UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.              )

 

 

1400 Toastmaster Drive
Elgin, Illinois 60120

April    , 2007

Notice of Annual Stockholders’ Meeting:

You are hereby notified that the Annual Meeting of Stockholders (the “Meeting”) of The Middleby Corporation (the “Company”) will be held at the Company’s executive offices located at 1400 Toastmaster Drive, Elgin, Illinois 60120 at 10:30 a.m., local time, on, Thursday, May 3, 2007, for the following purposes:

(1)            To elect eight directors to hold office until the 2008 Annual Meeting.

(2)            To consider and act on a proposal to ratify the selection of Deloitte & Touche LLP as independent public accountants of the Company for the current fiscal year ending December 29, 2007.

(3)            To consider and act on a proposal to approve an amendment to the Company’s restated certificate of incorporation.

(4)            To consider and act on a proposal to approve The Middleby Corporation 2007 Stock Incentive Plan.

(5)            To transact such other business as may properly come before the Meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on March 22, 2007 as the record date for the determination of stockholders entitled to notice of and to vote at the Meeting.

You are invited to attend the Meeting in person. If you attend the Meeting in person, you may vote your shares by bringing valid photo identification and delivering your completed proxy card or ballot at the Meeting. Please note that if you hold your shares through a bank, broker or other nominee, you must also bring a form of legal proxy, which you must request from such nominee, in order to vote at the Meeting.

Whether or not you plan to attend the Meeting in person, we urge you to return your proxy promptly in accordance with the following instructions. If you own shares in your own name, you may vote (i) by signing and returning the enclosed proxy card in the postage-paid envelope provided, (ii) by telephone or (iii) electronically via the Internet, as described in further detail on the proxy card. If you own shares through a bank, broker or other nominee, please execute your vote by following the instructions provided by such nominee.

 

1400 Toastmaster Drive
Elgin, Illinois 60120

2007 ANNUAL MEETING OF STOCKHOLDERS
May 3, 2007
PROXY STATEMENT

GENERAL

This Proxy Statement and the accompanying proxy are furnished to stockholders of The Middleby Corporation (the “Company”) in connection with the solicitation of proxies by the Company’s Board of Directors (the “Board”) for use at the 2007 Annual Meeting of Stockholders (the “Meeting”) to be held at the Company’s executive offices located at 1400 Toastmaster Drive, Elgin, Illinois 60120, at 10:30 a.m., local time, on Thursday, May 3, 2007, for the purposes set forth in the accompanying Notice of Meeting. This Proxy Statement, the form of proxy included herewith, and the Company’s Annual Report to Stockholders for the fiscal year ended December 30, 2006, are being mailed to stockholders on or about              , 2007.

Stockholders of record at the close of business on March 22, 2007 (the “Record Date”) are entitled to notice of and to vote at the Meeting. On such date there were outstanding 7,970,623 shares of common stock, par value $0.01 per share, of the Company (“Common Stock”). In deciding all questions, each holder of Common Stock will be entitled to one vote, in person or by proxy, for each share held on the Record Date.

Stockholders who are entitled to vote at the Meeting may vote by proxy pursuant to the following methods: (i) stockholders who own shares in their own name may vote in person at the Meeting by bringing valid photo identification and delivering your proxy card at the Meeting, or by mail, telephone or electronically via the Internet, pursuant to the instructions on the proxy card enclosed with this Proxy Statement or (ii) stockholders who own shares through a bank, broker or other nominee should follow the instructions provided by such nominee.

The election inspectors appointed for the Meeting will determine the presence of a quorum and tabulate the votes cast by proxy or in person at the Meeting. The presence, in person or represented by proxy, of the holders of a majority of the shares of Common Stock outstanding and entitled to vote at the Meeting is necessary to constitute a quorum. A quorum is necessary for the transaction of business at the Meeting. Abstentions and broker non-votes will be included in determining the presence or absence of a quorum. Generally, broker non-votes occur on a proposal when a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter or when a broker has such discretionary authority but does not exercise such discretion.

The eight nominees for election to the Board who receive the greatest number of votes cast for the election of directors by the shares present, in person or represented by proxy, will be elected to the Board. For the election of directors, abstentions and broker non-votes will have the effect of neither a vote FOR nor a vote AGAINST the nominee and thus will have no effect on the outcome. Approval of the proposal to ratify the Company’s appointment of independent public accountants and the proposal to adopt the Company’s 2007 Stock Incentive Plan requires the vote of a majority of the

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votes cast at the Meeting by holders of shares present in person or represented by proxy and entitled to vote at the Meeting. For these other matters, abstentions and broker non-votes will not be counted as votes cast either FOR or AGAINST approval of such matters and therefore will not have an effect on the outcome of the votes.

Approval of the proposal to amend the Company’s restated certificate of incorporation requires the affirmative vote of a majority of the Company’s outstanding shares of Common Stock. Both abstentions and broker non-votes are not affirmative votes and, therefore, will have the same effect as votes cast against this proposal.

Properly executed proxies will be voted in the manner directed by the stockholders. If no direction is made, such proxies will be voted as follows:

·       “Proposal No. 1—Election of Directors”; FOR the election of each of the named nominees as a director of the Company;

·       “Proposal No. 2—Ratification of Selection of Independent Public Accountants”; FOR the ratification of the selection of Deloitte & Touche LLP as the Company’s independent public accountants for the current fiscal year ending December 29, 2007;

·       “Proposal No. 3—Approval of an amendment to the Restated Certificate of Incorporation”; FOR the approval of the amendment to the restated Certificate of Incorporation;

·       “Proposal No. 4—Approval of 2007 Stock Incentive Plan”; FOR the approval of the 2007 Stock Incentive Plan .

Any proxy may be revoked by the stockholder at any time prior to the voting thereof by notice in writing to the Secretary of the Company, either prior to the Meeting (at the above Elgin address) or at the Meeting if the stockholder attends in person or a later dated proxy will revoke a prior dated proxy. As of the date of this Proxy Statement, the Board of Directors knows of no other business which will be presented for consideration at the Meeting. If other proper matters are presented at the Meeting, however, it is the intention of the proxy holders named in the enclosed form of proxy to take such actions as shall be in accordance with their best judgment.

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PROPOSAL NO. 1—ELECTION OF DIRECTORS

Eight directors are to be elected by a plurality of the stockholder votes cast at the Meeting to serve until the 2008 Annual Meeting of Stockholders and until their successors shall be duly elected and qualified or until their earlier death, resignation or removal. The following persons have been nominated:

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Each of the nominees has consented to serve as a director if elected. The Board of Directors knows of no reason why any of the foregoing nominees will be unavailable to serve, but, in the event of any such unavailability, the proxies received will be voted for such substitute nominees as the Board of Directors may recommend.

Vote Required for Approval; Board Recommendation

Nominees for election to the Board of Directors who receive the greatest number of votes cast for the election of directors by the shares present, in person or represented by proxy, will be elected to the Board of Directors. With regard to the election of directors, votes may be cast FOR or withheld AGAINST each nominee. Votes that are withheld will have no effect on the outcome of the election because directors will be elected by a plurality of the votes cast. Stockholders eligible to vote at the Meeting do not have cumulative voting rights with respect to the election of directors.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF THE ABOVE NAMED NOMINEES AS A DIRECTOR OF THE COMPANY.

Committees; Board Meetings

The Board of Directors of the Company held four meetings during the fiscal year ended December 30, 2006, and each director attended at least 75% of all Board and applicable Committee meetings. Although the Company does not have a formal attendance policy, the Company encourages all directors to attend the annual meetings of stockholders. All of the Company’s directors at the time attended the 2006 Annual Meeting of Stockholders. Current directors, Messrs. Putnam, Streeter, Yohe, Miller, O’Brien, Lamb, and Levenson, have been determined by the Board of Directors to be “independent directors” as such term is defined under Rule 4200(a)(15) The Nasdaq Stock Market, Inc. (“Nasdaq”). The Board is comprised of a majority of independent directors. The Company currently has an Audit Committee and a Compensation Committee.

