KIDBQ Kid Brands Inc (CE)

We are currently considered a “smaller reporting company” for purposes of the SEC’s executive compensation and other disclosures. As such, we have opted to take advantage of certain of the scaled disclosure requirements afforded to smaller reporting companies and, as a result, have provided more limited (or, in some cases, eliminated) disclosures that we have provided in prior years’ executive compensation disclosures. The executive compensation disclosures that follow comply with the SEC’s executive compensation disclosure rules for smaller reporting companies and therefore are generally more narrow in scope than the executive compensation disclosures and Compensation Discussion and Analysis that we have included in prior proxy statements.

Overview

The following discussion describes the Company’s executive compensation program for those individuals we have identified as our “named executive officers” or “NEOs” for 2013 in accordance with the executive compensation disclosure rules and regulations of the SEC for smaller reporting companies. As used below, the “Committee” refers to the Compensation Committee of the Board. The Company’s principal executive officer, the two other most highly compensated executive officers of the Company during 2013, who were in each case serving as executive officers on December 31, 2013 (“Top 2 Officers”), and two individuals (our former Senior Vice President and General Counsel and our former President of LaJobi) who would have qualified as Top 2 Officers had they been serving as executive officers on December 31, 2013, are our NEOs for 2013.

10

Table of Contents

Key Decisions for 2013

Although we fine-tune our compensation programs as conditions change, we believe it is important to maintain consistency in our compensation philosophy and approach. We recognize that value-creating performance by an executive or group of executives does not always translate immediately into appreciation in our stock price, particularly in periods of economic stress. Fiscal 2013 was a challenging year for the Company. In light of the Company’s recent financial performance, continued challenging economic conditions, and in order to emphasize our pay-for-performance philosophy discussed in “Compensation Philosophy and Overview” below, the following key actions were taken with respect to NEO compensation in 2013:

CEO Compensation

Mr. Benaroya (acting CEO through an agreement with RB, Inc. for the provision of his services from September 12, 2011 until March 14, 2013; President and CEO thereafter)

Pursuant to an agreement between the Company and RB, Inc., a Delaware corporation of which Mr. Benaroya is a principal shareholder, originally entered into as of September 12, 2011, and modified as of February 14, 2012, RB, Inc. provided the full-time services of Mr. Benaroya to the Company as interim Executive Chairman and acting CEO until March 14, 2013, for a fee of $100,000 per calendar month (reduced voluntarily by RB, Inc. to $75,000 per calendar month as of September 2012). Mr. Benaroya was not paid directors’ fees during the term of his engagement as interim Executive Chairman, nor did he participate in any bonus program, employee benefit plan or other compensation arrangement with the Company.

On March 14, 2013, Mr. Benaroya was appointed President and Chief Executive Officer of the Company, and continues to serve as Chairman of the Board. In determining the various components of Mr. Benaroya’s compensation package at the time of the commencement of his employment, the Committee reviewed a variety of factors it deemed appropriate, including, but not limited to, Mr. Benaroya’s responsibilities and prior experience, most current compensation, scope of the position, the current operational position of the Company, the desire to link a substantial portion of Mr. Benaroya’s compensation package to the Company’s near and long-term future performance, comparables provided by the executive search firm retained by the Company, as well as the Company’s current challenges and future plans. As a result of this analysis and negotiations between Mr. Benaroya and the Company, on March 14, 2013, the Company entered into an employment agreement with Mr. Benaroya as President and Chief Executive Officer of the Company. See the section captioned “Employment Contracts and Arrangements” for a description of the material provisions of Mr. Benaroya’s current employment agreement, including incentive compensation, equity grants, perquisites and post-termination benefits.

11

Table of Contents

Compensation Philosophy

We feel that the overall compensation levels of our executives (including our NEOs) should be sufficiently competitive to attract talented leaders and to motivate those leaders to drive Company or business unit performance. At the same time, however, we believe that compensation should be set at responsible levels, reflecting our continued focus on improving sales and margins, controlling costs and creating value for our shareholders. At the core of our compensation philosophy is our belief that compensation should be linked to performance. We believe that offering executives a total compensation package that incorporates a reward-for-performance philosophy helps achieve these objectives. As a result, a significant portion of the potential compensation of our executive officers is based upon achievement of corporate or business unit objectives. We also believe that total compensation and accountability should generally increase with position and responsibility. Consistent with this view, opportunities under our incentive compensation program typically represent an increasing portion of total compensation as position and responsibility increase, as individuals with greater responsibility have greater ability to influence the Company’s achievement of targeted results and strategic initiatives. Similarly, equity-based awards (when they are granted) generally represent a higher portion of total compensation for persons with higher levels of responsibility, making a significant portion of their total compensation dependent on long-term stock appreciation.

Elements of 2013 Executive Compensation

The material elements of our 2013 executive compensation program are: (i) base salary; (ii) annual cash incentive compensation; (iii) periodic equity awards; and (iv) perquisites and other benefits.

How We Choose the Level of each Element

We structure the size of the various elements awarded to our NEOs by balancing the interests of shareholders with the competitive need to provide an attractive overall compensation program. Although we do not have an exact formula for allocating among the different elements of our executive compensation program, we do ensure that a significant percentage of our NEO’s aggregate compensation package is contingent upon either Company or operating group results, as is more fully described below.

The particular amount of each element of an NEOs’ compensation for a particular year is determined by or with the approval of the Committee, which uses the following “considerations”, among others, in making such determinations:

12

Table of Contents

Certain of these considerations are given greater weight depending on the element of compensation under consideration.

The Committee does not attempt to maintain target percentiles with respect to a specific list of benchmark companies, but instead periodically uses analyses of peer group companies to determine whether the Company’s compensation programs are generally competitive with that of others in similar industries.

Objectives and Operation of the 2013 Executive Compensation Program

Base Salary

The objective of base salary is to provide current compensation that reflects job responsibilities, value to the Company and individual performance, while maintaining market competitiveness. The Committee reviews and approves the base salary and any salary adjustment for NEOs on an annual basis, upon hiring of any NEO and at the time of any promotion or other change in responsibilities of any NEO.

The Company’s agreement with RB, Inc. (approved by the Committee and effective until March 14, 2013) provided for a specified fee for the services of Mr. Benaroya (who was an employee of RB, Inc. and not of the Company during 2013 until such date) as Executive Chairman of the Company (Mr. Benaroya’s current employment agreement, as approved by the Committee, also specifies an annual base salary which is subject to reduction only upon specified circumstances). A minimum base salary for each of Ms. Carr and Mr. Schaub was determined by their respective Committee-approved employment agreements for 2013. There were no increases to the base salaries of the Company’s NEOs in 2013 other than Ms. Carr, whose base salary was increased from $350,000 to $375,000 as of April 1, 2013.

