exchange
Commission for audit committee members. The board has also determined
that Mr. Green is an audit committee financial expert under the rules of
the Securities and Exchange Commission. A description of each committee
member's qualifications and business experience is found in the
biographies beginning on page 2. The audit committee met six times during
2005. Our audit committee:
* monitors the integrity of our financial statements, including our
financial reporting process,
- 5 -
* monitors our systems of internal controls regarding finance,
accounting, and compliance with legal and regulatory requirements,
* monitors the independence and performance of our independent
auditor,
* monitors the performance of our internal audit function and our
financial executives,
* reviews our annual and quarterly financial statements and earnings
press releases, and
* annually retains our independent auditor and approves the terms and
scope of the work to be performed.
For more information on the audit committee, see the report of the audit
committee beginning at page 19.
COMPENSATION COMMITTEE. The current members of our compensation committee
are Ms. Daniels (Chair), Dr. Griffin and Mr. Obernier. This committee:
* reviews and administers our executive compensation programs,
* reviews matters relating to management advancement and succession,
* reviews and recommends to our board the compensation for our
officers and directors, including incentive compensation plans and
equity-based plans, and
* reviews and approves corporate goals for our chief executive
officer's compensation and evaluates his performance of those goals.
The compensation committee (and its predecessor, the compensation and
human resources committee) held seven meetings during 2005. For more
information on the compensation committee, see the report of the
compensation committee beginning at page 17.
BOARD MEETINGS AND ATTENDANCE
The board met 15 times during 2005. Each incumbent director attended at
least 75% of our board meetings and the meetings of the board committees
on which he or she served. We strongly encourage each director to attend
our annual stockholders meeting, although this is not stated in a formal
policy.
All non-management directors meet in executive session at each regular
board meeting. During 2005, these executive sessions were chaired by the
non-management director then serving as lead director. During 2005 our
non-management directors served as lead directors on a rotating basis
each quarter based on their tenure on the board.
BOARD COMPENSATION
Our non-employee directors receive:
* an annual retainer of $20,000,
* $1,500 for each board meeting attended in person,
* $1,200 for each board meeting attended by telephone,
* $1,200 for each board committee meeting, and
* non-qualified options for 5,000 shares of common stock and
restricted stock units for 3,500 shares under our long-term equity
incentive plan described on page 12. These options may be exercised
six months following the grant date.
Our non-employee directors will also receive an annual grant of
restricted stock units valued at approximately $15,000 on the date of
grant. These restricted stock units will vest immediately, but prohibit
the sale of the underlying shares for six months from the date of
issuance.
In addition, the chair of the audit committee receives $10,000 annually,
the chair of the compensation committee receives $7,500 annually and the
chair of each of the other board committees receives $5,000 annually.
Directors who are employees of Cenveo do not receive compensation for
their service on the board.
During 2005, all director compensation was pro rated for directors who
did not serve a complete year.
- 6 -
Board members are reimbursed for expenses incurred in connection with
their attendance at board meetings and in complying with our corporate
governance policies. Cenveo also provides directors' and officers'
liability insurance and indemnity agreements for its directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the compensation committee is an officer, former officer or
employee of Cenveo. No executive officer of Cenveo had any interlocking
relationship with any other for-profit entity during 2005.
OWNERSHIP OF VOTING SECURITIES
This chart shows the common stock ownership for each director and
director nominee, the executive officers named on page 9, and owners of
more than 5 percent of our outstanding common stock as of March 17, 2006.
Each stockholder has direct ownership and sole voting and investment
power for the shares listed unless otherwise noted. Unless otherwise
specified, the address for each stockholder named below is c/o Cenveo,
Inc., 201 Broad Street, One Canterbury Green, Stamford, CT 06901.
AMOUNT OF SHARES PERCENTAGE OF COMMON
BENEFICIAL OWNERS BENEFICIALLY OWNED(a) STOCK OUTSTANDING
Robert G. Burton, Sr. 3,124,768 (b)(c) 5.9%
Thomas W. Oliva 345,824 (c) *
Michael W. (Max) Harris 110,786 (c) *
Sean S. Sullivan 17,464 (c) *
Timothy Davis 6,200 (c) *
Patrice M. Daniels 10,000 (c) *
Leonard C. Green 538,230 (c)(d) 1.0%
Mark J. Griffin 5,600 (c) *
Robert T. Kittel 5,000 (c) *
Robert B. Obernier 13,500 (c) *
All directors and executive officers as a group 4,193,694 7.9%
OZ Management, L.L.C. 4,432,624 (e) 8.3%
Ronald Gutfleish 4,340,507 (f) 8.2%
FMR Corp. 3,705,800 (g) 7.0%
Wells Fargo & Company 3,146,655 (h) 5.9%
* Less than 1%.
(a) None of the listed beneficial owners hold stock options exercisable, or other rights to acquire
beneficial ownership of common shares, within 60 days of March 17, 2006.
(b) Includes 2,658,122 shares owned by Burton Capital Management, LLC. Mr. Burton is the Chairman, CEO
and Managing Member of Burton Capital. BCM was formed to invest in middle market manufacturing
companies that provide an opportunity for increased shareholder value through intense management and
operational changes and organic and acquisitive growth.
(c) For Mr. Burton: (i) includes 200,000 shares of unvested restricted stock; and (ii) does not include
100,000 shares underlying unvested restricted share unit awards or 500,000 shares issuable upon
exercise of unvested stock options. For Mr. Oliva, does not include 20,000 shares underlying unvested
restricted share unit awards or 175,000 shares issuable upon exercise of unvested stock options. For
Mr. Harris, does not include 20,000 shares underlying unvested restricted share unit awards or
175,000 shares issuable upon exercise of unvested stock options. For Mr. Sullivan, does not include
15,000 shares underlying unvested restricted share unit awards or 150,000 shares issuable upon
exercise of unvested stock options. For Mr. Davis, does not include 35,000 shares issuable upon
exercise of unvested stock options. For Ms. Daniels, does not include 3,820 shares underlying
unvested restricted share unit awards or 5,000 shares issuable upon exercise of unvested stock
options. For Mr. Green, does not include 3,820 shares underlying unvested restricted share unit
awards or 5,000 shares issuable upon exercise of unvested stock options. For
- 7 -
Dr. Griffin, does not include 3,820 shares underlying unvested restricted share unit awards or 5,000
shares issuable upon exercise of unvested stock options. For Mr. Kittel, does not include 3,820
shares underlying unvested restricted share unit awards or 5,000 shares issuable upon exercise of
unvested stock options. For Mr. Obernier, does not include 3,820 shares underlying unvested
restricted share unit awards or 5,000 shares issuable upon exercise of unvested stock options.
(d) Includes 52,100 shares owned by Dalled, Inc., 3,500 shares owned by Jobel Management Corp., 700
shares owned by Market Investments, L.P., 700 shares owned by Southern States Investment Co., Inc.,
12,700 shares owned by Mr. Green's spouse and 700 shares owned by Altman Trust-Green Realty
Associates. Mr. Green disclaims beneficial ownership of the foregoing shares except to the extent of
his pecuniary interest therein.
(e) The address for OZ Management, L.L.C., or OZ, is 9 West 57th Street, 39th Floor, New York, New York
10019. OZ serves as principal investment manager to a number of investment funds and discretionary
accounts with respect to which it has voting and dispositive authority over the shares reported
above, including such account for OZ Master Fund, Ltd., or OZMD. OZMD is the beneficial owner of
4,231,242 shares. Mr. Daniel S. Och is the Senior Managing Member of OZ. As such, he may be deemed to
be the beneficial owner of the shares beneficially owned by OZ. The foregoing information is based
solely on the Schedule 13G/A filed by OZ, OZMD and Mr. Och with the SEC on February 14, 2006.
(f) The address for Mr. Gutfleish is c/o Elm Ridge Capital Management, LLC, 3 West Main Street, 3rd
Floor, Irvington, New York 10533. Mr. Gutfleish is the managing member of two limited liability
companies that each manage one or more private investment funds that own our common stock. The
foregoing information is based solely on the Schedule 13G/A filed by Mr. Gutfleish with the SEC on
February 14, 2006.
(g) The address for FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02105. Fidelity Management &
Research Company is a registered investment adviser and a wholly owned subsidiary of FMR Corp. and is
the beneficial owner of 3,062,100 shares. Edward C. Johnson, III is the Chairman of FMR Corp. As
such, he may be deemed to be the beneficial owner of the 3,062,100 shares beneficially owned by
Fidelity Management & Research Company. Fidelity International Limited, or FIL, provides investment
advisory and management services to a number of non-U.S. investment companies and certain
institutional investors, and is the beneficial owner of 643,700 shares. Edward C. Johnson, III is the
Chairman of FIL. As such, he may be deemed to be the beneficial owner of the 643,700 shares
beneficially owned by FIL. The foregoing information is based solely on the Schedule 13G/A filed by
FMR Corp. and Mr. Johnson with the SEC on February 14, 2006.
(h) The address for Wells Fargo & Company is 420 Montgomery Street, San Francisco, California 94104. The
foregoing information is based solely on the Schedule 13G filed by Wells Fargo & Company with the SEC
on March 3, 2006.
