SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate line: [ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Material [ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12 REVLON, INC. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [ ] Fee paid previously with preliminary materials: [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement Number: (3) Filing Party: (4) Date Filed:
REVLON, INC. 625 MADISON AVENUE NEW YORK, NEW YORK 10022 April 30, 2001 Dear Stockholder: You are cordially invited to attend the 2001 Annual Meeting of Stockholders of Revlon, Inc., which will be held at 10:00 a.m., local time, on Friday, June 1, 2001, at Revlon's Research Center, 2121 Route 27, Edison, New Jersey 08818. The matters to be acted upon at the meeting are described in the attached Notice of Annual Meeting of Stockholders and Proxy Statement. While stockholders may exercise their right to vote their shares in person, we recognize that many stockholders may not be able to attend the Annual Meeting. Accordingly, we have enclosed a proxy which will enable you to vote your shares on the matters to be considered at the Annual Meeting even if you are unable to attend. If you desire to vote in accordance with management's recommendations, you need only sign, date and return the proxy in the enclosed postage-paid envelope to record your vote. Otherwise, please mark the proxy to indicate your vote; date and sign the proxy; and return it in the enclosed postage-paid envelope. In either case, you should return the proxy as soon as conveniently possible. This will not limit your right to attend the Annual Meeting and vote your shares in person. Sincerely yours, Jeffrey M. Nugent President and Chief Executive Officer
REVLON, INC. 625 MADISON AVENUE NEW YORK, NEW YORK 10022 ---------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To the Stockholders of Revlon, Inc. Notice is hereby given that the Annual Meeting of Stockholders of Revlon, Inc., a Delaware corporation (the "Company"), will be held at 10:00 a.m., local time, on Friday, June 1, 2001, at the Company's Research Center, 2121 Route 27, Edison, New Jersey 08818, for the following purposes: 1. To elect the following persons as members of the Board of Directors of the Company to serve until the next Annual Meeting and until such directors' successors are elected and shall have qualified: Ronald O. Perelman, Donald G. Drapkin, Meyer Feldberg, Howard Gittis, Vernon E. Jordan, Jr., Edward J. Landau, Jerry W. Levin, Jeffrey M. Nugent, Linda Gosden Robinson, Terry Semel and Martha Stewart. 2. To ratify the selection of KPMG LLP as the Company's independent auditors for 2001. 3. To consider and approve the Revlon, Inc. Third Amended and Restated 1996 Stock Plan. 4. To transact such other business as may properly come before the Annual Meeting. A proxy statement describing the matters to be considered at the Annual Meeting is attached to this notice. Only stockholders of record at the close of business on April 12, 2001 (the "Record Date") are entitled to notice of, and to vote at, the Annual Meeting and at any adjournments thereof. For at least ten days prior to the Annual Meeting and also at the Annual Meeting, a list of stockholders entitled to vote at the Annual Meeting will be available for inspection during normal business hours at the Company's Research Center, 2121 Route 27, Edison, New Jersey 08818. Such list will also be available for at least ten days prior to the Annual Meeting for such inspection at the offices of the Company's Secretary at 625 Madison Avenue, 6th Floor, New York, New York 10022. To ensure that your vote will be counted, please complete, date, sign and return the enclosed proxy card promptly in the enclosed postage-paid envelope, whether or not you plan to attend the Annual Meeting. BY ORDER OF THE BOARD OF DIRECTORS Robert K. Kretzman Senior Vice President, General Counsel and Secretary April 30, 2001 PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES ARE VOTED IN ACCORDANCE WITH YOUR WISHES.
REVLON, INC. ---------------- PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 2001 ---------------- This proxy statement is being furnished by and on behalf of the Board of Directors of Revlon, Inc. (the "Company") in connection with the solicitation of proxies to be voted at the Annual Meeting of Stockholders to be held at 10:00 a.m., local time, on Friday, June 1, 2001, at the Company's Research Center, 2121 Route 27, Edison, New Jersey 08818, and at any adjournments thereof. This proxy statement and the enclosed proxy card, Notice of Annual Meeting of Stockholders and Annual Report for the year ended December 31, 2000 are first being sent to stockholders on or about April 30, 2001. The Annual Report does not form any part of the material for the solicitation of proxies. At the Annual Meeting, stockholders will be asked to (1) elect the following persons as directors of the Company until the Company's next Annual Meeting and until such directors' successors are elected and shall have been qualified: Ronald O. Perelman, Donald G. Drapkin, Meyer Feldberg, Howard Gittis, Vernon E. Jordan, Jr., Edward J. Landau, Jerry W. Levin, Jeffrey M. Nugent, Linda Gosden Robinson, Terry Semel and Martha Stewart; (2) ratify the selection of KPMG LLP as the Company's independent auditors for 2001; (3) consider and approve the Revlon, Inc. Third Amended and Restated 1996 Stock Plan (the "Amended Stock Plan"); and (4) take such other action as may properly come before the Annual Meeting or any adjournments thereof. The principal executive offices of the Company are located at 625 Madison Avenue, New York, New York 10022 and the telephone number is (212) 527-4000. SOLICITATION AND VOTING OF PROXIES; REVOCATION All proxies duly executed and received by the Company, unless such proxies have been previously revoked, will be voted on all matters presented at the Annual Meeting in accordance with the instructions given therein by the person executing such proxy or, in the absence of such instructions, will be voted (1) FOR the election to the Board of Directors of each of the eleven nominees identified in this Proxy Statement; (2) FOR the ratification of the selection of KPMG LLP as the Company's independent auditors for 2001; and (3) FOR approval of the Amended Stock Plan. The Company has no knowledge of any other matters to be brought before the meeting. The deadline for receipt by the Secretary of the Company of stockholder proposals for inclusion in the proxy materials for presentation at the Annual Meeting was December 3, 2000. No stockholder proposals are included in the proxy materials. However, if any other matters are properly presented before the Annual Meeting for action, in the absence of other instructions it is intended that the persons named in the enclosed proxy and acting thereunder will vote in accordance with their best judgment on such matters. The submission of a signed proxy will not affect a stockholder's right to attend, or to vote in person at, the Annual Meeting. Stockholders who execute a proxy may revoke it at any time before it is voted by filing a written revocation with the Secretary of the Company at 625 Madison Avenue, 6th Floor, New York, New York 10022, Attention: Secretary, by executing a proxy bearing a later date or by attending the Annual Meeting and voting in person. THE ACCOMPANYING FORM OF PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. Solicitation of proxies may be made by mail and also may be made by personal interview, telephone and facsimile transmission and by directors, officers and employees of the Company without special compensation therefor. The Company expects to reimburse banks, brokers and other persons for their reasonable out-of-pocket expenses incurred in handling proxy materials for beneficial owners.
RECORD DATE; VOTING RIGHTS Only holders of record of shares of the Company's Class A common stock, par value $.01 per share ("Class A Common Stock"), and Class B common stock, par value $.01 per share ("Class B Common Stock" and, together with the Class A Common Stock, the "Common Stock"), at the close of business on April 12, 2001 (the "Record Date") will be entitled to notice of and to vote at the Annual Meeting or any adjournments thereof. On the Record Date, there were issued and outstanding 20,115,935 shares of the Company's Class A Common Stock, each of which is entitled to one vote, and 31,250,000 shares of the Company's Class B Common Stock, each of which is entitled to ten votes. Of that total, 11,250,000 shares of the Company's Class A Common Stock (or approximately 55.9% of the outstanding shares of the Company's Class A Common Stock) and all of the shares of the Company's Class B Common Stock, which together represent approximately 97.3% of the combined voting power of the outstanding shares of Common Stock, are beneficially owned by MacAndrews & Forbes Holdings Inc. ("MacAndrews Holdings"), a corporation wholly owned indirectly through Mafco Holdings Inc. ("Mafco Holdings" and, collectively with MacAndrews Holdings, "MacAndrews & Forbes") by Ronald O. Perelman, Chairman of the Board of Directors of the Company. The presence in person or by duly executed proxy of the holders of a majority in total number of votes of the issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum in order to transact business. MacAndrews & Forbes has informed the Company that it will vote (1) FOR the election to the Board of Directors of each of the eleven nominees identified in this Proxy Statement; (2) FOR the ratification of the selection of KPMG LLP as the Company's independent auditors for 2001; and (3) FOR approval of the Amended Stock Plan. Accordingly, the affirmative vote of MacAndrews & Forbes is sufficient, without the concurring vote of any other stockholder of the Company, to approve and adopt each of the proposals to be considered at the Annual Meeting. PROPOSAL NO. 1 ELECTION OF DIRECTORS The Board of Directors of the Company, pursuant to the By-laws of the Company, has fixed the number of directors at eleven effective as of the date of the Annual Meeting. The directors nominated for election will be elected at the Annual Meeting to serve until the next succeeding Annual Meeting of the Company and until their successors are elected and shall have qualified. All of the nominees are currently members of the Board of Directors. All nominees, if elected, are expected to serve until the next succeeding Annual Meeting. The proxies solicited hereby will be voted FOR the election of the nominees listed herein. The Board of Directors has been informed that all of the nominees are willing to serve as directors, but if any of them should decline or be unable to act as a director, the Board of Directors may, unless the Board by resolution provides for a lesser number of directors, designate substitute nominees, in which event the individuals named in the enclosed proxy will vote for the election of such substitute nominee or nominees. The Board of Directors has no reason to believe that any nominee will be unable or unwilling to serve. VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION The election to the Board of Directors of each of the eleven nominees identified in this Proxy Statement will require the affirmative vote of a plurality of the votes cast by the holders of shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. In tabulating the vote, abstentions will be disregarded and have no effect on the outcome of the vote. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE ELEVEN NOMINEES IDENTIFIED BELOW. NOMINEES FOR ELECTION AS DIRECTORS The name, age (as of April 12, 2001), principal occupation for the last five years, selected biographical information and period of service as a director of the Company of each of the nominees for election as a director are set forth below. 2
MR. PERELMAN (58) has been Chairman of the Board of Directors of the Company and of the Company's wholly owned subsidiary Revlon Consumer Products Corporation ("Products Corporation") since June 1998, Chairman of the Executive Committee of the Board of the Company and of Products Corporation since November 1995, and a Director of the Company and of Products Corporation since their respective formations in 1992. Mr. Perelman has been Chairman of the Board and Chief Executive Officer of MacAndrews & Forbes and various of its affiliates since 1980. Mr. Perelman is also Chairman of the Executive Committee of the Board of Directors of M&F Worldwide Corp. ("M&F Worldwide") and Chairman of the Board of Directors of Panavision Inc. ("Panavision"). Mr. Perelman is also a Director of the following corporations which file reports pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"): Golden State Bancorp Inc. ("Golden State"), Golden State Holdings Inc. ("Golden State Holdings"), M&F Worldwide, Panavision and REV Holdings Inc. ("REV Holdings"). MR. NUGENT (54) has been President and Chief Executive Officer of the Company and of Products Corporation since December 5, 1999. He has been a Director of the Company and of Products Corporation since February 14, 2000. He had been Worldwide President and Chief Executive Officer of Neutrogena Corporation from January 1995 until December 5, 1999. Prior to that, Mr. Nugent held various senior executive positions at Johnson & Johnson. MR. DRAPKIN (53) has been a Director of the Company and of Products Corporation since their respective formations in 1992. He has been Vice Chairman of the Board of MacAndrews & Forbes and various of its affiliates since 1987. Mr. Drapkin was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom for more than five years prior to 1987. Mr. Drapkin is also a Director of the following corporations which file reports pursuant to the Exchange Act: Anthracite Capital, Inc., BlackRock Asset Investors, The Molson Companies Limited, Playboy Enterprises, Inc., ProxyMed, Inc., Warnaco Group, Inc. and Weider Nutrition International, Inc. PROFESSOR FELDBERG (59) has been a Director of the Company since February 1997. Professor Feldberg has been the Dean of Columbia Business School, New York City, for more than the past five years. Professor Feldberg is also a Director of the following corporations which file reports pursuant to the Exchange Act: Federated Department Stores, Inc., PRIMEDIA Inc. and Paine Webber Group, Inc. (29 directorships within such fund complex). MR. GITTIS (67) has been a Director of the Company and of Products Corporation since their respective formations in 1992. He has been Vice Chairman of the Board of MacAndrews & Forbes and various of its affiliates since 1985. Mr. Gittis is also a Director of the following corporations which file reports pursuant to the Exchange Act: Golden State, Golden State Holdings, Jones Apparel Group, Inc., Loral Space & Communications Ltd., M&F Worldwide, Panavision, REV Holdings and Sunbeam Corporation ("Sunbeam"). MR. JORDAN (65) has been a Director of the Company since June 1996. Mr. Jordan has been a Managing Director of Lazard Freres & Co. LLC since January 2000. Since January 2000, Mr. Jordan has been Of Counsel at the Washington, D.C. law firm of Akin, Gump, Strauss, Hauer & Feld, LLP and was a Senior Partner of such firm for more than five years prior thereto. He is a Director of the following corporations which file reports pursuant to the Exchange Act: America OnLine Latin America, American Express Company, Callaway Golf Corporation, Clear Channel Communications, Inc., Dow Jones & Company, Inc., J.C. Penney Company, Inc., Ryder System, Inc., Sara Lee Corporation, Union Carbide Corporation and Xerox Corporation. He is also trustee of Howard University. MR. LANDAU (71) has been a Director of the Company since June 1996. Mr. Landau has been Of Counsel at the law firm of Wolf, Block, Schorr and Solis-Cohen LLP since February 1998, and was a Senior Partner of Lowenthal, Landau, Fischer & Bring, P.C., the predecessor to such firm, for more than five years prior to that date. He has been a Director of Products Corporation since June 1992. Mr. Landau is also a Director of Offitbank Investment Fund, Inc., which files reports pursuant to the Exchange Act. MR. LEVIN (56) was Chairman of the Board of the Company and of Products Corporation from November 1995 to June 1998 and has been a Director of the Company since its formation in 1992 and a Director of Products Corporation from its formation in 1992 to November 1998. Mr. Levin has been 3
President and Chief Executive Officer and a Director of Sunbeam since June 1998 and was elected Chairman of the Sunbeam Board in March 1999. He has served as Chairman and Chief Executive Officer of The Coleman Company, Inc. ("Coleman") since 1998. Mr. Levin was Chairman and Chief Executive Officer of Coleman from 1997 to March 1998. Mr. Levin was Chief Executive Officer of the Company and of Products Corporation from their respective formations in 1992 until 1997 and President of the Company and of Products Corporation from their respective formations in 1992 until November 1995. Mr. Levin has been Executive Vice President of MacAndrews Holdings since March 1989. For 15 years prior to joining MacAndrews Holdings, he held various senior executive positions with The Pillsbury Company. Mr. Levin is a Director of the following corporations which file reports pursuant to the Exchange Act: Ecolab, Inc., Sunbeam and U.S. Bancorp. MS. ROBINSON (48) has been a Director of the Company since June 1996. Ms. Robinson has been Chairman and Chief Executive Officer of Robinson Lerer & Montgomery, LLC, a New York City strategic communications consulting firm, since May 1996. In March 2000, Robinson Lerer & Montgomery was acquired by Young & Rubicam Inc. ("Y&R") and Ms. Robinson has served as Vice Chairman of Y&R since March 2000. In October 2000, Y&R was acquired by the WPP Group plc. For more than five years prior to May 1996 she was Chairman of the Board and Chief Executive Officer of Robinson Lerer Sawyer Miller Group, or its predecessors. Ms. Robinson is a trustee of Mt. Sinai NYU Health. MR. SEMEL (58) has been a Director of the Company since June 1996. Mr. Semel has been Chairman of Windsor Media, Inc., Los Angeles, a diversified media company, since October 1999. He was Chairman of the Board and Co-Chief Executive Officer of the Warner Bros. Division of Time Warner Entertainment LP ("Warner Brothers"), Los Angeles, from March 1994 until October 1999 and of Warner Music Group, Los Angeles, from November 1995 until October 1999. For more than ten years prior to that he was President of Warner Brothers or its predecessor, Warner Bros. Inc. Mr. Semel is also a Director of Polo Ralph Lauren Corporation, which files reports pursuant to the Exchange Act. Effective May 1, 2001, Mr. Semel will become Chairman and Chief Executive Officer of Yahoo! Inc., which files reports pursuant to the Exchange Act. MS. STEWART (59) has been a Director of the Company since June 1996. Ms. Stewart is the Chairman of the Board and Chief Executive Officer of Martha Stewart Living Omnimedia, Inc., New York City (formerly Martha Stewart Living Omnimedia, LLC, New York City). She has been an author, founder of the magazine Martha Stewart Living, creator of a syndicated television series, a syndicated newspaper column and a catalog company, and a lifestyle consultant and lecturer for more than the past five years. Ms. Stewart is a Director of Martha Stewart Living Omnimedia, Inc., which files reports pursuant to the Exchange Act. BOARD OF DIRECTORS AND ITS COMMITTEES The Board of Directors has an Executive Committee, an Audit Committee and a Compensation and Stock Plan Committee (the "Compensation Committee"). The Executive Committee consists of Messrs. Perelman, Gittis and Nugent. The Executive Committee may exercise all of the powers and authority of the Board, except as otherwise provided under the Delaware General Corporation Law. The Executive Committee also serves as the Company's nominating committee for Board membership. 4
AUDIT COMMITTEE REPORT The Audit Committee of the Company's Board of Directors currently consists of three independent directors and operates under a written charter adopted by the Board of Directors (See Exhibit 1). The members of the Audit Committee are Messrs. Feldberg, Landau (Chairman) and Ms. Robinson, each of whom was a member of the Audit Committee during all of 2000 and remains a member as of the date of this report. The Audit Committee's policy is to provide assistance to the Board of Directors in fulfilling its oversight responsibility to the stockholders, potential stockholders, the investment community, and others relating to the Company's financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company's financial statements, and the legal compliance and ethics programs as established by management and the Board. The Audit Committee makes recommendations to the Board of Directors regarding the engagement of the Company's independent auditors for ratification by the Company's stockholders, discusses with the auditors their independence from management, reviews the plan, scope and results of the audit, and reviews with the auditors and management the Company's policies and procedures with respect to internal accounting and financial controls, changes in accounting policy and the scope of the non-audit services which may be performed by the Company's independent auditors, among other things. The Audit Committee reviews interim financial statements annual financial statement included in the Company's Annual Report on Form 10-K with management and the auditors. Management is responsible for the Company's internal controls and the financial reporting process. The independent accountants are responsible for performing an independent audit of the Company's consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes. In this context, the Audit Committee has met and held discussions with management and the independent accountants on a regular basis during 2000. Management represented to the Audit Committee that the Company's audited consolidated financial statements for the year 2000 were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the audited consolidated financial statements with management and the independent accountants. The Audit Committee discussed with the independent accountants matters required to be discussed by Statement on Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU Section 380). The Audit Committee has received the written disclosures and the letter from the Company's independent accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and has discussed with the independent accountants that firm's independence. Based on the Audit Committee's review and discussion of the Company's audited consolidated financial statements with management and the independent accountants and the other reviews and discussions with auditors referred to in the paragraph above, the Audit Committee recommended to the Board of Directors that the Company's audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 for filing with the Securities and Exchange Commission. Respectfully submitted, Audit Committee Edward J. Landau, Esq., Chairman Meyer Feldberg Linda Gosden Robinson 5
The Compensation Committee, currently consisting of Messrs. Gittis, Drapkin, Landau and Semel, makes recommendations to the Board of Directors regarding compensation and incentive arrangements (including performance-based arrangements) for the Chief Executive Officer, other executive officers, officers and other key managerial employees of the Company. The Compensation Committee also considers and recommends awards pursuant to the Company's Amended Stock Plan, as may be amended and restated from time to time, and administers such plan. During 2000, the Board of Directors held four meetings and acted three times by unanimous written consent, the Executive Committee acted two times by unanimous written consent, the Audit Committee held six meetings and the Compensation Committee held no meetings and acted fourteen times by unanimous written consent. During 2000, all Directors (other than Ms. Stewart) attended 75% or more of the meetings of the Board of Directors and of the committees of which they were members. COMPENSATION OF DIRECTORS Directors who currently are not receiving compensation as officers or employees of the Company or any of its affiliates ("Non-Employee Directors") are paid an annual retainer fee of $35,000 (which fee was increased from $25,000 effective July 1, 2000), payable in quarterly installments, and a fee of $1,000 for each meeting of the Board of Directors or any committee thereof they attend. In addition, the Compensation Committee on May 22, 2000 granted under the Amended Stock Plan (See "--Approval of The Amended Stock Plan") to each of the Company's Non-Employee Directors options to purchase 7,500 shares of the Company's Common Stock, which options consist of non-qualified options having a term of 10 years, vest 25% on each anniversary of the grant date and will become 100% vested on the fourth anniversary of the grant date, and have an exercise price equal to $7.0625, the closing price per share on the New York Stock Exchange ("NYSE") of the Company's Class A Common Stock on the grant date (collectively, the "Year 2000 Non-Employee Director Awards"). The grant of each of the Year 2000 Non-Employee Director Awards was conditioned upon stockholder approval of the Amended Stock Plan at the 2001 Annual Meeting. EXECUTIVE OFFICERS The following table sets forth certain information concerning each of the executive officers of the Company as of April 12, 2001. NAME POSITION - ---- -------- Jeffrey M. Nugent President and Chief Executive Officer Douglas H. Greeff Executive Vice President and Chief Financial Officer The following sets forth the ages (as of April 12, 2001), positions held with the Company and selected biographical information for the current executive officers of the Company who are not directors. Biographical information with respect to Mr. Nugent is set forth above under the caption "Nominees for Election as Directors." MR. GREEFF (45) was elected Executive Vice President and Chief Financial Officer of the Company and of Products Corporation in May 2000. From September 1998 to May 2000 he was Managing Director, Fixed Income Global Loans, and Co-head of Leverage Finance at Salomon Smith Barney Inc. From January 1994 until August 1998 Mr. Greeff was Managing Director, Global Loans and Head of Leverage and Acquisition Finance at Citibank N.A. 6
