SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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Filed by a party other than the Registrant o

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þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to section 240.14a-12

RC2 CORPORATION

 

(Name of Registrant as Specified in Its Charter)

Registrant

(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

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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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RC2 CORPORATION
1111 WEST 22ND STREET
OAK BROOK, ILLINOIS 60523

 

Notice of Annual Meeting of Stockholders

to be Held on May 8, 2008

 

The Annual Meeting of Stockholders of RC2 Corporation, a Delaware corporation, will be held at the Doubletree Guest Suites and Conference Center, 2111 Butterfield Road, Downers Grove, Illinois 60515, on Thursday, May 8, 2008, at 11:00 a.m., local time, for the following purposes:

 

1. To elect ten directors to serve until the 2009 Annual Meeting of Stockholders.

 

2. To approve and adopt an amendment to the RC2 Corporation 2005 Stock Incentive Plan.

 

3. To approve and adopt the RC2 Corporation 2008 Incentive Bonus Plan.

 

4. To take action with respect to any other matters that may be properly brought before the meeting and that might be considered by the stockholders of a Delaware corporation at their annual meeting.

 

By order of the Board of Directors

 

Jody L. Taylor,

Secretary

 

Oak Brook, Illinois

April 7, 2008

 

Stockholders of record at the close of business on March 24, 2008 are entitled to vote at the meeting. Your vote is important to ensure that a majority of the stock is represented. Whether or not you plan to attend the meeting in person, please vote your shares by phone, via the internet or by completing, signing, dating and returning the enclosed proxy card at your earliest convenience. If you later find that you may be present at the meeting or for any other reason desire to revoke your proxy, you may do so at any time before it is voted. Stockholders holding shares in brokerage accounts (“street name” holders) who wish to vote at the meeting will need to obtain a proxy form and voting instructions from the institution that holds their shares.

 

Stockholders of record may also vote by the Internet or telephone. Voting by the Internet or telephone is fast, convenient, and your vote is immediately confirmed and tabulated. Most important, by using the Internet or telephone, you help us reduce postage and proxy tabulation costs. The Internet and telephone voting facilities will close at 1:00 a.m. central time on May 7, 2008.

 

Or, if you prefer, you can return the enclosed proxy card in the envelope provided.

 

PLEASE DO NOT RETURN THE ENCLOSED PROXY CARD IF YOU ARE VOTING OVER THE INTERNET OR BY TELEPHONE.

 

 

 

 

TABLE OF CONTENTS

 

 

RC2 CORPORATION
1111 WEST 22ND STREET
OAK BROOK, ILLINOIS 60523

 

Proxy Statement for the 2008 Annual Meeting of Stockholders
to be Held on May 8, 2008

 

Important Notice Regarding the Availability of Proxy Materials for the

2008 Annual Meeting of Stockholders to be Held on May 8, 2008:

This Proxy Statement and the Accompanying Annual Report

are Available at: www.rc2.com/investor/annualmeeting.asp

 

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of RC2 Corporation of proxies to be used at the Annual Meeting of Stockholders of RC2 to be held at the Doubletree Guest Suites and Conference Center, 2111 Butterfield Road, Downers Grove, Illinois 60515, on Thursday, May 8, 2008, at 11:00 a.m., local time, and any adjournments thereof. This proxy material is being mailed on or about April 7, 2008 to stockholders of record at the close of business on March 24, 2008.

 

Stockholders can vote by completing and returning a proxy card in the form accompanying this Proxy Statement or, if shares are held in “street name,” by completing a voting instruction form provided by your broker. Stockholders of record can also vote over the Internet or by telephone. If Internet and telephone voting are available to you, you can find voting instructions in the materials accompanying this Proxy Statement. The Internet and telephone voting facilities will close at 1:00 a.m. (central time) on May 7, 2008. Please be aware that if you vote over the Internet or by telephone, you may incur costs such as telephone and Internet access charges for which you will be responsible.

