UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule
14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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of the Securities
Exchange Act of 1934
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Soliciting Material Pursuant to § 240.14a-12
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TRANS WORLD ENTERTAINMENT CORPORATION
38 Corporate Circle
Albany, New York 12203
(518) 452-1242
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date and Time
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Thursday, June 27, 2019, at 10:00 A.M., EDT
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Place
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Trans World Entertainment Corporation
38 Corporate Circle
Albany, NY 12203
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Items of Business
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(1)
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To elect six Directors to serve one year terms and until their successors are chosen and qualified;
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(2)
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Advisory Vote to Approve Named Executive Officer Compensation;
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(3)
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Advisory Vote on Frequency of Holding Future Advisory Votes on Executive Compensation;
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(4)
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To grant authority to the Board of Directors, at any time or times for a period of up to six months from the date of the Annual Meeting, to adopt an amendment to the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to effect a reverse stock split at a ratio up to 1-for-20, such ratio to be determined by the Board, or conversely, to determine not to proceed with the reverse stock split (the “Reverse Stock Split”); and
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(5)
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To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof.
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Record Date
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Shareholders of record as of May 10, 2019 are eligible to vote.
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Proxy Voting
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A proxy and return envelope, not requiring postage if mailed in the United States, are enclosed for your convenience. Please complete and return your proxy card as promptly as possible. All shareholders are cordially invited to attend the Annual Meeting. Whether or not you plan to attend the meeting, your vote is important. Prompt return of the proxy will assure a quorum is present at the annual meeting and save the Company expense.
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By order of the Board of Directors,
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Edwin J. Sapienza,
Secretary
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May 29, 2019
TRANS WORLD ENTERTAINMENT CORPORATION
38 Corporate Circle
Albany, New York 12203
(518) 452-1242
PROXY STATEMENT
This Proxy Statement is furnished to the
shareholders of Trans World Entertainment Corporation, a New York corporation (the “Company”), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting of Shareholders of the Company to be held on June
27, 2019 (the “Annual Meeting”), and any adjournment or adjournments thereof. A copy of the notice of meeting accompanies
this Proxy Statement. It is anticipated that the mailing of this Proxy Statement and the form of proxy/voting instruction card
will commence on May 29, 2019.
As permitted by rules of the Securities
and Exchange Commission (“SEC”), we are making our proxy material, which includes our notice of annual meeting, proxy
statement and Annual Report on Form 10-K, available to our shareholders over the Internet. An electronic version of this proxy
statement and the Company’s Annual Report on Form 10-K are available at
www.envisionreports.com/TWEC
.
VOTING SECURITIES
The Company has only one class of voting
securities, its common stock, par value $.01 per share (the “Common Stock”). On May 10, 2019, the record date, 36,258,839
shares of Common Stock were outstanding. Each shareholder of record at the close of business on the record date will be
entitled to one vote for each share of Common Stock owned on that date, as to each matter presented at the Annual Meeting.
QUORUM AND TABULATION OF VOTES
The By-Laws of the Company provide that
a majority of the shares of our Common Stock entitled to vote at the Annual Meeting, present in person or by proxy, shall constitute
a quorum at the Annual Meeting of Shareholders of the Company. An inspector from Computershare appointed by the Company will determine
the presence of a quorum and will certify and tabulate the votes. Shares of Common Stock represented by a properly signed and returned
proxy are considered as present at the Annual Meeting for purposes of determining a quorum. Shareholders of record who are present
at the Annual Meeting, in person or by proxy, and who abstain from voting, including brokers holding customers’ shares of
record who cause abstentions to be recorded at the Annual Meeting, will be included in the number of shareholders present at the
Annual Meeting for purposes of determining whether a quorum is present. However, these shares will not be taken into account in
determining the outcome of any of the proposals. A shareholder (including a broker) who does not give authority to a proxy to vote
on a certain proposal will not be considered present and entitled to vote on that proposal. A broker non-vote occurs when a bank
or broker holding shares of a beneficial shareholder does not vote on a particular proposal because it has not received instructions
from the beneficial shareholder and the bank or broker does not have, or chooses not to exercise, discretionary voting power for
that particular item.
If you are a beneficial owner and hold
your shares in the name of a bank, broker or other holder of record and do not return the voting instruction card, the broker or
other nominee may vote your shares on each matter at the Annual Meeting for which he or she has the requisite discretionary authority.
If a shareholder does not give instructions to its broker as to how to vote the shares, the broker has authority under New York
Stock Exchange rules to vote those shares for or against “routine” proposals without a
voting registration card, brokers cannot vote on “non-routine”
proposals. Under these rules, “Item 1—Election of Directors”, “Item 2—Advisory Vote on Executive
Compensation” and “Item 3—Vote on the Frequency of Holding Future Advisory Votes on Executive Compensation”
are considered “non-routine” proposals and “Item 4—Reverse Stock Split” is considered a “routine”
proposal. We are subject to these rules even though shares of our common stock are traded on the NASDAQ Global Select Market. If
a broker votes shares that are unvoted by its customers for or against a “routine” proposal, these shares are counted
for the purpose of establishing a quorum and also will be counted for the purpose of determining the outcome of “routine”
proposals. If a broker does not receive voting instructions as to a non-routine proposal, or chooses to leave shares unvoted on
a routine proposal, a “broker non-vote” occurs and those shares will not be counted for determining the outcome of
those proposals. Shares for which broker non-votes occur are considered not entitled to vote on the particular proposal, and effectively
reduce the number of shares needed to approve that proposal.
Pursuant to the Company’s By-Laws,
election of the nominees set forth under “Item 1—Election of Directors” will be determined by the affirmative
vote of a plurality of the votes cast at the Annual Meeting, in person or by proxy on the proposal. With respect to the election
of directors, votes may be cast “for” all nominees, “withheld” from all nominees, or “withheld”
specifically from identified nominees. With respect to “Item 2—Advisory Vote on Executive Compensation”, the
votes that shareholders cast “for” must exceed the votes that shareholders cast “against” to approve the
advisory vote on compensation of our named executive officers. With respect to “Item 3—Vote on the Frequency of Holding
Future Advisory Votes on Executive Compensation”, the frequency of the advisory vote on compensation of our named executive
officers receiving the greatest number of votes - every three years, every two years or every one year - will be the frequency
that shareholders approve. “Item 4—Reverse Stock Split” will be determined by the affirmative vote of a majority
of the votes cast at the Annual Meeting, in person or by proxy on the proposal. Because your votes are advisory on Items 2 and
3, they will not be binding on the Board of Directors or the Company. However, the Board of Directors and the Compensation Committee
will review the voting results and take them into consideration when making future decisions regarding the named executive officers’
compensation or regarding the frequency of the advisory vote on the named executive officers’ compensation.
Pursuant to the advance notice provision
in our By-Laws, our Board of Directors has received a notice from an individual shareholder of the Company of his intent to nominate
at the Annual Meeting four individuals for election to the Board of Directors, and such shareholder
has indicated his intent to furnish a proxy statement to shareholders of the Company.
If any other matters shall properly
come before the Annual Meeting or any adjournments or postponements of the Annual Meeting and shall be voted on, properly executed
proxies will be deemed to confer discretionary authority on the individuals named as proxies therein to vote the shares represented
by such proxies as to any of those matters. The persons named as proxies intend to vote in accordance with the recommendation of
our Board of Directors or otherwise use their judgment.
A proxy may be revoked at any time prior
to the voting at the Annual Meeting by submitting a later dated proxy (including a proxy by telephone), by giving timely written
notice of such revocation to the Secretary of the Company or by attending the Annual Meeting and voting in person. However, if
you hold any shares of Common Stock in “street name” (that is through a bank, broker or other nominee) you may not
vote these shares in person at the Annual Meeting unless you bring with you a legal proxy from the holder of record of such shares.
The Company will pay the costs of soliciting,
preparing, printing and mailing this Notice of Annual Meeting of Shareholders and Proxy Statement, the enclosed proxy card and
the Company’s 2018 Annual Report to Shareholders. In accordance with the regulations of the SEC, we also reimburse brokerage
firms and other custodians, nominees and fiduciaries for their reasonable expenses incurred in connection with their forwarding
of proxies and proxy solicitation materials to beneficial owners of our Common Stock as of the record date. The solicitation of
proxies will be conducted primarily by mail, but may also include
the Internet, telephone, facsimile or oral communications by
directors, officers or regular employees of the Company acting without special compensation. The Company will also request persons,
firms and corporations holding shares in their names, or in the names of their nominees, which are beneficially owned by others,
to send or cause to be sent proxy materials to, and obtain proxies from, such beneficial owners, and, on request, will reimburse
such holders for their reasonable expenses in so doing.
PRINCIPAL SHAREHOLDERS
The only persons known to the Board of
Directors to be the beneficial owners of more than five percent of the outstanding shares of Common Stock as of May 10, 2019,
the record date, are indicated below:
Name
and Address of Beneficial Owner
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Amount
and Nature
of
Beneficial Ownership
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Percent
of
Class
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The Robert J. Higgins TWMC Trust
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14,279,715
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(1)
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39.4
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%
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38 Corporate Circle
Albany, New York 12203
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Neil S. Subin
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6,001,792
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(2)
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16.6
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%
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3300 South Dixie Highway, Suite 1-365
West Palm Beach, 33405
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Dimensional Fund Advisors LP
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2,022,043
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(3)
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5.8
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%
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Building One
6300 Bee Cave Road
Austin, TX 78746
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Josh Neblett
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1,933,513
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(4)
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5.3
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%
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38 Corporate Circle
Albany, NY 12033
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(1)
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Based on Form 5, filed February 21, 2017, by The Robert J Higgins TWMC Trust.
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(2)
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Based on Form 13G/A, filed February 13, 2019, by Neil S. Subin.
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(3)
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Based on Form 13G/A, filed February 8, 2019, by Dimensional Fund Advisors LP.
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(4)
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Based on Form 5, filed February 26, 2019, by Mr. Neblett. Includes 360,961 shares owned by the wife of Josh Neblett.
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Item 1.
Election of Directors
The Board of Directors (also referred
to herein as the “Board”) has nominated six candidates for election as directors to hold office (subject to the Company’s
By-Laws) for a one-year term expiring at the 2020 annual meeting of shareholders and until their successors have been elected and
qualified.
The nominees will be elected by a plurality
of the votes cast at the Annual Meeting in person or by proxy on the proposal.
If the nominees listed below should become
unavailable for any reason, which management does not anticipate, the proxy will be voted for any substitute nominee who may be
selected by the Nominating and Corporate Governance Committee of the Board prior to or at the Annual Meeting or, if no substitute
is selected prior to or at the Annual Meeting, for a motion to reduce the membership of the Board to the
number of nominees available. The information concerning the
nominees and their security holdings has been furnished by them to the Company.
The biographies of each of the Directors
contain applicable information regarding the person’s service as a director, business and other professional experience,
director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or
skills that caused the Board to determine that the person should serve as a director for the Company. The Company believes that
the backgrounds and qualifications of its Directors, considered as a group, should provide the Company and Board with diverse business
and professional capabilities, along with the experience, knowledge and other abilities that will allow the Board to fulfill its
responsibilities.
Nominees for Election as Directors
Michael Feurer
has been Chief
Executive Officer of the Company since October 2014 and a Director since January 2016. Mr. Feurer most recently served as Chief
Executive Officer and President of Vanity Stores from 2012 to 2014. Mr. Feurer’s prior experience includes nine years,
from 2001 through 2010, at Coldwater Creek in various positions, including Senior Vice President Merchandising and Merchandise
Operations and President, Strategic New Concepts. He also spent nine years at the Gap where he was responsible for Market Planning
and Planning and Allocation for their Canadian, European, and Japanese markets. Mr. Feurer has extensive international and domestic
retail experience gained through his positions at Coldwater Creek and Gap Inc., combined with the leadership skills developed
as the Chief Executive Officer at Vanity Stores.
Martin Hanaka
, has been the Operating
Chairman at Rens PetsDepot since August 2016. Previously, Mr. Hanaka served as Operating Partner at Highland Consumer Fund from
August 2014 to August 2016 and as the Interim Chief Executive Officer and a Director of Guitar Center, Inc. from January 2013 to
April 2013. Previously, Mr. Hanaka served as the Chairman of Golfsmith International Holdings, Inc. from April 2007 to November
2012 and was the Chief Executive Officer from June 2008 to November 2012. From September 1998 to August 2003, Mr. Hanaka served
as the Chief Executive Officer of The Sports Authority Inc. and served as Chairman from November 1999 through June 2004. From August
1994 to October 1997, he served as the President and Chief Operating Officer of Staples Inc. and served as a member of the Board
of Directors. He has served on a dozen public and private boards of directors, including the Company’s from 1998 through
2009. In addition to significant experience providing oversight as a director in various capacities, Mr. Hanaka contributes
substantial experience in the retail sector.
Robert E. Marks
has been the President
of Marks Ventures, LLC, a private equity investment firm, since 1994. Mr. Marks is currently a director of Terra Income Fund 6
and Denny’s Corporation (“Denny’s”) and served as Chairman of the Board of Directors of Denny’s from
2004 to 2006; a member of the Board of Trustees of the Greenwich, Connecticut Public Library, and a member of the Board of Trustees
of The International Rescue Committee. Mr. Marks has extensive finance, investment and executive compensation experience to share
with the Board.