Annual Cash Incentive Compensation

The objective of annual cash incentive compensation is to motivate and to reward the achievement of annual corporate or business unit performance objectives. Consistent with our pay-for-performance philosophy, incentive compensation provides our executives with the opportunity to earn more cash compensation based on the Company’s or a specified business unit’s performance.

2013 Cash Incentive Compensation

Commencing in 2012, we initiated a shareholder-approved executive Incentive Compensation Bonus Program (the “ICBP”), which replaced a similar incentive compensation program in effect from 2005 through 2011.

13

Table of Contents

Operation of the 2013 ICBP

General

All NEOs are eligible to participate in the ICBP as members of specified participant groups based on the Company’s business units (either Corporate; Sassy; Soft Home (Kids Line and CoCaLo); or LaJobi). NEOs are eligible to participate in the ICBP at a specified level (expressed as a percentage of annual base salary). The percentage for each NEO (such NEO’s “IC Percentage”) is assigned by the Committee (and may be determined by the Committee in the relevant individual’s employment agreement). Subject to specified restrictions set forth in the ICBP, the Committee has the sole discretion to determine, or modify at any time, the IC Percentage of any participant in the ICBP. The IC Percentages of all NEOs in 2013 ranged from 40% to 50% of base salary. NEOs, as a result of their higher responsibility levels and greater ability to impact Company performance, generally have IC Percentages exceeding those of less senior executives.

Each NEO’s IC Percentage multiplied by such NEO’s annual base salary equals such NEO’s “Target IC”, which is used to determine the amount of incentive compensation that such NEO is eligible to earn for the relevant year in the event that applicable corporate or business unit financial objectives are achieved.

Establishing Corporate Objectives

Achievement of any award under the ICBP is based entirely on attainment of a specified corporate or business unit financial objective for the applicable year (the “Target”) with respect to a specified measure of operating performance, such as operating income or Adjusted EBITDA (the “Chosen Metric”). Amounts are earned by NEOs based on three separate levels of achievement with respect to the Target, as follows: (i) if the Company or relevant business unit achieves 85% of the Target (the “Minimum Target”), the NEO will earn an amount equal to 20% of such NEO’s Target IC; (ii) if the Company or relevant business unit achieves the Target, the NEO will earn an amount equal to 100% of such NEO’s Target IC; and (iii) if the Company or relevant business unit achieves 120% of the Target (the “Maximum Target”), the NEO will earn an amount equal to 200% of such NEO’s Target IC. Amounts earned for achievement of results between (i) the Minimum Target and the Target and (ii) the Target and the Maximum Target, are in each case determined by a straight-line interpolation. No payments under the ICBP will be made for performance below the Minimum Target, and no payments in excess of 200% of a Participant’s Target IC will be made for performance above the Maximum Target. Notwithstanding the foregoing, no IC Payments (as defined below) will be made to any NEO (or other individual plan participant) in any plan year in excess of $1.5 million. The Committee may adjust the Targets established for a particular calendar year to account for extraordinary events which may affect the determination of performance, in order to avoid distortions in the operation of the ICBP. No such adjustments were made to the Targets set at the beginning of 2013 for any participant group during 2013.

Both the Chosen Metric and the Target required are determined annually by the Committee in its sole discretion. The Chosen Metric for all participant groups during 2013 was Adjusted EBITDA (either consolidated or that of a specified business unit or units, as applicable), which was defined for this purpose as net income before net interest expense, provision for income taxes, depreciation, amortization and other non-cash, special or non-recurring charges. The Committee believes Adjusted EBITDA to be an appropriate metric by which to measure performance because it is a measure of cash flow that provides the flexibility needed to adjust for special circumstances that affect the Company from time to time and therefore provides an opportunity to measure performance from different periods in a more consistent manner. For 2013, the Committee made no adjustments to the calculation of Adjusted EBITDA for any participant group in which any NEO was a member. The Targets for 2013 were set at amounts that exceeded 2012 results for Corporate and each business unit. The Targets for 2013 were based on consolidated Company Adjusted EBITDA for Corporate participants. Targets for Sassy, Soft Home (Kids Line and CoCaLo), and LaJobi participants were based on their respective Adjusted EBITDA (the combined Adjusted EBITDA of Kids Line and CoCaLo in the case of Soft Home participants).

14

Table of Contents

Achievement of the Target generally represents a slight “stretch”, representing how the Company would perform if it achieved budgeted amounts, recognizing that the budgets are generally set at slightly optimistic levels, whereas the Maximum Target is designed to be a true “stretch” goal for the Company or the relevant business unit[s] thereof (typically 120% of Target). From 2005 (the first year that the Company’s prior incentive compensation program was in effect) through 2013, current participant groups achieved objective corporate performance as follows (where “X” signifies that the Minimum Target was not reached; and a designation of “Min. Target”, “Target” or “Max. Target” signifies that that such respective Target level was either reached or exceeded):

The Maximum Target was not achieved by any participant group in any year. Generally, the Company seeks to maintain the relative difficulty of achieving the target levels from year to year.

An NEO must be employed by the Company at the time that IC Payments are made in order to receive any amounts otherwise payable to such participant under the ICBP for the preceding year. As a result, even if the Minimum Target had been reached by their participant groups, Messrs. Goldfarb and Schaub would not have received any IC Payments.

15

Table of Contents

Equity Awards

Equity awards are granted periodically to provide NEOs (and other executives) with potential upside opportunity if the Company’s stock price improves and to provide incentives for retention, as such awards vest over time. As a result of the Company’s financial performance in 2013, however, other than awards made to each of Mr. Benaroya and Ms. Friedman in connection with the commencement of their employment with the Company (discussed under “Employment Contracts and Arrangements” below), the Committee determined that it would be inappropriate to make grants of equity awards to NEOs.

Other Elements of Compensation and Related Benefits

Perquisites

We limit the perquisites that we make available to our executive officers. Executives are entitled to few benefits that are not otherwise available to all of our employees. The perquisites provided to the CEO and the other NEOs in 2013 are described in footnote (6) to the Summary Compensation Table below.

40l(k) Plan

The Company and each of its subsidiaries offer eligible employees, including all NEOs, the opportunity to participate in a retirement plan (the “401(k) Plans”) that is based on employees’ pretax salary deferrals pursuant to Section 401(k) of the Code. See the section captioned “Termination of Employment and Change-In-Control Arrangements” below for a more detailed description of the 401(k) Plans.