 

The shares represented by each valid proxy received in time will be voted at the Annual Meeting and, if a choice is specified on the proxy, it will be voted in accordance with that specification. If no instructions are specified in a signed proxy returned to us, the shares represented by that proxy will be voted in FAVOR of the election of the directors listed in the enclosed proxy, in FAVOR of the adoption and approval of the amendment to the RC2 Corporation 2005 Stock Incentive Plan (the “2005 Stock Incentive Plan”) and in FAVOR of the adoption and approval of the RC2 Corporation 2008 Incentive Bonus Plan (the “2008 Bonus Plan”). If any other matters are properly presented at the Annual Meeting, including, among other things, consideration of a motion to adjourn the meeting to another time or place, the individuals named as proxies will have the authority to vote on those matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote. If the Annual Meeting is adjourned or postponed, a proxy will remain valid and may be voted at the adjourned or postponed meeting. A stockholder will be able to revoke his or her proxy until it is voted. As of the date of printing of this Proxy Statement, we do not know of any other matters that are to be presented at the Annual Meeting other than the election of directors, the approval of the amendment to the 2005 Stock Incentive Plan and the approval of the 2008 Bonus Plan.

 

Stockholders may revoke proxies (including an Internet or telephone vote) at any time to the extent they have not been exercised by giving written notice to the Corporation or by a later executed proxy via the Internet, by

telephone or by mail. Attendance at the Annual Meeting will not automatically revoke a proxy, but a stockholder attending the Annual Meeting may request a ballot and vote in person, thereby revoking a prior granted proxy. The cost of solicitation of proxies will be borne by the Corporation. Solicitation will be made primarily by use of the mails; however, some solicitations may be made by employees of the Corporation, without payment of any additional compensation, by telephone, by facsimile, or in person.

 

Only stockholders of record at the close of business on March 24, 2008 will be entitled to notice of and to vote at the Annual Meeting. On the record date, we had outstanding 17,418,682 shares of Common Stock, par value $0.01 per share, entitled to one vote per share.

 

A majority of the votes entitled to be cast at the Annual Meeting, represented either in person or by proxy, will constitute a quorum with respect to the meeting. Approval of each matter specified in the notice of the meeting, other than the election of directors, requires the affirmative vote of a majority of the shares represented at the Annual Meeting. A plurality of the votes cast is required for the election of directors. This means that the ten director nominees with the most votes will be elected. Approval of any other matter that may properly be presented at the meeting will require the affirmative vote of a majority of the shares represented at the meeting and entitled to vote. Abstentions and broker non-votes (i.e., shares held by brokers in street name, voting on certain matters due to discretionary authority or instructions from the beneficial owners but not voting on other matters due to lack of authority to vote on such matters without instructions from the beneficial owner) will count toward the quorum requirement but will not count toward the determination of whether such matters are approved or directors are elected. The Inspector of Election appointed by our Board of Directors will count the votes and ballots.

 

At the Annual Meeting, ten directors are to be elected to hold office until the 2009 Annual Meeting and until their successors are elected. The ten nominees for election are named in the following table with brief biographies. As indicated below, each person nominated by our Board of Directors is an incumbent director. We anticipate that the nominees listed in this Proxy Statement will be candidates when the election is held. However, if an unexpected occurrence should make it necessary, in the judgment of the proxy holders, to substitute some other person for any of the nominees, proxies will be voted for a substitute nominee selected by the proxy holders (except where a proxy withholds authority with respect to the election of directors).

 

Boyd L. Meyer and Peter K.K. Chung will retire from the Board as of the Annual Meeting.

 

 

Our Board of Directors held four meetings in 2007, and all of our incumbent directors attended at least 75% of the meetings of the Board and the committees of the Board of which they were a member.

 

Executive sessions or meetings of outside (non-management) directors without management present are held regularly for a general discussion of relevant subjects. In 2007, the outside directors met in executive session four times.

 

The committees of our Board of Directors consist of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. The chart below identifies the members of each of these committees as of the date of this Proxy Statement, along with the number of meetings held by each committee during 2007:

 

 

 

 

Effective May 4, 2007, upon recommendation of our Nominating and Corporate Governance Committee, our Board of Directors modified the membership assignments of our committees. As a result of such changes, Linda A. Huett joined the Audit Committee, John S. Bakalar and Daniel M. Wright left the Compensation Committee and John J. Vosicky and Thomas M. Collinger joined the Compensation Committee, and Thomas M. Collinger and Michael J. Merriman, Jr. left the Nominating and Corporate Governance Committee and John S. Bakalar and Linda A. Huett joined the Nominating and Corporate Governance Committee.

