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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): APRIL 30, 2007
MOVADO GROUP, INC.
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(Exact name of registrant as specified in charter)
NEW YORK
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(State or other jurisdiction of incorporation)
1-16497 13-2595932
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(Commission File Number) (IRS Employer Identification Number)
650 FROM ROAD
PARAMUS, NEW JERSEY 07652
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 267-8000
NOT APPLICABLE
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS.
(e) On April 30, 2007, the Compensation Committee (the
"COMMITTEE") of Movado Group, Inc. (the "COMPANY") approved additional awards
under the Movado Group, Inc. Executive Long-Term Incentive Plan (the "LTIP"),
which was adopted initially on May 31, 2006 pursuant to Section 9 of the Movado
Group, Inc. 1996 Stock Incentive Plan (as amended and restated, the "PLAN").
The awards relate to the three-year Award Period (as defined below) ending on
January 31, 2010. The Committee may make additional awards under the LTIP with
respect to future Award Periods.
The LTIP provides for the award of "Performance Share Units" (as
defined in the Plan) during the three fiscal years beginning with the fiscal
year during which the award is granted (the "AWARD PERIOD"). Performance Share
Units are equivalent, one for one, to shares of "Stock" (as defined in the
Plan) that vest based on the Company's achievement of its "operating margin"
(as defined in the LTIP) for the last fiscal year of the Award Period (the
"PERFORMANCE GOAL") and continued service by the employee. Each participant's
target award is expressed as a number of Performance Share Units. The actual
number of shares of Stock earned by a participant will be based on the
Company's actual performance at the end of the Award Period relative to the
Performance Goal and can range from 0% to 150% of the target award.
Depending on the extent to which the Performance Goal is
achieved, up to 50% of the shares of Stock equal to the target Award will be
distributed within 75 days after the completion of the Award Period and the
remainder of the earned shares will be distributed on the second anniversary of
the completion of the Award Period. Participants must be employed at the
completion of the Award Period to receive the shares. The amount deferred to
the second anniversary is subject to forfeiture only in the event of the
participant's voluntary resignation or termination of the participant's
employment for "Cause" (as defined in the LTIP). A pro-rata payout will be made
for "retirement" (as defined in the LTIP), permanent disability (as determined
by the Committee) or death occurring during the Award Period based on actual
performance at the end of the Award Period.
Each Performance Share Unit will be credited with "Dividend
Equivalents" (as defined in the Plan) equal to the dividends paid on one share
of Stock during the Award Period and the subsequent two-year mandatory deferral
period. Dividend Equivalents will be in the form of "Phantom Stock Units" (as
defined in the Plan) and will be distributed as an equal number of shares of
Stock at the same time as the distribution of earned shares.
Upon the occurrence of a "Change in Control" (as defined in the
Plan), the Performance Share Units awarded will be converted on a one-for-one
basis to time-based Phantom Stock Units without pro-ration, which will vest at
the end of the Award Period. Upon vesting, one share of Stock will be
distributed for each Phantom Share Unit not previously forfeited. If the Change
in Control occurs during the first 12 months of the Award Period, the shares
will be converted at 50% of the target Award. If the Change in Control occurs
during the second 12 months of the Award Period, the shares will be converted
at 100% of the target Award. If the Change in Control occurs during the final
12 months of the Award Period, the shares will be converted at a percentage of
the target Award based on actual performance through the Change in Control
date. If a participant's employment is terminated within 24 months after the
Change in Control, the unvested Phantom Stock Units will become immediately
vested.
A form of the LTIP Award Notice, which contains a summary of the
material terms of the award, is filed as Exhibit 10.1 to this Form 8-K and
incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
10.1 Form of LTIP Award Notice.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report on Form 8-K to be signed on
its behalf by the undersigned, hereunto duly authorized.
Dated: May 4, 2007
MOVADO GROUP, INC.
By: /s/ Timothy F. Michno
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Name: Timothy F. Michno
Title: General Counsel
EXHIBIT 10.1
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MOVADO GROUP, INC.
EXECUTIVE LONG-TERM
INCENTIVE PROGRAM
INTRODUCTION:
The Movado Group, Inc. long-term incentive plan ("LTIP") is a performance share
program that has been established by the Compensation Committee of the Board of
Directors of Movado Group, Inc. (the "Committee") pursuant to Section 9 of the
Movado Group, Inc. 1996 Stock Incentive Plan (as amended and restated, the
"Plan").
Capitalized terms that are not defined below have the meaning given to them in
the Plan. Performance Share Units are equivalent, 1 for 1, to shares of Stock
that vest based on the Company's achievement of multi-year Performance Goals
and the continued service of the Plan Participant.
OBJECTIVES:
o Links compensation to the achievement of corporate goals
o Recognizes competitive practices in executive compensation
o Focuses key employees on the improvement of the Company's operating
profit
o Provides greater equity awards for achieving and exceeding goals
o Assists with the attraction and retention of key management personnel
TYPE OF AWARD:
Your Award is in the form of Performance shares as described under Section 9 of
the Plan. These Performance Share Units will be credited with Dividend
Equivalents during the Award Period as described below if the Performance Goals
are achieved and the stock is distributed.
PERFORMANCE GOALS:
The Performance Goal that will determine the number of shares of Stock, if any,
you receive is the Company's OPERATING MARGIN. Operating margin is defined as
operating profit divided by net sales, determined in accordance with GAAP as
consistently applied by the Company. This number will be adjusted to exclude
the impact of acquisitions and divestitures.
AWARD PERIOD:
The Award Period, which is the period of time within which performance is
measured to determine whether an Award of Performance Share Units has been
earned, is a three year period ending January 31.