EXECUTIVE COMPENSATION The following table sets forth information for the years indicated concerning the compensation awarded to, earned by or paid to the persons who served as Chief Executive Officer of the Company during 2000 and the four most highly paid executive officers (see footnote (a) below), other than the Chief Executive Officer, who served as executive officers of the Company during 2000 (collectively, the "Named Executive Officers"), for services rendered in all capacities to the Company and its subsidiaries during such periods. SUMMARY COMPENSATION TABLE LONG-TERM COMPENSATION ANNUAL COMPENSATION (A) AWARDS ------------------------------------------ ------------- SECURITIES SALARY OTHER ANNUAL UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) COMPENSATION ($) OPTIONS COMPENSATION ($) - --------------------------------- ------ ----------- ----------- ------------------ ------------- ----------------- Jeffrey M. Nugent ............... 2000 1,000,000 500,000 430,948 100,000 489,454 President and Chief 1999 160,256 0 36,382 300,000 38,743 Executive Officer (b) Douglas H. Greeff ............... 2000 422,500 450,000 7,868 100,000 0 Executice Vice President and Chief Financial Officer (c) Frank J. Gehrmann ............... 2000 250,000 187,500 0 50,000 464,231 Former Executive Vice 1999 494,038 370,000 3,089 65,000 14,244 President and 1998 427,500 370,500 3,343 30,000 17,297 Chief Financial Officer (d) Wade H. Nichols III ............. 2000 487,500 0 6,612 50,000 275,467 Former Executive Vice 1999 593,558 207,450 17,964 40,000 37,802 President and 1998 555,000 216,450 19,457 40,000 33,195 Chief Administrative Officer (e) - ---------- (a) The amounts shown in Annual Compensation for 2000, 1999 and 1998 reflect salary, bonus and other annual compensation (including perquisites and other personal benefits valued in excess of $50,000) and amounts reimbursed for payment of taxes awarded to, earned by or paid to the persons listed for services rendered to the Company and its subsidiaries. For the periods reported, the Company had an Executive Bonus Plan in which executives participate (including Mr. Nugent and Mr. Greeff (see "Employment Agreements and Termination of Employment Arrangements"). The Executive Bonus Plan provided for payment of cash compensation upon the achievement of predetermined business and personal performance objectives during the calendar year which are established by the Compensation Committee. Excluding Messrs. Gehrmann and Nichols, each of whose employment ceased during 2000 and prior to December 31, 2000, the Company did not have any "executive officers" during 2000 other than Messrs. Nugent and Mr. Greeff. Accordingly, for 2000 the Company is reporting the compensation of Messrs. Nugent and Greeff. Mr. Nugent's compensation is reported for 2000 and 1999 only because he did not serve as an executive officer of the Company prior to 1999. Mr. Greeff's compensation is reported for 2000 only because he did not serve as an executive officer of the Company prior to 2000. (b) Mr. Nugent served as President and Chief Executive Officer of the Company during 1999 and 2000. Mr. Nugent received a bonus of $500,000 in respect of 2000 pursuant to the terms of his employment agreement. The amount shown for Mr. Nugent under Other Annual Compensation for 2000 includes $430,948 in respect of gross ups for taxes on imputed income arising out of (i) personal use of a Company-provided automobile, (ii) premiums paid or reimbursed by the Company in respect of life insurance, (iii) reimbursements for mortgage principal and interest payments pursuant to Mr. Nugent's employment agreement and (iv) relocation expenses paid or reimbursed by the Company in 2000. The amount shown under All Other Compensation for 2000 reflects (i) $17,369 in life insurance premiums, (ii) $365,880 in Company-paid relocation expenses and (iii) $106,205 of additional compensation in respect of interest and principal payments on a bank loan obtained by 7
Mr. Nugent to purchase a principal residence in the New York metropolitan area pursuant to his employment agreement (See "Employment Agreements and Termination of Employment Arrangements"). The amount shown for Mr. Nugent under Salary for 1999 is comprised of $76,923 in salary and $83,333 earned by Mr. Nugent for consulting services provided by Mr. Nugent to the Company. Mr. Nugent did not receive a bonus for 1999. The amount shown for Mr. Nugent under Other Annual Compensation for 1999 includes a payment of $36,382 in respect of gross ups for taxes on imputed income arising out of relocation expenses paid or reimbursed by the Company in 1999. The amount shown under All Other Compensation for 1999 reflects $38,743 in Company-paid relocation expenses. (c) Mr. Greeff became Executive Vice President and Chief Financial Officer of the Company in May 2000. Mr. Greeff received a bonus of $450,000 in respect of 2000 pursuant to the terms of his employment agreement. The amount shown for Mr. Greeff under Other Annual Compensation for 2000 includes $7,868 in respect of gross ups for taxes on imputed income arising out of personal use of a Company-provided automobile. (d) Mr. Gehrmann served as Executive Vice President and Chief Financial Officer during 2000 and resigned effective June 30, 2000. The amount shown for Mr. Gehrmann under Bonus for 2000 is comprised of bonus payments of $187,500, which, pursuant to his employment agreement (See "Employment Agreements and Termination of Employment Agreements"), is the pro rated portion of his 2000 bonus through his separation date of June 30, 2000. The amount shown under All Other Compensation for 2000 reflects (i) $5,100 in respect of matching contributions under the Revlon Employees' Savings, Profit Sharing and Investment Plan (the "401(k) Plan"), (ii) $2,400 in respect of matching contributions under the Revlon Excess Savings Plan for Key Employees (the "Excess Plan"), and (iii) $456,731 payable pursuant to his employment agreement. The amount shown for Mr. Gehrmann under Bonus for 1999 reflects the bonus amount payable to Mr. Gehrmann pursuant to his employment agreement. The amount shown for Mr. Gehrmann under Other Annual Compensation for 1999 includes $3,089 in respect of gross ups for taxes on imputed income arising out of personal use of a Company-provided automobile. The amount shown under All Other Compensation for 1999 reflects (i) $4,800 in respect of matching contributions under the 401(k) Plan and (ii) $9,444 in respect of matching contributions under the Excess Plan. The amounts shown for Mr. Gehrmann under Other Annual Compensation for 1998 includes $3,343 in respect of gross ups for taxes on imputed income arising out of personal use of a Company-provided automobile. The amount shown under All Other Compensation for 1998 reflects (i) $4,800 in respect of matching contributions under the 401(k) Plan and (ii) $12,497 in respect of matching contributions under the Excess Plan. (e) Mr. Nichols served as Executive Vice President and Chief Administrative Officer during 2000 and retired effective September 30, 2000. The amounts shown under Other Annual Compensation for 2000 includes $6,612 in respect of payments in respect of gross ups for taxes on imputed income arising out of premiums paid or reimbursed by the Company in respect of life insurance. The amount shown for Mr. Nichols under All Other Compensation for 2000 reflects (i) $9,562 in respect of life insurance premiums, (ii) $5,100 in respect of matching contributions under the 401(k) Plan, (iii) $8,158 in respect of matching contributions under the Excess Plan, (iv) $6,495 in respect of above market earnings on compensation deferred under the Revlon Executive Deferred Compensation Plan (the "Deferred Compensation Plan") for each year in which compensation was deferred that were earned but not paid or payable during 2000, and (v) $246,152 payable pursuant to his retirement agreement (See "Employment Agreements and Termination of Employment Agreements"). The amount shown for Mr. Nichols under Bonus for 1999 reflects the amount payable to Mr. Nichols under the Executive Bonus Plan, taking into account the guarantee by the Company of a minimum of 50% of targeted awards for 1999. The amount shown under Other Annual Compensation for 1999 includes $17,964 in respect of gross ups for taxes on imputed income arising out of personal use of a Company-provided automobile and for taxes on imputed income arising out of premiums paid or reimbursed by the Company in respect of life insurance. The amount shown for Mr. Nichols under All Other Compensation for 1999 reflects (i) $9,377 in respect of life insurance premiums, (ii) $4,800 in respect of matching contributions under the 401(k) Plan, (iii) $11,781 in respect of matching contributions under the Excess Plan, and (iv) $11,844 in respect of above market earnings on compensation deferred under the Deferred Compensation Plan for each year in which compensation was deferred that was earned but not paid or payable during 1999. The amounts shown under Other Annual Compensation for 1998 includes $19,457 in respect of Company-paid tax preparation expenses and payments in respect of gross ups for taxes on imputed income arising out of personal use of a Company-provided automobile and for taxes on imputed income arising out of premiums paid or reimbursed by the Company in respect of life insurance. The amount shown for Mr. Nichols under All Other Compensation for 1998 reflects (i) $9,990 in respect of life insurance premiums, (ii) $4,800 in respect of matching contributions under the 401(k) Plan, (iii) $10,463 in respect of matching contributions under the Excess Plan, and (iv) $7,942 in respect of above market earnings on compensation deferred under the Deferred Compensation Plan for each year in which compensation was deferred that was earned but not paid or payable during 1998. 8
OPTION GRANTS IN THE LAST FISCAL YEAR During 2000, the following grants of stock options were made pursuant to the Amended Stock Plan to the executive officers named in the Summary Compensation Table: GRANT DATE INDIVIDUAL GRANTS VALUE (a) ------------------------------------------------------------------------- ---------- PERCENT OF NUMBER OF TOTAL OPTIONS GRANT SECURITIES UNDERLYING GRANTED TO EXERCISE DATE OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE ($) - ----------------------------- ----------------------- --------------- -------------- ------------ ---------- Jeffrey M. Nugent ........... 100,000 6% 4.00 12/5/10 249,540 Douglas H. Greeff ........... 100,000 6% 7.0625 5/22/10 441,288 Frank J. Gehrmann ........... 50,000 3% 7.0625 5/22/05 220,644 Wade H. Nichols III ......... 50,000 3% 7.0625 5/22/05 220,644 The grants made during 2000 under the Amended Stock Plan to Mr. Nugent were awarded on December 5, 2000 pursuant to his employment agreement, consist of non-qualified options having a term of 10 years, vest 25% on each anniversary of the grant date and will become 100% vested on the fourth anniversary of the grant date, and have an exercise price equal to the closing price per share on the NYSE of the Company's Class A Common Stock on the grant date, as indicated in the table above. The options granted to Mr. Greeff in 2000 under the Amended Stock Plan were made on May 22, 2000, consist of non-qualified options having a term of 10 years, vest 25% on each anniversary of the grant date and will become 100% vested on the fourth anniversary of the grant date (provided, however, an additional 25% of such options would vest on each subsequent anniversary date of the grant if the Company achieved certain performance objectives relating to the Company's operating income for the fiscal year preceding such anniversary date, which objectives were not achieved in 2000, so the 25% accelerated vesting will not occur on the May 22, 2001 anniversary of the 2000 option grant (the "Performance-Based Accelerated Vesting") and have an exercise price equal to the closing price per share on the NYSE of the Company's Class A Common Stock on the grant date, as indicated in the table above. The options granted to Mr. Gehrmann in 2000 consist of non-qualified options that, pursuant to the terms of his employment agreement will continue to vest and remain exercisable until one year after they are fully vested and such options were granted under the Performance-Based Accelerated Vesting. (See "Employment Agreements and Termination of Employment Agreements"). The options granted to Mr. Nichols in 2000 consist of non-qualified options that, pursuant to the terms of his retirement agreement will continue to vest and remain exercisable until one year after they are fully vested and such options were granted under the Performance-Based Accelerated Vesting. (See "Employment Agreements and Termination of Employment Agreements"). During 2000, the Company also granted an option to purchase 300,000 shares of the Company's Class A Common Stock pursuant to the Amended Stock Plan to Mr. Perelman, the Chairman of the Board of Directors of the Company. The option will vest in full on the fifth anniversary of the grant date and has an exercise price of $8.8125, the closing price per share on the NYSE of the Company's Class A Common Stock on March 30, 2000, the date of the grant. - ---------- (a) Grant Date Present Values were calculated using the Black-Scholes option pricing model. The model as applied used the grant dates of May, 22, 2000 with respect to the options granted on such date and used the grant date of December 5, 2000 with respect to the option granted to Mr. Nugent on such date. Stock option models require a prediction about the future movement of stock price. The following assumptions were made for purposes of calculating Grant Date Present Values: (i) a risk-free rate of return of 6.69% with respect to the options granted on May 22, 2000, and 5.45% with respect to the option granted to Mr. Nugent on December 5, 2000, which were the rates as of the applicable grant dates for the U.S. Treasury Zero Coupon Bond issues with a remaining term similar to the expected term of the options; (ii) stock price volatility of 69% based upon the volatility of the Company's stock price; (iii) a constant dividend rate of zero percent; and (iv) that the options normally would be exercised on the final day of their seventh year after grant. No adjustments to the theoretical value were made to reflect the waiting period, if any, prior to vesting of the stock options or the transferability (or restrictions related thereto) of the stock options. The real value of the options in the table depends upon the actual performance of the Company's stock during the applicable period and upon when they are exercised. 9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following chart shows the number of stock options exercised during 2000 and the 2000 year-end value of the stock options held by the executive officers named in the Summary Compensation Table: VALUE OF NUMBER OF SECURITIES UNEXERCISED IN-THE- UNDERLYING UNEXERCISED MONEY OPTIONS SHARES OPTIONS AT FISCAL AT FISCAL YEAR-END ACQUIRED VALUE YEAR-END (#) EXERCISABLE/ NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE UNEXERCISABLE (a)($) - ----------------------------- ----------------- -------------- --------------------------- --------------------- Jeffrey M. Nugent ........... 0 0 0/400,000 0/0 Douglas H. Greeff ........... 0 0 0/100,000 0/0 Frank J. Gehrmann ........... 0 0 50,250/116,750 0/0 Wade H. Nichols III ......... 0 0 112,500/77,500 0/0 - ---------- (a) The market value of the underlying shares of the Company's Class A Common Stock at year end, calculated using $4.96, the December 29, 2000 closing price per share on the NYSE of the Company's Class A Common Stock, was less than the exercise price of all stock options listed in the table. The actual value, if any, an executive may realize upon exercise of a stock option depends upon the amount by which the market price of shares of the Company's Class A Common Stock exceeds the exercise price per share when the stock options are exercised. LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR The following table sets forth the award made in 2000 under the Company's Senior Executive Long-Term Incentive Plan ("SELTIP") which was established in 2000. The SELTIP provides for a cash payment at the end of a three-year period, based on the Company's achievement of pre-established performance targets. For the three-year period ending December 31, 2002 the actual dollar amount of the payout will be based on the Company's cumulative consolidated net sales and cumulative operating income. Target payouts will be made if both objectives are achieved. PERFORMANCE OR OTHER PERIOD UNTIL ESTIMATED FUTURE PAYOUTS UNDER NAME (a) MATURATION OR PAYOUT NON-STOCK PRICE-BASED PLANS - --------------------------- -------------------------------------- -------------------------------- Douglas H. Greeff ......... Three-Year Fiscal Period (2000-2002) $0(b) Ending 12/31/02 - ---------- (a) Jeffrey Nugent did not participate in the SELTIP for 2000, and Mr. Gehrmann's and Mr. Nichols' eligibility to participate in the SELTIP ceased when they ceased employment. (b) The Company currently estimates that there will not be any payouts under the SELTIP for the three-year period ending December 31, 2002. EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS Each of Messrs. Nugent and Greeff has a current executive employment agreement with the Company's wholly owned subsidiary, Products Corporation. Mr. Nugent's employment agreement provides that he will serve as President and Chief Executive Officer at a base salary of not less than $1,000,000 for 2000, not less than $1,150,000 for 2001 and not less than $1,300,000 for 2002, and that management will recommend to the Compensation Committee that he be granted options to purchase 100,000 shares of the Company's Class A Common Stock on each of December 5, 2000 (which grant was made) and 2001. At any time on or after December 31, 2002, Products Corporation may terminate the term of Mr. Nugent's agreement by 24 months' prior notice of non-renewal. During any such period, after notice of non-renewal Mr. Nugent would be deemed an employee at will and would be eligible for severance under the Executive Severance Policy (see "--Executive Severance Policy"). 10
Mr. Greeff entered into an employment agreement with Products Corporation dated as of May 9, 2000, which provides that he will serve as Chief Financial Officer at a base salary of not less than $650,000 per annum and that management will recommend to the Compensation Committee that he be granted options to purchase 100,000 shares of the Company's Class A Common Stock on May 9, 2000 (which grant was actually made on May 22, 2000) and 50,000 shares of the Company's Class A Common Stock on each of February 15, 2001 (which grant was actually made on March 26, 2001) and 2002. At any time after May 8, 2003, Products Corporation may terminate Mr. Greeff's employment by 24 months' prior notice of non-renewal. During any such period, after notice of non-renewal, Mr. Greeff would be deemed an employee at will and would be eligible for severance under the Executive Severance Policy (see "--Executive Severance Policy"). Each of Messrs. Nugent's and Greeff's employment agreements provides for participation in the Executive Bonus Plan. Mr. Nugent's agreement also provides that he will receive not less than $500,000 as a bonus in respect of 2000. Mr. Greeff's employment agreement provides that he will receive not less than $450,000 as a bonus in respect of 2000. Each of Messrs. Nugent's and Greeff's employment agreements provides for participation in other executive benefit plans on a basis equivalent to other senior executives of the Company generally. The employment agreements of Mr. Nugent and Mr. Greeff provide for Company-paid supplemental term life insurance during employment in the amount of three times and two times base salary, respectively, and for Company-paid supplemental disability insurance. Each of the employment agreements currently in effect provides for protection of Company confidential information and includes a non-compete obligation. Mr. Greeff's employment agreement provides for his participation in the Senior Executive Long-Term Incentive Plan (the "SELTIP"), with a target payout of $500,000 at the end of the fiscal year ending December 31, 2002, subject to the terms of the SELTIP (See "Long-Term Incentive Plans -- Awards In Last Fiscal Year"). Mr. Nugent's employment agreement provides that in the event of termination of the term of such agreement by Mr. Nugent for breach by the Company of a material provision of such agreement or failure of the Compensation Committee to adopt and implement the recommendations of management with respect to stock option grants, or by the Company prior to December 31, 2002 (otherwise than for "cause" as defined in Mr. Nugent's employment agreement or disability), Mr. Nugent would be entitled, at his election, to severance pursuant to the Executive Severance Policy (see "--Executive Severance Policy") (other than the six-month limit on lump sum payments provided for in the Executive Severance Policy, which six-month limit provision would not apply to Mr. Nugent) or continued payments of base salary through December 31, 2004 and continued participation in the Company's life insurance plan, which life insurance coverage is subject to a limit of two years, and medical plans subject to the terms of such plans through December 31, 2004 or until Mr. Nugent were covered by like plans of another company, continued Company-paid supplemental term life insurance and continued Company-paid supplemental disability insurance. Any such payments to Mr. Nugent (other than any lump sum payment to which he may be entitled under the Executive Severance Policy) would be reduced by any compensation earned by Mr. Nugent from other employment or consultancy during such period. In addition, the employment agreement with Mr. Nugent provides that if he remains employed by Products Corporation or its affiliates until age 62, then upon any subsequent retirement he will be entitled to a supplemental pension benefit in a sufficient amount so that his annual pension benefit from all qualified and non-qualified pension plans of Products Corporation and its affiliates (expressed as a straight life annuity) equals $500,000. If Mr. Nugent's employment were to terminate on or after September 30, 2000 and prior to September 30, 2001 then he would receive 11.1% of the amount otherwise payable pursuant to his employment agreement and thereafter an additional 11.1% would accrue as of each September 30th on which Mr. Nugent is still employed (but in no event more than would have been payable to Mr. Nugent under the foregoing provision had he retired at age 62). Mr. Nugent would not receive any supplemental pension benefit and would be required to reimburse the Company for any supplemental pension benefits received if he were to terminate his employment prior to January 1, 2003 other than for "good reason" (as defined in his employment agreement), or if he were to breach the agreement or be terminated by the Company for "cause" (as defined in his employment agreement). Mr. Greeff's employment agreement provides that in the event of termination of the term of such agreement by Mr. Greeff for breach by the Company of a material provision of such agreement or failure 11
of the Compensation Committee to adopt and implement the recommendations of management with respect to stock option grants, or by the Company prior to May 8, 2003 (otherwise than for "cause" as defined in his employment agreement or disability), Mr. Greeff would be entitled, at his election, to severance pursuant to the Executive Severance Policy (see "--Executive Severance Policy") (other than the six-month limit on lump sum payments provided for in the Executive Severance Policy, which six-month limit provision would not apply to Mr. Greeff) or continued payments of base salary through May 8, 2005 and continued participation in the Company's life insurance plan, which life insurance coverage is subject to a limit of two years, and medical plans subject to the terms of such plans through May 8, 2005 or until Mr. Greeff were covered by like plans of another company, continued Company-paid supplemental term life insurance and continued Company-paid supplemental disability insurance. Any such payments to Mr. Greeff (other than any lump sum payment to which he may be entitled under the Executive Severance Policy) would be reduced by any compensation earned by Mr. Greeff from other employment or consultancy during such period. In addition, the employment agreement with Mr. Greeff provides that if he remains employed by Products Corporation or its affiliates until age 62, then upon any subsequent retirement he will be entitled to a supplemental pension benefit in a sufficient amount so that his annual pension benefit from all qualified and non-qualified pension plans of Products Corporation and its affiliates (expressed as a straight life annuity) equals $400,000. If Mr. Greeff's employment were to terminate prior to January 31, 2001 then he would receive no supplemental pension benefit. If his employment were to terminate on or after January 31, 2001 and prior to January 31, 2002 then he would receive 9.09% of the amount otherwise payable pursuant to his employment agreement and thereafter an additional 9.09% would accrue as of each January 31st on which Mr. Greeff is still employed (but in no event more than would have been payable to Mr. Greeff under the foregoing provision had he retired at age 62). Mr. Greeff would not receive any supplemental pension benefit and would be required to reimburse the Company for any supplemental pension benefits received if he were to terminate his employment prior to May 8, 2003 other than for "good reason" (as defined in his employment agreement), or if he were to breach such agreement or be terminated by the Company for "cause" (as defined in his employment agreement). The employment agreements in effect for Messrs. Nugent and Greeff provide for continuation of life insurance and executive medical insurance coverage in the event of permanent disability. Mr. Nichols retired from his employment with the Company effective October 1, 2000 and entered into a retirement agreement with Products Corporation dated as of September 15, 2000, which provides that he is to receive a retirement allowance payable in equal bi-weekly installments of $33,333 commencing October 1, 2000 and expiring February 28, 2003, which allowance would not be reduced on account of any compensation earned from other employment or consulting services by Mr. Nichols during such period. Pursuant to his retirement agreement, commencing January 1, 2005, the Company shall pay Mr. Nichols a monthly straight life annuity pension at a specified rate, to be reduced by any benefit to which Mr. Nichols is eligible under any defined benefit plan currently or previously maintained by Products Corporation or any of its affiliates. By mutual agreement, the term of Mr. Gehrmann's employment agreement with Products Corporation, as amended on March 23, 2000 and May 9, 2000, ended on June 30, 2000. Mr. Gehrmann's amended employment agreement provides that he is to receive continued base salary and bonus payments for a period of 36 months commencing on June 30, 2000 at the aggregate annual rate of $875,000, which payments would not be reduced by compensation earned for other employment or consulting services by Mr. Gehrmann during the severance period. Pursuant to his amended employment agreement, the Company recommended to the Compensation Committee that he be granted options to purchase 50,000 shares of the Company's Class A Common Stock in 2000, which options were granted to Mr. Gehrmann in May 2000. Mr. Nugent's employment agreement provides that he is entitled to a loan from Products Corporation of up to $500,000 for relocation expenses (which he received), which will be due and payable with interest at the applicable federal rate upon the earlier of the termination of his employment or five years from the initial loan. In addition, during the term of his employment agreement, Mr. Nugent will receive additional compensation payable on a monthly basis equal to the amount actually paid by him in respect of interest 12