16

Table of Contents

Post-Termination Benefits

Individual Employment and Post-Termination Agreements

We provide severance and other post-termination benefits to NEOs in order to help ensure a smooth transition for the Company in the event that an NEO’s position with the Company as an executive officer terminates. We have provided these benefits as we deemed them reasonable for critical members of our senior corporate staff in order to help ensure their cooperation and the continuity of management in the event of a termination of employment for specified reasons, and to help eliminate from any decision-making process potential distractions caused by concerns over personal financial and employment security. See “Employment Contracts and Arrangements” below for a description of severance arrangements for NEOs who are currently employed by the Company and post- termination agreements between the Company and specified NEOs whose employment as an executive officer of the Company terminated during 2013.

Equity Grants

See “Termination of Employment and Change-In-Control Arrangements” below for a description of the acceleration of vesting and the period of exercisability of equity granted by the Company to NEOs under the 2013 EIP and predecessor plans under various termination of employment events.

Key Decisions for 2014

With respect to 2014, no material changes have been made to the Company’s overall compensation philosophy or structure discussed in this Compensation Discussion and Analysis.

17

Table of Contents

18

Table of Contents

19

Table of Contents

Employment Contracts and Arrangements

The following is a description of employment contracts and arrangements, and where applicable, post-termination agreements, between the Company and each NEO.

Mr. Benaroya (acting CEO from September 12, 2011 until March 14, 2013; President and CEO thereafter)

Interim Agreement

Pursuant to an agreement between the Company and RB, Inc., a Delaware corporation of which Mr. Benaroya is a principal shareholder, originally entered into as of September 12, 2011, and modified as of February 14, 2012, RB, Inc. provided the full-time services of Raphael Benaroya to the Company as interim Executive Chairman and acting CEO until March 14, 2013, for a fee of $75,000 per calendar month ($100,000 per calendar month prior to September 2012). Mr. Benaroya was not paid directors’ fees during the term of his engagement as interim Executive Chairman, nor did he participate in any bonus program, employee benefit plan or other compensation arrangement with the Company. The agreement with RB, Inc. was terminated in connection with the appointment of Mr. Benaroya as President and Chief Executive Officer described below.

Current Employment Agreement

On March 14, 2013, the Company and Mr. Benaroya entered into an employment agreement (the “CEO Agreement”) with respect to his employment as President and Chief Executive Officer of the Company, for a term of four years, subject to annual extensions unless the Company or Mr. Benaroya provides written notice of termination to the other party at least four months prior to the end of the then-current term (and subject to earlier termination as provided in the Agreement).

Base Salary

Pursuant to the CEO Agreement, Mr. Benaroya is entitled to an annual base salary of $650,000 (prorated for the period of his service as President and CEO in 2013). The Compensation Committee will consider annual increases in such base salary, which may only be decreased under specified limited circumstances (a “Permitted Decrease”). His employment is “at will”.

Incentive Compensation

Pursuant to the CEO Agreement, Mr. Benaroya is eligible for an annual performance-based cash incentive compensation opportunity under the ICBP, including for the full 2013 calendar year, with an IC Percentage of 50%. The performance goals applicable to Mr. Benaroya will be established by the Compensation Committee annually in consultation with Mr. Benaroya, and will not be established at levels that are more stringent than comparable performance goals applicable to other executive officers of the Company for such year. Amendments to the ICBP will not apply to Mr. Benaroya without his consent.

Equity Awards

Pursuant to the CEO Agreement, on March 15, 2013, the following equity grants were made to Mr. Benaroya: (i) 200,000 Incentive Stock Options (“ISOs”) under the 2008 EIP; (ii) 200,000 inducement nonqualified stock options outside of the 2008 EIP (“NQSOs”); and (iii) 600,000 stock appreciation rights under the 2008 EIP (the “Cash SARs”). Vested Cash SARs were originally exercisable solely for cash, however, upon the approval of the Company’s shareholders at the 2013 Annual Meeting of Shareholders, all of the Cash SARs were converted into Nonqualified Stock Options (on a one-for-one basis) under the 2008 EIP (with no change to the exercise price, deemed date of grant, vesting schedule, or other terms thereof) (referred to herein as “Replacement Options”).

20

Table of Contents

The exercise price per share of each of the ISOs, NQSOs, and Replacement Options is the closing price per share of the Company’s Common Stock on the New York Stock Exchange on the grant date. The ISOs, NQSOs, and Replacement Options are referred to herein as the “Equity Awards”.

Twenty five percent of the ISOs vested on the date of grant, and an additional twenty-five percent will vest on each of the first, second and third anniversaries of the date of grant. The NQSOs were immediately vested on the grant date. 15,625 of the Replacement Options vest on the last day of each month during the first consecutive 24 months of the original term of the CEO Agreement (commencing March 31, 2013), and 9,375 of the Replacement Options will vest on the last day of each month during the subsequent consecutive 24 months. The Equity Awards generally expire on the tenth anniversary of the grant date. The vesting schedule and the period of exercisability of the Equity Awards will be accelerated on the occurrence of specified events as described below.

Other Benefits

Mr. Benaroya is entitled to participate in the Company’s employee benefit plans and perquisites applicable to senior executives generally and on a basis no less favorable than those provided to other senior executives. In addition, Mr. Benaroya is entitled to four weeks of annual paid vacation, or such greater amount provided to any other senior executive or pursuant to Company policy (equivalent to two additional weeks based on tenure), and director’s and officer’s liability insurance coverage during the term of his employment and for six years thereafter, providing coverage equal to at least current levels, or if greater, the coverage provided to any other present or former senior executive or director of the Company. Mr. Benaroya was also reimbursed for his legal fees in connection with the CEO Agreement in the amount of $40,000.

Stock Purchase

Pursuant to the terms of the CEO Agreement, Mr. Benaroya was entitled to purchase from the Company, for a period of 30 open trading window days following the execution of the Agreement, up to 200,000 shares of the Company’s Common Stock at fair market value at the time of purchase. He exercised this purchase right for all 200,000 shares on August 28, 2013.

Termination Benefits

If the employment of Mr. Benaroya is terminated by the Company for Cause or by Mr. Benaroya without Good Reason (each as defined below), he will be entitled to receive his base salary earned through the date of termination, bonus amounts under the ICBP earned for any prior year and not yet paid, and other vested amounts and benefits, if any, provided under applicable Company programs and policies in which he participated prior to the date of the CEO Agreement (collectively, the “Accrued Benefits”). In addition, the unvested portion of any Equity Award will be cancelled or immediately forfeited, as applicable. If Mr. Benaroya’s employment is terminated by the Company for Cause (defined below), any unexercised vested portion of any Equity Award will generally remain exercisable for a period of 30 open trading window days following such termination (subject to extension to the extent the Company’s insider trading policy or applicable law prohibits the exercise of the Equity Award or the sale of the underlying shares at the end of such period). If the employment of Mr. Benaroya is terminated by Mr. Benaroya without Good Reason, the vested portion of any Equity Award will be generally exercisable for a period of 6 months following the termination date, or if later, until the 30th open trading window day following such termination (subject to extension as described above). Notwithstanding the foregoing, in no event will an Equity Award be exercisable after the expiration of its term.