Michael Nahl
is the retired Executive
Vice President and Chief Financial Officer of Albany International Corp. Mr. Nahl joined Albany International Corp. in 1981 as
Group Vice President, Corporate, served as Senior Vice President and Chief Financial Officer from 1983 to 2005 and was appointed
as Executive Vice President in 2005. Mr. Nahl retired as Executive Vice President and Chief Financial Officer of Albany International
Corp. in September 2009. Mr. Nahl has been Chairman of the Board of Lindsay Corporation since January 2015 and was a member of
JPMorgan Chase and Company’s Regional Advisory Board from 1996 through 2010. Mr. Nahl has broad and extensive knowledge on
accounting, disclosure, risk management, auditing and finance matters, as well as operational and strategic experience to share
with our Board.
W. Michael Reickert
, has been the
managing member of Independent Family Office, LLC since 2005. Prior to founding Independent Family Office in 2005, Mr. Reickert
was employed by The Ayco Company, LP. from 1986 to 2004 in various positions, including Executive Vice President. Mr. Reickert provides the Board with financial and investment
expertise. Mr. Reickert is a trustee of the Robert J. Higgins TWMC Trust, which is our largest shareholder, and is also trustee
of various other trusts.
Michael B. Solow
is a partner with
Arnold & Porter Kaye Scholer LLP. Prior to its merger with Arnold and Porter LLP in 2016, Mr. Solow was the Co-Chairman
and Managing Partner of Kaye Scholer LLP, an international law firm based in New York City, where he has practiced since January
2001 and was a member of the firm’s Executive Committee. Prior to joining Kaye Scholer LLP, Mr. Solow was a Partner and Practice
Manager for the Financial Services Practice at Hopkins & Sutter, a Chicago, Illinois law firm. Mr. Solow has previously
served on other corporate boards, including Camelot Music, Inc. Mr. Solow provides the Board with extensive legal and management
experience, particularly his expertise in corporate finance and his experience in law firm management.
Item 2.
Advisory Vote to Approve Named Executive Officer
Compensation
The Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the “Dodd-Frank Act”) allows our shareholders to vote to approve, on an advisory (non-binding)
basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with SEC rules.
The objectives of our compensation programs
are to attract, motivate, retain and reward executives and employees who will make substantial contributions toward the Company’s
meeting the financial, operational and strategic objectives that we believe will build substantial value for the Company’s
shareholders.
We are requesting shareholder approval
of the compensation of our named executive officers pursuant to the compensation disclosure rules of the SEC, including the “Compensation
Discussion and Analysis,” the compensation tables and any related material disclosed in this Proxy Statement. This vote is
not intended to address any one specific item of compensation, but instead the overall compensation of our named executive officers
and the policies and practices described in this Proxy Statement.
This vote is advisory and therefore not
binding on the Company, the Compensation Committee of the Board of Directors or the Board. The Board and the Compensation Committee
value the views of our shareholders and, to the extent there is any significant vote against the named executive officer compensation
as disclosed in this Proxy Statement, we will consider those shareholders’ concerns and will evaluate whether any actions
are necessary to address those concerns.
Item 3.
Advisory Vote on Frequency of Holding Future Advisory
Votes on Executive Compensation
The Dodd-Frank Act also allows our shareholders
to vote, on an advisory (non-binding) basis, on how frequently they would like to cast an advisory vote on the compensation of
our named executive officers as disclosed in accordance with the compensation disclosure rules of the SEC. By voting on this proposal,
shareholders may indicate whether they would prefer an advisory vote on named executive officer compensation every year, every
other year or every third year.
After careful consideration of the alternatives,
the Board believes that conducting an advisory vote on executive compensation on a three year basis is appropriate for the Company
and its shareholders at this time. The Board will carefully consider the outcome of the vote when making future decisions regarding
the frequency of advisory votes on executive compensation. However, because this vote is advisory and not binding, the Board may
decide that it is in the best interests of the Company and its shareholders to
hold an advisory vote more or less frequently than the alternative
that has been selected by our shareholders.
Executive Officers
The Company’s current executive
officers (other than Mr. Michael Feurer whose biographical information is included under “Item 1—Election of Directors”
herein) are identified below.
Edwin Sapienza
has been Chief Financial
Officer of the Company since October 2019. Prior to being named Chief Financial Officer, Mr. Sapienza was the Company’s Vice
President – Strategy, Secretary and Treasurer since 2012, and has continued in those roles, in addition to serving as Chief
Financial Officer. Mr. Sapienza joined the Company in 1993 as a staff accountant.
Bruce
J. Eisenberg
has been Executive Vice President of Real Estate since May 2001. He joined the Company in August of 1993 as Vice
President of Real Estate and was named Senior Vice President of Real Estate in May 1995. Prior to joining the Company, Mr. Eisenberg
was responsible for leasing, finance and construction of new regional mall development at The Pyramid Companies.
EQUITY OWNERSHIP BY DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth the beneficial
ownership of Common Stock as of May 10, 2019, by each Director and named executive officer of the Company and all Directors and
executive officers as a group. All shares listed in the table are owned directly by the named individuals, unless otherwise indicated
therein. The Company believes that the beneficial owners have sole voting and investment power over their shares, except as otherwise
stated or as to shares owned by spouses.
Name
|
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Positions With the
Company
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Age
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Year
First
Elected
as
Director/
Officer
|
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Direct
Ownership
|
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Shares that
may be
acquired
within 60
days
of May 10,
2019
|
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Total
Shares
Beneficially
Owned
|
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Percent
of
Class
|
|
Michael B. Solow
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Chairman of the Board
|
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60
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1999
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16,294
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12,408
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28,702
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*
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Martin Hanaka
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Director
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70
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2013
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13,774
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15,000
|
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28,774
|
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*
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Robert E. Marks
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Director
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67
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2012
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99,602
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15,000
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50,602
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*
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Michael Nahl
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Director
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76
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2011
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14,747
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15,000
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28,263
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*
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W. Michael Reickert
|
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Director
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55
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2016
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64,000
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(1)
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7,500
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71,500
|
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*
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Michael Feurer
|
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Chief Executive Officer, Director
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49
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2014
|
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171,054
|
|
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669,664
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840,718
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2.3
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%
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Edwin J. Sapienza
|
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Chief Financial Officer
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49
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2018
|
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1,250
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|
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68,000
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69,250
|
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*
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Bruce J. Eisenberg
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Executive Vice President—Real Estate
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59
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1995
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—
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348,000
|
|
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348,000
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*
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All Directors and Executive Officers as a group (8 persons)
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|
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380,721
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|
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1,150,512
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1,531,293
|
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4.1
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%
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*
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Less than 1% of issued and outstanding Common Stock
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(1)
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Excludes 14,279,715 shares held in the Robert J Higgins TWMC Trust of which Mr. Reickert is a Trustee.
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CORPORATE GOVERNANCE
The Board of Directors
Meetings and Attendance
The Board of Directors held seven meetings
during the 2018 fiscal year. All of the Directors attended greater than 75% of the aggregate of: (i) the total number of meetings
of the Board of Directors, and (ii) the total number of meetings held by all committees of the Board on which such Director served.
It is the policy of the Board that all Directors
should be present at Company’s Annual Meeting of Shareholders. All of the Directors then in office and standing for election
attended the 2018 Annual Meeting of Shareholders.
Board Leadership Structure
The Board does not have a policy regarding
whether the roles of the Chairman and Chief Executive Officer should be separate, but rather makes this determination on the basis
of what is best for our Company at a given point in time. Our current Chairman, Mike Solow, was appointed as non- executive chairman
as of April 21, 2017. As non-executive Chairman, Mr. Solow presides at all meetings of shareholders and the Board, as well as all
executive sessions of the non-employee directors. We believe the Board leadership structure is appropriate for us at this time.
Code of Ethics
The Board of Directors has adopted a Code
of Ethics applicable to the Company’s officers, employees, Directors and consultants. The Code of Ethics is available on
the Company’s website, www.twec.com. A copy of the Code of Ethics is available in print to any shareholder who requests it
in writing to the Company’s Corporate Secretary, Trans World Entertainment Corporation, 38 Corporate Circle, Albany, NY,
12203.
Guidelines for Evaluating Independence of Directors
The Board has determined that all of the Directors,
other than Mr. Feurer and Mr. Reickert, are independent directors in accordance with the standards of the NASDAQ Stock Market and
as described below. The Nominating and Corporate Governance Committee as well as the Board annually reviews relationships that
Directors may have with the Company to make a determination of whether there are any material relationships that would preclude
a Director from being independent.
The standards relied upon by the Board in
affirmatively determining whether a director is “independent,” in compliance with the rules of the NASDAQ Stock Market,
are comprised of those objective standards set forth in the NASDAQ rules. The Board is responsible for ensuring that independent
directors do not have a material relationship with the Company or its affiliates or any executive officer of the Company or his
or her affiliates.
Committees of the Board of Directors
The Audit Committee
The Board of Directors has an Audit Committee
whose current members are: Robert Marks (Chairman), Martin Hanaka, and Michael Nahl. These Directors are, in the opinion of the
Board of Directors, “independent” (as defined under the standards of the NASDAQ Stock Market) of management and free
of any relationship that would interfere with their exercise of independent judgment as members of the Audit Committee. The Board
of Directors has determined that Robert Marks is both independent
and qualified as an Audit Committee financial expert as such term
is defined under the rules and regulations promulgated by the Securities and Exchange Commission and applicable to this Proxy Statement.
The Audit Committee held four meetings during the 2018 fiscal year. The Audit Committee’s responsibilities consist of the
selection, appointment and authorization of independent accountants, reviewing the scope of the audit conducted by such accountants,
as well as the audit itself, and reviewing the Company’s audit activities and matters concerning financial reporting, accounting
and audit procedures, related party transactions and policies generally. The Audit Committee was established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached as Appendix A to the 2018 Proxy Statement.
The Compensation Committee
The Board of Directors has a Compensation
Committee, consisting solely of independent Directors, whose current members are: Martin Hanaka (Chairman), Michael Nahl and Mike
Solow. The Compensation Committee held six meetings during the 2018 fiscal year. The Compensation Committee formulates and gives
effect to policies concerning salary, compensation, stock options and other matters concerning employment with the Company. The
processes and procedures used for the consideration and determination of executive compensation are described in the section of
this Proxy Statement captioned “Compensation Discussion and Analysis.” The Board of Directors has adopted a written
charter for the Compensation Committee, a copy of which is attached as Appendix B to this Proxy Statement.
The Nominating and Corporate Governance Committee
The Board of Directors has a Nominating and
Corporate Governance Committee, consisting solely of independent Directors, whose current members are: Michael Nahl (Chairman),
Martin Hanaka, Robert Marks and Michael Solow. The Nominating and Corporate Governance Committee held two meetings during the 2018
fiscal year. The Nominating Committee develops qualification criteria for Board members; interviews and screens individuals qualified
to become Board members in order to make recommendations to the Board; and oversees the evaluation of executive management. The
Committee seeks to select a Board that is strong in its collective knowledge of and diversity of skills and experience concerning
retail operations, accounting and finance, management and leadership, vision and strategy, risk assessment and corporate governance.
The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, a copy of which is
attached as Appendix C to this Proxy Statement.
The Nominating and Corporate Governance Committee
will consider nominations submitted by shareholders. To recommend a nominee, a shareholder should write to the Company’s
Secretary. See “Submission of Shareholder Proposals” in this Proxy Statement. Any recommendation must include (i) the
name and address of the candidate, (ii) a brief biographical description, including his or her occupation for at least the last
five years, and a statement of the qualifications of the candidate, taking into account the qualification requirements summarized
above, and (iii) the candidate’s signed consent to be named in the Proxy Statement and to serve as a Director if elected.
The Nominating and Corporate Governance Committee may seek additional biographical and background information from any candidate
which, to be considered, must be received on a timely basis.
The process followed by the Nominating and
Corporate Governance Committee to identify and evaluate candidates includes requests to Board members and others for recommendations,
including a search firm or outside consultant, meetings from time to time to evaluate biographical information and background material
relating to potential candidates and interviews of selected candidates by members of the Nominating and Corporate Governance Committee
and the Board. Assuming the appropriate biographical and background material is provided for candidates submitted by shareholders,
the
Nominating and Corporate Governance Committee will evaluate those
candidates by following substantially the same process, and applying substantially the same criteria, as for candidates submitted
by Board members. While the Company does not have a formal diversity policy for Board of Director membership, the Nominating and
Corporate Governance Committee and the Board of Directors, as a whole, seeks nominees or candidates to serve as directors that
represent a variety of backgrounds and experience that will enhance the quality of the Board of Director’s deliberations
and decisions. The Nominating and Corporate Governance Committee considers, among other factors, diversity with respect to viewpoint,
skills and experience in its evaluation of candidates for Board of Director membership. Such diversity considerations are discussed
by the Nominating and Corporate Governance Committee in connection with the general qualifications of each potential nominee. Our
Board of Directors has received a notice from an individual shareholder of the Company of his intent to nominate at the June 27,
2019 Annual Meeting four individuals for election to the Board of Directors, and such shareholder has indicated his intent to furnish
a proxy statement to shareholders of the Company. This same shareholder submitted the same four individuals to the Nominating and
Corporate Governance Committee for nomination at the Annual Meeting.