- 8 -
EXECUTIVE OFFICERS AND KEY EMPLOYEES
Please refer to pages 2 and 3 for the biographies of Mr. Burton, our
Chairman and Chief Executive Officer, and Mr. Oliva, our President.
TIMOTHY DAVIS
Timothy Davis, 51, has served as Cenveo's Senior Vice President, General
Counsel and Secretary since January 2006. From July 1989 through
December, 2005, he was Senior Vice President, General Counsel and
Secretary of American Color Graphics, Inc., a commercial printing
company.
MICHAEL W. (MAX) HARRIS
Michael W. (Max) Harris, 51, has served as Cenveo's President, Commercial
Print, since September 2005. He co-founded Optical Experts Manufacturing,
Inc., an optical disc manufacturing company in Charlotte, North Carolina,
in March 2001, and served as its Chairman and CEO from that date until
September 2005. From 1973 until 2001, Mr. Harris served in a variety of
roles at World Color Press, Inc. (which became Quebecor World (USA) Inc.
in 1999). He served as Executive Vice-President of Manufacturing from
1991 until March 1995. From March 1995 until October 1998, he served as
the President of World Color's Manufacturing Operations, and he served as
President of the Retail Group from October 1998 until March 2001.
SEAN S. SULLIVAN
Mr. Sullivan, 38, has served as Cenveo's Chief Financial Officer since
September 2005. He served as the Executive Vice President-Chief Financial
Officer of Spencer Press, Inc., a privately held printer that produces
catalogs, direct mail and general commercial print products, from October
2004 until September 2005. From May 2003 to September 2004, Mr. Sullivan
served as the Executive Vice President of Burton Capital Management.
Prior to Burton Capital Management, Mr. Sullivan served as the Senior
Vice President, Finance and Corporate Development for Moore Corporation
Limited from August 2001 to June 2002. Prior to Moore Corporation
Limited, Mr. Sullivan served as the Vice President of Mergers and
Acquisitions for Engage, Inc., an enterprise marketing software and
interactive media company. Mr. Sullivan began his career at Ernst & Young
and held various positions in the audit and M&A groups from 1989 through
1998. Mr. Sullivan is a certified public accountant.
- 9 -
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table presents information concerning all compensation
received by Robert G. Burton, Sr., our chairman and chief executive
officer, as well as by the four most highly compensated executive
officers other than the CEO who were serving as executive officers at
December 31, 2005. In accordance with the applicable rules of the SEC,
the following also presents the same information for James R. Malone,
Paul V. Reilly and Michel P. Salbaing, all of whom served as chief
executive officer or interim chief executive officer during 2005, for
Susan O. Rheney, who served as the Interim Chairman during 2005 and was
the top executive officer of Cenveo during a period in which there was no
named chief executive officer, and for the two other most highly
compensated executive officers who left Cenveo at or shortly following
the installation of a new board of directors during September 2005.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- ------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION AWARDS GRANTED SATION
FORMER EXECUTIVE OFFICERS (UNTIL SEPTEMBER 2005):
James R. Malone 2005 $183,076 $0 (2) $3,619,000(3) 400,000 $1,700,000(5)
Former President and
Chief Executive Officer
Paul V. Reilly 2005 $224,654 $0 (2) $0 -- $2,855,600(5)
Former President and 2004 $641,192 $0 (2) $372,000(4) 275,000 $0
Chief Executive Officer 2003 $618,077 $0 (2) $0 90,000 $0
Susan O. Rheney 2005 $0 $0 (2) $9,999(3) 5,000 $253,000(5)
Former Interim 2004 $0 (2) $0
Chairman of the Board 2003 $0 (2) $0
Michel P. Salbaing 2005 $262,609 $0 (2) $0 -- $1,306,422(5)
Former Senior Vice 2004 $360,962 $0 (2) $93,000(4) 80,000 $0
President and Chief 2003 $349,038 $0 (2) $0 25,875 $0
Financial Officer, and
Interim Chief Executive
Officer
Gordon A. Griffiths 2005 $305,228 $0 (2) $0 -- $1,426,075(5)
Former Executive 2004 $393,269 $0 (2) $124,000(4) 105,000 $0
Vice President and 2003 $375,000 $0 (2) $0 33,750 $27,665(6)
President--Commercial
Segment
Allen C. Conway 2005 $301,679 $0 (2) $0 -- $1,175,247(5)
Former Executive 2004 $299,022 $0 (2) $0 21,000 $0
Vice President and 2003 $254,241 $72,677 (2) $0 10,000 $0
President--Resale Segment
CURRENT EXECUTIVE OFFICERS (BEGINNING DURING OR AFTER SEPTEMBER 2005):
Robert G. Burton, Sr. 2005 $292,308 $0 (2) $2,856,000(3) 500,000 $0
Chairman and
Chief Executive Officer
Thomas W. Oliva 2005 $153,846 $0 (2) $190,400(3) 175,000 $0
President
- 10 -
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- --------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION AWARDS GRANTED SATION
Michael W. Harris 2005 $123,077 $0 (2) $190,400(3) 175,000 $0
President, Commercial
Print
Sean S. Sullivan 2005 $115,385 $0 (2) $142,800(3) 150,000 $0
Chief Financial Officer
Timothy Davis 2005 $23,192 $0 (2) $0 35,000 $0
Senior Vice President,
General Counsel and
Secretary
(1) Bonus amounts are shown for the year earned and are paid in the following year.
(2) None of the named executive officers has received perquisites, the value of which exceeded the lesser
of either $50,000 or 10% of his or her total salary and bonus. Perquisites paid included
contributions to each person's 401(k) account, tax services, life insurance, the allowance received
under Cenveo's former executive perquisite and benefits expense reimbursement plan and car allowance.
(3) These awards represent unvested restricted share unit awards, except for 200,000 shares of restricted
stock awarded to Mr. Burton, 275,000 shares of restricted stock awarded to Mr. Malone and 1,335
shares of restricted stock awarded to Ms. Rheney. The table shows the value of the awards on their
grant dates based on the price of our common stock on such dates. As of December 30, 2005, based on
the closing price of our common stock of $13.16 per share, the restricted stock awards had values of:
for Mr. Burton, $3,948,000 (300,000 shares); for Mr. Oliva, $263,200 (20,000 shares); for Mr. Harris
$263,200 (20,000 shares); for Mr. Sullivan, $197,400 (15,000 shares); for Mr. Malone, $3,619,000
(275,000 shares); and for Ms. Rheney, $17,569 (1,335 shares).
(4) Reflects a grant of restricted stock under our long-term equity incentive plan described on page 12,
based on the closing price of our common stock as quoted on the New York Stock Exchange on December
31, 2004 ($3.10 per share). These shares vested on September 12, 2005.
(5) For Messrs. Malone, Griffiths and Conway, includes severance paid pursuant to severance agreements
approved by the prior board of directors. For Mr. Reilly, includes severance of $2,460,200 and a
retention bonus of $389,400 paid pursuant to an agreement approved by the prior board of directors.
For Ms. Rheney, includes board compensation paid.
(6) Reflects club dues paid of $13,665 and relocation expenses of $14,000 for former Executive Vice
President Mr. Griffiths.
EXECUTIVE AGREEMENTS
Employment Agreement with Mr. Burton. Cenveo has entered into an employment
agreement with Robert G. Burton, Sr., the Chairman of the Board of Directors
and our Chief Executive Officer. The employment agreement is for a term that
will expire on December 31, 2008, subject to automatic 1-year renewals
unless prior notice of non-renewal is given, and provides for an annual base
salary of not less than $950,000 and, beginning in 2006, an annual incentive
bonus opportunity equal to 200% of base salary, which is payable on an "all
or nothing" basis depending on the achievement of target goals. In addition,
pursuant to the employment agreement, Mr. Burton was granted the following
equity awards: options to purchase 500,000 shares of our common stock at an
exercise price of $9.52 (the closing price on the date of grant); a
restricted stock award of 200,000 shares; and an award of 100,000 restricted
share units. Each equity award vests in four equal annual installments
beginning on September 12, 2006. If Mr. Burton's employment is terminated by
us without "cause" or by Mr. Burton for "good reason," his equity awards
will fully vest and he will be paid a lump sum equal to: (i) two times his
base salary in effect at the time of such termination; (ii) two times his
target bonus opportunity for the year in which such termination occurs; and
(iii) his automobile allowance for a period of 24
- 11 -
months following such termination. Mr. Burton would also be reimbursed for
"COBRA" coverage under our medical and dental plans for a period of up to
24 months following any such termination. If Mr. Burton's employment is
terminated on account of a "disability," he will be paid a lump sum equal
to two times his base salary in effect at the time of such termination.
Indemnity Agreements. Cenveo has entered into indemnity agreements with
each executive officer, which provide that Cenveo will indemnify the
executives in lawsuits brought against any executive in his or her
capacity as an officer of Cenveo.
Severance Paid During 2005. Management of Cenveo changed immediately
following the appointment of the current directors pursuant to the
Settlement and Governance Agreement that Cenveo entered into in
settlement of the proxy contest with Burton Capital Management LLC and
Goodwood Inc. for control of Cenveo's Board. In connection with the
settlement of the proxy contest, Cenveo was required to honor all of its
employee benefit plans, agreements and arrangements that applied to any
of its current or former employees, officers or directors.
