At Lifetime Brands Inc., Westbury, N.Y., it's a family affair in terms of employment of relatives of the current and former chief executive officers.
While the large number of relatives on the corporate payroll raises questions about meritocracy and corporate governance, the company has done well for shareholders at least in the past five years.
Lifetime Brands' proxy statement, filed May 4, lists relatives of Jeffrey Siegel, chairman, CEO and president and beneficial owner of 9.14% of the company's shares, and Milton L Cohen, who formerly held those positions and beneficially owns with Norma M. Cohen 8.66% shares of the company.
The relatives employed at Lifetime and their total compensation for 2005, according to the proxy statement, are:
• Evan Miller, a son-in-law of Milton Cohen, executive vice president and president of sales, $913,640;
• Craig Philips, a cousin of Jeffrey Siegel, senior vice-president-distribution and corporate secretary and a director, $365,623;
• Daniel Siegel, a son of Jeffrey Siegel, senior vice-president-sales, $461,553;
• James Wells, a son-in-law of Jeffrey Siegel, senior vice-president-sales, $446,509;
• Tracy Wells, a daughter of Jeffrey Siegel and the wife of James Wells, $12,060 for legal services to an outlet stores division;
• Stuart Glickman, a son-in-law of Milton Cohen, vice president-national sales manager, $272,693;
• Clifford Siegel, a son of Jeffrey Siegel, vice-president-inventory forecasting & replenishment, $230,000; and
• Scott Wit, a son-in-law of Jodie Glickman, daughter of Milton Cohen, a regional sales manager, $90,000.
Another relative, Bruce Cohen, son of Milton Cohen, left last year as a Lifetime executive vice president and director as well as president of its Outlet Retail Stores Inc. unit. Mr. Cohen, beneficial owner of 4.83% of the company, was paid $320,537 plus will receive a severance of $31,603.
Mr. Siegel was paid $1.69 million.
Whether or not a big working family is an investible value, Lifetime's total shareholder return has been outstanding, based on cumulative numbers reported in its proxy statement. Lifetime returned 228% for the five years ended Dec. 31, while an index of peer companies was up only 11.4% and the Nasdaq Market index lost a 7.9%.
"Just because a company has poor governance, it doesn't necessarily mean the stock can't do well but have risk associated with it," said Gavin Anderson, chief executive officer, GovernanceMetrics International Inc., New York, whose ratings universe doesn't include Lifetime. "That many relatives (working for the company) raises questions whether there is nepotism, whether people are awarded position based on merit … It's not to say those people aren't doing a good job. If the stock has done well, something is working. But it raises questions."
FMR Corp., parent of Fidelity Investments, Boston, with 11.76%, and Schwartz Investment Counsel Inc. and an affiliate, Bloomfield Hills, Mich., with 5.63%, are the largest non-family shareholders. "The relatives thing doesn't really bother us," said Scott Goginsky, senior research analyst at Schwartz. "If we are comfortable with management, it's not something that overly concerns us."
Institutional Shareholder Services Inc., Rockville, Md., rating Lifetimes' corporate governance notes it outscored 24.9% of companies in the Russell 3000 index and 43.6% of consumer-durables companies. The ISS rating report makes no mention of the relatives holding executive positions.
Lifetime's annual meeting is June 8.