From January 1, 2006 to July 25, 2006, the Audit Committee was comprised of Messrs. Putnam (Chairman), Streeter, and Lamb. From July 26, 2006 to December 30, 2006, the Audit Committee was comprised of Messrs. Putnam (Chairman), Streeter, Lamb, and Levensen. During the fiscal year ended December 30, 2006, the Audit Committee met four times for the purposes of (i) approving the selection of the Company’s independent auditors; (ii) reviewing the arrangements for and scope of the audit and pre-approving permitted non-audit services; (iii) reviewing the Company’s interim and annual financial statements or other results of the audit; (iv) reviewing the Company’s internal accounting procedures and controls and the recommendations of the Company’s independent auditors; and (v) reviewing the external audit process. All of the members of the Audit Committee have

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been determined by the Board of Directors to be financially sophisticated as required by Nasdaq Rule 4350(d) and to be “audit committee financial experts” as such term is defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC. All of the members of the Audit Committee have been determined by the Board of Directors to meet the additional independence criteria set forth in Nasdaq Rule 4350(d). The Audit Committee has a charter which was approved by the Board of Directors on March 4, 2003 and modified as of February 25, 2004, a copy of which is attached as Appendix A to this proxy statement for the 2007 Annual Meeting of Stockholders of the Company.

From January 1, 2006 to July 25, 2006, the Compensation Committee was comprised of Messrs. Yohe (Chairman), Miller, and O’Brien. From July 26, 2006 to December 30, 2006, the Compensation Committee was comprised of Messrs. Yohe (Chairman), Miller, O’Brien, and Levenson. During the fiscal year ended December 30, 2006, the Compensation Committee met three times. The function of the Compensation Committee is to make recommendations concerning the compensation of the Chairman of the Board, the President and Chief Executive Officer, and other executive officers of the Company. The Compensation Committee is also responsible for making grants to executive officers under the 1998 Stock Incentive Plan and the proposed 2007 Stock Incentive Plan, and for administering the Management Incentive Compensation Plan, the Executive Officer Incentive Plan, and the proposed 2007 Stock Incentive Plan. All of the members of the Compensation Committee have been determined by the Board of Directors to be independent as defined under applicable Nasdaq listing standards. The Compensation Committee does not have a written charter.

The Board does not have a standing nominating committee or a nominating committee charter that addresses the nominations process. In fiscal year 2005, the Board considered a recommendation from management of the Company that the Board establish a nominating committee comprised solely of non-employee directors, adopt a nominating committee charter and establish a formal policy for consideration of director candidates submitted by the Company’s stockholders. After reviewing management’s recommendation, the Board determined that it was not necessary to have a separate nominating committee or a formal policy for consideration of director candidates submitted by the Company’s stockholders at that time. See “Requirements and Procedures for Submission of Stockholder Nominations of Director Candidates and Proposals of Security Holders” for further information regarding the procedures for recommending a director nominee for consideration. The Board believes that it can adequately fulfill the functions of a nominating committee without having to appoint an additional committee to perform that function based upon the limited size of the Board and the current and anticipated operations and needs of the Company.

A majority of the independent directors discuss and evaluate potential director candidates and recommends potential director candidates to the full Board for selection. The full Board then considers the potential director candidates who have been recommended by a majority of the independent directors. Because the Company’s stockholders rarely, if ever, have recommended potential director candidates, the Board does not have a formal policy for consideration of potential director candidates recommended by the Company’s stockholders, but the Board will give due consideration to any and all such candidates under the same criteria as internally generated candidates. In selecting director candidates, the Board considers a variety of factors, including but not limited to, a candidate’s demonstrated good character and integrity, experience at strategy/policy setting levels, high level experience in dealing with business organizations, ability and willingness to devote time to the affairs of the Company, financial, technical or other special skills and experience, business contacts and ability to work effectively with other Board members.

Executive sessions of the independent directors are held in conjunction with regularly scheduled meetings of the Board of Directors and as otherwise deemed necessary. Robert L. Yohe is the acting lead independent director of the Board.

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The Board has adopted the following procedure for stockholders and other interested parties to communicate with the Board. All such communications should be sent by email to the Chairman of the Board at the address found on the Company’s website, www.middleby.com, or by regular mail to the Chairman of the Board at the Company’s executive office in Elgin, Illinois. The Chairman will collect and organize all such communications, deleting any sales or other solicitations and any which contain offensive material. A summary of the communications received will be periodically provided to the Board, which will determine the disposition of any such communication.

EXECUTIVE OFFICERS

The following is a summary of the professional experience of the executive officers of the Company.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis describes the material elements of compensation for The Middleby Corporation executive officers identified in the Summary Compensation Table as the “Named Executive Officers”.

The Board has a Compensation Committee (the “Committee”) which, during the course of 2006, was composed of the following outside directors, each of whom is “independent” in accordance with the governance rules of the Nasdaq Stock Market:  Robert L. Yohe, Chairman, Ryan Levenson, Gordon O’Brien and John R. Miller III. The Committee is appointed by, and responsible to, the Board for making recommendations to the Board, and approving where appropriate, all matters related to executive and non-employee director compensation.

Middleby Business Environment

The Middleby Corporation is a global leader in the foodservice equipment industry. The Company develops manufactures, markets and services a broad line of equipment used for commercial food cooking, preparation and processing. The Company’s leading brands include Blodgett®, Blodgett Combi®, Blodgett Range®, CTX®, Houno®, MagiKitch’n®, Middleby Marshall®, Pitco Frialator®, Southbend®, NU-Vu®, Alkar®, RapidPak®, and Toastmaster®. Middleby’s international subsidiary, Middleby Worldwide, is a leading exporter and distributor of foodservice and the Middleby Philippines Corporation, is a leading supplier of specialty equipment in Asian markets. In 2006, The Middleby Corporation was ranked no. 6 on the Forbes 200 Best Small Companies list.

Compensation Committee Structure

The Committee is currently comprised of four directors, named above, and at all times will consist of two or more persons, each of whom shall be an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986 (the “Code”). The Committee includes a chairperson and may make rules and regulations for the conduct of its business as it deems advisable and keeps minutes of Committee meetings. All determinations of the Committee are made by a majority of its members either present in person or participating by conference telephone at a meeting or by written consent. The Committee may delegate to one or more of its members or to one or more agents such duties as it may deem advisable, and the Committee or any person to whom it has delegated duties may employ the services of one or more individuals to render advice with respect to any responsibility of the Committee.

For additional information on the members, structure, scope of authority and operation of the Committee, see “Committees; Board Meetings” and “Proposal 1—Election of Directors.”

The Committee makes all decisions over total compensation for Named Executive Officers and other members of senior management, which involves decisions regarding base salary, annual cash-based incentive plan bonuses, and long term equity incentive plan awards. The Committee’s recommendations for compensation arrangements of the Chairman of the Board, Chief Executive Officer and President (the “CEO”) are presented to the full Board of Directors for approval.

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Compensation Programs Objectives

The Company’s compensation and benefits programs are influenced by the Company’s business culture and are designed to maximize strategic Company goals. The Company’s compensation program objectives are as follows:

·       Attract and Retain Executive Talent—The Committee intends to provide compensation packages that will attract and retain qualified executive talent and deliver increasing rewards for extraordinary performance;

·       Link Executive Compensation with Operating Performance—The Committee structures a portion of the compensation for Named Executive Officers and senior management to vary with the Company’s financial and operating performance. This requires that a significant portion of executive compensation is “at-risk” and linked to the achievement of both corporate and individual goals, in order to increase shareholder value;

·       Link Executive Long-Term Incentive Compensation with Shareholder Interests—The Committee believes that granting long term equity based awards using stock options, restricted stock, stock appreciation rights, or performance units, aligns the interests of Company executives with those of shareholders and furthers the Company’s goal of executive retention by using time-based vesting of equity awards.