and principal on a bank loan (the "Mortgage") of up to $1,500,000 obtained by Mr. Nugent to purchase a principal residence in the New York metropolitan area (the "Home Loan Payments"), plus a gross up for any taxes payable by Mr. Nugent as a result of such additional compensation. If Mr. Nugent terminates his employment for other than "good reason" or is terminated for "cause" (as such terms are defined in his employment agreement), then he shall be obligated to pay to Products Corporation an amount equal to the total amount of interest that would have been payable on the Home Loan Payments if the rate of interest on the Mortgage were the applicable federal rate in effect from time to time, plus the applicable tax gross up for such amounts. In addition, Mr. Nugent's employment agreement provides that he shall be entitled to a special bonus, payable on January 15 of the year next following the year in which his employment terminates, equal to the product of (A) $1,500,000 less the amount of Home Loan Payments made prior to the termination multiplied by (B) the following percentages: for termination in 2000, 0%; for termination in 2001, 20%; for termination in 2002, 40%; for termination in 2003, 60%; for termination in 2004, 80%; and for termination in 2005 or thereafter, 100%. Notwithstanding the above, if Mr. Nugent terminates his employment for other than "good reason" or is terminated for "cause" (as such terms are defined in his employment agreement), or if he breaches certain post-employment covenants, any bonus described above shall be forfeited or repaid by Mr. Nugent, as the case may be. Mr. Greeff's employment agreement provides that he is entitled to a loan from Products Corporation in the amount of $800,000 (which he received), with the principal to be payable in five equal installments of $160,000, with interest at the applicable federal rate, on each of May 9, 2001 and the four successive anniversaries thereafter, provided that the total principal amount of such loan and any accrued, but unpaid, interest at the applicable federal rate (the "Loan Payment") shall be due and payable upon the earlier of the January 15 immediately following the termination of his employment for any reason or May 9, 2005. In addition, Mr. Greeff's employment agreement provides that he shall be entitled to a special bonus, payable on each May 9th commencing on May 9, 2001 and ending with May 9, 2005 equal to the sum of the Loan Payment with respect to such year, provided that he is employed on each such May 9th, and further provided that in the event that Mr. Greeff terminates his employment for "good reason" or is terminated for a reason other than "cause" (as such terms are defined in his employment agreement), he shall be entitled to a special bonus in the amount of $800,000 minus the sum of any special bonuses paid through the date of such termination plus accrued, but unpaid, interest at the applicable federal rate. Notwithstanding the above, if Mr. Greeff terminates his employment for other than "good reason" or is terminated for "cause" (as such terms are defined in his employment agreement), or if he breaches certain post-employment covenants, any bonus described above shall be forfeited or repaid by Mr. Greeff, as the case may be. EXECUTIVE SEVERANCE POLICY Products Corporation's Executive Severance Policy provides that upon termination of employment of eligible executive employees, including Messrs. Nugent and Greeff (but excluding Messrs. Nichols and Gehrmann), other than voluntary resignation or termination by Products Corporation for good reason, in consideration for the execution of a release and confidentiality agreement and the Company's standard employee non-competition agreement, the eligible executive will be entitled to receive, in lieu of severance under any employment agreement then in effect or under Products Corporation's basic severance plan, a number of months of severance pay in semi-monthly installments based upon such executive's grade level and years of service reduced by the amount of any compensation from subsequent employment, unemployment compensation or statutory termination payments received by such executive during the severance period, and, in certain circumstances, by the actuarial value of enhanced pension benefits received by the executive, as well as continued participation in medical and certain other benefit plans for the severance period (or in lieu thereof, upon commencement of subsequent employment, a lump sum payment equal to the then present value of 50% of the amount of base salary then remaining payable through the balance of the severance period). Pursuant to the Executive Severance Policy, upon meeting the conditions set forth therein, as of December 31, 2000 Messrs. Nugent and Greeff would be entitled to severance pay equal to 19 and 18 months' of base salary, respectively, at the rate in effect on the date of employment termination plus continued participation in the medical and dental plans for the same respective periods on the same terms as active employees. 13
DEFINED BENEFIT PLANS The following table shows the estimated annual retirement benefits payable (as of December 31, 2000) at normal retirement age (65) to a person retiring with the indicated average compensation and years of credited service, on a straight life annuity basis, after Social Security offset, under the Revlon Employees' Retirement Plan (the "Retirement Plan"), including amounts attributable to the Pension Equalization Plan, each as described below. These amounts reflected in the table are attributable to all benefits accrued under the Retirement Plan on or before December 31, 2000 and will continue to apply to any person who is actively employed after that date who meets the Retirement Plan's eligibility requirements and who does not participate in the Cash Balance program described below (the "Non-Cash Balance Retirement Plan"). The table does not apply to benefits accrued on and after January 1, 2001 by any person who is eligible to participate in the Cash Balance program on or after that date. ESTIMATED ANNUAL STRAIGHT LIFE ANNUITY BENEFITS AT RETIREMENT HIGHEST CONSECUTIVE WITH INDICATED YEARS OF CREDITED SERVICE (a) FIVE-YEAR AVERAGE ------------------------------------------------------------------- COMPENSATION DURING FINAL TEN YEARS 15 20 25 30 35 - ----------------------- ----------- ----------- ----------- ----------- ----------- $ 600,000 $151,392 $201,856 $252,320 $302,784 $302,784 700,000 177,392 236,523 295,653 354,784 354,784 800,000 203,392 271,189 338,987 406,784 406,784 900,000 229,392 305,856 382,320 458,784 458,784 1,000,000 255,392 340,523 425,653 500,000 500,000 1,100,000 281,392 375,189 468,987 500,000 500,000 1,200,000 307,392 409,856 500,000 500,000 500,000 1,300,000 333,392 444,523 500,000 500,000 500,000 1,400,000 359,392 479,189 500,000 500,000 500,000 1,500,000 385,392 500,000 500,000 500,000 500,000 2,000,000 500,000 500,000 500,000 500,000 500,000 2,500,000 500,000 500,000 500,000 500,000 500,000 - ---------- (a) The normal form of benefit for the Retirement Plan and the Pension Equalization Plan is a straight life annuity. The Retirement Plan is intended to be a tax qualified defined benefit plan. Non-Cash Balance Retirement Plan benefits are a function of service and final average compensation. The Non-Cash Balance Retirement Plan is designed to provide an employee having 30 years of credited service with an annuity generally equal to 52% of final average compensation, less 50% of estimated individual Social Security benefits. Final average compensation is defined as average annual base salary and bonus (but not any part of bonuses in excess of 50% of base salary) during the five consecutive calendar years in which base salary and bonus (but not any part of bonuses in excess of 50% of base salary) were highest out of the last 10 years prior to retirement or earlier termination. Except as otherwise indicated, credited service includes all periods of employment with the Company or a subsidiary prior to retirement or earlier termination. Messrs. Nugent and Greeff do not participate in the Non-Cash Balance Retirement Plan. Effective January 1, 2001, Products Corporation amended the Retirement Plan to introduce a Cash Balance program under the Retirement Plan (the "Cash Balance Plan"). Under the Cash Balance Plan, eligible employees will receive quarterly pay credits to an individual cash balance bookkeeping account equal to 5% of their compensation for the previous quarter. Interest credits will also be allocated quarterly (based on the yield of the 30-year Treasury bond), commencing June 30, 2001. Employees who as of January 1, 2001 were at least age 45, had 10 or more years of service with the Company and whose age and years of service totaled at least 60 were "grandfathered" and continue to participate in the Non-Cash Balance Retirement Plan under the same retirement formula described in the preceding paragraph. All other eligible employees had their benefits earned (if any) under the Non-Cash Balance Retirement Plan "frozen" at the current level on December 31, 2000 and began to participate in the Cash Balance Plan on January 1, 2001. The "frozen" benefits will be payable at normal retirement age. Any employee who, as of January 1, 2001 was at least age 40 but not part of the "grandfathered" group will, in addition to the 14
"basic" 5% quarterly pay credits, receive quarterly "transition" pay credits of 3% of compensation each year for up to 10 years or until he/she leaves employment with the Company, whichever is earlier. Messrs. Nugent and Greeff both participate in the Cash Balance Plan and will be eligible to receive basic and transition pay credits. The estimated annual benefits payable under the Cash Balance Plan as a single life annuity (assuming Messrs. Nugent and Greeff remain employed by the Company until age 65 at their current level of compensation) is $199,000 for Mr. Nugent and $249,700 for Mr. Greeff. Messrs. Nugent's and Greeff's total retirement benefits will be determined in accordance with their respective employment agreements, each of which provides for a guaranteed retirement benefit provided that certain conditions are met. The Employee Retirement Income Security Act of 1974, as amended, places certain maximum limitations upon the annual benefit payable under all qualified plans of an employer to any one individual. In addition, the Omnibus Budget Reconciliation Act of 1993 limits the annual amount of compensation that can be considered in determining the level of benefits under qualified plans. The Pension Equalization Plan, as amended effective December 14, 1998, is a non-qualified benefit arrangement designed to provide for the payment by the Company of the difference, if any, between the amount of such maximum limitations and the annual benefit that would be payable under the Retirement Plan (including the Non-Cash Balance Retirement Plan and the Cash Balance Plan) but for such limitations, up to a combined maximum annual straight life annuity benefit at age 65 under the Retirement Plan and the Pension Equalization Plan of $500,000. Benefits provided under the Pension Equalization Plan are conditioned on the participant's compliance with his or her non-competition agreement and on the participant not competing with Products Corporation for one year after termination of employment. The number of years of credited service under the Retirement Plan and the Pension Equalization Plan as of January 1, 2001 (rounded to full years) for Mr. Nugent is one year, for Mr. Gehrmann was six years and for Mr. Nichols was 22 years. Mr. Greeff had no years of credited service as of January 1, 2001. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Company's Board of Directors currently consists of Messrs. Gittis, Drapkin, Landau and Semel, each of whom has been a member of the Compensation Committee during all of 2000 (other than Mr. Landau, who was elected by the Board of Directors to serve on such committee on May 10, 2000), and each of whom continues as a member as of the date of this report. Pursuant to the rules promulgated under the Exchange Act, set forth below is the report of the Compensation Committee regarding its compensation policies for 2000 for the Company's executive officers, including the Chief Executive Officer. The key elements of compensation used by the Company during 2000 were base salary and performance-based incentives, including annual cash bonuses, stock options and a long-term incentive program. The Company's executive compensation practices were intended to support its business goals of fostering profitable growth and increasing stockholder value. These practices were intended to align the interests of executives and stockholders through the use of a performance-based cash bonus plan, a stock-based compensation plan and a long-term incentive plan. The Company's compensation package was designed to be competitive with the compensation practices of other leading consumer products companies. Most of the basic elements of the Company's compensation program in effect in 2000, including base salary, annual cash bonuses and Awards under the Amended Stock Plan, were established at the time of the Company's initial public offering in February 1996 (the "Offering"). The Company subsequently established a long-term incentive program in 2000. The compensation program's elements were initially based upon consultations with the executive compensation consulting practice of William M. Mercer, Incorporated ("Mercer"). Since the Offering, the Compensation Committee has consulted with Mercer and other consultants in the field on compensation-related issues as it deems appropriate and considers such input as well as the Company's existing policies in its oversight and approval of the Company's ongoing executive officer compensation arrangements. In addition to Company sources and consultation 15
with Mercer, the Compensation Committee also considered information provided by salary surveys and similar data available from independent sources to help it assess the competitiveness and effectiveness of the Company's executive compensation practices in general and for the Chief Executive Officer in particular. BASE SALARY The Company's policy during 2000 was to pay salaries that reflected the executive's position in the Company and his or her contributions as determined by the Compensation Committee and that were competitive with a comparison group of other leading consumer products companies and certain other companies outside of the consumer products field (the "Comparison Group"). While the Comparison Group is comprised primarily of consumer products companies, companies outside of the consumer products field are also included because the Company believes, and the Compensation Committee concurs, that the market for executive talent is broader than simply other consumer products companies. In determining the salaries of executive officers, the Compensation Committee's policy has been to target the salary range for executive officers at a level which is competitive with the Comparison Group, with salaries above that level available to exceptional performers and key contributors to the success of the Company. Annual salary adjustments have been based on individual performance, assumption of new responsibilities, competitive data from the Comparison Group, employee retention efforts and the Company's overall annual salary budget guidelines. If an executive officer is responsible for a particular business unit, such unit's financial results have been taken into account. ANNUAL CASH BONUS EXECUTIVE BONUS PLAN The Executive Bonus Plan in effect during 2000 (in which executives including Mr. Nugent and Mr. Greeff participated) provided for payment of cash compensation upon the achievement of predetermined, objective, business and personal Performance Objectives (collectively, the "Objectives") during the calendar year which are established by the Compensation Committee. Eligibility for awards under the Executive Bonus Plan was conditioned upon the executive having executed the Company's standard employee confidentiality and non-competition agreement. The maximum award payable to any participant with respect to any bonus year was 100% of base salary. The Objectives for 2000 were based upon the Company's net sales, operating income, operating cash flow and customer satisfaction; such Objectives were subsequently revised to reflect the fact that the Company's business was in a state of transition during 2000 and the revised Objectives were based upon EBITDA, cash flow, net sales and customer satisfaction. For 2000 the Objectives were not met. Due to their exceptional efforts in compiling a comprehensive turnaround plan for the Company, including a major change in US customer trade terms, significant new product launches, an entirely new approach to advertising, major consolidations in manufacturing operations, substantial reductions in selling, general and administrative expenses, dispositions of non-core assets, as well as their efforts in securing a significant amendment to the Company's credit agreement to facilitate the turnaround plan, the Compensation Committee determined to make discretionary bonus payments to certain key executives and employees of the Company despite the fact that business objectives were not met. Certain participants in the Executive Bonus Plan received a discretionary award of 25% of their target awards, while certain key executives and employees who contributed substantially to the creation and who began execution of the strategic plan received higher discretionary awards. Mr. Nugent's and Mr. Greeff's bonuses were determined in accordance with their respective employment agreements. The Company's principal compensation vehicles for encouraging long-term growth and performance have been the grant of stock options or other awards under the Amended Stock Plan (See "Approval of the Amended Stock Plan") and in 2000 awards under the SELTIP (See "Senior Long-Term Incentive Program"). 16
THE AMENDED STOCK PLAN Under the Amended Stock Plan, Awards generally have been granted annually to executive officers. Guidelines for the size and type of Awards were developed based on, among other factors, the executive's position in the Company, his or her contributions to the Company's objectives and the practices of the Comparison Group. Since the Company, with the concurrence of the Compensation Committee, views the granting of such Awards as a way to obtain a competitive compensation advantage, the Company attempted to target Award levels so that, when taken together with salary and cash bonus, total compensation was intended to be competitive with the Comparison Group. Actual grants varied from guideline levels based on individual performance, business unit performance, the assumption of increased responsibilities or other factors. The grants of stock options made under the Amended Stock Plan in December 2000 to Mr. Nugent and in May 2000 to Mr. Greeff were made pursuant to their respective employment agreements, as were the grants to Mr. Gehrmann and Mr. Nichols. Section 162(m) of the Code generally disallows a publicly held corporation a tax deduction for compensation in excess of $1 million per year paid to the five most highly compensated executive officers of the Company (the "Covered Officers"). However, an exception to the deduction limitation of Section 162(m) applies to certain performance-based compensation, provided that the plan pursuant to which such compensation will be paid has been approved by stockholders in a separate vote and certain other requirements are met. The Compensation Committee will maintain the discretion to authorize awards under the Amended Stock Plan and other compensation that does not qualify for an exception to the deduction limitation if the Compensation Committee believes it is necessary or appropriate under the circumstances. SENIOR EXECUTIVE LONG-TERM INCENTIVE PROGRAM The SELTIP (in which certain executives including Mr. Greeff, but excluding Mr. Nugent, participated during 2000) provides for payment of cash compensation upon the achievement of predetermined corporate objectives (the "Corporate SELTIP Objectives") and personal objectives (the "Personal SELTIP Objectives") (which objectives are collectively referred to as the "SELTIP Objectives") during a three-year calendar period ending December 31, 2002 (the "Performance Period"). The Corporate SELTIP Objectives for the Performance Period were established by the Compensation Committee and the Personal SELTIP Objectives are established by the President and Chief Executive Officer. The first Performance Period commenced January 1, 2000 and ends on December 31, 2002. Corporate SELTIP Objectives for the first Performance Period were based on cumulative consolidated net sales and cumulative consolidated operating income. The maximum award payable to any participant with respect to any Performance Period is $500,000. The Company does not expect that a payout will be made under the SELTIP. CERTAIN AGREEMENTS During 2000 the term of Mr. Gehrmann's employment agreement ended effective June 30, 2000. On September 30, 2000 Mr. Nichols elected early retirement. (See "Employment Agreements and Termination of Employment Arrangements" for details of Mr. Gehrmann's employment agreement and Mr. Nichols' retirement agreement). The payments and benefits provided to each of Mr. Gehrmann and Mr. Nichols were principally determined by contractual commitments made to each pursuant to their prior employment agreements. (See "Employment Agreements and Termination of Employment Arrangements.") 2000 CHIEF EXECUTIVE OFFICER COMPENSATION Since the Company considered Mr. Nugent's recruitment essential to ensure efficient management of the Company's business and the successful execution of the Company's strategy of maximizing stockholder value, the Company entered into an employment agreement in December 1999 with Mr. Nugent to induce him to join the Company (see "--Employment Agreements and Termination of Employment Arrangements"). 17
In setting Mr. Nugent's compensation in the agreement, the Compensation Committee considered factors such Mr. Nugent's individual experience, his expertise in his prior position, his anticipated contribution to the Company, and the pay practices in effect for chief executive officers. The agreement provides for a base salary at an annual rate of $1,000,000 during 1999 and 2000. In 2000, Mr. Nugent was eligible to participate in the Executive Bonus Plan. In 2000, Mr. Nugent received a bonus of $500,000 which was granted pursuant to his employment agreement. The stock option awards specified in Mr. Nugent's employment agreement were determined with reference to Mr. Nugent's position in the Company, his individual experience and expertise and his anticipated contribution to the Company. The Compensation Committee's intent is to condition a meaningful portion of Mr. Nugent's total compensation upon Company performance and potential stockholder value. Respectfully submitted, Compensation and Stock Plan Committee Howard Gittis (Chairman) Donald Drapkin Edward Landau Terry Semel 18
PERFORMANCE GRAPH The following graph compares the cumulative total stockholder return on shares of the Company's Class A Common Stock with that of the S&P 500 Index, the S&P Health Care Index, the S&P Household Products Index and the S&P Cosmetics Index. The comparison for each of the periods presented assumes that $100 was invested on February 29, 1996 (the date the Company's Class A Common Stock was priced in connection with the Company's Offering), in shares of the Company's Class A Common Stock and the stocks included in the relevant index and that all dividends are reinvested. These indices, which reflect formulas for dividend reinvestment and weighting of individual stocks, do not necessarily reflect returns that could be achieved by individual investors. [GRAPHIC OMITTED] SOURCE: Bloomberg Financial Markets Database NOTES: Assumes $100 invested on 2/29/96 in Revlon stock (IPO date), in the S&P 500, S&P Health Care, S&P Household Products, and S&P Cosmetics indices Year end dates reflect the last trading date for each respective year Reflects month-end dividend reinvestment SUMMARY FEB. 29, 1996 DEC. 31, 1996 DEC. 31, 1997 DEC. 31, 1998 DEC. 31, 1999 DEC. 29, 2000 - ------------------------------- --------------- --------------- --------------- --------------- --------------- -------------- Revlon, Inc. .................. $100 $ 124.48 $ 147.13 $ 68.23 $ 33.07 $ 20.67 S&P Cosmetics Index ........... 100 136.60 173.09 176.08 149.24 145.18 S&P Household Prod. Index...... 100 129.56 182.62 215.60 257.85 217.95 S&P 500 Index ................. 100 117.81 157.10 201.99 244.49 222.24 S&P Health Care Index ......... 100 121.38 177.32 258.30 246.83 338.63 19