Board’s Role in Risk Oversight
The Board has an active role, as a whole and
also at the committee level, in overseeing management of the Company’s risks. The Board regularly reviews information regarding
the Company’s credit, liquidity, and operations (including cybersecurity and data protection), as well as the risks associated
with each. The Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive
compensation plans and arrangements. The Audit Committee oversees management of financial and operational (including cybersecurity
and data protection) risks and potential conflicts of interest. The Nominating and Corporate Governance Committee manages risks
associated with the independence of the Board. While each committee is responsible for evaluating certain risks and overseeing
the management of such risks, the entire Board is regularly informed through committee reports about such risks.
Communications with the Board of Directors
The Board has established a process for shareholders
to communicate with members of the Board. The Chairman of the Nominating and Corporate Governance Committee, with the assistance
of the Company’s Secretary, will be primarily responsible for monitoring communications from shareholders and providing copies
or summaries of such communications to the other Directors, as he or she considers appropriate. Communications will be forwarded
to all Directors if they relate to appropriate matters and may include suggestions or comments from the Chairman of the Nominating
and Corporate Governance Committee. Any such communication must state the number of shares beneficially owned by the shareholder
making the communication. In general, communications relating to corporate governance and long-term corporate strategy are more
likely to be forwarded than communications relating to personal grievances and matters as to which the Company tends to receive
repetitive or duplicative communications. Shareholders who wish to send communications to the Board may do so by writing to:
Chairman of the Nominating and Corporate Governance Committee
c/o the Company’s Secretary
Trans World Entertainment Corporation
38 Corporate Circle
Albany, New York 12203
Compensation of Directors
Name
|
|
Fees
Earned
or Paid in
Cash ($)
(1)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
Compensation
($)
|
|
Martin Hanaka
|
|
|
|
119,000
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
119,000
|
|
Robert Marks
|
|
|
|
48,000
|
|
|
|
|
80,000
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
128,000
|
|
Michael Nahl
|
|
|
|
121,144
|
|
|
|
|
1,856
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
123,000
|
|
W. Michael Reickert
|
|
|
|
28,500
|
|
|
|
|
80,000
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
108,500
|
|
Michael B. Solow
|
|
|
|
165,500
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
165,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Fees earned reflect the amount of cash received for the annual retainer, Board and
committee meeting fees and cash received in lieu of Deferred Shares. Fees earned for Mr. Solow reflect an annual retainer
of $50,000 for his role as Chairman of the Board.
|
|
|
(2)
|
Amount represents the grant date fair value as computed in accordance with Accounting Standards
Codification Topic 718, relating to the grant of deferred shares to a director in 2018. See Note 9 to the Consolidated Financial
Statements in the Company’s 2018 Annual Report on Form 10-K for the assumptions made in determining the value. Effective
May 1, 2018, 64,000 deferred shares were awarded to Mr. Marks and Mr. Reickert and 1,484 deferred shares were awarded to Mr.
Nahl.
|
Cash Compensation.
Each Director who
is not a salaried employee of the Company receives a $12,500 retainer per annum plus a $2,000 attendance fee for each Board meeting
attended and a $1,000 attendance fee for each committee meeting attended, except that the compensation for telephone conference
meetings is $1,000 and $500 for board and committee telephone conference meetings, respectively. A committee chairperson receives
an additional $5,000 retainer per year and the Audit Committee chairperson receives a $15,000 annual retainer. The Chairman of
the Board receives an annual retainer of $50,000. The Company may, in its discretion, determine to pay all or a portion of any
annual retainer in shares of Common Stock in lieu of cash and to make discretionary grants of Common Stock to non-employee Directors
from time to time. The Company has not elected to pay the annual retainer in shares or make discretionary grants during the past
three years.
Additional Compensation.
Currently,
each Director is eligible to participate in the Amended and Restated 2005 Long Term Incentive Plan. During the 2018 fiscal year,
no options were granted to members of the Board. As of May 10, 2019, Mr. Hanaka, Mr. Nahl, Mr. Reickert and Mr. Marks each held
options to purchase 15,000 shares.
On or about May 1 of each year, non-employee
Directors have been entitled to receive grants of vested shares of Common Stock representing $80,000 in market value of stock on
the grant date for service over the prior twelve months. They were entitled to elect to receive cash instead of shares of Common
Stock to the extent they met a share ownership requirement (shares having a value at least equal to 4x the annual retainer). During
our last fiscal year, each non-employee Director elected to receive cash in lieu of shares, with the exception of Mr. Marks and
Mr. Reickert who received the entire award in stock and Mr. Nahl who received shares have a value of $1,856 on the date of grant.
Effective for amounts otherwise payable on or
about May 1, 2019 and thereafter, in lieu of annual grants of shares having a fair market value of $80,000 on the date of grant,
each non-employee Director will be entitled to receive annual payments of $80,000 in cash, provided they are serving as a director
on the applicable payment date. Except to the extent a timely deferral election was made by the non-employee Director, the amount
payable in May of 2019 will be made in a single lump sum in May of 2019. Payments to non-employee Directors for periods beginning
after May 1, 2019 will generally be made in $20,000 increments paid quarterly in arrears on or about August 1, November 1, February
1 and
May 1, provided they are serving as a Director on the payment date
and they did not make a timely deferral election. To the extent a non-employee Director made a timely election to defer payments
until separation from service with the Company, such payments will be made upon separation from service, together with interest
on the deferred amounts computed at a rate equal to 120% of the applicable long-term federal rate (within the meaning of Section
1274(d) of the Internal Revenue Code of 1986, as amended) as in effect from time to time.
An initial grant of 15,000 stock options is made
to each new non-employee Director. The Board of Directors is also authorized, in its discretion, to grant additional stock options
or Common Stock awards to non-employee Directors.
COMPENSATION OVERVIEW
Introduction
This section describes the material elements
of compensation for the Company’s executive officers identified in the Summary Compensation Table below (who are referred
to below as the “named executive officers” or “NEOs”), the process by which such elements are determined
and established by the Compensation Committee for the respective individuals and the principles and considerations underlying such
determinations.
The compensation decisions for the named executive
officers relating to fiscal year 2018 took into account the Company’s consolidated financial results. Discussions relating
to the Company’s consolidated financial results and operating performance for the year are contained in the Management’s
Discussion and Analysis section of the Company’s 2018 Annual Report on Form 10-K.
Compensation Objectives and Approach
The objectives of our compensation programs
are to attract, motivate, retain and reward executives and employees who will make substantial contributions toward the Company
meeting the financial, operational and strategic objectives that we believe will build value for the Company’s shareholders.
In an effort to achieve these objectives, the key elements of such programs consist of base salary, annual performance-based cash
bonuses and share-based compensation.
The Compensation Committee’s compensation
determinations regarding the named executive officers are reviewed by the full Board. Generally, these determinations are made
annually and occur at the Compensation Committee’s regular meeting of each fiscal year occurring in April, at which cash
bonuses and share-based awards, if any, relating to the named executive officers’ performance during the preceding fiscal
year are granted, and any base salary adjustments for the current year are implemented. In preparation for these meetings, the
Chief Executive Officer meets with the Compensation Committee Chairman to present his preliminary compensation proposals relating
to the named executive officers to be addressed in the April meeting, based on the planned full-year financial results for the
Company and its subsidiaries.
The Compensation Committee reviews and approves
each element of compensation for the named executive officers. In establishing the levels and components of compensation for the
named executive officers, the Compensation Committee, as a threshold matter, evaluates the overall performance of the Company for
the year.
Key elements considered in the Compensation
Committee’s performance evaluations include corporate performance, the officer’s contributions to such performance
and the officer’s other accomplishments for the benefit of the Company during such period. In these evaluations, the
Compensation Committee does not apply rigid formulas with respect
to amount of compensation paid or the allocation between cash and non-cash compensation, and reviews long-term financial performance,
as well as financial performance for the previous year. Such evaluations also take into account the nature, scope and level of
the named executive officer’s responsibilities and the officer’s level of experience, past levels of compensation and
changes in such levels, tenure with the Company and other opportunities potentially available to such officer. In addition, the
members of the Compensation Committee interact with each of the named executive officers in connection with regular meetings of
the Company’s Board of Directors, which provides the Committee with an additional basis for evaluating such officer and his
performance. Based on all of these general evaluative factors and the additional factors described below, the Compensation Committee
makes its assessments and determines the components and levels of compensation for each such officer.
Management meets with members of the Compensation
Committee to assist the Committee in making compensation decisions regarding our named executive officers and also to discuss with
the Compensation Committee its recommendations for other executives. We believe that since our management has extensive knowledge
regarding our business, they are in a position to provide valuable input. Specifically, our Chief Executive Officer provides input
relevant to setting performance goals and certifies to the Compensation Committee the level of achievement of our performance targets
under our Executive Officer Bonus Plan and The Trans World Entertainment 2005 Long Term Incentive and Share Award Plan (As Amended
and Restated on April 5, 2017) (the “2005 Plan”).
Compensation Committee-Assessment of Risk
Each year, the Compensation Committee reviews
the Company’s compensation programs to assess risk in the Company’s compensation programs. As part of its consideration,
the Committee considers any potential risks that could arise from the Company’s compensation policies and practices and the
extent to which any of those risks would be reasonably likely to have a material adverse effect on the Company. The Committee considers
all facets of the compensation programs, their underlying assumptions and the objectives those programs were designed to achieve.
Some of the factors the Committee considers to minimize potential risks are the balance between cash and stock awards, the various
time frames associated with earning of awards (seasonal, annual and multi-year vesting) and the different performance metrics associated
with the incentive awards for each of the Company’s businesses and corporate associates. After that review, the Committee
has determined that the Company’s compensation programs for fiscal 2018 did not incentivize its associates, including senior
executives, to take unnecessary and excessive risks that could jeopardize the future of the Company and would be adverse to the
best interests of its shareholders.
The Company has sought to structure its overall
compensation program to contain an appropriate mix of long-term and short-term incentives that balance risk and potential reward
in a manner that is appropriate to the circumstances and in the best interest of the Company’s shareholders. In particular,
equity-based awards are structured to vest generally over a number of years, which encourages employees to focus on long-term results.
Moreover, both annual incentive bonus and performance-based equity awards are subject to discretionary reduction if determined
appropriate by the Compensation Committee. The Company believes that these factors reduce any incentive that employees may have
to take inappropriate risks. Accordingly, the Company believes that its compensation policies and practices encourage and incentivize
the employees to improve results in a disciplined, focused manner, with a view toward long-term success.
Cash Compensation
The Company pays base salaries at levels it
believes will attract and retain key employees and ensure that our compensation program is competitive. Base salaries for the named
executive officers are
established by the Compensation Committee, and reviewed by such
Committee for potential adjustment on an annual basis, based on the considerations described in the preceding section. The base
salary amounts paid to the named executive officers during the 2018 fiscal year are shown in the “Summary Compensation Table”.
The annual incentive bonus plan, the results
of which are shown in the Summary Compensation Table in the Non-Equity Incentive Plan Compensation column, provides for a cash
bonus, dependent upon the level of achievement of the stated corporate goals, calculated as a percentage of the officer’s
base salary, with higher ranked executive officers being compensated at a higher percentage of base salary. The Compensation Committee
approves the target annual incentive award for the Chief Executive Officer and, for each officer below the Chief Executive Officer
level, bases the target in part on the Chief Executive Officer’s recommendations. At the target level of bonus, the Chief
Executive Officer receives 100% of his salary and the other NEOs receive 60% of their salary. For the 2018 fiscal year, the performance
goal adopted for annual bonuses was based on limiting losses before interest, taxes, depreciation and amortization (“EBITDA”)
to not more than $2.8 million or achieving sales of at least $485 million. The Company’s loss before interest, taxes, depreciation
and amortization and sales did not achieve the target threshold, therefore incentives were not earned.
Share-Based Compensation
The Company believes that a component of its
officers’ compensation should consist of share-based incentive compensation, which appreciates or depreciates in value in
relation to the market price of our Common Stock. Accordingly, the Compensation Committee has in recent years made, and intends
in the future to continue to make, grants of share-based awards to the named executive officers and other key employees in such
amounts as the Committee believes will accomplish the objectives of our compensation programs. As discussed below, the holder’s
ability to realize any financial benefit from these awards typically requires the fulfillment of substantial vesting requirements
that are performance contingency-related in some cases and time-related in others. Accordingly, the Company believes that these
awards provide substantial benefit to the Company in creating appropriate performance incentives and in facilitating the long-term
retention of employees who add significant value. During fiscal year 2018, the Company granted a total 380,000 time vested options
to the named executive officers in recognition of their individual performance in fiscal 2017. During fiscal year 2018, the Company
also granted a total of 90,000 time vested restricted stock units to the named executive officers.