·       Performance-based compensation to Comply with Section 162(m) of the Internal Revenue Code—Performance-based compensation provided to Named Executive Officers and senior management should comply with the requirements that qualify the compensation as tax deductible to the Company, unless the Company determines under particular circumstances that it is in the Company’s best interest to provide compensation that is not tax deductible.

Compensation Decision Making Process

The CEO annually reviews the operating performance of each executive officer. Elements of executive reviews include an analysis of actual operating performance versus pre-determined operating performance targets, measures taken to improve efficiency of operations within the executive’s area of responsibility and assessment of the executive’s commitment to the Company’s core operating principles. Based on the CEO review, the CEO develops a recommendation to the Committee for each executive’s annual base salary, annual performance incentive plan structure, and the basis for long term equity based grants. The Committee uses the same methodology for the annual base salary and MICP performance-based bonus structure of the CEO.

With respect to annual cash bonus awards, the Committee determines the minimum amount of operating performance that must be achieved each year in order for an annual performance bonus to be paid. Target levels are set to be in line with the Company’s annual budget and are presented by the CEO to the Board of Directors for review and approval. The total compensation of Named Executive Officers and senior management of the company are set at levels intended to be competitive with amounts paid to executive officers and senior managers with comparable qualifications, experience, and responsibilities at other businesses of similar type or market capitalization, with an emphasis on pay for performance.

The Elements of the Company’s Compensation Program

The Company’s compensation program is divided into three elements: (1) base salary, (2) annual performance incentive programs, and (3) long term equity-based incentive programs.

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Base Salary

The base salary element of the compensation program sets executives base salaries at levels estimated to be below that of the median for executives in comparable positions at other similarly sized companies.  Annual non-executive salary increases are budgeted based on the current business environment and the individual’s level of responsibility and merit within the Company. For 2006 the range of non-executive salary increases was between 2% and 4.5% of base salary. The table below sets forth the base salary levels and associated changes for Named Executive Officers for the 2006 fiscal year. The base salary of Mr. Dei Dolori, our Group President, was increased in recognition of increased responsibilities for the Company’s Southbend division.

 

Annual Performance-Based Incentive Programs

Management Incentive Compensation Plan

The Management Incentive Compensation Plan (“MICP”) is intended to provide an incentive for superior performance and to motivate eligible employees (“MICP Participants”) toward the highest level of achievement and business results, to tie their goals and interests to those of the Company and its shareholders, and to enable the Company to attract and retain highly qualified executive officers. Each of the Named Executive Officers is eligible to participate in the MICP if selected by the Committee for participation, and all of the Named Executive Officers participated in the MICP in 2006.

Payment of MICP bonuses are made subject to the attainment of pre-established written performance goals approved by the Committee prior to the 90th day following the beginning of the Company’s fiscal year. For 2006, the performance goals were based upon attaining certain levels of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the fiscal year. The Named Executive Officers had the opportunity to earn bonuses under the MICP based on the following:

·       A minimum EBITDA goal that must be achieved prior to the payment of the MICP Participant’s target MICP bonus. The MICP will not pay bonuses to MICP Participants if actual EBITDA performance is below the minimum EBITDA goal.

·       Tiered performance goals above the minimum EBITDA goal, which if met lead to an incrementally higher annual bonus.

·       A maximum EBITDA that, if achieved or surpassed will result in the payment the maximum MICP bonus available to the MICP Participant. For 2006 the EBITDA goal resulting in maximum pay for maximum performance was equal to a 14.7% increase in EBITDA over the prior year’s results for Messrs. Bassoul and FitzGerald; an 21.9% increase in EBITDA targets relating to Pitco Frialator, Inc., GS Blodgett Corporation and Southbend over the prior year’s results in the case of Mr. Dei Dolori; an 23.0% increase in EBITDA targets relating to Middleby Cooking Systems Group over the prior year’s results in the case of Mr. Sieron; and an 22.3% increase in EBITDA targets relating to the Southbend operating division over the prior year’s results in the case of Mr. Ibrahim.

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The amount of the MICP bonus for MICP Participants at each EBITDA performance goal level is consistent with that individual’s role and responsibility within the Company. The Grants of Plan-Based Awards Table below shows the amounts which could have been earned by the Named Executive Officers under the MICP at target and maximum performance.

EBITDA is determined by the Committee in accordance with Generally Accepted Accounting Principles, subject to adjustment to reflect the impact of specific extraordinary items not reflected in the MICP Participant goals. Under the MICP, the EBITDA calculation does not include foreign exchange gains/losses and does include all bonuses and incentive compensation payable, including MICP payments, to Company employees for the applicable year.

Payments of MICP bonuses, if any, are made after the completion of the Company’s fiscal year end audit and only after the Committee certifies that the EBITDA goals with respect to which MICP payments are to be made have been attained. The bonus awarded to each Named Executive Officer in respect of 2006 performance under the MICP is reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below. The Company achieved the maximum EBITDA goal under the MICP in 2006 and as a result, Messrs. Bassoul, FitzGerald, Dei Dolori, Sieron, and Ibrahim, respectively, received the maximum MICP bonus for the year as follows: $3,500,000, $600,000, $600,000, $313,621 and $250,000. Mr. Sieron’s 2006 MICP bonus was adjusted in the discretion of the Committee as permitted by the plan to take into account expenses relating to the relocation of the Toastmaster business unit.

Stock ownership requirement.   The MICP plan supports the Company’s desire for Named Executive Officers and senior executives to maintain a minimum percentage of base salary in the form of Middleby Corporation common stock ownership. Unexercised stock options are not considered in calculating the stock ownership requirement. The base salary percentages are set by the Committee annually and are set at levels consistent with the individual’s level of responsibility within the Company. If an MICP Participant meets or exceeds their stock ownership requirement, then they are eligible to receive 100% of their MICP bonus. If an MICP Participant does not meets their stock ownership requirement, then a maximum of one-third of their MICP bonus will be used to purchase common stock on the MICP Participant’s behalf.

Stock ownership requirements of the Named Executive Officers as of December 30, 2006 are as follows:

Footnotes:

(1)            Does not include 475,000 vested unexercised options.

(2)            Does not include 45,000 vested unexercised options.

(3)            Does not include 5,800 vested unexercised options.

(4)            Does not include 15,837 vested unexercised options.

(5)            Does not include 5,000 vested unexercised options.

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Executive Officer Incentive Plan

The Executive Officer Incentive Plan (“EOIP”) is an annual cash-based incentive plan that operates with the purpose of reinforcing corporate, organizational and business-development goals; to promote the achievement of year-to-year financial and other core business objectives; and to reward the performance of the Company’s key employees in fulfilling their individual responsibilities. The EOIP provides an essential component of the total compensation package offered to Named Executive Officers. It reflects the importance placed by the Company on motivating employees to achieve superior results over a long term and paying employees based on that kind of achievement.

EOIP awards are granted to key employees (the “EOIP Participants”) of the Company who are selected by the Committee in its sole discretion. In determining the EOIP Participants to whom EOIP awards are granted, the Company considers key employees who exhibit extraordinary performance in achieving year-to-year financial goals and further exceed the core business objectives of the Company. For 2006, the CEO and CFO participated in the EOIP.