The settlement of the proxy contest was deemed to be a "change of
control" solely for purposes of (i) the change of control, severance and
employment agreements with the 14 persons who were executives of Cenveo
on September 9, 2005, (ii) Cenveo's severance plan for non-union
employees and (iii) Cenveo's 2001 long-term equity incentive plan. Under
these agreements, Cenveo made severance payments to the named executive
officers in the amounts described in note (5) to the Summary Compensation
Table.
On January 6, 2005, Cenveo entered into an employment separation
agreement and general release with Paul V. Reilly, who was then Chairman,
President and Chief Executive Officer. Pursuant to the agreement, Mr.
Reilly received a severance payment in the amount described in note (5)
to the Summary Compensation Table.
LONG-TERM EQUITY INCENTIVE PLAN
In 2001 our stockholders adopted a long-term equity incentive plan, which
provides incentive compensation to key officers, employees, directors and
consultants. Our former stock option plans were merged into this plan and
no longer separately exist. In 2004 our stockholders amended the
long-term equity incentive plan to authorize that an aggregate of
7,450,000 common shares be issuable under the plan. However, options for
145,500 shares still outstanding under the old stock option plans
continue to be governed by their respective grant agreements but are
administered under the 2001 plan. The plan provides for awards of:
* options for our common stock,
* stock appreciation rights based on our common stock,
* restricted shares of our common stock,
* restricted share units based on our common stock, and
* performance awards of our common stock.
The plan provides that no more than 1,500,000 shares may be issued in
connection with free-standing stock appreciation rights, no more than
1,000,000 shares may be granted as restricted stock, and no more than
750,000 shares may be granted as performance restricted stock or
performance restricted units payable in stock.
As of March 17, 2006, the number of common shares underlying outstanding
awards granted was as follows, with an additional 2,635,355 shares
available for grant in the future:
* 2,222,657 shares underlying options granted,
* 436,600 shares of restricted stock or underlying restricted share
units,
* no shares of performance accelerated restricted stock, and
* no shares of stock as performance awards.
No stock appreciation rights have been granted under the plan. The charts
beginning on page 14 show the stock options and restricted shares that
were granted to the named executive officers in 2005.
- 12 -
Shares Available for Awards under the Plan. Shares underlying awards that
are cancelled, expire unexercised, are forfeited, are settled in cash or
are otherwise terminated remain available for future awards under the
plan. Shares issued under the plan may be either newly issued shares or
shares that we have reacquired. Shares issued as substitute awards when
we assume outstanding awards previously granted by a company that we
acquire do not reduce the number of shares available for awards. The
number of shares reserved for issuance can be increased only with the
approval of holders of a majority of our outstanding stock. The plan
imposes individual limitations on the amount of certain awards in order
to comply with Section 162(m) of the Internal Revenue Code of 1986. Under
these limitations, generally no single participant may receive options or
stock appreciation rights in any calendar year that value more than
$1,000,000. Awards may generally be adjusted to prevent dilution or
enlargement of benefits when certain events occur, such as a stock
dividend, reorganization, recapitalization, stock split, combination,
merger or consolidation.
Eligibility. Current officers, employees, directors and consultants of
Cenveo or its subsidiaries or affiliates may be granted awards under the
plan.
Administration. The plan is administered by our compensation committee.
Awards to directors serving on the committee are determined and
administered by the full board of directors. The committee has the power
to:
* select participants,
* determine the type and number of awards to be granted,
* determine the exercise or purchase price, vesting periods and
performance goals, if any,
* determine, and later amend, the terms and conditions of any award,
* interpret the rules relating to the plan, and
* otherwise administer the plan.
Stock Options and Stock Appreciation Rights. The committee may grant both
incentive stock options, which can result in potentially favorable tax
treatment to the participant, and non-qualified stock options. The
committee may also grant stock appreciation rights either with or without
a related option. The committee determines the terms and individual
vesting schedules for each grant, including the exercise price, which
generally may not be less than the fair market value of a share of common
stock on the date of the grant. All stock options have been granted at
exercise prices equal to the fair market value of our stock at the date
of grant. All stock options granted to management during 2005
proportionately vest over periods between two and five years on the
anniversaries of the grant dates, and all non-qualified stock options
granted to directors vest between six months and one year following their
grant dates.
Restricted Shares and Restricted Share Units. The committee may grant
restricted shares of common stock and restricted share units. Restricted
shares are shares of common stock with transfer restrictions. These
restrictions lapse on the basis of performance and/or continued
employment as determined in advance by the committee. They may be
forfeited by participants as specified by the committee in the award
agreement. A participant who has received a grant of restricted shares
will receive dividends and the right to vote those shares. Restricted
shares may not be transferred, encumbered or disposed of during the
restricted period or until after the restrictive conditions are met.
Each restricted share unit has a value equal to the fair market value of
a share of our common stock on the date of grant. The committee
determines the restrictions applicable to the restricted share units. A
participant is credited with dividend equivalents on any vested
restricted share units when dividends are paid to stockholders.
Restricted share units generally may not be transferred, encumbered or
disposed of until after the restrictive conditions are met.
Performance Awards. A performance award is a right that is denominated in
cash or shares of common stock, and valued by the achievement of certain
performance goals during performance periods as established by the
committee. The plan specifies the types of goals the committee may
consider when granting performance awards. The committee determines the
form, time and type of payment. Performance awards are generally
forfeited when employment is terminated other than for death or total
disability. A participant's rights to any performance award are not
transferable, except by will or the laws of descent and distribution.
- 13 -
Other Stock-Based Awards. The committee may grant any other type of award
that is payable in or valued by our common stock. The committee
determines the terms and conditions of these awards.
Change in Control. All outstanding awards vest, become immediately
exercisable or payable and have all restrictions lifted immediately when
Cenveo experiences a change in control. All then-outstanding awards
vested on September 12, 2005 as a result in the change of control of the
Board.
Amendment and Termination. The Board may amend or terminate the plan
subject to any required stockholder approval. The committee may not amend
the terms of previously granted options to reduce the exercise price or
cancel options and grant substitute options with a lower exercise price.
STOCK OPTION GRANTS DURING 2005
The following table presents information concerning stock options granted
to each of the named executive officers during 2005 under our long-term
equity incentive plan and the potential realizable value for those stock
options based on future appreciation assumptions:
INDIVIDUAL GRANTS
---------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM(a)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ----------------------------
NAME GRANTED 2005 PRICE DATE 5% 10%
FORMER OFFICERS:
James R. Malone(b) 400,000 17.33% $7.75 3/12/06 $155,000 $310,000
Gordon A. Griffiths -- -- -- -- -- --
Allen C. Conway -- -- -- -- -- --
Susan O. Rheney 5,000 0.22% $7.49 4/27/15 $23,552 $59,686
CURRENT OFFICERS:
Robert G. Burton, Sr. 500,000 21.66% $9.52 10/27/12 $1,937,798 $4,515,893
Thomas W. Oliva 175,000 7.58% $9.52 10/27/12 $678,229 $1,580,563
Michael W. Harris 175,000 7.58% $9.52 10/27/12 $678,229 $1,580,563
Sean S. Sullivan 150,000 6.50% $9.52 10/27/12 $581,339 $1,354,768
Timothy Davis 35,000 1.52% $11.98 11/18/12 $170,697 $397,797
(a) Potential realizable value is based on an assumption that the market price of our common stock will
appreciate at the stated rates (5% and 10%), compounded annually from the date of grant until the end
of the term. The values are calculated based on rules of the Securities and Exchange Commission and
do not reflect our estimate or projection of future stock prices. Actual gains, if any, on stock
option exercises will depend on the future performance of the price of our common stock and the
timing of exercises.
(b) 5% and 10% potential realizable values were calculated using a one year option term.
- 14 -
STOCK OPTIONS EXERCISED IN 2005 AND 2005 YEAR-END OPTION VALUES
The following table presents information about the number and value of
stock options exercised in 2005 and held at December 30, 2005, by each
named executive officer. A stock option is "in-the-money" if the closing
market price of Cenveo stock exceeds the exercise price of the stock
option.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES RECEIVED OPTIONS AT 12-30-05 12-30-05(a)
ACQUIRED UPON ---------------------------- ----------------------------
NAME ON EXERCISE EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
FORMER OFFICERS:
James R. Malone 400,000 $700,623(b) 0 0 $0 $0
Paul V. Reilly 691,432 $2,279,728 0 0 $0 $0
Gordon A. Griffiths 223,750 $1,394,675 0 0 $0 $0
Allen C. Conway 39,000 $188,601 0 0 $0 $0
Susan O. Rheney 25,000 $161,650 5,000 0 $55,100 $0
CURRENT OFFICERS:
Robert G. Burton, Sr. -- -- 0 500,000 $0 $1,820,000
Thomas Oliva -- -- 0 175,000 $0 $637,000
Michael Harris -- -- 0 175,000 $0 $637,000
Sean Sullivan -- -- 0 150,000 $0 $546,000
Timothy Davis -- -- 0 35,000 $0 $41,300
(a) Based on the closing price per share of Cenveo stock as quoted on the New York Stock Exchange on
December 30, 2005 ($13.16 per share).