OWNERSHIP OF COMMON STOCK The following table sets forth as of January 31, 2001 the number of shares of Company's Common Stock beneficially owned, and the percent so owned, by (i) each person known to the Company to be the beneficial owner of more than 5% of the outstanding shares of the Company's Common Stock, (ii) each director of the Company, (iii) the Chief Executive Officer during 2000 and each of the other Named Executive Officers during 2000 and (iv) all directors and executive officers of the Company as a group. The number of shares owned are those beneficially owned, as determined under the rules of the Securities and Exchange Commission (the "SEC"), and such information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares of Common Stock as to which a person has sole or shared voting power or investment power and any shares of Common Stock which the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement. NAME AND ADDRESS AMOUNT AND NATURE OF OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS - ----------------------------------------- -------------------------- ------------------------ Ronald O. Perelman ...................... 42,800,000 83.3% 35 E. 62nd St. (Class A and Class B)(1) (Class A and Class B) New York, NY 10021 Donald Drapkin .......................... 12,000 (Class A)(2) * Meyer Feldberg .......................... 0 Frank J. Gehrmann ....................... 76,408 (Class A)(3) * Howard Gittis ........................... 65,000 (Class A) * Douglas H. Greeff ....................... 102,500 (Class A) * Vernon E. Jordan, Jr. ................... 0 Edward J. Landau ........................ 100 * Jerry W. Levin .......................... 536,489 (Class A)(4) 2.7% Wade H. Nichols III ..................... 139,234 (Class A)(5) * Jeffrey M. Nugent ....................... 0 Linda Gosden Robinson ................... 0 Terry Semel ............................. 5,000 (Class A)(6) * Martha Stewart .......................... 1,000 (Class A)(7) * All Directors and Executive Officers as a 61.0% Group (12 Persons) ..................... 12,272,089(Class A)(8) 100.0% 31,250,000 (Class B) - ---------- * Less than one percent. (1) Mr. Perelman through Mafco Holdings (which through REV Holdings) beneficially owns 11,250,000 shares of the Company's Class A Common Stock (representing approximately 56% of the outstanding shares of the Company's Class A Common Stock) and all of the outstanding 31,250,000 shares of the Company's Class B Common Stock, which together represent approximately 83% of the outstanding shares of the Company's Common Stock and has approximately 97% of the combined voting power of the outstanding shares of the Company's Common Stock. All of the shares of the Company's Common Stock owned by REV Holdings are pledged by REV Holdings to secure obligations, and shares of intermediate holding companies are or may from time to time be pledged to secure obligations of Mafco Holdings or its affiliates. Mr. Perelman also holds an option to acquire 300,000 shares of the Company's Class A Common Stock, which option vested on February 12, 1999. Such vested option to acquire 300,000 shares of the Company's Class A Common Stock, together with the Class A and Class B Common Stock beneficially owned by Mr. Perelman, represents approximately 83% of the outstanding shares of the Company's Common Stock. (2) All of such shares are held by trusts for Mr. Drapkin's children and beneficial ownership is disclaimed. (3) Includes 3,000 shares owned jointly by Mr. Gehrmann's wife; 1,194 shares distributed to Mr. Gehrmann upon cessation of his participation in the Company's 401(k) Plan; 1,474 shares distributed to Mr. Gehrmann upon cessation of his participation in the Company's Excess Plan; 2,500, 2,500, 2,500, 2,500, 3,000, 3,000, 3,000, 3,000, 20
7,500, 7,500, 7,500 and 10,000, 10,000 and 6,250 shares which may be acquired under options which vested on February 28, 1997, February 28, 1998, February 28, 1999, February 28, 2000, January 9, 1998, January 9, 1999, January 9, 2000, January 9, 2001, January 8, 1999, January 8, 2000, January 8, 2001, and February 12, 2000, February 12, 2001 and May 17, 2000, respectively. (4) Includes 25,000 shares held directly by Mr. Levin; 1,000 shares owned by Mr. Levin's daughter as to which beneficial ownership is disclaimed; 129 shares acquired pursuant to the Company matching under the 401(k) Plan; 360 shares that Mr. Levin has the right to receive pursuant to the Company matching under the Excess Plan; 42,500, 42,500, 42,500, 42,500, 42,500, 42,500, 42,500, 42,500 and 170,000 shares which may be acquired under options which vested on January 9, 1998, January 9, 1999, January 9, 2000, January 9, 2001, January 8, 1999, January 8, 2000, January 8, 2001, March 2, 1999 and February 28, 1999, respectively. (5) Includes 5,400 shares held directly; 1,157 shares distributed to Mr. Nichols upon cessation of his participation in the Company's 401(k) Plan; 2,676 shares distributed to Mr. Nichols upon cessation of his participation in the Company's Excess Plan; 7,500, 7,500, 7,500, 7,500, 10,000, 10,000, 10,000, 30,000 and 40,000 shares which may be acquired under options which vested on January 9, 1998, January 9, 1999, January 9, 2000, January 9, 2001, January 8, 1999, January 8, 2000, January 8, 2001, February 28, 1999 and February 12, 2000 and February 12, 2001 respectively. (6) Includes 2,000 shares owned by Mr. Semel's children as to which beneficial ownership is disclaimed and 3,000 shares owned jointly by Mr. Semel's wife. (7) Includes 500 shares owned directly and 500 shares owned indirectly by the Martha Stewart Inc. Defined Benefit Pension Plan. (8) Includes only shares beneficially held by persons who were directors and executive officers of the Company as of January 31, 2001. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS MacAndrews & Forbes beneficially owns shares of the Company's Common Stock having approximately 97.3% of the combined voting power of the outstanding shares of Common Stock. As a result, MacAndrews & Forbes is able to elect the entire Board of Directors of the Company and control the vote on all matters submitted to a vote of the Company's stockholders. MacAndrews & Forbes is wholly owned by Ronald O. Perelman, who is Chairman of the Board of Directors of the Company. TRANSFER AGREEMENTS In June 1992, Revlon, Inc. and Products Corporation entered into an asset transfer agreement with Holdings and certain of its wholly-owned subsidiaries (the "Asset Transfer Agreement"), and Revlon, Inc. and Products Corporation entered into a real property asset transfer agreement with Holdings (the "Real Property Transfer Agreement" and, together with the Asset Transfer Agreement, the "Transfer Agreements"), and pursuant to such agreements, on June 24, 1992 Holdings transferred assets to Products Corporation and Products Corporation assumed all the liabilities of Holdings, other than certain specifically excluded assets and liabilities (the liabilities excluded are referred to as the "Excluded Liabilities"). Certain consumer products lines sold in demonstrator assisted distribution channels considered not integral to the Company's business and which historically had not been profitable (the "Retained Brands") and certain of the assets and liabilities were retained by Holdings. Holdings agreed to indemnify Revlon, Inc. and Products Corporation against losses arising from the Excluded Liabilities, and Revlon, Inc. and Products Corporation agreed to indemnify Holdings against losses arising from the liabilities assumed by Products Corporation. The amount reimbursed by Holdings to Products Corporation for the Excluded Liabilities for 2000 was $0.4 million. REIMBURSEMENT AGREEMENTS Revlon, Inc., Products Corporation and MacAndrews Holdings have entered into reimbursement agreements (the "Reimbursement Agreements") pursuant to which (i) MacAndrews Holdings is obligated to provide (directly or through affiliates) certain professional and administrative services, including employees, to Revlon, Inc. and its subsidiaries, including Products Corporation, and purchase services from third party providers, such as insurance and legal and accounting services, on behalf of Revlon, Inc. and its subsidiaries, including Products Corporation, to the extent requested by Products 21
Corporation, and (ii) Products Corporation is obligated to provide certain professional and administrative services, including employees, to MacAndrews Holdings (and its affiliates) and purchase services from third party providers, such as insurance and legal and accounting services, on behalf of MacAndrews Holdings (and its affiliates) to the extent requested by MacAndrews Holdings, provided that in each case the performance of such services does not cause an unreasonable burden to MacAndrews Holdings or Products Corporation, as the case may be. Products Corporation reimburses MacAndrews Holdings for the allocable costs of the services purchased for or provided to Products Corporation and its subsidiaries and for reasonable out-of-pocket expenses incurred in connection with the provision of such services. MacAndrews Holdings (or such affiliates) reimburses Products Corporation for the allocable costs of the services purchased for or provided to MacAndrews Holdings (or such affiliates) and for the reasonable out-of-pocket expenses incurred in connection with the purchase or provision of such services. The net amount reimbursed by MacAndrews Holdings to Products Corporation for the services provided under the Reimbursement Agreements for 2000 was $0.9 million. Each of Revlon, Inc. and Products Corporation, on the one hand, and MacAndrews Holdings, on the other, has agreed to indemnify the other party for losses arising out of the provision of services by it under the Reimbursement Agreements other than losses resulting from its willful misconduct or gross negligence. The Reimbursement Agreements may be terminated by either party on 90 days' notice. Products Corporation does not intend to request services under the Reimbursement Agreements unless their costs would be at least as favorable to Products Corporation as could be obtained from unaffiliated third parties. TAX SHARING AGREEMENT Revlon, Inc., for federal income tax purposes, is included in the affiliated group of which Mafco Holdings is the common parent, and Revlon, Inc.'s federal taxable income and loss is included in such group's consolidated tax return filed by Mafco Holdings. Revlon, Inc. also may be included in certain state and local tax returns of Mafco Holdings or its subsidiaries. In June 1992, Holdings, Revlon, Inc. and certain of its subsidiaries, and Mafco Holdings entered into a tax sharing agreement (as subsequently amended, the "Tax Sharing Agreement"), pursuant to which Mafco Holdings has agreed to indemnify Revlon, Inc. against federal, state or local income tax liabilities of the consolidated or combined group of which Mafco Holdings (or a subsidiary of Mafco Holdings other than Revlon, Inc. or its subsidiaries) is the common parent for taxable periods beginning on or after January 1, 1992 during which Revlon, Inc. or a subsidiary of Revlon, Inc. is a member of such group. Pursuant to the Tax Sharing Agreement, for all taxable periods beginning on or after January 1, 1992, Revlon, Inc. will pay to Holdings amounts equal to the taxes that Revlon, Inc. would otherwise have to pay if it were to file separate federal, state or local income tax returns (including any amounts determined to be due as a result of a redetermination arising from an audit or otherwise of the consolidated or combined tax liability relating to any such period which is attributable to Revlon, Inc.), except that Revlon, Inc. will not be entitled to carry back any losses to taxable periods ending prior to January 1, 1992. No payments are required by Revlon, Inc. if and to the extent Products Corporation is prohibited under the Credit Agreement from making tax sharing payments to Revlon, Inc. The Credit Agreement prohibits Products Corporation from making such tax sharing payments other than in respect of state and local income taxes. Since the payments to be made under the Tax Sharing Agreement will be determined by the amount of taxes that Revlon, Inc. would otherwise have to pay if it were to file separate federal, state or local income tax returns, the Tax Sharing Agreement will benefit Mafco Holdings to the extent Mafco Holdings can offset the taxable income generated by Revlon, Inc. against losses and tax credits generated by Mafco Holdings and its other subsidiaries. The Tax Sharing Agreement was amended to eliminate a contingent payment to Revlon, Inc. under certain circumstances in return for a $10 million note with interest at 12% and principal payable by Mafco Holdings on December 31, 2005. As a result of net operating tax losses and prohibitions under the Credit Agreement there were no federal tax payments or payments in lieu of taxes made by Revlon, Inc. pursuant to the Tax Sharing Agreement for 2000. REGISTRATION RIGHTS AGREEMENT Prior to the consummation of the Offering, Revlon, Inc. and Revlon Worldwide Corporation (subsequently merged into REV Holdings), the then direct parent of Revlon, Inc., entered into the 22
Registration Rights Agreement pursuant to which REV Holdings and certain transferees of Revlon, Inc.'s Common Stock held by REV Holdings (the "Holders") have the right to require Revlon, Inc. to register all or part of the Company's Class A Common Stock owned by such Holders and the Company's Class A Common Stock issuable upon conversion of the Company's Class B Common Stock owned by such Holders under the Securities Act of 1933, as amended (the "Securities Act") (a "Demand Registration"); provided that Revlon, Inc. may postpone giving effect to a Demand Registration up to a period of 30 days if Revlon, Inc. believes such registration might have a material adverse effect on any plan or proposal by Revlon, Inc. with respect to any financing, acquisition, recapitalization, reorganization or other material transaction, or if Revlon, Inc. is in possession of material non-public information that, if publicly disclosed, could result in a material disruption of a major corporate development or transaction then pending or in progress or in other material adverse consequences to Revlon, Inc. In addition, the Holders have the right to participate in registrations by Revlon, Inc. of its Class A Common Stock (a "Piggyback Registration"). The Holders will pay all out-of-pocket expenses incurred in connection with any Demand Registration. Revlon, Inc. will pay any expenses incurred in connection with a Piggyback Registration, except for underwriting discounts, commissions and expenses attributable to the shares of the Company's Class A Common Stock sold by such Holders. OTHER Pursuant to a lease dated April 2, 1993 (the "Edison Lease"), Holdings leased to Products Corporation the Edison research and development facility for a term of up to 10 years with an annual rent of $1.4 million and certain shared operating expenses payable by Products Corporation which, together with the annual rent, were not to exceed $2.0 million per year. In August 1998, Holdings sold the Edison facility to an unrelated third party, which assumed substantially all liability for environmental claims and compliance costs relating to the Edison facility, and in connection with the sale Products Corporation terminated the Edison Lease and entered into a new lease with the new owner. Holdings agreed to indemnify Products Corporation to the extent rent under the new lease exceeds rent that would have been payable under the terminated Edison Lease had it not been terminated. The net amount reimbursed by Holdings to Products Corporation with respect to the Edison facility for 2000 was $0.2 million. During 2000, Products Corporation leased certain facilities to MacAndrews & Forbes or its affiliates pursuant to occupancy agreements and leases. These included space at Products Corporation's New York headquarters and at Products Corporation's offices in London. The rent paid to Products Corporation for 2000 was $0.9 million. Products Corporation's Credit Agreement is supported by, among other things, guarantees from Revlon, Inc., Holdings and certain of Holdings' subsidiaries. The obligations under such guarantees are secured by, among other things, the capital stock of Products Corporation, and the capital stock and certain assets of certain subsidiaries of Holdings. During 2000, the Company made an advance of $0.1 million to Mr. Jeffrey Nugent pursuant to his employment agreement for relocation expenses, which advance bears interest at the applicable federal rate. During 2000, the Company made an advance of $0.8 million to Mr. Douglas Greeff pursuant to his employment agreement, which advance bears interest at the applicable federal rate. During 2000, Products Corporation made payments of $0.1 million to a fitness center, an interest in which is owned by members of Mr. Donald Drapkin's immediate family, for discounted health club dues for an executive health program of Products Corporation. Mr. Drapkin is a director of the Company. During 2000, Products Corporation made payments of $0.2 million to Ms. Ellen Barkin (spouse of Mr. Perelman) under an agreement pursuant to which she provided voiceover services for certain of the Company's advertisements. The law firm of which Mr. Edward Landau is Of Counsel, Wolf, Block, Schorr and Solis-Cohen LLP, provided legal services to Revlon, Inc. and its subsidiaries during 2000, but did not provide any such services in 1998 or 1999. 23
An investment bank of which Mr. Vernon Jordan became a Managing Director in January 2000, Lazard Freres & Co. LLC, provided investment banking services to Revlon, Inc. and its subsidiaries during 2000, and it is anticipated that it will provide investment services to Revlon, Inc. and its subsidiaries during 2001. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT The Company's executive officers, directors and 10% stockholders are required under the Exchange Act to file reports of ownership and changes in ownership with the SEC and the NYSE. Copies of these reports also must be furnished to the Company. Based solely upon a review of copies of such reports furnished to the Company through the date hereof and written representations that no other reports were required, the Company believes that all filing requirements applicable to its executive officers, directors and 10% holders were complied with during 2000. PROPOSAL NO. 2 RATIFICATION OF SELECTION OF AUDITORS The Board of Directors has selected, subject to ratification by the Company's stockholders, KPMG LLP to audit the accounts of the Company for the fiscal year ending December 31, 2001. KPMG LLP has audited the consolidated financial statements of the Company and its predecessors for more than the past five years. Representatives of KPMG LLP will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. AUDIT FEES The aggregate fees billed by KPMG LLP for professional services rendered for the audit of the Company's annual financial statements for the fiscal year ended December 31, 2000 and for the reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q for 2000 (the "Audit Services") were $1.9 million. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES KPMG LLP billed no fees for professional services rendered to the Company for information technology services relating to financial information systems design and implementation (the "IS Services") for the fiscal year ended December 31, 2000. ALL OTHER FEES The aggregate fees billed by KPMG LLP for services rendered to the Company, other than the Audit Services and the IS Services described above under "Audit Fees" and "Financial Information Systems Design and Implementation Fees", respectively, for the fiscal year ended December 31, 2000 (the "Other Services") were $1.1 million, principally for tax services rendered to the Company and the audit of the closing statements for assets disposed of in 2000, and $0.5 million in costs associated with audits of the Company's foreign statutory financial statement filings. The Audit Committee has determined that the provision of the IS Services and the Other Services is compatible with maintaining KPMG LLP's independence. 24
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION The ratification of the selection of KPMG LLP as the Company's independent auditors for 2001 will require the affirmative vote of a majority of the total number of votes of outstanding shares of the Company's Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. In determining whether the proposal has received the requisite number of affirmative votes, abstentions will be counted and will have the same effect as a vote against the proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR 2001. PROPOSAL NO. 3 APPROVAL OF THE AMENDED STOCK PLAN At the Annual Meeting, the Company's stockholders will be asked to approve the Revlon Inc. Third Amended and Restated 1996 Stock Plan, a copy of which is attached as Exhibit 2 (the "Third Amended Stock Plan"), which would (1) expand the classes of eligible recipients of Awards (as defined in the Third Amended Stock Plan) under such plan to include directors of the Company and its affiliates who are not also employed by the Company or its affiliates ("Non-Employee Directors"), (2) increase by 1,500,000 shares the maximum number of shares with respect to which Awards may be granted under the Amended Stock Plan, and (3) increase by 300,000 shares the total number of shares of the Company's Class A Common Stock subject to options and stock appreciation rights ("SARs") which may be granted to any grantees under the Amended Stock Plan in any year. The Revlon, Inc. 1996 Stock Plan (the "Original Stock Plan") was adopted in connection with the Company's initial public offering in February 1996 (the "Offering"), and was amended in February 1999 to increase the number of shares available under the Original Stock Plan from 5,000,000 to 7,000,000 (the "Second Amended Stock Plan") (the Original Stock Plan, Second Amended Stock Plan and Third Amended Stock Plan will be referred to as the "Amended Stock Plan"). The Amended Stock Plan is intended to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and motivate key employees of the Company and its affiliates to contribute to the Company's growth and profitability and to align those individuals' long-term interests with those of the Company's stockholders. However, neither the Original Stock Plan, nor the Second Amended Stock Plan, authorized the grant of Awards to Non-Employee Directors. The Board of Directors believes that adoption of the Third Amended Stock Plan will allow the Company to attract and retain qualified outside directors by providing them with an element of compensation, when taken together with their annual retainer fee, is competitive, and the Board of Directors believes that approval of the Third Amended Stock Plan is in the best interests of the Company and its stockholders. Therefore, the Board of Directors has approved the Third Amended Stock Plan, subject to the approval of the Company's stockholders, to expand the classes of eligible recipients of Awards under such plan to include Non-Employee Directors. As of April 12, 2001, options to purchase an aggregate of 6,204,599 shares of the Company's Class A Common Stock were outstanding, options covering 73,750 shares were exercised and only 721,651 shares of the 7,000,000 shares authorized under the Amended Stock Plan remained available for future grants. The Board of Directors has amended the Amended Stock Plan, subject to the approval of the Company's stockholders, to (1) increase by 1,500,000 the maximum aggregate number of shares of the Company's Class A Common Stock with respect to which Awards may be granted and (2) increase by 300,000 the total number of shares of the Company's Class A Common Stock subject to options and SARs which may be granted to any grantee under the Amended Stock Plan in any year. The Board of Directors believes that the Company's stock option program is an important factor in attracting and retaining the high caliber of employees essential to the Company's success and in aligning their interests with those of the Company's stockholders. The amendment is intended to ensure that the Amended Stock Plan will have available sufficient shares to meet these needs. On May 22, 2000 under the Third Amended Stock Plan options to purchase 7,500 shares of the Company's Common Stock were granted to each of the Company's Non-Employee Directors (Messrs. Feldberg, Jordan, Landau and Semel and Ms. Robinson and Ms. Stewart), which options consist of 25
non-qualified options having a term of 10 years, vest 25% on each anniversary of the grant date and will become 100% vested on the fourth anniversary of the grant date, and have an exercise price equal to $7.0625, the closing price per share on the NYSE of the Company's Class A Common Stock on the grant date, and on December 29, 2000 options to purchase 25,000 shares of the Company's Class A Common Stock were granted to a Non-Employee Director of one of the Company's subsidiaries, which options consist of non-qualified options having a term of 10 years, vest 25% on each anniversary of the grant date and will become 100% vested on the fourth anniversary of the grant date, and have an exercise price equal to $4.96, the closing price per share on the NYSE of the Company's Class A Common Stock on the grant date (collectively, the "Year 2000 Non-Employee Director Awards"), in each case under the Third Amended Stock Plan, conditioned upon stockholder approval of the Third Amended Stock Plan at the 2001 Annual Meeting. In the event the Third Amended Stock Plan is not approved at the 2001 Annual Meeting, the Year 2000 Non-Employee Director Awards would be cancelled. SUMMARY OF THE AMENDED STOCK PLAN THE AMENDED STOCK PLAN The Original Stock Plan became effective on February 22, 1996, and will continue in effect until February 21, 2006, unless terminated sooner by the board of directors of the Company (the "Board"). The Third Amended Stock Plan will take effect upon approval by the Company's stockholders at the 2001 Annual Meeting. The following summary of the Third Amended Stock Plan is qualified in its entirety by the specific language of the Third Amended Stock Plan, a copy of which is annexed to this Proxy Statement. It should be noted that although an entire description of the Third Amended Stock Plan is provided, the only difference in terms of the Third Amended Stock Plan from the terms of the Second Amended Stock Plan (which was approved by the Company's stockholders at the 1999 Annual Meeting) is that: (1) the Third Amended Stock Plan expands the classes of eligible recipients of Awards under such plan to include Non-Employee Directors; (2) increases by 1,500,000 the maximum number of shares of the Company's Class A Company Stock with respect to which Awards may be granted under the Amended Stock Plan; and (3) increases by 300,000 the total number of shares of the Company's Class A Common Stock subject to options and SARs which may be granted to any grantee under the Amended Stock Plan in any year. The purpose of the Third Amended Stock Plan is to provide for certain officers, directors (including, without limitation, Non-Employee Directors) and key employees of the Company and certain of its affiliates an incentive to maintain and enhance the long-term performance and profitability of the Company. The Third Amended Stock Plan provides for grants of options to purchase shares of the Company's Class A Common Stock in the form of incentive stock options ("ISOs") and options which do not qualify as ISOs ("NQSOs"). Options granted under the Third Amended Stock Plan may be granted in tandem with SARs. The Third Amended Stock Plan also provides for grants of SARs not in tandem with options, restricted stock awards, unrestricted stock awards and performance awards (all awards granted under the Third Amended Stock Plan, collectively, "Awards"). AMENDED STOCK PLAN ADMINISTRATION The Third Amended Stock Plan is administered by the Compensation Committee, which is a committee of the Board consisting of two or more directors of the Company. Subject to the terms of the Third Amended Stock Plan, the Compensation Committee has the authority to construe and interpret the Third Amended Stock Plan and to establish and amend rules and regulations for administering the Third Amended Stock Plan. The Compensation Committee has the authority to determine the eligible participants under the Third Amended Stock Plan and the type and number of Awards to be granted under the Third Amended Stock Plan. SECURITIES SUBJECT TO THE THIRD AMENDED STOCK PLAN The Original Stock Plan originally covered 5,000,000 shares of the Company's Class A Common Stock, which may be authorized but unissued Class A Common Stock or authorized and issued Class A 26
