2005 Proxy Statement
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant ¨
Check
the
appropriate box:
¨
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Preliminary
Proxy Statement
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¨
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to §240.14a-11(c) or
§240.14a-12
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COLLECTORS
UNIVERSE, INC.
(Name
of Registrant as Specified In Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee
required
¨ $125
per
Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
¨ $500
per
each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
¨ Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) |
Title
of each class of securities to which transaction
applies:
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(2) |
Aggregate
number of securities to which transaction
applies:
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(3) |
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was
determined):
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(4) |
Proposed
maximum aggregate value of
transaction:
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¨
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Fee
paid previously with preliminary
materials.
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¨
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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COLLECTORS
UNIVERSE, INC.
1921
E. Alton Avenue
Santa
Ana, California 92705
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held On Monday, December 5, 2005
TO
THE
STOCKHOLDERS OF COLLECTORS UNIVERSE, INC.:
The
2005
Annual Meeting of Stockholders of COLLECTORS UNIVERSE, INC. (the “Company”),
will be held at the Company’s offices at 1921 E. Alton Avenue, Santa Ana,
California 92705 on Monday, December 5, 2005, at 10:00 a.m.,
Pacific
Time, for the following purposes:
(1) Election
of Directors.
To
elect the following seven nominees to serve as directors until the next Annual
Meeting of Stockholders or until their successors are elected and have
qualified:
A.
Clinton Allen
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Michael
R. Haynes
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Deborah
A. Farrington
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A.
J. “Bert” Moyer
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Ben
A. Frydman
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Van
D. Simmons
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David
G. Hall
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(2) Approval
of 2005 Stock Incentive Plan.
To
approve the 2005 Stock Incentive Plan which authorizes the Company to grant,
to
officers, directors, employees and service providers of the Company and its
subsidiaries, options and restricted rights to purchase up to an aggregate
of
230,000 shares of the Company’s common stock.
(3) To
transact such other business as may properly come before the meeting or any
adjournment or postponement thereof.
Additional
information regarding these matters is contained in the accompanying Proxy
Statement, which stockholders are urged to review. Only stockholders of record
at the close of business on October 17, 2005 will be entitled to vote
at
the meeting or any adjournment or postponement thereof.
By
Order
of the Board of Directors
A.
Clinton Allen
Chairman
of the Board
Santa
Ana, California
October
28, 2005
YOUR
VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND
THE
MEETING YOU SHOULD COMPLETE, DATE AND SIGN AND RETURN THE ENCLOSED
PROXY.
Any
stockholder present at the meeting may withdraw his or her proxy
and vote
personally on each matter brought before the meeting. Stockholders
attending the meeting whose shares are held in the name of a broker
or
other nominee who desire to vote their shares at the meeting should
bring
with them a proxy or letter from that firm confirming their ownership
of
shares.
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COLLECTORS
UNIVERSE, INC.
1921
E. Alton Avenue
Santa
Ana, California 92705
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
DECEMBER
5, 2005
INTRODUCTION
This
Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of Collectors Universe, Inc., a Delaware
corporation (the “Company”), for use at its 2005 Annual Meeting of Stockholders
to be held on Monday, December 5, 2005, at 10:00 A.M., Pacific Time, at the
executive offices of the Company, 1921 E. Alton Avenue, Santa Ana, California
92705. This Proxy Statement and the accompanying proxy card are first being
mailed to stockholders on or about October 28, 2005.
YOUR
VOTE IS IMPORTANT. PLEASE VOTE AS SOON AS POSSIBLE BY COMPLETING, SIGNING AND
DATING THE PROXY CARD ENCLOSED WITH THIS PROXY STATEMENT AND
RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Some
stockholders may have their shares registered in different names or hold shares
in different capacities. For example, a stockholder may have some shares
registered in his or her name, individually, and others in his or her capacity
as a custodian for minor children or as a trustee of a trust. In that event,
you
will receive multiple copies of this Proxy Statement and multiple Proxies.
If
you want
all of
your votes to be counted, please be sure to sign, date and return all of those
Proxies.
Who
May Vote?
The
shares of the Company’s common stock, $.001 par value, constitute the only
outstanding class of voting securities of the Company. If
you
were a stockholder on the records of the Company at the close of business on
October 17, 2005 (which is the record date established for the Annual
Meeting), you may vote at the Annual Meeting, and at any adjournment or
postponement thereof, either in person or by proxy. On that day, there were
8,611,103 shares of our common stock outstanding and entitled to
vote.
How
Many Votes Do I Have?
Each
share is entitled to one vote in the election of directors and on any other
matter upon which a vote may properly be taken at the Annual Meeting. Also,
in
the election of directors, there is no cumulative voting. As a result each
stockholder will be entitled, for each share of common stock that such
stockholder owns, to cast one vote for a single nominee for each position on
the
Board of Directors.
In
order
to vote, you must either designate a proxy to vote on your behalf at the Annual
Meeting, or attend the Annual Meeting and vote your shares in person. The Board
of Directors requests your proxy so that your shares will count toward a quorum
and will be voted at the Annual Meeting.
How
Will The Board Vote My Proxy?
A
properly executed proxy received by us prior to the Meeting, and not revoked,
will be voted as directed by you on that proxy. If you provide no specific
direction, your shares will be voted “FOR”
the
election of the Directors nominated by the Board and “FOR”
the
approval of the Company’s 2005 Stock Incentive Plan (Proposal No.
2).
If
any
other matter is presented at the Annual Meeting upon which a vote may properly
be taken, the shares represented by your proxy will be voted in accordance
with
the judgment of the holders of the proxy. However, if your shares are held
in a
brokerage account or by a nominee, please read the information below under
captions “How May I Vote” and “Voting Shares Held by Brokers, Banks and Other
Nominees” regarding how your shares may be voted.
Stockholders
should complete, sign, date and return their proxy cards in the postage-prepaid
return envelope provided with this Proxy Statement. If you sign and return
your
proxy card without indicating how you want to vote, your proxy will be voted
as
recommended by the Board of Directors (except for shares held by brokers, banks
and other nominees, as described below). If you forget to sign you proxy card
your shares cannot be voted. However, if you sign your proxy card, but forget
to
date it, your shares will still be voted as you have directed. You should,
however, date your proxy card, as well as sign it.
In
the
alternative, you may attend the Annual Meeting and vote in person. However,
if
your shares are held in a brokerage account or by a nominee holder, you will
need to contact the broker or the nominee holder to obtain a proxy that will
enable you to vote your shares in person at the Annual Meeting.
Voting
Shares Held by Brokers, Banks and Other Nominees
If
you
hold your shares of Company common stock in a brokerage or nominee account,
you
are the “beneficial owner” of those shares, holding them in “street name.” In
order to vote your shares, you must give voting instructions to your broker
or
the nominee holder of your shares. We ask brokers and nominee holders to obtain
voting instructions from the beneficial owners of shares of our common stock.
Proxies that are sent to us by brokers or nominee holders on your behalf will
count toward a quorum and will be voted in accordance with the instructions
that
you have provided to the broker or nominee holder of your shares. If you fail
to
provide voting instructions, your broker or other nominee will have discretion
to vote your shares for the election of the Board’s nominees at the Annual
Meeting (unless there is a “counter-solicitation” or your broker has knowledge
of a “contest,” as those terms are used in the New York Stock Exchange Rules).
However, under the New York Stock Exchange Rules, which are applicable to
brokerage firms and are followed by most other nominee holders, without your
instructions your shares will not be voted by your broker or nominee holder
on
the proposal to approve the 2005 Stock Incentive Plan (Proposal No. 2
below).
Required
Vote
Quorum
Requirement.
Our
Bylaws require that a quorum — that is, the holders of a majority of all of the
shares of our common stock entitled to vote at the Annual Meeting — be present,
in person or by proxy, before any business may be transacted at the Meeting
(other than adjourning the Meeting to a later date to allow time to obtain
additional proxies to satisfy the quorum requirement).
Election
of Directors.
A
plurality of the votes cast is required for the election of Directors. The
seven
nominees for election to the Board who receive the highest number of votes
cast
will be elected and any shares voted to “Withhold Authority” will not have any
effect on the outcome of the election. Broker non-votes, which relate to shares
for which “street” or “nominee” holders do not obtain voting instructions from
the beneficial holders and cannot or do not choose to vote the shares on a
discretionary basis, are not counted as votes cast and, therefore, also will
have no effect on the outcome of the election. However, shares voted to Withhold
Authority and broker non-votes are considered present at the meeting for
purposes of determining whether a quorum is present.
Approval
of 2005 Stock Incentive Plan.
Approval of the 2005 Stock Incentive Plan will require the affirmative vote
of a
majority of the shares present, in person or by proxy, and voted on this
Proposal. Abstentions will have the same effect as a vote against this Proposal.
Broker non-votes, however, will be treated as if they had not been voted and,
therefore, will not be counted, except for quorum purposes.
How
Can I Revoke My Proxy?
If
you
are the record owner of your shares and, after you have returned your proxy,
you
decide to change your vote, you may do so by taking any one of the following
actions:
·
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Sending
a written notice that you are revoking your proxy addressed to the
Secretary of the Company, at P.O. Box 6280 Newport Beach,
California
92658 and then voting again by one of the methods described immediately
below. To be effective, the notice of revocation must be received
by the
Company before the Annual Meeting
commences.
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·
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Returning
a new proxy with a later date than your earlier proxy. To be effective,
that later dated proxy must be received by the Company before the
Annual
Meeting commences.
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· |
Attending
the Meeting and voting in person or by proxy in a manner different
that
the instructions contained in your earlier
proxy.
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However,
if your shares are held by a broker or other nominee holder, and you want to
change the voting instructions you have previously given to the broker or
nominee holder, you will need to contact your broker or the nominee holder
to
ascertain the actions you will need to take to change your previous voting
instructions.
STOCK
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
following table presents certain information as of October 17, 2005,
regarding the shares of common stock of the Company beneficially owned by
(i) persons known by the Company to hold more than 5% of its shares,
(ii) the incumbent directors and the nominees for election to the Board
of
Directors at the upcoming Annual Meeting, (iii) the executive officers
of
the Company, and (iv) all of the directors and executive officers as
a
group.
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Shares
Beneficially Owned(1)
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Name
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Number
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Percent
of Class
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Delaware
Management Business Trust
Delaware
Management Holdings
2005
Market Street
Philadelphia,
PA 19103
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907,965(2)
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10.5
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%
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David
G. Hall
P.O.
Box 6280 Newport Beach, CA 92658
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771,518(3)
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7.7
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%
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Special
Situations Cayman Fund, L.P.,
Special
Situations Fund III,
Austin
W. Marxe and David M. Greenhouse
153
East 53rd Street, 55th floor,
New
York, NY 10022
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713,180(4)
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8.3
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%
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Van
D. Simmons
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232,360(5)
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2.3
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%
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Michael
R. Haynes
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115,164(6)
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1.2
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%
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A.
Clinton Allen
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90,125(6)
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*
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Ben
A. Frydman
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49,375(6)
(7)
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*
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Deborah
A. Farrington
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42,500(6)
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*
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|
|
|
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A.
J. Bert Moyer
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42,500(6)
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*
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|
|
|
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Michael
J. Lewis
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45,625(6)
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*
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|
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Joseph
J. Wallace
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8,750(6)
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*
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|
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All
Directors and Executive Officers, as a group (9 persons)
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|
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1,398,397(8)
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14.0
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%
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* Less
than
1%.
(1)
|
Beneficial
ownership is determined in accordance with the rules of the Securities
and
Exchange Commission. Under those rules and for purposes of the table
above
(a) if a person has decision making power over either the voting
or the
disposition of any shares, that person is generally deemed to be
a
beneficial owner of those shares; (b) if two or more persons have
decision
making power over either the voting or the disposition of any shares,
they
will be deemed to share beneficial ownership of those shares, in
which
case the same shares will be included in share ownership totals for
each
of those persons; and (c) if a person held options or warrants to
purchase
shares that were exercisable on, or became exercisable within 60
days of,
October 17, 2004, that person will be deemed to be the beneficial
owner of
those shares and those shares (but not shares that are subject to
options
or warrants held by any other stockholder) will be deemed to be
outstanding for purposes of computing the percentage of the outstanding
shares that are beneficially owned by that
person.