Performance periods for EOIP awards are as follows:

·       January 1, 2006 to December 31, 2006

·       January 1, 2007 to December 31, 2007

·       January 1, 2008 to December 31, 2008

·       January 1, 2009 to December 31, 2009

·       January 1, 2010 to December 31, 2010

At the beginning of each performance period the Committee will establish performance goals applicable to the EOIP award. Performance goals may include a threshold level of performance below which an EOIP bonus will not be earned, levels of performance at which a specified EOIP bonus will be earned, and a maximum level of performance beyond which no additional EOIP bonus will be earned. For 2006, the performance goals selected by the Committee related to earnings per share. The EOIP Participant could earn a target bonus amount in the event of an increase in EPS of 10% over the prior year’s result. The EOIP further provided incremental incentives for EPS targets between 10% and 16.5% over the prior year’s results. The Middleby Corporation attained an EPS of $5.13 per share for 2006, which far surpassed the maximum goal under the EOIP. As a result, each of Mr. Bassoul and Mr. FitzGerald earned the maximum bonus awarded under the EOIP of $1,342,258 and $223,719, respectively.

Payment of an EOIP award is made only if performance goals as specified by the Committee are attained and if the EOIP Participant is employed by the Company on the last day of the applicable performance period. In no event may an EOIP award for a performance period exceed $3.5 million per award. The Committee may, in its sole discretion, decrease the amount payable to an EOIP participant upon achievement of performance goals, but in no event may the Committee increase the EOIP amount otherwise payable to the EOIP participant.

Long Term Equity-Based Incentive Programs

The 1998 Stock Incentive Plan (“the “1998 Plan”) is an equity-based incentive plan that encourages Named Executive Officers and senior management of the Company and its subsidiaries to have common stock ownership in the Company and further aligns the interests of Named Executive Officers and senior management with those of stockholders. The Committee is authorized to make

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grants of stock options, stock appreciation rights, restricted stock or performance stock under the 1998 Plan.

Generally, the Committee determines the overall size of the long-term incentive award for each executive officer, including the CEO and CFO. The CEO will make recommendations to the Compensation Committee regarding award levels for executive officers other than the CFO.  However, the Committee may also make grants at varying times of the year, generally in connection with new employment arrangements or promotions, or based on the availability of shares under Company’s shareholder approved long-term equity compensation plans. The Committee has made such awards without regard to the release of the Company’s financial results for the year or the release of any other material non-public information. No equity-based awards were made to the Named Executive Officers during 2006.

No Backdating:   The Company does not backdate options or grant options retroactively. All grants to any Company employee are approved by the Committee and are presented to the full Board for final approval. The exercise price of an option is set at the fair market value of the underlying Common Stock, which is equal to the closing market price of such stock on the date of grant and this method has been consistently applied.

Pension Plans

Pursuant to his employment agreement, the CEO is entitled to a nonqualified defined benefit pension benefit as follows: Upon the CEO’s retirement on or after the date on which he attains the age of 55 (the “Age 55 Retirement Benefit”), but in no event prior thereto, he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 50% of his then current base salary, payable for the remainder of his life. If the CEO retires after the date on which he attains the age of 60 (the “Age 60 Retirement Benefit”), he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 62.5% of his then current base salary, in lieu of the age 55 Retirement Benefit, payable for the remainder of his life. If the CEO retires after the date on which he attains the age of 65, he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 75% of his then current base salary, in lieu of the age 60 Retirement Benefit, payable for the remainder of his life. The estimated monthly retirement benefit payable to the CEO is based on his compensation level as of December 30, 2006 would be $32,083 at the retirement age of 55, $40,104 at the retirement age of 60, and $48,125 at the retirement age of 65. The amount of the CEO’s nonqualified retirement benefit would be offset by the amount of the CEO’s accrued benefits under the tax-qualified plans maintained by the Company, other than any portion of such benefits that are attributable to the CEO’s own contributions to the qualified plans.

The CEO and his dependents are entitled to continue to participate in all health and medical plans and programs which the Company maintains for its senior executives and their families for life, subject to any Medicare coverage being the primary coverage.

Perquisites

Named Executive Officers of the Company and senior executives of the Company are offered limited perquisites. In general, executives in sales oriented positions are offered an automobile expense reimbursement that varies by individual, but, in no event exceeds ten thousand dollars per fiscal year. The CEO is offered the use of a Company automobile, with the associated income taxes added to annual income, and is reimbursed for the cost of annual income tax planning services.

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2007 Actions

On March 8, 2007, the Company made awards of restricted stock to each of the NEOs as follows: Mr. Bassoul, 69,500 shares, Mr. FitzGerald, 22,500 shares, Mr. Dei Dolori, 15,000, shares, Mr. Sieron, 10,000 shares and Mr. Ibrahim, 5,000 shares. Awards for Named Executive Officers other than Mr. Bassoul were made pursuant to the terms of the Company’s 1998 Stock Incentive Plan and will only become vested based on the achievement of specified significant increases in the market price of the common stock over a five-year period. Mr. Bassoul’s award was made pursuant to the terms of the Company’s 1998 Stock Incentive Plan and will only become vested based on the achievement of specified significant increases in the market price of the common stock over a seven-year period.

Accounting and Tax Implications of Executive Compensation

Current federal tax law imposes an annual individual limit of $1 million on the deductibility of the Company’s compensation payments to the CEO and its four most highly compensated other executive officers. Performance-based compensation that satisfies the conditions of Section 162(m) of the Code is excluded for purposes of this limitation. The 2006 awards made to the Chief Executive Officer and the other executive officers pursuant to the MICP, as well as the awards made pursuant to the EOIP to the CEO and CFO, were subject to, and made in accordance with, the Committee’s pre-established performance goals. The 2007 restricted stock grants described above were designed to comply with the requirements of Section 162(m) of the Code.

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The Compensation Committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion and Analysis (“CD&A”) with the Company’s management. Based on the review and discussions, the Compensation Committee recommend to the Company’s Board of Directors that the CD&A be included in these proxy materials.

	The Compensation Committee
	Robert L. Yohe, Chairman,
	Ryan Levenson, Gordon O’Brien and John R. Miller III

 

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SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the annual and long-term compensation for services to the Company in all capacities during the 2006 fiscal year received by the following persons collectively referred to as the Company’s “Named Executive Officers”: (i) the Chief Executive Officer of the Company, (ii) the Chief Financial Officer of the Company and (iii) the three most highly compensated executive officers of the Company (other than the Chief Executive Officer and the Chief Financial Officer).

NOTES:

1.                     Mr. Bassoul’s 2006 Non-Equity Incentive Plan Compensation consists of $3,500,000 paid under the Management Incentive Compensation Plan and $1,342,000 paid under the Executive Officer Incentive Plan. Details of both incentive plans are outlined in the Compensation Discussion and Analysis.

2.                     Mr. Bassoul is entitled to a nonqualified defined benefit pension benefit as follows: Upon Mr. Bassoul’s retirement on or after the date on which he attains the age of 55 (the “Age 55 Retirement Benefit”), but in no event prior thereto, he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 50% of his then current base salary, payable for the remainder of his life. If Mr. Bassoul retires after the date on which he attains the age of 60 (the “Age 60 Retirement Benefit”), he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 62.5% of his then current base salary, in lieu of the age 55 Retirement Benefit, payable for the remainder of his life. If Mr. Bassoul retires after the date on which he attains the age of 65, he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 75% of his then current base salary, in lieu of the age 60 Retirement Benefit, payable for the remainder of his life. The present value of accumulated pension benefits assumes a retirement age of 55, an interest rate of 5.75%, retirement income of $1.65 million, and a length of pension payout of 30 years.

3.                     All Other Compensation amounts in 2006 for Mr. Bassoul include $25,000 in director’s fees for services to the Company and its subsidiaries, $17,907 for a Company provided automobile, $4,400 in Company 401k matching funds, $1,375 Company contribution to Health Savings account, and $1,269 in Company paid Life Insurance benefits. The incremental cost to the Company with respect to the Company-owned automobile provided to Mr. Bassoul is estimated to be less than the $17,907 included in the table representing the taxable income imputed to Mr. Bassoul for personal use of the automobile.