21

Table of Contents

If Mr. Benaroya’s employment terminates as a result of the expiration of the CEO Agreement at the end of its term, Mr. Benaroya will be entitled to the Accrued Benefits, as well as the prorated amount of the bonus to which he would otherwise have been entitled under the ICBP had his employment continued through the end of the relevant year, based upon actual achievement of the relevant performance goals (the “Prorated Bonus Amount”). In addition, the Equity Awards will remain exercisable for the remainder of their respective terms.

If Mr. Benaroya’s employment is terminated by the Company without Cause or he terminates his employment for Good Reason (defined below), Mr. Benaroya will be entitled to receive the Accrued Benefits, his base salary (without regard to any Permitted Decrease) for a period of nine months after the termination date, the Prorated Bonus Amount, the amount of COBRA premiums for Mr. Benaroya and his family for continued coverage under the Company’s medical and dental programs, if any during the nine-month period following the date of termination (the “COBRA Amount”), and continued coverage under the Company’s life insurance program for a period of nine months following the termination date. In order to receive such benefits (and the accelerated vesting of Equity Awards described below), Mr. Benaroya must execute a release, substantially in the form of Release attached to the CEO Agreement. In addition, in the event of any such termination, the unvested portion of any Equity Award (as well as the unvested portion of any additional equity awards granted to Mr. Benaroya) will become immediately vested, and will remain exercisable in accordance with their respective terms.

If Mr. Benaroya’s employment is terminated by the Company as a result of his Disability (as defined below), he will be entitled to receive the Accrued Benefits (including payments under the Company’s long-term disability insurance plan to the extent provided for therein), the Prorated Bonus Amount, the COBRA Amount, and continued coverage under the Company’s life insurance program for a period of nine months following the termination date. If the employment of Mr. Benaroya is terminated as a result of his death, his estate will be entitled to receive the Accrued Benefits and the Prorated Bonus Amount. In addition, the death benefit under the Company’s life insurance program shall be paid to his designated beneficiary (or his estate in the absence of such designation), and Mr. Benaroya’s family shall be entitled to reimbursement of the COBRA Amount. In the event that the employment of Mr. Benaroya is terminated as a result of his death or Disability, the unvested portion of any Equity Award (as well as the unvested portion of any additional equity awards granted to Mr. Benaroya) will become immediately vested to the same extent as if Mr. Benaroya had completed an additional two years of service after the date of termination, and shall remain exercisable for the shorter of one year following the date of termination and the remainder of their term.

If Mr. Benaroya’s employment is terminated by the Company without Cause or by Mr. Benaroya for Good Reason at any time on or after, or within six months before the occurrence of a Change of Control, Mr. Benaroya will be entitled to the payments and benefits described above with respect to such terminations. Notwithstanding the foregoing, if a Change of Control occurs and outstanding Equity Awards and/or other Company equity awards issued to Mr. Benaroya are not assumed or converted into comparable awards with respect to the stock of the acquiring or successor company (or parent thereof), then immediately prior to such Change of Control, each such award, whether or not previously vested, will be converted into the right to receive cash, or at the election of Mr. Benaroya, consideration in a form that is pari passu with the form of the consideration payable to the Company’s shareholders in exchange for their shares (less any applicable exercise price). Any award that is not assumed or converted (as described above) may be canceled at the time of the Change of Control for no consideration if its per share exercise price is greater than such per share fair market value of the Company’s Common Stock.

22

Table of Contents

No Mitigation

In the event of the termination of Mr. Benaroya’s employment for any reason, he shall be under no obligation to seek other employment or otherwise mitigate damages, and there shall be no offset against any amounts due him under the CEO Agreement on account of any remuneration attributable to any subsequent employment that he may obtain.

Non-Compete

The CEO Agreement includes a restriction against specified competitive activities during Mr. Benaroya’s employment by the Company and for a period of nine months thereafter and a non-solicitation agreement for a period of nine months following his termination, unless the termination of Mr. Benaroya’s employment results from the expiration of the CEO Agreement at the end of its term.

Section 280G(b)(2)

The CEO Agreement includes a provision that would, under specified circumstances and at Mr. Benaroya’s request, reduce the aggregate of amounts constituting a “parachute payment” under Section 280G(b)(2) of the Internal Revenue Code to an amount that will equal three times his base amount less $1.00.

Terms used in the preceding discussion are defined in the CEO Agreement as follows:

• “Cause” is defined generally to mean (subject to applicable cure periods set forth in the Agreement): (A) willful failure by Mr. Benaroya to perform his material duties as an employee of the Company; (B) his conviction of, or plea of guilty or nolo contendere to, a felony; (C) his theft or misuse of material Company property; or (D) willful misconduct or an act of moral turpitude which is materially injurious to the Company, monetarily or otherwise; provided that Cause does not include a finding of liability in pending or future shareholder, derivative or punitive class actions or other civil actions.

• “Change of Control” is defined generally to mean: (a) any one person or group acquires ownership of shares of the Company that, together with the shares of the Company held by such person or group, constitutes more than 40% of the total fair market value or total voting power of the shares of the Company; (b) any one person or group acquires, or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons, ownership of shares of the Company having 30% or more of the total voting power of the shares of the Company; (c) one-half or more of the members of the Company’s Board are replaced during any 18-month period by directors whose appointment or election is not endorsed by at least 66 2/3% of the Company’s Board prior to the date of such appointment or election (other than a result of an election contest); or (d) any one person or group acquires, or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons, assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions (subject to specified exceptions). A Change of Control will be deemed to have occurred upon the consummation of a merger or consolidation of, or similar type of corporate transaction involving the Company or any subsidiary thereof with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than 60% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation.

23

Table of Contents

• “Disability” will be deemed to have occurred if Mr. Benaroya is absent from work for at least 135 consecutive days or for 135 days (whether or not consecutive) in any calendar year by reason of a physical or mental illness or injury.