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(2)
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According
to a report filed, on Schedule 13G with the Securities and Exchange
Commission (the “SEC”), by Delaware Management Business Trust and Delaware
Management Holdings (the “Delaware Management Companies”), they have sole
voting and dispositive power with respect to all of these shares.
That
report also states that these Shares are being held on behalf of
the some
or all of a number of investment funds referred to, collectively,
as the
Delaware Investments Family of Funds and that those Funds may be
deemed to
be the direct or indirect beneficial owners of these shares for purposes
of the reporting requirements of Section 13(d) of the Securities
Exchange
Act of 1934, as amended. Lincoln National Corp. is reported to be
the
ultimate parent of the Delaware Management
Companies.
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(3)
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Includes
46,426 shares held in grantor trusts established for Mr. Hall’s children.
Mr. Hall may, under limited circumstances, exercise dispositive power
(but
he does not have voting power) over those shares and, for that reason,
may
be deemed to share such dispositive power with the trustees of those
trusts.
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(4)
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According
to the most recent report on Schedule 13G filed with the SEC by Messrs.
Marxe and Greenhouse, 173,795 of these shares are owned by Special
Situations Cayman Fund, L.P. (“Cayman”) and the other 539,385 shares are
owned by Special Situations Fund III, L.P (“SSFIII”). That report states,
however, that Messrs. Marxe and Greenhouse share sole voting and
dispositive power over all 713,180 of the shares, because they are
the
controlling principals of AWM Investment Company, Inc., which is
the
general partner of and investment adviser to Cayman and the general
partner of MGP Advisers Limited Partnership (“MGP”), which is the general
partner of and investment adviser to
SSFIII.
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(5)
|
Includes
15,476 of the shares held by the grantor trusts established by Mr.
Hall
for his children that are referred to in footnote (3) above, because
Mr.
Simmons is a trustee for certain of those trusts. As trustee, he
exercises
voting power, and shares dispositive power with Mr. Hall, over those
15,476 shares and, therefore, these 15,476 shares are included in
both of
their respective share ownership totals. Mr. Simmons does
not have
any financial or pecuniary interest in any of the shares held in
these
trusts. Also includes 15,000 employee stock options that are exercisable
within 60 days of October 17, 2005.
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(6)
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Includes
the following numbers of shares which may be purchased on exercise
of
employee stock options that were exercisable on, or will become
exercisable within 60 days of, October 17, 2005: Mr. Haynes - 110,000
shares; Mr. Allen - 81,250 shares; Mr. Frydman - 48,750 shares; Ms.
Farrington - 41,500 shares; Mr. Moyer - 37,500 shares; Mr. Lewis
- 45,625
shares; and Mr. Wallace — 8,750
shares.
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(7)
|
Does
not include, and Mr. Frydman disclaims beneficial ownership of, a
total of
4,375 shares owned by other members of the law firm of Stradling
Yocca
Carlson & Rauth, of which Mr. Frydman is a stockholder and
member.
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(8)
|
Includes
a total of 388,375 shares which our executive officers and directors
have
the right to acquire by exercise of stock options that were exercisable
on, or will become exercisable within 60 days of, October 17,
2005.
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ELECTION
OF DIRECTORS
(Proposal
No. 1)
The
Company’s Bylaws currently provide for a Board of seven directors to serve for a
term of one (1) year and until their successors are elected and qualify to
serve. The Board of Directors has nominated the seven nominees named below
for
election as directors at the 2005 Annual Meeting. Unless
authority to vote has been withheld, the proxy holders named in the enclosed
proxies intend to vote the shares represented by those proxies at the Annual
Meeting for the election of all of the nominees named below.
All
of
the nominees are presently directors of the Company and all of them were elected
to the Board of Directors by the Company’s stockholders at the 2004 Annual
Meeting. All of the nominees have consented to serve, if elected. If any nominee
becomes unavailable for any reason before the election, the enclosed proxy
will
be voted for the election of such substitute nominee or nominees, if any, as
shall be designated by the Board of Directors. The Board of Directors has no
reason to believe that any of the nominees will be unavailable to
serve.
Vote
Required and Recommendation of the Board of Directors
Under
Delaware law, the seven nominees for election as Directors receiving the highest
number of votes at the Annual Meeting will be elected. As a result, proxies
voted to “Withhold Authority,” which will be counted, and broker non-votes,
which will not be counted, will have no practical effect on the outcome of
the
election.
The
names
and certain information, as of October 17, 2005, concerning the nominees for
election as Directors is set forth below.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR”
THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
Nominees:
|
Age
|
|
Director
Since
|
|
Principal
Occupation
|
|
|
|
|
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A.
Clinton Allen
|
61
|
|
2001
|
|
Chief
Executive Officer of A. C. Allen & Company
|
|
|
|
|
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Deborah
A. Farrington
|
55
|
|
2003
|
|
Co-Chairman
of StarVest Partners, L.P.
|
|
|
|
|
|
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Ben
A. Frydman
|
58
|
|
2000
|
|
Attorney
and Member of Stradling Yocca Carlson & Rauth
|
|
|
|
|
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David
G. Hall
|
58
|
|
1986*
|
|
President
of the Company
|
|
|
|
|
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|
Michael
R. Haynes
|
54
|
|
2003
|
|
Chief
Executive Officer of the Company
|
|
|
|
|
|
|
A.
J. “Bert” Moyer
|
61
|
|
2003
|
|
Business
Consultant and Private Investor
|
|
|
|
|
|
|
Van
D. Simmons
|
54
|
|
1986*
|
|
President
of DHRCC, Inc.
|
|
*
|
Although
Collectors Universe was organized in February 1999, Messrs. Hall
and
Simmons were both founders and served as directors of its predecessor
company, Professional Coin Grading Service, Inc. beginning in
1986.
|
A.
Clinton Allen has
served as a Director since June 2001 and as Chairman of the Board of Directors
since December 2002. Mr. Allen is the CEO of A. C. Allen & Company, a
private investment banking consulting firm. He is the Lead Director and Chairman
of the Audit Committee of Steinway Musical Instruments, one of the world's
largest manufacturers of musical instruments. He is also a member of the board
of directors of Brooks Automation, Inc., which provides integrated tool and
factory automation solutions for the global semiconductor and related industries
and of the board of directors of LKQ Corporation, the largest nationwide
provider of recycled OEM automotive parts. He also serves on the board of Source
Interlink Companies, Inc., a premier direct-to-retail marketing merchandising
and fulfillment company for home entertainment content products. He served
on
the board of directors of Blockbuster Entertainment Corporation from 1986 until
its acquisition by Viacom/Paramount in September 1994. Mr. Allen graduated
from
Harvard University and serves on the Executive Committee of the Friends of
Harvard Football, as well as the Harvard Visiting Committee on University
Resources and the Harvard Major Gifts Committee. He is a member of the Board
of
Directors and the President’s Council of the Massachusetts General
Hospital.
Deborah
A. Farrington
is
founder and is, and since 1998 has been, the Co-Chairman of StarVest Partners,
L.P., a $150 million private equity fund, which invests primarily in emerging
software and business services companies. From 1993 to 1997, Ms. Farrington
was
President and CEO of Victory Ventures, LLC, a New York-based private equity
investment firm. Also during that period, she was a founding investor and
chairman of the board of Staffing Resources, Inc., a diversified staffing
company which grew from $17 million to $300 million in annual revenues while
she
served on its board. Ms. Farrington serves on the Boards of NetSuite
Technologies, Inc., Comparison Markets, Inc., and Fieldglass, Inc., all of
which
are private companies. She is a graduate of Smith College and received an MBA
from Harvard Business School.
Ben
A. Frydman has
served as a Director of Collectors Universe since December 2000.
Mr. Frydman is, and for more than the past five years has been, engaged
in
the private practice of law, as a member and stockholder of Stradling Yocca
Carlson & Rauth, a Professional corporation, which provided legal services
to the Company in the fiscal year ended June 30, 2005 and is expected
to
provide legal services to the Company in the fiscal year ending June 30,
2006. Mr. Frydman is a member of the Board of Directors of The Coast
Distribution System, Inc., a public company that is one of North America’s
largest wholesale distributors of aftermarket parts and accessories for
recreational vehicles and boats. He also is a founding member of the Board
of
the Forum for Corporate Directors of Orange County, which is a nonprofit
corporation that conducts educational programs focusing on corporate governance.
Mr. Frydman has a B.A. degree, with honors, from UCLA and a Juris Doctor
degree, with honors, from Harvard Law School.
David
G. Hall
has
served as President of Collectors Universe since October 2001 and a Director
since its founding in February 1999. From April 2000 to September 2001,
Mr. Hall served as the Chief Executive Officer of the Company and as
its
Chairman from February 1999 to October 2001. Mr. Hall is a director
and
President of Professional Coin Grading Service, Inc., the Company’s predecessor
and now its wholly-owned subsidiary, and was its Chief Executive Officer from
1986 to February 1999, when it was acquired by the Company. Mr. Hall
was
honored in 1999 by COINage
Magazine
as
Numismatist of the Century, along with 14 other individuals. In 1990,
Mr. Hall was named Orange County Entrepreneur of the Year by INC.
Magazine. In
addition, he has written A
Mercenary’s Guide to the Rare Coin Market,
a book
dedicated to coin collecting.
Michael
R. Haynes has
been
the Company’s Chief Executive Officer since January 2003. Prior to joining
Collectors Universe, he had served as president, chief operating officer or
chief financial officer of eight
different companies engaged in the collectibles, precious metals, specialty
retail, distribution, e-commerce and manufacturing businesses, including Greg
Manning Auctions, Inc., where he served as President and Chief Financial Officer
from 1994 to 1995 and Heritage Numismatic Auctions, where he served as President
from 1974 to 1990. Mr. Haynes also was one of the co-founding board members
of
the Industry Council for Tangible Assets, a Washington, D.C. trade association
for dealers and auctioneers of tangible and collectible assets, where he served
for nine years. Mr. Haynes holds a Master's Degree in Business and a Bachelor
of
Science Degree in Mechanical Engineering, both from Southern Methodist
University. Mr. Haynes also is a CPA.
A.
J.
“Bert” Moyer,
who is
now a business consultant and private investor, served from March 1998 until
February 2000 as Executive Vice President and Chief Financial Officer for QAD,
Inc., a leading provider of enterprise resource planning software applications
for global manufacturing companies. Between September 2000 and February 2002,
Mr. Moyer was engaged as a consultant to QAD, Inc., assisting in the Sales
Operations of the Americas Region. He served as president of the commercial
division of the Profit Recovery Group International, Inc. from March until
July
2000. Prior to joining QAD, Inc. in 1998, Mr. Moyer was Chief Financial Officer
of Allergan, a specialty pharmaceutical company based in Irvine, California.
Mr.
Moyer serves on the boards of directors of CalAmp Corp., Virco Manufacturing
Corporation and LaserCard Corporation, all of which are public companies. Mr.
Moyer received his Bachelor of Science degree in Business Administration from
Duquesne University and graduated from the Advanced Management Program at the
University of Texas, Austin.
Van
D. Simmons is
the
President of DHRCC, Inc., a direct seller of rare coins. He served as President
of the Company’s David Hall Rare Coins Division from October 2000 until March
2004, when we discontinued that business. From July to October 2000, he served
as Vice President of Sales of the Company’s Bowers and Merena Division. From
1981 to 1997 he served as the President of DHRCC, Inc. Mr. Simmons was a
founding director of the Company in February 1999 and was also a founder and
served as a director of its predecessor company, Professional Coin Grading
Service, Inc., from 1986 to February 1999. He served as Chairman of the Board
of
David Hall’s North American Trading, LLC, a retailer of rare coins, from
February 1997 to July 2000.
There
are
no family relationships among any of the Company’s officers or
directors.