4.                     Mr. FitzGerald’s 2006 Non-Equity Incentive Plan Compensation consisted of $600,000 that was paid out of the Management Incentive Compensation Plan and $223,000 that was paid out of the Executive Officer Incentive Plan. Details of both incentive plans are outlined in the Compensation Discussion and Analysis.

5.                     All Other Compensation amounts in 2006 for Mr. FitzGerald include $4,400 in Company 401(k) matching funds, a $1,375 Company contribution to a Health Savings account, and $210 in Company paid Life Insurance benefits.

6.                     All Other Compensation amounts in 2006 for Mr. Dei Dolori include a $7,500 for a Company provided automobile allowance, $4,400 in Company 401k matching funds, a $1,375 Company contribution to a Health Savings account, and $905 in Company paid Life Insurance benefits.

7.                     All Other Compensation amounts in 2006 for Mr. Sieron include $9,600 Company provided automobile expense allowance, $4,400 in Company 401k matching funds, a $1,375 Company contribution to a Health Savings account, and $582 in Company paid Life Insurance benefits.

8.                     All Other Compensation amounts in 2006 for Mr. Ibrahim include $2,308 in Company 401(k) matching funds, a $1,375 Company contribution to a Health Savings account, and $690 in Company paid Life Insurance benefits.

9.                     Reporting person’s incentive plan compensation consists solely of Management Incentive Compensation Plan payments. The Management Incentive Compensation Plan is outlined in detail in the Compensation Discussion and Analysis section of this proxy.

10.                 The proportion of salary (non-performance based compensation) to total compensation for the Named Executive Officers is as follows: Mr. Bassoul, 7.8%, Mr. FitzGerald, 15.3%, Mr. Dei Dolori, 29.3%, Mr. Sieron, 26.9% and Mr. Ibrahim, 35.4%.

Employment Agreements

Selim A. Bassoul

The Company and MM entered into an employment agreement with Mr. Bassoul dated as of December 23, 2004. The agreement provides, among other things, for Mr. Bassoul to serve as

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President, Chief Executive Officer, and Chairman of the Board of the Company and of MM for a term ending March 1, 2012. Under the agreement, Mr. Bassoul receives an annual base salary of $770,000.

The employment agreement further provides that Mr. Bassoul is eligible to participate in the Company’s Management Incentive Compensation Plan. Under the terms of such plan, if the Company attains certain pre-established performance goals, Mr. Bassoul shall be entitled to receive (i) a target bonus equal to 100% of his base salary as in effect at the beginning of the fiscal year to which the award relates and (ii) for each year, an additional performance bonus determined on a scale based on the amount by which the Company’s earnings before income taxes and depreciation and amortization (“EBITDA”) as determined under the plan exceeds the pre-established performance goal. The maximum annual bonus that Mr. Bassoul may be eligible to receive under the Management Incentive Compensation Plan is $3,500,000.

The employment agreement provides for an aggregate grant to Mr. Bassoul of 300,000 shares of restricted stock (the “Restricted Stock”) pursuant to the terms of the 1998 Stock Incentive Plan. The Restricted Stock was granted in three separate tranches as follows: (i) 100,000 shares of Restricted Stock were granted on December 23, 2004, (ii) 100,000 shares of Restricted Stock were granted on January 5, 2005, and (iii) 100,000 shares of Restricted Stock were granted on May 12, 2005. The Restricted Stock is non-transferable and shall be forfeitable subject to the following vesting conditions: 60,000 shares of the Restricted Stock vested on December 31, 2005; 60,000 shares of the Restricted Stock shall vest on December 31, 2006; 60,000 shares of the Restricted Stock shall vest on December 31, 2007; 60,000 shares of the Restricted Stock shall vest on December 31, 2008; and 60,000 shares of the Restricted Stock shall vest on December 31, 2009, in each case subject to the continued employment of Mr. Bassoul on such date. Mr. Bassoul is entitled to vote and receive declared dividends with respect to all shares of Restricted Stock shares granted to him, irrespective of whether they are vested or not. The restricted stock will immediately vest if: (a) Mr. Bassoul terminates his employment because of a material diminution in duties, (b) Mr. Bassoul’s employment is terminated other than for cause (as defined in the employment agreement), or (b) Mr. Bassoul terminates his employment within six months following a “change in control” of the Company, as defined in the employment agreement.

The terms of the employment agreement relating to the termination of Mr. Bassoul’s employment are discussed below, under the heading “Potential Payments Upon Termination or Change in Control.”

Mr. Bassoul’s employment agreement also provides for a Company-provided automobile and a nonqualified retirement benefit, which is described in the “Pension Plans” section of this Proxy Statement.

Timothy J. FitzGerald

The Company and MM entered into an employment agreement with Timothy J. FitzGerald, the Company’s Vice President and Chief Financial Officer, which superseded both a severance agreement dated March 1, 2004 and a retention agreement dated July 22, 2004. The employment agreement has a five-year term and will continue until March 1, 2010, unless Mr. FitzGerald’s employment is earlier terminated under the terms of the employment agreement. Under his employment agreement, Mr. FitzGerald is entitled to receive an annual base salary of $250,000 and is eligible to earn an annual incentive bonus under the Company’s Management Incentive Compensation Plan. Pursuant to the Management Incentive Compensation Plan, the performance bonus for Mr. FitzGerald will be paid determined on a scale based on the amount by which the Company’s EBITDA (as determined under the plan) exceeds the pre-established performance goal for Mr. FitzGerald for the applicable year. The maximum annual bonus that Mr. FitzGerald may be eligible

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to receive under the Management Incentive Compensation Plan is $600,000. The Company also granted Mr. FitzGerald an aggregate of 50,000 shares of restricted stock of the Company pursuant to the terms and conditions set forth in a restricted stock agreement further described below. The restricted shares granted to Mr. FitzGerald vest ratably over a five year period, commencing on December 31, 2005 and will become fully vested on December 31, 2009, generally, as long as Mr. FitzGerald remains employed by the Company on each applicable vesting date. The restricted stock will immediately vest if: (a) Mr. FitzGerald’s employment is terminated other than for cause (as defined in the employment agreement), or (b) Mr. FitzGerald terminates his employment within six months following a change in control of the Company, as defined in the employment agreement.

The terms of the employment agreement relating to the termination of Mr. FitzGerald’s employment are discussed below, under the heading “Potential Payments Upon Termination or Change in Control.”

Grants of Plan-Based Awards

The Company did not grant any stock options, restricted stock or stock appreciation rights to any officer of the Company during the fiscal year ended December 30, 2006, including to the Named Executive Officers.

Grants of Plan-Based Awards in Fiscal Year 2006

(1)                These columns represent annual cash award opportunities under the Management Incentive Compensation Plan and/or the Executive Officer Incentive Plan. The actual payouts under the plans for 2006 performance were determined on March 6, 2007, and are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.

(2)                Pursuant to the officer’s Management Incentive Compensation Plan guidelines.

(3)                Pursuant to the officer’s Executive Officer Incentive Plan guidelines.

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Outstanding Equity Awards at 2006 Fiscal Year End

The following table sets forth certain information concerning outstanding stock options and stock awards under the 1998 Stock Incentive Plan during the fiscal year ended December 30, 2006 held by each of the Named Executive Officers.

Outstanding Equity Awards at Fiscal Year End

NOTES:

1.                     Mr. Bassoul was granted options to purchase 200,000 shares of Common Stock on February 26, 2002. The option grant vests in 20% increments over a five year period. The strike price of the option grant is $5.90, the closing price of the Common Stock on the date of grant.

2.                     Mr. Bassoul was granted options to purchase 50,000 shares of Common Stock on March 5, 2003. The option grant vests in 20% increments over a five year period. The strike price of the option grant is $10.51, the closing price of the Common Stock on the date of grant.

3.                     Mr. Bassoul was granted options to purchase 50,000 shares of Common Stock on October 23, 2003. The option grant was 100% vested on the date of grant. The strike price of the option grant is $18.47, the closing price of the Common Stock on the date of grant.