Retirement and Other Benefits
The Company’s benefits program includes
retirement plans and group insurance plans. The objective of the program is to provide named executive officers with reasonable
and competitive levels of protection against the four contingencies (retirement, death, disability and ill health) which could
interrupt their employment and/or income received as an active employee. Retirement plans, including the supplemental executive
retirement plan, are designed to provide a competitive level of retirement income to named executive officers and to reward them
for continued service with the Company. The retirement program consists of a supplemental executive retirement plan and the 401(k)
plan. Mr. Eisenberg is the only active participant in the supplemental executive retirement plan.
The group insurance program consists of life,
disability and health insurance benefit plans that cover all full-time management and administrative employees and the supplemental
long-term disability plan, which covers the named executive officers and other officers.
Other Compensation
The Company continues to maintain modest executive
benefits and perquisites for officers; however, the Compensation Committee in its discretion may revise, amend or add to the officer’s
executive benefits and perquisites if it deems it advisable. See the Summary Compensation Table for a summary of such benefits.
Deductibility of Compensation Expenses
Section 162(m) of the Internal Revenue Code
generally disallows a tax deduction to a public corporation for annual compensation over $1 million for each of its “covered
employees” (i.e., the chief executive officer, chief financial officer and certain other current or former executive officers).
Prior to the amendment of Section 162(m) in December of 2017, the deductibility of some types of compensation for named executive
officers (other than the chief financial officer) depended upon whether the named executive officer’s receipt of compensation
was deferred until after the executive terminated employment with the Company or on whether such compensation qualified as “performance-based
compensation” under Section 162(m). In general, the exceptions for deferred compensation and performance-based compensation
were repealed effective for years beginning after December 31, 2017. The Committee has generally sought to satisfy the requirements
necessary to allow the compensation of its named executive officers to be deductible under Section 162(m) of the Internal Revenue
Code, but it has retained the discretion to approve compensation that is not deductible under Section 162(m). In making future
compensation decisions, the Committee intends to take into account any available grandfather provisions under the amendments to
Section 162(m). However, the Committee believes that its primary responsibility is to provide a compensation program that will
attract, retain and reward the executive talent necessary to the success of the Company. Consequently, the Committee recognizes
that the loss of a tax deduction could be necessary or advisable in some circumstances due to the restrictions of Section 162(m).
Summary Compensation Table
The following table sets forth information
regarding compensation earned by our Chief Executive Officer and two other most highly compensated Executive Officers:
Name
|
|
Principal Position
|
|
Year
|
|
|
Salary
($)
(1)
|
|
|
Bonus
($)
(2)
|
|
|
Stock
Awards
($)
(3)
|
|
|
Option
Awards
($)
(4)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
(5)
|
|
|
All Other
Compensation
($)
(6)
|
|
|
Total
Compensation
($)
|
|
Michael Feurer
|
|
Chief Executive Officer
|
|
|
2018
|
|
|
|
700,000
|
|
|
|
—
|
|
|
|
49,000
|
|
|
|
73,500
|
|
|
|
—
|
|
|
|
15,361
|
|
|
|
837,861
|
|
|
|
|
|
|
2017
|
|
|
|
700,000
|
|
|
|
350,000
|
|
|
|
92,500
|
|
|
|
111,000
|
|
|
|
260,890
|
|
|
|
14,328
|
|
|
|
1,528,718
|
|
John N. Anderson
|
|
Chief Financial Officer until October 10, 2018
|
|
|
2018
|
|
|
|
249,038
|
|
|
|
—
|
|
|
|
14,700
|
|
|
|
58,680
|
|
|
|
—
|
|
|
|
142,837
|
|
|
|
465,255
|
|
|
|
|
|
|
2017
|
|
|
|
350,000
|
|
|
|
105,000
|
|
|
|
27,750
|
|
|
|
88,800
|
|
|
|
78,267
|
|
|
|
—
|
|
|
|
649,817
|
|
Bruce J. Eisenberg
|
|
Executive Vice
|
|
|
2018
|
|
|
|
425,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,115
|
|
|
|
—
|
|
|
|
—
|
|
|
|
442,115
|
|
|
|
President—Real Estate
|
|
|
2017
|
|
|
|
425,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,900
|
|
|
|
95,039
|
|
|
|
—
|
|
|
|
545,939
|
|
Edwin J. Sapienza
|
|
Chief Financial Officer
|
|
|
2018
|
|
|
|
224,615
|
|
|
|
—
|
|
|
|
4,900
|
|
|
|
12,275
|
|
|
|
—
|
|
|
|
2,403
|
|
|
|
244,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Josh Neblett
|
|
Chief Executive Officer – etailz until March 11, 2019
|
|
|
2018
|
|
|
|
285,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,522
|
|
|
|
290,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Salary represents amounts earned during fiscal year.
|
|
|
(2)
|
Bonus represents the earned bonus for each NEO for fiscal 2017.
|
(3)
|
Amounts represent the grant date fair value, as computed in accordance with Accounting Standards Codification Topic 718, relating to restricted share units awarded to Mr. Feurer, Mr. Anderson during fiscal years 2018 and 2017 and Mr. Sapienza in fiscal year 2018. See Note 9 to the Consolidated Financial Statements in the Company’s 2018 Annual Report on Form 10-K for the assumptions made in determining the value.
|
|
|
(4)
|
Amount represents the grant date fair value as computed in accordance with Accounting Standards Codification Topic 718, relating to the grant of stock options to the named executive officer in fiscal years 2018 and 2017. See Note 9 to the Consolidated Financial Statements in the Company’s 2018 Annual Report on Form 10-K for the assumptions made in determining the value.
|
|
|
(5)
|
Represents annual incentive compensation for each NEO for fiscal 2017.
|
|
|
(6)
|
Includes the following payments made by the Company to the named executive officers:
|
Name
|
|
Year
|
|
|
Perquisites
and Other
Personnel
Benefits
($)
|
|
|
Insurance
Premiums
($)
|
|
|
Company
Contributions
to
Retirement
and
401(K) Plans
($)
|
|
|
Death
Benefits
to
Survivor
($)
|
|
|
Total ($)
|
|
Michael Feurer
|
|
|
2018
|
|
|
|
11,700
|
|
|
|
—
|
|
|
|
3,661
|
|
|
|
—
|
|
|
|
15,361
|
|
|
|
|
2017
|
|
|
|
11,925
|
|
|
|
—
|
|
|
|
2,403
|
|
|
|
—
|
|
|
|
14,328
|
|
John N. Anderson
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,481
|
|
|
|
141,356
|
|
|
|
142,837
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,263
|
|
|
|
—
|
|
|
|
2,263
|
|
Bruce J. Eisenberg
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Edwin J. Sapienza
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,403
|
|
|
|
—
|
|
|
|
2,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Josh Neblett
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,522
|
|
|
|
—
|
|
|
|
5,522
|
|
Employment Agreements
Mr. Feurer
Mr. Feurer’s employment agreement with
the Company, as amended and restated on February 26, 2019, provides that Mr. Feurer serves as the Company’s Chief Executive
Officer with a base salary equal to $700,000 per annum (“Base Salary”). His employment is on an at will basis. Mr.
Feurer will be eligible for an annual bonus under the Company’s bonus plan, with a target determined by the Compensation
Committee, after consultation with the Executive, in an amount that provides the Executive with an opportunity to earn total compensation
at or above a median total compensation benchmark for the Executive’s position as deemed appropriate by the Compensation
Committee.
Mr. Feurer is eligible to participate in the
Company’s group health insurance, group life insurance, and 401(k) plans in accordance with their terms. Please see the “Severance
Benefits” section below for information on Mr. Feurer’s severance benefits.
Mr. Feurer also agreed to confidentiality and
non-compete covenants.
Outstanding Equity Awards at Fiscal Year-End
The table below summarizes the named executive
officers’ equity awards that were unvested or unexercised, as applicable, as of February 2, 2019.
|
|
|
|
Option Awards
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units
of Stock
That
Have Not
Vested (#)
|
|
Michael Feurer
|
|
|
10/13/2014
|
|
|
|
300,000
|
|
|
|
—
|
|
|
|
3.50
|
|
|
|
10/13/2024
|
|
|
|
—
|
|
|
|
|
4/14/2016
|
|
|
|
157,164
|
|
|
|
—
|
|
|
|
3.85
|
|
|
|
4/14/2026
|
|
|
|
—
|
|
|
|
|
5/6/2016
|
(2)
|
|
|
75,000
|
|
|
|
25,000
|
|
|
|
3.81
|
|
|
|
5/6/2026
|
|
|
|
—
|
|
|
|
|
5/1/2017
|
(2)
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
1.85
|
|
|
|
5/1/2027
|
|
|
|
50,000
|
(3)
|
|
|
|
6/27/2018
|
(2)
|
|
|
—
|
|
|
|
150,000
|
|
|
|
0.98
|
|
|
|
6/27/2028
|
|
|
|
50,000
|
(3)
|
John N. Anderson
|
|
|
3/1/2011
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
1.73
|
|
|
|
3/1/2021
|
|
|
|
—
|
|
|
|
|
5/7/2012
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
2.53
|
|
|
|
10/10/2021
|
|
|
|
—
|
|
|
|
|
6/21/2013
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
4.87
|
|
|
|
10/10/2021
|
|
|
|
—
|
|
|
|
|
6/3/2014
|
|
|
|
35,000
|
|
|
|
—
|
|
|
|
3.36
|
|
|
|
10/10/2021
|
|
|
|
—
|
|
|
|
|
4/1/2015
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
3.72
|
|
|
|
10/10/2021
|
|
|
|
—
|
|
|
|
|
5/6/2016
|
|
|
|
135,000
|
|
|
|
—
|
|
|
|
3.81
|
|
|
|
10/10/2021
|
|
|
|
—
|
|
|
|
|
5/1/2017
|
|
|
|
120,000
|
|
|
|
—
|
|
|
|
1.85
|
|
|
|
10/10/2021
|
|
|
|
—
|
|
|
|
|
6/27/2018
|
|
|
|
120,000
|
|
|
|
—
|
|
|
|
0.98
|
|
|
|
10/10/2021
|
|
|
|
—
|
|
Bruce J. Eisenberg
|
|
|
5/6/2010
|
|
|
|
200,000
|
|
|
|
—
|
|
|
|
2.11
|
|
|
|
5/6/2020
|
|
|
|
—
|
|
|
|
|
6/21/2013
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
4.87
|
|
|
|
6/21/2023
|
|
|
|
—
|
|
|
|
|
6/3/2014
|
(1)
|
|
|
28,000
|
|
|
|
7,000
|
|
|
|
3.36
|
|
|
|
6/21/2023
|
|
|
|
—
|
|
|
|
|
5/15/2015
|
(2)
|
|
|
26,250
|
|
|
|
8,750
|
|
|
|
3.88
|
|
|
|
5/15/2025
|
|
|
|
—
|
|
|
|
|
5/6/2016
|
(2)
|
|
|
26,250
|
|
|
|
8,750
|
|
|
|
3.81
|
|
|
|
5/6/2026
|
|
|
|
—
|
|
|
|
|
5/1/2017
|
(2)
|
|
|
17,500
|
|
|
|
17,500
|
|
|
|
1.85
|
|
|
|
5/1/2027
|
|
|
|
—
|
|
|
|
|
6/27/2018
|
(2)
|
|
|
—
|
|
|
|
35,000
|
|
|
|
0.98
|
|
|
|
6/27/2028
|
|
|
|
—
|
|
Edwin J. Sapienza
|
|
|
3/1/2011
|
|
|
|
8,000
|
|
|
|
—
|
|
|
|
1.73
|
|
|
|
3/1/2021
|
|
|
|
—
|
|
|
|
|
5/7/2012
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
2.53
|
|
|
|
5/7/2022
|
|
|
|
—
|
|
|
|
|
6/21/2013
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
4.87
|
|
|
|
6/21/2023
|
|
|
|
—
|
|
|
|
|
6/3/2014
|
(1)
|
|
|
6,000
|
|
|
|
1,500
|
|
|
|
3.36
|
|
|
|
6/21/2023
|
|
|
|
—
|
|
|
|
|
4/1/2015
|
(2)
|
|
|
5,625
|
|
|
|
1,875
|
|
|
|
3.72
|
|
|
|
4/1/2026
|
|
|
|
—
|
|
|
|
|
5/6/2016
|
(2)
|
|
|
5,625
|
|
|
|
1,875
|
|
|
|
3.81
|
|
|
|
5/6/2026
|
|
|
|
—
|
|
|
|
|
5/1/2017
|
(2)
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
1.85
|
|
|
|
5/1/2027
|
|
|
|
3,750
|
(3)
|
|
|
|
6/27/2018
|
(2)
|
|
|
—
|
|
|
|
25,000
|
|
|
|
0.98
|
|
|
|
6/27/2028
|
|
|
|
5,000
|
(3)
|
|
|
|
10/23/2018
|
(2)
|
|
|
—
|
|
|
|
50,000
|
|
|
|
1.04
|
|
|
|
10/23/2028
|
|
|
|
20,000
|
(3)
|
Josh Neblett
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Sapienza’s and Mr. Eisenberg’s options vest based on service with 60% vesting after
the third year of service and 20% vesting after the each of fourth and fifth year of service.
|
|
|
(2)
|
Mr. Feurer’s, Mr. Eisenberg’s and Mr. Sapienza’s, options vest based on service
ratably over four years.
|
|
|
(3)
|
Mr. Feurer’s and Mr. Sapienza’s Restricted Stock Units vest ratably over 4 years.
|
Pension Benefits
The Company maintains a non-qualified Supplemental
Executive Retirement Plan (the “SERP”) for certain current and former executive officers of the Company. Mr. Eisenberg
is the only one of our NEOs who participates in the SERP. The SERP, which is a nonqualified plan, provides eligible executives
defined pension benefits that supplement benefits under other retirement arrangements. The annual benefit amount is equal to 50%
of the average of the participant’s base compensation for the five years prior to retirement plus the average of the three
largest bonus payments for the last five years prior to retirement, to the extent vested. Participants vest 35% after 10 years,
75% after 20 years and 100% upon retirement at age 65 after 20 years of service. The bonus portion of the benefit vests only if
the participant is employed until age 65. In addition, the benefits become vested in full upon a change in control of the Company
prior to the participant’s termination of employment or a termination of employment due to the participant’s death
or disability. Additionally, all benefits under the SERP will be forfeited in the event of any of the following: competitive conduct
or solicitation for employment or employment of company employees, in any case during the 5 years following termination or at any
time while in receipt of benefits (these restrictions are waived in the event of a change in control); disclosure or use of confidential
information; or termination for cause. Payments are made in equal installments over 20 years. The Company has established a rabbi
trust whose purpose is to be a source of funds to pay benefits to participants in the SERP.