(b) Reflects the difference between the total value received upon sale of the shares and the total cost
of purchasing the shares at the grant price.
LONG-TERM INCENTIVE PLAN AWARDS
The following table presents information about awards of restricted stock
to each of the named executive officers in 2005 under our long-term
equity incentive plan described beginning on page 12.
NUMBER OF SHARES OF PERFORMANCE OR OTHER
NAME RESTRICTED STOCK PERIOD UNTIL MATURATION
FORMER OFFICERS:
James R. Malone 275,000 (1)
Paul V. Reilly 0 --
Gordon A. Griffiths 0 --
Allen C. Conway 0 --
Susan O. Rheney 1,335 (1)
CURRENT OFFICERS:
Robert G. Burton, Sr. 300,000 (2)
Thomas W. Oliva 20,000 (3)
Michael W. Harris 20,000 (3)
Sean S. Sullivan 15,000 (3)
Timothy Davis 0 --
(1) For Mr. Malone, represents 275,000 shares of restricted stock and for Ms. Rheney, 1,335 shares of
restricted stock. All of these shares vested upon the change in the composition of our board of
directors on September 12, 2005.
- 15 -
(2) For Mr. Burton, represents 200,000 shares of restricted stock and 100,000 restricted share units. 25%
of each of these grants vests on each anniversary date of the grants beginning in 2006.
(3) Represents: 20,000 restricted share unit awards for Mr. Oliva; 20,000 restricted share unit awards
for Mr. Harris; and 15,000 restricted share unit awards for Mr. Sullivan. Each of these grants vests
upon the satisfaction of a specific cost-saving objective.
CASH BONUS ANNUAL INCENTIVE PLAN
We have a cash bonus annual incentive plan which provides bonus
compensation to our executives and other key employees. The bonus plan is
designed to promote achievement of our financial goals by making a
portion of each participant's compensation depend on his achievement of
goals established by the Board and individual performance objectives.
Participants must be employed on the date the incentive payments are paid
before they can receive any payment under the bonus plan. The report on
executive compensation beginning on page 17 further describes the cash
bonus plan for 2005.
EQUITY COMPENSATION PLAN INFORMATION
The following table shows shares reserved for issuance for outstanding
options, stock appreciation rights and warrants granted under our equity
compensation plans as of December 31, 2005. All of our equity
compensation plans have been approved by our stockholders.
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED AVERAGE ISSUANCE UNDER EQUITY
EXERCISE OF OUTSTANDING EXERCISE PRICE OF COMPENSATION PLANS
OPTIONS, WARRANTS AND OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))
Equity compensation plans not N/A N/A N/A
approved by stockholders
Equity compensation plans approved 2,365,961 $8.97 2,635,355
by stockholders
Total 2,365,961 $8.97 2,635,355
OTHER BENEFIT PLANS
We do not provide any defined benefit or actuarial plan that is payable
upon retirement to the named executive officers. The named executive
officers may participate in other benefit plans available to all
employees, two of which are described below.
401(k) Savings Retirement Plans. We adopted a 401(k) savings and
retirement plan in 1994 for non-union employees. United States-based,
union-free employees of Cenveo and its affiliated companies who are
classified as employees expected to work a minimum of 1,000 hours per
year are eligible to participate in the plan. For 2005 each participant
was permitted to contribute to the plan up to the lesser of $14,000 or
50% of such employee's compensation. Contributions are not included in a
participant's current taxable income. In December 2005, we discontinued
the employer match under this plan.
We also sponsor a 401(k) savings and retirement plan for union employees.
Collective bargaining agreements determine eligibility for participation
and the amount of employer match.
Plan assets are held in trust. A plan participant can direct the investment
of contributions into one of twelve mutual funds and other investment
vehicles, including Cenveo common stock. Participant contributions to the
plan are always fully vested. Cenveo contributions vest at a rate of 20% for
each year of service completed by the participant. Generally, a
participant's vested plan benefit is distributable upon such participant's
retirement, disability, death or other separation from employment. On August
1, 2004 our former employee stock ownership plan was merged into our 401(k)
plan.
- 16 -
Severance Plan. Our severance plan provides severance benefits to our
senior executives upon termination of employment as a result of permanent
layoff or reduction in force, lack of work or job elimination, the sale
of a facility, division or business segment or an involuntary termination
without cause (as defined in the severance plan). In addition, severance
benefits will be provided upon termination of employment as a result of a
relocation of employment of greater than 50 miles or a substantial
diminution of the participant's duties, authorities, responsibilities, or
status (including title, offices, reporting requirements or supervisory
functions).
Upon a severance event, the amount of severance to be paid will be based
upon a participant's position. Depending on their position, the
participants (including the named executive officers) will be entitled to
receive up to two years of base salary, one year of outplacement services
and one year of health benefit continuation reimbursement. Severance
under the severance plan would be offset by any other severance payments
due under individual agreements or otherwise.
Employee Stock Purchase Plan. We adopted an employee stock purchase plan
during 2005 that allows our employees to purchase our common stock at
market prices on a monthly basis through payroll deductions. Payroll
deductions may not exceed $1,000 per month.
Key Employee Share Option Plan. Cenveo had adopted a key employee share
option plan in 1997 for executive officers and other key employees. Under
the plan, participants received options to purchase shares in regulated
investment companies at exercise prices set by the administering
committee. This plan was amended in 2002 to "freeze" both participation
and future contributions to the plan. Accordingly, participants with
balances at December 31, 2002 maintain their accounts, and distributions
to them will continue to be allowed at retirement, disability, death or
other termination from employment. Account balances are held in trust and
are invested in various mutual funds. However, since 2002, no new
officers or employees have been added to the plan, and no additional
funds have been allocated to the plan.
REPORT ON EXECUTIVE COMPENSATION
The compensation committee is responsible for the compensation packages
that we offer to our executive officers, including the named executive
officers. The following is the report of our compensation committee:
POLICIES GOVERNING EXECUTIVE COMPENSATION
The compensation committee's rationales in determining executive
compensation are as follows:
* to establish a direct relationship between executive compensation
and our annual, intermediate-term and long-term performance;
* to provide performance-based compensation opportunities (including
equity awards) that allow executive officers to earn rewards for
maximizing stockholder value;
* to attract and retain the key executives necessary for our long-term
success; and
* to reward individual initiative and the achievement of specified
goals.
In applying these general policies, the compensation committee's
objective is to ensure that more than one-half of the compensation
packages for our most senior executive officers, including the named
executive officers, are incentive-based because these individuals have
substantial control and responsibility for our direction and performance.
The compensation committee considers our performance, the individual
executive's performance, comparative compensation material (including
compensation levels and equity awards by our peer group), the overall
competitive environment for executives, the level of compensation
necessary to retain executive talent and the recommendations of
professional compensation consultants and management in making its
determinations on compensation.
The companies used to define the market for executive compensation
comparison purposes include a broad range of printing and publishing
companies similar in revenue size to Cenveo, as well as certain other
printing companies that are our direct competitors. In addition,
comparative market compensation data are collected from general industry
compensation surveys. The companies used to define the market for pay
comparison
- 17 -
purposes are more varied than those in the peer group used in the
performance graph because the compensation committee believes that our
competitors for executive talent are more varied than solely companies
within the printing industry.
EXECUTIVE COMPENSATION, GENERALLY
Our executive compensation package currently consists of a mix of salary,
bonus awards, stock option grants and restricted stock (and restricted
share unit) awards, as well as benefits under the employee benefit plans
that we offer.
SALARY. The compensation committee periodically reviews the base salary
of the Chief Executive Officer and his direct reports. The compensation
committee considers various factors in assessing specific salaries
including the executive's historical performance and future potential,
job content, level of responsibility and accountability.
BONUS. No bonus payouts are made under our bonus plan unless we achieve
our financial earnings per share (EPS) goals. Potential payout amounts
(expressed as a percentage of salary) and related financial performance
goals are established at the beginning of the relevant performance period
by the compensation committee, after assessing recommendations of
management and considering the factors described above.
Our financial performance is measured for bonus purposes in terms of EPS
and other financial goals. All bonus payouts are contingent upon the
achievement of our financial goals and, with respect to executive
officers responsible for various operations, contingent upon achieving
operation-specific financial goals. In addition, the compensation
committee, in its discretion, may increase or decrease any payout to be
made to a particular executive officer to reflect any special
circumstances that the committee deems significant.
EQUITY GRANTS. To further align the interests of management with the
interests of stockholders, our executive compensation package also
includes stock option grants and restricted stock (and restricted share
unit) awards. Options have a per share exercise price of 100% of the fair
market value of a share of our common stock on the date of grant and,
accordingly, the value of the option is dependent on the future market
performance of the common stock.