THE
BOARD OF DIRECTORS
The
Role of the Board of Directors
In
accordance with Delaware law and our Bylaws, the Board of Directors oversees
the
management of the business and affairs of the Company. The members of the Board
keep informed about our business through discussions with senior management
and
other officers and managers of the Company and its subsidiaries, by reviewing
analyses and reports sent to them by management and outside consultants, and
by
participating in Board and in Board committee meetings.
Attendance
at Meetings
During
fiscal 2005, the Board of Directors of the Company held a total of 10 meetings
and all of the directors attended at least 75% of the total of those meetings
and the meetings of the Board committees on which they served during the
respective periods they served as directors of the Company during that
year.
Our
Board
members are encouraged to prepare for and attend all meetings of our
stockholders and all meetings of the Board and the Board committees of which
they are members. All of the directors attended the 2004 Annual Meeting of
Stockholders.
Number
of Directors
The
Board
currently consists of seven members. Our Bylaws provide that the Board of
Directors is authorized to change the authorized number of directors from time
to time, as it deems to be appropriate.
Term
of Office of Directors - Annual Election of Directors
The
Company’s Bylaws provide that directors are elected annually to serve for a term
of one year ending at the next Annual Meeting of Stockholders and until their
successors are elected. If a vacancy occurs in any Board position between Annual
Meetings, the Board may fill the vacancy by electing a new director to that
position. The Board of Directors may also create a new director position and
elect a new director to hold that position for a term ending at the next Annual
Meeting of Stockholders.
Director
Independence
The
Board
has determined, after careful review, that each member of the Board is
independent under the definition of independence set forth in rules of NASDAQ
that are applicable to companies with shares listed on that NASDAQ National
Stock Market (the “NASDAQ Listed Company Rules”), with the exception of Messrs.
Haynes and Hall, who are officers of the Company, and Mr. Simmons who was
employed by the Company until March 31, 2004. In reaching this conclusion,
the
Board considered all relevant facts and circumstances with respect to any direct
or indirect relationships between the Company and each of the non-management
directors. The Board determined that any relationships that now exist, or may
have existed in the past, between the Company and any of the non-management
directors have no material effect on their independence.
In
accordance with the Board’s independence evaluation, 4 of the 7 incumbent
members of the Board are independent directors. In addition, all of the members
of the standing committees of the Board are independent directors.
Communications
with the Board
Stockholders
and other parties interested in communicating with the non-management directors
as a group may do so by writing to the Corporate Secretary, Collectors Universe,
Inc., P.O. Box 6280, Newport Beach, California 92658. The Corporate Secretary
will review and forward to the appropriate member or members of the Board copies
of all such correspondence that, in the opinion of the Corporate Secretary,
deal
with the functions of the Board or its committees or that the Corporate
Secretary otherwise determines requires their attention. Concerns relating
to
accounting, internal controls or auditing matters will be brought promptly
to
the attention of the Chairman of the Audit Committee and will be handled in
accordance with procedures established by the Board’s Audit
Committee.
Corporate
Governance Policies
Our
Board
of Directors believes that sound governance practices and policies provide
an
important framework to assist them in fulfilling their duty to the Company’s
stockholders. In September 2004, our Board of Directors adopted the following
governance policies, which include a number of policies and practices under
which our Board has operated for some time, together with concepts suggested
by
various authorities in corporate governance and the new requirements under
the
NASDAQ Listed Company Rules and the Sarbanes-Oxley Act of 2002. Some of the
principal subjects covered by those policies include:
|
•
|
Director
Qualifications,
which include measuring each candidate’s independence, experience,
knowledge, skills, expertise, integrity, ability to make independent
analytical inquiries; his or her understanding of our business
and the
business environment in which we operate; and the candidate’s ability and
willingness to devote adequate time and effort to Board responsibilities,
taking into account the candidate’s employment and other board
commitments.
|
|
•
|
Responsibilities
of Directors,
which include acting in the best interests of all stockholders;
maintaining independence; developing and maintaining a sound understanding
of our business and the industry in which we operate; preparing
for and
attending Board and Board committee meetings; and providing active,
objective and constructive participation at those
meetings.
|
|
•
|
Director
access to management and, as necessary and appropriate, independent
advisors,
including encouraging presentations to the Board from the officers
responsible for functional areas of our
business.
|
|
•
|
Maintaining
adequate funding
to
retain independent advisors for the Board, as the Board deems to
be
necessary or appropriate, and also for its standing committees
as the
members of those committees deem to be necessary or
appropriate.
|
|
•
|
Director
orientation and continuing education,
including programs to familiarize new directors with our business,
strategic plans, significant financial, accounting and risk management
issues, compliance programs, conflicts policies, code of business
conduct
and corporate governance guidelines. In addition, each director
is
expected to participate in continuing education programs relating
to
developments in the Company’s business and in corporate
governance.
|
|
•
|
Annual
performance evaluation of the Board,
including an annual self-assessment of the Board’s performance as well as
the performance of each Board
committee.
|
|
•
|
Regularly
scheduled executive sessions, without management,
are held by the Board. In addition, the Audit Committee meets separately
with the Company’s outside
auditors.
|
Code
of Business and Ethical Conduct
We
have adopted a Code of Business and Ethical Conduct for our officers, employees
and directors, as well as specific ethical conduct policies and principles
that
apply to our Chief Executive Officer, Chief Financial Officer and other key
accounting and financial personnel. A copy of our Code of Business and Ethical
Conduct is available at the Investor Relations Section of our website at
www.collectors.com. We intend to
disclose, at this location on our website, any amendments to that Code and
any
waivers of the requirements of that Code that may be granted to our Chief
Executive Officer or Chief Financial Officer.
Other
Governance Matters
In
addition to the governance policies discussed above, our Chief Executive Officer
and Chief Financial Officer have provided the certifications of our SEC filings
required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 each quarter
since the certification rules were adopted. We also have adopted charters for
our Board committees that comply with applicable NASDAQ Listed Company
Rules.
You
can
access our Board Committee charters, and other corporate governance materials,
news releases and SEC filings, by visiting the Investor Relations Section of
our
website at www.collectors.com.
Committees
of the Board of Directors
The
Board
has two standing committees: an Audit Committee and a Compensation Committee.
Information regarding the members of each of those Committees and their
responsibilities and the number of meetings held by those Committees in fiscal
2005 is set forth below. The Board of Directors, as a whole, functions as a
Board Nominating Committee.
Audit
Committee.
The
members of the Audit Committee are A. J. Bert Moyer, its Chairman, and A.
Clinton Allen and Deborah A. Farrington. All of the members of the Audit
Committee are independent within the meaning of the NASDAQ Listed Company Rules
and the enhanced independence requirements for audit committee members contained
in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Our Board
of Directors has determined that Mr. Moyer meets the definition of “audit
committee financial expert” adopted by the Securities and Exchange Commission
(the “SEC”). The Audit Committee has a written charter that specifies its
responsibilities, which include oversight of the financial reporting process
and
system of internal accounting controls of the Company, and appointment and
oversight of the independent public accountants engaged to audit the Company’s
financial statements. In accordance with the Charter and to ensure independence,
the Audit Committee meets separately with our outside auditors and separately
with members of management. A copy of the Audit Committee Charter, which
complies with applicable NASDAQ Listed Company Rules, is accessible at the
Investor Relations Section of our website at www.collectors.com.
The
Audit Committee held 10 meetings during fiscal 2005.
Compensation
Committee.
The
members of the Compensation Committee are Deborah A. Farrington, its
Chairperson, and A. Clinton Allen and A. J. Bert Moyer, each of whom is an
independent director within the meaning of the NASDAQ Listed Company Rules.
The
Compensation Committee reviews and approves the salaries and establishes
incentive compensation and other benefit plans for our executive officers.
Our
Board of Directors has adopted a charter setting forth the role and
responsibilities of the Compensation Committee. A copy of that charter, which
complies with applicable NASDAQ Listed Company Rules, is accessible at the
Investor Relations Section of our website at www.collectors.com.
The
Compensation Committee held 7 meetings during fiscal 2005.
Nominating
Committee.
The
Board of Directors has decided that the full Board of Directors should perform
the functions of a nominating committee for the Company. It made that decision
because the Board believes that selecting new Board nominees is one of the
most
important responsibilities the Board members have to our stockholders and,
for
that reason, all of the members of the Board should have the right and
responsibility to participate in the selection process. In its role as
nominating committee, the Board identifies and screens new candidates for Board
membership. Each of the Board members, other than Messrs. Haynes, Hall and
Simmons, is an “independent director” within the meaning of the NASDAQ Listed
Company Rules that are applicable to membership on a Board Nominating Committee
and the Board has decided that actions of the Board, in its role as nominating
committee, can be taken only with the affirmative vote of a majority of the
independent directors on the Board. Our Board of Directors has adopted a charter
setting forth the responsibilities of the Board when acting as a nominating
committee. A copy of that charter, which complies with applicable NASDAQ Listed
Company Rules, is accessible at the Investor Relations section of our website
at
www.collectors.com.
The
Board met one time during fiscal 2005 in its role as nominating
committee.
The
Director Nominating Process.
In
identifying new candidates for membership on the Board, the Directors will
seek
recommendations from existing Board members and executive officers. In addition,
the Board intends to consider any candidates that may be recommended by any
of
the Company’s stockholders who submit such recommendations to the Board in
accordance with the procedures described below. The Board also has the authority
to engage an executive search firm and other advisors as it deems appropriate
to
assist it identifying qualified Board candidates.
In
assessing and selecting new candidates for Board membership, the Board of
Directors will consider such factors, among others, as the candidate’s
independence, experience, knowledge, skills and expertise, as demonstrated
by
past employment and board experience and the candidate’s reputation for
integrity. When selecting a nominee from among candidates considered by the
Board, it will conduct background inquiries of and interviews with the
candidates the Board members believe are best qualified to serve as directors.
The Board members will consider a number of factors in making their selection
of
a nominee from among those candidates, including, among others, whether the
candidate has the ability, willingness and enthusiasm to devote the time and
effort required of members of the Board; the candidate’s independence, including
whether the candidate has any conflicts of interest or commitments that would
interfere with the candidate’s ability to fulfill the responsibilities of
directors of the Company, including membership on Board committees; whether
the
candidate’s skills and experience would add to the overall competencies of the
Board; and whether the candidate has any special background or experience
relevant to the Company’s business.
Stockholder
Recommendations of Board Candidates.
Any
stockholder desiring to submit a recommendation for consideration by the Board
of a candidate that the stockholder believes is qualified to be a Board nominee
at any upcoming stockholders meeting may do so by submitting that recommendation
in writing to the Board not later 120 days prior to the first anniversary of
the
date on which the proxy materials for the prior year’s annual meeting were first
sent to stockholders. However, if the date of the upcoming annual stockholders
meeting has been changed by more than 30 days from the anniversary date of
the
prior year’s annual meeting, the recommendation must be received within a
reasonable time before the Company begins to print and mail its proxy materials
for the upcoming annual meeting. In addition, the recommendation should be
accompanied by the following information: (i) the name and address of
the
nominating stockholder and the person that the nominating stockholder is
recommending for consideration as a candidate or Board membership; (ii) the
number of shares of voting stock of the Company that are owned by the nominating
stockholder, his or her recommended candidate and any other stockholders known
by the nominating stockholder to be supporting the nomination of that candidate;
(iii) a description of any arrangements or understandings that relate
to
the election of directors of the Company, between the nominating stockholder,
or
any person that (directly or indirectly through one or more intermediaries)
controls, or is controlled by, or is under common control with, such
stockholder, on the one hand, and any other person or persons (naming such
other
person or persons), on the other hand; (iv) such other information
regarding each recommended candidate as would be required to be included in
a
proxy statement filed pursuant to the proxy rules of the SEC; and (v) the
written consent of the stockholder’s recommended candidate to be named as a
nominee and, if nominated and elected, to serve as a director.
Director
Compensation
For
their
service on our Board, independent directors, who serve on the Audit Committee
or
Compensation Committee receive a retainer of $55,000, and other non-employee
directors receive a retainer $27,500 per year, as compensation for their
services in preparing for and attending Board meetings. The Chairman of the
Board of Directors and the Chairpersons of the Audit Committee and Compensation
Committee receive additional fees of $45,000, $10,000 and $5,000, per year,
for
the additional services they perform for the Board of Directors in those
capacities. Each of our non-employee directors is also eligible to receive
stock
option grants under our 2003 Stock Incentive Plan, including an automatic grant
of options to purchase 15,000 shares of our common stock on the date of each
Annual Stockholders Meeting at which he or she is elected or re-elected as
a
director.