4.                     Mr. Bassoul was granted options to purchase 125,000 shares of Common Stock on October 23, 2003. The option grant was 100% vested on the date of grant. The strike price of the option grant is $18.47, the closing price of the Common Stock on the date of grant.

5.                     Mr. Bassoul was granted options to purchase 100,000 shares of Common Stock on March 5, 2003. The option grant vests in 20% increments upon the earlier of the date that that the market price of the Common Stock surpasses $36, $37, $38, $39, and $40, or October 23, 2008. Consistent with vesting parameters, this option grant was fully vested in the fourth quarter of 2004. The strike price of the option grant is $5.90, the closing price of the Common Stock on the date of grant.

6.                     On January 5, 2005 Mr. Bassoul was awarded 100,000 shares of restricted stock. Of this amount 20,000 shares vested on December 31, 2006; if Mr. Bassoul remains employed with the Company on the respective vesting dates, the restricted stock will vest as follows: 60,000 shares on December 31, 2007 and the remaining 20,000 shares will vest on December 31, 2008. On May 12, 2005, Mr. Bassoul was awarded 100,000 shares of restricted stock. If Mr. Bassoul remains employed by the Company on the respective vesting dates, the restricted stock will vest as follows: 40,000 shares on December 31, 2008 and the remaining 60,000 shares will vest on December 31, 2009. Dividends on all restricted stock (to the extent declared by the Company) will be payable to Mr. Bassoul in cash at the same rate as to other stockholders.

At December 30, 2006, Mr. Bassoul held 180,000 shares of unvested restricted stock valued at $18,840,600 based on the year end closing price of the Common Stock of $104.67.

7.                     Mr. FitzGerald was granted options to purchase 10,000 shares of Common Stock on February 26, 2002. The option grant vests in 20% increments over a five year period. The option exercise price is equal to $5.90, the closing price of the Common Stock on the date of grant.

8.                     Mr. FitzGerald was granted options to purchase 5,000 shares of Common Stock on March 5, 2003. The option grant vests in 20% increments over a five year period. The option exercise price is equal to $10.51, the closing price of the Common Stock on the date of grant.

9.                     Mr. FitzGerald was granted options to purchase 35,000 shares of Common Stock on October 23, 2003. The option grant was 100% vested on the date of grant. The option exercise price is equal to $18.47, the closing price of the Common Stock on the date of grant.

10.                 On March 7, 2005 Mr. FitzGerald was awarded 50,000 shares of restricted stock. If Mr. FitzGerald remains employed by the Company on the respective vesting dates, the restricted stock grant will vest in 20% on December 31 of each year, commencing on December 31, 2005. Dividends on all restricted stock (to the extent declared by the Company) will be payable to Mr. FitzGerald in cash at the same rate as to other stockholders.

At December 30, 2006, Mr. FitzGerald held 30,000 shares of unvested restricted stock valued at $3,140,100 based on the Company’s common stock year end closing price of $104.67.

11.                 Mr. Dei Dolori was granted options to purchase 10,000 shares of Common Stock on February 26, 2002. The option grant vests in 20% increments over a five year period. The option exercise price is equal to $5.90, the closing price of the Common Stock on the date of grant.

12.                 Mr. Dei Dolori was granted options to purchase 5,000 shares of Common Stock on March 5, 2003. The option grant vests in 20% increments over a five year period. The option exercise price is equal to $10.51, the closing price of the Common Stock on the date of grant.

13.                 Mr. Dei Dolori was granted options to purchase 30,000 shares of Common Stock on October 23, 2003. The option grant was 100% vested on the date of grant. The option exercise price is equal to $18.47, the closing price of the Common Stock on the date of grant.

14.                 Mr. Dei Dolori was granted options to purchase 25,000 shares of Common Stock on February 28, 2005. The option vesting parameters are as follows: 25% vests if the closing price of the Common Stock averages $62 per share or higher for any consecutive period of 45 business days between February 28, 2005 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $74 per share or higher for any consecutive period of 45 business days between February 28, 2006 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $89 per share or higher for any consecutive period of 45 business days between February 28, 2007 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $107 per

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share or higher for any consecutive period of 45 business days between February 28, 2008 and February 28, 2009. If the options fail to vest before February 28, 2009 in accordance with the preceding criteria, such options will be deemed expired. The option exercise price is equal to $53.93, the closing price of the Common Stock on the date of grant.

15.                 Mr. Sieron was granted options to purchase 10,000 shares of Common Stock on February 26, 2002. The option grant vests in 20% increments over a five year period. The option exercise price is equal to $5.90, the closing price of the Common Stock on the date of grant.

16.                 Mr. Sieron was granted options to purchase 3,000 shares of Common Stock on March 5, 2003. The option grant vests in 20% increments over a five year period. The option exercise price is equal to $10.51, the closing price of the Common Stock on the date of grant.

17.                 Mr. Sieron was granted options to purchase 5,000 shares of Common Stock on October 23, 2003. The option grant was 100% vested on the date of grant. The option exercise price is equal to $18.47, the closing price of the Common Stock on the date of grant.

18.                 Mr. Sieron was granted options to purchase 25,000 shares of Common Stock on February 28, 2005. Option vesting parameters are as follows: 25% vests if the closing price of the Common Stock averages $62 per share or higher for any consecutive period of 45 business days between February 28, 2005 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $74 per share or higher for any consecutive period of 45 business days between February 28, 2006 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $89 per share or higher for any consecutive period of 45 business days between February 28, 2007 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $107 per share or higher for any consecutive period of 45 business days between February 28, 2008 and February 28, 2009. If the options fail to vest before February 28, 2009 in accordance with the preceding criteria, such options will be deemed expired. The option exercise price is equal to $53.93, the closing price of the Common Stock on the date of grant.

19.                 Mr. Ibrahim was granted options to purchase 5,000 shares of Common Stock on October 23, 2003. The option grant was 100% vested on the date of grant. The option exercise price is equal to $18.47, the closing price of the Common Stock on the date of grant.

20.                 Mr. Ibrahim was granted options to purchase 5,000 shares of Common Stock on February 28, 2005. Option vesting parameters are as follows: 25% vests if the closing price of the Common Stock averages $62 per share or higher for any consecutive period of 45 business days between February 28, 2005 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $74 per share or higher for any consecutive period of 45 business days between February 28, 2006 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $89 per share or higher for any consecutive period of 45 business days between February 28, 2007 and February 28, 2009, 25% vests if the closing price of the Common Stock averages $107 per share or higher for any consecutive period of 45 business days between February 28, 2008 and February 28, 2009. If the options fail to vest before February 28, 2009 in accordance with the preceding criteria, such options will be deemed expired. The option exercise price is equal to $53.93, the closing price of the Common Stock on the date of grant.

Option Exercises and Stock Vested for the Fiscal Year Ended December 30, 2006

The following table sets forth the aggregate amounts received or realized in connection with the exercise of stock options and vesting of stock awards under the 1998 Stock Incentive Plan during the fiscal year ended December 30, 2006 by each of the Named Executive Officers. Options awarded under the plan become exercisable in accordance with the terms of the grant and generally have a ten year term.

(1)            On December 23, 2004, Mr. Bassoul was awarded 100,000 shares of restricted stock. Of this amount, 60,000 shares vested on December 31, 2005 and the remaining 40,000 shares vested on December 31, 2006. On January 5, 2005 Mr. Bassoul was awarded 100,000 shares of restricted stock. Of this amount 20,000 shares vested on December 31, 2006.

(2)            Exercised option details for Mr. FitzGerald are as follows: exercise of 4,000 shares on September 7, 2006 comprising part of a total grant of 10,000 shares granted on February 26, 2002 at a strike price of $5.90.