The number of shares of common stock subject to options granted to our
executive officers is generally based on the salary, responsibilities and
performance of each officer. The compensation committee also expects to
consider the amounts and terms of prior grants in making new option
grants in each year. In addition, the compensation committee reviews the
number and value of options granted by selected peer companies in making
option grants to our executive officers.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Tax laws limit the deduction a publicly held company is allowed for
compensation paid to certain executive officers. Generally, amounts paid
in excess of $1 million to a covered executive, other than
performance-based compensation, cannot be deducted. The compensation
committee considers ways to maximize deductibility of executive
compensation, but the compensation committee retains the flexibility to
compensate executive officers in a manner commensurate with performance
and the competitive environment for executive talent regardless of the
ultimate deductibility of such compensation.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Robert G. Burton was appointed Chairman and Chief Executive Officer of
Cenveo on September 12, 2005. As discussed under "--Executive
Agreements," Cenveo has entered into an employment agreement with Mr.
Burton that provides, among other things, for an annual base salary of
not less than $950,000. Mr. Burton's compensation arrangement is
consistent with Cenveo's compensation policy.
Beginning on January 1, 2006, Mr. Burton will be eligible to receive a
cash bonus of 200% of his base salary to be paid on an all-or-nothing
basis in respect of each fiscal year in accordance with the provisions of
the annual goals set by the compensation committee. Mr. Burton did not
receive any bonus during 2005.
- 18 -
SEVERANCE PAID TO FORMER EXECUTIVES
Management of Cenveo changed immediately following the appointment of the
current directors pursuant to the Settlement and Governance Agreement
that Cenveo signed in order to settle a proxy contest that Burton Capital
Management LLC and Goodwood Inc. had waged for control of our Board. In
accordance with the terms of various severance arrangements that had been
approved by the former members of the Board, the departing executives
were paid the amounts described under "Compensation of Executive
Officers--Executive Agreements--Severance."
The foregoing report has been approved by all members of the compensation
committee.
Patrice M. Daniels (Chair)
Mark J. Griffin
Robert B. Obernier
REPORT OF THE AUDIT COMMITTEE
The Board has determined that all members of Cenveo's audit committee are
independent directors. The audit committee assists the Board in
fulfilling its responsibility for oversight of the quality and integrity
of its accounting, the system of internal controls established by
management, auditing and reporting practices as summarized beginning on
page 5. The full responsibilities of the audit committee are described in
its charter, a copy of which is attached to this proxy statement as
Exhibit A. The audit committee charter can also be accessed on Cenveo's
website at www.cenveo.com under "Investor --Governance".
Management is responsible for internal controls and the financial
reporting process, including the system of internal controls over
financial reporting. Cenveo's independent auditor, currently Ernst &
Young, LLP, is responsible for expressing an opinion on the conformity of
Cenveo's audited consolidated financial statements with generally
accepted accounting principles and on management's assessment of the
effectiveness of the company's internal controls as required by section
404 of the Sarbanes-Oxley Act. The audit committee monitors these
processes and reports its findings to the full Board. The committee has
reviewed and discussed Cenveo's audited consolidated financial statements
and the company's internal controls over financial reporting with
management and Cenveo's independent auditor. The audit committee has also
discussed with Cenveo's independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 (communication with
audit committees).
The audit committee has reviewed and implemented the provisions of the
Sarbanes-Oxley Act, the rules of the Securities and Exchange Commission
and the listing standards of the New York Stock Exchange. The audit
committee engaged independent legal counsel to review, assess and make
recommendations on procedures required by the Sarbanes-Oxley Act. The
audit committee also continues to follow the procedures recommended in
the report of the Blue Ribbon Committee on Improving the Effectiveness of
Corporate Audit Committees issued in February 1999, which is sponsored by
the major securities markets.
At each of its regular meetings in 2005, the audit committee met with
Ernst & Young and the senior members of Cenveo's financial management
team.
The audit committee reviewed with the financial management team:
* overall audit scopes and plans,
* results of internal and external audit examinations,
* management's discussion and analysis of financial condition and
results of operations contained in Cenveo's quarterly and annual
reports,
* evaluations of Cenveo's internal controls by management and Ernst &
Young, and
* quality of Cenveo's financial reporting.
- 19 -
In particular, the audit committee monitored and evaluated the process by
which management conducted its assessment of Cenveo's internal controls
over financial reporting as required by Section 404 of the Sarbanes-
Oxley Act.
The audit committee considered the need to ensure the independence of
Cenveo's auditors while recognizing that in certain situations Cenveo's
independent auditor may possess the expertise and be in the best position
to advise Cenveo on issues and matters other than accounting and
auditing. All audit services and fees payable to Cenveo's independent
auditor for audit services must be pre-approved. The audit committee's
charter allows a general pre-approval by the audit committee of
audit-related services without a specific case-by-case consideration of
each service to be performed by Cenveo's independent auditor. The audit
committee's charter requires that any other services, including any
permitted non-audit services, be approved by the audit committee or by an
audit committee member. The audit committee then communicates its
approval to management. All audit and non-audit services performed by
Ernst & Young during 2005 were pre-approved under these procedures.
Management reviewed Cenveo's 2005 audited financial statements with the
audit committee. In addressing the quality of management's accounting
judgments, the committee asked for management's representations that the
audited consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. The committee
expressed to both management and Ernst & Young its general preference for
conservative policies when a range of accounting options is available.
The audit committee had a private session at each of its four regular
meetings with Ernst & Young to candidly discuss financial management,
accounting and internal control adequacy and issues. The audit committee
asked Ernst & Young to address several questions that audit committee
members believe are particularly relevant to the audit committee's
oversight, including whether:
* there are any significant accounting judgments made by management in
preparing the financial statements that would have been made
differently had Ernst & Young prepared and been responsible for the
financial statements,
* Cenveo's financial statements fairly present to investors, with
clarity and completeness, its financial position and performance for
the reporting period in accordance with generally accepted
accounting principles and disclosure requirements of the Securities
and Exchange Commission,
* Cenveo has implemented internal controls and internal audit
procedures that are appropriate for it, and
* Ernst & Young had discovered any accounting adjustments made by
management during the year that would have been more properly
reflected in prior year results.
Based on the audit committee's review and discussions with management and
Ernst & Young referenced in this report and under "auditor independence"
on page 21, and Ernst & Young's report on the company's financial
statements, the audit committee recommended to the Board of Directors,
and the Board approved, that the audited financial statements be included
in Cenveo's annual report on Form 10-K for the year ending December 31,
2005, for filing with the Securities and Exchange Commission.
RESPECTFULLY SUBMITTED:
Leonard C. Green (Chair)
Patrice M. Daniels
Mark J. Griffin
Robert B. Obernier
- 20 -
INDEPENDENT PUBLIC AUDITORS
The audit committee has selected Ernst & Young, LLP as our independent
auditors for 2006. Representatives of Ernst & Young will be present at
the annual meeting and will be available to respond to appropriate
questions. They will have the opportunity to make a statement if they
desire to do so.
FEES
The following table shows the fees we paid to Ernst & Young in 2005 and
2004:
2005 2004
---- ----
Audit fees(1) $1,383,852 $1,639,014
Audit-related fees(2) $ 48,818 $ 104,400
Tax fees(3) $ 28,000 $ 41,000
All other fees $ -- $ --
Total $1,378,564 $1,784,414
(1) For auditing our annual consolidated financial statements and
accounting consultations during the audit and reviews of our
interim financial statements in our reports filed with the
Securities and Exchange Commission. Also includes fees relating to
the audit of our Canadian subsidiary, Supremex, in connection with
its sale. In addition, these fees include the audit of our
internal controls over financial reporting and management's
assessment of these controls.
(2) For audits of our employee benefit plans, accounting and auditing
consultation services and assistance with our debt offering in
2004.
(3) For tax return review and preparation and tax advice and planning.
AUDITOR INDEPENDENCE
The audit committee considered the effect that provision of the services
described above under "tax fees" may have on the independence of Ernst &
Young. These fees amounted to approximately 2.3% of our total fees paid
to Ernst & Young in 2004 and approximately 2.0% of our total fees paid in
2005. The committee approved these services and determined that those
non-audit services were compatible with maintaining the independence of
Ernst & Young as our principal auditor. Ernst & Young provided the
committee with the written disclosures required by Independence Standards
Board Standard No. 1 (independence discussions with audit committees),
and the committee discussed with Ernst & Young their independence.
- 21 -
RELATED PARTY TRANSACTIONS
SETTLEMENT AND GOVERNANCE AGREEMENT
On September 9, 2005, Cenveo's former management entered into a
settlement and governance agreement with Burton Capital Management and
Robert G. Burton, Sr. Pursuant to the settlement and governance
agreement, Cenveo's incumbent board of directors approved a reconstituted
board of directors.
Pursuant to the settlement and governance agreement, among other things:
* for a period of three years, our articles of incorporation and
bylaws will provide for the annual election of directors, the
ability of shareholders to remove directors without cause and the
ability of shareholders to call a special meeting;
* for a period of four years, no related party transactions will be
entered into by us without the approval of a committee of
disinterested directors;
* for a period of two years, except with the approval of a committee
of disinterested directors, we will not alter, amend or repeal our
shareholder rights plan, nor exempt Burton Capital Management, LLC
or certain of its affiliates from operation of such plan; and
* except with the approval of a committee of disinterested directors,
for a period of one year, Robert G. Burton, Sr. will not dispose of
any shares of our common stock that he owned on September 9, 2005.