Compliance
with Section 16(a) of the Securities Exchange Act of 1934
Based
upon information made available to us, the Company believes that all filing
requirements under Section 16(a) of the Securities Exchange Act of 1934
applicable to its directors and officers and any holders of more than 10% of
the
Company’s shares were satisfied with respect to the Company’s fiscal year ended
June 30, 2005.
COMPENSATION
OF EXECUTIVE OFFICERS
The
following table sets forth the annual and long-term compensation for the fiscal
years ended June 30, 2005, 2004 and 2003 paid by the Company to its
Chief
Executive Officer and the highest paid executive officers who earned total
cash
compensation during fiscal 2005 of more than $100,000 (the “Named
Officers”).
Summary
Compensation Table
|
Annual
Compensation
|
|
Long-Term
Compensation
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Other
Annual Compensation
|
|
Stock Option
Awards
(Shares) (#)
|
|
|
|
|
|
|
|
|
|
|
Michael
R. Haynes(1)
|
2005
|
|
$
303,129
|
|
$
300,000
(1)
|
|
$
-
|
|
80,000
|
Chief
Executive Officer
|
2004
|
|
273,509
|
|
225,051 (1)
|
|
-
|
|
40,000
|
|
2003
|
|
125,000
|
|
-
|
|
-
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
David
G. Hall
|
2005
|
|
$
300,000
|
|
300,000
(2)
|
|
$ -
|
|
-
|
President
|
2004
|
|
300,000
|
|
300,051
(2)
|
|
-
|
|
-
|
|
2003
|
|
300,000
|
|
150,000
(2)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Lewis
|
2005
|
|
$
221,971
|
|
$ 200,000
(4)
|
|
$
154,200
(5)
|
|
30,000
|
Chief
Financial Officer (3)
|
2004
|
|
223,824
|
|
125,051
(4)
|
|
-
|
|
37,500
|
|
2003
|
|
220,000
|
|
50,000 (4)
|
|
-
|
|
27,500
|
|
|
|
|
|
|
|
|
|
|
Joseph
J. Wallace
|
|
|
|
|
|
|
|
|
|
Vice
President Finance (3)
|
2005
|
|
$
135,000
|
|
$
35,054
(6)
|
|
$
-
|
|
5,000
|
|
2004
|
|
5,625
|
|
-
|
|
-
|
|
15,000
|
|
(1)
|
Mr.
Haynes joined the Company as its CEO effective January 1, 2003
and
received six months of salary in fiscal 2003. Mr. Haynes
annual base
salary was increased from $250,000 to $275,000 in October 2003
and to
$300,000 for fiscal 2005. Mr. Haynes' bonus compensation
in fiscal
2005, and $200,051 of his bonus compensation in fiscal 2004,
were paid
pursuant to annual incentive compensation plans for each of those
years.
He also received a $25,000 discretionary bonus that was awarded
to him by
the Compensation Committee for fiscal 2004. The bonuses paid
under the
2005 and 2004 incentive compensation plans were determined on
the basis of
(i) the Company’s financial performance in each of those years in
relation to Company performance targets and (ii) Mr. Haynes’s
achievement of certain individualized performance goals in each
of those
years.
|
|
(2)
|
Mr.
Hall’s fiscal 2005, 2004 and 2003 bonuses were paid under incentive
compensation programs that rewarded him for the performance of
the
Company’s authentication and grading division, which operates under his
direct management supervision.
|
|
(3)
|
Effective
September 15, 2005, Mr. Lewis was appointed Senior Vice President
-
Finance and Mr. Wallace was appointed as Chief Financial Officer,
succeeding Mr. Lewis in that position. As a result of his appointment
as
Chief Financial Officer, Mr. Wallace became an executive officer
of the
Company for the first time effective September 15,
2005.
|
|
(4)
|
Mr.
Lewis’fiscal
2005, 2004, and 2003 bonuses were paid pursuant to incentive
bonus plans
adopted in each of those years and bonus amounts were determined
on the
basis of (i) the Company’s financial performance in each of those
fiscal years measured in relation to Company financial performance
targets, and (ii) his achievement of certain individualized performance
goals.
|
|
(5)
|
Represents
compensation realized on the exercise, during fiscal 2005, of
stock
options to purchase 10,000 shares of common stock that were granted
to Mr.
Lewis in October 2001 at an exercise price of $3.08 per share,
which was
the fair market value of the Company’s shares on the date of the grant of
those options.
|
|
(6)
|
Mr.
Wallace’s fiscal 2005 bonus compensation consisted of a discretionary
award to him based on the Company’s financial performance and an
evaluation of his individual contributions thereto in fiscal
2005. Mr.
Wallace joined the Company on June 11, 2004 and, as a
result, his
2004 compensation was paid for the period from that date to June
30,
2004.
|
Option
Grants in Fiscal 2005
The
following table sets forth information regarding the options to purchase shares
of Company common stock that were granted to the Named Officers during the
fiscal year ended June 30, 2005:
Name
|
|
Number
of
Shares
Underlying
Options
Granted
|
|
Percent
of
Total
Options
Granted
to
All
Employees in
Fiscal
2005(1)
|
|
Exercise
Price
($/Share)
|
|
Expiration
Dates
|
|
Potential
Realizable Value of
Options
at Assumed
Annual
Rates of Stock Price
Appreciation
for
Option
Term(2)
|
|
|
|
|
|
|
|
|
|
|
|
5%
|
|
10%
|
|
Michael
R. Haynes
|
|
|
40,000 (3)
|
|
|
13.7%
|
|
$
|
15.59
|
|
|
2015
|
|
$
|
392,179
|
|
$
|
993,858
|
|
|
|
|
40,000 (4)
|
|
|
13.7%
|
|
$
|
19.60
|
|
|
2015
|
|
$
|
493,053
|
|
$
|
1,249,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Lewis
|
|
|
15,000
(5)
|
|
|
5.1%
|
|
$
|
15.59
|
|
|
2015
|
|
$
|
147,067
|
|
$
|
372,697
|
|
|
|
|
15,000 (4)
|
|
|
5.1%
|
|
$
|
19.60
|
|
|
2015
|
|
$
|
184,895
|
|
$
|
468,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
J. Wallace
|
|
|
5,000
(4)
|
|
|
1.7%
|
|
$
|
15.59
|
|
|
2015
|
|
$
|
49,022
|
|
$
|
124,232
|
|
(1)
|
During
the fiscal year ended June 30, 2005, the Company granted options
to
purchase an aggregate of 293,000 shares of common stock to employees
and
directors of the Company.
|
(2)
|
There
is no assurance that the values that may be realized by an executive
officer on exercise of options will be at or near the values estimated
in
the table, which utilize arbitrary compounded rates of growth of
stock
price of 5% and 10% per year.
|
(3)
|
These
options become exercisable in 4 equal annual installments of 10,000
shares
each, commencing on December 6, 2005 (one year after the date of
grant),
and will expire in 10 years unless sooner exercised or
terminated.
|
(4)
|
These
options became fully exercisable on the date of grant and will expire
in
10 years unless sooner exercised or
terminated.
|
(5)
|
These
options become exercisable in 4 equal annual installments of 3,750
shares
each, commencing on December 6, 2005 (one year after the date of
grant)
and will expire in 10 years unless sooner exercised or
terminated.
|
Option
Exercises in Last Fiscal Year and Fiscal Year End Option
Values
None
of
the Named Officers exercised options in fiscal 2005, except Mr. Lewis, who
exercised an option to purchase 10,000 shares of the Company’s common stock in
November 2004. The following table sets forth certain information with respect
to “in-the-money” options held by the Named Officers at June 30,
2005.
|
|
Options
Exercised
During
Fiscal 2005
|
|
Number
of Shares
Underlying
Unexercised Options
At
June 30, 2005
|
|
Value
of Unexercised
In-the-Money
Options
At
June 30, 2005 (1)
|
|
Name
|
|
Number
of
Shares
|
|
Value
Realized
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
R. Haynes
|
|
|
0
|
|
$
|
-
|
|
|
100,000
|
|
|
80,000
|
|
$
|
861,050
|
|
$
|
929,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Lewis
|
|
|
10,000
|
|
$
|
154,200
|
|
|
41,875
|
|
|
28,125
|
|
$
|
349,038
|
|
$
|
202,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
J. Wallace
|
|
|
0
|
|
$
|
-
|
|
|
8,750
|
|
|
11,250
|
|
$
|
23,863
|
|
$
|
42,638
|
|
|
(1)
|
Based
on the closing price of the Company’s shares on the NASDAQ National Stock
Market on June 30, 2005, of
$17.52 per share.
|
Employment
Agreement
In
January 2003, the Company entered into a one year employment agreement with
Michael Haynes pursuant to which he is employed as the Company’s CEO, at a
salary of $250,000 per year. In October 2003 the employment agreement was
extended to December 31, 2004 and Mr. Haynes’ base salary was increased to
$275,000 per year. Effective July 1, 2004, Mr. Haynes’ base salary was increased
to $300,000 per year and in October 2004 the Compensation Committee approved
a
one year extension of the agreement to December 31, 2005. The employment
agreement is terminable by the Company at any time, with or without cause,
effective on 15 days’ prior notice to Mr. Haynes. If the Company were to
exercise its right to terminate that Agreement without cause, it would become
obligated to continue Mr. Haynes’ salary and benefits (which consist of
health insurance) for a period that is the shorter of (i) six months
or
(ii) the then unexpired term of that agreement.
Certain
Transactions
During
2005, DHRCC, Inc., which is engaged in the direct sale of rare coins, primarily
at retail, and is owned by David G. Hall, who is our President and one of our
Directors, and Van D. Simmons, who also is one of our Directors, paid the
Company $29,000 for advertising fees and $26,000 for grading and authentication
fees. Those advertising fees and authentication and grading fees were comparable
to the fees charged by the Company in the ordinary course of its business to
unaffiliated customers for similar services. During 2005, the Company also
reimbursed DHRCC for warranty claims of approximately $11,000 in accordance
with
its standard authentication and grading warranty, and paid DHRCC approximately
$9,000 for the purchase of certain coin inventory.
DHRCC
also has subleased from the Company, through November 6, 2009, approximately
2,200 square feet of office space, located at the Company’s offices in Santa
Ana, California, at a rent equal to between $1.50 and $1.75 per square foot
per
month. That rent was determined on the basis of and is equal to the rent that
was being paid to the Company by an unaffiliated subtenant for comparable space
in the same building under a sublease entered into by the Company in March
2004.
Rent received under the DHRCC sublease, which commenced on March 1, 2004,
totaled $40,000 in fiscal 2005.
Compensation
Committee Interlocks and Insider Participation
The
Members of the Compensation Committee of the Board of Directors are Deborah
Farrington, A. Clinton Allen, and A. J. Bert Moyer, who are non-employee
directors of the Company and have been determined by the Board of Directors
to
be independent directors within the meaning of the NASDAQ Listed Company Rules.
No executive officer of the Company served or serves on the board of directors
or compensation committee of any entity which has one or more executive officers
serving as members of the Company’s Board of Directors or Compensation
Committee.
REPORT
OF THE COMPENSATION COMMITTEE
Decisions
relating to the compensation of the Company’s executive officers are made by the
Compensation Committee of the Board of Directors. It is the responsibility
of
the Compensation Committee to assure that the executive compensation programs
are reasonable and appropriate, meet their stated purposes and effectively
promote the interests of the Company and its stockholders.
Compensation
Philosophy and Policies for Executive Officers
The
Company’s strategic goal is to become the leading provider of value-added
services to the high-value collectibles markets in which it operates and to
expand its service offerings to other high value asset markets, and thereby
to
maintain a high level of revenue growth and achieve increasing profitability
and, in that way, increase stockholder value. In establishing compensation
programs for the Company’s executive officers, the Compensation Committee seeks
to create incentives and provide rewards for performance and accomplishments
by
its officers that will further these goals.