Potential Payments Upon Termination or Change of Control
Employment Agreement with Mr. Feurer
The employment agreement entered into between
the Company and Mr. Feurer provides severance benefits upon a termination of employment as described below.
Mr. Feurer’s employment agreement provides
that, in the event of his termination by reason of death or disability (as defined in the agreement), the he will be entitled to
receive earned but unpaid base salary and payment for accrued but unused vacation. Mr. Feurer also will be entitled to any benefits
mandated under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) or required under the terms of any death, insurance,
or retirement plan, program, or agreement provided by the Company and to which Mr. Feurer is a party or in which he is a participant.
In the event of his termination by the Company
for any reason other than cause (as defined in the employment agreement), death or disability or by the Mr. Feurer for good reason
(as defined in the employment agreement), Mr. Feurer will be entitled to receive: (i) earned but unpaid base salary and accrued
but unused vacation; and (ii) provided he executes a release of claims, continuation of his base salary for 18 months and continuation
of medical benefits for up to 18 months. To the extent the base salary continuation payments do not constitute deferred compensation
for purposes of Section 409A of the Code, such payments shall be made in a lump sum on the first day following the date on which
the release of claims becomes final and binding.
Agreements with Mr. Sapienza and Mr. Eisenberg
On February 26, 2019 we entered into Severance,
Retention and Restrictive Covenant Agreements with Mr. Sapienza and Mr. Eisenberg. The Severance, Retention and Restrictive Covenant
Agreements provide for retention bonuses payable to each of them in the amount of $200,000. In the case of Mr. Sapienza, one third
of his retention bonus will be payable to him on each of June 1, 2019, October 1, 2019, and March 1, 2020. In the case of Mr. Eisenberg,
twenty-five percent of his retention bonus will be
payable to him on each of June 1, 2019 and October 1, 2019, and
the remaining fifty percent will be payable to him on March 1, 2020. In order to receive the payments, except as described below,
they are required to remain employed with the Company through the applicable payment dates. However, upon consummation of a change
of control of the Company (as defined in the agreements) at a time when the executive remains employed by the Company, any unpaid
portion of the retention bonus will be paid to him in full.
The Severance, Retention and Restrictive Covenant
Agreements also provide that if their employment is terminated by the Company without cause or by them for good reason (as those
terms are defined in the agreements), Mr. Sapienza or Mr. Eisenberg, as applicable, will be entitled to the following: (i) the
continuation of his base salary for a period of six (6) months from the date of termination, (ii) any unpaid portion of his retention
bonus, (iii) any unpaid annual bonus that was earned (as determined by the Board of Directors of the Company in accordance with
the applicable annual bonus plan) for the year preceding the year in which termination occurs, and (iv) payment for health insurance
coverage for up to six months following termination at the same rate as the Company pays for health insurance coverage for its
active employees (with the executive required to pay for any employee-paid portion of such coverage). Payment of these amounts
is contingent on the executive signing (and not revoking within any statutory revocation period) a release of claims reasonably
acceptable to the Company.
Mr. Sapienza’s agreement provides that
his annual bonus for our fiscal year ending in 2020 will not be less than $100,000. It also provides that he will receive the minimum
bonus if his employment is terminated by the Company without cause or by him for good reason prior to payment of the bonus.
The agreements also include restrictive covenants
under which Mr. Sapienza and Mr. Eisenberg agree to confidentiality provisions, non-competition and non-solicitation covenants
that apply for six months after any termination of employment, and certain non-disparagement and cooperation covenants.
Equity Award Provisions
Pursuant to the terms of our 2005 Long Term Incentive
and Share Award Plan and applicable award agreements, unvested equity awards vest upon death, disability or a change of control
of the Company.
Supplemental Executive Retirement Plan
Under the provisions of our SERP, Mr. Eisenberg
would become fully vested in his pension benefit in the event of death, disability or a change of control of the Company.
Other Executives
Mr. Neblett’s employment was terminated
by etailz, effective on March 11, 2019. Under our severance agreement with Mr. Neblett, he received a lump sum payment in the amount
of $142,500 and medical benefits for up to six months following termination. Mr. Neblett reaffirmed his covenants relating to non-competition,
non-solicitation, confidentiality and intellectual property. He also executed a release and agreed to non-disparagement and cooperation
covenants.
Following Mr. Anderson’s death on October
10, 2019, his stock options and restricted stock units vested in full as provided in the applicable award agreements and we paid
death benefits to his widow in the amount of $141,356.
CEO Pay Ratio
The Dodd–Frank Wall Street Reform and
Consumer Protection Act requires companies to disclose the pay ratio of their Chief Executive Officer to their median employee.
We identified our median employee taking into account all full-time, part-time, seasonal and temporary employees.
To identify the median employee from the Company’s
employee population, we compared the amount of salary and wages paid to employees as reflected in payroll records for the 2017
calendar year as reported to the Internal Revenue Service on Form W-2 who were employed on February 3, 2018, excluding Mr. Feurer.
We annualized compensation for employees hired in 2017 and employees who took an unpaid leave of absence during the year, but we
did not annualize compensation for seasonal or temporary employees. No cost-of-living adjustments were made in identifying the
median employee.
The 2018 annual total compensation of our
Chief Executive Officer was $837,861 million, and the 2018 annual total compensation for the median employee was $17,346. The resulting
ratio of our Chief Executive Officer’s pay to the pay of our median employee for fiscal year 2018 is 48.3 to 1. We believe
it is noteworthy that given the nature of our business, a significant number of our employees are part-time, seasonal or temporary
employees.
RELATED PARTY TRANSACTIONS
The Company leases its 181,300 square foot
distribution center/office facility in Albany, New York from an entity controlled by the estate of Robert J. Higgins, its former
Chairman and largest shareholder. The original distribution center/office facility was occupied in 1985. The Company paid rent
under the leases of $1.2 million in fiscal years 2017 and 2016 and $2.1 million in fiscal year 2015.
Sara Neblett, the wife of Josh Neblett, the
former Chief Executive Officer of etailz, was employed with the Company as the Vice President- Partner Care of etailz. Ms. Neblett
received $169,125 in compensation in fiscal year 2018.
The Board has assigned responsibility for
reviewing related party transactions to its Audit Committee. The Audit Committee has adopted a written policy pursuant to which
all transactions between the Company or its subsidiaries and any Director or Officer of any affiliate of a Director or Officer
must be submitted to the Audit Committee for consideration prior to the consummation of the transaction. The transaction will then
be evaluated by the Audit Committee to determine if the transaction is in the Company’s best interests and whether, in the
Committee’s judgment, the terms of such transaction are at least as beneficial to us as the terms we could obtain in a similar
transaction with an independent third party. In order to meet these standards, the Committee may conduct a competitive bidding
process, secure independent consulting advice, engage in its own fact-finding, or pursue such other investigation and fact-finding
initiatives as may be necessary and appropriate in the Committee’s judgment. The Audit Committee reports to the Board, for
its review, on all related party transactions considered. The transactions that were entered into with an “interested Director”
were approved by a majority of disinterested Directors of the Board of Directors, either by the Audit Committee or at a meeting
of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act
of 1934 generally requires the Company’s Directors, executive officers and persons who own more than ten percent of the registered
class of the Company’s equity securities to file reports of beneficial ownership and changes in beneficial ownership with
the Securities and Exchange Commission. Based solely upon its review of the copies of such reports received by it, or upon written
representations obtained from certain reporting persons, the Company believes that all Section 16(a) filing requirements applicable
to its officers, Directors, and greater than ten percent shareholders were complied with.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews the Company’s
financial reporting process on behalf of the Board of Directors and monitors the Company’s efforts to comply with certain
aspects of the Sarbanes-Oxley Act of 2002. The Audit Committee of the Board has reviewed and discussed the Company’s audited
financial statements with the Company’s Management and its independent accountants, KPMG LLP. Management is responsible for
the financial statements and the underlying financial reporting processes, including the system of internal controls. The Audit
Committee has discussed with KPMG LLP the matters required to be discussed under professional standards. The Audit Committee also
has received the written disclosures and the letter from the independent accountants required by applicable standards of the Public
Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning
independence and has discussed with KPMG LLP the independence of such independent accounting firm. The Committee has also considered
whether the independent accountants’ other non-audit services to the Company is compatible with the accountants’ independence.
The Audit Committee also discussed with
the Company’s internal auditors and with KPMG LLP the overall scope and plans for their respective audits. The Audit Committee
meets periodically with the Company’s internal auditors and with KPMG LLP, with and without management present, to discuss
the results of their examinations, the evaluation of the Company’s internal controls and the overall quality and transparency
of the Company’s financial reporting. Based on its review and discussions referred to above, the Audit Committee recommended
to the Board that the audited financial statements for the fiscal year ended February 2, 2019 be included in the Company’s
Annual Report on Form 10-K for the Company’s fiscal year ended February 2, 2019.
Audit Committee of the Board of Directors
Robert Marks (Chairman)
Martin Hanaka
Michael Nahl
The
appointment of independent accountants by the Audit Committee is ratified annually by the Board of Directors. The decision of the
Board is based on the recommendation of the Audit Committee, which reviews and approves in advance the audit scope, the types of
non-audit services, and the estimated fees for the coming year. The Audit Committee also reviews and approves non-audit services
to ensure that they will not impair the independence of the accountants.
O
ur
Audit Committee may, in its discretion, appoint a new independent registered public accounting firm at any time during the year
if it believes that such change would be in the Company’s best interest and the best interest of our shareholders.
Set
forth below is a description of the fees billed to the Company by KPMG for fiscal years 201
8
and 201
7
.
Fees Paid to Independent Public Accounting Firms
Audit Fees
. Audit fees
include fees paid by the Company to KPMG LLP in connection with the annual audit of the Company’s consolidated
financial statements and KPMG LLP’s review of the Company’s interim financial statements. Audit fees also include
fees for services performed by KPMG LLP that are closely related to the audit and in many cases could only be provided by an
independent public accounting firm. Such services include comfort letters related to SEC registration statements and certain
reports relating to the Company’s regulatory filings. The aggregate fees billed to the Company by KPMG LLP for audit
services rendered to the Company and its subsidiaries for fiscal years 2018 and 2017 totaled $810,000 and $930,000,
respectively.
Audit-Related Fees
. Audit related
fees include fees paid by the Company to KPMG LLP in connection with audit related services, including audit services related to
employee benefit plan audits. The aggregate fees billed to the Company by KPMG LLP for audit related services rendered to the Company
and its subsidiaries were $22,000 and $21,500 for fiscal years 2018 and 2017, respectively.
Other Fees
. There were no other
fees paid to KPMG LLP in fiscal year 2018. Other fees paid to KPMG LLP in fiscal year 2017 included $5,000 related to the consent
for a Form S-8.
Tax Fees
. Tax fees include corporate
tax compliance and counsel and advisory services. SAXBST LLC was the Company’s primary tax advisor in fiscal year 2018. During
fiscal year 2018 and 2017, tax fees paid to KPMG LLP were $89,000 and $8,000, respectively.
Each year, the Company reviews its existing
practices regarding the use of its independent accountants to provide non-audit and consulting services to ensure compliance with
recent SEC proposals. The Company has a policy which provides that the Company’s independent public accounting firm may provide
certain non-audit services which do not impair the firm’s independence. In that regard, the Audit Committee must pre-approve
all audit services and non-audit services provided to the Company. This policy is administered by the Company’s senior financial
management, which reports throughout the year to the Audit Committee.
Item 4.
Reverse Stock Split
Our Board of Directors
has unanimously approved and declared advisable an amendment to the Company’s Certificate of Incorporation, as amended, to
effect a reverse stock split of all issued and outstanding shares of our Common Stock, in a ratio of up to 1-for-20, in order
to, among other things, assist the Company in its effort to regain compliance with the NASDAQ Listing Rules, which require the
Company to maintain a minimum bid price of $1.00 per share.