• “Good Reason” is defined generally to mean the occurrence of any of the following events without Mr. Benaroya’s express written consent (subject to applicable cure periods set forth in the Agreement): (A) a diminution of his base salary (subject to specified exceptions) or his annual bonus opportunity; (B) a diminution in his position, title, authority, duties, or responsibilities; (C) a relocation of the Company’s headquarters office outside of a 35 mile radius of the current office (other than a relocation to the current offices of LaJobi, Inc.); (D) a material breach of the Agreement by the Company; or (E) in connection with a Change of Control (defined below), the failure or refusal by the successor or acquiring company (or parent thereof) to expressly assume the obligations of the Company under the Agreement.

See footnote 6 of the “Summary Compensation Table” above for a description of perquisites received by Mr. Benaroya during 2013.

Ms. Carr (EVP, COO and CFO)

Effective as of September 12, 2012, Kerry Carr was appointed to the position of Executive Vice President and Chief Operating Officer of the Company pursuant to the terms of an agreement between Ms. Carr and the Company, as amended (the “Carr Agreement”), and also serves as Chief Financial Officer (effective as of July 1, 2013).

Base Salary

Ms. Carr’s current annual base salary is $375,000. Subsequent base salary increases will be considered annually by the Compensation Committee in its discretion.

Incentive Compensation

Ms. Carr is eligible to participate in the ICBP, with an IC Percentage of 50%, provided that for 2013 only, Ms. Carr was guaranteed a minimum bonus payment of $50,000. The performance goals for Ms. Carr shall be established annually by the Compensation Committee, and she will have an opportunity to consult with the Compensation Committee with respect to such goals.

Equity Awards

Pursuant to the Carr Agreement, Ms. Carr was issued an inducement grant of 373,134 SARs (outside of the 2008 EIP, as a result of the limited number of shares remaining available for grant thereunder). The SARs may be settled in cash, Common Stock, or a combination of both, in the sole discretion of the Compensation Committee, and are generally exercisable for a period of ten years from the date of grant. The SARs will vest at a rate of 20% per year commencing on the first anniversary of the date of grant.

Other Benefits

Ms. Carr is entitled to participate in the Company’s employee benefit plans and programs applicable to senior executives generally, and to three weeks of annual paid vacation (equivalent to one additional week based on tenure.

24

Table of Contents

Termination Benefits

If Ms. Carr’s employment is terminated by the Company for Cause or by Ms. Carr without Good Reason (each as defined below), or by reason of her death or disability, she will be entitled to receive her base salary through the date of termination, accrued vacation and any amounts required under the terms of the Company’s employee benefit plans. Subject to the provisions described below, if the Company terminates Ms. Carr’s employment without Cause or she terminates such employment for Good Reason, Ms. Carr shall also be entitled to receive base salary continuation, and medical and dental coverage, for six months following termination of employment subject to her execution of a release of claims in a form satisfactory to the Company. Notwithstanding the foregoing, if Ms. Carr’s employment is terminated by the Company without Cause or by Ms. Carr for Good Reason within six months following the consummation of a Change in Control (as defined below), the foregoing benefits shall be extended by an additional period of six months. In the event of disability or death of Ms. Carr while in the employ of the Company, all unexercised SARs will be deemed vested and may be exercised for up to one year (or the exercise period, if shorter) after such event. If Ms. Carr retires, vested unexercised SARs may be exercised within one year of such retirement or the remaining term of the grant, if earlier. If Ms. Carr’s employment is terminated for any other reason, any unexercised SARs will be cancelled and deemed terminated immediately, except that if her employment is terminated by the Company for other than Cause, all unexercised SARs, to the extent vested, may be exercised within 90 days of the date of such event (or the exercise period, if shorter).

On March 26, 2013, the Carr Agreement was amended to specify that in the event of a specified change in control (defined for this purpose generally to mean the acquisition of all the Company’s shares or assets by an unrelated party or a merger or consolidation other than a merger or consolidation resulting in the voting securities of the Company outstanding immediately prior thereto representing more than 60% of the voting securities of the surviving entity immediately thereafter), if any unexercised SARs are not assumed or converted into comparable awards with respect to the stock of the acquiring or successor company (or parent thereof), then immediately prior to such change of control, each such SAR, whether or not previously vested, will be converted into the right to receive cash, or at Ms. Carr’s election, consideration in a form that is pari passu with the form of the consideration payable to the Company’s shareholders in exchange for their shares (less any applicable exercise price). Any award that is not assumed or converted as described above may be canceled at the time of such change in control for no consideration if its per share exercise price is greater than such per share fair market value of the Company’s Common Stock. In addition, if Ms. Carr’s employment is terminated by the Company without Cause or by Ms. Carr for Good Reason within nine months following such a change in control, her SARs shall immediately vest, and remain exercisable for the remainder of their term.

Non-Compete

The Carr Agreement includes a restriction against specified competitive activities as well as a non-solicitation provision during Ms. Carr’s employment by the Company and for a period of one year thereafter.

Ms. Carr’s employment is “at will”.

Terms used in the preceding discussion of the Carr Agreement are defined as follows:

• “Cause” means she: (i) shall have been convicted of or entered a plea of nolo contendere with respect to any felony or any other crime (other than minor traffic offenses) involving fraud, theft, misappropriation, dishonesty, or embezzlement; (ii) shall have committed intentional acts that materially impair the goodwill or business of the Company or cause material damage to its property, goodwill or business; (iii) shall have refused to, or willfully failed to, perform her material duties; (iv) shall have violated in any material respect any written policies or procedures of the Company; or (v) shall have breached the representations and warranties set forth in her employment agreement (subject to a 10 day cure period, if applicable);

25

Table of Contents

• “Change in Control” is defined generally as when: (i) any person or group, other than specified existing 5% beneficial owners of the Company’s voting securities, becomes the beneficial owner of more than 30% of the Company’s voting power (subject to specified exclusions) (ii) as a result of any proxy solicitation made otherwise than on behalf of the Board, continuing directors cease to be a majority of the Board; (iii) the merger, consolidation, or other business combination other than one immediately following which current stockholders continue to own at least 60% of the voting power in the Company or other resulting entity (in substantially the same proportion); (iv) the sale of all or substantially all of the Company’s assets, other than one immediately following which the then-existing stockholders are the beneficial owners of at least 60% of the voting power in the purchasing entity (in substantially the same proportions); or (v) consummation of a recapitalization or similar transaction in which any person or group, other than specified existing 5% beneficial owners, becomes the beneficial owner in excess of 30% of the Company’s voting power; and

• “Good Reason” means her removal from her executive officer position (without terminating her employment) or other material diminution of her duties or responsibilities without her express written consent (subject to a 30 day cure period, if applicable).