SIZE OF INDIVIDUAL AWARDS:
Your target Award is expressed as a Number of Performance Share Units. The
actual number of shares of Stock earned is based on actual performance at the
end of the Award Period relative to the Performance Goals and can range from 0%
to 150% of the target Award depending on the achievement of the operating
margin goals.
PERFORMANCE STANDARDS:
o The number of shares of Stock earned is determined using the following
payout schedule for the Award Period ending January 31.
o Payouts between performance levels will be based on straight line
interpolation.
THREE YEAR FISCAL PERFORMANCE CYCLE
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Degree of Performance Operating % of Shares
Attainment Margin FY [ ]** Earned
(% of Target Goal)
Maximum (111%) * 150%
Target (100%) * 100%
Threshold (89.5%) * 50%
Below Threshold * 0%
* To be determined by resolution of the Committee
** The last fiscal year of the Award Period.
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VESTING AND EARN OUT:
After the Award Period ends, depending on the extent to which the Performance
Goals is achieved, up to 50% of the shares of Stock equal to the target Award
will be distributed within 75 days after completion of the Award Period and the
remainder of the earned shares will be distributed on the 2nd anniversary of
completion of the Award Period.
Participants must be employed at the completion of the Award Period in order to
receive the shares of Stock. The amount deferred to the 2nd anniversary is
subject to forfeiture only in the event of the Participant's voluntary
resignation or termination of the Participant's employment for cause.
TERMINATION FOR CAUSE
For purposes of this LTIP, the Participant's employment shall be deemed to be
terminated for "Cause" if the Participant is discharged: (i) on account of
fraud, embezzlement or other unlawful or tortious conduct, whether or not
involving or against the Company or any Affiliate, (ii) for violation of a
written policy of the Company or any Affiliate, (iii) for serious and willful
acts of misconduct detrimental to the business or reputation of the Company or
any Affiliate or (iv) for "Cause" or any like term as defined in any written
employment contract with the Participant
PRO-RATA PAYOUTS
Pro-rata payouts will be made for retirement, permanent disability (as
determined by the Committee) and death occurring during the Award Period based
on actual performance at the end of the Award Period.
RETIREMENT AND LEAVE OF ABSENCE
For purposes of the LTIP, "retirement" means a Participant's voluntary
resignation (i) at or after age 65, or (ii) before the age of 65 but after age
55 provided the Participant has been employed by the Company (or one of its
Affiliates) for at least 10 years and further subject to the specific approval
of the Committee (including any limitations or conditions the Committee may, in
its discretion, impose which are not inconsistent with the express terms of the
Plan such as, without limitation, a covenant by the Participant not to compete
with the Company).
The Committee may in its discretion determine whether any leave of absence
(including short-term or long-term disability or medical leave) shall
constitute a termination of employment for purposes of the LTIP.
DISTRIBUTION SCHEDULE
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TARGET AWARD: 2,000 PERFORMANCE SHARE UNITS
ACTUAL PERFORMANCE # OF SHARES # OF SHARES OF STOCK DISTRIBUTED
LEVEL EARNED (END OF CYCLE)* 2ND ANNIVERSARY
Maximum 3,000 1,000 2,000
Target 2,000 1,000 1,000
Threshold 1,000 500 500
*EQUAL TO THE LESSER OF (A) 50% OF NUMBER OF SHARES EARNED OR (B) 50% OF TARGET
SHARES
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PAYOUT:
Awards will be paid in shares of Stock, net of required tax withholding.
Dividend credits are paid on the number of shares actually earned, as described
below.
DIVIDENDS:
Each Performance Share Unit will be credited with Dividend Equivalents equal to
the dividends paid on one share of Stock during the Award Period and the
subsequent two-year mandatory deferral period.
Dividend Equivalents will be in the form of Phantom Stock Units and will be
distributed as an equal number of shares of Stock at the same time as the
distribution of earned shares.
CHANGE IN CONTROL:
If there should be a Change in Control, the Performance Share Units awarded
will be immediately and automatically converted on a 1 for 1 basis to
TIME-BASED Phantom Stock Units without pro-ration which will vest at the end of
the Award Period and upon vesting, one share of Stock will be distributed for
each Phantom Share Unit not previously forfeited. The basis for conversion
depends upon when during the Award Period the Change in Control occurs.
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TIME OF THE CHANGE IN CONTROL SHARES CONVERTED AT
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Months 1 through 12 Threshold
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Months 13 through 24 Target
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Months 25 through 36 Performance to Date
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If a Participant's employment is terminated within 24 months after the Change
in Control, the unvested Phantom Stock Units will become immediately vested.
MISCELLANEOUS:
The Committee reserves the right with or without notice, at any time and from
time to time, in its sole and absolute discretion to (i) amend or modify in
whole or in part any of the provisions of the LTIP in any respect whatsoever
(ii) suspend or cancel the LTIP and (iii) make exceptions to any or all of the
provisions of the LTIP on a case by case basis.
This LTIP shall be subject to all of the terms and provisions of the Plan,
which are incorporated hereby and made a part hereof. If there is any
inconsistency between any of the provisions of the LTIP and the Plan, the
provisions of the Plan shall govern.
NEITHER THE PLAN NOR THE LTIP CONSTITUTES A CONTRACT OF EMPLOYMENT AND THE
COMPANY SPECIFICALLY RESERVES THE RIGHT TO TERMINATE A PARTICIPANT'S EMPLOYMENT
AT ANY TIME WITH OR WITHOUT CAUSE AND WITH OR WITHOUT NOTICE OR ASSIGNING A
REASON.