The precise ratio
of the proposed Reverse Stock Split shall be a whole number within this range, determined in the sole discretion of our Board of
Directors. It is expected that such determination, if any, shall occur at some time on or prior to October 15, 2019. By approving
this proposal, shareholders will give our Board of Directors authority, but not the obligation, to effect the Reverse Stock Split
and full discretion to approve the ratio at which shares of Common Stock will be automatically reclassified up to and including
a ratio of 1-for-20. Our Board of Directors believes that providing our Board of Directors with this grant of authority with respect
to setting the reverse split ratio, rather than approval of a pre-determined reverse stock split ratio, will give our Board of
Directors the flexibility to set the ratio in accordance with current market conditions and, therefore, allow our Board of Directors
to act in the best interests of the Company and our shareholders.
In determining the
ratio following the receipt of shareholder approval, our Board of Directors may consider, among other things, factors such as:
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the historical trading price and trading volume of our Common Stock;
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the then-prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for our Common Stock;
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the number of shares of our Common Stock then outstanding, and the number of shares of Common Stock issuable upon exercise of options and warrants then outstanding;
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the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs;
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prevailing general market and economic conditions; and
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NASDAQ Listing Rules, which require the Company to maintain a minimum bid price of $1.00 per share.
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If our shareholders
approve this proposal and our Board of Directors does not otherwise abandon the amendment contemplating the Reverse Stock Split,
we will file a Certificate of Amendment to the Company’s Certificate of Incorporation with the Secretary of State of the
State of New York (the “New York Secretary of State”) to effect the proposed Reverse Stock Split, in the form attached
to this proxy statement as Appendix A to this Proxy Statement. Our Board of Directors has approved and declared advisable the proposed
amendment to the Company’s Amended and Restated Certificate of Incorporation as set forth in the Certificate of Amendment,
in the form attached to this proxy statement as Appendix A to this Proxy Statement. If the proposed Reverse Stock Split is effected,
then the number of issued and outstanding shares of our Common Stock would be reduced. Our Board of Directors has reserved the
right to abandon the amendment at any time before the effectiveness of the filing of the Certificate of Amendment with the New
York Secretary of State, even if the adoption of the amendment is approved by the shareholders. If the Certificate of Amendment
is not filed with the New York Secretary of State prior to December 27, 2019, our Board of Directors will abandon the amendment
and the Reverse Stock Split will not be effected. Thus, the Board of Directors, at its discretion, may cause the filing of the
Certificate of Amendment (following shareholder approval) to effect the Reverse Stock Split or abandon the amendment and not effect
the Reverse Stock Split if it determines that any such action is or is not in the best interests of our Company and shareholders.
Prior
to filing the amendment to the Certificate of Amendment reflecting the Reverse Stock Split, we must first notify NASDAQ of the
anticipated record date of the Reverse Stock Split. Our failure to provide such notice may constitute fraud under Section 10 of
the Exchange Act.
Purpose of Proposed Reverse Stock Split
Each securities exchange
has its own listing criteria. NASDAQ Listing Rules require the Company to maintain a minimum bid price of $1.00 per share to maintain
its listing on the NASDAQ. On May 10, 2019, the sale price of our Common Stock on the NASDAQ was $0.34 per share. A decrease in
the number of issued and outstanding shares of our Common Stock resulting from the Reverse Stock Split should, absent other factors,
assist in ensuring that our per share market price of our Common Stock trades above the required price. However, we cannot provide
any assurance that (i) we will regain compliance with NASDAQ Listing Rules, or other listing requirements, and in effect the NASDAQ
or (ii) even if we do, our minimum bid price would remain over the minimum bid price requirement of the NASDAQ following the Reverse
Stock Split.
Some investors prefer
to invest in stocks that trade at a per share price range more typical of companies listed on the NASDAQ. Also, some brokerage
houses and institutional investors have internal policies and practices that either prohibit them from investing in stocks priced
below a certain level (for example, $5.00 per share) or tend to discourage individual brokers from recommending lower-priced stocks
to their customers. As a result, we believe that the Reverse Stock Split may make our Common Stock more attractive to certain investors.
Reducing the number
of outstanding shares of our Common Stock through the Reverse Stock Split is intended, absent other factors, to increase the per
share trading price of our Common Stock. However,
other factors, such as our financial results
and financial outlook and investor perception of our future prospects, as well as general market and economic conditions, among
many factors, may positively or negatively affect the trading price of our Common Stock. Therefore, even if the Reverse Stock Split
is effected, the trading price of our Common Stock may not increase to a level we may have expected following the Reverse Stock
Split or, if it does, the trading price of our Common Stock may decrease in the future. Additionally, the trading price per share
of our Common Stock after the Reverse Stock Split may not increase in proportion to the reduction in the number of shares of our
Common Stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our Common Stock after
the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
We believe increasing
the trading price of our Common Stock will assist in meeting the continued listing criteria of NASDAQ or any other such national
securities exchange and is our best option to meet the bid price criteria to comply with the continued listing requirements. Accordingly,
we believe that the Reverse Stock Split is in our shareholders’ best interests.
In addition, an increase
in the per share trading value of our Common Stock would be beneficial to us because it would:
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improve the perception of our Common Stock as an investment security;
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reset our stock price to more normalized trading levels in the face of potentially extended market dislocation;
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appeal to a broader range of investors to generate greater investor interest in us; and
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reduce shareholder transaction costs because investors would pay lower commission to trade a fixed dollar amount of our stock if our stock price were higher than they would if our stock price were lower.
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Potential Effects of the Proposed Reverse Stock Split
If this proposal is
approved and the Reverse Stock Split is effected, the Reverse Stock Split will be realized simultaneously and in the same ratio
for all of our issued and outstanding shares of Common Stock. The immediate effect of a reverse stock split would be to reduce
the number of shares of our Common Stock outstanding and to increase the trading price per share of our Common Stock.
However, we cannot
predict the effect of any reverse stock split upon the market price of our Common Stock over an extended period, and in many cases,
the market value of a company’s common stock following a reverse stock split declines, in many cases, because of variables
outside of a company’s control (such as market volatility, investor response to the news of a proposed reverse stock split
and the general economic environment). We cannot assure you that the trading price of our Common Stock after the Reverse Stock
Split will rise in inverse proportion to the reduction in the number of shares of our Common Stock outstanding as a result of the
Reverse Stock Split. Also, we cannot assure you that a reverse stock split would lead to a sustained increase in the trading price
of our Common Stock. The trading price of our Common Stock may change due to a variety of other factors, including our operating
results and other factors related to our business and general market conditions. You should also keep in mind that the implementation
of a reverse stock split does not have an effect on the actual or intrinsic value of our business or a shareholder’s proportional
ownership in our Company. However, should the overall value of our Common Stock decline after the proposed Reverse Stock Split,
then the actual or
intrinsic value of the shares of our Common
Stock held by you will also proportionately decrease as a result of the overall decline in value.
Examples of Potential
Reverse Stock Split at Various Ratios.
The table below provides examples of reverse stock splits at various ratios up to 1-for-20, without giving effect to the treatment of fractional shares. The actual number of shares outstanding after giving effect to
the Reverse Stock Split, if effected, will depend on the actual ratio that is determined by our Board of Directors in accordance
with the amendment to the Company’s Certificate of Incorporation.
Shares
outstanding at
May 10, 2019
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Reverse Stock
Split Ratio
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Shares
outstanding
after Reverse Stock
Split
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Reduction in
Shares Outstanding
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36,258,839
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1-for-10
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3,625,883
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32,632,955
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36,258,839
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1-for-15
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2,417,255
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33,841,584
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36,258,839
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1-for-20
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1,812,941
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34,445,897
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The resulting decrease
in the number of shares of our Common Stock outstanding could potentially adversely affect the liquidity of our Common Stock,
especially in the case of larger block trades.
Effects on Ownership
by Individual Shareholders
. If we implement a reverse stock split, the number of shares of our Common Stock held by each shareholder
would be reduced by multiplying the number of shares held immediately before the Reverse Stock Split by the appropriate ratio and
then rounding up to the nearest whole share. The Reverse Stock Split would not affect any shareholder’s percentage ownership
interest in our Company or proportionate voting power, except to the extent that interests in fractional shares would be rounded
up to the nearest whole share.
Effect on RSUs
and Stock Options.
In addition, as a result of the Reverse Stock Split we would proportionally adjust the number of shares
subject to outstanding restricted stock units and stock options and the exercise price of outstanding stock options, to reduce
the number of shares and increase the exercise price per share based on the Reverse Stock Split Ratio (
i.e.
, the number
of shares subject to the restricted stock units and stock options would be multiplied by the Reverse Stock Split Ratio (rounding
down to the nearest whole number of shares in the case of stock options) and the exercise price per share of the stock options
would be divided by the Reverse Stock Split Ratio (rounding up to the next penny)). Additionally, the number of shares reserved
for issuance under our 2005 Long Term Incentive and Share Award Plan (as amended and restated on April 5, 2017) would be reduced
by multiplying the number of such shares by the Reverse Stock Split Ratio (rounding down to the nearest whole number of shares).
Other Effects on
Issued and Outstanding Shares
. If we implement a reverse stock split, the rights pertaining to the issued and outstanding shares
of our Common Stock would be unchanged after the Reverse Stock Split. Each share of our Common Stock issued following the Reverse
Stock Split would be fully paid and nonassessable.
The Reverse Stock
Split would result in some shareholders owning “odd-lots” of less than 100 shares of our Common Stock. Brokerage commissions
and other costs of transactions in odd-lots are generally higher than the costs of transactions in “round-lots” of
even multiples of 100 shares.
After the effective
time, our Common Stock will have a new Committee on Uniform Securities Identification Procedures (CUSIP) number, which is a number
used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged for shares
of Common Stock with the new CUSIP number by following the procedures described below. However, until such exchange
is made, the old stock certificates will
automatically represent the new, post-split number of shares. After the Reverse Stock Split, we will continue to file periodic
reports and comply with other requirements of the Exchange Act. Our Common Stock will continue to be listed on NASDAQ under the
symbol “TWMC”.
Authorized Shares of Stock
The Reverse Stock
Split would affect all issued and outstanding shares of Common Stock and outstanding rights to acquire Common Stock. We will not
change the number of shares of Common Stock currently authorized. However, upon the effectiveness of the reverse stock split, the
number of authorized shares of Common Stock that are not issued or outstanding would increase due to the reduction in the number
of shares of Common Stock issued and outstanding as a result of the reverse stock split.
As of May 10, 2019,
we have 200,000,000 shares of authorized Common Stock, of which 36,258,839 shares of Common Stock, par value $0.01 per share, were issued
and outstanding. If we issue additional shares, the ownership interest of holders of Common Stock will be diluted.
We will reserve for
issuance any authorized but unissued shares of Common Stock that would be made available as a result of the proposed Reverse Stock
Split.
We do not have any
plans, arrangements or understandings for the remaining portion of the authorized but unissued shares that will be available following
the Reverse Stock Split.
Procedure for Effecting the Proposed Stock Split and Exchange
of Stock Certificates
If shareholders approve
this proposal and our Board of Directors does not otherwise abandon the amendment contemplating the reverse stock split, we will
file with the New York Secretary of State a Certificate of Amendment to our Certificate of Incorporation, in the form attached
to this proxy statement as Appendix A to this Proxy Statement. The Reverse Stock Split will become effective at the time and on
the date of filing of, or at such later time as is specified in, the Certificate of Amendment, which we refer to as the “effective
time.” Beginning at the effective time, each certificate representing shares of Common Stock will be deemed for all corporate
purposes to evidence ownership of the number of whole shares into which the shares previously represented by the certificate were
combined pursuant to the Reverse Stock Split.
Upon the Reverse Stock
Split, we intend to treat shareholders holding our Common Stock in “street name,” through a bank, broker or other nominee,
in the same manner as registered shareholders whose shares are registered in their names. Banks, brokers or other nominees will
be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in “street name.”
However, these banks, brokers or other nominees may have different procedures than registered shareholders for processing the reverse
stock split. If you hold your shares with a bank, broker or other nominee and if you have any questions in this regard, we encourage
you to contact your nominee.
Following the Reverse
Stock Split, shareholders holding physical certificates must exchange those certificates for new certificates.
Our transfer agent
will advise registered shareholders of the procedures to be followed to exchange certificates in a letter of transmittal to be
sent to shareholders. No new certificates will be issued to a shareholder until the shareholder has surrendered the shareholder’s
outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the transfer agent. Any
old shares submitted for transfer, whether pursuant to a sale, other disposition or otherwise, will automatically be
exchanged for new shares.
Shareholders
should not destroy any stock certificate(s) and should not submit any certificate(s) until requested to do so.
No Issuance of Fractional Shares
No fractional shares
of Common Stock will be issued as a result of the Reverse Stock Split. Instead, shareholders who otherwise would be entitled to
receive fractional shares, upon surrender to the exchange agent of such certificates representing such fractional shares, will
be entitled to receive a certificate representing the number of shares they would otherwise be entitled to rounded up to the next
whole share.