See footnote 6 of the “Summary Compensation Table” above for a description of perquisites received by Ms. Carr during 2013. The terms of outstanding options awarded to Ms. Carr are described in the “2013 Outstanding Equity Awards at Fiscal Year End” table below.

Ms. Friedman (VP and General Counsel)

General

On August 14, 2013, Jodie Simon Friedman commenced her role as Vice President, General Counsel and Secretary of the Company at an annual base salary of $325,000. Ms. Friedman joined the Company on June 3, 2013, at the same annualized base salary. In accordance with the terms of her current employment arrangement with the Company, Ms. Friedman is entitled to participate in the ICBP with an IC Percentage of 40% (provided that for 2013 only, she was guaranteed a minimum bonus thereunder of $35,000). In connection with the commencement of her employment with the Company, Ms. Friedman was awarded 150,000 stock options under the 2013 EIP, which vest ratably over a five-year period, commencing on the first anniversary of the grant date. Additional equity grants are at the discretion of the Compensation Committee. Her employment is at will.

Termination Benefits

If Ms. Friedman’s employment is terminated by the Company without Cause (as defined in the 2008 EIP), she shall be entitled to receive base salary continuation, for a period of six months, subject to her execution of a release of claims in the Company’s form. In the event of a Change in Control (the acquisition of all the Company’s shares or assets by an unrelated party, or a merger or consolidation of the Company with any other entity other than a merger or consolidation resulting in the voting securities of the Company outstanding immediately prior thereto representing more than 60% of the voting securities of the surviving entity immediately thereafter), if any unexercised options are not assumed or converted into comparable awards with respect to the stock of the acquiring or successor company (or parent thereof), then immediately prior to such Change of Control, any unexercised options will be converted into the right to receive cash, or at Ms. Friedman’s election, consideration in a form that is pari passu with the form of the consideration payable to the Company’s shareholders in exchange for their shares (less any applicable exercise price). Any award that is not assumed or converted as described above may be canceled at the time of the Change of Control for no consideration if its per share exercise price is greater than such per share fair market value of the Company’s Common Stock. In addition, if Ms. Friedman’s employment is terminated by the Company without Cause or by Ms. Friedman for Good Reason (a material reduction in her authorities or responsibilities) within nine months following a Change in Control, her options shall immediately vest, and remain exercisable for the remainder of their term.

26

Table of Contents

Other Benefits

Pursuant to her arrangement with the Company, Ms. Simon Freidman is also entitled to participate generally in all retirement, savings, welfare and other employee benefit plans and arrangements provided to other executive officers of the Company. Ms. Friedman is also entitled to four weeks annual paid vacation (two more than she would be entitled to based on tenure).

See footnote 6 of the “Summary Compensation Table” above for a description of perquisites received by Ms. Friedman during 2013. The terms of outstanding options awarded to Ms. Friedman are described in the “2013 Outstanding Equity Awards at Fiscal Year End” table below.

Mr. Goldfarb (resigned as SVP and General Counsel as of August 14, 2013)

Marc S. Goldfarb was hired as Vice President, General Counsel and Secretary of the Company on September 26, 2005, and served as Senior Vice President and General Counsel of the Company from May 31, 2006 through his resignation as of August 14, 2013. During 2013, his annual base salary was $341,537. Mr. Goldfarb participated in the ICBP in 2013 with an IC Percentage of 50%. Other than stock options awarded to Mr. Goldfarb in connection with the commencement of his employment, equity grants were at the discretion of the Compensation Committee. His employment was “at will”.

Pursuant to his employment arrangement with the Company prior to his resignation, Mr. Goldfarb was also entitled to participate generally in all retirement, savings, welfare and other employee benefit plans and arrangements provided to other executive officers of the Company, including the Company’s severance policy (prior to its termination) with a guaranteed minimum of 8 months of severance, and received a monthly car allowance. Mr. Goldfarb was also entitled to three weeks annual paid vacation.

Mr. Goldfarb resigned as Senior Vice President and General Counsel of the Company to pursue other opportunities as of August 14, 2013. On September 18, 2013, the Company entered into a Consulting Agreement (the “MG Agreement”), effective as of August 15, 2013, with Mr. Goldfarb, for his retention as a legal consultant to the Company until April 14, 2014. Pursuant to the MG Agreement, Mr. Goldfarb received an aggregate: (i) $229,557 in consulting fees; (ii) $7,499, representing the value for the benefit of COBRA reimbursements.

The MG Agreement contained a non-solicitation agreement during its term, and also contains customary confidentiality and mutual release provisions. In addition, the MG Agreement provided that Mr. Goldfarb would not be required to provide services exceeding one half day per week. Pursuant to the MG Agreement, the Company will indemnify Mr. Goldfarb from all losses and damages arising out of or in connection with the MG Agreement, except to the extent caused by Mr. Goldfarb’s gross negligence or willful misconduct (in which case Mr. Goldfarb shall be liable for direct damages only). Any equity awards which were vested as of August 14, 2013 will continue to be exercisable until July 14, 2014. All unvested equity was forfeited at the time of his resignation.

See footnote 6 of the “Summary Compensation Table” above for a description of perquisites received by Mr. Goldfarb during the period covered by the table. The terms of outstanding equity awarded to Mr. Goldfarb are described in the “2013 Outstanding Equity Awards at Fiscal Year End” table below.

27

Table of Contents

Mr. Schaub (resigned as President of LaJobi as of December 5, 2013)

Mr. Schaub became the President of Sassy in February 2010 pursuant to an employment agreement dated February 19, 2010 and amended as of November 23, 2010, and also became the President of LaJobi in March of 2011. In June of 2011, Dean Robinson was appointed as the President of Sassy, and Mr. Schaub also became group head of Sassy (to whom Mr. Robinson reported) through the end of 2012. Mr. Schaub’s annual base salary prior to his resignation on December 5, 2013 was $375,000. Mr. Schaub participated in the ICBP during 2013 with an IC Percentage of 50%.

A grant of SARS and RSUs was made to Mr. Schaub in connection with the commencement of his employment. In addition, a grant of SARS and RSUs was made to Mr. Schaub on January 3, 2011 in accordance with the terms of the amendment to his employment agreement as of November 23, 2010. Further equity grants were at the discretion of the Compensation Committee. Prior to his resignation, Mr. Schaub was eligible to participate in all benefit programs made generally available to executives of LaJobi, as well as the Company’s severance policy prior to its termination. Mr. Schaub was entitled to three weeks annual paid vacation (equivalent to one additional week based on tenure), and his employment was “at will”.

Mr. Schaub’s employment agreement contained a confidentiality, non-disparagement, non-compete for the period of employment and any period thereafter during which Mr. Schaub receives any severance payments, and one year post-employment non-solicitation provision.