 

The Audit Committee is responsible for assisting our Board of Directors with oversight of (1) the integrity of our financial statements; (2) our compliance with legal and regulatory requirements; (3) our independent auditor’s qualifications and independence; and (4) the performance of our internal accounting function and independent auditors. Our Audit Committee has the direct authority and responsibility to select, evaluate and, where appropriate, replace the independent auditors, and is an “audit committee” for purposes of Section 3(a)(58)(A) of the Securities Exchange Act of 1934. We have placed a current copy of the charter of the Audit Committee on our web site located at www.rc2.com.

 

The Nominating and Corporate Governance Committee is responsible for assisting our Board of Directors by (1) identifying individuals qualified to become members of our Board of Directors and its committees; (2) recommending to our Board of Directors nominees for the annual meeting of stockholders; (3) developing and recommending to our Board of Directors a set of corporate governance principles applicable to our business; and (4) assisting our Board of Directors in assessing director performance and the effectiveness of our Board of

Directors. We have placed a current copy of the charter of the Nominating and Corporate Governance Committee on our web site located at www.rc2.com.

 

The Compensation Committee, in addition to such other duties as may be specified by the Board, (1) determines the compensation levels of our Chief Executive Officer and other executive officers, including salary rates, participation in incentive compensation and benefit plans, fringe benefits, non-cash perquisites and other forms of compensation; (2) reviews and makes recommendations to our Board of Directors with respect to incentive compensation plans and equity-based plans; and (3) reviews and makes recommendations to our Board of Directors with respect to the compensation of our outside directors. The Compensation Committee also administers our 2005 Stock Incentive Plan, Employee Stock Purchase Plan and our bonus plans. We have placed a current copy of the charter of the Compensation Committee on our web site located at www.rc2.com.

 

We are committed to establishing and maintaining high standards of corporate governance, which are intended to serve the long-term interests of the Corporation and our stockholders. Our Board of Directors has adopted Corporate Governance Guidelines which can be found on our web site at www.rc2.com.

 

Our Board of Directors has reviewed the independence of the nominees for election to the Board at the Annual Meeting under the applicable standards of the NASDAQ Stock Market. Based on this review, the Board of Directors determined that each of the following nominees is independent under the NASDAQ listing standards:

 

 

Based on such standards, Curtis W. Stoelting and Peter J. Henseler are the only directors who are not independent because Mr. Stoelting is our Chief Executive Officer and Mr. Henseler is our President.

 

Peter K.K. Chung and Boyd L. Meyer, who are not standing for re-election at the Annual Meeting, are also independent under the NASDAQ listing standards.

 

The Corporation has a standing Nominating and Corporate Governance Committee. Based on the review described under “Corporate Governance Matters — Director Independence,” our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent under the applicable standards of the NASDAQ Stock Market.

 

The Nominating and Corporate Governance Committee will consider director nominees recommended by stockholders. A stockholder who wishes to recommend a person or persons for consideration as a nominee for election to the Board of Directors must send a written notice by mail, c/o Secretary, RC2 Corporation, 1111 West 22nd Street, Oak Brook, Illinois 60523, that sets forth: (1) the name, address (business and residence), date of birth and principal occupation or employment (present and for the past five years) of each person whom the stockholder proposes to be considered as a nominee; (2) the number of shares of our Common Stock beneficially owned (as defined by section 13(d) of the Securities Exchange Act of 1934) by each such proposed nominee; (3) any other information regarding such proposed nominee that would be required to be disclosed in a definitive proxy statement to stockholders prepared in connection with an election of directors pursuant to section 14(a) of the Securities Exchange Act of 1934; and (4) the name and address (business and residential) of the stockholder making the recommendation and the number of shares of our Common Stock beneficially owned (as defined by section 13(d) of the Securities Exchange Act of 1934) by the stockholder making the recommendation.

We may require any proposed nominee to furnish additional information as may be reasonably required to determine the qualifications of such proposed nominee to serve as one of our directors. Stockholder recommendations will be considered only if received no less than 120 days nor more than 150 days before the anniversary of the date the proxy statement was sent to stockholders in connection with the previous year’s annual meeting of stockholders.