In accordance with the settlement and governance agreement, Cenveo was
required to honor all of its employee benefit plans, agreements and
arrangements that applied to any of its employees, officers or directors.
The consummation of the transactions contemplated by the settlement and
governance agreement was deemed to be a "change of control" upon
effectiveness of the amendments referred to in the last sentence of this
paragraph solely for purposes of (i) the change of control, severance and
employment agreements with 14 persons who were executives of Cenveo on
September 9, 2005, (ii) our severance plan for non-union employees and
(iii) our 2001 long-term equity incentive plan. Pursuant to (and in
accordance with) the settlement and governance agreement, we were
permitted to amend the foregoing change of control, severance and
employment agreements with such 14 persons, amend the foregoing severance
plan and amend the foregoing long-term equity incentive plan in order to
effectuate the foregoing provisions of the settlement and governance
agreement.
The settlement and governance agreement also requires us to indemnify our
current and former directors and officers to the fullest extent permitted
by applicable law and our charter and bylaws.
In addition, pursuant to the settlement and governance agreement, Cenveo
reimbursed Burton Capital Management, LLC $800,000 for expenses incurred
in its proxy efforts to elect a new board of directors.
- 22 -
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following graph presents the cumulative total yearly stockholder
return from investing $100 on December 31, 2000, in each of:
* Cenveo's common stock,
* Standard & Poor's 500 Index, which is a broad equity market index
published by Standard & Poor's;
* a peer group chosen by Cenveo with companies similar to Cenveo,
weighted by market capitalization, which includes Consolidated
Graphics, Inc., Deluxe Corporation, R. R. Donnelley & Sons Company
and Standard Register Company; and
* Standard & Poor's 1500 Commercial Printing Index, which is an equity
market index published by Standard & Poor's of companies that are in
the same industry as Cenveo (Cenveo has added this index because it
believes that the index provides better comparability to Cenveo than
the peer group described above).
The amounts shown assume that any dividends were reinvested. Our common
stock is listed on the New York Stock Exchange under the symbol "CVO."
[GRAPH]
Years ended December 31
-----------------------
2000 2001 2002 2003 2004 2005
--------------------------------------------------------
Cenveo 100.00 95.07 57.97 106.90 71.88 305.16
S&P 500 Index 100.00 86.96 68.79 88.29 97.77 102.50
Peer Group 100.00 141.28 147.94 172.86 184.13 169.56
S&P 1500 Commercial Printing Index 100.00 116.07 99.79 124.83 152.14 147.54
- 23 -
OTHER INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors, executive officers and certain other stockholders are
required to report their ownership of our common stock and any changes in
that ownership to the Securities and Exchange Commission and the New York
Stock Exchange. To the best of our knowledge, all required filings in
2005 were properly made in a timely fashion, except that Leonard C. Green
did not timely disclose ownership of certain shares when he first filed
on Form 3 with the SEC and did not timely disclose the acquisition of
certain shares on a Form 4 that was filed with the SEC on April 11, 2005.
In making these statements, we have relied on the representations of the
persons involved and on copies of their reports filed with the
Commission.
FINANCIAL MATERIALS
STOCKHOLDERS MAY REQUEST FREE COPIES OF OUR FINANCIAL MATERIALS (ANNUAL
REPORT, FORM 10-K AND PROXY STATEMENT) FROM CENVEO, INC., ONE CANTERBURY
GREEN, 201 BROAD STREET, STAMFORD, CT 06901, ATTENTION: CORPORATE
SECRETARY. THESE MATERIALS MAY ALSO BE ACCESSED ON OUR WEB SITE AT
www.cenveo.com.
STOCKHOLDER LIST
A list of registered shareholders on the record date for the annual
meeting will be available for inspection from April 5, 2006 through the
annual meeting at the offices of Hughes Hubbard & Reed LLP, One Battery
Park Plaza, New York, New York 10004.
CONTACT THE BOARD
Stockholders may at any time direct questions to the independent
directors of the Board by sending an e-mail to
independentdirector@cenveo.com. All communications required by
law or regulation to be relayed to the Board will be promptly delivered
to our independent directors. The independent directors monitor these
e-mail messages and facilitate an appropriate response.
Employees and others may confidentially or anonymously report potential
violations of laws, rules, regulations or our code of business conduct
and ethics, including questionable accounting or auditing practices, by
calling our ethics and business conduct hotline at 1-800-513-4056 or via
the internet at www.mysafeworkplace.com.
- 24 -
QUESTIONS AND ANSWERS
Q: WHY AM I RECEIVING THESE MATERIALS?
A: Cenveo is providing these proxy materials to you in
connection with its annual meeting of stockholders, which
will take place on May 5, 2006. As a stockholder, you are
invited to attend the meeting and may vote on the proposals
described in this proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to
the proposals to be voted on at the meeting, the voting
process, the compensation of directors and executive
officers and certain other required information. Our 2005
Annual Report is also enclosed.
Q: WHO MAY VOTE AT THE MEETING?
A: Only stockholders of record at the close of business on
March 17, 2006 may vote at the meeting. As of the record
date, 53,152,397 shares of Cenveo's common stock were issued
and outstanding. Each stockholder is entitled to one vote
for each share of common stock held on the record date.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A
STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
A: Most stockholders hold shares through a stockbroker, bank or
other nominee rather than directly in their own name. There
are some distinctions between shares held of record and
shares owned beneficially, which are summarized below:
Stockholder of Record. If your shares are registered
---------------------
directly in your name with our transfer agent, Computershare
Trust Company, Inc., you are considered to be the
STOCKHOLDER OF RECORD of those shares and these proxy
materials are being sent directly to you by Cenveo. As the
STOCKHOLDER OF RECORD, you have the right to vote by proxy
or to vote in person at the meeting. In that case, we have
enclosed a proxy card for you to use.
Beneficial Owner. If your shares are held in a stock
----------------
brokerage account or by a bank or other nominee, you are
considered the BENEFICIAL OWNER of shares held IN STREET
NAME, and these proxy materials are being forwarded to you
by your broker or bank, which is considered to be the
STOCKHOLDER OF RECORD of those shares. As the beneficial
owner, you have the right to direct your broker how to vote
and are also invited to attend the meeting. If you wish to
vote these shares at the meeting, you must contact your bank
or broker for instructions as to how to do so. Your broker
or bank has enclosed a voting instruction card for you to
use in directing the broker or nominee how to vote your
shares for you.
Q: WHAT MAY I VOTE ON AT THE MEETING?
A: You may vote to elect seven nominees to serve on Cenveo's
board of directors for terms expiring at the next annual
meeting and to ratify the selection of Ernst & Young LLP as
our independent auditors for 2006.
Q: HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE?
A: The board of directors recommends that you vote your shares
FOR each of the seven listed director nominees and FOR the
ratification of our independent auditors.
Q: HOW CAN I VOTE MY SHARES?
A: You may vote either in person at the meeting or by
appointing a proxy. Please refer to the instructions
included on your proxy card to vote by proxy. If you hold
your shares through a bank, broker or other record holder,
then you may vote by the methods your bank or broker makes
available using the instructions the bank or broker has
included with this proxy statement. These methods may
include voting over the internet, by telephone or by using a
traditional proxy card.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote FOR all of the
director nominees or your vote may be WITHHELD with respect
to one or more nominees. You may vote FOR, AGAINST or
ABSTAIN on the proposal to ratify the auditors.
- 25 -
Q: WHAT IS A "QUORUM", AND WHY IS IT NECESSARY?
A: Conducting business at the annual meeting requires a quorum.
For a quorum to exist, stockholders representing a majority
of the outstanding shares entitled to vote must be present
in person or represented by proxy. Under the Colorado
Business Corporation Act, abstentions and broker non-votes
are treated as present for purposes of determining whether a
quorum exists. A broker non-vote occurs when a broker cannot
exercise discretionary voting power and has not received
instructions from the beneficial owner.
Q: WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL, AND HOW WILL
VOTES BE COUNTED?
A: If a quorum is present, directors will be elected by a
plurality of the votes cast. This means that the seven
nominees receiving the highest number of votes will be
elected as directors. Cenveo's articles of incorporation do
not permit stockholders to cumulate their votes.
We expect that, in accordance with the rules of the New York
Stock Exchange, brokers will be permitted to exercise
discretionary authority for the election of the nominees
named in this proxy statement and on each matter presented
in this proxy statement.
Since directors will be elected by a plurality of the votes
cast, abstentions and broker non-votes will not have the
effect of a vote for or against the election of any
nominees.
Each of our proposals other than the election of directors
will be adopted if votes cast in favor of the proposal
exceed the votes cast against the proposal, and abstentions
and broker non-votes will therefore have no effect on the
proposal.
Q: CAN I CHANGE MY VOTE?
A: You have the right to revoke your proxy at any time before
the meeting by:
* providing written notice to Cenveo's corporate secretary
that you revoke your proxy,
* voting in person at the meeting, or
* appointing a new proxy before the meeting begins.