On December 5, 2013, Mr. Schaub, by mutual agreement with LaJobi, resigned as LaJobi’s President. In connection with his departure, on December 5, 2013, LaJobi entered into a Consulting Agreement (the “RS Agreement”) with Mr. Schaub. Pursuant to the terms of the Agreement, from December 5, 2013 until January 3, 2014 (the “Transition Period”), Mr. Schaub remained employed by LaJobi as a senior business advisor and from January 4, 2014 until March 14, 2014 (the “Consulting Period”), Mr. Schaub became a consultant to LaJobi. Pursuant to the RS Agreement, Mr. Schaub received $31,731, representing his base salary through the termination of the Consulting Period.

During the Transition Period, outstanding equity awards continued to vest in accordance with their terms. Equity awards which were vested on January 3, 2014 continued to be exercisable until April 3, 2014. All unvested equity at such time were forfeited.

The RS Agreement provided that Mr. Schaub not be required to provide services during the Consulting Period exceeding 10 hours per week. The RS Agreement contains a non-solicitation agreement during the Consulting Period and for a period of twelve months thereafter, and also contains customary confidentiality and mutual release provisions. LaJobi reimbursed Mr. Schaub for $2,000 of legal expenses incurred in connection with the negotiation of the RS Agreement.

See footnote 6 of the “Summary Compensation Table” above for a description of perquisites received by Mr. Schaub during 2013. The terms of outstanding equity awarded to Mr. Schaub are described in the “2013 Outstanding Equity Awards at Fiscal Year End” table below.

Material Terms of ICBP

A description of the ICBP, including its material terms and a description of the criteria to be applied in determining amounts payable thereunder, is set forth in “Operation of the 2013 ICBP” above.

Termination of Employment and Change-In-Control Arrangements

The following is a description of Company plans that pertain to the termination of employment of NEOs.

28

Table of Contents

401(k) Plans

The Company offers eligible employees the opportunity to participate in a 401(k) Plan based on employees’ pretax salary deferrals with discretionary Company matching contributions. Participating employees may elect to contribute from 1% to 80% (but not in excess of the amount permitted by the Code, i.e., $17,500 in 2013, and $23,000 in 2013 for employees age 50 and older who elect to make catch-up contributions) of their compensation, on a pretax basis, to the relevant 401(k) Plan. Because the 401(k) Plans are qualified defined contribution plans, if certain highly compensated employees’ contributions exceed the amount prescribed by the Code, such contributions will be reduced or limited. Employees’ contributions are invested in one or more of several funds (as selected by each participating employee). With respect to NEOs during 2013, the Company and LaJobi matched a portion (one-half of any amount up to 6%, and 100% of any amount up to 3%, of salary contributed, respectively) of the compensation deferred by each NEO. Matching contributions vest ratably over four years for the Company, and over six years for LaJobi). Under certain circumstances, the 401(k) Plans may permit participants to make withdrawals or receive loans therefrom prior to retirement age.

Equity Incentive Plans

2013 Equity Incentive Plan (the “2013 EIP”)

The Board adopted the 2013 EIP on May 22, 2013. The 2013 EIP was approved by the Company’s shareholders on July 18, 2013 at its 2013 Annual Meeting of Shareholders. The 2013 EIP is a successor to the 2008 EIP (defined below), which terminated as of July 10, 2013 (although outstanding awards thereunder continue to be covered thereby). As is described below, the 2013 EIP contains provisions which accelerate the vesting schedule and shorten the period of exercisability of outstanding awards in the event that a grantee’s employment is terminated under specified conditions, and permits adjustments to outstanding awards in the event of specified corporate transactions. The following is a summary of such provisions. The 2013 EIP is described in detail in the Company’s Definitive Proxy Statement for its 2013 Annual Meeting of Shareholders.

The 2013 EIP provides for awards in any one or a combination of: (a) stock options, (b) SARs, (c) restricted stock, (d) stock units, (e) non-restricted Stock, and/or (f) dividend equivalent rights, any of which may constitute a “Performance-Based Award” (an award that qualifies for the performance-based compensation exemption of Section 162(m) of the Internal Revenue Code of 1986, as amended).

Vesting, Term and Acceleration Provisions of Awards

Subject to the following (and unless an award agreement specifies otherwise), awards under the 2013 EIP generally vest over a five year period, and with respect to awards of stock options and SARs, generally remain exercisable for a period of 10 years from the date of grant. With respect to awards of stock options and SARs (other than such awards to outside directors, which is discussed in the following paragraph), (i) upon Disability (as defined in the 2013 EIP) or death, all unexercised awards vest, and may be exercised for up to one year or, if shorter, for their remaining term; and (ii) if a grantee’s employment is terminated for any other reason, all unexercised awards are cancelled as of the termination date; provided however, if a grantee’s employment is terminated for reasons other than Cause (as defined in the 2013 EIP), vested unexercised awards may be exercised within 90 days of termination, or, if shorter, for their remaining term, and if a grantee retires (as defined in the Company’s 401(k) Plan), vested unexercised awards may be exercised within one year of such retirement, or if shorter, for their remaining term.

29

Table of Contents

With respect to awards of awards of stock options and SARs to outside directors, unless otherwise provided in the relevant award agreement, in the event of the death or Disability of a grantee while serving as a member of the Board, all unexercised awards vest, and may be exercised for up to one year or, if shorter, for their remaining term; if a grantee ceases to serve as a member of the Board for any other reason, vested awards shall be exercisable for a period of 90 days following termination, or, if shorter, for their remaining term.

With respect to restricted stock or RSUs, unless otherwise provided in an agreement governing the award, upon a grantee’s termination of employment for any reason (not including an authorized leave of absence) all non-vested awards are forfeited, except in the event of Disability or death, in which case all restrictions lapse as of the date of the relevant event.

Adjustments

The committee administering the plan may adjust the aggregate number of shares of Common Stock available for awards thereunder, the exercise price of any awards thereunder, and any or all other matters it deems appropriate, including, without limitation, accelerating the vesting and/or exercise period pertaining to any award thereunder, in the event of specified changes in the outstanding Common Stock or a change in the Company’s capital structure as a result of specified corporate transactions, or under other circumstances specified in the 2013 EIP. However, no reduction in the exercise price of a stock option or SAR shall be effective unless it is approved by the Company’s shareholders.