Common Stock held in treasury or acquired by the Company for purposes of the Original Stock Plan. At the 1999 Annual Meeting of Stockholders the Original Stock Plan was amended to cover a total of 7,000,000 shares (which includes the 5,000,000 shares originally authorized under the Original Stock Plan). As amended by the Board of Directors, subject to stockholder approval, the Third Amended Stock Plan covers a total of 8,500,000 shares (which include the 7,000,000 shares previously authorized) of the Company's Class A Common Stock, which may be authorized but unissued Class A Common Stock or authorized and issued Class A Common Stock held in treasury or acquired by the Company for purposes of the Third Amended Stock Plan. As amended by the Board of Directors, subject to stockholder approval, the Third Amended Stock Plan increased the total number of shares of the Company's Class A Common Stock subject to options and SARs which may be granted to any participant of the Amended Stock Plan in any year from 300,000 shares to 600,000 shares. The total number of shares of the Company's Class A Common Stock subject to restricted or unrestricted stock Awards under the Amended Stock Plan may not exceed 1,000,000. The Amended Stock Plan provides that in the event of certain corporate transactions, the Compensation Committee may make equitable adjustments as it deems necessary or appropriate to any or all of (i) the number and kind of shares of the Company's Class A Common Stock which may thereafter be issued in connection with Awards, (ii) the number and kind of shares of the Company's Class A Common Stock issued or issuable in respect of outstanding Awards, (iii) the exercise price, grant price, or purchase price relating to any Awards; and (iv) the annual or other limitations on the number of shares with respect to which Awards may be granted. ELIGIBILITY Awards under the Third Amended Stock Plan may be made to such officers, directors (including, without limitation, Non-Employee Directors) and executive, managerial or professional employees of the Company or its affiliates as the Compensation Committee shall in its sole discretion select. AWARDS Subject to the terms of the Third Amended Stock Plan, the Compensation Committee may grant to participants Awards as described below. The terms of Award grants will be set forth in written agreements ("Award Agreements") between the Company and the participant, which Award Agreements will contain the provisions referred to below and such other provisions as the Compensation Committee may determine. Generally, no option or SAR may be exercised and no shares of the Company's Class A Common Stock underlying any other Award under the Amended Stock Plan may vest or become deliverable more than 10 years after the date of grant. Generally, Awards may be transferred by a grantee only by will or by the laws of descent and distribution, and may be exercised only by the grantee during his or her lifetime, provided that the Compensation Committee may provide in the applicable Award Agreement that options not intended to be incentive stock options may be transferred without consideration to any member or members of the grantee's "immediate family" (as defined in the Amended Stock Plan), a trust for the benefit of the grantee and/or members of his or her immediate family, or a partnership or limited liability company whose only partners or stockholders are the grantee and/or members of his or her immediate family. OPTIONS All options when granted are intended to be NQSOs, unless the applicable Award Agreement explicitly states that an option is intended to be an ISO. If an option is granted with the stated intent that it be an ISO, and if for any reason such option (or any portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification, such option (or portion) shall be regarded as a NQSO appropriately granted under the Amended Stock Plan, provided that such option (or portion) otherwise satisfies the terms and conditions of the Amended Stock Plan relating to NQSOs generally. Options may be exercised in amounts and at times determined by the Compensation Committee. Unless the Award Agreement provides otherwise, an option may not be exercised prior to the first 27
anniversary of the date of grant and shall become exercisable with respect to 25% of the shares subject thereto on each of the first, second, third and fourth anniversaries of the date of grant. Options that are not exercised during the term established by the Compensation Committee will expire without value. The purchase price of the Company's Class A Common Stock purchased pursuant to the exercise of an option ("Option Price") will be no less than 100 percent (100%), and, in case of an ISO granted to an owner of stock possessing 10% or more of the total combined voting power of all classes of stock of the Company, 110 percent (110%), of the fair market value (as defined in the Amended Stock Plan) of the Company's Class A Common Stock on the day the option is granted and may be adjusted in accordance with the antidilution provisions contained in the Amended Stock Plan. Upon the exercise of any option, the Option Price must be fully paid by certified or cashier's check, in shares of the Company's Class A Common Stock equal in fair market value to the Option Price, or, subject to the approval of the Compensation Committee, by personal check. The aggregate fair market value (determined as of the date of grant) of the shares granted to any participant under the Amended Stock Plan or any other option plan of the Company or its subsidiaries that may become exercisable for the first time in any calendar year is limited, with respect to ISOs, to $100,000. STOCK APPRECIATION RIGHTS The Compensation Committee may grant SARs either alone ("unrelated SARs") or in conjunction with all or part of an option. Upon the exercise of a SAR a holder generally is entitled, without payment to the Company, to receive cash, shares of the Company's Class A Common Stock or any combination thereof, as determined by the Compensation Committee, in an amount equal to (x) the excess of the fair market value of one share of the Company's Class A Common Stock on the exercise date over (i) in the case of a SAR granted in tandem with an option, the Option Price and (ii) in the case of an unrelated SAR, the appreciation base (determined pursuant to the Amended Stock Plan), multiplied by (y) the number of shares of the Company's Class A Common Stock subject to the SAR or the portion thereof surrendered. SARs vest and become exercisable in the same manner as options. RESTRICTED STOCK AWARDS AND UNRESTRICTED STOCK AWARDS The Compensation Committee may grant restricted or unrestricted stock Awards alone or in tandem with other Awards under the Amended Stock Plan. Vesting of restricted stock Awards may be conditioned upon the completion of a specified period of service, the attainment of specific performance goals or such other factors as the Compensation Committee may determine. The Compensation Committee may, in its discretion, require a grantee to pay an amount to acquire any restricted or unrestricted stock, which amount may be refunded to such grantee upon such events as the Compensation Committee may determine. During the restricted period, the grantee may not transfer, assign or otherwise encumber or dispose of the restricted stock, except as permitted by the Compensation Committee. During the restricted period, the grantee will have the right to vote the restricted stock and to receive any cash dividends if and to the extent so provided by the Compensation Committee. The Compensation Committee may grant stock Awards intended to constitute performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The following rules will apply to such performance based stock Awards (as such rules may be modified by the Compensation Committee to comply with Section 162(m) and any amendments, revisions or successor provisions): (i) payments under the stock Award shall be made solely on account of the attainment of one or more objective performance goals established in writing by the Compensation Committee not later than 90 days after the commencement of the period of service to which the performance Award relates (or, if less, 25% of such period of service); (ii) the performance goals to which the stock Award relates shall be based on one or more of the following business criteria applied to the participant, a business unit of the Company and/or an affiliate of the Company: stock price, market share, sales, earnings per share, return on equity, assets, capital or investment, net income, operating income, EBITDA, net sales growth, expense targets, working capital targets relating to inventory and/or accounts 28
receivable, operating margin, planning accuracy (as measured by comparing planned results to actual results), and implementation or completion of critical projects or processes; (iii) in any year, a participant may not be granted stock Awards covering a total of more than 100,000 shares of the Company's Class A Common Stock; and (iv) once granted, the Compensation Committee may not increase the amount payable under such stock Award; provided, however, that whether or not a stock Award is intended to constitute qualified performance-based compensation within the meaning of Section 162(m) of the Code, the Compensation Committee may make appropriate adjustments in performance goals under an Award to reflect the impact of extraordinary items (as defined in the Amended Stock Plan) not reflected in such goals. PERFORMANCE AWARDS The Compensation Committee may grant performance Awards relating to a specified number of shares to be delivered based upon attainment over a specified performance cycle of specified measures of the performance of the Company, one or more of its subsidiaries or affiliates or the participant as may be established by the Compensation Committee. The Compensation Committee may provide for full or partial credit, prior to completion of such performance cycle or achievement of the degree of attainment of the measures of performance specified in connection with such performance unit, in the event of the participant's death, normal retirement, early retirement, or total or permanent disability, or in other circumstances. The Compensation Committee may grant performance Awards intended to constitute performance-based compensation within the meaning of Section 162(m) of the Code. The following rules will apply to such performance Awards (as such rules may be modified by the Compensation Committee to comply with Section 162(m) and any amendments, revisions or successor provisions): (i) payments under the performance Award shall be made solely on account of the attainment of one or more objective performance goals established in writing by the Compensation Committee not later than 90 days after the commencement of the period of service to which the performance Award relates (or, if less, 25% of such period of service); (ii) the performance goals to which the performance Award relates shall be based on one or more of the following business criteria applied to the participant, a business unit of the Company and/or an affiliate of the Company: stock price, market share, sales, earnings per share, return on equity, assets, capital or investment, net income, operating income, EBITDA, net sales growth, expense targets, working capital targets relating to inventory and/or accounts receivable, operating margin, planning accuracy (as measured by comparing planned results to actual results), and implementation or completion of critical projects or processes; (iii) in any year, a participant may not be granted performance Awards covering a total of more than 100,000 shares of the Company's Class A Common Stock; and (iv) once granted, the Compensation Committee may not increase the amount payable under such performance Award; provided, however, that whether or not a performance Award is intended to constitute qualified performance-based compensation within the meaning of Section 162(m) of the Code, the Compensation Committee may make appropriate adjustments in performance goals under an Award to reflect the impact of extraordinary items (as defined in the Amended Stock Plan) not reflected in such goals. EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICES Except as otherwise provided in the applicable Award Agreement, the following will apply upon the grantee's termination of employment (or services in the case of Non-Employee Directors) with the Company and its affiliates. Except as described below, if the employment (or services in the case of Non-Employee Directors) of the grantee terminates, exercisable options and SARs will remain exercisable, and any payment or notice provided for under the terms of the vested portion of any other outstanding Award may be given, for a period of one year from the date of any such termination, and any unexercisable Awards or parts thereof will be cancelled on the date of such termination. If the grantee's employment is (or services, in the case of Non-Employee Directors, are) terminated for "good reason" (as defined in the Company's Executive Severance Policy) or for "cause" under an applicable employment agreement or, in the case of Non-Employee Directors, removal for cause as set forth in the Company's By-laws from time to time, or by the grantee other than for "good reason" or 29
"cause" under an applicable employment agreement, all outstanding Awards previously granted to such grantee (whether or not then vested or exercisable) shall be cancelled as of the date of termination. If the grantee voluntarily retires with the consent of the employer or retires as a Non-Employee Director with the consent of the Company or the grantee's employment is or services as a Non-Employee Director are terminated due to permanent disability, then (i) the grantee's outstanding Awards will continue to vest and become exercisable, and the grantee will be entitled to continue satisfying any Award conditions and (ii) the grantee will be entitled to exercise each such option or SAR and make payment or give notice as provided under any other Award in each case for a period of one year (or such other period that the Compensation Committee in its discretion may choose) from and including (x) the date on which all portions of the Award first become fully exercisable or vested or capable of being satisfied or (y) the date of termination of employment (or services in the case of Non-Employee Directors) or retirement, whichever of (x) or (y) occurs last, and thereafter such Awards shall be cancelled. Upon the grantee's death during employment (or services in the case of Non-Employee Directors) or during the period of continued vesting or exercisability described above, (i) the grantee's outstanding options and SARs will become fully exercisable, and any payment or notice provided for under the terms of any other outstanding Award may be immediately paid or given, and (ii) the options and SARs will remain exercisable, and payment may be made or notice given, for one year from the date of death (which period may extend more than 10 years after the grant of the Award), whereupon all Awards will be cancelled. EFFECTS OF CERTAIN CHANGES The Amended Stock Plan provides that in the event that the Company is to be merged or consolidated with another corporation or reorganized or liquidated, then the Compensation Committee may, in its discretion, provide that Awards granted to a grantee will terminate unless exercised within the period determined by the Compensation Committee (not less than 30 days), in which case the Compensation Committee must accelerate the exercisability and vesting of such Awards. AMENDMENT; TERMINATION The Company's Board of Directors may amend, suspend or discontinue the Amended Stock Plan at any time except that, unless approved by a majority vote of the Company's stockholders, no such amendment may (i) materially increase the maximum number of shares as to which Awards may be granted under the Amended Stock Plan, except for adjustments to reflect stock dividends or other recapitalizations affecting the number or kind of outstanding shares, (ii) materially increase the benefits accruing to Amended Stock Plan participants, (iii) materially change the requirements as to eligibility for participation in the Amended Stock Plan, (iv) permit an option or unrelated SAR to be exercisable, a restricted stock Award to vest, or shares of the Company's Class A Common Stock to be delivered pursuant to a performance Award, more than 10 years after the date of grant (except where such event occurs due to the death of the grantee), (v) permit a stock option to have an option exercise price, or a SAR to have an appreciation base, of less than 100% of the fair market value of a share of the Company's Class A Common Stock on the date the stock option or SAR is granted or (vi) extend the term of the Amended Stock Plan beyond the initial 10-year period. PAYMENT OF TAXES Whenever cash is to be paid pursuant to an Award, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. Whenever shares of the Company's Class A Common Stock are to be delivered pursuant to an Award, the Company shall have the right to require the grantee to remit to the Company in cash an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. With the approval of the Compensation Committee, a grantee may satisfy the foregoing requirement by delivering unrestricted shares of the Company's Class A Common Stock owned by the grantee for at least six months having a value equal to the amount otherwise payable or by electing to have the Company 30
withhold from delivery shares of the Company's Class A Common Stock having a value equal to the amount of tax to be withheld. Such shares shall be valued at their fair market value on the date on which the amount of tax to be withheld is determined. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award. CERTAIN FEDERAL INCOME TAX EFFECTS The following discussion is a brief summary of the principal United States Federal income tax consequences under current Federal income tax laws relating to Awards under the Amended Stock Plan. This summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign income and other tax consequences. Non-Qualified Stock Options. An optionee will not recognize any taxable income upon the grant of an NQSO and the Company will not be entitled to a tax deduction with respect to the grant of an NQSO. Upon exercise of an NQSO, the excess of the fair market value of the Company's Class A Common Stock on the exercise date over the option exercise price will be taxable as compensation income to the optionee and will be subject to applicable withholding taxes. The Company will generally be entitled to a tax deduction at such time in the amount of such compensation income. The optionee's tax basis for the Company's Class A Common Stock received pursuant to the exercise of an NQSO will equal the sum of the compensation income recognized and the exercise price. In the event of a sale of the Company's Class A Common Stock received upon the exercise of an NQSO, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss and will be long-term capital gain or loss if the holding period for such Class A Common Stock is more than one year. Incentive Stock Options. An optionee will not recognize any taxable income at the time of grant or timely exercise of an ISO and the Company will not be entitled to a tax deduction with respect to such grant or exercise. Exercise of an ISO may, however, give rise to taxable compensation income subject to applicable withholding taxes, and a tax deduction to the Company, if the ISO is not exercised on a timely basis (generally, while the optionee is employed by the Company or within 90 days after termination of employment) or if the optionee subsequently engages in a "disqualifying disposition," as described below. A sale or exchange by an optionee of shares acquired upon the exercise of an ISO more than one year after the transfer of the shares to such optionee and more than two years after the date of grant of the ISO will result in any difference between the net sale proceeds and the exercise price being treated as long-term capital gain (or loss) to the optionee. If such sale or exchange takes place within two years after the date of grant of the ISO or within one year from the date of transfer of the ISO shares to the optionee, such sale or exchange will generally constitute a "disqualifying disposition" of such shares that will have the following results: any excess of (i) the lesser of (a) the fair market value of the shares at the time of exercise of the ISO and (b) the amount realized on such disqualifying disposition of the shares over (ii) the option exercise price of such shares, will be ordinary income to the optionee, subject to applicable withholding taxes, and the Company will be entitled to a tax deduction in the amount of such income. Any further gain or loss after the date of exercise generally will qualify as capital gain or loss and will not result in any deduction by the Company. Restricted Stock. A grantee will not recognize any income upon the receipt of restricted stock unless the grantee elects under Section 83(b) of the Code, within thirty days of such receipt, to recognize ordinary income in an amount equal to the fair market value of the restricted stock at the time of receipt, less any amount paid for the shares. If the election is made, the holder will not be allowed a deduction for amounts subsequently required to be returned to the Company. If the election is not made, the holder will generally recognize ordinary income, on the date that the restrictions to which the restricted stock is subject are removed, in an amount equal to the fair market value of such shares on such date, less any amount paid for the shares. At the time the holder recognizes ordinary income, the Company generally will be entitled to a deduction in the same amount. Unrestricted Stock. A grantee generally will be taxed upon the grant of an Award of unrestricted stock. However, if at the time the shares are granted they are subject to a substantial risk of forfeiture, 31
as defined in the Code (including as a result of potential liability under Section 16(b) of the Exchange Act), the grantee will be taxed at the time the shares are no longer subject to such risk of forfeiture, subject to the grantee making an effective election under Section 83(b) of the Code. The amount of income recognized by the grantee will be equal to the fair market value of the shares on the date that the income is recognized. The Company generally will be entitled to a deduction at the time and in the amount that the employee recognizes ordinary income. SARs. The grant of a SAR will not result in income for the grantee or in a tax deduction for the Company. Upon the settlement of such a right, the grantee will recognize ordinary income equal to the aggregate value of the payment received, and the Company generally will be entitled to a tax deduction in the same amount. Performance Awards. Generally, the grant of performance Awards has no Federal income tax consequences at the time of grant. Rather, at the time the shares are no longer subject to a substantial risk of forfeiture (as defined in the Code) the holder will recognize ordinary income in an amount equal to the fair market value of such shares. A holder may, however, elect to be taxed at the time of the grant in accordance with Section 83(b) of the Code. The Company generally will be entitled to a deduction at the time and in the amount that the holder recognizes ordinary income. Certain Limitations on Deductibility of Executive Compensation. Section 162(m) of the Code generally disallows a publicly held corporation a deduction for compensation in excess of $1 million per year paid to the chief executive officer (the "CEO") or any of the four most highly compensated executive officers of the Company (other than the CEO) (collectively, the "Covered Officers"). Based upon a special transition rule contained in the Treasury regulations for private corporations that complete an initial public offering, the Company has, to the fullest extent possible under such regulations, treated Awards under the Amended Stock Plan made to Covered Officers as not subject to the deduction limitations of Section 162(m) of the Code. Pursuant to Section 162(m) of the Code, the transition rule is no longer available for Awards under the Amended Stock Plan upon grant of Awards with respect to all shares originally authorized for Awards under the Amended Stock Plan, which in the case of the Original Stock Plan was 5,000,000 shares, and, accordingly, the deduction limitation of Section 162(m) of the Code applies to all grants under the Amended Stock Plan after Awards with respect to the initial 5,000,000 shares were granted. However, an exception to the deduction limitation of Section 162(m) applies to certain performance-based compensation provided that the plan pursuant to which such compensation will be paid has been approved by stockholders in a separate vote and certain other requirements are met. The Second Amended Stock Plan which increased the number of shares authorized for issuance under the Original Stock Plan to 7,000,000 shares was approved by the Company's stockholders at the April 7, 1999 Annual Meeting, so that the Company believes that annual Award grants under the Second Amended Stock Plan should qualify for the performance-based compensation exception to Section 162(m) of the Code. If the adoption of the Third Amended Stock Plan is approved by the Company's stockholders at the 2001 Annual Meeting, the Company believes that the Awards granted under the Third Amended Stock Plan should qualify for the performance-based compensation exception to Section 162(m) of the Code. Nevertheless, the Compensation Committee will maintain the discretion to authorize Awards under the Third Amended Stock Plan that do not qualify for an exception to the deduction limitation if the Compensation Committee believes it is necessary or appropriate under the circumstances. AMENDED STOCK PLAN BENEFITS AND ADDITIONAL INFORMATION The following table shows the grants of options made during 2000 under the Amended Stock Plan to the Chief Executive Officer and the other Named Executive Officers, all current executive officers as a group, all current directors who are not executive officers as a group (the Non-Employee Directors), all current employees who are not executive officers as a group, and each other person who received five percent or more of such options. If the Third Amended Stock Plan is not approved by the Company's stockholders at the 2001 Annual Meeting, the Year 2000 Non-Employee Director Awards shall be cancelled. The closing price per share on the NYSE of the Company's Class A Common Stock as of April 12, 2001 was $4.34. 32