The
Committee’s compensation policy emphasizes competitive base salaries, annual
incentive compensation or bonus plans for selected officers and management
employees and long term incentive compensation in the form of stock options.
Stock options are granted at exercise prices equal to the market value of the
Company’s shares on the date they are granted. Since the financial reward
provided by stock options is dependent on appreciation in the market value
of
the Company’s shares above those exercise prices, stock options reward
executives for performance that results in improved market performance of the
Company’s stock, which benefits all stockholders. With the exception of standard
health insurance benefits that are available to all of its employees, the
Company provides essentially no perquisites to the CEO or its other executive
officers.
Base
Salaries.
All
executive officer salaries are reviewed and evaluated at least once per year.
In
determining appropriate salary levels and salary increases, the Compensation
Committee considers the extent to which the Company has achieved, and the extent
of the executive’s contribution to the achievement of, its strategic goals, the
level of responsibility of the executive, and his or her experience and other
qualifications. In addition, the Committee recognizes that to be able to retain
its existing executives and attract new executives, the Company must offer
executive salaries that are comparable to those paid by its competitors. As
a
result, the Compensation Committee also considers published data regarding
compensation paid by similar companies to individuals holding positions
comparable to those held by the Company’s executive officers.
Incentive
Compensation.
It is
the Committee’s policy to establish annual incentive compensation plans for the
Company’s CEO and the other Named Officers which will reward them for
(a) their contributions to the Company’s financial performance, measured in
relation to the Company’s annual operating plan for the year, which is initially
developed by management and then is submitted to the Board of Directors for
its
review, possible modification and approval; and (b) their achievement
of
individualized objectives, generally within the executive’s area of
responsibility, that are established by the Committee. In accordance with that
policy, during fiscal 2005 the Compensation Committee established a Senior
Management Bonus Plan for Messrs. Haynes, Lewis and Hall. Under that Plan,
the
Committee established fiscal 2005 revenue and earnings goals (“performance
goals”) and individualized management objectives for Messrs. Haynes and Lewis
and provided for the payment of bonuses to each of them based on the extent
to
which (i) the Company achieved or exceeded those performance goals and
(ii) they achieved or exceeded their respective individualized management
objectives. In the case of Mr. Hall, his fiscal bonus compensation under the
2005 Management Bonus Plan was tied to the contribution of the Company’s
authentication and grading divisions to the Company’s earnings, because those
divisions operate under Mr. Hall’s direct management supervision.
Stock
Options and Equity-Based Programs.
The
grant of stock options represents the only form of long term incentive
compensation that is awarded by the Company to its executive officers. As
discussed above, the Committee believes that the grant of stock options better
aligns the interests of the Company’s executive officers with those of the
stockholders by rewarding the executive officers for increases in the market
value of the Company’s shares. In addition, the Compensation Committee believes
that stock option grants provide the Company with a mechanism for recruiting
individuals by providing an opportunity for those officers to profit from the
results of their contributions to the Company.
The
options granted to executive officers provide the right to purchase shares
of
common stock, at the fair market value on the date of grant. Each stock option
may become exercisable (“vests”) either immediately or over a period of time
that generally ranges from one to five years as determined by the Compensation
Committee at the time the option is granted; although, in most cases, vesting
occurs over a four to five year period. Once vested, options remain exercisable
for a stated term, generally 10 years; however, on termination of an optionee’s
employment, options that have not yet become vested terminate automatically
and
vested options terminate three months (or, in the event such termination is
due
to the disability or death of the optionee, 12 months) thereafter. Decisions
with respect to the number of shares covered by each option grant and the
frequency of option grants to executives reflect the Compensation Committee’s
assessment of the executive’s level of responsibility, his or her past and
anticipated future contributions to the Company and the impact the executive
has
on decisions that affect the overall success of the Company.
CEO
Compensation.
During
fiscal 2005, the Compensation Committee approved an extension of Mr. Haynes
employment agreement to December 31, 2005 and, based on a compensation study
conducted for the Committee and recommendations made to the Committee by an
outside compensation planning and advisory firm and Mr. Haynes’ performance
during fiscal 2004, increased his annual salary from $275,000 and to $300,000,
effective July 1, 2004. Mr. Haynes also earned a bonus under the fiscal
2005 Management Bonus Plan of $300,000 based on the Company’s fiscal 2005
revenues and earnings and Mr. Haynes’ performance of the individualized
management objectives established for him by the Committee for fiscal 2005.
Options granted to Mr. Haynes by the Committee in fiscal 2005 consisted of
(i) a
grant, in December 2004, of an option to purchase up to 40,000 shares at an
exercise price of $19.60 per share, and (ii) a grant, in June 2005, of an option
to purchase up to an additional 40,000 shares at an exercise price of $15.59
per
share. In each case, the option exercise price was equal to the closing price
of
the Company’s shares on the date of grant, as reported by NASDAQ. The initial
40,000 share option is exercisable in four equal annual installments as to
10,000 shares each, beginning on December 6, 2005. The other 40,000 share option
was made fully exercisable as of the date of grant, because that option was
granted to Mr. Haynes based on his contributions to the Company’s fiscal 2005
financial performance.
Respectfully
Submitted,
Deborah
A. Farrington (Chair)
A.
Clinton Allen
A.
J.
Bert Moyer
REPORT
OF THE AUDIT COMMITTEE
The
following is the report of the Audit Committee with respect to the Company’s
audited consolidated financial statements for the fiscal year ended June 30,
2005 (the “2005 Financial Statements”).
The
Audit
Committee of the Board of Directors is responsible for assisting the Board
in
fulfilling its oversight responsibility as it relates to the Company's financial
reporting, and its internal financial and accounting systems and accounting
practices and policies. The Board of Directors has adopted an Audit Committee
Charter that sets forth the authority and specific duties of the Audit
Committee. A copy of the Charter is accessible at the Investor Relations section
of our website at www.collectors.com.
In
discharging its responsibility, the Audit Committee met and held discussions
with management and Grant Thornton, LLP, the Company’s independent registered
public accounting firm for the fiscal year ended June 30, 2005. Management
represented to the Audit Committee that the Company’s financial statements were
prepared in accordance with generally accepted accounting principles, and the
Audit Committee has reviewed and discussed the financial statements with
management and the independent auditors. The Audit Committee also discussed
with
the independent auditors the matters required to be discussed by Statement
on
Auditing Standards No. 61 (Communications
with Audit Committees), as
amended.
The
Audit
Committee has received from Grant Thornton the written disclosures required
by
Independence Standards Board Standard No. 1 (Independence
Discussions With Audit Committees)
and has
discussed with them their independence from the Company and its management
and
has considered whether the independent auditors’ provision of any non-audit
services was compatible with maintaining their independence.
Based
on
these discussions and reviews, the Audit Committee recommended that the Board
of
Directors approve the inclusion of the Company’s 2005 Financial Statements in
the Company’s Annual Report on Form 10-K for the year ended June 30, 2005 filed
with the Securities and Exchange Commission.
Management
is responsible for the Company’s financial reporting process, including its
system of internal controls, and for the preparation of consolidated financial
statements in accordance with generally accepted accounting principles. The
Company’s independent auditors are responsible for auditing those financial
statements. The Audit Committee’s responsibility is to monitor and review these
processes. It is not the Committee’s duty or responsibility to conduct auditing
or accounting reviews or procedures. The members of the Audit Committee are
not
employees of the Company and no member of the Committee is, nor does any member
of the Committee represent himself or herself to be or to serve as, accountants
or auditors by profession or experts in the fields of accounting or auditing.
Therefore, we have necessarily relied, without independent verification, on
management’s representation that the financial statements have been prepared
with integrity and objectivity and in conformity with accounting principles
generally accepted in the United States of America and on the representations
of
the Company’s registered independent public accounting firm included in their
report on the Company’s 2005 Financial Statements.
Respectfully
Submitted,
A.
J.
Bert Moyer (Chair)
A.
Clinton Allen
Deborah
A. Farrington
Notwithstanding
anything to the contrary set forth in the Company’s previous filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as
amended, that might incorporate future filings, including this Proxy Statement,
in whole or in part, the foregoing Compensation Committee and Audit Committee
Reports and the Performance Graph on the following page shall not be
incorporated by reference into any such filings.
STOCKHOLDER
RETURN COMPARISON
The
following graph compares, for each of the years in the five year period ended
June 30, 2005, the cumulative total returns for the Company and for (i) an
index
comprised of companies classified as “Auction House/Art Dealers that were
selected by the Company (the “Peer Group”), (ii) the Russell 2000 Small Cap
Index (the “Russell 2000”), which we have used in prior years, and
(iii) the Russell Micro-Cap Index, which we are using for the first
time
this year and intend to use in future years. The companies comprising the Peer
Group and their respective trading symbols are: Richie Bros. Auctioneers
(“RBA”), Sotheby's Holdings, Inc. (“BID”), Ableauctions.Com (AAC), Greg Manning
Auctions Inc. (GMAI), and Gallery of History, Inc. (“HIST”). The data for this
Peer Group Index was obtained from NASDAQ.
We
decided to begin using the Russell Micro-Cap Index and will be discontinuing
the
use of the Russell 2000 Index in future years, because we believe that the
companies included in Russell Micro-Cap Index are more representative of our
Company, particularly in terms of size and market capitalization, than the
companies included in the Russell 2000 Index.
|
|
June
30,
|
|
|
2000
|
|
2001
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
Collectors
Universe, Inc.
|
|
100.0
|
|
65
|
|
34
|
|
29
|
|
112
|
|
149
|
Peer
Group Index
|
|
100.0
|
|
79
|
|
83
|
|
83
|
|
102
|
|
106
|
Russell
2000 Composite Index
|
|
100.0
|
|
99
|
|
89
|
|
87
|
|
114
|
|
124
|
Russell
Micro-Cap Index
|
|
100.0
|
|
104
|
|
100
|
|
103
|
|
142
|
|
146
|
This
Stock Performance Graph assumes that $100 was invested, on June 30, 2000, in
Company’s shares and
in
the shares of the companies in the Peer Group Index, the Russell 2000 Index
and
the Russell Micro-Cap Index and that any dividends issued for the indicated
periods were reinvested. Stockholder returns shown in the Stock Performance
Graph are not necessarily indicative of future stock performance.
APPROVAL
OF THE 2005 STOCK INCENTIVE PLAN
(Proposal
No. 2)
Introduction
As
of
August 31, 2005 180,000 shares remained available for stock option grants under
our incentive stock plans. As a result, on the recommendation of the
Compensation Committee, the members of which are all independent directors
of
the Company, in September 2005 the Board of Directors adopted, subject to
stockholder approval, the 2005 Stock Incentive Plan (the “2005 Plan”), which
sets aside 230,000 shares of common stock for the grant of stock options and
restricted stock purchase rights to officers and other key employees, directors
of and consultants and other service providers to the Company and its
subsidiaries.
Reasons
for Adoption and Purposes of the 2005 Stock Incentive Plan.
The
Company’s primary business is the authentication and grading of high value
collectibles. However, the number of individuals who have the expertise to
authenticate and grade high value collectibles is limited, and competition
for
available collectibles experts in our markets is intense. Additionally, the
Board of Directors believes that an important factor that will affect the
Company’s ability to implement its growth strategies and initiatives, including
the expansion of our business into new markets, will be our ability to attract
additional key management personnel with relevant experience in those markets.
As a result, the Board of Directors believes that the Company needs options
and
restricted stock purchase rights to be able to offer meaningful incentives
that
will enable the Company to compete effectively for available collectibles
experts and such other key management personnel, as well as to retain existing
officers, key employees, directors and service providers. In the view of both
the Compensation Committee and the Board of Directors the 180,000 shares that
remain available for the grant of options and restricted stock purchase rights
are not sufficient in number for these purposes and, therefore, the Board of
Directors is asking stockholders to approve the 2005 Stock Incentive
Plan.