2008 Equity Incentive Plan (the “2008 EIP”)

The 2008 EIP was approved by the Company’s shareholders as of July 10, 2008. The 2008 Plan is a successor to the 2004 Plan (defined below), which terminated as of the date of such approval (although outstanding awards thereunder continue to be covered thereby). The 2008 EIP contains the same provisions which accelerate the vesting schedule and shorten the period of exercisability of outstanding awards in the event that a grantee’s employment is terminated under specified conditions, and permit adjustments to outstanding awards in the event of specified corporate transactions, as are described above with respect to the 2013 EIP.

For a more complete description of the 2008 EIP, see the Company’s Definitive Proxy Statement for its 2008 Annual Meeting of Shareholders.

2004 Stock Option, Restricted and Non-Restricted Stock Plan (the “2004 Plan”)

The 2004 Plan provided for awards of options, restricted stock and non-restricted stock to officers, directors and key employees designated by the Compensation Committee (however, Non-Employee Directors could be awarded options only). Awards could no longer be granted under the 2004 Plan after July 10, 2008.

30

Table of Contents

Acceleration of Vesting/Exercise Period

Subject to the following, options and restricted stock generally vest ratably over five years, commencing on the first anniversary of the date of grant and are generally exercisable for a period of ten years from the date of grant. With respect to awards of options (other than awards to Non-Employee Directors, which is discussed below), upon retirement (as defined in the Company’s 401(k) plan), Disability (as defined in the 2004 Plan) or death (either while employed or within the year after retirement), all unexercised options vest, and may be exercised for up to one year (unless provided otherwise in an option agreement evidencing the award) or the term of the unexpired option, if earlier; unless otherwise provided in an option agreement, (i) if a participant’s employment is terminated for reasons other than Cause (as defined in the 2004 Plan), vested unexercised options may be exercised within either: (a) 30 days of termination (for grants issued prior to August 2007); or (b) 90 days of termination (for grants issued subsequent to August 2007), or the term of the unexpired option, if earlier, and (ii) if a participant’s employment is terminated for any other reason, all options are cancelled as of the termination date.

With respect to awards of options to Non-Employee Directors, in the event of the death or Disability (as defined in the 2004 Plan) of a participant while serving as a member of the Board, all unexercised options vest, and may be exercised for up to one year (unless provided otherwise in an agreement evidencing the award) or the term of the unexpired option, if earlier; if a participant ceases to serve as a member of the Board for any other reason, vested options shall be exercisable for a period of 30 days following termination (unless otherwise provided in an agreement evidencing the award).

With respect to awards of restricted stock, unless otherwise provided in an agreement governing the award, all non-vested restricted stock is forfeited (at the time of termination) if the participant has not remained in the continuous employment of the Company for the period during which the restrictions are applicable, generally five years from the date of grant, except in the event of retirement, Disability (as defined in the 2004 Plan) or death, in which case all restrictions lapse as of the date of the relevant event.

Adjustment provisions were similar to those contained in the 2013 EIP and 2008 EIP.

For a more complete description of the 2004 Plan, see the Company’s Definitive Proxy Statement for its 2003 Annual Meeting of Shareholders.

31

Table of Contents

32

Table of Contents

33

Table of Contents

34

Table of Contents

The impact of specified termination events and change of control transactions on the vesting of, and period of exercisability applicable to the awards set forth in footnotes 8, 9, 10, 13 and 14 above is described in detail under “Employment Contracts and Arrangements” above, under the sections captioned “Mr. Benaroya, Ms. Carr and Ms. Friedman, respectively. With respect to all other awards described above, the impact of specified termination events and change of control transactions on the vesting of, and the period of exercisability applicable to, equity grants made under the 2004 Plan, the 2008 EIP, and/or the 2013 EIP, as applicable, are described in detail in the sections captioned “ Equity Incentive Plans ” above.

Additional Narrative Disclosure

See “Termination of Employment and Change-in-Control Arrangements” above for a description of the Company’s 401(k) Plans and Equity Incentive Plans, and see “Employment Contracts and Arrangements” above for a description of contracts and arrangements between the Company and its NEOs in connection with a termination of employment or change in control.

35

Table of Contents

Outstanding RSU awards at December 31, 2013 for each person who was a director in 2013 are as follows (the 5,000 RSUs granted to each Non-Employee Director in 2013 were all unvested as of December 31, 2013):

36

Table of Contents

Directors who are employees of the Company (Mr. Benaroya during 2013) receive no additional compensation for services as a director; however, all directors are reimbursed for out-of-pocket expenses incurred in connection therewith. In addition, the following compensation arrangements applied to each director in 2013 who was not an officer or other employee of the Company (“Non-Employee Directors”): (i) an annual retainer for service as a director of $15,000; (ii) a fee for attendance at each Board meeting of $1,250, except that the Chairman of the Board, if any, receives $2,000 for each Board meeting attended; (iii) a fee for attendance at each Audit Committee meeting of $1,500, except that the Chairman of the Audit Committee receives $2,000 for each Audit Committee meeting attended; and (iv) a fee for attendance at each Board committee meeting, other than the Audit Committee, of $1,250, except that the Chairman of such committee receives $2,000 for each committee meeting attended. In addition, Non-Employee Directors are entitled to reimbursement of $2,000 per day for participation in any directors’ retreat attended during the year (there were none during 2013). Further, it is the current intention of the Board to grant to each Non-Employee Director, on the date of each Annual Meeting of Shareholders immediately following which such Non-Employee Director is serving on the Board, awards under the 2013 EIP (or any successor plan) with an aggregate value on the date of grant consistent with the Board’s then-current policy, to the extent such awards are available for issuance under such plan. Cash compensation to directors has not been changed to date from the arrangements approved in May of 2005, other than compensation for temporary special committees formed on an as-needed basis from time to time (the form and value of equity awards, however, does change periodically). However, the Board determined to issue shares of our common stock to Non-Employee Directors in lieu of (and equivalent in value to) the $7,500 February 2014 semi-annual cash retainer. As a result, 9,146 shares of common stock were issued to each current Non-Employee Director on February 5, 2014 (this amount is reported in the “Fees Earned” section of the 2013 Director’s Compensation table above).

The Committee engaged James F. Reda and Associates, LLC, a Division of Gallagher Benefits Services, Inc. (“REDA”) in 2013 to complete a director compensation study with respect to a sample of public companies based on specified selection criteria identified by the Committee, however, no changes to director compensation resulted therefrom. REDA serves at the discretion of the Committee. In addition, during 2013, REDA was engaged on a limited basis to do an analysis of certain elements of the 2013 EIP prior to its presentation to shareholders for approval at the Company’s 2013 Annual Meeting of Shareholders, to run various Monte Carlo and Black Scholes calculations with respect to outstanding equity grants, and to review the Company’s Compensation Discussion and Analysis for the year ended December 31, 2012. REDA provided no other services in 2013.