STOCK OPTION GRANTS IN 2000 NAME OPTION GRANTS IN 2000 - ----------------------------------------------- ---------------------- Ronald O. Perelman (a) ........................ 300,000 Jeffrey M. Nugent ............................. 100,000 Douglas H. Greeff ............................. 100,000 Frank J. Gehrmann (b) ......................... 50,000 Wade H. Nichols III (c) ....................... 50,000 Executive Group (d) ........................... 200,000 Non-Executive Officer Employee Group .......... 810,750 Non-Employee Director Group ................... 70,000 - ---------- (a) Mr. Perelman was granted options in 2000 which exceeded 5% of the total options granted in 2000. (b) Mr. Gehrmann was Executive Vice President and Chief Financial Officer until June 30, 2000. (c) Mr. Nichols was Executive Vice President and Chief Administrative Officer until October 1, 2000. (d) The options granted to the Executive Group include options granted to Messrs. Nugent and Greeff. Future grants under the Third Amended Stock Plan will be made at the discretion of the Compensation Committee and, accordingly, are not yet determinable. In addition, benefits under the Third Amended Stock Plan will depend on a number of factors, including the fair market value of the Company's Class A Common Stock on future dates and the exercise decisions made by the optionees. Consequently it is not possible to determine the benefits that might be received by optionees receiving discretionary grants under the Third Amended Stock Plan. However, certain executive officers' employment agreements provide that management shall recommend to the Compensation Committee that such officers be granted options to purchase a specified number of shares annually. (See "Employment Agreements and Termination of Employment Arrangements.") VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION The approval of the Third Amended Stock Plan will require the affirmative vote of a majority of the total number of votes of outstanding shares of the Company's Common Stock present in person or represented by proxy at the 2001 Annual Meeting and entitled to vote. In determining whether approval of the Third Amended Stock Plan has received the requisite number of affirmative votes, abstentions will be counted and will have the same effect as a vote against the proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE THIRD AMENDED STOCK PLAN. ADDITIONAL INFORMATION The Company will make available a copy of its Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and any Quarterly Reports on Form 10-Q filed thereafter, without charge, upon written request to Robert K. Kretzman, Senior Vice President, General Counsel and Corporate Secretary, Revlon, Inc., 625 Madison Avenue, New York, New York 10022. Each such request must set forth a good faith representation that, as of the Record Date, April 12, 2001, the person making the request was a beneficial owner of shares of the Company's Common Stock entitled to vote. In order to ensure timely delivery of such documents prior to the Annual Meeting, any request should be received by the Company promptly. Stockholders who are not stockholders of record who wish to attend the Annual Meeting should bring written evidence of beneficial ownership of the Company's Common Stock, together with a form of picture identification, to the Annual Meeting. Additionally, any person wishing to receive an electronic copy of Revlon's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, without charge, may send an email making such a request and including a return email address to robert.kretzman@revlon.com. 33
STOCKHOLDER PROPOSALS Under the rules and regulations of the SEC as currently in effect, any holder of at least one percent or $2,000 in market value of shares of Common Stock held for at least one year who desires to have a proposal presented in the Company's proxy material for use in connection with the Annual Meeting of Stockholders to be held in 2001 must transmit that proposal (along with his or her name, address, the number of shares of Common Stock that he or she holds of record or beneficially, the dates on which the securities were acquired and documentary support for a claim of beneficial ownership) in writing by certified mail--return receipt requested to the Secretary of the Company at Revlon, Inc., 625 Madison Avenue, New York, New York 10022. Proposals of stockholders intended to be presented in the Company's proxy material for use in connection with the Annual Meeting of Stockholders to be held in 2002 must be received by the Secretary of the Company not later than December 31, 2001. On May 21, 1998, the Securities and Exchange Commission adopted an amendment to Rule 14a-4, as promulgated under the Exchange Act. The amendment to Rule 14a-4(c)(1) governs the Company's use of its discretionary proxy voting authority with respect to a stockholder proposal that is not addressed in the Company's proxy statement. The new amendment provides that if a proponent of a proposal fails to notify the Company at least 45 days prior to the first anniversary date of the date of mailing of the prior year's proxy statement, then the Company will be allowed to use its discretionary voting authority when the proposal is raised at the meeting, without any discussion of the matter in the proxy statement. With respect to the Company's Annual Meeting of Stockholders to be held in 2002, if the Company is not provided notice of a stockholder proposal, which proposal has not been submitted for inclusion in the Company's proxy statement in a timely manner, by March 16, 2002, the Company will be permitted to use its voting authority as outlined above. Additionally, holders of shares of Common Stock desiring to have proposals submitted for consideration at future meetings of the stockholders should consult the applicable rules and regulations of the SEC with respect to such proposals, including the permissible number and length of proposals and other matters governed by such rules and regulations. OTHER BUSINESS Management does not intend to present any other items of business and is not aware of any matters other than those set forth in this proxy statement that will be presented for action at the Annual Meeting. However, if any other matters properly come before the Annual Meeting, the persons named in the enclosed proxy intend to vote the shares of Common Stock they represent in accordance with their best judgment. New York, New York April 30, 2001 By Order of the Board of Directors Robert K. Kretzman Senior Vice President, General Counsel and Secretary 34
EXHIBIT 1 REVLON, INC. CHARTER OF THE AUDIT COMMITTEE DATED AS OF APRIL 13, 2000 Organization This charter governs the operations of the Audit Committee. The Committee shall obtain the approval of the Board of Directors for this charter and shall review and reassess the charter at least annually. The Committee shall be appointed by the Board of Directors and shall consist of at least three directors, each of whom is independent of management and the Company. Members of the Committee shall be considered independent if they have no relationship with management or the Company that may interfere (or give the appearance of interfering) with the exercise of the responsibilities of the Audit Committee. All Committee members shall be financially literate, or shall become financially literate within a reasonable period of time after appointment to the Committee, and at least one member shall have accounting or related financial management expertise. Statement of Policy The Audit Committee shall provide assistance to the Board of Directors in fulfilling its oversight responsibility to the shareholders, potential shareholders, the investment community, and others relating to the Company's financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company's financial statements, and the legal compliance and ethics programs as established by management and the Board. In so doing, it is the responsibility of the Committee to maintain free and open communication among the Committee, the independent auditors and management of the Company. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention, with full access to all books, records, facilities and personnel of the Company and upon approval of the Board to retain outside counsel or other experts to assist the Committee in carrying out its responsibilities. Although so empowered, however, the Committee shall not have a duty to conduct investigations, resolve disagreements between management and the independent auditors or assure compliance with law or conformity with the Company's legal compliance and ethics programs. Responsibilities and Processes The primary responsibility of the Audit Committee is to oversee the Company's financial reporting process on behalf of the Board of Directors and report the results of its activities to the Board. Management is responsible for preparing the Company's financial statements, and the independent auditors are responsible for auditing those financial statements. The Committee in carrying out its responsibilities believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The Committee should take the appropriate actions to set the overall corporate tone for quality financial reporting, sound business risk practices, and ethical behavior. The following shall be the principal recurring processes of the Audit Committee in carrying out its oversight responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate. 1. The Committee shall have a clear understanding with management and the independent auditors that the independent auditors are ultimately accountable to the Board of Directors and the Audit Committee. The Committee shall have the authority and responsibility to select, evaluate and, where appropriate, recommend to the Board appointment or replacement of the independent auditors. The Committee shall discuss with the auditors their independence from management and the Company and the matters included in the written disclosures required by the Independence Standards Board. Annually, the Committee shall review and recommend to the Board the selection of the Company's independent auditors, subject to shareholder approval. 35
2. The Committee shall discuss with the independent auditors the overall scope and plans for their audit including the adequacy of staffing and compensation. Also, the Committee shall discuss with management and the independent auditors the adequacy and effectiveness of the accounting and financial controls, including the Company's system to monitor and manage business risk and legal and ethical compliance programs. Further, the Committee shall meet separately with the independent auditors, with and without management present, to discuss the results of their examinations. 3. The Committee shall review the interim financial statements with management and the independent auditors prior to the filing of the Company's quarterly report on Form 10-Q. Also, the Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards. The chair of the Committee may represent the entire committee for the purposes of this review. 4. The Committee shall review with management and the independent auditors the financial statements to be included in the Company's annual report on Form 10-K (or the annual report to shareholders if distributed prior to the filing of Form 10-K), including its judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. Also, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards. 5. The Committee shall review the internal audit department responsibilities, budget and staffing as well as internal audit department activities. 36
EXHIBIT 2 REVLON, INC. THIRD AMENDED AND RESTATED 1996 STOCK PLAN (AMENDED AND RESTATED AS OF MAY 10, 2000) ARTICLE I GENERAL 1.1 Purpose. The purpose of this Third Amended and Restated 1996 Stock Plan (the "Plan") is to provide for certain officers, directors and key employees of Revlon, Inc. ("Revlon" and, together with its subsidiaries, the "Company") and certain of its Affiliates an incentive to maintain and enhance the long-term performance and profitability of the Company. It is the further purpose of the Plan to permit the granting of awards that will constitute performance based compensation for certain executive officers, as described in section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations promulgated thereunder. 1.2 Administration. (a) The Plan shall be administered by a committee (the "Committee") appointed by the Board of Directors of Revlon (the "Board"), which committee shall consist of two or more directors. It is intended that the directors appointed to serve on the Committee shall be "outside directors" (within the meaning of Code section 162(m) and the Treasury Regulations thereunder as may be in effect from time to time, and any amendments, revisions or successor provisions thereto) to the extent Code section 162(m) is applicable; however, the mere fact that a Committee member shall fail to qualify under the foregoing requirements shall not invalidate any award made by the Committee which award is otherwise validly made under the Plan. The members of the Committee shall be appointed by, and may be changed at any time and from time to time in the discretion of, the Board. (b) The Committee shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and Plan agreements executed pursuant to Section 2.6, (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, (iv) to make all determinations necessary or advisable in administering the Plan, and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan. (c) The determination of the Committee on all matters relating to the Plan or any Plan agreement (as defined in Section 2.6) shall be conclusive. (d) No member of the Committee shall be liable for any Plan Action (as defined in Section 3.2), including without limitation any action or determination made in good faith with respect to the Plan or any Award hereunder. 1.3 Persons Eligible for Awards. Awards under the Plan may be made to such officers, directors and executive, managerial or professional employees ("key personnel") of the Company or its Affiliates as the Committee shall in its sole discretion select. 1.4 Types of Awards Under Plan. (a) Awards may be made under the Plan in the form of (i) stock options ("options"), (ii) stock appreciation rights ("stock appreciation rights") related to an option ("related stock appreciation rights"), (iii) stock appreciation rights not related to any option ("unrelated stock appreciation rights"), (iv) restricted stock awards, (v) unrestricted stock awards and (vi) performance awards, all as more fully set forth in Article II (collectively, "Awards"). (b) Options granted under the Plan may be either (i) "nonqualified" stock options subject to the provisions of Code section 83 or (ii) options intended to qualify for incentive stock option treatment described in Code section 422. (c) All options when granted are intended to be nonqualified options, unless the applicable Plan agreement explicitly states that an option is intended to be an incentive stock option. If an 37
option is granted with the stated intent that it be an incentive stock option, and if for any reason such option (or any portion thereof) shall not qualify as an incentive stock option, then, to the extent of such nonqualification, such option (or portion) shall be regarded as a nonqualified option appropriately granted under the Plan provided that such option (or portion) otherwise satisfies the terms and conditions of the Plan relating to nonqualified options generally. 1.5 Shares Available for Awards. (a) Subject to Section 3.5 (relating to adjustments upon changes in capitalization), as of any date the total number of shares of Common Stock with respect to which Awards may be granted shall be equal to the excess (if any) of (i) 8,500,000 shares over (ii) the sum (without duplication) of (A) the number of shares subject to outstanding options, outstanding unrelated stock appreciation rights, outstanding restricted stock awards not vested pursuant to the lapse of restrictions and outstanding performance awards as to which the performance cycle has not expired, granted under the Plan, (B) the number of shares previously issued pursuant to the exercise of options granted under the Plan, (C) the number of shares subject to an option, restricted stock award or performance award or part thereof which is canceled by the Committee and for which cash is paid in respect thereof pursuant to Section 2.8(f), (D) the number of shares in respect of which stock appreciation rights granted under the Plan shall have previously been exercised, (E) the number of shares previously vested pursuant to the lapse of restrictions under restricted stock awards granted under the Plan, (F) the number of shares previously issued pursuant to unrestricted stock awards, and (G) the number of shares previously issued or issuable pursuant to performance units as to which the performance cycle has expired. In accordance with (and without limitation upon) the preceding sentence, if and to the extent an Award under the Plan expires, terminates or is canceled for any reason whatsoever without the grantee having received any benefit therefrom, the shares covered by such Award shall again become available for future Awards under the Plan. For purposes of the foregoing sentence, a grantee shall not be deemed to have received any "benefit" (i) in the case of forfeited restricted stock awards by reason of having enjoyed voting rights and dividend rights prior to the date of forfeiture or (ii) in the case of an Award canceled pursuant to subsection (c) of this Section 1.5 by reason of a new Award being granted in substitution therefor. (b) Shares of Common Stock that shall be subject to issuance pursuant to Awards made under the Plan shall be authorized and unissued or treasury shares of Common Stock. (c) Without limiting the generality of the preceding provisions of this Section 1.5, the Committee may, but solely with the grantee's consent, agree to cancel any Award under the Plan and issue a new Award in substitution therefor upon such terms as the Committee may in its sole discretion determine, provided that the substituted Award satisfies all applicable Plan requirements as of the date such new Award is made. (d) In any calendar year, a person eligible for Awards under the Plan may not be granted options or stock appreciation rights covering in the aggregate a total of more than 600,000 shares of Common Stock. 1.6 Definitions of Certain Terms. (a) The term "Affiliate" as used herein means any person or entity which, at the time of reference, directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company. (b) The term "Common Stock" as used herein means the shares of Class A Common Stock of the Company as constituted on the effective date of the Plan, and any other shares into which such Common Stock shall thereafter be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or the like. (c) Except as otherwise determined by the Committee, the term "fair market value" as used herein as of any date and in respect of any share of Common Stock shall mean, as determined by the 38
Committee, either (i) the closing price of a share of Common Stock as reported on the New York Stock Exchange as of such date or (ii) the mean between the high and low sales prices of a share of Common Stock as reported on the New York Stock Exchange as of such date. (d) In no event shall the fair market value of any share of Common Stock, the option exercise price of any option, the appreciation base per share of Common Stock under any stock appreciation right, or the amount payable per share of Common Stock under any other Award, be less than the par value per share of Common Stock. ARTICLE II STOCK OPTIONS; STOCK APPRECIATION RIGHTS; STOCK AWARDS; PERFORMANCE AWARDS 2.1 Grant of Stock Options. The Committee may grant options under the Plan to purchase shares of Common Stock to such key personnel, in such amounts and subject to such terms and conditions as the Committee shall from time to time determine in its sole discretion, subject to the terms and provisions of the Plan. 2.2 Grant of Stock Appreciation Rights. (a) The Committee may grant a related stock appreciation right in connection with all or any part of an option granted under the Plan, either at the time such option is granted or at any time thereafter prior to the exercise, termination or cancellation of such option, and subject to such terms and conditions as the Committee shall from time to time determine in its sole discretion, consistent with the terms and provisions of the Plan. The grantee of a related stock appreciation right shall, subject to the terms and conditions of the Plan and the applicable Plan agreement, thereby have the right by exercise thereof to surrender to the Company for cancellation all or a portion of such related stock appreciation right, but only to the extent that the related option is then exercisable, and to be paid therefor an amount equal to the excess (if any) of (i) the aggregate fair market value of the shares of Common Stock subject to the related stock appreciation right or portion thereof surrendered (determined as of the exercise date), over (ii) the aggregate appreciation base (determined pursuant to Section 2.6(d)) of the shares of Common Stock subject to the stock appreciation right or portion thereof surrendered. (b) The Committee may grant an unrelated stock appreciation right to such key personnel, and in such amount and subject to such terms and conditions, as the Committee shall from time to time determine in its sole discretion, subject to the terms and provisions of the Plan. The grantee of an unrelated stock appreciation right shall, subject to the terms and conditions of the Plan and the applicable Plan agreement, have the right to surrender to the Company for cancellation all or a portion of such stock appreciation right, but only to the extent that such stock appreciation right is then exercisable, and to be paid therefor an amount equal to the excess (if any) of (i) the aggregate fair market value of the shares of Common Stock subject to the stock appreciation right or portion thereof surrendered (determined as of the exercise date), over (ii) the aggregate appreciation base (determined pursuant to Section 2.6(d)) of the shares of Common Stock subject to the stock appreciation right or portion thereof surrendered. (c) Payment due to the grantee upon exercise of a stock appreciation right shall be made (i) by check, (ii) in Common Stock (valued at the fair market value thereof as of the date of exercise), or (iii) partly in the manner provided in clause (i) and partly in the manner provided in clause (ii), all as determined by the Committee in its sole discretion. If the Committee shall determine to make all of such payments in Common Stock, no fractional shares shall be issued and no payments shall be made in lieu of fractional shares. (d) The grant or exercisability of any stock appreciation right may be subject to such conditions as the Committee, in its sole discretion, shall determine, including a change of ownership or control of the Company or an Affiliate. A stock appreciation right may be deemed to be automatically exercised upon the occurrence of such events or conditions as may be determined by the Committee in an applicable Plan agreement. 39
2.3 Special ISO Requirements. In order for a grantee to receive special tax treatment with respect to stock acquired under an option granted as an incentive stock option, the grantee of such option must be, at all times during the period beginning on the date of grant and ending on the day three months before the date of exercise of such option, an employee of the Company or any of the Company's parent corporations (within the meaning of Code section 424), or of a corporation or a parent or subsidiary corporation of such corporation issuing or assuming a stock option in a transaction in which Code section 424(a) applies. If an option granted under the Plan is intended to be an incentive stock option, then the option exercise price per share shall in no event be less than 100% of the fair market value of the Common Stock on the date of such grant. If an option granted under the Plan is intended to be an incentive stock option, and if the grantee, at the time of grant, owns stock possessing 10 percent or more of the total combined voting power of all classes of stock of the grantee's employer corporation or of its parent or subsidiary corporation, then (i) the option exercise price per share shall in no event be less than 110% of the fair market value of the Common Stock on the date of such grant and (ii) such option shall not be exercisable after the expiration of five years after the date such option is granted. 2.4 Restricted and Unrestricted Stock Awards. (a) The Committee may grant restricted stock awards, alone or in tandem with other Awards under the Plan, to such key personnel, and subject to such restrictions, terms and conditions, as the Committee shall determine in its sole discretion and as shall be evidenced by the applicable Plan agreements. The vesting of a restricted stock award granted under the Plan may be conditioned upon the completion of a specified period of employment, or in the case of directors who are not employees of the Company or its Affiliates, their services as such, with the Company or any Affiliate, upon the attainment of specified performance goals, and/or upon such other criteria as the Committee may determine in its sole discretion. (b) The Committee may grant unrestricted stock awards, alone or in tandem with other Awards under the Plan, to such key personnel and subject to such terms and conditions as the Committee shall determine in its sole discretion and as shall be evidenced by the applicable Plan agreements. (c) Each Plan agreement with respect to a restricted stock award shall set forth the amount (if any) to be paid by the grantee with respect to such Award and when or in what circumstances such payment is required to be made. If a grantee made any payment for a restricted stock award or portion thereof which does not vest, appropriate payment shall be made to the grantee upon or following such forfeiture if and on such terms and conditions as the Committee may determine. (d) The Committee may provide that a certificate or certificates representing the shares underlying a restricted stock award shall be registered in the grantee's name and bear an appropriate legend specifying that such shares are not transferable and are subject to the provisions of the Plan and the restrictions, terms and conditions set forth in the applicable Plan agreement, or that such certificate or certificates shall be held in escrow by the Company on behalf of the grantee until such shares become vested or are forfeited, all on such terms and conditions as the Committee may determine. Except as the applicable Plan agreement may otherwise provide, no shares underlying a restricted stock award may be assigned, transferred, or otherwise encumbered or disposed of by the grantee until such shares have vested in accordance with the terms of such Award. Subject to the provisions of Section 3.2, as soon as practicable after any restricted stock award shall vest, the Company shall issue or reissue to the grantee (or to the grantee's designated beneficiary in the event of the grantee's death) a certificate or certificates for the Common Stock underlying such restricted stock award without such restrictive legend. (e) If and to the extent that the applicable Plan agreement may so provide, a grantee shall have the right to vote and receive dividends on the shares underlying a restricted stock award granted under the Plan. Unless otherwise provided in the applicable Plan agreement, any stock received as a dividend on, or in connection with a stock split of, the shares underlying a restricted stock award shall be subject to the same restrictions as the shares underlying such restricted stock award. 40