Additionally,
the Board of Directors believes that the grant of options and restricted stock
purchase rights helps to align the interests of management and key employees
with those of the Company’s stockholders, because the grant of options and stock
purchase rights reward management and other key employees for performance that
results in increases in the price of the Company’s shares, which benefits our
stockholders. At the same time, the 2005 Plan is limited to a total of 230,000
shares which, when added to the number of shares that are subject to outstanding
options and warrants and the shares that remain available for future grants,
will total approximately 19.5% of the number of our currently outstanding
shares.
For
these
reasons the Board of Directors is unanimous in its belief that adoption of
the
2005 Plan is in the best interests of the Company and its
stockholders.
Vote
Required for Approval of the 2005 Plan.
Approval of the 2005 Plan requires the favorable vote of the holders of a
majority of the shares of common stock that are present or represented and
voted
on this Proposal at the Annual Meeting. Proxies solicited by the Board of
Directors for which no specific instruction is given with respect to this
Proposal in any proxy will be voted FOR
approval
of the 2005 Plan. Abstentions will have the same effect as a vote against
adoption of the 2005 Plan, and broker non-votes will be treated as if they
had
not been voted and, therefore, will not be counted, except for quorum
purposes.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS
VOTE
“FOR”
APPROVAL OF THE 2005 PLAN.
Description
of the 2005 Plan
The
essential features of the 2005 Plan are summarized below. The summary does
not
purport to be a complete description of the 2005 Plan. Copies of the 2005 Plan
can be obtained, without charge, by writing to the Secretary, Collectors
Universe, Inc., P.O. Box 6280, Newport Beach, CA 92658.
Authorized
Number of Shares under the Plan.
In
order to accomplish the purposes of the 2005 Plan (which are described above),
the Plan sets aside 230,000 shares of the Company’s common stock for grants of
incentive or non-qualified stock options and restricted stock purchase rights
under the terms of the 2005 Plan. The maximum number of shares of common stock
that may be the subject of grants of options and restricted stock purchase
rights under the Plan to any Plan participant in any one year may not exceed
100,000 shares. The number of shares authorized for issuance under the 2005
Plan, and the foregoing limitation on annual grants to Plan participants, will
be subject to adjustment in the event of stock splits, stock dividends and
other
similar changes in the capital structure of the Company.
The
following table provides information relating to the number, and the average
exercise prices, of the shares of our common stock that, as of June 30, 2005,
were subject to (i) outstanding options under our existing stock incentive
plans, and (ii) outstanding warrants to purchase shares of common stock
that have been granted to non-employee service providers (comprised principally
of collectibles experts). No restricted stock purchase rights have been granted
by the Company.
|
|
As
of June 30, 2005
|
|
|
|
Column
A
|
|
Column
B
|
|
Column
C
|
|
|
|
Number
of Shares
Issuable
Upon Exercise
of
Outstanding Options and Warrants
|
|
Weighted-Average
Exercise Prices of Outstanding Options and Warrants
|
|
Number
of Shares Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding
Securities Reflected in Column A)
|
|
Equity
compensation plans approved
by shareholders
|
|
|
976,000
|
|
$
|
12.49
|
|
|
190,000
|
|
Equity
compensation not approved by
shareholders(1)
|
|
|
282,000
|
|
|
11.21
|
|
|
-
|
|
Total
|
|
|
1,258,000
|
|
$
|
12.20
|
|
|
190,000
|
|
|
(1)
|
Warrants
to purchase common stock granted to non-employee service providers
in the
fiscal years ended June 30, 1997 and
1999.
|
Administration
of the Plan.
The 2005
Plan provides that it shall be administered by the Board of Directors or a
Committee of the Board designated by it. The Board of Directors has designated
its Compensation Committee to administer, and to make grants of options and
restricted stock purchase rights under, the 2005 Plan. That Committee is
currently comprised of three directors, all of whom are independent (as that
term is defined in the Rules of the NASDAQ applicable to companies, like
Collectors Universe, that are listed on the NASDAQ Stock Exchange). Subject
to
the provisions of the 2005 Plan, the Committee has full authority to implement,
administer and make all determinations necessary under that Plan.
Incentive
and Nonqualified Stock Options.
Options
to purchase common stock granted under the 2005 Plan may be either “incentive
stock options,” within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”), or “nonqualified stock options,” as determined
by the Committee at the time of grant. Incentive stock options provide certain
income tax benefits to optionees under the Code that are not available to
holders of nonqualified options. See “Summary of United States Federal Income
Tax Consequences” below.
Eligibility
to be Granted Incentive Stock Options under the 2005 Plan.
Only
officers and other employees of the Company, or of any subsidiary or parent
corporation of the Company, are eligible to receive incentive options under
the
2005 Plan. As of October 17, 2005, there were a total of four executive officers
and 167 other employees of the Company or its subsidiaries that would have
been
eligible to receive a grant of incentive stock options under the 2005 Plan.
An
employee who is granted an incentive option may, if otherwise eligible, be
granted additional incentive options, or nonqualified options or rights to
purchase restricted stock, if the Committee so determines. However, if the
aggregate market value of the incentive options of an optionee that become
exercisable for the first time in any year were to exceed $100,000, only the
first $100,000 of such options would be accorded incentive stock option
treatment under the Code. The remaining options, in that event, would be treated
as nonqualified options for income tax purposes. For purposes of determining
whether or not this limitation has been exceeded, such options would be valued
at the fair market value of the underlying shares determined as of the date
the
options were granted.
Nonqualified
Options and Rights to Purchase Restricted Stock.
Officers
and other employees and members of the Board of Directors (whether or not they
also are employees) of, and independent contractors that provide services or
supply goods to, the Company or of any subsidiary or parent corporation of
the
Company, will be eligible to receive nonqualified options and restricted stock
purchase rights under the 2005 Plan.
An
individual who has been granted a nonqualified option or a right to purchase
restricted stock may be granted an incentive option (if he or she also is an
officer or employee of the Company or of any of its subsidiaries) or additional
nonqualified options or restricted stock purchase rights, if the Committee
so
determines.
Exercise
Prices of Options and Payment for Shares.
The
exercise price of any option granted under the 2005 Plan, whether it is an
incentive or a nonqualified option, must be at least equal to 100% of the fair
market value per share of the Company’s common stock on the date the option is
granted, except in the case of an incentive option that is granted to an
optionee who owns 10% or more of the outstanding shares of common stock of
the
Company (a “10% stockholder”), as to whom the exercise price must be at least
110% of such fair market value. Payment of the exercise price of options may
be
made, in the discretion of the Committee, by (i) cash, (ii) check,
(iii) delivery of the optionee’s full recourse promissory note evidencing
the optionee’s obligation to pay the exercise price (provided he or she is not
an executive officer of the Company), (iv) delivery of shares of the
Company’s common stock already owned by the optionee, (v) cancellation of a
portion of the option having a fair market value equal to the aggregate exercise
price of the shares being acquired (a “net exercise”), (vi) cancellation of
any indebtedness owned by the Company to, or a waiver of compensation due,
the
optionee, (vii) a “same day sale” or “margin” commitment from an optionee
(provided he or she is not an executive officer of the Company), or (viii)
any
combination of the foregoing methods or any other consideration or method of
payment permitted by applicable law.
Vesting
and Termination of Options.
When
granting options under the 2005 Plan, the Committee has the authority to
determine the time or times at which such options will become exercisable (that
is, when and in what increments options will “vest”), subject to the requirement
that options must expire no later than 10 years from the date of grant (or
five
years with respect to any incentive options granted to a 10% stockholder).
Accordingly, the Committee may determine to grant options that become
exercisable in full on the date of grant, which would entitle the optionee
to
exercise the options at any time in full or from time to time in part, prior
to
the expiration or earlier termination of the options. In the alternative, the
Committee may decide to grant options on terms that provide for them to become
exercisable in periodic installments, such as, for example, in four equal
successive annual installments of 25% of the options each, commencing on the
first anniversary of the date of grant.
Options
are nontransferable, other than upon death, in which case they may be
transferred by will or the laws of descent and distribution, and generally
may
be exercised only by an employee while employed by the Company. If an optionee’s
employment or service with the Company or any subsidiary is terminated for
any
reason, those of his or her options that have not yet become exercisable will
terminate automatically. Any options that have previously become exercisable
will remain exercisable for such period of time, not exceeding three months,
after termination of employment, as shall be determined by the Compensation
Committee at the time the options are granted. However, if the termination
of
employment or service is due to the optionee’s death or disability, the options
that had become exercisable prior to such termination of employment or service
will remain exercisable for 12 months thereafter. Upon termination of any
unexercised option, the shares subject to that option will again be available
for the grant of options under the 2005 Plan, as will any option shares that
may
be repurchased by the Company.
Rights
to Purchase Restricted Common Stock.
Restricted stock purchase rights entitle the recipient thereof to purchase
a
specified number of shares of common stock (“restricted shares”) pursuant to the
terms and subject to the conditions of a restricted stock purchase agreement.
Upon exercise of those rights, the participant will acquire ownership of the
restricted shares subject to the grant. However, the participant’s right to
continued ownership of the shares generally will be subject to vesting
requirements determined by the Committee and set forth in the stock purchase
agreement, which will provide that, if those vesting requirements are not
satisfied, the Company will become entitled to repurchase any or all of the
unvested shares at the price paid for them by the participant. Such vesting
requirements may include a requirement that the participant remain in the
Company’s employ or service for a specified period of time or that specified
performance goals or objectives be achieved by the Company or the participant.
Except in the case of stock purchase rights granted to executive officers of
the
Company, the stock purchase agreement also may permit the purchase price for
the
restricted shares to be paid by delivery of a promissory note providing for
payment of the amount of the note in installments over a multi-year period
or in
a lump sum payment at the maturity date of the note. Since a participant will
become the owner of the restricted shares on his or her exercise of the right
to
purchase those shares, the participant will (except as described below) have
all
of the rights of a stockholder with respect to those shares, including the
right
to vote and to receive any dividends that might be declared on the Company’s
outstanding common stock.
However,
it is expected that in most instances the stock purchase agreements will provide
that, until the vesting requirements have been satisfied, the Company will
be
entitled to retain possession of the shares, the transferability of which will
be restricted, and to apply any dividends paid on those shares to the payment
of
the then unpaid portion of the purchase price of the restricted shares. The
purchase price payable for restricted shares will be determined by the
Compensation Committee at the time of grant and may be less than the then fair
market value of the shares, if deemed appropriate by the Committee, except
that
the purchase price payable for restricted shares granted to the Company’s CEO
and the four highest compensated officers of the Company, in addition to the
CEO, may be no less than the fair market value of the Company’s shares on the
date such rights are granted. As is the case with stock options granted under
the 2005 Plan, the purchase price for restricted shares may be paid
in cash
or in another form of consideration approved by the Committee, including the
delivery of already owned shares by the participant or a promissory note, as
provided in the stock purchase agreement or as approved by the Committee. Upon
any reacquisition by the Company of the shares subject to restricted stock
purchase grants, whether due to a failure of those shares to have become vested
or otherwise, those shares will become available for the grant thereafter of
stock options or restricted stock purchase rights under the 2005
Plan.
Change
in Control.
In the
event of a change in control (as defined in the 2005 Plan) of the Company,
vesting of options and restricted shares will accelerate automatically unless
the options or restricted stock purchase agreements are assumed by the acquiring
or successor entity (or parent thereof) or the acquiring or successor entity
substitutes new options or other stock incentives for the outstanding options
and restricted stock purchase rights on terms and conditions which the
Committee, in its discretion, considers equitable. If options are assumed or
replaced with new options or other incentives by the acquiring or successor
entity (or parent thereof), then, the vesting of those substituted options
or
other incentives shall accelerate and they shall become fully exercisable in
the
event the participant’s employment or service relationship with the Company or
any subsidiary, or such successor entity, as the case may be, is terminated
or
deemed to be terminated within a period of time, not exceeding 12 months,
following the change in control, as determined by the Committee. However, the
Committee may, in its discretion, provide for other vesting arrangements in
option agreements, or restricted stock purchase agreements, including
arrangements which provide for full acceleration of vesting upon a change in
control whether or not the acquiring entity agrees to assume, or substitute
new
options or incentives for, the existing options or any unvested restricted
shares. In any event, upon consummation of a change of control of the Company,
any options that are neither assumed nor exercised will terminate.