Attending the meeting will not by itself revoke a proxy
unless you specifically revoke your proxy in writing.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: If your shares are registered differently and are held in
more than one account, then you will receive more than one
proxy card. Be sure to vote all of your accounts so that all
of your shares are voted. We encourage you to have all
accounts registered in the same name and address whenever
possible. You can do this by contacting ADP/Investor
Communication Services at 51 Mercedes Way, Edgewood, New
Jersey 11717, phone (631) 274-8024.
Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: We do not know of any business to be considered at the
meeting other than election of seven directors and
ratification of our independent auditors. If any other
business is properly presented at the meeting, your proxy
gives Sean S. Sullivan, our Chief Financial Officer, and
Timothy Davis, our Senior Vice President, General Counsel
and Secretary, authority to vote on these matters in their
discretion.
Q: WHO MAY ATTEND THE MEETING?
A: All stockholders who owned shares of our common stock on the
record date, March 17, 2006, may attend the meeting. You may
indicate on the enclosed proxy card if you plan to attend
the meeting.
Q: WHERE AND WHEN WILL I BE ABLE TO FIND THE RESULTS OF THE
VOTING?
A: The results of the voting will be announced at the meeting.
We will also publish the final results in our quarterly
report on Form 10-Q for the second quarter of 2006, which we
will file with the Securities and Exchange Commission.
- 26 -
Q: WHEN ARE STOCKHOLDER PROPOSALS FOR THE 2007 ANNUAL MEETING
DUE?
A: All stockholder proposals to be considered for inclusion in
our proxy statement for the 2007 annual meeting must be
received by our corporate secretary at our principal office
by February 3, 2007.
Q: WHO WILL BEAR THE COST OF SOLICITING PROXIES FOR THE
MEETING, AND HOW WILL THESE PROXIES BE SOLICITED?
A: We will pay the cost of preparing, assembling, printing,
mailing and distributing these proxy materials, including
the charges and expenses of brokers, banks, nominees and
other fiduciaries who forward proxy materials to their
principals. Proxies may be solicited by mail, in person, by
telephone or by electronic communication by our officers and
employees, who will not receive any additional compensation
for these solicitation activities.
- 27 -
EXHIBIT A
AUDIT COMMITTEE CHARTER
The Board of Directors (the "Board") of Cenveo, Inc. (the "Company")
hereby constitutes and establishes an Audit Committee (the "Committee")
with the authority, purpose, responsibilities and specific duties
described below.
PURPOSE AND RESPONSIBILITIES
The Committee has been formed to assist the Board in fulfilling its
oversight responsibilities and to carry out the requirements of
applicable law and the requirements of the New York Stock Exchange
("NYSE"). The Committee shall be directly responsible for the
appointment, compensation, and oversight of the work of the Company's
independent auditors (including resolution of disagreements between
management and the independent auditors regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work.
The primary purpose and responsibilities of the Committee are to:
1. Assist Board oversight of (a) the integrity of the Company's
financial statements, (b) the Company's compliance with legal
and regulatory requirements, (c) the independent auditor's
qualifications and independence, and (d) the performance of
the Company's internal audit function and independent
auditors;
2. Prepare the Audit Committee report required by the Securities
and Exchange Commission ("SEC") to be included in the
Company's annual proxy statement;
3. Fulfill the responsibilities of the Audit Committee set out
in Rule 10A-3(b)(2), (3), (4) and (5) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Section 303A
of the Listing Standards of the NYSE;
4. Monitor the integrity of the Company's financial reporting
process;
5. Monitor the Company's systems of internal controls regarding
finance, accounting, and legal and regulatory compliance;
6. Monitor the independence and performance of the Company's
financial executives; and
7. Provide an avenue of communication among the independent
auditors, management, the internal audit department and the
Board.
MEMBERSHIP AND OPERATIONS
Committee members shall meet the independence, experience and expertise
requirements of the Exchange Act, including the Sarbanes-Oxley Act of
2002 ("Sarbanes"), as well as all applicable rules and regulations of
the NYSE and the SEC. The Committee shall be comprised of three or more
directors. All members of the Committee shall have a basic understanding
of finance and accounting practices and be able to read and understand
fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management
expertise.
A Committee member shall not serve on the audit committee of more than
two other companies. Members of the Committee and the Chair shall be
appointed and removed from time to time by the independent members of the
Board.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Committee Chair shall prepare and/or
approve an agenda in advance of each meeting. The Chair shall have full
voting rights. The Chair may call, in his or her discretion, special
meetings of the Committee which meetings may be conducted telephonically.
In the event that the Chair is absent from a meeting, the member with the
greatest seniority on the Board shall chair the meeting unless the
members agree otherwise.
A-1
The Chair shall appoint a secretary of the Committee who need not be a
member of the Committee or the Board and who may be an employee of the
Company. The secretary shall keep minutes of the meeting but shall not be
entitled to vote on matters presented for a vote unless otherwise a
member of the Committee. Attendance by persons other than members of the
Committee at meetings of the Committee shall be allowed only at the
invitation of the Chair or a majority of the members. The duties,
responsibilities and powers of the Committee may be delegated to a
subcommittee upon a majority vote of the members.
ADDITIONAL DUTIES
The Audit Committee will fulfill its primary purpose and responsibilities
by carrying out the following duties:
A. General Committee Authority and Responsibilities.
------------------------------------------------
1. The Committee shall review and reassess the adequacy of this
Charter at least annually. The Committee shall submit this
Charter to the Board for approval and have the document
published at least every three years in accordance with SEC
regulations.
2. The Committee annually shall review its own performance.
3. The Committee shall meet privately in executive session at
least semi-annually with management, the director of the
internal audit department, the independent auditors and as a
committee to discuss any matters that the Committee or each
of these groups believe should be discussed.
4. The Committee, or its Chair, shall communicate with
management and the independent auditors quarterly to review
the Company's financial statements and significant findings
raised by the auditors.
5. The Committee shall, no less frequently than annually,
review and discuss with management the Company's policies
with respect to risk assessment and risk management.
6. The Committee shall maintain minutes of meetings and report
to the Board on significant results of its activities at the
next scheduled meeting of the Board following the meeting of
the Audit Committee.
7. The Committee shall advise the entire Board on a regular
basis with respect to the Company's financial policies and
procedures regarding compliance with applicable laws and
regulations, as well as the performance of the independent
auditors and internal audit function, and the independence
of the independent auditors.
8. The Committee shall set clear hiring policies for employees
or former employees of the independent auditors.
B. Financial Statement and Disclosure Matters.
------------------------------------------
1. The Committee shall review, and discuss with management and
the independent auditors, the Company's annual and quarterly
financial statements, including any certification, report,
opinion or review rendered by the independent auditors, and
including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results
of Operations."
2. The Committee shall review and discuss with management and
the independent auditors the Company's financial information
and earnings guidance provided to analysts and rating
agencies, and the Company's earnings press releases. These
reviews and discussions may be done generally (i.e.,
discussion of the types of information to be disclosed and
the type of presentation to be made) rather than with
respect to each release and each instance of guidance.
3. The Committee shall consider the integrity of the Company's
financial reporting and operational processes and controls,
in consultation with management, the independent auditors
and the internal auditors. The Committee shall discuss
significant financial risk exposures and the steps
management has taken to monitor, control and report such
exposures.
A-2
4. The Committee shall consider and review with management and
the independent auditors (and where appropriate the internal
auditors) at the completion of the annual examination (a)
any material off-balance sheet transactions, arrangements,
obligations (including contingent obligations) and other
relationships of the Company with unconsolidated entities or
other persons that may have a material current or future
effect on financial condition, changes in financial
condition, results of operations, liquidity, capital
expenditures, capital resources, or significant components
of revenues or expenses and (b) any material correcting
adjustments that have been identified by the independent
auditors in accordance with GAAP and applicable laws, rules
and regulations.
5. The Committee shall review significant findings, including
any audit problems or difficulties prepared by the
independent auditors in connection with the preparation of
quarterly and annual financial statements, together with
management's responses.
6. The Committee quarterly shall review and discuss the
following:
a. Major issues regarding accounting principles and
financial statement presentations, including any
significant changes in the Company's selection or
application of accounting principles, and major
issues as to the adequacy of the Company's
internal controls and any special audit steps
adopted in light of material control
deficiencies;
b. Analyses prepared by management and/or the
independent auditors setting forth significant
financial reporting issues and judgments made in
connection with the preparation of the financial
statements, including analyses of the effects of
alternative GAAP methods on the financial
statements; and
c. The effect of regulatory and accounting
initiatives, as well as off-balance sheet
structures, on the financial statements of the
Company.
7. The Committee shall review with the Board any issues that
arise with respect to the quality and integrity of the
Company's financial statements.
C. Oversight of the Company's Relationship with the Independent
------------------------------------------------------------
Auditors.
--------
1. The independent auditors shall be directly accountable to
the Committee and the Board. The Committee shall review the
qualifications, independence and performance of the
independent auditors. In connection with this review, the
Committee shall:
a. Assure regular rotation of the lead audit partner
in accordance with applicable law;
b. Consider whether, in order to assure continuing
auditor independence, there should be a regular
rotation of the firm of independent auditors; and
c. Annually (or more frequently) review and discuss
with the independent auditors all significant
relationships they have with the Company that
could impair the auditors' independence.