No Appraisal Rights
No appraisal rights
are available under the New York Business Corporation Law or under our Certificate of Incorporation, as amended, or our By-Laws
with respect to the Reverse Stock Split. There may exist other rights or actions under state law for shareholders who are aggrieved
by reverse stock splits generally.
Accounting Consequences
The par value of our
Common Stock would remain unchanged at $0.01 per share after the Reverse Stock Split. Also, our capital account would remain unchanged,
and we do not anticipate that any other accounting consequences would arise as a result of the Reverse Stock Split.
Potential Anti-Takeover Effect
Securities and Exchange
Commission (“SEC”) rules require disclosure and discussion of the effects of any proposal that could be used as an
anti-takeover device. This proposal, if adopted and implemented, will result in a relative increase in the number of authorized
but unissued shares of our Common Stock vis-à-vis the outstanding shares of our Common Stock and could, under certain circumstances,
have an anti-takeover effect, although that is not the purpose or intent of the proposal. A relative increase in the number of
authorized but unissued shares of Common Stock could have other effects on our shareholders, depending upon the exact nature and
circumstances of any actual issuances of authorized shares. A relative increase in our authorized but unissued shares of Common
Stock could potentially deter takeovers, including takeovers that our Board of Directors determines are not in the best interest
of our shareholders, in that additional shares could be issued (within the limits imposed by applicable law) in one or more transactions
that could make a change in control or takeover more difficult. Our Board of Directors is not aware of any attempt to take control
of our business and has not considered the Reverse Stock Split to be a tool to be utilized as a type of anti-takeover device. We
currently have no plans, proposals or arrangements to issue any shares of Common Stock that would become newly available for issuance
as a result of the Reverse Stock Split.
Certain U.S. Federal Income Tax Consequences
of the Reverse Stock Split
The
following is a summary of certain U.S. federal income tax consequences of the reverse stock split applicable to U.S. Shareholders
(as defined below). It does not purport to be a complete discussion of all of the possible U.S. federal income tax consequences
of the reverse stock split applicable to U.S. Shareholders and is included for general information only. Further, it does not address
any state, local or foreign tax consequences or any U.S. federal tax consequences other than income tax consequences (such as estate
and gift tax consequences). Also, it does not address the U.S. federal income tax consequences to U.S. Shareholders that are subject
to special tax rules, such as banks, insurance
companies, regulated investment companies,
partnerships or other pass-through entities for U.S. federal income tax purposes (and investors in such entities), persons subject
to the alternative minimum tax, persons subject to the Medicare tax on investment income, personal holding companies, broker-dealers,
U.S. expatriates, and tax-exempt entities. This summary does not address shareholders that are not U.S. Shareholders, and such
shareholders should consult their tax advisors regarding the tax consequences of the reverse stock split.
The discussion is based
on the provisions of the U.S. federal income tax law as of the date hereof, which is subject to change retroactively as well as
prospectively. This summary also assumes that the pre-reverse stock split shares were, and the post-reverse stock split shares
will be, held as “capital assets,” as defined in the Internal Revenue Code of 1986, as amended (i.e., generally, property
held for investment). The tax treatment of a U.S. Shareholder may vary depending upon the particular facts and circumstances of
such shareholder. Each shareholder should consult with such shareholder’s tax advisor with respect to the tax consequences
of the reverse stock split. As used herein, the term U.S. Shareholder means a shareholder that is, for U.S. federal income tax
purposes: an individual who is a citizen or resident of the United States; a corporation created or organized under the laws of
the United States, any state of the United States or the District of Columbia; an estate the income of which is subject to federal
income tax regardless of its source; or a trust if a U.S. court is able to exercise primary supervision over the administration
of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or such trust has
a valid election in effect to be treated as a U.S. person.
Other than with respect
to any cash payments for fractional shares discussed below, no gain or loss should be recognized by a U.S. Shareholder upon such
shareholder’s exchange of pre-reverse stock split shares for post-reverse stock split shares pursuant to the reverse stock
split. The aggregate tax basis of the post-reverse stock split shares received in the reverse stock split (including any fraction
of a post-reverse stock split share for which you received cash in lieu of such fractional share) will be the same as the shareholder’s
aggregate tax basis in the pre-reverse stock split shares exchanged therefor. The U.S. Shareholder’s holding period for the
post-reverse stock split shares will include the period during which the shareholder held the pre-reverse stock split shares surrendered
in the reverse stock split.
In general, U.S. Shareholders
who receive cash in lieu of fractional share interests in the post-reverse stock split shares will recognize taxable gain or loss
based on the difference between the amount of cash received by such U.S. Shareholder and such shareholder’s adjusted basis
allocated to the fractional share interests redeemed. Any such gain or loss will constitute a capital gain or loss and will constitute
long-term capital gain or loss if the holder’s holding period is greater than one year as of the effective date.
EACH SHAREHOLDER
SHOULD CONSULT WITH HIS OR HER TAX ADVISOR WITH RESPECT TO ALL OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK
SPLIT.
Board Discretion to Implement the Reverse
Stock Split
Our Board of Directors
has reserved the right to abandon the amendment at any time before the effectiveness of the filing of the Certificate of Amendment
with the New York Secretary of State, even if the adoption of the amendment is approved by the shareholders.
Required Vote
The affirmative vote
of holders of a majority of the outstanding shares of Common Stock as of the Record Date, is required for approval of this proposal.
Therefore, abstentions and broker non-votes will have the same effect as votes against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” ITEM 4.
OTHER MATTERS
Other Items.
Management knows of
no other items or matters that are expected to be presented for consideration at the meeting.
Proxy Solicitation.
The Company
will bear the cost of the meeting and the cost of soliciting proxies, including the cost of mailing the proxy materials. In addition
to solicitation by mail, Directors, officers, and regular employees of the Company (none of whom will be specifically compensated
for such services) may solicit proxies by telephone or otherwise. Arrangements will be made with brokerage houses and other custodians,
nominees, and fiduciaries to forward proxies and proxy materials to their principals, and the Company will reimburse them for their
ordinary and necessary expenses.
Financial
Statements.
The Company’s 201
8
Annual Report to Shareholders (which does not form a part of the proxy solicitation material), including financial statements for
the fiscal year ended February
2
,
201
9
,
is being sent concurrently to shareholders. If you have not received or had access to the 201
8
Annual Report to Shareholders, you may request a copy by writing to: Trans World Entertainment Corporation, Attention: Treasurer,
38 Corporate Circle, Albany, NY 12203, and a copy will be sent to you free of charge.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders of the Company wishing to
include proposals in the proxy material relating to the Annual Meeting of the Company to be held in 2020 must submit the same in
writing so as to be received at the executive offices of the Company on or before January 30, 2020. Such proposals must also meet
the other requirements of the rules of the Securities and Exchange Commission relating to shareholder proposals. Proposals should
be addressed to Edwin J. Sapienza, Secretary, Trans World Entertainment Corporation, 38 Corporate Circle, Albany, NY 12203. Two
such proposals were received with respect to the Annual Meeting scheduled for June 27, 2019; however, the Company is permitted
to exclude such proposals pursuant to Rule 14a-8(i) under the Securities Exchange Act of 1934, as amended, and the SEC’s
Office of Chief Counsel, Division of Corporation Finance, has confirmed that it will not recommend enforcement action to the SEC
regarding such omissions in reliance on Rule 14a-8(i).
For any proposal that is not submitted
for inclusion in next year’s proxy statement (as described in the preceding paragraph) but is instead sought to be presented
directly at next year’s annual general meeting, the rules of the SEC permit management to vote proxies in its discretion
if we do not receive notice of the proposal on or before the deadline for advance notice set forth in our By-Laws as described
below.
Our By-Laws
provide that any shareholder desiring to make a proposal or nominate a director at an annual meeting must provide written
notice of such proposal or nomination to the Secretary of the Company not later than April 28, 2020 nor earlier than March
29, 2020. Any such proposal or nomination must include the information required under our By-Laws with respect to each
proposal or nomination and the shareholder making such proposal or nomination. Notices of intention to present proposals at
next year’s annual general meeting should be addressed to Edwin J. Sapienza, Secretary,
Trans World Entertainment, 38 Corporate
Circle, Albany, NY 12203. Pursuant to the By-Laws provision described above, our Board of Directors has received a notice from
an individual shareholder of the Company of his intent to nominate at the June 27, 2019 Annual Meeting four individuals for election
to the Board of Directors, and such shareholder has indicated his intent to furnish a proxy statement to shareholders of the Company.
By Order of the Board of Directors,
Edwin J. Sapienza, Secretary
May 29, 2019
Appendix A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
Trans World Entertainment Corporation
Under Section 805 of the Business Corporation
Law
FIRST: The name of the corporation is Trans World Entertainment
Corporation (the “
Corporation
”). The name under which it was originally formed is: Trans-World Music Corp.
SECOND: The certificate of incorporation of
the Corporation (such certificate of incorporation, as amended or restated and in effect thereafter, the “
Certificate
of Incorporation
”) was filed by the New York State Department of State on February 7, 1972.
THIRD: The Certificate of Incorporation is hereby amended as follows:
Paragraph FOURTH of the Certificate of Incorporation
relating to capitalization of the corporations and designations of classes of preferred stock is amended to include the following
as new paragraph l., following the final paragraph thereof:
“Upon the filing of this Certificate
of Amendment to the Certificate of Incorporation, each _________ (___) shares of Common Stock of the Corporation issued and outstanding
immediately prior to this Certificate of Amendment to the Certificate of Incorporation, without further action, will be automatically
combined into and become one (1) share of fully paid and nonassessable Common Stock of the Corporation (the “
Reverse Stock
Split
”). No fractional shares shall be issued upon the Reverse Stock Split; rather, each fractional share resulting
from the Reverse Stock Split shall be rounded up to the nearest whole number. Each outstanding stock certificate of the Corporation,
which prior to the filing of this Certificate of Amendment to the Certificate of Incorporation represented one or more shares of
Common Stock, shall immediately after such filing represent that number of shares of Common Stock equal to the product of (x) the
number of shares of Common Stock represented on such certificates divided by (y) _____ (_____) (such adjusted shares, the “
Reclassified
Shares
”), with any resulting fractional shares rounded up to the nearest whole share as set forth above. Any options,
warrants or other purchase rights, which prior to the filing of this Certificate of Amendment represented the right to acquire
one or more shares of the Corporation’s Common Stock, shall immediately after such filing represent the right to acquire
_________ (_____) of one (1) share of the Corporation’s Common Stock for each share of the Corporation’s Common Stock
that such option, warrant or other purchase right previously represented the right to acquire. The exercise price of such
options, warrants and purchase rights shall be adjusted by multiplying the existing exercise price by ______ (____).
The number of authorized shares of Common Stock
of the Corporation and the par value of such shares will not be affected by this Certificate of Amendment.
The Corporation shall, upon the request of
each record holder of a certificate representing shares of Common Stock issued and outstanding immediately prior to the filing
of this Certificate of Amendment to the Certificate of Incorporation, issue and deliver to such holder in exchange for such certificate
a new certificate or certificates representing the Reclassified Shares.”
[Remainder
of Page Intentionally Left Blank]
FOURTH: The certificate of amendment was authorized
by: the vote of the board of directors followed by a vote of a majority of all outstanding shares entitled to vote thereon at a
meeting of shareholders.
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Name: Michael N. Feurer
Title: Chief Executive Officer
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[Certificate
of Amendment to Certificate of Incorporation of Trans World Entertainment Corporation]
Appendix B
TRANS WORLD ENTERTAINMENT CORPORATION
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
A.
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FORMATION OF THE COMPENSATION COMMITTEE
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There shall be a committee of the Board of Directors (the “Board”) of Trans World Entertainment
Corporation
, a New York corporation
(the “Company”)
to
be
known as
the
“
Compensation
Committee
” (the “Committee”). The Committee shall be composed of directors
who are independent of the management of the Company and are free of any relationship that, in the opinion of the Board, would
interfere with the exercise of independent judgment as a committee member. Without limiting the generality of the preceding sentence,
the directors appointed to the Committee shall satisfy (i) the independence criteria of the NASDAQ Stock Market and (ii) the applicable
rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), and shall not be an “affiliated
person” of the issuer or any subsidiary as defined under the Sarbanes-Oxley Act of 2002. In determining whether a director
is eligible to serve on the Committee, the Board shall also consider whether the director is affiliated with the Company, a subsidiary
of the Company or an affiliate of a subsidiary of the Company to determine whether such affiliation would impair the director’s
judgment as a member of the Committee. In addition, if deemed appropriate from time to time, each director appointed to the Committee
shall meet the definition of “non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934, and “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986. Committee members shall not
accept directly or indirectly any consulting, advisory or other compensatory fee from the Company or any subsidiary thereof. The
Committee shall
consist of no fewer than three independent directors,
for a term of appointment at the discretion of the Board, considering the recommendation of the Nominating & Governance
Committee, and further considering the views of the Chairman of the Board and the Chief Executive Officer (the “CEO”),
as appropriate
.
, usually for one year. The members of the Committee shall serve until their successors are appointed
and qualify, and shall designate the Chairman of the Committee. The Board shall have the power at any time to change the membership
of the Committee and to fill vacancies in it, subject to such new member(s) satisfying the above requirements and any other corporate
legislation in effect at that time. Except as expressly provided in this Charter or the by-laws of the Company, the Committee shall
fix its own rules of procedure.