Amendments
to and Termination of the Plan.
The
Committee may from time to time alter, amend, suspend or terminate the 2005
Plan
in such respects as the Committee may approve. However, no alteration,
amendment, suspension or termination of the 2005 Plan may substantially affect
in an adverse manner, or impair, the rights of any holder of any outstanding
options or restricted shares without that holder’s prior consent. Unless sooner
terminated, the 2005 Plan will terminate on May 31, 2015.
Accounting
Treatment
As
required by Statement of Financial Accounting Standards No. 123 (Revised 2004),
Share-Based
Payment (“SFAS
No. 123R”), the Company has adopted the fair value based method of accounting
for stock-based employee compensation under SFAS No, 123R, effective as of
July
1, 2005. In accordance with SFAS No. 123R, upon the grant of options or
restricted shares pursuant to the 2005 Plan, as well as options or restricted
shares that we may grant under our existing stock incentive plans, for financial
reporting purposes we will incur compensation expense that will be recognized
over the vesting period of the options or restricted shares using a fair value
based method for valuing outstanding options and restricted shares granted
under
the Plan. We are not able at this time to predict whether such compensation
expense will be material, on an on-going basis, as that will depend on, among
other things, the number of shares for which options or restricted stock
purchase rights are granted and the prices of our common stock in the
future.
Summary
of United States Federal Income Tax Consequences
The
following is a summary of certain United States Federal income tax consequences
of participation in the Company’s 2005 Plan. The summary should not be relied
upon as being complete. United States tax laws are complex and subject to
change. Moreover, participation in the 2005 Plan may also have consequences
under state and local tax laws, as well as foreign tax laws, which may vary
from
the United States Federal income tax consequences described below. For these
reasons, the Company recommends that each 2005 Plan participant consult his
or
her personal tax advisor to determine the specific tax consequences applicable
to him or her.
Incentive
Options.
No
taxable income will be recognized by an optionee under the 2005 Plan upon either
the grant or the exercise of an incentive option. Instead, a taxable event
will
occur upon the sale or other disposition of the shares acquired upon exercise
of
an incentive option, and the tax treatment of the gain or loss realized will
depend upon how long the shares were held before their sale or disposition.
As
is discussed below, the exercise of an incentive option also may result in
an
“item of adjustment” for purposes of the “alternative minimum tax.”
If
a sale
or other disposition of the shares received upon the exercise of an incentive
option occurs more than (a) one year after the date of exercise of the
option and (b) two years after the date of grant of the option, the
holder
will recognize long-term capital gain or loss at the time of such sale or
disposition in an amount equal to the difference between the proceeds realized
and the amount paid for such shares (which, if paid by delivery of a promissory
note, will be equal to the stated principal amount of such note). However,
generally, a sale, exchange, gift or other transfer of legal title of such
shares before the expiration of either the one-year or two-year period described
above (other than pursuant to certain nonrecognition exchanges or a transfer
from a descendent to an estate or transfer by bequest or inheritance) will
constitute a “disqualifying disposition.” A disqualifying disposition involving
a sale or exchange will result in ordinary income to the optionee in an amount
equal to the lesser of (i) the fair market value of the stock on the
date
of exercise minus the exercise price, or (ii) the amount realized on
disposition minus the exercise price. If the amount realized in a disqualifying
disposition exceeds the fair market value of the shares on the date of exercise,
the gain realized, in excess of the amount taxed as ordinary income as indicated
above, will be taxed as capital gain. A disqualifying disposition as a result
of
a gift will result in ordinary income to the optionee in an amount equal to
the
difference between the exercise price and the fair market value of the shares
on
the date of exercise. Any loss realized upon a disqualifying disposition will
be
treated as a capital loss. Capital gains and losses resulting from disqualifying
dispositions will be treated as long-term or short-term depending upon whether
the shares were held for more or less than the applicable statutory holding
period (which is currently more than one (1) year for long-term capital gains).
The Company will be entitled to a tax deduction in an amount equal to the
ordinary income recognized by the optionee as a result of the disqualifying
disposition.
Section
55 of the Code imposes an “alternative minimum tax” on an individual’s income to
the extent the amount of the alternative minimum tax exceeds the individual’s
regular tax for the year. For purposes of computing the alternative minimum
tax,
the excess of the fair market value (on the date of exercise) of the shares
received upon the exercise of an incentive option over the exercise price paid
is included in alternative minimum taxable income in the year the option is
exercised. If the shares are sold in the same year that the option is exercised,
the regular tax treatment and the alternative tax treatment will be the same.
If
the shares are sold during a year subsequent to that in which the option was
exercised, the basis of the stock acquired will equal its fair market value
on
the date of exercise for purposes of computing alternative minimum taxable
income in the year of sale. For example, assume that an individual pays an
exercise price of $10 to purchase stock having a fair market value of $15 on
the
date of exercise. The amount included in alternative minimum taxable income
is
$5, and the stock has a basis of $10 for regular tax purposes and $15 for
alternative minimum tax purposes. If the individual sells the stock in a
subsequent year for $20, the gain recognized is $10 for regular tax purposes
and
$5 for alternative minimum tax purposes.
An
optionee who is subject to the alternative minimum tax in the year of exercise
of an incentive option may claim, as a credit against the optionee’s regular tax
liability in future years, the amount of alternative minimum tax paid that
is
attributable to the exercise of the incentive option. This credit is available
in the first year following the year of exercise in which the optionee has
a
regular tax liability.
Under
the
2005 Plan, the Committee may permit an optionee to pay the exercise price of
an
incentive option by delivering shares of common stock of the Company already
owned by the optionee, valued at their fair market value on the date of
exercise. Generally, if the exercise price of an incentive option is paid with
already-owned shares or by a combination of cash and already-owned shares,
there
will be no current taxable gain or loss recognized by the optionee on the
already-owned shares exchanged. A special rule applies, however, if the shares
exchanged were previously acquired through the exercise of an incentive option
and the applicable holding period requirements for favorable tax treatment
of
such shares have not been met at the time of the exchange. In such event, the
exchange will be treated as a disqualifying disposition of such shares and
will
result in the recognition of income to the optionee, in accordance with the
rules described above for disqualifying dispositions. If this special rule
does
not apply, then the new shares received by the optionee upon the exercise of
the
option equal in number to the old shares exchanged will have the same tax basis
and holding period for capital gain purposes as the optionee’s basis and holding
period in the old shares. The balance of the shares received by the optionee
upon exercise of the option will have a tax basis equal to any cash paid by
the
optionee, and if no cash was paid, the tax basis of such shares will be zero.
The holding period of the additional shares for capital gain purposes will
commence on the date of exercise. The holding period for purposes of the
one-year and two-year periods described above will commence on the date of
exercise as to all of the shares received upon the exercise of an incentive
option. If any of the shares subject to the basis allocation rules described
above are subsequently transferred in a disqualifying disposition, the shares
with the lowest tax basis will be treated as being transferred
first.
Nonqualified
Options.
No
taxable income is recognized by an optionee upon the grant to him or her of
a
nonqualified option, provided that the exercise price of the option is at least
equal to 100% of the fair market value of the underlying shares on the date
of
grant. Upon exercise, however, the optionee will recognize ordinary income
in
the amount by which the fair market value of the shares purchased exceeds,
on
the date of exercise, the exercise price paid for such shares. The income
recognized by an optionee who is an employee will be subject to income tax
withholding by the Company out of the optionee’s current compensation. If such
compensation is insufficient to pay the taxes due, the optionee will be required
to make a direct payment to the Company for the balance of the tax withholding
obligation. The Company will be entitled to a tax deduction equal to the amount
of ordinary income recognized by the optionee, provided certain reporting
requirements are satisfied.
If
the
exercise price of a nonqualified option is paid by the optionee in cash or
by
delivery of a promissory note, the tax basis of the shares acquired will be
equal to the cash paid for the shares (which, if paid by delivery of a
promissory note, will be equal to the stated principal amount of such note),
plus the amount of income recognized by the optionee as a result of such
exercise. If the exercise price is paid by delivering shares of common stock
of
the Company already owned by the optionee or by a combination of cash and
already-owned shares, there will be no current taxable gain or loss recognized
by the optionee on the already-owned shares exchanged (however, the optionee
will nevertheless recognize ordinary income to the extent that the fair market
value of the shares purchased on the date of exercise exceeds the price paid,
as
described above).
The
new
shares received by the optionee equal in number to the old shares exchanged
will
have the same tax basis and holding period as the optionee’s basis and holding
period in the old shares. The balance of the shares received will have a tax
basis equal to any cash paid by the optionee plus the amount of income
recognized by the optionee as a result of such exercise, and will have a holding
period commencing with the date of exercise.
Upon
the
sale or disposition of shares acquired pursuant to the exercise of a
nonqualified option, the difference between the proceeds realized and the
optionee’s basis in the shares will be a capital gain or loss and will be
treated as long-term or short-term capital gain or loss if the shares have
been
held for more than the applicable statutory holding period (which is currently
more than one (1) year for long-term capital gains).
Restricted
Shares.
If no
Code Section 83(b) election is made in connection with the receipt of restricted
shares and repurchase rights are retained by the Company, a taxable event will
occur on each date the participant’s ownership rights vest (e.g., when the
Company’s repurchase rights expire) as to the number of shares that vest on that
date, and the holding period for capital gain purposes will not commence until
the date the restricted shares vest. The participant will recognize ordinary
income on each date shares vest in an amount equal to the excess of the fair
market value of such shares on that date over the amount paid for such shares.
Any income recognized by a participant who is an employee will be subject to
income tax withholding by the Company out of the participant’s current
compensation. If such compensation is insufficient to cover the amount to be
withheld, the participant will be required to make a direct payment to the
Company for the balance of the tax withholding obligation. The Company will
be
entitled to a tax deduction in an amount equal to the ordinary income recognized
by the participant. The participant’s basis in the shares will be equal to
the amount
paid, if any, for such shares (which, if paid by delivery of a promissory note,
will be equal to the stated principal amount of such note), increased by the
amount of ordinary income recognized. If the vesting requirements are not
satisfied, the participant generally will not recognize any gain or loss upon
the repurchase of the shares by the Company at the price paid for them by the
participant.
If
a Code
Section 83(b) election is made within 30 days after the date of exercise of
the
restricted stock purchase right, or if no repurchase rights are retained by
the
Company, then the participant will recognize ordinary income, on the date he
or
she purchases the shares pursuant to the stock purchase agreement, in an amount
equal to the excess of the fair market value of such shares on the date of
purchase over the amount paid for such shares (which, if paid by delivery of
a
promissory note, will be equal to the stated principal amount of such note).
If
the vesting requirements are not satisfied, the participant will only be able
to
recognize loss upon the repurchase of the shares by the Company if the
repurchase price paid by the Company is less than price paid for the shares
by
the participant. Thus, if the shares are purchased at less than fair market
value by the participant, and a Code Section 83(b) election is made, the
participant will recognize ordinary income on the date of exercise, but
generally will not be able to recognize a loss upon a subsequent forfeiture
of
the shares.
Tax
Withholding
Under
the
2005 Plan, in the case of any optionee who is an employee of the Company or
of
any subsidiary, the Company has the power to withhold, or require the optionee
to remit to the Company, an amount sufficient to satisfy United States Federal,
state and local tax withholding requirements with respect to any options
exercised or restricted stock issued under the 2005 Plan. To the extent
permissible under applicable tax, securities, and other laws, the Committee
may,
in its sole discretion, permit a participant to satisfy an obligation to pay
any
tax to any governmental entity in respect of any option or restricted shares
up
to an amount determined on the basis of the highest marginal tax rate applicable
to such optionee, in whole or in part, by (i) directing the Company
to
apply shares of Company common stock to which the optionee is entitled as a
result of the exercise of an option or the lapse of restrictions on restricted
shares, or (ii) delivering to the Company shares of common stock already
owned by the participant.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
accounting firm of Grant Thornton LLP (“Grant Thornton”) served as the Company’s
independent registered public accountants for the year ended June 30, 2005.