The Committee shall present its conclusions to the Board
and, if so determined by the Committee, recommend that the
Board take additional action to satisfy itself as to the
qualifications, independence and performance of the
independent auditors.
2. The Committee annually shall receive from the independent
auditors written certification that their firm is registered
with the Public Company Accounting Oversight Board to the
extent such registration is required under applicable laws
and regulations.
3. The Committee shall receive from the independent auditors,
prior to approving the appointment of the independent
auditors for audit services, written confirmations of the
following:
a. Neither the auditor having primary responsibility
for the audit nor the auditor responsible for
reviewing the audit has performed audit services
for the Company in each of the five previous
fiscal years of the Company; and
A-3
b. None of the CEO, CFO or Controller was employed
by the independent auditors and participated in
any capacity in the audit of the Company during
the one-year period preceding the date of the
initiation of the audit.
4. The Committee shall receive annually from the independent
auditors a report describing:
a. Their firm's internal quality-control procedures;
b. Any material issues raised by the most recent
internal quality-control review, or peer review,
or any inquiry or investigation by governmental
or professional authorities within the preceding
five years respecting one or more independent
audits carried out by their firm, and any steps
taken to deal with any such issues; and
c. All relationships between the independent
auditors and the Company to assess the auditor's
independence.
5. The Committee annually shall retain the independent auditors
on terms approved by the Committee, and any audit services
and fees therefore shall be subject to pre-approval, and
discharge the independent auditors when circumstances
warrant.
6. The Committee shall ensure that the independent auditors do
not provide for the Company any non-audit services
prohibited by applicable law or rules of the NYSE.
7. The Committee shall approve, subject to review in advance,
the engagement of the independent auditors for any permitted
non-audit services, as well as the fees and other
compensation to be paid to the independent auditors in
connection with such non-audit services. The Committee shall
communicate all such approvals to the Company's management
for disclosure in the appropriate periodic report of the
Company to the SEC. The authority to grant the approvals
required under this section may be delegated to any one or
more members of the Committee (each, an "Approving
Member"). Each Approving Member shall present to the full
Committee any approvals made by such Approving Member since
the last meeting of the Committee.
8. The Committee shall review the independent auditors' audit
plan prior to the audit, and shall discuss with the
independent auditors their scope, staffing, locations,
reliance upon management and internal audit, and general
audit approach.
9. The Committee shall receive from the independent auditors
reports respecting:
a. All critical accounting policies and practices to
be used;
b. All alternative treatments of financial
information within generally accepted accounting
principles that have been discussed with the
Company's management, ramifications of the use of
such alternative disclosures and treatments, and
the treatment preferred by the independent
auditors; and
c. Other material written communications between the
independent auditors and the Company's
management, such as any management letter or
schedule of unadjusted differences.
10. The Committee shall discuss the results of the audit with
the independent auditors prior to releasing the year-end
earnings, including matters required to be communicated to
audit committees in accordance with Statement of Auditing
Standards No. 61. Further to this point, the Committee shall
discuss with the independent auditors:
a. Any changes to the audit plan, restrictions on
scope of activities and observations of control
weaknesses;
b. Any audit problems or difficulties and
management's response;
c. The adoption of, or changes to, the Company's
significant auditing and accounting principles
and practices as suggested by the independent
auditors, internal audit department or
management; and
A-4
d. Any "management" or "internal control" letter
issued, or proposed to be issued, by the
independent auditors and the Company's response
to such letter.
11. The Audit Committee shall discuss with the national office
of the independent auditors any issues on which such office
was consulted by the Company's audit team.
D. Oversight of the Company's Internal Audit Function.
--------------------------------------------------
1. The internal audit department shall be responsible to senior
management, but have a direct reporting responsibility to
the Board through the Committee. The Committee shall review
the appointment, performance and replacement of the senior
internal audit executive. Changes in the senior internal
audit executive shall be subject to Committee approval.
2. The Committee shall review the annual internal audit plan,
staffing and audit costs.
3. The Committee shall discuss with the independent auditors
the internal audit responsibilities, budget and staffing and
any recommended changes in the planned scope of the internal
audit.
4. The Committee shall review significant reports prepared by
the internal audit department together with management's
responses and follow-up to these reports.
5. The Committee shall review with the Board any issues that
arise with respect to the performance of the internal audit
function.
E. Compliance Oversight Responsibilities.
-------------------------------------
1. The Committee shall establish procedures for the following:
a. The receipt, retention, and treatment of
complaints received by the Company regarding
accounting, internal accounting controls, or
auditing matters; and
b. The confidential, anonymous submission by
employees of the Company of concerns regarding
questionable accounting or auditing matters.
2. The Committee quarterly (or more frequently) shall review
with the Company's internal and/or external counsel, any
legal matters that could have a significant impact on the
Company's financial statements, the Company's compliance
with applicable laws and regulations and inquiries received
from regulators or governmental agencies.
3. The Committee annually shall receive reports from
management, the senior internal audit executive and the
independent auditors that the Company and its subsidiaries
are in conformity with applicable legal and regulatory
requirements and, if applicable, the Company's Code of
Business Conduct and Ethics.
4. The Committee shall review with the Board any issues that
arise with respect to the Company's compliance with legal
and regulatory requirements and with the Company's Code of
Business Conduct and Ethics.
5. The Committee regularly shall review reports and disclosures
of insider and affiliated party transactions.
6. The Committee shall discuss with management and the
independent auditors any correspondence with regulators or
governmental agencies and any employee complaints or
published reports that raise material issues regarding the
Company's financial statements or accounting policies.
POWERS
The Committee shall have such powers as are necessary or appropriate to
accomplish its purpose, responsibilities and duties.
1. The Committee may form and delegate authority to
subcommittees consisting of one or more members of the
Committee when appropriate.
A-5
2. The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities
and it has direct access to the independent auditors as well
as anyone in the organization.
3. The Committee shall have the authority, without seeking
Board approval, to retain independent counsel and other
advisors as the Committee determines necessary to carry out
its duties. As determined by the Committee, the Company
shall provide appropriate funding for payment of
compensation to any such advisors.
4. The Committee shall perform such other activities consistent
with this Charter, the Company's by-laws and governing law,
as the Committee or the Board deems necessary or
appropriate.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements
and disclosures are complete and accurate and are in accordance with
generally accepted accounting principles and applicable rules and
regulations. These are the duties of the Company's management and
independent auditors.
A-6
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==============================================================================
CENVEO, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ALL LISTED NOMINEES
VOTE ON DIRECTORS
1. Election of seven directors
NOMINEES:
01) Robert G. Burton, Sr. 05) Robert T. Kittel
02) Patrice M. Daniels 06) Robert B. Obernier
03) Leonard C. Green 07) Thomas W. Oliva
04) Mark J. Griffin
FOR WITHHOLD FOR ALL
ALL FOR ALL EXCEPT
/ / / / / /
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THE
NOMINEE'S NAME ON THE LINE BELOW.
------------------------------------------------
2. Proposal to ratify the selection of Ernst & Young
LLP as the corporation's independent auditors FOR AGAINST ABSTAIN
for the fiscal year ending December 31, 2006.
/ / / / / /
The shares represented by this proxy will be voted in the manner
directed. In the absence of any direction, the shares will be voted FOR each
named director nominee and FOR Proposal 2 and in accordance with their
discretion on such other matters as may properly come before the meeting.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THIS SIDE
(Signature(s) should conform to names as
registered. For jointly owned shares, each
owner should sign. When signing as attorney,
executor, administrator, trustee, guardian
or officer of a corporation, please give
full title).
YES NO
Please indicate if you plan to attend this meeting. / / / /
HOUSEHOLDING ELECTION - Please indicate if you
---------------------
consent to receive certain future investor
communications in a single package per
household. / / / /
---------------------------------------- --------------------------------
---------------------------------------- --------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
===============================================================================
-------------------------------------------------------------------------------
===============================================================================
REVOCABLE PROXY
CENVEO, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, MAY 5, 2006
The undersigned, revoking any proxy heretofore given, hereby
appoints, as proxies for the undersigned, SEAN S. SULLIVAN and TIMOTHY
DAVIS, or either of them, with full power of substitution, to vote all
shares of the capital stock of CENVEO, INC., a Colorado corporation
(hereinafter, the "corporation"), that the undersigned is entitled to vote
at the corporation's annual meeting of stockholders to be held on Friday,
May 5, 2006, at 12:00 p.m., Eastern time, at the Four Seasons Hotel, 57 West
57th Street, New York, New York 10022, receipt of notice of which meeting
and the proxy statement accompanying the same being hereby acknowledged by
the undersigned, and at any adjournments or postponements thereof, upon the
matters described in the notice of meeting and proxy statement and upon such
other business as may properly come before the meeting or any adjournments
or postponements thereof, hereby revoking any proxies heretofore given.
Each properly executed proxy will be voted in accordance with the
specifications made on the reverse side of this card and in the discretion
of the proxies on any other matter that may come before the meeting. Where
no choice is specified, this proxy will be voted FOR all listed nominees to
serve as directors and FOR Proposal 2.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
===============================================================================
APPENDIX
Page 23 of the proxy statement contains a Performance Graph. The
information contained within the graph is presented in a tabular format
immediately following the graph.