(f) Subject to Section 3.5 (relating to adjustments upon changes in capitalization), as of any date the total number of shares of Common Stock with respect to which restricted and unrestricted stock awards may be granted pursuant to this Section 2.4 shall not exceed (i) 1,000,000 shares less (ii) the sum (without duplication) of (A) the number of shares subject to outstanding restricted stock awards or parts thereof not vested pursuant to the lapse of restrictions, (B) the number of shares subject to restricted stock awards or parts thereof which are canceled by the Committee and for which cash is paid in respect thereof pursuant to Section 2.8(f), (C) the number of shares subject to restricted stock awards which have vested pursuant to the lapse of restrictions and (D) the number of shares subject to unrestricted stock awards, plus (iii) the number of shares subject to restricted stock awards or parts thereof not vested pursuant to the lapse of restrictions which are canceled without payment of cash or other consideration in connection with termination of the grantee's employment, services or otherwise. (g) In the event that the Committee grants a stock award that is intended to constitute qualified performance-based compensation within the meaning of Code section 162(m), the following rules shall apply (as such rules may be modified by the Committee to conform with Code section 162(m) and the Treasury Regulations thereunder as may be in effect from time to time, and any amendments, revisions or successor provisions thereto): (i) payments under the stock award shall be made solely on account of the attainment of one or more objective performance goals established in writing by the Committee not later than 90 days after the commencement of the period of service to which the stock award relates (or if less, 25% of such period of service); (ii) the performance goal(s) to which the stock award relates shall be based on one or more of the following business criteria applied to the grantee, a business unit or the Company and/or an Affiliate: stock price, market share, sales, earnings per share, return on equity, assets, capital or investment, net income, operating income, operating income before restructuring charges, plus depreciation and amortization other than relating to early extinguishment of debt and debt issuance costs, net sales growth, expense targets, working capital targets relating to inventory and/or accounts receivable, operating margin, planning accuracy (as measured by comparing planned results to actual results), and implementation or completion of critical projects or processes; (iii) in any year, a grantee may not be granted stock awards covering a total of more than 100,000 shares of Common Stock pursuant to this Section 2.4; and (iv) once granted, the Committee may not have discretion to increase the amount payable under such stock award, provided, however, that whether or not a stock award is intended to constitute qualified performance-based compensation within the meaning of Code section 162(m), the Committee shall make appropriate adjustments in performance goals under an Award to reflect the impact of extraordinary items not reflected in such goals. For purposes of the Plan, extraordinary items shall be defined as (1) any profit or loss attributable to acquisitions or dispositions of stock or assets, (2) any changes in accounting standards that may be required or permitted by the Financial Accounting Standards Board or adopted by the Company after the goal is established, (3) all items of gain, loss or expense for the year related to restructuring charges for the Company, (4) all items of gain, loss or expense for the year determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business all determined in accordance with standards established by Opinion No. 30 of the Accounting Principles Board (APB Opinion No. 30), (5) all items of gain, loss or expense for the year related to discontinued operations that do not qualify as a segment of a business as defined in APB Opinion No. 30, and (6) such other items as may be prescribed by Code section 162(m) and the Treasury Regulations thereunder as may be in effect from time to time, and any amendments, revisions or successor provisions and any changes thereto. The Committee shall, prior to making any award under this Section 2.4(g), certify in writing that all applicable performance goals have been attained. 2.5 Performance Awards. (a) The Committee may grant performance awards, alone or in tandem with other Awards under the Plan, to acquire shares of Common Stock to such key personnel and in such amounts and subject to such terms and conditions as the Committee shall from time to time in its sole discretion determine, subject to the terms of the Plan. 41
(b) Each performance award under the Plan shall relate to a specified maximum number of shares, and shall be exchangeable for all or a portion of such shares, or for cash (or such other form of consideration as may be determined by the Committee equivalent in value thereto) in up to an amount equal to the fair market value of an equal number of unrestricted shares, at the end of such specified period (a "performance cycle") as may be established by the Committee. The number of such shares which may be deliverable pursuant to such performance award shall be based upon the degree of attainment over such performance cycle of such measure of the performance of the Company, an Affiliate, one or more of its or their respective divisions or other business units, or the grantee, all as may be established by the Committee. The Committee may make such provision in the Plan agreement for full or partial credit, prior to completion of such performance cycle or achievement of the degree of attainment of the measures of performance specified in connection with such performance award, in the event of the participant's death, retirement or other cessation of services, or disability, or in such other circumstances, as the Committee in its sole discretion may determine to be fair and equitable to the participant or in the interest of the Company. (c) In the event that the Committee grants a performance award that is intended to constitute qualified performance-based compensation within the meaning of Code section 162(m), the following rules shall apply (as such rules may be modified by the Committee to conform with Code section 162(m) and the Treasury Regulations thereunder as may be in effect from time to time, and any amendments, revisions or successor provisions, and any changes thereto): (i) payments under the performance award shall be made solely on account of the attainment of one or more objective performance goals established in writing by the Committee not later than 90 days after the commencement of the period of service to which the performance award relates (or if less, 25% of such period of service); (ii) the performance goal(s) to which the performance award relates shall be based on one or more of the following business criteria applied to the grantee, a business unit or the Company and/or an Affiliate: stock price, market share, sales, earnings per share, return on equity, assets, capital or investment, net income, operating income, operating income before restructuring charges, plus depreciation and amortization other than relating to early extinguishment of debt and debt issuance costs, net sales growth, expense targets, working capital targets relating to inventory and/or accounts receivable, operating margin, planning accuracy (as measured by comparing planned results to actual results), and implementation or completion of critical projects or processes; (iii) in any year, a grantee may not be granted performance awards covering a total of more than 100,000 shares of Common Stock pursuant to this Section 2.5; and (iv) once granted, the Committee may not have discretion to increase the amount payable under such performance award, provided, however, that whether or not a performance award is intended to constitute qualified performance-based compensation within the meaning of Code section 162(m), the Committee shall make appropriate adjustments in performance goals under an Award to reflect the impact of extraordinary items not reflected in such goals. For purposes of the Plan, extraordinary items shall be defined as (1) any profit or loss attributable to acquisitions or dispositions of stock or assets, (2) any changes in accounting standards that may be required or permitted the Financial Accounting Standards Board or adopted by the Company after the goal is established, (3) all items of gain, loss or expense for the year related to restructuring charges for the Company (4) all items of gain, loss or expense for the year determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business all determined in accordance with standards established by Opinion No. 30 of the Accounting Principles Board (APB Opinion No. 30), (5) all items of gain, loss or expense for the year related to discontinued operations that do not qualify as a segment of a business as defined in APB Opinion No. 30, and (6) such other items as may be prescribed by Code section 162(m) and the Treasury Regulations thereunder as may be in effect from time to time, and any amendments, revisions or successor provisions and any changes thereto. The Committee shall, prior to making any award under this Section 2.5(c), certify in writing that all applicable performance goals have been attained. 2.6 Agreements Evidencing Awards. (a) Awards granted under the Plan shall be evidenced by written agreements ("Plan agreements") which shall contain such provisions not inconsistent with the terms and provisions of the Plan as the Committee may in its sole discretion deem necessary or desirable. 42
(b) Each Plan agreement with respect to the granting of an Award other than a related stock appreciation right shall set forth the number of shares of Common Stock subject to the Award granted thereby. Each Plan agreement with respect to the granting of a related stock appreciation right shall set forth the number of shares of Common Stock subject to the related option which shall also be subject to the related stock appreciation right granted thereby. (c) Each Plan agreement with respect to the granting of an option shall set forth the amount (the "option exercise price") payable by the grantee to the Company in connection with the exercise of the option evidenced thereby. The option exercise price per share shall in no event be less than 100% of the fair market value of a share of Common Stock on the date the option is granted. (d) Each Plan agreement with respect to a stock appreciation right shall set forth the amount (the "appreciation base") over which appreciation will be measured upon exercise of the stock appreciation right evidenced thereby. The appreciation base per share of Common Stock subject to an unrelated stock appreciation right shall in no event be less than 100% of the fair market value of a share of Common Stock on the date the stock appreciation right is granted. The appreciation base per share of Common Stock subject to a related stock appreciation right shall in all cases be the option exercise price per share of Common Stock subject to the related option. 2.7 Exercise of Related Stock Appreciation Right Reduces Shares Subject to Option. Upon any exercise of a related stock appreciation right or any portion thereof, the number of shares of Common Stock subject to the related option shall be reduced by the number of shares of Common Stock in respect of which such stock appreciation right shall have been exercised. 2.8 Exercisability of Options, Stock Appreciation Rights and Other Awards; Cancellation of Awards in Certain Cases. Subject to the other provisions of the Plan: (a) Except as hereinafter provided, each Plan agreement with respect to an option or stock appreciation right shall set forth the period during which and the conditions subject to which the option or stock appreciation right evidenced thereby shall be exercisable, and each Plan agreement with respect to a restricted stock award or performance award shall set forth the period after which and the conditions subject to which the shares underlying such Award shall vest or be deliverable, all such periods and conditions to be determined by the Committee in its sole discretion. Unless the applicable Plan agreement otherwise specifies: no option or stock appreciation right shall be exercisable prior to the first anniversary of the date of grant, and each option or stock appreciation right granted under the Plan shall become cumulatively exercisable with respect to 25% of the shares of Common Stock subject thereto, rounded down to the next lower full share, on the first anniversary of the date of grant, and with respect to an additional 25% of the shares of Common Stock subject thereto, rounded down to the next lower full share, on each of the second and third anniversaries of the date of grant, and shall become 100% exercisable on the fourth anniversary of the date of grant, and shall remain 100% exercisable until the day prior to the tenth anniversary of the date of grant and shall terminate and cease to be exercisable on the tenth anniversary of the date of grant. (b) Except as provided in Section 2.10(e), no option or stock appreciation right may be exercised and no shares of Common Stock underlying any other Award under the Plan may vest or become deliverable more than 10 years after the date of grant. (c) Unless the applicable Plan agreement otherwise provides, a related stock appreciation right shall be exercisable at any time during the period that the related option may be exercised. (d) Unless the applicable Plan agreement otherwise provides, an option or stock appreciation right granted under the Plan may be exercised from time to time as to all or part of the full number of shares as to which such option or stock appreciation right shall then be exercisable. (e) An option or stock appreciation right shall be exercisable by the filing of a written notice of exercise with the Company, on such form and in such manner as the Committee shall in its sole discretion prescribe, and by payment in accordance with Section 2.9. 43
(f) Unless the applicable Plan agreement otherwise provides: in the case of an option or stock appreciation right, at any time after the Company's receipt of written notice of exercise of an option or stock appreciation right and prior to the option or stock appreciation right exercise date (as defined in subsection (g) of this Section 2.8), and in the case of a stock award or performance award, at any time within the six business days immediately preceding the otherwise applicable date on which the previously restricted stock award or performance award would otherwise have become unconditionally vested or the shares subject thereto unconditionally deliverable, the Committee, in its sole discretion, shall have the right, by written notice to the grantee, to cancel such Award or any part thereof if the Committee, in its sole judgment, determines that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company's acquisition of Common Stock from, and/or the grantee's sale of Common Stock to, the public markets illegal, impracticable or inadvisable. If the Committee determines to cancel all or any part of an Award, the Company shall pay to the grantee an amount equal to the excess of (i) the aggregate fair market value of the shares of Common Stock subject to the Award or part thereof canceled (determined as of the option or stock appreciation right exercise date, or the date that shares would have been unconditionally vested or delivered in the case of a stock award or performance award), over (ii) the aggregate option exercise price or appreciation base of the option or stock appreciation right or part thereof canceled (in the case of an option or stock appreciation right) or any amount payable as a condition of delivery of shares (in the case of a stock award or performance award) Such amount shall be delivered to the grantee as soon as practicable after such Award or part thereof is canceled. (g) Unless the applicable Plan agreement otherwise provides, the "option exercise date" and the "stock appreciation right exercise date" shall be the date that written notice of exercise, together with payment, are received by the Company; provided that if subsection (f) of this Section 2.8 is applicable, the option exercise date or stock appreciation right exercise date shall be the later of: (i) the sixth business day following the date written notice of exercise is received by the Company; and (ii) the date when payment is received by the Company. 2.9 Payment of Award Price. (a) Unless the applicable Plan agreement otherwise provides or the Committee in its sole discretion otherwise determines, any written notice of exercise of an option or stock appreciation right must be accompanied by payment of the full option or stock appreciation exercise price. If Section 2.8(g) applies, and the six business day delay for the option exercise date or stock appreciation right exercise date is applied, the grantee shall have no right to pay the option or stock appreciation right exercise price or to receive Common Stock with respect to the option or stock appreciation right exercise prior to the lapse of such six business days. (b) Payment of the option exercise price and of any other payment required by the Plan agreement to be made pursuant to any other Award shall be made in any combination of the following: (i) by certified or official bank check payable to the Company (or the equivalent thereof acceptable to the Committee); (ii) with the consent of the Committee in its sole discretion, by personal check (subject to collection) which may in the Committee's discretion be deemed conditional; and/or (iii) unless otherwise provided in the applicable Plan agreement, by delivery of previously-acquired shares of Common Stock owned by the grantee for at least six months (or such longer or shorter period as the Committee may in its discretion determine that will not result in variable accounting treatment) having a fair market value (determined as of the option exercise date, in the case of options, or other relevant payment date as determined by the Committee, in the case of other Awards) equal to the portion of the exercise price being paid thereby, provided that the Committee may require, as a condition of accepting any such delivery of shares of Common Stock, that the grantee furnish an opinion of counsel acceptable to the Company to the effect that such delivery would not result in the grantee incurring any liability under Section 16(b) of the Act and does not require any Consent (as defined in Section 3.2) (a "Compliance Opinion"). Payment in accordance with clause (i) of this Section 2.9(b) may be deemed to be satisfied, if and to the extent that the applicable Plan agreement so provides or the Committee permits, by delivery to the Company of an assignment of a sufficient amount of the proceeds from the sale of Common Stock 44
to be acquired pursuant to the Award to pay for all of the Common Stock to be acquired pursuant to the Award and an authorization to the broker or selling agent to pay that amount to the Company and to effect such sale at the time of exercise or other delivery of shares of Common Stock, provided that the Committee may require, as a condition of accepting any such payment, that the grantee furnish a Compliance Opinion. In the case of payment made in accordance with clause (iii) of this Section 2.9(b) or clause (ii) of Section 3.4(b), if (A) the person paying the option exercise price or other payment required by a Plan agreement is the grantee of the Award and is actively employed by, or serving as a director of, the Company or its Affiliates on the exercise date and (B) all or any portion of the previously-acquired shares of Common Stock so delivered in payment were acquired by the grantee upon exercise of an option or stock appreciation right, then, if and to the extent that the applicable Plan agreement so provides or the Committee in its sole discretion so determines, the grantee shall be granted a replacement option on the option exercise date or other payment date to purchase a number of shares of Common Stock equal to the number of shares so delivered in payment, at an exercise price equal to the fair market value of the Common Stock on the exercise date and upon such other terms, conditions and restrictions (which may be the same as or different than the terms, conditions and restrictions of the Award so exercised) as the Committee may determine and set forth in the Plan agreement evidencing such replacement option. As soon as practicable after receipt of full payment, the Company shall, subject to the provisions of Sections 2.8(f) and 3.2, deliver to the grantee a certificate or certificates for the shares of Common Stock deliverable pursuant to such Award, which certificate or certificates may bear such legends as the Company may deem appropriate concerning restrictions on their disposition in accordance with applicable federal and state securities laws, rules and regulations or otherwise. (c) Notwithstanding any other provision of this Plan or the applicable Plan agreement, no grantee shall, directly or indirectly, sell any shares of Common Stock unless (i) such grantee owns the shares to be sold or has exercised an Award with respect thereto and the shares to be sold are immediately issuable to the grantee pursuant to such exercise (subject to Section 2.8(g) if applicable) and (ii) such grantee delivers such shares in settlement in accordance with all settlement rules applicable to such transaction. 2.10 Termination of Employment or Services. (a) The following "default rules" set forth in this Section 2.10 shall govern the exercisability of options and the continuation of other Awards following termination of employment of a grantee with the Company and its Affiliates, or the termination of services as a director for the Company and its Affiliates for directors who are not employees of the Company or its Affiliates, except in each case where: (i) other provisions of the Plan specify a different rule (e.g., Section 3.11 dealing with early termination of an option following certain corporate events); or (ii) the Plan agreement provides for a different rule (as specified by the Committee pursuant to its authority under the Plan). (b) Upon termination of a grantee's employment with the Company and its Affiliates, or in the case of termination of services for directors who are not employees, (i) by the Company or its Affiliate either for (A) "good reason" as defined in the Revlon Executive Severance Policy as in effect on the date of adoption of this Plan, with respect to employees or (B) "good reason", "cause" or any like term as defined under any employment agreement to which a grantee may be a party or, in the case of non-employee directors, removal for cause as set forth in the Company's By-laws from time to time or (ii) by a grantee otherwise than either for (A) "good reason", "cause" or any like term as defined under any employment agreement to which a grantee may be a party from time to time or (B) the reasons described in subsection (d) or (e) hereof, all outstanding options and stock appreciation rights granted to such grantee shall cease to be exercisable, and such grantee may not satisfy any condition or limitation which is unsatisfied (and no additional portion shall otherwise become vested) under any other outstanding Award, following the date of such termination of employment with respect to employees or termination of services in the case of non-employee directors, and all outstanding Awards held by such grantee shall in all respects automatically be canceled on the date of such termination of employment or services, as the case may be. 45