A
representative of Grant Thornton will attend the Annual Meeting, will have
an
opportunity to make a statement and will be available to respond to appropriate
questions from stockholders.
The
Audit
Committee is awaiting a proposal from Grant Thornton with respect to the audit
of the Company’s consolidated financial statements for the fiscal year ending
June 30, 2006 and the audit of the effectiveness of the Company’s internal
control over financial reporting as of June 30, 2006. For that reason, it has
not yet engaged an accounting firm to conduct such audits. However, the Audit
Committee has approved the engagement of Grant Thornton to review the Company’s
unaudited interim quarterly financial statements that will be included in its
Quarterly Reports on Form 10-Q for the first three quarters of fiscal
2006.
Deloitte
& Touche, LLP (“Deloitte”) served as the Company’s independent registered
public accountants for the year ended June 30, 2004. However, as previously
reported in a Current Report that we filed with the Securities and Exchange
Commission on Form 8-K dated January 26, 2005, on that date we were informed
by
Deloitte that it had decided to resign as the Company’s independent registered
public accounting firm upon the completion of its review of the Company’s
interim financial statements to be included in its Quarterly Report on Form
10-Q
for our second quarter that ended on December 31, 2004. The Company was informed
by Deloitte that its decision to resign was not the result of any disagreements
between the Company and Deloitte on matters of accounting principles or
practices, financial statement disclosure or auditing scope or
procedures.
Deloitte’s
audit reports on our financial statements for fiscal years ended June 30, 2004
and 2003 contained no adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting
principles.
During
the period from July 1, 2002 to January 26, 2005, there were no disagreements
between the Company and Deloitte on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures which,
if not resolved to Deloitte’s satisfaction, would have caused it to make
reference to the subject matter of the disagreement in connection with its
reports. During the period from July 1, 2002 to January 26, 2005 there were
no
reportable events as defined in Item 304(a)(1)(v) of Securities and Exchange
Commission Regulation S-K.
We
provided Deloitte with a copy of the disclosure we included in our Current
Report on Form 8-K reporting its resignation and, at our request Deloitte
furnished us with a letter addressed to the Securities and Exchange Commission
stating that Deloitte agreed with the statements that we made in that Current
Report.
As
also
previously reported, in a Current Report dated February 8, 2005, that we had
filed with the Securities and Exchange Commission, the Audit Committee of the
Company’s Board of Directors approved the appointment and engagement of Grant
Thornton as the Company’s independent registered public accounting
firm.
During
the period from July 1, 2002 to February 8, 2005 (the date Grant Thornton was
engaged), neither the Company, nor anyone acting on its behalf, consulted with
Grant Thornton regarding (i) the application of accounting principles
to
any specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, or
(ii) any of the matters or events set forth in Item 304(a)(2)(ii) of
Regulation S−K.
Audit
and Other Services Performed and Related Fees
Services
Rendered by and Fees Paid to Grant Thornton in Fiscal 2005.
Audit
Services.
During
fiscal 2005, Grant Thornton rendered audit services to the Company, which
consisted of (i) the annual audit of our consolidated financial statements
for the fiscal year ended June 30, 2005 and a review of our interim consolidated
financial statements that were included in our Quarterly Report on Form 10-Q
filed with the SEC for the quarter ended March 31, 2005, and (ii) an
audit
of the effectiveness of our internal control over financial reporting as of
June
30, 2005, in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
Fees
paid for those services totaled $591,000.
Other
Services.
The
only other services rendered to us by Grant Thornton in fiscal 2005 were
accounting due diligence services in connection with our acquisition of a
business that we consummated in early September 2005. Fees paid to Grant
Thornton for those services totaled $47,000.
The
Audit
Committee determined that the provision by Grant Thornton of the due diligence
services, and the fees paid for those services, in fiscal 2005 were compatible
with maintaining Grant Thornton’s independence.
Services
Rendered by and Fees Paid to Deloitte in Fiscal 2005 and Fiscal
2004.
Audit
Services.
In
fiscal 2005, Deloitte rendered audit services to us consisting of reviews of
our
interim consolidated financial statements included in our Quarterly Reports
on
Form 10-Q filed with the SEC for the quarters ended September 30 and December
31, 2004. Audit fees paid for those fiscal 2005 services totaled $30,000. In
fiscal 2004, Deloitte rendered audit services to us that consisted of the audit
of our annual consolidated financial statements for the fiscal year ended June
30, 2004 and reviews of our interim consolidated financial statements included
in our Quarterly Reports on Form 10-Q filed with the SEC for the first three
quarters of that year. Audit fees paid to Deloitte for those fiscal 2004
services totaled $206,714.
Audit-Related
Services.
In
fiscal 2005, Deloitte rendered audit related services to us in connection with
the incorporation, by reference, of our audited financial statements for the
fiscal years ended June 30, 2002, 2003 and 2004 and our unaudited interim
consolidated financial statements for the six months ended December 31, 2004
and
2003, into our registration statement that we filed with the SEC to register,
under the Securities Act of 1933, as amended, a total of 3,450,000 shares of
our
common stock for sale in a public offering that was completed in the third
quarter of fiscal 2005. Deloitte’s fees for such audit related services totaled
$216,000. In fiscal 2004 Deloitte rendered audit related services to us
consisting of an audit of the financial statements of the Company’s auction
businesses (which had not previously been audited separately) to facilitate
the
sale of those businesses by the Company. Fees paid for those services totaled
$324,891.
Tax
Services.
Deloitte rendered tax planning and advisory services to us in fiscal 2005 and
2004, for which it was paid fees of $1,000 and $62,508,
respectively.
Other
Services.
Deloitte did not render any other services to us in fiscal 2005. In fiscal
2004,
Deloitte rendered advisory services to us in connection with the preparation
and
processing of applications for enterprise zone tax credits, for which it
received fees of $175,000 and $27,180 in fiscal 2005 and 2004,
respectively.
The
Audit
Committee determined that the provision by Deloitte of audit-related and tax
services, and the fees paid for those services, in fiscal 2005 were compatible
with maintaining Deloitte’s independence.
Audit
and Non-Audit Services Pre-Approval Policy
The
Audit
Committee Charter, a copy of which is accessible at the Investor Relations
Section of the Company’s website at www.collectors.com,
provides that our Audit Committee will pre-approve all audit and non-audit
engagements of any independent registered public accounting firms, including
the
nature of the services to be performed and the fees for such services, either
through specific approval of the Audit Committee or by the Chairman of the
Committee pursuant to authority specifically delegated to him by the Committee.
Any engagement approved by the Chairman pursuant to delegated authority is
required to be reported to the Audit Committee at its next meeting. Since the
adoption of the Charter, all audit and non-audit services provided by the
Company’s independent registered accounting firms have been
pre-approved.
SOLICITATION
We
will
pay the costs of soliciting proxies from our stockholders, and plan on
soliciting proxies by mail. In order to ensure adequate representation at the
Annual Meeting, Company directors, officers and employees (who will not receive
any additional compensation therefor) may communicate with stockholders,
brokerage houses and others by telephone, email, telegraph or in person, to
request that proxies be furnished. We will reimburse brokerage houses, banks,
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy materials to the beneficial owners of the Company’s shares.
SHAREHOLDER
PROPOSALS
Under
Securities Exchange Act Rule 14a-8, any stockholder desiring to submit a
proposal for inclusion in our proxy materials for our 2006 Annual Meeting of
Stockholders must provide us with a written copy of that proposal by no later
than 120 days before the first anniversary of the release of our proxy materials
for the upcoming 2006 Annual Meeting. However, if the date of our Annual Meeting
in 2006 changes by more than 30 days from the date on which our 2005 Annual
Meeting is held, then the deadline will be a reasonable time before we begin
to
print and mail our proxy materials for our 2006 Annual Meeting. Matters
pertaining to such proposals, including the number and length of such proposals,
the eligibility of persons entitled to have such proposals included and other
aspects are governed by the Securities Exchange Act of 1934, as amended, and
the
rules of the SEC promulgated thereunder and other laws and regulations to which
interested stockholders should refer.
OTHER
MATTERS
We
are
not aware of any other matters to come before the 2005 Annual Meeting. If any
other matter not mentioned in this Proxy Statement is properly submitted to
a
vote of stockholders at the Meeting, the proxy holders named in the enclosed
proxies will have discretionary authority to vote all proxies they have received
with respect to such matter in accordance with their judgment.
ANNUAL
REPORT
The
2005
Annual Report to Stockholders of the Company is being sent with this Proxy
Statement to each stockholder of record as of October 17, 2005. The Annual
Report is not to be regarded as proxy solicitation material.
By
Order
of the Board of Directors
October
28,
2005
Michael
R, Haynes
Chief
Executive Officer
COPIES
OF THE COMPANY’S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM
10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED JUNE 30, 2005 WILL
BE
PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE SECRETARY,
COLLECTORS UNIVERSE, INC., P.O. BOX 6280, NEWPORT BEACH, CA
92658.
COLLECTORS
UNIVERSE, INC.
P
R O X Y
Solicited
by the Board of Directors
Annual
Meeting of Stockholders—December 5, 2005
The
undersigned hereby revokes all previously granted proxies and appoints A.
Clinton Allen, Michael R. Haynes and David G. Hall, and each of them
individually, the attorney, agent and proxy of the undersigned, with full power
of substitution, to vote all stock of Collectors Universe, Inc. which the
undersigned is entitled to represent and vote at the 2005 Annual Meeting of
Stockholders to be held at 1921 E. Alton Avenue, Santa Ana, California 92705,
at
10:00 A.M. Pacific Time on December 5, 2005, and at any and all adjournments
or
postponements thereof, as fully as if the undersigned were present and voting
at
the Annual Meeting, as directed on the reverse side of this Proxy.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER
ON
THE REVERSE SIDE OF THIS PROXY. WHERE NO DIRECTION IS GIVEN, THOSE SHARES WILL
BE VOTED “FOR”
THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ON THIS PROXY AND
“FOR”
THE APPROVAL OF THE 2005 STOCK INCENTIVE PLAN. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY TO VOTE ON ALL OTHER MATTERS WHICH MAY COME BEFORE THE
MEETING.
IMPORTANT-PLEASE
SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
(continued
and to be signed on other side)
ê
DETACH PROXY CARD HERE ê
COLLECTORS
UNIVERSE, INC.
Please
mark your votes as in this example: x
|
|
THE
DIRECTORS RECOMMEND A VOTE “FOR”
PROPOSAL NO. 1 AND PROPOSAL NO. 2
|
|
|
|
|
|
|
Proposal No. 1
|
ELECTION
OF DIRECTORS:
|
|
|
|
FOR:
¨
The
Nominees Named Below
|
|
WITHHOLD AUTHORITY:
¨
To Vote for
All of the Nominees Named Below
|
|
A.
Clinton Allen, Deborah A. Farrington, Ben A. Frydman, David G. Hall,
Michael R. Haynes, A. J. “Bert” Moyer and Van D.
Simmons
|
|
|
(Instruction:
To withhold authority to vote for any Nominee, print the Nominee’s name in
the space below.)
|
|
|
Exceptions:
|
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Proposal No. 2.
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APPROVAL
OF THE 2005 STOCK INCENTIVE PLAN
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FOR
¨
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AGAINST
¨
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ABSTAIN
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Proposal No. 3.
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IN
THEIR DISCRETION, UPON OTHER BUSINESS WHICH PROPERLY COMES BEFORE
THE
MEETING OR ANY ADJOURNMENT THEREOF.
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Dated:
, 2005
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(Signature of stockholder)
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(Signature if held jointly)
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Please
sign your name exactly as it appears hereon. Executors,
administrators,
guardians, officers of corporations and others signing in a
fiduciary
capacity should state their full titles as such.
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WHETHER
OR NOT YOU
PLAN TO ATTEND THE MEETING, YOU ARE
URGED
TO SIGN
AND RETURN THIS PROXY, WHICH MAY BE
REVOKED
AT ANY
TIME PRIOR TO ITS USE.
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é
Please Detach Here é
You
Must Detach This Portion of the Proxy Card
Before
Returning it in the Enclosed Envelope