(3)            On March 7, 2005 Mr. FitzGerald was awarded 50,000 shares of restricted stock. If Mr. FitzGerald remains employed by the Company on the respective vesting dates, the restricted stock grant will vest in 20% on December 31 of each year, commencing on December 31, 2005. Dividends on all restricted stock (to the extent declared by the Company) will be payable to Mr. FitzGerald in cash.

(4)            Exercised option details for Mr. Sieron are as follows: (i) exercise of 6,000 shares on December 4, 2006 part of a total grant of 10,000 shares granted on February 26, 2002 at a strike price of $5.90, (ii) exercise of 1,800 shares on December 4, 2006 part of a total grant of 3,000 shares granted on February 26, 2002 at a strike price of $10.51, and (iii) exercise of 4,623 shares on December 4, 2006 part of a total grant of 5,000 shares granted on October 23, 2003 at a strike price of $18.47.

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(5)            Exercised option details for Mr. Dei Dolori are as follows: (i) exercise of 1,000 shares on March 6, 2006 part of a total grant of 5,000 shares granted on February 26, 2002 at a strike price of $10.51, and (ii) exercise of 20,225 shares on August 18, 2006 part of a total grant of 30,000 shares granted on October 23, 2003 at a strike price of $18.47.

Pension Benefits at 2006 Fiscal Year End

Pursuant to his employment agreement, Mr. Bassoul is entitled to a nonqualified defined benefit pension benefit as follows: Upon Mr. Bassoul’s retirement on or after the date on which he attains the age of 55 (the “Age 55 Retirement Benefit”), but in no event prior thereto, he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 50% of his then current base salary, payable for the remainder of his life. If Mr. Bassoul retires after the date on which he attains the age of 60 (the “Age 60 Retirement Benefit”), he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 62.5% of his then current base salary, in lieu of the age 55 Retirement Benefit, payable for the remainder of his life. If Mr. Bassoul retires after the date on which he attains the age of 65, he shall be fully vested in a monthly retirement benefit equal to one-twelfth of 75% of his then current base salary, in lieu of the age 60 Retirement Benefit, payable for the remainder of his life. The estimated monthly retirement benefit payable to Mr. Bassoul based on his compensation level as of December 30, 2006 would be $32,083 at the retirement age of 55, $40,104 at the retirement age of 60, and $48,125 at the retirement age of 65. The amount of Mr. Bassoul’s nonqualified retirement benefit would be offset by the amount of Mr. Bassoul’s accrued benefits under the tax-qualified plans maintained by the Company, other than any portion of such benefits that are attributable to Mr. Bassoul’s own contributions to the qualified plans.

Pension Benefits Table

(1)            The present value of accumulated pension benefits assumes a retirement age of 55, an interest rate of 5.75%, retirement income of $1.65 million, and a length of pension payout of 30 years.

(2)            Mr. Bassoul and his dependents are entitled to continue to participate in all health and medical plans and programs which the Company maintains for its senior executives and their families for life, subject to any Medicare coverage being the primary coverage.

(3)            The present value of accumulated medical pension benefits due to Mr. Bassoul assumes a retirement age of 55, an interest rate of 5.75%, and a length of benefit period of 30 years.

Potential Payments Upon Termination or Change in Control

Under Employment Agreements

Selim Bassoul

During the term of Mr. Bassoul’s employment agreement with the Company (see above “Employment Agreements”), the parties have the right to terminate the agreement at any time and, in the case of any termination, Mr. Bassoul will be paid all compensation accrued to date, including, in the event that the termination is by the Company and MM for reasons other than cause, a pro rata share of incentive

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compensation under the Management Incentive Compensation Plan that would otherwise have been payable to him had he remained employed by the Company until the last day of the fiscal year, such pro rata share to be paid following the conclusion of the fiscal year for which payable. Under the employment agreement, if the Company terminates Mr. Bassoul’s employment without cause, Mr. Bassoul terminates his employment due to a material diminution of his duties or a change in his title, or Mr. Bassoul terminates his employment within the six-month period following a change in control, Mr. Bassoul will be entitled to an amount equal to three times the sum of his annual base salary and the greater of (x) the amount of incentive compensation earned under the Management Incentive Compensation Plan with respect to the full calendar year immediately prior to the date of termination and (y) the average incentive compensation paid to Mr. Bassoul under the Management Incentive Compensation Plan for each of the three calendar years immediately prior to the date of termination. Further, the employment agreement provides that if Mr. Bassoul’s employment agreement is terminated by either party, for reasons other than cause, Mr. Bassoul and his dependents are entitled to continue to participate in all health and medical plans and programs which the Company maintains for its senior executives and their families until the later of the death of Mr. Bassoul or his spouse, subject to any Medicare coverage being the primary coverage. The agreement also provides Mr. Bassoul with certain additional payments intended to reimburse him for the excise tax payable should any payments made to him in the event of a change in control be subject to the excise tax imposed on “excess parachute payments” under section 4999 of the Code, and to reimburse him for the income, excise and employment taxes on the reimbursement payment.

Timothy J. FitzGerald

During the term of Mr. FitzGerald’s employment agreement (see above “Employment Agreements”), Mr. FitzGerald’s employment may be terminated by the Employer (defined as the Company and MM) or by Mr. FitzGerald at any time, or by the death of Mr. FitzGerald. The employment agreement provides Mr. FitzGerald with the following severance benefits. If the Employer terminates Mr. FitzGerald’s employment without “cause” (as defined in the employment agreement), or if Mr. FitzGerald terminates his employment within six months following a change in control of the Company, Mr. FitzGerald will be entitled to a lump sum payment equal to two times the sum of: (a) Mr. FitzGerald’s annual base salary for the full calendar year immediately prior to the date of termination, and (b) the greater of (i) the amount of his annual bonus paid under the Company’s Management Incentive Compensation Plan with respect to the full calendar year immediately prior to the year of termination and (ii) the average of Mr. FitzGerald’s annual bonuses paid under the Management Incentive Compensation Plan for each of the two calendar years immediately prior to the year of termination. Mr. FitzGerald will also be entitled to an additional payment (referred to as a “gross-up” payment) to cover the amount of any excise tax, including income taxes and excise taxes incurred with respect to the gross-up payment, in the event that any amount payable to him in connection with a change in control of the Company results in the excise tax imposed on “excess parachute payments” under the Code.

Other Named Executive Officers

The Named Executive Officers other than our CEO and CFO do not have any employment or severance agreements with the Company. In the event of termination (including in connection with a change in control), payment of severance and a prorated MICP bonus may be approved by the Compensation Committee in their discretion. Stock option grants would vest in accordance with grant provisions.

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Under Equity Incentive Plans

Outstanding stock options held by the Named Executive Officers become fully vested upon a change in control of the Company. Pursuant to the terms of their respective employment agreements described above, the restricted stock held by Messrs. Bassoul and FitzGerald becomes vested upon certain terminations of employment, as shown in the tables below.

Upon termination of employment for reasons other than disability or death, each of the Named Executive Officers would be entitled to exercise then-vested stock options for a period of three months days following such termination of employment. In the event of the disability or death of the Named Executive Officer, the executive or his estate or beneficiary, as the case may be, would be entitled to exercise then-vested stock options for a period of one year following such termination.

Quantification

The tables below illustrates the potential payouts to each Named Executive Officer under each of the various separation situations discussed above. The tables assume that the terminations took place on December 30, 2006, the last day of our fiscal year.

Termination without cause:

 

Employee terminates due to material diminution in duties:

 

Termination of employment within 6 months of change in control:

 

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Directors’ Compensation

The following table sets forth information concerning the annual and long-term compensation for services to the Company performed by the Board of Directors who were not employees of the Company during the 2006 fiscal year.