(c) Upon termination of a grantee's employment with the Company and its Affiliates, or in the case of termination of services for non-employee directors, for any reason other than as described in subsection (b), (d) or (e) hereof, the portions of outstanding options and stock appreciation rights granted to such grantee that are exercisable as of the date of termination of employment or, in the case of non-employee directors, services, of such grantee may continue to be exercised, and any payment or notice provided for under the terms of any other outstanding Award as respects the portion thereof vested as of the date of termination of such employment or services, as the case may be, may be given for a period of one year from and including the date of termination of such employment or services, but no additional portions of outstanding options or stock appreciation rights granted to such grantee shall become exercisable, and such grantee may not satisfy any condition or limitation which is unsatisfied (and no additional portion shall otherwise become vested) under any other outstanding Award, following the date of such termination of employment or services, and such unexercisable Awards or parts thereof shall in all respects automatically be canceled on the date of such termination of employment or services. (d) If the grantee voluntarily retires with the consent of the grantee's employer or retires as a non-employee director with the consent of the Company or the grantee's employment or services as a non-employee director terminates due to permanent disability, all outstanding options and stock appreciation rights granted to such grantee shall continue to become exercisable, all other outstanding Awards granted to such grantee shall continue to vest, and the grantee shall be entitled to continue satisfying any performance or other condition under all other Awards, in each case in accordance with the terms of the applicable Plan agreements, and the grantee shall be entitled to exercise each such option or stock appreciation right and to make any payment, give any notice and satisfy any performance or other condition under each such other Award, in each case, for a period of one year from and including (x) the date on which all portions of the Award first become fully exercisable or vested or capable of being satisfied, as the case may be, or (y) the date of termination of employment, services (in the case of non-employee directors) or retirement, whichever of (x) or (y) occurs last, and thereafter such Awards or parts thereof shall be canceled. Notwithstanding the foregoing, the Committee may in its sole discretion provide for a longer or shorter period for exercise of an option or stock appreciation right or may permit a grantee to continue vesting under an option, stock appreciation right or restricted stock award or to make any payment, give any notice and continue satisfying any performance or other condition under any other Award in the case of a grantee whose employment terminates solely because such grantee's employer ceases to be an Affiliate of the Company or a grantee who transfers employment with the Company's consent to a purchaser of a business disposed of by the Company. The Committee may in its sole discretion determine (i) whether any termination of employment or services (in the case of non-employee directors) is a voluntary retirement with employer or Company consent or is due to permanent disability for purposes of the Plan, (ii) whether any leave of absence (including any short-term or long-term disability or medical leave) constitutes a termination of employment within the meaning of the Plan, (iii) the applicable date of any such termination of employment or services (in the case of non-employee directors), and (iv) the impact, if any, of any of the foregoing on Awards under the Plan. (e) If the grantee's employment or services (in the case of non-employee directors) terminates by reason of death, or if the grantee's employment or services (in the case of non-employee directors) terminates under circumstances providing for continued rights under subsection (c) or (d) of this Section 2.10 and during the period of continued rights described in subsection (c) or (d) the grantee dies, all outstanding options and stock appreciation rights granted to such grantee shall become fully exercisable, and any payment or notice provided for under the terms of any other outstanding Award may be immediately paid or given and any condition may be satisfied, by the person to whom such rights have passed under the grantee's will (or if applicable, pursuant to the laws of descent and distribution) for a period of one year from and including the date of the grantee's death (notwithstanding that such period may extend more than 10 years after the grant of the Award) and thereafter all such Awards or parts thereof shall be canceled. 46
ARTICLE III MISCELLANEOUS 3.1 Amendment of the Plan; Modification of Awards (a) The Board may, without shareholder approval, at any time and from time to time suspend or discontinue the Plan or revise or amend it in any respect whatsoever, except that no such amendment shall impair any rights under any Award theretofore made under the Plan without the consent of the person to whom such Award was made. Furthermore, except as and to the extent otherwise permitted by Section 3.5 or 3.11, no such amendment shall, without shareholder approval: (i) materially increase the benefits accruing to grantees under the Plan; (ii) materially increase the number of shares of Common Stock in respect of which Awards may be issued under the Plan pursuant to Section 1.5 or pursuant to grants of restricted or unrestricted stock awards pursuant to Section 2.4, or increase the number of shares of Common Stock in respect of which Awards may be granted in any year under Section 1.5 or 2.5; (iii) materially modify the designation in Section 1.3 of the class of persons eligible to receive Awards under the Plan; (iv) except as provided in Section 2.10(e), permit a stock option or unrelated stock appreciation right to be exercisable, or shares of Common Stock underlying any other Award to vest or become deliverable, more than 10 years after the date of grant; (v) permit a stock option to have an option exercise price, or a stock appreciation right to have an appreciation base, of less than 100% of the fair market value of a share of Common Stock on the date the stock option or stock appreciation right is granted; or (vi) extend the term of the Plan beyond the period set forth in Section 3.14. (b) With the consent of the grantee (unless otherwise provided in the Plan or the applicable Plan agreement) and subject to the terms and conditions of the Plan (including Section 3.1(a)), the Committee may amend outstanding Plan agreements with such grantee, including, without limitation, any amendment which would (i) accelerate the time or times at which an Award may vest or be exercised and/or (ii) extend the scheduled expiration date of the Award. 3.2 Restrictions. (a) If the Committee shall at any time determine that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award under the Plan, the acquisition, issuance or purchase of shares or other rights thereunder, any determination regarding vesting or termination of any Award or satisfaction of any performance or other condition thereunder or the taking of any other action thereunder (each such action being hereinafter referred to as a "Plan Action"), then such Plan Action shall not be required to be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee. Without limiting the generality of the foregoing, in the event that (i) the Committee shall be entitled under the Plan to make any payment in cash, Common Stock or both, and (ii) the Committee shall determine that Consent is necessary or desirable as a condition of, or in connection with, payment in any one or more of such forms, then the Committee shall be entitled to determine not to make any payment whatsoever until such Consent shall have been obtained in the manner aforesaid. (b) The term "Consent" as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or other self-regulatory organization or under any federal, state, local or foreign law, rule or regulation, (ii) the expiration, elimination or satisfaction of any prohibitions, restrictions or limitations under any federal, state, local or foreign law, rule or regulation or the rules of any securities exchange or other self-regulatory organization, (iii) any and all written agreements and representations by the grantee 47
with respect to the disposition of shares, or with respect to any other matter, which the Committee shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, and (iv) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies or any parties to any loan agreements or other contractual obligations of the Company or any of its Affiliates. 3.3 Nontransferability. (a) No Award granted to any grantee under the Plan and no rights under any Plan agreement shall be assignable or transferable by the grantee (voluntarily or by operation of law) other than by will or by the laws of descent and distribution to the extent provided by the Plan and any applicable Plan agreement. During the lifetime of the grantee, all rights with respect to any Award granted to the grantee under the Plan or under any Plan agreement shall be exercisable only by such grantee. (b) Notwithstanding Section 3.3(a), the Committee may in the applicable Plan Agreement or at any time thereafter provide that options granted hereunder which are not intended to qualify as incentive stock options under Code section 422 may be transferred without consideration by the grantee, subject to such rules as the Committee may adopt to preserve the purposes of the Plan, to: (i) the grantee's spouse, children or grandchildren (including adopted and stepchildren and grandchildren) (collectively, the "Immediate Family"); (ii) a trust solely for the benefit of the grantee and or members of his or her Immediate Family; or (iii) a partnership or limited liability company whose only partners or shareholders are the grantee and/or members of his or her Immediate Family members. (each transferee described in clauses (i), (ii) and (iii) above is hereinafter referred to as a "Permitted Transferee"); provided that the grantee provides the Committee with advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the grantee in writing that such a transfer would comply with the requirements of the Plan and any applicable Plan Agreement; and provided further that with respect to options granted to officers and directors subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") no such options may be transferred within six months of the grant date to the extent such transfer would result in the grant of the option being deemed to constitute a non-exempt purchase under Section 16 of the Exchange Act. The terms of any such transferred option shall apply to the Permitted Transferee, except that (a) Permitted Transferees shall not be entitled to transfer any options, other than by will or the laws of descent and distribution; and (b) Permitted Transferees shall not be entitled to exercise any transferred options unless there shall be in effect a registration statement on an appropriate form under the Securities Act of 1933, as amended, covering the shares to be acquired pursuant to the exercise of such option if the Committee determines that such a registration statement is necessary or appropriate. Upon notice from a Permitted Transferee of its intent to exercise an option, the Committee shall advise such Permitted Transferee if a registration statement is necessary and if so whether such registration statement is in effect. 3.4 Withholding Taxes. (a) Whenever under the Plan shares of Common Stock are to be delivered upon exercise of an option or stock appreciation right, upon the lapse of restrictions on restricted stock awards, pursuant to performance awards or otherwise, the Committee shall be entitled to require as a condition of delivery that the grantee remit an amount sufficient to satisfy all federal, state and other governmental withholding tax requirements related thereto. Whenever cash is to be paid to a grantee under the Plan (whether upon the exercise or cancellation of an Award or otherwise), the Company shall be entitled as a condition of its payment to deduct therefrom, or from any compensation, 48
expense reimbursement or other payments due to the grantee, an amount sufficient to satisfy all federal, state and other governmental withholding tax and like requirements related thereto or to the delivery of any shares of Common Stock under the Plan. (b) A grantee may satisfy, in whole or in part, the foregoing withholding requirements by delivery of unrestricted shares of Common Stock owned by the grantee for at least six months (or such shorter or longer period as the Committee may approve or require that will not result in variable accounting treatment) having a fair market value (determined as of the date of such delivery by the grantee) equal to the amount otherwise payable. Without limiting the generality of the foregoing: (i) the Committee may require, as a condition of accepting any such delivery of shares of Common Stock, that the grantee furnish a Compliance Opinion and (ii) such delivery may be made by withholding shares of Common Stock from the shares otherwise issuable pursuant to the exercise of the Award giving rise to the tax withholding obligation (in which event the date of delivery shall be deemed the date the Award was exercised). 3.5 Adjustments Upon Changes in Capitalization. If and to the extent specified by the Committee, the number of shares of Common Stock which may be issued under the Plan, the number of shares of Common Stock subject to or underlying options, unrelated stock appreciation rights, and restricted stock awards and performance awards theretofore granted under the Plan, any annual or other limitation on the number of shares with respect to which Awards may be granted, and the option exercise price of options, the appreciation base of stock appreciation rights and any payments due with respect to other Awards theretofore granted under the Plan, may be appropriately adjusted (as the Committee may determine) for any increase or decrease in the number of issued shares of Common Stock resulting from the subdivision or combination of shares of Common Stock or other capital adjustments, or the payment of a stock dividend after the effective date of the Plan, or other increase or decrease in such shares of Common Stock effected without receipt of consideration by the Company; provided, however, that any options, unrelated stock appreciation rights, restricted stock awards or performance awards, to the extent covering fractional shares of Common Stock resulting from any such adjustment, shall be eliminated and terminated, and provided further, that each incentive stock option granted under the Plan shall not be adjusted in a manner that causes such option to fail to continue to qualify as an "incentive stock option" within the meaning of Code section 422. Adjustments under this Section shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. 3.6 Right of Discharge Reserved. Nothing in the Plan or in any Plan agreement shall confer upon any officer, director, employee or other person the right to continue in the employment of, or to continue performing services as a director for, the Company or any of its Affiliates or affect any right which the Company or any of its Affiliates may have to terminate the employment or services of such officer, director, employee or other person. 3.7 No Rights as a Stockholder. No grantee or other person exercising an option or stock appreciation right or entitled to delivery of shares of Common Stock pursuant to any other Award shall have any of the rights of a stockholder of the Company with respect to shares subject to an option or stock appreciation right or shares deliverable upon exercise of any other Award until the issuance of a stock certificate to such person for such shares. Except as otherwise provided in Section 3.5, no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is registered in the name of the grantee. In the case of a grantee of a restricted stock award, the grantee shall have the rights of a stockholder of the Company if and only to the extent provided in the applicable Plan agreement. 3.8 Nature of Payments. (a) Any and all grants of options, stock appreciation rights, stock awards and performance awards and payments of cash or issuances of shares of Common Stock hereunder shall be granted, issued, delivered or paid, as the case may be, in consideration of services performed for the Company or for its Affiliates by the grantee. 49
(b) All such grants, issuances and payments shall constitute a special incentive payment to the grantee and shall not, unless otherwise determined by the Committee, be taken into account in calculating the amount of compensation of the grantee for the purposes of determining any pension, retirement, death or other benefits under (i) any pension, retirement, life insurance or other benefit plan of the Company or any Affiliate or (ii) any agreement between the Company or any Affiliate, on the one hand, and the grantee on the other hand. (c) By accepting an Award under the Plan, the grantee shall thereby be understood to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the Award beyond the period provided herein or in the applicable Plan agreement, notwithstanding any contrary provision in any written employment contract or other agreement with the grantee, whether any such agreement is executed before or after the grant date of the Award. 3.9 Non-Uniform Determinations. The Committee's determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Plan agreements, as to (a) the persons to receive Awards under the Plan, (b) the terms and provisions of Awards under the Plan, (c) the exercise by the Committee of its discretion in respect of the exercise of rights pursuant to the terms of the Plan or any Plan agreement, and (d) the treatment of leaves of absences, disability leaves, terminations for cause or good reason and other determinations under the Plan or any Plan agreement. 3.10 Other Payments or Awards. Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company, any Affiliate or the Committee from making any award or payment or granting any right to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. 3.11 Reorganization. (a) In the event that Revlon or any successor is merged or consolidated with another corporation and, whether or not Revlon or such successor shall be the surviving corporation, there shall be any change in the shares of Common Stock as then constituted by reason of such merger or consolidation, or in the event that all or substantially all of the assets of the Company are acquired by another person, or in the event of a reorganization or liquidation of Revlon or any successor (each such event being herein after referred to as a "Reorganization Event") or in the event that the Board shall propose that Revlon or any successor enter into a Reorganization Event, then the Committee may in its discretion, by written notice to a grantee, provide that such grantee's options and stock appreciation rights and all other Awards requiring action on the part of such grantee will be terminated unless such grantee exercises or takes such action within 30 days (or such longer period as the Committee shall determine in its sole discretion) after the date of such notice; provided however that if the Committee takes such action the Committee also shall accelerate to an appropriate earlier date the dates upon which all outstanding options and stock appreciation rights of such grantee shall be exercisable and such action under such other Awards may be taken The Committee also may in its discretion, by written notice to a grantee, provide that the restrictions on restricted stock awards lapse and the performance and other conditions of other Awards shall be adjusted in the event of a Reorganization Event upon such terms and conditions as the Committee may determine. (b) Whenever deemed appropriate by the Committee, the actions referred to in Section 3.11(a) may be made conditional upon the consummation of the applicable Reorganization Event. 3.12 Legend on Certificates. All certificates for shares of Common Stock issued pursuant to Awards hereunder may be stamped or otherwise imprinted with a legend in such form as the Company may require with respect to any applicable restrictions on the sale or transfer of shares. 50
3.13 Section Headings. The section headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said sections. 3.14 Effective Date and Term of Plan. (a) This Plan shall be deemed adopted and become effective upon the approval thereof by the Board; provided that, notwithstanding any other provision of the Plan, no Award made under the Plan shall be exercisable unless the Plan is approved, directly or indirectly, by the express consent of shareholders holding at least a majority in voting power of the Company's voting stock voting in person or by proxy at a duly held stockholders' meeting, within 12 months after the date the Plan is adopted. (b) The Plan shall terminate on February 22, 2006, and no Awards shall thereafter be made under the Plan. Notwithstanding the foregoing, all Awards made under the Plan prior to such termination date shall remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Plan agreement. 3.15 Tenure. A participant's right, if any, to continue to serve the Company or any of its Affiliates as a director, officer, employee or otherwise, shall not be enlarged or otherwise affected by his or her designation as a participant under the Plan. 3.16 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended. 3.17 Governing Law. This Plan shall be governed by the laws of the State of New York applicable to agreements made and to be performed entirely within such state. 3.18 Conditions. If pursuant to Section 2.10(e) or Section 3.11(a) the dates upon which options shall be exercisable are accelerated, it shall be on the condition that with respect to options granted to officers and directors subject to the reporting requirements of Section 16 of the Exchange Act the shares underlying such options may not be sold by any such individual (or their estate or Permitted Transferee) within 6 months after the grant of the option to the extent such sale would result in the grant of the option being deemed to constitute a non-exempt purchase under Section 16 of the Exchange Act. 51
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE! ANNUAL MEETING OF STOCKHOLDERS REVLON, INC. CLASS A COMMON STOCK JUNE 1, 2001 Please Detach and Mail in the Envelope Provided - -------------------------------------------------------------------------------- A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. WITHHOLD AUTHORITY to vote for all nominees FOR listed at right 1. ELECTION OF [ ] [ ] DIRECTORS FOR all nominees listed (except as marked to the contrary below): - ----------------------------------------------------- NOMINEES: Ronald O. Perelman Donald G. Drapkin Meyer Feldberg Howard Gittis Vernon E. Jordan Edward J. Landau Jerry W. Levin Jeffrey M. Nugent Linda Gosden Robinson Terry Semel Martha Stewart FOR AGAINST ABSTAIN 2. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ] serve as the Company's independent accountants for fiscal 2001. 3. Proposal to approve the Revlon, Inc. Third Amended [ ] [ ] [ ] and Restated 1996 Stock Plan. 4. In their discretion, upon such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE ELEVEN NOMINEES FOR ELECTION AND FOR PROPOSALS 2 AND 3. STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES. SIGNATURES: Date: ,2001 -------------------------------------- -------------------- NOTE: Please sign exactly as name or names appear on stock certificate (as indicated hereon.) - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- REVLON, INC. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 1, 2001 The undersigned hereby appoints Robert K. Kretzman and Michael T. Sheehan, as proxies, each with the full power to appoint his substitute, and hereby authorizes them to represent and vote, as designated on the reverse side of this card, all shares of Class A Common Stock of Revlon, Inc. (the "Company") held of record by the undersigned at the close of business on April 12, 2001, at the Annual Meeting of Stockholders to be held on June 1, 2001 or any adjournment thereof. (TO BE SIGNED ON REVERSE SIDE) - --------------------------------------------------------------------------------
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE! ANNUAL MEETING OF STOCKHOLDERS REVLON, INC. CLASS B COMMON STOCK JUNE 1, 2001 Please Detach and Mail in the Envelope Provided - -------------------------------------------------------------------------------- A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. WITHHOLD AUTHORITY to vote for all nominees FOR listed at right 1. ELECTION OF [ ] [ ] DIRECTORS FOR all nominees listed (except as marked to the contrary below): - ----------------------------------------------------- NOMINEES: Ronald O. Perelman Donald G. Drapkin Meyer Feldberg Howard Gittis Vernon E. Jordan Edward J. Landau Jerry W. Levin Jeffrey M. Nugent Linda Gosden Robinson Terry Semel Martha Stewart FOR AGAINST ABSTAIN 2. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ] serve as the Company's independent accountants for fiscal 2001. 3. Proposal to approve the Revlon, Inc. Third Amended [ ] [ ] [ ] and Restated 1996 Stock Plan. 4. In their discretion, upon such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE ELEVEN NOMINEES FOR ELECTION AND FOR PROPOSALS 2 AND 3. STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES. SIGNATURES: Date: ,2001 -------------------------------------- -------------------- NOTE: Please sign exactly as name or names appear on stock certificate (as indicated hereon.) - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- REVLON, INC. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 1, 2001 The undersigned hereby appoints Robert K. Kretzman and Michael T. Sheehan, as proxies, each with the full power to appoint his substitute, and hereby authorizes them to represent and vote, as designated on the reverse side of this card, all shares of Class B Common Stock of Revlon, Inc. (the "Company") held of record by the undersigned at the close of business on April 12, 2001, at the Annual Meeting of Stockholders to be held on June 1, 2001 or any adjournment thereof. (TO BE SIGNED ON REVERSE SIDE) - --------------------------------------------------------------------------------
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE! ANNUAL MEETING OF STOCKHOLDERS REVLON, INC. PROXY CARD FOR REVLON EMPLOYEES' SAVINGS, INVESTMENT AND PROFIT SHARING PLAN PARTICIPANTS JUNE 1, 2001 Please Detach and Mail in the Envelope Provided - -------------------------------------------------------------------------------- A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. WITHHOLD AUTHORITY to vote for all nominees FOR listed at right 1. ELECTION OF [ ] [ ] DIRECTORS FOR all nominees listed (except as marked to the contrary below): - ----------------------------------------------------- NOMINEES: Ronald O. Perelman Donald G. Drapkin Meyer Feldberg Howard Gittis Vernon E. Jordan Edward J. Landau Jerry W. Levin Jeffrey M. Nugent Linda Gosden Robinson Terry Semel Martha Stewart FOR AGAINST ABSTAIN 2. Proposal to ratify the selection of KPMG LLP to [ ] [ ] [ ] serve as the Company's independent accountants for fiscal 2001. 3. Proposal to approve the Revlon, Inc. Amended and [ ] [ ] [ ] Restated 1996 Stock Plan. 4. In their discretion, upon such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE ELEVEN NOMINEES FOR ELECTION AND FOR PROPOSALS 2 AND 3. STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES. SIGNATURES: Date: ,2001 -------------------------------------- -------------------- NOTE: Please sign exactly as name or names appear on stock certificate (as indicated hereon.) - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- REVLON, INC. PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 1, 2001 FOR REVLON EMPLOYEES' SAVINGS, INVESTMENT AND PROFIT SHARING PLAN PARTICIPANTS The undersigned hereby appoints Robert K. Kretzman and Michael T. Sheehan, as proxies, each with the full power to appoint his substitute, and hereby authorizes them to represent and vote, as designated on the reverse side of this card, all shares of Class A Common Stock of Revlon, Inc. (the "Company") held of record by the undersigned at the close of business on April 12, 2001, at the Annual Meeting of Stockholders to be held on June 1, 2001 or any adjournment thereof. (TO BE SIGNED ON REVERSE SIDE) - --------------------------------------------------------------------------------