 

The Nominating and Corporate Governance Committee will consider any nominee recommended by a stockholder in accordance with the preceding paragraph under the same criteria as any other potential nominee. The Nominating and Corporate Governance Committee believes that a nominee recommended for a position on our Board of Directors must have an appropriate mix of director characteristics, experience, diverse perspectives and skills. Qualifications of a prospective nominee that may be considered by the Nominating and Corporate Governance Committee include:

 

 

We have placed on our web site located at www.rc2.com a description of the procedures for stockholders to communicate with our Board of Directors, a description of our policy for our directors and nominee directors to attend our annual meeting of stockholders and the number of directors who attended last year’s annual meeting of stockholders.

 

We have adopted a Code of Business Ethics that applies to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer. A copy of the Code of Business Ethics is available on our corporate web site which is located at www.rc2.com. We also intend to disclose any amendments to, or waivers from, the Code of Business Ethics on our corporate web site.

 

The Audit Committee is comprised of four members of our Board of Directors. Based on the review described under “Corporate Governance Matters - Director Independence,” our Board of Directors has determined that each member of our Audit Committee is independent as defined in the applicable standards of the NASDAQ Stock Market and the Securities and Exchange Commission (“SEC”).

 

The Audit Committee has:

 

 

Based on such review and discussions with management and the independent auditors, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, for filing with the SEC.

 

AUDIT COMMITTEE:

 

Daniel M. Wright (Chairman)
John J. Vosicky
Michael J. Merriman, Jr.
Linda A. Huett

 

The following table summarizes the fees we were billed for audit and non-audit services rendered by our independent auditors, KPMG LLP, during 2007 and 2006:

 

 

 

 

The Audit Committee of our Board of Directors considered that the provision of the services and the payment of the fees described above is compatible with maintaining the independence of KPMG LLP.

 

The Audit Committee is responsible for reviewing and pre-approving any non-audit services to be performed by our independent auditors. The Audit Committee has delegated its pre-approval authority to the Chairman of the Audit Committee to act between meetings of the Audit Committee. Any pre-approval given by the Chairman of the Audit Committee pursuant to this delegation is presented to the full Audit Committee at its next regularly scheduled meeting. The Audit Committee or Chairman of the Audit Committee reviews and, if appropriate, approves non-audit service engagements, taking into account the proposed scope of the non-audit services, the proposed fees for the non-audit services, whether the non-audit services are permissible under applicable law or regulation and the likely impact of the non-audit services on the independence of the independent auditors.

 

Since the effective date of the Securities and Exchange Commission rules requiring pre-approval of non-audit services on May 6, 2003, each new engagement of our independent auditors to perform non-audit services has been approved in advance by the Audit Committee or the Chairman of the Audit Committee pursuant to the foregoing procedures.

 

Our Board of Directors has determined that all four of the members of the Audit Committee, John J. Vosicky, Michael J. Merriman, Jr., Daniel M. Wright and Linda A. Huett, qualify as “audit committee financial experts” as defined by the rules of the Securities Exchange Commission based on their work experience and education.

 

The following table sets forth the name, age, current position and principal occupation and employment during the past five years of our executive officers who are not nominees for directors:

 

 

The following table sets forth information regarding the beneficial ownership of shares of our Common Stock as of February 29, 2008 by (1) each director and named executive officer (as defined below), (2) all directors and executive officers as a group, and (3) each person or other entity known by us to beneficially own more than 5% of our outstanding Common Stock.

 

The following table is based on information supplied to us by the directors, officers and stockholders described above. We have determined beneficial ownership in accordance with the rules of the SEC. Unless otherwise indicated, the persons and entities included in the table have sole voting and investment power with respect to all shares beneficially owned, except to the extent authority is shared by spouses under applicable law. Shares of common stock subject to options that are either currently exercisable or exercisable within 60 days of February 29, 2008 are treated as outstanding and beneficially owned by the option holder for the purpose of computing the percentage ownership of the option holder. However, these shares are not treated as outstanding for the purpose of computing the percentage ownership of any other person. The table lists applicable percentage ownership based on 17,957,286 shares outstanding as of February 29, 2008.

 

Unless otherwise indicated, the address for each person listed below is 1111 West 22nd Street, Oak Brook, Illinois 60523.