(1)                Each director of the Company receives an annual retainer of $30,000, and each director who is not an officer of the Company receives an additional retainer of $1,000 for each meeting of the Board of Directors or committee thereof that he attends and $500 for each telephonic meeting that he participates in. Each director who serves as a committee chair receives an additional annual retainer of $5,000, and the lead independent director receives an additional annual retainer of $5,000.

(2)                Mr. Levenson was elected to the Company’s Board of Directors on May 11, 2006.

(3)                Board of Directors fees for Mr. O’Brien’s services are paid directly to his employer, American Capital Strategies.

(4)                On May 15, 2006 the company granted 500 options to each non-employee member of the Board. A total of 3,500 options were issued in total under this grant. The 2006 award value for each individual grant under SFAS 123R determined at the time of issuance was $18,049. On March 7, 2007 the company determined that these options were inadvertently issued under the 1998 Stock Incentive Plan, which did not provide for option grants to non-employee directors. On March 8, 2007 the Company rescinded all 500 options granted to each member.

(5)                The Company maintains an unfunded retirement plan for non-employee directors. The plan provides for an annual benefit upon a change in control or retirement from the Board of Directors at age 70, equal to 100% of the director’s last annual fee (excluding meeting fees), payable on a quarterly basis for a number of years equal to the director’s years of service, up to a maximum of 10 years. In November, 2006, the Board of Directors approved the termination of The Middleby Corporation Board of Directors pension plan (“Plan”). All current Directors with more than 10 years of service to the Company will remain in the Plan and will be allowed to continue to have benefits vest and accrue in the Plan until they meet the Plan retirement age of 70, at which point their respective Plan distributions will begin. Any future Board members will not be eligible for the Plan. The Director’s retirement plan obligation is calculated using an interest rate of 5/75% for a director retiring at age 70, and a benefit payout term of 10 years.

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The number of stock options and stock awards outstanding as of December 30, 2006 for each non-employee member of the Board of Directors are as follows:

 

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information contained in this Proxy Statement relating to the occupations and security holdings of directors and officers of the Company and such individuals’ transactions with the Company is based upon information received from each individual as of March 22, 2007.

The following table sets forth certain information with respect to the beneficial ownership of shares of the Common Stock, as of March 22, 2007, by each person known by the Company to be the beneficial owner of more than five percent of Common Stock, each director and each nominee for director of the Company, each Named Executive Officer of the Company and all current directors and executive officers of the Company as a group. Unless otherwise indicated below, the address for each person listed below is c/o The Middleby Corporation, 1400 Toastmaster Drive, Elgin, Illinois 60120.

*                    Indicates beneficial ownership of less than 1%.

(1)            Mr. Bassoul is the Chairman, Chief Executive Officer and President of the Company. His holdings include 475,000 shares of Common Stock subject to options exercisable within 60 days, 180,000

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shares of restricted Common Stock, 69,500 shares of restricted Common Stock granted on March 8, 2007 and 23,000 shares held by Mr. Bassoul’s spouse as trustee.

(2)            Mr. FitzGerald is Vice President and Chief Financial Officer of the Company. His holdings include 45,000 shares of Common Stock subject to options exercisable within 60 days, 30,000 shares of restricted Common Stock, 22,500 shares of restricted Common Stock granted on March 8, 2007, and 4,700 shares held by Mr. FitzGerald’s spouse and children.

(3)            Mr. Dei Dolori is a Group President. His holdings include 5,800 shares of Common Stock subject to options exercisable within 60 days and 15,000 shares of restricted Common Stock granted on March 8, 2007.

(4)            Mr. Sieron is a division Vice President. His holdings include 15,837 shares of Common Stock subject to options exercisable within 60 days and 10,000 shares of restricted Common Stock granted on March 8, 2007.

(5)            Mr. Ibrahim is a division President. His holdings include 5,000 shares of Common Stock subject to options exercisable within 60 days and 5,000 shares of restricted Common Stock granted on March 8, 2007.

(6)            Includes 3,000 shares of common stock, granted in March 2003, subject to options exercisable within 60 days.

(7)            Morgan Stanley share holdings and percentage ownership information presented in the above table was obtained from a Schedule 13G filing dated February 15, 2007. The address of Morgan Stanley is 1585 Broadway, New York, NY 10036.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the Company’s directors and executive officers and any person that beneficially owns more than ten percent of the Company’s Common Stock are required to report their beneficial ownership and any changes in that ownership to the SEC and the Nasdaq. These reports are required to be submitted by specified deadlines, and the Company is required to report in this proxy statement any failure by directors, officers and beneficial owners of more than ten percent of its Common Stock to file such reports on a timely basis during the Company’s most recent fiscal year or, in the case of such a failure that has not previously been so disclosed, prior fiscal years. Based solely on a review of the copies of reports furnished to the Company during and with respect to the year ended December 30, 2006 and written representations from certain of the Company’s directors and executive officers, the Company does not know of any failure by its executive officers, directors and beneficial owners of more than ten percent of its Common Stock to file on a timely basis any reports required by Section 16(a) for the year ended December 30, 2006 and, to the extent applicable for purposes of this disclosure, prior fiscal years.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee conducted its oversight activities for the Company in accordance with the duties and responsibilities outlined in the Audit Committee charter, approved by the Board of Directors on March 4, 2003 and modified as of February 25, 2004, a copy of which is attached to this proxy statement for the 2007 Annual Meeting of Stockholders of the Company.

The Audit Committee has reviewed and discussed with management the Company’s audited financial statements as of and for the fiscal year ended December 30, 2006.

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The Audit committee discussed with the independent auditors, Deloitte & Touche LLP, the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees, as modified or supplemented, by the Public Company Accounting Oversight Board (“PCAOB”).

The Audit Committee has received and reviewed the written disclosures and the letter from the independent auditors required by Securities and Exchange Commission and the PCAOB with Audit Committees, and have discussed with the auditors the auditors’ independence.

The Audit Committee has reviewed and discussed with management the status of Sarbanes-Oxley compliance objectives as of December 30, 2006.

Based on reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the fiscal year ended December 30, 2006 be included in the Company’s annual report on Form 10-K for the fiscal year ended December 30, 2006.

 

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 30, 2006, the Compensation Committee consisted of Messrs. Yohe, O’Brien, Miller, and Levenson, all of whom were “independent directors” of the Company and were not officers of the Company. During the fiscal year ended December 30, 2006, Selim A. Bassoul, Chairman, President and Chief Executive Officer of the Company, participated with the full Board in reviewing and approving certain components of compensation of other executive officers and senior managers. Recommendations concerning the compensation of Mr. Bassoul were made by the Compensation Committee to the Board of Directors. During 2006, no member of the Compensation Committee was, or formerly was, an officer or employee of the Company, or had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K, promulgated under the Securities and Exchange Act of 1934, as amended.

The Middleby Corporation Code of Ethics

The Company has adopted a code of ethics that applies to all directors, executive officers, officers and employees of the Company. The Company has made the Code of Ethics available on its website at www.middleby.com.

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Audit Firm Fee Summary

During fiscal years 2006 and 2005 the Company retained its principal auditor, Deloitte & Touche LLP, to provide services in the following categories and amounts:

 

All of the services described in Audit Fees, Audit Related Fees, Tax Fees, and All Other Fees were pre-approved by the Audit Committee.

The Audit Committee has considered whether the provision of non-audit services by the Company’s principal auditor is compatible with maintaining the independence of Deloitte & Touche LLP as the Company’s public accountants.

The Audit Committee Charter provides that the Audit Committee shall pre-approve all audit and permitted non-audit services to be performed by the independent auditors (subject to the de minimis exceptions under applicable law, rules and regulations). However, the Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant such pre-approvals, and the decisions of any member to whom such authority is delegated shall be presented to the full Audit Committee at its next regularly scheduled meeting. In determining whether to pre-approve permitted non-audit services, the Audit Committee (or the members with authority to pre-approve) shall consider whether the auditor’s performance of such services in compatible with independence.

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