B.
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RESPONSIBILITIES OF THE COMMITTEE
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The Committee shall:
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(a)
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discharge the Board’s responsibilities
relating to compensation of the Company’s executives (including the CEO and all other executive officers, as defined
under Section 16 of the Securities Exchange Act of 1934, and related rules) and
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(b)
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prepare an annual report on executive
compensation for inclusion in the Company’s proxy statement in accordance with applicable rules and regulations.
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C.
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DUTIES OF THE COMMITTEE
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In carrying out its responsibilities, the Committee shall:
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1.
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Review and approve all executive compensation.
The
Committee shall review and approve corporate goals and objectives relevant to all executive officer compensation,
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evaluate
each executive officer’s performance in light of those goals and objectives, and set the executive compensation level
based on this evaluation. In determining the long-term incentive component of executive officers compensation,
the Committee should consider the Company’s performance and relative shareholder return, the value of similar incentive
awards to executive officers at comparable companies, and the awards given to the Company’s executive officers in past
years. The Company’s CEO may not be present during any deliberations or voting regarding his or her compensation.
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2.
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Conduct an Annual Review.
The
Committee
shall annually review and make recommendations to the Board with respect to the compensation of all officers and other
key executives.
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3.
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Make Recommendations to the Board.
The Committee
shall make recommendations to the Board with respect to incentive compensation plans and equity-based plans.
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4.
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Have sole authority to retain and oversee external advisors.
The Committee shall have the sole authority to appoint, retain, oversee and terminate any internal or outside legal counsel, external auditor, accountants, financial consultant and other advisors (each a “compensation advisor”) as it determines necessary or appropriate to assist in the execution of its duties and responsibilities set forth in this charter, including the evaluation of director,
Chief Executive Officer
and senior executive compensation. The Committee shall have sole authority to approve the compensation advisor’s compensation, fees and other retention terms. The Company shall provide
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appropriate funding, as determined by the Committee, for the payment of reasonable compensation to compensation advisers retained by the Committee.
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5.
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Have sole authority in the selection of external advisors.
The Committee
may select, or receive advice from, any compensation adviser it prefers, including ones that are not independent. However, the Committee
may select, or receive advice from, a compensation adviser other than in-house legal counsel, only after taking into consideration the following six independence factors:
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(i)
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The provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser;
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(ii)
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The amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
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(iii)
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The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
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(iv)
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Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
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(v)
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Any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and
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(vi)
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Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the Company.
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Notwithstanding the foregoing,
the Committee is not required to conduct an independence assessment for a compensation adviser that acts in a role limited to the
following activities for which no disclosure is required under the requirements of the SEC: (a) consulting on any broad-based plan
that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that
is available generally to all salaried employees; and/or (b) providing information that either is not customized for a particular
issuer or that is customized based on parameters that are not developed by the adviser, and about which the adviser does not provide
advice.
For the avoidance of
doubt, the Committee is not required to implement or act consistently with the advice or recommendations of any compensation adviser
to the Committee. The retention of any outside advisers shall not affect the ability or obligation of the Committee to exercise
its own judgment in fulfillment of its duties.
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6.
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Administer awards and incentives.
The Committee shall adopt, administer, approve and ratify awards under incentive compensation and stock plans, including amendments to the awards made under any such plans, and review and monitor awards under such plans.
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7.
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Make periodic reports.
The Committee shall make periodic reports to the Board.
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8.
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Review the Charter.
The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
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9.
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Review Committee performance.
The Committee shall annually review its own performance.
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10.
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Delegation of authority.
The Committee may form and delegate authority to subcommittees when appropriate.
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11.
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Review overall compensation for officer employees.
The Committee shall review the overall compensation structure of the Company to determine that it establishes appropriate incentives for officer employees at all levels. All incentives, while industry-dependent and different for different categories of officers should further the Company’s long-term strategic plan and be consistent with the culture of the Company and the overall goal of enhancing shareholder value.
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April 2017
Appendix C
TRANS WORLD ENTERTAINMENT CORPORATION
CHARTER OF THE NOMINATING AND CORPORATE GOVERNANCE
COMMITTEE OF THE BOARD OF DIRECTORS
A.
FORMATION OF THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
There shall be a committee of the Board of Directors (the “Board”)
of Trans World Entertainment Corporation, a New York corporation (the “Company”), to be known as the “Nominating
and Corporate Governance Committee” (the “Committee”). The Committee shall be composed of directors who are independent
of the management of the Company and are free of any relationship that, in the opinion of the Board, would interfere with the exercise
of independent judgment as a Committee member. Without limiting the generality of the preceding sentence, the directors appointed
to the Committee shall satisfy the independence requirements of the NASDAQ National Market and shall not be an affiliated person
of the issuer or any subsidiary as defined under the Sarbanes-Oxley Act of 2002. The Committee shall consist of no fewer than three
independent directors, for a term of appointment at the discretion of the Board of Directors, considering the views of the Chairman
of the Board and the Chief Executive Officer, as appropriate, usually for one year. The members of the Committee shall serve until
their successors are appointed and qualify, and shall designate the Chairman of the Committee. The Board shall have the power at
any time to change the membership of the Committee and to fill vacancies in it, subject to such new member(s) satisfying the above
requirements and any other corporate legislation in effect at that time. The Committee may form and delegate authority to subcommittees
when appropriate, and shall meet as necessary, but at least once each year, in order to enable it to fulfill its responsibilities
and duties as set forth herein. Except as expressly provided in this Charter, the by-laws of the Company and any applicable corporate
governance guidelines of the Company, the Committee shall fix its own rules of procedure.
B.
RESPONSIBILITIES OF THE COMMITTEE
The Committee shall (1) assist the Board in identifying individuals
qualified to become Board members and recommend to the Board the director nominees for the next annual meeting of shareholders;
(2) recommend members of the Board to serve on the committees of the Board; (3) recommend to the Board individuals qualified to
be elected as officers of the Company; (4) recommend to the Board the corporate governance and business ethics policies, principles,
guidelines and codes of conduct applicable to the Company; and (5) lead the Board in its annual review of the Board’s performance.
C.
DUTIES OF THE COMMITTEE
NOMINATING
. The Committee shall:
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•
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Develop policies on the size and composition of the Board and qualification criteria, as prescribed by corporate legislation and NASDAQ rules, for Board members in order
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to insure that the Board is comprised of members reflecting the proper expertise, skills, attributes and personal and professional backgrounds for service as a director of the Company and who have sufficient time available to devote to the affairs of the Company;
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•
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Actively seek, interview and screen individuals qualified to become Board members for recommendation to the Board;
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•
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Receive suggestions concerning possible candidates for election to the Board, including self-nominations, nominations from shareholders in accordance with the Company’s by-laws and other third-party nominations;
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•
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Recommend to the Board individuals for vacancies occurring from time to time on the Board, including vacancies resulting from an increase in the size of the Board;
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•
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Recommend the slate of nominees to be proposed for election at each annual meeting of shareholders;
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•
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Recommend members of the Board to serve on the committees of the Board; and
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•
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Recommend to the Board individuals qualified to be elected as officers of the Company.
|
CORPORATE GOVERNANCE
. The Committee shall:
|
•
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Develop and recommend to the Board a set of corporate governance and business
ethics policies, principles, guidelines and codes of conduct applicable to the Company and its directors, officers and employees;
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•
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Review and reassess at least annually the adequacy of the Company’s
corporate governance and business ethics policies, principles, guidelines and codes of conduct in light of emerging issues
and developments related to corporate governance and other factors and formulate and recommend any proposed changes to the
Board for approval;
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|
•
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Generally advise the Board as a whole on corporate governance matters;
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|
•
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Review and reassess at least annually the adequacy of this Charter and recommend
any proposed changes to the Board for approval;
|
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|
|
•
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Annually review its own performance; and
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|
•
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Review and assess the management succession plan for the Chief Executive Officer
position.
|
OTHER
. The Committee shall have the authority to:
|
•
|
Request reports from internal or external sources on matters related to its
authority and duties as described in this Charter and on any subject that it deems related to its responsibilities;
|
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|
•
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Retain and terminate any search firm to be used to identify director or officer
candidates and to approve the search firm’s fees and other retention terms;
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|
•
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Receive communications from shareholders and provide copies or summaries of
such communications to the other Directors, as the Chairman of the Committee considers appropriate;
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•
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Retain and terminate outside accountants, legal counsel and other
advisors to advise the Committee with respect to Committee matters as it may deem appropriate in its sole discretion and approve
related fees and retention terms; and
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|
•
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Perform such other activities as the Committee or the Board may from time
to time deem necessary or appropriate.
|
D. PROCEDURE FOR SHAREHOLDER NOMINATIONS
(A)
The Committee will
consider nominations submitted by shareholders. To recommend a nominee, a shareholder must write to the Company’s Secretary.
To be considered by the Committee for nomination and inclusion in the Company’s proxy statement for its annual meeting of
shareholders, a shareholder recommendation for a director must be received by the Company’s Secretary no later than the deadline
for submitting shareholder proposals pursuant to Rule 14a-8(e) of the Securities Exchange Act of 1934. Any recommendation must
include (i) the name and address of the candidate, (ii) a brief biographical description, including his or her occupation for at
least the last five years, and a statement of the qualifications of the candidate, taking into account the qualification requirements
summarized above, and (iii) the candidate’s signed consent to be named in the proxy statement and to serve as a director
if elected. The
Committee may seek additional biographical and background
information from any candidate that must be received on a timely basis to be considered by the Committee.
(B)
Assuming the appropriate
biographical and background material is provided for candidates submitted by shareholders, the Committee will evaluate those candidates
by applying substantially the same criteria, as for candidates submitted by Board members.
April 2013
|
Trans World Entertainment
Corporation
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Using a
black ink
pen, mark your votes with an X as shown in
this example.
Please do not write outside the designated areas.
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Your
vote matters – here’s how to vote!
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You
may vote online or by phone instead of mailing this card.
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Votes
submitted electronically must be
received
by 1:00 a.m., Eastern Standard
Time,
on June 27, 2019.
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Online
Go
to
www.envisionreports.com/TWMC
or scan the QR code – login details are located in the shaded bar below.
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Phone
Call
toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada
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Save
paper, time and money!
Sign
up for electronic delivery at
www.envisionreports.com/TWMC
|
Annual Meeting Proxy Card
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▼ IF VOTING BY MAIL, SIGN, DETACH
AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
A
|
Proposals – The Board of Directors
recommends a vote
FOR
all the nominees listed and
FOR
Proposals 2 and 4,
and every
3 YEARS
on Proposal 3.
|
1.
|
Election of Directors:
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01 - Michael Feurer
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02 - Martin Hanaka
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03 - Robert Marks
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04 - Michael Nahl
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05 - Michael Reickert
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06 - Michael Solow
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Mark here to vote
FOR
all nominees
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Mark here to
WITHHOLD
vote from
all nominees
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01
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02
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03
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04
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05
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06
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For All
EXCEPT
- To withhold a vote for one or more nominees,
mark the box to the left and the corresponding numbered box(es) to the right.
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For
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Against
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Abstain
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2.
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Advisory vote to approve Named Executive Officer compensation.
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1 Year
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2 Years
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3 Years
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Abstain
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3.
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Advisory vote on frequency of holding future advisory votes on Executive compensation.
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For
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Against
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Abstain
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4.
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To grant authority to the Board of Directors, at any time or times for a period of up to
six months from the date of the Annual Meeting, to adopt an amendment to the Company’s Certificate of Incorporation,
as amended, to effect a reverse stock split at a ratio up to 1 for 20, such ratio to be
determined by the Board, or conversely, to determine not to proceed with the reverse stock split.
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5.
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In their discretion, the Proxies are authorized to vote upon all other matters that properly
may be presented at the meeting.
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B
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Authorized Signatures – This section must be completed for your vote to be counted. –
Date and Sign Below
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Please sign exactly as name(s) appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full
title.
Date (mm/dd/yyyy) – Please print date below.
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Signature 1 – Please keep signature within the box.
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Signature 2 – Please keep signature within the box.
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/
/
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1 U P X
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032LAB
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Small steps make an impact.
Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/TWMC
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▼ IF VOTING BY MAIL, SIGN, DETACH
AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
Proxy – Trans
World Entertainment Corporation
|
Notice of 2019 Annual Meeting of Shareholders
Trans World Entertainment
38 Corporate Circle
Albany, NY 12203
Proxy Solicited by Board of Directors for Annual Meeting –
June 27, 2019
Michael Solow and Edwin J. Sapienza, or any of
them (each, a “Proxy” and together the “Proxies”), each with the power of substitution, are hereby authorized
to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present,
at the Annual Meeting of Shareholders of Trans World Entertainment Corporation to be held on June 27, 2019 or at any postponement
or adjournment thereof.
Shares represented by this proxy will be voted as directed herein.
If no such directions are indicated, the Proxies will have authority to vote FOR Item 1, For Item 2, every 3 YEARS for Item 3 and
FOR Item 4.
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)
Change of Address
– Please print new address below.
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Comments
– Please print your comments below.
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Meeting Attendance
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Mark box to the right if
you plan to attend the
Annual Meeting.
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